“We Can’t Pretend Interest Payments Aren’t Rising Anymore…”

Authored by Sven Henrich via NorthmanTrader.com,

Is anyone paying attention? I don’t know, but the cost of carrying debt has been rising and it’s already showing measurable impacts despite the Fed Funds rate still being very low.

My concern of course is that the global debt construct will bring global growth to a screeching halt (see also The Debt Beneath).

As the 10 year is already piercing above the 2.6% area now I want to pay attention to the data coming in as the Fed is dot plotting more rate hikes to come:

After all the Fed has hiked 5 times off the bottom floor in the past 2 years:

Can we see any measurable impact? You bet we can.

Here are personal interest payments for consumers:

Mind you we are still near the lows of the previous cycle and already total interest payments are near record highs.

The driver of course is record consumer debt and credit card debt (see also macro charts). But despite rates still being historically low this rise in interest rates has an impact on the consumer.

Already we see this:

“The big four US retail banks sustained a near 20 per cent jump in losses from credit cards in 2017, raising doubts about the ability of consumers to fuel economic expansion. “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5bn hit from soured card loans last year, about $2bn more than a year ago.”

I repeat: “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.”

That’s a problem given the Fed’s dot plot. Before you know it consumers will be handing over a good portion of their tax cuts to credit card companies. Winning.

Is the government carrying record debt immune to this? Nope.

Here’s the latest monthly Treasury statement:

Interest on debt alone was $32B for 1 month.

During the same month the year prior it was $25B:

That’s a 28% increase year over year. Perhaps the data is lumpy month to month, we’ll see confirmation in the next few months. But much of this US government debt has to be refinanced in the next few years, meaning it will be subject to much higher rates and the US needs to continue to add to its debt to keep itself financed..

Indeed the recent tax cuts only exacerbate an already existing debt sale schedule:

“Economists with Deutsche Bank expect the extra debt the Treasury must issue to fund President Donald Trump’s tax package and the amount of debt the Federal Reserve plans to redeem at maturity this year will bloat issuance to about $1tn in 2018. That’s up more than 50 per cent from a year earlier and, when coupled with a 30 per cent rise in the amount of corporate debt that’s due to mature, leaves questions of who the eventual buyer will be.

A good question indeed.

That’s a lot of debt issuance:

Somebody has to buy it or the pain is real:

“If demand for US fixed income doesn’t double over the coming years then US long rates will move higher, credit spreads will widen, the dollar will fall, and stocks will probably go down as foreigners move out of depreciating US assets,” Torsten Sløk, an economist with the bank, said.

No, we can all pretend rising rates don’t have an impact, we can also pretend deficits don’t matter, and we can also pretend money grows on trees.

But we can’t pretend interest payments aren’t rising. Because they are. Right now.

Tokyo Holds “First Ever” Missile Attack Drills

Two months ago, we reported that Hawaii was restoring an air raid warning system that hadn’t been operational since the Cold War. Only this time, it’s due to the rising tensions between the US and North Korea…

Indeed, these tensions nearly caused a panic last week when one employee at Hawaii’s Emergency Management Agency accidentally selected the wrong dropdown menu choice, broadcasting a “Ballistic Missile Threat” warning to the cellphones of Hawaii residents.

On Monday, Tokyo activated the government’s “J-alert” system in a drill for the public to practice their response to a missile strike, RT reported. Once activated, the system warned people to “evacuate calmly inside a building or underground.”

Video of the response showed people filing into a subway station…

Around 350 people participated in the first of its kind evacuation drill, which took place in Tokyo’s Bunkyo Ward, as well as a local amusement park. People sheltered in a nearby subway station and buildings, according to local media.

Last year, North Korea memorably launched several moderate-range ballistic missiles over the Northern Japanese island of Hokkaido. 



However, the exercise made some Japanese people uncomfortable: A small group of protesters denounced the drills claiming they promoted Japanese militarism. One protester told the media that the exercises merely provided the illusion of safety – in the event of a nuclear strike, nobody in the blast zone would survive.

Japan’s first-ever drills for the evacuation of Japanese civilians were conducted in March of last year in the coastal city of Oga. Japanese authorities have warned that a missile launched by North Korea could reach Japan in 10 minutes…

Las Vegas Update: Irregularities Cause Story Behind Massacre To Stink To High Heaven

Authored by Jon Hall via Free Market Shooter blog,

Months ago, I called for scrutiny amid a constantly-revolving news cycle concerning the Las Vegas massacre that occurred last October.



The victims of the Las Vegas massacre.

64-year-old Stephen Paddock opened fire on a country music festival from the 32nd floor of the Mandalay Bay hotel, which overlooked the festival venue. Paddock’s onslaught left 58 dead and 546 injured.



Sadly, despite being the worst mass-shooting in U.S. history, the story has long since been abandoned by any traditional media outlets. A slow and ebbing trickle of developments have transpired despite the story dropping off of the radar…

For instance, in late December, the chief of the FBI’s Las Vegas office, Aaron Rouse, revealed the agency likely wouldn’t brief the public concerning the massacre until their official report was released sometime around the one-year anniversary of the tragedy.

Speaking with the Las Vegas Review-Journal, Rouse detailed:

Paddock’s motivation has not been linked to any sort of affiliation or ideology, and evidence still suggests the gunman had no co-conspirators… FBI investigators have about 22,000 hours of surveillance and cellphone footage to comb through, along with about 250,000 separate photos… Local and federal authorities have to sift through about 40 terabytes of data.

At the turn of the new year, it was revealed that Mandalay Bay staff – where Paddock had been staying – had at least 10 interactions with him during his stay.

Paddock’s huge arsenal of guns and thousands of rounds of ammunition somehow wasn’t noticed throughout 10 interactions with hotel staff – an immediate answer is needed as to how.

Court documents unsealed a week ago reveal that Marilou Danley, Paddock’s girlfriend, told authorities that they would likely find her fingerprints on some of the bullets used during the massacre because she helped Paddock load ammunition into magazines.

Although claiming she had no prior knowledge of Paddock’s plans, Danley deleted her Facebook account at 2:46 a.m. on the night of the massacre, just hours after Paddock began firing at 10:08 p.m. 

FBI agents also knew Paddock left behind caches of guns, ammunition, and explosives when they sought warrants before searching his properties. Oddities in Paddock’s online behavior were also noticed. As reported by Fox News:

The documents said Paddock had received an email from a Gmail account in July encouraging him to try an AR-style rifle before buying one. “We have huge selection” in the Las Vegas area, the email allegedly noted.

Paddock wrote back that he wanted to try several scopes and different types of ammunition. An email in response suggested trying a bump stock on the rifle with a 100-round magazine.

Paddock’s email address and the Gmail address had similar names, leading investigators to suspect that he may have been emailing himself, although they couldn’t figure out why.

Over the weekend, the trickle of developments continued, with Fox News revealing Paddock had child porn his computer… but last we knew, the hard drive to Paddock’s computer was missing.

Furthermore, after months of claims and explanations by authorities that Paddock was a “lone gunman”, Fox5 of Las Vegas revealed that Metro Police confirmed they’re unable to release further details on the case because “there are still suspects being investigated”. 

Even after months of being ignored by the mainstream media, the story still doesn’t add up.



The Las Vegas shooting investigation – with only four months of radio silence from authorities to show after the horrific incident and no clear answers – is still as murky as ever with no clear sign of when the veil will drop… if ever.