haha, but the channel is good for compiling informtion relating to Tesla and broadcasting it.
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haha, but the channel is good for compiling informtion relating to Tesla and broadcasting it.
Some good points:
But public demand is lagging, and until that changes, governments will have to incentivize consumers to buy electric cars. Currently EVs appeal to a narrow demographic: affluent, educated, coastal, and liberal, with the highest enthusiasm among 35- to 45-year-olds, according to research by James Archsmith, who researches energy and environmental economics at the University of Maryland, and his co-authors. Their research concludes that under some scenarios, achieving a 50% market share for EVs in 2035 would require paying subsidies in excess of $30,000 per electric car, totaling in the trillions of dollars, and that achieving more modest penetration targets could cost public treasuries in the hundreds of billions of dollars.
www.realclearwire.com
But public demand is lagging, and until that changes, governments will have to incentivize consumers to buy electric cars. Currently EVs appeal to a narrow demographic: affluent, educated, coastal, and liberal, with the highest enthusiasm among 35- to 45-year-olds, according to research by James Archsmith, who researches energy and environmental economics at the University of Maryland, and his co-authors. Their research concludes that under some scenarios, achieving a 50% market share for EVs in 2035 would require paying subsidies in excess of $30,000 per electric car, totaling in the trillions of dollars, and that achieving more modest penetration targets could cost public treasuries in the hundreds of billions of dollars.
'Zero Emissions' From Electric Vehicles? Here's Why That Claim Has Zero Basis
By John Murawski, RealClearInvestigationsOctober 27, 2022 As California, New York, and other states move to phase out the sale of gasoline-powered cars, public officials routinely echo the Biden adm
Tesla's Model Y is on track to sell >760K units this year grossing over >$50B in revenue. The highest revenue generating vehicle in the world. On track for the 4th best selling vehicle in the world. >2x better margins than the other best selling vehicles.
I feel sorry for Volvo, Ford, GM, Toyota, etc.
I feel sorry for Volvo, Ford, GM, Toyota, etc.
When the high interest rates have their impact on house values, I expect cheap cars will suddenly become much more popular. EVs are virtual signaling for those who can afford luxury.
The federal funds rate will likely be lower than it is today, two years from now.
Also a true statement when comparing July 2007 to July 2009, and yet one of those years was somewhat better than the other for car sales.
Interesting forecast.
Being the FED is slow to move yet reacts with a "knee jerk" reaction to political pressure... The cycle of high / low /high / low interest rates could put America right back where it is today by Thanksgiving 2024.
If you are seeing a light at the end of the tunnel.... Please share it with us.
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Going through a low-high-low interest rate cycle won't result in the same end state as the start state, because the intermediate period of high rates will result in destruction and capital redeployment in response to the misallocations that occurred when rates were low.
It's been popular the last week or so to discuss how the drop in M2 is not just going to slow inflation, but actual cause deflation. Let's take a look:
It looks like the Fed has dried up liquidity to mid-202 levels, and we know how tight things were back then.
I've also seen a lot of arguments concerning whether monetary policy or supply shocks are the cause of inflation (often with statements along the lines of "the EU central bank printed only half as much as the Fed and yet their inflation is even worse"). The logical fallacy here is that it has to be an either/or situation and that there must be a single cause of inflation across multiple regions.
Don't get me wrong - I'm 100% confident the Fed will fuck this up, and the most likely next stop is deflation and a liquidity crisis. But I don't think we are anywhere closer to that point yet.
It looks like the Fed has dried up liquidity to mid-202 levels, and we know how tight things were back then.
I've also seen a lot of arguments concerning whether monetary policy or supply shocks are the cause of inflation (often with statements along the lines of "the EU central bank printed only half as much as the Fed and yet their inflation is even worse"). The logical fallacy here is that it has to be an either/or situation and that there must be a single cause of inflation across multiple regions.
Don't get me wrong - I'm 100% confident the Fed will fuck this up, and the most likely next stop is deflation and a liquidity crisis. But I don't think we are anywhere closer to that point yet.
This has been coming for 6 months.
Article from May 26, 2022 10:00 AM ET
The economy and stock market have been built on massive stimulus and liquidity from a rapidly expanding money supply. With M2 growth decelerating last month, the stock market looked in trouble. Now that it has become a contraction, the effect could be very profound.
seekingalpha.com
Article from May 26, 2022 10:00 AM ET
The economy and stock market have been built on massive stimulus and liquidity from a rapidly expanding money supply. With M2 growth decelerating last month, the stock market looked in trouble. Now that it has become a contraction, the effect could be very profound.
Monthly M2 Shrinks For The First Time In Over 12 Years
Over the past three years, M2 growth has averaged 14.3% annualized. Click here to know more...
seekingalpha.com
$TSLA catalysts - 10/25
1/ TWTR overhang lifts Oct
2/ FY’23 EPS revisions 4Q
3/ New gigas (UK, East NA) 4Q
4/ FSD beta wide release 4Q
5/ 7.5K EV credit into effect 1Q
6/ TSLA $10B buyback 1Q
7/ Cytruck launch mid-FY’23
8/ $30K EV Launch mid-FY’24
$550 PT 6-12 mo
1/ TWTR overhang lifts Oct
2/ FY’23 EPS revisions 4Q
3/ New gigas (UK, East NA) 4Q
4/ FSD beta wide release 4Q
5/ 7.5K EV credit into effect 1Q
6/ TSLA $10B buyback 1Q
7/ Cytruck launch mid-FY’23
8/ $30K EV Launch mid-FY’24
$550 PT 6-12 mo
Might not matter once 'Federales' pile on Musk's businesses due to him taking over Twitter.
Tesla in the past was Teflon plated against 'Federales' , absolutely no scrutiny no matter the shenanigans, that time might be over.
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I think you are correct that it is both factors causing inflation. The real turd in the punch bowl is that the oversupply of goods along with the tightening will cause a crazy whipsaw in prices since demand isn’t going to be high enough to absorb the oversupply, inflation will have burned through savings and layoffs will further reduce disposable income. It will catch most off guard. This is one we are going to be talking about for quite a while.
I’m already seeing huge sale signs all over the place. I even saw one today at a rock/stone store. Oversupply of rock on the 3rd rock from the sun, go figure. The irony was not lost on me.
Mind you, all of this is out the door if they decide to hit the pedal on printing again to offset the recessionary/deflationary forces.
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Here's one contrary take:
Robotaxis Are More Than a Decade Away, Says Luminar’s CEO
TIME 100 Next honoree Austin Russell discusses the state of the industry, driver safety, and Elon Musk
time.com
As an engineer in the auto industry, I'm automatically skeptical of anyone advocating an all-the-eggs-in-one-basket approach, regardless of the problem domain or proposed solution.
Q3 again shows why unit sales are misleading when comparing valuations of automakers
Cars sold
Toyota: 2.6M (+5% y/y)
Tesla: 344K (+42% y/y)
Operating profit excl. FX impact
Toyota: $3.1B (-38% y/y)
Tesla: $3.9B (+97% y/y)
Cars sold
Toyota: 2.6M (+5% y/y)
Tesla: 344K (+42% y/y)
Operating profit excl. FX impact
Toyota: $3.1B (-38% y/y)
Tesla: $3.9B (+97% y/y)
$AMD last night recognized for the first time competitive pressure from Intel in PCs. Interesting. Gaining share in a supply constrained environment was easy. Defending it in a demand constrained one will be challenging.
Yep, lots of buy back's going on...
BP Looking At Billions in Buybacks For Q4 | OilPrice.com
British oil and gas supermajor BP Plc. has announced plans to buy back $2.5 billion in shares after an impressive third quarter
oilprice.com
A bunch of people fell for the irrational theory that the Fed was going to capitulate. Ironically enough, the resultant run-up in asset prices makes this even less likely.
"The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive."
Those are not the words of a man who is going to pivot in the near future.
The share price for APPL is right where it was 2 years ago. Obviously all that "share buyback" did not filter down (in one way or another) to the stock holders.
Apple (AAPL) CEO Tim Cook is flush with cash. The head of the world’s first company to reach a $3 trillion market cap took home a staggering $98.7 million in stock and cash in 2021. That’s a 571% increase in his compensation compared to 2020.
Apple FCF $20B this quarter. What do you do with that much extra cash? Repurchases are more advantageous than dividends due to no-capital gains. However, I think apple should consider increasing their dividend slightly.
So, how much does it actually cost to produce one IPhone ? Not like a new IPhone is engineered and build every 2 years. They are simply adding bells and whistles to the same ole phone. Got to be a lot of mark up.
Dying for a cell phone.
Teen plummets to her death trying to retrieve her cellphone
A Turkish teen fell four stories to her death Oct. 12 after dropping her cellphone and losing her footing when she tried to grab it, according to local reports.
www.foxnews.com
That is a healthy margin... Unsure if I will ever need anything other than my old flip phone.
Yeah. My grandfather ~90 y/o uses a flip phone. No other need.
When I heard that I figured we would go for another dive but it did not happen.
The wheels are turning slow... The continuing dive will go deep into 2023... The plan is to run the peasants out of money.
The dive we are in now has been going on for 12 months.
SPX
I was about to pull the lever for cash to go from broker holdings/stable NAV funds into equities. But then I remembered, layoffs are just starting. Maybe after Q4 I’ll pull the levers.
No worries... You have plenty of time to make that call... These markets look like a slow motion train wreck....
But, as always, someone is going to chime in and brag about how much money they made this year on some unknown stock.
i pulled in june but felt a tinge recently, like i could have taken advantage...but i think that is shortsighted.
certainly there are some safer bets and maybe even opportunities, but they are mostly immoral, like making money from pot.
certainly there are some safer bets and maybe even opportunities, but they are mostly immoral, like making money from pot.
Pot is turning into a huge bust, both locally and nationally. Too many players and too much money poured into the market chasing "sure bets" and it's turned into a race to the bottom.
I'm sure there will eventually be a turnaround, but for now I'm sitting back and LMAO.
Seems to me that there's still another leg down on both corporate earnings (broader market, not just tech companies) and PE multipliers.
They have a good product and its easy to install and monitor.
We have switched from the major UPS makers to Enphase controller/batteries with solar where we have the right roof - for our field sites.
I think Intel has had their hay day. I was building fabs for them when they moved on to the Ronler Acres Campus.... Over the years they began to bring in Green Card workers from India... As time went on they began to offer the old white folks some pretty good retirement perks to "Early Out".... About that time the Green Cards had been there long enough to start to move into supervision. As different teams got a new Supervisor from India the moral went down. Many instances of a male supervisor from India berating a woman on his team to the point they left at the end of the shift and were crying all the way to the parking lot... That did not go over well with the husband... Connect the dots. Google up some Intel articles and note that the Campus # 1 honcho is from India.... Some of the last lay off's were sent in an inner office email and they basically said.... You can voluntarily take this severance package or you can continue to work and risk getting a lay off with no perks at all.
Craig Barrett (ex - CEO Intel) played his cards right when he parted ways with Intel. The end of an era. Moved to Montana and the CB Ranch.
Founded by two really sharp white guys..... 50+ years later operated by people from India...... How's that work out ?
https://www.intel.com/content/www/us/en/history/virtual-vault/articles/intels-founding.html
Triple Creek Ranch | About Us
An oasis of luxury in the Montana wilderness. Triple Creek Ranch is an intimate, luxury ranch resort designed for adults. Situated among the towering pines on the southern side of Trapper Peak, the highest mountain in the Bitterroot Mountain Range of Western Montana, this unforgettable retreat...www.triplecreekranch.com
Our best new hires have come from Tier 2 rural colleges. 20 new grads this year alone.
Lots of new fabs going in in the USA.
U.S. Semiconductor Renaissance: All the Upcoming Fabs
Everything we know about new chip manufacturing facilities in America.
Well... let's just post it all
Firms that have announced layoffs in October:
- Nebraska-based e-commerce platform Spreetail has laid off an unspecified number of workers for at least the second time since August, according to one LinkedIn member.
- Mindbody, a Central Coast-based software company, is cutting jobs for the second time in two years.
- Swiss banking giant Credit Suisse is planning to cut about 9,000 positions over the next three years, after reporting a $4 billion net loss in the third quarter, according to The Wall Street Journal.
- Autonomous vehicle startup Argo AI is shutting down operations, impacting roughly 2,000 workers.
- Real-estate platform Zillow cut 300 jobs in its second round of layoffs this year.
- Database management giant Oracle is "quietly" letting go of employees for the second time since August, according to Business Insider.
- Cybersecurity startup Snyk cut 14% of its workforce, about 200 jobs.
- Mental health startup Cerebral laid off 20% of its staff in a major restructuring.
- Dutch technology giant Philips is cutting about 4,000 jobs — 5% of its global workforce — after five consecutive quarters of declining sales.
- Philadelphia-based delivery startup Gopuff let go of as many as 250 workers in its third round of cuts this year, according to Bloomberg.
- Boston internet provider startup Starry announced the layoffs of roughly half its staff, including 175 workers in Massachusetts.
- LinkedIn members are sharing about a second round of layoffs at Sendoso, a direct mail and gifting platform, since the beginning of June.
- LinkedIn members also have shared about being let go at Khoros, an Austin, Texas-based community management platform, and Careerbuilder, a Chicago-based employment website.
- Microsoft, LinkedIn's parent company, let go of about 1,000 employees across multiple divisions, Axios reported.
- News aggregator Flipboard will lay off 21% of its staff (24 employees), according to an exclusive from Axios.
- Computer software company and maker of SurveyMonkey Momentive.ai announced an unspecified number of job cuts in a post on LinkedIn.
- Video game publisher Take-Two is closing its studio in New York City, resulting in 65 layoffs, Bloomberg reported.
- Cloud tech giant Oracle let go of 201 employees in its Redwood City, California, office.
- Customer relationship management platform Salesforce cut an unspecified number of jobs, according to Protocol.
- Weight-loss app Noom laid off employees for the second time this year, cutting about 500 jobs, the majority in coaching.
- Media giant Gannett is cutting costs by having employees take a week of compulsory unpaid leave, offering voluntary buyouts and temporarily suspending 401(k) contribution matches.
- Brex, a corporate spend-management startup, laid off 136 people (11% of its staff), TechCrunch reported. The company was valued at $12.3 billion in January.
- MX employees have taken to LinkedIn to share about the banking software company letting go of an undisclosed number of staff.
- Chipmaking giant Intel is planning thousands of job cuts, Bloomberg reports, as sales of personal computers continue to plummet.
- Warner Brothers Discovery laid off more than 80 employees, and said those were included in 125 open positions that won't be filled.
- General Electric is slashing “hundreds of jobs” at its onshore wind-turbine unit in the U.S., according to anonymous sources.
- Peloton is cutting staff for the fourth time this year, this latest round affecting about 500 employees, or 12% of its workforce.
- JBS Foods is closing the Denver factory of plant-based meat startup Planterra Foods, which will result in about 121 layoffs.
High-profile firms that cut staff in September include:
- San Francisco-based digital document signing platform DocuSign cut 9% of staff, about 670 employees.
- Wells Fargo laid off 36 workers, and has cut more than 400 jobs in its home-mortgage division in central Iowa since April.
- Gap eliminated 500 corporate positions.
- Real-estate brokerage Compass announced its second round of cuts in three months.
- Cloud communications platform Twilio laid off about 850 employees in a cost-cutting move.
- Warner Bros. Discovery let go of about 100 employees, mostly in its ad sales unit.
Margins are being hit by inflation and lead times.
The question being asked and answered is:
1. How do we reduce overhead but retain capacity to deliver?
2. What are the low margin projects within the operating units and who on those is not delivering?
3. Who are the low performers in general.
Next set of questions will be:
1. Can we work more hours?
Long ago, one of the very successful business leaders wrote a short article and the jest of it was "Building cars is for developing countries".... One day I will find the original quote so I can give him credit.Lots of new fabs going in in the USA.
U.S. Semiconductor Renaissance: All the Upcoming Fabs
Everything we know about new chip manufacturing facilities in America.www.tomshardware.com
Manufacturing computer chips is for developing countries.
America has come full circle. We raised and educated the smartest and most driven Entrepreneur's and engineers in in the history of the world and were the world leader.
Here we are..... The Model T was introduced to the world in 1908.
114 years later America has reinvented building a car as the greatest thing since sliced bread.
The Intel 4004 was the world's first microprocessor—a complete general-purpose CPU on a single chip. Released in March 1971
Here we are.... 51 years later all excited about building Fab's to make computer chips....
I can only hope an American will invent / produce a concept that will replace the battery.
Total nonfarm payroll employment increased by 261,000 in October. Monthly job growth has averaged
407,000 thus far in 2022, compared with 562,000 per month in 2021. In October, notable job gains
occurred in health care, professional and technical services, and manufacturing.
In October, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents,
or 0.4 percent, to $32.58. Over the past 12 months, average hourly earnings have increased by
4.7 percent. In October, average hourly earnings of private-sector production and nonsupervisory
employees rose by 9 cents, or 0.3 percent, to $27.86.
75bps coming next month unless CPI report is good.
407,000 thus far in 2022, compared with 562,000 per month in 2021. In October, notable job gains
occurred in health care, professional and technical services, and manufacturing.
In October, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents,
or 0.4 percent, to $32.58. Over the past 12 months, average hourly earnings have increased by
4.7 percent. In October, average hourly earnings of private-sector production and nonsupervisory
employees rose by 9 cents, or 0.3 percent, to $27.86.
75bps coming next month unless CPI report is good.
For people, companies, and governments that want/need to borrow cheap money, it's bad. For people that desperately want the stick market to go up and up forever and ever, it's bad. For the working man, it's good in the short term, and TBD after that.
Friend sent this to me. Been around long enough to see where we are headed and getting my ducks lined up. 2023 is going to be a shit show.
Subject: FW: The Ross Rant
As usual, the Street had not listened to what Powell has been consistently saying for months, that the Fed will keep raising until inflation is back to 2%, and that stopping inflation is their only goal right now. As I watched the presser on Wednesday, and the movement of the market as he spoke, it was clear the Street was still not paying attention carefully even as he was repeating they will keep raising. It was not until he finished that traders woke up to what he really had said, and the market dropped 500. The Fed is not stopping until inflation is back down a lot from here, and stopping inflation is the key driver of their actions, even if it means considerably more unemployment. Expect the Fed to go at least 50 in December, and very possibly another 75, and then 50 in January, and after that maybe 25 for several more months. Traders are living in dreamland if they really think the Fed is going to pivot anytime soon. They will stay the course, the stock market topped out this week, and it is headed back down to 3,300 or maybe 3,000 on the SPX. FF will get to 5%, and maybe a tiny bit more, and the ten year will get to 4.5% with the two year to 4.75%. The Street is missing what is happening, as usual. This is a replay of 2008 in that the Street refuses to believe what is really happening because it does not fit what they want. Services costs continue to rise as wages continue to rise more than they had been. Services are 70% of the CPI, so until unemployment increases, and wages slow, inflation will remain too high.
The savings rate is now 3.1%, the lowest since the forties. Clearly consumers do not now have the extra cash to save from their paychecks, and are not getting the free Covid money anymore. So if you take the big jump in credit card use, and the huge, near historic drop in savings rate, you can conclude, consumers are very stretched, which is consistent with reports that 65% are now living paycheck to paycheck and are not flush as Moynihan of B of A claims. There is a disconnect between the people who say consumers are in good shape, and those people living on the edge now. And the layoffs are just beginning, and inflation is still around 8%, but wages are only up around 5%, and rising. Anyone other than Biden can get that math. Talking heads on TV are not understanding what is really happening, and those who say inflation is now declining a lot, and the Fed is going to slow or stop soon, are wrong. Job numbers may stay decent for a while, but don’t be mislead, labor participation has not moved all year from its very low level.. It is not the start of a long term rally, but just a classic bear bounce. Good time to sell some more.
As the cold settles in, and heating oil and utility bills mount up, consumers will be pressed a lot further. It is very likely this week was the top of this latest rally before the market heads back to 3,300 or maybe even 3,000. Maybe as the Republicans get control of the senate, the rally lasts a little longer, but when Q4 earnings come out, and the Fed raises 50, or maybe even 75 in Dec, and inflation is still at 7.5%+ in December, then the market will return to its downward spiral. There will be a major black swan in the finance arena, or from Russia, in the next few of months, and then we will see the market go further down. We are not at the bottom, so don’t rush in unless you just want to trade in the very short term. Just be patient. My energy portfolio is up over 20% all in returns, and I am staying in. More big dividends ahead. Even if the Republicans can force through a lifting of all the regs and restraints on oil production, very unlikely, it will take time to do that, and then it takes 6 months at least for the oil producers to fully ramp back up, and that assumes they can find the workers and the parts they need which they cannot do easily. Oil and gas will remain in short supply for a long time. They need to put back over 300 million barrels into the SPR. That alone will keep prices up despite Biden claiming he is going to buy oil at $70. The Saudis will just reduce production further to force Brent prices up over $90.
Wheat prices shot up 6% this week, but settled back a bit. Corn and sunflower oil are back in decent supply. Putin seems to be striking out in any way he can to destroy and disrupt since he is losing the war itself, so he might stop the ships again. His new conscripts are getting chewed up and sent home in body bags, which is going to make the Russian people much more against the war than had been the case. There are several different people maneuvering to take Putin’s place, but nobody is going to make a near term move. According to the Ukrainians, a very unreliable source, over 70,000 Russian soldiers have died, which would mean another 150,000 might have been wounded or captured using the standard 3 wounded for one dead ratio. Independent sources say the number is a lot lower, but still unsustainably high for the Russians to succeed in the invasion. It is unknown how many fully functional tanks he really has left, or how many fully trained tank crews. As a result he has to resort to missiles and drones, and we don’t know how many of those he has, so he will do whatever he can to cause other problems and shutting off food is one way. Result, inflation is not going away quickly due to food prices and diesel shortages, on top of wage pressure.
The dollar continues to be too high, pressuring less developed nations to the point that there will be a currency and inflation crisis soon. The Yuan has declined 11% this year. The lockdowns continue. There is no way to know what is the real GDP of China. In addition, China has loans out to numerous countries for infrastructure projects. China does not cooperate in loan workouts with the rest of the world, so it is unknown how some of these defaulting nations are going to get out of the mess. The Yen is also down considerably. Argentina again is one of the big problems as usual. The longer and worse this gets, the worse for deeply indebted nations whose capital is flooding into the US for safety. This is not going to go well.
European growth last quarter was better than expected by a little, but all the EU officials are warning the worst is coming soon. Germany has told its manufacturers that its sales to China and other major customers will now change and be much worse. A large trade delegation from Germany is in China this week to try to reinvigorate exports despite everyone else working on pulling out of China. There is a widespread push to move production and operations out of China by international companies due to the lockdowns and political uncertainties. The entire trade pattern is changing, and Germany will come out worse. The Germans have also let it be known that it is not going to bail out Italy again. Things in Europe are going to be ugly in 2023. You do not want to invest there.
The Germans were under intense pressure from protestors to reopen the pipeline. The Brits and US had to prevent that. The Russians probably have it right. It is very possible it was the UK that blew the pipeline, but the story that Liz Truss gave it away by texting Blinken is considered by my knowledgeable friends to not be true. The Swedes appear then to have gone out and picked up the evidence and destroyed it so the Russians could not get it. We will now see what Russia does to retaliate. Germany has to be really pissed off at the UK now.
There is a potential major debt crisis brewing. As I have previously mentioned, the US pension funds are losing heavily this year, down 10%-15% on average, with some down 25%They cannot sustain that. It is the government union pension funds that are the problem, not the private companies which switched from defined benefit years ago. There is a increasing shortfall in these government funds that will need to be funded at some point, and that means higher taxes are coming at the local and state level. The shortfalls very possibly will be so large that the federal government may be pushed to fund these shortfalls. States like IL and KY are in major trouble, and in IL they are just making it worse. IL may become unaffordable for companies and upper income residents to live there. It is going to become Detroit with the new criminal law they just passed. The far left are pushing very hard to tax IRAs and other deferred tax plans. They will not succeed so long as Republicans can stop that, but it may happen in state taxation like in IL. This is going to get very nasty over the next couple of years. In time, there will be no companies nor rich people left in IL. In addition, rising rates will cause some junk bonds to default. Stay away from any investment in companies that do not have good cash liquidity, and short term debt maturities. 2023 is going to have a lot of pressures on companies.
Cap gains constitute around 50% of CA state tax revenue. Not this year, and not anymore, as companies continue to move out in growing numbers. CA lived off Silicon Valley huge profits, but now that Meta is crashing and others, CA has a major revenue problem on top of all the other self-inflicted problems it has. Why anyone with money lives in CA anymore is a mystery. The US deficit is now so large that if rates continue to increase over the long term, which they will, then financing the deficit becomes unsustainable. If Treasuries require a 5% rate to get sold, then when compared to where rates were one year ago, there is no room in the budget for increasing defense the way it needs. We have a real problem at the national level. We will see what the Republicans do once they take over in January, but we can’t continue as we have been now that rates are rising.
The geopolitical risk is now so high that capital continues to flow into the US. This has kept US Treasury rates lower than they should be at this point. This is especially true of the 2 year. The 2 year will rise further, but is a good place to park cash once it rises a little further. There is likely a flood of cash that will come in when it reaches 4.75%. The problem is the dollar will continue to rise as more capital comes here, and that puts even more pressure on foreign debt denominated in US dollars.
Google may be charged as making in-kind contributions to Democrats by pushing go vote messages to people identified as Democrat. That is illegal. The DOJ will not touch it but Congress might. The election is very likely to be a pleasant surprise for Republicans and the pollsters will be wrong again. R’s take PA, AZ, NV and OH and maybe even GA. Kemp is going to crush Abrams, and she will claim the new voting law suppressed her voters. The media will make the same claim as will Sonnenfeld, who created the All Star boycott by big companies about the voting law. It is now clear the vote is bigger than ever and nobody is suppressed. Sonnenfeld is now claiming all the oil experts are wrong and there is no diesel shortage. I can assure you he is wrong, and there is a major diesel supply problem. I asked Sonnenfeld to apologize for his misinformation that created the boycott. I am still waiting for he and the CEOs to apologize for what they did.
Subject: FW: The Ross Rant
As usual, the Street had not listened to what Powell has been consistently saying for months, that the Fed will keep raising until inflation is back to 2%, and that stopping inflation is their only goal right now. As I watched the presser on Wednesday, and the movement of the market as he spoke, it was clear the Street was still not paying attention carefully even as he was repeating they will keep raising. It was not until he finished that traders woke up to what he really had said, and the market dropped 500. The Fed is not stopping until inflation is back down a lot from here, and stopping inflation is the key driver of their actions, even if it means considerably more unemployment. Expect the Fed to go at least 50 in December, and very possibly another 75, and then 50 in January, and after that maybe 25 for several more months. Traders are living in dreamland if they really think the Fed is going to pivot anytime soon. They will stay the course, the stock market topped out this week, and it is headed back down to 3,300 or maybe 3,000 on the SPX. FF will get to 5%, and maybe a tiny bit more, and the ten year will get to 4.5% with the two year to 4.75%. The Street is missing what is happening, as usual. This is a replay of 2008 in that the Street refuses to believe what is really happening because it does not fit what they want. Services costs continue to rise as wages continue to rise more than they had been. Services are 70% of the CPI, so until unemployment increases, and wages slow, inflation will remain too high.
The savings rate is now 3.1%, the lowest since the forties. Clearly consumers do not now have the extra cash to save from their paychecks, and are not getting the free Covid money anymore. So if you take the big jump in credit card use, and the huge, near historic drop in savings rate, you can conclude, consumers are very stretched, which is consistent with reports that 65% are now living paycheck to paycheck and are not flush as Moynihan of B of A claims. There is a disconnect between the people who say consumers are in good shape, and those people living on the edge now. And the layoffs are just beginning, and inflation is still around 8%, but wages are only up around 5%, and rising. Anyone other than Biden can get that math. Talking heads on TV are not understanding what is really happening, and those who say inflation is now declining a lot, and the Fed is going to slow or stop soon, are wrong. Job numbers may stay decent for a while, but don’t be mislead, labor participation has not moved all year from its very low level.. It is not the start of a long term rally, but just a classic bear bounce. Good time to sell some more.
As the cold settles in, and heating oil and utility bills mount up, consumers will be pressed a lot further. It is very likely this week was the top of this latest rally before the market heads back to 3,300 or maybe even 3,000. Maybe as the Republicans get control of the senate, the rally lasts a little longer, but when Q4 earnings come out, and the Fed raises 50, or maybe even 75 in Dec, and inflation is still at 7.5%+ in December, then the market will return to its downward spiral. There will be a major black swan in the finance arena, or from Russia, in the next few of months, and then we will see the market go further down. We are not at the bottom, so don’t rush in unless you just want to trade in the very short term. Just be patient. My energy portfolio is up over 20% all in returns, and I am staying in. More big dividends ahead. Even if the Republicans can force through a lifting of all the regs and restraints on oil production, very unlikely, it will take time to do that, and then it takes 6 months at least for the oil producers to fully ramp back up, and that assumes they can find the workers and the parts they need which they cannot do easily. Oil and gas will remain in short supply for a long time. They need to put back over 300 million barrels into the SPR. That alone will keep prices up despite Biden claiming he is going to buy oil at $70. The Saudis will just reduce production further to force Brent prices up over $90.
Wheat prices shot up 6% this week, but settled back a bit. Corn and sunflower oil are back in decent supply. Putin seems to be striking out in any way he can to destroy and disrupt since he is losing the war itself, so he might stop the ships again. His new conscripts are getting chewed up and sent home in body bags, which is going to make the Russian people much more against the war than had been the case. There are several different people maneuvering to take Putin’s place, but nobody is going to make a near term move. According to the Ukrainians, a very unreliable source, over 70,000 Russian soldiers have died, which would mean another 150,000 might have been wounded or captured using the standard 3 wounded for one dead ratio. Independent sources say the number is a lot lower, but still unsustainably high for the Russians to succeed in the invasion. It is unknown how many fully functional tanks he really has left, or how many fully trained tank crews. As a result he has to resort to missiles and drones, and we don’t know how many of those he has, so he will do whatever he can to cause other problems and shutting off food is one way. Result, inflation is not going away quickly due to food prices and diesel shortages, on top of wage pressure.
The dollar continues to be too high, pressuring less developed nations to the point that there will be a currency and inflation crisis soon. The Yuan has declined 11% this year. The lockdowns continue. There is no way to know what is the real GDP of China. In addition, China has loans out to numerous countries for infrastructure projects. China does not cooperate in loan workouts with the rest of the world, so it is unknown how some of these defaulting nations are going to get out of the mess. The Yen is also down considerably. Argentina again is one of the big problems as usual. The longer and worse this gets, the worse for deeply indebted nations whose capital is flooding into the US for safety. This is not going to go well.
European growth last quarter was better than expected by a little, but all the EU officials are warning the worst is coming soon. Germany has told its manufacturers that its sales to China and other major customers will now change and be much worse. A large trade delegation from Germany is in China this week to try to reinvigorate exports despite everyone else working on pulling out of China. There is a widespread push to move production and operations out of China by international companies due to the lockdowns and political uncertainties. The entire trade pattern is changing, and Germany will come out worse. The Germans have also let it be known that it is not going to bail out Italy again. Things in Europe are going to be ugly in 2023. You do not want to invest there.
The Germans were under intense pressure from protestors to reopen the pipeline. The Brits and US had to prevent that. The Russians probably have it right. It is very possible it was the UK that blew the pipeline, but the story that Liz Truss gave it away by texting Blinken is considered by my knowledgeable friends to not be true. The Swedes appear then to have gone out and picked up the evidence and destroyed it so the Russians could not get it. We will now see what Russia does to retaliate. Germany has to be really pissed off at the UK now.
There is a potential major debt crisis brewing. As I have previously mentioned, the US pension funds are losing heavily this year, down 10%-15% on average, with some down 25%They cannot sustain that. It is the government union pension funds that are the problem, not the private companies which switched from defined benefit years ago. There is a increasing shortfall in these government funds that will need to be funded at some point, and that means higher taxes are coming at the local and state level. The shortfalls very possibly will be so large that the federal government may be pushed to fund these shortfalls. States like IL and KY are in major trouble, and in IL they are just making it worse. IL may become unaffordable for companies and upper income residents to live there. It is going to become Detroit with the new criminal law they just passed. The far left are pushing very hard to tax IRAs and other deferred tax plans. They will not succeed so long as Republicans can stop that, but it may happen in state taxation like in IL. This is going to get very nasty over the next couple of years. In time, there will be no companies nor rich people left in IL. In addition, rising rates will cause some junk bonds to default. Stay away from any investment in companies that do not have good cash liquidity, and short term debt maturities. 2023 is going to have a lot of pressures on companies.
Cap gains constitute around 50% of CA state tax revenue. Not this year, and not anymore, as companies continue to move out in growing numbers. CA lived off Silicon Valley huge profits, but now that Meta is crashing and others, CA has a major revenue problem on top of all the other self-inflicted problems it has. Why anyone with money lives in CA anymore is a mystery. The US deficit is now so large that if rates continue to increase over the long term, which they will, then financing the deficit becomes unsustainable. If Treasuries require a 5% rate to get sold, then when compared to where rates were one year ago, there is no room in the budget for increasing defense the way it needs. We have a real problem at the national level. We will see what the Republicans do once they take over in January, but we can’t continue as we have been now that rates are rising.
The geopolitical risk is now so high that capital continues to flow into the US. This has kept US Treasury rates lower than they should be at this point. This is especially true of the 2 year. The 2 year will rise further, but is a good place to park cash once it rises a little further. There is likely a flood of cash that will come in when it reaches 4.75%. The problem is the dollar will continue to rise as more capital comes here, and that puts even more pressure on foreign debt denominated in US dollars.
Google may be charged as making in-kind contributions to Democrats by pushing go vote messages to people identified as Democrat. That is illegal. The DOJ will not touch it but Congress might. The election is very likely to be a pleasant surprise for Republicans and the pollsters will be wrong again. R’s take PA, AZ, NV and OH and maybe even GA. Kemp is going to crush Abrams, and she will claim the new voting law suppressed her voters. The media will make the same claim as will Sonnenfeld, who created the All Star boycott by big companies about the voting law. It is now clear the vote is bigger than ever and nobody is suppressed. Sonnenfeld is now claiming all the oil experts are wrong and there is no diesel shortage. I can assure you he is wrong, and there is a major diesel supply problem. I asked Sonnenfeld to apologize for his misinformation that created the boycott. I am still waiting for he and the CEOs to apologize for what they did.
I am in the belief that we need demand destruction. We need unemployment to tick up.
The "up tic in unemployment" needs to be in the workers that are making a 6 figure salary... America has consistently moved to unemploy the minimum wage workers.... Now, the result is people who were working for minimum wages have figured out they are better off to simply not work and enjoy the luxuries of the government "safety nets" like food, housing, medical care, transportation, education / training, free ISP hook up and a host of other things.
Government Benefits | USAGov
Get information on government benefits that may help you pay for food, housing, health care, and other basic living expenses. Find out about eligibility requirements for programs like food stamps, welfare, and Medicaid, and how to apply for them.
www.usa.gov
