We noted earlier this week that the number of cost-burdened-renters has surged to historic highs, as 21.3 million households now pay more than 30% of income for housing.
The WSJ has an incredible chart that shows this development in crystal clear terms: Since 1960, inflation-adjusted rents have risen by 64%, while household incomes only increased by 18% during the same period.
* * *
One final observation on this matter is that as the chart shows, the rate of change in household income since 1960 dropped significantly between 2000 and 2010, and has remained flat since.
Despite mainstream economists hopes that somehow “this time will be different,” the ongoing massaging of economic data through seasonal adjustments to obtain better headlines did not translate into actual prosperity. Of course, “reality” is a cruel mistress and despite ongoing hopes and overstatements, “fantasy” eventually gives way.
The chart below shows the S&P 500 index with recessions and when the National Bureau of Economic Research dated the start of the recession.
There are three lessons that should be learned from this:
The economic “number” reported today will not be the same when it is revised in the future.
The trend and deviation of the data are far more important than the number itself.
“Record” highs and lows are records for a reason as they denote historical turning points in the data.
The last two-quarters of economic growth have been less than exciting, to say the least. However, these rather dismal quarters of growth come at a time when oil prices and gasoline prices have plummeted AND amidst one of the warmest winters in 65-plus years.
Why is that important? Because falling oil and gas prices and warm weather are effective “tax credits” to consumers as they spend less on gasoline, heating oil and electricity. Combined, these “savings” account for more than $200 billion in additional spending power for the consumer. So, personal consumption expenditures should be rising, right?
What’s going on here? The chart below shows the relationship between real, inflation-adjusted, PCE, GDP, Wages and Employment. The correlation is no accident.
Economic cycles are only sustainable for as long as excesses are being built. The natural law of reversions, while they can be suspended by artificial interventions, can not be repealed.
More importantly, while there is currently “no sign of recession,” what is going on with the main driver of economic growth – the consumer?
The chart below shows the real problem. Since the financial crisis, the average American has not seen much of a recovery. Wages have remained stagnant, real employment has been subdued and the actual cost of living (when accounting for insurance, college,
Just after the close of trading in a post on its blog, Tesla announced that yesterday evening (one wonders why if the company knew about it yesterday did it wait until after the close on quarter end Friday to release the news), that one of its cars had been involved in a fatal crash while driving in auto pilot mode.
US REGULATORS OPEN INVESTIGATION INTO TESLA MODEL S:
TESLA MODEL S IN SELF-DRIVING MODE INVOLVED IN FATAL CRASH – U.S. SAFETY OFFICIALS
US AUTO SAFETY REGULATORS OPEN INVESTIGATION INTO 25,000 TESLA MODEL S CARS OVER USE OF AUTOMATED DRIVING SYSTEM LINKED TO ONE FATAL CRASH:
The stock, as well as lawyers everywhere, smell blood.
We learned yesterday evening that NHTSA is opening a preliminary evaluation into the performance of Autopilot during a recent fatal crash that occurred in a Model S. This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the US, there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles. It is important to emphasize that the NHTSA action is simply a preliminary evaluation to determine whether the system worked according to expectations.
Following our standard practice, Tesla informed NHTSA about the incident immediately after it occurred. What we know is that the vehicle was on a divided highway with Autopilot engaged when a tractor trailer drove across the highway perpendicular to the Model S. Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied. The high ride height of the trailer combined with its positioning across the road and the extremely rare circumstances of the impact caused the Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S. Had the Model S impacted the front or rear of the trailer, even at high speed, its advanced crash safety system would likely have prevented serious injury as it has in numerous other
The Silver Market really broke out this week, far outpacing Gold, and is the market to watch in my opinion going forward regarding more "Central Bank Currency Devaluation QE Stimulus Initiatives" and the resultant implications for financial markets.
Expect the UK to drop out of the headlines as it chooses new leaders and untangles itself from the EU. The big news going forward will be the trend Brexit started, as other European countries consider their own variations on the “leave” theme — with all that that implies for interest rates, bank stocks and general financial instability. Fascinating and terrifying year ahead.
00:01:32 Checking on the Markets: DX, CL, RB, NKD
00:05:10 Chaos created by Brexit
00:09:05 China’s massive debt flowing economy
00:09:58 Japan’s GDP debt
00:10:54 US numbers
00:12:46 Lines: Pivot point
00:16:05 “I want people to be a wolf”
00:18:11 George Soros about Brexit
00:26:47 Brexit vote map
00:35:32 DX over NKD. Support resistance line
00:39:48 Neil Farage EU parliament
00:40:42 EU politicians nobody has a real clue about 80%
00:51:50 Total Broadway ticket sales
01:01:13 Wealth extraction
01:11:30 YG and SI Inflation
01:13:21 Top Trade: BX
01:23:30 Long Term Portfolio
01:26:36 BX Trade Idea
01:34:46 Weekly Chart SPX
01:38:46 5% Portfolio: TLT
01:40:04 Butterfly Portfolio
01:44:34 TLT puts
01:47:47 Checking on the Markets, Trade Ideas
Nothing would do more to obliterate the legacy of President Obama or the credibility of Federal regulators than for another major U.S. insurer to need a massive taxpayer bailout like AIG did in 2008 because of its exposure to Wall Street mega banks.
But the trading action of the giant U.S. insurer, MetLife, following the Brexit vote in the U.K. has tongues wagging on Wall Street. The question is why this company traded worse than even the biggest Wall Street banks in the immediate aftermath of the Brexit vote. In last Friday and Monday’s trading sessions, MetLife lost 17.3 percent of its market capitalization or $8.4 billion. Adding to the curiosity, this comes at a time when MetLife is fighting in court to avoid the government’s designation of it as a non-bank systemically important financial institution or SIFI.
Insurers like MetLife are supposed to be the safest of the safe. They hold life insurance policies to protect families in the case of the death of the breadwinner and annuities to provide income to retirees that rely on those policies to buy food and pay bills in retirement. Insurers like MetLife are not supposed to go into a swan dive when a country on the opposite side of the Atlantic holds a voter referendum.
The concerns about MetLife should have grabbed the public’s attention when the Financial Stability Oversight Council (F-SOC) released its report on why it was designating MetLife a SIFI on December 18, 2014. The report noted:
“MetLife leads the U.S. life insurance industry in certain institutional products and capital markets activities, such as issuances of funding agreement-backed notes (FABNs), guaranteed minimum return products (such as general and separate account GICs), and securities lending activities. These activities expose other market participants to MetLife and create on– and off– balance sheet liabilities that increase the potential for asset liquidations by MetLife in the event of its material financial distress. Efforts to hedge such risks through derivatives and other financial activities are imperfect and further increase MetLife’s complexity and interconnectedness with other financial markets participants…”
The report also found that MetLife was serially tapping the taxpayer bailout mechanisms during the 2008 financial crisis, writing…
Poland, Hungary, Slovakia and the Czech Republic issued a joint statement “The genuine concerns of our citizens need to be better reflected. National parliaments have to be heard.“
Poland and the Czech republic want Juncker booted.
Governments in Warsaw, Budapest, Prague and Bratislava say powers should be repatriated to national capitals to make the EU more democratically accountable.
“No one believes in the United States of Europe” said Poland’s deputy prime minister Mateusz Morawiecki.
“Our voice is the voice of reason,” said Morawiecki, “as for many years the British voice was the voice of reason.”
Czech prime minister Bohuslav Sobotka has said the overall functioning of the EU and the commission should change.
Robert Fico, the Eurosceptic premier of Slovakia — which takes over the EU’s rotating presidency this week — has offered to host an exceptional summit to discuss the bloc’s future shape. “If somebody thinks we can offer to the European public what we give it now after Brexit, they are mistaken,” said Fico.
#Brexit Poland Deputy Prime Minister “UK the voice of Reason. No One Believes in United States of Europe.”
That was quick. With practically of the Brexit loss recovered in four days and the market now up for the quarter and the year, what’s not to like?
After all, the central banks are purportedly at the ready, and, in the case of the ECB and BOE, are already swinging into action according to their shills in the MSM. MarketWatch thus noted,
Markets were boosted by reports indicating the European Central Bank is weighing changes to its bond-buying program, while “the Bank of England also said they are all in,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
The European Central Bank is considering changing the rules regarding the types of bonds it can buy as part of its stimulus package to ...
Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 136.4, unchanged from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.11%, up from 2.08% the previous week and the fourteenth week in positive territory. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 7.2, up from last week and its highest since early May of 2013.
In September of 2012, when Silver was trading at $28, the Power of the Pattern shared the chart below. The patterns suggested that even though Silver had already declined a great deal ($50 to $28), patterns called for it to fall nearly another 50%, to the $15 level.
Chart below was from 2012, see original post HERE.
By Jacob Wolinsky. Originally published at ValueWalk.
John DeVoy, a long time analyst at Seth Klarman’s Baupost Group has left the hedge fund for a position at Loomis Sayles. Devoy formerly worked at Loomis before spending close to ten years at the Boston based hedge fund. The news was announced via a press release from Loomis. The statement says that DeVoy will be returning to the company “as a dedicated credit strategist for the flagship full discretion team.”
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.
For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....
One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...
After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither PSW Investments, LLC d/b/a PhilStockWorld (PSW)
nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Site owned and operated by PSW Investments, LLC. Contact us at: 403 Central Avenue, Hawthorne, NJ 07506. Phone: (201) 743-8009. Email: firstname.lastname@example.org.