Jobs and Inflation: Gradually and Then Suddenly

By Ben Hunt – Re-Blogged From Wolf Street

If you’ve been reading my notes immediately before and after the June Fed meeting (“Tell My Horse” and “Post-Fed Follow-up”), you know that I think we now have a sea change in what the Fed is focused on and what their default course of action is going to be. Rather than looking for reasons to ease up on monetary policy and be more accommodative, the Fed and the ECB (and even the BOJ in their own weird way) are now looking for reasons to tighten up on monetary policy and be more restrictive. As Jamie Dimon said the other day, the tide that’s been coming in for eight years is now starting to go out. Caveat emptor.

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Crisis Investing in Brazil

By Doug Casey – Re-Blogged From International Man

Editor’s Note: Brazil is in crisis once again.

This time, Brazil’s president, Michel Temer, has been accused of corruption, bribery, and obstruction of justice.

When news of this scandal broke, it triggered a huge selloff in Brazilian stocks. The iShares MSCI Brazil Capped ETF (EWZ), which tracks Brazil’s stock market, plummeted 18% in one day. It was the fund’s worst day since the 2008 financial crisis.

Most investors now want nothing to do with Brazilian stocks. But we’re not like most investors. We understand crises can actually lead to huge moneymaking opportunities.

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China Makes a Power Play in Brazil and Argentina

The last two years have been hard on Argentina and Brazil. A sweeping corruption investigation and the impeachment of President Dilma Rousseff have sent Brazil’s currency tumbling. The country’s economy contracted by 3.8 percent in 2015 and by another 3.6 percent the following year. The Argentine peso, meanwhile, fell 40 percent against the U.S. dollar after the government lifted currency controls in late 2015. But for foreign investors, the two South American nations’ economic hardship presents an opportunity. The depreciated currencies in both countries, combined with their governments’ need for investment, has enabled Chinese companies to buy up cheap assets and launch major infrastructure projects in Argentina and Brazil alike. The electricity sector in particular has been a focus of their activities.

(YASUYOSHI CHIBA/AFP/Getty Images)

Can Trump Get 3 Percent Growth?

By Peter Morici – Re-Blogged From Newsmax

President Donald Trump’s economic team paints a rosier picture about what his policies could accomplish than the economics profession is willing to endorse.

His team is formulating budget and tax proposals that project 3 percent annual growth, while the number crunchers at the Congressional Budget Office estimate only 1.9 percent.

How fast the economy can grow comes down to the simple sum of likely worker productivity and labor force growth. Since the financial crisis, productivity has advanced about 1 percent a year, as compared to the 2 percent in prior decades.

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The Commodity Cycle: What It Means for Precious Metals Prices

By Stefan Gleason – Re-Blogged From https://www.moneymetals.com

The cycle for any commodity follows the same basic pattern…

When prices are low, production falls. As new supplies diminish, the market tightens and prices move higher. The higher prices incentivize producers to invest in production capacity and increase output. Eventually, the market becomes oversupplied, prices fall, and the cycle starts all over again.

Of course, this is a simplified model of what drives commodity cycles. Booms and busts can be amplified and extended by speculators, by unexpected shifts in demand, or even by interventions from central banks and governments.

Regardless of the causes, commodity markets will always be cyclical in nature. Commodities as a group can be pressured upward or downward by extrinsic forces such as monetary inflation or credit contraction.

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Stalling Engines: The Outlook for U.S. Economic Growth

By John P Hussman – Re-Blogged From Hussman Funds

Imagine driving a car moving down the road at 20 miles an hour. You hold a rope out the window. At the other end of that rope is a skateboard. If the skateboard is behind the car, yanking the rope pulls the skateboard forward, so the skateboard might temporarily speed ahead until it gets way ahead of the car and the rope tightens again. At that point, yanking the rope will pull the skateboard back, so even while the car continues down the road at 20 miles an hour, the skateboard actually loses ground for a while. Over the long-term, the car and the skateboard move ahead at the same speed, but the speed of the skateboard over shorter horizons depends on its position relative to the underlying trend.

The same proposition applies to the trajectory of numerous economic and financial variables. We have to be attentive to at least two things: 1) the central tendency of growth in underlying fundamentals, and 2) our current position, relative to that central tendency. The difference between the two is what separates longer-term growth from cyclical fluctuations.

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What is the Opportunity Cost of Climate Waste?

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

What do we miss out on because the world wastes so much money and attention on climate? Imagine if some of that squandered money was spent on other fields such as medical research, such as the following accidental discovery, which if developed offers the possibility of longer life and superhuman athletic prowess.

Mouse

Mouse. By George Shuklin (Own work) [CC BY-SA 1.0], via Wikimedia Commons

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