Comparing the growth in the number of full time jobs versus the growth in new home sales starkly illustrates both the horrible quality of the new jobs, and how badly ZIRP has served the US economy.
Growth in new home sales has always been dependent on growth in full time jobs. For 38 years until the housing bubble peaked in 2006, home sales and full time jobs always trended together, subject to normal cyclical swings. With the exception of 1981-83 when Paul Volcker pushed rates into the stratosphere, new home sales always fluctuated between 550 and 1,100 sales per million full time workers in the month of March.
That correlation broke in the housing crash of 2008-09 when sales fell to a low
But in the housing crash in 2007-09 sales fell to a low of 276 per million full time workers. Since then the number of full time jobs has recovered to greater than the peak reached in 2007. In spite of that, new home sales per million workers remain at depression levels.
With 30 year mortgage rates now at 3.6% sales are lower today than they were when mortgage rates were above 17% in 1982. Sales have never reached 400 sales per million workers in spite of the recovery in the number of jobs, in spite of ZIRP, in spite of mortgage rates often under 4%.
ZIRP has actually made the problem worse. It has caused raging housing inflation which has caused median monthly mortgage payments for new homes to rise by 20% since 2009. ZIRP has enabled corporate CEOs to game the stock market to massively increase their own pay while encouraging them to cut worker salaries and shift higher paying jobs overseas. That leaves the US economy to create only low skill, low pay jobs that do not pay enough for workers to be able to purchase new homes.
The perverse incentives of ZIRP are why the housing industry languishes at depression levels.
The Obama administration delivered a shot across the bow to Asia’s leading exporters and Germany for their economic policies and warned that a number of major economies around the globe could face intense pressure to engage in currency interventions to counter slow growth.
The U.S. Treasury Department, in its semiannual currency report to Congress, called out China, Japan, South Korea, Taiwan and Germany for relying on policies it says threaten to damage the U.S. and the global economy.
The countries are cited in a new name-and-shame list that can trigger sanctions against offending trade partners under fresh powers Congress granted last year to address economic policies that threaten U.S. industries.
Over the past two decades, for example, many U.S. officials have accused China of using an undervalued currency to bolster its manufacturing sector. A cheaper currency makes products cheaper overseas.
U.S. officials are increasingly concerned other countries aren’t doing enough to boost demand at home, relying too heavily on exports to bolster growth.
Counting on cheap currencies as a shortcut to boosting exports can create risks across the global economy, as nations fight to stay ahead of their competitors.
Please throw me a barf bag.
Except for Japan, the US was the first at QE and the first to slash and hold interest rates at ridiculous levels.
The US sponsored a global asset boom in emerging markets, sinking Brazil in the wake.
Dark money gets darker --> Paul Blumenthal at The Huffington Post: "Republicans in Congress are trying to decrease the already scant amount of disclosure for politically-active nonprofits — known as dark money groups. The legislative effort is unsurprisingly supported by the main political arm of the billionaire brothers Charles and David Koch." The bill workings its way through Congress would "eliminate the requirement for nonprofits to make a non-public disclosure of their donors to the IRS when they file their annual tax forms. The donor disclosures — known as the Schedule B report — are not released to the public, but the list of donation amounts with the donor names redacted are released."
And also: The American Legislative Exchange Council (ALEC), that secretive group promoting policies backed by the Koch network, will begin its spring task force meeting in Pittsburgh a week from today. Mary Bottari of the Center for Media and Democracy, a progressive watchdog organization that tracks ALEC, outlines some items on the agenda, including weakening workers comp laws, privatizing public schools and an amendment to the constitution requiring a balanced budget, which could effectively end Social Security and Medicare as they exist today.
Another hospital attack --> Doctors Without Borders (Medecins Sans Frontieres) reports that on Wednesday night an airstrke destroyed their hospital in Aleppo, Syria, killing "at least 14 people, including at least two doctors." Other estimates of deaths are as high as 50 or more. Secretary of State John Kerry condemned the bombing and said, "It appears to have been a deliberate strike on a known medical facility and follows the Assad regime's appalling record of striking such facilities and first responders. These strikes have killed hundreds of innocent Syrians."
Meanwhile, W.J. Hennigan at the Los Angeles Times reports, "The Pentagon has disciplined 16 service members for mistakes that led to the deadly airstrike on a Doctors Without Borders hospital in northern Afghanistan last fall, but no one will face criminal charges… The…
The Fed has been sitting on the funds rate like some monetary mother hen since December 2008. Once it punts again at the June meeting owing to Brexit worries it will have effectively pegged money market rates at the zero bound for 90 straight months.
There has never been a time in financial history when anything close to this happened, including the 1930s. Nor was interest-free money for eight years running ever even imagined in the entire history of monetary thought.
So where’s the fire? What monumental emergency justifies this resort to radical monetary intrusion and repression?
Alas, there is none. And that’s as in nichts, nada, nope, nothing!
There is a structural growth problem, of course. But it has absolutely nothing to do with monetary policy; and it can’t be fixed with cheap money and more debt, anyway.
By contrast, there is no inflation deficiency—–even by the Fed’s preferred measure. Indeed, the very idea of a central bank pumping furiously to generate more inflation comes straight from the archives of crank economics.
The following two graphs dramatize the cargo cult essence of today’s Keynesian central banking regime. Since the year 2000 when monetary repression began in earnest, the balance sheet of the Fed has risen by 800%, while the amount of labor hours used in the US economy has increased by 2%.
At a ratio of 400:1 you can’t even try to argue the counterfactual. That is, there is no amount of money printing that could have ameliorated the “no growth” economy symbolized by flat-lining labor hours.
Owing to the recency bias that dominates mainstream news and commentary, the massive expansion of the Fed’s balance sheet depicted above goes unnoted and unremarked, as if it were always part of the financial landscape. In fact, however, it is something radically new under the sun; it’s the footprint of a monetary fraud breathtaking in its magnitude.
In essence, during the last 15 years the Fed has gifted the US economy with a $4 trillion free lunch. Uncle Sam bought $4 trillion worth of weapons, highways, government salaries and contractual services but did not pay for them by extracting an equal amount of financing from taxes or tapping the private savings pool, and thereby “crowding out” other…
Will Bernie Sanders’s supporters rally behind Hillary Clinton if she gets the nomination? Likewise, if Donald Trump is denied the Republican nomination, will his supporters back whoever gets the Republican nod?
If 2008 is any guide, the answer is unambiguously yes to both. About 90 percent of people who backed Hillary Clinton in the Democratic primaries that year ended up supporting Barack Obama in the general election. About the same percent of Mike Huckabee and Mitt Romney backers came around to supporting John McCain.
But 2008 may not be a good guide to the 2016 election, whose most conspicuous feature is furious antipathy to the political establishment.
Outsiders and mavericks are often attractive to an American electorate chronically suspicious of political insiders, but the anti-establishment sentiments unleashed this election year of a different magnitude. The Trump and Sanders candidacies are both dramatic repudiations of politics as usual.
If Hillary Clinton is perceived to have won the Democratic primary because of insider “superdelegates” and contests closed to independents, it may confirm for hardcore Bernie supporters the systemic political corruption Sanders has been railing against.
Similarly, if the Republican Party ends up nominating someone other than Trump who hasn’t attracted nearly the votes than he has, it may be viewed as proof of Trump’s argument that the Republican Party is corrupt.
Many Sanders supporters will gravitate to Hillary Clinton nonetheless out of repulsion toward the Republican candidate, especially if it’s Donald Trump. Likewise, if Trump loses his bid for the nomination, many of his supporters will vote Republican in any event, particularly if the Democratic nominee is Hillary Clinton.
But, unlike previous elections, a good number may simply decide to sit out the election because of their even greater repulsion toward politics as usual – and the conviction it’s rigged by the establishment for its own benefit.
That conviction wasn’t present in the 2008 election. It emerged later, starting in the 2008 financial crisis, when the government bailed out the biggest Wall Street banks while letting underwater homeowners drown.
Both the Tea Party movement and Occupy were angry responses – Tea Partiers apoplectic about…
By now I must be at least the millionth commentator to observe that Donald Trump is the candidate for whom social media have longed. What FDR was to radio and JFK to television, Trump is to Twitter, Instagram, Facebook, Snapchat, et al.
This is usually taken to mean that Trump, like some political McLuhan, is a mastermind who understands social media the way his forebears understood their media. But I suspect that with him, it may be less a matter of his brilliance or even his intuition than of the accidental match of personality with medium. He is a man of his technological moment.
Where Trump and social media do conjoin, promoting his candidacy and changing our whole political environment, isn’t in the generation of noise. It is in something even more fundamental to each: Trump is the “decontexualizer-in-chief” operating in a medium that likewise is about cutting the world into bits that don’t necessarily accrete into anything sensical.
Books have been written about the impact of social media on our electoral process, and decontextualization usually isn’t high on the list of transformations, in part because fragmentation isn’t usually high on the list of properties that inhere to social media. Those properties, as I see them, are instantaneity, anonymity, democratization, authenticity and yes, fragmentation, and they lead, in their various ways, to a variety of consequences.
Studies have shown, not surprisingly, that social media contribute to increased polarization of our politics, since social media allow like-minded people to find one another who might otherwise be atomized – sometimes to public advantage, and sometimes not.
Ah, the crescendo of complaint! The Republican establishment and the mainstream media, working hand in hand in their unprecedented, non-stop assault on the “short-fingered vulgarian” named Donald Trump, would have you believe that Trump augurs the destruction of the Republican Party. Former Reagan speechwriter and now Wall Street Journal/CBS pundit Peggy Noonan expressed the general sentiment of both camps when she said on Super Tuesday that “we’re seeing a great political party shatter before our eyes.”
But here is what no one in the GOP establishment wants you to know, and no one in the media wants to admit: Donald Trump isn’t the destruction of the Republican Party; he is the fulfillment of everything the party has been saying and doing for decades. He is just saying it louder and more plainly than his predecessors and intra-party rivals.
The media have been acting as if the Trump debacle were the biggest political story to come down the pike in some time. But the real story – one the popularity of Trump’s candidacy has revealed and inarguably the biggest political story of the last 50 years — is the decades-long transformation of Republicanism from a business-centered, small town, white Protestant set of beliefs into quite possibly America’s primary institutional force of bigotry, intellectual dishonesty, ignorance, warmongering, intractability and cruelty against the vulnerable and powerless.
It is a story you didn’t read, hear or see in the mainstream media, only in lefty journals like The Nation and Rolling Stone, on websites like People for the American Way, and in columns like Paul Krugman’s. And it wasn’t exactly because the MSM in its myopia missed the story. It was because they chose not to tell it – to pretend it wasn’t happening. They are still pretending.
It is hardly a surprise that the GOP establishment and their enablers in the media are acting as if Trump, the Republican frontrunner, is a break from the party’s supposedly genteel past. Like Captain Renault in Casablanca, who was “shocked, shocked,” to find gambling in Rick’s establishment, the GOP solons profess to…
The first month of the European Central Bank’s expanded stimulus program has done little to aid the region’s government bonds.
Even as the ECB increased its asset-purchase program to 80 billion euros ($92 billion) in April, from 60 billion euros, sovereign securities headed for their biggest monthly decline since August, according to Bloomberg World Bond Indexes.
“The whole notion of the ECB stepping up their purchases in April and May has already been front run,” said Martin van Vliet, senior interest-rate strategist at ING Groep NV in Amsterdam.
Euro-region government securities handed investors a loss of 1 percent this month through Thursday, the Bloomberg Eurozone Sovereign Bond Index shows. U.S. Treasuries dropped 0.3 percent, while Japanese bonds returned 0.9 percent.
The five-year, five-year forward inflation-swap rate, which ECB President Mario Draghi has cited in the past to justify monetary easing, climbed to 1.47 percent Friday, the highest closing level in almost seven weeks, as Brent crude futures touched the most since Nov. 4.
That America is in the throes of a systemic health crisis can no longer be denied. According to the U.S. Department of Health And Human Services, more than two-thirds (68.8 percent) of adults are overweight or obese. (Overweight is typically defined as a body-mass index (BMI) of 25 or higher. A BMI of 24.9 is not exactly featherweight; I would have to add 30 pounds to reach a BMI of 24.9.)
The health risks of being overweight or obese include:
type 2 diabetes
high blood pressure
nonalcoholic fatty liver disease (excess fat and inflammation in the liver of people who drink little or no alcohol)
osteoarthritis (a health problem causing pain, swelling, and stiffness in one or more joints)
some types of cancer: breast, colon, endometrial (related to the uterine lining), and kidney
Since the early 1960s, the prevalence of obesity among adults more than doubled, increasing from 13.4 to 35.7 percent in U.S. adults age 20 and older. (Source)
The Journal of the American Medical Association (JAMA) reported in 2015 that roughly half of all adult Americans are diabetic or prediabetic (also called metabolic syndrome).
If we add up everyone in America who is either suffering from or at risk of lifestyle-related diseases such as heart disease, diabetes and lifestyle-related types of cancer, it’s clear this is an unprecedented national health crisis that has no easy or cheap medical fix.
Why have we become so unhealthy? The answers come thick and fast: we are more sedentary as most work is now white-collar; the foods low-income people can afford are unhealthy; children now spend time playing digital games rather than playing outside; serving sizes of sodas and other high-calorie/low nutrition beverages have ballooned; people buy more convenience and fast foods and prepare fewer meals at home, and so on.
Two things are clear: there is no one solution to the epidemic of lifestyle-related diseases. Limiting sodas in schools and demanding better labeling of food are examples of reforms that are well-intended, but have so far had little effect on the expanding waistlines of Americans or their ill-health.
For the first time ever, Berkshire Hathaway's annual meeting in Omaha goes digital and is being webcast live on Yahoo Finance. Those so inclined can watch Warren Buffett and Charlie Munger's deep thoughts in real time from the Woodstock of Crony Capitalism at the webcast link below.
By Jacob Wolinsky. Originally published at ValueWalk.
60 Minutes profiled Fintech tonight specifically payment app Venmo (which is under FTC investigation for “deceptive or unfair practices” according to a recent report CNN Money)- is this a sign of the top? Judge for yourself
You may not agree with this stance, but it’s a really good explanation for how Puerto Rico got into the mess it’s in.
There are headlines crossing wire tonight that the government will not be making a bond payment tomorrow. PR is calling out to the US to make a deal for relief – not necessarily a bailout but the buying of time for a restructuring.
John Oliver explained why the current situation can be blamed mostly on the Puerto R...
The first phone call that changed Michael Daugherty’s life came in May 2008. Daugherty was a happy man, running a good business in a nice place. That’s how he talks about it, like the opening five minutes of a movie, setting up how...
Sometimes is just works! Wyckoff logic is excellent when all the evidence supports your view.
The traditional Wyckoff logic traders will see the Wyckoff accumulation in this stock. Notice the NetVolume divergence with price, very telling. Point and Figure chart showing off an excellent 'CAUSE', that exploded into a fantastic 'EFFECT'. Some times winning is just too easy!
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PnF Chart, love the 'CAUSE' that was the base for the 'EFFECT'
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This chart looks at the Nasdaq 100 index over the past 10-years.
A potential “Head & Shoulders” (H&S) topping pattern could be in play, highlighted in red.
Even if this is NOT an H&S topping pattern, the following situation has me watching Tech very closely; the index broke 5-year rising support line (A) last fall and the rally over the past couple of months has it kissing the underside of lines (A) and (B) at (1).
The NDX “Kissed” the underside of dual resistance of late and has turn...
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Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote,
"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today.
Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
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Back on September 2, 2015 when bitcoin was trading at $230, we laid out the simplest and most fundamental reason why, irrelevant of one's ideological persuasion with "alternative" or digital currency - bitcoin would soar.
it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the ...
Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,
The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now.
And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now.
Phil writes back,
I was expecting them to start throwing poop at each other &n...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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