Housing is still on the rocks and prices are headed lower. Master illusionist Ben Bernanke has managed to engineer a modest 7-month uptick in sales, but the fairydust is set to wear off later this month when the Fed stops purchasing mortgage-backed securities (MBS). When the program ends, long-term interest rates will creep higher and sales will begin to flag. The objective of Bernanke’s $1.25 trillion quantitative easing program was to transfer the banks’ toxic assets onto the Fed’s balance sheet. Having achieved that goal, Bernanke will now have to find a way to unload those same assets onto the public. Freddie and Fannie, which have already been used as a government-backed off-balance-sheet dumping ground, appear to be the most likely candidates.
Bernanke’s liquidity injections have helped to buoy stock prices and stabilize housing, but the economy is still weak. There’s just too much inventory and too few buyers. Now that the Fed is withdrawing its support, matters will only get worse.
Of course, that hasn’t stopped the folks at Bloomberg News from cheerleading the "nascent" housing rebound. Here’s a clip from Monday’s column:
"The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. ‘The underlying trend is turning positive,’ said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York."
Just for the record; there have been no "increases in jobs". Unemployment is stuck at 9.7 percent with underemployment checking in at 16.8 percent. There’s no chance of housing rebound until payrolls start to rise. Jobless people cannot afford to buy homes.
Also, while it is true that the federal homebuyer tax credit did cause a spike in home purchases its effect has been short-lived and sales are gradually returning to normal. It’s generally believed that "cash for clunker-type" programs (like the homebuyer tax credit) merely move demand forward and have no meaningful long-term impact.
So, it’s likely that housing prices — particularly on the higher end — will continue to fall until they return to their historic trend. (probably 10 to 15 per cent lower) That means…
That’s right, the new Forbes list is out where we celebrate the top .000014%!
Thanks to an unprecedented concentration of wealth, the World’s supply of Billionaires jumped 27% in 2009 and the 1,011 people in the club accumulated an AVERAGE of $500M more Dollars EACH! Isn’t that great? That’s $505Bn or 65% of America’s TARP spending handed over to 1,011 people who are, according to Forbes(The Capitalist’s Tool), clearly better than us.
They sure are doing better than us as America’s 450 Billionaires added $225Bn to their bank accounts (and that’s AFTER taxes) and the saddest thing is that amount is INCLUDED in the $1.6Tn bounce of US Total Net Worth we had after losing 18% of it in 2008. A lot of positive economic statistics are skewed by our top 1% but even the top 1% is blown away by the top 450 (0.00014%) who are sitting on $3.6Tn of our nation’s total household wealth 8% or 27M times more than the average citizen. Wow, I guess they are better than you - better in fact than 26,999,999 of you!
As I mentioned in "The Dooh Nibor Economy (that’s "Robin Hood" backwards)," America has become a real wealth-building machine the funnels every last cent off the bottom of the pyramid and sends it straight to the top. Those of us standing near enough to the top (the top 10%) are lucky enough to pick up enough table scraps to make us 1,000 times better than you - our bottom 90% "friends" and that is just great for walking around town but you must pity us because even we are embarrased to show up in our shoddy Armani suits when we are invited to hob-nob with the top 1% in their custom-tailored suits who don’t look at lables but at the thread-count of your sleeve.
Even those "masters of our universe" cower in the presense of that top .00014%, who are, by definition, 26,999 times better than they are! So don’t go thinking the people in the top 10% have it so easy - we have a whole different set of problems to deal with. You only need to make $150,000 a year to join the top 10% club - we have to make over $2M to crack the top 1% and $2M doesn’t even pay 1/10th of the MONTHLY interest on the assets on our top 450.
So congratulations to the Forbes winners, especially from the 462,000 of us that…
Some additional detail behind the improvement we’ve seen on the margin in the labor market year to date. The AP reports:
Job openings rose sharply earlier this year, a sign that employers might be preparing to step up hiring.
The number of openings in January rose about 7.6 percent, to 2.7 million, compared with December, the Labor Department said. And the job openings rate climbed to 2.1 percent, the highest in nearly a year. That rate measures available jobs as a percentage of total employment.
There are now about 5.5 unemployed people, on average, competing for each opening. That’s still far more than the 1.7 people who were competing for each opening when the recession began. But it’s down from just over 6 people per opening in December 2009.
The gradually brightening jobs picture corresponds to what many job search Web sites are reporting.
As can be seen below, while the number of openings has jumped, the level of hires has not necessarily improved (possibly partially explained by the wariness of those with jobs to make the plunge).
While not anywhere near normalized, the unemployed to job opening ratio has turned sharply.
This will be another important metric to watch in coming months.
The unemployment rate decreased in nine U.S. states in January and climbed in 30, signaling the thawing of the labor market is not broad-based.
The jobless rate in Michigan showed the biggest drop, falling to 14.3 percent, still the highest in the nation, from 14.5 percent in December, according to figures issued today by the Labor Department in Washington. New York and New Jersey were among eight states where unemployment decreased by a tenth of a point.
A national unemployment projected to average 9.8 percent this year signals state budgets will be strained by decreases in tax revenue and rising jobless insurance payments. The loss of 8.4 million jobs since the recession began in December 2007 means the labor market in the world’s largest economy will take years to rebound.
“This is a recovery that’s really kind of concentrated,” said Steven Cochrane, director of regional economics at Moody’s Economy.com in West Chester, Pennsylvania. “It still portends weakness in income-tax revenue and sales-tax revenue into fiscal year 2011.”
Unemployment in the Detroit area, home to General Motors Co. and Ford Motor Co., dropped to 15.3 percent from 16 percent in December, contributing to the decrease in Michigan’s jobless rate.
States showing the most improvement in coming months will probably be those with a large manufacturing base, said Moody’s Economy.com’s Cochrane. The need to rebuild inventories and growing exports is propelling a factory rebound that will help some parts of the country over others, he said.
Unemployment in California, Florida, Georgia, North and South Carolina and the District of Columbia climbed to the highest levels since records began in 1976.
Thirty states and the District of Columbia recorded over-the-month unemployment rate increases, 9 states registered rate decreases, and 11 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Over the year, jobless rates increased in all 50 states and the District of Columbia. The national unemployment rate fell from 10.0 percent in December to 9.7 percent in January, but was up from 7.7 percent a year earlier.
In January, nonfarm payroll employment increased in 31 states and the…
After last Friday’s print of 9.7 percent for the unemployment rate, more than a few pundits are calling the 10.1 percent jobless rate seen back in October the high for the cycle. It seems to be way too early to make that call based on the millions of "discouraged" workers who, when they start looking for work again, will suddenly count as "unemployed" again.
Stephen Roach seems to agree, figuring that the real jobless rate today is 11.5 percent.
The odds of a double-dip recession are now 40 percent? That’s good to know. There’s been a lot of talk about another downturn for the U.S. economy, but it comes as news to me that they’ve already taken the time to poll economists and that they were this pessimistic.
Are "businesses" which aggregate user-provided content in order to serve adverts to those users "innovative?" Are they serving a "need" or attempting to contrive a new "need"?
While I usually present a specific thesis here, today’s topic is more a "work in progress" as I think through the paradoxes and connections between "needs" and contrived needs.
The two beginning data points are the South Pacific island nation of Vanuatu, formerly the New Hebrides, and an article from BusinessWeek on the dozens of Silicon Valley startups founded or funded by Google alumni: And Google Begat…The search giant’s former employees are seeding tech startups— and shaping another wave of innovation.
A friend’s son recently served a Peace Corps stint in a remote Vanuatu village. There is no electricity–illumination is provided by candles–and fresh potable water is a 2 kilometer walk away. The village pursues a generally traditional lifestyle apparently by choice; if you want to own a car and drive around in Western-style petroleum-based affluence, you can do so in the nation’s capital.
In the village, the women reportedly do most of the heavy lifting (agriculture, childcare, etc.) while the men have sufficient free time to brew up some hootch (kava) to enjoy in afternoon conviviality.
This "subsistance" is not poverty in the sense that people have enough to eat, shelter, some basic education, relative security from the predations of the State and/or external marauders (in our era, global Neoliberal Capitalism of the predatory/cartel variety).
This lifestyle is, with modest variations such as kerosene lamps or limited electricity, still lived by hundreds of millions of human beings. It is not to be romanticized or distorted by global-market, post-industrial definitions of "poverty." There are all sorts of poverty once you have enough to eat, a community and shelter, and definitions of a "good life" and a "better life" have to be carefully parsed.
We, on the other hand, are embedded in advanced, post-industrial Neoliberal Capitalism– post-industrial in the sense that most of the nasty bits are performed elsewhere, so "we" get to live with high standards of environmental control, and Neoliberal in the sense that the Savior State is an active partner with global predatory finance Capitalism to exploit both foreign markets and domestic populations.
By the standards of our status quo, residents of Vanuatu are living at "Stone Age" levels which are far below the "poverty" of our low-income citizenry. That the teens…
Today the BLS reported 36,000 job losses with the unemployment rate holding at 9.7%. Before diving into the numbers let’s analyze the snow job ahead of the report.
Speaking before Congress, Fed Chairman Ben Bernanke harped about snow, warning policymakers will "to be careful about not overinterpreting" the upcoming data." In the wake of that warning, economists busily upped their projections for job losses in February, some by as much as 220,000 jobs.
Did 220,000 people not receive any pay for the period in question?
Color me skeptical.
In terms of the unemployment rate, the blizzards will not have an effect. In terms of the reported jobs number there will be an impact but the most likely impact is in the number of hours worked.
Regardless, expectations as to the importance of the blizzard range from negligible all the way to 220,000. Whatever the affect was, it will be over by next month although I have seen analysis that says the effects will last until May.
In today’s job report, the BLS chimed in about snow, confirming the above.
BLS Confirms Bernanke’s Snow Job
Effect of Severe Winter Storms on Employment Estimates
Major winter storms affected parts of the country during the February reference periods for the establishment and household surveys.
In the establishment survey, the reference period was the pay period including February 12th. In order for severe weather conditions to reduce the estimate of payroll employment, employees have to be off work for an entire pay period and not be paid for the time missed. About half of all workers in the payroll survey have a 2-week, semimonthly, or monthly pay period. Workers who received pay for any part of the reference pay period, even one hour, are counted in the February payroll employment figures.
While some persons may have been off payrolls during the survey reference period, some industries, such as those dealing with cleanup and repair activities, may have added workers.
In the household survey, the reference period was the calendar week of February 7-13. People who miss work for weather-related events are counted as employed whether or not they are paid for the time off.
Should Bernanke Have Known That?
Yes. Did he know that and make misleading statements hoping to get economists to…
Here is an interesting pair of articles, one on California the other on boomers postponing retirement for financial reasons.
In California, it’s no surprise that economists are surprised at just how bad things are. Please consider California job losses grow.
"The economy was a lot worse than everybody thought," said Howard Roth, chief economist with the state’s Department of Finance. "The job market is weaker than we figured."
It appears California lost 871,000 jobs in 2009, suggests an estimate provided by the state Employment Development Department.
"This is the worst recession for California since the Great Depression," said Brad Kemp, director of regional research with Beacon Economics.
If those estimates hold up when final revisions are released this month, the actual job losses in the state would be far more grim than first believed. In the initial EDD estimate, released Jan. 22, the EDD reported California employers chopped 579,000 jobs from payrolls in 2009.
"We will have a really big downward revision," Roth said.
That would translate into an 292,000 more jobs that were lost, on top of the prior losses.
Seven In Ten Boomers Put Off Retirement For Financial Reasons
The economy continues to change the retirement timeline for many mature workers, leaving them with tough decisions about their futures. More than seven-in-ten (72 percent) workers over the age of 60 who said they are putting off their retirement are doing so because they can’t afford to retire financially, according to a new survey by CareerBuilder. When comparing genders, the survey found that three-quarters (76 percent) of female workers over the age of 60 who said they are putting off retirement are doing so because they can’t afford it, while 68 percent of males said the same.
Note: The title of the article on Yahoo Finance: More Than Seven-in-Ten Workers Age 60+ Are Putting Off Retirement Due to Financial Restraints, According to a New CareerBuilder Survey is misleading.
The correct take-away is "Of those putting off retirement, 7.2 out of 10 do so for financial reasons". Another key number is how many are putting off retirement. That the article does not say, but unprecedented debt levels are no doubt a big problem, with serious implications.
It appears as though the concerns expressed by the Adminstration about the snow storms and their impact on lost employment was overdone, if not misplaced. The market is pleasantly surprised with this -36,000 jobs number, since the expectations had been calibrated lower so effectively.
In fairness to the Obama Administration, they are only doing what Bush II, Clinton, and Bush I had been doing right along with almost every statistic that they have issued. It’s called ‘perception management.’ Greece used one method of accounting management in shaping the numbers, and the US uses its own approach to what is essentially a similar problem.
“Propaganda proceeds by psychological manipulations, character modifications, and the creation of stereotypes useful when the time comes.
The two great routes that propaganda takes are the conditioned reflex and the myth.” Jacques Ellul
In addition to the ‘better-than-expected’ jobs loss announced today for February, the Bureau of Labor Statistics also went back and adjusted the employment numbers from April-July 2009.
"With the release of February data on March 5, 2010, BLS has corrected April-July 2009 establishment survey estimates for all employees and women employees for the federal government series. The changes result from corrections to initial counts for Census temporary and intermit- tent workers for Census 2010."
This adjustment itself was not so great, certainly not as significant as the benchmark revision done in January for the 12+ months preceding.
I thought it would be an interesting exercise to compare the views of the US employment Seasonally Adjusted "headline numbers" presented by the BLS in December 2009, and the current view that they are showing as the true number today after the two recent sets of revisions.
The net result of the revisions is that jobs were added to the beginning and the end of what will be defined as ‘the recession.’
This serves to now make the slump look steeper and more severe, and the recovery to be a little sharper, with plenty of jobs leftover to create a ‘flat impression’ in 2010 at worst.
In short, jobs were removed from almost every month in the revision during the slump, and shoved into the beginning and into the end.
That looks like a nice picture of a recovery, doesn’t it? See, the Feburary 2009 stimulus program and the strategy of massive bank bailouts have worked.
I have seen corporate managers who have come into a new position and inherited a mess jigger…
The money train left the station just ahead of the US market close yesterday when the House passed a $15Bn Jobs Bill although it remains to be seen if Jim Bunning will pass it. China doesn’t need Bunning’s permission to hand out free money and they will be "allocating 63.2 Billion Yuan" to fight high housing prices by SUBSIDIZING low-cost housing. Come to think of it - I object to that! Someone in China needs a lesson in some basic economics…
The big boost this morning came from Japan, where bonds hit the highest level of the year after the Nikkei newspaper said the central bank at its March 16 meeting may discuss additional monetary easing steps. It doesn’t matter whether this report is true or not as it already did it’s job and shot the Nikkei up 223 points for the day, erasing two week’s worth of losses in a single session. It’s hard for the BOJ to get easier than our own Fed but Chicago Fed President Charles Evans said yesterday he needs evidence of “highly sustainable” growth before supporting tighter monetary policy, while James Bullard of the St. Louis Fed said the central bank should remain “accommodative” - these are, of course, the Fed’s code words for MORE FREE MONEY!
Of course, our Futures are up 1% from yesterday’s low and the commodity markets LOVE IT and oil is back at $80.65 with copper back at $3.40 despite "weak" demand in China, where stockpiles of copper are now at 7-year highs and even Goldman Sachs has withdrawn their buy recommendation on coppper because of concern that economic recovery in developed markets isn’t on “solid footing.” “About 60 percent of China’s copper is used in the power industry, and our sales to wire-and-cable users reflected that demand is rather weak,” Chairman Wei Jianghong said, while attending the National People’s Congress.
“The demand is not very strong in the first place,” Jiangxi Copper Chairman Li said in Beijing while at the congress. “But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.” Copper stockpiles in China jumped to 149,478 tons for the week ended Feb. 26, 28 percent more than the week ended Feb. 12, according to the Shanghai Futures Exchange. Demand from China for global supplies may weaken because prices on the Shanghai Futures Exchange are now close to those in London, discouraging arbitrage trading, Goldman Sachs analysts…
Economist Steven Roach of Morgan Stanley Asia has some not-so-kind words for economist Paul Krugman and his view that the Chinese currency should be allowed to strengthen considerably from its current level.
...
Next step for the Fed weasels - petitioning the Supreme Court in an attempt to completely trample America's constitution. In the meantime, Mark Pittman smiles from above as Satan reevaluates the amend and extend provisions of his affirmative covenants with the Fed.
March 19 (Bloomberg) -- The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the largest ever U.S. government bailout, a federal appeals court said.
The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of more from Tyler
The front month on the SP futures has now switched from March to June as a part of the Quad Witching Expiration. (Technically it switched last week, but for charting purposes I made the switch last night.) The June Futures have essentially the same formations as did March, it's just that the earlier months have few trades to mark them.
This is the first serious test for US equities since mid-February, as it has been on a spectacular rally streak, no doubt fueled by excess liquidity applied to a selling exhaustion in the funds. Curiously not among corporate...
As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week - I could only conclude that cashing them out was the only decision I could be comfortable with this week. Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% - since most of the trades were designed to make 40% for the year - it just seems silly not to take the money and run now, on March 19th.
You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks - that is NOT how the markets are supposed to work! When the ma...
C - Citigroup, Inc. – One investor established a mammoth bullish stance on Citigroup in the first 20 minutes of the current trading session. Citigroup’s shares at the time of the transaction were trading at approximately $4.05, but have since slipped lower and are down 0.50% to $4.03 as of 2:45 pm (ET). It looks like the Citi-bull sold 240,000 put options outright at the April $4.0 strike to take in a premium of $0.16 per contract. Premium received on the sale, which represents maximum potential profits, amounts to $3.840 million to the investor if Citigroup’s shares trade above $4.00 through expiration day. The short stance in put options implies the investor is willing to have 24 million shares of the underlying stock put to him at an effective price...
Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second. All the buys fit into my screen shot but the sells did not. Click here to see all the sells.
Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/more from Insider
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That’s right, the new Forbes list is out where we celebrate the top .000014%!
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Wheee - more free money!
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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
(