Through Oct 14 the traditional 60/40 401k portfolio is down a net 21% in 2022, not counting inflation

 Bonds are supposed to perform well as the safe haven asset when stocks fall, reducing the net impact to the portfolio when equities decline.

But not this year!

Bonds have actually crashed on the long end, down even more than stocks, as stocks entered a bear market.

The bond crash is a market statement rebuking the spending those bonds have represented: Not enough return for the risk.

So far the spendthrift Congress remains tone-deaf, leaving it to the Fed to raise interest rates . . . ever so feebly.

No one in his right mind believes raising interest rates 300 basis points is going to have much impact on inflation raging at 800 basis points.

That's because spending money you don't have to save the economy destroys the economy

 

Dems Spent $2T to Save Economy, But Won't Talk About It

Jim Tankersley, NYT

You can't get this kind of information just anywhere, and you know why

Wawa shuttering two Philadelphia stores amid city's retail crime surge:

Retail theft is up more than 50% in Philadelphia

Jim Cramer's stupid people who made a lot of money on Oct 13 weren't stupid until today, when they gave it all back, lol

Jim thought the market would tank on the inflation news. Instead it rallied.

But the market took it all back today.

Jim is nothing if not entertaining, as are other market cheerleaders.

Gayed meanwhile fully expected the rally to continue today.

Tonight there is much weeping and gnashing of teeth behind the brave faces.

Traditional 60/40 portfolio fails to protect investors when both stocks and bonds dive: Worst in 100 years

 

CNBC S&P 500 chart doesn't show the 2022 low-to-date on 10/12/22 like Yahoo Finance and Google Finance even though they mentioned it

 

COVID-19 is over: Drudge no longer features stats

Food and energy are bad enough, which core inflation would you rather have?

 

Democrats underestimate the power of Crimea as a political liability

 

GOP Overestimates Power of Crime as a Political Issue

Walter Shapiro, New Republic

 

AOC Receives Backlash At Town Hall: "You're Voting To Start A Nuclear War With Russia And China"; "You're Establishment"

France is upwind

 France Says It Won't Deploy Nukes If Vlad Uses Them Against Ukraine...

Debt draws forward prosperity -- Ambrose Evans Pritchard

 

Payback is a bitch, or why everything sucks

Debt stopped buying economic growth, if it ever did in the first place, way back in 1982, but no one has seemed to notice.

Prosperity based on debt is not prosperity.

Debt draws forward prosperity, and then when you get forward, there's no prosperity there because you already made off with it.

It's like the polar explorer who starved and froze to death because he ate the food caches on the way to the pole instead of saving them for on the way back.

 

The US military can't meet its recruitment quotas, so it's going to insult some more the confederates who are now shunning enlistment

 Department of Defense OKs renaming 9 military bases...

 They've got nothing better to do.

The Bank of England is pulling out the QE stops to keep the yields from rising which pulling out the QE stops two weeks ago didn't stop

Fail harder!

Makes sense to me!

 

Ben Bernanke wins Nobel Prize in Economics for 495 bank failures under his leadership as Federal Reserve Chair Feb 2006-Feb 2014

 

 

The 495 failures were a huge improvement over the 9,000 bank failures during The Great Depression of the 1930s, his specialty of study in the 1980s, experts said under their breath.

Americans can't afford new cars, but they're all out of skeletons

 

New cars are finally back in stock — but Americans might not be able to afford them

US GDP is so dead

 

US homes were at least 84% overvalued in 2021

 Rounding out the Unholy Trinity of Big Ticket Asset Inflation, Housing joins Stocks and Bonds in similar overvaluation territory in 2021 at about 84%.

In Feb 2012 when housing bottomed after The Great Financial Crisis, a previous inflation-adjusted Case-Shiller home price index chart no longer updated for present years showed that prices had fallen into the top range of US house prices which had prevailed throughout the post-war from the 1950s to the late 1990s. Mind you, the top range of those inflation-adjusted prices.

Thanks to Democrats and Republicans, including Bill Clinton and Newt Gingrich, the American Dream, the nest of the American future, was turned into a mere commodity in the late 1990s, to be churned in the markets for profit.

Long-suppressed long term interest rates have conspired with commoditization to produce valuations which have exploded, making houses unaffordable as nests, which is why your kid is still living in your basement.

The chart below shows the nominal price figures, on an average annual basis through 2021. The blow-off tops in 2022 are even worse (the index topped 308 in June), and are not shown because the year ain't over, and prices are falling.

At an average index level of 260 in 2021, prices were inflated from 141 in 2012 by about 84%, not far below the overvaluation of stocks and bonds at 90% and higher.

 

 

 

 

The percentage holding full-time jobs through September 2022 held above 50%, disappointing the ubiquitous advocates of a Fed interest rate pivot

 Full time as a percentage of civilian population in September was 50.3%, and for 2022 through September averaged 50.15%.

Not bad, considering.

The Fed will see little evidence in this figure that its interest rate increase policy is harming employment.

Stocks on Friday collapsed after a head fake to start the week to within 1.5% of the 52-week lows set a week ago.

Long term investment grade bonds and US Treasury securities also revisited lows from 9/27/22, coming within pennies of those benchmarks.

30-year yield for UST is back up to 3.86%. It was 3.87% on 9/27. At the beginning of 2022, yield was a paltry 2.01% by comparison.

UK gilts are experiencing the same action despite the Bank of England intervening to buy bonds. 

The bond crisis is not over.

With yields soaring across the board no one wants to own the lower paying outstanding issues, which are legion, destroying their value.

But everything in the global economy is based on those, piled up in earnest after The Great Financial Crisis of 2008, and in orgiastic frenzy afterwards during the late pandemic.

Bond yields in 2022 are telling you that they are overvalued by 92%.

Stock market valuation is telling you a similar thing.

From 1938 through 2019 the median ratio of the S&P 500 to GDP is 81. In 2020 we averaged 154, or 90% overvalued.

This is the major deflationary headwind facing the world, the other side of the COVID-19 inflationary shock coin.

Push here, it comes out over there.

Modern central banking cannot escape this conundrum any more than the gold standard could.

The only thing the individual can do in this situation is to owe nothing and save everything, preferably in your hands.

Good luck.

 

 

 

 

 

 

 

 

 

 

 

 

The rentier class at CNBC, FinTwit, Wall Street, is in a panic about Fed rate hikes and just lies this morning about the latest battle: Payrolls beat expectations but CNBC says payrolls slowed

 Well yeah, they slowed from 315k, but that was EXPECTED.

The parasites who derive their main livelihood from the returns on financials are in a panic over Fed rate hikes designed to reduce inflation. Whether those will do that or not is beside the point.

This is all about their carry trade. 

The Fed has been making cheap money available since December 2002 to restart the stock market and it has hardly stopped . . . until lately. The politics of inflation have finally caused the Fed to pivot on this long-standing policy, and they couldn't be more angry.

The top 10% borrow at cheap government rates and plow the money into private financial products which pay higher rates which the 90% have to pay. They prosper, gloriously, off the difference. But increase their cost of borrowing and you are diluting the gravy train.

Ever since the Fed started raising rates in earnest earlier this year, the rentiers have been trying everything they can to get them to pivot, without success.

This morning the hope was that a really poor employment report would get the Fed to back off, except the 263k figure beat expectations of 250k.

The Fed is likely to stay the course and keep raising rates.

CNBC paints this as slowing in keeping with the rentiers' rhetorical narrative aimed at the Fed, which has a dual mandate to maximize employment and maintain stable prices.

Never mind that the dual mandate is nuts since unstable prices exact a far greater cost on the people than unemployment ever does. Inflation doubling makes everyone pay 100% more for everything indefinitely, whereas unemployment affects fewer and is definitely cyclical.

And never mind the Fed has NO mandate to suppress interest rates, buy securities, and bail out the world.

But I digress.

You are being lied to and manipulated . . . constantly.

Because they can, and it works.

 

Joe Biden's nuclear war comments are completely irresponsible, but so is just about everything that comes out of his pie hole

 He's making matters worse, not better.

He's attributing statements to Putin which Putin did not make, which is the default practice for Democrats when speaking of their opponents.

A lot more is at stake than losing control of the US House and Senate in a few weeks.

Joe's irresponsible remarks risk real catastrophe from a deadly opponent.

Think what you will about Putin, Biden is a fool. 

Nobody fucks around with a Biden, he says, the day after Saudi Arabia does just that, telling him to go pound sand.

The whole world knows he's a fool, which is perilous for the rest of us.

Biden: Nuclear ‘Armageddon’ risk highest since ’62 crisis

 

BIDEN WARNS OF NUCLEAR 'ARMAGEDDON'
 

I don't know about you, but my natural gas and electric costs are up 71% from two years ago

 Why?

Basically a combination of demand for domestic electric power production, demand for LNG exports to Europe because of the Ukraine war, low inventories headed into the winter, and fear.

Prices have quadrupled.

And Biden is considering ending all offshore drilling.

We are so screwed by these Democrat clowns.

Why Have U.S. Natural Gas Prices Soared Since 2020?

. . . natural gas production levels are at record highs, so we can’t blame a lack of production on this issue. This is from soaring demand, led in the past two years by the fastest-growing LNG export market in the world.

59% still pay in cash because the drug dealers don't take credit cards

 

The cashless economy trend is not necessarily new, but it is gaining momentum, according to new research from the Pew Research Center.

The nonpartisan fact think tank found 41% of Americans say none of their purchases in a typical week are paid for in cash. That’s up from 29% in 2018 and 24% in 2015.

In contrast, 59% of respondents say they still pay for at least some of their typical weekly purchases in cash.

More. 

 

 

Despite 2015 Paris climate agreement, global reliance on coal grew by about 8%, looks to grow 23% more, shattering Greta's world, lol

 The NGOs report said there are currently more than 6,500 coal plant units globally with a combined capacity of 2,067 gigawatts. ...

Urgewald’s Schuecking told CNBC that since the 2015 Paris accord was signed, the global coal plant fleet had seen a net increase of roughly 157 gigawatts. That’s the equivalent of Germany, Russia, Japan and Poland’s coal fleet added up together.

The research found that 467 gigawatts of new coal-fired capacity were still in the pipeline worldwide. And, if realized, these projects would increase the world’s current coal power capacity by 23%. ...

China was found to be responsible for 61% of all planned coal power capacity additions and, perhaps unsurprisingly, the top four coal plant developers were found to be Chinese companies . . .. China Energy Investment Corporation was the world’s top thermal coal producer last year. This was closely followed by Coal India . . ..

I omitted Schuecking's temper tantrum parts of the story, here.

She is, predictably, a German environmentalist wacko who is also against nuclear power. Urgewald is full of crazy Karens just like her who agitate against corporations and try to get individuals like David Malpass of the World Bank fired because they don't mouth the right words like the Paris Climate Accord hypocrites do.

Urgewald is Exhibit A for the prospect of Germans freezing to death this winter.

The most obscene interest rate policy moment in US Federal Reserve Bank history

 

Climate emergency: 2022 average temperature in Grand Rapids MI through September was 0.4 degrees F above the long-term average since 1892

Mean average temperature in Grand Rapids MI through September 2022: 51.5F.

Mean average temperature in Grand Rapids MI through September since 1892: 51.1F.

From the "it's ok when we do it" department: Berkeley Law goes judenrein

 

Berkeley Law School Develops Jewish-Free Zones

Kenneth Marcus, Jewish Journal

Denmark restarts two coal and one oil power station, Germany restarts three coal power stations

From the story:

Orsted said the order applied to “unit 3 at Esbjerg Power Station and unit 4 at Studstrup Power Station, which both use coal as their primary source of fuel, and unit 21 at Kyndby Peak Load Plant, which uses oil as fuel.” ...

A few days before Orsted’s announcement, another big European energy firm, Germany’s RWE, said three of its lignite, or brown coal, units would “temporarily return to [the] electricity market to strengthen security of supply and save gas in power generation.”

 

The libertarians are not conservatives' friends

 

Expand the H-2B Program In Order to Fill Millions of Jobs 

David Bier, Cato Institute

Democrat Drudge posts hilarious self-own

 As TV doctor, Oz provided platform for questionable products and views...

 

Global fascists wrecked the US middle class, and now they want to wreck it some more

 UN Calls on Fed to Halt Rate Rises...

US COVID-19 Big Picture Through 9/30/22

 Deaths per day through September 2022 are down from 896 through August to 846 through September.

Cases per day through September 2022 are down from 163,178 through August to 151,878 through September. 

Drilling down, there were 441 deaths per day in September vs. 511 deaths per day in August. May, June, and July figures were all in the 300s.

Cases really fell off. There were 3.222 million new cases in August vs. 1.810 million in September, portending fewer deaths going forward.

The CDC ranked COVID-19 the 3rd leading cause of death in 2020:

~1,909 people per day died of heart disease in 2020;

~1,650 died of cancer everyday in 2020;

~1,146 died of COVID-19 everyday in 2020 measured from Feb 29 when the first death was announced.

The New York Times data I use shows about 4,742 fewer total deaths in 2020 than the CDC does.

But any which way you measure it, even over 365 days in 2020, 2021 deaths per day were much higher than in 2020 and deaths per day now in 2022 at 846 to date are much lower than in either of the previous two years.

 

The traditional 60/40 portfolio is down 20.77% ytd

 VTSAX is down 24.89% through 9/30.

VBTLX is down 14.59% through 9/30.

And don't forget to subtract all-items inflation of 6.14% from Nov 2021 through Aug 2022!

Headlines are popping up advocating safe havens in cash and short-duration US Treasury securities, but you'll still lose in those relative to inflation, just not as much.

What a great job the Democrats have done this year! Destroying the bond market wasn't on my bingo card for 2022, even though the high and rising prices for bonds has been a deal-breaker for me for a long time.

The Democrats' green war on energy has consequences.

Is real war next?

Drudge goes from hundreds of Florida hurricane deaths two days ago to only dozens today

 

Warp speed unwind

 

Excited for Facebook being on its way to a $20 stock again

 

Spiking interest payments on the national debt through 2Q2022 threaten to crowd out other current spending on Social Security, Medicare, and National Defense

 Wait until the second half is done. 

This is going to be ugly.

The long-term gains from a higher savings rate will trounce the gains from earning higher returns

 Charlie Bilello, here.

But I have problems:

If a household saved 1% of their disposable income per year and earned a 10% rate of return, they would have a balance of $99,272 after 30 years.

Alternatively, if they saved 10% of their disposable per year and earned only a 1% rate of return, they would have a balance of $209,927 after 30 years.

That’s a 111% higher ending balance for the 10% savers as compared to the 1% savers even though their annualized investment returns were 9% lower.

He doesn't mean the "returns were 9% lower" since he's already stated the returns were 111% higher. He means the return RATES were 9% lower. But that's not true. The difference between a 1% return rate and a 10% return rate is not 9%.

It's 90%.

He does it again here, twice:

For instance, if a household only saved 1% per year and earned a 5% return, after 30 years they would have $40,096. Earning a 6% return would bump that up to $47,712, a 19% increase.

By comparison, if their returns stayed at 5% but they were able to save 1% more per year (2% savings rate), they would be left with $80,192 after 30 years. That’s a 100% increase in the ending balance through saving 1% more versus a 19% increase from earning a 1% higher return.

But the difference between saving at 1% vs. 2% is not "to save 1% more" nor "saving 1% more". 

It's saving 100% more.

Aka double.

Furthermore, the difference between returns paying 6% and 5% is not "earning a 1% higher return". 

6% is a 20% higher rate of return than 5%.

He means 1 point of return.

This sort of confusion runs rampant in America, even with a guy who clearly knows how to do percentages and has a very consequential story to tell, and it has to do with imprecision of language. Increasing by one percentage point from 1 to 2 is an increase of 100%. Increasing a percentage by 9 points from 1 to 10 is an increase of 90%. 

It shouldn't be surprising that increasing savings RATES by 90% and 100% produces returns in the end which are also of the same magnitude higher, but for some reason it is.

The precision of the math he presents is extremely important, but the language isn't precise at all.

@charliebillelo has 475k followers on Twitter, lol.

A society which loses such precision is a confused society, and it's showing up in everything, everywhere.

 

 

This inflation is transitory

 

First it was the US Army actually recruiting a Chinese spy, now its first trans officer is a spy for the Russians but the CNBC story won't mention the trans part or show the picture

 You can't make this shit up.

Army major and doctor wife charged in plot to give U.S. military medical info to Russians

  

Army's first trans officer and her Johns Hopkins doctor wife are INDICTED after trying to pass medical records of senior officers and their families from home of special forces Fort Bragg to Russians to 'exploit'

 

 CNBC has updated the story:

Henry in 2015 was reported to be the first known active-duty Army officer to come out as transgender.

Thanks Obama!

Thanks Joe!

The update is still riddled with typos and even an incomplete sentence, but they've made sure to get the major's personal pronouns right.

The major is a real piece of work.

It's all in the eyes.

Two consecutive quarters of negative Joe Biden GDP followed by a third projected to come in at less than 1% and Paul Krugman is worried about some other Zombie

 

Why Zombie Reaganomics Still Rules the GOP

 

Paul Krugman, New York Times

Housing in America in 2021 has never been more unaffordable

Median household income in 2021 bought just 17.8% of the median sales price of houses sold.

 

Every damn time: The Army Times won't show the picture of the US Army reservist found guilty of spying for China, you have to go to the South China Morning Post for that

 Ex-Army reservist convicted of acting as Beijing agent...  

Former Chicago graduate student Ji Chaoqun convicted of spying for China part of larger plan: analysts

 

The most important thing to the Army Times obviously is to hide the man's identity, because you know, racism.

Nevermind the lunacy of recruiting foreigners to serve in the US military.

This country is so screwed it's almost indescribable.

 

 

 

The Great Long Term Investment Grade Bond Debacle of 2022

Safe havens aren't supposed to do this.

Long term return for VWESX since inception in 1973 near the end of 2018 reached north of 8%.

In 2022 ytd return is -27.28%.

The whole spectrum of bonds as represented by VBTLX is down ytd 14.79%.

Traditional investors with a 60/40 portfolio are down over 20% through yesterday because stocks and bonds both are falling.

Cash is king again.

 

LOL, Democrat Larry Summers is EXTREMELY ALARMED by the reappearance of Reagan-like TAX CUTS in the UK

 

 

 

 

 

 

 

 

 

Larry knows danger when he sees it.

Larry is all Trussed up and ready for action!

Yes, very attractive, imma gonna run right out anda buy your new designs

 

Fetterman's giant self-own: I have nine dates tattooed on my right forearm, each one a day on which someone died violently while I was mayor

 Didn't do a very good job as mayor then, did ya fella?

Fetterman to Tucker: Lay off my tattoos!

That's because we're hanging up on the pollsters, if we answer at all

 SILVER: Polls Still Do Not Show Republican Bounceback...

Phony boom narrative under Trump continues under Biden, only the lie is much bigger

 Factory Jobs Booming Like It's 1970s...

Well, it's the lying New York Times, of course, and drive-by repeater, Drudge.

The summer peak in 2019 was 12.905 million.

The summer peak in 2022 was 12.916 million, up . . . eleven thousand! Woo hoo!

Meanwhile in the 1970s, many MILLIONS more worked in manufacturing in the United States, and many millions more as a share of the population:

11.8% of the population in 1979 on average vs. just 4.9% in August 2022!

From the end of the story, lol:

Eight percent of the surveyed companies reported moving segments of their supply chain out of China to the United States in the past year, while another 16 percent had moved some operations to other countries. But 78 percent of the companies said they had not shifted any business away from China.

 

 

Mike Lee is such a phony, advocating for a clean continuing resolution instead of a last minute omnibus, as if there's much of a difference

 Mike hopes you never hear of regular order again.

Here.

Last guy to mention it I think was Paul Ryan in 2015:

"We need to let every member contribute, not once they earn their stripes, but now," he said. "The committees should take the lead in drafting all major legislation: If you know the issue, you should write the bill. Let's open up the process." "In other words," he said, "we need to return to regular order."

Sorry NY Daily News, NYC criminal behavior remains an overwhelmingly black phenomenon

 

NYPD's Arrest Practices Are Still Starkly Discriminatory

Robert Gangi, NY Daily News

 

Crime and Enforcement Activity
in New York City
(Jan 1 – Dec 31, 2021

Get ready to be working zero hours per week, at least for money

 

Two conditions need to develop before buying bonds

. . . the trend in the bond market . . . still looks bearish. ...

As yields rise and inflation eases, the relative allure of bond payouts becomes attractive, in absolute and relative terms vs. other assets.

James Picerno, here. 

Yields are indeed rising, but prices are still falling, so no, not quite yet. Bond prices ought to stabilize when inflation finally eases, and so far prices haven't stabilized.

VWESX is instructive.

There's just a handful of years back in the 1980s where the average price of this very long term investment grade bond fund had been below $8 like the current price is today.

That's one reason why Jeffrey Gundlach rightly says that bonds are "wickedly cheap".

But VWESX only just got there on September 20th, hitting $7.99. We're down to $7.88 this weekend.

Meanwhile yields across this investment grade spectrum are bunched up in the fours, with only about 55 basis points difference between the shorts and longs, and intermediates effectively paying the same as or more than longs.

Prices on the longs need to fall a lot more before making them more attractive than intermediates if you are going to settle for only similar yield.

After all, the long term average return of investment grade longs is north of 7.5%, not in the fours.

But what the hell do I know?

Invest, or don't, at your own risk.