Skip to comments.Investment & Finance Thread (week July 27 - August 2 edition)
Posted on 07/27/2014 10:28:41 AM PDT by expat_panama
While this past week may have been pretty much nothing in the way of general asset growth (metals flat off --stocks flat in market under pressure), it's been a great week for geek number thingees, in fact we updated the link list to include Business Insider's Chart page (hat tip to Wyatt's Torch) and we've been into the income shifts that have turned the Great Recession into the gift that keeps giving.
Chgogal gave us the headsup to the NYTimes piece "The Typical Household, Now Worth a Third Less" and Wash. Post Chart study Median household incomes have collapsed since the recession (more here).
Seems that even the NYT and WaPo are talking about middle class money problems and they included the Census Br's Real Median Household Income crash that's been raising so many eye brows lately.
They focused on the trend since 2000, but what we need to remember is that (if you believe the Census Br.) we had growth before the early 2000's--
--and that contrasts with the steady growth of average incomes reported by the Bureau of Economic Analysis. (Lots of agencies w/ lots of numbers for lots of our tax dollars).
Some folks say the problem we got is too much inequality --rich are richer but suddenly the rest of us are getting left behind. No so; at least that "suddenly" part; it's actually a long term trend and the percent median of the average has been falling at a steady rate for decades.
What we got new in '09 is flat out income loss for all.
This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--
Open invitation continues always for idea-input for the thread, this being a joint effort works well. Keywords: financial, WallStreet, stockmarket, economy.
Post Sunday dinner econ discourse ping.
Good morning. It is here anyway.
GLD is basing - could be a sign of inflation or only safe harbor in an otherwise bad market ??
TNX - 10 yr. Treasury interest rate keeps dropping - Bonds should move up and the market should drop. Time will tell
Noticing that, seems like it's been that way w/ both stocks and metals for say, 6 weeks or so.
lol! I keep forgetting we got time zones here...
I have been hedging against inflation with gold and silver miners and streamers lately. Hoping it does better than the metals themselves since they have a profit that is the difference between the metal price and the cost of mining and refining. Most pay dividends as well. Stocks I currently hold: SCCO, SLW, SAND, ABX, EGO
“...it’s actually a long term trend and the percent median of the average has been falling at a steady rate for decades.”
And yet for most of that time the average Joe’s investment portfolio and home value has steadily increased. We would attribute that to unchecked monetary and fiscal policy I take it? Or is that simplifying it too much?
...the average Joes investment portfolio and home value has steadily increased...
Most people (me included) get turned around when the words 'median' and 'average' are on the table.
Our always truthful friends at the Census.gov (/sarc) say we're getting increasing income inequality so that means the median incomes (half richer & half poorer) is becoming smaller and smaller relative to the size of the average incomes (total incomes divided by population). So what we're hearing from the press is that this is some kind of new thing, but reality is that it's been going on for decades.
imho income inequality is a good thing. Only a Marxist would want everyone to get paid the same amount.
Watson the game's afoot! While this morning's futures are cautious w/ metals up and stocks weak, Market Watch said it best: "Get ready for 48 hours and a little more of the most intense outpouring of information on the U.S. economy youre likely to ever see." (econ calendar here) This morning's buzz:
imho income inequality is a good thing. Only a Marxist would want everyone to get paid the same amount.
Goes against nature and the law of supply and demand: how many people can do heart surgery, vs. how many people can do burgers.
So you need a heart transplant? Go to McDonalds.
Had to stare at that one a bit, being color blind didn’t help much, but I can see what it’s showing now. These data show a powerful side to the economy that many ignore at their own risk and Q2 GDP may very well come out @ +3. Still, some negative indicators do still persist...
Where’s all that excess capital from 1999 sitting?
If its in cash then it can flow back in, but if its in gold, commodities or food prep it’s not coming back soon or easily.
Is there really that much money sloshing around outside of productive assets?
I think this is statistical legerdemain for political purposes. What’s a household?
I’m on mobile right now so can’t post FRED graph but go there and type in “Cash” and look at the chart for cash held by banks. I posted to my Twitter feed so here you go:
That’s stunning. Thanks. You’re awesome.
LOL . I don’t get that on here much :-)
BTW did you see the Chicago MSA housing start data on the other thread?
Good morning; nothing happened yesterday w/ stocks'n'metals and futures today have stocks off a bit and metals up a bit. Today's reports are just Case-Shiller 20-city Index and Consumer Confidence, but my take is today's the other half of the Calm Before the Storm.
Yes. It’s accurate. Chicago’s housing market is slow and splotchy. There’s a 77 page or so document on porches that the Dept. of Buildings put out for homeowners. Porches.
Sounds about right... Does your screen name reflect the airport code or is it a zero?
Agreed. Wyatt makes me think so much that I've had to over-clock my brain and ductape a cooling fan to my head.
Wheres all that excess capital from 1999 sitting?
Cash :-) ...look at the chart for cash held by banks.
Those numbers do make it seem like money was taken out of stocks and put into banks, but there's more. The high NTM P/E's of '99 does look definitely bullish for stocks in general and especially internet/biotech, the P/E change isn't because folks put their money in the banks. Those cash holdings that banks are sitting on is a bank management choice because deposits are just business as usual.
--and thank you for helping me think and for the feedback. In fact, it'd probably be a good idea for me to find some simple html code to put up a poll for the ping list to check on what folks' interests/preferences are these days. Always best to not just scratch others where I itch.
COnsumer confidence blows away expectations. 7-year high.
Note fro D.R. Horton’s earnings call this morning:
Horton reported earnings of $.32 per share, compared to expectations of $.49 per share. The miss was driven almost entirely by a ~$50M charge the company took related to the value of its land holdings in Chicago. The asset impairment is a reflection of the land being less than its carrying value on a discounted cash flow basis. In its simplest form, Horton could not build houses and generate positive cash flow on a material amount of land. This impairment charge is the only material charge taken by any of the large builders on land holdings since the housing recovery began.
Horton’s is facing the reality others won’t. Land is the riskiest of all the RE plays. Why would you build here? How many lake view condos can this market absorb? They start for one beds/studios around $300K. Small apartments near the lake or downtown rent for a bargain rate of $2400.00. Those same renters pay prices 10-20% higher than they would in the suburbs, along with higher taxes. It’s nuts.
GDP coming out tomorrow. Should get the market moving one way or the other. Sure hope they are close to the ballpark this time. Last time they were barreling down the freeway in the wrong direction. ;^)
Whoa, big day today! After yesterday's stocks off is higher volume w/ metals flat, we now got both stocks and metals expected up ahead of all this:
|MBA Mortgage Index
ADP Employment Change
FOMC Rate Decision
An office pool might be nice here, we got till an hour before opening bell to guess at what the GDP will be and the grand prize will be a big I-told-ya-so plus you get to wear the Guru hat. More weirdness:
Consensus is 2.9% - Deutsche Bank came out with north of 4% yesterday. Regardless we know two things will happen:
1) It will be revised down
2) FReepers will scream and yell that the books are cooked and that we are really in a depression
“An office pool might be nice here”
I’ll start. Up 2.6%.
40 min. left. I’m in for +3.4 and stocks react by tanking fearing rate increases.
ADP +245K (consensus +250K - FactSet)
Briefing forecast +3.7.
OK, +4.0. going back to bed...
BEA: Real GDP increased at 4.0% Annualized Rate in Q2
by Bill McBride on 7/30/2014 08:30:00 AM
From the BEA: Gross Domestic Product: Second Quarter 2014 (Advance Estimate) Annual Revision: 1999 through First Quarter 2014
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 4.0 percent in the second quarter of 2014, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised).
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The advance Q2 GDP report, with 4.0% annualized growth, was above expectations of a 2.9% increase. Also Q1 was revised up.
Personal consumption expenditures (PCE) increased at a 2.5% annualized rate - a decent pace.
Private investment rebounded with residential investment up 7.5% annualized, and equipment up 5.3%. Change in private inventories added 1.66 percentage points to growth after subtracting 1.16 in Q1.
Overall this was a solid report. I’ll have more later on the report and revisions.
Imagine what it would have been without a Cook County Democrat in the WH. The economy is coming back. The opportunity areas are going to be urban and particularly urban poor. Too many billionaire elites are enamored with Africa’s prospects when we’ve got mini Africas in every city and by that I mean entrenched generational poverty, not a race.
This is a big opportunity for popular conservatism to make inroads into traditionally Democratic strongholds. If you want to keep labor productivity growing you have to deregulate and reduce taxes on urbanites. You have to move people off welfare into some type of productive work, even with a subsidy to a business. If half the welfare rolls earned half their welfare via real productive work, the benefits to the nation would be enormous.
Chicago has a 107 page pamphlet on how to build a porch. 107 pages on a porch you could build yourself without plans for the entire history of the city, but now it’s deemed too dangerous. You need an architect and an over-engineered plan. It’s nuts. http://www.cityofchicago.org/content/dam/city/depts/bldgs/general/Porch/Porch2011/RevPorch_Guide52611_Secured.pdf
That’s how Cook County Democrats view the world. One in which every detail must be planned out. It’s a soviet model in America and it doesn’t work.
Sadly, Q2 is partly a carryover from delayed spending in Q1. That Q1 shrank is a tragedy and one caused by Democratic policies. Blaming Obama isn’t factual. He’s just pushing normal Democrat policies to the limit.
Q2 is partly a carryover from delayed spending in Q1. That Q1 shrank is a tragedy and one caused by Democratic policies...
You may be right; what we know for sure is that Q1 was revised up to -2.1 so the average of the first 1/2 of 2014 was just under 1%. We'll see how Q2 gets revised and if it makes the average negative, but no matter what we should never underestimate the economic power of the American People.
Cut taper to $25B/month
Removed “unemployment is elevated” language
Probability of persistent <2% inflation has diminished