Wednesday, December 14, 2016

Odds and Ends

My grandparents taught me to never waste. We passed down clothes from older to younger and if they were still in good condition, we donated them. If not, we cut off the buttons on shirts and put them in a jar for possible use somewhere down the road. We had jars for many things in closets. It was called the Odds and Ends collection. As the inaugural approaches, it is time for Trump to act and the following bits and pieces are not from a DC5 lyrics.
Capital Controls
were enacted in China in the gambling district of Macau. When you realize there is a war on cash, Trump needs to reassure everyone that he won't end the use of money in our society. Although there are many ways to view the decision to limit cash withdrawals from ATMs by the Chinese authorities, two main points come to mind. One, this stops outflows of money from China as many people use this technique to convert Yuan's into dollars. Secondly, maybe there is a deeper problem like not enough currency in circulation to meet the demands of the Chinese population? This is how rumors begin that can cause runs on banks and the Chinese do not have FDIC insurance for depositors.
has declared that it will cut back on its QE purchases. If you hadn't noticed, the euro has dropped in value. This is an attempt to strengthen the currency. It sits at 106 and it will decline further after the Fed hikes US interest rates tomorrow by another quarter point. This is great for European exporters, but very painful for citizens in the EU. A lower euro makes prices rise. Inflation will be a severe topic in the EU in 2017 along with the health of its banking system.
King Dollar
Currently, it sits above its confluence point at 100.99. It also entered a bullish cross pattern on the daily chart. It should rise again after the Fed announcement. This is great for US consumers, however it is hiding inflation in imports. A strong dollar makes products seem cheaper, but in reality, inflation is rising. Any decline in the dollar will hurt consumers and our economy. When our GDP can only reflect a 1.6% growth rate, we are on the border of trouble. When you consider all the manipulation of stats to makes our economy look better, a weak dollar will spell trouble with a capital "T".
Economists say that free trade improves our standard of living and produces quality jobs. When I gather results that lie doesn't hold up. At present, our labor participation rate of 62.7% is almost 5% points lower than our historic average and this goes back to 1970s. Pundits counter that unemployment is at historic lows at 4.6%. Yeah, how about the fact that 34 hours is now considered full time and almost half of labor is part-time? These odds and ends takes us back to GDP. Usually, our exports make up 9.5% of GDP. Now, it is up to 12.2%. The shills claim globalization works. I reply that we average $40 billion in deficits every month in every year for over a DECADE. The world dumps on us and steal our jobs. This is why we have more people in poverty and collecting food stamps than ever before. Dear reader, don't forget all the invading species that destroy our environment on land and water.
So, Donald, what are you gonna do about it? Remember, action speaks louder than words and as for the record setting stock market, remember this: the higher you go, the thinner the air.