Institutional Money Funds vs. Equities

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Look at all that money patiently waiting for a miracle to occur.



This post inspired by the comments of Luke Smith which can be found here.

Source Data:
St. Louis Fed: Custom Chart

Household Net Worth vs. GDP

December 9, 2012
Gongol: Household net worth rises in America

That's good -- it's up to $64.8 trillion. But if the national GDP is $13.6 trillion a year, then we only have a national price-to-earnings ratio of 4.8. On Wall Street, that would be abominably low. Something here suggests that we're not pricing our work correctly, not pricing our net worth correctly, or doing an absolutely abysmal job of managing our household balance sheets. Or perhaps there's some other explanation to be found.

1. He's a bit off on GDP. It's actually closer to $15.8 trillion.

2. GDP isn't earnings. GDP represents economic activity. It's an opinion, but I'd say GDP is more like sales than earnings.

If one sticks with the business analogy, then that puts our price-to-sales ratio at a whopping 4.1 to 1. That seems pretty darned high to me, especially if one factors in our massive debt.


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If I was a gambling man, then I'd offer a long-term return to the median theory. Heck, I might even offer it if I wasn't.

And lastly, those who believe that the ratio should be over 4.4 must believe many more economic bubbles are on the way (in addition to the dotcom and housing bubbles which got us there before). High real interest rates would seemingly have little hope of doing it. That ship has sailed.

Source Data:
St. Louis Fed: Custom Chart

Real S&P 500 (October 2012 Dollars)

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There were clearly better times in all of recorded history to swing for the fences. For example, 1982 looks pretty darned good in hindsight. Got time machine?

As a retired saver, I cannot afford to take big risks with my nest egg. I have no job to fall back on if the gambling doesn't pay off.

This is not investment advice.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Real S&P 500 Index (October 2012 Dollars)

The Three Little Pigs

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BLOW IT DOWN... BUT, MAKE IT LOOK LIKE AN ACCIDENT.

Source Data:
St. Louis Fed: Custom Chart

Sears: The Best Tool for "Made in America"

December 7, 2012
Sears accused of misleading public on Craftsman line

Costello declined to say how many Craftsman tools were made in the U.S. and Hart, who filed suit against the retailer in 2004, isn't sure either. After the suit was filed, Sears took Craftsman tools off the shelves and blacked out the words "Made in America," she said.

The best tool for the job is apparently a black marker. Sigh.

See Also:
The Softer Side of Sears (Musical Tribute)
Our Pillars of Retail Strength

Married Workers per Capita

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In addition to changing demographics, rising divorce rates, and a poor economy since 2000, there's also the following.

October 9, 2012
As Protestants decline, those with no religion gain

"Protestant" is no longer America's top religious umbrella brand. It's been rained out by the soaring number of 'Nones' -- people who claim no faith affiliation.

For what it is worth, I'm a nonbeliever in a great many things. The resilience of the economy? The claims of politicians? A one true religion? You name it.

Rev. Albert Mohler, president of the Southern Baptists Theological Seminary in Louisville, saw a welcome clarity in the report, even if he didn't like the new picture in focus.

"Today, there's no shame in saying you're an unbeliever, no cultural pressure to claim a religious affiliation, no matter how remote or loose," Mohler says. "This is a wake-up call. We have an incredible challenge ahead for committed Christians."

Candy Mountain

Shun the nonbeliever. Shun. Shun.

Got kidney?

See Also:
Skepticism

Source Data:
St. Louis Fed: Custom Chart

41.0 Million Missing Jobs

Long-Term


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@#$%!


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@#$%!


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@#$%!

Short-Term


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@#$%!


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@#$%!


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@#$%!

Let's take it back to 1984 yet again.


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@#$%!

See Also:
40.8 Million Missing Jobs

Source Data:
St. Louis Fed: All Employees: Total nonfarm

The Layoff Lottery

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All things being equal, the odds of being laid off in a given week are currently 360 to 1. Employees haven't been this "safe" since the dotcom bubble and the housing bubble. Hurray.

Every nonfarm payroll worker gets a chance to play this game each and every week. Households with two workers get to play twice. It's just like playing Powerball. The odds are so much better though!

At 360 to 1 odds per week, the chance that a single worker can go 5 years without a layoff is 49%.

(359/360)^(52*5) = 49%

The chance that both workers in a two-earner household can go 5 years without a layoff falls to a much lower 24%.

(359/360)^(52*5*2) = 24%

That poses a serious problem for households which require two incomes to make the mortgage payments. Who thinks banks factored this math in when making the mortgage loans? I sure don't. Sigh.

And lastly, I strongly believe that we will return to the blue median trend line at some point in the not too distant future (and quite possibly well below it). Factor in that I've been a permabear since 2004. Your opinion may vary.

Disclosure: I've seen the unemployment lines twice in my life, which is pretty much par for the course. Look how many times I dodged the bullets though.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart