Black Coffee: A Light in the Tunnel

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 an enjoyable week. Without further ado, let’s get right to this week’s commentary …

There is only one kind of shock worse than the totally unexpected: the expected for which one has refused to prepare.

– Mary Renault

Credits and Debits

Credit: Did you see this? Despite declining consumer sentiment and depressed sales, the stock market continues to hold up well and volatility remains subdued. As such, at least one analyst is insisting that there is still “little evidence of market stress.” Patience, Grasshoppa; patience. That being said, it’s important to remember that the nominal stock market gains for most stocks aren’t quite as good as advertised, as they fail to accurately reflect losses in the US dollar’s (USD) purchasing power due to inflation. Just sayin’.

Credit: So … just how well have stocks been performing lately? The Dow was up 0.3% on Friday, which extended its winning streak to eight trading sessions. The S&P 500 has been on a tear too. On Thursday it gained 0.5%, moving back above 5200 for the first time since April 9. Even so, we’re fairly certain that this is how the average investor would sum up their personal experience with the equities market …

Debit: Stocks aren’t the only market that’s soaring. Skyrocketing cocoa prices has been the norm for most of the past year – and now coffee is perking up. While cocoa prices are at a 50-year high, a supply crunch now has coffee prices at a 45-year high – with spot prices across key markets surging 17% in just the past month. You know what that means: It won’t be long before people stop calling Starbucks coffee “Sixbucks” and start calling it “Sevenbucks.”

Debit: On a related note, Bloomberg reports that the term “sticky inflation” surged to a record 17 mentions in corporate earnings calls this quarter. Not coincidentally, Newell Brands -which owns Rubbermaid, Yankee Candle, Coleman, Paper Mate, and many others – warned last week that, “Consumers are continuing to carefully manage their discretionary spending as the cost of food, energy and housing inflation has outpaced wage growth.” Heh. Ya think? Hey … does anybody remember when both Fed Chair Jerome Powell and Treasury Secretary Janet Yellen assured us that inflation was transitory? We do.

Debit: By the way, the obsession with inflation isn’t surprising when you consider that 29% of US households – that’s 40 million families – are categorized as ALICE. For those of you not up on the current lingo, “ALICE” stands for “asset limited, income constrained, employed.” The term was created by United Way to describe American households whose income exceeds the government’s so-called “poverty line,” but still can’t meet their basic needs. In other words: families that are one crisis from financial ruin – and maybe severe domestic strife …

Debit: Needless to say, American households aren’t the only ones in trouble; so is the US banking system. In fact, there is still $12 billion in Fed loans filling holes in bank balance sheets that need to be repaid from its emergency Bank Term Funding Program (BTFP). Yeah … nothing to see here, folks.

Debit: Although foreign demand for US debt all but dried up after the start of the Ukraine war, US Treasuries (UST) demand was maintained via the Fed’s Reverse Repo Program (RRP) account – but that account is almost depleted. So where will future UST demand come from? Will the Fed restart QE? Is so, inflation expectations will soar, causing investors to demand higher yields for their long-duration USTs – which the US government can’t afford. Translation: The debt is a ticking time bomb can’t be defused. And the fuse is clearly getting shorter, as US Treasuries are already paying out $2 million in interest every minute.

Credit: Believe it or not, twas a time when USTs were considered the ultimate financial safe haven; even better than gold, because USTs offered a real yield. However, as macroanalyst Andy Schectman notes, “Who who’d be stupid enough to buy any USTs of 10-year or greater (today)? Who in their right mind would do that? It’s counterparty risk on top of brain-dead monetary policy; as irresponsible a fiscal policy as you could ever imagine.” He’s absolutely correct – if you believe, as we do, that a reckoning isn’t too far away. As for those of you who insist there’s a light at the end of this very dark financial tunnel, you’re right too. But for the wrong reason:

Credit: Despite the conventional wisdom, all fiat currency – including our USD – is neither money or wealth. A big reason the US finds itself caught in the current intractable debt trap is because 99% of the public fails to understand this – and sadly, 99% of federal politicians take advantage of that. To wit, Ron Paul, who served on the House Banking Committee notes that “inflation devalues the USD by reducing the spending power of not only your income or wages, but of every single dollar you’ve ever saved.” Yep. The truth is: Only gold is money. Everything else is an IOU. That’s not semantics, folks – even though people mess with language all the time.

Debit: By the way, if you’re looking for those in charge to save us from an oncoming USD crisis, please stop. A recent video clip of the current US Chief Economist and head of the US Council of Economic Advisors, Jared Bernstein, shows him being unable to explain how our fraudulent debt-based monetary system works, despite his lofty position. After rambling for about a minute in a desperate attempt to craft an answer, he reluctantly admits, “I don’t get it.” Well … to be fair, he’s not the first person to be bamboozled by a seemingly-innocent question. Just ask Miss South Carolina … (h/t: Revolver.com) 

Credit: Our current debt-based monetary system is con game that depends on continuing pubic faith that the USDs they’re receiving in exchange for their labor, goods and services actually have value – not only today, but decades from now. However, that facade is now crumbling, as evidenced by the dwindling number of nations willing to extend unlimited credit to America in exchange for their products and commodities. Restoring gold to America’s monetary system will restore that trust. Of course, the politicians will vehemently resist this because gold forces the government to live within its means. But as history reminds us, the free market always wins in the end.

By the Numbers

Among companies that trade on major US exchanges and have market capitalizations of at least $1 billion, here are the 10 best-performing stocks of 2024 (through the end of April):

157% Vera Therapeutics (symbol: VERA)

165% Cullinan Therapeutics (CGEM)

167% Avidity Biosciences (RNA)

185% Trump Media & Technology Group (DJT)

191% Canopy Growth (CGC)

202% Super Micro Computer (SMCI)

239% Alpine Immune Sciences (ALPN)

328% Viking Therapeutics (VKTX)

431% Janux Therapeutics (JANX)

565% Root (ROOT)

Source: US News & World Report

The Question of the Week

[poll id=”535″]

Last Week’s Poll Result

How many times have you gone to a movie theater in the past 12 months?

• Zero (55%)
• Once (22%)
• More than twice (14%)
• Twice (9%)

More than 1800 Len Penzo dot Com readers answered last week’s question and it turns out that roughly 1 in 4 of you have visited a movie theater at least twice in the past year. As for yours truly, put me among the majority of folks who haven’t been to the movies in more than a year. These days it’s just so much easier for me to watch the latest flicks in the comfort of my own home! (It’s cheaper too.)

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

Useless News: Morning Commute

A man was riding on a full bus minding his own business when the gorgeous woman next to him started to breastfeed her baby. The baby wouldn’t take it so she said, “Come on sweetie, eat it all up or I’ll have to give it to this nice man next to us.”

Five minutes later the baby was still not feeding, so she said, “Come on, honey. Please take it or I’ll give it to this nice man here.”

After a few more minutes the baby still wasn’t feeding.

That’s when the anxious man blurted out, “Come on, kid … make up your mind! I was supposed to get off this bus four stops ago!”

(h/t: Gary H.)

Buy me a coffee? Thank you so much!

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More Useless News

Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. Kentucky (2.21 pages/visit)
2. New Hampshire (2.19)
3. Connecticut (2.15)
4. Delaware (2.11)
5. Maine (2.06)

46. Oregon (1.47)
47. North Carolina (1.44)
48. New Mexico (1.33)
49. Vermont (1.19)
50. Virginia (1.08)

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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 my post on knowing the right time to buy a home, Edward left this comment:

Just wanted to say I love reading your blog and look forward to all your posts, especially the Black Coffees. Keep up the great work, Len!

Thanks, Edward! (Your check is in the mail.)

If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀

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