Oct. 17, 2019
Permission to republish original opeds and cartoons granted.
Now, the 10-year, 3-month and the 10-year has uninverted, too. So, was it a recession signal or not?
Don’t look now, but now the inversion between the 10-year treasury
and the 3-month treasury that began in May has uninverted, calling into
question whether it was a recession signal. Meaning, for Democrats hoping for
an economic downturn prior to Nov. 2020, then, this signal could be very bad
news politically for them — even as it could be very good news for the American
people. For, every month that goes by where economic data remains strong, the
more those inversions might look like a false signal. Which is why voters,
especially closer to the election, will tend to focus on things that matter to
them: a 50-year low in unemployment, rising incomes and wages and sustained
economic growth.
Video: The FBI is illegally spying on the American people, FISA court says. Why is this still happening?
The FISA court blasts the FBI for illegally spying on American
citizens, but what consequence is there when that happens? Unless Attorney General
William Barr cleans house at the Justice Department and intelligence agencies, his
will keep happening and probably get worse.
ALG thanks Sen. Lindsey Graham for looking at Giuliani-raised concerns on U.S.-led Ukraine corruption
Americans for Limited Government President Rick Manning: “Chairman
Graham’s promise to begin honest, open hearings into the origins of the false
Russia collusion issue focused on facts which many in the previous
administration will likely find embarrassing is a breath of fresh air. Allegations out of Ukraine and indeed from
former Vice President Joe Biden’s own book and statement before the Council on
Foreign Relations certainly raise alarm bells about whether Biden’s actions
toward Ukraine to have presidents and prosecutors general removed have been
above board. Perhaps even more importantly, the apparent actions of the foreign
service, including the former ambassador to Ukraine Yovanovitch, to stop
anti-corruption Ukrainian officials from traveling to the United States to
provide evidence of malfeasance of U.S. officials in their country to the U.S.
Justice Department warrant investigation to determine if they were illegal,
unseemly or perhaps justified.”
Simon Veazey: China’s ‘One Belt, One Road’ lobbying push into Europe flies under the radar
“Beijing-funded think tanks, institutions, and ever-more savvy
lobbying tactics are sprouting up across Europe as the stealth vanguard of
China’s globalization plans. Those plans all come under the Chinese moniker of
the One Belt, One Road (OBOR), Xi Jinping’s flagship foreign policy project. Concerns
have been increasingly raised over OBOR debt traps, 5G security, and the
security implications of key bridges, railways, and ports built by Chinese
state-owned enterprises, as well as the key question of whether such
infrastructure brings any tangible benefits to locals. But ministers, lawmakers,
and policy advisers in Europe seeking advice on such questions face a growing
and often hidden influence from China’s lobbying, according to analysts.”
Now, the 10-year, 3-month and the 10-year has uninverted, too. So, was it a recession signal or not?
By Robert Romano
Don’t look now, but the inversion between the 10-year treasury and the 3-month treasury that began in May has uninverted, either calling into question that it was a recession signal or confirming it, depending on what happens in the coming months.
This signal was given much fanfare when it went into negative territory, but now that it’s back in positive territory, not so much.
If it was a recession signal, then you might expect a recession any time in the 9-to-17-month range based on the last three recessions, with an average period of a recession taking place about 14 months after the deepest inversion began. If true, that might signal a recession beginning anywhere from Feb. 2020 to Oct. 2020.
Or it could have been a false signal. In Sept. 1998 and Feb. 2006, the 10-year, 3-month briefly inverted before returning to positive territory and inverting again prior to the recessions. The same thing could be happening here, where there is actually more juice left in the business cycle. It’s not an exact science.
The fun part is you don’t get to find out until afterward. So, it always helps to look at confirming sets of data. For example, the 10-year, 2-year briefly inverted in September for a few trading days before returning to positive territory. It too gave off a premature signals in 1998 and early 2006.
The 10-year, federal funds rate — the federal funds rate is controlled by the Federal Reserve — inverted alongside the 10-year, 3-month in May, but has not yet returned to positive territory.
That’s a lot of mixed signals.
For Democrats hoping for an economic downturn prior to Nov. 2020, then, this signal could be very bad news politically for them — even as it could be very good news for the American people. For every month that goes by where economic data remains strong, the more those inversions might look like a false signal, probably benefitting President Donald Trump in his reelection bid.
Who cares about inversions? You’re probably bored to tears reading this. This is why voters, especially closer to the election, will tend to focus on things that really matter to them: a 50-year low in unemployment, rising incomes and wages and sustained economic growth.
Additionally, it is worth noting that, particularly, the 10-year, 3-month inverted right about the same time the U.S.-China trade talks broke off in May, and has suddenly uninverted now that those talks have reached a verbal trade agreement on Oct. 11.
This could indicate that, given the $737 billion trading relationship between the U.S. and China, investors engaged in a flight to safety when the ongoing trade negotiations turned south, which promptly corrected when those talks successfully concluded.
It could also mean on the other hand, that, even with a trade deal between the U.S. and China, the business cycle is simply at an end and it’s getting near the time for the next recession anyway.
Sometimes, there’s a narrative about recessions, even if we’re just living in a boom-to-bust cycle. In that case, then, it would hurt the narrative that the trade impasse would have been the cause of the next recession, since it turns out the trade tale with China appears to have had a happy ending after all.
I’ve personally written a bit about the strong dollar as being a warning sign, since the last time it was this strong on a trade-weighted basis was prior to the 2001 recession.
And one could go on and on. Ahead of time, it’s all speculation and very much reading tea leaves. You don’t to find out until after the fact.
There are also admitted biases. If you favored the President’s economic policies, you might be more inclined to agree that the inversions were a false signal, because you thought the policies might prolong the business cycle. But if you did not, you might think that a recession is imminent because you think those policies were bad for the economy all along. So, good luck finding an objective opinion on the topic.
It could be that the inversions were in fact a reliable recession signal this time, but that the recession still does not happen until after the election. Which might mean President Trump would get all the political benefits of the boom while it lasted, but his party might suffer in the 2022 midterms afterward (which are also cyclical and might happen either way in a second Trump term).
Is your head spinning yet?
That is why the politics of recessions and ascribing blame tend to be problematic. If blame goes to the incumbent when things are bad, the opposition is assuming a risk that things might actually be good, thereby ensuring the incumbent gets credit when the news is in fact positive.
I tend to think we’re at or near the end of the business cycle, but we might not see another recession until after 2020. But even if a recession did begin in 2020 some time, you might not notice until it turned up in the data after the fact.
The point is, there are a lot of complexities and factors that are impossible to calculate ahead of time. Both Recessionistas and those saying the inversions were a false signal have good arguments to make. But anyone claiming they know the date certain the next recession will be is either lying or wrong. I won’t lie to you. I just don’t think it’s knowable.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
Video: The FBI is illegally spying on the American people, FISA court says. Why is this still happening?
To view online: https://www.youtube.com/watch?v=bUgxxpaRgd0
ALG thanks Sen. Lindsey Graham for looking at Giuliani-raised concerns on U.S.-led Ukraine corruption
Oct. 16, 2019, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement thanking House Judiciary Committee Chairman Lindsey Graham (R-S.C.) for his Oct. 8 statement that “it is time for the Senate to inquire about corruption and other improprieties involving Ukraine” and inviting Trump attorney Rudy Giuliani to testify:
“The House of Representatives has engaged in one of the most outrageous abuses of power in our nation’s history through its pretend impeachment effort that is merely an excuse to conduct a secret, partisan investigation against the President dependent upon media animus toward Donald Trump to drive selectively leaked information derived from testimony that is not subject to bi-partisan scrutiny and questioning.
“It is with this backdrop in mind that Chairman Graham’s promise to begin honest, open hearings into the origins of the false Russia collusion issue focused on facts which many in the previous administration will likely find embarrassing is a breath of fresh air. Allegations out of Ukraine and indeed from former Vice President Joe Biden’s own book and statement before the Council on Foreign Relations certainly raise alarm bells about whether Biden’s actions toward Ukraine to have presidents and prosecutors general removed have been above board.
“Perhaps even more importantly, the apparent actions of the foreign service, including the former ambassador to Ukraine Yovanovitch, to stop anti-corruption Ukrainian officials from traveling to the United States to provide evidence of malfeasance of U.S. officials in their country to the U.S. Justice Department warrant investigation to determine if they were illegal, unseemly or perhaps justified.
“Chairman Graham, thank you for opening this investigation, providing the minority rights to ensure real participation and debate, as it is important to show the nation what a fair inquiry looks like, in contrast to the travesty that continues in the House. While I have little hope that the bevy of Democratic presidential contenders on your Committee will avoid trying to turn hearings into a circus, in the end everyone will know who was the ringmaster and who were the clowns.”
To view online: https://getliberty.org/2019/10/alg-thanks-sen-lindsey-graham-for-looking-at-giuliani-raised-concerns-on-u-s-led-ukraine-corruption/
ALG Editor’s Note: In the following featured column from The Epoch Times’ Simon Veazey, China’s One Belt, One Road initiative continues unabated in the European Union:
China’s ‘One Belt, One Road’ lobbying push into Europe flies under the radar
By Simon Veazey
Beijing-funded think tanks, institutions, and ever-more savvy lobbying tactics are sprouting up across Europe as the stealth vanguard of China’s globalization plans.
Those plans all come under the Chinese moniker of the One Belt, One Road (OBOR), Xi Jinping’s flagship foreign policy project.
Concerns have been increasingly raised over OBOR debt traps, 5G security, and the security implications of key bridges, railways, and ports built by Chinese state-owned enterprises, as well as the key question of whether such infrastructure brings any tangible benefits to locals.
But ministers, lawmakers, and policy advisers in Europe seeking advice on such questions face a growing and often hidden influence from China’s lobbying, according to analysts.
Mapping Out EU Structures
“China has devoted far more resources to lobbying the EU and influential persons connected to it,” said Chris Devonshire-Ellis, the chairman & founding partner of Dezan Shira and Associates, which advises foreign investors in the OBOR initiative.
“They have mapped out the entire EU structure and, via Embassies, managed to piece together a concise map of who is connected to who and likely to be able to further their business interests.”
China launched the OBOR initiative in 2013 to build up geopolitical influence around the world, chiefly by partnering with more than 60 countries on infrastructure projects across Latin America, Europe, Asia, and Africa.
Beijing built up lobbying experience in its investment push into Africa, and outguns the EU on the lobbying front, according to Devonshire-Ellis.
“The China research intelligence program is a globally influential structure, not just pertinent to the EU”
According to Devonshire-Ellis., the African Continental Free Trade Agreement (AfCFTA) “required a huge amount on lobbying and ability to get pan-African governments around a table to agree to it.”
“That influence was beyond the EU’s capabilities. The same is happening with the belt and road initiative,” he said.
In 2015, the EU wrong-footed Chinese negotiators when it threw its legislative weight into the Budapest-Belgrade railway project, insisting that the tender be monitored and subject to controls and regulations imposed from Brussels.
That high-speed railway, linking EU member Hungary and non-EU Serbia, had been seen as a litmus test of the belt and road initiative into Europe. With drag from the EU’s intervention, some analysts suggest that little progress has been made in the five years since the project started.
After three years Beijing finally emerged from the tussle clutching the contracts, and with a determination to sharpen their lobbying game, notes Devonshire-Ellis.in an earlier report.
Enter The Think Tanks
Key to influencing policymakers and intellectuals along the Belt and Road is China’s burgeoning network of think tanks in Europe, according to Jakimow Malgorzata, assistant professor in East Asian Politics at Durham University and Secretary of the Centre for Contemporary Chinese Studies (CCCS).
“China’s think tank networks are huge,” said Malgorzata. “These have been recognized by the Chinese Ministry of Foreign Affairs as the predominant tool for soft power.”
Such tactics raise alarm bells for watchdogs and transparency campaigners in Europe, who fear Beijing could be exploiting the EU’s lack of lobby transparency.
A report published in April by lobbying watchdog Corporate Europe noted that “often, conferences and seminars held in Brussels with a China theme are in fact receiving Chinese Government sponsorship.”
“Setting up and funding think tanks are a well-known lobbying tactic in Brussels; they create a useful impression of objectivity and impartial scholarship, whilst helping to shape the policy environment.”
The report, which was characterized by Devonshire-Ellis in an earlier analysis as a “who’s who” of China’s lobbying efforts in Europe, lists dozens of organizations and networks scattered throughout Europe with substantial ties to China, where there are yet more think tanks and institutes.
