It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
I hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?
There are no risk free paths now.
– Fed Chairman Jay Powell
Credits and Debits
Debit: Did you see this? First it was France – now it’s the US. The White House released a trial balloon last week, stating that they are “thinking about” raising the retirement age for Social Security (SS) from 67 to something higher in order to prolong its solvency. Something tells us it’s going to take something far more substantial than that to kick the SS can down the road this time around.
Credit: By the way, the last SS retirement age increase occurred in 1983 and it affected everyone under the age of 45 – including yours truly – based on a graduated age increase. We suspect any future age bump would follow a similar strategy. Then again, even if Congress does raise the retirement age, it would probably be prudent to exclude Social Security from your retirement planning – just in case. Well… unless you’re the gambling type…
Credit: On Friday, the Dow rose 0.7%,the S&P 500 climbed 0.6% and the Nasdaq was up 0.4% – but those gains were not enough to erase a loss for the week. The big question now is whether or not the market will roll-over again or not next week.
h/t: @MemeForThought
Debit: Speaking of stocks, the Dow is down 70% from its 2000 peak when priced in gold terms. The good news is the talking heads keep telling anyone who will listen that the artificial intelligence (AI) market is going to fix everything. Or not…
Credit: After the Fed cut interest rates 25 bps last week, macro analyst Peter Bockvar remarked, “When credit spreads are wide and stocks are in a bear market, the Fed is quick to ease. In contrast, when asked about cutting into a record high in stocks Fed Chair Jerome Powell brushed it off. In a 1955 speech the Fed Chair at the time, William McChesney Martin, said ‘The Fed is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.’ The Fed is now adding more alcohol to that bowl.” Well… at least they’re admitting it…
Debit: With the Fed’s latest move to cut interest rates, they have signaled their decision to abandon the fight against inflation in favor of keeping the economy afloat – even at the risk of destroying what is left of the USD’s rapidly falling purchasing power. Meh. Nothing to see there. Or here…
Debit: In other news, the price tag for repairs on Baltimore’s damaged Francis Scott Key Bridge – a portion of which collapsed after being struck by a runaway ship – has ballooned from an initial $1.9 billion to more than $5 billion over the past year. As if that isn’t bad enough, the projected completion date has also been pushed out two years, from 2028 to 2030. Then again, something tells us that a good chunk of that price increase is mont likely due to, um, extenuating circumstances…
Hopefully, that $5 billion price tag for the Francis Scott Key bridge includes one of these signs.
Debit: Unfortunately, higher prices aren’t just plaguing the construction industry. The menu price of a hamburger, fries and a Coke from McDonalds is now $10. Sixty years ago, that same burger, fries, and soda was just 35 cents. For those not counting at home, that’s a 2757% increase. Ouch. Needless to say, those skyrocketing prices for fast food is just one of many reasons why it’s always better to cook your meals at home.
h/t: Mike Maloney
Credit: But here’s the twist: if you’d saved silver instead of dollars, you’d have more buying power today, not less. In fact, a silver dime and a silver quarter minted in 1964 currently has a melt value of approximately $10.08 – that’s enough to buy that exact same meal from McDonalds. As macro analyst and precious metals dealer Mike Maloney points out, thousands of year of history proves that gold and silver, otherwise known as “real money, eventually does an accounting of the fiat currency supply.” Clearly, we’re in the process of that accounting adjustment now. Apparently, in more ways than one…
h/t: @duediligenceguy
Credit: Now for the really alarming news: Macro analyst Jim Rickards there is going to be “a financial panic of unprecedented proportions” triggered by stablecoins and unregulated digital assets baked into the so-called Genius Act. Rickards points to Vietnam’s mandatory biometric IDs and account freezes as the model – a trial run for centralized digital control – and says that, once adopted, governments can monitor, freeze, and confiscate funds at will. Well… assuming your bank even has the funds…
Credit: Here’s the bottom line: When confidence cracks, holders will dump stablecoins, sell Treasuries, and rush for cash. AI will only accelerate the stampede. “The best definition of a crisis is when everybody wants their money back,” Rickards says. This time, the exit doors may slam shut. Not coincidentally, Morgan Stanley’s Chief Investment Officer, Mike Wilson, now favors a 60% allocation to equities, 20% to gold and 20% to fixed income. Yes, folks – hell has officially frozen over. Got gold?
By the Numbers
Here’s a look at the top 10 US states with the highest likelihood of crashing into an animal, based on the number of crashes involving animals per 10,000 drivers:
38 Mississippi
84 West Virginia
104 Pennsylvania
109 Michigan
120 Kansas
129 South Dakota
140 Minnesota
199 Wisconsin
207 Alaska
236 Montana
Source: State Farm
The Question of the Week
How long has it been since you've traveled by air?
- Less than 6 months
- Less than a year
- Between 1 and 2 years
- More than 2 years
Last Week’s Poll Results
How old are you?
- 70 or older 30%
- I’m in my 60s 27%
- I’m in my 50s 16%
- I’m in my 40s 13%
- I’m in my 30s 11%
- 29 or younger 3%
More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that almost 3 in 4 of you are 50 or older. This is to be expected as the younger generations have generally moved away from the dinosaur world of blogs