Man Plans and G-d Laughs!
So in retrospect, in 2015, not a single person got the answer right to ‘where do you se yourself 5 years from now?’
Where you gonna be in 2020?
Stuck at home for almost the entire year!
But you are a fortune teller and are so smart you should’ve rolled your dice in the ever exploding bubble of a stock market.
Oh, that’s right, you did! 😉
(Credit Photo: Andy Blumenthal)
I went to the mall today.
This is a few weeks into reopening phase 2!
I expected people would have pent up demand and be swarming the stores even while keeping their social distance.
They weren’t at the mall!
The stores were nearly void of people.
The shelves were virtually empty of goods.
Whatever merchandise there was seemed to marked “sale, sale, sale” even on the already deeply-discounted clearance items.
It was completely frightening–like the economy is dead or on severe life support!
Most stores had 3 or more associates standing around or sitting twiddling their thumbs.
This while the stock market keeps ticking up and the NASDAQ is reaching new highs almost daily.
Coronavirus is surging again across much of the U.S. and there is almost 140,000 dead in the U.S. after just 5 months even though much of the population was in self-quarantine.
The economy looks to me in sh*t shape, despite the U.S. pumping $3 trillion dollars more of debt to artificially prop up the economy and the fed lending out money at super low rates.
It makes NO sense for the market to be hitting all time highs as if everything is all roses when the economy is still a true mess!
The New Yorker magazine wrote back in May of a post coronavirus “decade of depression” with an L shaped recovery, yet we keep seeing a V-shaped one and no one seems to be able to offer any plausible explanation for it.
Two-months ago, even before the recent stock run-up to higher levels, Business Insider reported that “the Stock Market is trading at its highest valuation in 18-years.“
Last month, Forbes reported that “the stock market appears to be reaching unsustainable highs.“
Yesterday again, Bloomberg reported that the “economic recovery is faltering.”
Almost daily, I read that companies are laying off their workers (in Travel, Transportation, Entertainment, Retail, Energy, etc.) or declaring bankruptcy (e.g. Hertz, JC Penny, Neiman Marcus, Chesapeake Energy, and more).
This while we are still, in the best case scenario, maybe half a year away from the possibility of a tested, approved vaccine. And then it will then need to be mass produced and mass distributed to hundreds of millions of people in this country and billions globally.
In the meantime, we certainly could be up for a second wave of Coronavirus on top of the flu in the fall/winter. And then the Coronavirus may mutate and become more virulent requiring annual vaccines like the flu shot–more hit or miss.
All this while U.S.-China trade war is imperiling our economy further, and arch-enemies Iran and North Korea remain national security threats.
To me this all points to that we are nowhere near out of the woods and perhaps that there is a wildfire raging and no one seems to be paying any attention!
The stock market euphoria is a common trap and is the definition of “irrational exuberance” but comes after investors have been robotically indoctrinated to buy the dips!
IMHO, buyer beware, beware, beware. 😉
(Credit Photo: Andy Blumenthal)
I believe this photo best summarizes where we are with the Coronavirus stock market.
As they say:
Don’t count your chicken before they hatch.
This market has gotten way ahead of itself and the pending economic realities of the Coronavirus and the consequences of the trillions of response fund debt.
Remember:
– The virus does not yet have a vaccine, and it is mutating and may become even more virulent!
– The deaths continue to soar in the U.S. with now over 75,000 dead in just two months.
– The deaths involve much pain and suffering both for the victim and his/her grieving loved ones.
– The unemployment is at all time highs since the Great Depression.
– Companies are starting to move from temporary layoffs to permanent firings and contraction, and many eventually to bankruptcy.
– Profitability and gross domestic product are way down and may be even worse in the next quarter.
– Price Earning ratios are around their 10-year highs even looking out toward a possible 2021 recovery.
– Restarting the economy does not mean a return to what was as the extreme trauma from the pandemic, shutdown, and social distancing rebalance us to a “new normal.”
– A second and third wave of Coronavirus may be as bad or even worse than the first.
– The two biggest global economies of the U.S. and China are facing a deteriorating and toxic relationship.
– The lingering $3,000,000,000,000 that we just added to our National Debt is going to increasingly strangle our future economic outlook.
– The election is in November and brings increasing instability and likely volatility.
In summary, the term used by former Fed Chairman, Alan Greenspan of “irrational exuberance” seems like a gross understatement when it comes to our current stock market.
Get ready to see the froth come painfully off this drunken market–these eggs are about ready to crack. 😉
(Credit Photo: Andy Blumenthal)
I don’t know about you but I have found the communication about the Coronavirus to be absolutely confusing.
And the actions demonstrating unpreparedness, disorganized response, general chaos, and panic do not match the few calming words we are getting.
No wonder everyone is panicking and the bottom is falling from the market.
On one hand:
– The officials tell everyone to remain calm, and there is no reason to panic.
– Help is on the way.
– People are overreacting.
– Most people that get Covid 19 won’t even know they had it or the symptoms will be mild (or maybe moderate)
– The death rate is “only” like 3 or 4% and it’s mostly older people or those with chronic ailments anyway (as if these people don’t matter).
– Younger children aren’t really getting it (although we don’t know exactly why or the impact on pregnant women).
– It’s less contagious and deadly than the flu (wait, it’s more contagious and deadly).
– There are plenty of tests available for everyone (no, there aren’t).
– It will be over in a few weeks when the seasons change and the temperature goes up.
– A vaccine will soon be ready for testing and then distribution after 12-18 months.
– The numbers of infected are going down in China–see they have it under control!
– Maybe we should allow investigative drugs to be used (or maybe not, the FDA thinks this is a bad idea).
– The impact to the economy will be over probably by August (or will it?).
– It’ll ALL be over soon.
On the other hand:
– We don’t know what we’re facing (people are routinely using the words apocalypse and armageddon).
– This could be the “big one!”
– Is this a punishment from G-d (and is the Messiah coming)?
– This has reached pandemic proportions.
– We are declaring a national emergency.
– This may have come out of a Chinese bioweapons lab.
– Also, China suppressed information and initial response on this making the outbreak worse.
– “China should be punished for these things” (or some version of this).
– Cases are raising around the world.
– The contagion is worse than initially thought (there are comparisons to the Spanish Flu of 1918 which killed around 50 million people)
– The death rate is higher than expected.
– We don’t know why or where certain people got Covid 19 from.
– The hospitals are already overwhelmed and are unprepared for a real surge of cases.
– We need to “flatten the curve” so our healthcare system isn’t brought to its knees.
– We are already triaging patients and our doctors and nurses are working extra long hours and are exhausted.
– We aren’t prepared for this–our healthcare system and government has “failed us”.
– We’re rolling out unprecedented economic assistance from the Fed, the Treasury…another trillion dollar deficit (no answer for how this gets paid, if ever…can anyone say runaway inflation in the future and lots of worthless dollars).
– Washing and “Social Distancing” are paramount.
– There is a run on toilet paper and disinfectants and these are either sold out or vendors are price gouging these items.
– We are shutting down the country (workplaces, fitness centers, eat-in restaurants, entertainment, travel, places of worship, and any significant gathering of people).
– The instructions to stay at home in “indefinite”!
– People are stuck in the house and worried about how long this will go on.
– Some places like New Rochelle, NY are under quarantine and the National Guard has been called out.
– There is talk of a curfew and further measures of quarantine to be enforced under penalty of imprisonment.
– The lines at the stores (Costco, Sam’s Club, Supermarkets, Groceries) are out the door and the shelves are empty.
– Amazon announces that they are running out on consumer stables!
– Businesses are suspending workers, moving them to part time, and laying them off.
– The stock market is down by 1/3 and we’re told that this could just be the beginning.
– A recession is looming and the economic impact and duration is unknown.
– Italy is on lockdown.
– Borders are being closed.
– People can’t get home from abroad.
– Cruise ships aren’t being allowed to port.
– Airlines are screaming for a financial bailout.
– Navy Hospital Ships with 1,000 beds each are being deployed to the east and west coast.
– We’re sending $1,000 checks (or something like this) to people below a certain income level (maybe $65,000).
– Taxes are supposedly being deferred (although not filing of returns or estimated taxes yet).
– People are wearing masks everywhere (but we are being told only the sick ones need to wear it and we see everyone in China wearing it and of course our first responders and medical professionals, so which is it).
– Primary voting is delayed in some states and there is question whether the November Presidential election will also be delayed.
Summary:
Does anyone know WTF is going on around here???
(Credit Photo: Andy Blumenthal)
Get comfortable with your salary, because it isn’t going anywhere positive–payrolls are stagnant!
The Wall Street Journal reports that wages since the recession “have grown slowly, advancing at a pace of about 2% annually” for a total of 12% since 2009.
In contrast, in the 20 years prior to the recession, wages “grew on average better than 3% annually”–that’s 50% more increase per year!
Sure some of the increase is now coming in the form of benefits growth, such as time off, subsidized commuting costs, and health insurance premiums, but workers still need to be able to pay their bills.
For the federal workforce, things have even been worse with pay raises of “just 2% [total] over the last five years” and a proposed 1.3% (with locality pay) for 2016.
Is it surprising then the innovation–one of our greatest strengths–is also drastically slowing in the United States. We are not rewarding risk with reward like we used to–and that changes the whole innovation equation!
Also no surprise then that mergers and acquisition are booming as the key to corporate growth as well as cost-savings through economies of scale are seen as one of the only ways to wring out profit growth in companies bottom lines.
All in all:
– While inflation is up an average of 2.13 over the same 10-year period.
– This leaves the average household more than 6% worse off then they were a decade ago…that’s a lot of time to be working and getting negative returns on your investment of time and effort.
Combine this with:
– Manufacturing down to only 9% of jobs in the U.S. economy
– The country’s ongoing spending binge–a national debt that has doubled over 8 years from around $10 trillion to almost $20 trillion by 2017 and interest payments about to take off with rising interest rates.
– Throw in a arms-race with China and Russia and the aging Baby Boomers setting up the economy for dramatic increases in Social Security and Medicare
And the “fun” NOT is only just beginning. 😉
Interest rates have been near zero since the recession of 2008.
That supposedly to stimulate the economy.
However, aside from a stock market bubble again, not sure we have a much stimulated economy.
We have a false low on the unemployment rate, while the the true percentage of the labor force working is the lowest in almost 40 years!
Moreover, manufacturing is down almost 40% from the 1979 peak with a loss of over 7.2M jobs.
Commodities are at firesale prices as demand is sluggish and there is short-term oversupply.
And innovation is facing a global slowdown.
So people are out of work, we’re not making things, demand is depressing prices, and even ideas are few and far between–not too rosy a picture, regardless of what some politicians may have you believe.
Let’s not forget that we have an over $18 trillion federal debt, and this is projected to grow ever greater as we borrow to fund social entitlements such as social security, medicare, etc.
In this scenario, why would the Federal Reserve ever want to raise interest rates?
Well, if they don’t raise rates, then they can’t lower them later again when the economy really stalls out and goes into deep recession.
Hence, this is seen as a tool for their financial toolkit–and if there are no tools with which to manipulate the economy, then there is no need for a (neutered) Federal Reserve.
But think for a second what happens when the Fed raises rates, it’s going to slow the economy even further than the chug chug chug economy that we are already dealing with.
Maybe even more important, it will raise the amount of interest payments we must folk over on the trillions of dollars of debt we owe.
Simply put, when we raise interest rates, we pay more interest on our already astronomically high national debt, and this pushes our national deficit up even higher as we borrow more to pay the interest on the previous debt.
If you did this with your credit cards, you’d probably be looking at the equivalent of debtor’s prison sooner or later.
Rather than feed the Fed’s toolbox with interest rate bumps and drops, why not keep rates low as long as they can stay low, reducing our interest payments, and curtailing our national deficit and debt.
What about the stock bubble…that’s a lesson investors will be learning about in their own good time–it’s the stock market, stupid. 😉
(Source Photo: Andy Blumenthal)
So the world financial markets continue to go haywire.
The Uber glorified taxi service and app (with an almost half billion dollar operating loss) is now valued at–get this–over $50,000,000,000!
And commodities–you know the precious materials that REAL things are made off (gold, silver, copper, aluminum, oil, gas, coal, wheat, cotton, corn, soybeans, cotton, cocoa, coffee, sugar, beef, and more) hit a 13 year low.
When the nothings of this world like a basic cab service become invaluable and the real things that power our homes, technology, transportation, and manufacturing become valueless–then we know a day of painful financial reckoning is coming.
The markets can stand on their head for only so long before the blood rushes in and people become dizzy and see spots.
A reversion to the mean is the one something here that is inevitable, along with a pretty decent recession to boot. 😉
(Source Photos: Andy Blumenthal)
Just an observation today about there being so much poverty in the Nation’s capital and around the country.
Homeless, hungry, and sick people on the streets in one of the richest countries in the world.
Yet, we have trillions going overseas to fight wars with seemingly little to no tangible benefits.
And so much ostensible waste with pork barrel politics, inefficiencies, and failed projects.
A relative joked with me the other day saying, “It doesn’t matter if you’re rich or poor as long as you have money!”
Here we borrow money ($17.6 trillion ) and print money and the Federal Reserve buys debt ($4.1 trillion ) to keep interest rates low and the economy churning.
People from real estate mogul, Donald Trump to Economist, Robert Wiedemer, who predicted the last recession, are warning of dire economic consequences because of these short-sighted policies.
So do we have real money to continue to burn or is it smoke and mirrors and as Wiedemer says, “the medicine will become the poison”–what do you think?
(Source Photo: Andy Blumenthal)
I took this photo of a sign at the Metro station to the Reagan National Airport by Washington, D.C.
“Expect The Unexpected” is the warning.
Don’t be complacent–anything can happen–be vigilant–is the message.
It reminds me of a Seinfeld episode where Jerry jokes about people going to the beach and hiding their wallets in their shoes.
Like, a criminal would never think to check your shoe!
Oh, push the wallet all the way down to the toes, under the tongue, that way the bad guys will never be able to get to it.
Here, it’s more a case of of why don’t we expect the darn expected.
Everybody knows that people “hide” their valuables at the beach in their shoes!
In modern times, we seem blind though to any expectations at all.
– Arab Spring and civil war spreading into Syria and Iraq–after Tunisia, Libya, Yemen, Egypt, and more–who would’ve thought?
– Russia taking over Crimea and agitating in Eastern Ukraine–after their little excursions into Georgia and Chechnya–who would expect that?
– Financial meltdowns and major recession after the dot com and housing bubbles–even my barber was talking about retiring and buying a mansion in the Caribbean–where are these coming from?
The question then is are we really unable to see past our noses or do we just hold steadfast to principle that ignorance is bliss?
Well let’s just test the “expect nothing doctrine” that we seem to all be living by these days and see how you feel about these:
Well, if you are blind or dumb enough to believe these, just keep putting your money in your shoes at the beach, because there is no reason to expect that anyone would ever think to look for it there. 😉
Like many of you, as I watch the events unfold with the Russian military invasion of Ukraine, I am amazed at the “restraint” being shown by the West.
But I can’t help asking myself why a military invasion by the Great Bear into a sovereign nation that is leaning toward democracy is being met with restraint.
Sitting in Starbucks, I overheard one young women saying to an older gentlemen that she did not understand the reaction of the President in saying there would be “consequences” and that no one took that seriously as there was no specificity, almost as if their where no real consequences to even threaten Russia with.
So why all the word-mincing, dancing around the subject, and restraint by the West in light of this very dangerous escalation in eastern Europe:
1) Surprise – Was the West completely taken by surprise by Russia’s military intervention? Didn’t something similar happen with Georgia in 2008–less than 6 years ago? Did we not foresee the possibility of Russia lashing out against Ukraine to protect its interests when Ukraine turned back toward European integration and away from the embrace of Russia that it had made only weeks earlier? After Pearl Harbor, 9/11, and with all our “Big Data,” intelligence, and military planning–how did we miss this (again!)?
2) Duped – Were we duped by the misinformation from Russia saying that the 150,000 troops they called on a “training exercise” was planned months ago and it just happened to coincide with the toppling of Ukraine’s President? Also, were we fooled when the “mysterious” soldiers showed up without national markings and Russia said they weren’t their military–uh, where did they come from–did they float down from the heavens?
3) Apathetic – Are we just apathetic to Ukraine’s plight? Are they just a poor country of little strategic value to us? Are we so war weary from Iraq and Afghanistan that we just want to place our heads in the sand like ostriches even when democracy and freedom is threatened in a European nation of some 45 million people?
4) Fear – Are we afraid of the military might of the nuclear-armed Russian Federation? Is America, the European Union, NATO, the United Nations all not willing to stand up and hold Russia accountable even if that means a military confrontation? Not that anyone wants World War III, but if we don’t stand up and defend against wanton aggression, how can any country or anyone be safe going forward?
5) Optionless – Are we just out of options? Russia got the upper hand on this one and they are logistically right there on the border and in the country of Ukraine now and what can we do? Despite the U.S. assertion that it can project military power anywhere around the world and a defense budget bigger than the 10 next largest combined–how can we be out of options? Are we out of options because we tacitly understand that one wrong miscalculation and we could end up with WMD on our homeland doorstep?
6) Butter Over Guns – Have we retrenched from world affairs, downsized our military, and emphasized domestic issues over international ones? Have we forgotten the risk that comes from a world without a superpower that helps to maintain stability and peace? Are we just under so much financial duress with a growing mountain of national debt, a economic recovery still struggling, and the lowest employment participation in over 30 years that we can’t even entertain spending more treasure to fight again?
7) Leadership – Who is managing the crisis? We’ve seen our President speak, various other government officials from the U.S. and European Union, the Secretary General of the U.N., the Secretary General of NATO, and more? Who is in charge–setting the tone–deciding the strategy? Who has point so that we and Russia know who to listen to and what is just background noise?
What is so scary about this whole thing is how quickly things can escalate and seriously get out of control in this world, and this despite all the alliances, planning, and spending–at the end of the day, it looks like we are floundering and are in chaos, while Russia is advancing on multiples fronts in Ukraine and elsewhere with supporting dangerous regimes in Syria, Iran, North Korea and more.
Whether we should or shouldn’t get involved militarily, what is shocking is: 1) the very notion that there wouldn’t be any good military options, and 2) that the consequences are not being spelled out with speed and clarity.
In the streets, at the cafe, on the television, I am seeing and hearing people in shock at what is happening and what we are and are not doing about it.
Even if we get Russia to stop advancing (yes, based on what happened with Georgia, I doubt they will actually pull back out), the question is what happens the next time there is a conflict based on how we’ve managed this one?
I do want to mention one other thing, which is while I feel empathy for the plight of the Ukrainians seeking freedom from Russia now, I also must remember the events of Babi Yar where, between 1941-1944, 900,000 Jews were murdered in the Soviet Union by Nazi genocide and their Ukrainian collaborators. This is history, but no so long ago.
All opinions my own.
(Source Photo: here with attribution to Utenriksdept)