Looking Backwards …
LB #1
This week was about the economy and the jobs reports. We know the government and the Bureau of Labor Statistics have been missing on the numbers. That’s a fact. We can speculate whether it is on purpose to help Kamala get elected or they are just having difficulty after Covid broke many of their labor models. Do I know if it is intentional, nope. I just know that they have been and will likely continue to be wrong. However, I can also get an insight since they have continually been overstating the jobs numbers and being forced to revise them down. So when I see a jobs report come out Friday with less than expected and I know that they have been overstating jobs I realize the report is probably worse than it was. The headline number was 142k jobs but the street was expecting 160k so that is not good, but if we expect them to be overstating by a third then we are back under 100k jobs for the second month in a row because they revised the July number all the way down to 89k from 114k and June’s were reduced 61k to 118k.
Unfortunately, the jobs picture gets worse. Let’s go to ZeroHedge, in January they tweeted out that since October 2019 American native-born workers have lost 1.4 million jobs and foreign born workers have gained 3 million jobs. Now in a vacuum this doesn’t appear good, but frankly this is why we have an immigration problem in this country. There is work and native-born Americans don’t want to do much of it. Think of farm labor, fruit picking in California, back of house hospitality jobs, these have been the domain of immigrants for 100 years. So I think we are measuring larger numbers than ever but frankly this is not shocking to me. It was the acceleration that was. In the last month the US added 635k foreign born workers and lost 1.325 million native born workers. Now we can look back to July 2018 and see native born workers are flat while immigrants are up 4.7 million. These jobs are not high paying, they are not laden with benefits, the good jobs are being replaced with lesser jobs.
We have more proof of that in the same ZeroHedge article, “that’s because it consisted of an increase of 527K part-time jobs, offset by a 438K plunge in full-time jobs. This means that since last June, the US has added just over 2 million part-time jobs and lost over 1.5 million full-time jobs. Needless to say, part-time jobs pay far less, don’t offer benefits, and generally lead to a suboptimal outcome for the labor market, one of which is the need to get more than one job, and sure enough, the number of multiple jobholders – or people who for whatever reason have more than one job – jumped above 8.5 million, back to all-time highs.” Now folks I can tell you that this economy is not going to be better off with less teachers and more lettuce pickers for Caesar salads. We have mentioned that school districts are being particularly hard hit due to the local and state budgetary problems. They are spending but they can’t print money so they will need a bailout or more cuts will come. Staffing rationalization is the latest and greatest term I have heard for layoffs. They are a coming.
LB #2
On Tuesday Russian President Vladimir Putin visited Mongolia. What is interesting is that according to the International Criminal Court (ICC) he should have been arrested but instead received a guard of honor as he met the Mongolian president. This from Holly Ellyatt at CNBC, “Putin is the subject of an international arrest warrant issued by the ICC in March 2023. The court alleged that he is responsible for war crimes, with a particular focus on the unlawful deportation of children from Ukraine to Russia. At the time, the Kremlin described the ICC’s actions as “outrageous and unacceptable” and said they had no effect on Russia, which is not a member of the ICC. Mongolia has now found itself in hot water as Putin visits the country — his first visit to an ICC member state since the arrest warrant was issued — with apparent impunity.
Under the Rome Statute, the founding treaty of the ICC that came into effect in 2002, ICC member states are obliged to detain and surrender to the court any persons who are subject to an ICC arrest warrant, if they set foot on their soil.
The court has no way to enforce the rule, however…International legal experts warned Monday that Mongolia’s failure to fulfil its obligations to the ICC will very likely have some consequences, with some mooting the possibility of prosecution.
“ICC States Parties should not be inviting persons subject to an ICC arrest warrant to visit their countries for any reason. Full stop,” noted Mark Ellis, executive director of the International Bar Association, or IBA, an organization representing the global legal profession. Democracy Fellow with the Center for European Policy Analysis, Elena Davlikanova, commented that Russia was using the trip to “mock the ICC,” with the economically supplicant country a deliberate choice for a visit to test the ICC’s mettle.”
It is easy to join these little groups that have no backbone, and Russia is simply flexing and pushing back against the US led world order. This is how wars start. Other ICC member states Hungary and Armenia have already come out and said they would arrest Putin which simply erodes the court’s effectiveness. In a world where the US and its Neocon cronies have seldom faced any pushback as America takes war to the rest of the world this is an interesting development. Who knew that Mongolians had such backbone. I am woefully ignorant of anything Mongolian except Mongolian beef.
LB #3
The end of the inverted yield curve is upon us. Let’s go to ZeroHedge, “after 26 months, or 565 trading sessions of inversion, yesterday the curve finally disinverted, marking the end of the longest 2y10y curve inversion in 50 years. What this means is a matter of furious debate.” The article goes on to mention Bloomberg’s Simon White who says that because of the trillions in reserves that the repo and not the yield curve will be the signal to watch. Deutsche Bank’s Jim Reid who has been a fan of the yield curve as a signal now thinks it has malfunctioned. I simply note their impatience. This is what I saw. The curve has been flirting with steepening from a couple weeks, but Friday it accelerated 6 pts to the positive with the 2 year yield now at 3.65% and the 10 year at 3.716%. This is what I also saw Bitcoin down, gold down, silver down, copper down, oil down gas futures down, stocks crushed, bonds rallying aka yields down, but we aren’t done yet. Lumber down, wheat down soybeans down corn down sugar down, coffee down, cotton down, cattle down and even hogs down. Everything that wasn’t bolted down went down. Down like a man’s interest in sleeping with a woman when seeing a picture of Hillary Clinton.
It was a widespread and brutal selloff right when the yield curve started inverting? This is a growth scare and it is because it isn’t the only signal out there. The Sahm rule was triggered last month and says we are in recession, the jobs report got revised down 818,000 jobs and that data is only accurate through March so who knows how many more jobs have been overstated by now. The yield curve un-inversion is telling us that recession is here. We have known that, but it is starting to dawn on Wall Street and they didn’t respond well to the news.
Looking Forwards…
LF#1
We are in the home stretch of the dumb and dumber popularity contest known as the presidential election and it seems a dead heat. The polling seems quite close at the moment which surprises me a bit considering the economic climate and the fact that Kamala is still being hidden. There is a debate coming up so perhaps we will get more clarity after that like we did the last presidential debate when Joe Biden went into it as a competent and ready president for four more years and limped out a finished candidate that will now be known as a lame duck who has virtually disappeared. This was due to his own doing not Trump’s which is even more mind boggling. However, watching Kamala preaching price controls and more spending versus Trump preaching tariffs and more spending make me want to stick my head into an economics textbook and slam it on my ears a couple thousand times to stop my fury at their stupidity. At this point I would vote for 100-year-old Jimmy Carter if he promised to help the government stop spending money they don’t have. But we will get the leader we deserve so onward and upward we go, our behavior along with the debt.
But here is a very interesting thing regarding the election that got my attention as we get closer to poll time. Adam Brandon wrote for RealClearWire this week, “Older generations can roll their eyes at influencers for their flamboyant and excessive behavior. But there is absolutely no denying their effectiveness at reaching mass audiences of young people at a shockingly low cost.
It’s often said that politics is downstream of culture. And culture is incredibly dynamic. Historians and political scientists frequently point to the 1960 presidential debate between John F. Kennedy and Richard Nixon. People who listened to the radio walked away thinking that Nixon won, while those who watched the debate featuring the handsome and well-tanned Kennedy thought the opposite.
Kennedy was more effective at using television to his campaign’s advantage. Today, whoever is more effective at leveraging social media will see a similar boost….By all indications, Kamala Harris is working to broaden the Democratic coalition, primarily through her work to reach these independent voters. Team Harris has spent about $72 million through her digital ad campaigns alone compared with Trump’s $16 million.
For example, the DNC featured an influencer named Merrick Hanna. Hanna has more than 32 million followers/subscribers on TikTok alone. Let’s compare this with Fox News, which had 2.27 million primetime viewers for the entire month of August. The irony is that the people watching Fox News likely already know how they will vote.
As you can see, cable TV ads have all but lost their efficacy. If you want to know why Kamala Harris is ahead in the polls, it’s because she’s making a concerted effort to talk to new and undecided voters outside of her key voting bloc, while Trump continues to preach to his loyal base.” Now folks, I hate to sit here and think that one candidate will win or the other based on technology instead of the issues, their vision, or their moral fiber. But it might very well come down to where they are advertising.
LF#2
Laveen Athrappully from the Epoch Times writes via ZeroHedge, “Solar energy firm Lumio filed for Chapter 11 bankruptcy after getting caught up in a “severe liquidity crisis” following a fall in market demand…Multiple solar companies have gone bankrupt over the past year. Last month, San Jose-based SunPower, for example, filed for Chapter 11 bankruptcy, with $1.1 billion in debts. The company had announced in April that it would lay off around 1,000 employees to transition to a “low fixed-cost model.” The firm said the solar market had been “slower to recover” than it initially expected. In February, solar installer Sunworks and three subsidiaries ceased operations and filed for bankruptcy. According to a post by Solar Insure, a provider of solar-monitoring and warranty-protection services, there have been more than 100 solar bankruptcies in 2024 alone, a number “unseen before” in its “almost 20 years in the solar sector,” the company said.” Folks, many of these companies like Lumio are small and you won’t hear of many of them but this higher for longer interest rate cycle has certainly pushed much of the malinvestment into bankruptcy, into mergers, and that is what is supposed to happen in a business cycle. Many were founded based on tax credits and milking the government and getting away with it with low interest rates to roll over unproductive enterprises, but now they are done.
LF#3
We have discussed just how fakey AI has been so far. ChatGPT has been the flag bearer for this new technology and kicked off the AI craze last May. This from ZeroHedge, “New data from Goldman’s Peter Oppenheimer, citing analytics firm Similarweb, reveals that the total number of monthly visits to ChatGPT’s website sharply declined from spring through mid-summer, as reported in a note to clients on Thursday.
Here’s more from Oppenheimer:
“Furthermore, the original ‘excitement’ about chat-GPT is fading in terms of monthly users (Exhibit 11). This does not mean, of course, that the growth rates in the industry will not be strong, but it does suggest that the next wave of beneficiaries may come from the new products and services that can be created on the back of these foundation models…
The implosion in monthly visits doesn’t suggest an end to OpenAI; instead, customers are bored with GPT-4 or have gravitated to other large language models powered by big tech, such as xAI’s Grok. There’s a very real possibility that some users have found no need to integrate chatbots into their daily lives.”
There is a chart showing the number of visits to ChatGPT website and it appears to be about 1.8 billion visits in March and April and that has declined to just over 200 million. Much like we have discussed with EVs, full self-driving, and wind and solar power without a baseload alternative, this technology is overhyped and either underwanted or underperforming, so far. But it better start showing results soon because there have been hundreds of billions of capex into this technology and if it doesn’t show results, that’s how people get fired.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 40,345.
The 10-year Treasury bond is at …at 3.716%
The price of Brent Crude is … at $68.16 per barrel.
The price of gold is … at $2,526/oz.
The price of silver is … at $28.27/oz.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.