The Great Recession in the US Is Worse Than We Were Previously Told
by ilene - July 30th, 2011 2:40 am
Courtesy of Jesse’s Cafe Americain
And Rick Davis of Consumer Metrics Institute
With all the hoo-hah over the deficit fandango, relatively little attention was paid to the latest GDP number and the prior revisions to growth.
The US needs to get serious about jobs creation and median wage growth. Austerity does not facilitate growth, despite the corporatist spin to the contrary.
The problem with the first stimulus package was that it was too heavily weighted to tax cuts, and not programs to stimulate domestic growth and investment, rather than consumption. Cutting taxes, including capital gains taxes, does not promote growth. Reducing government in and of itself does not promote growth. These are fallacies.
To accomplish its goals, the US must prioritize its spending away from financial and military adventurism, and let go of the false theories of efficient markets and trickle down growth.
That will be difficult given the current structure of the country’s leadership and the embedded nature of its crony capitialism. ~ Jesse
Consumer Metrics Institute
Lakewood, Colorado
July 29, 2011BEA Reports 1Q-2011 and "Great Recession" Far Worse Than We Were Previously Told
Included in the BEA’s first ("Advance") estimate of second quarter 2011 GDP were significant downward revisions to previously published data, some of it dating back to 2003. Astonishingly, the BEA even substantially cut their annualized GDP growth rate for the quarter that they "finalized" just 35 days ago — from an already disappointing 1.92% to only 0.36%, lopping over 81% off of the month-old published growth rate before the ink had completely dried on the "final" in their headline number. And as bad as the reduced 0.36% total annualized GDP growth was, the "Real Final Sales of Domestic Product" for the first quarter of 2011 was even lower, at a microscopic 0.04%.
And the revisions to the worst quarters of the "Great Recession" were even more depressing, with 4Q-2008 pushed down an additional 2.12% to an annualized "growth" rate of -8.90%. The first quarter of 2009 was similarly downgraded, dropping another 1.78% to a devilishly low -6.66% "growth" rate. And the cumulative decline from 4Q-2007 "peak" to 2Q-2009 "trough" in real GDP was revised downward nearly 50 basis points to -5.14%, now officially over halfway to the technical definition of a full fledged depression.
One of the consequences of the above revisions to history is that the BEA headline "Advance"
…
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DiggMeasuring the Performance of the Ivy Portfolio
by Chart School - July 30th, 2011 12:35 am
Courtesy of Doug Short.
I’ve been posting a monthly moving average update for the five ETFs in featured in Mebane Faber and Eric Richardson’s Ivy Portfolio since the spring of 2009, when I featured my review of the book.
In addition to the monthly updates, last year I made a couple of generic studies of momentum investing with moving averages.
● Learning from the S&P 500 Monthly MAs
● Learning from the Nikkei Monthly MAs
Investing strategies are not the primary focus of my website, and I don’t personally track the performance of the Ivy Portfolio other than to highlight the monthly signals. For ETF performance tracking and backtesting, I use ETFReplay.com, an excellent website for analyzing the performance of individual ETFs and ETF portfolios based on customized moving-average strategies. There are many free tools on ETFReplay.com. However performance backtesting of portfolios does require a paid subscription.
The image below illustrates my research on the Ivy Portfolio since 2007. If you click the image, you’ll open a HUGE version that also shows the monthly performance over the complete range as compared to SPY (SPDR S&P 500 Index). For cash, I’ve used SHY (Barclays Low Duration Treasury (2-yr).
Now, the portfolio in this illustration doesn’t *exactly* match the Ivy five. I picked 2007 as my starting point to show the performance from before the market peak in the Fall of that year. Thus I was forced to make one substitution for the Ivy ETFs — EFA (iShares MSCI EAFE Index Fund) in place of VEU (Vanguard FTSE All-World ex-US ETF), which was launched in early 2007 and didn’t produce a 10-month signal until December of that year. But the substitution presumably understates the all-Vanguard IVY portfolio: I make this assumption because the latest VEU monthly close has outperformed EFA since the March 2009 monthly close (84.5% versus 73.0%).
For anyone interested in researching momentum investing with ETFs, the ETFReplay.com website is an outstanding resource, one that I’m pleased to include in my dshort Favorites.
Sabrient Divers – 07/30/2011
by Sabrient - July 30th, 2011 12:00 am
Top 5 Divers |
||||
| Stock | Rating | Analysis | ||
| FST | STRONGSELL | Projected value for Forest Oil is diminishing and long term growth rates are declining — someone throw them a lifeline. | ||
| EMCI | SELL | We project an unfortunate decrease in value for EMC Insurance, and we’re not alone in this opinion as other analysts are also reducing expectations. | ||
| DTG | SELL | Projected value for Dollar Thrifty is diminishing and long term growth rates are declining — someone throw them a lifeline. | ||
| AGN | SELL | Degradation in recent earnings and declining long term growth prospects are pushing Allergan lower and lower in our stack. | ||
| EXP | STRONGSELL | We project an unfortunate decrease in value for Eagle, and we’re not alone in this opinion as other analysts are also reducing expectations. | ||
BaNaNa AMeRiKa con’t
by Zero Hedge - July 29th, 2011 11:44 pm
Courtesy of ZeroHedge. View original post here.
Submitted by williambanzai7.
. 
SELL EVERYTHING IN THE VAULT! 
Getting Technical: Weekend Update
by Chart School - July 29th, 2011 10:35 pm
Courtesy of Doug Short.
Here’s the latest weekend update from Serge Perreault, a Chartered Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.
Due to a lack of a strong momentum last week, the S&P500 bounced off the resistance of a sideways trading range formation dating back to January, broke its EMA10 on 10.4% above-average volume and is now testing its EMA40.
Note: For newcomers to technical analysis, here are brief explanations for the two key indicators that Serge features:
Pyrrhic Victory and Q&A with Kirk Report
by Zero Hedge - July 29th, 2011 10:29 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Vitaliy Katsenelson.
Dictionary.com
A quick thought on the debt-ceiling debacle. I believe that by August 2nd we’ll see the debt ceiling increased, as the cost of not doing so is simply unknown and most likely too high. However, it will be a Pyrrhic victory for whatever side claims it, as the victory will undoubtedly undermine the world’s trust in the US dollar and its debt ($37.5 billion leaving money-market funds that invest in Treasuries in one week proves the latter point already).
I analyzed Brown & Brown about a year ago (May 2010), and judging from the latest quarter this analysis it is still very relevant today (here is a link).
I was interviewed by Charles Kirk, the host of KirkReport.com.
Q&A With Vitaliy Katsenelson
A number of members have requested that I interview a value-focused investor with a longer-term time horizon. While there are many people I could choose, I thought it was about time I finally interviewed Vitaliy Katsenelson who fits that profile. Many of you know Vitaliy from his website, Contrarian Edge, as well as his books on investing.
While there are thousands of traders who read The Kirk Report daily, there are still just as many who utilize longer-term approaches and who are focused on finding value versus short-term momentum. No matter what your strategy or focus, we hope you find this interview helpful.
Kirk: Hi, Vitaliy! It’s great to have you here with us today. While I know many are familiar with you and your background, please start out by telling us a little bit about yourself and how you began to learn about the markets and investing.
Vitaliy: I was born in Murmansk, a city in northwest Russia, located above the Arctic Circle (think long winters with little daylight, intense cold and beautiful white nights in the summer). Murmansk, on the Barents Sea, is the home of the only Russian shipping port that doesn’t freeze in the…
WHy DeFauLTiNG oN THe NaTioNaL DeBT WiLL Be AWeSoMe!
by Zero Hedge - July 29th, 2011 9:44 pm
Courtesy of ZeroHedge. View original post here.
Submitted by williambanzai7.
WHY DEFAULTING ON THE NATIONAL DEBT WILL BE AWESOME
What’s the matter, Gentle Reader, got the blues?
Getting repeatedly cornholed by The Party leaving you a little raw?
Tea Party says defaulting on our debts is a good thing and that makes you cranky?
Worried that America is about to become a bankrupt third world soccer playing shithole where Spanish speaking chickens wander the street and dysentery is the national pastime?
Well of course you are.
But you know, that’s not necessarily a bad thing.
Becoming a Third World shithole, I mean.
You’ve got to look at the silver lining.
Now, now, quit sniffling. I know it’s not easy seeing that the glass is half full. You’re scared and nervous and thinking about getting stinkin’ drunk, aren’t you?
Me too – well, minus the scared and nervous part anyway.
So how’s about you quit Bogarting the Victory Gin, Winston, and pass it over here? If Oceana is gonna burn, we here at MiniStone say get out the Fiddles and Par-Tay!
What?
Oh for crying out loud. Look, don’t be a double plus ungood wet blanket.
Sure, there’s no doubt this permanent state of emergency can be depressing, what with the Default Crisis and all (heh heh, default crisis, see what I did there with the Orwellian 1984 pun? Double plus subtle, eh?). We were just getting over Budget Crises 2011 or 2010: The Prequel or whatever episode it was. And before that it was the Health Care Crisis and the Mortgage Crisis and, of course, there was the Bailout Crisis and the Social Security Crisis and the Medicare Crisis and who can forget my favorite, The Defense of Marriage Crisis? There was the Election Crisis and the Birth Certificate Crisis and There’s A Stinky Black Man in the White House Crisis and well, hell, I forget, it’s all just starting to blur together.
Today it’s the Debt Ceiling Crisis.
Crisis, crisis, crisis! It’s always something. What is it this week? War with Eurasia or war with Eastasia? What’s next? Show of hands, who really cares? I mean really? So long as they keep the conflict going, that’s the important thing. It’s not the battles that matter, it’s the war. Got to keep fighting. Hearts and minds you know.
And hey, so what if we default on America’s debt?
There are a lot of advantages…
How China Ate America’s Lunch
by Zero Hedge - July 29th, 2011 8:26 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Luc Vallee.
In response to one of my recent posts, The Sceptical Market Observer: A New Set of Crisis Villains, Clif Carothers sent me a very insightful and elaborate comment on the relative evolution of the economies of China and the United States over the last 35 years. He claims, very convincingly, that China has deliberately and successfully exploited Europe and America’s wealth to leverage its own development. Less a conspiracy than a brilliantly executed plan, the bottom line is that China’s strategy worked. The brilliant exposé below should be an eye opener for most.
Originally entitled “Kyoto Protocols Would Have Accelerated China’s Plan to Reverse-Exploit EurAmerica”, I changed the title of the piece because Clif’s thesis covers much more ground. It is a fascinating story and I am very proud to present it here.
If you are patient and read the whole piece, you will get to the Kyoto Protocol part of the story. America’s response to Kyoto somehow suggests that not everyone is sleeping at the switch. But as Clif discusses towards the end of this post, the level of awareness about what needs to be done in this country needs to be raised if we are to succeed in getting back into the game.
Here it goes:
My set of Villains…
China had a better strategy and executed it brilliantly
Multinational Corporations (MNCs) saw an opportunity to ride the wave of America’s destruction for profit and the business of business is profit so…
Bankers are in the business of transferring capital flow to the highest returns and those are to be found in China so..
Politicians are in the business of getting elected and that comes mostly from having more campaign funds from MNCs and bankers than one’s opponent sooooooooo….
In 1978, the year China emerged onto the world stage with its four modernizations, China, a country with four times the population of the United States, had a paltry gross domestic product of $216 billion, less than eight percent of the United States. China exposed her strategy of four modernizations to the world as if to say, “Please invest in China and we will ensure that our workforce is educated, and that our business infrastructure is stable for your investment.” Yet, this openly expressed strategy, that may have seemed to the rest of the world as…
Everyone But the Rating Agencies Knows the U.S. Has Already Lost Its AAA Rating
by ilene - July 29th, 2011 8:06 pm
This post by JDA probably explains this chart from Business Insider. - Ilene
Courtesy of Jr. Deputy Accountant
This is from Jim Rogers’ wise mouth:
“Everyone already knows that the U.S. has lost its AAA status,” Rogers said. “Anyone who knows what is going on, already knows that the U.S. is now the biggest debtor nation in the history of the world. It’s only S&P and Moody’s that haven’t figured out what is going on. The investment world knows that the U.S. is not AAA.”
Anyone feel like writing a memo?
Going Bananas
by ilene - July 29th, 2011 7:58 pm
Courtesy of Michael Panzner of Financial Armageddon
It’s been a while since I discussed our country’s increasing resemblance to a banana republic, but four recent reports essentially confirm that we’re more like those third world countries we used to make fun of than many people think. Among the things we have in common:
1. Significant corruption
"Poll: Plurality Say Congress is Corrupt" (UPI)
A plurality of Americans say they think most members of Congress are corrupt, with less than a third saying the opposite, a Rasmussen Reports survey indicated.
The survey, released Wednesday, also indicated a staggering 85 percent of voters said they believe congressional members are interested in advancing their own careers rather than helping people.
Forty-six percent of likely voters said they view most members of Congress as corrupt, up 7 percentage points from June and the highest finding yet, Rasmussen Reports said.
2. Deteriorating infrastructure
"Infrastructure Woes Take Toll on US Economy-Engineers" (Reuters)
Failing infrastructure will cost the United States billions of dollars in lost productivity, income and trade in coming decades, according to a civil engineering report released on Wednesday that said the impact on gross domestic product could reach $2.7 trillion.
The American Society of Civil Engineers regularly tallies the amount needed to upkeep declining U.S. roads, bridges and waterways. It said the country will need to invest roughly $220 billion annually to maintain the country’s infrastructure in "minimum tolerable conditions."
It said the gap between infrastructure needs and federal funding is growing.
"If present trends continue, the funding gap for rail and bus transit, seen as 41 percent in 2010, is expected to increase to 55 percent in 2040," it said. "The expected gap in highway funding, 48 percent in 2010, is expected to increase to 54 percent by 2040."
3. Reckless fiscal policies
"Republican Leaders Voted for Debt Drivers They Blame on Obama" (Bloomberg)
House Speaker John Boehner often attacks the spendthrift ways of Washington.
“In Washington, more spending and more debt is business as usual,” the Republican leader from Ohio said in a televised address yesterday amid debate over the U.S. debt. “I’ve got news for Washington – those days are over.”
Yet the speaker, House Majority Leader Eric Cantor, House Budget Chairman Paul Ryan and Senate Minority Leader Mitch McConnell all voted for major drivers of the nation’s debt during the past decade: Wars in Afghanistan and Iraq, the…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(