We have far more important things to talk about.
OK, that photo of the Billionaire Boxers surely started your day out on a nauseating note. I had to do it, though, because the important news of the day is that Elon Musk and Mark Zuckerberg are close to agreeing on a venue for what I am calling the “Muckerberg Fight.” The billion-dollar billionaire prize fight looks like it is set to occur in Italy if Musk doesn’t continue to try to weasel his way out.
I say that is the important news because the stock market has decided no other news is important. Wholesale inflation rose in today’s news. The market shrugged. That, of course, is the leading inflation that ultimately gets handed down to consumers. It is what is coming from further up the pipeline. Even yesterday CPI rose, and the market shrugged because it didn’t rise as much as expected. All of this is, however, the first turn in the wrong direction for inflation since the Fed started its own multi-billion-dollar fight.
What the market believed was news, instead of the real turn in CPI and in leading wholesale prices, was consumer sentiment. Analysts noted that consumer belief in inflation down the road is fading, and that gave stocks the bump they need because we all know consumer feelings about what inflation might do are surely far more valid than data about what inflation ACTUALLY IS doing. Fantasy over fact always wins in this market.
Treasury yields rose upon the stuff I thought was the real news, and rising yields usually compete with stocks; however, the market shrugged that off, too. So, in a world where consumer feelings are believed to say more about the central issue of the economy over the past two years — inflation — than the facts about inflation say, the important news to that world must surely be that the Muckerberg fight is still on.
Upside-down housing news
According to another story, the US housing market has regained all of its lost trillions of dollars in value, and that makes sense because there is only one house for sale right now in the entire US, and everyone who needs a house wants it. Therefore, we are to believe the whole US housing market should be revalued based on what the last house sells for.
What I am getting at is that, when we are in an economic state where housing prices are soaring again because there is so little inventory, it doesn’t quite make sense to say the housing market has recovered the total lost by all homes in the US. The second inventory returns to normal, those prices will plunge through the floor. Of course, that is also why inventory is not returning to normal: nearly no one is willing to sell at the low prices that would be necessary to find buyers under interest rates that are 3x higher than they have been for years.
A better perspective here is to think of this rise in housing prices as an artifact of a freezing market. Sellers are holding out for more money than they ever have, therefore selling fewer houses than ever. Most sellers are willing to sit the present situation out because they dread the thought of replacing their home at today’s interest rates, especially when there are so few homes for them to look at as replacements. It may take awhile for the ice dam to break. Then it will wash away the housing market in a flush of prices like that actual iced dam did to houses along the Mendenhall River in the news earlier this week.
This is ultimately a self-feeding doom loop in housing related to dwindling supply (not a housing recovery that has any legs), which also means, for now anyway, more inflation in CPI is likely down the road as these new higher prices, if they stick around awhile, will tend to raise homeowners’ estimates of what their houses would rent for if they ever tried to rent them out.
That, of course, is the Bureau of Lying Statistics absurd method of calculating housing inflation — asking non-renters to take their best stab at what their houses would rent for … as if renting and owning are even the same kind of costs. It’s like asking a barber to estimate the cost of renting a bulldozer (something he never does) then using his estimate of the rental cost of a bulldozer as a stand-in for the cost of buying a bulldozer on a payment plan.
In a world where guesses are better than value among the leading statisticians, surely the Muckerberg fight is the news that really matters.
Additional dumbing down of CPI
Speaking of really dumb CPI measures. I pointed out about a year ago how the BLS was going to super-dumb-down the high inflationary effects of medical costs by subtracting out what it considered gross over-calculations from the past in monthly installments this year. That is their way to rectify their prior errors in medical costs — taking it out of this year, thus lowering this year’s overall inflation rate, even though medical costs did not actually go down this year.
Wolf Richter, today, gives a good rundown on how that program has been going and how absurdly it has reduced government-reported CPI all year. In short, the Bureau of Lying Statistics has taken health insurance costs in 2023 all the way back down to what they were in 2019, as if that actually happened this year just because the BLS screwed up the numbers in the past.
In a world where the impact of health insurance costs on consumers is done by subtracting out the equivalent of four years of past inflation and reporting that as the true number for this just to rectify past errors, surely news about the Muckerberg fight is the real news that matters most.
The BRICS are broke
Back at the start of the war, when many were talking about how the Russian ruble had survived US sanctions, I pointed out that it (like housing now) only appeared to be doing well because it had no competitors, having been taken out of the biggest market of actively traded currencies. I proclaimed “the ruble is rubble.” So, it is no surprised to read in today’s news that the rubles value has fallen to 100 rubles to the dollar, and Russia has stopped buying all foreign currencies as a way of propping the ruble up against further ruin.
Much talk was also made of how the ruble was going to be gold-backed — all also fantastic talk. Russia put a floor in the price of Russian gold. It never backed its currency with gold. It never planned to back the ruble with gold. Sometimes this stuff is just the fantasy of those who want to see the dollar fall. Oh, it’ll be replaced in due time, but it is not collapsing in the kind of climactic style many hope for — not anytime soon anyway.
What we have seen, instead, it that the BRICS two big currency competitors to the dollar are now both practically quivering piles of ruin. They have become the corpses of the currency world. That doesn’t mean the BRICS won’t create a currency that competes against the dollar, as has also been much talked about, but they are not going to exactly find a lot of global trust (the foundational value of all modern currencies) when the currencies of the main nations behind the new currency are falling all apart. The BRICS are bruised and rather badly.
China, today, announced, in somewhat related news, it will be regulating about a 1,000 small yuan hedge funds out of business because there is too much damaging speculation in its hedge-fund industry.
This should still all be relatively good for gold, however.
Covid drives doctors mad
In what I am calling the “Covid Redux,” talk of masking has returned as Covid cases rise about 80% globally. Of course, the numbers are nowhere near as high as during the plague, so the CDC and others are pumping the numbers by telling people they are much lower than they were in 2020 because health agencies are no longer doing anywhere near as much testing:
The WHO warned that the reported number of cases and deaths do not reflect the true numbers, in part because countries carry out far less testing and monitoring than during earlier stages of the pandemic…. The WHO has urged countries to ramp up vaccination efforts. Pharmaceutical firms Pfizer/BioNTech, Moderna and Novavax are all working on updating their Covid vaccines to target [the new] XBB subvariants.
The experts just don’t have the capacity any longer apparently to get the numbers up where they want them, such as by deeming anyone who dies of a motorcycle accident on the way to the clinic to be tested for Covid a “Covid-related death.” Because the WHO and CDC are doing their best to upgrade alarms and create more vaccines to foist upon us all, I have also included a headline in today’s news to an article celebrating the valor of the unvaccinated who stood against great persecution by the Vax totalitarians when those latter Trojans tried their best to seize control of the world during the Covidcrisis via severely damaging economic warfare.
A pox upon weather tellers, too
And, in other news of literally desperate measures, news stories are now measuring the temperature of beach sand to prove the case of global warming. Apparently, it is a new-found surprise that sand, rock and concrete can sometimes get hot enough in the summer to burn your feet if you try to stand in one place too long, while grass remains much cooler.
Unless you’re showing me a picture of an egg frying on the beach or being poached in the hot ocean, please don’t bother telling me the sand gets hot in the summer. We all know this. (Story included as an example of extreme weather reporting where it is not the weather that is extreme, but the reporting.)
Now, you can cool off with this: In order to save us from the heat, Biden just announced he is spending $1.2 billion to suck the air that plants breathe out of the air that we breathe. CO2 — plant oxygen that makes the world ideal for plant life — will be removed by giant vacuum cleaners.
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