Tag Archives: World Economy

Christoper Walken Dances on The Economy

The Economy: Economic numbers come in two broad categories: 1) Hard data such as trade balances or housing starts and 2) Soft data such as sentiment or confidence surveys. Hard data is based on numbers. Soft data is based on how the respondent is feeling at that moment in time. You can dispute the numbers but the argument will remain grounded in statistics. Surveys based on feelings are completely subjective and should be taken with a dose of skepticism. Numbers this week neatly fell into these two categories. Hard data was mixed with initial jobless claims up, existing home sales and durable goods down. Soft data and surveys were positive with optimism and odds of a December rate hike falling below 50%. Geopolitical concerns have continued to weigh on markets as NOKO, Iran and trade wars remain unresolved. Stocks swooned over the Italians … But it’s officially summertime so don’t worry be happy. Grab the beach toys and head for the water.

Food for Thought: In keeping with the never-ending 73-year old Italian Opera Buffa, check out the Video of the Week link below. Few know that Christopher Walken is an accomplished hoofer. Lighten your day and watch him here or there. Courage! The latest Sign of the Apocalypse is another Italian Meltdown. Financial markets are having a hissy fit. It’s almost as if traders are trying to stay relevant in a world where the only thing that matters is what the Central Banks are doing. … and that remains unchanged . The 2012 ECB vow that they will do “whatever it takes” to keep the punchbowl full of moonshine remains in force. With the exception of the Fed, global central banks remain committed to free-money, for all, forever. How this ultimately plays out is anybody’s guess. Many investors see asset bubbles in both stocks and real estate. Others see compelling bargains. Both have seen years of gains. But while we know that all trends reverse, we don’t see anything to indicate an inflection point. Pick your poison. … onward into the Summer Doldrums.

Music of The Week: Beegie Adair’s “Dancing in the Dark”

Video of The Week: Christopher Walken Dances

We Quarterback Money®

– Ray

Storm Clouds in Stocks

The Economy: The Song Remains The Same. Global slow growth; China head-in-the-sand; Europe in Brexit Denial; the Russians ignoring sanctions to re-establish their traditional presence in the Middle East. Macro data seems to confirm a global economy that is continuing to slow. What this means at the local level is more difficult to determine. With 60% of the U.S. budget going to entitlements, there is direct taxpayer support for the U.S. economy. As the world’s 6th largest economy, California is awash in money. Yet, in our ongoing, informal poll, people continue to say, “I’m waiting for the other shoe to drop.” If this is optimistic-unease it may explain why most financial markets have gone nowhere for the past 15-months.

Food for Thought: Only 18-days till the Theater of the Absurd closes. One Champion is accused of being a Russian puppet. (Huh?!?) The other Champion is accused of being the darling of a corrupt Justice Department and the FBI. (Please!?!) In a more genteel age, “I am not a crook” and “I did not have sex with that woman” were seen as the epitome of lowbrow. No more. As the greatest economic and military power in history, as the world’s beacon of hope and enlightenment, we have set new benchmarks for gutter crawlers, petty dictators, morons and idiots.
Debate #1: Stupid
Debate #2: Stupider
Debate #3: Stupidest
Father, take this cup from me.

Music of the Week: Halie Loren’s “After Dark”

Donald Trump and Hillary Clinton

The Economy: Economic numbers have surprised to the downside this week. Oil is off 20% from its high of a few weeks ago. Home ownership is at its lowest since 1965. GDP came in 50% below expectations. Some are saying the U.S. economy is stalling. Central bank activity has likewise been muted. The Bank of England and the Bank of Japan were both supposed to initiate massive stimulus programs. It didn’t happen. The Fed met this week and did nothing. Ennui, exhaustion or summertime blues, no matter. Financial markets took the poor numbers as confirmation that slowing economies would keep interest rates lower for longer. Poor economic numbers should keep the monetary printing presses running full-out.

Food for Thought: Thank you Talking Heads, Supreme Court Justices, former Mayors and other professional blowhards. We get it. The Donald is dangerous and The Hillary is a criminal. The Donald is the most dangerous man in the history of the planet. Worse than Cain, worse than Attila, worse than Stalin. The Hillary is the worst criminal in the history of the planet. Worse than Jezebel, worse than Bloody Mary Queen of Scots, worse than Bonnie Parker. That’s why as Americans we’ve selected them to be our Champions. Because warts and all, they are Our Champions. Now, let’s get on with it.

Music of the Week: The Essential Etta James.

BREXIT

The Economy: Fed Chair Yellen appeared before Congress this week; Tuesday before the Senate, Wednesday before the House. Hostility towards Yellen was palpable with House members reducing her to confusion and gestures of helplessness. Global distain for authority in general and Central Bankers in particular was evident in spades. But the Mother of All Events was the Brexit vote on Thursday. Pollsters and pundits got it all wrong with their incessant predictions of a landslide win for “Remain.” Flashing the Longbowman’s “V” the Brits moved to reestablish their national sovereignty and leave the EU. Financial markets crashed in shock and awe on Friday. (Only fools are going to buy this dip.) The uncertainty of Brexit was quickly on display. Though the process is supposed to take 2-years, British politicians began to call to immediately disregard many EU laws; particularly those on immigration and banking. Political parties throughout Europe began to call for Exit Referendums in their own countries. This is the death knell for the EU. Great Britain is the second largest economy in the EU. Saying the EU will survive is akin to saying that a marriage is still intact after one of the spouses has left after leaving an “I’m thru with U” note nailed to the front door. It’s gonna get messy.

Food for Thought: For over 70-years global bureaucrats and central bankers have pushed the secular, one-world agenda characterized by multiculturalism, globalization and the tyranny of the minority. These mostly unelected officials, while deriding the Divine Right of Kings, have ruled with the arrogance of dictators. They have ignored the social contract based on the consent of the governed. Brexit signals the beginning of the end of their failed reign. Despite the near universal, and very vocal, support of “Remain” by global politicians and despite the total support by the mainstream media for “Remain” the Brits revolted against the overlords and their propagandists. Political ramifications were immediate with British Prime Minister Cameron resigning. The ripples are beginning to roil outwards from ground zero with economic changes in the wind. If a slowing global economy, negative interest rates and the failure of global monetary policy weren’t enough, Brexit adds to the uncertainty that has so paralyzed Janet nd the Seven Dwarfs. However, we see opportunity in chaos. Contact us for how to protect your assets in the coming roller coaster ride.

7 Realities of Life

7 Realities Of Life from the Libertarian Republic

1. Your Feelings Are Largely Irrelevant

Seriously, nobody who has already graduated college cares about your feelings. That means that when you complain to your boss because your co-worker mis-gendered you, he’s probably not going to bend over backwards to bandage your wounds. Given feelings are entirely subjective in nature, it’s completely unreasonable to demand everyone tip-toe around you to prevent yours from being hurt. The reality is that people will offend you and hurt your feelings, and they won’t stop to mop up your tears because they shouldn’t have to. Learning to accept criticism, alternative viewpoints, and even outright insults will make you happier in the long run than routinely playing the victim card.

2. You Cannot Be Whatever You Want To Be

This is a comforting lie parents have started telling their children to boost their morale in school. Unfortunately, millennials are now convinced it’s true, especially as society has now decided to push this narrative as well. The reality is if you’re 17 years old and still can’t figure out basic division, you’re not going to be a rocket scientist. If you’re overweight and unattractive, you’re not going to be the quarterback’s prom date. If you lack fine motor skills, you’re not going to be a heart surgeon. It’s okay to accept that you cannot be whatever you want to be. In fact, once you accept this, you’ll be able to focus on the things you can be — the things you really are talented at.

3. Gender Studies Is A Waste Of Money

You heard me. While some millennials taking useless degrees will claim they’re beneficial for teaching or research positions, the reality is that they just put themselves several thousands dollars in debt to learn how to be a professional victim. While you’re struggling to make ends meet after graduation because nobody who pays more than minimum wage is interested in your qualifications and you’re drowning in student loan debt, be sure to check out the next harsh reality before you start complaining.

4. If You Live In America, You’re Already In The 1%

That’s right. Even though you work at McDonald’s for minimum wage because you got a useless, outrageously expensive college degree, you’re still far better off than the vast majority of the planet. Don’t believe me? Fly to Uganda and check out the living conditions there. Fly to China, Saudi Arabia, North Korea, Iran, Russia, and even European countries like Ukraine and Greece, and you’ll quickly discover just how well-off you really are. While it may be cool these days to dump on capitalism, it’s the only reason you aren’t already worse off.

5. You Don’t Have A Right To It Just Because You Exist

That includes healthcare, guaranteed income, and somewhere to live. Just because you’re here and breathing doesn’t mean society owes you anything. Like the billions of people who lived before you, working hard is a better guarantor of wealth and the ability to comfortably take care of yourself than begging society or the government to do it for you. Demanding healthcare be a right, for example, is equivalent to demanding government force the taxpayer to pay for it. While that may seem like a good idea in theory, it only leads to rationing of care when costs become unsustainable, which negatively impacts not just your health, but everyone else’s, too.

6. You DO Have The Right To Live As You Please — But Not To Demand People Accept It

By contrast, you do have the right to live however you please, so long as it’s within the confines of the law. If you want to cross-dress, smoke marijuana, drink lots of alcohol, have lots of sex, and, yes, even go to school for gender studies, then by all means, go for it. Government should not be allowed to legislate people’s behavior as long as it doesn’t infringe upon someone else’s rights, but that doesn’t mean society isn’t allowed to have an opinion. You don’t have the right to demand people keep their opinions about your lifestyle to themselves, especially if you’re open and public about it. I have as much of a right to comment on the way you live your life as you do to actually live it. Your feelings are not a protected right, but my speech is.

7. The Only Safe Space Is Your Home

No matter where you go in life, someone will be there to offend you. Maybe it’s a joke you overheard on vacation, a spat at the office, or a difference of opinion with someone in line at the grocery store. Inevitably, someone will offend you and your values. If you cannot handle that without losing control of your emotions and reverting back to your “safe space” away from the harmful words of others, then you’re best to just stay put at home. Remember, though: if people in the outside world scare you, people on the internet will downright terrify you. It’s probably best to just accept these harsh realities of life and go out into the world prepared to confront them wherever they may be waiting.

San Diego’s Economy

The Economy: The Fed’s Beige Book was released today. The Beige Book is produced 8-times a year. It is a summary of current economic conditions in the U.S. Today’s Beige Book highlighted “modest growth.” There’s no real news here. The U.S. has had modest growth since 2009. What we should be seeing by this time in the economic cycle is an economy that’s in danger of overheating. We don’t have overheating. Instead, we have a Fed that is uncertain of continued economic expansion and terrified that another quarter point interest rate hike will destroy American capitalism. On the contrary, our informal street poll tells us that even a 2% rise in interest rates wouldn’t change people’s buying habits. Is the confidence we encounter on the street due to life in the sunny California Fast Lane? As we’ve noted previously, California is a dynamic Pacific Rim Country. The Golden State is flush with Defense dollars, booming high-tech/med-tech, enviable tourism, manufacturing and agriculture. Most Californians appear to be doing just fine. So why the national wailing and moaning? Are we missing something out here on the Left Coast?

Food for Thought: The interesting thing about the current economy is that many Americans are still talking about the 2008 financial crisis almost a decade after the fact. By contrast, in the late 1980s nobody was still talking about Paul Volker and struggle to end runaway inflation. In the late 1990s, nobody was still talking about the Savings and Loan crisis. At the peak of the last economic cycle in 2007, no one was still talking about the Dot-Com bust of 2000. Yet today people still talk about the Financial Crisis and its lasting effects. Perhaps this is because median family net worth for the middle class is 30% below its 2000 peak and lower than it was in 2002. Perhaps it’s because the internet has created an information explosion manned by screaming click-bait gadflys who are obsessed with sensationalizing the negative.

Music of The Week: Van Morrison’s “Astral Weeks”

Memorial Day in La Jolla

The Economy: Hundreds of millions of dogs and burgers will be inhaled and millions of gallons of brewskies will be quaffed by Dudes and Dudettes in the Grand American Tradition this weekend. GDP will spike. Presidential candidates may go for a smile. We’ll doff our caps or curtsey for those that gave the ultimate sacrifice while continuing another Great American Tradition of thumbing our noses at authority. The weekend spike in GDP caused by the national hedonistic orgy will be offset on Tuesday by a GDP dip as productivity-crushing hangovers reduce economic activity to near-zero. The economy will gradually recover until the evening of Thursday June 2nd, when relief partying for the coming weekend will create an economic stall that will persist until the following Monday, June 6th. Have a Great Holiday. We’ll catch you on the rebound.

Food for Thought:  On Memorial Day: Memorial Day is the holiday for remembering the people who died while serving in our armed forces. The holiday originated as Decoration Day after the American Civil War. The name of the holiday gradually morphed from Decoration Day to Memorial Day after World War II. In 1968 Congress passed legislation which moved four holidays, including Memorial Day, from their traditional dates to a specific Monday in order to create three-day weekends. The change moved Memorial Day to the last Monday in May. Memorial Day is not to be confused with Veterans Day which is celebrated November 11th; the anniversary of the end of World War I. Memorial Day is a day honoring the men and women who died while serving, whereas Veterans Day honors all U.S. military veterans. Memorial Day marks the unofficial beginning of summer. On Memorial Day, the flag of the United States is flown at half-mast (or half-staff for you Army and Air Farce types …Go Navy Beat Army!).

Helicopter Money

The Economy:  Economic data released this week confirmed a growing U.S. economy: Pending home sales up; Personal income up; Consumer spending up; Home prices up; Consumer confidence up; ADP Employment report in line. But the headlines belonged to Fed Chair Yellen and her speech on Tuesday. Yellen assured markets that the Fed would go slowly on any future rate hikes … if in fact they occur in 2016 at all. The expanding U.S. economy is no longer reason to hike rates. Yellen cited global uncertainty and potential fallout from recent events as justifying a slower path of rate increases. She made it clear that the Fed still has room for additional stimulus but that it can hike if the economy grows faster than expected. Global financial markets were ecstatic over the prospect of continued easy money.

Food for Thought: In the 1970s we had “stagflation.” The economy was stagnating with little growth but inflation was a problem. Eventually inflation rocketed and it was the Volcker Fed that whipped inflation with 21% money markets and a 15% 30-year U.S. Treasury. Now we have a Fed beholden to zero interest rates (ZIRP), considering negative interest rates (NIRP) and thinking about helicopter money. Our concern is that the Fed induced financial engineering, which has driven stocks higher, will end with the gravy train going off a cliff. The first 10% correction in 4-years was met with panic by global central bankers intent on continuing to inflate asset bubbles. In this investing environment, know what you own and why you own it.

San Diego Commercial Real Estate

The Economy: Recent economic data has been like the weather in Indianapolis: If you don’t like it, wait a couple of minutes and it’ll change. Conflicting data continues to point to a slowly expanding US economy. 7-years into this same slow motion movie and you have to ask, “What next?” Global Central Banksters have given us more than 600 interest-rate cuts and $12 trillion of asset purchases during the past 7- years. With the latest meetings of the ECB and the Fed, the answer is more of the same. Events
outside of our borders are now dictating the course of Fed policy despite the fact that within our borders the economy has demonstrated that removal of monetary accommodation is overdue. Today it was reported that bonds yields of Sanofi, the French pharmaceutical company, and Royal Dutch Shell have turned negative. This is nonsense.

Food for Thought: We’ve had five years of a bull market in the San Diego commercial real estate rental market. Now it may be over. 2016 has seen office space availability increase dramatically. Year to date, 570,000 square feet of office space has come on the market. This is in addition to the 360,000 square feet of space vacated by Qualcomm in 2015. This supply does not include new construction. Rather, it is due to slowing demand and additional space becoming available in existing buildings. In addition, many start-ups are beginning to struggle and their deaths will add more inventory to the market in 2016. The maturing demand for office space is expected to limit rent increases. While the tenants market of 2009 is still in the future, the landlord’s market we’ve seen for the past 3-years is over. The exception to this scenario is Downtown’s Class A buildings. That market is hot with limited availability. However, the offshoot is that rents in Class B and C buildings, some of which are functionally archaic, are under pressure.

Music of The Week:  Susie Arioli’s Album “That’s for Me”

Super Mario Draghi Rules

The Economy: Super Mario Draghi continues his legacy of Shock and Aw Shucks. We haven’t seen this kind of Italian Brass since Caesar crossed the Rubicon. Today Mario announced an aggressive expansion of ECB stimulus. Interest rates were cut further into deeper negative territory. Quantitative Easing was expanded by 30% from 60 Billion/month to 80 Billion/month. But the biggest change was adding corporate bonds to assets that the ECB can purchase. Global financial markets were not impressed. Moving into private sector debt is a Rubicon. What next? … Central Bank ownership of stocks, then real estate? Perhaps the ECB’s solution to slow growth is for the Central Bank to own all member assets and means of production. Nice way to come back to Marxism. Stalin and Mao must be gloating. Break out the Hammer and Sickle and fire up The Internationale.

Food for Thought: This week marks the 7th anniversary of the Bull Market. Stocks celebrated by trading down and breaking a 5-week rally. We continue to recommend that investors take profits and raise cash. The selloff that marked the first 6-weeks of the year has been arrested. But as we look out over the environment, we find it difficult find the drivers of growth that would power financial markets to meaningful new highs. Selling positions and moving into a money market fund is particularly prudent with retirement plan assets or annuities. In many cases investors can cherry-pick positions to sell within the same mutual fund. This is called a “Versus Purchase” transaction (VSP). We’re into tax season, now is a good time to review and protect your retirement assets. Buy and hold has worked for the past 7-years. Nothing lasts forever.