From Alhambra Investments:
As always, it’s about the whole thing. A
true economic boom spreads out real gains to the vast majority of the
population. There will always be some proportion of people who are left
out. But in the good ones, the true upswings, that share is minimal.
This is the big problem right now, especially as GDP has been positive in a lot of places
for a long time. It is what confuses people into thinking there has to
be a boom. The sad fact is that economic output all over the world, the
US included, hasn’t been near enough to minimize the proportion being
excluded from these small economic gains. There are still too many
people on the wrong side of the economic divide.
In America, though they go along with the media as to how the economy is described they sure aren’t acting consistent with the rhetoric. Spending remains down across-the-board, and those in the most afflicted of areas are swinging back and forth looking for someone to give them answers.
Two years ago, the Rust Belt
provocatively delivered Donald Trump the White House based in large part
on his observations about the “fake” unemployment rate. Finally,
someone in the right position was willing to say what many actually felt
and still feel. He’s since embraced that particular statistic as has so
many around him. Last night, maybe the President was reminded?
President Donald Trump got a
warning sign on Tuesday from the Midwestern and Rust Belt states that
handed him the presidency, as voters delivered big victories to
Democrats and offered a road map for the crowd of candidates lining up
to challenge him in 2020.
There are a whole bunch of acerbic
political factors rolled up in this midterm ballot and it’s far too easy
and admittedly convenient to distill everything into these broad
economic terms. Regardless of complexity, it’s difficult not to
appreciate the possibility.
The US economy is not booming enough,
therefore it is not booming. And now it faces far more difficult
prospects than the low ceiling.
While everyone is focused on Democrats
versus Republicans, who controls the House and which the Senate, in
those economic terms attention should be directed towards Oklahoma and
Chicago. The oil market is screaming that even if it was a real boom, it
is in its dying days.
It is now more a matter of morbid
curiosity, to see the oil curve contort and recoil bringing back
memories just four years old. The curve is behaving exactly like it did
in late 2014, another period people have largely forgotten how so many
desperately tried to make that one into a boom, too. It failed because
there wasn’t near enough “good” growth to stave off the building
negative pressures.
Those showed up right on the WTI curve
as well as in any number of places. The warnings were ignored because
that’s what Economists and central bankers do best. Subprime is never
contained because it’s never about subprime.
The fundamentals for the oil market
aren’t good; they really weren’t all that much better last year, either.
The mainstream penchant for making a lot out of a little followed in
Cushing, OK, too. Was economic demand really picking up? Judging by
domestic crude stocks, it didn’t really seem that way.
Instead, a large amount of domestic oil
was diverted overseas. It made the onshore crude inventory seem more
balanced by simple comparison....
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