On Twitter: Stare Decisis @MsResJudicata: "New York Fed leader John Williams says the economy operating with historically low unemployment without sparking inflation is good news ". Apparently not such good news for federal government employees compared to nominal economic growth (inflation + real standard of living growth) :
On Twitter: Anil @anilvohra69: "US cuts off Huawei from tech. How long before China cuts off US from rare earths? If it does, say bye-bye to high capacity batteries. Wonder how well an iPhone runs without batteries? Hmm. Or an electric car without electricity?" A lot of technological advancement appears to eminate from China, like cheap Lithium batteries, and efficient solar panels. Trump is going to force China to develop its own semiconductors and software. In the future China is probably going to take over this market, like they have other products. A lot of US workers have already been forced to work in the service industry because the US can't compete with cheaper manufacturing elsewhere. It is going to get worse. Trump wants to withhold technology from China, whilst the US has an inferior technology work force:
From 7 Dec 2018: American science in decline as China’s rises - University World News. "The US also relies on Asian graduates staying on to fill vacancies in engineering, physics and chemistry. The shortage is because of America’s low science education requirements in its schools."
From 20 Feb 2019: America’s STEM Crisis Threatens Our National Security (Science, Technology, Engineering, and Mathematics) - American Affairs."...in the past 15 years, India and China have outpaced the United States in the number of science and engineering (S&E) bachelor’s degrees conferred.” Indeed, “these two countries have produced almost half of the total degrees, with India at 25% and China at 22% of the global total.” Meanwhile, “American S&E bachelor’s degrees comprised only 10% of the global total."
The media creates an exaggerated impression of the impact of the trade wars. Chinese imports were 2.6% of the US economy in 2018. As can be seen from the list of major Consumer Expenditures from the Bureau of Labour Statistics, only 3.0% is spent on Apparel and Services, some of which is imported. Some of the 12.6% food is also traded, but the resale costs and restaurant services is likely to be much bigger. Some cars and oil (EIA) for fuel are imported under the 15.8% transportation. The US has already isolated itself from the rest of the world through import restrictions and subsidies, which has made imports cheap. Because imports have become cheap, they are now small compared to the local expenses.
On Twitter: Yahoo Finance @YahooFinance: "Meet the 20-year old bitcoin trader who says he turned $1,000 into $3.7 million". Other people will need to lose $3.7 million, because no useful economic output was generated to obtain the money.
On Twitter: Daniel Lacalle @dlacalle_IA: "All over Europe you will hear or read governments say that their sovereign bond yields are falling due to their excellent policies... Japanisation from financial repression.": chart.
From 26 April 2019: Consumer Expenditures - Bureau of Labour Statistics. Consumers spent +5.3% more than a year ago, excluding cash contributions, insurance and pensions. If they bought the same products, that would be the inflation rate.
On Twitter: Reuters Business @ReutersBiz: "JUST IN: Huawei says it will seek remedies to Trump's export blacklist, adds that sanction 'will do significant economic harm to the American companies with which Huawei does business' ".
On Twitter: Maria Bartiromo @MariaBartiromo: "Wilbur Ross on Huawei: Many rural telecom carriers already using it in 4G environment http://ow.ly/3t0O30oKAVO @MorningsMaria @FoxBusiness".
Can Tariffs Bankrupt Americans? - Talk Markets. Will the targeting of legitimate exports persuade the China goverment to take action against counterfeit goods? This assumes that exporters have some influence over the government. US farmers who have lost exports have no influence over the US government. China has for a long time shown a willingness to lower the value of the Yuan, which cancels out the US import duties, and makes US exports more expensive in China.
On Twitter: Chris Gardner @chrissgardner: "Attention: the selfie ban is definitely in effect again this year. No personal photos on the red carpet at all. I saw two women try though—one was successful and other got interrupted by security and rushed inside. #Cannes2019." So, participants are not allowed to take photos of another awards ceremony nobody cares about, and therefore does not exist as far they are concerned. "If a tree falls in a forest and no one is around to hear it, does it make a sound?" - Wikipedia.
Trump warns China not to retaliate against tariff hike - Reuters. It is unnecessary to retaliate, because the US has made its exports more expensive all by itself. Some US branded exports don't actually say were they are made. They are probably not made in the US. In that case, the idea of increasing exports to boost manufacturing could be flawed.
On Twitter: Late Night with Seth Meyers @LateNightSeth: "Duchess Meghan Markle gave birth to a baby boy, who is now 7th in line for the throne. Which if you ask me is just unfair, making a baby kill 6 people?" If you are in a royal family, you gots to have a master plan to take over the kingdom.
On Twitter: Stare Decisis @MsResJudicata: "Real wages have declined for most Americans, despite huge gains in productivity over the last several decades. Look at this chart based on research from the Economic Policy Institute, which shows this problem clearly..." chart
On Twitter: Yahoo Finance @YahooFinance: 'Highlight: “Our industry is particularly exposed,” says American Apparel & Footwear Association CEO @rhelfen on apparel being affected by tariffs levied on China. “41% of all apparel… comes from China, 72 % of footwear, 84% of accessories…so we are highly exposed to China.” '
U.S. Gives China a Month for Trade Deal as Talks Deadlocked - Bloomberg. The idea that the Chinese government could decide which US products their population want is absurd. In return Trump will order Chinese meals for every-one. The only way for the US to sell more is to scrap all import restrictions (including for governments services), subsidies, and financial bailouts, which would weaken die US dollar, and make US products more competitive. The weakening dollar would result in capital flight, which would instantly create a trade surplus.
On Twitter: Jennifer Jacobs @JenniferJJacobs: "The China trade team has left for the airport. A White House statement on the trade talks is coming out soon, we’re told."
Holger Zschaepitz @Schuldensuehner: "#Uber’s dull thud may startle unicorn herd. The lack of positive excitement for the biggest listing of a U.S. technology company since Facebook in 2012 suggests investors are becoming more choosy." Dirge pricing - Breaking Views. Profit since founding chart. If autonomous cars from another service provider (e.g. Tesla) are shown to be safer, it won't be good for Uber and Lyft.
US imports from China is down for March, compared to a year ago, but the level is not unusual compared to previous years, as shown on the FRED chart below. Import duties are beneficial if US exports are essential. It forces other countries to lower prices to compensate for the import duties, by a drop in the value of their currency. Other countries are effectively forced to offer more goods in exchange for US exports. This is one of the main reasons the US economy has grown for two decades exploitation of cheap labour in other countries (the other being debt).
Due to years of import protection, subsidies and financial bail-outs, US labour is already so much more expensive that an extra 25% tariff makes little difference. It works for low cost US exports, like software and television programs, but not labour intensive industries like manufacturing. Expensive US exports have encouraged other countries the develop the same products. Cheap labour in other countries tends to drag down wages. Debt is required to maintain living standards. Imports protection ends up damaging the economy. The Democratic Party should do an audit to see how many products Donald Trump buys that are made in China.
As tariff hike looms, China asks U.S. to meet it halfway, denies backtracking - Reuters. It is impossible for Trump to balance trade without stopping the capital inflow. He could achieve this indirectly by making the dollar and economy unattractive to invest in. He has to beat the inflation in other countries, like China. In the past, countries decoupled from gold so they could devalue their currencies.
On Twitter: St. Louis Fed @stlouisfed: "U.S. #trade deficit widened slightly in March, increasing 1.5% to a seasonally adjusted $50 billion": chart.
On Twitter: TheStreet @TheStreet: "Breaking - FCC votes to deny China mobile U.S. market access". The strong dollar, cheap imports, and economy growing on debt is the result of decades of protectionism.
On Twitter: Danielle DiMartino @DiMartinoBooth: “The California Association of Realtors’ concerns about affordability is escalating; the median California home price is $530,000 sidelining prospective buyers despite state’s 10-year low in unemployment and the strongest wage gains in nearly a decade”.
British Presenter Fired After Posting Chimp Picture With Royal Baby Tweet - Variety. Jarvis Dupont @JarvisDupont: "I am APPALLED Danny Baker posted THIS TWEET yesterday because it is SO OFFENSIVE, and will have caused UPSET to many people. He sneakily deleted it, but luckily I have this screenshot so that even MORE PEOPLE can be OFFENDED by it. LOOK. AT. IT. KEEP. LOOKING. AT. IT.": photo.
Beware Of The ‘Permanently High Plateau’ Fallacy - Real Investment Advice. Up to now debt growth has excellerated each time to keep the economy growing. The party ends when the cost of higher interest rates cancels the benefit of more debt.
On Twitter: Bjorn Hojgaard @bjornhojgaard: "It never really was about trade. What has changed for good is America’s view of China from a friendly, ascendant power to an adversary economically, politically and militarily. That this is brushed off as a trade spat is simply astonishing. Pain is coming." No, Trump is looking at the large trade deficits the US has with China, and other countries. In 2018 the US bought $540B from China, whilst China only bought $120B from the US, a deficit of -$420B. US total trade deficit with the world was -$879B, due to capital inflow. If not for this capital inflow, the US would have had a trade surplus with other countries that matched all the trade deficits. China cannot buy minerals from mining countries, and balance its exports to other countries. What Trump will end up doing is to reduce all trade. The same thing happened during the Great Depression (1929-1939).
On Twitter: Holger Zschaepitz @Schuldensuehner: "#ECB deleveraging continues. ECB's balance sheet has shrunk another €13.7bn as weekly redemptions > weekly reinvestments. But total assets at €4,683.9bn still near record, equating to 40.5% of Eurozone's GDP vs Fed's 18.5%.": chart. The drop in 2013-2014 corresponds with an economic decline. How much will the economy weaken when the big mountain goes down?
On Twitter: zerohedge @zerohedge: "German manufacturing recession continues": graph.
US goods imports from China was $539.5B in 2018 (census.gov). It was 2.6% of the US economy (GDP of $20,494B in 2018). For the first two months of 2019 both imports and exports fell. It is not clear where on the website service data is. There is probably a trade deficit because China buys raw materials, like mining products, from other countries. Those countries buy more finished goods from the US than they sell to the US. It is virtually impossible to change this flow of goods.
Tiger Woods awarded Presidential Medal of Freedom - Sky News. What does it mean? Well, it either means he is free to ride into Washington on his horse, or he is no longer a black slave. The next step is to become a Lord, from where he can work his way up to become a Duke. He's ultimate hope is to be adopted by the royal family. Telling an African American he is now free is awkward. Freedom of the City: "The medieval term 'freeman' meant someone who was not the property of a feudal lord but enjoyed privileges such as the right to earn money and own land. Town dwellers who were protected by the charter of their town or city were often free – hence the term 'freedom' of the City."
The China Shanghai Composite Stock Market index fell -5.6% to a price/earnings of 13.4 (Ceicdata). Unlike US stock markets the index is not near a multi year peak Macrotrends. The index is now lower than in Aug 2009, after a recovery in world stock markets following the collapse during the Great Depression.
On Twitter: Holger Zschaepitz @Schuldensuehner: "GK on trade war threat: This is just last minute theatrics, designed to placate critics who think Trump settling for too weak a deal. Odds still favor an agreement in time for Trump & Xi to sign it ahead of G20 on Jun28. Risk brinksmanship will destroy deal has risen to 1 in 5." chart (Global trade volume).
On Twitter: Donald J. Trump @realDonaldTrump: "For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....". Minimum wage in China is 28% of the USA. The 25% tariff increases China's minimum wage to 35% of the USA.
Buffett knocks Elon Musk’s plan for Tesla to sell insurance: ‘It’s not an easy business’ - CNBC. If Tesla cars avoid accidents, and have fewer fires due to the absence of fuel, the insurance rates would be much lower, or the insurer make big profits. In addition to cheap insurance, you also have low maintenance and longer car life due to lack of a fuel engine. To carry on buying a fuel car when a superior product is available makes no sense.
On the FRED chart below interest rates (red) rise until it causes a recession, which results in unemployment (blue) rising. Since 1980 the peak interest rate that has resulted in a recession has decreased. Debt has grown to a point where a small increase in interest rates results in a recession, which has probably started already.
Friday 3 May 2019
On Twitter: Liz Ann Sonders @LizAnnSonders: "Be mindful of this when you hear “there’s no risk of a recession with the unemployment rate so low” (gray bars are recessions)": chart.
On Twitter: Will Meade @realwillmeade: "I see people are excited about Buffett-Berkshire taking a position in Amazon $AMZN, to me its a huge sign of a major top.
It tells me Buffett and his team can’t find any value bargains so they style drift and buy a growth stock with a PE of 95. When everyone chases its a top." The Berkshire Hathaway (BRK.A) share price tumbled about 50% in 2008-9. So not exactly a portfolio that is cleverer than the rest of the market.
On Twitter: Yahoo Finance @YahooFinance: ' Highlight: Productivity rises 3.6%. “It’s a little early to say this is the start of a new trend,” says @WellsFargo’s Mark Vitner. But “something has changed.” @bart_ark adds: “A lot of this… is related to the strong investment trends that we have been seeing.” ' Productivity tends to improve because worker wages do not keep up with the actual inflation rate. They produce the same goods for effectively lower pay.
On Twitter: Charlie Bilello @charliebilello: With 71% of companies reported, S&P 500 earnings up 2% year-over-year, slowest growth in 3 years. $SPX: chart. Taking into account share buybacks, the profit growth might be around 0%.
On Twitter: Irene @goldmarketgirl: "The main problem of Western the world is that producers are a becoming more and more a MINORITY as socialistic governments grow and take more from less producers to hand over to a growing MAJORITY that want something for nothing (aka free)."
The Tesla Equity Raise: Fool Us Again, Elon! - The Street. To build more factories requires more capital. After all the factories are built, and provided car sales are maintained, profits should improve every year as inflation devalues debt.
On Twitter: Brian Cheung @bcheungz: ' "Stephen Moore told Trump the "unrelenting attacks on my character have become untenable for me and my family." Adds "Trumponomics has been VINDICATED" ': text. It is wonderful what you can do with $72 trillion in debt (FRED).
The FRED chart below shows the ratio of the Wilshire 5000 stock market index, to all US debt:
The US Federal Reserve, like central banks everywhere else, relies on inflation measurements by another government department, which is not "independent". This means interest rate decisions are not independent. They should add that disclaimer every time they use the word inflation.
UNLOCKED: The Curious Case of Rising Fuel Prices and Shrinking Inflation - Real Investment Advice. Anyone can take their monthly bills from a year ago, and compare it to the price of the same items today, to determine their own inflation rate. If that figure is not over 5% it would be surprising. It is mainly imported goods that have had low price increases over the last decade or two, and they make up a small part of the inflation basket. (If nominal economic growth is 5%, and company profit growth lags revenue growth, it suggests inflation is above 5%).
On Twitter: Yahoo Finance @YahooFinance: 'Highlight: "It was a very constructive meeting," @SenSchumer said in a press conference about meeting with President Trump to discuss infrastructure plans. "It’s clear that both the White House and all of us want to get something done in a big and bold way." ' They will have to boldly borrow the big money. Governments should only borrow for capital projects. Now, after squandering $22T they want to invest in infrastructure.
On Twitter: Charlie Bilello @charliebilello: "Apple has bought back 1.9 billion shares in the past 6 years, bringing shares outstanding down to their lowest level since 2000. With $75 billion more buybacks announced today, trend set to continue for some time. $AAPL": chart. On a price/earnings of 18, this is a poor use of shareholder profits.
There is no fundamental limit to how high a stock market can rise, despite a weakening economy, but it does mean it has further to fall.
On Twitter: Liz Ann Sonders @LizAnnSonders: "A first: 3 years of deteriorating budget deficits without recession @Gavekal": chart. Other signs also suggest a declining economy for the last 3 years. Keeping the official inflation rate down to show real economic growth has become universal practice, which also writes off debt through high actual inflation. It is what third world countries have always done, by printing money to pay for government expenses or debt.
On Twitter: Holger Zschaepitz @Schuldensuehner: "#Germany may already be in recession, @DiMartinoBooth says in latest weekly Quill, as inventory run-up continues. Difference betw auto export expectations & auto inventories has dropped to -42.9, lowest spread since Jun2009. Comps have excess inventories of unsold goods to unload": chart.
On Twitter: Sean Mitra @AerrolRoll: "Hey @elonmusk and @Tesla, why would you sell cars in Canada that pick up snow into the bumper? Our #Model3 three is two weeks old and this is what we get... I was excited to get a #tesla but this has a really disappointing experience."photo. Tesla cars can also be used to scrape ice of the road. What a versatile vehicle.
China Plans to Build a Moon Base Near the Lunar South Pole - Space. New space race? Kennedy said 57 years ago: "We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too." (Space.com). Finding out what the "other things" were, is also hard.
Tesla's Musk agrees to new vetting rules for tweets in SEC deal - Reuters. It is far easier for all interested parties to follow Elon Musk on Twitter, than to try and get the infomation from the SEC. Wikipedia: "The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government". Another inefficient government organisation run by burocrats.
There is another source of economic growth statistics, namely stock markets. The revenue growth of all companies corresponds to real economic growth + inflation. Their profits give an indication of cost inflation. If there is real economic growth, one would expect for profit growth to exceed revenue growth. The feared ‘earnings recession’ is not showing up in the first-quarter numbers - CNBC: "As of Tuesday, when just 26% of S&P companies reported, earnings looked to be down 1.1% for the first quarter."
There could be various reasons why company profit growth lags revenue growth. Inflation is measured per item, which can't be seen in the overall figures. One possible scenario is that volume fell, the selling price of goods were raised (to get nominal economic growth of 5%), but was not enough to cover fixed overhead costs. The economic growth is far more likely to be high inflation being underreported.
Amazon smashes earnings expectations - CNBC. Expensive on a price/earnings of $1902.25/~4x$7.09 = 67, net profit margin of 5.9%, and revenue growth of +17%. Retailers usually have low profit margins. Without a further increase in margins, profit growth is limited to the revenue growth rate.
On Twitter: Charlie Bilello @charliebilello: "Amazon Revenue up 17% over the past year, slowest YoY growth rate since 2015. $AMZN": chart.
On Twitter: Lance Roberts @LanceRoberts: "It is incredible that @CNBC is crediting the rally to strong earnings when #estimates were lowered by 11% so companies could beat them. Corporate profits, which strips out share buybacks, tells the real story. $SPY $TLT #Profits": chart.
On Twitter: Pete 'Mance' Raymond @ThePeteRaymond: image (College federal loan).
Tesla Misses Estimates But Forecasts a Stronger Second Half: 8 Key Takeaways - The Street. First quarter sales was too low to cover expenses. Was the same a year ago. Cars sold have increased 110% compared to a year ago, but car revenue was only up +37%, as the average price per car dropped from $85,400 to $55,700. Does it make sense to build a cheaper car in an expensive labour country? The 2018 price/sales is $258.66/$125.9.
Tesla says the exploding car feature is optional, and available on all new models X, Y, Z. Highway Vehicle Fires (2014-2016)
- US Fire Administration, FEMA: "Each year, from 2014 to 2016, an estimated 171,500 highway vehicle fires occurred in the United States, resulting in an annual average of 345 deaths; 1,300 injuries; and $1.1 billion in property loss."
Recording this prediction for future reference: On Twitter: Squawk Box @SquawkCNBC: "This might be the year Tesla implodes," high-profile tech investor Paul Meeks says of the carmaker. "The gig may be up for $TSLA".
On Twitter: St. Louis Fed @stlouisfed: "Median sales price of new homes sold in March was $302,700, down 4.0% from February and 9.7% from a year earlier": chart.
It Was All About the Stimulus, Not Fundamentals - The Street. "to reduce debt by structural deleveraging". Is debt ever reduced? For more than 50 years US government and household debt has only gone up (nominal $ value). It is only reduced by inflation.
On Twitter: CNN Business @CNNBusiness: "Tesla CEO Elon Musk says he expects the company to have a fleet of self-driving taxis on the streets next year". If a company has superior autopilot to competitors, that would be a big opportunity. Probably not the case.
On Twitter: TalkMarkets @TalkMarkets: "Jobless Claims Fall To A Cycle Low". With $22T in government debt you can create a lot of jobs.
How Empires Fall: Moral Decay - Zero Hedge. Empires might decline because they concentrate wealth derived from their territories, which draw in migrants. The US does not physically occupy territories, but exploits cheap labour in other countries. By limiting imports, more money is made from exports, which creates the relative wealth migrants are attracted to. Increasing debt also creates more economic activity.
On Twitter: TalkMarkets @TalkMarkets: "Retail Sales Surge 1.6% Wiping Out Dec And Feb Losses But Bond Yields Drop". The only thing surging is (unreported) inflation.
On Twitter: Drew Dudley @drewallendudley: "It's All About Who Reaps the Gains (Asset Bubbles) and Who Eats the Losses (Stagnating Wages)As this chart shows, the spending of the top 5% has far outpaced the spending of the bottom 95%, but as the chart of labor's share of the economy reveals, very little has trickled down.": chart.
On Twitter: Squawk Box @SquawkCNBC: "This aged well": Squawk Box @SquawkCNBC: "The analyst who called the decline in $Lyft now sees this for Pinterest, Uber, and Zoom. @JoeSquawk @andrewrsorkin @MelissaLeeCNBC". The investors who bought shares cheaply during the IPO (Initial Public Offering), sell when the share price drops, to make profit, causing the share price to return to the IPO price.
On Twitter: Sam Ro @SamRo: "Kitkat and Reese’s Peanut Butter Cup customers won’t tolerate price hikes. For every 1% increase in pricing, volume drops 2.1% and 3.9%, respectively. - UBS": graph.
On Twitter: Ivanka Trump @IvankaTrump: "Wonderful and productive visit to Côte d'Ivoire! #WGDP!": video. These people have probably no idea who Ivanka Trump is, or that the USA exists. The ones who learn about the first world, try to migrate there.
On Twitter: St. Louis Fed @stlouisfed: "From the FRED Blog: Rent inflation has risen faster than overall inflation, but what really matters is still location, location, location": Is the rent too high?.
Below is a FRED chart of Industrial Production: Durable Consumer Goods. Growth has slowed.
On Twitter: CNBC Tech @CNBCtech: "Netflix shares will climb as streaming platform becomes a global 'cultural necessity,' Deutsche says". Unless it has content people must see, viewers could easily switch over to alternative services.
Persecution of Huguenots under Louis XV - Wikipedia. "Under this duress, many Protestants converted to Catholicism; others fled the country." The bible in Exodus 34:7 says that God "visits the iniquity of the fathers upon the children and the children's children to the third and fourth generation." This would be more than 8 generations. It is more a sign of the decline of civilization.
On Twitter: Ivanka Trump @IvankaTrump: "Today, @USAIDMarkGreen, @DBohigian, and I visited Holy Trinity Church in Addis Ababa to pay our respects and honor the memory of the lives lost in the tragic Ethiopian Airlines crash. My heartfelt sympathies to all the victims’ families and loved ones." photo.
America’s Upper Middle Class Feeling the Pinch Too - Bloomberg: "An analysis of more than 87 million U.S. single family homes by ATTOM Data Solutions found that in 2018 property taxes rose by four percent annually on average. As of February, only incomes among the top 25 percent surpassed this rate an an annual basis, according to the Atlanta Federal Reserve. This means that for the rest, a greater share of income must go toward property taxes, leaving a smaller slice for everything else." Typical way the public pays for debt through inflation. To repay debt, the public must cut spending.
The S&P 500 index (and Wilshire 5000) is approaching new highs. With every stock market position one takes it is worth considering the upside and downside potential. The downside at these levels is much bigger than the upside. The US economy is running on debt. Governments everywhere are trying to inflate the debt away, without revealing the actual inflation rate. Inflation makes assets attractive, including the stock market, but some sectors are likely to do better than others. Inflation shifts wealth from workers to the rich who hold assets. This can already be seen in US store closures, which is partially due to online sales, but probably mainly the result of the public having to pay more for some sevices, and having less money left over for shopping. Statistics that is supposed to reflect the health of the consumer, such as consumer spending, is meaningless because it needs to be compared to the actual inflation rate.
The FRED chart below compares US economic output (GDP in blue) with federal government debt (red). The two levels are not directly comparable because GDP represents annual spending (income statement of a company), whilst debt is the accumulative effect of overspending (balance sheet of a company). For every $100 the government borrows, one could expect for multiples of the $100 to be spent during the year, as the money circulates through the economy (velocity of money supply). An increase in the red line was ineffective in pushing up economic output from 2008 to 2012. Since then the lines have move up at approximately the same rate, which means the extra debt has only been spent once during the year. The problem comes when the debt must be repaid.
Elon Musk @elonmusk: "Please note that the price of the Tesla Full Self-Driving option will increase substantially over time".
Fred Lambert @FredericLambert: 'Is that what you mean when you say that Tesla vehicles are now "appreciating assets"?'
Elon Musk @elonmusk: "Yes".
On Twitter: Liz Ann Sonders @LizAnnSonders: "There are now more $100 bills in circulation than $1 bills @DeutscheBank @SoberLook": chart. More cash suggests suspicious activity, just like Trump not wanting to release his tax returns.
On Twitter: Squawk Box @SquawkCNBC: "BREAKING NEWS: @Chevron to buy Anadarko for $33B in cash & stock. @andrewrsorkin breaks down the details $APC $CVX": video. A long time ago, the Standard Oil monopoly was broken up - Wikipedia: "It ordered Standard to break up into 34 independent companies with different boards of directors, the biggest two of the companies were Standard Oil of New Jersey (which became Exxon) and Standard Oil of New York (which became Mobil)".
On Twitter: (((The Daily Shot))) @SoberLook: "Chart: US nursing home care PPI -": chart. An attractive chart from an investor perspective.
On Twitter: Simon Kuestenmacher @simongerman600: "Since everyone is talking about black holes at the moment. Here is an astronomer explaining what a black hole is in five different levels of complexity from a 5 year old to another expert. My brain hurts. Source": video. What he seems to be saying, is that you cannot take a photo of a black hole with a Kodak Instamatic, unless it is Uranus.
Astronomers have found a black hole right here on earth the Home To Win by Canadian television channel HGTV. They must have had black paint left over, so they also painted a Changeroom black.
Will the Real P/E Ratio Please Stand Up? - The Street. "What is the source of the huge discrepancy between 17.1 and 75.3 for the Russell 2000's P/E ratio? The inclusion or exclusion of companies with negative earnings."
For economic growth, look for low government spending to GDP: China 32%, France 55.7%, Germany 43.6%, UK 39%, USA 38%. And low debt.
The only logical outcome for Brexit is the withdrawal of the article 50 notice. It seems unlikely that a sufficient majority of public voters will be achieved in future referendums or elections, as well as members of parliament.
The US Secretary of the Treasury Steven Mnuchin is not to be confused with "munchin", who is a big eater. The eating habits of the Mnuchin is unknown.
WikiLeaks @wikileaks: "Assange arrest video: "The UK must resist this attempt by the Trump administration": video.
One possible reason why the profits of the S&P 500 companies grew much more than sales over the past 11 years is that sales prices were raised, whilst volume of items sold declined. The product of the two then results in low sales growth, but higher profits. It would mean consumer price inflation is much higher than the official figure. A common erroneous method of measuring inflation is to divide total sales by the number of items sold, without recording which items were involved. So, if the public were forced to buy cheaper goods, but in the same volume, it would be reported as low inflation.
On Twitter: Holger Zschaepitz @Schuldensuehner: "Good Morning from #Germany where Target2 claims of Bundesbank on rest of the Eurosystem on course to the €1tn milestone despite end of QE. Have risen by €68.6bn in March, biggest monthly jump ever to €941bn, near record high.": chart. Chart corresponds with economic ups and downs.
Lori Loughin and Hubby just indicted for additional charge of money laundering - TMZ. The severity of the punishment for a crime is usually related to the losses suffered by the victims (Proportionality (law)). In this case the victims and their losses are difficult to determine. The victims are students who did not get admitted. The bribe of $500,000 is tiny compared to the $22,000,000,000,000 government debt that politicians have accumulated. The number of victims and their suffering will be far worse.
Global economy cooling, coordinated stimulus may be needed: IMF - Reuters. Governments cause the boom and bust economic cycles, through interest rates. It starts with politicians increasing spending and taxes until the economy stalls. Then interest rates are lowered, which leads to inflation. Interest rates rise to suppress the inflation, and so the cycle continues, instead of dealing with the underlying problem of high government expenditure.
The FRED chart below shows federal government tax receipts (green) increasing before a recession (grey bands). The tax shown is only 10% of GDP (economic output in red), whilst government spending to GDP was 38% in 2017.
How Western Economies Can Avoid the Japan Trap - Project Syndicate. The main problem in Japan is that government expenses and taxes are too high. Same for most of Europe except Germany. Same in the US, where the government borrows to fund the budget deficit.
On Twitter: Reuters Business @ReutersBiz: "Self-driving cars won’t dominate the roads anytime soon, the chief scientist of Uber's autonomous vehicle unit says at a @Reuters Newsmaker event ". Could go down in history as another 25 Famous Predictions That Were Proven To Be Horribly Wrong: Number 17: "The horse is here to stay but the automobile is only a novelty—a fad." - -The president of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor Co., 1903.
Watch As Tesla Model 3 Accelerates And Slams Into Car While On Autopilot - Zero Hedge. It doesn't make sense that autopilot works well under very difficult conditions, but fails in simple one lane driving. In some previous accidents the driver apparently ignored alerts from the car to take control, or fell asleep. Tesla says: "A driver can easily override Autopilot by lightly touching the steering wheel or brakes." A driver could accidently disengage autopilot when they fall asleep. Whatever the situation, autopilot needs to significantly safer than human driving.
Why does Japan not have the problems of countries like Greece despite a debt to GDP ratio of 253% in 2017 (Trading Economics)? It is difficult to find clear information on the internet, with the usual superficial searches. Some websites mention high external debt, whilst others say most debt is held by the Japanese public. Some give high private debt, whilst other give low private debt. The question is what does the government do with the debt?
The government does have a budget deficit, which has decreased from -9.5% in 2009 to -4.5% in 2017 (Trading Economics), but relative to the growth in debt, little of the debt is used to fund government spending. Which means the debt is not used to keep taxes down, to leave the public with more money to spend. Personal income tax rates have increased from 50% from 2009 to 56% in 2018. (Trading Economics).
On Twitter: Yahoo Finance @YahooFinance: "Samsung patented a design for a bendable phone": video. The world has reached peak mobile phone. Hold out for 100G. This will communicate telepathically.
On Twitter: Elon Musk @elonmusk: "Latest Autopilot update is epic. Rolling out to all US owners with Enhanced Autopilot or Full Self-Driving option. International coming soon.": Dr. Camilo Ortiz @DrCamiloOrtiz: "Im amazed. My car drove me practically all the way home, with no input from me, changing lanes, merging on and off of 3 highways, in rush hour, in the rain, in NYC traffic!!! Stunned. @Tesla @elonmusk": video. Incoming revolution. Other car manufacturers have been caught napping.
Stock Market Briefing: S&P 500 Revenues & the Economy - Yardeni Research. The revenue per share is only up 1.4% per year since the peak of 2008 (figure 1), or total sales 1.2% per year (figure 9).The S&P 500's share of the economy has declined since 2008 (figure 3). Earnings per share has increased 5.1% per year (figure 22). The S&P 500 index has increased 6.6% per year since the peak in 2008. The rise in the stock market is not out of proportion to the rise in profits. One of the main reasons for profit growth could be the shift of manufacturing to cheaper labour countries. Trump has unsuccessfully being trying to stop it, because businesses will do whatever they have to do to make more money. It is dependent on the US being able to export goods/services of greater value in return.
What Deleveraging? Global Leverage Continues To Break Records - Real Investment Advice. The moment debt stops increasing, the economy goes into a recession. Governments are speeding towards a disaster, and nobody dares to stop. How does this end? Somewhere between Greece and Venezuela. Either way there is going to be suffering. Greece is not allowed to print its own money. The economy declined from $354B in 2008 to $192.69B in 2016 (Trading Economics). The debt to GDP remained near 180% from 2011 to 2017 (Trading Economics). So the amount of debt has been reduced, but relative to the size of the economy remains very high. Since 2018 the debt has increased again (Trading Economics).
Germany’s Economy Almost Slipped Into A (Two-Quarter) Recession Last Year - Talk Markets. Don't worry, inflation will be adjusted (to whatever it takes) to show the Eurozone economy is still growing. Economic growth of 2.3% equates to a doubling in the standard of living over one generation, 30 years apart (excluding population growth). Looking at the standard of living of the new generation it is doubtful whether there is any economic growth.
Jim Cramer: The Truth Is the SEC Has No Juice With Musk - Real Markets. The accounts of companies, including number of cars sold, could have been completely computerized for decades already. Companies could post daily results. There is no reason why the market needs to be surprised every 3 months.
There is a lot of media coverage over a US-China trade deal. What is the US going to buy from China (and will they do it through Alibaba)?
There is big insider dealing in shares going on at Amazon. Musk wants to know whether this has been cleared with the SEC.
IMF chief points to global growth deceleration - World Socialist Web Site: “Only two years ago, 75 percent of the global economy experienced an upswing,” she said. “For this year, we expected 70 percent of the global economy to experience a slowdown in growth.” Apparently stock markets do not look ahead as is often claimed, but are instead delusional.
The worldwide growth in government debt is similar to money printing in Venezuela or Zimbabwe to pay for public support. By borrowing money and delaying payment for government services, governments are effectively giving the public money to spend. This is worse than private debt, because people don't release they are spending borrowed money. Eventually money will be printed to pay for the debt.
On Twitter: Yahoo Finance @YahooFinance: "Highlight: “This is the beginning of the end for $TSLA,” says Empire Financial Research Founder Whitney Tilson. He adds: “I predicted a $100 stock price by the end of the year — and that’s a prediction I’m sticking to.”
The Brexit saga exposes a flaw in the process. Members of parliament do not necessary agree with the referendum result, and therefore do not support any of the Brexit deals. There should have been a general election in which Brexit was the only campaign issue allowed, so that the public's view would be represented in parliament.
The size of government debt per person is astounding. US data is the easiest to find on the internet. US government debt is $22,000B. Divided by the number of households of 128M, the government debt works out to $172,000 per house. The average house price is $200,000. Normally, a house would be by far the biggest debt a person would take on in their life, which they would pay off in 20 to 30 years. The US public owes almost as much as the value their house through government borrowing.
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