YOU CAN DO IT PHILLY!!!!

I have a good feeling about this. We just need 4 more murders to set the record. Get to work brothers.

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My Scary Chart

Jim Cramer and the rest of the captured MSM, along with their Wall Street puppet masters, captured political snakes, and crony capitalist corporate chieftains will tell you to ignore this scary chart. It’s different this time. The Fed has your back. The economy is booming. Stocks for the long term. Where else are you going to put your money? Trust us.

AND IT’S GONE!!!!Ā 

Guest Post by Daniel Thorton

Hedgeye Guest Contributor | Thornton: My Scary Chart - Bubble bear cartoon 09.26.2014 1

 

I published the graph below in a recent essay titled, Why the Fedā€™s Zero Interest Rate Policy Failed, but the graph deserves special attention because of what it seems to imply for the economy going forward. The graph shows household net worth (wealth) as a percent of personal disposable income. Household net worth as a percent of disposable income increased dramatically in the mid-1990s. Its collapse precipitated the 2000 recession. It increased even more dramatically during the subsequent expansion only to collapse again, precipitating the 2007 ā€“ 2009 recession.

 

Hedgeye Guest Contributor | Thornton: My Scary Chart - thornton1

 

Once again, household net worth has increased dramatically. Since the end of 2012 it has increasing by nearly 100 percentage points to 640% of disposable income. This is scary; not just because it is an incredibly large rise in wealth in a short period of time, but because it happened twice before with very bad consequences.

Continue reading “My Scary Chart”

NOT THERE YET

So close, yet so far. Even though the pundits crow about new all-time highs, we aren’t there yet on an inflation adjusted basis. Let alone, using true inflation numbers. The powers that be count on the ignorant masses to not realize inflation has ravaged their returns and their daily expenses. Until the S&P 500 breaks out decisively above 2,000, we are still in a secular bear market. We should make t-shirts that say:

All That Money Printing and All I Got Was This Stupid T-shirt

 

NO CASH ON THE SIDELINES – DIFFERENT THIS TIME?

Ā Retail investors were right in 1999 and 2007. Right?

Wrong. They went all in at the peaks.

Guess when they had the largest allocation to cash?

That’s right. They had huge cash positions at the bottoms in 2002 and 2009.

They now have the lowest cash allocation since 1999. This is after the market has risen by 175%. Margin debt is also at a record high. The Wall Street shysters see happy times ahead. Bears are dead. Bulls are stampeding.

I’m sure the retail investor will be right this time. Just like always.

AAII-Cash-Allocations

ā€œAccording to the recent AAII Asset Allocation Survey by retail investors, cash levels in July dropped to the lowest level since 1999 at only 15.8%. Just as this was happening, European markets like DAX 30 have started a free fall of 10% in only a few weeks, while S&P 500 is also experiencing the strongest sell off in months. It seems to be that the same old theme of buying very high and later down the track, most likely panic selling into an upcoming low, will once again be occurring.ā€

Via Pater Tenebrarum via Acting-Man blog,

NEW ALL-TIME HIGH

I bet you thought this was going to be about the stock market after the Federal Reserve minutes confirmed that Yellen will be printing for eternity. Yes the .1% are thrilled and have programmed their HFT supercomputers to buy buy buy. This story is about the common folk who need to buy food to eat. The all-time high in the stock market has no meaning to 90% of the population, but an all-time high for beef impacts every middle and low income person in the country who have seen their incomes stagnate since 1998. This won’t show up in the CPI numbers because the BLS drones assume you switched from beef to Alpo, therefore there was no price increase.

Beef prices hit all-time high in U.S.

Extreme weather has thinned the nation’s cattle herds, roiling the beef supply chain from rancher to restaurant.

Come grilling season, expect your sirloin steak to come with a hearty side of sticker shock.

Beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon.

Extreme weather has thinned the nation’s beef cattle herds to levels last seen in 1951, when there were about half as many mouths to feed in America.

“We’ve seen strong prices before but nothing this extreme,” said Dennis Smith, a commodities broker for Archer Financial Services in Chicago. “This is really new territory.”

The retail value of “all-fresh” USDA choice-grade beef jumped to a record $5.28 a pound in February, up from $4.91 the same time a year ago. The same grade of beef cost $3.97 as recently as 2008.

The swelling prices are roiling the beef supply chain from rancher to restaurant.

Norm Langer managed to go two years without raising prices at his famed Westlake delicatessen.

But last week, he reluctantly began printing new menus showing a 50-cent increase for sandwiches at his 67-year-old restaurant.

Langer accepts it’s one of the perils of business when your bread and butter happens to be corned beef and pastrami. But he fears he may have to raise prices again, driving away customers.

“No beef, no delicatessen. That’s the bottom line,” Langer said after a typically frenetic lunch service. “Jewish delis aren’t vegetarian, they’re based on corned beef and pastrami. Things are beyond my control. With the price increase, I hope my customers are tolerant.”

Langer said beef prices are the main reason his wholesale food costs have risen 45% in the last two years ā€” much of it passed from his longtime supplier, R.C. Provision Inc.

The half-century-old Burbank company prepares corned beef, pastrami, roast beef and chili for L.A. icons such as Canter’s Deli, Pink’s Hot Dogs and Original Tommy’s Hamburgers. All the restaurants have to do is heat it up or slice it to their liking.

It’s been an increasingly difficult endeavor, with slaughterhouses driving up their prices for brisket and navel, an extra fatty portion of the belly crucial for making unctuous pastrami.

“For any profitability, you have to mark it up more and more,” said the company’s general manager, Jerry Haines, who has watched profit margins dwindle to about 1% from 5% in the last few years rather than hike prices enough to cover the increased costs.

Speaking last week at his company’s plant scented with paprika and smoked beef, Haines said small businesses like his are struggling to secure enough red meat. Slaughterhouses, also known as packers, are more likely to reserve their reduced supplies for big customers like McDonald’s.

There’s more pressure to throw the special cuts needed to make deli meat into the grinder for hamburgers. What’s left for Haines costs more. Brisket has more than tripled in price since 2008. Navel has more than doubled.

“This whole thing now is being driven by hamburger,” said the gravelly voiced Haines, who keeps years of beef prices recorded on stacks of small sheets of paper. “You take all the McDonald’s and Burger Kings across the United States; the amount of meat needed to make those hamburgers is forcing the value of other cuts of meat to go up.”

The biggest fast-food chains aren’t immune to the price pressure either. Experts say $1 value menus could soon be a thing of the past.

In October, McDonald’s said its Dollar Menu of more than a decade would morph into a so-called Dollar Menu & More, which mixes $1, $2 and $5 items. Wendy’s made a similar move last year.

Yum Brands Inc., which owns Taco Bell, said in December that it expects 4% price inflation for beef and other meats in 2014, though the company didn’t indicate whether the costs would be passed on to consumers.

That’s in line with research at the U.S. Department of Agriculture, which forecast all food inflation to be between 2.5% and 3.5% this year.

Soaring beef prices are being blamed on years of drought throughout the western and southern U.S. The dry weather has driven up the price of feed such as corn and hay to record highs, forcing many ranchers to sell off their cattle. That briefly created a glut of beef cows for slaughter that has now run dry.

The nation’s cattle population has fallen to 87.7 million, the lowest since 1951, when there were 82.1 million on hand, according to the USDA. (The peak was 1975, with 132 million heads of cattle, but the animals then were less meaty and required more feed).

“We’re dealing with chronically low herds,” said Richard Volpe, an economist for the USDA. “Beef prices should remain at near-record highs this year and into 2015.”

Volpe and other experts say American consumers probably will think twice at the supermarket meat aisle, forgoing steak and ground beef for cheaper sources of protein.

“Chicken and other poultry may stand to benefit from this whole big mess,” said Smith of Archer Financial Services.

One reason why beef prices will take some time to ease: Calves require more than two years to gain enough weight for slaughter. And not every rancher will still have a herd to breed from after so much liquidation.

Kevin Kester, a fifth-generation rancher in Parkfield, about 25 miles northeast of Paso Robles, is faced with selling off his remaining 300 cows, which have provided crucial DNA for new calves. The herd is not unlike a rancher’s intellectual property ā€” storing decades of coveted genetic material for traits such as healthy and productive birthing and meatier mid-sections (think more prime rib).

Recent rains have provided grass for a few weeks more. But the cost of keeping the cattle beyond that on expensive hay is too high.

“Twenty-plus years of genetics down the toilet,” Kester said.

http://www.latimes.com/business/la-fi-beef-prices-20140406,0,2966247.story#ixzz2yPsQfJ85