No, we’re not talking about Florence here, when we talk about the Big Blow-Over. No, we’re pondering if and when the economy which has been in a massive recovery since 2009 will finally hit its zenith and will begin the next cyclical decline.
Thing is – and I’ve mentioned this to your before – there is a semi-regular 11-year cycle to recessions. Though, if does move around a bit. Since the markets hit lows in the April-May 2009 area, we can tack on 11-years (roughly the Clement Juglar and the sunspot cycle) and estimate that 2020 is a great target to be thinking about when to be “street and dislocation-ready.”
For now, we’ve got fresh storm clouds on the horizon. Retail sales figures just released by the Census Bureau this morning:
We’ll get a little better “bead on things” when the Fed releases the Industrial Production and Utilization report here in 45-minutes, or so.
Despite the drop in autos, there was some good news on foreclosures recently. “CoreLogic Loan Performance Insights Find Overall U.S. Mortgage Delinquency and Foreclosure Rates Lowest for June in 12 Years” and there’s also been something like a 6.2% increase in home prices.
On the other hand, we could be at (or nearing) the cyclical low in delinquencies. CorelLogic’s reference to rates being at “their lowest in 11-years” locks us back into that 11-year cycle thinking.
If auto sales and retail can spring-back, there’s a case for a Dow soaring past the old record. 26,616 isn’t that far away.
Thursday, the Dow surged almost 150-points and this morning – before the release of the Retail sales figures, futures were suggested another 50-points. That’s dropped to 30-something after the data.
Where’s “The Big Crisis” that will arrive and derail things? We’ve got a couple of candidates:
- Word that Special Persecutor Robert Mueller has come to some kind of deal with Paul Manafort…which could set up the long-speculated Constitutional crisis in America. With the rest of the world’s major economies looking “long in the tooth and arguably done with 5-wave advances (Elliott) since 2009) the US has been running counter the trend with a strong dollar. That’s why gold looks to cheap. Strong dollar. But, when you toss in a Constitutional Crisis…Well, that’s when foreign investors begin to rethink what’s been the Trump Bump.
- Dirty Politics in America could scare-off mostly rational foreign investors. When you think about our country from the foreign perspective, there’s been a mass polarization with an “Impeach Trump” agenda even though two-years in, there’s been no evidence of Trump involvement with Russia – which was supposed to be the reason for the probe. Not two-bit tax charges and process crimes. While the Greg Jarrett book on this whole charade is selling well, the Big Picture is found in an older book worth your time reading: “Three Felonies A Day: How the Feds Target the Innocent.”
- Today, with reports that Diane Feinstein is holding a damning tip letter from a constituent about Supreme Court nominee Brett Kavanaugh (which has a fake dossier ring to it, to our ears), we wonder how low the political class will sink in their unending efforts to stop the Trump agenda? When it happens – and when the articles of impeachment come (perhaps right after the election or in January as a time-frame) who would leave their future invested in a country where politicians will be holding the financial class hostage?
For all Americans, the problem today is “Where can I put my money where it will grow as something even a tiny bit better than the inflation rate?”
Retail gives us one answer, I think. Since putting money in the bank is a sucker’s game (purchasing powers goes down faster than interest accumulates these days), people are buying things for the future. Want a UHD TV? It’s a damn good bet that it will be more expensive next year than whatever present prices are. If the US dollar stops rising, it will take more dollars to buy foreign goods. Domestically, this change in foreign exchange rates looks like inflation. Which it is, but it’s the source of inflations (Keynes general rise of prices) that matters.
On the Crooked Minimum Wage
Wage-driven inflation is something else. That’s one of the Obama notions (he’s welcome to take credit for it): Raising the minimum hourly wage on some federal projects. Let me show you something about minimum wages:
Now we can use the Fed’s inflation data to see where the rate should be today…just to have kept apace inflation:
- The 1997 minimum wage adjusted for inflation should be $8.05 today.
- The 2007 raise to $5.85 works out to just $7.07 in today’s money.
- $6.55 in 2008 works to $7.62 today.
- And the 2009 increase to $7.25 should be paying $8.46 today.
“Wage Characteristics of Workers” (BLS, 2015) says in part, “Among those paid by the hour, 870,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. Together, these 2.6 million workers with wages at or below the federal minimum made up 3.3 percent of all hourly paid workers.”
The sad minimum wage continue to shine as a beacon of how the Political Class has screwed the Working Class. Where’s #metoo on this one? Why, there’s been more screwing here than you could fit on Drudge!
In 1956, for example, the minimum wage was $1.00 (this is back when a dollar could still be exchanged for silver specie, by the way).
Adjusted for inflation (and just that the government admits to and can’t “factor out” – the min wage should be $9.21 today.
The $1.15 minimum wage of 1961 pencils out to an inflation-adjusted $9.63 per hour today.
And the $1.25 per hour in 1963 forwards to present day at $10.22 an hour.
While a lot of republicans are whining about Obama, he (perhaps inadvertently?) got a few things right.
Until America gets an honestly adjusted minimum wage – which we’d reckon would be around $11 dollars now, a couple of really clear conclusions jump out of the data, none of which make us very happy.
1. The US hit Peak Prosperity (by this measure) in 1963. That’s when people’s work was most highly-valued and while single working heads of household could get along pretty well and one parent could stay home and provide for home-trained VALUES that made for a great generation – the one that went to the Moon and such.
2. It also means that while the socialists have really been talking mostly hate and mostly division, they do own a major issue that they’re not playing well: Economics for the lower class.
We could go on, but if you get those two facts clear in your head one more implication may be true:
3. While the local lefties on the Left Coast may seem extreme with things like Seattle’s $15 an hour min wage press, the data says they’re at least more honest than the Crooks in Congress who have abandoned minimum wage adjustments for almost a decade’s worth of inflation.
When that kind of thinking starts to spread, the old-line, corporate bought-and-paid-for republicans might actually have to find honest work.
A simple calculator suggests they’re not qualified for any honest jobs, however.
No, not her…the storm that’s sitting at this hour right over the Brunswick Nuclear Plant in southern North Carolina:
Had an interesting idea someone should market: A small, blow-up, push in front of you sturdy blow-up push-boat. Something that would be a 3-foot square that you could put some critical grab-and-go stuff in. With a keel of some kind so it would be easy to push straight, a cover, and which would be cheap enough to be mass distributed in advance…,
Tell someone at Amazon. I bet it would make a hell of a globally useful Amazon Basics product as Hurricane Florence leaves hundreds of thousands without power in North Carolina.
And in Other…
Critical health note to be aware of: 3 die of breast cancer after receiving organs from same donor: report.
Here we see the need for a border wall…again: Illegal immigrant charged in stabbing death of 16-year-old girl, report says. Illegal alien isn’t PC, by why aren’t the libs defending the dead and maimed?
Passings: Volkswagen Beetle to end production in 2019. We can pretty clearly see a dune buggy shortage looming…
And as if we didn’t know all politicians are a joke? No joke as ex-comic becomes Slovenia’s new prime minister. Again, the world catches up with America.
Moron the morrow – got a couple of prepping articles about pirate radio and music at the end of the world on tap…