James Paterson, the youngest senator ever to be elected in Australia at 28-years-old, has boldly stated, “I’m not here for personal power and advancement.” He is a member of the Liberal Party and says he is there to pursue “radical reforms,” which include throwing out the national curriculum in schools, for they are indeed pointless, and reimposing a debt ceiling. He also wants to get rid of the “official” talking points used by politicians and embrace what he calls respect for the voters’ intelligence by speaking plainly.

Perhaps the 51.6-year cycle of the Economic Confidence Model is indeed what some call the third generational shift. The hippie generation of the Clinton era simply laid down their marijuana and lined their pockets as did the generation of politicians before them. They even took the corruption to new heights. Historically, it is the third generation that gets fed up with the last two and turns it all upside down. Perhaps this is just time.

President Barack Obama has made his selection for nomination to the U.S. Supreme Court. Appellate court Judge Merrick Garland from the District of Columbia is his choice. Of course, the Senate Republicans have vowed to block any Obama nominee. This is purely politics. Historically, those who have been appointed to the Supreme Court do not always follow the desires of those who appoint them. Once in that position, they are there for life. The greatest negative against Garland is the fact he was a prosecutor, went to a private law firm and practiced corporate law, and then returned as the assistant attorney general for the District of Columbia. You cannot be a prosecutor and honestly function under the Constitution for their job is always to deny its existence and that government has the power to do whatever it desires at that instant. The danger is that a prosecutor has an inherent bias against people in general, and I have never met one who I would say can really be trusted as a judge.

I have checked my records and have not encountered him before personally. I probably know more people on the Supreme Court through direct contact than anyone prior to their appointment. That presents a problem if I were to argue before the Supreme Court because it may have caused a real problem with recusals, whereas in any other level of federal court they will NEVER recuse themselves.

I will read over some of his decisions where he actually wrote them for the majority. I would NEVER say that someone was a piece of shit just because Obama nominates them. Quite frankly, it has been many of the “conservative” judges appointed by Republicans who have stripped us of most of our rights. It was Chief Justice Roberts who was appointed by George W. Bush and screwed us royally by upholding Obamacare on grounds not even argued. He held it was a tax, which the Democrats swore it would not be. Chief Justice John Roberts did far more damage than simply saving Obamacare. He made this the law of the land that will plague the youth for a generation to come. Justice Scalia was a strict constructionist. His dissent in KING ET AL. v. BURWELL explained it all and demonstrates that just because a Republican president appoints someone, he does not necessarily adhere to the same philosophy.

The Act that Congress passed provides that every individual “shall” maintain insurance or else pay a “penalty.” 26 U. S. C. §5000A. This Court, however, saw that the Commerce Clause does not authorize a federal mandate to buy health insurance. So it rewrote the mandate-cum-penalty as a tax. 567 U. S., at ___–___ (principal opinion) (slip op., at 15–45). The Act that Congress passed also requires every State to accept an expansion of its Medicaid program, or else risk losing all Medicaid funding. 42 U. S. C. §1396c. This Court, however, saw that the Spending Clause does not authorize this coercive condition. So it rewrote the law to withhold only the incremental funds associated with the Medicaid expansion. 567 U. S., at ___–___ (principal opinion) (slip op., at 45–58). Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare. (KING ET AL. v. BURWELL)

Therefore, I will read some of Garland’s decisions to see if there can be any insight into his philosophy, and, more importantly, his thinking process. The former can change with circumstances. The latter never changes. So just because Obama nominated Garland is not sufficient grounds to say you should block him. Judges are not beyond reproach. Federal Chief Judge Richard Roberts of DC just retired March 16th, 2016 the same day sexual charges were alleged in a civil lawsuit by a woman. So just because someone was a judge does not alter anything.

With both Asia and European markets were in pretty much a waiting station ahead of the FED, so it is probably worth us heading straight to where the action started! Even the events of the UK Budget were almost removed with talks of,  “It could all change come June 23rd anyway” so why get too hot under the collar today! The net result of the Budget for the UK was a negative GBP -0.5% whilst stocks counter-balanced that with a +0.5% rise. Enter the FED.

No change but it was interesting to hear we now have a FED that is globally data dependent! Much discussion about the Taylor Rule and Phillips Curve which may make good TV but where does that leave us if they are now considering data globally! Today’s measure of inflation or recent jobs declines are now questionable if comparing the dots to a world of negative interest rates and zero or negative growth. Tonight the market prices 30-40bp per year while the FED looks for 100bp; so much for narrowing the gap. The Fed is looking beyond the borders which domestic analysts typically do not do. The Fed appears to be making the same mistake as it did in 1927 and is surrendering DOMESTIC policy objectives for INTERNATIONAL.

The reaction from stocks were positive with the DOW jumping over 125 points at one stage but eased back slightly to close up 75 at 17,325 (+0.5%). Was also refreshing to see that both China 300 (futures) and Hang Seng rallied on the news and was last seen +1% the pair.

Gold rallied over $40 (+2.3%) on the Fed announcement as short-covering and as alternative investment to the steep decline seen in short-term bond yields. Nonetheless, without gold exceed last year’s high of  1307.80, there is little hope of  sustaining the rally much longer. The 2yr Treasury note yield dropped 10bp (from 0.95% to 0.85%) by the close of trading. The longer end also rallied (in price terms) but failed to measure the same pace as 2’s. Re-steepening the curve 2/10 closed +106bp. Ahead of the announcement we did see the spread between 5/10’s the narrowest (45bp) we have seen since 2007 – closed tonight at +53bp. As most of the European markets had already closed we will need to see the reaction of many peripherals tomorrow. However, in futures trading German 10yrs were last seen trading 0.3% (-1bp). European closes:- Italy 10yr 1.33% (-3bp), Greece 8,62% (+14), Turkey 10.04% (+5bp) and UK Gilts saw a parallel shift of 1bp lower across the curve to end 2’s 0.5%, 5’s 0.935% and 10’s 1.52%.

The USD lost ground against many currencies today. The DXY lost 1% to close 95.67. Earlier in the day all core currencies were down around 0.5% against the greenback but after the FED all this was reversed quickly. With the uncertainty of the US elections, we may not see any real dollar rally until after the May time period.

Asia closed mixed in a session dominated by central bank thinking and with the uncertainty of holding recent gains. The BOJ was vocal only in that they stated it was too early still to monitor the effects of the recent negative move. The JPY returned to previous highs and in late US trading Nikkei futures have dropped a further 0.8% while the currency trades with a 112 handle. Having spent the majority of the day in the negative territory, China managed a recovery that has accelerated by an additional 0.2% into the close.

Europe was negative across the board with sentiment a worrying concern, one dealer commented. Today was a reasonably quiet day so given we have the FED decision imminent, UK Budget on 16th and more data to be released on Thursday, markets will have plenty to play with later. Eurozone saw employment release, in line. The US had numbers that were not too much to get excited about and so the markets are happy to wait until the real news hits.

In the US, retail sales saw a hefty revision to the January number which unsettled markets. By the close we were small changed, so we await the FED announcement.

Gold continued its decline with the price dropping a further 1% to close $1233, low of the day was $1225.We have seen the price drop nearly $60 (from $1283) as money has moved out of safe-havens and back into more speculative emerging markets, dealers reported.

A Republican Party split is looking much closer after today. Trump won Florida, Rubio’s home state, and that led Rubio to drop out. However, Trump was denied a victory in Ohio, which was won by its own sitting governor, John Kasich. This will make it very difficult for Trump to win the necessary delegates for a first ballot in the Republican Convention. This Ohio victory doesn’t make Kasich a likely nominee in the least; it is just a spoiler to help the establishment pick who they want to be their nominee and that is certainly not Trump. Kasich has now won just one state so it appears that Ohio has sealed the fate of the Republican Party. Without Ohio’s 66 delegates, Trump now faces an extremely difficult path to reach the majority of delegates he needs to avoid a “contested” GOP convention. So the establishment looks like it will win and no candidate will enter the convention with a majority of delegates locked up. So after the first ballot, they are free to vote for whoever the establishment wants. It looks like the computer may be right after all. This is beginning to appear to be a very insane situation. The last time no candidate had the required amount for a nomination was 1976. Under the rules of the GOP, all these primaries were pointless. Delegates can choose one of the candidates who ran, or someone else entirely – Romney?

With the people voting for Trump, the Republican Party may have to face a huge, strong anger backlash from his supporters. We are more likely to see a third party candidacy from Trump himself. The establishment will not have an outsider in that office so Trump might as well run third party to illustrate the corruption. The Republicans prefer Hillary to Trump any day of the week. The establishment fears ending elections that cannot be bought by their supporters, for their families might get fired from cushy jobs. Trump would not just sign whatever bill was put before him.

Obama has been a joke. Obama misses more than 50% of the morning briefings. Ever since Bush was in office and Dick Cheney actually ran the country, those in power have preferred a stooge as president. That way, they get to do whatever they want while the “boss” actually does nothing. As the joke goes, when Russia invaded Georgia, someone ran in to tell President Bush. He said, “Really? Well I didn’t win that state anyhow. Texas would be a different matter.”

Someone like Trump presents a huge threat to the establishment. They would have to assassinate him because he got in their way. The establishment might try blaming Cuba again or someone else they really do not like. The talk behind the curtain is clear— hand it to Hillary and everything remains intact.

So a Republican split is looking more likely. They have drawn the line in the sand. By no means will they accept Trump. He might as well begin forming a third party. What is going to be exposed is that we do not live in a Democracy. As long as the people vote for their groomed candidates, the pretense is fine. Now when it threatens their existence, well it’s time to bring the grapes of wrath down upon everyone. Their mistake: they assume this will all blow over. Where they are wrong is that to defeat Trump, they must expose the truth. It’s their game and they make the rules. Your vote really means nothing to them. I suspect this is step one in what the computer warns will be an entirely new political system ahead.

Private Blog

The usual domestic analysis has its usual blinders on like a horse pulling a carriage in Central Park. Typically, this analysis blames everything on the Fed and remains clueless about international capital flows or trends. They argue that the S&P 500 doubled in value from November 2008 to October 2014, coinciding with the Federal Reserve Bank’s “quantitative easing” asset purchasing program. All they can do is blame QE as if it worked. They claim the Fed poured billions of dollars into the bond market monthly and that produced a bull market simply because the Fed’s balance sheet went from $2.1 trillion to $4.5 trillion. Strange. The ECB has tried this and has had to publicly admit it has failed three times and counting.

Then we have others yelling that corporate buy-backs are the cause and they have been the only real buyer. Both of these types of analysis are the same; as if we made the absolutely true statement that everyone who has ever eaten a carrot has died at some point so there is a 100% correlation that, obviously, carrots are lethal. They fail to test any other influences so it must be just the carrots since that is all you have considered.

Both theories completely ignore international events and trends. They assume ALL of the quantitative easing stayed in the USA when in fact countries like China sold in their long-term holdings and reduced their average maturity to less than five years. Pension funds ran into high-yield emerging market debt, taking the money outside as that market rose to $9 trillion since 2007 and they issued that debt in dollars so they could sell it domestic USA pension funds ignorant of currency risk. Then there has been the flight of capital from Europe and China into the USA. That has been ever so evident in high-end real estate markets. Both of these slices of events are reflective of our problem with analysis – it is just too primitive. We have yet to wake up and look out the window – OMG, there are other countries beyond our border! The statistics show that 64% of Americans have never left the country. This seems to also plague those who pretend to be analysts.

Fabric of Space Time

QUESTION:

My personal insurance costs under Blue Cross doubled. Absolutely everyone I have spoken to has had the same result. Here, a woman tells Clinton that the Democrats are out of touch. Her family of four had their healthcare costs “skyrocket” from $480 a month to $1,080 a month. This is causing a dramatic economic decline and is part of the downturn in the economy as the average working family has lost a tremendous amount of disposable income to health care that is sucking everyone dry. There is no possible way for Hillary to lower deductibles and costs at the same time. She is just bullshitting this person on CNN. When Social Security goes broken in 2017 and they will raise the age and taxes. Any career politician is just hopeless, regardless of which party they belong to. Neither side is capable of running any responsible business, no less a country.