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

Remembering Martin Luther King Jr.: 5 things I've learned curating the MLK Collection at Morehouse College

 

Remembering Martin Luther King Jr.: 5 things I’ve learned curating the MLK Collection at Morehouse College

Martin Luther King Jr. waves with his children, Yolanda and Martin Luther III, from the 1964 World’s Fair in New York City. Photo by Hulton Archive/Getty Images

Courtesy of Vicki Crawford, Morehouse College

For the past 11 years, civil rights historian Vicki Crawford has worked as the director of the Morehouse College ...



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Politics

What Supreme Court's block of vaccine mandate for large businesses will mean for public health: 4 questions answered

 

What Supreme Court’s block of vaccine mandate for large businesses will mean for public health: 4 questions answered

New York City’s vaccine mandates are unaffected by the court ruling. AP Photo/Mary Altaffer

Courtesy of Debbie Kaminer, Baruch College, CUNY

The U.S. Supreme Court on Jan. 13, 2022, blocke...



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Zero Hedge

Ghislaine Maxwell Will No Longer Fight To Keep Epstein 'John Does' Secret; Suspected Of 'Intimate Relationship' With Prince Andrew

Courtesy of ZeroHedge View original post here.

Convicted sex offender and UK socialite Ghislaine Maxwell will no longer appose keeping "vast swaths of information" about her "sex trafficking operation" with Jeffrey Epstein sealed, after accuser Virginia Roberts Giuffre requested they be made public, according to the Daily Mail.

One of Maxwell's lawyer stated in a letter to federal judge Loretta Preska last week that the defense team will no l...



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ValueWalk

Apex Group's Financial Services 2022 Outlook

By Anna Peel. Originally published at ValueWalk.

An outlook on financial services trends in North America 2022 from Georges Archibald, Managing Director, Americas at global financial services provider Apex Group.

Q4 2021 hedge fund letters, conferences and more

Financial Services 2022 Outlook

"2022 will be characterized by three key trends: continued asset inflows to alternatives, further service provider consolidation and technology-enabled efficiency gains.

In a continuation o...



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Chart School

US Dollar Short Term Cycle Peak Near - Update

Courtesy of Read the Ticker

The short term US Dollar cycle peak is upon us, it is time for capital flows to rule the direction of the DXY.



Previous Post: US Dollar Short Term Cycle Peak Near



Capital flows and interest rate differentials move currency around.



If capital flows take over, then they DXY is going into the 80's at least. Of course hiking rates 4 times is easier on the world when the DXY is near 80 rather than 95. A lot if US debt held by emerging markets is at risk otherwise. And yes a lower US dollar in early 2022 helps China out, as it suppo...



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Biotech/COVID-19

What Supreme Court's block of vaccine mandate for large businesses will mean for public health: 4 questions answered

 

What Supreme Court’s block of vaccine mandate for large businesses will mean for public health: 4 questions answered

New York City’s vaccine mandates are unaffected by the court ruling. AP Photo/Mary Altaffer

Courtesy of Debbie Kaminer, Baruch College, CUNY

The U.S. Supreme Court on Jan. 13, 2022, blocke...



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Digital Currencies

The metaverse is money and crypto is king - why you'll be on a blockchain when you're hopping

 

The metaverse is money and crypto is king – why you’ll be on a blockchain when you’re virtual-world hopping

In the metaverse, your avatar, the clothes it wears and the things it carries belong to you thanks to blockchain. Duncan Rawlinson - Duncan.co/Flickr, CC BY-NC

Courtesy of Rabindra Ratan, Michigan State University and Dar Meshi, Michigan State University ...



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Kimble Charting Solutions

Inflation About To Blast Off or Is The Peak In Play?

Courtesy of Chris Kimble

Current data suggests that inflation has been in our everyday lives for several months. And today’s Producer Price Index data was pretty ugly.

BUT… could inflation be peaking?

Today’s chart 2-pack offers a glimpse of why inflation could subside over the near-term.

Here we look at the “monthly” chart of the US Dollar and Euro currencies. It’s pretty easy to see the rising trend channel for the US Dollar and falling trend channel for the Euro. As well, both currencies have formed a wedge pattern, with the US Dollar testing resistance and the Euro testing support.

Shou...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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