en A Troubling Statistic: Illinois Has The Nation's Highest Black Unemployment Rate <p><a href=""><em>Submitted by Michael Lucci via,</em></a></p> <div class="intro"><span>New Bureau of Labor Statistics data show Illinois&rsquo; black residents have an unemployment rate of 12.7 percent, <strong>more than double the state&rsquo;s overall rate. </strong></span></div> <p><a href="" target="_blank">Illinois had the nation&rsquo;s highest black unemployment rate in 2016</a>, according to <a href="">annual unemployment data</a> released by the federal Bureau of Labor Statistics, or BLS.<strong> Only 51 percent of black adults reported having some form of work in Illinois, highlighting an economic crisis that far too few political leaders are talking about. </strong>The BLS data support the conclusions in recent <a href="">quarterly reports from the Economic Policy Institute</a>, which have pointed to Illinois as having the nation&rsquo;s highest black unemployment.</p> <p>Illinois&rsquo; weak job creation has a significant effect on the black community, especially due to manufacturing job losses in the Chicago area and a lack of construction job opportunities. Illinois&rsquo; black unemployment rate was 12.7 percent in 2016, <strong>compared with 6.7 percent for Latinos and 5 percent for whites.</strong></p> <p><strong>Illinois&rsquo; 12.7 percent black jobless rate is the highest in the U.S., tied with Nevada.</strong> However, Illinois&rsquo; black population is seven times as large as Nevada&rsquo;s, meaning Illinois&rsquo; crisis is playing out on a much larger scale. Illinois&rsquo; neighboring states achieved much lower black jobless rates than Illinois in 2016. (BLS does not calculate a black unemployment rate for Iowa, however, because the state&rsquo;s black population does not constitute a sample large enough to be included in the BLS survey.)</p> <p><strong>The weighted average black jobless rate for all other states is 8.1 percent, and the weighted average among Illinois&rsquo; border states is 8.9 percent.</strong></p> <p><a href=""><img height="519" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Perhaps equally telling is Illinois&rsquo; black employment rate &ndash; the percentage of black adults who are engaged in some form of work. <strong>Illinois&rsquo; black employment rate is only 51.2 percent, compared with 63.2 percent for whites and 65 percent for Latinos.&nbsp;</strong>Illinois&rsquo; 51.2 percent black employment rate means that just over half of Illinois&rsquo; adult black residents have some form of work. Michigan is the only state with a lower black employment rate than Illinois.</p> <p>The weighted average black employment rate for other states is 56.8 percent, and the weighted average among Illinois&rsquo; border states is 59.2 percent.</p> <p><a href=""><img alt="" src="" /></a></p> <p>Black employment in Illinois fell by 18,000 people from 2015 to 2016, and the number of black workers in Illinois&rsquo; labor force shrank by 16,000. Despite the shrinking workforce, the black unemployment rate increased to 12.7 percent from 12.2 percent year over year.</p> <p><strong>The number of black people working in Illinois has been in decline since the turn of the century.</strong> There were 77,000 fewer blacks working in Illinois in 2016 compared with 2000, a shocking 10 percent decline in total employment. By comparison, Illinois&rsquo; combined white and Latino employment is actually up by 272,000 since 2000, according to the <a href="">BLS&rsquo; annual average data</a>.</p> <p><strong>Similarly, the recovery in black employment over the Great Recession era lags that of the rest of the state. <u>Black employment is still down 5.1 percent compared with its pre-recession high.</u></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1450" height="767" alt="" src="" /> </div> </div> </div> BLS Bureau of Labor Statistics Bureau of Labor Statistics Bureau of Labor Statistics Business Causes of unemployment in the United States Economic Policy Institute Economy Full employment Illinois Illinois Labor Michigan New Bureau Recession Recession recovery Social Issues Social justice Structure Unemployment Unemployment Unemployment in the United States Wed, 24 May 2017 21:10:00 +0000 Tyler Durden 596587 at CBO Projects Obamacare Repeal Will Cut Deficit By $119 Billion, Leave 23 Million More Uninsured <p>The CBO has finally scored the House-passed healthcare bill, H.R.1628 (which as a reminder remains DOA in the Senate), and finds modest improvement <a href="">relative to its last scoring of the proposed Healthcare bill as of March 23.</a> Here are the apples to apples comparisons with the last proposed version of the bill: </p> <ul> <li>Under the House-passed Bill, <strong>the US budget deficit would be reduced by $119 billion between 2017 and 2026</strong>. This is $31 billion less than the proposed March bill, which would have <strong>lowered the deficit by $150 billion</strong>.</li> <li>Offsetting the smaller benefit on the deficit, the CBO found that the <strong>number of Americans expected to lose their health coverage would rise to 23 million in 2026</strong>, which is <strong>1 million fewer than the 24 million </strong>forecast in March, or roughly $31 billion in spending over 10 years to provide 1 million Americans with insurance over the same time period. </li> </ul> <ul> <li>The CBO concludes that in 2026, <strong>an estimated 51 million people under age 65 would be uninsured</strong>, compared with 28 million who would lack insurance that year under current law. Under the last CBO estimate, the number of Americans wihtout insurance in 2026 was 52 million of Americans under 65, so an improvement of 1 million as expected. </li> </ul> <p>Below is the "bridge" of the budget deficit reduction from the CBO:</p> <p><a href=""><img src="" width="500" height="623" /></a></p> <p>The key details from the official score:</p> <ul> <li>CBO and JCT estimate that, over the 2017-2026 period, enacting H.R. 1628 would reduce direct spending by $1,111 billion and reduce revenues by $992 billion, <strong>for a net reduction of $119 billion in the deficit over that period </strong>(see Table 1, at the end of this document). The provisions dealing with health insurance coverage would reduce the deficit, on net, by $783 billion; the noncoverage provisions would increase the deficit by $664 billion, mostly by reducing revenues.</li> <li>CBO and JCT estimate that, in 2018, <strong>14 million more people would be uninsured under H.R. 1628 than under current law</strong>. The increase in the number of uninsured people relative to the number projected <strong>under current law would reach 19 million in 2020 and 23 million in 2026</strong>. </li> <li>In 2026, an estimated <strong>51 million people under age 65 would be uninsured, compared with 28 million who would lack insurance that year under current law. </strong>Under the legislation, a few million of those people would use tax credits to purchase policies that would not cover major medical risks.</li> </ul> <p>Furthermore, since much of the impact of the GOP bill would be at the state level and whether states request various waivers, the CBO added the following discussion on the impact of premiums on state-specific impacts:</p> <ul> <li><strong>About half the population resides in states that would not request waivers regarding the EHBs or community rating, CBO and JCT project. </strong>In those states, <strong>average premiums in the nongroup market would be about 4 percent lower in 2026 than under current law, </strong>mostly because a younger and healthier population would be purchasing the insurance. The changes in premiums would vary for people of different ages. A change in the rules governing how much more insurers can charge older people than younger people, effective in 2019, would directly alter the premiums faced by different age groups, substantially reducing premiums for young adults and raising premiums for older people.</li> <li><strong>About one-third of the population resides in states that would make moderate changes to market regulations. </strong>In those states, CBO and JCT expect that, overall, <strong>average premiums in the nongroup market would be roughly 20 percent lower in 2026 than under current law, </strong>primarily because, on average, insurance policies would provide fewer benefits. Although the changes to regulations affecting community rating would be limited, the extent of the changes in the EHBs would vary widely; the estimated reductions in average premiums range from 10 percent to 30 percent in different areas of the country. The reductions for younger people would be substantially larger and those for older people substantially smaller.</li> <li><strong>Finally, about one-sixth of the population resides in states that would obtain waivers involving both the EHBs and community rating and that would allow premiums to be set on the basis of an individual’s health status in a substantial portion of the nongroup market, CBO and JCT anticipate. </strong>As in other states, average premiums would be lower than under current law because a younger and healthier population would be purchasing the insurance and because large changes to the EHB requirements would cause plans to a cover a smaller percentage of expected health care costs. In addition, premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums, despite the additional funding that would be available under H.R. 1628 to help reduce premiums. <strong>Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly</strong>. As a result of the narrower scope of covered benefits and the difficulty less healthy people would face purchasing insurance, average premiums for people who did purchase insurance would generally be lower than in other states—but the variation around that average would be very large. CBO and JCT do not have an estimate of how much lower those premiums would be.</li> <li>Although premiums would decline, on average, in states that chose to narrow the scope of EHBs, some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care. <strong>People living in states modifying the EHBs who used services or benefits no longer included in the EHBs would experience substantial increases in out-of-pocket spending on health care or would choose to forgo the services</strong>. Services or benefits likely to be excluded from the EHBs in some states include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits. In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed. That could happen, for example, to some people who use expensive prescription drugs. Out-of-pocket payments for people who have relatively high health care spending would increase most in the states that obtained waivers from the requirements for both the EHBs and community rating.</li> </ul> <p>Full CBO document below (<a href="">link</a>)</p> <p><iframe src=";view_mode=scroll&amp;access_key=key-DS6VERQVSGulUqQEw9FM&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1024" height="682" alt="" src="" /> </div> </div> </div> 111th United States Congress 115th United States Congress American Health Care Act Budget Deficit Business Economy of the United States Health Health Health in the United States Health insurance Health insurance coverage in the United States Health insurance in the United States Healthcare reform in the United States Internal Revenue Code Internal Revenue Service National debt of the United States Obamacare Presidency of Barack Obama Republican Party Senate Social Issues Statutory law United States United States federal budget United States fiscal cliff Wed, 24 May 2017 20:51:59 +0000 Tyler Durden 596589 at Wall Street's Take On The Fed Minutes: June, Sept. In Play; BS Unwind May Come Sooner <p>While the dollar and TSY yields both dropped to session lows shortly after the FOMC announcement hit as traders focused on the Fed disclosure that FOMC voters thought it prudent to await evidence an "economic slowdown is transitory" suggesting the committee still wanted to hike rates but was willing to wait for the certainty of data,&nbsp; Goldman's disagreed and according to a just released assessment by Goldman's Jan Hatzius, the statement was more hawkish than perceived by the market. </p> <p>Specifically, Hatzius claims that the May FOMC minutes mirrored the statement in "downplaying the weak Q1 GDP print and the soft March inflation data, and also noted that most participants judged that “it would soon be appropriate” for the FOMC to hike again." </p> <p>Hatzius also pointed out what he highlighted earlier, namely that <strong>the minutes contained new information about the eventual process for phasing out reinvestment, </strong>which will likely occur by “preannouncing a schedule of gradually increasing caps to limit the amounts of securities that could run off in any given month.” </p> <p>As a result, Goldman continues to see "<strong>an 80% probability of a rate hike at the June meeting and expect this to be followed by another rate hike in September and the announcement of balance sheet normalization at the December meeting. However, we see the risks to the timing of the balance sheet announcement as skewed toward the September meeting.</strong>"</p> <p><em>Here are the key points from his note: </em></p> <p>MAIN POINTS:</p> <ol> <li>The minutes to the May FOMC meeting mirrored the statement in downplaying the weak Q1 GDP print as “likely to be transitory,” and also noted that “most participants judged that if economic information came in about in line with their expectations, it would soon be appropriate for the Committee to take another step in removing some policy accommodation.” Although the minutes noted that FOMC members judged it “prudent to await additional evidence indicating that the recent slowing” in growth is transitory, we view this as a fairly low bar that the data thus far have met. </li> <li>Notably, “several participants” pointed to conditions that could justify a “somewhat more rapid” removal of policy accommodation, such as a faster-than-expected decline in the unemployment rate, a faster increase in wage growth, or highly stimulative fiscal policy changes. This comment might be a bit dated in light of the deterioration of the prospects for fiscal stimulus in recent weeks. On the other side, “a couple” noted that a more gradual pace of tightening might be warranted, especially if inflation proved not very sensitive to a lower unemployment rate. </li> <li>On inflation, the minutes noted that “most participants” viewed the soft March data as primarily reflecting “transitory factors” and specifically downplayed “idiosyncratic factors such as a large drop in the measure of quality-adjusted prices for wireless telephone services.” Participants generally thought that inflation would stabilize around 2 percent, though a few “expressed uncertainty about the reasons for the recent unexpected weakness” and its implications for the inflation outlook. On the other hand, “a couple” expressed concern that undershooting full employment “could pose an appreciable upside risk to inflation.” Overall, the minutes implied that participants generally saw the inflation outlook as “little changed,” though we note that these comments are somewhat dated at this point following a second soft CPI report for April.</li> <li>The minutes provided new information about the process for phasing out reinvestment, noting that “nearly all” participants supported a staff proposal of “preannouncing a schedule of gradually increasing caps to limit the amounts of securities that could run off in any given month.” The minutes did not clarify how long the phase-in would take or how large the final peak cap would be. While this proposal differs from our prior expectation of a percentage phase-out, the difference appears to be more stylistic than substantive. We interpret the proposal for dollar amount caps as a prudent response to reduce variability associated with MBS prepayment and the irregular monthly schedule of maturing assets. The minutes noted that with a preannounced schedule, the phase-out process “could likely proceed without a need for the Committee to make adjustments as long as there was no material deterioration in the economic outlook,” implying a fairly strong bias toward sticking to the schedule once announced.</li> <li>We continue to see an 80% probability of a rate hike at the June meeting. We also continue to expect another rate hike in September, followed by the announcement of balance sheet normalization at the December meeting. However, we see the risks to the timing of the balance sheet announcement as skewed toward the September meeting, in which case the third rate hike of the year would likely be deferred.</li> </ol> <p>* * * </p> <p>Elsewhere, Citi economists issued a comparable note according to which the risk of a September balance sheet announcement has also been brought forward, relative to the baseline December expectation.&nbsp; </p> <p>"The fact that operational details are closer to being specified shows that the FOMC could be ready to announce tapering of its balance sheet earlier than previously expected. This increases the risk of a September announcement relative to our current view for an announcement in December" said Citi economist Andrew Hollenhorst.</p> <p>They also note that, like Goldman's reading of the minutes, the FOMC members see Q1 weakness as transitory, and note that the statements on inflation.</p> <p>"On transitory Q1 growth weakness: “Members generally judged that it would be prudent to await additional evidence indicating that the recent slowing in the pace of economic activity had been transitory before taking another step in removing accommodation”. But also: “Most participants judged that if economic information came in about in line with their expectations, it would soon be appropriate to take another step in removing some policy accommodation.” In our view, positive economic activity data since the meeting corroborate the view that Q1 GDP weakness was transitory. This is consistent with our expectation that the Fed will hike in June."</p> <p>Furthermore, Citi focuses on the read through from the recent weak inflation print. It says: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>On (1), “<strong>most participants</strong>” viewed recent softer inflation data as primarily reflecting transitory factors with a “few” expressing concerns that progress on the inflation mandate had slowed.</p> <p>&nbsp;</p> <p>On (2), a “<strong>few</strong>” participants continued to anticipate a substantial undershooting of the unemployment rate, and “several” point to the possibility for the need of a more rapid removal of accommodation, for instance, if the unemployment rate fell appreciably further, or if wages increased faster than expected, or if stimulative fiscal policy were enacted.</p> </blockquote> <p>According to Hollenhorst these statements, even read in the context that inflation softened further and the unemployment rate fell since the meeting, appear to imply that unemployment rate undershoot is not a major concern while recent inflation softness is generally viewed as transitory.</p> <p>Bottom line, Citi read the May minutes as neutral with the "discussion around balance sheet reduction was the most interesting part with earlier-than-expected details of a general plan" and reiterates the bank's call remains for hikes in June and September with balance sheet reduction announced in December, although it may come as soon as September.</p> <p>* * * </p> <p><em>Finally, here is Stone McCarthy:</em></p> <ul> <li>The minutes from the May 2-3 FOMC meeting strongly support our view that <strong>the FOMC will raise interest rates and announce its balance sheet normalization plans at the upcoming June 13-14 FOMC meeting</strong>. In line with our expectation, “nearly all” Fed officials agreed it is “likely appropriate” to begin reducing the balance sheet later this year.</li> <li>Consistent with a gradual implementation of a “passive and predictable” unwind of the balance sheet, policy makers are considering a “preannounced schedule of gradually increasing caps to limit the amount of securities that could run off” the balance sheet in any given month. Initially, <strong>this appears to be a more gradual phase-in than we assumed in our base-case scenario.</strong></li> <li>In line with our expectation, Fed officials signalled they will likely begin to reduce the balance sheet later this year and <strong>the details of their final plan could be announced soon – we anticipate that happening at the upcoming June 13-14 FOMC meeting</strong>. Consistent with a gradual implementation of a “passive and predictable” unwind of the balance sheet, policy makers are considering a proposal for "a set of gradually increasing caps, or limits, on the dollar amounts of Treasury and agency securities that would be allowed to run off each month, and only the amounts of securities repayments that exceeded the caps would be reinvested each month". Initially, <strong>this appears to be a more gradual phase-in than we assumed in base-case scenario</strong>. In our base-case scenario we assumed that the FOMC would phase-in the reduction in debt reinvestments by allowing 50% of the maturing Treasury and MBS securities to roll-off in the first year of implementation. However, <strong>starting in the second year, the FOMC’s plan might be in line with our view in which there is a full ceasing of debt reinvestments.</strong></li> <li>Beyond June, assuming the current political chaos does not greatly dampen economic activity via a negative confidence shock, <strong>we look for another rate hike in September</strong>. This would lift the mid-point of the Fed funds target range to 1.38%. Our read of the minutes provides support for this call, though some policy makers “judged that it would be prudent to await additional evidence” that slower growth was transitory. Our forecast that real GDP growth rebounds above 3% (annualized) in Q2 argues for another rate hike in September. Thereafter, in Q4, the FOMC could initiate balance sheet reduction and refrain temporarily from lifting the Fed funds rate during the quarter.<strong><br /></strong></li> </ul> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="640" height="363" alt="" src="" /> </div> </div> </div> Business Committees CPI Economy Fed Funds Target Federal Open Market Committee Federal Reserve System FOMC Full employment Inflation James B. Bullard Jan Hatzius Macroeconomics Monetary policy Structure Unemployment Unemployment US Federal Reserve Wed, 24 May 2017 20:35:37 +0000 Tyler Durden 596586 at Can The US Economy Ever Get Back To 3% GDP Growth? <p><a href=";utm_source=hs_email&amp;utm_medium=email&amp;utm_content=52307679&amp;_hsenc=p2ANqtz--u7XSfqN9C1mBr89nokLIypx6kOMScu0bF7tAz5kvcG9l_xKyBGgpDj4L7CvVQRetfgFKKCjwO2aTYEcXYbisi---Nzw&amp;_hsmi=52307679">ConvergEx&#39;s Nicholas Colas</a> asks <strong><em>&quot;Can the US economy get back to the 3% GDP growth it enjoyed in the 1980s &ndash; mid 2000s?&quot;</em></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>White House economic policy makers</strong> say &ldquo;Yes&rdquo;.</p> <p>&nbsp;</p> <p>Most <strong>professional economists</strong> say &ldquo;No&rdquo;.</p> <p>&nbsp;</p> <p><strong>History </strong>says, &ldquo;Worker productivity drives economic growth, not politicians or economists.&nbsp; Fix productivity and you can get to 3%.&rdquo;</p> </blockquote> <p><a href=""><img height="316" src="" width="600" /></a></p> <p><span style="text-decoration: underline;"><strong>History may not be laconic, but it has a point. </strong></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Since the end of World War II, productivity growth has been the most important factor in GDP growth - even more so than greater female workforce participation.&nbsp; <strong>So how does the US improve worker productivity?</strong>&nbsp; That conversation has been hijacked by the tech sector, but the answer must lie elsewhere.&nbsp; No one doubts that 21st technological advances are impressive, but they have done nothing for measureable productivity or wage growth (unless you write code).</p> </blockquote> <p><a href=""><img height="323" src="" width="600" /></a></p> <p><strong>When I started as a Wall Street analyst in 1991, I spent countless hours in the corporate library searching for old annual reports and other financial statements.</strong>&nbsp; If you wanted Chrysler&rsquo;s 1982 10K, it was on a CD-ROM and you printed it out on nasty smelling chemically treated paper.&nbsp; Back issues of the Wall Street Journal were on microfiche &ndash; images on plastic index-card sizes you needed to pop into a projector to read.</p> <p><strong>Now you can get all that information and more on the Internet, delivered to your smart phone/tablet/PC, at any hour and in any place on the planet with a wireline or wireless phone connection. </strong>Countless data providers will make a historical financial model for you on the fly. Stock price charts are free from Yahoo! and Google, plus many other sources.</p> <p><strong>All this has made me much more productive &ndash; I doubt I could write these notes as frequently as I do without the Internet.&nbsp;</strong> Once a week, maybe&hellip;&nbsp; Twice in a pinch.&nbsp; But daily?&nbsp; Let&rsquo;s put it this way &ndash; I could, but you might not find them as useful.</p> <p><strong>One easy example: the Richmond branch of the Federal Reserve has a must-use US economic overview they keep updated on a weekly basis.</strong> Whenever I have to give a macro talk, I just use that deck rather than spend days reinventing this particular wheel.&nbsp; That way I can spend my time thinking about the data, rather than just finding it. <a href=""><strong>You can see it here.</strong></a></p> <p><strong>What&rsquo;s even better about the Richmond deck is that it shows HOW the Fed thinks about the domestic economy. </strong>The first thing after the title page is a review of recent GDP growth, followed by longer-term trends back to 2007. That pride of place is telling: the US central may have a stated &ldquo;dual mandate&rdquo; of employment and inflation, but they clearly see overall economic growth as the starting point for any discussion of the domestic economy.</p> <p><strong>And then you get to the third slide, which decomposes long term GDP growth into two key drivers: the increase in the size of the workforce and the change in the productivity of those workers (GDP/total workforce headcount).&nbsp;</strong> Here is what that graph shows:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Long term (10 year average) GDP growth has been through 3 distinct phases since the end of World War II. </strong>The first was a period of 3.5 &ndash; 5.0% growth from the 1950s to the early 1970s. From the 1970s to the mid &ndash; 2000s, the US economy grew around 3%. Since the Great Recession, 1.5% growth has been the norm.</p> <p>&nbsp;</p> <p><strong>Growth in the workforce shows little correlation with these trends.</strong> The peak here was in the early 1980s at just over 2% annually (also a 10 year average) - primarily a function of women entering the workforce in greater numbers. From there it has been a long slow slide to the 0.5% growth we see today.</p> <p>&nbsp;</p> <p><strong>Productivity growth seems to be the real driver of GDP growth since the 1950s. </strong>It was highest in the 1960s at 2-3% annually (10 year averages here, too), dropped to 1% in the 1970s along with GDP, and rebounded to 2% 80s, 90s and early 2000s along with GDP&rsquo;s 3% sustainable trend.</p> </blockquote> <p><strong>Various White House officials have gotten lot of grief of late from professional economists and other pundits about their goal of returning the US economy to a sustainable pace of 3% GDP growth. </strong>The Richmond Fed&rsquo;s slide tells us what that debate is really about. Improve the current parlous state of productivity growth (1.1%, as shown on Slide 41 of the Fed deck), and you will get better structural GDP growth. It is a one-ingredient recipe.</p> <p>There is one school of thought that says, essentially, <strong>&ldquo;You&rsquo;re doing it wrong&rdquo; &ndash; how economists measure productivity doesn&rsquo;t accurately capture all the wonders of the Internet. </strong>A few points:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Perhaps because services like Google and Facebook are free, we are missing billions of dollars of value in the classic definition of GDP. </strong>See here: <a href="" title=""></a></p> <p>&nbsp;</p> <p><strong>Or perhaps old time economic measures don&rsquo;t accurately reflect quality improvements in software offerings and other services</strong>: <a href="" title=""></a></p> <p>&nbsp;</p> <p><strong>And one recent counterpunch that says &ldquo;nope, the data as observed is correct&rdquo;</strong>: <a href="" title=""></a></p> </blockquote> <p><strong>The trouble with claiming a widespread undercounting of US worker productivity is that wage growth has been so slow since the Great Recession.</strong> The annual change in the Employment Cost Index has hovered between 1.5 &ndash; 2.5% since 2009 versus 3.0-3.5% in 2007. Growth in Average Hourly Earnings was below 2% between 2010 and 2015 and even current readings of 2.7% are well below pre-recession levels of 3.0 &ndash; 3.5%. If we are underestimating productivity growth so badly, why aren&rsquo;t wages rising as much as a decade ago?</p> <p><strong>In fact, the intersection of technology and weak worker productivity growth is pushing society in an entirely different direction: replacing &ldquo;inefficient&rdquo; people with machines and software that can grow more productive with future upgrade cycles.</strong>&nbsp; We&rsquo;ve seen this movie before (railroads and cars vs. horses, factory automation, etc), but this is the IMAX version. And no one really knows how it turns out&hellip;.</p> <p><strong>All this puts the &ldquo;3% GDP growth debate&rdquo; in a different and, I think, more useful light</strong>. It is really about reasserting the preeminence of humans &ndash; the workforce &ndash; in any calculus of macroeconomic policy. Make them (us, really) more productive, and the economy will grow faster. And if that is impossible, and with it that 3% target, then technology will replace the worker rather than simply augment his or her efforts.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="936" height="504" alt="" src="" /> </div> </div> </div> Business Chrysler Economic growth Economy Economy of the United States Employment Cost ETC Federal Reserve Google Great Recession Gross domestic product Labor Political debates about the United States federal budget Productivity Recession Richmond Fed smart phone Solow residual US Federal Reserve Wall Street Journal White House White House Wed, 24 May 2017 20:25:00 +0000 Tyler Durden 596574 at UK Police Launch Massive Manhunt For Suicide Bomber Network; His Brother, Father Arrested In Libya <p><em><strong>Update: </strong></em>Having mobilized hundreds of soldiers to protect key landmarks across London, the British police launced a huge manhunt for “a network” of accomplices who may have helped Salman Abedi build the suicide bomb and "who could be ready to kill again."&nbsp; Part of yesterday's hike in the UK risk threat assessment is the fear that Abedi could have been working as part of a group of accomplices with possible links to militant groups who have the competence to plot and execute suicide bombings.</p> <p>"<strong>The question is: Was he acting alone or was he part of a network of others who want to kill</strong>. That is what the investigation is focusing on," a source told Reuters adding that "the concern is that there may be others out there who helped him to make the bomb. Making a bomb of this sort requires a certain level of expertise and competence," the source said.</p> <p>At an afternoon press conference, Manchester Chief Constable Ian Hopkins said it is clear “this is a network we are investigating.” He declined to give any further details on the investigation. British police have declined to provide many details about the suspect, but a U.S. official has said he was a British citizen of Libyan descent. British officials believe he had recently returned from Libya. Hopkins also wouldn’t comment on whether police had found anyone who made the explosive device used in the attack.</p> <p>Moments ago Reuters reported that the younger brothers of the bombing suspect was arrested in Libya on suspicion of ISIS ties:</p> <ul> <li><strong>HASHEM ABEDI, YOUNGER BROTHER OF MANCHESTER ATTACKER, ARRESTED IN TRIPOLI BY COUNTER-TERRORISM FORCE ON SUSPICION OF ISLAMIC STATE LINKS</strong></li> <li><strong>BROTHER OF MANCHESTER ATTACKER ARRESTED IN TRIPOLI WAS PLANNING "TERRORIST ACT" IN THE LIBYAN CAPITAL - COUNTER-TERRORISM FORCE</strong></li> </ul> <p>Hashem Abedi <strong>confessed to being in the U.K. during preparations for Monday’s attack and was aware of all plans</strong>, said Ahmed Dagdoug of Radaa, one of several large militias responsible for security in Tripoli <a href="">quoted by the WSJ</a>.&nbsp; Radaa, which holds sway over part of the Libyan capital, said the <strong>younger Abedi was arrested late Tuesday in the city as he picked up a wire transfer of 4,500 Libyan dinar</strong>, or about $3,260, sent by his late brother, Salman.</p> <p>The group’s spokesman, Mr. Dagdoug, said it was also holding Abedi’s father, Ramadan Abedi, to aid in the investigation of the attack, which killed 22 people outside a concert by American singer Ariane Grande. It wasn’t immediately clear whether the Libyan group was in contact with British investigators, who on Tuesday in Manchester arrested a man one Western official identified as 23-year-old Ismail Abedi, another brother of the suspect.</p> <p>Meanwhile, in the UK the police arrested at least three more men as part of their investigation into the suicide bombing as authorities said they are pursuing a “network” in connection with the attack. The arrests in Manchester take the total currently in custody to four. Under British law, a person can be taken into custody in a terrorism investigation and held up to 14 days without charges.</p> <p>As reported earlier (see below), U.K. investigators told French authorities that Abedi had probably also traveled to Syria, according to the French interior minister. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>A leading theory is that the attacker may have received specialist training abroad or that there is a technician in the U.K. who constructed the bomb, the Western official said. </p> <p>&nbsp;</p> <p>“To cause this many fatalities it has to be a viable device of a certain level of sophistication,” the official said, adding that it didn’t seem like something Abedi could have done by himself. Officials were still in the initial phase of the investigation, the person said.</p> </blockquote> <p>Earlier, Home Secretary Amber Rudd earlier told the British Broadcasting Corp. Abedi that Abedi was previously known to security services “up to a point.” “When this operation is over, we will want to look at his background and what happened, how he became radicalized and what support he might have been given,” she said.</p> <p>* * *</p> <p><strong><em>Earlier: </em></strong></p> <p>Just hours after <a href="">the UK raised its terror alert to Critical</a>, or the highest possible, for the first time in ten years, Britain’s Interior minister Amber Rudd said that Salman Abedi, the Manchester suicide bomber who killed 22 people at a concert venue, and had recently returned from Libya had likely not acted alone and troops were being deployed to key sites across Britain to help prevent further <a href="">attacks according to the FT</a>. </p> <p><img src="" width="500" height="281" /><br /><em>Salman Abedi, the suspect in the Manchester attack</em></p> <p>Rudd said on BBC radio that the bombing was “<strong>more sophisticated than some of the attacks we’ve seen before, and it seems likely, possible, that he wasn’t doing this on his own.” </strong>She said Abedi had been known to security services before the bombing. Asked about reports that Abedi had recently returned from Libya, Rudd said she believed that had now been confirmed. </p> <p>Rudd said up to 3,800 soldiers could be deployed on Britain's streets, taking on guard duties at places like Buckingham Palace and Downing Street to free up police to focus on patrols and investigation. An initial deployment of 984 had been ordered, initially in London, then elsewhere. The minister also <strong>scolded U.S. officials for leaking details about the investigation into the Manchester attack before British authorities were prepared to go public</strong>.</p> <p>Separately Rudd's French counterpart said Abedi had links with Islamic State and had probably visited Syria too. According to Reuters, French Interior Minister Gerard Collomb said British investigators had told French authorities Abedi had probably travelled to Syria as well.</p> <p><strong>"Today we only know what British investigators have told us - someone of British nationality, of Libyan origin, who suddenly after a trip to Libya, then probably to Syria, becomes radicalized and decides to carry out this attack," </strong>Collomb told BFMTV.&nbsp; Asked if he believed Abedi had the support of a network, Collomb said: "That is not known yet, but perhaps<strong>. In any case, (he had) links with Daesh (Islamic State) that are proven."</strong></p> <p>The Islamic State promptly claimed responsibility for the Manchester attack, but there were contradictions in its accounts of the action and a lack of crucial detail. </p> <p>As Collomb was speaking in France, Rudd was asked by the BBC about the fact that information about Abedi, including his name, had come out from the United States and whether she would look again at how information was shared with other countries. "Yes, quite frankly. I mean the British police have been very clear that they want to control the flow of information in order to protect operational integrity, the element of surprise, <strong>so it is irritating if it gets released from other sources and I have been very clear with our friends that should not happen again."</strong></p> <p>Asked whether the U.S. leaks had compromised the investigation, she said: "I wouldn't go that far but I can say that they are perfectly clear about the situation and that it shouldn't happen again."</p> <p>According to <a href="">Bloomberg</a>, "it is rare for the U.K. government to publicly criticize the U.S. and in such blunt terms. The rebuke raises the risk that key allies could become more reluctant to share vital security information with the world’s superpower."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The bomber’s name, Salman Ramadan Abedi, was first revealed early on Tuesday by CBS in the U.S. and hours later the U.K. authorities put out a statement refusing to confirm the information until a formal identification had been completed. The police said any speculation would be “unhelpful and potentially damaging” to the investigation. It was only much later in the day, that the U.K. confirmed his identity.</p> </blockquote> <p>Separately, Manchester Police said on Wednesday <a href="">morning three men had been arrested </a>“after police executed warrants in south Manchester” in connection with the continuing investigation.</p> <p>On Tuesday police raided the Abedi family home in the Fallowfield district of south Manchester, in one of three operations carried out as authorities tried to establish whether Abedi was working alone or as part of a network. Family friends and neighbours said Abedi’s parents were originally from Libya and recently returned to the country.</p> <p>The son of Libyan immigrants, British-born Abedi, 22, blew himself up on Monday night at the Manchester Arena indoor venue at the end of a concert by U.S. pop singer Ariana Grande. His 22 victims included an eight-year-old girl, several teenage girls, a 28-year-old man and a Polish couple who had come to collect their daughters. The bombing also left 64 people wounded, of whom 20 were still receiving critical care for highly traumatic injuries.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="700" height="394" alt="" src="" /> </div> </div> </div> Abidi Africa British police Eastern Mediterranean France Geography of Africa Government of Australia Kevin Rudd Libya Manchester Arena Manchester police North Africa Politics of Australia Reuters Rudd Government UK Government War Wed, 24 May 2017 20:19:28 +0000 Tyler Durden 596534 at Stocks Surge As VIX Crushed To 9-Handle Despite Fed Warning Of "Risks To Financial Stability" <p>It&#39;s crazy pills time again...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>&nbsp;</p> <p>Post-FOMC Minutes, eveything was bid...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 284px;" /></a></p> <p>&nbsp;</p> <p>So The fed said this...<strong><em> &quot;asset valuation pressures in some markets were notable... vulnerabilities appeared to have increased for asset valuation pressures.. a sharp decline in such valuations could pose risks to financial stability,&quot;</em></strong></p> <p>And investors did this...Nasdaq record highs, S&amp;P record close...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 344px;" /></a></p> <p>&nbsp;</p> <p>Which lifted the S&amp;P and Dow green post-Trump-Dump...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 435px;" /></a></p> <p>&nbsp;</p> <p><u><strong>VIX was crushed back to a 9-handle </strong></u>to get ensure the S&amp;P held above 2400...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 366px;" /></a></p> <p>&nbsp;</p> <p>The S&amp;P 500 ETF (SPY) set a 2017 volume low for the second day in a row...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 494px;" /></a></p> <p>&nbsp;</p> <p><strong>It seems noone wants to talk about the flash crash in Russell 2000 this morning...</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 352px;" /></a></p> <p>&nbsp;</p> <p>Today&#39;s rally lifts The Dow into the green for May (for now)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 408px;" /></a></p> <p>&nbsp;</p> <p>The dollar fell to a fresh low for the session after the minutes of the Federal Open Market Committee&rsquo;s May meeting <strong>showed that &ldquo;a few&rdquo; participants expressed concern that progress on inflation might have slowed. </strong>FOMC participants generally judged that it would be prudent to await more evidence that weaker economic data was &ldquo;transitory&rdquo; before further removing accommodation. <strong>Does that look transitory?</strong></p> <p><a href=""><img height="304" src="" width="600" /></a></p> <p><strong>U.S. Treasuries rose after the release of the minutes while the greenback tumbled.</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 655px;" /></a></p> <p><strong>Fed funds futures continued to price around 80 percent odds of a June rate increase.</strong></p> <p>The entire TSY curve dropped today, almost erasing yesterday&#39;s spike...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>The dollar drop pushed it red on the week led by CAD strength (BOC comments)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>Despite dollar weakness, WTI and RBOB could not catch a bid after weaker than expected product inventories (and rising production) sent prices lower...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 445px;" /></a></p> <p>&nbsp;</p> <p>Gold and Silver both gained on the day...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 449px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="44" alt="" src="" /> </div> </div> </div> Business CAD Committees fed Federal Open Market Committee Federal Open Market Committee Federal Reserve System flash NASDAQ Russell 2000 Russell 2000 S&P 500 SPY US Federal Reserve Valuation VIX Wed, 24 May 2017 20:03:16 +0000 Tyler Durden 596585 at Images Of British Troops Deployed In London <p>As Prime Minister Theresa May promised, troops have been deployed to guard &ldquo;key&nbsp; locations,&rdquo; including the Palace of Westminster, several embassies and &ldquo;other sensitive sites,&rdquo; in London and other British cities, <a href="">the Evening Standard reported.</a></p> <p>The mass deployment follows Monday&rsquo;s attack at Manchester Arena, <strong><a href="">which killed 22 kids attending an Ariana Grande concert,</a> as well as the 23-year old attacker. It was the worst terror attack in the U.K. since 2005.</strong></p> <p>The <a href="">Financial Times reports</a> that nearly 4,000 military personnel have been deployed across Britain to help police with counter-terror efforts after May raised the threat level to &ldquo;critical&rdquo; on Tuesday as authorities scramble to apprehend any accomplices that may have aided Salman Abedi, the chief suspect in the bombing <a href="">who was known to police prior to Monday&#39;s attack. </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>There are fears an Islamist bombmaker may be on the loose </strong>because of the sophistication of the device used in the Manchester attack on Monday,&rdquo; the Evening Standard noted.</p> </blockquote> <p>The FT also noted that the attack occurred at a time when police chiefs across Britain <strong>have warned about difficulties recruiting the extra 1,500 police the U.K. government promised following the attacks in Paris and Brussels. </strong></p> <p>Counter-Terrorism forces have arrested Hashem Abedi, the younger brother of the Manchester attacker, in Tripoli, according to media reports.</p> <p>Parliament has been closed to the public, the changing of the guard at Westminster has been cancelled and the Old Bailey&rsquo;s public galleries were also shut, the Evening Standard reports.</p> <p><strong>Soldiers are likely to be on duty at this weekend&rsquo;s FA Cup Final at Wembley. And Chelsea have cancelled Sunday&rsquo;s victory parade to celebrate their premier league win, <a href="">ESPN reported.</a></strong></p> <p>Here&#39;s a few photos showing troops arriving outside the Palace of Westminster, Scotland Yard and 10 Downing Street:</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 333px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 296px;" /></a></p> <p><img alt="" src="" style="width: 500px; height: 336px;" /></p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 290px;" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1327" height="884" alt="" src="" /> </div> </div> </div> City of Westminster Counter-terrorism Government Government buildings London Manchester Arena Palace of Westminster Parliament of the United Kingdom Politics Prevention Safety Scotland Yard UK Government War Wed, 24 May 2017 19:50:00 +0000 Tyler Durden 596568 at Brazil Deploys Troops To Protect Government Buildings As Protesters Set Ministries On Fire <p><em><strong>Update 2:</strong></em> Physical confrontation erupts in Brazil's Congress between Temer's supporters &amp; opponents after he deploys the military against protesters.</p> <blockquote class="twitter-tweet" data-lang="en"><p lang="pt" dir="ltr">Deputados da base e da oposição se agridem durante sessão após Presidência decretar Forças Armadas na rua para garantir a ordem <a href=""></a></p> <p>&mdash; Folha de S.Paulo (@folha) <a href="">May 24, 2017</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>* * * </p> <p><em><strong>Update 1: </strong></em>Reuters reports that Temer has deployed troops to protect government buildings:: </p> <ul> <li><strong>BRAZIL DEFENSE MINISTER JUNGMANN SAYS PRESIDENT TEMER HAS ORDERED ARMY TROOPS TO PROTECT GOVT BUILDINGS FROM PROTESTERS</strong></li> </ul> <p>* * * </p> <p><iframe src="" width="500" height="281" frameborder="0"></iframe></p> <p>Amid massive protests demanding the ouster of Brazilian President Michel Temer, local riot police used tear gas and concussion grenades against groups of violent protesters in the Brazilian capital, where according to GloboNews protesters set fire to several ministry buildings on Wednesday afternoon, as tens of thousands gathered outside Congress.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">ERRATA: The protesters set on fire the Brazilian "IRS" federal buildings in Brasília the capital of Brazil and the Ministry of Agriculture <a href=""></a></p> <p>— Silver Surfer (@AlexLFz) <a href="">May 24, 2017</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en"><a href="">#Brazil</a> <a href="">#Brasilia</a> Protesters have set fire to the finance ministry. <a href=""></a></p> <p>— Genvisec Infomap (@GenvisecInfomap) <a href="">May 24, 2017</a></p></blockquote> <script src="//"></script><p>Protesters chanting "Out with Temer!" marched to the presidential palace to demand an end to austerity reforms, <a href="">AFP reports </a>adding that police stopped their advance by using tear gas, while the protesters retaliated by throwing stones at the officers. </p> <p>"It's the end of this putchist government. That's why the people have taken to the streets," said Francisca Gomes, 59, who came from Sao Paulo for the protest and carried a funeral ribbon carrying the image of the president and the words: "RIP Temer."</p> <p><iframe src=";show_text=0&amp;width=500" width="500" height="315" frameborder="0" scrolling="no"></iframe></p> <p>Brasilia's security service said that 500 buses had converged on the capital, with some 25,000 protesters. Organizers claimed there were far more, but an independent estimate was not immediately possible.</p> <p>The protest began peacefully but clashes erupted almost as soon as the crowd got close to the government complex, where large numbers of riot police hiding behind black shields and others on horseback stood in reserve. Driven back, the protesters spread out, with some throwing stones against ministry buildings.</p> <p>"Damned government," a man said as he retreated, with eyes streaming from the effects of the tear gas. </p> <p>"In a democracy, no government can resist when the people take to the streets," said Dorival Pereira, 60, who had traveled 18 hours from Mato Grosso do Sul to be at the protest. Like many demonstrators, she wore a T-shirt with the slogan "Elections now!"</p> <p>"Four people were detained by police,” Brazil’s Globo broadcaster reported, citing a police statement that also said three of the arrested had drugs on them and another a melee weapon. Protesters then set the Agricultural Ministry’s building on fire and smashed windows at several other ministerial buildings, Brazilian media report. All ministry buildings were subsequently evacuated and civil servants sent home.</p> <p><iframe src=";width=500" width="500" height="701" frameborder="0" scrolling="no"></iframe></p> <p>The protesters have erected barricades on the streets using “sofas, chairs and tables” from nearby buildings and are burning litter.</p> <p><iframe src=";show_text=0&amp;width=500" width="500" height="315" frameborder="0" scrolling="no"></iframe></p> <p>The demonstrators burnt public bicycles and “plundered” the Ministry of Planning, according to some reports. The demonstrators also “did some damage” to the Brasilia Metropolitan Cathedral and the Museum of the Republic, according to Globo.</p> <p>Tension in Brazil has risen sharply over the past week, after news broke that the Supreme Court authorized an investigation into the president over allegations of passive corruption and obstruction of justice. Unions opposed to Temer’s labor and pension reforms organized Wednesday protests, with some 35,000 taking to the streets and calling for immediate general elections. According to Brazilian law if Temer resigns or is forced out of office, Congress will elect an interim president.</p> <p>As the protests took place outside Congress, members of Temer’s allied base were meeting to discuss whether to stick by the embattled president.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="794" height="447" alt="" src="" /> </div> </div> </div> Afro-Brazilian Feminism Agricultural Ministry Brasilia's security service Brazil Brazil Congress Corruption Damned government Euromaidan Foreign relations of the United States Internal Revenue Service Michel Temer Ministry of Agriculture Politics Politics of Brazil Reactions to Innocence of Muslims Religion Reuters Sports riots Supreme Court Time Twitter Twitter Unrest in Bosnia and Herzegovina War Wed, 24 May 2017 19:30:13 +0000 Tyler Durden 596583 at Trump Reveals Location Of 2 Nuclear Subs To Duterte <p>In a story published Wednesday, <a href="">the New York Times</a> alleged that President Trump <strong>revealed to Filipino President Rodrigo Duterte the location of two U.S. nuclear submarines lurking in the waters off the Korean peninsula,</strong> ready to counter any acts of aggression by North Korean leader Kim Jong Un.</p> <p><img alt="" src="" style="width: 500px; height: 282px;" /></p> <p><strong>Here&rsquo;s what Trump allegedly said,</strong> according to a transcript of the call, which was circulated to reporters by the Americas wing of the Philippines embassy. The contents of the document were later confirmed by &quot;a senior White House official.&quot; <a href="">Per NYT:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;We have a lot of firepower over there,&rdquo; Mr. Trump noted. &ldquo;We have two submarines &ndash; the best in the world. We have two nuclear submarines, not that we want to use them at all.&rdquo;</p> </blockquote> <p><strong>The NYT is once again bashing Trump for his &quot;loose lips,&quot; </strong>even though Trump&rsquo;s comments were clearly meant to assuage concerns expressed by Duterte, who told Trump that he believes North Korean leader Kim Jong Un is &ldquo;unstable&rdquo; and a danger to the entire region.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;He told Trump that &ldquo;as long as those rocket and warheads are in the hands of Kim Jong Un we will never be safe as there&rsquo;s no telling what will happen next.&rdquo;</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 340px;" /></a></p> <p><strong><a href="">First it was the Russians,</a> now it&rsquo;s the Filipinos.</strong> But regardless of with whom Trump decides to share classified information, there are two important details these mainstream media reports have consistently glossed over.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>One... Did Barack Obama, George Bush, or Bill Clinton ever share secrets during conversations with foreign leaders? <strong>The story doesn&rsquo;t tell us.</strong></p> <p>&nbsp;</p> <p>Two... It&rsquo;s not illegal for Trump to share these secrets. <strong>Yet the stories seem to imply that some kind of grave impropriety was commented by the president. Not so.</strong></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="567" height="386" alt="" src="" /> </div> </div> </div> Alt-right American people of German descent Barack Obama Donald Trump KIM New York Times Politics Politics Politics of the United States Rodrigo Duterte The Apprentice United States White House White House WWE Hall of Fame Wed, 24 May 2017 19:06:22 +0000 Tyler Durden 596558 at FOMC Minutes Signal Rate-Hike "Soon", Economic Weakness Probably "Transitory" But Need "Evidence" <p>Having top-ticked US economic data with its March rate-hike, all eyes are on the May minutes to confirm the total lack of data-dependence now present at The Fed. The main focus of the minutes was on the &#39;normalization&#39; of the balance sheet (since June hike odds are at 100%), which was confirmed with details of the plan revealed. Economic weakness in Q1 was shrugged off as &quot;transitory&quot; - although with the provision that evidence is needed - and tightening as well as balance sheet rolloff is appropriate &quot;soon&quot;, likely signaling that a June rate hike is on despite the recent economic slowdown. Fed also warns of asset valuations.</p> <p><strong>Key Minutes Headlines:</strong></p> <ul> <li>*MOST FED OFFICIALS SAW <strong>TIGHTENING LIKELY APPROPRIATE `SOON&#39;</strong></li> <li>*<strong>FED BALANCE-SHEET PLAN </strong>WOULD RAISE ROLLOFF CAPS EVERY 3 MONTHS</li> <li>*FOMC VOTERS: PRUDENT TO AWAIT EVIDENCE<strong> SLOWDOWN IS TRANSITORY</strong></li> </ul> <p>The Minutes had something for everyone, starting with the &quot;<em>dovish cop</em>&quot;, and the focus on the triple reiteration of &quot;weakness&quot; in the FOMC minutes, and furthermore the warning that Q1 GDP weakness was <strong>not </strong>due to seasonality:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The staff judged that the weakness in first-quarter real GDP <strong>was probably not attributable to residual seasonality and that it instead reflected transitorily soft consumer expenditures and inventory investment.</strong></p> </blockquote> <p>Another risk factor: the Fed expected PCE inflation to pick up more the spring &quot;which would be more consistent with ongoing gains in employment.&quot; It did not happen...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Importantly, <strong>PCE&nbsp; growth was expected to pick up to a stronger pace in the spring</strong>, which would be more consistent with ongoing gains in employment, real disposable personal income, and households&rsquo; net worth.</p> </blockquote> <p>The Fed also wanted move evidence the slowdown is transitory:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Members generally judged that it would be prudent to <strong>await additional evidence indicating that the recent slowing in the pace of economic activity had been transitory before taking another step in removing accommodation.</strong></p> </blockquote> <p>However, we then quickly shift to the &quot;<em>hawkish cop</em>&quot; because ironically, just a few lines lower, the Fes does blame the weather:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It was noted that much of the recent slowing likely reflected transitory factors, such as low consumer spending for energy services <strong>induced by an unusually mild winter and a decline in motor vehicle sales&nbsp; from an unsustainably high fourth-quarter pace. </strong>Nevertheless, contacts expected that demand for motor vehicles would be well maintained.</p> </blockquote> <p>The outlook is also expected to improve:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>With respect to the economic outlook and its implications for monetary policy, members agreed that the slowing in growth during the first quarter was likely to be transitory and continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace, labor market conditions would strengthen somewhat further, and inflation would stabilize around 2 percent over the medium term.</p> </blockquote> <p>Sure, it could also be inducted by the collapse in demand for auto and credit card loans as the Fed itself discovered just a few days after the May FOMC meeting in its latest Senior Loan Officer Survey, and reported previously here.&nbsp; Yet despite the Fed&#39;s growing concern about &quot;weakness&quot;, its conclusion was that gradual tightening remains appropriate:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Although the data on aggregate spending and inflation received over the intermeeting period <strong>were, on balance, weaker than participants expected</strong>, they generally saw the outlook for the economy and inflation as little changed and judged that <strong>a continued gradual removal of monetary policy accommodation remained appropriate.</strong></p> </blockquote> <p>As for employment and inflation...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Consistent with the downside risks to aggregate demand, the staff viewed <strong>the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were judged to be roughly balanced</strong>. The downside risks from the possibility that longer-term inflation expectations may have edged down or that the dollar could appreciate substantially were seen as roughly&nbsp; counterbalanced by the upside risk that <strong>inflation could increase more than expected in an economy that was projected to continue operating above its longer-run potential</strong>.</p> </blockquote> <p>Also notable is the Fed&#39;s explicit warning that &quot;vulnerabilities have increased for asset valuation pressures.&quot;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>This overall assessment reflected the staff&rsquo;s judgment that leverage as well as vulnerabilities from maturity and liquidity transformation in the financial sector were low, that leverage in the nonfinancial sector was moderate, and that <strong>asset valuation pressures in some markets were notable.</strong> Although these assessments were unchanged from January&rsquo;s assessment, <strong>vulnerabilities appeared to have increased for asset valuation pressures,</strong> though not by enough to warrant raising the assessment of these vulnerabilities to elevated.</p> <p>* * *</p> <p>&quot;In addition, it was noted that real estate values were elevated in some sectors of the CRE market, that a sharp decline in such valuations could pose risks to financial stability, and that potential reforms in the housing finance sector could have implications for such valuations.&quot;</p> </blockquote> <p>So...&nbsp; the prices are too high?</p> <p>The Fed also touched on deregulation risks:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;With regard to financial stability, several participants emphasized that higher requirements for capital and liquidity in the banking system and other prudential standards had contributed to increased resilience in the financial system since the financial crisis. However, they expressed concerns that a possible easing of regulatory standards could increase risks to financial stability. &quot;</p> </blockquote> <p>And on the future balance sheet &quot;renormalization&quot; and runoff:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;Under the proposed approach, the Committee would announce a set of gradually increasing caps, or limits, on the dollar amounts of Treasury and agency securities that would be allowed to run off each month, and only the amounts of securities repayments that exceeded the caps would be reinvested each month. As the caps increased, reinvestments would decline, and the monthly reductions in the Federal Reserve&rsquo;s securities holdings would become larger. The caps would initially be set at low levels and then be raised every three months, over a set period of time, to their fully phased-in levels. The final values of the caps would then be maintained until the size of the balance sheet was normalized.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>If The Fed somehow makes believe that the data &quot;continues to support&quot; normalization, then their credibility just went negative...</p> <p><a href=""><img height="318" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Data-dependence? The Fed is still calling for 2 more rate hikes, the market sees just 1.44 hikes...</p> <p><a href=""><img height="304" src="" width="600" /></a></p> <p>&nbsp;</p> <p>So what happens when The Fed balance sheet normalization begins?</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>June rate hike odds were 100% before the Minutes (and 50% chance of anmother hike by December - 39.3% + 9.6%)</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 159px;" /></a></p> <p>&nbsp;</p> <p>Full Minutes Below...</p> <p>&nbsp;</p> <p><iframe class="scribd_iframe_embed" data-aspect-ratio="0.7729220222793488" data-auto-height="false" frameborder="0" height="600" id="doc_50623" scrolling="no" src=";view_mode=scroll&amp;access_key=key-HP45WyzwwmLu7IapghnS&amp;show_recommendations=true" width="100%"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="964" height="511" alt="" src="" /> </div> </div> </div> Business Committees CRE CRE Economy Federal Open Market Committee Federal Reserve Federal Reserve System Finance Financial economics Financial markets Fundamental analysis Headline inflation headlines Inflation James B. Bullard Leverage Loan Officer Survey Macroeconomics Market Conditions Monetary Policy Monetary policy Money Personal Income Prudential Real estate Unemployment US Federal Reserve Valuation Wed, 24 May 2017 19:03:15 +0000 Tyler Durden 596576 at