Since this is nominally a website about common-sense economics, we will start there before moving on to Emergency Room Adventures and this morning’s latest flash-in-the-pan data on Jobs.
The conventional wisdom is that the markets rise – lots of times – during the first week to 10-days of a month. Because that’s when the “fresh money” comes into the market.
Flip side of this (so we mentioned to our Peoplenomics subscribers a long time back) is that quite often you get an end-of-month “adjustment” as the “hot money” squares up with the Bankster class.
When the Fed is “root’n, toot’n, and shoot’n” the money supplies higher, it’s an easy call to scream rally and be right – in the long-term.
What a lot of people miss, however, is that this is only true so long as the Fed’s version of money is the only game in town.
The dynamic began to change when the “money changers in the Temple” decided that in addition to “local value” there was also an “internationalist’s value” to everything.
Which means that even though a U.S. stock may not be paying its own rent (via dividends and the like) it is still a major asset play.
Think of this as having its “echo in real estate.”
A rental property – with reliable tenants – offers not only enough money to pay the underlying note and taxes, but also enough to kick something back to the inventor.
What has been happening (with “hot” stocks) is no one is really paying “full freight rates” and many of the high flyers are not-yet here. They are stories. Some damn good ones, so don’t get me wrong. Ure loves electric vehicles (though hybrids more-so), along with space-based low Earth orbit internet and a whole lot more.
Still, there’s the real estate Model for markets: What’s real and what is hype?
Starlink Gets Real
Although we have plenty of reservations about Elon Musk’s Tesla autos and power walls, and what have you, his Spacex based Starlink low earth orbit data system looks to be proving itself a winner.
We plunked down the first $100 toward a $500 100 MB data service this week.
But, the problem is?
Like Donald Trump, the template of Musk is lots of good ideas, but also lots of Social Media hype. While $100-bucks is not going to hurt (too bad!) if it doesn’t play out, we do see some genius to Musk going for an ongoing revenue-generator, rather than a semi-conventional manufacturing model.
So keep an eye on it…we are.
Back to the House Model?
The stock market is not-yet paying its own “rent on money.” And, as such, we think there’s a long ways to fall.
We described this period – long ago – as Ure’s Discontinuity Zone.
While the rest of the economy is cratering, anything left alive will hold the potential for infinite value.
It’s like going into the Great Depression and owning a Mansion no one can afford. It still has some asset value. 17-rooms in the hills above Burbank with 24-kt. gold plumbing and back-to-back Olympic-sized pools.
Why, even the poor will see that as having some “VALUE.”
Which is holding the market up.
But what happens when (as we enter the high-risk area for inverted yields and possible negative interest rates): What happens?
- Over hyped houses (Bitcoin) continue to soar. Though the term “sketchy” applies. BTCs were around $50,000 a copy this morning which is down 10% from where the Greatest Fools were dumping in.
- By the way, Bob Prechter of Elliott Wave International has a dandy article on cryptos and counts, if you haven’t seen it.
- On the other side, a quality, upper-middle income property (like Gold) is having its ass kicked again: Gold was down in the $1,788 range, while cousin Silver was holding $28. How much is due to the relationship with Robinhood remains to be seen. But Gold could fall to the $1,000 range in nominal terms if we get into negative rates. there’s nothing to charge “rent on” and storage of “empty homes” ain’t cheap.
- The low-end real estate rental market may be thought of as bonds. Not as many people buying them. And God, how boring can you get? Who would piddle-around in bonds when they could collapse any time the word “Inflation” is uttered?
Which gets to a simple question we all get to ask: Will “Rent Get Its Revenge?” Maybe Yes! But the toughest of all question is? In which asset classes and what order.
Getting this right is the stuff family fortunes are made of. For the rest? Blood in the Streets.
Today’s Job Data
With incredible “hypenstance and circumcision” the Fed chief has been yammering about Job Creation. But that’s not America’s problem.
Joe Biden and J. Powell may not want to hear this, but the role of markets is to provide capitalization to good (money-making) business models. Save a few RECURRING REVENUE models that the smart people are moving towards (Gates on renting Office software and Musk’s Spacex – Starlink come to mind) there may not be much in the way of “easy pickings” for us small-time investors.
Robotics and A.I. only sound promising to people who haven’t “read the downside” which has been out there is Science Fiction lore for seven decades and longer.
With 10-million people unemployed and mass evictions likely (or more more hare-brained money printing) calamity has gone swimming after a full-meal deal. Which brings the specter of economic cramps to follow.
Here’s the latest Tout on job claims:
In the wake of this, we might get one more day of life to the market. But, even though faster information flows paradoxically slows arrival at trend outcomes, eventually we get there.
We haven’t had a “good wash-out bottom” yet. Something where little guys – like us – would look at stodgy old investments like “paid for” real estate and be willing to put our heads in the noose to get a piece of the next-gen version of a Golden Goose.
Investing in ONE of several thousand money schemes called crypto currencies is like trading building permits in 1930. Might work – for a while – but the Depression didn’t end until when? (1943?)
Durable Goods Report
So…how “durable” are manufacturing orders in mid- train wreck? Surprisingly good:
After the numbers, the market was still looking for an Aggregate decline (again) but a good story is being told by the “rent payers” – those stocks in the Dow than crank out reliable “rents” in the term of dividends.
The Headlines March On:
Big Pandemic means Big Money: Moderna expects $18.4 billion in 2021 sales from Covid vaccine, chief medical officer to depart. But the shot news isn’t all good as Booster shots could be needed for people vaccinated against COVID-19.
Eye Popper: 38% of Americans would give up sex for a year just to travel again, survey finds. (Bet me the 38% are older and have lost a home or assets in a divorce along the way?)
And “Where does it all go?” (Besides Away!) “2021 U.S. Household Bill Pay Market Size: $2.91 Trillion Spent by American Consumers Each Year on Recurring Bills. Quick, look surprised!
Life in the Emergency Room: Lessons
We were having a dandy day around here until around 6:30 PM last night. Elaine’s hip replacement had its picture taken (looked great!) and she had gone to sleep being tired from over-doing it for the day.
Woke up with terrible leg spasms. So I called the doc who prompted me toward an ER visit to get a precautionary X-ray.
The good news – at least for a few hours – was that the spasms subsided after I pushed a ton of liquids, some calcium, magnesium, and apple juice into her along with .6 liters and up of O2. (Joys of left-over airplane accessories, the O2 has always been saved on-hand for emergencies…).
When the spasms came back – in spades about 11:30 PM – there was no avoiding the 9-1-1 call. When O2, ice, heat, fluids and minerals and Oxy weren’t cutting it, the ER visit I figured would be covered by insurance.
After 3-hours in the ER, the X-ray showed no displacement of Hip-2, but the drug cocktail was changed up. It was updated to include the hydrocodone and Tylenol type pain-biller with some ibuprofen, as well.
With a lot of IV fluids, we got out of there about 3 AM and back out to our slice of paradise. Where she’s feeling better – but still lots of residual pain from overdoing Wednesday and getting upside down on hydration.
(On the other hand, 4-hours without a pee break should have been a warning flag…but I’m rusty on medical skills!)
Bumps on the road: We all know the biggest risk of aging is financial (and we can hardly wait for the bills on this one. But there were two pretty-interesting Survival Lessons in all this.
- First was the ER doc told me when we got home, if the spasms started again, one way to quiet them down is to drink some Tonic Water. More magic of quinine. Winked and said “light on the gin.” We didn’t get into the specifics of what “light” was – as regards gin. Near as I can figure “light” applied to any ETOH compounds is (like Unicorns) “light” is said to exist, but I’ve never seen it.
- Second point – and this was interesting as hell, too – was that the ER didn’t have any blankets. “We just got sheets back today...” one ER staffer explained to the patient next to us. They are hoping with overtime in the laundry dept. to get everything back to “normal” in a couple of days. But the “boil water” warning in Palestine, Texas didn’t come off in town until Thursday and MIGHT come off out here in the rural system by Friday afternoon. We’ll see.
- Oh, and the patient next to us? Had severe intestinal distress. Bad enough to wind up the CAT scanner. He was given the news that he’s got a “gastro collision zone” going on inside: Puking and barf out one end and watery brown out the other. “The more quickly it comes on, the more quickly it will pass,” he was told. But such misery (or Elaine’s either) we wouldn’t wish on anyone.
- ER will likely be busy Saturday night. Full “Snow Moon” [of native American lore] falls there Saturday. And with month-end checks for some, we beat the rush. They will have laundry back.
Running on 4-hours of sleep in 48, my personal “good news” is the Caregiver’s Diet has now dropped 14-pounds. Plus, as an added bonus, I may have Elaine open a school to teach dock workers and truck drivers-wronged how to swear.
Shocking! But, here’s in the land where “Everything’s a Business Model” I’m looking at foul language the same way Musk might be looking at Starlink.
Recurring Revenue Business Models.
Could teaching the art of swearing be one of the world’s “oldest professions?” Second?
Ure will now go look in on his short position, try to redo the cancelled big grocery resupply order, and get on with working the speed bumps to Home Health Care physical therapy. Has our Starlink earth dish shipped? Amazon order of more ice bags on schedule? Finish up the tax filing and get the refund on the way?
3:42 AM coming down the empty back roads to the ranch: Had a disoriented small coyote run ahead of our headlights for an eighth of a mile. Little suckers run 24 miles an hour, if anyone asks. Which was some kind of sign from the Almighty…but as is so often the case, damned if it made any sense to my pea-sized brain. Maybe when I catch up on ZZZ’s.
We having fun, yet?
I’m about to nuke some Chinese for breakfast and find out…
Write when you get rich,