Fed Wait: Caught Between Trends

imageWhilst we sit around and twiddle, waiting for Janet et alia to do their thing next week, we can’t hope but sit back and appreciate the “ViseGrips Moment” in here.

To the good:

    • The U.S. unemployment rate is still very nice.
    • The U.S. dollar is (for the moment) in a relatively stable range.
    • There is enough politic going that any outrageous moves on borders or (still more)_ refugees would likely be denounced.
    • Prices are moderate in  their increases and the price of a gallon of gas this morning is $2.01 versus $2.639 according to the Triple A Fuel price report here.

    So while things are not perfect, there are definitely some good things about if a person wants to wear the rose-colored glasses for a while.

    But there is the bad, as well.

      • Average wages are flat.
      • Food prices are going up either 1.6% or 2.9% annually depending if you cook at home or go out.
      • The Baltic Dry Index has dropped again – this morning to 546 – a sign that trade is falling apart.
      • And, of course, the Public Debt to the Penny was $18.789 trillion dollars as of Monday.

      This latter number is interesting in that we only have (very roughly) 149.364 million people working.  Which means each of us working is responsible for a pretty fair chunk of Federal Debt:  $125,793 worth.

      Why, it’s like making house payments on a cheap-o lake property…without the lake property! 

      There aren’t many good investment options, either, when you sit back and think about it:  Bonds have fallen in yield, which has been pushing their prices gently up since the interest rate peak in 1980/81.  But investing in bonds when there’s more talk of negative rates about isn’t a good idea.

      There are been speculation that negative rates might come to Canada, and that’s right next door…

      In a long wave economic perspective, the present quandary is easily understood.  We have been expanding the economy since the interest rate lows back in 1942, or so…the depths of World War II.  That was when “smart money” was not taking the bet on whether we would win, or not.

      Now, we’re actually below those kinds of rates – first time ever – and yet there has been no rush on the part of young people to buy homes.  It’s a phenomena that happens with some regularity in evolving cyclical depressions.

      The psychology goes something like this:

      Say you want a car.  Do you buy it today or do you wait?

      Certainly, if you need cheap transportation for work, you could buy it today.  But what if you waited?

      In a world of negative rates, you would likely be able to score a zero-percent loan if you wait.  And another thing?  More and better electronics are coming to the “cockpit.”  I hadn’t driven a car with a built-in mouse before until we rented a car in northern Arkansas on one of our flying trips a while back.

      Sure, texting while driving….but mousing while driving?  How cool is that? 

      Thus we get to the conundrum of the Fed next week.  If they raise rates will it force pools of money in bonds to flow into slightly riskier, higher-yielding investments like stocks? 

      I happen to believe it will…and that will be the same icing on the economic cake that will blow the Dow up to 23,000 or higher in 2016 if our calculus is right.

      To be sure, when it happens, the media will, as usual, ascribe any change to precisely the wrong reason.  Rather than money flowing in the direction of higher returns, the mainstream  will report a “rising spirit of optimism in America based on (fill in the wrong answer).

      We figure someone in the back rooms of the Fed has this old Jimmy Durante tune running through their head….retooled as “Did you ever have the feeling that you wanted to Raise…”

      Deflation Date, Blah, Blah, Blah

      From the Labor Department:

      Prices for U.S. imports fell 0.4 percent in November following a 0.3-percent decline in October, the U.S. Bureau of Labor Statistics reported today. A decrease in import fuel prices drove the November decline in the price index for overall imports.

      U.S. export prices declined 0.6 percent in November, after a 0.2-percent decrease the previous month. Imports All Imports: Overall import prices decreased 0.4 percent in November, after falling 0.3 percent in October and 1.1 percent in September. Import prices have trended down throughout 2015, declining each month with the exception of May and June.

      Prices for imports fell 9.4 percent for the year ended in November, and have not increased on a 12-month basis since the index rose 0.9 percent in July 2014. Fuel Imports: Fuel prices resumed a downward trend in November, declining 2.5 percent following a 0.1- percent uptick the previous month. T

      he price index for import fuel decreased 24.9 percent between June and September. A 2.5-percent drop in petroleum prices and a 4.6-percent decline in natural gas prices both contributed to the November decline in overall import fuel prices.

      Prices for overall fuel fell 43.2 percent over the past 12 months, after decreasing 15.9 percent between November 2013 and November 2014. Petroleum prices declined 44.5 percent over the past year, while prices for natural gas fell 32.3 percent. All Imports Excluding Fuel: The price index for nonfuel imports also decreased in November, falling 0.2 percent following 0.3-percent declines in each of the previous 4 months.

      Lower prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; capital goods; and automotive vehicles all factored into the November decline in nonfuel import prices. Prices for nonfuel imports decreased 3.2 percent for the year ended in November. Prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; and each of the major finished goods categories all fell over the past 12 months.

      Hmmm…notice the bevvy of falling prices?  That, little buddy,  is what we call global pernicious deflation – and that’s why the column early wondering whether Janet and the Fed have missed their window of opportunity to stop the auguring in…

      Meantime, this morning futures are flat…pass the No-Doz.

      Then There Are Bitcoins

      While I don’t a single one to my name, we noted a month or two back in analysis for our www.peoplenomics.com subscribers that Bitcoins appear to have put in their low and are currently “basing” which could lead to a further advance.

      That was when BTCs were in the high $300’s and this morning they continue to hold trading around $415 when I checked it out.  One of these days, I may have to get me a wallet.

      While I ponder that, there’s a very good story floating about over who, exactly, is Satoshi Nakamoto?

      Check out the story “Bitcoin creator Satoshi Nakamoto denies being Craig Wright (maybe) .”

      Even though Bitcoin promoters would love to have their tailings (as in mining) tax-free the reality is that by taxing them as tangible property, government can maintain a lock on how gains are accounted for.

      A Curious Tax Question

      Speaking of money and taxes:  I was sitting around t’other day considering what to do 10-30 years from now when I (at some point will) die.

      Here’s the question:  If my estate is quickly settled and funds dispersed to the heirs, can IRS open an audit on a dead person?

      Oh, sure, if there were fraud alleged,. I suppose there would be some basis.  But if it were a simple matter – say under-reported income in year of death that didn’t come to light until later; well, could they audit?

      The reason I’m thinking about it is government thinks it is so all-powerful…if I could screw them out of a nickel from the safety of the grave, would I do it?

      And, if they really are as all-powerful as many bureaucrats seem to believe, could they do me the courtesy of raising me from the dead to respond to a notice of audit?

      Just thinking ahead here…and lots more fun than “advance directives” and “should we spend it all now and tell the kids we’ve decided to go that route?”

      I plan to finish sorting this stuff our before I’m 80, or so…just in case.

      Is CNN Shoving Trump Off Stage?

      I’ve been a reporter long enough that I’ve seen it all and can spot some of the fancy-footwork a mile away.  Thanks to a certain northwest political strategist for the schooling.  Fun when you see how “news story ideas” are planted because when comes down to it, reporters have to “play their sources” to keep on the good side of background string-pullers…

      To my point:  Along comes this story on CNN:

      How would a Trump independent bid work?

      …I sniff the winds of political change and wonder WTF is going on here?

      Trump didn’t mention it…so who in the background is trying to shove him off-stage or at least change labels?

      This has all the framing of a trial balloon being floated by the old-guard (bought and paid for, lobbyist-beholding) GOP to encourage The Donald to do something else – other than wear their party label.

      You see, the do-nothing GOP is being disgraced and embarrassed as the Do Nothing Party.

      Ure’s counter-proposal:  I think it would be dandy if Trump would propose right back to the GOP operatives this idea: How about THEY give up the label of Republican (small central government, balanced budget, strong on civil rights and America-first values) and  THEY  – the Obama Wing of the GOP – put on a more honest label for the Boehner’s and Ryan’s of this world?

      I think the Turncoat Party would be fine.

      But the polls post Trumps Border Moratorium remarks should be coming in shortly and those who were predicting Trump would slide into Oblivion will be proven wrong.

      Meantime, Trump ratings go higher

      Waiting for Comey’s Exit

      Remember our prediction that Obama would bounce FBI Director Comey for not toeing the party line?

      Well, here he goes again, according to this story:  Not drinking the White House Kool-Aid on the sentencing “catch and release” program.

      Comey is going in the books as a Great American…and thank you for your service. Keep it up as long as you can…

      Foreign Affairs:  Who Wins in WW III?

      A note from our military affairs consultant warhammer:

      Good Morning, George!

      As I perused the headlines this AM, this snippet popped out at me from the Air Force Magazine daily report: 

      ISIS Hopes to Draw US Into “Apocalyptic War”

      —JENNIFER HLAD

      ?ISIS is trying to engage the US in “what they believe is an apocalyptic war with the West,” and anything we do to support that idea is against our national security interests, Vice Chairman of the Joint Chiefs of Staff USAF Gen. Paul Selva told the Senate Armed Services Committee on Dec. 9. “We have to be very careful about how we prosecute a campaign that appears to be an indiscriminate attempt to attack ISIL and the population that surrounds it,” he said. Defense Secretary Ash Carter also spoke against sending in a “significant” US ground force, quoting Chairman of the Joint Chiefs Marine Gen. Joseph Dunford, who last week testified that “ISIL would love nothing more than a large presence of US forces on the ground in Iraq and Syria so that they could have a call to jihad.” Sen. John McCain, chairman of the committee, rejected that argument, and said President Obama has mounted a “strawman argument” by saying his critics wanted to send 100,000 US troops into Iraq and Syria. “No one is calling for that,” said McCain (R-Ariz.), while stressing that the US does need “several thousand additional US troops” in Iraq, and a “multinational ground force,” including a “strong US component,” in Syria.

      I’m just not used to seeing the ‘A’ word in political or diplomatic dialog.  Adding ‘war’ to it definitely grabs my attention, beyond ‘universe’ just merely winking at me.  This is more like getting hit on the head with the round end of a ball peen hammer!

      As the dialog in the Washington accelerates over ISIS, it is clear the fundamentalist Islamic regime intends to suck the world into chaos and bloodshed, all in the name of religion.  Try as they might, western leaders do not understand the nature of the ISIS threat.  It has massive hypnotic appeal to young men and women living in poverty with no hope of individual capitalistic success or fame and glory.   Cut off victims’ heads on video or die at the hand of the infidel enemy and you get instant fame plus get a ticket straight to heaven.  Oh, and overall victory has been assured through sacred prophecy.  

      Politicians debate.  Elections come and go.  Memories of 911 and horrific world wars past are relegated to dusty books that nobody reads anymore.  You know what scares the (fill in the blank) out of me?  ISIS has a solid plan.  We don’t!

      Cheers,

      Once again, our oak leaf cluster fellow calls it right.  And he will likely be even more so over time as the hollowing-out of the U.S., military continues.

      Comments

      Fed Wait: Caught Between Trends — 13 Comments

      1. One can set up their estate to avoid probate and even avoid needing a lawyer. It is not hard to do and it can save thousands AND lots of time.

      2. How can anyone ignore that ISIS is a construct of the CIA? How can the world ignore that Turkey, a member of NATO, is assisting ISIS in the sale of the oil they steal from Iraqi/Syrian oil fields? How can the world ignore that the US has known about the oil convoys and refused to bomb them, thus being responsible for the financial strength of ISIS?
        This is a farce and until these facts are discussed in the media, I refuse to buy into any theories about what ISIS intends to do and what a threat it is to the US.

      3. You can’t have “Turncoat” as we have it in Australia, the elected Conservative Prime Minister was deposed by a left slanted politician called Turnbull – now called Turncoat. Sorry!!

      4. Hi George. Your comments about maybe leaving something for the kids struck me as very funny. Believe me when your 80 the kids will have nothing to do with you. Kids and grand kids do not want to associate with old people.
        I have seen this in many different families over the years. I don’t attend family reunions any more because I can stay home and be ignored. Being 85 is definately no fun. It’s better on the other side. Why not spend the kids inheritance in you old age??? Can’t take it with you anyway. You are very lucky to have someone with you to have fun with. Snazzee

        • Sad for you. Let me tell you how we treated my Dad. We kept a very close eye on him and he was visited weekly by children and grandchildren and the ones out of state, came every summer and Christmas until he passed away at 85. He had a bad bout of CHF at 75, some of us never left his side. He started showing signs of Parkinsons at 79. At 80 3/4, he broke his left hip, and 83, he broke his right hip. We bought a used wheelchair van and he never was left alone or at home alone and was included in everything and taken everywhere, he loved to go and do and be around his family. At 84 1/4, he had a feeding tube, he was hospitalized 4 times the last year of his life for infections due to a foley catheter, he was never left alone EVER in the hospital for any thing in that long 10 year decline. All 10 of his grand kids were there for his last Christmas and birthday and 8 of his 9 children were there, too (as one sibling was taking care of our sick Mother in another country). We lost the most incredible Man/Dad/Father/Grandfather/Father-in-Law earlier this year from pancreatic cancer. Losing him was a great loss and he is dearly missed.

          We took care of our Dad 24/7 the last 4 years of his life, and IF I could have one more minute with him on this earth, I would GRAB it!

          I remember asking him once, how was it to parent 9 children? He said, “you kids were no trouble at all, I had a lot of fun raising you kids.” Well, I knew we were trouble, but he loved us and he didn’t see or remember the negatives, and he did not have dementia and was with it right up until he passed away. I spent 10 years of my life making sure my Dad was well cared for in every single way, I was his guardian and DPOA, and took him to all of his doctor appointments, was there for every hospitalization, and I lived 200 miles away. I respected and loved him and treasured him and made sure that he did not worry for anything. I did not get paid nor take money for my time and effort as he was NO trouble at all. He made me a better person, I now know that I can take care of an invalid in every single way, not shirk from the responsibility or duty and thrive under the demands of necessity. Even to the end, he was my greatest teacher.

          We are grateful for all of his love and all that he did for us his whole life.

          One time we were talking, and I thanked my Dad for all the wonderful ways that he was such a great Dad to all of us, and he said this: “You have it wrong, it is you kids that made me the man I am.”

          There ARE families that treasure their elders and love them with all of their heart. There is a great gift given to an adult child or grand child that gets an opportunity to give back to such a beloved elder, you deserve to be treasured like that and to give that gift to your children and grandchildren. Show your children and grandchildren this posting since they seem to not get it. You deserve to be honored, loved, respected, and treasured.

      5. Re ISIS:The Pentagram should just cool their jets. Uncle Putin is doing a fine job of mopping up the mess WE help create.Unless of course they REALLY want to replace Assad with someone more compliant and fascistic.

      6. I bought a 5xUSB charger wall plug-in from China for 99cents (total including shipping) on ebay, 11/27/15. On 12/8 I get a card in the mail saying come sign for a package at the Post Office, since I wasn’t home for them to deliver. It was the USB charger!! Can you believe that! Maybe the Post Office has a secret jump room somewhere for instant product transfers from China, and that is why the Container west coast shipments are down. idk ??

      7. OT – cashless society is not going to happen. Why? Because it is unnecessary:

        http://www.bbc.com/news/technology-22369628
        http://www.nextenergynews.com/news1/next-energy-news-rfid-coins-1.16b.html

        What will happen is further erosion of freedoms and ever finer tracking of money down to the hand-to-hand level. It’s all there, right in plain sight. They just need a currency ‘event’ to roll out the ‘solution’…

        The testing phase is over:

        http://www.eetimes.com/document.asp?doc_id=1225333

        Never forget the world is gamed by bankers…

      8. not sure about in the US, but as an auditor in Canada, I’d say the estate can be audited and the executor held responsible for any tax liability even after distribution of assets. I have audited Trusts for a variety of reasons and would have no great difficulty assessing the Executor or Trustee.

        • Vic is correct. This is the reason savvy executors/trustees hold a contingent reserve and obtain a tax release/clearance letter from the IRS prior to distributing ALL of the assets. You never know what a decedent has or has not done re: taxes.

          • Is it possible to set everything up as a trust, including future earnings, to be administered by George, for the purpose of setting up remaining lifetime disbursements, with the goal of his last act to hand someone his last gold and/or silver coin ? Something in the spirit of what Facebook Boy is doing, except with the express purpose of limiting exposure to current and future tax liability ? Call the yearly payments to those who are to be benificiaries something like a current period inheritance disbursement, in amounts which would be found to be acceptable under current gifting guidlines to family members. If that fails you could make a series of bad bets with your loved ones in levels which would make them most appreciative and ensure their participation in lengthening your days as much as possible.