Stock Market Pinocchio Style

Look folks, Pinocchio’s nose is getting longer by the minute.


The market continues on a tear, even while the economy is heading in the other direction. 


I know people have been conditioned to buy on the dips, but I’m not sure that applies while we’re in the middle (or maybe still just in the beginning) of a pandemic that has claimed 286,000 lives in just over 2 months (and that’s with a global shutdown)!


Somehow, there is a notion that when things start to reopen that all the problems will just magically go away, including the $3 trillion we just added to our national debt, all the bankruptcies being declared, and all the job losses that are becoming permanent. 


If you believe this, perhaps you’d like to buy the Brooklyn Bridge.


The greater fool theory is alive and well.  😉


(Credit Graphic: Andy Blumenthal)

The Coronavirus Stock Market

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)

Predicted It Right In 2017

This was such a funny photo I found of me from 2017.


Holding a book called The End of The F*cking World.


Little did we know back then Coronavirus was coming our way.


One thing that is amazing to me is the incredible lack of responsibility when it comes to our fiscal (tax rates and spending) and monetary policy (interest rates and money supply). 


For example, we’ve spent almost $3,000,000,000,000 (i.e. trillion) on Coronavirus Relief/Recovery. 


And there is another package in the works to borrow and spend more money. 


This on top of our already tens of trillions of dollars of national debt we already accumulated. 


The crazy thing is that this is going on globally with Europe and Japan and others borrowing and spending without any sanity as well. 


Now here is the BIG QUESTION for you all:


If everyone is borrowing and spending, who are they borrowing from???


Yep, this is called funny money! 


Because it’s not possible for everyone to be borrowing and carrying a bottom line net debt at the same time.  


The money has to come from somewhere doesn’t it?


The Federal Reserve is “injecting” trillions into the economy and their balance sheet of “loans” to us is going up towards $11 trillion dollars now.  


These injections are short term medicine that may kill the patient down the road by overdose!


Have you ever heard of a Chair of the Federal Reserve that “urges policy makers to spend more“?


Simple economics tells us that this will yield at some point an unbelievable inflation.


We are injecting or “printing” more and more money (or electronic bytes of it), and that causes the money to devalue because there is so much of it (supply side economics) with nothing but hot air backing it up (we haven’t been on the gold standard since 1971).


There is a DAY OF RECKONING coming when:


– People’s savings and wallets will devalue and money will be worth close to squat after RUNWAY INFLATION.  


– Also, what do you think will happen to the stock market and jobs too when people have only loads of valueless funny money and can’t buy anymore like they used too–can anyone say MARKET CRASH and UNEMPLOYMENT!


Folks, you heard it here first, the end of the f*cking world is coming–it’s called CONSEQUENCES, plain and simple. 😉


(Credit Photo: Dannielle Blumenthal)

Rescue Plan Is Largely Another Shortsighted Bailout

First of all let me point out these photos of the day.


The first one are blue lines on the floor at Whole Foods telling people to keep their social distance from other customers. 


One person crossed the blue line and another customer promptly yelled at them that they were going to get them sick!


The second photo is limiting Nutter Butters (“Nut Butters”) to 4 per customer during this coronavirus–sh*t people are downing Nutter Butters like there truly is no tomorrow.  LOL


Finally, looking over the $2 trillion Coronavirus Rescue Plan, I see a lot of bailouts–about half through grants and half through loans.  


On the positive and largely necessary side are increases to unemployment insurance payments and aid to needy households (up to $150,000 for married couples is needy?) and to hospitals and transit.


In terms of the business loans, there are “forgivable” ones to small business, so not sure how that is a “loan.”


Overall though, it seems like we are throwing a lot of other money around that we as a country don’t have and will end up paying in terms of a higher national debt and higher interest payments for generations to come.  


This is another lost opportunity!


If we were already going to spend big money like this, why not pass the infrastructure spending bill to rebuild our aging roads, bridges, electric grid, aviation, public transit, and expand internet coverage.  This would actually put people back to work and build America again, rather than give corporate handouts that are shortsighted and with squat to show for it for the country’s ultimate benefit.


Everyone likes to get freebies, but eventually the country will come back to pay the piper, and there will be bread lines and not Nutter Butter. 😉


(Credit Photos: Minna Blumenthal)

The Unbelievable Stupidity Of Raising Interest Rates

Bull

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)

2014 The Bad News Goes On

Bad News

What a 2014 it’s been as the world continues it’s descent into madness.  


If Ebola, the War with Hamas in Gaza, the shoot down of Malaysian Airlines Flight MH17 killing 298 including 80 children and 15 crew, the intransigence of Iran on Nuclear Weapons, employment still near a 30-year low, the National Debt hitting over $18 trillion (and growing $2.43 billion a day!) and the suicide of comedian, Robin Williams wasn’t enough…


– Criminal Records: 1 in 3 adult Americans (i.e. 80 million people) now have a criminal record…hmm, if the average family has around 2.5 people then just about 1 person per household has a criminal record. Are you starting to look around you now?


– Economy: Uber, yes, it’s a online “ride-sharing” (i.e. taxi) service, but after it’s recent IPO, Uber is worth over $41 billion dollars (more than Delta, Charles Schwab, Salesforce.com, and Kraft Foods). Someone’s getting taken for a ride. Is this even surprising considering the S&P is priced over 27 times average 10-year earnings (while the historical average is only 16), the result of pumping the economy with short term easy money policies.  


– Cyber Attacks: After a blithering cyber attack by North Korea, Sony withdraws the release of the movie, The Interview, surrendering to cyber terror, and putting us all at greater risk in the future because cyber crime does pay!


– Islamic Terrorism: While ISIS advances in Syria and Iraq, 132 school children (mostly ages 6-18) plus 9 adults massacred by the Taliban this week in Peshawar, many shot in the head and others lit on fire with gasoline and burnt to death so they are unrecognizable. This only 9 months after the April kidnapping by Boko Haram of more than 280 schoolgirls in Nigeria, which was repeated this week with the kidnapping of another 185 woman and children.


– Russian Militarism: The Great Bear is back with a vengeance as Putin continues driving Russian nationalism and buildup of advanced weapons, including WMD (e.g. nukes), aircraft, submarines, and ICBMs to counter alleged “Western Aggression.” And despite, the rubbles’ massive decline, Putin promises an economic comeback within 2 years–he’ll wait out the West and hold Crimea hostage and spoil it for everything it’s worth


So where are we going next–more hell on Earth or at some point a turnaround towards heaven again?   


(Source Photo: Andy Blumenthal)

Care To Be Curious?

Care To Be Curious?

Here’s three topics for the curious of mind today:

Are we technologically safer? As we attempt to beef up IT security, we continue to be technologically insecure. Just this last week, BBC reported how a fridge was part of 100,000 devices used to send out 750,000 pieces of spam. Yes, a fridge, and there was also a television involved–sounds like the beginning of a bad joke, right? But this is our reality these days…Proofpoint, a cloud computing and security company said “Many of these devices are poorly protected at best, and consumers have virtually no way to detect or fix infections when they do occur.”

Is our economy healing or hurting? As unemployment fell from 7% to 6.7% last week–an impressive reduction–the overall labor force participation rate didn’t rise, but rather sank to 62.8%–its lowest level in 35 years! And while, the Wall Street Journal explains that U.S. employment is simply not keeping up with population growth, the S&P 500 hit a new record high just last Wednesday. Meanwhile, the Fed continues to pour money into the economy, although at a slowing rate (expected to go down next week to only $65B a month), speculation is building whether we have another real bubble brewing, and this one of our own making, perhaps.

Is this the lead up to peace or war with Iran? As we continue to seek a long-term deal with Iran on their dangerous nuclear weapons foray, we read from Bret Stephens that Iranian President Rouhani said during his presidential campaign, “Saying ‘Death to America” is easy…We need to express ‘Death to America’ with action.” If we are getting a good deal that can truly lead to WMD disarmament of Iran, why did Rouhani tweet, “In #Geneva agreement world powers surrendered to Iranian nation’s will.” Curious, whether this is for political consumption in Iran or whether he sees the deal as just a stalling tactic leading to a breakout capability in nuclear weapons as well as a way to get some goodies in terms of sanctions relief for his country in the meantime.

What does little kitty cat say about these? 😉

(Source Photo: Andy Blumenthal)