- Calm before the storm: Stocks near records, consumer spending hot…
- But what’s up with foreclosure filings and upside-down auto borrowers?
- The elites’ plans for your wealth, Trump notwithstanding
- In the meantime, small caps roar ahead
- “Deficits don’t matter,” Trump edition
- A painful pension cut… a reader who says David Stockman needs to get out more… confidence that Trump’s version of hopey-changey will work out fine… and more!
Steady as she goes on Wall Street… and in the U.S. economy. But for how long?
The Dow is taking a breather this morning — down 42 points, at 18,826. But that can easily reverse, and the Big Board might end up with a seven-day win streak. The Nasdaq, on the other hand, is up more than three-quarters of a percent; at 5,252, it’s less than 80 points off its all-time high, set in September.
The day’s economic numbers are likewise sanguine. Retail sales leaped 0.8% in October — more than any of the dozens of economists polled by Bloomberg expected. And September was revised upward. Auto sales are on fire again — about which more shortly. Building materials and garden supplies are likewise strong, we’re told. (Garden supplies in October? But we digress.)
Meanwhile, the first read on the economy so far in November is also looking up: New York State factory activity as measured by the Federal Reserve’s Empire State survey is back in positive territory for the first time since July.
But something’s wrong with this picture of prosperity. And it turns up in some lesser-followed economic numbers…
Foreclosure filings leaped 27% from September to October, according to Attom Data Solutions.
One month never tells the whole story… but the jump comes off a nine-year low. “The volume is still down 8% from a year ago, but annual drops had been in the double digits all year, until now,” reports CNBC’s housing specialist Diana Olick — who often uncovered signs of the 2000s housing bubble on CNBC’s website even while the TV network was telling us housing prices could never go down.
Most of the new volume is coming on loans written since the Panic of 2008. Generally, these loans aren’t on the books of the banks; they’re FHA loans, for which you, dear taxpayer, are on the hook.
Then there’s the alarming number of people who are underwater… on their car loans.
The auto data mavens at Edmunds tell us so far in 2016, about one-third of trade-ins toward buying a new car were worth less than the outstanding value of the old loan. It’s the highest rate on record.
From a personal finance standpoint, this is madness: Edmunds reckons the average underwater car buyer is upside-down on his existing vehicle to the tune of $4,832. That translates into an extra $100 per month in car payment on a vehicle the borrower no longer owns!
“With today’s strong economic conditions at their back,” says Edmunds’ Ivan Drury, “these shoppers are willing to absorb a significant financial hit to get into a newer vehicle.”
Hmmm… Is it really “strong economic conditions”? Or desperation for a functional set of wheels so they can still get to the job they’re hanging onto for dear life? Just askin’…
We point out these inconvenient statistics just in case you’re looking for affirmation that something’s not quite right.
You’ll find plenty more in Jim Rickards’ new book, The Road to Ruin — released to the general public today. It reveals beneath-the-surface dynamics in the markets and the economy that are far bigger than even a shock outcome to a U.S. presidential election. It reveals plans that have been in place long before Trump’s ascendance… and that will be implemented whether he goes along or not.
➤ The U.S. government’s “ice-nine” plan to steal your wealth and prevent you from getting your cash. If you have a dollar to your name, you need to read Page 22
➤ The secret program for controlling citizens used by elites and leaders from Caesar and Napoleon to Rockefeller and Roosevelt… through both Bushes and Obama. If you think this is some conspiracy theory, you better see Page 58
➤The exact date by which the elites will finally reach their goal of world money under their control. You MUST take immediate and specific action before that. Hurry to Page 186
➤ The institution that will decide what the dollar is worth in the near future. (Hint: It is NOT the Federal Reserve, Congress, the U.S. Treasury or the IMF.) Page 70
➤ The climate change “Trojan horse” the elites are using to mask a troubling plan for you and the world’s taxpayers. Page 88.
Best of all, because you’re an Agora Financial reader… you can order through us and get a special bonus chapter with his game plan for the severe bear market he sees just around the corner. It’s all yours free… as long as you can cover $4.95 for shipping. Grab yours at this link — no long video to watch.
“It’s a brave new world,” says Greg Guenthner of the furious sector rotation he spotted for us late last week. “Money is pouring out of some of the best performing stocks of the past two years and into the forgotten corners of the market.
“And right now, the most powerful post-election surge belongs to small-cap stocks.”
Small caps as measured by the Russell 2000 index topped out 18 months ago… and plummeted 30% peak to trough. “But small stocks have finally snapped out of their slumber,” Greg writes in this morning’s Rude Awakening. “Bottoming out with the broad market back in February was the first hurdle. Now, after a swift pullback in October, small caps are finally back on top again.
“The Russell 2000 posted a new all-time high yesterday. It’s now nearly 40% above its February lows and ripping higher. Heck, while the major averages barely budged to begin the week, the Russell jumped another 1.2% yesterday.
“What we’ve witnessed over the past week is the beginning of a huge small-cap rally,” Greg concludes. “Expect these tiny champions to lead the market melt-up into 2017.”
Gold is stabilizing this morning despite renewed dollar strength. The bid on the Midas metal is $1,224, even as the dollar index is clambering past 100 again.
Treasury yields are backing down a bit, the 10-year a hair below 2.23%.
“There is now a real risk that we will see an onslaught of deficit-financed goodies — tax cuts, infrastructure spending, more on defense — all in the name of stimulus, but which in reality will massively balloon the debt,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Hey, what’d we tell you about “Trumpflation” last Thursday? Here’s Politico this morning, talking about “a potential echo of the last time Republicans ran Washington, when then-Vice President Dick Cheney memorably remarked, ‘Deficits don’t matter.’” The headline of its story is, “GOP and Trump Put Deficit on Back Burner.”
Not to put too fine a point on it, House Speaker Paul Ryan piped up a few hours later: “Welcome to the dawn of a new unified Republican government.”
The Committee for a Responsible Federal Budget finds Trump’s campaign promises would raise the national debt by $5.3 trillion over the next decade.
Of course, if Trump follows the path of Obama and Bush 43, he’ll double the national debt over two terms. $40 trillion, here we come.
Heh — whom are we kidding? The system will break apart long before that. Are you ready for what comes next?
We know low interest rates are putting a hurt on pension plans and retiree benefits worldwide… but it’s really getting serious for retirees at Labatt — the Canadian brewer now owned by Anheuser-Busch Inbev.
One of the perks for Labatt retirees was free beer for life — one case of 12 per week. (And once the employee died, the benefit passed on to the spouse!) But no more. The allotment will be cut in half during 2018 and eliminated altogether in 2019.
No word how much money the company will save; Molson did much the same in 2009, saving barely $1 million a year. Little wonder the union says retirees are getting “nickel and dimed.”
But the union says the benefit has a positive rebound effect for the company: “If I’m going to a barbecue, it’s nice to bring a case or two of a beer I made, since we work hard to be the best of the best,” says Jim Stirr, the union local president in Edmonton. “It’s a sense of pride. I’m a salesperson, basically.”
“David Stockman is living in a bubble, and a big one,” a reader writes after our musings about infrastructure yesterday.
“My wife and I have traversed this country from Florida to Washington state, from California to Maine and back for the last 2½ years in our fifth wheel trailer. We live in it full time, and our preference is to do most of our traveling on the interstate system.
“In a word, it is a disaster. It SUCKS. We have left the interstate to seek other roads that won’t shake, rattle and roll us into oblivion. Perhaps Stockman accepts potholed, bumpy, disintegrating surfaces in stride, but we sure as hell don’t.
“Our roads, and our bridges, are in serious trouble, as D.C. has funneled money into buying votes with social programs instead of taking care of our roads. Anything you buy got there by truck, and without good roads, the cost of everything goes up. We were so frustrated with the roads in our country this summer, we discussed coming off our full-time traveling life permanently.
“Stockman can stick it in his pipe and smoke it. I’d suggest another place to deposit it, but this is a family site.
“P.S. Keep your sensible (mostly) stuff coming. Always look forward to your perspective, which seldom is what one would expect.”
The 5: We hear ya… and your editor likewise enjoys traversing the interstate system. But just remember, it’s there because of political decisions made decades ago to favor truck traffic over rails.
In any event, Mr. Stockman’s broader point is that most public works projects are better performed and funded on a local level rather than a Trumpian infrastructure commissariat.
“How’s that hopey-changey stuff workin’ out?” a reader writes after we saw the media rumors that JPMorgan Chase CEO Jamie Dimon was in the running for a Trump Treasury secretary. (He took himself out of the running.)
“Working out just fine! After eight years of Obama, we’re happy as larks, and the hopey-changey stuff will work itself out!
“Hillary scared the Beetlejuice out of Americans from the farms, the factories, the stores, the schools, etc., the deplorables, the rednecks, the hillbillies, the real Americans!!! My life is great and could only be better if I am told that the Hillary/Bill Clinton Cabal is under lock and key!! LOCK HER UP!”
The 5: *Sigh*
If you want to go to sleep, that’s your prerogative. Here at The 5, we’ll stay on alert as always. Just know that by the time you notice any of our alarms, it might be too late.
The 5 Min. Forecast
P.S. Compare and contrast…
ABC News, last Wednesday: “White House Press Secretary Josh Earnest said today that the Presidential Daily Brief (PDB), which President Obama receives each morning along with other intelligence material, has now been made available to Trump, Vice President-elect Pence and a few designated members of his team.”
NBC News, this morning: “The Trump transition has yet to take up offices in the State Department or the Pentagon, government officials tell NBC News, and as of last night Trump had not received an intelligence briefing.”
We’re not in a position to say whether the latter is true… or if it is, if that means the Deep State is already aggressively maneuvering to sideline the president-elect.
But we do know the global power elite has big plans for you… and they’re not going to let a little thing like the election of Donald Trump get in their way.
That’s why it’s so important you get your hands on a copy of The Road to Ruin, Jim Rickards’ new book, out today. Order through us and your copy will have a bonus chapter with an investment blueprint for the next six months. It’s available only through Agora Financial and yours for a mere $4.95. Follow this link for access.