Wednesday, June 28, 2017

Raising the Minimum Wage Unfortunate Unintended Consequences

News
The invisible hand, like it or not, controls 'the show' called capitalism. Many believe capitalism should be replaced by system more sympathetic to humanity. Saying that I don't disagree neither makes me conservative or liberal. I am neither. Today's politics or political rhetoric (horseshit) can only bee seen as two sides of the same coin when viewed in terms of long term market trends. In my opinion, we must learn to live with capitalism until technology renders it obsolete. While obsolescence is inevitable, it will take a significant jump in technology in terms of how humanity transforms it resources to support life.

With that said, Seattle's attempt to legislate fairness within a society struggling to make ends meet is wrestling with a predictable outcome at least in terms of the invisible hand. Long story short, a higher minimum wage, while benefiting some, has hurt many others as jobs and hours worked have been reduced within the context of global economic slowdown the few recognize.

The solution to the problem, unfortunately, will not come from public policies. Public policies, even when created with good intentions, often makes things worse. Why? Humans have a terrible track record of managing the business cycle!

The sooner the politicians understand this point, the faster the solutions come. Those solutions will continue to elude us until proper education of all youth is given a full priority. That never seems to happen because capitalism tendency to concentrate wealth over time.

Headline: That new Seattle study is a big problem for fans of a higher minimum wage — or is it?

No two ways about it: The University of Washington’s new study of the jobs effect of Seattle’s higher minimum wage spells trouble for supporters of minimum wage increases.

That’s not merely because the study released Monday found a steep reduction in jobs and income among the city’s lowest-paid workers following the minimum wage raise to $13 an hour in January 2016, on its way to a nation-leading $15 for most employers within four years. It also found a strong increase in employment of workers earning more than $19 an hour. In the restaurant sector, for instance, the study found a 10.7% reduction in jobs paying less than $19, but no overall change in employment, implying that jobs paying more than $19 increased by 20%.


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The Majority Remains Skeptical of the US Stock Rally

News
Commentaries ranging from crash predictions to skepticism about a correction-less rally are found not only in the financial but also nontraditional headlines. The latest commentary is posted in the Style section.

The Stock Traders Almanac notes:

It has also been 502 calendar days since the last S&P 500 correction of 10% or more which nearly equals the average duration between corrections since 1950 of 515 days (table).

 Couple of observations:

  • Studying corrections since 1949 is simply too short of time. The study of cycle, an important component of historical analysis, requires at least 20 independent observations of 'unique' data points. It takes nearly a hundred years of data to compile 20 independent observations of stock market performance within the first year of the 4-year business cycles. This number goes up as longer cycles are studied.
  • While the Matrix is defining increasing misalignment/consolidation across US stocks indices, it's not showing any focused bear opportunities. Large declines usually occur under focused bear opportunities. In addition, not all consolidations produce meaning declines. Again, the computer shows us that.
  • The Dow Industrials' current up impulse, generated through the alignment of price and volume, is entering its 68 week (table 2). Although 68 weeks is well past the average duration of 39, it's still relative young when compared to the max duration of 181 weeks. 181 weeks is only the max duration through 1999. The historical max is likely much higher.


Table 1


Table 2


Headline: S&P 500 Correction Counter Reaches 502 Days

After narrowly bucking the trend of poor performance during the week after June option expiration week, by a little more than 10 points, DJIA and the rest of the market is stumbling early in the final week of Q2 and the first half. Tech and small-cap were the biggest decliners today as the IMF cut its growth forecast for the U.S. from 2.3% to 2.1% for 2017 and trimmed its 2018 outlook even more, from 2.5% to 2.1%. Debt, labor force participation, a 13.5% poverty rate and the increasing likelihood that meaningful policy changes would materialize were among some of the main drivers that led to this downtrodden outlook.


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Junk Science Attacks Coconut Oil, Who's Driving It?

News
Give me a break! Fake or junk science finds its way into everything from financial market analysis to nutrition. The American Heart Association recently released a report that reaffirmed the same flawed conclusions reached in a 1970's report that coconut oil has never been healthy, and in many respects, is bad for you. This suggestion comes despite tropical nations' heavy and consistent use of coconuts for thousands of years without evidence it increases the incidence of heart disease or illness. If fact, the coconut is so revered for its healing properties among indigenous people, it's known as the Tree of Life.

While Western science tries to boil down all complex systems into cause and effect, a process familiar to investors that read financial headlines, we ignore complex nutritional relationships and genetics as the driver of deficiencies and disease.

For example, fats, including saturated ones, are classified as short, medium or long-chained. This classification is based on the number of carbon molecules in the molecule. Coconut oil, the new/old evil saturated fat is largely a medium chain molecule. These fats are easily absorbed by the liver through the portal vien and available for immediate energy conversion. Easily absorbed fat molecules are less likely to circulate in the blood, thus, causing numerous problems from obesity to atherosclerosis.

Nearly 50% of coconut's fat is lauric acid, a molecule converted to monolaurin in the body. Monolaurin adversely effects the lipid membranes of bacteria, yeast, fungi, and enveloped viruses that make us sick. Guess the report forgot to mention that. Lauric acid is so important to human development and maintenance of health that it's the main component of human breast milk, an food source designed by evolution to protect children from illness during infancy.

I've seen this type of stuff enough in the financial world to ask the next logical question, who's funding this report/study? The council of soybean growers angered by coconut oil's increasing market share over soybean oil in recent years?

Headline: Coconut oil isn't healthy. It's never been healthy.

The American Heart Association recently released a report advising against the use of coconut oil.

The Dietary Fats and Cardiovascular Disease advisory reviewed existing data on saturated fat, showing coconut oil increased LDL ("bad") cholesterol in seven out of seven controlled trials. Researchers didn't see a difference between coconut oil and other oils high in saturated fat, like butter, beef fat and palm oil. In fact, 82% of the fat in coconut oil is saturated, according to the data — far beyond butter (63%), beef fat (50%) and pork lard (39%).


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Tuesday, June 27, 2017

06/23/17 #Cotton Chart $BAL

Cotton Chart
Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bagholders of trend transitions.

Cotton's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix for subscribers.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Monday, June 26, 2017

US Economy Heading Towards Contraction

News
The U.S. economy, a complex system that's highly dependent on the global economy, continues to stumble stumbled in 2017. The Chicago Fed National Activity Index and, more importantly, the Economic Activity Composite (located in the Matrix) confirm the economic slowdown. Falling consumer confidence and spending is contribution to the slowdown that mainstream media appears unable to recognize, again.   Resumption of the global economic contraction in the second half of 2017 could support numerous cycle inversions that not only leave investors on the wrong side of the trend but also holding the bag when they panic to catch up.

Headline: Chicago Fed National Activity Index (CFNAI)

The Chicago Fed National Activity Index (CFNAI) was –0.26 in May, down from +0.57 in April.


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06/23/17 #Gold Chart $GLD

Gold Chart
Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bagholders of trend transitions.

Gold's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in the The Matrix for subscribers.

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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Sunday, June 25, 2017

06/23/17 Chart of the Day #Seasonality

Chart of The Day
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February, Mark Twain

There are two times in a man's life when he should not speculate: when he can't afford it and when he can, Mark Twain


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.