We have a problem, Houston

The Chinese have reacted to the closing of the Chinese consulate in Houston by expelling the Americans in the US consultate in Chengdu. This was not great for risk assets overnight. NG is on a tear: still going up.

Lies, damn lies, statistics and unemployment statistics

Wolf again nails it. Unemployment is a terrible metric: it’s the difference between two large numbers: people working, and people deemed to be looking for work. Even small errors in estimating either of these can make it go haywire. Now there are all sorts of quasi-employment. It’s a mess, but as you’d guess, Wolf explains that things are worse than the headlines suggest.

New Financial Repression Round

This Markets Insight article by Russell Napier is his usual stuff. Inflation is coming, equities are going down. It’ll be like 1945-79 all over again, except equities won’t bounce, because their are already in the stratosphere. This is a UK perspective. I’m not sure that here is so bad for equities, but I don’t think that inflation will be great for equities anywhere for roughly the same reason. Interesting points are that he thinks that the BoE will not be the principal agent of the govt. The Treasury will force bad assets (gilts) onto unwilling savers to effect the transfer of wealth from creditors to debtors. He’s positive about gold. The only problem is that everyone is, which is surely a sell signal. Project Zimbabwe continues apace.

Today Wrap (6:30pm)

JPY down against almost everything. Not sure why. The main equity market down a bit. Precious metals up a bit. The dollar down quite a bit. The FAANG getting hit quite a bit, but $IWM hit too, so there was no place to hide. The 10 year note continued to grind higher. Maybe this is the beginning of the end. Bizarrely, Donald Trump met with Dave Portnoy: one reality TV star meets another. Who knows, within the decade we might see Dave getting the Democratic (or Republican) nomination. An equally strange thing happened in 2016.

House prices never go down, especially in a country with a sovereign currency which the Central Banks is endlessly creating more of

Well, that’s a popular view, but the BoJ has demonstrated that this aint necessarily so. Twenty years of falling prices, down more than 40% from ~1992 to 2010 demonstrates as much.

Not Trading

This article from Wired sheds some light on how dependent London is on oligarchs and kleptocrats bringing in money for laundering. This is not exactly news, but it’s interesting that a US tech magazine is covering it.

I had never heard of Glenn Loury before this evening, but this conversation with Russ Roberts made me hugely respect the guy. Clearly, race is a problem in the USA, but the solution proposed by the Black Lives Matter movement are surely too simplistic to work. It would take me too long to summarize the chat, which was wide ranging, and I would not be able to do justice to Loury’s wonderful eloquence. Just listen to it: it’s well worth your time whatever colour your skin happens to be.

Parting thought

Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket. — Eric Hoffer.