Day of Reckoning

“Time is money says the proverb, but turn it around and you get a precious truth.  Money is time.”

– George Gissing

Divine Disorder

Time, like money, offers a unique marker.  Something to count and compare.  Something to use for measuring progress – and failure.

What is your annual income?  How many hotdogs did Joey Chestnut eat in 10 minutes on July 4, 2021?  What is the year-to-date return of bitcoin?  What is the max MPH of a 1969 Ford Mustang at sea level?

In fact, the tick tock of time all seems so systematic, arranged, and orderly.  Almost a direct proof of deism.  Sixty seconds make a minute, 60 minutes make an hour, 24 hours make a day, and one day equals one complete rotation of the planet earth.

Roughly every 30 days the moon orbits the earth – which is one month.  Then every 12 months the earth orbits the sun – which is one year.

So far so good, right? Continue reading

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Wall Street Clustery

In the buildup to this week’s Consumer Price Index (CPI) report we came across an article on MarketWatch.  The author, Jeffry Bartash, closed his remarks with a brief contrast of the CPI with the Federal Reserve’s preferred price gauge, the Personal Consumption Expenditures (PCE) index.

According to Bartash, the PCE index gives less weight to housing than the CPI.  Housing costs are the most significant monthly expense for many people.  For whatever reason, the PCE index developers at the Commerce Department don’t think this is an important factor for understanding price changes.

Maybe this is why the Fed prefers the PCE index over CPI.  Another likely reason is that the PCE index also considers shifts in consumer behavior as a result of higher prices.  As elaborated by Bartash:

“A grocery shopper, for example, might buy ground beef instead of ribeye to save money.  Or a shopper in a hardware store might buy a cheaper imported tool instead of a more costly American-made one.”

These supposed shifts in consumer behavior may help fabricate the PCE index more to the Fed’s liking.  In reality, they make for poor assumptions as to what consumers actually do. Continue reading

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Tang Ping in the Year of the Dragon

“Never give a sword to a man who can’t dance.” – Confucius

Intervention from Beijing

Have Chinese stocks, supported by fresh government intervention, reached their bottom?

This week, from Monday through Thursday, the Shanghai Composite Index is up 5.52 percent.  Similarly, over this time, Hong Kong’s Hang Seng Index is up 3.53 percent.

Still, these indexes have a lot of ground to make up.  The Shanghai Composite Index is down 22.61 percent since September 2021.  Meanwhile, the Hang Seng Index is down over 50 percent in the last six years.

Chinese stocks have lost a combined $7 trillion since 2021.  The poor stock market performance has become an embarrassment for President Xi Jinping.

Several years ago, he was relishing in his nifty slogan: “The East is rising, the West is declining.”  Now, he’s compelling regulators to devise a rescue.

In late-January, Beijing announced several interventions to, hopefully, stimulate the Chinese economy and revive the stock market.  This week, on February 5, bank reserve ratio requirements were cut by 50 basis points.  This is expected to free up about one trillion yuan ($139.04) worth of long term funds. Continue reading

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Do You Have a Passion for Political Solutions?

This week, as expected, the Federal Reserve did not hike nor cut the federal funds rate.  Instead, following the two-day FOMC meeting, the central bank announced on Wednesday it would be holding even – within a target range of 5.25 and 5.5 percent.

What surprised the stock market were Fed Chair Jay Powell’s words that followed the official statement.  Powell repeatedly said the Fed needs more “confidence” that it has consumer price inflation licked.

Powell also said it won’t likely cut rates at its next meeting in March.  This comment had the effect of a turd in a swimming pool.  Stocks abruptly sold off.  The S&P 500 closed the day down 1.6 percent and the NASDAQ dropped 2.2 percent.  Shares of Alphabet slid 7 percent, after reporting poor ad revenues.

The Fed continues to find itself in a precarious position.  Consumer price inflation remains above its 2 percent target.  Yet some regional banks are hemorrhaging cash.

Case in point, on Wednesday shares of New York Community Bancorp crashed 38 percent.  This came after it reported a fourth quarter loss of $252 million. Continue reading

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