Looks like Spain has caught the California disease: high unemployment and a rising exodus.
Irrespective of the reasons, it's the same message: lack of responsible leadership.
According to Spain's National Statistics Institute, unemployment hit 27.2 percent, which means it most likely even higher. Governments are not known for their being forthright when it comes to negatives news.
A record 6.2 million are out of work, the INE recently reported, and the total number escalated from 26 to 27.2 percent in the first quarter of this year.
http://www.marctomarket.com/2013/04/spain-update-running-from-bulls.html#more
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A lot of smart people think the next bubble to go pop is student loans.
As the percentage of borrowers more than 90 days delinquent rises and concerns about these loans grow, it looks as if investors are starting to send a message: nada mas.
At least that's the message about the more risky tranches of these loans if the recently canceled Sallie Mae bond offering means anything.
These bonds offer higher yields in the main, but those yields depends on how they get packaged. Sallie Mae, the largest non-government student lender, on Thursday had to recall an offering that had been on the market for two weeks owing to lack of interest.
Market translation: not enough reward for level of risk.
http://online.wsj.com/article/SB10001424127887323335404578444832431703020.html?KEYWORDS=sallie+mae
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Friday, April 26, 2013
FRIDAY READS
Latest GDP Data
http://blogs.wsj.com/economics/2013/04/26/economists-react-persistent-but-underwhelming-growth/
Looking Ahead http://www.nytimes.com/2013/04/25/business/janet-l-yellen-possible-fed-successor-has-admirers-and-foes.html?pagewanted=all&_r=0
Death Of Gold Exaggerated
http://www.futuresmag.com/2013/04/25/gold-rises-most-since-september-as-central-banks-j?ref=hp
Liberty Or Surveillance: Your Choice
http://reason.com/archives/2013/04/25/america-made-a-pact-with-the-devil-after
This Ain't Pennies
http://dealbook.nytimes.com/2013/04/25/soros-takes-big-stake-in-j-c-penney/
Oxy Reports
http://labusinessjournal.com/news/2013/apr/25/lower-oxy-profit-better-expected/
http://blogs.wsj.com/economics/2013/04/26/economists-react-persistent-but-underwhelming-growth/
Looking Ahead http://www.nytimes.com/2013/04/25/business/janet-l-yellen-possible-fed-successor-has-admirers-and-foes.html?pagewanted=all&_r=0
Death Of Gold Exaggerated
http://www.futuresmag.com/2013/04/25/gold-rises-most-since-september-as-central-banks-j?ref=hp
Liberty Or Surveillance: Your Choice
http://reason.com/archives/2013/04/25/america-made-a-pact-with-the-devil-after
This Ain't Pennies
http://dealbook.nytimes.com/2013/04/25/soros-takes-big-stake-in-j-c-penney/
Oxy Reports
http://labusinessjournal.com/news/2013/apr/25/lower-oxy-profit-better-expected/
Thursday, April 25, 2013
FLAWED STUDIES
How do you tell a flawed study when you see one?
For most it isn't easy unless you've been around the study business and spent lots of time in the world they're studying. In this case Type 2 diabetes.
The first thing you know all studies have an agenda, though the people involved will deny it. The second thing you want to know is who funded it.
The third thing is how they arrived at the magical number nearly all studies spout. Again, in this case 22%.
The next thing you know every study needs a quote from a so-called expert. And an independent one all the better. This time a statistical one who overwhelms us with the brilliant line:
That tells you fruit juice makers are not the bad guys--yet. Next time you buy a bottle or can of fruit juice check out how much sugar it contains, if you can.
For most it isn't easy unless you've been around the study business and spent lots of time in the world they're studying. In this case Type 2 diabetes.
The first thing you know all studies have an agenda, though the people involved will deny it. The second thing you want to know is who funded it.
The third thing is how they arrived at the magical number nearly all studies spout. Again, in this case 22%.
The next thing you know every study needs a quote from a so-called expert. And an independent one all the better. This time a statistical one who overwhelms us with the brilliant line:
"The bottom line is that sugary soft drinks are not good for you - they have no nutritional value and there is evidence that drinking them every day can increase your relative risk for type 2 diabetes," he said in an emailed comment.
Can and relative are interesting choices to describe your everyday risk. Driving on a California freeway everyday can increase your relative risk having an accident too. And we'll put our evidence up against his any time.
The tip off in this study is: "Fruit juice consumption was not linked to diabetes incidence."
That tells you fruit juice makers are not the bad guys--yet. Next time you buy a bottle or can of fruit juice check out how much sugar it contains, if you can.
If you check online you'll see this story was picked up by ABC News and blasted over other outlets.
http://www.reuters.com/article/2013/04/25/us-diabetes-drinks-idUSBRE93N1DL20130425
http://www.reuters.com/article/2013/04/25/us-diabetes-drinks-idUSBRE93N1DL20130425
THURSDAY READS
DEFENSE WINS FOR NOW
http://online.barrons.com/article/SB50001424052748703889404578442853939461028.html?mod=BOL_hpp_highlight_bottom#articleTabs_article%3D3
DEFAULTS ALARMING
http://blogs.wsj.com/developments/2013/04/24/despite-improvement-in-loan-mod-defaults-report-raises-alarms/
CAN YOU DECIDE?
http://investorplace.com/2013/04/should-i-buy-exxonmobil-shares-3-pros-3-cons/
DO BUYBACKS REALLY BUY LOVE?
http://blogs.wsj.com/moneybeat/2013/04/24/for-its-next-feat-apple-will-win-back-investors-with-buybacks/
ONCE IT GETS STARTED
http://www.bloomberg.com/news/2013-04-05/japan-s-new-stimulus-may-trigger-yen-avalanche-soros-says.html
Wednesday, April 24, 2013
EXOTIC PERMUTATIONS
If the name of the title sounds like one of those fancy spas executives often frequent, in this case it's code for unintended consequences.
But like one of those spas it pretty nice duty if you can get it.
But like one of those spas it pretty nice duty if you can get it.
He added that this wasn't specifically contemplated when such plans were devised a dozen years ago to give executives a way to sell some shares of their own companies despite being exposed to nonpublic information about it. It is, he said, an "exotic permutation."
CLASSIC EXAMPLE
The NYT motto reads "All the news that's fit to print."
After you read the posted story you should know why it ought to say: "All the news that's fit to spin."
Let's start at the top, the title: "The Incredible Shrinking Budget."
The only thing incredible about the incredible shrinking budget is whoever wrote this headline. If nothing else it shows you what contempt the NYT has for you.
The article claims the deficit is not only falling but falling rapidly. They then quote a report from Goldman Sachs aka in many eyes as Government Sachs. This is the same GS that shorted gold then put out a report to clients that gets spread to the public by MSM to short gold.
For anyone but GS that's called front running; it's illegal for you and me. It's also designed to pry the retail crowd loose from their metal ETFs and send a message about the economy.
Take a closer look at the paragraph below.
“Revenues have also exceeded expectations, with a 12 percent gain fiscal year to date. What is more notable is that the strength in revenues preceded the payroll tax hike at the start of the year, and the spending decline does not seem to reflect sequestration, which has just started to take effect.” To translate: the deficit could come in even smaller than currently anticipated because of spending cuts and higher tax rates.
To begin with, there's more qualifiers ("does not seem, "could come") in there than you'll see next month at the Indy 500.
The strength in revenues was no surprise. People cashed in some winnings to avoid higher taxes that they knew are coming. This was true at the state level also. Even tax-crazy California reported higher revenue.
This next paragraph would be even funnier if not for such blatant cheerleading. The growing economy, bolstering tax revenues, reducing the need for spending on unemployment insurance, the budget is finally coming into balance. Enough already.
"Washington has gotten its act together" and they write this BS with a straight face. The next time Washington gets its act together will be the first time.
On the face of it, this sounds like something to applaud: The growing economy is bolstering tax revenue and reducing the need for spending on programs like unemployment insurance. Washington has gotten its act together. The budget is finally coming back into balance. Indeed, Goldman now expects the budget deficit to fall to just 2.7 percent of economic output by the 2015 fiscal year. Many economists consider budget deficits that small to be sustainable — particularly if the federal government is investing in public goods like schools and roads — with the accrued debt paid off by later years’ economic growth.
This next paragraph is their coup d' gras, the final haymaker to knockout sequestration.
But a number of budget experts are booing rather than applauding, including the fiscal hawks at the International Monetary Fund. Last week, the fund nudged down its estimates for United States growth in 2013 and 2014. It said it saw many bright spots in the American economy, including the strength of the private sector, but it criticized Washington for imposing too much austerity, too soon, and thus sapping strength from the recovery and preventing the unemployment rate from coming down faster.
There always has to be another reason for the failure of the unemployment rate to decline. It couldn't be lousy government policy in the first place owing to huge budget deficits, big debt and out-of-control slopping at the public trough.
You can't blame the author, though. She probably doesn't know yet: she's just another pawn. Toss her a by-line, a few chips, some guacamole and she's good to go.
http://economix.blogs.nytimes.com/2013/04/22/the-incredible-shrinking-budget-deficit/
After you read the posted story you should know why it ought to say: "All the news that's fit to spin."
Let's start at the top, the title: "The Incredible Shrinking Budget."
The only thing incredible about the incredible shrinking budget is whoever wrote this headline. If nothing else it shows you what contempt the NYT has for you.
The article claims the deficit is not only falling but falling rapidly. They then quote a report from Goldman Sachs aka in many eyes as Government Sachs. This is the same GS that shorted gold then put out a report to clients that gets spread to the public by MSM to short gold.
For anyone but GS that's called front running; it's illegal for you and me. It's also designed to pry the retail crowd loose from their metal ETFs and send a message about the economy.
Take a closer look at the paragraph below.
“Revenues have also exceeded expectations, with a 12 percent gain fiscal year to date. What is more notable is that the strength in revenues preceded the payroll tax hike at the start of the year, and the spending decline does not seem to reflect sequestration, which has just started to take effect.” To translate: the deficit could come in even smaller than currently anticipated because of spending cuts and higher tax rates.
To begin with, there's more qualifiers ("does not seem, "could come") in there than you'll see next month at the Indy 500.
The strength in revenues was no surprise. People cashed in some winnings to avoid higher taxes that they knew are coming. This was true at the state level also. Even tax-crazy California reported higher revenue.
This next paragraph would be even funnier if not for such blatant cheerleading. The growing economy, bolstering tax revenues, reducing the need for spending on unemployment insurance, the budget is finally coming into balance. Enough already.
"Washington has gotten its act together" and they write this BS with a straight face. The next time Washington gets its act together will be the first time.
On the face of it, this sounds like something to applaud: The growing economy is bolstering tax revenue and reducing the need for spending on programs like unemployment insurance. Washington has gotten its act together. The budget is finally coming back into balance. Indeed, Goldman now expects the budget deficit to fall to just 2.7 percent of economic output by the 2015 fiscal year. Many economists consider budget deficits that small to be sustainable — particularly if the federal government is investing in public goods like schools and roads — with the accrued debt paid off by later years’ economic growth.
This next paragraph is their coup d' gras, the final haymaker to knockout sequestration.
But a number of budget experts are booing rather than applauding, including the fiscal hawks at the International Monetary Fund. Last week, the fund nudged down its estimates for United States growth in 2013 and 2014. It said it saw many bright spots in the American economy, including the strength of the private sector, but it criticized Washington for imposing too much austerity, too soon, and thus sapping strength from the recovery and preventing the unemployment rate from coming down faster.
There always has to be another reason for the failure of the unemployment rate to decline. It couldn't be lousy government policy in the first place owing to huge budget deficits, big debt and out-of-control slopping at the public trough.
You can't blame the author, though. She probably doesn't know yet: she's just another pawn. Toss her a by-line, a few chips, some guacamole and she's good to go.
http://economix.blogs.nytimes.com/2013/04/22/the-incredible-shrinking-budget-deficit/
CORRELATION
You hear a lot of talk today about correlation.
Many believe things now are more correlated than ever. In other words, what happens in Asia doesn't just stay there. That's just one of the concerns with all the QE Japan's doing.
Think emerging markets and growth. More developed, industrialized nations want to capitalize on that growth. It's a two way street. Correlation doesn't just apply to markets, however. There's something called asset correlation.
And that brings us to commodities. Recently they've taken a hit while equities have climbed, not historically unusual between the two asset classes, notwithstanding the last few years when they've somewhat surprisingly shown more correlation.
In simple terms commodities and equities are usually believed to be negatively correlated. They don't both tend to rise or fall at the same time. With bonds and commodities even more so.
When people think about emerging markets hunger comes up. And that's correct. But it's not all nutritional hunger. The so-called experts estimate there are now seven billion people inhabiting the Good Ship Planet Earth with another two billion projected in the next 20 years.
More hunger, again not all the nutritional kind. In 1929 when the stock market crashed there were 120 million people in the US. Today in California alone there are 34 million and those are the ones we presumably know about.
So here are a few reasons you want to own some commodities.
1. Commodities are historically negatively correlated to equities and bonds while throwing off decent returns. It's called diversification.
2. Inflation protection. Commodity prices tend to rise with inflation.
3. Growth is usually correlated with industrialization. And that brings us full circle to emerging markets and how to play them.
Welcome what the market gives you. Just make sure you do your homework.
Many believe things now are more correlated than ever. In other words, what happens in Asia doesn't just stay there. That's just one of the concerns with all the QE Japan's doing.
Think emerging markets and growth. More developed, industrialized nations want to capitalize on that growth. It's a two way street. Correlation doesn't just apply to markets, however. There's something called asset correlation.
And that brings us to commodities. Recently they've taken a hit while equities have climbed, not historically unusual between the two asset classes, notwithstanding the last few years when they've somewhat surprisingly shown more correlation.
In simple terms commodities and equities are usually believed to be negatively correlated. They don't both tend to rise or fall at the same time. With bonds and commodities even more so.
When people think about emerging markets hunger comes up. And that's correct. But it's not all nutritional hunger. The so-called experts estimate there are now seven billion people inhabiting the Good Ship Planet Earth with another two billion projected in the next 20 years.
More hunger, again not all the nutritional kind. In 1929 when the stock market crashed there were 120 million people in the US. Today in California alone there are 34 million and those are the ones we presumably know about.
So here are a few reasons you want to own some commodities.
1. Commodities are historically negatively correlated to equities and bonds while throwing off decent returns. It's called diversification.
2. Inflation protection. Commodity prices tend to rise with inflation.
3. Growth is usually correlated with industrialization. And that brings us full circle to emerging markets and how to play them.
Welcome what the market gives you. Just make sure you do your homework.
BRIEFS
Recently we wrote about Goldman Sachs sacking gold. Here's quote from a statement released today from the bank advising their clients to cover their shorts in the precious metal.
"Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists' forecast for a reaccelerating in U.S. growth later this year," they said.
This is designed to shake more retail investors out of gold ETFs and help the Fed further pump up the equity bubble. Bottom line message: "See. We told you everything is fine."
--------
Beware of chains. President Obama's new budget plan wants to swap the current CPI used to gauge inflation to a chained CPI. What's the difference? The new CPI, owing to some nebulous economic mumbo-gumbo, factors in possible substitutions. Like if gasoline prices get too high we'll all start riding tricycles.
The key word here is possible as in substitutions one might make. Pork prices jump up while beef prices stay the same. Everyone is assumed to switch or substitute pork for beef, including those allergic to both. It's called egalitarianism. How would you like yours-- with or without mayo?
If hardly a new concept and it's designed to screw the COLA folks, all those yield-starved seniors Obama and his cronies claim they care so much about.
Tax brackets are indexed to the current CPI. With the new one they aren't. That means higher taxes for everyone, middle class included. Even the left of center Tax Policy Center calls it "a back door tax hike of $100 billion."
About the only thing going to get chained if this economic political voodoo flies is you and me.
------
Here a quote from Mohamed El-Erian, Pimco. talking about airport delays.
"Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists' forecast for a reaccelerating in U.S. growth later this year," they said.
This is designed to shake more retail investors out of gold ETFs and help the Fed further pump up the equity bubble. Bottom line message: "See. We told you everything is fine."
--------
Beware of chains. President Obama's new budget plan wants to swap the current CPI used to gauge inflation to a chained CPI. What's the difference? The new CPI, owing to some nebulous economic mumbo-gumbo, factors in possible substitutions. Like if gasoline prices get too high we'll all start riding tricycles.
The key word here is possible as in substitutions one might make. Pork prices jump up while beef prices stay the same. Everyone is assumed to switch or substitute pork for beef, including those allergic to both. It's called egalitarianism. How would you like yours-- with or without mayo?
If hardly a new concept and it's designed to screw the COLA folks, all those yield-starved seniors Obama and his cronies claim they care so much about.
Tax brackets are indexed to the current CPI. With the new one they aren't. That means higher taxes for everyone, middle class included. Even the left of center Tax Policy Center calls it "a back door tax hike of $100 billion."
About the only thing going to get chained if this economic political voodoo flies is you and me.
------
Here a quote from Mohamed El-Erian, Pimco. talking about airport delays.
“Any avoidable headwind to growth – and this one is self-manufactured by Congress – is a travesty for an economy that is already struggling to grow by 2% a year, has an unemployment rate of 7.6% (with some 40% composed of long-term joblessness), has seen its labor participation rate fall to a level last seen in 1979, and still needs to de-leverage safely over time.”
WEDNESDAY READS
More Headwinds
http://blogs.marketwatch.com/thetell/2013/04/23/pimcos-el-erian-sequester-flight-cancellations-signal-more-headwinds-for-economy/
Accountability
http://management.fortune.cnn.com/2013/04/23/success-laziness-accountability/
Political Chicanery Trumps People Again
http://online.wsj.com/article/SB10001424127887324874204578438913145965432.html?mod=WSJ_hp_mostpop_read
Defense Japanese Style
http://www.marctomarket.com/2013/04/great-graphic-japanese-uridashi-issuance.html#more
Bargain Hunter
http://www.inc.com/julie-strickland/price-psychology-.html?cid=em01015week17e
http://blogs.marketwatch.com/thetell/2013/04/23/pimcos-el-erian-sequester-flight-cancellations-signal-more-headwinds-for-economy/
Accountability
http://management.fortune.cnn.com/2013/04/23/success-laziness-accountability/
Political Chicanery Trumps People Again
http://online.wsj.com/article/SB10001424127887324874204578438913145965432.html?mod=WSJ_hp_mostpop_read
Defense Japanese Style
http://www.marctomarket.com/2013/04/great-graphic-japanese-uridashi-issuance.html#more
Bargain Hunter
http://www.inc.com/julie-strickland/price-psychology-.html?cid=em01015week17e
Tuesday, April 23, 2013
SPEAK UP
Contriving, backstabbing, evil people.
No, we're not talking this time about one of our old girlfriends though the description is close.
We're talking about the Obama administration and the air traffic controller mess. Now before many of you get too froggy and want to start jumping, the Republicans would be doing the same thing given the chance.
And that's the point: the triumph of politics over people. These contriving, backstabbing, evil folks care less about you and yours and any inconveniences you suffer. When are you going to get your head around that fact?
These people are among the most selfish, egotistical, power-hungry lot around and it's our fault. We put up with it. You and your children and your ideals are just political pawns.
We'd say that they're infantile, but that would be an insult to children everywhere.
What you can do about it is get angry, real angry. Show them what real bipartisan anger looks like. The people stranded at these airports cross all political, racial and religious lines. They're young and old and infirm. En mass they're apolitical.
It's an in-your-face insult. You can sit there and take it, shrug it off or do something.
No, we're not talking this time about one of our old girlfriends though the description is close.
We're talking about the Obama administration and the air traffic controller mess. Now before many of you get too froggy and want to start jumping, the Republicans would be doing the same thing given the chance.
And that's the point: the triumph of politics over people. These contriving, backstabbing, evil folks care less about you and yours and any inconveniences you suffer. When are you going to get your head around that fact?
These people are among the most selfish, egotistical, power-hungry lot around and it's our fault. We put up with it. You and your children and your ideals are just political pawns.
We'd say that they're infantile, but that would be an insult to children everywhere.
What you can do about it is get angry, real angry. Show them what real bipartisan anger looks like. The people stranded at these airports cross all political, racial and religious lines. They're young and old and infirm. En mass they're apolitical.
It's an in-your-face insult. You can sit there and take it, shrug it off or do something.
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