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?
On the plains of hesitation bleach the bones of countless millions who, at the dawn of decision, sat down to wait, and waiting died.
– George W. Cecil
Credits and Debits
Credit: Did you see this? Recent retail sales data shows consumer spending remains robust. Hooray! However, while this has led some to believe economic issues are resolved, the underlying factors that fueled inflation may still be hiding in plain sight. The good news is: The stock market is still flirting with its all-time highs. At least for now.
Debit: Unfortunately, the rising consumer sales figure for last month needs a bit of reality check, as Zero Hedge points out the positive September spending figure is entirely due to higher prices. Or to put it another way: Consumers are spending more but receiving less. Apparently they’re drinking less too …
Debit: In other news, a market analyst who also happens to be a former executive for both Target and Toys ‘R US is projecting that the upcoming holiday spending season between Black Friday and Christmas will see growth in the 2.5% range. However, the same retail expert notes that 2.5% “is not very good. In (retail’s) heyday, we’d want to see more like 4% growth.” Then again, if we’re being honest, considering this guy worked in the C-suite for two of the worst run companies in America, we should probably take his warnings with a heaping spoonful of salt. Or not …
Debit: Of course, the US government bean counters continue to insist that the economy is doing just fine – but the recent string of corporate bankruptcies keep piling up. This time it’s restaurant TGI Friday’s. Bloomberg reports that the casual-dining chain is filing for bankruptcy protection. Apparently, the company has been struggling to turn around a business pressured by customers’ tighter budgets and preference for faster food. That is, opposed to this stuff:
Debit: Meanwhile, the National Debt is bigger than ever – and the rate at which it is piling up is becoming faster with each passing day. Just how fast is it growing these days? Well, it expanded by an astonishing $455 billion in the two weeks between September 26th and October 9th – and nearly $500 billion in just three weeks. Yikes.
Credit: On a related note, a group of financial analysts from Bank of America announced last week that, with soaring US deficits and the National Debt rising at an exponential pace, gold is officially “the last safe haven.” Yes, folks; hell has officially frozen over. At least they are finally buying into “safety first” – financially or otherwise:
Credit: By the way, it’s not just the Bank of America who is finally admitting what we’ve been preaching here for years. Billionaire investor Ray Dalio said this week that “If you don’t own gold, you know neither history nor economics.” Dalio was underscoring the yellow metal’s proven role as a safe haven during turbulent economic times. He warned that a significant economic contraction and debt restructuring may be in the cards over the next 18 months – and that the crisis will catch many investors unprepared for the consequences. Uh oh. Oh … and speaking of consequences:
Debit: By the way, Dalio expects a challenging scenario to unfold where the US Treasury will be forced to issue substantial amounts of debt, potentially surpassing available demand. This could lead to either significantly higher interest rates or extensive money printing by the Fed, reigniting runaway inflation and further devaluing the US dollar (USD) – not to mention lowering the living standard of America’s middle-class.
Credit: For his part, macro analyst Bill Holter believes that the Fed’s recent 50 basis-point rate cut – despite above-average inflation and still-soaring housing and stock markets – may be that the central bank is aware of something burning in the financial system under the surface. We agree; but we’re all part of the same tin-foil-hat brigade. If you don’t believe us, just ask the “educated” mainstream media crowd …
Credit: Not coincidentally, the price of gold is up nearly 50% year-over-year. Even so, the recent gold bull move is still an under-the-radar stealth rally, and has arguably not yet gained universal investor attention. But it will. Eventually. Maybe …
Debit: Just before periods of financial market and economic turmoil in the US, the Dow Jones Industrial Average and gold prices have traded at all-time highs in tandem (1973, 2007). The only other instance of a dual-high in these two assets was late 2020, following upheaval caused by the once-in-a-lifetime COVID pandemic. The question is: Could this occurrence be a loud warning of brewing trouble for the markets in 2025? We’ll soon find out. The good news is: Gold holders will come out of this just fine, regardless of what happens to the stock market.
By the Numbers
Depending on the city, the rate of mortgage delinquency in the US currently ranges from around 3% to 23%. With that in mind, a new survey determined the cities with the ten highest mortgage delinquency rates to highlight where people are at the biggest risk of foreclosure:
12.7% Memphis, TN
13.2% Lubbock, TX
13.3% Baltimore, MD
13.4% El Paso, TX
14.2% Corpus Christi, TX
14.4% Newark, NJ
14.6% Philadelphia, PA
14.9% Baton Rouge, LA
16.1% Detroit, MI
23.3% Laredo, TX
Source: WalletHub
The Question of the Week
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Last Week’s Poll Results
Have you ever driven your vehicle 100 mph or faster?
- Yes 59.7%
- No 40.3%
More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that 3 in 5 of you confess having a lead foot on steroids. Well … at least once during your lifetime. 😉
This week’s question was submitted by reader Frank. 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: Restaurant Tip
Two elderly gentlemen were talking, and one said, “Last night my wife and I went out to a new restaurant and it was really great; I recommend it highly.”
The other man said, “What is the name of the restaurant?”
The first man thought a while and finally said, “What’s the name of that flower you give to someone you love? You know, the one that’s red and has thorns.”
“Do you mean a rose?”
“Yes, that’s the one,” replied the man. Then he asked his wife, “Rose, what’s the name of that restaurant we went to last night?”
(h/t: James)
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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 me at: Len@LenPenzo.com
After reading a Len Penzo dot Com article explaining the 4 things every homeowner should look for in a pest control company, Tori Raddison left this comment:
Getting rid of a rat’s nest is much more effective than getting rid of a few rats — that includes my soon-to-be ex-husband who left me last month for my best friend.
You know … I’m really thinking it may be time to start a new therapy blog.
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Photo Credit: public domain
Hi Len,
Thanks for the tasty cuppa!
Went to the grocery store to pick up just a few things yesterday and spent over $100. I couldn’t believe it! I remember when my mom used to scream when she spent that much for the whole week. Those were the good old days to be sure!
Have a great weekend everybody!
Sara
Our grocery bill is about 35% higher over the past three years – that’s almost 12% annualized. The CPI numbers are a joke.
Thanks for the George Carlin clip. What a great comedian. One of my all time favorites. He was the guy who created the saying “It’s a big club and we aren’t in it.”
He was one prescient dude, Sam. When I was growing up he was my favorite comedian too.
That graph of federal interest payments on debt perfectly shows the predicament the Fed is in. By hook or crook, They are going to have to keep interest rates down to almost nothing, but that is only going to let the inflation genie back out of the bottle. The dollar is toast.
I think the USD isn’t going anywhere – but its purchasing power is going be even more degraded in the next couple of years than it has been during the past few years.
We live in interesting times.
That’s one way to put it.
It’s true.
Yes, it is.
“Consumer spending remains robust”. Fake news, = lie. If inflation the past 3.5 years has been about 30%, then consumer spending would need to be about 30% higher than 3.5 years ago to reflect the same volume of goods and services have been purchased).. if the spending numbers are about even then inflation adjusted spending is down 30%.
Yep.
I agree with the photo demonstration on how to eat liver with onions.
I ordered two extra large fruit cakes for Len’s Christmas gift. I opened the box, and out popped members of Congress. One from each political party.
My mom and dad loved liver and onions. Stunk up the house every time they cooked it. Apparently, I used to love it as a baby – or so my mom tells me. I guess my taste buds matured as I got older.