MADRID (Reuters) - Hundreds of taxis blocked a central traffic artery in Madrid during Monday’s morning rush hour, in their biggest show of strength yet as a protest seeking tighter regulation of Uber and other ride-hailing services entered its second week.
Mexico is in the midst of a crisis again.
Oil thieves have been drilling holes in Mexico’s extensive network of oil and gas pipelines across the country to steal fuel and sell it on the black market.
State-owned oil company PEMEX found more than 12,500 illegal holes in the pipelines last year.
But Mexico’s new president Andrés Manuel López Obrador has decided to do something about this.
So now, instead of transporting oil and gas via pipelines, they’ll ship everything via truck and rail.
There are only a few TINY issues with that solution: it costs up to 14 times more to send fuel via trucks. And more importantly, it takes weeks longer to arrive at the stations.
Across the entire country, including in the biggest cities of Mexico City and Guadalajara, more than 1,000 gas stations have been closed. Many of those still open have limited purchases of gas up to five gallons per person.
And the lines to get to them can reach up to a mile-long.DYI: Obviously if Mexico becomes the next Venezuela then Katy bar the door on our southern border as a massive wave of desperate individuals and families seek refuge here in the States. This is not a pro or con piece regarding Trump’s attempt to build a wall. Just pointing out that if Mexico doesn’t get a handle on their massive corruption the country will fly apart at the seams leaving the U.S. with one hell of a southern border problem of mass migration.
We know that after 10 years of expansion, a recession is baked in. Trees don't grow to the moon, etc.
Recessions slash income but leave fixed costs--rent, auto and student loan payments, mortgages, etc.--untouched. It sounds too obvious to be useful but if incomes decline while major expenses remain unchanged, that's a problem for every household and entity with high fixed costs.
Put another way: fewer bad things can happen to households and entities with no debt and low fixed costs.
The age-old advice to survive recessions is:
get rid of debt, diversify the household's income streams, slash fixed costs and build up some savings.
The funny thing about slashing your budget to survive a recessionary storm is that it works wonders whether the recession is deep or shallow. If your income doesn't take a hit, then you're saving money to buy recession-discounted assets or spend on important purchases later without having to go into debt.
National home sales across Canada slipped for the second consecutive year, dropping 11% when compared to 2017. It was indeed the steepest annual decline since the Financial Crisis in 2008. As a result, the average home price leaked lower to $488,699, a 4% decline from last year. The decline marked the first year-over-year drop since 2008, when the national average slipped a mere 0.71%.
But as Shiller writes, all mania’s eventually come to an end, and the media plays an equal role in compounding the role of public sentiment in the opposite direction.
And this time it’s not rising interest rates that have caused the downturn: Mortgage rates in Australia are near record lows, and the policy rate of the Reserve Bank of Australia is stuck at a record low 1.5%.
Instead, the downturn was triggered by sky-high prices in one of the world’s most fabulous housing bubbles that smacked into a regulatory crackdown on some of the elements that had made those sky-high prices even possible: Mortgage fraud, bank wrongdoing, reckless lending, and excessive property speculation aided and abetted by the banks.
Would-be home owners are instead being scrutinized more than ever before to ensure they can service a loan, mortgage brokers say. The change in attitude is tightening the screws on the property market and raising fears that New Zealand could join Australia in seeing house prices start to slide.DYI: The long awaited worldwide recession in my judgment has begun. How long will the United States hold out before the ripple effect sets in is anyone’s guess. It appears the slide will be felt this year, if not; then very early 2020. I’ll keep my eyes wide open for any concrete signs for an American downturn.
The scary thing is that, in the estimation of Grant’s Interest Rate Observer, business debt as a percent of GDP tops 72%, which is more than the peak of the last economic up-cycle, 68.8% in 2017’s first quarter.
As financial pundit William D. Cohan recently wrote, vis-a-vis the corporate debt situation: “It’s been quite a party. Now comes the hangover.”
Commercial banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans.
Not a single respondent to the International Association of Credit Portfolio Managers survey anticipates default rates will drop. It's the worst quarterly outlook since mid-2009, during the depths of the Great Recession.
None of this means defaults will spike to the levels experienced in the aftermath of the 2008 financial crisis. Rather, investors are acknowledging that the historically low level of defaults will inevitably climb as economic growth slows.
Even though evidence is mounting that the U.S. economy may be soon heading into a recession, there are plenty of analysts who say that the surge in credit card borrowing is a sign of strong confidence among households. That's hardly the case. In fact, households' confidence in the future growth of their incomes has been cooling since late last summer, which means borrowers will only reach for what’s in their wallet to compensate for what their paychecks will not cover.
Add it all up and it’s likely that any rush to "charge it" will be a last gasp as income expectations continue to decline and eventually cross lines with credit card borrowing. The closer we get to recession, the more desperate a sign credit card borrowing is anything but a reflection on strengthening in household finances. Households wouldn’t be reporting that they expect their incomes to rise less if that was the case.
The big Megaphone pattern in the Dow/Gold ratio since 1913 completed on the upside in 1999. Between 1999 and 2011, the ratio crashed by 87%. This is not the end of the down trend. The next big move will at least reach the bottom of the Megaphone. I would be surprised if the ratio doesn’t go well below the 1 level it reached in 1980. More likely is 1 Dow to 1/2 ounce of gold or lower.
There are many ways to construct an investment portfolio. My preference is to have your core asset classes be U.S. stocks, international stocks, and U.S. bonds, but there are other ways to construct an asset allocation. One lazy portfolio that is favored by more conservative or pessimistic investors is the so-called “permanent portfolio.” Its defining characteristic is a high percentage of gold and a relatively low percentage of stocks. Let’s take a look at this portfolio and see if it might be the asset allocation for you. Harry Browne wrote “Fail-Save Investing: Lifelong Security in 30 Minutes” in 2001, where he describes the permanent portfolio. He markets the permanent portfolio as one designed to perform well in a wide range of market conditions. The permanent portfolio proposed by Harry Browne consisted of equal weighting in four asset classes: 25% U.S. Stocks25% Treasury Bills25% Long-Term Treasury Bonds25% Gold
Using historical returns from Portfolio Visualizer, let’s see how the permanent portfolio has done compared to a standard three-fund portfolio of 60% U.S. stocks, 30% international stocks, and 10% total bond market since the publication of Harry Browne’s Fail-Save Investing in 2001 (assuming annual rebalancing):
2001 – 2017
Permanent Portfolio 214.9%Three Fund Portfolio 166.6%
The permanent portfolio actually outperformed the three-fund portfolio from 2001-2017. Of course, using 2001 as a starting date would be the worst possible time for the three-fund portfolio, as that was during the tech crash and the market experienced two crashes during this time period. Let’s look at the performance of the permanent portfolio versus the three-fund portfolio starting in 1987, when historical data for all asset classes are available on Portfolio Visualizer:
