• Employment and manufacturing reports are stalled or falling.
  • The global trade war is going from simmer to slow-rolling boil.

Big economic reports on the Friday before a long holiday weekend can produce epic violence in the bond market, but not last week.

Long-term rates are entering a third-straight month in the same narrow trench, the 10-year T-note 1.50 percent-1.60 percent, mortgages still close to 3.50 percent.

The all-important employment report for August was non-accelerating, even on the slow side. The manufacturing ISM (Institute of Supply Management) survey tanked three points from July and August forecast to negative-growth 49.1, and auto sales dropped from peak despite give-away incentives.

A Fed rate hike on September 21 would be riskier than staying put.

In one swell foop, tie that risk to the U.S. election and conditions overseas….

Elections and free-trade agreements

Our election is peculiar for many reasons, but the most odd and powerful is this: High heat from damaging aspects of globalization and trade have driven both parties to agreement.

Republican free-traders have joined with traditional Democrat protectionists to oppose Obama’s second-term top priority, new free-trade agreements.

No one has explained to citizens that growing trade is the one sure way to increase national wealth, so long as the displaced are cared for. Nor do citizens at all appreciate the overall economic gain — U.S. and global — from the explosion in trade since 1990.

The focus of U.S. anger is the TPTT (I have yet to read a critic who wants to understand the deal). The Atlantic version is the TTIP, and Europeans sound exactly like us, complaining about secret deals cut by elites, and harm to sovereignty and labor. Same for the EU-Canada version (TTP). All three are dead as Julius Caesar.

The deals are all OK and would be helpful. The trade damage to displaced workers is primarily the result of predatory practices by China and Germany, the two running a combined annual trade surplus near $1 trillion.

We don’t talk about that because we don’t know a peaceful way to stop them.

The result is a global trade war going from simmer to slow-rolling boil.

The IMF’s (International Monetary Fund) Christine LaGarde, Chicago lawyer and then French minister, I used to think an adept but insubstantial careerist. Not.

She has consistently and courageously raised a warning, repeatedly downshifting forecasts of global growth: “The political pendulum threatens to swing against economic openness … disappointing growth for a long time … inward-looking assaults on free trade … and every nation for itself.”

What the Apple tax affair tells us about international economies

The Apple tax affair belongs on the Comedy Channel, but it is a perfect example of multi-national incompetence and decadence, government and corporate, except for a tip o’ the hat to Ireland. (How did Ireland escape the certain bankruptcy ahead in 2009?)

Stick us with your bad-bank debt tab, will you? We’ll cut our corporate taxes to next to nothing, but attract enough phony-relocating corporate profit to our island so that even a tiny percentage bite will be enough to bail out our poor 5 million souls.

Apple Sales International employs 5,500 people in Cork, and it has reported an accumulated profit in Ireland of $91.5 billion(!) and paid a single-digit tax rate.

The European Union (EU) corporate tax rate is 25 percent. The EU this week demanded that Apple pay $14.5 billion in avoided taxes to Ireland.

Jesus, Mary, and Joseph! How the Lord provides for the faithful! But Ireland does not want the money, preferring to maintain its tax haven and a far bigger overall take from the shell games of other technology “relocators.”

The U.S. Treasury secretary, non-entity hack Jack Lew, is outraged, saying the money is owed to the U.S. Our corporate tax rate is 33 percent, that unique altitude guaranteeing avoidance.

Tim Cook, proving that technology executives have no ethical advantage over robber barons of old, said that he is outraged that anyone expects Apple to pay anything.

Global centrifugal forces abound. And the Fed wants to tighten?

Another rebellion has achieved its first success. Unfortunately dismissed as conspiracy theory, a dozen years ago, aliens began to abduct humans and replace us with cell phones and earbuds.

An Earth First! strike team on Thursday blew up a SpaceX rocket and its Facebook satellite, deeply reassuring to the few of us still here.

The 10-year T-note in the last year

The 10-year T-note in the last year

The 10-year T-note in the last year. No movement from central banks, no move in the 10-year. Dribbling up toward 1.60 percent, but in-range.

The 2-year T-note is the best Fed-forecaster

The 2-year T-note is the best Fed-forecaster

The 2-year T-note is the best Fed-forecaster — as in reminders here, pay no attention to the Fed funds futures market. No real change in expectations in the last year.

Transient frights driven by unjustified alarmism by Fed officials, possible complacency, but a tough and unprecedented international situation.

Preventing inflation is the Fed’s long-term duty

Preventing inflation is the Fed’s long-term duty

Preventing inflation is the Fed’s long-term duty, and I fail to see the hazard in this compound chart.

Lou Barnes is a mortgage broker based in Boulder, Colorado. He can be reached at lbarnes@pmglending.com.

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