VGPMX at 9.63 hasn't been this cheap since 2003

The 2009 low was 9.73.

The thing is, the historical low water mark for this sector fund, which is a stock fund not a pure metals fund, was in August 1998 at 5.05. You could really lose your shirt in this fund even at this bargain price. I'd look for a broader stock market correction than the current 5% before I even thought about it more seriously.

On January 2, 2002 this fund was at 8.56. Following the Peter Cundill rule, you would have sold your entire initial investment in this fund at that price by late 2003 and recouped it because it would have doubled already at 17.12. (Often the easy money is made quickly off the lows, but it did take until February 2002 for the 5.05 price to double to 10.10, not quite four years.) The all-time high for this fund at 40.02 in May 2008 did not come until almost five years later.

US Federal Reserve continues to fail against deflationary headwinds

Bloomberg reports here:

The Fed needs a clear strategy for getting the inflation rate higher after falling short of its 2 percent target for 28 consecutive months. ...

Prices fell 1.2 percent for the 12 months ending in July 2009, when the economy had just exited the recession, according to the inflation measure the Fed uses, the personal consumption expenditures price index. Unemployment that month was 9.5 percent. Since Fed officials first published their inflation target in January 2012, the index has averaged 1.5 percent. ...

The 2 percent inflation objective first appeared in a January 2012 statement on longer-run policy goals, and has been restated each January since. The statements say nothing about tactics for returning inflation to 2 percent over the medium term.


-----------------------------------------------------

The all-items consumer price index shows the same thing, with the average of the annual average change at just +1.59% for each of the five years 2009-2013. In the most recently completed year, 2013, the change from 2012 was just +1.46%. And year over year on August 1, 2014, the change has been just +1.69%.

Despite a balance sheet for all Federal Reserve banks which appears to have peaked at $4.459 trillion on September 24th as QE prepares to end and excess reserves only slightly off peak at $2.677 trillion, inflation is slim to none in this economy, and slim just left the building.

In point of fact, these numbers are nearly meaningless in the face of the real deflation in the economy, which has nothing to do with prices but with credit. Total credit market debt is hardly expanding at all. Compared to the post-war record, where credit creation has doubled on average about every eight years, we have hit a brick wall since 2007.

At that time total credit market debt outstanding stood at $50 trillion. Seven years later it is barely $57.5 trillion, and there isn't a snowball's chance in hell that next year it will be at $100 trillion or anywhere close to that.

What we are witnessing is the unraveling of the post-war credit based economy, and no one seems to have a clue how to fix that, least of all the US Federal Reserve.

The irony: The Arab street views the Christian West as as anti-capitalist as itself

From Hernando de Soto, here:

For the poor in many Arab states, it can take years to do something as simple as validating a title to real estate. At a recent conference in Tunisia, I told leaders, “You don’t have the legal infrastructure for poor people to come into the system.” “You don’t need to tell us this,” said one businessman. “We’ve always been for entrepreneurs. Your prophet chased the merchants from the temple. Our prophet was a merchant!” ...

All too often, the way that Westerners think about the world’s poor closes their eyes to reality on the ground. In the Middle East and North Africa, it turns out, legions of aspiring entrepreneurs are doing everything they can, against long odds, to claw their way into the middle class. And that is true across all of the world’s regions, peoples and faiths. Economic aspirations trump the overhyped “cultural gaps” so often invoked to rationalize inaction.

As countries from China to Peru to Botswana have proved in recent years, poor people can adapt quickly when given a framework of modern rules for property and capital. The trick is to start. We must remember that, throughout history, capitalism has been created by those who were once poor.

News flash: most women in southeast Michigan want peters

Don't they everywhere?

Moochelle flubs Braley name in Iowa stump speech six times, Terri Lynn Land in Michigan ripped for similar number of mentions that she's a mom

Politico, here:

After calling him “Bruce Bailey” at least five or six times during her remarks at a campaign event, even directing people to ‘vote.BruceBailey.com,’ an audience member eventually corrected the first lady.

Breitbart, here:

“In case you were wondering, @TerriLLand mentioned she's a mom with kids six times during the #MICalling show,” Chad Livengood, a reporter for the Detroit News, tweeted.

The Faggot States of America (in passionate purple)

Notice that the non-gay-marriage states are all in yellow, the color of cowardice, as in homophobia.

Americans have been content to keep over $1 trillion in checking accounts for the last year

Or should I say they have been desperate, because they have been earning nothing on it? The feeling before August 2008 going back all the way into the 1970s, thirty-five years!, meant Americans felt comfortable with 3 to 4-times less cash on hand for immediate withdrawal. The panic of 2008 continues.

Net balances first moved above $1 trillion in October 2013, but notably have surged to that level since August 2008 out of all proportion with the historical record. 

Supremes let stand lower court rulings overturning state marriage laws, Rush Limbaugh misreports it

Rush Limbaugh opened the show today incorrectly saying the Supremes' ruling sent the matter back to the states when in fact allowing the lower court rulings to stand effectively validates the power of lower courts to strip the states of the power to define marriage for themselves. Someone in the office evidently told Rush he got it exactly backwards, and now he's been spending a few minutes correcting himself and beating a trail to put the focus on matters which are trivial by comparison, like the liberals' hypocrisy in ignoring Joe Biden's most recent offensive gaffes.

Combined with John Boehner's recent funding of openly gay GOP candidates, it is clear that real conservatives no longer have a home in the Republican Party, which is repudiating its former support for such laws in the states, and neither do they have a voice on the Rush Limbaugh radio program.

Conservatives who intend to vote for Republicans next month, or Democrats or libertarians for that matter, should have their heads examined, and their souls exorcised.

I didn't leave the Republican Party, the Republican Party left me

Temperature anomaly for Grand Rapids, Michigan, through September 2014 rises to -27.0 degrees F

The September temperature anomaly for Grand Rapids, Michigan, came to -0.7 degrees F. Added to the cumulative anomaly of -26.3 through August, the annual anomaly through September now totals -27.0 degrees F. That's an average to date of -3.0 degrees F per month.

Hahahahaha: Obama decries income inequality after $50k/plate fundraiser

h/t John Kass

The New York Times speaks out against free-trade

Here:

Since the 1970s, economic orthodoxy has argued for low tariffs, free capital flows, elimination of industrial subsidies, deregulation of labor markets, balanced budgets and low inflation. This philosophy — later known as the Washington Consensus — was the basis of advice the International Monetary Fund and the World Bank gave to developing countries in return for financial help. The irony is that during the Industrial Revolution, today’s rich countries — Britain, France and the United States — pursued the very opposite policies: high tariffs, government investment in industry, financial regulations and fixed values for currencies. Trade expanded, and capital flowed anyway. ... Nations that have ignored the nostrums of the Washington Consensus — China, India and Brazil — have grown rapidly and raised their standards of living. Improvements in poverty and inequality occurred in Latin America only in the 2000s, after the I.M.F. and the World Bank reduced their grip on those nations.

46,486,434 Americans received food stamps in July

The figure is down 2.4% from a year ago, according to the report released today.

11.2 million fewer people contribute to the economy today than in 2007

You'll have to do the math.

Rick Newman, here:

... there are still more than 16 million Americans who are unemployed or working less than they want because they can’t find a good full-time job. That’s 4.2 million more than in 2007.

Many others have dropped out of the labor force, which shows up in the numbers as a 3.3 percentage point drop in the participation rate since 2007. That might not seem like a big number, but it represents something like 7 million people who would be working or looking for work if they hadn’t dropped out. Combined with all the unemployed and underemployed, that’s a lot of people who are contributing less to the economy than they would have in a 2007 scenario.

The other big bummer is hourly wages, which have barely risen since 2007 when factoring in inflation. And that’s just for people with jobs. If you included people who used to have jobs but no longer do, the earnings number would be negative, which is why median household income is still far below where it was in 2007. That means people with jobs are barely staying even with inflation, on average, while the ranks of the economically distressed have swollen significantly.

Dallas Ebola vomit wasn't cleaned off the sidewalk for four days, and then improperly

Meanwhile, things Duncan contaminated filled 140 barrels.

The UK Telegraph, here:

Q: Was the ambulance trip to hospital handled properly?

A: On Sept 28 [Sunday] the daughter of his girlfriend brought Duncan tea in bed and found him shivering and sick. An ambulance was called. When it arrived neighbours witnessed him vomiting on the ground outside the apartment as he was placed in the emergency vehicle. No extra precautions were taken for the ambulance ride despite the fact he was Liberian and showing possible symptoms of Ebola. The ambulance was used for another 48 hours before being taken out of service. After his eventual diagnosis the three ambulance workers were told to stay home until they get the all clear. Meanwhile, it took until Thursday for workmen ... using high-pressure water jets and bleach to clean the area outside the apartment where he had been sick.

Unemployment drops to 5.9%, September jobs added were 248,000

Jobs are being added at the rate of 213,000 per month in the prior twelve months according to the report from the BLS (In 2013 population increased 187,000 per month). The average workweek is up .1 to 34.6 hours. Average hourly earnings were down a penny to $24.53. Those working usually part-time are 900,000 fewer in number than at the peak first reached in March 2010. Those working usually full-time are 3.4 million fewer in number than in the peak year of 2007. People working part-time but who want to be full-time are 2.6 million more in number than in the same month in 2007. The percentage of the population working, after falling dramatically after the election of Obama in November 2008 from 61.6 to 57.6 by January 2011, remains subdued at 1973 levels, at 59.1%.

How to sell the S&P500 in a bull market using the "Cundill" sell point

The Peter Cundill Sell is the principle that you sell half of your investment once it doubles, recovering 100% of the principal you risked. 

Assume you invested at the last S&P500 closing low, which was on March 9, 2009, at S&P 500 676.53. You multiply times 2 = 1,353.06, and sell half your holdings when the S&P500 rises to that level, according to the idea.

But the S&P500, for example, hit that level way back on April 27, 2011 at 1,355.66. So you doubled your money a long time ago, sold half your stake and recouped your entire principal. But then what? Cundill thought you were free to do anything with the remaining amount invested (which are the profits). The principal has to be reserved for another doubling opportunity.

What would a conservative bet with just the profits have meant from there?

Say you were to wager that the S&P500 would increase not 100% more as before, but only 25% more, because the S&P500 would have to hit 2706.12 to do the former. You are not greedy, just optimistic, you say. Is that a conservative plan? Maybe compared to what has just happened since 2009, but not really, because since 1970 the median annual return only has been north of 12%, half as much as that.

So you decide to let the profits ride, hoping for just an additional 12% on the index going forward. Here are the milestones of 12% from 1,353.06 up to today's current market level (1,949) at each of which you presumably sold half of your stake, gradually exiting the market and its growing risk:

1515.43 (February 2013)

1697.28 (July 2013)

1900.95 (May 2014).

An initial $10,000 invested this way made you $10,000 by April 2011 (not counting dividends).

The remaining $10,000 made you $1,200 by February 2013.

The remaining $5,600 made you $672 by July 2013.

The remaining $3,136 made you $376 by May 2014.

Since then you've had only $1,756 riding the market, making an additional 2.5% to date, or an additional $44. Total made: about $12,292 nominal. And you sell today.

By way of contrast, the buy and hold investor over the same period is up about $18,700, assuming he bought in low like you did and sells . . . TODAY. But trust me. He didn't buy low. And he won't sell today, tomorrow, in time to escape the correction, or any other time. He'll just ride it on down right past the 35% down marker at which point he'd begin waving up at you as he's headed lower. 

Jobless claims in September, not seasonally adjusted, have averaged just 236,000 weekly

Jobless claims in September have now averaged just 236,000 weekly as of this morning's report, the equivalent of an annual rate of just 12.3 million first time claims for unemployment.

Claims in August had averaged 253,000 weekly, down over 18% from July's 310,000 weekly. The average for the whole first half of the year was 326,000 weekly, so the current low level well below 300,000 sustained for two straight months is very welcome news at least for job holders.

With claims averaging 266,000 weekly at midpoint in the second half, it is conceivable that total claims in 2014 could come in under the 16 million mark, which would beat the best performance for initial claims achieved since 2000 (under George Bush). That will require claims averaging no more than about 310,000 weekly for the last three months of 2014. The last two months show that that low level is possible.

Stock futures a half hour after the report are nonplussed.

At 10.01 VGPMX is tonight again below the March 2009 low of 10.04

Vanguard Precious Metals and Mining is looking attractive once again, revisiting the territory of December 2013 when the fund briefly dipped below 10.00 to 9.69 or so. If a real stock market correction of 10% or more makes an appearance at long last, I'd expect the fund to fall in price quite a bit more, this sector fund being a stock fund. A stock market bear of 20% or more might actually take the NAV much lower, with the vicinity of 5.00 being not inconceivable.

ABA survey finds internet banking declines from 39% of customers in 2013 to 31% in 2014

Branch banking is up from 18% of customers in 2013 to 21% this year in the survey even as the number of branches has fallen back to 2006 levels, at 94,715.

Reported here.