You may recall that in January the holiday retail season had a confusing stat. The last government report by the Commerce Department stated that retail sales fell in December. The market felt that this report would be revised to a positive. They were wrong. In fact, it was revised even lower.
Before this news market belief is one factor in the rise in the market since the Christmas Eve low. The market received more conviction of its thinking when Redbook reported surging retail sales. The market got a second when Master Card also saw rising sales. Now, the market is getting some doubt. Not here! We offer this:
More Info
Walmart had a strong quarter. The bulls used the earnings report to push this market back to resistance level. At this point the market could test its old highs, consolidate or take the elevator down.
Other Factors
It is no new news that the Federal Reserve has decided to pause their attempt to return interest rates to normal levels. We, at the Evolution of Democracy all agree in one point. The Fed cannot go up past 3.75%. The debt service to our government, our corporations and citizens would approach unrepayable. No one will admit it, but fiat money always fails and our nation is reaching that inflection point with fiat debt.
Bottom line: The Fed has failed. It is on pause to hike and, or possible cut. Now, consider this: could all those positive earnings reports suddenly, go on pause?
Indicators
The first crack was reported by Apple. It not only missed on revenues, but this happened during its best selling period.
All those return items from the Christmas season has effected the earnings of retail. The nail in the coffin came from a government report. They are back to work. It verified the Commerce report. Sales declined in December. Macy's, and a host of other large retailers had a poor Christmas.
In a related aspect Bank Rate reported that 7 million car loans are past 90 days. Let me repeat that, seven million consumers are behind and delinquent in their auto loan. This is going to slow the economy even further. In addition, consumer debt is at an all-time high at $4 trillion. That scary number does not include mortgage debt. Also, credit cards in circulation has risen by 13% to 430 million since 2015. This figure is also an all-time high. The average card borrower has $5,736. in debt which is up 7.5% since 2015 according to Trans Union. In a sad survey, 40 million Americans already believe that they will miss at least one credit card payment. This means people are only making the minimum payment. It also turns $5 grand into $6,372. with interest. Not good.
As JFL stated, the consumer is no longer consuming. By becoming aware of the 800,000 furloughed government employees who generally had a better paying job than most folks, and who could not make ends meet with missing one paycheck, has opened the consumers eyes to recall the financial crisis of 2008. The consumer is turning into a saver. A new report shows that savings in America rose 7.6% from December. Could this momentum end the disposable society? I can only hope so. Peace.
Wednesday, March 13, 2019
Wednesday, March 6, 2019
Oil + Tariffs= "R" Word?
Dear Reader, every once in a while, you come across from the media or internet some talking head who claims the one sure sign of a pending recession. Yes, there is one and it is this: demographics and innovation.
If you have a declining and aging population, say like Japan, no force can propel the economy forward.
Secondly, if the time period that you live does not produce new innovation, no force can propel the economy forward.
In the example above using Japan, their economy has been in a slow downturn since 1989. The reason that it did not collapse is because the period contained many new innovative techniques and technology which has acted as a buffer to the decline.
With that said the ingenuity of man to cause problems is endless. Two of the chief reasons that will put in motion the chain reaction to cause a recession to an economy is the price of oil and interest rates.
OIL
It is the most important commodity in the world. Everyone needs some form of energy. It is central to transportation. It is the life blood in manufacturing. It is used to make products, help us cook and warm our homes. The last point is readily understood by the US population with our severe winter. Let me clarify that last statement. Everyone except the Federal Reserve. They don't include the price of oil in their inflation matrix. CROOKS! LIARS! THIEVES!
At the moment, oil production is being kept off the market to increase the price. This is basic supply and demand. Teddy Roosevelt isn't around to Trust Bust OPEC and their best buddy, Russia. No one needs to yell and scream at them because it is their right to do what is best for them. Our government could have responded to this as far back as Tricky Dicky with alternative forms of energy. It is nice to see that slowly but surely, we are getting off our addiction to gasoline with electric vehicles. However, we are still a long way into that transition point. If you have not noticed, the price of oil is slowly rising. As of last Friday, it was $57.26 for our light crude. The European price for Brent is higher at $67.12. Funny, how the market prices things? Light oil is better and yet, it is cheaper than the heavier grade. Anyway, the supply cut is slowly working and soon the transition from winter gasoline to summer blend will effect pricing even further. The trend is up. Sebastian told you months ago to find and track a cheap oil stock to at least benefit from the action of with-holding oil from the market.
Looking at the chart action in oil reveals a few price signs that you should look for and become aware off. My chart will show support levels. If those price resistance points are breached, both light sweet and heavy crude will explode to the $100 level. If oil reaches that point, it will begin a chain reaction that will send the economy into a recession.
*$BRENT: $72 = $80 = $85 = $100 plus
*$WTIC : $60 = $65 = $75 = $100 plus
The other artificial problem is the Federal Reserve. They can cause a recession by raising interest rates beyond what consumers and industry can support. At the moment, President Trump has put pressure on the Fed. The chairman, Powell's ego got the message. Not only is the Fed not going to raise interest rates, but a cut is a possibility. In any event the Fed is ready to allow inflation to surpass their 2% target. They say that they will monitor the inflationary aspects to the economy, but they have the tools to reign in any unwanted effects. So much, BS!
Tariffs
The tax on a product is as old as man. During the present bull cycle, China already had in place tariffs on many US products and even ban entry to others. In fact, every nation has protective tariffs, quotas, and regulations designed to help their nation. A Ford Fiesta is close to $40 grand in South Korea. A Florida pink grapefruit is $7 bucks a piece in Japan. Tariffs protect home industry to which helps workers and that raises the standard of living. On the negative side, tariffs cause inflation. Inflation is always dangerous, but by itself, is not the worse economic sin. Our standard of living began declining when we began the cycle to import rather than self provide. We should place heavy tariffs on all imports and a small tariff to American companies that outsourced labor that makes the product on foreign soil. Tariffs do not cause recessions. Idiots and greed are the roots to the "R" word.
Now, there will always be folks out there who will object to my viewpoint. I hope that they use the recent Dallas True Value home show as an example. There were 400 vendors who cried about price increases due to the tariffs tensions between the US and China. This is what I see. There are 400 areas that we can create jobs and never have to worry about imports in the future. Comprende?!
If you have a declining and aging population, say like Japan, no force can propel the economy forward.
Secondly, if the time period that you live does not produce new innovation, no force can propel the economy forward.
In the example above using Japan, their economy has been in a slow downturn since 1989. The reason that it did not collapse is because the period contained many new innovative techniques and technology which has acted as a buffer to the decline.
With that said the ingenuity of man to cause problems is endless. Two of the chief reasons that will put in motion the chain reaction to cause a recession to an economy is the price of oil and interest rates.
OIL
It is the most important commodity in the world. Everyone needs some form of energy. It is central to transportation. It is the life blood in manufacturing. It is used to make products, help us cook and warm our homes. The last point is readily understood by the US population with our severe winter. Let me clarify that last statement. Everyone except the Federal Reserve. They don't include the price of oil in their inflation matrix. CROOKS! LIARS! THIEVES!
At the moment, oil production is being kept off the market to increase the price. This is basic supply and demand. Teddy Roosevelt isn't around to Trust Bust OPEC and their best buddy, Russia. No one needs to yell and scream at them because it is their right to do what is best for them. Our government could have responded to this as far back as Tricky Dicky with alternative forms of energy. It is nice to see that slowly but surely, we are getting off our addiction to gasoline with electric vehicles. However, we are still a long way into that transition point. If you have not noticed, the price of oil is slowly rising. As of last Friday, it was $57.26 for our light crude. The European price for Brent is higher at $67.12. Funny, how the market prices things? Light oil is better and yet, it is cheaper than the heavier grade. Anyway, the supply cut is slowly working and soon the transition from winter gasoline to summer blend will effect pricing even further. The trend is up. Sebastian told you months ago to find and track a cheap oil stock to at least benefit from the action of with-holding oil from the market.
Looking at the chart action in oil reveals a few price signs that you should look for and become aware off. My chart will show support levels. If those price resistance points are breached, both light sweet and heavy crude will explode to the $100 level. If oil reaches that point, it will begin a chain reaction that will send the economy into a recession.
*$BRENT: $72 = $80 = $85 = $100 plus
*$WTIC : $60 = $65 = $75 = $100 plus
The other artificial problem is the Federal Reserve. They can cause a recession by raising interest rates beyond what consumers and industry can support. At the moment, President Trump has put pressure on the Fed. The chairman, Powell's ego got the message. Not only is the Fed not going to raise interest rates, but a cut is a possibility. In any event the Fed is ready to allow inflation to surpass their 2% target. They say that they will monitor the inflationary aspects to the economy, but they have the tools to reign in any unwanted effects. So much, BS!
Tariffs
The tax on a product is as old as man. During the present bull cycle, China already had in place tariffs on many US products and even ban entry to others. In fact, every nation has protective tariffs, quotas, and regulations designed to help their nation. A Ford Fiesta is close to $40 grand in South Korea. A Florida pink grapefruit is $7 bucks a piece in Japan. Tariffs protect home industry to which helps workers and that raises the standard of living. On the negative side, tariffs cause inflation. Inflation is always dangerous, but by itself, is not the worse economic sin. Our standard of living began declining when we began the cycle to import rather than self provide. We should place heavy tariffs on all imports and a small tariff to American companies that outsourced labor that makes the product on foreign soil. Tariffs do not cause recessions. Idiots and greed are the roots to the "R" word.
Now, there will always be folks out there who will object to my viewpoint. I hope that they use the recent Dallas True Value home show as an example. There were 400 vendors who cried about price increases due to the tariffs tensions between the US and China. This is what I see. There are 400 areas that we can create jobs and never have to worry about imports in the future. Comprende?!
Wednesday, February 27, 2019
Odds and Ends: February 2019
The market is still being swayed by news except now, the news is bordering on truth or fiction. A report by the Commerce Dept. stated that retail sales had its worst December since 2009. Immediately, two positive reports stated that sales rose. Master Card claimed sales were up by 6.2% for December. Redbook reported surging sales across the board. Who is right? Which is fiction?
Sebastian is sticking by his call for a market downturn by mid-March. He adds these tidbits to his call.
*Sysco just announced layoffs
*Payless is no more
*Home sales plunged 9.8% YOY.
*National disasters in the US cost $91 billion in 2018. Means higher insurance prices are coming.
*Italy fell back into recession. Germany disappointed. Brexit turmoil.
*Trade tensions between US and China continue with tariffs looming.
*Activision announced job cuts and the whole gaming industry is under pressure.
*IMF reported a global slowing.
*Saudi Arabia announced more oil cuts for March. This means higher prices for US and EM. Those two areas are under consumer duress and this adds to the equation.
*The Brexit problem has caused Honda and Ford to close all their UK auto plants.
Car Wreck?
The following report is scary on many levels. When reading, keep in mind the recent 800,000 furloughed federal employees. These are well paying jobs and those workers could not make do with missing a paycheck. This reveals a terrible danger that US citizens cannot manage money. In addition, the value of our money keeps declining which has even more dangerous repercussions.
According to a report by Bank Rate.com there are 7 million car loans that are 90 days behind. Delinquent! In a related report it was revealed that one-third(33%)of Americans have ZERO SAVINGS! And, yes, there is an AND, Americans have more credit card debt than savings.
Now, those 7M car loans will add hefty late fees. Dear Reader, if those people could not make their payment with low rate financing, how are they going to meet the higher bill which will include late fees?
Bottom line: lending institutions will begin reporting lower guidance and the derivatives out there will hop like Mexican jumping beans.
Gov't fees
You now need a license to fly a drone along with a test which also means another fee. JFL called this one over a year ago.
A change in the tax code now requires companies to include all lease agreements to their bottom line.
The tax code has also revealed that many Americans will get a lower refund this year or worse. They will owe money to the government.
Gallium Nitride
Will be big in the future in electronics. GaN can withstand power surges and it has a wider band. This will be in chips and other applications.
Traffic Congestion
Inrix sturdy shows the US economy lost $87b sitting in traffic. This is a waste of time and energy. Congress should take note and do something good for the nation. Trump's idea for an infrastructure bill is needed before more deaths take its toll on our highways and bridges. I fear self-interest and ego's will kill another good suggestion.
Of course the federal government and the California government will no longer make a super train between LA and San Fran to which will make future congestion even worse in our most populated state.
On the plus side, Harley-Davidson will introduce an electric bike this August. At least the stop-and-go on the commute will be a little quieter.
Pork chops, anyone?
Tyson foods should benefit in the Year of the Pig. China is suffering with Asian Swine Flu. They will have to increase pork imports as pork is the meat of choice in Asia. I can see it now in the discussions over the trade tensions. A Chinese minister will rise and say, "To show our good faith, China will increase US exports of pork." He will sit and smile for the camera.
Box Office
Movie receipts are down 25% this year and that is after last years disaster of the Oscar telecast on TV. It was the lowest rating ever!
Equality and Fair Share
Amazon made $11 billion in profits in 2018 and the company will pay ZERO in taxes. New York was right. They would have received $3 billion in incentives, but the negative impact to the local infrastructure is off the charts. If Amazon truly wanted to be in New York - come, but no incentives other than being in the best city in the world. It is about time that Congress tax internet sales and give brick and mortar locations a fighting chance to survive.
Watch Brexit! It is like what Mark Twain said, "If voting meant anything, they wouldn't allow you to vote." They will continue to put off what the people wanted, but government doesn't.
Hey, Buddy, could you spare $2Gs for a phone call? Yes. You read that right. Remember the good old days when with a phone booth, all you needed was a .25cents to make a call? Well, Samsung is still "playing" consumers. The music went from a new phone to a better number 2, then, #3 and so forth. Along with the new models came pricing. Now, you need $2,000 for the latest model. What was it that PT Barnum use to say? Oh, yeah, "A sucker is born every minute."
This could be the last post as Google has reneged on its pledge to offer a blog for the public. I feel that they do not relish views that they oppose. They announced that the following on blogs is too small to continue. Isn't it ironic that workers rights through unions was once too small a public view? How about the Magna Carta? Ideas are central to change. To eliminate opposition is to silence ideas and only express one view. Isn't that the creed of the Communist Party?
Bye. Hopefully, some day the Evolution of Democracy will be published. Look for it!
Sebastian is sticking by his call for a market downturn by mid-March. He adds these tidbits to his call.
*Sysco just announced layoffs
*Payless is no more
*Home sales plunged 9.8% YOY.
*National disasters in the US cost $91 billion in 2018. Means higher insurance prices are coming.
*Italy fell back into recession. Germany disappointed. Brexit turmoil.
*Trade tensions between US and China continue with tariffs looming.
*Activision announced job cuts and the whole gaming industry is under pressure.
*IMF reported a global slowing.
*Saudi Arabia announced more oil cuts for March. This means higher prices for US and EM. Those two areas are under consumer duress and this adds to the equation.
*The Brexit problem has caused Honda and Ford to close all their UK auto plants.
Car Wreck?
The following report is scary on many levels. When reading, keep in mind the recent 800,000 furloughed federal employees. These are well paying jobs and those workers could not make do with missing a paycheck. This reveals a terrible danger that US citizens cannot manage money. In addition, the value of our money keeps declining which has even more dangerous repercussions.
According to a report by Bank Rate.com there are 7 million car loans that are 90 days behind. Delinquent! In a related report it was revealed that one-third(33%)of Americans have ZERO SAVINGS! And, yes, there is an AND, Americans have more credit card debt than savings.
Now, those 7M car loans will add hefty late fees. Dear Reader, if those people could not make their payment with low rate financing, how are they going to meet the higher bill which will include late fees?
Bottom line: lending institutions will begin reporting lower guidance and the derivatives out there will hop like Mexican jumping beans.
Gov't fees
You now need a license to fly a drone along with a test which also means another fee. JFL called this one over a year ago.
A change in the tax code now requires companies to include all lease agreements to their bottom line.
The tax code has also revealed that many Americans will get a lower refund this year or worse. They will owe money to the government.
Gallium Nitride
Will be big in the future in electronics. GaN can withstand power surges and it has a wider band. This will be in chips and other applications.
Traffic Congestion
Inrix sturdy shows the US economy lost $87b sitting in traffic. This is a waste of time and energy. Congress should take note and do something good for the nation. Trump's idea for an infrastructure bill is needed before more deaths take its toll on our highways and bridges. I fear self-interest and ego's will kill another good suggestion.
Of course the federal government and the California government will no longer make a super train between LA and San Fran to which will make future congestion even worse in our most populated state.
On the plus side, Harley-Davidson will introduce an electric bike this August. At least the stop-and-go on the commute will be a little quieter.
Pork chops, anyone?
Tyson foods should benefit in the Year of the Pig. China is suffering with Asian Swine Flu. They will have to increase pork imports as pork is the meat of choice in Asia. I can see it now in the discussions over the trade tensions. A Chinese minister will rise and say, "To show our good faith, China will increase US exports of pork." He will sit and smile for the camera.
Box Office
Movie receipts are down 25% this year and that is after last years disaster of the Oscar telecast on TV. It was the lowest rating ever!
Equality and Fair Share
Amazon made $11 billion in profits in 2018 and the company will pay ZERO in taxes. New York was right. They would have received $3 billion in incentives, but the negative impact to the local infrastructure is off the charts. If Amazon truly wanted to be in New York - come, but no incentives other than being in the best city in the world. It is about time that Congress tax internet sales and give brick and mortar locations a fighting chance to survive.
Watch Brexit! It is like what Mark Twain said, "If voting meant anything, they wouldn't allow you to vote." They will continue to put off what the people wanted, but government doesn't.
Hey, Buddy, could you spare $2Gs for a phone call? Yes. You read that right. Remember the good old days when with a phone booth, all you needed was a .25cents to make a call? Well, Samsung is still "playing" consumers. The music went from a new phone to a better number 2, then, #3 and so forth. Along with the new models came pricing. Now, you need $2,000 for the latest model. What was it that PT Barnum use to say? Oh, yeah, "A sucker is born every minute."
This could be the last post as Google has reneged on its pledge to offer a blog for the public. I feel that they do not relish views that they oppose. They announced that the following on blogs is too small to continue. Isn't it ironic that workers rights through unions was once too small a public view? How about the Magna Carta? Ideas are central to change. To eliminate opposition is to silence ideas and only express one view. Isn't that the creed of the Communist Party?
Bye. Hopefully, some day the Evolution of Democracy will be published. Look for it!
Wednesday, February 20, 2019
Banks and Outlook
The banking industry reported strong quarterly results. The few missteps were Citi Group with their guidance and Germany's largest bank, Deutsche Bank.
On the positive side American Express had a record quarter. Bank of America was very profitable. It had an exceptionally strong report. Recently, two large regional banks joined forces to create the 6th largest banking concern in the US. BB&T allied with Sun Trust as a merger of equals. Even in this low interest rate environment US banks have found a model that works for them. The future, however poses new obstacles and challenges.
Internet
The corner bank and its branch network in shopping centers throughout the nation face a challenge with internet banks. Due to low overhead these digital tellers can offer a higher interest return to depositors. I don't see this as a big problem because people get an internal relief that drowns the fears around the stability of a lending institution by seeing an actual business. With all the dangers of hacking, a friendly teller trumps a half-of-a-percent interest. In addition, your corner bank does offer internet banking.
With that said, there are other and more dangerous problems looming on the horizon.
Consumer
With very few exceptions most home mortgages are made through the government by either Fannie Mae or Freddie Mac. This is a huge loss of business for the banking institutions. To try to salvage some of this "credit money," banks are getting into lines of credit lending for income. This is very profitable and one of the streams that are providing the current success for the banks. Banks are still the first option for small business, but as I reveal, this is dangerous territory.
Anyway, the US consumer is spending. Visa and Master Card are two hot stocks. At present, the consumer is buying autos. Last year(2018) was the fourth straight year in which over 17 million new cars were sold. Sounds great except the average price of the vehicle is now over $30,000. Dear Reader, in the 1970s you could buy the average home for that figure. This tells you many things amongst which the purchasing value of the dollar continues to decline and with it, the ability of the US consumer to maintain a standard of living. It too is also declining. In the 1970s it was common to purchase a auto with cash. Auto loans were for 36 months. Today, very few car sales are for cash. The length of an auto loan has been extended for 84 months. This is a terrible trend. As we have heard recently in the news with the federal employees being furloughed, even employed citizens with good jobs cannot get bye with missing one pay check. People are taking from Peter to pay Paul. This could cause a hiccup to lending institutions.
It gets worse. The consumer has run up a tab of $4 trillion when you combine credit cards, auto loans and student debt. This spending in the last five years is up 25%. Now, has the income equally rose the same percentage? No! Of course, not! The US consumer is in dangerous territory which means there will be defaults on the horizon. Speaking of which, currently, there are 7 million auto loans delinquent by 90 days according to Bank Rate.com. That figure translates to trouble in Big City.
Corporate
Our CEOs have done a poor job of leading our economy during the recovery from 2007-08. Corporate debt is $9 trillion and rising. Spending shareholder money on buybacks rather than research will come back to bite our nation. We have invented solar, but do not lead in the field. We developed PCs, but had them built on foreign soil. NAFTA killed 12 million manufacturing jobs. The same could be said about the textile industry, food industry, furniture, etc. Our iconic brands like GE, IBM, AT&T have low rated bonds at BBB and many companies are floating on debt. We hear that some emerging markets cannot service their debt like Venezuela. How far are we when our national debt climbs one trillion per year? It is now $22trillion! Next year, 23Trillion! I know that this is off the subject, but I feel that all things are related. So add this, there is possible collateral damage from derivatives. In 2007 the total swap market was $61 trillion. Today, it passes $120 trillion. This is unsustainable!
Potential Bankruptcy
This is another aspect that has the banking institution on the hook. The following are corporations that will possibly join Radio Shack and the Doo-doo bird. Keep in mind the name appears once, but these are chains which represent thousands of workers and millions in debt.
*Office Depot *Pier 1 Imports
*Land's End *Neiman Marcus
*99 Cents Only *Bebe
*Mattress Firm *Destination Maternity
*Guitar Center *Stein Mart
*Bon-Ton *Vitamins Shoppe
*BKH Acquisition Corp. *David's Bridal
*Fred's Pharmacy *Winn-Dixie's operator, Southeastern Grocers
*Nine West *Tops Market
*Cole Haan *Charlotte Russe
*Claire's *Full Beauty Brands
*Pet Smart *Bluestem Brands
*Eddie Bauer * Payless
How many more do you need? The retail crisis will disrupt our economy with thousands being unemployed and banking looking to the Federal Reserve to bail them out, again. If all that is scary consider that AI(robotics) will eliminate 25% of manual labor. The present economy is performing well, but a little further out there, dark clouds are forming.
On the positive side American Express had a record quarter. Bank of America was very profitable. It had an exceptionally strong report. Recently, two large regional banks joined forces to create the 6th largest banking concern in the US. BB&T allied with Sun Trust as a merger of equals. Even in this low interest rate environment US banks have found a model that works for them. The future, however poses new obstacles and challenges.
Internet
The corner bank and its branch network in shopping centers throughout the nation face a challenge with internet banks. Due to low overhead these digital tellers can offer a higher interest return to depositors. I don't see this as a big problem because people get an internal relief that drowns the fears around the stability of a lending institution by seeing an actual business. With all the dangers of hacking, a friendly teller trumps a half-of-a-percent interest. In addition, your corner bank does offer internet banking.
With that said, there are other and more dangerous problems looming on the horizon.
Consumer
With very few exceptions most home mortgages are made through the government by either Fannie Mae or Freddie Mac. This is a huge loss of business for the banking institutions. To try to salvage some of this "credit money," banks are getting into lines of credit lending for income. This is very profitable and one of the streams that are providing the current success for the banks. Banks are still the first option for small business, but as I reveal, this is dangerous territory.
Anyway, the US consumer is spending. Visa and Master Card are two hot stocks. At present, the consumer is buying autos. Last year(2018) was the fourth straight year in which over 17 million new cars were sold. Sounds great except the average price of the vehicle is now over $30,000. Dear Reader, in the 1970s you could buy the average home for that figure. This tells you many things amongst which the purchasing value of the dollar continues to decline and with it, the ability of the US consumer to maintain a standard of living. It too is also declining. In the 1970s it was common to purchase a auto with cash. Auto loans were for 36 months. Today, very few car sales are for cash. The length of an auto loan has been extended for 84 months. This is a terrible trend. As we have heard recently in the news with the federal employees being furloughed, even employed citizens with good jobs cannot get bye with missing one pay check. People are taking from Peter to pay Paul. This could cause a hiccup to lending institutions.
It gets worse. The consumer has run up a tab of $4 trillion when you combine credit cards, auto loans and student debt. This spending in the last five years is up 25%. Now, has the income equally rose the same percentage? No! Of course, not! The US consumer is in dangerous territory which means there will be defaults on the horizon. Speaking of which, currently, there are 7 million auto loans delinquent by 90 days according to Bank Rate.com. That figure translates to trouble in Big City.
Corporate
Our CEOs have done a poor job of leading our economy during the recovery from 2007-08. Corporate debt is $9 trillion and rising. Spending shareholder money on buybacks rather than research will come back to bite our nation. We have invented solar, but do not lead in the field. We developed PCs, but had them built on foreign soil. NAFTA killed 12 million manufacturing jobs. The same could be said about the textile industry, food industry, furniture, etc. Our iconic brands like GE, IBM, AT&T have low rated bonds at BBB and many companies are floating on debt. We hear that some emerging markets cannot service their debt like Venezuela. How far are we when our national debt climbs one trillion per year? It is now $22trillion! Next year, 23Trillion! I know that this is off the subject, but I feel that all things are related. So add this, there is possible collateral damage from derivatives. In 2007 the total swap market was $61 trillion. Today, it passes $120 trillion. This is unsustainable!
Potential Bankruptcy
This is another aspect that has the banking institution on the hook. The following are corporations that will possibly join Radio Shack and the Doo-doo bird. Keep in mind the name appears once, but these are chains which represent thousands of workers and millions in debt.
*Office Depot *Pier 1 Imports
*Land's End *Neiman Marcus
*99 Cents Only *Bebe
*Mattress Firm *Destination Maternity
*Guitar Center *Stein Mart
*Bon-Ton *Vitamins Shoppe
*BKH Acquisition Corp. *David's Bridal
*Fred's Pharmacy *Winn-Dixie's operator, Southeastern Grocers
*Nine West *Tops Market
*Cole Haan *Charlotte Russe
*Claire's *Full Beauty Brands
*Pet Smart *Bluestem Brands
*Eddie Bauer * Payless
How many more do you need? The retail crisis will disrupt our economy with thousands being unemployed and banking looking to the Federal Reserve to bail them out, again. If all that is scary consider that AI(robotics) will eliminate 25% of manual labor. The present economy is performing well, but a little further out there, dark clouds are forming.
Wednesday, February 13, 2019
Digital Bytes
The majority of reporting companies for the earnings season is over. I rate it as a mixed bag. I will go further to offer my view for the year based on a sample of reports by corporations, the volume of traded shares and price action on the charts.
Many corporations posted good earnings, and yet, they gave poor guidance like Northrop-Grumman. On the flip side some firms had a weak quarter, but gave a strong guidance like Hershey. Keep in mind that some of the earnings of companies that beat expectations was due to previously lowering their guidance. CEOs are trying to manipulate the market to keep their evaluations high. Nothing new here.
The main reason for my conclusions on the market, and thus, the economy is based on three factors. One, the potential trade war between the US and China. Their could be moments of peace, but a leopard cannot hide its spots. There is something within the Chinese culture that allows the people in their culture to make a buck off someone else. By this I mean the Chinese copy products and they use the perception of the buyer when offered a inexpensive price, to acquire. They pirate anything and everything. Bottom line: they will continue to steal technology and copy cat products. Maybe this is why the Japanese do not get along with the Chinese?
Two, the impact of on again, off again trade deals to sales will cause the market to be range bound. This will cause more seasonal employment. The economy will have periods of strength and weakness.
Finally, the benefits of the tax cuts will have a reverse effect on the market. When corporations report their earnings, they will always fall short on year-over-year due to the strong stimulus of the tax act. In addition, many states will increase their gasoline taxes and fees. The consumer will realize the dangers to the economy of on again, off again trade deals. Federal workers will look to unionize and society in general, will see the wisdom of saving for a rainy day. This will reinforce the concept of periods of strength and weakness. The days of a consumer society are ending.
Bottom line: I see a year of consolidation in the stock market with more volume to the downside. Gold will benefit as our record deficits and our ability to repay our debts along with rising costs of healthcare, social security, Medicare and our military will begin to dawn on everyone. The dollar should fall to .92 cents.
As stated above, I developed my conclusions based on the fundamental side of corporate reports. The charts indicate the market is range bound, however there is more strength on the down days than on the up days. Here is a sample of reports.
Warning: Citi Group, Nvidia, Dow Dupont, Apple, Whirlpool, Harley Davidson, ITW, 3M, AK Steel, and Verizon.
Upbeat Guidance: Visa, Royal Caribbean, Oshkosh, Honeywell, Charter, Boeing, Exxon, Chevron, Facebook, Amazon, Master Card, and American Express.
There are a few points within the above companies worth mentioning. Boeing had a $100 billion dollar quarter which is mind blowing. The two oil giants, XOM and CVX posted substantial gains in a quarter where oil lost 30% of its price. In addition, oil service companies had a poor quarter. They say that oil firms are cutting rig count. The reasons are many, but one is the logistics of getting oil or gas to a pipeline for delivery. They are attempting to supply as needed. In the past those ideas never seem to work which means oil price shocks will happen in 2019. Find a cheap oil stock and just wait.
Home sales will continue to struggle unless some new fad like small homes take root. There are three basic needs: food, water and shelter. All three are rising beyond the wages that Americans receive. This is a problem that will overflow into the streets.
Beat Goes On: The cost for a Super Bowl ad for a 30-second commercial rose to $5.25 million. Yowza! However, the beat hit a skip in the record as the US and Russia ended their nuclear treaty. This is not good news for the world and the keepers of the Doomsday Clock.
Many corporations posted good earnings, and yet, they gave poor guidance like Northrop-Grumman. On the flip side some firms had a weak quarter, but gave a strong guidance like Hershey. Keep in mind that some of the earnings of companies that beat expectations was due to previously lowering their guidance. CEOs are trying to manipulate the market to keep their evaluations high. Nothing new here.
The main reason for my conclusions on the market, and thus, the economy is based on three factors. One, the potential trade war between the US and China. Their could be moments of peace, but a leopard cannot hide its spots. There is something within the Chinese culture that allows the people in their culture to make a buck off someone else. By this I mean the Chinese copy products and they use the perception of the buyer when offered a inexpensive price, to acquire. They pirate anything and everything. Bottom line: they will continue to steal technology and copy cat products. Maybe this is why the Japanese do not get along with the Chinese?
Two, the impact of on again, off again trade deals to sales will cause the market to be range bound. This will cause more seasonal employment. The economy will have periods of strength and weakness.
Finally, the benefits of the tax cuts will have a reverse effect on the market. When corporations report their earnings, they will always fall short on year-over-year due to the strong stimulus of the tax act. In addition, many states will increase their gasoline taxes and fees. The consumer will realize the dangers to the economy of on again, off again trade deals. Federal workers will look to unionize and society in general, will see the wisdom of saving for a rainy day. This will reinforce the concept of periods of strength and weakness. The days of a consumer society are ending.
Bottom line: I see a year of consolidation in the stock market with more volume to the downside. Gold will benefit as our record deficits and our ability to repay our debts along with rising costs of healthcare, social security, Medicare and our military will begin to dawn on everyone. The dollar should fall to .92 cents.
As stated above, I developed my conclusions based on the fundamental side of corporate reports. The charts indicate the market is range bound, however there is more strength on the down days than on the up days. Here is a sample of reports.
Warning: Citi Group, Nvidia, Dow Dupont, Apple, Whirlpool, Harley Davidson, ITW, 3M, AK Steel, and Verizon.
Upbeat Guidance: Visa, Royal Caribbean, Oshkosh, Honeywell, Charter, Boeing, Exxon, Chevron, Facebook, Amazon, Master Card, and American Express.
There are a few points within the above companies worth mentioning. Boeing had a $100 billion dollar quarter which is mind blowing. The two oil giants, XOM and CVX posted substantial gains in a quarter where oil lost 30% of its price. In addition, oil service companies had a poor quarter. They say that oil firms are cutting rig count. The reasons are many, but one is the logistics of getting oil or gas to a pipeline for delivery. They are attempting to supply as needed. In the past those ideas never seem to work which means oil price shocks will happen in 2019. Find a cheap oil stock and just wait.
Home sales will continue to struggle unless some new fad like small homes take root. There are three basic needs: food, water and shelter. All three are rising beyond the wages that Americans receive. This is a problem that will overflow into the streets.
Beat Goes On: The cost for a Super Bowl ad for a 30-second commercial rose to $5.25 million. Yowza! However, the beat hit a skip in the record as the US and Russia ended their nuclear treaty. This is not good news for the world and the keepers of the Doomsday Clock.
Wednesday, February 6, 2019
Dangerous Reality
It has been long known that copy cats walk among us. Some try to emulate role models that perform good deeds in society. Sadly, some copy cats perform evil like serial killers. Experience is a great educator and I came across something recently that alarms me.
Before I get into that episode I saw two popular reality TV shows that foster the same ideas as my interaction story.
Survivor and Big Brother:
Are you aware of these two highly rated TV shows? Do you watch them? As a disclaimer I only watched the first season of Survivor and I turned off the TV with Big Brother after five minutes.
With that said, I offer you a new vision or one that you may have already grasped concerning the fundamentals to these shows. It is basically the same principal for both. It is this: competition for a money prize by eliminating contestants in weekly events. Sounds fair, but it isn't.
What happens in these reality shows is sick and dangerous to society as a whole. In Survivor, people are stranded on an island with only the clothes on their back. They must survive the elements and yet, still compete to win by being the last person standing.
In this phony world the physically weak, those with no leadership abilities and or, poor mental capacity ban together to vote off the island anyone who is stronger, smarter and a leader. Anyone who offers their experience, especially older contestants. They are out even before the first vote. They put a target on anyone who wins a competition or demonstrates ability. In the first episode of Survivor, an older man found all the other helpless contestants water. He made fire with his glasses and he reminded those who slept close to the water that high tide is unknown. It would be best to sleep high in a tree. He was correct on all accounts. He was the first voted off the island.
In Big Brother the contestants are confined to a house with no outside contact during the eliminating process. The person who can cook, clean up and help run the house smoothly will always be the first kicked out of the house by the lazy, inept and slower IQs.
Do you see what these TV producers are pushing? All you a low achiever. All those who don't understand how true wealth is accumulated, but has a big mouth. All of you get together and vote out or shutout the competition. Anyone can say free education for all! Free medical or basic income for all! Whatever the issue. It does not matter. What matters is how can you do it so that it is cost effective and self sustaining? That is how you make a difference!
Anyway, back to the real world. I was planning a vacation to Europe. I went online to do price comparisons. I came across the best price offered by Aeroflot. I never heard of that airline. It is a Russian carrier. I'm not prejudiced against the Russians. In fact I always wanted to see their country and meet their people. It won't happen!
After I purchased the ticket, a note flashed on my screen. In order to board the plane from New York with a stopover in Moscow and then, on to Rome, I would have to get a Visa. Dear Reader, this is no fill-out the application on the internet. You need to submit the reason for landing in Moscow and the commissioner will determine either yes or no with a possible fee to this application. Get Real!
There is no way in hell that I will submit to this procedure. It is a barrier placed by paranoid people to shutout the possible goodwill by human contact. This is the small, weak and mentally challenged keeping out the dangers of the sharing of cultures with respect for each other. Now, I do not know if the US imposes the same barriers to Russian tourists. However, since our paranoid military has so much influence in our government, I fear it is like a tit-for-tat game. This is not good for peace.
Recently, the Doomsday Clock was in the news. The time is two minutes to mid-night. People, with these type of actions by government, the time just moved to 1 minute and 59 seconds.
P.S. This might be my last post as Google is closing the door to free speech as they claim not enough interest. Thank you Dear Readers for your loyalty even if you disagreed with me. Hopefully, some day my book will be published, Evolution of Democracy - look for it.
Before I get into that episode I saw two popular reality TV shows that foster the same ideas as my interaction story.
Survivor and Big Brother:
Are you aware of these two highly rated TV shows? Do you watch them? As a disclaimer I only watched the first season of Survivor and I turned off the TV with Big Brother after five minutes.
With that said, I offer you a new vision or one that you may have already grasped concerning the fundamentals to these shows. It is basically the same principal for both. It is this: competition for a money prize by eliminating contestants in weekly events. Sounds fair, but it isn't.
What happens in these reality shows is sick and dangerous to society as a whole. In Survivor, people are stranded on an island with only the clothes on their back. They must survive the elements and yet, still compete to win by being the last person standing.
In this phony world the physically weak, those with no leadership abilities and or, poor mental capacity ban together to vote off the island anyone who is stronger, smarter and a leader. Anyone who offers their experience, especially older contestants. They are out even before the first vote. They put a target on anyone who wins a competition or demonstrates ability. In the first episode of Survivor, an older man found all the other helpless contestants water. He made fire with his glasses and he reminded those who slept close to the water that high tide is unknown. It would be best to sleep high in a tree. He was correct on all accounts. He was the first voted off the island.
In Big Brother the contestants are confined to a house with no outside contact during the eliminating process. The person who can cook, clean up and help run the house smoothly will always be the first kicked out of the house by the lazy, inept and slower IQs.
Do you see what these TV producers are pushing? All you a low achiever. All those who don't understand how true wealth is accumulated, but has a big mouth. All of you get together and vote out or shutout the competition. Anyone can say free education for all! Free medical or basic income for all! Whatever the issue. It does not matter. What matters is how can you do it so that it is cost effective and self sustaining? That is how you make a difference!
Anyway, back to the real world. I was planning a vacation to Europe. I went online to do price comparisons. I came across the best price offered by Aeroflot. I never heard of that airline. It is a Russian carrier. I'm not prejudiced against the Russians. In fact I always wanted to see their country and meet their people. It won't happen!
After I purchased the ticket, a note flashed on my screen. In order to board the plane from New York with a stopover in Moscow and then, on to Rome, I would have to get a Visa. Dear Reader, this is no fill-out the application on the internet. You need to submit the reason for landing in Moscow and the commissioner will determine either yes or no with a possible fee to this application. Get Real!
There is no way in hell that I will submit to this procedure. It is a barrier placed by paranoid people to shutout the possible goodwill by human contact. This is the small, weak and mentally challenged keeping out the dangers of the sharing of cultures with respect for each other. Now, I do not know if the US imposes the same barriers to Russian tourists. However, since our paranoid military has so much influence in our government, I fear it is like a tit-for-tat game. This is not good for peace.
Recently, the Doomsday Clock was in the news. The time is two minutes to mid-night. People, with these type of actions by government, the time just moved to 1 minute and 59 seconds.
P.S. This might be my last post as Google is closing the door to free speech as they claim not enough interest. Thank you Dear Readers for your loyalty even if you disagreed with me. Hopefully, some day my book will be published, Evolution of Democracy - look for it.
Wednesday, January 30, 2019
Facts: Fiat Has Failed and Fed Will Stall
I begin by reminding you of the rules and regulations concerning unemployment. To register to collect unemployment benefits, a worker must have at minimum 26 consecutive weeks of work. The past few weeks 700,000 retail workers were let go, pink slip, adios amigo! They will not be counted in the weekly report. They are seasonal, Christmas help. The point shows many aspects of our economy. The BLS says unemployment claims hit a fifty year low last week, but this fact shows there are many people out there willing to work. They are just tired of part-time employment. This is only retail. How many other work fields utilize seasonal help. There are many, especially agriculture. We have a lot of unemployed people, but they are not counted because they do not fall into the Department of Labor rules and regulations.
Money Facts
How about the saga of the furloughed government workers? I bring them up because federal workers are at middle class level. All their whining and crying due to the loss of one or two paychecks and they cannot afford to live. It is a reflection of the American mentality. They cannot control spending. They do not save for a rainy day. They do not know how to manage money. Very sad, indeed. Keep in mind that they represent the middle class. What about low wage earners like the 700,000 laid of seasonal help? There are many culprits as to why our basic citizen cannot make ends meet. Look at our so-called leadership! The government has run deficits since Bill Clinton was in office. Before that, you have to go to the Kennedy administration. The problem is the government just prints more money and you and I do not have that privilege. This is not a piece that will direct you to a money guru for advice, but look at our currency itself. It is the chief reason why as a society we are losing the middle class, the American Dream and our way of life. Simple: It is fiat money.
.65 cents an hour
Yes. That figure was the minimum wage at one time. Funny thing, people got buy because our way of life was much stronger. A gallon of gas was .30 cents or less. A teenager could find summer employment and the money he SAVED was enough to cover a local college come the Fall. However, our immoral government leaders kept spending like for the military and every year that they spent more than revenues, our dollar became less in value. In fact, since the Federal Reserve started in 1913, our dollar has lost 95% of its value. That is what fiat money does to a society. Here is another fact. There has never been a government who has succeeded using fiat currency. They all end in collapse. Hey, federal workers, did you read that? Understand it? This period of work without pay will happen again and again. Start saving for those rainy days.
Anyway, the Federal Reserve has its motives in greed. This greed leads to wealth which leads to power. This is why this group of unelected private bankers are for the banking industry. Congress violated the constitution by giving away its right to manage our currency and that currency should be backed by gold. Gold keeps government from running deficits. It also protects our standard of living. Our currency no longer has this solid foundation. It is just military strength behind the economy. The cost of fiat money has to get cheaper and cheaper because the debt it has created is larger and larger.
Some Aspects
Our national deficit keeps growing. Let me show you the recent trend. It is alarming! In 2009 the US debt was 60% of GDP. In ten years that deficit has grown another 40% to 104% of everything of value that is produced in our country. Could you live by spending and owing 104% of your income?
Of course, not. This point reflects the true danger of fiat money. It is easy to print, but difficult to pay. This is why the Fed cannot raise interest rates beyond 3.5% because our nation could not service the debt without raising taxes. If you want a poster child for a government that taxes everything, look at France. The French impose a 45% tax rate and tax anything and everything in society and still, the government is in debt with no money for stimulus projects.
How about the consumer? If you combine credit cards, auto loans, and student debt, it is now up 25% in the last five years to $4 trillion. The price of products, shelter and healthcare rise faster and higher than our wages. We always need more money because the value of our currency keeps declining. In many locations people need to use 50% of their income for rent. There is no discretionary money left on the table. A recent report reveals that 42% of Americans have no savings for retirement. The list is as long as the immigration line. The money tree that once was America is barren of green leaves.
A related point to this is student loans are defaulting at higher rate than mortgage defaults in 2007 and more than all junk mortgages in 2007.
How about corporate leadership? I should say, so-called leadership. Corporate debt is $9 trillion and rising. Within those borrowings is iconic brand names like GE, IBM and AT&T. Their rated bonds are BBB and falling. The biggest evil here is derivatives. Collateral debt obligations in 2007 was $61 trillion. They are now over $120 trillion. Fiat money numbers grow exponentially and the reality will dawn on the market place that they will not be repaid. This also means a day of reckoning and possible collapse of our currency which will lead to a collapse of our economy and depression.
By the way, China is even worse than us. Their debt in 2000 was $2 trillion. Today, it is up 2000% to $40 trillion or off the charts!
Fiat money is a failure and the Fed cannot raise rates. Fiat money can only continue this game by getting cheaper even negative. When the music of manipulation stops, you better have some gold under the last seat. End the Fed!
Money Facts
How about the saga of the furloughed government workers? I bring them up because federal workers are at middle class level. All their whining and crying due to the loss of one or two paychecks and they cannot afford to live. It is a reflection of the American mentality. They cannot control spending. They do not save for a rainy day. They do not know how to manage money. Very sad, indeed. Keep in mind that they represent the middle class. What about low wage earners like the 700,000 laid of seasonal help? There are many culprits as to why our basic citizen cannot make ends meet. Look at our so-called leadership! The government has run deficits since Bill Clinton was in office. Before that, you have to go to the Kennedy administration. The problem is the government just prints more money and you and I do not have that privilege. This is not a piece that will direct you to a money guru for advice, but look at our currency itself. It is the chief reason why as a society we are losing the middle class, the American Dream and our way of life. Simple: It is fiat money.
.65 cents an hour
Yes. That figure was the minimum wage at one time. Funny thing, people got buy because our way of life was much stronger. A gallon of gas was .30 cents or less. A teenager could find summer employment and the money he SAVED was enough to cover a local college come the Fall. However, our immoral government leaders kept spending like for the military and every year that they spent more than revenues, our dollar became less in value. In fact, since the Federal Reserve started in 1913, our dollar has lost 95% of its value. That is what fiat money does to a society. Here is another fact. There has never been a government who has succeeded using fiat currency. They all end in collapse. Hey, federal workers, did you read that? Understand it? This period of work without pay will happen again and again. Start saving for those rainy days.
Anyway, the Federal Reserve has its motives in greed. This greed leads to wealth which leads to power. This is why this group of unelected private bankers are for the banking industry. Congress violated the constitution by giving away its right to manage our currency and that currency should be backed by gold. Gold keeps government from running deficits. It also protects our standard of living. Our currency no longer has this solid foundation. It is just military strength behind the economy. The cost of fiat money has to get cheaper and cheaper because the debt it has created is larger and larger.
Some Aspects
Our national deficit keeps growing. Let me show you the recent trend. It is alarming! In 2009 the US debt was 60% of GDP. In ten years that deficit has grown another 40% to 104% of everything of value that is produced in our country. Could you live by spending and owing 104% of your income?
Of course, not. This point reflects the true danger of fiat money. It is easy to print, but difficult to pay. This is why the Fed cannot raise interest rates beyond 3.5% because our nation could not service the debt without raising taxes. If you want a poster child for a government that taxes everything, look at France. The French impose a 45% tax rate and tax anything and everything in society and still, the government is in debt with no money for stimulus projects.
How about the consumer? If you combine credit cards, auto loans, and student debt, it is now up 25% in the last five years to $4 trillion. The price of products, shelter and healthcare rise faster and higher than our wages. We always need more money because the value of our currency keeps declining. In many locations people need to use 50% of their income for rent. There is no discretionary money left on the table. A recent report reveals that 42% of Americans have no savings for retirement. The list is as long as the immigration line. The money tree that once was America is barren of green leaves.
A related point to this is student loans are defaulting at higher rate than mortgage defaults in 2007 and more than all junk mortgages in 2007.
How about corporate leadership? I should say, so-called leadership. Corporate debt is $9 trillion and rising. Within those borrowings is iconic brand names like GE, IBM and AT&T. Their rated bonds are BBB and falling. The biggest evil here is derivatives. Collateral debt obligations in 2007 was $61 trillion. They are now over $120 trillion. Fiat money numbers grow exponentially and the reality will dawn on the market place that they will not be repaid. This also means a day of reckoning and possible collapse of our currency which will lead to a collapse of our economy and depression.
By the way, China is even worse than us. Their debt in 2000 was $2 trillion. Today, it is up 2000% to $40 trillion or off the charts!
Fiat money is a failure and the Fed cannot raise rates. Fiat money can only continue this game by getting cheaper even negative. When the music of manipulation stops, you better have some gold under the last seat. End the Fed!
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