Right out of the hopper today, after the market declines this week, another take on jobs and this one is not good. From here:

“U.S.-based employers announced 38,792 cuts in December, a 33% decrease from the 57,727 cuts announced one month prior. It is up 11% from the 34,817 cuts announced in the last month of 2023, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

In the final quarter of the year, companies announced plans to cut 152,116 jobs, down 13% from the 174,597 cuts announced in the third quarter of this year. It is up 30% from the 117,163 cuts announced in the same quarter of 2023.

In 2024, employers announced 761,358 job cuts, up 5.5% from 721,677 announced in 2023. It is the highest annual total since 2,304,755 cuts were announced in 2020. Except for 2020, it is the highest total since 2009, when employers planned 1,288,030.

Tomorrow morning could be weak in markets as a result is our take on it. The silver lining? When aren’t we wrong?

Markets Closed Today

Well, the Dow and the NASDAQ, anyway.  Futures were pricing lower across the board, however.  And the crypto con slowly unwinds with BTC sagging to $93,628.70 when we looked earlier.

Ports to Stay Open

One notable market risk came off the table overnight: Longshoremen reach tentative deal with ports and shippers, averting potential strike.

Train Wreck Report I

SoCal fires are on a terrible roll: Los Angeles wildfires spread to Hollywood as 100,000 ordered to evacuate..  While 10’s of thousands will have massive fire losses, already the hype machine about Climate is kicking in with attention-getters like This Week’s Unholy Mix of Drought, Wind, and Fire in Southern California: A Warning of an Accelerating Insurance Crisis in Climate-Risk Areas? For a little less faddish view, try Experts: Palisades Fire Will Worsen California’s Insurance Crisis.

I know: “What crisis?”  (Did you really sleep through the PG&E fires?)

Hat tip to Reader Ray for the explainer ( in our listen to the smart grownups talking) Comments section:

“Fire insurance coverage in Southern California ended on September 1st, 2024. I don’t know if current policyholders are grandfathered in, nor if they are, for how long.

The Democrat supermajority in the California Legislature thoughtfully capped insurance rates a while back. State Farm was the last fire insurance provider in the State. They pulled the plug because they could not remain solvent on the “margin” to which Sacramento limited them. Paris Hilton is going to have to pay the $28mln out of pocket, if she wants her Malibu bungalow rebuilt…

Personally, I’d like to hear from the Surf Dude, to make sure he’s still in one piece. These fires are serious shit.”

Obviously, what percentage of homeowners insurance is earmarked for fire coverage (specifically) will be all over the place, but AI explains that:

“Fire and lightning damage is the second most common claim for homeowners insurance, accounting for 21.9% of claims. The most common claim is wind and hail at 40.7%.
Fire damage claims are the most expensive type of claim, resulting in an average premium increase of $273.
Factors that affect fire insurance premiums include: The amount insured, The nature of the insured property, The history of claims, The nature of the insured business, and The risk profile of the business.”

We expect some modest economic impact from this fire and a wholesale change in how people think about insurable risks of home ownership.

At the extremes?  No insurance would take a lot of the wind out of sales of mortgages (and CMOs).  OR, there will be an increase in general insurance of the property which could become baked into future sales prices.  Presumably, this would be amortized for some x-percent of homes being lost over the typical home ownership period.  Which is??

“In the 100 largest metro areas, the length of median homeownership duration ranges from 6 to 18 years. For example, the median homeownership duration in Sacramento, CA is 11.9 years, while in San Francisco, CA it is 16.3 years.”

Media is turning this into politics, too, and not without reason: James Woods Smacks Down ‘Blithering Idiot’ Gavin Newsom For Dropping Ball On Forest Management.  Brush huggers.  Which is why we spend time “limbing up” our tree farm.  And what’s this? The idiot speaks? Biden brags about how Hunter’s house was spared, despite over 1,000 homes burning down in the L.A. area. ViseGrips to the forearm – stat!

Oh, and another democrat being outed: LA Mayor Karen Bass Gets ROASTED for Cutting $17.6 MILLION From Fire Department As City Goes Up in Flames – Twitchy

The problem with these possible insurance outcomes? None of them protects the people paying for the home!  In the “insurance goes bye-bye” model, homeowners are screwed if they suffer a loss.  And in the “payable to the mortgage company only” case, they’re left baked and screwed. Marvy.

Insurance in China, you ask?  Home insurance penetration is relatively low compared to other major economies and in Russia  home insurance is voluntary, meaning homeowners are not legally required to purchase it, and as a result, only a small percentage of people do.

But our outlook for slower real estate turnover is based on facts. In Russia, the average down payment for a home purchase is around 20-30%, with some sources stating that the current average is closer to 30%.  In China a first-time home-buyer pays 15% of the property value, while second-home purchases require a minimum 25% down payment.  The US has been way below global down payments for a long time… no-doc blowback, anyone?

If you eyeball it just-so (and we do a lot of McGoo-like squinting around here) you can see a business model change. Bigger down payments to buy homes, less mortgage holder risk exposure… That could add in to the Economic Depression we envision getting up a head of steam this year. Remember, the CRE collapse still hasn’t been written down yet, either. And someone’s still gotta take the fall for that.

This all puts the “Fed in the box” after unjustifiably (in our view) lowering rates to help the Biden-Harris re-mess. Which brings us to…

Train Wreck Report II

Don’t look now, but the Fed Consumer Debt (ne credit) came out Wednesday.

Click over to Federal Reserve Board – Consumer Credit – G.19 and look at the mess.

What we see? My consigliere and I are both looking at the paradox. Which seems to reduce to “How can credit card use collapse and yet Retail was being reported up?”  My theory is that we will find out some possible “real uglies” on the 17th when the Retail Sales come in.

My consigliere is wondering how many people are using the new round of “company cards” that many of the large retailers have decided to begin issuing.  That’s a good point, because it may show up as “spending” but might not transit the books of Usury, Inc.

This afternoon, the Fed Balance Sheet will be released.  Useful if you missed the Creative Accounting class.  Tomorrow the official jobs report and we half-expect a large drop in the Household numbers while some BS headlines about how good things are rolled by.  A reality check, then?

Unemployment Filings Up

Just out:

At the State levels:

Rip N. Reed Reports

Hard to be anything but happy in the newsroom in the old days.  An A.P. wire machine chugging out miles of dead trees next to the UPI machine. And that newfangled BusinessWire machine making funny dot-matrix noises.  Still, the news got out but it’s mostly been replaced with idiocy and RSS…

Little doubt  Carter was better than Biden, we figure.  And we admired his Habit work, too: Americans flock to the Capitol to pay respects to former President Carter ahead of funeral: ‘Job well done’

She said WHAT? Nitro pill, please: Alexandria Ocasio-Cortez Calls Out Fellow Democrats for Being ‘Too Reflexively Anti-Republican’. (Does this mean socialist wannabe’s can read voter survey data?)

About Your Passport:  If it’s a US document congrats – 9th ranked in the world and tied with Estonia in this year’s rankings: The Official Passport Index Ranking | Henley & Partners. They rank Singapore as the best passport in the world this year.  Meanwhile Russian Passport Climbs in Travel Freedom Ranking. 46th.  China is 60th, BTW.

Europe’s idea of Justice is on the rocks: Syrian Who Sexually Assaulted 12-Year-Old Only Has to Pay $100 in Compensation.

Another Biden “torpedo” is going to miss: Trump Plans to Restore America’s Energy Output, Will Announce Emergency on Day One to Remove Biden Restrictions.  Is that strategic reserve filled up, yet?  Let’s zoom out here….

Chess At Sea

Something we have been keeping an eye on (because it will drive/impact Middle East naval operations) is the lack of U.S. refueling ships to keep the fleets going.  (A side of false economy with that?)  Still, it’s good to see that French Navy’s new tanker conducts first replenishment at sea with U.S. commercial oiler – Naval News.  Relying on the French to keep projecting power?  Um…

Here, look at what Biden did to our strategic p[etroleum reserves during his” squanderency”

See how reserves cratered when Biden showed up? Real numbers from the EIA here. Barely has a start on refilling since he was called out on China “gimme’s” last summer…

Around the Ranch: A Peoplenomics Follow-up

We try to get our “deep thinking” pieces posted for the mid-week report.  this allows subscribers to schedule reading into their workweeks without screwing up valuable weekend time blocks.  Our Wednesday piece this week dealt in particular with Downscaling (my latest book) and how Housing is a core part of that.

Turns out that one of the topics in that discussion was touched on in a late Tuesday report out from  the Tax Foundation which bears on exactly the “tax overhead” of property ownership that’s key to successful Downscaling.  They said in part “Americans Moved to Low-Tax States in 2024:”

“States that saw significant domestic migration-related population growth include South Carolina, Idaho, Delaware, North Carolina, and Tennessee.

At the other end of the spectrum, Hawaii lost the greatest share of its population to other states, followed by New York, California, Alaska, and Illinois.”

As we have discussed (on the Peoplenomics side) one of the key aspects to maintaining a high disposable income is strict personal income/expense management.  While it’s not comfortable, at first, to “drop out” of multiple “Rat Races” (including homes, landscaping, vehicles, and social events like meals out and entertainment) the payoff in the long run can be (and has been for us) a huge increase in financial wherewithal.

We sometimes like to analyze people’s financial condition just as you’d assess icebergs.  Most people have “melted through retained earnings” such that they have become Debtbergs.  Ready to “roll-over” any old time.  Witjh the Downscaling plan – and implicit recognition of increased retained earning through smarter spending and big increases in retained personal earnings (whether savings or investments) the outcome of being true “icebergs” comes about.  You never know which ones have the most mass below the waterline.

Properly structured then, Downscaling is all about the “Heads I win, Tails I win” approach to personal finance.  You may not be too keen on rural areas in the “least tax” states (including Texas), but in terms of standard accounting ratios, our annual percent of personal income paid as property taxes is a ridiculous 0.274 percent.

As a thinking point, consider that in Marin County (over the Gate from SF) the median property tax rate in 2024 was over $10,000.  Which would apply (not Downscaling) a personal income of $3.648 million to hit property tax “ratio equivalency.”  (Sadly, we’re nowhere near that top line, but we do win the tax domicile contest, hands down.)

The median income of Marin (2023 numbers) was $139,197.  So, median to median property taxes were 7.187 percent of median income.  Texas, in comparison, sports a much lower median income (statewide) of $76,060 with property taxes of just $4,916 in 2023. Which means real median property tax rates more in the 6.4 percent range.  But ridiculously lower (by a decimal point or two!) in rural areas where there’s low public employee retirement obligations and agricultural tax incentives to be harvested.

I mean, you’re welcome to remain in the higher tax burden glitz and all.  The restaurants are better, traffic is not, and oh yeah, the crime rates  trend higher in Big Cities. Which gets me to wondering, Big Spender: have you taken an I.Q. test recently?

I mean if you want to live on the railroad tracks, I guess that’s your call.  But we have been watching those lights up the track from out here…

Write when you get rich,

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