I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
...
Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
The following chart shows the natural log of the CPI for shelter. When using natural logs, constant exponential growth is seen as a straight line. I have added long-term trend lines in red.
With lofty housing prices and lofty mortgage rates, it seems very unlikely that we're going to make it back to the top of the trend channel anytime soon. Which, if you think about it, is kind of odd. I could swear that the Fed really wanted that. Just not all at once, apparently. Too bad.
If I were a gambling man, I would wager that there is more risk leaving the channel to the downside than to the upside. And maybe I am a gambling man, because I continue to hold TLT. Very encouraged by today's CPI report. One battle doesn't win the war though, of course.
The following chart shows the unemployment rate minus the 12-month percentage change in the median CPI. I have added long-term trend lines in red and a short-term arrow in green.
I looked at Earl and his eyes was wide
His lip was curled, and his leg was fried
And his hand was froze to the wheel
Like a tongue to a sled in the middle of a blizzard
I says, Earl, "I'm not the type to complain
But the time has come for me to explain
That if you don't apply some brake real soon
They're gonna have to pick us up with a stick and a spoon"
The following chart shows the natural log of the 30-year Treasury yield. When using natural logs, constant exponential growth (or decay) is seen as a straight line. I have added long-term trend lines in red and a short-term trend arrow in green.
Will the long-term trend ultimately prevail? Trapped in a world of nearly permanent ZIRP?
Will the short-term trend break everything? Housing! Stocks! Bonds! Employment!
Will it be a combination of both? Or neither?
Stay tuned for the next exciting and terrifying episode of...
Bought a narrow white Billy bookcase at the Seattle area Ikea store yesterday. Would have bought it sooner but it has been out of stock. It's been a day. It's already out of stock again. Out of curiosity, I checked the status of their normal white Billy bookcase. It too is out of stock.
Bought a white 5x5 Kallax at Ikea recently. Would have bought it sooner but it had been out of stock. It was also out of stock shortly after I bought it. It's out of stock right now. Once again, out of curiosity, I checked the status of their other white Kallax shelf units.
4x4? Out of stock.
4x3? Out of stock.
4x2? Out of stock.
4x1? Out of stock.
3x3? Out of stock.
2x2? Out of stock.
It's like we're living in a WW2 supply chain disruption movie. Doesn't seem to be getting better yet. The U-Boats are now seemingly hunting allied cargo ships in packs.
The following chart shows the natural log of the median CPI. When using natural logs, constant exponential growth is seen as a straight line. I have added a trend channel in red.
Once the inflationary extremes are stripped out, it's just more of the same. When combined with exponentially decaying long-term interest rates, it is of little consolation to safety-seeking long-term savers though.
And I would walk 500 more, and I would walk 500 more, and I would walk 500 more, and I would walk 500 more. In 2021. Maybe.
6.9 x 365 = 2,518.50
Would definitely be a lifetime personal best to walk that many miles in a single year. Might happen. Feet are holding up well so far. Very motivated. Using OluKai flip-flops almost exclusively. Spotify and audiobooks help too.
The ratio peaked in 2000. 21 years later, we've almost come full circle. What good fortunes will the next 21 years bring? Fully autonomous self-driving cars? Better late than never. Am I right?
This is not investment advice. As a utility investor, I am indifferent when it comes to how utilities perform relative to tech stocks from here. That said, it would not surprise me in the least if utilities outperform Tesla. Keep in mind that I want Tesla to succeed, just as I would have wanted Ford to succeed in the early days if I would have been a gasoline investor.
As a side note, my first mower was gas-powered. My next mower was battery-powered. I really liked how quiet it was, but I did not like that, as it got older, it took more than one charge to mow my lawn (nor did I like that the battery was not easy to swap out). My current mower is gas-powered. Spent more than an hour today cleaning its carburetor. My next mower may be battery-powered, again. As much as the thought of a fully-autonomous self-driving lawn mower appeals to me, I don’t think I’m emotionally prepared to risk having it mow over things that randomly might appear in my lawn completely unsupervised though. You know, like the neighborhood kids and pets.
I’m not even emotionally prepared to risk owning a fully-autonomous self-driving vacuum. We have two dogs and a cat. All it took was one poopocalypse story involving a Roomba to cure me of that desire.
Speaking of easy recoveries, I'm looking for investors to help fund my state of the art Mexican 8-track tape factory. With your help, we're going to be cranking out all the hits of the 1970s just as nature intended, again.
WFC avoids controversy and pays investors handsomely – and now it’s the world's most valuable bank.
Hahaha! WFC avoids controversy! Surely that is the quote of the day! No?
If you opened up a Wells Fargo (ticker: WFC) checking account with $5,000 a year ago, you made somewhere in the neighborhood of 0.01 percent annual percentage yield. But if you invested that same amount in Wells Fargo stock, then boom – you made yourself more than $640, or close to 13 percent on your money.
Hahaha! And if you continued to hold that $5,640 in WFC stock until today, it would now be worth $4,681 (adjusted for dividends). Where did that missing $319 go? Surely that is the quote of the day! No?
Meanwhile, Wells Fargo stock has proven steady (with a few dips here and there) going back to third quarter of 2009 – and more than doubling since.
Hahaha! Proven steady? That's gotta be the quote of the day! Right? No?
Pragnya Pattnaik, senior analyst at The Edge Consulting Group, says that Wells Fargo "has managed to perform better than most of its peers primarily through gains in market share, lower equity capital requirements and expanding relationships through cross-selling."
Hahaha! Expanding relationships through cross-selling! Quote of the day! Am I right or am I right? No?
I give up. What's the quote of the day? Does it involve a musical tribute?
While Wells Fargo investors should always watch out for changes in key indicators, including slowdowns on the mortgage banking and earnings growth side, the future has only clear skies ahead for WFC stock, Pattnaik says.
Hahaha! Other than the widespread cross-selling fraud and the "retirement" of CEO John Stumpf, the future has only clear skies ahead! Yes! Woohoo!
Some markets are more advantageous than others. In Miami, it's 53 percent cheaper to buy than to rent a home of similar size, the biggest discount among the metropolitan areas included in the report.
The closure of Detroit's Packard Car Company in 1956, the impact of San Francisco's Great Earthquake in 1906, and Bernanke's "there is no housing bubble to go bust" national housing bubble bust of 2005 notwithstanding, it's better to buy than to rent, and probably always will be? Miami is a screaming bargain? Hmmm.
In broader Miami, inventory rose 11 percent, resulting in a 40-month supply of luxury condos. Inventories for single-family homes in both areas are also higher.
Given these broad-based increases, Miller said the luxury real estate market in Miami is likely to get worse before it gets better.
Ever get the feeling that Miami is destined to be the real estate speculation capital of the world? These booms and busts never seem to end. Is it the water? Is it the sun? Is there something in the air? Please don't tell me this gambling vice has a catchy tune!
Here is my advice, for what it is worth. Only buy a home if you believe you can stay for at least a few years. The more the better. That's especially true in a modern world, where job security can often be expressed in mere months for unlucky souls. I rented for years when I was working and never regretted it. I moved often to go where the work was. Owning a home could have easily anchored me [underwater]. Your experience may vary, of course.
I should also mention that as a homeowner, the mere mention of the word earthquake makes me cringe. Care to guess who is mostly on the hook during a big one? Me. In the battle between Mother Nature and my house, the former will eventually win. But hey, at least it's not built on a flood plain. That's something I guess. Now if I could just stop thinking about volcanoes. Mt. Rainier is in the distance. 99.99% beautiful. 0.01% terrifying. So far, so good.
Though Bartenstein did not make any specific recommendations, he was positive on consumer discretionary, healthcare, energy and financial sectors.
It is a little known fact that the best way to protect yourself from a 15% stock market correction is to buy stocks. Zig when others say to zag. That's what I say.
Next up: learn how to protect yourself from Diabetes this Halloween by eating all the candy all at once. It is a little known fact that once you've gorged on all the candy, you won't be tempted to eat any more.
1. STAY CALM
2. OBSERVE THE ROBBER, IF YOU CAN
3. DON’T BE A HERO
4. BE COOPERATIVE, UNLESS …
5. DON’T COMPARE NOTES WITH OTHER WITNESSES
6. CONTINUE TO BANK CONFIDENTLY
1. Stay calm as you sell all of your banking stocks at the early stages of the financial crisis. Always better to calmly sell early, than sell late in a blind panic.
2. Observe the bank CEOs, if you can. In times of trouble, they can be elusive. Do not lose hope. For those who are patient, simply wait for them to testify before Congress. Watch them squirm for taxpayer bailouts.
3. Don't be a hero. Don't deposit more money in the weaker institutions until the crisis has passed. You'll know when the crisis has passed. Interest rates will be normalized to what they were just before the legendary dotcom crash, because nothing is more normal than that.
4. Cooperate. As they say, don't fight the Fed, unless fighting the Fed involves buying long-term treasuries before the Fed does. If that's the case, fight the Fed with every fiber of your being. Don't let the Fed win! Gobble them up faster than they can! And should you ever "need" to sell instead of simply holding to maturity as I intend, then be prepared to potentially fight the Fed again. Sell before they do or you might regret it, unless, of course, the Fed intends to hold to maturity too, like they've been doing.
5. Don't compare notes with other witnesses. The last thing this country needs is a bunch of naysayers continually pointing out the weak financials. Whatever you do, don't start an Illusion of Prosperity blog. Oops.
6. Continue to bank confidently. 25-sigma events are relatively rare. The odds of two of them happening in one lifetime are probably less than 50%, unless something unexpected happens. You know, like the sudden appearance of a flock of black swans flapping to the beat of the Candy Mountain song.
But we turned out to be wrong about Twin Cities housing prices. As part of our move to Rochester, where I now work as a professor of economics, we recently sold that house. Including money spent on renovations over the years, our capital loss came to about 45 percent of the 2005 purchase price. Back when we bought the place, I would have said that such a loss was completely impossible.
Since it is completely impossible for an economist who lost 45% on real estate purchased at the peak of the housing bubble in 2005 to become the current president of the Minneapolis Fed, we all should have complete and utter confidence in the Fed.
What? He is the president? Stop it! Get out!
Since it is completely impossible to tune a piano, nobody will ever enjoy piano music.
What? That's completely impossible! There's no way her fingers can be moving that fast!
Barnes & Noble (BKS -1.65%) may be the only happy news on this list as the bookseller has actually decided to close fewer stores in 2016 than it has in any year since 2000. The chain will shutter only eight locations, down from the 13 it had originally planned to lose this year, Fortune reported. The change comes because while most retailers have seen sales slow at physical stores, Barnes & Noble has actually lost online sales volume while its retail locations have been a relative strength.
In addition to closing stores for 15+ consecutive years and recently losing online sales volume in this digital era, Barnes & Noble investors can also find happiness in only losing 30% of their money (counting dividends and splits) over the past year.
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