Puppies! (Musical Tribute)

The following chart shows the 12-month moving average of pet care services employment divided by child day care services employment.


Click to enlarge.



In most of our America
There's a growing feeling of utopia
Conditioned to respond to all the treats
Of these exceedingly low rates, which can turn up heat
Alan Greenspan said he would bury you
With cash in hand since the jobs were few
It seemed like such an ignorant thing to do
But the puppies loved their rawhide chews

How could I save my little dogs?
From Ben Bernanke's cash flow bog?
There is a monopoly in central banks
The economy grows and then it tanks
We share the same psychology
Regardless of genealogy
His bones were thrown and we pursued
Ben knew the puppies love his rawhide chews

There is an historical lack of sense
To put the debt in the hands of these miscreants
There is this thing called a tug of war
It's a game we play again once more
Janet Yellen says she will protect you
With cash in hand since the jobs are few
Her bones are thrown and we pursue
I hope the puppies love their rawhide chews

We share the same psychology
Regardless of genealogy
Why might dogs hoard? Here's a clue
Is if the puppies love their rawhide chews

Source Data:
BLS: CES Databases

My Nomination for Most Interesting Post of 2014 (per Minute Spent Reading)

If you are looking for something interesting to read, do yourself a favor. Check out the following post at Young Money. It won't take long. It's packed full of interesting anecdotes! I could not stop reading it.

December 13, 2014
Young Money: Recent articles of interest

The Wall Street Journal recently polled institutional investors. 91% are bearish on Treasury bonds, and 95% see 10-year yields over 2.5% by the end of 2015 compared to 2.1% today. (I'm not sure about the 4% who expect rates to jump but aren't bearish.)

That's my personal favorite interesting tidbit. I have not felt this alone since 2011.

February 17, 2011
30-Year TIPS Auction Results

High Yield: 2.190%

It was a very lonely auction for me as a retail investor.

As of today, the 30-year TIPS yields just 0.82%.

Where was everyone? Apparently they were too busy reading Jeremy Siegel's "Great American Bond Bubble" rant to show up!

I definitely read his rant. I've written 199 sarcasm reports and it still remains the mother of them all! I just could not believe what I was reading. His theories seemed like satire. You know, something The Onion might write.

August 18, 2010
The Mother of All Sarcasm Reports (v.58)

Why didn't I think to compare my TIPS to the tech stocks of 2000?

If we buy the 10-Year TIPS this very minute and hold it the full 10 years then...

1. We are GUARANTEED to get ALL of our money back, even if deflation strikes.

2. We are GUARANTEED to get an additional amount to compensate us for 10 years of inflation.

3. We are GUARANTEED to get an additional 0.96% per year in interest.

Yes sir. That's exactly like Jim Cramer's Winners of the New World, well, once you strip out all the guarantees anyway.

I wish you could see my eyes rolling now. They've never moved this sarcastically before. I can't even keep them in the sockets. It's making me so dizzy that I'm tempted to vomit.

I did not end up buying the 10-year TIPS. It did not interest me. I went out 30 years in absolute defiance of his rant. "Great American Bond Bubble" opportunities like that just don't come around all that often, especially in a world where interest rates fall over the long-term until proven otherwise. Thanks Jeremy! What would I do without you?

As an important side note, an inflation protected treasury bond is guaranteed to pay face value at maturity. That gives them some deflation protection if bought at face value and held to maturity. The odds of needing deflation protection on a 30-year TIPS seems extremely low to me though. Even Japan could keep their inflation rate at 0% for decades, at least so far. But who can really say for sure? This economy does many things that people (think Chief Economists at the National Association of Realtors) once thought impossible.

U.S. Exports of Goods to China

The following chart shows the 12-month moving average of U.S. exports of goods to China.


Click to enlarge.

Well, now. Isn't that one of the ugliest charts ever. Can't you just feel the prosperity being released parabolically? From where I sit, the blue parabola failed to the downside. We used the red parabola to return to it but then overshot it. So here we are dangling above the blue parabola. That's not the key here though. I can sum that up in two sentences.

1. The blue parabola wants to go down from here.
2. The red parabola wants to go down from here.

Ugly. Ugly.

December 12, 2014
Predictions for 2015 (With 80% Confidence)

• Full year exports of goods to China will not increase from 2014 to 2015.

That was my prediction. It will be a good one if we follow either parabola. It is not required though. The data just needs to go sideways.

The exports of goods from the United States to China may be my weakest link. Other than glossing over a very noisy chart and combining that with a gut feel (not seen in the chart), I believe there is a parabola lurking that will work in my favor. I probably should have checked before making the prediction, but I'm not going to change it. What's done is done.

It was a very noisy chart, see the source data below. It did clean up real nice though. It exposed not just one, but two lurking parabolas. Talk about hitting the parabolic jackpot.

I am now 80% confident and no longer feel that this prediction is my weakest link. Can exports go higher? Sure. As a conservative guess, I'd say there's a 20% chance. Funny how that math works.

Keep in mind that this is just a guess. Parabolas fail all the time. Perhaps these fail and ruin my prediction. Then again, failures can go in either direction. Failures may actually enhance my prediction. Go figure.

If predicting the future is so easy, then everyone would be doing it. Okay, nearly everyone predicts the future. The rear view mirror is very tantalizing. I'll give you that.

"If past history was all there was to the game, the richest people would be librarians." - Warren Buffett

I'm no librarian. That's why I need to find my damn Tarot cards for confirmation! ;)

Source Data:
St. Louis Fed: U.S. Exports of Goods to China

Predictions for 2015 (With 80% Confidence)

If you make 5 predictions and are 80% confident in each one, then the following chart shows what you can expect.


Click to enlarge.

December 10, 2014
Credit Bubble Stocks: Predictions For 2015 From The Readership (80% Confidence Edition)

Reader Stagflationary Mark predicts:

• The Fed Funds rate will not increase in 2015.

• The 30-year treasury will remain below 3%.

• Full year exports of goods to China will not increase from 2014 to 2015.

• Full year department store sales will fall from 2014 to 2015.

• Although continuing to claim that hyperinflation is imminent, ShadowStats will remain unwilling to raise its annual subscription price of $175. ;)

The ideal outcome would be 4 out of 5 correct. I want my 80% confidence predictions to be right 80% of the time. That's the goal. As seen in the chart, I would be relatively comfortable with 3 to 5 right though.

Few think the Fed will wait until 2016. I'm not so sure on that. For the past 5 years, predictions about the Fed's ability to raise rates have continuously been way too optimistic. Now that oil has fallen, I'm going to stick with what works. It's like the Murphy's Law of monetary policy theory. The time needed to raise rates will always be twice as long as you think it will be, unless you factor that in. Then it would take four times as long, lol. Sigh.

As for the 30-year treasury, I've certainly built up a bit of a cushion in the past 2 days. 2.74% today? Nice drop. However, I'm not liking all this volatility (even in my favor). The last thing I need to see is a bounce back to 3.01% in January. That would be game over for me. I need it to stay under 3% for the entire year.

The exports of goods from the United States to China may be my weakest link. Other than glossing over a very noisy chart and combining that with a gut feel (not seen in the chart), I believe there is a parabola lurking that will work in my favor. I probably should have checked before making the prediction, but I'm not going to change it. What's done is done.

As for department store sales, they've been in a downtrend since 2000. I just need a dollar! One dollar less. That's all I'm asking. Jeff Bezos, you got my back?

And lastly, ShadowStats is my ringer. If they raise their subscription price from $175.00 to $175.01 then all hope is lost for me. These predictions could all go very, very wrong! On the other hand, I will strongly suspect that ShadowStats reads my blog, so perhaps it won't be a total loss. In fact, I'm willing to taunt! That's how confident I am.

Hyperinflation imminent! Each and every year! Even as oil prices crash again! Count on it!

Dare you to raise the subscription price a penny in sharp defiance! Dare you! Or better still, go to $500!

Hyperinflation, baby. That's what I'm talking about. Not.

The Sarcasm Report v.199

September 20, 2013
Pittsburgh Post-Gazette: Rising rates pushing early retirement

Allow me to summarize this article by removing most of the filler words, forming a new paragraph structure, and altering the punctuation a bit to convey the overall intent of the message. Think of it as the Cliff Notes version.

Pension! Low interest rates! Pension! Rising interest rates! Sizable increase in rates! Interest rates are low! If interest rates go up, pension! Rates still near historic lows! Expected to rise! Pension! If rates go higher, retire sooner!

Higher interest rate projections! Pension Benefit Guaranty Corp.! Pension! Rising interest rates! Retirement! Retiring earlier! Retiring before rates rise even further! Pension!

Interest rates are lowest! Pension! Rising rates! Pension! Pension! Pension! Rising interest rates! Rising interest rates! Pensions! When interest rates are higher, pension! Rising interest rates! Increase in interest rates! Pension! Pension! Rates go up!

You'd like more details? Are you sure? Don't feel you are getting enough sarcasm per dollar spent? Hey, I aim to please!

"But if interest rates go up to 5, 6 or 7 percent, the monthly annuity payment can look a lot more attractive than a lump sum payout."

And if monkeys fly out of my bottom, and they clean up real well under running water, then these monkeys can look a lot more attractive than any other lumps that might come out. I swear they will! Look for them soon! During my next monkeyscopy!

Enough sarcasm?

"Many who were considering retiring are jumping at the chance to do so before rates rise even further," he said. "Most participants who have a pension benefit where they are allowed to take a lump sum understand the time to take the lump sum is when interest rates are lowest."

Forehead. Desk. Whack. Whack. Whack. For the love of all that's holy, just finish me off now. Use a bat! Swing hard! My forehead cannot take much more sarcasm!

Thanks to rising interest rates used to calculate the cost of future payment to retirees, General Motors reported in its 2012 annual report that each 1 percent increase in interest rates cuts $8.76 billion from the present value of its pension obligation.

 
If a 1 percent increase can reduce the pension obligations by that much, then let's go looking for that 1 percent! Please brace for the sarcastic grand finale! You know it's coming!



Look! Thanks to rising interest rates, there it is! A full 1 percent! Oh, wait. That's a decrease. I wonder what that does.



You know what really bums me out about all of this? This could have been saved for my 200th sarcasm report. What an epic event that could have been, but I wasted it. Now I have to wait for something even more sarcastic to come along? Is that even possible? Oh well, let's try to make the best of a bad situation.

Party like it's 199!

Source Data:
St. Louis Fed: Custom Chart
U.S. Treasury: Daily Treasury Yield Curve Rates

Long-Term Dividend Growth (Musical Tribute)

The following chart shows the 1-year moving average of the natural log of real total corporate dividends (adjusted for inflation). When using natural logs, exponential growth can be seen as a straight line.


Click to enlarge.

I have good news, bad news, worse news, and more good news.

1. The good news is that we made it back into the red long-term trend channel.

2. The bad news is that the blue trend failed a year ago. It is what got us back into the red long-term trend channel.

3. The worse news is that the red long-term trend channel has now failed again as well.

4. And finally, the good news. Maybe nobody will notice or care.

Let's zoom in for a closer look.


Click to enlarge.



Source Data:
St. Louis Fed: Custom Chart

The Little Debt Problem (Musical Tribute)

The following chart shows the annual growth in nonfinancial corporate business credit market instruments.


Click to enlarge.

If at first you don't succeed (blue parabola), then invert (red parabola) and try again!

During a sustainable credit expansion, the goal is to stay above 0% credit growth. Just thought I'd mention it for those who think any kind of economic parabola is sustainable.

If credit is so cheap, then what's up with the red trend line? Seriously.



The Little Debt Problem

Debt they sold me
Pa ra bo la trends
A new born wealth could be
Pa ra bo la trends

The finest cash I need
Pa ra bo la trends
To feed ongoing greed
Pa ra bo la trends
Ra bo la trends
Ra bo la trends

Bought to honor "Them"
Pa ra bo la trends
In the end

Little hazy
Pa ra bo la trends
Some things we can't foresee
Pa ra bo la trends
Some used their cash on bling
Pa ra bo la trends
As debt can feed our greed
Pa ra bo la trends
Ra bo la trends
Ra bo la trends

Shall I pay for you
Pa ra bo la trends
In the end

Yellen nodded
Pa ra bo la trends
I took on risk for "Them"
Pa ra bo la trends
I took more risk for "Them"
Pa ra bo la trends
I spent the rest for "Them"
Pa ra bo la trends
Ra bo la trends
Ra bo la trends

As "They" said debt's cheap
Pa ra bo la trends
It came to end

Source Data:
St. Louis Fed: Custom Chart

Exponential Trend Failures of the Day: Household Equity in Real Estate

Click to enlarge.

As seen in red, the "sure thing" 27.7% annual growth rate is no more.

Let's see what the Fed has been doing. Surely they are responsible in some way!


Click to enlarge.

Did the Fed cause the "sure thing" exponential trend failure in blue? Yes, obviously! The Fed raised rates and the trend failed. Anyone with two brain cells can clearly see the correlation!

Did the Fed cause the "sure thing" exponential trend failure in red? No, obviously! The Fed did not raise rates and the trend failed anyway. Anyone with two brain cells can clearly see the lack of correlation!

Something else is going on! Holy crap!

The Fed isn't in control of this plane! We're on autopilot! We better work smarter! Quick! You there! Help me make make some parachutes out of these luggage contents! Anyone have a sewing machine? And you, sir! Think up a way to turn seat cushions into hot air balloons! Think people! Think! And for the love of all that's holy, open up the liquor! There's no reason to hoard it now!



Source Data:
St. Louis Fed: Households; Owners' Equity in Real Estate, Level
St. Louis Fed: Effective Federal Funds Rate