Monday , September 16 2019
Home / Mike Shedlock
Mike Shedlock

Mike Shedlock

Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Articles by Mike Shedlock

Saudi Oilfield Attack: By Yemen, Iraq, or Iran? Israel? Production Back Up When?

16 hours ago

Despite growing pressure from hawks to attack Iran, huge questions go unanswered.
From the North (Iraq or Iran) or the South (Yemen)?
Saudi, U.S. officials are investigating possibility that cruise missiles fired from Iraq or Iran hit the Saudi petroleum facilities.
What about Israel or Lebanon?

Cruise Missiles or Drones?
As the rush to judgement unfolds, a huge number of questions go unanswered.
No one knows yet if the attack came from the North or the South or whether it was by drone or by cruise missile.
Suspicions Rise That Saudi Oil Attack Came From Outside Yemen
Please consider Suspicions Rise That Saudi Oil Attack Came From Outside Yemen

Saudi and American officials are investigating the possibility that attacks on Saudi oil facilities Saturday involved cruise missiles launched

Read More »

48,000 GM UAW Workers Set to Strike Tonight, First Nationwide Strike in 12 Years

19 hours ago

Labor talks between GM and the UAW union have reached an impasse. A Strike is set for midnight tonight.
For the first time in 12 years, GM’s UAW Workers Set to Go on Nationwide Strike.

The United Auto Workers (UAW) said on Sunday that its roughly 48,000 hourly workers at General Motors Co facilities would go on strike as of midnight Sunday after U.S. labor contract talks reached an impasse, the first nationwide strike at GM in 12 years.

“We do not take this lightly,” Terry Dittes, the UAW vice president in charge of the union’s relationship with GM, said at a press conference in downtown Detroit. “This is our last resort.”

GM said in a statement that its offer to the UAW during talks included more than $7 billion in investments, 5,400 jobs – a majority of which would be new jobs – pay

Read More »

Another Rush to Judgment: Pompeo Joins the Fool’s Parade

2 days ago

Secretary of State Michael Pompeo blames Iran for attacks on a massive Saudi Aramco oil facility.
Drone Strike Shuts Half of Saudi Production
In case you are new to this story, here is the background: Drone Strikes Shut Down Half of Saudi Arabia Oil Production
Administration and Senatorial hawks are out in force.
As noted a bit ago, US War Hawk Nut Case Senator Graham Responds to Saudi Refinery Attack
Secretary of State Michael Pompeo is now in on the act.
No Evidence Drones Originated in Yemen


Another Rush to Judgment


Excuse me for asking, but where the heck is the evidence Iran did this?


I do not rule out Iranian involvement, even though it makes little sense.
Rather, I cannot sand another warmongering rush to judgement accusation with no evidence presented or even

Read More »

Drone Strikes Shut Down Half of Saudi Arabia Oil Production

2 days ago

The Shutdown amounts to a loss of some five million barrels a day, roughly 5% of the world’s daily production of crude.
Houthi rebels in neighboring Yemen claimed responsibility for a Coordinated Drone Strike Shutting Down About Half of Saudi Arabia’s Oil Output.

A coordinated drone strike hit at the heart of Saudi oil production on Saturday, sparking an enormous blaze and forcing the kingdom to shut down about half of its crude output, according to people familiar with matter.

The Saudi production shutdown amounts to a loss of about five million barrels a day, the people said, roughly 5% of the world’s daily production of crude oil. The kingdom produces 9.8 million barrels a day.

This attack appeared to be the most effective, starting large fires at Hijra Khurais, one of Saudi Arabia’s

Read More »

Nuclear War with Russia Winnable Said Trump’s Incoming National Security Advisor

2 days ago

Questioning “mutual assured destruction,” Charles Kupperman called nuclear conflict “in large part a physics problem.”
Incoming National Security Advisor, Charles Kupperman, made the claim Nuclear War With USSR Was Winnable.
He made those statements in the 1980s. I do not know his views today, but let’s review what he said then.

President Donald Trump’s acting national security adviser, former Reagan administration official Charles Kupperman, made an extraordinary and controversial claim in the early 1980s: nuclear conflict with the USSR was winnable and that “nuclear war is a destructive thing but still in large part a physics problem.”

Kupperman, appointed to his new post on Tuesday after Trump fired his John Bolton from the job, argued it was possible to win a nuclear war “in the

Read More »

Cass Freight Index Down 9th Month “Signaling Economic Contraction”

3 days ago

Year-over-year freight volume is down nine consecutive months starting December of 2018.
The Cass Freight Index report cites "More Signs of Contraction".
When the December 2018 Cass Shipments Index was negative for the first time in 24 months, we dismissed the decline as reflective of a tough comparison. In January and February 2019, we again made rationalizations. When March was also negative (-1.0%), we warned that we were preparing to “change tack” in our outlook; when April was down (-3.2%), we said, “we see material and growing downside risk to the economic outlook.”
With the -3.0% drop in August, following the -5.9% drop in July, -5.3% drop in June, and the -6.0% drop in May, we repeat our message from last three months: the shipments index has gone from “warning of a potential

Read More »

Auto Sales Surge 1.8% in August, Spending Flat Ex-Autos

3 days ago

A surge in auto sales buoyed consumer spending in August. Ex-autos, retail spending was flat.
Despite reports of SUVs piling up on dealer lots, the Census Bureau’s Advance Monthly Retail Sales report shows autos are leading the way.
Key Spending Items
Motor vehicles and parts sales rose a whopping 1.8% in August for an overall retail sales gain of 0.4%
Motor vehicles and parts dealers were up 6.8 percent from last year.
Excluding Autos, sales were flat.
Total sales for the June 2019 through August 2019 period were up 3.7 percent from the same period a year ago. The June 2019 to July 2019 percent change was revised from up 0.7 percent to up 0.8 percent.
Retail trade sales were up 0.6 percent from June 2019, and 4.6 percent above last year.
General merchandise sales fell 0.3% for the month

Read More »

Hyperinflation Returns to Zimbabwe, 70% Interest Rate and 230% Inflation

3 days ago

Zimbabwe raised its benchmark interest rate to 70% in an attempt to curtail a second round of hyperinflation.
Zimbabwe Hyperinflation is Back
Hyperinflation in Zimbabwe was a period of currency instability in Zimbabwe that, using Cagan’s definition of hyperinflation [50% in a month], began in February 2007. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe’s hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe’s peak month of inflation is estimated at 79.6 billion percent month-on-month, 89.7 sextillion percent year-on-year in mid-November 2008.
In 2009, Zimbabwe stopped printing its currency, with currencies from other countries being used. In mid-2015, Zimbabwe announced plans to have

Read More »

No Deal Still on the Table, Scotland Silliness, DUP Dealing

3 days ago

Despite a lot of huffing and puffing by Remainers nothing has changed.
Eurointelligence wrote yesterday morning "No, the Scottish courts will not stop Brexit"
I thought the stuff on Scotland silly I did not bother writing about it. Here’s the Eurointelligence take.

The Brexit saga underwent another plot twist yesterday when two British courts, the High Court of England and Wales, and the Inner House of Session of Scotland, simultaneously issued diametrically opposed judgments on whether Boris Johnson’s decision to prorogue parliament was lawful. The English court held that this is not a matter for the courts but for parliament. The Scottish court found that not only was the issue justiciable, but that Boris Johnson had acted unlawfully in advising the Queen to prorogue. Each decision is

Read More »

“Free Stuff” Grand Prize Leader Kamala Harris Ahead of Bernie Sanders and Warren

3 days ago

Kamela Harris is currently in first place in the "Free Stuff" giveaway contest.
Never before have so many politicians promised to spend so much. Among some candidates, the 2020 presidential campaign has turned into a contest to see who can offer the most “free stuff.”


John Stossel, the official arbiter of the much coveted "Free Stuff Blue Ribbon" has Kamala Harris currently in the lead.
So far, Harris is the only candidate topping the $4 trillion mark.
But it’s a close race and the numbers are guaranteed to go up. Bernie Sanders is in second place at $3.976 trillion. Elizabeth Warren is a close third at $3.806 trillion.
"Sleepy" Joe Biden is not even in the race. He only seeks an additional $297 billion, not much more than Trump at $267 billion.
The top three, Harris, Sanders, and

Read More »

Another Surge in CPI Medical Care Costs

4 days ago

The cost of medical care services jumped 0.9% in August and is up 4.3% from a year ago.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in August on a seasonally adjusted basis after rising 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment. Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index.
The energy index fell 1.9 percent in August as the gasoline index declined 3.5 percent. The food index was unchanged for the third month in a row.
The index for all items less food and energy rose 0.3 percent in August, the same

Read More »

ECB’s Counterproductive QE: Whatever It Takes Morphs Into “As Long As It Takes”

4 days ago

The ECB cut interest rates 10 basis points to -0.50% and promised more QE. Trump is howling.
As Long As It Takes
The ECB cut rates today and issued a 5-Point Press Release Statement emphasis mine.
(1) The interest rate on the deposit facility will be decreased by 10 basis points to -0.50%. The interest rate on the main refinancing operations and the rate on the marginal lending facility will remain unchanged at their current levels of 0.00% and 0.25% respectively.
(2) Net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB

Read More »

Australia “Cash Back” Government Scheme Fails to Inspire Consumer Confidence

5 days ago

Australia gave "cash back" in July to those making up to $126,000. The move failed to inspire consumer confidence.
Tax Refund Scheme
In July, the government of Australia concocted a $1080 Tax Refund Scheme.
The maximum offset of $1080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000. The offset is calculated on each person’s individual income not household income.
Those who earned less than $37,000 will get $255 back. This gradually increases to $1080 for those earning $48,000.
Anyone earning between $90,000 and $126,000 will get lower amounts. Those earning over $126,000 won’t receive any refund.
Results In
Bloomberg reports Australian Consumer Confidence Sinks Despite Cash Handouts

Australian households were gloomier this month as worrying headlines

Read More »

CEOs Abandon Ship: Record 159 CEO Exits in August as Overall Layoffs Surge

5 days ago

Reports by Challenger, a global outplacement and business firm, shows record CEO churn and growing corporate layoffs.
Overall Layoffs a Growing Concern
The August Challenger report says 53,480 Announced Cuts Led by Tech, Trade Issues a Growing Concern

U.S.-based employers ramped up the pace of downsizing in August, as companies announced plans to cut 53,480 jobs from their payrolls. This is up 37.7% from July’s total of 38,845, according to the latest report on job cuts released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

August’s total is the fourth highest for job cuts this year, and marks the eighth consecutive time job cuts were higher than the corresponding month one year earlier. Last month’s total was the highest

Read More »

Trump Calls Jerome Powell and the Fed “Naive Boneheads”

5 days ago

Trump’s attack on the Fed reached a new level today when trump call them all "boneheads".
Economists expect the ECB to cut rates further into negative territory on Thursday.
The Fed is expected to cut rates a quarter of a point on September 18.

In the past week the Fed has jawboned against multiple cuts.
Market participants responded by reducing their bet on a 50 basis point cut a week ago to an 11.2% chance of doing nothing today.
I somehow sense that Trump is not particularly happy about this state of affairs.
There will be more howls tomorrow if the ECB takes the expected rate cut action.
Irony of the Day
Trump is correct. The Fed are proven boneheads. But Trump’s requested action would increase the boneheadedness.
Keeping rates too low too long blows bubbles. We we are in the midst.of

Read More »

China Needs Money – Evidence in Desperate FDI Actions, Not Words

5 days ago

China is heading for fiscal and current-account deficits amid an escalating trade war. Its response is to encourage FDI.
New Open Door Policy
Bloomberg reports China Is Throwing Open Its Market Door. Be Wary.

China’s latest welcome to foreigners smells of desperation.

Global funds no longer need quotas to buy Chinese stocks and bonds, the State Administration of Foreign Exchange said in a statement Tuesday. That removes a hurdle to foreign investment that’s been in place for almost two decades, since the nation first allowed access to its capital markets.

Scrapping the quota is less a confident liberalization by a maturing economy and financial system than an overt admission that the country needs money. China has been edging dangerously close to twin deficits in its fiscal and current

Read More »

Multiple Rumors of Johnson Seeking a Deal with Ireland, Dumping DUP

6 days ago

Numerous articles note a softening of Boris Johnson’s stance, especially in regards to Ireland. Let’s take a look.
Failure of Statecraft
In Dublin, on September 9, Boris Johnson and Leo Varadkar, the Irish Taoiseach (Prime Minister) held a joint press conference in Dublin on the backstop.


Boris Johnson said the UK could get through No Deal, "But it Would be a Failure of Statecraft”. Johnson also brought up the idea of a Northern Ireland only backstop.
I thought it was general posturing. After all, Johnson has to make it appear as if he wants a deal, whether or not he really does.
Genuine Breakthrough?
The Guardian reports EU Looks to Northern Ireland-Only Backstop to Break Brexit Impasse.
The Journal reports Northern Ireland-Only Backstop Ruled Out by Boris Johnson, says DUP
See the

Read More »

Questioning Lagarde as Gross Interest Income in Germany Heads Towards Zero

6 days ago

Thanks to negative interest rates, Germans interest income has plunged towards zero.
Counterproductive Interest Rate Policy
Eric Dor, Director of Economic Studies at the IESEG School of Management in Paris emailed an article with some interesting charts regarding the Counterproductive Interest Rate Policy of the ECB.
What follows is a guest post by Dor, with my comments at the end. I added or changed some subtitles.
Collapse of Interest Income in Germany
The extremely accommodating monetary policy of the ECB has had huge redistributive consequences. The disposable income of savers has been hit by the collapse of the average return on their accumulated wealth invested in interest products. Low interest rates have benefited borrowers. By boosting asset prices, the decline of

Read More »

Trump Fires National Security Advisor John Bolton: Good Riddance

6 days ago

A feud between John Bolton and Trump finally blew open today. There are conflicting stories about what happened.
Bolton’s Tweet


Trump’s Tweets


Robert Costa


Bolton Settles the Issue
Offering to resign is not resigning.
The New York Times has the correct headline: Trump Fires John Bolton as National Security Adviser.

President Trump fired John R. Bolton, his third national security adviser, on Tuesday amid fundamental disagreements over how to handle major foreign policy challenges like Iran, North Korea and Afghanistan.

His departure comes as Mr. Trump is pursuing diplomatic openings with two of the United States’ most intractable enemies, efforts that have troubled hard-liners in the administration, like Mr. Bolton, who view North Korea and Iran as profoundly

Read More »

Phantom FDI – Companies Aren’t Investing, They’re Hiding Money

6 days ago

Economists Brad Setser, John Hussman, and Paul Krugman discuss tax avoidance disguised as corporate investments.
Phantom FDI


Profit Shifting


Low Tax Countries


Mind You, This Takes a Hell of a Lot of Work


But Stunning Results


Fizzle


Mish Asks Where’s Da Money?


Hussman Reply


Proposal
It would be a hell of a lot simpler to slash the US corporate tax rate to 10% with no loopholes and put a minimum tax rate of 12% on FDI and profits held overseas.
100% of that money "held" overseas would return in about 15 seconds because it really isn’t there in the first place as Hussman explained some time ago.
Hussman’s only mistake was failure to come up with a catchy phrase like "Phantom FDI".
Mike "Mish" Shedlock

Read More »

Liberal Democrats Officially Back Revoking Article 50, Rule Out Labour Alliance

7 days ago

The Liberal Democrats will make Brexit cancellation part of their official election platform.
The Liberal Democrat leader, Jo Swinson Supports Brexit Cancellation and will write that into its election manifesto.
“Whenever the election comes, our position is clear and unequivocal. A majority Liberal Democrat government would not renegotiate Brexit, we would cancel it by revoking article 50 and remaining in the European Union,” said Swinson.
“The Liberal Democrats are the number one choice for people at the next general election who are opposed to Brexit. Our position is clear and unambiguous. A majority Liberal Democrat government would not renegotiate Brexit, we would stop Brexit,” said former shadow frontbencher Chuka Umunna joined the party in June.
I disagree with Swinson but her

Read More »

Families Go Deep in Debt to Stay Middle Class: Revolving Credit Jumps 11.2%

7 days ago

The Fed’s consumer credit report shows a jump in total credit and an even bigger jump in credit card debt.
The Fed’s Consumer Credit Report shows consumer went on another credit card binge in July.

Econoday economists expected a boost of $16.1 billion in a range of $15.2 billion to $17.0 billion.
Credit jumped $23.3 billion.
High Debt Levels Are Weighing on Economies
The Wall Street Journal reports High Debt Levels Are Weighing on Economies.

Debt owed by governments, businesses and households around the globe is up nearly 50% since before the financial crisis to $246.6 trillion at the beginning of March, according to the Institute of International Finance, an association of global financial firms.

The borrowing helped pull economies out of the nasty recession, but left them with high

Read More »

Benn Bill to Halt No-Deal Becomes Law, Speaker Bercow to Resign October 31

7 days ago

Johnson allowed Royal Assent of the Benn Bill. It will be challenged on Oct 19. Common’s Speaker Bercow will resign.
Johnson allowed Royal Assent of the Benn Bill. That means one of three things.
Johnson believes he can mount a legal challenge later.
No legal challenge is needed because the bill has flaws and can be legally circumvented.
Johnson has gone mad.
The Benn bill proponents believe the bill is air tight.
Unless you believe Johnson has gone mad, take your pick of the other two. I do not know.


Bercow Resigns
Common’s Speaker John Bercow has resigned effective October 31.
The Speaker does not vote but has a lot of powers. The Speaker is supposed to enforce parliamentary rules and supposed to be party neutral.
Bercow is neither. He allowed the Benn bill to proceed to the House of

Read More »

Take it to the Limit: Two Letters and a Dramatic Change of Brexit Tune

7 days ago

Boris Johnson disclosed his "Test Legal Limits" strategy (or parts of it) this morning. Premature? Let’s discus.
Last Thursday, Eurointelligence stated that Royal Assent of the Benn Bill was likely on Friday. I strongly objected.
Eurointelligence repeated that view on Friday and again I strongly objected.
I seldom go against their views because they are generally unbiased. In this case, however, I was confident they blew the legal discussion.
This morning, without admitting or even discussing their now obvious errors, Eurointelligence says "Chances of no-deal are rising and rising."
Eurointelligence Dramatic Change in Tune

Boris Johnson will not break the law and go to jail. We note there is a lot of hyperventilating commentary out there that misses the essential point. He will

Read More »

New Questions on Chinese GDP and Solvency as SOE’s Told to “Pay Bills on Time”

7 days ago

IOUs proliferate in China’s Financial system. That’s not the only problem.
Questioning China’s Growth
The Wall Street Journal reports China Says Growth Is Fine. Private Data Show a Sharper Slowdown.

In the second quarter of this year, official Chinese data showed economic growth of 6.2%, close to Beijing’s target and within a percentage point of what it has reported every quarter for the past 4½ years.

A few months earlier, satellites monitoring Chinese industrial hubs suggested parts of the world’s largest trading economy were contracting. An index of Chinese industrial production created by a multinational manufacturer was pointing to lower growth than official figures. And a web-search index used to gauge how many workers return to their jobs after the Lunar New Year holidays was

Read More »

Brexit News Synopsis: France Threatens Veto, UK Poll Analysis, Labour MP Quits

7 days ago

Even if Boris Johnson submits an extension request, France threatens a veto. Hard line stance has benefited Johnson.
You can lead a horse to water but you cannot force the horse to drink.
The same applies to the Benn act which allegedly forces Johnson to seek an extension.
Allegedly is the key word. It is debatable for the simple reason the bill is constitutionally illegal.
Even if deemed legal, the Guardian Live Blog notes that France has threatened to veto the request.
Guardian News Synopsis
The French government has threatened to veto a further Brexit extension due to the “worrying” lack of progress in the recent talks. The French foreign minister, Jean-Yves Le Drian, highlighted the lack of realistic proposals being put forward by Downing Street.
Boris Johnson has moved quickly to

Read More »

American Dream: 68% of Millennial Homeowners Regret Buying a Home

7 days ago

A Bank of the West study finds that 68% of millennials regret buying a home.
Please consider the polling results of a Study on the American Dream.
What Best Describes Your Views?

Key Findings
3% of Millennial live the American Dream.
16% of Boomers live the American Dream.
25% have abandoned the American Dream.
11% overall (13% of Millennials) never believed in the American Dream in the first place.
52% (54% of Millennials) believe the American Dream is possible.
Top Ingredients of the American Dream

Key Findings
56% of Millennials prioritize home ownership vs 68% of Baby Boomers.
49% of Millennials prioritize retiring comfortably vs 73% of Baby Boomers.
41% of Millennials prioritize having children vs 36% of Baby Boomers.
38% of Millennials prioritize car ownership vs 42% of Baby

Read More »

Boris Johnson to “Test Legal Limits”, Amber Rudd Resigns, Javid Interview

8 days ago

Amber Rudd, pensions secretary, quit Johnson’s cabinet. Chancellor Sajid Javid had an impressive interview on policy.
Tory Remainer Purge Continues
The BBC reports Amber Rudd Quits Cabinet Blaming Brexit Inaction.

The ex-work and pensions secretary said the government was having no "formal negotiations" with the EU about a new deal, only "conversations".

Instead, 80-90% of Brexit work was spent preparing for an "inferior" no-deal option, she said.

Ms Rudd told the Sunday Times she would be considering whether to stand as an independent Conservative should there be an general election.

In her resignation letter to the prime minister, Ms Rudd said: "I joined your cabinet in good faith: accepting that ‘No Deal’ had to be on the table, because it was the means by which we would have the

Read More »

Labour’s Ridiculous Position: Seek a Deal With the EU, then Campaign Against It

8 days ago

Some of Brexit positions are nearly beyond belief. Here’s one of them.
Shadow (opposition) Foreign Secretary Emily Thornberry proposed in a Brexit debate that she would seek the "best deal possible" with the EU, then campaign against it, favoring Remain.


Scorched Earth Coup
Please consider Remainers’ Scorched Earth Tactics and Premature Triumphalism Will Rebound Spectacularly.

For the first time in its history, the cossetted, unelected panjandrums in the House of Lords, the epicentre of Remain fanaticism, this week ripped up its rules to ensure that Hilary Benn’s squalid Brussels capitulation Bill was fast-tracked through the Peers’ House in a dangerous and damaging precedent. By comparison, this Government has played fair. It could well have engineered a much longer filibuster to the

Read More »