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Bernanke Screws Americans (Again)

Takeaway: Look at your dollars while you still got ‘em. “In God We Trust” it says. Not un-elected central planners.

“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”

-Benjamin Franklin

 

What in the world is Ben Bernanke doing?

 

What is so frightening about what is going on right now is that this un-elected, un-accountable individual has the power to change the entire risk parameters of the economy with an un-qualified market timing opinion that spits in the face of economic data. If you didn’t know that an un-elected central planner could change the entire complexion of risk overnight, now you know.

 

Bernanke Screws Americans (Again) - bbo

 

Look, I get the whole fear-mongering, love for Ben thing. Politicians and bankers who put the country on the brink saved us from themselves in 2008 – or so they claim. Even if you believe that, that was back in 2008-2009. We’re half-way through 2013 for God’s sake.

 

The last time I saw disgraced Lehman CEO Dick Fuld, he was living large at my golf club. Meanwhile, Tim “Turbo Tax” Geithner just got paid $200,000 to speak at an #OldWall conference. And bankers who are long FICC (Fixed Income, Currencies, Commodities) not to mention Bill Gross, have been begging and pleading with Bernanke for more ultra easy money. Is this the society Ben Franklin and Thomas Jefferson had in mind? 

 

If it’s not self-evident to you by now that markets are going squirrelly on this, your internet connection must be down. Pardon the pun, but in a nutshell:

  1. American Purchasing Power (US Dollar) is getting pounded on this
  2. Gold, Silver, Oil, etc. (Bernanke Bubbles) are all ripping
  3. Treasury Yields are having their 4th down-day in a row, after rising on employment #GrowthAccelerating

So here’s the deal: Ben Bernanke is not only going to a) time the economic cycle (even though his growth forecasts have been wrong 58-73% of the time, depending on what year you use), he’s also going to b) time the market cycle.

 

That’s just great.

 

Actually, to be balanced, what he’d say he’s attempting to do (which is unprecedented by the way during a recovery) isn’t timing, per se. I think these Keynesian types who have never risk managed a market or run a business in their life call it “smoothing.”

 

I call that reckless.

 

Here’s my policy advice: longer-term, Mr. Market is already pricing in #StrongDollar and #RatesRising. So just let it go pal. Let free-market prices and economic cycles clear. Or do what you’re doing and your legacy will be that of someone who kept trying to re-flate bubbles as they were blowing up.

 

If Bernanke doesn’t take Mr. Market’s advice on this, here’s what is most likely going to happen:

  1. US Dollar Debauchery = Commodity Reflation
  2. Commodity Reflation = Consumption #GrowthSlowing

In other words, with Oil prices ripping higher above the key, long-term risk line of $108.11/barrel earlier this morning, Bernanke once again clobbers everyday Americans.  This is Washington at its finest: Congress can’t pass basic laws in areas where 90% of Americans agree; Bernanke has been operating on his own for years, but his policy has never been so out of line with the American People as it is today.  It doesn’t take a Princeton PhD to recognize that inflation at the gas pump is a massive, and instantaneous, tax hike.  Or doesn’t Bernanke remember the impact on consumers when he cut rates too early in the summer of 2008 – and triggered an oil spike to $150 a barrel?

 

Higher oil prices slow growth – prepare for that, new as of today, compliments of Bernanke.

 

This is not new territory for this conflicted monetary cat. Remember what he did with his “communication tooling” in September of 2012? He said he would print to infinity and beyond. Commodities, most notably gold, had their last hurrah on that.Then, within 2-3 months, markets were in bedlam, US Consumption growth tanked, and the USA printed a pathetic Q412 GDP number of 0.38%! Just awesome.

 

It’s especially awesome for the guy who gets paid to run Gold Bond funds. Why don’t we take rips on this volatility roller coaster over and over and over again? Bernanke is on the switch – we’ll have 3 coasters on the same track at the same time; he’s wicked good on timing!  Indeed, he creates the timing.  It must be awesome, playing God with people’s lives.

 

Speaking of God, what’s my economic strategy this morning? Prayer.

 

Seriously, what on God’s good earth (the actual God now, not the un-elected one) am I supposed to recommend you do on this? Lever yourself up with asset classes that are crashing? Fortuitously, we aren’t short anything related to Bernanke’s banker boy bonuses (FICC – Fixed Income, Currencies, Commodities). And we’re not short anything PIMCO yet either, so maybe I’ll just sell everything and take the rest of the summer off.

 

I’m getting really tired of all this un-American central planning anyway. We’ve had a great year, and there’s no way I’m letting whoever this guy thinks he is make me give it all back.

 

Americans, look at your dollars while you still got ‘em.  “In God We Trust” it says.  Not un-elected central planners.


Initial Claims: #Steady

Takeaway: The U.S. labor market continues to roll along.

This note was originally published July 11, 2013 at 10:35 in Macro

The Data & The Divergence

 

Seasonally Adjusted Claims:  Headline seasonally-adjusted claims increased  +17K to 360K from 343k (unrevised) the prior week with the the 4-week rolling average increasing 6K WoW to 352K.

 

Non-Seasonally Adjusted Claims:  The 4-week rolling average of NSA claims, which we consider the more accurate reflection of underlying labor market trends, was down -9.8% YoY, a 30bps improvement vs -9.5% the prior week. 

 

We would highlight that claims data for the week containing the July 4th holiday presents a challenge from a seasonal adjustment perspective and complicates an attempt at discerning any incremental change in the direction of labor trends.  Additionally, autocompanies keeping plants open instead of implementing typical July production shutdowns this year (first time since 2008) further complicates a clean interpretation of this weeks data. 

 

All in, the divergence between the seasonally adjusted and non-seasonally adjusted data continues to widen with the seasonal distortion driving an optical deterioration in the reported headline number while the underlying (ie. real) labor market trend remains one of accelerating improvement.  In short, the TREND (inclusive of today’s data) in the labor market remains one of strength and, given the existent July 4th holiday and autoworker dynamics, we wouldn’t read too much into this or next week’s claims data in isolation.  

 

Initial Claims: #Steady  - cd

 

Initial Claims: #Steady  - NSA Claims 071113

 

Christian B. Drake

Senior Analyst 

 


Initial Claims: Steady with an Extra Side of Seasonality

The Data & The Divergence

 

Seasonally Adjusted Claims:  Headline seasonally-adjusted claims increased  +17K to 360K from 343k (unrevised) the prior week with the the 4-week rolling average increasing 6K WoW to 352K.

 

Non-Seasonally Adjusted Claims:  The 4-week rolling average of NSA claims, which we consider the more accurate reflection of underlying labor market trends, was down -9.8% YoY, a 30bps improvement vs -9.5% the prior week. 

 

We would highlight that claims data for the week containing the July 4th holiday presents a challenge from a seasonal adjustment perspective and complicates an attempt at discerning any incremental change in the direction of labor trends.  Additionally, autocompanies keeping plants open instead of implementing typical July production shutdowns this year (first time since 2008) further complicates a clean interpretation of this weeks data. 

 

All in, the divergence between the seasonally adjusted and non-seasonally adjusted data continues to widen with the seasonal distortion driving an optical deterioration in the reported headline number while the underlying (ie. real) labor market trend remains one of accelerating improvement.  In short, the TREND (inclusive of today’s data) in the labor market remains one of strength and, given the existent July 4th holiday and autoworker dynamics, we wouldn’t read too much into this or next week’s claims data in isolation.  

 

Initial Claims:  Steady with an Extra Side of Seasonality - SA Claims 071113

 

Initial Claims:  Steady with an Extra Side of Seasonality - NSA Claims 071113

 

Christian B. Drake

Senior Analyst 

 


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BACCARAT VOLATILITY STRIKES AGAIN

Core metrics were solid in May driving 6% YoY GGR growth.  Volatile Baccarat the laggard.

 

 

On the surface, May GGR growth of “only” 6% looks disappointing since we were expecting mid-teens growth off of low hold last year.  However, the core metric of slot volume was actually strong.  Baccarat drop actually declined 13% and hold was a little lower than normal which drove the negative variance from our estimate.  We would focus on the strength of slot volume which suggests an increasingly healthier Las Vegas Strip.

 

BACCARAT VOLATILITY STRIKES AGAIN - s1

 

Baccarat drop and revenue are notoriously volatile.  Following February and March YoY growth of 100% and 39%, respectively, Baccarat drop fell 17% and 11%, respectively in April and May.  History suggests June and/or July should show marked improvement.  Typically, negative Baccarat months are followed by strong months due to “whale play” timing.  The following chart displays the YoY volatility in monthly volume but also shows that the annual volume is fairly consistent and generally up.

 

BACCARAT VOLATILITY STRIKES AGAIN - s2

 



Morning Reads on Our Radar Screen

Takeaway: A quick look at some stories on Hedgeye's radar screen.

Keith McCullough – CEO

Bernanke Supports Continuing Stimulus Amid Debate Over QE (via Bloomberg)

Dollar slips as markets reassess Fed plans to scale back QE (via Reuters)

 

Morning Reads on Our Radar Screen - bbo9

 

Tom Tobin – Healthcare

Why The White House Is Panicking About ObamaCare (via Forbes)

 

Matt Hedrick – Macro

Germans Hail Snowden as NSA Evokes Stasi Seizing Lives of Others (via Bloomberg)

 

Howard Penney – Restaurants

Restaurant sales stall in June (via Restaurant News)

 

Jonathan Casteleyn – Financials

Bernanke Supports Continuing Stimulus Amid Debate Over QE (JC note: When the lender of last resort continues to be the lender of first resort unintended consequences happen … via Bloomberg)

 

Brian McGough – Retail

L Brands Reports Flat June Comps (LTD) (via Dividend.com)


Dial-in: Stratfor's Top Three Geo-Political Tail Risks Featuring George Friedman

Dial-in: Stratfor's Top Three Geo-Political Tail Risks Featuring George Friedman - friedman.dialin

 

We will be hosting an expert call featuring George Friedman, renowned author, Founder and Chairman of global intelligence company, Stratfor Enterprises. The call titled "Stratfor's Top Three Geo-Political Tail Risks" will be held today, July 11th at 11:00am EDT.

 

 

CALL OBJECTIVE:

A global geopolitical overview of what IS important.

 

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 134473#
  • There are no slides associated with this call

 

CALL OVERVIEW:

Europe, China and the U.S. are the 3 pillars of the international system that Stratfor considers important right now and for the foreseeable future.

 

On the call Friedman will discuss the historical shift that is taking place, current events and the potential for long term impact.

 

 

ABOUT GEORGE FRIEDMAN

George Friedman founded Stratfor in 1996 and now guides Stratfor's strategic vision and oversees the development and training of the company's intelligence unit.

 

Friedman has authored several books, including The Next 100 Years, The Next Decade, America's Secret War, The Intelligence Edge, The Coming War With Japan and The Future of War.

 

He received his Bachelor's degree from the City College of the City University of New York and holds a Ph.D. in Government from Cornell University.

 

AREAS OF EXPERTISE

  • Global Geopolitics
  • Intelligence Gathering and Analysis
  • International Affairs
  • Geopolitical Forecasting
  • Modern and Historical Warfare
  • U.S. Foreign Policy

For Stratfor's latest strategic piece CLICK HERE. For more information about Stratfor and their global strategic analysis offerings CLICK HERE.

 

 

Contact if you have any further questions. 


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