If the economy is off to the races again … policy is actually working to stimulate demand … and risk appetite is back with a vengeance, then what the heck is eating Treasury traders? Or stated another way, what do bonds know that stocks don’t?
Market Roundup
Take a look at the following two charts. The first shows S&P 500 stock futures. The second shows the yield on the 30-year Treasury bond.
|
|
| The big rally. |
|
|
| The yield. |
You can see that the S&P 500 rallied all the way back to where it broke down in the first place. Futures climbed from around 1,804 to 2,048, roughly where they finished 2015.
But the rally in long-term bond yields was much less vigorous. The 30-year was yielding around 3% at the end of 2015, and 2.4% at the February panic lows. But it only managed to climb back to 2.75% or so during the stock bounce before running out of gas. Since then, it has been sinking anew.
Or how about today? Dovish comments from Federal Reserve Chairman Janet Yellen helped send the Dow Industrials up 97 points. But that ostensibly “bullish” move was accompanied by a surge in bond futures prices of more than a point, and a drop of another three basis points in yield.
What’s going on? Why aren’t bond yields rising further and faster, and thereby confirming the stock market advance? I believe it goes back to where we are in the credit and economic cycle.
Big money investors simply don’t believe that another round of central bank hocus-pocus can extend a bull market and credit orgy that’s on its last legs. Instead, as I pointed out in mid-March, the vast majority of institutional investors believe we’re in a late-cycle environment.
That’s also why defensive stocks and sectors are leading this rally, rather than the traditional “risk on” names. The Utilities Select Sector SPDR Fund (XLU) jumped to within a whisker of an all-time high, for instance, while the Financial Select Sector SPDR Fund (XLF) tacked on all of four pennies. If we were truly on the cusp of another vigorous credit boom and economic expansion, you’d see financials, industrials, technology, and materials names surging to new highs.
[Read More – The Consequences of Reckless Lending – Mike Larson]
So how can you profit? I’ve given you several pointers here in Money and Markets over the past several weeks. And I’m happy to announce that I’ll have the chance to go into even more detail at another upcoming event.
Specifically, I’ll be participating in The MoneyShow Las Vegas, scheduled for May 9-12 at Caesars Palace. This free conference features an impressive lineup of experts who will help position your portfolio for success during 2016 and beyond.
|
|
| Defensive stocks and sectors have led the rally this time around. |
With over 160 hours of educational classes, engaging panel discussions, an exhibit hall filled with industry-leading companies, live trading and software demos, and unsurpassed networking opportunities, The MoneyShow Las Vegas will help you learn how to invest and trade to win!
You can call 800-970-4355 to register today. Just be sure to mention priority code “040948.” Or for more details, click here.
Now I’d like to get your take. Why do you think the bond market isn’t buying into the stock market’s enthusiasm? Is that a negative sign for the economy and risky assets? Do you “trust” bond traders more than stock investors, or do you think the latter group has the environment right? Let me hear about it in the comment section.
|
Meanwhile, European turmoil and risky lending here at home were the biggest topics on your mind in the past day.
Reader Howard offered the following thoughts on Europe’s litany of woes: “It appears to me that the Europeans have brought this on themselves by inviting refugees to come by the hundreds of thousands. The people smugglers are making money and millions are looking for sanctuary. There is little chance for assimilation and their open-borders policy has created a flood that has no solution at the moment.
“For me, as a person who values my own and my family’s freedom and safety, I wouldn’t go there as a tourist and I wouldn’t invest there either. The markets everywhere look overbought at the moment, and it seems like a good time to be in cash despite the lousy returns.”
Reader Thomas added: “Radicalism in any religion always ends in death, destruction and chaos. Right now you have all the elements of a perfect storm in Europe: Over 1 million refugees scattered all over Europe … record unemployment among the youth … severe austerity measures on all citizens … right-wing neo-Nazi growth … EU travel freedom under the Schengen treaty destroyed … a euro currency under severe pressure … a possible Brexit … Greece in trouble yet again … and on and on.”
As for the impact on investors, Reader Anthony G. said: “I see a global economy selloff in the immediate days. This market is overbought, and the gains from the recent rally will soon melt down.”
Reader Dave also warned about the potential impact of European turmoil on world markets, saying: “From a business standpoint, I am with you, Mike. Europe has so many issues to deal with that business can’t help but be affected. Stay away awhile longer.
“Here at home, the time has finally come when we must re-set our expectations a bit lower, and either stay with cash and value stocks, or be capable of discerning the future.”
Separately, on the topic of renewed home-equity lending, Reader John B. said: “I survived The Big Short. Alas, I was on the wrong side of the equation. Now today I see the same game going on in real estate loans, auto loans, and energy loans. Watch out below!”
Reader Mike S. also warned of future problems, saying: “This will all end badly. The cause is the Federal Reserve manipulation of interest rates. The banks are reaching for products to increase their bottom line. I have seen this act before.”
I appreciate everyone taking the time to weigh in. I’m definitely concerned by what I’m seeing in the auto-lending business, as well as commercial real estate. As for the risk of losses on energy loans, the writing is on the wall there too. All of this will make for an increasingly turbulent environment for major bank and financial stocks in my view.
[Read More – Yet ANOTHER Billionaire Warns About Coming Chaos – Mike Larson]
If there’s anything else you’d like to add, the discussion section below is a great place to weigh in. I’ll cover as many of your comments as possible.
|
The U.S. government dropped its court fight against Apple (AAPL) over encryption on the iPhone. That’s because the Department of Justice was able to access information on the smartphone of San Bernardino, Calif., terrorist Syed Rizwan using other methods. But the debate over privacy vs. security will no doubt rear its head again in future terrorism or criminal cases.
A hijacker took control of an EgyptAir jet and diverted it to the island of Cyprus today. But the event appeared to be related to a dispute between the man and his ex-wife, rather than yet another terrorism-linked crisis. All 56 passengers and seven crew members were ultimately released, and the hijacker was arrested.
“Flood of Central Bank Moves Can’t Get World Economy Out of Rut?” That’s the headline of a Bloomberg story, and basically what I’ve been saying about the global central bankers here in Money and Markets for the last year or two. It’s worth a read if you have a few minutes.
The campaign for a $15 minimum wage has succeeded in California. The state’s base wage will climb gradually to that level by 2022, thanks to a deal struck between legislators and Gov. Jerry Brown.
Do you think California’s wage plan is a good or bad one for workers and employers? What do you think about the government dropping its fight against tech giant Apple? And is it just me, or would we be much better off if central bankers would stop trying to do the impossible and just get out of the way? Let me know your thoughts in the comment section.
Until next time,
Mike Larson
Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 72 comments }
The current market is as Samuel Johnson said regarding second marriages; the triumph of hope over experience. One would have thought that we would have learned by now that, while the market is forward looking, it does eventually demand some results for that faith. In this case, there has been little reason to think anyone has kept the faith through real results.
The bond market can see the unsustainable borrowing by central banks. It will surely come back to haunt the global economy.
Watch the rats flee the ship of California (califorinacation).
They’ve been fleeing for some time. In the future, CA will consist of highly-paid employees of unicorns and the poor and unemployed. Everyone else will be gone. America’s first engineered third-world state.
$15 an hour will help some and kill jobs for young first time applicants. It will certain lead to more automation and the hiring of more illegals.
Actually, the same thing happened in Seattle and they have witnessed Great Economic Success…Perhaps you are wrong about California, aye?
Don’t be so cheap. Why not $25 an hour. Heck, let’s make it $50 and everybody can be rich. Jim
it should be $25 or so an hour with the cost of everything these days!! the costs of almost EVERYTHING has at least doubled in the past 7-8 years!! but wages????…………………………..also, MIKE, what happened to the high of 16,800 on the DOW you threw out a couple weeks back??
Remember the Republican claims of doom and gloom when Democrats raised both the minimum wage and taxes on the 1% in 1993? The result was the longest period of peacetime noninflationary growth in 100 years and a BALANCED BUDGET.
I remember when Newt and the GOP took back the house in ’94 because the voters were gagging on liberalism which in turn woke up Bubba.
Better back-pedal a little more on this one, MIke. “The longest period of noninflationary growth in 100 years”, and the “balanced budget” have nothing to do with Democrat policies you reference. They stand on Reagan’s policies of the 80s, and are clearly delineated by Reagan advisor Lawrence Lindsey in his 1989 book, “The Growth Experiment”, Chapter 12 to be specific, “The Great Surplus of ’99”. Check it out, and get real with political claims.
The budget in the 90’s was balanced because of Newt gingrich and the internet boom! Slick Willie and the dems had nothing to do with it! Get your facts right Mikey. california is a cesspool and proof of a world gone wrong. You can have it with all the illegals.
Think of it like this. In Henry Ford’s day he realised that to sell cars, workers needed to be able to afford them. These days with the rest of the world eating our lunch with free trade agreements, we can barely afford a wage increase. This is like baking a cake. You need to have all the right ingredients. Investment capital needs to be able to see a profit or it won’t come. Workers need well paid jobs. We want fair trade not just free trade and the 5% of Washington insiders need to get out of the way.
It’s a circular situation. In order to have a profitable business you must have customers who can pay. In order to be a paying customer you must have money. For most people that means a job that pays more than subsistence wages. When the original minimum wage was enacted the thinking was that it would provide a breadwinner (usually the male or husband in those years) enough income to provide for himself, his wife, and a small child, in modest surroundings. The present minimum wage doesn’t even provide enough for one person at this time.
More proof that Americans are clueless about the world outside our borders. The 1994-2Q2001 prosperity outbreak, was due to one cause alone: The Communist Party of the Soviet Union went bankrupt, speculating on oil futures, and took the Soviet Union down with it, the way Delphi took down General Motors.
Even Cold War costs money.
Downsizing our military and terminating hundreds of doomsday-weapons projects, that were designed only for Cold War use and are useless against terrorists, saved us a whale of a lot of money.
Unfortunately, the Clinton Administration never actually delivered a balanced budget…they promised to deliver one someday and came close.
Come the third quarter of 2001 and all bets were off. 19 days shy of the end of the quarter, the World Trade Center Towers 1, 2, and 5 came down with a crash….air traffic halted for several days…and Hillary Clinton showed us how she looks when she takes an attack personally. It probably occurred to her, that thanks to some folks in a plane over Shanksville, PA, that plane didn’t come flying into Capitol Hill while she was in the office watching the other 3 crash sites on CNN. (And yes, a captured terrorist did state that the Shanksville plane was hijacked by a team whose target was the US Capitol.)…point being, she was one of the intended targets and realized it.
The bottom line here is, that the Wahhabi militants at war on us, do not conceive of money in the same way that we do.
The typical Westerner provides for retirement, expecting to need money to live on, and a place to live, in retirement.
The typical Al-Qaeda or ISIS suicide bomber expects to live forever in Seventh Heaven and to have all his needs met by 70 virgins who will care for him.
The Soviets were pushovers, by comparison. As dialectical materialists, they had no hope of God or Heaven…so doomsday weapons that could make the world uninhabitable, were a genuine deterrent to Materialist aggression.
Telling a guy who sincerely believes he goes to Seventh Heaven when he blows himself up, and immediately gets all his needs met, that he shouldn’t blow himself up, is a different problem entirely.
The only real leverage, is that the suicide bomber might worry what his family will do with him gone.
ISIS, Al Qaeda, and similar groups, often overcome this problem, by arranging for large gifts of money from wealthy supporters in Saudi Arabia, to the bereaved families, for their care and upkeep, in honor of their blown-up son or daughter.
Until Saudi Arabia invents a way to bankrupt itself, those funds will continue flowing, and desperate families will take the money and sell their children to be suicide bombers.
Exactly how we fix this problem isn’t obvious, but it’s abundantly clear that occupying Mideast countries with troops, has not made us more secure. The cost of the war is destroying the economy. If we allow that policy to continue, our enemies need only wait for us to go broke first.
Maybe Europeans are buying more USA 30 year bonds for security now than they were in Dec 2015 because of the migrants problem heating up and threatening future euro economics.
How does making it more difficult to hire inexperienced workers going to help them? My eighteen year old daughter works at the health food store after school for $8 an hour. I know for a fact if they had to pay her $15 she would be unemployed. Prices will necessarily rise as well to cover the increased cost, hurting fixed income folks This looks like another example of good intentions having priority over common sense. Jim
The store might still need your daughter’s help, Jim, but they would cut her hours as much as possible. If it was a full time job, it would turn into part time, especially if that eliminated any benefits. As you might say, unintended consequences.
There have been two Stock Market Crashes and Depressions in the past 100 years… Both occurred after periods of Conservative Republican Domination of roughly 30 years… Both of those Crashes saw Liberal Progressive Democrats and Democratic Majority Congresses elected….
The 1st Stock Market Crash lost 90% and lasted three years, from 1929 until 1932…
During the 1st recovery from 1932 forward until 1981, America witnessed the Longest and Greatest period of Economic Growth and Success in it’s history…. It was the Longest and Greatest Increase in the Stock Market, the Greatest Period of Growth of the Middle Class and the greatest increase in Manufacturing and Economic Output and the greatest period of increasing living standards for the Average American in our history. That period lasted about 50 years…
Then came the Republican Revolution in 1981 and EVERYONE of those Indicators of Economic Success fell and after roughly 30 years of Conservative Republican Domination, we again had another Stock Market Crash and Depression…… That 2nd Stock Market Crash lost 60% and only lasted about 1.5 years (Nov, 2007 until March 2009)
That 2nd Republican Stock Market Crash and Depression, AGAIN brought the election of a Liberal Progressive Democratic Administration and a Democratic Majority Congress… Since then the Stock Market has reclaimed all those losses and is now at an all time high, unemployment is falling, jobs are increasing, living standards are beginning to climb and manufacturing is slowly returning to America’s shores… If past history is an indicator, this period of Increasing Economic Success under Liberal Progressive Democratic Domination ought to last until roughly 2059…..
Much the same political group that called FDR a “Communist” and forecast economic ruin are now calling Obama, a “Communist” and again forecasting economic ruin.. Of course, they were wrong then and if past history is an indicator, they will be proven wrong again…
Good grief! Jim
Wow, wrong on every point. Go back to Democrat Underground or Daily Kos, Comrade!
Joe,
Please detail Eagle’s misstatements with peer reviewed references.
Great.
recessions and crashes are just a part of an economic cycle. if the party you want in power stayed in power all the time and we never had a recession or crash, things would get so expensive to a point no one could afford anything and the crash would be so great everyone would lose everything. that would be even worse than what we have.
Yawn. Tell it to those not counted, those not participating in the labor force since it is the lowest since the late 1970s, at 62.8%. Liberals are controlling Japan where the Japanese Central Bank (JCB) is desperately trying to spend yen at unprecedented levels, even utilizing negative interest rates, to utterly no avail, as the population shrinks. Phfft, what about demographics? Puhlease, leave your anti-conservative, pro-socialist democrap screeds off this site.
Eagle, Mike, George. Please answer a question for me. I work, I’m not rich, and between withholding, city, county, state, and the Feds I pay about 55 per cent of what I make to them now. It’s been that way for quite awhile. Business pays about 35 per cent of what they make. The Feds have spent $19 trillion beyond this, promised folks about $80 trillion more in future entitlements, and God only knows how far cities, counties, and states are in the hole, yet we are still constantly told we have not reached the promised land and we need to give more. My question is: How much is enough? Give me a number please. Jim
Consider Cleveland, Ohio where some derelict houses have been knocked down. Something is wrong here when houses can’t sell for less than $1000.
Liberals can always point to Detroit, Cleveland, Baltimore, New Orleans, etc to prove their point that long term Democrat control is a great thing. It is inconceivable to me that anyone can claim government has been doing a good job. Jim
Don’t forget Chicago!!
the GOP sent those jobs to China, the Far East and Mexico… Next?
Yes you just have to love what George Bush did for New Orleans have the hurricane. Zero.
Really isn’t hard to explain Jim…. Return the tax rates to where they were when Reagan gave those HUGE tax breaks to his benefactors, the wealthiest 3% and thing would get straightened out…… It worked really well from 1932 forward….
Eagle 495
I am many things, but as an investor I don’t give a damn about either side of politics. I wouldn’t invest a buck into an economy controlled by either the Democrats or the GOP. They are there for themselves. We need an economy controlled by the will of the people with a leader who has the vision to help dig us out of the rat hole we are sinking into. It hurts me to see so much investment capital just sitting on the side lines waiting for politicians to get their sponging asses out of the way.
So where would you invest? From 1929 to 1932 of 1932-1981? Or 1981-2009 or 2009 to the current, aye?
The US government has finally solved all of this. With all their low interest rate shenanigans they have you “channeled” into the stock market. Its the only game left an they have made sure you know.
All politicians are much the same, Eagle. They are in it for their own good, and that of their backers. Those to the left know ordinary people can sway a vote for or against them, so they cater to the masses which usually back them.Those to the right know where the money is, so they cater to money, which understands they must give a little to the voting mass, but push the wealth to the backers.
The facts and history show that politicians are not the same… The GOP has always been the party of the Ultra Wealthy and the Democrats have always been the party of the average American at lest since the beginning of the 20th Century…
Eagle495
Are you saying that there are no ultra wealthy Democrats in history?
Uh-huh. Average Americans like politician Bill Clinton. He used the Presidency to move himself well up on ultra wealthy list. He has made over $3 Million just giving talks in Mexico alone. That is just one place where he yacks off. He got $400,000,, cash on the barrel-head, just for one of those talks to Mexican bankers, industrialists and politicians. Just average kinds of people like him.
WRONG WRONG WRONG! The ONLY REASON THE STOCK MARKET IS WHERE IT IS IS BECAUSE OF THE FED AND QUANTITATIVE EASING.
Ask you grandparents…. FDR did much the same thing…… And it worked then and it will now……
Shorting US bonds is the new widowmaker trade. There is a hidden central market bid, QE never really ended its just being kept off balance sheet.
bonds down and stocks up
Bonds are debt and might not be repaid
stocks are companies still in business and hope fully productive and paying dividends ..
thats why i see stocks up and bonds down
but hay , when governments get budgets & bonds are all paid off , i see the earth pulling ahead
The problem is that yields on bonds have gone down, which means bonds have gone up. This happens when more investors want to buy bonds (give the government money) than sell them. There are many possible reasons, including that stock buyers may want to hedge a bit by also buying bonds.
Right! Bonds are debt hence must be repaid. Like Greece will ever repay theirs. Other than from more bonds, from Goldman, Morgan, Deutche Bank, AND some hedge funds. So stock is an investment?? Only the portion of assets not financed by debt. In the case of many companies invested in oil fracking that can be zilch. Or will be after some years of negative profits. Debt gets paid off first so maybe is the better risk and reward. Barely, buying stocks is only a bet that the short-term rewards will be greater and the day of reckoning deferred.
MINIMUM SERVICE, MAXIMUM WAGE
If the new California Minimum wage is indexed to inflation then a baseline level of inflation will be locked-in for infinity. So, if the FED wants inflation, then minimum wage increases are one way to force the market in their direction. Of course, this is creeping socialism not Free Markets. Fewer college and High School students will find those summer jobs and have to borrow even more in Student Loans. Once they graduate, they can then make the minimum.
Not necessarily. Social Security is indexed to inflation, and this year there was no increase.
Hey Mike — Excellent and succinct explanation of where we are in the grand scheme of things. Should be read by everyone! Nothing much else to say except this ain’t gonna end well.
A number of cities in California have raised the minimum wage from $10 to $15 an hour over the last year and a half, cities next door to each other. The $5 difference has had some effect on retail and fast food sales by city. The gradual phase in means there shouldn’t be a fast spike in prices, and in some cities none at all. It is also to be fully in effect six years down the road so who knows what inflation will do in the meantime. It should lessen the problems for local politicians. Hopefully this will remove the ability of individual cities to raise wages locally. However the minimum wage both Federal and states should be adjusted on an annual basis at least. As should s few user taxes like the fuel tax should be raised also on an annual basis and it should be directed solely at road construction, not parks and mass transit.
Why should wages be a matter of law? Please tell me what makes politicians smart enough to tell us how much workers should earn for any job, under any conditions. The pols like the idea, of course. It means more tax receipts to further their own vote buying with public money – for awhile – until most workers lose their jobs to foreigners or machines. That has already been happening, in case we haven’t noticed. Then workers want even higher legal minimums. Fur shur.
this market is such a scam!!! really, the people with the most $$$ basically control most things—numerous acquaintances, whose multi-billion dollar hedge funds swing markets each and every day as a group and usually are the ones who get out first and back in first to create greater returns and in the end, dictate which way markets go—until the most major shit hits the fans that they have no control over like the majority of countries who won’t be able to pay their bills…. just a thought
The shorts are in pain. The longs are in power.
Raising the minimum wage to an arbitrary amount is a bad idea but is nothing new. The legislatures (whether Federal or state) don’t seem to understand that artificial mandates are not a part of “free markets/capitalism” and do more harm than good.
In January, the price of oil (WTI) fell about $10 and short sellers began buying, because of reaching a target, in many cases, I presume. This cause the price to jump for a week or so, then fall again in February. Many of the remaining short holders decided to close their positions. Shorts fell by 67% in these two months, according to the CFTC. All this activity, possibly induced other investors to buy, and the price shot up about $15 into early March. Now Oil is turning down again, with fewer short sellers to cause such a covering jump this month. It could go much lower.
One hundred per cent correct. It was a classic short squeeze. Jim
On the FBI vs. Apple, it appears that either:
1) Apple security is garbage, and third parties can break it, or
2) Apple quietly caved and discretely gave a third party the means to break their security.
Neither gives me confidence in Apple’s security. If I had any secrets, I wouldn’t have an Apple device.
Aside from the problems with Puerto Rican bonds, which I wrote about this past weekend, I read that about 54% of student loans are in trouble, with about 33% delinquent, or in default. The companies issuing these loans got the money to do so by selling bonds. They can sometimes work out payment delays with former students, but they may have to forgive some, and courts might nullify others. From the companies’ viewpoints, of course, it makes little difference, since the loans are guaranteed by Uncle Sam. Just add them to all the other National Debt.
Deadbeat Island! The President gave $125,000,000 in Christmas bonuses to govenment employees then defaulted in January. Chuck, I followed up on you Sabine Oil case. You were right. The Texas Bankruptcy Court nullified their pipeline contracts. All these pipeline companies with “safe” take or pay contracts look scary now. Ultra and Chesapeake will,probably ask for similar relief. Jim
Always great to hear what Larry has to say — he’s made magnificent calls over the decades and has worked jointly with renowned cycle forecaster Martin Armstrong. So the street cred is 5-star all the way. However, I believe it might be very useful to also check out what other technical and cycle experts have to say about where the market may be headed. A few names come to mind: Greg Mannorino, Michael Lewitt, Harry Dent. You find them on the internet/YouTube.
Adapt and trade accordingly.
Stu,
You might do well to figure out which one’s have sold out to the GOP and the wealthiest 3%…….. Those are the guys that were pretty silent as the GOP was setting us up for another 1929 in 2007 (hint: those that saw “no problem or where silent when Glass-Steagall was removed by the Republican majority in 1999) and are now screaming that the world is gong to end under the Democrats since 2009…… Those people where wrong during BOTH time periods….. In other words do your homework and pick one who has had good results over the past 50 years rather than those spouting unprofitable right wing dogma, aye?
Bond prices are rising (less interest rate risk, as Yellen’s speech implies, slow recovery with global risks). Stock prices are rising, per your chart of SPX. However, the bond price chart(s) is not shown, instead the yield (inverse) chart is shown.
In my home country they once calculated how much money workers have available who earn 1000, 2000, or 3000 per month. The low income earner had more available than his income because government subsidies added to the income. The middle income earner had a little less than his income available because he paid some taxes but got some subsidies/breaks. The top earner had only 75% of his income available because he did pay taxes and did not receive a thing from government.
I suspect the same thing is true in the Socialist Republic of the USofA. What that means is that someone has to pay the subsidies. Guess who! We know the subsidies Walmart “Associates” receive come from the 1% or may be the 10%. Instead of paying the workers directly they pay the bloated government to pay the workers which makes everything even more expensive. Did any economist ever calculate the amounts of money being transferred that way and how much money is being lost in overhead?
ll I hear is ideology but no real solutions. I imagine a $15 minimum wage is a step in the right direction moneywise and also a benefit in emotional and physical health.
Didn’t have that problem before Reagan gave hiw benefactos the wealthies 3% HUGE tax breaks or before the Republics wrote and passed GATT and NAFTA which sent millions of Middle Class Union jobsw to China, the Far East and Mexico….
Home buyers used to come to Vegas from California to purchase our Homes in droves for the last 3 years because, for the price they got for their home in California, they could buy three here.
Now they are coming here to find work. That is telling me work has slowed down in that State a lot. $15.00/hour does not sound like a whole lot to me here in Vegas where I have to pay that much for general labor for home improvement work around my house. I’m always making small improvements and needed repairs. Hot tub, security lighting, landscaping, etc.
Stock buy back programs have been surging recently, driving these stock values through the roof and in turn the indexes to highs, whilst the bond market does not enjoy the same activity. Instead investors are growing weary of Sovereign debt which can be seen in the cost of insurance of that debt, that is through the roof!
While Nordic countries are experimenting with minimum/guaranteed incomes Americans are procrastinating at paying people a liveable wage like $15 an hour which might take effect by 2022. I have been retired some 23 years now and I think I was making close to $15 an hour when I retired. House prices have doubled in this time frame and more plus everything else has double or more in price yet wages are going nowhere. In 20 years time 50% of the present jobs will disappear thanks to robotics so what is the answer to this festering dilemma along with low wages for the lucky few who will have jobs?. What about the masses of unemployed consumers who have no money to spend? Do we just abandon our fellow man to his own resources or vote Republican so they can take away much needed social assistance like food stamps etc. If they gain the white house as well as the 2 houses it would not surprise me to see them implement work camps for people unable to find a job. After all we are not all created equal. So what is the answer???
Congratulations, you got out of America just as the Republicans were getting up to full speed on screwing the 97% and enriching their benefactors thr 3%….. Vote the carpetbaggers (the GOP) out of office (as our grandparents did in 1932) and things will get better……
The stock market movements really amaze me. Janet Yellen goes opposite of the hawkish comments of last week and the stock market moves up. The hawkish comments came the week after Yellen went dovish. We seem to be in a dovish hawkish push pull situation. Have market fundamentals simply disappeared. American markets go up Asian markets go down European markets go up following the US lead. The next day Asian markets follow the US lead and European markets go down its all a cycle. People are still tied to the Fed speak umbilical cord. I laugh when predictors here call for Dow 31,000 because of the fact that the world wide nervous money will all flow into the US forget fundamentals. This one trick pony may work for a while but the quicksand foundation this idea is built on will ultimately collapse as surely as the sun will come up tomorrow its all a matter of when. This idea is in the same vein as helicopter money from heaven. If Dow 31,000 is in the future just tell companies to quit reporting their income. It will be irrelevant.
In fact, as capitalist economies the Nordic countries have proven that capitalism works better when it’s accompanied by smart, universal social policies that are in everyone’s self-interest. 1 percent own 99 percent of the wealth and that is not in everyones self interest. They are running out of ways to tax people and the rich are to greedy to share any of their wealth. If history repeats itself, the rich will get richer, the poor will get poorer then finally there is a revolt. It seems that is the only fix because I do not think the rich will just dump money back into the hand of the poor.
Impossible insane economic conditions require insane, untested crazy solutions. Over the last century governments have proven to themselves that DEBT does not matter. The solution of course is then for governments to go to there central banks with their bloated budgets and quit taxing the productive side of the economy. You can only imagine the out rageous growth that would occur.
I just saw a chart showing that in the first three months of this year, 31 companies worldwide, defaulted on their bonds. This is just 11 shy of 2009’s count, and we know what happened then. Also, 27 of those companies were American, just one less than In 2009. Make of it what you will, but it doesn’t look good.
buy your June SDS calls NOW!!! they are so cheap and you will, more than likely, see a return of 1000% by the first week of June—just saying’—memories are soo short these days and the complacency just blows me away!!! get ready