Wednesday, May 23, 2018

Homes, Gas and Recycling

It is no secret that rising interest rates sink home sales. Even though interest rates are still at historical lows, the housing industry has seen lower sales, lower applications for housing permits and rising rates on mortgages. One central reason is workers cannot afford new housing with little affordable units for sale. This aspect surfaced in the earnings news from Home Depot. They had a rare earnings miss. What the media is overlooking is the flippers.

Remodeling

Ever since the financial crisis of 2008, home flipping has disappeared. Well, that is not true entirely. Flippers returned to their original role by buying distressed homes, remodeling them and returning them to the market. These homes are generally more affordable, but flippers have turned to up-scale neighborhoods. They have abandoned the entry level, starter homes for the big bucks. In addition, there are no more distressed bargain homes for sale in the market. This is what is hurting Home Depot's bottom line. The loss of flippers and this aspect will reveal itself going forward. This too, will hurt housing sales going forward along with rising interest rates.

On the flip side of flippers, KKR is starting a new program to lend money to flippers. Of course, these mortgages will be shorter in term and come with a higher interest rate. And so, we have begun again to chip away at housing precautions. The road to trouble has been cleared.
A new start-up called Ribbon is offering home buyers "cash." The thinking is cash buyers "appear" stronger on paper and have their offer accepted. If the buyer ultimately fails to secure a purchase mortgage, Ribbon will buy the home and offer it to the buyer or re-sale market. This company is speeding on the trouble road.

Finally, NBR reports that homes sales declined last month. This is big since this is the busiest time of the year for home sales. In addition, permits are down and new starts was revised lower. With higher rates coming, our most important consumer category is looking weak. This same weakness was reflected in the earnings miss by Toll Brothers. They blamed the miss on higher wages and costs of materials. Funny, no one mentioned lumber which is off the charts. Homes just got more expensive.

Gasoline

The price for a gallon is close to $3.00 nationally and I predict it will smash through that figure. Yes, the US is now the largest producer of oil, but lobbyists got permission to sell aboard. Our democracy in action. Ha!
Whenever you talk oil, you have to include the dollar. The dollar stopped its downturn and it is now rising or at least at a higher level. A rising dollar should keep gas prices low. However, this is not happening. The crack spread has risen from $1.85 three months ago to $2.26. This is a Fibonacci expansion level. There could be a retracement, but oil seems to be heading for $75 a barrel. This is a huge move and we will pay at the pump. It also means that $2.50 wholesale, is within range. At that wholesale price, we can expect to pay $3.50 at the pump. Ouch!
With world demand is rising and OPEC is manipulating production. Russia is selling to China, and the supply glut is dwindling. The basic supply/demand curve is in effect. Bottom line: less money in our pockets and the market will also feel pain. It will be reflected first in the airlines as American and Southwest will tell you.

Recycling

Get ready for higher taxes due to landfill concerns. This is probably another area where the Federal Reserve does not keep track of costs in their phony, manipulated matrix to figure inflation. As stated above, the price of gas has risen .57 cents year-on-year a gallon, but the Fed keeps saying that there is less than 2% inflation. So much B.S.!

Anyway, if I were to ask you what is our largest export to China over the past 20 years, what would you say? The answer is surprising. It is Garbage. That's right, but the Chinese importers are upset and I can see their valid point. Instead of dumping in our landfills, we send to China our used cardboard, cans, etc. under recycling. Now, the Chinses say to us, clean up our act. What they are saying is that we have included waste in our junk. With local cutbacks, our recycling plants have left egg shells in crates, pizza slices in boxes and sauce in jars. We are suppose to separate this crap from the recyclable parts. This complaint has nothing to do with tariff talks. This is just between an exporter and importer. It is so typical of us. We cut corners and now, it is coming back to bite us in the ass and our noses too. We could not only lose our most successful export, but pay through higher garbage rates and taxes for landfill concerns.      

Thursday, May 17, 2018

Buffett Talk, Argentina Talk and B.S. Talk

Buffett spoke to the media at his annual shareholder meeting last week. His thoughts trigger two responses from me. One, he is consistent and secondly, he is such a hypocrite.

He was joined by his right hand man, Charlie Munger and charity buddy, Bill Gates. Together, they trolled the dangers of cryptocurrency. They all agree that it is fake money, but Buffett also thinks gold is not money. I have a serious problem with that.
The subject of bitcoins has two sides. I, too, believe it is a fake asset, but the dialogue that fiat currencies are really products for government manipulation does hold water with me. This is why I believe in gold just as our founding fathers because it is a true asset that cannot be manipulated, especially by governments.

Doug Casey said it best when discussing three choices of money. Since the US went off the gold stand, our currency is backed by faith as in we owe you nothing. The euro is fiat, but the answer to the question is, who owes me nothing? Finally, the answer to cryptocurrency is I don't know who owes me nothing.

With that said, there are nations where citizens have few choices to protect their assets. They utilize the cryptocurrency to protect themselves from inflation and government seizures. There is however, a negative side where criminals can launder money or the wealthy hide money and avoid taxes. Like almost any issue, the bitcoin is a two-sided story.

Nevertheless, there are forces that control stories so we only hear one side of the tale. Buffett is the perfect example. He famously stated that derivatives are weapons of (financial) mass destruction(WMD). What is never talked about is the reality that Buffett controls more derivatives than anyone in the world. He is lock, stock behind fiat money which is the real reason why he opposes gold. He is such a hypocrite!

If I was a citizen of Argentina, I might feel differently about cryptocurrencies. Inflation there, is running at an unbelievable 40%. Their peso fell to almost 24 to the US dollar. The central bank of the nation increased their lending rates three times last week to stem the tide, but nothing seems to work. The citizens have lost confidence and that is all that there is behind fiat money. Their black market is almost as large as their public GDP. The ministers of Argentina have asked the following for help:
1) IMF
2)World Bank
3)Inter-American Development Bank and
4)Development Bank of Latin America(CAF).
The nation already owes $10 billion each year for the next ten years from past debt. They are deep in do-doo. The sad part of all this is the US is following the same path as Argentina. Their nation is rich in natural resources, good agricultural land and once had one of the highest standards of living in the world. Now, poverty is at their door.

We reflect Argentina in many ways except we had the highest standard of living, ever and now, with annual deficits of one trillion that is added to the $21-plus trillions that we owe, who are we going to call for help, Ghostbusters?

By the way, the NAFTA talks ended and they ended the same way as the trade talks with China=
Nothing! - NADA! - Forget About It! - A big Goose Egg - Zero! - OO! - Just B.S.!

Wednesday, May 9, 2018

Brexit v. EU - China v. US

No, this is not a schedule for competition in World Cup. It is the recent revelations in negotiated talks as well as related material. It follows the script of my unpublished work, "all things are connected."
Brexit

There is a fierce dialogue in Parliament concerning the on-going talks and repercussions of those actions with the EU. The trade unions fear that by losing structured trade with the EU members, they and England will be left in "nowhere land." The trajectory will leave the English behind and they will disintegrate as a nation. The talk from Brussels isn't helping. The EU has taking a hard line with England and the US with Trump's tariffs on products.
David Davis, a foreign minister in Exiting the European Union(DExEU) has tried to calm the fears of labor in Britain. His speech centered on combating union fears of a "Mad Max" collapse. He pointed out the strength in the pound as things are in a positive direction.
The calm was short lived as news of a "divorce bill" that the EU is placing on England for leaving. It is said to be $50 billion euros. Ouch! Theresa May claimed it will be less as she added a two year transition period to Brexit. The additional time will begin after the extended timeline of March 2019. This thing even won't begin until 2021 or later.
Isn't it ironic that the recent budget for the EU was $25 billion short with $12 billion gone as this was England's participation fee. The EU just fills the short with the divorce proceedings. Got to love those bureaucrats.

May also stated that England now has the right to negotiate its own trade deals, but it would like to continue working with the EU on terrorism. The EU said it will not share its files with non-members, but it will try to restrict illegal immigration into England, ...And the beat goes on...

In the other competition, the trade talks between the US and China ended with no results other than the wants.
The US wants at least a $200 billion decline in annual trade with China. It is too bad that our negotiators have not studied the wisdom of the Ugly, Tuco from The Good, the Bad and the Ugly. He prevailed although caught with his pants down in a tub, "When you come to shoot, shoot, don't talk."
China wants the US to stop investigating technology transfers to Chinese companies. They want more high-end technology.
Yeah, they are such good and honest trade partners. Do they honor patents=NO!
Do they steal corporate information and products=YES!
Do they cut corners in license agreements=Yes!
In addition, they demand full knowledge of company products in China and all these companies must be registered as Chinese. Bottom line: SCREW YOU! Let's close the door again to China.

Since this is the 200 birthday of Karl Marx, it is appropriate to mention him. Just because he is the founder of Communism, that does not mean that all his ideas were wrong. He had some great insights into our human nature. His observations on class are relevant, especially today. He said the middle class will die off and there will be just rich and poor. He said capitalist will do anything for profits even outsource to anti-capitalist nations. He is looking correct in those two points. After the Russian Revolution, capitalist went to Moscow to do deals. Nixon opened China to our jobs.
By the way, one million people have left the "Golden State" in the last ten years due to the high cost of housing. California became the largest state because it had land to grow and opportunities to advance. No longer. There is a sharp class divide in California. People now buy RVs to live-in because they cannot afford rent or to buy a home.
Same old same old

New York led our nation until government taxed its companies and citizens to exit. Seattle is doing the same today with Boeing and Amazon. They are leaving as well as citizens. California is following the same script and I'm sorry Eagles fans, "You can check out and NEVER RETURN!"
This conflict in democracy and our capitalist society goes back to Ford at Ford and Sloan at GM. Ford paid workers so that they could grow along with his company. His philosophy was the company, its workers and its product. Shareholders benefitted over the long-term because the foundation and intangibles were strong. The company was like your house. You did not see the appreciation from year-to-year, but in time you benefitted greatly. They could afford to buy the product.
Sloan said the company comes first. His corporate greed was excessive. He paid workers as little as possible. Unions saved those auto workers, but anti-unionism is winning in America. That is so sad. Greed has over-taken the philosophy of everyone benefits to only the rich benefits.
For example: Apple just instituted a $312 billion dollar buyback of its shares. They should have used the tax break to build a factory in the US. This is why I hate Apple, Nike and many other ungrateful, rich companies who outsource work. In Ford v. Sloan, I'm for FORD. 

Marx spoke a few truths. Only one man spoke truth all the time. This one should be applied by corporate thinking as their philosophy. His words as written by a follower: 
- "If one member suffers, all suffer together; if one member is honored, all rejoice together."
- Cor: 12:26.

Wednesday, May 2, 2018

This May, Go Away

There are many points converging in the market as we enter the month of May. If you connect the dots, the picture suggests a correction is beginning. In fact, since the market peaked, it has been in a sideways or consolation range. The trading volume has been stronger on the down side with less and less buyers on the upside. The reason? To each their own fear, but here are a few.

Treasury:
The Republicans claim to be conservative with their approach to government to which, they want smaller, less taxes and less spending. The reality is the GOP utilizes a liberal approach. They are open minded to spend on the military, cut taxes for the rich and sink the government with debt. Of the three worst spenders in US history, two are republicans, Reagan and Bush. Obama leads for the moment, but Trump will trump them all. The treasury revealed that it set a record for bonds in the first quarter(Jan-March) at $488 billion. At this pace, Trump will sink the US with $trillion dollar shortfalls. Our debt is growing at 3X our revenues. The deficit will be so bad that the US could lose its reserve currency standing. If that happens, be prepared for $6.00 a gallon gas. By the way, China is looking to take that position. They offer gold for oil if the seller doesn't want the Chinese currency.

Energy:
 ...continues to want higher prices. Oil has been on an uptick since January of this year. Gasoline as you should already be aware, is up .65 cents in the past two months. It currently rests at $2.12, but if is rises pass $2.18, watch out! Keep in mind the driving season begins at the end of May. Even the Federal Reserve can't lie about inflation. They stated that inflation "just" met their 2% target. Oh, really? What about the price of homes? The cost to rent? Food? Insurance? Medical? Every thing that we buy. 2% = Get Real!

Fed:
Speaking of the devils, they will probably not announce a quarter point increase in the cost of money later today. However, everyone feels a rate hike is coming in June. This will add to housing costs and push more buyers out of the market. Even if I'm wrong, this spring, there is no springing into housing. Recent data indicates a 3% drop in signed contracts for sale which follows three straight months of declining sales. However, the market still does not believe in the Fed's strengthening policy. The consensus is the Fed will weaken along with the economy. The signs are in place.

Consider Goldman Sacks:
At one time, a few years back, they had 500 traders on the floor. Today, they have three as in 1,2,3. -tres. They have more people looking into government regulations than market traders.
Even with a record budget for military spending to which the military complex is bankrupting our nation, defense stocks are in correction mode. They are down 15% in the past two weeks.

Autos:
Nissan revealed a 28% sales decline for April. Ford lost 15% in sales with sedans. It is so bad that Ford will no longer make sedans. They are exiting the market. The maker of the greatest sedan, the Mustang will no longer create sedans. WOW! Tesla failed to meet production levels - again and again it continues to burn through cash at $1 billion a month!

Apple:
Will give the market a push as it made its numbers to which also effects its suppliers. Additionally, Apple will buy back another $100 billion of its shares and it stated that it still has in effect the planned purchase of another $210 billion making a total of $310 billion. That is support in capital letters. This is Trump's corporate tax gift in action. Money for the rich as the nation goes bankrupt! To be honest, I approve of the tax cut as I hoped that companies would manufacture here in the US, however it does not seem to be happening.

Teacher Strikes:
It is now in five states as Arizona and New Mexico joined the party. This is spreading in another version of "me too." Soon, police, sanitation and fire fighters will be asking for more as the finances of states get busted and they cannot run deficits. Pension problems will resurface.

The current expansion for the stock market and the economy is 106 months. This is tied for the second longest in history. Political officials will take bows on this point, but Sebastian does not. He has a litany of issues like our music industry is dying. Just yesterday, Gibson filed for bankruptcy. Our kids can't buy toys because there is no longer a Toy 'R Us. Our malls only have rats running around, especially where there was a Subway store as 500 are closing - no lunch for you! In addition, he reminds us that this so-called progress fails to include deficits, environmental issues like air and water, to which are never subtracted to give a clearer picture of the overall standard of living in America. Our economists know the price of everything, but the value of nothing.    

Wednesday, April 25, 2018

Employment Picture: Many Down - Some Up

The Bureau of Labor Stats(BLS) released its employment forecast for the US up to 2025. Funny, these bureaucrats can tell you where to go for a job and how much it will pay, but they never cite a reason why jobs disappear. However, Sebastian knows. They were undercut by foreign imports under the lie of free trade. Anyway, we all know that our retail industry is in serious danger. The one vocal point is items in stores are subject to a sales tax and consumers can by-pass this cost by purchasing over the internet. The Supreme Court holds the future with its decision on this point. If the internet sales get taxed, retail could survive. If not, it will collapse and I predict this failure will sink the economy into a deep, deep recession. By the way, if that implies that all is well at the moment and it does seem things are better, there are still 14 states that have not yet recovered from the housing crisis of 2008.
With all that said, here is the BLS data. The findings show more jobs will disappear than are created, but there are areas for growth in the future.

It is the beginning of baseball season and in honor of the late, great Mel Allen
Its...going, going, gone!

*Systems Operators, Chemical Plant Operator: = -9%
*Locomotive workers,  Railroad workers:           = -3%
*Secretaries, Administrative Assistants:              = -7%
*Machinist, Tool & Die Makers:                           = -7%
*Water & Wastewater Treatment Operator:      = -3%
*Desktop Publishing:                                              = -14%
*Insurance:                                                              = -5%
*Postal service:                                                        = -13%
*Labor Relations:                                                    = -8%(No union jobs - my input)
*Adult Literacy Teacher:                                       = -5%
*Advertising Sales:                                                  = -4%

*RETAIL( This is so wrong- the figure is already higher : = -5%
*Correctional Officers & Bailiffs: This is another misleading stat. States are seeking to lower costs and these jobs will move with a new name and of course, lower pay: = -7%

As stated there is some good news - don't be misled by the high stat percentage as many of these fields are new endeavors.

Come and get'em! Hot off the grill!
*Solar:                                                                       = +105%
*Windtechs, Turbines:                                            =  +96%
*Home Health Aid:                                                  = +41%
*Nurses:                                                                    = +31%
*Medical Therapy:                                                   = +29%
*Occupational Therapy(recover from accident) : = +28%
*Math & Stats:                                                          = +33%(lot of jobs - do your homework)
*Genetic Councilor(medical history):                     = +29%
*Physical Therapy:                                                    = +30%
*Software Development(learn code):                       = +28%

What I didn't see here was robotics which is already effecting many fields and with the rise of self-service check-outs, the loss of grocery jobs unless this is considered retail which makes the above 5% figure way, way off. Teenagers will have a hard time seeking work to help pay for their future education. If I was young, I would get into alternative energy in a big way. Looking for a better job, I have two words with the same wish - GOOD LUCK!                                           

Wednesday, April 18, 2018

China: Aiming At Its Own Foot

When a political party controls government, they throw money around to their supporters, especially spoils to its loyal members. Many of those self-serving drones get bureaucratic jobs. They sit around and try to develop a means to maintain their position with living off the dole. To make matters worse, in many cases, the position comes with a pension too. Europe wrote the playbook for all to follow.
The Chinese Communist Party is second to no one in broadening these bureaucratic agencies. Now, those party lap-dogs have presented the big-wigs with an idea.
Social Credit System
In their thinking this program will coalesce the nation. The social engineers of Dystopia will give it a nice name like Congress when it passes a dangerous idea. If you think America is diverse with 50 states that consists of a North, South, Mid-west and West regions of thought, consider China with no one central language, a vast history of regional differences with an equal history of revolution until one big dog takes control. The Chinese Communist are the alpha dog today, but prosperity will kill it.
In a negative spin of John Kennedy's famous speech, "Ask not what your country can do for you, but what you can do for your country," the Chinese will commence a social credit system.
Big Brother in action...
The Chinese will gather info on all its citizens like NSA did illegally in the US. They will track your smartphone use, your computer searches, your social media, job, finances, family and friends. They will tell their trading partners that they are going after the nation's black market which is huge and managers who cut corners in license agreements, intellectual theft, disregard for patents with clone products, etc. The spin will sound great, but the real purpose is to find potential enemies of state. To eliminate any competition to their authority and status quo. In essence, they will copy the World Wrestling Federation creed: Lie, cheat, steal to stay on top.
Anyway, the Chinese will set up a standard that all can follow, provided that you do as told. If you are rated a good citizen you can enjoy good financing to get a house, a car and travel. If you or if any of your family or associates are rated poorly, you will be locked out of financing, job promotions, airline tickets, a car license and or, passport. In a nation that uses technology to pay for products and services like with a smartphone, poorly rated people will be locked out. You will be a prisoner walking the streets. You will be destined to low level jobs and you will be looked down upon by the nation as evil to the country and state. You are not worthy.
Consider for a moment, the present state of Singapore? The city has cameras everywhere. If you are seen chewing gum, you will be fined. If spotted throwing your gum on the street for example, it is automatic JAIL TIME! Jay walking is also considered a serious crime as well as pot smoking. As you can see, the concept already has a foot hold in Asia. History has examples. In England around 1600, they had on the law books, hundreds of crimes that ended in jail or death by hanging. If caught stealing bread, you would have "Dickens" to pay. No wonder many came to America and the state of Georgia was a choice between the rope and life.
Back to China: the nation could easily end currency in daily transactions like fools are considering in the US. If a poorly rated citizen is locked out of a smartphone, that person would suffer immensely. If enough of them get together, they will rise up against the state. Then, maybe, a new dog will be running the pound? I can only hope that the idiots running our government do not copy the idiots in China.

Wednesday, April 11, 2018

What Would You Do?

I was attending a writing class recently, and yes, one never outgrows an ability to grow and improve. The teacher asked us to first think about all the various types of government and then, to put forth what we as individuals feel is the best form. The idea was in setting the groundwork for a future work be it fiction or non-fiction. What would you do?
The first idea that popped into my head was the word, "Utopia." It is central to any thinker of the dismal science. Man has always struggled to find one. Those of us who believe in God think the only utopia is heaven. While we journey on earth, we try to follow the teachings centered on love with the hope to obtain paradise. However, there are moments within history when leaders arose that put into place government that promoted the general welfare and allowed all to pursue happiness. The sins of man always seem to re-capture leadership positions and thus, no government has a legacy that can be duplicated.
Man has tried all the ideas pertaining to government, but with little success. Democracy seems to hold within its format the most promise, but its progression is very, very slow. This aspect gave birth to the title and mission of this blog, The Evolution of Democracy. 
The inherit problem for democracy lies in its ability to get ordinary citizens into the seat of leadership. Not only that, even if one was to emerge, is that person the right person whose views reflect the populous?
Since I believe that all things are connected which is the theme to my unpublished work, the first connection to government is money and land. Consider the first struggles that are attached to the formation of modern democracy. The Magna Carter was a battle between the king and his aristocratic peers. The US began has a battle due to taxes placed by a king. Whenever outbreaks occurred, whether it established a new government or not, you will always find that the plight of ordinary citizens never changes. The French and Russian revolutions are perfect examples. The citizens fought and died and when the graves were filled, the vacuum in government was filled with people who acted like the government that was just deposed. They enacted self-serving laws and self-promotion.
The Rise of the Oligarchy
This is the weakness in democracy. When the founding fathers of the US began deliberations to form government, they feared democracy because they thought people would vote themselves benefits, especially the majority over the minority. Their fears were only half-right. John Adams had the other half. The reason we have two houses in Congress was because Adams feared that only the wealthy would hold office in the Senate. He hoped the house would have ordinary citizens. We now know differently. The weakness in the US democracy is it is controlled in both houses by the rich and large landholders who voted themselves benefits at the expense of everyone else. They are no different than the oligarchs who run Russia or the Chinese Communist party that controls China. There is no true democracy anywhere on earth.
So, if I were to throw out an idea, it would follow the democratic principles, but the citizens could look for certain sign posts to see if those principles were being followed. How many ordinary citizens have progressed on the political rung to represent the people? It is the same old, same old leadership of rich lawyers, landowners and similar?
Government needs to protect its citizens from foreign powers. This does not mean that the nation actively engages in international affairs. It is never the police force of the world. It enacts laws that benefit the majority, but sunsets them to evaluate their fairness to the minority. When dealing in trade with the global community, all aspects of a product/sale must be evaluated. Since I also believe that our operating system of capitalism is a plus, the playing field of any trade must be put into perspective. It must be evaluated to our currency to which should return to gold, silver and other precious metals for backing strength. When our nation was on the gold standard, it was extremely foolish to allow convertibility. Nations stole our gold. Who wouldn't take gold for paper? This led to the destruction of our currency. Why did our so-called leaders allow manipulative, fiat paper which does not match gold on any level to be exchanged for our gold? Idiots!
Anyway, our individual companies must have the help of our government because global nations utilize state sponsored enterprise. This makes any trade unfair for our individual companies. By the way, capitalism has its sins and those are man's sins like greed, coercion, fraud, ego, amongst others. This is not the time and place to address them. The government should strive to make the country self-sufficient as best as it is able. Whomever is elected, they should not ban opposing party ideas because they come from political opposition. Our seniors would be destitute if it weren't for the concept of social security which is a socialist contribution. A liberal gave us our creed that all men are created equal or else we would have collapsed with race riots ages ago. Conservative thinking gave us a strong currency in the gold standard, but there are no real conservatives in government anymore. My mother's words of wisdom, "There are good and bad in all groups." It should be central to government leadership.
Our nation developed individually in the form of states, but federal government destroys states rights. This needs to be amended to allow each its own sphere of influence. The government should not seek to expand and always operate in economic balance of revenues to expenses. The government should do more for the school systems with all schools, no matter parochial or public, to receive funding because all of their students are citizens of the same state. The application of rules and regulations of the government should be citizens first with the hope to live and let live in developing our individual pursuit of happiness with peace and love throughout the land.
What would you do?
P.S. I did not address the jurisdiction or power of the judicial branch of government. The reason is that I have an answer, but it is to be revealed if I ever get my unpublished work, published.