Weekly Review

A weekly review that is not really weekly, nor is it much in the way of a review. I have been sitting on my hands watching a wildly overvalued market drift sideways with its price action for most of the summer. My last post on the topic is easy enough to find because I have not written much else lately that I would consider worth sharing. Here is the snapshot:


I’ll describe the action since my last update succinctly as possible. The S&P500 is higher by a whopping 18 points, or 0.83%. The risk to the downside has been tremendous while earnings and economic indicators have been continuing to decline and the stock market is higher by less than 1% since July 25th.

There’s your update.
Stay safe out there.

Weekly Review, Post-Brexit

I just realized that it has been a month since I posted anything to this blog, which means that it has been a month since Brexit. The world was coming to an end, at least in the European Union, and we were on tenterhooks awaiting to see how the fallout would affect the United States and the rest of the developed world. If you look at the stock market for your barometer then all is well. Here is what has happened since:


Meanwhile, the market is still wildly overvalued on a fundamental basis and I will look for opportunities to profit like the capitalist pig dog that I am regardless of what the market does.

Cheers, and stay safe out there.

Weekly Review, Brexit

A wild ride to nowhere, that’s what this year has given us. Here is the picture of the S&P500 year-to-date:


From the previous weekend to Thursday afternoon the stock market was pricing in the wrong outcome of the British referendum to leave the European Union. Last Thursday night, our time, reality started to set in and the futures market started collapsing. I watched the S&P500 futures contract, the e-mini, go from a high of 2119.50 to lock-limit down at 1999 shortly after midnight when trading was halted. As the retail trading hours approached the S&P500 rallied but then the rally faded late in the afternoon to finish -3.60% on the day and sending the price into negative territory year-to-date.


I saw the arguments from both sides of the referendum before the vote. I think the hatred that is being directed toward the majority who voted in favor of leaving is unwarranted and mean-spirited, especially when it comes from voices here in the United States where we will feel little-to-no impact from that vote; except the British Pound was devalued in the aftermath so traveling to London just got more affordable for almost everyone else on the planet who has ever wanted to travel there.

I also think the main reason that most of that hatred exists is based on one thing and one thing only, that the “leave” crowd did want more control over immigrants making their way into the United Kingdom. I was only focused on the economics of the situation. Getting worked up about it makes about as much sense as someone from another country being upset about who we elect here in the United States. Speaking of meddling in other’s affairs, have a look at this picture that landed in my twitter stream this morning (from @zerohedge):

obama tells brits what to do

I remember watching President Obama’s speech to the Brits and also the CEO of JP Morgan Chase, Jamie Dimon, having some sort of town hall discussion with the Brits, and my thought at the time was, “If the president of another country and a ceo of one of its largest investment banks was trying to convince me which way to vote, I’d tell them to fvck off.” That chart is evidence that many Brits grew just suspicious enough about Obama’s and Dimon’s intentions and what it meant for them after they received the sales pitch. Nice work, gentlemen, you may have helped convince the Brits to do the right thing, even if you think it happened for the wrong reasons.

The most disgusting thing about Mr. Obama’s speech was his idea that the Brits would have to stand “in the back of the line” to trade with the United States if they passed the referendum, as if national trade deals are the be-all, end-all of trading with another country. Nonsense. Countries may trade with each other but businesses and consumers make most of those transactions. Now we should not be surprised if other countries get more vocal about who we elect in this country or what decisions we make about our own future.

What now?

I have no idea but I suspect we will see more selling to start the week, and perhaps we will see increased volatility for the rest of our election cycle; but those are guesses. I still think the market is overvalued and looking for an excuse, so to speak, to start dropping in price to find more buyers. Clearly any buying that has happened over the last 18 months has come with just as much enthusiasm to let shares go as the market kept trying to make new highs. Here is the picture of the last 18 months:


Not only has the market gone nowhere this year but it has gone nowhere for the last year and half, except down and back up again. Maybe the next trip down is the one that really gets shares shaken out of the weak hands and the market trades once again at reasonable valuations instead of the wildly overvalued status it currently holds. We shall see.

Stay safe out there.

State of the US Consumer, from Business Insider

First the link: State of the US consumer makes for a grim read

Quote of the day:

It’s pretty well known at this point that income inequality has gotten worse over the past decade. The rebound from the financial crisis disproportionately benefited the wealthy, the owners of capital, while wages have remained stagnant.

Two charts and then my two cents follows:

auto loans


Study those charts for a nanosecond and you can see that auto loans and credit cards are going bad at a faster rate. All that free money at low interest rates that the Federal Reserve has pumped into banks since March 2009 has only encouraged more lending/borrowing for what most cannot afford. This too will end very badly, just like all the other times that the academics at the Fed kept rates too low for too long.

Weekly Review, One Chart

Back in April I wrote about the picture of the weekly unemployment claims and its correlation to the S&P500. Here is the description again:

The yellow line in the following chart shows the 4-week moving average of initial jobless claims, which is reported every Thursday morning at 8:30am. The line is inverted to show its correlation with the S&P500, which is represented by the white line.

Now the updated chart:


Now the zoomed-in view to show recent activity:


Now the story:

Our economy is heavily driven by the consumer and as long as they (we) have jobs then our spending habits will most likely stay resilient and continue to provide revenue for companies that make their money from us. The stock market peaked in May 2015 and it has recently made another attempted bull run to break out to the upside but fell just short, as least for now.

The four-week moving average of unemployment claims hit an all-time low (high on the chart, yellow line) in the first week of March and yet the stock market is still struggling to break out to new highs.

The consumer is doing his part. He still has a job and he’s still spending money. The bad news, if any can be parsed out of one chart, is that the number of people seeking unemployment benefits can hardly get better than what it was three months ago when the four-week average of that number was 260,000. Further help from the consumer may be lacking just when the S&P500 needs that extra oomph to get the cheerleaders on financial entertainment television all talking about new highs.

Meanwhile, the most boring bear market of my lifetime continues to tread water near an all-time high price for the S&P500 index, and my weekly reports have been downgraded to monthly until I have some market action worth writing about.

Cheers, and stay safe out there

Race Predictor

I’ve worn my new watch for a whopping total of two runs since I received it the other day and I found an interesting item under the menu of the computer that I am now wearing, a race predictor. Here’s the photo of what I am currently calling my “inherent ability”:


I have a little more than a year to improve on those numbers with some concentrated and specific marathon training in my attempt to turn back the clock 15 years.

The fascinating thing to me about those numbers is that they were derived from my pace, heart rate, and running cadence, all of which the watch constantly measures. In the past I used to have to run time trials or races, competing with all the anxiety that those things bring with them (like a person who has test-taking anxiety). Then, after those time trials, I would come back to my computer and plug my numbers into a spreadsheet to come up with a predicted time at each distance. But I had to put in the work to justify running at those predicted paces.

I am under no illusion that I could run a 21-minute 5k right now. In fact I have a 5k race coming up next weekend (my first time trial) that I am not really ready for, and if anyone asks me what my expected time is I am going to say something like, “I hope to be done with this race before my lungs know what hit them.”

However, I do have a pretty good aerobic base built up over the past year since I finally conquered my chronic achilles tendonitis, so we shall see what we shall see. I have no anxiety about the race, but nonetheless I do want the best time I can achieve.