By Robert Romano

Producer prices fell 0.2 percent in May, led by a 5.4 percent drop in energy, according to the latest data from the Bureau of Labor Statics, and following 0 percent change in consumer prices reported a day earlier. Producer prices overall for the last year have increased 2.2 percent.

The news comes as the U.S. dollar has been strengthening on a net basis for much of this year, currently growing at 3.5 percent over the past 12 months, with the nominal broad U.S. dollar index now at 123.87 as of June 7, according to the latest Federal Reserve data.

Whereas a weak dollar tends to push up asset prices, whether in commodities, equities, real estate or cryptocurrencies, a strong dollar tends to slow down their increases, and if sustained, can even push them down.

In this case, it can serve as a function of higher interest rates — including the Federal Reserve raising interest rates beginning in 2022 — making borrowing dollars more expensive, which eats up dollars on a net basis, thus strengthening it.

After spending, borrowing and printing almost $7 trillion for Covid — the M2 money supply increased 43 percent from its Feb. 2020 level of $15.3 trillion to more than $22 trillion by April 2022 — the Fed then began hiking interest rates in earnest to combat the incipient consumer inflation, which peaked at 9.1 percent in June 2022. Since then, more than $1.18 trillion has been destroyed, a 5.3 percent decrease, to its current level of $20.8 trillion.

Strengthening the dollar in this manner in 2022 and again in 2024, is having the intended effect, with consumer inflation now down to 3.3 percent the past 12 months, and producer prices now well off their peak of 11.2 percent over twelve months in March 2022, all the way back down to 2.2 percent.

Lower producer and then consequential lower consumer prices is some good news, as it provides relief for both businesses and households, but they can also indicate softening demand as spending is pared back, which if sustained can lead to slowdowns and recessions.

On that count, since July 2022, the spread between 10-year and 2-year treasuries has been inverted, the longest period on record.

This happens when buy more long-term bonds than short-term bonds, likely on the expectation that interest rates — and therefore growth — will be lower looking forward. This usually happens near the end of the business cycle, but it cannot last forever. With the unemployment rate steadily rising from its April 2023 low of 3.4 percent to 4 percent in May, it is now at is highest level since Nov. 2021. This is also right on schedule, since as inflation cools because spending is pared back, layoffs tend to occur.

If and when a recession strikes, for example if unemployment continues rising, the Federal Reserve usually responds by cutting interest rates. At the same time, short-term interest rates should simultaneously resolve themselves below long-term interest rates, as the yield curve uninverts itself — the most painful part of the cycle, as that is when unemployment tends to spike the most.

Once again, the question might be whether there will be pain now, or pain later. On one hand, inflation still has not fully normalized, and on the other it’s an election year and the last thing the incumbent administration of President Joe Biden needs politically is a sudden spike in unemployment, although with unemployment already up 900,000 to 6.6 million from its April 2023 low of 5.7 million, it appears to already be baked into the cake.

The Fed could start cutting rates right now — it held them steady at 5.25 percent to 5.5 percent at its June 12 meeting — but that might come at the expense of its ability to fully tame the inflation brought on by the Covid spending binge. The answer appears to be to hold steady until the air comes out the economy, and deal with the rest of it later, meaning there could be more pain looking forward. Stay tuned.

Robert Romano is the Vice President of Public Policy at Americans for Limited Government Foundation.

To view online: https://dailytorch.com/2024/06/producer-prices-drop-0-2-in-may-as-dollar-strengthens-is-a-correction-coming/

 

Rebecca Downs: Senate Democrats Continue Attack on SCOTUS With 'Ethics' Bill

By Rebecca Downs

For several weeks, Sens. Dick Durbin (D-IL) and Sheldon Whitehouse (D-RI) have been increasing their attacks on the U.S. Supreme Court, especially conservative justices like Justice Samuel Alito. They both sit on the Senate Judiciary Committee, with Durbin being the chairman in addition to the majority whip. On Wednesday, Durbin is going to bring Supreme Court "ethics" bill to the floor, though it'll certainly fail from being passed via unanimous consent. Further, there's already an ethics code in place for the justices.

The move will reportedly come Wednesday, per The Hill:

Senate Judiciary Committee Chairman Dick Durbin (D-Ill.) told reporters that Democrats will attempt to move the ethics bill, which he authored with Sen. Sheldon Whitehouse (D-R.I.), via unanimous consent. A Durbin spokesperson said the UC request would happen on Wednesday. 

A Republican senator is widely expected to deny consent. 

“We’re planning on making a move on the floor this week to move the ethics bill for the Supreme Court,” Durbin said, adding that “there may be some new evidence that comes out” related to ethics at the Court.

Durbin, the No. 2 Senate Democrat, said the evidence is not related to the recordings of Justice Samuel Alito and his wife, Martha-Ann, that emerged on Monday. 

“It relates to the ethical considerations from some of the justices for gifts they’ve taken and not reported,” he said.

Democrats have been calling for the ethics bill to receive a vote on the floor, especially as Senate Majority Leader Chuck Schumer (D-N.Y.) holds votes to put Republicans on the record on hot-button issues.

That recording referenced has been criticized as another false flag kind of attack against Alito. Far-left Rolling Stone published "undercover audio" from Lauren Windsor who secretly recorded Alito and Chief Justice John Roberts at the Supreme Court’s Historical Society’s annual dinner. When she said she hoped America would return to a "place of godliness," Alito dared to respond "I agree with you." Jim Thompson, writing for our sister site of RedState, fittingly called the report a "2,000 word nothingburger."

If Windsor's name sounds familiar, it's because she, along with the Lincoln Project, was involved in that stunt just days before the 2021 Virginia gubernatorial election, in which performance artists showed up to now Republican Gov. Glenn Youngkin's campaign bus. They appeared in khakis and white dress shirts, armed with tiki torches reminiscent of the "Unite the Right" rally in Charlottesville from 2017. The Charlottesville City Council told off the Lincoln Project and Youngkin went on to beat former Democratic Gov. Terry McAuliffe in that race. 

Curt Levey, a constitutional law attorney and the president of the Committee for Justice, spoke to Townhall to weigh in about what Durbin and Whitehouse's motivations might be. It's all familiar, as Levey has reminded before it has to do with Court decisions coming out that Democrats are surely not going to like, from January 6 to matters of administrative law. 

Durbin may try to deny that such reports factor into the timing of bringing the bill, but it's still mighty convenient. Levey pointed out that it's "not a coincidence" that such actions from Durbin and Whitehouse are happening now, not only as it has to do with the recording's release, but also the end of the Court's term. On that note, Levey offered that Democrats are "trying to discredit in advance" such decisions they won't like.

Pointing out how such a vote is "all for show," Levey offered that there is "no chance in the world" that the so-called bill will pass, whether by unanimous vote or in the Republican-controlled House. Durbin's "simply making a statement and trying to remind people he thinks the ethics of the Supreme Court are iffy and he’s doing it because he expects in the next few weeks there are going to be big Supreme Court decisions Democrats are not going to like," Levey added. 

When it comes to Durbin's denials, Whitehouse also shared reporting from The New York Times on the recording, as he claimed Alito "answered like a movement activist."

On those "ethical considerations," Guy touched upon those earlier on Tuesday, and how those concerns about taking gifts not reported are bogus. This includes trying to go after Justice Ketanji Brown Jackson, a liberal, but Democrats have been going after Alito's fellow conservative, Justice Clarence Thomas, for much longer over such an issue, using heavily criticized reports. 

This "ethics" bill looks to be a threat that Durbin and Whitehouse trot out every time there's a supposed issue with conservative justices. The New York Times also published multiple hit pieces about flags the Alitos flew on their properties, including an upside down American flag back in 2021, and an "Appeal to Heaven" flag last summer. In their various social media posts and letters trying to appeal to the chief justice, the senators have also promoted their bill. 

Another piece from The Hill from Monday covered how Whitehouse is looking for more information about an interview Alito gave with the Wall Street Journal published last July, not long after a ProPublica report came out regarding Alito's trips. ProPublica put out those heavily criticized pieces on Thomas as well. 

Levey, who spoke with Townhall about such an interview at the time, also noted "it's curious" that Whitehouse would try to bring up an interview from almost 11 months ago, as he again reminded we're in the final weeks of the Court's term. Levey also reiterated the real motivation behind such attacks, noting Durbin and Whitehouse are "going fast and furious to try to discredit the Supreme Court," whether by bringing up this interview or announcing such a bill. 

This isn't the only way in which Senate Democrats look to be going after the justices and the Court as a whole. Still another piece from The Hill addressed how "Democrats see Supreme Court leverage in spending bills," as Democrats are looking to tie bills on "ethics" to funding the Court.

The Judicial Crisis Network's Carrie Severino posted a warning about such a plan, highlighting how it comes "in the wake of more manufactured controversies ginned up by the Left."

To view online: https://townhall.com/tipsheet/rebeccadowns/2024/06/11/senate-democrats-continue-attack-on-scotus-with-ethics-bill-n2640334

 

Urge State Attorneys General To Sue New York At U.S. Supreme Court To Stop Election Interference And Overturn Trump Conviction!