Black Coffee: The Great Escape

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’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …

Debt is like any other trap: Easy enough to get into, but hard enough to get out of.

-Henry Wheeler Shaw

Credits and Debits

Credit: Did you see this? Despite the warnings from some economists that tariffs would result in more economic pain for most Americans, US workers saw their personal incomes rise by 0.8% for the month, with grocery prices falling by the largest margin since September 2020. Imagine that.

Credit: On a related note, since peaking in January, egg prices have fallen 61%, with the national average for a dozen large white shell eggs is now $2.52. Now that’s quite a trick. Although I wonder if it would receive the same reception that this one did:

Credit: In other news, stocks closed Friday on a high note. All of the major market indices posted notable gains for the week. As a result, the S&P is now just 2% off it’s all-time high, which was reached in February. For the week, the S&P 500 was up 1.5%, the Dow advanced 1.2%, and the Nasdaq gained 2.2%. Just don’t tell that to Tesla stockholders; it’s stock price is down more than 35% since mid-December. The good news is that there are plenty of circulating rumors that Tesla’s engineering department has come up with an exciting new plan to help jump-start waning customer interest …

Credit: Speaking of the stock market, Gallup takes an annual poll asking Americans about their long term investment preferences. This year 37% say real estate is the best long-term investment – that’s the same figure as last year. Perhaps not surprisingly, 23% now say gold is their top investment choice – that’s five points more than last year. As for the remaining choices, 15% prefer stocks (6% lower than in 2024), 13% said CDs, 5% favor bonds, and 4% cryptocurrency. Curiously, while 1 in 25 people admitted that they preferred crypto coins, somehow, scratchers didn’t even manage to make the list.

Debit: On the other hand, Gen Z currently has different priorities. They’d rather spend money on concerts than buy designer clothes (29%), invest in stocks (20%), save for vacations (19%), pay off their credit card (17%) or save for a home (16%). In fact, Gen Z are so committed to going to concerts that they’re willing to pay a 75% resale premium for the privilege. On average, Gen Z sets aside an average of $1900 for concerts each year. Besides …. what else are they going to spend their money on?

Debit: Unfortunately, the same survey found that, on a per-ticket basis, Gen Z is not only willing to pay $300 or more for concert tickets – young concert goers say they’re also going into debt to see shows. Then again, they’re not the only ones spending like drunken sailors without regard to the eventual consequences …

Debit: Since Gen Z doesn’t seem to have a problem paying a premium for relaxation and entertainment, we suspect they’re probably also okay with the latest increase in Hawaii’s climate-change tax. It turns out that Aloha State politicians have not only jacked up the environment-tax on all hotel guests to 11%, but they’ve also expanded its reach to include every passenger of cruise ship that visit those islands. Still, we marvel at politicians who can’t seem to keep potholes filled but still believe they’ve got the ability to control the climate. In the meantime, for those who hate high tourist taxes, there are plenty of better alternatives than Hawaii. Or not …

Credit: In other news, sagacious macro analyst Franklin Sanders notes that the Fed’s recently-released minutes of its FOMC’s May revealed that “they whined and worried about tariffs aggravating inflation. But the only entity which creates inflation – by expanding the currency supply – is the Fed. So the Fed whining about inflation is like a fellow who kills his mother and father, and then throws himself on the court’s mercy because he’s an orphan.” Then again, they really don’t have a choice. After all, the Fed is already hopelessly trapped within a prison from which it can’t escape – unlike this place:

Credit: On a related not, commentator James Howard Kunstler pointed out this week that, the sad “reality is the doleful fact that there’s no work-around for the nation’s monumental debt. Since it can’t be paid off, there are two stark paths: default and ruinous deflation; or make a futile attempt to inflate it away with more fake money. Either way, you’re broke. In the meantime, the remorseless interest that has to be paid on $37 trillion squeezes out everything else we’re supposed to care for relating to the common good.” The good news is the current party in power has pledged to ruthlessly cut federal government spending, so we’ll be just fine. Oh, wait …

h/t: @Pinellas_LP

Credit: Meanwhile, market analyst Michael Oliver says long-term US Treasuries (UST) are showing signs of severe weakness and could be on the verge of collapse. This suggests that this will eventually force the Fed to put print more US dollars in a desperate attempt to save the bond market – which will, in turn, only devalue the US dollar (USD) even faster. And this is the reason for the year-long run-up in both gold and silver prices.

Credit: With all this monetary system chaos in mind, here’s the bottom line: Whether or not you find yourself laying awake at night worrying about the safety of your hard-earned money – including your retirement nest egg – you should probably consider accumulating a little wealth insurance. Even if it’s nothing more than a single American Silver Eagle or Canadian Silver Maple Leaf every month, you’ll sleep a whole lot better at night.

By the Numbers

Who wants some ice cream? With summer just around the corner, you may be curious about the top ice cream flavors last year. The top two or three aren’t surprising:

1 Vanilla

2 Chocolate

3 Strawberry

4 Butter pecan

5 Cookie dough

6 Cookies & cream

7 Mint chocolate chip

8  Chocolate chip

9 Rocky road

10 Peanut butter cup

Source: International Dairy Foods Association

The Question of the Week