If A Tree Falls?
Continuing from And The Band Played On?...
A 10% increase in real wages over 55 years. That's a whole 2/10's (actually 0.0018) of 1% annual increase, resulting in reduced purchasing power and a lowered standard of living. Yippy Skippy, It's Getting Better? Warning: Unless you want a hard dose of reality, which will upset those on a steady diet of MSM parrot food, and/or living in a economic bubble, DO NOT click on that link. Dr. Zaius style warning: Don't look for it, Taylor. You may not like what you find. Moving West...
Think record levels of mortgage and non mortgage debt viz. auto, consumer credit and student. Thus, any increase in short term money flows will wind up servicing a record household debt load already at all time delinquency levels. Translated, any positive short term ROC (rate of change or delta) flows will only go to transfer payments. And we know what that means...
Further destruction of money viz. shrinking loans (assets), deposits (liabilities), balance sheets and aggregate demand. Result? Not a supernova, but more like the aftermath, as those funds cannot escape this ever growing massive economic black hole's gravitational force.
Speaking of expectations and "juncture recognition" or "slippages between action and outcome", in And The Band Played On? we mentioned the sinking shippers. In a race to the bottom lowered expectations are being echoed loudly in ED (eurodollar futures), short term yields, 90 day LIBOR, global PMI's, IP and GDP estimates.
For example, February Global Markit PMI's are plumbing new depths of late: Japan a 32 month low; Germany a 60 month low; the EU a 69 month low. All together now, things are looking up indeed?
What about US? The US hit a 17 month low, Q3 2018 GDP 3rd print was 3.4, Q4 2018 what was 3.0 is now estimated at 1.4, TBD on February 28th. Expect Q1 2019 to come down from 2.4 estimated to 1 or less?
If a tree falls in a forest, in this case, if a whole forest of trees falls and no one is around to hear it, does it make a sound? Even if no one listens? And the band played on (or business as usual). Making the titles of our last two conjoined missives apropos, we think.
More to come in Pay No Attention? Stay tuned, no flippin.
Recommended reading:
Timing Is Everything?
Know Your Limitations?
Parting The Red Sea?
A Little Shop Of Horrors?
Where's Your Messiah?
Rapture?
Ro-BUST?
Beware The Ides Of Winter?
Meddling With Powers?
The Perfect Storm?
Begin The Benign?
A Case of Tape-r Worm?
Beware The Ides of Winter Early?
A Disturbing Lack of Faith?
Canary In A Coal Mine?
FreeTrade Warning?
Global Economy Down?
Wear Sunscreen?
Trust Me On The Sunscreen?
Let Me Warn You?
Lunar New Year For Old Blind Men?
Shutdown Impacts Inflection?
LIBOR: Putting Out A Fire With Gasoline?
A Yen For Liquidity? Or No Yen For Carry?
Interest Rate Swaps: Putting Out A Fire With Gasoline?
Expectations: Putting Out A Fire With Gasoline?
Conundrums: Putting Out A Fire With Gasoline?
And The Band Played On?
"Monetary velocity is still quite dead, the M1 money component and Divisia DM1 and DM2 have collapsed, and since July 2018 the Baltic Dry Index has tanked 66%...
That unholy trinity is anything but bullish for the global economy or our emasculated two legged dog of one (FIRE economy and market speculation.)"
Our current brand of stagflation: economic slowing coupled with a loss of future economic capacity (strangulation), accompanied by rising prices or inflation (exsanguination) and pernicious real wage stagnation (purchasing power erosion), all resulting in a lowered standard of living... and the band played on?Speaking of which, the rich get richer while the poor get poorer....
"Stagflation endures for the lower income quintiles (viz., income inequality)." - Salmo TruttaIndeed that gravitational force is strong, here is a better look at those quintiles, and by age. The real horror story is since 1964, we have seen an increase in average annual wages from $20.27 per hour to $22.65. Ponder that for a moment...
"The RoC in short-term money flows (real output) will exceed the RoC in long-term money flows (inflation) by an increasing gap." - Salmo TruttaLest we forget John Q's borrowing to speculate or BTFD as mentioned in And The Band Played On? .... As the numbers are staggering, just read the 1st page of the latest Fed household credit report. They that dance must pay the piper?
Think record levels of mortgage and non mortgage debt viz. auto, consumer credit and student. Thus, any increase in short term money flows will wind up servicing a record household debt load already at all time delinquency levels. Translated, any positive short term ROC (rate of change or delta) flows will only go to transfer payments. And we know what that means...
Further destruction of money viz. shrinking loans (assets), deposits (liabilities), balance sheets and aggregate demand. Result? Not a supernova, but more like the aftermath, as those funds cannot escape this ever growing massive economic black hole's gravitational force.
"It's about William G. Bretz’s Juncture Recognition, or Soros's General Theory of Reflexivity: his “slippages between actions and outcomes”…”a negative feedback process (market distortions) is self-correcting, overt speculation depends on knowing not only what will happen, but when it will occur." - Salmo TruttaTiming can be everything? Knowing what, when and importantly: how market participants will react, right or wrong. The latter solidly entrenched in what the participants have been led to believe or in how their expectations are managed and anchored viz. via Fed speak and a steady diet of MSM parrot food which would make Goebbels proud.
Speaking of expectations and "juncture recognition" or "slippages between action and outcome", in And The Band Played On? we mentioned the sinking shippers. In a race to the bottom lowered expectations are being echoed loudly in ED (eurodollar futures), short term yields, 90 day LIBOR, global PMI's, IP and GDP estimates.
For example, February Global Markit PMI's are plumbing new depths of late: Japan a 32 month low; Germany a 60 month low; the EU a 69 month low. All together now, things are looking up indeed?
What about US? The US hit a 17 month low, Q3 2018 GDP 3rd print was 3.4, Q4 2018 what was 3.0 is now estimated at 1.4, TBD on February 28th. Expect Q1 2019 to come down from 2.4 estimated to 1 or less?
If a tree falls in a forest, in this case, if a whole forest of trees falls and no one is around to hear it, does it make a sound? Even if no one listens? And the band played on (or business as usual). Making the titles of our last two conjoined missives apropos, we think.
More to come in Pay No Attention? Stay tuned, no flippin.
Recommended reading:
Timing Is Everything?
Know Your Limitations?
Parting The Red Sea?
A Little Shop Of Horrors?
Where's Your Messiah?
Rapture?
Ro-BUST?
Beware The Ides Of Winter?
Meddling With Powers?
The Perfect Storm?
Begin The Benign?
A Case of Tape-r Worm?
Beware The Ides of Winter Early?
A Disturbing Lack of Faith?
Canary In A Coal Mine?
FreeTrade Warning?
Global Economy Down?
Wear Sunscreen?
Trust Me On The Sunscreen?
Let Me Warn You?
Lunar New Year For Old Blind Men?
Shutdown Impacts Inflection?
LIBOR: Putting Out A Fire With Gasoline?
A Yen For Liquidity? Or No Yen For Carry?
Interest Rate Swaps: Putting Out A Fire With Gasoline?
Expectations: Putting Out A Fire With Gasoline?
Conundrums: Putting Out A Fire With Gasoline?
And The Band Played On?
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