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Mark's Market Blog

11-25-12: Thanksgiving, a thankfully slow week.

By Mark Lawrence

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Markets shot up all week on very low and declining volume. What does it mean? We'll find out in the coming week. Perhaps we'll return to the established channel (blue lines below), perhaps we've broken out.

S&P 500 June 2 2012 to November 23 2012

The US ordered three assault ships - The USS New York, USS Iwo Jima, and the USS Gunston Hall - to turn around and return to Israel in preparation for the possible evacuation of US citizens. Meanwhile there's currently a cease-fire agreement in place. Apparently the Palestinians have run out of ammo.

Egypt's president Morsi issued a series of decrees removing judicial oversight from his actions, the actions of the islamic-dominated constitution committee, and the actions of the islamic-dominated senate. So much for democracy. The Egyptian stock market promptly lost 10%.

Japan has been an export driven economy for my entire life. Lately that's changing. Japan is now persistently running trade deficits. Their aging population means the ration of retired people to young workers keeps rising to unsustainable levels. They've been running budget deficits for years, but those deficits were funded by their own people and huge Japanese savings. As the population ages, people are now starting to draw down on their savings instead of continue to build them up. And the Yen has been falling against the dollar for several months. What's going to happen? Predicting the fall of the yen is famous on Wall Street for ruining careers, but it's really starting to look like we're seeing the end game in Japan. Their combination of aging population, high employment costs, huge debt and continuing government deficits cannot continue indefinitely.

Simplify the tax code, eliminate loopholes and deductions, make the rates more fair. I love those words. Chances are you do too. Is it realistic? Nah. Here's why: most of the "loophole" and "deduction" money goes to health insurance, pensions, and mortgages - the very foundation of the American Middle Class, or at least what's left of it. The ones with blue dots are the ones I think aren't primarily aimed at the middle class.

Tax Deductions favor the middle classes

Perhaps we've hit a bottom in the housing market. If the unsold inventory were to get sold, then people would resume building houses. House building employs about 2.5 people per home built. Of course the US is not one single housing market - California, Nevada and Florida continue to lag behind in house prices and starts.

Housing Starts in the US - building homes creates jobs

House prices in the US

Americans aren't driving so much these days. Below we see miles driven per person, which is showing an unprecedented drop-off. A third of our eighteen year olds have no driver's license - a fact which I find jaw-dropping, I had my learner's permit at age 15 ½ and 45 seconds. From 2001 to 2009, the average annual number of vehicle miles traveled by 16 to 34-year-olds decreased from 10,300 miles to 7,900 miles per capita, a drop of 23 percent. I've been in every one of the 48 states and every Canadian province save New Foundland on a Harley, and it was all fantastic. Now, with high gas prices, high unemployment, low pay for half our population, and an emerging generation that would rather skype and text than go see for themselves, driving is being consigned to the dust heaps of history. The slogan of my youth. "See the USA in a Chevrolet" is now a quaint footnote in some history of marketing class. Well, I guess that just means next time I take off on a cross country journey, I'll have less traffic to contend with. Yet another reason to make money: money buys freedom and travel.

Miles driven per capita is dropping as gas prices rise and young people prefer iPhones

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