Fraud vs Fact: Pictures Of A Collapsing U.S. Economy

Everyone who looks for the truth knows that the U.S. economy is collapsing.  If one were to apply the accounting standards used in 1990 to the S&P 500 earnings, one would find that the current p/e ratio on the S&P 500 is the highest in history – by several magnitudes.  But here’s some snapshots that illustrate the divorce going on between the real economy and the fake economy portrayed by Government reports and the stock market – these two graphs show wholesale business inventories to shipments (sales) and retail sales vs. the Government’s non-farm payroll fiction (click to enlarge, 1st chart from Govt report, 2nd from The King Report) – click to enlarge:



Inv/Sales ratio tells us that retail sales are plunging relative to the accumulation of inventory in wholesaler warehouses. Remember what happened in 2008 when this ratio started going parabolic like this…The second graph shows the Government’s jobs creation fiction vs. the plunging retail sales. Even if a few more part-time jobs are being created and filled, many more people are leaving the labor force than are finding jobs and that’s reflected in the retail sales numbers.

This next graph shows the huge divergence between retail sales and the S&P 500 (source: King Report, label edits are mine) – click to enlarge:


I mean, that graph is kind of self-explanatory. Imagine a graph that showed the real p/e ratio vs. retail sales. The real p/e ratio would be insanely parabolic, especially if you stripped out all the financial companies’ non-cash market to market mark-up “gains.”

What I’d really like to know – in that I see 50,000 more GM new vehicles are being re-called – who are the idiots buying GM cars and trucks given the 100,000’s of thousands of recalls being issued and many reported deaths from defective vehicles?

And then of course there’s oil and lumber, both of which continue to fall off a cliff:


Housing bulls can choose ignore what the falling price of lumber means for future new home sales – but they won’t be able to ignore the consequences of plunging homebuilder stocks. Readers who bought my Beazer and KB Home reports when I published them had an opportunity to make over 20% in a very short time period. Both stocks did a cliff-dive after their last earnings reports. Both are going to go bankrupt eventually. Most of the other homebuilders will soon cliff-dive…Homebuilder Research.

My favorite anecdote about oil:  After the cliff dive down to the high 40’s, I walked into my tennis club and one of the members – who happens to a Cyprus ex-pat – accosted me for my view on whether or not oil was a strong buy.  I said, it will probably have a quick bounce and then head to the $30’s.   He looked at me skeptically which told me he went long – and is now wrong.   Kristos, you should stick with software consulting…

I can’t pound the table hard enough on shorting AMZN.  I go into excruciating detail showing how and why the Company is using highly misleading – if not fraudulent – accounting.   You will never see analysis like this other than from this blog:  AMAZON dot CON.   Last time around AMZN dropped from $100 to under $50.  Last time around AMZN actually had some semblance of an operating profit.  Now it has no operating profit.  What will the stock do this time around?


8 thoughts on “Fraud vs Fact: Pictures Of A Collapsing U.S. Economy

  1. Dave, you should also mention your mining stock reports. The PMs are very strong lately on a relative basis to the $US. The FED won’t hike rates in June/July and might even hint at more money printing. The € is getting by far too weak and no end in sight. I’m sure the FED won’t call it QE as it would make clear that they completely failed. Your call that silver might be the best investment in 2015 could come to fruition.

  2. The US economy is so…..screeeewed!!!! Thank you Fed / PPT / Oligarchs and our illustrious politicians who will sink us all into poverty to only hold on to power. What a corrupt bunch of reprobates. May they all burn in hell.

    1. Yes, note that was not seasonally adjusted, from Jan to Feb. Jan is one of the slowest months of the year. 12% unadjusted for seasonality is not very good.

      1. If you go pull up the actual weekly reports on the MBAA website, you’ll see that week to week for the Wednesday’s that covered Feb – there’s a week lag in the report – so you measure from the 2nd Wed of Feb to the 1st Wed of March – the mortgage purchase apps got HAMMERED in Feb on seasonally adjusted basis. Now, I’m not a fan of seasonally adjusted data, but it does capture what mortgage apps did week to week this year vs. previous years as you move from Jan to Feb. Purchase apps were DOWN on that basis this past Feb.

        1. Understand – Seems the long term trends are what I need to watch – all this micro data is frankly making my head spin!!!
          Enjoy your weekend out there in Blue Sky country.

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