Archive - Aug 2015

We're regularly told by the Fed and defenders of the current incumbent president that the economy is humming along pretty well. People who write columns for the New York Times and who compile government reports are doing pretty well. Unfortunately for those who don't write columns or enjoy comfortable government jobs, things seem less rosy. In fact, in an economy with a rising cost of living (especially in housing), stagnant real wages, and falling worker productivity, many in the so-called working class are very, very worried about the future. And this is a reason that Donald Trump is doing so well in the polls...

Having hovered around the $43/$44 level all morning, new from Baker Hughes that the oil rig count in the US rose 6 to 670 (its highest in over 3 months) has sent it back down to a $43 handle...

The omens are not good when momentum and quality become highly correlated, warns SocGen's cross-asset research group. Quality is now essentially price momentum and vice versa, and history tells us when these two strategies collide the omens are not usually good, as it is a phenomena usually associated with equity markets turning bearish. This becomes even more evident when they plug the factors into their bear market indicator... simply put, we are in a bear market!

"It hurts morale when people feel like they aren’t being appreciated. I hear people every day talking about looking for other jobs and wanting to remove themselves from Wal-Mart and a job that will make them feel like that."

Chinese investment in U.S. commercial real estate has changed over the past three years, and this has caused changes in the ownership of U.S. assets. It has changed even more over the past six months, and this means even bigger changes for U.S. industrial real estate.

Fool me once, shame on you. Fool me twice, shame on me. Fool me thrice, Happy Jack. Fool me a fourth time... dude, seriously!!

Did you take out a $245,000 loan to pay for your degree? Good news, the Department of Education wants you to know that "your payment could be as low as $0 a month!"

The chart below shows why a Fed rate hike hike in the coming months virtually assures a recession: in July, wages for non-supervisory workers failed to rise once again, increasing by a paltry 1.8% Y/Y after peaking at 2.0% in late 2014. Worse, the current trend suggest the record lows of 1.3% will be revisited in the coming months.

The S&P 500, having broken below its 200-day moving average again, has joined The Dow Transports, Dow Industrials, and Russell 2000 (small caps) in negative territory year-to-date...

Elements of the financial media are either unbelievably lazy or completely complicit in helping to maintain the illusion of success for the Centralized powers (large governments and Central Banks).

Spot Silver prices are spiking this morning after an initial drop post-payrolls. The 2.9% jump, breaking back above $15, is the biggest daily jump since early May... This is happening as UK's Royal Mint releases 50,000 new GBP100 silver coins...having previously run out of supply to meet physical demand.

But but but... the smart men on TV said a) rate-hikes are priced-in, 2) rate-hikes are bullisher for stocks than rate-cuts (why would The Fed raise rates if everything was not awesome?), and thirdly) buy the dip! It appears The Fed knows it is going to need some ammo sooner rather than later... But it's not just the mega-caps, The Russell 2000 (small caps) has tumbled back into the red year-to-date...

Here is another, even more disturbing way of showing the "New Economy" - since December 2014, the US has lost 1.4 million manufacturing workers. These have been replaced almost one to one, with new waiters and bartenders. Win, win for everyone, especially the welfare state and of course, China.

Americans are finally driving more. Some of that comes from a better labor market. An additional piece stems from discretionary travel. And a final component is due to lower fuel costs. All those factors point to a better economic backdrop for the second half of 2015.  If the U.S. can’t generate better labor market and economic growth with these tailwinds, what will it take?