{"id":46673,"date":"2017-12-30T04:15:17","date_gmt":"2017-12-30T12:15:17","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=46673"},"modified":"2018-01-03T07:36:22","modified_gmt":"2018-01-03T15:36:22","slug":"black-coffee-30-december-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id46673-black-coffee-30-december-2017.html","title":{"rendered":"Black Coffee: Which Way Will the Pendulum Swing in 2018?"},"content":{"rendered":"

\"\"<\/a>It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

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.<\/p>\n

Time has almost run out on 2017, so let’s get right to it, shall we?<\/p>\n

“Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.”<\/em><\/p><\/blockquote>\n

— Hal Borland<\/strong><\/p>\n

“And now we welcome the new year. Full of things that have never been.”<\/em><\/p><\/blockquote>\n

— Rainer Maria Rilke<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Debit:<\/strong><\/span> If you’re hoping 2018 will be a profitable year for your investments, think again: According to market analyst David Collum, a vicious market cycle will soon be completed where we regress to the mean<\/a>. Collum says between 2009 and 2016, US GDP growth has been tracking the Great Depression, “So you can be thrilled your 401k has appreciated — but it’s sitting on an air pocket because nothing has improved.”<\/p>\n

Credit:<\/strong><\/span> Did you see this? Last month, a Pennsylvania utility customer got her monthly electric bill and saw that she owed $284 billion<\/a>. Yes, billion<\/em>. No, she wasn’t mining bitcoin. Anyway … after a quick phone call, the electric company knocked nine zeroes off the statement; the actual balance was $284.<\/p>\n

Credit:<\/strong><\/span> Meanwhile, the Wall Street Journal is wondering if the world’s central banks are about to lose control of interest rates<\/a>. It’s a fair question — but anybody who has invested in bonds better hope not. Stocks too for that matter. At least this time.<\/p>\n

Debit:<\/strong><\/span> Of course, the auto industry has used the Fed’s artificially-low interest rates to boost sales, but at least one car salesman is now warning that his industry’s business model has “morphed into an ugly free for all<\/a>” as automotive credit standards have disappeared to help manufacturers achieve market growth at any cost. As a result, “People are buying cars they can’t afford or shouldn’t even have been able to buy.” Deja vu<\/em>?<\/p>\n

Debit:<\/strong><\/span> On a somewhat related note, one in three working-age Americans between 23 to 63 share a home with a roommate<\/a> — or their adult parents. That’s up from 21% just a dozen years ago. Uh huh. By the way, as a precaution, I just warned my 20-year old son, Matthew, that he better not get any bright ideas.<\/p>\n

Debit:<\/strong><\/span> In case you’re wondering why so many adults live with a roommate — or Mom and Dad — the reason is simple: According to the latest Case Shiller data, every single US metro area<\/a> saw home prices climb higher relative to last year, while 16 of 20 major U.S. cities experienced home year-over-year price growth of 5% or higher. Unfortunately, that’s double the rate of average US wage growth. Sustainable? I think not.<\/p>\n

Debit:<\/strong><\/span> Speaking of wages, the average private sector worker in America earned $58,726 last year. Compare that to the average federal worker’s salary of $86,365<\/a> in 2016. Think about that.<\/p>\n

Debit:<\/strong><\/span> Meanwhile, there are more signs that the end of the petrodollar is coming<\/a>. Officials at the Shanghai International Energy Exchange say they still plan to go live with a crude-oil futures contract denominated in yuan any day now — thereby allowing oil producing nations to bypass the US dollar for the first time since 1973. If that contract does<\/em> become a reality, then Americans can expect higher prices on imports in 2018.<\/p>\n

Debit:<\/strong><\/span> Despite all of the disturbing economic news, including the rapidly unfolding macroeconomic news that portends a dismal future for the petrodollar and, by extension, a decline in Americans’ future standard of living, this week Yahoo Finance boldly declared 2017 as “the year the financial crisis officially ended<\/a>.” Well … okay.<\/p>\n

Credit:<\/strong><\/span> Than again, maybe Yahoo is right. After all, this December’s final trading day saw the S&P 500 close higher than the previous month for the 13th consecutive time, including a “perfect year” of 12 monthly positive returns<\/a> — which has never happened before. Not surprisingly, the S&P is now at its most overbought level since 1959.<\/p>\n

Credit:<\/strong><\/span> By the way, it’s not just Wall St. that’s in a good mood; after many years, it appears Main St. is too. I say that because Mastercard is reporting that shoppers spent over $800 billion during this holiday season; that’s more than ever before<\/a>. In fact, holiday sales in stores and online between November 1 and December 24 rose almost 5% — that’s the fastest year-on-year pace of increase since 2011. Not too shabby.<\/p>\n

Debit:<\/strong><\/span> So has the financial crisis really ended? Or is the US economy an illusion — aided by the biggest mountain of consumer, corporate and government debt<\/a> the world has ever seen, and abetted by the macroeconomic ignorance of 99% of the general population?<\/p>\n

Credit:<\/strong><\/span> Ron Paul believes it’s the latter; and if that ain’t bad enough, he expects an upheaval<\/a> similar to the Soviet Union’s 1989 economic collapse — although he doesn’t believe the US will disintegrate into separate countries. Of course, nothing is certain — and I’m sure most folks think Paul is off his rocker — but you’ve got to admit, the fact that such thoughts are even being openly discussed suggests something is surely amiss.<\/p>\n

By the Numbers<\/strong><\/p>\n

Here’s the annual performance summary for several selected assets in 2017:<\/p>\n

– 9.9%<\/strong><\/span><\/span> The US Dollar<\/p>\n

– 1.7%<\/strong><\/span><\/span> 10-year Treasury Note<\/p>\n

+ 5.6%<\/strong><\/span><\/span> Silver<\/p>\n

+ 13.0%<\/strong><\/span><\/span> Gold<\/p>\n

+ 19.4%<\/strong><\/span><\/span> S&P 500<\/p>\n

+ 25.1%<\/strong><\/span><\/span> Dow Jones Industrials<\/p>\n

+ 28.2%<\/strong><\/span><\/span> Nasdaq<\/p>\n

+ 1355%<\/strong><\/span><\/span> Bitcoin<\/p>\n

Source: CNBC<\/a>; MarketWatch<\/em><\/p>\n

The Question of the Week<\/strong><\/p>\n

[poll id=\"195\"]<\/code><\/p>\n

Last Week’s Poll Results<\/strong><\/p>\n

Are you a saver by nature, or do you have to force yourself?<\/p>\n