Tuesday, February 23, 2016

Economic Reality...

is scary...as opposed to what is considered news and information from the media world and most of the candidates running for president in 2016 by both of the major political parties. I'm sorry, dear reader the facts are not optimistic. Of course, it goes without saying that the Obama administration will never address these aspects, issues or trends. There are too many indicators and all are signaling a recession for the US. It could have already started. The bureaucratic government stats are lagging information. The government can't see the forest due to all the trees. Having said that, a stat from the Bureau of Labor Statistics reported a 2.4% rise in inflation. This is the highest rise in over three years for a monthly reading. I see this inflation in housing, whether renting or buying. I see it in the price of eggs and other dairy products. I see it in the cost of a Big Mac. It is up 6.7% last year. I see it in insurance and clothing. The federal government only sees lower fuel costs. It is the excuse for not giving social security recipients a "Cola" increase this year.
However, my personal economic situations do not collectively effect the nation. This does.
Baltic Dry Shipping
index fell to an all-time low under 300. Global shipping is falling off the earth. If it were only ocean containers that were hitting a rough patch, that would be one thing. However, land rail traffic is also at a standstill. If you were to visit a locomotive hub in Colorado, you would see idle locomotives that appear like a rental car lot at a major airport.
Corporate Profits
margins are all but erased since the third quarter of 2014. Declines in the S & P 500 will reach 4% and this is two straight quarters of profit declines. Some call this a "earnings recession."
too are feeling the pinch. Rock solid oil loans are hitting dust with commodity prices falling. This in time will trigger the derivative market which could devastate the global economy. The flat lining of yields reflects this worry. There were 112 global bond defaults last year and 2016 at the moment looks worse.
just fell under 5%, but job cuts also just surged 218%, according to the January reading of the Challenger Report. US factory orders have dropped 14 months in a row. Not only that, but take a look at the following releases by various companies.
* Royal Dutch Shell announced 10,000 jobs to be eliminated.
* Johnson & Johnson is dropping 15% of its workforce.
* Caterpillar is closing 5 plants and another 670 jobs.
* Sprint laid off 8% of their people.
* Go Pro is laying off 7% of its personal.
* Wal-Mart is closing all their new small stores(269). Think of all the lost jobs for workers and less revenues for the company.
There are many other behind the scene actions taking place, especially in the oil industry and all the businesses that service that industry. Add the latest release of oil inventories to the worries: Oil in storage is over 500 million barrels and climbing.
Together, all this adds up to a gloomy picture that the Fed is only making worse as they returned to their playbook. They are now increasing the money supply. It rose over 9%. This is the way the Fed usually pays off old debt by creating new debt with cheaper money and a way to devalue the dollar. It will raise the price of oil, all commodities and everything. It is why I say, End the Fed!