Steve Bull's Blog, page 137
January 20, 2023
Monetary Policy. Is The Fed Trying To Wean Markets Off Of It?
Is the Fed trying to wean the markets off monetary policy? Such was an interesting premise from Alastair Crooke via the Strategic Culture Foundation. To wit:
“The Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation ‘dragon’ (they would need to be much higher to do that). The purpose is to break a generalised ‘dependency habit’ on free money.”
That is a powerful assessment. If true, there is an overarching impact on the economic and financial markets over the next decade. Such is critical when considering the impact on financial market returns over the previous decade.
“The chart below shows the average annual inflation-adjusted total returns (dividends included) since 1928. I used the total return data from Aswath Damodaran, a Stern School of Business professor at New York University. The chart shows that from 1928 to 2021, the market returned 8.48% after inflation. However, notice that after the financial crisis in 2008, returns jumped by an average of four percentage points for the various periods.“
We can trace those outsized returns back to the Fed’s and the Government’s fiscal policy interventions during that period. Following the financial crisis, the Federal Reserve intervened when the market stumbled or threatened the “wealth effect.”
Many suggest the Federal Reserve’s monetary interventions do not affect financial markets. However, the correlation between the two is extremely high.
The result of more than a decade of unbridled monetary experiments led to a massive wealth gap in the U.S. Such has become front and center of the political landscape.
It isn’t just the massive expansion in household net worth since the Financial Crisis that is troublesome. The problem is nearly 70% of that household net worth became concentrated in the top 10% of income earners.
…click on the above link to read the rest…
Contrarian Thoughts on the Petro-Yuan and Gold-Backed Currencies
Rather than cheer the concept of a new currency, we’re better served to look at the velocity of that currency and the cycles of investing that currency in assets denominated in that currency for a low-risk return.
Longtime readers know not to expect me to rubber-stamp anything, be it the status quo or proposed alternatives. Our interests are best served by screening everything through the mesh of independent analysis, a.k.a. contrarianism. Which brings us to the two sources of alt-media excitement in the currency space, the petro-yuan and another wave of proposed gold-backed currencies.
I’m all for competing currencies. The more transparent and open the market for currencies, the better. In my view, everyone should be able to buy and trade whatever currencies they feel best suits their goals and purposes.
In all the excitement over de-dollarization, some basics tend to get overlooked.
1. The yuan remains pegged to the US dollar, so it remains a proxy for the USD. It will only become a true reserve currency when China lets the yuan float freely on the global FX market and yuan-denominated bonds also float freely on global bond markets. In other words, a currency can only be a reserve currency rather than a proxy if the price and risk of the currency is discovered by global markets, not centralized monetary/state authorities.
2. Most commentators stop on first base of the oil-currency cycle: China buys oil from exporting nations by exchanging yuan for oil. So far so good. But what can the oil exporters do with the yuan? That’s the tricky part: the petro-yuan has to work not just for China but for the oil exporters who will be accumulating billions of yuan.
…click on the above link to read the rest…
Agriculture In A Post-Oil Economy
The decline in the world’s oil supply offers no sudden dramatic event that would appeal to the writer of “apocalyptic” science fiction: no mushroom clouds, no flying saucers, no giant meteorites. The future will be just like today, only tougher. Oil depletion is basically just a matter of overpopulation — too many people and not enough resources. The most serious consequence will be a lack of food. The problem of oil therefore leads, in an apparently mundane fashion, to the problem of farming.
To what extent could food be produced in a world without fossil fuels? In the year 2000, humanity consumed about 30 billion barrels of oil, but the supply is starting to run out; without oil and natural gas, there will be no fuel, no asphalt, no plastics, no chemical fertilizer. Most people in modern industrial civilization live on food that was bought from a local supermarket, but such food will not always be available. Agriculture in the future will be largely a “family affair”: without motorized vehicles, food will have to be produced not far from where it was consumed. But what crops should be grown? How much land would be needed? Where could people be supported by such methods of agriculture?
WHAT TO GROW
The most practical diet would be largely vegetarian, for several reasons. In the first place, vegetable production requires far less land than animal production. Even the pasture land for a cow is about one hectare, and more land is needed to produce hay, grain, and other foods for that animal. One could supply the same amount of useable protein from vegetable sources on a fraction of a hectare, as Frances Moore Lappé pointed out in 1971 in Diet for a Small Planet [12]. Secondly, vegetable production is less complicated…
…click on the above link to read the rest…
US EIA Short Term Energy Outlook, Jan 2023
The US EIA Short Term Energy Outlook (STEO) was published on January 10, 2023. This report generally provides forecasts for Total Liquids production for non-OPEC nations, crude only output for OPEC nations, and both C+C and Total Liquids forecasts for the US. At Peak Oil Barrel we focus on crude plus condensate (C+C) output as this is the critical input that provides most of the World’s liquid fuels used for land, air and water transportation. The STEO also provides forecasts for natural gas and electricity output as well as price forecasts for oil, natural gas, and electricity. This post will focus on oil (both total liquids and C+C).
We find the OLS trend in the ratio of C+C divided by total liquids for non-OPEC minus the US over the period from October 2014 to September 2022 (it has been decreasing at an annual rate of 0.267% over that period) and we assume the trend continues from October 2022 to December 2024 (the end of the STEO forecast). This allows us to estimate non-OPEC minus US C+C. Likewise we find the ratio of OPEC crude to C+C which was relatively flat at about 93.7% from Jan 2010 to December 2019 and seems to be returning to this level since the depths of the pandemic. By assuming the ratio is 93.7% crude to C+C for OPEC we can estimate OPEC C+C from October 2022 to December 2022 using the STEO crude only estimate. The non-OPEC minus US C+C estimate is added to the STEO US C+C estimate and this is combined with the OPEC C+C estimate to find the World C+C STEO forecast.
Figure 1…click on the above link to read the rest…
January 19, 2023
Inside the Facebook Files: Emails Reveal the CDC’s Role in Silencing COVID-19 Dissent
Throughout the pandemic, the CDC was in constant contact with Facebook, vetting what users were allowed to say on the social media site.
Emails between the CDC and Facebook (Lex Villena / Reason)The Centers for Disease Control and Prevention (CDC) played a direct role in policing permissible speech on social media throughout the COVID-19 pandemic. Confidential emails obtained by Reason show that Facebook moderators were in constant contact with the CDC, and routinely asked government health officials to vet claims relating to the virus, mitigation efforts such as masks, and vaccines.
For a broader analysis of the federal government’s pandemic-era efforts to suppress free speech—and whether they violated the First Amendment—see Reason‘s March 2023 cover story on the ramifications of these emails. This article provides screenshots of the emails themselves.
After Elon Musk took control of Twitter, he permitted several independent journalists to peruse the company’s previous communications with the FBI, the CDC, the White House, and government officials elsewhere. These disclosures, which have become known as the Twitter Files, reveal that government bureaucrats put substantial pressure on Twitter to restrict alleged misinformation relating to elections, Hunter Biden, and COVID-19.
The Facebook Files, which were obtained by Reason as a result of the state of Missouri’s lawsuit against the Biden administration, reveal that the CDC had substantial influence over what users were allowed to discuss on Meta’s platforms: Facebook and Instagram.
The messages reveal an environment where the CDC kept tabs on Meta’s moderation practices and regularly told the company what the agency wanted it to do.
For instance, in May 2021, CDC officials began routinely vetting claims about COVID-19 vaccines that had appeared on Facebook. The platform left it up to the federal government to determine which assertions were accurate.
…click on the above link to read the rest…3 Ways to Grow Lettuce Even if You Don’t Have a Garden
Fresh salad is a recommended mainstay of healthy eating. But, salad can get expensive. Lettuce seeds, however, are cheap. You can grow lettuce, throughout the year, even if you don’t have a garden with one of these three indoor techniques.
If you’re new to indoor gardening, lettuce or herbs are great plants to start with. Herbs, because a small amount is all you need for a meal and there are lots of potted herbs for sale. Lettuce, because you can start it from seed and it’ll keep coming back for many month’s of salad harvests. Even better, there are a ton of different lettuce varieties, in different colors, available too. So salads don’t have to be green and bland when you grow lettuce yourself.
THIS …In this article, we are covering three different, indoor growing methods to grow lettuce. Each technique has a discussion of the tools and materials needed, and it’s benefits and ease or difficulty of set-up. If these methods seem difficult, there are always microgreens, and sprouts, that can also help keep your salad bowl full throughout the year. Whether you grow lettuce, or sprouts, or microgreens, all can add tasty nutrition to salads, sandwiches, and all your meals throughout the year.
First off, make sure you have some lettuce seeds. A quick look at Richter’s herbs, reveals 12 different lettuce varieties from speckled to red, and from smooth leaved to oak-leaf varieties. Other seed companies, especially those specializing in heirloom varieties, will have similar ranges of lettuces. Even a 1$ package of green lettuce from the dollar store, or hardware store, can work to get started with.
…click on the above link to read the rest…
What is Degrowth?
C.R. “Doodle” White Overlook, Hampton, TennesseeI’m going to start this article with a song from Billy Joel. Those outside the United States might find the song somewhat difficult to understand. When the song came out, even I didn’t fully comprehend the implications the song brings to the forefront. The song is basically lamenting the de-industrialization that occurred in the US in the late 1970s and early 1980s. Most of this was caused by degrowth stemming from the peak conventional oil reached here in the US in 1970-71 (the US has since reached a new peak, but this was only achieved with the new technology of fracking). Another factor was environmental laws and the economics surrounding inflation and the necessity of wages to increase to meet the rising cost of living. Manufacturers started realizing that they could save money by moving operations elsewhere and avoiding environmental regulations and expensive labor costs. The US began a transition from a manufacturing behemoth to a more service-oriented economy.
Billy Joel’s song pointed to several social issues above and beyond the disappearing factory jobs, such as high school education here in the US being designed more for how to do certain jobs rather than how to think critically and how to solve problems. Another issue mentioned is the lack of coal (resource decline), having mined it all out locally. Still, it is a rather bold statement regarding the times back then, not to mention what a great song it is (number 43 on Billboard’s Top 100 year end chart for 1983).
With so much talk recently about supply chain issues, inflation, the job market, the cost of groceries, cars, and houses skyrocketing, it seems that many people are finally beginning to realize that there is a serious issue going on…
…click on the above link to read the rest…
Want to Know Where the Economy Is Going? Watch The Top 10%
Should the wealth effect reverse as assets fall, capital gains evaporate and investment income declines, the top 10% will no longer have the means or appetite to spend so freely.
Soaring wealth-income inequality has all sorts of consequences. As many (including me) have noted, the concentration of wealth and income in the top 0.1% has enabled the few to buy political influence to protect their interests at the expense of the many and the common good.
In other words, extreme wealth-income inequality dismantles democracy. There is no way to sugarcoat this reality.
But the concentration of wealth and income isn’t limited to the top 0.1% or top 1%. The top 5% and top 10% have increased their share of household wealth and income, too, and this has far-reaching consequences for the economy, as the top 10% accounts for the bulk not just of income but of spending.
According to the Federal Reserve, ( Distribution of Household Wealth in the U.S. since 1989), the top 1% owned 22.7% of all household wealth in 1989. Their share increased to 30.6% in 2022. The share of the 9% below the top 1% (90% to 99%) remained virtually unchanged at 37.4%. The top 10% own 68% of all household wealth.
But this doesn’t reflect the real concentration of income-producing assets, i.e. investments. Total household wealth includes the family home, the F-150 truck, the snowmobile, etc. What separates the economic classes isn’t their household possessions, it’s their ownership of assets that generate income and capital gains.
As the chart below shows, the top 10% own the vast majority of business equity, stocks/bonds and income-producing real estate, between 80% and 90% of each category.
This means the tremendous increases in asset valuations of the past two decades have flowed almost exclusively to the top 10%, with the important caveat that the vast majority of the gains in income and wealth have flowed to the top 0.1%, top 1% and top 5%.
…click on the above link to read the rest…
Avian Flu Is Crushing Farmers
Rescued chickens gather in an aviary at Farm Sanctuary’s Southern California Sanctuary in Acton, Calif., on Oct. 5, 2022. A wave of the highly pathogenic H5N1 avian flu has now entered Southern California as the fall bird migration sets in, raising concerns for wild birds and poultry farms in the region. (Mario Tama/Getty Images)Avian Flu Is Crushing FarmersHARRISBURG, Pennsylvania—The public’s pocketbooks have been hit hard by the skyrocketing cost of eggs in the last few months. Prices have doubled and, in some places, tripled over what they cost a year ago—if you can even find them in your local grocery store.
The average cost of a dozen eggs in the United States is over $4.25, more than twice what it was just a year ago. Options such as cage-free eggs or organic go for over $7. Inflation is a part of the reason, but the agriculture industry says the bigger cause is the outbreak of the avian flu here in the United States a year ago; nationwide, it has affected nearly 60 million birds—nearly 5 million of them here in Pennsylvania.
American consumers love their eggs. The food staple is highly regarded by every walk of life for its simplicity and accessibility; for some families, it is their major source of protein. For others, it is the most important ingredient in baking and the central element in preparing casseroles, pasta, and numerous other dishes.
For many of us, it is hard to make a meal without an egg, so of course consumers are deeply affected by this. However, there is another side of that story that we are not examining. That is the equally devastating economic impact this is having on American poultry farmers and all of those who work with them. Their lives, livelihoods, and family legacies have been upended and even destroyed by the avian flu, a worldwide outbreak that shows no signs of subsiding.
…click on the above link to read the rest…
Wick Watering: Simple and Efficient
Set up a wick system to water your potted and in-ground plants with hands-free efficiency.
by Adobestock/detry26Use wick watering to keep your plants hydrated. Self watering wick systems are simple to assemble, and they use less water than other methods.Wick watering is a lesser-known method of efficient irrigation. I was first introduced to the concept while reading a paper from India many years ago, in which wicks were used in conjunction with buried clay-pot irrigation. I later discovered a variety of systems for wick watering that had been used in lab studies to measure water use, vacation-water plants, provide a steady water supply for plants in greenhouses, and starting seeds. I couldn’t find any research on the use of wick irrigation in the field or garden, so I gave it a try. Over the past 30 years, I’ve conducted many experiments and field trials that have helped me understand how to design and use self-watering wick systems.
Wick irrigation uses a wettable fabric or rope to carry water from a reservoir or pipe to the roots of a plant. Wick watering can work by capillary flow that goes up and over a rise, resulting in a slow flow; by gravity flow, where water runs down the wick, which produces a fast flow; or by a hybrid of both systems. Here’s a closer look at both techniques so you can determine which will work best for your plants.
Capillary Wicks
With capillary wicks, the water rises through small channels in the wicking material. In one test I performed, water in a 7/16-inch washed solid-braid nylon rope rose 10 inches in 100 minutes and 22 inches in 20 hours.
Image by Lorain Ebbett-RideoutCapillary wicks are a popular way to water houseplants and starts.…click on the above link to read the rest…
