Grant on Fed: ‘We Are the Prisoners of a Very Dubious Set of Pseudo-Scientific Pretensions’

Jim Grant lays into the Fed for not hiking rates and posits the question: Who the fuck are these assholes running our monetary system and why are they so God damned dumb?

Yes, indeud. I did warn you of this eventuality. All of the jawboning and arcane trading ahead of the Fed, selling off gold, treasuries, REITs, utes and even stocks, ended up reversing today — after people realized they weren’t a very serious group of people.

Examine what happened and extrapolate what you must. You might believe stocks were the biggest winners today, but as a point in fact, they weren’t.

Sovereign yields headed lower again and gold was a massive outlier. The ark and the mine have never been more desirable than they are now. After you strip away the fictitious data and central bank over planning, you’ve got nothing but a gigantic fraud and a woefully slowing and underpforming economy. But, knowing what we know now, the Fed and their cabal of followers and supporters, it’s as plain as the day is long what must be done and what should be bought.

The rigged market will continue, but non systematic risk still looms amongst individual earnings disasters to come. The only place to invest cash, and to make virtually risk free returns, is to front run central banks through the purchase of bonds. Also, knowing their end game is to denigrate their currencies to achieve a faux prosperity, gold is a must own.

In other words, the ark still floats, freely, unencumbered, and with grace against the tumultuous killer seas. The gold mine is a popular destination for persons unplugged from the matrix, where food, drink and parties are all abundantly shared.

Le Fly is deeply entrenched and winning, much to your chagrin.

Details of my battle plan and portfolio are in Exodus.

Three Fed heads disagreed with holding off on raising rates, as the dot plot fades to to background. The language changed in the Fed press release, suggestive of a serious intent to hike in December.

Markets like this status quo. Gold and silver are higher by 1.5% and 3.2%, respectively.

Oil is higher by 3%.

The dollar is down 0.3% v the euro and 1% v the yen.

Markets are about to break 100 to the upside.

UPDATE: Markets are fading fast with the dollar gaining ground. As usual, markets are very volatile post Fed meeting.

The SEC has charged legendary investor, Leon Cooperman, with insider trading for illicit profits in Atlas pipelines.
Although I have no idea, whatsoever, as to Leon’s innocence or guilt, I can tell you he’s been a critic of both Obama and Hillary. And, unlike many of his industry peers, he’s been very critical of Hillary Clinton.

Here’s what he said last year, regarding her public stance against hedge funds, her hypocrisy, and corruption at the Clinton Foundation.

“I don’t need anybody crapping all over what I do for a living,” the founder of $9.2 billion hedge fund firm Omega Advisors said .

“I have nothing to apologize for. I’ve made a lot of money. I’m giving it all back to society,”

Cooperman echoed some of his peers in noting that Clinton criticizes the industry despite her own hedge fund ties.

“[She] hangs out with all these people in Martha’s Vineyard and in the Hamptons and then the very first thing she has to say is to criticize hedge funds,” he said.

That’ll learn him.

The SEC has taken this fight into the streets, dragging Cooperman’s family into the mix.

They also allege Omega failed to report holdings in a timely fashion more than 40x.

Here is the full complaint.

Oh, one last thing before I go (extra Columbo), there this very public shaming of Obama by Copperman.

This is truly a must read for those of you who believed median incomes gained 5.2% in 2015.

David Stockman breaks it down like no one else, exposing the lies issued by the census bureau and suggesting it was timed to benefit Hillary Clinton in the 2016 elections.

But even the 2015 numbers make no sense in their own right. Start with the Census Bureau’s “money income” data which is the basis for its claim that the median household income leapt higher last year by the greatest amount ever recorded. Hidden in its presentation of “real” dollars is the assumption that aggregate money income for all 125.8 million US households rose by 5.7% in nominal terms last year.

But how was that possible when nominal GDP increased by only 3.0% during 2015? Likewise, disposable personal income—again in nominal terms—-grew by just 3.7%.

The fact is, the median income can grow nearly twice as fast as aggregate income only if gains in the middle and bottom of the income ladder grew far faster than the total income pie. And that includes the big bucks earned by bankers, athletes, lawyers, business executives and the rest of the white collar elites.

To the contrary, the Census Bureau’s own report shows that the median nominal earnings of full-time male workers in 2015 grew by 1.6% and for full-time female workers by 2.8%. That hardly squares with 5.7% average aggregate growth of incomes for all workers—unless main street households was suddenly showered with windfalls from stock dividends they don’t own, bank accounts that pay no interest or rental incomes from properties registered in someone else’s name.

Even when you allow for gains in the number of workers employed in 2015 over prior year, which was about 2%, it still doesn’t add up. The total wage bill for all workers grew by just 4.2% in nominal terms during 2015. That’s by the Census Bureau’s own reckoning (table A-4), and that’s also before inflation!

Then again, when we look at the deflator used in the report—-even more red flags arise. To wit, according to the BLS’ CPI-U-RS, the cost of living in main street America, where presumably the median household resides, only increased by 0.1% last year.

That’s right. The report claims that the inflation index only rose from 347.8 to 348.2 during the entire year. Never mind that medical costs were up by 3.6%, housing rents by 3.5% and food by 1.4%. Allegedly, falling oil prices off-set all of that—-even though energy accounts for less than 9% of the CPI.

All of this suggests that there must be something in the footnotes hinting that the Census Bureau might have moved the goal posts, and indeed that is exactly the case.

Starting in 2013 with a partial phase-in, which was fully implemented in 2014, Census changed the questions and the methods it uses in calculating the “money incomes” of households. During 2014, for example, it started to “collect the value of assets that generate income if the respondent is unsure of the income generated.”

It also helpfully filled in the questionnaire where respondents answered with “don’t know” or where they “refused” to answer with its own quesstimates about what the answer should have been!

For instance, as a result of this “improved reporting” of interest income, the number of recipients increased by 41.6% and the aggregate amount of interest collected soared by 111.7%, according to John Williams at Shadow Statistics.

That’s right. During the entire course of 2015 the Fed kept savers lashed to the zero bound, but interest income surged by triple digits.

Even more preposterously, according to Williams its new counting methods “upped the number of recipients of money from IRA, Keogh and 401k withdrawals by 419.5%, increasing aggregate income in that area by 230.1%”

Needless to say, raiding your retirement fund is not “income” in the first place; it’s a liquidation of assets that were earned and counted in earlier periods.

All this blatant fiddling, of course, was described in purely clinical terms:

“The data for 2013 and beyond reflect the implementation of the redesigned income questions.”
When you look at the broken trend after 2014, however, it all begins to make sense. That is, the Census Bureau fudged the report just in time for the 2016 elections. Otherwise, how do you explain the chart below?

How did the 2.4% growth trend for money incomes between the 2008 pre-recession peak and 2014 suddenly rear up on its hind-legs and leap upwards by 5.7%?

In short, there is nothing which can explain last week’s phony headline gains except election year manipulation and spin. In fact, on a weighted basis for the mix of full-time male and female workers, the median after-inflation wage rose by just 2.01% during 2015. So plain and simply, there is no way that the median household could have gained 5.2%.

Maybe Washpo will publish a correction? Meh, doubtful.

Former Treasury Secretary, Lawrence Summers, must’ve bee seething in his office earlier this morning. He might’ve been reading over some hawkish Fed comments, regarding how the economy was ready for higher rates and how it’d be cool to diverge from the rest of to world because American exceptionalism.

But Larry wasn’t in the mood. He intercommed his secretary and told her ‘no fucking calls’, then proceeded to type feverishly on his iPhone 4, into his Twitter app, to make the case against higher rates.

BHOLD.

Shots fired. The ball is in your court, Chair Yellen.

You’re all a bunch of racist pigs. But don’t worry, as soon as Clinton gets in, she’s gonna have a chat with you about it and everything will get better after that.

On the Steve Harvey radio show, Clinton called in to respond to the unfortunate killing of a black man by police by suggesting there was ‘systemic racism’ in the country and if black people voted for her, well then, she’d talk to whitey to let him know that we could rise above this sordid behavior.

“We gotta tackle the systemic racism, this horrible shooting again, how many times do we have to see this in our country?” she said in an appearance on the Steve Harvey show. Clinton was specifically referring to the police shooting of Terence Crutcher in Tulsa, Oklahoma, saying he had his “hands in the air” when he was killed.

“This is unbearable and it needs to be intolerable,” she said.

Clinton told Harvey that if the African-American community came out and voted for her, she would work to stop racial shootings by police officers.

And the money quote:

“Maybe I can by speaking directly to white people say, ‘Look this is not who we are,’” she said. “We’ve got to do everything possible to improve policing, to go right at implicit bias.

Is anyone buying this shit? Cops need better training. They don’t need reeducation camps.

If you’ve got the stomach to bear through it, here’s the interview.

My core thesis is to be long both treasuries and gold because it’s my belief that central banks will continue to inflate asset prices and manipulate the yield curve to reduce borrowing costs and avoid making hard fiscal decisions. There is no better way to lose an election than to cut public entitlements,

Based off the BOJ actions announced last night, gold is soaring, alongside the miners.

There’s still plenty of upside for gold, in my opinion. The metal took a siesta the past month, but should be getting back to outperformance in the weeks ahead, as investors gravitate to something tangible and that makes sense in this wacky world.

This is precisely what the BOJ didn’t want, which makes the pin action in the yen all the more beautiful. When the BOJ announced their diabolical schemes to shape the yield curve, the yen had slumped by nearly 1%. Slowly but surely, that faithful, yet boorish, servile reaction has eroded and has finally given way to market forces who know better.

The Yen approaches 100 v the dollar, higher by 0.75%.

The peso has been getting its face clocked for the past month, almost the inverse of Trump’s polling numbers. Things are getting so bad for the peso that speculators are now floating the idea that Mexico may need to intervene by hiking rates.

“As we approach 20 versus the dollar, there will be more and more people speculating about intervention and rate hikes from the central bank,” said Anders Svendsen, an analyst at Nordea Bank A/S in Copenhagen. “That kind of speculation will prevent it from breaching that level unless we get some kind of external driver that really spooks the markets.”

Make to peso crappy again.