PrefBlog

So there’s more on the attempt to discredit Lisa Cook of the Fed:

A Justice Department official is set to probe Federal Reserve Governor Lisa Cook after she was accused by a member of President Donald Trump’s administration of committing mortgage fraud, according to a letter sent Thursday to Fed Chair Jerome Powell.

The letter, seen by CNN, was written by Ed Martin, a lawyer at the department who’s tasked with investigating mortgage fraud. Martin said the situation “requires further examination.”

In a letter dated August 15, Federal Housing Finance Agency Director Bill Pulte said that Cook claimed two properties — a home in Michigan and a condo in Atlanta — as her primary home addresses. On Thursday, he said on social media the administration is “probing a 3rd property owned by Cook.”

Pulte, a vocal Trump ally, said in an interview with Bloomberg earlier on Thursday that he looked into Cook, a then-President Joe Biden appointee, based off a tip. He added that his agency has used artificial intelligence software from Palantir to track potential mortgage fraud.

In his letter, Martin also said: “I encourage you to remove Ms. Cook from your Board. Do it today before it is too late!”

“After all, no American thinks it is appropriate that she serve during this time with a cloud hanging over her,” he said.

This keeps getting more mysterious. This was started because of a tip? How did the tipster know? Does Pulte actually have copies of the documents, or what?

And Martin, the Justice Department guy. I really have to question the propriety of him writing “I encourage you to remove Ms. Cook from your Board. Do it today before it is too late!” at any time, let alone before “further examination”. That’s not what Justice Departments do, at least not in civilized countries.

There’s some more commentary on the spectacle of free-enterprise, freedom-loving, double-entry-bookkeeping rugged American types kow-towing to Trump:

The orthodoxy manifested itself in familiar ways. Groups that claimed the mantle of individual liberties would decry new legislation. Talk radio and podcasts would mock unnamed bureaucrats for ham-fisted overreach. And powerful business lobbies were quick to denounce — in press releases and even lawsuits — regulations or taxes they saw as government overreach.

But when faced with President Donald Trump’s efforts to seize control of private enterprise — such as his recent arrangement to have the US pocket a portion of Nvidia’s sales to China, his social media outbursts at individual executives, his moves to take a stake in Intel, and his use of executive powers to cajole banks and law firms he perceives as insufficiently loyal — those same groups have gone quiet.

Take the US Chamber of Commerce, the largest business advocacy group in the country.

Last year, the Chamber sued a federal consumer watchdog group for attempting to cap credit card late fees at $8 a month, claiming the agency “exceeded its statutory authority.” In 2023, it sued the Biden administration over provisions for Medicare price negotiations in the Inflation Reduction Act, claiming the move would consolidate “unfettered and unchecked power” to the department of Health and Human Services.

But under Trump’s second term, the Chamber has had little to say publicly about Trump’s aggressive meddling in the private sector.

Similarly, the Business Roundtable, another DC-based lobbying group that represents hundreds of chief executives, has rarely been shy about denouncing what it sees as presidential overreach in the form of taxes and environmental regulations. This year, though, the group has been largely MIA on the MAGA shift toward a style of capitalism that more closely resembles the autocratic regimes of Russia and China.

Both groups have criticized Trump’s trade war, warning that tariffs hurt American businesses. But neither has spoken out about the president’s more direct assault on free enterprise.

Neither the Chamber of Commerce nor the Business Roundtable responded to multiple requests for comment.

And now Trump’s going after another Fed governor:

President Donald Trump on Wednesday called on a top policymaker at the Federal Reserve to resign, after one of his allies alleged that she committed mortgage fraud.

In a letter dated August 15, Federal Housing Finance Agency director Bill Pulte urged the Justice Department to investigate a pair of mortgages taken out in recent years by Fed Governor Lisa Cook.

On Wednesday, Trump referenced those allegations on his social media platform, writing that “Cook must resign, now!!!”

But Cook pushed back on calls to resign, saying she would not be pushed out of the Fed.
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In the letter, which Pulte posted on social media, he alleged that Cook, a Biden appointee, “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”

Pulte refers to a mortgage Cook took out in June 2021 to purchase a property in Ann Arbor, Michigan, which stipulated it would be her primary home address for at least a year, according to the letter. Cook then took out another mortgage in Georgia two weeks later, Pulte said, also declaring that property as her primary home address. Cook’s Georgia home was later listed as a rental, according to Pulte.

“There can be no mortgage fraud. This came across our desk, and it’s my duty to report it,” Pulte said. “It wouldn’t matter if she were a Republican or a Democrat. It is what it is.”

I’d like to know exactly what is meant by ‘this came across our desk’. How? I mean, these are banking documents; in what manner did they cross Pulte’s desk? Did they become public as a result of Cook’s governorship and were found by a dedicated Republican dirt patrol? Or was the process more … complex?

One way or another, stay tuned! This is getting dirty.

PerpetualDiscounts now yield 5.72%, equivalent to 7.44% interest at the standard conversion factor of 1.3x. Long corporates now yield 5.03%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 240bp, a sharp narrowing from the 255bp reported August 13.

We are often told that capitalism will eventually collapse under the weight of its own contradictions. So I get highly amused when I see things like rugged Floridian Republicans socializing property insurance, the crony capitalism of export licenses for computer chips and now, the idea of state capitalism with Trump in charge:

Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick confirmed on Tuesday that the US government is considering an extraordinary investment in struggling chipmaker Intel. But they gave different answers about what the Trump administration sought to do with that stake.

Such a deal, if it were to happen, would mark an unusual arrangement that would see the Trump administration use taxpayer money to take a stake in a private American business.
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The reports and Bessent’s comments also come after chipmakers Nvidia and AMD said they would pay 15% from their chip sales in China to the government in exchange for export licenses. If the government does take a stake in Intel, it could also serve as a model for other Trump administration investments, two people familiar with the White House discussions on the matter told CNN last week.

These are indeed interesting times.

Canadian inflation was basically flat in July:

Canada’s annual inflation rate eased to 1.7 per cent in July from 1.9 per cent in the prior month as lower year-on-year gasoline prices kept the consumer price index low, but core measures of inflation stayed sticky. Analysts polled by Reuters had forecast the annual inflation rate at 1.8 per cent and the monthly inflation rate at 0.3 per cent. The CPI increased by 0.3 per cent in July from 0.1 per cent in June on a monthly basis, Statistics Canada said.
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To gauge underlying price pressures, the Bank of Canada keeps a close eye on its preferred core measures of inflation, which did not ease in July, continuing to hover around 3 per cent annually.

However, BMO chief economist Douglas Porter noted that the three-month annualized trend for those measures eased to 2.4 per cent in July.

The money market thought the news was a little dovish:

Money markets are now pricing in odds of a rate cut on Sept. 17 at about 38 per cent, up from 32 per cent prior to the data, according to LSEG data. They are also still pricing in a full quarter point rate cut by the end of this year – but no more. The Bank of Canada has stayed put at 2.75 per cent at its last three rate decision meetings.

Here’s how implied probabilities of future interest rate moves stood in swaps markets moments after the 8:30 a.m. data, according to LSEG data. While the bank moves in quarter-point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.

I continue to be fascinated by the impending drying up of US Social Security and there was a decent review on CNN today:

“Today, we celebrate that 90th anniversary of one of the most significant pieces of legislation ever signed into law, the Social Security Act of 1935. And we’re going to make it stronger, bigger and better. … During the campaign, I made a (pledge) to our seniors that I would always protect Social Security, and under this administration, we’re keeping that promise and strengthening Social Security for generations to come,” Trump said.

But in citing what he said were his administration’s successes, Trump made some false and exaggerated or unverifiable claims. Among them:
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Claim: Social Security’s finances are better

In praising the accomplishments of Social Security Commissioner Frank Bisignano, who was standing next to the president for the proclamation signing, Trump said that while the media has reported that the program was going to “go bust” in less than a decade, “Not anymore it’s not.”

But in fact, the program still faces the prospect of not being able to pay 100% of promised benefits by 2034 in the retirement and disability programs if lawmakers don’t act to address the pending shortfall, according to the latest annual report from Social Security’s trustees. By that point, unless changes to the system are made, payroll tax revenue and other income sources will only be able to cover 81% of scheduled benefits.

And with the estimated reduction in tax revenue from Trump’s One Big Beautful Bill Act, the Committee for a Responsible Federal Budget estimates that the insolvency date will now be a year or two earlier.

There are several longstanding reasons for the funding shortfall, including demographics and other spending and tax legislation passed under Republican and Democratic administrations. But, to close that gap, lawmakers (as they’ve known for years) will need to come up with a package of fixes that may include raising more in Social Security taxes, raising the retirement age, changing the formula to reduce the amount of initial benefits a person receives at retirement, and changing how benefits are annually adjusted for cost of living, according to CRFB.

I fail to understand why the Democrats aren’t banging the drum on this at every opportunity.

And the PPI for July came out:

The latest Producer Price Index, which measures the average change in prices paid to producers, jumped 0.9% from June, lifting the annual rate to 3.3%, according to Bureau of Labor Statistics data. PPI serves as a potential bellwether for the prices consumers may see in the months ahead.
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Excluding food and energy, core PPI also shot higher by 0.9%, sending the annual rate to 3.7%, the highest level since March.

PerpetualDiscounts now yield 5.75%, equivalent to 7.48% interest at the standard conversion factor of 1.3x. Long corporates now yield 4.93%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 255bp, unchanged from that reported August 6.

So, the US Inflation number came out:

The Consumer Price Index stayed steady at 2.7 percent compared to the same time last year. On a monthly basis, prices rose 0.2 percent from June. But an important gauge tracking consumer prices that strips out volatile food and energy prices accelerated more rapidly.

“Core” C.P.I., which is closely watched by the central bank, jumped 0.3 percent over the course of the month, or 3.1 percent on a year-over-year basis. That is one of the largest monthly increases so far this year and represents the fastest annual pace in five months. In June, core inflation rose 0.2 percent from the previous month, or 2.9 percent from July 2024.
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Businesses have managed to avoid passing along price increases because of a strategy earlier in the year to stockpile goods that were likely to be subject to Mr. Trump’s levies. Many companies have also sought to absorb the costs themselves in order to avoid driving away customers, some of whom are increasingly under financial strain.

But the July data showed more businesses reaching a tipping point, left with little option but to raise prices following June’s notable uptick. The biggest impact has so far been concentrated in categories such as furniture, appliances and other household wares, as well as recreation goods and footwear.

In July, the broader household furnishings index rose 0.7 percent in June, following a 1 percent increase in June. Compared to the same time last year, those prices are up 2.4 percent. Recreation-related prices rose 0.4 percent. Some of the larger gains in July came in apparel and footwear, categories that are exposed to tariffs on countries around the world, including India, Vietnam and China. Prices on infants and toddlers apparel were up 3.3 percent in July. Footwear was up 1.4 percent.

Speaking of statistics, the new BLS honcho was named:

President Trump announced on Monday that he would nominate E.J. Antoni, an economist at the conservative Heritage Foundation, to lead the Bureau of Labor Statistics. Mr. Trump fired the previous commissioner of the agency after it reported weak job growth.

Dr. Antoni, who would need to be confirmed by the Senate, has previously criticized the bureau and questioned its methods and reports. His nomination underscored Mr. Trump’s attempts to place his own allies in control of a key repository of data about the nation’s hiring, wages and prices.
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“There are better ways to collect, process, and disseminate data — that is the task for the next B.L.S. commissioner, and only consistent delivery of accurate data in a timely manner will rebuild the trust that has been lost over the last several years,” Dr. Antoni posted on X last week.“There are better ways to collect, process, and disseminate data — that is the task for the next B.L.S. commissioner, and only consistent delivery of accurate data in a timely manner will rebuild the trust that has been lost over the last several years,” Dr. Antoni posted on X last week.
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Kevin Hassett, the director of the White House National Economic Council, previously insisted the administration was “absolutely not” trying to shoot the messenger on the heels of a poor jobs report.
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The agency has already seen quite a few departures. It employed about 2,300 people in September 2024, the most recent official data available, but about a third of top positions are currently vacant. And the White House has already weakened outside oversight of the agency’s methods by dissolving an advisory panel of experts in January.

Those changes, along with a diminished budget, will also make it difficult for Dr. Antoni to tackle what economists see as a legitimate problem at the bureau: shrinking survey coverage and declining response rates, which can exacerbate the kinds of large revisions that Mr. Trump cited as a reason for firing Dr. McEntarfer.

In its budget request for 2026, the White House proposed decreasing the bureau’s budget by $56 million.

The new spittle-licker promptly came up with a … surprising … idea:

President Trump’s nominee to lead the Bureau of Labor Statistics is suggesting that the agency suspend its monthly jobs report, an economic staple that is relied upon by the Federal Reserve and U.S. businesses to gauge the health of the economy.

In an interview on Fox News Digital on Monday ahead of his nomination, E.J. Antoni criticized the monthly employment report as flawed and suggested it be replaced with “more accurate, though less timely, quarterly data.”
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“How on earth are businesses supposed to plan — or how is the Fed supposed to conduct monetary policy — when they don’t know how many jobs are being added or lost in our economy? It’s a serious problem that needs to be fixed immediately,” Antoni told Fox News Digital.

He added, “Until it is corrected, the BLS should suspend issuing the monthly job reports but keep publishing the more accurate, though less timely, quarterly data.”
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Responding to the BLS’ employment surveys is voluntary for businesses, while the federal government’s Office of Management and Budget directs the BLS to release “robust” data on basic economic indicators in a “timely” manner. But that’s become more challenging as fewer people and institutions respond to surveys, experts say.

“Response rates have declined for nearly every top-tier government statistical survey over the last decade, a trend that accelerated during the pandemic,” Goldman Sachs economists wrote in an Aug. 11 research note.

He then promptly illustrated the administration’s penchant for thinking about things only after the tough-guy talk:

President Donald Trump’s pick to head the Bureau of Labor Statistics, who previously proposed scrapping monthly jobs reports, is now backing off that idea, according to a report.
Trump tapped EJ Antoni, the chief economist at the conservative Heritage Foundation, for the role after firing the agency’s last commissioner following her release of a poor July jobs report.
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He has since walked back on that proposal, CNN reported. Antoni will continue to issue monthly jobs numbers if confirmed, Heritage Foundation economist Stephen Moore told CNN Tuesday.
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It’s not immediately clear what may have changed his mind. The Independent has reached out to the Heritage Foundation for more information.

Just wait until these clowns find out that doing a good job costs money, spent largely on staff to negate the DOGE firings. Lots and lots of it. They’ll be so surprised that they’ll insist on getting a few Nobel prizes for discovering the concept.

Incidentally, WordPress fans, it turns out that having an unbalanced number of ‘bolding’ formatting statements causes all sorts of peculiar things to happen with the layout. For the last ellipsis in the last blockquote, I had bold-ellipsis-bold instead of bold-ellipsis-unbold and this caused … problems that were not very obvious. Thanks, WordPress!