Mining Productivity Miracle

The following chart shows the mining industrial production index divided by the number of mining employees (thousands).

Bagger 293

Bagger 293 is 96 metres (314.9 feet) tall (Guinness World Record for highest terrestrial vehicle, shared with Bagger 288). It is 225 metres (738.2 feet) long (same as Bagger 287), weighs 14,200 tonnes (31.3 million pounds), and requires five people to operate.

At what point are these fully-automated and/or self-replicating?

VPU Distribution History

This chart is one reason why I am mostly comfortable holding VPU over the long-term. I say mostly comfortable because:

1. Past performance is not necessarily indicative of future returns.

2. Exponential trends eventually fail. This one will be no exception.

3. VPU's distributions held up great during the Great Recession. However, had the fund existed during the dotcom bubble collapse, it would not have done well. XLU investors buying utilities in 2000 were no doubt greatly disappointed in 2003. Both the price and the distributions fell over the period, and not by a trivial amount. See data here.

4. A return to the 1970s era, which I am not at all predicting, could make the dotcom bubble's utility pain potentially seem tame by comparison. My comfort level is therefore tied to the belief that rising inflation will be transitory and that long-term yields will begin to fall again at some point in the next few years.

My expectations are low. Not trying to hit a home run here. I'd be perfectly happy walking to first base. This investment is mostly just a bond replacement in a TINA world, at least to me. Anything more than that is just a bonus. That said, there is a definite possibility of a substantial bonus, assuming the wheels don't fall off.

VPU Performance v.003

Months Elapsed: 3
Total Growth: 5.23%
Annualized Growth Rate: 22.60%
Distribution Yield (TTM): 3.17%

VPU paid a $0.9851 dividend today (a 9.5% increase from 2020 Q1). It was automatically reinvested through a DRIP @ $139.874. VPU closed @ $140.51.

From down 4.59% last month to up 5.23% now, it's been quite a volatile start. Live by the sword, die by the sword, live, die, and so on.

3 months down, 197 to go.

New York City Restaurant Employment

The exponential growth trend failed in 2015, the Fed started raising rates in 2016, and then the pandemic hit in 2020. What's next? Meteor?



Source Data:
St. Louis Fed: All Employees: Leisure and Hospitality: Full-Service Restaurants in New York City, NY

Revisiting a 2014 Fed Funds Rate Prediction for 2020

September 25, 2014
Illusion of Prosperity: Fed Funds Rate Prediction for 2020 (Musical Tribute)

I'd be tempted to predict a rate between 1.0% and 3.3% based on the "Cone of Decaying Monetary Policy" channel (and using the inverses of the natural logs to predict the rate in the future). However, that would assume we can even get back into that channel and stay there for any appreciable length of time. Can you say exponential trend channel failure?

I therefore predict that the Fed Funds Rate at some point in 2020 will be a mere 0.25%. Think ZIRP + Japan. It just feels right (and oh so wrong). Can it go higher between now and then? Maybe, maybe not. The higher it goes the more likely a monster will be unleashed though. I have few doubts about that.

Dare I double down with the exact same rate prediction for 2030? I do dare! 0.25% at most.

When milk sours over time, more time just means more sour. At no point does the milk start becoming fresh again. Interest rates have been exponentially decaying for 40 years. Old money won’t soon be turning fresh again.

I might sound like a broken record, but this economy can’t afford to reward savers with vast riches any longer. If you are a saver, don’t panic though. This economy also can’t afford stagflation or hyperinflation. The only temporary safe harbor is to keep following Japan’s lead. Won’t work forever, but it may delay the inevitable for far longer than most think possible, in theory.

My opinion and a dollar could pay off the total credit market debt outstanding, if repeated 83,523,750,000,000 times. Unfortunately, I'll run out of dollars long before I run out of opinions!

Guard Cat on Duty

Don’t be deceived by the placement of the vent. I assure you that Dexter is guarding the front door. The warm air flow is just a coincidence. 🤪

Revised Estimate for the Upcoming 30-Year Treasury Yield Peak: 2.8% to 3.1%

Steep climbs tend to fizzle out at the end, as the momentum fades. This estimate range of 2.8% to 3.1% assumes a 1 to 2 year delay. For a description and reasoning behind my first estimate of 3.2%, see here.

I see no reason to panic. There is no drama here, at least not yet. The drama would start, for me, if we breach the red line by a sizable margin. Until that point, I continue to strongly believe that the long-term trend in the 30-year Treasury yield will continue to exponentially decay. And not in spite of the M2 money stock growing exponentially, but at least partially because of it.

The king of bonds may thought to be dead, but long live the king!

Guard Dog Training

River barks nonstop when trucks deliver packages to our home (or a neighbor's home), but patiently watches when trucks remove packages from our home (or a neighbor's home).

I don't mean to brag, but I think we've done an exceptional job with her training. Perhaps I should write a book? Hahaha! :)