The World is Running Hot and Cold
Paris is burning. Texas is burning. Canada is burning. But Ukraine is cooling while Prigozhin is chilling. The economy is hot and cold. Housing is running the AC and furnace at the same time.
The streets of Paris are aflame as vehicles have been overturned and set on fire over claims of police brutality against a Black person, while the US Supreme Court — Judge Clarence Thomas presiding — has decided to bring an end to America’s institutionalized racism by mandating colleges and universities become color blind and finally stop using race as a factor in admissions screening. As The Babylon Beepoints out today, Democrats are bound to start screaming that you cannot stop racism by outlawing institutionalized racism. The Supreme Court said, “Stop ALL of it.”
On a different former minority battle front, the “Gay Furries” continue to overheat government computers with their hack attacks, but you can put out those flamers now with Bud Light because the news today also says Bud is selling cheaper than water just to clear it off the shelves after Bud’s LGBTQ promotional face flop. LGBTQ?+++ backlash is both chilling America and igniting new fires like those by the “Gay Furries.”
More than a third of America is up in smoke anyway as the Great Fire of Canada blankets a third of the United States’ population in suffocating, stagnant dark clouds. While Canada burns under 235 out-of-control wildfires, Texas is withering under a scorching heat dome that has stalled over the lower US, driving Texas power consumption to all-time brownout highs … as if all that smoke across the northern tier wasn’t brown enough.
Speaking of consuming power, China’s president Xi has added to his power consumption.
Make those commie dictators and their central planning departments stronger.
On the other hand, things are cooling off a tad in Chinese Hong Kong where …
China is continuing to struggle to make its yuan stronger as its currency fades on the global stage. For the third time in one week, China’s central bank has had to add props to the props to the original props that it added to the yuan to prevent it from sliding against the dollar and other currencies. So, the dollar stays hot, as the yuan cools in global trade.
Iran is cooling down in nuclear terms and heating up at the same time. Word has it that the Biden administration may be reaching a new nuclear pact with Iran in which Iran will wind its nuclear enrichment back down in exchange for freer oil trade. World also has it that Iran has now enriched enough uranium to such a point that the first Iranian testing of a nuclear bomb is said to be imminent.
Speaking of bombing, Russia seems almost proud to announce today that the hot-headed Prigozhin and his group of mercenaries will no longer be doing any fighting in Ukraine. This news about the cooling of the hottest parts of the war in Ukraine is bound to be received with some celebration by Kyiv since the Wagner forces had been the only Russian forces seeing any measurable gains in Ukraine for almost a year. While even those minute gains took months in Bakhmut, at least the Ukrainians won’t have to worry about the now exiled Prigozhin and his troops anymore. Those former fighters are chilling for the time being in their new Belarus summer camp.
Most of all, however, the economy is hot and cold everywhere at the same time. Unemployment applications are falling in the US again, adding potential heat to Jerome Powell’s inflation inferno that he created and now must battle back down.
Funny, that Fed stuff. One analyst today warns that the Fed may raise rates “longer than anyone expects.” Well, it won’t be longer than I expect, but it does appear to be longer than most people expect, given the jubilant rise in stocks over GDP’s diminishing prospects of recession that were reported in today’s upward revision of past GDP.
Since recession would be the only thing that might ever get Powell to go back to easing, why are stocks so pumped to see these combined signs of sticky inflation and receding recession? Of course, Powell won’t even pivot back to easing when a recession hits until said recession causes serious economic-banking destruction … as saving banks is always job one for the Fed. So, clearly the stock market is heating as if inflation is cooling when it isn’t and as if we are avoiding recession when we aren’t
Tightening for “longer than anyone expects” only intensifies the prospects of recession, while rising GDP and falling unemployment only add heat to inflation. So, this whole weird combo just presses Powell to tighten harder, but stock investors picked and chose the news as they wanted to hear it.
Bond investors, on the other hand, picked up on the jobs news and on Powell’s repeated statements that the Fed will likely be tightening harder and maybe even faster again. So, yields soared, causing the yield curve to invert even worse. Bonds are clearly predicting Powell will tighten us into a deep recession — the kind that causes serious breakage.
Powell also assured us today that banks have just passed strenuous stress tests, so they are as strong and secure as they were known to be right before the major March banking collapses. While assuring us the Fed is delivering strong banks, Powell admitted the Fed’s failure in overseeing banks prior to the recent banking crisis and explained that the Fed needs more regulatory power because it failed to use the regulatory power that it already had.
They’ve got this.
One certain strong sign for banks is that one of America’s greediest banks, which holds world records in losses on class-action law suits, just reported a massive paper loss of $100-billion on the bonds that it holds in reserves. That surely cannot be a problem because that is what brought down smaller banks in March, so we’ve been there and dealt with that. (If you cannot detect the sarcasm throughout, let me nudge you now.)
Nothing to see there, Folks. Only small banks fail … proven by two of the three largest bank failures in US history having just happened in the last three months. Banking is strong.
Housing is both hot and cold just like the economy.
While the economy, as measured in GDP, was sent down to the 1% zone in the first quarter, it has now been revised up for the first quarter a full percent to the safe 2% zone. Sure that presses Powell to tighten harder and faster gain, as he said he would but more forced tightening couldn't happen at a better time because bankruptcy filings are reported today has having already risen to levels they only reach after we are already deep in recession. No wonder stocks are soaring today. What news could be better than tightening hard into a recession?
The heating and cooling in housing is now screaming “no recession” and “deepening recession” simultaneously … as though we are running the air conditioner and the furnace at the same time. Pending home sales just cooled for the third month in a row, but that is right after housing starts and new-home sales were reported to be heating up rapidly, even though existing-home sales remained flat. Pending sales have plunged 21% from a year ago.
For anyone who might be interested, my latest podcast interview, in part about CBDCs and forced global financial control, is posted at:
(The numerous headlines, running hot and cold, that support today’s editorial can be found in boldface type below:)
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