I suppose we ought to start with the retail data just out:
Saved by the auto industry, looks like to us. (Who the hell is driving?)
With CV-19 still raging – and variants popping up – should be interesting to see how the coming few months roll. Do people have anywhere left in their homes to pile up more stuff?
Or, is this is the leading edge of deconsumption and wow! Does that ever wreck the sales pitch of growth – holy mantra of corporations!
Side of Producer Prices with That?
OK…hot off the griddle:
“Final demand goods: The index for final demand goods advanced 1.1 percent in December, the largest increase since moving up 1.5 percent in May. Over 70 percent of the December rise can be traced to prices for final demand energy, which climbed 5.5 percent. The index for final demand goods less foods and energy advanced 0.5 percent. In contrast, prices for final demand foods inched down 0.1 percent.
Product detail: Nearly half of the December increase in the index for final demand goods is attributable to gasoline prices, which jumped 16.1 percent. The indexes for iron and steel, diesel fuel, jet fuel, meats, and home heating oil also moved higher. Conversely, prices for natural cheese (except cottage cheese) fell 10.8 percent. The indexes for electric power and for electronic computers and computer equipment also declined.”
Which prevented a melt-down in futures pricing. Though we will be watching the markets to see if there’s discounting of trouble-to-come next week as the week winds up. A rally at the close might be an interesting short entry…or not.
Dow futures down 150 at click-time.
False Growth and the H.6 Money Stocks
The way we figure it, one of the reasons the stock market is showing what we consider “crooked growth” is that retail hasn’t completely been flushed down the crapper (saw retail sales, right?). This leads to people talking about “recovery” like there was really going to be any.
We don’t think so…at least not yet.
Here’s why: Take a look at the Fed H.6 money stocks report – last one of 2020 and the first few days of this year is just out:
See those highlighted numbers in yellow? The right one says (rounding) that any physical asset (with continuing demand) ought to be priced up somewhere around 25% when we consider only M2 (cash, some time deposits etc.) for the year.
A closer read will be had by ShadowStats subscribers who follow M3 (reconstructed) which was hidden in one of the most misleading of all Alan Greenspan’s moves tenure as Fed Chief. Ending reporting of M3.
The “false growth” notion says (looking at the data) that spending is going along just fine. It ISN’T and we’ll dig into that in a sec.
But, we think what’s really going on is the intergenerational gulf. Old people are starting to croak. Helped along by CV-19 and such. And a lot of the young people coming up don’t have much in the way of skills or leisure-time pursuits.
IoW I’m thinking people can sense the Depression coming, they’re stocking up on necessary items now and they know at some point when soft hyperinflation hits, they will be scrambling just to hold their heads above water.
Like us: We see economic troubles continuing into the foreseeable future without a break. Rather than roll into the manias (cryptos and stocks) we’re focused on bulking up the larder and getting long-term consumer durables that may not be affordable later. (Priced a reasonable quality foam King mattress lately? That kind of thing…)
So we think a lot of present day consumption is because people can hear the squealing tires and see the brick wall ahead. Getting what they think they will need now but these levels of sales are not sustainable as the layoffs increase.
Now to the Data
Supporting this view are stories like these:
Says Forbes’ Duncan Madden: “The Covid-19 Pandemic Has Cost The Global Tourism Industry $935 Billion.”
And making its way into Drudge headlines today was the Yahoo story “Covid-19 prompts rethink of mass tourism…”
Maybe it’s not obvious, but think about hotels, car rentals (and rippling back to auto manufacturing), theme parks (like Disney properties), airlines, Boeing… Well, you get the drift. (See where “Disneyland Ends Annual Passes?”)
Even some of the digital stalwarts are starting to slice workers. “Dropbox to layoff 11% of workforce, COO to step down” reports Reuters.
The really grim is still not apparent, but air travel is not coming back. Notice Air Canada is laying off 1,700 (more) and reducing Q1 lift?
A headline in the South Bay’s The Merc earlier this week offers this wider view: “COVID economy: Layoffs jolt tech, hotel, restaurant, retail sectors
Layoffs jolt workers in Bay Area, nearby regions: state filings.”
For now, sure, the economy doesn’t seem to be telegraphing disaster: People are still doing refi’s to lock in low rates on worries that firming as seen in the CPI will drive housing prices back up.
And a lot of smart young people are still buying homes because a) you’ve gotta have somewhere to live (besides an underpass) and b) because it’s a forced savings plan and most people don’t have a nickel’s worth of self-discipline.
But when this quarter is over, and the agitators take to the streets this summer? We don’t rule out a mega collapse this Fall, if we can avoid it in late winter to spring this year.
Not trying to rain (or snow) on your parade, but keeping it real.
Useful to Know
NY Times biz section calls it: “PepsiCo Suspends Political Donations, Citing Capital Rampage.” Laughably, we’ve always held that corporate lobbying should be made illegal because it’s like “payoffs.” Now, corporations are voluntarily backing out. They’ll be back to check-writing in other ways, though. America has the best government money can buy.
We’re pretty clear that Congress’ upcoming “getting tough” on social media clowns will message them “How dare you cut us off!” Tough talk to follow – it’s really a public price-setting negotiation when seen at the macro level. YGTBFKM, right?
Speaking of the District of Corruption: House Dems who accused colleagues of aiding Capitol rioters have yet to provide any evidence. Must be nice to live in a proof-free world, huh?
How’s our 400,000 CV dead by February forecast looking? Well, as of this morning we’re at 388,705 dead in the U.S. so first of Feb. maybe not, but by the end of the month? Sadly, yeah, likely. As Global Death Toll Nears 2 Million As WHO Battles New Virus Strains.
Useless Distractions for the Masses
“NASA finds an alien planet with 3 suns.” No word if any daughters were seen. (rim shot)
And who was driving? So how does this happen? NHTSA says U.S. highway traffic deaths rose in 2020 due to risky driving.
Viral Video Experiment
We don’t ask you to do much, as a reader of this site. But we’re going to make an exception this morning. In the name of “science.”
Backstory here: Young – soon to be millionaire – son of Chris Tyreman, who already has his first business book out on Amazon (Reviving the Art of Innovation: Using Your Sense to Make a Dollar) (and has a net worth of $350,000 at age 16) is working on experiments involving video. Yes, that’s right, videos on YouTube.
Here’s how he explains the experiment:
“It started with my home schooling, and wanting to learn video editing. So to kill two birds with one stone, dad and I thought it might be cool to create some You Tube videos teaching people how to accrue wealth. From there, the idea snowballed. So here is what has come of it:
Dad then spoke to a friend of his in the US who has a very popular business site (Urbansurvival.com) and they created the idea for an interesting experiment as part of my schooling which can be done with the videos I create:
The question was posed: What does it take to create a viral video and channel on YouTube.
Purpose of the experiment:
- To give people access to information on accruing wealth, for free.
- To see if our combined resources have the ability to use the YouTube algorithm to push the video up into the main public view.
- Whether this placement will naturally lead to a viral video and channel.
We need everyone to do three things.
- Click on the video link:
- Click on the subscribe button when you get there
- Send this post to all of their friends and ask them to do the same thing, like an old fashion chain letter.”
To us, this sounds like the kind of baseline knowledge that a junior web scientist ought to be collecting, so we’re putting it out there for you to help with. Yes, we’ve both subscribed.
We’ll keep you updated on results. Maybe some next week. Besides, the video (where Judah’s dad, Chris, explains 10 reasons why a lot of people are poor rather than rich), presenting 10-good rules we try to live by. If you don’t know them already, they’re worth learning.
Off to the long weekend – Saturday Gourmet takes up teriyaki and a quest for a long-lost wine tomorrow. Sunday ShopTalk works on cheaply installing solar panels. Monday? Market’s closed, so non-destructive pillow testing is in the running. But, let’s see what the news flow looks like. May be a really short column…
Write when you get a round tuitt. Usually found near left-hand sky clamps.