Weekly Market Update by Retirement Lifestyle Advocates

Food Prices Rise at Fastest Rate in 18 Months

         “The Wall Street Journal” reported (Source: https://www.wsj.com/world/food-prices-rose-at-fastest-rate-in-18-months-in-september-un-says-815be9d2) that food prices rose at the fastest rate in 18 months.  The data came from the Food and Agriculture Organization at the United Nations.

         Month-over-month food prices rose 3% with sugar prices leading the price rise, up 10.4% in September.

         Cereal prices were up 3%, dairy prices rose 3.8%, and vegetable oil prices jumped 4.6%.  The article pointed to growing conditions and transportation interruptions as the cause of the price increases; however, it’s my view that the primary cause of these price increases remains the easy money policies that have been pursued by world central banks.  And now, with the recent ‘pivot’ by the Federal Reserve, I expect there will be even more price inflation moving ahead.

FEMA is Broke and It’s Hurricane Season

         “ABC News” recently reported in the aftermath of Hurricane Helene that FEMA, the federal agency tasked with providing disaster relief, has no money.

         Homeland Security Secretary Alejandro Mayorkas told reporters that congress may need to pass a supplemental funding bill to provide the agency the necessary funds to make it through the current hurricane season.  Hurricane season officially ends on December 1.

         FEMA is taking some heat after spending $1.4 billion this year to help house illegal aliens.  This was reported by MSN (Source:  https://www.msn.com/en-us/news/us/fema-hammered-over-helene-response-out-of-funds-after-spending-1-4b-to-help-illegal-immigrants/ar-AA1rIn2b).

         Governor Greg Abbot of Texas, Rep. Jim Jordan, and Rep. Tim Burchett have all called on the agency to cease spending on illegals and put relief efforts first.

Gold Overtakes Euro as the Second Largest Central Bank Reserve Holding

         According to Bank of America, gold is now the second largest reserve asset of central banks, overtaking the Euro.  The US Dollar remains the largest central bank reserve asset.

         The yellow metal now represents 16% of global bank reserves while the US Dollar represents 58% of reserve assets.  While that is still a commanding share, it is down from 70% in 2002.  (Source:  https://www.investing.com/analysis/gold-is-now-the-2nd-largest-central-bank-reserve-asset-200652268)

         Russia recently announced that the country will increase its daily purchases of gold from 1.2 billion Rubles to 8.2 billion rubles (US Dollar equivalent is $13.5 million per day in gold purchases increasing to $90 million per day in gold purchases).  The country is using windfall oil and gas sale profits to fund the purchases.

         Poland was the largest buyer of gold in the second quarter of this year and rather than storing the purchased gold, took delivery.

         At this point, I’m very interested in the BRICS Summit that Russia is hosting later this month.  Like last year, there are rumors that the BRICS coalition will be unveiling a new trade currency, perhaps gold backed.

Impressive Recent Jobs Report?

         The most recent jobs report boasted impressive job growth and higher wages for workers.  The unemployment rate fell.  However, when digging into the report, one finds the number of government workers soared by 785,000.  (Source:  https://www.zerohedge.com/economics/behind-todays-stunning-jobs-report-record-surge-government-workers)

         This is the largest monthly surge in government workers on record and made the reported unemployment rate 4.1% rather than the 4.5% that would have been reported without the increase in government jobs.  On a percentage basis, government jobs increased by 3%.

         Probably no surprise that US Government debt also, once again, hit record highs.

Dockworker Strike Ends Three Days After It Begins

         While the agreement reached last week only extends the current contract through January of 2025 while the union and employers negotiate automation on the docks, dockworkers won a 62% increase in wages over six years.

         Workers in the International Longshoreman’s Association will see their base hourly pay increase from the current $39 per hour to $63 per hour over the next six years.  While the 62% wage increase was less than the 77% increase sought by the union, it is still a generous contract.  Presently, with work rules and mandatory overtime, many dockworkers earn more than $100,000 annually.  This contract will see that number increase to more than $160,000 annually over the next six years.

Financial Repression as a Debt Management Strategy

         The International Monetary Fund openly discusses this concept.  Here’s how they describe it:

“Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulations of cross-border capital movements, and (generally) a tighter connection between government and banks.

High public debt often produces the drama of default and restructuring.  But debt is also reduced through financial repression, a tax on bondholders and savers via negative or below-market real interest rates.

After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion.

Financial repression is most successful in liquidating debt when accompanied by inflation.”

         In other words, compel (or force) investment into government bonds and pay an interest rate that is lower than the real inflation rate.  This allows governments to borrow in dollars and pay debt back in dimes.

         It’s also a good argument to move some of your assets to a Roth IRA (if it makes sense for you) and to hold physical assets in your portfolio. 

         This week’s RLA radio program features an interview that I did with cycles analyst Dr. Charles Nenner.  The radio program is available now by clicking on the "Podcast" link at the top of this page.

“The first time I see a jogger smiling, I’ll consider it.”

                                                      -Joan Rivers