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Now, whether you think GMO will be the cause of all health problems going forward — or you believe that it’s simply a harmless and valuable progression of biology — really doesn’t matter. Suppressing information is never a good idea and Monsanto’s bare knuckle tactics have certainly generated much deserved criticism.
Yet the market already has an answer to Monsanto’s cloak of secrecy. As I was eating a bag of pistachios this morning, I noticed a very bright, big label that stated the product was NON-GMO. So while Monsanto can prevent products from being labeled GMO, it can’t do the opposite. And in the marketplace, that amounts to almost the same thing: Those consumers who abhor the notion of GMO foods will simply buy products only labeled NON-GMO. And the grand big plan at suppressing information will once again be thwarted by market forces.
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| Market forces prevail in the GMO debate. |
The bag of pistachios made me think of the Bank of Japan (BOJ): Another, colossal, monolithic entity that has tried to control the market and so far, failed miserably.
Japan has been in the throes of deflation for the better part of the past two decades. Japanese monetary authorities have tried every trick in the book to stimulate the economy without much success. What’s worse is that despite all these woes, the yen has strengthened, exacerbating growth problems for export-driven Japanese economy.
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Economic Tidal Waves Act Just like Tsunamis According to the National Geographic, the enormous energy of a tsunami can lift giant boulders, flip vehicles and demolish houses. But from a financial standpoint, the K Wave will be even worse: Millions could lose their homes. Millions more could see their lifesavings wiped out in an instant. Businesses, large and small, could close their doors. Even the bare necessities of life — food, water, clothing — might become scarce. That’s why it’s so important that you get your free copy of “STOCK MARKET TSUNAMI” right away, click here to download now! – Larry Edelson. |
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A few months back, the BOJ decided that it would take the ultimate monetary policy action and take short-term rates negative. The thinking was that banks would be forced to lend out money rather than see the value of the asset depreciate. But like many market manipulators before them, the BOJ did not foresee the unintended consequences of their action. Negative short-term rates drove longer-term bonds into negative territory as well, flattening the yield curve. Banks who make most of their money by borrowing-short and lending-long, saw their profits evaporate. With no profits on the books, banks’ lending standards got even more stringent: They lent less and wound up with the greatest hoard of cash in Japanese history. In short, the opposite of what the BOJ intended.
| “Last night the BOJ essentially had to admit defeat.” |
Which brings us to today.
Last night, the BOJ essentially had to admit defeat and announced to the market that they will no longer practice standard quantitative easing (QE). Instead they will focus on yield targeting. They still intend to buy Japanese bonds and stocks, but now will focus on making sure that the yield on the benchmark 10-year Japanese Government Bonds (JGB) remains above the zero level. In short, the BOJ realized that in order for QE to have any impact on the market, they need to manufacture a steepening yield curve, so that the finance sector could implement the monetary transmission mechanism. The BOJ promised that there was “no limit” to their willingness to keep 10-year rates above zero.
In the wake of the announcement, the JGB yields did pop above the zero line for about two hours. And then the market proceeded to pound the rates right back below zero. So much for BOJ’s “limitless” ability.
If the policymakers can’t get a hold on the market and push rates back up within the next two weeks, they will lose whatever shred of credibility they have left and USD/JPY — which is already closing in on the 100 level as I write this — could drop below post-Brexit lows of 98.00 within a few days. That would completely unwind the stimulus of the past three years, keeping Japan trapped in deflation for as far as the eye can see.
Happy trading,
Boris Schlossberg
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To just about no one’s surprise, the Fed kept rates unchanged today.  In a statement following this week’s meeting, the Fed said, “the committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.” But keep your eyes peeled: A boost in the key lending benchmark may come in December. Stay tuned.
Retailing behemoth Target has authorized another $5 billion share repurchase program. The buyback comes on top of a current $10 billion program, which should expire before the end of the year. The new program gives management the wherewithal to purchase shares into 2017. Good news? In general, yes. Share buybacks reduce the number of outstanding shares, which is a positive for earnings, assets, and cash flow. After all, with fewer shares in the open market, shareholders have a bigger piece of the pie. However, keep an eye out: Repurchases can signal that management is short on other investment opportunities, which could dampen growth.
No doubt about it: Earnings forecasts can be tough going. After all, pretty much everyone from Wall Street to Main Street takes note of how much a company’s bottom line is likely to grow down the road. But with earnings expected to get a 13.4% bump in 2017 (according to FactSet) — following what’s expected to be little growth in 2016 — we’re getting a bit optimistic. It’s no wonder, then, that UBS is calling the forecasts “irrationally exuberant.” The bank joins a similar chorus echoed by Goldman Sachs and Deutsche Bank. Take-away: Always take earnings forecasts — and forecasts of just about every ilk — with a grain of salt.
Mortgage applications took a 7.3% hit last week — according to the Mortgage Bankers Association — as mortgage rates inched up. Refinance apps took the biggest hit, falling 8%. That now puts refinancing applications at their lowest level since June. And while home buyers are not as sensitive to rate increases as those wanting to refinance, the bump in the 30-year fixed mortgage is having its effect on mortgage activity.
The Money and Markets Team
{ 29 comments }
If Target earns enough to afford a stock buyback, OK – though a dividend increase might have more effect for raising the stock price. And if they are borrowing money for that buyback, as many companies are doing these days, that would be a negative factor, possibly endangering the company’s financial health.
OK, again I feel compelled to point out that there is no such thing as GMO free food. ALL FOOD has been genetically modified in some way. If by GMO we are talking about foods that are genetically modified in a laboratory, then that fact must be stated. However, I don’t think it matters how foods have been altered!
Breeding pigs to be more or less lean is not the same as inserting jellyfish genes to make the pig glow in the dark. Some genetic modifications are fundamentally different than others.
On GMO, I would not say market forces prevail, but stupidity. Nowhere has anyone proved (in properly designed experiments) that GMO food are bad. Perhaps that is why Monsanto is trying to avoid the labeling–to avoid the prejudice. I say this with over 40 years as a chemist.
Being a chemist (40 years or more) does not qualify one to comment on biological and nutritional issues, let alone calling the public “stupid”. All chemists are recommended to read Rachel Carson’s “Silent Spring” published more than half a century ago ,which essentially launched the environmental science and public conscientiousness on long-term effects of any new product. It’s pure greed to push any new product by saying that “nowhere has anyone proved it is bad”.
Monsanto should have started this by proving it is not bad, rather than offer a challenge to anybody anywhere to prove it’s bad. LOL…
Sorry Bill, chemists should not be allowed to weigh in on the biological/ genetic effects of altered food unless he or she has extensive background in that particular discipline. Just sayin… No thank you on genetically modified foods. My body is full up on chemicals that have tainted my food supply for the last 65 years. Not to worry, they can’t harm you, right? LMAO Some Genetically Modified Organisms are going to come back and haunt us…
hate to thinthat all research developed products are based on ANIMAL tests and then pronounced that the RESULTS justify the RISKS, the RISKS are taken by the PATIENTS or the CONSUMERS and the RESULTS i.e.PROFITS go to the CORPORATE producers. WE NEED TO BALANCE THIS EQUATION BY SIMPLIFYING THE ABILITY OF THE RISK TAKERS TO BE COMPENSATED BY THE PROFITEERS FOR EACH FAILURE.
Regarding Silent Spring, my understanding was that the statements on DDT were simply made up with no scientific background to the claims made. That is not science. I have also seen first-hand in Washington, D.C. how the scientists are pressured to falsify reports to meet the political agenda. The most recent being to change 3 different studies that reported zero impact to say there is an impact from oil rig normal operations on coastal communities. Another neighbor reported that environmental “scientists” are requesting access to classified satellite data, and admitting they have no data to back up their global warming claims. All I can say is follow the money. Many academics rely on kow-towing to the latest political whims.
Dave, I think your comment is very short-sighted. Furthermore, I have read of a number of studies that do, indeed indicate danger in GMO food. And there is always the Law of Unintended Consequences. Not all GMOs produce the desired, or even expected results.
Was your 40 years of experience at Monsanto?
Regarding Target’s $5B buyback program and decision to not invest that money in a way to increase or protect current earnings, I occasionally go to a Target. It appears to be an older store as far as to when it was initially opened…..and looks dated and somewhere toward the “Dump” end of the continuum on the store appearance scale. Protecting short-term stock price may be good for the officers in the executive suite as they cash in their stock options, but does little to grow the business…… or remain competitive in an increasingly competitive environment. Management should be held accountable for such a short-sighted practice, but who’s kidding whom. I suspect they will get larger bonuses and golden parachutes for their “success” in raising share price. And Jeff Bezos probably quietly says, “Thank you.”
Dear Boris: Fiat money will fail again. It failed in 1914,1939 and 1971. We need a gold standard for us and the world. Since the central planners at the Fed opened for business in 1914, we have lost over 90% of our purchasing power. Inflation on a cumulative basis has increased by2200%. The Fed has failed in its mission to keep inflation and prices low, coupled with a stable dollar with stable purchasing power. It is a crime that this vital issue has not been discussed in this campaign. A currency represents three things to a country; it is the foundation upon which we built the most diversified and greatest economy the world has ever seen, it represents our sovereignty and it is part of our identity. Regards, Robert Calabro.
Fiat money always fails. From the first recorded experiment with paper fiat money in China, through the Roman debased coins and the John Law bank in France, right up to the present day, no fiat currency has ever failed to fail – fiat currencies always expire worthless. Our present currency is over 95% of the way to zero from its starting point in 1913.
I agree 100 %
Great comment!
Short of higher tax rates on high earners, treating all income the same, and a large continuing economic stimulus, nothing will get our economy expanding enough to lift us out of recession and start paying off the debt with the taxes obtained thereby. Demand increases are necessary to cure all inequality evils.
So central planning is the answer? Didn’t work for the USSR.
It is likely that making it easier to start and run a small business will … result in more small businesses. Imagine that! So your argument that only taxes and stimulus can help the economy seems patently wrong.
There must be something basically WRONG when over a span of 30+ years the value of CEOs versus RANK AND FILE goes up from 30 times to 149 times, and the corpns. of which they are CEOs, collapse and take the PENSIONS of the RANK and file with them.
Well folks is the BIS or the good news bear out of China BSing you. Would you believe manufactured numbers spouted by Mr. Li that always seem to be bang right on projected forecasts? The leader of a closed society who suppresses freedom at will who has the populous in a physical and financial choke hold who doles out money to failing businesses or the BIS the head banker to all banks. I do not have a lot of respect for the BIS or any of the other BS central banks but if I had to choose I would say that the BIS is ahead in the honesty game when comparing them to Mr. Li you know the guy that thumbed his nose at the La Hague decision on the islands in the South China Sea. Why you would want to put your faith, trust and above all your money in the hands of a Shyster like him is beyond me. Poor old VW now facing a 9 billion lawsuit by investors when will the pain for stupidity ever stop for them.
On the lighter side. If you own Tesla stock it could prove to be just like the following story from Norway. I would really be wary owning this stock. It seems to be solely managed by a ego maniac genius who tolerates nothing from anybody.
Tesla sued in Norway because their cars were sluggish.
Tesla products make sense only to the extent they are subsidized. End the subsidies, end Tesla.
The Sharing Economy by Lorna Gold examines the origins and experience of a radical alternative to the current globalised economy. It’s a very interesting read about some 800 businesses and civil society organisations building a vibrant global community in which the values of sharing flourish.
All of which was accomplished by a magic pill totally reversing human nature.
Come down to it, GLOBALISATION is nothing but a system of CREATING MONOPOLY with the view to GRAB the world-wide consumers BY THEIR THROATS after having slaughtered their LOCALS for their worth. MONSANTO/BAYER are the PRIME EXAMPLES of GLOBALISATION gone BERSERK.
re GMOs – the big problem is not GM itself – but why it is GM – it is either so the crop can survive spraying with Monsanto Round-up. the result is we are consuming food containing Round-up which does not directly interfere with animal biologic processes but wreaks havoc on our gut bacteria.
How do u protect urself when u buy Chinese Equities? When will we have Smart people run for political office in America? I guess when we go back to basics…that is to say pay attention to STATE & LOCAL GOVERNMENT, teach CIVICS starting in elementary schools, stop labelling people/issues…who gives a dam about liberal/conservative…TALK ISSUES WITH FACTS/TRUTH!!! Signed,
Gun-toting Liberal-Progressive Radical Capitalist
Don’t need the fear-mongering NRA or the fascist Putin-loving Donald Chump…u so-called patriots better wake up to the MOST dangerous demagogue running for PRES.-Donald Chump! U don’t like Clinton stay home, vote 3rd party or hold ur nose, vote Clinton or get ready for the Chump police state…get it. Have a nice day!
For every law working it’s way thru Congress requiring GMO labeling, there will be six making it illegal to label anything about GMO.
With the FDA receiving approximately 70 percent of it’s funds from the food industry & the GMO people donating millions to the Clinton Foundation we will continue to be at risk.
U can not have a police state without taking the guns away from all of us.
GMO foods have been modified to withstand toxic Monsanto Roundup weedkiller, which has increased in amt., Glyphosate in conj. with other toxic ingreds. is shown to be carcinogenic, the GMO grain is made with BT Toxin, which not only kills bugs, it kills off good bacteria in the gut. Witness increasing stomach inflammation, overweight, leaky gut syndrome, IBS, etc. all recently occurring in people. The St.Louis Post had an article showing how pigs fed GMO corn vs, non-GMO feed were more overweight and had stomach damage. This if the city the home of Monsanto. Don’t take my word, just research it for yourself, google some phrases. Modern agriculture verges on corporate monopoly and destruction to man, animal and plant life, which this technology brings. Corporations have a tradition of pushing their product for profit at our expense. The FDA was created to fight this issue, now the FDA is bought by the industry.
As far as the truth will out I am not so sure. There was a bill in Pennsylvania to forbid dairies to put a notice on their product that their milk was produced without growth hormone. it was very nearly passed. Fortunately, there was an outcry on this attempt to silence the truth and it was modified. Milk producers now have to put a disclaimer on their non hormone milk to the effect that growth hormone has not been proved dangerous. This is the start of the sllppery slope
We can now see the threats coming out of the CDC, where anyone traveling on an airline, who had a cough, respiratory infection or a rash and has not been vaccinated against EVERYTHING could be arrested by the TSA.
Genetically Modified foods should not be eaten. When you cut off a part of the Chromosomes, to alter a characteristic of a plant of animal….you take other chromosomes with you. We do not know the function of those other chromosomes. Geneticists call these “junk genes”….because they BELIVE the genes have no useful purpose, and are vestiges of past characteristics of the organism. This is FALSE logic, because th genes are called “junk”…….ONLY because science has YET to discover their function. This is like buying a car and taking off parts of the motor. You don’t know what the parts really do…..the motor is still running. But is it running as well as it should with all its parts?…You just don’t know nor can you tell..We should not eat GMO foods until all the genes functions are understood…..