{"id":49790,"date":"2018-07-07T04:15:03","date_gmt":"2018-07-07T11:15:03","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=49790"},"modified":"2018-07-09T15:49:44","modified_gmt":"2018-07-09T22:49:44","slug":"black-coffee-7-july-2014","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id49790-black-coffee-7-july-2014.html","title":{"rendered":"Black Coffee: Going Nowhere Fast"},"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

I hope everyone is having a great weekend! Let’s get this party started …<\/p>\n

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”<\/em><\/p><\/blockquote>\n

— Adam Smith<\/strong><\/p>\n

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

Debit:<\/strong><\/span> If you trust the government data, there is a severe labor shortage<\/a> in the US. Yep. A new report says employers are having a rough time finding qualified employees to fill a record 6.7 million job openings, which is hard to believe considering there are 102 million Americans<\/a> — almost one-third of the US population — who aren’t currently employed, voluntarily or otherwise. Hmm.<\/p>\n

Credit:<\/strong><\/span> Perhaps the “tight” labor market is a primary reason why, after more than a decade, a growing number of workers are beginning to see more money in their paychecks<\/a>. Or maybe it’s being necessitated by something else … like a debauched currency. Regardless, I guess it’s better late than never.<\/p>\n

Credit:<\/strong><\/span> Unfortunately, wages don’t seem to be rising fast enough to outpace inflation. At least that’s true if you’re using Jack-in-the-Box tacos as an inflation benchmark. Don’t laugh; if the benchmark is good enough for Bloomberg — and, apparently, it is<\/a> — then it’s good enough for me.<\/p>\n

Debit:<\/strong><\/span> Heck … even the Personal Consumption Expenditures price index — which is not much better than the extremely misleading Consumer Price Index — shows inflation is now running at a 6-year high<\/a>.<\/p>\n

Debit:<\/strong><\/span> No matter what the actual inflation rate is, one thing is certain: Americans’ annual spending grew faster than their incomes for the 29th month in a row<\/a>. As a result, the savings rate is now near an all-time low. Imagine that.<\/p>\n

Debit:<\/strong><\/span> Meanwhile, the yield curve is now one rate hike away<\/a> from officially inverting; the last time it was this flat was the summer of 2007. Why does this matter? Well … because 9 of the last 10 curve inversions presaged a recession, that’s why. Oh … and because the last two preceded bear markets that resulted in stocks losing half their value. But other than that, yield curve inversions are pretty mundane.<\/p>\n

Debit:<\/strong><\/span> The flattening yield curve hasn’t scared investors who have pushed margin debt to an all-time high<\/a>. In fact, margin debt is nearly 40% higher than the previous high reached just prior to the Great Financial Crisis (GFC) of 2008. Meh. I’m sure that’s just a coincidence too.<\/p>\n

Debit:<\/strong><\/span> Then again, investor enthusiasm in the stock market belies the fact that the economy has yet to recover from the ’08 GFC, as evidenced by US industrial production, which has yet to recover from its last peak 125 months ago. Folks, that’s the longest manufacturing recovery gap<\/a> in the history of the 100- year data series! In other words, it’s been a decade of this:<\/p>\n