by Jun Nie and Lisa Taylor, Federal Reserve Bank of Kansas City
Export growth is an important source of aggregate growth in the U.S. economy. Indeed the importance of exports in contributing to U.S. economic growth has risen steadily over the past three decades, with exports nearly doubling as a share of GDP. Export growth has been championed in recent years as a key driver for the country’s ongoing economic recovery.
But exports of goods and services produced in the United States depend crucially on foreign demand. When foreign economic growth is low, foreign demand tends to be weak as people have less income to purchase U.S. goods and services. In this way, lower foreign growth may lead to less growth in U.S. exports.
So many variables play into determining where to set up shop for a small business, and how favorable local government is to business surely warrants consideration.
In this infographic, we break down the best and worst states to do business in based on the Tax Foundation’s 2011 Business Tax Climate Index. Of course, many, many other factors serve important roles in influencing the location for a small business (e.g. population density, local culture, climate, etc.), so while tax law draws attention, it’s certainly not the deciding factor.
This week eight central banks took policy decisions with three banks cutting rates (Israel, Serbia and Turkey) and five leaving rates on hold (Indonesia, Iceland, Russia, Latvia and Chile) as the Bank of Japan’s (BOJ) monetary easing continues to impact monetary policy decisions worldwide.
This week’s rate reduction by Israel and Turkey brings it to a total of five rate cuts in reaction to the BOJ’s new phase of monetary easing, which has lead to a drop in the value of the yen and raised fears of an accelerated influx of capital into higher-yielding currencies, threatening to create asset bubbles.
Prior to this week’s cuts, Australia and Korea had cut rates, specifically mentioning foreign exchange as part of their reasoning, while Turkey has now cut rates twice since the BOJ's announcement on April 4, in both cases pointing to strong capital inflows.
Econintersect: Click Read more >> below graphic to see today's list.
The top of today's reading list has two articles that might indicate a market top from two authors who are postulating just the opposite ........ and the last article says the House of Representatives may have just passed an act that will effectively eliminate the debt ceiling. But then the author posted another article the next day which says what Congress has done is ambiguous.
This week we have a Ted Talk about the mathematics of scaling for cities and corporations. Trained as a theoretical physicist, Geoffrey West has turned his analytical mind toward the inner workings of more concrete things, like ... animals. In a paper for Science in 1997, he and his team uncovered what he sees as a surprisingly universal law of biology — the way in which heart rate, size and energy consumption are related, consistently, across most living animals. (Though not all animals: “There are always going to be people who say, ‘What about the crayfish?’ " he says. “Well, what about it? Every fundamental law has exceptions. But you still need the law or else all you have is observations that don’t make sense.")
Econintersect: The CDC (Centers for Disease Control and Prevention) has released a report that finds the number of children in the U.S. with mental disorders has been growing between 1994 and 2011. In any given year between 13% and 20% of U.S. children experience a mental disorder. The treament costs are estimated at $247 billion annually. The new report just released by the CDC covers data fromm 2005-2011.
Econintersect: Secretary of the Treasury Jacob (Jack) Lew has sent a letter to John Boehner, Speaker of the House of Representatives, detailing actions that will be taken in the interim until action is taken to increase the debt limit of the United States. The letter and the actions are pro forma, repeating what has transpired in the past when action was not prompt with regard to raising the limit. In the following, the press release by the Treasury Department is presented in full, as well as an Appendix which describes the "Extraordinary Measures". A substantial portion of the measures amount to simply postponing actions that would add to the national debt. Almost all of the approximately $260 billion in "headroom" will simply be booked as federal debt after the new limit is established.
Econintersect: Chairman Ben S. Bernanke at the Bard College at Simon's Rock (Great Barrington, Massachusetts) told graduates of the importance of innovation, creativity and critical thinking on their futures. This is a speech readers should absorb, and forward to your children and grandchildren
The history of technological innovation and economic development teaches us that change is the only constant. During your working lives, you will have to reinvent yourselves many times. Success and satisfaction will not come from mastering a fixed body of knowledge but from constant adaptation and creativity in a rapidly changing world. Engaging with and applying new technologies will be a crucial part of that adaptation.
This modern, flat infographic presents a combination of data from the Ponemon Institute, offering a candid insight in to the true cost to employers of misplaced or stolen hardware.
Econintersect: Click Read more >> below graphic to see today's list.
The top of today's reading list has Felix Salmon asking if we have solved our fiscal problems........ and the last article is Bill Gross' admonition that, although the bond market has peaked, interest rates will not rise immediately.
Econontersect: The minimum required income for a family of four averaged $58,000 in a national poll conducted in April by the Gallup organization. The poll covered more than 2,000 randomly selected adults (18 and older) from all 50 states and the District of Columbia. The results varied with region of the country, income of the respondent and whether the residence was rural, urban or suburban. A telling statistic reflecting upon the diversity of opinion is the significant difference between mean (average) of $58,000 and median (mid-point reponse), which was $50,000. That indicates the distribution of answers was not balanced, with a long tail of responses to higher incomes.
As a nation of multi-taskers we use any moment that our hands are free to send a cheeky text or check the latest facebook updates, so we weren’t surprised when a recent polled revealed that 75% of people admitted to toilet tweeting, emailing and even making a cheeky call whilst sat on the loo. (Tweeting we get, but calling someone?!)
Horror stories of dropping your phone down the loo are increasingly common, with a slip of the hand being all it takes to see your shiny smartphone lying in the deep dark abyss of the toilet bowl. As inevitable is this is, we decided to delve deeper into how exactly your phone can survive this gloomy fate, with a handy info graphic revealing all the steps needed to recover a loo ridden device.
Econintersect: Click Read more >> below graphic to see today's list.
The top of today's reading list has Edward Harrison's discussion of Canadian house prices........ and the last article is about Brooklyn, NY police raiding a tomato patch assuming it to be pot.
Please read The U.S. Business Cycle in the Context of the Yo-Yo Years which is an update on ECRI's recession call. The readings improved again this week - and the current levels of the WLI are still within an improvement channel - and showing positive growth to come within the next six months. ECRI's inflation index has risen and is reported on below.
Econintersect: This week the Department of Homeland Security (DHS) froze funds in the Dwolla account of Mt.Gox's U.S. unit, alleging that it had broken the law regarding money laundering. Dwolla is an online payments firm, similar to the more widely known PayPal. Mt. Gox is a Tokyo-based exchange that handles 80% of the global transactions of Bitcoins.
The specific changes that alleges the company and a subsidiary were conducting transactions "as part of an unlicensed money service business" that should have been registered with the Treasury's Financial Crimes Enforcement Network (FinCen).
California’s Silicon Valley is credited by many to be the epicenter of technology and innovation in the U.S., but as rental rates continue to climb in the area, startups are beginning to evaluate other states to call home.
Fed's Balance Sheet is a record $3.311 trillion (up from the last week's record $3.281trillion). The complete balance sheet data and graphical breakdown of the cumulative and weekly changes follows the "read more".
Econintersect: Click Read more >> below graphic to see today's list.
The top of today's reading list discusses why so few bankers have gone to jail........ and the last article asks why investors can't imagine a collapse of the bond market.
Econintersect: Week 19 of 2013 ending 11 May shows same week total rail traffic improved according to data released by the Association of American Railroads (AAR):
Four week rolling average is improving (normal for this time of year);
13 week rolling average is improving ( normal for this time of year);
52 week rolling average is improving ( normal for this time of year);
The market was expecting 330,000 to 335,000 vs the 360,000 reported. The more important 4 week moving average is marginally worse, moving from 336,750 (reported last week) to 339,250. Econintersect does not view one week's bad numbers as a negative trend.
by Eric S. Rosengren - President & Chief Executive Officer, Federal Reserve Bank of Boston
[Editor's Note: This speech was given at The Global Interdependence Center Central Banking Conference. Milan, Italy on May 16, 2013]
It is a great pleasure to be invited to participate in the Global Interdependence Center’s conference on central banking. This continues to be a period requiring unusual policy actions – even experimentation – at central banks around the world. So it is important to understand the forces affecting policymaking as well as the impact of the policies, both domestically and internationally.
Facebook is booming and business has never been better for the social media giant. However, it’s proliferation in the last few years has resulted in some unintended and unwanted consequences. The alarming numbers on Facebook are on the rise and further climbing. Be it a teen or an employee – effort is needed to ensure that the damaging impact of Facebook is contained and curbed – this is where tools such as the Facebook spy come in.
Econintersect: The EU-17 (Eurozone) suffered the fifth consecutive quarter of negative GDP growth in Q1 2013. The wider Europe (EU-27) saw the fourth contraction in the past five quarters. The first quarter saw a much smaller contraction than for 4Q 2012. For the Eurozone the fifth quarter of contraction matched the length of the Great Recession. The depth of contraction has been much less than in the 2007-2009 event.
Econintersect: The Japanese economy has responded to the declining value of the yen resulting from the expansionary policies of the Abe government with a sharp rebound in GDP growth to 0.9% for the quarter and 3.5% year-over-year for the first quarter 2013 which ended in March. The major factors in the growth spurt were increased exports (as measured in yen), improved domestic consumption and increased government investment which was largely offset by a decline in private investment. The 3.5% growth was stronger than the 2.7% estimate provided by Bloomberg.
Researchers from the University of Illinois recently published a research paper on the geography of Twitter that contains some interesting data on general Twitter use. The data, provided by social media data vendor GNIP, reveals that Twitter usage is very concentrated, i.e. a small percentage of heavy users account for a large chunk of the Tweets that are sent.
has opened a portal to Amazon's great products. All purchases at Amazon using this link help support Econintersect at the same prices one normally receives.
From Terminal Velocity (3) – “The Pyramid Scheme”[i]:
Reading between the lines, it is clear that the Fed intends to maintain a large balance sheet of assets for some time; even after interest rates have begun to normalize. The Fed will then use a rolling form of Operation Twist, across the Yield Curve and across asset classes, in order to target particular areas that it believes need influencing. The overall size of the balance sheet and its composition will then be managed, to achieve a background of benchmark interest rates for specific capital market sectors and the economy in general. This balance sheet management will involve increases and decreases in overall size, in addition to substitution of different assets and maturities. In this way, the Fed intends to anticipate and prevent bubbles or excessive tightness in liquidity from occurring.
It therefore looks as though the Fed will allow QE to roll off via expiry; and that it is quite prepared to provide specific monetary support to specific credit instruments, even as interest rates are rising in general. The intention and capability are to make the economic recovery sustainable during the rising rate environment.
The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then we must be content to return, quo ad hoc, to the savage state, to recur to barter in the exchange of our property, for want of a stable, common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers. ≈ Thomas Jefferson, in a letter to John Adams, 21 March 1819 Read more »
The Ideology to End Ideologies – A Response to Corey Robin on Nietzsche, Hayek, Mises, and Marginalism
by Philip Pilkington
This article was first published by Naked Capitalism (May 13, 2013)
Editor's Note:Econintersect considers this a fundamentally important discussion of the philosophical underpinnings of 20th and 21st century economic thinking. It is contentious, to the point of being "in your face", and is a far more complex subject than many would try to address in an essay of this length. However, the author has succeeded illustriously in his effort. The reader is encouraged to take the time to read this carefully and critically. We think it is well worth the effort.
The political philosopher Corey Robin recently published an interesting essay on what he thinks to be the connection between the late German philosopher Friedrich Nietzsche and the economic theory of marginalism which Robin associates with the Austrian school (but which, of course, is also a mainstay of mainstream neoclassical economics). I should start by saying that I respect Robin’s work a great deal; I respect it to the extent that I did an interview with him for this very site when his last book appeared. However, his latest piece is grossly misguided and reflective of the fact that, when it comes to theoretical economics, academic critics on the left simply do not know their enemy at all. Read more »
There have been several posts over the past few weeks discussing college / university education. Goldman Sachs economist Jan Hatzius stated:
[T]he faster job growth among college graduates is entirely due to faster growth in the size of the college-educated population; the employment/population ratio among college graduates has in fact fallen sharply,
The media exhibited much consternation today as economists’ consensus guess on first time unemployment claims turned out to be way too optimistic this week. That raised two questions in my mind. Was the number really that bad, and even if it was, does it matter?
The Labor Department reported that the seasonally adjusted (SA) representation of first time claims for unemployment rose by 32,000 to 360,000 from a revised 328,000 (was 323,000) in the advance report for the week ended May 11, 2013. The consensus estimate of economists of 330,000 for the SA headline number was too optimistic after 3 weeks of guesses that were too pessimistic. Call it “evening things up.” They were wrong one way 3 times in a row, so they overcompensated the other way this week. It’s a ridiculous game, but everybody plays anyway. Forecasters are virtually always wrong, not just because economic forecasting is quackery, but also because the seasonally adjusted number, being made-up, is impossible to consistently guess (see endnote). Read more »
The University of Michigan Consumer Sentiment preliminary number for May came in at 83.7, a major advance over the April final reading of 76.4. This is the highest level since July of 2007, prior to the Great Recession. The Briefing.com consensus was for 78.5.
See the chart below for a long-term perspective on this widely watched index. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
Read more »
The Conference Board Leading Economic Index (LEI) for the U.S. improved 0.6% in April to 95.0 (2004 = 100). Overall, the index value has been slowly trending up, and one month is not a trend.
This index is designed to forecast the economy six months in advance. The market expected a 0.3% improvement in the LEI (versus the +0.6% reported).
Both the LEI and ECRI's WLI are forecasting improving growth for the next six months.
Read more »
One of the most interesting phenomena marking the recent financial crisis was the disruptions in the interbank market, where banks borrow and lend reserves to each other. This post draws upon my paper with Douglas Gale, “Liquidity Hoarding,” to discuss this practice by banks during times of increased uncertainty about future liquidity needs and its consequences for the efficient transfer of liquidity in the interbank market.
The Philly Fed Business Outlook Survey fell into negative (contraction) - after two months in positive territory. This survey has been negative for 9 of the last 13 months. Key element new orders slipped further into contraction territory.
This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the most negative of all the Fed manufacturing surveys.
The market was expecting the index value of 2.0 to 2.5 (actual was -5.2). Positive numbers indicate market expansion, negative numbers indicate contraction.
Read more »
Residential building permits and construction completions in April 2013 continues to show the industry growth.
Our analysis paints a slightly different picture than the headline data.
Apartment building permits comparing April 2012 to April 2013 are stronger this month.
The rate of annual growth for building permits in the last 12 months for this sector has been mostly in a channel between 25% and 40%. This month is above this channel.
Please note that the media concentrates on housing starts as a single metric for this data series - while Econintersect focuses on the general growth trends of the sector (permits versus completions) which are the best indicator of trends which show the health of this sector. Housing starts would give an indication of construction contribution to GDP.
The April 2013 Consumer Price Index (CPI-U) year-over-year inflation rate fell from 1.5% to 1.1% . Core inflation (CPI less food and energy) fell slightly also from 1.9% to 1.7%.
The dynamics were large decreases from the gasoline index (which is not part of core inflation), and some inflationary pressures from electricity and natural gas.
The Producer Price Index (released yesterday) showed finished goods fell to a 0.6% year-over-year inflation rate.
Read more »
We thought it would be amusing to start this discussion with the latest “Smoke and Mirrors” from RealtyTrac. They clearly have an interesting perspective and “scale” in relation to measuring the housing recovery. If a picture can be worth a thousand words, hyperbole has just reached a new level. No prizes for guessing what the consensus view on the housing market is. Read more »
This article was originally published by Voxeu.org(May 3, 2013)
Europe’s austerity-first approach has triggered research-based efforts to evaluate the effectiveness of debt-reduction strategies. This column, based on a US empirical study, suggests that an ‘austerity shock’ in a weak economy may be self-defeating. Public-debt reduction historically occurs gradually amid improved growth. If policymakers, firms and households respond as in the past, we should expect lower deficits amid higher growth and, eventually, decreasing debt ratios.
In many advanced countries, in the wake of the 2008 global financial crisis, deficits skyrocketed and public debt ballooned (see Figure 1). In fact, fiscal stimulus accounted for only a small fraction of the increase in debt, whereas collapsing revenues and higher unemployment and social benefits contributed the largest share (IMF 2011). Read more »
The headlines say Industrial Production (IP) declined 0.5% in April 2013 and up 1.9% year-over-year. Econintersect's analysis using the unadjusted data is that IP was also showed a decline of 0.5% month-over-month but the year-over-year was up 2.5% year-over-year.
The year-over-year rate of growth is trending up using a three month rolling average, but is down using any rolling average between 6 to 12 months.
Industrial production is being affected by large movements in utilities, but the data was soft in most categories.
The market was expecting a month-over-month decrease of 0.2% to 0.5% (vs the headline growth decline of 0.5%).
The manufacturing sub-index (which is more representative of economic activity) was down 0.4% month-over-month - and up 1.3% year-over-year - seasonally adjusted.
The Empire State Manufacturing Survey (manufacturing in New York State) in May 2013 shows manufacturing is contracting after expanding for the previous three months in a row.
This noisy index has moved from 17.1 (May), 2.3 (June), 7.4 (July), -5.9 (August), -10.4 (September), -6.2 (October), -5.2 (November), -8.1 (December), -7.8 (January 2013). 10.0 (February) , 9.2 (March), 3.1 (April) - and now -1.4.
Expectation was for a reading of 1.0 to 3.5 versus the -1.4 reported
New orders sub-index also shows this sector is marginally contracting, while unfilled orders continues to say this sector is slightly contracting.
As this index is very noisy, it is hard to understand what these massive moves up or down mean - however this regional manufacturing survey is normally one of the most pessimistic.
Read more »
The Producer Price Index year-over-year inflation is disappearing..
The BLS reported that the Producer Price Index (PPI) finished goods prices year-over-year inflation rate fell from 1.1% in March to 0.6% in April 2013 - with the month-over-month growth down 0.7%. The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.
The market had been expecting a contraction of 0.5% month-over-month in finished goods prices compared to the 0.7% contraction.
Read more »
Note from dshort: I've updated this commentary to include the latest labor force data in May's release of the April employment report.
Every Thursday I post an update on weekly unemployment claims shortly after the BLS report is made available. My focus is the four-week moving average of this rather volatile indicator. The financial press takes a fairly simplistic view of the latest weekly number, and the market often reacts, for a few minutes or a few hours, to the initial estimate, which is always revised the following week.
One of my featured charts in the update shows the four-week moving average from the inception of this series in January 1967. Read more »
In April 2013, year-over-year price deflation continues in import prices for 11 of the last 12 months . Export price price are also deflating this month:
with imports down 0.5% month-over-month, down 2.6% year-over-year
and exports down 0.7% month-over-month, down 0.9% year-over-year.
The dominate factors in the month-over-month changes were falling oil import prices and falling food export prices - however export prices fall was broad based.
Read more »
An amendment to a standing water treaty between the United States and Mexico has received publicity over the past six months as an example of progress in water sharing agreements. But the amendment, called Minute 319, is simply a glimpse into ongoing mismanagement of the Colorado River on the U.S. side of the border. Over-allocation of the river's waters 90 years ago combined with increasing populations and economic growth in the river basin have created circumstances in which conservation efforts -- no matter how organized -- could be too little to overcome the projected water deficit that the Colorado River Basin will face in the next 20 years.
Read more »
Editor's note: Two days ago Elliott Morss published an Op Ed on flaws in U.S. governance represented by the failure to even debate proposed background check legislation for gun buyers. A discussion ensued between Dr. Morss and a reader and contributor, Richard P. Rust, which has led to this posted debate. Read more »
Princeling Jiang Mianheng, son of former leader Jiang Zemin, is spearheading a project for China's National Academy of Sciences with a start-up budget of $350m.
The aim is to break free of the archaic pressurized-water reactors fueled by uranium -- originally designed for US submarines in the 1950s -- opting instead for new generation of thorium reactors that produce far less toxic waste and cannot blow their top like Fukushima.
He has already recruited 140 PhD scientists, working full-time on thorium power at the Shanghai Institute of Nuclear and Applied Physics. He will have 750 staff by 2015.
This article was originally published by Money Morning, (May 17, 2013)
In New York City last week investors from around the country gathered for the Ira Sohn Conference to pitch their lists of the best stocks to buy in 2013.
One of the more interesting presentations this year featured Steve Eisman of Emrys Partners, who gave a presentation that was very bullish on the prospects for the U.S. housing market.
While many investors have proffered opinions of the strength and validity of housing market performance, investors should pay especially close attention to Eisman when he speaks on the subject.
With just one look, it is now possible to see exactly which option strategies are currently profitable and which are not. Those who use option performance as a technical indicator can now see where the stock market is today (as measured by the S&P 500 index) and where it is likely to go next, with a simple “You Are Here” marker.
Industrial Production fell by 0.5 percent in April on a seasonally adjusted basis after having increased 0.3 percent in March and 0.9 percent in February, according to the Fed. The consensus estimate was for a decrease of 0.2%. Economists had been missing to the optimistic side on most forecasts for the past several months. This month they course corrected and now their estimates are too low.
The media only pays attention to this silliness because it has nothing better to do. I’m more interested in how the the trend of actual, not seasonally manipulated, economic data lines up with the performance of the stock market, since there is some historical correlation.
Ready or not, we should expect a week dominated by an even greater focus on Fed policy. There are four reasons:
The economic data calendar is very light;
Earnings season has ended;
Many will be heading for the exits early, anticipating a holiday weekend; and finally
Bernanke testifies on the economy before the Congressional Joint Economic Committee. There will also be other Fed speeches and the minutes of the last FOMC meeting.
Below is a summary of the activity at Trefis during the past week that Trefis thought Econintersect readers would find interesting.
Trefis is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. It provides the unique feature of allowing the user to model future valuation based upon projected changes in components of each business. It also provides communication capabilities among members, including consensus of member analysis compared to Trefis staff analysis and blogging opportunities for members.
Will investors perpetually bid up an earnings stream that has peaked and may be on the verge of shrinking? We’re about to find out…
With first-quarter earnings season under way, expectations for earnings have rarely been higher. But there are many signs that corporate profits have peaked, including a surge in negative guidance from company management.
Disappointment and lower stock prices are likely; it makes no sense for investors to pay ever higher prices for a shrinking earnings stream.
Back in February 2012, when Facebook announced its plans to go public, the tech world immediately went crazy. The hype was enormous over what should become one of the biggest IPOs of all time. On May 18, Facebook started trading at $38, giving the company an implied valuation of $104 billion. Unfortunately, what was supposed to be a sure shot investment, turned out to be a dud.
U.S. stocks rose on Friday, ending higher for a fourth consecutive week after a consumer sentiment barometer beat expectations.
At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.80%, the S&P 500 index ended up 0.95%, while the Nasdaq Composite index rose 0.97%.
We have all heard the phrase, “Trade with the trend, the trend is your friend.” While there is much truth to this statement, what specific rule-based action do we take to make money from this simple concept? To dive into the important details and make sure that by the end of this article you are a better trader, I will use a recent Online Trading Academy Pro Pick in the stock market to make my points. Pro Picks is the Stock, Futures, and Forex picking service for Online Trading Academy graduates in the Extended Learning Track (XLT). The service is delivered daily, giving XLT members an entry zone, stop price, and target or targets. Each trade is also delivered in a very educational way with a detailed explanation of strategy so that users can learn to do this themselves. The core strategy at Online Trading Academy is the simple combination of supply (retail), demand (wholesale), and trends.
Below, technical overviews and analysis for key stock indices, commodities and currency pairs, based on market activity at the end of the 16 May 2013 U.S. session. This information is a comprehensive summary derived from simple and exponential moving averages along with key technical indicators shown for specific time intervals.
Why does silver move so much further, and faster, than gold...?
The silver market often gets a bum rap. The reason is that often its gyrations are much greater than those of the gold market.
What causes this? There are theories that bankers and investment companies are conspiring to try to manipulate the market. However, buying or selling alone is not a conspiracy. It is called a speculation. Where conspiracy begins is poorly defined in law, especially where it's one through market trading. But one factor is true: market perception can be changed by those with big wallets.
New historical and inter-year highs were made late in the session proving the old bull still had the 'stuff'.
Markets closed out Friday's session on a high note and the news of this 'unbelievable' bull market should bring in the 'sheeples' in groves for the eventual slaughter. I would expect Monday to be a big day – one way or the other.
In September 2011, our cycle analysis predicted the formation of a long-term top in the gold market. Following the development of a consolidation formation from late 2011 until early 2013, prices moved below congestion support in the 1,550 area. As expected, the breakdown was followed by a severe decline of 12 percent during the last [...]
Our computer models analyze a large basket of fundamental, technical, internal and sentiment data in order to calculate our Secular Trend Score (STS) and our Cyclical Trend Score (CTS). The historical data used by our models extend back to the market crash in 1929 and have enabled our STS to correctly identify every secular inflection [...]
MEP, weighs in on Thursday's conflicting jobless claims, the Philadelphia Fed Manufacturing Index, consumer price index (CPI), as well as housing starts and building permits.
With just one look, it is now possible to see exactly which option strategies are currently profitable and which are not. Those who use option performance as a technical indicator can now see where the stock market is today (as measured by the S&P 500 index) and where it is likely to go next, with a simple “You Are Here” marker.
Niall Ferguson is the champion of anti-Keynesian economists. Last week, he explained why America’s pursuit of Keynesian policies is leading to disastrous consequences.
Ferguson gave four symptoms of U.S. degeneration as evidence that Keynesian policies have created underlying weaknesses.
Ferguson, a professor at Harvard, gave the opening talk at last week’s Strategic Investment Conference in San Diego, hosted by Altegris Investments and John Mauldin. His remarks were based on his newly released book, The Great Degeneration: How Institutions Decay and Economies Die.
Elizabeth Warren may be the best senator in Congress — or at least the most honest. Expect to see her attacked from both sides of the aisle.
She continues to castigate the Obama adminsitration (and she’s a Democrat!) for not punishing the crooked banks (all the big banks are crooked) for criminally defrauding millions of Americans out of trillions of dollars, while continuing to stuff their own pockets.
Naturally, Obama avoids this subject (as do the Republicans) like it were poop in the punch bowl. For politicians, the banks are too big (i.e. too big as contributors) to jail.
France has been given by the European Commission an extra two years to get its budget deficit down to 3 % of GDP, but on condition that it implements reforms that will improve its longer term budget outlook.
Top of the list is to get the national pension system under control, currently running a deficit of about 0.7 % of GDP and set to rise to almost 1 % of GDP by 2020 or even earlier, and getting steadily larger thereafter.
This will be a tough nut to crack for the present socialist government under President Francois Hollande. No socialist government in the past 30 years has dared to reform the system, leaving it to conservative governments to patch it up.
Like bombs, guns are dangerous: in 2011, 87 people were shot every day - 54 suicides, 30 homicides. In addition, 851 people were shot unintentionally, like what happened a week back - a 5-year old boy who was given a gun as a present by his parents and unintentionally shot his 2-year old sister.
In earlier pieces, I have reflected on how we have handled other known killers: cigarettes, alcohol, motor vehicles, and overeating. I have also documented how many deaths have resulted because certain drugs are illegal. This article explains how lessons learned from our efforts to control these other killers apply to guns.
Since the world seems to be interested in Alternative für Deutschland I have translated some of their demands into English. It’s all from the programme which they posted on their website. I selected only a few which I thought interesting:
Walter Young is the owner and CEO of Emery Winslow Scale (EWS) Company, headquartered in Seymour, Connecticut.
Walter is 91 years young. As far as I know, he is the senior-most active CEO in the scale industry, as well as in America. His life story is both legendary and ordinary, but uniquely American ...
Like his former MIT colleague Stanley Fischer, Mario Draghi hinted that their former MIT colleague's "Helicopter" will soon be taking off, in his most recent ECB press conference; but was quick to opine that it won't be flying in Europe[i]. In doing so, he provided more support to the thesis in Terminal Velocity (4)[ii], that "the Eurozone, faced with the prospect of break-up, as the Germans refuse to pick up the tab for fiscal union without a global bank run, provides the lowest fruit on the tree to be picked this summer". Draghi has gone even further than Fischer, by creating the necessary conditions for a fully blown European bank run. He has created these conditions by going one better than Bernanke and moving beyond the "Zero Bound"; to the "Negative Bound", where lenders and depositors pay financial institutions to take their money[iii]. The thought of paying a shaky European bank to take one's deposits, after what happened to depositors in Cyprus, apparently seems like a reasonable quid pro quo to "Super Mario".
(This piece first appeared in The Guardian, 16 April 2013)
Since her death, many eulogies of Thatcher have spoken of her as a revolutionary. Thatcherism (along with the associated Reaganomics) is seen as a radical transformative agenda that changed the face of economy and society. But seen from the developing world decades later, much of this agenda appears familiar, in the form of structural adjustment policies that have been forced upon different countries at different times by international institutions.
I am writing part of this week's letter in the rafters of a huge auditorium as I watch 1100 liberal art graduates at a major university receive their degrees. (I long ago made a promise to be here.) This was an expensive education, and the graduates are smart; yet when you ask them what their plans are, all too often you hear that they have not been able to find jobs or are opting to continue with school, often borrowing yet more money to do so, as they see no other viable options.
The New Yorker carries an interesting article on David Graeber, Occupy Wall Street and anarchy. I have read the first one hundred plus pages of “5,000 years of debt” and found them enlightening. Brad DeLong read on and found a seemingly endless list of flaws, irritating the author who apparently was struck dumbfounded on what he perceived as personal attacks. The author writes about a new book on anarchy by James Scott:
This week eight central banks took policy decisions with three banks cutting rates (
Econintersect: Secretary of the Treasury Jacob (Jack) Lew has sent a letter to John Boehner, Speaker of the House of Representatives, detailing actions that will be taken in the interim until action is taken to increase the debt limit of the United States. The letter and the actions are pro forma, repeating what has transpired in the past when action was not prompt with regard to raising the limit. In the following, the press release by the Treasury Department is presented in full, as well as an Appendix which describes the "Extraordinary Measures". A substantial portion of the measures amount to simply postponing actions that would add to the national debt. Almost all of the approximately $260 billion in "headroom" will simply be booked as federal debt after the new limit is established. 
Econintersect: This week the Department of Homeland Security (DHS) froze funds in the Dwolla account of Mt.Gox's U.S. unit, alleging that it had broken the law regarding money laundering. 
Econintersect: Week 19 of 2013 ending 11 May shows same week total rail traffic improved according to data released by the Association of American Railroads (AAR):
yen resulting from the expansionary policies of the Abe government with a sharp rebound in GDP growth to 0.9% for the quarter and 3.5% year-over-year for the first quarter 2013 which ended in March. The major factors in the growth spurt were increased exports (as measured in yen), improved domestic consumption and increased government investment which was largely offset by a decline in private investment. The 3.5% growth was stronger than the 2.7% estimate provided by Bloomberg.
Reading between the lines, it is clear that the Fed intends to maintain a large balance sheet of assets for some time; even after interest rates have begun to normalize. The Fed will then use a rolling form of Operation Twist, across the Yield Curve and across asset classes, in order to target particular areas that it believes need influencing. The overall size of the balance sheet and its composition will then be managed, to achieve a background of benchmark interest rates for specific capital market sectors and the economy in general. This balance sheet management will involve increases and decreases in overall size, in addition to substitution of different assets and maturities. In this way, the Fed intends to anticipate and prevent bubbles or excessive tightness in liquidity from occurring.
It therefore looks as though the Fed will allow QE to roll off via expiry; and that it is quite prepared to provide specific monetary support to specific credit instruments, even as interest rates are rising in general. The intention and capability are to make the economic recovery sustainable during the rising rate environment.
The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then we must be content to return, quo ad hoc, to the savage state, to recur to barter in the exchange of our property, for want of a stable, common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers. ≈ Thomas Jefferson, in a letter to John Adams, 21 March 1819 
The political philosopher Corey Robin recently published 
The media exhibited much consternation today as economists’ consensus guess on first time unemployment claims turned out to be way too optimistic this week. That raised two questions in my mind. Was the number really that bad, and even if it was, does it matter?
The 
The University of Michigan Consumer Sentiment preliminary number for May came in at 83.7, a major advance over the April final reading of 76.4. This is the highest level since July of 2007, prior to the Great Recession. The Briefing.com consensus was for 78.5.
See the chart below for a long-term perspective on this widely watched index. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
The Conference Board Leading Economic Index (LEI) for the U.S. improved 0.6% in April to 95.0 (2004 = 100). Overall, the index value has been slowly trending up, and one month is not a trend.
This index is designed to forecast the economy six months in advance. The market expected a 0.3% improvement in the LEI (versus the +0.6% reported).
Both the LEI and ECRI's WLI are forecasting improving growth for the next six months.
The Philly Fed Business Outlook Survey fell into negative (contraction) - after two months in positive territory. This survey has been negative for 9 of the last 13 months. Key element new orders slipped further into contraction territory.
This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the most negative of all the Fed manufacturing surveys.
The market was expecting the index value of 2.0 to 2.5 (actual was -5.2). Positive numbers indicate market expansion, negative numbers indicate contraction.
Residential building permits and construction completions in April 2013 continues to show the industry growth.
The April 2013 Consumer Price Index (CPI-U) year-over-year inflation rate fell from 1.5% to 1.1% . Core inflation (CPI less food and energy) fell slightly also from 1.9% to 1.7%.
The dynamics were large decreases from the gasoline index (which is not part of core inflation), and some inflationary pressures from electricity and natural gas.
The Producer Price Index (
For the second month in a row, both import and export container counts are contracting year-over-year - comparing same months in 2012 and 2013.
The headlines say Industrial Production (IP) declined 0.5% in April 2013 and up 1.9% year-over-year. Econintersect's analysis using the unadjusted data is that IP was also showed a decline of 0.5% month-over-month but the year-over-year was up 2.5% year-over-year.
The Empire State Manufacturing Survey (manufacturing in New York State) in May 2013 shows manufacturing is contracting after expanding for the previous three months in a row.
The Producer Price Index year-over-year inflation is disappearing..
The 
Every Thursday I post an 
In April 2013, year-over-year price deflation continues in import prices for 11 of the last 12 months . Export price price are also deflating this month:
Editor's note: Two days ago Elliott Morss published an Op Ed on flaws in U.S. governance represented by the failure to even debate proposed background check legislation for gun buyers. A discussion ensued between Dr. Morss and a reader and contributor, Richard P. Rust, which has led to this posted debate. 
Thorium is touted by many as the future energy source for the world. Thorium would be used in place of uranium and plutonium in nuclear reactors:
In New York City last week investors from around the country gathered for the Ira Sohn Conference to pitch their lists of the best 
With just one look, it is now possible to see exactly which option strategies are currently profitable and which are not. Those who use option performance as a technical indicator can now see where the stock market is today (as measured by the S&P 500 index) and where it is likely to go next, with a simple “You Are Here” marker.
Industrial Production fell by 0.5 percent in April on a seasonally adjusted basis after having increased 0.3 percent in March and 0.9 percent in February, according to the Fed. The consensus estimate was for a decrease of 0.2%. Economists had been missing to the optimistic side on most forecasts for the past several months. This month they course corrected and now their estimates are too low.
Will investors perpetually bid up an earnings stream that has peaked and may be on the verge of shrinking? We’re about to find out…
We have all heard the phrase, “Trade with the trend, the trend is your friend.” While there is much truth to this statement, what specific rule-based action do we take to make money from this simple concept? To dive into the important details and make sure that by the end of this article you are a better trader, I will use a recent Online Trading Academy Pro Pick in the stock market to make my points. Pro Picks is the Stock, Futures, and Forex picking service for Online Trading Academy graduates in the Extended Learning Track (XLT). The service is delivered daily, giving XLT members an entry zone, stop price, and target or targets. Each trade is also delivered in a very educational way with a detailed explanation of strategy so that users can learn to do this themselves. The core strategy at Online Trading Academy is the simple combination of supply (retail), demand (wholesale), and trends.
The silver market often gets a bum rap. The reason is that often its gyrations are much greater than those of the gold market.
Niall Ferguson is the champion of anti-Keynesian economists. Last week, he explained why America’s pursuit of Keynesian policies is leading to disastrous consequences. 
Elizabeth Warren may be the best senator in Congress — or at least the most honest. Expect to see her attacked from both sides of the aisle.
France has been given by the European Commission an extra two years to get its budget deficit down to 3 % of GDP, but on condition that it implements reforms that will improve its longer term budget outlook.
Like bombs, guns are dangerous: 
Like his former MIT colleague Stanley Fischer, Mario Draghi hinted that their former MIT colleague's "Helicopter" will soon be taking off, in his most recent ECB press conference; but was quick to opine that it won't be flying in Europe[i]. In doing so, he provided more support to the thesis in Terminal Velocity (4)[ii], that "the Eurozone, faced with the prospect of break-up, as the Germans refuse to pick up the tab for fiscal union without a global bank run, provides the lowest fruit on the tree to be picked this summer". Draghi has gone even further than Fischer, by creating the necessary conditions for a fully blown European bank run. He has created these conditions by going one better than Bernanke and moving beyond the "Zero Bound"; to the "Negative Bound", where lenders and depositors pay financial institutions to take their money[iii]. The thought of paying a shaky European bank to take one's deposits, after what happened to depositors in Cyprus, apparently seems like a reasonable quid pro quo to "Super Mario".
