Wilbur Ross has agreed to sell some — but not all — of his sprawling web of assets should the billionaire be confirmed as Donald Trump’s commerce secretary. …read more
Source: Wilbur Ross is keeping some of his empire
By Tyler Durden
Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,
This week, Congress passed a budget calling for increasing federal spending and adding $1.7 trillion to the national debt over the next ten years. Most so-called “fiscal conservatives” voted for this big-spending budget because it allows Congress to repeal some parts of Obamacare via “reconciliation.” As important as it is to repeal Obamacare, it does not justify increasing spending and debt.
It is disappointing, but not surprising, that the Obamacare repeal would be used to justify increasing spending. Despite sequestration’s minor (and largely phony) spending cuts, federal spending has increased every year since Republicans took control of the House of Representatives. Some will attribute this to the fact that the Republican House had to negotiate with a big-spending Democratic president — even though federal spending actually increased by a greater percentage the last time Republicans controlled the White House and Congress than it did under President Obama.
The history of massive spending increases under unified Republican control of government is likely to repeat itself. During the presidential campaign, President-elect Donald Trump came out against reducing spending on “entitlements.” He also called for a variety of spending increases, including spending one trillion dollars on infrastructure.
One positive part of the infrastructure proposals is their use of tax credits to encourage private sector investments. Hopefully this will be the first step toward returning responsibility for building and maintaining our nation’s infrastructure to the private sector.
Unfortunately, the administration appears likely to support increased federal spending on “shovel-ready” jobs. Claims that federal spending helps grow the economy rely on the fallacy of that which is not seen. While everyone sees the jobs and economic growth created by government infrastructure projects, no one sees the greater number of jobs that could have been created had the government not taken the resources out of the hands of private businesses, investors, and entrepreneurs. Despite what some conservatives seem to think, this fallacy applies equally to Republican and Democrat spending.
President-elect Trump has criticized the past two administrations’ reckless foreign policy, and he has publicly shamed the powerful Lockheed Martin company for wasting taxpayer money. Yet, he continues to support increasing the military budget and has called for increased military intervention in the Middle East.
The fact is the United States already spends too much on militarism. Not only does the United States spend more on the military than the combined military budgets of the next eight highest spending countries, but Pentagon waste exceeds the total Russian military budget.
America can no longer afford to waste trillions of dollars on a militaristic foreign policy. Donald Trump should follow-up his attacks on wasteful military spending by dramatically changing our foreign policy and working to cut the Pentagon's bloated budget.
If the new administration and Congress increase spending, they will need the Federal Reserve to monetize the growing debt. The need for an accommodative monetary policy gives the Federal Reserve and its allies in Congress and in the deep state leverage over the administration. …read more
Source: Ron Paul Asks "Will Trump Continue The Bush-Obama ‘Big Spending’ Legacy?"
By Tyler Durden
Authored by Ludwig von Mises via The Mises Institute,
Profits are never normal. They appear only where there is a maladjustment, a divergence between actual production and production as it should be in order to utilize the available material and mental resources for the best possible satisfaction of the wishes of the public. They are the prize of those who remove this maladjustment; they disappear as soon as the maladjustment is entirely removed. In the imaginary construction of an evenly rotating economy there are no profits. There the sum of the prices of the complementary factors of production, due allowance being made for time preference, coincides with the price of the product.
The greater the preceding maladjustments, the greater the profit earned by their removal. Maladjustments may sometimes be called excessive. But it is inappropriate to apply the epithet “excessive” to profits.
People arrive at the idea of excessive profits by confronting the profit earned with the capital employed in the enterprise and measuring the profit as a percentage of the capital. This method is suggested by the customary procedure applied in partnerships and corporations for the assignment of quotas of the total profit to the individual partners and shareholders. These men have contributed to a different extent to the realization of the project and share in the profits and losses according to the extent of their contribution.
But it is not the capital employed that creates profits and losses. Capital does not “beget profit” as Marx thought. The capital goods as such are dead things that in themselves do not accomplish anything. If they are utilized according to a good idea, profit results. If they are utilized according to a mistaken idea, no profit or losses result. It is the entrepreneurial decision that creates either profit or loss. It is mental acts, the mind of the entrepreneur, from which profits ultimately originate. Profit is a product of the mind, of success in anticipating the future state of the market. It is a spiritual and intellectual phenomenon.
The absurdity of condemning any profits as excessive can easily be shown. An enterprise with a capital of the amount c produced a definite quantity of p which it sold at prices that brought a surplus of proceeds over costs of s and consequently a profit of n per cent. If the entrepreneur had been less capable, he would have needed a capital of 2c for the production of the same quantity of p. For the sake of argument we may even neglect the fact that this would have necessarily increased costs of production as it would have doubled the interest on the capital employed, and we may assume that s would have remained unchanged. But at any rate s would have been confronted with 2c instead of c and thus the profit would have been only n/2 per cent of the capital employed. The “excessive” profit would have been reduced to a “fair” level. Why? Because the entrepreneur was less efficient and because his lack of …read more
Source: In A Free Market, No Profit Is "Excessive"
By Tyler Durden
As we observed in yesterday morning’s market wrap, while US market were taking the day off for the MLK holiday, China was busy defending an accelerating selloff across its stock markets.
During Monday trading, having traded quietly lower for the past few days, Chinese stocks tumbled in early trading on the mainland and in Hong Kong’s offshore market amid weakness in Asian equities. The Shanghai Composite Index dropped as much as 2.2% to head for its fifth loss in as many days, its longest losing streak since Aug. 2015.However a sudden bout of late afternoon buying sent the loss down to just -0.3%, on speculation China’s national team was once again back in the markets.
The exact same pattern emerged overnight as well:
Very much like the previous day, China’s CSI 300 Index climbed 0.2% on Tuesday, after earlier losing as much as 0.8%. On Monday, the index recovered from an intraday drop of 1.7% to close little changed, with some traders speculating the afternoon rally was caused by state buying.
We now have confirmation that, indeed, after a long hiatus, it was precisely the “national team” that had made an appearance, and was propping up stocks with an explicit directive: don’t let stocks drop during Xi Jinping’s trip to Davos. It is almost as if it is a rite of passage for Davos participants to demonstrate how effective they are at manipulating their stock market.
As Bloomberg reports today, China has taken “steps” to support its stock market this week – by which it means ordered various central bank conduits to buy stocks during selloffs – “according to people familiar with the matter, as President Xi Jinping’s appearance at the World Economic Forum in Davos puts Asia’s largest economy in the global spotlight.”
Apparently China did not question what it would look like once it emerged that it is manipulating its market to give the false impression of stability at a time when Xi was addressing Davos, and expounding on the glorious benefits of globalization and liberalization… if not so much for asset price discovery or the yuan, of course.
State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes, the people said, asking not to be identified because they aren’t authorized to discuss the matter publicly. China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions, the people said.
To be sure, Chinese authorities have traditionally intervened in markets before and during events of political significance, with government funds stepping in to boost stocks before a key meeting of the National People’s Congress last year and before a 2015 military parade celebrating the 70th anniversary of the World War II victory over Japan.
“China is doing this probably because it wants to paint an image of positivity as President Xi attends Davos,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. Stocks will continue …read more
Source: China Orders No Market Selloffs During President’s Davos Trip
By Tyler Durden
Today's trading brought to you by the letter “B” and not by the number 20,000…
“B” is for Breaking narratives.. as the reflation trade rolls over…
“B” is for Brexit talk from Theresa May sparked the biggest surge in cable since 1993, smashing back above 1.2400…
“B” is for Banks stumbled most since the election…(despite great earnings from MS today)
“B” is for Brazil declined Saudi production cut request and hit oil prices…
“B” is for Bullion – soaring up 16 of the last 18 days (7 in a row), touching $1220 today…
“B” is for Bonds which saw yields plunge today…. (yields down 4bps to 7bps across the curve today)
Not surprising given the record short position…
And “B” is for Blood on the streets in FX land…
* * *
Year-to-date, gold is the biggest winner and The Dow back unchanged…
Small Caps end the day in the red for 2017…
Banks led markets lower…
And Banks and Energy stocks are the year's biggest losers…
VIX somehow manage to end with an 11 handle…
All the majors rallied against the greenback today but it was cable that outperformed…
Since The Fed hiked rates, bonds have rallied… “policy error”?
Are stocks ready to drop back to reality?
Source: Trump Bump Stalls Amid Bullion, Brexit, Banks, Bonds, Brazil, & Black Gold
Lyft explains how carpooling and tolls could end traffic. …read more
Source: Lyft: Here’s how to make America’s roads great again
Under pressure from Trump, GM plans to invest $1 billion in U.S. plants, add or retain 1,000 jobs. …read more
Source: GM to invest $1 billion in U.S. plants
Advocacy groups claim that OneWest, once run by Steve Mnuchin, deliberately avoided making loans to African Americans, Asian Americans and Latinos. …read more
Source: Bank owned by Mnuchin accused of discrimination
Shares of Corona distributor Constellation Brands have dropped 10% since the election due to concerns about how Trump’s tax and immigration policies will impact the beer company. …read more
Source: Corona has a Trump-Mexico problem
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