It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
Are you ready? I know I am, so here we go …
“It’s not a matter of what’s true that counts, but a matter of what’s perceived to be true.”
— Henry Kissinger
Credits and Debits
Debit: Before 2017 is finished, retailers will have closed more than 6300 stores thanks to many years of steady declines in sales and customer traffic. This is precisely why the stock market is currently in the middle of a brutal bear market that’s ripping the faces off even the most battle-tested Wall Street floor traders. Oh, wait …
Credit: On Wednesday the Dow Jones Industrials crossed 22,000 for the first time ever, and on Friday the index closed the week with its eighth consecutive all-time high. I’m sure by now, most investors are feeling like multi-millionaires, if not financial geniuses. Then there’s me.
Credit: Heck, it seems like only recently that everybody was rooting for the Dow to hit 20,000. Oh, yeah; that’s because it was.
Credit: Not everybody is celebrating though. Legendary Wall Street trader Art Cashin says the Dow’s seemingly relentless rise has him nervous because 50% of the index’s gains have come from just 10% of its stock components. Hey, Art: shut up you big worrywart and enjoy the ride. People are making lots of easy money! Besides … it’s different this time. Right?
Debit: The recreational vehicle industry is enjoying record-breaking growth too, and RV shipments are expected to surge to their highest level ever this year. By the way, the last two times RV sales saw similar spikes, sharp stock market corrections followed. What’s that? Yeah … I should probably just shut up too.
Debit: Then again, stock analyst Jason Goepfert is warning that the number of so-called Hindenburg omens just hit an all-time record — and the only similar cluster that matches the current swarm occurred in early October 2000. Uh oh.
Credit: Before you start pounding on your keyboards to send me a nasty comment, rest assured that I know exactly what you’re thinking right now: What the heck is a Hindenburg omen? Well … I’m not totally sure myself. But it sounds really scary, doesn’t it?
Debit: Meanwhile, the US dollar is in the middle of its biggest collapse since 1985. The greenback has lost 9% (!) against other currencies since January 1st — and technical indicators suggest it could soon fall even further. If so, that would almost certainly result in noticeable price increases for imported goods, including gasoline. We’ll see.
Debit: In fact, with the dollar plunging this year, it’s not too surprising that Alan Greenspan is now predicting that a return of 70s-style stagflation is right around the corner. You know what that means: It won’t be long before everybody finally realizes that the worst thing about the 1970s wasn’t disco.
Credit: That isn’t the only prediction Mr. Greenspan made this week — he also said the massive Treasury bond bubble that’s been building for the past 35 years is living on borrowed time. Apparently, bonds can be irrationally exuberant too.
Credit: When the Fed began its tapering campaign, rates on the 10-year T-bill were more than 3%; and they were above 2.5% when tapering ended. Now they’re near 2.28%. So how come rates haven’t risen even though 75% of historical T-bill buyers are now net sellers? Remember, when people don’t want your debt, rates should increase. Say, do you think the Fed is secretly …? Nahhhh.
Debit: Speaking of liabilities, how far would you go to evade paying a debt? A woman in China used plastic surgery in order to avoid personal debts totaling $3.71 million. No, really. The ruse didn’t work — but at least she’ll look great while she’s in prison.
The Question of the Week
[poll id="175"]
Last Week’s Poll Results
Have you ever been the victim of a burglary?
- No (76%)
- Yes (24%)
More than 1100 Len Penzo dot Com readers responded to last week’s question, with one in four saying they’ve been burgled. According to the latest figures from the US Department of Justice, there are an average of 3.7 million burglaries each year. More disturbing is the fact that 28% of those burglaries occurred when somebody was actually home — although that is actually worse news for criminals who encounter homeowners who protect their castles with firearms.
By the Numbers
Here are a few more burglary stats from the DoJ:
27% Household members home during a burglary who become the victim of a violent crime.
65% Violent-burglary offenders who are known to their victims.
61% Violent burglaries that occur despite the burglar being unarmed.
12% Burglars who are armed with a firearm.
9% Violent burglaries that result in serious injuries to the victim.
17% Burglaries where the offender gains access through an open door or window.
4% Burglaries where the offender gains access with a door key.
Source: US Department of Justice
Insider Notes: Triffin’s Dilemma
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Other Useless News
Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.
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Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com
After reading about the most important things homeowners should consider in a pest control company, Amanda D. shared this:
I’ve been dealing with mice; so many mice. I hear them in the walls, and the other day I found three in a sack of rice.
Well … I just have to ask: Were they blind?
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
“I’ve been dealing with mice; so many mice. I hear them in the walls, and the other day I found three in a sack of rice.” – Amanda D.
Well I just have to ask: Were they blind? – Len
Bet they weren’t, but bet she cut off their tails with a butcher knife, anyway.
If all she did was cut off their tails, those mice were pretty lucky!
Well, I suppose. But detailed affairs might be difficult …
Len,
You forgot to mention how great our economy is doing by all those new part time restaurant and bartender jobs added. Oh yeah, the price of physical Silver is dropping because 4 of the biggest miners production plummeted, oh wait isn’t that backwards?!?
This government is getting lamer by the day!
Jared
Jared, those of us who are paying attention clearly understand that today, down is up, black is white, and bad is good. This is all a result of our corrupt monetary system. When the money we use in all of our transactions is corrupt, society follows.
Sometimes I wish I were living among the 99% who go on with their everyday lives, blissfully unaware. For now, it is clearly the “better deal” — but I take solace in knowing that at some point that blissful ignorance will most definitely be seen in retrospect as a huge mistake.
I love disco music Len!
Thanks for another great weekend coffee break!
Sara
(Psst. Truth be told, Sarah — I like it too.)
Len, I am going to admit I don’t get what you mean when you said “You don’t think the Fed is secretly …”
Please fill in the blank. Thank you.
” … monetizing the debt!”
Do I win a prize?
Winner winner, chicken dinner, JB. Good luck collecting on it though. LOL
Psst! I know where you can get some Confederate money …
And I’ve got a few $100-trillion bills from Zimbabwe — although, ironically, those are now worth more as collectors items than they were when they initially came off the printing press in 2009 and had the purchasing power to buy about three eggs.
I bought five of them in 2012 for $5. Today those bills are selling on eBay for about $50 each (three times as much as an ounce of silver!) — and the price keeps rising.
Referred here by a friend a few weeks ago. Excellent content. Regarding the stock market, it’s all about the pensions. The plunge protection team cannot let the stock market fail because it will wipe the pension out and that is a sure recipe for unrest.
I think you are absolutely correct, Owen.
Hindenburg omens… mmm… haha.
The markets seem so bubbly, but then I second guess myself. If irrational exuberance is really what we’re looking for, there seems to be a lot of bear-ish news coming out, which makes me question if we’re really at the peak of it yet?
The only certainty is there is no certainty, Albert. It’s hard to tell what’s going on anymore. I truly believe these markets have been artificially propped up for a long time now; if that is indeed the case, then stocks could keep climbing for a lot longer.
I see Greenspan is still trying to reinstate his credentials as a real money guy and save his neck from the blowback thats coming his way when the house of cards he helped build collapses.
Yeah, after he became Fed chair, Greenspan seemed to totally forget what he learned while studying under the tutelage of Ayn Rand.
“Credit: Heck, it seems like only recently that everybody was rooting for the Dow to hit 20,000. Oh, yeah; thats because it was.
“Credit: Not everybody is celebrating though…”
Some of us “not everybodys”, don’t fret, one way or the other. Its not because we are insulated from all the the effects of a financial crash – we aren’t. But our strategy for a continued good life are in place and we will do all right with our own independent resources.
I understand where your pessimism is derived from — I too am very nervous about this frothy market. But at some point the market rises to the point where a 20% or so decline isn’t all that decimating if you consider where that knocks you down to. I just don’t want to be the guy kicking myself that I missed a significant move upward. Difficult to time the market — you have to be right twice.
Scott, I think when this market finally tanks — that is, when the plunge protection team finally loses its grip — stocks are going to end up falling at least 60% off their current highs. The question is: Will the PPT ever lose their grip?
The other scenario is the bond market melts down first and then we have a currency crisis — in which case the stock market, ironically, rises rapidly (to reflect the decreasing value of the dollar). The thing is, the real value of the stock market will be falling, despite the higher prices. See Zimbabwe and Venezuelan stock markets as most recent examples.
“…the bond market melts down first ,,,”
For what it’s worth, that’s Allen Greenspan predicted earlier this week:
https://www.cnbc.com/2017/08/01/alan-greenspan-the-bubble-is-in-bonds-not-stocks.html