The Wednesday Reader Note

This morning our Peoplenomics.com subscribers are getting a pretty good ponder on what lies ahead in America's economic future:

Helicopter Ben, "Terrorism," or Global Revaluation?

Over at the Strategic-Living website, SurvivalWoman and I have a new interview with a lady private eye which wonders "Are you Safe from Snooping Eyes?"  Answer if you're in a rush is no, but a damn interesting article on what's going on in the world of gumshoes these days.  Yup, we know people in all kinds of places...  SurvivalWoman piece on "Paracord for Function and Fashion" is good stuff, too, since I am one of those paracord-wearing guys when traveling, especially over the mountainous West.

That oughta keep you busy for a while - and of course, we'll be back with more of our typically cheerful, how to face the collapse of the world advice at the regular time on tomorrow morning.

I'm gonna go watch and see if my expected rally can re-ignite itself off the housing numbers this morning...

Tuesday May 15, 2012

Big Rally Day

About here, Peoplenomics readers will be saying "Oh...got'cha..." on my latest move of both nickels in markets yesterday morning.  The S&P, NASDAQ, and other indices were up smartly in the preopen due to the bond sales in Europe.

If you're trying to figure the "long-chain molecule" I think it may go something like this:  Rates going up in EU bond sales increases the inflation expectations which, in turn, increase the price of gold, silver, oil, and other commodities and this them makes fractions of ownership in American companies look like they may go up, too...and a rally is what ensues.  Which I think is where we are this morning, except that leads to...

Inflation Outlook

Consumer price index report out this morning is stuck on "no movement:"

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.3 percent before seasonal adjustment.

The energy index, which had risen in each of the three previous months, declined in April on a seasonally adjusted basis and offset increases in the other major indexes. The gasoline index fell 2.6 percent in April and accounted for most of the decline in energy, though the indexes for natural gas and fuel oil decreased as well. The food index rose in April as five of the six major grocery store food group indexes increased.

The index for all items less food and energy rose 0.2 percent in April, the same increase as in March. Increases in the indexes for shelter, used cars and trucks, medical care, airline fares, new vehicles, and apparel all contributed significantly to the April increase.

The 12-month change in the index for all items was 2.3 percent in April, the lowest figure since February 2011. The index for all items less food and energy also increased 2.3 percent over the last 12 months. This is the first time since October 2009 that the 12-month all items change has not exceeded the 12-month change for all items less food and energy. The food index has risen 3.1 percent over the last 12 months, and the energy index has risen 0.9 percent.

I've always wondered why "seasonal adjustments" would matter in year-on-year numbers...I mean wouldn't one summer be pretty much like another...so what's to adjust?  See?  This is why I can't get a high paid government job:  I ask the wrong questions.

Spending Data

Even more interesting:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for April, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $408.0 billion, an increase of 0.1 percent (±0.5%)* from the previous month and 6.4 percent (±0.7%) above April 2011. Total sales for the February through April 2012 period were up 6.6 percent (±0.5%) from the same period a year ago. The February to March 2012 percent change was revised from 0.8 percent (±0.5) to 0.7 percent (±0.3%).

 

Retail trade sales were up 0.1 percent (±0.5%)* from March 2012 and 6.1 percent (±0.7%) above last year. Nonstore retailers sales were up 11.0 percent (±3.1%) from April 2011 and building material and garden equipment and supplies dealers were up 10.3 percent (±2.8%) from last year.

But I ask:  Does this look like a recovery?

Obviously, I need to get my eyes checked again.

Pervert

It's refreshing not to be on the receiving end of such labeling, for a change.  Seems Rebekah Brooks (former Murdoch employee) is to be charged (along with hubby) for "perverting the course of justice..."

America Going to Pot

Might want to sign up to volunteer next time a Minnesota law enforcement training program is held...seems they were giving pot to a volunteer to see what their reactions would be.  Volunteers?  Show of hands?

Paranoia Meds?

A lot of people have asked me if I think there's anything to a  supposed DHS whistleblower claiming a Reichstag type event is in the planning stage in order to enact martial law in the US.

Let us know how the Secret Service interview goes.

Digital Wallet

Our Canadian news analyst has been watching the wallet lately:

Digital wallets would be the next Big Thing...except for the problem an increasing number of us don't have anything to put in them.

Voting Day

In Nebraska.  Our reader there needed reminding. Texans go to the polls on May 29th...two weeks.

No. The words of the Canadian reader are not mine to apologize for.  I published his note as it reflects one side of a very important issue, just as this morning's counterpoint represents the other view. 

As I am sure you are aware, wars are fought at many levels and in case you have forgotten what's we're doing in the sandbox, zakat charged by the Taliban on opium is a serious and ongoing problem for the World and I don't read too much about the Muslim community denouncing the Taliban, though admittedly I haven't researched it too closely.  A fuller discussion of the subject may be found in "How Opium Profits the Taliban."

I'd also note in passing, that Islam does have, in its history, large scale wars of conquest, although formal US operations of today are admittedly more current, they are in size much smaller proportionate to population.  And it can certainly be argued that the Crusades of the 11th-13th centuries were a delayed reaction (payback) to these earlier wars of conquest.

While I'm none-too-pleased with US conduct in many respects, a read of the history of the scimitar reveals its roots were not in the USA and on a per capita (decapita?) basis, it was one of histories most horrific inventions.  All the parties, seems to me, have blood on their hands, so who is fit to lead?

Has there been universal Muslim outrage that Iran is developing nuclear weapons, too?   Renunciation of states not signing the nonproliferation treaty?  (*Including Israel, btw.) Sorry....who's fit to lead...seriously!

America is in tough times - and they are about to get worse, despite all the hype and campaign promises that one can hear in the run-up to the elections.  But the fact is that although times are tough there are still plenty of opportunities to preserve capital - and maybe even make a buck or two - by playing the markets (and that includes retirement funds) smart.  This morning we'll offer some thoughts on the coming decision point for markets as we briefly review Henry George's way of seeing things and how that matters in today's world.  First, though, a few overnight headlines...

More for Subscribers                       To Subscribe, CLICK HERE

                    Need Logon Assistance?  Click here

 Safer Computing:  Swearing Off Cookies

It has been a while since I roared the praises of the Maxa Cookie Manager which you can download and install for a free test drive by clicking here.

To upgrade from the demo to full working is still less than $30 (During their Spring Sale) and one heck of a bargain at that, if I do say so.

I am a high-reliability computing kind of guy - and near as I have it figured, the road to a hassle-free computing experience is (like flying an airplane) a matter of going through a proper checklist before popping onto the web:

• You need an active cookie manager - because sites you visit can put small bits of code on your computer and some of these are designed for Flash, have no expiration, and can really bugger-up the computing experience.  This part gets handled by Maxa Labs' product which on my system says 184,380 cookies have been removed, 73,881 "web bugs" which can track movement from site to site and such, and I have only 10-active cookies.

• Second thing you need is a good antivirus program - and I happen to really like Avira's Antivir pro.

• Then you need to deal with Malware  so for this Malware bytes is updated and run daily.

• And last, though certainly not least is the firewall and the one in Win 7 works fine.

Like anything in computers, updates are critical so before work every morning, the computer does its update ritual - Check of Maxa (5.3.02 is current) Avira, and Malware bytes. 

Toss in a good bit of common sense (example:  Don't open email purporting to be from UPS, IRS, the US Post Office, or anything else that even has a hint of fishy odor to it) and first thing you know, the internet's actually a useful tool.

"Live on $10,000" A Year

Having a hard time making ends meet?  (Like who isn't, right?)  A good starting point to better match up income with outgo is our $10 e-book "How to Live on $10,000 a Year...or less!"

It's an automatic download.  It's written in an information dense style: The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the cheap, but also how to migrate up the economic foodchain if you have a little hustle left.  A bonus section called "How to Build Anything" should instill confidence if you've never taken on a home improvement/home creation project before, too.....  Click here for the index and details.

Do Tell

Please pass along word of this site to your friends by simply clicking here to send 'em a short email.  - Thanks!

----

Last week's report is always here.

Monday May 14, 2012

Special Update:

As I mentioned to Peoplenomics subscribers a week or so back, one of the thoughts that crossed my mind while sitting under an old oak tree at the US Civil War Memorial in Vicksburg, MS was that it takes it a really, really big issue to divide a country against itself.  And I wondered then whether gay rights might be such an issue.  It's emotionally hot - feelings run deep - and that makes it something easily manipulated by amoral marketers on both sides of the political trough.

It's worth mentioning the concern again this morning since over the weekend, Newsweek came out with a cover picture of president Obama complete with a rainbow-colored "halo" and the caption lower left "The First Gay President" although many news outfits are asking whether that's quite accurate.

Still, as a half-century viewer of politics in America, there aren't too many things that could divide us against ourselves, though gay rights may have that potential, especially in the deep South where we've been traveling lately.

True, there's a new Gallup Poll out thisi morning that says the majority of Americans have settled on gay/lesbian rights as the "new normal."  But I'd wager a beer (or so) that if one were to overlay a "heat map" on the issue of gay rights today, the geographical similarity to the Civil War might become apparent.

And politics being the crass business of twisting voter's emotions this way and that, don't be surprised to see this become one of the few polarizing issues as we get deeper into the silly season which has the potential to trump the economy.

Depressing 2nd Depression Notes

We've been chronicling this "stealth Depression" since 1997 when it became obvious that we were on an unsustainable path.  (*See chart in the Coping section which follows the news part of this report.)  So it really comes as no surprise to see the headlines that California is now underwater to the tune of $16-billion thanks to too much government, failing pension returns, and the list goes on.

Alas!  When some calls this the worst recession since the 1930's they reveal two important facts:  a) They haven't been reading this site over the past 15-years where I've been something of a broken record on this stuff.  But the second thing they reveal (b)) is that they have no grasp of economic history.

So why are they holding office?

Tanks for Voting, Though

We can help but notice the uneasy calm out of the former Soviet Union (FSU) where Vlad Putin got out the tanks to send a message to Russian voters last week:  I'm back and in charge.

What's the old saying?  Tigers don't change their stripes often?  Or, maybe it's that one-time KGB strongmen didn't keep their roles in the New Russia by playing namby-pamby Mr. Nice.  Same power trippers, new packaging.

Spain Yields

The interest paid by Spain to borrow billions this morning has gone up a bit.  This as Europe wonders if Greece will split the sheets with the EU and strategists wonder how much dough Spain and the other basically broke EU members are going to cost to paper-over.

Dimon's Were Forever

...until the $2-billion blow-up over Thursday and Friday of last week.  Fast-forward to this morning and several excecs are out and the open question seems to be whether this was a big enough spark to cause an explosion (albeit in slow-motion) of the derivatives bubble.  JPMorgan's got something around $71-trillion of notional value.  True, only a small fraction of that could ever be realized (in theory, notes Ures truly nervously).  Even so, that's about 5-times the entire US Gross Domestic Product and how big a fraction does that have to be in order to cause panic in markets?

Freebie NBC Marketing Idea

Speaking of Mr. Dimon, here's a new marketing name for their Meet the Press show.  How about "Meet Depressed?"

Kicking Down Markets

So between the Russians snubbing the G8 meetings, the higher bond yileds out of Spain/Europe, the further collapse of gold by almost $20-bucks, the Newsweek cover, and trading mess at JPMorgan, what will markets worry about next now that a downside move of 1% is possible in today's trading, based on the futures?

Glad you asked.

Retail sales and the consumer price index come out tomorrow and that has the potential to drive the US markets down to the 1,325 (or lower) target we've been patiently waiting for.

Coping: With Canadians and Movie-goers

Got this pretty good email from a reader on the Far Side (or the border with Canada) which you might enjoy. 

You're not going to like this. The reason you won't like it is that you are on the inside and do not see what the rest of us see regularly.

 

I am next door in Canada. We are your good friend and we like you. Yep, someone really IS on your side. I am 67 years old.

 

For most of my life I have listened to Americans being told they are part of the 'greatest country in the world'. Over and over again, all your life, you have been told how wonderful you are.

 

Well, (Take a deep breath here) you were but, you seem to be on the way out. We are all humans.

 

Other countries have risen to prominence over the centuries and they have all faded (Greece comes to mind along with Rome et al). To this day I see, on U.S. channels, 'how we won WWII' movies and documentaries. But, your movie making propagandists seem to forget Britain, France, Canada, New Zealand, Australia, India, China and some I may have forgotten were also there.

 

We, also all poured our best young men and women into that one. I thank God my Dad, a Wireless Air Gunner, survived.

 

America is not the country it was after WWII. It seems to be poorly led and fading. Just as civilizations of power did before America's rise, (You're still up there, but wobbling) more and more laws, rules and easements are removing your balls and abilities.

 

The obvious loss of moral fiber within society is surely creating visible cracks in your country, which is now seen as weak by the middle eastern people, who are using your politically correct immigration laws to gently invade your country and prepare for the rise and takeover of Islam and Sharia.

 

This has been announced and publicized by members of the Islamic community around the world, but somehow doesn't get much mention in the USA. Islam is in the process of trying to take over the world, and looking in from where I am, nobody seems to care.

 

And so American, what will you do? Will you lie down and let the world walk in and take your country? [I am not advocating hate or violence here, but instead, a rebuilding]

 

The rebuilding starts with you, at home, practicing and teaching your children morals, fairness and integrity. That hard work pays off with a better life. That charity is something good. Lending a helping hand to your neighbor builds friendship and trust. This then is what America was and can be again, but you must build and maintain it.

 

Never forget: You aren't the only beacon of freedom in this world, but you are the brightest and we stand at your side.

That's both comforting but disturbing to read in black and white, isn't it?

As long as we're in Monday morning reality checks, how about this one...

"George,

The movie is the message?

Have you seen "Atlas Shrugged Part 1"? The opening scene is the year 2016, DOW under 4,000, Depression, and gas at $37.50 a gallon.

The movie was a silent release, short lived... But boy oh boy if the movie is the message from a visual cue to put a modern twist on an old book it sure leads on to ponder.

Especially since I subscribe to this theory to some degree that the movie is the message also. I was waiting for something like the "Adjustment Bureau" to come out for a long time and I don't happen to think all of the Sci-Fi blockbusters are completely made up. I think they are taken from some of the ancient texts from India and South East Asia where the whole notion of life here beginning out there is a staple I the religion.

But the DOW being below 4K was in another movie recently besides Atlas Shrugged Part 1, but I can't think of the name of it right now.

Oh and I wrote to you last year when I had broke even. Well I went and got all positive again and the individual stocks I picked have handed me my ass and I am back to being in the hole massively.

I don't agree with everything on the website www.senseoncents.com  but he had a small write up a little while ago about how more and more people are deciding to not play ball and leave the market all together. And for once... I am finally feeling that way. I mean hell, the whole market can't be up because of tablets and Smartphone's. That's just plain old' silliness and those who really manufacture things are whipsawed all over the place (DE, CAT, F, GM, etc.) including the material stocks who provide the raw ingredients (FCX, CLF, Etc.).

This all smells of total bullshit AGAIN even though we are over 13K in the DOW and 1400 on the S&P. When Doug Kass is starting to say the road ahead is up I really start to wonder.

So pissed at myself right now for being positive and getting whacked hard. FCX, DECK, CY, and CLF come to mid of recent pain.

Thanks for all your work."

About here, I will roll out the whole (ugly) truth of how lifestyle "feels" to us average 'Mericans right now:  Take the ratio of the S&P by the M2 money supply and this is what the BOHICA feels like, despite all the crap otherwished by DC'ites:

This chart says it all:  Shows you how since the "Roaring Twenties" analog (1998 minicrash to the 2000 market highs) America is replaying the Great Depression but with sand in our eyes, manufactured and thrown by people we (quite mistakenly) trusted to do the right thing.

They haven't, so our debt load is unsustainable, and the global outcome is now inevitable, sorry, it's just not apparent to most folks. 

I'm sure if you'd asked the average Roman about the collapse of Rome at the time they wouldn't have be able to articulate it, either. 

The Future "Road to Riches"

Elaine and I aren't ready to move into buying up a string of rental houses yet, but when we get further down the flush (when the market is down to the Dow 4,400 area (or lower, perhaps Dow 780 in 2015/2016 or in there) it will be the best time every to buy rental properties.  Already, you can find deals where a home can be picked up from banksters who don't manage homes any better than they do risk or bonuses, cheap enough to cash flow neutral from the get-go.

A reader noted a while back:

"You are totally correct that owning rental housing is the best way to get rich. In my 43 plus years in this business I have literally seen hundreds of people do it. However, I have seen hundreds fail at it, including myself. Like most endeavors it takes a particular set of manual and, more importantly, dealing with renter skills. The latter which I apparently lack. The best two days of my life were when I got rid of my last rental and my ex-wife."

That chart above may come down even lower than it was in the 1980's - and if it does, that might be a reasonable time for young people to get into housing again.  It's the advice I'm giving my kids:  Be saving up for a down payment now.

Fad Watch

Then there's this reader question:

"morning George. How will facebook make money? Do people actually click on these ads they see in any meaningful amounts? Who are these people and can they be counted on to continue clicking on ads.

I mean I dont get it. Back in the day this thing called google came about. I was like how can that make money who would invest in that. well I wonder an I wrong again with this facebook deal.

with face book I dont care if the sun is shining and the birds are chirping or what sally wore for work or what jim found while walking down the street. I dont care.

Who clicks on these damed ads I dont get it.

im saying fb is a fad and wil be gone in a short time. ofc I wrong about google"

I've been asking myself that, too.  On the ad response question, serious marketing gurus (like the guy I shave in the morning) plan on 1/2 to 1.2% click-throughs, so yes, lots of people click.  Big money - BIG.

But the strategic question is this:  Is the whole social networking "thing" a fad?  We you old enough to remember the CD Radio craze?  Go here and click down to " Web = CB Radio:  It's just a recipe" for details. 

That's what I'm better on in the long term.  All I figure I have to do is plot the ascension of FB and other socials and then lay in long-term shorts and count the money.  All fads and manias run their course.  You don't have to be a genius picking out the up and comers.  All you need to do is spot the biggies and then short 'em on the way down. 

Yeah, simple, huh?  But who was warning you (and everyone else I know) about the dangers of the housing bubble from 2002 when people looked at me like I had two heads?  No one wants to think a fad is over - people fall in love with positions - and it's as true with gold, housing, or the Iraqi Dinar scam.  It's how the  Ponzi's and the Madoff's of the world constant come and go.

Of course you know all that, but what we don't know is what WuJo reports we'll have tomorrow or what the CPI fairytale will be, so see you for more coffee, fun, sport, and amusement tomorrow!

As one reader noted about our reports (while noting that as the People's Economist this might apply to me...):

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today."

And with six-sigma confidence, at that.