Trump nominated Judy Shelton, a gold standard advocate, for the Fed. She faces an uphill battle.
Could Trump’s Next Fed Chair Be A "Goldbug?"
Judy Shelton is an American economic advisor to President Donald Trump. She is known for her advocacy for a return to the gold standard and for her criticisms of the Federal Reserve.
The Mises Institute asks Could Trump’s Next Fed Chair Be A "Goldbug?"

This week, Donald Trump formally nominated Judy Shelton and Christopher Waller for vacant governorships on the Federal Reserve. Waller, the Vice President of the Richmond Fed, is widely viewed as a standard Fed nominee with the reputation of being a "dove" who has criticized recent interest rate hikes. It is Judy Shelton who is particularly interesting.

A former campaign adviser for Trump, Shelton

Klobuchar made a strong showing in the latest debate. And unlike Hillary, Warren and Harris, she isn’t a lightning rod.
Who can beat Trump? I believe nearly any Democratic candidate other than lightning rods like Elizabeth Warren, Kamala Harris, or Hillary Clinton.
This issue came up in a Tweet today by Dilbert creator Scott Adams.

Of course this was followed up by the inevitable

Many would suggest the same about Trump. But even if it was true about Biden, it could be overlooked easily if people had any degree of faith in his VP.
If Biden wins the nomination, his team will figure this out, even if he cannot.
Bernie Sanders?
Bernie Sanders has huge issues. He is an admitted Socialist, but he would appeal to the millennials and anyone staunchly anti-war.
The lead images is from How

The GDPNow forecast fell from 2.3% to 1.8% this week on weak retail sales. The Nowcast estimate rose 0.1%.
The Atlanta Fed GDPNow Model forecast for the 4th quarter fell a half a point this week whereas the New York Fed Nowcast Model rose a tenth of a point .
GDPNow Tracking

The yellow highlight shows the half-point drop on January 16.
Analysts, including me, generally concluded sales were solid, rising 0.3% in December, yet the GDPNow forecast fell.
I commented Retail Sales Mostly Solid But Department Stores Hit Again.
Q. Why the forecast decline?
A. The model expected better.
It’s not the report that matters to these forecasts, but rather how well the forecast dose vs. what the model expected.
Housing and Industrial Production Balance Out
On January 17, I noted housing starts rose to a

Manufacturing is looking increasingly recessionary.
Peak Manufacturing

​
Key Manufacturing Details
For the first time in history, manufacturing production is unlikely to take out the previous pre-recession peak.
Unlike the the 2015-2016 energy-based decline, the current manufacturing decline is broad-based and real.
Manufacturing production is 2.25% below the peak set in december 2007 with the latest Manufacturing ISM Down 5th Month to Lowest Since June 2009.
Other than the 2015-2016 energy-based decline, every decline in industrial production has led or accompanied a recession.
Manufacturing Jobs
After a manufacturing surge in November due to the end of the GM strike, Manufacturing Sector Jobs Shrank by 12,000 in December.
PPI Confirmation
Despite surging crude prices, the December

Industrial Production fell 0.3% as expected, but revisions subtract another 0.3%. Weather was a factor.
According to the Fed’s Industrial Production and Capacity Utilization report, Industrial production declined 0.3 percent in December.
A decrease of 5.6 percent for utilities outweighed increases of 0.2 percent for manufacturing and 1.3 percent for mining. For the fourth quarter as a whole, total industrial production moved down at an annual rate of 0.5 percent.
At 109.4 percent of its 2012 average, total industrial production was 1.0 percent lower in December than it was a year earlier. Capacity utilization for the industrial sector fell 0.4 percentage point in December to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2018) average.
Weather Impact
"The drop

Seasonally-adjusted housing starts jumped 19.9% to a 13-year high. Housing permits fell 3.9%
Seasonal-adjustments, coupled with an exceptionally warm December, and a surge in multi-family construction, especially in the Midwest led to a reported overall surge in housing starts.
The Census Department’s New Residential Construction report has the details.
Housing Starts
Privately‐owned housing starts in December were at a seasonally adjusted annual rate of 1,608,000. This is 16.9 percent above the revised November estimate of 1,375,000 and is 40.8 percent above the December 2018 rate of 1,142,000. Single‐family housing starts in December were at a rate of 1,055,000; this is 11.2 percent above the revised November figure of 949,000. The December rate for units in buildings with five units or

China posted another quarter of 6% annualized GDP. That’s the slowest in 29 years.
The Financial Times reports China GDP grows at slowest pace in 29 years

China’s economy last year grew at the lowest rate since 1990 while the country’s birth rate fell to a record low, highlighting the domestic challenges facing Beijing despite a truce in its painful trade war with the US.

Also note that State Grid, China’s power utility, forecasts a dramatic fall in growth by 2025 with a risk of falling to 4%.
Michael Pettis at China Financial Markets has a pertinent series of Tweets, summarized below. Emphasis in Tweet 3 is mine.
Q4 growth was up 6.0% over the previous Q4, just like Q3, bringing annual growth to 6.1%. I was hoping – but not expecting – that Beijing would’ve been more serious about

A nonpartisan Congressional watchdog says Trump acted illegally on Ukraine. This is the heart of the impeachment trial.
The Trump Impeachment Trial is now underway. This is only the third such occurrence in US history.

Shortly after 2 p.m., Chief Justice John Roberts, who is presiding, was escorted into the Senate by Sens. Lindsey Graham (R., S.C.), Roy Blunt (R., Mo.), Dianne Feinstein (D., Calif.) and Patrick Leahy (D., Vt.).

Everyone in the chamber rose to their feet, including members of the public and press who looked on from the balconies. The only sound was the scratching of reporters’ pens. Then Chief Justice Roberts spoke.

“Senators, I attend the Senate in conformity with your notice for the purpose of joining with you for the trial of the President of the United States. I am

Year-over-year, the Cass shipping index turned in its worst performance since the Great Recession.
The Cass Freight Shipment Index is still sounding recession alarm bells.

There is lots of hope in the stock market and the freight market for a better 2020, but the trends have yet to turn. Maybe with the January index readings? Doubtful, as the index (both shipments and expenditures) normally falls off sequentially from December to January, which would imply another negative y/y comp ahead. Our view is that the second quarter of 2020 has the best chance of seeing actual y/y growth in shipments and freight costs, if traditional seasonal freight patterns hold, as the second quarter of 2019 did not see the typical seasonal surge in activity.

Shipment volumes dropped 7.9% vs December 2018

Retail sales rose 0.3 percent in June, essentially in line with expectations after taking revisions into consideration.
The U.S. Census Bureau announced the following Advance Estimates of U.S. Retail and Food Services Sales for December 2019.
Retail sales were $529.6 billion, an increase of 0.3 percent from November and 5.8 percent above December 2018.
Total sales for the 12 months of 2019 were up 3.6 percent from 2018. Total sales for the October 2019 through December 2019 period were up 4.1 percent from the same period a year ago.
The October 2019 to November 2019 percent change was revised from up 0.2 percent to up 0.3 percent.
Economists at Econoday expected a 0.4% rise vs the announced result of 0.3%. However, the commerce department revised November sales from +0.2% to +0.3%,

Elizabeth Warren made a fool out of herself after the debates Tuesday eve. She refused to shake Bernie Sanders’ hand.
Credibility Gap
Leading up to the handshake gaffe, Elizabeth Warren made the claim Bernie Sanders told her early in the campaign that a woman could not win the 2020 election.
Sanders vehemently denies the allegation. Thus we have a Giant Credibility Gap.
As Current Affairs reports, Warren’s claim is highly dubious because:
Bernie Sanders has a long history of saying the opposite of what Warren is accusing him of saying, and thinking a woman can’t win is incompatible with his political worldview.
Elizabeth Warren has a long history of saying untrue and distorted things for politically opportunistic reasons.
Iowa Debate Fiasco
Things got to a head following the Iowa debate on

The Fed’s Beige Book, a regional economic report shows modest growth and labor shortages in the final 6 weeks of 2019.
The Fed’s "Beige Book" is a compilation of economic activity by each of twelve Federal Reserve districts produced approximately two weeks before each FOMC rate setting meeting.
The next FOMC rate setting meeting will be on January 29.
Overall Economic Activity
Economic activity generally continued to expand modestly in the final six weeks of 2019. The Dallas and Richmond Districts noted above-average growth, while Philadelphia, St. Louis, and Kansas City reported sub-par growth. Consumer spending grew at a modest to moderate pace, with a number of Districts noting some pickup from the prior reporting period. On balance, holiday sales were said to be solid, with several

The Producer Price Index missed expectations across the board: Even services have been weak.
This morning the BLS released its report on the Producer Price Index for December 2019.
Key PPI Points
The Producer Price Index for final demand edged up 0.1 percent in December, seasonally adjusted. On an unadjusted basis, the final demand index moved up 1.3 percent in 2019, after a 2.6-percent advance in 2018.
The December increase in the final demand index was the result of a 0.3-percent rise in prices for final demand goods. The index for final demand services was unchanged.
Prices for final demand less foods, energy, and trade services inched up 0.1 percent in December following no change in November. In 2019, the index for final demand less foods, energy, and trade services climbed 1.5

New plane orders at Boeing are the lowest since 2005 and deliveries the lowest since 2005. Blame the Boeing 737 Max.
Due to never-ending 737 Max issues, plane orders at Airbus have soared while Boeing Orders Fall to 16-Year Low.
Quick Comparison Facts
Boeing New Orders: 246 new orders for commercial jets of all types before cancellations and model swaps is the lowest tally since 2003.
Airbus New Orders: 1,131 new orders last year for a net total of 768 counting cancellations.
Boeing Deliveries: 380 aircraft, including military versions of its jetliners, a 14-year-low that compares.
Airbus Deliveries: Airbus had 863 deliveries, a record high.
Boeing Backlog: 4,500.
Airbus Backlog: The A320, Airbus’s rival to the Boeing 737 family, is currently sold out until late 2024.
Airbus new orders

Real wages for production workers fell 0.2% in Dec. Real wages for all employees fell 0.1%. Both barely up from yr ago.
The BLS informs us that Real Earnings Declined in December.
Real Wages All Employees

Real average hourly earnings for all employees decreased 0.1 percent from November to December, seasonally adjusted. This result stems from an increase of 0.1 percent in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.
Real average hourly earnings increased 0.6 percent, seasonally adjusted, from December 2018 to December 2019. The change in real

The cost of medical care services dramatically outpaces stated CPI inflation measures.
Once again the BLS tells us inflation is under control. Once again, close inspection suggests something else.
Let’s investigate, starting with the BLS Consumer Price Index Report for December 2019.
According to the BLS, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November.
The gasoline index increased 2.8 percent in December. The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November.
The All Items index rose 2.3 percent over the last 12 months. So did the index for all items less food and energy, the same increase as the periods ending October and

The odds of a brokered convention are greater than most think.
Five Significant Changes
The superdelegates do not get to vote in the first round this year unless a candidate has a majority. Unlike 2016 when they all went to Hillary, this year they don’t vote until round 2 unless it is already decided.
California is now part of Super Tuesday. In 2016, the California primary was held on June 7. This year, the survivor bias bandwagon effect will be significantly reduced and possibly eliminated.
Following NH there will be two debates, and likely 4 candidates minimum at each. Currently there are six.
This will likely not be a two-way races headed into Super-Tuesday. Elizabeth Warren may have little overall chance, but she does have a chance of getting 15% in many states.
Progressive Split:

On Wednesday, the US and China will sign a compromise deal that will calm but not end a two-year trade war.
Hooray, we have a deal at last, assuming nothing happens between now and Wednesday. But serious issues linger.
The Wall Street Journal comments on How the U.S. and China Settled on a Trade Deal Neither Wanted.

The accord promises increased purchases of U.S. goods and services, greater access for American firms to China’s banking, insurance and other financial sectors, an end to tariff threats—and a chance to reset relations between the world’s largest economies. The two sides also have agreed to bi-annual meetings to discuss trade and economic issues.

Even so, the deal isn’t what either side said it had wanted. The U.S. doesn’t get the fundamental reforms in Chinese economic

Airbus CEO Guillaume Faury announced expansion of Airbus production in the UK. Trump won’t be pleased.
The Brexit doom and gloomers have been proven wrong already as Airbus Pledges Expansion in the U.K. After Brexit.

Chief Executive Officer Guillaume Faury said Prime Minister Boris Johnson’s Brexit deal, which will see Britain leave the European Union on Jan. 31, means the split from the bloc “is at least now for certain,” though the nature of future ties still needs to be worked out.

The European aerospace giant, which employs more than 13,500 people at 25 U.K. sites and supports 100,000 supplier jobs, warned under previous CEO Tom Enders that future production might be in doubt as the prospect of a no-deal Brexit threatened to create border delays and inflate costs.

“Airbus is

Philadelphia is one of the least safe big cities in the US. How did it get that way?
Social Justice Warriors
Thanks to George Soros, Larry Krasner was elected District Attorney in Philadelphia. Krasner is Self-Proclaimed Social Justice Warrior.
Consider the case of Michael White, a 22-year-old black college student who admitted killing Sean Schellenger, white. Numerous witnesses and a cellphone video confirmed what happened.
Krasner initially charged White with first-degree murder and denied his request for bail. But under pressure from leaders in Philadelphia’s African-American community, Mr. Krasner downgraded the charge to third-degree murder. Then, days before the trial, Mr. Krasner dropped the murder charge entirely.
White was then acquitted. How’s that for justice?
Please consider

Let’s investigate the possibility no Democratic candidate will amass 50% of the votes resulting in a brokered convention
It’s not posted yet anywhere I can find, but I am told those are the results of the latest California poll taken in January.
Regardless, let’s assume something like that represents the current state of affairs.
How would that impact the the Democratic primary process?
Proportional Voting
Republicans have winner-take-all rules in some states but the Democrats generally have some sort of proportional allocation, typically with a 15% threshold.
In California, 35% of the votes are statewide, the rest by district.
15% Threshold

The above chart is from Nate Silver 538: 15 Percent Is Not A Magic Number For Primary Delegates.

Democrats allocate their delegates proportionately

Fox News is not pro-Trump enough for Trump allies. Their solution is something that amounts to a Trump News Network.
Hicks Equity Partners, a firm tied to Republican National Committee co-chair Thomas Hicks Jr., is pitching GOP donors on buyout of One America News Network.
Please consider Trump Allies Explore Buyout of Conservative Channel Seeking to Compete With Fox News

Allies of President Trump are pursuing an effort to acquire right-leaning news channel One America News Network, according to people familiar with the matter, in a bid to shake up a conservative media market that has been dominated by Fox News.

The investment firm Hicks Equity Partners is looking to acquire the channel and is pitching other wealthy GOP donors to arrange a bid of roughly $250 million for the channel’s

Fox News is not pro-Trump enough for Trump allies. Their solution is something that amounts to a Trump News Network.
Hicks Equity Partners, a firm tied to Republican National Committee co-chair Thomas Hicks Jr., is pitching GOP donors on buyout of One America News Network.
Please consider Trump Allies Explore Buyout of Conservative Channel Seeking to Compete With Fox News

Allies of President Trump are pursuing an effort to acquire right-leaning news channel One America News Network, according to people familiar with the matter, in a bid to shake up a conservative media market that has been dominated by Fox News.

The investment firm Hicks Equity Partners is looking to acquire the channel and is pitching other wealthy GOP donors to arrange a bid of roughly $250 million for the channel’s

The Trump administration threatens Iraq’s New York Fed account where its international oil sale revenue is kept.
In his latest act of international belligerency, Trump Warns Iraq It Risks Losing Access to Key Bank Account if Troops Told to Leave.

The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said.

Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical

We now have a clear picture of what’s happening in Iowa. It’s a now three-way tie.
Poll Averaging
The title of my post may appear a bit silly, but it’s not. Rather, it’s a blast at those who average polls that are months old to project who is in the lead.
This is what things looked like on January 4.

On the basis of polls dating back to November 6, Real Clear Politics said Pete Buttigieg was in the lead.
Those polls were so freaking old they conveyed zero information.
We now have one poll reasonable enough to discuss. Instead of having no information we can now see that Iowa is rough a three-way tie between Bernie Sanders, Joe Biden, and Pete Buttigieg.
What Happened to Michael Bloomberg?
RCP listed Bloomberg on January 4, but doesn’t now.
Why?
He dropped out of the Iowa Caucus and New

The BLS reported hourly earnings for production workers rose in Dec. Discounting huge negative revisions, wages fell.
Every month, I report on hourly earnings in my jobs report. I start from my prior month as my template. Let’s compare the most recent two reports, one from today (for December) the other from December 6 (for November).
Two Most Recent Jobs Reports
In November I commented "Average hourly earnings of Production and Supervisory Workers rose $0.07 to $23.83. That’s a 0.29% gain."
This month, I noticed "Average hourly earnings of Production and Supervisory Workers rose $0.02 to $23.79. That’s a 0.08% gain. Oops. It looks like we had a little revision here. Last month I reported wages rose $0.07 to $23.83."
Year-Over-Year Wage Growth As Calculated for November
All Private Nonfarm

After a manufacturing surge in November due to the end of the GM strike, the manufacturing sector shrank by 12,000.
​Initial Reaction
Jobs came in worse than expected. ADP forecast a 202,000 jobs.The Bloomberg consensus was 157,000 jobs.
The GM strike ended last month causing a huge surge in manufacturing and auto parts jobs in November. For December, manufacturing unexpectedly fell by 12,000 jobs.Manufacturing was a one-hit, no-wonder, in this corner.
145,000 is not a bad number, but it is a letdown in expectations both from a manufacturing side and a private employment side. Private employment only rose by 139,000 be expectations of 150,000.
Job Revisions
The change in total nonfarm payroll employment for October was revised down by 4,000 from +156,000 to +152,000, and the change for

On January 6, Judge Judy endorsed Michael Bloomberg. Does it matter?

Ways It Could Matter
It could take enough votes away from Biden to allow Sanders to win
It could take enough votes away from everyone resulting in a brokered convention
it could even propel Bloomberg to the nomination
Those are possible, but most likely distant long shots.
That said, this is not an irrelevant endorsement. Judge Judy likely has far bigger name recognition than many of the Democratic candidates.
Fourth Way
There is one more way in which it could matter. It could provide the impetus for Bloomberg to get into the Democratic debates.
If this endorsement is the trigger, it could impact the nomination in unforeseen ways including a brokered convention.
Campaign Financing
Bloomberg, is worth about $60 billion.

Yesterday, Borden filed for bankruptcy. Dean Foods filed in November.
Please note One of America’s Oldest and Largest Milk Producers Files for Bankruptcy.

Borden said it filed for bankruptcy because it cannot afford its debt load and its pension obligations. It has 3,300 employees, 22% of whom are covered by a collective bargaining agreement.

The company said it also has been hurt by broader industry trends, including a 6% drop in overall US milk consumption since 2015. Borden noted that more than 2,700 family dairy farms went out of business last year, and 94,000 have stopped producing milk since 1992. With the wholesale cost of milk rising due to fewer suppliers and retail milk prices weaker due to lower consumption, the margins for milk processors like Borden have suffered, the

Trump fired up a Tweetstorm of activity with a pair of unrelated Tweets today.
How’s Your 409K Doing?

Trump has since deleted that Tweet
Replacing it with this.

Some suggest Trump did it on purpose to elicit a response. And there were some funny ones.

Simple Math?

Musical Tribute

Mine’s Real Fine! How’s Yours?

409 Fun Facts
The 409 was in the Chevrolet Big-block Engine group.

The Chevrolet "Big Block" is a term for a series of large displacement V8 engines that have been developed and produced in the United States from the 1950s until 2009. As American automobiles grew in size and weight following the Second World War, the engines powering them had to keep pace. Chevrolet had introduced its popular small block V8 in 1955, but needed something larger to power its medium duty