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A Tale Of Two Centuries: Growth (1950-99) vs. Debt (2000-23)

For weekend reading, Gary Alexander, senior writer at Navellier & Associates, offers the following commentary: The first estimate for U.S. … Read…

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For weekend reading, Gary Alexander, senior writer at Navellier & Associates, offers the following commentary:

The first estimate for U.S. Gross Domestic Product (GDP) for the first quarter of 2023 just came out last week, and it was an anemic +1.1%, par for the course for the Biden era, and for our post-9/11 world.

In last Friday’s “Review & Outlook” section, The Wall Street Journal editorialized (in “The Case of the Missing Investment”) that the supply side of the economy is hurting from Biden’s anti-growth policies.

In particular, the Journal pointed out that, “Gross private domestic investment fell 12.5% in the quarter, driven by declines in business equipment (down 7.3%) and residential housing (down 4.2%). This tells a worrying story about economic policy.

Slowing Growth And Soaring Debt

A characteristic of the post-pandemic recovery has been that business investment often hasn’t kept pace with robust consumer demand, and now it looks like investment might fall behind again.” This is a sad commentary on the anti-business tone in Washington.

We have seen brief spurts of high growth – such as in 2019 and 2021, just before and after COVID struck – but overall, the last 22 years of slow growth and soaring debt would tempt a cynic to say that Osama bin Laden permanently wounded our economy.

When he engineered those flights into the World Trade Center and Pentagon, he may not have destroyed America’s financial system, but he slowed 55 years of postwar growth to half-speed. From then on, we have lived more on future borrowings than on present production.

Our many reactive overseas wars – in Afghanistan and Iraq, then Libya and Syria, and more – to fight the long shadow of bin Laden are only part of the cost. We have also expanded many non-productive programs at home while running up debts that are now well over five-fold what they were on 9/11.

Total Public Debt Outstanding

After three successive years of balanced budgets, 1999-2001, the national debt quintupled in 20 years.

After half a century of 3.6% average annual growth, and 2.4% real annual per capital growth, 1950 to 1999, per capita growth was cut in half, and average annual growth has been reduced to 2% since 2000.

per capita growth

The year 2000 is also about the time when able-bodied men and women started dropping out of the labor force.

I’ve covered men in the past, but the current issue of National Review (“Missing Workers Found: It turns out they are not immigrants,” May 1, 2003, by Steven Camarota, director of research at the Center for Immigration Studies) shows that “The labor-force participation rate of U.S.-born women rose until about the year 2000 and has declined since, even as the share of U.S.-born women with children has also declined significantly.

The decline in employment is primarily among the U.S.-born non-college-educated, and this holds true whether one studies the 16-to-64, 18-to-64 or 25-to-54 age range.”

Labor Force Participation

The overall labor force participation rate for U.S.-born adults aged 18 to 64 without a bachelor’s degree was 76.4% in 2000, but it fell to 70.3% at the end of 2022, when the unemployment rate was under 4%. The reason for this great statistical gap is that the unemployment rate only counts those who say they are looking for a job.

“They do not include the roughly 54 million working-age people who are neither working nor looking for work,” says National Review. Did something in the dot-com bubble or 9/11 (or both) kill our entrepreneurial spirit or our working drive or the spirit of growth in our country?

Labor Force Participation rate

The Day of Reckoning for Debts is Approaching

Presidents and Congressional majorities of both Parties spend too much money, to be sure, but we voters choose these people and re-elect them.

This is what we apparently want, that proverbial “free lunch” of rising benefits at low or no cost. The result has been trillion-dollar deficits in most years since 2009:

Federal Government Budget Balance

So far in the 2020s, deficits are approaching $10 trillion: $3.132 trillion in 2020, $2.776 trillion in 2021, $1.375 trillion in 2022, and $1.1 trillion in the first half of FY’23, for a $9.5 trillion rate for four years.

So far, we have not faced the inevitable consequences of this massive debt, since interest rates have been so low, at near zero for nearly 14 years until last year. This free ride will not continue.

In the last year, including this week’s 0.25% rate increase, the Fed raised rates 10 consecutive times for 500 basis points. This has raised the outlay for interest paid on the federal debt to $565 billion over the last 12 months (through March 31, charted below), up about 50% from early 2022, with more rises to come.

Federal Government Outlays

This total is based on average interest rates on publicly held debt of around 2.2%. At average payments of just 3%, the annual interest expense would be $740 billion at current debt levels – but debts will increase.

This brings us to the silliest of all debates – the “debt ceiling debate.” This carnival is like a convention of overeaters arguing over diet plans so that they can wrestle into their bathing suits this summer, after which they will binge again in the fall.

Setting a new debt ceiling only gives them permission to overspend more, until the next ceiling comes into view. Where is the virtue in that? Do away with ceilings and start talking “floors” instead. Start reducing spending to last year’s spending level instead – a new floor.

In the meantime, let’s keep investing in good stocks. Don’t “Sell in May” or “Go Away,” since well-run companies can still grow despite the direction the nation as a whole is taking.

In fact, with fewer of us willing to work, those who work the hardest and smartest will be rewarded the most, and there are now far fewer companies on U.S. exchanges, from a peak of 8,090 in 1996 to barely half that, 4,266 in 2019:

us listed companies peak in 1996

With far more money chasing far fewer stocks, there is a thriving market for good stocks. The world is still growing on all major continents, and there will be customers in developing nations as well as at home for enlightened businesses seeking new markets, so go where the smart money is going – toward growth.

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Bitcoin price must break $31K to avoid 2023 ‘bearish fractal’

BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.
Bitcoin…

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23 hours ago

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October 23, 2023

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BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.

Bitcoin (BTC) held above $30,000 at the Oct. 23 Wall Street open as analysis said BTC price strength could cancel its “bearish fractal.”

BTC/USD 1-hour chart. Source: TradingView

BTC price preserves majority of early upside

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it hovered near $30,700, still up 2.5% on Oct. 23.

The largest cryptocurrency made snap gains after the Oct. 22 weekly close, stopping just shy of $31,000 in what became its highest levels since July. 

Now, popular trader and analyst Rekt Capital is keen to see the $31,000 level break. 

“Bitcoin has Weekly Closed above the Lower High resistance to confirm the breakout,” he commented alongside the weekly chart.

BTC/USD annotated chart. Source: Rekt Capital/X

Rekt Capital argued that BTC/USD could disregard the bearish chart fractal in play throughout 2023 next. This had involved the two year-to-date highs near $32,000 forming a doubletop formation, with downside due as a result.

Specifically, Bitcoin requires a “breach” of $31,000 in order to do so. 

More encouraging cues came from the True Market Deviation indicator from on-chain analytics firm Glassnode.

As noted by its lead analyst, Checkmate, on Oct. 23, the metric, also known as the Average Active Investor (AVIV) profit ratio, has crossed a key level.

Bitcoin’s True Mean Market price (TMM) — the level that BTC/USD spends exactly 50% above or below — is now below its spot price, at $29,780. 

“Have we now paid our bear market dues?” Checkmate queried, describing TMM as Bitcoin’s “most accurate cost basis model.”

Bitcoin True Market Deviation (AVIV) chart. Source: Checkmate/X

Institutions awaken in “Uptober"

Analyzing the potential drivers of the rally, meanwhile, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, flagged the potential approval of the United States’ first Bitcoin spot-price-based exchange-traded fund (ETF).

Related: BTC price nears 2023 highs — 5 things to know in Bitcoin this week

While not yet awarded the green light, a U.S. spot ETF is being treated as an inevitability after legal battles resulted in regulators losing sway.

“The potential approval of a spot ETF for Bitcoin has spurred a significant increase in bullish inflows in the crypto market,” Van Straten wrote in an update published on Oct. 23.

He noted that Glassnode data shows inflows via over-the-counter (OTC) trading desks spiking since late September.

“In addition, the Purpose Bitcoin ETF, with its holdings of approximately 25,000 Bitcoin, has observed consistent inflow throughout the past month. Even though these inflows might not be termed as ‘large,’ they denote a positive market sentiment,” he continued.

“This uptick in inflows across various platforms indicates an optimistic market response to the potential approval of a Bitcoin ETF, bolstering the overall landscape of digital assets.”
Bitcoin transfers to OTC desk wallets. Source: CryptoSlate/Glassnode

The largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC), continues to see a lower discount to the Bitcoin spot price, having already seen its smallest negative margin since December 2021.

This stood at -13.12% as of Oct. 23, per data from monitoring resource CoinGlass.

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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California bill aims to cap crypto ATM withdrawals at $1K per day to combat scams

A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000.
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23 hours ago

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October 23, 2023

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A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000. California legislators have proposed a new bill titled “Digital financial asset transaction kiosks,” calling for a cap on crypto ATM withdrawals of $1,000 per day in light of growing scams. Additionally, starting in 2025, the law would limit operators’ fees to $5 or 15% (whichever is higher). The bill, if approved, would come into effect on Jan. 1, 2024. The bill was introduced after legislative members visited a crypto ATM in Sacramento and found markups as high as 33% on some crypto assets compared with their prices on crypto exchanges. On average, a crypto ATM charges fees between 12% and 25%, according to a legislative analysis. Government officials also found ATMs with limits as high as $50,000, prompting them to take regulatory measures to curb such high premiums and withdrawal limits. There are more than 3,200 Bitcoin ATMs in California, according to Coin ATM Radar. Democratic State Senator Monique Limón, who co-authored the proposed legislation, said the “new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside” when there are real issues happening. Another provision of the bill would require digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025 Crypto ATMs are a popular way for people to exchange cash for their choice of cryptocurrency but have become a hub for scams and exploits because of the nature of transactions (i.e., hard cash). Unlike bank and wire transfers, each transaction leaves less of a trail. Related: CoinSmart president says crypto taxes are a ‘little bit more favorable’ outside US Some residents have recently been caught up in such scams, where the scammer persuades the victim to go to a nearby crypto ATM and deposit cash for the crypto of their choice. Some of those affected by ATM scams have lauded the bill and said the low transaction limit would give victims time to realize if they are being duped, reported the LA Times. On the other hand, crypto ATM businesses said the new bill would harm the small operators who must pay rent on their ATMs. The operators noted that the bill fails to address the core issue of the fraud and instead takes a punitive path focused on a specific technology. They warned such a move would shudder the industry and hurt consumers while doing nothing to stop bad actors. Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

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An airline just launched one of the country’s longest domestic flights

The trip from New York’s JFK to Anchorage International Airport will take over seven hours.

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23 hours ago

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October 23, 2023

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While the title for longest commercial flight in the world will soon be taken over by the 20-hour and 10,576-mile journey between Sydney and London that Australia's Qantas Airways  (QUBSF) - Get Free Report is preparing to launch in 2025, the U.S. is a big country with a number of long-haul domestic flights on its own.

Without even looking at U.S. territories overseas such as Guam or American Samoa, one can spend more than 10 hours in the air and end up only in another state. Some of the longest domestic flights in the U.S. include routes from Boston to Honolulu in Hawaii and Chicago to Alaska's Anchorage.

Related: The World's Longest Flight Is a New Route: Here's Where It Goes

In a move to bring more service from mainland U.S. to Alaska, Alaska Airlines  (ALK) - Get Free Report is about to launch its longest flight yet that is subsequently also one of the longest in the country — the route from New York's JFK to Anchorage International Airport will take over seven hours and cross 3,386 miles.

An Alaska Airlines aircraft.

Image source: Shutterstock

New flight takes travelers to 'land of midnight sun'

The route will debut on June 13, 2024 and take place daily on a Boeing 737-8  (BA) - Get Free Report. The airline recently invested in the plane with the longest capacity in its fleet to be able to serve faraway destinations on the East Coast.

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"We're eager to welcome guests to our great state from the city that never sleeps to the land of the midnight sun on Alaska's new nonstop flight," Jillian Simpson, president and CEO of the Alaska Travel Industry Association, said in a statement. "There's so much to do in Anchorage and in the smaller towns nearby, mapping out your itinerary might be the toughest thing you do before heading west."

The route is part of Alaska Airlines' wider efforts to expand its coverage between Alaska and the mainland U.S. On May 18, it will also launch a nonstop route between Anchorage and San Diego that will take just over six hours and span nearly 2,500 miles. While the airline serves many Californian cities, San Diego's smaller size meant that residents would have previously needed to transfer in Seattle or LA on their way to Alaska.

New routes meant to serve both burgeoning tourist interest and local demand

After adding the new flights, Alaska Airlines expects to have 63 flights a day leaving from Anchorage during the summer of 2024. This is designed to meet the burgeoning traveler interest in the state as well as serve Alaskans who are separated from large American cities by geography.

"Alaskans like to get out," the airline said in announcing the new routes. "Sometimes that might mean hitting all the must-sees in New York City or taking surf lessons in SoCal. We'll make it more convenient for our guests to get there from Anchorage, as well as lots of other places."

For those who are able to make travel plans this far in advance, both the New York and San Diego flights to Anchorage are already available for booking on Alaska Airlines' website. The former starts at $400 each way for mid-week departures, while flying into the state from San Diego will cost from $300.

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