patrick.net

errc says

The paycheck economy is tapped. They don't have savings to keep this all going.

Who doesn't have the savings? The richest boomers are loaded for savings precisely set aside to spend during their old age.

Logan Mohtashami says

You know, in the domain of AI, statistics are less and less regarded as a good angle to approach intelligence.
Why?
For the exact reason your chart illustrate: an average is not a good generalization. You can always calculate an average and you will find one. But this doesn't tell you whether this average is actually the center of a cluster or whether this is just a random point between clusters.

Follow the money. Healthcare is a dead end street. Any money spent into the paycheck economy is quickly recycled back into the coffers of the 1%. Where it goes to die. Because they don't have any avenues for spending (enough) money to support the consumer economy.

We're not broke(yet), we're just tapped out. Any money us paycheck economy actors get our hands on, we spend, and it's gone forever.

Rew says

If the consumer economies are dead

Retail Sales, Car Sales and Home Sales are near or at cycle highs

Why do you presume to call something dead when in a light demographic patch sales are at cycle highs

logan these threads are getting vexing.

1.60% break point. demographics. charts. charts. charts. brexit. charts. charts. dshort. charts dshort. 1.60% break point. 1.60% break point.

charts.

marcus says

From my view, something is broken, and the piper has to be paid in some way at some time, before markets will be somewhat "normal" again.

blue is total debt to GDP, red is fed funds rate.

Two regime changes happened under Greenspan, at the start of his time and at the end.

The turd in the pool as I can see it is simply:

http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm

Collectively we each got ~$1,000 poorer -- more in the hole, actually -- in 2015.

What I don't know is what the end game for that is. Greenbacks become wallpaper I guess, but exactly how we go from now ("tallest midget" status) to that is the question.

Heraclitusstudent says

All I'm pointing out is that there is a wave of regular people that are in fact also accumulating money too and they are far more numerous than the rich.So the question is: how do these boomer retirement savings compare to the rich fortunes. I don't know the exact answer, but I would think the kind of order of magnitude.

WHAT? Wow, that conjecture is really wrong. Where have you been? There is hardly a week since Piketty's book in 2013/2014 that some newspaper or blog posts a chart or table showing the wealth distribution among various subgroups of the wealth spectrum.

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States

The top 1% has 34.6% of the wealth. That is over 1/3. That means the bottom 99% have 2/3, So the ratio of poor/rich total wealth is 2/1, roughly. That is a very far cry from "(an) order of magnitude" (which means 10 of times). Come on. you KNEW this, did you not?

landtof says

1.60% break point. demographics. charts. charts. charts. brexit. charts. charts. dshort. charts dshort. 1.60% break point. 1.60% break point.

charts.

US 30-Year Yield hit a new all-time low this morning: 2.20%. $TYX

Just to give the 30 year some love not the 10 ;-)

Here is one critique of the Perma Bear crowd

10 year getting this low since 2012... all events have nothing to do with domestic economics but world economics

Yes, I have a 1 handle in my 10 year calls in my prediction article but that has to do with the world demographic deflationary factors not a U.S. story

Here is my examples

Core inflation above 2%
Service inflation X energy is 3.2%
ECI wage inflation running at 3.5%
ECI wage inflation for job switchers are running at 4%

Now, I know this data because I track it, but this was never supposed to happen again in the U.S but it did

World deflationary factors are real, the world is old... old people don't spend .. this is a legit thesis .. but ... we do have better demographics than Europe and Japan

Logan Mohtashami says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

My bond funds had an amazing June - it's scary. NAC (which I am not invested in) broke 17 today, crazy.

Strategist says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

If you channel 10's with European Banks they are almost identical

Thank Europe and Japan for all this! :-)

Logan Mohtashami says

Strategist says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

If you channel 10's with European Banks they are almost identical

Thank Europe and Japan for all this! :-)

I do, Ido. And the stocks are back to 18,000.

Strategist says

I do, Ido. And the stocks are back to 18,000.

Think about how many people bet against this country since March of 2009.... in big general themes

I am having way too much fun mocking my Anti American Cry Baby friends on facebook... they have nothing to say for themselves

Soft is Soft for a reason... we aren't Europe this is America

Hey Logan, in 2009 it was a no brainier. The Dow went so low that being anti American investing wise was actually very dumm. It was a huge oportunity.

Now being anti American (investing wise) is kind of reasonable. Almost 8 years roaring US stock market. The recession is due.

Ironworker says

The recession is due.

This is true, the economic expansion is on the verge of being the longest on record

Which I have created a data base of all the horrific calls since March of 2009... because people aren't versed in economics enough to make the difference between media yellow journalism marketing than to the best domestic economy in the world

The cycle lasted too long against the real hard core bears...

The data miners will be correct on their recession calls not all these people

That's what we want... we want to change the game ;-)

justme says

The top 1% has 34.6% of the wealth. That is over 1/3. That means the bottom 99% have 2/3, So the ratio of poor/rich total wealth is 2/1, roughly. That is a very far cry from "(an) ordersof magnitude" (which means 10 of times). Come on. you KNEW this, did you not?

Ok, but the top 20% owns ~85% of the wealth and they are likely disproportionately people (boomers) close to retirement (or already retired) sitting on a large nest egg.

It seems likely 35% out of these 85% is in fact retirement nest eggs. In any case, these nest eggs would be the same order of magnitude as the 35% of the top1%.

And you also need to consider companies and countries (foreign reserves).

I get the point that if there is a black hole in this system, any additional flow of money will always eventually fall into it.

In a system with a limited amount of money (gold standard), this kind of system would quickly result in a crash, as debts can't be paid and default/contagion takes place, leading to a new cycle. Limited money means limited possible run in the system, a sinus type of outcome rather than exponential.

Now with the government/central banks being a "white hole" producing an unlimited amount of cash, the economy becomes more and more a direct flow from the white to the black hole. No collapse happens, but the tidal forces still destroy a lot of what used to amount to a normal capitalistic economy.

I can fix this mess in a day. The government issues a check every year for the total income reported on a tax return up to about $15,000 and prints the money.

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

Thats not a solution, because it still leaves those without an income out in the cold. A better solution would be to eliminate the federal income tax, and print whatever money is needed to fund the governments expenses.

errc says

A better solution would be to eliminate the federal income tax, and print whatever money is needed to fund the governments expenses.

A scene from patnet?
https://en.wikipedia.org/wiki/The_Haywain_Triptych

Heraclitusstudent says

A scene from patnet?

As some of you here know, I love art and post historical art photos every night on facebook

and can tie them sometimes to economics..... above

The Haywain Triptych (Center Panel). Hieronymus Bosch, 1516. #bosch

Ironworker says

Almost 8 years roaring US stock market. The recession is due.

I saw the 4Q07-2009 recession coming from late 2006, when I first learned a) how much fraud was in the housing market and b) how much of the economy was being driven by the $1T/yr new mortgage debt flow we were enjoying 2004-2006:

Real (2009-dollars) per-capita (age 15-64) consumer debt growth, YOY.

Note we've just crawled back to the baseline last year, we're not all that overextended now.

Recessions come for reasons, they don't just appear like earthquakes or hurricanes.

The Fed's not going to tighten lending like it did in the 50s thru 80s.
Consumer debt is under control.
Governments can borrow all they want at super-cheap rates.
Boomers are edging into retirement, and that's going to open up new jobs for Gen Y and also increase the demand side as the boomers finally start drawing down their lifetime savings accumulated from the 70s to now.

Health sector jobs are going to continue growing to take care of all these old people:

Health jobs as % all jobs

Not saying we're not going to see a recession this decade, but I don't see what is going to get it going.

Now, if Hillary wins and the GOP still holds the House, then, yeah, there could be an utter shit show for 4 to 8 years, making the gov't sector as crazy as some third-world banana republic.

Bellingham Bill says

Recessions come for reasons, they don't just appear like earthquakes or hurricanes.

Clap Clap Clap

Jim Rodgers recently said we will have a recession because we are over due for time

Economic cycles don't die of old age, they need a over investment thesis ... Tech 2000, Housing 2007

Fed funds rising to fight inflation

2007 prime age labor force growth peaked so we were due to a slow down regardless

So, the over investment thesis in this cycle? Oil? commercial real estate?

The cycle is old for sure...

But mother economics... she is a serial killer.. she wants to get caught.. she will leave you real big clues for when the recession is coming

If recessions are so easy to understand after they've happened, how come nobody sees them coming ahead of time and does anything about it?

Or should we feel confident that this time they've figured it out?

exfatguy says

Or should we feel confident that this time they've figured it out?

Don't follow them.... Them... vested interest ...

Follow the data....

Data makes it clear when we hit..

1. Unemployment Claims
2. (LEI) leading economic indicators
3. Fed rates hikes fighting inflation

The real hard core variable is to find what sector has created the biggest supply and demand imbalance and if it that can create recession

So many people got 2015 and 2016 recession call wrong because they were following PMI data with out context .. there recession calls never happened.

You can tell the difference between real economic trackers and false ones looking to making a $$$

Numbers can't lie.. only people, poets, politicians, promises.. these are lies, numbers are the closest thing we have to the handwriting of God

I won't fall you guys, trust me on this.. I am always looking out to recessionary data lines, while the cycle is old.. she still has some legs left

Logan Mohtashami says

Numbers can't lie.. only people, poets, politicians, promises.

Numbers also don't tell a full story. GDP is growing because of ridiculous healthcare spending as we are over medicating ourselves and trying to fix fat people through drugs, test,and doctor visits instead of food and exercise.

Oil is below $50 even after the dollar sell off. That's recessionary. Oil companies have been able to reap off consumers for 2 years. Finally someone is looking at it: http://www.marketwatch.com/story/major-oil-refiners-investigated-by-california-attorney-general-2016-06-30

I can respect that.

Here's my analysis, coming completely non-partisan although it won't seem that way:

At the end of Democratic Presidencies, the economy tends to be doing well, but only if that President served two terms. At the end of Republican Presidencies, the economy tends to be doing bad regardless of the number of terms held.

That said, I'm probably still going to vote for Trump... hey, I might be able to buy a house once it's all over! :D

tr6 says

instead of food and exercise.

as someone who trains all year round, I agree with you on this one

Logan Mohtashami says

Data makes it clear when we hit..

1. Unemployment Claims

2. (LEI) leading economic indicators

3. Fed rates hikes fighting inflation

Yes, and watching the yield curve would have helped predict most recessions in the last 50 years. But it may be different now, being that things are broken and all (ZIRP).

exfatguy says

If recessions are so easy to understand after they've happened, how come nobody sees them coming ahead of time and does anything about it?

Markets are forward looking. The markets will likely be in a serious correction or worse by the time Logan is certain a recession is coming. What is the famous quote ? Something like, "the stock market has predicted 9 out of the last 5 recessions."

marcus says

Yes, and watching the yield curve would have helped predict most recessions in the last 50 years. But it may be different now, being that things are broken and all (ZIRP).

In the last 50 years falling Industrial production over 1% year over year would have meant recession too. Things are much different in this cycle for sure

So many people banked on this metric giving us a recession late 2015 and for sure 2016

marcus says

Markets are forward looking. The markets will likely be in a serious correction or worse by the time Logan is certain a recession is coming. What is the famous quote ? Something like, "the stock market has predicted 9 out of the last 5 recessions."

Why do so many Patnetters think a recession is just around the corner? We are still recovering from a hangover from the last recession.
The stock market is at all times high in spite of world economic problems. There is no recession on the horizon.

There is a recession on horizon. It will follow bubble. And if it is in US equities which I think it will be, we have a ways to go. The biggest gains are to be gained just before the bubble pops.

Ironworker says

The recession is due.

This time it's different. It's a new paradigm. No more recessions.

Ironman says

Strategist says

The stock market is at all times high

If you think the stock market is an accurate representation of the overall economy, you need to put down the wine glass RIGHT NOW!

I literally did. So I could pour a second glass. And I stuck some masking tape over the computer camera lens.

Ironman says

Strategist says

The stock market is at all times high

If you think the stock market is an accurate representation of the overall economy, you need to put down the wine glass RIGHT NOW!

Actually, the stock market is usually 6 to 9 months ahead of the economy.

Ironman says

Strategist says

Actually, the stock market is usually 6 to 9 months ahead of the economy.

OK, so why has the stock market basically flat-lined since Fall of 2014?

Damn recovery isn't done yet. Blame Obama.