Monday, December 14, 2015

This is how you know we are completely effed and in recession.

All of a sudden late in the day came a flurry of articles trying to convince me the junk bond market wasn't a problem and even if it was - the service sector is still expanding. So - no big whoop. Because a waiters salary is going to hold up an oil patch workers salary apparently. I mean, really? No one learned math in the last seven years?

"While a bond implosion is never to be lightly dismissed, I think it is pretty obvious that our current situation, where the carnage is centered on the Oil patch and other commodities, and the service economy remains in a decent expansion, is more like 1998.

The bottom line is that, while low grade corporate bonds almost always blow out on the cusp of of early stages of a recession, the converse is not true. You can have a junk bond blowout without triggering or indicating a recession."


  1. So the fear in the markets in Sept leads to less investment by businesses in Oct and Nov. If sales are soft for Christmas , then we hear about negative growth for the quarter in late Jan. That should kick off the, are we facing a recession on mainstream media and three more months later it will be a self fulfilling prophecy. I'm thinking 2016 should be avoided unless you have to have skin in the game. I'll tell you this much, it's a lot less stressful to watch the markets when you measure your own stock price by performance. Everytime we have another game roll out the door, it's another point added to our value. The closer you can get to your money the more control that you have over this world. I honestly don't think that ill ever invest in the public markets again. I don't see how they can raise rates, but it will still be carnage if they don't because it will be an admission of what is really going on. DF

  2. "The closer you can get to your money the more control that you have over this world."

    Most people will never learn this lesson. It always makes me deeply happy when someone does get it. Maybe it's only something you learn when you get that close to the edge.

    Sometimes the only thing that separates that thin line of success from failure is the ability to get up every morning and put one foot in front of the other and keep trudging on. A lot of people don't understand that. Speaking as someone who got to visit their family in the projects this year. Twice in two States. Someday I will write about it.

    There is a very large contingent of people in this country that view success as luck. But luck won't get you most places. You have to have some skill to take advantage of luck. Sometimes it takes an awful lot of effort to achieve luck. For instance I seem lucky now, but I can assure you - when my properties were down 50% - there was very little luck involved. I fought hard.

    I'm not sure you need to invest in markets as much as you just need
    to invest in "something". There is nothing that makes me quite as frustrated as this administration convincing people that owning nothing is a good path. It's awesome until you hit your 40's and realize you have nothing and very few years to make up for that.

    Growing up the way I did - the only way I saw people getting ahead in life was by owning things that eventually went up in value. Old cars, houses. Pinball machines or whatever. I've seen very few people who owned nothing wind up being okay later in life.

    As for Christmas sales I think people could be stocking up before the long financial winter. I can't be sure, but packages are under quite the delay right now. Perhaps it just means we hate stores and are having more stuff shipped.

  3. No doubt about it online sales are strong. UPS is having to rent thousands of Uhaul's right now in order to meet demand. I think this is good for Amazon, but bad for brick and mortar when all is said and done. It could be that people are going online because they're nervous about being in public places right now or its an extension of a trend we've seen for a long time now, but I think it's more likely that they're trying to save money and are flocking to discounters for the bargains. If they are bottom fishing, then it says something about how people view their pocketbooks right now. If Macy's is seeing the same gains as Amazon then full steam ahead. I pretty sure beer is supposed to be the safe play in times of trouble as long as you can avoid drinking your profits ;)