AI Weekend Analysis for January 25, 2014

The latest stock market analysis is at
http://www.amateur-investor.net/Weekend_Market_Analysis_Jan_25_2014.htm

Social Security is in Big Trouble

If the current trends in the Social Security Trust Fund (SSTF) continue over the next decade the SSTF will have negative assets by 2028 or 2029 if not sooner.   The assets (red line) in the SSTF will top out by 2015 or 2016 and then begin to accelerate to the downside as we reach 2020 based on current trends as Expenditures (green line) will far exceed Receipts (blue line).   Keep in mind when the SSTF has negative assets then Social Security Payments must be cut by 25% based on the current law.  If you are below the ago of 50 you are probably going to get screwed as you approach retirement age as the Social Security Trust Fund will likely be insolvent. 

Weekend Market Analysis for January 18th, 2014

Will the next 5 years in the market act like the previous five.  Read the latest analysis at
http://www.amateur-investor.net/Weekend_Market_Analysis_Jan_18_2014.htm

US Wage Growth versus Corporate Profits

I was asked if I could chart the change in US Wage Growth versus Corporate Profits.   The chart below shows the results.   Notice how Corporate Profits and US Wages rose in tandem from the mid 1950's through the late 1960's.  However after that things began to change as US Wage Growth began to trend downward while Corporate Profits continued to rise.   Currently there is a huge divergence between the two so as I said in the previous post something is going to give soon.

Quarterly US Wage Growth Plumments

Since 2009 the Quarterly Wage Growth as compared to a year ago has dropped dramatically.  The red line is an 8 Quarter Moving Average.   As you can see it's now dropped to around "0" which is the lowest on record since the late 1940's.  Thus as the cost of things we buy continues to go up our wages are stagnating significantly.   Something is going to give soon.  Either wages have to start going up or the consumer is going to stop consuming and only buy things that they really need to survive with (food for example).

   

Is Obama the next Neville Chamberlain?

Since many Americans don't pay attention to history as they are too concerned about their latest gadget from Apple it appears the next Neville Chamberlain has arrived.  As World War 2 was edging closer in the late 1930's  Neville Chamberlain, the Prime Minister of England, made a Grand Bargain with Adolf Hitler thinking that it would prevent a World War.  However after was all said and done Hitler never followed the agreement and just went on his merry way to invade several more countries leading to World War 2.  Thus Neville Chamberlain looked like a complete jackass and in the end actually made things even worse.

Here we are nearly 80 years later and Neville Chamberlain #2 has arrived in the name of Barack Obama who has decided by himself to make a Grand Bargain with Iran over their Nuclear ambitions.  I suspect we are going to see a major war in the Middle East within the next 2 to 3 years (if not sooner) with all of the major powers involved at some point.   Trust me folks Israel is not going to sit idly by as Iran secretly continues to develop Nuclear Weapons.  When the war begins make sure that you personally thank Mr. Obama for his Grand Bargain.        

Amateur Investors Weekend Analysis

The market has finished up 5 years in a row which has been very rare.  To see what happened after previous events read the following analysis at
http://www.amateur-investor.net/Weekend_Market_Analysis_Jan_11_2014.htm

Billions of Dollars Wasted on Iraq

For those that don't follow DEBKA it's one of the most useful sites out there that follows events in the Middle East.  Although they are not always 100% accurate more times than not they do provide keen insight into Middle Eastern politics and events.   Their latest article is very disturbing as it appears Al Qaeda is taking over major parts of Iraq after the US spent billions of dollars to prevent it from happening.   What is even more amazing is that the Sunni groups the US trained to defeat Al Qaeda has now joined forces with them to take over key parts of the country.

For more read http://www.debka.com/article/23571/Al-Qaeda-defeats-a-major-Iraqi-army-offensive-invades-Ramadi-and-Falluja