Prepare For The Fall...

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10 year yield vs credit card interest rates. Consumers are getting hosed.

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He is either a severe drug addict or suffering from dementia. Dude is completely fucked up. My dog can out together more coherent sentences.

i don't think that's true. there is a method to the madness. hear me out. he's trying to push the fed out and build him up as the enemy in the people's eye so he can have someone to blame when this 10 year bull run built on debt crumbles to pieces. if trump can pressure the fed into a zero interest rate environment he can prolong the coming recession possibly until after the election. he needs a strong market. if the market is crashing and the economy in a recession going into the election even his base will start to abandon him. interest rates at zero = market up. unfortunately it also means increasing debt even further. essentially borrowing from generations to come to pay for today...

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US Manufacturing Weakest In 10 Years As New Export Orders Collapse

With Flash PMI in contraction and ISM sliding fast, expectations were for a very modest rise in both measures of manufacturing in August as 'hard' US macro data picked up relative to expectations.

The headline Markit Manufacturing PMI inched back into expansion with a final 50.3 print for August (after a 49.9 flash print), however, that is still the lowest since September 2009, with new export orders plunging at the fastest pace in 10 years.

The headline ISM Manufacturing plunged into contraction, printing 49.1 (well below the 51.3 expectations) to the lowest since Jan 2016 as employment and new orders (seven year low) collapsed.

As Bloomberg notes, the latest downturn underscores how slowing global growth and an escalating U.S. trade war with China are taking an even bigger toll on domestic producers. Although manufacturing only makes up about 11% of the economy, there are concerns that entrenched weakness - and any layoffs that may result - could filter through to the rest of the economy and endanger the record-long expansion.

"The August PMI indicates that US manufacturers are enduring a torrid summer, with the main survey gauge down to its lowest since the depths of the financial crisis in 2009. Output and order book indices are both among the lowest seen for a decade, indicating that manufacturing is likely to have again acted as a significant drag on the economy in the third quarter, dampening GDP growth.

“At current levels, the survey indicates that manufacturing production is falling at an annualised rate of approximately 3%.

“Deteriorating exports are the key to the downturn, with new orders from foreign markets dropping at the fastest rate since 2009. Many companies blame slower global economic growth for weakened order books, but also point the finger at rising trade war tensions and tariffs.

“Hiring has stalled as companies worry about the outlook: optimism about the year ahead is at its lowest since comparable data were first available in 2012. Similarly, price pressures are close to a three-year low, as crumbling demand has removed firms’ pricing power.”

This was also reflected in the Q2 decline in business investment. Sufficient reason for the Fed to start cutting rates in July. And this will not be the last. As we explained previously, by taking a risk management approach to trade policy uncertainty, the Fed is amplifying the effect of trade policy on monetary policy.

All President Trump needs to do is raise tariffs or take another protectionist measure to get the Fed to cut rates further. In fact, the Fed is enabling the US administration to be tough on trade as the central bank has promised to offset any expected negative impact on the US economy by cutting rates in advance. This means that the Fed is bolstering Trump’s bargaining position in the ‘game of chicken’ between the US and China. This also makes it more likely that President Trump will continue to escalate the trade war.

And that makes it more likely that the Fed will have to make additional insurance cuts before the end of the year. Consequently, there is now a strong feedback loop between trade policy and monetary policy that will force the FOMC to make more insurance cuts in the near future, most likely in September and October.

The vicious circle this sets up does not bode well for any rational investor.

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There is no money in Social Security. The Government takes your money and buys Bonds which they then spend.

The headlines following a newly released report from the Social Security trustees could lead you to believe that the Social Security Trust Fund is going broke faster than anticipated. But it’s already broke, and has been for years — because the federal government borrowed the money from the trust fund and spent it.

Here’s how the trust fund works. The federal government imposes a Social Security payroll tax on workers: 12.4 percent, with employers and employees both paying half.

That money is deposited in the trust fund and the government uses it to pay current Social Security benefits. (There’s actually two trust funds, one for retirees and one for the disabled, but the trustees often combine the two for reporting purposes.)



Historically, workers have paid in more than was needed to cover benefits, allowing the trust fund to grow to $2.9 trillion — at least on paper. However, the federal government has borrowed the trust fund surplus to cover other government expenses, depositing interest-bearing IOUs in its place.

If Social Security must pay out more than it receives, which the trustees say will happen this year for the first time since 1982, the government cannot draw from other assets because it doesn’t have any. Indeed, the federal government has to borrow hundreds of billions of dollars every year just to cover its current expenses.

Thus the government must borrow the money — or raise taxes — to redeem its IOUs so Social Security can pay benefits.

So does that trust fund represent real assets, or is it little more than a Ponzi scheme?

The Ponzi scheme is named after convicted money swindler Charles Ponzi, whose investment schemes in 1920 made him millions — until it all collapsed, costing others millions.

The federal government’s Security and Exchange Commission helpfully explains the scam: It’s investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.

That’s pretty much how Social Security works. Of course, unlike Ponzi, Social Security doesn’t have to “solicit new investors”; federal law requires virtually all working Americans to be an “investor.”

But even that won’t save the system. Fewer workers are paying in as the baby boomers retire. The Social Security Administration says there were some 5.1 workers per beneficiary in 1960; there will only be about 2.6 by 2020.

The SEC says that in Ponzi schemes fraudsters take investors’ contributions “to use for personal expenses, instead of engaging in any legitimate investment activity.” Arguably, that’s what Congress does when it spends the surplus.

Defenders of the trust fund claim that Social Security deposits are guaranteed by the “full faith and credit of the federal government,” though currently it may be fair to say that there’s more faith than credit.

Complicating the defenders’ claim is the fact that the trustees also warn us that the trust fund will be officially depleted of the assets (it doesn’t have) by 2034. After that, Social Security will only be able to pay about 75 cents on the dollar—unless Congress comes up with an intervention.

But while I have highlighted the similarities between Social Security and a Ponzi scheme, there is one big difference. Ponzi went to jail for his scam, don’t expect members of Congress to suffer the same fate.

https://thehill.com/opinion/campaign...-already-broke

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Ford Motor Company was just downgraded to junk status credit...

Ford Motor saw its credit rating downgraded to "junk" status by Moody's Investors Service late Monday.

The impact of the action, which occurred after the stock market closed, could increase the cost of borrowing money because the automaker is considered a higher credit risk — sort of like a higher interest rate on a car loan for someone with a low credit score.

“Ford remains very confident in our plan and progress,” the carmaker said in a statement. “Our underlying business is strong, our balance sheet is solid and we have plenty of liquidity to invest in our compelling strategy for the future. As Moody’s notes, we are already addressing two of its primary concerns: operating inefficiency and our China business. The agency also calls out our 'sound' balance sheet and liquidity position, and expects our global redesign and new products to contribute to improvement in earnings, margins and cash generation."

Moody's said the downgrade reflects the company's anemic global business position and "considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan."

However, the outlook is "stable," the debt ratings agency said, noting that its $23 billion in cash exceeds its debt.

Ford has undergone an $11 billion restructuring, and a cash cost of about $7 billion, Moody's wrote. "Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers."

Cash flow and profit margins are likely to remain weak and Ford faces such difficulties at a time auto markets are softening, Moody's said. Ford "does have a sound balance sheet and liquidity position from which to operate," Moody's said.

It added, "The alliance with Volkswagen AG will provide important long-term benefits to Ford's position in electric vehicles, autonomous vehicles and commercial vehicles. Nonetheless, Moody's anticipates only minimal impact on Ford's earnings and cash generation before 2022."

Shares of Ford fell after ending the regular trading day up 2.1% at $9.54.

Industry analyst Jon Gabrielsen said the rating is a considerable concern for companies because, as the auto industry goes into a downturn, carmakers like Ford generally need to do considerable borrowing.

"Moody's rating agency is everything," he said. "Anytime major investors see a downgrade to junk status, which shows a higher risk, it tends to cause the stock price to go down."

Moody's wrote: "The erosion in Ford's performance has occurred during a period in which global automotive conditions have been fairly healthy."

Moody's cited Ford's "operating inefficiencies" in "almost all" of Ford's key markets. "An upgrade of Ford during the near term is unlikely."