Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

The U.S. Treasury Just Issued a “Buy” Signal for Hard Money Investors

This article was published by The McAlvany Intelligence Advisor on Friday, November 15, 2018:

This writer opined in this space [at The McAlvany Intelligence Advisor] on Wednesday that, due to certain technical and political indicators, this would be an opportune time for hard money advocates to open or add to their holdings of precious metals. That same day, the U.S. Treasury issued its own fundamental “buy” signal. In its monthly statement of receipts and outlays of the U.S. government, it noted that although receipts jumped more than seven percent in October, year-over-year, government spending rose a breathtaking 18 percent compared to October a year ago.

Buried in the various charts and graphs was this note:

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U.S. Government Ran $100 Billion Deficit in October

This article appeared online at TheNewAmerican.com on Thursday, November 15, 2018: 

The U.S. Treasury’s monthly statement of income and expenditures should have been a cause for celebration: Total receipts of $253 billion (a quarter of a trillion dollars) in October were 7.6 percent ahead of last October’s receipts. This is the expected result of lowering tax rates and removing onerous regulations so that the economy could breathe again.

But the celebration never happened.

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Latest NFIB Report Confirms Robust Health of U.S. Economy

This article appeared online at TheNewAmerican.com on Wednesday, November 14, 2018:  

Just when concerns over the future of the U.S. economy have reached fever pitch thanks to the recent volatility on Wall Street, along comes the National Federation of Independent Business (NFIB) to calm those concerns. Its October report, “Small Business Economic Trends”, was summed up thus:

Overall, small businesses continue to support the 3 percent plus growth of the economy and add significant numbers of new workers to the employment pool.

 

The percent of owners with one or more unfilled openings is at a 45 year record high level.

 

Employment is growing faster than the population (210,000 per month this year to date), so the gains in jobs are being “fueled” in part by increased labor force participation.

 

Consumer optimism is also running at near-record levels, supported by rising wages and plentiful job openings.

After reviewing the numbers in each category (from “plans to increase employment” to “earnings trends”), the authors of the study concluded: “Bottom line, the October report sets the stage for solid growth in the economy and in employment in the fourth quarter, while inflation and interest rates remain historically tame. Small businesses are moving the economy forward.”

Indeed they are. The NFIB boasts membership of 325,000 small business owners, reflective of the estimated 28 million small-to-medium-sized businesses in the United States with fewer than 500 employees. That’s compared to about 20,000 companies with 500 employees or more.

And they swing a big hammer.

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Another Opportunity to Purchase Gold and Silver?

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 14, 2018:

With gold closing at $1,202 an ounce and silver closing below $14 an ounce on Tuesday, safe haven hard money investors have the third opportunity in three years to take advantage of such prices.

In November 2015, gold bottomed at $1,081 an ounce; in December 2016 it found support at $1,169 an ounce, and on Tuesday it dropped $1.50 from Monday’s close to finish at exactly $1,202.

Three separate studies have shown the connection between monetary uncertainty and the behavior of precious metals prices. The first, completed by Jonathan Batten, Cetin Ciner and Brian Lucey, concluded that

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Dow Loses 800 Points in Two Days — a Forecast of Weakening Economy?

This article appeared online at TheNewAmerican.com on Tuesday, November 13, 2018:

Monday’s selloff in stocks brought the Dow Jones Industrial Average (DJIA) down to 25,377, off more than five percent since early October. Other averages followed suit. Is this decline a harbinger of further declines to come and, more ominously, an end to the one of the strongest economic rebounds in U.S. history?

The president blames the Democrats. On Monday he tweeted that “the prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches.”

Those headaches are likely to be substantial, as far-left House Democrats take over powerful seats in the new Congress. Whether they gain traction is another matter entirely. Featuring such far-left anti-Trumpers as Nancy Pelosi, Maxine Waters, and Elijah Cummings, Democratic efforts could backfire in the 2020 reelection campaigns. Without an apparent legislative agenda, the Democrats will rely on loud and noisy opposition to the president’s policies, which are likely to tire voters two years from now.

The president is already in “retaliation” mode, warning last Wednesday that Democrat subpoenas, harassment, and charges will create a “warlike” atmosphere and that he might do some investigating of them in return.

But are those threats the primary cause of Wall Street’s troubles?

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OPEC: Do “Whatever it Takes” to Balance Oil Market

This article appeared online at TheNewAmerican.com on Monday, November 12, 2018:

Following the emergency meeting attended over the weekend by members of the OPEC cartel and its non-members in Abu Dhabi, Saudi Arabia’s Energy Minister Khalid al-Falih said “We need to do whatever it takes to balance the oil market.” That goal is indicative of OPEC’s increasing nervousness that it is running out of options to counter increasing U.S. oil production. Last month, the EIA (Energy Information Administration) announced that the United States now leads the world in crude oil production, ahead of both Saudi Arabia and Russia.

For many years, the cartel was able to dictate oil policy and prices globally, bending the world oil markets to the cartel’s needs and purposes. Ten years ago,

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OPEC is in a Pickle, Thanks to U.S. Oil Producers

This article was published by The McAlvany Intelligence Advisor on Monday, November 12, 2018:  

In this space a week ago, this writer panned King Hubbard’s “Peak Oil” theory as fracking technology and favorable market conditions for U.S. producers continued to drive world crude oil prices lower. In early October, the price of oil for November delivery was over $76 a barrel. At the market close on Friday, November 2, the price for December delivery was below $63, pushing the oil market close to bear market territory.

The oil market continued its remarkable decline, with December oil futures trading at the close on Friday, November 9, below $60 a barrel.

This has gotten the attention of the oil ministers of OPEC and its hangers-on (like Russia and Oman), and on Saturday they held an emergency meeting in Abu Dhabi, UAE to see what could be done to stop the decline. On Sunday, Saudi Arabia’s oil minister told Oman’s oil minister that, come December, the cartel will cut oil production by a million barrels a day.

Everything was running along smoothly right up through August.

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U.S. Officially the World’s Largest Crude Oil Producer

This article appeared online at TheNewAmerican.com on Monday, November 5, 2018: 

In an interview with CNNMoney in June, Pioneer Natural Resources Chairman Scott Sheffield said he expected U.S. crude oil production to surpass 11 million barrels a day by this fall, making the United States the world’s top oil producer. Right on schedule the Energy Information Administration announced on Thursday that the U.S. oil industry produced 11.3 million barrels of crude oil a day during August, an increase of 416,000 barrels from the previous month and topping production from Saudi Arabia and Russia. That level of crude oil production is more than 2 million barrels a day ahead of August 2017, the largest increase over any 12-month period in U.S. history.

Sheffield told CNNMoney that “we’ll be at 13 [million] very quickly” and predicted that that number could jump to 15 million in a very few years.

On Wednesday U.S. Interior Secretary Ryan Zinke told Fox News that officially “today we are the largest oil and gas producer on the face of the planet, rolling through 11 million … on our way to 14.”

In less than 10 years, thanks largely to the development of, and continued improvement to, fracking technology, U.S. crude oil production has more than doubled, from 5 million bpd (barrels per day) in 2008 to more than 11 million today.

This has immediate as well as long-term ramifications that extend far beyond gas prices at the pump.

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So Much for King Hubbard’s “Peak Oil” Theory

This article was published by The McAlvany Intelligence Advisor on Monday, November 5, 2018: 

When M. King Hubbard concluded in 1956 that the world would shortly run out of oil, his theory was adopted by environmentalists and government meddlers as the basis for interference in the energy business.

Hubbard’s theory initially predicted that U.S. crude oil production would peak at around 1970. Revisions to the theory pushed the peak date out to 2000 when U.S. crude would hit 12.5 billion barrels per year and then start its inevitable and irreversible decline.

For 2018, U.S. crude oil production will hit 30 billion barrels. So much for Hubbard’s “peak oil” predictions.

But, as Eric Peters (who blogs at EricPetersAutos.com) laments, government interference based on the discredited “peak oil” theory remains firmly in place:

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Jobs Report So Strong Even Democrats Can’t Find Anything Wrong With It

This article appeared online at TheNewAmerican.com on Friday, November 2, 2018:

Friday’s jobs report from the Bureau of Labor Statistics (BLS) was so strong that even Democrats could find nothing in it to criticize. And they were looking, especially as the midterms are just days away.

Tweeted Jason Furman, who headed President Obama’s Council of Economic Advisors: “I’m not seeing anything bad in this jobs report. Strong hourly wage growth, even stronger weekly wage growth, higher labor force participation, lower broader underemployment, while job growth bounced back from last month and the unemployment remained low.”

Jared Bernstein, former Vice President Joe Biden’s economic advisor, couldn’t find anything wrong with Friday’s jobs report either:

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Stocks Bounce Higher on Better-than-expected Jobs Report

This article appeared online at TheNewAmerican.com on Wednesday, October 31, 2018: 

Stocks bounced higher on Wednesday following Tuesday’s relief rally, responding to another positive employment report from ADP/Moody’s.

October has been awful for stocks: Even after Tuesday’s rally, the Dow Jones Industrial Average (DJIA) was down 5.9 percent for the month, while the S&P 500 Index was off by 7.9 percent. But the report from ADP/Moody’s dispelled some of the gloom and possibly portends more light on Friday when the U.S. Department of Labor issues its own employment report.

Economic forecasters once again underperformed the American economy. Those polled by Econoday had expected 178,000 new jobs in October while those polled by Refinitiv expected 189,000. The economy, defying both outlooks, notched a gain of 227,000 new jobs in October.

And those gains were all across the economy. Remarkably,

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Gurus at Treasury Jiggering Its Offerings

This article was published by The McAlvany Intelligence Advisor on Wednesday, October 31, 2018:

The announcement from the U.S. Treasury was terse:

Total net marketable securities issued in the fourth quarter will be a projected $425 billion.

 

That will bring total debt issued in 2018 to $1.34 trillion, the highest since $1.59 trillion was issued in 2010.

 

2018 debt issuance also jumped 146% from 2017, when just $546 billion was issued.

It took Liz McCormick at Bloomberg to explain just how Treasury was going to manage all of that: stay short and provide inflation protection. Specifically, Treasury’s latest offerings will focus on five-year maturities or less, and brush the dust off its TIPS – Treasury Inflation-Protected Securities.

But of course that hardly addresses the underlying problem: a government continuing to spend beyond its (taxpayers’) means. The numbers are ugly: The national debt of the United States Government jumped by $1.3 trillion during its fiscal year that ended on September 30. The gap between the government’s spending and its income for that fiscal year was $779 billion, a jump of $113 billion over the year before.

At some point, the question will be raised: Who will buy? That was the question raised back in 2011 when Standard & Poor’s cut the government’s credit rating and put it on its “negative” watch list. Said S&P at the time:

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U.S. Treasury’s Massive Problem: How to Fund Increasing Deficits

This article appeared online at TheNewAmerican.com on Tuesday, October 30, 2018:  

The national debt of the United States government jumped by $1.3 trillion during the fiscal year ending September 30. The gap between the government’s spending and its income for that fiscal year was $779 billion, a jump of $113 billion over the year before. And now, the U.S. Treasury has announced how it’s going to manage all this: It’s going to issue new debt in the amount of $1.34 trillion, a 146 percent increase from 2017 and the highest amount of new debt issued since 2010.

Said the Treasury:

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What if the Fed Cancels Its December Rate Hike?

This article was published by The McAlvany Intelligence Advisor on Monday, October 29, 2018:  

Instead of asking “Is the sell-off in stocks likely to continue?” or “If so, how far and how fast?” or “Is it a precursor to the economy peaking?,” a better question might be: Just how far, how high, and how fast might both stocks and the economy move if the Federal Reserve were to step aside?

It could happen. It’s already on the table. In a brief comment made by the No. 2 man at the Fed, the newly-arrived Richard Clarida, at the insider-controlled Peterson Institute for International Economics last week, said not only is the U.S. economy “very, very solid,” he added that “I believe that some further gradual adjustment in the federal funds rate will be appropriate.” This is code-speak for possibly taking the December rate hike out of consideration. As The Wall Street Journal noted, the “some further” description is a “subtle phrase” used in the past “to signal that officials are debating an end to such rate increases.”

At the moment, there are two “camps” on the Fed’s Board of Governors:

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Bear Market in Stocks Not Likely

This article appeared online at TheNewAmerican.com on Monday, October 29, 2018:  

The selloff in stocks, which has taken more than 2,000 points and nearly eight percent off the Dow since October 3, has triggered much angst among market watchers and among some investors. Is the sell-off likely to continue? Is this a precursor to a decline in the economy? Has the economy peaked? Is the stock market telling investors there’s no place to go but lower?

Not according to managers of millions of investors’ funds, including Bruce Bittles, Robert W. Baird’s chief investment strategist: “The economic fundamentals remain favorable. Given the strength in the labor markets and confidence levels among small businesses, the odds of a business downturn are unlikely. We remain bullish on the U.S. economy.”

John Mallen, chief investment officer at Helios Quantitative Research, said,

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Ron Paul Is Right: It’s Long Past Time to End the Fed

This article was published by The McAlvany Intelligence Advisor on Friday, October 26, 2018: 

Most people think of the Fed as an indispensable institution without which the country’s economy could not properly function. What most people don’t realize is that the Fed – created by the Morgans and the Rockefellers at a private club off the coast of Georgia – is actually working against their own personal interests.

Want proof? Try the multiple selloffs on Wall Street since the beginning of October. Some people blame them on October. After all, it’s the month when sell-offs happen. It’s in the tides. It’s in the moon’s cycles. It’s a spooky month. Etc., etc.

Others, looking slightly deeper at possible causes, blame them on trade “disputes,” China’s intransigence, the murder in Saudi Arabia, the rise in oil and gas prices, the “caravan” of dissidents headed for the U.S.’s southern border, the rash of fake bomb attacks, fill in the blank.

They came closer to the truth when they considered

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White House Issues Attack on Socialism in Response to Sanders’ “Medicare for All”

This article appeared online at TheNewAmerican.com on Friday, October 26, 2018: 

It’s highly unlikely that Harvard-trained economist Justin Wolfers has ever been to Caracas, Venezuela. It’s also unlikely that he took the time to read the 72-page report “The Opportunity Costs of Socialism” issued by President Trump’s Council of Economic Advisers (CEA) explaining the dangers in enacting Bernie Sanders’ socialist healthcare takeover called “Medicare for All.” But he has an opinion, nevertheless: he called it “dreck” in his tweet: “For several generations the CEA harnessed the best and brightest to serve their country, ensuring White House policy was informed by modern [i.e., Keynesian] economic thinking. It’s sad to see [the present Trump CEA] debase that tradition, spending their time on this dreck.”

Merriam-Webster offers various synonyms for “dreck,” including chaff, deadwood, debris, dross, dust, garbage, junk, litter, offal, refuse, riffraff, rubbish, scrap, trash, truck, and waste. In other words, Wolfer doesn’t think much of the CEA’s effort.

On the other hand,

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Fed to Blame for Stock Market Selloff?

This article appeared online at TheNewAmerican.com on Thursday, October 25, 2018: 

Wednesday’s selloff on Wall Street took away all the gains stocks had made since the first of the year, turning the major stock averages — the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite — negative for the year.

Stock watchers blamed everyone and everything except the real culprit for the selloff: trade “disputes,” China’s intransigence, the murder in Saudi Arabia, the rise in oil and gas prices, the “migrant caravan” headed for the southern border, the rash of fake bomb attacks, fill in the blank.

Those watchers came closer to placing the blame more accurately, however, when

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The Economy and the Caravan Giving Trump a Boost in the Midterms

This article appeared online at TheNewAmerican.com on Tuesday, October 23, 2018: 

Donald Trump, the President of the United States, has been given two gifts: one of his own making; the other from pro-open-borders leftists. Together they bode well for Republicans in the November midterm elections.

The first is the booming and relentless U.S. economy. As Shobhana Chandra of Bloomberg noted on Tuesday, “The U.S. economy is poised for its best back-to-back quarters of growth since 2014, handing President Donald Trump a $20 billion talking point just in time for the midterm elections.” The report from the Commerce Department due out Friday, according to economists surveyed by Bloomberg, is likely to show that

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Jobless Claims Fall Again; Impact on Midterms?

This article appeared online at TheNewAmerican.com on Monday, October 22, 2018:  

In covering the latest report on initial jobless claims, showing not only a decline for the week ending October 13 but the lowest four-week average in 50 years, MarketWatch’s Jeffry Bartash said, “It just can’t get a whole lot better in the U.S. job market. Openings just hit a record high, the U.S. unemployment rate has fallen to a 49-year low of 3.7 percent, and hiring remains robust. The demand for labor is so strong it’s pushing up the cost of worker compensation — wages and benefits — and giving an economic growth cycle that’s now more than nine years old the staying power to become the longest expansion ever.”

Initial unemployment claims were 210,000 for the week, down 5,000 from the previous week, meeting forecasters’ estimates.

The only people hurting are

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann