Friday, October 17, 2014

Republicans Need To Man-Up

While going about my business today, I had the chance to listen to three Right-Wing Radio talk show hosts.  The anger among them was very real, about the angriest I have ever heard before.  Spittle was flying from my radio as at least one of them essentially blew up, I just hope that you cannot catch Ebola over the radio...

What set them off (albeit after much recent provocation by Obama & Co.) was the appointment of political hack Ron Klain to be the "Ebola Czar" by our inept (or maybe not...) President Obama.

Let's take a quick look at Attorney Ron Klain:

-- Vice President Joe Biden's Chief of Staff
-- Vice President Al Gore's Chief of Staff
-- Vice President Al Gore's lawyer (one of many) in the 2000 Florida voting dispute
-- Worked with Fannie Mae (housing corruption)
-- Approved loans (totaling $500 million) to Solyndra, which went bankrupt *

* Where did the Solyndra money go, Ron Klain?

Note that Ron Klain has no experience in medical matters nor in emergency management.

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I will briefly outline a few points not being made in most of the MainStream Media (MSM) that seem relevant:

The following countries have enacted, in one form or another, travel restrictions on visitors from Liberia, Sierra Leone and Guinea (I believe the info is current, but please be aware that some info might be wrong or outdated) of one sort or another:

           -- South Africa
           -- Zimbabwe
           -- Zambia
           -- Guinea-Bissau
           -- Senegal (had one Ebola infection, apparently NO Ebola now)
           -- Kenya
           -- Ethiopia
           -- Cape Verde
           -- Seychelles
           -- Equatorial Guinea
           -- Cameroon
           -- South Sudan
           -- Chad
           -- Belize (just today denied a cruise ship permission to call)
           -- Haiti
           -- Trinidad & Tobago

That's 16 countries.  So far.  Note the USA is not among them.

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The President is proposing, as Commander-in-Chief (so I believe that Congress cannot step in) to send our Reserves and/or National Guard to one or more of the afflicted countries in West Africa.  One report is that our troops (Reserve & National Guard!) will receive just four hours of training re virus control during or prior to their deployment to Africa.

Mothers and fathers.  How would YOU feel if your young soldiers were going to deploy in AFRICA to "fight Ebola"?  What a horrible assignment...

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For MONTHS now, we have had an essentially open border with Mexico.  Virus "D-68" apparently came along with the "unaccompanied minors" from Central America.  This virus has already killed a small number of students.  The virus is now epidemic in many states.

Have you been hearing THAT via the MSM?

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And let this be known:

I am extremely disappointed with the weak Republican responses to Obama's terrible handling of the Ebola matter.  It looks like it will soon become a real crisis.  Yet the Republicans have been quiet on this, the response by the R-Team during the House questioning of Frieden, Fauci, et al was very weak.

And the Republicans are the POLITICAL OPPOSITION!  (or are they?)

Here are some prominent Republicans who could and should be speaking out:

Gov. Rick Perry of Texas.  Governor, the time has come for YOU to declare that TEXAS will not send its National Guard to West Africa!  Instead, you will deploy them along the Texas/Mexico border.  As the US government has failed in its duty to protect and defend the people of the USA, Texas will have to do the job itself, even if it is expensive and would invite vindictive retribution (oh yeah) from the Obama administration.

Minority Senate Leader McConnell and House Speaker Boehner.  Where the HELL are you guys?!  You should both be screaming bloody murder!  YOU TWO are the leaders of the "opposition", have you two decided that now is the time to show that maybe Republicans and Democrats really are the same?

Republican Senate and other Candidates.  NOW is a good time to speak out against Obama and his dangerous policies!  IMO, this would be not only good for the country, but good for your election prospects!  So, speak out!  WTF are you waiting for?

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It looks like I may be the one who must speak some truths here (run, hide the kids!).  I cannot understand (political cowardice does not sound like it explains such damp responses...) why the R-Team will not pound the table for the below:

--  Secure the southern border with Mexico.  Now.  "Immigration reform" later.

--  Restrict/quarantine/whatever ALL incoming visitors from Liberia, Guinea and Sierra Leone.  What is so hard about this?  The 16 countries above have dome more than we have, and ALL of them are poor.

--  The House of Representatives should go on record NOW passing defunding ObamaCare.

--  ALL Republican candidates should be HAMMERING President Obama on the Ebola response disasters.  ALL Republicans should be demanding that incompetent CDC Director Tom Frieden (last job: NYC Mayor Bloomberg's point man on banning large sodas there in NYC...) be removed (likely he will be thrown under the bus by Obama soon).

--  Texas and Arizona should be leading the way as the Obama declines to protect our country.  Just do it.

-- All Republican Governors.  Do not let Obama send your young men & women on the fool's errand to Africa!

WHAT am I missing here?  WHY is no one screaming for the above?

The answers to reducing risks to our citizens (the primary duty of the federal government) are obvious and dead-drop easy!  I just listed some just above!

Next step?  I suppose I will have to send letters to my worthless politicians "representing" me in Washington, DC.  NONE of three (two Senators, one House Rep) have said jack-squat...

/rant off

Monday, October 13, 2014

Deflation First, Then Inflation?

In this article, I would like to illustrate the case for a deflation (soon), perhaps later to be followed by an inflation (a possibly severe inflation).  Here, I am using the "popular definition" of deflation (prices declining) rather than the more correct definition of a deflation as a decline in the supply of money.  Economic history has shown that an inflation (or even hyperinflation) is often preceded by a deflation.  People are making the case now that we may have just entered a deflation phase, this is what I would like to examine today.

This article is "chart-heavy", and so illustrates weakening prices...  I am still not convinced that charts can help "predict future price movements" (technical analysis).  Also, please note that there are scale differences among these charts, interpret with caution!

I recently wrote about the US dollar being very strong lately, it has continued up, but this week has just turned down.  A strong US$ would likely negatively correlate (somewhat) with many commodity prices.  As always, *click* on any image for a better view.

Note the US$ is up about another 0.5% since my September article (recall that the US$ chart above is the US dollar vs. other currencies).  Keep this chart in mind as we look at below commodity prices.

I am going to examine some commodity prices that would support this case of deflation now.  I will later look at a pair of commodities "going the other way", that is, NOT supporting deflation now.

It is important to note that each traded commodity has its own "industry characteristics", its own patterns of production (supply) and usage (demand).  These characteristics will cloud this analysis, but if we find a general pattern across most commodities, that would tend to be supportive evidence that deflation may be on its way...

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So, what is going on with other commodity (and similar) prices lately?   Below are charts and comments on 10-year treasury interest rate, the Baltic Dry Index (shipping rates of bulk commodities), oil & gasoline, steel and iron ore, copper and silver.  The general trend for all of these is down.

US Treasuries (here, 10-year Note, a three-year chart (note above US$ chart is a six month chart)) typically move with the US$, but the correlation is not all that strong.  Here is what the 10-year rate has been doing (lower rate = higher Treasury price approx. = weaker economic conditions):

Note that interest rates is a complicated topic, even Treasury rates (being about the easiest to analyze of all interest rates) are difficult enough, even for professional traders!  Treasuries and the stock market interact with each other more so than either with commodity prices.  Bottom line here is that lower 10-year rate hints at weakness...

The "Baltic Dry Index" ("BDI") is a aggregation of shipping rates for bulk commodities in ocean-going ships.  Think cement, iron ore, and corn.  A weak BDI suggests weakening economic conditions.  The BDI is down lately, as conditions are weakening in China:

I would characterize shipping rates as additional, but weak, further evidence that things are getting weak, which implies deflation...  Treasury interest rates and the BDI both hint at weakness.

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Energy prices (here we will look at crude oil and gasoline) have been weak lately.  Even retail gasoline has been going down, I have not had to pay $70 to fill my SUV's gas tank in some two months.

Crude oil:

Gasoline (three-year chart):

The above price of gasoline chart is a two-year chart of gasoline prices in BULK.  Note that over the past two weeks that the price is down some 10%.  I will be watching to see if prices at the pump start to decline (at least some).  I have seen reports of some retail prices for regular unleaded at just under $3.00 per gallon!

Oil and gasoline prices are down.

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There are reports out of the Far East (China) that iron ore prices are down.  Iron ore, of course, is the raw material most used in making steel.  Recent iron ore prices:

China is the main world driver of iron ore prices.  China (particularly construction) is slowing, they are using less steel (and so iron ore) as well as cement.  Steel prices are approximately stable, here is a chart of steel rebar (used for reinforcing concrete in construction), note this is a 12-year chart, so it does not clearly show recent price moves in detail.  I should also note that there are LOTS of different kinds of rebar (not to mention steel), so the +/- 15% price decline since perhaps Jan 1, 2012 does not give us much information.  Note that the peak price was in late 2008 (when the financial crisis hit).

Rebar prices fairly well correlate with other forms of steel, see

Two-year copper (used by China in construction, electricity and automotive):

Copper has been relatively weak in 2014 (as well as the past two years).  But, the above copper chart is but weak evidence (but additional) that deflation may be imminent...

Metals prices are down for 2014, and even over the past couple of years.  But, prices are not down dramatically!  I would characterize metals prices as being weakly correlating evidence of current or soon-to-be deflation.

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US produced agricultural commodities are weaker, but each of these have other factors that affect prices (like crop size!).  Corn:


Soybeans, very weak!

Note that all three ag charts show substantial 2014 price weakness.  I would characterize those charts as additional evidence of price weaknesses ("deflation"), at least for 2014.  Note that each of the above charts do not look exactly the same (although corn and soybeans do correlate fairly well).

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US$ strength, declining Treasury rates (2014), declining BDI (2014), lower oil & gasoline prices, lower metals prices and lower US agriculture prices all point, to varying degrees, a deflation.  Note that all of the above are commodities that are heavily traded...

On the other hand, some commodities do NOT point to a deflation.  Coffee (which after crude oil is the world's most heavily traded commodity!):

Coffee is up big in 2014.  Maybe there was a poor harvest somewhere...?  There is very little coffee produced in the USA.

Stocks?  Up, up and away (except for the past two weeks!):

Coffee may be some kind of a special case.  The S&P 500 seems very highly valued (overbought) to me...  Beware buying stocks now...

IMO, the strength of the stock market is perhaps a warning bell!  And coffee may have characteristics that currently do not reflect world economic weakness.

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China is weak.  Europe is weak.  Peru is weak.  The USA is outperforming the world!  Will this continue?  Ahh...

Yet, we hear that QE is happening everywhere (China, Japan, soon in Europe, and probably to continue in the USA particularly if stocks go down, the Fed will ease...).

At some point, IMO, the strong US$ and additional money-printing (in whatever form) will lead to the commodities to start going up.

"Deflation Now, Then Inflation?"

Wednesday, October 1, 2014

I-95 Curiosities

My "SMS Trip" has concluded, I am back home safe and sound having met with a large number of people (for me) and it all went so much better than I expected.  My thanks go out (again) to the many wonderful people I saw over the past 12 days (that would be 17 people).

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All of my trip was along or near to Interstate 95, the world's busiest highway.  I drove some 2500 miles!  I have been on nearly all of that highway, from Maine to S Florida.  Some parts of it many, many times.  Much of it is boring, I have heard I-95 characterized as very boring (but I concur with one of my oilfield co-workers who long ago called I-10 between Lake Charles and Lafayette (Louisiana) as "the world's most boringest highway").  Much of I-95 IS boring, but not "the world's most boringest highway.

In Georgia, for example, I saw this billboard, I do not know who paid for it, but this kind of sentiment is getting around...:


Here is a sign "with all five of them".  Can you figure out what all five of them are?  It's not too hard...

This next picture has a humorous history, but from long ago.  Its story is famous in our little family!  I used to drive this stretch of I-95 between South Carolina and the DC area a lot in the past.  For several of those trips I liked to drive at night (less traffic), I would take a long afternoon nap before leaving, and around sunset take off.  Well, driving long distances means stops to get gas, and driving at night means coffee and pit stops...  It was "that time" again, I needed gas anyway, so I stopped at the first gas station I saw heading north.

I paid and then asked to use their bathroom (coffee is VERY diuretic as anyone who drinks coffee and drives long distances knows).  I was directed to go to "the other building, and walk in the door "just" around its corner.  The out-building was dark, and I made my way there, turned the its corner and saw the door was open.  I also saw a chicken standing guard there (hey I grew up in the South for much of my youth so have a working knowledge of farm activities).  I slipped past the chicken, flipped the light switch (not working) to go to the metal trough (if any of you fellas have been around an old facility, you have used them).  As I was conducting my business, I glanced down to the floor just to my right and saw a soaked roll lying between me and the stall (with no door).

I felt rather lucky that I had just the smaller job..., and then I thought to myself, "Wow, all this bathroom needs is a condom machine, and it would be the PERFECT Southern Bathroom."  Yes, it had such a machine.  I went back and informed my two women of the classic old-style Southern Bathroom, which naturally they wanted to see...

Well, the same buildings are still there, but, no longer in use.  The out-building is the partially burned-down one (visible between the two support columns of the roof above the gas pumps), note the roof is partially collapsed.  So, the building is still there (sort of), but the memories remain (maybe you had to be there for this to be of interest...):

*Click* on the above image for a better view!  There is a sign that the station is "temporarily closed" (not visible in this photo).  There are LOTS of derelict properties in South Carolina, a state that suffered harshly in the recent years of the bad economy...

One of THE most famous tourist traps in the world is "Pedro's South of the Border", a Mexican-themed (though clearly not even close to looking like Mexico...).  You can see many signs (in both directions) for MANY miles (it used to be over 100 miles when I was younger) letting you know South of the Border is coming up.  It is located in Dillon, SC on the NC/SC border.  Fireworks (including explosive firecrackers illegal almost EVERYWHERE else in the USA, yes, they still sell "Black Cat" brand, all such fireworks are made in China).  The billboard ads are very cheesy:

South of the Border from about about a quarter of a mile away:

Pop Quiz!  Who is the most famous person to come from Dillon, SC?

Quick Clue!  He worked (a summer job IIRC) for the local crime bosses... *

This last picture is shows something that is much rarer than many would suspect.  If you have driven enough (or looked enough at US highway maps), you probably have a basic understanding of how the highway numbering system works.  The "US Highways" were funded long ago by both the individual states and the federal government.  They are all marked with a "shield" with the highway number, the signs are in black & white.  Our "Interstate Highways" (a big infrastructure program started under President Eisenhower) are a simpler shield design, but with blue and red coloring.  The NUMBERS of these highways are fairly logical, and one thing the road engineers did was to use a different numbering system between the two highway systems (to avoid confusion, say, when a stranger would hear "just go west on Hwy 50").  So it is RARE to see a US Highway and an Interstate Highway both have the same number in one sign!

This is the only example of such a sign that I have seen, do let me know if there are others!  The sign is near Wilmington, NC.

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* Answer for famous resident of Dillon, SC:

Ben Bernanke!  That is what I read, that Ben Bernanke grew up in that small South Carolina town that, surprise!, was corrupt.  Hmm, indeed!