Authored by Bruce Wilds via Advancing Time blog,

Volatility Ahead, Deflation, Then Inflation, Equals Inflation

Deflation followed by inflation still amounts to inflation in the long run. This means when liquidity dries up the value is gone and you must have the staying power to ride things out. Thinking you can move in and out fast enough not to be crushed may be optimistic. The future looks far from tame and it is likely investors are in for a wild ride. Remember that bad things happen when you hit a wall.

The CPI is a poor indicator of true inflation, it is rigged to give the impression everything is still in control. Decades ago, politicians and those concocting this system created it as a way to reduce the cost of living adjustments for government payments to Social Security recipients, etc. By moving to a substitution-based index and weakening other constant-standard-of-living ties those reporting inflation have muddied the water lessening the impression of just how much our cost of living is impacted by inflation. 

Other tricks were also used to give the illusion of less inflation. In cases where the quality of the product is deemed by the government to be “improved” prices in the CPI, calculations are now adjusted lower to offset the higher quality. Extending this idea the Baskin Commission Report, December 4, 1996, actually used steak and chicken as its substitution example. It is said that without these changes, Social Security checks would be more than double what they are today.

Then we have the GDP. It is created by junk numbers, which makes it a “more out of nothing at all” thing. For example, utility bills are up everywhere, and guess what? For most consumers and businesses this acts as a “not good” driver of the GDP. Another driver is government spending which tends to be a negative growth multiplier that pulls money away from the private sector. In short, the case could be may that the GDP is a big fat hoax. 

Today we are looking at an America that is running a wartime deficit at a time of peace. Considering how the GDP numbers are figured this is heavily weighted to give the impression all is well. When we think about the definition of a recession, two consecutive quarters of negative GDP, government spending makes it almost impossible to get there. Still, other factors are at work that signal trouble ahead.

A fair number of economic forecasters foresee a hard downward move in the value of assets followed by a massive rise due to inflation. It has been my experience that it is not as easy to move in and out of hard assets such as real estate or even precious metals. The bars to entry are often high with a lot of fees, many of these markets are also illiquid. This is the main reason many investors turn to stocks. 

Are You Ready To Get Jerked Around?

Adding to the difficulty of moving in and out of hard and tangible assets is trust. Who do you buy from in an uncertain market? Will you get what you pay for or will you be scammed? Most investors lack the knowledge they need when moving into different markets and generally they don’t have the specialized contacts they need. In fact, the average American often does not have the financial resources to open the accounts that would allow them to invest in many markets.

This all means we should focus on several points. Often the most important ingredient when it comes to wealth preservation is not putting yourself in a position where you get squeezed out of your asset. The squeeze usually is the result of debt and over-leverage. This is especially true in volatile markets where liquidity has dried up. It is also important to remember in a world of global markets many markets are still local. The collapse of a market in one area does not mean it will drop in another or guarantee it will stay down when due to narrow short-term circumstances.

Having assets that hold their value is important. Also, not putting all your eggs in one basket is something we should remember. When the so-called experts are busy downplaying the risk of jumping in and out of various markets a red flag appears in front of my eyes. What is in it for them, do they have an agenda? “They” don’t care about you. The goal is to whipsaw investors and savers out of their money. There is a reason caveat emptor, a term that means “buyer beware,” remains in our vocabulary. Buyer beware is still a relevant term. 

Several months after Elon Musk shared his thoughts on X (previously Twitter), advocating for greater use of nuclear power in response to a Times Magazine article featuring J. Robert Oppenheimer’s grandson’s views on nuclear’s role in a net zero-carbon economy, a Pew Research Center survey noted a rise in the number of Americans supporting nuclear power. 

About 57% of Americans (a majority) say they now favor nuclear power generation plants nationwide, up 14 percentage points since 2020, according to Pew. This dramatic rise in just a few short years as demand for electricity with the ‘electrify everything’ push, including in transportation, soars. 

Pew said respondents still favored solar power (82%) and wind power (75%) over nuclear power, though the biggest takeaway is that nuclear power support rises. 

We presented a bull nuclear thesis to readers back in December 2020, recommending uranium on the belief that nuclear power would eventually be incorporated into the ESG (Environmental, Social, and Governance) framework, as highlighted in our article “Is This The Beginning Of The Next ESG Craze,” is proving to be accurate.

“It’s also important to underscore that nuclear energy became unpopular in part due to its association with nuclear weapons and fears about its safety. But the actual safety record shows it is one of the safest sources of energy, and it is becoming more popular to be an environmentalist and pro-nuclear,” Charles Oppenheimer wrote.

Pew noted in the report:

Support for nuclear power has increased among both parties since 2020. Half of Democrats and Democratic-leaning independents now say they favor expanding nuclear power, an increase from 37% in 2020. And two-thirds of Republicans and Republican leaners now favor more nuclear power, up 14 percentage points since 2020, when 53% said they support more nuclear power.

When asked about the federal government’s role, 41% of Americans say it should encourage the production of nuclear power. Some 22% think the federal government should discourage the production of nuclear power, and 36% think it should neither encourage nor discourage it. The share of Americans who think the federal government should encourage nuclear power production is up 6 points from last year.

Still, a far larger share of Americans think the federal government should encourage the production of wind and solar power (66%).

“Republicans are more likely than Democrats to favor more nuclear power and to say the federal government should encourage its production,” Pew said. 

Perhaps the two political parties have found common ground on at least one topic. 

Currently, the US has 93 nuclear power reactors, many built in the 1970s/80s. The newest is Southern Co.’s Vogtle nuclear power plant project in Georgia, which came online this summer and has unleashed a new nuclear generation of carbon-free electricity in the southern state. 

As we’ve detailed, “Nuclear Power May Become Crucial In Decarbonization Efforts,” which Musk has also echoed. 

Nuclear will play an essential role in the energy transition and decarbonization efforts. Solar and wind are unreliable, and power grids must have mixed power generations to meet increasing power demand in all climate situations. 

Democrat presidential hopeful Robert F. Kennedy Jr. has blasted President Biden for issuing formal approval for European nations to export US-made F-16 fighter jets to Ukraine, calling it a “disaster” in the making for Ukraine and the world.

RFK Jr. said somewhat sarcastically on X (formerly Twitter) that it’s a “great decision for the defense industry, but a disaster for Ukraine and humanity.” He emphasized that “F-16s won’t stop the collapse of the Ukrainian military (which some experts say is imminent). These planes require a lot of training and maintenance. This isn’t the movies.”

He has elsewhere called on the Biden administration to admit the “failure” of its Ukraine policy and to instead focus on the domestic crises impacting the nation. This comes also as the Maui death toll could continue to soar as emergency crews are still digging through rubble left in the wake of the devastating fires.

As for the F-16s, they are unlikely to go operational in Ukraine until next year, possibly as late as next summer, given Ukrainian pilots must complete a lengthy training program. Both Denmark and the Netherlands have said they will supply the initial round of a half-dozen jets, due to be delivered around New Year.

Russia responded Monday to Biden’s formal approval late last week for F-16s to Kiev, which includes the start of a pilot training program based in Denmark. Moscow is warning this will only escalate the war. 

“The fact that Denmark has now decided to donate 19 F-16 aircraft to Ukraine leads to an escalation of the conflict,” Russian ambassador Vladimir Barbin said in a statement, as quoted in Reuters.

“By hiding behind a premise that Ukraine itself must determine the conditions for peace, Denmark seeks with its actions and words to leave Ukraine with no other choice but to continue the military confrontation with Russia,” he stressed.

Denmark has meanwhile sought to assure its allies as well as Russia that the jets are not being transferred with an aim toward attacking Russian territory. “We donate weapons under the condition that they are used to drive the enemy out of the territory of Ukraine. And no further than that,” Danish Defense Minister Jakob Ellemann-Jensen said on Monday. “Those are the conditions, whether it’s tanks, fighter planes or something else.”

DENMARK 🇩🇰 GREETS ZELENSKY 🇺🇦

The Danish Parliament 🇩🇰 greeted Pres. Zelensky 🇺🇦 with a full 1.5 minutes of standing applause.

👏🇩🇰🇺🇦👏🇩🇰🇺🇦👏🇩🇰🇺🇦👏 pic.twitter.com/komnNmpRNK

— Jason Jay Smart (@officejjsmart) August 21, 2023

President Zelensky is at the same boasting that he is “confident” F-16s from the West will lead to Russia losing the war. “Today we are confident that Russia will lose this war,” Zelensky said while visiting Denmark over the weekend. 

Denmark is expected to deliver 19 jets in total while the Netherlands has over 40 F-16s available, but it’s not yet confirmed how many the country plans to send.

Authored by Steve Watson via Summit News,

An MSNBC talking head daydreamed about Donald Trump visiting a dirty, scary and dangerous jail, delighting in the idea that Trump could be “really freaked out” by it.

Host Alicia Menendez asked guest Jill Wine-Banks how the process of Trump visiting Fulton County jail in Georgia will be different from the previous indictments he has faced.

The talking head shot back “It’s going to be very different because they have said that they are going to do mug shots and fingerprints. And he will be turning himself in at the Fulton County Jail, not in a federal building, not in a clean, nice environment.”

She continued,”It is, from what we hear from the press, a really dirty, dangerous, scary place.”

“So it’s going to be a very different picture. And I think the picture of him there, I think his experience of being in a real jail – I can tell you that some of the Watergate defendants, when they were put in the D.C. jail, really freaked out. And we had to move them to a Army base where they could be housed without being in fear at all times so that they could cooperate and testify,” Wine Banks added.

Watch:

Similarly, former Watergate figure John Dean, told CNN Friday that the jail is “a hellhole” and that just “a whiff of that place” could make it more likely that Trump’s co-defendants will consider making deals.

They are absolutely loving watching Trump have to deal with the endless efforts to bring him down.

John Dean tells @Acosta on Trump’s Georgia surrender, “The jail he is going to surrender at is a hellhole. It has received a lot of negative and national attention. ” pic.twitter.com/lymYqR0NAn

— Sarah Reese Jones (@PoliticusSarah) August 19, 2023

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Authored by Jack Phillips via The Epoch Times,

Sen. Ted Cruz (R-Texas) has ramped up demands that Anheuser-Busch hand over documents in relation to an investigation of whether Bud Light’s marketing promotion with a transgender influencer was marketing beer to kids.

“The level of cooperation the Committee receives will bear significantly on my assessment of whether this is part of a broader problem across the Anheuser-Busch InBev product line and whether changes to federal law are necessary to prohibit Anheuser-Busch InBev from marketing beer to children,” the Republican senator wrote in a letter (pdf) to Anheuser-Busch InBev CEO Michael Doukeris last week, claiming that AB InBev hasn’t sent over the documents three months after he asked the firm.

Mr. Cruz is seeking communications between the company and the transgender influencer, Dylan Mulvaney, as well as social media content scripts, the firm’s corporate policy for advertising, and data the beer company possesses on the age demographics of the influencer’s following on social media.

The senator made note of Code Compliance Review Board (CCRB) member’s dissenting opinion that found that “Mulvaney appeals to persons below the legal drinking age with a ‘special attractiveness’ … is especially attractive to young teens and girls; is often recognized as preadolescent; and caters to very young people.” Ultimately, the CCRB majority found there was nothing in the Instagram posts that would “have special attractiveness below the legal drinking age,” according to its report.

The board also found that the influencer’s audience age demographics were more than 80 percent aged 21 or older. The board has a compliance standard of over 73 percent.

Sen. Ted Cruz (R-Texas) speaks on Title 42 immigration policy in Washington, on May 3, 2023. (Kevin Dietsch/Getty Images)

“Moreover, even now that the CCRB has completed its review, Anheuser-Busch persists in refusing to provide the requested documents,15 revealing plainly that the ongoing CCRB review was never the real reason for Anheuser-Busch’s refusal to cooperate. Anheuser-Busch is now suggesting that CCRB review was sufficient, and that it need not cooperate with congressional document requests,” said Mr. Cruz’s letter.

“This position is untenable; Anheuser-Busch does not decide whether and when a congressional investigation is concluded.”

Giving Anheuser-Busch an Aug. 29 deadline to comply, his letter said that “these dilatory tactics by your subsidiary must end. Otherwise, Anheuser-Busch InBev will leave Congress no choice but to infer this obstructionism is intended to shield inculpatory information from the Committee’s investigation.”

But in a statement to the Washington Times, Anheuser-Busch said it takes “its role in promoting responsible drinking very seriously, and our marketing is directed to adults of legal drinking age.”

Over the past several months, Bud Light’s sales have seen weekly declines following the Mulvaney social media posts were made as conservatives called for a boycott of the brand, accusing it of caving in to “woke” culture. Last week, an analyst forecast that Bud Light will not see its prospects improve in 2023.

“We assume no recovery in Bud Light [this year],” RBC Capital Markets analyst James Jones wrote in a note this week, according to Yahoo Finance.

Recent sales data show that retail-store dollar sales of the brand dropped 26.1 percent in the week ending July 15 and 26.8 percent in the week ending July 22, compared with the previous year. At the same time, the beer lost its No. 1 spot to Modelo Especial in May and June, according to figures.

In May, the CEO of AB-InBev, Michel Doukeris, attempted to distance the beer brand with the Mulvaney incident and said that only “one can” with the influencer’s face was produced.

“It was one post. It was not an advertisement,” Mr. Doukeris told Financial Times in May.

The influencer was not part of an official marketing campaign, Mr. Doukeris said. He added that social media-driven “misinformation” and “confusion” were part of the problem without elaborating.

Hunter Biden’s lawyers played heavy with the Department of Justice, effectively threatening to force President Joe Biden to testify in any criminal trial against the First Son if a plea agreement wasn’t reached over his multiple alleged crimes.

“President Biden now unquestionably would be a fact witness for the defense in any criminal trial,” wrote Hunter Biden attorney Chris Clark in a 32-page letter last fall, Politico reports, calling the news that there was enough evidence to charge Hunter an “illegal” leak.

That letter, along with more than 300 pages of previously unreported emails and documents exchanged between Hunter Biden’s legal team and prosecutors, sheds new light on the fraught negotiations that nearly produced a broad plea deal. That deal would have resolved Biden’s most pressing legal issues — the gun purchase and his failure to pay taxes for several years — and it also could have helped insulate Biden from future prosecution by a Republican-led Justice Department.

The documents show how the deal collapsed — a sudden turnabout that occurred after Republicans bashed it and a judge raised questions about it. The collapse renewed the prospect that Biden will head to trial as his father ramps up his 2024 reelection bid. -Politico

According to Clark, putting Joe Biden on the stand would create political and constitutional chaos by pitting Joe Biden against his own DOJ.

“This of all cases justifies neither the spectacle of a sitting President testifying at a criminal trial nor the potential for a resulting Constitutional crisis,” reads the letter, which was shared with Politico along with several other documents.

Backstory

In the spring of 2022, Hunter Biden’s legal team was on the war path – using a PowerPoint presentation that invoked the looming ghost of Trump right from their opening slide. Their point was clear: Trump’s ceaseless haranguing of Hunter makes any charges against the younger Biden appear as yielding to political pressure, thus damaging the integrity of the Justice Department.

Of course, Hunter put himself in the spotlight by taking tens of millions of dollars from Ukraine, China and Russia in exchange for zero identifiable benefit aside from access to his father.

While initial concerns surrounded possible charges of influence peddling or money laundering, the actual case circled around late tax payments from 2014 to 2019. Biden’s lawyers argued that charging Hunter with tax crimes would make the DOJ look like they had capitulated to Trump’s call for an investigation.

Fast-forward to later in 2022, and we discover that Hunter could also face federal gun charges, traced back to 2018 when he was deeply hooked on crack cocaine. As things escalated, Hunter’s attorneys sought meetings with the highest echelons of the DOJ. These were not mere fishing expeditions but highly strategic maneuvers designed to corner the department into a position where it had to make a call: either it would take a reputation hit for being “politically influenced” or face accusations of providing “preferential treatment” to the President’s son.

By spring 2023, it seems the DOJ was looking for an exit strategy, and were open to cutting a deal that would save face for everyone involved – especially the department itself. The proposed agreement doesn’t require a guilty plea from Hunter but has its own laundry list of requirements.

From the fall of 2022 through the spring of 2023, Clark sought meetings with people at the highest levels of the Justice Department — almost entirely without success. In multiple emails, he asked to meet with the head of the Criminal Division, the head of the Tax Division, the Office of Legal Counsel, the Office of the Solicitor General, Deputy Attorney General Lisa Monaco and the attorney general himself. On Feb. 21, 2023, Clark’s team reached out to multiple officials at Main Justice, who passed his request from one person to the next.

The search ended when Clark sent Associate Deputy Attorney General Bradley Weinsheimer an exasperated email, saying he had asked the government over and over to tell him who at headquarters they could appeal to if Weiss decided to charge their client. -Politico

“Please advise whether you would be the appropriate person to hear our client’s appeal, in the event that the U.S. Attorney’s Office decides to charge Mr. Biden,” wrote Clark.

Two new reports — one from NYT, the other from POLITICO — report the Biden DOJ was eager to drop the Hunter Biden investigation entirely without even misdemeanor charges. Only the 2 IRS whistleblowers prevented this.

Now, Biden’s lawyers want the 2 whistleblowers prosecuted: https://t.co/aMP1LWsPZj

— Glenn Greenwald (@ggreenwald) August 20, 2023

Weinsheimer caved, meeting with Clark and Weiss on April 26. While it’s not clear what happened during the meeting, the Wall Street Journal reported that an IRS supervisor was prepared to testify that there was internal political pressure to slow walk and stonewall the investigation. Unlike Biden’s lawyers who argued that their client was being treated too harshly because of politics, the IRS supervisor was set to testify that Hunter was receiving “preferential treatment.”

After that, a deal emerged in May which would see Hunter admit to filing taxes late in 2017 and 2018, that he owned a gun while using drugs, and that he would both pay back-taxes and never own a gun again. If Hunter could stick to these basic agreements until January 2025, the DOJ would promise not to prosecute him for anything they’d investigated thus far.

“The Department of Justice agrees not to criminally prosecute Robert Hunter Biden and the affiliated businesses (namely: Owasco P.C.; Owasco LLC; and Skaneateles LLC): (a) for any federal crimes arising from the conduct generally described in the attached Statement of Facts (Attachment A); or (b) for any other federal crimes relating to matters investigated by the United States,” reads the now-dead plea deal.

Then, IRS investigator Gary Shapley testified that the DOJ had “slow-walked” the investigation.

Within days of the interview airing, Justice Department prosecutors made clear to Biden’s lawyers that the deal would have to change and that Biden would need to plead guilty to tax charges, according to two people familiar with the talks who were granted anonymity to share sensitive details.

Biden’s team acceded to the new demand, agreeing he would plead guilty to two misdemeanor counts of willfully failing to pay his taxes. But he wouldn’t plead guilty to the gun charge; instead, that issue would be resolved through a pretrial diversion agreement that could result in withdrawal of charges after a few years. -Politico

Then, on the evening of June 2, Clark emailed Wolf to say that immunity from prosecution was vital to the deal – sending language to include saying that the US would not prosecute Hunter Biden for “any federal crimes arising from the conduct generally described” in the two documents that would be included in the final deal.

“This language or its functional equivalent is very critical to us,” Clark added.

Reading between the lines – the deal would protect Hunter from a potential Trump administration, or that of another Republican who might win the 2024 election. The language Clark insisted on would have immense consequences:

“The United States agrees not to criminally prosecute Biden, outside of the terms of this Agreement, for any federal crimes encompassed by the attached Statement of Facts (Attachment A) and the Statement of Facts attached as Exhibit 1 to the Memorandum of Plea Agreement filed this same day. This Agreement does not provide any protection against prosecution for any future conduct by Biden or by any of his affiliated businesses.”

Then, after a judge asked several questions about the deal at a hearing last month, the deal completely unraveled – and the prosecutor overseeing the probe has been made a special counsel, who says that the case is heading to trial.

On Thursday, the judge greenlighted a motion by prosecutors to withdraw the tax charges so they can be filed elsewhere. She also approved Clark’s request to leave Biden’s legal team because he may be called as a witness at a potential trial.

Whether Joe Biden could become a witness is now the big question.

Via SchiffGold.com,

Most people now seem to think the Federal Reserve can beat price inflation and guide the economy to a soft landing. In his podcast, Peter Schiff explains why most people are wrong. The Fed is actually in a no-win situation. And if the Fed can’t win, gold can’t lose.

The Federal Reserve released the minutes from the July FOMC meeting last week. They revealed that many of the FOMC members still think the inflation fight is far from over.

With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”

Peter said they should be worried about an upside surprise with inflation.

I’ve been saying to take your eyes off the rearview mirror and look at everything that’s happening in the windshield. Forget about the fact that the CPI has gone down from new to three. We’re now going back up.”

During his press conference after the July meeting, Federal Reserve Chairman Jerome Powell gave markets some hope that rates could come down next year — even before the central bank hit its 2% target. But as Peter pointed out, if the FOMC members are still concerned about upside inflation, that means the Fed will have to reassess cutting rates next year.

In fact, the Fed might actually have to raise rates more than they thought. In other words, it might not just be one more rate hike. Maybe the Fed has got to go up to 6%. Maybe they’ve got to go higher than that.”

This spooked the markets last week, and we saw a pretty significant selloff in both stocks and bonds. Gold also fell below $1,900 an ounce. Peter called it a “buy area.”

Bond yields have risen close to the high point in this cycle. And as Peter pointed out, they should be higher given the amount of debt in the economy.

Tax hikes can’t make it through Congress. Nobody wants to cut spending. So, the fiscal situation that we’re in is far more precarious than it was back then [the last time yields were this high]. Rates should be higher.”

Meanwhile, the Atlanta Fed recently raised its GDP forecast for Q3 to 5.8%.

“I can’t even remember the last time we had a 5.8% quarter,” Peter said, pointing out this doesn’t look like a “soft landing.”

That isn’t landing at all. That’s the plane still up there in the air, right? You’re not landing at 5.8%. You’re not even close to the runway. Now, a lot of people would think if the economy is this strong, well, the Fed can’t cut. In fact, the Fed has to hike. We’re going to have more inflation. Because you still have all these Keynesians out there who think that inflation is a byproduct of economic growth, and if we’re going to have this booming economy, well, then we’re going to have the trade-off of higher inflation.”

Peter said that’s the messaging he hears coming from the mainstream financial media.

As if slowing the economy is what’s going to bring down inflation. It’s not. The truth is if they really want to bring down inflation, the consequence is going to be that the economy weakens. It has to,  because we have a bubble economy that is based on debt. Everybody is loaded up with debt and it’s all based on excess consumption. The American economy is about spending more than you earn. We have elevated that to an art form.”

Americans have a comparative advantage in shopping.

That’s the easy part. The hard part is making all the stuff. Working in the factories; that’s the hard part. Anybody can go to a store and bring stuff home.”

Peter said the only way to fight inflation is to reduce spending.

You’re not trying to weaken the economy. You’re trying to stop the spending.”

In reality, we don’t want to put people out of work. Working people add productivity.

Remember, inflation is about too much money chasing too few goods. So, the more people who are working, the more goods they are producing. So, we want people to work. We just don’t want them to spend. We want them to take what the earn and save it. That’s how you bring down inflation. You get more production and you get less consumption. So, you get more goods and less money.”

Meanwhile, you want fiscal responsibility. You want the government to cut its spending so demand goes down.

You don’t want the government to give people money to go out and buy stuff.”

You also need consumers to quit borrowing. That’s the whole point of rate hikes. You want borrowing to be too expensive.

It’s all about more savings and less spending. That’s how we bring down inflation. Well, the Fed is not accomplishing that at all because the rate hikes have been too little too accomplish that, and they’ve had no help from the government because the government is spending and borrowing like there’s no tomorrow.”

When you boil it all down, it’s clear that the Fed needs to initiate much bigger rate hikes.

Since the narrative is we just need a weaker economy, positive economic data is viewed as bad news. Peter said that’s because Wall Street has one thing right: interest rates need to come down. This economy can’t function long-term in a high interest rate environment.

But the way people perceive the Fed’s outlook is the main thing driving the markets right now.

Everybody just cares what these guys think. If they’re scared of inflation, which they should be – they should be a lot more afraid of it than what they’re publicly admitting – it’s a game-changer for the markets. And the markets are already skating on thin ice. The markets were already ignoring all kinds of bad news and shrugging it off because they were looking for these rate cuts to bail them out. Well, maybe the bailout isn’t going to come as soon as they think.”

Peter said this is why he’s patient with gold.

We can’t go on for many more years. The numbers at this point are just so astronomically big. And again, the only thing that’s keeping gold from exploding is this idea that the Fed is going to succeed in bringing inflation back to 2% and a soft landing. They’re not going to do either, but they have to do both. But the markets are confident that the Fed is going to pull this off. It’s not going to happen. The markets are completely wrong. And so gold is priced for something that is not going to happen.”

Even if price inflation does come back down and there is a recession. The Fed will cut rates. The budget deficits will keep getting bigger. The central bank will go back to QE.

That’s bullish for gold. Even if inflation comes down with a weak economy that’s bullish for gold. But if inflation goes up, that’s bullish for gold too, as long as the Fed stops fighting it, which eventually they have to do. Because if inflation keeps going up, the economy is going to collapse. The Fed can’t keep raising rates. It’s like a game of chicken. At some point, the rate hikes are too much for this overly indebted economy to bear. We are all levered to the max. It can’t happen. The Fed is in a no-win position. And when the Fed can’t win, gold can’t lose.”

So far we’ve had a fairly light calendar over the summer, but as DB’s Jim Reid notes, this week that should change with the Fed’s Jackson Hole Economic Symposium. The overall title this year is “Structural Shifts in the Global Economy”, and Chair Powell’s speech on Friday at 10am is simply given the heading “Economic Outlook”. Unlike last year’s fire and brimstone last-minute-revised speech, most economists don’t expect Powell to send strong signals about the near-term policy path. However, it is true that recent years have seen Powell deliver some important longer-term policy messages. In particular, last year saw him deliver a fairly short and direct message on the importance of price stability, which left little doubt as to the Fed’s resolve to return inflation to target.

As Reid observes, this year’s conference comes at an interesting moment. On the one hand, nominal and real yields have risen substantially. But some other measures of overall financial conditions are still not particularly tight, and Bloomberg’s index of US financial conditions right now is more accommodative than its historical average. Moreover, the supposedly resilient economic data out of the US over recent weeks has helped to bolster the soft-landing case. However, the risk is that with the data coming in so strong, real yields keep pressing higher, which raises the chance that something ends up breaking, as has usually occurred during previous Fed hiking cycles through history.

Apart from Jackson Hole, another important focus this week will be China’s economy. On Sunday, the People’s Bank of China encouraged banks to boost lending to support growth. And this morning, banks have cut the one-year loan prime rate by 10bps to 3.45%. However, Chinese equities have still fallen this morning, since that was smaller than the 15bps cut expected. Furthermore, the 5-year loan prime rate was left unchanged, contrary to the 15bps cut that was expected there too.

Looking forward to the week ahead, there are several other events to look out for. On the data side, the flash PMIs for August are coming out on Wednesday, which will offer an initial indication as to how the major economies have been faring this month. Separately, another important release that day in the US will be the Q1 Quarterly Census of Employment and Wages (QCEW). That provides a benchmark for employment data, so it means we’ll also get some revisions to nonfarm payrolls over previous months. Our US economists have some more details on the release here.

When it comes to earnings, the bulk of this season is over now, so there’s not much left to come out. That said, one remaining highlight will be Nvidia on Wednesday. Readers might recall that their outlook back in late-May was far above expectations thanks to demand for AI processers, and it helped kick off a significant equity rally that continued into June and July. So that’s definitely one to watch out for.

On the rates side, this week’s US Treasury auctions include 20yr Treasuries (Tuesday) and 30yr inflation-protected Treasuries (Wednesday), which will be interesting with yields having risen to multi-year highs. Otherwise from central banks, there are plenty of speakers apart from Fed Chair Powell, including ECB President Lagarde on Friday.

Lastly in the political sphere, there’ll be some more action on the 2024 US Presidential race over the week ahead. In particular, the first Republican primary debate is taking place on Wednesday. But yesterday, former President Trump confirmed that he wouldn’t be doing the debates. President Trump remains the polling frontrunner for the Republican nomination by a substantial margin, and FiveThirtyEight’s average gives him 54.3%, which is well ahead of the next-placed candidate, Florida Governor Ron DeSantis on 14.8%. No other candidate is in double-digits.

Courtesy of DB, here is a day-by-day calendar of events

Monday August 21

• Data: Germany July PPI
• Earnings: BHP, Zoom

Tuesday August 22

• Data: US July existing home sales, August Richmond Fed manufacturing index, Philadelphia Fed non-manufacturing activity, UK July public finances, Italy June current account balance, France July retail sales, ECB June current account
• Central banks: Fed’s Goolsbee and Bowman speak
• Earnings: Baidu, Lowe’s

Wednesday August 23

• Data: US, UK, Japan, Germany, France and Eurozone August PMIs, US July new home sales, Eurozone August consumer confidence, Canada June retail sales Earnings: NVIDIA, Analog Devices, Snowflake, Peloton

Thursday August 24

• Data: US July durable goods orders, Chicago Fed national activity, August Kansas City Fed manufacturing activity, initial jobless claims, France August manufacturing and business confidence
• Central banks: Fed’s Jackson Hole symposium through August 26, Fed’s Harker speaks
• Earnings: Meituan, Marvell, Intuit, GAP, Affirm

Friday August 25

• Data: US August Kansas City Fed services activity, UK August GfK consumer confidence, Japan August Tokyo CPI, July PPI services, Germany Q2 private consumption, government spending, capital investment, August Ifo survey
• Central banks: Fed’s Powell and Harker speak

* * *

Finally, looking at just the US, Goldman writes that the key economic data release this week is the durable goods report on Thursday. There are a few scheduled speaking engagements from Fed officials this week, including a speech by Fed Chair Jerome Powell on Friday at the Jackson Hole Economic Policy Symposium.

Monday, August 21

• There are no major economic data releases scheduled.

Tuesday, August 22

• 10:00 AM Existing home sales, July (GS -0.5%, consensus -0.2%, last -3.3%)
• 10:00 AM Richmond Fed manufacturing index, August (last -9)
• 02:30 PM Fed Governor Bowman and Chicago Fed President Goolsbee (FOMC voter) speak: Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman will participate in a fireside chat at a Fed Listens event on youth unemployment in Chicago. Moderated Q&A is expected. On July 31st, President Goolsbee said that he had not “made up my mind for what should happen” at the FOMC’s September meeting and emphasized that “nothing is off the table.” President Goolsbee noted that “it was fabulous to see that inflation is coming down in this way,” following the release of the June PCE inflation report. On August 5th, Governor Bowman noted that she expected “additional rate increases will likely be needed to get inflation on a path down to the FOMC’s 2 percent target,” and stressed that the FOMC “should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled.”

Wednesday, August 23

• 09:45 AM S&P Global US manufacturing PMI, August preliminary (consensus 49.0, last 49.0)
• 09:45 AM S&P Global US services PMI, August preliminary (consensus 52.4, last 52.3)
• 10:00 AM New home sales, July (GS flat, consensus +1.4%, last -2.5%)

Thursday, August 24

• 08:30 AM Initial jobless claims, week ended August 19 (GS 235k, consensus 240k, last 239k); Continuing jobless claims, week ended August 12 (consensus 1,700k, last 1,716k)
• 08:30 AM Durable goods orders, July preliminary (GS -4.0%, consensus -4.0%, last +4.6%); Durable goods orders ex-transportation, July preliminary (GS +0.4%, consensus +0.2%, last +0.5%); Core capital goods orders, July preliminary (GS +0.4%, consensus +0.1%, last +0.1%); Core capital goods shipments, July preliminary (GS +0.4%, consensus +0.1%, last +0.1%): We estimate that durable goods orders fell 4.0% in the preliminary July report, reflecting a pullback in commercial aircraft orders from the spike in June. We forecast a 0.4% rise in both core capital goods orders and shipments, reflecting a pickup in US freight and global industrial activity but a continued modest drag from tighter credit.
• 11:00 AM Kansas City Fed manufacturing index, August (last -11)
• 12:00 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will be interviewed by CNBC at the Kansas City Fed’s Jackson Hole Economic Symposium. On August 8th, President Harker noted that “absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work.” President Harker also noted that he expects the funds rate to be at its peak level “for a while,” and observed that he does not “foresee any likely circumstance for an immediate easing of the policy rate.”

Friday, August 25

• 09:00 AM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will be interviewed by Bloomberg TV and Yahoo Finance Live at the Kansas City Fed’s Jackson Hole Economic Symposium.
• 10:00 AM University of Michigan consumer sentiment, August final (GS 71.4, consensus 71.2, last 71.2): We expect the University of Michigan consumer sentiment index to increase by 0.2pt to 71.4.
• 10:05 AM Fed Chair Powell speaks: Federal Reserve Chair Jerome Powell will deliver a speech at the Kansas City Federal Reserve Bank’s annual Economic Symposium in Jackson Hole. The topic of the conference this year is “Structural Shifts in the Global Economy.” Text and media Q&A are expected.

Sourece: DB, Goldman, BofA

A parking lot of vessels has formed on either side of the Panama Canal as a worsening drought in the Central American country has reduced the number of ships able to sail through one of the world’s most important trading routes.

The Wall Street Journal counts more than 200 vessels “currently waiting to transit, a figure that has been climbing since the canal capped daily transits to 32 last month from an average 36 under normal conditions.” 

Pacific and Atlantic entrances of the critical waterway are dotted with vessels. WSJ said some ships are waiting “more than 20 days” for access to the canal, forcing some carriers to reroute because of the bottleneck. 

“The delays are changing by the day. Once you make a decision to go there is no point to return or deviate, so you can get stuck,” said Tim Hansen, chief commercial officer at Dorian LPG, which operates more than 20 large LNG carriers.

Since our May 22 report Panama Canal Hit By Shipping Restrictions As Water Crisis Set To Worsen, the draft restriction on the canal appears to have remained at 44 feet. For some context, a 50-foot draft is considered average for the canal during normal weather conditions, though a recent drought has left Lake Gatun, the largest of two lakes that feed the canal, with extremely low water levels. 

Around 6% of all global maritime traffic passes through the canal, mainly from the US, China, and Japan. During the 2016 and 2019 droughts, the draft limit went as low as 43 feet. 

Retailers and energy companies use the canal for extensive trade between China and the rest of Asia and the US. The restrictions have led to a bottleneck on the waterway that forced some ship operators to reroute: 

“Waiting time is one thing, but it’s also the uncertainty,” said Øystein Kalleklev, the CEO of Oslo-based Avance Gas. 

Kalleklev added:

“The Panama Canal is a big mess these days.

“Twenty days in a queue is unprecedented at this time of the year.”

Climate alarmists in the mainstream press have conveniently blamed ‘climate change’ for Panama’s drought while ignoring El Niño, a weather pattern that brings drier conditions across much of Central America. 

Dear Greta, Panama could use some of that polar ice you claim is melting at a “record rate.” 

“The melting of ice across the planet is accelerating at a record rate /…/ The rate of loss is now in line with the worst-case scenarios of the Intergovernmental Panel on Climate Change.” https://t.co/Xn9wpWSgfF

— Greta Thunberg (@GretaThunberg) January 25, 2021

Authored by Jonathan Turley,

Below is my column in The Hill on the increasingly popular theory that former president Donald Trump is already barred from office under the 14th Amendment.

It is a theory that, in my view, with a political appeal that outstrips its constitutional support.

In a constitution designed to protect free speech and prevent the concentration of power, this theory would allow for the banning of candidates based on fluid definitions of aiding and abetting insurrection.

Such ballot cleansing is common in countries like Iran where citizens await to learn which opposition candidates will be allowed to run. The implications of this theory for our constitutional system is chilling.

Here is the column:

The popularity of urban legends is a testament to the will to believe. The desire of people to keep Elvis alive or prove that a Sasquatch could exist furtively in our backyards shows the resilience of fables.

Constitutional urban legends often have an even more immediate appeal and tend to arise out of the desperation of divided times.

One of the most popular today is that former President Donald Trump can be barred from office, even if he is not convicted in any of the four indictments he faces, under a long-dormant clause of the 14th Amendment.

This 14th Amendment theory is something that good liberals will read to their children at night. 

It goes something like this:

Donald Trump can never be president again, because the 14th Amendment bars those who previously took federal oaths from assuming office if they engaged in insurrection or rebellion. With that, and a kiss on the forehead, a progressive’s child can sleep peacefully through the night.

But don’t look under the bed.

For as scary as it might sound to some, Trump can indeed take office if he is elected…even if he is convicted. Indeed, he can serve as president even in the unlikely scenario that he is sentenced to jail.

Democrats have long pushed this theory about the 14th Amendment as a way of disqualifying not only Trump but also dozens of Republican members of Congress.

For some, it is the ultimate Hail Mary pass if four indictments, roughly 100 criminal charges and more than a dozen opposing candidates fail to get the job done.

I have strongly rejected this interpretation for years, so it is too late to pretend that I view this as a plausible argument. However, some serious and smart people take an equally strong position in support of the theory. Indeed, conservative scholars William Baude and Michael Stokes Paulsen have argued for the interpretation and insist in a recent law review article that “the case is not even close. All who are committed to the Constitution should take note and say so.”

But some of us like to believe that we are committed to the Constitution and, for that same reason, we say no.

While I have great respect for these academics, I simply fail to see how the text, history or purpose of the 14th Amendment even remotely favors this view. Despite the extensive research of Baude and Paulsen, their analysis ends where it began: Was January 6 an insurrection or rebellion?

I have previously addressed the constitutional basis for this claim. It is, in my view, wildly out of sync with the purpose of the amendment, which followed an actual rebellion, the Civil War.

Democrats have previously sought to block certification of Republican presidents and Democratic lawyers have challenged elections, including on totally unsupported claims of machines flipping the results. If we are to suddenly convert the 14th Amendment into a running barrier to those who seek to challenge election results, then we have to establish a bright line to distinguish such cases.

The 14th Amendment bars those who took the oath and then “engaged in insurrection or rebellion against the same.” It then adds that that disqualification can extend to those who have “given aid or comfort to the enemies thereof.” According to these experts, Jan. 6 was an “insurrection” and Trump gave “aid and comfort” to those who engaged in it by spreading election fraud claims and not immediately denouncing the violence.

But even the view that it was an “insurrection” is by no means a consensus. Polls have shown that most of the public view Jan. 6 for what it was: a protest that became a riot. One year after the riot, CBS News mostly downplayed and ignored the result of its own poll showing that 76 percent viewed it for what it was, as a “protest gone too far.” The view that it was an actual “insurrection” was far less settled, with almost half rejecting the claim, a division breaking along partisan lines.

The theory that this was a rebellion or insurrection has always been highly contested. On Jan. 6, I was contributing to the coverage and denounced Trump’s speech while he was still giving it. But as the protest increased in size, some of us noted that we had never seen such a comparatively light level of security precautions, given the weeks of coverage anticipating the protest. We then watched as thinly deployed police barriers were overrun and a riot ensued. It was appalling, and most of us denounced it as it was unfolding.

Trump waited to speak, despite criticism from many of us. We now know that many aides called for him to call upon his supporters to pull back, but he waited for a couple hours.

Sulking in the Oval Office does not make Trump a seditionist.

Indeed, despite formal articles of the second impeachment and years of experts insisting that Trump was guilty of incitement and insurrection, Special Counsel Jack Smith notably did not charge him with any such crime.

The reason is obvious.

The evidence and constitutional standards would not have supported a charge of incitement or insurrection.

Yet these experts still believe that Trump can be barred from office without any such charge even being brought, let alone a conviction. Just judicial fiat that certain challenges were made in bad faith or were rebellious in character.

There is no limiting principle to avoid a slippery slope of partisan disqualifications. Would Trump not be disqualified if he had called for his supporters to withdraw an hour earlier?

Would it have been disqualifying if the security was stronger (as suggested days earlier) and there was no entry into the Capitol?

Putting aside the lack of evidence, there is a lack of logic to these claims.

A relatively small number of individuals have been charged with seditious conspiracy, a widely misrepresented charge that can amount to as little as preventing the execution of any law.

If Trump supported a rebellion or insurrection, what was the plan? Not only did Smith not charge him with any such crime, but there was little evidence that even the most radical defendants charged were planning to overthrow the nation’s government or were part of a broader conspiracy. There were no troops standing by, no plan for a post-democratic takeover by Trump or his alleged minions. At worst, according to witnesses against Trump, there was a despondent and defiant president who may have gotten satisfaction from the chaos in Congress.

That leaves us with the argument that any effort to stop a constitutional process is akin to an insurrection or rebellion under the 14th Amendment. If that were the standard, any protests — including the anti-Trump protests and the certification challenges to electoral votes in 2016 — could also be cited as disqualifying. If that were the case, figures such as Rep. Jamie Raskin (D., Md) could be summarily purged from office for having sought to overturn an election.

We would be left on a slippery slope, as partisan judges and members would seek to block opposing candidates from ballots, all supposedly in the name of protecting democracy.

There is a simpler and more obvious explanation for what occurred on Jan. 6, 2021: A political protest became a political riot, and a constitutional theory became constitutional legend.