Sunday, September 28, 2014

Bethune, SC

If tears could build a highway
And memories a lane
I'd walk right up to Heaven
To see you again.
written in cement in Bethune, South Carolina
(Bethune Pottery)

My family and I lived in a small town when I was a child (9 - 13 years old) in the middle of nowhere in South Carolina.  Bethune had a population of about 500 people.  We moved there because my father's employer moved him around as part of his career.

Here is a photo of our family taken about 1968 of the us on the front porch by my Uncle John that we used as our Christmas card that year, (as always *click* on any image for a better view):

"Bethune Gothic"
Sitting: Stephen Mix, Amelia Mix, Robert Mix (holding lunch)
Standing: Lin Mix, Joseph Mix

I bring up this topic today because of my visit to see people there I have not seen in some 45 years!  Most preparations have been made by my former classmates.  As I write, I am preparing to make the three hour or so drive over from I-95 in NC where I am now (my journey up and down the East Coast along I-95 has had its moments to which I will cover in the near future).  This promises to be an interesting and fun day!
*  *  *

Those years there were among the happiest of my life.  The people (kids in my school class) were very nice and decent kids.  Even though we had just moved down there from Massachusetts (where my father's company was headquartered), and so being a Yankee (um, recall that in the mid-1960s the War Between the States was a mere 100 years before...), the locals treated us very nicely (well, most of them...).

Small towns in the South in the 1960s were typically rather poor by US standards.  You will need to look on a good map of use a search engine to find it.  Bethune had one stoplight (at the junction of US 1 and SC Hwy 341).  Two small elementary schools with one high school.  The one cop also had to split his duty with nearby McBee, seven miles away.  There was little crime, so Officer Falkenberry was not overworked.  Recall those days: Vietnam protests, "sex & drugs & rock 'n' roll", hippies..., much of that had not arrived to Bethune yet, although the social changes DID get there later on.  After the 7th Grade we moved away as my dad got a promotion to HQ up in Boston.

And as the years went by, I lost track of my friends there in Bethune.

Until recently, when one of them found me via Facebook.  O, ye doubters of Facebook and technology!  Responsibly used, even Facebook is of great value!  (LOL)  So, as I had plans to pass relatively close on I-95, some of them helped me to plan a small reunion this Sunday.

So, for now I pause in writing this piece, all that follows will be what happens (happened) later today...

*  *  *

Today was a beautiful day to visit.  In addition to seeing whatever friends I could from the 45 or so years ago, I wanted to see certain places that I remember well.  Here is the house we lived in (for real, of course the picture at top was a joke, it is our family though).

602 S. Walton St., see number written vertically in blue at far right.  The trees are different, and the house appears to have improvements, but that's the place!  Note sandy soil at lower left, almost all of the soils around this part of SC are sandy, but they still grow plenty of corn, soybeans and cotton.

Most of Bethune is centered on Main Street and US Highway 1 (Columbia, the capital of South Carolina, is 52 miles away on US 1).  It is (and was) the main intersection in town.  Here is a photo of Main St. (SC Hwy 341), recall that Bethune is very small!

There is one stoplight in town, you can see it some 50 yds. from where I took the picture, way beyond is a blinking red light (you can just see it to the "left" of the car with headlights on), where US 1 crosses (and has the right-of-way).  You can also notice the railroad crossing signal, this was the Seaboard Coast Line when we lived there (now part of CSX).  Yes, my brother and I would put a couple of pennies on the rails when a train would come...

Welcome to Bethune:

*  *  *
I arrived in town early, before I had scheduled to meet whomever would come (3:00 PM, so it would not conflict with church or lunch), that is why I took the above pictures.  But, each arrived, in two cases with spouse, neither of whom I had met.  We met at the eating part of the Exxon (not visible in the photo I took of Main St. and US 1 I took above).  Meet five of my friends from the Bethune High School of 1974 (even though I went on to another school after we moved from Bethune):

Left to right: Libby Catoe, Leroy Stevens, Starling Stokes (green shirt at back), Larry Farmer (with SC Gamecocks hat), Ronnie Newman (partly blocked by Larry) and Libby's husband.  All of them (ex. Ronnie) still live in Bethune, Ronnie lives in Columbia, SC.  Two more were hoping to come by, but had commitments they could not abandon.  (Maybe next time!)  We talked mostly about other friends, people and teachers we had, o so many years ago.  There have been a couple of people I know who have passed along, and another one or two with health problems, but this is what people in their fifties all experience...

It is very important for me to now mention something.  These five classmates, from long ago, are among the finest & kindest people I ever had the pleasure of being friends with. 

I moved there from the north (ie, I was a Yankee, yes in the South they have long memories), yet I was treated wonderfully, much better than at the school I then went to up north for five years (Grades 8 - 12).  I now wish I had come to Bethune years ago...  These valued friends today added a LOT of value to my life!  Thank you very much for your kind hospitality.  I will never forget today.

*  *  *

We chatted awhile, but Leroy had to leave.  He had work to do, on Sunday!  Leroy owns a business (which I will describe below).  After he left, the others mentioned his incredible work-ethic.  It was normal for him to work (at least some) on Sundays.

Some 30 minutes after he left to go back to work, we saw him drive his backhoe by on US 1, on his way to pick up some clay.  HE went, not one of his employees.

Leroy owns Bethune Pottery, he makes lots of lawn ornaments and similar products out of a mixture of cement and clay.  (I did not ask anything about his production processes, other that he uses molds that he gets from various places)  His business is the largest "small business" in Bethune, he employs about 10 people.  Here is a fun little item from a Yahoo pottery group about clay coming from Bethune and mentioning Leroy's business:

The Augusta (Georgia) newspaper had an article listed by Google, but I could not bring it up.

After our snack & chat, Larry and his lovely wife Jean led me out to Leroy's business.  Here is an overview picture:

If I understood correctly, his is one of the very largest businesses of this type in the South!

While we there, Leroy had come back.  Here he is off to get more clay, but using his tractor and a wagon...  The man, my old friend works (Sunday today...)!  And his success proves it.  And, he REALLY WAS working today, the photo is not a posed shot, I had to STOP him to take the picture.

*  *  *

If you haven't figured it out yet, I was and am very moved by re-starting my friendships from such fine people from so long ago.  These people, from a remote place not well connected to most of my readers, I deeply thank and welcome their friendship again.

Fare well Bethune, until I have the chance to back.

Friday, September 26, 2014

King Dollar?

Lately we have seen almost everything go down vs. the US dollar.  Other currencies, gold & other commodities, almost everything investable (except, arguably US Treasuries, which have performed extremely well in recent years much to my surprise).  This almost begs for an examination of US dollar recent performance as well as discussing likely future prospects of the dollar versus other investments.

First I would like to show what has been happening lately with the dollar compared to some of its alternatives, I just use the "US Dollar Index" (I believe it is some 50% composed of the Euro, and almost all of the rest is the Japanese Yen and the UK Pound).

Most of what I present below is from which a free (but limited) service. To my knowledge, stockcharts does not track Bitcoin, so I had to go elsewhere for that chart (see below).

 Here is the US dollar over the past six months, this is a measure of the strength (going up) vs. weakness.  *Click* on any image for a better view!

All three marked indicators show very strong performance by the US$.  7% in a little under three months is a very large move in foreign currency terms.  The dollar has moved up big vs. the Euro (now just under $1.27), and the Japanese Yen (109 Yen to the dollar).  The UK Pound is around $1.626 (it has not fallen as much as the Yen, Euro and Ruble).  The Russian Ruble is near a new low.

  • Sidebar: Speaking of the Russian Ruble and Russia, I will mention that the Ruble is very low as Western sanctions bite, and I wonder (woooh, conspiracy theories!) if the US .gov is working with Saudi Arabia to beat the Russians down "a la Reagan" by cutting Russian hard currency income because of lower prices for their exported oil.  I do not think this the case for lower oil prices, as oil and everything else has been going down lately.  But, I promise that I will get around to looking at a conspiracy theory or two before too long...

Of interest to technical analysts, here is a rather amazing chart, note how the dollar's recent move is very impressive even looking back two years...:

Each of those little red and white bars are what the pros call "candlesticks".  I cannot recall EVER having seen 10 white ones in a row...

*  *  *

OK, most of the foreign currencies (that would also include the Peruvian Sol for those interested) are down vs. the dollar.  What about gold?  Gold over the last 6 months, note that at that the ticker for gold itself is $GOLD, and may differ slightly in its price movements from the gold ETF (ticker: GLD), the GLD is "paper gold"...

Notice how gold moved almost exactly inversely with the dollar.  US$ up, gold down.  Not pretty for gold owners!  Here is the sad story for the past two years:

Note how gold (priced in dollars) is essentially at a "triple bottom" (for anyone interested in technical trading), this is usually NOT a good sign...

Six month crude oil ("West Texas Intermediate Crude"):

Crude oil is moving very similarly to gold, down!  Note the rather orderly "channel" (gray lines) from about $107 per barrel (late June) to $93 and change now, a decline of about 12%.  Note also the ominous-sounding "Death Cross", this is a pattern where the 50-day moving average (blue curvy line) crosses over (downwards) below the 200-day moving average (red curvy line, less volatile), while at the same time the prices are below both.  I do not have statistics as to whether a Death Cross has any predictive value or not, but the technical traders watch these kinds of patterns closely.

Gasoline prices seem to have edged down just a bit, not much, but a little.  I have not had to pay $70.00 to fill up my SUV in a month or two, smile...  Gasoline prices are "sticky" to the downside, that is, when crude goes up gasoline goes up right away.  But, when crude goes down, there is a lag time..., they do not cut prices as quickly as they raise them, hmm, funny that.

Bitcoin 6 month chart, note eerie similarity to decline (with gold) since early July (source:

Bitcoin has gone down some 30% from its recent (July) peak.  But, Bitcoin is extremely volatile!  Bitcoin topped out at over $1100 last December, when the craze was going full-blast (yes, that was the general time-frame I started learning about and buying BTC...).

6 month cotton price, ugh!  A slowdown in China figures into here too...

That "Death Cross" business (50-day moving average (blue) crossing below 200-day (red) with prices even lower about July 9) looks like it predicted lower prices.  Cotton, like many commodities, has its own price dynamics and is influenced by weather (for example) in cotton-producing areas.  (Gold is not really influenced by weather, strikes, etc.)  But, China is importing much less cotton currently.

I had to take a "screen shot" of this next chart, it is an index of food and beverage prices of the last few months and is only through August.  But the general trend is clear, DOWN!  I know nothing about this particular index, but it would appear that in the aggregate, wholesale commodity food prices are down about 7% (again, April - August).


*  *  *

STOCKS have been somewhat positively correlated with the dollar.  Although last week was down and volatile in the stock market, stock prices have been surprisingly weakly correlated with the dollar, stocks in general ARE up (and near all-time highs), but the price action only somewhat similarly matches the dollar movements.  It is possible that foreigners are buying dollars more aggressively than buying US stocks, but that is just a speculative thought on my part.  Because the correlation is somewhat weak, I do not put the chart in here, but you can look at it (the S&P 500, the most important stock index for the pros) here:

Normally (but things have not been "normal" since at least 2007...), the US$ and the longer-dated US Treasury bonds move together (positive correlation).  But they have not, the 10-Year Treasury price chart appears to have very little correlation with anything!  See for yourself if you don't believe me:

I can offer no explanation for this -- the Treasuries not being strongly correlated with the US dollar.  QE (or at least the "Taper") is slowly ending, which MAYBE would push prices down some, but that MIGHT be balanced by foreign (or other) demand for a "safe haven" investment.

*  *  *
Bottom Line:

The US dollar has indeed been King Dollar recently.  Nothing else seems to match it, nor do I have a ready explanation based on price movements (at least the ones above).

Will this continue?  Is the US$ really the King?

Or is it just the "cleanest dirty shirt in the closet"?

Hmm, we will have to wait and see.  Because I do not know.  But, something seems very wrong with this latest King Dollar...

How do we deal with this?  If ("a big if") this trend continues (and it might, deflation -- at least short-term -- is a threat), one way is to have plenty of CA$H.  Dollar goes up, the value of cash does too.  But it is safer ONLY if you have at least some of it outside of the banks!

Monday, September 22, 2014

China & Peru Now Point To Recession?

Recently China has been in the news re their huge debts, new QEs, real estate overbuilding and other signs that they may be on the verge of recession.  Chin has also stopped importing the massive amounts of copper and iron ore that they had been importing for years.

Australia has started shutting down some iron ore mines.  Zero Hedge recently reported that iron ore prices have sunk to a very low $80 per tonne.

Peru has for the first time arrived at the edge (or worse) of recession.  The below chart comes from the INEI (Peru's economic statistics agency):

peru_gdp_july_2014.gif (538×253)

I found this at Otto Rock's interesting blog on Latin America and mining (especially Peru), here is the link to the article with the chart:

Note how close to zero Peru's growth has been in the past four months or so.  Otto comments that this news is being "spun" as good news, but..., if you account for the fact that governments often lie, then you might infer that Peru may have entered recession.  Otto's blog ( is quite irreverent, but is really more interest to people in mining or involved with Peru.

If Peru HAS entered recession, that would be the first time since the mild one in 2008-2009 (mild for Peru).

Another indicator that Peru may be slowing down is the recent performance of our own bearing business there.

Year Expr1001
2007 $543,000
2008 $610,000
2009 $597,000
2010 $620,000
2011 $607,000
2012 $759,000
2013 $874,000

(figures rounded)

Some of the above lower 2014 sales figures (6% lower) we can explain away by noting that some of our best selling pieces have not been available, but Peru's slowing economy is a factor.  Many of our customers are telling us that business is slower.

Lower commodity prices (which hint at lower Chinese demand) also affect Peru as a major exporter of copper and other metals.  Gold production is likely to decline this year as well, as Peru's production at their huge Yanacocha mine is going down faster than production from mines gearing up.  Lower export volumes at lower prices, this is known in economics as "deterioration terms of trade", which is not good for an export economy.

* * *

In addition to the well known facts of China's risks (eg, credit bubble, "ghost" cities, bad demographics), there are some new tidbits of information:

-- Zero Hedge and others have been reporting a new giant QE in China...

-- A recent surveys of Chinese billionaires shows some 40% are considering leaving...

-- A LOT of Chinese money has arrived (and still coming) buying US real estate...

-- Alibaba has just IPO'd...  The largest IPO ever.  A typical sign of a top...

The Alibaba IPO may be significant in that it is typical of OUR country slowing as well as any Chinese themselves cashing out by buying US real estate.

Mish (Michael Shedlock) often comments on important financial issues out of China, often he cites respected Chinese observer Michael Pettis:

Pettis has his own blog, mostly on China (where he teaches and writes):

The Telegraph out of the UK has coverage of China that is usually better than that of the US media, although only a percentage is financial news:

* * *

And it is not just Peru and China.  Brazil entered recession recently (probably due at least in part to lower commodity exports).  Europe and Japan are teetering...:

Spain and France are both in Mish's latest (France apparently now is recession).

Abe's "Abenomics" (deficit spending witgh help of the Bank of Japan's new QE).

The above remarks include nothing about the arguably recessionary conditions in the USA (if we ever recovered from 2008/2009).