What Does This Miscellaneous Aggregation of Some Startling Numbers Tell Us?

What does this miscellaneous aggregation of some startling numbers tell us about the economy and the markets?

- The Philly Fed Manufacturing Report was the worst since the Great Recession, excluding the Covid pandemic.

Comment: Compare this to all the talk about a strong economy - compliments of the current administration, of course. But, hey, isn't that always the way? Remember when the previous President took all the credit for the strong stock market at least when it was strong. When the worm turns, have you ever heard a President of member of the administration say, "Yeah, that miserable market/economy is all due to our actions"?

If you keep you eyes and ears open, and filter out the obvious (or at least should be obvious) BS, you may see what's really going on with the economy these days.

- Fed's Other Deposit Liabilities  (ODL) decreased 7.2% in January. ODL is a measurement of money supply. It is considered a better indicator of money supply than the more traditional M2 measure. The drop over the last 12 months was a record. As a measure of money supply, it is a leading indicator of credit. According to Lacy Hunt, the contraction in money coupled with a rise in interest rates has reduced the desire of banks to lend and the desire of businesses and individuals to borrow. 

Comment: If Mr. Hunt's analysis bears weight, contrast this with the fact that the Fed has only reduced its balance sheet around 3% since it said it would be doing so. This is insignificant and would indicate that there's no tightening of availability of credit. So weigh the two views.

Why is this important? Because there's a lot of chatter from the Fed and most media and Wall Street sources about the rate hikes. The Fed folks assert they'll raise rates until they quell inflation. But few question this. Does raising rates serve as the sole antidote to inflation? Or, as one of our Brain Trust guys has asserted ever since we initially subscribed over a decade ago, do we need to see credit tightening along with rate hikes?

Add to this the fact that even at its current rate, if inflation is higher, the current rate remains negative. That's right, we've still go negative interest rates operating out there. And another view (from the same Brain Trust guy but also other trusted sources) asserts that rates need to be around 3% higher than the rate of inflation to have any real dampening effect. We're far from that. According to the St. Louis Fed, the current "effective" rate (their term) is 4.33%. With inflation somewhere north of 6% (at the least - some non-government calculations have it much higher) you see the difference, right? It's a negative number, at least around -2%. That won't do the trick.

- For those who are skeptical about recent economic data being put forth by official government sources (e.g., unemployment, retail sales, unemployment claims, oil reserves, etc.) there's this article that culminates with "In other words, there will be another 12 months of randomly fabricated data meant to serve just one narrative - a political one - instead of representing the true (sad) state of the economy. The problem is that the Fed, and the market, are both using this flawed, seasonally manipulated adjusted data to make monetary policy and capital allocation decisions; decisions which in retrospect one year from today will be proved to have been dead wrong."

You might dismiss this, but before you do, give it some attention and consideration. Frankly, it's hard to see how folks accept what the government dishes out blindly, or at least without some serious parsing, questioning, and a touch of skepticism. Seriously. It's hard to fathom folks who believe almost anything the government proffers. Not that we all didn't accept the Covid checks they sent without question. But aside from that, can your really be excused if you believe politicians of either party?

But it goes beyond the natural skepticism of politicians' babble. Unless I'm mistaken, the BS seems to have been ramped up exponentially these days. 

You see, lies aren't a problem for so many these days. They justify lying by claiming their lies serve some sort of "higher purpose." But, seriously, anything thought to be "higher" purpose necessarily must have issued from a Higher Being. And given that, does anyone seriously believe God thinks it's OK if we lie - especially if that's our steady diet?

With that in mind, let's wrap up with a couple miscellaneous comments from sources that know a thing or two about a Higher Being: 

- The fool hath said in his heart: There is not God. (Psalm 13)

- A man without prayer is an animal without reason (St. Philip Neri, patron saint of Rome)