Jim Sinclair’s Commentary
Behold, we live in the BS world.
The Inflation Targeting Scam And Why It Guarantees The Mother Of Financial Meltdowns
May 19, 2016
The estimable Martin Feldstein put the wood to the Fed in a recent op ed and in so doing hit the nail directly on the head. He essentially called foul ball on the whole inflation targeting regime and the magic 2.00% goalpost in part due to the measuring stick challenge.
A fundamental problem with an explicit inflation target is the difficulty of knowing if it has been hit.
That problem is plainly evident in the chart below. You could very easily make the argument that goods prices are beyond the Fed’s reach because they are set in the world markets and by the marginal cost of labor in China and the EM.
Therefore the more domestically driven CPI index for services such as housing, medical care, education, transportation, recreation etc. is the more relevant yard stick. Alas, if there is something magic about 2.00%, why then, mission accomplished!
On a five year basis, services inflation is up at 2.2% annually, and during the past year it has heated up to 3.2%.
Then again, if the Fed were not comprised of power-hungry apparatchiks looking for any excuse to intrude in the financial markets and dominate their hourly behavior, it might well recognize the merit of what we have termed “CPI Using Market Rent” (box).
Jim Sinclair’s Commentary
It looks like pay to play might have just gotten much more expensive.
Banks Sued by Investor Over Agency-Bond Rigging Claims
By Tom Schoenberg, David McLaughlin, Chris Dolmetsch
May 18, 2016 — 1:44 PM MST
Updated on May 18, 2016 — 5:11 PM MST
How Wall Street Led LendingClub Into Crisis
Suit follows probes of SSA bond market in U.S. and U.K.
Traders are alleged to have colluded to fix bond prices
Bank of America Corp. and Deutsche Bank AG were among five banks sued over claims that traders conspired to manipulate trading agency bonds issued by government entities and institutions like the World Bank, harming investors who bought and sold the securities.
The suit by Boston Retirement System, a pension fund representing city workers, follows inquiries by U.S. and U.K. authorities into the market for the debt, known as supranational, sub-sovereign and agency bonds, or SSAs. The probes target alleged illegal collusion in international trading and follow billions of dollars in settlements over claims that banks rigged interest-rate benchmarks and currency markets.
“Defendants’ scheme was driven by greed and opportunity,” the fund said in the complaint filedWednesday in Manhattan federal court.
The lawsuit, which also names Credit Agricole SA, Credit Suisse Group AG and Nomura Holdings Inc. or their units as defendants, resembles claims made against banks over misconduct in currency markets. It accuses traders of colluding with one another to fix prices at which they bought and sold SSA bonds in the secondary market. It adds the threat of possible triple damages available under U.S. antitrust law for investors harmed by any illegal price-fixing.
Jim Sinclair’s Commentary
Just another way for the 1% to screw you.
House Republicans Rig Hearing to Block Consumers from Going to Court
Public Citizen Is Fighting to Return Access to the Courts to American Consumers
By Pam Martens and Russ Martens: May 19, 2016
The ink was barely dry on a proposal by the Consumer Financial Protection Bureau (CFPB) to restore the rights of banking customers to take their grievances into a court of law instead of a system of forced arbitration, when House Republicans threw together a hearing yesterday to scaremonger over make-believe evils of the proposal. The hearing was convened by the Republican-controlled Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee and not-so-subtly titled “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?”
The American Law Litigation Daily called the hearing “seriously lopsided.” ValueWalk called it “skewed.” We’re calling it brazenly rigged.
Paul Bland, Executive Director of the Nonprofit, Public Justice
In decades of watching Senate and House hearings, we have never seen a more unlevel playing field. Out of the four witnesses called to testify, three were hand-picked to parrot the position of the banks with one lonely witness on hand to counter their repeated misstatements of fact. Watching that one lone witness, Paul Bland, Executive Director of the nonprofit organization, Public Justice, attempt to provide balance to the proceeding was akin to watching bullies on the playground hurling dumb epithets at the straight-A kid in their class.
Most of the Republicans didn’t even bother to call on Bland or ask his opinion. At one point, Republican Congressman Blaine Luetkemeyer of Missouri, a former banker himself, posed a slanted question to all four witnesses, then snapped at Bland, “You’re outvoted, it’s three to one.” When you rig a witness panel, naturally you can easily achieve three opinions against one. (On a side note, Luetkemeyer is attempting to do to endangered species what’s currently happening to banking customers – strip them of protections from predators.)
Jim Sinclair’s Commentary
Minimum wage rises. Get more money. People lose their jobs. Price of goods and services rise. All employees put on part time. Politician get the vote of those hurt the most.
Wendy’s to Lay Off All Cashiers, Autonomize 6,000+ Locations to Fight Wage Increases
May 17th, 2016
The fight for $15 per hour. The unintended consequences of raising the minimum wage are already beginning to take hold on several industries nationwide. In one of the most public moves combating wage increases to date, Wendy’s fast food chain has announced plans to automatize cashiers at over 6,000 facilities nationwide by the end of 2016.
Though Wendy’s made their decision official this past Thursday, Company CEO Emil Brolick hinted last August that the franchise might do just this. At the time Wendy’s was debating laying off employees in favor autonomization, or increasing the prices on their menu. As Emil Brolick stated “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.”
Wendy’s CFO Todd Penegor went on to add “We continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant. You’ll see a lot more coming on that front later this year from us.”
Indeed they will. In an interview with Business Daily, Wendy’s representatives noted how the company’s 258 restaurants in California were struggling to keep up with the $10/hr wage demands, and similarly, the company’s 200+ franchises in New York simply cant keep up with the cost of wage inflation. Last month these two states voted to impose a minimum wage increase to 15$ statewide – going into effect within the next several years.
This legislation, along with the growing support for “the fight for $15$” nationwide, was the deciding factor. Wendy’s will now faze out cashiers at every location nationwide, in favor of self serve kiosks. The company also claims they will move forward with mobile phone ordering and mobile payment systems, which the company has been testing for the last several years.
Bill Holter’s Commentary
Below are links to portable solar electricity. I have ordered these myself and make no endorsement other than they were recommended to me by a friend. I believe you should also buy a couple of good quality car batteries to store electricity. I can imagine nothing worse than spending a summer in Texas without even a floor fan running. While this will certainly not keep you accustomed to how you live now, it will not attract “flies” like a noisy generator will. Food for thought.