Jobs number shows America First trumps China tariff fears

====================SPECIAL SATURDAY POST========================

The 312,000 new jobs reported for December is a huge green flag for the Trump administration.

To reach that level — almost double the Wall Street estimates — this late in the economic cycle is off the charts. Firms added 2.64 million employees in 2018 with wages climbing 3.2% for the year.

Fed chair Jay Powell blinked yesterday in a speech in Atlanta by making a more dovish statement on 2019 rate rise. As well he should. Powell should take a look at the carnage his December rate rise caused in the stock market.

His talking about the hike in the fall and his press conference comments after the rise took markets took the Dow Jones index the woodshed during the last quarter of 2018.

I have often said that Powell is tilting to windmills searching for inflation in this economy, which at 1.8% is below the Fed’s 2% target. He has pricked the asset bubble of stocks to take away the middle class wealth effect and also hurt them with cheapening home values as mortgage rates rise.

The Fed needs to understand that most of the wage increases in 2018 — while healthy — are more a mechanism of raising minimum wage in many states than overall salary increases for the US workers.

So the inflationary value of the 3.2% is muted at best due to the expendable income these households have.

While the naysayers on Wall Street are still predicting an economic slowdown here in 2019 due to tariff tiffs, Trump’s nationalistic agenda of bringing jobs back to the US is resonating with US companies.

Certainly the employment gains are testament that US companies don’t see China and a trade war as a detriment, in fact it may be creating a boost as more manufacturing jobs are being created here.

I’m sure Powell took notice of the stock market’s explosion higher on his more dovish stance. The 747-point rise erased all of the bad Apple news on Thursday and perhaps set up a new takeoff for shares to soar.

Listen we need to go back to the days when three percent of the US population knew who the Fed chairman was and take ego and hubris out of the monetary equation.

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Markets losses were a Democratic election tactic

Despite a national tax cut and record low unemployment with marginal wage gains, stocks had their worst year since 2008.

The Dow Jones industrial average lost 5.6 percent from the beginning of October to year’s end.The index hit 26,951.81, on Oct. 3 before crashing 3,624.35 to close out 2018 at 23327.46.

I’ll get to the other numbers down below, since you can read them in any stock story today. What I want to tell you is that there was no economic or monetary policies that precipitated such a fall one month prior to the midterm elections.

You see how I tied those two together. I believe part of the Democratic Party’s plan was to take away from President Trump his ability to ballyhoo the market gains under his administration. Remember in 2016 and 2017 the S&P 500 soared 9.5 percent and 19.4 percent.

Make the American people question his tariffs and other trade dealings with China and Europe. This makes sense from the left, since most have a globalist view as witnessed by their actions on the border wall. Open borders for immigration and unfair trade pacts for America are their bread and butter.

I have touched on this last week as it was going on. But the volatility in the markets in the last quarter of the year shows that this was a battle for votes. The hundreds of points moves in the market on almost a daily basis as some institutional investors tried to move the market higher based on fundamentals, only to be licking their wounds at the end of the session as big liberal left money managers booked gains and then sat on the sidelines.

Federal chief Jerome Powell’s actions seems to be working in cahoots with the left. Where was/is the inflation that the Fed appears to be fighting? It’s not there with crude falling and wages only moving up marginally.

Only if you take stock market gains as an inflationary bubble, do you have a modicum of intent. But those profits are only realized when you sell, not when they are paper profits.

The second mandate of the central bank is to achieve full employment, which we basically have now. But if you continue to raise rates — four times last year — you will curtail new hirings as the cost to bring new employees outweight the benefit of staffing up.

In the broader markets, the S&P 500 index fell more on a percentage basis to close the year off down 6.2 percent. The Nasdaq fell 3.9 percent as the high-flying tech giants fell from grace as hedge funds were forced to sell the good to pay for the bad bets made in 2018.


Have a wonderful New Year’s Day and a better 2019. Please like and retweet if this post is informative to you.

Dark forces in the stock market

What we are witnessing in the stock market is unprecedented with moves mostly lower, but with a record-breaking break out to the upside on Wednesday.

The 1,086 point move on the Dow was the highest point move ever. The question Tuesday morning is why will we give back more than 400 points to the downside?

These moves and the huge slide before Christmas feel like a tug of war between two factions.

One with a need to damage the economy along with President Trump’s claims that he is succeeding where his predecessor failed.

The other side is somewhat muted in its response to this highjacking of the markets.

How else do you describe the latest moves?

Fed chief Jay Powell appears to be in with the first camp. How else to categorize four rate rises this year while enjoying full unemployment without finding inflation in the couch cushions.

In all my years of market watching I have no other idea of what we are witnessing in the markets. The moves are unprecedented, so therefore a new thought n the cause is needed.

The dark forces in the market are attempting to take the economy into recession through cratering consumer confidence by taking the wealth effect away from Americans. Next will be to repeal the tax cut in the House in 2019.

With these initiatives the Democrats feel they have a better shot of gaining the White House in 2020. It’s a nefarious plan backed by Democratic money in the markets.

Let’s see who will ultimately will win the war for hearts, minds and wallets.

Fed chief Powell just hiked rates for last time

Federal Reserve chief Jay Powell hiked rates a fourth time this year on Wednesday to 2.5% for the Fed Funds Rate. He also told reporters that the committee is looking at two additional hike in 2019, taking one prospective hike away for next year.

This is the classic overshoot by the Fed. Seeing inflation that’s not there, Seeing bogeyman that will never materialize.

In the face of a global trade slowdown as Europe falls into a rioting mess over socialist policies to curb emissions with higher taxes on fuel consumption and other government intrusions into the people’s lives.

The Asian market has been weakening for all of 2018 as demand for tech goods have cratered. Apple has little market penetration for its new iPhones as consumers say $1,000+ models are too rich. I’ll stick with my older model.

Tariffs — in an attempt to level the trade playing field — have rocked China after decades of favorable trading terms. No longer having advantages against domestic producers is producing a boom for US manufacturers.

So where are Powell & Co. looking for this bogeyman called inflation? Gas is trading below $48 a barrel, however you still see problems here in the US.

Fedex reported troubling results this week in their quarterly results. This in the face of allegedly growing online sales the trucking industry is moving less freight.

This pullback by the US consumer can be put at the feet of Powell & Co. since there jawboning and hikes have taken 401(k)s into the red for the year, which has Americans pulling back. The numbers for this will come out in early 2019.

I’ll put myself on the line today, this is the last rate rise Powell will oversee. It will go so horribly wrong in 2019 that the Fed will actually have to cut rates by September 2019. This will be because of how the global slowdown will affect US growth.


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Trump has every right to be Fed up with Powell

As the Federal Reserve begins its two-day meeting Tuesday, to presumably raise rates to 2.5%, President Trump is out there battling the central bank on its direction and policy.

Trump tweeted Monday:

It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!

Trump is correct in his brief economic assessment on global growth, where America’s say 2.5% rise in GDP looks a lot better than Europe or China. As well as the lack of any meaningful domestic inflation.
The Fed’s concern earlier this year was asset bubbles leading to inflation. What does that mean in layman’s terms: Americans were starting to do well in the stock market and their paychecks with the tax cuts after a decade of economic malaise were bringing them a sense of pride and contentment.
Well we can’t have that, the Fed seem to say. And sure enough with four hikes this year in rates the Fed has wiped out all gains in stocks this year and then some.
So what is the end result for America because of the Fed’s policies?
The rate hikes have muted the economic benefits of the tax cuts, by taking away revenue growth to pay for the tax cuts. Tax revenue is up slightly this year over the last couple, but if the Fed was not slamming on the brakes, then the economy would be moving ahead at closer to 4% GDP.
This tax revenue growth could allow the federal government to actual pay for the runaway entitlement programs and actually be able to cut budget deficit growth.
I don’t anticipate the Fed pausing and not raising rates at Wednesday’s meeting since it was telegraphed to the market for the last three months. Yes, the market would spike if they did pause, but then start asking itself what does the Fed know and probably sell of again.
I do agree with the President on the need for Fed chief Jay Powell to “take the victory” and pause after this hike. Let’s see where the economy sits in June 2019. It takes six months before you get the full meaning of how your economic policies are working.
I’m assuming that’s all that is at work here, a disagreement on economics and not something broader.

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