Strong economy
Solid growth across nation
Envy of the world
Showing posts with label America. Show all posts
Showing posts with label America. Show all posts
Sunday, June 30, 2024
Monday, February 22, 2016
Early Political Donors Face Diminishing Primary 2016 Expectations
The early shakeouts of the 2016 US presidential campaign have done more than dash the hopes of some long-shot candidates. The financial backers who committed piles of money to the early efforts of doomed campaigns also face major disappointments. Any expectation that money could transform this election are gone.
The Jeb Bush campaign was one of the largest wastes of money in American political history. The biggest Bush donors got badly burned and they now face candidates who are unlikely to consider their business interests. The current Republican front-runner has spent little on direct media or ground organizations compared to the other serious candidates. One of the cheapest modern GOP campaigns, in both popular votes and party delegates acquired, is possible with celebrity-powered free media that reads the cultural zeitgeist correctly.
The Anglophile Establishment in America has always had a bias in favor of large enterprises. Big sectors employ lots of unionized voters and are easier to protect with trade rules and tax breaks. The remaining Establishment hopes in either major political party lack popular appeal precisely because their longstanding ties to big business are so obvious.
The business community must now face the prospect of a future administration that owes them nothing. A progressive Senator promising unlimited free benefits and a real estate tycoon promising a free border wall will feel no loyalty to Wall Street or subsidized sectors, assuming they get their party nominations. America is on the cusp of a political transformation that may break the rule of an oligarchy unable to fathom its own shortcomings. Money could not buy political cover this time. Political "investors" must recalibrate what it means to earn ROI without political influence, if their fortunes even survive the next recession.
The Jeb Bush campaign was one of the largest wastes of money in American political history. The biggest Bush donors got badly burned and they now face candidates who are unlikely to consider their business interests. The current Republican front-runner has spent little on direct media or ground organizations compared to the other serious candidates. One of the cheapest modern GOP campaigns, in both popular votes and party delegates acquired, is possible with celebrity-powered free media that reads the cultural zeitgeist correctly.
The Anglophile Establishment in America has always had a bias in favor of large enterprises. Big sectors employ lots of unionized voters and are easier to protect with trade rules and tax breaks. The remaining Establishment hopes in either major political party lack popular appeal precisely because their longstanding ties to big business are so obvious.
The business community must now face the prospect of a future administration that owes them nothing. A progressive Senator promising unlimited free benefits and a real estate tycoon promising a free border wall will feel no loyalty to Wall Street or subsidized sectors, assuming they get their party nominations. America is on the cusp of a political transformation that may break the rule of an oligarchy unable to fathom its own shortcomings. Money could not buy political cover this time. Political "investors" must recalibrate what it means to earn ROI without political influence, if their fortunes even survive the next recession.
Monday, February 01, 2016
Thursday, January 07, 2016
The Haiku of Finance for 01/07/16
China selloff wave
Markets down both there and here
More stock pain coming
Markets down both there and here
More stock pain coming
China Triggers US Stock Avalanche
Any stock market watchers who peeked out of their caves this week noticed that the economic slowdown in China is triggering a stock market selloff there, which in turn triggered a market selloff here in the US. Collapsing world commodity prices indicated that stock markets had overestimated basic industrial demand. The Baltic Dry Index's massive decline in 2015 should have told people what was coming.
I read through some financial news headlines this week. Wall Street's court stenographers quoted the usual mutual fund managers' nonsense about how this is expected, and how it's a buying opportunity, and of course how US stocks are poised for success. What a pile of baloney. The sociopaths and trust fund kids running those active management strategies are privately kicking themselves. A slew of hedge funds, distressed debt funds, and multi-strategy fund shops are doomed to close. Leverage is going to bite these idiots hard.
The only sane voice this week was George Soros, who repeated an oft-heard warning that central bank policies have endangered the world's financial systems. No one listened to me when I gave this warning many times in the past few years. Hardly anyone listened to the few other financial experts who gave the same warning. Someone may listen to George Soros now. Everyone who doesn't listen will be on the wrong side of some seriously winning market trades.
I would very much like this stock market avalanche to continue until the DJIA is under 3000. Many stupid investment professionals deserve to buried under their losses. The bloom coming off Wall Street's rose will be gone for a decade after the dust settles. Watch out below.
I read through some financial news headlines this week. Wall Street's court stenographers quoted the usual mutual fund managers' nonsense about how this is expected, and how it's a buying opportunity, and of course how US stocks are poised for success. What a pile of baloney. The sociopaths and trust fund kids running those active management strategies are privately kicking themselves. A slew of hedge funds, distressed debt funds, and multi-strategy fund shops are doomed to close. Leverage is going to bite these idiots hard.
The only sane voice this week was George Soros, who repeated an oft-heard warning that central bank policies have endangered the world's financial systems. No one listened to me when I gave this warning many times in the past few years. Hardly anyone listened to the few other financial experts who gave the same warning. Someone may listen to George Soros now. Everyone who doesn't listen will be on the wrong side of some seriously winning market trades.
I would very much like this stock market avalanche to continue until the DJIA is under 3000. Many stupid investment professionals deserve to buried under their losses. The bloom coming off Wall Street's rose will be gone for a decade after the dust settles. Watch out below.
Thursday, November 26, 2015
Thursday, August 06, 2015
Leading GOP Candidates Stand Nowhere On US Fiscal Sanity
The first Republican Party presidential debates for the 2016 elections are happening tonight. I am not watching them because I do not watch TV. I tried to keep up with a couple of live blog feeds but the posts were not very enlightening. Most of the contenders seem to be sniping in sound bites. Politicians have little control over cultural matters but some voters insist on hearing about such distractions. I would like to know where these politicians stand on fixing the US government's fiscal imbalances.
The Bowles-Simpson National Commission on Fiscal Responsibility and Reform laid out a plan to balance the US government's finances. The rest of Washington, DC did not take it seriously. Both major parties would rather use select line-items as political footballs and campaign stunts. The signed audit statements for the federal government's major entitlement programs show them continuing to accrue unfunded liabilities. The difficult policy choices that could resolve those liabilities grow more difficult with each passing year.
The financial markets ignore the US government's perennial deficits while our dollar is strong. Petrodollar recycling supports demand for our sovereign debt as long as Saudi Arabia is OPEC's swing producer, and as long as that monarchy remains politically stable. The US has not yet met Greece's fate. The President we elect in 2016 will face the wrath of the world's financial markets if the US government is unable to stabilize its finances. Our popular fascination with candidates' one-liners and hairstyles will not excuse us from history's judgment if we cannot get solid financial solutions from them before we give them our votes.
The Bowles-Simpson National Commission on Fiscal Responsibility and Reform laid out a plan to balance the US government's finances. The rest of Washington, DC did not take it seriously. Both major parties would rather use select line-items as political footballs and campaign stunts. The signed audit statements for the federal government's major entitlement programs show them continuing to accrue unfunded liabilities. The difficult policy choices that could resolve those liabilities grow more difficult with each passing year.
The financial markets ignore the US government's perennial deficits while our dollar is strong. Petrodollar recycling supports demand for our sovereign debt as long as Saudi Arabia is OPEC's swing producer, and as long as that monarchy remains politically stable. The US has not yet met Greece's fate. The President we elect in 2016 will face the wrath of the world's financial markets if the US government is unable to stabilize its finances. Our popular fascination with candidates' one-liners and hairstyles will not excuse us from history's judgment if we cannot get solid financial solutions from them before we give them our votes.
Wednesday, July 22, 2015
Liberty And Engaged Citizens
Prosperity and liberty go together well in cultures that tolerate experimentation and respect for the individual. Writing about investment theories and market action is probably not enough to galvanize support for the enabling culture of economic prosperity. Two writers who may be able to help have recently crossed my radar. Charles Murray, author of By the People, and Larry Gerston, author of Reviving Citizen Engagement, recently spoke at the Commonwealth Club about how to re-energize Americans' concern for public life. I will offer my own thoughts below.
Mr. Murray approaches freedom from the conservative / libertarian right. Curtailing the intrusive power of government regulation would indeed be a boon to the US economy. I suggest he put his ideas to the free market test and crowdfund his proposed legal defense fund. I am generally not fond of those who thumb their noses at the rule of law, but Dr. Martin Luther King elevated it to a moral necessity in the face of unjust laws. Funding his legal defense while he contemplated action in Birmingham's jail would clearly have been a morally correct action. I must also caution those who think human history is an unbroken line of progress to higher states of maturity, freedom, and organization. Things do collapse sometimes despite the best efforts of well-meaning leaders.
Mr. Gerston arrives from the progressive left to critique Americans' disengagement. I agree with him that corporate tax loopholes and the erosion of economic security for workers are bad for prosperity and freedom. I would add that they are just as bad as over-regulation. I am totally on board with his idea for mandatory national service. A couple of years in the US military or a community service program would teach many otherwise entitled Americans that their rights come with civic obligations. Tax reform would work if it dramatically simplified the tax code but I doubt Mr. Gerston's proposed tax increase would pay for the unfunded GAAP liabilities of our entitlement programs. He would benefit from reading David Stockman's critiques of income inequality before he offers solutions emphasizing wealth redistribution.
I recently blogged about what a just society means. Real solutions throughout American history have come from both the right and the left at various times. Diagnosing social problems and working for solutions requires a citizenry engaged in guarding its own liberty. I would very much like to see my fellow citizens assume the task.
Mr. Murray approaches freedom from the conservative / libertarian right. Curtailing the intrusive power of government regulation would indeed be a boon to the US economy. I suggest he put his ideas to the free market test and crowdfund his proposed legal defense fund. I am generally not fond of those who thumb their noses at the rule of law, but Dr. Martin Luther King elevated it to a moral necessity in the face of unjust laws. Funding his legal defense while he contemplated action in Birmingham's jail would clearly have been a morally correct action. I must also caution those who think human history is an unbroken line of progress to higher states of maturity, freedom, and organization. Things do collapse sometimes despite the best efforts of well-meaning leaders.
Mr. Gerston arrives from the progressive left to critique Americans' disengagement. I agree with him that corporate tax loopholes and the erosion of economic security for workers are bad for prosperity and freedom. I would add that they are just as bad as over-regulation. I am totally on board with his idea for mandatory national service. A couple of years in the US military or a community service program would teach many otherwise entitled Americans that their rights come with civic obligations. Tax reform would work if it dramatically simplified the tax code but I doubt Mr. Gerston's proposed tax increase would pay for the unfunded GAAP liabilities of our entitlement programs. He would benefit from reading David Stockman's critiques of income inequality before he offers solutions emphasizing wealth redistribution.
I recently blogged about what a just society means. Real solutions throughout American history have come from both the right and the left at various times. Diagnosing social problems and working for solutions requires a citizenry engaged in guarding its own liberty. I would very much like to see my fellow citizens assume the task.
Saturday, July 04, 2015
Sunday, June 07, 2015
The Limerick of Finance for 06/07/15
Chinese rules could blow investment deal
Treaty fans know delays are now real
Foreign firms looking down
Time to get out of town
A new Great Wall has little appeal
Treaty fans know delays are now real
Foreign firms looking down
Time to get out of town
A new Great Wall has little appeal
Friday, May 29, 2015
Monday, March 02, 2015
Student Loans Still Out Of Control In March 2015
Over-indebted American Baby Boomers have raised their Millennial children in their own image. They have passed on their proclivity for living beyond one's means to a new generation. Gen-Y continues to take on new debt in the form of unpayable student loans.
The Project on Student Debt noted last November that average college debt for the class of 2013 was two percent higher per graduate than the prior year. Debt.org notes that total US student debt still tops $1T. Carrying so much debt would not be so bad in a normal economic expansion. The problem today is that personal income growth has slowed to a trickle. Median incomes for most middle class demographics, however you slice them, have not increased since the early 1970s after adjusting for inflation.
Baby Boomers have an average net worth of maybe a buck fifty because hardly any of them saved anything for retirement. They all counted on Social Security, which is in financial peril according to the Bowles-Simpson commission as long as its recipients aren't means-tested. Millennials have done their parents' generation one better. They are going for negative net worth rather than merely going for broke.
The Project on Student Debt noted last November that average college debt for the class of 2013 was two percent higher per graduate than the prior year. Debt.org notes that total US student debt still tops $1T. Carrying so much debt would not be so bad in a normal economic expansion. The problem today is that personal income growth has slowed to a trickle. Median incomes for most middle class demographics, however you slice them, have not increased since the early 1970s after adjusting for inflation.
Baby Boomers have an average net worth of maybe a buck fifty because hardly any of them saved anything for retirement. They all counted on Social Security, which is in financial peril according to the Bowles-Simpson commission as long as its recipients aren't means-tested. Millennials have done their parents' generation one better. They are going for negative net worth rather than merely going for broke.
Saturday, January 31, 2015
Achievement Requires Action Beyond Sharing Lame Memes
It's cute to see people spread motivational sayings around as social media memes. Toms of Twitter feeds are devoted to squeezing out daily dozens of comforting aphorisms. It takes zero effort to click a like button. Unfortunately, real accomplishment always requires far more work than passing a quote around among bots.
Modern Americans have gotten fat, lazy and stupid. Three generations of expanding middle class entitlement programs got the ball rolling. Dumbing down public education to the lowest common denominator of what a unionized teacher finds palatable helped move it along. Cultural worship of self-esteem over the stress of working toward a goal was the coup de grace. Politicians and popular entertainers who pander to emotionally needy "tall adolescents" put the final nail in the coffin.
Cheap capital and energy make life easy. Life throughout much of human history has rarely been easy. Lazy Americans are in for a world of hurt when the the Federal Reserve can no longer accommodate their coddled lifestyles with costless credit. I expect social media memes during the second half of this decade to reflect the bitterness of many newly impoverished Americans. Lots of people are going to learn the hard way just how hard life can get.
Wishing on a star does take the wisher to the star. The star does not care what a wisher thinks. Goals are great to have. Making a goal manifest in reality means work, focus, resilience, and perpetual repeats of a grinding cycle with no assurance of success. Belief is not enough. Achievement requires action.
Modern Americans have gotten fat, lazy and stupid. Three generations of expanding middle class entitlement programs got the ball rolling. Dumbing down public education to the lowest common denominator of what a unionized teacher finds palatable helped move it along. Cultural worship of self-esteem over the stress of working toward a goal was the coup de grace. Politicians and popular entertainers who pander to emotionally needy "tall adolescents" put the final nail in the coffin.
Cheap capital and energy make life easy. Life throughout much of human history has rarely been easy. Lazy Americans are in for a world of hurt when the the Federal Reserve can no longer accommodate their coddled lifestyles with costless credit. I expect social media memes during the second half of this decade to reflect the bitterness of many newly impoverished Americans. Lots of people are going to learn the hard way just how hard life can get.
Wishing on a star does take the wisher to the star. The star does not care what a wisher thinks. Goals are great to have. Making a goal manifest in reality means work, focus, resilience, and perpetual repeats of a grinding cycle with no assurance of success. Belief is not enough. Achievement requires action.
Tuesday, January 20, 2015
The Haiku of Finance for 01/20/15
Speaking union's state
More taxes for more handouts
Same old pandering
More taxes for more handouts
Same old pandering
Sunday, January 18, 2015
Presidential Campaigns for 2016 Begin in Jan. 2015
The party out of power has begun its 2016 positioning with a wide open field. The contender from 2012 has clearly been in the running since the day after he lost the election, protestations of disinterest notwithstanding. His private investment firm and annual policy conference in Utah were clearly proxies for a permanent campaign. The other leading GOP contender, from a family that has sent two members of its bloodline to the White House, did not take the hint to stay out of the race. The Democratic heir apparent's ambitions are the worst-kept secret in America. It's up to the financial establishment and deep state elite to decide which one of these leading choices is the most marketable; the other fringe contenders only count as entertainment. Alfidi Capital offers an initial handicap of the environment the obvious leaders face.
Comparing the 2016 race to the political comebacks of Richard Nixon and Ronald Reagan overstates the obstacles facing a contender who lost elections. Nixon prevailed during a very unpopular war with a promise of a secret peace plan. The incumbent party could not escape the specter of Vietnam in 1968. Reagan prevailed during heavy stagflation in the economy, with the inadvertent help of an independent candidate who split the vote in 1980. Public concerns over war and economic prosperity trump any other consideration in voters' minds when electing a President.
Elections in times of peace and prosperity can turn more on the personal characteristics of candidates but Americans still have strong preferences for incumbents. Charisma matters to voters who want a candidate they think will be just like themselves. Successful Presidential candidates are of course nothing like commoners, and their charm in appearing so is a useful mask. Ronald Reagan was everyone's favorite uncle or grandfather in 1984, depending on one's age group. The two former governors leading the GOP pack in 2015 remind a lot of working class Americans of their supervisors at work. The former First Lady on the Democratic side reminds a lot of Gen-X and Boomer professional women of themselves. I'm pretty sure that whichever party nominee picks a Hispanic running mate will lock up a lot of newly minted Nuevos Americanos who want someone just like themselves.
John Williams' Shadow Government Statistics published its Commentary #442 on May 12, 2012. It is noteworthy for its discussion of how real disposable income growth affects presidential elections. This figure was less than +3.0% in 2012 and yet the incumbent won reelection, bucking the historical trend since 1932. The substitution of large government entitlement programs for personal income is a recent phenomenon. Its power to mask weak income growth is phenomenal. Food assistance (EBT/SNAP), free cell phones, and SSI disability payments do not count as earned income but represent hidden purchasing power for low-income voters. The mentality of a candidate who tells private businesses "you didn't build that" reveals the attractiveness of handouts as an election year ploy.
The leading candidates of both parties at this stage of the 2016 campaign are notable for their bland public personas. The two former GOP governors who worked in finance appear stiff when they try to affect a common touch. Their private sector accomplishments are less impressive to low-information voters than how they might look wearing a plaid shirt and denim jeans. The leading Democrat offers the novelty of breaking the gender glass ceiling. Her fans are willing to overlook her lack of accomplishments in national office. It is fair to ask how many bills she authored in the US Senate and how many diplomatic problems she resolved as Secretary of State. Most people won't care about the answers, but history will note our indifference.
The two leading center-right Republicans share the same donor base; the one that raises the most money will probably win the nomination. The leading Democratic contender has a ready-made donor base in her husband's non-profit foundation. All three of them have longstanding friends on Wall Street. Whoever wins the fundraising race by mid-summer 2016 will own the messaging through November. The state of the economy in the summer and fall of 2016 will be the primary factor driving the electorate's final choice but funded messaging will matter only in swing states. Commitment to a large new war is unlikely between now and then, so that controversy will probably not be present in the race.
The GOP nominee from 2012 came close but got no cigar thanks to the incumbent's gifts to his base in swing states. Organizing for Action's (OFA) permanent campaign is a template for operatives who want to win. There is little indication in open sources that the GOP has mastered the geolocated Big Data that drove the 2012 policy handouts in swing states. The only outcome in doubt for the 2016 election cycle, in the absence of an economic crisis or difficult war, is whether the obvious front-runners assemble OFA-style campaigns.
Full disclosure: I voted for Mitt Romney in 2012, and I would like to do so again. His career experiences made him the best-qualified choice in 2012.
Comparing the 2016 race to the political comebacks of Richard Nixon and Ronald Reagan overstates the obstacles facing a contender who lost elections. Nixon prevailed during a very unpopular war with a promise of a secret peace plan. The incumbent party could not escape the specter of Vietnam in 1968. Reagan prevailed during heavy stagflation in the economy, with the inadvertent help of an independent candidate who split the vote in 1980. Public concerns over war and economic prosperity trump any other consideration in voters' minds when electing a President.
Elections in times of peace and prosperity can turn more on the personal characteristics of candidates but Americans still have strong preferences for incumbents. Charisma matters to voters who want a candidate they think will be just like themselves. Successful Presidential candidates are of course nothing like commoners, and their charm in appearing so is a useful mask. Ronald Reagan was everyone's favorite uncle or grandfather in 1984, depending on one's age group. The two former governors leading the GOP pack in 2015 remind a lot of working class Americans of their supervisors at work. The former First Lady on the Democratic side reminds a lot of Gen-X and Boomer professional women of themselves. I'm pretty sure that whichever party nominee picks a Hispanic running mate will lock up a lot of newly minted Nuevos Americanos who want someone just like themselves.
John Williams' Shadow Government Statistics published its Commentary #442 on May 12, 2012. It is noteworthy for its discussion of how real disposable income growth affects presidential elections. This figure was less than +3.0% in 2012 and yet the incumbent won reelection, bucking the historical trend since 1932. The substitution of large government entitlement programs for personal income is a recent phenomenon. Its power to mask weak income growth is phenomenal. Food assistance (EBT/SNAP), free cell phones, and SSI disability payments do not count as earned income but represent hidden purchasing power for low-income voters. The mentality of a candidate who tells private businesses "you didn't build that" reveals the attractiveness of handouts as an election year ploy.
The leading candidates of both parties at this stage of the 2016 campaign are notable for their bland public personas. The two former GOP governors who worked in finance appear stiff when they try to affect a common touch. Their private sector accomplishments are less impressive to low-information voters than how they might look wearing a plaid shirt and denim jeans. The leading Democrat offers the novelty of breaking the gender glass ceiling. Her fans are willing to overlook her lack of accomplishments in national office. It is fair to ask how many bills she authored in the US Senate and how many diplomatic problems she resolved as Secretary of State. Most people won't care about the answers, but history will note our indifference.
The two leading center-right Republicans share the same donor base; the one that raises the most money will probably win the nomination. The leading Democratic contender has a ready-made donor base in her husband's non-profit foundation. All three of them have longstanding friends on Wall Street. Whoever wins the fundraising race by mid-summer 2016 will own the messaging through November. The state of the economy in the summer and fall of 2016 will be the primary factor driving the electorate's final choice but funded messaging will matter only in swing states. Commitment to a large new war is unlikely between now and then, so that controversy will probably not be present in the race.
The GOP nominee from 2012 came close but got no cigar thanks to the incumbent's gifts to his base in swing states. Organizing for Action's (OFA) permanent campaign is a template for operatives who want to win. There is little indication in open sources that the GOP has mastered the geolocated Big Data that drove the 2012 policy handouts in swing states. The only outcome in doubt for the 2016 election cycle, in the absence of an economic crisis or difficult war, is whether the obvious front-runners assemble OFA-style campaigns.
Full disclosure: I voted for Mitt Romney in 2012, and I would like to do so again. His career experiences made him the best-qualified choice in 2012.
Saturday, September 27, 2014
Masses Congregate for a Study in Contrasts
I witnessed the masses behaving normally today. I chose to attend a technology conference in Santa Clara where entrepreneurs and serious investors pursued wealth. The same locale played host to other events targeting a more downscale audience. I did not attend the Herbalife or sports autograph events because the arriving attendees told me all I needed to know. The differences were noticeable.
The tech conference people were dressed for business, at least by Silicon Valley standards. The people at the other conferences were disgusting. The Herbalife event attracted a large number of folks who looked like they brought their friends up from south of the border for a quinceanera. I don't know whether they were documented appropriately but in California's current political climate it doesn't matter. The sports memorabilia people were uniformly obese and dressed in sports team attire that made their lack of physical fitness all the more disgusting.
The Herbalife people looked like they were holding evangelical revivals in between their formal events. They were loud enough to distract me as I made my way between the tech conference's seminars. I don't have time to deconstruct Herbalife's marketing model right now, so go read what the Salty Droid and others have to say about their practices. I saw enough faith-based nonsense from these people today to permanently distance myself from any Herbalife operative.
The sports memorabilia people were everywhere, flocking to meet their highly paid idols and generally getting in my way. I could not avoid the posters for their event, and the prices they paid for a touch of greatness were LOL-worthy. Former NFL players were signing autographs for up to $150 with a photo session. The slobs come away with memories that will last a lifetime. The real athletes come away with five figures of income for a few hours of "work" sitting and smiling.
Herbalife's cult followers and the Bay Area's fat sports fans have much in common. They both strive for fleeting glory bestowed by an authority figure, just for showing up. Their paths to the convention center led to the only extrinsic validation they may ever have in their sad lives. I try very hard not to feel sorry for people in the left tail of the IQ bell curve. They exist so the rest of us have a consumption base for our marketable solutions.
Our associations tell the world what we value in other humans. I will never spend time with the clueless dupes buying into Herbalife and the fat losers overpaying for a minor celebrity's signature. I am so proud of myself for picking the right crowd to join.
The tech conference people were dressed for business, at least by Silicon Valley standards. The people at the other conferences were disgusting. The Herbalife event attracted a large number of folks who looked like they brought their friends up from south of the border for a quinceanera. I don't know whether they were documented appropriately but in California's current political climate it doesn't matter. The sports memorabilia people were uniformly obese and dressed in sports team attire that made their lack of physical fitness all the more disgusting.
The Herbalife people looked like they were holding evangelical revivals in between their formal events. They were loud enough to distract me as I made my way between the tech conference's seminars. I don't have time to deconstruct Herbalife's marketing model right now, so go read what the Salty Droid and others have to say about their practices. I saw enough faith-based nonsense from these people today to permanently distance myself from any Herbalife operative.
The sports memorabilia people were everywhere, flocking to meet their highly paid idols and generally getting in my way. I could not avoid the posters for their event, and the prices they paid for a touch of greatness were LOL-worthy. Former NFL players were signing autographs for up to $150 with a photo session. The slobs come away with memories that will last a lifetime. The real athletes come away with five figures of income for a few hours of "work" sitting and smiling.
Herbalife's cult followers and the Bay Area's fat sports fans have much in common. They both strive for fleeting glory bestowed by an authority figure, just for showing up. Their paths to the convention center led to the only extrinsic validation they may ever have in their sad lives. I try very hard not to feel sorry for people in the left tail of the IQ bell curve. They exist so the rest of us have a consumption base for our marketable solutions.
Our associations tell the world what we value in other humans. I will never spend time with the clueless dupes buying into Herbalife and the fat losers overpaying for a minor celebrity's signature. I am so proud of myself for picking the right crowd to join.
Thursday, August 28, 2014
Friday, May 30, 2014
Stocks Ignore Shrinking US GDP
The first quarter decline in the US's GDP has barely made a ripple in the national news cycle. I think this is because the stock market's continued upward climb allows Americans the luxury of ignoring deteriorating economic fundamentals. Those Americans who are not invested in equities have their EBT cards, entitlement checks, and mortgage relief programs to keep them happy. The BEA news release page describes it as a second estimate. Revisions wouldn't be so necessary if the BEA used a simpler methodology devoid of hedonic adjustments and double-counting entertainment expenses.
I also think a second quarter of declining GDP will trigger alarm at the Fed. Two consecutive quarters of declining GDP are the textbook definition of a recession. The Fed will have to revisit its rationale for tapering its purchases of US Treasuries and agency paper. This won't happen right away, but we also won't have to wait until August to see whether the Fed is anticipating a second quarter GDP decline. Chair Yellen and her allies in the FOMC have shown the intellectual flexibility to turn on a dime. Stanley Fischer's swearing-in as the Fed's newest governor comes just in time. I expect him to do exactly what he did at the Bank of Israel when the next US crisis hits, until the crisis overwhelms the Fed's management tools and the US is forced to devalue its currency.
Meanwhile, the DJIA and S&P 500 are hitting record highs. The rah-rah crowd ignores mean reversion, but it's going to hurt when stocks return to their historical long term average of a P/E ratio at 14. Don't count on earnings climbing to make these elevated equity valuations look like a new normal. Incomes are stagnant and young people can't spend on household formation when they carry enormous college loan debts. Consumers simply will not be able to spend at levels that keep corporate earnings elevated.
I expect more bad GDP news, more Fed overreaction with stimulus, and more financial problems for Americans regardless of whether they own stocks. Nothing has changed the Alfidi Capital basic investment thesis.
I also think a second quarter of declining GDP will trigger alarm at the Fed. Two consecutive quarters of declining GDP are the textbook definition of a recession. The Fed will have to revisit its rationale for tapering its purchases of US Treasuries and agency paper. This won't happen right away, but we also won't have to wait until August to see whether the Fed is anticipating a second quarter GDP decline. Chair Yellen and her allies in the FOMC have shown the intellectual flexibility to turn on a dime. Stanley Fischer's swearing-in as the Fed's newest governor comes just in time. I expect him to do exactly what he did at the Bank of Israel when the next US crisis hits, until the crisis overwhelms the Fed's management tools and the US is forced to devalue its currency.
Meanwhile, the DJIA and S&P 500 are hitting record highs. The rah-rah crowd ignores mean reversion, but it's going to hurt when stocks return to their historical long term average of a P/E ratio at 14. Don't count on earnings climbing to make these elevated equity valuations look like a new normal. Incomes are stagnant and young people can't spend on household formation when they carry enormous college loan debts. Consumers simply will not be able to spend at levels that keep corporate earnings elevated.
I expect more bad GDP news, more Fed overreaction with stimulus, and more financial problems for Americans regardless of whether they own stocks. Nothing has changed the Alfidi Capital basic investment thesis.
Thursday, April 17, 2014
Subscribe to:
Posts (Atom)