Archives

S&P 500 on Feb 3, 2019 It looks like we may be in a bear market.  The Dow Jones 30 Industrial Index is down by 7 percent from its record high.  The corresponding decline in the S&P 500 Index is 8 percent and for the NASDAQ Composite Index it is already a 11 percent loss (in late December this was a 24 percent loss).  The NASDAQ is by far the most “representative” of the 3 major indices because it contains 95 percent of all publicly traded companies in the USA.  An even more ominous sign is the rise of the acceptance of the concept of “socialism” in the USA.  Dangerous proposals for massive increases in taxation (which is already sky high) and the implementation of a so-called “wealth tax” on one’s net worth foretell the event of an eventual “debt jubilee” or the write down of financial assets and liquid wealth (i.e. US Dollar denominated bank accounts, retirement savings, pension plans, life insurance contracts and the like) – an eventual global currency reset or “global economic reset” which will bring the US Dollar back down to earth.  The leader of the future is clearly China and the continent of Asia – not America or Europe. New auto sales in the USA reached 17,334,481 new units in 2018.  The Volkswagen Group had a record year worldwide, in China and in the USA (the 2 largest national global auto markets, respectively).  The VW Group is the largest and best capitalized vehicle group on earth.  Their record performance in the US market is due to their large number of brands which now include Volkswagen (the mass market brand from Germany), Audi (a luxury brand from Germany), Porsche (a luxury and a sports car brand from Germany), Navistar (a commercial truck brand based in…

Financial, Economic and Social Mood Update (January 1, 2019) Happy New Year to all – may 2019 be a good and better year for each and every one of us, with no exceptions. I would like to follow up on some of the topics from the December 2018 blog. It looks like we’ve finally entered a bear market. The Dow Jones 30 Industrial Index is down by 14 percent from its record high. The corresponding decline in the S&P 500 Index is 15 percent and for the NASDAQ Composite Index it is already a 19 percent loss (just a few days ago this was a 24 percent loss). The NASDAQ is by far the most “representative” of the 3 major indices because it contains 95 percent of all publicly traded companies in the USA. Even more importantly, the US Dollar value of all global debt has declined by 26 percent in the last 12 months – from USD $247 TRILLION down to USD $184 TRILLION. This means that we should soon see clear signs of asset price deflation and of financial company failures – such as banks, credit unions, brokerage houses, mortgage companies and insurance companies. The value of global financial derivatives (“contingent liabilities” which are basically very risky bets taken by commercial money center banks) has collapsed by a Fibonacci-near 63 percent in the last 2 years – down from USD $4 QUADRILLION to USD $1.5 QUADRILLION. Bankruptcies should follow in close order among major pension plans and among the unfunded liabilities of the major socialist welfare states in the industrialized countries of North America (USA and Canada), Japan and the European Union. BEV (batter electric vehicle) sales increased at an even faster pace during the first 11 months of 2018 and even more so during November 2018. As…

Financial, Economic and Social Mood Update (December 1, 2018) Is a stock market top finally in place? Perhaps – all of the major indices have fallen somewhat. The NASDAQ Composite Index has fallen the most, by a net 11 percent since August 30, 2018 (it had been down by as much as 16 percent). The bond market has been in a visible decline for about 4 years. One can already find retail US Dollar CD rates as high as 3 percent per annum in “brick and mortar” bank branches (not merely at Internet banks). Commodities are also in a definite bear market – the “black gold” known as crude oil has fallen by more than 30 percent in 2 months. The US Dollar remains artificially very high, but much of the rest of the world continues to move away from US Dollar denominated international trade. Both the Ford Motor Company and General Motors (GM) have announced substantial job cuts, factory closures and model terminations which represent about 15 percent of their total size. General Electric (GE), once one of the most respected and valuable Fortune 500 companies in the USA, is moving ever closer toward bankruptcy – a future which may also be in store for the United States of America. This month’s blog deals with huge macro-economic topics confronting today’s global economy. The biggest monetary investment to date is the “One Belt, one Road” (OBOR) project originating in mainland China. The Chinese and their 67 global partners (67 other countries) are investing up to USD $8 TRILLION in massive infrastructure projects which will eventually be a 21st century copy of the ancient Chinese “silk road” which linked China to much of the rest of the world through trade and finance. The 68 countries partaking in the OBOR project comprise…

Financial, Economic and Social Mood Update (November 1, 2018) I skipped the monthly update blog for October, but we are now back in business in November. I took a much needed vacation to the San Francisco, California Bay Area in the second half of September. It was a trip down “memory lane” for me as I grew up in the East Bay from 1967 to 1987 – Elementary School, First Communion, Middle School, Confirmation, High School and finally my undergraduate studies at UC Berkeley (Class of 1984). The stock market remains relatively robust, but it appears that we may (perhaps) have hit the top of the price-value bubble. The Dow Jones 30 Industrials Index hit a new nominal record on October 3, 2018 (26,852) and had lost 7 percent by November 1. The NASDAQ Composite Index (this one has the largest number of publicly listed companies) hit a new nominal record on August 30 (8,133) had lost 10 percent by the close of trade on November 1 (10 percent or more is the usual threshold into a bear market). The S&P 500 “Blue Chip” Index hit a new nominal record high on September 21 (2,940) and had lost 8 percent by November 1. The Dow Jones Wilshire 5000 “Total Market” Index (this index includes all of the publicly listed companies in the USA) hit a new nominal record high on September 20 (30,500) and had lost 8 percent by November 1. As I’ve said many times before, the most difficult thing to estimate in any market is timing. Nothing ever moves in a straight line forever, so obviously the stock market will have its up and downs just like everything else in life. A “crash” will happen, but the question is when. Falling stocks mean your investments (especially your retirement…

Financial, Economic and Social Mood Update (September 1, 2018) The stock market and the overall economy remain robust. There have been repeated calls for a massive crash of both since at least 1995, but nothing major has transpired outside of the partial crashes which took place in 2000-2002 and again in 2007-2009. The Dow Jones 30 Industrial Average is at 98 percent of its record high from January 26, 2018 and the other major US indices (NASDAQ Composite Index, S&P 500 Index and the Wilshire 5000 “Total Market” Index) all reached record nominal high values within the past few trading days. I suppose I can say that this month’s topic has to do with demographics, but in a way that interests most of us in a much more personal way – this being with respect to our genealogy or to our ancestry. After a good deal of prodding, I finally had my own DNA test done. The results which came back both confirmed much of what I already expected, as well as surprised me a very good deal. An Italian (Sicilian) American friend of mine had this done, and his results surprised him immensely. All of his ancestors came from Sicily to New York, much like so many Italian-Americans in the USA. His DNA test came back 75% Greek, 20% Jewish and just 5% Sicilian. If anything, this reminds us just how much people have moved around over the centuries and beyond. Another Borromeo from the Philippines shared his DNA test results with me as well. His father’s family (Borromeo) came from Camiguin Island, which is directly north of the much larger island of Mindanao in the southern Philippines. His mother’s family came from Cavite on the island of Luzon (the northern Philippines). Cavite is the same place where we…

Financial, Economic and Social Mood Update (August 1, 2018) The stock market and the overall economy remain quite robust. There have been repeated calls for a massive crash of both since at least 1995, but nothing major has transpired outside of the partial crashes which took place in 2000-2002 and again in 2007-2009. I will now continue with a discussion about the major demographic changes taking place in our world. Birth rates have collapsed, people are living longer, the traditional family structure is under tremendous stress, families are smaller, and the relative sizes of the major human ethnic groups are shifting. Asians have long been the largest group within the human family. At the time of Jesus Christ, the world human population was about 200 million, 50 million of whom lived in China. The percentage of Asians in the world peaked at 66% of the human race in 1750. Today it stands at 60 percent and by the year 2100 (82 years from now) it is projected to fall to 52 percent. Families are still relatively large on the Indian subcontinent, but in other parts of Asia they have become very small – especially in places such as China, Hong Kong, Macao, Taiwan, Thailand, Japan, Korea, Iran and in the countries of the former Soviet Union. Like all regions which experienced European and American colonization, Africa suffered a relative loss in population for many years. Africa’s percentage of the worldwide human population fell from 74 percent in A.D. 550 to just 7 percent by 1900. Today it stands at 16 percent, but it is projected to skyrocket to 38 percent by the year 2100. The reason for this is that Africans have the largest traditional family structure in the world today – the highest birth and fertility rates which compare…

Financial, Economic and Social Mood Update (July 1, 2018) The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,272 points by April 2, 2018 which was a loss of 12.3 percent of its wealth. Its value on Friday June 29 was no less than 24,302 – just 8.7 percent off its record high. The American economy and the global economy are relatively robust. 44 percent of the human population on earth belongs to the upper or to the middle class. Part of the global lower class is not what one would term destitute – 34 percent of the globe belongs to the “working” lower class. The bottom 22 percent of the human global population is still largely destitute, being either homeless or in lack of “adequate” shelter. June’s topic largely dealt with imploding (or collapsing) global human population demographics. Much more remains to be said on this monumental problem – which will be discussed at more length in future monthly updates. Gargantuan changes are awaiting us on the economic and financial fronts as well. Populist political trends are putting an immense amount of pressure upon the post-World War 2 European experiment – the European Union or EU. The dream for the current EU was born shortly before the end of the Second World War, when the exiled governments of the Low Countries (the Netherlands, Belgium and Luxembourg) met in London in 1944. Adolf Hitler’s attempt to unite and rule Europe by the force of German arms would end in the rubble of Germany’s great capital city of Berlin in May 1945. Hitler’s Germany & its extreme right-wing politics were a very severe “reaction” to what had happened after the disaster of the “Great War” of…