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

Rogue science strikes again: The case of the first gene-edited babies

 

Rogue science strikes again: The case of the first gene-edited babies

Chinese scientists led by He Jiankui claimed they used CRISPR to modify human embryos that eventually were born as twin girls. AP Photo/Mark Schiefelbein

Courtesy of G. Owen Schaefer, National University of Singapore

The idea of scientists tinkering with the genes of babies was once the provenance of science fiction, but now it’s apparently entered the realm of reality: On Nov. 26, Chinese scientist He Jiankui reported the historic live births of ...



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Zero Hedge

Plastic Apocalypse: Dangerous Microplastics Invade Alps To Artic, Found In Fresh Snow

Courtesy of ZeroHedge

A new study has revealed that high levels of microplastics have been detected in some of the most remote regions of the world.

The discovery, published in the journal Science Advances, is the first international study on microplastics in snow, conducted by the Alfred Wegener Institute in Germany.

Melanie Bergmann, the lead scientist, and her team of researchers found microplastics from the Alps to the Arctic contained high levels of the plastic fragment, raises questions about the environmental and health implications of potential exposure to airborne plastics....



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Insider Scoop

Heavy Volume Drives Low-Float Stock Plus Therapeutics Up 200%

Courtesy of Benzinga

Plus Therapeutics Inc (NASDAQ: PSTV) is the latest and one of the most extreme recent examples of the powerful combination of low float and heavy trading volume.

Plus shares traded higher by more than 215% on Friday. The biotech stock more than tripled after the company reported ...



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Lee's Free Thinking

Long Term Stock Market Chart Perspective

Courtesy of Lee Adler

After a big day like yesterday, I like to get a little long term stock market chart perspective. (Yes, this stilted verbiage is for search engine optimization ).

We do that with a monthly bar chart, which I update when relevant in Lee Adler’s Technical Trader. That’s in addition to the regular daily bar/cycle charts covering the past year, and a weekly cycle chart covering the past 4 years.

I wrote on July 14, in reference to the price and indicator patterns on the weekly chart:

The market has overshot a 3-4 year cycle projection in terms of both price and time. There are no long term projections. A 4 year cycle high is ideally due now. A 4 ye...



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Kimble Charting Solutions

S&P About To Decline 14%, Catching Up With The Crude Oil Declines?

Courtesy of Chris Kimble

This chart looks at the performance of the S&P 500, Crude Oil and the Yield on the 10-Year note over the past 4-months.

Crude Oil has declined around 14% more than the S&P during this time frame. Yields have declined, even more, around 36%. The is a huge spread between these assets over this short of a time period.

A few importa...



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Chart School

Bitcoin 2019 fractal with Gold 2013

Courtesy of Read the Ticker

Funny how price action patterns repeat, double tops, head and shoulders. These are simply market fractals of supply and demand.

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Ref: US Crypto Holders Only Have a Few Days to Reply to the IRS 6173 Letter

Today's news from the US IRS has been blamed for the recent price slump, yet the bitcoin fractal like the gold fractal suggest the market players have set bitcoin up for a slump to $9000 USD long before the IRS news hit the wire.

Get the impression some market players missed out on the b...

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The Technical Traders

Global Central Banks Move To Keep The Party Rolling - Part III

Courtesy of Technical Traders

This section of our multi-part article regarding current and past central bank actions, we are going to attempt to look at key elements of the past and present to highlight what we believe may turn out to be an incredible “setup” in the global markets. 

This setup is almost like a complex chess game where two skilled players battle for control and near the end of the game, one player is left with the King, a Rook, and a Pawn while the other player has a dramatic advantage with stronger chess pieces.  Yet, as the game continues, the weaker player is able to remove one or two of the stronger players key pieces and move his pawn to his opponent’s side to r...



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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

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

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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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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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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