{"id":68728,"date":"2021-09-18T02:15:56","date_gmt":"2021-09-18T09:15:56","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=68728"},"modified":"2021-09-21T08:26:39","modified_gmt":"2021-09-21T15:26:39","slug":"black-coffee-18-sep-2021","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id68728-black-coffee-18-sep-2021.html","title":{"rendered":"Black Coffee: A Lack of Financial Horse Sense"},"content":{"rendered":"

\"\"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 everybody had a terrific week. With the hardest part of it over, let’s get right to this week’s commentary …<\/p>\n

Mules have more horse sense than horses. They know when to stop eating — and they know when to stop working.<\/em><\/p><\/blockquote>\n

— Harry Truman<\/strong><\/p>\n

The castle gates will always open for gold-laden donkeys.<\/em><\/p><\/blockquote>\n

— Russian proverb<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? The S&P 500 has set new highs on 41% of all trading days<\/a> in the third quarter — that’s the highest rate since the first quarter of 1998. It’s also been exactly 218 trading days since the S&P 500 experienced a daily decline of at least 5%. Hey … does anybody remember when markets weren’t juiced by central bank liquidity, and stocks used to move up and<\/strong><\/em> down? Pepperidge Farms remembers.<\/p>\n

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Credit:<\/strong><\/span> Maybe the soaring stock market is why, amidst a historic labor shortage, workers heading into their 60s have had enough<\/a>. Indeed, the percentage of survey respondents who say they don’t<\/strong><\/em> want to work past the age of 62 rose from 50% last year to 52% today; at the same time, the percentage of workers expecting to be employed when they’re 67 fell, from 34.1% to 32.4%. Until then, they’ll just keep buying the dip.<\/p>\n

Credit:<\/strong><\/span> Frankly, it shouldn’t surprise anyone that the same survey does indeed note that some workers are<\/strong><\/em> rethinking their future<\/a> because they have ‘bigger nest eggs’ thanks to ‘exuberant financial markets.’ Apparently, they aren’t concerned with the declining purchasing power of their currency, or see the connection between higher stock prices and the debauched dollars that make up their nest eggs — but maybe they should.<\/p>\n

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Debit:<\/strong><\/span> Speaking of debauched dollars, the latest inflation report showed that on a year-over-year (YoY) basis headline CPI rose 5.3%<\/a> last month. That’s the 15th straight monthly rise in consumer prices and the fourth<\/strong><\/em> straight month above 5% on a YoY basis. Apparently, “transitory” has a different meaning these days. Then again, that’s par for the course now.<\/p>\n

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Debit:<\/strong><\/span> While most existing home owners are probably feeling wealthier as home prices continue their rocket trip to the moon<\/a>, the trouble is US home prices relative to household incomes are higher than they’ve ever been — yes, even higher than the insane heights of the last housing bubble in 2008 — which begs the question: How much higher can prices realistically rise?<\/p>\n

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Debit:<\/strong><\/span> Then again, homes prices aren’t rising in a vacuum. After surging 7.8% in July, US producer prices increased sharply<\/a> again in August, leading to the biggest annual gain in nearly 11 years. In the last 12 months, the PPI has accelerated 8.3% — that’s the biggest year-on-year increase since November 2010 when the series was modified. Why was it modified, you ask? Well … to hide actual inflation, of course.<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, Congressional Democrats are still arguing over how high taxes are going to be raised<\/a> to “pay” for their proposed $3.5 trillion infrastructure bill<\/del><\/span> pork-laden boondoggle — which is quite comical when you consider that the Fed has had no qualms printing as much currency as the government needs to keep the massive federal bureaucracy running for more than a decade now.<\/p>\n

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Credit:<\/strong><\/span> Of course, as Famous Dave at JSMineset observed earlier<\/strong><\/em> this week, “If the world could become prosperous simply by allowing governments to deliver freshly-printed currency to the public, then nobody would have ever had to toil<\/a> in the factories or fields during the last 5000 years.” Uh huh. Even so, millions of statists out there still believe that wealth generation and social prosperity comes from the government rather than the private sector; a notion that’s as crazy as believing a horse can play baseball. Oh, wait …<\/p>\n