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THE U.S. ECONOMY IS DOING OKAY

              From Worldometer (new  COVID-19 deaths yesterday):

    DAY   USA  WORLD    Brazil    India    South Africa

June     9     1093     4732         1185        246       82
July    22      1205     7128         1293      1120     572
Aug    12      1504     6556        1242        835     130
Sept     9      1208      6222       1136       1168       82
Oct     21      1225      6849         571        703       85
Nov    25       2304    12025        620        518      118
Dec    30       3880    14748       1224       299      465
Jan     14       4142      15512        1151        189      712
Feb      3       4005    14265       1209       107      398
Mar      2       1989     9490        1726       110      194
April     6        906    11787         4211       631       37
May     4        853     13667        3025      3786     59 
June    1        287    10637         2346      3205      95
 July    7         251      8440        1595        817      411
Aug     4         656    10120        1118        532      423 
Sept   22      2228      9326          839       279     124
Oct      6       2102      8255          543       315       59
Nov    3        1436      7830         186        458       23
Dec     1       1633      8475          266        477       28
Jan     7        2025      6729         148         285     140
Feb     2        2990   12012          946        991      175
Mar     2        1778     7756          335         173       28 
Apr     1         439      4056         290         52        12
May    5         225      2404        151            ?        64 
June    2        216      1413          130          10        31 
July    7         320       1958        297          38         9 
Aug   4          311        2138         258          70         ? 
Sep    1          272       1732          39            ?          ? 
Oct    6         281        1305        119            9          ?
        12          322       1254          60          12         ? 
        13         246        1240          44          10       52

Summary:
  • This pandemic seems stabilized.
  • South Africa has in the past shown signs of new variants, but checking their web page, I see nothing of concern.
  • China is showing a mild uptick, but nothing special.
    • No major lockdowns at this time, but everything is still ultra-controlled.
    • The Politburo meets beginning Sunday to select Xi Jinping for a third general secretaryship.
    • However, the China's Nation People's won't meet until March to give Xi a third presidency. 
    • All these decision are pretty much expected, but Xi remains cautious, and could continue his extreme pandemic control measures until then.
    • However, the International Monetary Fund lowered China's growth from the 8.2% growth forecast down to 3.2%.
    • If South Korea, Japan, Taiwan, New Zealand and Australia are examples of how strict policies prevented COVID-19 in the first year of the pandemic, only to go haywire over the past few months, China's numbers could go berserk after March when the country opens up, for there is little natural immunity and their vaccines are only marginally protective.  The one positive is, like in these countries, the death rate will not be abnormally high.
    • In any case, look for China to again lead the world in new cases/day by the summer of next year, and this will be by a huge margin.
First, why did the House January 6 Special Committee bother to subpoena Donald Trump yesterday at their final hearing before the mid-term elections?  Some say it was a dare to tempt him to re-enter the center ring as a showman. I think doing so adds just one more reason for those marginal Republicans and Independents to vote for a Democrat in their home state.  When you add a point or two in half a dozen issues like abortion, democracy, gun rights, and the environment, yet another Trump factor can make that crucial difference when the current races are so close. 

There is now a growing sense that some want this Special Committee to finish what it started, and what better way than for the House to remain in the control of Democrats on November 8.  That 6January2020 video they showed for the first time of besieged Congressional leaders, filmed by Nancy Pelosi's daughter, was frightening and stunning.  This you got to see!!!

The Volatility Index (VIX) is a good indicator of an edgy market.  The lower the value (under 20), the more stable, the higher (above 40) the more, yes, volatile.  On 13October2008 the VIX jumped to 70.  This was during the global financial crisis of 2008.

  • There was the Lehman failure in mid-September.
  • Then Europe began to unravel on October 6.
  • On that day the Dow Jones Industrials closed below 10,000, a 30% drop from the high of around 14,000 on 9October2007.
  • On October 9 the Dow dropped below 8600, a five-year low.
  • Throughout the world companies began to fail on October 10, and global markets crashed.
  • Monday, October 13 was the day the VIX shot up to an all-time high and the Dow plunged 695 points within the first five minutes of the trading session.  That day only saw a minus 128, but trading on the New York Stock Exchange closed for the week with the Dow at 8451, 40% below the all-time high of 9October2007.

On 27March2020 the VIX rose to 66.  The COVID Pandemic had been declared by WHO earlier in the month, and the world did not know what to do.  

  • How soon we forget, but  the VIX was at 17 on February 17, jumping to 42 on March 6.
  • The stock market crashed on 9March2020, with the Dow plunging on that day, and also on March 12 and 16.  Those were the three worst point drops in U.S. history, with the third of nearly 3000 Dow points.
  • So what then happened?
    • The VIX dropped to 27 on May 29 and further to 16 on June 11.  
    • We quickly recovered, as indicated by the VIX.
    • The Dow was at 6627 on March 6 and slowly climbed to 28,824 on10January2020, sinking to 19,174 on March on March 20.
    • The Dow then climbed to 36,800 on 4January2022.
With these two above examples, how does it look today?
  • A year ago the Dow was at 31,135 (VIX 17).
  • Dropped to 28,736 on September 30 (VIX 32).
  • Went up to 30,316 on October 4 (VIX settled to 29).
  • Yesterday's close was 30,039 (VIX back up to 32) a jump of 828 points.
  • Looks pretty metastable to me.
Yesterday the U.S. government announced that Social Security beneficiaries will see an 8.7% increase in monthly payments on 1January2023, the heftiest in 40 years.  In 1981 there was an 11.2% jump.
  • The average retiree will get an extra $140/month.
  • The maximum anyone can get is currently $3,345/month.
  • The increase last year was a significant 5.9%, also the biggest in that time frame at that time.
  • This has averaged 2.3% since 2000.
  • However, there have been zero increases since the 2008 financial crisis.
  • About some history:
    • Cost-of-living adjustments did not begin until 1975.
    • Based on how the CPI-W index increases.
    • Rich or poor, everyone on Social Security gets the same % increase.
  • No matter what you read, the fact of the matter is that there is enough money that Social Security is good at least until 2035.
Will there be a recession?  Certainly not for the next month, but better yet, inflation is predicted to drop from the 8.2% of the third quarter to 7.2% in the final quarter of this year, then to 3.9% in the second half of next year.  So inflation should not be serious factor for the mid-term election.

Maybe more important that all the above is that the U.S. economy is doing well compared to most other countries.  
  • With 4% of the world population, we generate and earn more than 20% of the world's income.
  • Elimination of remaining global trade barriers should increase the benefit to American by another 50%.
  • During the past five years the U.S. GDP is up an annual 2.3%.
  • This deficit began 50 years ago, and was now at $676 billion as of 2020.
  • All things concerned, our deficit has decreased since the Great Recession of 2008, and we are now have a similar deficit to that period.
  • Our largest trade deficit is with China, totaling almost $285 billion, or 34% of net trade.
  • However, our trade deficit is not particularly crucial to our economic well-being.
  • But economists disagree on many things, and the trade deficit is just one of them.
Okay, then what about our national debt?
Our U.S. dollar is at a good high compared to our major trading partners.  The following only shows to mid-July, but the trend is continuing.

Or looking at this on the foreign exchange market:

So if you're worried about our U.S. economy, things are relative, and we are doing better than much of the rest of the world.  The pandemic hurt the world, but we suffered less:


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