The Sarcasm Report v.186

iShares Short Treasury Bond ETF

Average Yield to Maturity: 0.15%

Expense Ratio: 0.15%

Perfect!

It is just like cash, only it isn't cash. It's a professionally managed bond fund! Genius!

Check out the fund's chart. What's not to like? $2.4 billion in assets! Very popular!

July 20, 2009
Focus on short end of yield curve, PIMCO says

Focus as you patiently await the end of ZIRP! 5 years so far! But we really, really, really mean it this time!

It's at an end! Cutting out! Kaput! Finished! Drop the curtain! Break camp! Pull up stakes! Finis! Absolutely, positively it! Not pulling your leg! Down the road! We swear we won't ever be back! Ain't gonna happen! Forget about it! Shutting it down! Lost our lease! Can't find it! Don't care! We're done! Closing shop! Putting up the shutters! Bolting the doors! Slamming them closed! Gonna board the place up! Nailing it shut! Big nails! Nothing gets in or out! Sealing it off! We're history! We really! Really! Really! Mean it! We're not jerking your chain on this! No snow job! Not bluffing! No kidding!

This concludes today's sarcasm report. :)

charts fed chairman humor sarcasm sarcasm report treasuries videos

ZIRP: Great Depression vs. Great Recession

The following chart compares the 3-month treasury bill yield in the aftermath of the Great Depression to the 3-month treasury bill yield in the aftermath of the Great Recession.


Click to enlarge.

For the record, I am not predicting World War III (nor would I expect it to even remotely solve our long-term ZIRP problem as effectively as World War II did).

I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones. - Albert Einstein

I think you can see why I might be fond of ultra long-term inflation protected treasuries and I-Bonds. You might also understand why I might be somewhat skeptical of rising interest rate theories.

I believe we are trapped in ZIRP much like Japan has been since their housing bubble popped in the early 1990s (which will become all too apparent when the next recession hits, whenever that is).

We might temporarily escape from our padded cell at some point, but we'll never get the straight-jacket off, much less get past the search lights, the dogs, the barbed wire fences, and Janet Yellen, our trusted security guard. That's just asking too much, lol. Sigh.

Gallows humor.

February 11, 2014
Janet Yellen to Emerging Markets: Good Luck

Monetary policy is hard enough without having to worry about the spillover effects to other countries that should take care of themselves.

Contrary to the opinion of those who think the stock market continues to go up easily from here and that vast riches await those willing to swing for the fences at any price, monetary policy is hard. For what it is worth, that's what I'm reading into what she has to say anyway.

This is not investment advice.

Source Data:
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate
NBER: US Business Cycle Expansions and Contractions

charts fed chairman housing japan sarcasm stock market treasuries

Disposable Personal Income vs. CPI

The following scatter chart compares annual disposable personal income per capita growth (bottom scale) to the annual increase in the consumer price index (left scale).


Click to enlarge.

From 1960 to 2013:

1. 2009 was the worst year for disposable personal income growth per capita. It was also the record low year for consumer price inflation.

2. 2013 was the second worst year for disposable personal income growth per capita. Once again, inflation came in below expectations.

The following chart shows recent annual disposable personal income per capita growth. I'm using the monthly data instead of the annual averages this time to more adequately show all the gory details.


Click to enlarge.

January 10, 2014
Fed's Bullard: Inflation to pick up in 2014

WASHINGTON (MarketWatch)-- St. Louis Fed President James Bullard said Friday he expects inflation to pick up this year, despite having been surprised by lower prices last year.

1. Good luck on that inflation theory!
2. Brace for more surprises!

jjchandler.com: Tombstone Generator

Click to enlarge.

This is not investment advice, but damn.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts deflation employment inflation japan sarcasm stock market treasuries

Our Economy Distilled (Musical Tribute)

The following chart shows the annual change in beer, wine, and distilled alcoholic beverage wholesalers' sales.


Click to enlarge.

Don't let the trend line concern you. As seen in the next chart, I assure you that we are more than prepared to throw a legendary party!


Click to enlarge.

Just look at all that inventory accumulation. Yes, sir. Somebody must know something. The party's definitely coming!

Saturday night - high
Saturday night - high 'n' dry
Saturday night - I'm high
Saturday night - high 'n' dry

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts deflation musical tribute sarcasm stock market videos

JOLTS of Déjà Vu

The following chart shows the semiannual average of the number of job openings divided by the number of hires (as seen in the Job Openings and Labor Turnover Survey).


Click to enlarge.

Note that this ratio appears to be a leading indicator for the last two recessions (too bad there isn't more data to backtest it further).

When the view out the front window (job openings) looks worse than the view out the rear window (hires), then there may be reason for concern (again).

The next chart shows the annual percentage change in the semiannual data.


Click to enlarge.

Let me guess. We can blame the "recent" decline on two years of bad weather?

The financial experts are bracing for this economy to accelerate in 2014. I have but one question. Which direction? Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts employment sarcasm

The Sarcasm Report v.185

Click to enlarge.

The blue line shows the annual average of the St. Louis Fed Financial Stress Index and the Kansas City Financial Stress Index.

The red line shows the negative of the annual average of the real S&P 500 Index (December 2013 dollars).

1. The key to maintaining the stock market's currently lofty level is to keep the financial stress at a near record low. That's right. Keep it there permanently. Just say no to stress.

2. The key to maintaining the financial stress at a near record low is to keep the stock market at its currently lofty level. That's right. Keep it there permanently. Just say no to stress.

What could possibly go wrong with this circular reasoning strategy? As seen in the chart, there hasn't been this little financial stress in the system since the top of the housing bubble in the mid 2000s! Oh, what a carefree time that was!

I am very optimistic about our long-term future!! ZIRP! Employment growth! Real GDP growth! Real median household income growth! Uncharted territory growth! You name it! It's going to be an adventure.

February 11, 2014
ASX bets on derivatives clearing

"We don't even celebrate trillions any more," the Englishman recently elevated to the top job of global clearing house LCH Clearnet, told The Australian on a recent visit to Sydney.

It's not quite so flippant a comment as it might seem. The arcane world of over-the-counter derivatives such as interest rate swaps that Davie inhabits turns over $600 trillion of notional value a year, so a trillion is not far off being a rounding error.

This concludes the sarcasm report.

Source Data:
St. Louis Fed: Custom Chart

charts debt employment fed chairman housing sarcasm sarcasm report stock market treasuries

A Great Disturbance in the Civilian Labor Force

Click to enlarge.

The blue line (left scale) shows the civilian labor force participation rate of those aged 25 to 54. It peaked in the late 1990s and it has been pretty much going down ever since.

The red line (left scale) shows the civilian labor force participation rate of those aged 55 and over. It bottomed in the early 1990s and it has been generally going up ever since (recent flattening notwithstanding).

The green line (right scale) shows the civilian labor force participation rate of those aged 25 to 54 divided by the civilian labor force participation rate of those aged 55 and over.

In a truly healthy economy, should those aged 25 to 54 really be dropping out of the labor force at faster pace than those aged 55 and over (as seen in that green line since the early 1990s)?



Wikipedia: Giant Sucking Sound

The "giant sucking sound" was United States Presidential candidate Ross Perot's colorful phrase for what he believed would be the negative effects of the North American Free Trade Agreement (NAFTA), which he opposed.

In space no one can hear you scream suck.

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm trade deficit videos

If Credit Is the Lifeblood of Our Economy...

...then we are officially @#$%ed.



Credit growth (in red) is slowing.
Savings growth (in blue) is slowing.

Without either of those two, I guess we'll just have to rely on wage growth. Good luck on that one. Sigh.

This is not investment advice.

See Also:
Low CD Rates: Lending Drought and Savings Monsoon

Source Data:
St. Louis Fed: Custom Chart

charts debt employment sarcasm

Restaurant Employment Prosperity (Musical Tribute)

The following chart shows annual food services and drinking places employment growth.


Click to enlarge.

3.7% annual growth! Very impressive. Each time we get a recession (the deeper the recession the better), we get more growth. More recessions for the win! Genius!

We just need to stay in that strong, resilient, predictable, and consistent trend channel long-term, preferably near the top. The long-term trend is so obvious that I don't even feel the need to add a trend line. Did I mention how stable and sustainable the channel is? Just look at it! A few more years of this and it will be almost impossible to leave the channel no matter what happens. Who doesn't love certainty?

The annual data in the first chart doesn't include 2014 yet, but I can give you a glimpse of how the year is starting off using monthly data.


Click to enlarge.

There are a whopping 10.5 million people employed in this rapidly growing industry. Growth appears to have peaked back in July. As of January, the growth is still above 3% though and there's nothing but biscuits and gravy on the horizon! Can't you see it? And with average hourly earnings of production and nonsupervisory workers in this industry coming in at $10.96 (December 2013), what's not to like?

In honor of the charts, I suggest we all try to work Chipotle into our conversations (more than we already do). Start the day off right. When we wake up each morning we should exclaim, "What a great day to Chipotle!" Or alternatively, "The future's so bright I gotta Chipotle!"

January 30, 2014
Traffic jump boosts Chipotle restaurant sales, stock soars

(Reuters) - Chipotle Mexican Grill Inc (CMG.N) said on Thursday an increase in customer visits contributed to bigger-than-expected growth in quarterly sales at established restaurants, and its shares rose nearly 13 percent in extended trading.

People braved the extreme weather to eat burritos? It's a frickin' polar vortex miracle!



See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts employment musical tribute restaurant sarcasm stock market videos

Our Economic Plague Ship (Musical Tribute)

Long-time reader mab offers the following comment in this post:

I'm watching CNBC. What's the deal? The "experts" keep blaming our economic ills on the cruise ship Queen Elizabeth!

In my opinion, this really deserves its own Christmas ship musical tribute!



Sing along! You know the tune!

Out in the Harbor

Out in the harbor, cruise ship ills
In through the dust mask, doctor bills
Down with economies, it destroys
Spreading little bugs, with sick bellboys

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

First came the sickness of little Bill
Oh dear God ships make him ill
Gave him a virus to choke and wheeze
One that fevered him to high degrees

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

Next came the sickness of little Mitt
Have we ever seen so much vomit?
Here was some fluid for what he lacked
Also a drug some say acts like crack

Oh, no, no! Who could've known?
Oh, no, no! Who wouldn't groan?
Out in the harbor, sick, sick, sick
In through the dust mask, it's ick, ick, ick

No day is complete without at least a little gallows humor. Sigh.

musical tribute sarcasm videos

The Fed's 10-1 Leverage Has Paid Off! (Musical Tribute)

The following chart compares the trillions of dollars the monetary base has grown (in blue) to the trillions of dollars household net worth has grown (in red) since the first quarter of 2009.


Click to enlarge.

Each dollar the Fed spends gets us back ten! Why on earth is the Fed tapering the sure thing? We need even moar leverage! Not less!

Crazy Theory

Let's cash out $10.8 trillion of household net worth (just half of the gain), hand it to the Fed, and let them reinvest it for us! We'll get $108 trillion back! We can then use that money to pay off all our debts and still have plenty left over! Perhaps even enough for every man, woman, and child to retire!

Why hasn't anyone else thought of this? Genius!

December 17-18, 2013
Minutes of the Federal Open Market Committee

Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector.

Oops. Please disregard my crazy theory above. It would seem that I was offering the very thing the Fed is most worried about. You have to admit that it seemed like a darned good theory on paper though. I just hadn't factored in any unintended consequences. In my defense, it's really easy to do once I went down the "excessive risk-taking" path (gambling $10.8 trillion on a "sure thing" would definitely qualify).

Marrakesh Night Market

The magic lies scattered
On rugs on the ground
Faith is conjured by the night market's sound

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts debt fed chairman housing musical tribute sarcasm stock market treasuries videos

Cass Freight Shipping Index

The Cass Freight Index

Data within the Index includes all domestic freight modes and is derived from $23 billion in freight transactions processed by Cass annually on behalf of its client base of hundreds of large shippers. These companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail and heavy equipment. Annual freight volume per organization ranges from $1 million to over $1 billion. The diversity of shippers and aggregate volume provide a statistically valid representation of North American shipping activity.

The following chart shows the annual average of the index (to remove seasonal variations).


Click to enlarge.

Looks like we've got zero chance of making it back to 2006 levels. Oh, well.

The following chart shows the year over year percentage change.


Click to enlarge.

Look at that strong and robust recovery! Ignore the part where the growth is stagnant or negative (the last 2 years or so).

The future's so bright, I gotta swear, "Hades!"

Oops. Somebody moved the "s" and added a comma. D'oh!

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

charts sarcasm

Linear Trend Failure of the Day

Click to enlarge.

It would seem that banks are not going to be paying people to take out mortgages after all. Who knew?

Strike one more economic tailwind off the list.

Source Data:
St. Louis Fed: Origination Fees and Discount Points for 30-Year Fixed Rate Mortgage

charts debt housing linear trend failure sarcasm

Ugly Chart of the Day

The following chart shows the quarterly average of civilian employment divided by those not in the labor force.


Click to enlarge.

Maybe it is different this time.

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm

China's Growth Is Slowing? Big Shocker.

The following chart shows the natural log of imports from China divided by disposable personal income. When using natural logs, constant exponential growth is seen as a straight line.


Click to enlarge.

Can you say market saturation?

Source Data:
St. Louis Fed: Custom Chart

china sarcasm trade deficit

This Is Not 1982

The following chart shows the annual average of the Dow Jones Industrial Average adjusted for inflation (December 2013 dollars). It does not account for dividends (which over the long-term can be very important clearly).


Click to enlarge.

This is not 1982. We know this because the Dow Jones Industrial Average is not trading at roughly 1916 levels (adjusted for inflation).

I'm just pointing it out for those who truly believe that this is 1982 and that a whole new era of American prosperity will soon be unleashed. That said, something may soon be unleashed (again). 1999 and 2007 weren't enough warnings?

It is yet another ugly chart, but what's new? As a retiree, I'm generally a risk-off kind of guy, and that's got risk written all over it.

1. Profit margins will stay permanently elevated?
2. ZIRP is guaranteed to work long-term?
3. The business cycle is dead so it's nothing but up from here?
4. There aren't any itchy trigger fingers hovering over sell buttons?
5. The Fed knows exactly what it is doing?
6. We can continue to borrow our way to prosperity forever?
7. America can never have too many restaurants?
8. The rise in Internet commerce won't hurt malls irreparably?

About 15% of U.S. malls will fail or be converted into non-retail space within the next 10 years, according to Green Street Advisors, a real estate and REIT analytics firm. That's an increase from less than two years ago, when the firm predicted 10% of malls would fail or be converted.

It takes a great deal of faith and/or hubris to answer a resounding "yes" to all those questions. I don't have enough faith to answer yes to any of them.

This is not investment advice, but damn. Surely there were better times in all of recorded history to put money to work in the stock market.

Source Data:
St. Louis Fed: Custom Chart

automation charts fed chairman inflation restaurant sarcasm stock market

ISM: New Orders Are "Strong" and "Resilient"

The following chart shows the average of the ISM manufacturing new orders index and the ISM non-manufacturing new orders index.


Click to enlarge.

How long do you suppose businesses will continue to hire if that recent trend continues?

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm

Civilian Employment - Quarterly Change

The following chart shows the quarterly change in the quarterly average of civilian employment.


Click to enlarge.

The blue parabolic trend line uses all of the data points.
The red parabolic trend line uses select low data points in red.

I say we just blame the trends on cold weather and problems in emerging markets. What's the worst that could happen?

Risk on, baby! Risk on!

This is not investment advice.

See Also:
Trend Line Disclaimer
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm stock market

Personal Income Growth (Musical Tribute)

Click to enlarge.

It is not adjusted for inflation, population growth, or income inequality.



See Also:
Real Annual Disposable Personal Income per Capita Growth
Employment Hump Déjà Vu (Musical Tribute)

Source Data:
St. Louis Fed: Personal Income Growth

charts employment inflation linear trend failure musical tribute sarcasm videos

My Take on Construction Spending (Musical Tribute)

The following chart shows the natural log of the combined total of religious construction spending, sewage and waste disposal construction spending, and amusement and recreation construction spending all divided by disposable personal income. I am once again using a natural log so that exponential growth (or in this case decay) can be seen as a straight line.


Click to enlarge.

Why religious, sewage and waste disposal, and amusement and recreation construction spending you might ask?

1. We have lost faith.
2. The @#$% is hitting the fan again.
3. We are not amused.



"Bond" is certainly having a good year so far (the last few weeks in particular). Shocking.

The 20-year TIPS is back under 1%. Let's just blame the next 20 years on a few months of cold weather and call it good.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

charts employment inflation musical tribute sarcasm treasuries videos