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 …
Let them eat cake.
– Marie Antoinette
Credits and Debits
Credit: Did you see this? With worldwide air travel slated to hit a record 5 billion passengers, the global airline industry is expected to earn more than $1 trillion in revenue next year. Analysts are also predicting that airlines’ average profit per passenger will increase to $7 next year – that’s up from just $2.25 last year. Then again, that’s not the only thing that is going up:
Debit: Unfortunately, while the airline industry has recovered from its pandemic doldrums, the fast food industry is continuing to struggle – especially in the People’s Socialist Republic of California, where Governor Newsom signed the $20 minimum wage law for fast food workers that took effect this year on April Fool’s Day. Since then, California has seen the elimination of 6000 jobs in the sector. Compare that to the same period last year, when California gained 17,528 private sector fast food jobs – an increase of 3.1%. Since the law was passed, California’s fast food employment decline (-1.1%) has been steeper than its decline in private employment (-0.3%). Imagine that. In the meantime …
Debit: That’s not the only bad news for Californians. A drop in the number of home sales across Southern California has not kept home prices from increasing year-over-year. In fact, sale prices are up 5.5% year-over-year, from a median of $725,000 in 2023 to a median of $765,000 in 2024. Despite this fact, the number of sales fell 5.9% year-over-year. Hard to believe, isn’t it? Needless to say, this has resulted in yet more cries for a return to the so-called “good ol’ days.”
Debit: On a related note, the Fed reported this week that although US economic activity rose slightly, input prices are once again rising faster than selling prices for most US businesses. As a result of this, these businesses are now experiencing declining profit margins. Hmmm. I wonder how that happened …
Debit: On Monday a federal judge rejected the Consumer Financial Protection Bureau’s request to allow its rule capping credit card late fees at $8 to take effect. That regulation would have blocked card issuers with more than one million open accounts from charging more than $8 for late fees unless they can prove higher fees are necessary to cover their costs. And while we realize that late fees are supposed to be punitive enough to discourage late payments, it also seems that to us that these credit card companies are already more than fairly compensated for their risk by the usurious interest rates they command.
Credit: Last week, bitcoin (BTC) topped $100,000 – rising more than 45% in just 30 days. That prompted the always-sagacious Franklin Sanders to observe: “Hmmmm, can anybody say, “parabolic rise”? Call me a cave dweller; call me an old fogey; call me a digital ignoramus; call me a nat’ral born durn fool from Tennessee; (but) I just never can bring myself to buy anything with a parabolic chart. Why? Because it’s a chart of a bubble, and bubbles always end in an explosion that takes your money with it.” And on a related note …
Credit: More from Mr. Sanders: “Does BTC have a compelling … utterly convincing story? Sure, bubbles always do. Am I missing the opportunity of a lifetime? Might be; I’ll just have to miss it. In the end, BTC is simply another fiat currency, payable in nothing, backed by nothing but the hopes of computer nerds and speculators. And no matter how many times folks repeat ‘bitcoin is the new gold,’ it ain’t. Nothing else is gold but gold – and silver.” Okay, okay … and, apparently, this too:
Credit: In the meantime, China resumed gold purchases last month, increasing their holdings by 5 metric tons. The Middle Kingdom was the world’s largest official sector buyer of gold in 2023 in order to diversify its portfolio and hedge against currency depreciation. Imagine that. As for those you insisting that 30-year Treasury bonds are still a rock-solid monetary safe haven and long-term store of value, well … then please explain this:
Credit: With the world’s central banks continuing to buy the yellow metal, understanding future US monetary policy becomes more important than ever. With that in mind, macro analyst Tavi Costa points out that “Trump’s choice for Treasury Secretary, Scott Bessent, represents a significant policy shift; Bessent is a strong advocate for gold and firmly believes a major global monetary realignment is imminent. He aligns with Trump’s goals: Preserving the US dollar’s (USD) reserve status while devaluing it against other currencies, noting those aims ‘aren’t mutually exclusive.’” That’s a wake up call, folks. Well … at least for those who are paying attention.
Credit: We’ll end this week with an observation from macro analyst Brandon Smith, who notes that “It’s impossible to keep the USD in a position of global dominance when …everything is working against (it) right now, and there’s a lot of people out there that question if it’s even worth saving. But, the USD is all we have until a tangible safety net can be established.” That safety net is gold. And it will be the bridge that carries over the current debt abyss to the next monetary system – whatever that may be.
By the Numbers
A recent Redfin-Ipsos survey asked people earning less than $50,000 annually what sacrifices they made to ensure they could afford their housing expenses (multiple answers were accepted). Here were the top 10 answers:
14% Dipped into retirement savings.
15% Worked a side hustle.
19% Received cash from family or friends that doesn’t need to be repaid.
20% Delayed or skipped healthcare treatments.
21% Worked extra hours at their job.
23% Sold belongings.
24% Skipped meals.
25% Borrowed money from family or friends that does need to be repaid.
36% Took fewer or no vacations.
42% Dined at restaurants less often.
Source: @KobeissiLetter
The Question of the Week
Last Week’s Poll Result
How many times have you been to a movie theater in 2024?
- None 60%
- Once 17%
- More than twice 16%
- Twice 7%
More than 1900 Len Penzo dot Com readers answered last week’s question and it turns out that 2 in 5 of you have seen a feature on the big screen at least once this year. And with the Christmas holiday season upon us, it’s quite possible that figure could go up a just a bit more before the year is out. As for me, I’ll be staying home and focusing on watching Hallmark Christmas movies with the Honeybee.
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: The Secret to Christmas Wrapping
This is the time of year when we think back to the very first Christmas when the Three Wise Men: Gaspar, Balthazar and Herb went to see the baby Jesus; and according to the Book of Matthew, “presented unto Him gifts; gold, frankincense, and myrrh.”
These are simple words, but if we analyze them carefully, we discover an important, yet often overlooked, theological fact. There is no mention of wrapping paper.
If there had been wrapping paper, Matthew would have said so: “And lo, the gifts were inside 600 square cubits of paper. And the paper was festooned with pictures of Frosty the Snowman.
And Joseph was going to throweth it away, but Mary saideth unto him, she saideth, ‘Holdeth it! That is nice paper! Saveth it for next year!’ And Joseph did rolleth his eyeballs. And the baby Jesus was more interested in the paper than the frankincense.”
But these words do not appear in the Bible, which means that the very first Christmas gifts were not wrapped. This is because the people giving those gifts had two important characteristics:
1. They were wise.
2. They were men.
Men are not big gift wrappers. Men do not understand the point of putting paper on a gift just so somebody else can tear it off. This is not just my opinion; this is a scientific fact based on a statistical survey of two guys I know.
One is Rob, who said the only time he ever wraps a gift is “if it’s such a poor gift that I don’t want to be there when the person opens it.” The other is Gene, who told me he does wrap gifts, but as a matter of principle never takes more than 15 seconds per gift.
“No one ever had to wonder which presents daddy wrapped at Christmas,” Gene said. “They were the ones that looked like enormous spitballs.”
I also wrap gifts, but because of some defect in my motor skills, I can never completely wrap them. I can take a gift the size of a deck of cards and put it the exact center of a piece of wrapping paper the size of a regulation volleyball court, but when I am done folding and taping, you can still see a sector of the gift peeking out. (Sometimes I camouflage this sector with a marking pen.)
If I had been an ancient Egyptian in the field of mummies, the lower half of the Pharaoh’s body would be covered only by Scotch tape.
On the other hand, if you give my wife a 12-inch square of wrapping paper, she can wrap a C-130 cargo plane. My wife, like many women, actually likes wrapping things.
If she gives you a gift that requires batteries, she wraps the batteries separately, which to me is very close to being a symptom of mental illness.
If it were possible, my wife would wrap each individual volt.
My point is that gift-wrapping is one of those skills like having babies that come more naturally to women than to men. That is why today we’re presenting these gift-wrapping tips for men:
1. Whenever possible, buy gifts that are already wrapped. If, when the recipient opens the gift, neither one of you recognizes it, you can claim that it’s myrrh.
2. The editors of Woman’s Day magazine recently ran an item on how to make your own wrapping paper by printing a design on it with an apple sliced in half horizontally and dipped in a mixture of food coloring and liquid starch. They must be smoking crack.
3. If you’re giving a hard-to-wrap gift, skip the wrapping paper! Just put it inside a bag and stick one of those little adhesive bows on it. This creates a festive visual effect that is sure to delight the lucky recipient on Christmas morning:
YOUR WIFE: Why is there a Hefty trash bag under the tree?
YOU: It’s a gift! See? It has a bow!
YOUR WIFE (peering into the trash bag): It’s a leaf blower.
YOU: Gas-powered! Five horsepower!
YOUR WIFE: I want a divorce.
YOU: I also got you some myrrh.
In conclusion, remember that the important thing is not what you give or how you wrap it. The important thing, during this very special time of year, is that you save the receipt.
(h/t: Kevin)
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More Useless News
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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
From Janice:
I had no idea you were a prepper!
I am. And with apologies to Dr. Pepper: Wouldn’t you like to be a prepper too? 😬
If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀
I’m Len Penzo and I approved this message.