Issues, News & Views

Who will be the
2016 candidates
for President of
the United States?



Donald Trump has come out
of nowhere and stolen the
show. He seems to have
captured the zeitgeist, the
spirit of the times. Can it last?

Who, from among this
strong, diverse field , will
emerge victorious to return
the GOP to the White

With the inept Obama
Administration in its final
days, one would have
expected that experienced
governors with a record
of accomplishment would
dominate the Race 2 Replace
but outsiders and novices
Trump, Carson and Fiorina
are in the hunt! Seasoned
executives for sure, but
not the ones the beltway
had in mind!



The creaky, rusty Clinton
machine grinds slowly
onward, wayward, relying
solely on muscle memory
for movement. Will
Democrats suddenly rise
from their slumber to the
realization she cannot win a
General Election?

Is Hillary a foregone
conclusion, or will
someone else swoop in and
steal the show?

Folks on the right can barely
contain their joy at the
prospect of a Clinton
candidacy. Shouldn't that
give pause to the Democrats?
Biden and Warren are both
better candidates and better
Democrats than Clinton, but
aren't even in the race. And
then there are O'Malley and
Sanders, again, both better
Democrats and better
candidates. Yet the Dems
seem intent on following
Clinton in a lemming-like
charge over the cliff.


2016/01/11 - Happy New Year. Maybe. There are many things in life that bring joy - faith, family, friends, football, Jose Bautista, to name but a few. But as for matters that occupy our humble website - politics, geopolitics, and public policy - 2016 promises to extend the joylessness of 2015 as the Obama Administration grinds our beloved country into the ground with scorched earth policies right up to the bitter end of its term. So on that happy note we present to you our semi-annual state of affairs.

Inflation and Interest Rates: Let's get the arcane out of the way first, since it lays the foundation for what follows. Of course we refer to the St. Louis Fed M2 Velocity graph. Velocity of money is a determining factor of money supply and thus inflation, and until the M2V trend begins an extended upward trajectory, we can expect an environment of relatively subdued inflation and interest rates, a currency stability that tends toward strength, and low commodity prices.

Commodities - Copper: The price of anything is determined by the immutable law of supply and demand, along with the relative value of the asset being exchanged (which itself is determined by supply and demand). Thus a stronger dollar means you don't have to give up as many dollars to get a barrel of oil, or a pound of copper. Copper prices have declined to recession-level lows of $2/lb due in part to dollar strength, but even more so due to declining global demand. Producers have been cutting production in response to the softness. The market for Hg is sometimes referred to as "Dr. Copper" because it diagnoses the strength of the global economy. The copper market currently indicates hypothermia, a temperature well below 98.6°. But it's not just copper, the entire metals complex is under stress, and both specialist and diversified miners of various metals such as Rio Tinto, Vale, Glencore and Freeport, to name but a few, are feeling it.

Commodities - Oil: If the copper market is hurting, it's worse in oil - the dollar price of oil is collapsing due to a trifecta of a strong dollar, tepid demand, and increasing production. Copper producers are cutting back supply, while oil producers are increasing supply in an all-out price war. The glut is so severe the world may run out of places to store oil. Prices are now at 15-year lows. Back in July we said "don't look for oil above $65 for a long time", but that was timid, prices closed below $33/bbl on Friday. And this is with Iran and Saudi Arabia burning each other's embassies and fighting a proxy war on the Arabian Peninsula, with Libya in disarray, and with portions of Iraqi and Syrian oil production in the hands of terrorists. This geopolitical inferno ought to be a doomsday scenario for $200/bbl oil, but the various combatants seem intent on capturing rather than destroying their enemy's productive capacity. We don't see the bottom for oil quite yet, but it might not be that far beyond the horizon. We may be declaring a bottom in our July update.

Shipping: If oil and copper aren't sufficient as indicators of global economic weakness, then check the Baltic Dry Index, an indicator of the price for maritime shipping of raw materials. The Baltic Dry hit a new all-time low of 490 on Friday. Again, it's the same problem as with the commodities: projects of all kinds - oil fields, mines, ships, ports - that were initiated early in the decade to take advantage of anticipated growing Chinese demand, are now coming on-line just as Chinese demand is faltering, leading to global over-capacity, over-supply and a glut of just about everything. It is an ingredient of the recession recipe. A "recession" is the painful process where excessive capacity and supply are cleared from the market.

The Shanghai Composite: If you thought the controls that the Chicomms put in place last summer to arrest the precipitous decline at the Shanghai Stock Exchange had worked, you were wrong. The price of anything is always a function of supply and demand, not communist dictates. The controls were merely a hastily constructed dam holding back too much water. The pressure grew, and this week saw gut-wrenching declines as various rules were changed, added, eliminated, reinstated, amended, discarded and so forth. And if you try to sell some shares you could end up in jail. This policy "errortica" motivates capital to flee the country. The People's Bank of China burned through tremendous amounts of foreign reserves attempting to support the currency, then threw in the towel. The Renminbi has dropped 6% against the dollar in the past four months. The Chinese were quick to lay the blame on Evil America for its currency strength. You see? It's all about M2V, the velocity of money.

China: Is the Chinese economy in even worse shape than we think? China is a black box. Data collection is difficult anytime, anywhere. Even US data, like Friday's jobs report, is rife with contradictions below the headline number; but when understated folks like Citibank wonder aloud whether China is flat-out lying about their numbers, how is it possible to make sense of what anyone tells us? There are so many conflicting reports of China's dismal/flat/rosy future it is difficult to make sense of it all. But demographics, debt, the Shanghai Composite, and Dr. Copper, indicate a darkening sky.

Grexit: Six months ago we were lamenting the hype about Greece, and advised readers to ignore it and focus on China. Anybody talking about Greece these days?

Jobs Report: The labor market, like an Obama speech, sounds good but it doesn't feel good. Take Friday's jobs report. Five percent unemployment sounds good, but CNBC also reported that absent the decline in work force participation since Obama took power, the unemployment rate would be 7.6%. If the labor market is so strong, why are people giving up looking for work? Because the jobs being created are part time and low paying. Real wages have declined since Obama took power. How do the statisticians tabulate a person taking three part time jobs to cobble together an existence? That gets counted as a full-time worker, and, three jobs created! People are suffering, and they are embittered by the cynical happy talk from the Administration's back slapping victory lappers like Press Josh Ernest and Labor Secretary Thomas Perez. Considering that BS, there's no need to be confused about Donald Trump's staying power.

US Economy: In July we said we did not think the US Economy was heading toward recession. We were correct. But we believe the probability of recession is increasing. We would still bet against a recession within the next six months but we wouldn't bet very much. Buying a ticket for the $1.5 Billion Powerball could be safer than betting against a recession. Economic numbers are tepid at best. ISM, PMI, Factory Orders, regional Fed surveys (Philly -5.9, Empire -4.59, Dallas -20.1, KC -8)... nothing to put a smile on your face. Even PMI Services declined from 56.1 to 54.3. And our stock market is taking on water as well. Pretty well every major statistical data point is either declining, or has already turned negative.

US Equities: Back in July when the S&P was trading around 2100 we predicted only marginal increases, expecting that 2200 was attainable but 2300 was not. We were partially right, as the S&P failed to hit 2300, but also failed to get anywhere past 2100. But, we also said that if China continues to soften, all bets are off. Regarding 2016, our optimism is shrinking. Election year uncertainty only exacerbates the uncertainty surrounding global economic conditions. From the current level of 1922, we will probably break 1800, and possibly 1700, even without a recession.

Geopolitics: North Korea claims to have detonated a thermonuclear device. We've given Iran the sun, the moon, and the stars - oh, and a path to nuclear weapons - for free. We didn't even get our hostages back. How bad is Obama? We have given up on Crimea, shoved the Budapest Memorandum into a drawer, and thrown Ukraine under the bus. We have shown Ukraine, Iran, North Korea, and indeed the entire planet, what happens to countries that don't have, or voluntarily give up, nuclear weapons.

Iran: The pusillanimous Obama has emboldened the Iranians to pick fights with Saudi Arabia - toppling the Sunni government in neighboring Yemen, and burning down the Saudi embassy in Tehran. Déjà vu? No, we distinctly remember that this actually did happen before, it's the same old Iran, up to their same old tricks. Except this time we have a President even worse than Carter.

Jimmy Carter: Ah yes, Jimmy Carter. This is Carter's world. I went to see the Star Wars movie Friday, it was just like 1977, it was just like Carter's world: economic malaise, geopolitical inferno... and Star Wars.

Key Indicators: Keep an eye on these four measure to provide an indicator of where the global economy is heading. If they keep going down, it is not good news.
• 1 - $2.00/lb - the current price of copper.
• 2 - $33.00/bbl - the current price of oil.
• 3 - 490 - last Friday's Baltic Dry Index record close.
• 4 - 3,000 - the Shanghai Composite's current level.

2016: The bad news is that this is Carter's World. The good news is that means Reagan's World is just around the corner. Vote Ted Cruz in your caucus/primary, vote Ted Cruz in November. Happy 2016!


January 26, 2016 - One of the distinguishing values embraced by us New Yorkers is the pleasure we take in disparaging the fine Americans who do not live within fifty miles of salt water.

Click here to enjoy a garden-variety example of an arrogant New Yorker indulging his snobby elitism to dump on flyover country.

And yet, consider how New Yorkers squeal when the flownovers push back at them. Note the rage that has been directed at Ted Cruz for taking up the other side of Trump's elitism - how dare that Ted Cruz!

Today's Wall Street Journal published a truly awful op-ed from one of their worst columnists, Bret Stephens. Enjoy his overblown offendedness from his imagined microaggressions!

It's not just the hypocrisy of a New Yorker being offended by imagined slurs from flownovers - it's his utter ignorance that it was a New York elitist that concocted the slur in the first place and directed it at the flownovers.

Here's another New York value: we can dish it out, but we can't take it.

January 22, 2016 - Otto Warmbier, a University of Virginia student from Cincinnati, has been detained in North Korea for allegedly committing a "hostile act".

Naturally, dumbass pandering politicians like Ohio Governor John Kasich are lashing out against the NK Communists. Chalprem's view, however, is that we should be lashing out against this idiot Warmbier.

The United States is technically at war with North Korea. North Korea is our enemy! Anyone foolish enough to go there deserves whatever it is they get. What part of N-M-E don't they get?

This is not the first time Chalprem has lamented the stupidity of visting hostile lands, as if, incomprehensibly, this actually should need to be pointed out.

Such morons have no right to expect that America should do anything to secure their release - no money, no exchanges, no concessions of any sort, not even a phone call. Nothing. Nothing, except maybe a MOAB or two. Or more.

January 18, 2016 - Economic barometers continued to get slammed this week.

Today's New York Fed monthly Empire State Manufacturing Survey plummeted from -4.6 to -19.4. But that was only a hint of the carnage:
• Copper $1.95/lb down 8.7% year to date, 24% year-on-year.
• Oil $29.70/bbl down 19.9% year to date, 46% year-on-year.
• S&P 500 1880 down 8.0% year to date, 7% year-on-year.
• Shanghai 2902 down 18.0% year to date, 13% year-on-year.
• Baltic Dry 373 down 19.9% year to date, 49% year-on-year.

These prices are telling us, in unison, that global supply exceeds global demand. When that happens, suppliers cut back. And when many suppliers cut back signifcantly... well, that's what a recession is.

We are not predicting a United States recession yet. But we may soon. The stage is set.

January 11, 2016 - Surprise! Fox News is reporting that the FBI's Clinton email investigation has expanded to include public corruption over at Clinton Global.

As we said last March, "the purpose of the private server was to ring-fence the Clintons' family foundation, Clinton Global Initiative (CGI), or more accurately, Clinton Inc."

The expansion of the investigation to Clinton Inc. was thus to have been expected. The Clintons are always only all about the monetization of everything, so why would there not be a direct link between Hillary's power position at the State Department, and her bank account at Clinton Inc? With the Clintons, how could it be otherwise?

We have said time and again that the investigation would find its way to Clinton Inc. It had to. There's a reason why "follow the money" is a cliché, but it's never been more true than with the Clintons.

January 07, 2016 - On Monday the Supreme Court will hear arguements in Friedrichs v. California Teachers Association.

Friedrichs, a school teacher, claims her First Amendment rights are violated by the CTA because they use her mandatory fees in support of causes she disagrees with. The CTA insists that Friedrichs must pay the dues because she is a beneficiary of the Union's advocacy, and free-riding would be unfair.

In addition to the merits of Friedrich's argument, the dark side of the CTA's defense must not be ignored: aggressive unions can and do inflict damage on employers that in turn impair the working conditions and job security of employees.

Voluntary dues creates a natural balance - where the union becomes too powerful, making excessive demands that imperil the workers' long-term prospects, the employees can withhold their support; and where the employer becomes to powerful, the workers can increase their supprot of the union.


© Copyright 2017 Challenge The Premise. All rights reserved.