Update: Best Case for Bears Today

The best case scenario for bears today is a big miss on jobs. That should trigger a melt-up in stocks because the main pillar of the "it's not a recession" crowd has been employment. The Federal Reserve also cited employment as a reason not to slow rate hikes. Those arguments come crashing down if employment misses big. My only concern in that scenario is the market tends to process this information slowly. Stocks probably rip into the open because rate hike odds would tumble. This should spark the final move higher in the bear market rally. Commodities might rally too based on fewer rate hikes and bonds should rally. The yield curve might have another surge into deeper inversion. Even if it went on for a few days, bears who bought puts for September and October today would probably have decent profits by mid-to-late August. Best case though is a final run here because the market is primed to be stupidly bullish.

Another way that scenario plays out is one more vicious squeeze of the bears with a dip and then rip. NQ would test its support around 12900 and ES would test the low of the prior week range, before going back up.

A very strong jobs report would probably weaken bonds and strengthen the dollar. Eventually, trades related from that would play out. I'm not sure how stocks would react in the short-term. Probably up because that's been the general direction.

Finally, the jobs report is ulimately meaningless. It's one data point. Most likely the report will be within the range of estimates making it also somewhat meaningless for traders. All it will do is remove uncertainty. Instead of ultra-low volume as we saw yesterday, volume will surge as the market zooms towards its intended target. Only in rare situations such as we are in now can a jobs report act like a 2x4 across the face of investors, traders and policymakers.

BTC and ETH are hinting that markets want to run.

Jobs were almost double expectations. This is a macro disaster for stocks with yields surging and the yield curve inverting even more, should it hold. I never trust the first move though. Buckle up! Should be a wild day.

It's a Recession! Job Losses Have Only Begun

While Wall Street debated if the recession would start later this year or early next year, and the Baizuo in government and media were redefining recession, I called the recession in June, dating it back to January. IICS Calls Recession Back to January 2022. It is now official. The BEA reports 0.9 percent contraction in real GDP in Q2 2022.

No special insight was needed for the call since the Atlanta Fed GDP Now model showed this was likely. The only insight I added was that I believe whatever number is reported was going to be rosier than reality. Even if GDP was positive in Q2 and technically not a recession, I would not have retracted my recession call because I believe the future data revisions will show a deeper contraction. Things are also poised to get worse.

It is true that this recession is rather mild thus far if looking at jobs and economic activity, but the outlook isn't a soft-landing. The odds that this is only the start of something much larger are much higher than anyone in government or Wall Street would care to admit to themselves, let alone in public.

Federal Reserve Bank of NY Model Projects 2 Years of Recession

It's Not a Recession. It's a Depression.

The good news on jobs is that unemployment might remain low for people who want to work because poor education, substance abuse and welfare have permanently reduced labor supply, particularly skilled labor. If you're willing to learn a skill and show up to work everyday, you are probably at low risk for job losses outside of the worst case scenarios. Notice how low claims are below. That chart isn't population adjusted either. Claims are very low compared to the population because many people are no longer "in the labor force." They live on welfare, disability, or retired. While it's great for skilled labor, it isn't great for overall economic growth.

Having said that, job losses started ticking up in June. Below is the 4-week average of continuing claims for unemployment.  History shows turns on this chart shouldn't be taken lightly. Continuing claims started rising in April, the average turned up in June. Everyone in a political position (government, media, Federal Reserve) are all talking up jobs. They are betting their reputations and their careers in some cases, on the uptick below being a wiggle rather than a trend change. 

As for the markets, initial moves on recession news were: long-term treasuries up, stocks up, gold up, oil down, dollar down and yen up. Expect some chop, but many of these moves can continue for a few days.

It's Not a Recession. It's a Depression.

The ruling class is out in force with redefining a recession. Here's why it's a waste of time.

AP: EXPLAINER: How do we know when a recession has begun?

By one common definition, the U.S. economy is on the cusp of a recession. Yet that definition isn’t the one that counts.

The U.S. isn't on the cusp of recession. By the common definition of negative growth in two consecutive quarters, a recession is already six months-old if BEA reports a negative number on Thursday.

As for definitions, they can be flexible. I don't think a bear market is a 20 percent drop in stocks. Every correction from 2009 to 2021 was a correction, not a bear market, even though stocks fell 20 percent or more at times. What's the quibble with the recession definition?

But economists say that wouldn’t mean that a recession had started. During those same six months when the economy might have contracted, businesses and other employers added a prodigious 2.7 million jobs — more than were gained in most entire years before the pandemic. Wages are also rising at a healthy pace, with many employers still struggling to attract and retain enough workers.

(long string of expletives)

Excuse me FRED, can you drop some tactical nukes for me?

FRED: Sure thing boss!

Great, let's start with rising wages. Adjust those for inflation would ya Freddie?

FRED: Incoming!

Real wages are plummeting. Seems consistent with ye olde recession.

The job market’s strength is a key reason why the Federal Reserve is expected to announce another hefty hike in its short-term interest rate on Wednesday, one day before the GDP report. Several Fed officials have cited the healthy job growth as evidence that the economy should be able to withstand higher rates and avoid a downturn. Many economists, though, are dubious of that assertion.

Shall we drop another tactical nuke on their critical meme infrastructure?

At best, labor is a coincident to lagging indicator. If the recession is already six months old and labor didn't start turning down until April, there could be a lot more pain ahead. As in, this recession isn't going to be some dip in activity, but something that at minimum will be a three to four quarter protracted contraction. Looking back, I see they revised GDP to make the 2008 recession much longer than originally recorded. It had been a mild contraction, barely scoring as a recession. I have contended for months that even if not a recession now, the BEA would eventually revise this year into a recession.

The Fed is also trying to combat raging inflation, which reached a 9.1% annual rate in June, the worst mark in nearly 41 years. Rapid price increases, particularly for such essentials as food, gas and rent, have eroded Americans’ incomes and led to much gloomier views of the economy among consumers.

Inflation creates a price illusion. Only looking at wages, revenues or GDP makes one think there's growth. The number is going up. Adjusting for inflation reveals the more activity you engage in, the more money you lose because it's happening with devalued currency. .

Look at the imploding retail stocks as an example. Retailers bought goods expecting to sell them amid high demand, but demand was fake. It was inflation. Supply chains helped disrupt the timing, but also the economy rapidly shifted as inflation came out of the economy. They should have never ordered the inventory. 

Nobody knows how deep this incoming economic malaise could get because it is still wholly distorted by a CPI still running at above 8 percent over the past 12 months. The CPI is rapidly decelerating though. The Cleveland Fed's Nowcast for July is down to 3.3 percent annualized. I don't annualize to forecast, but merely to show how fast the monthly CPI numbers can collapse. If highly efficient companies such as Wal-Mart report department "growth" that could be more than 100 percent price gains (I don't know that this is true, I've only see reported sales figures for various firms that are below the CPI), it indicates the collapse of inflation could reveal widespread economic losses. Wal-Mart is probably a winner in this environment too, keep that in mind.

It did in the first three months of the year, when GDP contracted 1.6% at an annual rate. Economists have forecast that on Thursday, the government will estimate that the economy managed to grow at an annual rate of just below 1% in the April-June quarter, according to data provider FactSet. If accurate, that forecast would indicate that the economy isn’t technically in recession by any definition.

Even if growth does go negative for a second straight quarter, Fed officials and Biden administration economists point to a lesser-known measure called “gross domestic income.”

GDP calculates the value of the nation’s output of goods and services by adding up spending by consumers, businesses and governments. By contrast, GDI, as the name implies, seeks to measure the same thing by assessing incomes.

Over time, the two measures should track each other. But they often diverge in the short run. In the first quarter, GDI grew 1.8% — much better than the 1.6% decline in GDP.

As part of its judgment of whether an economy is in recession, the NBER considers an average of the two measures. In the first quarter, the average was 0.2%, suggesting that the economy expanded slightly.

This isn't an argument devoid of logic. There have been near-miss recessions in the past. The flaw here is inflation. It assumes these numbers are accurate and won't be revised in the future. Given the high rate of inflation, I'm highly confident future revisions will be negative.

Consider these charts and comments from Jeff Snider:

Inverted curves aren't about what just happened. They've already discounted the (likely) 2 qtrs of negative GDP. IOW, the "technical recession" is already in there.

The deep inversion is about what's still coming. And if what already did is half a year of lower output... pic.twitter.com/QGl8KNiezI

— Jeffrey P. Snider (@JeffSnider_AIP) July 26, 2022

The market can't be discounting something like dot-com recession, because that scenario would mean we've already had the recession (Q1/Q2 '22). Can't be something like H1 '08, either. Inversion *has* to be something like 81-82 or 2d part of 08-09.https://t.co/EH7guxTKpo pic.twitter.com/iwE3bxruVq

— Jeffrey P. Snider (@JeffSnider_AIP) July 26, 2022

In two weeks, the spread between the 30-year and 3-month treasuries has been cut in half. The 3-month is only pricing in a 50 bps hike too. If the Fed goes ahead with 75 bps, my hunch is the curve could invert tomorrow or quickly after the initial chaotic frenzy in markets.

Arguing over the definition of recession is missing the forest for the trees. Something wicked this way comes.

Living Wages Impossible With Mass Immigration and Without Tariffs

The difference between a socialist and myself is that I want to live in a civilized country with functional systems. In order to achieve this, we must look at what works and what doesn't. Why systems exist, why they were implemented, what was the goal. Socialism is a road to Hell because it's a failure at first principles, because ultimately socialism is the political form of envy. If one does not envy others, one would not opt for socialism because harming others is wrong. Socialism is based on the moral assumption that wealth is ill-gotten, that economics is zero sum, that employers exploit workers. Some do, but those are crimes in any civilized country. Socialists assume everyone is being exploited (which morphed into thinking all white people are racist, it's the same exact template).

Taking money from one person and giving it to another is theft. It is not charity. If you really live in a society that won't voluntarily help the poor, that won't donate to charity or volunteer, then why would you give this type of people authoritarian power over the people? If a society is moral, it will have Christian charity. If it is not a charitable society, then the state will be uncharitable.

When problems emerge from socialism (and globalism), the socialist thinks the problem isn't enough socialism. Some countries that make socialism "work" are highly homogenous Northern European nations that have zero taxes on capital. They are indeed quite socialist, but have capitalist carve outs because without them, their economies would collapse rather quickly. These countries are actually more pro-billionaire than the USA if you can believe it. China is another example of this, of communists realizing their economic policies are junk.

In the U.S., we constantly hear about expensive and low quality education, expensive or difficult to obtain healthcare and expensive housing. Education and healthcare have the largest share of government spending and regulation of any major industry. Housing is explicitly supported with subsidies in the tax code and via government created mortgage companies. Any solution to these problems that doesn't involve slashing spending and removing government is doomed to failure.

We see the same stupidity in American conservatives. Their solution for every economic problem is tax cuts. That isn't to say tax cuts aren't always good. Lowering the cost of government is a laudable goal, but conservatives don't lower the cost of government. They mainly borrow money to finance tax cuts. Ironically, one can use MMT to justify exactly this policy. Even if they reduced spending to meet revenues, at some point tax cuts stop creating behavioral changes. Lowering the income tax from 80 percent to 20 percent creates a huge positive impact, but lowering it another 75 percent to 5 percent doesn't create as large a behavioral change. At some point, you have to declare victory and focus on other areas.

Tired of waiting for solutions, the American people have started taking steps to better their lives. One emergent trend is unionization. Workers do need some balance against corporations. Will it work though? Where does corporate power lie? How do they crush the rights of workers? Via immigration and tax policy. Mass immigration crushes wages via supply and demand. Anyone who is pro-labor and pro-mass immigration is caught in a paradox. Some will trot out the lie that immigrants benefit the economy. Except, workers are not "the economy." The only immigrants who benefit workers are those who increase labor demand. Which immigrants increase labor demand? The ones who build businesses. Entrepreneurial immigrants exist, but they are very tiny slice of overall immigration. The majority of immigrants to the U.S. go on welfare and they use welfare at higher rates than Americans. Go back 40 years or more and all unions were anti-immigration. Why? They weren't infected by the "dats racist" mind virus. They understood supply and demand.

By restricting immigration, many goals of unionization will be achieved by the marketplace because domestic workers will become more valuable. I can only go by anecdotal data because mass immigration is all over the country, but when immigration crackdowns have occurred, wages have jumped close to $15 per hour in cities, ironic because the socialists call their minimum wage demand the "Fight for $15." That can be achieved by banning immigration alone, and its' sustainable because higher wages will drive automation. Automation is another name for capital investment. When businesses invest capital in labor saving, it drives wages up. One man driving construction equipment in the USA makes as much money as 50 ditch diggers in a poor country. As wages rise, fewer workers will find jobs. Those with the least skills and lowest ability will suffer most of the losses if the country is not helping them by restricting the supply of low skill, low ability immigrants. If you want high wages, and don't want high unemployment and increased poverty, immigration restriction is the free lunch.

There's a global economy though. If wages in the U.S. rise too quickly or if unions become too powerful and drive labor costs up, corporations will shift more work overseas. Some companies are now outsourcing cashier jobs overseas, so the service industry is the next to get hit. How does one fight against outsourcing pressures? With tariffs. Here come the screams of the globalists! Taxes are bad. Sure taxes are bad, they cause people to avoid doing things. Sort of like...income taxes and capital gains taxes. The tariffs should be set at a level that raises revenue for the government and offset with tax cuts that support labor. Maybe use the tariffs to fund Social Security and Medicare and cut payroll taxes. That would support employers and employees both. The country will need some positive regulatory and tax shifts in favor of employers, if it also has a goal of raising wages, because wages are a cost for business. We want taxes and regulations working together to support workers, and the people who hire and pay workers are private businesses.

Today, taxes and regulations support multinational corporations (and farmers, sorry guys) crushing workers. Wages are low and stay low. The American left is thoroughly cucked on this topic. Their solutions will only make things worse and they've been ideologically wrecked by "dats racist." Most will not consider even modest restrictions on immigrations. They are the main supporters of the system that crushes wages. Conservatives aren't any better. They support corporations and mass immigration, and are biased against unions. Thus, the ruling class completely defeats its enemies and guarantees workers will never get anywhere. If instead the left woke up to the damage caused by immigration, they'd have a very powerful issue that would carry them to wins. This would in turn energize the already growing populist wing of the GOP that is anti-immigration and anti-corporate.

Even Good News is Bad News: Population-Adjusted Lowest Initial Unemployment Claims Ever

The prior low was in 1969. Race riots, runaway crime thanks to soft-on-crime left-wing government, the Democrat party eating itself alive, Vietnam war, a stock market top and the beginning of massive inflation. Many lows also came months before a peak in stocks or after stocks had already peaked. Hmmmm....

External border closures in Australia reduced the unemployment rate by around 2.7 points

New academic paper: External border closures in Australia reduced the unemployment rate by around 2.7 points Discussion and commentary here: Immigration collapse reduced Australia’s unemployment by 2.7%

This image shows unemployment and where it might have been had borders been left open:

Perhaps the Baizuo administration has left the border wide open specifically to cripple the American worker. Without mass migration pulling wages lowere, there would be far lower unemployment, a far stronger economy and much higher inflation as a result because wages would be rapidly climbing.

Illegal Alien Wages Collapse Under Open Borders

Increase supply and lower the price? Who'd have thunk it? Mass migration is now so out of control that even illegal aliens are seeing their wages collapse or are simply not being paid at all, because the person hiring them can find a new sucker the next day! And this isn't happening at the border where migration is always relatively high, but in far away places such as hipster neighborhoods in New York City.

This is not satire: Hipster would-be socialists are exploiting workers, thanks to Biden’s border disaster

On February 28, NBC News ran a piece captioned “Undocumented day laborers face harsh work prospects due to immigration spike”. As hard as it is to believe, neither the headline nor the video itself is satire.

The primary focus is on workers at the corner of Division and Marcy Avenues in the Williamsburg section of Brooklyn, known as La Parada, or “the stop”. The voiceover explains, “This is a place where immigrant women find a job for the day, primarily doing domestic work. Every day, up to 150 women wait here, bargaining for hourly pay that is often below minimum wage”.

Why, exactly, would workers bargain for pay that falls below the state and/or federal minimum? The video continues: “Often, these day laborers are undocumented”.

Here’s the problem, according to NBC News: “With more women looking for work, there is more competition. Desperate to find a job and with little to no English, many new arrivals don’t negotiate their rate.”

Increase supply and prices go down. This is basic economics. There is only one type of immigrant who immediately improves the economy: the super producer. The entrepreneur, the inventor, the business founder. Not someone who runs a convenience store or a restaurant, but a business that creates substantial new wealth. Productive people don't subtract from the economy and their children may become more productive, but they aren't making the average person better off unless there's a labor shortage, in which case adding labor can have an immediate positive impact. Less productive migrants are net negatives. They produce more GDP because they purchase basic necessities, but that money flows to corporations and the wealthy. They consume more welfare than they pay in taxes, sometimes substantially more. It adds more debt (inflation) into the economy and makes the average citizen worse off, the average worker far worse off because their effect on labor prices pulls everyone's wages down. Moreover, we can't ignore the raw numbers of immigrants. There aren't enough productive immigrants to cause problems such as overcrowding in schools. Low/no skill mass migration is the main driver of negative outcomes for ordinary Americans.

A high minimum wage is a terrible idea because many of these migrants can't produce enough economic output at a $15 minimum wage. What will happen is mass unemployment that drives up welfare costs, coupled with a large black market for sub-$15 an hour labor. The low living standards of American "minimum wage" workers was caused by three factors: feminism, mass immigration and offshoring. The first and third of those are over. Female labor force participation peaked already. Offshoring peaked. A growing desire for onshoring will reverse that trend soon enough, if wars and soaring transportation costs don't do it first. The last factor is more extreme than ever: open borders.

If you are not familiar with New York City or Williamsburg in particular, the neighborhood is rated as number one among “The 10 Most Hipster Neighborhoods on Earth” on Thrillist.

According to that outlet: “If hipsters have a mecca, it's most certainly Williamsburg. A world of bow ties, trilby hats, and suede chukka boots, where everyone's an amateur photographer with an unnecessarily expensive DSLR camera.”

Williamsburg is also extremely “progressive”, a blue enclave in a sea of blue in an area polling outfit FiveThirtyEight refers to as “The Elite Circles” (along with lower Manhattan), “the most progressive slice of the city”.

I trust that commuters are not traveling into La Parada from the more conservative environs (like Staten and Long Islands) looking for domestic help, so most of the would-be employers there are likely Williamsburg locals. It appears, then, that hipster would-be socialists are busy dickering for the cheapest, below-minimum wage workers whom they may or may not end up paying — a fact that speaks volumes.

Baizuo love to scream about $15 minimum wage, but I'm willing to bet the minimum wage in New York City could approach $20 an hour without mass immigration. Close the border and deport the illegal aliens, and watch wages soar. Imagine a person violently and gleefully stabbing a knife into the back of the American worker over and over while alternatively screaming "racist" at the worker and "Fight for $15" and you understand the mind of the modern Baizuo.

Wage Inflation Hits Domino's

Domino’s Pizza is having a hard time finding delivery drivers and it’s hurting sales

“Domino’s is facing outsized labor challenges given heightened competitive activity for delivery drivers and we have limited visibility into the timing of an improvement as dynamics appear to be somewhat structural in nature and Domino’s is unlikely to supplement with third-party driver networks as it seeks to maintain control of the customer experience and its delivery infrastructure is a competitive advantage,” analysts wrote in a note.

It looks like Domino's is finally ready to plunge, but it will probably take the next leg down in the broader market.

Bond Market to Fed: Now or Never

The January employment report was far above expectations. Additionally, private market analysts were right about the BLS mistaking real job gains for seasonal employment. The November and December figures were revised higher by 700,000 jobs combined. Long story short, the Federal Reserve has been running its asset buying program at full blast, when the data was screaming to taper. Now the bond market and crude oil market are going to have a fight to decide who is in charge, and the Fed better pray they don't team up against the Fed.

The big question today is kneejerk or follow through. If the immediate response to the jobs report was a knee jerk move, the markets will recover or stabilize. If this was the new direction, then another wave of the correction could unfold as bonds breakdown, interest rates breakout, crude oil zooms to $100 per barrel and the majr indexes free fall through their lows. Crude oil has risen more than 6 percent in the past two trading sessions.

Traitors in the State House

The American people have been conquered and now they will be destroyed, how could they not be? Why would anyone lift a finger for people who willingly put people like this into office?

Breitbart: GOP, Democrat Governors Beg Biden for More Foreign Workers to Take U.S. Jobs

In a letter to Biden, Govs. Spencer Cox of Utah (R), Jared Polis of Colorado (D), Janet Mills of Maine (D), Larry Hogan of Maryland (R), Charlie Baker of Massachusetts (R), Phil Scott of Vermont (R), David Ige of Hawaii (D), and Lou Leon Guerrero of Guam (D) ask the Biden administration to import more foreign workers through the J-1, H-2A, and H-2B visa programs to fill agricultural and nonagricultural jobs. The governors wrote:

We recognize there are many causes of the labor shortage, including some that are outside our control. However, that fact only highlights the importance of the policy solutions we can control. One such solution is to increase the number of temporary foreign workers coming into the United States under a variety of exchange or worker visas.

Their lockdowns helped drive people out of the workforce and now the jobs they opened up, they want to give away to foreigners.

Massachusetts, alone, has more than 145,000 residents unemployed as of December 2021, while nearly 156,500 Maryland residents are unemployed. In Maine, nearly 32,000 residents are jobless, as well as more than 154,000 in Colorado, over 37,000 in Hawaii, nearly 32,000 in Utah, and nearly 8,000 in Vermont.

A flooded labor market from mass legal and illegal immigration to the U.S. has had a devastating impact on the nation’s working and middle class while redistributing wealth to the highest earners. Creating an economy that tilts in favor of employers, the economic model helped keep wages stagnant for decades.

The American people are going to way of the Roman people. Something to read about in the history books.

Maybe This is Why Healthcare Stocks Are Tumbling

I was surprised by seeing a bunch of healthcare stocks on my bearish screens, but those with direct labor costs may be in some trouble between the vaxx mandates and soaring labor costs.

ArcaMax: US hospitals struggle to match Walmart pay as staff flees omicron

“This is the most significant labor shortage that we have ever seen,” said Sally Zuel, vice president of human resources at Union Health in Terre Haute, Indiana.

As a result, wages are climbing skyward: In November hospitals’ labor expense per patient was 26% above the pre-COVID level two years earlier, according to data from consulting firm Kaufman Hall.

The workforce squeeze is upending every aspect of care. A Fort Lauderdale, Florida, hospital temporarily closed its labor and delivery unit due to staff shortages. The chief executive of a 25-bed facility in rural Nebraska monitored patients on the floor himself Monday. In Indiana, where the National Guard was called in to reinforce hospital staff, administrators offer double pay to workers to extend their shifts when colleagues are sick.

“We’ve had more staff out because they’ve tested positive and have contracted COVID than we did at the very beginning,” said Lynda Shrock, vice president of human resources at Logansport Memorial Hospital in Logansport, Indiana.

Big Employment Miss, But Oil and Rates Spoil Rally

Employment missed big on the jobs number. Last night, I mentioned upwards of 1 million jobs could have been added between revisions and the Decemebr gain. Instead, November was raised a paltry 39,000, a little more than one-tenth of what was expected. The December figure was 199,000 net new jobs. This will probably be rewvised higher though. The wage data was hot, up 0.6 percent versus 0.4 percent expected. Unemployment rate fell to 3.9 percent, boom levels. Also, the household survey reported 500k new jobs. There is a narrative that many people are quitting and setting up independent businesses. On net, the report doesn't even really matter anymore. Crude oil is still up and the 10-year yield has broken out to the upside. If it holds, Nasdaq at least is cooked.

The number to watch today is 15492 on the NQ. That is the December low. As long as it holds, selling may be limited and bulls could even spark another rally from here. From the Nasdaq Composite close yesterday, it would require a 1.50 percent decline to break the December lows.

All Eyes on New Jobs

Nomrally, jobs numbers aren't that important, but the Fed is using it as their excuse to do QE with markets at all-time highs, unemployment at boom time levels and inflation running hot.

for the jobs number tomorrow: is the model still going to interpret reopening jobs as seasonal hires? Also, were the private sector analysts correct about November jobs being 500k instead of the reported 200k for the same reason? There were huge revisions in the September report (for July and August) because of the seasonal glitch. I seldom look at the ADP number, but it was 500k above forecast. If, and that's a huge if, but if the jobs number for December is as strong as ADPs and the revision comes in as expected, December jobs plus November revision may clear 1 million. Expectation: rates up, stocks down.

If jobs miss or meet and there's no positive revision, stocks probably drift higher off technical support levels. A drop off a report such as this would be a tell that the market "wants" to go lower.

A jobs miss would probaly boost stocks since it should weaken rate hike expectations.

Baizuo Self-Owned Again: Inflation Erases Stimulus Checks

It takes a special kind of stupid to believe printing money is way to get out from under a problem caused by too much money printing, unless you're the person in debt who wants to dump the cost onto unsuspecting poor and middle-income people.

CNBC: Economists warn of inflation inequality as poor get slammed by rising prices

A recent analysis by the Penn Wharton Budget Model found that low- and middle-income households spent about 7% more in 2021 for the same products they bought in 2020 or in 2019. That translates into about $3,500 for the average household.

The government sent checks to individuals and families and those checks do not cover the rising cost of goods and services caused by sending out those checks in the year they sent the checks. The inflation isn't finished yet. By the time the inflation is done, poor and middle income workers will have seen their standard of living crushed by Baizuo policies. Adjust for inflation next year and most families may be spending at least $4,000 to $5,000 more for the same goods and services they bought in 2020, but they won't have stimulus checks to offset. Thus the average Ameican will see their living standard plummet in 2022.

The only way to stop the inflation is to stop inflating. If you care about low and middle-income workers, they already pay very little in taxes. Wage increases are the best way to boost their living standards, and that could be accomplished by reducing low skill immigration, deporting illegal aliens and instituting protective tariffs that reduce the advantage held by countries who do not protect the environment, have low labor standards, and so on. Make it more profitable to build factories in domestically. Then wages will rise and the economy will boom too as more economic activity takes place onshore.

The Federal Reserve Runs Most Aggressive QE With Claims At Historic Lows

The Fed bought $140 billion in assets in December because unemployment? 4-week moving average of initial continuing claims:

Here are the initial claims. Even worse for the Fed's insane policies: they're below the prepandemic low.

Stagflation

The market is still cruising for a crash, misinterpreting a jobs miss as being favorable for Fed policy with respect to the stock market. Inflation is hurting employment though. The Fed has to tighten to save the labor market. Short-term it may hurt employment (might not because if supply chains ease it might balance out), but if a stagflationary recession begins, they will be in a worse position than Volcker. He could act when financial markets were beaten down, near generational lows and when markets didn't matter as much for the economy. Imagine something like the 2008 or March 2020 crash happening and the Fed's response is an emergency 100 basis point rate hike.

Gold miners continue to look attractive. My only caveat is that if the correction isn't finished, gold may be pulled lower along with everything else. I will be looking to add a long position with tight stops.

mRNA Mandate Triggered Southwest Sickout, Other Pilots Emboldened

A couple of days ago I posted Rumor: "Vaxx" Mandate Protest Shuts Down Jacksonville ATC Tower. The truth has now come out. There is no protest. Pilots who do not want the shots will lose their sick days when fired next month, so they are using up all their sick days now.

American Greatness: A Southwest Pilot Explains What Happened over the Weekend

The tyrannical mandate, he explained, erased all of the good will pilots and other conservative employees had felt toward their company.

That newfound ill will manifested itself over the three day weekend, not with an organized strike, but with many disgruntled employees calling in sick, or not signing up for overtime to help the airline fulfill the increase in flights typical for a holiday weekend.

Gary Kelly, the CEO of Southwest, told employees last week that the airline had no choice but to comply with the regime’s vaccine mandate.

...The way Southwest schedules these flights these days, he said, is they rely on a significant number of pilots to pick up an extra trip for time and a half overtime pay. That time and a half pay is usually enough of a enticement to draw the needed number of pilots to fly those trips, he said.

After the vaccine mandate, however, Southwest shouldn’t have expected any pilots to sign up for those extra flights, he said.

...He stressed that there was no “organized sickout,” or even unofficial talk amongst themselves about calling in sick.

“Nothing like that is going on,” he insisted.

Bad news for anyone planning to fly in the next month or so assuming this mandate isn't reversed:

According to conservative director Robby Starbuck, a Republican candidate for US Congress in Tennessee, employees from several other airlines have been messaging him to say that they have been “emboldened” by the actions of the Southwest employees over the weekend.

Baizuo Admin Continues the Clown Show

"All federal employees must be vaccinated to stop this pandemic. It is very very important that everyone get vaccinated. Except for the federal workers who visit everyone's house and business 6 days a week, and interact with the public on a daily basis."

ZH: Biden Exempts Over 600,000 USPS Workers From Federal Mandatory Vaccination Order

USG credibility is approaching terminal velocity. I applaud the decision though, because if the US Postal Service is exempt, then everyone is exempt. The entire government response is a farce.

Democrats and GOPe Ready to Legalize Indentured Servants for Farmers, Allowing Them to Sell Citizenship for Profit

Who cares about the 13th Amendment? Modern slavery is Woke! Under a new bill, farmers will be able to sell citizenship to foreign farm workers. That isn't an overstatement. Considering the value of a green card as evidenced by programs such as the EB-1 visa, I have no doubt we might eventually hear stories about scammers who send agents abroad to sell guest worker slots to foreigners who wull then be working for farmers at a negative wage, once the cost of buying the job are factored in.

NumbersUSA: House to Vote on Two Major Amnesties this Thursday: H.R. 6 and H.R. 1603

The Farm Workforce Modernization Act (H.R. 1603) would grant amnesty to more than 1 million alien farmworkers and their family members. Just as troubling, it would also replace the existing agriculture guest worker program with a new one that amounts to what can only be described as indentured servitude. Farmers would be able to sponsor guest workers, and if they work a certain number of hours over a set period of time, workers may receive a green card.

Together, the two bills would grant amnesty to more than 5 million illegal aliens while doing nothing to prevent the kind of massive border surges that Border Patrol agents currently face.

In a disappointing turn of events, Rep. Dan Newhouse (R-Wash.) lead ten GOP cosponsors on the horrific farm amnesty, H.R. 1603.

The other Republicans supporting the farm amnesty include Reps. Elisa Stefanik (NY), Mark Amodei (NV), Mario Diaz-Balart (FL), Doug LaMalfa (CA), Cathy McMorris Rogers (WA), Mike Simpson (ID), Fred Upton (MI), David Valadao (CA), and Jeff Van Drew (NJ), a former Democrat who switched parties in 2019.

Amazing that this is being done in the midst of mass unemployment, with more than 10 million unemployed. We're deep into 1789 territory with the current ruling class.

Prolapsed anus economy farts bureaucrat boom

MacroBusiness:Prolapsed anus economy farts bureaucrat boom