(Back at the Ranch) If you’re wondering why the market is about flat in the futures market this morning, it is because of a lack of news.
I have a theory of markets and news that is pretty simple: Markets go where they will based on economics and returns on investment. But the daily news gives markets an excuse to do things that are mainly rational.
Over the weekend, we saw a good bit of hand-wringing. Stories like how a U.S. interest rate increase could “trigger a global debt crisis” and how Yale Nobel Laureate Robert Shiller says stocks are significantly overpriced and that raises the risk of a global recession.
You know this tune, I’m sure. Mainstream thought wasn’t around back when our Peoplenomics Trading Model went short the week ending July 3…and yet now that the market is down 7.3% in our Model, along come the great headliners, which is fine, I suppose.
We’re waiting for data, too, after all. And there is plenty of it this week.
For one, tomorrow will bring retail sales, Empire state, and industrial production numbers. Which means we could get a kick up, or down, depending on those.
Then Wednesday, even before the Fed meeting/announcement on rates in the afternoon, we will see the consumer price index.
I hate to argue with great brains (like Shiller) but in my view of things, stocks are not overpriced. If anything, they may be underpriced.
Here’s why:
Suppose I gave you $100,000 and said “Here, live on this for five years.” How would you do it?
One approach might be to simply put it into a bank…a big one like Bank of America. Unfortunately, a regular savings account there is paying all of 0.01% as of this morning. Check my math here, but is that even a monthly cheeseburger? Nope.
So we then look at bonds.
According to the US Treasury website here, as of May of this year the I series bonds were paying what?
I Bond Earnings Rate of 0.00% includes a Fixed Rate of 0.00%
As bad as that may sound, there is a key distinction now between a bank and the Treasury. Banks have been quietly changing their “terms of service” so that money put in a bank is no longer your money. It is instead a loan to the bank which means you loan the bank money which is slightly insane.
But, you see, it gets things ready for a Euro-style bail-in, although I’m hoping we still have a while longer before that shows up. Like 18-48 months. But, we shall see.
Now let’s look at a stable $200-billion class stock like, oh, Wal-Mart. As you can see over here, the trailing (and forward) 12-month dividend yield is running about 3%.
With all due respect to the learned Harvard Professor, I’m not sure how Wal-Mart (and many other good dividend stocks) can be assessed as highly over priced when competitive money pays (let me check here…) sh-t.
Money is like water. It flows to places depending on relative yield to the money’s owner.
The Fed will make a decision on rates Wednesday. But as long as stock yields are this far above prevailing interest at banks and fixed income products, there’s no great “over-pricing of stocks” so much as there is a “huge underpricing of bonds.”
So here are the three outcomes for Wednesday:
1. Fed raises a quarter (25 basis points). Markets panic as bonds drop in price as yield rises.
2. Fed raises a tenth (10 basis points). Market is stable, people (except us) scratch their heads.
3. Fed hold steady. The meme goes through the assembled multitude “Oh my God! The Fed can’t even raise rates!” As which point the market will collapse to our 1850 down to 1800-S&P level by mid November.
As a bonus, if the Fed holds and markets drop, the Schmita charlatans will claim victory, having confused greatly the difference between the Word of God and the Word of the Fed.
In the meantime, Asia was down a bit overnight. But Europe is about flat and market marketers will prognosticate like crazy, using weasel-words so they are all proclaim their greatness.
We’ll just “run by the numbers” and laugh at the folly or humans.
Speaking of Folly
Kentucky Clerk Kim Davis Says Licenses Being Issued Without Her Authority. Which is fine. She is not the law of the land.
She is, however, entitled to her opinion, but doesn’t have the right to impose it on others.
People often get wrapped around the axle on things like this. Hot, emotional, and so forth. But The Law is what it is and it everything from great religious documents, we have only to look at how the Law is usually pretty good.
It matters little to us whether it is broken by some self-proclaimed expert in Washington, or a local self-appointed dispenser of values.
People who don’t enforce the laws as they are written, though, get called out in Kentucky more so than they do in Washington…which is a folly worth noting.
Media-Induced Dissonance
It’s a subtle thing, but the mass media has gone down a dangerous road, already hewn by Congress.
You see, in Washington, one of the worst traits of corrupted democrazy is the “mixing of laws” which happens all the time. A law comes along, like a border law, or whatever. And a section is added having to do with house, something else on transportation, a directive on gas laws, a commemoration on this, and….well…you get the idea. Eventually there can be several hundred items in a law, all having nothing to do with its title.
This is a terrible habit and impediment to clear thinking. It’s like asking an airplane pilot to take off safely from LAX while at the same time having him or her control the freeway onramp signals on the 101 in Burbank. The one doesn’t have anything to do with the other. So let’s toss in making scrambles eggs at the same time, while we’re at it.
See how missions, roles, and all that gets screwed up?
I happened to look at Google News this morning and here’s how the media is screwing with your head, perhaps inadvertently:
The headline is about Trump and Carson. But wait! Who is that in the Picture? Why that’s Bernie, isn’t it?
And this is how the Big Controls work. Write Trump, mention Carson, show Bernie. At least in this feed.
If American Media was more objective, and less supportive of comparative journalism, we would see more stories that a single candidate-focused and actually hold their feet to the fire on tough issues. Like immigration from Syria where we know Obama’s number is 10,000 and we’re guessing Bernie’s number would be bigger.
But instead of positions, the mish-mass in media leads to dissonance and that is how America can (and has been) led astray.
Similarly, the way the media stream works, stories like “Cruz puts religious agenda over women’s liberties” show up in RSS feeds without the note on the source page that shows it is an opinion piece written by a woman who is an English senior…
Oh well…
Egypt Kills Mexican Tourists
The future of borders will be on the menu for Peoplenomics readers tomorrow. So as background, not only is the Coping section this morning a must-read, but so is this bit about how Egypt kills people who are in prohibited border areas.
George, what law or statute did Kim Davis break. Sorry, our courts merely offer opinions. Last time I looked, our legislative branches ( both state and federal) made the laws.not courts. If sheeple are told the lie long enough, they believe those as truth. Hitler said that didn’t he. But of course, its all in the marketing right.
Indeed, Kim Davis is entitled to her opinion and acting upon it too, as all people elected bring their opinions to the table in their job capacity.… The kerfuffle about issuing licensure for marriage is not about treating gay people as equal to others, it is not even about Kim Davis, but they are using her as they always do when wanting to make a huge shift of control… The issue is the fact that the populace is accepting the judge’s decision (he is not the law of the land either) as if he were judge and jury. A judge’s only capacity is to mediate not make decisions; that is a right given to a jury of peers – this is common law. And per common law, no one asks for permission to marry.
Why are any individuals asking for permission to marry? Of old, no one had a marriage certificate. It is my understanding they started issuing them for interracial marriages… that was the gateway in creating another control point – soon all states in time required marriage certificates.
And yet another point – the system acts like it cares about gay rights, that is not true. They are pushing the gay agenda because that is yet another way the population is controlled. Which reminds me, the original Roe vs Wade was not about so called rights, it was about lowering the population, thus offering up free abortions. One can get into rights about vaccines, as that is yet another population control mechanism.
If people want to marry, do it, don’t ask for permission. Stop asking for permission to drive on public roads… stop volunteering to pay property taxes, any taxes. No taxes are needed, yet people think they are – LOL – Seriously, time to start thinking about not going alone to get along. Just go back to the 1800’s, (Homestead Act) you got land free and clear, no taxes no nothing, if you had shown improvements on the land. Now one does improvements they are punished with higher property taxes = burden. A real government goes not tax its people, they create a script and spend it into circulation as they pay for the infrastructure. The script we have now is also created out of thin air only it is our taxes that pay a private corp for issuing it.
Tis time for people to stop volunteering in continuing the system. The controlling system can’t go away, nor can we create anew if we the people continue to comply, going along as sheeple. It is time to stop allowing other men to be our keepers, rule over and govern (control). If people are to start treating and acting as if all are equal then government would not be burdening people with taxes, stealing from Peter to pay Paul, etc… Time to just say NO, I DO NOT ACCEPT. :”)
I do not attempt to advocate either side of this issue here, but I wish to address the facts.
She chose her religious beliefs to stand on at the beginning of this, which was an invalid argument based on constitutional law. What she did correctly say later, which should have been her original argument, was that she was upholding the Kentucky Constitution and law as written. She should have said that she was unable to issue licenses because of the conflict between it and the Supreme Court decision. That would have forced the issue back into the legislature and out from in front of her desk.
Also, the only reason licenses are issued is for the state to collect yet another fee from us in order to get our information and the promise of future tax benefits for doing so. Joanie is right in advocating the end of participating in their little scam. If you truly find something offensive you try to leave it alone. Don’t like the lines, the rules, and the frustration ? Stop taking their money. That’s how they sink their claws into you.
My spoiled (now ex) wife found the whole unemployment benefits process quite offensive and demeaning, having never in 30 years of employment gone through the process. I politely told her that if she really felt that way she should stop taking their money. She got a job a couple of weeks later, we got a divorce the next year. Go figure. ;~)
Agreed. This day is coming…this day of lawless reckoning…the day the sheep stop getting sheared….the government is going to pass all sense of sensibility and the people-sheep are just going to STOP paying taxes, STOP sending their children to undeclared and unjust wars, STOP getting robbed to pay for invaders, STOP voting even. It is already starting. The citizen sheep who have done the right thing all of these years are noticing that law breakers take and get more than law abiders….everywhere graft wins…hard work is a sucker’s punch. It is building steam, too. We are watching our government continue to sell us out and import in their preferred races and it is not us!
So you presume that something that requires ‘government notification’ or ‘permission’ just be ‘done’? Oh, I think I’ll let you be the trailblazer . . . bet you don’t like paying taxes, or serving on jury duty or any of those minor little things that go with being an American citizen . . . or perhaps you are a ‘new arrival’ and don’t understand these things?
In fact, the ‘law’ that Kim Davis ignored, is more of an opinion reflecting an oxy-moronic situation or delusional fraud or an enabling act of hatred–depending on how pragmatic you are or what your mental focus is. Being given an ‘order’ does not free one from the consequences of their actions from whomever or whatever dispenses consequences.
As I understand it, a jury can decide if a law has validity, and with any luck, they would be educated, enlightened and mentally functional.
I’m liking the question of ‘what law did Kim Davis violate?’.
Marriage is defined by creation, not social constructs, even though such constructs can seriously mess up a marriage.
George, recently you had us write on our calendar, Friday, 9/11 S&P 1,740 and Monday, 9/14 S&P 2,012.
What was that suppose to be about, again?
The mainstream media seems to be glossing over a point: like a county or two in Alabama, she was not issuing licenses to ANYONE. She declined to issue licenses to straight people as well. But the media has an agenda to promote.