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The more things change in the USA casino capitalism the more they stay the same

News Neoliberalism as a New Form of Corporatism Recommended Links Casino Capitalism COVID-19 Epidemic: The Media Narrative is mostly deceptive fearmongering, but the threat of recession is real Neoliberalism 101: 12 best articles on neoliberalism Rational Fools vs. Efficient Crooks: The efficient market hypothesis
The new dot-com Stock Market bubble Corruption of Regulators  Corruption at the SEC Unemployment Peak cheap Energy and Oil Price Slump Redistribution of wealth up as the essence of neoliberalism Neoclassical Pseudo Theories and Crooked and Bought Economists as Fifth Column of Financial Oligarchy
Stability is destabilizing: The idea of Minsky moment Secular Stagnation under Neoliberalism Numbers racket and "Potemkin numbers" GDP as a false measure of a country economic output How US measures inflation Core inflation as a Potyomkin Village of the real (headline) inflation NAIRU
Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Neoliberal Attacks on Social Security Financial Sector Induced Systemic Instability of Economy USA-Russia Gas War Paper oil, Minsky financial instability hypothesis and casino capitalism Productivity Myths and Rising labor costs hypocrisy Fudged Employment Statistics: Birth-death adjustment scam
Inflation, Deflation and Confiscation Retirement scams Stock Market as a Ponzy scheme Financial Sector Induced Systemic Instability Neoclassical Pseudo Theories The Great Stagnation Investing in Vanguard Mutual Funds and ETFs
Vanguard Notes on 401K plans Notes on 100-your age investment strategy behavior in rigged markets Chasing a trade The Possibility Of No Mean Reversion Junk Bonds For 401K Investors Tax policies
John Kenneth Galbraith The Roads We Take Economics Bookshelf Who Rules America Financial Quotes    
Financial Humor Bulletin, 2008 Financial Humor Bulletin, 2009 Financial Humor Bulletin, 2010 Financial Humor Bulletin, 2011 Financial Humor Bulletin, 2012 Financial Humor Etc

When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. it is  ideological as in "greed is good" slogan.  Like a country which adopted a certain religion follows a certain path, the USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugmans most recent op-ed, particularly this:

Most of all, the vast riches being earned or maybe that should be earned in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that the financial system as a whole has become more resilient thanks to derivatives, no less? The answer, I believe, is that theres an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what theyre doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

When will the next crash occur ?

There is no doubt that it will occur. But the question is whether the market in 2021 is ripe to the crash?  If the answer is yes, you better trip your stock holdings. Especially if you are over 60 and has sizable 401K savings.

Can the stock market go another 20-50% up. No double it can. But a more interesting question is: "Can it go down 50%?" from the current level.  The situation when some financial assets are grossly overvalued is called a bubble. Few understand that bubbles are not accident or the result of actions of "evil does" but a logical development of investing in financial  capitalism, which logically creates so called "Minsky moment".  See also  a book Boom and Bust- A Global History of Financial Bubbles, by William Quinn and John Turner of Queens University Belfast in Northern Ireland.  Rather than regarding overvalued assets as a bubble, the authors view them as a fire.  Boom and Bust looks closely at 300 years worth of market manias using the metaphor of the fire triangle. (oxygen, fuel and heat). Remove one factor, and you can prevent or put out a fire.

The key lesson of previous bubbles is that financial markets, however, can easily heat up fivefold or even 10-fold and then collapse at least 50% in a flash, burning millions of speculators and sometimes charring entire economies. Here is one review from Amazon:

Trey Shipp, 5.0 out of 5 stars The 3 elements you need for a bubble
Reviewed in the United States on December 26, 2020. Verified Purchase

Quinn and Turner prefer to use the analogy of a "fire" to describe speculative bubbles. A fire is "destructive, self-perpetuating and difficult to control once it begins." And just as a fire needs oxygen, fuel, and heat, a speculative bubble needs assets that are easy to trade (i.e., oxygen), plenty of money and credit (fuel), and speculation (heat). It also needs a spark, which usually comes from government action or new technology.

The authors describe how these key elements played out in 11 speculative booms since the 1700s:
French Mississippi Bubble (1719 to 1720)
British South Sea Bubble (1719 to 1720)
British Emerging Market Mines Bubble (1824 to 1826)
U.K. Railway Mania (1844 to1846)
Australian Land Boom (1886 to 1893)
The U.K. Bicycle Mania (1895 to 1898)
U.S. Roaring Twenties (1920 to 1931)
Japanese stock and real estate bubble (1985 to 1992)
U.S. Dot-Com Bubble (1995 to 2001)
U.S. and European Subprime Bubble (2003 to 2010)
the 2007 and 2015 Chinese stock bubbles.

Some of the many interesting facts they uncover include:

The word "bubble" originated from Shakespeare in the 'All the world's a stage' speech from his comedy "As You Like It." He uses 'bubble' to mean "fragile, empty or worthless, just like a soap bubble." Beginning in 1719, with the South Sea Bubble, writers like Daniel Defoe and Jonathan Swift used "bubble" to describe new companies that were worthless.

Charles Mackay's 1841 book "Extraordinary Popular Delusions and the Madness of Crowds", which gives a vivid account of the foolish speculation during the South Sea Bubble, is mostly fiction: almost none of the anecdotes can be substantiated.

In 2008 The Economist described the British Railway Mania as "arguably the greatest bubble in history."

During the British Railway Mania of 1848, railway shares rose from constituting 23 percent of total stock market value to 71 percent. So many new speculators began buying railway stocks that 15 new stock exchanges opened in England during the mania to meet the demand. (Half of them shut down when the mania ended.)

Fueling the railway bubble was the Bank of England's low discount rate. At 2.5 percent in 1844, it was the lowest it had ever been in the 150 years of the bank's history. Investors bought railway stocks to earn a higher yield.

The Japanese government deliberately sparked the land and stock bubbles during the late 1980s to create a boom. Japan lowered interest rates, gave tax breaks to real estate developers, and allowed banks to accept land as collateral, which increased the amount of lending they could do, which was usually plowed back into more land and stocks.

The authors believe that the Dot-com bubble during the late 1990s had many good economic benefits, despite the 8-month recession that followed it. The bubble directed a lot of money into innovative companies and motivated smart entrepreneurs to create new companies. It also supplied the capital needed to build internet communications, which have been so critical for our lives today.

Between 2000 and 2008 in both Ireland and Spain, more than one new home was built for every new inhabitant in the country.

In the U.K., the bank Northern Rock marketed "Together mortgages," which allowed individuals to borrow up to 125 percent of their home value, targeting borrowers who could not afford to buy a home or even furnish it.

The Chinese stock market bubbles resembled the South Sea and Mississippi bubbles of 1720, where the bubbles were created deliberately to offload government debt onto stockholders.

The main lesson from the book is that while bubbles can be blurry during the heat and smoke of a speculative fire, we should look for three key elements: asset marketability, speculation, and leverage.

In proportion to market sizewhich weights giant tech stocks heavilythe companies in the S&P 500 recently traded at 21 times expected earnings over the next 12 months, according to Matarin Capital Management, an investment firm in New York. Thats about 24% higher than their average over the past quarter-century.  This can go higher (probably to mid 30th) or crash to Earth.


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[Jul 29, 2021] What Happens to Stocks and Cryptocurrencies When the Fed Stops Raining Money

Inflation also might be coming via the devaluation of the dollar.
Notable quotes:
"... These articles are great at d ..."
"... There are no safe options. TIPS are indexed to the CPI. The CPI is "adjusted" by weighting, substitution, and hedonics to preserve the mirage of low inflation. We are being forced to either speculate in the market or watch our savings get swallowed by inflation. ..."
May 08, 2021 | www.moonofalabama.org
Zeb Long
These articles are great at describing the problem, but not so great at suggesting what investors ought to do to protect themselves.

TIPS are sometimes suggested, but if the govt is manipulating the reporting of inflation then TIPS aren't going to be much help. Gold and blue chip stocks... "diversify"? how about some articles that will explore strategies.

J James Robertson
There are no safe options. TIPS are indexed to the CPI. The CPI is "adjusted" by weighting, substitution, and hedonics to preserve the mirage of low inflation. We are being forced to either speculate in the market or watch our savings get swallowed by inflation.

[Jul 24, 2021] Higher Inflation Is Here to Stay for Years, Economists Forecast by Gwynn Guilford and Anthony DeBarros

Jul 11, 2021 | www.wsj.com

Strong economic rebound and lingering pandemic disruptions fuel inflation forecasts above 2% through 2023, survey finds. The U.S. inflation rate reached a 13-year high recently, triggering a debate about whether the country is entering an inflationary period similar to the 1970s. WSJ's Jon Hilsenrath looks at what consumers can expect next.

Americans should brace themselves for several years of higher inflation than they've seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while.

Economists surveyed this month by The Wall Street Journal raised their forecasts of how high inflation would go and for how long, compared with their previous expectations in April.

The respondents on average now expect a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2% in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3% a year in 2022 and 2023.

That would mean an average annual increase of 2.58% from 2021 through 2023, putting inflation at levels last seen in 1993.

"We're in a transitional phase right now," said Joel Naroff, chief economist at Naroff Economics LLC. "We are transitioning to a higher period of inflation and interest rates than we've had over the last 20 years."

[Jul 24, 2021] U.S. inflation is still climbing and now higher labor costs are adding to the pressure

Cost of energy is climbing and that will increase the level of inflation.
The position of dollar is weakening too and that might contribution to inflation pressures.
Jul 24, 2021 | www.msn.com

The yearly rate of inflation leaped to a 13-year high of 3.6% in April, using the Fed's preferred PCE price gauge. By another measure inflation hit a 28-year peak .

Inflation likely rose sharply again in May. Economists polled by Dow Jones and The Wall Street Journal predict the consumer price index rose 0.5% last month. The report comes out on Thursday. If so, that would push the yearly rate close to 5% from 4.2% in April.

Consumer prices have only risen that fast twice in the past 30 years, most recently in 2008 when the cost of a barrel of oil topped $150.

... ... ...

The central bank has stuck to its prediction that inflation will drop back toward 2% by next year. But many are beginning to wonder.

"The writing is on the wall: The Fed's temporary-inflation mantra is sounding more dated by the week," said senior economist Sal Guatieri of BMO Capital Markets.

[Jul 24, 2021] Woke Nasdaq's Boardroom Diversity Push

Neoliberal oligarchy fight against income redistribution by pushing perverted social justice smoke screen and in effect can turn the USA in South Africa. Money quote from comments: "If I read NASDAQ's proposal for Board representation in the Onion, I would have thought that even these jokesters have exceeded the creativity threshold of ridiculousness I thought was possible." and "What about the Mentally Ill? Do they get a seat? How about the Homeless?"
Three words about famele CEO and board room members: Elizabeth Holmes, Theranos. BTW what is unclear in NASDAQ bold critical race theory support is: Can we exchange one black member for two female members? Or not.
Also why stop at the boardrooms. Why not require the same in professional sport teams?
Jul 24, 2021 | www.wsj.com
Nasdaq has, in its own words, embraced "the social justice movement." The actual job of a stock exchange, however, is to ensure that trading is orderly and its listed companies follow standard governance rules. But doing that doesn't earn the applause of the political left. Progressive approval apparently means a lot to Nasdaq, which has officially proposed to its regulator -- the Securities and Exchange Commission, newly chaired by Gary Gensler -- to increase boardroom diversity through a "regulatory approach."

This proposal would require that Nasdaq-listed companies not only disclose the diversity characteristics of their existing boards, but also retain "at least one director who self-identifies as female," and "at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, two or more races or ethnicities, or as LGBTQ+."

Noncompliant firms must publicly "explain" -- in writing -- why they don't meet Nasdaq's quotas. Nasdaq has, in its own words, embraced "the social justice movement."

The actual job of a stock exchange, however, is to ensure that trading is orderly and its listed companies follow standard governance rules. But doing that doesn't earn the applause of the political left. Progressive approval apparently means a lot to Nasdaq, which has officially proposed to its regulator -- the Securities and Exchange Commission, newly chaired by Gary Gensler -- to increase boardroom diversity through a "regulatory approach."

[Jul 24, 2021] New variation of the old saying

Apr 07, 2021 | www.zerohedge.com

OldNewB

Give a man a gun and he can rob a bank.

Give a man a bank and he can rob the world.

[Jul 24, 2021] The Fed, BLS and al Capone: the Fed, in sync with the fiction writers at the Bureau of Labor Statistics (BLS), reports consumer inflation as honestly as Al Capone reported taxable income

Jul 24, 2021 | www.zerohedge.com

The Fed, in sync with the fiction writers at the Bureau of Labor Statistics (BLS), reports consumer inflation as honestly as Al Capone reported taxable income.

Vardaman 3 hours ago

"A basket of things no one actually buys, with prices we just pull out of our asses..."

Glock 1 hour ago

Yep, the BLS uses the CPI-W to literally avoid raising SS payments. The real rate of inflation for seniors is close to 10% as the things they spend most of their money on like medical care, medicine, food and utilities have gone through the roof

While the government claims they are entitled to 1.5% or less COLA's out of which comes a bigger deduction every year for Medicare. Scam artists.

[Jul 21, 2021] Bubbles, bubbles everywhere- Jeremy Grantham on the bust ahead

Jul 20, 2021 | www.msn.com

NEW YORK (Reuters) - In this manic era of meme stocks, cryptocurrencies and real-estate bidding wars, studying the history of financial markets might seem a little dry and old-fashioned.

Except to Jeremy Grantham.

The chairman of the board of famed asset managers GMO is a certified bubble-ologist, fascinated by how and why bubbles emerge. Grantham studies classic ones like 1929, but - now in his eighties - he has also lived through (and called) numerous modern booms and busts, including the dot-com wreckage in 2000, the bull market peak in 2008 and the bear market low in 2009.

In case you did not know where this is headed: He says we are in a bubble right now.

In January Grantham wrote an investor letter, "Waiting For the Last Dance," about an inflating bubble that "could well be the most important event of your investing lives."

Six months later, the stock market is starting to show some cracks. Grantham spoke with Reuters about this moment of market history.

Q: When your letter of warning came out, what was the response like?

A: I got a lot of pushback. Waves of Bitcoin freaks attacked me in every way possible. They said my ears were too big, and that I needed to be locked up in an old-folks home.

Q: So if we were already in a bubble then, where do things stand right now?

A: Bubbles are unbelievably easy to see; it's knowing when the bust will come that is trickier. You see it when the markets are on the front pages instead of the financial pages, when the news is full of stories of people getting cheated, when new coins are being created every month. The scale of these things is so much bigger than in 1929 or in 2000.

Q: What is your take on equity valuations now?

A: Looking at most measures, the market is more expensive than in 2000, which was more expensive than anything that preceded it.

My favorite metric is price-to-sales: What you find is that even the cheapest parts of the market are way more expensive than in 2000.

Q: What might bring an end to this bubble?

A: Markets peak when you are as happy as you can get, and a near-perfect economy is extrapolated into the indefinite future. But around the corner are lurking serious issues like interest rates, inflation, labor and commodity prices. All of those are beginning to look less optimistic than they did just a week or two ago.

Q: How long until a bust?

A: A bust might take a few more months, and, in fact, I hope it does, because it will give us the opportunity to warn more people. The probabilities are that this will go into the fall: The stimulus, the economic recovery, and vaccinations have all allowed this thing to go on a few months longer than I would have initially guessed.

What pricks the bubble could be a virus problem, it could be an inflation problem, or it could be the most important category of all, which is everything else that is unexpected. One of 20 different things that you haven't even thought of will come out of the woodwork, and you had no idea it was even there.

Q: What might a bust look like?

A: There will be an enormous negative wealth effect, broader than it has ever been, compared to any other previous bubble breaking. It's the first time we have bubbled in so many different areas "" interest rates, stocks, housing, non-energy commodities. On the way up, it gave us all a positive wealth effect, and on the way down it will retract, painfully.

Q: Are there any asset classes which are relatively attractive?

A: You could always own cash, or you could do what the institutions do, which is buy heavily into the asset classes that are least bad. The least overpriced are value stocks and emerging markets. Those are the two arbitrages. With value and emerging, you should make some positive return over the next 10 years.

Q: It is difficult to be bearish right now?

A: Not for me, because I don't have career risk anymore. But every big company has lots of risk: They facilitate a bubble until it bursts, and then they change their tune as fast as they can, and make money on the downside.

But this bubble is the real thing, and everyone can see it. It's as obvious as the nose on your face.

[Jul 20, 2021] Bubbles, bubbles everywhere- Jeremy Grantham on the bust ahead

Jul 20, 2021 | www.msn.com

NEW YORK (Reuters) - In this manic era of meme stocks, cryptocurrencies and real-estate bidding wars, studying the history of financial markets might seem a little dry and old-fashioned.

Except to Jeremy Grantham.

The chairman of the board of famed asset managers GMO is a certified bubble-ologist, fascinated by how and why bubbles emerge. Grantham studies classic ones like 1929, but - now in his eighties - he has also lived through (and called) numerous modern booms and busts, including the dot-com wreckage in 2000, the bull market peak in 2008 and the bear market low in 2009.

In case you did not know where this is headed: He says we are in a bubble right now.

In January Grantham wrote an investor letter, "Waiting For the Last Dance," about an inflating bubble that "could well be the most important event of your investing lives."

Six months later, the stock market is starting to show some cracks. Grantham spoke with Reuters about this moment of market history.

Q: When your letter of warning came out, what was the response like?

A: I got a lot of pushback. Waves of Bitcoin freaks attacked me in every way possible. They said my ears were too big, and that I needed to be locked up in an old-folks home.

Q: So if we were already in a bubble then, where do things stand right now?

A: Bubbles are unbelievably easy to see; it's knowing when the bust will come that is trickier. You see it when the markets are on the front pages instead of the financial pages, when the news is full of stories of people getting cheated, when new coins are being created every month. The scale of these things is so much bigger than in 1929 or in 2000.

Q: What is your take on equity valuations now?

A: Looking at most measures, the market is more expensive than in 2000, which was more expensive than anything that preceded it.

My favorite metric is price-to-sales: What you find is that even the cheapest parts of the market are way more expensive than in 2000.

Q: What might bring an end to this bubble?

A: Markets peak when you are as happy as you can get, and a near-perfect economy is extrapolated into the indefinite future. But around the corner are lurking serious issues like interest rates, inflation, labor and commodity prices. All of those are beginning to look less optimistic than they did just a week or two ago.

Q: How long until a bust?

A: A bust might take a few more months, and, in fact, I hope it does, because it will give us the opportunity to warn more people. The probabilities are that this will go into the fall: The stimulus, the economic recovery, and vaccinations have all allowed this thing to go on a few months longer than I would have initially guessed.

What pricks the bubble could be a virus problem, it could be an inflation problem, or it could be the most important category of all, which is everything else that is unexpected. One of 20 different things that you haven't even thought of will come out of the woodwork, and you had no idea it was even there.

Q: What might a bust look like?

A: There will be an enormous negative wealth effect, broader than it has ever been, compared to any other previous bubble breaking. It's the first time we have bubbled in so many different areas "" interest rates, stocks, housing, non-energy commodities. On the way up, it gave us all a positive wealth effect, and on the way down it will retract, painfully.

Q: Are there any asset classes which are relatively attractive?

A: You could always own cash, or you could do what the institutions do, which is buy heavily into the asset classes that are least bad. The least overpriced are value stocks and emerging markets. Those are the two arbitrages. With value and emerging, you should make some positive return over the next 10 years.

Q: It is difficult to be bearish right now?

A: Not for me, because I don't have career risk anymore. But every big company has lots of risk: They facilitate a bubble until it bursts, and then they change their tune as fast as they can, and make money on the downside.

But this bubble is the real thing, and everyone can see it. It's as obvious as the nose on your face.

[Jul 20, 2021] Higher Inflation Is Here to Stay for Years, Economists Forecast by Gwynn Guilford and Anthony DeBarros

Jul 11, 2021 | www.wsj.com

Strong economic rebound and lingering pandemic disruptions fuel inflation forecasts above 2% through 2023, survey finds. The U.S. inflation rate reached a 13-year high recently, triggering a debate about whether the country is entering an inflationary period similar to the 1970s. WSJ's Jon Hilsenrath looks at what consumers can expect next.

Americans should brace themselves for several years of higher inflation than they've seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while.

Economists surveyed this month by The Wall Street Journal raised their forecasts of how high inflation would go and for how long, compared with their previous expectations in April.

The respondents on average now expect a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2% in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3% a year in 2022 and 2023.

That would mean an average annual increase of 2.58% from 2021 through 2023, putting inflation at levels last seen in 1993.

"We're in a transitional phase right now," said Joel Naroff, chief economist at Naroff Economics LLC. "We are transitioning to a higher period of inflation and interest rates than we've had over the last 20 years."

[Jul 19, 2021] What was not mentioned

Jul 19, 2021 | www.zerohedge.com

Filosofur 7 hours ago

I find it very odd that ZH not even mentioning the 1000 point drop in dow today...wtf??

sbin 7 hours ago

1000 points is a good start.

Pareto 7 hours ago

its only 2%

[Jul 16, 2021] The Most-Overlooked Tax Breaks for Retirees by Rocky Mengle , Kevin McCormally

Jul 01, 2021 | www.kiplinger.com
Unfortunately, seniors often miss tax-saving opportunities that are available to them. Don't let that happen to you!

For new retirees, it's more important than ever to take full advantage of every tax break available. That's especially true if you're on a fixed income. After all, you have to stretch out your retirement savings to cover the rest of your life. But holding on to your money during retirement is easier said than done. That's why retirees really need to pay close attention to their tax situation.

Unfortunately, though, seniors often miss valuable tax-saving opportunities . In many cases, it's simply because they just don't know about them. Don't let that happen to you -- check out these often-overlooked tax breaks for retirees . You could save a bundle!

When you turn 65, the IRS offers you a gift in the form of a larger standard deduction . For example, a single 64-year-old taxpayer can claim a standard deduction of $12,550 on his or her 2021 tax return (it was $12,400 for 2020 returns). But a single 65-year-old taxpayer will get a $14,250 standard deduction in 2021 ($14,050 in 2020).

The extra $1,700 will make it more likely that you'll take the standard deduction rather than itemize. And, if you do claim the standard deduction, the additional amount will save you over $400 if you're in the 24% income tax bracket .

Couples in which one or both spouses are age 65 or older also get bigger standard deductions than younger taxpayers. If only one spouse is 65 or older, the extra amount for 2021 is $1,350 – $2,700 if both spouses are 65 or older. Be sure to take advantage of your age!

For new retirees, it's more important than ever to take full advantage of every tax break available. That's especially true if you're on a fixed income. After all, you have to stretch out your retirement savings to cover the rest of your life. But holding on to your money during retirement is easier said than done. That's why retirees really need to pay close attention to their tax situation.

Unfortunately, though, seniors often miss valuable tax-saving opportunities . In many cases, it's simply because they just don't know about them. Don't let that happen to you -- check out these often-overlooked tax breaks for retirees . You could save a bundle!

When you turn 65, the IRS offers you a gift in the form of a larger standard deduction . For example, a single 64-year-old taxpayer can claim a standard deduction of $12,550 on his or her 2021 tax return (it was $12,400 for 2020 returns). But a single 65-year-old taxpayer will get a $14,250 standard deduction in 2021 ($14,050 in 2020).

The extra $1,700 will make it more likely that you'll take the standard deduction rather than itemize. And, if you do claim the standard deduction, the additional amount will save you over $400 if you're in the 24% income tax bracket .

Couples in which one or both spouses are age 65 or older also get bigger standard deductions than younger taxpayers. If only one spouse is 65 or older, the extra amount for 2021 is $1,350 – $2,700 if both spouses are 65 or older. Be sure to take advantage of your age!

The rules are clear: To qualify for tax-free profit from the sale of a home, the home must be your principal residence and you must have owned and lived in it for at least two of the five years leading up to the sale. But there is a way to capture tax-free profit from the sale of a former vacation home.

Let's say you sell the family homestead and cash in on the break that makes up to $250,000 in profit tax-free ($500,000 if you're married and file jointly). You then move into a vacation home you've owned for 25 years. As long as you make that house your principal residence for at least two years, part of the profit on the sale will be tax-free.

Basically, the $250,000/$500,00 exclusion doesn't apply to any profit that is allocable to the time after 2008 that a home is not used as your principal residence. For example, assume you bought a vacation home in 2001, convert it to your principal residence in 2015 and sell it in 2021. The post-2008 vacation-home use is seven of the 20 years you owned the property. So, 35% (7 ÷ 20) of the profit would be taxable at capital gains rates; the other 65% would qualify for the $250,000/$500,000 exclusion.

[Jul 16, 2021] This one signal says a stock market correction may be on the way by Michael Brush

Notable quotes:
"... Here are the other ominous signs of froth in the IPO market. ..."
"... Tech leads the way: It dominates the IPO market again, just as in 1999. ..."
"... Frothy first-day gains: The average first-day pop for IPOs in the second quarter was 42% ..."
"... Historically high valuations ..."
"... Retail investors in the mix ..."
"... "I think it says more about general liquidity than it does about where the stock market is going next," says Kevin Landis of the Firsthand Technology Opportunities TEFQX, -3.24% , referring to the IPO frenzy. "There is so much money sloshing around. The capital markets look like the rich guy from out of town who just got off the cruise ship, and we are all coming out of the woodwork to sell him stuff," he says. ..."
"... "Things are going up simply because of liquidity, which means eventually there will be a top," says Landis. "But not necessarily an impending top right around the corner." Landis is worth listening to because his fund outperforms his technology category by 9.6 percentage points annualized over the five years, according to Morningstar. ..."
"... Market calls are always a matter of what intelligence spies call "the mosaic." Each bit of information is a piece of an overall mosaic. While the IPO market froth is disturbing, you should consider this cautionary signal as just one among many. ..."
Jul 14, 2021 | www.marketwatch.com
A frothy market for initial public offerings suggests stocks are overvalued

Oatly, which produces oat milk products, went public in May. (Photo Illustration by Scott Olson/Getty Images)

I hear more money managers say it's starting to feel like 1999" the bubble year followed by an epic market crash.

They may be on to something.

The initial public offering (IPO) market now shows the froth that foreshadows big stock market corrections.

Consider these troubling signals from the IPO market.

1. Ominous volume: Second-quarter IPO proceeds were the biggest since" get this" the fourth quarter of 1999. The huge tech selloff that scarred a generation of investors started in March 2000 and then spread to the entire market.

Some details: A total of 115 IPOs raised $40.7 billion in the second quarter. That follows a busy first quarter when 100 IPOs raised $39.1 billion. Both quarters saw the largest amount of capital raised since the fourth quarter of 1999, when IPOs raised $46.5 billion. These numbers come from the IPO experts at Renaissance Capital, which manages the IPO exchange traded fund, Renaissance IPO ETF IPO, -3.43% .

Of course, adjusted for inflation, the 2021 numbers shrink relative to the fourth quarter of 1999. But this doesn't get us off the hook. The 2021 IPO figures, above, exclude the $12.2 billion and $87 billion raised by special purpose acquisition companies (SPACs) in the second and first quarters.

This spike in IPO volume is troubling for a simple reason. Investment bankers and companies know the most opportune time to sell stock is around market highs. They bring companies public at their convenience, not ours. This tells us they may be selling a top now.

Here are the other ominous signs of froth in the IPO market.

2. Tech leads the way: It dominates the IPO market again, just as in 1999. The tech sector raised the majority of second-quarter proceeds and posted its busiest quarter in at least two decades with 42 IPOs, says Renaissance Capital. This included the quarter's largest IPO, DiDi Global DIDI, +1.61% , the Chinese ride-hailing app. The large U.S.-based tech names were Applovin APP, -5.54% in app software, the robotics company UiPath PATH, -3.68% , and the payments platform Marqeta MQ, -4.93% .

3. We can expect more of the same: A robust IPO pipeline sets the stage for a booming third quarter, says Renaissance Capital. The IPO pipeline has over a hundred companies. Tech dominates.

4. Frothy first-day gains: The average first-day pop for IPOs in the second quarter was 42% . That's well above the range of 31%-37% for the prior four quarters.

5. Historically high valuations : Typically, tech companies have come public with enterprise-value-(EV)-to-sales ratios of around 10. Now many are coming public with EV/sales ratios in the 20-30 range or more, points out Avery Spears, an IPO analyst at Renaissance Capital. For example, the cybersecurity company SentinelOne S, -6.14% came public with an EV/sales ratio of 81, says Spears.

6. Retail investors in the mix : They're big participants in IPO trading" often driving IPOs up by crazy amounts in first-day trading. "In the second quarter there were a lot of small deals with low floats and absolutely insane trading, popping well over 100% and in one case over 1,000%," says Spears. Pop Culture Group CPOP, -12.38% rose over 400% on its first day of trading, and E-Home Household Service EJH, -3.67% advanced 1,100%. "This demonstrates presence of retail investors in the market," she says. Both names have since fallen.

Keep in mind that the 2000 selloff was not the only one foreshadowed by IPO froth. The selloffs during mid-2015 to early 2016 and the second half 2018 were both preceded by high-water marks for IPO deal volume.

IPO-froth pushback

"It's different this time" are maybe the most dangerous words in investing. But market experts say several factors suggest the robust IPO market isn't such a negative signal.

First, decent quality companies are coming public. "Because companies stay private longer, you are seeing far more mature companies coming public," says Todd Skacan, equity capital markets manager at T. Rowe Price. These aren't like the speculative Internet companies of 1999. "It would be more of a signal of froth if more borderline companies were coming public like in the fourth quarter of 1999," he says.

We saw some of this with the SPACs, says Skacan, but the SPAC craze has cooled off. Second-quarter SPAC issuance fell 79% compared to the first quarter, muted by "investor fatigue and regulatory scrutiny," says a Renaissance Capital report on the IPO market. In the second quarter, 63 SPACs raised $12.2 billion, compared to the 298 SPACs that raised $87 billion in the first quarter.

Next, the type of company coming public might also calm fears. Alongside all the tech names, there are many industrial and consumer-facing companies" not the kinds of businesses that indicate froth. The latter category includes public national brands like Mister Car Wash MCW, -1.82% and Krispy Kreme DNUT, -2.16% , and the high-growth oat milk brand Oatly OTLY, -2.79% .

Third, IPOs are only floating 10%-15% of their overall value, and many post-IPO valuations are not that much higher than valuations implied by pre-IPO capital raises. That's different, compared to 1999. "It is not like they are selling a high number of shares at inflated prices," says Skacan. This makes sense, because companies that are more mature when they do an IPO don't need as much money.

Liquidity flood

"I think it says more about general liquidity than it does about where the stock market is going next," says Kevin Landis of the Firsthand Technology Opportunities TEFQX, -3.24% , referring to the IPO frenzy. "There is so much money sloshing around. The capital markets look like the rich guy from out of town who just got off the cruise ship, and we are all coming out of the woodwork to sell him stuff," he says.

"Things are going up simply because of liquidity, which means eventually there will be a top," says Landis. "But not necessarily an impending top right around the corner." Landis is worth listening to because his fund outperforms his technology category by 9.6 percentage points annualized over the five years, according to Morningstar.

The bottom line

Market calls are always a matter of what intelligence spies call "the mosaic." Each bit of information is a piece of an overall mosaic. While the IPO market froth is disturbing, you should consider this cautionary signal as just one among many.

Michael Brush is a columnist for MarketWatch. At the time of publication, he owned APP. Brush has suggested APP in his stock newsletter, Brush Up on Stocks . Follow him on Twitter @mbrushstocks,

[Jul 15, 2021] Investors, Don t Depend on Stocks and Bonds to Hedge Each Other

Jul 15, 2021 | www.bloomberg.com

There's nothing more beautiful to a professional investor than a negative correlation between stocks and bonds. When stocks have a bad month, bonds have a good month, and vice versa. Since their zigs and zags offset each other, the value of the combined portfolio is less volatile. The customers are pleased. And that's how it's been for most of the last two decades.

But for almost a year now, Bloomberg market reporters have been detecting anxiety from the pros that the era of negative correlation may be over or ending, replaced by an era of positive correlation in which stock and bond prices move together, amplifying volatility instead of dampening it. "Bonds Have Never Been So Useless as a Hedge to Stocks Since 1999," read the headline on one article this May.

Yet hope springs eternal. The headline on a July 7 article was, "Bonds Are Hinting They'll Hedge Stocks Again as Growth Bets Ease."

In the big picture and over long periods, it's obvious and necessary that stock and bond returns are positively correlated. After all, they're competing investments. Each generates a stream of income: dividends for (most) stocks, coupon payments for bonds. If stocks get very expensive, investors will shift money into bonds as a cheaper alternative until that rebalancing makes bonds more or less equally expensive. Likewise, when one of the two asset classes gets cheap it will tend to drag down the other.

When the pros talk about negative correlation they're referring to shorter periods""say, a month or two--over which stocks and bonds can indeed move in different directions. Lately two giant money managers have produced explanations for why stocks and bonds move apart or together. They're worth understanding even if your assets under management are in the thousands rather than billions or trillions.

Bridgewater Associates, the world's biggest hedge fund, based in Westport, Conn., says that how stocks and bonds play with each other has to do with economic conditions and policy. "There will naturally be times when they're negatively correlated and naturally be times when they're positively correlated, and those come from the underlying environment itself," senior portfolio strategist, Jeff Gardner says in an edited transcript of a recent in-house interview.

According to Gardner, inflation was the most important factor in the markets for decades""both when it rose in the 1960s and 1970s and when it fell in the 1980s and 1990s. Inflation affects stocks and bonds similarly, although it's worse for bonds with their fixed payments than for stocks. That's why correlation was positive during that long period.

For the past 20 years or so, inflation has been so low and steady that it's been a non-factor in the markets. So investors have paid more attention to economic growth prospects. Strong growth is great for stocks but doesn't do anything for bonds. That, says Gardner, is the main reason that stocks and bonds have moved in different directions.

PGIM Inc., the main asset management business of insurer Prudential Financial Inc., has $1.5 trillion under management. In a report issued in May, it puts numbers on the disappointment the pros feel when stocks and bonds start to move in sync. Let's say a portfolio is 60% stocks and 40% bonds and has a stock-bond correlation of -0.3, which is about average for the last 20 years. Volatility is around 7%. Now let's say the correlation goes to zero" not positive yet, but not negative anymore, either. To keep volatility from rising, the portfolio manager would have to reduce the allocation to stocks to around 52%, which would lower the portfolio's returns. If the stock-bond correlation reached a positive 0.3, then keeping volatility from rising would require reducing the stock allocation to only 40%, hitting returns even harder.

PGIM's list of factors that affect correlations is longer than Bridgewater's but consistent with it. The report by vice president Junying Shen and managing director Noah Weisberger says correlations between stocks and bonds tend to be negative when there's sustainable fiscal policy, independent and rules-based monetary policy, and shifts up or down in the demand side of the economy (consumption). The correlation is likely to be positive, they say, when there's unsustainable fiscal policy, discretionary monetary policy, monetary-fiscal policy coordination, and shifts in the supply side of the economy (output).

One last thought: It's a good idea to spread your money between stocks and bonds even if they don't hedge each other. The capital asset pricing model developed by William Sharpe in the 1960s says everyone should have the same portfolio, consisting of every asset available, and adjust their risk by how much they borrow. True, not everyone agrees. John Rekenthaler, a vice president for research at Morningstar Inc., wrote a fun article in 2017 about the different strategies of Sharpe and fellow Nobel laureate Harry Markowitz.

[Jul 15, 2021] If you think stocks and housing are in a bubble, check out bonds by Mark Hulbert

Images removed. See the original for the full version...
Notable quotes:
"... To shed light on this question, let's look at where both asset classes stand relative to their long-term trendlines. It's important to take a long-term perspective because commentators seem overly eager to detect bubbles everywhere they look these days. They (and we) need to be reminded that not every bull market is a bubble, and not every bear market represents the bursting of a bubble. ..."
Jul 15, 2021 | www.marketwatch.com

Which U.S. asset class is more likely in a bubble right now" stocks or housing? More than 80% of traders polled in a Charles Schwab survey say both.

To shed light on this question, let's look at where both asset classes stand relative to their long-term trendlines. It's important to take a long-term perspective because commentators seem overly eager to detect bubbles everywhere they look these days. They (and we) need to be reminded that not every bull market is a bubble, and not every bear market represents the bursting of a bubble.

Why are we so eager to detect bubbles? Will Goetzmann, a finance professor at Yale University, told me that he suspects it traces to the moral overtone that investors have when they declare something to be forming a bubble. When they do, he said, they're implying that those who lose big in that bear market will be getting what they deserve.

This column leaves moral judgments out of the equation. I instead am focusing on the most comprehensive data set of U.S. equity and housing returns that I know. This database, which extends back to the late 1800s, was compiled by Ã'scar Jordà of the Federal Reserve Bank of San Francisco, Katharina Knoll of Deutsche Bundesbank in Frankfurt, Dmitry Kuvshinov and Moritz Schularick, both of the University of Bonn, and Alan M. Taylor of the University of California Davis.

This database is unique in several ways. One big advantage is that it includes data for both stocks and housing; other databases extend further back in the case of the stock market but don't include housing. The database also takes rent into account when calculating housing's return. Some prior historical analyses of housing's return have focused only on price appreciation, which significantly underreports housing's performance.

The chart below plots the returns since 1890 of U.S. stocks and housing. Notice that equities and housing have each produced largely similar returns over the past 130 years . As recently as the late 1940s, housing was ahead of equities for cumulative performance since 1890. As recently as the late 1970s the two data series were nearly neck-and-neck. Notice further that housing's performance has been less volatile than the stock market's, especially since World War II.

For each asset class I calculated an exponential trendline that most closely fit the 130 years' worth of data. The bad news is that both stocks and housing currently are above their respective trendlines, so if you insist that both assets are in bubbles now you in fact could find some statistical support.

Of the two, the stock market is further ahead of its long-term trendline than is housing. So if you'd have to pick which of the two is more likely to decline significantly, you should choose stocks.

Bonds are vulnerable

I've not said anything about bonds, but they are even further ahead of their trendline than either stocks or housing. So from this long-term perspective they are even more vulnerable than stocks to a big decline.

[Jul 15, 2021] Many Jobs Lost During the Coronavirus Pandemic Just Aren't Coming Back by Lauren Weber

when the tax rates increase even more, it just encourages automation or DIY (bring your own sheets to avoid paying the cleaning fee), which just grinds down growth rather than accelerates it.
Notable quotes:
"... Applebee's is now using tablets to allow customers to pay at their tables without summoning a waiter. ..."
Jul 15, 2021 | www.wsj.com
Companies see automation and other labor-saving steps as a way to emerge from the health crisis with a permanently smaller workforce
PHOTO: JIM THOMPSON/ZUMA PRESS

... ... ...

Economic data show that companies have learned to do more with less over the last 16 months or so. Output nearly recovered to pre-pandemic levels in the first quarter of 2021 -- down just 0.5% from the end of 2019 -- even though U.S. workers put in 4.3% fewer hours than they did before the health crisis.

... ... ...

Raytheon Technologies Corp. RTX 0.08% , the biggest U.S. aerospace supplier by sales, laid off 21,000 employees and contractors in 2020 amid a drastic decline in air travel. Raytheon said in January that efforts to modernize its factories and back-office operations would boost profit margins and reduce the need to bring back all those jobs. The company said that most if not all of the 4,500 contract workers who were let go in 2020 wouldn't be called back.

... ... ..

Hilton Worldwide Holdings Inc. HLT -0.78% said last week that most of its U.S. properties are adopting "a flexible housekeeping policy," with daily service available upon request. "Full deep cleanings will be conducted prior to check-in and on every fifth day for extended stays," it said.

Daily housekeeping will still be free for those who request it... Unite Here, a union that represents hotel workers, published a report in June estimating that the end of daily room cleaning could result in an industrywide loss of up to 180,000 jobs...

... ... ...

Restaurants have become rapid adopters of technology during the pandemic as two forces -- labor shortages that are pushing wages higher and a desire to reduce close contact between customers and employees -- raise the return on such investments. ... Applebee's is now using tablets to allow customers to pay at their tables without summoning a waiter. The hand-held screens provide a hedge against labor inflation, said John Peyton, CEO of Applebee's parent Dine Brands Global Inc.

... ... ...

The U.S. tax code encourages investments in automation, particularly after the Trump administration's tax cuts, said Daron Acemoglu, an economist at the Massachusetts Institute of Technology who studies the impact of automation on workers. Firms pay around 25 cents in taxes for every dollar they pay workers, compared with 5 cents for every dollar spent on machines because companies can write off capital investments, he said.

... ... ...

-- Heather Haddon contributed to this article. D


DANIEL WEBER

A lot of employers were given Covid-aid to keep employees employed and paid in 2020. I assume somebody has addressed that obligation since it wasn't mentioned.

But, what happens to the unskilled workers whose jobs have been eliminated? Do Raytheon and Hilton just say "have a nice life on the streets"?

No, they will become our collective burdens.

I am all for technology and progress and better QA/QC and general performance. But the employers that benefit from this should use part of their gains in stock valuation to keep "our collective burdens" off our collective backs, rather than pay dividends and bonuses first.

Maybe reinvest in updated training for those laid off.

No great outcome comes free. BUT, as the article implies, the luxury of having already laid off the unskilled, likely leaves the employer holding all the cards.

And the wheel keeps turning...

Jeffery Allen
Question! Isn't this antithetical (reduction of employees) to the spirit and purpose of both monetary and fiscal programs, e.g., PPP loans (fiscal), capital markets funding facilities (monetary) established last year and current year? Employers are to retain employees. Gee, what a farce. Does anyone really care?
Philip Hilmes
Some of this makes sense and some would happen anyway without the pandemic. I don't need my room cleaned every day, but sometimes I want it. The wait staff in restaurants is another matter. Losing wait staff makes for a pretty bad experience. I hate having to order on my phone. I feel like I might as well be home ordering food through Grubhub or something. It's impersonal, more painful than telling someone, doesn't allow for you to be checked on if you need anything, doesn't provide information you don't get from a menu, etc. It really diminishes the value of going out to eat without wait staff.
al snow
OK I been reading all the comments I only have a WSJ access as the rate was a great deal.
Hotel/Motel started making the bed but not changing the sheets every day for many years I am fine as long as they offer trash take out and towel/paper every day
and do not forget to tip .
clive boulton
Recruiters re-post hard to fill job listings onto multiple job boards. I don't believe the reported job openings resemble are real. Divide by 3 at least.

[Jul 15, 2021] Apple, Amazon, ARKK, and other big names indicate a market correction is coming, strategist says. Here's why. - MarketWatch

Jul 15, 2021 | www.marketwatch.com

Stocks are near all-time highs, and though U.S. markets opened slightly lower on Thursday, it's much easier to find bulls than bears these days.

But a technical indicator showing itself in five high-profile stocks and two funds suggests that a market correction is coming, according to strategist Michael Kramer of Mott Capital Management , in our call of the day .

The relative strength index, or RSI, measures the speed and change of recent price movements and is one of the most renowned technical signals. It allows investors to evaluate whether a security is overbought or oversold -- i.e. overvalued or undervalued. A reading of 70 or above is considered overbought, while 30 and below is oversold.

A look back at 2018 is enough to tell investors why they should watch this indicator, according to Kramer, who noted on January 29, 2018 that high RSIs for some of the biggest names signalled that the stock market was ready to fall. "Things got really ugly after that through February 8," he said.

In those 10 days early in 2018, Dow industrials DJIA, +0.15% tumbled near 9%, the S&P 500 SPX, -0.33% plunged more than 10%, and the Nasdaq Composite COMP, -0.70% fell near 10%.

Now, "the same thing is emerging," Kramer said, "with the biggest stocks all reaching very overbought reading."

Apple AAPL, -0.45% , Amazon AMZN, -1.37% , Alphabet GOOGL, -0.96% , Nvidia NVDA, -4.41% , and Microsoft MSFT, -0.52% are showing overbought RSIs, as are Cathie Wood's ARK Innovation ETF ARKK, -1.50% and the QQQ QQQ, -0.70% fund tracking the Nasdaq 100.

By the end of Wednesday, Apple had an RSI of more than 80, with Amazon at 70, Microsoft at 76, and Google-owner Alphabet at 73 and showing a rising pattern, Kramer said. He noted that Nvidia's RSI was in the process of breaking a near-two month rise up to 83.

Ark Innovation ETF's RSI was sitting at 76, while the QQQ was above 75. "When the QQQ RSI gets this high, the outcomes are not good most of the time, including January 2018," Kramer said.

[Jul 14, 2021] Cryptos are a collectors item just like fine art.

Jul 13, 2021 | www.moonofalabama.org

jsanprox , Jul 12 2021 1:59 utc | 103

Cryptos are a collectors item just like fine art. While money has value based on the military jack boot of empire which insures its value only with its domination of most countries and the violent destruction of any attempt to set up a transparent real money system exchangable for gold (Libya). A painting by a hot painter is worth 900k because there are a handful of people who will pay that for it, they're interest in it keeps the value at a certain level. Same with Bitcoin, but that interest is spread out to millions of people. If they all decide its worthless than it is, but why would they? I think a lot of these evidence free claims of hacking and ransom wear are made to devalue the currency that the ransom is paid in, it could have easily been paid in dollars via the internet, as cryptos is basiclly just that: a stand in for the dollar being moved to an account that is a number. Cryptos in this way provide a window to real capitalism. This to me is natural human evolution toward anarchism and a system of exchange that is transparent and based on people working together instead of militaristic violence. You can exchange cryptos for gold, rubles and yaun, so saying that it exist only based on the dollars supremacy is wrong.


Hoarsewhisperer , Jul 12 2021 3:36 utc | 104

What I know about computers and Bitcoin would get lost in a thimble. However, what I've learnt about the US Govt over the years tells me that this problem wouldn't be happening if the USG hadn't dedicated itself to micro-managing, and dominating the www - for Top Secret (i.e. bullshit) reasons.

I was appalled when I learnt that the USG had made strong encryption ILLEGAL, and dumbfounded when I first heard about the PRISM 'co-operative' USG-mandated www surveillance program. Edward Snowden's NSA revellations confirmed that the USG has KILLED computer security for crappy, feeble-minded reasons.

It's more or less par for the course that the USG blames other entities for its own prying and mischief-making. Were it not for the USG placing LOW limits on computer security, we would all have access to Pretty Good Privacy and pro-active, timely means of detecting and defending and/or evading malware.

Stonebird , Jul 12 2021 8:31 utc | 107

Jörgen Hassler | Jul 12 2021 5:32 utc | 105

"They mostly never see the piece, it's kept in climate controlled storage."

This is standard practice. Using "Ports Franches" as in several Swiss towns including Geneva. Perfectly legal as they are not IN the country (for Tax purposes).

However, this is not really for "drug" cartels but just a way of transferring assets from one rich person to another. Many ownership deals are made inside the Port Franche itself, without the need to transport the work outside. There is a limitation on the time a work can be left inside the building, but I believe all that they have to do is drive more or less "round the block" and re-enter it. I'm a bit hazy about that detail, as I do not have a spare Rembrandt to verify this personally.

****

jsanprox | Jul 12 2021 1:59 utc | 103

A painting by a hot painter is worth 900k because there are a handful of people who will pay that for it, they're interest in it keeps the value at a certain level.

The primary dealers agree on a common price level for a stated painter. These paintings can even be used as collateral when borrowing money.
Other painters do not have a "guaranteed" price level but one based on auction values (ie. What the customer is willing to pay.)
The Primary dealers are a very small group who control all the big art fairs and which other dealers are allowed to sell or deal there -.
There are "rules" about "participation" (not sure about the terminology here), that various dealers will have made between themseves. ie. There is a split-up of profits following certain agreed parts. Woe unto a dealer that doesn't pay his part. (OK; personal note here, I once accidently fell foul of the "cartel" because a gallery owner with my works, had not paid "out" on a large sum that he had made on another artist he was representing. They decided to "get" him.)

****

Ransomware ; Why are people getting all hot and bothered about Corporations paying money in Bitcoin? Happens all the time.

Another Personal anecdote ; About five years ago I started recieving emails from unknown "people", Real first names, with an attachement. As normal, these go into trash without being opened (or into a folder I have, called "dodgy spam?) About 20 + of them. Next I recieved one email saying (in French) " I know your little secret, and if you don't want everyone else to know, pay (about €30) a "Small" sum into the following bitcoin account xxxxx."

In France you can " porter plainte" , ie, denounce and start a legal process against an "unknown person, or persons". This is to protect yourself, and is run by the Government/police. In my case, never having opened any of the "attachments", I don't know what they were, probably porn of some sort. IF they had been opened there would have been a suspicion that I was a "willling" victim. (The first question asked by the Gov. Site was "Have you paid them/it, and by how much". in my case - none)

******

Haven't heard anything since. BUT, Bitcoin was already being used for criminal purposes.

Nobody had to find a super-secret backdoor into my computer. Just buy a data base with working emails - Corporations use them all the time to send publicity. By looking at the address, and other more or less freely available information, they can target people, by location, age, etc.


vk , Jul 12 2021 15:47 utc | 113

@ Posted by: jsanprox | Jul 12 2021 1:59 utc | 103

But you only know a Picasso is worth a lot because you can calculate it in USD terms (ultimately: you can also calculate in any other fiat currency, but, since we live in the USD Standard, we only know a certain amount of fiat currency is worth if we can convert it to USDs). The USD is still the unit of accountancy and the means of payment even in the art market.

You can never pay your taxes or fill the tank of your car with a Picasso - you would have to sell it for USDs, and use these USDs to pay for everything you need. Sure, two megarich persons could exchange art between them as some kind of permute, but that doesn't constitute a societal unity (because billionares don't exist in a vacuum). It is a particularity of society, not society itself.

The same is true with crypto. And with gold. And with platinum. And with whatever else you want. It is a myth crypto is "fake" just because it is purely digital: the material specification of the thing doesn't matter for its status of money. Being digital is the lesser of crypto's problems. Crypto's main problem is the very economic foundations of its existence, which ensure it will never be money.

And no: subdividing crypto wouldn't solve it - they tried it with gold when capitalism lived through the Gold Standard (when it was on its death throes) and there's a limit to this. Even if the digital era allowed it, you would then simply have fiat money system with extra steps and double the brutality, because then the power to issue money would rest with few private individual hoarders of the crypto with no legal accountability and responsibility; it would be a dystopian "Pirates of the Caribbean" meets "Mad Max" scenario.

[Jul 09, 2021] Could Pfizer and Moderna Be in Trouble After the Latest COVID Vaccine Findings

So Motley Fool analysts advocate profiteering... Nice. there is some dark neoliberal humor in stating that the elimation of booster shots is bad..
Jul 09, 2021 | www.msn.com

Keith Speights: Some findings were recently published in Nature magazine that indicate that the Pfizer-BioNTech and the Moderna vaccines may provide protection for years.

Many investors are and were hoping for annual recurring revenue from these companies' vaccines. Brian, how troublesome is this latest data for the prospects for Pfizer, BioNTech, and Moderna?

Brian Orelli: There's a bit of an extrapolation going on here. The researchers looked at memory B cells, which tend to provide more long-term protection than, let's say, antibodies. They looked at those in the lymph nodes and found the cells were there as long as 15 weeks.

Typically, they'd mostly be gone by four to six weeks. So that's the basis of this claim that it could offer protection for years. If true, that will be a big blow obviously to vaccine makers, at least for Moderna and BioNTech.

Pfizer would be fine because it's so diversified. It's really hard to make an argument for the valuations of Moderna and BioNTech right now if these vaccines are one and done over a couple of years. They really need to have ongoing sales until they can get growth from other drugs in their pipelines.

Speights: Brian, when I first saw the story, I went to check out to see how the stocks were performing, and Moderna is up, BioNTech was barely changed, Pfizer barely changed. It seems to me that investors really aren't making much of this news. Do you think that's the right take at this point?

Orelli: I think it's still too early to be able to conclude that it's definitely going to work for years. The other issue is that we're looking at, will those B cells actually protect against the variants?

If they don't protect against the variants, then it doesn't really matter if you have B cells in your lymph nodes. If they're not going to protect against the variants then we're going to have to get a booster shot anyway.

Speights: Right. Obviously, if these vaccines provide immunity for multiple years, these companies aren't going to make nearly as much money as they expect and a lot of investors expect. So this is a big story to watch, but like you said, really, really early right now and too soon to maybe go drawing any conclusions at this point.

[Jul 08, 2021] Grocery Stores Are Masking Price Hikes Via Shrinkflation

Jul 08, 2021 | www.zerohedge.com

The continued decline in Treasury yields has prompted many short-sighted arm-chair analysts to declare that the Fed was right about inflationary pressures being "transitory". Of course, as Treasury Secretary Janet Yellen herself admitted, a little inflation is necessary for the economy to function long term - because without "controlled inflation," how else will policymakers inflate away the enormous debts of the US and other governments.

As policymakers prepare to explain to the investing public why inflation is a "good thing", a report published this week by left-leaning NPR highlighted a phenomenon that is manifesting in grocery stores and other retailers across the US: economists including Pippa Malmgren call it "shrinkflation". It happens when companies reduce the size or quantity of their products while charging the same price, or even more money.

As NPR points out, the preponderance of "shrinkflation" creates a problem for academics and purveyors of classical economic theory. "If consumers were the rational creatures depicted in classic economic theory, they would notice shrinkflation. They would keep their eyes on the price per Cocoa Puff and not fall for gimmicks in how companies package those Cocoa Puffs."

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However, research by behavioral economists has found that consumers are "much more gullible than classic theory predicts. They are more sensitive to changes in price than to changes in quantity." It's one of many well-documented ways that human reasoning differs from strict rationality (for a more comprehensive review of the limitations of human reasoning in the loosely defined world of behavioral economics, read Daniel Kahneman's "Thinking Fast and Slow").

Just a few months ago, we described shrinkflation as "the oldest trick in the retailer's book" with an explanation of how Costco was masking a 14% price hike by instead reducing the sheet count in its rolls of paper towels and toilet paper.

NPR's report started with the story of Edgar Dworsky, who monitors grocery store shelves for signs of "shrinkflation".

A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.

He stepped into the cereal aisle, where he hoped to find the smoking gun. He scanned the shelves. Oh no, he thought. He was too late. The store had already replaced old General Mills cereal boxes -- such as Cheerios and Cocoa Puffs -- with newer ones. It was as though the suspect's fingerprints had been wiped clean.

Then Dworsky headed toward the back of the store. Sure enough, old boxes of Cocoa Puffs and Apple Cinnamon Cheerios were stacked at the end of one of the aisles. He grabbed an old box of Cocoa Puffs and put it side by side with the new one. Aha! The tip he had received was right on the money. General Mills had downsized the contents of its "family size" boxes from 19.3 ounces to 18.1 ounces.

Dworsky went to the checkout aisle, and both boxes -- gasp! -- were the same price. It was an open-and-shut case: General Mills is yet another perpetrator of "shrinkflation."

It's also being used for paper products, candy bars and other packaged goods.

Back in the day, Dworsky says, he remembers buying bigger candy bars and bigger rolls of toilet paper. The original Charmin roll of toilet paper, he says, had 650 sheets. Now you have to pay extra for "Mega Rolls" and "Super Mega Rolls" -- and even those have many fewer sheets than the original. To add insult to injury, Charmin recently shrank the size of their toilet sheets. Talk about a crappy deal.

Shrinkflation, or downsizing, is probably as old as mass consumerism. Over the years, Dworsky has documented the downsizing of everything from Doritos to baby shampoo to ranch dressing. "The downsizing tends to happen when manufacturers face some type of pricing pressure," he says. For example, if the price of gasoline or grain goes up.

The whole thing brings to mind a scene from the 2000s comedy classic "Zoolander".

[Jul 08, 2021] Who Goldman think it actually is?

Jul 08, 2021 | www.zerohedge.com


3 play_arrow 1


duck_fur 9 hours ago

Note to Goldman: you're a bank. Stick to banky-stuff. Leave the fear **** and lies to the professionals in the .gov and MSM.

p3scobar 7 hours ago

Goldman is the government... sooo.....

espirit 9 hours ago

If Goldman can give medical advice, so can I.

A Lunatic 9 hours ago remove link

Turning off the TV will neutralize the Delta Variant.

rag_house 9 hours ago

Just like 'Climate Change' you know it's contrived when the bankers start doing 'science.'

liberty2day 9 hours ago

when did they not?

rag_house 8 hours ago

Bankers aren't scientists. They simply dream up fake things they want to convince people of and bribe people to try to make it seem real.

Enraged 9 hours ago remove link

Goldman Sachs Charged in Foreign Bribery Case and Agrees to Pay Over $2.9 Billion

The Goldman Sachs Group Inc. and Goldman Sachs (Malaysia) have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees.

https://www.justice.gov/opa/pr/goldman-sachs-charged-foreign-bribery-case-and-agrees-pay-over-29-billion

[Jul 08, 2021] Nothing to do...

Jul 08, 2021 | www.zerohedge.com


3 play_arrow 1

HillaryOdor 5 hours ago remove link

bond prices have nothing to do with recovery [sic]

stock prices have nothing to do with growth, except growth of the money supply

Kreditanstalt 3 hours ago

"...the price of a beer or a McDonalds in 10-years time will be exactly the same as it is today. (Which it won't.)"

But the type who buy US government bonds don't care about the price of burgers. They only plan to flip the thing back to the next Greater Fool...or THE FED

[Jul 08, 2021] What's wrong with neoclassical economics?

Jul 08, 2021 | www.zerohedge.com

Sound of the Suburbs 2 hours ago remove link

You don't want to do what they did in the 1920s, and allow the banking system and the markets to become closely coupled.

Too late.

Most of today's problems could be seen in the 1920s.

What's wrong with neoclassical economics?

  1. It makes you think you are creating wealth by inflating asset prices
  2. Bank credit flows into inflating asset prices, debt rises faster than GDP and you eventually get a financial crisis.
  3. No one notices the private debt building up in the economy as neoclassical economics doesn't consider debt.

What is the fundamental flaw in the free market theory of neoclassical economics?

The University of Chicago worked that out in the 1930s after last time.

Banks can inflate asset prices with the money they create from bank loans.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.

"Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of "bank-financed inflation of securities and real estate" through the leveraged creation of secondary forms of money."

https://www.newworldencyclopedia.org/entry/Henry_Calvert_Simons

Margin lending had inflated the US stock market to ridiculous levels.

Richard Vague had noticed real estate lending balloon from 5 trillion to 10 trillion from 2001 – 2007 and went back to look at the data before 1929.

Real estate lending was actually the biggest problem lending category leading to 1929.

The IMF re-visited the Chicago plan after 2008.

https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

Existing financial assets, e.g. real estate, stocks and other financial assets, are traded and bank credit is used to fund the transfers.

The money creation of bank credit inflates the price.

You end up with a ponzi scheme of inflated asset prices that will collapse and feed back into the financial system.

The money creation of unproductive bank lending made the economy "roar", but there was little real wealth creation going on.

They didn't have the GDP measure then, but we can still look at the data.

https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

At 18 mins.

1929 and 2008 stick out like sore thumbs.

When you have productive bank lending, debt and GDP rise together like the UK before 1980.

https://www.housepricecrash.co.uk/forum/uploads/monthly_2018_02/Screen-Shot-2017-04-21-at-13_53_09.png.e32e8fee4ffd68b566ed5235dc1266c2.png

We used to be the financial superpower and it looks like we knew what we were doing in the past.

At the end of the 1920s, the US was a ponzi scheme of inflated asset prices.

The use of neoclassical economics and the belief in free markets, made them think that inflated asset prices represented real wealth accumulation.

1929 – Wakey, wakey time

Why did it cause the US financial system to collapse in 1929?

Bankers get to create money out of nothing, through bank loans, and get to charge interest on it.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

What could possibly go wrong?

Bankers do need to ensure the money they lend out gets paid back to balance their books.

Banking requires prudent lending.

If someone can't repay a loan, they need to repossess that asset and sell it to recoup that money.

If they use bank loans to inflate asset prices they get into a world of trouble when those asset prices collapse.

As the real estate and stock market collapsed the banks became insolvent as their assets didn't cover their liabilities.

They could no longer repossess and sell those assets to cover the outstanding loans and they do need to get the money they lend out back again to balance their books.

The banks become insolvent and collapsed, along with the US economy.

When banks have been lending to inflate asset prices the financial system is in a precarious state and can easily collapse.

Cont ......

Sound of the Suburbs 2 hours ago

That was the 1920s.

What was the ponzi scheme of inflated asset prices that collapsed in Japan in 1991?

Japanese real estate.

They avoided a Great Depression by saving the banks.

They killed growth for the next 30 years by leaving the debt in place.

Japan could study the Great Depression to avoid this fate.

https://www.youtube.com/watch?v=8YTyJzmiHGk

What was the ponzi scheme of inflated asset prices that collapsed in 2008?

"It's nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world" All the Presidents Bankers, Nomi Prins.

We avoided a Great Depression by saving the banks.

We left Western economies struggling by leaving the debt in place, just like Japan.

It's not as bad as Japan as we didn't let asset prices crash in the West, but it is this problem has made our economies so sluggish since 2008.

We, in turn, seem to have learnt something from Japan, as they did let asset prices crash.

The banking system and the markets are still closely coupled.

Any significant fall in asset prices will feed back into the banking system.

We are trapped, and the only way to keep things from collapsing is to keep pumping in more and more liquidity.

It's a choice

  1. Let the assets bubbles collapse, and watch this feed back into the financial system.
  2. Keep the whole thing afloat, but make things worse in the long run as the bubbles just get bigger and bigger.

We've gone for option two.

That's why the FED get so jittery when the markets start to fall.

During the coronavirus lockdowns there was no way the markets could be allowed to reflect what was going on in the real economy.

The banking system would go down.

Sound of the Suburbs 1 hour ago remove link

They learnt from the mistakes of the 1920s and put regulations in place to ensure this didn't happen again.

Financial stability arrived in the Keynesian era and was locked into the regulations of the time.

https://www.brettonwoodsproject.org/wp-content/uploads/2009/10/banking-crises.png

"This Time is Different" by Reinhart and Rogoff has a graph showing the same thing (Figure 13.1 - The proportion of countries with banking crises, 1900-2008).

Neoclassical economics came back and so did the financial crises.

The neoliberals removed the regulations that created financial stability in the Keynesian era and put independent central banks in charge of financial stability.

Why does it go so wrong?

Richard Vague had noticed real estate lending balloon from 5 trillion to 10 trillion from 2001 – 2007 and knew there was going to be a financial crisis.

Richard Vague has looked at the data for financial crises going back 200 years and found the cause was nearly always runaway bank lending.

We put central bankers in charge of financial stability, but they use an economics that ignores the main cause of financial crises, private debt.

Most of the problems are coming from private debt.

The technocrats use an economics that ignores private debt.

The poor old technocrats never really stood a chance.

[Jul 08, 2021] Bonds As An Investment Have A Very Ugly Side

Jul 08, 2021 | www.zerohedge.com

Let it Go 3 hours ago

Many people seem to have forgotten after their nearly four-decade run that bonds have a very ugly side that can yield great pain. Today's lower yields may be part of a greater conundrum created by the reality of too much freshly printed money floating around and people needing someplace to stash it. The article below delves into why interest rates may unexpectedly rise.
https://Bonds As An Investment Have A Very Ugly Side.html

besnook10 4 hours ago

the equity market is reflecting the rush to dollar assets as a function of economic uncertainty especially dedollarization while the low rates also reflect the lower demand for dollars because of dedollarization.

George Bayou 5 hours ago

Treasury rates are set by the fed and have absolutely nothing to do with reality anymore. The rates are set so that the government can sustain a higher debt ceiling, nothing more. Corporate bonds can be made artificially low because they don't have to compete against treasuries.

buzzsaw99 4 hours ago

i would argue that the s&p 500 is set by the fed and has absolutely nothing to do with reality anymore. i would further add that if the fed didn't meddle treasury rates would be even lower and the corporate spread would be huge.

bshirley1968 PREMIUM 4 hours ago

I would argue you are both right. The meddle when they have to. As long as the sheep run with their narrative, the "markets" usually go the way they want them to. But they will step in when there is a divergence.

George Bayou 4 hours ago remove link

I agree that the s&p is inflated due to fed injection and currency devaluation. I disagree about treasury rates, if the fed stopped buying treasuries then the market would not take up the slack unless the rates went higher.

The fed can't do this not only because the government couldn't afford paying higher rates, but the housing industry that they've inflated would get crushed as well.

[Jul 08, 2021] In Bonds There Is Truth - The Importance Of 1.34% - ZeroHedge

Jul 08, 2021 | www.zerohedge.com

Authored by Bill Blain via MorningPorridge.com,

"How many impossible things can you believe before breakfast?"

US 10-year bonds and US equity are in full rally mode. They show contradictory expectations for a stalled recovery and future strong growth! How can that be? Because the market is about what participants collectively think – and how markets think has been utterly changed by 12 years of monetary experimentation, repression, and distortion. We've got to change the way we think about markets.

That the reflation trade is fading fast? Falling bond yields = rising bond prices, and are a sign the market anticipates a slowdown and declining inflationary threat.

Yet, we still expect to see further equity upside? Falling dividend yields = rising equity prices, and are a sign the market anticipates strong growth and rising corporate profits.

In bonds there is truth. Bonds are about credit risk – getting repaid principal and interest. But not the US treasury market – which is why it is called the risk-free rate. The risk of holding a Treasury bond actually boils down to inflation risk. Whatever mad-eyed Libertarian preppers hiding in mountain lairs say, the US Government defaulting on debt is a 50 Sigma possibility – it aint going to happen.

But inflation will eat away the value of the bond today in terms of its purchasing power relative to its future purchasing power at maturity. The greater inflation, the less the bond is worth, and its price today should reflect that. Inflation could occur through rising prices, and declining confidence in currency which creates inflation as its FX value tumbles.

If you assume zero inflation – as the market clearly does when the 10-year risk free rate is 1.34% – then there is no downside risk holding Treasuries. You will happily collect $1.34 for each $100 invested semi-annually and the price of a beer or a McDonalds in 10-years time will be exactly the same as it is today. (Which it won't.)

Bonds have rallied strongly in recent weeks – clearly telling us the expectations of a strong global recovery have stalled. There is little upside to holding bonds. Just certainty. If the global economy does staggering well you won't get $2 back on your $100 investment. The only way you get more at maturity is if we see deflation – when the price of a beer is less in 10 years time than it is today.

Yet, we all know the world is a very uncertain place – its been illustrated by supply chain shifts and breaks, and rising trade hassle and protectionism. Inflation is not only likely – but nailed on. And that means any pension fund buying bonds today to pay your pension tomorrow – is going to fail unless they find other ways to generate returns.

It's the same problem if they buy equity. Long term, bonds outperform, but today we believe stocks are the only place to generate Alpha. If you want upside, then buy stocks. If the global economy rallies and grows, then profits rise and companies become more valuable yada, yada The downside? If the global economy stalls, companies make less money, the price falls or they collapse completely and you get nothing back.

How can the two markets be telling us such a contradictory story?

Distortion is a terrible thing. It affects minds and they way we think about markets.

And this is what I suddenly realised yesterday talking to my chums yesterday. We all noted the same thing – those of us of a certain age are watching younger, more nimble financial minds take over our business. That's normal. They have different perspectives and different reads on what's happening and No One Working In Global Finance Today Under the Age of 32 has ever known markets that were undistorted by QE!

Think about it a second – central bank policies holding interest rates artificially low and them standing ever-ready to support global markets from the consequences of induced bubble conditions – have been the dominant theme of market for 12 years now. A whole generation of very clever bankers and investment managers are maturing into senior positions across the global financial industry having known nothing else.

It amazes me in our own internal discussions how the divide between we few surviving old fogey's who remember free market currency crashes, bond market collapses and equity tumbles, and the younger financiers who can just accept the distortions caused by central banks to avoid these events, as a factor to include in their market expectations..

That's probably why anyone over 40 is such a bear and convinced the market is unsustainable, while the younger generation is far more accepting of distortion as a permanent market reality..

Remember when it comes to generating investment returns, it's not what you think, but what the market thinks that matters. It is just a voting machine

(And, by the way, the only way funds are going to make proper returns in these markets is probably to shift out of distorted financial assets (bonds and equity) and start buying real world assets linked to reality that's a story for tomorrow!)

* * *

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J J Pettigrew 5 hours ago (Edited)

In the past year the combined QE of the EU plus the Fed went from $8.3 Tr to $17.4 Tr. That is massive economic stimulus and rate suppression. It is estimated by the Fed that for each $ 1Tr of QE in the US, there is a 50 BP reduction from what would have been market interest rates. So, $4 trillion of QE by the Fed equals 200 BP of rate reduction. If inflation is running at 3%, and then there is 2% QE reduction, then real Fed Funds rates are around 500 BP negative. QE is completely distorting the bond market. That is driving a lot of the stock market growth

NoDebt 5 hours ago

Well, for sure, one thing UST rates are NOT is a proxy for inflation. Haven't been in a long time.

They are a proxy for where the Fed wants the rates to be. Nothing more. And that is mostly driven by the need to finance profligate federal government deficits. What the market won't buy at a given rate, the Fed will buy. But make no mistake, the rate will be what they want it to be. Simple as that.

buzzsaw99 5 hours ago

That the reflation trade is fading fast? Falling bond yields = rising bond prices, and are a sign the market anticipates a slowdown and declining inflationary threat...

ah, ********. there is no market.

Herdee 3 hours ago (Edited)

The numbers are 3.5% for the U.S. and 2.5% for Japan. Hit those numbers on interest rates and it's game over. Neither one of them at that point according to their tax revenues could even make a payment on the interest, let alone make a principle payment.

Adino 2 hours ago

Yeah, I'd love for someone to explain to me how $30 trillion + debt and over $130 trillion in unfunded liabilities gets paid off without hyperinflation.

Especially when the frn itself is the primary source of the debt.

bshirley1968 PREMIUM 4 hours ago

Sure, whatever Blain.

It's just time to throw bond traders a bone. Two weeks from now stawks will be once again pushing new records and we'll be talking about "rising interest" rates.

The narrative changes.......consistently.

How long ago were we hearing about the significance of 1.75% on the ten year......as stawks rallied to all time highs day after day? Now we are supposed to be scared because rates are falling......and telling us there is "risk" out there.

The ******** is thick.......and it's all ********.

Hal n back 4 hours ago

meanwhile, this week a 10.7 ounce bag of M&M's went up 11%.

90% hamburger meat is $4 a pound on sale.

eggs, which do fluctuate, are 1.49 a dozen for large (they were 88 cents not too long ago)

cereals are up in price or down in content.

A bagel is now a buck without the smear.

Too bad there is not an official true inflation rate. even when the govt does it by region, its not correct.

Actually too bad government is not held accountable. On a fair and even basis.

ChromeRobot 5 hours ago

Yeah there is no possible way that the "Japanofication" of US bonds and economy can occur. Our CB is much smarter than theirs. Lol, lol, lol.... The 10yr has appreciated 10% in a month! Who cares about the yield. Negative yields on German bunds. This guy kills me!

Heroic Couplet 5 hours ago

The libertarian magazine Reason yesterday had an interesting article about the 10 year Treasury and how student loan interest rates are tied to it. Now, if the 10 year goes down, are we going to see the 3% student loan interest rate and the 6% student loan interest rate go down? OF COURSE NOT.

gcjohns1971 1 hour ago

The US Defaulted in 1790 "Continentals" 1824 "He killed the Bank", the Civil War "Greenbacks", arguably the Panic of 1907, 1933 "Gold Confiscation", 1971 "Temporary suspension of Convertibility...Like the Pound Sterling in 1914!..

Kreditanstalt 3 hours ago

"...the price of a beer or a McDonalds in 10-years time will be exactly the same as it is today. (Which it won't.)"

But the type who buy US government bonds don't care about the price of burgers. They only plan to flip the thing back to the next Greater Fool...or THE FED

[Jul 04, 2021] The most bitterly funny story of the week is that a defector from North Korea thinks that even her homeland is 'not as nuts' as the indoctrination now forced on Western students

Jul 04, 2021 | www.zerohedge.com


As Peter Hitchens noted recently "the most bitterly funny story of the week is that a defector from North Korea thinks that even her homeland is 'not as nuts' as the indoctrination now forced on Western students."

One of Yeonmi Park's initial shocks upon starting classes at Colombia University was to be met with a frown after revealing to a staff member that she enjoyed reading Jane Austen. "Did you know," Ms. Park was sternly admonished, "that those writers had a colonial mind-set? They were racists and bigots and are subconsciously brainwashing you."

But after encountering the new requirement for the use of gender-neutral pronouns, Yeonmi concluded: "Even North Korea is not this nuts North Korea was pretty crazy, but not this crazy." Devastatingly honest, but not exactly a compliment to what once might have been the land of her dreams.

Sadly, Hitchens reports that her previous experience served Yeonmi well to adapt to her new situation: "She came to fear that making a fuss would affect her grades and her degree. Eventually, she learned to keep quiet, as people do when they try to live under intolerant regimes, and let the drivel wash over her."

Eastern European readers will unfailingly understand what it is that Hitchens meant to say.

[Jul 03, 2021] Opinion: The looming stagflationary debt crisis will deliver a one-two punch to markets and economies by Nouriel Roubini

Highly recommended!
Notable quotes:
"... For now, loose monetary and fiscal policies will continue to fuel asset and credit bubbles, propelling a slow-motion train wreck. The warning signs are already apparent in today's high price-to-earnings ratios SPX , low equity risk premiums, inflated housing and tech assets COMP , and the irrational exuberance surrounding special purpose acquisition companies (SPACs), the crypto sector BTCUSD, , high-yield corporate debt , collateralized loan obligations, private equity, meme stocks AMC, and runaway retail day trading. ..."
"... But meanwhile, the same loose policies that are feeding asset bubbles will continue to drive consumer price inflation, creating the conditions for stagflation whenever the next negative supply shocks arrive. Such shocks could follow from renewed protectionism; demographic aging in advanced and emerging economies; immigration restrictions in advanced economies; the reshoring of manufacturing to high-cost regions; or the balkanization of global supply chains. ..."
"... More broadly, the Sino-American decoupling threatens to fragment the global economy at a time when climate change and the COVID-19 pandemic are pushing national governments toward deeper self-reliance. ..."
"... Making matters worse, central banks have effectively lost their independence, because they have been given little choice but to monetize massive fiscal deficits to forestall a debt crisis. With both public and private debts having soared, they are in a debt trap. Central banks will be damned if they do and damned if they don't, and many governments will be semi-insolvent and thus unable to bail out banks, corporations, and households. The doom loop of sovereigns and banks in the eurozone after the global financial crisis will be repeated world-wide ..."
"... When former Fed Chair Paul Volcker hiked rates to tackle inflation in 1980-82, the result was a severe double-dip recession in the United States and a debt crisis and lost decade for Latin America. But now that global debt ratios are almost three times higher than in the early 1970s, any anti-inflationary policy would lead to a depression, rather than a severe recession. The question is not if but when. ..."
Jun 30, 2021 | www.marketwatch.com

Roubini warns: After 'the Minsky Moment' crashes overheated speculative markets, 'the Volcker Moment' will will arrive to crash the debt-burdened global economy

( Project Syndicate ) -- In April, I warned that today's extremely loose monetary and fiscal policies, when combined with a number of negative supply shocks, could result in 1970s-style stagflation (high inflation alongside a recession). In fact, the risk today is even bigger than it was then.

After all, debt ratios in advanced economies and most emerging markets were much lower in the 1970s, which is why stagflation has not been associated with debt crises historically. If anything, unexpected inflation in the 1970s wiped out the real value of nominal debts at fixed rates, thus reducing many advanced economies' public-debt burdens.

The warning signs are already apparent in today's high price-to-earnings ratios, low equity risk premiums, inflated housing and tech assets, and the irrational exuberance surrounding special purpose acquisition companies (SPACs), the crypto sector, high-yield corporate debt, collateralized loan obligations, private equity, meme stocks, and runaway retail day trading.

Conversely, during the 2007-08 financial crisis, high debt ratios (private and public) caused a severe debt crisis -- as housing bubbles burst -- but the ensuing recession led to low inflation, if not outright deflation. Owing to the credit crunch, there was a macro shock to aggregate demand, whereas the risks today are on the supply side.

Worst of both worlds

We are thus left with the worst of both the stagflationary 1970s and the 2007-10 period. Debt ratios are much higher than in the 1970s, and a mix of loose economic policies and negative supply shocks threatens to fuel inflation rather than deflation, setting the stage for the mother of stagflationary debt crises over the next few years.

For now, loose monetary and fiscal policies will continue to fuel asset and credit bubbles, propelling a slow-motion train wreck. The warning signs are already apparent in today's high price-to-earnings ratios SPX , low equity risk premiums, inflated housing and tech assets COMP , and the irrational exuberance surrounding special purpose acquisition companies (SPACs), the crypto sector BTCUSD, , high-yield corporate debt , collateralized loan obligations, private equity, meme stocks AMC, and runaway retail day trading.

But meanwhile, the same loose policies that are feeding asset bubbles will continue to drive consumer price inflation, creating the conditions for stagflation whenever the next negative supply shocks arrive. Such shocks could follow from renewed protectionism; demographic aging in advanced and emerging economies; immigration restrictions in advanced economies; the reshoring of manufacturing to high-cost regions; or the balkanization of global supply chains.

Recipe for macroeconomic disruption

More broadly, the Sino-American decoupling threatens to fragment the global economy at a time when climate change and the COVID-19 pandemic are pushing national governments toward deeper self-reliance. Add to this the impact on production of increasingly frequent cyberattacks on critical infrastructure and the social and political backlash against inequality, and the recipe for macroeconomic disruption is complete.

Making matters worse, central banks have effectively lost their independence, because they have been given little choice but to monetize massive fiscal deficits to forestall a debt crisis. With both public and private debts having soared, they are in a debt trap. Central banks will be damned if they do and damned if they don't, and many governments will be semi-insolvent and thus unable to bail out banks, corporations, and households. The doom loop of sovereigns and banks in the eurozone after the global financial crisis will be repeated world-wide

As inflation rises over the next few years, central banks will face a dilemma. If they start phasing out unconventional policies and raising policy rates to fight inflation, they will risk triggering a massive debt crisis and severe recession; but if they maintain a loose monetary policy, they will risk double-digit inflation -- and deep stagflation when the next negative supply shocks emerge.

But even in the second scenario, policy makers would not be able to prevent a debt crisis. While nominal government fixed-rate debt in advanced economies can be partly wiped out by unexpected inflation (as happened in the 1970s), emerging-market debts denominated in foreign currency would not be. Many of these governments would need to default and restructure their debts.

At the same time, private debts in advanced economies would become unsustainable (as they did after the global financial crisis), and their spreads relative to safer government bonds would spike, triggering a chain reaction of defaults. Highly leveraged corporations and their reckless shadow-bank creditors would be the first to fall, soon followed by indebted households and the banks that financed them.

The Volcker Moment

To be sure, real long-term borrowing costs may initially fall if inflation rises unexpectedly and central banks are still behind the curve. But, over time, these costs will be pushed up by three factors. First, higher public and private debts will widen sovereign and private interest-rate spreads. Second, rising inflation and deepening uncertainty will drive up inflation risk premiums. And, third, a rising misery index -- the sum of the inflation and unemployment rate -- eventually will demand a "Volcker Moment."

When former Fed Chair Paul Volcker hiked rates to tackle inflation in 1980-82, the result was a severe double-dip recession in the United States and a debt crisis and lost decade for Latin America. But now that global debt ratios are almost three times higher than in the early 1970s, any anti-inflationary policy would lead to a depression, rather than a severe recession. The question is not if but when.

Under these conditions, central banks will be damned if they do and damned if they don't, and many governments will be semi-insolvent and thus unable to bail out banks, corporations, and households. The doom loop of sovereigns and banks in the eurozone after the global financial crisis will be repeated world-wide, sucking in households, corporations, and shadow banks as well.

As matters stand, this slow-motion train wreck looks unavoidable. The Fed's recent pivot from an ultra-dovish to a mostly dovish stance changes nothing. The Fed has been in a debt trap at least since December 2018, when a stock- and credit-market crash forced it to reverse its policy tightening a full year before COVID-19 struck. With inflation rising and stagflationary shocks looming, it is now even more ensnared.

So, too, are the European Central Bank, the Bank of Japan, and the Bank of England. The stagflation of the 1970s will soon meet the debt crises of the post-2008 period. The question is not if but when.

Nouriel Roubini is CEO of Roubini Macro Associates and chief economist at Atlas Capital Team.

This commentary was published with permission of Project Syndicate -- The Looming Stagflationary Debt Crisis.

See also:

[Jul 03, 2021] U.S. Wins International Backing for Global Minimum Tax

Jul 02, 2021 | www.wsj.com

The U.S. has won international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies , a major step toward securing a final agreement on a key element of the Biden administration's domestic plans for revenue raising and spending.

Officials from 130 countries that met virtually agreed Thursday to the broad outlines of what would be the most sweeping change in international taxation in a century. Among them were all of the Group of 20 major economies, including China and India, which previously had reservations about the proposed overhaul.

Those governments now will seek to pass laws ensuring that companies headquartered in their countries pay a minimum tax rate of at least 15% in each of the nations in which they operate, reducing opportunities for tax avoidance .

[Jul 03, 2021] Another important aspect of the collapse of neoliberalism -- reaching the natural resources limits, especially fossil energy extraction limits by George Kaplan

Notable quotes:
"... The US seems to be especially vulnerable to issues caused by lack of precarity as it has such a poor welfare system, previously relying on infinite growth to smooth things over or a, now failing, religious faith to keep things in order; prolonged economic and political success that has led to a sense of entitlement and self-belief in the American way, a history of putting personal liberty above all else, which embraces competition rather than co-operation; and a world beating phobia of death well beyond when reproductive age has passed. ..."
"... The gig economy, middle class collapse, MAGA, BLM (and the police actions that prompted its rise), cancel culture, (un)reality TV's attraction, FOMO, the increase in low level strife, self-harming, on-line pornography addiction, the Oxycodone/Fentanyl epidemic etc. are all manifestations and/or causes of that precarity. Civil wars and major revolts (and almost any that succeed in their aims) tend to happen only when there is intra elite infighting rather than uprisings from below. The most likely catalyst for that at the moment is Trump, which may be a good sign given his ineffectualness, ineptitude and general repulsive lack of charisma; anyone even a bit more like a real human being could cause serious ructions. ..."
Jun 26, 2021 | peakoilbarrel.com
Off Topic Finish: Waiting for the Great Leap Forward

I have been reading "˜A More Contested World: Global Trends 2040' by The National Intelligence Council; slowly as there's a lot in it but also a lot missing. No mention of specific resource limits, no discussion of GM just general "˜technology' concerns concentrating on AI and of course, god forbid any mention of overpopulation. It is very US-centric "" in the good scenarios the world gets to a better place only through US leadership "" and humanist focused with no consideration of the rights of the earth in general, only the perpetuation of our civilisation and to that end all future scenarios are some variant of technology led, growth obsessed, centralised BAU (maybe not with full globalism but still based around hegemonic power structures at some level). It's a view from mainstream economists and politicians carrying all the normal drawbacks that those words imply: i.e. bad things happen when the world doesn't do as it's told to do by us, and if you don't agree with us about what constitutes "˜bad' then you're wrong about that too.

I think similar studies from more global or European NGOs and governmental departments (both from individual countries or the EU) tend to be more objective and those from the militaries (from anywhere in the west) tend to be more honestly subjective. See for example: The Adaptation Committee's Independent Assessment of UK Climate Risk , Decoupling debunked "" Evidence and arguments against green growth as a sole strategy for sustainability ; Reinforcing Environmental Dimensions of European Foreign and Security Policy ; Arctic Climate Change Update 2021: Key Trends And Impacts ; Our Future on Earth ; and The State of the Global Climate 2020 or, for military sources: Implications of Climate Change for the U.S. Army ; NATO is responding to new challenges posed by climate change ; Ministry of Defence Climate Change and Sustainability Strategic Approach ; and Armed Forces, Capabilities and Technologies in the 21st Century Environmental Dimensions of Security .

The rising wealth gap and other inequality issues are a common theme in these global risk studies. However, theories in some recent studies have proposed that it is not inequality itself that is the problem so much as a prolonged sense of precarity (a new word to me and, apparently, to MS spellchecker, but it is essentially identical to precariousness) of the non-elites that accompanies it.

This makes sense from an evolutionary standpoint, as parents desire a stable and resource abundant household in which their children can be expected to reach a reproductive age. This might be expected to come more from the female side, as they are tied to their offspring more than males, who are free to spread their sperm and move on. I have read reorts, possibly anecdotal only, that it will invariably be the woman that will be the party insisting on buying the largest house that can be attained, whether affordable or not. I'm all for gender equality and women's rights but some things are innate and equal-rights do not mean equal hormones, ambitions, impulses and behaviors.

From this viewpoint therefore, solving the wealth inequality issue is actually anathema to population reduction. For example the already low birth rate in Italy had a further step down caused by the increased precarity due to the economic impact of Covid-19, the government has responded by offering direct incentives for having children. The apparent short term aims are in direct opposition to the what is best long term, this is called a dilemma rather than a problem.

The US seems to be especially vulnerable to issues caused by lack of precarity as it has such a poor welfare system, previously relying on infinite growth to smooth things over or a, now failing, religious faith to keep things in order; prolonged economic and political success that has led to a sense of entitlement and self-belief in the American way, a history of putting personal liberty above all else, which embraces competition rather than co-operation; and a world beating phobia of death well beyond when reproductive age has passed.

The neologism for the growing proportion of people affected by precarity is the precariat. The always readable Tim Watkins has a new post that touches on some of theses issues, with a particular eye on the possibility (or not) of significant inflationary issues ( The Everything Death Spiral ).

The gig economy, middle class collapse, MAGA, BLM (and the police actions that prompted its rise), cancel culture, (un)reality TV's attraction, FOMO, the increase in low level strife, self-harming, on-line pornography addiction, the Oxycodone/Fentanyl epidemic etc. are all manifestations and/or causes of that precarity. Civil wars and major revolts (and almost any that succeed in their aims) tend to happen only when there is intra elite infighting rather than uprisings from below. The most likely catalyst for that at the moment is Trump, which may be a good sign given his ineffectualness, ineptitude and general repulsive lack of charisma; anyone even a bit more like a real human being could cause serious ructions.

IRON MIKE IGNORED 06/26/2021 at 4:54 pm

Great post George thank you. It is quite evident for the astute observer that western democracy has over the years turned more and more into an amalgam of kleptocracy, oligarchy and plutocracy.

How many countries have colonial Europe and U.S foreign policy destroyed in the name of "democracy" and "freedom" ?
I've lost count.

Plato famously is said to have said:
"If you do not take an interest in the affairs of your government, then you are doomed to live under the rule of fools."

In Platos book the republic, Socrates despises democracy as one of the worst forms of government. His criticism those many years ago still resonates till this day (in my opinion).

WIthout invoking logic, I feel the world is in uncharted waters and heading towards a precipice which no one will see coming.

You have a typo, I believe you mean oxycontin (oxycodone) epidemic. HICKORY IGNORED HOLE IN HEAD IGNORED 06/27/2021 at 1:12 pm

Hicks , not being based in USA ,my view maybe incorrect . The US is undergoing an identity crisis . Where in the world did we have this gender crisis , male "" female heck can't people see between their thighs ? Red-Blue . White Supremacy vs BLM . North vs South . Growing up in the 70's US entrepreneurship was my inspiration . My hero's were Ford, Sloan , Edison etc and what do we have today, Musk ? What changed that a society where work was an ethic has transformed into a system where everyone is looking for an opportunity to suck at the teat of the government . Amazing transformation for someone who has a reference point . Now I am going into the stupid zone . What changed was the net surplus energy available per capita to the US citizen . Once that flipped it was downhill all the way . I reserve the right to be incorrect in my assessment .

06/27/2021 at 10:45 am

Regarding the off-topic finish, I don't think most people realize how fragile is the glue holding the US together.
Fragmentation along tribal lines is the biggest theme in American culture.
If a minority collection of tribes succeeds in the attempts to reverse election results, even more than the Electoral College already does, the country will undergo a major restructuring (polite description) with no guarantees on a recognizable outcome.

[Jul 03, 2021] Larry Summers Sees 5% Inflation At The End Of 2021

Notable quotes:
"... This is not the first time Summers has predicted that the firehose of fiscal and monetary stimulus will unleash soaring inflation. While career economists at the White House and Fed - who have peasants doing their purchases for them - urge Americans to ignore the current hyperinflation episode, saying that the recent inflation surge will soon pass, Summers has been unique among his fellow Democrats in predicting that massive monetary and fiscal stimulus alongside the reopening of the economy would spark considerable price pressures. ..."
"... Asked how financial markets may behave in the rest of 2021, Summers said "there will probably be more turbulence" as traders react to faster inflation by pushing up bond yields. "We've got a lot of processing ahead of us in markets," he said. ..."
Jul 03, 2021 | www.zerohedge.com

It may not be quite hyperinflation - loosely defined as pricing rising at a double-digit clip or higher - but if former Treasury Secretary and erstwhile democrat Larry Summers is right, it will be halfway there in about six months.

One day after Bank of America warned that the coming "hyperinflation" will last at least 2 and as much as 4 years - whether or not one defines that as transitory depends on whether one has a Federal Reserve charge card to fund all purchases in the next 4 years - Larry Summers, who is this close from being excommunicated from the Democrat party, predicted inflation will be running "pretty close" to 5% at the end of this year and that bond yields will rise as a result over the rest of 2021.

Considering that consumer prices already jumped 5% in May from the previous year, his forecast is not much of a shock.

Speaking on Bloomberg TV, Summers said that "my guess is that at the end of the year inflation will, for this year, come out pretty close to 5%," adding that "it would surprise me if we had 5% inflation with no effect on inflation expectations." If he is right, the recent reversal in one-year inflation expectations which dipped from 4.6% to 4.2% according to the latest UMich consumer sentiment survey, is about to surge to new secular highs.

This is not the first time Summers has predicted that the firehose of fiscal and monetary stimulus will unleash soaring inflation. While career economists at the White House and Fed - who have peasants doing their purchases for them - urge Americans to ignore the current hyperinflation episode, saying that the recent inflation surge will soon pass, Summers has been unique among his fellow Democrats in predicting that massive monetary and fiscal stimulus alongside the reopening of the economy would spark considerable price pressures.

Asked how financial markets may behave in the rest of 2021, Summers said "there will probably be more turbulence" as traders react to faster inflation by pushing up bond yields. "We've got a lot of processing ahead of us in markets," he said.

Ironically, Summers - who now teaches at Harvard University whose president he was not too long ago when he hung out with his buddy Jeffrey Epstein...


Plus Size Model 5 hours ago (Edited)

Exactly!! Not only that, it's not just the FED that is contributing to inflation. We can also blame the SEC and the DOJ. I've never seen a Zero Hedge article blaming stock price appreciation or buybacks for causing inflation or increasing the money supply. The DOJ never enforces antitrust laws. The FBI never investigates money laundering from overseas that creates artificial real estate appreciation that inflates the money supply when people take out HELOC. There are other oversight bodies that, in a sane world, would not allow foreign investment in real estate. Bitcoin and others are a new tool that is being used to manipulate the money supply. It's comical how coins always go down when the little guys are holding the bag and go up when Coinbase executives want to cash out.

Another thing, this artificial chip shortage, punitive tariffs, and new tax laws are also adding to price increases.

Totally_Disillusioned 1 hour ago

Speculative investments have NEVER been included in the forumulation of CPI that determines inflation rate.

Revolution_starts_now 6 hours ago

Larry Summers is a tool.

gregga777 5 hours ago (Edited) remove link

Banksters in 2010's: We've got to revise how we calculate inflation again to conceal it from the Rubes.

Banksters in 2020: Ho Lee Fuk! Gun the QE engine! Pedal to the metal! Monetize all of the Federal government's debt! Keep those stonks zooming upwards!

Banksters in 2021: Ho Lee Fuk! The Rubes have caught onto our game! Gun the QE engine! Keep that pedal to the metal! Maybe the Rubes won't notice housing prices going up 20% per year?

Summer 2021: Ho Lee Fuk! They are noticing Inflation! We'd better revise how we calculate inflation again to conceal it from the Rubes.

[Jul 03, 2021] Housing Prices Are Going Up. Must They Crash by Kevin Erdmann

When and how another housing bubble will burst? This is the question.
The author forget that the current movement out of the cities into the suburb can lead to the collapse of prices in overpriced areas of big cities like NYC. Also the retain space collapse is evident even to untrained observers. So people moving out of big cities like NYC and cities devastated by riots need to sell their current condos and apartments. To whom?
Jun 29, 2021 | thebusinessnewsindia.com

There are many reports of homebuyers getting into bidding wars and many cities where home prices have appreciated by well more than 10% over the past year. This naturally leads to a concern about market volatility: Must what goes up come down ? Are we repeating the excesses of the early 2000s, when housing prices surged before the market crashed?

Some analysts argue that this time, it's even less likely that prices will fall. Inventories of new homes for sale are very low, and lending standards are much tighter than in 2005. This is true. In fact, the ground is even firmer than it seems.

New home inventories were very high before the Great Recession. Today, they are closer to the level that has been common for decades. The portion of inventory built and ready for move-in is especially low because of supply chain interruptions combined with a sudden boost of demand during the coronavirus pandemic. We shouldn't worry much about a crash when buyers are eagerly snapping up the available homes.

... ... ...

At the June 2006 Federal Reserve meeting, Ben Bernanke said, "It is a good thing that housing is cooling. If we could wave a magic wand and reinstate 2005, we wouldn't want to do that." It's notable that Jerome Powell, who today holds Bernanke's former position as Fed chair, isn't openly pining for a "cooler" housing market.

There is a common belief that before the Great Recession, homebuyers were taken in by the myth that home prices never go down, and they became complacent. Those buyers turned out to be wrong. Yet, even when a concerted effort to kill housing markets succeeded, we had to beat them into submission for three full years before prices relented. Home prices can go down, but we have to work very hard, together, for a long time, to make them fall.

If you are a buyer in a hot market where home prices are 30% higher than they were a year ago, you're getting a 30% worse deal than you could have had back then. Nothing can be done about that. That said, the main things to be concerned with are the factors federal policymakers are in control of. There is little reason to expect housing demand to collapse. If it does, it will require communal intention""federal monetary and credit policies meant to create or accept a sharp drop in demand. And even if federal officials intend for housing construction to collapse, history suggests that a market contraction would push new sales down deeply for an extended period of time before prices relent.

Guest commentaries like this one are written by authors outside the Barron's and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to ideas@barrons.com .

Kevin Erdmann is a visiting research fellow with the Mercatus Center at George Mason University and author of Shut Out: How A Housing Shortage Caused the Great Recession and Crippled Our Economy.

[Jul 02, 2021] Number Of US Truck Drivers Sidelined Due To Substance Abuse Violations Has Surpassed 60,000

Jul 02, 2021 | www.zerohedge.com

Lone_Star 7 hours ago

I don't see what's wrong with truck drivers being all hopped up on amphetamines, they were doing it to bomber pilots during WWII and beyond.

rockstone 7 hours ago

The whole idea is to keep a shipping network from resembling a bombing run.

fxrxexexdxoxmx3 PREMIUM 7 hours ago

Comment of the day

ParkAveSlasher 7 hours ago (Edited)

I would think a bombing run would be the most efficient thing a delivery and offload could resemble

[Jul 02, 2021] More Than 72 Million Americans Are Living Paycheck To Paycheck

The problem is that many people face long term unemployment without substantial emergency funds, which further complicates already difficult situation.
Notable quotes:
"... More than 2K adults to were interviewed to try and ascertain how long they could survive without income. It turns out that approximately 72.4MM employed Americans - 28.4% of the population - believe they wouldn't be able to last for more than a month without a payday. ..."
Jul 02, 2021 | www.zerohedge.com

Imagine you lost your job tomorrow. How long would you be able to sustain your current lifestyle? A week? A month? A year?

As we await Friday's labor market update, Finder has just published the results of a recent survey attempting to gauge the financial stability of the average American in the post-pandemic era.

More than 2K adults to were interviewed to try and ascertain how long they could survive without income. It turns out that approximately 72.4MM employed Americans - 28.4% of the population - believe they wouldn't be able to last for more than a month without a payday.

Another 24% said they expected to be able to live comfortably between two months and six months. That means an estimated 133.6MM working Americans (52.3% of the population) can live off their savings for six months or less before going broke.

On the other end of the spectrum, roughly 8.7MM employed Americans (or 3.4% of the population) say they don't need to rely on a rainy day fund since they have employment insurance which will compensate them should they lose their job.

Amusingly, men appear to be less effective savers than women. Some 32.4MM women (26.7% of American women) say their savings would stretch at most a month, compared to 40MM men (29.9% of American men) who admit to the same. Of those people, 9.7MM women (8% of American women) say their savings wouldn't even stretch a week, compared to 15.5MM men (11.6% of American men) who admit to the same.

A majority of employed Americans over the age of 18 say their savings would last six months at most. About 70.7MM men (52.8% of American men) and 62.8MM women (51.8% of American women) fear they'd be in dire straits within six months of losing their livelihood.

Unsurprisingly, younger people tend to have less of a savings buffer - but the gap between the generations isn't as wide as it probably should be.

While increasing one's income is perhaps the best route to building a more robust nest egg, Finder offered some suggestions for people looking to maximize their savings.

1. Create a budget and stick to it

Look at your monthly income against all of your monthly expenses. Add to them expenses you pay once or twice a year to avoid a surprise when they creep up. After you know where your money is going, you can allot specific amounts to different categories and effectively track your spending.

... ... ...

* * *

Source: Finder

[Jun 26, 2021] There Is No Labor Shortage, Only Labor Exploitation and burning desire not to spend money on training by Sonali Kolhatkar

Notable quotes:
"... Indeed, economists and analysts have gotten used to presenting facts from the perspective of private employers and their lobbyists. The American public is expected to sympathize more with the plight of wealthy business owners who can't find workers to fill their low-paid positions, instead of with unemployed workers who might be struggling to make ends meet. ..."
"... West Virginia's Republican Governor Jim Justice justified ending federal jobless benefits early in his state by lecturing his residents on how, "America is all about work. That's what has made this great country." Interestingly, Justice owns a resort that couldn't find enough low-wage workers to fill jobs. Notwithstanding a clear conflict of interest in cutting jobless benefits, the Republican politician is now enjoying the fruits of his own political actions as his resort reports greater ease in filling positions with desperate workers whose lifeline he cut off. ..."
Jun 12, 2021 | www.nakedcapitalism.com

For the past few months, Republicans have been waging a ferocious political battle to end federal unemployment benefits, based upon stated desires of saving the U.S. economy from a serious labor shortage. The logic, in the words of Republican politicians like Iowa Senator Joni Ernst, goes like this: "the government pays folks more to stay home than to go to work," and therefore, "[p]aying people not to work is not helpful." The conservative Wall Street Journal has been beating the drum for the same argument, saying recently that it was a " terrible blunder " to pay jobless benefits to unemployed workers.

If the hyperbolic claims are to be believed, one might imagine American workers are luxuriating in the largesse of taxpayer-funded payments, thumbing their noses at the earnest "job creators" who are taking far more seriously the importance of a post-pandemic economic growth spurt.

It is true that there are currently millions of jobs going unfilled. The U.S. Bureau of Labor Statistics just released statistics showing that there were 9.3 million job openings in April and that the percentage of layoffs decreased while resignations increased. Taking these statistics at face value, one could conclude this means there is a labor shortage.

But, as economist Heidi Shierholz explained in a New York Times op-ed , there is only a labor shortage if employers raise wages to match worker demands and subsequently still face a shortage of workers. Shierholz wrote, "When those measures [of raising wages] don't result in a substantial increase in workers, that's a labor shortage. Absent that dynamic, you can rest easy."

Remember the subprime mortgage housing crisis of 2008 when economists and pundits blamed low-income homeowners for wanting to purchase homes they could not afford? Perhaps this is the labor market's way of saying, if you can't afford higher salaries, you shouldn't expect to fill jobs.

Or, to use the logic of another accepted capitalist argument, employers could liken the job market to the surge pricing practices of ride-share companies like Uber and Lyft. After consumers complained about hiked-up prices for rides during rush hour, Uber explained , "With surge pricing, Uber rates increase to get more cars on the road and ensure reliability during the busiest times. When enough cars are on the road, prices go back down to normal levels." Applying this logic to the labor market, workers might be saying to employers: "When enough dollars are being offered in wages, the number of job openings will go back down to normal levels." In other words, workers are surge-pricing the cost of their labor.

But corporate elites are loudly complaining that the sky is falling -- not because of a real labor shortage, but because workers are less likely now to accept low-wage jobs. The U.S. Chamber of Commerce insists that "[t]he worker shortage is real," and that it has risen to the level of a "national economic emergency" that "poses an imminent threat to our fragile recovery and America's great resurgence." In the Chamber's worldview, workers, not corporate employers who refuse to pay better, are the main obstacle to the U.S.'s economic recovery.

Longtime labor organizer and senior scholar with the Institute for Policy Studies Bill Fletcher Jr. explained to me in an email interview that claims of a labor shortage are an exaggeration and that, actually, "we suffered a minor depression and not another great recession," as a result of the coronavirus pandemic. In Fletcher's view, "The so-called labor shortage needs to be understood as the result of tremendous employment reorganization, including the collapse of industries and companies."

Furthermore, according to Fletcher, the purveyors of the "labor shortage" myth are not accounting for "the collapse of daycare and the impact on women and families, and a continued fear associated with the pandemic."

He's right. As one analyst put it, "The rotten seed of America's disinvestment in child care has finally sprouted." Such factors have received little attention by the purveyors of the labor shortage myth -- perhaps because acknowledging real obstacles like care work requires thinking of workers as real human beings rather than cogs in a capitalist machine.

Indeed, economists and analysts have gotten used to presenting facts from the perspective of private employers and their lobbyists. The American public is expected to sympathize more with the plight of wealthy business owners who can't find workers to fill their low-paid positions, instead of with unemployed workers who might be struggling to make ends meet.

Already, jobless benefits were slashed to appallingly low levels after Republicans reduced a $600-a-week payment authorized by the CARES Act to a mere $300 a week , which works out to $7.50 an hour for full-time work. If companies cannot compete with this exceedingly paltry sum, their position is akin to a customer demanding to a car salesperson that they have the right to buy a vehicle for a below-market-value sticker price (again, capitalist logic is a worthwhile exercise to showcase the ludicrousness of how lawmakers and their corporate beneficiaries are responding to the state of the labor market).

Remarkably, although federal jobless benefits are funded through September 2021, more than two dozen Republican-run states are choosing to end them earlier. Not only will this impact the bottom line for millions of people struggling to make ends meet, but it will also undermine the stimulus impact that this federal aid has on the economies of states when jobless workers spend their federal dollars on necessities. Conservatives are essentially engaged in an ideological battle over government benefits, which, in their view, are always wrong unless they are going to the already privileged (remember the GOP's 2017 tax cuts for corporations and the wealthy?).

The GOP has thumbed its nose at federal benefits for residents before. In order to underscore their ideological opposition to the Affordable Care Act, recall how Republican governors eschewed billions of federal dollars to fund Medicaid expansion. These conservative ideologues chose to let their own voters suffer the consequences of turning down federal aid in service of their political opposition to Obamacare. And they're doing the same thing now.

At the same time as headlines are screaming about a catastrophic worker shortage that could undermine the economy, stories abound of how American billionaires paid peanuts in income taxes according to newly released documents, even as their wealth multiplied to extraordinary levels. The obscenely wealthy are spending their mountains of cash on luxury goods and fulfilling childish fantasies of space travel . The juxtaposition of such a phenomenon alongside the conservative claim that jobless benefits are too generous is evidence that we are indeed in a "national economic emergency" -- just not of the sort that the U.S. Chamber of Commerce wants us to believe.

West Virginia's Republican Governor Jim Justice justified ending federal jobless benefits early in his state by lecturing his residents on how, "America is all about work. That's what has made this great country." Interestingly, Justice owns a resort that couldn't find enough low-wage workers to fill jobs. Notwithstanding a clear conflict of interest in cutting jobless benefits, the Republican politician is now enjoying the fruits of his own political actions as his resort reports greater ease in filling positions with desperate workers whose lifeline he cut off.

When lawmakers earlier this year debated the Raise the Wage Act , which would have increased the federal minimum wage, Republicans wagged their fingers in warning, saying higher wages would put companies out of business. Opponents of that failed bill claimed that if forced to pay $15 an hour, employers would hire fewer people, close branches, or perhaps shut down altogether, which we were told would ultimately hurt workers.

Now, we are being told another story: that companies actually do need workers and won't simply reduce jobs, close branches, or shut down and that the government therefore needs to stop competing with their ultra-low wages to save the economy. The claim that businesses would no longer be profitable if they are forced to increase wages is undermined by one multibillion-dollar fact: corporations are raking in record-high profits and doling them out to shareholders and executives. They can indeed afford to offer greater pay, and when they do, it turns out there is no labor shortage .

American workers are at a critically important juncture at this moment. Corporate employers seem to be approaching a limit of how far they can push workers to accept poverty-level jobs. According to Fletcher, "This moment provides opportunities to raise wage demands, but it must be a moment where workers organize in order to sustain and pursue demands for improvements in their living and working conditions."

Sonali Kolhatkar is the founder, host and executive producer of "Rising Up With Sonali," a television and radio show that airs on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute. This article was produced by Economy for All , a project of the Independent Media Institute.

[Jun 26, 2021] Paul Tudor Jones Says Inflation risk isn't transitory and that Economic Orthodoxy Has Turned Upside Down

Jun 14, 2021 | finance.yahoo.com

Paul Tudor Jones said economic orthodoxy has been turned upside down with the Federal Reserve focused on unemployment even as inflation and financial stability are growing concerns.

Inflation risk isn't transitory, the hedge fund manager said in an interview on CNBC.

If the Fed says the U.S. economy is on the right path, "then I would go all in on the inflation trade, buy commodities, crypto and gold," he said. "If they course correct, you will get a taper tantrum and a sell off in fixed income and a correction in stocks.

[Jun 26, 2021] Exxon Prepares to Cull U.S. White-Collar Ranks by Up to 10%

Jun 22, 2021 | www.bloomberg.com


By Joe Carroll and Kevin Crowley
June 21, 2021, 3:30 PM EDT Updated on June 21, 2021, 4:00 PM EDT
Performance-improvement program will involve 5%-10% annually
Reviews are separate from sweeping job cuts disclosed in 2020

Exxon Mobil Corp. is preparing to reduce headcount at its U.S. offices by between 5% and 10% annually for the next three to five years by using its performance-evaluation system to suss out low performers, according to people familiar with the matter.

The cuts will target the lowest-rated employees relative to peers, and for that reason will not be characterized as layoffs, the people said, asking not to be identified because the information isn't public. While such workers are typically put on a so-called performance improvement plan, many are expected to eventually leave on their own. This year's evaluation is happening now but affected employees have not yet been notified, the people said.

"Our annual performance assessment process has been occurring over the last several months," Exxon spokesman Casey Norton said in an email. "Where employees are not contributing to their highest ability, they may need to participate in an improvement plan. This is an annual process which has been in place for many years, and it is meant to improve performance. This process is unrelated to workforce reduction plans."

The plan is separate from Exxon's announcement last year that it will cut 14,000 jobs worldwide by 2022, and it would extend reductions well beyond that original time frame. It's a tumultuous time for Exxon, which is still grappling with the fallout from last month's annual meeting, when shareholders rebuffed top management and replaced a quarter of the company's board over climate and financial concerns.

Exxon had 72,000 employees globally at the end of last year, of which 40% worked in the U.S., according to a company filing.

White-Collar Jobs

Several high-profile traders have also left in the last few weeks. While the performance-review process mostly applies to white-collar jobs in areas such as engineering, finance and project management, there's no suggestion the trading departures were related to the review program.

Exxon's other cost-cutting initiatives have included suspending bonuses and halting employee-contribution matches to 401k savings plans as the pandemic crushed demand for crude, saddling the company with a record annual loss.

International crude prices have surged 44% this year to almost $75 a barrel, improving Exxon's financial position markedly. Still, the supermajor has some way to go to pay down debts accumulated during 2020's market collapse. A smaller and more efficient workforce is key to further improvements.

Exxon achieved $3 billion of annual "structural cost reductions" in 2020 and will continue to make savings through 2023, Chief Executive Officer Darren Woods said at the annual meeting in May.

"We've got additional work to continue to take advantage of the new organization and find opportunities to reduce our costs," Woods said.

Exxon's shares rose 3.6% to $62.59 at the close in New York trading amid a broad rally in energy stocks on stronger oil prices.

[Jun 25, 2021] U.S. inflation likely to remain elevated for up to four years - BofA

Jun 25, 2021 | finance.yahoo.com

BofA expects U.S. inflation to remain elevated for two to four years, against a rising perception of it being transitory, and said that only a financial market crash would prevent central banks from tightening policy in the next six months.

It was "fascinating so many deem inflation as transitory when stimulus, economic growth, asset/commodity/housing inflations (are) deemed permanent", the investment bank's top strategist Michael Hartnett said in a note on Friday.

Thyagaraju Adinarayan
Fri, June 25, 2021, 5:24 AM
By Thyagaraju Adinarayan

LONDON (Reuters) - BofA expects U.S. inflation to remain elevated for two to four years, against a rising perception of it being transitory, and said that only a financial market crash would prevent central banks from tightening policy in the next six months.

It was "fascinating so many deem inflation as transitory when stimulus, economic growth, asset/commodity/housing inflations (are) deemed permanent", the investment bank's top strategist Michael Hartnett said in a note on Friday.

Hartnett thinks inflation will remain in the 2%-4% range over the next 2-4 years. U.S. inflation has averaged 3% in the past 100 years, 2% in the 2010s, and 1% in 2020, but it has been annualising at 8% so far in 2021, Bofa said in the note.

Global stocks were holding near record highs hours ahead of the reading of May core personal consumption expenditures index, an inflation gauge tracked closely by the Fed. The gauge is estimated to rise 3.4% year-on-year.

... In the week to Wednesday, investors pumped $7 billion into equities and $9.9 billion into bond funds, while pulling $53.5 billion from cash funds, BofA calculated, using EPFR data.

[Jun 25, 2021] Meme-based investing 'is a totally nihilistic parody of actual investing,' says Jeremy Grantham, who called 3 stock-market bu

Jun 25, 2021 | www.marketwatch.com

Meme-based investing 'is a totally nihilistic parody of actual investing,' says Jeremy Grantham, who called 3 stock-market bubbles Last Updated: June 24, 2021 at 7:18 p.m. ET First Published: June 24, 2021 at 3:16 p.m. ET By Mark DeCambre 18 'This is it guys, the biggest U.S. fantasy trip of all time,' says Grantham

Jeremy Grantham, founder of GMO, speaks in 2012 in Oxford, England GETTY IMAGES
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Listen to Article 3 minutes 00:00 / 03:10 1x

"'Meme' investing -- the idea that something is worth investing in, or rather gambling on, simply because it is funny -- has become commonplace. It's a totally nihilistic parody of actual investing. This is it guys, the biggest U.S. fantasy trip of all time."

That's Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., in a recent interview with Bloomberg News , lamenting the state of an investment world that has prominently featured the emergence of meme-linked trading in stocks like GameStop Corp. GME, -1.32% , AMC Entertainment Holdings AMC, -4.66% and BlackBerry Ltd. BB, -4.42% , among others.

Deep Dive: We put AMC, GameStop and other meme stocks' numbers to the test -- here's which ones came out on top

Plus: We put 6 more meme stocks' numbers to the test, and the differences are telling

Grantham noted that the meme cryptocurrency dogecoin DOGEUSD, -1.74% is "worth billions in the market and not even pretending to be [a] serious [investment]."

"Dogecoin was created as a joke to make fun of cryptocurrencies being worthless, and, not only has it taken off, but it's such a success that second-level joke cryptocurrencies making fun of dogecoin have gone to multibillion-dollar valuations," he said.

Indeed, AMC Entertainment is up over 2,500% in 2021 thus far; GameStop has gained over 1,000% in the year to date; dogecoin is up by about 5,000%, despite a precipitous drop; and BlackBerry shares are up over 90% so far this year.

NOW PLAYING: The Road to Regulating Crypto 00:01 03:05

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By comparison, traditional assets have seen more mundane returns. The Dow Jones Industrial Average DJIA, +0.69% is up a more than respectable 12% so far in 2021, while the S&P 500 SPX, +0.33% has returned over 13% in the year to date and the Nasdaq Composite COMP, -0.06% has made a powerful comeback in June to achieve a gain of nearly 12% in the first six months of the year.

Grantham views the social-media-driven meme-stock moves as concerning and indicative of bubbles percolating in financial markets that will ultimately need to be contended with.

Grantham is worth paying attention to due to his prescient calls over the years. He said that stocks were overvalued in 2000 and again in 2007, anticipating subsequent market downturns, the Wall Street Journal reports . Grantham also signaled that elements of the financial market had become unmoored from reality leading up to the 200809 financial crisis.

However, his bearishness thus far hasn't helped his core investment strategies, amid a relentless run-up in stocks, be they traditional or meme. The Nasdaq Composite has already put in back-to-back record closes this week and was aiming for a 17th record finish on Thursday, while the S&P 500 index was eyeing a record of its own.

What the News Means for You and You

[Jun 25, 2021] Near-term global bond market correction likely-strategists- Reuters poll

Jun 25, 2021 | finance.yahoo.com

A significant global bond market correction is likely in the next three months as central bankers eye the exit door from pandemic emergency policy, according to a Reuters poll of strategists who also forecast modestly higher yields in a year.

Financial markets were caught off guard by the Federal Reserve's surprisingly hawkish tone at its meeting last week, sparking a sell-off in equities and a safe-haven rush into Treasuries.

While Fed Chair Jerome Powell played down rising price pressures on Tuesday, just a day later two Fed officials said the recent bout of higher inflation could last longer than anticipated.

The MOVE index - a bond market volatility gauge - hit a two-month high on Monday, underscoring those mixed signals and uncertainty about the near-term.

In the June 17-24 poll, over 60% of fixed-income strategists, or 25 of 41, who answered an additional question said a significant sell-off in global bond markets was likely over the next three months.

... The U.S. 10-year Treasury yield was forecast to rise about 50 basis points to 2.0% by June 2022, from around 1.5% on Thursday.

... When asked how high would U.S. 10-year Treasury yields rise to over the next three months, the median of 30 analysts was 1.75%, with forecasts ranging between 1.5% and 2.0%.

... "Inflation is not all transitory. It is going to be a mix of sustainable and transitory," said Guneet Dhingra, head of U.S. interest rates strategy at Morgan Stanley.

[Jun 21, 2021] Do you remember when a trillion was a big number? Well, it still is especially if we are talking about possible stock market losses even with "accommodative" FED

Jun 21, 2021 | www.zerohedge.com

Traders are addicted to trading, much like murderers fixate on murdering. The traders noticed a slight change in the Fed's tone and sold anything tied to inflation. They whacked gold good. Then they went after the other commodities. When they were done there, they went after value stocks, before finishing the week by blasting a bunch of cyclical names.


25 play_arrow
ted41776 5 hours ago

the only kind of ism that has exist is sociopathism

they always end up at the top of any power pyramid and make the rules that apply to all others but not them

same as it always was and same as it always will be

NoDebt 4 hours ago

Traders are addicted to trading, much like murderers fixate on murdering

A line I wish I had come up with.

lambda PREMIUM 4 hours ago

This was already modeled and formalized: The Gambler Fallacy.

[Jun 21, 2021] Minneapolis Fed President Neel Kashkari Calls DOGE a Ponzi Scheme

Jun 21, 2021 | slashdot.org

(cointelegraph.com) 45 BeauHD on Monday June 21, 2021 @05:20PM from the not-dog-friendly dept. The president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, took a jab at Dogecoin (DOGE) last week by referring to the memecoin as a Ponzi scheme , upping his rhetoric against cryptocurrencies. Cointelegraph reports: Kashkari's comments were in response to a LinkedIn poll by Paul Grewal, the chief legal officer and corporate secretary of Coinbase, who asked his connections about the proper way to pronounce "Doge." "The right pronunciation is pon-zi," Kashkari quipped.

This isn't the first time Kashkari has taken aim at cryptocurrencies. In February 2020, he said digital assets like Bitcoin (BTC) lack the basic tenants of a stable currency and praised the Securities and Exchange Commission for "cracking down" on initial coin offerings. Kashkari is not a member of this year's Federal Open Market Committee, the group responsible for setting United States monetary policy. The Minneapolis branch of the Fed will serve as an alternate FOMC member in 2022 before rotating back onto the committee as a voting member in 2023.

[Jun 20, 2021] Wishful Thinking in a World Without Yield by Jason Zweig

Jun 20, 2021 | www.wsj.com

June 18, 2021

... ... ...

In the face of prolonged low interest rates, all investors face three basic choices, says Mr. Skjervem, the consultant who formerly managed roughly $100 billion as chief investment officer of the Oregon State Treasury.

You can raise your existing holdings of traditional risky assets like stocks, even though no one thinks they're cheap.

You can add a bunch of new and exotic bets and hope they don't blow up on you.

Or you can grit your teeth and stay the course, through a period of what may be lackluster returns, until interest rates finally normalize.

"People are looking for the silver bullet, the magic wand, the get-out-of-jail-free card," says Mr. Skjervem. "There isn't one."

me title=

Write to Jason Zweig at intelligentinvestor@wsj.com


John Smith

Jason Zweig always offers a breath of fresh air in the world of investment advice.

I like the cautionary tale he offers in re Fund "Trustees". Likely that many serve as decoys on the pond. Ignore that blind, look how comfortable the plastic ducks appear.

Stuart Young
There will be no solution to the yield problem until Powell and the Federal Reserve Bank stop having a fire sale on money and return interest rates to their normal levels. It certain that there is much resistance to do this from the administration due to the trillions of dollars they are borrowing and yes, these borrowed dollars are coming from the same Federal Reserve Bank that controls the interest rates for the nation.
John Zarwan
Two quick comments. 1, a pension system is different than an individual, as the pension system has a legal obligation to meet the payouts of its members. If my retirement nest egg doesn't provide, too bad for me, but my heirs aren't required to make up the shortfall. 2, it would have been nice if the article focused more on the purported subject rather than the shortcomings of a possibly corrupt pension plan.
BRIAN HILL
For those who say just have an S&P 500 index fund, the index had no return from 2000 to 2012 and other long periods like 1966 to 1982. And if you were withdrawing income during this period the sequence of return risk would be a disaster. You need multiple asset classes - not just large cap US stocks.
Richard Fishman
How easy it is for these pension trustees to make themselves popular with participants by raising earning assumptions and payouts when they have their big daddy the U.S. Pension Benefit Guarantee Corp. ready to raid the taxpayers pockets again and again. As usual, intelligent, conservative, fiscal management is a joke. What else is new?
Khyshang Lew
I do agree. It is time to lower expected rate of return.
Frank Walker
I wouldn't want to pour any water on all the great returns of the past 10 years but they came after a major crash in 2008. A Federal Reserve that dropped the interest rate to 1.5% on a 10 year bond. They have created a Stock, Bond, and Real Estate market bubble. How would your averages work out with a 50% correction?
Ralph Tibiletti

"People are looking for the silver bullet, the magic wand, the get-out-of-jail-free card," says Mr. Skjervem. "There isn't one."

All of these problems are caused by a dysfunctional federal government controlled by politicians from both parties whose only concern is getting elected and reelected. They accomplish their goal by redistributing wealth in the form of many different entitlement programs and by catering to the legislative needs of special interest groups.

Voting is not the solution because we only replace the existing set with a different set that will perform in the same way. We need a Solomon like individual who can solve the problem.

Y.C. Sung
Private equity is great for money managers; there's no transparency in the value of the investment. Unlike public market managers who have a scorecard on them every day, private equity managers have wide latitude in valuing their investments. They can avoid being fired for a long time.
Rachel Glyn
Not sure why it's different than a SPAC.
Ralph Tibiletti
"The challenge we all face as investors is that the collapse in interest rates makes achieving historical rates of return very difficult,"
As we all know this problem has been caused by the Fed's zero interest rate and money printing polices in support of the profligate spending and borrowing by both parties in the federal government.

Why is the Fed so interested in the interest rate that savers may receive but has no interest in the interest rate that lenders may charge like credit card companies? It does seem a bit unfair when lenders can borrow at near zero percent interest rates and then loan the money out at 16 percent plus. This smacks of inequality with which both the Fed and the federal government seem so terribly concerned.

James Winkle
The only magic bullet for a lot of people is to spend less.

[Jun 20, 2021] Facebook, Alphabet Keep Rising; Apple, Netflix Fade - WSJ

Jun 20, 2021 | www.wsj.com

Big tech stocks are going their own ways in 2021.

It is a far cry from last year, when the so-called FAANG stocks took a commanding role in a market driven by the coronavirus pandemic.

After the swift downturn of early 2020, shares of Facebook Inc., FB -2.04% Apple Inc., AAPL -1.01% Amazon.com Inc., AMZN -0.07% Netflix Inc. NFLX 0.49% and Google parent Alphabet Inc. GOOG -0.64% recovered more quickly than the broad stock market. Then they pushed higher, ultimately powering the S&P 500 to a 16% gain for 2020.

... ... ...

While Alphabet Class A and Facebook shares are up 37% and 21%, respectively, other members of the group have weighed on the market. Amazon shares are up 7.1% in 2021, lagging behind the 11% rise in the benchmark S&P 500. Apple and Netflix have fared even worse, down 1.7% and 7.4% for the year.

... ... ...

For much of 2020, a badly constricted economy pushed investors toward stocks -- like the FAANG names -- whose businesses were less affected and whose future growth became even more alluring with the drop in interest rates. The Russell 1000 Growth Index advanced 37% for the year, while the Russell 1000 Value Index eked out a 0.1% gain -- the largest annual performance gap between the two style benchmarks in FactSet data going back to 1979.

Big tech stocks were among the leaders of that rally. Apple shares climbed 81% in 2020 -- last August becoming the first U.S. public company to surpass $2 trillion in market value -- while Amazon rose 76% and Netflix gained 67%. Facebook added 33% for the year, and Alphabet 31%.

J

James Robertson

These companies are too big and too powerful. I hope for anti-trust legislation that cuts them down to size. The tech oligarchs have too much influence on what Americans think and do. They are a direct threat to our democracy. I hope more Americans will decide to support smaller companies (especially local stores), putting conviction ahead of convenience.
J Pate
Google and Amazon has no near peer competitors. Netflix and Apple do. My family got rid of Netflix last year and now have Hulu. There is a ton of free steaming sites also. We never missed Netflix.
Jay Urbain
"While Alphabet Class A and Facebook shares are up 37% and 21%, respectively, other members of the group have weighed on the market. Amazon shares are up 7.1% in 2021, lagging behind the 11% rise in the benchmark S&P 500. Apple and Netflix have fared even worse, down 1.7% and 7.4% for the year."

Time to take another look at AMZN and AAPL.

Jon Tannen
Gasp! So after breathtaking rises for Apple and Netflix stocks, they're merely flat these days? Not up 30% this month? Uh-oh! Sound the alarms! Someone please tell the writer that stocks are not a straight diagonal to the sky. [She's actually wrong about Apple's valuation being down this year, according to WSJ's very charts! The price is 130 now vs. 129 on Jan 4. But hey, she's obliged to come up with an article this week.]

This all reminds me of analyst Dan Niles coming on CNBC for years and proclaiming he's shorting Apple. Every few months: "I'm shorting Apple." "I'm shorting Apple." Again and again and again. The guy must be broke. [Of course, no one calls him out about it.]

Marshall Dillon
Amazon? Not for me. I have switched most of my online buying to Walmart and local stores. Amazon needs to get out of politics and stop suppressing free speech, much like the WSJ moderators.
SACHIN SHARMA
This entire article is misleading. Choosing 2020 as a base year to compare this group of stocks leaves out the important context of what happened the prior ten years, when FB and GOOGL underperformed vs APPL, NFLX, AMZN. A mean reversion within this group because money managers need to justify their existence could be the simple explanation. Also, how much of the Russel growth fund performance came from AMC and GME, those bell weather companies?

[Jun 18, 2021] Corporate elites are loudly complaining that the sky is falling -- not because of a real labor shortage, but because workers are less likely now to accept low-wage jobs

In IT corporate honchos shamelessly put more then a dozen of very specific skills into the position rescription and want a cog that hit that exactly. they are not interested in IQ, ability to learn and such things. that want already train person for the position to fill, so that have zero need to train this persn and they expect that he will work productively from the day one.
Jun 14, 2021 | www.nakedcapitalism.com

Hayek's Heelbiter , June 12, 2021 at 7:50 am

But corporate elites are loudly complaining that the sky is falling -- not because of a real labor shortage, but because workers are less likely now to accept low-wage jobs.

Duh. This is so blindingly obvious, but NC is the only place that seems to mention this fact.

Here in the UK, the outmigration of marginally paid workers from Eastern Europe and the resultant "labour shortage" triggered by Brexit has made it abundantly clear that Blair's change to open borders was not from any idealistic considerations but as a way of importing easily exploited labor.

Business leaders quoted in the the tsunami of hand-wringing MSM articles about the current catastrophe are offering such helpful solutions as allowing housekeepers to use pools and gyms in off hours, free meals to waiters, etc. Anything but a living wage.

Dr. R.k. Barkhi , June 12, 2021 at 5:57 pm

" I don't actually see any untruths to the GOP talking points. "
"" Workers are less likely to accept a job while receiving Gov't benefits" and "workers are less likely to accept low wage crappy jobs ".

Well,if u can survive on a $300/week program that ends after several weeks pass,bless u. No one else in America can. That's a $7.50 hr full time "summer job" with no pension or medical benefits that teenagers with no dependents,few bills n maintenance issues might be interested in; adults with adult responsibilities,no way. That so called RepubliCons, the "economics experts", can make such a fraudulent claim n anyone out of elementary school believes it has a quantum particle of reality or value is . well I'll just say a sad n unbelievable situation.

Now the rest of your comments are laudable.

Objective Ace , June 13, 2021 at 11:57 am

They get 300 dollars plus regular UI. They can also get Medicaid and CHIP, or if they are still making too much they are eligible for Obamacare exchange. Plus they're eligible for SNAP and housing vouchers

Equitable > Equal , June 13, 2021 at 4:38 am

There is one significant fallacy in this article: The author conflates Republican opposition to enhanced benefits with opposition to unemployment benefits overall.

I very much stand with labour over business on most (probably all) points, but the Republican argument is to end the enhanced benefits in most cases – Not to abolish unemployment assistance. They believe the role of government is to step in to help pay basic bills in the event of unemployment, but oppose the current higher level of benefit due to the market distortions it causes (Hence the appearance of the term 'labour shortage'.)

I agree that it basically forces mcdonalds et al to up their wages if they want to do business, which should be a positive for society, but I find it unlikely that the author could have unintentionally mistunderstood the argument on such a fundamental level, and all it does is try to drive a wedge further between each side of the argument.

Sierra , June 12, 2021 at 3:46 pm

Hayek,

Sonali Kohatkar is pro open borders and has the nerve to complain about wage arbitrage?
https://freespeech.org/stories/prop-287-immigration-ca/

Anyone that believes that workers supported their jobs being sent overseas is either demented or delusional or suffers from a mental hernia. The same goes for the common working stiffs supporting massive immigration to help drive down their ability to demand a livable wage.

American labor has been sold down the river by the International Labor Leaders, politicians and the oligarchy of US corporate CEO's.
======

Got a new hip recently. Do your P.T., take it easy, follow the warnings of what not to do until you heal and you should discover that decades feel like they are lifted off your shoulders.

Hayek's Heelbiter , June 13, 2021 at 12:16 pm

Sierra,
You've made a very interesting point that actually never occurred to me and one in which I never seen fully examined.
Exploiting labour and outsourcing it are two sides of the same coin with the same goal in mind, diverting revenue streams into the C-suite and rentier class.
Obviously you cannot outsource most of the workers in the hospitality industry or the non-virtual aspects of world's oldest profession, but a lot of the tech industry and the virtual aspects of the latter are very amenable to being shipped overseas.
Immigrants are extremely visible and an easy target, while outsourcing is essentially an impossible to contain concept that creates real world hardship.
Dear NC readers, do you know of any studies comparing and contrasting the economic impact of immigration and/or limiting it and outsourcing?

sierra , June 12, 2021 at 3:51 pm

Those hip words were meant for Yves of course

Fazal Majid , June 12, 2021 at 8:46 am

Indeed, economists and analysts have gotten used to presenting facts from the perspective of private employers and their lobbyists.

You are acting if economists and lobbyists are separate groups, as opposed to largely a subset thereof. Funny how a field entirely based on the study of incentives claims incentives don't distort their policy prescriptions, isn't it?

As for low-paid jobs, they are traditionally the last resort of immigrants and other marginalized populations, but the anti-immigration push that began under Obama, and enthusiastically continued by Trump and Biden, has perfectly predictable consequences.

One factor not mentioned is many free-riding businesses refuse to pay for training, then wonder why there are no trained workers to hire.

Now, there are definitely fields where there is a genuine and deliberate labor shortage. Usually white-collar credentialed professions like medical doctors and the AMA cartel.

Yves Smith , June 12, 2021 at 8:51 am

Economics is not based on incentives. That's behavioral economics. I hate to quote Larry Summers, but this is Summers on financial economics:

Ketchup economists reject out of hand much of this research on the ketchup market. They believe that the data used is based on almost meaningless accounting information and are quick to point out that concepts such as costs of production vary across firms and are not accurately measurable in any event. they believe that ketchup transactions prices are the only hard data worth studying. Nonetheless ketchup economists have an impressive research program, focusing on the scope for excess opportunities in the ketchup market. They have shown that two quart bottles of ketchup invariably sell for twice as much as one quart bottles of ketchup except for deviations traceable to transaction costs, and that one cannot get a bargain on ketchup by buying and combining ingredients once one takes account of transaction costs. Nor are there gains to be had from storing ketchup, or mixing together different quality ketchups and selling the resulting product. Indeed, most ketchup economists regard the efficiency of the ketchup market as the best established fact in empirical economics.

Howard Beale IV , June 12, 2021 at 9:22 am

Happy to see you back at a keyboard, and hoping your recovery is progressing well. I had the misfortune of spending two days in the hospitals while they got my blood chemistry strightened out. Here's the kicker; the hospitalist, who I saw 3 times, submitted a bill for a whopping $17,000. Just yesterday, the practice she works for submitted a bill that was one-tenth her charges for the work she did, yet her bill is still sitting waiting to be processed.

Yves Smith , June 12, 2021 at 9:53 am

OMG, how horrible. HSS is a small hospital for a big city like NYC, only 205 beds and 25 operating rooms. No emergency room. They are not owned by PE and so I don't think play outsourcing/markup games (they are very big on controlling quality, which you can't do if you have to go through middlemen for staffing). Some of the MDs do that their own practices within HSS but they are solo practitioners or small teams, which is not a model that you see much of anywhere outside NYC

Howard Beale IV , June 12, 2021 at 12:05 pm

The last time I was hospitalized, all the hospitalists were in the employ of the hospital, now they are in the employ of a nationwide hospitalist practice, which has all the smell of private equity around it. I'm really beginning to think that a third party focusted on healthcare might have a real shot at upsetting the political order – maybe it's time to drag out your skunk party for 2024.

Arizona Slim , June 12, 2021 at 1:22 pm

How are you feeling? We miss you around here.

tegnost , June 12, 2021 at 10:25 am

As for low-paid jobs, they are traditionally the last resort of immigrants and other marginalized populations, but the anti-immigration push that began under Obama, and enthusiastically continued by Trump and Biden, has perfectly predictable consequences.

Well I'm sorry you can't find easily exploitable labor, except I'm not immigrants face the same ridiculous costs, and weren't hispanic workers more heavily impacted by covid due to those marginal jobs (I'll switch your dynamic to low wage workers , and marginal jobs, thanks), so by your logic more should have been let in to die from these marginal jobs? but yeah we need more PMC except we don't
Now, there are definitely fields where there is a genuine and deliberate labor shortage. Usually white-collar credentialed professions like medical doctors and the AMA cartel."
Last I checked it was private equity, wall st and pharmaceutical companies and their lobbyists that drive up costs so labor needs to charge more.
Wake up and smell the coffee.

Bill Smith , June 12, 2021 at 9:24 am

How much of this is over specification on the part of employers in the ad for the job? We want the perfect candidate who can do the job better than we can with no training .

Yves Smith , June 12, 2021 at 9:48 am

OMG this is such a long-standing pet peeve! We've commented on this nonsense regularly. Companies took the position that they don't have to train and now they are eating their cooking.

Bill Smith , June 12, 2021 at 10:30 am

Exactly.

The mismatch between job openings and job applicants is not just about wages.

In fact, if companies were willing to take a chance on people who didn't exactly match the job requirements, the likely effect would be to raise the wages some of those that did not qualify under the over exacting job requirements. [And likely paying these new employees less than they had contemplated paying the perfect candidate.]

But that seems like someone making the hiring decision might, just possibly, be seen as taking a risk.

Howard Beale IV , June 12, 2021 at 2:55 pm

At my empolyer we know we can't find any colleges that teach mainframe skills, so we bring in graduates who are willing to learn those skills – we submit them to a 3-month bootcamp and then there's a long period of mentorship under a senior person to their group that has an opening. Since everybody and their dog are now moving headfirst into DevOps, where all the tooling is in somewhat less ancient software, they get exposed using those Eclipse/VScode-based tools and are able to come up to speed somewhat quicker. Still, no one in corporate America dares to bite the bullet and re-platform their core systems with few exceptions (SABRE) for fear of losing all the institutional knowledge that's in software, rather than wetware (humans).

Howard Beale IV , June 12, 2021 at 3:03 pm

Just think what is happening right now with everyone holding an Indian outsourcing contract. You don't have individual's cellphone numbers over in India, which would cost you an arm and a leg to call, never mind what's going on in their facilities.

Mike Elwin , June 13, 2021 at 2:27 pm

On the other hand, there's something to be said for employers not training their staffs. In the SF Bay Area computer industry, employees and independent contractors alike continually race to train themselves in the new technologies that seem to crop up like mushrooms after a rain. Many companies train their customers–and charge them for it–before they'll train their staffs. This is a principal reason there's a market for contractors. Training oneself in new technologies lays a base for opportunities that don't appear if you spend a decade in the same job (unless, like mainframe programming, your job is so old it's new). I suppose this is a beneficial side of capitalism?

Lambert Strether , June 13, 2021 at 2:37 pm

> continually race to train themselves in the new technologies that seem to crop up like mushrooms after a rain

And what, one might ask, do mushrooms grow best in .

Louis , June 12, 2021 at 10:38 am

I get that you want experience for mid to senior level jobs but the experience requirements for what are ostsensibly entry-level jobs have gotten absurd. The education requirements have also gotten out of hand in some cases.

That being said, a lot of the shortages are in low-wage, part-time jobs so the issue isn't necessarily ridiculous requirements, like you sometimes see for entry level white collar jobs, but wages that are too low and awful working conditions.

How many people want to be treated like dirt–be it by customers, management, or both–for not much more than minimum wage if they have other options?

A wage increase will help fill these jobs but there also needs to be a paradigm shift in how employees are treated–the customer is not always right and allowing them to treat employees in ways that would not be tolerated in other businesses, and certainly not in many white-collar workplaces is a huge part of the problem and why these jobs have long had high-turnover.

TomDority , June 12, 2021 at 9:51 am

It never ends – when it was about immigrant labor under George B junior – I think – the call was
-- - They do jobs that Americans won't -- or something to that effect.
It always bothered me that the sentence was never, in my mind, completed. It should have been said
-- They do jobs that Americans won't do at that pay level. --
The tax system, economic system and higher education departments have been perverted by the continuous bribery and endowments by the rentier class to our elected law makers and dept heads for decades –
The creditor, debtor relationships distorted for eons.
The toll takers have never, in history, been in any higher level of mastery than they are now.
It is not to throw out the constitution but, to throw out those who have perverted it.

Oh , June 12, 2021 at 12:23 pm

The construction industry knows how to exploit immigrant labor, documented as well as undocumented. I'm sure most peole born here refuse to work for the same wages.

chris , June 12, 2021 at 6:14 pm

The exploitation occurs on many levels. For small residential jobs, a lot of wage theft occurs. For larger jobs, a lot of safety regs get ignored. When you have a population that won't use the legal avenues available to other citizens to push back against abuse you can get a lot done :/

King , June 12, 2021 at 10:04 am

When I go looking for a job if a degree isn't required I am very unlikely to pursue it further. Same if the list of 'required' is overly detailed. I'm making assumptions in both of these cases (that might not be correct) about pay, benefits, work environment, etc. and what is actually going on with a job listing. Why? Chiefly my likelihood of actually getting a reasonable offer. I expect either being seen as overqualified in the first case or the job only being listed because of some requirement in the second.

I have to wonder if many places know how to hire. This is made much more difficult by years of poorly written (maybe deceptive) job postings. You probably know many of the phrases; flexible schedule, family ___, reliable transportation required, and so on. Its no surprise if puffery doesn't bring back the drones.

Noone from Nowheresville , June 12, 2021 at 10:07 am

If we're playing with statistics. How many of these posted job openings, how many interviews did the companies offer v. how many offers were made until the position was filled? If position remains open, has the company increased the base pay offer? guaranteed an increased min. number of weekly hours? offered bonuses or increased benefits? How many times has this same job opening using the original posting criteria been re-posted? Is this a real single job opening that the company plans to fill in real time or just a posting that they keep opening because they have high turnover? etc., etc., etc.

The real problem with this workers are lazy meme is that it is repeated and repeated all year long on the local news from the viewpoint of business. It has filtered down to local people. I hear them repeating what the local news said without giving it any critical thought. Even those who say that we need unions and believe themselves to be on the side of workers.

Ear wigs are good for businesses. Insidious for workers.

synoia , June 12, 2021 at 12:03 pm

In the UK, in the days of Labor Strive, before Neo-liberalism , there was always newspaper reports about "Labor Strife" and "bolshy workers." Never once did the press examine Management had behaved and caused the workers to become "bolshy" – a direct reaction to Management's attitudes and behavior, probably based on the worst attributes of the UK's class system.

Definition: A bolshy person often argues and makes difficulties.
Management get the workers (Their Attitudes) it deserves.
I recommend reading "The Toyota Way" to explore a very successful management style.

tegnost , June 12, 2021 at 10:40 am

This song is getting a probably getting more hits these days
Take this job and Shove It
https://www.youtube.com/watch?v=eIjEauGiRLo
But I hear lots of businesses will close to to no labor, so when they close they can go work for 7.25 an hour for one of their competitors who also needs laborors Solidarinosc!

tegnost , June 12, 2021 at 11:40 am

Geez this song is probably getting more hits these days due to no laborors? hmmm.it must mean something, like proof read your posts .,

Generalfeldmarschall von Hindenburg , June 12, 2021 at 10:43 am

If businesses are suffering, it's restaurants and small scale enterprise. The Covid response was tailored to the needs of economy of scale mega biz. They likely knew multitides of mom-n-pops would go away- and they have. But that's fine.

Susan the other , June 12, 2021 at 11:24 am

So if state governments can turn down federal unemployment supplements because they want labor to go back to work for unlivable wages this means the federal government can do nothing about it. When push comes to shove the question that must be settled is, Is it a human right to receive employment assistance until a job is found that pays a livable wage? (Not even a republican will actually say No). So then that puts all the stingy states on notice that there is a human rights issue here. States will have the choice to either let businesses shut down for lack of workers, or states can subsidize minimum wages and benefits. If states choose, in desperation, to subsidize minimum wages, then the states can apply to the feds to be compensated. The thing that is needed in the interim, between when the real standoff starts and ends, is a safety net for workers who are being blocked by the state from receiving unemployment benefits. I say call in the national guard. This is a human rights issue.

Dr. R.k. Barkhi , June 12, 2021 at 6:08 pm

Great point. Im appalled at the RepubliCon governers responses. And they call themselves Christians?

Imo Profitism (or Crapitalism if u pref2) is a Rights issue.

jim truti , June 12, 2021 at 11:45 am

The real exploitation happened when we allowed companies to delocalize, manufacture product in China and sell it here with no strings attached.
James Goldsmith seems like a prophet now, he was so absolutely right.

https://www.youtube.com/watch?v=wwmOkaKh3-s

eg , June 12, 2021 at 11:45 pm

He sure does

Tom , June 13, 2021 at 5:34 pm

Wow. The Clinton flack was insufferable. AND WRONG about pretty much everything. Goldsmith was brilliant. I wasn't paying enough attention at he time, but how many high profile people were making the arguments he was making?

Michael Hudson , June 12, 2021 at 12:23 pm

I'm surprised that nobody has taken the opportunity to comment on how this discussion shows how hypocritical Biden and the democrats were not to press for raising the minimum wage.
The pretense (which they must have coached the "Senate scholar" on) was that raising the minimum wage was not related to revenue (i.e., a revenue bill). But of course it is! Right now, paying below-poverty wages enabled Walmart and other employers to make the government pay part of their wage bill. Higher minimum wages would raise these government aid recipients out of the poverty range, saving public revenue.
That is so obvious that the failure of the Democrats to make the point shows that they really didn't want to raise wages after all.

Nikkikat , June 12, 2021 at 1:40 pm

I didn't expect much from Biden but he's even worse than I thought. Along with those bought senators hiding behind Joe Manchin. Depressing to think how much worse everything will become for working people here.

Lambert Strether , June 12, 2021 at 1:48 pm

> the Democrats to make the point shows that they really didn't want to raise wages after all.

Come on, man. They're "fighting for" it.

chris , June 12, 2021 at 6:41 pm

This all day long and twice on Sunday

When I think about how they're complaining about Manchin now when there was a serious primary challenge against him last year, and how the Democrat organization rallied around Manchin and not his challenger, it is disgusting to see Slate/The Guardian/NYT/other "Blue no matter who" mouth breathers write articles asking what can be done to salvage a progressive agenda from the curse of bipartisanship.

I had given up on national politics long before the 2020 election circus but this latest has confirmed my resolve. The destruction of the Democrat party can't come soon enough.

Noone from Nowheresville , June 12, 2021 at 5:25 pm

If I call them Hypocritics, when I never believed them in the first place, will they feel any shame at all? Or must I be part of their class for them to feel even the tiniest of niggles?

Perhaps they'll feel ashamed once they cut the check for the $600 they shorted us this winter. Or maybe that they are reneging on the extended unemployment benefits early or

One side makes you sleep on a bed of nails and swear allegiance.The other side generously offers to help you out, no strings attached, but you might bleed out from the thousands of tiny means-testing cuts. Each side want the lower tiers to face the gauntlet and prove one's worthiness, hoping to convince us that a black box algorithm is the same thing as a jury of peers.

Telee , June 12, 2021 at 9:30 pm

Exactly right! And keep in mind deluge of op-eds telling us that Biden is a transformational president! The same authors presented a deluge of op-eds telling us how Senator Sanders was to radical for the American people after he did well in early primaries. That the reforms he supported like Medicare for all, raising the minimum wage, lowering drug costs, help with daycare, doing something about climate change etc. were reforms that the people would never accept because the people value their freedom and don't want to live in a socialistic country.
It looks like none of the promises Biden made during the campaign will be implemented by President Biden. That why he is in the White House.

rowlf , June 12, 2021 at 12:38 pm

Would a lot of these positions be filled if the US had single payer healthcare or similar? Would workers accept low paying positions if they didn't have to lose so much of their pay to crappy health insurance?

Nikkikat , June 12, 2021 at 1:31 pm

At our local Petsmart they cut staff during the pandemic. They laid off all full time workers
And are only hiring back part time. I knew several of the laid off people and they are not coming back. Two of the people that worked full time have found other jobs one with slightly better pay the other with slightly better benefits. We are in California where rent is very high so another person we know decided to use this as a chance to relocate to another state where housing is less expensive. Our older neighbor retired, although vaccinated now, he decided it just wasn't safe and after the CDC told everyone to take off their mask off. He is glad he just decided to live on a little less money. I suspect there are a lot of reasons as Yves stated above for a lack of workers, but this "they are lazy" trope is capitalistic nonsense.

Petter , June 12, 2021 at 4:53 pm

This "they are lazy" trope has a long history. Yasha Levine wrote about it for the Exiled and it was reposted here at NC.
https://www.nakedcapitalism.com/2012/04/yasha-levine-recovered-economic-history-everyone-but-an-idiot-knows-that-the-lower-classes-must-be-kept-poor-or-they-will-never-be-industrious.html

Some highlights:
>> everyone but an idiot knows that the lower classes must be kept poor, or they will never be industrious.
-- Arthur Young; 1771
>>Even David Hume, that great humanist, hailed poverty and hunger as positive experiences for the lower classes, and even blamed the "poverty" of France on its good weather and fertile soil:
'Tis always observed, in years of scarcity, if it be not extreme, that the poor labour more, and really live better.

>>Poverty is therefore a most necessary and indispensable ingredient in society It is the source of wealth, since without poverty, there could be no labour; there could be no riches, no refinement, no comfort, and no benefit to those who may be possessed of wealth.

athingtoconsider , June 12, 2021 at 1:38 pm

I'll just point out, per the Old Testament, that wage, debt and rent slavery were the exception, not the norm (as they are in the US) for citizens (Hebrews) in ancient Israel/Judah.

That's because the assets in ancient Israel/Judah were roughly equally owned by all citizens with provisions in the OT Law (eg. Leviticus 25, eg. Deuteronomy 15, eg. Deuteronomy 23:19-20) to keep it that way in the long run (but less than 50 years).

Contrast that to US where we have privileges for a private credit cartel, aka "the banks", and no limits to the concentration of land ownership and the roots of our problems are evident.

So begging for better jobs for citizens is, in the Biblical context, pathetically weak tea indeed.

Amateur Socialist , June 12, 2021 at 1:53 pm

On a personal note I had a great job interview Thursday at the local food co-op. This is my first in person interview since I was terminated without cause by IBM (after almost 24 years there in a server development job) almost a year ago. Despite applying for over 100 positions. I'm over 60 and haven't worked in a year so I admit I'm grateful to even get the chance.

I have another interview with them next week and hoping to start soon as a produce clerk making $13.50 an hour. If I can get on full time they offer a decent insurance plan including dental. The HR person acknowledged that I was "wildly overqualified" but encouraging. The possibility of getting health care is key; my IBM Cobra benefits will start costing me almost $1400/monthly for myself and my husband in September after the ARA subsidy expires.

I've adjusted my expectations to reinvent myself as a manual laborer after decades in fairly cushy corporate life. I've managed to keep my health and physical capacity so somewhat optimistic I can meet the job requirements that include lifting 50 lb boxes of produce. But we'll see.

athingtoconsider , June 12, 2021 at 2:52 pm

and haven't worked in a year Amateur Socialist

You mean you haven't had a job in a year since it's highly doubtful that you have not done any work in a year; eg. cooking, cleaning, shopping, car maintenance, gardening, chauffeuring, mowing the lawn, home maintenance and caring for others count as work.

We need to stop conflating work (good) with wage slavery as if the former necessarily requires the latter.

Amateur Socialist , June 12, 2021 at 3:57 pm

Okay sure. I haven't earned in a year. But it's still a problem I'm trying to sort out best as I can.

Since I still live in the US where earning is highly correlated with insurance coverage, and I still have about 5 years until we're both qualified for Medicare this may turn out to be a great thing that has happened.

And since I don't see a path out of wage slavery today I'll be happy to accept almost any offer from the food co-op. It's a union job with decent pay and benefits and may offer other opportunities in the future. They mostly buy and sell products that are locally made so that makes it easier too. The money we are all enslaving each other over is staying around here as much as possible. Okay.

Arizona Slim , June 12, 2021 at 4:32 pm

A former neighbor worked in our local food co-op and loved her job. At the co-op, she was a cashier. She also was a retired attorney.

Dr. R.k. Barkhi , June 12, 2021 at 6:25 pm

Good luck! Fyi i strongly suggest u look into taking your IBM pension asap as 1. It will minimally impact your taxes as u r now earning less n 2. How many more years do u think it will be there? ( I usually recommend most people take their social security at 62 for similar reasons but in your case I'd do your research b4 making any move like that. ) Take a blank state n Fed tax form n pencil in the new income n see what the results are.
Btw truly wonderful people are involved in food co-ops,enjoy!

Eudora Welty , June 12, 2021 at 3:17 pm

Good luck! I will be thinking of you next week.

Sound of the Suburbs , June 12, 2021 at 2:52 pm

No one really questions the idea of maximising profit.
How do you maximise profit?
You minimise costs, including labour costs, i.e. wages.

Where did the idea of maximising profit comes from?
It certainly wasn't from Adam Smith.

"But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin." Adam Smith
Exactly the opposite of today's thinking, what does he mean?
When rates of profit are high, capitalism is cannibalising itself by:
1) Not engaging in long term investment for the future
2) Paying insufficient wages to maintain demand for its products and services
Today's problems with growth and demand.
Amazon didn't suck its profits out as dividends and look how big it's grown (not so good on the wages).

The benefits of the system can be passed upwards in dividends or downwards in wages.
Both actually detract from the money available for re-investment as Jeff Bezos knows only too well.
He didn't pay dividends, and paid really low wages, to maximise the amount that he could re-invest in Amazon and look how big it's grown.
The shareholders gains are made through the value of the shares.
Jeff Bezos hopes other people are paying high enough wages to buy lots of stuff from Amazon; his own workers don't have much purchasing power.

Where do the benefits of the system go?
Today, we pass as much as possible upwards in dividends.
In the Keynesian era they passed a lot more down in wages.

cnchal , June 12, 2021 at 10:34 pm

> Jeff Bezos hopes other people are paying high enough wages to buy lots of stuff from Amazon; his own workers don't have much purchasing power.

You are missing the tree in the forest. Jeff hopes other people will pay a high enough price for Amazon stawk. We already know Jeff doesn't give a shit about the stuff he sells, or the inhumane working conditions that go along with the low pay and short "career". I mean, not even the nastiest farmer would treat his mules like that, even if mules were easy and cheap to come by.

So far, Mr Market says beating workers, good.

Sound of the Suburbs , June 12, 2021 at 2:55 pm

We don't think people should get money when they are not working.
Are you sure?

What's the point in working?
Why bother?
It's just not worth all the effort when you can make money doing nothing.
In 1984, for the first time in American history, "unearned" income exceeded "earned" income.
They love easy money.

With a BTL portfolio, I can get the capital gains on a number of properties and extract the hard earned income of generation rent at the same time.
That sounds good.
What is there not to like?

We love easy money.

You've just got to sniff out the easy money.
All that hard work involved in setting up a company yourself, and building it up.
Why bother?
Asset strip firms other people have built up, that's easy money.

People do love easy money.

Sound of the Suburbs , June 12, 2021 at 3:45 pm

"West Virginia's Republican Governor Jim Justice justified ending federal jobless benefits early in his state by lecturing his residents on how, "America is all about work. That's what has made this great country."
Have you had a look around recently?

In 1984, for the first time in American history, "unearned" income exceeded "earned" income.
America is not about work at all.

athingtoconsider , June 12, 2021 at 5:44 pm

America is not about work at all. SoS

The US is largely about exploiting or being exploited with most of US doing both.

We should resent an economic system that requires we exploit others or be a pure victim ourselves.

That said and to face some truths we'd rather not, the Bible offers some comfort, eg:

Ecclesiastes 7:16
Do not be excessively righteous, and do not be overly wise. Why should you ruin yourself?

Ecclesiastes 5:8-9
If you see oppression of the poor and denial of justice and righteousness in the province, do not be shocked at the sight; for one official watches over another official, and there are higher officials over them. After all, a king who cultivates the field is beneficial to the land.

Nonetheless, we should support economic justice and recognize that most of us are net losers to an unjust economic system even though it offers some corrupt compensation* to divide and confuse us.

*eg positive yields and interest on the inherently risk-free debt of a monetary sovereign.

KLG , June 12, 2021 at 6:54 pm

Jim Justice made his money the old fashioned way, he inherited it:

From Wiki: James Conley Justice II (born April 27, 1951) is an American businessman and politician who has been serving as the 36th governor of West Virginia since 2017. With a net worth of around $1.2 billion, he is the wealthiest person in West Virginia. He inherited a coal mining business from his father and built a business empire with over 94 companies, including the Greenbrier, a luxury resort.

https://en.wikipedia.org/wiki/Jim_Justice

chris , June 12, 2021 at 6:31 pm

I wonder how much of this is also related to a change in the churn we assume existed pre-pandemic? For example, the most recent JOLTS survey results from April 2021 show the total number of separations hasn't really changed but the number of quits has increased.

So, one possible interpretation of that would be employers are less likely to fire people and those who think they have skills in demand are more interested in leaving for better opportunities now. That makes intuitive sense given what we've been through. If you had a good gig and it was stable through 2020 you had very little reason to leave it even if an offer was better with another company. That goes double if you were a caregiver or had children. Which of course is why many women who were affected by the challenges of balancing daycare and a career gave up.

This is also my experience lately. While it's only anecdotal evidence, we're having a hard time hiring mid career engineers. Doesn't seem like pay is the issue. We offer a ton of vacation, a separate pool of sick time, decent benefits, and wages in the six figures with a good bonus program. We're looking to hire 3 engineers. We can't even get people to apply. In 2019 we could be sure to see a steady supply of experienced candidates looking for new opportunities. Now? If you have an engineering position and your company is letting you work from home it seems you don't have a good reason to jump.

Buckeye , June 12, 2021 at 10:47 pm

Look no further than Cedar Point Amusement Park in Sandusky, Ohio. They had only half the staff they normally need at $10 an hour. So they double the wage to $20 an hour and filled every job in less than a week. The Conservaturds will never admit they are lying.

DWoolley , June 13, 2021 at 3:24 pm

As a small business owner providing professional services I am grateful for the comment section here.

I have called professional peers to get a behind the corporate PR perspective of their businesses. Although anecdotal, the overall trend in our industry is to accept the labor shortage and downsize. Most firms have a reliable backlog of work and will benefit from an infrastructure bill. Our firm has chosen to downsize and close vacant positions.

Remote work, although feasible, has employees thinking they are LeBron James, regardless of their skill set. Desperate employers are feeding their belief. Two years from now it will be interesting to see if these employees they fail forward. Company culture minimized employee turnover pre-covid. This culture has little meaning to an employee working in his daughter's playroom.

For context, in California, I believe the median income for licensees is approximately $110,000 with lower level technicians easily at $75k in the urban areas.

Lastly, the "paltry" $300 per week is in additional to the state unemployment checks and is not subject to taxes. As stated previously, $300 is equal to $7.50 per hour. Federal minimum wage is $7.25 and is adopted by many states minimum, for what it's worth.

Thanks again for the forum.

JBird4049 , June 13, 2021 at 6:32 pm

With respect, I do not see any there there in the comment. Adjusted for inflation the minimum wage at its height in 1968 at 1.60, would be just under $13 per hour today. However, even at $15 in California, it is inadequate.

Anyone making anything like the minimum wage would not be working from home, but would be working in some kind of customer service job, and would find paying for adequate food, clothing, and shelter very difficult. Not in getting any extras, but only in getting enough to survive. People, and their families, do need to eat.

If the response of not paying enough, and therefore not getting new hires, is to downsize, perhaps that is good. After all no business deserves to remain in business, especially if the business model depends on its workers being unable to survive.

Sue inSoCal , June 13, 2021 at 4:13 pm

I am also fed up with the "lazy worker" meme. Or rather, propaganda. People are literally exhausted working 2 or 3 lousy jobs and no real healthcare. Equally irritating to me is a misguided notion that we have some magically accessible generous safety net in the US. As though there aren't thousands and thousands on waiting lists for government subsidized housing. Section 8 vouchers? Good luck.

https://homesnow.org/short-history-of-public-housing-in-the-us-1930s-present/

We've ended "welfare as we [knew] it" (AFDC) thanks to Bill Clinton and then the screw was turned tightly by Junior Bush (no child care, but go to work.) The upshot was bad news for kids.

https://www.economist.com/democracy-in-america/2019/02/25/how-welfare-reform-has-had-a-negative-effect-on-the-children-of-single-mothers

Seems to me one of the few things left is the food stamp program, and I can't imagine how that's been reconfigured. Whomever gave that fantastic list of goodies people can get in the US with a mere snap of the fingers isn't in the real world, imho.

Ok! Yves, lovely to see you again, my friend! (Cue the Moody Blues ) Get well!

10 legged shadow , June 13, 2021 at 4:54 pm

Here is my story.
I am 56 years old, on dialysis and I was collecting SSI of 529 a month.
I was living with and taking care of my mother in her home because she had dementia.
She died in December and I had to start paying the bills. In March I inherited her IRA which I reported to SS. I was able to roll it over into my own IRA because I am disabled, due to the Trump tax law changes.
I reported the changes in a timely manner and because I couldn't afford to live here without a job, I took a part time job for 9 an hour.
So now, because I inherited my mother's IRA and have too much resources I no longer qualify for SSI and have been overpaid to the tune of almost 2 grand, which I am assuming I will have to pay back. I have no idea how that works either. Do they just grab money out of your account? Anyone who knows please tell me.

JBird4049 , June 13, 2021 at 11:35 pm

I would run, run, run to the nearest public assistance counselor or lawyer. In the San Francisco Bay Area, it is should not be too hard to find one. They saved me. There are also in California several state websites. There was a useful to me benefits planning site (It only covers nine states though).

The rules for SSI (Supplemental Security Income), SSDI (Social Security Disability Insurance), Social Security, Medi-Cal or Medicaid, and Medicare are each different. Each state has its own modifications as well, so that is fifty additional sets of modified rules especially for the medical benefits. If they are determined to claw back the money, how it is done might depend on the individual state. It is truly a maze of flycatchers and trapdoors out for you and your money.

The overworked benefits clerks often do not have the knowledge to deal with anything even slightly unusual and are not encourage or at least discouraged from finding out due to the never shrinking pile, not from anyone's malice. This means you could lose benefits because they did not know what they were doing or just by mistake. So, it is up to you to find those nonprofit counselors or the for profit lawyer to help you through the laws, rules, and whatever local regulations there are. Hopefully, you will not have to read through some of the official printed regulations like I did. If wasn't an experience paper pusher.. The average person would have been lost. Intelligence and competence has nothing to do with. Hell, neither does logic, I think.

In my case, when I inherited a retirement account, SSDI was not affected, because of how the original account was set up. However, SSDI is different from SSI although both have interesting and Byzantine requirements. I guess to make sure we are all "deserving" of any help.

So don't ask anonymous bozos like me on the internet and find those local counselors. If it is nonprofit, they will probably do it completely free. If needed, many lawyers, including tax lawyers, and CPAs will offer discounted help or will know where you can go.

Sound of the Suburbs , June 14, 2021 at 12:03 pm

What is the floor on wages?
Disposable income = wages – (taxes + the cost of living)
Set disposable income to zero.
Minimum wages = taxes + the cost of living
So, as we increase housing costs, we drive up wages.

The neoliberal solution.
Try and paper over the cracks with Payday loans.
This what we call a short term solution.

Someone has been tinkering with the economics and that's why we can't see the problem.
The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between "earned" and "unearned" income and they conflated "land" with "capital".
They took the focus off the cost of living that had been so important to the Classical Economists as this is where rentier activity in the economy shows up.
It's so well hidden no one even knows it's there and everyone trips up over the cost of living, even the Chinese.

Angus Deaton rediscovers the wheel that was lost by the early neoclassical economists.
"Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might" Angus Deaton, Nobel prize winner.
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
This raises the costs of doing anything in the US, and drives off-shoring.

The Chinese learn the hard way.
Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
https://www.youtube.com/watch?v=MNBcIFu-_V0
They let real estate rip and have now realised why that wasn't a good idea.

The equation makes it so easy.
Disposable income = wages – (taxes + the cost of living)
The cost of living term goes up with increased housing costs.
The disposable income term goes down.
They didn't have the equation, they used neoclassical economics.
The Chinese had to learn the hard way and it took years, but they got there in the end.

They have let the cost of living rise and they want to increase internal consumption.
Disposable income = wages – (taxes + the cost of living)
It's a double whammy on wages.
China isn't as competitive as it used to be.
China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.

[Jun 18, 2021] You Can't Create Permanent Inflation From Artificial Growth

Inflation for common people level means devaluation of the dollar. It can happen for reasons completely detached from money supply issues. For example shortage of commodities (especially oil) or diminishing of the world reserve currency status of the dollar (refusal of some countries to hold their currency reserves in dollars and switch to other currencies in mutual trade). Increase of military expenses (Pentagon budget is over trillion dollars now) also does not help (guns instead of butter policy)
Jun 18, 2021 | www.zerohedge.com

The reason that rates are discounting the current "economic growth" story is that artificial stimulus does not create sustainable organic economic activity.

"This is because bubble activities cannot stand on their own feet; they require support from increases in money supply that divert to them real savings from wealth generators. Also, note again that a major cause behind the possible decline in the pool of real savings is unprecedented increases in money supply and massive government spending. While the pool of real savings is still growing, the massive money supply increase is likely to be followed by an upward trend in the growth rate of the prices of goods and services. This could start early next year. Once the pool of real savings starts to decline, however -- because of massive monetary pumping and reckless fiscal policies -- various bubble activities are will plunge. This, in turn, is likely to result in a large decline in economic activity and in the money supply." – Mises Institute

As stimulus fades from the system, that decline in money supply is only one of several reasons that "deflation" will resurface.

Monetary & Fiscal Policy Is Deflationary

The Federal Reserve and the Government have failed to grasp that monetary and fiscal policy is "deflationary" when "debt" is required to fund it.

How do we know this? Monetary velocity tells the story.

What is "monetary velocity?"

"The velocity of money is important for measuring the rate at which money in circulation is used for purchasing goods and services. Velocity is useful in gauging the health and vitality of the economy. High money velocity is usually associated with a healthy, expanding economy. Low money velocity is usually associated with recessions and contractions. " – Investopedia

With each monetary policy intervention, the velocity of money has slowed along with the breadth and strength of economic activity.

While in theory, "printing money" should lead to increased economic activity and inflation, such has not been the case.

A better way to look at this is through the " veil of money" theory.

If money is a commodity, more of it should lead to less purchasing power, resulting in inflation. However, this theory began to fail as Governments attempted to adjust interest rates rather than maintain a gold standard.

Crossing The Rubicon

As shown, beginning in 2000, the "money supply" as a percentage of GDP has exploded higher. The "surge" in economic activity is due to "reopening" from an artificial "shutdown." Therefore, the growth is only returning to the long-term downtrend. As shown by the attendant trendlines, increasing the money supply has not led to either more sustainable economic growth rates or inflation. It has been quite the opposite.

However, it isn't just the expansion of the Fed's balance sheet that undermines the strength of the economy. For instance, it is also the ongoing suppression of interest rates to try and stimulate economic activity. In 2000, the Fed "crossed the Rubicon," whereby lowering interest rates did not stimulate economic activity. Therefore, the continued increase in the "debt burden" detracted from it.

Similarly, we can illustrate the last point by comparing monetary velocity to the deficit.

As a result, monetary velocity increases when the deficit reverses to a surplus. Such allows revenues to move into productive investments rather than debt service.

The problem for the Fed is the misunderstanding of the derivation of organic economic inflation

6-More Reasons Deflation Is A Bigger Threat

Previously, Mish Shedlock discussed Dr. Lacy Hunt's views on inflation, or rather why deflation remains a more significant threat.

To summarize, the long-term risk to current outlooks remains the "3-Ds:"

Conclusion

With this in mind, the debt problem remains a massive risk. If rates rise, the negative impact on an indebted economy quickly depresses activity. More importantly, the decline in monetary velocity shows deflation is a persistent threat.

Treasury&Risk clearly explained the reasoning :

"It is hard to overstate the degree to which psychology drives an economy's shift to deflation. When the prevailing economic mood in a nation changes from optimism to pessimism, participants change. Creditors, debtors, investors, producers, and consumers all change their primary orientation from expansion to conservation.

These behaviors reduce the velocity of money, which puts downward pressure on prices. Money velocity has already been slowing for years, a classic warning sign that deflation is impending. Now, thanks to the virus-related lockdowns, money velocity has begun to collapse. As widespread pessimism takes hold, expect it to fall even further."

There are no real options for the Federal Reserve unless they are willing to allow the system to reset painfully.

Unfortunately, we now have a decade of experience of watching monetary experiments only succeed in creating a massive "wealth gap."

Most telling is the current economists' inability to realize the problem is trying to "cure a debt problem with more debt."

In conclusion, the Keynesian view that "more money in people's pockets" will drive up consumer spending, with a boost to GDP being the result, has been wrong. It hasn't happened in 40 years.

Unfortunately, deflation remains the most significant threat as permanent growth doesn't come from an artificial stimulus.


bikepath999 2 hours ago

Title is 100% wrong! It's artificial growth (money printing) that is the inflation! Organic growth thru increased production can actually lead to deflation!

OldNewB 2 hours ago

Exactly. Inflation can be the reduction in the rate of deflation due to productivity increases.

bikepath999 2 hours ago

Transitory is just the new little catch phrase to have you chasing after your own tail rather than skinning alive a central banker or politician

dead hobo 2 hours ago (Edited)

Transitory was Janet Yellen's favorite word for years. It was her catch phrase like Bernanke's was 'The benefits outweigh the costs'. Total blather in both cases.

In both cases, it was muppet-speak for 'p*ss off'. But it sounded oh so intelligent and the media lapped it up.

About the above article ... Economics, as commonly applied by sales folk, teachers, experts, and pundits is theology, not science. One credibility trick is to quote an expert who quoted another expert. Like above. How can you argue against this depth?

Misesmissesme 2 hours ago (Edited)

They are somewhat correct on the technical definition of inflation. However, hyper-inflation does not care about any of that. It only needs a government willing to print and a populace that has lost faith in the currency. We know the gov and the Fed are game. It's just a matter of time until the masses lose faith in the dollar.

OldNewB 2 hours ago (Edited) remove link

Devaluing the fiat by printing to infinity has nothing to do with growth.

Printing IS inflation. Where it shows up is another matter.

Whether it results in higher prices is a function of behavior between buyers and sellers of assets, products and services.

-- ALIEN -- 2 hours ago (Edited) remove link

International Energy Agency said GLOBAL PEAK OIL PRODUCTION for all liquids happened in 2018.

NO economic growth is possible without growing the energy supply, so 2% predicted growth is BS,

unless other countries contract by 2+%.

Quia Possum 2 hours ago

We're beyond the point of pulling the rip cord.

Some ZH writer had an excellent analogy to a hot air balloon on fire. Up to a height X, you can jump off safely. Up to a height Y you can jump off and survive with some broken bones, but you're going to have to muster some courage to do that. But once you pass that height you're dead whether you jump or stay in the balloon all the way.

[Jun 18, 2021] 2Y Treasury Yields Are Exploding Higher, Yield Curve Collapse Crushes Banks - ZeroHedge

Jun 18, 2021 | www.zerohedge.com
Tesla's Milton 1 hour ago remove link

Marcus (Goldman's bank) pays 0.70% for an 18 month CD. It's not much but it's a lot better than a 2 yr. Treasury.

[Jun 14, 2021] Economist David Rosenberg says the Bond Market might have inflation right

The price of energy is growing. and that means inflation is accelerating, but it will probably take the form of stagflation...
Stagflation is characterized by slow economic growth and relatively high unemployment -- or economic stagnation -- which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can also be alternatively defined as a period of inflation combined with a decline in gross domestic product (GDP). See also Stagflation - Wikipedia
Stagflation led to the emergence of the Misery index . This index, which is the simple sum of the inflation rate and unemployment rate, served as a tool to show just how badly people were feeling when stagflation hit the economy.
Under neoclassic economic doctrine stagflation was long believed to be impossible. This pseudoscience demonstrated in the Phillips Curve portrayed macroeconomic policy as a trade-off between unemployment and inflation.
Jun 14, 2021 | www.zerohedge.com

I commented above on direction. I believe the bond market has the direction in June correct (falling yields).

That said, the "real yield" is nearly -5% (CPI minus the 3-Month Treasury Yield). This fosters speculation in assets.

We are in the midst of the third big bubble in just over 20 years.

Extrapolating Conditions

It's usually a big mistake to extrapolate current conditions far into the future. And that includes now.

Sure, there are huge wage pressures and the price of some commodities, especially lumber, went through the roof.

But where to from here is what's important.

Despite Wage Increases, Real Hourly Pay Is Losing to Inflation

On June 11, I commented Despite Wage Increases, Real Hourly Pay Is Losing to Inflation

I also noted Huge Upward Wage Pressures for Both Skilled and Unskilled Labor

But Lacy Hunt is holding pat as well.

He pinged me in response to Explaining the Shortage of Skilled Workers and Why It Will Get Worse with these thoughts.

Mish,

Excellent analysis. I would add one point as a result of your conclusion. Older populations with declining birth rates and slower population, depress household, business and public investment. The contracting effect on investment is highly deflationary and overwhelms the impact of inflation due to the smaller labor force. This condition is plainly evident in Japan and Europe. Moreover, this pattern will be increasingly apparent in the US .

The Transitory Boat

The transitory boat is a small one. Powell and Yellen have to say that no matter what they believe.

Rosenberg, Hunt, and I are in the small boat.

And if you want another reason to be in that boat with us, then think about what happens when asset bubbles burst. It won't be inflationary, that's for sure.

Meanwhile, "I just say buy the gold," Rosenberg said. "Gold has 1/5 of the volatility that bitcoin has."

For more on gold and real interest rates, please see my June 11 post Real Interest Rates Suggest It's a Good Time to Buy and Hold Gold

[Jun 14, 2021] World War II Was Transitory- - Putting Inflation In Context

Jun 14, 2021 | www.zerohedge.com

Via Global Macro Monitor,

Let us preface our inflation note with one of our favorite quotes:

"World War II was transitory"

– GMM

Inflation has eroded my purchasing power in my transitory life. Bring back the $.35 Big Mac, which was only about 20% of the minimum wage. Now? About 40-50%... Enough to spark a revolution?

[Jun 13, 2021] America's Fuel-Making Corridor Prepares for Hurricane Laura - WSJ

Jun 13, 2021 | www.wsj.com

By Rebecca Elliott and Collin Eaton Updated Aug. 26, 2020 4:11 pm ET

Refineries, petrochemical facilities and ports along the Gulf Coast were closing as Hurricane Laura barreled toward the Texas-Louisiana border.

The hurricane strengthened to a Category 4 storm Wednesday, with sustained winds of 140 miles an hour, according to an afternoon update from the National Hurricane Center. It is projected to unleash a storm surge as high as 20 feet along portions of the Louisiana coast with as much as 15 inches of rainfall.

...

[Jun 13, 2021] Inflation doesn't really matters for the US bond prices: the only thing that matters is the question: "How much bonds does the one market member with unlimited funds buy?".

Jun 13, 2021 | peakoilbarrel.com

EULENSPIEGEL IGNORED 06/11/2021 at 10:07 am

This isn't your history bond market.

Inflation doesn't really matters, what only matters is the one big question: "How much bonds does the one market member with unlimited funds buy?".

And the time the FED was able to rise more than .25% is in the rear mirror – when they hike now, inflation or not, all these zombie companies and zombie banks will fail and no lawyer in the world will be able to clean up the chaos after all these insolvency filings.

They have to talk the way out of this inflation. They have to talk until it stops, or longer. They can't hike. They can perhaps hike again when most of the debt is inflated away – a period with 10+% inflation and 1% bond interrest.

And yes, they can buy litterally any bond dumped onto the market – shown this in March last year when they stopped the corona crash in an action of one week.

I think most non-investment-banks are zombies at the moment, and more than 20% of all companies. They all will fail in less than 1 year when we would have realistic interrest rates. On the dirty end, this would mean 10%+ for all this junk out there – even mighty EXXON will be downgraded to B fast.

In old times the FED rates would be more than 5% now with these inflation numbers. Nobody can pay this these days.

And now in the USA – look for how much social justice and social security laws you'll get. The FED has to provide cover for all of them.

We in Europe will do this, too. New green deal, new CO2 taxes, better social security – the ECB already has said they will swallow everything dumped on the market.

So, oil 100$ the next years – but some kind of strange dollars buying less then they used to.

Just my 2 cents. REPLY HOLE IN HEAD IGNORED 06/12/2021 at 5:39 am

Eulen , your 2cents = 1 Dollar . Everything you say is correct . Weird is the only word for what is happening in the financial world . I was in my first year of college when Paul Volcker hiked interest rates into double digits so I have a benchmark to measure against . This is not going to end well . Take care . REPLY

[Jun 13, 2021] Dennis Gartman is still considered a commodities expert. He infamously said in 2016 that WTI would never be above $44 again in his lifetime. He is still alive last I knew

There are also Bagdad Bobs from IEA " "World oil supply is expected to grow at a faster rate in 2022, with the US driving gains of 1.6 million bpd from producers outside the OPEC alliance. "
Jun 13, 2021 | peakoilbarrel.com
SHALLOW SAND IGNORED 06/11/2021 at 3:58 pm

Dennis Gartman is still considered a commodities expert.

He infamously said in 2016 that WTI would never be above $44 again in his lifetime. He is still alive last I knew.

[Jun 12, 2021] Stockman Warns -Buckle Up!-, May's Soaring CPI Print Was No 'Transitory' Blip

All factors that Stokman sites does not exclude bond rate remaining withing this yea max-min band for the rest of the year. You never know how long Fed will continue to buy bonds to suppress the yield.
The last "dead chicken bounce" of 10 year bond caught many people unprepared and surprised.
Jun 12, 2021 | www.zerohedge.com

Authored by David Stockman via Contra Corner blog,

The Fed's destructive money-pumping has many victims, but chief among these is the Wall Street financial narrative itself.

It emits not a whiff about the patent absurdity of the Fed's monthly purchase of $120 billion of treasury and GSE debt under current circumstances; and treats with complete respect and seriousness the juvenile word game known as "thinking about thinking about tapering" by which the clowns in the Eccles Building fearfully attempt to placate the liquidity-intoxicated speculators on Wall Street.

So it's not surprising that today's 5.0% CPI reading was made inoperative within minutes after the BLS release by a chorus of financial pundits gumming about "base effects" and ridiculing outliers like soaring used car prices (up 29.7% YoY), which, of course, Bloomberg reporters never see the inside of anyway.

Then again, that's why we look at the two-year stacked CAGRs, which smooth the ups and downs of the worst lockdown months last spring; and also why we use the 16% trimmed mean CPI, which eliminates the highest 8% and lowest 8% of items in the overall CPI each month (both sets of deleted outliers are different each month).

In the present instance, therefore, off-setting the used car prices in the highest 8% of items during May is the -5.0% YoY drop in health insurance costs (if you believe that BLS whopper) and the -5.3% drop in sporting event prices, which, of course, have been largely zero since last April.

In any event, the 16% trimmed mean CPI for May was up by 4.7% annualized versus the April number and was higher by 2.62% on YoY basis.

Still, the more salient point is that on a two-year stacked basis the plain old CPI -- used car prices and all -- leaves not a scintilla of doubt: Consumer inflation is accelerating and rapidly.

During the last eight months the growth rate for the two year stack has risen from 1.48% to 2.55% per annum. And we don't recall a word in May 2019 about that year's reading being particularly deflationary. It was actually up 1.83% from May 2018.

Per Annum CPI Increase, Two-Year Stack:

Still, according to the Fed apologists there's nothing troubling about the above because the Fed is now only trying to hit its 2.00% inflation target "averaged over time".

Let's see. Here are the CPI growth rates going back to May 2014. It turns out you have to average back seven years before you have a shortfall from the 2.00% target!

CPI Increase per Annum To May 2021 From:

You get the scam. These mendacious fools will just keep averaging back in time until the get a number that's a tad under 2.00%, smack their lips loudly and then pronounce the current inflation to be "transitory".

And they will also toss out any inflation index that undercuts their MOAAR inflation mantra -- like all of the data reported above!

So we will say it again : The CPI is a highly imperfect general price measure owing to its one-sided treatment of quality (hedonic) improvements, wherein some reported prices are adjusted downward for improved product features like airbags and more powerful PCs, put few prices are adjusted upward for the junkie toys, towels, kitchenware, appliances and furniture that comes out of China.

But with the 8% highest and 8% lowest prices dropped out monthly to filter out the short-run noise, the 16% trimmed mean version of the CPI at least purports to be a fixed basket price index, not a variable weight deflator like the Fed's beloved PCE deflator.

In short, the 16% trimmed mean CPI puts paid to the "transitory" scam. Come hell or high water, this serviceable inflation measure has been rising at 2.00% per annum since the year 2000, and even more than that during the 1990s.

Thus, during the 112 months since the Fed formally adopted inflation targeting in January 2012, it has risen by 2.03% per annum and by 2.15% per annum since January 2000.

Equally significantly, there have been only a handful of times during the 256 monthly readings since January 2000 when the year-over-year measure dropped materially below 2.00%.

YoY Change, 16% Trimmed Mean CPI, 2000-2021

For want of doubt, here is the Fed's preferred short-ruler -- -the core PCE (personal consumption expenditure deflator less food and energy). And the Fed's case for its insane money-pumping essentially boils down to the dueling information covered by the red bars above and the purple bars below.

As it happens, the one-year change in the core PCE deflator is 3.1% and the stacked two-year gain is 1.99% per annum. That latter is apparently not close enough to 2.00% for government work, meaning that the Fed needs to get more years into its average.

Even then, you have to be trained in the medieval theology of counting angels on the head of a pin to ascertain the purported earth-shaking "shortfall" from target. Compared to April 2021, here are the multi-year CAGRs on an April-to-April basis:

That's right. For the five year-pairs shown above, the average CAGR for the core PCE deflator was 1.90%. It seems that "lowflation" amounts to that which you need a magnifying glass to ascertain -- 10 basis points of shortfall.

Of course, our monetary bean counters are not done "averaging", either. If you go back to January 2012 when the Fed officially adopted inflation targeting, the core PCE deflator is up by 1.69% per annum, and since January 2000 it has risen by 1.75% per annum.

So there you have it. For want of 25-31 basis points of annual inflation -- -averaging back to the beginning of the current century -- you have a camarilla of central bankers giving deer in the headlights an altogether new meaning. That is to say, they are apparently not even thinking about thinking about tapering their massive bond-buying fraud owing to the barely detectable differences between purple and red bars of these dueling charts.

As we said a few days back, would that they had applied the 25th Amendment to the Federal Reserve Board.

These sick puppies are in urgent need of palliative care.

YoY Change In Core PCE Deflator, 2000-2021

They are also in need of a dose of realism, and on that score there are three figures in the May CPI report which tell you all you need to know. To wit, compared to May 2020, durable goods prices were up by 10.3%, nondurables were higher by 7.4% and services less energy gained 2.9%.

In fact, in the recent history of these three figures lays a stinging refutation of the entire "lowflation" scam promulgated by the Fed money printers and their acolytes and shills on Wall Street and in Washington, too.

On this matter, the Donald was right, even if by accident or for the wrong reasons. What we are referring to, of course, is the "Shina" factor.

Beijing's form of state-controlled printing press capitalism has systematically drivendown the cost of manufactured goods and especially durables by, in effect, draining the rice paddies of China's great interior and herding its latent industrial work force into spanking new factories which paid wages less than meager. And CapEx costs were rock bottom, too, owing to $50 trillion of central bank-fueled domestic debt and the greatest cheap capital-driven malinvestment spree in human history.

The result was an intense, multi-decade long deflation of manufactured goods as the high labor costs embodied in US and European manufacturers were steadily squeezed out of global prices levels as production shifted to China and its East Asian supply chain.

That impact is patently obvious in the composition of the CPI among the three components which were flashing warning lights in today's inflation report.

Composition of CPI By Major Components, 2000-2021

In the first place, the core of domestic inflation lies in the 58.8% weight of the CPI consisting of mainly domestically supplied services. The 2.9% YoY gain reported for May for CPI services less energy was essentially par for the course.

That is, during the last 21 years (since January 2000) this component (black line) has risen by 2.71% per annum, and since January 2012 it has gained a similar 2.63% per annum.

Needless to say, if there is any part of the inflation rate that the Fed can most powerfully impact, it is domestically supplied services like health care, education, housing, entertainment, travel and foods services. So where's the "lowflation" in that part of the CPI basket?

Alas, we don't have lowflation in services at all, but a stubborn 2.6%-3.0% upward price drift in domestic service components which account for nearly three-fifths of the household budget.

By contrast, the durable goods component (brown line) accounts for 11.1% of the CPI, and it's been an anchor to the windward for more than two decades. As of May 2021, prices were still 8% below their January 2000 level.

The truth is, the alleged lowflation on the top line CPI has been heavily attributable to the deflationary durable goods sector, but, alas, that era is apparently over. The Chinese rice paddies have been drained on a one-time basis and its labor force is now actually shrinking, while the Donald's ill-timed tariff barriers have forced production to move to higher cost venues, albeit not necessary the USA of A.

Either way, the anchor to the windward is largely gone , meaning that rising durable goods prices going forward will no-longer weigh as heavily on the CPI.

It should be further noted that during the past two-decades nondurable prices have also held-down the CPI top line -- again in large part owing to the "Shina" factor and downward pressures from cheap apparel, footwear, home furnishings and the like.

During the past 21 years, the nondurables component (yellow line) of the CPI rose by 1.99% per annum, which is as close as you please to the target, but was also on anchor on the overall CPI top-line ( purple line) which increased by 2.19% per annum.

Alas, during the period since January 2012, nondurables rose by just 0.63% per annum owing to flat-lining energy and commodity prices, thereby pulling the overall CPI down to 1.80% per annum, where it too fell awry of the Fed's sacred 2.00% target.

But here's the thing. A smattering of surging nondurable goods prices in the May 2021 report are a stark reminder that the times they are a changin'.

On a YoY basis, these components suggest that "lowflation" in durables may have passed its sell-by date and that the 7.4% YoY gain in nondurables overall may be lifting, not suppressing, the CPI top-line going forward.

YoY Change In Major Nondurables Components:

In sum, the chart above captures the one-time history of the Fed's phony "lowflation" narrative -- an aberrant condition that is now fading fast. Sooner or latter they will run out of excuses and back inflation reports to average down. And that, in turn, means tapering of the Fed's great bond-buying fraud -- the lynch pin of the greatest bond and stock bubble in recorded history.

Do we think that will trigger the greatest financial asset value collapse in modern times?

Why, yes, we do! play_arrow


wareco 4 hours ago remove link

Seriously? David Stockman? This guy has been perpetually wrong for the last 4 years, at least. In June, 2017, he was calling for the S&P to fall to 1600. Never happened. In October 2019, he loudly proclaimed that everyone should get out of the "casino". S&P up 40% since then. He has as much credibility as that self-promoter, Harry Dent, who has been calling for gold to drop to $700 since 2012.

Sound of the Suburbs 8 hours ago (Edited) remove link

Stage one – The markets are rising.

Look at all that wealth we are creating.

Stage two – It's a bubble.

That wealth is going to disappear.

Stage three – Oh cor blimey! I remember now, this is what happened last time

At the end of the 1920s, the US was a ponzi scheme of inflated asset prices.

The use of neoclassical economics, and the belief in free markets, made them think that inflated asset prices represented real wealth.

1929 – Wakey, wakey time

The use of neoclassical economics, and the belief in free markets, made them think that inflated asset prices represented real wealth, but it didn't.

It didn't then, and it doesn't now.

Putting a new wrapper around old economics did fool global elites.

You'd have to get up pretty early in the morning to catch me out.

E5 9 hours ago

Not going to happen.

No one is buying.

No one is raising salaries.

Inflation is a stalled plane.

Everyone is waiting.

Self fulfilling prophecy. Mainstreet is waiting on their inheritance from dead Boomers. The only thing that will save America. Money being spent and Cuban Missile Crisis not happening under Boomers.

[Jun 12, 2021] Junk Bonds Are Dominating Even One of America's Safe Havens

Notable quotes:
"... The dynamics show how much the municipal-bond market has been swept up in the global push into higher yield assets as central banks worldwide hold interest rates low to stoke the economic recovery. ..."
"... That's fueled a surge in debt sales by corporations and governments battered by virus lockdowns. And for the state and local government debt market, it has revived the years-long rally in junk bonds that was only temporarily derailed by the coronavirus lockdowns. ..."
"... So far this year, government agencies across the U.S. have sold more than $6.5 billion of bonds that can only be marketed to institutional investors able to bear the risk, driving such issuance toward the biggest year on record, according to data compiled by Bloomberg. ..."
Jun 10, 2021 | finance.yahoo.com

The municipal junk-bond boom is roaring back.

With the economy rebounding swiftly from the pandemic, interest rates on high-yield state and local government securities have tumbled to the lowest in over two decades. Cash is pouring into mutual funds focused on the junk-rated debt so quickly that money managers are fighting to get in on new deals. And prices have rallied, driving high-yield bonds to their biggest run of outperformance since 2014.

The demand is so strong that a California agency sold 35-year bonds for the development of a senior-living community at a yield of 4.43%, about two-and-a-half percentage points less than bankers initially anticipated. The price went on to surge 8% in secondary trading.

"We couldn't think of a better time to come to market," said Sarkis Garabedian, an investment banker at Ziegler, the underwriter on the bonds. He said the firm hadn't seen such interest in a transaction for a new senior living campus since they started tracking the metrics in the 1980s. "We really hit the sweet spot here."

Recent bond sales have raised money for an ethanol production facility in North Dakota, a bevy of charter schools, and a youth-sports complex in Arizona. American Samoa, a junk-rated territory, is tapping the market for the first time since 2018. And the owner of a plant that recycles rice waste into fiberboard may sell more debt even though it has already been driven to default.

The dynamics show how much the municipal-bond market has been swept up in the global push into higher yield assets as central banks worldwide hold interest rates low to stoke the economic recovery.

That's fueled a surge in debt sales by corporations and governments battered by virus lockdowns. And for the state and local government debt market, it has revived the years-long rally in junk bonds that was only temporarily derailed by the coronavirus lockdowns.

So far this year, government agencies across the U.S. have sold more than $6.5 billion of bonds that can only be marketed to institutional investors able to bear the risk, driving such issuance toward the biggest year on record, according to data compiled by Bloomberg.

[Jun 12, 2021] Headline CPI is expected to jump 4.7% year-over-year

May CPI is expected at 8:30 a.m. ET Thursday. It is unclear to me why the 10-year Treasury yield fell below the key 1.5% Wednesday. Was it short-covering? if so what triggered it? If predictions are true it might jump up on Jun 10, 2021 because you can't have Headline CPI 4.7% and the 10-year Treasury yield 1.5%. That's the theatre of absurd.
Rent, owners' equivalent rent and medical care services collectively are 50% of the core CPI basket.
Notable quotes:
"... Headline CPI is expected to jump 4.7% year-over-year, the highest rate since sky high energy prices spiked inflation readings in the fall of 2008. ..."
"... "I am worried about rent and owners' equivalent rent because it should go up. It had decelerated," she said. Shelter is more than 30% of CPI , and rent costs have bottomed in some cities, Swonk added. "The issue is it could have longer legs and keep overall inflation measures buoyed more than people expect." ..."
Jun 09, 2021 | www.msn.com

...The consensus forecast for the core consumer price index, which excludes food and energy, is 3.5% on a year-over-year basis, according to Dow Jones. That's the fastest annual pace in 28 years.

Economists expect both core and headline CPI rose by 0.5% in May. Headline CPI is expected to jump 4.7% year-over-year, the highest rate since sky high energy prices spiked inflation readings in the fall of 2008.

... ... ...

"I am worried about rent and owners' equivalent rent because it should go up. It had decelerated," she said. Shelter is more than 30% of CPI , and rent costs have bottomed in some cities, Swonk added. "The issue is it could have longer legs and keep overall inflation measures buoyed more than people expect."

[Jun 12, 2021] Don't dismiss market bubbles" some leave lasting progress behind

Notable quotes:
"... As bubbles peak, they combine objective signs of excess" prices rising much faster than earnings can justify" with subjective signs of mania, such as frenzied trading and borrowing. ..."
"... My research on the 10 biggest bubbles of the past century, from the US stock market in 1929 to Chinese shares in 2015, shows that prices typically rise 100 per cent in the year before the peak, with much of the gain packed into the climactic last months. That finding is closely in line with bubble studies from academics at Harvard and others. ..."
"... By those standards, there are at least five current bubblets. They include the cryptocurrency market for bitcoin and ethereum; clean energy stocks, including some of the biggest names in electric vehicles; small cap stocks, including many of the hottest pandemic stories; a basket of tech stocks that lack earnings, which is also chock-a-block with famous brands; and special purpose acquisition companies (Spacs) , which allow investors a new way to buy into private firms before they go public. ..."
"... The historical bubbles in my study did suffer midcourse setbacks on the way up, but typically those corrections were around 25 per cent and never more than 35 per cent. Beyond that point" a 35 per cent drop" the bubbles in my sample became monophasic, or stuck on a one-way downhill path. ..."
"... It is important to remember that a bubble is often a good idea gone too far. In the early 2000s, the conventional wisdom was that the dotcom bubble had fuelled mainly junk companies with business plans barely worth the napkins they were written on. Later, researchers found that, compared with other bubbles, those in the tech sector produce many start-ups that fail but also help launch major innovations. For every few dozen dotcom flame-outs, there was a giant survivor such as Google or Amazon that would go on to make the economy more productive. ..."
Jun 06, 2021 | investornewsletter.net

As bubbles peak, they combine objective signs of excess" prices rising much faster than earnings can justify" with subjective signs of mania, such as frenzied trading and borrowing.

To some the entire US stock market looks bubbly given its dizzying run-up, but earnings growth has also been extraordinarily strong through the pandemic. Beneath the surface, however, sectors of the market from green tech to cryptocurrency show tell-tale bubble signs.

My research on the 10 biggest bubbles of the past century, from the US stock market in 1929 to Chinese shares in 2015, shows that prices typically rise 100 per cent in the year before the peak, with much of the gain packed into the climactic last months. That finding is closely in line with bubble studies from academics at Harvard and others.

By those standards, there are at least five current bubblets. They include the cryptocurrency market for bitcoin and ethereum; clean energy stocks, including some of the biggest names in electric vehicles; small cap stocks, including many of the hottest pandemic stories; a basket of tech stocks that lack earnings, which is also chock-a-block with famous brands; and special purpose acquisition companies (Spacs) , which allow investors a new way to buy into private firms before they go public.

Each of these bubblets is captured in an index that rose in the last year by around 100 per cent, often much more, to a peak value between $500bn and $2.5tn. Day traders and other newbies rushed in, a common symptom of late stage market manias. Now these bubbles are faltering, as they so often do, in response to increases in long-term interest rates. What's next?

The historical bubbles in my study did suffer midcourse setbacks on the way up, but typically those corrections were around 25 per cent and never more than 35 per cent. Beyond that point" a 35 per cent drop" the bubbles in my sample became monophasic, or stuck on a one-way downhill path.

For the median case, the bottom was found 70 per cent below the peak, and came just over two years after the peak. Except for the index of small-cap pandemic stocks, the other four bubble candidates have all experienced drops of at least 35 per cent, but also of no more than 50 per cent (in the case of ethereum). In other words, they are not likely to resume inflating any time soon, and they are still far from the typical bottom.

There is one new factor that could upset this historical pattern. Despite the rise in long-term interest rates, there is plenty of liquidity sloshing around the markets, with central banks committed to easy money as never before. The risks though are skewed to the downside.

It is important to remember that a bubble is often a good idea gone too far. In the early 2000s, the conventional wisdom was that the dotcom bubble had fuelled mainly junk companies with business plans barely worth the napkins they were written on. Later, researchers found that, compared with other bubbles, those in the tech sector produce many start-ups that fail but also help launch major innovations. For every few dozen dotcom flame-outs, there was a giant survivor such as Google or Amazon that would go on to make the economy more productive.

[Jun 12, 2021] There s a new LGBTQ-focused ETF

Notable quotes:
"... Just in time for Pride Month, a new exchange traded fund aims to connect with LGBTQ investors. ..."
"... LGBTQ Loyalty Holdings partners with Harris Poll to annually survey 150,000 self-identifying LGBTQ constituents across the U.S. for their views about a company's brand awareness, brand image, brand loyalty and how the firm supports the community. As noted in its prospectus , 25% of the index's weighting is derived from that survey data. ..."
Jun 06, 2021 | www.marketwatch.com

Just in time for Pride Month, a new exchange traded fund aims to connect with LGBTQ investors. Two previous efforts failed to attract enough assets.

The fund, LGBTQ + ESG100 ETF LGBT, , launched in late May, is a passively managed, large-cap index fund that holds the top 100 U.S. companies that most align with the LGBTQ community.

In 2019, two LGBTQ-focused ETFs were delisted: ALPS Workplace Equality Portfolio ETF and InsightShares LGBT Employment Equality ETFs. Like this new fund, both were mostly U.S. large-cap, passive index ETFs comprising companies that received high or perfect marks for workplace equality in the Human Rights Campaign Corporate Equality Index , a benchmark for corporate LGBTQ policies.

The first ETF stuck around for five years, but the second barely made it two years, even though it was launched with much fanfare by UBS. Neither gained many assets.

Bobby Blair, CEO and founder of LGBTQ Loyalty Holdings, which launched the fund with issuer ProcureAM, says community input on holdings makes this fund different.

LGBTQ Loyalty Holdings partners with Harris Poll to annually survey 150,000 self-identifying LGBTQ constituents across the U.S. for their views about a company's brand awareness, brand image, brand loyalty and how the firm supports the community. As noted in its prospectus , 25% of the index's weighting is derived from that survey data.

... the LGBTQ + ESG100 has an annual expense ratio of 0.75%.

[Jun 12, 2021] Tech giants and tax havens targeted by historic G7 deal by David Milliken and Kate Holton

Jun 05, 2021 | finance.yahoo.com

David Milliken and Kate Holton Sat, June 5, 2021, 4:01 AM

...Hundreds of billions of dollars could flow into the coffers of governments left cash-strapped by the COVID-19 pandemic after the Group of Seven (G7) advanced economies agreed to back a minimum global corporate tax rate of at least 15%.

Facebook said it expected it would have to pay more tax, in more countries, as a result of the deal, which comes after eight years of talks that gained fresh impetus in recent months after proposals from U.S. President Joe Biden's new administration.

"G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age," British finance minister Rishi Sunak said after chairing a two-day meeting in London.

The meeting, hosted at an ornate 19th-century mansion near Buckingham Palace in central London, was the first time finance ministers have met face-to-face since the start of the pandemic.

U.S. Treasury Secretary Janet Yellen said the "significant, unprecedented commitment" would end what she called a race to the bottom on global taxation. German finance minister Olaf Scholz said the deal was "bad news for tax havens around the world". Yellen also saw the G7 meeting as marking a return to multilateralism under Biden and a contrast to the approach of U.S. President Donald Trump, who alienated many U.S. allies. "What I've seen during my time at this G7 is deep collaboration and a desire to coordinate and address a much broader range of global problems," she said.

Ministers also agreed to move towards making companies declare their environmental impact in a more standard way so investors can decided more easily whether to fund them, a key goal for Britain.

... ... ...

Key details remain to be negotiated over the coming months. Saturday's agreement says only "the largest and most profitable multinational enterprises" would be affected.

... ... ...

The G7 includes the United States, Japan, Germany, Britain, France, Italy and Canada.

[Jun 12, 2021] Average hourly earnings for workers in leisure and hospitality rose to $18.09 in May by Jonnelle Marte and Ann Saphir

Jun 04, 2021 | finance.yahoo.com

... Average hourly earnings for workers in leisure and hospitality rose to $18.09 in May, the highest ever and up 5% from January alone, according to Labor Department data released on Friday. Pay rose even faster for workers in non-manager roles, who saw earnings rise by 7.2% from January, far outpacing any other sector.

That higher pay could be a sign that companies are lifting wages as they seek to draw people back to work after more than a year at home. Some businesses are struggling to keep up with higher demand as more consumers, now fully vaccinated, get back to flying, staying in hotels and dining indoors. Job gains in leisure and hospitality this year have so far outpaced gains in other sectors.

But it is too soon to know whether the boost will be enough to help speed up hiring at a time when many workers are still facing other obstacles, including health concerns and having to care for children and other relatives.

"The fact of the matter is, the pandemic is still going on," said Daniel Zhao, a senior economist for Glassdoor. "The economy is running ahead of where we are from a public health situation."

Some 2.5 million people said they were prevented from looking for work in May because of the pandemic, according to the Labor Department.


... ... ...


Employment in leisure and hospitality is still in a deep hole when compared with pre-pandemic levels. The industry added 292,000 jobs in May, with about two-thirds of that hiring happening in restaurants and bars. But overall employment is still down 2.5 million jobs, or 15% from pre-pandemic levels, more than any other industry.

... ... ...

Some people who previously worked at hotels or restaurants moved on to other types of jobs during the pandemic, such as packaging goods at a warehouse, and it's too soon to know whether they will switch back as more of the economy reopens, said Zhao.

...About half of states are putting an early end to a $300 federal supplement to weekly unemployment benefits, winding them down as soon as June 12. The supplement expires nationwide on Sept. 6.

(Reporting by Jonnelle Marte and Ann Saphir; Editing by Chizu Nomiyama and Jonathan Oatis)

[Jun 12, 2021] Suze Orman thinks rising stock prices could be a problem for you" here's why

Jun 08, 2021 | finance.yahoo.com

"Over the past five years, the S&P 500 stock index has more than doubled. For the past 10 years, it has nearly quadrupled," says Orman. "If you have left your portfolios on autopilot, that could likely mean that you now own more stock than you intend to, or should."

Left to their own devices, your increasingly valuable stocks may have started to account for an even larger portion of your account

... ... ...

Orman cites a recent analysis from Fidelity Investments on the retirement plans the company handles. Fidelity estimates about 20% of savers own more stock than they'd recommend for someone of their age.


[Jun 12, 2021] Forget Activism- Chronic Underperformance Is Big Oil's Biggest Problem

Jun 06, 2021 | finance.yahoo.com

Whereas climate change issues are the presumptive reasons behind the latest wave of investor revolts at the oil and gas giants, lurking beneath the surface is a growing sense of apprehension about Big Oil's strategy and failure to generate adequate returns for shareholders in recent decades.

The naked truth is that Exxon and its cohorts have severely underperformed the broader market over the last two decades in terms of total returns to shareholders, implying the sector's woes are long-term and strategic rather than short-term and cyclical.

Chronic underperformance

XOM

Source: CNN Money

Big Oil's underperformance relative to the market is clearly evident whether you are looking at 2-year, 5-year, 10-year, or even 20-year timespans.

For instance, since 2015, Exxon shares have returned a -2.5% compound annual loss based on share prices and dividends, a far cry from the average annual gain of +14.4% by the S&P 500 over the timeframe.

Over the past two decades, Exxon's compound annual return has clocked in at +4.2%, still considerably lower than the broad market benchmark's return of +7.1%.

... ... ...

Exxon is hardly alone, with none of its peers, including Chevron, Royal Dutch Shell (NYSE:RDS.A), BP Inc. (NYSE:BP), and Total (NYSE:TOT) coming close to matching the returns by the broader share market over the past decade.

In fact, on an inflation-adjusted U.S. dollar basis, returns by Exxon, Shell, and BP have been negative over the past five years, a period which coincided with the biggest bull market in the history of the stock market.

The renewable energy conundrum

You cannot blame the oil majors for continuing to engage in a lot of hand-wringing at a time when investors are demanding they pump less oil and transition to cleaner energy.

For the oil majors, successfully transitioning to green energy companies is not going to be a walk in the park because these companies have to ride two horses.

That's the case because the majority are already battling dwindling cash flows which means they cannot afford to gamble with whatever little is left. Oil prices have been on a downtrend since 2014, a situation that has only worsened during the pandemic.

Oil and gas firms are still grappling with the best way to presently use dwindling cash flows; in effect, they are still weighing whether it's worthwhile to at least partially reinvent themselves as renewables businesses while also determining which low-carbon energy markets offer the most attractive future returns.

Most renewable ventures, like solar and wind projects, tend to churn out cash flows akin to annuities for several decades after initial up-front capital expenditure with generally low price risk as opposed to their current models with faster payback but high oil price risk. With the need to generate quick shareholder returns, some fossil fuel companies have actually been scaling back their clean energy investments.

Energy companies are also faced with another conundrum: Diminishing returns from their clean energy investments.

Related: ''We'll See $200 Oil": Russia & OPEC Ministers Blast IEA's Net Zero Plan

A paper published in Science Direct last August says that dramatic reductions in the cost of wind and solar have been leading to an even bigger reduction in revenue inflows leading to falling profits. This is particularly true for wind energy as later deployments of wind usually have lower market value than earlier ones due to wind energy revenue declining more rapidly than cost reductions. Solar is more resilient, with technological progress approximately balancing out the revenue degradation, which perhaps explains why solar stocks have gone ballistic.

Adding wind and solar to our grid tends to reduce electricity prices during peak generation times: Indeed, electricity prices in California can come down to zero during long sunny durations. This was not a problem for early deployments but is becoming a major concern as renewables increasingly play a bigger part in our electricity generation mix.

But, ultimately, Big Oil will have to take the plunge and engage in drastic internal restructuring and product cycle transitions even as activists like Engine No.1 promise to continue turning the screw. As Charlie Penner of Engine No.1 has told FT , the energy transition is happening faster than expected and has undermined Big Oil's assumptions about long-term demand for its oil.

By Alex Kimani for Oilprice.com

->


[Jun 12, 2021] Sidewalk Robots are Now Delivering Food in Miami

Notable quotes:
"... Florida Sun-Sentinel ..."
"... [A spokesperson says later in the article "there is always a remote and in-field team looking for the robot."] ..."
"... the Sun-Sentinel reports that "In about six months, at least 16 restaurants came on board making nearly 70,000 deliveries... ..."
Jun 06, 2021 | hardware.slashdot.org

18-inch tall robots on four wheels zipping across city sidewalks "stopped people in their tracks as they whipped out their camera phones," reports the Florida Sun-Sentinel .

"The bots' mission: To deliver restaurant meals cheaply and efficiently, another leap in the way food comes to our doors and our tables." The semiautonomous vehicles were engineered by Kiwibot, a company started in 2017 to game-change the food delivery landscape...

In May, Kiwibot sent a 10-robot fleet to Miami as part of a nationwide pilot program funded by the Knight Foundation. The program is driven to understand how residents and consumers will interact with this type of technology, especially as the trend of robot servers grows around the country.

And though Broward County is of interest to Kiwibot, Miami-Dade County officials jumped on board, agreeing to launch robots around neighborhoods such as Brickell, downtown Miami and several others, in the next couple of weeks...

"Our program is completely focused on the residents of Miami-Dade County and the way they interact with this new technology. Whether it's interacting directly or just sharing the space with the delivery bots,"

said Carlos Cruz-Casas, with the county's Department of Transportation...

Remote supervisors use real-time GPS tracking to monitor the robots. Four cameras are placed on the front, back and sides of the vehicle, which the supervisors can view on a computer screen. [A spokesperson says later in the article "there is always a remote and in-field team looking for the robot."] If crossing the street is necessary, the robot will need a person nearby to ensure there is no harm to cars or pedestrians. The plan is to allow deliveries up to a mile and a half away so robots can make it to their destinations in 30 minutes or less.

Earlier Kiwi tested its sidewalk-travelling robots around the University of California at Berkeley, where at least one of its robots burst into flames . But the Sun-Sentinel reports that "In about six months, at least 16 restaurants came on board making nearly 70,000 deliveries...

"Kiwibot now offers their robotic delivery services in other markets such as Los Angeles and Santa Monica by working with the Shopify app to connect businesses that want to employ their robots." But while delivery fees are normally $3, this new Knight Foundation grant "is making it possible for Miami-Dade County restaurants to sign on for free."

A video shows the reactions the sidewalk robots are getting from pedestrians on a sidewalk, a dog on a leash, and at least one potential restaurant customer looking forward to no longer having to tip human food-delivery workers.

... ... ...

[Jun 12, 2021] Get Ready for $178 Billion of Selling Ahead of the Capital-Gains Tax Hike. These Are the Stocks Most at Risk. - MarketWatch

Jun 07, 2021 | www.marketwatch.com

...Analysts at Goldman Sachs""in October""ran the numbers on the stock market impact of previous capital-gains tax hikes. While there is only a modest impact on the stock market as a whole, momentum stocks usually get socked before they are levied, they found. That makes sense""investors logically are more motivated to sell the stocks where they would save the most by avoiding higher capital-gains taxes.

The last time capital-gains taxes were hiked, in 2013, the wealthiest households sold 1% of their equity assets, the Goldman analysts found. According to the Federal Reserve's distributional financial account data , the top 1% held $17.79 trillion of equities and mutual funds in the fourth quarter of 2020""so a 1% selling of stocks this time would be $178 billion. (The most recent Internal Revenue Service breakdown, from 2018, found that millionaires accounted for just over 500,000 filers or about 0.4% of the total.)

[Jun 12, 2021] Don't get too optimistic about a stock market rally" they've been fizzling out

Notable quotes:
"... As I argued three weeks ago, this sentiment pattern suggests that the market may remain in a fairly narrow range for the next several months. ..."
"... be on the lookout for when the market timers remain bullish in the face of declines, or bearish in the wake of rallies. That will indicate that a bigger decline or rally is in store. ..."
"... In the meantime, the market timers' behavior suggests both market rallies and declines will be subdued. That's good news to the extent you were worried that a major new bear market is about to begin, but bad news if you were hoping for a more sustained rally. ..."
Jun 04, 2021 | futurewealthdaily.com
This post was originally published on this site

... ... ...

This quick jumping onto and off of the bullish and bearish bandwagons has become the new normal, as you can see from the table below.

... ... ...

As I argued three weeks ago, this sentiment pattern suggests that the market may remain in a fairly narrow range for the next several months. The contrarian bet is that the market will finally break out of that trading range whenever the market timers stubbornly hold onto their sentiment beliefs in the face of the market moving in the opposite direction.

That is, be on the lookout for when the market timers remain bullish in the face of declines, or bearish in the wake of rallies. That will indicate that a bigger decline or rally is in store.

In the meantime, the market timers' behavior suggests both market rallies and declines will be subdued. That's good news to the extent you were worried that a major new bear market is about to begin, but bad news if you were hoping for a more sustained rally.

. .. ... ...

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com .

[Jun 10, 2021] Mcjobs increases in May. Good jobs no so much. Labor-force participation dropped

Jun 10, 2021 | www.wsj.com

Job gains in May were led by leisure and hospitality, with the sector adding 292,000 jobs. Payrolls grew by 559,000 last month, the Labor Department reported Friday, up from a revised 278,000 in April, which marked a sharp drop from March's figure.

The labor recovery has slowed from earlier in the year -- in March, the economy added 785,000 jobs

... The labor-force participation rate, the share of adults working or looking for work, edged slightly lower in May to 61.6%, down from 63.3% in February 2020.

M

Michael Quick

Republicans, always eager to snatch the bread from the mouths of the poor, are blaming unemployment benefits for the reluctance of workers to return to jobs. In some red states, they already are snatching it.

But more men are returning to work than are women. Doesn't that prove that unemployment benefits are not holding back former workers?

I'll bet more women will return to work in September, after schools start up in-person classes.

William Lamb
Republican turn a blind on helping people, except themselves. They would rather have one being a slave and get pay less then nothing with little perks in making less then high quality item that will still have defects, even if we pride our workmanship that is suppose to equal to none. It would like being in 1950s, when there was not much world competition, when world economy was still recovering from WW2.

I guessed Republican want American to continue working by low paying wages so they can enrich themselves, and show that America can still produce things with slave wages.

johm moore
Most of the jobs are insufficient to support a reasonable quality of life. A job today is about like a half a job pre-NAFTA and the job export process in terms of the quality of life that it supports.
Bryson Marsh
If UI was holding back employment, then why are we adding so many low wage jobs? The missing jobs are in *middle income* sectors.
David Chait
I wouldn't call people returning to work "new" jobs, that just seems disingenuous.
rich ullsmith
Asset prices rise when the jobs report is lukewarm. Thank you, Federal Reserve. May I have another.
Sam Trotter
It should be made mandatory to publish the offered wage/rate. I see so many fake jobs posted on LinkedIn with no description of bill rate for contract positions or Base+Bonus for Full-Time roles. Too many mass scam messages.

[Jun 10, 2021] U.S. 10-Year Treasury Yield Slips Below 1.5%

In view of rising energy prices what those "other factors" might be? Does it mean that the USA are still in secular stagnation started in 2008?
The unemployment rate fell to 5.8% in May from 6.1% the prior month. U6 is still over 10% -- the depression level. See Table A-15. Alternative measures of labor underutilization
Jun 10, 2021 | www.wsj.com

Analysts said other factors are driving lower yields, including a weaker dollar, which has lifted demand for Treasurys from foreign investors. Foreign investors tend to hold more Treasurys when the dollar declines and reduces the costs of protecting against swings in currencies.

[Jun 10, 2021] Inflation Remains Hot, but Treasury Yields Still Aren't Moving. Here's Why

Jun 10, 2021 | financialgazette.co.uk

That is a counterintuitive response , because rising inflation erodes the value of Treasuries' payouts. And the data did indicate stronger inflation: Excluding volatile food and energy costs, prices rose 0.7% in May. That was the second-highest monthly increase in consumer prices since the early 1980s, behind April's 0.8% rise. Compared with last year, when the global economy was mired in a pandemic-driven slowdown, headline consumer prices rose at a 5% pace . (Excluding food and energy, they rose 3.8%.)

The market's moves could be muted because investors are betting that central bankers are going to stick with their view that most of the strength in consumer prices will pass after a potentially bumpy reopening period and keep policy easy.

... ... ...

... Most Fed watchers expect the central bank to start discussing a reduction of its bond purchases this summer or early fall.

That doesn't mean Treasuries have much room to rally more from here.

The Fed's meeting next week may be the first test. If central-bank officials talk about starting to remove accommodation earlier than expected, that could send yields higher. In fact, strategists from TD Securities decided to take a bearish view on the 10-year note on Thursday, after yields fell below 1.5% earlier this week. They argued that continued economic momentum and stronger inflation could lead central-bank officials to take a more upbeat tone on the economy than investors expect at their meeting on June 15 and 16.

[Jun 09, 2021] Nearly 4 million people quit their jobs in April

Jun 09, 2021 | www.marketwatch.com

The percentage of people quitting their jobs, meanwhile, also rose to a record 2.8% among private-sector workers. That's a full percentage point higher than a year ago, when the so-called quits rate fell to a seven-year low.

...A recent study by Bank of America, for example, found that job switchers earned an extra 13% in wages from their new positions. That's a big chunk of money.

...Normally people who quit their jobs are ineligible for unemployment benefits, but they can get an exemption in many states for health, safety or child-care reasons.

About half of the states, all led by Republican governors, plan to stop giving out the federal benefit by early July to push people back into the labor force. Economists will be watching closely to see how many people go back to work.

[Jun 09, 2021] No inflation fears here -- ARK's Wood says portfolio should triple in five years

Jun 09, 2021 | finance.yahoo.com

Wood, who became the face of the outsized rally in technology stocks such as Zoom Video Communications Inc and electric vehicle maker Tesla Inc during the coronavirus pandemic last year, said that falling lumber and copper prices signal that the market is "beginning to see signs that the risks are overblown" from inflation.

...Wood, whose ARK Innovation ETF was the top-performing actively managed U.S. equity fund tracked by Morningstar last year, has seen her performance stagnate along with the slowdown in growth stocks. Her flagship fund is down nearly 28% from its early February high.

[Jun 07, 2021] How Inflation Eats Away at Your Retirement Income

A short-term period of slightly higher inflation wouldn't be memorable, but an extended run of inflation above 3% can be problematic. Social Security Is Your Best Inflation Hedge; you need to maximize it.
Social Security checks represent about a third of income for all retirees. Among elderly recipients, those checks represent half of their retirement income for married couples and 70% for singles.
A primary residence, if you own a house and it is fully paid off, also gave some minimal inflation protection.
Another factor is that once people actually get into retirement, , their spending generally decreases so much that they're spending less overall, even accounting for inflation.
Jun 07, 2021 | www.investopedia.com
​ While seniors can't directly affect the inflation rate, there are ways to minimize the shadow it casts over their retirement.

Reducing housing costs, for instance, is a step in the right direction. Trading in a larger home for a smaller one, even if the mortgage is paid off, reduces the monthly outflow for property taxes, utilities, homeowners insurance, and maintenance.

Another smart move is adding investments to your portfolio that are likely to increase in value as inflation rises.

A real estate investment trust (REIT) or energy sector stocks, for example, are better positioned to see their value grow in tandem with the inflation rate.

[Jun 07, 2021] Have Stocks Already Priced In The Economic Boom? by Lance Roberts

Jun 07, 2021 | www.zerohedge.com

Authored by Lance Roberts via RealInvestmentAdvice.com,

The media is buzzing with claims of an "Economic Boom" in 2021. While the economy will most certainly grow in 2021, the question is how much is already "baked in?"

"The economy has entered a period of supercharged growth. Instead of fizzling, it could potentially remain stronger than it was during the pre-pandemic era into 2023.

Economists now expect the second quarter to grow at a pace of 10%, and they expect growth for 2021 to be north of 6.5%. In the past decade, only a few quarters gross domestic product growing at even 3%."

The premise is that strong "pent up" demand will sustain the economic recovery over the next few years.

However, since market lows in 2020, the market surge has not only recouped all of those losses but has rocketed to all-time highs on expectations of surging earnings growth.

The question: How much has gotten priced in?

A Return To Normalcy

Just recently, Liz Ann Sonders wrote a piece for Advisor Perspectives. To wit:

"Vaccines and herd immunity continue to bring COVID cases down, and the economic reopening continues to kick into a higher gear. Such is what the data is starting to show. Across economic metrics, from the gross domestic product ( GDP ) to retail sales and job growth, boom conditions are evident ."

She is correct in her statement. However, there is a difference between an "economic boom" and a "recovery." As shown in the chart of GDP growth below, the U.S. has already experienced a very sharp "economic recovery" from the recessionary lows. (I have included estimates for the rest of 2020, which shows a return to trend growth.)

The following chart shows the economic recovery against the massive dumps of liquidity pumped into the economy. (Estimates run through the end of 2021 using economist's assumptions.)

Can't Recoup Losses

Certain areas of the economy, like airlines, hotels, and cruise ships, have yet to recover to pre-pandemic levels. However, those industries only make up a relatively small amount of overall economic activity. Furthermore, these industries will continue to struggle for some time as individuals will not take "two vacations" this year since they missed last year. That activity is now forever lost.

Yes, the economy will recover most likely to pre-pandemic levels this year due to stimulus injections, but as discussed previously , what then?

"The biggest problem with more stimulus is the increase in the debt required to fund it. There is no historical precedent, anywhere globally, that shows increased debt levels lead to more robust economic growth rates or prosperity. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the change in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare."

Just as it is with investing, getting "back to even" is not the same thing as "organic growth."

The Second Derivative

What is shown above is the "second derivative" effect of growth.

"In calculus, the second derivative , or the second-order derivative , of a function f is the derivative of the derivative of f." – Wikipedia.

In English, the "second derivative" measures how the rate of change of a quantity is itself changing. Since we measure GDP growth on an annual rate of change basis, the larger the economy grows, the lower the rate of change will be. Here is a simplistic example go GDP growth:

In year 1, GDP = $1. In the second year, GDP grows to $2. The annual rate of change is 100%. However, in year 3, even though the economy grows to $3, the annual rate of change falls to just 50%.

Given the long-term historical correlation between economic growth, corporate earnings, and annualized returns, the reversion to trend growth has implications for investors. As Liz notes:

"Using three broad ranges for GDP growth historically, the lowest range (when the economy is barely growing or in recession) is accompanied by the highest annualized stock market performance. GDP is only slightly back into positive territory on an annualized basis. However, the strong growth expected in the second quarter will push GDP into the highest zone. At that level, stocks have historically posted a negative annualized return."

The reason is that once economic growth reaches higher levels, stocks have climbed to levels incorporating those expectations. In other words, when things are as "good as they can get," stocks begin to reprice for slower future growth rates.

That is the phase we are at currently.

How Much Pent Up Demand Is There Anyway

The main driver of the expected recovery from a "recessionary" low stems from the question of how much "pent up" demand currently exists?

If we look at durable goods as an example, such would suggest that much of the demand for long-lasting products got pulled forward by consumers over the last 12-months.

Of course, if we broaden that measure to retails sales which make up ~40% of the personal consumption expenditures (PCE) index , we see much the same.

Given PCE, which comprises nearly 70% of GDP, has already recovered much of pandemic-related decline, how much "pent up" demand remains.

However, wage growth outside of personal transfer payments (i.e., stimulus) hasn't recovered. It is impossible to sustain higher rates of economic growth without wage growth.

Importantly, as we saw in January and February following the $900 billion stimulus bill passage, there was a short-lived surge of activity. However, once individuals spent the money, activity quickly faded. We saw the same with retail sales in April following the American Rescue Plan, which sent out $1400 checks.

After the $1400 checks get spent, what will be the driver for continued consumption at previous rates? Further, given the impact of a larger economy (as it recovers), the rate of change will decline markedly in the months to come.

Earnings Growth Inflection

"Earnings growth has a high correlation to stock market performance, but with time lags that are less well-understood. We are about halfway through the first quarter S&P 500 earnings season and so far, the results are exceptionally strong." – Liz Ann Sonders

That is correct, and given the high correlation between earnings and market returns, we come back to the same question. Has the advance in the market accounted for the rebound in earnings? More importantly, what happens when that growth reverses?

"Relative to last year's second-quarter plunge of nearly -31% year-over-year, expectations are that S&P 500 earnings will be up more than 46% in this year's first quarter. The second quarter will boast a whopping 60% increase. Such should be the inflection point in terms of the year-over-year growth rate." – Liz Ann Sonders

The problem is the S&P rose to levels that earnings growth will have difficulty supporting, particularly as the stimulus fades from the system. As with economic growth, the 2nd derivative of earnings growth is now a headwind for the markets.

Such is also the problem of "pulling forward sales."

Conclusion

Notably, the outsized growth of the market reflects repetitive interventions into the financial markets by the Fed. Those interventions detached financial asset growth from their long-term correlation to GDP growth, where corporate revenue comes from. Historically, when the S&P 500 becomes separated from economic growth, a reversion occurred.

Currently, analysts are expecting earnings to surge well above economic growth rates. However, the flaw in the analysis is the assumption earnings growth will continue its current trend.

While there will be an economic recovery to pre-pandemic levels, a recovery is very different from an expansion.

As Liz concludes:

"Optimism is extremely elevated. Such is certainly justified by stock market behavior over the past year and recent economic releases. But some curbing of enthusiasm may be warranted given the history of the stock market as an uncanny 'sniffer-outer' of economic inflection points."

As she goes on to point out, this is not a time for FOMO-driven investment decision-making. The reality is that the supports that drove the economic recovery will not support an ongoing economic expansion. One is self-sustaining organic growth from productive activity, and the other is not.

The risk of disappointment is high. And so are the costs of being "wilfully blind" to the dangers.

[Jun 07, 2021] Yes, inflation is rising but no individual equity sector, including the energy sector, offers significant protection against high and rising inflation

Jun 07, 2021 | finance.yahoo.com

Yes, inflation is rising, and retirees must now consider repositioning not just their short-term safe-haven investments (we'll talk more about that in part two) but their entire portfolio as well (which we'll focus on here). Well that, conveniently enough, is the subject (and title) of a paper soon to be published in the Journal of Portfolio Management that was co-authored by Campbell Harvey, a professor at Duke University, and several of his colleagues affiliated with Man Group. What more, Harvey and his co-authors found that no individual equity sector, including the energy sector, offers significant protection against high and rising inflation.

... here's what Harvey and his co-authors discovered after researching eight periods of inflation dating back to 1925: Neither equities nor bonds performed well in real terms during the inflationary periods studied. Real being the nominal rate of return minus the rate of inflation.

... ... ...

TIPS

"Treasury Inflation-Protected Securities (TIPS) are robust when inflation rises, giving them the benefit of generating similar real returns in inflationary and noninflationary regimes, both of which are positive," the authors wrote.

In fact, TIPS had a 2% annualized real return during the most recent five periods of inflation.

But what looks promising in a research paper might not work in reality given the current yield on TIPS (0.872% as of June 2, 2021). The low yield means that TIPS are a "really super expensive" inflation hedge going forward, said Harvey.

"It means that you're going to get a negative return in noninflationary periods," he said. "So yes, they provide the protection, but they're an expensive way to get that protection."

Commodities

"Traded commodities" have historically performed best during high and rising inflation. In fact, traded commodities have a "perfect track record" of generating positive real returns during the eight U.S. periods studied, averaging an annualized 14% real return.

Now investors might not be able to trade commodities in the same manner as institutional investors using futures, but they can invest in ETFs that invest in a broad basket of commodities, said Harvey.

Other assets

Residential real estate on average holds its value during inflationary times, though not nearly as well as commodities. Collectibles such as art (7%), wine (5%) and stamps (9%) have strong real returns during inflationary periods, as well.

And while some suggest adding bitcoin to a diversified portfolio as an inflation protection asset, caution is warranted given that bitcoin is untested with only eight years of quality data -- over a period that lacks a single inflationary period, the authors wrote. "It's not just untested," said Harvey. "It's too volatile."

Gold is also too volatile as a reliable hedge against inflation. Harvey noted, for instance, that the performance of gold since 1975 is largely driven by a single year, 1979, when gold dramatically appreciated in value. "And that makes the average look really good," he said.

Read: Gold- it's not just for crazies

Dynamic strategies

Harvey also said his number one dynamic strategy for inflationary times is changing the sector exposures in your portfolio. With this strategy, you would allocate a greater portion of your assets to sectors that have historically performed well during inflationary periods, such as medical equipment, and less if anything at all to sectors that have performed poorly during inflationary periods, such as consumer durables and retail. "You can naturally rebalance your portfolio to be a little more defensive," he said. "And that can be done by any investor."

Harvey and his co-authors also found active equity factors generally hold their own during inflation surges with "quality stocks" having a small positive real return and "value stocks" having a small negative return.

Dynamic strategies are "active" strategies that involve monthly rebalancing of portfolios, according to Harvey. In contrast, passive strategies require minimal or no rebalancing; for example, holding an S&P 500 index fund.

Active equity factor investing uses frequent rebalancing to take bets that deviate from the investment weights implied by a passive market portfolio. These bets seek to produce returns over and above the passive market portfolio, said Harvey.

In Harvey's study, quality is defined as a combination of profitability, growth and safety and value is defined with traditional metrics such as the book-to-price ratio.

Is now the time to reposition your portfolio?

According to Harvey, inflation surging from 2% to more than 5% is bad for stocks and bonds. We're not there yet; the current rate of inflation is 4.2%. But we are getting close to the "red zone" and now would be a good time to "rethink the posturing of your portfolio," Harvey said. "So even if it doesn't occur, it doesn't matter. If the risk is high enough, you take some actions, you're basically buying some insurance."

And being proactive is the key. "So, at least right now, it's better to have the discussion now than when it's too late; when we're already in the surge and the asset prices have already dropped," said Harvey.

Remember too that what you hedge is "unexpected" inflation, Harvey said. "What you really are concerned with is unexpected inflation or a surprise in inflation. We call it an economic shock."

But not a transitory shock. That won't have any effect on asset prices. "You need to consider long-term inflation," he said.

And that place to look for that is in the break-even inflation (BEI) rate reflected in TIPS and nominal Treasurys. The BEI is the weighted average of inflation expectations over the life of the bond. And changes in the BEI have the advantage of reflecting changes in long-term or permanent inflation expectations. Presently the BEI is 2.44%. "Anything that is a long-term measure of inflation is going to have the maximum reflection in the asset prices," he said.

As for the current inflationary environment, Harvey said it's a mix of transitory and not-so transitory elements. Lumber prices are up but likely not permanently. The rising prices of other goods and services, however, may not be transitory. "It's obviously difficult to dissect this," he said. "But it's really important for people that are running a portfolio draw that distinction."

[Jun 07, 2021] Will hot US inflation data unsettle markets-

Jun 05, 2021 | finance.yahoo.com

FT reporters

US government bonds rallied on Friday following a weaker-than-expected reading on American job growth for the month of May. But a key report on consumer price inflation will provide a fresh test for investors. Consumer prices rose at its fastest pace in more a decade in the 12 months to April, but analysts project that it has picked up even more since then, raising fears that the economy is overheating. Economists surveyed by Bloomberg expect the year on year inflation rate to have jumped to 4.7 per cent in May in figures to be released by the Department of Labor on Thursday, compared with 4.2 per cent in April.

[Jun 07, 2021] Commodity Price Surges Add to Inflation Fears

Jun 07, 2021 | www.wsj.com

It looks like this surge is suitable, especially in energy... That spells troubles for the US economy which is based on cheap energy.

Higher prices for commodities are flowing through to more companies and consumers, making it harder for central bankers to ignore them

...The world hasn't seen such across-the-board commodity-price increases since the beginning of the global financial crisis, and before that, the 1970s. Lumber, iron ore and copper have hit records . Corn, soybeans and wheat have jumped to their highest levels in eight years . Oil recently reached a two-year high .

At current metal prices, Rio Tinto PLC, BHP Group Ltd. , Anglo American PLC and Glencore PLC could this year generate a combined $140 billion in earnings before interest, taxes, depreciation and amortization, according to Royal Bank of Canada. That compares with $44 billion in 2015, when metals prices were at or near lows.

However, in Russia, a commodity exporter, surging commodity prices also are driving up inflation. While Russia's international reserves hit $600.9 billion in May, the highest ever, its central bank increased its benchmark interest rate by 0.5 percentage point to 5% in April. It said it would consider further increases, citing "pro-inflationary risks generated by price movements in global commodity markets."

"We think that the inflation pressure in Russia is not transitory, not temporary," Russia's central-bank governor Elvira Nabiullina told CNBC in a recent interview.

...Nicolas Peter, chief financial officer of BMW AG , said in May that it expects an impact of 500 million euros, equivalent to about $608 million, from prices for raw materials. Increased steel prices have added about $515 to the cost of an average U.S. light vehicle, according to Calum MacRae, an auto analyst at GlobalData.

[Jun 07, 2021] When it comes to inflation, the Fed must consider inequality

Jun 07, 2021 | finance.yahoo.com

Like most central banks, the US Federal Reserve has been forced to ask why more than a decade of ultra-loose monetary policy has had such lacklustre economic results.

The Fed's data are misleading because they assume the US is the middle-class nation it has ceased to be.

Until it uses data that reflect the nation as it is, the Fed will no more get America back to shared prosperity than someone using a map of New Amsterdam will find the pond in Central Park.

[Jun 07, 2021] Yellen says higher interest rates would be 'a plus' for policy makers

Only if they can control it... And that is not given.
Jun 07, 2021 | www.msn.com

Speaking with Bloomberg News following a G-7 finance ministers' meeting in London, Yellen said it's OK if President Joe Biden's $4 trillion spending plans trigger inflation and higher rates.

"If we ended up with a slightly higher interest-rate environment it would actually be a plus for society's point of view and the Fed's point of view," she told Bloomberg.

"We've been fighting inflation that's too low and interest rates that are too low now for a decade," she said. "We want them to go back to" a normal environment, "and if this helps a little bit to alleviate things then that's not a bad thing -- that's a good thing."

The Fed has said it won't start to scale back its $120 billion-a-month asset purchases until the economy had made "substantial further progress" toward the Fed's goals of full employment and stable long-run 2% inflation.

While indicators of inflation have been rising , bond yields have been subdued, leaving many experts skeptical that a "taper tantrum" in in the cards whenever the Fed starts paring back its purchases.

[Jun 07, 2021] heard on Bloomberg radio yesterday that the Reddit investors are beginning to pour into oil and grains. So, worried about volatility.

Jun 07, 2021 | peakoilbarrel.com

SHALLOW SAND IGNORED 06/05/2021 at 9:49 am

Biden Admin proposing elimination of IDC expensing and percentage depletion, among other tax preferences.

Elimination of IDC expensing will affect US shale.

Percentage depletion only affects small producers. We can make it without percentage depletion. Will just result in us paying more income tax. But lower 48 onshore conventional production in US is below 2 million barrels per day and slowly falling. Hopefully we will be permitted to continue to produce oil for the many uses of it besides light transport.

As long as Biden doesn't try to sell these as "Big Oil Tax breaks" I'm not going to complain.

I think elimination of these tax preference items will lower US production, which will increase oil prices. US is historically the only major producer that has desired low oil prices. That is because we are still a net importer of crude oil.

Now that Trump is gone, it appears US also is not too concerned about oil prices.

What a turnaround from this time, last year. We had just reactivated our wells at the end of May, 2020, after oil had went negative on April 20.

Yesterday WTI closed around $69.50.

President Biden could turn out to be very good for small conventional lower 48 onshore producers. He just needs to recognize that our oil is still needed, and will still be needed for decades.

I will keep beating my drum. Stripper well oil is small footprint. Existing source. Very low methane emissions from upstream operations. Employs the highest number of persons per BO. Employs largely rural populace. Owned by small business. Family owned. Pays a lot in local taxes. Is very low decline. Predictable. Uses the smallest amount of materials, such as plastics and steel. I can go on, but won't.

Stripper well doesn't need "tax breaks" either, if it is afforded a strong, stable oil price. In my view, $60-70 WTI won't kill the consumer.

But, I heard on Bloomberg radio yesterday that the Reddit investors are beginning to pour into oil and grains. So, worried about volatility.

Only about 1/5-1/6 of voters in the very rural counties (25K or less in population) votes for Biden. Yet his policies appear to be a boon for those populations.

Here's to $5+ corn, $14+ soybeans, $6+ wheat, $6+ milo and $65+ WTI! Keeping prices there would really solidify a part of the US that is really struggling.

I suspect I might be the only person still posting here that lives in an oil and grain producing region. There just aren't many of us left.

Labor will be our huge problem. Maybe strong and stable commodity prices could bring some people back, or keep some of our young people here?

Thank goodness for the people from Mexico and Central America. Without them, rural USA would be in really big trouble. SHALLOW SAND IGNORED 06/05/2021 at 10:48 am

Dennis.

I will add, if rural is in big trouble, I believe the entire USA is in big trouble.

I have never seen the labor shortages that I am seeing today in my community.

I know there are many efforts to radically change how our country's food supply is produced. But, like energy transition, those will take decades.

It is not attractive to most to live in rural locations. Very, very difficult psychological and emotional transition for those that try to move from urban/suburban to rural. I have seen it first hand. We cannot keep doctors for that reason, for example. There are almost no attorneys here under the age of 60. Management of our factories has mostly been moved, because it can be due to technology, and because management doesn't want to live here.

Most in the factories here are being hired in at $16-19 per hour, and will be over $20 soon after. Most work at least 10 hours of overtime a week.

But we have a very high percentage of young adults in the rural areas struggling with hard drug dependency. Meth is the big one, and it is easier for a 20 year old to get meth than to get a beer in most rural areas.

Our country needs to do so much better across the board on hard drug dependency. One of the many reasons being to fill all of these job openings. Of course, there are more important ones than that.

I bet if hard drug dependency was completely eliminated, over 90% of child abuse and neglect court cases would also be wiped out. That is the most important reason we need to do better.

[Jun 07, 2021] There s a new LGBTQ-focused ETF

Jun 06, 2021 | www.marketwatch.com

Just in time for Pride Month, a new exchange traded fund aims to connect with LGBTQ investors. Two previous efforts failed to attract enough assets.

The fund, LGBTQ + ESG100 ETF LGBT, +0.91% , launched in late May, is a passively managed, large-cap index fund that holds the top 100 U.S. companies that most align with the LGBTQ community.

In 2019, two LGBTQ-focused ETFs were delisted: ALPS Workplace Equality Portfolio ETF and InsightShares LGBT Employment Equality ETFs. Like this new fund, both were mostly U.S. large-cap, passive index ETFs comprising companies that received high or perfect marks for workplace equality in the Human Rights Campaign Corporate Equality Index , a benchmark for corporate LGBTQ policies.

The first ETF stuck around for five years, but the second barely made it two years, even though it was launched with much fanfare by UBS. Neither gained many assets.

Bobby Blair, CEO and founder of LGBTQ Loyalty Holdings, which launched the fund with issuer ProcureAM, says community input on holdings makes this fund different.

LGBTQ Loyalty Holdings partners with Harris Poll to annually survey 150,000 self-identifying LGBTQ constituents across the U.S. for their views about a company's brand awareness, brand image, brand loyalty and how the firm supports the community. As noted in its prospectus , 25% of the index's weighting is derived from that survey data.

... the LGBTQ + ESG100 has an annual expense ratio of 0.75%.

[Jun 07, 2021] As bubbles peak, they combine objective signs of excess prices rising much faster than earnings can justify with subjective signs of mania, such as frenzied trading and excessive leveraging

Jun 06, 2021 | investornewsletter.net

As bubbles peak, they combine objective signs of excess" prices rising much faster than earnings can justify" with subjective signs of mania, such as frenzied trading and borrowing. To some the entire US stock market looks bubbly given its dizzying run-up, but earnings growth has also been extraordinarily strong through the pandemic. Beneath the surface, however, sectors of the market from green tech to cryptocurrency show tell-tale bubble signs.

My research on the 10 biggest bubbles of the past century, from the US stock market in 1929 to Chinese shares in 2015, shows that prices typically rise 100 per cent in the year before the peak, with much of the gain packed into the climactic last months. That finding is closely in line with bubble studies from academics at Harvard and others.

By those standards, there are at least five current bubblets. They include the cryptocurrency market for bitcoin and ethereum; clean energy stocks, including some of the biggest names in electric vehicles; small cap stocks, including many of the hottest pandemic stories; a basket of tech stocks that lack earnings, which is also chock-a-block with famous brands; and special purpose acquisition companies (Spacs) , which allow investors a new way to buy into private firms before they go public.

Each of these bubblets is captured in an index that rose in the last year by around 100 per cent, often much more, to a peak value between $500bn and $2.5tn. Day traders and other newbies rushed in, a common symptom of late stage market manias. Now these bubbles are faltering, as they so often do, in response to increases in long-term interest rates. What's next?

The historical bubbles in my study did suffer midcourse setbacks on the way up, but typically those corrections were around 25 per cent and never more than 35 per cent. Beyond that point" a 35 per cent drop" the bubbles in my sample became monophasic, or stuck on a one-way downhill path.

For the median case, the bottom was found 70 per cent below the peak, and came just over two years after the peak. Except for the index of small-cap pandemic stocks, the other four bubble candidates have all experienced drops of at least 35 per cent, but also of no more than 50 per cent (in the case of ethereum). In other words, they are not likely to resume inflating any time soon, and they are still far from the typical bottom.

There is one new factor that could upset this historical pattern. Despite the rise in long-term interest rates, there is plenty of liquidity sloshing around the markets, with central banks committed to easy money as never before. The risks though are skewed to the downside.

It is important to remember that a bubble is often a good idea gone too far. In the early 2000s, the conventional wisdom was that the dotcom bubble had fuelled mainly junk companies with business plans barely worth the napkins they were written on. Later, researchers found that, compared with other bubbles, those in the tech sector produce many start-ups that fail but also help launch major innovations. For every few dozen dotcom flame-outs, there was a giant survivor such as Google or Amazon that would go on to make the economy more productive.

[Jun 07, 2021] Average hourly earnings for workers in leisure and hospitality rose to $18.09 in May by Jonnelle Marte and Ann Saphir

Jun 04, 2021 | finance.yahoo.com

... Average hourly earnings for workers in leisure and hospitality rose to $18.09 in May, the highest ever and up 5% from January alone, according to Labor Department data released on Friday. Pay rose even faster for workers in non-manager roles, who saw earnings rise by 7.2% from January, far outpacing any other sector.

That higher pay could be a sign that companies are lifting wages as they seek to draw people back to work after more than a year at home. Some businesses are struggling to keep up with higher demand as more consumers, now fully vaccinated, get back to flying, staying in hotels and dining indoors. Job gains in leisure and hospitality this year have so far outpaced gains in other sectors.

But it is too soon to know whether the boost will be enough to help speed up hiring at a time when many workers are still facing other obstacles, including health concerns and having to care for children and other relatives.

"The fact of the matter is, the pandemic is still going on," said Daniel Zhao, a senior economist for Glassdoor. "The economy is running ahead of where we are from a public health situation."

Some 2.5 million people said they were prevented from looking for work in May because of the pandemic, according to the Labor Department.


... ... ...


Employment in leisure and hospitality is still in a deep hole when compared with pre-pandemic levels. The industry added 292,000 jobs in May, with about two-thirds of that hiring happening in restaurants and bars. But overall employment is still down 2.5 million jobs, or 15% from pre-pandemic levels, more than any other industry.

... ... ...

Some people who previously worked at hotels or restaurants moved on to other types of jobs during the pandemic, such as packaging goods at a warehouse, and it's too soon to know whether they will switch back as more of the economy reopens, said Zhao.

...About half of states are putting an early end to a $300 federal supplement to weekly unemployment benefits, winding them down as soon as June 12. The supplement expires nationwide on Sept. 6.

(Reporting by Jonnelle Marte and Ann Saphir; Editing by Chizu Nomiyama and Jonathan Oatis)

[Jun 07, 2021] Sidewalk Robots are Now Delivering Food in Miami

Notable quotes:
"... Florida Sun-Sentinel ..."
"... [A spokesperson says later in the article "there is always a remote and in-field team looking for the robot."] ..."
"... the Sun-Sentinel reports that "In about six months, at least 16 restaurants came on board making nearly 70,000 deliveries... ..."
Jun 07, 2021 | hardware.slashdot.org

18-inch tall robots on four wheels zipping across city sidewalks "stopped people in their tracks as they whipped out their camera phones," reports the Florida Sun-Sentinel .

"The bots' mission: To deliver restaurant meals cheaply and efficiently, another leap in the way food comes to our doors and our tables." The semiautonomous vehicles were engineered by Kiwibot, a company started in 2017 to game-change the food delivery landscape...

In May, Kiwibot sent a 10-robot fleet to Miami as part of a nationwide pilot program funded by the Knight Foundation. The program is driven to understand how residents and consumers will interact with this type of technology, especially as the trend of robot servers grows around the country.

And though Broward County is of interest to Kiwibot, Miami-Dade County officials jumped on board, agreeing to launch robots around neighborhoods such as Brickell, downtown Miami and several others, in the next couple of weeks...

"Our program is completely focused on the residents of Miami-Dade County and the way they interact with this new technology. Whether it's interacting directly or just sharing the space with the delivery bots,"

said Carlos Cruz-Casas, with the county's Department of Transportation...

Remote supervisors use real-time GPS tracking to monitor the robots. Four cameras are placed on the front, back and sides of the vehicle, which the supervisors can view on a computer screen. [A spokesperson says later in the article "there is always a remote and in-field team looking for the robot."] If crossing the street is necessary, the robot will need a person nearby to ensure there is no harm to cars or pedestrians. The plan is to allow deliveries up to a mile and a half away so robots can make it to their destinations in 30 minutes or less.

Earlier Kiwi tested its sidewalk-travelling robots around the University of California at Berkeley, where at least one of its robots burst into flames . But the Sun-Sentinel reports that "In about six months, at least 16 restaurants came on board making nearly 70,000 deliveries...

"Kiwibot now offers their robotic delivery services in other markets such as Los Angeles and Santa Monica by working with the Shopify app to connect businesses that want to employ their robots." But while delivery fees are normally $3, this new Knight Foundation grant "is making it possible for Miami-Dade County restaurants to sign on for free."

A video shows the reactions the sidewalk robots are getting from pedestrians on a sidewalk, a dog on a leash, and at least one potential restaurant customer looking forward to no longer having to tip human food-delivery workers.

... ... ...

[Jun 07, 2021] Forget Activism- Chronic Underperformance Is Big Oil's Biggest Problem

Jun 06, 2021 | finance.yahoo.com

Whereas climate change issues are the presumptive reasons behind the latest wave of investor revolts at the oil and gas giants, lurking beneath the surface is a growing sense of apprehension about Big Oil's strategy and failure to generate adequate returns for shareholders in recent decades.

The naked truth is that Exxon and its cohorts have severely underperformed the broader market over the last two decades in terms of total returns to shareholders, implying the sector's woes are long-term and strategic rather than short-term and cyclical.

Chronic underperformance

XOM

Source: CNN Money

Big Oil's underperformance relative to the market is clearly evident whether you are looking at 2-year, 5-year, 10-year, or even 20-year timespans.

For instance, since 2015, Exxon shares have returned a -2.5% compound annual loss based on share prices and dividends, a far cry from the average annual gain of +14.4% by the S&P 500 over the timeframe.

Over the past two decades, Exxon's compound annual return has clocked in at +4.2%, still considerably lower than the broad market benchmark's return of +7.1%.

... ... ...

Exxon is hardly alone, with none of its peers, including Chevron, Royal Dutch Shell (NYSE:RDS.A), BP Inc. (NYSE:BP), and Total (NYSE:TOT) coming close to matching the returns by the broader share market over the past decade.

In fact, on an inflation-adjusted U.S. dollar basis, returns by Exxon, Shell, and BP have been negative over the past five years, a period which coincided with the biggest bull market in the history of the stock market.

The renewable energy conundrum

You cannot blame the oil majors for continuing to engage in a lot of hand-wringing at a time when investors are demanding they pump less oil and transition to cleaner energy.

For the oil majors, successfully transitioning to green energy companies is not going to be a walk in the park because these companies have to ride two horses.

That's the case because the majority are already battling dwindling cash flows which means they cannot afford to gamble with whatever little is left. Oil prices have been on a downtrend since 2014, a situation that has only worsened during the pandemic.

Oil and gas firms are still grappling with the best way to presently use dwindling cash flows; in effect, they are still weighing whether it's worthwhile to at least partially reinvent themselves as renewables businesses while also determining which low-carbon energy markets offer the most attractive future returns.

Most renewable ventures, like solar and wind projects, tend to churn out cash flows akin to annuities for several decades after initial up-front capital expenditure with generally low price risk as opposed to their current models with faster payback but high oil price risk. With the need to generate quick shareholder returns, some fossil fuel companies have actually been scaling back their clean energy investments.

Energy companies are also faced with another conundrum: Diminishing returns from their clean energy investments.

Related: ''We'll See $200 Oil": Russia & OPEC Ministers Blast IEA's Net Zero Plan

A paper published in Science Direct last August says that dramatic reductions in the cost of wind and solar have been leading to an even bigger reduction in revenue inflows leading to falling profits. This is particularly true for wind energy as later deployments of wind usually have lower market value than earlier ones due to wind energy revenue declining more rapidly than cost reductions. Solar is more resilient, with technological progress approximately balancing out the revenue degradation, which perhaps explains why solar stocks have gone ballistic.

Adding wind and solar to our grid tends to reduce electricity prices during peak generation times: Indeed, electricity prices in California can come down to zero during long sunny durations. This was not a problem for early deployments but is becoming a major concern as renewables increasingly play a bigger part in our electricity generation mix.

But, ultimately, Big Oil will have to take the plunge and engage in drastic internal restructuring and product cycle transitions even as activists like Engine No.1 promise to continue turning the screw. As Charlie Penner of Engine No.1 has told FT , the energy transition is happening faster than expected and has undermined Big Oil's assumptions about long-term demand for its oil.

By Alex Kimani for Oilprice.com

->


[Jun 07, 2021] Get Ready for $178 Billion of Selling Ahead of the Capital-Gains Tax Hike. These Are the Stocks Most at Risk. - MarketWatch

Jun 07, 2021 | www.marketwatch.com

...Analysts at Goldman Sachs""in October""ran the numbers on the stock market impact of previous capital-gains tax hikes. While there is only a modest impact on the stock market as a whole, momentum stocks usually get socked before they are levied, they found. That makes sense""investors logically are more motivated to sell the stocks where they would save the most by avoiding higher capital-gains taxes.

The last time capital-gains taxes were hiked, in 2013, the wealthiest households sold 1% of their equity assets, the Goldman analysts found. According to the Federal Reserve's distributional financial account data , the top 1% held $17.79 trillion of equities and mutual funds in the fourth quarter of 2020""so a 1% selling of stocks this time would be $178 billion. (The most recent Internal Revenue Service breakdown, from 2018, found that millionaires accounted for just over 500,000 filers or about 0.4% of the total.)

[Jun 07, 2021] Don't get too optimistic about a stock market rally" they've been fizzling out

Jun 04, 2021 | futurewealthdaily.com
This post was originally published on this site

... ... ...

This quick jumping onto and off of the bullish and bearish bandwagons has become the new normal, as you can see from the table below.

... ... ...

As I argued three weeks ago, this sentiment pattern suggests that the market may remain in a fairly narrow range for the next several months. The contrarian bet is that the market will finally break out of that trading range whenever the market timers stubbornly hold onto their sentiment beliefs in the face of the market moving in the opposite direction. That is, be on the lookout for when the market timers remain bullish in the face of declines, or bearish in the wake of rallies. That will indicate that a bigger decline or rally is in store.

In the meantime, the market timers' behavior suggests both market rallies and declines will be subdued. That's good news to the extent you were worried that a major new bear market is about to begin, but bad news if you were hoping for a more sustained rally.

. .. ... ...

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com . Continue Reading

[Jun 06, 2021] Rethinking Unemployment- From Adam Smith to Marx -Reserve Army of the Unemployed- to the Neoliberal War on Full Employment -

Jun 06, 2021 | www.nakedcapitalism.com

Rethinking Unemployment: From Adam Smith to Marx "Reserve Army of the Unemployed" to the Neoliberal War on Full Employment Posted on June 5, 2021 by Yves Smith

Yves here. This post gives a useful, high level view of how the basis for unemployment has changed over time, including under Covid.

By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at t he Institute for New Economic Thinking website

Canadian economist Mario Seccareccia, recipient of this year's John Kenneth Galbraith Prize in Economics, says it's time to reconsider the idea of full employment. He spoke to Lynn Parramore of the Institute for New Economic Thinking about why 2021 offers a rare opportunity to rebalance the economy in favor of Main Street.

Once upon a time – not so long ago, really – unemployment was not a thing.

In agricultural societies, even capitalistic ones, most people worked on the land. A smaller number worked in villages and towns – shoemakers and carpenters and so on. Some might go back and forth from the countryside to the town, depending on the availability of work. If your work in town building houses dried up, you might come back to the country for the harvest.

Economist Mario Seccareccia, who loves history, notes that before the Industrial Revolution, it was unthinkable that someone ready and able to work had no job to do.

Questions: If unemployment was once unknown, why do we accept it now?

Where did unemployment come from?

In those pre-Industrial Revolution times, there were paupers, mostly people who could not work for some reason such as a disability. These were deemed deserving of charity. A small number of paupers were considered deviants and treated harshly, perhaps made to labor in public work-houses under vile conditions.

Seccareccia notes that early classical economists like Adam Smith and David Ricardo recognized that able-bodied people could experience temporary joblessness, but not the long-term variety. The word "unemployment" only became widely used in the nineteenth century. As cities grew and manufacturing took off, people living in cities and towns grew apart. Movement between the two places grew less fluid. The agricultural sector of the economy was shrinking.

At first, if you lost your factory job, you could still probably pick up something in the countryside to tide you over. But if you had grown up in the city, as more and more people did, you might not know how to do rural work. By the late nineteenth century, most city dwellers could no longer count on falling back on agricultural work during hard times.

Karl Marx noted that England's enclosure movement, which gained momentum as early as the seventeenth century, had made things hard for agricultural workers as wealthy landowners grabbed up the rights to common lands that workers had traditionally been allowed to use and were a vital part of their sustenance. Uprooting peasants from the land and traditional ways of life, Marx observed, created an "industrial reserve army" – basically a whole bunch of people wanting to work but unable to find a job during times when industrialists held back investment or when machines took over certain jobs.

Marx saw that this new kind of unemployment was a feature of capitalism, not a bug. Still, a lot of mainstream bourgeois economists thought that the market would somehow sort things out and eventually provide enough job openings to prevent mass unemployment.

It didn't turn out that way. Exhibit A: The Great Depression.

Especially after World War I, many later economists, most notably John Maynard Keynes, warned that high rates of unemployment were getting to be the norm in the twentieth century. Keynes predicted that a lot of people would go on being jobless unless the government did something. This was very bad for society.

Keynes emphasized that full employment was never going to just happen on its own. Mainstream economists thought that if wages fell enough, full employment would eventually prevail. Keynes disputed that. As wages fell, demand contracted even further, leading to even less business investment and so forth in a never-ending cycle. No, capitalism, with its business cycles led to involuntary unemployment, according to Keynes.

Seccareccia observes that economist Michał Kalecki agreed that the government could make policies to help more people stay employed at a decent wage, but there was just one problem: wealthy capitalists weren't going to have it. They would oppose state-supported systems to hold demand up so that fear of unemployment checked workers' demands for better pay and improved work conditions.

For a while, after World War II, the capitalists were on the defense. The Great Depression and the Communist threat got western countries spooked enough to go along with Keynes's argument that governments should try to encourage employment by doing things like creating big projects for people to work on. Safety nets were created to keep folks from falling into poverty. The goal of full employment gained popularity and many more workers joined unions.

Capitalists v. Full Employment

Economists have bandied about various definitions of what full employment ought to look like, explains Seccareccia: "A well-known definition came from William Beveridge, who said that what you wanted was as many jobs open as people looking for them – or even more jobs because every person can't take every type of job."

In the mid-twentieth century, with the economy doing well, neoclassical economists like Milton Friedman started to push back against the idea of full employment. He discouraged the use of fiscal and monetary policy to support employment, arguing that attempts to push down unemployment beyond what he insisted was its "natural" rate in the economy would simply lead to inflation.

In the 1960s, some of what Friedman warned about did actually happen. Employment was low and prices started to go up mildly, particularly during the Vietnam War era. However, the biggest boost to the credibility of Milton Friedman came with the OPEC cartel oil-price hikes of the 1970s that pushed the inflation rate to double-digit levels while simultaneously pushing up unemployment. So, in the '70s, western countries started backing off from encouraging full employment and maintaining strong safety nets. Proponents of the new neoliberal framework were in favor of cutting safety nets, shedding government jobs, and leaving it to the market to decide how much unemployment there would be. They said that it had to be this way to keep inflation from rising, even though the cause of that high inflation of the '70s had nothing to do with high public spending and excessive money creation that Friedman and his friends talked about.

Seccareccia points to proof that the neoclassical logic didn't hold up. In the two decades before the Global Financial Crisis of 2007-8, the rate of unemployment went down, but inflation didn't go up. That proved that the neoclassical economists were wrong. But unfortunately, policymakers didn't really digest this before the Great Recession hit. So, they bungled the response badly by putting the brake on public spending too quickly because of fears of excessive budget deficits and potentially higher future inflation that never materialized. They kept insisting that the employment level would return to that "natural" state Friedman had talked about if they just left things to the market.

"But it didn't work out that way," says Seccareccia. "Unemployment skyrocketed and it took a decade to return to pre-crisis levels.

Which brings us to the COVID-19 crisis.

A Crisis Is a Terrible Thing to Waste

Seccareccia says that we have to understand the difference between the current situation and the Global Financial Crisis. This time, it really is different.

"The earlier crisis started in the financial sector and spread to the real economy," he explains. "But in 2020, when the Coronavirus emerged, the financial and industrial sectors got hammered at the same time." This meant that people in both sectors stopped spending. Households couldn't spend even if they wanted to because traveling, dining out, and other activities were off-limits. Businesses cut investment as uncertainty loomed and exports declined due to restrictions at borders. Unless you were Home Depot or an e-commerce company, you couldn't sell anything.

The COVID-19 crisis also saw workers pulled out of activities thought to be too high risk for spreading the virus. Across the country, non-essential workers were sent home and told to stay there. Most, especially in sectors like leisure and hospitality, can't do their work from home . A lot of these people lost their wages, and because most of them were low-wage to begin with, they could least afford the hit. Many were only able to maintain their incomes through government unemployment insurance. Businesses, meanwhile, were kept afloat with subsidies.

Seccareccia notes that unemployment had an interesting twist in the pandemic because it was both the problem and the initial cure for the health crisis. Unemployment kept the virus from circulating. It saved lives.

Fast-forward to late spring, 2021. As America and other western countries seek to put the pandemic behind them, the economy is opening back up. Employers are wanting to hire, and they are even competing with each other for workers. But many job seekers are waiting to go back to work. There are a lot of reasons why: caregiving for kids is still a huge burden, and people are still worried about getting sick. Transit routes have been disrupted making it harder for people to get to work. It's also possible that some workers may be resisting jobs on offer which come with low pay and inadequate benefits.

Employers have started complaining they can't find workers and blame the social safety net as the problem. Some employers, like those in the hospitality industry, are offering higher pay to lure workers back.

Just as Kalecki predicted, the wealthy capitalists are getting uneasy. The Chamber of Commerce, for example, has pushed the U.S. to stop expanded unemployment insurance benefits so that people will be forced to return to low-wage jobs. Some Republican-dominated states have jumped on board with this idea. Economist Larry Summers, for his part, is warning about inflation and telling the Federal Reserve to raise interest rates so that wages don't go up. He complains that when he walks outside, all he sees are people eager to fill job vacancies . It's unclear where he was living when he said that, or which people he is talking about.

Others argue that expanded unemployment insurance isn't the problem, but the crappy jobs on offer. Seccareccia believes that it's a good thing if employers raise their wages, even if that means a little bit of inflation.

Rising inequality, he emphasizes, is unsustainable in a healthy society, and it's about time ordinary people had a little power to improve their lot. "When employers are worried about people quitting," he says, "that's when you know you're getting close to full employment. And in a capitalist society, it's an extremely rare situation when the number of quits begins to exceed the number of new hires as an economy nears the peak of a business cycle."

In Seccareccia's view, "there's a balancing act between workers 'fearing the sack' and employers 'fearing the quit.'" He observes that capitalists are very good at making sure that the former situation is more common, and they've been spectacularly successful in the last 40 years. "This is why you have flat wages and runaway inequality," says Seccareccia. "Productivity goes up but the workers don't share in it." Profits pile up at the top.

Right now, inflation has been creeping up in some areas. In a couple of sectors, like used cars, it's rising a lot. The question is, beyond a couple of unique cases, what will happen to inflation overall? And will be temporary? A lot of economists think that inflation will be short-lived and will not get very high, so it's nothing to get excited about. Some economists, like Antonella Palumbo, think the worry about inflation is overdone . She notes that with unemployment still high and vast numbers of people who formerly worked but are still out of the labor force, the ranks of the famous reserve army of unemployed are still huge. As the economy restarts, all kinds of short-run bottlenecks are cropping up, but that reserve army is not going anywhere fast and will continue to limit wage increases.

Seccareccia points out that wealthy capitalists trying to stop workers from getting paid better and conservatives complaining about laziness fail to mention that meanwhile, the stock market is soaring, making the rich richer. Plus, the housing market is booming because the more affluent people lucky enough to have kept their jobs over the pandemic now have extra money saved to spend on big-ticket items. "Is it really fair," he asks, "to complain about a few hundred dollars a week received by those at the bottom of the economic ladder? Especially how much the economy is already titled in favor of the haves?"

So, what exactly should the government do about unemployment? Should it do anything at all? For Seccareccia's part, he thinks this is a perfect time to reconsider the idea of full employment, which has been so long abandoned by policymakers in favor of some "natural" unemployment rate. "Policymakers need to understand why COVID may offer a chance not seen since the end of WWII," he says. "We could actually make the economy fairer for ordinary people."


Alice X , June 5, 2021 at 6:02 am

The 1943 Michal Kalecki piece can be found here:

https://mronline.org/2010/05/22/political-aspects-of-full-employment/

EarlyGray , June 5, 2021 at 6:07 am

> So, what exactly should the government do about unemployment?

My favoured solution, and that of other readers of this blog, I suspect, is the Job Guarantee as promoted by MMT.
Because a well designed job guarantee would provide a floor on wages and benefits, the private sector would be forced to match it at the very least. But as has been pointed out on this blog many times before, Kalecki's point that full employment would remove employers ability to effectively threaten workers with the sack, means that it will be very difficult politically to see it implemented.

Mikel , June 5, 2021 at 9:47 am

Still building "houses" with floors only?

I think a definition of "enough" is needed.

Amateur Socialist , June 5, 2021 at 8:07 am

Next week I start my 2nd year of pandemic triggered unemployment after I was terminated without cause. On June 26th my extended UI benefits will be halted by TX Governor Greg Abbot. Okay.

In a year of applying for new positions I have managed to get exactly 1 phone interview after a 40 year career in technology development, ending up with almost 24 years at IBM. In my last year with them I received both a performance bonus and a salary hike. But I'm now over 60 and have been unemployed longer than 3 months so that's probably fairly typical experience. Okay.

The path to full employment is probably going to require the creation of new opportunities in a still contracting economic system. It's not impossible if you're focused on the goal. Here's my shortlist of policy initiatives that could dramatically and quickly grow the number of available jobs, particularly for the under employed younger people who are paying off student loans.

Dramatically increase social security and medicare eligibility/benefits to convince older workers to leave the workforce.
Expand paid family leave and vacation policies to align with other industrialized nations in order to require businesses to hire to cover needed absences.
Drop the number of hours that define full time work to allow more workers to get full benefits.

Yeah, I'd like to be considered for another good paying job in a still viable industry. I spent decades developing skills that are still relevant and valuable. But I'm old and I'm expensive because I have expectations based on my own employment history that 40 years of neoliberal policies have rendered obsolete. Okay.

I'm close enough to retirement and lucky enough in my ability to save and plan that this won't wreck us. I try to imagine my pandemic inspired involuntary retirement as an opportunity to become a labor rights activist. It helps.

Rolf , June 5, 2021 at 9:23 am

My situation is virtually the same, although in academia as research scientist at major US university, with last 6 years as invited scientist at German research institute. Returned to US to the nightmare of Trump at 63, but fully (and naively) intending to continue working. I've lost count of how many job applications I've tendered, with only one interview in two years, then COVID. Now resigned to the fact that work for me from here on out will be different. I continue to write papers with colleagues at university to maintain a reputation in my field. Now recognize that people take one look at my CV, and think: "Old! Expensive!" -- but the truth is I would be willing to work for little just to stay active in a field applying expertise I've spent decades acquiring. I've since met many, many seniors in the same boat: trained professionals with lots of experience who still want to work (and, in my case, need at least some income).

But at least I had a career. I can't imagine the hopelessness of people 35-40 years my junior, with huge debt from college, grad school, and unable to find a decent job.

Something must change. The situation as it exists is unsustainable. One bright light seems to be increasing recognition of the way the economy actually functions, the role of public spending, and the real limits to growth, prosperity.

Amateur Socialist , June 5, 2021 at 9:40 am

Appreciate your commiseration Rolf. I expect there is an army of people like us who are in this situation or about to be.

Fwiw (maybe not much), I'm actively trying to get hired full time at the food coop near my house. The workers there are represented by a union and get full insurance benefits including dental with a 40 hour work week. The Vt minimum wage of $11.75/hr doesn't matter as much as those insurance benefits do; we're still in that 5 year gap between age 60 and age 65 where you are on your own if you need healthcare.

And I've pretty much decided to laugh off Beaux Jivin's campaign promise to drop the medicare eligibility age to 60 etc. It's abandoned along with many other campaign promises. Okay.

Rolf , June 5, 2021 at 12:18 pm

Thanks, A/S, for your kind words. Yes, benefits are key. I really am increasingly worried that Biden, and the Democratic Party in general, don't seem the grasp the fact that the GOP is absolutely committed to recovering control of Congress and the White House by *any* means necessary. Biden in particular seems to entertain the notion that he can bring the right wing to his way of thinking by conciliation, negotiation, compromise, and good performance. But the GOP is not interested in Dem's performance or compromise -- McConnell has made this quite clear. So Dems have an opportunity to make significant history, a true course correction, but only this once. To pursue "bipartisanship" with a party that has no interest in compromise is hugely naïve -- I can't imagine Biden is that foolish, except that he did begin his campaign with the promise that "nothing would fundamentally change".

The food coop gig sounds like a good, sound shot -- all the best to you.

Left in Wisconsin , June 5, 2021 at 1:32 pm

Fellow army member, age 61. Lucky to have health care via spouse but definitely not enough wealth to retire. Two interviews in last two years, both in retrospect clearly designed to fill out an interview field when preferred (much younger) hire had already been identified. The canard about atrophied skills might apply in the occasional instance but IMO is just more bullsh1t in defense of existing social order.

Dem obliviousness to the reality all around us is truly horrifying. I used to argue that the big sort would result in fenced "progressive" enclaves in which all parties – those inside and those outside – would be thrilled to not have to interact with each other. But it's clear to me now that progressives don't need physical separation to avoid seeing what they don't want to; they are completely able to not see the world right in front of them.

Rod , June 5, 2021 at 10:52 am

I spent decades developing skills that are still relevant and valuable .

Well, you agree. And I agree with you, though I don't know you.
But Obviously the 'Market' does not.
Whose right here, and why?? is the issue.

Amateur Socialist , June 5, 2021 at 12:29 pm

I guess I should include this post script regarding my IBM termination:

After I'd been unemployed for about 90 days I was contacted by a recruiter working on behalf of IBM and my former managers. They were looking for people with exactly my skills and experience to come back to work at IBM as temporary contractors. I agreed to a short phone interview to learn more about the opportunity.

Once the recruiter verified my experience and contacts at IBM, I managed to confirm that they expected to bring me back on at about 80% of my former salary. With no benefits and zero job security. I laughed out loud at this acknowledgment of their duplicity but agreed to let myself be considered and provided a resume. Never heard back which is probably okay.

Carla , June 5, 2021 at 8:29 pm

Amateur Socialist, Rolf and Left in Wisconsin -- I take my hat off to all of you. Work left both my partner and me a number of years ago, and we quickly learned that we had aged out of the market and were useless to society as we thought of it. Fortunately, we relatively quickly became eligible for Medicare, which even in its steadily diminishing state was (and is) a significant help.

Good luck to all of you, and A/S, please let us know the outcome of your pursuit of the job with benefits at your local Food Co-op.

Objective Ace , June 5, 2021 at 5:39 pm

I think your experience demonstrates the problem with defining full Employment as, "anyone who wants a job has one". Using this definition, the simple way to get the economy to FE then is to just make all the jobs so terrible and low paying that no one wants them. You dont need a job, and you dont want just any old crappy job. You want one similiar to your old one, If that doesnt exist anymore, one would reasonably say you dont want a job, since what you want doesn't exist, hence we're at full employment

All of this is to say, we shouldnt necessarily just encourage the government to get us to FE. Capitalists by themselves are quite capable of getting us there, as I'd argue they did in the 19th century. Its government interventions like minimum wage and basic safety protocols that keep us from reaching FE since that's what makes people actually want a job

Rod , June 5, 2021 at 9:08 am

Interesting overview.

it was unthinkable that someone ready and able to work had no job to do.

I think there is a conflation of the language terms bandied about–work-v-jobs-v-employment are all couched in the concept of a Consumption Based Economy. I am tired of this.

weeding the garden is work–unless I'm paying you then it becomes a job. In both instances, however, you are employed in the endeavor. This is grooming behavior using language, imo, and needs to stop.

I think this muddle is a componant of the current 'Jobs Discussion".

Covid has rattled generations coming out of Displacements following the very unequal GFC, and an undefined(maybe) examination of Meaning and Place within the current state of the world and the Economy that has been chosen to fulfill the needs of that Economy (Societal and Personal). More Intuitive than cognitive to many.

Selling Plastic bric-a-brac for the Man, to make the rent in an endless cycle, may have lost its cache' subconsciously, to the 'common man' in this time of apparent Climate Crises et al.

There is still plenty to do, and little time for Idleness( itself a "reward' promoted as a 'something' by the Consumptive Economy).

Rod , June 5, 2021 at 9:19 am

There is still plenty to do , like this(and all it encompasses)

Hero rat that sniffed out over 70 landmines retires The Hill

Mikel , June 5, 2021 at 9:41 am

"Proponents of the new neoliberal framework were in favor of cutting safety nets, shedding government jobs, and leaving it to the market to decide how much unemployment there would be. They said that it had to be this way to keep inflation from rising,"

"The market" – that's the first con people have to get over. There is.no "the market" like there it is something like nature.
It's system of intentional, changeable human decisions backed by beliefs and emotions of all kinds now matter how many theories or quantifications occur. And a corporate beuracracy is still a beuracracy.

And actually this neoliberal thinking of letting some imaginary entity "the market" "decide" (we should be lughing at this silliness!) to keep people unemployed to avoid "inflation" only makes sense if it actually meant to signify "avoid inflation of the population."

Phil in KC , June 5, 2021 at 9:44 am

The modern police force is a consequence of idle and unemployed city dwellers. Idled workers don't just sit down and die from malnutrition. Instead, they roam around looking for food, or opportunities that would lead to procuring food. Hungry, impoverished mobs are never a good idea: Ask Czar Nicholas, Kaiser Wilhelm, or the French aristocrats of the 1780's (rather, interrogate their ghosts) how idle, hungry crowds furthered their reigns. For all that, look to the unrest of the 1930's in the US.

Given this reality–that unemployed and starving people refuse to sit down and die peacefully–what will happen as automation starts to rob routine jobs? Already we are seeing robots prowling the Walmart aisles, driverless vehicles delivering pizzas, and self-checkout lines in big box stores. We who work are losing the war on unemployment, which leads to a question: Who is the winner?

Almost as an afterthought, one wonders how much in contributions to Social Security and Medicare have been lost because of automation. Robots don't pay taxes.

Jesper , June 5, 2021 at 10:21 am

Maybe Keynes had an idea what to do?
https://www.openculture.com/2020/06/when-john-maynard-keynes-predicted-a-15-hour-workweek-in-a-hundred-years-time-1930.html

After the achievement of the 40-hour workweek, paid vacations, and other labor concessions, many influential figures believed that egalitarian access to leisure would only increase in the 20th century. Among them was economist John Maynard Keynes, who forecast in 1930 that labor-saving technologies might lead to a 15-hour workweek when his grandchildren came of age. Indeed, he titles his essay, "Economic Possibility for our Grandchildren."

The benefits of labour-saving technologies have mostly been taken as money instead of time and by doing so the capitalist class kept power thereby leading to them getting the lions-share of the benefits of the labour-saving techologies.
The political class could, and still can, side with people and decide that labour-saving technologies is to be taken out as reduced amount of hours spent working for someone else. As is the politcal class have bought the 'lump of labour'-fallacy-fallcy hook, line and sinker so what we see is increased pension-age etc

Vicotria H , June 5, 2021 at 10:31 am

I tried out retirement for a few months. I'm 62 and got SS and a very small pension. It's not enough so I went back – temping. The jobs I can get as a paralegal/admin person don't pay a lot but there seem to be quite a few of them based on companies that are merging or have merged and have a huge mess to clean up. So they hire you for a few months to slog through chaos and fix it. Then on to the next one. I'll keep doing this until I can move to a cheaper part of the U.S. Remote helps in that if I don't have a Zoom interview they can't tell how old I am. I feel for everyone who can't even get tedious work. If my SS was higher I would stop working. If my salary had matched that of the male co-workers that had the exact same job as me, my pension would be higher. Retiring in America for many people is part nomadic as you have to move out of your area to survive after you leave your regular job, or it gets rid of you and the other part is being extremely frugal. Woohoo what a life after over 40 years of helping companies make money.

Rod , June 5, 2021 at 11:00 am

If my SS was higher I would stop working

Is this a complete and true statement, or a shortcut to meaning something else?
No criticism, just looking for the clarity.

Victoria H , June 5, 2021 at 11:20 am

Yes a totally true statement. For it to be higher I would have had to wait until almost 67 to take it. It will go up a tad from my additional employment – maybe. Anyway it's a mostly a set amount. I make as a temp in 2 weeks (take home) what I get in SS once per month. If I make over about $19k annually while taking the SS, the US gov will begin to reduce the SS payment.

John Zelnicker , June 5, 2021 at 1:22 pm

@Victoria H
June 5, 2021 at 11:20 am
-- -- -

Social Security takes the highest 40 quarters (10 years) of your earnings to calculate your benefit. If your current work results in higher numbers than are being used currently, the higher numbers will be used and your benefit will increase.

Victoria H , June 5, 2021 at 11:40 am

I tried to reply to your question – yes it is a true statement. What I wrote additionally may have been moderated out for some reason so I won't repeat it. It only mentioned dollar amounts and the US gov so maybe that was bad – not sure!

Rod , June 5, 2021 at 2:06 pm

Victoria H
and I thank you for that.
But I think you, and I will 'work' until we die–

What does work mean?
noun. exertion or effort directed to produce or accomplish something; labor; toil. productive or operative activity. employment, as in some form of industry, especially as a means of earning one's livelihood: to look for work. the result of exertion, labor, or activity; a deed or performance.

Work | Definition of Work at Dictionary.comhttps://www.dictionary.com › browse › work

I am personally familiar with what you are going through and My wife is there right now.

I waited till full retirement at 66 to collect–not being able to leave 2k on the table(diff btwn 62 and 66 for me). I cannot describe the amount of effort and gyration I needed to extend to achieve that– which may explain why I am the only one in my 'Friend Circle' to actually accomplish it.

Trigger Warning

I thought the coup de grace was when I had to sign up for–and Pay For, with cash, Quarterly–Medicare without a SS check to have it automatically deducted from. Because of my birthday I needed to pony up about 5 months worth of premiums(but i had 3 months to save up for the next Q pymt). I doubt you've ever been curbed at the end of a physical altercation, but that is what it felt like to me. Best think about all that.
Good news–do your own taxes for your enlightenment and you will see that the SS Income Worksheet provides a path to structuring your Income to counter-balance additional Income.
Discalimer–I am in no way an Acc'tant or Tax Man or even giving Advice. I am a Carpenter–but Written Instructions are Written Instructions and Numbers are Numbers and I made a paid living following both–so it's understandable enough to give you some options to ponder.

And to Rolf/AmSoc and all the others -- IMNSHO(the first ever time I have used this phrase) the most dispiriting element about 'Retirement' in America is the Stranding of So Many Valuable Assets embodied in the Retired when the world desperatly needs "All Hands On Deck" to resist the Man Made Extinction looming.

Rolf , June 5, 2021 at 3:22 pm

the most dispiriting element about 'Retirement' in America is the Stranding of So Many Valuable Assets embodied in the Retired when the world desperately needs "All Hands On Deck" to resist the Man Made Extinction looming.

These are true words, Rod. I think catastrophic changes (no hyperbole) lie ahead, for which there is little precedent. Many make absurdly blithe assumptions, thinking they won't be affected, or that wealth will insulate them. This is arrogant folly, and we will need everyone to row in the same direction.

Carla , June 5, 2021 at 9:32 pm

The man who owns the Heating and Air Conditioning company I have been using for the last decade lives in the neighborhood and is 88 years old. After his brother had health problems, and the young nephew he employed left for greener pastures,he now does pretty much all the work himself, and let me tell you, he knows his stuff. I know I should have a back-up in mind, just in case, but so far, haven't found anyone else I can trust.

Dr. R.k. Barkhi , June 5, 2021 at 5:49 pm

Well said. I took retirement at 62 for several reasons,number 1 being i didn't believe it would be around long enough to pay me back.

"All hands on deck" is imo exactly what is needed,but the mostly planned divisiveness (fake right vs fake left aka RepubliCons vs Dumbocrats) will help ensure that never occurs,to someone's benefit.

redleg , June 5, 2021 at 12:20 pm

Just think how many people would quit working, or enter self-employment, if they weren't dependent on employer providedmedical insurance. I don't know the answer/estimate; it would have to be a large number, enough to significantly raise wages across the board.

Amateur Socialist , June 5, 2021 at 11:29 am

Retiring in America for many people is part nomadic

This observation made me remember a critical scene from the excellent oscar winner last year, Nomadland . Frances McDormand's character meets a friend who explains why she took to the road: "Five hundred forty dollars a month from Social Security. After working non stop for over 40 years. How am I supposed to live on that".

I'm paraphrasing possibly badly from memory; it's a very short scene that isn't really pursued farther in the script. But I do remember thinking "Aha! This is the root cause of all this misery and despair "

We moved to southern Vermont from Texas just prior to the pandemic believing we had relocated to a cheaper part of the US as you also mentioned. But Vermont's strong public health track record during the pandemic has unleashed a huge real estate boom here so who knows We may end up priced out of Vermont eventually too.

Rolf , June 5, 2021 at 12:29 pm

Real estate is still relatively cheap in Texas (at least around Houston), with the caveat that Republicans don't always keep the power on or the water pressure up in the middle of winter.

Amateur Socialist , June 5, 2021 at 12:34 pm

Unfortunately our place was in the Austin exurb of Bastrop. Which is now part of the Austin insane real estate boom. And yes Houston can be cheap but only if you don't mind living near a refinery. Or in the path of many future hurricanes. Hard pass.

Pelham , June 5, 2021 at 11:11 am

I keep seeing references to "flat wages." While it's technically true, I suspect it's enormously deceptive.

Yes, we have flat wages. But the cost of necessities that add little or no value to people's lives but which they're FORCED to pay for have shot up far, far beyond the pace of inflation. Think medical care, housing and education, to name just three, all of which are somehow ignored or slighted in official inflation stats.

Susan the other , June 5, 2021 at 11:54 am

Right now the best transition is for the government to regulate capitalism in the direction the future (sustainability) dictates. The problem with regulating capitalism is that most capitalists think it is already too regulated; taxes are too high, etc. They are on the edge of revolution themselves. And regulated capitalism is almost an oxymoron to most Americans. It's just business as usual to a European because they have better social spending and blablablah. The statistic I remember is that the EU spends about 45% of its revenue on social stuff; the US spends a little less than 35%. The problem, as I see it, is this: If we in the US do not achieve adequate social spending we create the perfect breeding ground for exploitation of the environment. People will be desperate for a job – any job. Which will not only cause worse CO2 problems, it will poison off, or starve off, many many species now living on the edge. We will further pollute the oceans and waterways. And we will not only stick with our sick and poisonous agricultural practices, we will exponentiate them – precluding all efforts to fix these unsustainable things. Capitalism as we have known it must change. So, even the great idea of capitalism must adapt to reality. Somebody please tell Larry. At this point "inflation" is an absolutely meaningless word. It would be a very good thing if we followed Eisenhower's advice to LBJ and began to create social structures that are fair to all of society – to the capitalists whose current mandate of voracious profiteering is clearly unsustainable, as well as to "labor" – as we see it evolving – and now, most importantly, we must include the rights of the planet itself and all of our fellow travelers. We won't last very long if we kill them all off and trash the Earth. The race to the bottom that all privateering capitalism eventually creates is the most absurd thing in the history of civilization.

Rod , June 5, 2021 at 2:12 pm

Always with the Big Picture and the Clear Eyes.
Thanks

Carla , June 5, 2021 at 9:35 pm

Indeed.

redleg , June 5, 2021 at 12:13 pm

A good start would be breaking up all of the ubiquitous monopolies/monopsonies/cartels, that have taken over every sector of the economy, from food processing to entertainment to banking to manufacturing to politics to (ad infinitum/nauseum).

John Zelnicker , June 5, 2021 at 1:27 pm

I went to Firehouse Subs yesterday there was a whiteboard inside on a table, facing into the restaurant, that said they were hiring and offered starting pay of $9.00 for crew members and $12.00 for shift managers.

Just inside the door, facing out, was a whiteboard offering starting pay of $11.00 for crew members and $14.00 for shift managers. Seems like they're getting the message.

As an aside, I'd like to give props to Firehouse Subs for using pressed paper clam boxes and paper bags.

LawnDart , June 5, 2021 at 6:47 pm

The average mortgage payment in USA is $1158mo.

Using the 28/36 rule, how much should employers be paying hourly if their employees are valued enough to be able to afford a home?

[Jun 06, 2021] Morgan Stanley: earnings revisions will not be able to offset that de-rating, leaving the overall market vulnerable to a 10-15 % correction over the next 6 months.

Jun 06, 2021 | www.zerohedge.com

For the past several months, Morgan Stanley's fundamental analysts have been turning increasingly bearish on stocks, with the pessimistic sentiment plateauing earlier this week when chief equity strategist Michael Wilson said that there is far too much optimism in the market, and that while earnings are slowly rising, forward PE multiples are far too high and are set to slide, with "the de-rating about 75% to go or an approximate 15% decline in P/Es from here." As a result, in Wilson's view - which is rapidly emerging as the most bearish on Wall Street - " earnings revisions will not be able to offset that de-rating, leaving the overall market vulnerable to a 10-15 % correction over the next 6 months."

It now appears that Morgan Stanley's fundamental bearishness has spilled over into the bank's technical analyst team and as the bank's chief Euro equity Strategist Matthew Garman writes, for only the fifth time in over 30 years, each of Morgan Stanley's five market timing indicators are giving a sell signal at the same time.

Not only that, but the bank's Combined Market Timing Indicator - which has been in sell territory since March - just hit a new all time high of 1.19, surpassing the previous record high seen in June-2007, right around the time of the first great quant crash and before the market collapsed.

According to Garman, the only time equities have risen after a "Full House" Sell Signal was in Feb 17, shortly after the Shanghai Accord kicked in to prevent a global recession. The other previous occasions where there was a "Full House" Sell Signal were Mar-90, May-92, Jun-07. According to MS, "in the 6M post the initial Full House Sell Signal, MSCI Europe has fallen on average 6% ."

So with every in house risk indicator screaming sell, does that mean that Morgan Stanley will have the balls to tell its clients to sell? Why of course not, because in this market where stuff like the AMC, GameStop and Bed Bath squeezes force analysts to admit they no longer have any idea what's going on...

... Morgan Stanley is keeping the hope and assuming that the current period will be similar to 2017 - the only other time when a massive sell signal did not result in a market plunge.

Back in 2017, we remained constructive despite the signal given i) strong EPS growth, ii) an early cycle environment, iii) EU inflows, iv) low sentiment and v) a rise in M&A. Sentiment metrics may look more elevated than in 2017, but many of those factors remain in place today. While we see a trickier risk-reward for equities globally, we maintain our view that there is a compelling case for Europe to outperform global peers.

Yet even Morgan Stanley is forced to admit that while Defensives may just scrape by after a record sell signal, cyclicals are about to be hammered. The next chart shows the relative performance of Cyclicals versus Defensives after a Full House Sell Signal on. As MS notes, "perhaps unsurprisingly, given the poor performance at the market level, Cyclicals have struggled. In the 6M post the four initial Full House Sell Signals, Cyclicals have underperformed Defensives on average 12%, and this drops to -15% looking at any day
when the MTIs have all said sell at the same time."

This was true even in 2017 when equity markets rose: "we previously cited similarities with the 2017 Full House Sell Signal as reasons to not get overly cautious on equity markets in aggregate at this moment in time. After the February-2017 Full House Sell Signal, MSCI Europe continued to rise pretty consistently through the rest of the year. However, despite strong performance from the market in aggregate, the performance of Cyclicals versus Defensives was much poorer. Between February and June 2017 Cyclicals underperformed Defensives by 6%."

It's not just the bank's sell signal that is prompting concerns about the future returns of cyclicals: Borrowing a page from our own warnings (see " China's Credit Impulse Just Turned Negative, Unleashing Global Deflationary Shockwave "), Morgan Stanley looks at "a number of China data points which are giving warning signs" first and foremost the collapse in China's credit impulse, to wit:

While credit tightening has been front-loaded in 1H21, as outlined here, our economists remain constructive on China's growth recovery. Having said that, a number of Chinese data points do suggest the Cyclical bounce looks overextended. China's credit impulse has just turned negative, and historically this has provided a lead indicator for the year-on-year performance of European Cyclicals (Exhibit 5). Similarly, the relative performance of Cyclicals versus Defensives has closely tracked moves in Chinese 10Y bond yields, which are now at their lowest levels since September 2020, standing in sharp contrast to the performance of Cyclicals.

Putting it all together, readers have to ask themselves if what is coming will be an analog of the one and only episode on history when the market did not plunge after all Morgan Stanley market timing indicators hit a sell (and were at an all time high), or will this case be similar to Mar-90, May-92, Jun-07 when the outcome was anything but a happy ending.

[Jun 06, 2021] Eurozone Inflation Above Target Sooner Than The ECB Expected

The USA is not immune. Energy price will drive inflation here too. So the decline of 10 years bond rate might a trap.
Jun 02, 2021 | www.wsj.com

The annual rate of inflation in the eurozone rose in May to hit the European Central Bank's target for the first time since late 2018, as energy prices surged in response to a strengthening recovery in the global economy.


[Jun 06, 2021] GOM is the major factor in the USA oil prodcution comeback , not "shale plays " that are supposedly should be the last hurrah of oil production in the USA

Notable quotes:
"... LTO drilling locations are diminishing faster and faster. Look for massive consolidation as E&P companies can only grow through M&A. ..."
"... The energy transition will be painful and longer than anticipated. Criminalization of an industry that embodies national security and that gives the "haves" a competitive advantage in favor of hopes and prayers is folly and irresponsible. ..."
"... A few years ago I heard Chinese venture capitalist speak at the Aspen Institute. He claimed that democracy is not a form of government but instead a religion. He gave the example that in Nigeria, the US is concerned about human rights while the Chinese could care less who dies in Nigeria as long as they can get the oil. He also stated that the Chinese only care about how they can feed, shelter, move, and run their economy and human rights are not remotely introduced into their paradigm. Something to think about. ..."
Jun 01, 2021 | peakoilbarrel.com

HOLE IN HEAD IGNORED 05/30/2021 at 1:40 pm

Ovi, great work as usual .My POV is that it is GOM that is the major factor in the comeback , not "shale plays " that are supposedly going to be the saviors of Industrial civilisation . Confirms my argument ( and of many others )that shale is all juiced out . Better to lower expectations from LTO for the future . REPLY OVI IGNORED HOLE IN HEAD IGNORED 05/30/2021 at 1:40 pm

Ovi, great work as usual .My POV is that it is GOM that is the major factor in the comeback , not "shale plays " that are supposedly going to be the saviors of Industrial civilisation . Confirms my argument ( and of many others )that shale is all juiced out . Better to lower expectations from LTO for the future . REPLY OVI IGNORED 05/30/2021 at 5:00 pm

Thanks HH

I know the general opinion seems to be that the shale plays are finished. Looking at the data that is in the post doesn't confirm, at this time, that shale is overblown. Let's look at the two states at the top of the post, Texas and NM and the onshore L48 first chart.

Looking at the Texas increase from January to March one gets 4,745 – 4,661 = 84 kb/d or 42 kb/d/mth.
Looking at NM from November to March, one gets 1,155 – 1,112 = 43 or 11 kb/d/mth.
The total being 53 kb/d/mth.

Looking at the total onshore L48 increase from January to March, one gets 8,861 – 8,814 = 47 or a net of 23.5 kb/d/mth. So within the onshore lower 48 there is 30 kb/d/mth of decline.

I would not bet much on my two month or four month analysis, but I think we will need to monitor what is happening in Texas and NM for another six months to get a better idea of what is happening in the Permian. The price of oil will be the determining/critical factor.

05/30/2021 at 5:00 pm

Thanks HH

I know the general opinion seems to be that the shale plays are finished. Looking at the data that is in the post doesn't confirm, at this time, that shale is overblown. Let's look at the two states at the top of the post, Texas and NM and the onshore L48 first chart.

The total being 53 kb/d/mth.

Looking at the total onshore L48 increase from January to March, one gets 8,861 – 8,814 = 47 or a net of 23.5 kb/d/mth. So within the onshore lower 48 there is 30 kb/d/mth of decline.

I would not bet much on my two month or four month analysis, but I think we will need to monitor what is happening in Texas and NM for another six months to get a better idea of what is happening in the Permian. The price of oil will be the determining/critical factor.

LTO SURVIVOR IGNORED 05/31/2021 at 12:39 am

LTO drilling locations are diminishing faster and faster. Look for massive consolidation as E&P companies can only grow through M&A. Many companies have drilling inventories of less than four years. The LTO revolution is over as we knew it and the number of E&P companies will shrink dramatically. There will be minimal growth and much less than 75kbd per month.

The energy transition will be painful and longer than anticipated. Criminalization of an industry that embodies national security and that gives the "haves" a competitive advantage in favor of hopes and prayers is folly and irresponsible.

China will bury us as they try to capture as much of the hydrocarbon as they can knowing that energy equals power.

A few years ago I heard Chinese venture capitalist speak at the Aspen Institute. He claimed that democracy is not a form of government but instead a religion. He gave the example that in Nigeria, the US is concerned about human rights while the Chinese could care less who dies in Nigeria as long as they can get the oil. He also stated that the Chinese only care about how they can feed, shelter, move, and run their economy and human rights are not remotely introduced into their paradigm. Something to think about.

[Jun 06, 2021] Are rising prices and inflation going to hurt your investments- Here's how to protect your nest egg-

Jun 02, 2021 | finance.yahoo.com

Investments in real estate, commodities and gold can help offset higher inflation, wealth manager say.

Real estate, for instance, can gain value amid inflation, while property owners can increase rent on tenants. Real estate investment trusts have also offered attractive returns in prior periods of rising inflation.

Commodities historically do well when the U.S. dollar is weak, and higher inflation tends to push the greenback lower.

"Inflation is inevitable, especially with the amount of money the government is spending," says Patrick Healey, founder and president of Caliber Financial Partners, a financial planning firm. "From a financial standpoint, you do need to have some hedges in your portfolio."

...Materials and energy companies stand to benefit from higher commodities prices, while higher interest rates tend to help financial stocks with higher profit margins.


[Jun 06, 2021] Yes, It's Still the Economy, Stupid by Karl Rove

An interesting question how stock market casino will volve. Will the Ponzi collase or will run for a couple more years.
Jun 02, 2021 | www.wsj.com

the OMB expects slower growth in the long run. It projects gross domestic product growth running slightly over 2% on average annually between fiscal 2022 and 2031, while the nonpartisan Congressional Budget Office pegs growth at less than 2% on average over the same window. Either growth rate is anemic, making more "broadly shared prosperity" unlikely as well.

...

It may be that raising federal spending turns out to be a winning formula for Democrats in 2022. Then again, it may not. Especially since Mr. Biden would hike taxes high enough to eat up more GDP than in any 10-year period in American history, according to the American Action Forum's Gordon Gray. The spending binge would also increase the nation's public debt to 117% of GDP""greater than the previous record GDP percentage that Washington clocked in the year after World War II.

Recent polling suggests the Democrats' approach may not help them in the midterms.

... Democrats may be counting on Republicans to emphasize "culture war" issues rather than deliver a focused, principled attack on the president's orgy of spending and tax increases. This isn't to suggest issues like defunding the police, critical race theory and border security are unimportant. But in 2022, as in most years, the economy will likely be the real congressional battleground. The sooner Republicans recognize that, the better.

Mr. Rove helped organize the political-action committee American Crossroads and is author of "The Triumph of William McKinley" (Simon & Schuster, 2015).

M

Maria Stepanova

I don't believe policies matter any more. In 2020, democrats secured a permanent upper hand for themselves which is mail-in ballots.
Kenneth Johnson
WSJ headline---"Yes, It's Still The Economy, Stew ped"

If....by the summer of 2022....inflation is 4%+....we're in a recession....and unemployment is 6%+....the Democrats will lose the midterms....I hope.

If none of those things is true....they may 'dodge a bullet'.
Any other opinions?

Ron Hoelscher
They have lost the culture war and do not seem to realize it.

As far as spending, when an economy evolves to have very few people controlling the 90% of the economy then the governing party must resort to handouts to the 90% to stay in power.

I think the Romans called it "bread and circuses." Trump was the circus, now people want some bread.

[Jun 03, 2021] Will the stock bubble continue to inflate

Jun 03, 2021 | peakoilbarrel.com

HHH IGNORED HOLE IN HEAD IGNORED 05/31/2021 at 2:16 pm

Ovi, refer Iranian oilfields . I have always said that Iran is producing and selling all the oil it wants to sell or can sell . The regime has outlived 10 US administrations and 6 US presidents inspite of sanctions . They are having to sell at a discount but at the end of the day the oil flows . Just some road bumps and a zig zag route . I doubt they have a lot of spare capacity .If and when the sanctions are lifted all what is " unofficial " will become " official " . As to OPEC or OPEC+ that they are close to capacity viewpoint is more prevailing by the day .

05/31/2021 at 12:58 pm

Current around of stimulus has run it's coarse. I look for jobs numbers and inflation numbers to soften over next few months. Which means more QE and lower interest rates for longer. Higher stock prices.

But for the real economy. We pulled 5 years worth of GDP forward. Unless governments are prepared to spend even more on a monthly and yearly basis going forward than they did since March 2020 until now. And put more money into the hands of average people. We roll over first then fall off a cliff economically. Private banks just aren't going to create the money via loan creation in volume needed to offset or match what the government has done over past year. So without further massive stimulus we get massive credit contraction.

With the debt burden not just public debt but private debt hanging over the economy we likely never return to pre-pandemic levels of Global GDP

Price action for oil is still bullish but that can change in a hurry when jobs and inflation data turn soft. HOLE IN HEAD IGNORED 05/31/2021 at 2:00 pm

HHH, " With the debt burden not just public debt but private debt hanging over the economy we likely never return to pre-pandemic levels of Global GDP " . Been parroting this from a long time but few want to admit that
the BAU is over . Life is(was) a party and all parties must end .

[Jun 03, 2021] Bitcoin is a -farce- - Amundi CIO

Jun 03, 2021 | finance.yahoo.com

Thu, June 3, 2021, 7:18 AM AMUN.PA +0.21%

LONDON (Reuters) - Cryptocurrencies such as bitcoin are a "farce" and a symptom of bubbles forming in financial markets, Amundi chief investment officer Pascal Blanque said on Thursday.

Bitcoin, trading at around $39,364, fell 35% last month after China doubled down on efforts to prevent speculative and financial risks by cracking down on mining and trading of the largest cryptocurrency.

Speaking at a news conference, Blanque described the crypto currency as a "farce," adding that it was a symptom of the bubbles forming in markets.

[Jun 01, 2021] Four hedges to shield your finances from inflation - BNN Bloomberg

Jun 01, 2021 | www.bnnbloomberg.ca

May 27, 2021

Four hedges to shield your finances from inflation

By Dale Jackson

https://imasdk.googleapis.com/js/core/bridge3.462.0_en.html#goog_37473322 Portfolio manager sees opportunity in rising dividend stocks

Columnist image Dale Jackson

Personal Finance Columnist, Payback Time

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If you buy food or gas like everyone else, you already have a profound understanding of how inflation can consume your budget.

The latest official inflation tally showed a jaw-dropping 3.4 per cent increase in the cost of living in April compared with a year earlier.

That's not to say runaway inflation is inevitable. The Bank of Canada has vowed to use its monetary bag of tricks to keep it under control. Also, if you draw income from a defined benefit pension (DB), Canada Pension Plan (CPP) or Old Age Security (OAS), benefits are automatically tied to inflation.

Canadians who invest through a defined contribution pension (DC), or through a self-directed registered retirement savings plan (RRSP) or tax-free savings account aren't so lucky. But there are steps you can take in your investment portfolio to hedge against a rapid increase in the cost of living. The objective of a hedge is to add protection without sacrificing return potential. Here are four ways to put that protection in your portfolio.

1. Commodity equities

Equity markets generally advance with inflation (to a point), so it's good to stay invested and diversified across sector and geographic lines. But some equities actually contribute more to - and benefit more from - inflation. Commodities like crude oil, lumber, grain and metals have taken the lead. That means bigger profits for commodity producers.

You can invest in specific commodities on the futures market through exchange-traded funds (ETFs), or purchase shares in commodity-producing companies directly or through ETFs and mutual funds.

2. Real estate

Real estate is another equity asset class already contributing to - and benefitting from - inflation. Home owners are reaping rewards from soaring residential real estate prices but there are many ways to diversify real estate holdings into other real estate subsectors through real estate investment trusts. REITs are companies that own and operate residential, commercial and industrial real estate that generate income from rents and capital gains through price appreciation.

3. Short-term fixed income

Proper portfolio diversification includes safe fixed income, such as government bonds. Dedicating a significant portion to fixed income in a portfolio will cushion it from volatility on the equity side. How much of your portfolio should be dedicated to fixed income depends on your tolerance for risk and how soon you need the cash.

It's hard to make that argument right now when yields are near rock-bottom lows, so it's best to bite the bullet for now and keep your fixed income in short-term maturities to take advantage of higher yields if inflation pushes interest rates up. A typical one-year guaranteed investment certificate (GIC), for example, pays about one per cent (well below the current inflation rate).

You can also hedge fixed income with inflation-adjusted products such as annuities or real return bonds, but the added cost of that protection could eat into overall returns if inflation does not become a problem.

4. Fixed-rate mortgage

Variable-rate mortgages are now available at about one per cent. While it might be tempting for homeowners to borrow money for (close to) nothing, a rapid rise in mortgage rates could translate into hundreds of dollars added to a monthly household budget or tens of thousands of dollars over the course of the mortgage.

Five-year fixed rates are available at two per cent. That means you will pay two per cent no matter what inflation does to mortgage rates in the next five years.

If you aren't already locked in, think about locking in now.

[Jun 01, 2021] ARK Invest Stocks To Buy And Watch- 6 Stocks That Cathie Wood's ARK ETFs Own; Zoom Slides Before Earnings

Reminds me of Trading Places.
Jun 01, 2021 | finance.yahoo.com

Theo the Cat 19 April, 2021 Ark is gonna turn into Titanic.

[Jun 01, 2021] ARK Invest Stocks To Buy And Watch- 6 Stocks That Cathie Wood's ARK ETFs Own; Zoom Slides Before Earnings

Skepticism grows, judging from Yahoo comments below.
Jun 01, 2021 | finance.yahoo.com

Scorpion 16 April, 2021 I am not surprised either that ARK bought COIN. She is a gambler not an investor. Most of her investment is in overvalued, overhyped stocks they can't just keep going up.
Lou 18 May, 2021 Until recently she was loaded up with Tesla - as much as 10% of the ARKK portfolio - which accounted for a good part of its stellar performance (note that she had TSLA in some of the other ARK funds. Not sure any of these other choices are going to give her ETFs the ride TSLA gave them. Reply 2 Rene 7 May, 2021 Any one that invest in Bitcoin ,dogecoin, Coin etc, must have his brain fall of pot or must have so much money like the Tesla Ceo, that they can gamble for ever in a Casino, with that kind of money, i too will invest in Tin air, and artificial money because Y cannot invest money sufficient to go broke in 10 life times. that is very easy I don't need to expect any return in my investment.
Theo the Cat 19 May, 2021 I would never buy ARKK's stocks, but I am definitely watching and eating popcorn. Alex 27 April, 2021 ARK is losing steam. People start to realize ARK can't survive in a bear market
Theo the Cat 19 April, 2021 Ark is gonna turn into Titanic.
Rock 25 May, 2021 no one cares what ARK invests in... unless you want to lose money Reply 2 Cybercraig 25 April, 2021 I may end up selling ARK.G for a loss to balance next year's taxes. Yech! Reply 5 4 Mighty Lion 19 May, 2021 Why is the reporting about ARK so sexist? Every single article I've ever seen starts "Cathie Wood's ARK ETFs ... (such and such) ..." If it was managed by a man, they would just say "ARK ETFs ... (etc). Reply 2 FlorinS 4 hours ago How can we trust Cathie Wood ? Only few days ago she predicted that Bitcoin may reach $500,000.

[Jun 01, 2021] California's Controversial Math Overhaul Focuses on Equity; computer science is next

May 31, 2021 | news.slashdot.org

Money quote from comments: "When news of this proposed standard came out, I read the actual standard because I wanted to see if it really was that bad. Things were reported like, "Saying an answer is 'wrong' is racist. There is no right and wrong in math, just shades of truth." These kinds of things are worrisome. So I read a good chunk of the proposal, and I couldn't find anything like that. Instead, I found their point was that anyone has the capability of learning math, and so we should be teaching it to everyone. If people aren't learning it, then that's a problem with our teaching methods.

Not sure Google and Apple will be happy. Clearly programming languages are racists as almost all of them were created by white guys and they disproportionally punish poor coders...

A plan to reimagine math instruction for 6 million California students has become ensnared in equity and fairness issues -- with critics saying proposed guidelines will hold back gifted students and supporters saying it will, over time, give all kindergartners through 12th-graders a better chance to excel. From a report: The proposed new guidelines aim to accelerate achievement while making mathematical understanding more accessible and valuable to as many students as possible, including those shut out from high-level math in the past because they had been "tracked" in lower level classes. The guidelines call on educators generally to keep all students in the same courses until their junior year in high school, when they can choose advanced subjects, including calculus, statistics and other forms of data science.

Although still a draft, the Mathematics Framework achieved a milestone Wednesday, earning approval from the state's Instructional Quality Commission. The members of that body moved the framework along, approving numerous recommendations that a writing team is expected to incorporate. The commission told writers to remove a document that had become a point of contention for critics. It described its goals as calling out systemic racism in mathematics, while helping educators create more inclusive, successful classrooms. Critics said it needlessly injected race into the study of math. The state Board of Education is scheduled to have the final say in November.

2+2=5 if we say it is ( Score: 4 , Insightful) by Anonymous Coward on Monday May 31, 2021 @03:06PM ( #61440248 )

People learn at different rates. Lowest common denominator serves no one. Reply to This
Re:2+2=5 if we say it is ( Score: 2 ) by PPH ( 736903 ) on Monday May 31, 2021 @03:28PM ( #61440308 )

And War is Peace, Freedom is Slavery, Ignorance is Strength.

Report to Room 101 for remedial math. Reply to This Re:I can't believe this white supremacy ( Score: 5 , Informative) by phantomfive ( 622387 ) on Monday May 31, 2021 @03:41PM ( #61440352 ) Journal

When news of this proposed standard came out, I read the actual standard because I wanted to see if it really was that bad. Things were reported like, "Saying an answer is 'wrong' is racist. There is no right and wrong in math, just shades of truth." These kinds of things are worrisome.

So I read a good chunk of the proposal, and I couldn't find anything like that. Instead, I found their point was that anyone has the capability of learning math, and so we should be teaching it to everyone. If people aren't learning it, then that's a problem with our teaching methods.

I also found that instead of getting rid of calculus, they are suggesting that you learn calculus as a Junior or Senior in high school. This seems fine to me.

The only thing I wish they'd put more emphasis on is statistics, because if you don't understand statistics, the modern world is a very confusing place. Reply to This Parent Share Flag as Inappropriate Re:

Does the curriculum for grades 1-10 have the appropriate foundational education for kids in grades 11-12 to actually succeed in a calculus class? Because if not, then the notion that any significant portion of juniors and seniors will be able take a calculus class is just a fantasy. Re:

That is the goal, but I am not enough of an expert to know whether they reached their goal or not. Re:

Reading (mostly skimming) through chapter 8 (about grades 9-12), a couple things stick out:

First off, they define three different possible "pathways" for grades 9-10, which seems completely in opposition to goal of a "common ninth- and tenth- grade experience." It sounds like they envision that some high schools will only provide a single pathway while others will provide multiple ones -- but it seems incredibly obvious that that's going to put students on different tracks.

I did not dig into what was inclu In Australia, the course hasn't changed ...

in 40 years since I did it. (I have been helping my kids.)

Which is a problem, because the world has changed with the advent of computers.

So they work on quite difficult symbolic integrations. But absolutely nothing on numerical methods (and getting the rounding errors correct) which is far more useful in the modern world.

For non-specialist students, there is almost nothing on how to really build a spreadsheet model. That again is a far more useful skill than any calculus or more advanced algebra.

And then Re: I can't believe this white supremacy I doubt they could get AP Calculus to work. It's going to have to be an easier version of pre Calculus. Because of how they schedule the classes today, some kids take summer courses so that they can get the prerequisites in time. Keeping everyone at the same slow pace is painful for the stronger students. I'm wondering if they are having trouble finding teachers who are qualified to teach math. Kumon The ones whose parents can send them to Kumon or Russian Math after school, will have the capacity. Those who cant even if they were smart enough for the accelerated program under current system wont. With any law follow the money- see who will make money from this. Re:I can't believe this white supremacy ( Score: 4 , Insightful) by CrappySnackPlane ( 7852536 ) on Monday May 31, 2021 @04:14PM ( #61440460 )

Which planet did you go to school on?

Here on Earth, here's how "everyone learns calculus in 11th grade" works:

The entire class has to stop and wait for the kids who are genuinely overwhelmed - be it because they're smart-but-poor-and-hungry or, you know, because they're just fucking dumb , both types exist, it doesn't matter - to catch up, because the teacher's job rests on whether 79% or 80% of their students score a passing grade on the statewide achiev^H^H^H^H^H^H (whoops, can't have achievements, that's ableist) "performance" tests. The teacher, being a rational creature who understands how to make sure their family's bread remains buttered, spends the bulk of their time helping along little Jethro and Barbie.

The bright kids are left bored out of their minds, and the "solution" presented by these absolute shitstains is to suggest the bright kids do after-school activities if they want to actually learn. Like, that's great for the 1% who genuinely love math the way some kids love music or acting or sports, but what about the 25% or so who are really gifted at math and would like to do more with it, but aren't so passionate about it that they want to give up more of their precio