Persons taking food stamps in October 2014 are UP 0.5% from September

Persons taking food stamps in October 2014 number 46,674,364. This is up 0.5% from September.

But compared to October 2013 persons taking food stamps are down 1.6%.

If the economy is improving the number should be going down, shouldn't it?

Liberalism simply caved in fear at the front door to Charlie Hebdo, bringing death to its followers

A happy and especially healthy New Year!

When push comes to shove, certain things, like your own flesh and blood, become more important than the cause of liberalism. It's what they do that counts, not what they say.

Corinne "CoCo" Rey, quoted here:

Eleven-thirty am, in Paris. Corinne Rey, known as Coco, a cartoonist who works for the French satirical magazine Charlie Hebdo, had just picked up her daughter from a nearby creche. “When I got to the front door of the magazine’s building with her, two masked and armed men threatened us – violently,” she said. “They wanted to get inside, go upstairs. I tapped in the entrance code … They spoke perfect French. They said they were from al-Qaida.”

Surviving "innocents" at Charlie Hebdo say they vomit on all their new supporters!

Liberalism believes in nothing!

Quoted here:

“We have a lot of new friends, like the pope, Queen Elizabeth and (Russian President Vladimir) Putin. It really makes me laugh,” Bernard Holtrop, whose pen name is Willem, told the Dutch centre-left daily Volkskrant in an interview published today.

France’s far-right National Front leader “Marine Le Pen is delighted when the Islamists start shooting all over the place,” said Willem, 73, a long-time Paris resident who also draws for the French leftist daily Liberation.

He added: “We vomit on all these people who suddenly say they are our friends.”

Free ice cream for everyone, too!

What do liberals and libertarians have most in common this week?

What do liberals and libertarians have most in common this week?

The almost giddy pleasure they take in ridicule of religious founders and their followers.

That this ridicule of religion has animated liberalism for a long time in America is a given. Just ask any devout Christian, if you can still find one, how Serrano's Piss Christ made him feel.

But conservatives, on the other hand, have always believed above all in self-restraint, without which there cannot be any such thing called limited government. As Oswald Spengler reminded us in the 1930s but everyone seems to have long since forgotten, Christianity is renunciation and nothing else. The exploding ignorance of this knowledge had already gone hand in hand with the development of totalitarian forms of government in Spengler's own time, and has only gotten worse since. The world is now dominated as a consequence by two forms of fascism which ended up winning against communism, one of the left and one of the right: the one is in China and the other in the United States. The reason? Fascism is more successful at production and consumption than communism, which is all there is to materialist philosophers. To them self-restraint is as much of an enemy as it was an opiate to Marx. 

The most uncomfortable example of self-restraint for our own time has been self-censorship, which is nothing more than the recognition of the existence of the evil inclination inside of every human being, a recognition only made possible by an openness to a moral vision of the universe. That moral vision says that that evil inclination must be restrained by the free choice of the self if civilized society is to survive. But our supposed political allies today in conservatism and libertarianism want nothing to do with that. They have together more in common with liberalism than with the transcendent world of which I am writing. 

Self-censorship in fact used to be seen as a virtue in America, when it was a more religiously informed country. "Let what you say be simply 'Yes' or 'No'; anything more than this comes from evil", said the founder of our religion. The idea was to live and let live because the evil and the good had to grow up together until the harvest. Otherwise the wheat would be lost with the tares. Accordingly, to be wise meant often to hold your tongue and keep your peace, even when you knew you were right, and to forgo arguments especially over religion because you were free to go to your church or to no church at all, and I was free to go to mine. "Strive for peace with all men", said another of our authorities. If Christians have been given their own form of jihad, that has been it, but they have failed miserably at it.

It must be stated plainly, nothing distinguishes what is different about Islam from us more than its opposition to peaceful coexistence, however poorly we have lived up to our own ideals. Islam means submission to its law, its prophet and its God. A Muslim is "one who submits". Peace only exists between the two of us when we submit to them. Which is why it follows that inviting Muslims into Christian countries is a recipe for conflict.

All around us this week so-called conservatives are urging us to join them in unloading a barrage of invective against Islam's founder, Muhammad. They do not want to live in peace. They want a war, which threatens to destroy us all.

Here's Roger Kimball at Pajamas Media:

"Were I (per impossible) editor of The New York Times, I would run those cartoons of Mohammed on the front page of the paper every day for a month." 

Here's Ralph Peters at Fox News:

"Even if those terrorists are tracked down and killed - and I hope they are killed and die miserably - the end result of this is going to be we're going to continue to self-censor."

"The correct response to this attack, by all of us in journalism ... if we had guts, those cartoons would be reprinted on the front page of The New York Times, The Wall Street Journal, The Washington Post, The Los Angeles Times tomorrow. They won't be."

And here's a local libertarian in Michigan, one Steve Gruber:

It was blood thirsty little pieces of crap-spawned from the repugnant womb of modern Islam that murdered a dozen innocents inside an office for a French satirical magazine. Screaming glory be to Allah while executing 10 staff members and two police officers the vile nature of modern Islam was on display for all to see once again. Why did they attack the magazine? Because the magazine routinely skewered just about anyone and everyone and had the courage to publish cartoons making fun of Mohammed. Well too damn bad. ... In the spirit of America let me say to hell with Mohammed and any of his followers if they think it proper to murder cartoonists or anyone else in the name of Allah.

What these individuals, were they conservatives, should be calling for is separation, keeping Muslims at a distance from Christian civilization, because the two are fundamentally not reconcilable until Muslims undergo a reformation of their own which renounces the inspiration of Koranic surahs legitimating violence against infidels. I predict it will be a cold day in hell before that happens because the so-called conservatives cannot see that the so-called innocents were anything but. They were as much the enemies of what made the West the West as the Muslims are.

Instead all that these ideologues of ours offer is ridicule of Islam, but from the safe distance of an increasingly less intact West. They call this courage, but shrink from what real courage requires: The courage that doesn't need to justify itself in the face of mortal danger, but which freely and quickly acts to excise the cancer and banish it, as well as abolish the tenuous economic cords made of petroleum from which it profits. Libertarian devotion to first principles of freedom of movement, trade and the like all work together to sabotage this doctor from performing the necessary surgery. All they can do is insult, and retreat to the safety of the drone war against an implacable enemy, ala John Galt.

Having grown up in a Christian denomination which held very dim views of everyone else's religion but was convinced everyone else was worth converting to our way of thinking because Christ died for them too, I find the overt lack of charity toward a whole religion and its founder a sign of profound decadence in our own civilization, criminal acts by religious fanatics notwithstanding.

We have to live together in the same world, but it were better if we grew in separate gardens to the extent that that is possible. The only constructive policy with Islam going forward is utter disengagement with its worst elements, and repression of those when called for, such as now in Yemen. Unfortunately for the West, this means withdrawing from Muslim lands, especially Arabia, and actively choosing to promote independence in energy to the extent that whether Islam reforms or does not reform, we can live without them and prevent them from harming others.

We cannot continue to serve God and mammon. Otherwise we are no different than them.

Rate of wage growth slows by almost 44% year over year 2014 vs. 2013

Not-seasonally-adjusted, the average hourly earnings of all employees grew by 1.88% between December 2012 and December 2013, to $24.30 from $23.85.

For the latest similar period ending in December 2014, average hourly earnings grew by 1.06%, a decline in the rate of growth of almost 44%, to $24.56.

This is pretty surprising given the enormous gains made by the stocks of corporations in 2013, up nearly 30%, and in 2014, up 11%.

Obviously the gains are accruing to the stockholders, not the workers who are viewed as a cost, not an asset.

Are full-time jobs up 427,000 or down 47,000 in December?

Not-seasonally-adjusted full-time is in red.

The latest Employment Situation Report for December 2014 shows full-time jobs either up 427,000 in the seasonally-adjusted measure, or down 47,000 in the not-seasonally-adjusted measure, both from the respective November levels.

Which to believe?

Since 1968 the not-seasonally-adjusted count of full-time jobs between November and December has gone down 33 times vs. 13 times going up, with one year flat (1992). This is consistent with the historical record of cyclicality in full-time vs. part-time.

Full-time typically peaks in the summers and troughs in the winters while part-time does the opposite. Full-time tends to peak in the summers with work related to seasonal and student employment, while part-time tends to peak in the winters with holiday additions to the workforce.  Therefore it is consistent with this pattern to expect part-time jobs to be peaking right now (they already did last month) and full-time to be near its lowest point in the current cycle, which usually happens in January, for which measure we will have to wait another month.

So full-time down 47,000 is obviously more in keeping with the generally expected pattern than the seasonally-adjusted figure.

It is noteworthy, however, how low that negative full-time figure is relative to the recent past and to the historical average.

The 30-year average of the subtractions to full-time between November and December (excluding the outlier years in 2007, 2008 and 2009 when employers panicked and fired 1.4 million on average, 1.7 million on average in 2008 and 2009 alone) is a subtraction of nearly 244,000 full-time jobs.  Add to that that we haven't had this low a subtraction since the year 2000 between November and December and you get the feeling that things are indeed improving.

Unfortunately what we don't see yet is the kind of addition to the full-time rolls which occurs rarely at this time of year and typically after recessions. The last time we saw this in the November-December data was in 2005, 2004 and 2003 when we had three back to back years of full-time gains averaging 290,000, well above the average gain for the 13 up years of 145,000.

What we'd like to see right now, but don't, is a similar strong recovery of full-time after a recession like we've seen in the past.

For example, after the recession of 1970, full-time recovered between November and December of both 1971 and 1972, adding an average of 105,000 full-time jobs for those two months. Similarly after the recession of 1974, full-time jobs recovered for three straight years, averaging an addition of 195,000 full-time jobs between November and December of 1975, 1976 and 1977. And of course after the recession of 2001 we've already pointed out the three years of November-December additions to full-time averaging 290,000, double the average.

Even the long drought of additions to full-time jobs at this time of year which began in 1978 and lasted through 1992 was broken for two back-to-back years in 1986 and 1987 when an average of 66,000 full-time jobs were added between November and December. This was the rather delayed recovery of full-time after the recession of 1982, which cast a long shadow over employment much like the most recent recession has done.

As things stand, the current brutal drought of full-time additions at this time of year now stands at a record nine years, one more than the previous record posted between 1978 and 1985. The average subtraction to full-time then between November and December was 202,000. Now it has soared to 586,000 on average, almost 3x worse.

That's the scale of the trouble we've been in, and so far there's been no sign of leadership out of this mess, except that the pain right now is well-below its average level for this time of the year.

The simple fact remains that full-time is still far below its 2007 peak, no matter how you measure it.

On GDP Mish sounds just like Ambrose Evans-Pritchard five years ago

Here is Mish in 2015:

"Effectively we have borrowed current growth from the future. Looking ahead, growth surprises will be predominantly on the downside for years to come."

Here is Ambrose in 2010:

"Debt draws forward prosperity, which leads to powerful overhang effects that are not properly incorporated into Fed models. That is the key reason why Ben Bernanke’s Fed was caught flat-footed when the crisis hit, and kept misjudging it until the events started to spin out of control."

Rush Limbaugh is a buffoon who just makes stuff up about the two dead policemen at Charlie Hebdo

Here, doing his very best to misinform as usual, and making a fool of himself:

"The two cops who were shot, do you know how they arrived on the scene?  They rode their bicycles.  That's right.  They came pedaling up.  After hearing about this attack, and the cops are dispatched, the two who were shot showed up on bicycles."

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One of the two dead policemen was a body guard of one of the employees of the French satirical publication targeted by two Muslim fanatics. He was already in the office when he was gunned down. He wasn't outside on a bicycle.

If there were two officers of the municipal police on bicycles dispatched to the scene, obviously only one of them was shot, and the other escaped.

The intricacies of the French police force obviously don't interest Rush Limbaugh, either. He would rather ridicule and caricature the French police as mindless victims of liberalism who must do their jobs without being able to defend themselves, when the fact is municipal police are typically unarmed but can choose to carry if they wish. Nevertheless the municipal police, which are basically the traffic division in France but enforce the local laws at the behest of mayors, represent barely 7% of the police force in France.

The national police are all armed, and the militarized units especially so.

TARP ends, but conservatives still don't realize it was just a sideshow

Existing crisis loans 1st of the month in billion$

That TARP was just a sideshow was not known at the time in 2008, but it should be known by now.

Too bad conservatives haven't paid attention.

TARP assumed the role of the main actor on the stage of the financial panic as the liberal government of George W. Bush tried to show that it was capable of doing something to bring the panic of 2008 to an end. Bush at length signed the TARP legislation on October 3, 2008, at which point the stock markets promptly rewarded him by caving over the next three weeks, setting the stage for the final denouement by March 2009. Only Securities and Exchange Commission changes to mark-to-market accounting rules at that point stopped the cratering and put a floor under stock prices. Meanwhile behind the scenes the liberal government of Woodrow Wilson in the form of the Federal Reserve had already been hard at work for months frantically doing the real rescue.

Now that TARP is over, liberal political operatives are wont to characterize TARP as a success because it supposedly made a profit accruing to the government, and hence to The People, who are ever almighty in liberalism. They also say this to keep our eyes off the ball. "Conservatives" continue to take that bait and argue there was a loss to TARP, never examining themselves to see if they are in the larger truth. National Review's Matt Palumbo is just the latest example, here, quibbling over a few measly billions of dollar based on an argument from inflation to substantiate a loss to TARP.

It doesn't get much more pathetic than that.

TARP became the sideshow it always was once and for all when Bloomberg News, using the Freedom of Information Act, forced the Fed long after the fact in late 2010 and early 2011 to reveal the true scope of its bailout of the world in 2008-2009. Behind the scenes the rest of us had groped in the dark trying to fathom TARP's $700 billion bailout, when that turned out to be just a decimal point in the real bailout, the Fed's $7.7 trillion lending authority through the discount window and other programs.

"Conservatives" still haven't grasped this.

Over five million Americans lost their homes in the wake of the panic, almost 30 million ended up filing first time claims for unemployment in 2009 (85% more than did just last year), and almost eight years after the employment peak of 2007 full-time jobs still have not recovered, the most disgraceful record in the post-war.

The Federal Reserve bailed out hundreds upon hundreds of large banks and corporations not just in the United States but all across the globe by backstopping them with promises of huge sums if needed while regular Americans were simply left to fend for themselves:

$7.77 trillion -- The amount the Fed pledged to rescue the financial industry, according to Bloomberg research that examined announced, implied or actual upper limits on lending and guarantees. This number, which represents potential commitments, not money out the door, was first published in March 2009, when it peaked.

“One of the keys to understanding why we’ve avoided another Great Depression, so far, is to see how bold the Fed was in 2008 and 2009,” said Niall Ferguson, a Harvard University history professor. “That boldness consisted of a range of contingency commitments that backstopped the banking system. Just because they weren’t used doesn’t mean they weren’t important.”

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Actual loans at rock bottom prices over time amounted to about half that, at $3.3 trillion, as can be appreciated here in just one of the lending programs of the Fed, the famous discount window. The low interest rates charged there, a sideshow in themselves, are thought to have benefited the banks at the same time by about $13 billion, according to Bloomberg, over what they would have had to pay at market rates.

That was simply the cherry on the gargantuan crony capitalism cake, an object, I am sure, of singular fascination for the likes of the Matt Palumbos of the world.

That spike in the graph is the discount window lending in the 2008 panic

John Early's model predicts 4Q2014 GDP between -1.2% and +1.4%

See John Early's "5 Reasons GDP Growth in Q4 May be 0%" at Seeking Alpha, here.

The House has a Boehner again

Top 10 investing years for subsequent 10 year returns since 1965 to date

1988: 18.80% nominal per annum average from the S&P500 12/'88-12/'98

1987: 18.15%

1989: 17.99%

1990: 17.57%

1979: 17.27%

1981: 16.53%

1982: 16.16%

1978: 16.14%

1977: 15.02%

1985: 14.98%

These years have an average total S&P500 market capitalization to GDP (in trillions) ratio of 48.

The ratio at the end of 3Q2014 was 112, which historically produces 10 year returns averaging about 3.24% nominal.

Rush Limbaugh is back for 2015 and he's dumber than ever, just like Zero Hedge

Here:

And the second thing I saw was the economy is growing at this 5% rate.  By the way, do you know how that happened, folks?  Do you know what the bulk of the economic growth -- I mean, what is the economy?  The economy is consumer spending, essentially, consumer spending and consumption, commerce.  You know what the majority of spending was in the fourth quarter was people spending money on Obamacare, mandated by law.  The vast majority of our economic growth -- this was made public by Tyler Durden at -- I forget the website.  It's off the top of my head.  Well-known business website.  Over half of the spending in this country in the fourth quarter was you and me and everybody else spending money on health care. ... Well, some economic growth, when over half of it is essentially required by the government? 

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Aside from the fact that the quarter in question is stated in error as the fourth, the idea that "the majority of spending . . . was people spending money on Obamacare" is ludicrous.

Line 17 in the snapshot above from the GDP report shows that 3Q2014 healthcare spending was $2.0089 trillion. Line 2 shows the total of all personal spending at $12.002 trillion. Healthcare spending thus represented just 16.7% of that in 3Q. And that percentage is identical to the percentage spent also on healthcare in 2013. Healthcare spending is not anywhere near "over half of the spending in this country in the fourth [sic] quarter".

ObamaCare hasn't suddenly driven up healthcare spending in 2014 at all. Maybe after the fourth quarter is over and we get the final number for that in March 2015 we will be able to say that Obamacare has driven up healthcare spending overall, but so far we cannot say that. So far such increases have been born by too small a percentage of the adult population to show up in the data.

What we can say is that so far healthcare spending is growing at a pace slightly behind the pace of the overall economy, which grew at 4.96% annualized in 3Q. Healthcare spending grew at a slightly less robust 4.6% rate.

It is likewise incorrect to say as Rush Limbaugh says that healthcare spending accounts for "the bulk of the economic growth" in 3Q. Healthcare spending grew $88.6 billion in 3Q2014 from 2013, which represents just 10.65% of the $831.7 billion overall increase in GDP over 2013 in the latest report. Over 89% of the increased growth thus came from other categories.

Conservatism is not about fighting lies with more lies.

John Tamny of Forbes spends four pages trying to convince us falling oil prices are always due to a rising dollar

Here, in Forbes:

"Falling crude prices ... were a function of a rising dollar that revealed itself in a major decline in the price of gold that is and was priced in dollars."

I don't know. Maybe he's trying to convince himself, not us. Reminds me of listening to a religious fanatic who can't stop talking. You know the kind. They usually get older and eventually think the better of it and move on. But not John Tamny.

The idea that a falling dollar produces higher oil prices is a nice theory occasionally supported by the data. The trouble is, there are too many examples of the correlation breaking down.

Crude oil prices from the mid-1980s to 2004 were remarkably range-bound between $12 and $35 a barrel despite the huge drop in the dollar from 1985 and its subsequent rise through the early 2000s. The dollar's rise in the late 1990s did nothing to change this. In fact, oil rose in tandem with the dollar then, as it did marginally after 1995 and as it did at the end of the late recession.

The sheer scale of the moves in oil prices is not commensurate with the relatively small moves in the dollar since 2005, nor is the relative tranquility of oil prices before that explained by the out-sized moves in the dollar.

The case is similar with gold, which at the current price of the dollar is still much, much higher than a dollar at this level in the past would indicate is called for. Gold was quiescent for 20 years and a lot lower than now all the while the dollar moved dramatically down and up again and down, off the 85 level. Contrary to Tamny, the recent decline in the price of gold has hardly been major, and hardly enough to convince that it is hewing to the performance of the dollar.

To illustrate how little gold has cared for the dollar's level, just look at how long it took for gold to peak after the 2008 all-time low in the dollar: over three years. And there is also that roughly 13 point rise in the dollar during the late recession when gold also began its long and biggest leg up.

That's not supposed to happen.

Sorry!

What does stock market valuation in 2014 portend for the future?

Using the S&P 500 index level at the end of 3Q2014 divided by the final report of GDP in trillions of dollars you get a ratio of 112. 

To put that in its proper context from 1965, the mother of all buying opportunities at the end of 1981 produced a level of 38 and the outlier year at the other end of the scale was 1999 at the end of which the level stood at 152. So 112 is well north of the Mason-Dixon line of 95 for this analysis.

The nominal average return per annum for the ten years from the end of 1981 was 16.53% with dividends fully reinvested, but from 1999 it was . . . wait for it . . . -0.73%.

Similar levels to 2014 have obtained at the end of 2001 (108), 1997 (113), 1968 (110), and 1967 (112). The respective subsequent 10 year average returns have been 2.79%, 6.02%, 2.81% and 3.49%, for an average of these of 3.78%.

In other words, the future doesn't look so hot. 

Stock market valuation illustrated by total market capitalization to GDP ratios, selected years

"Steven Goddard" has a little fun with WaPo for Alaska temperature alarum

Yeah, where are all the stories about last winter? All gone, down the memory hole.

Here:

"The US recorded [in 2014] the most nights below zero since 1989, but Anchorage now represents the global climate."

Dollar soars almost a percent to close at 91.15, highest close since December 2005

Grand Rapids, MI, finishes 2014 with a total temperature anomaly of -30.3 degrees F

December was 2.7 degrees F above normal and nearly snowless with just one inch, most of which came on December 31st, a welcome respite from the all-time record snows of November at 31 inches, accompanied as those were by below normal temperatures totaling 5.8 degrees F.

The temperature deficit from normal through November of 33 degrees F was thus reduced to 30.3 degrees F total for 2014, for a monthly average deficit of 2.525 degrees F.

Collapsing oil prices will blow a $1.4 billion hole in Canada's tax revenues, wiping out the projected surplus

So says Garth Turner, here, at The Greater Fool:

Fully 30% of the pump price is federal and provincial tax, of which 12% goes to Ottawa. It’s now clear that with buck-a-litre gasoline that Canadians will spend about $12 billion less filling up in 2015 than last year. There alone is $1.4 billion Joe Owe won’t have to play around with – and he was forecasting [a] surplus of less than a billion.

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Nice nuts on the truck, Garth.

Market valuation in 2014 is 15% above the 2007 level

Average market cap to GDP in 2006 and 2007 came in at 1.23, and then fell to 0.74 by the end of 2008.

As of the end of 3Q2014, the ratio has risen to 1.415, which is 15% above the level seven years ago before the stock market crash, and 91% above the 2008 level.

Current valuation is about 17.5% below the stratospheric level of 1.715 reached at the end of 1999, and almost 195% above the 1981 level at 0.48, the mother of all buying opportunities in our lifetimes.

Buy and Hold: Why bother with Bridgewater's All Weather or with a simple global market portfolio?

Meb Faber compares the returns from behemoth Bridgewater's All Weather portfolio to a simple global market portfolio (GAA) here, acknowledging that the leveraged version of the latter which beats All Weather is probably too expensive for individuals to implement:

All Weather, 1996-2014: 6.34% net of inflation

GAA (unleveraged), 1996-2014: 5.23% net of inflation.

I say, why bother?

You can invest very cheaply in a low-cost S&P500 index fund and do very nearly just as well on the stock side: The average annual return from the S&P500 net of inflation, 11/'95-11/'14, has been 6.23%.

And for the bond portion of your portfolio an investment in a low-cost long term bond index fund like VBLTX has yielded 7.89% since 1994. Net of inflation at about 2.31% this must come in in the neighborhood of 5.4% per annum.

Which begs the question, Why not just pick a decent low-cost balanced fund?

Actively managed Wellesley Income, VWINX, has yielded 10.09% per annum since 1970, with inflation annualizing at about 4.17%. And the traditional Balanced Index, VBINX, has yielded 8.38% since 1992, with inflation annualizing at about 2.38%. Either fund puts you in the vicinity of 5.9% to 6% per annum net of inflation. Expense ratios for these funds are less than a quarter point.

Just sayin'.

Tonight's S&P500 level is 0.8% above the inflation-adjusted August 2000 level, the previous high

2058 vs. 2041.

Mario is dead: Long live the Mario

Mario Cuomo (1932-2015)

Happy talk from Robert Lenzner of Forbes misses the 180 month bear market in performance

Robert Lenzner of Forbes, here, is only off by an order of magnitude (18 months vs. 180):

Bull markets last on average about 97 months each and gain an average of 440 points in the Standard & Poor’s 500 stock index. By comparison bear markets since the 1930s have an average duration of only 18 months and an average loss in value of about 40 percent.

Let's talk the most recent bear market in performance.

If you invested your nest egg in the stock markets fifteen years ago in a total stock market index fund, your average return annually, say in VTSMX, would be 4.75% through 2014, per Morningstar.

On the other hand, if you had taken the safe route and invested everything in an intermediate term bond index fund, say in VBIIX, your average annual return would be 6.52% through 2014, also per Morningstar.

DESPITE THE PHENOMENAL PERFORMANCE OF STOCK MARKETS SINCE 2011, WHEN THE S&P500 REVISITED THE 2008 CLIFF LEVEL BEFORE THE BOTTOM IN 2009, STOCKS ARE STILL IN A BEAR MARKET. NO ONE REALISES HOW BAD THEIR CONDITION STILL IS.

Only fools are investing in the stock market today. Returns from stocks 10 years from now will be similarly disappointing as they have been since 1999. If you have physical gold, keep it, imho. And if you can, raise cash, imho. Opportunities for riches to agile investors who are prepared to scoop up bargains as in the 1930s are in the offing.

As everyone should know by now but doesn't, 1999 was a blow off top period leading up to the previous inflation-adjusted stock market peak of August 2000.

Valuations today have still not reproduced themselves in comparison to the end of 1999 on a total market cap to GDP basis, but they are way above the 2007 levels and represent an historically exceptionally rarefied level of valuation. Valuation at the end of 2014 based on total stock market cap to GDP will be relatively certain with the second report of 4Q2014 GDP at the end of February.

Stay tuned.

Erick Erickson asserts a difference between libertarianism and libertinism

Today filling in as guest host of the Rush Limbaugh Show in response to a caller recommending the Republican Party move in a more specifically libertarian direction.

The comment was more diplomacy than wisdom.

In the Molly Ball feature on Erickson for The Atlantic here, Erickson more than once eschews libertarianism, let alone libertinism:

“Nationally, people think of me as a Tea Party person, and I am,” Erickson told me. “But in Georgia, the Tea Party can’t stand me.” The local movement, he explained, is dominated by libertarian followers of former Congressman Ron Paul, and Erickson has opposed many of its chosen candidates. Erickson’s conservatism is of a more traditional bent, deeply informed by his evangelical faith. He believes Republicans must not yield in pursuit of small government, strong national defense, and the primacy of the traditional family.

Erickson sounded almost gleeful as he told me about the Tea Party hating him. He seems to delight in confounding expectations, and in almost every way, he refuses to be pigeonholed: he is a southerner who defines himself by his small-town sensibility, but he spent most of his childhood in Dubai. He speaks for the conservative grass roots, but he pals around with cable-news regulars and Beltway elites. He’s a strict no-compromises ideologue, but during his one foray into elected office, he was a model of bipartisan cooperation. ...

When I pressed him on whether his zeal for regulation while on the city council was at odds with his less-government philosophy, he said he believed human trafficking was a problem that government should have a role in solving. “I’m not a libertarian,” he said. Even small-government absolutists, after all, can agree that sexual slavery ought to be prevented.

Index fund flows in 2014 may indicate the top is in, or nearly in

Seen here:

The impact of index funds has been revolutionary. When John Bogle, the founder of Vanguard, introduced the first vehicle designed to passively track the performance of a stock index about 40 years ago, it was derided as “Bogle’s Folly.” Today the fund’s successors, at Vanguard and elsewhere, hold $2 trillion in assets. ...

Actively managed funds still hold a majority of total stock fund assets, 63% at the end of September. But in the first nine months of 2014, actively managed stock funds attracted $2.5 billion, while $173 billion found its way into index funds, or 98.6% of the total.

This flood of money into index funds came after the market already had recorded substantial gains. [James] Stack contends that such lopsided affection for passive investing — and the lack of concern for risk that he infers from it — hints at an approaching top, as does the evidence of history.

“Generally, the times when index investing reaches the highest popularity are in aging bull markets or near market peaks,” he says.

Social Security disability rolls are growing annually 9.1% more on average under Obama than under Bush

The average annual addition to the disability rolls under Bush, who added 2.7 million over eight years, was 342,000. Under Obama, who has added 1.9 million over five years through 2013, the average annual addition has been 373,000. The current program total is 12.156 million through 2013. If the 2014 addition rate is similar to the immediate past, the program total is probably close to 12.5 million as of December 31st.

The latest statistical report for the program, released in December, may be viewed here.

Figures cited above are derived from Table 1, page 17, disabled beneficiaries and their non-disabled dependents. Table 66 figures are higher and include the disabled aged 18-64 who also get Social Security and/or Supplemental Security Income, the average cost for all of which in 2013 came to $161 billion. 

Total stock market capitalization through 12/31/14 is $26.004 trillion

Wilshire 5000 level X 1.2

Updated: Global middle class hits one billion in 2014, but has actually declined since 2010

So reported the Times of India here in October:

Credit Suisse's Global Wealth Report 2014 released on Tuesday says that there are one billion adults at present who belong to the middle class - with wealth anywhere between $10,000-$100,000 range.

The Global Wealth Report 2014 itself may be viewed here, from which the pyramid at the left.

Notice the relatively small size of the global middle class, just 21.5% of the world's adults, with the vast majority of these coming first from China, and then second from the Asia-Pacific region, followed by Europe, Latin America and North America in that order, according to the details on pages 24ff.

Update: The inaugural Global Wealth Report in 2010 here actually showed a LARGER global middle class adult population of 1.045 billion then vs. the 1.01 billion today, a 3.3% decline. As a percentage of the world's adult population, the middle class share also has declined, from 23.5% of all adults in 2010 to 21.5% in 2014, a decline of 8.5%.

22 States and DC raise minimum wage this year: Expect teen employment to remain in depression or decline further

Teen employment levels today at 4.6 million are still 2.9 million below their 2006 peak of almost 7.5 million.

This is not just an artifact of the 2008 Panic.

The Federal minimum wage was increased nearly 41% over three years beginning before the panic began, from $5.15 to $5.85 in July 2007, to $6.55 in July 2008, and to $7.25 in July 2009. It is noteworthy that teen employment suffered almost immediately with the first increase in 2007, not reachieving the 2006 peak teen employment level in July of 2007 even as full-time employment hit an all-time record high. Teen employment continued to decline each summer through 2011 before stabilizing at the new low level, averaging about 4.4 million now vs. about 5.9 million previously. Raising the minimum wage has effectively sidelined 1.5 million teenagers permanently.

Raising the minimum wage now in 45% of the country only means inexperienced people like teenagers will find it even more difficult to find that first job going forward.

This is not free-market economics. It is crony capitalism which redistributes income to low-wage-earning adults at the expense of the young.

Call it part of the liberal war on children. Hey, if you forgot to abort 'em, impoverish them!

Healthcare spending through three quarters of 2014 has been only average

Healthcare spending through three quarters of 2014 has been only average, despite what you may have heard about a government conspiracy trying to hide massive spending for political reasons.

Healthcare spending's contribution to GDP in 1Q was -0.16, in 2Q +0.45, and in 3Q +0.52, for an average of three final quarterly reports of healthcare spending on an annualized basis totaling just +0.27 in 2014.

This number is completely within the historical norm for the previous four years, 2010 through 2013, when we had positive contributions of 0.15, 0.28, 0.37 and 0.24, averaging 0.26.

Expect to hear alarm bells sounded again if the 4Q number is high in the first estimate at the end of this month, but you should ignore them. The only proper comparison is with the third and final revision, for which we will have to wait until the end of March 2015.

That's just the way it is.

15-year total return from popular Vanguard index funds through 12/31/14 shows bonds beating stocks since 1999 except on the short end

Per annum return per Morningstar tonight:

Total international stock index, VGTSX = 2.96%

Short term bond index, VBISX = 4.05%

S&P 500 stock index, VFINX = 4.13%

Total stock market index, VTSMX = 4.75%

Total bond market index, VBMFX = 5.45%

Intermediate term bond index, VBIIX = 6.52%

Long term bond index, VBLTX = 8.37%

US could join this list of the world's top oil exporters thanks to relaxation of 1974 oil export ban yesterday

Export of up to 1 million barrels per day could put the US in 16th or 17th on this list from the US Energy Information Administration by the end of 2015.

Jobless claims finish December averaging 362,000 per week, 2014 ends at 15.9 million total first time claims for unemployment

All figures are raw, not-seasonally-adjusted.

The 15.9 million figure is now the lowest in the 21st century, beating the heretofore best level achieved under Bush, which was 16.2 million (but when the participation rate of the labor force was much higher than it is today, 66.4% in November 2006 vs. 62.8% in November 2014). Previously I had expected claims to total 15.7 million in 2014, but first time claims for unemployment ramped up a little higher in December than they had been averaging through November.

Here's the historical record:

2001 20.9 million

2002 20.9 million

2003 20.8 million

2004 17.7 million

2005 17.7 million

2006 16.2 million

2007 16.7 million

2008 21.6 million

2009 29.5 million

2010 23.7 million

2011 21.7 million

2012 19.4 million

2013 17.8 million

2014 15.9 million.

Conditions remain very favorable for making continued progress on a recovery of full-time jobs, which are still 3.8 million off their 2007 peak, over seven years ago.

The global oil war just got even more interesting: Dept. of Commerce relaxes export ban

With a tip o' the hat to Andrew Critchlow at the UK Telegraph, Reuters reported just a couple of hours ago that the US Dept. of Commerce has announced relaxation of some parts of the 1974 US oil export ban, here:

(Reuters) - The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world.

The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad. It also issued a long-awaited document outlining exactly what kinds of oil other would-be exporters can ship. ...

... the impending swell of U.S. petroleum into global markets may intensify what many analysts say is a pivotal oil market war, with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) unwilling to yield ground. Now they will face even greater competition beyond U.S. shores.

Alan Greenspan is expecting mediocre GDP in 4Q, says housing and investment must recover to fix it

Quoted here at Bloomberg:

Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back.

“Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

Greenspan, who retired from the Fed’s helm in January 2006, said he expects growth to dip below a 3 percent annual rate in the fourth quarter of this year. His forecast is in line with the estimate of 2.5 percent in a Bloomberg survey of economists.

Libertarian Real Clear Markets trots out no less than THREE screeds against housing today

Libertarians really hate the idea that people want to get married, settle down and have children . . . you know, producing future Americans, future tax-payers, well-adjusted, law-abiding, competent future workers. They'd rather have machines they can move around and interchange at will without all the trouble that human beings present. 

Dangerous idiots they are these libertarians, enemies of the permanent things, and of humanity itself.

Good thing no one is paying attention on New Year's Eve Eve.

Norway whacks GDP projection by over 50% amidst plunging oil prices

Seen here:

According to Statistics Norway, lower investment in the oil sector, Norway's primary growth engine, will likely slow the country's overall GDP growth to 1% next year from 2.1% anticipated in September.

The Conservative-led government has not proposed modifications to the current tax levels imposed on the oil and gas sector, where an additional 51 percent income tax rate applies to make the effective rate 78 percent.

Instead, in order to compensate for declining oil revenues, the current right-wing government, made up of the Conservative and Progress parties, has proposed tax reform measures that would significantly alter the distribution of Norway's tax revenues. 

The measure, that would see the tax burden moved from corporate and personal income toward taxes on consumption and property, has been criticized by left-leaning opposition parties.

IEA revises down 2015 oil demand growth by 20%, a third of British oilers in big trouble, mostly smaller

Andrew Critchlow reported Dec. 12th here:

The International Energy Agency (IEA) said on Friday that world demand for oil will grow by 900,000 barrels per day (bpd) next year, a downward revision of 230,000 bpd from its previous estimate.

The Paris-based watchdog now expects world demand to reach 93.3m bpd in 2015. The agency said: "A strong dollar and the lifting of subsidies have so far limited supportive price effects on demand."

And here on the 29th:

A third of Britain’s listed oil and gas companies are in danger of running out of working capital and even going bankrupt amid a slump in the value of crude, according to new research.

Financial risk management group Company Watch believes that 70pc of the UK’s publicly listed oil exploration and production companies are now unprofitable, racking up significant losses in the region of £1.8bn.

Less than 10 years ago $2.29 per gallon was a new high price for gasoline

You could almost say the few people Obama's added to the labor force he's sent straight to the unemployment lines

The lowest jobless claims yet still don't yield the lowest unemployment levels under Bush.

As I pointed out here, jobless claims for 2014 are probably going to finish the year at the 15.7 million level, not-seasonally-adjusted. The comparable year under Bush was 2006, coincidentally also his sixth year in the presidency, when there were 16.2 million similarly measured jobless claims. That's as low as claims ever fell under Bush in absolute terms, and as low as they've been in this century, until now.

So things are better under Obama, right, because claims are going to be the lowest yet this century?

The civilian labor force level was 152.6 million in November 2006, almost 10 million higher than when Bush was first elected, but only 3.7 million higher now at 156.3 million as of November 2014. So claims were 10.6% of the civilian labor force in 2006, and 10.0% of the civilian labor force in November 2014, so yes, things are marginally statistically better, but still very close.

But what's not close is the unemployment rate, or the unemployment level. Not-seasonally-adjusted the rate was 4.3% in November 2006, but 5.5% in November 2014. The civilian labor force has barely grown by 1.7 million after six years of Obama, yet the unemployment level is still 2.05 million higher today than it was in November 2006 when first time jobless claims were at their lowest level before now.

You could almost say Obama sent the few people he's added to the labor force since 2008 straight to the unemployment lines. The other 8 million or more sent themselves straight out of the labor force, never to be counted as unemployed again.

Obama's civilian labor force has only grown 1.7 million since 11/2008, 1.3 million of which came in the last year!

The civilian labor force grew by 1.3 million 11/13-11/14

By contrast George Bush's civilian labor force grew by 11.8 million over his presidency, 6.9 times more than Obama's. To the same almost 6 year point in his presidency Bush's civilian labor force grew by 9.8 million, 5.8 times more than Obama's.

The current year's addition of 1.3 million may be contrasted to the 2.4 million added at the same interval under Bush.

Obama, he sucks!

The civilian labor force grew by 2.4 million 11/05-11/06

2.8x more people left the work force in the last year than did at the same time under Bush

360,000 left the labor force 11/05-11/06

1 million have left the labor force 11/13-11/14

Unemployment comes down faster when you have fewer unemployed people to count.

Giving USA puts 2013 charitable giving at $335 billion, still in depression from 2007's $349 billion

Seen here:

"At an estimated $335.17 billion, total charitable giving from U.S. individuals, corporations, foundations and bequests in 2013 approached the peak seen before the worst of the Great Recession, adjusted for inflation, according to research released today by Giving USA Foundation and its research partner, the Indiana University Lilly Family School of Philanthropy. ...

"Donations in 2013 increased 4.4 percent (in current dollars) from the revised estimate of $320.97 billion for 2012. Adjusted for inflation, total giving rose 3.0 percent over the 2012 estimate. ...

"When adjusted for inflation, 2007 donations totaled an estimated $349.50 billion."

Jeb Bush pocketed $1.4 million in 2013 working for ObamaCare profiteer Tenet Healthcare of Dallas

So says the LA Times, here:

And on Wednesday, Bush resigned from the board of directors of Tenet Healthcare Corp., also effective Dec. 31, according to a corporate filing. The Dallas-based company actively supported the 2010 Affordable Care Act, and has seen its revenue rise from it, an issue that could draw fire in Republican primaries.

Bush earned cash and stock awards worth nearly $300,000 from Tenet in 2013, according to corporate filings. He also sold Tenet stock worth $1.1 million that year, the records show.

Dr. Copper has been trading below $3 since before Thanksgiving

Except for a brief ten day period in March, copper hasn't been this low this long since the stock market low in 2009. Combined with oil falling out of bed, the prospects for improving GDP look dim.

Part-time jobs peak at the end of the year, and full-time jobs peak in the middle of the year

Part-time jobs hit a new all-time high level in November at 28.225 million. This follows a pattern of part-time peaking at Christmas time and full-time peaking around Independence Day. The oscillation between the two is best observed in the not-seasonally-adjusted data.

If Obama had wanted to "rescue" the economy in 2009, he should have ramped-up the wars as he's doing now

If Obama had really wanted to rescue the economy in 2009, he would have ramped up dramatically the wars in Iraq and Afghanistan instead of putting them on the path to euthanasia. In this sense he was a very bad Keynesian who made FDR spin in his grave.

Of course, that assumes he is smart enough to understand Keynesianism, being raised as a doctrinaire Marxist who was content to bask lazily in the glow of his presidential victory while a bunch of Clinton re-treads did their mediocre best for him . . . recreating HillaryCare. A more sinister interpretation believes that the inattention to the economy was all on purpose, since suppressing the middle class is the main objective of revolutionary leftism faced with successful capitalism almost everywhere. Still others simply chalk it up to Obama's incompetence, just another example of the Affirmative Action Presidency at work.

But I digress.

The simple reason for the need to have ramped up the wars back in 2009 is that the radical stimulus spending called for by the likes of Paul Krugman (3x what Obama ended up spending), who ridiculed the smallness of Obama's stimulus spending plan in The New York Times here, cannot be accomplished quickly through any other department of the federal government except through what we used to call more accurately The War Department. 'There are only a limited number of “shovel-ready” public investment projects — that is, projects that can be started quickly enough to help the economy in the near term,' Krugman wrote at the time.

That's for sure.

Proof of this can now be seen in the GDP numbers in just the last year when ISIS all of a sudden became a threat on the administration's radar screen even though ISIS had been building in the open for years and the administration actually had been warned about it and knew about it.

Federal government consumption had been a net negative subtraction from GDP for each of the last three years, 2011-2013, totaling -0.28 points of GDP for each year on average, and 75% of that came on average from cutting spending on National Defense.

All of that changed on a dime in 3Q2014 when ISIS surged into Iraq. Consumption on national defense suddenly vaulted to +0.69 points of GDP from +0.12 points in 1Q and -0.07 points in 2Q, to the point where defense spending now represents fully 97% of the federal contribution to GDP in the third quarter of 2014, and over 13% of GDP overall. All the current big contributors to GDP come in lower than this except for exports, with which defense spending is tied. 

Only the military can spend large sums of government money quickly in this slow-moving, inertia-plagued bureaucratic state. Future presidents, take note: War is still the father of everything.

Our markets closed early today in honor of the birth of Jesus Christ, you rag-headed heathen bastards