March 28th and Memories

By Jeff Kelly on March 28, 2024

When March 28^th arrives on a Thursday it conjures up some difficult memories. On a Thursday afternoon, March 28^th very long ago my mom died.

My mom and brothers loved to fish. We had always rented small boats to fish on San Diego Bay. We had our own outboard motor that we used to propel the row boats we would rent. But, after many years, with a small amount of money my folks had saved and a little I had saved plus a loan from the bank we were able to buy our own small boat. We were really excited.

We headed out to the bay for a day of fishing. My brother, Greg, my mom and I. This was the first day we owned the boat. My mom let me skip school, another treat. We successfully launched the boat off the trailer and had a nice day. We even caught a few fish. However, at the end of the day we tried to start the engine to return to the dock and nothing happened. This was a very small boat with no radio and no back-up power. Eventually we drifted in front of the naval base where you see the Navy Seals train. This is about 1 mile south of the Hotel del Coronado.

We decided to try and get the boat onto shore through the surf breaking at the beach. That didn’t work and the boat flipped over in the surf. My brother and I came up to the surface and began to search for our mom. We didn’t find her for over an hour. By then it was too late.

I have many vivid memories of that day but the biggest is the transition from excitement and happiness to the depths of despair. When I got home the phone rang, it was a friend calling me to tell me the girl he wanted to take to the prom had said yes. Of course, he had no idea what was going on in my life. He was so happy; I didn’t tell him my mom had died. I just wanted to get off the phone with him to start calling family about the tragedy. I had to call my brothers and sister. My dad and other brother were in no shape to do so.

The other takeaways from that awful day are tomorrow is promised to no one. We are at Easter weekend. Please make sure those you care for know how much you care. There will come a time when you don’t have the opportunity to tell them. Second, when we encounter people in daily life, we have no idea what they are going through. Kindness and courtesy go a long way.

Lastly, life is what we make it and more directly what we think is important. My mom used to tell us kids she’d had a “great life”. Well, she didn’t get to finish school because she had to work on the farm to make money for the family. She worked hard her whole life. She never really got “ahead”. But she loved us with her whole being. Her family was her life. In that sense she felt rich indeed.

So, on this Easter week, I wish for you all a life you love as my mom loved us and the happiness that comes from closeness of those we cherish.

But, with all that said I’d give anything to have that March 28^th over again.

Markets continue to trade well. More stocks continue to participate. Other world markets joined the party. It’s all good as they say. A few notes showing the nature of the data below. It’s not yet great but is improving and the rate of change is better.

ISM Manufacturing & Services Survey data for March continues to come in mixed (stable but stalled), ‘Less Bad’ continues to propagate across the domestic consumer data-verse.

• NY Fed Credit data (Feb) = Credit Availability & Consumer Financial Sentiment Improving
• Univ Michigan = Household Financial Conditions Improving
• Census Pulse Survey = latest march data = Difficulty Paying for Usual Household Expenses & Food Insecurity declining & sitting at year+ lows
• Household Balance Sheet | 4Q23 Household DFA (Distribution of Financial Accounts) data: The bottom 50% of Households showed the first improvement in net financial position since the hiking cycle began with Assets (Debt + Equity ownership) rising $45B Q/Q vs a Consumer Credit (Increase in Consumer Debt) increase of $17.7B.
• Excess Cash | 4Q23 Household DFA data = While real purchasing of aggregate cash for the bottom quintile of income fell again, real cash balances across every other income cohort increased in 4Q23 for the first time since 1Q23.

Lastly, as the chart below shows, April is a decent month historically.

CHARTS FROM THE WEEK PAST

New highs usually peak well ahead of price.

No peak yet.

Rail traffic looks good.

Intermodal Units up 10.2% for the week and 9.1% vs. 2023.

Tech looks tired.

Sort of like me on a typical Friday.

Services Index from the Dallas Fed moved lower in March to -5.5 vs. -3.9 in prior month … still in contraction but at least off lows of cycle (and not consistent with prior recessions/slowdowns).

Crazy how high those used truck prices got in 2022.

And they have fallen below PRE-PANDEMIC levels.

Recession probability over the next 12 months is low.

OPEC supply is growing, total supply is falling.

This leaves open the possibility of price spikes in the oil markets.

Housing picking up with no rate cuts.

Why would the Fed cut rates?

Households are much wealthier since the pandemic.

If the government shoves trillions of dollars into the economy, we should have something to show for it.

Used car prices look lower and that’s good for coming inflation numbers.

Over 85% of the world’s economies are now running with positive real rates.

New highs are still improving.

This will likely roll over prior to prices peaking.

Active real estate listings in Phoenix are looking better.

A decent proxy for the country.

U.S. debt outlook is bleak.

It won’t matter until it matters. Then it will matter a lot.

Long term interest expense starts to go parabolic.

These things happen in phases.

It doesn’t happen all at once.

With unemployment so low, deficits should be much lower.

This will cause a bigger acceleration in debt when the economy slows.

Construction spending is moving up to all-time highs.

Durable goods nicely higher.

Rate of change also moving well.

In Germany, income expectations continue to rise.

Several automakers have supplies at least twice the industry average.

Ram, Chrysler, Jeep, Dodge. High overall.

Despite the popular narrative, high income earners do pay most U.S. Income taxes.

In 2021, the bottom half of taxpayers made 10.4% of all AGI and paid 2.3% of taxes. The top 1% earned 26.3% of all AGI and paid 45.8% of all taxes.

Mr. Musk’s management appears to be destroying the value of Twitter.

I won’t call it X.

Debt is getting refinanced.

The maturity walls in 2025 and 2026 have been reduced significantly since the beginning of 2024. Record corporate bond issuance.

WEEKEND HOMEWORK

Good things can take time. A reef comes to life.

It took 30 years, but world’s largest artificial reef built near San Diego nuclear power plant is finally thriving

A very good book on potential pitfalls that could cause some issues.

From Wall Street to the White House, the fantasy of an eventual “return to normal” is still alive and well, nurtured by dangerously outdated theories. But the economic world as we know it—and the rules that govern it—are over. In the coming decade, we’ll witness sustained inflation, a series of sovereign and corporate debt crises, and a thundering of capital out of financial assets into hard assets. Few are prepared.   
Lawrence G. McDonald, founder of the economic research platform The Bear Traps Report, got a real-world education in market risk when, as a Lehman Brothers VP, he watched the firm ignore flashing warning signs before its collapse. His analysis led him to identify twenty-one indicators for gauging the health of an economy and detecting early signals of opportunity and danger.