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What We Read Today 25 July 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • Russia Retail Sales Growth Approaches Zero (The Daily Slot, email, no url) The question asked is: How long can Putin retain his high approval ratings in Russia? The reason for the question is the graph after the Read more >> jump.

Russia-retail-sales-2014-jul-24

  • Anthony Rizzo comes through in big way for cancer patient (Jimmy Traina, Fox Sports) The Chicago Cubs have an illustrious 144 year history, the longest of any major league baseball team. They appeared in three World Series and won two over a three-year stretch 1906-1908, winning the latter two world championships. The team continued to be one of the best in baseball from 1909 though the late 1930s. They were very successful during the span from 1929-1938 with four National League titles but lost all four World Series. They last won a National League title in 1945, but lost the World Series to Detroit after receiving the "curse of the goat". The curse has continued to this day as the Cubs suffer the distinction of having the longest sports championship drought of any major professional sports team in North America (105 years) and have not won the National League title since 1945 (68 years). For generations the Chicago Cubs have epitomized the saying "wait 'til next year". You can read a short-book-length Cubs' history at Wikipedia.

All of the above history is to introduce the fact that the Cubs are not "losers". Read the Fox Sports story.


There are 12 articles discussed today 'behind the wall'.

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seismic-zones-us

  • As U.S. strengthens, sluggish wages explain Fed's caution (Joathan Spicer and Ann Saphir, Reuters) With wage gains remaining close to the inflation rate, the Fed has a lot of room to continue without tapping on the brakes. But wage levels may start to rise as the labor market becomes tighter, especially for skilled workers. So the amount of breathing room may be less than some doves would like.
  • The current ECB programs create a QE-like environment, setting up for moral hazards (Walter Kurtz, Sober Look) The moral hazard Kurtz refers to for the Eurozone is because the ECB appears ready to imitate the Bank of Japan and drive long-term interest rates (almost) to zero. That removes a fiscal restraint incentives from member governments and thus spend profligately. Of course that is what "the Keynesians" want them to do. Below we see the astounding central bank action in Japan and the response of the 10-year bond diving toward no interest. Using the official inflation rate the Japanese bond appears to have a negative real interest rate of (-3%). But the apparent inflation rate of 3.6% may actually be negative once tax distortions are corrected for. See GEI News. And that could make the real interest rate on the Japanese 10-year as high as 1% or even 1.5% or more. In the meantime the U.S. 10-year real rate is about 60 basis points, possibly less than Japan.

Japan-bonds-qe-sober-2014-jul-24

"SIPC, a brokerage 'insurance' arm of Wall Street, has been and remains today engaged in insurance fraud. SIPC claims to insure brokerage accounts. Nothing could be farther from the truth. What it's really doing is placing all brokerage account holders at extreme risk."

war-markets-1973-1983

  • Desperately Seeking a Cheaper Kilowatt Hour (Frank Holmes, U.S. Global Investors) Frank Holmes has contributed to GEI. Diversification of electrical power sources is the key to driving prices lower. And nuclear is part of that diversification, according to Holmes.

nuclear-energy

  • Money Fleeing High Yield Market (The Daily Slot, email, no url) For the second day in a row we have a graphic showing a sudden risk aversion. Junk bonds tend to trade more like stocks than like Treasuries. Is there a stock market message here?

high-yield-fund-flows-daily-slot-2014-jul-24

  • Survey says 67% of homeowners are planning to renovate in the next six months! (Michael Haltman, Hallmark Abstract Service) Michael Haltman has contributed to GEI. Over 1,500 visitors to the Realtor.com website took part in a survey showing that 67% plan some type of home renovation immediately! Additionally, of the two thirds who plan to renovate one or more parts of their home, 20% of them say that they plan on listing their home for sale prior to the end of 2014. The data would imply that about 13% hope to sell their home within the next year or less. If that number were successful and this was repeated every year then the average duration of home ownership before selling would be between 7 and 8 years. Historically that number has been up to double that, between 10 and 16 years. See graph below from How Long Buyers Remain in Their Homes (Paul Emrath, Housing Economics.com). According to the National Multifamily Housing Council, there are 79 million owner occupied homes in the U.S. If the number of sellers in the survey were to actually offer their homes for sale that would produce an inventory of 10 million homes. Current inventory is 2.3 million homes and the quantity has ranged between 1.8 and 2.5 million for the past 2 1/2 years. See GEI Analysis for latest detailed data and analysis. Econintersect: The sample polled (visitors to Realtor.com) is obviously not a representative sample of the entire population. If it were the existing homes market would be flooded with 3 years of inventory by the end of this year. That would create a second housing market crash.

Time-to-sell-home-nahb-2009

july202014

facebook-earnings-explosion-SA-2014-jul-24


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