|#SubscriberNotes and #WeekendAnalysis have been updated on the website. Consolidation time now?|
Sunday, August 30, 2015
Thursday, August 27, 2015
|#SubscriberNotes have been updated on the website. Upcoming cycle lows in equities should correspond to a selling opportunity in bonds.|
Wednesday, August 26, 2015
Tuesday, August 25, 2015
Monday, August 24, 2015
Saturday, August 22, 2015
|The utilities would like for you to believe that they can do solar cheaper than you. But, it's not true.
Questioning Solar Energy Economies of Scale, 2014 Edition points out that while installing solar arrays is cheaper in quantity, the cost of delivering that power to consumers eats up all of the cost savings over residential solar. Undoubtedly, the utilities are fighting for their lives with customers defecting from the grid more and more by installing solar+storage on their rooftops and cutting the cord. Utilities want to convince politicians that they know what's best for consumers and make it illegal for individuals to switch to distributed generation of electricity. And, they're going to lie to protect their monopoly.
Yet more reason that consumers should demand government subsidies to help install their own solar panels and batteries to cut the cord with the electric utilities.
|Everybody has their conspiracy theories. Like, for instance, why the government is lowballing the odds of climate change wiping out life on earth.
Last week, the EPA released a report which lowballed the effect methane gas has on Global Warming. According to How The EPA And New York Times Are Getting Methane All Wrong by Joe Romm, the 100-year Global Warming Potential (GWP) of methane is 34, but the government tells us it's just 25, a figure that's 20 years out-of-date. He shows that the EPA knows that figure is out of date and uses it anyway. That means the government is underplaying the potential for methane gas to exacerbate the problems caused by CO2 in warming the planet.
The big question is whether the EPA is protecting the oil and gas industry by lowballing the facts? It certainly looks like it. Put that possibility on the table, along with the fact that Shell has been recently permitted to resume its Arctic Ocean drilling operations and the fact is that the government is not trying to limit the damage from greenhouse gasses—it's trying to protect the big polluters who are likely bribing government bureaucrats.
And, once again, the truth is that the government is not the solution to climate change. It's part of the problem. It will be up to private citizens to act to end climate change, not the public officials who are secretly being enriched by the 1%.
Friday, August 21, 2015
In this just-released report, you'll see new excerpts from our two flagship monthly publications, The Elliott Wave Theorist and The Elliott Wave Financial Forecast. Get valuable insight into the volatility we saw in the markets this week. We think you'll come away better prepared than most investors.
Thursday, August 20, 2015
|#SubscriberNotes have been updated on the website. Gold miners continue to rise as we're early days in a new intermediate term T.|
Wednesday, August 19, 2015
|#SubscriberNotes have been updated on the website. Crazy intraday volatility in equities as the bond market heads for a significant turn.|
Tuesday, August 18, 2015
Monday, August 17, 2015
Saturday, August 15, 2015
|Ramez Naam writes in How Cheap Can Solar Get? Very Cheap Indeed “If current rates of improvement hold, solar will be incredibly cheap by the time it’s a substantial fraction of the world’s electricity supply.” He concludes:
If solar electricity continues its current learning rate, by the time solar capacity triples to 600GW (by 2020 or 2021, as a rough estimate), we should see unsubsidized solar prices of roughly 4.5¢ / kWh for very sunny places (the US southwest, the Middle East, Australia, parts of India, parts of Latin America), ranging up to 6.5¢ / kWh for more moderately sunny areas (almost all of India, large swaths of the US and China, southern and central Europe, almost all of Latin America).
And beyond that, by the time solar scale has doubled 4 more times, to the equivalent of 16% of today's electricity demand (and somewhat less of future demand), we should see solar at 3¢ per kWh in the sunniest areas, and 4.5¢ per kWh in moderately sunny areas.
If this holds, solar will cost less than half what new coal or natural gas electricity cost, even without factoring in the cost of air pollution and carbon pollution emitted by fossil fuel power plants.
As crazy as this projection sounds, it's not unique. IEA, in one of its scenarios, projects 4¢ per kWh solar by mid century.
Fraunhofer ISE goes farther, predicting solar as cheap as 2 euro cents per kWh in the sunniest parts of Europe by 2050.
Obviously, quite a bit can happen between now and then. But the meta-observation is this: Electricity cost is now coupled to the ever-decreasing price of technology. That is profoundly deflationary. It's profoundly disruptive to other electricity-generating technologies and businesses. And it's good news for both people and the planet.
Friday, August 14, 2015
These excerpts from Robert Prechter's Elliott Wave Theorist highlight the flaws in the conventional approach to forecasting oil prices -- and show you why oil fooled almost everyone.
Thursday, August 13, 2015
|#SubscriberNotes have been updated on the website. "Everyone out of the pool" is the message. Where it's coming from is key.|
Wednesday, August 12, 2015
|#SubscriberNotes have been updated on the website. Today's reversal in stocks and bonds came just where seasonals called for.|
Tuesday, August 11, 2015
|Every time you buy pizza at Papa Johns, you're supporting the Koch empire of climate denial. We are going up against the greatest challenge to the continued existence of life on Earth, folks. Support for the climate deniers is simply insanity in action. We must boycott any climate denier and Papa Johns is the latest denier which must be boycotted. For more information, see American Family Voices.|
Monday, August 10, 2015
Sunday, August 09, 2015
Thursday, August 06, 2015
|#SubscriberNotes have been updated on the website. What will the central banks do when the stock market finally crashes? There's the rub.|
Wednesday, August 05, 2015
|#SubscriberNotes have been updated on the website. "Rats Deserting the Sinking Ships" accurately describes Disney and the Dow Industrials.|
Tuesday, August 04, 2015
Monday, August 03, 2015
Sunday, August 02, 2015
Friday, July 31, 2015
This eye-opening complimentary report, which represents more than 10 years of research, goes beyond the Fed's history and government mandate; it digs into the Fed's real motivations for being the United States' "lender of last resort."
Thursday, July 30, 2015
Wednesday, July 29, 2015
|#SubscriberNotes have been updated on the website. It's been a nice rally, especially in the Dow. What's next?|
|The inexorable Law of Supply and Demand is at work. Robert Scribbler writes in Climate Change Changes Everything — Massive Capital Flight From Fossil Fuels Now Under Way:
|One of the biggest problems is the availability of clean water. A group in Egypt may have found an answer which uses free energy from space—the sun, in other words.
Innovative System to Extract Water from Air Using Solar Energy describes a way to extract water from the air using free energy from space. It works by adsorbing water during the day out of the air and collecting it in a tank at night. It costs about $100 to build and just works to produce up to 2.3 L of water per square meter.
Tuesday, July 28, 2015
Monday, July 27, 2015
|The Democratic candidates for the 2016 Presidential campaign seem to be coming together to make Global Warming the main issue. ThinkProgress reports:
If the Democrats make Global Warming the central issue in the campaign, the Republican Party will be facing very strong headwinds, making their hold on Congress tenuous at best. And, recapturing the White House for the GOP virtually impossible.
The biggest worry, though: Getting a Democratic sweep of the Congress and the Presidency and then seeing a replay of the Clinton-Gore Administration, which dropped the ball on Global Warming. They weren't even as effective as the Bush-Cheney Republican Administration which followed them in office.
|By Ron Paul, originally published at Ron Paul Institute For Peace and Prosperity.
Last week, Retired General Wesley Clark, who was NATO commander during the US bombing of Serbia, proposed that “disloyal Americans” be sent to internment camps for the “duration of the conflict.” Discussing the recent military base shootings in Chattanooga, TN, in which five US service members were killed, Clark recalled the internment of American citizens during World War II who were merely suspected of having Nazi sympathies. He said: “back then we didn’t say ‘that was freedom of speech,’ we put him in a camp.”
Sunday, July 26, 2015
Saturday, July 25, 2015
|Over the years, we've noticed a tendency for Barack Obama to say the right things and do the wrong things. At first, it could be rationalized as an inexperienced politician trying to maximize the approval of citizens. But, it became clear that this man is an inveterate liar who sold his soul to the highest bidder. His blather is not to be believed.
With Global Warming having been proved beyond a shadow of a doubt as the major challenge for the continuation of life on Earth, you would think the president would be fighting the fossil fuel industry on every front. Sadly, the ethical sham that is Obama is proving he's a chameleon whose colors are set by who's next with bribe money.
The latest proof comes from Obama's approval for Shell to drill in the Arctic. We don't need more oil and we certainly don't need more climate change in the Arctic. Obama will go down in history as yet another corrupt politician who should have been spending more time in the Big House than in the White House.
Thursday, July 23, 2015
|#SubscriberNotes have been updated on the website. Have the central bankers created a permanently-high stock market plateau? Could be.|
|If you want to see New York City, do so soon. It's not going to be a viable city for too much longer.
Climate scientist James Hansen and fellow scientists have just published a forecast for sea level rise that says sea levels are likely to rise by 50 feet in the next 50 years. This will flood New York City and many other coastal cities around the world. The first to go will likely be Miami, which regularly sees flooding at high tides right now.
The UN's IPCC is wrong in assuming that seas will only rise 3 feet this century. Instead, the rise is likely to be much more. Hansen et al. have studied what happened the last time CO2 was at this level: seas were much higher. This was during the last interglacial period called the Eemian. The UN thinks we should keep the total rise in Earth's temperature to 2°C over pre-industrial levels, but that would result in a 50-foot rise in seas if Hansen's group is right. Hansen's paper proposes that we keep the rise to just 1½°C. But, since the temperature of the Earth has already risen about a degree already, that leaves just ½°C for temperatures to rise. Moreover, given the level of CO2 in the atmosphere already, most of that is already “baked in the cake.”
Only an immediate reversal of CO2 emissions and return to lower levels can possibly head off these catastrophic sea level rises. This would include a moratorium on building new coal-fired generators as well.
A reasonable person can only conclude that humanity has set its course for disaster and will not turn away from the consequences of both greed and folly. The politicians have lied to us for years about why they cannot take action to avert disaster. Maybe it will soon be time for the population to take action to punish those who have set humanity on this course.
Wednesday, July 22, 2015
|#SubscriberNotes have been updated on the website. Buy the dip is new mantra despite givebacks. A very short term rally could end quickly, though.|
Tuesday, July 21, 2015
Monday, July 20, 2015
|Jeff Masters of Weather Underground reports that June 2015 was the warmest June ever:
June 2015 was Earth's warmest June since global record keeping began in 1880, said NOAA's National Centers for Environmental Information (NCEI) on Monday. NASA also rated June 2015 as the warmest June on record. June 2015's warmth makes the year-to-date period (January - June) the warmest such period on record, according to both NOAA and NASA. A potent El Niño event in the Eastern Pacific that crossed the threshold into the "strong" category in early July continues to intensify, and strong El Niño events release a large amount of heat to the atmosphere, typically boosting global temperatures by at least 0.1°C. This extra bump in temperature, when combined with the long-term warming of the planet due to human-caused emissions of heat-trapping gases like carbon dioxide, makes it likely that 2015 will be Earth's second consecutive warmest year on record. Four of the six warmest months in recorded history (for departure from average) have occurred this year, according to NOAA.
|By Ron Paul|
Last week’s successfully concluded Iran agreement is one of the two most important achievements of an otherwise pretty dismal Obama presidency. Along with the ongoing process of normalizing relations with Cuba, this move shows that diplomacy can produce peaceful, positive changes. It also shows that sometimes taking a principled position means facing down overwhelming opposition from all sides and not backing down. The president should be commended for both of these achievements.
Our unwise policy with Iran is a perfect example of what the interventionists have given us—60 years of needless conflict and fear for no justifiable reason. This obsession with Iran is bewildering. If the people knew the truth, they would strongly favor a different way to interact with Iran.Let’s not forget that the Iran crisis started not 31 years ago when the Iran Sanctions Act was signed into law, not 35 years ago when Iranians overthrew the US-installed Shah, but rather 52 years ago when the US CIA overthrew the democratically-elected Iranian leader Mossadegh and put a brutal dictator into power. Our relations with the Iranians are marked by nearly six decades of blowback.
When the Cold War was winding down and the military-industrial complex needed a new enemy to justify enormous military spending, it was decided that Iran should be the latest “threat” to the US. That’s when sanctions really picked up steam. But as we know from our own CIA National Intelligence Estimate of 2007, the stories about Iran building a nuclear weapon were all lies. Though those lies continue to be repeated to this day.
It is unfortunate that Iran was forced to give up some of its sovereignty to allow restrictions on a nuclear energy program that was never found to be in violation of the Non-Proliferation Treaty. But if the net result is the end of sanctions and at least a temporary reprieve from the constant neocon demands for attack, there is much to cheer in the agreement. Peace and prosperity arise from friendly relations and trade – and especially when governments get out of the way.
Re-blogged from Ron Paul Institute for Peace and Prosperity.
Sunday, July 19, 2015
Thursday, July 16, 2015
Wednesday, July 15, 2015
|#SubscriberNotes have been updated on the website. Time to hunker down as holding long stocks is the risk.|
Exclusive invitation: Our friends at Elliott Wave International have just released a new subscriber report, A Bubble in Trouble. On an exclusive, limited-time basis, they've allowed us to share it with you, for FREE. Learn more and read their research-packed report now >>
Tuesday, July 14, 2015
Monday, July 13, 2015
|Airbus' E-Fan battery-powered airplane takes off from England and lands in France last Friday to become the first battery-powered plane to cross the English Channel:|
|By Ron Paul from Ron Paul Institute For Peace and Prosperity|
The drama over Greece’s financial crisis continues to dominate the headlines. As this column is being written, a deal may have been reached providing Greece with yet another bailout if the Greek government adopts new “austerity” measures. The deal will allow all sides to brag about how they came together to save the Greek economy and the European Monetary Union. However, this deal is merely a Band-Aid, not a permanent fix to Greece’s problems. So another crisis is inevitable.
Sunday, July 12, 2015
Saturday, July 11, 2015
|In a shocking turn, Greece is demanding that Germany repay its own debts before demanding debts be repaid by Greece. The Independent:
The Greek government has demanded that Germany pays it back €279bn (£205bn) in loans Greece was forced to give the Nazi authorities who occupied the country during World War Two.
Greece has long demanded reparations from Germany but in a statement on Monday Greece's deputy finance minister Dmitris Mardas put an exact figure on the amount the country says it is owed for the first time.
Mr Mardas was speaking at a committee set up by the country's left-wing Syriza government to calculate how much money Germany owed Greece.
Thursday, July 09, 2015
|#SubscriberNotes have been updated on the website. Which index should turn up in relative strength to warn the trend is turning up? We tell you tonight.|
Wednesday, July 08, 2015
|#SubscriberNotes have been updated on the website. Can Shanghai's crash be stopped? Or, even derailed?|
|Gail Tverberg makes an interesting point. The PIIGS countries (Greece, Portugal, Italy and Ireland) turn out to be very big users of oil—and are financial basket cases. Is there a connection between high oil usage and debt? What Greece, Cyprus, and Puerto Rico Have in Common explores this aspect of modern debt.|
Tuesday, July 07, 2015
Monday, July 06, 2015
|The Greek crisis needs to be put into perspective: Greece will never repay its debts.
Yet, Germany demands that Greece repay its debts. Germany should remember that it has never repaid any of its own debts.
Thus, the German people should realize that if they require Greece to pay its debts, it should start by paying its own debts as a good example.
Reference Thomas Piketty in a Zeit Online interview.
Sunday, July 05, 2015
Friday, July 03, 2015
|Norman Pagett writes in The End of the Oil Age:
Pagett is another gloom-and-doomer who explains why the old growth model is totally busted. And, what that means for our species. But, is the ultimate outcome of our civilization to fail miserably? The probability seems high, but humans over history have shown that last-minute saves are our speciality. Perhaps when faced with extinction, we will change our model to fit the environment. Moreover, we may be able to change our environment to fit within it. Perhaps we can find a “living wage” that doesn't doom us to fall back into the Dark Ages.
One part of our solution is what Kent Moors calls “Space Energy.” Planet Earth is surrounded in space by vast amounts of energy. If we could tap this energy, it would dwarf the amounts we extract from the ground in the form of fossil fuels. Moreover, it's highly likely that we are going to tap this infinite source of power in the next few decades. Thus, one problem is solved: unlimited, virtually-free energy for our use, replacing dirty fuel with clean, sustainable energy. As Dr. Moors points out, Albert Einstein didn't win his Nobel Prize for relativity. He won it for “Space Energy.” Now, 110 years later, we are on the verge of “Space Energy” taking the lead in energy and eliminating fossil fuels entirely.
Thursday, July 02, 2015
|#SubscriberNotes have been updated on the website. Cash markets are closed on Friday, but CMEgroup futures will trade until 13:00.|
Wednesday, July 01, 2015
|#SubscriberNotes have been updated on the website. Illiquid markets going into Sunday's Greek referendum magnify risk for traders.|
Tuesday, June 30, 2015
Monday, June 29, 2015
|John Hussman writes in Durable Returns, Transient Returns:
This is not a Goldilocks market. No, this is a Roseanne Roseannadanna market (Gilda Radner’s character from Saturday Night Live). Though investors seem to believe that catalysts for a market plunge should be known ahead of time, they’re likely to learn in hindsight that the specific catalyst didn’t matter. History teaches that once obscene valuation is coupled with overvalued, overbought, overbullish extremes, and is then joined by deterioration in market internals, the outcome is already baked in the cake. Afterward, investors discover “Well Jane, it just goes to show you… It’s always something. If it’s not one thing, it’s another.”The market is on tap to lose half of its value multiple times in the next big half cycle. The last two half cycles took place during 2000-2003 and 2007-2009. The next one is likely to be even bigger.
Sunday, June 28, 2015
Thursday, June 25, 2015
|#SubscriberNotes have been updated on the website. Time for a rebound in stocks? Yes, but the trend remains down into July.|
Wednesday, June 24, 2015
|#SubscriberNotes have been updated on the website. Stock market correction looks a lot like March-April. Are we following Mercury's lead?|
|The government tells us that First Quarter GDP contracted at “just” -0.2%, but in doing so they revealed their lies once again. The deflator used to convert nominal GDP to real GDP was just about zero. However, the much more accurate Billion Prices Project shows that inflation was running at about 1.6%, so the real GDP figure should have been reported as contracting by -1.8%.
It's clear that the economy is doing just fine—only if you believe the government lies they tell.
Tuesday, June 23, 2015
Monday, June 22, 2015
Sunday, June 21, 2015
|The deniers have no place to hide.
Decoded Science reports:
Saturday, June 20, 2015
|There is no longer any doubt: We are entering a mass extinction that threatens humanity's existence. That is the bad news at the center of a new study by a group of scientists including Paul Ehrlich, the Bing Professor of Population Studies in biology and a senior fellow at the Stanford Woods Institute for the Environment. Ehrlich and his co-authors call for fast action to conserve threatened species, populations and habitat, but warn that the window of opportunity is rapidly closing. Read more: http://stanford.io/1RgQBMj|
Thursday, June 18, 2015
|#SubscriberNotes have been updated on the website. Long near the opening meant big profits on today's rally. Maintain sell stops on open stock index futures.|
Wednesday, June 17, 2015
Tuesday, June 16, 2015
Monday, June 15, 2015
Sunday, June 14, 2015
Saturday, June 13, 2015
|David Stockman explains why the global financial system is a Gargantuan Financial Trap in The Futility of Our Global Monetary Experiment:
Sometimes we get so caught up in the monthly so-called incoming data and the short-term releases — that are seasonally maladjusted anyway and get revised four times over — that we really lose track of where we are. So, the other day I said let's just look at two extended periods of time that occurred in different economic and policy environments and do an assessment of where we are.
I took 1953 to 1971, that representing the end of the Korean War and the beginning of the Great Prosperity in the middle century, ending in the August 1971 fatal mistake that Nixon made when he closed down Bretton Woods and the rest. I call that the Golden Era of Prosperity. During that period, the economy grew and I use real final sales to measure the growth because that takes out the inventory fluctuations and distortions that are in the GDP number per se. But, if you take real final sales for that eighteen-year period, it was 3.6 percent a year compounded during a time in which the Fed was run by William McChesney Martin, a survivor — or veteran, you might say — of the 1929 crash and the trauma of the 1930s. He was a man who wasn't necessarily, in the classic sense, a hard-money gold-standard advocate, but he certainly was a wise financial hedge who understood the dangers of speculation in the financial markets and of too much heavy-handed intervention in the financial system.
During that eighteen-year period from 1953 to 1971, the balance sheet of the Federal Reserve expanded by only $42 billion over eighteen years. (Now during QE, that was about two weeks worth of expansion at the peak.) More importantly, if you look at it in real terms — in inflation-adjusted terms — the balance sheet of the Fed in that period grew about 3 percent a year, and the economy grew at nearly 4 percent. Therefore, the Fed was engaged in a very modest light-touch policy allowing the mechanism of capitalism, including the financial markets at the heart of it, to function. The balance sheet of the Fed grew by 0.8 percent of the growth in the GDP.
Now, let's take the last fourteen years, we're in a totally different world. Greenspan has changed the whole notion of the role of the central bank, followed by Bernanke and Yellen. During that period, GDP growth of the economy has down shifted sharply to 1.8 percent a year over the last fourteen years, half of what occurred during the golden era. By contrast, the balance sheet of the Fed grew from $500 billion to four and a half trillion. But look at it in the same annual terms: 17 percent a year growth in the balance sheet, and 15 percent after adjusting for inflation.
That means that the Fed's balance sheet grew eight times more rapidly than the economy during the last fourteen years. That's just the inverse of the relationship that occurred back in the Golden Era.
So, I think if you need any proof at all of this massive intrusion into the financial system isn't working; the huge amount of money printing and balance sheet expansion; the unremitting financial repression and pegging of interest rates; look at the fundamental comparison that I just made. It's not working in the real economy. That is, it's not generating expansion and giving standard gains on Main Street.
The only thing it's really doing is simply inflating the serial bubble that ultimately reach unsustainable peaks and collapse. We've had two of them this century already from that policy and we're now overwhelmingly — if you really look at the evidence — in a third great bubble that is in some ways more fantastic than the earlier two. It's only a matter of time before it bursts and implodes and we'll then be back to square one.
Hopefully on the third strike, the people who gave us these bubbles will be out. I think that might be a fair metaphor or proposition to make. Hopefully, when this next big bust comes — and surely it will when you look at the degree of speculation of the stock market in the high yield market or many other sectors that we can talk about — there will be a great day of reckoning in the country in terms of demanding a fundamental change in monetary policy and we'll see the resignation of all the people who are sitting on the Fed today that have led us right into this gargantuan financial trap.
Friday, June 12, 2015
|A new lab study found that a daily dose of aspirin was effective at blocking breast tumor growth. Previous studies have already shown a similar effect on colon, gastrointestinal, prostate, and other cancers.
Thursday, June 11, 2015
Wednesday, June 10, 2015
|#SubscriberNotes have been updated on the website. Today's rally in stocks was tipped by our best indicator on Monday. Are rising bond yields kryptonite for stocks?|
Tuesday, June 09, 2015
Monday, June 08, 2015
|Snapchat's CEO Evan Spiegel points out that tech stocks are in a bubble and doomed to crash at some point in time. This is refreshing since it comes straight from a CEO of an obscenely-valued tech stock.
Mises Institute writer Ryan McMaken reports:
Spiegel said the investment bubble is being fueled by an "easy money policy" and low interest rates, which may not last a whole lot longer according to recent economic indicators. Those low interest rates are funneling investments toward stock markets, hedge funds and, yes, startups.John Hussman explains that valuations based upon interest rates are only weakly related to reality in Why Stocks are Not "Cheap Relative to Bonds":
We're near the third peak in a Fed-induced bubble in equities and wondering why the economy can't grow at its historic rate. The answer is simple: you can't create wealth out of an ink pot. That's a lesson many investors have yet to learn even after three major stock market bubbles of the last fifteen years.
Sunday, June 07, 2015
Friday, June 05, 2015
|David Stockman calls it Another Paint-By-The-Numbers Friday:
Thursday, June 04, 2015
|#SubscriberNotes have been updated on the website. Has the Dow formed a major top in May? And, which index will be the weakest?|
EWI Asian-Pacific markets editor Mark Galasiewski always finds compelling indicators to support his forecasts -- indicators that few others see. This past December he highlighted a little-followed sector index to help support his outlook for Chinese stocks. You can read his analysis in Elliott Wave International's new free report.
Wednesday, June 03, 2015
|#SubscriberNotes have been updated on the website. Bonds growing more attractive to value investors by the day while stocks struggle.|
Tuesday, June 02, 2015
Monday, June 01, 2015
Sunday, May 31, 2015
Friday, May 29, 2015
|They scoffed when we said that the economy was in recession. But, when the governments of both Canada and the US reported Q1 GDP actually falling, they aren't scoffing anymore. Canada's GDP fell by 0.6% while the US fell by 0.7%, both subject to substantial revisions in the future. You may recall that during the last recession, the first reports had GDP shrinking by a similar amount. Years later, the government confessed that the economy was in freefall in the early days of the recession.
Now, GDP being negative isn't a definition of recession. But, it certainly isn't a vote of confidence. With stock prices having been pushed to nosebleed levels for the third time in the last two decades, there's a cliff and the stock market is looking awfully unsteady with the prospect of a recession. And, remember, the Fed is out of bullets, only having QE to stimulate asset prices, not the real economy. There's a reason why the Fed wants to raise interest rates—to be able to lower them if a recession strikes—but it may just be too late in the business cycle for that to happen. If so, expect the Fed to trot out QE and push stocks further toward orbit.
Thursday, May 28, 2015
|#SubscriberNotes have been updated on the website. Pay attention to the leaders, not the laggards, and you'll find it pays off.|
|With obscene valuations, US stocks are far too expensive and promise to fail to advance over the next decade. That's the conclusion of value investors, who see the current business cycle as greatly extended and due for a crash in the stock market.
The reasons why are easy to see: stock buybacks have boosted prices while reducing capital investment and productivity. The US stock market is in for a long decline.
The details can be read in Wall Street Gamblers At Work—–U.S. Firms Spend More On Buybacks Than Factories. Here's the bottom line:
An analysis conducted for The Wall Street Journal by S&P Capital IQ shows that companies in the S&P 500 index sharply increased their spending on dividends and buybacks to a median 36% of operating cash flow in 2013, from 18% in 2003. Over that same decade, those companies cut spending on plants and equipment to 29% of operating cash flow, from 33% in 2003.
At S&P 500 companies targeted by activists, the spending cuts were more dramatic. Targeted companies reduced capital expenditures in the five years after activists bought their shares to 29% of operating cash flow, from 42% the year before, the Capital IQ analysis shows. Those companies boosted spending on dividends and buybacks to 37% of operating cash flow in the first year after being approached, from 22% in the year before.
Capital spending by businesses accounts for about one-eighth of all spending in the U.S. economy. Historically, it has been an important driver of long-term growth, as upgrades make workers and companies more productive, says Michael Feroli, chief U.S. economist at J.P. Morgan Chase & Co.
Money plowed into dividends and buybacks doesn't disappear from the economy. Its recipients can spend it, too.
But Washington University's Mr. Fazzari says that most stock is owned by the wealthy, who tend to save more of their income. By contrast, he says, many kinds of business investment—from building construction to equipment maintenance and purchases—involve payments to contractors and suppliers who pay wages to middle and low-income workers.
Many companies have made changes while under no direct threat from activists. General Electric Co.'s institutional investors had long urged the conglomerate to scale down its large lending business. In April, GE said it would sell off that business and buy back $50 billion of its stock.
The surge of activism has sharpened the debate about the fundamental purpose of a company. Does it exist to satisfy shareholders or does it have an imperative also to try to build for the long term?
The answer is far from settled. If the activists are right, they are stopping companies from throwing good money after bad. "If they aren't, then we have to worry about the impact," says Yvan Allaire, the executive chairman of the Institute for Governance of Private and Public Organizations. "It has to be a fairly significant impact on the economy.
Wednesday, May 27, 2015
|#SubscriberNotes have been updated on the website. Traders bought the dip today. It's why we use trailing buy stops on short positions to take profits.|
|Mike Stasse is looking for a global collapse. He re-blogs Tom Lewis, who says:
What’s wrong with the global consumer? In the immortal words of Howard Davidowitz, a leading expert on retail, consumers “don’t have any f’ing money.” It is slowly — way too late — dawning on the Masters of the Universe that unless ordinary people have money to spend — and by that we mean real money, not more credit cards or a third mortgage — the Masters are toast.
There is the ultimate explanation for why the global economy peaked in 2008: the consumer, 70% of the economy, got hit with the inevitable. We're now suffering through a central banker-induced coma of forced liquidity which isn't repairing anything, just keeping the patient, the global economy, on life support.
Lewis states what's ahead:
Now, even if you believe, as I do, that the notion of infinite growth on a finite planet is ridiculous, and the notion that all growth is always good is suicidal, you still live, as I do, in a system that will crash if its faith on growth is broken. So pay attention to these idiots. They’re driving.The consumer knows that the system is broken. It may take a while to convince the Masters of the reality of that statement. When will they finally admit the system is so broken it can never be fixed? That's the bottom line truth: the economy is dead and artificial money creation only borrows time from the future. The system is in a state of collapse under the surface. It's only a matter of time before it becomes clear to the Masters that their time is up.
Tuesday, May 26, 2015
|Deniers will deny it, but they've proven themselves better called liars than deniers.
Weather pattern Government, named by Decoded Science, has been dumping huge amounts of rain accompanied by numerous tornadoes on Texas. This is causing flash flooding in a state which has been suffering from drought for several years. Is this a consequence of global warming? Yes, it is.
Global warming's effects go beyond just making the temperature rise. One effect is stalling the jet stream in place for many days, or even several weeks, at a time. Thus, the weather you get just keeps on keeping on. Government is just the latest version of a stalling in the atmosphere caused by global warming. A few years ago, global warming caused the average summertime temperatures in Texas to reach levels normally seen in Tucson, Arizona, or about 115° day after day. Normally, midsummer temperatures in central Texas only reach about 95°, so we saw a 20° rise in daily maxima. That was another example of the effects of global warming. Now, Government is forcing a trough in the upper atmospheric winds to dump rain for weeks at a time, overflowing drainage systems which were never designed to handle such extremes.
Since we know that burning fossil fuels is the cause of global warming, we should be demanding that those who have caused this disaster pay for it. But, of course, that would only be the right thing to do. It won't happen because those who own fossil fuels are protected by government from the effects of Government. Ideally, government should seize the assets of fossil fuel companies to protect citizens from further damages. We don't think keeping oil in the ground is the right answer, however. Oil is good for many other uses that don't involve burning. Adding CO2 to the atmosphere just isn't something any sane race would condone.
If you had a 10 percent chance of having a fatal car accident, you'd take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you'd reevaluate your assets. So if we know the world is warming and there's a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren't we doing more about climate change right now? We insure our lives against an uncertain future--why not our planet?|
In Climate Shock, Gernot Wagner and Martin Weitzman explore in lively, clear terms the likely repercussions of a hotter planet, drawing on and expanding from work previously unavailable to general audiences. They show that the longer we wait to act, the more likely an extreme event will happen. A city might go underwater. A rogue nation might shoot particles into the Earth's atmosphere, geoengineering cooler temperatures. Zeroing in on the unknown extreme risks that may yet dwarf all else, the authors look at how economic forces that make sensible climate policies difficult to enact, make radical would-be fixes like geoengineering all the more probable. What we know about climate change is alarming enough. What we don't know about the extreme risks could be far more dangerous. Wagner and Weitzman help readers understand that we need to think about climate change in the same way that we think about insurance--as a risk management problem, only here on a global scale.
Demonstrating that climate change can and should be dealt with--and what could happen if we don't do so--Climate Shock tackles the defining environmental and public policy issue of our time.