With the early futures down 125 points, in advance of economic data, it’s not hard to imagine any number of reasons why the US stock markets shouldn’t have a face-plant pending.
A few things coming to mind – a checklist of sorts:
- 10 people are dead in another rampage shooting. This time out west of Boulder. The two takeaways for us? The spa shooting last week – give us two very clear 135-146 day “murder cycle” makers. The second is this will further the Biden (and “president Harris”) agenda to grab guns from the public. Conveniently, democrats won’t be held to account for Chicago gun violence. By one tally, “Colorado incident is seventh mass shooting in US in past 7 days.” Sure looks like the murder cycle window, doesn’t it?
- And a Jonathan Ponciano/Forbes piece “Bitcoin, Tesla And GameStop: 10 Numbers That Sum Up The Fastest Market Recovery Ever” reveal the headiness that permeates finance. With Bitcoin still over $57,000 at click-time, we’ve oiled up the ViseGrips and will be reapplying them to the forearm shortly.
- Covid-19 isn’t leaving any time soon. Most worrisome now is a report out of Hawaii that “3 Fully Vaccinated People Test Positive For COVID-19, DOH Confirms.” The cases, say reports, involved Pfizer and Moderna shots and the cases were mild. But, they were cases…
With the U.S. Balance sheet (in a sec.) looking lame, and with a less than stellar Covid future peeking out again, the rationale for infinitely priced markets is evaporating. The art (less science) will be calling the turn.
Early birds are already selectively shorting, but the longer-term decline is only now arising in longer-term charts. It’s down to a matter of when we’ve “sprung.”
America’s Accounting Time Bomb
While the Fed has been talking up all of its “thumbs on the scale of price discovery” and how we need more this (and that), we see a problematic accounting issue lurking.
The 10-year Treasury Note is still hovering around 1.684% early. While that doesn’t sound bad to those of us old enough to remember 13% rates in the early 1980s, it’s still up almost 3-times since August of last year when the possible 10-year low of 0.51% was marked.
Three knock-on’s follow from such moves in the bond market:
First is that interest on the $28-trillion of public debt swamps us. At 0.51%, the interest alone on the Public Debt is $142.8-billion a year. Spread over the 150-million people (roughly) who work anymore, that’s $952 per worker.
With the interest rate higher, the interest jumps to $471.5 billion which trickles down to $3,143 per worker.
Second is that company sales must increase 1.684% just to keep up with interest rate changes. In other words, a zero-growth figure in such an inflation setting still needs to grow to tread water.
Third is rising rates will begin to unwind some of the massive gains in real estate. That’s because while the total amount people pay might not change much (until the slow-down dynamic picks up speed), the proportion going to sellers goes down and the amounts going to finance companies (lenders) goes up.
Fourth and fifth? Well, you can figure that companies claiming high growth rates, but not paying dividends will soften, I assume. And then there’s the evaporation of “the Wealth Effect” as general prices increases come down the pike. Which will lessen demand, leading to lay-offs, or worse.
This is only one (but perhaps least socially disruptive) track through present economic times. As crumby as it sounds, though, it’s far preferable to deflationary collapse (less likely because of unlimited printing capacity of government, but bounded by the “pushing wet noodles around” problem – which is why “free money” under the guise of CV-19 is one way to “push” the economy. The last option would be a Zimbabwe-like hyperinflation.
In this view, we survey the investment world alternatives and see contrary indicators:
- Bitcoin (and cryptos) are rampaging higher in a hyperinflation indicating way. Lesser, but still large gains are being seen in “hot city” real estate.
- Stocks generally are bidding up, though not quite at hyperinflation rates by broader indices like the S&P 500 and Russell 2000.
- Value plays (stocks paying dividends, fully paid-up assets, and agriculture-based enterprises) are better positioned for the possible deflationary outcome. But some consider such stocks boring as hell.
Anyone can make a strong case for any of the above. But, a cornerstone of the UrbanSurvival Philosophy is to “Play for Minimum Loss” and eschew “Playing for Maximum Gains.”
The Crypto Crowd can trash the environment and squander resources (wasting energy on mining) all day long. But making-up “secret numbers” when 7.7 billion people need something to eat seems ethically bankrupt. Then again, so does selling digital tripe to Greater Fools under the guise of it being a “breakthrough technology.” No, fire is a breakthrough technology. Wheels. Irrigation. Don’t get me started. Crypto will always be one quantum computing breakthrough from collapse.
When I see stories like Miami’s Mayor Wants to Make His City a Crypto Hub, I am reminded of the crassness of politicians. Always looking for a cause (or buzz) to hitch their wagon to.
It suffices to note that notional financial abstractions are less edible than what comes out of a vegetable garden. Yet, amazingly, in a world where people can’t even figure-out what sex they are, we’re somehow not surprised at prevailing lunacy levels.
Bureau of Economic Analysis (BEA) is our PR pick-of-the-day:
Not a happy-looking trend, is it?
“Exports of goods increased $30.9 billion, to $387.5 billion, and imports of goods increased $36.4 billion, to $640.5 billion. The increases in both exports and imports reflected increases in nearly all major categories. The increase in exports was led by industrial supplies and materials and capital goods, and the increase in imports was led by industrial supplies and materials; automotive vehicles, parts, and engines; and consumer goods.
After the number, Dow futures were down 125 and the S&P was down 12-something.
Two hours in we will see some home sales data.
Now the Good Stuff
A number of medical stories of extreme interest to aging persons are making the rounds:
The first has to do with our old friend gout. Which follows from having serum uric acid levels (SUA) being too high. Turns out, in research out of China, report in the Journal of Hypertension (cited by Nature.com) that “Baseline and change in serum uric acid predict the progression from prehypertension to hypertension: a prospective cohort study.”
What comes into focus for me *(and this seems very useful) is a sequence that goes like this:
- Eating lots of meat, especially pork, tends to raise SUA levels.
- Over time, SUA levels indicate a track toward CHD.
- And so one asks whether early intervention in SUA management can work as well (and who knows, better?) than the statin approach?
Very interesting concept.
Viagra for Longer Life!
I kid you not: Story over on StudyFinds.com today offers a great discussion of how Viagra (and similar-acting) medications may extend lifespan!
Damned if I can remember where I read the story, but somewhere in the deep filing-system-of-mind there’s a memory that Viagra was initially isolated as a blood pressure moderating drug. But, when the “hard effects” became noticed, the drug maker made a decision to take it to market for its erectile dysfunction treatment potential. The reports coming out now suggest a kind of “second life” for such “stiff dickeners,” as it were…
By the way, Ure has also noticed in his own personal experiments that a good level of Vitamin D (with K) and a good multi-vite and a delta-8 CBD seems to have…er…useful effects. This is not medical advice, of course.
We have a nickel bet ready to place that no matter how grody sex in your seventies, eighties, and beyond may sound (when young) the longer you’ll live. Ure’s Crackpot Theory of Hormone Cycling.
For the International File
And Russia Forecasters Warn Over Siberia Forest Fires. Air purifier sales for the US West Coast to rise?
And the Chinese are quietly moving to a digital currency (Digital yuan pilots making steady progress: official) but will they offer convertibility in from other crypto’s? We doubt it, but we’ll know soon-enough.
Around the Ranch
3D printing: Shameless product tout: $25 for four ounces, but I ran some prints overnight and 3D Printer Adhesive Glue Bed Weld Original on a 60C hot glass printer bed is PFM (pure freaking magic). Just the ticket to turn out KC-135 parts that have been orphaned, lol.
In the Wood shop: Always happens: As soon as I order a new tool, the price drops. Latest is Rockler’s Router Table Box Joint Jig which is down to $79 from $88 last week.
For those not into real woodworking, a box joint has straight end-fingers. the Dovetail joints are prettier, but take more time to crank out than setting the jig up on the shaper table. Zing, zing….
Ham Radio antennas: One of my buddies in the local ham club wanted to know more about Ure’s Super Antenna. Sent him links to the three articles that outline its evolution: The first is here:
And the second part
And then to wrap up:
Waiting for reader Hank out on the Big Island to add some long-side wires to his OCFD to see if he gets similar results.
RV’ing: My consigliere is the proud owner of a 30-foot class ultra-light travel trailer. Might bring it down here for Thanksgiving. Being a lot of plastic (and an aluminum hitch for weight reduction) it poses some interesting antenna design issues.
Don’t know if you remember, but my buddy (the Major) has had issues getting his Icom-7000 and AH-3 to load up well on his (also) lot’s of plastic travel trailer.
Humor? Speaking of (the Major, who married a Captain, whose son will likely be a Lt. Col. shortly) chastised me at martini time here for my PGA/LPGA remarks Monday. “Don’t get worked up about it, after all, aren’t most golfers swingers?” (rim shot, audience groans)…
Off to a million projects. And a discussion of non-financial investments on Peoplenomics tomorrow..
Write when you get rich,