Thursday, July 31, 2014

Jobless claims not seasonally adjusted now average 310,000 weekly in the last month

310k weekly annualizes to 16.1 million. Claims in the first half of the year annualized to about 16.95 million.

If the trend in the last month continues, 16.5 million actual claims is in the realm of possibility, a very good number.

CNBC laugh of the day: Report of booming economy lifts S&P500 0.12!

"Also on Wednesday, official data showed the U.S. economy expanded in the second quarter at a better-than-expected annualized 4 percent. This helped the S&P 500 and Nasdaq end higher."


Evidently the GDP report helped lift only the NASDAQ. Uh huh.

Wednesday, July 30, 2014

Average report of GDP under Obama 43% worse than under Bush

For 2001 through 2008, according to today's comprehensive GDP revision from the BEA, George W. Bush had an average report of GDP at 2.1%. For 2009 through 2013, Barack Obama has had an average report of GDP at 1.2%, almost 43% worse on average than Bush.

2Q2014 GDP comes in at 4% in first estimate, 1Q adjusted again in the comprehensive annual revision to -2.1%

Reuters points out here that growth in the first half now comes to . . . 0.9%:

"The economy grew 0.9 percent in the first half of this year and growth for 2014 as a whole could average above 2 percent. The first quarter contraction, which was mostly weather-related, was the largest in five years."

Note that expectations at fxstreet had bumped up from 2.9% earlier to just 3.0% before this morning's BEA release, which will probably end up being closer to the truth two months from now in the final estimate than today's 4% print.

Recall the saga of the first quarter:

Advance estimate +0.1%
2nd estimate -1.0%
Final estimate -2.9%
Comprehensive revision released today -2.1%.

So now the terrible winter quarter to kick off the year was actually only 28% less bad than we thought a month ago, 110% worse than we thought two months ago, and 2200% worse than we thought three months ago.

That's progress!

Steven Goddard wants it both ways: the US temperature record is the best long term record but has been massively altered, nevermind CET is 355 years old and getting older

Tuesday, July 29, 2014

Attention Drudge readers: Anthony Watts booted "Steven Goddard" from WattsUpWithThat some years ago

Seen here.

Drudge recently linked to a "Goddard" (a nom de plume) story about the summer of 2014 being the "coolest summer on record" in the country, through like July 23rd, which it certainly is from the point of view of extreme summer temperatures, i.e. the annual frequency of 90 degree F or above on a percentage basis. For his story showing the chart of the NOAA data, see here. Extreme summer temperatures have been in decline for most of the last century, contrary to the alarmism of the global warming crowd, a point "Goddard" doesn't seem to have emphasized.

There is no reason to doubt his presentation of the facts that I can detect, except that it could be argued from a chart of the other extreme, the annual frequency of below zero temperatures, that for the same period, about eighty years, there has been a slight decline in the frequency of that metric, too. So there may be a decline in extremes also on the cold side if confirmed. So far "Goddard" has not supplied the trend line for that chart in the comments section. But if confirmed, that would suggest a general thesis that climate extremes have been declining within a minor warming trend which may or may not be reversing now. That's big news since climate alarmists keep telling us the warming trend will produce "extreme weather". It isn't. It's producing ameliorating conditions.


Sunday, July 27, 2014

Justin Amash thinks the Republican future lies with just 3% of the population

Quoted here:

"I am trying to grow a new generation of Republicans that includes more gays and lesbians . . .."

Grand Rapids Press Laughably Says Justin Amash Opposes Corporate Special Interests, Praises His Evolution Toward Democrats

You mean like the DeVos family's special interests, or his own family's, or the Club for Growth's which has spent nearly $400,000 attacking Amash's challenger, Brian Ellis? What a joke.

"But Amash has, during his two terms in Congress, started to evolve. He has worked with Democrats, most notably to try curtailing federal spying programs. He also promises to never outright vilify Democrats as a party, a welcome approach during a time of toxic political discourse. Amash has built a broad following at home and nationally. He also remains staunchly opposed to the outsized influence of corporate special interests."


Justin Amash is as bought and paid for by powerful outside interests as any representative in America.

Saturday, July 26, 2014

New IRS 1040 clearly shows you'll owe ObamaCare TAX liability on line 61 if you don't have coverage

So in addition to lying about getting to keep your health insurance if you like it, Obama also clearly lied about not raising taxes on anybody making less than $250,000 a year.

Friday, July 25, 2014

Bank Failure Friday: GreenChoice Bank, fsb, Chicago, Illinois, failed tonight

GreenChoice Bank, fsb, Chicago, Illinois, failed tonight, costing the FDIC $14.2 million.

The bank is bank failure number 14 in 2014, and number 506 since February 2007.

Thursday, July 24, 2014

Justin Amash represents DC's Club For Growth, not Michigan's Third District

Justin Amash must be worried about his reelection prospects.

Amash is blanketing Michigan's 3rd Congressional District with a barage of anti-Brian Ellis radio ads and mailings even though Amash claims an overwhelming lead against his humble opponent based on his own polling data. Why waste the money if he is so far ahead? Well, maybe it's not exactly his money.

What the voters probably don't realize is how much of Amash's anti-Ellis attack is financed by the Club For Growth, a libertarian organization founded by a former editor of The Wall Street Journal who is now employed by The Heritage Foundation, one Steve Moore (Heritage, it will be remembered, gave us ObamaCare long before Obama came along, as their answer to HillaryCare). Like Heritage, Club For Growth is based in Washington, DC, not in Michigan's Third. Amash gets the benefit of their negative attack ads while being able to claim he has nothing to do with them.

So far in the campaign, Club For Growth appears to be responsible for almost $400,000 of spending in attack ads against Brian Ellis, who by contrast is in large measure underwriting his own campaign with a remarkably similar amount of his own money. It is notable that Ellis is pledging to overturn ObamaCare, which in Michigan is causing health care workers to lose their jobs, while showcasing his endorsements by Michigan Right To Life, veterans groups and other conservatives upset with Amash's failure to walk the conservative talk.

Amash has an excuse on Facebook for every vote which he has failed to deliver on behalf of social and economic conservatives in his own district, just as Obama can always point to someone or something for why he never gets anything accomplished as president.

Republicans ought to consider the similarity and ask themselves if those two aren't really just cut from the same cloth.

Another wild week in jobless claims, this time down 78,215 not seasonally adjusted

Last week claims were up 47,079.

Not seasonally adjusted, claims in the last four weeks are averaging 323,000 per week or 16.8 million annualized. That would ordinarily be a pretty good level, except for the fact that the labor participation rate is so low, 63.4% not seasonally adjusted. It averaged 66.1% in 2007, when annual claims actually were at a similar level. When fewer people are participating as today, the level of job losses feels worse because it is experienced by a smaller work force.

Wednesday, July 23, 2014

Brian Wesbury is already making excuses for 2Q2014 GDP

"The 2.9% drop in real GDP during the first quarter was a fluke caused by a brutal winter and some one-off events. With much of the monthly data in for Q2, it looks like the US will see that drop almost completely reversed.

"Normally, we would expect a bigger bounce as pent-up demand (lost to the weather) returned and added to growth already in train. But, not this time. In recent years, tax rates have been hiked, regulations have increased and government spending has expanded. All of these are a burden on the economy that creates slower potential growth."


Almost completely? Does that mean "not completely"? As in less than 2.9%?

Excuse me, but government spending boosts GDP, and with divided government spending growth remains flat to non-existent with Republicans in control of the purse strings in the US House. Brian Wesbury can't have it both ways, later acknowledging that real government purchases will add .4 to 2Q GDP. Which is it, a drag on growth or a contributor? Meanwhile Canada grew in the first quarter in real terms. We did not. Winter. My. Foot.

Funny how fxstreet has a consensus estimate already yesterday of 2.9%, same as Wesbury's.

Safe, very safe.

Tuesday, July 22, 2014

Mirror Mirror: Consensus for first estimate of 2Q2014 GDP, just eight days away, is +2.9%

That's a complete mirror image of 1Q2014 GDP from the third and final estimate at -2.9%.

HaHaHaHa...Ha. The average of the two is still nutin honey.

Monday, July 21, 2014

Libertarian insanity from Kevin Williamson at National Review

"The foundation of classical liberalism, and of the American order, is not the rule of law, a written constitution, freedom of speech and worship, one-man/one-vote democracy, or the Christian moral tradition — necessary as those things are. The irreplaceable basis for a prosperous, decent, liberal, stable society is property. ... But we do not have any property."

Precisely. Bang head against a wall. Repeat.

If your liberty depends on something which can be taken away by another, you didn't have any in the first place. The march of liberty throughout history is the record of the instantiation of what appears to be a fiction but whose basis is apprehended in the transcendent moral order, and for that reason is more real than the reality. Hence the slave can grow to be actually free even though he remains in the bonds of servitude. Such a man makes his master the true slave, and himself the real master. And when a community of such men decides to bind itself together by laws, constitutions and rights, they do so on a qualitatively different basis than do those who do not know liberty, for they look up to the One, not out at the many, which way lies chaos, injustice and servitude. "Thy Kingdom come, thy will be done on earth as it is in heaven."

Maybe Kevin Williamson should join the conservative movement and say goodbye to his sect of classical liberalism.

Sunday, July 20, 2014

Stupidest thing P.J. O'Rourke ever wrote

"Imagine trying to make the Ten Commandments into laws."

Hm. I thought we already had.

Stock markets remain closed on Sundays, Good Friday, Thanksgiving and Christmas. At least five states still explicitly prohibit car sales on Sundays, and most dealers elsewhere are closed anyway. Alcohol sales remain restricted or prohibited on Sundays in many places. Massachusetts still has a one-day-of-rest-in-seven statute. Most banks are closed on Sundays, along with many other businesses. Congress rarely works on Sundays, let alone Monday through Friday.

And then we have these trifles of the law which never seem to go out of style, unless you are a feminist, a banker or a politician:

Thou shalt not kill.
Thou shalt not steal.
Thou shalt not bear false witness against thy neighbor.

That's the problem with libertarianism. It has no imagination.

Eastside Commercial Bank, Conyers, Georgia, failed on Friday, July 18th, 2014

Eastside Commercial Bank, Conyers, Georgia, failed on Friday, costing the FDIC $33.9 million. 6,730 institutions remained under the FDIC through March 31, 2014.

It's bank failure number thirteen so far in 2014, and number 505 since February 2007.

Friday, July 18, 2014

Michael Savage is as lazy as Rush Limbaugh: keeps saying WWI started in 1917 with assassination of Arch Duke Ferdinand

World War I started in 1914 with the assassination of the Duke, not 1917. 

Savage has started the show today saying 1917 after having said the same thing all day yesterday.

He's had plenty of time to check his facts and correct the record, but hasn't.

Measuring the pain of jobless claims 2001-2013

In 2013 jobless claims not seasonally adjusted fell to their lowest level under Obama, totaling 17.8 million, just 100,000 more than two back to back years in the Bush administration when jobless claims not seasonally adjusted fell to 17.7 million after 2003. Which felt worse, 2013 or 2004/2005, since the level was nearly the same? One way to measure that would be to compare the level to the labor force participation rate. Using the not seasonally adjusted annual averages of that, if you divide the total jobless claims by the rate you get the following: 2004=.268, 2005=.268, 2013=.281.

How would you know which was worse? During the whole period under question, jobless claims hit their lowest level in 2006 at 16.2 million, when the labor force participation rate averaged 66.2%. Dividing the claims by the rate gives you .244, the lowest result for the period. The highest result for the period, not coincidentally, was .451 in 2009 when claims soared to 29.5 million and the labor force participation rate averaged 65.4. So it seems reasonable to suggest that 2013, the best year to date for aggregate claims since 2007, still feels worse than either 2004 or 2005. About 4.9% worse. Indeed, even if you assumed you had 100,000 fewer claims in 2013 to equalize them to 2004/2005 when you also had 17.7 million instead of 17.8 million first time claims for unemployment, not seasonally adjusted, you'd still get a result higher than .268, at .279, because the civilian labor force participation rate had fallen to 63.3 from 66.0. So just because a similar number of people is losing jobs compared to some point in the past doesn't mean things have returned to normal. If they had, right now fewer people would be making jobless claims in proportion to the smaller number of people participating in the labor force, and they aren't. Not yet.

Thursday, July 17, 2014

Lowest high temperature ever for July 16th yesterday in Grand Rapids

71 degrees F.

CDC finds fewer than 3% of Americans say they are gay

WaPo reports here.

Pew study shows no religious group in America rates itself more highly than Jews do

Story here, except you have to figure it out from the table. The summary artfully skirts that conclusion:

"Evangelicals also hold very positive views of Jews, with white evangelical Protestants giving Jews an average thermometer rating of 69. Only Jews themselves rate Jews more positively."

No kidding. White evangelicals win walking away for a positive evaluation of Jews, except for Jews themselves. Jews nearest competitors in self-love in the study are atheists, white evangelicals and Catholics, but none of them come close to the Jews themeselves when it comes to rating themselves positively. Meanwhile Jews rate white evangelicals the lowest of any group, lower even than Muslims.

Where is the love, man?

Completed foreclosure activity in May 2014 still 2.2 times above pre-2007 levels

CoreLogic reports here:

According to CoreLogic, for the month of May 2014, there were 47,000 completed foreclosures nationally, down from 52,000 in May 2013, a year-over-year decrease of 9.4 percent. On a month-over-month basis, completed foreclosures were up by 3.8 percent from the 45,000 reported in April 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. ... The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.8 percent), Florida (5.2 percent), New York (4.3 percent), Hawaii (3.1 percent) and Maine (2.8 percent).

Jobless claims as a percentage of the civilian labor force level 2001-2013

The following is based on data not seasonally adjusted. The civilian labor force level used was annual average.

Jobless claims as a percentage of the civilian labor force level

2001 14.5%
2002 14.4
2003 14.2
2004 12.0
2005 11.9
2006 10.7
2007 10.9
2008 14.0

2009 19.1
2010 15.4
2011 14.1
2012 12.5
2013 11.4

Media misses huge surge in jobless claims this morning which point to economic weakness

Not seasonally adjusted first time claims for unemployment surged over 47,000 in today's report above last week's 322,512,  to 369,591.

The state with the most claims? Michigan, with 9,821. The sector? If you guessed manufacturing, you would be wrong. All of it was service sector in Michigan. Perhaps only 2,000 of the layoffs elsewhere were in manufacturing. The bulk of the jobs losses everywhere were in services. In other words, in the crappy jobs Americans have reluctantly taken.

To keep pace with the rate of first time claims, not seasonally adjusted, from the first half of the year in the second half, claims need to average 326,000 a week. We're 44,000 over that today, a bad sign.

Wednesday, July 16, 2014

Japan: What to expect in America if interest rates are kept at 0.25% indefinitely?

Japan has kept its benchmark interest rate near 0% since 1996, nearly 18 years. Japan's stock market has not come anywhere near to recovering its 1989/1990 highs, nearly a quarter of a century ago. Real GDP in Japan is growing at a glacial pace, less than 1.0% on average annually since 1999.

Do you think the 30,000 people who live around Club for Growth HDQ would vote for Justin Amash?


Let's reduce Nancy Pelosi's congressional district to the 2 square miles around 1 Maritime Plaza

That way the 30,000 people who live around Del Monte Corporation Headquarters will know who she really represents.

Tuesday, July 15, 2014

Republicans stopped growth of representation in the 1920s: Why isn't fixing that the Tea Party's job one?

From the Wikipedia article, here:

In 1921, Congress failed to reapportion the House membership as required by the United States Constitution. This failure to reapportion may have been politically motivated, as the newly elected Republican majority may have feared the effect such a reapportionment would have on their future electoral prospects. Then in 1929 Congress (Republican control of both houses of congress and the presidency) passed the Reapportionment Act of 1929 which capped the size of the House at 435 (the then current number). This cap has remained unchanged for more than eight decades. Three states – Wyoming, Vermont, and North Dakota – have populations smaller than the average for a single district.

The "ideal" number of members has been a contentious issue since the country's founding. George Washington agreed that the original representation proposed during the Constitutional Convention (one representative for every 40,000) was inadequate and supported an alteration to reduce that number to 30,000. This was the only time that Washington pronounced an opinion on any of the actual issues debated during the entire convention.

In Federalist No. 55, James Madison argued that the size of the House of Representatives has to balance the ability of the body to legislate with the need for legislators to have a relationship close enough to the people to understand their local circumstances, that such representatives' social class be low enough to sympathize with the feelings of the mass of the people, and that their power be diluted enough to limit their abuse of the public trust and interests.


All the ancient American debates about this issue argue over ratios of 1 representative for every 15,000 or 30,000 or 40,000 or 50,000 of population. But today because of what the Republicans did in the 1920s, arresting growth of representation and fixing the number at 435, the ratio has soared to 1 for every 728,000!

If you wonder why your representative doesn't represent you today, that is why. He or she doesn't know who you are, or care.

If you want to fix America, fix that. We could start by doubling the size of the House, which means halving all the districts.

That sound you're hearing right now is Congressmen everywhere shitting their pants.

Monday, July 14, 2014

Obama is maintaining a constant pressure upon the opposition (that would be you) at the border

Bob Brinker cites high valuations in 1Q2000 as determinative for his sell call then

Bob Brinker cited high forward operating price to earnings ratios at "almost 30" in 1Q2000 as an important reason behind his call to sell at the time, during the first hour of his radio program yesterday. He continues to like stocks right now because forward p/e ratios are in line with a long term average around 16. You can listen for yourself this week in the seven day archive at by picking Sunday between 1 and 2 pm.

The trouble is, the measure never got much above 25 in the first place, and then flirted with the vicinity of that already in early 1999, a year before Bob sold the market. That suggests that as a timing tool there is considerable elasticity to it in practice, or in Bob's memory. Unfortunately, however, the forward p/e has predicted nothing untoward since, from 2005 to this day, missing the 2008-2009 debacle entirely.

Factset framed things this way, here, in March, where you'll also find a nice chart of forward p/e ratios over time:

"On the other hand, the current forward 12-month P/E ratio is still below the 15-year average (16.0). During the first two years of this time frame (1999 – 2001), the forward 12-month P/E ratio was consistently above 20.0, peaking at around 25.0 at various points in time. With the forward P/E ratio still below the 15-year average and not close to the higher P/E ratios recorded in the early years of this period, one could argue that the index may still be undervalued."


The p/e based on reported earnings, however, actually did average 32.4 for the ten months between November 1998 and August 1999 inclusive and then fell somewhat by the first quarter of 2000 to an average of 28.4. Perhaps Bob Brinker is thinking of that instead of forward p/e ratios. The p/e ratio from reported earnings is presently above its mean and median levels at 19.6. This measure climbed into the 20s from the October 2007 high into the crash in September/October 2008.

That said, the forward ratio of 25 by itself admittedly looks extreme in its historical context, and current forward estimates close to 16 are arguably at a minimum indicating that stocks are not yet frothy.

Buy and hold investors from the Aug.'00 high have made all of 1.32%/yr through May 2014

The August 2000 level of 2045 was the inflation-adjusted all-time high for the S&P500. Average annual returns adjusted for inflation have been a paltry 1.32% since then, indicating how steeply valued stocks were at the time: The Shiller p/e was 42.87. h/t

Average real rate of return from stocks since 2000 highs didn't turn positive until May 2013

Through April 2013 your real return annually was negative on average. August 2000 is the benchmark for the inflation-adjusted high for the S&P500 at 2045. Through May 2013 your real return annually turned positive on average. h/t

If no man is an island, how come Christian morality is being defeated everywhere?

Alan Noble, here:

"[M]orality has this nasty habit of not staying put; it sneaks out of our personal conscience and affects those around us. Some morals affect communities more than others, but no moral is entirely contained. My choice to live my life the way I want to will impact my community, no matter how careful I am to defer and tolerate and be sensitive to others. And this is a basic tenet of evangelical Christianity, too: Faith must be lived out in the public square; a privatized faith is no faith worth the name. Because of this, the real debate isn’t about whether morality should be public or private; it’s about figuring out what kind of moral impositions are tolerable and fair in a pluralistic society."


It's no longer self-evident that Christian morality holds the field in US public life. It's not sneaking out everywhere and overturning everything. In fact Christian morality has been almost entirely defeated in the US. Otherwise we would not be at this pass. Which must mean the morality embraced by Christ's followers today is a fiction for far many more of the 75% of Americans who claim to be Christian than we otherwise think. The fact is, we've been running on the vapors of past Christians' morality, not our own, and the car is sputtering to a halt. It'll be a long walk home. 

Sunday, July 13, 2014

Food stamp recipients decline 2.7% in April 2014 from a year ago

Total recipients in April 2014 ticked up from the month earlier to 46,247,450 but remain down from 47,548,577 a year prior.

Bob Brinker was right in March 2003, but not until May 2009 at the earliest

Bob Brinker's gain since March 2003 when he called for his followers to fully invest in the stock market has been an impressive 7.14% per annum inflation-adjusted, on average, in the S&P500 index through March 2014.

Things didn't look anywhere near that good in April 2009, however, when his  return was still -0.45% per annum, inflation-adjusted, on average, for the 6 years plus one month. His returns had plunged at their worst to -2.32% per annum just the month before, through March 2009, because of the market crash, which of course he never saw coming and he never predicted. Bob remained fully invested into the teeth of the 2008-2009 banking apocalypse cum financial panic, and never told his followers to sell, as did Jim Cramer, infamously, the Monday after TARP was signed into law by President George W. Bush on October 3, 2008, a Friday, on national television no less. Who needs Monday morning coffee with that kind of news on NBC? I say Bob Brinker gets a lot of credit for that courage, and Cramer gets nothing but ridicule.

Bob Brinker's advice began to turn positive again in May 2009, as the stock market began to recover with the suspension of mark to market rules by the SEC in late March. Brinker never told anyone to get out of the markets, but soldiered on to where we are today. Was it prescience? Bull-headedness? Luck? Faith?

Here's what I think it was: Bob believes in secular markets, and he knew the secular high in 2000 was not matched in 2007 on an inflation-adjusted basis (1753), so there was no need for caution even though there might be a big correction. The financial collapse made him look like a fool for the size of it, but he knows that today even at 1967 the S&P500 remains well off the real 2000 high of 2045. We could just as easily get a big correction here before we march on to retest that real high.

Either way the market should retest the former high before the secular bear comes to an end, which means we have a bit more to go in point terms, but not very much.

I'm expecting a stock market sell order from Bob Brinker in the not very distant future as we get closer to 2045.

Anyone wanna bet we get as high as 2249?


Important inflation-adjusted milestones in the S&P500 index: 75 years of no progress have happened before

1967.57 Sunday, July 13, 2014

1752.10 October 1, 2013
  846.80 March 1, 2009
1753.10 October 1, 2007
1087.54 February 1, 2003
1767.00 February 1, 2001
2045.09 August 1, 2000
1727.35 December 1, 1998
1054.18 October 1, 1996
  841.39 June 1, 1995
  716.77 January 1, 1992
  266.94 July 1, 1982
  713.70 December 1, 1968
  430.68 November 1, 1958
  266.47 July 1, 1954
    83.44 June 1, 1932
  430.42 September 1, 1929
    83.51 December 1, 1920
  278.75 September 1, 1906
    83.77 January 1, 1878
    64.37 June 1, 1877
    83.38 February 1, 1871

Friday, July 11, 2014

With every child you don't have . . .

. . . the country dies a little bit more because of you.

America is already well on the way to being completely dead because of all the children we stopped having since the 1960s, and the irony of it is that the parents of the Baby Boomers told their children not to have so many children. Trust me, I know from personal experience. So why would the children of the Boomers do anything but the same? And they have.

The greatest generation were liberals, and their death wish is coming true in spades, visiting their iniquity on the third and fourth generations of them that hate me, saith the Lord. They've not only spent your inheritance, they've also made sure there's no one to inherit it.

I hate them all.

Japan poised to rise from the dead: nuclear plants finally to begin restart after 2011 Fukushima disaster

The Japan Times reports here:

The Nuclear Regulation Authority is moving toward the first reactor restart under its new safety requirements since the Fukushima disaster started, giving impetus to bond sales by utilities as borrowing costs plunge. ...

“The fact that the government is in favor of restarting reactors is positive because it shows a firm commitment toward the electric power companies,” said Yasuhiro Matsumoto, the senior manager for the financial services industry at ABeam Consulting Ltd. “Once one restart is approved, others will come one after another, and the pace may quicken. You can’t approve one but turn down others.” ...

All 48 of Japan’s functioning commercial reactors are idled for safety checks after a tsunami wrecked Tokyo Electric Power Co.’s Fukushima No. 1 plant on March 11, 2011, and caused the worst nuclear crisis since Chernobyl in 1986.

Minus 2.9% GDP has never occurred outside of a recession: They're ignoring it like 2008

Jeffrey Snider, here:

The most recent example of this, in a larger scale setting, was the first quarter's GDP estimate. Rather than embrace the information that might be relevant to what is actually taking place, the entire orthodox economics profession is busy trying to convince everyone that there was nothing useful in that result. It was, as has been repeated over and over, an aberration of no significant value; an error term to be denied a full place in the analysis of where the economy might actually be headed.

A GDP figure of nearly minus three percent is decidedly rare, however, so unusual that it has never taken place outside of a recession. But that is precisely what we are supposed to ignore when being counselled to take no notice of it. Actually, counsel is too slight and too soft of a word, as what is really occurring is nothing short of a demand. The surety at which the orthodox profession, especially those of monetary disposition, exercises such confidence about forecasting is very much descriptive of ideology rather than science.

Thursday, July 10, 2014

Ambrose Evans-Pritchard oddly unaware high CO2 coincides with 17yr+ pause in global warming

Ambrose Evans-Pritchard, here:

[Shale] has whittled down the US current account deficit, now just 2pc of GDP [approximately $340 billion?]. Cheap gas costs - a third of EU prices and a quarter of Asian prices - has brought US industry back from near death, perhaps for long enough to give America another two decades of superpower ascendancy. But making money out of shale is another matter.

Even if the fossil companies navigate the next global downturn more or less intact, they are in the untenable position of booking vast assets that can never be burned without violating global accords on climate change.

The IEA says that two-thirds of their reserves become fictional if there is a binding deal limit to CO2 levels to 450 particles per million (ppm), the maximum deemed necessary to stop the planet rising more than two degrees centigrade above pre-industrial levels. It crossed 400 ppm threshold this spring, the highest in more than 800,000 years.


Ambrose's problem is that he has insufficient skepticism: There is no binding deal, and we couldn't stop developing nations from spewing even if we wanted to. Ambrose has become a co-dependent in the climate scare and is trafficking in last year's news:

If CO2 was at the same level as of 800,000 years ago, why are we cooler by 5-10 degrees and sea levels lower by 75-120 feet? This would indicate there’s no CO2/temp/sea level relationship.

Indeed, as the picture has unfolded in the last year, we are well past the 17 year milestone for no temperature anomaly. All that extra CO2 is doing nothing, except maybe producing too much vegetation.

So I bought a lawn tractor to mow it all down.

About market timing on the way down, Mish can be very wise

History suggests bear markets will destroy many bears, some by turning bullish at the top, others by turning bullish way too soon after a correction.

Watch those valuation measures on the way down, folks, be patient, and keep your powder dry. 

What unites some Christians and libertarians is radically unconservative: belief in human change for the better

Here's Christian libertarian economist David Brat, Cantor-killer:

"Preach the gospel and change hearts and souls. If we make all of the people good, markets will be good. Markets are made up of people. Supply and Demand are curves, but they are also people. Nothing else. If markets are bad, which they are, that means people are bad, which they are. Want good markets? Change the people. If there are not nervous twitches in the pews when we preach, then we are not doing our jobs."


Conservatives generally haven't believed human nature changes for the better, but it is central to the Catholic doctrine of grace that grace infuses the baptized and changes them, and the belief is central also to the doctrine of some protestants.

These were called Schwaermer by Luther, "enthusiasts".

In politics we called them ideologues.

Wednesday, July 9, 2014

Josh Brown must be nuts: valuations are high, markets are exuberant and growth is as pathetic as 2007

Is Ritholtz paying him to say this stuff?

"Valuation is not going to tell you when the run ends. We were reasonably valued in 2007. The economy fell off the cliff," he said. Brown also said he agreed with Yardeni that there was "no sign of a recession."

"Those are usually what coincide with the end of a bull market," he said. "I'm not telling you P/E expansion takes us significantly higher, but earnings growth could, revenue growth could, and in the second half of this year, we should be seeing a meaningful uptick based on what analysts are expecting at the moment. So, I think it's smarter to be constructive than to be worried about the next 5 percent in either direction."


In late September 2007 the Shiller p/e was high, in the range of 26/27, the S&P500 was making new all time highs, and 1Q2007 GDP had just been finalized at 0.6% after a 2.1% and a 1.1% print for the two previous quarters of 2006. That's growth of more or less just 1.2% over three quarters.

The 3.8% 3rd estimate for Q2 at the time arguably contributed to the blow off market top at 1565 within days of the announcement, but growth in the economy had been pathetic up to that point. People thought things were looking up again, but within a year we were almost scraping people off the sidewalks of Wall Street.

Today valuations are similarly high at 26, the market has made new all time highs, and we've just booked a horrible NEGATIVE GDP for the first quarter. The average of the last three quarters is now the same as it was in late September 2007: 1.2%.

Valuations are reasonable? There's no sign of a recession? Both may very well be coinciding right now to signal the end of a bull market, just like in 2007.

Sorry Mark Judge, the original punk rockers of Christendom were Lutherans

Why can't Mark Judge write a decent opener? He starts off, here, with this:

"With the takeover of liberalism and secularism in the West, Catholicism is now a subculture."

What he means is:

"With the takeover of the West by liberalism and secularism, Catholicism is now reduced to a subculture."

And it's too bad, too, because the rest of what he writes is worth reading . . . if only he could imagine a subculture. You know, like Lutherans. The original punk rockers of Christendom, who shouted like Joey Ramone 

I don't like sacraments
I don't like celibates
I don't like priests and nuns
I don't like what the pope has done
Well I'm against it

The truth is Catholics could never be punkers and never have been. Being a punker requires being an individual, and saying no to something, like disco and rap, and instead Catholics have been busy for centuries saying yes to everyone and everything, absorbing every culture and every cult under the aegis of their big tent. It's been the secret to their success.

To take only the latest example, they see illegals coming across the border and immediately want to welcome the stranger, give them a shower, a meal and a place to sleep. The protestants see this and want to kick their asses all the way back to Guatemala.

Catholics aren't really against anything, and never have been.

That's why if they get their way, America is finished.

I'm against it. 

Tuesday, July 8, 2014

Something about riskier bonds for Bob Brinker listeners to think about

Seen here:

"The sensitivity of a bond to interest rate increases is determined by the time to maturity, not its credit rating."


Some of Bob Brinker's followers/critics think his recent move away from all bonds with durations beyond one year was a big mistake.

If there's a bond run, which becomes more likely when bonds are overvalued, which they arguably are, selling becomes more difficult than people realize. Steep losses would be almost certain, but it is also likely that the ultra short duration bonds would recover much more quickly, and perhaps not just because they are ultra short. People might actually plow into them as they did with bonds in general in the wake of the financial panic of 2008, boosting prices.

Monday, July 7, 2014

I'll go out on a limb and predict the S&P500 maximum market high for this cycle since 2009

I'll predict 2249.60 for an S&P500 market high before the market begins to revert to mean. From 1977 that's not quite 14% more to go, or 272 more points!

But my money is in cash!

Sunday, July 6, 2014

John Hope Bryant is an ignoramus about Jesus and poverty

Seen here:

'The Greek word for poor, as used by Jesus, is poucos, which means non-productivity. To be poor doesn’t mean you don’t have anything; it means you aren’t doing anything. Poverty is cured by hard work. “Lazy hands make a man poor” (Proverbs 10/4). The Bible says, “How long will you lie there, you sluggard? When will you get up from your sleep? A little sleep, a little slumber, a little folding of the hands to rest – and poverty will come on you like a bandit, and scarcity like an armed man.” Proverbs 6/10-11.'


Actually the Greek word is properly transliterated "ptochos", not "poucos". And Bryant couldn't be more wrong about how the poor behave. The truly poor don't lay about and do nothing. The root of the word signifies that the poor do plenty . . . of crouching and begging.

But the worst thing is trying to baptize Jesus in this enterprise of viewing poverty as an evil, a problem to be solved. Unfortunately in the case of Jesus it's exactly the opposite of what Bryant thinks.

Frankly, Jesus prized poverty and required it as a condition of discipleship: "So likewise, whosoever he be of you that forsaketh not all that he hath, he cannot be my disciple" (Luke 14:33).

John Hope Bryant is all over the place in a media onslaught spreading his silly message about the poor saving capitalism, nevermind they can't save for the next month let alone the system most notably conceptualized by Adam Smith, a man feeble in neither mind nor money.

Expect more of this pap from Bryant and your federal government, through his connection with the Consumer Financial Protection Bureau, a propaganda project of the Dodd-Frank bill.

The Bureau's current director, by the way, was an unconstitutional recess appointment by the president according to a Supreme Court ruling just in recent days.

GDP less interest payments on the debt 2006-2012 is net positive $44.1 billion, that's all

Nominal GDP, not seasonally adjusted, for the seven years 2006-2012 totals $2,941.8 billion.

Nominal interest payments on the debt for all the same fiscal years totals $2,897.7 billion.

And people wonder why we're not growing when all we've got is a measly $44.1 billion to show for it.

Interest payments on the massive debt of $17,609 billion are gobbling up economic growth.

Think of it this way. The seven year average interest payment on the debt, $414 billion annually, represents a simple interest rate of 2.35% on today's balance. That's what the economic growth rate should look like. Instead, last quarter it was -2.9%, down almost $74 billion seasonally adjusted, and negative $118 billion real.

The huge public debt is the drag on the economy, and would be the knee on the chest of the heart attack victim if the Federal Reserve didn't suppress interest rates the way it is doing. 

Friday, July 4, 2014

For the 1st time in my adult life, I am proud of Joan Rivers

So says Drez Zipper, here.

Presidents ranked by average jobs created Q1 to Q2 since the 1970s

From total nonfarm not seasonally adjusted, average percentage achieved:

1. Clinton +2.22%
2. Reagan +2.07%
3. Bush 1  +1.69% (four years, accepts Profiles in Courage Award for raising taxes)
4. Obama  +1.68% (six years, blames drought, winter weather, hurricanes, earthquakes)
5. Bush 2  +1.38%.

The definition of a jobs boom Q1 to Q2 is not the just reported +2.06%

Best jobs booms for each president Q1 to Q2 since the 1970s, from total non farm employment, not seasonally adjusted:

1. Reagan in 1984: +2.69%
2. Clinton in 1994: +2.56%
3. Bush 2  in 2005: +2.14%
4. Obama  in 2011: +2.09%
5. Bush 1  in 1989: +1.92%.  

Total nonfarm is up 288,000 in June: Why I'm yawning

Unemployment in June falls to 6.1% and total non farm employment is up 288,000, seasonally adjusted, to finish the second quarter. Not seasonally adjusted, the figure is an impressive sounding 582,000 newly employed.

So Q1 GDP at -2.9% is meaningless, right? We're really doing much much better than that number indicates, yes?

That's what fellow traveler Rex Nutting thinks over at MarketWatch in "The payrolls report is right, and GDP isn't". He goes so far as to say that even 2008 negative GDP was meaningless:

"Take, for instance, the first quarter of 2008, just as the Great Recession began. The first estimate of quarterly GDP was 0.6% growth. In mid-2008, that was revised to 0.9%. A year later, however, GDP was revised to a 0.7% decline. The most recent estimate is that the economy shrank 2.7%. It’s madness to think this number means anything."

Spoken like a true believer in the success rate of Soviet 5-year plans. At least "shrank" shows he's educated.

And even John Silvia of Wells Fargo says the jobs report shows "economic growth is far better than the Q1 GDP report indicates".

Oh really? I don't think so. The employment gains aren't telling us anything indicative of a break out to the upside either for jobs or for the economy. To see this you have to stop comparing apples to oranges by comparing monthly change in jobs to GDP which is measured on a quarterly basis.

When you look at the jobs figures on a quarterly basis, you see that total nonfarm always takes a dive in Q1, good economy or bad economy, and it always rebounds in Q2, good economy or bad economy. It tells you almost nothing about the economic trend that in Q2 you always get an increase. So we should expect the jobs numbers to go up in the spring, and they always do. Go all the way back in the not seasonally adjusted data to 1981 and you will see that this is true, in the awful year 1982 when the gain was a lousy 1.0%, and even in the dreadful year of 2009. When 2009 was over there were nearly 30 million first time claims for unemployment, yet between Q1 and Q2 that year total nonfarm went up 138,000, a paltry 0.1% but still completely counter trend. The worst was over. Not.

In 2014 we have just witnessed total nonfarm go up 2.805 million jobs between the end of Q1 and the end of Q2, the most since Obama has been president. But guess what? That's an increase of barely 2.06%. Obama's actually done better, for example in 2011 when the increase was 2.09%, his best Q1 to Q2 gain on record. But we don't point to that number today as a sign of the economy turning around at that time, especially since the measure has been weaker since, and GDP has actually gone negative since.

It's instructive to compare Obama's recent 2.06% quarter on quarter gain with past presidents' records for the same period from winter to spring.

How high was the best record Q1 to Q2 since 1980, for example? You would be surprised that it's barely 29% higher than Obama's best to date. Reagan, of boom fame, holds top spot at just 2.69% in 1984. Clinton comes in second with 2.56% in 1994. George W. Bush comes in third with 2.14% in 2005. Obama comes in fourth in 2011 at 2.09%. And George Herbert Walker Bush brings up the rear in 1989 at 1.92%.

But the best record isn't a very good predictor of economic growth ranking. Best GDP to worst was Clinton, Reagan, Bush I, Bush II, and then Obama (so far), not Reagan, Clinton, Bush II, Obama, Bush I.

The overall jobs record between Q1 and Q2 seems like a better predictor of likely economic growth ranking. Clinton, first for GDP, averaged 2.22% over eight years while Reagan, second, averaged 2.07% for the increase in total nonfarm between the winter and the spring. In third is George Herbert Walker Bush at 1.69% (third also for GDP), followed closely by Obama at 1.68% (last for GDP so far) and George W. Bush bringing up the rear at 1.3% (fourth for GDP).

It's entirely possible that Obama already peaked for jobs increases from winter to spring in 2011. Each of the other four presidents peaked early or mid-term. It would be unusual for Obama to do better this late in his term. And so far he hasn't, and has just two more opportunities to prove me wrong.

Overall Obama has lost his momentum, his aura and his credibility, and his lately shrill tone sounds more like a dying bunny the cat got in the backyard than a statesman presiding over the final years of a successful term. I think that means it's likely Obama's overall jobs performance is going to remain weak, as will his GDP.

Thursday, July 3, 2014

Jobless claims now average 326,000 weekly in the first half of 2014, down 7% from 2013

Jobless claims for the first 26 weeks of 2014 now average 326,000 weekly, not seasonally adjusted. For the same period last year the average was 352,000.

The current rate implies 16.95 million claims in 2014. In 2013 actual claims not seasonally adjusted were 17.75 million.

The best years in recent memory were under George W. Bush: 16.2 million claims in 2006, and 16.7 million claims in 2007.

First time claims for unemployment had been as high as 29.5 million in 2009.

Rush Limbaugh whitewashes Republicans' central role in abolishing Glass-Steagall

Are we supposed to believe Rush Limbaugh doesn't know that three Republicans co-sponsored the Gramm-Leach-Bliley Act of 1999 which overturned Glass-Steagall? How did their names get on there, by accident? And that both parties overwhelmingly voted for it in the end after 205 House Republicans and 53 Senate Republicans voted to get it to conference in the first place? Were it not for those Republicans the bill never would have seen the light of day, but here's Rush Limbaugh yesterday, boob extraordinaire, spreading the lies, misinformation and stupidity he's ranting against:

[I]f anybody eliminated regulations on the bank, it wasn't the Republicans. It was good old Bill Clinton and Robert Rubin. Those are the two architects. You could even say that the repeal of Glass-Steagall is what led to the so-called financial crisis in 2008, and there's not a Republican fingerprint on it.  It's all Bill Clinton and Robert Rubin. ... [T]his is just insane, the level of lying, the misinformation and the stupidity of people who accept it and buy it, because we have a corrupt media who is willing or unknowing, could well be they're ignorant, too, spreading all this drivel. ... [T]here's not one Republican fingerprint on that. They might have voted for it in the end, but the whole impetus for it was Bill Clinton and Robert Rubin.



Wednesday, July 2, 2014

Obama ranked worst president in post-war in Quinnipiac poll

Uh oh: Antarctic sea ice anomaly looks like a . . . hockey stick!

US Debt to GDP ratio, nominal, record date 3/31/14 (3rd estimate of GDP 6/25/14)

$17.6 trillion
-----------------------     = 1.035
$17.0 trillion

Impact of a '94-style bond debacle on today's NAVs of popular Vanguard bond index funds

In November and December 1994, the NAVs of some popular Vanguard bond index funds hit their lowest levels in memory during that year's bond market meltdown. What if we revisited those lows today? How much could you lose, both in value and in time?

On the short end, VBISX at 10.53 to start the week would have to fall to 9.50 to match that debacle low from December 1994, wiping out 9.78% of value. With a duration of 2.7 years, presumably you'd have to sit tight almost three years from such a low to recoup your losses as the fund replaced its maturing issues with higher yielding short-term instruments in the new landscape. 

In the intermediate space, VBIIX at 11.46 now would have to fall to 9.16, the November 1994 low, wiping out 20.07% of value. Your duration-implied wait to recoup your losses there is 6.5 years.

VBLTX in the long term space at 13.59 today would have to fall to the November 1994 level of 8.87 to match the November 1994 low, wiping out 34.73% of value. Could you wait 14.5 years to recover from that?

Consider also VBMFX, the total bond index. At 10.82 this week it would have to fall to 9.15 to match the November 1994 meltdown low. That would wipe out 15.43% of value from here. Time to recovery based on duration of the fund? 5.6 years.

Or VFIIX, the Ginnie Mae fund. Current net asset value started the week at 10.73. That would have to fall to 9.54 to match the November 1994 meltdown low, wiping out 11.09% of value. Duration for that fund is 5.5 years.

Many Americans have fled to bond funds for safety in the wake of the financial panic 6 years ago. By doing so, they have driven NAVs to levels in such funds never before seen in their histories, helping to create a bubble. Exiting from such bubbles is not easy when everyone suddenly wants to do so at the same time.

No wonder market timer Bob Brinker of Money Talk Radio Program fame has recently gone ultra short duration for his fixed income investing. He has picked funds which have durations of about one year. That's it.

The wisdom of the move is not yet well appreciated because of what it is not telling you: that a stock market crash is coming, right after the bond market nose dives. He doesn't want to be caught booking huge bond losses in his portfolios when the opportunity to invest new cash will present itself not long after. In other words, I think this is Brinker's way of raising cash now without saying so.

Not advice. Just my humble opinion.  

Brian Wesbury thinks suspension of mark-to-market rules was a fix

Brian Wesbury thinks suspension of mark-to-market rules was a fix, here:

"The financial system returned to normal once mark-to-market accounting was fixed."


Proving once again that moral absolutes have no meaning to liberals, who routinely deep six the rules when they become inconvenient or too costly should they break them. The rules are fine when one guy here or there goes bankrupt, but when everybody does then it's, well, "We have to abandon free-market principles in order to save the free-market system." One rule for thee, another for me.

That pretty much sums up in one sentence the difference between us and them. While they have been bailed out and gotten filthy rich by shit-canning the rules, the rest of us who have to live by them in the real world of stop signs and pink slips are left to wallow in an economy growing at an average nominal pace under Obama of $383 billion per annum. Brian Wesbury continues to call that a ploughhorse economy even though under George W. Bush we grew on average 45% better than that every year of his presidency.

It was the worst in the post-war, until Obama.

S&P500 is about 71.77 away from the all-time real high

The real high was August 1, 2000 at 2045.09.

El Diablo: Communists and Christians drink from the same well

"I can only say that the communists have stolen our flag. The flag of the poor is Christian. Poverty is at the center of the Gospel. Communists say that all this is communism. Sure, twenty centuries later. So when they speak, one can say to them: 'but then you are Christian'".

Tuesday, July 1, 2014

The Ramones didn't know how right they were about Burger King

I don't like playin' ping pong
I don't like the Viet Cong
I don't like Burger King
I don't like anything
And I'm against ...
Well I'm against it
I'm against it

Charles Murray proves my point: Libertarians and liberals are birds of a feather together on the left

Here, where he speaks of the good guys on the left, as if there were such a thing:

As a libertarian, I am reluctant to give up the word "liberal." It used to refer to laissez-faire economics and limited government. But since libertarians aren't ever going to be able to retrieve its original meaning, we should start using "liberal" to designate the good guys on the left, reserving "progressive" for those who are enthusiastic about an unrestrained regulatory state, who think it's just fine to subordinate the interests of individuals to large social projects, who cheer the president's abuse of executive power and who have no problem rationalizing the stifling of dissent.


Simply stated, liberals are free, free from the "superstitions" of religion and its limiting dogmas and moral codes, and consequently happen to seek to be free also from the state which seeks to pay respect to religion. Libertarianism is born of this, not of the right. It pays no respect to religion, placing the individual at its center, not God and the transcendent moral order which permeates existence. There are many libertarians who deny they are atheists, but they are simply insane, suffering from bipolar disorder as do liberals.