The Economy remains Stuck on Stupid.

Stock market sell off...check.   New US House Speaker...check.  New US Government budget...check. Paris terrorist attack...check.  Nothing, no one, not a single activity can change the direction of this market.  That direction has been for over 6 years an uneven but steady climb upward for mega and large cap stocks.  Indeed no government policy or business policy has changed much either and we do not expect much change until at least Spring of 2017 and even then it is a big IF.  

We are as they say "stuck on stupid" and for those of us who have held and are still holding mega and large cap stocks we say "thank you very much."  For those needing jobs and those needing good paying jobs the tide is out and will be out for at least another two years or maybe longer.  For those needing higher interest rates that tide could be out for years.  So holding US Treasuries or buying CD's for safety has been less than rewarding and mostly a fools errand.  We have been stating and posting for some time now there will be no interest rate increases by the Federal Reserve for at least until late 2016 and we doubt any then.   The economy is just not capable of withstanding a rise in rates and with an election season upon us there will be none. 

Keeping up with inflation, or what used to be called inflation is pointless.  Witness that Social Security gave no increase this year and likely will not next year either.  Witness mortgage rates back down in the 3% range.  Here is a fact you can take to the bank. If you are in a business that needs human capital, or is human capital intensive, we would highly suggest you start considering another profession unless you are old enough to run the clock out.  Human capital, otherwise known as jobs, is a receding expense in most businesses due to the advance of technology.  McDonalds and Walmart are fast approaching the point where robots and such will replace higher cost humans.  Only in businesses where experienced or well trained human capital is needed is there job safety.  We say all this to note one of the reasons inflation is dead is that the highest cost of business which tends to be labor is fast losing the ability to ask for more compensation.  So the need and push for higher interest rates follows the inflation trend. 

So the beat goes on and we remain stuck on stupid.  Financial engineering by large cap companies buying back stock and increasing dividends to reward those with assets.  Political economy rewarding those who do not work, will not work, or feed off the government largess of the spending of those same non workers.  Crony capitalism remains alive and doing this well and those of us who have assets say another "thank you very much." 

As we stated in our next to last post the Doom and Gloom crowd, which is always wrong, has gone completely into hiding with the recent stock market surge back to this summer's highs.  They will likely stay there awhile, unless so real global crisis occurs such as someone gets mad and enters someone else's safe space, and even then if a terrorist attack can not stop money movement what can?  In any case keep your assets in mega and large cap stocks, mutual funds, or ETF's and enjoy the ride.  If you need a job, maybe even a high paying job, since you have been unable to figure out how to get on the government plantation gravy train of not needing a job, we suggest you consider electing a pro-growth President and Congress next time.  Of course with the two leading contenders not being pro-growth that might not be in the cards.