Dividend Hikes Vs. Net Income

Companies should start hiking dividends when earnings rise.

Historically.

 

Disposable Income Vs. Housing Prices

In order to buy houses you need to have disposable income.

 

Watch the housing price to disposable income ratio. 

 

Housing affordability drops when disposable income drops.

Correlation: gold per capita Vs. income per capita

Apparently, Indians and Chinese buy more gold when their wages go up and I'm pretty sure Chinese people will continue to see wage growth in the future. One reason in particular is that their currency will continue to appreciate. Another reason is that their government debt to GDP is very low. So businesses won't be taxed to death like in the Western world. Besides, they are creditor nations with a lot of foreign exchange reserves.

The WGC issued another report on gold here:
http://www.gold.org/download/file/3543/investment_commentary_looking_into_q4_2014.pdf

In there you can see the correlation between income and gold net worth per capita. The more you earn, the more gold you buy, and the funny thing is that it's exponential. So rich people put more money in gold than poor people. You would expect that the curve were linear. Probably poor people have more basic needs...

Retail Sales Vs. Disposable Personal Income Per Capita

When people have a low disposable personal income (income after taxes) (green chart), they will not go out and buy things. Retail sales (blue chart) will therefore drop. You can also think of it like this. When taxes go up, people have less savings, less disposable income and can't buy much as a result.

The amount of stimulus money in household checking accounts also helps spending.

 

Retail sales need to take into account the inflation rate, so the real retail sales numbers (blue line) are typically lower inflation adjusted.

Correlation: Disposable Income Vs. Housing Prices: Is there a housing bubble?

Peter talked a lot about housing on the radio show of 21 March 2013. He said that house prices could drop a lot from here, but I don't agree with that.

To see where housing prices will go we need to look at 3 fundamentals. The most important one is wages and income. If your monthly disposable income doesn't match with the house you are buying, you will not be able to pay off your house. The second factor is mortgage rates. If you need to pay an ever increasing higher interest, you will have difficulties to pay off your house (at an adjustable rate mortgage). The last factor is savings. If you don't have a pool of savings, you can't make an adequate down payment for your house.

Let's analyze these 3 fundamentals in this article.