The Dollar Is Extremely Strong, Pushing Down the World

[Ricboff]

from the article , opening paragraph in case no one wants to click

'After two decades of uninterrupted borrowing – including three years in which deficits surpassed 10 percent of the economy – the U.S. national debt is higher as a share of Gross Domestic Product (GDP) than at any time since World War II and is on course to breach that record. Yet policymakers have done little to contain our $24 trillion national debt, and most legislation has added to it in recent years. Additionally, there have been numerous claims that “debt doesn’t matter” and the United States should borrow even more than the $16 trillion it is projected to borrow over the coming decade. These claims are problematic and concerning.'


anddddddddd

Excessively high debt levels are damaging for many reasons. High debt levels:

• Threaten economic vitality: The recent surge in deficit spending has contributed to rapid near-term inflation and over time will result in higher interest rates, slower economic and income growth, and a small but increased risk of fiscal crisis.
• Place a strain on the budget: The federal government currently spends as much on interest payments as it does on most of our safety net programs combined, and interest is projected to become the largest government expenditure within the next 30 years. As interest and mandatory spending dominate a greater share of the budget, our government’s ability to invest in new priorities will be limited.
• Create geopolitical challenges and risks: With large portions of our debt held by foreign investors, a substantial share of our national income goes abroad. We are consequentially left with fewer financial tools to manage conflicts with other countries when they have increased leverage over our economy.
• Make responding to new emergencies more challenging: High deficits and debt – particularly if coupled with high inflation or interest rates – make it harder to borrow in response to a recession, pandemic, war, or other legitimate emergency.
• Are unfair to younger and future generations: The federal budget already favors consumption on seniors over investment in children. Failing to address rising debt also leaves future generations with an additional fiscal and economic burden.

Given these very real threats and risks, policymakers should pursue the appropriate tax and spending adjustments to bring the fiscal situation under control.

.........................

there r no more fiscal conservatives. Am i wrong?

the good thing? a toxic political environment . Blame the other side

 

[Bozzie]

at say 10% rates? dunno

see chart/fig #3...what would that figure look like at 10%?

Risks and Threats from Deficits and Debt | Committee for a Responsible Federal Budget

After two decades of uninterrupted borrowing – including three years in which deficits surpassed 10 percent of the economy – the U.S.

www.crfb.org

Chart three...amazing..the interest alone...astronomical @ 10%

 

[Bozzie]

Great sales on home appliances right now...The glut in some goods is real.
Maybe the only thing we didn't get crushed on during the longest remodel ever on the Oregon coast.

Consumer spending continues to shift from goods to services.​

The second consecutive quarterly decline in the gross domestic product was made possible, in part, by the anemic level of consumer spending.

“Even though we’ve been pleased with the resilience of consumers, it’s been a sharp slowdown,” said Diane Swonk, chief economist for KPMG.

Consumer spending grew by 0.3 percent, or 1 percent on an annualized basis, a rate that Ms. Swonk called “a crawl.” Over the last three quarters, the increase had averaged 2.1 percent on an annualized basis.

The figures are adjusted for both seasonal factors and inflation.

 

[Willie99]

IDK, I think it's pretty hard to look at the spending habits and the policy positions of the most recent administrations and NOT see a difference in spending

Seriously?

the world just keeps getting more and more bizarre

 

[Ricboff]

Chart three...amazing..the interest alone...astronomical @ 10

LOL, cryin bro!!!!!!!.... As per Powel ; 'we r reacting to the data'. LMFAO. No negative rates ?

kudos to you--buy land and reap the rewards from it.


folks r dumber than a box of rocks and eat the party rhetoric blindly....like kids in a candy store.

 

[Willie99]

Ah yes, no place has more worldly and sophisticated scholars than theRx

They all rock, as they attack everyone else's unknown sources. But whatever knowledge base someone may have, they're all lemmings

I love this bar

 

[Ricboff]

hit a nerve , lol, there's the Pot calling the kettle black. ddint like what was written Giuseppe ?

 

[Ricboff]

candle on the monthly UUP is going as planned. Front running is for the highly risk tolerant :_


even a blind squirrel finds a nut once and and a while ...SOOO many different ways to have played this (dbc, eem , gld ,uso, short the usd, qqq...etc) . Keep in mind this is the MONTHLY time frame. The candle lookin' like she will close as hoped for --loner term , does not bode well for the USD. Keep in mind, Aug could see price action go half up the July candle -however -the anatomy highly suggest further downward action

the candles r the graphic depiction of investor sentiment.

 

[Bozzie]

IDK, I think it's pretty hard to look at the spending habits and the policy positions of the most recent administrations and NOT see a difference in spending

Seriously?

the world just keeps getting more and more bizarre

I'm just trying to save a little on appliances ...

 

[Bozzie]

Ah yes, no place has more worldly and sophisticated scholars than theRx

They all rock, as they attack everyone else's unknown sources. But whatever knowledge base someone may have, they're all lemmings

I love this bar

Cosmos all around...99

 

[Bozzie]

3.5 by EO December

 

[PatsFan1283]

Chevron, Exxon post record quarterly profits as commodity prices boom

Chevron and Exxon earned record profits during the second quarter of 2022.

www.cnbc.com

all you need

 

[Ricboff]

will be interesting to see how it all plays out. The catalyst for a bear market arrived-- Central bank reversing policy. Spy was done 20% and they didnt blink , qqq's are still down 20%. Can get violent bullish moves during a bear market (as we got for July) put i dont believe anything is in the clear. I cant see inflation below 5% for anytime soon!.....but i do think if growth prospects really take a turn for the worse, Powell relents . The big question is have we seen the lows for year? big support for the qqq will be $308. Marvelous candle just formed on the monthly qqq's. Aug action 'should' not take it more than half-way down that candle . And waht is really good? the candle that formed on UUP for July, ., um, red flag i would not be a USD bull for the mid-term horizon (3-6mth)

This talk of recession is nuts, who cares, just semantics at this point--for fucks sake inflation is at 40 yr high. Many will and ARE being hit hard, just to pay bills.

XLE had a wonderful pullback, deep retrace to its 200 SMA , 27% haircut. I thought the 50 SMA would hold--gapped BELOW it, didnt bode well and off to the 200 SMA it went -- held and today re-claimed its 50 SMA. Noticeable gaps on the chart (magnets); above -- at $87, but below there are two ; $75, $69. Closed today at $78. It loses $74? eye to fill the gap at $69 and reverse.

why is clean energy having a strong move?

TAN- (solar) is up 19% for the month, up 9% ytd
ICLN - is now green ytd, up 4%

 

[Bozzie]

Retail’s ‘Dark Side’: As Inventory Piles Up, Liquidation Warehouses Are Busy​

Consumers are buying fewer discretionary goods and returning more. To clear their shelves, retailers are selling to liquidators at steep discounts.

PITTSTON, Pa. — Once upon a time, when parents were scrambling to occupy their children during pandemic lockdowns, bicycles were hard to find. But today, in a giant warehouse in northeastern Pennsylvania, there are shiny new Huffys and Schwinns available at big discounts.
The same goes for patio furniture, garden hoses and portable pizza ovens. There are home spas, Rachael Ray’s nonstick pans and a backyard firepit, which promises to make “memories every day.”
The warehouse is run by Liquidity Services, a company that collects surplus and returned goods from major retailers like Target and Amazon and resells them, often for cents on the dollar. The facility opened last November and is operating at exceptionally high volumes for this time of year.
The warehouse offers a window into a reckoning across the retail industry and the broader economy: After a two-year binge of consumer spending — fueled by government checks and the ease of e-commerce — a nasty hangover is taking hold.
With consumers cutting down on discretionary purchases because of high inflation, retailers are now stuck with more inventory than they need. While overall spending rebounded last month, some major retailers say shoppers are buying less clothing, gardening equipment and electronics and focusing instead on basics like food and gas.

Adding to that glut are all the things people bought during the pandemic — often online — and then returned. In 2021, shoppers returned an average of 16.6 percent of their purchases, up from 10.6 percent in 2020 and more than double the rate in 2019, according to an analysis by the National Retail Federation, a trade group, and Appriss Retail, a software and analytics firm.

Last year’s returns, which retailers are not always able to resell themselves, totaled $761 billion in lost sales. That, the retail federation noted, is more than the annual budget for the U.S. Department of Defense.
It’s becoming clear that retailers badly misjudged supply and demand. Part of their miscalculation was caused by supply chain delays, which prompted companies to secure products far in advance. Then, there is the natural cycle of booms — whether because of optimism or greed, companies rarely pull back before it’s too late.

“It is surprising to me on some level that we saw all that surge of buying activity and we weren’t collectively able to see that it was going to end at some point,” J.D. Daunt, chief commercial officer at Liquidity Services, said in an interview at the Pennsylvania warehouse earlier this month.
“You would think that there would be enough data and enough history to see that a little more clearly,” he added. “But it also suggests that times are changing and they are changing fast and more dramatically.”
Strong consumer spending may have saved the economy from ruin during the pandemic, but it has also led to enormous excess and waste.
Retailers have begun to slash prices on inventory in their stores and online. Last Monday, Walmart issued the industry’s latest warning when it said that its operating profits would drop sharply this year as it cut prices on an oversupply of general merchandise.

Image

The warehouse opened in November and is operating at exceptionally high volumes.

Many companies cannot afford to let discounted items ‌linger on their shelves because they have to make room for new seasonal goods and the necessities that consumers now prefer. While some retailers are discounting the surplus within their stores, many would rather avoid holding big sales themselves for fear of hurting their brands by conditioning buyers to expect big price cuts as the norm. So retailers look to liquidators to do that dirty work.

continued...

 

[Bozzie]

Additionally, industry executives say the glut is so large that some retailers could run out of space to house it all.

“It’s unprecedented,” said Chuck Johnston, a former Walmart executive, who is now chief strategy officer at goTRG, a firm which helps retailers manage returns. “I have never seen the pressure in terms of excess inventory as I am seeing right now.”
So, much of the industry’s flotsam and jetsam washes up in warehouses like this one, located off Interstate 81, a few exits from the President Biden Expressway in Scranton, the president’s hometown.
The giant facility is part of an industrial park that was built above a reclaimed strip mine dating back to when this region was a major coal producer. Today, the local economy is home to dozens of e-commerce warehouses that cover the hilly landscape like giant spaceships, funneling goods to the population centers in and around New York and Philadelphia.
Liquidity Services, a publicly traded company founded in 1999, decided to open its new facility as close as it could to the Scranton area’s major e-commerce warehouses, making it easy for retailers to dispense with their unwanted and returned items.
Even before the inventory glut appeared this spring, returns had been a major problem for retailers. The huge surge in e-commerce sales during the pandemic — increasing more than 40 percent in 2020 from the previous year — has only added to it.
The National Retail Federation and Appriss Retail calculate that more than 10 percent of returns last year involved fraud, including people wearing clothing and then sending it back or stealing goods from stores and returning them with fake receipts. But more fundamentally, industry analysts say the increasing returns reflect consumer expectations that everything can be taken back.
“It’s getting worse and worse,” Mr. Johnston said.
Some of the returns and excess inventory will be donated to charities or returned to the manufacturers. Others get recycled, buried in landfills or burned in incinerators that generate electricity.
Liquidators say they offer a more environmentally responsible option by finding new buyers and markets for unwanted products, both those that were returned and those that were never bought in the first place. “We are reducing the carbon footprint,” said Tony Sciarrotta, executive director of the Reverse Logistics Association, the industry trade group. “But there is still too much going to landfills.”
Retailers will probably receive only a fraction of the items’ original value from the liquidators but it makes more sense to take the losses and move the goods off the store shelves quickly.
Still, liquidation can be a sensitive topic for the big companies that want customers to focus on their “A-goods,” not the failures.
Mr. Sciarrotta calls it “the dark side” of retail.
On a tour through the Pennsylvania warehouse, Mr. Daunt and the warehouse manager, Trevor Morgan, said they were not allowed to discuss where the products originated. But it was not difficult to figure out.
An 85-inch flat-screen TV had an Amazon Prime sticker still on the box. Bathroom vanities came from Home Depot. There was a “home theater” memory foam futon with a built-in cup holder from a Walmart return center.
Many unopened boxes on the warehouse floor carried the familiar bull’s-eye logo of Target. Air fryers, baby strollers and towering stacks of Barbie’s “Dream House,” which features a swimming pool, elevator and a home office. (Even Barbie, it seems, has grown tired of working from home.)

When Target’s sales exploded during the first year of the pandemic, the company was a darling of Wall Street. But in May, the retailer said it was stuck with an oversupply of certain goods and the company’s stock price plummeted nearly 25 percent in one day. Other retailers’ share prices have also fallen.
Target’s stumbles have been an opportunity for people like Walter Crowley.Mr. Crowley regularly rents a U-Haul and drives back and forth to the liquidation warehouse from his home near Binghamton, N.Y.
Mr. Crowley, who turns 54 next month, focuses mostly on discounted home improvement goods, which he resells to local contractors, like multiple pallets of discontinued garage door openers, tiles and flooring.

But on a sweltering day earlier this month, he stood outside the warehouse in his U-Haul loading up on items from Target.

“I saw its stock got tanked,” said Mr. Crowley, a cigarette dangling from his mouth and sweat pouring down his face. “It’s an ugly situation for them.”
Charles Benincasa, 39, is a temporary worker who has had numerous “warehousing” jobs, the most recent at the Chewy pet food distribution center in nearby Wilkes-Barre.
Mr. Benincasa said his friends and family had gotten in the habit of returning many of the goods they buy online. But as he’s watched the boxes pile up in the Liquidity Services warehouse, he worries about the implications for the economy.

“Companies are losing a lot of money,” he said. “There is no free lunch.”

 

[Ricboff]

Oil

click 1D, widescreen, candles ..

Crude Oil WTI Futures Chart - Investing.com

Get instant access to a free live streaming Crude Oil WTI Futures chart.

www.investing.com

check out the monthly, lol . have a look at march's candle

Powell was able to give USO a boost and it filled the gap on the upside (see 4th candle from the right)..but its BACK on the cliff--just look at that. China data was negative earlier in the week adb hammered the fucker.

Crude Oil WTI Futures Chart - Investing.com

Get instant access to a free live streaming Crude Oil WTI Futures chart.

www.investing.com

$84ish if it cant hold

 

[Ricboff]

im neither a bear or a bull. Pure chartist . (Long term, history tends to repeat itself)

Interesting read , one person's opinion. He certainly isnt bullish


Traders expect the U.S. Fed to soften as Chairman Powell suggested they have reached a neutral rate with the last rate increase. The US stock markets started an upward trend after the last 75bp rate increase – expecting the U.S. Fed to move toward a more data-driven rate adjustment.

My research suggests the U.S. Federal Reserve has a much more difficult battle ahead related to inflation, global market concerns, and underlying global monetary function. Simply put, global central banks have printed too much money over the past 7+ years, and the eventual unwinding of this excess capital may take aggressive controls to tame.

REAL ESTATE DATA SHOWS A SUDDEN SHIFT IN FORWARD EXPECTATIONS​

The US housing market is one of the first things I look at in terms of consumer demand, home-building expectations, and overall confidence for consumers to engage in Big Ticket spending. Look at how the US Real Estate sector has changed over the past five years.

The data comparison chart below, originating from September 2017, shows how the US Real Estate sector went from moderately hot in late 2017 to early 2018; stalled from July 2018 to May 2019; then got super-heated in late 2019 as extremely low-interest rates drove buyers into a feeding frenzy.

As the COVID-19 virus initiated the US lockdowns in March/April 2020, you can see the buying frenzy ground to a halt. Between March 2020 and July 2020, Average Days On Market shot up from -8 to +17 (YoY) – showing people stopped buying homes. At this same time, home prices continued to rise, moving from +3.3% to +14% (YoY) by the end of 2020.

The buying frenzy then kicked back into full gear and continued at unimaginable levels throughout 2021 as interest rates stayed near lows and FOMO increased. Over the past 7+ years, the excess capital meant buyers could sell their existing homes, relocate to a cheaper area, avoid COVID risks, and reduce their mortgage costs with almost no risks. This “great relocation” event likely sparked the high inflation/CPI trends we are battling right now.

(Source: Realtor.com)

EXTREME EASY MONETARY POLICIES MAY PROMPT A HARSH U.S. FED ACTION IN THE FUTURE​

Traders expect the U.S. Federal Reserve to softly pivot away from rate increases after reaching a “normal level.” I believe the U.S. Federal Reserve will have to continue aggressively raising rates to battle ongoing inflation and global concerns. I don’t believe traders have even considered what may be necessary to break this cycle – or are simply hoping they never see 14% FFR rates again (like we saw in the 1980s).

The harsh reality is the excess capital floating around the globe has anchored an inflationary trend that may be unstoppable without central banks taking interest rates to extremes. There was only one other period where I see similarities between what is taking place now and the recent past – 1970~2003.

Throughout that span of time, the U.S. Federal Reserve moved away from the Gold Standard and entered an extended period of money creation. This prompted a big increase in CPI and Inflation, leading to extreme FFR rates above 15% in 1982 to battle inflationary trends (see the charts below). CPI continued above 5% for another 15+ years after 1982 – finally bottoming in 2010.

What if the extended money printing that started after the 2007-08 Global Financial Crisis sparked another excess capital/inflation phase just like the 1970 to 2003 phase? What’s next?

REAL ESTATE WILL BE THE CANARY IN THE MINE IF FED STAYS AGGRESSIVE​

I believe Real Estate could see an aggressive unwinding in valuation and future expectations if the U.S. Fed continues to raise rates over the next 12+ months aggressively. Once mortgage rates reach 8% or higher, home buyers and traders are suddenly going to question, “where is this going?” and “where will it end?”.

The Fed may have to break a few things to battle inflation trends. This same thing happened in the early 1980s, and real asset growth didn’t start to accelerate until the last 1990s (amid the DOT COM Bubble).

REAL ESTATE & FINANCIALS MAY SHOW THE FIRST SIGNS OF STRESS​

I believe IYR and XLF are excellent early warning ETFs for a sudden shift in consumer/economic activity related to future Fed rate decisions. Once the Fed moves away from expected rates/trends, the Real Estate and Financial sectors will begin to react to economic contractions and weakening consumer demand/defaults.

This potential trend is still very early in the longer-term cycle, but I believe traders are falsely focused on a possible U.S. Fed pivot, thinking the Fed will shift away from continued rate increases. I believe the U.S. Federal Reserve must raise rates above 5.5% FFR in order to start breaking inflationary trends. That means FFR rates need to rise 125% or more from current levels (250 bp+) – which may be higher.

 

[Bozzie]

Real-estate here is still a cash game...Inventory is way behind demand.
We are looking for another property..not too fazed by the rates...problem is the competition.
it's a have and have not world anymore sadly. The young and middle class are priced out here no matter the rates.

 

[Ricboff]

Real-estate here is still a cash game...Inventory is way behind demand.
We are looking for another property..not too fazed by the rates...problem is the competition.
it's a have and have not world anymore sadly. The young and middle class are priced out here no matter the rates.

agreed, N America ,mnay areas rather , is no longer the land of opportunity

real estate took a sad sad turn during covid, imo . A house is shelter, raise a family in. How the fuck can young people buy a house for $800,000- $1,000,000 on combined income of $75,000? Bank of mom and dad need to sign. wtf has happened? Everyone just turned a blind eye. Like no one gives a shit.

In my neck of the woods its become a fuckin joke.

Let me share - im a co-executor of an estate, in the probate process. The diseased is my aunt. Landed immigrant, she was a seamstress. Her husband was a bartender. no kids, crazy savers . Came to Canada to start to new life, opportunity . No post-secondary education. They were able to buy a house, actually bought a second. My uncle passed yrs ago, and my aunt unfortunately got the Big D (dementia, a HORRIFIC disease ), she passed a few mths ago. These folks bought their house at reasonable multiple to income. One house sold for $1.7 mill. lol-guys a nothing special house!! NADA!!!! The second is a corner lot, and needs a shit load of work, actually likely a tear down. This will likely sell for $1.5 mill


one word






KAPUT

 

[Bozzie]

agreed, N America ,mnay areas rather , is no longer the land of opportunity

real estate took a sad sad turn during covid, imo . A house is shelter, raise a family in. How the fuck can young people buy a house for $800,000- $1,000,000 on combined income of $75,000? Bank of mom and dad need to sign. wtf has happened? Everyone just turned a blind eye. Like no one gives a shit.

In my neck of the woods its become a fuckin joke.

Let me share - im a co-executor of an estate, in the probate process. The diseased is my aunt. Landed immigrant, she was a seamstress. Her husband was a bartender. no kids, crazy savers . Came to Canada to start to new life, opportunity . No post-secondary education. They were able to buy a house, actually bought a second. My uncle passed yrs ago, and my aunt unfortunately got the Big D (dementia, a HORRIFIC disease ), she passed a few mths ago. These folks bought their house at reasonable multiple to income. One house sold for $1.7 mill. lol-guys a nothing special house!! NADA!!!! The second is a corner lot, and needs a shit load of work, actually likely a tear down. This will likely sell for $1.5 mill


one word






KAPUT

It's absolutely nuts... Feel lucky to be on the other side of finding a career, accumulating assists ect...I don't see how middle class families pull off the American dream anymore , with the price of educating kids, home ownership, taxes and basic everyday necessities ...stresses me out even thinking about it, real bummer watching my nephews fight the fight in todays world.