Login/Sign up

World Association of International Studies

PAX, LUX ET VERITAS SINCE 1965
Post Coal in My Stocking; from Ric Mauricio
Created by John Eipper on 12/26/18 4:09 AM

Previous posts in this discussion:

Post

Coal in My Stocking; from Ric Mauricio (John Eipper, USA, 12/26/18 4:09 am)

Ric Mauricio writes:

Merry Christmas from Silicon Valley. Yesterday I found coal in my Christmas stocking. Yes, the last couple of months have been quite a downer in the markets. And everyone is asking me what the cause is. Well, it is a little bit of everything.

Let's first address what the President blames .... increasing interest rates by the Fed and the Fed unwinding their bond positions. Is this to blame? Yes and no. Chairman Powell is looking at economic numbers and bases his decisions on low inflation and unemployment. Never mind that the inflation rate calculation is hosed or that those who are no longer eligible for unemployment are not counted. Chairman Powell says, "Let them eat bear." For those who blame low interest rates on the asset inflation, here is your answer. Never mind that many small investors are getting hurt and that businesses are now reassessing projects going forward, thus leading to an economic slowdown. Never mind that pension plans are even more underfunded today than they were two months ago, and we will now see cuts in pension plan payouts. But Mr. President, wasn't it you who replaced Janet Yellen with Jay Powell? But we don't know if Ms. Janet would be doing the same dance as Mr. Jay.

Others blame the global economic turmoil of the President's "Tariff Man."  Yes, the threat of global economic wars is taking a toll on global economics and as a result, stocks, especially multinational companies whose economic welfare depends on global trade. One need only look at the Smoot-Hawley tax of 1930 to know my view on tariffs.

The yield curve is not yet quite inverted. It is the 2 year vs. the 10 year that gives us the signal. So, as yet, no indication of a recession. But I am watching it very closely.

Another blame is the partial shutdown of the government. Actually, this only hurts government workers, who are not getting paid during the shutdown. Imagine if you need to pay your mortgage with this income. I only wish they would shut down the IRS. Congress and the White House should not be paid either. They're requiring many essential government workers to work without pay. Why can't Congress and the White House be subject to the same rule?

The biggest blame, which the news does not seem to focus on, is debt. The national debt is growing at a much faster rate than the previous eight years, although still not at the rate of the George W. Bush era, but it is accelerating. If one noticed, the George W. Bush era was not a good one for the stock market. This growth in the national debt is not surprising, given the current president's penchant for spending. $5 billion? No problem. He will argue that leverage is good. Yes and no. If one purchases an asset with 20% down and 80% debt, and that asset's value increases by 4% per year, you will have a 20% return per year (but mathematically, only if you buy a new asset every year; if you hold on, mathematically, that return will decrease each year). What's interesting is that even with leverage, the president has only managed to have a return of 7% per year since he inherited his $200 million per year in 1979. And that's due to his unwise use of leverage that has led to bankruptcies. Will his love of debt lead the US to bankruptcy? Only time will tell.

In the meantime, I will burn my lump of coal and dirty the air. After all, the president says we are not causing climate change.

JE comments:  Would love to join you at brazierside, Ric!  Will Santa one day be depositing "renewable" energies in the stockings of naughty children?

Meanwhile, with the US government shutdown, the Grinch will probably take over the markets for the rest of the week.


SHARE:
Rate this post
Informational value 
Insight 
Fairness 
Reader Ratings (0)
0%
Informational value0%
Insight0%
Fairness0%

Visits: 107

Comments/Replies

Please login/register to reply or comment: Login/Sign up

Trending Now



All Forums with Published Content (44446 posts)

- Unassigned

Culture & Language

American Indians Art Awards Bestiary of Insults Books Conspiracy Theories Culture Ethics Film Food Futurology Gender Issues Humor Intellectuals Jews Language Literature Media Coverage Movies Music Newspapers Numismatics Philosophy Plagiarism Prisons Racial Issues Sports Tattoos Western Civilization World Communications

Economics

Capitalism Economics International Finance World Bank World Economy

Education

Education Hoover Institution Journal Publications Libraries Universities World Bibliography Series

History

Biographies Conspiracies Crime Decline of West German Holocaust Historical Figures History Holocausts Individuals Japanese Holocaust Leaders Learning Biographies Learning History Russian Holocaust Turkish Holocaust

Nations

Afghanistan Africa Albania Algeria Argentina Asia Australia Austria Bangladesh Belgium Belize Bolivia Brazil Canada Central America Chechnya Chile China Colombia Costa Rica Croatia Cuba Cyprus Czech Republic Denmark East Europe East Timor Ecuador Egypt El Salvador England Estonia Ethiopia Europe European Union Finland France French Guiana Germany Greece Guatemala Haiti Hungary Iceland India Indonesia Iran (Persia) Iraq Ireland Israel/Palestine Italy Japan Jordan Kenya Korea Kosovo Kuwait Kyrgyzstan Latin America Liberia Libya Mali Mexico Middle East Mongolia Morocco Namibia Nations Compared Netherlands New Zealand Nicaragua Niger Nigeria North America Norway Pacific Islands Pakistan Palestine Paraguay Peru Philippines Poland Polombia Portugal Romania Saudi Arabia Scandinavia Scotland Serbia Singapore Slovakia South Africa South America Southeast Asia Spain Sudan Sweden Switzerland Syria Thailand The Pacific Tunisia Turkey Turkmenistan UK (United Kingdom) Ukraine USA (America) USSR/Russia Uzbekistan Venezuela Vietnam West Europe Yemen Yugoslavia Zaire

Politics

Balkanization Communism Constitutions Democracy Dictators Diplomacy Floism Global Issues Hegemony Homeland Security Human Rights Immigration International Events Law Nationalism NATO Organizations Peace Politics Terrorism United Nations US Elections 2008 US Elections 2012 US Elections 2016 US Elections 2020 Violence War War Crimes Within the US

Religion

Christianity Hinduism Islam Judaism Liberation Theology Religion

Science & Technology

Alcohol Anthropology Automotives Biological Weapons Design and Architecture Drugs Energy Environment Internet Landmines Mathematics Medicine Natural Disasters Psychology Recycling Research Science and Humanities Sexuality Space Technology World Wide Web (Internet)

Travel

Geography Maps Tourism Transportation

WAIS

1-TRIBUTES TO PROFESSOR HILTON 2001 Conference on Globalizations Academic WAR Forums Ask WAIS Experts Benefactors Chairman General News Member Information Member Nomination PAIS Research News Ronald Hilton Quotes Seasonal Messages Tributes to Prof. Hilton Varia Various Topics WAIS WAIS 2006 Conference WAIS Board Members WAIS History WAIS Interviews WAIS NEWS waisworld.org launch WAR Forums on Media & Research Who's Who