Comey Lives!

Former FBI Director James Comey has been charged with making false statements to Congress and obstruction of justice. 

Specifically, it is alleged that he lied to Congress when he said that he did not authorize a leak of information about an investigation into Hillary Clinton, and that in doing so he obstructed Congress. 

It appears that there is solid evidence that he did that very thing. 

Andrew McCabe, formerly of he FBI, previously confirmed that a leak by him to a Wall Street Journal reporter about that investigation was authorized by Comey. 

If this is true, then Comey is a criminal.

Ask Trump's former lawyer what lying to Congress means. For Mr. Cohen, it meant that he was sentenced to three years in jail.

Many in the press in the USA are saying that these charges show that the DOJ is now doing Trump's bidding. If this means they are catching criminals who previously perverted the American political system for their own ends, let's hope to see more.

.

Stock Market Doom, Again!!

The board here at mewetree.blogspot.com has been predicting a stock market crash and recession for years, and starting in 2019. 

https://mewetree.blogspot.com/2019/04/the-curve-invertedrecession-coming.html

https://mewetree.blogspot.com/2019/08/bubble-ii-deeper-dive.html

https://mewetree.blogspot.com/2019/10/best-recession-analysis.html

https://mewetree.blogspot.com/2020/01/bubble-trouble.html

https://mewetree.blogspot.com/2024/10/stock-market-time-to-sell.html

Of course, 2020 saw the COVID-19 pandemic begin, and with that, a government-sponsored depression as economies were shut down. We then saw a massive recovery after the pandemic subsided.

During the pandemic, governments and central banks poured cash into the world's economies to keep them afloat. That stimulus followed a decade of massive stimulus that itself followed the financial crisis in 2008-09 which prompted a massive asset bubble that was about to burst when COVID-19 hit.

Well, it is 2019 again, albeit with even more stimulus and even bigger asset bubbles this time. A recession and stock market crash are coming, the only question is when.

The indictors that matter are as follows.

Yield Curve: The Yield Curve in the USA was inverted from July of 2022 to August of 2024; for 25 straight months. It has never been inverted for this long. It has been back to normal for the last year.

Yield curves invert when the interest rates paid on short-term government debt are higher than the interest rates paid on long-term government debt. The yield inverts when the smart money starts to buy long-term government debt as a safe haven from an expected stock market pull-back and recession, thereby driving yields down as the price of long-term debt rises.  A recession and stock market decline ALWAYS follows an inversion, specifically after the inversion ends and the yields go back to normal.

The world has been due for a recession for over a year now. It will happen, but no one knows when.

Shiller PE: This is a measure of the ten year trailing price to earnings ratio, usually measured against the S&P 500 index. It's historic and normal level should be about 16. Today it is at 39.86, which is the second-highest level ever, outside of the dot.com bubble in the early 2000's. This is literally screaming that the stock market is massively overvalued. Going back to normal would see the S&P 500 drop from about 6,650 today to about 3,200. 

https://www.multpl.com/shiller-pe

Elevated stock prices made sense when interest rates were at historically low levels. They don't make sense now. The market will tank, but no one knows when.

Buffet Indicator: This is Warren Buffet's market indicator, and it measures the total value of the stock market divided by total GDP.  The historic trend line for this indictor suggest that this should equate to about 125%. Today it is at 217%, which is more than two standard deviations from the norm. This suggests that the market is strongly overvalued.

https://www.currentmarketvaluation.com/models/buffett-indicator.php

Warren Buffet is holding over $348 Billion in cash right now. That is the largest cash position (really mostly T-bills) that he has ever taken. He is the most successful investor in history. His cash position is screaming that the market will tank, but no one knows when.

It will happen - but no one knows when.

.

Is Canada America's "Best" Trading Partner??

President Donald Trump has launched a world-wide trade war. He has applied tariffs against all countries on Earth that have significant economies, except Russia, in an attempt to adjust trade relations, and return manufacturing to America from countries that he alleges are "ripping off America."

Some countries are obviously ripping America off. Those countries have non-tariff barriers that make it virtually impossible for American companies to sell products. Others are long standing trade partners that have trade surpluses with America in some areas, and trade deficits in others. President Trump is concerned about manufacturing in particular, as he wants manufacturing jobs to return to the USA.  

Of America's main trading partners, which one is the best, with "best" meaning that this country imports the most stuff from the United States, and therefore more willingly accepts the idea that trade should follow comparative advantage, where countries should just do what they do best, and trade between these countries allows for each to benefit from the other's comparable economic advantages?

Total imports of American goods and services to a country does not tell the tale of who is America's best trading partner. To get a sense of the "best", it is suggested that an analysis of imports of a per capita basis would be better as it would show the level to which the citizens and businesses in a given country are comfortable with importing both goods and services from the United States.

America's main trading partners, and their relative imports of American-made goods and services on a per capita basis, are listed below (2024 numbers in $ US). Services are included with goods as services are a massive proportion of the American economy, and inclusion of services provides a better picture of the overall trade relationship.

China - $164.6 Billion/1.415 Billion people = $116 per citizen

European Union - $630.43 Billion/450 Million people = $1,401 per citizen

Japan - $85 Billion/123 Million people = $691 per citizen

UK - $78.3 Billion/69.23 Million people = $1,130 per citizen

Australia - $61.6 Billion/27.2 Million people = $2,265 per citizen

South Korea - $87.2 Billion/51.75 Million people = $1,690 per citizen

Mexico - $384.4Billion/130.9 Million people = $2,937 per citizen

Canada - $764.9 Billion/41.29 Million people = $18,525 per citizen

For every $1 US in goods and services that China imports from the USA on a per capita basis, Canada imports $159 US. 

Canada's relatively massive imports of goods and services from the USA are driven both by acceptance of the basic precepts of free trade, and by the very close proximity of the two countries. Still, it is what it is - based on who actually imports goods and services from America, there is simply no question which country is America's best trading partner.

Note - the board of mewetree.blogspot.com is Canadian and drives a car that was made in America. Of nine homes in the neighborhood, four have American-made cars in their driveways. How many neighborhoods in China, the EU, Japan or South Korea could say the same thing?