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  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    NFP is 151k. A bit of an eyebrow raiser. Not horrible, but not good enough to lean in the direction it will influence the Fed to rate hike.


    Again, what we may see, if the Fed winds up hiking once each year for the next four years, is 2000 is the high for 2016, 1900 is the high for 2017, 1800 is the high 2018, etc.
    Feb 5, 2016. 08:42 AM | Likes Like |Link to Comment
  • Quick Chat 287   [View instapost]
    NFP 151k.

    A bit disappointing, but not horrible (sub 100k). However, it does cause an eye brow to be raised. It is also not really an indicator if the Fed will keep raising in March.


    Another scenario that I have been kicking around is that instead of 4 rate hikes a year, we get 1 rate hike for the next 4 years.

    In that case the S&P could slowly make some ground each year. So in 2016 is slowly claws its way towards to 2000 or maybe slightly over, but then economic data drags it back down into the 1900s. Employment data stays weak, not horrible, so by Dec, the Fed really feels the pressure, and then hikes again. The Jan of the following year, we repeat this Jan, and a new range gets established.

    So, for the next 4 years, the S&P claws to the low of the prior year as the high for that year. For example, 2000 for 2016, 1900 for 2017, 1800 for 2018, etc.
    Feb 5, 2016. 08:39 AM | 2 Likes Like |Link to Comment
  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    "Or, and this is what most real estate pros do, sell the property but roll the proceeds (and the gains) into another property - usually a higher value property"

    They also use 1031 exchanges. You can also use this strategy for vacation homes, if its structured properly.

    Feb 4, 2016. 09:42 PM | 1 Like Like |Link to Comment
  • The Great Skyscraper Bubble Is Ready To Pop!  [View article]
    AUs got a point. It really is just a symptom. With the right set of circumstances, the building could go on for a long time. So, the real thing to look for is the trigger. What's going to suddenly dry up the supply of CB notes that are funding the expansion.

    As I pointed out above, the trigger is typically the CB itself. That happens because the CB assumes all bouts of inflation will just get worse and worse, so it starts drying up CB notes via increasing rates.

    Of course, its still tough telling where the breaking point is.

    Here is one of the earliest examples of a proto CB leading to a boom and bust cycle.


    Once you start to recognize what's going on, you can engage in the Cantillon Effect. That's basically timing the run up of the bubble, and getting out at the top. I call it risk-on and risk-off.

    Feb 4, 2016. 09:35 PM | Likes Like |Link to Comment
  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    They leave before that happens.


    There's a difference between imposing a tax, and imposing a tax you can actually collect.

    What's left are the folks who can't leave. At least they get to do stuff like this.

    Feb 4, 2016. 08:45 PM | 2 Likes Like |Link to Comment
  • Why So Negative?  [View article]
    It would be better to just get rid of the IRS, altogether. The Fed note collection by the IRS is bad from the perspective is that it is the same thing as Fed note collection when the Fed increases the DR or reverses QE. The big difference is the compliance cost the IRS imposes via the lost time that could be used on productivity but instead is wasted on filling out forms, paying lawyers for tax court, putting people in jail (like Wesley Snipes, fortunately Charlie Wrangle avoided it), and armies of people employed to make all this happen.

    Imagine what would happen if people could start improving their business with the time they saved by not having to devote 20% of their time to the IRS.
    Feb 4, 2016. 07:30 PM | 2 Likes Like |Link to Comment
  • The Great Skyscraper Bubble Is Ready To Pop!  [View article]
    "Correlation vs causation... spot on."

    The you better tell that to Bernanke, and all sorts of Fed officials throughout history, because they can't have it both ways. They can't talk about wealth effects and affecting assets values as a transmission vehicle for Fed policy, but then when it blows up in their faces, suddenly say, "you can't blame us".

    In fact, we were originally promised the Fed would end all economic downturns, and then when that turned out to be demonstrably untrue, they changed it to, "Well, we only save you after the horrible downturn has occurred. Just forget all those promises we made about stopping in the first place. In fact, its correlation vs causation problems when things go bad, but its definitely causation and correlation when things are going good.".
    Feb 4, 2016. 05:32 PM | 1 Like Like |Link to Comment
  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    I've read that in some places where they have spent billions on "lite rail" that the build costs combined with the annual operating costs would be enough to buy each rider a new car each year for the rest of their life.

    There's a saying, "capital and labor just want to be loved". If you want a robust economy with lots of jobs and lots of wealth and lots of opportunity to have even more, all you have to do is protect property rights with a stable, reliable, and speedy legal system. That makes your country a magnet for labor and capital from around the world, and then wealth builds upon wealth, and the result is exponential prosperity.

    In that environment you would expect and S&P of 5000.
    Feb 4, 2016. 05:24 PM | 3 Likes Like |Link to Comment
  • The Great Skyscraper Bubble Is Ready To Pop!  [View article]
    Generally the problem is the Fed. It tends to be the straw that breaks the camels back. Combined with that is fiscal policy of taxation and regulation that reduces productivity, which essentially reduces profitability. Nature takes over, and lower future cash flows has to result in a lower PV, unless there are some other expectations that prop of PV because of expectations that cash flow will be higher at some point.

    In general, though, fiscal policy can move slow. The Fed can move much faster, which is why it tends to be the trigger. The bust usually comes after a long series of rate hikes.

    Note how the recession tends to follow the rate hikes.


    Two periods are notable exceptions. The 1960s and 1990s. Both periods had tax reform that resulted in counteraction the deflationary moves by the Fed.

    Another glaring example of a Fed induced crash is 1929. Strong died in 28, and Young took over. Strong had kept the DR rate low. The new Fed was worried that the stock market was too high, so they took the DR up to 6% (like 2004 to 2008) to temper the stock market. The DR hit 6% in Sept of 1929, and we all remember what happened in Oct of 1929.

    This is why the current round of Fed hikes is such a concern. Rate hikes are risk-off no matter how small, but enough of them will bring on a recession and collapses in equity markets. So, the important thing to watch now, above all else, will be more Fed hikes. This is not to discount the increasing tax and regulatory variables, but just that the Fed acts faster than fiscal policy.
    Feb 4, 2016. 05:19 PM | 1 Like Like |Link to Comment
  • S&P 500 Update: Bulls And Bears Focus On Crude Oil And The Fed. Both Have Taken Their Eye Off Of What Really Matters - Earnings  [View article]
    Somebody else is talking about this.

    Feb 4, 2016. 05:02 PM | Likes Like |Link to Comment
  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    "The fee, which drew swift objections from oil industry groups, is part of a broader administration plan to shift the nation away from transportation systems reliant on internal combustion engines and fossil fuels."


    Funny, gov builds roads, roads are a subsidy for cars, we wind up with lots and lots of cars, then gov wants to tax oil to reduce the number of cars. Finally, gov says we need infrastructure spending on roads and bridges, which will provide room for more cars, then increased car sales are hailed as a sign of a booming economy, which then an oil tax is aimed at getting rid of car sales.

    Thank goodness the experts are in charge.
    Feb 4, 2016. 04:44 PM | 3 Likes Like |Link to Comment
  • Jobless Claims at 285K, misses consensus  [View news story]
    Its just evidence that the Fed is not run by "experts". They are basically ideologues who only proclaim their ideology to be expertise. Although, I guess you can say they are experts in the ideology, like Bossuet, but just because they are experts in their ideology, does not mean their ideology is correct. In fact, if you ignore all the charts, data, and theory proclamations, and look at the basic premise under which they operate, and see if it actually fits with the laws of nature, what we find echos Sir Thomas More.

    'Some men think the Earth is round and others think the Earth it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.'
    Feb 4, 2016. 04:24 PM | 1 Like Like |Link to Comment
  • Quick Chat 287   [View instapost]
    Looks like they are working on giving themselves an out. Of course, what will they do, if unemployment data is decent through Fed and March?


    NFP has been tracking fairly close with ADP lately, so Friday may be enough of a relief to create a collective sigh of relief that we pop over 1950 on the S&P.
    Feb 4, 2016. 12:49 PM | 2 Likes Like |Link to Comment
  • (96)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #96  [View instapost]
    Trying to give themselves an out? Let's see what NFP brings on Friday. ADP and NFP have been tracking a little closer lately, so we good see an emotional sigh of relief that pushes the S&P over 1950.

    Feb 4, 2016. 12:45 PM | Likes Like |Link to Comment
  • How Will The No Taper Surprise Affect Stocks?  [View article]
    "increasing wages, but that has it's own set of problems, namely, inflation (et al)."

    That's actually a myth. The Fed has actually written this is a myth, yet the top Fed people still believe it.
    Feb 4, 2016. 12:26 PM | Likes Like |Link to Comment