Posts Tagged ‘cost of living’

Speculative fervour

Speculative fervour – shadow boxing the Fed

Courtesy of Data Diary

LONDON, ENGLAND - JUNE 30: A sign saying ' Peace and love be with you all' is displayed at the peace camp in Parliament Square on June 30, 2010 in London, England. Mayor of London Boris Johnson has won a High Court order to evict the protesters who have been camping in the square since May 1, 2010. (Photo by Peter Macdiarmid/Getty Images)

There is something of a speaking-in-tongues fervour about the place recently. Bring back big hair, smelly armpits and the Doobie Brothers I say. We all need a little peace, love and skyrocketing oil prices. (If you want a 1973 vintage backtrack to this post – Jesus is Just Alright here.)

To distil a few themes from the cacophony:

1) When money is cheap, speculation is abundant. And it doesn’t get any cheaper than when the government is giving it away. The end is nigh when the suspension of disbelief can’t be sustained.  That is when investors will want out – it’s every Ponzi scheme’s dilemma. We aren’t there yet.

2) Inflation is the destination, we just don’t know whether we will get there. The Fed will stop at nothing in their pursuit of inflation, but they can’t control where liquidity flows. They want wage inflation. They think by spurring asset price inflation it will lead to rising inflation expectations and then onto real incomes. The problem is that consumables may just explode in the meantime – what good is a few dollars saved on mortgage repayments when your cost of living has gone through the roof.

3) Corporate margin expansion has reached its peak. The majority of margin expansion since 2000 has come via the wage bill. Absent productivity gains, this is a finite trend. The Fed says they want wages to increase relative to everything. Labour winning over capital is not multiple friendly.

4) Last chance to buy cheap goods from China. It’s revalue the Yuan or cop tariffs.  Either which way, the days of ridiculously cheap goods from China are near an end.

5) Commodities supercycle is likely to go parabolic. The flight from paper money to real assets has been gathering steam. With the financialisation of commodity derivatives, this trend can run to unprecedented extremes (for those not familiar with the term, it means ‘hasn’t happened before’). Should China ease credit again – which is a fair bet given the impending hit they will take on exports – capital investment will be sucking at the physical market at the same time. That sounds like a recipe for a party.

Data Diary.


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Where’s the Land of Opportunity These Days?

Where’s the Land of Opportunity These Days?

By Doug Hornig, Casey Research 

Surging Oil Industry Brings Opportunity To Rural California

Recent decades have witnessed an amazing shrinkage of the American manufacturing sector, from #1 in the world to virtual non-existence. Companies, taking advantage of cheaper labor costs abroad, have either outsourced some portion of the workforce or relocated their entire operations offshore. Remember the “great sucking sound” that Ross Perot claimed he could hear? 

Well, today, if you listen, there’s a different, almost opposite sound in the air. Instead of American jobs going to lower-paid foreign workers, foreign workers are leaving America for better jobs. It’s happening, increasingly, among professionals who expatriated to the U.S. in search of the good life and have begun seeing better prospects back in their countries of origin. 

In a worldwide survey by HSBC Bank International, conducted among 3,100 expats in the first quarter of 2009, more than 1 in 5 (22%) working and living in the U.S. said they were considering pulling up stakes and returning home. That’s 50% higher than the overall average of expats everywhere. 

This may seem strange to residents of the traditional land of opportunity. We’re much more accustomed to foreign graduates of American colleges doing whatever it takes to get that green card. But it’s in keeping with numbers noted by other observers. 

And it’s all about the career prospects.

Those studying the trend say that foreign professionals are becoming frustrated with their lack of advancement in the U.S., citing widespread salary and promotion freezes, not to mention layoffs. As our unemployment rate has ballooned to an “official” 10% and everyone is downsizing, people with advanced degrees have not been spared. Competition for the best jobs is more intense than ever, and switching employers no longer results in an automatic step up the ladder.

In addition, employees holding H-1B skilled worker visas often get the short end of the stick from employers. No one with a hard-to-obtain H-1B is going to complain about unfair treatment – or so the thinking goes – because termination most often results in a quick plane ride back home.

But that may not be much of a sword to hold over someone’s head as home begins to look more and more attractive. People who came here from India and China, even as recently as a decade ago, are well aware of the explosion in opportunity that’s transpired way…
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Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong

Fantastic dish served up at Jesse’s Cafe.  Highly recommended – especially if you’re a normally intelligent person who can’t understand economics. It has nothing to do with you! Imagine being an inquisitive medical student at the time when blood-letting was used to treat all ills… I loved this: 

"The ugly truth is that economics is a science in the way that medicine was a profession while it still used leeches to balance a person’s vapours. Yes, some are always better than others, and certainly more entertaining, but they all tended to kill their patients."

- Ilene

Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong

jesse's cafe, consumersServed by Jesse of Le Café Américain

US Personal Income has taken its worst annual decline since 1950.

This is why it is an improbable fantasy to think that the consumer will be able to pull this economy out of recession using the normal ‘print and trickle down’ approach. In the 1950′s the solution was huge public works projects like the Interstate Highway System and of course the Korean War.

Until the median wage improves relative to the cost of living, there will be no recovery. And by cost of living we do not mean the chimerical US Consumer Price Index.

The classic Austrian prescription is to allow prices to decline until the median wage becomes adequate. Given the risk of a deflationary wage-price spiral, which is desired by no one except for the cash rich, the political risks of such an approach are enormous.

On paper it is obvious that a market can ‘clear’ at a variety of levels, if wages and prices are allowed to move freely. After all, if profits are diminished, income can obviously be diminished by a proportional amount, and nothing has really changed in terms of viable consumption.

The Supply side idealists (cash rich bosses, Austrians, Marxist, monetarist, and deflationist theorists) would like to see this happen at a lower level through a deflationary spiral. The Keynesians and neo-liberals wish to see it driven through the Demand side, with higher wages rising to meet the demands of profit in an inflationary expansion. Both believe that market forces alone can achieve this equilibrium. Across both groups runs a sub-category of statism vs. individualism.

all wrongUnfortunately both groups are wrong.

Both approaches require an ideal, almost frictionless, objectively rational, and honest economy in…
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Phil's Favorites

Boeing is doing crisis management all wrong - here's what a company needs to do to restore the public's trust

 

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Boeing is doing crisis management all wrong – here's what a company needs to do to restore the public's trust

Courtesy of Kelli Matthews, University of Oregon

In a crisis, time is not on your side.

A crisis creates a vacuum, an informational void that gets filled one way or another. The longer a company or other organization at the center of the crisis waits to communicate, the more likely that void will be filled by critics.

That’s exactly what&...



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Kimble Charting Solutions

Connect Series Webinar March 2018

Courtesy of Chris Kimble.

We cover dominating patterns in major global Indices, sectors, commodities and the metals markets.  We produce chart pattern analysis and empower people to improve entry and exit points.

To become a member of Kimble Charting Solutions, click here.

...

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Zero Hedge

US Home Price Growth Slowest Since 2012

Courtesy of ZeroHedge. View original post here.

Following disastrous starts and permits data, Case Shiller's home price index was expected to show growth continuing to slow. and it did, considerably worse than expected.

Case-Shiller's 20-City Composite grew at just 3.58% YoY in January (well below the 3.8% YoY expectation and December's 4.14% YoY print). This is the weakest annual growth since September 2012, decelerating for a 10th month in January as buyers held out for more affordable properties.

...



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Insider Scoop

Analyst: Apple's New Credit Card Bodes Well For Green Dot

Courtesy of Benzinga.

Apple Inc. (NASDAQ: AAPL) announced Monday it will launch its own branded credit card called Apple Card and this should be viewed as a positive for Green Dot Corporation (NYSE: GDOT), according t...



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ValueWalk

Tesla's Massive Increase In Delivery Volume In Europe And China

By Jacob Wolinsky. Originally published at ValueWalk.

Whitney Tilson’s email to investors discussing a few good posts on Tesla on the VIC message board about the massive increase in delivery volume in Europe and China.

41 – jcoviedo – 3 days 2 hrs ago

Re: Re: Re: Several bullish points

40

Q4 hedge fund letters, conference, scoops etc

Elon leaked...



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Chart School

Weekly Market Recap Mar 24, 2019

Courtesy of Blain.

It was looking like another week of Federal Reserve Kool Aid and crushing bears .. until Friday.  On the back of bad economic news out Europe, the yield curve inverted on the 3 month vs 10 year bond – before you fall asleep to that news, it is a quite important indicator for the economy (not necessarily the stock market… yet).   More on that in a bit.  As you can see the action in the bond market Friday was quite severe so it will be interesting to see the move in the coming few days.

As for the Federal Reserve:

The Federal Reserve signaled no more increase in interest rates this year and just one in 2020, according to its new ‘dot plot,’ and the bank said it would...



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Biotech

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Reminder: We are available to chat with Members, comments are found below each post.

 

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Assorted cannabis bud strains. Roxana Gonzalez/Shutterstock.com

Courtesy of James David Adams, University of Southern California

Medical marijuana is legal in 33 states as of November 2018. Yet the federal government still insists marijuana has no legal u...



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Digital Currencies

Facebook's cryptocurrency: a financial expert breaks it down

 

Facebook's cryptocurrency: a financial expert breaks it down

Grejak/Shutterstock

Courtesy of Alistair Milne, Loughborough University

Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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 ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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