CMR is the leading provider of funding and management support for small to medium-sized businesses and entrepreneurs 

Authored by James Howard Kunstler via Kunstler.com,

Two-Punch

“The statement that “Joe Biden wasn’t involved in Hunter Biden’s business,” is absurd in its face. Joe Biden was Hunter Biden’s business.”

- Margot Cleveland

Understand: no amount of political blustering will bring this gaslit nation into daylight when there is no more money and no more credit and no feasible way to feed the blob that ate our government.

The equation is simple. Our country can’t handle normal interest rates; and the value of the dollar can’t withstand more ultra-low interest rates. Someone, please, ask Congress to stop screwing that pooch over there!

Oh, and that “can” we’ve been kicking down the road turns out to be a rusty old 50-gallon drum. Somebody has stuffed America into it and is fixing to drop us overboard beyond the continental shelf off the Jersey Shore. Can that be stopped, too?

So, here at week’s end we see these two rather momentous issues juxtaposed:

1. the battle over how to finance that blob-infested monster in DC; and

2. the battle to expose the crimes of a real-life Manchurian Candidate president.

Neither battle is going all that well for the minority of citizens who want to live in a pro-reality society. If we follow the fiscal trend, all the tax revenue we can grudge up will barely cover the annual interest on our $30+trillion debt. If we can’t boot out the brain-dead cat’s paw in the White House, then say goodbye to the rule of law and liberty with it.

The people we elect to Congress don’t want to be accountable for specifically authorizing spending on the blob’s multitudinous pet projects. So, they depend on multi-thousand-page omnibus bills nobody can ever scrutinize, and continuing resolution dodges to postpone any necessarily painful action on a budget. Therefore, a dissenting coterie in the House proposes to play hard-ball over de-funding the blob, that is, a government shutdown of unknown duration, until gaslight is replaced by sunlight. The blob itself sends out a frantic S.O.S. 

Don’t let these white supremacist, “far-right” MAGA nut-jobs drag us out of the comfortable warm, moist darkness we thrive in — perfect conditions for continued blob growth!

After all, these Congresspersons have their lobbyist-donors to answer to, and they’d better come up with the right answer — or else their chance of eventually retiring as multi-millionaires, like Nancy Pelosi did, might slip away. Of course, the joke would be on them (and the rest of us) if it eventually costs a million dollars for a slice of pizza when they try to cash-out. Or is there some dirty secret involved here — for instance, that the blob has also taken over whatever remained of the US economy, too. So that defunding the blob also blows a hole in that putative economy? Or maybe not. Maybe the regular economy can breathe a little again with the blob’s boot off its neck. Let’s go ahead and shut off the flow for a week or two, see what happens.

I imagine some of you took in the opening of House Oversight’s impeachment inquiry, or at least enjoyed a few choice tidbits on Web video. Chairman Comer (R-KY) tried to proceed gingerly, so as to not appear vicious, and called onstage three witnesses to establish an upright basis for the exercise. Alas, they were led by the earnest but equivocating GWU law professor Jonathan Turley, straining so hard to be above reproach that he seemed to levitate out of his seat. The Democrat minority were allowed to invite their own shill, one Michael J. Gerhardt, a law prof from North Carolina, who was there to make the gaslight flicker, and sho’nuff did.

Ranking (minority) Member Jamie Raskin immediately tried to distract the proceeding with a call to subpoena Rudy Giuliani — supposedly to impugn the process. The majority briskly tabled Raskin’s motion. The old trouper has been worked over pretty severely by a lawless DOJ the past three years, had his client correspondence stolen by the FBI, his law license suspended by a malign New York Bar Association… but don’t forget he is an experienced and resourceful federal prosecutor himself. He spent many months beating the thickets of corruption in Ukraine for then-President Trump, and certainly knows more about what went on in that grubby money laundry than practically anyone. Bring him on. I’d like to see ol’ Rudy joust with the likes of Cori Bush (D-CA) , AOC (D-NY), and Kweisi Mfume (D-MD).

The New York Times pushed the leitmotif of their narrative this morning: there’s no evidence that “Joe Biden” committed any impeachable offenses.

That wasn’t the point of Mr. Comer’s opening exercise, which did not include what are called “fact witnesses” - exactly what The New York Times pretended to not understand. The point was to open this ugly business delicately, with some decorum. It will be interesting to see how long the news media can keep pretending there’s nothing to see in the Biden family’s global business doings when a firehouse of evidence is turned on them.

You can be sure the committee is sitting on some items we have not heard about.

There’s reason to be discouraged that the people we elect can bring the two great issues of the moment - the blob’s budget and the impeachment of “Joe Biden” - to satisfactory conclusions. They are arguably pseudopods of that very blob, whose very existence is being threatened now, and they have to worry about their shots at becoming multi-millionaires, too. The weeks ahead will inform us if there’s anything that can be salvaged of our federal government or whether we must make other arrangements.

*  *   *

Support his blog by visiting Jim’s Patreon Page

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Fed’s “soft landing” hopes are likely overly optimistic. Such was the context of the recent #BullBearReport, which discussed the long record of the Fed’s economic growth projections. To wit:

“However, there is a problem with the Fed projections. They are historically the worst economic forecasters ever. We have tracked the median point of the Fed projections since 2011, and they have yet to be accurate. The table and chart show that Fed projections are always inherently overly optimistic.

As shown, in 2022, the Fed thought 2022 growth would be near 3%. That has been revised down to just 2.2% currently and will likely be lower by year-end.”

As we noted, the Fed’s outlook for more robust growth allowed them to keep one rate hike on the table. While the prospect of further rate hikes spooked the stock and bond markets immediately following the announcement, as we discussed, such was needed to keep markets in line.

“The Fed projecting one last rate increase is also a way of preventing investors from immediately turning to the next question: When will the Fed cut? The risk is that as soon as investors start doing that, rate expectations will come down sharply, and with them, long-term interest rates, providing the economy with a boost the Fed doesn’t want it to receive just yet.

That is right. Since October last year, the market has been hoping for rate cuts and increasing asset prices in advance. Of course, higher asset prices boost consumer confidence, potentially keeping inflationary pressures elevated. Keeping a rate hike on the table keeps the options for the Federal Reserve open.“

Are the Fed’s “soft landing” hopes wrong?

Soft-Landing Hopes And Economic Realities

“On the eve of recessions in 1990, 2001, and 2007, many Wall Street economists proclaimed the U.S. was on the cusp of achieving a soft landing, in which interest-rate increases corralled inflation without causing a recession.” – Nick Timaros, WSJ

Similarly, the combination of easing inflation and a cooling labor market has fueled “soft landing” hopes among economists and Federal Reserve officials. However, soft landings are elusive as the Fed often holds rates too high for too long. Eventually, something breaks financially, economically, or both, leading to recessions and bear markets.

The Fed and most economists were wrong in 2022 when they forecasted an economic contraction. Economic growth, the labor market, and consumer spending proved unexpectedly resilient despite rising interest rates and elevated inflation. Much of that growth remains from the massive monetary liquidity still flowing through the economy.

With the restart of student loan payments, the UAW strike, and still high prices eating into consumer’s excess savings, that support is fading. However, other measures with near-perfect track records predicting recessions also suggest “soft landing” hopes are likely wrong.

Leading Indicators Lead

The Leading Economic Index is one of those indicators that should not be dismissed. As its name suggests, the data is forward-looking. With a negative reading for 17 months straight, the recession warning is quite evident. As shown, a recession occurred whenever the Fed hiked rates, and the 6-month rate of change in the LEI was negative by more than 2%.

However, our own Economic Output Composite Index, which comprises more than 100 data points of hard and soft, leading and lagging indicators, confirms the warning of the leading economic index.

Notably, since we know that increases in interest rates impact economic growth, it is unsurprising that when the annual rate of change in interest rates spikes, economic growth slows. Given the magnitude of the current rate of change in interest rates on a heavily indebted economy, the “soft landing” hope seems to be a stretch.

But one indicator suggests recession is most prominent in the second half of 2024.

The Risk Of Recession In 2024 Is Likely

Of all the economic indicators we regularly review, one has continually preceded economic recessions. While “soft landing” hopes are high, the inversion of multiple yield curves suggests those hopes are misplaced. As discussed previously, the media always assumes this time is different regarding yield curve inversions because a recession didn’t occur immediately upon the inversion. There are two problems with this way of thinking.

1. The National Bureau Of Economic Research (NBER) is the official recession dating arbiter. They wait for data revisions by the Bureau of Economic Analysis (BEA) before announcing a recession’s official start. Therefore, the NBER is always 6-12 months late, dating the recession.

2. It is not the inversion of the yield curve that denotes the recession. The inversion is the “warning sign,” whereas the un-inversion marks the start of the recession, which the NBER will recognize later.

As discussed in “BTFD Or STFR,” if you wait for the official announcement by the NBER to confirm a recession, it will be too late. To wit:

“Each of those dots is the peak of the market PRIOR to the onset of a recession. In 9 of 10 instances, the S&P 500 peaked and turned lower prior to the recognition of a recession.“

While many analysts will focus on one yield curve inversion, we monitor and track ten different yield spreads affecting various economic areas. Currently, 90% of the yield spreads we monitor, shown below, are inverted, which historically is one of the best leading recessionary indicators. However, even then, it was several months before the economy slipped into recession.

When these yield spreads turn negative, and a recession doesn’t occur immediately, the media discounts the risk. Such is why, before previous recessions, there were “soft landing” hopes. As shown, a recession followed an inversion of 50% or more of the tracked yield curves. Note that during the 1995 “soft landing,” yield curves never inverted. (Read this for a complete history.)

Conclusion

Most importantly,it is NOT the inversion of the yield curves that denote the onset of a recession. It is when the yield curve UN-inverts that marks the start of the recession. When the longer duration yields begin to fall, such will coincide with a decline in economic activity. Then, the “soft landing” hopes will fade into an economic recession reality.

The yield curve is sending a message that investors should not ignore. Furthermore, “risk-based” investors tend to act sooner rather than later. Of course, the contraction in liquidity causes the decline, eventually exacerbating the economic contraction. 

Despite commentary to the contrary, the yield curve is a “leading indicator” of what is happening in the economy. However, the Fed remains focused on economic data that is “lagging” and subject to massive revisions.

While consumers may continue to support economic growth, such will change dramatically when job losses occur. As job losses increase, there is a rapid change in psychology.

Using the “yield curve” as a “market timing” tool is unwise. However, dismissing the message it is sending entirely is just as foolish.

History has not been kind to those that do.

How it started. 

This aged well ??????

Meta's clone dies as X continues to blow up, months away from profitability, and breaking all user metric records.

What a year... pic.twitter.com/6bQSgeKAps

— Mario Nawfal (@MarioNawfal) September 29, 2023

How it's going? 

Meanwhile... 

Progress https://t.co/Km2qVCqP9P

— Elon Musk (@elonmusk) September 29, 2023

By mid-July, a little more than a week after Meta launched Twitter-clone Threads on July 5, we noted (read: here) a startling trend of the keyword "Twitter Killer" being used by corporate press ahead, during, and after launch. This was a coordinated attack - as the corporate press, and now even some in the Biden administration, want to cancel the free-speech billionaire. 

Have some in the corporate press given up on their Twitter X attacks?

"It's okay to admit defeat, especially when something is not working out," Forbes said this week as Threads has lost a whopping 80% of its users since launch. 

And Musk has made it a mission to be that 'asteroid' to make legacy, dinosaur media extinct: "I hope people around the world engage in citizen journalism, so we know what's truly happening and we get real-time, on-the-ground coverage!"

You'd be surprised how many people still don't notice the bias

Let's give it another year, citizen journalists will continue to expose mainstream media

— Mario Nawfal (@MarioNawfal) September 29, 2023

One X user said, "You'd be surprised how many people still don't notice the bias Let's give it another year, citizen journalists will continue to expose mainstream media." 

By Michael Msika, Bloomberg Markets Live reporter and strategist

Coming off a rough quarter and with clouds hanging over the continent’s economic outlook, stock investors aren’t getting excited about the remaining months of the year, which have historically been strong.

After three consecutive quarters of gains, the Stoxx 600 is set to end the July-September period with negative returns. The peak interest rate narrative has taken a hit as central banks continued to send hawkish messages, with more work likely needed to bring inflation back to the 2% target.

While the Stoxx 600 only experienced modest declines during the quarter, a heavy sector rotation has played out, with investors taking profit on winners from the first half of the year, such as luxuries, tech and travel, while soaring oil propelled energy stocks higher.

“It feels like a storm is coming,” says Freddie Lait, managing partner at Latitude Investment Management. Investors should “avoid very hot sectors or at least take some money off the table.”

The latest Bank of America fund managers survey showed that overall, they are still pessimistic in the near term. Some 63% of European-based investors predicted downside for the market in the coming months, a consequence of monetary tightening as well as earnings downgrades. The cautious view is echoed by strategists who see range-bound returns at best in the last quarter.

That would come as sharp contrast to the historical returns of the Stoxx 600. Seasonality shows that European equities’ perform best over the last three months of the year. October in particular can be volatile, but the benchmark ended with positive returns in 18 of the past 25 years. This year, however, more losses are likely before a potential rebound.

“A bottom for the stock market is likely to happen during the fourth quarter,” says Matthias Born, equity chief investment officer and portfolio manager at Berenberg. “Sentiment is getting more and more negative, flows are going to cash, positioning is low, which could also create a buying opportunity in a similar way to what we saw last October.”

High rates remain a major problem for stocks, as bonds and cash are now offering a very competitive yield and less risk, especially if earnings estimates start to come down. That in turn would pressure valuations, making stocks more expensive than they currently look.

“Amid peak central banks’ hawkishness and downside risks to the economy, bonds are looking more reasonably priced now and increasingly attractive versus equities,” says Barclays strategist Emmanuel Cau. “History shows that yields tend to move lower after the Fed stops hiking rates, and if the low PMIs are indeed a reliable indicator of growth, equities could have catch-down potential” to bonds.

With no clear signs of recovery, economic surprises in Europe remain negative, while composite PMI has been in contraction since June. Still, earnings are showing resilience, providing a floor to equities, according to Cau. He expects earnings to determine the trajectory of the broader equity market, rather than the direction or the level of rates. 

“Europe is facing macro headwinds with anemic growth and stubborn inflation,” says Andrew McCaffery, global CIO at Fidelity International in his third quarter view. “Activity is slowing and the outlook for equities is cloudy.”

Authored by Simon White, Bloomberg macro strategist,

Rising term premia, which have recently turned positive again, has been driving the rise in yields and the bear steepening in the yield curve, with more likely to come.

After spending most the past six years negative, bond risk premia, aka term premia, are positive again on long-dated Treasuries (measures such as the ACM term premium is shown in the chart below; Kim and Wright term premium also recently turned positive).

Term premia have fallen relentlessly since the GFC, driven by central-bank appetite for bonds through QE, and from the appeal of fixed-income as a portfolio hedge.

But with the stock-bond correlation positive again, driven by elevated inflation and inflation expectations, bonds are losing their efficacy in the traditional 60/40 approach to portfolio investing. Term premia are rising to reflect this.

As colleague Ed Harrison just noted, it’s not only the change in Fed expectations that’s driving the move in yields. When it comes to the yield curve, it is term premium’s rise that’s been behind the recent bear steepening. The yield curve and term premium have tracked each other very closely over the last 30-40 years.

There’s likely more to come. Inflation expectations remain historically elevated, and point to term premia’s rise continuing.

The future fate and leadership of PMC Wagner has become clearer on Friday, following the Aug. 23 death of Yevgeny Prigozhin and much of his senior leadership when their private plane went down outside Moscow while en route to St. Petersburg. It is believed that either a bomb was detonated, or it was shot down by an anti-aircraft missile.

The lingering question since then has centered on who will take command of Wagner, and whether it will remain a private entity, or possibly be broken apart. Those questions appear to have been at least partially answered with Putin's Friday Kremlin meeting with Andrei Troshev, among the most senior ex-commanders of the Wagner mercenary group and former aide to Prigozhin.

"President Putin asked Mr Troshev to oversee volunteer fighter units in Ukraine," the Kremlin said, in the clearest indicator to date that Wagner fighters will be returning to the Ukraine battlefield in large numbers.

Importantly, the Kremlin also confirmed that Troshev now works for the defense ministry, according to spokesman Dmitry Peskov, and will coordinate reintegration of Wagner fighters with Russia's armed forces on a voluntary basis.

Putin has additionally told Troshev he could "volunteer units that can perform various combat tasks, above all, of course, in the zone of a special military operation" - referring to Ukraine.

"You know about the issues that need to be resolved in advance so that the combat work goes in the best and most successful way," Putin added. 

There were indicators even before Prigozhin's death, but following the June mutiny, that Troshev would be given control of Wagner under defense ministry oversight. At the time, the following backgrounder was released by US media: 

Sedoy is the call sign of Andrey Troshev, a retired Russian colonel and a founding member and Executive Director of the Wagner Group, according to sanctions documents published by the European Union and France.

European Union sanctions concerning the situation in Syria detail Troshev’s position as the chief of staff of the Wagner Group operations in Syria, which supported the Syrian regime.

Troshev was born in April 1953 in Leningrad, in the former Soviet Union, according to the EU sanctions from December 2021.

“Andrey Troshev is directly involved in the military operations of the Wagner Group in Syria. He was particularly involved in the area of Deir ez-Zor,” it added. “As such, he provides a crucial contribution to Bashar al-Assad’s war effort and therefore supports and benefits from the Syrian regime.”

Russian President Vladimir Putin was shown meeting one of the most senior former commanders of the Wagner mercenary group and discussing how best to use ‘volunteer units’ in the Ukraine war https://t.co/9RftwZkH5z pic.twitter.com/ih2EBr2N5V

— Reuters (@Reuters) September 29, 2023

Earlier this week, CNN had cited Ukrainian military sources to say that Wagner fighters have been redeployed to the battlefield in Ukraine, but this time under the regular Russian military command. 

Hundreds of Wagner fighters have reportedly already appeared in the east, according to the Ukrainian sources. The last time the Ukrainians had seen them in significant numbers was after Wagner units had handed control of Bakhmut in the east over to the Russian regular armed forces.