Pandemic, Violence, Homelessness, Poverty, Racial Divide, Geopolitical Tension, Food Insecurity, Jobless, Loneliness and Abuse. Each and everyone is a sad story. For those affected there seems to be no end in sight. For those of us who are aware, the media, society constantly bombard us and our senses need a reprieve. It is here with words from artists, including our own Sebastian. Take a moment and relax, while pondering their inspiration for a better world.
- Let America Be America Again
- Langston Hughes
Let America be America again,
Let it be the dream it used to be.
Let it be the pioneer on the plain
Seeking a home where he himself is free.
(America never was America to me.)
Let America be the dream the dreamers dreamed
Let it be that great strong land of love.
Where never kings connive nor tyrants scheme
That any man be crushed by one above.
(It never was America to me.)
O, let my land be a land where Liberty
Is crowned with no false patriotic wreath
But opportunity is real, and life is free.
Equality is in the air we breathe.
(There's never been equality for me.
Nor freedom in this "Homeland of the free.)
The free?
Who said the free? Not me?
Surely not me? The millions on relief today?
The millions shot down when we strike?
The millions who have nothing for our pay?
For all the dreams we've dreamed
And all the songs we've sung
And all the hopes we've held
And all the flags we've hung,
The millions who have nothing for our pay -
Except the dream that's almost dead today.
O, let America be America again -
The land that never has been get -
And get must be - the land where (every) man is free.
The land that's mine, the poor man's, Indians, Negro's, Me -
Who made America
Whose sweat and blood, whose faith and pain,
Whose hand at the foundry, whose plow in the rain,
Must bring back our mighty dream again.
Sure, call me any ugly name you choose -
The steel of freedom does not stain.
From those who live like leeches on the people's lives,
We must take back our land again,
America!
O, yes,
I say it plain,
America never was America to me,
And yet I swear this oath -
America will be!
Out of the rack and ruin of our gangster dead,
The rape and rot of graft, and stealth, and lies,
We, the people, must redeem
The land, the mines, the plants, the rivers,
The mountains and the endless plain -
All, all the stretch of these great green lakes -
And make America again!
- No Title
- Sr. Celeste Hupert, CSFN
Mercy of God I trust in Thee
These times we live in are
Now not so free
Mercy of God, we call upon you
forgive us our sins
Our hearts renew
Mercy of God through your lfe
We are saved because
You conquered our strife
Mercy of God we plead with you
Stop this coronavirus
The earth renew
Mercy of God we trust in you
Given new life in us
Let your light shine through
Mercy of God fill us with peace
Peace within and your love
May in us forever increase.
- The Spirit Around Us
- Sebastian (from unpublished work, Reuniting the Unknown).
As you read, whether you believe or not, take this moment
in silence to remember all those who gave all for all of us...
Do any of us have the right to cease any voice, any breath?
We give thanks when there is calm,
To show appreciation.
To add a positive force.
To take disturbance as an opportunity,
To channel our emotions for positive energy,
To the spirit.
And no matter if we breakdown life
Into its smallest matter scientifically
Or create it physically, whether we look
Within or about us, the source of our
Consciousness feels its power.
- Thomas Jefferson
" If the American people ever allow private banks (read Federal Reserve)
to control the issue of their currency, first by inflation, then by deflation,
the banks and corporations that will grow up around them will
deprive the people of all property until their children
wake up homeless on the continent their Fathers conquered..."
- Aeschylus
Even in our sleep, pain which cannot forget
falls drop by drop upon the heart,
until, in our own despair,
comes wisdom
through the awful grace of God.
Wednesday, June 10, 2020
Wednesday, June 3, 2020
Distant Eyes: Inflation, Deflation or What?
With the lockdowns fading and attempts to return to normalcy, my mind thinks about the future. We had a meeting at Evolution. The biggest obstacle that we face was ourselves. This divide is evident with the civil rights protests currently happening. It was also at our meeting. We are similar. You see, we are pals. We think a like. This has a weak link because the future outcomes are as variable as the dust floating in the sky. The great Greek philosopher, Herodotus had a saying, "Where wisdom is called for, then force is of little use. Our streets are full of bad choices and mostly, with force.
Our government chose force in more ways than one. Excess force by police. The force lockdowns. The use of (force) debt to overcome all economic problems. The lack of admittance to mistakes. They remind us all of Winston Churchill's observation about Americans, "You can always count on America doing the right thing - after they tried everything else."
Two Biggest Harms
The two lingering effects of the response to the virus will be the harm it did to individual firms and all workers associated with those enterprises. The civil rights issue will always be with us as long as workers are exploited.
The other and more dangerous response will be the government's use of debt. The stimulus checks to people and the bonus help with money for the unemployment insurance was acceptable. However, any financial assistance to the larger corporations like airlines is unacceptable. One aspect of capitalism is its destruction nature. It acts like Darwin's survival of the fittest. Many corporations were led by greedy CEOs. These small minded honchos chose buybacks to sweeten their option in retirement. This satisfied investors who do not see the big picture. The same CEOs didn't cover their workers pension. The government did not intervene. The CEOs didn't do R&D to give their firms a future. They didn't save for a rainy day. They need to be chased out of the system along with their thinking. Their firms will be replaced by more efficient entities. This is how the free market operates or is suppose too. The police need more go-between. Try the easy way before using the heavy hand of the law.
Forrest Gump's Nature
Maybe the Gump had a major disability, but he was always positive in nature. He didn't see Lt. Dan with no legs. Lt. Dan is our economy. We want to die, but if we find something at the bottom of our soul, we will survive. A little rain falls on every head. We will continue with life, but the life that we will partake in might change. We should prepare. Preparation is the key to success. The police have to learn to put things in their proper perspective. A traffic ticket is not a life and death situation. That's it for the cliché's and preaching.
Inflation or Deflation?
The biggest market is the bond market. It is the place for smart money. The bonds are saying that there will be deflation ahead. The Fed has kept low rates. This makes money cheap which helps many assets. This is central to the aspect that the stock market has been rallying even with 40 million Americans unemployed. Cheap money helps assets and thus, the companies within the stock exchanges. The Fed chair, Powell says even though the Fed has kept rates low, the Fed will not entertain negative rates. Dear Reader, he is lying. We already have negative rates and in fact, we had them for years. The benchmark for notes is the US 10-year bond. Currently, it is at .63%. This note is suppose to cover inflation for ten years. In early April, gasoline decline to under $2 dollars per gallon. The most important commodity was acting deflationary. The government said deflation is dangerous and it is present in our economy. Since that time, gasoline has increased in price to over $2.50 a gallon. This one necessary item that is needed by everyone has already broken the outlook for the 10-year note. Thus, this proves we have negative rates!
Put it this way. The government is like the guy who works at a gasoline retail location. When prices rise, he finds his ladder. He climbs to raise prices before the sun comes out. When prices fall, he can't find his ladder. It takes the guy over a week to lower prices. Of course, he is an amateur. The government takes years.
Bottom line: these aspects are central to the case for deflation. Civil unrest doesn't help either.
Experts
Give them the Bronx cheer! Anyway, the experts are the ones leading the scenario for deflation in our future. They do not see or know real people. The pandemic has shown many things. We have exported too many necessary aspects that are needed by society. We cannot manufacture medicine or any of the components of PPE that is needed by people in responsive positions like first responders and health care workers. The connections are endless - the truck drivers, stock shelf people, on and on. I once said that I admire Russian thinking in education. They remind young minds that garbage workers do a dirty job for low pay, but their work is essential. It stops the spread of dangerous bacteria! They should be thanked.
How many thanks did you realize during this painful period? What we see here at Evolution is ordinary people waking up to reality. This happened once before in the early1970s. Garbage workers went on strike for better wages and benefits. It took a while, but they succeeded. However, other workers and mostly in unions, also said and thought about what the sanitation people realized. They went on strike. Our nation had a endless series of strikes. We will get this again!
Landlords will seek higher rents to make up for lost income. Banks will add fees to make up for forbearance with mortgages. Grocery stores will try to maintain the higher food prices that they received from hoarding. Everyday workers will realize the dangers that could arise from their job. They will want a higher wage. The meme is in the air. The virus of higher prices will spread.
The result will be inflation. The irony of this future shock will be at the Fed. For years the Fed said it was seeking 2% inflation. It was rarely received. By the way, seeking inflation is against the Fed mandate. Nevertheless, I see workers seeking higher wages. Corporations will be seeking AI to replace workers. The battle lines will cause inflation until one side wins the battle. The other and more strongly effect of this virus will be felt by our currency. All the Fed printing will devalue our dollar which will cause inflation. When ordinary citizens wake up to this crime, there will be more civil unrest. There will be more protests. This is why I desire to form a new third political party that places citizens as its primary purpose.
Bottom line: This is the case for inflation. Protests foster the idea of hoarding. This is inflationary.
Or What Case?
The thing that I worry about most is the disruptive aspects of new technology. As corporations look to be first with driverless vehicles, and with robots doing warehouse work and self-checkouts and internet shopping over personal visits to retail, the loss of jobs will severely hurt our economy. When people lose their ability to live and only exist, civil unrest is not far behind. In addition, wages will shrink due to the availability of laborers. This points to deflation. However, the loss of income points to a stagnating economy. If prices rise and they will due to the dollar losing value with excessive printing or worse losing its status as the world's reserve currency, the US will have inflation. Then, we could encounter the worse of all economies - stagflation. This is rising prices in a shrinking economy. First remedy is not a vaccine but to End the Fed!
We need fiscal leadership. We need a balance budget. We need to end foreign wars and cut the military budget in half! Then, our society will begin to heal. Peace.
Our government chose force in more ways than one. Excess force by police. The force lockdowns. The use of (force) debt to overcome all economic problems. The lack of admittance to mistakes. They remind us all of Winston Churchill's observation about Americans, "You can always count on America doing the right thing - after they tried everything else."
Two Biggest Harms
The two lingering effects of the response to the virus will be the harm it did to individual firms and all workers associated with those enterprises. The civil rights issue will always be with us as long as workers are exploited.
The other and more dangerous response will be the government's use of debt. The stimulus checks to people and the bonus help with money for the unemployment insurance was acceptable. However, any financial assistance to the larger corporations like airlines is unacceptable. One aspect of capitalism is its destruction nature. It acts like Darwin's survival of the fittest. Many corporations were led by greedy CEOs. These small minded honchos chose buybacks to sweeten their option in retirement. This satisfied investors who do not see the big picture. The same CEOs didn't cover their workers pension. The government did not intervene. The CEOs didn't do R&D to give their firms a future. They didn't save for a rainy day. They need to be chased out of the system along with their thinking. Their firms will be replaced by more efficient entities. This is how the free market operates or is suppose too. The police need more go-between. Try the easy way before using the heavy hand of the law.
Forrest Gump's Nature
Maybe the Gump had a major disability, but he was always positive in nature. He didn't see Lt. Dan with no legs. Lt. Dan is our economy. We want to die, but if we find something at the bottom of our soul, we will survive. A little rain falls on every head. We will continue with life, but the life that we will partake in might change. We should prepare. Preparation is the key to success. The police have to learn to put things in their proper perspective. A traffic ticket is not a life and death situation. That's it for the cliché's and preaching.
Inflation or Deflation?
The biggest market is the bond market. It is the place for smart money. The bonds are saying that there will be deflation ahead. The Fed has kept low rates. This makes money cheap which helps many assets. This is central to the aspect that the stock market has been rallying even with 40 million Americans unemployed. Cheap money helps assets and thus, the companies within the stock exchanges. The Fed chair, Powell says even though the Fed has kept rates low, the Fed will not entertain negative rates. Dear Reader, he is lying. We already have negative rates and in fact, we had them for years. The benchmark for notes is the US 10-year bond. Currently, it is at .63%. This note is suppose to cover inflation for ten years. In early April, gasoline decline to under $2 dollars per gallon. The most important commodity was acting deflationary. The government said deflation is dangerous and it is present in our economy. Since that time, gasoline has increased in price to over $2.50 a gallon. This one necessary item that is needed by everyone has already broken the outlook for the 10-year note. Thus, this proves we have negative rates!
Put it this way. The government is like the guy who works at a gasoline retail location. When prices rise, he finds his ladder. He climbs to raise prices before the sun comes out. When prices fall, he can't find his ladder. It takes the guy over a week to lower prices. Of course, he is an amateur. The government takes years.
Bottom line: these aspects are central to the case for deflation. Civil unrest doesn't help either.
Experts
Give them the Bronx cheer! Anyway, the experts are the ones leading the scenario for deflation in our future. They do not see or know real people. The pandemic has shown many things. We have exported too many necessary aspects that are needed by society. We cannot manufacture medicine or any of the components of PPE that is needed by people in responsive positions like first responders and health care workers. The connections are endless - the truck drivers, stock shelf people, on and on. I once said that I admire Russian thinking in education. They remind young minds that garbage workers do a dirty job for low pay, but their work is essential. It stops the spread of dangerous bacteria! They should be thanked.
How many thanks did you realize during this painful period? What we see here at Evolution is ordinary people waking up to reality. This happened once before in the early1970s. Garbage workers went on strike for better wages and benefits. It took a while, but they succeeded. However, other workers and mostly in unions, also said and thought about what the sanitation people realized. They went on strike. Our nation had a endless series of strikes. We will get this again!
Landlords will seek higher rents to make up for lost income. Banks will add fees to make up for forbearance with mortgages. Grocery stores will try to maintain the higher food prices that they received from hoarding. Everyday workers will realize the dangers that could arise from their job. They will want a higher wage. The meme is in the air. The virus of higher prices will spread.
The result will be inflation. The irony of this future shock will be at the Fed. For years the Fed said it was seeking 2% inflation. It was rarely received. By the way, seeking inflation is against the Fed mandate. Nevertheless, I see workers seeking higher wages. Corporations will be seeking AI to replace workers. The battle lines will cause inflation until one side wins the battle. The other and more strongly effect of this virus will be felt by our currency. All the Fed printing will devalue our dollar which will cause inflation. When ordinary citizens wake up to this crime, there will be more civil unrest. There will be more protests. This is why I desire to form a new third political party that places citizens as its primary purpose.
Bottom line: This is the case for inflation. Protests foster the idea of hoarding. This is inflationary.
Or What Case?
The thing that I worry about most is the disruptive aspects of new technology. As corporations look to be first with driverless vehicles, and with robots doing warehouse work and self-checkouts and internet shopping over personal visits to retail, the loss of jobs will severely hurt our economy. When people lose their ability to live and only exist, civil unrest is not far behind. In addition, wages will shrink due to the availability of laborers. This points to deflation. However, the loss of income points to a stagnating economy. If prices rise and they will due to the dollar losing value with excessive printing or worse losing its status as the world's reserve currency, the US will have inflation. Then, we could encounter the worse of all economies - stagflation. This is rising prices in a shrinking economy. First remedy is not a vaccine but to End the Fed!
We need fiscal leadership. We need a balance budget. We need to end foreign wars and cut the military budget in half! Then, our society will begin to heal. Peace.
Wednesday, May 27, 2020
Odds and Ends: May 2020
I'm not here to blow my own horn or the movie by Frank Sinatra. However, JFL told you one month ago that the unemployment numbers should be 10 million higher and he was right. Now, we get reports like this one from the University of California at Beck Institute. It says that 42% of all recently laid off workers will permanently lose their job. Not good.
Another opinion with a similar observation comes from Michael Feroli of JP Morgan Chase. He sees the recovery and return to employment as very slow. In a related aspect the stock market has been betting on artificial intelligence firms in the recent rally. This won't be good for workers or their wages.
Covering Your Ass
The Fed Chairman, Powell said in an interview on 60 Minutes that the economy will recover. Don't bet against America. Another Great Depression is unlikely.
However, later he said, "No one knows what will happen and it appears the recovery will drag out into 2021. It depends on Congress."
I see a lot of "ifs" to his call. If you are making bets, I'd rather go with the Yankees.
Isn't it the norm that one politician blames another segment of government for our problems, most notably the economic ones? We, at Evolution see it as both of our political parties are corrupt. They both allowed manufacturing to outsource labor. They refuse to provide protectionism while every nation in the world resorts to utilize protectionism. Every nation claims that they don't, but they lie just like our politicians. We have reached an inflection point in our economy. Our rising poverty rates, homelessness and shrinking middle class all point to an economy that has little social mobility. This was all evident prior to the virus. The virus showed us that we cannot protect ourselves because we don't produce anything. Not even a simple protective mask. The supply chains are all imports from China. The only thing that we export is DEBT!
P.S. The amount is $3 billion per day.
Here is another reason to End the Fed!
The excessive money printing is mind boggling until you realize some concrete points.
1 million seconds = 11 days
1 billion seconds = 1988
1 trillion seconds = 30,000 B.C.
This is currency destruction and standard of living destruction. For example, your household earns
$50,000 a year. It will take 20 million years to earn one trillion.
A job that pays one dollar per second or $3,600 a day which translates to $86,400 a year needs 31,700 years to reach $1 trillion. The Federal Reserve printed $9 trillion in one month.
Not alone...
The Fed has all central, fiat banks doing the same thing. The G-20 recently agreed to freeze bilateral loan repayments until the end of 2020. I bet that this will be extended. Why, you ask? Because defaults are happening so fast with so many that they are overwhelming the international court system just like the virus overwhelmed hospitals. Oil is central to the economic well being of Mexico, Nigeria, Columbia, Ecuador as well as many other nations. Their budgets are busted with the decline in the price of oil. This is also happening in the EU due to expenses that were not planned due to Covid-19. There is a rising meme to split from the EU and Brexit has not yet been resolved.
Housing worries
It is bad enough that housing had a no spring sale season, but with people losing their income, this is beginning to surface. Vacation homes are coming onto the market. Oxford Economics estimates that 15% of Americans are behind on their mortgage payments. With home prices high the owners of second homes are deciding to change future plans. These homes are far from services. If a flood of them hit the market at the same time, prices will not only fall, but the housing market could change overnight. It could go from a limited supply to a glut of homes. This is doubly possible in retirement communities.
More tension...
China passed a new law circumventing Hong Kong's current legislation. This could cause economic problems to the 1300 US firms doing business in Hong Kong. That huge number should give everyone some insight to the amount of US jobs lost to outsourcing. I can almost hear the critics saying, "This is the positive effects of globalization." Yeah, I got your positive effects, right here, pal. Try to find a job that pays a living wage in America? Anyway, this law will come in conflict to the special trading privilege relationship that the US has with Hong Kong. To be honest, I did not know that we enjoyed a special relationship with Hong Kong. Nevertheless, going forth this is in doubt.
In a related aspect...
Nations are displaying low-level, tit-for-tat tendencies. France said that it will impose a 14-day quarantine on all foreign fliers. The UK responded with a similar quarantine. This only hurts both nations and all airlines. The international airline agency, IATA said the airlines need stimulus, but it should come without political strings. Global airlines recovery will be slow and hard as the firms have to much debt. We, at Evolution feel nations should make a decision. Either you impose flight restrictions on a nation or allow travelers to fly freely like before the virus hit.
Don't believe all stats...
The makers of the game, "Fortnight" claim that they have 350 million users in the US. Last time I checked with the US Census, the population figure was 320 million. I guess the company uses modern math? Go figure! Be save. Be positive. Be with His peace.
Another opinion with a similar observation comes from Michael Feroli of JP Morgan Chase. He sees the recovery and return to employment as very slow. In a related aspect the stock market has been betting on artificial intelligence firms in the recent rally. This won't be good for workers or their wages.
Covering Your Ass
The Fed Chairman, Powell said in an interview on 60 Minutes that the economy will recover. Don't bet against America. Another Great Depression is unlikely.
However, later he said, "No one knows what will happen and it appears the recovery will drag out into 2021. It depends on Congress."
I see a lot of "ifs" to his call. If you are making bets, I'd rather go with the Yankees.
Isn't it the norm that one politician blames another segment of government for our problems, most notably the economic ones? We, at Evolution see it as both of our political parties are corrupt. They both allowed manufacturing to outsource labor. They refuse to provide protectionism while every nation in the world resorts to utilize protectionism. Every nation claims that they don't, but they lie just like our politicians. We have reached an inflection point in our economy. Our rising poverty rates, homelessness and shrinking middle class all point to an economy that has little social mobility. This was all evident prior to the virus. The virus showed us that we cannot protect ourselves because we don't produce anything. Not even a simple protective mask. The supply chains are all imports from China. The only thing that we export is DEBT!
P.S. The amount is $3 billion per day.
Here is another reason to End the Fed!
The excessive money printing is mind boggling until you realize some concrete points.
1 million seconds = 11 days
1 billion seconds = 1988
1 trillion seconds = 30,000 B.C.
This is currency destruction and standard of living destruction. For example, your household earns
$50,000 a year. It will take 20 million years to earn one trillion.
A job that pays one dollar per second or $3,600 a day which translates to $86,400 a year needs 31,700 years to reach $1 trillion. The Federal Reserve printed $9 trillion in one month.
Not alone...
The Fed has all central, fiat banks doing the same thing. The G-20 recently agreed to freeze bilateral loan repayments until the end of 2020. I bet that this will be extended. Why, you ask? Because defaults are happening so fast with so many that they are overwhelming the international court system just like the virus overwhelmed hospitals. Oil is central to the economic well being of Mexico, Nigeria, Columbia, Ecuador as well as many other nations. Their budgets are busted with the decline in the price of oil. This is also happening in the EU due to expenses that were not planned due to Covid-19. There is a rising meme to split from the EU and Brexit has not yet been resolved.
Housing worries
It is bad enough that housing had a no spring sale season, but with people losing their income, this is beginning to surface. Vacation homes are coming onto the market. Oxford Economics estimates that 15% of Americans are behind on their mortgage payments. With home prices high the owners of second homes are deciding to change future plans. These homes are far from services. If a flood of them hit the market at the same time, prices will not only fall, but the housing market could change overnight. It could go from a limited supply to a glut of homes. This is doubly possible in retirement communities.
More tension...
China passed a new law circumventing Hong Kong's current legislation. This could cause economic problems to the 1300 US firms doing business in Hong Kong. That huge number should give everyone some insight to the amount of US jobs lost to outsourcing. I can almost hear the critics saying, "This is the positive effects of globalization." Yeah, I got your positive effects, right here, pal. Try to find a job that pays a living wage in America? Anyway, this law will come in conflict to the special trading privilege relationship that the US has with Hong Kong. To be honest, I did not know that we enjoyed a special relationship with Hong Kong. Nevertheless, going forth this is in doubt.
In a related aspect...
Nations are displaying low-level, tit-for-tat tendencies. France said that it will impose a 14-day quarantine on all foreign fliers. The UK responded with a similar quarantine. This only hurts both nations and all airlines. The international airline agency, IATA said the airlines need stimulus, but it should come without political strings. Global airlines recovery will be slow and hard as the firms have to much debt. We, at Evolution feel nations should make a decision. Either you impose flight restrictions on a nation or allow travelers to fly freely like before the virus hit.
Don't believe all stats...
The makers of the game, "Fortnight" claim that they have 350 million users in the US. Last time I checked with the US Census, the population figure was 320 million. I guess the company uses modern math? Go figure! Be save. Be positive. Be with His peace.
Wednesday, May 20, 2020
GOLD: Where Is It Going?
The money printing ability by the Federal Reserve was the one obstacle it had to overcome in becoming an entity back in 1913. Having achieved liftoff, it stifled itself on the printing side of the ledger. It concentrated monetary policy through interest rates. This is its favorite weapon. However, incessant use causes collateral damage.
This is what happened in 1929. But, since they are part of the status quo package of government, they get the history books to say that tariffs was the root cause of the Great Depression in 1929.
Those same books never devote a deep discussion on gold. Why did the founding fathers choose it? The first Secretary of the Treasury, Hamilton opposed the solid currency. He favored fiat to which we have today. Thank God, the deeper thinkers persuaded the majority to go with a strong currency to start the nation. The history books never acknowledge this sound thinking because it is in direct opposition to our present government make-up.
Gold as a currency...
forces government to live within its means like the rest of us. If someone has a grand project in mind, it takes years to influence the nation and other legislators to get on the wagon. Then, the biggest hurdle, the cost? The government needs to know that there will be a return on the investment. This is its good and bad points. The government was slow to react, but when it did, it has the ability to pay the price for its action. Why, you ask? Because every dollar the government prints must be backed by a dollar's worth of gold. Gold forces government to be accountable!
We do not have that type of government today. We got egos, greed and corruption like Senator Burr who got caught using inside information on the virus. He tells the public that the government has things under control while at the same time, he unloads his stocks before the effects hit the market. He is not the only one. The others have not been caught as of yet.
This is the true thought behind the so-called label, "Gold Bugs!" As the bulls and bears do battle in the stock market, gold is beginning to see some light, especially with the invisible sickness circulating in the air. It is up 15%. Last Friday, it closed at a new recent high of $1756. A week earlier, it touched a higher level of $1788, but it ended that day lower. This is how markets move. It does not matter the direction of up or down. The momentum or trend will only have so much energy. The price of gold on that previous high was building cause in its ability to climb in price. It achieved that cause last Friday with strong volume.
Personality
Stocks and commodities do have a personality. They do better at different times of the year. Retail generally performs better in the fall. Kids wants new clothes for school. The holiday season has its needs. Thus, we shop. Another example is the summer driving season. Oil does better. On the flip side there are seasons where the entities do not do well. Generally, summer is that time for gold. In addition, the anti-gold fiat powers will time their movements to this season. What I'm saying is two things. If gold does not fall, just follows a consolidation range, it will burst upward after the summer season. If it falls, but not below its uptrend level, and you missed getting on board, this will be your opportunity to buy. With that said, always notice the volume behind the trade / price movement.
Charts and Fibonacci...
are two tools everyone should use. If you look at the recent prices in the continuous contract in gold, the price action began around last Christmas. It was a slow, uptrend. Gold reached $1600, but then, retraced back to $1550.
Gold usually acts as a safe haven. With the word on the virus spreading, gold began to act like its historical value. It rose to $1690. Then, again, it retraced. It ran out of energy, however it was building cause to rise even higher.
Dear Reader, always keep in mind that gold is the enemy of our present government, the Federal Reserve and greedy Wall Street funds. They attacked. They sought to keep gold out of the investment picture. It fell back to $1565, but not for long. The energy behind the metal pushed the price over $1700. Yea, Team!
The opposition forces are strong. They counter-attacked! Gold fell to almost $1450. This is reality. Gold will always be attacked by the powers-to-be. Don't ever be ashamed to take profits. No one can pick the top or bottom. Money in your pocket is better than hoping for a new surge to get even.
Fed Printing
This changed the landscape. Now, they use this policy on a yearly basis in their make-up. The government stimulus gave some money to citizens who got forced out of work. They gave the most like they always do, to corporations. However they spend, all their actions help to protect the banking system. This is why and who pushed for the establishment of the Federal Reserve. The names are different, but the motives are the same. Banking privatizes the profits and socializes the losses!
With that said, the market and people are not stupid. Gold resumed its uptrend after the excessive printing of $3 to $6 trillion. This was the charge by gold to the $1788 level. Fibonacci says that gold will continue towards $1856. If it gets strong volume at that time, it should challenge the all-time high of $1920. There will be counter-attacks. Nevertheless, after the dust settles, sometime in 2021, the global economy will start the discussion to end the dollar as the world's reserve currency. This will be the end of the US as the number one nation in the world. China will slowly take that position. The IMF will seek power and introduce a new basket of currencies to use as a reserve. The problem is it will be fiat. The printing will never stop until the public realizes our debt might not be repayable. The Federal Reserve could push out negative interest rates. People, this declares that money is worthless. It is just paper like they print in Zimbabwe. Gold has already broken out against every foreign currency. When this discussion is in the news, gold should be over $1920.
Look at this picture another way. It took the Federal Reserve 94 years of printing to reach the $1 trillion level. Since the financial crisis of 2008, they have printed another $9 trillion or 10x the amount. They are destroying our currency and standard of living. Still another reason to End the Fed
No matter what is said and done, as a nation, new economic problems will surface in the near future.. This could lead to a negative contagion in society with trust. Trust in our currency. Trust in our government. Trust with our neighbors. We are in dangerous times. Try to be positive and be with His peace.
This is what happened in 1929. But, since they are part of the status quo package of government, they get the history books to say that tariffs was the root cause of the Great Depression in 1929.
Those same books never devote a deep discussion on gold. Why did the founding fathers choose it? The first Secretary of the Treasury, Hamilton opposed the solid currency. He favored fiat to which we have today. Thank God, the deeper thinkers persuaded the majority to go with a strong currency to start the nation. The history books never acknowledge this sound thinking because it is in direct opposition to our present government make-up.
Gold as a currency...
forces government to live within its means like the rest of us. If someone has a grand project in mind, it takes years to influence the nation and other legislators to get on the wagon. Then, the biggest hurdle, the cost? The government needs to know that there will be a return on the investment. This is its good and bad points. The government was slow to react, but when it did, it has the ability to pay the price for its action. Why, you ask? Because every dollar the government prints must be backed by a dollar's worth of gold. Gold forces government to be accountable!
We do not have that type of government today. We got egos, greed and corruption like Senator Burr who got caught using inside information on the virus. He tells the public that the government has things under control while at the same time, he unloads his stocks before the effects hit the market. He is not the only one. The others have not been caught as of yet.
This is the true thought behind the so-called label, "Gold Bugs!" As the bulls and bears do battle in the stock market, gold is beginning to see some light, especially with the invisible sickness circulating in the air. It is up 15%. Last Friday, it closed at a new recent high of $1756. A week earlier, it touched a higher level of $1788, but it ended that day lower. This is how markets move. It does not matter the direction of up or down. The momentum or trend will only have so much energy. The price of gold on that previous high was building cause in its ability to climb in price. It achieved that cause last Friday with strong volume.
Personality
Stocks and commodities do have a personality. They do better at different times of the year. Retail generally performs better in the fall. Kids wants new clothes for school. The holiday season has its needs. Thus, we shop. Another example is the summer driving season. Oil does better. On the flip side there are seasons where the entities do not do well. Generally, summer is that time for gold. In addition, the anti-gold fiat powers will time their movements to this season. What I'm saying is two things. If gold does not fall, just follows a consolidation range, it will burst upward after the summer season. If it falls, but not below its uptrend level, and you missed getting on board, this will be your opportunity to buy. With that said, always notice the volume behind the trade / price movement.
Charts and Fibonacci...
are two tools everyone should use. If you look at the recent prices in the continuous contract in gold, the price action began around last Christmas. It was a slow, uptrend. Gold reached $1600, but then, retraced back to $1550.
Gold usually acts as a safe haven. With the word on the virus spreading, gold began to act like its historical value. It rose to $1690. Then, again, it retraced. It ran out of energy, however it was building cause to rise even higher.
Dear Reader, always keep in mind that gold is the enemy of our present government, the Federal Reserve and greedy Wall Street funds. They attacked. They sought to keep gold out of the investment picture. It fell back to $1565, but not for long. The energy behind the metal pushed the price over $1700. Yea, Team!
The opposition forces are strong. They counter-attacked! Gold fell to almost $1450. This is reality. Gold will always be attacked by the powers-to-be. Don't ever be ashamed to take profits. No one can pick the top or bottom. Money in your pocket is better than hoping for a new surge to get even.
Fed Printing
This changed the landscape. Now, they use this policy on a yearly basis in their make-up. The government stimulus gave some money to citizens who got forced out of work. They gave the most like they always do, to corporations. However they spend, all their actions help to protect the banking system. This is why and who pushed for the establishment of the Federal Reserve. The names are different, but the motives are the same. Banking privatizes the profits and socializes the losses!
With that said, the market and people are not stupid. Gold resumed its uptrend after the excessive printing of $3 to $6 trillion. This was the charge by gold to the $1788 level. Fibonacci says that gold will continue towards $1856. If it gets strong volume at that time, it should challenge the all-time high of $1920. There will be counter-attacks. Nevertheless, after the dust settles, sometime in 2021, the global economy will start the discussion to end the dollar as the world's reserve currency. This will be the end of the US as the number one nation in the world. China will slowly take that position. The IMF will seek power and introduce a new basket of currencies to use as a reserve. The problem is it will be fiat. The printing will never stop until the public realizes our debt might not be repayable. The Federal Reserve could push out negative interest rates. People, this declares that money is worthless. It is just paper like they print in Zimbabwe. Gold has already broken out against every foreign currency. When this discussion is in the news, gold should be over $1920.
Look at this picture another way. It took the Federal Reserve 94 years of printing to reach the $1 trillion level. Since the financial crisis of 2008, they have printed another $9 trillion or 10x the amount. They are destroying our currency and standard of living. Still another reason to End the Fed
No matter what is said and done, as a nation, new economic problems will surface in the near future.. This could lead to a negative contagion in society with trust. Trust in our currency. Trust in our government. Trust with our neighbors. We are in dangerous times. Try to be positive and be with His peace.
Wednesday, May 13, 2020
Virus = Trickle Death Economy
The warmer weather has calmed nerves pertaining to the coronavirus, however it appears that the early fatality estimates of 100,000 will be correct. The other disturbing aspect will be the 1.5 million cases in the US and probably, 5 million worldwide. The real sad aspect of this virus will be the severe hit to our economy and to the global economy. In our small world as individuals, we only are aware of how the virus effects us. If you lost your job, this is not a recession, but a depression. If your job was not effected like a police officer and your health is fine, you might think all this is an overreaction? It isn't.
Work behind the scenes
There are many groups and firms out there that seek data like Cambridge Analytica, who sold our privacy data to Facebook. There are many others like Salesforce, Cloudera and Teradata. Sometimes we catch a break and are privy to this info. I have two which will shed some light on the darkness of this disease.
According to James Beard Foundation as many as 80% of restaurants that are currently closed, may never reopen. Dear Reader, there are 16 million people who are employed in this field.
A poll conducted by Weiss, an investment firm asked small business owners if they expect to fold before the end of the year. 52% said, "YES!" This represents another 16 million companies to which many more thousands of jobs will be lost along with their production and lost of revenue for local government. In addition, whomever supplied them with items that were necessary to produce a product will see this shrinkage in demand. This is how all things are connected.
Related aspect...
Black Knight reports that 3.8 million homeowners are one month or more behind in paying their mortgage. We will get a government report on this come Monday. This could confirm, reject or get worse. Sorry. The data is a lagged stat. There isn't a revealed figure for 2020. Nevertheless...
The other financial problem is the 40 million of us who rent. The call for rent strikes is being heard and small landlords fear their little empire could be crushed as they receive from Peter (renters) to pay Paul (banks). US households are holding record debt of 14.3 trillion and many are adding to this by borrowing from their credit cards to pay rent, utilities and purchase food. There are millions of people out there who are entitled to unemployment and as of yet, they have not received one check. It gets worse when you read the garbage put out by the Labor Bureau concerning the unemployment numbers. They say unemployment is 14.7%. It is ten points higher!
This does not mean that they put out lies. It is like the old expression, "Garbage in, garbage out."
For example, Florida has a population of 21.67 million. It is the 3rd largest state by population. Now, follow this thinking. Florida put out its unemployment figure last week. It says that it has only 416,000 unemployed. This is pure BS! Why, you ask? Because if the labor department is correct with 33 million citizens being unemployed, this comes to a one in five ratio. Now, go back to Florida's report. Let's say one-half of Florida's population was working. Using the same ratio, we arrive at 2 million plus unemployed. That should be the minimum figure. It is probably way, way more. Florida is a service state with its jobs. It relies on tourism. Orlando is the tourist capitol. It has Disney, Universal and Sea World. They are all closed! The reason for the phony report of 416K is because no one can get through to the unemployment office to file a claim. The other side of the picture is the staff at Florida's office is understaffed. You get the same stories all across the nation and most notably, from Red States. The one report that the labor department had right concerned truckers. These over-the-road haulers move 70% of merchandise. The report says 88,300 truckers were laid off. People, it gets worse as the disease has already claimed the following firms. Going out of business signs are being posted on a daily occurrence. Keep in mind that every company employs thousands and yet, the stock market keeps climbing. They are wrong and coming, very soon will be a record down day in the market as they take their blinders off.
Bankruptcy Call (so far for 2020):
Diamond Offshore Drilling Eco-Stim Energy Solution
BlackRidge Technology International Whitney Petroleum
Real Good Solar Foresight Energy
Valeritas Holdings United Cannabis
J. Crew LSC Communication
Pier I Imports McClatchy
McDermott International Stealth Technologies
Globe Photos Pioneer Energy Services
Frontier Communications Omagine
Yuma Energy Generation Zone
Carbo Ceramics Broad Vision
Quorum Health Neiman Marcus
Helios and Matheson Analytics Souplantation
many, many more to come...
Litigation Nation
Ambulance chasers are out in full force. When the danger of the virus passes, the new danger of lawyers will be even more disastrous. There will be suits against hospitals, governors, the president, manufacturers and any business that remained open with sick people on site. The list and reasons will be as long as the number of cases which are well over a million. There are already cases where pastors versus their state. Nurses and retail workers for not providing a safe workplace. College students seeking reimbursement of tuition for cancelled classes. Insurance firms that sought ways out of paying claims. Airlines for not refunding ticket costs due to canceled flights. Sport vendors due to cancelled games. The CARES Act because it declares that their loans are forgivable and yet, banks seek payment. How about this one? Illegals are suing for stimulus checks for their children who were born in the US which makes them citizens. They want a check!
The stock market has yet to realize this aspect. Just like the government, they cannot see farther than their nose. The only good news that I have to offer is this: the night is followed by dawn...Peace.
Work behind the scenes
There are many groups and firms out there that seek data like Cambridge Analytica, who sold our privacy data to Facebook. There are many others like Salesforce, Cloudera and Teradata. Sometimes we catch a break and are privy to this info. I have two which will shed some light on the darkness of this disease.
According to James Beard Foundation as many as 80% of restaurants that are currently closed, may never reopen. Dear Reader, there are 16 million people who are employed in this field.
A poll conducted by Weiss, an investment firm asked small business owners if they expect to fold before the end of the year. 52% said, "YES!" This represents another 16 million companies to which many more thousands of jobs will be lost along with their production and lost of revenue for local government. In addition, whomever supplied them with items that were necessary to produce a product will see this shrinkage in demand. This is how all things are connected.
Related aspect...
Black Knight reports that 3.8 million homeowners are one month or more behind in paying their mortgage. We will get a government report on this come Monday. This could confirm, reject or get worse. Sorry. The data is a lagged stat. There isn't a revealed figure for 2020. Nevertheless...
The other financial problem is the 40 million of us who rent. The call for rent strikes is being heard and small landlords fear their little empire could be crushed as they receive from Peter (renters) to pay Paul (banks). US households are holding record debt of 14.3 trillion and many are adding to this by borrowing from their credit cards to pay rent, utilities and purchase food. There are millions of people out there who are entitled to unemployment and as of yet, they have not received one check. It gets worse when you read the garbage put out by the Labor Bureau concerning the unemployment numbers. They say unemployment is 14.7%. It is ten points higher!
This does not mean that they put out lies. It is like the old expression, "Garbage in, garbage out."
For example, Florida has a population of 21.67 million. It is the 3rd largest state by population. Now, follow this thinking. Florida put out its unemployment figure last week. It says that it has only 416,000 unemployed. This is pure BS! Why, you ask? Because if the labor department is correct with 33 million citizens being unemployed, this comes to a one in five ratio. Now, go back to Florida's report. Let's say one-half of Florida's population was working. Using the same ratio, we arrive at 2 million plus unemployed. That should be the minimum figure. It is probably way, way more. Florida is a service state with its jobs. It relies on tourism. Orlando is the tourist capitol. It has Disney, Universal and Sea World. They are all closed! The reason for the phony report of 416K is because no one can get through to the unemployment office to file a claim. The other side of the picture is the staff at Florida's office is understaffed. You get the same stories all across the nation and most notably, from Red States. The one report that the labor department had right concerned truckers. These over-the-road haulers move 70% of merchandise. The report says 88,300 truckers were laid off. People, it gets worse as the disease has already claimed the following firms. Going out of business signs are being posted on a daily occurrence. Keep in mind that every company employs thousands and yet, the stock market keeps climbing. They are wrong and coming, very soon will be a record down day in the market as they take their blinders off.
Bankruptcy Call (so far for 2020):
Diamond Offshore Drilling Eco-Stim Energy Solution
BlackRidge Technology International Whitney Petroleum
Real Good Solar Foresight Energy
Valeritas Holdings United Cannabis
J. Crew LSC Communication
Pier I Imports McClatchy
McDermott International Stealth Technologies
Globe Photos Pioneer Energy Services
Frontier Communications Omagine
Yuma Energy Generation Zone
Carbo Ceramics Broad Vision
Quorum Health Neiman Marcus
Helios and Matheson Analytics Souplantation
many, many more to come...
Litigation Nation
Ambulance chasers are out in full force. When the danger of the virus passes, the new danger of lawyers will be even more disastrous. There will be suits against hospitals, governors, the president, manufacturers and any business that remained open with sick people on site. The list and reasons will be as long as the number of cases which are well over a million. There are already cases where pastors versus their state. Nurses and retail workers for not providing a safe workplace. College students seeking reimbursement of tuition for cancelled classes. Insurance firms that sought ways out of paying claims. Airlines for not refunding ticket costs due to canceled flights. Sport vendors due to cancelled games. The CARES Act because it declares that their loans are forgivable and yet, banks seek payment. How about this one? Illegals are suing for stimulus checks for their children who were born in the US which makes them citizens. They want a check!
The stock market has yet to realize this aspect. Just like the government, they cannot see farther than their nose. The only good news that I have to offer is this: the night is followed by dawn...Peace.
Wednesday, May 6, 2020
OIL: Where is it going?
Long before the pandemic of the virus hit the world, it was drowning in a pool of excess oil. The oil index ($XOI) declined 500 points in 2018 from 1600 level to a low in December of that year. Then, it was range bound from the lows of 1100 to a high around 1300 until February of this year.
60% decline
Yes, in one month the index fell below 500 from the 1300 level. The flu arrived and it showed its effects. Since that dangerous level, it has staged a rally, if you want to call reaching the 800 point level a rally. It is like a baseball game (since this would be that season) where you are losing 12 to nothing. Then, your team scores six runs to make the final look competitive. It wasn't. It was a rout.
Asset value
At its present price, oil is trading below its asset worth. What does this mean, you ask? Could it go lower? These are good questions. It means that to find and produce a barrel of oil, a certain level of investment is required. Remember, we all need energy every day and oil with its by-products are in many, many consumer items. In a way, it is almost like water at least to our way of life. We have to have it. The present price of crude on Friday was $19.78 for US sweet and $26.44 for Brent sour. No oil firm can survive with those prices.
If you believe that market price tests its high as well as its lows, then we have tested the 1969 lows just prior to the first Arab Oil Embargo. You can do the math, but keep in mind the value of the dollar has declined due to inflationary forces and debt. Also, state and federal taxes have been increased. Charting is a necessary tool.
So, what price should it be?
Basically, oil has too much invested in it by too many influential firms, people and nations to disappear. It is the world's most important commodity for the present deviation to radically change its need and importance. When all is said and done, oil should trade from $42 to $64. However, many price changes will occur before that stability is reached. Then, one must consider the rise of electric cars into the equation. At the moment, every oil firm and producer is cutting back production to minimize the losses because oil is selling for less than it costs to produce.
In related industries, both the trucking and airlines lockdown has deepened the hurt for oil firms. The need for trucking has declined considerably. Flightrader 24 reports the number global flights for April was 33,500. The normal number is around 100,000 flights per month. Together, this lack of demand has added to the glut. This will take time to change, especially with public demand.
A closer look...
Exxon reported its first losing quarter since 1997. As a result they are cutting spending by 30%. They are not alone. The other American giant, Chevron also announced it is cutting spending. However, both firms declared that their dividend is safe. This will add some stability for its share price. The two big boys were joined by another conglomerate, Conoco-Phillips. Together, the three will trim production by 600K barrels a day this month. Exxon and Chevron will cut production another 800K barrels a day in June. This is a serious decline in energy. When you add the agreement between Russia and OPEC to cut production, the present oil glut will be razor cut, little-by-little. Global usage was about 100 million barrels a day before the virus. It dropped 30 million barrels in April.
These production cuts take time for their effect. If the world economy begins to racket up by December along with the US and Chinese economies, I foresee another oil spike come next early in 2021. Why? Because the demand will exceed the supply. You should know this from the recent financial crisis of 2008. The playbook of production cuts work, but it comes with a heavy price.
In the meantime, as stated, there will be many obstacles to climb Mt. Normalcy before stability returns. For instance, Royal Dutch Schell announced a dividend cut from 47 cents down to 16 cents. Sweden's giant, Equinor eliminated its first quarter dividend. Many, many other smaller firms have cut their dividend completely. This will continue to wreck oil share prices. Even with all producers seeking to trim production, Mt. Normalcy has other roadblocks like bankruptcies (WLL-Whiting), job cuts and possible consolidation. I think the last point is a positive. Acquisition is cheaper than exploration. Estimates of capital expenditures is around a whopping $100 billion for 2020.
World suppliers in seeking to cut production will find it harder than US firms. They have sharing agreements (UK and Sweden), government partners (socialist nations) and unions. Yes! At least they respect workers rights, especially skilled workers in this field. However, this respect has a costs.
Deep Water Rigs
Any driller of offshore wells faces a serious dilemma. By shutting down these wells, it means a total loss of investment. Even though the driller knows there is oil, the process needs to begin all over again to capture that oil.
The rigs on land do not have this problem. They are closer to a light switch. They can be shuttered and reopened with little investment costs. There are also many firms who hedged their production like my favorite, Encana now called Ovintiv (hate that name). They should survive. If you speculate, the big boys will have no trouble surviving this downturn and they come with a dividend. I would wait until a better perspective is known about the virus and its possible second wave. Don't let that stimulus check burn a hole in your pocket - save it or pay off personal debts. Peace.
60% decline
Yes, in one month the index fell below 500 from the 1300 level. The flu arrived and it showed its effects. Since that dangerous level, it has staged a rally, if you want to call reaching the 800 point level a rally. It is like a baseball game (since this would be that season) where you are losing 12 to nothing. Then, your team scores six runs to make the final look competitive. It wasn't. It was a rout.
Asset value
At its present price, oil is trading below its asset worth. What does this mean, you ask? Could it go lower? These are good questions. It means that to find and produce a barrel of oil, a certain level of investment is required. Remember, we all need energy every day and oil with its by-products are in many, many consumer items. In a way, it is almost like water at least to our way of life. We have to have it. The present price of crude on Friday was $19.78 for US sweet and $26.44 for Brent sour. No oil firm can survive with those prices.
If you believe that market price tests its high as well as its lows, then we have tested the 1969 lows just prior to the first Arab Oil Embargo. You can do the math, but keep in mind the value of the dollar has declined due to inflationary forces and debt. Also, state and federal taxes have been increased. Charting is a necessary tool.
So, what price should it be?
Basically, oil has too much invested in it by too many influential firms, people and nations to disappear. It is the world's most important commodity for the present deviation to radically change its need and importance. When all is said and done, oil should trade from $42 to $64. However, many price changes will occur before that stability is reached. Then, one must consider the rise of electric cars into the equation. At the moment, every oil firm and producer is cutting back production to minimize the losses because oil is selling for less than it costs to produce.
In related industries, both the trucking and airlines lockdown has deepened the hurt for oil firms. The need for trucking has declined considerably. Flightrader 24 reports the number global flights for April was 33,500. The normal number is around 100,000 flights per month. Together, this lack of demand has added to the glut. This will take time to change, especially with public demand.
A closer look...
Exxon reported its first losing quarter since 1997. As a result they are cutting spending by 30%. They are not alone. The other American giant, Chevron also announced it is cutting spending. However, both firms declared that their dividend is safe. This will add some stability for its share price. The two big boys were joined by another conglomerate, Conoco-Phillips. Together, the three will trim production by 600K barrels a day this month. Exxon and Chevron will cut production another 800K barrels a day in June. This is a serious decline in energy. When you add the agreement between Russia and OPEC to cut production, the present oil glut will be razor cut, little-by-little. Global usage was about 100 million barrels a day before the virus. It dropped 30 million barrels in April.
These production cuts take time for their effect. If the world economy begins to racket up by December along with the US and Chinese economies, I foresee another oil spike come next early in 2021. Why? Because the demand will exceed the supply. You should know this from the recent financial crisis of 2008. The playbook of production cuts work, but it comes with a heavy price.
In the meantime, as stated, there will be many obstacles to climb Mt. Normalcy before stability returns. For instance, Royal Dutch Schell announced a dividend cut from 47 cents down to 16 cents. Sweden's giant, Equinor eliminated its first quarter dividend. Many, many other smaller firms have cut their dividend completely. This will continue to wreck oil share prices. Even with all producers seeking to trim production, Mt. Normalcy has other roadblocks like bankruptcies (WLL-Whiting), job cuts and possible consolidation. I think the last point is a positive. Acquisition is cheaper than exploration. Estimates of capital expenditures is around a whopping $100 billion for 2020.
World suppliers in seeking to cut production will find it harder than US firms. They have sharing agreements (UK and Sweden), government partners (socialist nations) and unions. Yes! At least they respect workers rights, especially skilled workers in this field. However, this respect has a costs.
Deep Water Rigs
Any driller of offshore wells faces a serious dilemma. By shutting down these wells, it means a total loss of investment. Even though the driller knows there is oil, the process needs to begin all over again to capture that oil.
The rigs on land do not have this problem. They are closer to a light switch. They can be shuttered and reopened with little investment costs. There are also many firms who hedged their production like my favorite, Encana now called Ovintiv (hate that name). They should survive. If you speculate, the big boys will have no trouble surviving this downturn and they come with a dividend. I would wait until a better perspective is known about the virus and its possible second wave. Don't let that stimulus check burn a hole in your pocket - save it or pay off personal debts. Peace.
Wednesday, April 29, 2020
Odds and Ends: April 2020
"To error is human, to forgive, divine."
- Alexander Pope
As the warm weather approaches, fortunately for all of us, the flu season will pass. What will linger is the wrangling for power within the government, Monday Morning Quarterbacking. In hindsight, we all should win the Super Bowl, but our two political parties are capable of ruining a wet dream.
We will hear that President Trump waited too long to enact a policy of prevention. He will counter that China hid the damage of contagion. He will lash out at experts, pundits and Democrats like a real estate agent taking any and all listings. If he puts enough on the wall, one may sell. This is the presidents position. The Democrats will basically do the same process. The only difference will be the names. They will fault the president and the Republican senate. They will cry about the allocation of the stimulus. They will produce new "experts" who will suggest that the administration took the wrong approach. This is why our government sucks! No one seeks what is best for the nation. No one enacts like Profiles in Courage.
Dear Reader, there was no playbook for this situation. My earlier comments and feeling was that the government overreacted. Now, I'm thinking, "It is always better to be safe than sorry." Let us all thank God that the virus was not as bad as everyone feared. It is time to move on.
The problem is what remains of our economy and life situation. My position was and still is the same. We need to protect workers. Globalization is another word for taking from America and giving our wealth to the world. Well, world, we have nothing left to give. Did you not see the lines of our citizens at food banks? Our jobs only produce enough to last until the next paycheck. It is true that we live above our means, but these last two crisis's have opened our minds. We will cut video streaming. We will live a more simple life and we will put something away for a rainy day. With that said, we should also demand that things be produced once again in America. We have nothing! We produce nothing! The supply chains revealed this aspect. We need to be self-sustaining once again. We need to return to our manufacturing roots that provide a livable wage. This will stop the climb of poverty and homelessness along with the new fear of food insecurity.
Where we are now...
With that said, let us look at conditions as the S&P ratings service does. From their viewpoint we are in trouble. Sebastian reminds us that mortgage debt fueled the crisis of 2008. The S&P worries that corporate debt could fuel a new crisis. They say that corporations have been borrowing up at a 75% clip. US firms now owe a record $10 trillion. Their credit quality is at an all-time low. They have downgraded more companies in the first quarter than ever before. In the financial crisis of 2008 the S&P downgraded a total of 1500 companies. In the first three months of 2020, they have already downgraded 1270 firms.
This cannot all be laid at the foot of the virus. Last year and looking ahead into this year, S&P ratings predicted a higher level of defaults. It put the percentage at 3.3%. Now, it is revised up to 10%.
It gets worse...
By the end of this year, S&P sees the rate of defaults climbing over 13%. If this happens, defaults will break a 40-year record to the negative side. Not good.
Quick Oil Lesson
The contract to purchase oil did something no one would ever predict: it went negative in value.
How can this be, you ask? People, there are two contracts for oil. The US contract and the European contract. There is a big difference between them. When the American contract expires, the holder of the contract agrees to take possession of the quantity of oil. No one has the ability at this moment to store oil, especially with declining prices and outlook. This is why speculators were dumping contracts.
Think about this? If you had a storage facility, you could have taken possession of oil for free and received payment to do so. I think of these things, but I lack the money to enact the ideas.
The Brent oil contract is ended in a cash solution. The pluses and minuses are calculated. It is no different than buying and selling a stock, just much, mucho bigger numbers.
However, there are other problems with oil. The basics of supply and demand. The demand side is so bad that the most important commodity in the world is trading below its asset value. Could it go lower, you ask? Possibly, but in reality, too much money is invested into this sector for the deviation to radically change its importance and value. The first signs of a return to normalcy will have a huge request that will give oil a trading range until the global economy sets its footprint level.
Does 2% Interest You?
Switzerland, the one time home for gold and now, the land of negative interest rates, just tried an experiment. In an effort to retain its high income, "special" clients who were taking money out of the nation, the Swizz bank piloted a program that offered a 2% interest rate. Guess what? It got oversubscribed. This is the sorry state of the world for savers and one to which central banks machinations has put us.
Speaking of central banks or the devil, the IMF sees the worst world recession since the Great Depression. These are the same people who four months ago said global growth would be 3.3%. They are seeking aid from wealthy nations of $8 trillion to help poor countries in South America, Asia, Africa and the Middle East. Question? If they are a bank, how come they don't give their money to these needy nations? Better yet, ask China to cover the bill, after all, they made the most money from all of their manipulations. Let them show a nicer face to the world. Don't count on that...
SBA
The agency is providing loans to small businesses in America. How about the "poor" NBA? They have cancelled all their games due to the virus. So, they gave a loan of over $4 million to the LA Lakers. Another example how not in touch with reality our government leaders are.
Real Unemployment
The media was making noise about the huge record jump in unemployment numbers (26 million).
They should have looked deeper into the reports from state agencies to the Bureau of Labor Statistics. JFL enlightened us to the reality that states are doing a terrible job with unemployment claims. States have cut back on insurance for workers as well as the agencies that address the claims. It is almost impossible to file a claim on the internet and even worse by phone. Then, there are millions of migrants who were working full-time, but of course, they will not be able to file a claim. JFL figures that there are another13 plus million laid off workers to which makes the total unemployment figure rise to 40 million. Yowzah!
NFL Draft...
was a success before and after. When ABC offered advertising for the event, companies bid more than ABC had slots. They could have raised their fees. The actual event garnered the highest ratings ever for this type of broadcast. We love our football.
- Alexander Pope
As the warm weather approaches, fortunately for all of us, the flu season will pass. What will linger is the wrangling for power within the government, Monday Morning Quarterbacking. In hindsight, we all should win the Super Bowl, but our two political parties are capable of ruining a wet dream.
We will hear that President Trump waited too long to enact a policy of prevention. He will counter that China hid the damage of contagion. He will lash out at experts, pundits and Democrats like a real estate agent taking any and all listings. If he puts enough on the wall, one may sell. This is the presidents position. The Democrats will basically do the same process. The only difference will be the names. They will fault the president and the Republican senate. They will cry about the allocation of the stimulus. They will produce new "experts" who will suggest that the administration took the wrong approach. This is why our government sucks! No one seeks what is best for the nation. No one enacts like Profiles in Courage.
Dear Reader, there was no playbook for this situation. My earlier comments and feeling was that the government overreacted. Now, I'm thinking, "It is always better to be safe than sorry." Let us all thank God that the virus was not as bad as everyone feared. It is time to move on.
The problem is what remains of our economy and life situation. My position was and still is the same. We need to protect workers. Globalization is another word for taking from America and giving our wealth to the world. Well, world, we have nothing left to give. Did you not see the lines of our citizens at food banks? Our jobs only produce enough to last until the next paycheck. It is true that we live above our means, but these last two crisis's have opened our minds. We will cut video streaming. We will live a more simple life and we will put something away for a rainy day. With that said, we should also demand that things be produced once again in America. We have nothing! We produce nothing! The supply chains revealed this aspect. We need to be self-sustaining once again. We need to return to our manufacturing roots that provide a livable wage. This will stop the climb of poverty and homelessness along with the new fear of food insecurity.
Where we are now...
With that said, let us look at conditions as the S&P ratings service does. From their viewpoint we are in trouble. Sebastian reminds us that mortgage debt fueled the crisis of 2008. The S&P worries that corporate debt could fuel a new crisis. They say that corporations have been borrowing up at a 75% clip. US firms now owe a record $10 trillion. Their credit quality is at an all-time low. They have downgraded more companies in the first quarter than ever before. In the financial crisis of 2008 the S&P downgraded a total of 1500 companies. In the first three months of 2020, they have already downgraded 1270 firms.
This cannot all be laid at the foot of the virus. Last year and looking ahead into this year, S&P ratings predicted a higher level of defaults. It put the percentage at 3.3%. Now, it is revised up to 10%.
It gets worse...
By the end of this year, S&P sees the rate of defaults climbing over 13%. If this happens, defaults will break a 40-year record to the negative side. Not good.
Quick Oil Lesson
The contract to purchase oil did something no one would ever predict: it went negative in value.
How can this be, you ask? People, there are two contracts for oil. The US contract and the European contract. There is a big difference between them. When the American contract expires, the holder of the contract agrees to take possession of the quantity of oil. No one has the ability at this moment to store oil, especially with declining prices and outlook. This is why speculators were dumping contracts.
Think about this? If you had a storage facility, you could have taken possession of oil for free and received payment to do so. I think of these things, but I lack the money to enact the ideas.
The Brent oil contract is ended in a cash solution. The pluses and minuses are calculated. It is no different than buying and selling a stock, just much, mucho bigger numbers.
However, there are other problems with oil. The basics of supply and demand. The demand side is so bad that the most important commodity in the world is trading below its asset value. Could it go lower, you ask? Possibly, but in reality, too much money is invested into this sector for the deviation to radically change its importance and value. The first signs of a return to normalcy will have a huge request that will give oil a trading range until the global economy sets its footprint level.
Does 2% Interest You?
Switzerland, the one time home for gold and now, the land of negative interest rates, just tried an experiment. In an effort to retain its high income, "special" clients who were taking money out of the nation, the Swizz bank piloted a program that offered a 2% interest rate. Guess what? It got oversubscribed. This is the sorry state of the world for savers and one to which central banks machinations has put us.
Speaking of central banks or the devil, the IMF sees the worst world recession since the Great Depression. These are the same people who four months ago said global growth would be 3.3%. They are seeking aid from wealthy nations of $8 trillion to help poor countries in South America, Asia, Africa and the Middle East. Question? If they are a bank, how come they don't give their money to these needy nations? Better yet, ask China to cover the bill, after all, they made the most money from all of their manipulations. Let them show a nicer face to the world. Don't count on that...
SBA
The agency is providing loans to small businesses in America. How about the "poor" NBA? They have cancelled all their games due to the virus. So, they gave a loan of over $4 million to the LA Lakers. Another example how not in touch with reality our government leaders are.
Real Unemployment
The media was making noise about the huge record jump in unemployment numbers (26 million).
They should have looked deeper into the reports from state agencies to the Bureau of Labor Statistics. JFL enlightened us to the reality that states are doing a terrible job with unemployment claims. States have cut back on insurance for workers as well as the agencies that address the claims. It is almost impossible to file a claim on the internet and even worse by phone. Then, there are millions of migrants who were working full-time, but of course, they will not be able to file a claim. JFL figures that there are another13 plus million laid off workers to which makes the total unemployment figure rise to 40 million. Yowzah!
NFL Draft...
was a success before and after. When ABC offered advertising for the event, companies bid more than ABC had slots. They could have raised their fees. The actual event garnered the highest ratings ever for this type of broadcast. We love our football.
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