Tuesday 7 Jan 2025
The median listing price per square feet in California (blue) was 2.5x more expensive than in Texas (red) in Nov 2024.
Converting the FRED price index to average home value according to Motley Fool Money, house prices in the two states were similar back in 1975. That is a big difference in asset appreciation.
Monday 6 Jan 2025
New services often have unforeseen problems. The Tesla robotaxi sounds like a great idea, but there might be a big demand from commuters travelling to and from work, whilst the cars sit idle the rest of the day. People will also have to wait for the robotaxi to arrive depending on how many are roaming the streets.
.... From 11 Nov 2024: "Waymo’s autonomous ride-hailing service still can’t compete with traditional rideshares on either price or speed" - Yahoo Finance.
Australia's prosperity based on GDP relative to US total debt as real economic output (blue) peaked in 1974 when the iron and steel price was high relative to US total debt per person, as real iron price (red). It is now at the same level as 38 years ago. Australia has done better than most other countries due to an export with limited supply. It makes sense for companies and countries to concentrate on their comparative advantages. Subsidies and import duties is the wrong way to go.
Sunday 5 Jan 2025
"Australia's Victoria braces for fire danger as 45 degrees Celsius nears" - X was Twitter. All that green energy cooling the earth. They should welcome the fires, because the smoke seeds the clouds, bringing the rain which completes the earth's cooling cycle.
Friday 3 Jan 2025
"$SPX is expected to report Y/Y earnings growth of 11.9% for Q4 2024, which is below the estimate of 14.5% on September 30" - X was Twitter. A lot of companies are doing badly. The overall earnings growth is skewed by the large companies.
Adam Savage of Mythbusters said the Discovery show ended because ratings fell along a bell curve. The internet exposes the facts. The ratings did decline slowly towards season 11, but by season 14 (last one with Adam Savage and Jamie Hyneman) it was higher than ever - Ratingraph.
"Biden officially blocks US Steel-Nippon Steel deal" - X was Twitter. Makes sense for the next time the US is at war with Japan. "We are dismayed by President Biden’s Executive Order to block our pending transaction with Nippon Steel. We will take all appropriate action to protect our legal rights to secure a future in which U. S. Steel can thrive and compete." - US Steel, X was Twitter.
Tesla's vehicle deliveries was no surprise given the numbers for the first three quarters, from 2 Oct: X was Twitter. Tesla sales for 2024 are about 1.9% of global passenger car sales.
There is inconsistent information on world car sales: "Last year (2023), global vehicle production reached 93.5 million units, representing a 2% increase compared to pre-pandemic levels in 2019 and a significant 17% rise from 2022" - Visual Capitalist.
.... Or sales of 76.67 million 2023 was still below the 2018 level: Our World in Data. With electric cars being more expensive, except in China, one would expect for the number of cars sold to be lower.
Thursday 2 Jan 2025
"Saudi Arabia ran a current account deficit in the third quarter, as oil export receipts didn't cover current external spending. With a balance of payments break even of around $90 a barrel, the q4 external deficit will be large ..." - X was Twitter.
"Prices for nickel, used in stainless steel and batteries, dropped towards $15,000 a ton on the London Metal Exchange" - X was Twitter.
"X and Google have not applied for a social media operating license under Malaysia’s new law which kicked in on Wednesday, according to the country’s internet regulator" - X was Twitter. There are 1.1 billion websites. Social media is probably a tiny percentage of the content on the web.
"Apple finally forced to pull Lightning-based iPhones from sale in the EU" - X was Twitter. Europe's USB-C charger mandate.
Wednesday 1 Jan 2025
"Despite Pres. Milei’s popularity, Argentina’s official inflation continues to surge at a PUNISHING 166%/yr" - X was Twitter.
"Charted: Tesla’s Market Cap Nears Half of Global Auto Industry" - X was Twitter.
"U.S. Dollar is now the most overvalued in history according to Bank of America" - X was Twitter.
Japan residential property prices in dollars (red) look cheap relative to the US average house price (blue). Average home in Japan is ¥30-50 million or $273,000-$455,000 (Tokyoportfolio) compared to $501,000 in US. Index based statistics are useless.
Residential property price for Germany in dollars (red) relative to the US average house price (blue). In 2023 average cost in Germany was €2971/m2, but as high as €10,420 in Munich (Koronapay). Median price in US is $2800/m2 (Properstar).
Tuesday 31 Dec 2024
"The last time just 10 stocks accounted for 38% of total market cap was just before the Great Depression (chart Goldman)" - X was Twitter.
Is Taurine The Elixir Of Life? Considerations For Supplementation - Zero Hedge. Taurine powder and collagen powder then.
"AAPL is now trading at over 10x sales, Apple's highest valuation in history" - X was Twitter. That is absurd for a business without growth. Shareholders need 10 year's worth of revenue in dividends and share buybacks to get their money out.
The California grid ran on 100% renewables with no blackouts or cost rises for a record 98 days - Electrek. "This paper shows that the main grid in the world’s fifth-largest economy was able to provide more than 100% of the electricity that it used from only four clean renewable sources: solar, wind, hydroelectric, and geothermal, for anywhere from five minutes to over 10 hours per day for 98 out of 116 days during late winter, all of spring, and early summer, as well as for 132 days during the entire year of 2024, without its grid failing".
.... It implies a lot of overcapacity. In 2023 electricity sold was 215,625GWh. Natural gas capacity was 39,689MW x 24 hours x 365 days = 347,676GWh maximum available, far greater than the electricity sold (California Energy Commission). The high price of battery storage must be added to the price of solar and wind.
.... The California average electricity rate is 30.22c compared to 16.94c USA average (Energybot).
US internal migration map: X was Twitter. It is not longer "Go West, young man" (Wikipedia)
"India puts into orbit two small satellites for its first space-docking experiment, a key step in ambitions to build a space station and send people to the moon" - X was Twitter. The man in the moon will finally get some curry.
Monday 30 Dec 2024
"German electric air taxi company Volocopter has filed for bankruptcy, the latest in a string of similar green startups to hit financial turbulence" - X was Twitter.
"During the recent campaign Donald Trump proposed a 10% cap on credit card interest rates. Great idea. Let’s see if he supports the legislation that I will introduce to do just that." - X was Twitter. Legislate is what congressmen/parliamentarians do all day. At 10% few people will qualify for a credit card.
Delinquency Rate on Credit Card Loans, All Commercial Banks (bue) and Commercial Bank Interest Rate on Credit Card Plans, All Accounts (red):
The S&P 500 PE ratio is 30.83 - Multipl. The PE ratio has made a lot of these spikes. As long as a company has high revenue and profit growth, the PE ratio almost doesn't matter, because the share price will likely rise at that growth rate. It is only when the growth stops that shareholders look for dividend and share buyback yield.
The revenue growth, dividend yield and buyback yield can be compared on the website Stockanalysis. Companies with low growth often have a dividend + buyback yield that approaches 4%, which is about the nominal inflation rate. The growth stocks are very expensive based on PEG, that is the PE-ratio over growth. The stock market could collapse just because of the high valuations. The same arbirary share prices on the way up, applies on the way down. There is no downside limit until the dividend+buybacks are significant.
The annual increase in corporate equity market value (red) is sometimes equal to all wages (blue). Thus shareholders made as much money as all the workers, without lifting a finger. There were corrections in 2001 and 2009, which cancelled out most the wealth created. Since then there was a stock market fall in 2022, but nothing big enough to balance out the wealth gains since 2010. What is the feedback mechanism that will cause a correction?
Up to 1995 the movements in equity value (red) was small compared to total wages (blue). Something happened after 1995 that caused the stock market to become much bigger, or just more volatile. Big monopolies developed, and cheap products out of China have contributed to profits.
The tradtional view is that rising interest rates cause an economic decline and stock market fall. The interest cost on all debt relative to all wages (blue) doesn't look especially high at the time the corporate equity market value relative to total debt falls (red). The interest cost (blue) was as high as 50% of wages in 1981 and 1984. The interest cost (blue) is now as high as in 2000 and 2007, and we do not see economic weakness yet.
Is a market collapse caused by a weak economy? The decline in corporate equity value (red) is much bigger and starts before changes in the economy (blue). Corporate profits (not shown) which determine share prices seldom go down, when it does, it is only briefly. A decline in the stock market does impact spending by shareholders, and thus the economy. It looks like the stock market falls by itself. A collapse is caused by shareholders piling out to prevent losses.
Sunday 29 Dec 2024
"Robert Downey Jr visited the trading pits in the 1990s. He hated it!!" - X was Twitter.
"Austin house bought in 2022 for $425K with $85 downpayment" - X was Twitter. The $340,000 present value at 5% per year long term house price growth, would be $553,824 in ten years. If a tenant pays just the interest, the owner equity would increase from $85,000 to $213,824 in ten years, a growth rate of 9.7% per year.
"The fall of Intel has been a sight to behold. A titan on its knees." - X was Twitter. US branded semiconductors are expensive.
Saturday 28 Dec 2024
"S&P 500 forward P/E ratios and their following 10-year returns. That's not great" - X was Twitter.
"You have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%." - Warren Buffett, 1999 - X was Twitter.
"Wise words from a true genius (Milton Friedman)" - X was Twitter.
"Today, the USB-C becomes officially the common standard for charging electronic devices in the EU" - X was Twitter. The maximum current is 5A. It has four positive supply pins and four grounds. That means each of those tiny pins must handle up to 1.25A. That is not a good idea. Big current requires big connectors.
From 6 days ago: How Europe's Building the World's Longest Underwater - Youtube.
"We do need to make this easier to find" - Elon Musk, X was Twitter: "friendly reminder that you can mute words on X".
Friday 27 Dec 2024
S&P 500 Earnings Set to Shine: January's Critical Market Test - Investing. "The forecast for Q4 is a sequential and year-over-year acceleration to 12%, and the final tally will likely be higher". Banks do well as long as the money supply grows, because they take their cut on that money that flows through bank accounts.
From 19 Dec: 5 Top Semiconductor Stocks To Buy For 2025 - Forbes.
....From 24 Dec: China’s listed semiconductor companies report strong growth - GlobalTimes.
....NAURA Technology Group "is currently the largest semiconductor equipment manufacturer in China". "In January 2018, the Committee on Foreign Investment in the United States (CFIUS) approved Naura's purchase of Akrion Systems, a Pennsylvania-based rival that was a supplier of advanced wafer surface preparation technology. This was the first takeover of an American company by a Chinese one that was approved since Donald Trump became President of the United States". "In December 2024, Naura was targeted in a new round of US export controls and added to the United States Department of Commerce's Entity List".
...All the talk about semiconducter manufacturing in the US, whilst the number of employees has increased little so far:
Thursday 26 Dec 2024
"Ok, pls explains these orbs over NY" - Reddit. It looks similar to Disney drone displays - Disneyland Paris.
US federal government debt growth is high and constant. Is it planned or a response to inflation?
In many countries government expenses rise with inflation, while tax income falls behind due to low nominal economic growth. Then the government has to print or borrow money to make up for the shortfall. This can also be seen during and after US recessions (grey band). Debt increases because expenses (red) continue to rise whilst income (green) falls behind. Wherever a country has rising government debt, it often is a sign of a declining real economy.
Wednesday 25 Dec 2024
People are now using the word "festivities". Before you join in the festivities, remember to check in your six-shooter with the sheriff (Back to the Future III).
The US personal consumption expenditure on New Autos (red) has fallen from 4.2% to just 0.25% of total expenditure. Recreational goods and vehicles (blue) improved from 2.0% to 3.3%. Apparently some people have replaced their car with an RV, in which case it is less for recreation, and more for living in. The transition to electric vehicles at twice the price is not going to happen. Comparing this with the number of new cars sold, implies people bought cheaper cars.
Based on the high real economic growth statistics, are people living the high life on yachts? If the number of employees in ship and boat building is any indication of the demand for ships, it has declined since 1980.
Tuesday 24 Dec 2024
"Your cart (Trump)" - X was Twitter. "Trump Christmas message" - Reddit.
"Nvidia $NVDA has reportedly asked Super Micro $SMCI, Dell $DELL and other partners how its high-end, restricted AI chips have ended up in China, as the Commerce Dept is looking to better enforce export restrictions with smuggling of servers detected" - X was Twitter. Nevermind the super high-end chips. The industry can't even produce an easy to use computer with software that doesn't need updating every few days.
"Which Countries Are Putting Tariffs On China’s Tech?" - X was Twitter. A lot of countries have import duties on cars to protect local manufacture. It results in the local population having to pay more for cars.
According to official statistics, US real economic output increased 3.2x since 1982. It is difficult to find this enormous increase in the standard of living. Passenger car registrations have declined since the 1980s. If people were wealthier they would have bought a new car more often, and collected cars.
US passenger enplanements grew by 1.5% per year from 2000 to 2024. Perhaps more people prefer flying over driving. Some of the present travelling might be pent-up demand from the 2020 fall. It does rise up to recessions (grey bands).
Personal consumption expenditure (PCE) on air transportation as fraction of all PCE is less than 1%, and shows little growth since 1980. There is no sign that people have joined the jet set.
Spending on watches and jewelry is less than 1% of PCE, and has declined with lower interest rates since 1980. No sign of greater prosperity there.
Monday 23 Dec 2024
"BREAKING: Nordstrom, $JWN, is going private in an all-cash transaction valued at $6.25 billion. The Nordstrom family is paying shareholders $24.25 in cash for each share they own." - X was Twitter. The stock market is dominated be speculators trying to make money off investors. "Nordstrom went public July 29, 1971 at $24.50 per share (before stock splits). After adjusting for stock splits, the initial price per share was approximately $0.2552." - Nordstrom.
"New Census data reveals Democratic strongholds only grew thanks to record foreign migration offsetting massive domestic flight" - X was Twitter.
When new sheriff Trump cleans up the town, he should do something about the fake inflation figures produced by the government. He did nothing the first time around. As leader of a political party he is obligated to continue with the impossible economic growth figures to win voter support. "There are 3 kinds of lies: lies, damned lies, and statistics" (Mark Twain).
The US drive to manufacture semiconductors will result in Americans paying more for semiconductors, while the rest of the world buys cheap products. It is just like the cars from Asia that have taken over the world. Whilst Ford sales fell -27% in North America by 2022, it fell -43% in Europe, -58% in China, and -75% in South America (Stockdividendscreener). General Motor's North America sales declined -10%, Asia etc -39%, and South America -48% (Stockdividendscreener).
The US government stimulus funded with debt (red) created inflation, which added to corporate profits (blue). Government debt never declines, but a slower rate of debt growth could impact a stock market that is priced for high growth.
Sunday 22 Dec 2024
"Charted: Per-Capita CO2 Emissions by Global Region (1960-2022)" - X was Twitter. North America is still the biggest emitter. They demand that Sub-Saharan Africa, at the bottom, cut CO2 emissions. The reduction of CO2 emissions in North America and Europe has led to higher temperatures.
"I am beyond honored that President Trump has chosen me to lead his Council of Economic Advisers. I look forward to working to help implement the President's policy agenda to create a booming, noninflationary economy that brings prosperity to all Americans!" - X was Twitter.
"Doubts About UK Statistics Agency’s Surveys Spread to GDP Data - Bloomberg" - X was Twitter.
Saturday 21 Dec 2024
"$SPX is expected to report Y/Y earnings growth of 11.9% for Q4 2024, which is below the estimate of 14.6% on September 30" - X was Twitter.
Friday 20 Dec 2024
"Analysts expect $SPX to report earnings growth of 14.8% and revenue growth of 5.8% for CY 2025" - X was Twitter. The 5.8% is basically inflation.The investors and fund managers following the stock market are just watching inflation.
Deep clean your Windows PC: 10 professional tricks and tools - PC World.
"U.S. cuts Samsung CHIPS Act award by nearly $1.7bn" - X was Twitter. All these subsidies mean Americans are forced to pay for expensive semiconductors, leaving less money for other expenses.
'The "hours of work required to buy an ounce of Gold" indicator is approaching a familiar sticking point and historical stumbling block for the gold price.' - X was Twitter. It is never returning to the 1971 level. Relative to gold, the US economy has declined, and so has the standard of living. The official economic growth is 3.1% annualized for Q3. At that rate your standard of living should be 2.5x higher than your parents 30 years ago.
Even NASA Can't Explain The Alarming Surge in Global Heat We're Seeing - Science Alert. "Scientists are unanimous that burning fossil fuels has largely driven long-term global warming". Countries with green energy like Brazil experience high temperatures. From 18 Mar 2024: "A heatwave stifling Brazil has set new records with Rio de Janeiro’s heat index hitting 62.3 degrees Celsius (144.1 degrees Fahrenheit), the highest in a decade, weather authorities say" (Aljazeera).
Surprise Hair Loss Breakthrough: A Sugar Gel Triggers Robust Regrowth - Science Alert.
The GDP per capita of France (blue) and Germany (red). The lower GDP in France corresponds with an increase in government expenditure to GDP, which was 57.0% in 2023 (Trading Economics). Germany isn't far behind at 48.4% in 2023 (Trading Economics). The EU has turned into a socialist region. EU citizens can freely move to countries with more free government benefits, thus forcing all governments to provide the same benefits.
Thursday 19 Dec 2024
9 Highest Dividend-Paying Stocks in the S&P 500 - Money US News.
Big Lots: ‘Going out of business’ sales to begin at all locations - The Hill.
"JUST IN - Trump calls for abolishing the debt ceiling — NBC" - X was Twitter. What happened to the plan to cut government spending?
"Trump rang the NYSE bell at the literal stock market top" - X was Twitter.
The earnings of the S&P 500 keep growing, but some companies have fallen out of the race. The world's biggest company by market cap, Apple (AAPL), had the lowest quarterly earnings since 2020 (Macrotrends). Revenue growth (Macrotrends) has also stopped. Its price/earnings is 41.69 (Macrotrends). Even if all the profits are returned to shareholders, the earnings yield of 2.4% is still too low. Total US debt as nominal inflation rate has grown by more than 5% per year from 1952 to 2009. It looks like this rate is returning. Then the Apple share price should be 50% lower. If China does the same to semiconductor manufacturing that it has to solar panels, the future for expensive smartphones looks limited. We have seen this before, with Backberry and Nokia.
The total value of US housing relative to total debt as nominal inflation rate went up during rising interest rates, from 1963 to 1979, and from 2009 to the present. If fell with lowered interest rates from 1980 to 2009. The traditional investment strategy is to buy stocks, real estate and bonds when interest rates decline. While these asset classes do go up, they apparently lag inflation. This makes sense. Real economic growth only occurs when interest rates rise. The higher cost of debt forces the economy to be more efficient. Higher interest rates could also be a response to a strong economy. Either way, lower interest rates are not a good sign.
US restaurant sales (blue) has grown faster than total wages (red) and Personal Consumption Expenditures (green). Either people are eating out more, or prices have increased more than wages and PCE.
Wednesday 18 Dec 2024
"North American graphite producers want 920% duties on shipments of Chinese graphite, protections that will hurt importers like Tesla" - X was Twitter. Imagine a Trump president that restricts imports at will.
The song We're in the Money from the 1933 movie Gold Diggers appeared during the Great Depression 1929-1941.
Why is the US stock market so much bigger than the rest of the world? Largest Companies by Marketcap. There are only 5 non-US companies amongst the top 30: Saudi Aramco (2222.SR) in Saudi Arabia, TSMC (TSM) in Taiwan, Novo Nordisk (NVO) in Denmark, Tencent (TCEHY) in China, LVMH (MC.PA) in France.
PE ratio of the world's stock markets: World PE Ratio. The US stock is expensive, but so are other stock markets given their poor growth.
The US stock market, like all other stock markets, can't outperform the economy forever. The US stock market has done well with big brands selling worldwide, whilst exploiting cheap labour in other countries. An investor's primary goal is to beat inflation. In most countries the economy declines relative to the actual inflation rate, not the official rate reported by politicians, and therefore the stock market also gives a negative real return. That is the advantage of an investment that leverages inflation, provided the income out of the investment pays the cost of the debt.
This chart shows US corporate equities market value relative to total debt as nominal inflation rate. If you bought at the peak in 1968, you broke even after 32 year, and then you had to sell quickly before the next decline. If you bought in 2000, you waited 20 years for Covid and government stimulus. Stock markets are far too volatile, and do not provide consistent growth.
Tuesday 17 Dec 2024
Javier Milei was elected president of Argentina on 19 Nov 2023 (in run-off elections after 22 Oct initial election). Looking at Argentina's government debt to GDP (blue) up to 2023 he's got work to do. Meanwhile the Peso currency (red) was hammered before and after the election.
Monday 16 Dec 2024
"Foreigners have not been this exposed to U.S. equities since the Dot.com crash" - X was Twitter. The capital inflow from foreigners who can't get a real return in their own country, has strengthened the dollar, and harmed US manufacturing for decades.
"MIT study explains why laws are written in an incomprehensible style" - X was Twitter. The verbiage is because legal professionals want to show off their skill level. It is the same reason trade journals are full of research achievements.
"Europe will build its own secure satellite network" - X was Twitter. With public money. Who will get the free or subsidized service?
Who causes inflation? Many governments print money to pay for expenses. A budget deficit is either funded by borrowing or printing. Sometimes it is first borrowed, and then printed to reduce the debt.
Taking US total debt growth as nominal inflation rate, the share of that debt growth from business (blue), households (red) and federal government (green) is shown below as percentages (if the math is correct).
Up to 2008 households (red) and businesses (blue) contributed the most to debt and inflation. The contribution of the US federal government (green) was small. If business debt leads to economic growth, it would not be inflationary.
After 2008 government (green) contributed the most. Sometimes the contribution from all three is similar.
Sunday 15 Dec 2024
"US stocks now make up 65% of the global equity market, their highest weighting in history. This is more than 11x bigger than the second largest country by market cap (Japan at 5.5%)." - X was Twitter.
"The Italian government is willing to work with Stellantis NV as the carmaker charts a new course as long as it keeps jobs and factories in the country, Prime Minister Giorgia Meloni said" - X was Twitter. Subsidies cause a shift of money from poor people who do not have a car, to wealthy car owners.
"Australia’s markets watchdog sued HSBC Bank of Australia for failing to protect customers who lost millions of dollars in scams" - X was Twitter. Instead of the government performing its primary function of prosecuting the criminals, responsibility is shifted to a third party.
Saturday 14 Dec 2024
I can't stick to one accent I have ADHD - Youtube.
Friday 13 Dec 2024
On 6 Dec, the PE ratio of the S&P 500 index was 25.41, and Nasdaq 100 index 33.92 - WSJ.
New sales of battery electric vehicle in the US was 8.9% of the market in Q3, and appears to top out despite all the charts on the internet showing high growth (CarEdge). Tesla's share of US EV market has declined from 74.8% in Q1 2022 to 48.2% in Q3 2024.
In Norway 94.3% of new car registrations are all electric, and 26.3% of cars on the road are electric. Norway gets 89% of its electricity from hydropower, and 9% from wind. The hydropower is dependent on dam water levels being maintained, and the water not freezing in winter. Norway hydropower reservoirs varies between 20% in winter and 90% in summer.
The US average house price (red) exceeds the median house price (blue) because of larger mansions at the top end of the market.
Thursday 12 Dec 2024
"BREAKING: Corporate executive stock sales have hit an all time high, per FT" - X was Twitter.
Macy's accelerates store closures this year - Fox Business.
....Macy’s provides more details about that employee who hid more than $150 million worth of expenses - CNN.
....What happened to the “magic of Macy’s”? - MarketPlace. Shopping has moved online, and imported cheaply.
"President-elect Donald Trump has invited Chinese President Xi Jinping to attend his inauguration next month, CBS reported" - X was Twitter. What about his fat friend from North Korea?
Does asset price inflation eventually come through in general inflation and nominal GDP (Gross Domestic Product)? The US average house price relative to GDP per capita (blue) is the same now as in 1963. Wages have declined as a share of GDP, so the average house price is more expensive compared to average wage (red). There has been a permanent shift in wealth and spending from workers to the upper class.
UK house prices relative to GDP per person declined from 1856 to 1918. It remained the same from 1923 to 1998 with a lot of volatility. Since then it has doubled. The decline up to 1918 could be due to a change in building materials and mass education of the population. "By the 1880s education was compulsory for children aged 5 to 10" (Wikipedia).
The Gross Domestic Product Deflator at Market Prices in the United Kingdom from 1270 to 2016 is amusing:
On a log scale:
Wednesday 11 Dec 2024
"Milei: Argentina ends deficit for the first time in 123 years" - X was Twitter.
"BREAKING: Argentine President Javier Milei has introduced a proposal that would reduce national taxation by 90%" - X was Twitter.
US debt per capita (green) has outpaced Japan (red) since 2013, and so has Gross Domestic Product per capita (blue versus purple). The US, like Captain Kirk in Star Trek, is going were no man has gone before. Everything goes up as long as debt grows. When an economy is subjected to competition from other countries, the debt must be repaid with less income.
Some people must have made the New Year's resolution for this year to eat more chocolate, and then they couldn't stop eating. The global price of cocoa (red) has fallen back. The producer price of chocolates (blue) made a small jump, and other chocolate (green) a big jump, without a decline so far.
Tuesday 10 Dec 2024
The incoming US president Trump is in favour of the US dollar being the world's reserve currency, and medium of exchange for international trade. This creates a distortion in the supply and demand for credit. The cheap supply of money results in an increase in unproductive debt. Interest rates stay low, and inflation high. US savers do not get a real return on their savings. The low return creates asset bubbles, and a wealth gap between workers and the wealthiest 10%.
The stronger dollar makes imports cheaper, so if he is in favour of import duties, then he should also be against the reserve currency status.
US annual increase in federal debt held by foreigners (blue) and net capital inflow as -current account balance (red).
Foreign investors hold 24% om US federal debt, down from a peak of 34%:
Monday 9 Dec 2024
"S&P 500 Price-to-Book ratio hits highest level since March 2000, the peak of the Dot Com Bubble" - X was Twitter.
This is too easy – I just used Sora for the first time and it blew my mind - Techradar.
Elon Musk's Grok AI now available for free to all users. Here's how to get started - LiveMint.
US corporate equity market value (red) has moved away from Personal Consumption Expenditure (blue). Is it sustainable? The GDP (Gross Domestic Product) from which businesses generate an income consists of this consumption, investment, government spending, and exports.
A wealth gap opens up between the minority asset holders, and the working majority. Wages, and the price of products workers produce, rise at a slower rate. So you have high inflation on assets, and low inflation on products and services.
Up to 1990 corporate equity market value (red), and corporate profits over government bond interest rates (green) varied around Personal Consumption Expenditure (blue). The profits over interest rates (green) are the share prices at which the earnings yield matches bond yields.
After 1990 corporate profit margins improved and bond interest declined, so investor pushed up stock prices (red) in search of yield. For a while stock prices (red) could have been much higher based on corporate profit over government bond interest rates (green). At the moment the two coincide.
Big US brands with limited competition have high profit margins, whilst the highly competitive Chinese economy supplies products at a fraction of the price. Which economic model will survive? Warren Buffett invests in companies with a competitive advantage. It makes sense for investors, but not for the rest of the population. The same inefficiencies typical of big government is also found in big monopolies. The present stock market level is dependent on the monopolies remaining without competition, and interest rates staying too low.
Friday 6 Dec 2024
The US Housing Inventory: Median Days on Market always rise towards January. There is no sign of houses staying on the market for longer, compared to the period before 2020. Some of the money the government created after 2020 went into housing, lowering the time houses stayed on the market:
US new completed houses sold (blue) compared to for sale (red):
Long term chart of Monthly Supply of New Houses in the United States:
Long term chart of New Houses Sold by Stage of Construction, Not Started:
Thursday 5 Dec 2024
3 free Linux distros that look and feel like Windows - PC World.
"Denmark Receives No Bids in Largest-Ever Offshore Wind Tender" - X was Twitter. Existing operators probably discovered higher than expected costs, making it unprofitable.
Not only will Trump find it difficult to cut government spending, he can't default on government debt by declaring bankruptcy, like he did with his business debt.
The limits to US debt in terms of interest payment and capital repayment, relative to average wage was shown 2 April 2024. The chart below combines the interest cost per worker of total US debt at the 10 year government bond yield, plus the repayment of the debt over a 40 year working career (blue), compared to average annual wage (red).
The difference between the two is money workers have left over for spending after paying for the debt. It is more complicated as workers enjoy the benefits of spending that debt. The money that has already been spent, and are now owed, hopefully provide long term value. Some people like to buy now, and pay later, whilst others like to live debt free.
The total cost of the debt (blue) has shot up the last few years. It was also high from 1981 to 2007, as debt kept rising as interest rates came down.
If debt is repaid over 25 year, the cost of debt (blue) is now as high as in 2007, before the Great Recession. If workers paid for all the debt, at this repayment rate their entire wage would be spent on debt. Putting it another way, people have spent 25 years worth of wages on home loans, government debt, and business debt, most of which will be recouped from them through taxes or higher prices on goods.
Wednesday 4 Dec 2024
Relative to US total debt as nominal inflation rate, US economic output (green) fell up to 2009, and then levelled off. China's economic output (red) increased until 2021, and has now levelled off. Brazil's economic output (blue) has declined over 3 decades.
Tuesday 3 Dec 2024
FACT SHEET: President Biden’s Trip to Angola - The White House. Biden lends legitimacy to an oppressive regime. "Angola has been ruled by the same party since independence, and authorities have systematically repressed political dissent." Global Freedom = 28/100 - Freedomhouse.org.
"JUST IN - China bans exports of gallium (China 80%, from bauxite to aluminium process), germanium (China 60%, from zinc ore and coal fly ash), antimony (China 63%), and other key high-tech materials with potential military applications to the United States — AP" - X was Twitter. Nobody knows what it is used for, including the incoming US president. They will have to find something familiar.
"President-elect Trump is nominating at least eight billionaires to his Cabinet" - X was Twitter. What happened to "... government of the people, by the people, for the people ..." by U.S. President Abraham Lincoln at the Gettysburg Address (Wikipedia)? The poor majority will not come first.
From 12 July 2024, posted by The White House: Tariffs as a Major Revenue Source: Implications for Distribution and Growth: "But, as we show in this issue brief, to use them as a revenue source that would significantly or even wholly replace the income tax would increase inflation and invite deep economic distortions that benefit the wealthy and harm low- and middle-income Americans."
Alcohol deaths have more than doubled in recent years, especially among women - Fox News.
Monday 2 Dec 2024
Going to Spain on holiday? You’ll be asked for new personal data in a crackdown on organised crime - Euro News. Tourists have had to supply their passports to hotels for many decades. We are stilll waiting for the collection of financial information to produce any results whatsoever.
From 9 days ago: America CAN'T Compete with China's NEW High-Speed Future! - Youtube.
From 1 month ago: Why Economists Hate Trump's Tariff Plan | WSJ - Youtube.
"Trump is HOOKED on tariffs. That's bad news. They amount to nothing more than a SALES TAX on Americans." - X was Twitter.
When there are more savers and investors than entrepreneurs, you have too much money creating stock market bubbles. The deterrents to running a business should be removed, such as big government, big business, and outdated education.
When interest rates are too low, inflation runs away, which can be seen on this chart of US total debt growth as an ever increasing rate of growth. It happened up to 1985, 1999, 2007 and 2020. They were followed by stock market falls: 1987 (small -23% Black Monday fall), 2000 (dotcom bubble), and 2008 (Great Recession). There was a -24% correction in 2022, but the recovery in the stock market suggests that inflation is not yet under control.
If debt growth resulted in real economic growth it would not be inflationary. This requires (1) another industrial revolution with (2) participation by whole population. If there is any real growth it is marginal, due to low participation. Some people are wealthier than past generations, whilst others are poorer. On average the standard of living has increased little.
US consumers are impacted by (1) inflation, represented here by the annual increase in total debt (blue), and by (2) higher interest rates shown as the cost of interest on all debt (red). If interest rates (red) are too low, then inflation (blue) dominates. The lack of control over past inflation has resulted in the amounts increasing over time. Once debt (blue) is allowed to rise out of control, it does not decline (blue below zero for a long time).
Sunday 1 Dec 2024
Statement from President Joe Biden - The White House. The pardon is the symptom of the disease, which is that one person has too much power.
Trump threatens a 100% tariff on BRICS countries if they abandon U.S. dollar - NBC News. If two parties trade through a third currency, they have to pay an additonal foreign exchange fee. It does not make sense. In 2021 US trade was only 11.5% of world trade (Wikipedia).
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