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Japan Redux

Thu, 23 May 2013 04:14:40 +0000

Investing Daily Article of the Week

After nearly two decades of economic stagnation, Prime Minister Shinzo Abe’s massive stimulus program seems to be finally driving Japan’s economy into a period of growth.

Japan’s gross domestic product (GDP) only grew 1 percent in the fourth quarter, another dismal showing in a decades-long period of stagnation. However, earlier this week the government reported that the country’s economy grew by an annualized 3.5 percent in the first three months of this year.

Not only did that pace beat the consensus expectation of less than 3 percent, it also made Japan one of the fastest growing developed economies in the world. For example, US GDP grew by just 2.5 percent and the euro zone experienced a -0.9 percent contraction.

Top 10 American Misconceptions about Democracy

Thu, 23 May 2013 04:03:08 +0000

Written by Frank Li

America is a very young country (as compared with China, for example) and Americans often take many old things as new, innocently and ignorantly. Two examples:

Fiat money: It was invented by the Chinese more than 1,000 years ago!

Money printing: It has been used, misused, and abused, by many governments around the world ever since fiat money was invented.

On the Imposition of the German Export-led Growth Model on the Eurozone

Thu, 23 May 2013 03:54:59 +0000

by Dirk Ehnts, Econoblog101

Martin Wolf had an article in the FT yesterday about the German growth model being applied to the whole euro zone. He notes that because of the flawed analysis that ‘government debt did it’ there is only one way left for demand to grow:

That leaves external adjustment. According to the IMF, France will be the only large eurozone member country to run a current account deficit this year. It forecasts that, by 2018, every current eurozone member, except Finland, will be a net capital exporter. The eurozone as a whole is forecast to run a current account surplus of 2.5 per cent of GDP. Such reliance on balancing via external demand is what one would expect of a Germanic eurozone.

Gold and Silver Prices Could Soar

Thu, 23 May 2013 03:47:11 +0000

Cash vs. Futures Arbitrage and Squeeze Potential in Gold After Bottom Setup – Free Podcast

by Lee Adler, Wall Street Examiner

In this free podcast (recorded Monday afternoon) Russ Winter tells Lee Adler that a shortage of physical gold at the Comex and no real price discovery means that gold and silver prices should soar. Lee says the technical picture on gold has been conducive to a bottom, and says stocks still look to be headed higher.

This is a one-time free podcast, available to all click here to access the Monday, May 20 podcast (Cash vs. Futures Arbitrage and Squeeze Potential in Gold After Bottom Setup).

Tornado History

Thu, 23 May 2013 03:35:33 +0000

Econintersect: Associated Press Science writer Seth Borentstein has reported that the strength of the Moore, Oklahoma tornado on 21 May 2013 dwarfed the "awesome energy of the atomic bomb that leveled Hiroshima". Just how powerful was this storm? How does it compare historically? Econintersect heard again and again from TV reporters that Tuesday evening that this was the most powerful tornado in history. Is that true?

Game Consoles: Not Just for Gaming Anymore

Thu, 23 May 2013 03:16:33 +0000

by Felix Richter, Statista.com

Yesterday, Microsoft introduced the next generation of its Xbox video game console. The Xbox One will compete with Nintendo's Wii U and Sony's PlayStation 3 in a market that has been radically transformed in the past few years. Now that smartphones and tablets deliver high quality gaming content to everyone that has a few dollars to spare, home consoles need to provide customers with additional features in order to lure them into paying hundreds of dollars for a dedicated gaming device.

Comparing the Japanese and U.S. Zero Bound Experience

Thu, 23 May 2013 03:05:57 +0000

Econintersect: William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York offered some of insights into the Federal Reserve's Policies - and show some contrasts to the May Federal Reserve Meeting Minutes.

Those exit principles stated that we would first stop reinvesting, then raise short-term interest rates, and finally sell agency mortgage backed securities over a three-to-five year period. This seems stale in several respects. .... More broadly, it may be desirable to update our thinking around the path and composition of the balance sheet over time, in light of our capacity to shape this path in a way that mitigates potential costs and risks. .... Expectations about future MBS sales or actual sales have the potential to generate or amplify such an upward spike in long-term rates. If the Committee believes that it could be costly in terms of credibility to incur a period of no remittances to Treasury—a notion I am personally somewhat skeptical about—avoiding MBS sales would also reduce this risk. Indeed, the Committee might conclude that it was better on all three counts to allow the agency MBS securities to run off passively over time.

Trucking Tonnage Falls Marginally in April 2013

Thu, 23 May 2013 02:23:40 +0000

Econintersect: The American Trucking Associations’ (ATA) trucking index fell 0.2% in April after rising 0.9% in March. Compared with April 2012, seasonally adjusted tonnage was up 4.3%. Truck tonnage year-to-date is up 4.0% over 2012.

It should be noted that trucking jobs grew in April 2013 according to the Bureau of Labor Statistics. From ATA Chief Economist Bob Costello:

“The slight drop in tonnage during April fit with trends from other industries that drive a significant amount of truck freight, such as manufacturing and housing, noting that in April, compared with the previous month, factory output slipped 0.4% while housing starts plunged 16.5%.”

Infographic of the Day: Top 10 Most Dangerous Foods

Thu, 23 May 2013 02:08:20 +0000

Here is an infographics that will serve as a heads up about the Top 10 most dangerous foods globally.

May 2013 FOMC Meeting Minutes: Mid-Year QE Slowdown on the Table

Thu, 23 May 2013 01:46:33 +0000

Econintersect: The 01 May 2013 meeting statement presented the actions taken. This post covers the economic discussion during this FOMC meeting between the members. The Fed's Balance Sheet (which we report on weekly) is now at record levels.

It appears that the FOMC members believed the economy is little changed, and there was a possibility of slower QE purchases by mid-year:

.....Participants generally saw the economic outlook as little changed since they met in March. However, economic data releases over the intermeeting period were mixed, raising some concern that the recovery might be slowing after a solid start earlier this year, thereby repeating the pattern observed in recent years. Various views on this prospect were offered, from those participants who put more emphasis on the underlying momentum of the economy, noting the strengthening in private domestic final demand, to those who stressed the growing fiscal restraint or the other headwinds still facing the economy.

.....A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome..

Specific participant discussions follows.

The Strength In The Dollar Is Hard To Ignore

Wed, 22 May 2013 21:47:14 +0000

Written by Poly, Zentrader

I’m not entirely sure what the Dollar is trying to do here, but it’s getting hard to ignore the strength. As far as the Cycles stand it’s telling me that at least a Daily Cycle Top should be just about in. The wildcard now is whether this 7 day surge has greater Investor Cycle implications. If a new Investor Cycle is in play, it will have a significant impact on where the dollar is headed and will alter the outlook for the precious metals.

I try to always respect price, but something about this move just doesn't feel right to me. This is a Day 12 high with a strong close above the Bollinger Band, so regardless of the Week count we should see a 3-7 day decline into a DCL.

What We Read Today 22 May 2013

Wed, 22 May 2013 21:39:35 +0000

Econintersect: Click Read more >> below graphic to see today's list.

The top of today's reading list has GEI contributor Washington's Blog asking if "everything is rigged" ........ and the last article is about the banning of a former president from the upcoming Iranian election.

Massive Free Fall Sends Averages Down With Investors Worried

Wed, 22 May 2013 21:02:22 +0000

Closing Market Commentary For 05-22-2013

Markets closed down in what is described as the largest high to low drop intraday in the SP500 in 5 weeks. Other averages suffered the same fate dropping almost freefall since 1 pm with heavier than usual volume to go with it.

About 3:30 pm the 'dippers once again saved the day by charging in, buying up all those 'bargains' and melting the averages up a bit. They are probably correct this time anyway.

Prometheus: Looking Beyond Quantitative Easing

Wed, 22 May 2013 19:56:16 +0000

During the past several years, the Federal Reserve has engaged in a historic market intervention through its quantitative easing (QE) programs. Early on in the process, Federal Reserve Chairman Ben Bernanke indicated that the intent of the intervention was to inflate the stock market and thereby spur a “virtuous cycle” through which the economy would [...]

Jitters Push Markets Downwards, HFT Computers Push Upwards

Wed, 22 May 2013 16:18:44 +0000

Midday Market Commentary For 05-22-2013

Right after I posted the morning commentary suggesting that now is the time to be vigilant and cautious, the markets started a melting off the highs in what can be best described as a gotcha. There were a bunch of angry investors that were taken out at the knees when their 'to close' trailing stops were triggered on the fall. But then the BTFD dippers jumped in and stopped the decent at about yesterdays highs.

By noon the averages had climbed back to ¾ of the morning decent on seriously falling volume. The HFT computers are suspect in the current melting up.

Riots in Sweden continue after police shooting

Wed, 22 May 2013 16:04:37 +0000

Police in Sweden have arrested six people after a second night of escalating riots in a Stockholm suburb. On Monday night, around 200 people took part in demonstrations following the fatal police shooting of a 69-year-old man.

Bernake to Congress: Ending Accomodative Monetary Policy Could End Recovery

Wed, 22 May 2013 15:57:52 +0000

Econintersect: Fed Chairman Ben S. Bernanke told the Joint Economic Committee of the U.S. Congress today:

A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further. Such outcomes tend to be associated with extended periods of lower, not higher, interest rates, as well as poor returns on other assets. Moreover, renewed economic weakness would pose its own risks to financial stability.

April 2013 Existing Home Sales Show Above Average Growth

Wed, 22 May 2013 14:53:25 +0000

Written by Steven Hansen

The headlines for existing home sales say that sales improved in April . Our analysis shows sales (based on comparing year-over-year growth) is a little above average for the growth evidenced over the last 12 months. This month looks good analytically. Econintersect Analysis:

Sales up 6.0% month-over-month, Up 13.5% year-over-year - growth rate trend is accelerating
Prices down 0.5% month-over-month, Up 9.4% year-over-year
The homes for sale inventory grew again this month, and is historically normal for Aprils.

Markets Open Higher – New Highs Made On High Volume

Wed, 22 May 2013 14:26:46 +0000

Opening Market Commentary For 05-22-2013

Premarkets were up a 'tad' leading speculation of a bull run when the markets opened.

Markets did open up, but not in a spectacular fashion as the bulls and bears battled it out. It first appeared as if the markets were floundering until the higher than normal volume was noticed.

By 10 am the markets had melted up rapidly where the averages were setting new highs where the DOW was up 0.60% and the $RUT was up +0.70% and still going. Now is the time to be very cautious.

Nonfinancial Leverage NFCI Less Good Trend Continues w/e 17 May 2013

Wed, 22 May 2013 13:16:11 +0000

The Nonfinancial leverage subindex of the National Financial Conditions Index increased slightly (less good) this week but still remains well in economic expansion territory. Econintersect focuses on non-financial tools to monitor the economy.

This index remains on a "less good" trend line, and is believed to be a good forward indicator a recession is coming. A value above zero is a recession warning.

Infographic of the Day: Study Abroad, Step 1: The Best Colleges, Programs, and States for Studying Abroad

Wed, 22 May 2013 13:05:24 +0000

Where to go to school if you want to go abroad. Find out which states, universities, and programs are the best for studying abroad.

Eurozone: Periphery Countries Restored External Balances, Recovery Follows?

Wed, 22 May 2013 12:57:01 +0000

by Matthew Higgins and Thomas Klitgaard - Liberty Street Economics, Federal Reserve Bank of New York

Current account deficits in euro area periphery countries have now largely disappeared. This represents a substantial adjustment. Only two years ago, deficits stood at nearly 10 percent of GDP in Greece and Portugal and 5 percent in Spain and Italy (see chart below). This sharp narrowing means that spending has been brought in line with income, largely righting an imbalance that had left these countries dependent on heavy foreign borrowing.

EURUSD Technical Analysis (20 to 24 May)

Wed, 22 May 2013 06:04:35 +0000

EURUSD Technical Analysis – 20 to 24 May – Weekly Update – Euro Dollar Outlook

by Nick Simpson, Forex-FX-4X

The euro/dollar pair experienced an extension of the prevailing downside trend on Friday, moving to a low of 1.2795, before retracing to the two day low area from Wed/Thur around 1.2840 – a longer term price pivot zone.
Price is now threatening to take out prior support around the 1.2745 area.
The 61.8% Fibonacci retrace of the longer term swing higher follows as a technical area of interest around 1.2680.
Large speculators had increased the net short EUR position by over 40% on the weekly basis according to the latest COT report data, to hit $7.6 billion for the specified reporting period and -46,291 versus -33,533 net short contracts.

Housing Smoke and Mirrors (7) – “Get Out of Jail”

Wed, 22 May 2013 05:52:49 +0000

Written by Adam Whitehead, KeySignals.com

In Housing Smoke and Mirrors (4)^[i] and (5),^[ii] to confront the threat of the deteriorating bad mortgage vintages -

“the Federal Reserve and the Federal Government were observed to be running swiftly into the housing market.”

The latest data, on the HOPE NOW programme, has confirmed that the ratio of modifications to foreclosures was two-to-one in the first quarter of this year.^[iii] Housing Smoke and Mirrors (6)^[iv] suggested that the governance rules of the GSEs were about to be changed, so that they could modify mortgage principle values. This would then allow them to securitize their “Zombie Home” mortgages into MBS, that could then be bought by the Fed.

Investing.com Technical Analysis 21 May 2013

Wed, 22 May 2013 05:42:05 +0000

Investing.com Technical Analysis (as of Tue, 21 May 2013 05:00pm EDT)

by Investing.com Staff, Investing.com

Below, technical overviews and analysis for key stock indices, commodities and currency pairs, based on market activity at the end of the 21 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.

The Sick Man Is Europe

Wed, 22 May 2013 05:32:50 +0000

by Dirk Ehnts, Econoblog101

The Pew Global Attitudes Project has its annual report out. It confirms what all European already know: disillusionment with the way the European institutions function. Democracy is a nice word, but in Europe, it is not one man one vote. The European parliament is too weak to go after the commission. The troika sits in many countries, potentially blocking legislation that would help those most affected and the ECB has stressed its mandate as far as it goes but can not do any more. Here is a vital passage:

Bank of Japan: Maintain Course on Improving Economy

Wed, 22 May 2013 05:28:04 +0000

Japan maintains QE targets, says economy picking up

by Peter Nielsen, Central Bank News

The Bank of Japan (BOJ) maintained its aim of expanding the monetary base by an annual 60-70 trillion yen, along with purchases of Japanese government bonds and other securities, and voiced confidence that the economy was now picking up speed and consumer prices would start to rise.

The BOJ, which launched its "new phase of monetary easing" in early April, said it would continue with its plan to buy government bonds so their outstanding amount rises by 50 trillion yen a year and the average remaining maturity of these purchases will be about seven years.

The Dollar Debate

Wed, 22 May 2013 00:38:45 +0000

Written by Marcus Holland, ForexTraining.co.uk

The dollar has been one of the strongest currencies during 2013 and has bucked a trend that has existed over the past three years. As the debt crisis unfolded in the spring of 2010, investors flocked to the dollar as a safe haven currency. The risk on/risk off environment generated a choppy market for currency traders, but that phenomenon seems to have ended.

Barry Ritholtz: Apology Due from Inhof and Coburn

Wed, 22 May 2013 00:26:55 +0000

Econintersect: Blogger, investment analyst and Washington Post columnist Barry Ritholtz has posted a piece at his blog The Big Picture. The title: "NY/NJ/CT Congressional Delegation Should Demand Apology from Oklahoma Senators Inhofe and Coburn". Both Inhofe and Colburn were among 31 senators who voted against the relief effort for Hurricane Sandy. Now both are backing emergency aid for their own state. Inhoffe told MSNBC that the tornado recovery funding will be a "totally different" situation from Sandy. (See The Washington Post.)

The Trade of the Decade - and It Is Not Gold

Tue, 21 May 2013 22:14:39 +0000

New Life for the New Trade of the Decade

From Daily Reckoning

by Bill Bonner, Daily Reckoning

First, stocks hit new highs last Friday. Gold lost $22 per ounce. But believe it or not, our new Trade of the Decade is going well.

As you may recall, we began a "Trade of the Decade" back at the start of the 21st century. "Buy gold. Sell stocks." That was it. No fancy straddles, hedges or derivatives. Not even any stock selection. Just a simple macro trade that you could stick with for the next 10 years.

How did it turn out? Beautifully. Gold was the top performing asset class of that period from 2000-2010.

New Mortgage Modification Program Can’t Stop Further Housing Collapse

Tue, 21 May 2013 21:22:27 +0000

Written by Keith Jurow, Capital Preservation Real Estate Report

Here We Go Again On March 27, 2013, the Federal Housing Finance Administration (FHFA) announced the introduction of still another mortgage modification program. Entitled the Streamlined Modification Program, it was intended to enable distressed borrowers to more easily qualify for a modification. Unlike the HAMP modification program, borrowers will not have to show any financial hardship whatsoever in order to qualify. If their first lien is owned or guaranteed by either Fannie Mae or Freddie Mac, the only requirement is that they be delinquent for 90 days or more and complete a 3-month trial period. Also - they cannot be delinquent for more than two years and cannot have had two or more previous modifications. Nice deal, huh? The obvious criticism is that it will only encourage borrowers to default in order to qualify. FHFA's answer is that it will minimize losses to Fannie and Freddie by reducing foreclosures. Really? Read more »

Thin Ice: An Assessment

Tue, 21 May 2013 21:05:36 +0000

A Review of the Documentary "Thin Ice" produced by Oxford University, United Kingdom, Victoria University of Wellington, New Zealand (VUW), and London-based DOX Productions.

Written by Charles McKenna

Editor's note: The trailer for the documentary can be viewed at the end of this article.

Scientists have just released the results of new work that broadens their database and provides more accurate estimates of expected temperature rise due to climate change. Their recent conclusion: Past estimates of global warming have severely underestimated the actual temperature rise we are likely to experience.

What We Read Today 21 May 2013

Tue, 21 May 2013 20:58:57 +0000

Econintersect: Click Read more >> below graphic to see today's list.

The top of today's reading list discusses the production (mining) cost of silver ........ and the last article is about Sheila Barr's claim that Dodd-Frank ends taxpayer bailouts.

New Highs And Markets Close Higher, But Weak

Tue, 21 May 2013 20:26:04 +0000

Closing Market Commentary For 05-21-2013

New highs were made again today as the Energizer Bunny Market keeps pushing higher and higher. This kind of news is sure to excite the 'sheeples' into a buying frenzy and help push this long run into a climatic end.

By 4 pm the averages had slipped off the sessions high, but remained in the green in what I would call a lackluster trading session.

Averages Recover From Morning Lows And Seeking Higher Ground

Tue, 21 May 2013 16:30:45 +0000

Midday Market Commentary For 05-21-2013

The markets fall this morning was nothing less of clearing out the shorts and catching those with stops that were to narrow to withstand a minor drop. The DOW remained in the green while most averages dropped -0.25%.

By noon the averages had slowly melted back up into positive territory remaining flat to lackluster status. Volume has been low to moderate with an occasional green spike of the BTFD dippers.

Coincident Indicator Review: Philly Fed USA Coincident Index Showed Economic Growth in April 2013

Tue, 21 May 2013 16:12:18 +0000

A comparison of US Coincident Index, Aruoba-Diebold-Scotti business conditions index, Conference Board's Coincident Index, ECRI's USCI (U.S. Coincident Index), and Chicago Fed National Activity Index (CFNAI) coincident indicators follows.

Stratfor: Syria’s Outside Patronage, a New Offensive for the Regime

Tue, 21 May 2013 15:39:02 +0000

The battle for the Syrian city of Al-Qusayr, which came under regime artillery fire May 19, is actually part of a larger battle for the highly coveted Homs governorate. As we noted in 2012, the battle has wide-reaching ramifications for the Syrian rebels since Al-Qusayr sits along a major transit point for rebel supplies and reinforcements coming in from Lebanon. But it is equally important to loyalist forces. If the Syrian regime loses control of the Orontes River Valley and its major road junctions, Damascus will be largely cut off from Aleppo and the Alawite-dominated coast, which would limit the regime's access to supply lines from port cities.

Infographic of the Day: The Future Of The Mainframe

Tue, 21 May 2013 15:11:28 +0000

Get the facts from BMC's 6th Annual Mainframe Survey For the 6th year running, BMC has surveyed 1,300 mainframe users worldwide. Why? So we can better understand the world of mainframe through the eyes of the people who use it every day.

Inescapable Cycle: Bubble after bubble after bubble

Tue, 21 May 2013 14:57:43 +0000

This Keiser Report, examines whether the markets are soaring or crashing but find it impossible to determine as long standing data patterns have broken down.

Markets Open Higher – Serious Fall By 10 AM

Tue, 21 May 2013 14:29:44 +0000

Opening Market Commentary For 05-21-2013

Premarkets were flat early on and at 9 am they jumped up +0.20% but not much of any indication to what Mr. Market had in mind for today. If today ends up, it will be the second longest winning streak since 1968 where the DOW rallied 24 straight Wednesdays.

By 10 am the markets had melted up to near to yesterday’s highs and turned down. The melting began in earnest with a steep drop for 15 minutes with relatively heavy profit taking.

The Arrogance of Power

Tue, 21 May 2013 07:22:49 +0000

by Ajay Shah, ajayshahblog

Yu Hua has a great piece in the New York Times titled In China, Power is Arrogant where he says:

Several of these rules have since been revoked, but their wacky and arbitrary nature demonstrates the arrogance of power in China. One can imagine all too easily their creators — sitting in comfortable armchairs, drinking high-grade tea and smoking fine cigarettes — discussing the issues at hand as if they were purely intellectual abstractions, never considering how ordinary people might react. That people will be unhappy is no cause for concern because, for so long, the power of the state has trampled on individual rights. Only when rules are so onerous that they stir actual protest do higher-ups take notice: “You guys are just making a mess of things,” they’ll tell their bureaucrat underlings.

Profit Margins Are Irrelevant – Stock Prices Measure Liquidity, Not Profit Growth

Tue, 21 May 2013 07:13:31 +0000

by Lee Adler, Wall Street Examiner

Rising corporate profit margins have been a key driver of rising stock prices according to a report in Business Insider that summarizes a research piece from BAML. The report claims that margins have grown mostly due to low interest rates and low taxes and that this margin growth will end. However, the report contends that currently fat margins will not revert back to historical norms as the bears claim. If margins are stable, profit growth should be as well. Therefore they expect stock prices to rise 5-7% annually.

News Flash! Corporate profits don’t drive stock prices and stock prices don’t discount the future.

Stock prices have already risen 17% this year, and they might rise another 17%. That might be followed by a decline of 40% next year. The idea that prices will rise along a nice soft 5-7% curve because profit growth will be around that rate is just silly.

Escaping Liquidity Traps: Lessons from the UK’s 1930s Escape

Tue, 21 May 2013 07:09:57 +0000

by Nicholas Crafts

This article was originally published by Voxeu.org on May 12, 2013

The UK escaped a liquidity trap in the 1930s and enjoyed a strong economic recovery. This column argues that what drove this recovery was ‘unconventional’ monetary policy implemented not by the Bank of England but by the Treasury. Thus, Neville Chamberlain was an early proponent of ‘Abenomics’. This raises the question: is inflation targeting by an independent central bank appropriate at a time of very low nominal-interest rates? In mid-1932, the UK had experienced a recession of a similar magnitude to that of 2008-09, was engaged in fiscal consolidation that reduced the structural budget deficit by about 4% of GDP, had short-term interest rates that were close to zero, and was in a double-dip recession (Crafts and Fearon 2013). The years from 1933 through 1936 saw a very strong recovery with growth of over 4% in every year. The Chancellor of the Exchequer, Neville Chamberlain (in office from November 1931 to May 1937) was the architect of this recovery. Given the similarities with the situation now facing George Osborne, is there anything he could learn from the policies adopted by his predecessor? Read more »

Fortune: Criminal Fraud Produces Damaging and Ineffective Generic Drugs

Tue, 21 May 2013 07:07:18 +0000

Econintersect: Katherine Eban, along with reporter associates Doris Burke and Frederik Joelving, have published an excellent investigative journalism story in Fortune. The subtitle for the article tells only part of the story:

"The epic inside story of long-term criminal fraud at Ranbaxy, the Indian drug company that makes generic Lipitor for millions of Americans."

This is not just a story about Lipitor, and not just about Ranbaxy, but also about an entire system of drug approval, oversight and regulation which is seriously flawed, even criminogenic.

Senators: Apple Avoids Billions in Taxes

Tue, 21 May 2013 07:01:39 +0000

Econintersect: The U.S. Senate permanent subcommittee on investigations released a report Monday evening 20 May 2013 charging Apple of creating what are essentially shell entities in Ireland to shelter (by special arragement with the Irish government) as much as $74 billion in income from taxation by the U.S. or any other government. Perhaps even $138 billion of income is involved; Econintersect is having trouble adding up all the numbers at this point. One of the techniques that was exercized involved both the use of U.S. tax law loopholes and by claiming they "are not tax residents of any jurisdiction", according to the report. The committee is headed by Carl Levin (D. MI) and John McCain (R, AZ). The committee will commence hearings on the report today, Tuesday 21 March 2013.

How the IRS’s Nonprofit Division Got So Dysfunctional

Tue, 21 May 2013 06:57:47 +0000

Special Report from ProPublica

by Kim Barker and Justin Elliott

ProPublica.org published this article originally 17 May 2013.

May 18: This post has been corrected.

The IRS division responsible for flagging Tea Party groups has long been an agency afterthought, beset by mismanagement, financial constraints and an unwillingness to spell out just what it expects from social welfare nonprofits, former officials and experts say.

The controversy that erupted in the past week, leading to the ousting of the acting Internal Revenue Service commissioner, an investigation by the FBI, and congressional hearings that kicked off Friday, comes against a backdrop of dysfunction brewing for years.

Moves launched in the 1990s were designed to streamline the tax agency and make it more efficient. But they had unintended consequences for the IRS’s Exempt Organizations division.

Romanian Teen Wins Top Intel Prize

Tue, 21 May 2013 06:52:12 +0000

Econontersect: What Intel Corp. calls the "world's largest high school science research competition" was won by a 19-year old Romanian, Ionut Budisteanu, at the award ceremnoy in Phoenix, AZ last Friday (17 May 2013). The contest was sponsored by the Intel International Science and Engineering Fair, a program of Society for Science & the Public. Budisteanu was selected for the top prize from 17 category winners who were determined after judging of 1,600 entires from more than 70 countries. His entry involved the use of artificial intelligence to create a viable model for a low-cost, self-driving car.

Click on photo for larger image of all three top winners at gizmag.

Week Ending 20 May 2013: 7.0 Cent Gasoline Price Rise

Mon, 20 May 2013 21:59:07 +0000

Gasoline prices rose an average of 7.0 cents cents nationwide this past week from last weeks rise to 6.5 cents from the week before (+15.0 cents since 29 April) - with the largest rise in the Gulf Coast (2.8) followed by West Coast California (+2.5).

Average prices by region and a breakdown by grade follow after the "Read More".

Averages Melt Down From Earlier Highs – End Flat And Lackluster

Mon, 20 May 2013 21:38:29 +0000

Closing Market Commentary For 05-20-2013

Markets coasted along this afternoon in a sideways fashion on somewhat low volume spiked with spurts of profit taking. Like in the past we may be staging a rest stop before plowing ahead with the bulls in tow. Hard to tell what Mr. Market has in mind knowing all well what weaknesses are abound.

By 4 pm the markets had not decided on a direction and closed on a somber note.

Lyme Wars

Mon, 20 May 2013 21:21:58 +0000

Updated 22 May 2013

Econintersect: Lyme disease is a prevalent infectious disorder in the north central and northeastern United States and parts of Europe. It is also reported infrequently in a number of southern and western U.S. states. There is a Lyme disease hot spot along the northern California coast. It derives its name from the town of Lyme, CT, where it was diagnosed in 1975. There is generally accepted evidence that the disease has existed without the formal name for at least 100 years.

Click on image for wider view of Borrelia burgdorferi.

Insider Trading 17 May 2013: James R. Murdoch Selling News Corp. Shares

Mon, 20 May 2013 20:27:11 +0000

by Asif Suria

Insider buying decreased slightly with insiders purchasing $65.81 million of their stock last week compared to $66.13 million in the week prior. Selling increased with insiders selling $3.65 billion of stock last week compared to $2.06 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week increased to 55.43. In other words, insiders sold more than 55 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 31.13.

What We Read Today 20 May 2013

Mon, 20 May 2013 19:53:55 +0000

Econintersect: Click Read more >> below graphic to see today's list.

The top of today's reading list has Yahoo!'s vow to not srew up Tumblr ........ and the last article is about a huge pile of Canadian tars sands refuse collecting in Detroit.

Markets Recent Rise Leaves Averages Flat On Low Volume

Mon, 20 May 2013 16:45:45 +0000

Midday Market Commentary For 05-20-2013

The 'Energizer Bunny Market' keeps on going. The averages just have continued to melt up all morning setting new highs along the way. Only recently (12:06) has the push upward been sedated into a sideways market.

I continue to see more upside, particularly after the DOW and $SPX have broken up and out of the previous historical highs. The small caps need to approach their old highs before I will call a top. The only other thing that will derail this bull run is a significant Black Swan.

By 1:00 pm the markets took a breather with a bearish slant to it on low volume. The small caps are leading the way down and that is about where it stands.

Iraq sees worst violence in years

Mon, 20 May 2013 16:24:57 +0000

Tribal chiefs in Iraq have issued a warning about the country's future after the latest wave of sectarian violence. Sunni leaders in Ramadi say there will be all out war if Iraq doesn't split into a federation. 68 people have died.

Markets Opened Down Fractionally – Sea Saw Action Expected Today

Mon, 20 May 2013 14:14:27 +0000

Opening Market Commentary For 05-20-2013

Premarkets were down -.020% with no important news coming out of Europe, appears to be an ordinary Monday morning start.

Markets did open down but soon began to melt up to Friday's highs where the small caps made new highs by +0.01% on low volume. By the 15 minute mark the averages started to melt down again +0.08% to +0.19% on moderate volume.

By 10 am the small caps were the first to report a small gain of +0.01% to +0.05% as the BTFD crowd timidly stepped in to melt the averages back up to previous morning highs. I do not see this market going anywhere, in a radical way, today except for a sea-saw action.

CFNAI Super Index Mixed In April 2013

Mon, 20 May 2013 13:18:26 +0000

Written by Steven Hansen

The economy was almost statistically unchanged in April 2013 - and this index is suggesting the economy is expanding just below the historical trend rate of growth - with the Chicago Fed National Activity Index (CFNAI) 3 month moving (3MA) average increasing from -0.5 to -0.4. The 3MA has now been in negative territory for two months, but still well above the levels associated with recessions. Read more »

Do Big Cities Help College Graduates Find Better Jobs?

Mon, 20 May 2013 12:59:12 +0000

by Jaison R. Abel and Richard Deitz - Liberty Street Economics, Federal Reserve Bank of New York

Although the unemployment rate of workers with a college degree has remained well below average since the Great Recession, there is growing concern that college graduates are increasingly underemployed—that is, working in a job that does not require a college degree or the skills acquired through their chosen field of study.

Eisman: Best Housing Stocks to Buy in 2013

Mon, 20 May 2013 07:29:38 +0000

Money Morning Article of the Week

by Tim Melvin

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.

Terminal Velocity (9) – “Helicopter Take-off”

Mon, 20 May 2013 07:25:17 +0000

Written by Adam Whitehead, KeySignals.com

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.

Niall Ferguson: Four Reasons Why the U.S. Is Failing

Mon, 20 May 2013 07:07:30 +0000

by Robert Huebscher, AdvisorPerspectives.com

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.

Options Indicate Bull Market Stage 1 Underway

Mon, 20 May 2013 06:42:48 +0000

by Chris Ebert, Zentrader

Stocks and Options at a Glance

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.

Economic Growth in Foreign Regions and U.S. Export Growth

Mon, 20 May 2013 02:47:05 +0000

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.

Infographic of the Day: Best and Worst States for Business by Tax Laws

Mon, 20 May 2013 02:29:10 +0000

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.

Monetary Policy Week: Cuts Continue

Sun, 19 May 2013 23:07:00 +0000

Monetary Policy Week in Review – May 18, 2013: Israel, Turkey, Serbia cut, five hold as BOJ easing reverberates

by Peter Nielsen, Central Bank News

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.

Japan: Exporting Deflation

Sun, 19 May 2013 21:19:52 +0000

by John Mauldin, Thoughts from the Frontline

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 »

Prometheus: Gold Market Long-term Correction Continues

Sun, 19 May 2013 20:56:11 +0000

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 [...]

What We Read Today 19 May 2013

Sun, 19 May 2013 19:40:48 +0000

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.

Five Reasons Why We Should Eliminate School Loans

Sun, 19 May 2013 19:24:59 +0000

by Rodger Malcolm Mitchell, www.nofica.com

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.

Evidence of Bubble in Stock Prices when Compared with Industrial Production

Sun, 19 May 2013 19:11:22 +0000

by Lee Adler, Wall Street Examiner

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.

Why Conflicting Economic Data All Leads Back To The Unemployment Rate

Sun, 19 May 2013 14:57:37 +0000

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.

The Week Ahead: Ready for Fedspeak?

Sun, 19 May 2013 07:23:21 +0000

by Jeff Miller, A Dash of Insight

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.

What should we expect?

France and Pension Reform - A Sick Headache

Sun, 19 May 2013 07:06:17 +0000

Written by Hilary Barnes

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.

Documentary of the Week: Math of Cities and Corporations

Sun, 19 May 2013 06:19:01 +0000

Documentary of the Week (17 1/2 minutes)

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.")

[Watch video after the Read more >> jump.]

Up to 20% of U.S. Children May Have a Mental Disorder

Sun, 19 May 2013 05:19:02 +0000

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.

Secretary Lew Sends Debt Limit Letter to Congress

Sun, 19 May 2013 04:27:15 +0000

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.

Bernanke Tells Graduating Students to Adapt

Sun, 19 May 2013 03:37:09 +0000

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.

Infographic of the Day: What's the Cost of a Lost Laptop?

Sun, 19 May 2013 03:07:44 +0000

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.

Economic Zeitgeist

Sat, 18 May 2013 21:21:41 +0000

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 »

Trefis: Highlights Week Ending 17 May 2013

Sat, 18 May 2013 21:07:08 +0000

Written by Trefis

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.

Click on graphic for larger image and go to Trefis interactive page.

Click "Read more..." to see our clickable table of contents and most covered companies of the week.

What We Read Today 18 May 2013

Sat, 18 May 2013 20:03:25 +0000

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.

'Bitcoin bomb may blow up banks' bondage, hence US attacks'

Sat, 18 May 2013 16:27:41 +0000

The cyber currency, Bitcoin, has suffered a setback - US authorities seized the accounts of a major operator and now hampers the process of exchanging Bitcoins. This digital currency gives you control of your assets and no middle man.

Should You Tell Your Kid to Drop Out of High School?

Sat, 18 May 2013 07:01:22 +0000

Written by Steven Hansen

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,

A Different View of Silver

Sat, 18 May 2013 06:54:50 +0000

Special Report from the Bullion Vault

Written by Miguel Perez-Santalla, Bullion Vault

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.

Prepare for Earnings Disappointments?

Sat, 18 May 2013 06:50:35 +0000

Corporate Disappointment

From Daily Reckoning

by Dan Amoss, Daily Reckoning

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.

Gallup: Minimum Required Income $58k for Family of Four

Sat, 18 May 2013 06:22:50 +0000

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.

Infographic of the Day: How to Fix a Phone Dropped in the Toilet

Sat, 18 May 2013 03:33:31 +0000

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.

Initial Claims Not Great but Not as Bad as Claimed

Fri, 17 May 2013 22:54:57 +0000

by Lee Adler, Wall Street Examiner

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 »

US Guns: What Should Be Done?

Fri, 17 May 2013 22:52:37 +0000

Written by Elliott Morss, Morss Global Finance

Introduction

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.

What We Read Today 17 May 2013

Fri, 17 May 2013 18:45:35 +0000

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.

'US clamps down on Bitcoin, fears lack of control'

Fri, 17 May 2013 16:12:20 +0000

US authorities froze the account of the world's largest Bitcoin exchange, which helps move customers' cash online. The booming digital currency has hit bureaucratic blocks ever since its rapid growth came to the attention of government.

Preliminary May 2013 Michigan Consumer Sentiment Highest Since July 2007

Fri, 17 May 2013 14:50:20 +0000

by Doug Short, Advisor Perspectives/dshort.com

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 »

10 May 2013 ECRI's Weekly Leading Index Growth Declines

Fri, 17 May 2013 14:41:21 +0000

Current ECRI WLI Growth Index

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.

April 2013 Leading Economic Index Forecasts Continuing Economic Expansion

Fri, 17 May 2013 14:13:50 +0000

Written by Steven Hansen

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 »

Really Real Rates vs. Gold

Fri, 17 May 2013 05:02:53 +0000

Bullion Vault Article of the Week

Written by Adrian Ash, Bullion Vault

Quantitative easing and zero rates haven't worked. So let's have much more of 'em, eh...?

Gold attracts investment capital when other asset classes fail to deliver.

So now equities have clearly regained their appeal after more than a decade of what finance professionals would rather we called "sub-optimal" returns, gold investing has lost its urgency for money managers. Indeed, it's become a neat little "short" to trade against whilst picking the next winner in the S&P's all-time high dash.

Bitcoin: US Government Freezes Account of Largest Exchange

Fri, 17 May 2013 04:16:35 +0000

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).

Infographic of the Day: Is There Silicon Beyond the Valley?

Fri, 17 May 2013 04:12:38 +0000

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.

Alternative fur Deutschland?

Thu, 16 May 2013 22:20:33 +0000

by Dirk Ehnts, Econoblog101

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:

Uncertainty, Liquidity Hoarding, and Financial Crises

Thu, 16 May 2013 21:13:40 +0000

Analysis from Liberty Street Economics

Tanju Yorulmazer, Federal Reserve Bank of New York

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.

Falsterity: France slips into new recession amid higher taxes

Thu, 16 May 2013 18:02:03 +0000

The French economy has slipped back into recession - after being dragged further into Europe's financial troubles. And the poor figures are stacking up against President Hollande, whose ratings have slumped with record speed.

May 2013 Philly Fed Business Outlook Goes Negative

Thu, 16 May 2013 16:36:23 +0000

Written by Steven Hansen

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 »