Reuters Writes: Robust auto sales keep economy on steady growth path

 

WASHINGTON (Reuters) – The U.S. economy appears to be faring better in the third quarter than analysts had feared with automakers reporting surprisingly strong August sales on Wednesday, helping to buoy expectations of a pullback in monetary stimulus ahead.

In another report, the Federal Reserve said strong demand for autos helped keep the economy on a “modest to moderate” growth path in recent weeks, an assessment that leaves the door open for a reduction in the central bank’s bond purchases.

Auto sales rose 17 percent last month to a seasonally adjusted annual rate of 16.1 million units. That was the fastest pace since October 2007 and beat the 15.8 million-unit rate analysts surveyed by Reuters had expected.

Auto sales are a key leading indicator of consumer spending, which accounts for about 70 percent of U.S. economic activity.

“We continue to head in the right direction,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “With vehicle sales above 16 million (and) a slow but steadily improving job market, the Fed is going to feel comfortable tapering in September.”

AP Writes: US factory orders drop 2.4 percent in July

WASHINGTON (AP) — Orders to U.S. factories fell in July by the sharpest amount in four months, held back by weaker demand for commercial aircraft and heavy machinery. A key category that reflects business investment plans also fell.

Factory orders dropped 2.4 percent in July compared with June, when orders rose 1.6 percent, the Commerce Department reported Thursday.

Orders for core capital goods, a category viewed as a proxy for business investment spending, fell 4 percent in July.

Orders for durable goods, items expected to last at least three years, declined 7.4 percent, a slightly bigger drop than the 7.3 percent fall estimated in a preliminary report last week. It was the biggest decline since a 12.9 percent fall in August 2012. Orders for nondurable goods, items such as chemicals, food and paper, rose 2.4 percent in July after a 0.5 percent decline in June.

Auto sales up, factory orders down. What is going on?  I believe what you are beginning to see and will continue to see over the next few quarters is divergence all over the place. While some sectors will do well, others will be in trouble.

This kind of a behavior is indicative of a major turning point in the markets and the overall economy. Eventually most sectors will turn down, but at least for now as this topping process continues, some will continue to grow. This is confirmed by my stock market work which indicates that the bull run that started in March of 2009 is now over and the market should reverse itself into the 2016 final bear market bottom. Dragging all sectors down in the process.

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Bloomberg Writes: Syria Attack Has China Outraged — at U.S.

 

As the U.S. prepares for a potential attack on Syria, China is left in the awkward position of reacting to the news and occasionally justifying opposition to any U.S. action.

This is not new. In early 2012, China joined Russia in vetoing a United Nations Security Council draft resolution condemning Syrian violence and supporting an Arab League peace plan. It was a controversial move at the time, and the criticism was so overwhelming that People’s Daily, the Communist Party’s mouthpiece newspaper, felt compelled to editorialize in favor of China’s veto — after the fact.

That move itself was unusual for a government that rarely feels the need to explain itself retroactively. But on Syria, Chinese leaders appeared unusually sensitive to suggestions that they may have been insensitive to an unfolding humanitarian crisis. Referring to the U.S. as “the military giant,” the paper wrote in February 2012:

“Even if it stays for a while, it will not take protecting lives of local civilians as its primary task. The tragedies that have occurred in Iraq and Afghanistan have proved it.

“Using violence to prevent humanitarian disasters sounds just and responsible. However, aren’t the attacks and explosions that have occurred after the regime changes in the two countries humanitarian disasters?”

Read The Rest Of The Article Here

 

Living outside of the US and watching NBC Nightly News last night, something struck me.  American media is no longer free. I know the media is controlled by corporate interest, but I didn’t realize the extent of the control and the extent of the governmental control until last night.

Basically, half they show they showed dead children followed by crying Syrian men, women and children (of course in some refugee camp) all to a single person saying something to the tune of “America the Great, please help us, you are our only chance for freedom, please defeat Assad, he is killing us, blah, blah, blah”.

What I couldn’t figure out is why there were not able to find one Syrian, not a single Syrian who hates America and/or doesn’t want American intervention.  Wasn’t it just a few years ago there were hundreds of thousands of Syrians in the streets burning American flags and chanting “Death to America”.  And they couldn’t find one Syrian who hates America?  Am I missing something here or did decades of hate turn to love overnight.

You know what this is called? PROPAGANDA.  I grew up in the Soviet Union and I know bullshit when I see it.

Has anyone stopped to ask some questions here.  For example, everyone keeps screaming about ample evidence that Syrian Government was responsible for the gas attack. Apparently there are intercepted phone calls,  direct orders, physical evidence, etc…. Okay, fair enough.  Don’t tell me. Show me. Oh, that’s right, it’s against national security interest to share that information with the American people.

Same song, different day and a different country.  I am sadden by this and what is happening in America.  Another war, another country destroyed, thousands killed. Oh, by the way, here is Senator McCain playing poker  during the Senate hearing in regards to Syria, all while being the number one proponent of going into war. Class act, if you ask me.

 

As the Bible says “Put your sword back in its place, for all who draw the sword will die by the sword.”

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The Exchange Writes: Hesitation on Syrian Strike Threatens Economic Recovery

President Obama’s vacillation on Syria—first delaying military action and then booting the decision to Congress—poses grave threats to U.S. prosperity.

Imminent military action, especially in the Middle East, instigates fears of shortages and panic in oil markets. Two years ago, oil prices jumped to more than $110 in anticipation of the U.S. action in Libya but then subsided when the worst did not happen to oil supplies.

With mounting evidence that Syria used chemical weapons, oil prices again jumped, and a prolonged debate in Congress could push gasoline above $4.00. That would dent Detroit’s resurgent auto sales, shelve investment decisions across manufacturing, and weigh on already flagging new home sales.

Should the Congress approve military force, Iran could attack Israel or cut back on oil production, permanently pushing up prices. However, once U.S. strikes begin, if those consequences don’t materialize, oil prices should fall back.

The article continues….

The president exacerbated near term fears by first vacillating after Syrian President Assad crossed his red line, and then asking Congress to vote the week of September 9.

Had Obama acted quickly on his own authority, or at least called Congress back into session immediately, the period of uncertainty would have been cut from at least a month to one week.

Extended uncertainty can wreck havoc on investment and consumer spending, and potentially tank the economy.

They behave so badly, despite U.S. protestations, because from Obama is viewed as weak and naïve. By leading from behind internationally and failing to act forcefully against protectionism that harms American workers, he has emboldened those nations’ to give lip service to international rules and then do whatever they please.

Meanwhile, the U.S. recovery drags along at a paltry 2 percent, while China grows at 7.5 percent, and Japan and Germany recover.

If the liberals and Tea Party block U.S. military action, that vote will mark the end of the United States of America as a prosperous nation with the resolve to lead.

Read Full Article Here

So, there you go folks.   This is one of the dumbest things that I have ever read. Apparently American prosperity and economic growth doesn’t depend on innovation, hard work, fiscal discipline and sacrifice that have made this country so great, but now depends on bombing Syria back into the stone age.  

The scary part is, this is normal and legitimate thinking for millions of Americans today. Maybe they are onto something. While at it, perhaps the US should bomb the rest of the countries as well. Just imagine how much economic growth and wealth it will bring to our nation. Plus, it will show everyone once and for all how much resolve we truly have. Crazy!!!  

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Bloomberg Writes: One Number to Explain a Confusing Housing Recovery

 

Reading the tea leaves in the housing market can be a confusing task.

Today we learned that pending home sales fell in July. Last week the news was that new home starts are down, too. But at the same time, serious delinquencies have hit a five-year low. For those of you who want a big picture view to gauge what’s going on, Trulia has a number for you: 64 percent. That’s how close the housing website says the market is to being back to normal.

To calculate the all-in stat, Trulia’s chief economist, Jed Kolko, combines three main factors: construction of new homes, sales of existing homes, and homes that are delinquent or in foreclosure. He then sees how far those those stats have come from the bottom of the market to a “normal,” prebubble pace. Existing home sales are the closest to normal, up to 94 percent of the original pace. But builders are putting up new homes at less than half the regular rate. Foreclosures and delinquencies, on the other hand, have fallen enough to make up more than half of the ground they lost in the downturn.

The results put the market in what Kolko calls the third phase of the recovery. The first stage started in 2009, when the sales and construction bottomed out. The second stage began in 2012, when home prices reached their low point. And this third phase, Trulia says, began this spring, when tight inventories loosened and mortgage rates started to rise.

At this point, the main issue holding the market back from fully recovering is household formation, or as Kolko puts it: “When young adults finally start moving out of their parents’ homes.” That in turn would spur the construction and sales of new homes and push the market closer to a full recovery.

Listen, there is no confusion at all. This is how the bear market works. First, a significant leg down (2006-2009) in real estate followed by a rebound (2009-now). The rebound acts as a “Trap” of sorts that reassures investors that the market is much better now and is about to recover. When everyone is sucked in, the trap is set and the market (Real Estate Market in this case) begins a massive leg down.

What you are seeing now and why a lot of people are “confused” is the topping out and a reversal process in the real estate market. In simple terms, watch out below. The US Real Estate Market is about to crater big time over the next few years. Don’t be in it, unless you have to. 

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Daily Ticker Writes: McDonald’s Should Share Billions in Profits With Fast Food Workers: Labor Organizer

 

When 250,000 people marched on the National Mall 50 years ago they demanded among other things a hike in the minimum wage from $1.25 to $2 an hour. Today thousands of fast food workers are holding a one-day strike in cities across the country, demanding a wage of $15 an hour. That’s equivalent to the $2 an hour protestors called for in 1963, after adjusting for inflation.

Organizers report that workers have walked off their jobs in 60 U.S. cities today, including New York City where 500 striking workers took over a McDonald’s at 5th Avenue near 34th Street, and the Empire State Building.

In addition to a $15-an-hour wage, protestors want the right to form a union without intimidation or retaliation from their employer.

Kendall Fells, the organizing director of Fast Food Forward, which is overseeing the New York City campaign, tells The Daily Ticker that these workers are not demanding that Congress raise the minimum wage but that the companies that employ them pay a living wage.

Read the rest of the article here:

What is happening to American capitalism? Why does everyone want a handout and/or a bailout. Why should you earn $15/hour when the market is only willing to pay $7.25/hour.  Why should corporations share profits with workers when the shareholders (the real people who took the risk) are left behind?

At least for now, corporations like McDonald’s should not worry about any traction in this movement. At the same time, these companies should

1. Fire striking workers.

2. Replace them with robots. Which is already starting to happen.

As for  the workers in question. Do yourself a favor and get a better skill set, a better job and a better pay. Any excuse that limits you ability to do so, is just that, an excuse.  Stop being lazy, get off your ass and do what you need to do in order to improve your life. 

If you can, please share our blog with your friends as we try to get traction. Gratitude!!! 

Bloomberg writes ” Obama Focuses on Risk of New Bubble Undermining Broad Recovery”

 

President Barack Obama, who took office amid the collapse of the last financial bubble, wants to make sure his economic recovery doesn’t generate the next one.

Obama this month spoke four times in five days of the need to avoid what he called “artificial bubbles,” even in an economy that’s growing at just a 1.7 percent rate and where employment and factory usage remain below pre-recession highs.

 “We have to turn the page on the bubble-and-bust mentality that created this mess,” he said in his Aug. 10 weekly radio address.

Obama’s cautionary notes call attention to the risk that the lessons of the financial crisis, which was spawned by a speculator-driven surge in asset values, will be forgotten, widening the income gap and undermining a broad-based recovery.

“Clearly, this is a growing concern both in the administration and at the Fed,” said Adam Posen, a former member of the Bank of England’s monetary policy committee.

Not Imminent

That may explain why six years after the housing meltdown ignited the worst recession since the 1930s and vaporized $16 trillion in household wealth, bubble reminders are intruding on Obama’s speeches.

“It’s a legitimate concern from an economic perspective,” says Roberto Perli, a partner in Cornerstone Macro, a Washington economic-research firm, and a former Fed official. “But I don’t think it’s motivated by consideration of imminent risk.”

The U.S. recovery, outpacing Europe and Japan, has created 6.7 million jobs since February 2010. Claims (INJCJC) for jobless benefits fell last week to their lowest level in almost six years. And after a two-decade-long borrowing binge, households have pared their debt burden to mid-1980s levels.

Still, growth has been below historical trend for the past four quarters, according to the ChicagoFederal Reserve Bank’s National Activity Index, a blend of 85 indicators measuring employment, production, housing and consumption.

 

Are you F$&*% kidding me?  He “wants to make sure his economic recovery doesn’t generate the next bubble”

I don’t know if I should cry or laugh. I am sorry to break it to you Mr. Obama, but as we stand today, as of August of 2013 we are in the biggest financial bubble of all time. EVER. Bigger than 1929, bigger than 2000 and bigger than 2007/8.

That’s what happens when instead of letting defaults and previous imbalances (credit collapse and real estate) work through the system, you put the pedal to the metal and paper everything over with more money created out of thin air. 

The imbalances are so massive at this point in time,  that pain is simply unavoidable. We have never seen anything like that. The result?  Stagnated and a significant US Stock Market Decline into 2016-2018 bottom. Inflation thereafter.