Too hot to shop: There goes Q2 GDP

Keeping the people ignorant of their poverty: Obama's media shills bury the awful GDP story

NBC briefly had a red banner headline at the top of the page and then moved the GDP story to the top left but not among the page lead stories.

ABC buried the story near the bottom left.

CBS buried the story near the bottom right.

GDP tanks 2.9% in first quarter, CNBC shills for Obama calling it disappointing, doesn't even put GDP in headline

Consensus estimate for GDP has worsened to -1.7% from -1.6% at fxstreet

Bob Brinker mentioned the consensus estimate for GDP this last weekend on his radio program Money Talk at -1.8%. fxstreet.com had had the consensus estimate at -1.6% as recently as last week, but now shows it at -1.7%. Very curious.

How did the winter get so much worse in the last month for its impact on GDP? After all, everyone has blamed the -1.0% print in the second estimate on the bad winter. But somehow things are much worse than we thought because of the weather? 70% or 80% worse than we imagined?

It's not because of the winter, dear friends. It's because your master wants you to suffer, wants to cut you down to size, wants to destroy your aspirations.

He is succeeding.

How does it feel to be a slave?

The keys to corporate profits since the 2008 panic

Layoffs and ZIRP and buybacks, oh my! Layoffs and ZIRP and buybacks, oh my!

Art Hogan doesn't think valuation is a fundamental

Here:

"At these levels you need a strong catalyst, and I thought we got that, but we've got investors that are nervous about things other than fundamentals, namely geopolitical and valuations, so the path of least resistance is to take chips off the table. There's a large cohort of investors looking for any opportunity to take some money off the table near record highs," said Art Hogan, chief market strategist at Wunderlich Securities.

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Translation: paying too much for something shouldn't concern you.

$82,077: What you need to make to afford the median existing home price in May 2014

The median sales price of an existing home in May rose to $213,400 from $201,500 in April.

In May you needed to make $82,077 for that home to be affordable to you.

In April you needed $77,500.

Housing affordability is generally calculated by multiplying your salary by 2.6.

Just 10.5% of individual wage earners made $80,000 or more per year in 2012, which means the vast majority of Americans must settle for homes which are priced in the bottom half of the market. Two people each making the median wage in 2012 of $27,519.10 could afford a home priced at no more than $143,100, which was the typical price of a suburban home in the collar communities of Chicago in . . . 1993, over twenty years ago.

"And it is a device of tyranny to make the subjects poor, so that a guard may not be kept, and also that the people being busy with their daily affairs may not have leisure to plot against their ruler. Instances of this are the pyramids in Egypt and the votive offerings of the Cypselids, and the building of the temple of Olympian Zeus by the Pisistratidae and of the temples at Samos, works of Polycrates (for all these undertakings produce the same effect, constant occupation and poverty among the subject people); and the levying of taxes, as at Syracuse (for in the reign of Dionysius the result of taxation used to be that in five years men had contributed the whole of their substance)." -- Aristotle, Politics, 5, 1313b.

Run away: Today's total market capitalization/GDP ratio is 1.46

$25.003 trillion
-------------------  = 1.46 (June 23, 2014: a really bad time to invest)
$17.101 trillion


$10.222 trillion
------------------- = 0.71 (April 6, 2009: a pretty good time to invest)
$14.381 trillion













h/t John Hussman, Warren Buffett

Consumer indebtedness has exploded since the 1980s

Americans haven't saved 10% since 1984

Blaming negative GDP on the harsh winter is already forecast to get worse

The consensus estimate of the third and final report of 1Q2014 GDP, coming out on Wednesday next week, is already 60% worse than the actual second report at -1.6%. What, is the late winter suddenly become worse in the last month?

The first estimate, you will recall, came in at +0.1%, and was quickly downgraded in various places to something ranging between -0.2% and -0.4%. When the second estimate came in at a much worse -1.0%, just about everyone blamed the harsh winter for the pathetic print, including the White House, which incredibly credited GDP from spending on utilities at the same time it debited GDP because people weren't traveling (which isn't true--just examine the government's miles-traveled reports over the winter), weren't vacationing and weren't spending money on hotels and restaurants, and other such drivel.

Having it both ways, it seems, only applies south of the Canadian border, where real GDP was a negative almost $40 billion. North of it real GDP was actually positive, despite the winter, at about $4.7 billion US. A much smaller economy Canada's is, to be sure, but for that reason you'd think it more vulnerable to the harshest winter in decades whereas our much larger, more varied economy ought to be more resilient.

But up against an Obama, you would be wrong. He is secretly happy that things are going as poorly as they are, because it means that the middle class is steadily shrinking and soon will no longer be able to stand in his way, and the Democrat Party's way, of remaking America into a few haves and a lot of have-nots.

In this they are assisted by the libertarians who have successfully infiltrated the Republican Party as conservatives, who see this as their natural mission, too. Politically speaking, they are out to defeat Republicanism just as much as the Democrats are. The successful individual lone ranger is the sine qua non of their vision, after all, whose fabulous wealth is the only object of their affection. And the only thing standing in his way are people who believe in something bigger than themselves.

People who believe in something larger than themselves in America today occupy the extremes of the left and the right, and seem to be getting fewer in number as we speak, a fact noted in a recent article in The New Republic. Between them are a mass of social and economic libertines who are already the slaves of the elites, for whom neither the economic nor the moral restraint of the Protestant founders which built our country are a value. Unless we recover something of the latter the America of the past will cease to exist, if it hasn't already.

And persistently poor GDP proves it.

Tonight's S&P500 remains 4.02% below the August 2000 inflation-adjusted all-time high

2045.09 is the inflation-adjusted all-time high, on August 1, 2000. 1962.87 is the current level of the S&P500, June 20, 2014.

1753.10 is the inflation-adjusted high on October 1, 2007 before the crash. We are currently almost 12% above that.

Your real rate of return with full dividend reinvestment August 2000 to May 2014 is just 1.32% per annum.

Your real rate of return with full dividend reinvestment October 2007 to May 2014 is 3.36% per annum.

Update: And your real rate of return with full dividend reinvestment between August 2000 and October 2007 was -0.51% per annum.

Bank Failure Friday . . . two tonight: the 10th and 11th in 2014

Reported here and here.

The FDIC still insures 6,730 institutions through March 31, 2014.

In February 2007, over 500 bank failures ago, the FDIC still insured 8,743 institutions, meaning about 1,500 additional institutions have succumbed to acquisition by bigger banks which have swallowed them up since the financial panic.

Call it income inequality, banker style.

FISA Court rules NSA can take your metadata for another 90 days, until September 12th

Story here, buried in the tyranny's Friday afternoon document dump.

Robert Kaplan either steals from Plato, or is simply ignorant of him

Here in "The Loneliness of the Tyrant", where he discourses at length on the psychological predicament of many strongmen past and present, but never once mentions Socrates' famous meditation on the soul of the tyrannical man:

"No one should envy a tyrant. His existence is miserable."

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Is not his case utterly miserable? and does not the actual tyrant lead a worse life than he whose life you determined to be the worst? ... 

He who is the real tyrant, whatever men may think, is the real slave, and is obliged to practise the greatest adulation and servility, and to be the flatterer of the vilest of mankind. He has desires which he is utterly unable to satisfy, and has more wants than any one, and is truly poor, if you know how to inspect the whole soul of him: all his life long he is beset with fear and is full of convulsions, and distractions, even as the State which he resembles: and surely the resemblance holds? ... 

Moreover, as we were saying before, he grows worse from having power: he becomes and is of necessity more jealous, more faithless, more unjust, more friendless, more impious, than he was at first; he is the purveyor and cherisher of every sort of vice, and the consequence is that he is supremely miserable, and that he makes everybody else as miserable as himself.

-- Plato, Republic, Book 9

Rupert Murdoch abandoned Australia for our country, lies about H-1B visas, and calls us the nativists

What else would a traitor to his own do and say?

The POS, here:

"Next, we need to do away with the cap on H-1B visas, which is arbitrary and results in U.S. companies struggling to find the high-skill workers they need to continue growing. We already know that most of the applications for these visas are for computer programmers and engineers, where there is a shortage of qualified American candidates. But we are held back by the objections of the richly funded labor unions that mistakenly believe that if we keep innovation out of America, somehow nothing will change. They are wrong, and frankly as much to blame for our stalemate on this issue as nativists who scream about amnesty."

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The only shortage of workers in America is of the kind which will take the same pay as a cheaper foreign import. The libertarian idea which has infected the Republican Party is best observed in the person of Rupert Murdoch and his many properties such as Fox News, The Wall Street Journal and the NY Post.

Shiller p/e vs. S&P500 p/e: Was either a guide to investing since 2008?

The merit of the Shiller p/e, which is backward looking, for timing investment decisions is cautioned against even by its supporters like John Hussman. It's something of a straw man to attack people like him for using it that way when they really don't use it to time market entry and exit points. Hussman views the indicator as one of a number of things which help him forecast 10-year returns going forward, a point lost it seems on people who don't read him carefully. High Shiller p/e levels in the present are part of an ensemble of indicators which to Hussman forecast low average annual returns over the course of the next decade.

That said, which has been the better indicator for timing a major allocation of monies to stocks in the recent past, the backward-looking Shiller p/e or the simple S&P500 p/e?

Today's Shiller p/e is a very high 26.06, 57.65% above its mean level of 16.53. The S&P500 p/e is 19.32, 24.56% above its mean level of 15.51. By both measures, today would seem to be a costly time to invest new monies in the stock markets.

How about during the March 2009 period when stocks tanked to their lows during the financial crisis?

The Shiller p/e actually told you to invest, hitting 13.32 on March 1, just days before the markets bottomed. In fact between October 2008 and June 2009 the indicator remained at or below 16.38, in other words below mean level, while the S&P500 inverted bell curve fell from 1100 to 683 and rose to 940. With the S&P500 now over 1900, any time during that woeful period looks in retrospect like a great time to buy. The trouble was that people didn't have any money to invest, being fully invested as usual, riding it all the way down after riding it all the way up.

The S&P500 p/e on the other hand was quite high on March 1, 2009 at 110.37, 612% above its mean level! It most definitely told you NOT to buy then, when you should have bought then. This indicator didn't hit its lows for the period, at the 13 level, until the late summer of 2011 and then only briefly, when interestingly enough the S&P500 was trading near 1100 again, in retrospect another very good time to buy. But at that time the Shiller p/e was above mean, at about 20, and you might have been forgiven for not taking the bait. But because you didn't you've missed an 800 point climb in the S&P500.

You have to go all the way back to the late 1980s to get an S&P500 p/e ratio consistently below 15, and even earlier to the mid-1980s for the Shiller p/e. All of which is to say that stocks have been rather expensive for quite a long time in general, coinciding with the generational focus on it as the way to make the big money for retirement.

In other words, we're in a bubble, and we blew it.

Krauthammer on IRS scandal: Nixon was missing only 18 minutes, Lerner is missing two years

CHARLES KRAUTHAMMER: Nixon was missing only 18 minutes. Lerner is missing two years. Nixon is a piker compared to this administration when it comes to concealment, hiding or pretending that they can't find stuff.

@BarackObama: We never said record Antarctic sea ice is made of cheese

If the Iraq War had been about getting the oil, it wasn't a very good deal

DoD direct spending on the war in Iraq was $758 billion.

Iraqi exports, mostly oil, reached $94.2 billion in 2012, and have totaled barely $441 billion from 2004 to 2012. We blow more than that on gasoline in a single year.

At the current US gasoline average price of $3.648/gallon, the 134.51 billion gallons of gasoline consumed in the US in 2013 is the equivalent of spending $490.7 billion.