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Financial Napalm – Web of Deception, Rory Hall and Dave Kranzler
TND Guest Contributor: Rory Hall and Dave Kranzler | The Daily Coin |
Monday February 16 when I wrote “Complete Breakdown in ALL Economic Activity” I took a lot of heat from people saying the Baltic Dry Index (BDI) was being affected by the Long Shoreman’s strike on the west coast of the United States.
Well, it turns out that when Dave Kranzler explained the strike would be short lived and have almost no effect on the BDI as a whole he was spot on. Today we learn that housing starts have failed to produce, again, any meaningful rise. Also, the Producers Price Index, which measures economic activity from “the back of the house”, manufacturing, orders and inventory, has followed the BDI and has done it’s own cliff dive.
If we look at the housing market, as it is one of the biggest drivers of the American economy, things are looking, well, not all unicornie and rainbowie.
Mortgage Applications cratered by over 13% after tumbling 9% in the week before on even the most fractional of 10 Year yield increases. That hope suffered another embarrassing defeat moments ago when the Census Bureau reported that in January both housing starts and permits missed expectations, rising at 1070K and 1053K, respectively, once again missing Wall Street consensus of 1089K and 1067K. The reason: yet another drop in single-family housing. Because while multi-family, i.e., rental units, remained brisk and rose from 340K to 381K for the starts and from 360K to 372K for the permits…
Missing expectations is one thing, but a real drop in output is another thing all together. How can people expect to buy houses when they can not afford to put food on their table? How can people that currently own houses be expected to move into another house, when there is no one to purchase their existing home? If you, and several of your friends, are looking to rent an apartment, no worries. Come spring there will be plenty to choose from with multi-family units leading the way in the housing market. We all have to live somewhere and, usually, with someone, so it makes sense that we would need to build some place for people to stretch out their cot.
all charts/Zerohedge.com
These items working in concert show, with little question, that the US economy and thus the world economy, are failing on all fronts. It seems “the shadow of crisis” not only has not passed but is growing darker.
all charts/Zerohedge.com
And let’s not forget about inflation.
We also learned today that beef is up a mere 24% year-over-year. Looks like bologna for dinner, again.
While the PPI report is full of useful, seasonally-adjusted data points, the two items the vast majority of American consumers should be most interested in are the prices of beef and veal, and the prices of alcoholic beverages. Here we have some good and bad news: the good news, is that while the beef/veal price index has risen to a new all time high of 255.2, the pace of annual increase is now slowing down, and is is now “only” up 24% from a year earlier. The bad news, is that the price of alcoholic beverages, after posting two straight months of annual price declines, has once again started rising.
So, kids, where do we go from here? We can’t afford a house, so we will remain renters, assuming we will be able to continue to afford such a luxury. Can’t have a hamburger and certainly not a steak; chicken it is!! The company you work for is slowing down due the rising inventories and a serious lack of orders. Hopefully, you will not wind up flipping burgers or slinging hash at the local diner. But, if you do, at least the other suckers will help to continue to supply the Feds with just enough of a tax base to provide you with food stamps.
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About Dave Kranzler:
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.
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About The Daily Coin:
TheDailyCoin.org was founded by Rory Hall. The website features articles and commentary, as well as The Daily Coin podcast, also appearing on The Daily Coin YouTube Channel. Mr. Hall has served as a daily contributor to STGReport.com over the past two years. He has written several original articles and interviewed some of the top precious metals professionals in the industry, as well as top preparedness specialists in the world. YouTube Channel, The Daily Coin, was launched in February 2014 and website TheDailyCoin.org was launched April 25, 2014
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