{"id":70764,"date":"2022-01-22T02:15:37","date_gmt":"2022-01-22T10:15:37","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=70764"},"modified":"2022-01-25T09:05:00","modified_gmt":"2022-01-25T17:05:00","slug":"black-coffee-22-jan-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id70764-black-coffee-22-jan-2022.html","title":{"rendered":"Black Coffee: Stuck in the Middle"},"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 wonderful week. And with that, let’s get right to this week’s commentary, shall we?<\/p>\n

Clowns are the pegs on which the circus is hung.<\/em><\/p><\/blockquote>\n

— PT Barnum<\/strong><\/p>\n

Once you realize that everyone is in the same boat, that all these jokers ruining our world are just greedy kids grabbing for marbles – I think that realization means you’re an adult.<\/em><\/p><\/blockquote>\n

— Conor Oberst<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Luxury British department store Selfridges will become the world’s first retailer to sell dresses by legendary Spanish designer Paco Rabanne. Well actually, they’re the first to sell his dresses in digital<\/strong><\/em> form. No, really. A select number of Rabanne’s dresses will be sold as non-fungible tokens<\/a> (NFTs) from $2000 to more than $100,000. So customers will receive a digital certificate of ownership for each outfit, rather than the dress itself, leading financial analyst Michael Every to wryly note: “Welcome to The Emperor’s NFT Clothes.”<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, I see that McDonald’s is limiting operations<\/a> at individual stores to address labor shortages. Some locations might reduce hours of operations by as much as 10% to help with the labor shortage. Other fast-food restaurants, supermarkets<\/a> and drug stores<\/a> are also reducing hours of operations for the same reason – which begs the question: At what point does the labor shortage become destructive to the economic recovery? While you’re thinking about that, here is some Golden Arches trivia you can amaze your friends with:<\/p>\n

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Debit:<\/strong><\/span> In other news, this week the Empire State Fed Manufacturing Index was released to the public and it came in far below<\/em><\/strong> expectations. In fact, it fell so far that it actually fell into negative<\/strong><\/em> recessionary territory<\/a>. Yes; negative. And, yes; recessionary! Of course, this news led most economists to the exact same reaction …<\/p>\n

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http:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2022\/01\/dog-what.mp4<\/a><\/video><\/div>\n<\/div>\n

Debit:<\/strong><\/span> Despite all of the rotten economic news, stocks are still near all-time highs. But there are warning signs<\/a> for those who are paying attention; for example, 334 companies trading on the New York Stock Exchange recently hit a 52-week low, more than double the amount that marked new one-year highs. That’s happened only three other times in history, with all of them occurring in December 1999. Yes, that’s shortly before the Dotcom bubble popped. Prolly just a coincidence.<\/p>\n

Debit:<\/strong><\/span> One of those companies that is plumbing its 52-week low is exercise-equipment manufacturer Peloton, which has cut its full-year outlook<\/a> – an outlook that worsened after it became apparent that too much demand was pulled forward due to people canceling their gym memberships during the pandemic and opting for at-home gyms. And now there is also word that the company is tacking on hundreds of dollars in fees for delivery and setup. As a result, shares are now trading near $30 – after reaching nearly $170 last January. Don’t worry about the insiders, though; they got out in time<\/a>. As always.<\/p>\n

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Why spend upwards of $2000 on a Peloton when you can kluge one yourself? (h\/t: ZeroHedge)<\/p><\/div>\n

Credit:<\/strong><\/span> According to Sprott investment strategist Paul Hathaway, “Extremes in valuation, speculation and indebtedness seem intrinsic to the manic investment psychosis of the metaverse. Valuations stand at indisputable, well-documented nosebleed levels<\/a>. The S&P 500 has (twice) traded above its current valuation of 23 times forward price-to-earnings (P\/E) ratio – prior to the 2000 Dotcom crash and now in the current market.” Wait … prior<\/strong><\/em> to the Dotcom crash? Is it me — or is there a pattern starting to form here?<\/p>\n

Debit:<\/strong><\/span> By the way, the prognosis for equities becomes more dire when one realizes that even if the liquidity support from the Fed continues, stocks begin to suffer<\/a> in the face of persistent inflation. It’s bad enough that the broad market’s Cyclically Adjusted Price-to-Earnings (CAPE) ratio is currently above 40 – this is an extremely rare event, as it has been above that figure just 2% of the time. Then toss in inflation, which is “officially” running at 7%; the trouble for the market is, inflation has historically acted as a headwind for stocks once it reaches 4%. See for yourself:<\/p>\n

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Debit:<\/strong><\/span> But wait; there’s more bad news for stocks. For example, the Nasdaq gained 18% in 2021, despite the fact that just 31% of the stocks<\/a> in the index are trading above their 200-day moving averages – and there is a similar lack of breadth in the S&P 500 and Russell 3000 indices. So the red lights are flashing and the klaxons are blaring — and yet, when it comes to the investing public …<\/p>\n