As I write this piece and you read it, the important aspect to keep in mind is the trade talks between the US and China and the US and EU. As JFL stated many times, Brexit will keep being delayed until the status quo gets what it wants. The people's vote is in name only. With that said, there are still many dots that if connected will result in changes, either good or bad. The earning season will only matter as a trend if the talks cannot reach an outcome.
Oil
OPEC's oil restrictions end in May. Do they continue? Does Russia stay with Saudi Arabia with cuts? Can President Trump influence the Saudi's like he did last year to boost production? Many questions. With the summer driving season beginning at the end of May along with the changing to summer blend of gasoline from winter's grade, will cause rising prices. How high depends on the answers to those questions as well as Iran sanctions and the weather. The world's most important commodity affects bottom lines in almost every business and of course, the consumers pocketbook.
Two truths
Jamie Dimon, CEO of J.P. Morgan Chase spoke one truth. He said, "40% of US workers make less than $15. per hour." This is why we sold more new homes with half the population in 1950 than we do today. People cannot afford housing. The purchasing power of the dollar keeps declining due to the Fed and Treasury printing more and more worthless dollars. NASA didn't need to find a blackhole. The government knows where it is. It is the 86 trash-can for reckless spending, especially the military. The other not spoken truth is gold kept the printing press in check, maintained our standard of living and the purchasing power of the dollar. Which is why I say, "End the Fed!"
By the way, even though gold has retraced and it is testing support, the silver/gold ratio has not changed. This is a contrarian play on silver.
1st Signs
We see the first signs of failure with fiat money with federal and state government. It appears as taxes. Taxes drove many businesses out of the northeast into the mid-west. Taxes pushed industry south and some kept going south into Mexico. The latest example is from New York. The state is proposing a golf tax. The tax will be put on the real value of a property as opposed to income. Dear Reader, it is not only the consumer that cannot afford housing, but state governments cannot find enough revenue to operate. They become desperate. They have unfunded pensions. They suffer with mass migration. When this happens, they cannibalize their constituents with tax after tax like in Europe. We saw the first signs in the tax overhaul in the federal government. They capped the tax deduction on state taxes at $10,000. We will see more and more of this type of thinking and action from our government. The national deficit will reach $25 trillion by the 2020 election. This is deep doo-do territory.
What We Need
Sorry about the open question. First off, we always need peace, but I'm talking about our economy and society. A recent report by the people in engineering points to a top concern on our infrastructure. They reported that there are 47 structually defient bridges in the US. In addition, there are 237,000 that need repairs. Now, get this! Both the bridges and roads are still in use by 178 million drivers every day.This is a tragedy waiting to happen.
Mueller Report
The stupid and petty leadership of the democrats cannot move on to real pressing matters. Instead, they keep clamoring about releasing the full report by Barr. Hey, the report revealed that 34 people did something illegal and they have been arrested. How about working on immigration, infrastructure, our deficit and trade relations?
More Retail Gloom
UBS reports that by 2026, another 75,000 stores will be out of business. Multiply that number by the amount of employees in each store and then, consider the related aspects like pensions, loss of revenue and the trickle effect in each region when there is less money in circulation? Not a good forecast. On the flip-side, Amazon had $10 billion in profits and paid no taxes! When is the inept leadership in Congress going to wake-up and tax internet sales? Make it an even playing field for the brick and mortar.
Finally, Did I hear someone say, yea? Wise-guy.
It is a known fact that Americans are very nomadic in nature. We move a lot. The next big nomadic push will come from high tax states to places where there is no state tax like Florida. The first push began because of the loss of work opportunities. We are losing our ability for social mobility. Ray Dalio, CEO of Bridgewater Associates, claims that low wage earners only have a 14% to move up to middle-class. This also reflects that our middle-class is shrinking and from I see with the Mueller Report, the upper class has no morals. Our positive values come from the middle-class. Anyway, people who have lived in the same home for generations are being pushed out by state taxes. In many areas the state tax is more than the original price of the home itself. At present, there are 87 million homeowners in America. Taxes rose on average by 4% in 2018 which is a more realistic inflationary number and higher than wage growth income. Also, taxes increased the average tax burden to $3498. To get a glimpse to this prediction of moving, see how the present fiat money(read worthless) does in taxes over time. We begin our sample with New York and the first county north of the city, Westchester. The average home owner tax is $17,392. OUCH! In Long Island it is $11,708.
Go across the bridge to New Jersey.
*Bergen = $11,771.
*Union = $11,075.
*Morris = $10,507.
*Passaic = $9,988.
Add in this tidbit, it cost $15 to go over the George Washington.
It is not just the northeast to which I did not include Connecticut which is also a tax nightmare. How about the West Coast? Forget housing in San Fran where everything is over a million. Go across the bridge to Marin County. Home taxes average $12,242, OUCH! I don't know the toll price, but I know it is higher than when I lived out there. This is where fiat money is taking us. The road to Zimbabwe. The road to Venezuela. The road to the Weimar Republic. Where's Bob and Bing when you need them?
Note: After this week I will take two weeks off due to Easter. May His Peace Be With You. Maybe make a donation to restore Notre Dame - to master love, you must practice love.
