Monday, July 26, 2010

Put Your Rally Caps Back On: FIve Reasons the Long-Term Bull Market Rally Will Resume

"Many are wondering whether the bull market is back on or this is just a bear market rally. I believe we could be at another quality buying opportunity, not nearly the extreme of 2009, but a great chance to pick up stocks on a 10% discount. Below are my five reasons for being bullish," continue reading here.

Women Dominate Men in 7 of 10 Graduate Fields, and Women Are Gaining on Men in All 10 Fields

The table above displays data from The Council of Graduate Schools for the average annual growth in graduate school enrollment by gender over the ten year period from 1998-2008 for the ten main fields of graduate study.  The bottom table above displays data for graduate school enrollment by gender in 2008.  

Not only do women outnumber men in graduate school overall by a ratio of 143 females enrolled for every 100 males, but women outnumber men in 7 out of 10 graduate fields of study, and the annual growth in female graduate school enrollment from 1998-2008 is greater than the growth rate for men in all ten graduate fields of study.   Even in academic disciplines like engineering where women were underrepresented in 2008 in terms of graduate school enrollment, the number of women enrolled in graduate engineering programs has grown at more than twice the annual growth rate for men in engineering from 1998 to 2008.  More evidence that men have become the "second sex" in higher education. 

Global Economic Recovery Watch

1. Australia Leading and Coincident Indexes Improve in May -- "The Conference Board Leading Economic Index (LEI) for Australia increased 0.3 percent and The Conference Board Coincident Economic Index (CEI) increased 0.2 percent in May. The Conference Board LEI for Australia remains on a rising trend, which began in the middle of last year. However, its six-month growth rate has moderated in recent months. At the same time, The Conference Board CEI for Australia has continued to increase this year, and its six-month growth has been fairly stable. Taken together, the current behavior of the composite indexes suggests that the economic expansion is likely to continue, albeit at a modest pace in the near term."

2. Las Vegas June Home Sales Increase from May -- "A total of 5,397 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area in June, up 23.1 percent from May but down 2.2 percent from a year earlier.  The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in June was $136,290, up 1.7 percent from $134,0000 in May and up 1 percent from $135,000 a year earlier.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – fell to 46.4 percent of all resales in June, down from 49.5 percent in May and down from a near-record 70.0 percent a year ago.  Foreclosure resales have declined each month since they peaked at 73.7 percent in May of 2009. Last month’s figure was the lowest since foreclosure resales were 43.3 percent of the resale market in January 2008."

Euro Leading Index Remains on Upward Trend

BRUSSELS, July 26, 2010 -- "The Conference Board Leading Economic Index® (LEI) for the Euro Area increased 0.5 percent in June to 111.2 (2004 = 100), following a 0.3 percent decline in May and a 0.8 percent increase in April.

Said Jean-Claude Manini, The Conference Board senior economist for Europe: “After declining in May, the LEI for the Euro Area has picked up in June. While the recovery is unlikely to falter in the short-term, the pace of economic growth may ease somewhat. Confidence indicators have been the primary cause of the recent volatility in the LEI, which may affect the impact of austerity measures on growth in the Euro Area in the medium term.”

After increasing in June, The Conference Board LEI for the Euro Area is 16.4 percent above its March 2009 trough. Meanwhile, The Conference Board Coincident Economic Index® (CEI) for the Euro Area, which measures current economic activity, remained unchanged in June. The index stands at 102.4 (2004 = 100) according to preliminary estimates. It increased by 0.2 percent in May and decreased by 0.1 percent in April."

Sunday, July 25, 2010

M&A Activity in First Half 2010 Highest Since 2007

Star Tribune -- "After sputtering for more than a year amid the credit crisis and ensuing recession, the deals machine appears to be running once again. Mergers and acquisitions posted a fourth consecutive quarterly increase in the second quarter and deals in the first half of the year reached the highest level since 2007, an indication that more companies are increasing their confidence in the economy.  Nationally, there were 5,345 deals in the first half of the year, up 49 percent from the same period last year, according to research firm Dealogic (see chart above)." 

Saturday, July 24, 2010

How Texas Avoided the Great Recession and Real Estate Bubble: Market-Oriented Land Use Policies

From the article "How Texas Avoided the Great Recession":

"One reason that Texas did so well is that it fully escaped the “housing bubble” that did so much damage in California, Florida, Arizona, Nevada and other states (see chart above). One key factor was the state’s liberal, market oriented land use policies. This served to help keep the price of land low while profligate lending increased demand. More importantly, still sufficient new housing was built, and affordably. By contrast, places with highly restrictive land use policies (California, Florida and other places, saw prices rise to unprecedented heights), making it impossible for builders to supply sufficient new housing at affordable prices.

Speculation is often blamed as having contributed to the higher house prices that developed in California and Florida. This is correct. Moreover, with some of the strongest demand in the United States, Texas would seem to have been a candidate for rampant speculation. After all, it happened back in the 1970s when a huge oversupply of housing, industrial, retail and office space collapsed in the face of falling energy prices.

Yet the speculators were not drawn to the metropolitan areas of Texas. This is because speculators or "flippers" are not drawn by plenty, but by perceived scarcity. In housing, a sure road to scarcity is to limit the supply of buildable land by outlawing development on much that might otherwise be available.

However, the speculators did not miss California and Florida. Nor did they miss Las Vegas or Phoenix, where the price of land for new housing rose between five and 10 times as the housing bubble developed. Despite their near limitless expanse of land, much of it was off limits to building, and the exorbitant price increases were thus to be expected."

MP: The graph above shows that Texas never had a real estate bubble like those in California, Florida, Arizona or Nevada.  Consequently, Texas never had the real estate crash like in the other states.  This article presents an interesting perspective about how restrictive land use policies contributed to the real estate bubbles around the country, and how Texas may have escaped the Great Recession at least partly due to more liberal land use policies. 

HT: Romell Nandi

Sen. John Kerry Skips Town on Sails Tax

Boston Herald -- "Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, Rhode Island, instead of in Nantucket, MA, where the senator summers. Cash-strapped Massachusetts still collects a 6.25% sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000."

HT: Matt B.

Where the Jobs Are: The Top 25 Counties in U.S.

From CNN Money, note that 5 out of the top 7 counties are in one state. 

HT: Romell Nandi

Friday, July 23, 2010

Markets in Everything: The $35 Computer

CS Monitor -- "It looks like an iPad, only it's 1/14th the cost: India has unveiled the prototype of a $35 basic touchscreen tablet aimed at students, which it hopes to bring into production by 2011.

If the Indian government can find a manufacturer, the Linux operating system-based computer would be the latest in a string of "world's cheapest" innovations to hit the market out of India, which is home to the 100,000 rupee ($2,127) compact Nano car, the 749 rupees ($16) water purifier and the $2,000 open-heart surgery."

HT: Joy Pavelski

FL Home Sales Increase 22nd Month Year-to-Year, Median Prices Up for Fourth Straight Month

ORLANDO, FL -– Sales of existing homes in Florida rose in June, marking 22 consecutive months that sales activity has increased in the year-to-year comparison, according to the latest housing data released yesterday by the Florida Realtors.  Other highlights of the report include:

1. A total of 18,038 single-family existing homes sold statewide last month compared to 15,732 homes last year (see chart above). 

2. June’s statewide existing home sales increased 7.7% over statewide sales activity in May of 16,748 homes.

3. June's statewide existing-home median price of $143,400 was 2.1% higher than May’s statewide existing-home median price of $140,400, marking the fourth consecutive month that Florida's median home price has increased over the previous month.

MP: This almost seems like there might actually be something resembling a real estate recovery going on in Florida - 22 straight months of sales gains, and four consecutive months of increasing median home prices?

Thursday, July 22, 2010

Bouillabaisse

1. Family companies represent 60% of the nation's employment and almost 80% of all new jobs. Family businesses control roughly 50% of the country's GDP and some 35% of the Fortune 500 are family businesses.

2. There is a real hunger in consumers for customized, personalized products, and a new wave of entrepreneur is capitalizing on this trend to bring "customization to commerce" for chocolate, men’s dress shirts, and a whole lot more.

3. Maywood, a city in California now outsources everything.  Sky hasn't fallen.

4. Another California city, Bell (population of 38,000), one of the poorest municipalities in Los Angeles County, is paying its city manager an annual salary of $800,000 and its police chief is making $457,000 per year. Outsourcing anyone?

5. Books sold on the Kindle are now outpacing the hardcover books Amazon sells. In the past month, for every 100 hardcover books sold, there have been 180 Kindle books sold through Amazon.

6. Wi-Fi service is now offered on more than one-third of the nation's passenger planes.

Rail Traffic Continues to Post Gains vs. Last Year

The Association of American Railroads released its weekly update today on rail traffic through last week, reporting that rail activity continues to show improvements compared to the same weeks last year.  Highlights include:

1. U.S. railroads originated 282,199 carloads for the week ending July 17, 2010, up 5.5% compared with the same week in 2009, but down 13.8% from pre-recession levels in 2008.

2. Intermodal traffic totaled 227,661 trailers and containers, up 20.1% from the same week a year ago and down only 2.5% compared with 2008. Compared with the same week in 2009, container volume increased 22.1% and trailer volume rose 10%. Compared with the same week in 2008, container volume increased 5.6% and trailer volume dropped 32.5%.

3. For the first 28 weeks of 2010, U.S. railroads reported cumulative volume of 7,874,125 carloads, up 7.3% from 2009, but down 13.2% from 2008, and 5,855,507 trailers or containers, up 13.1% from 2009, but down 6.4% from 2008.

4. Combined North American rail volume for the first 28 weeks of 2010 on 13 reporting U.S., Canadian and Mexican railroads totaled 10,278,759 carloads, up 10.3% from last year, and 7,319,184 trailers and containers, up 13.8% from last year.

MP: Overall, this was a fairly positive report, despite the AAR's headline "Weekly Rail Traffic Continues to Reflect Sluggish Economy."  Compared to the same week last year, both carload and intermodal volumes were up, by 5.5% and 20.1% respectively.  The graph above displays 4-week moving average growth rates for both series (to smooth out the weekly fluctuations), and shows ongoing weekly improvements in rail traffic compared to last year, especially for intermodal shipping.  Intermodal traffic volume has registered year-to-year gains for 30 straight weeks, starting late last December; and the last 20 weeks have all been double-digit gains.   

Markets in Everything: The Pedal Pub

PedalPub.com

Median Home Price Reaches 20-Month High

One bright spot from today's housing report from the National Association of Realtors is that the median home price in June reached a 20-month high of $183,700, the highest median home price since October of 2008 (see chart above).   Also, existing-home sales in June were 9.8% above last year, which marks the 13th consecutive month of year-to-year sales gains, following at least 30 consecutive months of year-to-year declines.   

Wednesday, July 21, 2010

One More Reason Wal-Mart Deserves Nobel Prize


NY Times Economix Blog -- "Mr. Mobarak, a Bangladeshi who has advised his country’s government, found that the presence of apparel jobs in Bangladesh appears to bolster school enrollments of girls, especially for young girls (see chart above).

“A doubling of garment jobs causes a 6.71 percent increase in the probability that a 5-year-old girl is in school,” Mr. Mobarak writes in a summary of his findings.

For India, Bangladesh and other developing countries, these findings provide a reason for optimism. Governments in these places are struggling to improve the quality of infrastructure — hard (highways, ports, electricity) and soft (schools, courts, basic governance) – but private forces unleashed by nascent economic reforms and globalization are not standing idly by. They are already changing societies and economies."

MP: Thanks to Milton Recht for sending this along, and for pointing out that Wal-Mart should get some of the credit for this phenomenon by providing a market for all of the clothing produced in countries like Bangladesh. 

California Mortgage Defaults Fall to 3-Year Low

DQNews -- "The number of California homes pushed into the formal foreclosure process between April and June dropped for the fifth consecutive quarter to the lowest level in three years. The declines were greatest in the most affordable areas, where foreclosure activity continues to fall from extremely high levels over the past two years.  Highlights include:

1. A total of 70,051 Notices of Default (NODs) were filed at county recorder offices during the April-to-June period. That was down 13.6% from 81,054 for the prior quarter, and down 43.8% from 124,562 in second-quarter 2009. 

2. Last quarter's total was the lowest since the second-quarter of 2007, when 53,943 NODs were recorded. The peak was in first-quarter 2009 when 135,431 homeowners received foreclosure notices.

3. Foreclosure resales accounted for 36% of all California resale activity last quarter. It was down from a revised 42.5% the prior quarter, and down from 49.9% a year ago. The peak was 57.8 percent in first-quarter 2009."
 
MP: This news about California defaults falling to a three-year low, and to a level in 2010:Q2 of about half of the level in 2009:Q1, suggests that the real estate problems in California and other markets are "slowly fading," and confirms some commentary about the economy in general from Scott Grannis, who writes today that:
 
"The economy's problems are slowly fading.....   Jobs are now being created, albeit slowly, but they are no longer being destroyed. Those who are working are doing just fine, as productivity has been quite healthy. Much of the world is doing pretty well, and some places, like China and India, are growing like weeds. Commodity prices show no sign of flagging demand. The yield curve is very steep, and that makes it easy for bank profits to mushroom; plus, a steep yield curve has been a very reliable predictor of recoveries."

Tuesday, July 20, 2010

ASA Staffing Index 24% Above Same Wk. Last Year

The weekly American Association Staffing Index for temporary help and contract work continues to show strong gains compared to the same week in the previous year, and the index has increased in every week this year vs. 2009 (see chart abvoe). For the last twelve weeks (starting April 19) the weekly gains have been above 20%, and for the last 20 weeks (starting Feb. 15) the gains have been above 10%. Compared to last year, the ASA Index was 24% higher during the 28th week of this year (July 5 - 11 this year).

High Stakes Test: Can Big Government Successfully Organize the Dynamic, Information Age Economy?

David Brooks in today's NY Times:

"When historians look back on the period between 2001 and 2011, they will be amazed that a nation that professed to hate bureaucracy produced so much of it.

First, Democrats passed a health care law. This law created 183 new agencies, commissions, panels and other bodies.  Democrats also passed a financial reform law. The law that originally created the Federal Reserve was a mere 31 pages. The Sarbanes-Oxley banking reform act, passed in 2002, was only 66 pages. But the 2010 financial reform law was 2,319 pages, an intricately engineered technocratic apparatus. As Mark J. Perry of the American Enterprise Institute noted, the financial reform law is seven times longer than the last five pieces of banking legislation combined.

Once again, government experts were told to take a complex, decentralized system — in this case the financial markets — and impose rules, rationality and order. The law creates one über-panel, the Financial Stability Oversight Council. It directs government experts to write rules in 243 separate areas.

This progressive era amounts to a high-stakes test. If the country remains safe and the health care and financial reforms work, then we will have witnessed a life-altering event. We’ll have received powerful evidence that central regulations can successfully organize fast-moving information-age societies.

If the reforms fail — if they kick off devastating unintended consequences or saddle the country with a maze of sclerotic regulations — then the popular backlash will be ferocious. Large sectors of the population will feel as if they were subjected to a doomed experiment they did not consent to. They will feel as if their country has been hijacked by a self-serving professional class mostly interested in providing for themselves.

If that backlash gains strength, well, what’s the 21st-century version of the guillotine?"

LEIs/CEIs: U.K., China, Spain, France and Germany

Over the last week, The Conference Board has released leading economic indexes (LEIs) and coincident economic indexes (CEIs) for the following five countries, which all registered increases (or stayed the same) in May:

1. The U.K. leading economic index increased by 0.3% in May to 102.4, following gains of 0.6% in April and 1.0% in March. The Coincident Economic Indicator (CEI) for the U.K. increased by 0.1% in May.

2. China's leading economic index increased by 0.8% in May, and China's CEI increased 0.9% in May, following a 1.4% increase in April and a 0.5% increase in March.


3. The Conference Board LEI for Spain remained unchanged in May after increasing in April and the Coincident Economic Index (CEI) increased 0.1% in May.

4. The LEI for France increased 0.3% in May and the CEI increased 0.2%.

5. Germany's LEI increased 0.5% in May and its CEI increased 0.5%.

Bottom Line: Steady and positive growth is ongoing in all of these countries, and
can be expected to continue in the future.

Markets in Everything: You Drink, They Drive

Minnesota's Premier Designated Driving Service

Monday, July 19, 2010

Markets in Everything: Rent-A-Friend

Scott Rosenbaum, 30, has a database of 218,000 men and women who members of his site Rent a Friend can hire "to hang out with, go to a movie or restaurant with," or be "someone to show you around an unfamiliar town." The US-based site already has around 2,000 members, each paying up to $25 to access the site.

When they see a friend they like the look of, they can rent them for as little as $10 an hour. Rosenbaum said he wanted to "go a step back" from dating sites and offer a service that was, in the words of his website "strictly platonic." He told The Times: "No one was offering friendship."

The service is not just about getting people to meet up for a drink or a meal. It lists a host of diverse activities that members might like to hire friends for, including "teaching manners," "snowboarding," "family functions" and just "hanging out."

Link.

HT: Steve Bartin


Vogue's September Issue: +100 Ad Pages vs. 2009

Crain's New York -- "Luxury magazines, like the economy, are making a slow comeback. On Monday, Vogue magazine will announce ad-pages results for its all-important September issue, and industry insiders say that the fashion monthly will show a spike of 100 advertising pages, or 23% over a year ago, for a total of 529 (see chart above).

The relatively improved economic climate has been boosting numbers for Vogue's sister titles at Condé Nast, the most luxury-oriented of the major magazine publishers and the one that was hardest hit by the downturn. But even 23% growth for the September issue—in which designers and fashion companies display their next season's lineups—barely puts Vogue back in the league it was in a few years ago.

In 2007, the magazine carried a record 727 ad pages—and weighed in at four pounds nine ounces. In 2008, Vogue dropped 7% of its ad-weight, coming in at 674 pages."


Double Dip? Seven Reasons Why Not

From Lord Abbett's senior economist Milton Ezrati in today's WSJ:

"It seems these days that half the headlines in the financial media fear a double-dip recession, as do half the conversations on Wall Street. There certainly are risks, not least in Europe’s financial difficulties. But still, there are reasons to question such widespread concerns. History, after all, offers only one true double-dip experience, and that grew out of a policy error. More, the actual data on the economy fly in the face of such an outlook. Following are seven reasons to doubt the double-dip outlook."

The reasons include: Consumer spending is firm, housing data are misleading, business spending and exports are awfully strong for a dip, overall production is good, employment is not so threatening, financial markets are healthier than the headlines imply, and China continues to grow.

Read the rest here.

Exhibit A: Increased Worker Productivity



Watch an amazing video of robotic inventory and mobile fulfillment that triples worker productivity and reduces errors. See related CD post here on how increases in worker productivity have eliminated millions of manufacturing jobs.

Sunday, July 18, 2010

CA June Home Sales: Median Prices Rise for 8th Month, Foreclosure Sales Fall to 28-Month Low

Highlights from the DQNews report on June California home sales:

1. In June, 43,964 houses and condos were sold in California, which was an increase of 7.3% percent from May (40,965), and down by 0.50% from the 44,167 houses sold in June 2009 (see chart).

2. The median price for a California home sold in June was $270,000, up 9.8% from $246,000 in June 2009, and down by 2.9% from $278,000 in May (see chart).

3. The year-over-year increase in median home prices in June is the eighth month in a row of an increase (starting in November 2009, which likely marks the bottom for home prices in CA), following 27 months of year-over-year declines.

4. Of the homes sold in June, 34.7% were properties that had been foreclosed on during the past year, down from 35.4% in May and down from 45.6% in June of 2009 (see chart). The last time foreclosure resales were as low was in March 2008, 28 months ago.

Seattle Shipping Boom: +45% Gain YTD from 2009


The chart above shows monthly shipping volume (TEUs = twenty-foot equivalent units, data here) at the Port of Seattle (America's 10th largest port, and third largest port on the West Coast).  As might be expected, shipping at the Seattle port is dominated by trade with China, to the extent that more than half (56%) of the shipping volume (by dollar amount) is with China, and the almost $19 billion of shipping with China in 2009 was more than the value of shipping with the next 100 countries combined.   

Shipping volume for June (190,129 TEUs) was 49% above last year's shipping in June, and this follows year-to-year increases of 57.38% in May, 57.2% in April, 39.4% in March, 48.2% in February and 21.7% in January.  Year-to-date, shipping volume at the Seattle port is above last year by 45.2%.  At this pace, annual Seattle shipping in 2010 will likely exceed both last year's shipping volume of 1.58 million TEUs and the 1.70 million TEUs in 2008, and possibly even the 1.973 TEUs in 2007.    

Saturday, July 17, 2010

Increased Worker Productivity Has Destroyed Millions of Jobs, and We Should Be Grateful


Ron Bullock, chairman of Bison Gear & Engineering Corp, writing in the Washington Examiner:

"More effective foreign competition has led to increasing manufactured-goods trade deficits and the loss of 7 million U.S. manufacturing jobs since 1980."

Don Boudreaux responds:

"This account – repeated ad nauseam – would be more plausible if it were also the case that U.S. manufacturing output, during this same time, had declined. But this output rose. Manufacturing output today is nearly 100 percent higher than it was 30 years ago (see chart). Importantly, manufacturing output is up while manufacturing employment is down for a reason that is cause not for the pessimism that universally attends accounts such as Mr. Bullock‘s but rather for optimism. That reason is substantial growth in productivity, which is the only source of sustained and widespread prosperity."

MP: The graphs above tell the story. U.S. Manufacturing output has more than doubled since 1975 (data here) while manufacturing employment has decreased by about 8 million jobs (data here), resulting in more than a three-fold increase in worker productivity (output per worker) since the 1970s. Therefore, it's the dramatic increase in the productivity of American workers that helps explain the loss of millions of manufacturing jobs, and this a a cause for optimism, not pessimism, as Don points out.

Just like we should celebrate, not mourn, the loss of millions of farm jobs due to the ongoing and significant increases in worker productivity that reduced farming jobs as a share of total jobs from 90% in the 1700s to the current level of only about 2.6% (see chart below, data here), we should also celebrate the loss of millions of factory jobs due to dramatic increases in worker productivity. Any time we can get more output with fewer workers, whether it's farming or manufacturing, it's a sure sign of economic progress and a rising standard of living.


Friday, July 16, 2010

2,319 Page Dodd-Frank Bill aka The “Lawyers’ and Consultants’ Full Employment Act of 2010"

Now that Congress has passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” it might be a good time to compare the 2,319-page financial reform bill (245 pages longer than the healthcare bill) to the previous bills listed below (and see graph above) that are considered among the most consequential legislative acts for banking and finance.

1. Federal Reserve Act (1913) - 31 pages.

2. Glass-Steagall Act (1933) – 37 pages.

3. Interstate Banking Efficiency Act (1994) – 61 pages.

4. Gramm-Leach-Bliley Act (1999) – 145 pages.

5. Sarbanes-Oxley Act (2002) – 66 pages.

Read more here at The Enterprise Blog.

Thursday, July 15, 2010

What's Your Political News IQ?

Take the latest Pew Research Center News Quiz

Markets in Everything: Currency Design, Part II

"India has finally got a symbol for the Rupee and joined a select club of countries whose currencies have an unique identity (see graphic above). The Union Cabinet on Thursday approved the design, which includes both the Devnagiri 'Ra' and the Roman capital 'R' and has two parallel lines running at the top. The parallel lines symbolise the equal to sign.

The symbol selected has been designed by an Indian Institute of Technology postgraduate D Udaya Kumar and was selected from among five short listed symbols."
 
See CD post here from March 2009 about the contest for the rupee symbol, with a $5,000 prize to the winner, almost 5 times India's per-capita GDP of $1,031 in 2009 ($2,941 on a Purchaing Power Parity basis, which takes into account the relative cost of living). 
 
HT: Sanil Kori

New Jobless Claims Fall to Lowest Level Since 2008


WASHINGTON – "New applications for unemployment benefits fell sharply last week as General Motors and other manufacturers skipped their usual summer shutdowns.  The Labor Department said Thursday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008 (see chart above).  It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week."

MP: The two-week drop of -46,000 initial jobless claims was the largest in a year, and brought the new claims number to 429,000, the lowest level since the week ending August 23, 2008. 

Wednesday, July 14, 2010

Monster Employment Index Europe: 16-Month High

European Online Recruitment Activity Reaches 16-month high, Reports Monster Employment Index

June 2010 Index Highlights:

1. The Monster Employment Index Europe reported two percent increase in online worker demand in June, with job opportunities up 12 percent year-on-year

2. Online job availability increased the most in production, manufacturing, maintenance and repair, from both a monthly and annual perspective

3. Germany registered the sharpest monthly increase among major countries, while Sweden continued to exhibit the most positive long-term trend

4. June marked the fifth consecutive month of expansion in online job opportunities,  suggesting the overall industry is on a path of gradual recovery. This is also reflected in the accelerated rate of annual growth compared to the previous month.

5. Job opportunities are now up 12 percent compared to June 2009 and their highest level since February 2009.

One Way to Find Rent-Controlled Apartments in Manhattan: Follow the Obituaries

Jessica Hagy.

Blog's About "Everything"

1. The "Blog" of "Unnecessary" Quotation Marks.

2. The blog of unnecessary apostrophe's, i.e. "apostrophe abuse."

Record High North Dakota Oil Production in May

Following an ongoing pattern, North Dakota continued to set more new records in May for monthly oil production (data here), see previous CD post here. The following are new, all-time record highs set in May:

Daily Oil Production: 296,423 barrels in May; 4.23% increase from April, 43.85% increase from May 2009, 89.5% increase from May 2008.

Total Monthly Production: 9,189,101 barrels in May, the first time that monthly production topped 9 million barrels.  Amazingly, oil production in North Dakota has doubled in just the last two years. 

Do They Have This in Canada or UK?



Cyrus Massoumi, CEO & Founder of ZocDoc:

"After I ruptured my eardrum on a flight, I couldn't find a doctor for 3 days. I knew that there had to be an easier way for patients to find doctors. That was when I had the idea for ZocDoc."

From TechCrunch:

"ZocDoc automates a task that can be incredibly frustrating and time-consuming for consumers. ZocDoc allows users to book their doctor appointments online, even for same-day appointments (around 40% of ZocDoc users schedule same-day appointments). Patients can see real-time availability of doctors in their area, confirm who accepts their insurance plan and read feedback and reviews of doctors from other patients.

The service currently offers patients more than 1 million available appointments across 20 specialties. The company has launched regional sites in New York, Washington DC, Chicago, and most recently San Francisco."

NY Fed Model: No Chance of a Double-Dip in 2011



The New York Federal Reserve updated its "Probability of U.S. Recession Predicted by Treasury Spread" today with treasury yield data through June 2010, and the Fed's recession probability forecast through June 2011 (see top chart above). The NY Fed's Treasury model uses the spread between the yields on 10-year Treasury notes (3.2% in June) and 3-month Treasury bills (0.12% in June) to calculate the probability of a U.S. recession up to twelve months ahead (see details here) using the spread between those two yields (3.08% in June, see bottom chart above). 

The Fed's model (data here) shows that the recession probability peaked during the October 2007 to April 2008 period at around 35-40%, and has been declining since then in almost every month. For June 2010, the recession probability is only 0.06% and by a year from now in June of next year the recession probability is only slightly higher, at only 0.18% (less than 1/5 of 1%).

According to the NY Fed Treasury Spread model, the chances of a double-dip recession through the middle of next year are essentially zero, see earlier CD post here

LA Port Shipping Boom: Highest June on Record

I reported yesterday that international trade reached a 19-month high in May, and today's report from the Port of Los Angeles provides additional statistical evidence of an ongoing boom in international trade activity.  Shipping volume reached a 22-month high in June of  730,318 TEUs, the highest monthly shipping activity since August of 2008 (see chart above), and 32.38% above June last year.  On a year-to-date basis, shipping activity at the LA Port is up by 15%. Other highlights include:

•Strengthening of the overall trade environment.

•Imports were up 32%, Exports were up 12%, empty containers were up 53%, overall up by 32% for month of June, YTD up 15%

•Vessel services were upsized to handle the surge of volume

•Carriers are bringing back peak season services – six more vessel arrivals over June 2009

•Vessels are arriving close to full capacity

•Large amount of empty container returns to Asia as a result of higher import volumes and to replenish the shortage of empty equipment in Asia    

•For the month of June, this year sets an all-time record high 

Double-Dippers Are All Wet: Towel Off Already

According to Arturo Estrella, professor of economics and department head at Rensselaer Polytechnic Institute:

Recession watch: Probability of recession for June 2011, based on the yield curve, is 0.2% (see chart above, data here). Probability has been higher than 30% before every recession since 1967.

Professor Estrella is featured in this Bloomberg article "Double-Dippers Are All Wet Ignoring Yield Curve":

"The yield curve has inverted prior to all of the last seven recessions, with no false signals since 1967, according to Estrella, whose website provides all kinds of research and data for the uninitiated.

Estrella uses the monthly average spread between the 3- month Treasury bill and the 10-year Treasury note to filter out the noise. The lead time between the appearance of a negative monthly spread and recession can be anywhere from three to 18 months. In the most recent instance, the spread turned negative in July 2006, and the U.S. economy slipped into recession in December 2007, according to the National Bureau of Economic Research, the official arbiter of the business cycle.

Slowdown, yes; recession, no. That’s the message of the yield curve. Its track record is impeccable. It beats forecasters, econometric models, even the Fed, which seems to resist the inherent message in the spread.  For all those double-dippers still splashing around in the pool, it’s time to get out, towel off and learn to love a slow recovery."

HT: Larry Kudlow

Tuesday, July 13, 2010

June So. California Home Sales Highest Since 2006

DQNews---"Southern California’s housing market continued its slow crawl toward normalcy in June as sales volume rose and the median price slipped back a notch from May, but remained 13 percent higher than a year ago. Red-hot, fire-sale deals continued to give way to mere bargains in the lower- cost inland markets where first-time buyers and investors have competed fiercely.  Highlights include:

1. A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for June 2009 (see chart).

2. The sales count was the highest since July last year when 24,104 homes were sold. It was the strongest month of June since 2006 when 31,602 homes sold. The average June since 1988 has had 28,086 sales.

3. The median price paid for a Southland home was $300,000 last month. That was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000 for June 2009 (see chart). The low point of the current cycle was $247,000 in April 2009, the high point was $505,000 in mid 2007.

4. Foreclosure resales accounted for 33.0 percent of the resale market last month, down from 33.9 percent in May, and down from 45.3 percent a year ago (see chart). The all-time high was February 2009 at 56.7 percent."

MP: More evidence of a continuing recovery in the California real estate market with June sales exceeding both May 2010 and June 2009 and reaching a four-year high for June, median home prices are above a year ago by 13.2%, and ongoing declines in foreclosures as a share of total sales.  Record-low mortgage rates likely also played a role, and will continue to support the real estate recovery in Southern California.  

What About "Farm Subsidy Inequality"?

Many people get upset about income inequality, and for example the fact that the top 1% earned almost 23% of total income in 2007 (see table above, IRS data here).  But not too many people seem to get very upset about the fact that "farm subsidy inequality" is even greater, see the table above (data here). 

For example the top 10% earned about 48% of all income in 2007, but the top 10% of the recipients of farm subsidies received 74% of all subsidies between 1995 and 2009 (an average of $445,000 per recipient).  For just the year 2009, the top 10% of recipients received a little less, 61% of the total, averaging about $48,000 per recipient.  Where's the outrage about "farm subsidy inequality?" 

The U.S. Trade Surplus With China: Farm Products

From today's Financial Times (free subscription may be required):

"As U.S. politicians lose sleep over the trade deficit with China and the dollar-renminbi exchange rate, American farmers are eyeing a record $14 billion in exports there this year. The U.S. had a $4 billion trade surplus in agricultural products with China in the first four months of 2010, helping shave the total deficit to $71 billion in the period.

The U.S. is the world’s largest exporter of soybeans and cotton, commodities for which China is the world’s top importer. Exports “exploded” after China’s 2001 accession to the World Trade Organisation, says the US Department of Agriculture. Growing livestock and textile industries have stoked demand for animal feed and fibres.

“It’s huge,” says Randy Mann, who cultivates corn, soybeans and wheat on 2,500 acres (1,000 hectares) in Kentucky and chairs a trade and international affairs committee of the American Soybean Association. “Probably a third of the price on the Chicago Board of Trade is related to the soybean market in China. That’s the impact it can have.” Soybean prices have doubled in a decade to $10 a bushel."

How Bad Would European Socialism Really Be?

Perhaps this is heresy to even ask this, but suppose we moved in the direction of greater European-style socialism - how bad would that really be?

According to IMF data for 2009 (available here), GDP per capita for the U.S. and some European countries are as follows (PPP values in parentheses):

1. Luxembourg: $104,512 ($78,395)
2. Norway: $79,085 ($52,561)
3. Switzerland: $67,560 ($43,007)
4. Denmark: $56,115 ($35,757)
5. Ireland: $51,356 ($39,468)
6. Netherlands: $48,223 ($39,938)
7. U.S.A.: $46,381
8. Austria: $45,989 ($38,939(
9. Finland: $44,492 ($33,556)
10. Sweden: $43,986 ($35,965)
11. Belgium: $43,533 ($35,422)
12. France: $42,747 ($33,679)

Maybe another way of looking at this is that free market capitalism is so strong and creates so much wealth, prosperity and abundance, that even European-style socialism isn't enough to really impede the wealth-creating process?  Even with European-style socialism, there are six European countries that have higher per-capita GDP than the U.S. and another five that aren't far behind us (Update: using PPP per-capita GDP above, the comparison changes significantly), so perhaps Jet USA in the cartoon above would fly right through the clouds of European socialism, and barely even slow down?      

Comments welcome. 

ASA Staffing Index Level 28.5% Above Last Year

The weekly American Association Staffing Index for temporary help and contract work continues to show strong gains compared to the same month in the previous year, and the index has increased in every week this year vs. 2009.  For the last eleven weeks (starting April 19) the weekly gains have been above 20%, and for the last 20 weeks (starting Feb. 15) the gains have been above 10%.  Compared to last year, the ASA Index was 28.5% higher during the 27th week of this year (June 28-July 4 this year). 

U.S. Trade Reaches 19-Month High of $314b in May

The BEA released monthly data today on U.S. International Trade for May (link), and reported that "Total May exports of $152.3 billion and imports of $194.5 billion resulted in a goods and services deficit of $42.3 billion, up from $40.3 billion in April, revised.  May exports were $3.5 billion more than April exports of $148.7 billion. May imports were $5.5 billion more than April imports of $189.0 billion."

Total U.S.international trade (exports + imports) reached a 19-month high of $314 billion in May, the highest level since October 2008, and 27.5% above the April 2009 low of $246 billion (see chart above).  Further, international trade volume has increased in 10 out of the last 13 months, providing further evidence that the economy started on a recovery path last summer and continues to make solid gains almost every month.    

"Money Laundering" in Zimbabwe: Literally

"Zimbabwe's coalition government officially declared the U.S. dollar legal tender last year to eradicate world record inflation of billions of percent in the local Zimbabwe dollar as the economy collapsed. $1 bills are essential currency in Zimbabwe and putting them through the washing machine is the only way to ensure they remain hygenic. 

Low denomination U.S. bank notes change hands until they fall apart, and the bills are routinely carried in underwear and shoes through crime-ridden slums. Some have become almost too smelly to handle, so Zimbabweans have taken to putting their $1 bills through a spin cycle and hanging them up to dry with clothes pins."

Link.

Monday, July 12, 2010

Bolt Won't Return to High-Tax UK Until 2012

UK Telegraph -- "Organizers of next month's Aviva London Grand Prix at Crystal Palace had hoped to stage the first 100 meters head-to-head of the season between Bolt, Tyson Gay and Asafa Powell but the triple Olympic champion is set to shun the meeting because it would expose him to a huge tax bill. Unless the tax rules are relaxed, athletics administrators fear British fans will be denied the chance to see the sport's biggest star in action again until he returns to the capital in two years' time to defend his Olympic titles.

Since April, foreign sports stars competing in Britain are liable for a top rate of income tax of 50 percent but, controversially, the tax is charged not just on the money they earn in Britain but on a proportion of their worldwide sponsorship income."

MP: See previous CD posts on how high taxes drive highly-paid professional athletes away here, here, and here, illustrating the basic economic principle that "if you tax something, you get less of it."

HT: Kyle Stingily

Dallas Morning News Editorial Writer Coined the Term "Right to Work" on Labor Day in 1941


Dallas Morning News editorial writer William Ruggles (pictured above) "thought every American had a right to work. He used those words in an editorial on September 1, 1941 (Labor Day) asking for a 22nd amendment to the U.S. Constitutional guaranteeing the right to work with or without union membership. In so doing, he coined a phrase and sparked a movement that would change the labor landscape in America," according to a recent story in the Dallas Morning News as part of its 125th anniversary celebration.   Here are some excerpts from the article:

“The answer seemed to me to be an amendment to the federal Constitution that would be so clear and unequivocal that no jurist could argue against its meaning,” Ruggles said later. Texas passed its right-to-work law in 1947.

Although that constitutional guarantee never materialized, 22 states enacted legislation patterned after the editorial. These laws prohibit agreements between trade unions and employers that make membership and payment of union dues or fees a requirement of employment even if the company is operating under union-negotiated bargaining agreements. 

Love them or hate them, economists, historians and lawyers agree that right-to-work laws were the leading factor in the Sun Belt’s success. “Economic growth in places like Georgia and Texas was driven by the combination of the right to work and the cost of labor,” says Al Niemi, dean of the Cox School of Business at Southern Methodist University. “Since the right to work dictated the cost of labor, right to work was the single most important driver.”

HT: Jeff Perry

Dodd-Frank Cave to Hollywood: No Movie Futures

LA Times (June 14, 2010) -- "Box- office futures have passed a final regulatory hurdle, clearing the way for the first bets to be placed in the near future, and overcoming objections by Hollywood that sought to block it. In a 3-2 vote, the Commodity Futures Trading Commission on Monday afternoon approved a contract created by the company Media Derivatives that would allow traders to bet on the gross receipts that a movie pulls in during its opening weekend.

The idea of betting on future box-office receipts has faced vociferous opposition from the movie industry, led by the Motion Picture Assn. of America, which has said that the contracts would be vulnerable to manipulation and could even hurt how movies perform in theaters.

The decision Monday could still be counteracted by legislation that seeks to ban any trading in box-office futures. The Senate has approved such legislation, but it would need to be approved by the House of Representatives to make it into the final financial reform bill."


The Wrap (July 1, 2010) -- "Hollywood Stock Exchange (HSX.com) laid off the majority of its staff on Thursday, TheWrap has learned.  The move comes as HSX's parent company Cantor Fitzgerald's long-gestating plans to sell shares of box-office earnings hit a legislative roadblock last week.

Bowing to pressure from big studios, the House of Representatives and Senate have included a ban on movie box-office futures trading in their proposed financial reform legislation. On Monday, shortly after getting federal approval for Cantor's trading plan, exchange president Richard Jaycobs admitted that congressional action will prevent the company from moving forward."

Wheat Subsidies: A Scam for the Ages

A great example from today's The Gartman Letter about how government agricultural subsidies generate significant and costly economic distortions and inefficiencies: 

"One of the axioms of economics is the simple notion that if you subsidize the production of anything you are going to get more of it… and usually more of it than you need. Our favorite example of that was back in the 1970s and 1980s when the US government subsidized durum wheat production in the Dakotas primarily. We got more durum wheat than we could use, so we had to subsidize the export of that wheat to Italy primarily.

Italian pasta makers gladly took the subsidized overproduction at newly subsidized prices that were below the world price of that wheat, and produced wonderful pastas that they exported to the US. The US pasta producers protested and got the government to put a tariff on the imported pasta! In other words, American tax payers “paid” to have too much wheat grown; “paid” again to have that excess wheat exported and “paid” again to buy the pasta they cherished from the Italian pasta producers… and all along the way there were more and more government employees needed to supervise each level of subsidies and tariffs. It was a wonder to behold! It was a scam for the ages."

Dennis then uses this example to ask "how anyone could be surprised to find that new home sales have fallen off the edge of a precipice in recent months following the “incentives” for buying new homes put into effect late last year and expiring several months ago this year?"

Update: Wheat farmers continue to receive very generous subsidies, more than $30 billion has been paid out between 1995 and 2009 to more than a million farmers, see data here and here.  More than $2 billion has been paid out in each of the last two years (2008 and 2009). 

Sunday, July 11, 2010

BDI Weakens; Other Shipping Measures Are Strong

I have had some repeated requests from some loyal CD readers to get an update on the Baltic Dry Index (you can always go here on your own any time you need your "BDI fix"), which has been in decline for the last month after reaching a YTD high in late May (see chart above).  Dennis Gartman addressed this recent decline in the BDI in his newsletter on July 8, where he quoted Julian Jessop, Chief Economist of Capital Economics:

"The BDI is a composite measure of the cost of hiring a ship to transport dry bulk commodities such as grains, coal and metal ores. It is therefore understandable that the near -50% fall in the index since late May is attracting plenty of attention. However, there are two reasons to be wary of making big calls on commodities (or anything else) on the basis of the BDI. For a start, fluctuations in the index could be driven by changes in the supply of shipping as well as in the underlying demand for commodities transported by sea. For example, a fall in the BDI could reflect an increase in the number of ships available to carry dry commodities (either new-builds or conversions from other uses, such as tankers. Similarly, the BDI might be distorted by temporary port closures, changes in the cost of fuel and insurance, and many other factors."

Dennis Gartman then added, "We shall accept it for perhaps half of the decline. We might even willingly accept it for two thirds of the decline, but there is more at work here than a mere increase in supply. Demand too must be weak, and it is this weakness that has our attention."


Other shipping statistics that measure physical volumes (TEUs) rather than shipping rates have been showing positive increases in recent months, see CD posts here for the port of Los Angeles and here for the port of Seattle. Also Scott Grannis has reported recently on the ongoing strength in the HARPEX Shipping Index.  As Dennis Gartman suggests, we should definitely pay attention to the BDI if it continues to weaken, but we should also pay attention to the other indicators of shipping activity, many of which continue to show signs of strength, including the HARPEX, rail traffic, LA Port shipping volume, Seattle Port shipping, and U.S. trucking tonnage.