Jesse Felder – Recapping US Economic Data, Money Supply Trends, Fed Policy and Market Dislocations
Jesse Felder, Founder and Editor of The Felder Report joins us to focus on the key economic data he is watching, how it filters into inflation and Fed policy then to market dislocations. While many people have shifted to a soft landing or no landing narrative Jesse is much more worried about what the Fed will have to do to get inflation under control. We also discuss US money supply and how higher rates could turn around the recent downtrend.
Click here to follow along with Jesse over at The Felder Report.
What The Growth In ‘Financial Shenanigans’ Says About The Economy
Jesse Felder – The Felder Report – March 1, 2023
“We have already seen an inordinate amount of outright fraud this cycle (see this and this) that has, so far, proven to be a terrific indicator of where we stand in the larger market cycle. Today, Bloomberg reports that earnings quality for the S&P 500 Index recently fell to its worst levels in at least three decades and this may be an important sign of where we stand in the larger economic cycle.”
The way they quantify “earnings quality” is to compare the aggregate net income of all companies in the index (ex-financials and energy) to aggregate cash flow. Normally, cash flow should be greater than earnings because it adds back non-cash charges like depreciation and amortization. When that is not the case it can be a red flag that companies are resorting to accounting gimmicks to make earnings look better than they otherwise would. By inference then, companies haven’t employed “financial shenanigans” (to borrow a term from CFRA Founder Howard Schilit) to inflate earnings as aggressively as they are doing today at any point in the past few decades…”
It seems like it has been 20 years or more since Congress deregulated, FASB altered accounting rules, and Regulators stopped any real monitoring of Wall Street fraud. Glass-Steagall was long gone and Dodd- Frank was a humorous replacement. While most tried to proceed as if markets had some legitimacy, The Fed and The Wall Street banks were emptying The Treasury for the extended future. The Agenda was to steal the money, undermine Democracy and establish an autocratic Government whereby the Constitution could be undermined and tossed in the trash can. Without a Constitution, there would be no Law. Without the Law there would be no Criminal Prosecutions.
The money was stolen, the Constitution was undermined … but the people are still voting for the politicians.
The glitch is that “corruption” is on the rise because the Law has been weakened because certain factions of Law Enforcement were blocked from doing their jobs by “corrupt leadership”. The Law has not been ignored at all corners of Country but only significant areas like the SEC, CFTC, Treasury, Justice Dept Appointed Officials, etc. The more serious glitch is that they regulate the greater portion of wealth, thus the larger damage to the country.
To say the least, completion of most of the “theft” plan has left the perpetrators in a quandary as to how to navigate the situation when all around them is collapsing and the ropes and pitchforks are getting closer to their front doors.
Labor Productivity and Costs, a Big Inflation Problem in Pictures
Mish Shedlock – (03/02/2023)
“Today, the BLS made a massive revision in labor productivity resulting in the largest annual decline in productivity since 1974.”
What’s Going On?
– Aging boomers are retiring or working less hours necessitating the need for more part time workers.
– The increase in jobs largely reflects an increase in lesser skilled and more part time workers.
– This is coupled with the Quiet Quitting meme
– Quiet quitting morphed into a new meme “Act your wage.”
“Declining productivity is due to the decades long decline in the marginal productivity of debt. This makes full time, full benefits jobs impossible to sustain. It’s a feature, not a bug, of a fiat currency system in terminal decay.”
https://mishtalk.com/economics/labor-productivity-and-costs-a-big-inflation-problem-in-pictures
It’s like The Russians say, “If they pretend to pay us, we’ll pretend to work”. Getting paid in fiat currency these days is a pretension. DT
Employment data is so questionable anyway as a lot of it is not current data but rather modeling projections. Sometimes the revisions may be more telling as there actually may be some data backing up the WAGs. Unfortunately most of us ignore the current and revised data and seek out more reliable input than the government or politicians.
The public is broke, the consumer has a fascination with the stock market but they can’t afford to invest. I don’t think we are headed for recession I see a Depression. DT