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.
Well … another busy week is behind us. So with that in mind, let’s get this party started!
Dig a well before you get thirsty.
– Chinese proverb
Credits and Debits
Credit: Did you see this? According to the latest Conference Board survey, an astounding 53% of Americans believe stock prices will rise over the next 12 months. That is an extremely bullish response that is even higher than during the peak euphoria of the Dot-com bubble. This is backed up by another key indicator known as the “Euphoriameter” – no, really – that confirms investor bullishness has reached unprecedented levels. See for yourself:
Debit: In other news, a new survey of chief information and technology officers in the banking sector has determined that those institutions could cut as many as 200,000 jobs globally during the next three to five years, with back office, middle office, and operations roles being the most vulnerable. On average, Wall Street expects a 3% reduction in their workforce due to the implementation of AI. However, almost 25% of the respondents predict an even steeper decline, with job losses ranging between 5% and 10% of their total headcount. Then again, some people might consider the increased efficiency that would result from such a transition to be good news …
Debit: On a related note, we see that Capital One is facing the wrath of American consumers for misleading customers about their savings account interest rates. In fact, this week the Consumer Financial Protection Bureau filed a lawsuit against the bank, alleging that it misled customers when it introduced a new savings account with a higher interest rate, without offering the same rate to existing savings account holders. Imagine that.
Debit: Meanwhile, the bird flu has egg prices starting the year on a rotten note thanks to a 4% decline in US egg production year over year. How bad is the egg market right now? Well … egg prices climbed 8% nationally last month alone and are now at their highest point since January 2023 – which is why it’s more important than ever to be employed in high-paying job. Er … especially if you’re single and looking for that special someone:
Debit: By the way, here in California – which has been hit by the bird flu harder than most other states – egg prices are averaging nearly $9 per dozen to start the year. And our local grocery store is limiting purchases to two dozen eggs per customer – assuming you can afford them. The good news is, the government insists that inflation is under 3%.
h//t @PythiaAtDelphi
Debit: Perhaps those high egg prices is one reason why a new survey of American households found that 2 in 3 respondents complain that the cost of living for the average family in their area is unaffordable. But even more alarming, 1 in 3 respondents say that they couldn’t cover bills for even one month if they lost their income. Why? Because inflation-adjusted wages in the US have been steadily falling since 2021. In other words: Most American’s standard of living has been in a free fall for four consecutive years. And that’s for the people who actually have a job …
h/t: @TFMetals
h/t: @RealEJAntoni
Credit: According to the Populist Times, despite $46 billion in credit card defaults – an amount that’s 50% higher than the same time last year, and the highest since the depths of the Great Financial Crisis in 2010 – it “doesn’t necessarily spell disaster for the entire financial system.” Of course, it doesn’t – especially when it almost guaranteed that the Fed will bail out any failing entities by printing as much currency as needed to keep the system afloat. The trouble is: That will result in a much bigger disaster for the monetary system.
Credit: Of course, Treasury yields have been surging since last month’s surprisingly perky jobs data shifted rate cut expectations. How much so? Well … the 30-year yield recently topped 5% for the first time since 2023. Then again, long-term yields have been on an upswing since the Fed’s cutting cycle began – almost 100 basis points. That should be a reminder that, although they can try – when push comes to shove, the Fed really can’t control the long-term interest rates; only the short end.
Credit: Speaking of rising interest rates, the 10-year Treasury note has climbed nearly a full percentage point since last January. Unfortunately for homebuyers, mortgage rates track the 10-year note – which explains why national home loan interest rates are officially higher today than they were during the same period last year. If this cloud has a silver lining, it’s that the 30-year and 15-year mortgage rates have only increased by 0.27 percentage points over the same timeframe.
Credit: The always sagacious macro analyst Franklin Sanders observed this week that, “The impetus driving gold higher is largely grounded in an international dollar (USD) repudiation. They’re buying gold to dump USDs and that because they doubt the USD’s future.” Uh huh. The fact is, almost every currency around the world is suffering from a severe lack of trust today because governments are no longer robbing Peter to pay Paul – they’re also robbing Peter to pay Peter. Now, if only somebody was around to put an end to it …
Credit: If you think about it, it’s really not surprising that the USD’s popularity is waning. This is especially true when one considers that just prior to the USD’s anchor to gold being removed in 1971, the yellow metal was valued at $35 per troy ounce. Today, however, it’s hovering near $2700, compounding at an annual rate of approximately 8.1% over the past 54 years. By any measure, that’s a risk-free return that’s hard to ignore.
By the Numbers
Even with the home affordability crisis gripping the US real estate market, certain states offer relatively accessible housing alternatives when we look at home prices relative to personal income per capita in a given location. For example, despite the current housing bubble, Iowa, Ohio, Oklahoma, Illinois, North Dakota, Louisiana, Indiana, Kansas, Missouri and Nebraska still have barely reasonable – at least by today’s standard – price-to-income ratios of 4.0 or less. On the other hand, here are the ten states with the least affordable housing when measured by the local price-to-income ratio in 2024:
6.9 Arizona
7.0 Rhode Island
7.1 Oregon
7.3 Colorado
7.6 Washington
7.7 Idaho
7.8 Montana
8.1 Utah
9.6 California
11.0 Hawaii
Source: Tradingpedia
The Question of the Week
Last Week’s Poll Result
What are the biggest natural disaster threats where you live?
- Tornadoes 40%
- Hurricanes 22%
- Wildfires 18%
- Floods 11%
- Earthquakes 10%
More than 1700 Len Penzo dot Com readers answered last week’s poll question and it turns out that the biggest threat to most of your homes is a tornado, which suggests to me that most of my readers live in the middle of the country.
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: Love & Marriage
While attending a marriage seminar on communication, Wally and his wife Carolyn listened to the instructor declare, “It’s absolutely essential that husbands and wives know the things that are important to each other!”
The instructor then specifically addressed the men, “So, gentlemen … how many of you can describe your wife’s favorite flower?”
Upon hearing that, Wally leaned over, gently touched Carolyn’s arm and whispered, “It’s Pillsbury All-Purpose, isn’t it?”
(h/t: Sam I Am)
Squirrel Cam (After Dark)
That’s not a giant rat roaming around our front porch at 11:30 p.m.; it’s a ‘possum! We call him Poppy.
Buy Me a Coffee? Thank You So Much!
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 — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Alberta (2.25 pages/visit)
2. British Columbia (2.07)
3. Yukon (2.00)
4. Nova Scotia (1.93)
5. Prince Edward Island (1.88)
9. Saskatchewan (1.61)
10. Quebec (1.48)
11. Newfoundland & Labrador (1.33)
12. Manitoba (1.27)
13. Nunavut (1.00)
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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 my recent article outlining 18 things the millionaire next door doesn’t want you to know, Tina left this comment:
I can’t even begin explaining how awesome this post is!
Aww, come on, Tina. Give it a try!
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.
Photo Credit: stock photo