Thursday 31 Oct 2024
Trump’s former pick to join the Federal Reserve has proposed a radical solution to solve inflation - CNN. The fear of deflation started due the Great Depression when money supply shrank -30% from 1930 to 1933. It assumes that consumers are buying stuff they don't need now, but are just buying because the price is going up.
The cocoa price spiked in April, and has fallen back by September.
Australia's house prices (blue) are up 26x since 1976, which is 7.0% per year. It does more or less match average wage divided by the benchmark government bond interest rate (red), being proportional to the amount a worker can afford, except for the 2011-2022 period when interest rates were very low.
Wednesday 30 Oct 2024
When will houses prices in the US (blue) rise again, and in all the other countries where it has shot up? The problem is finding the primary driver. Apparently it is not wages (green) because that has lagged. House prices have increased with the inverse of interest rates (red) since 1980, except higher interest rates (red down) have not stopped the increase in house prices (blue up). Apparently home owners do not want to sell at a loss, so prices do not go down much. Mortgage debt service payments as a percent of disposable personal income was only 6.0% in Q2. Mortgage debt is not a big factor.
Is this another self-perpertuating bubble? As existing home owners experience an increase in price, they can afford to pay more for their next house. Newcomers are outside the loop, the first time house buyers.
If a couple spends a third of their average wages on the mortgage interest (red) they can afford the average house price (blue). House prices could be a combination of the average wage and interest rates. Then house prices could have been much higher between 2007 to 2022.
Tuesday 29 Oct 2024
"Indian Home Affairs Minister Amit Shah authorized a wave of violence across Canada that included extortion and homicides, said a senior Canadian government official" - X was Twitter.
US presidents Obama, Trump and Biden imposed import duties on China solar panels, which has resulted in less than 1% now being imported from China. Manufacturing simply shifted to southeast Asia from where almost all the panels come (CSIS).
.... China and other countries are so much cheaper that the idea by politicians to manufacture in the US is just ridiculous: "In the late 1990s, the United States was the world’s leading producer of solar panels. However, the U.S. solar industry was overtaken by Japan’s, which was then surpassed by Germany’s, which was finally edged out by China in 2008. By that time, the average solar panel cost $4.40 per watt. Today, China dominates global solar manufacturing with over 80 percent market share, producing panels that cost as little as $0.10 per watt" (CSIS).
.... Meanwhile over 100 US solar installers went bankcrupt due to "higher interest rates, tighter financing, and adverse policy shifts in key states" - SolarInsure.
US personal consumption expenditure on food has declined from 20.2% of all expenditure in Jan 1959 to 7.4% in Aug this year.
The price of US gasoline (blue) has returned to the average wage (green) after being expensive. A fall can also mean a recession (grey band). Based on electricity tariffs (red) electric vehicles are cheap to charge relative to 1997.
Monday 28 Oct 2024
Hydrogen Stocks Crash as Hype Faces Reality Check - Oilprice.
"JUST IN - Washington Post owner Jeff Bezos has reportedly given the newspaper a mandate to add more conservative opinion writers at the paper — NY Post" - Disclose TV, X was Twitter. It might be too late to be conservative.
The US stock market is primarily driven by inflation, which has two components: wages (blue) and the increase in net worth (red). Based on the past, one could expect for the net worth increase (red) to stop momentarily, that is go to zero on the chart. The S&P 500 (green) matches the change in net worth (red) on this arbitary scale, except the stock market is now indicating a big increase in net worth. Interest rates will have to rise to stop the inflation.
Not only do workers have to pay for government debt, they are further being impoverished by the inflation caused by the increase in net worth. When will the poor peasants revolt against the wealthy landlords? Will it be before or after AI (Artificial Intelligence) take over their jobs? The net worth of the wealthiest 10% (blue) is now double the average wage (red) compared to what it was in 1992. If the poor invested in a house (green) the asset would have grown 1.3x wages since 1992, or 2x since 1975. It is worth owning a house with a mortgage to leverage the inflation.
Federal government total expenditure as a ratio of total wages. Looks like the US is becoming a socialist country. Government spending declined during the reign of Bill Clinton (Jan 1993 to Jan 2001) and Barack Obama (Jan 2009 to Jan 2017), both Democrats.
Saturday 26 Oct 2024
The Slimjet browser has started to crash on most website, but not all. "I suspect a new version of the very widely used Google Web Tools has rolled out to websites across the net, and there's something in the scripts that Slimjet doesn't like." - Slimjet Web Browser Online Forum. Google is too powerful, also the owner of Youtube. Yahoo! was the big search engine before Google. Time for a new search engine.
.... Slimjet released a new version to fix the crash after a Windows 11 update. The problem also existed in Windows 10.
"Trump says he would replace income tax with tariffs on Joe Rogan podcast" - X was Twitter. Tax receipts (red) is 76% of imports (blue). A 76% import duty on imports will make a lot of the imports unviable, and would increase prices for consumers. It does not matter who pays the taxes, the fundamental problem is when the government spends money, some people receive a benefit for which they do not have to work, which shrinks the economy. Taxpayers are also discouraged by not knowing what they pay for.
Friday 25 Oct 2024
S&P 500 earmings update - Factset: "The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the third quarter is 3.6% today". Together with S&P 500 maximum dividend + share buybacks yield of 3.4% at a p/e ratio of 29.7, the total return is 7.1%. The government 10y bond yield is 3.72%, but offers no growth.
"Waymo, Alphabet’s autonomous driving unit, raised $5.6 billion from investors, its largest-ever funding round." - X was Twitter. Apparently the best autonomous car, already driving passengers without a driver, and about to expand.
"Astronauts return to Earth after delay due to Boeing capsule snags" - X was Twitter.
"Airlines are using technology to crack down on people who cut the line" - X was Twitter. Get rid of the queues and delays.
"Australia’s central bank Governor Michele Bullock said it will take “another year or two” before inflation is sustainably back within the 2-3% target, in a signal policy is likely to remain restrictive for some time yet" - X was Twitter. She is talking bollocks.
.... Australia's M3 money supply (blue) grew 6.3% per year over the last ten years, and total debt (red) 6.0% per year up to 2022. The average house price in Sydney increased from A$962,965 in March 2014 to A$1,924,710 by June (Property Update), which is an increase of 7.2% per year.
Euro zone durable consumer goods (blue) have made a bubble, and looks set to fall into a recession. In the past it rose with M3 money supply (red), but M3 growth has already stopped.
US heavy weight truck sales (blue) fall long before a recession (grey bands). There is no decline in sales up to September. Rail freight carloads (red) declined permanently during recessions.
Thursday 24 Oct 2024
"Electric aircraft startup Lilium has run out of money" - X was Twitter.
"To beat EV tariffs, China looks to double production to staggering amounts" - X was Twitter. Limiting imports pushes up the currency of the import country, making their exports more expensive, and lowers the currency of the export country, making their exports even cheaper. To make imports more expensive, imports must be increased, not decreased.
The mortgage interest rate by itself is not useful information. The interest rate is high because inflation is high. Over the long term US house prices (red) should grow at a similar rate to interest rates (blue). House prices have jump already, so buyers need to wait for the next bubble.
The interest only cost of the average house with a new 100% loan was $2925 per month in Q2 (blue). The interest cost of federal government debt per working couple was $1629 per month in Q2. Before 2022 the mortgage cost (blue) was mostly lower than the present federal debt cost (red). In other words, with the interest people now have to pay on government debt, they could have bought a house with an interest only loan before 2022. Rent increases with inflation, but loan payments remain the same for the same interest rate.
Wednesday 23 Oct 2024
Texas sues US over noncitizen voting allegations - Reuters. "Texas's Republican Attorney General Ken Paxton sued Democratic U.S. President Joe Biden's administration on Tuesday, saying the federal government was not providing the help it needed in assessing the citizenship status of some of its registered voters".
Nvidia CEO Jensen Huang: AI “is going to be the largest of industrial revolutions we've ever seen.” - X was Twitter. He will also be replaced by Artificial Intelligence.
On social media there are short term charts showing how unusually high US federal government interest payments (blue) are compared to defense spending (red). They have coincided before around 1998.
The US Delinquency Rate on Single-Family Residential Mortgages at Commercial Banks shows no increase up to Q2. Mortgages held by commercial banks are a minority according to: "As of 2023, Fannie Mae and Freddie Mac support around 70 percent of the mortgage market" - Bankrate.
Total Mortgages Held by Fannie Mae (blue) compared to Households and Nonprofit Organizations; One-to-Four-Family Residential Mortgages:
Tuesday 22 Oct 2024
'Standard Chartered on August crude oil demand: We assess demand at an all-time high of 103.79 million barrels per day (mb/d), an upwards surprise of about 450 thousand barrels per day (kb/d) above our (pre-JODI data release) forecast. "August is the third successive month in which a new all-time demand high has been set" ' - X was Twitter. Probably backup power for green energy.
The crux of the economic problem in the US is total wages (blue) compared to federal government debt (red), because it is workers who will have to pay for it in the future. What happens to the economy? There are always two parties involved. The standard of living of workers will decline, whilst the lenders will have money returned. Spending will shift further from the workers to the wealthy. Lenders by nature are savers and not spenders, thus the economy declines.
In the case of Japan, government debt also climbed (red), and after the 1995 the economy (blue) stopped growing. Since 2012 government debt and the economy have declined.
Monday 21 Oct 2024
Rossi Now Claim Zero Point Energy Can Power an Electric Car - Next Big Future.
"Hollywood filmmaker Alcon Entertainment is suing Elon Musk, saying Tesla used imagery inspired by the 2017 movie “Blade Runner 2049” at a recent event even after permission was denied" - X was Twitter. The compensation will be based on the money lost by this Blade Runner because people who would rather watch the Tesla event = $0. Tesla should claim compensation for promoting Blade Runner.
New Diabetes Treatment Eliminates Need for Insulin in Most Patients - ExtremeTech.
UK economic output relative to US total debt as nominal inflation rate is 40.6% of 1971. Until 1992 the economic output remained more or less the same.
UK economic output relative to UK total debt as nominal inflation rate was 36.9% of 1987:
UK total debt (blue) exceeded M3 money supply (red) for a long time:
Saturday 20 Oct 2024
"The Most Reliable Car Brands, According to Consumer Reports" - X was Twitter. It does make sense for Chevrolet (General Motors) and Ford to be down on the list, but Volkswagen and Mercedes are even lower.
"U.S. Banks now facing $515 billion in unrealized losses" - X was Twitter. FRED discontinued the chart, so this must be bad:
Friday 18 Oct 2024
Gold (yellow) is pushed up by speculators, although the gold mining exchange traded fund GDX is not particularly high (Bigcharts) suggesting that mining costs are also rising, unless it is a switch to lower grade ore. The price of nickel (grey) and oil (brown) still heads towards a recession.
Thursday 17 Oct 2024
Wife of Tory councillor jailed for stirring racial hatred after Southport attack - The Guardian. "The post was later deleted but police established it was available for at least three and a half hours". Some-one with a time machine should go back and explain to the forefathers what a bad idea is for an island to colonize populations with explosive growth, and force them to learn your language.
US average annual wage (blue) compared to the average annual increase in wealth for the wealhiest 10% (red). In April the average wage was $53,694, and by Q2 the increase of wealth was $183,000 per person.
Wednesday 16 Oct 2024
How much can a rise in the stock market contribute to the inflation that results in higher economic output (GDP)? The Willshire 5000 index market cap increased by +$14,810B over the year to date. US GDP was $29,017B over the year to Q2. The stock market index is a capital value, and GDP an annual amount. To stop inflation, interest rates need to target the stock market.
Tuesday 15 Oct 2024
The US price of eggs (blue) have shot up again. It keeps going back above average wage (red). Bacon (green) has stayed with wages. Medical care (purple) and average house price (turquoise) have increased more than wages.
Monday 14 Oct 2024
The S&P 500 stock market index (blue) corresponds with the US current account deficit (red), which suggests foreign capital inflow contributed to the stock market rise. During recessions (grey bands) the current account shrinks.
The stock market is a capital value, and the current account deficit an annual amount. The current deficit was $266.8B in Q2, which is $1067B over a year. The WiIlshire 5000 market cap increased by +$14,810B over the year to date. If all the foreign inflow went into the stock market, it accounted for 7.2% of the rise.
That is despite US economic output (GDP) as fraction of world GDP having declined from 40% in 1960 to 26% in 2023:
Sunday 13 Oct 2024
"WATCH: SpaceX Starship launch tower successfully catches Super Heavy booster for the first time" - X was Twitter.
"What Hurricane Milton did to a Duke Energy solar farm in Florida" - X was Twitter.
Saturday 12 Oct 2024
"It is our understanding that these robots were not operating entirely autonomously," a Morgan Stanley report said. - X was Twitter. The human robots look more like a potential nightmare.
"Visualizing the Sugar Content of Popular U.S. Drinks" - X was Twitter.
Friday 11 Oct 2024
"Ranked: The Largest Producers of Wind Power, by Country" - X was Twitter. For all the coverage China's coal power station gets, they also have the most wind power by far. The 442GW of installed wind power at 20% utilization can deliver 774TWh of energy compared to 9220TWh electricity used in 2023.
"With less than 30 days until the election, the Biden-Harris Department of Justice is filing an unprecedented lawsuit against me and the Commonwealth of Virginia, for appropriately enforcing a 2006 law to remove noncitizens from the voter rolls" - X was Twitter. Politicians are only interested in winning elections. After elections there is no motivation to do anything.
"Net immigration had the LARGEST increase under Pres. Biden. The US took in over 10 MILLION immigrants and saw a significant increase in unauthorized immigration from 2021 to 2024" - X was Twitter.
Thursday 10 Oct 2024
Photos: Hurricane Milton brings devastation across Florida - NPR. Humans should have adapted their lifestyle to the climate, including structures that are hurricane resistant a few hundred years ago, instead of relying on support from public funds or insurance.
Wednesday 9 Oct 2024
"Socialists are really a strange species, they are so detached from reality that they repeat the same mistakes over and over again" - X was Twitter.
"Rio Tinto to buy Arcadium Lithium for $6.7bn" - X was Twitter. Isn't Rio Tinto already too big?
eBay announces ban on private sales of electric bicycles - Electrek. Roads are anyway unsafe for cycling, except for dedicated bicycle lanes.
US average wage relative to total US debt per capita as nominal inflation rate (blue) is 16.5% of what it was in 1964. How is it even possible for people to borrow so much, and not spend it, so as to cause inflation? The increased debt does create inflation once, but because it goes into unproductive assets, there is no further income or spending. The drawback is that the debt accumulates without a way to pay it back.
With interest rates declining people can afford to sit on more debt, resulting in lower money velocity, and low inflation. It is worth holding the debt, which is invested in asset, because asset prices increase as interest rates decline. It does require for the money to stay with the wealthiest 10%, and out of the hands of the other 90% who like to spend it.
Whatever the real decline in wages, the average debt per person is now a lot higher. Average wage is now $54,600 per year compared to total debt of $296,000 per person. In 1964 the wage was $4500 per year compared to total debt of $4024. Today it takes 6.1x longer just to pay back the debt principal. At a 5% interest rate, the cost is now 27% of the average wage, and at 10% interest it is 54% of the wage. The nation goes broke at high interest rates.
Even without inflation, wages probably would have declined due to lower labour cost in other countries. Japan's economic output relative to US total debt (red) and China's (green) give an indication of when manufacturing shifted to these countries.
All US household and nonprofit organizations debt, to all wages paid, is 2.0x higher than in 1964 (below). Workers also indirectly pay for the other debt – any cost or tax is passed onto until it reaches a party that cannot pass it on further, which are workers with no pricing power.
The velocity of US money flow (below) has declined from 0.773 in 1951 to 0.291 now. That means the average person took 1.3 years to spent their share of the money in circulation in 1951. Now it takes 3.4 years. That is extremely inefficient.
Argetina's apparent money velocity was 4.0x in 2017, which means money changed hands every quarter. When money loses value at a high rate, you want to spend it quickly.
Tuesday 8 Oct 2024
The Boring Company’s Vegas Loop is a comedy of trespassing errors - Engadget.
"JUST IN: Warren Buffett Indicator hit 197%, the highest level in history, surpassing the Dot-Com Bubble and the Global Financial Crisis." - X was Twitter.
"JUST IN: Hang Seng Index falls by 9.41%, its largest loss in 16 years and 2nd largest loss this century" - X was Twitter.
Six days ago: Hang Seng Index climbs 1,310 points, sixth consecutive days of gains - The Standard.
Monday 7 Oct 2024
The S&P 500 PE ratio is 30.02 on this magnificent chart: Longtermtrends. A -50% fall would bring it back to the long term average. The interest rate decline from 1980 to 2010 led to a higher PE ratio, because stocks were priced for "growth", which is basically inflation caused by asset appreciation. The present high valuation requires more inflation. Stock markets don't really need a reason to fall. Once it starts falling, shareholders pile out to prevent further losses.
The sectors with the highest valuations are Real Estate (39.4x) and Information Technology (38.0x), and the lowest Energy (12.7x): World PE ratio.
Repeating what appears to be a self-perpetuating bubble. US corporate profits (blue) is still climbing, and so is the net worth of the wealthiest 10% (green). Asset appreciation leads to more money in circulation, more corporate profits, which increases asset prices, etc. Increased wealth due to inflation does not involve production. Therefore workers have to pay for the wealth created through wages that do not keep up with inflation.
"Stock Comparison: Magnificent 7 vs. 2000s Tech Bubble" - X was Twitter.
"Kamala supporters filming running over a Trump sign get quite a surprise" - X was Twitter.
Not only is the US restricting imports, they are impeding exports: "Thank you for considering McMaster-Carr for your purchase. However, we will not accept orders from your facility due to the cost of complying with US export regulations."
Sunday 6 Oct 2024
"NASA released the clearest view of Mars ever" - Nature is Amazing, X was Twitter. These are the rocks with which houses will built on Mars.
What Is Dark Matter? - Extremetech.
Saturday 5 Oct 2024
"How rich people pay no taxes" - Seek Wiser, X was Twitter.
Friday 4 Oct 2024
"The EU agrees to impose tariffs of up to 45% on imports of electric vehicles from China" - OilPrice, X was Twitter. Governments keep repeating the same failed policies. Interest rates were lowered from 1980 to 2010 despite it repeatedly failing to create economic growth. Green energy has resulted in higher temperatures, so they push for more green energy. Same with import restrictions and subsidies.
The economic output (GDP) of France (blue) and the US (red) relative to US total debt as nominal inflation have a similar decline. France's figure could be more volatile due to the exchange rate. Economies were impacted by a shift of manufacturing to Japan and China, and the government response.
The economic output of Mexico (blue) and Argentina (red) have declined over 40 years relative to US total debt. Mexico at -0.69% per year, and Argentina at -2.3% per year. The population of Mexico is 131M and Argentina 46M. Argentina has had currency destruction, which must have made it more difficult to keep track of its gross domestic product.
Thursday 3 Oct 2024
The price/earnings of Walmart (WMT) is at 42 (Finance Charts). The market is expecting more "growth", which is basically inflation caused by more money creation. It has made higher peaks over the last 6 years, but was much lower before that.
The index of US oil and gas extraction (red) has shot up. Did it have a negative impact on other industries? The fraction of gross domestic product (GDP) of oil and gas extraction (blue) has declined since 2009:
Wednesday 2 Oct 2024
Relative to the 1990s, the iron ore price (red) has outperformed copper (orange), oil (brown), and US total debt per capita as nominal inflation rate (green). Copper and steel can be recycled, whilst oil is burnt up.
Tuesday 1 Oct 2024
From 27 Sep: American Households' Average Monthly Expenses: $6,440 - The Ascent. Average monthly expenses increased 5.9% over a year, which looks like a realistic figure for inflation based on money = debt growth. Average annual income after taxes increased 5.6%.
According to the charts below, the US Household Consumption Expenditures on Housing relative to total wages (blue) have not increased since 2009. Mortgage Debt Service Payments as a Percent of Disposable Personal Income (green) have declined. Personal current taxes have increased (red). People love inflation and taxation. This is why they keep voting for the same politicians.
US wage growth (blue) did not do too badly against money = debt per capita as nominal inflation (red) after interest rates reached rock bottom in 2009. It was the lowered interest rates the preceding decades that was the problem.
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