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After Trump presents his defense and all motions for dismissal are heard by trial judges, and all appeals play out, Trump won’t be convicted of anything. Every single fake charge against him will be dismissed, in the end. Liberal prosecutors are just trying to tie him up in court until next summer so he has trouble winning the GOP nomination. That’s the result they’re trying to get from all these fictional, fraudulent indictments.

Trump has to respond tactically by moving as fast as possible to get dismissals of all these fake charges against him, then use these disgraceful, fake, fictional indictments against the democrats in the general election. These fake, fraudulent indictments may backfire very badly against the democrats, and will simply prove once again that the democrat party is a corrupt and disgraceful organization that can’t be trusted to govern in America. The dismissal of all these fake indictments may cost Biden the election next year, and we’ll see a second massively successful Trump administration take office in 2024. Hang in there Donald...we all still support you completely!

This is a shocking decision by OPEC+, considering that the global economy is now fighting stagflation. Biden could have stopped this decision with one phone call to the Saudis, but he didn’t make that call. That’s a stunning decision by Biden considering the election that’s now about a month away. Why didn’t Biden stop this production cut? Good question, but again it looks like he’s listening to environmental extremists who want to push people into EVs as fast as possible all around the world.

That extra push through higher gasoline prices is completely unnecessary. EVs will win out in the end because electric motors are so much more efficient at converting energy into mechanical motion. That’s why EVs have such great acceleration. Most of the energy in gasoline is lost through heat generated by internal combustion engines and isn’t used to accelerate motor vehicles. So we don’t need this extra push from higher gasoline prices. The world is converting to EVs at a rapid pace already, and this oil production cut is just going to add to stagflation at the worst possible time.

Make that call to the Saudis, Joe, and ask them to roll back this production cut. You can get that done and announce it before 5 PM eastern time today, if you really want to help the American people.

Release of oil from the SPR have had a significant effect on oil prices. But the SPR isn’t a major source of supply, when you look at the numbers. Total global demand for crude oil is around 100 million barrels per day, while SPR releases last week were 7.5 million barrels, or about 1 million barrels per day. That affects oil prices for sure, in the finely balanced oil market, which doesn’t have much storage compared to daily demand. But we haven’t really glutted the market...we’ve just cooled off an overheated market.

Gasoline demand has been very sluggish over the last few months. Last week, demand was down to 8.7 million barrels per day from 9.6 million last year. This is just personal observation from Arizona, but I’ve noticed people are driving slower overall on the highways and more people are using the air compressors at gas stations to inflate their tires. People start using less gas when the price gets up around $4 per gallon.

The SPR is not close to empty, and was at 442.5 million barrels last week. I expect to see more politically-motivated releases from the SPR into the mid-term election.
I stay out of the oil market, which is really the Wild West of the trading business. Here’s the last oil status report:

https://ir.eia.gov/wpsr/overview.pdf

Just checked my math and it is correct. Here’s the CPI report for August, released today:

http://globalbasic.econoday.com/byshoweventfull.aspx?fid=541684&cust=global-basic&year=2022&lid=0&prev=/byweek.asp#top

The Ex-Food & Energy-M/M line is the core CPI rate for one month only. Actual = 0.6%, Prior = 0.3%. July is the prior month. The average for the last two months is 0.45%. Now compound that out over 12 months to get the annualized rate: that’s 1.0045 to the 12th power. Result is 1.055, which is 5.5% annualized core inflation. The core rate was lower for the PCE index in July (PCE index is another consumer inflation index from US government using different methodology).

The market has overreacted to the last two consumer price index (CPI) reports. We had an overdone rally in response to the July report that was much cooler than expected, and today we had an overdone selloff in response to a hot report for August. There seems to be some noise in the CPI data lately, which usually has smoother trends up and down. If you average the last two months of CPI data, you get monthly core inflation of 0.45%, or about 5.5% annualized inflation. So we’re not exactly in hyperinflation territory, and commodities like crude oil are moving down on sluggish demand.

It appears likely that there were a lot of sales in July to prepare for the Fall Christmas shopping season and clear out inventories that build up in the first half of the year, such as sales on summer apparel, consumer electronics, car tires, and car batteries. Then prices may have bounced back up from July sale prices in August. This happens every year but there may have been an unusually large amount of merchandise on sale in July this year. Trading volume was not that heavy today compared to big down days in the first half of the year, so this was more of a buyers’ strike today. This selloff could stop quickly if the Producer Price Index report is close to expected numbers tomorrow. It looks like large institutions were expecting some downward volatility in September and were positioned with large hedges to offset a substantial part of this downward move. There’s no sign of panic today, just a September buyers’ strike.

I only see one chart about mortality at the source link. That’s a chart of percent changes in mortality from 2020 to 2021. It has a sharp spike up to a maximum in September, which is hard to explain completely by lockdowns in 2020. But a substantial part of the increase from 2020 could be caused by a dip in deaths from traffic accidents and homicides in 2020 (resulting from lockdowns and people staying home). Again, we need to see the original data for mortality in 2020 and 2021 for people between 18 and 55. Until we have that data, it’s difficult to reach any definitive conclusions.

I’d like to see the underlying data for mortality numbers for both years for the 18 to 55 age group, and not just this chart of percent changes. We need to know what happened in both years 2020 and 2021, because with all the lockdowns of economic activity, there could have been a dip in mortality in 2020.

Traffic accidents are a major cause of death for younger people, and there could have been a big dip in traffic accidents in 2020 because of lockdowns of bars, clubs, sporting events, concerts, and workplaces. So people were staying home more and driving much less in many places. The underlying data for the chart needs to be added to the original post.

And yes, I agree that the CDC appears to be suppressing access to some important data.

When you look at total deaths in the US in 2021 by month, there’s no spike upward in September, 2021. So this percent increase appears to be caused by a rebound to relatively normal levels from a dip in 2020. Data is online right here:

https://www.cdc.gov/nchs/nvss/vsrr/provisional-tables.htm

More mysterious statements from the Fed in this article:

https://www.cnbc.com/2022/08/30/feds-williams-pushes-back-on-market-expectations-of-a-rate-cut-next-year.html

“I do think with demand far exceeding supply, we do need to get real interest rates … above zero,” Williams said. “We need to have somewhat restrictive policy to slow demand, and we’re not there yet.”

He added that he thinks the Fed is “still quite a ways from that.”

I'm not sure what he means by saying "demand far exceeding supply". Demand and supply for what? Prices are fairly stable where I shop. There's some inflation of food prices, but I wouldn't say demand far exceeds supply. Is he talking about the labor market? If so, I hope the Fed's economists understand that businesses do not actually intend or expect to fill all the job openings listed on the internet. They only intend and expect to fill about 20% of the jobs listed on the internet. Most of the job openings listed on the internet are just very selective fishing expeditions, looking for a few highly qualified applicants. If they can find a few highly qualified applicants, then they might fill 30% of the jobs listed in a given month. But most of the jobs listed are not actually jobs that have to be filled in the next few months. Back when job openings were listed in newspapers, it was expensive printing up and distributing newspapers and the ads were expensive. So companies only listed jobs they really needed to fill. Now it costs almost nothing to post a job opening on the internet. The internet is just electrons zipping around the world at very low costs that are paid mainly by end users. Anyway, I hope they understand that job listing do not mean what they meant 30 years ago, and the labor market is not nearly as tight as it might appear from all the jobs listed on the internet.

I'm not sure why he said the Fed is still quite a ways from a restrictive policy. We've just had two negative quarters of GDP growth, so I would say another increase of 50 basis points in interest rates would certainly get us to a restrictive policy. These Fed people need to be careful about trying to make objective judgments about highly subjective data on consumer inflation. Consumer prices are very difficult to measure, because the basket of products and services that consumers purchase each year is constantly changing, and the quality and capabilities of those products and services are also constantly changing. The BLS makes a lot of highly subjective quality adjustments and changes to the weightings placed on the items measured, in their calculations of the CPI. So the CPI is just an approximate estimate of consumer inflation. Nobody really knows the exact current rate of consumer inflation (which is different for each consumer) or the exact real interest rate at the present time. So I wouldn't be trying to fine-tune interest rates that much based on approximate estimates of consumer inflation. It's better to watch the GDP data to get a good sense for whether monetary policy is restrictive.

I hope this is mostly hawkish talk intended to convince corporate managers that their labor and material costs will be under control soon, and so they don't need to increase their selling prices again. If the Fed governors really think the Fed is quite a ways from restrictive interest rates, then we're in big trouble and we're going to have a recession for sure starting late this year or early next year.

Here’s another strange, extreme statement from Powell in this speech:

“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy.”

This is a strange statement because price stability is not THE “bedrock” of our economy. That’s a statement that a banker makes, not a real business person or a real economist. Please allow me to correct this statement: The bedrock of our economy is he production of high-quality goods and services—the supply of goods and services. The quality of life in America begins right there and all other beneficial outcomes result from production and supply. Production, in turn, is the natural result of wise, well-reasoned government policies based on economic freedom, wise law-making, the rule of law, and reasonable, rational taxation and regulation of economic activity. Price stability then results from strong growth in the production of high-quality goods and services, combined with reasonable monetary policy.

Corrupt government, such as today in Venezuela, is the biggest destroyer of economic growth and prosperity. War also destroys prosperity, and all wars between nations result from corrupt, evil, unreasonable government on one or both sides of the war. Production, resulting from wise government policies and the work and talents of our people, is the bedrock of our economy and the economy of every nation.

Now that we have that cleared up, hopefully someone will mention this truth to the narrow-minded bankers in the Federal Open Market Committee. Another statement Powell makes repeatedly is that price stability is necessary for a strong labor market. I’m not sure what he means by that statement, because we certainly had a strong labor market in the 70s when inflation was well above 2.0%. Employers will hire lots of workers even when prices are rising, as long as they can increase their prices as fast as rising labor costs. Again, he seems to have the cause-and-effect sequence reversed here. Strong production and supply results in price stability (when combined with good monetary policy) and also results in a good labor market that benefits all workers. Employment is the result of strong growth in production.

Those are the correct month-to-month price index changes for July. That’s the change in the price indexes from June to July. The 12-month price changes, of course, haven’t improved as much. That will take more time.

Just listened to Powell’s speech again, and it’s filled with very extreme statements and highly questionably assumptions based on distant economic history from the 70s and 80s. Here’s one of his very extreme statements:

“While the lower inflation readings for July are certainly welcome, a single month’s improvement falls far short of what the committee will need to see before we are confident that inflation is moving down.”

This is just a really extreme statement and completely unjustified. Let me give you the actual data for month to month price changes from July CPI report (Source is Econoday.com):

CPI: consensus estimate = 0.2% actual = 0.0%
CPI excluding food & energy prices: consensus estimate = 0.5% actual = 0.3%

That’s a big improvement from June’s numbers. A different measure of inflation, the PCE price index, was even better:

PCE Index: consensus estimate = 0.1% actual = -0.1%
Core PCE Index: consensus estimate = 0.3% actual = 0.1%

These inflation numbers are a big drop from June’s numbers and from the previous 12 months. This is very strong evidence that inflation is at least moving down. To say that this evidence falls “far short of what the committee will need to see before we are confident that inflation is moving down”, is extreme and almost certainly wrong. Inflation is definitely moving down, and dropping at a fairly rapid pace.

Another statement that the US will need a long phase of below-trend growth to bring inflation back down, is just an assumption based on distant economic history from the 70s and 80s. We may not need a long phase of below-trend growth to get inflation under control. We may actually be close to getting inflation back to around 2% right now. Our economy is much more efficient and flexible, much less unionized, and much more energy-efficient than it was back in the 1970s. Back in the 70s, we didn’t have all the big low-cost retailers and manufacturers like Wal-Mart, Costco, Home Depot, Amazon, Target, Intel, AMD, Micron Technology, Cisco Systems, Honda, and Toyota Motors...and we didn’t have the internet back then, which has made businesses much more efficient and has substantially reduced energy consumption in our economy.

The Fed governors have there minds back in the 1970s, and are unaware of how quickly inflation can drop back down to recent low levels, once congress stops this surge of spending in response to the Covid pandemic. The Fed has almost finished its job and another 50 basis point rate hike will likely be enough to control inflation, IF congress stops its spending spree and gets fiscal policy back under reasonable control, and soon. The focus of government should shift now to fiscal policy and brining spending back down from the recent wild surge of big spending. If they can get that done, then the Fed doesn’t need to do much more.

Yeah, the stock market really got crushed today. I’m not sure why that happened. No doubt, some investors were hoping to hear the Fed hint at a pause in rate hikes, and that didn’t happen. Instead they got a fairly hawkish statement from Powell.

You are right about increasing homelessness. I spent some time in Las Vegas a several years ago on a coast-to-coast driving trip, and I was surprised at the huge increase in the homeless population in Vegas. I hadn’t been there since 2004, and there was a huge increase in the homeless population living on the streets there since 2004. They hang out near bus stops, convenience stores, and grocery stores. I was further surprised by the young age of these people. 25 years ago, 90% of homeless people appeared to be men between 35 and 65 years old, some with mental illnesses. But on this recent trip I saw a lot of homeless young people in their 20s living on the streets—even young women. It was a sad sight. The Obama regime and the Great Recession really nailed our economy and hiring by the private sector.

I heard that Las Vegas passed a new law that prohibits living on the streets, so they must have shelters for homeless people now. There was a resurgence of business confidence, hiring, and employment during the Trump presidency, and probably also some drop in homelessness from a peak during the Obama regime. There’s still a long way to go on employment and job training, but we’re moving in the right direction, if the Bidenites don’t screw it up.

We may already be in a recession. Most economists say that evidence of a real recession includes a drop in hiring and a substantial increase in unemployment, and we haven’t seen that yet. But that may happen later this year or early next year. Home building is in a recession now and production of motor vehicles is close to a recession. That may spread to the broader economy in the next few months if the Fed continues to raise interest rates and drives the Federal funds rate above 3%.

I’m talking about Biden’s first year in office, when the S&P 500 index rallied from around 3300 in election week 2020 all the way up to 4800 at the end of last year. We’re way down from that all-time high now, because of war in the Ukraine, a surge in inflation, and the Fed raising interest rates.

Good point. As a nation, we have so much debt that we can’t afford to pay more than about 2.5% interest on 10-year treasury bonds, in the long term. So the Fed can’t keep the Fed funds rate above 3% for more than a few quarters. They’ll bring actual inflation down to about 3.25%, and then use statistical adjustments at the BLS to bring reported inflation down to around 2.4%, and then say that’s low enough.

An end to the stupid war in the Ukraine and restrictions on Russian exports of natural gas will eventually help to bring down energy prices and inflation.

I didn’t say increasing velocity of money is a cause of inflation. I said that back in the 70s, increasing velocity of money was a sign that monetary policy wasn’t too loose and interest rates weren’t too low back then.

I made some doubles and triples in some stocks after the Covid selloff, but I didn’t anticipate this huge stock market rally during Biden’s first year. That was a big surprise to me and a lot of other investors.

Inflation has causes on both the demand side and the supply side of the economy. Monetary policy affects the demand side, and hyperinflation can result from very loose monetary policy and heavy money-printing. Lack of supply, resulting from oligopolies, lack of competition, and high tax rates, also causes inflation.