One Benefit of Trickle Out Economics

Our trade deficit of ~$500 billion per year continues to flood the world with dollars.

I did find an unexpected benefit today though.

May 18, 2016
America's millionaires don't like what they see in the markets or economy

The most alarming move to "safety investments" that Altfest is seeing among clients, though, is people actually putting fences around their houses (country homes in the case of her New York City clients). "Clients are telling me they need $50,000 for a fence. It's not a majority of Americans, but I've heard it more than once," Altfest said.

Alarming? I think not. It takes labor to install fences. American labor. The more money we ship out of the country, the more fences the wealthy may ultimately need.

GDP? Employment? Hello? This isn't rocket science.

China Is a Victim

January 12, 2016
Jim Rogers Says China Is a Victim, Not Cause of Problems

Yes, the victim. We used our vast military might to force China to make goods for us in exchange for useless paper dollars, completely against their will. Then, we sent over our "Hot Commodities" billionaire to convince them how wonderful both they are and commodities, in general. Next, we crashed that commodity bubble single-handedly thereby forcing them back into US dollars. And finally, knowing with 100% certainty that cash was trash, we started talking about the wonders of commodities yet again.

Poor China. Apparently, promised the world by a foreign power, and believed in every story we sent them with great naivety. We are clearly the masters of deceit, to trick a country that's been around pretty much since the invention of dirt.

May 12, 2016
China's commodities meltdown could rock the markets

One truly astonishing feature of this bout of speculation is that the average holding period of a commodity futures contract was just three hours in April, according to a Bloomberg article. That makes other speculative trading episodes look like long-term investing.

Even if one is wrongly imprisoned, a victim of our system so to speak, then this still might not be the best time to bend over and reach for that bar of soap. We have a long history of #%^*ing China up the asset classes, or so I'm told.

Just a few questions. How on earth did we ever convince them to send us so many actual goods for cash that we can easily print? Is it because they were desperate for our jobs? Why won't they spend their dollars on our goods and services instead of hoarding them? What are they waiting for? Yet another commodity meltdown and a new entry point for even more speculation?

My heart goes out to the victims of the ELEMENTS Rogers International Commodity ETN, down roughly 50% since its inception just before the Great Recession. Half the soap is gone. But don't you worry, Jim Rogers is teaching his daughters Chinese. You should too. When a billion Chinese victims apply for your soon-to-be-automated job, you don't want to be left behind.

In all seriousness, can't we all just get along? There is no reason that we can't all be victims, together. Let us look forward to the day that all factories are automated, all Amazon fulfillment centers are automated, automated drones deliver all the goods directly to our homes, and all profits and wages go directly to the top 1 percent. It's utopia, assuming we cut the taxes of the richest to somehow magically pay for all of it, or at the very least simply borrow the money ad infinitum. What could possibly go wrong?

Breaking News: Imports from China Nosedived in Q1

As seen in this chart I created using the St. Louis Fed's database of economic data, imports from China fell 6.66% from the first quarter of 2015 to the first quarter of 2016. I kid you not. 6.66%.

Many might consider -6.66% to be the devil's work. They might point out that a fall of that magnitude is nearly unprecedented, with the only exception being during the Great Recession (also seen in the chart). Not me!

Instead, I consider this to be absolute proof of our strong and resilient economy. Rather than buying cheap goods from China this year which would ultimately add to our many overworked American landfills, many Americans are clearly now choosing a smarter path.

We're spending all of our money on good old-fashioned American services, ranging from good old-fashioned American nail salons which fill our many strip malls to good old-fashioned American financial services where good old-fashioned American advisors will tell us, for a small fee, that we can always expect the good old-fashioned American stock market to grow 10% each and every year. Always has, always will.

Warning: Definitely NOT Safe for Work!

This Is Why You Should be Optimistic In 2016!

May 3, 2016
Here's What Usually Happens to Stocks in Years Like 2016

Despite the huge comeback in the S&P 500, investors remain skeptical of the bull rally. If history is any guide, they shouldn't be so worried.

I could not agree more. In fact, I've done my own research looking back at all the years like 2016.

In order to find years like 2016, I first eliminated all years when the yield on the 3-month treasury bill was higher than the current 0.19% and all years when the yield on the 30-year treasury bond was higher than the current 2.66%.

I then eliminated all years that were not election years. I then eliminated all election years when the Democratic front runner wasn't a former first lady with a history of email server problems. I then eliminated all election years when the Republican front runner wasn't a billionaire who starred in a reality television game show and had ties to the casino industry. I then eliminated all election years when both the front runners didn't have justifiably historically high disapproval ratings simultaneously. I then eliminated all years when both candidates didn't love waterboarding as a means of torture.

I then eliminated all years when the US government was running a budget surplus and our country was running a trade surplus. I then eliminated all years when the typical toaster was not made in China.

I then eliminated all years when the bull market in stocks was not at least seven years old. I then eliminated all years when the stock market had not at least tripled during that bull market.

I then eliminated all years when Sears published a Wish Book. I then eliminated all years when I would not have been able to create this blog post with my phone, the same phone I also use to buy stuff on the internet without ever having to talk to an actual human retail salesperson.

I then eliminated all years without a Patriot Act and all years without a Department of Homeland Security.

And do you know what I found? Not once in our country's history has the stock market done poorly in years just like 2016. Not once. That's why you should be as optimistic as I am. And if that isn't enough proof, just check out my horoscope.

Cancer 2016 Horoscope: An Overview – A Look at the Year Ahead

The Cancer Horoscope 2016 foretells that Cancerians will be optimistic and confident during 2016 which will ensure success in their ventures.

It was predicted in 2015 that I would be optimistic in 2016, and here I am expecting the most favorable outcome for the stock market. Coincidence? I think not. Unbridled confidence! Don't let my blog's name fool you!

Question of the Day

April 18, 2016
How much could the return of factory jobs add up to?

Two?

A few years ago, Hiawatha Rubber, a small precision manufacturer outside Minneapolis, enjoyed some employment gains tied to reshoring. Howard Hauser, vice president of operations, said some of the firm’s customers suffered quality issues with Asian suppliers and handed the work to Hiawatha instead.

“We did bring a couple jobs back, but that kind of stopped then. That trend has not continued,” he said. “So at this point I would look back at that and say that was a bit of a fluke.”

Two! Woohoo! I knew it! What do I win?

Hello? Damn. I think it was a rhetorical question. Sigh.

Our Strong and Resilient Economy

April 22, 2016
The New York Times: U.S. Suicide Rate Surges to a 30-Year High

Dr. Alex Crosby, an epidemiologist at the Centers for Disease Control and Prevention, said he had studied the association between economic downturns and suicide going back to the 1920s and found that suicide was highest when the economy was weak.

I know what you must be thinking. If suicide rates are highest when the economy is weakest, and suicide rates are currently surging to a 30-year high, then the title of my post must be either sarcastic or just plain wrong.

Well, there's more to the story.

But other experts pointed out that the unemployment rate had been declining in the latter period of the study, and questioned how important the economy was to suicide.

Yeah, I'm siding with these nameless other experts. The unemployment rate is proof that the economy is strong. Nothing else matters. Somebody needs to send Janet Yellen a memo letting her know just how strong it is. She needs to know that it is safe to raise the fed funds rate to no less than 4%. And while she is at it, she should feel confident in unwinding all those trillions in treasury bond purchases. Our strong and resilient heavily outsourced debt-ridden service economy can certainly handle it.

And while we are on this "other experts" topic, there is something on my mind that really bothers me. Many experts believe that the earth is spherical. There are other experts who believe that the earth is flat though. It is unfortunate that we may never truly know who is actually right. I gotta tell you. My property seems pretty flat. Just sayin'.

Don't even get me started on those experts who believe the earth is more than 6,000 years old. That's just crazy talk. I have lived a long time. I can't imagine anything lasting billions of years. Granted, I may be a bit biased. Much of my stuff is made in China.

Who am I kidding? You caught me spewing sarcasm again. Guilty as charged.

Two Things Corporations Can Do with Eternally-Cheap Dollars!

April 15, 2016
Fed is Bluffing on Rate Hikes

So the market could still pull off that feat of new highs right into economic and earnings weakness -- especially since the giant corporate “BuyBack Machine” can still vacuum up shares with eternally-cheap dollars.

Vacuum up those shares with eternally-cheap dollars! Woohoo!

Hey! Do you know what else corporations can do with eternally-cheap dollars? Pay decent wages, of course! Hurray! Everybody wins!

April 12, 2016
American Apparel lays off hundreds of workers and considers outsourcing some manufacturing

The main problem is that it’s difficult to pay workers decent wages...

What? If dollars are as eternally-cheap as is claimed, then why aren't they being given out like candy to the workers of America? Makes no sense! Other than American Apparel's recent bankruptcy caused by excessive debt and lack of eternally-cheap dollars, what am I missing?

Eternally-cheap dollars my @$$. That's the kind of thing a used car dealer tells you to make a sale. Trade those eternally-cheap dollars for this eternally-cheap car! Can't lose!

No, seriously. This cheap car runs fine, on the level. And when I say on the level, I really mean don't take it on any hills. The brakes are shot and the engine can't take the strain, lol. Sigh.

Quote of the Day

September 21, 2015
Why US manufacturers are nixing the US for China

For us, it's more important to find well-educated, motivated people at the right cost—which, by the way, is probably one quarter of the U.S. cost. - Racho Jordanov, CEO and president of JHL Biotech

A Friendly Reminder for Mexico

The cash we keep sending you is very valuable so please stop pooping on our vegetables! Thank you! Have a nice day! :)

September 10, 2015
2nd death linked to salmonella-tainted cucumbers

The outbreak, caused by a strain called salmonella Poona, has been identified as coming from cucumbers grown in Mexico...

September 5, 2015
What We All Need To Know During A Cucumber Salmonella Outbreak

While Salmonella comes from animal feces, fruits and vegetables can become contaminated.

Vocabulary Word of the Day: Necessarily

August 18, 2015
GM may import a Buick built in China

But even if GM does start to export Chinese cars to the U.S., that won't necessarily be opening the door to Chinese cars flooding the market here, said Brinley.

The prosecution has laid out a very impressive set of reasons why my client should be found guilty. I'll admit that. There was the hatred my client expressed whenever the victim's name was mentioned, even during this trial. I get that.

There is the smoking gun that was found in his glove box. There are 17 witnesses who saw him pull the trigger. There is the victim's blood that was found on his shirt, pants, and shoes. His fingerprints were found on the victim's eyeglasses. The victim's DNA was found in my client's trunk.

But just because my client bragged about the ease of the kill and the burying of the body during his confession at police headquarters, it doesn't necessarily mean he is guilty. There is still plenty of reasonable doubt!! My client is trustworthy. The body was found in a shallow grave just 50 yards from my client's house, right where my client said it would be!

The Crock of @#$% Report v.026

August 11, 2015
This is 'more damaging...than the Great Recession'

"Productivity growth is the primary driver of gains in real wages." - Paul Ashworth, chief U.S. economist at Capital Economics

1. When your job is outsourced to China to improve productivity, what happens to your paycheck?

2. When your job is replaced by a fully automated factory robot to improve productivity, what happens to your paycheck?

3. If the high speed androids of the future are able to work each and every hour of each and every day to improve productivity, what will happen to your paycheck if you can't keep up with them?

Your paycheck becomes a crock of @#$%. That's what. Sigh.

General Tso's Chicken

August 2, 2015
Final Caixin China PMI for July surprises by dropping to two-year low

"The downturn in China's manufacturing sector intensified at the start of the third quarter. Renewed falls in both total new work and new export orders led manufacturers to cut production at the fastest rate since November 2011," the news release said.

General Tso was last seen cowering under his military tank, mumbling something about possible broken prosperity promises to more than a billion people.

"The weakness of numbers like the PMI does suggest that [the China economy] is having a very hard time turning around," Donna Kwok, senior China economist at UBS, told CNBC.

Can China mustard the energy to ketchup to its potential growth rate? Or is the potential growth rate just one big missed steak? In any event, China's central planners have little margarine for error.

Food for thought.

P.S. If you like food puns, I aim to peas. Otherwise, sorry to a salt you.

18 Trillion Financial Gifts I Hope to Give the Children of Others

July 15, 2015
5 Financial Gifts I Hope to Give My Children

There are so many little nuggets of wisdom I've learned through the years of writing about personal finance I want to pass onto my children. And with solid finances myself, I could confidently tell them that these tips aren't just theory but work wonderfully well in practice.

There are so many little dollars of federal government debt that we've accumulated through the years that I want to pass onto your children. I'd give it to my children but, since I don't have any, I have no choice but to gift it to yours, your childrens' children, and so on.

And with weak finances as a country, I could confidently tell them that this debt isn't just theory but will work wonderfully well in practice... at slowing future growth and being a general drag on their standard of living.

Please tell your children that I am truly sorry that it has come to this. I have spent my life trying to avoid taking on debt that I could or would not pay. The government has given me no choice though. It's as if we're a country that spends beyond our means and our government is merely a reflection of that.

Every nation gets the government it deserves. - Joseph de Maistre

Psst... Your personal finances are only as "solid" as their weakest link. I see 18 trillion weak links in federal debt and a great deal more if one factors in what decades of accumulated trade deficits have done. But hey, if you are lucky, maybe that can be your childrens' problem. Probably best not to talk to them about it though. Ignorance is bliss.

Happy Dependence Day!

We depend on the Middle East to send us a never ending supply of cheap oil!

We depend on food stamps to help feed 45.6 million Americans!

We depend on an ever growing debt to keep this economy going!

We depend on the Fed to prevent economic bubbles from forming!

We depend on our weapons of mass destruction to stop other countries from using their weapons of mass destruction! So far, so good! Knock on wood.

We depend on the largest prison system in the world to protect pot-smoking Americans from themselves! And nothing says protection like a felony conviction with an ample jail sentence. That's just the kind of thing that employers want to see on a resume before deciding where the highest paying jobs will go!

We depend on peaceful cooperation within the halls of Congress to keep this country on the right path! The alternative would be a stalemate of dysfunctional proportions too horrific to imagine!

We depend on the Patriot Act to protect our freedoms! Yay! Freedoms!

We depend on torture (waterboarding) to stop the spread of terrorism! It's "bound" to work! Pun intended!

We depend on China to send us cheap hand-made fireworks so that we can really enjoy the spirit of the 4th of July!

Fireworks

In the United States, fireworks displays are a popular patriotic tradition on the Fourth of July, but almost all of the fireworks exploded in the US are hand-made in China.

But most of all, we depend on sarcasm to protect us from going stark raving mad. How much? We think it's a lot more than we think, lol. Sigh.

He Is Not the Problem, But He Is a Symptom

June 18, 2015
Billionaire sees opportunities in asset bubbles

Greene—who became a billionaire betting against the housing market during the financial crisis...

It is not his fault that some entity generates financial asset bubbles by dwelling on consumer price inflation.

"People like me have been just able to accumulate wealth at a pace that's unprecedented in history," he said.

It is not his fault that he accumulated wealth at an unprecedented pace. It would be fair to say that nearly everyone makes the attempt.

"Not only do you have zero interest rates and central banks printing money everywhere, but on top of that we have historically low tax rates."

It is not his fault that we have zero interest rates. It is not his fault that we have historically low tax rates, especially for the wealthy.

And lastly, it is not his fault that the long-term trend in the unemployment rate looks like an exercise in tank slapping, as opposed to a flat line of unemployment stability.

If only [monetary policy] we [Fed] knew [fiscal policy] who [Congress] to blame?

China's Scrabbling Export Economy Could Spell 'DISASTER'

May 31, 2015
China factories scrabble for growth in May, export demand shrinks

It's all fun and games for China's investors, until someone loses an 'I'.



How can I be expected to resist puns served up on a tray? ;)

The Everything Bubble Theory vs. The Too Much Money Theory

May 13, 2015
Welcome to the everything bubble

Everything is overvalued.

Which seems more likely?

1. Bonds are overpriced. Stocks are overpriced. Real estate is overpriced. Luxury art is overpriced. Gold is overpriced. Silver is overpriced. Oil is overpriced. Every single investment idea you can think up is overpriced simultaneously.

2. There's too much money in investor hands chasing too few investment ideas in a subpar economic growth world. It's causing the price of investment assets to inflate.

Think hard before you decide. Your answer will have a huge impact on where you put your money. If you are a long-term investor who truly believes that everything is overpriced simultaneously then you'll want to bury US dollars in your backyard for the long-term. Good luck on that.

This in spite of the fact that we've been exporting ungodly sums of US dollars to the rest of the world  for decades (through a massive trade deficit). Perhaps we can convince the rest of the world to bury their US dollars too? Wouldn't that be a hoot! And let's not forget the $10.6 trillion in deposits at commercial banks. Perhaps that should be buried as well.

This is not investment advice. I will say this though. I have no desire to put the bulk of my retirement nest egg in cash. Over the long run, that's not been the greatest of plans. Even those who buried cash in 2000 or 2007 are no doubt wishing they had dug it back up.

Attention China Miracle Growth Investors: No Need to Panic!!!

April 14, 2015
No Need to Panic About Weak China Exports

China’s exports were shockingly weak in March. We did not see that coming...

Please allow me to summarize.

1. Shockingly weak.
2. Did not see that coming.
3. No need to panic.

In other news, I seem to have tipped over a candle. The flames are rapidly spreading through the room. I should probably use my phone to call the fire department and then grab a fire extinguisher. But you know what? There's no need to panic. Might just as well finish this post first.

It's getting more difficult to see the screen now, what with all the black smoke. I'm turning up the brightness to compensate. Oh, yes. That worked wonderfully. Stay calm they say.

I'm starting to get a bit parched. *cough* Better head off into the kitchen and fix myself an ice cold lemonade. I swear it must be getting hotter. So happy summer is nearly here.

That's odd. There's a burning sensation on my right leg. Did not see that coming.  Perhaps a quick jog around the room will make it go away. Just bounced off the wall. How silly of me! And what is it with my flailing arms? Can't seem to stop. This must look quite comical to others. Better not head outside lest the neighbors see it. I can't think of anything more embarrassing.

Signing off now. Asprin is needed. I'll need to make it past two burning chairs and a couch to reach it. Wouldn't be wise to attempt it while typing. I need to stay focused on the goal and keep my wits about me. Don't worry. All is good. Safe and sane to the very end, and you can quote me on that.

Have a great day! Mine is filled with adventurous optimism, let me tell you! The world is my burning oyster!

Why Do Investors Around the World Keep Buying Our $#@%?

Investors around the world continue to purchase our $#@% despite the warnings that our $#@% is overpriced, and must therefore fall.

Just look at all the $#@% they buy. Our bonds? Our stocks? Our real estate? Our crops? It makes no sense. Why do they keep buying all that $#@%? There must be some rational explanation, especially after all the warnings we've given them.

Out of curiosity, are we running a massive trade deficit? I mean, I suppose if we just kept shipping dollars overseas then some of those dollars might come back to us. You know, to buy our $#@%. Never mind. That's just a crazy theory. This is America. As manufacturer to the world, we don't run massive trade deficits.

April 2, 2015
Treasury yields fall below 2 percent

Investors around the world continue to purchase safe haven Treasurys despite the warnings of rising rates.

Disclosure: Buyer and holder of US long-term government bond $#@% since 2000, and proud of it. Love that Made in USA label.

In all seriousness, nearly my entire nest egg sits in government bond $#@%. No joke. No regrets. Not a believer in future prosperity theories I guess, nor do I believe making money off of money will be getting any easier as time goes on. Put another way, I believe our country is on a $%@%ty long-term path.

The Crock of @#$% Report v.001

March 13, 2015
China’s New Normal Means More Jobs in U.S., Good News for Yellen

The bottom line for the U.S. and global economies, according to Roach: China is shifting from a country propelled by demand from the rest of the world to one with a more balanced economy and greater appetite for imports.

“They’re going to be a source of growth for us,” Zandi said. “They’re not going to be an impediment.”

The following chart shows the annual percentage growth in the exports of goods from the U.S. to mainland China.


Click to enlarge.

1. Greater appetite for U.S. imports?
2. A source of growth for us?
3. It's all a crock of @#$%?

You make the call.

Source Data:
St. Louis Fed: Custom Chart