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Tuesday, March 31, 2015

Creedence Time

Theme song for this post:

I am very unhappy about this. CMI (NACM's business-to-business credit report) is falling out in a most determined fashion. Folks, look at this mess! You can get the reports here.. I don't know why so little attention is paid to this report, because it gives you a very important part of the picture.

The trajectory for the combined index since last September: -1.8, +2.1, -1.1, -0.9, +0.3, -2.0, -1.9. Now, this latest fall is quite worrying, because it is telling us that the spring pickup is not destined to be very strong and will be isolated to consumer spending pickups.

The most important near-term indicator for this report is the amount of credit extended (working capital):
Manufacturing Feb/Mar: 49.4, 45.1
Servicing Feb/Mar: 54.8, 47.2

It's not because companies are so flush that they don't need credit, because rejections of credit apps:
Manufacturing Feb/Mar: 50.3, 43.8
Services Feb/Mar: 45.9, 42.0

This looks a lot like the credit crunch is propagating itself through the business network.

Well, the offset to this is that when companies get short and can't get trade credit, they go to the banks and get loans. So, heading out to H.8, take a look at C&I loans:
Credit is growing too quickly, and even the dumbest banker (yes, there are many) is going to start to realize there's a problem somewhere around here. Because these businesses aren't paying their bills, which takes us back to CMI:
Manufacturing (disputes, beyond terms, cust deductions) for March: 48.6, 46.0, 48.7. 
Services (disputes, beyond terms, cust deductions) for March: 49.4, 45.1, 48.7

Note also the ominous rise for C&I back in 2007 shown in the graph above.

And speaking of 2007, we did not see contractions in the B2B amount of credit extended until Oct/Nov 2008. A blast from the past.

On the brighter side, you will note that the trajectory downward was far, far steeper in 2008, and the unfavorable factors had been worsening for a long time, which is why the trajectory downward was so steep. So this is not the springloaded spiral into despair one had then.

And it is not certain that the consumer will not carry this through, although consumer credit indicates a somewhat strapped consumer without tremendous carrying power.

But in 2007/2008, you had a correlation with the collapse in consumer credit, when they realized they couldn't infinitely draw credit from their homes. That produced a tremendously strong correlation with a tremendously strong recession.

This does explain why CPI is higher than it should be - companies are determined to keep prices high to maintain profit margins.

It's not at all clear that we have the sustained correlation necessary for a real recession here, but it is time to get sober and watch carefully. The big fall in energy prices did provide some consumer boost, and given a bad winter, it was urgently needed.

Freight is unclear. Rail has blisteringly high intermodal (partially related to the earlier labor action, and perhaps partially related to icing conditions that probably shifted some freight to rail). We'll have to wait a few months to see how that shakes out, but probably retail is overstocked, apparently at the wholesale level according to business inventories/sales ratios.  However I have not attached too much importance to that because a lot of it is in the petroleum build. However, it's apparent that there is a business input pile-up at wholesalers in stuff like metals, computer equipment and so forth.

So I guess we wait to see what happens, but don't count on inflation and interest rate increases in the summer. We probably have a tug of war going on between businesses trying to keep prices up and consumers still having cash flow issues, and the companies need to come off the pricing to get consumers to spend more. But large companies have a strong dollar profit problem, as overseas profits are comparatively worse when translated to the USD.

Construction is holding up fine so far.

We should begin to see weakness in jobs reports based on the latest round of activity reports.

Consumer credit is rising, but student loans continue to account for a very large share of the accumulation. As a flow contributor, my reading of the university system is that on net, it must still contract, so that's not a terribly strong indicator. From first quarter 2014 to Jan 2015, total increase was 223 billion, and federal government was 99 billion.

I began this year sure that my recession call was wrong, due to expanding consumer purchasing power based on lower fuel prices. But now I begin to think I was perhaps a bit overoptimistic - we could be looking at a delayed reaction rather than a real reprieve. I hope not.

On the brighter side and on a completely different topic, the diabetes/metabolic syndrome research thing is going stunningly well. We now have three patients who have recovered more than 20 points of their ejection fraction. 45->67%, 25->47%, congestive heart failure to 35%. The last was a man who doc swore had no hope but a heart transplant, but he can walk for hours now. Also excellent and improving organ function. We are now trying to get to the children and reverse the early insulin resistance with a protocol that we hope will offer real hope for what is really almost an entirely genetic disease. The older adults have gained decades of life expectancy.

PS: Accidentally when experimenting on myself I appear to have totally cured myself. After decades of neurological disease, which turns out to have been a completely genetic issue.

Glad to hear you're doing well! I don't suppose your miracle method can do anything to slow down Parkinson's...

I certainly hope interest rates stay low. I've got to sell the house and move later this year. I still think things get dicey this fall, but I'm not sure when interest rates will go up.
Neil, some people with Parkinson's will get considerable relief from berberine:

If one were to try this, first check in with the doctor, and start titrating up from 200 mg a day slowly.

You have to check interactions with other drug, esp. statins. Berberine is a PCKS9 inhibitor, and in persons with over insulin secretion or diabetes, it lowers blood sugars. It also lowers lipids.

It also tends to lower lipids. While it is a lot safer then oral blood sugar lowering medications, in some people with high natural insulin levels the combination of just berberine and natural insulin levels can produce initial hypoglycemia, yo start very slowly and titrate up.

Also it drop BP very much in certain people, so if the person is on blood pressure medication you have to be cautious.

The strength of the effect of berberine seems to vary depending on genetics, so you have to initiate slowly and keep checking lab values, plus make adjustments to other medications as necessary. Magnesium, insulin levels, lipids, blood chemistry and zinc have to be monitored.

Also only use the ground-up plant versions.

There is a strong linkage between various forms of neurological illnesses, esp. dementias, and insulin resistance. Berberine seems to work particularly well in persons born with insulin resistance.

So tell whoever to check with their doctor, though not a lot of them seems to have any experience with berberine.
Thanks, M_O_M. I will pass that along.

Glad to hear from you, though given the date I did a double-take when the post showed up in my newsfeed. Glad that the medical research makes progress for the patients.
The House of Saud is doing all it can to help the consumer, not out of any love for the consumer, but because they hate the Iranians that much.
Nice to have you back and hear you are in good health! I am about to make my pulmonologist very unhappy as I am canceling a bronoscopy that he wanted. Sometimes, you just have to tell them know.

Boyfriend and I are getting married in June! It's a little anticlimactic, but will be fun anyway.
Teri, that's WONDERFUL. No, it is not anti-climactic, and I am so very happy for you both.
WSJ - Sorry, I didn't realize that. Long nights. Also it it isn't much of a spring.
We're getting wayyy too much spring out West. Rainfall is 90% of normal, but it all came down in a few large warm storms ... so it didn't do groundwater a lot of good, and there is less than 20% of normal snowpack. Going to be a long fire season this year.
So glad you are better, even well. I am not sure that the world is ready for a vigorous KS. I'll be looking into the berberine for my Type II diabetes.

Your econ report is part of a growing chorus of smart voices. Bubbles burst. The Fed has been propping up a limping economy for six years. Your analysis is so detailed, and you know how it gives me and my wife goose bumps, but the intuitive sense was already there. We laugh at intuitive thinking, but we all use it, to a greater or lesser degree. They even teach school kids to consider whether their answer to a problem "makes sense." We less than brilliant math students relied on that "method" long before it was formally taught in schools.

I told a doctor friend, since promoted to Glory, that we, he and I, used that sort of thinking to evaluate some new wrinkle in medicine that was far outside our area of real expertise. As soon as I said it, he exclaimed, "Coronary artery bypass!" It is an attempt to use surgery to cure an essentially chemical problem. It works, sort of, and with several problems, but the underlying premise just does not (there it is again.) "make sense." Of course, these intuitive hypotheses are how we first decide to check into something with carefully controlled experiments, and we don't rush off like a Gadarene herd every time somebody pops up with a new intuitive leap. Still, those are where the discoveries will be made.

BTW,. what do you think are the prospects for berberine in ALS?

Michael Adams
"PS: Accidentally when experimenting on myself I appear to have totally cured myself. After decades of neurological disease, which turns out to have been a completely genetic issue."
= = = =
I am *SO* happy to hear this! It was news "worth waiting for"!
(This was the apparent Lyme disease, or closely related tick-borne illness, right? So you're saying your severe reaction is more related to your personal body chemistry's response, rather than to the virulence of the pathogen you were exposed to? And the hope is that other people's dysfunctional responses to similar "triggers" can be "stepped-down" in a similar way with your protocols?)

PS- side comment to Teri - Congratulations! It's a joyous occasion, whatever the timing. My best to you both!.

Teri, congratulations!

Michael, so happy you are alive.

Before you start the berberine, check your magnesium levels. If they are not at least 2.4, start supplementing with something like Slow-Mag before you even start the berberine at 200 mg daily.

For patients with certain genetics, the effect on the circulation is remarkable and just about immediate. The small blood vessels stop constricting, restoring blood circulation to the tissues, and the magnesium levels will therefore fall. In heart patients, this can induce fatal results.

Since blood sugar is dropping, medications have to be adjusted with sudden and harrowing speed in certain individuals.

In these people in later stages, the lipids are high, and those levels drop rapidly too, which enhances the overall effect.

Also you have to watch kidney function and potassium levels, because the blood pressure drops quite a bit. If the person is on something like ACE inhibitors, and if the person is not able to exercise enough to raise blood pressure significantly twice a day,

Also check sed rate, because if that is high the effect can be remarkably strong. The berberine seems to block TNF alpha, and high levels of TNF alpha seem to cause insulin-induced vasoconstriction.

I discovered Berberine in January of this year and started taking it to keep my blood glucose low. My nephrologist said not to take Berberine within 4 hours of other medications.

I have an incurable blood cancer (Multiple Myeloma) and had a Bone Marrow Transplant. My oncologist said that if I can keep my blood glucose low and steady it will help my remission. It has!

I eat a ketogenic diet - 83% fat, 5% carb 12% protein and have for a year and my cancer markers are better than a year ago! And, I am off the chemo drugs. (besides diet and Berberine, I take vitamins and Curcumin and Resveratrol.

Thank you for your links.
Agate - there are few human conditions that aren't helped by keeping blood sugars low and steady. For those with significant blockages who need higher blood sugars, keeping it steady is paramount. Insulin fluxes can cause vasoconstriction.

I will pray for you. I am glad you have found a means to minimize your chemo drug intake.

Berberine is supposed to help multiple myeloma, as determined in this study:

The p53 signalling pathway is involved in cancer growth:

The JNK protein referenced is also involved in insulin signalling.

Specifically, the action of insulin in vasodilation and vasoconstriction.

Best of luck.
Thanks MOM.

I appreciate the links - I was taking Berberine just for the blood glucose lowering effects. I didn't realize it is anticancer!

I found several good articles from your links. Here is one:
2014 May;38(5):563-70.
Berberine induces apoptosis in human multiple myeloma cell line U266 through hypomethylation of p53 promoter.

Thank you for your prayers, also. Those have eternal significance :-)

Thanks for the info on berberine! My husband has high blood pressure (it runs in his family) and has issues with compartment syndrome in his shins that make exercising very difficult. The blood pressure does not help the compartment syndrome. Sounds like berberine may help. I will have him check in with his doctor about it.
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