An economic canary

Not Denninger, but what he posted about this morning. Karl’s link here. Reuters link here.

Shares in Orlando, Florida-based Darden fell almost 9 percent in premarket trading.

The company now expects earnings from continuing operations of 25 cents to 26 cents per share for the second quarter ended November 25. Costs associated with its purchase of Yard House USA Inc would cut earnings by 5 cents per share, while Hurricane Sandy would reduce EPS by about 1 cent.

Analysts, on average, expected fiscal second-quarter earnings, excluding items, of 47 cents per share, according to Thomson Reuters I/B/E/S.

Darden expects same-restaurant sales to be down 3.2 percent at Olive Garden, off 2.7 percent at Red Lobster and down 0.8 percent at LongHorn Steakhouse during the second quarter.

This is an economic canary in a coal mine. Here’s why…

No one in my immediate AO cooks anymore. They Kroger/Publix on an almost meal to meal basis, and most of that is pre-packaged & processed junk. No one cooks. When they go out, the frequent the places mentioned above. This is the land of Chili’s, Longhorn, bad Mexican, and QSR.

The next ones you will see is the fast food chains saying much that same, followed shortly by Dot Gov saying that they have struck a deal with McD’s & BK to accept EBT funds.

Seriously folks, it hasn’t even gotten bad yet.

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We Need More of This

Full of win here. Simply full of win.

‘We had nothing to pursue him with,’ said Newport Chief Deputy Philip Brooks, who went outside to see seven of his fleet’s 11 vehicles destroyed.

Denninger’s take on this is really good. He drives the ultimate point home – and no, it’s not about the ‘war on (some) drugs’…

Government — and laws — exist only with the consent of the governed.  This man withdrew his consent.  Yes, he will be punished for that act, and he should be — destruction of property (unless it’s your own) is a crime.  Nonetheless the fact remains that at some point the cost of telling people what to do with their own bodies simply overwhelms the nanny state’s ability to cover it through taxation, if the people decide that the line has been drawn in the wrong place.

We need more of this – and on this level.

Denninger Sends

From one of yesterday’s tickers:

Take a look at the FVX (5yr Treasury Yield) and you see a materially-more-frightening thing.  Yields have backed up from 0.7% to 0.97%.  Sounds trivial.  It’s not — it’s a huge move, close to 40% on yield since the end of January!

Yep.

This matters because the Federal Government’s deficit spending in February is what has been driving the “improving” economic numbers, just as it has been for the last three years.  This is a pincer move; while yields have to normalize if and when they start to move in this direction that move will also choke off federal deficit spending capacity.

The Depression featured this sort of attempt at “repression” by The Fed and government and it was unsuccessful.  It looked successful for a while, but eventually the math caught up with them and we slumped back into the morass.  Our “exit” was war; we blew up all of our industrial competitor’s output capacity and by doing so rejiggered demand.  That’s a rather bleak way of looking at what was “death by all forms” for the common man, but from an economic perspective that’s what happened.  But “war as a solution” since that time hasn’t “worked” (and in fact can’t) since small-ball wars run into the broken-window fallacy; you can’t “win” by breaking windows as the economic damage from a war exceeds the benefit.  For war to be a “winning” strategy you have to literally flatten your economic competitors so that even with the economic damage you wind up with a net benefit.

Wall cloud indeed.

Agreed – Fair Warning from Denninger

I completely agree with Karl.

It is not often that one gets this sort of rotational warning in such a clear form, but you’re getting it now.  The same thing is true in the DOW, with IBM being the power mover there.

Beware folks.  Be very, very careful.

Though, my opinion is that we will see a run up to uncharted territory before the fall if crude doesn’t skyrocket over the summer. When you see the DJIA in the 19,000 to 22,000 range, it is literally time to head for the hills. The end result of that one will be five times what 2000 & 2008 were.

Denninger Sends

Second half kaboom!

Could the be the catalyst we are looking for. Maybe not though. Brinkmanship on a global level is the order of the day. Might just be another fizzle, though Karl has been on target lately.

*Original content has been lacking. Apologies. Day gig is still in an interesting transition. I have another survival post in the works. Hopefully sometime this week.

So, in review…

Entertaining reading:

So just to review today’s notes:

The IAEA finally grows a brain and figures out that yes, Iran is building a nuclear weapon and a reliable delivery system;

Berlusconi’s quitting; Italy/EeeUUUWW is about to implode, taking all major US banks down with it (and most every other part of the ‘conomy;

JoePa’s on his way out in a sex scandal, years after multiple event(s) were reported to him;

Herman Cain us under full frontal assault by a woman that hugged him a month ago, lives in David Axelrod’s building, has a history of financial and legal troubles, and has Gloria Allred on her team;

A Federal appeals court is upholding the clearly unconstitutional Oblahmacare as constitutional;

A.G. Holder has perfected lying under oath and should win an Academy Award for his performance as an unrepentant, unapologetic murderer;

And Obama openly insults Benjamin Netanyahu.

I need to open a fresh bottle of Laphroaig. And buy a shitload of .223.