His phone is ringing off the hook for an appointment. No, this has nothing to do with Obamacare or the ACA. This doctor has his degree in housing, plumbing, electrical wiring and hundreds of other applications. He has been on vacation as demand had been lacking.
$COPPER
came alive around October 25th in 2016, maybe as an early Christmas present. It went from $2.10 a pound to $2.55. This is a huge, huge move. It has formed a classic pole/flag chart pattern. The good doctor filled in the flag section in a $2.45 to $2.65 consolidation range.
New Year
It rang in 2017 with a new pole/flag bullish continuation pattern. The doctor filled the flag from $2.61 to $2.70. Then, with last Friday's close, copper formed yet another continuation bullish pole/flag chart pattern. It sits at $2.77 a pound.
Copper is a global indicator that gets most of its momentum from China and India along with the expectation of Trump's infrastructure package. China is on holiday which should give all of us a chance to make an appointment as in an entry price.
Medicine
BHP Billiton's(BHP) flagship copper mine in Chile went on strike, so all the other players are benefiting. In addition, Freeport-McMoRan(FCX) is having trouble in its flagship copper mine in Indonesia. The government won't issue an export permit and this too, is medicine for Dr. Copper.
TGB
is a nice cheap, copper stock. Taseko Mines has followed the same pole/flag chart pattern. It could test $2.50 and if volume comes behind it, all the way to $3.50. Smart traders picked it up at .30cents. They have already received 5x their money. Good for them and maybe good for the rest of us. I am making an appointment at $1.23 which is the 200-day average for Taseko. If your cell can't reach him, try a landline. Later.
Wednesday, February 15, 2017
Tuesday, February 7, 2017
What's Happening With Oil?
Ever since the OPEC meeting and the tie-in to Russia on oil cuts, oil spiked from $47 to $57. The market paused at that price in December 2016 to see if the deal had conviction. At the moment, it looks like all the players are cooperating except there is a new swing producer in town - US. The market is aware and the oil price is testing a decline. Let's take a closer look.
Rig Count
has crossed the magic threshold for North America(US & Canada) of 1000 or more working wells. This means that US can produce up to 10 million barrels per day, especially if shale comes back to previous levels. Dear reader, unlike mines, well sites can resume production in as little as two weeks. A new well site can produce in six months. It can take ten years to get a mine into production. With that said, let us look at the recent past US production along with global figures.
US : reached a 25 year high in 2015. By the way, we led the world in production in 2015.
World: averaged 80 plus million bbl/day in 2015. This level is 40% higher than 2008 when oil hit its all-time high of $147 per barrel.
Today, world demand is 93mbbl/day. Supply exceeds demand by one-half million per day.
Pluses and Minuses
New world discoveries are a real problem with only 2.8b on the books while present demand is 29b.
US oil inventory is approaching 500m.This is up 5% year over year(YOY) and a record amount.
US gasoline is up 1% YOY.
US distillates is up 6.9% YOY.
US demand is down 2% YOY on oil.
US demand is down 5.7% YOY in gasoline.
US demand is up 5% YOY in distillates.
China's oil production is down and demand is up. It is now a big importer of oil.
India needs more oil than China.
The Baltic Shipping Index is down 50% since the Trump win. Even though this is dry goods, less boats, less need for oil.
US demand is down and now, is an exporter.
Iran is upping its production. It could reach 4 million bbl/day, however there is new tension with the US and Trump. Iran says it will answer Trump on the 10th of this month which is the anniversary of the Iran Revolution. It turned out to be a big nothing. No shake up of the market, for now. Could only be temporarily like the oil cut agreement.
Then, there is this future aspect...
Electric Cars.
Production of this cleaner burning fuel surged over 60% in 2014 after rising 44% in 2013. Bloomberg predicted that there will be over 200 million electric cars in the world by 2035. British Petroleum sees 100 million. So, let us average it to 150m. That is still a big number and it means less fossil fuel going forward.
All in all, I see oil testing the $47 level. Iran could put a $50 floor, but long term, I see oil back at $40 a barrel.
Rig Count
has crossed the magic threshold for North America(US & Canada) of 1000 or more working wells. This means that US can produce up to 10 million barrels per day, especially if shale comes back to previous levels. Dear reader, unlike mines, well sites can resume production in as little as two weeks. A new well site can produce in six months. It can take ten years to get a mine into production. With that said, let us look at the recent past US production along with global figures.
US : reached a 25 year high in 2015. By the way, we led the world in production in 2015.
World: averaged 80 plus million bbl/day in 2015. This level is 40% higher than 2008 when oil hit its all-time high of $147 per barrel.
Today, world demand is 93mbbl/day. Supply exceeds demand by one-half million per day.
Pluses and Minuses
New world discoveries are a real problem with only 2.8b on the books while present demand is 29b.
US oil inventory is approaching 500m.This is up 5% year over year(YOY) and a record amount.
US gasoline is up 1% YOY.
US distillates is up 6.9% YOY.
US demand is down 2% YOY on oil.
US demand is down 5.7% YOY in gasoline.
US demand is up 5% YOY in distillates.
China's oil production is down and demand is up. It is now a big importer of oil.
India needs more oil than China.
The Baltic Shipping Index is down 50% since the Trump win. Even though this is dry goods, less boats, less need for oil.
US demand is down and now, is an exporter.
Iran is upping its production. It could reach 4 million bbl/day, however there is new tension with the US and Trump. Iran says it will answer Trump on the 10th of this month which is the anniversary of the Iran Revolution. It turned out to be a big nothing. No shake up of the market, for now. Could only be temporarily like the oil cut agreement.
Then, there is this future aspect...
Electric Cars.
Production of this cleaner burning fuel surged over 60% in 2014 after rising 44% in 2013. Bloomberg predicted that there will be over 200 million electric cars in the world by 2035. British Petroleum sees 100 million. So, let us average it to 150m. That is still a big number and it means less fossil fuel going forward.
All in all, I see oil testing the $47 level. Iran could put a $50 floor, but long term, I see oil back at $40 a barrel.
Wednesday, February 1, 2017
Short Cup
No, the title is not a nickname to describe my girlfriend, but refers to my morning medicine, java, a cup of jo. I could care less in what size my elixir arrives at a local establishment as long as the mug is clean and they offer refills. I do like the aroma of vanilla and the taste of hazelnut, but a good smooth bean is all I really need. Since Starbucks made headlines on Friday, I decided to take a closer look at the coffee king. Under disclosure, I like Starbucks coffee, but their prices are high and no refills keeps me walking to a more price friendly venue.
BOGO = Buy One Get One Free
The chancellor of Germany, Angela Merkel blasted the coffee chain as a poster child for avoiding taxes and even questioned whether Starbucks pays any taxes to any country? She was attacking two political issues with one target.
First, she was changing the political atmosphere in Germany from refugees and offering a reason for Germany's recent recessionary situation. Starbucks hurts German coffee houses and pays no local taxes while local merchants still have this burden. This gives Starbucks an unfair advantage. The anti-American fast food theme always plays well in Europe. Secondly, she was sending a message to Trump concerning international trade. She is testing the waters for this issue in 2017. She is also seeking another term in office in this election year. She plans on hammering on this nail using Starbucks as the villain in her election campaign.
EU and Taxes
The EU is also after Starbucks. They say the company owes back taxes in Europe to the tune of $32 million. Starbucks is fighting the claim as it says, it has a deal with the Netherlands and Luxembourg.
In Hollywood, they say there is no such thing as bad publicity, but poor public press doesn't play well on Wall Street.
Charts, Gap and Refill
As I refill my cup from my GLW coffee pot(they make the best home perked coffee), I checked the charts on Friday's price action. SBUX gapped down by 4% on huge volume. This is never a good sign. I further checked back in time all the way back to 2009. Starbucks may not offer refills, but they filled the pockets of investors to the brim. The stock rose from $3.50 a share to over $64 in 2016 in a straight upward move. Sorry, I missed that.
Now, I see a different opportunity. As stated, the stock went straight up like a rocket ship, but as time passed, the volume of buyers is shrinking. This is also not a good sign. The market at present is very bullish, especially with the recent milestone of 20K. I think the gap gets filled, however it will only need one point to accomplish this window. With a PE/ratio only a fraction under 29(high), with more bad press in the works, problems with coffee beans in Brazil and international trade as a political issue in 2017, Starbucks could retrace back to $40 to which makes it a nice short as in short cup. The key will be the volume refilling the gap. If it stays light that will be a green light to short this cold cup of coffee.
BOGO = Buy One Get One Free
The chancellor of Germany, Angela Merkel blasted the coffee chain as a poster child for avoiding taxes and even questioned whether Starbucks pays any taxes to any country? She was attacking two political issues with one target.
First, she was changing the political atmosphere in Germany from refugees and offering a reason for Germany's recent recessionary situation. Starbucks hurts German coffee houses and pays no local taxes while local merchants still have this burden. This gives Starbucks an unfair advantage. The anti-American fast food theme always plays well in Europe. Secondly, she was sending a message to Trump concerning international trade. She is testing the waters for this issue in 2017. She is also seeking another term in office in this election year. She plans on hammering on this nail using Starbucks as the villain in her election campaign.
EU and Taxes
The EU is also after Starbucks. They say the company owes back taxes in Europe to the tune of $32 million. Starbucks is fighting the claim as it says, it has a deal with the Netherlands and Luxembourg.
In Hollywood, they say there is no such thing as bad publicity, but poor public press doesn't play well on Wall Street.
Charts, Gap and Refill
As I refill my cup from my GLW coffee pot(they make the best home perked coffee), I checked the charts on Friday's price action. SBUX gapped down by 4% on huge volume. This is never a good sign. I further checked back in time all the way back to 2009. Starbucks may not offer refills, but they filled the pockets of investors to the brim. The stock rose from $3.50 a share to over $64 in 2016 in a straight upward move. Sorry, I missed that.
Now, I see a different opportunity. As stated, the stock went straight up like a rocket ship, but as time passed, the volume of buyers is shrinking. This is also not a good sign. The market at present is very bullish, especially with the recent milestone of 20K. I think the gap gets filled, however it will only need one point to accomplish this window. With a PE/ratio only a fraction under 29(high), with more bad press in the works, problems with coffee beans in Brazil and international trade as a political issue in 2017, Starbucks could retrace back to $40 to which makes it a nice short as in short cup. The key will be the volume refilling the gap. If it stays light that will be a green light to short this cold cup of coffee.
Tuesday, January 24, 2017
In Defense of Protectionism
In our present environment the two most hated words is to be called, "a liberal." I'm not going to enter that fray here. However, I will say that my approach to my fellow man is open minded. The other word is to call for protectionism. It is a populist mantra, but condescended by the elite. They control the media and school system, and especially the military. Their shills spend half the budget on the military and decry the expense of social security which is the worker's money that already has been paid into the system. In addition, they pound out misinformation year-after-year in defense of free trade.
In theory
one cannot argue against free trade, but in reality, it is a fantasy. In my unpublished work, I have a meme that all things are connected. If I go off on a tangent, it is because there is a connection. However, space limits of a blog do limit in depth discussion.
The free trade idea is that the best product at the best price gives consumers the best choice without tariffs. It does sound like economic Darwinism, and to me, this is flawed because I BELIEVE. The flaw in this economic survival is the unseen hand of the state behind its national company versus the single entity corporation. The state uses tricks of the trade to help its domestic like passing regulations, currency manipulation, corporate espionage, stealing or violating patents and delaying licenses amongst others. If I was in charge, I would've put huge tariffs or even banned trade with countries with such violations. If we were strong right from the beginning, we wouldn't have these problems now.
Anyway, the root of free trade dates back to the English aristocracy who financed the push to industrialize Great Britain. In those days, they used the term, "Trade Society." In seeking to expand(self-interest) their market, they had to defeat the European guild system. At that time, due to limited growth, the system was stagnating. Its one big strength, the use of monopoly(protectionism) under the master concept, was put under attack by the English. A master could make a better product, but he couldn't compete with price and mass production. Although its time passed, the system forged the first economic freedoms for citizens and it is the root of the middle class.
As a result, industrialization wiped out the value of labor. The respect of labor would not return until the power of unions developed. This is the heart of the struggle. It is the value of labor to run the machines versus the value of money to build a plant with the machines. Look at it this way. Your state spends money to build a bridge and they put a toll on it to pay for it. How come when the tolls receive enough money to cover the cost of the bridge, the tolls not only don't come off, but go up in price? The owner of the plant not only becomes rich, he wants more. In seeking better returns, he betrays the labor who originally made him a success.
1st Protections
The English won, but the rest of Europe caught up with them. A new thinking emerged, "Social Democracy." It found a voice for the abuses of the industrial revolution. The thinking leaned heavily toward socialism. It took hold in Germany. Chancellor Bismarck introduced the first pension(social security) and concepts that we classify today as the welfare state. He spoke out against the idea of free trade which was the new name for a trade society because he said the idea was a mask to cover self-interest. He was right back then, and still, even today. He put tariffs to protect German industry and he utilized the assistance of government to develop large corporations. This is the root of Siemens and many other German international companies. Protectionism helped Germany become the top economy of Europe.
Globalism
In nation after nation, protectionism follows the same playbook as Germany. In Japan, the root falls under cronyism with the "Keiretsu bank." In South Korea, the root of government favoritism is the "Chaebols." In China, it is the Communist Party. This is why a Jeep cost over $100,000 in China(protectionism). They use the government to pass laws and you can't buy a Harley over there. In Tokyo, a pink US grapefruit cost $8.00 (protectionism) and on and on in every nation. Free trade is a lie! Every nation uses protectionism. It is also an unwritten law in many nations that if you buy American, you are buying luxury and possibly, putting your neighbor out of work. Proof in the pudding? How many Mustangs, quite possibly the greatest car ever made for price, style, durability and performance were purchased in foreign lands? There is no such thing as free trade! Even in the US, we have protectionism under a mask called agriculture subsidies and government contracts. We just don't have anyone with the guts to call a spade a spade. Trump does and so do I.
Fiat v. Private
No company can match the resources of a state backed corporation and the writing is on the subway walls just like the guild system. Capitalism has brought up our living standards and along with our freedoms developed our great nation. By betraying our labor, capitalism is destroying itself with outsourcing. They will lose to state sponsored entities. Our middle class has been gutted. Gresham's Law states that bad money will drive out good money. You cannot find a silver dime today. Heck, you can't even find a copper penny.
JFL's Law: fiat nations will drive out capitalist nations and labor will return to the abuses of earlier eons, if we don't protect. This is why I hope Trump can do it. If he fails, there will be nothing left to protect and nations like China could threaten us with all the value of the bonds that they hold. We will be economic indentured servants to agencies like the WTO and IMF and nations like China. Let's hope he can do it.
In theory
one cannot argue against free trade, but in reality, it is a fantasy. In my unpublished work, I have a meme that all things are connected. If I go off on a tangent, it is because there is a connection. However, space limits of a blog do limit in depth discussion.
The free trade idea is that the best product at the best price gives consumers the best choice without tariffs. It does sound like economic Darwinism, and to me, this is flawed because I BELIEVE. The flaw in this economic survival is the unseen hand of the state behind its national company versus the single entity corporation. The state uses tricks of the trade to help its domestic like passing regulations, currency manipulation, corporate espionage, stealing or violating patents and delaying licenses amongst others. If I was in charge, I would've put huge tariffs or even banned trade with countries with such violations. If we were strong right from the beginning, we wouldn't have these problems now.
Anyway, the root of free trade dates back to the English aristocracy who financed the push to industrialize Great Britain. In those days, they used the term, "Trade Society." In seeking to expand(self-interest) their market, they had to defeat the European guild system. At that time, due to limited growth, the system was stagnating. Its one big strength, the use of monopoly(protectionism) under the master concept, was put under attack by the English. A master could make a better product, but he couldn't compete with price and mass production. Although its time passed, the system forged the first economic freedoms for citizens and it is the root of the middle class.
As a result, industrialization wiped out the value of labor. The respect of labor would not return until the power of unions developed. This is the heart of the struggle. It is the value of labor to run the machines versus the value of money to build a plant with the machines. Look at it this way. Your state spends money to build a bridge and they put a toll on it to pay for it. How come when the tolls receive enough money to cover the cost of the bridge, the tolls not only don't come off, but go up in price? The owner of the plant not only becomes rich, he wants more. In seeking better returns, he betrays the labor who originally made him a success.
1st Protections
The English won, but the rest of Europe caught up with them. A new thinking emerged, "Social Democracy." It found a voice for the abuses of the industrial revolution. The thinking leaned heavily toward socialism. It took hold in Germany. Chancellor Bismarck introduced the first pension(social security) and concepts that we classify today as the welfare state. He spoke out against the idea of free trade which was the new name for a trade society because he said the idea was a mask to cover self-interest. He was right back then, and still, even today. He put tariffs to protect German industry and he utilized the assistance of government to develop large corporations. This is the root of Siemens and many other German international companies. Protectionism helped Germany become the top economy of Europe.
Globalism
In nation after nation, protectionism follows the same playbook as Germany. In Japan, the root falls under cronyism with the "Keiretsu bank." In South Korea, the root of government favoritism is the "Chaebols." In China, it is the Communist Party. This is why a Jeep cost over $100,000 in China(protectionism). They use the government to pass laws and you can't buy a Harley over there. In Tokyo, a pink US grapefruit cost $8.00 (protectionism) and on and on in every nation. Free trade is a lie! Every nation uses protectionism. It is also an unwritten law in many nations that if you buy American, you are buying luxury and possibly, putting your neighbor out of work. Proof in the pudding? How many Mustangs, quite possibly the greatest car ever made for price, style, durability and performance were purchased in foreign lands? There is no such thing as free trade! Even in the US, we have protectionism under a mask called agriculture subsidies and government contracts. We just don't have anyone with the guts to call a spade a spade. Trump does and so do I.
Fiat v. Private
No company can match the resources of a state backed corporation and the writing is on the subway walls just like the guild system. Capitalism has brought up our living standards and along with our freedoms developed our great nation. By betraying our labor, capitalism is destroying itself with outsourcing. They will lose to state sponsored entities. Our middle class has been gutted. Gresham's Law states that bad money will drive out good money. You cannot find a silver dime today. Heck, you can't even find a copper penny.
JFL's Law: fiat nations will drive out capitalist nations and labor will return to the abuses of earlier eons, if we don't protect. This is why I hope Trump can do it. If he fails, there will be nothing left to protect and nations like China could threaten us with all the value of the bonds that they hold. We will be economic indentured servants to agencies like the WTO and IMF and nations like China. Let's hope he can do it.
Wednesday, January 18, 2017
From La Dolce Vita to Brutto Vita
One of the global risks in 2017 will be the state of Italian banking. The IMF recently declared that Deutsche Bank of Germany as the riskiest in the world. Dear reader, Italian banks as a whole industry is in the worst shape compared to any other banking industry. As a group, they have the most non-performing loans than any other Western nation. Why are their loans in such a sad condition? I do not know, but I have my suspicions.
EU
As a member of the European Union, they are subject to price limits, quota exports and currency value. In addition, their yearly budget can only fall 3% below balance. This got me thinking that my fellow pisans are suffering from the same ills of globalization just like we do in America. We lost our electronic industry and most of our manufacturing too. I think the Italians lost their motion picture industry along with many other businesses. When I was young, the choices for a flick generally included foreign films. I was not a big fan of English movies, but the Swedes and Italians made some good genres. In my opinion, the best cowboy movie ever was, The Good, The Bad, and the Brutto. Today, we never see a flick from them or from anyone except the English and Chinese. The movie industry hires many types of people from costumes to carpentry and lighting to computers. Consider what would happen to Los Angeles if Hollywood dies? How many business loans and mortgages would crumble? I could see small Italian firms suffering from this loss of business. Here are a couple of their leading banks.
World's Oldest Bank
is the Italian institution, Monte dei Paschi di Siena. It just received a government bailout of 5 billion euros. Even with this cash flow, the bank is still stuck in the mud.
Another Italian behemoth is UniCredit. They are seeking to raise 13 billion euros with a rights-offer to which is exactly the current market value of the company. You buy this offering and the one sure outcome will be the value will decrease by 50%.
Both of these companies will approach the European Central Bank(ECB)with their plan to go forward. Germany doesn't want to throw good money after bad = big obstacle. What will happen? Only the Shadow knows, but the ECB will do the waiting game like with Greece. They hope with time that things will turn a corner. Nevertheless, this means more low or negative financing at a time when the US central bank is raising rates. This also implies a strong dollar compared to the Euro. A smart move by European citizens would be to buy gold to protect their own economic situation. Anyway, you throw the pound into the mix with Brexit and you have currency volatility. Not good. However, as in the US, the EU will find ways to tax which should bolster the euro and their banking system. This is why the sweet life in Italy has turned ugly.
Tax and spend across the pond? It will sound like the influence of the Democrats onto the socialist continent. Who would've thought ? In this year of the rooster we may not find Rocky Balboa chasing the bird, but governments looking for revenues.
EU
As a member of the European Union, they are subject to price limits, quota exports and currency value. In addition, their yearly budget can only fall 3% below balance. This got me thinking that my fellow pisans are suffering from the same ills of globalization just like we do in America. We lost our electronic industry and most of our manufacturing too. I think the Italians lost their motion picture industry along with many other businesses. When I was young, the choices for a flick generally included foreign films. I was not a big fan of English movies, but the Swedes and Italians made some good genres. In my opinion, the best cowboy movie ever was, The Good, The Bad, and the Brutto. Today, we never see a flick from them or from anyone except the English and Chinese. The movie industry hires many types of people from costumes to carpentry and lighting to computers. Consider what would happen to Los Angeles if Hollywood dies? How many business loans and mortgages would crumble? I could see small Italian firms suffering from this loss of business. Here are a couple of their leading banks.
World's Oldest Bank
is the Italian institution, Monte dei Paschi di Siena. It just received a government bailout of 5 billion euros. Even with this cash flow, the bank is still stuck in the mud.
Another Italian behemoth is UniCredit. They are seeking to raise 13 billion euros with a rights-offer to which is exactly the current market value of the company. You buy this offering and the one sure outcome will be the value will decrease by 50%.
Both of these companies will approach the European Central Bank(ECB)with their plan to go forward. Germany doesn't want to throw good money after bad = big obstacle. What will happen? Only the Shadow knows, but the ECB will do the waiting game like with Greece. They hope with time that things will turn a corner. Nevertheless, this means more low or negative financing at a time when the US central bank is raising rates. This also implies a strong dollar compared to the Euro. A smart move by European citizens would be to buy gold to protect their own economic situation. Anyway, you throw the pound into the mix with Brexit and you have currency volatility. Not good. However, as in the US, the EU will find ways to tax which should bolster the euro and their banking system. This is why the sweet life in Italy has turned ugly.
Tax and spend across the pond? It will sound like the influence of the Democrats onto the socialist continent. Who would've thought ? In this year of the rooster we may not find Rocky Balboa chasing the bird, but governments looking for revenues.
Wednesday, January 11, 2017
Please, Explain to Me
Why the hype is so far from reality in our economy? Be positive. Yes, I understand that, but a pink slip is being sent everywhere. Hope springs with a new administration. Hey, I'm all for giving anyone a chance, but I like to see action not words to form a foundation to my hope. Why so glum, pal? The Dow is almost at 20,000 and rising. Yes, that is the root for my question.
If the Dow hits 20K, if the rally keeps on keeping on, if all goes as in the belief of where it is to go in this hopeful plan, then explain to me this reality which exists:
* Theranos is laying off 41% of its workforce.
* Sears, the once king of retail, is on the brink of extinction.
* Macy's, who holds our attention every Thanksgiving with its parade, is closing over 100 stores and laying off 10,000 workers.
* Kohl's, is shedding 1,500 people and closing another 18 stores. This company is repeating the process that it began in 2014 = store closings and layoffs.
The last three are generally anchors to malls which then makes those malls appear as ghost retail outlets. This usually ends bad for the mall and all the other merchants. In addition, here is a litany of small businesses and small chains that are closing doors and laying off people and yet, we never see these results in the weekly unemployment claims? A small sampling includes:
* Best Buy
* Smoky Davis
* Miss Molly
* Kmart
* M and M Jewelers
* GameStop( this company started store closings in 2013, again in 2014 and again in 2015 with more in 2017.)
So, if Obama takes credit for a recovery from the crisis of 2008, then why all this grief? If the Trump surprise gave us this rally, why? Consider this, if we are a consumer economy and the above is where we do our consuming, why do these companies see no future and so little hope? E-commerce, especially Amazon.
Don't lay that crap on me because e-commerce is barely 20% of all transactions. People shop in person and the figure represents 80% of all sales. Retail may not be the best job, but employment is better than unemployment. So, Dow 20K, explain that?
If the Dow hits 20K, if the rally keeps on keeping on, if all goes as in the belief of where it is to go in this hopeful plan, then explain to me this reality which exists:
* Theranos is laying off 41% of its workforce.
* Sears, the once king of retail, is on the brink of extinction.
* Macy's, who holds our attention every Thanksgiving with its parade, is closing over 100 stores and laying off 10,000 workers.
* Kohl's, is shedding 1,500 people and closing another 18 stores. This company is repeating the process that it began in 2014 = store closings and layoffs.
The last three are generally anchors to malls which then makes those malls appear as ghost retail outlets. This usually ends bad for the mall and all the other merchants. In addition, here is a litany of small businesses and small chains that are closing doors and laying off people and yet, we never see these results in the weekly unemployment claims? A small sampling includes:
* Best Buy
* Smoky Davis
* Miss Molly
* Kmart
* M and M Jewelers
* GameStop( this company started store closings in 2013, again in 2014 and again in 2015 with more in 2017.)
So, if Obama takes credit for a recovery from the crisis of 2008, then why all this grief? If the Trump surprise gave us this rally, why? Consider this, if we are a consumer economy and the above is where we do our consuming, why do these companies see no future and so little hope? E-commerce, especially Amazon.
Don't lay that crap on me because e-commerce is barely 20% of all transactions. People shop in person and the figure represents 80% of all sales. Retail may not be the best job, but employment is better than unemployment. So, Dow 20K, explain that?
Wednesday, January 4, 2017
Forecast 2017
-"Today comes from yesterday, and together forms a path toward tomorrow."
- JFL
Before I make a fool of myself and digitalize my opinions, I always like to look back on my previous prognostications. In my Forecast 2016 I said that the Fed would only add a quarter-point rate hike and a whole lot of BS! Perfect. Do I have a crystal ball? No. Because I called for the dollar to be range bound from 93 to 100. Well, I was right for ten months. Close, but no cigar.
King dollar has hit 103 four times in the last two months, but it failed to hold price due to the lack of conviction as in volume. However, if the Fed comes true, the dollar will rise further, but that will be revealed in time or a later paragraph.
I was correct in saying that world currencies would continue to devalue to gain market share in exports. The last two reporting months had global imports giving (us) the US a record average of over $61 billion per month. Maybe I am a sage? Can anyone foresee the day when imports cause us $100 billion in deficits in one month? Sadly, this will happen if we stay on the path that we are traveling.
Smaller Points
I thought that the "hover-board" would become a fad. Not my fault that it contained a faulty design. I also said that Virtual Reality would grow and become big. I got that one!
I was wrong on precious metals as I said that they would consolidate their gains. They went up and now, they are in a downturn. They did turn a profit for 2016 and I could argue that the bear market in the metals is over. I will make my yearly call after the 1st of May. Read on!
I was correct in my market forecast in calling that the market would correct by 10% in the first quarter, but I was wrong in saying that a test of the August 2011 was on the way. I was also wrong in saying that S&P earnings would continue to decline into the fourth quarter. I was right for three quarters, but again, no cigar.
I was correct in my worry about mutual fund withdrawals along with pension underfunding becoming a problem. In addition, I was right in my call that health companies would drop out of the ACA.
No one in the media mentioned my call that the EU would continue into debt and the refugees would become a multi-nation problem for them. Go figure.
I was perfect in my South American views except the Brazilian exchange did become the best in the world. I didn't see that.
My call on the Middle East was easy as there is never a solution in that region since the Roman times.
Finally, I still stand behind my call that Denmark should be praised and copied with their approach to alternative energy. All in all, I think that I earned another B-plus grade. Why couldn't I receive those grades in high school?
D-Day Pushed Off
Before I rest on my laurels, my Forecast 2017 will not be in a typical format. Just as the Chinese calendar for the new year starts at the end of January and the Hebrews have a different calendar as well as India and elsewhere, it is getting impossible to use our Western date in this global environment in the 21th century as the starting point. My outlook will only hypostasize until the 1st of May. It will all depend on what happens on the 20th of January and the first 100 days of the new administration.
As we enter 2017, the market is adjusting to the over-bought condition in the belief in Trump. The smart money is taking profits off the table in a wait-and-see approach. I'm beginning to have my doubts too, but for different reasons. The only aspect that I can agree with is Trump's call to renegotiate or end trade deals. He has appointed a billionaire cabinet of Republicans who favor the same old same old approach. They favor less government and by that they mean a free pass to do whatever they want to increase profits. This is greed over responsibility. It is a sin of capitalism. For example, you have the relationship of coal and electricity. The utility needs to put scrubbers to clean out the poison of residue and the coal company needs to put safeguards for the miners. Greed says this is an obstacle to profits. The only way that scrubbers will be installed is if legislation forces them. The only precautions for miners comes from legislation. We have to protect ourselves from the sins of capitalism. However, we do not need agencies that create laws without Congress. I feel that Trump will allow the judgement of his appointed to make that call. I do not trust these people to do the right thing which is make companies take safeguards, to spend money on responsibility to our eco-systems and workers.
Barons of yore...
We already turned that corner in the 1880s and it took fifty years to stop the exploitation of the land and labor. The fight goes on. We need to repeal the Taft-Hartley Act of 1947, but I never hear anyone calling for this crusade. Bottom line: I don't like Republicans and I don't trust Democrats. Libertarians are naïve. Socialists have more bad points than good. We need a new party for the people and nation.
Boiling Pot
To make any calls prior to Trump's actions would be premature. At this time you hear from pundits the same calls either pro or con on the economy. It is rare for anyone to hit it on the head. There is a boiling pot out there which contains the terrible condition of banks in Italy and Germany along with elections in Europe and refugees. There is the oil agreement to which I say won't last. There is the continuing defaults on bonds by Chinese companies. There is the dangerous debt to GDP in Japan. ISIS, terrorism and the Middle East is never far from headlines. There is the reality that a black swan will appear and I feel that derivatives will be it. Whatever happens, it won't happen until Trump has his honeymoon period. This is the reason why I cannot make any valid calls at this time. In addition, I do see the Fed making a rate hike early in the year and one more at the end of the year. I hope the military cannot talk Trump into an aggressive policy with China, especially in the South Seas. China is slow to act, but once they do, it will be hard to change. We do not need the Chinese to view Trump's policy as aggressive because they may meet aggression with aggression. Keep in mind that it is you and I that make America strong not the military complex. It is not a new bomber, but us. We are the ones who will be doing the doing and dying if the military screws up. It is like the Fed has the backs of the banking industry, we are the reluctant insurance policy for the "deep state."
The strong dollar will be good for US consumers, but it will mask inflation. If Donald follows Clinton's thinking and he forces a lower dollar, we will have dangerous inflation. If king dollar continues to rise, it could go to 113. At that point even a corporate tax cut won't help earnings. This will also effect world currencies and volatility in money is never good.
The boiling pot has spices like the business cycle, the migration cycle and sadly, even a war cycle. I do not like the foundation of the world at this moment. The cornerstone will rest on Trump's inaugural address. If he follows JFK, things will be fine. If he follows Reagan, our nation will be bankrupt by the end of his administration. I could go on-and-on, but why? We all need to give Donald a chance. His actions will speak louder than his words and after the first 100 days, then we will know where our destiny will lead.
- JFL
Before I make a fool of myself and digitalize my opinions, I always like to look back on my previous prognostications. In my Forecast 2016 I said that the Fed would only add a quarter-point rate hike and a whole lot of BS! Perfect. Do I have a crystal ball? No. Because I called for the dollar to be range bound from 93 to 100. Well, I was right for ten months. Close, but no cigar.
King dollar has hit 103 four times in the last two months, but it failed to hold price due to the lack of conviction as in volume. However, if the Fed comes true, the dollar will rise further, but that will be revealed in time or a later paragraph.
I was correct in saying that world currencies would continue to devalue to gain market share in exports. The last two reporting months had global imports giving (us) the US a record average of over $61 billion per month. Maybe I am a sage? Can anyone foresee the day when imports cause us $100 billion in deficits in one month? Sadly, this will happen if we stay on the path that we are traveling.
Smaller Points
I thought that the "hover-board" would become a fad. Not my fault that it contained a faulty design. I also said that Virtual Reality would grow and become big. I got that one!
I was wrong on precious metals as I said that they would consolidate their gains. They went up and now, they are in a downturn. They did turn a profit for 2016 and I could argue that the bear market in the metals is over. I will make my yearly call after the 1st of May. Read on!
I was correct in my market forecast in calling that the market would correct by 10% in the first quarter, but I was wrong in saying that a test of the August 2011 was on the way. I was also wrong in saying that S&P earnings would continue to decline into the fourth quarter. I was right for three quarters, but again, no cigar.
I was correct in my worry about mutual fund withdrawals along with pension underfunding becoming a problem. In addition, I was right in my call that health companies would drop out of the ACA.
No one in the media mentioned my call that the EU would continue into debt and the refugees would become a multi-nation problem for them. Go figure.
I was perfect in my South American views except the Brazilian exchange did become the best in the world. I didn't see that.
My call on the Middle East was easy as there is never a solution in that region since the Roman times.
Finally, I still stand behind my call that Denmark should be praised and copied with their approach to alternative energy. All in all, I think that I earned another B-plus grade. Why couldn't I receive those grades in high school?
D-Day Pushed Off
Before I rest on my laurels, my Forecast 2017 will not be in a typical format. Just as the Chinese calendar for the new year starts at the end of January and the Hebrews have a different calendar as well as India and elsewhere, it is getting impossible to use our Western date in this global environment in the 21th century as the starting point. My outlook will only hypostasize until the 1st of May. It will all depend on what happens on the 20th of January and the first 100 days of the new administration.
As we enter 2017, the market is adjusting to the over-bought condition in the belief in Trump. The smart money is taking profits off the table in a wait-and-see approach. I'm beginning to have my doubts too, but for different reasons. The only aspect that I can agree with is Trump's call to renegotiate or end trade deals. He has appointed a billionaire cabinet of Republicans who favor the same old same old approach. They favor less government and by that they mean a free pass to do whatever they want to increase profits. This is greed over responsibility. It is a sin of capitalism. For example, you have the relationship of coal and electricity. The utility needs to put scrubbers to clean out the poison of residue and the coal company needs to put safeguards for the miners. Greed says this is an obstacle to profits. The only way that scrubbers will be installed is if legislation forces them. The only precautions for miners comes from legislation. We have to protect ourselves from the sins of capitalism. However, we do not need agencies that create laws without Congress. I feel that Trump will allow the judgement of his appointed to make that call. I do not trust these people to do the right thing which is make companies take safeguards, to spend money on responsibility to our eco-systems and workers.
Barons of yore...
We already turned that corner in the 1880s and it took fifty years to stop the exploitation of the land and labor. The fight goes on. We need to repeal the Taft-Hartley Act of 1947, but I never hear anyone calling for this crusade. Bottom line: I don't like Republicans and I don't trust Democrats. Libertarians are naïve. Socialists have more bad points than good. We need a new party for the people and nation.
Boiling Pot
To make any calls prior to Trump's actions would be premature. At this time you hear from pundits the same calls either pro or con on the economy. It is rare for anyone to hit it on the head. There is a boiling pot out there which contains the terrible condition of banks in Italy and Germany along with elections in Europe and refugees. There is the oil agreement to which I say won't last. There is the continuing defaults on bonds by Chinese companies. There is the dangerous debt to GDP in Japan. ISIS, terrorism and the Middle East is never far from headlines. There is the reality that a black swan will appear and I feel that derivatives will be it. Whatever happens, it won't happen until Trump has his honeymoon period. This is the reason why I cannot make any valid calls at this time. In addition, I do see the Fed making a rate hike early in the year and one more at the end of the year. I hope the military cannot talk Trump into an aggressive policy with China, especially in the South Seas. China is slow to act, but once they do, it will be hard to change. We do not need the Chinese to view Trump's policy as aggressive because they may meet aggression with aggression. Keep in mind that it is you and I that make America strong not the military complex. It is not a new bomber, but us. We are the ones who will be doing the doing and dying if the military screws up. It is like the Fed has the backs of the banking industry, we are the reluctant insurance policy for the "deep state."
The strong dollar will be good for US consumers, but it will mask inflation. If Donald follows Clinton's thinking and he forces a lower dollar, we will have dangerous inflation. If king dollar continues to rise, it could go to 113. At that point even a corporate tax cut won't help earnings. This will also effect world currencies and volatility in money is never good.
The boiling pot has spices like the business cycle, the migration cycle and sadly, even a war cycle. I do not like the foundation of the world at this moment. The cornerstone will rest on Trump's inaugural address. If he follows JFK, things will be fine. If he follows Reagan, our nation will be bankrupt by the end of his administration. I could go on-and-on, but why? We all need to give Donald a chance. His actions will speak louder than his words and after the first 100 days, then we will know where our destiny will lead.
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