Short Memories

Consumer Confidence was reported this morning to have risen sharply, to the highest since December 2000. Stocks rose and bonds fell, taking this news as a sign of economic strength, one presumes. Obviously the buyers do not remember what happened in 2001. when the market fell to a loss of 27% by September.

Oh, and by the way, there is essentially no historical correlation between changes in the reported Consumer Confidence and changes in actual retail spending. Just sayin’

Everything Is Awesome

Apparently CNBC showed this after last Thursday’s close. Just sayin’.

Inflation

There is much noise that the Fed will raise interest rates to combat “inflation.”

Over the last year to the end of February, wages are up 2.8% (nominal). The price of oil, as a metric for energy prices, is up 32%.

Guess what is driving “inflation.”

The Saudis are still pumping as hard as they can, but justifying it on the grounds that they are storing the above-quota output, not selling it internationally. It seems to me that a tank in Saudi and a tank in Oklahoma are pretty much fungible, except that we at least think we know how much is in the Oklahoma tanks.

The bottom line is that global inventories of oil are continuing to expand to new records, more or less on a daily basis. The EIA is forecasting that US shale is set to expand production by 109k barrels from March to April, rising from 4.853mmbpd to 4.962mmbpd, and offsetting OPEC’s entire February production cut.

At some point we are going to see a reaction and that will be the end of “inflation.” For a while, anyway.

Your Bubble Goes Here

From Bill Hester of John Hussman’s staff.

From A Friend

GREAT QUOTES

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. — John Adams

If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed. — Mark Twain

Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself. — Mark Twain

I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. — Winston Churchill

A government which robs Peter to pay Paul can always depend on the support of Paul. — George Bernard Shaw

A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money. — G. Gordon Liddy

Democracy must be something more than two wolves and a sheep voting on what to have for dinner. — James Bovard , Civil Libertarian (1994)

Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries. — Douglas Casey , Classmate of Bill Clinton at Georgetown University

Giving money and power to government is like giving whiskey and car keys to teenage boys. — P.J. O’Rourke , Civil Libertarian

Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. — Frederic Bastiat , French economist(1801-1850)

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it — Ronald Reagan (1986)

I don’t make jokes. I just watch the government and report the facts. — Will Rogers

If you think health care is expensive now, wait until you see what it costs when it’s free! — P.J. O’Rourke

In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other. — Voltaire (1764)

Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you! — Pericles (430 B.C.)

No man’s life, liberty, or property is safe while the legislature is in session. — Mark Twain (1866)

Talk is cheap…except when Congress does it. — Anonymous

The government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other. — Ronald Reagan

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. — Winston Churchill

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin. — Mark Twain

The ultimate result of shielding men from the effects of folly is to fill the world with fools. — Herbert Spencer , English Philosopher (1820-1903)

There is no distinctly Native American criminal class…save Congress. — Mark Twain

What this country needs are more unemployed politicians. — Edward Langley , Artist (1928-1995)

A government big enough to give you everything you want, is strong enough to take everything you have. — Thomas Jefferson

We hang the petty thieves and appoint the great ones to public office. — Aesop

FIVE SENTENCES TO LIVE BY

You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

What one person receives without working for… another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

You cannot multiply wealth by dividing it.

When half of the people get the idea that they do not have to work, because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation!

Crude Dreams

It seems like the price of crude oil is finally taking notice of the new records in inventories being set every week.

OPEC is ruminating about further cuts. The problem, for OPEC anyway, is that keeping the price high has fed a resurgence in US production as the rig count keeps driving higher and higher. A resurgence that will not easily be countered as the high prices have allowed producers to sell forward the oil that they have yet to produce either into the public futures market, or by private contract. Either way, they can drill with confidence in the pricing.

As a result, the global re-balancing of the oil markets that OPEC hoped to achieve remains a fantasy. GLWT.

As a side note, speculators’ most recently reported positions in WTI crude oil futures total about 525 million bbl., or nearly $27 billion at the current price of $51.

Unsentimental

The Atlanta Fed GDPNow forecast for Q1 GDP now stands at 1.2% annualized growth. This despite outrageously bullish sentiment everywhere you look.

1937, anyone?

Something Is Going To Snap

Snapchat is trading this morning at a $40 billion valuation. In 2016 revenue was $404 million, and it lost $514.6 million. User growth slowed from 17 percent in Q2 2016 to 3.2 percent in Q4.

There is only one word that applies – mania.

Pension Tsunami Sighted

NY Teamsters Pension Fund becomes first to run out of money.

Oh, and after the close the API announced that crude and product inventories continue to set new records. Not to worry, speculative buying continues. GLWT.

 

Socialism Is Good For You

If you need to lose weight, that is. Due to lack of food supply, Venezuelans have lost an average of 19lbs. over the last year. This despite having the largest proven oil reserves in the world.