Black Coffee: The Merry Christmas Edition

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.

I hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?

Christmas is the day that holds all time together.

– Alexander Smith

Credits and Debits

Credit: Did you see this? According to the Kobeissi Letter, the top 10 stocks in the S&P 500 now account for 35% of the entire index. The last time we saw this level of concentration was two decades ago; right before the Dotcom bubble received its needle prick. Oh … and did we mention that the so-called “Magnificent 7” stocks – Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA and Tesla – are now approaching a 100% gain for 2023. Meanwhile, the remaining 493 stocks in the S&P 500 are collectively up less than 10%. For what that’s worth.

Debit: And while Wall Street may be partying like it’s 1999, Main Street isn’t so exuberant. In fact, a new survey finds less than half of American workers are confident in their retirement readiness. And nearly four out of five workers say their finances cause them anxiety. You can thank inflation for the great majority of that anxiety. And maybe – just maybe – a little bit of carelessness …

Credit: In other news, the Fed seems to think they’ve put the inflation genie securely back in the bottle. However, Bloomberg macro strategist Simon White says, with the Fed pledging to lower rates in 2024, they’ve “enabled interest-rate costs to fall – but only by heightening future inflation risks and the prospect of higher yields. Meanwhile, inflation is showing signs of stickiness and some leading indicators are pointing to a re-rise in price growth.” Uh oh. That means, it’s far more likely the Fed is on the verge of snagging defeat from the jaws of “victory.” Let’s go to the tape …

Debit: Speaking of high inflation, year-over-year (YoY) inflation in Turkey for November stood at 61%. In fact, rampant inflation is making life so difficult there that the 44-year-old head of Turkey’s central bank has been forced to move back in with her parents. No, really. And there’s not much of a light at the end of the tunnel for the central bank governor – or her fellow Turks – with economists forecasting YoY inflation to hit 75% in the next several months. Then again, expensive housing isn’t just a problem in Turkey …

Debit: Then again, I guess living with your parents is better than being homeless – and homelessness has risen sharply in the United States, with the latest government report indicating that around 653,000 people are currently living on the street – that’s 12% higher than last year and the highest number on record. Being government data, it probably badly understates the actual figure.

Debit: By the way, if you think inflation is bad in Turkey and the US, just be thankful you don’t live in Argentina, where prices have risen 25 times (!) since 2017. Although, believe it or not, there are even worse places to live than Argentina. Trust us, we live here …

Credit: On second thought, there are some benefits to living in California. For example, California has completed the first leg of its long-awaited High Speed Rail boondoggle. In fact, we are being told that Governor Newsom will get the honor of enjoying the first ride in a rear coach car designed especially for him. It took years to get to this historic moment and billions in taxpayer funds. (h/t: Gary)

Credit: Of course, with GDP supposedly accelerating at 5.2%, unemployment still near all-time lows, and corporate profits still booming, there should be no fear about interest rates being too high. But last week the Fed said they will be cutting rates soon and more than anyone expected. As Zero Hedge notes, “It’s almost as if the Fed knows something really bad is about to happen and want to front run the event. Or, they see something terribly wrong within the financial system and are trying to fix it before it blows up.” In other words: they’re winging it.

Credit: As macro analyst Matthew Piepenburg pointed out this week, there is an ominous lack of nations willing to fund future US deficits by purchasing more Treasury bonds. As such, he says “America has devolved from a gold-backed currency and the world’s leading creditor, manufacturer and trade partner to a debt-soaked America with a gold-welched dollar. Now it is the world’s biggest debtor, weakest manufacturer and the open loser in a trade war with China; hardly a proud evolution from its (glory days). In short, the iconic America is no more.” Uh huh. I mean … who can argue with that?

Debit: On the other hand, it’s looking increasingly likely that none of this will matter in the long run. We say this because Bloomberg pointed out that recent measures taken to ostensibly “protect the system” – both globally and here in the US – actually amplify risk. How so? Well … in a market collapse, the stocks and bonds you think you own will be sucked into default funds as additional collateral for the evaporating value of market derivatives – the so-called “financial weapon of mass destruction” that Warren Buffett warned about 20 years ago. In the end, people holding stocks and bonds will be left with nothing.

Debit: Curiously, the World Economic Forum has been openly insisting for the last several years that by 2030 we’ll all “own nothing and be happy.” Coincidence? Maybe; maybe not. But those previously-mentioned measures to “protect” the system have all been codified into law. As such, these laws are now being dubbed as “The Great Taking.” All that’s left is for a final financial crisis to put them into effect. Although that assumes everyone will take the powers-that-be’s so-called “medicine” willingly …

Credit: Whether you buy into “the Great Taking” or consider it a conspiracy theory, one thing is certain: Physical gold and silver held in your possession carries no counterparty risk whatsoever. Precious metals are immune from the claws of government and the financial squid better known as Wall Street. That’s why gold and silver are the ultimate form of wealth insurance. It’s also a good reason why you should probably consider keeping at least a small portion of it as part of your retirement nest egg. You know … just in case “conspiracy theory” end up becoming conspiracy fact – as they usually do.

By the Numbers

Here are the 10 nations with the highest year-over-year annual inflation in 2023:

283% Venezuela

215% Lebanon

161% Argentina

62% Turkey

39% Iran

35% Egypt

29% Pakistan

28% Nigeria

7.9% Hungary

7.5% Russia

Source: @SpectatorIndex

The Question of the Week

[poll id="516"]

Last Week’s Poll Results

How much of your paycheck are you currently setting aside for retirement?

• None (25%)
• More than 25% (19%)
• 11% – 15% (16%)
• 6% – 10% (13%)
• 16% – 20% (13%)
• 21% – 25% (9%)
• 1% – 5% (5%)

More than 1900 Len Penzo dot Com readers responded to last week’s question and it turns out that almost half of you set aside at least 16% of your paycheck for retirement. That’s awesome!

If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.

Useless News: Santa Question

My nine-year-old son, Gabriel, had heard some rumors at school that Santa wasn’t real. So he approached me with a big question: “Dad, tell me the truth. Is Santa real?”

I decided to tell him it was us who had bought his latest Nintendo Wii game.

“Really?” he said. “Well …you should have let Santa bring it.”

“Why is that?” I asked.

“Because,” he said, “that way, it would have been free.”

(h/t: Mario Rodriguez via RD.com)

Buy Me a Coffee!

For the best reading experience, I present all of my fresh Black Coffee posts without ads. If you enjoyed this week’s column, buy me a coffee! (Dunkin’ Donuts; not Starbucks.) Thank you so much!

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More Useless News

Here are the top five articles viewed by my 47,812 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. When Is the Right Time to Stop Giving Gifts to Nieces and Nephews?
2. 10 Financial Rules of Thumb That Are Really Old Wives’ Tales
3. 14 Reasons Why Treadmills Are for Suckers
4. Clever Low-Cost Homemade Gifts Everyone Will Enjoy
5. 9 Ways to Save Money When Buying a Car

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(The Best of) 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 me at: Len@LenPenzo.com

After reviewing several of my blind taste test articles, including the ice cream comparison, Mister wrote in to express concerns about one of the panelists; specifically, my dog, Major:

I’ve read several of your product surveys and I notice a trend with all of the dog’s evaluations. I suspect he’s lost his sense of taste or smell.

Well … that would certainly explain why he considers cat poop to be such a delicacy.

If you enjoyed this, please forward it to your friends and family. 😊

I’m Len Penzo and I approved this message.

Photo Credit: public domain