20-Year TIPS Yield Hits New Record Low

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I suffered through a lousy economy for 20 years and all I got was a stinkin' -0.17% real yield.

Make the t-shirts now using cheap foreign labor. Hoard them for 20 years. Sell them then as collectors' items once their value goes up. Just an idea! Could happen, lol. Sigh.

As a side note, you will lose 3.3% of your purchasing power over the 20 years if you buy this bond today. That's in addition to any income tax the bond generates over the period.

(1-0.0017)^20 = 0.967

In order for this investment to make any sense at today's prices, the economy has to do pretty darned poorly over the next 20 years. As a permabear since 2004, I'm not exactly ruling it out.

Here's a shout out to the pension fund managers still expecting 8% returns well into the distant future.

[Expletive Deleted] YOU!

Just so I'm perfectly clear here, "THANK" is not the word. ;)

Source Data:
FRB: Selected Interest Rates
U.S. Treasury: Daily Real Yield Curve

Initial Claims Danger v.22

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This crappy initial claims report was better than I expected. I'm therefore downgrading the danger from extreme. I'm backhanding the compliments today. That's right. There's a sense of optimism in the air!

The biggest news of the day is found within the report.

In the week ending November 3, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 8,000 from the previous week's unrevised figure of 363,000.

Holy Mother of God! A miracle has occurred! So endeth 70 straight weeks of upward revisions!

See Also:
Extreme Initial Claims Danger v.21

Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims

That Dog Don't Hunt

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The chart shows net corporate dividends divided by GDP.

The exponential trend channel implies that dividends will exceed GDP at some point in the distant future. Good luck on that theory!

Urban Dictionary: That Dog Don't Hunt

An obviously faulty endeavor; also as ~ /won't hunt/, predictive of failure.

Source Data:
St. Louis Fed: Custom Chart

Real Consumer Credit per Civilian Employed (Musical Tribute)

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Vietnam War

U.S. combat units were deployed beginning in 1965. Operations spanned international borders, with Laos and Cambodia heavily bombed. American involvement in the war peaked in 1968, at the time of the Tet Offensive.

Iraq War

The Iraq War was an armed conflict in Iraq that consisted of two phases. The first was an invasion of Ba'athist Iraq by the United States and the United Kingdom, starting on March 20, 2003.

Source Data:
St. Louis Fed: Real Consumer Credit per Civilian Employed

Exponential Trend Failure of the Day

The following chart shows the number of Americans who are not on food stamps.


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Fail.

If a growing population is supposedly the solution to all of our problems then perhaps we should start creating more high paying jobs. I think it is going to be an extremely difficult task.

If one considers rapidly increasing automation and an increasingly global competitive environment, I am not at all confident that what worked in the past will extrapolate well into the future.

Source Data:
USDA: Supplemental Nutrition Assistance Program
St. Louis Fed: Population

Pent Down Demand

How come we always hear about pent up demand but we never hear about pent down demand?


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I've added an exponential trend line in red.

Source Data:
St. Louis Fed: Light Weight Vehicle Sales: Autos & Light Trucks
St. Louis Fed: Vehicle Miles Traveled

Job Openings: Construction + Manufacturing + Retail Trade

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It is election night and I am still permabearish.

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Custom Chart

Pivotal Ohio

The following chart shows Ohio's unemployment rate divided by the nation's unemployment rate.


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I suspect Romney is sweating bullets.

November 5, 2012
In Ohio, Polls Show Benefit of Auto Rescue to Obama

If the polls are correct, and President Obama wins a narrow Electoral College victory on Tuesday, the pivotal moment of the 2012 presidential race may have actually occurred in 2009. About two months after taking office, Mr. Obama set the terms of the government’s rescue of General Motors and Chrysler, a move that eventually helped to resurrect the American automobile industry, and, in turn, bolster the economy of the king of swing states: Ohio.

Source Data:
St. Louis Fed: Custom Chart