Reading the Economy

[jyl]

Originally Posted by recycled sixtie

Using baseball analogy a biz analyst the other day on our BNN channel said we were in the 5th inning. To me it feels like the 8th. Having said that I have great respect for a low cost balanced mutual fund. In this case I let the mutual fund analysts do the respective bond weightings.

This does not reflect the tabs factor but I feel good with it.

Bond index ETFs and funds are usually constructed similarly to stock index ETFs and funds. They hold bonds in proportion to the outstanding bonds issued. Meaning they have the largest weights in bonds from corporations with the most debt. This is, I feel, not what you want to do when the economy is doing badly.

[tabs]

Originally Posted by Shaun @ Tru6

Don't you mean the Wynn buffet?

That comes after the Ashram meeting and walking on water down at the lake.

[Shaun @ Tru6]

Just don't kill any fig trees.

[KFC911]

Originally Posted by tabs

.. and walking on water down at the lake.

meh....I get by with a decent pair of waders...no dragon on da azz

[Shaun @ Tru6]

on the plus side of our new tariff war, bacon and baby back ribs may become very inexpensive in the coming months. have to wonder where all the pig farm illegal alien laborers will go.

[tabs]

Originally Posted by Shaun @ Tru6

on the plus side of our new tariff war, bacon and baby back ribs may become very inexpensive in the coming months. have to wonder where all the pig farm illegal alien laborers will go.

In the Grocery store meat counter...."Boy this Pork sure has a bean after taste."

Albertson had the backs for $2.21 lb...Sam's by comparison is $2.78. A few years back they were $3.99 lb at Sam's or Costco.

Chicken bodies, thighs drums are on sale for $0.77 lb.

Tri tip (Choice) $2.99 at Alberts and on sale at WINCO $2.77

Sam's Gallon 1% milk at $2.16.

Beef prices I think remain high.

But you can see that while there has been inflation over the decades prices on the things mentioned have declined.

[tabs]

The US produces a lot of food that feeds the world. Lets see the Chinese slap a tariff on Chicken feet.

Awhile back they wanted to buy Smith-field pork...

The Chinese are PREDATORY capitalists... It is just business...and all is fair...

The one thing that is missing is almost all analysis of Chinese intentions is their motivations. Westerners ascribe Chinese intentions as being based upon their own western perspectives of imperialistic expansionism. What has to be remembered is that the Chinese were humiliated and taken advantage of by the West starting with the First Opium War in 1839. From that experience the Chinese motivation and intentions are never to let that happen again. China has been determined to control it's own destiny. that is the missing piece that completes the picture.

Thus without knowing your facts sic history you are a cluster fk stumbling around ignorantly in the dark. Wear your dunce cap well Boyz and be proud of the fact that you are fat, dumb and stupid .

[Shaun @ Tru6]

how much capital flight will there be from the U.S. into other countries to fill the Chinese purchasing void caused by the tariff war.

In other words, when China stops buying U.S. pork, how much money will be sent overseas to build pig farms to satiate China's gluttonous pork requirements?

How will this effect our economy, near term and long term?

[Tervuren]

I see us in a damned if we don't situation.

Better to discuss and research the do's then do nothing.

The do's may hurt to, but nearly what the don't will.

[jyl]

Some are saying that because Chinese imports of US goods is much smaller than US imports of Chinese goods, in a simple tit-for-tat tariff war China will run out of bullets first.

That is misguided.

1. Much of the goods that the US imports from China are consumer goods. Large increases in the prices of these will cause enough pain to US voters to force politicians to change course.

2. Chinese consumers are a lot angrier at the US than US consumers are at China. And the former are not voters.

3. US companies are very exposed to China as a key part of their supply chain for goods sold globally, while Chinese companies are not similarly exposed to the US. Think consumer electronics goods assembly. Most semiconductors are packaged in China. Appliances. Etc.

4. US companies have major investments in Chinese subsidiaries and joint ventures that manufacture in China goods for the Chinese domestic market. The US automakers, for example.

5. A devaluation of the Chinese currency can be used to partially offset tariff impacts.

6. MOST IMPORTANT - if tariffs rise to anywhere near to where China is starting to run out of bullets, the US economy will have long since fallen into a recession.

Also, notice that the labor market is very tight in the US at present. Not only is unemployment < 4%, many of the unemployed are basically unemployable (criminal record, drug use, otherwise bottom of the barrel as far as labor goes). Many manufacturing companies are struggling to hire enough reliable, capable employees just to handle existing business. There is not the ability to move tens of millions of manufacturing jobs from China to the US, because we simply don't have the excess labor. And the supply of new US labor may tighten further, depending on immigration policy.

[Tervuren]

Originally Posted by jyl

Some are saying that because Chinese imports of US goods is much smaller than US imports of Chinese goods, in a simple tit-for-tat tariff war China will run out of bullets first.

That is misguided.

1. Much of the goods that the US imports from China are consumer goods. Large increases in the prices of these will cause enough pain to US voters to force politicians to change course.

2. Chinese consumers are a lot angrier at the US than US consumers are at China. And the former are not voters.

3. US companies are very exposed to China as a key part of their supply chain for goods sold globally, while Chinese companies are not similarly exposed to the US. Think consumer electronics goods assembly. Most semiconductors are packaged in China. Appliances. Etc.

4. US companies have major investments in Chinese subsidiaries and joint ventures that manufacture in China goods for the Chinese domestic market. The US automakers, for example.

5. A devaluation of the Chinese currency can be used to partially offset tariff impacts.

6. MOST IMPORTANT - if tariffs rise to anywhere near to where China is starting to run out of bullets, the US economy will have long since fallen into a recession.

And what happens if we do nothing?

Owned by China?

There is a big push-back against our consumer society from young people, they may actually vote for measures that would cause U.S. citizens to value goods instead of one use throw away like we do today.

Young people want to see re-use, recycling. The higher prices on cheaply made consumer goods may be something that is considered good.

Look at some of the threads here about how young people aren't buying things these days. There may be less pushback to raised prices than you think.

Now those disposed to complain because of who is president will complain no matter what happens.

How do you think what you outline in your post affects the long term treasury bond yield vs the short term treasure bond yield?

I see the need for a long term recession so we can get our stuff together and be more responsible, responsible and boom times rarely go together.

[jyl]

Originally Posted by Tervuren

And what happens if we do nothing?

Owned by China?

There is a big push-back against our consumer society from young people, they may actually vote for measures that would cause U.S. citizens to value goods instead of one use throw away like we do today.

Young people want to see re-use, recycling. The higher prices on cheaply made consumer goods may be something that is considered good.

Look at some of the threads here about how young people aren't buying things these days. There may be less pushback to raised prices than you think.

Now those disposed to complain because of who is president will complain no matter what happens.

How do you think what you outline in your post affects the long term treasury bond yield vs the short term treasure bond yield?

I see the need for a long term recession so we can get our stuff together and be more responsible, responsible and boom times rarely go together.

Not sure about the long bond yield. Higher prices tend to drive higher inflation which tends to drive long yields up, but recessions and low productivity tend to drive it down, and there are other factors affecting long yields as well.

On the need for a long term recession - we had one, lasted from 2008 to 2012-13-ish for most folks.

The consumer exhibited a lot of responsible behavior. Housing prices corrected, house size declined, consumers deleveraged, savings rate went up. Some of this was merely forced, but there has been a certain change in perspective among the generation that came of age during the recession, as you note.

Corporates initially did the same, cutting labor, deleveraging, focusing on core biz. But after a couple years, corporates took advantage of near-zero interest rates to lever up again, buying back stock and chasing M&A. Corporate debt load is now at record levels.

US govt initially went deep into the red, as it is supposed to do in a recession (govt spending = economic stabilizer). Deficit started declining as recovery progressed, again as it is supposed to do. Then we did the massive corporate tax cut and passed a deep deficit budget, and govt deficit is soaring again, this is not supposed to happen in the late stages of a recovery.

When the next recession comes, either the US govt will not be able to do its job as ecoomic stabilizer, or deficits will balloon to market-destabilizing levels.

[tabs]

What I do that is unique and what no one else that I can see does is to understand perspectives and mindsets. It is one thing thing to see how a person arranges the deck chairs in their mind and quite another to be able to comprehend the collective mindset. It is a difficult conceptual concept to convey. The best I can do is to say that it is like seeing an image in a mirror that is reflected off of another mirror. A hall of mirrors in effect. It is like threading the eye of the needle to grasp the mindset.

The American mindset based on experience since the end of WW2 has been one of unprecedented prosperity and opportunity. The Americans of today do not know anything different and as such have forgotten what it like to suffer privation and hunger. They can not conceive of anything else and live accordingly. The American experience in the past has been one of a can do nation that can pull itself up by it's bootstraps in a crisis. That was then and this is now for the difference is that in the past the American mindset was of a pragmatic nature born of understanding hardships and privation. The American people while having the same potential as before have a different mindset. One where even losers get Trophy's. No one not only thinks that they have to suffer a hardship let alone having to bite the bullet and suffer one.

People's perspectives in general don't see beyond nor think that the world is anything different than their own perceptions which are based upon their own experiences or narratives. "They are bitterly clinging to their guns and religion." "It is a shame that 48M Americans don't have HC in a rich nation like America." "They didn't earn it by themselves." The moment that GW came on TV in 08 the illusion of American prosperity and invincibility cracked. "Omg how could America be having a meltdown crisis." "How could that ever have happened?" The propensity is to blame the other side as being causation instead of seeing beyond that to the reality that it is the collective mindset based upon a faulty perceptional mindset of what reality is.

America in 1980 had a soul searching come to Jesus moment where it chose to go with the paving over of economic realities with Reagan's "New Morning In America." The solution to the American economic ills was to put it on the credit card. That allowed America to continue with the perceptional mindset that America is a invincible and prosperous nation. The end of the Reagan illusion came in 08 when reality gob smacked America and the world in the face. Since 08 the operational reality is that it is a new normal, (where all the kings horses and men could not put poor Humpty Dumpty back together again). While the American mindset is still in denial of that reality by creating the mother of all bubbles a SOVEREIGN DEBT BUBBLE. This is perceptional mindset is leading like the lemmings to a cliff of a catastrophic failure.

So while the numbers do tell a tale, it is the operational mindset of Americans in general that is the rational of my being pessimistic.

[Shaun @ Tru6]

Yeah but how is the prime rib at the Golden Nugget these days?

[tabs]

Originally Posted by Shaun @ Tru6

Yeah but how is the prime rib at the Golden Nugget these days?

Found another cheap & gud place to go...they just don't have as good of deserts..

Btw your effort at being dismissive does not negate the veracity of what I say. Is it a feeble attempt at denial? Or is it beyond you and is too hard for you to figure out? Or is it a commentary that this Board is just too slow for people to grasp it and as such I am wasting my time here?

It is a further evolutionary articulation of reality, so while it is the same premise that you have heard before it is a different nuanced approach. A different perspective or evolutionary way to work the equation...Dont you see I am recalculating the numbers by going through the litany to see if it all adds up the same way. In arithmetic they called it checking your work.

I am cutting new ground in that I am outlining perspective and mindset as being causation. Using the collective American mindset as being analogous to the conceptual ground I am illuminating. So you should not get lost in analogy but stay focused on the concept. It is easy to get lost in the forest of analogy especially if you don't have clarity. Or if you will, you can't separate the wheat from the chafe.

[Shaun @ Tru6]

You know if I can ever find the time, I'll come out for a food visit sometime.

[tabs]

In reality the value of my "insights" has the same value as that of a brown eyed mullet in Sydney harbour. Basically everything that I have illuminated pointedly since 2009 has come to pass. When it comes to this shyte I am about as good as it gets. I have always been good at this stuff. Now what was on the come in 09 has become over time slowly obvious to every swinging Johnny out there. So it has become redundant and thus pointless to ruminate about it anymore.

The thing that I am struck by is the complacency at the huge deficits and increase in debt that is coming. People just seem to shrug their shoulders as if it didn't matter and carry on as if it were nothing. In every society that has carried on in a similar fashion sooner or later crashed and burned when gravity prevailed. That is mathematical. No one knows when that day will arrive? My day out of the hat is 2022 give or take? By 2022 the US will be another 4T in debt along with all the asundery side debts that no one likes to add into the total.

The other thing that I am struck by is the shear increase in the volume of dysfunction and madness that is occurring. It is literally too much to keep up with and or make sense of. The system is on overload. Now the question becomes is the swirl of madness really increasing or is the speed of communication just making it seem like the volume is increasing? That it is about the same as it always has been? That is the litmus test question that I always ask myselff before I make comment. My take is that global society is showing increasing stress about it's economic well being. That the level of dysfunction and madness is the true reflection of how dire the economic situation really is (here one is not making comment about what that actual level is, just that it is a gauge). It is up to you to make that determination for yourself.

[sugarwood]

Originally Posted by Sooner or later

Tabs, one of these years/decades you might be right.

Broken clock is right twice a day.

I bet when there's finally a market correction, he will say "Told ya so!"
Actually, he's simply been wrong for 8 years straight.

Blind squirrel eventually finds an acorn.

[cabmandone]

Seems like everything is running fine based on the June jobs report. More people entered the work force which brought UE up slightly but overall pretty solid.

[Tervuren]

Originally Posted by sugarwood

Broken clock is right twice a day.

I bet when there's finally a market correction, he will say "Told ya so!"
Actually, he's simply been wrong for 8 years straight.

Blind squirrel eventually finds an acorn.

I personally was expecting 2017, but there were changes in the years leading up to it.

The ACA kept getting modified instead of staying as written, that really made things better.

Now I don't really have any expectations whatsoever.