If the American people ever allow private banks (read Federal Reserve) to control the issue of their currency, first by inflation (1970s), then by deflation (present), the banks and corporations that will grow up around (central bank) will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks (central bank / Fed) and returned to the people, whom it properly belongs.
- Thomas Jefferson
In past articles I have reported the dangerous demise of not only our retail sector, but the restaurant industry. The dangers that republicans love to blame is unions. However, they cannot use that lie in these cases, because those industries have little or no union influence. The guilt lies elsewhere. One central cause is the loss of our purchasing power caused by the combined spending of government and the massive dollar printing by the Federal Reserve.
There is no need to reprint the litany of causalities that is a result of dollar printing and deficit spending. You can see the effects while driving in your auto. There are many malls that sit vacant like ghost towns of the Old West. There are many more malls and shopping centers where the anchor vacated and resourceful owners turned that retail space into a skating ring or another space eater.
Little tots today will never have heard of Sears, J.C. Penny, Radio Shack or K-Mart. With that said, they will age into a world with less opportunity because Congress refused to make a level playing field between brick and mortar and the internet. It is understandable that the government gave advantages to online shopping in its nascent stages. They wanted the new technology to succeed. Today, we see the effects of this put-off decision. Forever 21 is the latest retail entity to file for bankruptcy. Why would any consumer buy a product at a store if that same person knew that one could get the same product for 6% less? We are talking about the sales tax.
State Sales Tax
on a national average is about 6%. If you buy on the internet, the seller offers as an incentive, free shipping. A consumer gets the same product from TVs to diapers without paying a sales tax. Every day e-commerce is bustling with shoppers as a lone clerk walks around an empty shop, waiting and hoping for a customer. This is why there are fewer and fewer book stores, clothing stores, department stores and now, supermarkets are also under duress. All these wage opportunities for kids and upward to earn are fading. All those warehouses, stocking jobs and similar for Christmas money are ending. This may be the time for the Fall Classic, but no one can afford to go to a game. The scoreboard in the industry is like the results of the N. Y. Mets in their early years. The only record that the team recorded was the most losses by a team, ever!
8,200 Stores
will close between now and next year. Simple math translates into tens of thousands lost jobs. Since 2007 that number exceeds 200,000 people. The only bright light in our economy as unemployment hit a 50-year low of 3.5% last week was whenever a business ended, another sought help. This one man's ceiling for another man's floor will not continue. The news will awaken one day to the tsunami of lost jobs in a slowing economy and unemployment will explode overnight.
It Gets Worse
The announcement of store closings could balloon past 8K to 12,000. This is according to Coresight Research. In another survey by Duke University, the CFOs of two-thirds of the companies responded that they expect a recession in 2020. The overall condition is not helped by cheap money. The reason is like an addiction by an addict. CEOs take the debt in hope of turning around the enterprise, but later and sadly, realize that they are over-leveraged. They cannot make revenue meet expenses. They close their doors.
New Hurdle
Politics will enter the equation. I have already pointed out how Congress which is basically Democrats and Republicans have failed to act responsibly. Some states have realized taxing e-commerce is an easy tax to pass. The revenue helps to balance their budgets. The problem is candidates seeking to make debt and the national deficit an issue will look to the same target. This Monday morning quarterbacking will result in dual taxation like we already pay with gasoline purchases. When you buy gas, you pay both a state and federal tax. So, we will get taxation on the internet and although the playing field in retail will be level, it may be too late. Sadly, I foresee another threat to the industry. Foreign retail will fill the void. This will only worsen our national deficits. Our government will be bought as they do little for our citizens. There are many examples of this process in the making. States have allowed foreign companies to build roads and then, put up excessive tolls to pay for the expense. Candidates like Bernie Sanders offer ideas to tax companies that don't pay employees fairly. His idea is to put a wealth tax on companies over $100 million in revenue that have an excess pay gap between the CEO and the lowest paid employee. To put this in clear language: Walmart would pay $800 million, J. P. Morgan would pay $1 billion and even McDonald's would cough up $100 million. Together, all these actions and ideas will not paint a pretty picture for retail in the future.
Believe It or Not
Even after all that I pointed out, the retail association foresees a robust Christmas shopping season. They forecast a 4.2% sales increase in 2019 as compared to 2018. They base their prediction on the good economic standing of the consumer. Dear Reader, this is like a meal in a restaurant. While you are eating, no one worries about the bill. After your hunger is vanquished and you receive the bill, ii is then when you question your thinking. I hope the retail group is correct and homes are warmed by new purchases, because in January comes the bill.
Banks are more dangerous than standing armies. The idea of spending (deficits) that may be paid by posterity under the scope of funding is but swindling futurity on a large scale.
- Thomas Jefferson
Wednesday, October 9, 2019
Wednesday, October 2, 2019
Leave Engineers for Bridge Work
Lately, everyone is adding their two cents on how to help the economy. Central to the ails of our economy and the EU is deflation. To us here at Evolution, this is only partly true. When every aspect in legislation, when every employer and every economic thinker centers their resolutions toward the wealthy and offer nothing for the laborer, you will get stagnation. The only aspect that has helped to keep the economy rolling is the aspect that the consumer does not utilize deflation more with its purchases. If the consumer waited for lower prices, then economies will have the worst economic outlook: stagflation - it could be on the horizon, especially if oil prices spike.
Fortunately, the consumer only utilizes the power of deflation with Christmas shopping. Nevertheless, we have global summits of G-7s, G-8s and G-20s. We have a World Bank along with the IMF. These are the same idiots whose programs got us to this point. We have destroyed currencies by seeking manipulating advantages and over-spending to the point where money loses value everyday with negative bonds. We hear the constant message that central banks have the answers in their tool box. If that is so, how come our nation has over $20T in debt and the world has over $130T? How come the Fed places a 2% inflation rate and never reaches that goal? I'll tell you why: they don't count, food, energy and shelter. They talk in riddles how a computer is cheaper today because it offers more for the price than previously on the market. They rarely challenge government spending to push for a balanced budget.
Independent Fed = BS!
They never admit that they are wrong! The Fed declares that it is independent, but the position is appointed. The government makes known its borrowing needs before the Fed policy meeting. Then, the Fed lowers rates to make the debt borrowing less costly. The stock market and the bond market also communicate with the Fed through the media and its price action. If a policy is ill received by the market, it tanks until the policy is changed to the thinking of both the stock market and bond market. This is indirect pressure and now, we have a president who regularly uses the media to excerpt even more pressure. Independence? BS!
Central Problem
They believe that they can engineer an economy. Engineers build bridges not economies. When central banks try something new like Keynesian economics after WWII, and they have some success, they take bows. However, when the added government debt becomes a factor, they try fiscal policy. They try rate policy. Now, they are advocating Modern Monetary Theory. They never consider the poor citizen and how their policies effect the everyday life.
If you take a quick historical view, society progressed when craftsmen took power from the nobility. When America gave the world, "All men are created equal." When unions were finally accepted, the quality of life exploded. But, the butt people can buy votes. They countered unions with Taft-Hartley. They got legislation to outsource labor and factories and yet, they were not taxed as a foreign concern. This is the heart of the problem. Dear Reader, the outlook is dismal.
Central Banks Work With Government
This the current meme floating around the world. The so-called independence of a central bank is being blurred so the central bank can work with governmental policies to aid the economy. This is the old Russian Five Year Plan or the present programs of the Communist Party in China. It also appears within the work of BOJ (Bank of Japan), the US, Fed and the EU, ECB. So much for the independence of the Fed, but here at Evolution, we never viewed the Fed as a separate entity (see above). Nothing spells kill the American dream, the positive aspects of capitalism and social mobility like a planned economy. The problem began when we allowed the creation of the Fed and their motive to replace gold backed economy with a fiat trust economy. This is why I say, End the Fed!
Politicians soon correlated debt with winning an election. Don't get me wrong, new ideas sometimes cost the investment of debt, but the projection is the problem. We are seeing it today with the democratic debates. Every candidate has an idea and the only thing that they have in common is debt.
Free tuition! What good is a college degree if it is watered down like a high school diploma? There has to be a job at the end of schooling. Obamacare? I'm against it. If there is free medical plan for all and a way to pay for it, I'm all in. The key to any debt investment is the detail in how to pay for it. The Keynesians never understand that important aspect. I could rant on-and-on, but I think that you get the point.
Fiscal - Monetary
cooperation only adds to debt. The projection of fiat interest rates to negative only proves that it is a failure and weakens government to make good decisions. If government or a politician offered a real solution, it would appear unpopular and easily attacked by the media or an opponent. This is why the outlook is bleak. Great ideas will be wisps into the air as people look up for "helicopter money." It is so much easier to sit on the couch, turn on the TV than to go into the garage and try to make something that will give meaning to your life. (Ask not what your country can do for you, but what you can do for your country.)
I see the rich staying rich and the poor growing in numbers. We are already experiencing a decay in morals and it will only get worse. This is not a Brave New World, but a loss of individualism. This leads to the loss of creativity and the loss of will power. Give some credit to the Viet Cong for surviving in tunnels as an example of will power. The only fear that they had was our "Tunnel Rats." God bless those brave souls. Anyway, we are becoming lazy and obese. If this continues, we will be slaughtered like a pig.
Fortunately, the consumer only utilizes the power of deflation with Christmas shopping. Nevertheless, we have global summits of G-7s, G-8s and G-20s. We have a World Bank along with the IMF. These are the same idiots whose programs got us to this point. We have destroyed currencies by seeking manipulating advantages and over-spending to the point where money loses value everyday with negative bonds. We hear the constant message that central banks have the answers in their tool box. If that is so, how come our nation has over $20T in debt and the world has over $130T? How come the Fed places a 2% inflation rate and never reaches that goal? I'll tell you why: they don't count, food, energy and shelter. They talk in riddles how a computer is cheaper today because it offers more for the price than previously on the market. They rarely challenge government spending to push for a balanced budget.
Independent Fed = BS!
They never admit that they are wrong! The Fed declares that it is independent, but the position is appointed. The government makes known its borrowing needs before the Fed policy meeting. Then, the Fed lowers rates to make the debt borrowing less costly. The stock market and the bond market also communicate with the Fed through the media and its price action. If a policy is ill received by the market, it tanks until the policy is changed to the thinking of both the stock market and bond market. This is indirect pressure and now, we have a president who regularly uses the media to excerpt even more pressure. Independence? BS!
Central Problem
They believe that they can engineer an economy. Engineers build bridges not economies. When central banks try something new like Keynesian economics after WWII, and they have some success, they take bows. However, when the added government debt becomes a factor, they try fiscal policy. They try rate policy. Now, they are advocating Modern Monetary Theory. They never consider the poor citizen and how their policies effect the everyday life.
If you take a quick historical view, society progressed when craftsmen took power from the nobility. When America gave the world, "All men are created equal." When unions were finally accepted, the quality of life exploded. But, the butt people can buy votes. They countered unions with Taft-Hartley. They got legislation to outsource labor and factories and yet, they were not taxed as a foreign concern. This is the heart of the problem. Dear Reader, the outlook is dismal.
Central Banks Work With Government
This the current meme floating around the world. The so-called independence of a central bank is being blurred so the central bank can work with governmental policies to aid the economy. This is the old Russian Five Year Plan or the present programs of the Communist Party in China. It also appears within the work of BOJ (Bank of Japan), the US, Fed and the EU, ECB. So much for the independence of the Fed, but here at Evolution, we never viewed the Fed as a separate entity (see above). Nothing spells kill the American dream, the positive aspects of capitalism and social mobility like a planned economy. The problem began when we allowed the creation of the Fed and their motive to replace gold backed economy with a fiat trust economy. This is why I say, End the Fed!
Politicians soon correlated debt with winning an election. Don't get me wrong, new ideas sometimes cost the investment of debt, but the projection is the problem. We are seeing it today with the democratic debates. Every candidate has an idea and the only thing that they have in common is debt.
Free tuition! What good is a college degree if it is watered down like a high school diploma? There has to be a job at the end of schooling. Obamacare? I'm against it. If there is free medical plan for all and a way to pay for it, I'm all in. The key to any debt investment is the detail in how to pay for it. The Keynesians never understand that important aspect. I could rant on-and-on, but I think that you get the point.
Fiscal - Monetary
cooperation only adds to debt. The projection of fiat interest rates to negative only proves that it is a failure and weakens government to make good decisions. If government or a politician offered a real solution, it would appear unpopular and easily attacked by the media or an opponent. This is why the outlook is bleak. Great ideas will be wisps into the air as people look up for "helicopter money." It is so much easier to sit on the couch, turn on the TV than to go into the garage and try to make something that will give meaning to your life. (Ask not what your country can do for you, but what you can do for your country.)
I see the rich staying rich and the poor growing in numbers. We are already experiencing a decay in morals and it will only get worse. This is not a Brave New World, but a loss of individualism. This leads to the loss of creativity and the loss of will power. Give some credit to the Viet Cong for surviving in tunnels as an example of will power. The only fear that they had was our "Tunnel Rats." God bless those brave souls. Anyway, we are becoming lazy and obese. If this continues, we will be slaughtered like a pig.
Wednesday, September 25, 2019
Odds and Ends: September 2019
One of the scariest months for the stock market and it is touching all-time highs. Go figure? By now you know the suspects for a correction. No need to repeat the obvious. However, a sliding view of the sectors along with tidbits will allow you to see some direction. One point to consider: If President Trump has true conviction, there will be no trade deal with China because China will continue to steal, cheat or do whatever they feel necessary to be number one. Too much ego is a bad thing. Maybe somebody should remind Antonio Brown of that point? Anyway, we begin with housing...
New Home Sales
They rose for a second straight month to a yearly estimate of 1.36M. This gives hope, especially when added to existing home sales. They also rose to a yearly estimate of 5.49M. Since housing effects so many aspects to an economy, these are very important indicators. Robert Shiller told Bloomberg last week that he sees another crash coming. I agree up to a point. There are serious problems with affordability, rising state taxes and insurance. Those factors will offset any Fed rate cut. Housing prices will stagnate for a period of time. The upper end will feel the most damage. Another reason for pessimism is population growth. Our large population grows at 150,000 per month. This equates to 1.8M a year. New home sales fall short of this figure. This means housing will be needed, but it will be multi-family as opposed to a single residence. This is not good for society and an economy.
By the way a better view of upscale housing is displayed by the new condo in New York. The view from the 131st floor is exceptional like the price, $63M. No offers for it and the city has a glut of expensive units for sale with 25% still available. This unit offers a special elevator that speeds upward at 2,000 feet per minute. Of course, I see future problems as the elevator stops at the 120th floor, then the 125th floor, then 126th floor as the impatient owner of the 131st floor stammers at his fellow neighbors in the cabin to the sky.
ECB
They cut negative rates to even deeper into red territory. Mario, in his last act as chairperson says this will help along with QE buying of bonds. Nothing says future growth like guaranteeing that one will lose money by purchasing a bond to stimulate an economy. In a related game of fools, the Brexit merry-go-round has been extended until 31st. of October. Does anyone play Led Zeppelin anymore? Remember these lines, How many more times will you treat me the way you do? As I stated before the democratic vote went against the aristocratic vote which is why nothing gets done.
The Fed cut rates as we all know and Greenspan said, "Negative rates will come to the US." However, watch the King Dollar as it approaches expiration date of existing contract in correlation to Brexit.
In a related aspect, watch corporate debt as firms seek to refinance loans with cheap money. Rate cuts allow poor companies to operate. They would be out of business in normal times. China suffers from this same zombie effect. Recently, big business took $72B with another $50B planned. Many of these loans will be with negative bonds. This will force the rating agencies to downgrade the firm. This begins a bad cycle which will force companies to cut costs which begins with jobs.
The consumer will be effected then as now. Consider the following:
You can see this at ground level as auto loans for car loans are now 6-years in length. The average monthly payment is $550. Now, the consumer must also pay his rent/mortgage along with food, energy and utilities. This leaves little or no room for anything else like entertainment, medical or emergency expenses. If corporations begin to cut, the outlook is not good!
California versus Trump, EPA, Lyft, all comers...
The state recently said that drivers for car services like Lyft are employees. As such, they must be treated under laws regulating employees. They can no longer be paid as contractors. This will raise expenses for those type of companies. Then, President Trump said California can no longer determine auto mileage and exhaust requirements. Trump got the EPA to fight the state. This is how our nation began heading towards the Civil War with state rights versus federal government. California has 22 states in its confederacy. This will be a topic in 2020.
"All We are saying is, 'Give Peace a Chance..."
is another oldie that needs playing time again and now, more than ever. The freaking military is pushing the same BS it used when that liar, Bush used the media to start the war against Iraq and later, Afghanistan. Remember Weapons of Mass Destruction? Now, we the military says with 100% accuracy that Iran attacked the oil fields in Saudi Arabia. One thing I can say, our military can't say 100% about anything. The Who were right, "Meet the new boss. Same as the old boss."
By the way President Trump has given the military more than 50% of our budget. The military will use some of that dough in a new program to prevent cyber attacks. The "JEDI" is coming. It stands for Joint Enterprise Defense Infrastructure.
Don't blame the driver...
UPS just received permission to use drones in package delivery. Amazon had already got the green light. I can see it now, your new electronic gismo falls 50 feet from the sky into thousands of pieces. You are mad as hell, but the drone has long left your residential air space and you gave them permission to use a drone. Good luck on your replacement fight.
Medical help?
President Trump says he will favor using Canadian prescription companies to lower medical costs. This will be a hot topic in 2020.
New Idiot Economic Theory
ever hear of Tupy-Pooley effect? They say money is time. If you don't have enough money, it is because you don't have enough time (working). You need to work more (think slave) and then, you can make your purchase. They also overlook the wages for labor. This is related to the GM strike. I always feel for workers, but anyone working in autos receives a quality pay scale. I do sympathize with their future outlook. Electric cars need less workers and the auto firms need to see the horizon. This is a tough confliction point and it will have many ramifications.
Lousy Bankruptcy Court
I said this before: the bankruptcy court process needs to be overhauled. The problem is lawyers set the process and lawyers are corrupt. Case in point: Purdue Pharma. They filed for bankruptcy. All the lawsuits against the firm will be thrown out. These crooks walk free with a trail of dead in the thousands behind them. This is so wrong!
More smallness...
The Democrats are seeking to punish the reelection of Trump in 2020 by pushing impeachment investigations. This shows the smallness in our political leaders. The democrats remember when jealous Republicans sought the same actions on Bill Clinton. The odds for success are tiny like their motives. They saw Gore lose in the resulting election. They hope the bad press will sway votes. The irony is they say Trump tried to gain election scandal info on Biden to sway the next election. Where are ideas to help make America better? I said it before and I'll say it again, "We need a new political party that represents the people and their interests."
New Home Sales
They rose for a second straight month to a yearly estimate of 1.36M. This gives hope, especially when added to existing home sales. They also rose to a yearly estimate of 5.49M. Since housing effects so many aspects to an economy, these are very important indicators. Robert Shiller told Bloomberg last week that he sees another crash coming. I agree up to a point. There are serious problems with affordability, rising state taxes and insurance. Those factors will offset any Fed rate cut. Housing prices will stagnate for a period of time. The upper end will feel the most damage. Another reason for pessimism is population growth. Our large population grows at 150,000 per month. This equates to 1.8M a year. New home sales fall short of this figure. This means housing will be needed, but it will be multi-family as opposed to a single residence. This is not good for society and an economy.
By the way a better view of upscale housing is displayed by the new condo in New York. The view from the 131st floor is exceptional like the price, $63M. No offers for it and the city has a glut of expensive units for sale with 25% still available. This unit offers a special elevator that speeds upward at 2,000 feet per minute. Of course, I see future problems as the elevator stops at the 120th floor, then the 125th floor, then 126th floor as the impatient owner of the 131st floor stammers at his fellow neighbors in the cabin to the sky.
ECB
They cut negative rates to even deeper into red territory. Mario, in his last act as chairperson says this will help along with QE buying of bonds. Nothing says future growth like guaranteeing that one will lose money by purchasing a bond to stimulate an economy. In a related game of fools, the Brexit merry-go-round has been extended until 31st. of October. Does anyone play Led Zeppelin anymore? Remember these lines, How many more times will you treat me the way you do? As I stated before the democratic vote went against the aristocratic vote which is why nothing gets done.
The Fed cut rates as we all know and Greenspan said, "Negative rates will come to the US." However, watch the King Dollar as it approaches expiration date of existing contract in correlation to Brexit.
In a related aspect, watch corporate debt as firms seek to refinance loans with cheap money. Rate cuts allow poor companies to operate. They would be out of business in normal times. China suffers from this same zombie effect. Recently, big business took $72B with another $50B planned. Many of these loans will be with negative bonds. This will force the rating agencies to downgrade the firm. This begins a bad cycle which will force companies to cut costs which begins with jobs.
The consumer will be effected then as now. Consider the following:
You can see this at ground level as auto loans for car loans are now 6-years in length. The average monthly payment is $550. Now, the consumer must also pay his rent/mortgage along with food, energy and utilities. This leaves little or no room for anything else like entertainment, medical or emergency expenses. If corporations begin to cut, the outlook is not good!
California versus Trump, EPA, Lyft, all comers...
The state recently said that drivers for car services like Lyft are employees. As such, they must be treated under laws regulating employees. They can no longer be paid as contractors. This will raise expenses for those type of companies. Then, President Trump said California can no longer determine auto mileage and exhaust requirements. Trump got the EPA to fight the state. This is how our nation began heading towards the Civil War with state rights versus federal government. California has 22 states in its confederacy. This will be a topic in 2020.
"All We are saying is, 'Give Peace a Chance..."
is another oldie that needs playing time again and now, more than ever. The freaking military is pushing the same BS it used when that liar, Bush used the media to start the war against Iraq and later, Afghanistan. Remember Weapons of Mass Destruction? Now, we the military says with 100% accuracy that Iran attacked the oil fields in Saudi Arabia. One thing I can say, our military can't say 100% about anything. The Who were right, "Meet the new boss. Same as the old boss."
By the way President Trump has given the military more than 50% of our budget. The military will use some of that dough in a new program to prevent cyber attacks. The "JEDI" is coming. It stands for Joint Enterprise Defense Infrastructure.
Don't blame the driver...
UPS just received permission to use drones in package delivery. Amazon had already got the green light. I can see it now, your new electronic gismo falls 50 feet from the sky into thousands of pieces. You are mad as hell, but the drone has long left your residential air space and you gave them permission to use a drone. Good luck on your replacement fight.
Medical help?
President Trump says he will favor using Canadian prescription companies to lower medical costs. This will be a hot topic in 2020.
New Idiot Economic Theory
ever hear of Tupy-Pooley effect? They say money is time. If you don't have enough money, it is because you don't have enough time (working). You need to work more (think slave) and then, you can make your purchase. They also overlook the wages for labor. This is related to the GM strike. I always feel for workers, but anyone working in autos receives a quality pay scale. I do sympathize with their future outlook. Electric cars need less workers and the auto firms need to see the horizon. This is a tough confliction point and it will have many ramifications.
Lousy Bankruptcy Court
I said this before: the bankruptcy court process needs to be overhauled. The problem is lawyers set the process and lawyers are corrupt. Case in point: Purdue Pharma. They filed for bankruptcy. All the lawsuits against the firm will be thrown out. These crooks walk free with a trail of dead in the thousands behind them. This is so wrong!
More smallness...
The Democrats are seeking to punish the reelection of Trump in 2020 by pushing impeachment investigations. This shows the smallness in our political leaders. The democrats remember when jealous Republicans sought the same actions on Bill Clinton. The odds for success are tiny like their motives. They saw Gore lose in the resulting election. They hope the bad press will sway votes. The irony is they say Trump tried to gain election scandal info on Biden to sway the next election. Where are ideas to help make America better? I said it before and I'll say it again, "We need a new political party that represents the people and their interests."
Wednesday, September 18, 2019
Meetings: Some Public, Some Private
There are meetings that you would have liked to be a fly on the wall. How about the decision meeting to make my favorite comedy, It's a Mad, Mad, Mad, Mad World?
For you young folks and citizens of foreign nations, it is a story of human foibles. It was made at a time when Hollywood actually made movies with a plot and character actors gave the films depth. In a nutshell a bank robber is fleeing LA. He panics while driving along a dangerous road. He wipes out. His car crashes off a cliff. Innocent bystanders stop to assist. A small group tries to help the man, but he dies. Just prior to dying, he informs his helpers that he hid his money under the "Big W."
They debate and think nothing of it until each sees another turn around on the highway, going back to LA. The madness begins. This is a great, great and funny movie with a fabulous cast which includes the 3 Stooges. Enough said. The rest takes you and me back to today.
ECB
They had their private meeting last week. Mario Draghi attended his next to last meeting. His eight year term is ending with Christine Lagarde taking over the ECB. He is going out the way that he came into the chairperson position. He cut rates into a deeper negative yield and he reinstituted QE. He prints money like you and me breathe air. The above movie could make a sequel today centered around central banking. This is not a foible. This is idiocy. You buy a bond and you guarantee that you will lose money over its maturity. These geniuses would rather lose money than admit that they are wrong. That fiat money never succeeds and one cannot engineer an economy. They never speak of gold, especially as a currency.
Fed
They will have their private meeting on the 18th. President Trump has put pressure on the chairman, Powell to cut rates. Trump wants the dollar lower to help with exports. He has pointed to the Fed that Europe with Draghi just cut rates and he expresses the same path to include negative rates. Keep in mind when Trump was wheeling and dealing in his younger days, he was constantly seeking cheap money to finance his buying sprees. Needless to remind you that many of his business went bankrupt and he was close a few times himself. By the way his federal budget is already over one trillion to the red. He does not know how to save for a rainy day and the weather outlook has clouds on the horizon.
We, at Evolution of Democracy expect the ego of Powell to cut rates again like he did in the last meeting. I, especially use the word ego because President Trump has suggested that he might seek a way to fire Powell, if he does not do what the president desires. The market is expecting this cut. If Powell shows some gumption and hold rates, the market will rollover. This could be a no show or big showdown. We'll know later today.
In an open meeting former chair, Greenspan said, "The US will get negative rates." He does not blame fiat money for this rate movement. However, we already knew that he is a hypocrite from his quick switch from gold to fiat. His classic essay on money backs gold, but later in life when offered the job at the Fed, he changed his position. Nothing like money to give one a different perspective. Of course, his ego helps too.
And then this - on Tuesday the New York Fed governor had to inject $53B to steady the overnight repo market. This happens when short tern rates run up too fast and there is not enough liquidity in' the market. Now, he say the market will need another $75B on Wednesday. Yeah, these guys have things under control. The last time the N.Y. Fed had to enact such measures was in 2008. Didn't Bernanke say at the time, "all is contained"?
The rest of the followers...
they play the currency manipulation game. They will cut as they have done already 38 times since the Fed changed course and stop raising interest rates. To give you some more perspective, central banks have cut rates 14 times since August which followed 8 cuts in July. Dear Reader, this foolish practice by emerging markets along with Japan and China. This does not help their economies. They forget that their biggest expense is oil. They need to buy US dollars to purchase oil. By cheapening their currency to drive exports, they increase their deficits to purchase necessities like oil. No one seems to look out into the horizon to see the storm clouds forming. Central banks are raising cash today by selling negative bonds. Tomorrow, they will be in a deeper hole because they are guarantying that they lose money over the duration. Yes, this is a Mad, Mad, Mad, Mad World.
For you young folks and citizens of foreign nations, it is a story of human foibles. It was made at a time when Hollywood actually made movies with a plot and character actors gave the films depth. In a nutshell a bank robber is fleeing LA. He panics while driving along a dangerous road. He wipes out. His car crashes off a cliff. Innocent bystanders stop to assist. A small group tries to help the man, but he dies. Just prior to dying, he informs his helpers that he hid his money under the "Big W."
They debate and think nothing of it until each sees another turn around on the highway, going back to LA. The madness begins. This is a great, great and funny movie with a fabulous cast which includes the 3 Stooges. Enough said. The rest takes you and me back to today.
ECB
They had their private meeting last week. Mario Draghi attended his next to last meeting. His eight year term is ending with Christine Lagarde taking over the ECB. He is going out the way that he came into the chairperson position. He cut rates into a deeper negative yield and he reinstituted QE. He prints money like you and me breathe air. The above movie could make a sequel today centered around central banking. This is not a foible. This is idiocy. You buy a bond and you guarantee that you will lose money over its maturity. These geniuses would rather lose money than admit that they are wrong. That fiat money never succeeds and one cannot engineer an economy. They never speak of gold, especially as a currency.
Fed
They will have their private meeting on the 18th. President Trump has put pressure on the chairman, Powell to cut rates. Trump wants the dollar lower to help with exports. He has pointed to the Fed that Europe with Draghi just cut rates and he expresses the same path to include negative rates. Keep in mind when Trump was wheeling and dealing in his younger days, he was constantly seeking cheap money to finance his buying sprees. Needless to remind you that many of his business went bankrupt and he was close a few times himself. By the way his federal budget is already over one trillion to the red. He does not know how to save for a rainy day and the weather outlook has clouds on the horizon.
We, at Evolution of Democracy expect the ego of Powell to cut rates again like he did in the last meeting. I, especially use the word ego because President Trump has suggested that he might seek a way to fire Powell, if he does not do what the president desires. The market is expecting this cut. If Powell shows some gumption and hold rates, the market will rollover. This could be a no show or big showdown. We'll know later today.
In an open meeting former chair, Greenspan said, "The US will get negative rates." He does not blame fiat money for this rate movement. However, we already knew that he is a hypocrite from his quick switch from gold to fiat. His classic essay on money backs gold, but later in life when offered the job at the Fed, he changed his position. Nothing like money to give one a different perspective. Of course, his ego helps too.
And then this - on Tuesday the New York Fed governor had to inject $53B to steady the overnight repo market. This happens when short tern rates run up too fast and there is not enough liquidity in' the market. Now, he say the market will need another $75B on Wednesday. Yeah, these guys have things under control. The last time the N.Y. Fed had to enact such measures was in 2008. Didn't Bernanke say at the time, "all is contained"?
The rest of the followers...
they play the currency manipulation game. They will cut as they have done already 38 times since the Fed changed course and stop raising interest rates. To give you some more perspective, central banks have cut rates 14 times since August which followed 8 cuts in July. Dear Reader, this foolish practice by emerging markets along with Japan and China. This does not help their economies. They forget that their biggest expense is oil. They need to buy US dollars to purchase oil. By cheapening their currency to drive exports, they increase their deficits to purchase necessities like oil. No one seems to look out into the horizon to see the storm clouds forming. Central banks are raising cash today by selling negative bonds. Tomorrow, they will be in a deeper hole because they are guarantying that they lose money over the duration. Yes, this is a Mad, Mad, Mad, Mad World.
Wednesday, September 11, 2019
Transition
Pot could generate big income and government always wants revenue. This is why we can drink and gamble. Our federal government is looking into the legalization of pot just like the 11 states that allow recreational use and the 33 (Majority) that allow medical use of cannabis. With that said, consider the following.
This is the point in time where we are at in the US. A 69-year old woman from North Carolina can testify after she testifies in court. She was arrested outside the gates of Disney World in Orlando, Florida with the possession of hashish oil. She told the police that it is CBD oil for pain. It is made from pot. The police like to make their arrests appear better by making the innocent victim appear more guilty before going to court which compromises innocent until proven guilty. Go figure?
How about this? Two truck drivers were pulled over in Idaho for transporting pot. They told the police that they were carrying hemp which by the way, is now legal in the US. The cops put them in jail anyway. They are awaiting trial.
The two episodes reveal the daily problem with cannabis in America. Although the federal law still makes marijuana illegal, it is legal in 33 states in one form or another. It is legal in 10 states and D. C. for recreational use. The problem is simple. What is legal in one state may not be legal in another. With that said, the trend for national legalization is a work in progress.
What's in it for me?
You asked and I'll answer. There is a $4 trillion market out there and cannabis will disrupt it. Companies that sell alcohol, tobacco, pharmaceuticals and soft drinks will be the target. Here is a breakdown in the category.
*Pharmaceutical = $1.1 trillion
*Alcohol = $1.5 trillion
*Soft drinks = $1.1 trillion
*Tobacco = $ 791 billion
*Illicit market = $ 200 billion
Cannabis will be competition to all these markets and then, there will be the growing, creative uses under medical and therapeutic. The categories will expand with usage. I like Aurora (ACB). The leader in the field is Canopy Growth. The two companies have a leg up on the competition through the legalization of weed in Canada. I believe that there will be enough profits to go around and even fund a sequel to Cheeks and Chong's, Up In Smoke.
However...
Even with all the good news surrounding pot companies and their explosive revenues, the various stock firms are all languishing in the market. Why, you ask?
One of the chief reasons is behind the scenes politics along with corruption. Big, greedy money did not jump into these firms from the get-go. They played a wait-and-see approach. After the dust settled, which is now, they are seeking entry. With that said, they want the cheap, original offer price. Many of these big cats have stakes in the competition to which is listed above. The "sin" stockholders have no qualms about the virtues of the product, only the profits. These same people have the Congressional members on their sim card. We, at Evolution, can only hypothesis what that phone call might have said. We ascertain this theory from what we are clearly able to see. The police have allowed illegal pot/medical shops to operate out in the open. The kid on the corner has been replaced by an air-conditioned shop in an outlet shopping center.
Just in LA
The black market operators have over 250 stores un that city that dispense Mary Jane. Estimates range that these outlets earn 7x what legal firms sell. Dear Reader, this is lost tax revenue for California. This is happening in over 33 states. The government has not acted, but I can tell you that they have been collecting data. I see a big change coming. If you want a prediction, I say that on this Halloween, the police coordinate with a huge
Crack Down
like a flash back to prohibition era. They will raid and close all these shops. The next day, all those suffering pot firms that are listed will rise like smoke into the upper layers. Maybe like a sequel to Up In Smoke Two?
This is the point in time where we are at in the US. A 69-year old woman from North Carolina can testify after she testifies in court. She was arrested outside the gates of Disney World in Orlando, Florida with the possession of hashish oil. She told the police that it is CBD oil for pain. It is made from pot. The police like to make their arrests appear better by making the innocent victim appear more guilty before going to court which compromises innocent until proven guilty. Go figure?
How about this? Two truck drivers were pulled over in Idaho for transporting pot. They told the police that they were carrying hemp which by the way, is now legal in the US. The cops put them in jail anyway. They are awaiting trial.
The two episodes reveal the daily problem with cannabis in America. Although the federal law still makes marijuana illegal, it is legal in 33 states in one form or another. It is legal in 10 states and D. C. for recreational use. The problem is simple. What is legal in one state may not be legal in another. With that said, the trend for national legalization is a work in progress.
What's in it for me?
You asked and I'll answer. There is a $4 trillion market out there and cannabis will disrupt it. Companies that sell alcohol, tobacco, pharmaceuticals and soft drinks will be the target. Here is a breakdown in the category.
*Pharmaceutical = $1.1 trillion
*Alcohol = $1.5 trillion
*Soft drinks = $1.1 trillion
*Tobacco = $ 791 billion
*Illicit market = $ 200 billion
Cannabis will be competition to all these markets and then, there will be the growing, creative uses under medical and therapeutic. The categories will expand with usage. I like Aurora (ACB). The leader in the field is Canopy Growth. The two companies have a leg up on the competition through the legalization of weed in Canada. I believe that there will be enough profits to go around and even fund a sequel to Cheeks and Chong's, Up In Smoke.
However...
Even with all the good news surrounding pot companies and their explosive revenues, the various stock firms are all languishing in the market. Why, you ask?
One of the chief reasons is behind the scenes politics along with corruption. Big, greedy money did not jump into these firms from the get-go. They played a wait-and-see approach. After the dust settled, which is now, they are seeking entry. With that said, they want the cheap, original offer price. Many of these big cats have stakes in the competition to which is listed above. The "sin" stockholders have no qualms about the virtues of the product, only the profits. These same people have the Congressional members on their sim card. We, at Evolution, can only hypothesis what that phone call might have said. We ascertain this theory from what we are clearly able to see. The police have allowed illegal pot/medical shops to operate out in the open. The kid on the corner has been replaced by an air-conditioned shop in an outlet shopping center.
Just in LA
The black market operators have over 250 stores un that city that dispense Mary Jane. Estimates range that these outlets earn 7x what legal firms sell. Dear Reader, this is lost tax revenue for California. This is happening in over 33 states. The government has not acted, but I can tell you that they have been collecting data. I see a big change coming. If you want a prediction, I say that on this Halloween, the police coordinate with a huge
Crack Down
like a flash back to prohibition era. They will raid and close all these shops. The next day, all those suffering pot firms that are listed will rise like smoke into the upper layers. Maybe like a sequel to Up In Smoke Two?
Wednesday, September 4, 2019
Gold is Soaring, But...
you may not have the dough available to get on the gold train? Or maybe you think that I'll get into it on the next pullback? However, did you not have this decision point before and passed? When gold rose from $1275 to $1325 back in June, did you get in? How about your second chance when gold rose from $1400 to $1500 in late July, early August? The point is this, there is fear in investing, especially for ordinary citizens with limited resources. This is why I say to you, here and now, why not choose...
The Poor Man's Gold
SILVER! That's right. The other precious metal like the slogan for pork, the other white meat. Historically, and I'm talking about the period before central banks came into power, silver had a gold ratio of 16 ounces of silver for one ounce of gold. After the Fed came into being in 1913 that spread began to widen. Silver fluctuated from 25 to 40 per one ounce of gold. As central banks pushed gold out of the monetary equation, the spread continued to widen. Today, it runs up to 95, but generally stabilizes around 89 ounces for one ounce of gold. This is why silver is even a better opportunity than gold.
For the remainder of this piece, I will refer to gold unless more clarity is needed. The reason is simple: if gold rises, so does silver and the opposite is also true. Let us look at gold.
Hitting All-time Highs versus...
all the major currencies: the euro, the British pound, Canadian dollar, Australian dollar amongst others. This makes the precious metals a world-wide event. As a result new money is entering the commodity. If you have more people in the store, you will have more sales. However, there are two threats...
Fed and Banking Industry
The Federal Reserve and central banks throughout the world picked fiat money ages ago. They will seek to protect their choice. Their problem is printing without responsibility has devalued fiat currencies and excessive debt has got to a point where not only do they need to keep interest rates low, but seek even a lower formula. This has led them to negative yields. These intellectual midgets think that they can engineer an economy. They play God. By doing this, they oppose their old argument against gold. They use to say that gold does not pay any interest and it cost money to store it (Like each of us has so much that we need a safe deposit box). Now, with the push into negative bonds, your dollar value will be less than your original purchase price. You lose money! Gold on the other hand always maintains value and it can also rise to a value 10x any interest rate. Keep in mind, that all fiat money has no value other than the government declaring it legal tender. If another chooses not to accept your dollar, then what?
Gold never has this problem because it always maintains value. It is not political. It cannot default. It does not need government compliance which is one reason why government hates it. Gold protects the citizen by keeping its value while government has lost its focus to put you first.
The danger is this: the Fed can manipulate interest rates and it can use the media as its pulpit.
Sadly, our media does not possess the strength of character to oppose central banks. They do not foster an opposing view or find economic disciples like myself to offer an opposing view to central banks policies.
The other danger with the Fed is in its second Congressional mandate: stabilize prices. In the past the Fed and central banks worked together. They would announce an agreement like Bretton Woods. They could do this again. I don't think that they can get it going until some new crisis develops like the Brexit event with the EU. They will try something. You can "bank" on it.
The other danger is the banking industry. Lately, large institutional banking firms have come out to say that gold is in a bull market. They have raised their target price and they have purchased large investments into precious metals. Dear Reader, these people stand with central banks and fiat money. There are been many prosecutions of traders in large firms like J.P. Morgan Chase for trying to manipulate the precious metal market. Mainly, they short metals to which keeps the price low. They may try this technique again since they have a large investment into the precious metals. This is risky for them as new money enters the market, but bumps will appear along the way. This is why it is for your benefit to understand charting and resistance levels.
Back to Hi, Ho Silver!
The above trend helps make any investment into silver less risky. The charts are bullish on it. Last Friday, silver closed at $18.34. The momentum is strong. The present continuous contract reached almost 500 million. The next target price is $19.71. That's a ironic number because in 1971 Nixon took us officially off the gold standard. Anyway, silver has enough energy to pass that level. The real resistance point is $21. If silver maintains its strength, and passes this point, there is no resistance until $35. That people, is a rocket ship that you can afford and put some eggs in your nest basket. Personally, I like Wheaton Precious Metals (WPM). It is a streamer and it has very little risk. It gets around half of its value from gold and the other half from silver from mining companies that they financed. It pays a dividend, but if you reinvest the cash, the company pays you 3%. If you cannot afford to buy shares, then get some silver coins. You can finance them in a IRA account. Another option is to buy "junk silver." Those are old silver coins that use to flow within our currency back in the day of the gold standard. The last year for these coins is 1964.
Finally, since silver is the tail of gold, let me give you its projection. Currently, gold is aiming for $1575. Once it reaches this level, a pullback is in order. Gold could fall back to $1480-1490. If it does, jump into silver with both feet. The Fed is trapped. The banking industry really cannot afford to fight the tape and together, this gives you a chance of a lifetime. As the Lone Ranger would say, "Away, Silver!" That's beautiful. Peace.
The Poor Man's Gold
SILVER! That's right. The other precious metal like the slogan for pork, the other white meat. Historically, and I'm talking about the period before central banks came into power, silver had a gold ratio of 16 ounces of silver for one ounce of gold. After the Fed came into being in 1913 that spread began to widen. Silver fluctuated from 25 to 40 per one ounce of gold. As central banks pushed gold out of the monetary equation, the spread continued to widen. Today, it runs up to 95, but generally stabilizes around 89 ounces for one ounce of gold. This is why silver is even a better opportunity than gold.
For the remainder of this piece, I will refer to gold unless more clarity is needed. The reason is simple: if gold rises, so does silver and the opposite is also true. Let us look at gold.
Hitting All-time Highs versus...
all the major currencies: the euro, the British pound, Canadian dollar, Australian dollar amongst others. This makes the precious metals a world-wide event. As a result new money is entering the commodity. If you have more people in the store, you will have more sales. However, there are two threats...
Fed and Banking Industry
The Federal Reserve and central banks throughout the world picked fiat money ages ago. They will seek to protect their choice. Their problem is printing without responsibility has devalued fiat currencies and excessive debt has got to a point where not only do they need to keep interest rates low, but seek even a lower formula. This has led them to negative yields. These intellectual midgets think that they can engineer an economy. They play God. By doing this, they oppose their old argument against gold. They use to say that gold does not pay any interest and it cost money to store it (Like each of us has so much that we need a safe deposit box). Now, with the push into negative bonds, your dollar value will be less than your original purchase price. You lose money! Gold on the other hand always maintains value and it can also rise to a value 10x any interest rate. Keep in mind, that all fiat money has no value other than the government declaring it legal tender. If another chooses not to accept your dollar, then what?
Gold never has this problem because it always maintains value. It is not political. It cannot default. It does not need government compliance which is one reason why government hates it. Gold protects the citizen by keeping its value while government has lost its focus to put you first.
The danger is this: the Fed can manipulate interest rates and it can use the media as its pulpit.
Sadly, our media does not possess the strength of character to oppose central banks. They do not foster an opposing view or find economic disciples like myself to offer an opposing view to central banks policies.
The other danger with the Fed is in its second Congressional mandate: stabilize prices. In the past the Fed and central banks worked together. They would announce an agreement like Bretton Woods. They could do this again. I don't think that they can get it going until some new crisis develops like the Brexit event with the EU. They will try something. You can "bank" on it.
The other danger is the banking industry. Lately, large institutional banking firms have come out to say that gold is in a bull market. They have raised their target price and they have purchased large investments into precious metals. Dear Reader, these people stand with central banks and fiat money. There are been many prosecutions of traders in large firms like J.P. Morgan Chase for trying to manipulate the precious metal market. Mainly, they short metals to which keeps the price low. They may try this technique again since they have a large investment into the precious metals. This is risky for them as new money enters the market, but bumps will appear along the way. This is why it is for your benefit to understand charting and resistance levels.
Back to Hi, Ho Silver!
The above trend helps make any investment into silver less risky. The charts are bullish on it. Last Friday, silver closed at $18.34. The momentum is strong. The present continuous contract reached almost 500 million. The next target price is $19.71. That's a ironic number because in 1971 Nixon took us officially off the gold standard. Anyway, silver has enough energy to pass that level. The real resistance point is $21. If silver maintains its strength, and passes this point, there is no resistance until $35. That people, is a rocket ship that you can afford and put some eggs in your nest basket. Personally, I like Wheaton Precious Metals (WPM). It is a streamer and it has very little risk. It gets around half of its value from gold and the other half from silver from mining companies that they financed. It pays a dividend, but if you reinvest the cash, the company pays you 3%. If you cannot afford to buy shares, then get some silver coins. You can finance them in a IRA account. Another option is to buy "junk silver." Those are old silver coins that use to flow within our currency back in the day of the gold standard. The last year for these coins is 1964.
Finally, since silver is the tail of gold, let me give you its projection. Currently, gold is aiming for $1575. Once it reaches this level, a pullback is in order. Gold could fall back to $1480-1490. If it does, jump into silver with both feet. The Fed is trapped. The banking industry really cannot afford to fight the tape and together, this gives you a chance of a lifetime. As the Lone Ranger would say, "Away, Silver!" That's beautiful. Peace.
Wednesday, August 28, 2019
Odds and Ends August 2019
This is the end...
Jim Morrison of the Doors used the words in a hit song. You may have seen a ding-dong holding the words on a street corner sign, but sadly, it is really here.
Scientist have discovered that rainwater now contains plastic residue. This means plastic will be in our crops, drinking water and consumed by our livestock in grass and feed. It will run within our veins until it causes a blockage and we DIE!
This could produce a cancerous plague like the Black Plague that hit Europe in the Middle Ages. I have a partial answer to save fresh water, but mankind will need a communal research team to find a way to sanitize rainwater to make it safe again.
This sad report makes everything else pall in comparison. Is it not said, "Waste not, want not?" Protect His earth!
American Ways Are Also Dying
It seems like bad news follows more bad news. A consumer report says that one-fourth of all US malls are already gone along with 500 department stores that shuttered their doors for good. Remember those old fake ads in your local newspaper saying, "Going out of business! Everything 75% off!" Well, now they are for real. The outlook is worse. Amazon controls 50% of all online shopping. Keep in mind that the US consumer accounts for 70% of the economy. The US consumer is changing its preference. For the retail survivors they will need to expand their e-commerce and yet, somehow keep the live store experience one that consumers will cherish.
Sebastian asks, "Where will all those lost jobs find new employment?" Speaking of employment, the latest revision by the Bureau of Labor Statistics says that, are you ready for this, 501,000 reported jobs were miscalculated. The bureau was off by 501,000. Nothing like appointing your own people to make you look good with false reports.
New Home sales...
plunged in July by 12.8%. This leads to a yearly projection of 635K units. That figure is pathetic! To put that number in perspective, consider that during the 80s and 90s in Orlando, Florida, which is a small city, that metropolitan sold more than the projected total for this year. Sadly, I'm not surprised. The price of a new medium home is $312,800. Dear Reader, to qualify for a mortgage with that price, your household must make at least $6,000 per week. I can't make that much in a month! But, hey! Look at the bright side! That sale price is actually down 4.5% from a year ago and interest rates are lower.
By the way, July sales of existing homes rose by 2.5%. This was the first up-tick in a year and a half. In addition, people were refinancing which is one good effect from low interest rates. Maybe, they will use it to take a trip? Here is a suggestion:
First Spaceport
You read it right. Virgin Galactic is opening the first spaceport. You can relax in this New Mexico facility. Sit in the lounge and watch the big bird fly your fellow tourists into a low orbit space flight as you wait for your turn. You won't see anyone from our blog there, but good luck.
Inverted Yield
The global community keeps pushing negative yield bonds. If you took out one of these notes and you planned to take up the previous piece about a space flight, well, when you return from orbit, you will have less money than before you took off. Think how crazy this "Junk" really is: You can purchase a 2-year bond and receive more interest than a 10-year note. No wonder recessions follow inverted yields. This is whacky math! The end is near...
Some Positive News...
Gold exploded last Friday to close above $1526 which is three dollars more than JFL said for gold to move to a new Fibonacci sequence. The next level is $1576. I would think that gold will take a pause when it reaches that projection. It could regress a little, but more likely just consolidate. After this period look for gold to rise to $1708. Yay! Go! Make some money and buy American!
God is great!
And He works in small ways. Consider a recent Ural Airlines flight. The Russian jet ran into a flock of birds which killed the engines. The pilot remained calm as he located a cornfield. He landed in it. Everyone survived. Praise the Lord!
Jim Morrison of the Doors used the words in a hit song. You may have seen a ding-dong holding the words on a street corner sign, but sadly, it is really here.
Scientist have discovered that rainwater now contains plastic residue. This means plastic will be in our crops, drinking water and consumed by our livestock in grass and feed. It will run within our veins until it causes a blockage and we DIE!
This could produce a cancerous plague like the Black Plague that hit Europe in the Middle Ages. I have a partial answer to save fresh water, but mankind will need a communal research team to find a way to sanitize rainwater to make it safe again.
This sad report makes everything else pall in comparison. Is it not said, "Waste not, want not?" Protect His earth!
American Ways Are Also Dying
It seems like bad news follows more bad news. A consumer report says that one-fourth of all US malls are already gone along with 500 department stores that shuttered their doors for good. Remember those old fake ads in your local newspaper saying, "Going out of business! Everything 75% off!" Well, now they are for real. The outlook is worse. Amazon controls 50% of all online shopping. Keep in mind that the US consumer accounts for 70% of the economy. The US consumer is changing its preference. For the retail survivors they will need to expand their e-commerce and yet, somehow keep the live store experience one that consumers will cherish.
Sebastian asks, "Where will all those lost jobs find new employment?" Speaking of employment, the latest revision by the Bureau of Labor Statistics says that, are you ready for this, 501,000 reported jobs were miscalculated. The bureau was off by 501,000. Nothing like appointing your own people to make you look good with false reports.
New Home sales...
plunged in July by 12.8%. This leads to a yearly projection of 635K units. That figure is pathetic! To put that number in perspective, consider that during the 80s and 90s in Orlando, Florida, which is a small city, that metropolitan sold more than the projected total for this year. Sadly, I'm not surprised. The price of a new medium home is $312,800. Dear Reader, to qualify for a mortgage with that price, your household must make at least $6,000 per week. I can't make that much in a month! But, hey! Look at the bright side! That sale price is actually down 4.5% from a year ago and interest rates are lower.
By the way, July sales of existing homes rose by 2.5%. This was the first up-tick in a year and a half. In addition, people were refinancing which is one good effect from low interest rates. Maybe, they will use it to take a trip? Here is a suggestion:
First Spaceport
You read it right. Virgin Galactic is opening the first spaceport. You can relax in this New Mexico facility. Sit in the lounge and watch the big bird fly your fellow tourists into a low orbit space flight as you wait for your turn. You won't see anyone from our blog there, but good luck.
Inverted Yield
The global community keeps pushing negative yield bonds. If you took out one of these notes and you planned to take up the previous piece about a space flight, well, when you return from orbit, you will have less money than before you took off. Think how crazy this "Junk" really is: You can purchase a 2-year bond and receive more interest than a 10-year note. No wonder recessions follow inverted yields. This is whacky math! The end is near...
Some Positive News...
Gold exploded last Friday to close above $1526 which is three dollars more than JFL said for gold to move to a new Fibonacci sequence. The next level is $1576. I would think that gold will take a pause when it reaches that projection. It could regress a little, but more likely just consolidate. After this period look for gold to rise to $1708. Yay! Go! Make some money and buy American!
God is great!
And He works in small ways. Consider a recent Ural Airlines flight. The Russian jet ran into a flock of birds which killed the engines. The pilot remained calm as he located a cornfield. He landed in it. Everyone survived. Praise the Lord!
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