You Think Now is a Good Time to Buy That House Because Mortgage Rates are so Low -- Well, You May Want to Think That Premise Over Again!

Ok, let's just look at mortgage rates and analyze what is happening.  Thirty-year rates are currently 3.75% on a national basis, which is still low by historical standards.  (See the following chart on 30-year mortgage rates.)  Now, let's look at a conventional $200,000 loan for 30 years at 3.75%.  This produces a P&I of $926.  How much house does $926 buy if rates go up to 6.36%, which was the 30-year rate as of October 2006?  [Why am I asking how much home does $936 buy?  Well, usually when individuals buy a home, they are concerned about what the monthly payment is going to be.]  Ok, the answer is $150,268.  So, you think housing has "bottomed?  Not so fast.  See, you have an imputed approximately 33% valuation increase in the price of houses today that will, over time, decline when rates rise.  In other words, just like bonds, when interest rates rise, prices decline. Therefore, the time to buy that house is when rates are historically high, not low, because then when rates go down you get the imputed price increase.  (This is your financial tip for the week.)

$SLV's Triple-Bottom Bearish Formation: Price Objective at $12.50

We have not seen $SLV at these price levels since March 2010!  The last time $SLV was at $12.50 was July 2009.  The $12.50 is based solely on the price objective of the "Spread-Triple Bearish Formation."  (See the "Green Circle.") 

Walmart Care Clinics

 

Now, this is true affordable health care, which I like a lot.  "An office visit costs $40, which Walmart

says is about half the industry standard and just $4 for Walmart employees and family members with the company’s insurance.  A pregnancy test will cost just $3, and a cholesterol test is $8.  Walmart Care Clinic will also treat chronic conditions such as diabetes."

What say, you, health-care providers?  Are you going to match these Walmart prices?  I doubt it.

Employment Has Never Been Better!

Say what! Well, according to the BLS, initial jobless claims just collapsed to the lows of April 2000. Therefore, employment has never been better. Right! Now, for the truth, which is right before your eyes in the following chart:

Point & Figure Chart of $IWM: Is $90 Realistic?

$INDU: Extremely Oversold

Civil Forfeiture/Civil Asset Forfeiture

This is how police justify stealing American citizens’ money.  And, yes, American citizen, this is legal and for real!  Therefore, never carry a lot of cash in your car.

After reviewing the above video, go to Michael Krieger's article entitled, "Common People Do Not Carry This Much U.S. Currency." 

Is IWM Signaling a Start to the Next Bear Market?

Four Seasons of the Kondratieff Wave

Kondratieff Wave is a fifty year cycle that turned into its Winter phase, or Stage Four, occurred in 2000, which is precisely at the bursting of the tech bubble.  So what can we expect going forward, since we still have another 36 years of this Winter Wave?  See the following chart.

China Overtakes U.S.A.

It should come as no shock that China has usurped the United States with the world's largest GDP. Sad, but true!  By the end of 2014, according to the International Monetary Fund, China will make up 16.48% of the world's purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up 16.28% (or $17.416 trillion).

I wonder if you will hear this on your nightly news tonight.  No, because the preponderance of Americans are still living in yesterday's world.

What the Main Street Media Will Not Be Telling You About the Latest Employment Numbers

Great news on the employment front, especially if you are between 55 and 69. This group comprised the vast majority of the job additions for September 2014, 230,000. What about the prime worker group, which would be those aged 25-54?  They lost 10,000 jobs.  What?  Say, it is not true. Those grandparents are not being hired in those positions within the economy to make the so-called "big bucks." We are talking here the Wal-Mart greeters of the world. But, the media is claiming a major victory for the economy. Give me a break!  





By the way, here is the breakdown of job gains by all age groups since the start of the depression in December 2007: 5.5 million jobs "gained" in the 55-69 age group.  Not bad.  What about those prime workers between the age of 25-54? Negative 2.04 million.  Not so good!

Source: Zero Hedge

$SLV's 15/40-week EMAs

$IWM's EMAs

$SLV Has No Friends -- That's the Good News! Bad News, Still in Stage Four Bear

Bulls: Take Heed of the Following Chart!

iShares Russell 2000 ETF (IWF): Trend Change Ahead?

The iShares Russell 2000 ETF (IWM) seeks to track the investment results of an index composed of small-capitalization U.S. equities. Small-cap equities portend the direction of the market indexes in general, such as the DJIA and S&P 500.

The following chart of the IWM illustrates its 15-week EMA in relation to its 40-week EMA. If you are a long-term reader of my blog, you know the significance of this exponential moving average strategy (EMA).  For those of you that are new, the EMA strategy is as follows: (1) 15-week EMA > 40-week EMA -- market trend is up (Bullish), and (2) 15-week EMA < 40-week EMA -- market trend is down (Bearish).

As you can see from the following IWM chart, the 15-week EMA exceeds the 40-week EMA. Therefore, yes, the bullish trend is still in place. However, both the 15-week EMA and 40-week EMA appear to be rolling over (flattening out), which could be a precursor of a change in trend from bullish to bearish. I will continue to monitor this ETF very closely.

$SLV: Relief Rally?

$SLV at a Four Year Low! What's Next?

What's Up With Oil?

The price decline in oil is due the softness in the world economies  It really is that simple, pundits.  Just refer to the following chart.  But, what about the tensions in the Middle East, you opine?  As I stated, look at the chart and surmise the expectations for GDP growth forward.

Mortgage Rates Up, Home Purchase Activity at 20-Year Low

The following four charts are compliments of Zero Hedge.  As you will quickly notice, we don't have a housing recovery, in spite of what you hear from your real-estate broker.  However, never let a housing crisis go to waste without government intervention.  (I believe I have heard that phrase being used in the past.)  So, out of the House Financial Services Committee comes H.R. 5148 "Access to Affordable Mortgage Act of 2014."  That reads a whole lot like the "Affordable Health Care Act," doesn't it?  Well, do yourself a favor and do a Google search on this pending legislation; because if it is passed into law, we will definitely have another sub-prime mortgage debacle like 2008.

Now the charts,

 

Welfare Recipients Can Use EBT Cards for Marijuana

Now, let me get this right.  Welfare recipients can not use their EBT cards at liquor stores; but they can at marijuana dispensaries in those states that have legalized pot.  Yes, that is correct.  Congress in 2011 had passed laws that allowed the Department of Health and Human Services (HHS) to prohibit EBT benefits from being spent at vice institutions, such as liquor stores, strip clubs and casinos.  However, HHS did not interpret that authority to include marijuana shops.  No, I am not kidding, but I surely wish that I was kidding.  Call your Representative and Senators and tell them to cut this crap out immediately.

What Stock Market Bubble?

Up, up, and away!  Just look at the following chart of the S&P 500 by John Hussman.  Do you see any potential consequences to investors' wealth going forward?  Nah!  Everything is well.  Risk-on, investors. What investors fail to see is that the level of bearishness is close to a thirty-year low.

2017 Self-Driving Cadillac

The 2017 Cadillac model will feature “Super Cruise” technology that takes control of steering, acceleration and braking at highway speeds of 70 miles per hour or in stop-and-go congested traffic.  Now, I have a question for GM. If you, GM, can not get an ignition switch to work properly that has caused untold number of deaths, how are you going to convince the American public that you can create a system that can drive itself without killing more GM owners?

Government Publishes Detailed Instructions (700 Words) on How to Safely Roast Marshmallows

Come on now, I know what you are thinking.  But, really, it is not as easy as it looks.  That is why the government has provided us with a detailed, 700 words, instruction on how to exactly roast those marshmallows.  The key according to the article is to have a stick of at least "two and a half feet." However, the article does not stipulate a maximum length for the roasting stick.  (That just might be a good research study for the government to institute.)  The bottom-line for the perfect roasted marshmallow is to keep it directly out of the fire.  Bon Appetit.

Tax Inversion Deals

Warren Buffett's Berkshire Hathaway will finance approximately $3 billion for Burger King's planned acquisition of Tim Hortons, which is located in Canada. Of course, there is nothing wrong with financing this  acquisition by Buffett. But, this is when this financial transaction gets very interesting, because Buffett is backing Burger King, who will move its headquarters from Florida to Canada where corporate taxes are much lower. How low? The U.S. corporate tax rate is 39.1%, but 26.5% in Ontario, Canada, where Tim Hortons is based. (The 39.1% nominal corporate tax rate in the U.S. includes national, state, and city-level tax rates, which is the highest across all 34 Organization for Economic Cooperation and Development (OECD) member countries. Canada's, by comparison, is 26.5%.)

This "inversion deal" will allow Burger King to shift its entire corporate tax liability from the United States to a much lower tax cost country (Canada).  Now, there is nothing wrong with trying to reduce one's tax bill, but Buffett has supported President Obama's push to increase taxes on the wealthiest individuals while making deals to reduce taxes on his own entities. I guess the old adage applies here to Mr. Buffet that states, "Do what I say, not what I do."  

A simply solution would be for the United States to reduce its corporate tax rates to be more competitive in the world environment. That would be one great way to stop these "Inversion Deals." What say, you?

What Will $100 Buy You in Your State?

The following map shows the real value of $100 in each state.  (If you live in AL, AR, MO, MS, SC, and TN, you better stay there!  On the other hand, if you live in AK, CA, HI, NY, and DC, you may want to pack your bags and move out!)

What's Up with the 10-Year TSY Note Rate?

Spread of the Caliphate: Islamic State (Part 5)

Cisco Epitomizes Wall Street’s Greed at the Expense of Main Street’s Misery

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Since 2011, Cisco has repurchased $21.9 billion of its stock and fired has fired 21,000 of its Fed's “Zero Interest Rate Policy (ZIRP) allowing Cisco, and companies like it, to issue debt at virtually zero, which allowed them to buy back it shares. 

Spread of the Caliphate: Islamic State (Part 4)

Spread of the Caliphate: Islamic State (Part 3)

Russian Humanitarian Armed Forces

Is that really a tank disguised as a Red Cross vehicle heading to Eastern Ukraine?

Spread of the Caliphate: Islamic State (Part 2)

Spread of the Caliphate: Islamic State (Part 1)

CNN May Need to Provide Geography Lessons for its Reporters

Boost FICO Scores by Changing How It's Calculated

Tens of millions of individuals will now be eligible to get additional credit to take on more debt to buy that new car, home, or just anything, because Fair Isaac Corporation (FICO) is about to change how your FICO score is calculated.  (Can anyone say sub-prime mortgage debt?)  According to the Wall Street Journal, Fair Isaac will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency.  Given this revision alone, some borrowers' FICO scores could increase by at least 50 points.  Lenders, for one, better be caution about these new FICO scores.  If these lending institutions do increase loans of any type, based on these revised scores, they better start increasing their "loan-loss provisions."

You Know the Economy is in Bad Shape When Americans Can Not Even Afford to Eat Off McDonald's Dollar Menu

Year over year domestic July sales for McDonald's Corporation declined 3.2%, which is the ninth month in a row for declining same store sales.  (See the following chart.)  If Americans are spending less on food, what else are they not buying?  This does not portend well for the economy.  But, then again, for those of you that I have been following my blog, you already do that the economy is in the "tank" in spite of what the Wall Street pundits are saying.

Let's Bring Back the Good Old Days (1949-79)

Those good old days were when the middle-class, "Main Street," actually benefited more than "Wall Street." By Main Street, I am referring to the "bottom 90%.  On the other hand, Wall Street is represented by the "top 10%."  Since 1982, it has been all about the growth discrepancy between Wall Street and Main Street, with the major advantage to Wall Street by a wide margin.  (See the following bar graph.)

Ebola Terror in London as Passenger Dies Getting off an African Flight

i24 News

i24news is an international 24-hour news and current affairs television channel based in Jaffa Port/Tel Aviv, Israel. 

Wal-Mart is Hiring. Guess Who?

Old Workers (Wal-Mart Greeters) Hit Record High

As the following bar-chart illustrates (Zero Hedge), while all other age groups posted a jobs uptick for July 2014, it was those in the 25-54 age group that saw a 142,000 jobs decline for July.  (Historically, this age group is the most important and has the highest earnings.)  Those in the 55-69 age group saw an increase of 159,000 jobs. Welcome to the "NEW" normal.

Bear Time, My Fellow Investors?

Preliminary GDP Surges 4% for the Second Quarter 2014

 

Four percent growth in GDP is wonderful news.  But, wait a minute!  Shouldn't we be also looking at the internals of the data and not just the headlines?  Yes, of course, but then again who wants to be depressed with the truth?  I know, go ahead and call me "Mr. Kill Joy!"

Now for the truth, which is always in the details.  Over the past year, GDP rose by $675 billion.  However, 52%, or $351 billion, was due to nothing else but increase inventory stuffing at businesses in anticipation that it will be sold.  (See, if you increase the stock of inventory, GDP automatically rises.) Well, good luck with that business mindset. I don't see that the consumer is financially able to take all the inventory off the shelves.

Price of Electricity Climbs to All-Time Record

Thank you, EPA.  For the first time ever, the average price for a KWH of electricity in the United States has broken through the 14-cent mark, climbing to a record 14.3 cents in June 2014, according to data released by the Bureau of Labor Statistics (BLS).  The previous high was 13.7 cents per KWH. (See the following graph.)

Do You Know the Difference Between the "West Bank and the Gaza Strip?"

A very succinct article describing the differences and similarities between the political factions of the "West Bank and Gaza" can be read at the International Business Times.

Delinquent Non-Mortgage Debt in America

According to a recent study by the Urban Institute, approximately 77 million Americans, or 35% of adults with a credit file, have a report of debt in collections.  In other words, every third person you pass on the street is going to have debt in collections.  Debt in collections involves a non-mortgage bill, such as a credit card balance, medical or utility bill that is more than 180 days past due and has been given to a collection agency. (In regard to the collection industry, it now employs approximately 140,000 workers and recover about $50 billion each year.)

America's Lost Decade of Wealth!

According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline. What the heck has happen to our nation? I, for one, no longer know it. I simply know its name.

GM Announces Another 718,000 Recalls

So what else is new?  Another week and another recall by GM.  Well, to be honest, it has been three weeks since the last recall, not one week.  Of this batch of the 717,950 cars recalled, all were new models built in 2010 and later, such as  Camaro, Equinox, Caprice, Regal.  This brings the grand total of recalls year to date to a 29,200,000 around the globe, which is well over three time the total number of cars sold in the past three years.  My thought is that we should have just left GM stay in bankruptcy and go through a reorganization without a government bailout.

Was Flight MH-17 Diverted Over Restricted Airspace?

Recent MH-17 flight paths, as tracked by Flightaware, show that while all ten most recent paths pass safely well south of the Donetsk region, and cross the zone above the Sea of Azov, it was only today's tragic flight that passed straight overhead Donetsk. (See the following flight paths.)  Therefore, according to Zero Hedge, "the key questions one should ask before casting blame, is why did the pilot divert from his usual flight plan, why did he fly above restricted airspace, and just what, if any instructions, did Kiev air control give the pilot in the minutes before the tragic explosion?"

The Federal Reserve is not Your Friend!

Since 2009, the Federal Reserve's QE data show that it has done little, if anything, to assist Main Street (You) but instead has bailed out banks (Wall Street), enriched the wealthy, and increased income inequality.

Sin City is Screwed

"Lake Mead, the man-made reservoir that supplies 90% of the water for 2 million people in the Las Vegas area, has been reduced by drought to the lowest level since it was filled in 1937, according to the federal government. This shortfall is not only endangering the water supplies to the residents but to the 43 million annual visitors to the Las Vegas area." 

If you live there, you might want to consider selling your home, if you can, and leave.

What is the Worst State in America to Live in According to its Residents?

According to Gallup, Illinois is the winner, or should I say loser.  Why anyone would want to live in this state is beyond me, especially with all its financial problems and excessive taxation.

Jobs Jump by 288,000 in June, U.S. Unemployment Rate at 6.1%

CNN had the following headline: "For 288,000 Individuals: You're Hired! Jobs Recovery Seems to Hit its Stride!"  Fox Business: "Dow Strikes 17,000 for the First Time in History After the Unemployment Rate Fell to its Lowest Level in Nearly Six Years!"  Wow!  Wonderful news.  It is only wonderful if you simply focus on the headlines and not the "internals" of the report.

The media simply does not do its research behind these numbers provided by the Bureau of Labor and Statistics (BLS). They simply accept whatever is given to them as facts.  Speaking of facts, let's analyze these so-called wonderful employment numbers. First, if one takes the 12-month change in total employment added and subtract the 12-month change in the addition to the working-age population, your net gain in jobs added is 1,000!  Yes, our economy only created 1,000 jobs over the past 12 months.  Second, if you analyze the BLS's Birth/Death Model, which is a statistical adjustment, not actual number, used by the BLS, this measure added 743,000 so called jobs over the last 12 months.  However, the BLS counts these Birth/Death jobs as real.  Third, the BLS reports that the number of full-time jobs in June tumbled by 523,000, while part-time jobs soared by 799,000!  Fourth, the labor force participation rate remained flat at 62.8%, which is the lowest percentage since 1978.  (The labor force participation rate is the percentage of actual employment plus those looking for employment to the pool of civilian working age population.)

Now, you have the real facts behind today's employment numbers, which you will not get from the media.

Eleven (11) Things You Probably Didn’t Know You Could Buy with Food Stamps

Currently, approximately 48 million individuals are on food stamps. (And this 48 million number is after six years of so called economic growth.) To put this in perspective, 28 million individuals were on food stamps back in 2008.  According to my calculations, that would be a 71% increase.  From a cost perspective, its cost the taxpayers approximately $110 billion a year to fund this program.  Now, don't get me wrong.  I know there are families in true need.  But, I also know that there are major abuses within this program, which need to be closed immediately.  

According to the Daily Caller, the following eleven things are what one could and have purchased with food stamps (EBT cards):

1. Fast Food: Taco Bell is one of many fast food restaurants that accept EBT cards. Guacamole is extra? Who cares? It’s on the taxpayer. 
2. Bail: Convicted felons – like drug dealer Kimball Clark – have reportedly used their EBT as bail money. Clark reportedly instructed someone to go to an ATM to withdraw money from his EBT for bail. Because it’s difficult to trace ATM abuse, many speculate this problem is more widespread and not just found in isolated incidents. 
3. Lingerie: Kiss My Lingerie, an adult store in Gonzales, Louisiana, accepts EBT. Other adult stores have also been known to accept welfare transactions. In this case, officials said the store doesn’t violate the rules for EBT because of discrepancies in the law. 
4. KFC: Well, chicken is a protein, and protein is good for you, right? KFC is another well-known fast food chain that accepts EBT. 
5. Shoes: While Payless Shoe Source is known for their BOGO sales, they’re certainly not the cheapest place to buy shoes. Despite the prices and functionality, they also accept EBT. 
6. Strip clubs: Last year, the New York Post reported that FOIA requests revealed welfare recipients were regularly making EBT withdrawals at the ATMs near and inside infamous porn shops, liquor stores, lounges and hookah parlors. Technically, it also doesn’t break the law because of the “cash assistance program.” 
7. Lobster: There have been multiple cases of this. As long as it’s not tobacco or alcohol, you’re golden. 
8. Starbucks: While corporate stores don’t accept EBT, any Starbucks in a Target or grocery chain is considered a grocery item. So $7.00 for a mocha cookie crumble frappuccino and pumpkin loaf? Go. 
9. Cold hard cash: Some people are in the business of selling their EBT benefits for cash. Craigslist has been a great conduit for these “creative entrepreneurs.” 
10. K-cups: A lot of people don’t buy coffee in this form because it’s too expensive, but it’s not off limits in the world of welfare. 
11. Cupcakes/Gourmet cakes: It’s considered food, no matter the price. Hello, non-essential $45 cake.