Tapering over the problem from 36,000 feet
The Washington Examiner explains some of the idiocy floating through Washington where the Federal Reserve has been directed to ease off of the feed of addictive money fed to Wall Street (all while us common folk suffer through an over-supply of money in the system — otherwise known as inflation).
It should come as no surprise that the Dow Jones Industrial Average continues its meteoric rise past 36,000 — even with the Federal Reserve’s long-anticipated “tapering” (buying fewer bonds) starting later this month . After all, a balloon goes up when it gets inflated. But how much of this apparent growth is real, and how much is a meaningless illusion?
The Commerce Department’s report on third-quarter GDP sheds light on the subject. Economic growth was disappointing, increasing at a torpid 2.0% annualized rate, far below expectations. But the real devil is in the details.
August to September. More than a third of inventory growth and almost half of sales growth for wholesalers in September was just inflation.
Likewise, the Census Bureau’s latest retail trade report showed more than half of the increase in retail sales and inventory growth in October was just inflation. Both retailers and wholesalers are making nominal profits by having goods sit in a warehouse for a month.
This is why corporate earnings reports should be thoroughly beating expectations right now. The market almost ought to expect blowout earnings because inflation — by almost any measure — is near its 30-year high, and earnings are priced nominally. Inflation increases the size of the bottom line simply because the dollar is losing purchasing power. Higher earnings numbers are not actually worth more because the dollar that measures them has shrunk in value.
These inflationary pressures are crushing consumers. While prices have been steadily increasing, real disposable personal income decreased 5.6% in the third quarter, and personal savings fell $300 billion. People are dipping into savings to pay their bills, which are getting more expensive every month because of inflation.
Another major point of concern is gross private domestic investment, or the amount invested in business. At first glance, it appeared to have grown by a healthy 11.7%, a sign of future economic growth. But that number, too, is an illusion. Of the $96.5 billion increase in real GDP, 97% was businesses stocking up on goods for resale, not pouring money into fixed investment such as capital goods. It seems businesses have been anticipating price increases and supply chain disruptions and stockpiled accordingly — not truly investing in growing their businesses.
(Read more at the Washington Examiner)
So, after an administration of good economic growth and low costs, we get smoke blown
From the beginning, all of the “good news” from the Biden regime has likely been smoke that they have been desperately trying to blow up one orifice or another. They need to join the real world.
Biden shows his stripes as an ecoterrorist and destroyer of democracy
The history of the Joe Biden oil shortage
First, remember that a large part of the oil market comes from the futures market. Therefore, prices have risen from the beginning of the Biden regime since he:
- Suspended for 60 days federal oil and gas leasing (on both land and water) on his first day (and never renewed it),
- Cancelled the Keystone pipeline on his first day,
- Banned fracking on federal land on his first day,
- Restricted easements and rights-of-way across federal lands for drillers to access drill sites (considering the great number of square miles in the West under federal jurisdiction, this presents a problem),
- Tried to block Michigan’s Line 5 (which supplies heating oil, propane, and other hydrocarbons to the Michigan peninsula),
- Banned drilling near the Chaco Culture National Historical Park,
- Made several shipments from our Strategic Petroleum Reserve to Asia,
- Has begged China to open their strategic reserves not that long after he
- Begged Russia to pump more oil — and why wouldn’t they, since he:
- Removed sanctions from the Nord Stream 2 pipeline (a messier and more problematic pipeline than the Keystone)
- Has made Russia the #2 supplier of petroleum to the U.S.
(By the way, Russia did not increase production), and
- Begged OPEC to pump more oil (a offer that they politely refused).
Never mind that the contents of the Strategic Petroleum Reserve had been purchased during the Trump administration (and were thus paid for with tax dollars). Dementia Joe has done nothing but spend more money left over from the Trump administration and squander it.
Now, Joe tries to fix things with a non-action
Now, Zero Hedge outlines in its initial paragraph the non-starting nature of Dementia Joe’s most current idiotic move in the energy sector.
As noted earlier, Biden’s announcement of an exchange-based release from the SPR has been a dud, with Brent sliding from $85 to $78 on the rumor of the imminent “not-so-strategic” release – which it appears was meant to be an emergency backstop for true emergencies as well as to sliding Democrat poll numbers – and then promptly recovered more than half the drop, spiking from $78 to $82 today following news of the coordinated, global SPR release of some 32mm bbl, an amount that we said earlier was a “rounding error” and far too small to make a real difference, and the market seems to agree.
And then there is the matter of payback.
But while the market’s verdict is clear, and Joe Biden will certainly not be happy with the outcome, here is what Wall Street analysts think in their kneejerk reactions to the announcement, courtesy of Bloomberg:
RBC Capital Markets analysts including Helima Croft
- The U.S. administration “believe they have the ability to do another release of a similar magnitude” if prices rise further
- Any such release would be through an exchange mechanism, meaning the barrels will have to be replaced
- The U.S. is keenly focused on reducing gasoline and diesel prices ahead of the holidays but also sees SPR releases as part of a plan to deal with inflationary pressure
- Next week’s OPEC+ meeting will be crucial in determining the efficacy of Tuesday’s announcement
- It’s most likely that OPEC+ will stick with its existing plan to proceed with output increases next week, but Saudi Arabia may push to scale back the plan
UBS strategist Giovanni Staunovo
- Outlook for crude prices remains positive, as oil demand still expected to increase and OPEC+ remains in control of most of the oil market
- SPR releases are not a fix for imbalances caused by a lack of investment and still-rising demand
- Traders will shift their attention to the OPEC+ meeting on Dec. 2
- OPEC+ may be encouraged to stay on hold and not increase production in Jan. due to lockdowns in Europe
(Read the analysis of four other leaders of the industry at Zero Hedge)
Let’s go, Brandon
It’s time for Brandon’s nap.
When all you can muster is a non-action that brings the cost of oil to a “rounding error” cost and the rest of the world prospers on the goofiness of the Biden regime, it is time for a long, long nap for Joe and his regime. Just go away.