Are the Dems about to cave on the wall and move to Wall Street

While we await the State Of The Union on Tuesday as well as Feb. 15th deadline on the House bill for border wall funding, it appears the Democrats are lining up their new target.

Wall Street appears to be in the cross hairs of more than the Sen. Elizabeth Warren, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez.

On Sunday  Sen. Chuck Schumer and Sanders penned an Op-Ed in the NY Times suggesting that corporate stock buybacks need to curtailed as firms have changed to be solely focused on shareholder value at the detriment of workers.

The opinion piece cited this statistic without any attribution.

Between 2008 and 2017, 466 of the S&P 500 companies spent around $4 trillion on stock buybacks, equal to 53 percent of profits. Another 30 percent of corporate profits went to dividends. When more than 80 percent of corporate profits go to buybacks and dividends, there is reason to be concerned.

I believe this is significant that Schumer, who has bankers as his top supporters, comes out against the hands that feed him. It appears the democrats are searching for a new cause that can resonate with American people.

This marks an important change with the liberal left. Of course it has more gravitas than Ocasio-Cortez slamming Wall Street with uninformed rhetoric.

I’m more interested to see if this gets any traction with the Limousine Liberals in New York, Chicago and Los Angeles, who have profited from these share buybacks in their portfolios.

So looking into my crystal ball, are the Democrats about to cave on the wall and will move to Wall Street as its next cause?

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Random thoughts on job numbers, Super Bowl

Here’s some random thoughts on today’s news.

January’s jobs numbers blow away estimates. New jobs at 304K vs. 165K estimate with average hourly earnings rising 3.2% in line with estimates.

Labor Department says unemployment rate ticked up to 4.0% on the government shutdown.

Look for stocks to soar as job growth gains while the Fed is dovish on rate rise.


Why is now a Super Bowl week tradition that news comes out about people being arrested for human sex trafficking at the site of the game? The last four years or so I have seen these stories.

It’s disturbing on so many levels because it’s not limited to just adult women being imported. Disgusting.


Democratic presidential hopeful Sen. Elizabeth Warren called out Sears/Kmart owner Eddie Lampert for what he has done to the once iconic retail chain.

The Massachusetts senator wants the billionaire hedgie to answer eight questions by Feb. 14 about his plan to buy Sears out of bankruptcy.

Now of course Warren is grandstanding, since Lampert is not compelled to answer to Warren about anything. And of course Warren is so out of touch since the federal bankruptcy court in White Plains, NY is likely to decide the fate of the retailer on Feb. 4.

While Warren says she is sticking up for the workers, if Lampert does not take control again of the retailer, then the creditors will liquidate the chain and no one will be working.

But don’t let that business mumbo-jumbo stop Warren from pounding the table for a cheap sound bite.


This is for some of my new readers. Deutsche Bank is teetering on the brink of a huge reorganization in order to wind it down.

Take a look at this award-winning video I did on this long-time troubled financial firm.

Looks like the Fed overshot again with rate hikes

As I wrote Wednesday morning prior to Fed chief Jay Powell’s announcement of standing pat on Fed funds rate.

Stocks and the gold price took off on the news that the Fed statement took all the language out of their plan to look at raising rates, due to recessionary fears. The Fed is currently at 2.5% on the rate.

What does this mean? Well appears that Powell & Co. may have overshot — once again — restraining lending too much and may put the US economy into negative reading on growth.

As I wrote at the time, the December rate hike was not needed since the Fed had already taken much of the air out of the economy through pricking the asset bubble in stocks.

Now due to the government shutdown we will not get our first reading of fourth quarter growth, which would normally be out Thursday, until later on in the month. However the Fed probably had a good read on that GDP number, which is probably below 2% growth.

 

The gold standard and the Fed

Fed chair Jay Powell is scheduled to give a press conference Wednesday after announcing that the central bank will hold rates steady as expected.

Powell’s comments and the language in the statement on future hikes will be what markets are looking at for direction.

We all have seen that the Fed has looked under every rock in the economy to find inflation and has come up empty. It is still trending below the 2% threshold that the Fed uses to assess its policies.

Yes Powell & Co. prick the asset bubble know as the stock market to curtail that inflationary aspect by jawboning future rate hikes much to President Trump’s ire.

When talking about the Fed it was very interesting that President Trump retweeted Tuesday a Laura Ingraham post (below).

The post links the US economy to the “Gold Standard”. The president replies, “So true and not even close.”

Trump hinted during the presidential campaign he would like to go back to a gold standard for the dollar, which would send gold prices soaring in order to sustain that move.

However, gold prices over the last 10 days have risen close to $30 an ounce and broken through the long-held sub-$1,300 mark.

We also have this drop from Dec.12, 2018 No. 2619 answering a query if we have the gold:

Yes.
Gold shall destroy FED.
Q

So we have multiple mentions of the Fed and gold from various sources. Might it be wise to pick up some of the “ancient relic” as so many modern pundits call gold?

Not advising either way, but gold appears to be having a moment. On Nov. 13, 2018 gold was trading at $1,213 an ounce. Today it is $1,318 an ounce.

Hmm.

Is Wall St. behind the border wall stonewalling?

Let’s look at an alternative view of why the Democrats are fighting so hard to not fund the Mexican border wall.

As I have written before $5-$6 billion in funding is equivalent to running an aircraft carrier  group for a week, so it’s not about the money.

Let’s look at the principals behind this stonewalling (pun intended). Sen. Chuck Schumer is the voice of Wall Street banking in the Senate. Rep. Nancy Pelosi has Silicon Valley just to her south. In this matter it’s the newer financial products, which allow digital transfers, that have a vested interest in cross-border payments.

What would a wall do to the money flows over the border? How would the wall change cash inflows to the US banking system?

President Trump in his Oval Office address last week said: “The border wall would very quickly pay for itself. The cost of illegal drugs exceeds $500 billion a year. Vastly more than the $5.7 billion we have requested from Congress.”

Well all that cash winds up in the US banking system eventually.

So between legal and illegal trading profits moving over the border and US banking firms counting on that additional liquidity to fund other revenue streams, you could make a case that larger forces are at play over the funding of the wall to keep the status quo.

This explanation makes more sense from the point of view of the protracted stalemate going on right now.

What’s that old expression? Follow the money.