by ilene - March 27th, 2015 9:40 pm
Courtesy of Mish.
The Patriot act expires in June, and anyone in their right mind would wish the entire concept to go away entirely. NSA Spying has a 100% perfect track record of failure.
Sadly, the answer to the question Would NSA Data Surveillance End With Patriot Act? is a resounding “No”.
The National Security Agency would lose its legal justification for collecting data on Americans’ phone and email activity if Congress does not reauthorize the Patriot Act by June 1, but privacy advocates are skeptical about whether that would mean the end of the controversial surveillance program.
President Barack Obama has called on Congress to pass a bill that would end the bulk surveillance program while keeping certain spying powers intact for national security reasons. The clock is ticking, however, as the NSA loses its legal authority for domestic surveillance provided by Section 215 of the Patriot Act in June. If Congress does not renew that provision then the Obama administration will not push to continue the program, although its absence would damage America’s national security, says Ned Price, a spokesman for the National Security Council.
“If Section 215 sunsets, we will not continue the bulk telephony metadata program,” Price tells U.S. News. “Allowing Section 215 to sunset would result in the loss, going forward, of a critical national security tool that is used in a variety of additional contexts that do not involve the collection of bulk data.”
The NSA, however, could invoke other legal powers to continue the data collection program without Section 215 of the Patriot Act, says Harley Geiger, senior counsel for the Center for Democracy and Technology advocacy group. The government has also conducted bulk collection of email metadata in the past using Section 214 of the Patriot Act, for instance, which is also called the Foreign Intelligence Surveillance Act “pen trap statute,” Geiger says.
“The FISA pen trap statute does not have a sunset and would not be affected by a sunset of Section 215,” he says. “For these and other reasons, we believe that legislation to end bulk collection would be more effective than merely letting Section 215 sunset. However, we believe Congress should sunset Section 215 if effective reform is not possible.”
Passing surveillance reform may be difficult in a Congress controlled by Republicans, considering
by ilene - March 27th, 2015 6:08 pm
Courtesy of John Rubino.
Among the many things that mystify economists these days, the biggest might be the lingering perception, despite six years of ostensible recovery, that the average person is getting poorer rather than richer. Lots of culprits come in for blame, including the growing gap between the 1% and everyone else, negative interest rates (which starve savers and retirees of income) and the crappy nature of the new jobs being created in this recovery.
But one that doesn’t get much mention is the changing nature of the bills we’re paying. It seems that Americans are spending a lot more on health care, which leaves less for everything else. Here’s an excerpt from a MarketWatch report of a couple of weeks back, with two charts that tell the tale:
The percentage of money U.S. consumers spend on health care rose in 2014 for the third straight year to another record high, according to one government measure.
Some 20.6% of total consumer spending in 2014 was devoted to health care, including prescription and over-the-counter drugs, annual figures from the Commerce Department report on personal expenditures show. That’s up from 20.4% in 2013.
Health-care expenses has been rising for decades regardless of government efforts to control costs. The percentage of consumer spending on health care rose from 15% in 1990, topping 20% for the first time in 2009.
With the health-care pie continuing to expand, consumers are paying the same or less as percentage of their spending on most other goods and services compared to 10 years ago.
Americans spend a smaller share of their money on cars and clothing, among other things. The percentage of money they spend on housing and going out to eat is basically unchanged over the longer run.
Not surprisingly, the only other major category to show a sustained increase in spending over the past 25 years is education. The share of money Americans spend on college has climbed to 1.59% from 0.9% in 1990.
————– End of Excerpt ————-
What this means is that we’re spending more on two big categories — health care and education — that don’t make us feel richer. Health care, of course, is just maintenance. It’s like changing a car’s oil or fixing a broken transmission, which only restores the status quo rather than…
by ilene - March 27th, 2015 4:30 pm
Courtesy of Lance Roberts via STA Wealth Management
This weekend's reading list is a bit of a hodge-podge of reads on a variety of different topics. However, before we get into it I wanted to address an interesting statement by the Atlanta Federal Reserve President Dennis Lockhart who Thursday:
"Atlanta Federal Reserve Bank president Dennis Lockhart said on Thursday there was little risk of a misstep that would force the Fed to lower rates once it begins raising them.
The economy is in solid shape to weather the upcoming turn to tightening monetary policy Lockhart, said at an investment education conference in Detroit.
"'Conditions are pretty solid,' said Lockhart, who regards an initial rate hike at the June, July or September Fed meetings as a high probability. 'I take the decision pretty seriously,' Lockhart said. 'Once we start, I want to be able to move deliberately towards higher rates.'"
This is a pretty common meme among the majority of economists as of late, and particularly surprising coming from the Atlanta Fed President considering:
- The U.S. is currently more than 6-years into an economic recovery (long by historic standards), and;
- The Atlanta Fed's own GDPNow forecast is pegging a near 0% growth rate for the first quarter.
But let's take a look at the decline in durable goods orders this week. Paul McCulley, the former legendary economist and fund manager at PIMCO, viewed durable goods a bit differently than the mainstream analysis generally given. He preferred the year-over-year trend of the 3-month moving average of core CAPEX orders as an indicator of broader economic activity over the next few quarters. If you are currently "bullish" on the direction of the US economy, you may want to take a closer look at the chart below.
Secondly, core CAPEX has been negative on a monthly basis for 6-consecutive months. Since 1992, there have only been 5-instances where core CAPEX orders have been negative for 4-or more consecutive months. The first three instances were leading indicators of future recessions. In 2012, there were 6-consecutive months of decline as the economy got very close to a recession but was saved by Central Bank interventions and the warmest winter in 65-year. The…
by ilene - March 27th, 2015 4:20 pm
Economy in U.S. Grew 2.2% in Fourth Quarter on Consumer Spending — The U.S. economy expanded at 2.2 percent annualized pace in the fourth quarter, led by the biggest gain in consumer spending in eight years.
A Physicist Is Building a Time Machine to Reconnect With His Dead Father — The hour is late.
His scientific papers were published years ago, filled with equations wrought by the energies of a younger man. But at 69, theoretical physicist Ron Mallett still goes to work every day to build a time machine based on his most elegant construct…
[Photo: American theoretical physicist Dr. Ronald Mallett pours dry ice into a ring laser at a laboratory at the University of Connecticut on March 23, 2015. Photographer: Scott Eisen/Bloomberg]
If getting trapped in a time warp doesn't scare you, how about pirates and bombs?
Add Bombs to Worries for Ships Dodging Pirates, Terror Off Yemen — When it comes to world trade, a 17-day shortcut trumps terror, piracy and now bombs.
With the Biotech sector significantly outperforming other areas of the market, people are continuing to ask if the sector is in a bubble.
Credit Suisse is out with a note this morning that takes a closer look at this debate.
"We are in completely unprecedented times for the stock performance of the biotech sector," the note says, going on to point out that since the start of 2011 the NYSE Biotech Index has delivered 204 percent while the S&P 500 is up 64 percent in that time frame, and it's also up nearly 400 percent since the previous peak reached during the dotcom bubble of 1999 and 2000.
Google to Develop Robot Surgical Devices in Pact With J&J— Google Inc. is joining forces with Johnson & Johnson to develop a robotic-assisted surgical program, moving into a growing field…
by ilene - March 27th, 2015 4:20 pm
Courtesy of David Stockman
They were trying to put in a bottom—–again! The sell-off earlier this week amounted to the sixth sizeable “dip” since November 20—-so the market’s ingrained reflex was back at work all afternoon, trying to scoop up the “bargains”.
But the roundtrip to the flat-line shown below is not a classic “wall of worry” and its not a “bottom” that’s being put in. This market is dumber than a mule, and the nation’s central bank and its counterparts around the world have made it so.
The plain truth is that six years of torrential money printing and worldwide ZIRP have not happened with impunity. On the one hand, massive, sustained and universal financial repression caused an artificial growth and investment boom in much of the world, especially China and the EM, which has now run out of steam and is visibly and rapidly cooling.
There is probably no better proxy for the global investment boom than the spot price of iron ore because it captures China’s massive infrastructure construction spree and the waves of mining, shipbuilding, steel-making and construction materials spending that it set off all over the world. But this huge tidal wave has now crested, leaving behind the worst of both worlds——cooling demand and still expanding supply.
For the first time since around 1980, China’s steel consumption is projected to fall in 2015——with demand slumping from 830 million tons last year toward 800 million tons, and that is just the beginning as China’s credit-fueled construction frenzy finally comes to a halt. In fact, during the boom that took iron ore prices from a historic level of around $20-30 per ton to a peak of nearly $200 in 2011, China’s iron and steel capacity grew like topsy. Production capacity expanded from about 200 million tons at the turn of the century to upwards of 1.1 billion tons at present.
Yet this year’s decline of demand to around 800 million tons does not begin to reflect the coming adjustment. That’s because there is still a residual component of one-time demand in that number that is in no way sustainable. Even if the pace is slackening, the Chinese are still building high-rise apartments which will remain empty and airports, roads, rails and bridges that are hideously redundant.…
by ilene - March 27th, 2015 4:17 pm
Courtesy of Mish.
Of S&P 500 companies providing first-quarter outlooks, MarketWatch reports 84% have been negative as Profit Warnings Pile Up.
Ahead of the start of earnings reporting season, which unofficially kicks off when Alcoa Inc., reports results on April 8, about 84% of the companies that have provided first-quarter outlooks gave negative outlooks. That’s above the 81% that warned Q1 2014, and the five-year average of 68%.
I believe that yellow highlight I added should say Q3. More importantly, it would have been nice for MarketWatch to actually link to FactSet because it contains some interesting charts and analysis.
Let’s dive into the FactSet Earnings Insight Report for first quarter of 2015.
- Earnings Growth: For Q115, year-over-year earnings for the S&P 500 are projected to decline by 4.6%. If the index reports a year-over-year decline for the quarter, it will be the first time since Q 3 2012 (-1.0%).
- Earnings Revisions: On December 31, the estimated earnings growth rate for Q1 2015 was 4.2%. All ten sectors have lower growth rates today (compared to December 31) due to downward revisions to earnings estimates, led by the Energy sector.
- Earnings Guidance: For Q1 2015, 85 companies have issued negative EPS guidance and 16 companies have issued positive EPS guidance.
- Valuation: The current 12-month forward P/E ratio is 16.7. This P/E ratio is above the 5-year (13.7) average and the 10-year (14.1) average for the index.
- Earnings Scorecard: Of the 16 companies that have reported earnings to date for Q1 2015, 14 have reported earnings above the mean estimate and 10 have reported sales above the mean estimate.
Earnings vs. Price
Q1 2015 Earnings Season: By the Numbers Overview
Analysts and corporations continue to lower expectations for earnings for the S&P 500 for the first quarter. On a per-share basis, estimated earnings for the first quarter have fallen by 8.2% since December 31. This is the largest decline in the bottom-up EPS estimate for a quarter since Q1 2009.
by ilene - March 27th, 2015 3:12 pm
Courtesy of Mish.
Is gold about to “run out”? The correct answer to that question is the likelihood of that happening is precisely 0%.
However, that is not the conclusion one would come to from the Zerohedge headline Peak Gold? Goldman Calculates There Is Only 20 Years Of Gold Supply Left.
Zerohedge supplied a couple of charts.
Diamonds Aren’t Forever
Gold About to Run Out?
Zerohedge comments …
If the “known reserves” of gold plunge in the coming decade, no matter how many gold futures and GLD short sales are conducted by the BIS, the price will have to go up, and it will go up high enough to where a new surge of gold miners will come online and find thousands of new tons of gold reserves around the globe.
Unless they don’t, and Goldman is correct that “peak gold” may have arrived. This will be even more true if over the coming years the long overdue fiat economic panic finally washes over the globe, and a revulsion toward central bank policies forces a scramble into gold whose value (if not price since fiat currencies will be redundant) soars.
The answer is unclear, but what is certain is that like the price of oil over the past decade and until last fall when price discovery finally became somewhat credible, what happens in the physical realm has absolutely zero marginal impact on the price of commodity which has about 100 ounces in deliverable paper contracts for every ounce in underlying. It will be only after the gold price distortions via the derivative market are eliminated that such trivial price-formation forces as supply and demand are once again relevant.
Gold Not About to Run Out …
SNB Warns of “Temporary Deflation”, Promises Further “Unconventional Measures” Including Forex Interventions to Achieve “Stability”
by ilene - March 27th, 2015 3:30 am
Courtesy of Mish.
Swiss Bonds are negative out to 10 years. They briefly went negative out to 15 years in the wake of the sudden removal of the Swiss National Bank peg to the euro back on January 13 as shown in the following chart.
Swiss 15-Year Bond Yield
Yield on 20-year Swiss bonds plunged to 0.10% on January 13 as well. Today, you can get 0.19% for 15 years or 0.31% for 20 years. That’s how crazy things are.
SNB Warns of “Temporary Deflation”
Please consider SNB Warns of ‘Difficult Times’ as Currency Move Hits Home
Switzerland is facing “difficult times” and a short period of deflation following January’s abrupt unwinding of a currency peg, one of the Swiss National Bank’s most senior policy makers said on Thursday night.
The comments from Fritz Zurbrugg, one of three permanent members of the SNB’s governing board, show the impact of the January 15 currency move on an economy often regarded as a safe harbour during the eurozone crisis.
The Swiss franc has shot up in value since the removal of the peg that capped it at SFr1.20 per euro, making Swiss exports and Swiss holidays more expensive. A euro is now worth SFr1.05.
Mr Zurbrugg said that the fall in prices that Switzerland faces is “temporary” and would not threaten price stability in the medium term. “A damaging deflationary spiral is not expected.”
Swiss inflation is already in negative territory, with prices falling 0.8 per cent in February — worse than the 0.3 per cent fall in prices across the eurozone in the month….
by ilene - March 26th, 2015 5:15 pm
Courtesy of Lance Roberts via STA Wealth Management
Much of the commentary from the more liberal leaning media has continued to tout that the rise in asset markets over the last few years are clear evidence of economic prosperity in this country. However, is that really the case?
In order for rising asset prices to be reflective of overall economic prosperity, the "wealth" generated by those rising asset prices should impact a broad swath of the American populous. Let's take a look to see if that is the case.
"Mo Money" Or No Money
In September of last year, I discussed the Federal Reserve's 2013 Survey of household finances which showed a shocking decline in the median value of net worth of families across all age brackets.
While the mainstream media continues to tout that the economy is on the mend, real (inflation-adjusted) median net worth suggests that this is not the case overall.
However, Shane Ferro from Business Insider posted a stunning piece on what has happened to American families as asset prices have surged higher. To wit:
"Nearly half of American households don't save any of their money.
If it isn't obvious, this has a broad range of implications. People who don't save won't have any buffer should the economy turn, and they lose their jobs. Longer term, people who don't save won't have the capacity to retire. It's not good."
What is clear is that rising asset prices, which have been induced by the Federal Reserve's monetary policy and suppression of interest rates, has indeed benefitted those that have assets to invest.
The findings are strikingly similar to the U.S. Federal Reserve survey from last year.
"'Savings are depleted for many households after the recession,' it found. Among those who had savings prior to 2008, 57% said they'd used up some or all of their savings in the Great Recession and its aftermath. What's more, only 39% of respondents reported having a 'rainy day' fund adequate to cover three months of expenses and only 48% of respondents said that they could not completely cover a hypothetical emergency expense costing $400 without selling
by ilene - March 26th, 2015 4:12 pm
Picture from Amazon Picking Challange
Courtesy of Mish.
Amazon is sponsoring a robot warehouse automation contest to see to who can pack the most boxes in the least amount of time without dropping any packages or crushing anything delicate such as cookies.
In the contest, in which human workers are not eligible to apply, the robots will have to work without any remote guidance from their creators.
Please consider the MIT Technology Review, Amazon Robot Contest May Accelerate Warehouse Automation.
Packets of Oreos, boxes of crayons, and squeaky dog toys will test the limits of robot vision and manipulation in a competition this May. Amazon is organizing the event to spur the development of more nimble-fingered product-packing machines.
Participating robots will earn points by locating products sitting somewhere on a stack of shelves, retrieving them safely, and then packing them into cardboard shipping boxes. Robots that accidentally crush a cookie or drop a toy will have points deducted. The people whose robots earn the most points will win $25,000.
Amazon has already automated some of the work done in its vast fulfillment centers. Robots in a few locations send shelves laden with products over to human workers who then grab and package them. These mobile robots, made by Kiva Systems, a company that Amazon bought in 2012 for $678 million, reduce the distance human workers have to walk in order to find products. However, no robot can yet pick and pack products with the speed and reliability of a human. Industrial robots that are already widespread in several industries are limited to extremely precise, repetitive work in highly controlled environments.
Pete Wurman, chief technology officer of Kiva Systems, says that about 30 teams from academic departments around the world will take part in the challenge, which will be held at the International Conference on Robotics and Automation in Seattle. In each round, robots will be told to pick and pack one of 25 different items from a stack of shelves resembling those found in Amazon’s warehouses. Some teams are developing their own robots, while others are adapting commercially available systems with their own grippers and software.