October 4
Faster GDP growth can stabilize the deficit, IF Congress exercises modest fiscal restraint by capping spending at the rate of nominal GDP growth.
Unfortunately, demographics largely drive spending and demographics are destiny.
The New York Times is apoplectic because even after the devastation from the recent hurricane the public is unwilling to harm the economy by accelerating the pace of “green investment.”
https://www.nytimes.com/2024/10/02/opinion/hurricane-helene-climate-change.html
Earlier this week , my friends and I discussed climate change. Most were skeptical about the idea of climate change. Others expressed views similar to mine; yes climate change is real but the causes are complex, the benefits of green investments are decades away, and unless every nation takes action a rush to green destroys capital.
APA and CDE are worth a look. See below.
Tim Walz like too many American politicians does not understand the constitutional right to free speech. Hate speech is protected by the First Amendment. See below under Politics.
Markets and Stocks
Momentum is to the upside but the market is not cheap; consequently, buy on dips.
NVDA CEO Huang told CNBC that "Blackwell is in full production, and demand for Blackwell is insane and on-schedule. Everyone wants to be the first to get their hands on it."
Here is the video of the full interview. The last minute is about the “insane demand” for the Blackwell platform.
The weekly jobless claims are consistent with a stable and reasonably strong labor market. If the labor market is okay, then the economy is okay.
Fed Chair Powell made it clear this week, the FOMC believes that inflation is on a glide path to 2% inflation.
Two more 0.25% rate cuts are plausible before year end. Policy is currently very tight. Rates are restraining economic activity.
My mantra continues: the economy is expanding, inflation is falling, earnings are accelerating and the Fed is cutting; so, equities should grind higher.
Below I write about CDE, a play on silver and gold prices and about APA, a bet that the oil field off of Surinam will be a GIANT.
The Japanese yen on Wednesday suffered its biggest drop in more than two years after Japan’s new prime minister, Shigeru Ishiba, jolted currency markets by saying the economy isn’t ready for another interest-rate hike.
The Japanese currency fell more than 2% to close near a session low of 146.51 per dollar after Ishiba’s comment, which was followed by similarly cautious remarks from Bank of Japan Governor Kazuo Ueda. The decline marks the yen’s sharpest daily drop since June 2022, far surpassing the swings seen during the intense market volatility of early August.
Is the technology carry trade back on ?
France's TotalEnergies and American APA Corp, symbol, APA, Tuesday announced a positive investment decision for Suriname's most promising oil and gas project, Block 58, which is expected to inaugurate the nation's offshore output. The transaction is a 50/50 JV between the two companies.
TotalEnergies expects to begin output at the $10.5 billion project in the first half of 2028.
The small South American country wants to follow in the footsteps of neighboring Guyana, where a consortium led by Exxon Mobil has discovered more than 11 billion barrels of recoverable oil and gas resources.
My thoughts: it could be a home run, or just a lot of black holes. But I think it’s worth following.
Coeur Mining is also an interesting speculation. The symbol is CDE. The share price is just over $7.00. I like the idea but it is risky. I think it is worth a punt, wager .
Coeur Mining, Inc. today reported year-end 2023 proven and probable reserves of 3.2 million ounces of gold and 243.9 million ounces of silver, net of depletion.
Measured and indicated resources totaled 3.2 million ounces of gold, 196.3 million ounces of silver, 1,517 million pounds of zinc and 768.7 million pounds of lead, reflecting year-over-year increases for all metals driven by additions at Palmarejo, Rochester, Wharf and Silvertip.
Silver just hit its highest price in more than a decade, and growing demand and falling interest rates mean it could have more room to run.
On Thursday, silver hit $32.43 an ounce, its highest price since 2012. The metal is up 35% so far this year. That beats a 30% rally for gold, which has been trading at all-time highs.
Still, silver also stands to benefit from other tailwinds, including increasing demand. The commodity plays a significant role in the global economy’s transition to green energy, as a key component in solar panels and electric car batteries. See Barron’s.
I am interested in gold and silver both because of increased demand from India and also as hedges against the fiscal profligacy of the U.S. government
India's silver imports are on course to nearly double this year due to rising demand from solar panel and electronics makers, and as investors bet the metal will give better returns than gold, leading importers said on Friday.
Higher imports by the world's biggest silver consumer could give further support to global prices , which are close to their highest level in more than a decade. India imported 3,625 metric tons of the white metal last year.
This year's purchases could rise to between 6,500 and 7,000 tons due to the rising industrial demand, said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer.
India's silver imports in the first half of 2024 jumped to 4,554 tons from 560 tons a year ago, trade ministry data showed.
"There is a traditional demand for jewellery. People are also buying for investment purposes now that the duty cut has made silver more affordable," Thakkar told Reuters on the sidelines of the India Gold Conference.
India slashed import duties on silver in July to 6% from 15%, a step aimed at tackling smuggling.
Thakkar said investment demand had been "phenomenal" in the first half of the year as people bought silver anticipating that it would give them a better return than gold.
Local silver futures hit a record high of 96,493 rupees ($1,151) per kilogram in May and are up nearly 14% so far in 2024, slightly exceeding a 13% increase in gold prices.
https://www.reuters.com/world/india/indias-silver-imports-double-demand-solar-investment-2024-08-23/
Economics
Why are labor monopolies that harm the economy and the consumer legal, but big technology monopolies that benefit the consumer and promote economic efficiency, illegal?
‘They won’t be able to sell cars. They won’t be able to stock malls. They won’t be able to do anything in this country without my f—ing people. And it’s about time they start realizing it,’ says International Longshoremen’s Association chief Harold Daggett, who is leading the dockworkers strike from Texas to Maine.
The profane 78-year-old is throwing himself behind an effort to win a historic pay increase, get dockworkers behind his goal of halting automation in its tracks, and establish longshore labor as a formidable partner in global trade.
Why do politicians fret so much about manufacturing?
Manufacturing
Politicians of all stripes promise to restore manufacturing to its historic role as a source of good jobs for Americans. They blame trading partners like China, Germany and Mexico for unfairly stealing those jobs. They blame corporations for outsourcing those jobs. They blame unions for hampering manufacturing companies’ growth. Democrats blame Republicans. Republicans blame Democrats. Voters pine for a golden age in our immediate rearview mirror when most Americans had high-paying, stable manufacturing jobs.
The facts tell a different story. According to the Bureau of Labor Statistics, manufacturing’s share of nonfarm employment declined from roughly 32% in 1947 to approximately 8% at the end of 2023. Yes, there was a slight increase in the rate of decline around 2001, when China entered the World Trade Organization. But you have to stare pretty hard to see the effect. In any event, that effect is trivial compared to the long, slow, inexorable decline in the importance of manufacturing as a source of U.S. jobs.
Has the decline in manufacturing been the catastrophe portrayed by various politicians? Hardly. Inflation-adjusted gross domestic product per capita increased from around $15,000 in 1947 to about $66,000 in 2023. Real per capita disposable income rose by a similar rate. So it isn’t true that our prosperity depends on having most people work in the manufacturing sector—quite the opposite. Technology has dramatically raised labor productivity in manufacturing. Automakers here and abroad need far fewer employees now than they did in 2000 to make better cars than they used to. That’s a powerful force reducing employment in the auto sector—and the same is true in many other industries.
Per capita income couldn’t have risen so dramatically if most of the workers who left manufacturing landed up working in fast-food restaurants. Americans moved from manufacturing to other types of jobs in which their labor is needed and their level of productivity allows their employers to compete. Financial services, medicine, biotech and higher education are all examples of industries that have grown dramatically over time and powered our prosperity. The icing on the cake is that banking and software are huge U.S. exports.
NBER working paper 32997 makes the interesting point that regulations that limit hours and years worked are impediments to building wealth.
We document large differences in lifetime hours of work using data from the NLSY79 and argue that these differences are an important source of inequality in lifetime earnings.
To establish this we develop and calibrate a rich heterogeneous agent model of labor supply and human capital accumulation that allows for heterogeneity in preferences for work, initial human capital and learning ability, as well as idiosyncratic shocks to human capital throughout the life-cycle.
Our calibrated model implies that almost 20 percent of the variance in lifetime earnings is accounted for by differences in lifetime hours of work, with 90 percent of this effect due to heterogeneity in preferences.
Higher lifetime hours contribute to lifetime earnings via two channels: a direct channel (more hours spent in production at given productivity) and a human capital channel (more hours spent investing in human capital, which increases future productivity).
Between a third and a half of the effect of lifetime hours on lifetime earnings is due to the human capital channel. Our model implies that policies that limit long hours have important effects on both the mean and variance of lifetime earnings.
https://www.nber.org/papers/w32997
Politics
Vice President candidate Walz is ignorant about the constitutional right to free speech.
When Vance pivoted to correctly pointing out that Walz had previously "said there's no First Amendment right to misinformation," Walz said there is no right to hate speech.
Walz is wrong. While clear and present threats aren't protected by the First Amendment, "hate speech" most certainly is. Speech that is merely offensive—and not part of an unprotected category like true threats or harassment—has full First Amendment protection. Walz's mistaken belief that it seems intuitively impossible for Americans to express offensive or hateful ideas reveals a censorious nature, which is extremely troubling for someone seeking the vice presidency.
"The Supreme Court of the United States has repeatedly rejected government attempts to prohibit or punish hate speech." The First Amendment recognizes that the government cannot regulate hate speech without inevitably silencing the dissent and dialogue that democracy requires. Instead, we as citizens possess the power to most effectively answer hateful speech—whether through debate, protest, questioning, laughter, silence, or simply walking away."
https://reason.com/2024/10/02/yes-tim-walz-you-can-shout-fire-in-a-crowded-theatre/
Sociology
@paulg The amount of time young men spent gaming was not exactly low in 2019. Usually when you see dramatic growth it's from a low starting point, but this is dramatic growth from a high starting point.
@robkhenderson Instead of gaming young men should be lifting and reading books instead. If books are too tall an order, my newsletter is an acceptable substitute.