The Weekly Quill — Productivity Paralyzed

The Unknown of the Post-Stimulus U.S. Economy Encumbers Corporate America

Honorable men take full credit for their actions. Honorable men do not belittle, berate and bully. And honorable men shoot equines out of their misery, but only if they are fatally injured. But what of a man who commands his soldiers take no prisoners and later denies issuing such an order even as his subordinates’ reputations are destroyed? What of a man who callously shoots dead two mules and orders them pushed off a bridge because they’d slowed the progression of his armored convoy? And what of a man who encounters a soldier hospitalized with combat fatigue and proceeds to repeatedly slap, curse and threaten to either send him to the front lines or have him killed by a firing squad? Witnesses to such acts including members of the press were a huge distraction for Dwight D. Eisenhower in 1943 as he hustled to call in favors to bury the incidents for the sake of the war effort.

Word eventually got out. It always does. In late November 1943, the incidents hit the headlines in the States causing such an uproar that many in the U.S. Congress lobbied for one George Smith Patton Jr. to be stripped of his rank. While this effort failed, the Senate nonetheless delayed Patton’s promotion to permanent major general. And though he never lost his job, the string of incidents cost him the prestigious and historic role of commanding ground forces in June 1944’s invasion of Normandy.

One might hastily conclude that Patton is the last paragon of leadership to emulate. Nothing could be further from the truth. For many, their knowledge of the great general was conveyed in Patton, the 1970 powerhouse film that swept the Oscars earning Best Picture, Best Actor, Best Original Screenplay, Best Director and Best Editing, among others. That’s not such a bad thing as the movie was true to both the military genius and equally his dark side that made him who he was.

George C. Scott, whose status as a Hollywood icon was solidified with that one role, said this of Patton’s persona of which he masterfully took possession: “I believe this man was an individual in the deepest sense of the word. If that is the only message, it’s the goddamndest finest one we’ve had come along in a long time. It is my conviction that had Patton been in charge, the war would have been perceptibly shorter, with thousands less casualties…our position today would have been different in regards to Russia. He possessed qualities and elements in his personality that are sadly lacking in men today.”

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The Way to Want, Danielle Dimartino Booth of Quill Intelligence

The Way to Want — The Politics of Economics

“What is a butterfly?
At best, He’s but a caterpillar dressed.
The gaudy fop’s his picture just, as Poor Richard says. 

But what madness must it be to run in debt for these superfluities! We are offered, by the terms of this vendue (public auction), six months’ credit; and that perhaps has induced some of us to attend it, because we cannot spare the ready money, and hope now to be fine without it. But, ah, think what you do when you run in debt; you give to another power over your liberty. If you cannot pay at the time, you will be ashamed to see your creditor; you will be in fear when you speak to him, you will make poor pitiful sneaking excuses, and by degrees come to lose you veracity, and sink into base downright lying; for, as Poor Richard says, the second vice is lying, the first is running in debt. And again, to the same purpose, lying rides upon debt’s back…When you have got your bargain, you may, perhaps, think little of payment; but creditors, Poor Richard tells us, have better memories than debtors, and in another place says… the borrower is a slave to the lender, and the debtor to the creditor, disdain the chain, preserve your freedom; and maintain your independency: be industrious and free; be frugal and free. At present, perhaps, you may think yourself in thriving circumstances, and that you can bear a little extravagance without injury; but,

For age and want, save while you may;
No morning sun lasts a whole day.” 

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

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Apocalypse Later — “Someday this war on investor’s gonna end …”

Lt. Col. Bill Kilgore’s best on-screen moment did not end with the utterance of “napalm,” that soul-searing substance that still lingers in the minds of a troubled generation. No, his words were not powerful for the overt horror elicited, but for their resigned sense of hopelessness, the disquiet induced as his speech to his troops trails off, “Someday this war’s gonna end…”

Speak to veterans of Vietnam and they will tell you the deeply divisive war did not have to end as it did. I’m proud to be related to one of the soldiers who fought valiantly and with honor. What went wrong is sadly straightforward. Without getting swept up in politics, from a purely strategic perspective, Americans did not hold the ground they’d won. “Search and destroy” missions required U.S. soldiers to take enemy territory, in many cases destroying its livability in the process, and move on to the next target. The Viet Cong were pushed out but for a moment — as soon as American patrols left the area, they would return and rebuild with more reinforcements and win the confidence of the South Vietnamese in the process. Worse yet, American soldiers would rebuild a bridge the enemy had destroyed and promptly abandon it to be blown to bits once again.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Danielle DiMartino Booth, Quill Intelligence, GERMANY ECONOMIC REUNIFICATION3

Germany’s Economic Reunification — Can China Save the Global Reflation Trade?

Will the real Easter please stand up? Roughly one-in-three inhabitants of our shared planet can tell you that “on the third day” after the crucifixion, Jesus rose from the dead and ascended into heaven. They can also tell you what preceded the crucifixion — the Last Supper. That particular breaking of unleavened bread also happened to be a Passover feast, which marks the Jewish Exodus from slavery in Egypt. Or at least, that’s the version conveyed in Matthew, Mark and Luke. There was blanket agreement among the earliest Christians that what followed the ultimate sacrifice — life itself and new beginnings — should be commemorated. As for the day Easter would be celebrated, time would bring controversy.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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The New Unicorns on the Block

Few legends have had humbler beginnings than that of the unicorn. In fact, the literary introduction of this wondrous creature was met not with fanfare and adulation but  with such derision that the author of the beast became nothing if not Ancient Greece’s answer to literary mockery.  Adding self inflicted insult to the chronicler’s injury, was the reality of what we think of as an otherworldly, graceful beast being nothing more than a large, wild ass. Unknowingly, Ctesias, the much-mocked ancient author, did the greatest kindness to artists, dreamers and little girls through the ages by immortalizing the unicorn in his mid-fifth century B.C. Indica. Until Alexander the Great launched his ill-fated campaign to conquer India in 326 B.C., the book would stand as the only written account of life north of Persia. In Indica, Ctesias relayed other incredulous beings such as the Skiopolae, a ginormous people whose feet were so big they could be used as shelter from the elements, and the martikhora, a red creature with the face of a man, three rows of teeth and a scorpion’s stinger on its tail. (There were also mundane accounts of massive mountains, a.k.a. the Himalayas, and creatures of indescribable proportions, which were in fact, elephants.)

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Danielle DiMartino Booth, Quill Intelligence, LA COSA NAFTA

La Cosa NAFTA

Why go with the Ancient when you can go Mod and have it both ways? There still exists a place, or two, where Greek meets Latin, where you don’t have to choose which of the cultures bests the other, because you can indulge in both at the same time. The journey requires you venture to the tip and heel of Italy’s boot, to the regions of Bovesia and Grecìa Salentina. There, Griko is spoken as it was when the Greeks first crossed the Strait of Otranto in the 11th century BC, where the transcendental turquoise waters of the Adriatic and Ionian Seas meet as one. In that Griko and Standard Modern Greek are close cousins, you can partake of the delights of both Italy and Greece without moving an inch.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Danielle DiMartino Booth, COUNTING CRANES ON MARS5 sm

Counting Cranes on Mars — Central Bank Stimulus & Global Commercial Real Estate

Are we in good company? Were we at some point? It would seem we have a little bit more waiting to do. It isn’t until 2020 that we can get six feet under to ascertain if signs of life on Mars come from within its fertile (?) soils or if a whiff of an organic presence happened upon the Red Planet by way of its solar surroundings. The European Space Agency’s ExoMars spacecraft, scheduled to touch down in 2020, will be capable of drilling deeper that NASA’s Curiosity rover, characterized as an engineering marvel conveniently housed in an SUV body. Being restricted to 2-inch forays into a watery lake bed that once filled Mars’ Gale Crater revealed sulfur-spiked rocks containing organic molecules (LIFE!). Three Martian meteorite landings later, researchers at the Carnegie Institution for Science were able to probe deeper and confirm the 3.5-billion-year-old carbon footprint.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Bloomberg Opinion, Bear Market, Danielle DiMartino Booth, Quill Intelligence

How to Identify a Bear Market Rally

History is replete with examples of major stock market recoveries following big sell-offs, many of which turn out to be head fakes.

This article originally appeared in Bloomberg Opinions — 2.24.19

 

The remarkable rebound in the U.S. stock market from the lows in late December has resulted in gains that the analysts at Goldman Sachs rightly point out already constitute banner returns for an entire calendar year. History is replete with examples of major recoveries following big sell-offs, many of which turn out to be head fakes otherwise known as bear market rallies. At the end of the trading day, it’s still fundamentals that should drive investing decisions.

If the economy is, in fact, slowing and that is what has sidelined the Federal Reserve, then what we are witnessing at the moment is a bear market rally. AdMacro Ltd head of research Patrick Perret-Green recently warned the firm’s clients that though the January employment jobs report might have looked good on paper with 304,000 jobs created, it nevertheless flashed a bright recession signal as the unemployment rate ticked up to 4 percent, the highest since June.

According to historic payroll data and the National Bureau of Economic Research, every time the three-month average unemployment rate exceeded its six-month average at cycle peaks over the past 50 years — like it did in January — the U.S. economy has experienced a recession. In a 2016 speech to the International Monetary Fund, then Federal Reserve Bank of New York President — and current Bloomberg Opinion contributor — William Dudley corroborated the historic pattern citing research first conducted earlier in his career at Goldman Sachs:

“History shows it is very difficult to push the unemployment rate back up just a little bit in order to contain inflation pressures. Looking at the post-war period, whenever the unemployment rate has increased by more than 0.3 to 0.4 percentage points, the economy has always ended up in a full-blown recession with the unemployment rate rising by at least 1.9 percentage points. This is an outcome to avoid, especially given that in an economic downturn the last to be hired are often the first to be fired.”

To Dudley’s point, the odds that layoffs will continue rising are high. As per January data from Challenger, Gray & Christmas, layoffs have risen over the prior year for six straight months. Economists would characterize that as an established trend. Retail and more recently, energy, have been some of the weakest sectors. Media is another sore spot.

Backing out to the broader economy, one of the fastest growing reasons for increased layoffs last year was mergers and acquisitions. There’s likely to be no letup in 2019 after last year’s record M&A activity, which is just one of the more creative avenues companies have pursued to reduce costs in recent years. The looming earnings recession will compel firms to be more direct in their approach, as in outright headcount reduction to protect profit margins.

Auto dealers are struggling to shoulder the weight of the most crowded lots in almost two years. As a result, auto production contracted in January, promising to pressure Midwest manufacturing, a stand out area of the economy in recent months as other regions faltered. As is the case with the earnings sudden stop, motor vehicle and parts swung from 8.4 percent year-on-year growth in December to a 0.7 percent contraction in January, according to Industrial production data from the Fed.

Although autos were a sweet spot in the delayed December retail sales release, that strength appears to be wavering as cumulative tax refunds disappoint. In the first 18 days of the tax season through Feb. 21, cumulative refunds totaled $36.3 billion, down $61.7 billion, or 63 percent, from the same period last year. This portends poorly for the seasonal surge in auto buying and consumer spending tied to households’ propensity to spend the majority of their tax refund proceeds. If anything, Fed data show households are hunkering down, with checking and savings account balances rising dramatically, moves generally associated with spending pullbacks.

It is the combination of an earnings recession and an economic slowdown that derail parallels with the 2015-16 stock swoon and rebound. As breathtaking as the rally off the Christmas Eve lows has been, it is not at all unusual to see protracted and magnificent surges punctuate bear markets. In the five months through August 1989, the S&P 500 rallied 19.2 percent before backsliding.

What makes the current run historically remarkable is the magnitude of the 10.5 percent rally in such a short time span, which belies the bottoming of the unemployment rate in the face of accelerating layoffs.

Bear Market Rallies can be Protracted and Pronounced

It was a bit curious to read in his recent Bloomberg Opinion commentary that Dudley thought it was “hard to see how the normalization of the Fed’s balance sheet tightened financial conditions in a way that would have weighed significantly on stock prices.” The current bear market rally was, after all, catalyzed by Chairman Jerome Powell’s assurances that quantitative tightening might be suspended soon, a stance since corroborated by both hawkish and dovish Fed officials.

Skeptical investors have been badly bruised if they were emboldened to fight both the Fed and the C-Suite at the same time. There is one force, however, that trumps both of these faith-based investing approaches and that is economic fundamentals. This may be a bear market rally for the ages, but that shouldn’t imply investors should do anything other than rent it. Owning it promises to end in tears.

This article originally appeared in Bloomberg Opinions — 2.24.19

Jay and the Giant Pension — Central Banks’ Dilemma Defined

Sometimes the shoe fits. September 13, 2016 would have marked the 100-year anniversary of British children’s author Roald Dahl’s birth. In rejecting appeals to issue a commemorative coin celebrating his life, the Royal Mint noted the author was, “associated with antisemitism and not regarded as an author of the highest reputation.” Dahl did indeed make incendiary and hateful remarks stemming from Israel’s 1982 invasion of Lebanon which Israel felt justified in undertaking, and which did in truth result in 15,000-20,000 civilian deaths. Upon learning of his stained character by his own words, that even seemed to give Adolph Hitler a pass, I resolved to move on to a theme other than Dahl which had been my first intent, for this week’s missive. It would not be one caricatured by Jay Powell careening downhill in a giant peach that laid waste to his nemeses.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Quill’s Quintessential Quest — The Neverending Search for the Holy Grail of Economics

To be truly faithful, one must commit to the seemingly impossible. Add acts of apparent random to the faith, and sometimes the impossible becomes the possible. So it was for two faithful researchers whose journey had them stumbling upon the Holy Grail of an ageless quest. In a 2014 book, “Los Reyes del Grial,” (“The Kings of the Grail), Margarita Torres and Jose Miguel Ortega del Rio maintain that the quest had ended. They had definitively identified the most sought after chalise from which Jesus Christ drank at the Last Supper, one in the same with that then used by Joseph of Arimathea to collect Jesus’ blood as it flowed from His side at the crucifixion.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website —  www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

Amazon.com | Barnes & Noble.com | Indie Bound.com  |  Books•A•Million