GUALFIN, ARGENTINA – First, the jobs report on Friday showed a big collapse in hiring. The official numbers showed 20,000 new jobs added in February, a far cry from the 170,000 that were expected.

Then, the Atlanta Fed said projected GDP growth for Q1 slowed to a crawl. It estimates Q1 growth will come in at just 0.2%.

And now this. The Washington Post:

Total household net worth in the fourth quarter of 2018 dropped by the largest amount since the fourth quarter of 2008 when the country was amid a steep recession, according to data released Thursday by the Federal Reserve.

Total household net worth is a measure of the assets – such as homes, stocks and bank accounts – owned by American families and nonprofits minus their debts. In the fourth quarter of 2018, it fell by about $3.7 trillion, a 3.5 percent quarterly decline. Going back to 1952, the start of the Fed’s data, only three quarters – the third and fourth quarters of 2008, and the second quarter of 1962 – posted bigger declines in household net worth, percentage-wise.

Yes, the “recovery” seems to be rolling over. But let’s wait to hear a few more notes before we “guess that tune.”

Irredeemable System

In the meantime, the mob is warming its tar and collecting its feathers. Already, almost every Democrat with his eye on the White House has come forward with a new way to punish the rich.

Tax their incomes, tax their wealth, tax their estates… even prohibit them from becoming billionaires. The latest thing, last week, was a proposal from Hawaii Senator Brian Schatz to tax their investment transactions.

Here at the Diary, we have mixed feelings about this… as we do about so many other things. On the one hand, most people would put us in the “rich” category, even though no club of the truly rich would have us…

On the other hand, the mob has a point. Much of the wealth enjoyed by the rich has come to them unfairly. It’s not the fruit of honest economic expansion; instead, the feds rigged the system.

They suppressed interest rates, dumped $4 trillion into asset markets and borrowed $13 trillion – since 2009 – to protect the rich from losses.

And on the third hand – if there were such a thing – the mob and the Democrat contenders don’t seem to care what’s really going on. They offer solutions to problems that don’t exist… and remedies that will just make the unfairness worse.

In the news over the weekend, for example, Ms. AOC was giving a speech in Texas. Bloomberg was on the story:

Democrat Alexandria Ocasio-Cortez, whose sudden rise to prominence has made her a target of Republicans and a sometime irritant to her party’s leaders, called capitalism an “irredeemable” system that is to blame for income inequality.

The 29-year-old, first-term U.S. House member from New York and self-described democratic socialist addressed an enthusiastic crowd Saturday at the South by Southwest conference in Austin, Texas, about issues that resonate with her fellow millennials, from universal healthcare to combating climate change.

Really? Is capitalism to blame for income inequality?

Free System

In a free (capitalist) system, some people will always work harder, get luckier, invest their time and money more wisely, and get richer.

The typical working stiff puts in 8 hours a day and doesn’t bother himself too much about the bigger picture. What is he doing? Why? How could he do more, work more efficiently, create a better product or service at a lower price? He doesn’t worry about it.

Some people, on the other hand, get to work at 8 a.m… and stay until 8 p.m. Even after hours, they try to figure out how to make the business more profitable… how to prevent customer complaints… how to beat the competition.

They miss their kids’ soccer games… they can’t remember their wedding anniversary… they stare dull-faced at cocktail parties, ignoring the banal pleasantries of their companions, as their brains work on business problems.

Those guys, generally, earn more money.

Is there something wrong with that? Is there a “solution” that doesn’t make things worse?

Always Scams

The fixes are always scams – tax, regulate, redistribute. And they’re always controlled by the elite… Returning their money to its rightful owners has never been high on their priority list.

And Ms. AOC? Has she got a better idea than all the social reformers and revolutionaries who came before her? Unlike them, is she untainted by sin, by ignorance, or by self-interest?

Should she say who earns what?

Should the heavy hand of the socialist state – instead of the invisible hand of capricious capitalism – determine what products and services are on offer… at what price… and what profit margin?

Human societies have been down that road often enough to know that they usually don’t like where they end up. We got a taste of where they end up in Thursday’s news. Household net worth dropped – the fourth biggest drop in half a century.

More to come…

Regards,

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Bill

MARKET INSIGHT: HOW AMERICANS GOT $4.6 TRILLION POORER

By Joe Withrow, Head of Research, Bonner & Partners

As Bill reported above, American households lost more money in the stock market last quarter than in any single quarter during the 2008 financial crisis…

That’s the story of today’s chart, which tracks the changes in household net worth due to the performance of their stock portfolios.

Chart

As you can see, U.S. households lost $4.6 trillion in the stock market during the fourth quarter of 2018. That coincided with a 14% fall in the S&P 500 from October 1 to December 31 of last year.

Last quarter’s loss in net worth was more than any single quarter during the 2008 financial crisis… Despite the S&P 500 falling roughly 22% in the fourth quarter of 2008 – a larger drop in percentage terms.

This suggests that Americans are overexposed to stock market volatility today. If a 14% fall can wipe out $4.6 trillion worth of paper wealth, imagine the damage a 50%-plus crash would do…

This has been a serious concern for Bill and his coauthor on the Bill Bonner Letter, Dan Denning.

Here’s how Dan put it to readers in a recent issue:

According to a recent study from Goldman Sachs, roughly 40% of investor wealth is held in stocks. That means that if you’re like most investors, you have roughly half your money in stocks. That’s not a problem in a bull market.

But as Bill and I have been showing you, keeping your wealth locked up in equities means you also run the risk of seeing your net worth cut in half, and having it stay that way for decades. Or for good…

The point of The Bill Bonner Letter is to make sure that doesn’t happen. It’s why we write the letters every month, to help you avoid the “Big Loss,” as Bill says.

Our advice remains the same: Own fewer U.S. stocks and allocate more of your wealth to cash and tangible goods.

Joe Withrow

P.S. As we have been warning you in these pages, the snapback rally in stocks is not to be trusted. All the data we’ve uncovered is pointing to one conclusion: lower stock prices ahead. Now is the time to get your financial house in order.

For help doing that, subscribers of The Bill Bonner Letter are invited to use Bill and Dan’s “New Permanent Portfolio.” It’s a strategy designed to protect, and even grow your wealth during tough times. Subscribers can access it here. And if you’re not a subscriber, join Bill and Dan right here.

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Facebook Wants You to Have Privacy… Just Not From Facebook
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But read also…

Declare Your Digital Rights

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MAILBAG

Today, dear readers jump around topics. Conservatives vs. liberals… One “gentleman rancher” talks overpopulation… and some appreciation for Bill’s Argentina tales

I’ve got a theory. And, as a “gentleman rancher” who enjoys chasing cattle around in the mountains on horseback, you should appreciate this, Bill. I think that government overreach to control every aspect of our lives, whether it be fascist in nature (aka “Trumpism”), socialist in nature (aka Alexandria Ocasio-Cortez), or whacko in nature (aka Nicolas Hulot) is rooted in overpopulation. Yeah, it sounds crazy, but hear me out…

As any rancher knows, control of the herd must be maintained at all costs. To that end, they employ cowboys (gauchos), dogs, and fences. The larger the herd, the stricter the controls must be in order to manage the herd (more cowboys, dogs, and stronger fences).

As the human herd has increased by leaps and bounds, we have seen governments, the world over, become ever more authoritarian. The laws, regulations, and the attendant penalties for violating that the government uses to control us have become increasingly severe as the human population has grown. Its “cowboys” (aka police) have also increased in number and become more and more violent. So, maybe the answer to freeing ourselves from government oversight isn’t to be found at the ballot box, but for people to have fewer babies. Just a thought.

– Dale A.

Mr. Bonner, you missed and overlooked an important point in today’s report. You painted the conservative as the ideal and the liberal as the evil one. Almost all words have a denominative (actual dictionary meaning of word) and connotative (the emotional charge of the word) meaning. No one except the die-hard conservative believe they are the ideal. As the conservatives consider liberal evil, the liberals feel the same about the conservatives.

Quit using emotionally loaded words like “conservatives” with your supposed rational and logical arguments. Some of us know better. You need to replace conservative with such phrase as “Middle of the Road,” not extremes to the left or right. The ancient Greeks had the phrase “Moderation in All Things.” Never give up thinking and reasoning in this crazy world we live in. Thanks for keeping some of us far away from the American power centers… thinking and waiting for your next report.

– Richard P.

I’m one of your regular readers and really enjoy your views, thoughts, and reports. But to me, an Argentine national, now of 22 years Australian citizenship and counting, the news of your good Natalio’s mishap came across as touching. Please give him a big “abrazo” from a countryman Down Under, and wish him a speedy recovery to get back in the saddle. I’m sure that is what he wants to do.

– Eric D.

Of all your missives, I most enjoy reading those about your ranch in Argentina. While my knowledge of your cattle operation is limited to what you publish in your newsletters, I’ll be “Captain Obvious” and posit that you cannot operate a cow-calf operation cost effectively, unless you can grow grass; and you cannot grow grass without water.

Unless you want to raise cattle as a “hobby” and absorb the annual recurring monetary loss, I’ll further posit you would most likely have an improved cash flow by focusing on wine production and tourism; and eliminating the cattle operation, unless it’s part of an agro-tourism enterprise. As an aside, I have purchased several cases of your Malbec, and it is quite good.

– David T.

IN CASE YOU MISSED IT…

Here’s something the mainstream media won’t tell you…

A new technological breakthrough is expected to unlock $12.3 trillion in new wealth, giving it the potential to be the single-best investment opportunity of 2019.

And Jeff Brown, Bill’s go-to tech expert, has discovered the one small company that is perfectly positioned to profit from this mountain of money… but you’ll want to act quickly. Read on here.

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