Thursday 29 Feb 2024
The price/earnings ratio of a company indicates the number of years shareholders have to wait to get their money back as profits, if it is all paid out as dividends and share buybacks, or it requires high growth. For example, Apple requires 29 years without growth. This table shows last quarter revenue growth compared to the previous year. Most already have high profit margins, which make share price growth due to improved margins unlikely.
Traditionally price/earnings is equal or less than growth. That is the PEG ratio (price/earnings to growth ratio). For example Apple trading on a p/e of 29 should have growth of 29%. Actual growth was 2.1%. Moreover high growth for a big company is not sustainable. It is usually small companies that have high growth potential.
Shareholders are hoping that present conditions persist, namely that a present price/earnings of say 30 will still be 30 in a year's time, and that the share price increases with the profits. If revenue and profits grow 10%, the share price will increase 10%.
| Company |
Price/sales |
Price/earnings |
Net profit margin |
Revenue growth |
| Apple (AAPL) |
7.6 |
29 |
26% |
2.1% |
| Amazon (AMZN) |
3.2 |
60 |
5.3% |
13.9% |
| Alphabet (GOOGL) |
6.2 |
26 |
24% |
13.5% |
| Meta (META) |
9.1 |
31 |
29% |
24.7% |
| Microsoft (MSFT) |
13.8 |
38 |
36% |
17.6% |
| Nvidia (NVDA) |
40 |
95 |
42% |
3.65x |
| Tesla (TSLA) |
7.0 |
45 |
15.5% |
3.5% |
US currency in circulation looks like it is moving vertically on a long term chart from Aug 1917. This is the nature of exponential growth. It only becomes a problem when the amount printed on notes grows impractically large. If this chart represented the real value of money, a 1c coin in 1924 is equivalent to about $5 today. If money doubles every 10 years, over the next 100 years a $1 note would turn into $1000. A few bags of groceries could cost $100,000. In 200 years it could be $100,000,000.
On a log scale the rate of growth has slowed down slightly the last two decades. Big growth occurred during the second world war, and after 1960, which forced the delinking of the dollar to gold in 1971, so governments could print money merrily.
Wednesday 28 Feb 2024
"If this is what AI can generate from a single picture today, who on earth is still going to acting schools?"- Twitter.
Chinese EV Minivan Adds 310 Miles Of Range In 10 Minutes Of Charging - InsideEVs. "It'll start at the equivalent of around $83,000".
US federal government debt (blue) and debt without the loans from the Federal Reserve Bank (red) up to Q3 of 2023. Despite paying back some Federal Reserve loans, government debt growth (blue) has not slowed down. Loans from other sources (red) have accelerated. The money that is paid back to the Federal Reserve comes out of circulation, which should result in economic weakness.
US total debt growth (blue) has slowed but is still climbing. M3 money supply (red) has declined
Tuesday 27 Feb 2024
"FTC sues to block a $25 billion deal between Kroger and Albertsons, alleging the largest supermarket merger in US history would lead to higher prices" - Twitter.
A Google search, for the number of democracies at the United Nations, returns these top results:
...."Democracy is a core value of the United Nations. The UN supports democracy by promoting human rights, development, and peace and security." - www.un.org.
...."Only 14 members elected to the 47-member UN Human Rights Council, based in Geneva, are considered “free” countries by the rights group Freedom House, leaving 70 percent of slots occupied by nations designates as “partly free” or “not free." - www.timesofisrael.com.
....According to Visual Capitalist only 8% of countries in the world have full democracy, and that includes Australia and Canada which still have the UK monarch as head of state.
At times it looks like the Euro Area economy is doing badly because the Euro currency weakens against the US dollar. Relative to M3 money supply the US economy (light green) and Euro Area economy (blue) have performed the same since 1995. US economic output to total debt (dark green) has performed slightly better. Some of the increased money supply could result in real economic growth, which would lift the chart up from its declining trend.
If the US and Europe economies perform the same, in terms of the real economic growth for the amount of money created, the €/$ exchange rate (red) should match the ratio of the Gross Domestic Products (blue), in which case the dollar is now too strong. Time will tell.
Monday 26 Feb 2024
Japan's Nikkei stock market index (red) has returned to the 1989 peak, shown in US dollars, compared to the US Wilshire 5000 index (green), and Germany's stock market index (blue). From 1972 to 2015 the three stock markets provided the same return.
Stock market indices mainly rise due to inflation. Relative to the US total debt or the money in circulation, the Nikkei was 8.4x higher at its peak.
Saturday 24 Feb 2024
The lunar lander IM-1 Odysseus of Intuitive Machines ended on its side. A month ago, a Japanese lunar lander SLIM (Smart Lander for Investigating Moon) by the Japanese Aerospace Exploration Agency (JAXA) also ended on its side. So apparently there are now two spacecraft on the moon lying on their side. Houston we have problem.
Friday 23 Feb 2024
IM-1 landing coverage - Intuitive Machines.
US personal interest payments as ratio of total wages has shot up to previous peaks. It most often peaks just before a recession (grey bands), except in 1982.
One of the best demarcations of a recession is lower growth in total wages. It looks better on a log scale. The chart breaks up as it falls.
Thursday 22 Feb 2024
The US (green), Euro Area (blue) and China (red) have a similar level of exports in US dollars.
The economies of the US (green) and China (red) are growing, whilst the Euro Area (blue) is not growing. In 2008 the US and Euro Area economies were the same size. Today the US is almost double the size. It could be due to a strong US dollar. The Euro Area exports is high relative to economy size. The Euro Area economy is more reliant on exports.
Like the size of the economies, US economic output per person (green) is higher than the Euro Area (blue). China's economic output per person (red) is low.
US government debt (green) has also increased a lot, whilst Euro Area government debt (blue) has levelled off in US dollars.
US government debt in dollars (red) has grown faster than Euro Area government debt in Euros (blue):
The growth in unproductive debt in the US can't be good for the US dollar in the future. An increase in US government debt (blue up) is often associated with a weaker dollar (red down), but not before 1985:
Wednesday 21 Feb 2024
To what extent does the high cost of electric vehicles lower the standard of living? The US new vehicle prices (blue) have increased since 2021, but that is probably due to money created. According to government statistics, the price of used vehicles (red) were 50% cheaper in the 1960s compared to new vehicle prices (blue).
The Average New Car Price Is Unbelievably High - Financial Samuari: "... the average new car price at the beginning of 2023 is $49,388". 1960s Cars – Swinging ’60s Cars - Supercars: "The average 1960s cars costs about $2,752 ...". So, at the start of 2023 it was 18x higher, compared to the index 3.6x. No statistic that has been converted to an index is reliable.
Tuesday 20 Feb 2024
US household debt to GDP (blue) has declined from 100% in 2009. Since then the government (red) has borrowed on their behalf. The public is typically more responsible in the debt they take on. The government is not, but the public will pay for the government debt one way or another.
To reduce goverment debt (blue down) spending should be reduced (red down) and/or income increase (green up).
Another way to reduce the value of government debt (blue down), is to create more money (red up):
Monday 19 Feb 2024
Eli Lilly (ELI) is another stock on a crazy price/sales of 22 (Eli Lilly Price to Sales Ratio 2010-2023 - Macrotrends), and price/earnings of 142 (Eli Lilly PE Ratio 2010-2023 - Macrotrends).
The average US house price to average wage (blue) is now 9.3, compared to 4.3 in 1964, which is more than double. House sizes doubled from 1200 ft2 in the 1960s to 2,392 ft2 in the 2010s (Compass California Real Estate Blog). People like to spend the maximum amount of money they can afford on a house. The question every estate agent asks: "What is the maximum you can afford?". As interest rates declined from 1980, they could afford bigger houses.
The cost of construction material to average wage (red) and lumber to average (green) has declined slightly. As cities grow bigger, the inner suburbs which provide a shorter commute, become more expensive, until they turn into slums. You could still build your own house in the outer suburbs, at a slightly lesser portion of your wage than in the 1960s.
The average house prices in California at $750,000 (blue) is 50% more expensive than the national average of $492,000 (red).
Sunday 18 Feb 2024
Dutch startup Monumental is using robots to lay bricks - TechCrunch.
EV charging statistics 2024 - Zapmap. "At the end of January 2024, there were 55,301 electric vehicle charging points across the UK, across 31,445 charging locations." Petrol Stations Numbers – The Challenges for the Industry - APEA.org.uk. "... the number of Petrol Filling Stations in the UK has remained stable over the past 12 months with, at the end of the year, 8,381 fuel forecourts in the UK – a reduction of three on 2020 numbers".
.... EV market stats 2024 - Zapmap. "As of the end of January 2024, there are around 1,000,000 fully electric cars on UK roads", which is a 15% market share.
.... The UK charging locations is 3.8x more than the fuel stations, but the fuel cars are 5.7x more. Either the electric vehicles need to be charged often, or it is more profitable to sell electricity, or there is a government subsidy involved.
Saturday 17 Feb 2024
"NOW - Violent clashes between Eritrean migrants and the police in The Hague, Netherlands." - Twitter.
Friday 16 Feb 2024
Commodities that appear to have nothing in common show surprising correlation: corn (yellow), copper (orange) and oil (brown). They are gradually weakening.
The price of coal (blue), iron and steel (red) compared to all commodities (green):
A weaker US dollar (red up) usually results in a higher commodity price in dollars (blue up). There are periods when the dollar strenghtens (red down) and commodities rise (blue up) like 1981-5, and since 2020. If the 1981-5 episode repeats now, the dollar should weaken. Commodity prices (blue) don't go down for long.
Thursday 15 Feb 2024
There is a lack of government-independent statistics to reveal the actual state of economies. Here is US economic output (Gross Domestic Product) relative to the WTI oil price, all the way back to 1947. There was big growth from 1949 to 1973. After the gold standard was abolished in 1971 the oil price became much more volatile. Ignoring the price volatility, the economy is now smaller than 1973. The population has grown 60% since 1973.
US economic output per worker relative to the WTI oil price. In 1947 a worker produced 3445x the price of a barrel of oil, and today 2269x.
In 1947 the average worker could have been paid with 1683 barrels of oil. Today he/she only gets 978 barrels.
Wednesday 14 Feb 2024
Argentina reduced its government debt (red) from 147% of GDP (Gross Domestic Product) in 2002 to 39%, but printed an enormous amount of money (blue) in the process. The currency has been replaced many times due to extreme devaluation. The new 1985 currency was destroyed by 1990, upon which the peso was pegged to the US$. The money printing has continued. In Nov 2023 the Argentine peso weakened 118% against the US$.
A government can either reduced debt by cutting spending, and/or printing more money. Germany's government debt to GDP was reduced from 82% in 2010 to 60% in 2019.
Germany's government debt (blue) remained constant from 2011 to 2019, whilst more Euro money (red) was created. That is usually how it is done. The value of the debt was reduced by devaluing the currency. By 2021 the debt had increased back to the same ratio to money supply.
Monday 12 Feb 2024
From June 2023: Coal production and consumption statistics - Eurostat. EU hard coal consumption declined to 150 million tonnes in 2020. In 2021 it increased to about 170 million tonnes. Brown coal consumption declined to 250 million tonnes in 2020, and increased to 280 million tonnes in 2021. Lower levels were predicted for 2022.
.... From 27 Jan 2024: Supply, transformation and consumption of solid fossil fuels - Eurostat. The EU consumption of coal (blue) had declined to 427.301 million tonnes by 2020, but increased to 495.414 million tonnes by 2022. No data for 2023 is available.
Can a country lower government debt once it exceeds 100% of GDP (Gross Domestic Product)? US Federal Debt to GDP (green) is at 120%. Japan (blue) and Greece (red) have not been able to reduce debt. Argentina (purple) has. It probably requires that voters choose a very different government.
Sunday 11 Feb 2024
Taylor Swift Reunites With Sir Paul McCartney at 2024 Super Bowl - Billboard.
Apparently it was not Taylor Swift's involvement that drew him to the Super Bowl. Paul McCartney sang at the 2005 Super Bowl: The Beatles' Paul McCartney Rocks the Super Bowl XXXIX Halftime Show | NFL - Youtube.
Saturday 10 Feb 2024
This DIY electric parade float chassis could be any vehicle you want it to be - Electrek.
Friday 9 Feb 2024
Digging into the big tech rally - JP Morgan. "Just seven stocks – Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla – account for almost 30% of the S&P 500 market cap. Those seven companies have contributed more than half of the S&P 500's 32% rally since the start of 2023."
The S&P 500 Price to Sales Ratio (Multpl) at 2.72 is lower than 2021, but historically high due to the high profit margins of big technology companies with limited competition. The US consumer appears to have a propensity to favour one service provider, like only Apple for smartphones.
| Company |
Price/sales |
Price/earnings |
Net profit margin |
| Apple (AAPL) |
7.6 |
29 |
26% |
| Amazon (AMZN) |
3.2 |
60 |
5.3% |
| Alphabet (GOOGL) |
6.2 |
26 |
24% |
| Meta (META) |
9.1 |
31 |
29% |
| Microsoft (MSFT) |
13.8 |
38 |
36% |
| Nvidia (NVDA) |
40 |
95 |
42% |
| Tesla (TSLA) |
7.0 |
45 |
15.5% |
"San Francisco was one of the best cities in the world 30 to 40 years ago. But now is filled with crime & homelessness. What went wrong? How do you fix this?" - Twitter.
Shell Is Immediately Closing All Of Its California Hydrogen Stations - InsideEVs.
Wednesday 7 Feb 2024
It’s never been more expensive to be a Disney fan - CNN Business.
$3 for a single McDonald’s hash brown? Customers are fed up and pushing back - CNN Business.
What are the factors that result in a fall in the US stock market? Total investment return consists of earnings, received as dividends and share buybacks, plus growth. With the 2000 stock market collapse (red), corporate profits (blue) remained constant, and even rose after 2001 whilst the stock market was still falling. Sales growth, represented by economic growth (green), fell. During the 2000 dot.com bubble technology stocks were priced for high growth.
With the 2008 stock market collapse both corporate profits (blue) and economic growth (green) declined. Presently corporate profits (blue) stay high. Profits are resilient as most companies simply increase price products, or cut staff. Economic growth (green) has declined, but is still higher than 2000 and 2008 recessions. Stocks are priced for high growth.
Whilst share prices rise or stay high, investors see no reason to sell. It is when the stock market falls that people sell to protect their investment. This forces more people to sell, which causes the collapse. They stop selling when there is fundamental value, especially dividends. The approximate earnings yield after 2000 rose from 4% to 11% , and after 2008 from about 9% to 14%. It is now 6.7%. The actual earnings yield of the S&P 500 is 3.7%, and the Nasdaq 3.9%.
Tuesday 6 Feb 2024
A new virus-like entity has just been discovered—'obelisks' explained - Phys.org.
Monday 5 Feb 2024
Warner Bros. Discovery Beats Investor Suit Over Inflated Subscriber Figures - The Hollywood Reporter.
Should Egypt Renovate This Ancient Pyramid? - Smithsonian. "Officials have announced plans to rebuild the granite blocks they say once covered the Pyramid of Menkaure".
The equity (cash value) US households have in their homes reached a low of 26% in 2012, and is up to 48% in Q3 2023. The rest should be debt. Thus in 2012 home loans were 74% of the home values, and now it is 52%.
However dividing total mortages by the approximate total value of housing produces much lower values, like 19% in Q3 of 2023:
According to Bankrate "The average mortgage debt balance per household was $241,815 as of Q2 2023, a 4 percent increase from 2022". That is 48% of the average sales price of $503,000. Perhaps only homes with a mortgage are counted.
Sunday 4 Feb 2024
"Former President Donald Trump said he might impose a tariff on Chinese goods of more than 60% if elected, signaling an increasingly hawkish tone against the top supplier of goods to the US" - Twitter. The Chinese RMB Yuan will need to decline to make goods competitive after the tariffs, thus making US exports more expensive. US made goods are already extremely expensive. Everybody outside the US benefits from cheap Chinese goods.
US imports of Chinese goods was 11.9% all imported goods and services in Q3 of 2023.
China's exports to the US was 15.5% of all exports in Oct 2023. It reached an average of 40% around 2000.
Friday 2 Feb 2024
US interest rates (red) are usually in sync with jobs growth (blue). When the rate of job creation increases (blue up), interest rates rise (red up). Since the Great Recession of 2009 the two have moved out of phase.
Greece's government debt to economic output (GDP) is still at 180% despite all the plans by the ECB (European Central Bank) to bring it down.
Thursday 1 Feb 2024
Apple (AAPL) Investor Relations: Q1 revenue +2.1% (+2.4% per year last three year), shares -2.4% less, dEPS up from $1.88 to $2.18, net profit margin up from 25.6% to 28.4%, price/earnings $185.85/$6.43 = 28.9, and dividend yield 0.52%. It is expensive for growth of 2.1% + share buybacks 2.4% + dividends yield of 0.52% = 5% total return.
Meta Platforms (META) was Facebook (FB), Investor Relations: year revenue +16% (16.2% per year last 3 years), shares -2.4% less, dEPS up from $8.59 to $14.87 (13.8% per year last 3 years), net profit margin is up from 19.9% to 29.0%, price/earnings = $394.78/$14.87 = 27. Q4 revenue +25%, and Q4 dEPS $5.33.
Amazon (AMZN) Investor Relations: Year net sales growth +11.8%. Q4 net sales +13.9%, and net profit margin $1.00/($169,961M/10,610M) = 6.2%. The year price/earnings is $159.28/$2.90 = 55. It is priced for high revenue growth. Every retailer is trying to compete with online sales, but Amazon remains ahead.
US E-Commerce Retail Sales (blue) has grown 4.3x over ten years, compared to 1.68x for Retail Trade and Food Services (red). Amazon grew 8.4x over ten years - Amazon Revenue 2010-2023 | AMZN - Macrotrends.
"The average American household owes $10,000 in credit card debt, $58,957 in student loan debt, $241,840 in mortgage debt, and $22,612 in auto loans, per YahooFinance." - Twitter. They are also liable for government debt.
US total debt per household (blue) and average house price (red). Since 1990 total debt per household (blue) is much bigger than the value of their house.
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