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Inflation….What Inflation?

Core inflation dropped to a 10 Year low of 1.1% Y-O-Y or 0.1% in February. Bad news for Gold Bugs expecting Zimbabwe type of an inflationary environment. I have been a strong proponent, since about 2002, that we are in a deflationary environment as opposed to an inflationary one. Massive bad debt we have in our system must be liquidated, which is deflationary. The reason we see resemblance of inflation is due purely to FED’s efforts.

By pumping a tremendous amount of credit into our financial system the FED was able to create an illusion of inflation. However, most of this inflation went right into the stock market and the real estate market. Creating massive bubbles in both today and in 2007. Today’s low CPI is another confirmation of that. As the FED slows QE even further it won’t be long before net positive CPI number turns into a negative one. 

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Inflation….What Inflation?  Google

The Labor Department has released its latest report on retail inflation via the Consumer Price Index (CPI). Prices in February were up 0.1% on the headline CPI. Core inflation, excluding food and energy, rose by 0.1% as well. Bloomberg had estimates of 0.1% on the headline and 0.1% on the core inflation reading.

The end result is that prices were up only 1.1% from a year ago. What stands out here is that this is the weakest 12-month gain in about six months, but furthermore it remains well under the Federal Reserve’s inflation target of 2% — the same day that an FOMC meeting is starting. The core inflation was up by 1.6% from a year ago.

Food prices were up by 0.4%, but energy prices were down by -0.5%. The gain in food was the most in over two years, which may be partly driven by that West Coast drought. Lower gasoline prices around the country offset higher heating bills in the Midwest and Northeast.

Stock futures surged Tuesday morning on Putin’s comments that he does not want to enter other parts of Ukraine. Tuesday’s CPI report has not taken any noticeable gains away.

Putin To The West: Shut Up Already. You Did The Same Thing In Kosovo

Whatever you think of Putin, you got to respect a man who is willing to stand up for what he believes in. Take notes Obama. Putin gave an important speech overnight and here are some of his major points. Pay close attention to the first two points to understand why he was willing to go to war over Ukraine.  

  • Putin accused the West of cheating Russia on many occasions, doing whatever it wants in pursuit of its own interests regardless of the legality of such actions. He said it was high time for Western powers to admit that Russia has its own international agenda and national interests too, and that they must be respected.
  • Russia would not tolerate the expansion of NATO to its borders and the military threat it poses, Putin said. Moscow is not against cooperation with NATO, but only if it is done with mutual respect.
  • Putin dismissed criticism of the Crimean referendum, which calls the move illegitimate. He cited Kosovo’s unilateral declaration of independence as an example of self-determination praised by the West.
  • He dismissed the notion that Kosovo was a unique case due to the bloodshed and ethnic conflicts in Yugoslavia, a position maintained by Washington.
  • The president brushed aside the allegations that Russia “invaded” Crimea ahead of the referendum. He said Moscow only reserved the right to use its troops to protect ethnic Russians from the radicals, but never did so.
  • The referendum on independence in Crimea was conducted in strict accordance with democratic principles and the international law, President Vladimir Putin told the Federal Assembly, as he was welcomed by a standing ovation.
  • Putin stressed that the results of the referendum, in which more than 82 percent of Crimean residents came to polling stations and more than 96 percent of those voted for rejoining Russia, leave no room for equivocation.
  • He said he sympathized with Ukrainians who took to the streets of Kiev in protest against President Yanukovich, whom they saw as profoundly corrupt.

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Putin To The West: Shut Up Already. You Did The Same Thing In Kosovo  Google

Putin: Crimea similar to Kosovo, West is rewriting its own rule book

The referendum on independence in Crimea was conducted in strict accordance with democratic principles and the international law, President Vladimir Putin told the Federal Assembly, as he was welcomed by a standing ovation.

Putin stressed that the results of the referendum, in which more than 82 percent of Crimean residents came to polling stations and more than 96 percent of those voted for rejoining Russia, leave no room for equivocation.

He said the history of Crimea, its cultural, religious and spiritual ties bind it with the peoples of Russia, Ukraine and Belarus, which explains the attitude Russians have towards the peninsula.

The president said Crimea had dark pages in its past, particularly the persecution of Crimean Tatars and other minorities in the USSR. The authorities of Crimea seek to recompense for those ills. One such move would be accepting the language of Crimean Tatars as an official language in Crimea on par with Russian and Ukrainian.

Putin lashed out at former Soviet leader Nikita Khrushchev, under whose rule Crimea was attached to the Soviet Ukraine without any regard for Crimeans’ wishes and in violation of the laws of the time.

Crimean separation from Russia was reinforced again after the split of the Soviet Union, Putin said. This could be partially blamed on Moscow too, as it hailed the so-called “parade of sovereignty” of the Soviet Republics.

 

Russia has since respected the results of the USSR’s dissolution, including Crimea’s being part of Ukraine.

Russia’s position was based on the assumption that Ukraine would remain a friendly partner respecting the historic ties between the two countries. Russia continues and will continue to see these relations as most important.

Putin criticized several governments in Kiev for neglecting average Ukrainians, seeing the country as a source of profit.

He said he sympathized with Ukrainians who took to the streets of Kiev in protest against President Yanukovich, whom they saw as profoundly corrupt.

But the new authorities who replaced Yanukovich after an armed coup are to a large degree controlled by the radical nationalists, Putin stated.

Those same radicals voiced threats against Ukrainians who resist their rule, particularly those living in Crimea.

Turning a blind eye to those threats and the moves of the new authorities, which violated the rights of ethnic Russians in Ukraine, would be betrayal on part of Russia, Putin said.

The president brushed aside the allegations that Russia “invaded” Crimea ahead of the referendum. He said Moscow only reserved the right to use its troops to protect ethnic Russians from the radicals, but never did so.

 

Russian President Vladimir Putin addresses the Federal Assembly, including State Duma deputies, members of the Federation Council, regional governors and civil society representatives, at the Kremlin in Moscow March 18, 2014. (Reuters / Maxim Shemetov)

Russian President Vladimir Putin addresses the Federal Assembly, including State Duma deputies, members of the Federation Council, regional governors and civil society representatives, at the Kremlin in Moscow March 18, 2014. (Reuters / Maxim Shemetov)

 

Whatever troops Russia has in Ukraine are present lawfully, since Russia can deploy up to 25,000 troops as part of the contract to maintain its naval base in Crimea, Putin said.

Putin dismissed criticism of the Crimean referendum, which calls the move illegitimate. He cited Kosovo’s unilateral declaration of independence as an example of self-determination praised by the West.

That ballot was ruled legitimate from the standpoint of international law by the International Court of Justice, and the same rule applies to Crimea, he said.

He dismissed the notion that Kosovo was a unique case due to the bloodshed and ethnic conflicts in Yugoslavia, a position maintained by Washington.

The ICJ says nothing about number of victims in justifying Kosovo’s secession from Serbia, Putin said.

Russia dismisses the “need” for victims for Crimea to declare independence, Putin said. He added that there could be victims there, if it were not for the Crimean self-defense forces, which prevented any possible provocations.

The Russian president also praised the Ukrainian military in Crimea, who showed restrained during the crisis and did not allow any bloodshed in the defiant peninsula.

Putin accused the West of cheating Russia on many occasions, doing whatever it wants in pursuit of its own interests regardless of the legality of such actions. He said it was high time for Western powers to admit that Russia has its own international agenda and national interests too, and that they must be respected.

Russia would not tolerate the expansion of NATO to its borders and the military threat it poses, Putin said. Moscow is not against cooperation with NATO, but only if it is done with mutual respect.

Putin said that amid the Ukrainian turmoil and considering the historic context, he understood well why the Crimean people chose to join Russia. Any other status would not ensure the stability and safety of Crimea. Crimea wants to be under a stable sovereignty, and the fact is that this sovereignty may only be Russian, he stressed.

The Russian population is overwhelmingly in favor of accepting Crimea as part of Russia, Putin said.

Considering all those factors, Putin is submitting a draft federal law which would incorporate Crimea and the City of Sevastopol into Russian territory, as well as a request to ratify an international treaty with the government of Crimea to make this happen. He said he was sure of the legislature’s support for both documents.

Russian Mafia Talking Head…..We Can Nuke America Back To The Stone Age

Watch with caption below and decide for yourself

Russian Mafia Talking Head…..We Can Nuke America Back To The Stone Age

The Real Reason Why Car Dealers Are Terrified Of Tesla

No More Oil Changes. For most car dealers, their servicing centers are their cash cows. And nothing brings cars in like a regular oil change. It’s not a secret that once they are changing your oil they are likely to find 20 other things that “require your immediate attention and repair or your tires will fall off and you will die in a fiery crash”. Now, Tesla is trying to change all of that. With their battery pack technology, your car will not need an oil change or for the most part other servicing. In fact, Tesla offers service download where they would download your car information and let the software fix it. 

Isn’t technology great?

Not according to Coalition of Automotive Retailers which is fighting Tesla and it’s direct sales model in every state that it can.  

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The Real Reason Why Car Dealers Are Terrified Of Tesla  Google

 

Car Dealers Are Terrified of Tesla’s Plan to Eliminate Oil Changes

Car dealers fear Tesla. In states across the country, powerful car dealer associations have lobbied to ensure the electric car maker and its direct-sales model are kept out. This movement claimed another victory this week when New Jersey banned Tesla stores in the state.

On the surface, the fear is hard to fathom. In New Jersey, for instance, sales of Tesla’s $70,000 Model S reportedly number in the hundreds. But if you dig a little deeper, it becomes obvious why dealers are worried. They don’t just fear Tesla’s cars. They fear Tesla’s plan to create a world where you never have to bring your car into the shop again.

The first and most striking way Tesla kills the dealer service department cash cow is downloads. As part of its sales pitch, Tesla says you should think of its Model S sedan as “an app on four wheels.” That may sound like vacuous Silicon Valley marketing copy, but the company isn’t just being metaphorical. Software is at the heart of what keeps Teslas running. These internet-connected cars are designed to self-diagnose their problems. The vehicles can also download software fixes or updates — even new features — much like an iPhone when Apple puts out a new version of iOS. When fixes happen over the air, there’s no need for a shop in the first place.

It’s hard to charge for an oil change when there’s no oil to be changed.

The ability to repair a car via software is especially important when the vehicle itself consists of so much new technology that traditional mechanics don’t know how to fix. The flip side is that without an internal combustion engine, there’s not as much to fix. I’ve written before that a Tesla without its outer shell looks like acell phone on wheels. It’s basically just a big battery. That means no spark plugs, no air filters, no fuel pumps, no timing belts. In short, Teslas don’t have any of the parts that force you to take your car in for “regularly scheduled maintenance” — services that can cost dearly at the dealer. But it’s hard to charge for an oil change when there’s no oil to be changed.

To be fair, Tesla isn’t doing away entirely with bringing your car in. The company recommends an inspection once a year or every 12,500 miles. Its service plans start at $600 per year* or less if you buy multiple years at once. The plans include replacement of standard parts like brake pads and windshield wipers. The company will monitor your car remotely and tell you when there are problems, such as faulty batteries. In theory, there are pitfalls in an arrangement where the company that makes your car is the only one that can fix it. But Tesla would seem to alleviate that concern with its flat-rate plans, rather than fee-for-service gouging for every fix. What’s more, the company says your warranty is still valid regardless of whether you get your car serviced at all.

Yes, these all sound like grand promises. And for all we know, Tesla won’t be able to deliver on them in the end. But Consumer Reports’ decision to name the Model S the country’s best overall car suggests otherwise.

Even the fact that Tesla is making these promises at all must strike horror in the hearts of dealers. Once presented with the possibility that most of the costly headaches of owning a car aren’t necessary, car buyers might start asking dealers why they don’t change, too. The answer, of course, is that all those headaches are exactly what keep us coming back to the shop and putting more money in their pockets.

At Tesla’s most recent annual meeting, one shareholder asked founder and CEO Elon Musk about whether challenges to the company from traditional auto dealers hurt the company’s business outlook. Musk argued that consumer desire for a better way of buying and owning cars would win out. He said the traditional franchise model that dominates auto-selling in the U.S. wouldn’t work for Tesla for several reasons, including its reliance on maintenance to make money. “Our philosophy with respect to service is not to make a profit on service,” Musk said. “I think it’s terrible to make a profit on service.”

The shareholders applauded — the same shareholders that have sent Tesla’s stock price up nearly 650 percent over the past year. Yes, for now, Tesla only makes luxury cars, and its approach to service might seem like a luxury. But if it starts making cars regular people can afford, that applause for car dealers could be the sound of money spiraling down the drain.

What You Ought To Know About Warren Buffett

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FUN FACTS ABOUT WARREN BUFFETT: 

  • Warren Buffett, the 3rd richest man in the world, still lives in the $31,500 house he bought in 1957.
  • Warren Buffett gave 85% of his money to charity (mostly to the Bill and Melinda Gates Foundation) to a total of 40.7 billion dollars.
  • Warren Buffett filed his first tax return in 1944, at the age of 14, and took a $35 deduction for the use of his bike and watch on his paper route.
  • In 2010, a lunch with Warren Buffett was auctioned off to a man for $2.63 million dollars
  • If you invested $1000 with Warren Buffett in 1957, you would have amassed upwards of $30 Million today.

WARREN BUFFETT QUOTES:

  • “If past history was all there was to the game, the richest people would be librarians.”
  • “Only when the tide goes out do you discover who’s been swimming naked.”
  • “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

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What You Ought To Know About Warren Buffett Google

Investment Joke Of The Day

Young Chuck moved to Texas and bought a Donkey from a farmer for $100. The farmer agreed to deliver the Donkey the next day.

The next day he drove up and said, ‘Sorry son, but I have some bad news, the donkey died.’ Chuck replied, ‘Well, then just give me my money back.’ The farmer said, ‘Can’t do that. I went and spent it already.’ Chuck said, ‘Ok, then, just bring me the dead donkey.’ The farmer asked, ‘What ya gonna do with him? Chuck said, ‘I’m going to raffle him off.’ The farmer said ‘You can’t raffle off a dead donkey!’ Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’

A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’ Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $998.’ The farmer said, ‘Didn’t anyone complain?’ Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’

Chuck now works for Goldman Sachs.

Daily Stock Market Update. March 17th, 2014. InvestWithAlex.com

Daily Chart March 17, 2014 investwithalex

A strong up day with the Dow Jones up 181 points (1.13%) and the Nasdaq up 34 points (0.81%). 

This stock market action is consistent with what I have warned about at the end of February. The fact that the market is shifting from it’s bull market to it’s bear market and to expect a lot more volatility. That is exactly what we have seen thus far in March.  While most people believe that the market is acting wildly due to geopolitical events associated with Ukraine/Russia/USA, it is anything but true. As I have said so many times before, the market is tracing out it’s exact mathematical structure. When the market is done, it will reverse itself and start the bear market of 2014-2017.

Now, the market left a huge gap on the downside that it will have to eventually close.  Whether it’s going to happen over the next few days or over the next few weeks is indicative of whether or not the bear market has already started. If you would you like to know exactly when the market will top out as well as the internal structure of the upcoming 2014-2017 bear market, please CLICK HERE.  

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Daily Stock Market Update. March 17th, 2014. InvestWithAlex.com Google

Warning: Before You Travel To The US

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Over 54% of Americans have never been outside of the US. A sad statistic to be sure, but understandable. After all, the State Department has so many “warnings” that it is plausible to see why most American’s believe that they will be rapped, kidnapped, shot and beheaded as soon as the step foot on any foreign soil. Having been around the world, for the most part, I completely ignore the State Department advisory warnings. Yet, have you ever thought about what other nations warn about when it comes to travel into the US?

That’s right….damn German nudist….I am talking about you. If you keep undressing in public places we will keep arresting you.  Here are some of the other ones and they are classic. 

Australia

“The US has higher incidence of violent crime compared to Australia. Earthquakes, fires or wildfires, floods, extreme heat, landslides and debris flow (mudslides), thunderstorms and lightning, tornadoes, tsunamis, volcanoes (Hawaii, Alaska and Pacific Northwest), winter storms (freezing rain, heavy snow and blizzards) and extreme cold. Regardless of how healthy and fit you are, if you can’t afford travel insurance, you can’t afford to travel to the US.”

Canada

“Remain alert and discreet while in entertainment areas. Canada and the U.S. have a treaty that permits a Canadian imprisoned in the U.S. to request a transfer to Canada.”

England and the UK

The Gov.UK site warns that U.S. “speed and drink driving [sic] limits are lower than in the UK” so, watch yourself. “The plant Khat (or Qat) is an illegal narcotic in the US. You will be arrested and detained with the possibility of a prison sentence if you bring Khat into the country.” 

Germany

“Nude bathing and changing clothes at the beach stirs up public agitation and can lead to unpleasantnesses.”

Ireland

“Crime remains relatively low in the US.” However, the weather is another matter and there are numerous warnings about hurricanes including the fact that the season runs from June until the end of November and “can affect the whole of the southern US.” “When it is hot, drink plenty of water and apply sun screen” and also, “When it is cold, keep warm with layers of clothes.” 

Italy

“Beware of brushfires in California” 

That’s not too bad. 

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Warning: Before You Travel To The US Google

Is China Ready To Start It’s Mass Migration To “Empty Cities”?

China’s communist leadership has long maintained that they are building infrastructure and “empty cities” to allow more than 700 Million Chinese now living in the rural areas to migrate to urban centers. It’s quite an ambitious plan, where close to 100 Million people (equivalent to about 33% of the US population) are expected to make the move by 2020.  

Will it work? 

I believe the plan itself will work as more and more Chinese will chose urban living and higher wages. However, this move will do nothing to bypass China’s economic and credit issues. With massive credit, shadow banking and real estate bubbles, China won’t be able to escape massive defaults and their subsequent impact on the Chinese economy.  Plus, there are numerous questions of exactly how these rural Chinese supposed to afford to live in widely overpriced cities. Either way, it would be interesting to see how this experiment works out. 

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Is China Ready To Start It’s Mass Migration To “Empty Cities”  Google

China announces plans to expand cities, railways to support economic growth, raise incomes

BEIJING (AP) — China has announced plans to expand its cities and improve public services to support economic growth by allowing millions more rural residents to migrate to urban jobs.

The Cabinet plan issued Sunday calls for raising the share of China’s population of almost 1.4 billion people living in cities to 60 percent from 53.7 percent now, a shift of about 90 million people.

The ruling Communist Party sees allowing people to migrate into cities for higher-paid jobs as a pillar of more sustainable growth based on domestic consumption instead of trade and investment.

China’s evolution from a mostly rural society began with market-oriented economic reform in the 1980s. Cities such as Beijing and Shanghai have grown to become among the world’s largest but migrants are hampered by a household registration system that binds them to their hometowns. That limits access to schools, health care and pensions even for those who live in cities for years.

Sunday’s announcement of the “National New Type Urbanization Plan” for 2014-2020 gave no financial or other details. But plans announced earlier call for improving housing for 100 million people who live in dilapidated shantytowns.

“Domestic demand is the fundamental impetus for China’s development, and the greatest potential for expanding domestic demand lies in urbanization,” the report said, according to the official Xinhua News Agency.

The ruling party has promised in its latest five-year development blueprint to make the economy more productive by giving entrepreneurs and market forces a bigger role and overhauling banking and other industries.

The urbanization plan says railways will reach cities with more than 200,000 residents by 2020 and those with more than 500,000 people will be linked by high-speed rail, according to Xinhua.

It promises to pursue a “human-centered and environmentally friendly path,” according to Xinhua.

“A scientific and reasonable urban development model should be adopted, with green production and consumption becoming the mainstream in urban economic activities,” it said. “China should strive to push for harmonious and pleasant living conditions.”

Longer-term, authorities expect 300 million people from the countryside to become city dwellers by 2030, the equivalent of migration by the entire U.S. population.

The latest plan promises to give permanent urban status to 100 million rural migrants, according to Xinhua.

A study by Tsinghua University in Beijing found only 27.6 percent of China’s people have urban status with full claims to education, health and other public services, while hundreds of millions of city dwellers with rural status have limited benefits.

Bill Gates Confirms: Robots Will Take Your Jobs

I have been a proponent that outsourcing, macroeconomic forces and robotics will be the major driving forces behind increased unemployment over the next few decades. In fact, in one of my earlier articles “4 Reasons US Unemployment Rate Will Be at 20% by 2017” I have outlined the rationale and analysis behind such developments. Bill Gates tends to agree (see article below). According to him, upcoming software and robotics advances will decimate our labor pool over the next few decades. It will impact “low-skilled” category particularly hard. I tend to agree.  

I guess laying on the couch, eating bonbons, watching Jerry Springer while robots wipe your ass will be the future for many Americans. I can’t wait. 

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Bill Gates Confirms: Robots Will Take Your Jobs  Google

Bill Gates: Yes, robots really are about to take your jobs

Microsoft cofounder Bill Gates isn’t going to sugarcoat things: The increasing power of automation technology is going to put a lot of people out of work. Business Insiderreports that Gates gave a talk at the American Enterprise Institute think tank in Washington, DC this week and said that both governments and businesses need to start preparing for a future where lots of people will be put out of work by software and robots.

“Software substitution, whether it’s for drivers or waiters or nurses… it’s progressing,” Gates said. “Technology over time will reduce demand for jobs, particularly at the lower end of skill set… 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

As for what governments should do to prevent social unrest in the wake of mass unemployment, the Microsoft cofounder said that they should basically get on their knees and beg businesses to keep employing humans over algorithms. This means perhaps eliminating payroll and corporate income taxes while also not raising the minimum wage so that businesses will feel comfortable employing people at dirt-cheap wages instead of outsourcing their jobs to an iPad.

And it’s not just “low-skilled” workers who will have to worry about automation. AsBusiness Insider points out, The Economist earlier this year predicted that high-paying jobs such as accountants, real estate sales agents and commercial pilots would all lose their jobs to software within the next 20 years.