This morning features DDD – Decent Data Density and a chance for people to ponder whether typical pre-holiday optimism will show up. At the same time, the flood waters may be receding a bit as we’ve had our own adventures with rain here at the ranch.
Making Up Money Dept.
Let’s start with they data because there’s a fair bit of it. While most news outlets will focus on the just released trade and personal incomes, though, a quick sobering look at what the Fed has been doing with the money supply is in order:
Let’s start with the annualized rates of increase going on now – these from last night’s release of the H.6 Money Stocks report by the Fed:
To reiterate: Our view is the Fed is simply printing its way through a massive Depression (which kicked stocks down 33% to lows in March). Which – when we look at a 37.4% M2 increase sure wants to pencil out to a 4.4% “growth rate” if you only account using money. Not volume or units of goods.
You can make some other estimates, as well: Consider where the M1 and M2 were back in January (which was when the leading edge of CV was noticed) and certain in February when there was no doubt it would kick the economy down a flight of stairs…
While these are monthly figures, they are certainly an easy basis of comparison with the numbers out last night:
Penciling Out Comps
It doesn’t take a “rocket surgeon” to divide weekly average M2 January into monthly M2 average current. By this measure M2 is up 19.75%.
Nor is it hard to figure the same way for M1 (being cash and equivalents) and come up with a gain in “ready money” of 34.13%. Its worse if you figure it basis the February M1 – this gets you up into the 35 and a half percent range.
This is not to scare anyone. Instead, when we look at the high in our Aggregate Index the week of February 19, 28,953.75 and compare it with the close Thursday, which was 31305.94, we can begin to understand where the dynamics.
Simply: More money sloshing about means higher stock prices. 8.12 percent higher, in fact, as of Thursday’s close.
Can We Rally More?
Absolutely – but for how long is anyone’s guess. We have a boatload of economic pressures and no tried-and-true way to pencil things out.
Still, historically hints the Trader’s Almanac, there can be holiday rallies. Probably best known of these are Santa Claus rallies, which – if you leave out the Christmas eve 2018 bloodbath of the elves – does show up and and then. But the week before a Memorial, Fourth, or Labor Day weekend can see a lot of upside action. Good cheer and optimism rise. Higher vitamin D levels from getting Sun instead of flourescent lights? Who knows.
Meanwhile, we’re walking lightly on some economic quicksand. Because?
- Well, people who don’t like Marxist riots in their home town are eyeing Exurbia. Homes are cheaper in the woods – which we’ve been telling you for almost two decades now.
- Speaking of which, see what happened in Oregon? “Oregon protester convicted of arson in fire near police precinct gets probation, community service.” Seriously?
- People who don’t like high property taxes are discovering the joys of rural, too. Not as many services, but not as big a bite.
- When we moved out here, 56K dial-up from the phone company was as good as it could be. Today, we’re at 12 MB down and 1.5 MB up ((passing hurricanes, notwithstanding!)) When the 5G constellations turn up, we will be competitive bandwidth wise with anywhere.
- Big companies are discovering that tele-commuting works, though it’s be repackaged as “work from home” but same thing.
- And between lower property and tax costs, there’s the lesser bite of commuting and (oh-boy!) it’s good for the environment.
- Both political parties are about to go crazy: Dems will cast it as a chance to vote against racism. R’s will cast it as law and order and “it’s the economy stupid.”
What these times are specifically NOT GOOD (in our long-term view) for Big Cities. Ones with huge public employee pensions, massive sports complexes that were built using taxpayer-backed bonding authority (we warned many times on these!)…and schools that want to get paid more to in part add administrators.
Even though a good education LMS (learning management system) will spit out more statistics than 46-dozen liberal arts Masters-types all day long. And without three months off, comp-time, maternity leave and and personal time measured in months not to mention a totally delish retirement fund.
Doesn’t even look like a close match to us, but we’re not here to convert anyone. I talk to fellow ham radio operators all the time and they say “We just moved into to a retirement home and the HOA says no ham antennas! Out here? Air-powered antenna launcher good for 100+ foot tree-topping heights. Although we caught sight of a neighbor just yesteday. “Just livin the dream…”
OK, Running with Numbers, Now:
Personal Income and Expenses: (We like to warm up with humor):
Personal income increased $70.5 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $39.9 billion (0.2 percent) and personal consumption expenditures (PCE) increased $267.6 billion (1.9 percent).
Real DPI decreased 0.1 percent in July and Real PCE increased 1.6 percent (tables 5 and 7). The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
International Trade and Inventory data?
Advance International Trade in Goods The international trade deficit was $79.3 billion in July, up $8.3 billion from $71.0 billion in June. Exports of goods for July were $115.0 billion, $12.2 billion more than June exports. Imports of goods for July were $194.3 billion, $20.5 billion more than June imports.
Advance Wholesale Inventories Wholesale inventories for July, adjusted for seasonal variations but not for price changes, were estimated at an end of-month level of $633.7 billion, down 0.1 percent (±0.2 percent)* from June 2020, and were down 5.4 percent (±0.9 percent) from July 2019. The May 2020 to June 2020 percentage change was revised from down 1.4 percent (±0.2 percent) to down 1.3 percent (±0.2 percent).
Advance Retail Inventories Retail inventories for July, adjusted for seasonal variations but not for price changes, were estimated at an end-of month level of $594.7 billion, up 1.2 percent (±0.2 percent) from June 2020, and were down 11.2 percent (±0.5 percent) from July 2019. The May 2020 to June 2020 percentage change was revised from down 2.6 percent (±0.2 percent) to down 2.7 percent (±0.2 percent).
Could be worse. After the data, the futures were pointing to a 160- point higher opening.
This’s and That’s
Battle for the streets during the Digital Uprising continues. As “‘We have all had a knee on our neck’: Activists to call for police reform, voting rights at March on Washington. ” Pardon me, but who doesn’t have voting rights? You mean the illegal aliens? People not in the country legally? I mean WTF? Anything to incite, huh?
We assume you caught in a recent decision that three (and maybe four, Kagan didn’t voice an opinion in the case) Supremes thought US rights extended outside America’s borders. Which is plan nuts.
On the other side, as the RNC nominated (no surprise who) Rudy Giuliani says ‘all lives matter’ while slamming anti-police brutality protests in RNC speech. He musta missed a memo from Antifa or BLM.
EBM Meets BLM
You know our motto around here, right? EBM: Everything’s a Business Model.
We got to wondering this morning if BLM was becoming a business model.
Sure enough, here’s a list from the TESS database at the USPTO. Not sure if all this trademarking activity will end racism. But, it’s sure to help law schools along.
We will report back in five years on whether such monetizations axctually bring change…
Up on a ladder at 5 AM in pouring down thundershowers still (until today) unable to find out why I have a roof leak. Maybe found it…live storms are best, I guess.
Laura, meantime is storming through the midsection today: Weakened but still dangerous, Laura to pose continued threat. And rotating power outages and flood clean up work is underway in the Houston to NOLA corridor south of I-10 where the damage was worst. Hurricane after hurricane wreaked havoc in Orange, Texas. Finally, residents say they got a break.
Off to rebuild our mail box, next. Knocked over by a garbage truck Thursday. Been one of those non-stop, too busy – no time to think – weeks…
Write when you get rich,