The Mike Bertelsen Project

slump

noreply@blogger.com (Anonymous) — Wed, 8 Oct 2014 08:11:00 -0500

October 08, 2014

Sell-off yesterday. And pretty much started with the IMF report on global growth. Light.
Europe in the spotlight..... so what's new and Asia. We'll be looking.

Market nervousness is talked about on CNBC this morning.

road to recovery

noreply@blogger.com (Anonymous) — Fri, 12 Sep 2014 07:55:00 -0500

The road to the economy's recovery has been a long and winding one. For sure.

What we have to look at is the job picture. Frankly the overall job growth situation has been dismal. It could be worse, so we have that going for us. The addition of more jobs would be beneficial to several sectors of the U.S. economy including housing.

The remainder of 2014 has the pulse of the consumer in the mix. While I'm on that subject, August retail sales were reported earlier today as increasing by 0.6 percent after an upwardly revised 0.3 percent. July was previously reported to have been flat.

The core sales correspond mostly with the GDP, which increased 0.4 percent in August.

Reuters was a source for this entry.

jobs number weak

noreply@blogger.com (Anonymous) — Fri, 5 Sep 2014 08:10:00 -0500

The jobs report released this morning gave us significantly lower report than expected. This shows growth has slowed or even has halted. The report gave a number of 142,000 jobs added in August. The expectation number was at 225,000.

Labor force participation was little changed at 62.8% and that number has held steady since April.

At this writing the Dow is striving to hold off a fourth down day in-a-row.

This Forbes article was the source for this post.

the taper continues

noreply@blogger.com (Anonymous) — Wed, 30 Jul 2014 20:26:00 -0500

No surprises from the Federal Reserve Open Market Committee.The committee said it would take $10 billion off its monthly asset purchases. Interest rates to remain at 0 - .25%.

In the June minutes, the committee said it would conclude QE in its October meeting.

In the statement today, the FOMC said, "a range of labor market indicators suggests that there remains significant underutilization of labor resources." Translated: no significant job growth. Expect inflation to rise just a bit too.

For the full statement from the Fed, click here for the businessinsider.com story which was the source for this entry.

your own best interest

noreply@blogger.com (Anonymous) — Wed, 23 Jul 2014 08:35:00 -0500

The issue is the "American Dream" and optimism. Can we all really "make it"? Perhaps it's time to change our paradigm. John Oliver explains:

The wealth gap increased as, according to NBC Nightly News, the 1% had 19.3% of the income in 2013.Policies that benefit the few have been supported by the many. John Oliver says because of optimism. He calls optimism America's greatest quality. Could it also be our greatest downfall? America has a system where wealth is disbursed by a lottery of wealth. We have accepted it.
Here's the source of the story from Salon.com

supermarket inflation

noreply@blogger.com (Anonymous) — Wed, 2 Jul 2014 07:19:00 -0500

CNBC welcomed Jim Grant of Grant's Interest Rate Observer. Jim is bullish on the asset class global market. He went on to say that the Fed has crushed credit spreads. This has resulted in many investors shorting treasuries to hedge against rising rates.

Has the Fed fueled inflation?

ADP released the June numbers for payrolls. Manufacturing up 12,000, construction up 36,000. May payrolls left unrevised at 179,000 to the upside.

a tip on tips

noreply@blogger.com (Anonymous) — Fri, 20 Jun 2014 15:38:00 -0500

I came across an article from Market Watch tweeted by Ben Eisen on Treasury inflation-protected securities (TIPS).

TIPS are leading the way in a market that's decided to ignore Yellen's inflation remarks http://t.co/zA7WFrAV1w pic.twitter.com/goutcLcyxU
— Ben Eisen (@BenEisen) June 20, 2014

The interesting item that struck me was Fed Chairman Yellen shrugging off a recent rise in inflation. Apparently no big deal. Let's hope.

TIPS protect against inflation. The article goes on to say TIPS have stabilized this year amid rising inflation. If CPI keeps climbing, TIPS look more attractive and could see growing demand.

kill switch

noreply@blogger.com (Anonymous) — Wed, 18 Jun 2014 22:02:00 -0500

Market participants are trying to come to grips with technology glitches. These glitches have the potential to destabilize the markets. Electronic trading errors and how they can be prevented is being looked at again. Best practices and deployment are among the policies to ensure market participants have better systems.

These are the 5 biggest problems with the U.S. equity markets:

It's extremely fragmented.
High-frequency traders supply 40 to 60 percent of the volume traded.
Mini-flash crashes are erupting in stocks on a daily basis.
Algorithms are rushed to the market and may not be adequately tested.
The SEC lacks a much-needed consolidated audit trail to police all trading activity.

So what can the financial industry do? Automated trading is here to stay. We can't stop progress.

A kill switch approach might be the most widely accepted approach to the problem. A kill switch at the exchange level that could halt trading if a broker-dealer exceeded a certain peak net volume threshold has been discussed among several working groups.

More oversight and testing has been needed to enforce a market-wide framework. Perhaps collaboration on algorithms isn't possible, but on a kill switch.... well, just maybe.

fedex

noreply@blogger.com (Anonymous) — Wed, 18 Jun 2014 15:57:00 -0500

FedEx (FDX) traded at an all-time high today, up 8.64, translating into a 6.16% gain on a volume of 5.6 million shares. A $.20 dividend will be paid to shareholders of record as of June 19, 2014.

chart from money.cnn.com

Their May ended quarter results were much better than expected at $2.46 per share. The FedEx air fleet has been able to use new Boeing 777 planes which are efficient energy users.


Boeing 777

The company's strengths are seen in many areas as an article in thestreet.com points out.

the tech rally

noreply@blogger.com (Anonymous) — Tue, 17 Jun 2014 17:01:00 -0500

The DJIA, Nasdaq, and S&P 500 all closed higher. Nasdaq led it all.

Nasdaq Chart from cnn.com

Tesla and Netflix both had good days.
Core inflation rose 0.3% from last month.
Asian stocks were mixed.

Source: article from money.cnn.com

dynamics

noreply@blogger.com (Anonymous) — Sun, 15 Jun 2014 12:33:00 -0500

There are always two forces politically. Why? Because we always have the ability to act like dumb sheep or see the train coming down the track and move out of the way. Thomas Jefferson said the Tree of Liberty must be fed from time-to-time by the blood of tyrants and patriots. This is just the way things function.

The world needs to be seen by dynamics.

Government debt is becoming more difficult to sell and taxes are going to go up.

unemployment rate and the fed

noreply@blogger.com (Anonymous) — Mon, 9 Jun 2014 11:09:00 -0500

There is intrigue. The unemployment rate stayed at 6.3% which has the Fed's attention. There is no certainty what this means for monetary policy.

A new system has come into focus. This is from economist Andrew Levin and is relayed on a post from businessinsider.com giving us a good view of what it's all about. Levin's info is quantitative and the Fed likes that data. The emphasis has been on wages.


from Pandi/Columbia

The chart above is very interesting to me, since it also charts the underemployment gap. Wages are not definitively moving higher. This alone has me wondering if the Fed really expects a change in their policy for 2014. The middle of June will give us more of a handle on the Fed's tone.

deflation continued

noreply@blogger.com (Anonymous) — Fri, 6 Jun 2014 07:54:00 -0500

from zerohedge.com

A slowing world economy is here. The Eurozone and China are at the focus of this. See the post from zerohedge.com.

Structural changes in the U.S. economy are ongoing. Can the Fed break through this stagnant stalemate? Could a replay of 2008 be setting up? With the GDP number down for Q1 2014 in the U.S. there isn't much room for optimism when it comes to asset increases. The drag on the overall big picture has the bond guys wondering and waiting. Interest rates have been projected to go up, however the data speaks for a flat interest rate. Can the high risk pool help the U.S. economy if enough folks jump in? Can all-time highs keep getting higher?

This is the situation we are facing. Our views on housing and wealth generation have been muddled by the stark reality of sluggish job growth. Frankly we aren't back to work like we should be.

The risk-off scenario is coming into view according to a safehaven.com article, which gives plenty of reasons why this should play out. Hello U.S. Treasuries.

With the 10 Year Note yield being put on the radar, could this tell us that global debt bubble fears will increase? Chinese government debt is up 25 times since 2000! This has gave us the notion of a crumbling economy in China. Here at home we need job growth. But we're at the mercy of so much around us. According to a seekingalpha.com story, our labor participation rate is just under 63%.

I can't help but see a continued lag in the U.S. job market.

q1 gdp

noreply@blogger.com (Anonymous) — Sat, 31 May 2014 15:37:00 -0500

The recession ended 5 years ago. Did you notice? GDP figures can be volatile, as we were reminded by several economists. In a zerohedge.com story by Tyler Durden, the economic pulse isn't good. There is always a silver lining in side every dark cloud.... right?

Some have noted weaker than expected Q1 2014 GDP will bring a stronger Q2 number. Keep that in the brainpan because that will be the silver lining.... if it happens. Tyler brings forth the notion of ignoring the hard data and relying on the Fed's balance sheet.

One central point is stagnating median incomes. There has been info pointing to this for about 5 years. Housing has been struggling in some areas of the country and are still feeling the effects of the recession. Smart Girl Politics asks, "What happened to the recovery?"

The positive spin on the economy continues as they point out in their article. One "spin" of note is that the U.S. economy contracted for the first time since 2011. This contraction shows how much fragility the economy has.

come tumblin' down

noreply@blogger.com (Anonymous) — Sun, 25 May 2014 08:06:00 -0500

If you are imagining the great economic recovery is recovering, a post by Tyler Durden from zerohedge.com gave some info that raised an eyebrow. World trade volume dropped for the third time in four months, the biggest drop in global trade since May 2009.

Developing Asian economies had the biggest drop of 4.5%.
$12 trillion in global money printing hasn't helped.

Another post from zerohedge.com gave us this chart on average real hourly earnings:

On May 16, zerohedge.com featured a post on real hourly wage declines. Wage inflation has not reared its head. Year-over-year growth in both pay and hours has actually been falling since early 2012. Fed policy action has not healed the labor market.

recovery woes

noreply@blogger.com (Anonymous) — Tue, 13 May 2014 12:53:00 -0500

Recovery disappointment is still here. Slow for sure. Vern Gowdie of Daily Reckoning writes that two problems exist:

As income declined, credit became the chief vehicle for maintaining living standards.
Employment is less attractive.

America has a shrinking middle class. Read the story: CLICK HERE

Tyler Durden of zerohedge.com writes on the Fed's QE and how it must be sustained. But it has an expiration date. Just what that date is is not known, but I have a feeling that it could be within 14 months. Can stock valuations survive?

The Truth About QE. Read the story: CLICK HERE

interest rates

noreply@blogger.com (Anonymous) — Fri, 2 May 2014 09:17:00 -0500

from sreettalklive.com

Lance Roberts of STA Wealth Management was on CNBC April 30th and was in on the discussion about interest rates. One question which surfaces is whether interest rates are going up or not. The consensus is that they are going up, but Mr. Roberts makes a case for the opposite.

First, there are three components we all need to take into consideration that correlate with interest rates:

Inflation
Economic Growth
Wage Growth

Look at interest rates as a level of demand for capital in the economy. When an economy expands, the need for more capital rises. But we are in a state of a stagnant economy. The need for more capital too is stagnant. This alone can only keep interest rates low. Mr. Roberts points out that consumption is a factor for interest rates. Consumption hasn't increased in my estimation. Levels remain flat, keeping producers from charging higher prices. If our level of inflation goes up, so will the rate at which lenders will charge for their money. So far, we've had no need for bigger capital demand.

The stock market has been going higher. This isn't a good barometer, as Mr. Roberts points out, for what really is going on in the economy when it comes to consumers. I agree. He also points out that stocks are cheap based on low interest rates. The Fed has been buying bonds for the past 4 years to keep interest rates low. We have to wonder if the Fed will continue this policy. I say yes they will as higher interest rates at this time will slow consumption. Consumption is already slow. Why would anyone allow for higher interest rates now? The Fed may be in a corner, but really the choice is clear: more bond intervention.

Rising rates, as Mr. Roberts points out, are a negative for stock market returns. Some may say the bond market is in a bubble, but the chart displays that interest rates in relation to the three components are fairly valued.

Read in the entire story by Tyler Durden on zerohedge.com

post recovery

noreply@blogger.com (Anonymous) — Tue, 29 Apr 2014 12:40:00 -0500

Wages are rising, loan growth by commercial banks has picked up, but investment is depressed. Two outta three ain't bad. Hiring could be kicked into a higher gear. Recovery then growth, in that order, have been slow.... but upticks are here.

Read more from Business Insider.

Theweek.com has a story about using GDP as a measurement. Problems yes, but it's all we have. Intermediate goods are left out. Taken into consideration, the question has been asked if the economy is really bigger than it is.

Read the story from theweek.com.

Is there something afoot on the consumer side? Zerohedge.com has a story on quarterly sales and consumers falling flat. Current projections are a 2.5% revenue gain. The narrow channels on the radar can't be ignored.

Read the story from zerohedge.com

Solid ground or not, it's still a bit soft in the middle.

economic recovery flat

noreply@blogger.com (Anonymous) — Tue, 28 Jan 2014 13:09:00 -0600

A good article I came across has some good ammo on why the economic recovery isn't really happening. The recovery (if that is what you call it) is flat.

The Fed's efforts has injected money into the stock markets. Several analysts have stated since last summer that that's about all the Fed's QE policy has accomplished.

Here are a couple of items from list list of 37:

The employment-population ratio has now been under 59 for 51 months in a row.
Only about 47% of the adults in the U.S. have a full-time job.

For the entire list visit this post on A Sheep No More

Why an Economy Grows and Why it Crashes

emerging market fx

noreply@blogger.com (Anonymous) — Sun, 26 Jan 2014 19:42:00 -0600

Emerging Market FX: The Straw That Broke The Carry-Trade's Back

China manufacturing down. U.S. interest rates flat.

Link to the zerohedge.com story:

http://www.zerohedge.com/news/2014-01-26/emerging-market-fx-straw-broke-carry-trades-back

---
Sent from Zite, available for free in the App Store.

Sent from my iPhone

the 20

noreply@blogger.com (Anonymous) — Sun, 26 Jan 2014 08:14:00 -0600

Ever wonder what the early warning signs are of a financial meltdown?

Here's some mentioned in a blog post I found:

CNBC reports retailers had the worst holiday shopping season since 2008.
Intel announced the elimination of 5,000 jobs this year.
Venezuela devalued their currency by 40%
Ukraine is rapidly coming apart at the seems

For all 20 check out Tyler Durden's post on zerohedge.com

Tax Return Software and More

treasury bond positions

noreply@blogger.com (Anonymous) — Sun, 26 Jan 2014 07:49:00 -0600

Treasury yields are getting pushed lower. The longer term outlook? Attached to the current account trading surplus, especially with Asian trading partners.

Americans will have to step up in the Treasury bond market and there's only one way to get them to buy http://t.co/FDl28seuOK
— BI: Finance (@clusterstock) January 26, 2014

and we go on and on

noreply@blogger.com (Anonymous) — Sat, 25 Jan 2014 19:57:00 -0600

Rick Santelli of CNBC gives the blueprint of the central bank plan and warns it can't go on forever.
Many thanks to Tyler Durden for bringing this to our attention.

inequality discourse

noreply@blogger.com (Anonymous) — Wed, 8 Jan 2014 06:27:00 -0600


click to enlarge

Pew Reasearch has released data on their inequality study. They have put together a "5 facts primer". Here are the 5 topics:

By one measure, U.S. income inequality is the highest it’s been since 1928.
The U.S. is more unequal than most of its developed-world peers.
The black-white income gap in the U.S. has persisted.
Americans are relatively unconcerned about the wide income gap between rich and poor.
Wealth inequality is even greater than income inequality.

Source: Pew Research Center

crowd madness

noreply@blogger.com (Anonymous) — Thu, 2 Jan 2014 23:46:00 -0600

In his 1841 work Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay (1814-89) identified a common thread of individual and collective idiocy running through such follies of the past. These included alchemy, witchhunts, and crusades.

A clear implication of Mackay’s work was that all of these follies had been consigned to the past by intelligence, experience and enlightenment. But one folly remains alive and well. Financial bubbles. The past thirty years has given us the growth and bursting of the greatest financial bubble in history. This bubble confirmed the idiocy identified by Mackay. This 'money for nothing' lunacy has mired much of the world in debt from which there is no escape.

Perhaps the most truly remarkable feature of this "super-cycle" was that it endured for so long in defiance of all logic or common sense. Individuals in their millions believed that property prices could only ever increase, such that either borrowing against equity (by taking on invariably-expensive credit) or spending it (through equity release) was a safe, rational and even normal way to behave. Former Federal Reserve boss Alan Greenspan has been ridiculed for believing that banks would always act in the best interests of their shareholders, and that the market would sort everything out in a benign way. But regulators more generally bent over backwards to ignore the most obvious warning signs, such as escalating property price-to-incomes ratios, soaring levels of debt-to-GDP, and such obviously-abusive practices as sub-prime mortgages. Debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money.


click to enlarge

No other major economy got it quite as wrong as Britain under Gordon Brown, but much the same was happening across the Western world, most notably in those countries which followed the disastrous Anglo-American philosophy of “light-touch” financial regulation.

Where the Western countries were concerned, was that they reduced their production without making corresponding reductions in their consumption. Corporations’ outsourcing of production to emerging economies boosted their earnings (and, consequently, the incomes of the minority at the very top) whilst hollowing out their domestic economies through the export of skilled jobs.

At constant (2011) values, consumption by Americans increased by $6,500bn between 1981 and 2011, whilst consumption on their behalf by the government rose by a further $1,700bn, but the combined output of the manufacturing, construction, agricultural and extractive industries grew by barely $600bn. At less than $200bn in 2011, net exports of services did almost nothing to bridge the chasm between consumption and production. Between 1981 and 2011, and again expressed at constant values, American indebtedness soared from $11 trillion to almost $54 trillion. Fundamentally, what had happened here was that skilled, well-paid jobs had been exported, consumption had increased, and ever-greater quantities of debt had been used to fill the gap. This was, by any definition, unsustainable.

At the same time, there is no real evidence that the economy is recovering from what is already a more prolonged slump than the Great Depression of the 1930s. We are now more than four years on from the banking crisis and, under anything approaching normal conditions, there should have been a return to economic expansion by now. Governments have tried almost everything, from prolonged near-zero interest rates and stimulus expenditures to the creation of money on a gigantic scale. These tools have worked in the past, and the fact that, this time, they manifestly are not working should tell us that something profoundly different is going on.

Beyond visibility and culpability, the two big questions which need to be addressed are ‘how bad can it get?’ and ‘is there anything that we can do about it?’ Of these, the first question hardly needs an answer, since the implications seem self-evident. In terms of solutions, the first imperative is surely a cultural change away from instant gratification, a change which, if it is not adopted willingly, will be enforced upon society anyway by the reversal of economic growth.