Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1311 | 0.2 | 0.02% |
| Eurostoxx Index | 2442.2 | 15.200 | 0.63% |
| Oil (WTI) | 98.97 | 0.640 | 0.65% |
| LIBOR | 0.5601 | -0.001 | -0.18% |
| US Dollar Index (DXY) | 79.746 | -0.410 | -0.51% |
| 10 Year Govt Bond Yield | 2.06% | 0.04% |
Congrats to the Pats and G-Men.
Markets are slightly higher this morning as Greek bondholders have made their best and final offer to the EU and IMF. Much of Asia was closed overnight in observance of the Lunar New Year.
Even Krugman is figuring out the economy is improving. He notes that housing has been a drag on the economy, but six years into the bust, it is becoming less and less of a drag as the excesses have been largely worked off. If housing becomes a positive, it could finally set the stage for the virtuous economic cycle we have been waiting for.
Of course Krugman takes shots at Obama for “giving into Republican demands that he slash spending” and at Bernake for giving in to Republican demands that it tighten money, positing that we wouldn’t be on the slow road to recovery if we had simply listened to him. He also goes on to slay the Bush dragon and the ECB dragon as well. The Fed tightened? Obama slashed spending? Whatever, Paul. I used to like Krugman when he was just an economist, now he is more of left wing Larry Kudlow.
Earnings Season continues this week with a ton of reports. The biggest names will be Apple, Boeing, and McDonalds, but there are a lot of industrials and energy names reporting as well. In economic data, we have the FOMC decision this week (will be interesting to see if the recent economic strength is noted in the statement). Durable Goods and Leading Economic indicators will be good data points this week.
Filed under: Earnings Announcements, Economic data, Uncategorized | Tagged: Paul Krugman |
All Things in Moderation 
Don’t know about the rest of the country, but housing starts here in Tampa are on the upswing. Up ~20% in Q4.
Hopefully, that is good news for our employment numbers, as we are still lagging the national unemployment rate.
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I moved out of Tampa 20 years ago but I still go back now and then. The house I bought in 1990 for 65k and sold in 1992 (long story) for 72k now has a Zillow estimate of $102k and a last sale price of $107k in 2001. So prices in that neighborhood have been flat for at least a decade. Joel Achenbach has a good piece in WaPo today on the changing nature of Tampa.
http://www.washingtonpost.com/national/health-science/for-gop-in-florida-its-boom-burbs-or-bust/2012/01/22/gIQAvZXiJQ_story.html
Some of the towns he mentions didn’t even exist when I lived in Florida. Every time I go back to Tampa it reinforces the soundness of my decision to leave.
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I live in New Tampa, pretty close to Wesley Chapel and the Shops at Wiregrass. Achenbach has a pretty good sense of this area, IMO.
The housing bubble burst here in 2007, but prices are still falling as foreclosure and short sale inventories get cleared out. The realtors I have talked to think that things are starting to bottom out. But who knows?
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jkt
You should have settled across the Bay. There is a world of difference between St. Petersburg and Tampa. Not to pick on my brothers across the Bay.
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I don’t know if you saw the article in the Tampa Bay Times about a week ago. Some company in California is forecasting housing prices in Florida to rise..IMO dramatically. I wish they were right…but the doubting Thomas in me….well they had Miami’s going up over 8% and the Tampa Bay area increasing 7.4%. I find that astounding and almost impossible for me to even imagine much less believe.
Still, I guess it’s better to have positive forecasts than negative.
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Up at least 15% here on housing starts, Mike, if I heard correctly on KUT this morning.
Brent, do you think Apple will skyrocket after earnings report today or has everyone already assumed the news?
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Mark, I have no idea, but I have been expecting the “law of large numbers” to catch up with Apple for some time.
Also, I believe Apple reports tomorrow after the close.
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Mike, is there a need for more housing in FL? Or is that a regional/local problem that doesn’t apply to the whole state?
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bsimon,
I don’t know about a need, but there is a market for new housing. Housing starts in South Florida (think Miami) are up ~20% too. A major constraint, though, is the availability of loans, or rather the high hurdle for mortgage eligibility.
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“The Fed tightened? Obama slashed spending? Whatever, Paul.”
Completely agree. How annual deficits in excess of $1 trillion dollars can be viewed as “slashing spending” is beyond me.
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For those who haven’t seen this yet it’s worth a read. The Chinese manufacturing is not only cheaper, but apparently also better than in the United States:
“How the U.S. Lost Out on iPhone Work
By CHARLES DUHIGG and KEITH BRADSHER
Published: January 21, 2012
When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.
But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.”
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“There is reason for optimism on the economy, writes Paul Krugman:”
January 23, 2012
“It’s time to start calling the current situation what it is: a depression”
December 12, 2011
Apparently, we have just witnessed the greatest 5 weeks of economic activity in recorded history!
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lol, I’m sure it has nothing to do with the fact that’s it’s an election year.
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I mean I’ve done well over the last five weeks, but apparently nowhere near as well as I should have!
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Wow, banned. What a great catch. You should bring that to the Daily Show’s attention. They wouldn’t even need to change the punch line.
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That’s great. Almost as good as the notion that the Federal Government is practicing “austerity”.
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What do you mean? Absence of stimulus is austerity. EVERYBODY knows that.
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So in a depression there can be no optimism?
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I think the very definition of an economic depression is no optimism.
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This one is great as well:
“Such moral outrage is common among the opponents of globalization–of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.”
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html
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From jnc4p’s link:
“A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.”
I’m not sure what to make of that.
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Those don’t sound like jobs we’d want back. But why not bring the process back – or can it not be automated?
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serfdom
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The whole article is worth reading — what particularly struck me was the desire for a workforce that had more than high school, but less than college. I’ve been screaming that for years. I knew a bunch of kids that couldn’t hack it as undergrads (for whatever reason) and would have been better served with some sort of trade school/apprenticeship.
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nova:
If they don’t go to college, they can afford the tea and biscuits.
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On this issue, Krugman was to your right in 1997:
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html
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jnc
Thanks for that Grove article in Businessweek.
It certainly made me look at things differently.
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The article worth rereading on conjunction with this is Andy Grove’s piece from Business Week.
Andy Grove: How America Can Create Jobs
The former Intel chief says “job-centric” leadership and incentives are needed to expand U.S. domestic employment again
By Andy Grove
“Recently an acquaintance at the next table in a Palo Alto (Calif.) restaurant introduced me to his companions, three young venture capitalists from China. They explained, with visible excitement, that they were touring promising companies in Silicon Valley. I’ve lived in the Valley a long time, and usually when I see how the region has become such a draw for global investments, I feel a little proud.
Not this time. I left the restaurant unsettled. Something did not add up. Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late—unless you’re counting Asia, where American tech companies have been adding jobs like mad for years.
The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.
Friedman is wrong. Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.
The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs. ”
http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
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My parents live in Tarpon Springs so I am know that things are slightly less reactionary on that side of the bridge. I’ve lived in the greater Tampa area three times, as a kid, in high school, and just out of college. Three strikes and its out. Infrastructure improvements proceed at a glacial pace. The schools are woefully underfunded and inadequate. The anti-tax retirees dictate everything.
By the way, it’s a misnomer to say that St. Petersburg is where all the old people live. The old people live in Sarasota. Their parents live in St. Petersburg.
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That’s a funny joke jkt but you have it backwards.
The old people live in St. Petersburg..their parents live in Sarasota..and the parents of those old people in Sarasota live in Venice.
BTW the concept of old folks in St. Pete is no longer applicable. Our median age has been on a downward trend and it’s now below 40!!!
In fact our 38.5 is only a few years above the national median.
But you are correct about the retirees killing our school systems. It’s the..”I’ve raised my kids up in the North and had to pay high taxes, I didn’t come down here to pay high taxes to raise somebody else’s kids”.
And because of our geography and the nation’s post WWII love affair with the Automobile we are woefully behind in things like Mass Transit and highway infrastructure…..but NOT St. Pete.
We were platted out in the late ’20’s boom and the real estate speculators got the city to take out bonds and build the infrastructure to support what where largely vacant lots that were being sold and flipped each year by Yankees (I use that term affectionately) who came down and enjoyed free vacations with the proceeds from that flipping. When the market crashed in ’29 it almost caused St. Pete to lose their credit rating and renege on the bonds…the city hung in there..and made it through…the upside being that we are one of the only cities in Florida where the infrastructure was in place before the onslaught of people starting moving in.
As someone who serves on our planning commission this means when projects come before us and City Staff do the required due diligence on the “concurrency issues”…water, sewage, highways etc…we are prepared because of the gross overcapacity those real estate speculators hoodwinked the city into providing back in the ’20’s. The law of unintended consequences actually working in a beneficial manner.
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Opening I-75 led to the southern sprawl of Tampa/St Pete down to Venice/Naples/Ft Myers. St Pete as the original retirement destination has now outlived its first generation and got the benefit of gentrification.
My old stomping grounds of Brandon as I understand it has become highly Hispanic as newer whiter immigrants to the state have settled north and south of the old SR60 core.
I’m going back for a weekend next month and hope to check out old stomping grounds and go to Berns for the first time in 25 years. I suspect little had changed there.
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Yello,
ARRA helped with some of the infrastructure (e.g, widening of I-275 from Tampa to the junction with I-75, widening of Bruce B Downs to handle the large influx of New Tampa residents). But no light rail (extra 1% sales tax) or high speed rail to Orlando (Rick Scott).
Hillsborough County schools got a big infusion of cash ($100M) from the Gates Foundation to improve teacher quality. It seems to have had an effect, despite some criticisms. At least the Gates’ seem to be happy with their investment.
Bern’s will probably be just like you remember it. Awesome. You might try SideBern’s for something a little different.
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Mike,
Hopefully you didn’t find my provincial retort insulting to you Tampans. If you’ve been here two years I’m sure you’re aware of the love/hate relationship between the East side of Tampa Bay and the West side of the Bay. LOL That split is going to be used as an excuse as to why the Rays will eventually leave, but they are gone because Tampa..the region..simply does not have enough Corps to buy the boxes and pay wages high enough for the fans to purchase many tickets.
Jkt
Stay in touch. Perhaps we can hook up for a beer at one of our many waterfront cafes. I’d be happy to show you and the Misses the beauties of St. Pete.
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RUK,
No offense taken — or even noticed. Heck, where I live, it could be Minnesota except for the palm trees and warm weather (how about that 80 degree weather, huh?).
I’m a big baseball fan and really like the Rays, but getting to the Trop for a 7 pm start is a pain in the butt with the traffic across the Howard Frankland at rush hour.
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Tampa is the nation’s southernmost Midwest city. It’s I-75’s fault. Having lived on both coasts, the cultural differences are stunning and largely based on where their respective highways originate.
I am dying to get to St Pete to see the new Dali museum but I don’t think it opens until after my trip in February.
The story of MLB’s abuse of the Tampa Bay area are legendary. It gets my blood boiling just remembering it.
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Yello,
The new Dali has been open for a while (a year?). There’s a Chihuly museum on Beach as well, if you’re into blown glass.
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Ok guys here is an open invitation..oops not open..confined to mike and jkt.
jkt let us know of your plans when you finalize your trip. Perhaps we can invite Mike over to join us for a beer at one of our many waterfront sidewalk cafes. Happy to give you all a quick tour of our lovely downtown including one of the very first condos in the state of Florida…Babe Ruth and Lou Gehrig used to rent out the top two penthouses when the Yankees still had spring training here. If you are baseball nuts I can even take you by the old field where the Yankees used to train.
BTW I’m a bona fide Yankee hater. lol And so jkt if you wish to see the Yankees in their current Spring Training home that’ll be Mike’s responsibility. Plan in advance however as Yankee Spring tickets are a very hot ticket.
BTW jkt Mike is right about the Dali. It’s pretty impressive along with all the updates to the Mahaffey theater next door.
The new Dali opened at 11:11AM 1/11/11
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Speaking of Florida:
Florida cops beat, taser 66-year-old man with dementia
warning: graphic video
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Nova
You’ve just touched on why we in Florida love Texas. We have sooo many wackjobs and bad incidents here…can you say Casey Anthony?…that we need the occasional break from embarrassment that Texans can provide.
Said with respect Mark…I’m lobbing that rock from a glass house. Gov Skeletor makes Rick Perry look like a …a…Presidential candidate.
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Big week ahead:
“Wall Street Still Divided on Fed Easing But Optimistic on Economy”
http://www.cnbc.com/id/46075671
Personally, I think wihout a comittment to QE3 from this meeting, you will see a selloff. Also look to the imposition of Iranian oil sanctions by Europe later this week. If it’s not a paper tiger, there will be repercussions for their financial crisis in Europe, depending on the duration.
Also in the unilkly event of a retaliatory Iranian military action, no matter how futile, oil and gold will shoot the the roof, even if temporarily.
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Are we allowed to ask stupid questions on this blog…I’m going to test the water..
john/banned All things considered do you think QE3 is a good thing?
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Hmm, the Fed is already running the economy, so this is tinkering around the edges. Overall it’s a similar effect to a stimulus package, but targeted at the housing market. Now I and a number of posters here think the problem with the housing market is that prices are still too high in about 6 states, but it would be hard to win an election on that.
I guess I would say that it will have a temporary economic boost, with the hangover coming down the road.
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“a temporary economic boost, with the hangover coming down the road.”
AKA “Pretend and Extend”. This is distinct from say a policy of “eating our peas”.
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I agree with your overall conclusions, though I think
I read Krugman’s comments to be that if Obama and the Fed hadn’t ignored TP demands, we wouldn’t be on the road to recovery. Put differently, we’re on the slow road to recovery precisely because Obama and the Fed ignored Republicans.
BB
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The double negative threw me for a moment. I have believed since the fall that the best thing for the country is gridlock, as long as Europe doesn’t collapse. Neither party is handing out silver bullets at the present time.
Krugman always reaches that type of conclusion. When Europe stopped declining last month, he said it was because effectively speaking they had adopted his policy proposals even though of course on the surface it seemed nothing like his policy proposals. LOL
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I’m a big fan of gridlock, and hence divided government.
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How would you calculate the value of being able to inherit a rent controlled apartment in Manhattan ($331.76 per month) for estate tax purposes?
“A Manhattan Eden, for $331.76 a Month
By ELIZABETH A. HARRIS
Published: January 23, 2012”
““I’ve had people actually get angry with me,” said one of Mr. Warwick’s neighbors, who declined to be identified by name and risk being chastised by strangers. She took over a rent-controlled lease from her parents, and she would not specify what she paid, except to say that it is under $400 a month.
“I’m an inheritor,” the tenant said recently by telephone, a slight quiver in her voice. “It’s not a very popular position these days.” And then, very politely, she ended the call.”
Reminds me a bit of the underground housing market in Havana.
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Had no idea this was possible, wow.
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The comments are great. we have to subsidize “creative” people. It’s true. My sister-in-law is an artist. What this actually means is her fat cat brother-in-law pays for her airfare.
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Rent control in NYC, as I learned it from my great uncle who was a NYC cop, was intended to provide enough middle class apartment housing to keep teachers, cops, firefighters, ER nurses, and EMTS actually in the city. I don’t know if that was true, but where he and my Aunt lived, “Stuyvesant Village”, sure had a lot of cops, firefighters, and teachers in the 50s and 60s. When my aunt died no one in the family “inherited” the unit so I am wondering about that aspect. I think the rule was that to “inherit” you had to be a resident relative within the unit, like a caretaking adult child.
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There are definitely rules on this, but as I noted with the analogy to Havana, it’s a system that rewards insiders who know how to game it, at the expense of efficiency and transparency.
More to the point, being able to get an apartment in Manhattan for less than $400 per month has an economic value, that presumably can’t be assessed for tax purposes when it is transferred from one generation to the next.
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My first 4 years in Manhattan were in Stuy Town with legal sublets. I was paying $300 a month. Easy walking distance to my favorite East Village bars. God, I miss those days…
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“OT: SOPA fallout
“Dodd accused of “bribery” over SOPA remarks
Hollywood’s top lobbyist warns Democrats that his industry will cut off the money flow if they don’t get in line
By Justin Elliott
Monday, Jan 23, 2012 11:03 AM Eastern Standard Time”
“With the (at least temporary) shelving last week of the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA), Hollywood was dealt a defeat following a backlash led by Internet giants Google, WikiPedia and others.
Now Chris Dodd, senator turned Motion Picture Association of America chief, is out with an informative interview warning lawmakers — particularly Democrats — not to count on Hollywood’s historically generous campaign contributions. He told Fox late last week:
‘Candidly, those who count on quote ‘Hollywood’ for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake. Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake. …
I would caution people don’t make the assumption that because the quote ‘Hollywood community’ has been historically supportive of Democrats, which they have, don’t make the false assumptions this year that because we did it in years past, we will do it this year. These issues before us — this is the only issue that goes right to the heart of this industry.’
The premise of Dodd’s comments is that campaign contributions are essentially transactional, and that Hollywood money comes with an implied — or perhaps explicit — quid pro quo. That’s how one would expect watchdog or good government groups to talk about the world of campaign finance, but it’s striking coming from Hollywood’s top lobbyist, particularly a man who spent three decades in the U.S. Senate. Dodd is speaking from experience.”
http://www.salon.com/2012/01/23/dodd_accused_of_bribery_over_sopa_remarks/singleton/
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Airing laundry like that in public is very dangerous. It makes explicit what everybody already (either rightly or cynically) assumes.
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An interesting article in the New Yorker about Bain and other venture capital firms.
The author’s point…the jobs issue is not really relevant in the discussion about Bain..good or bad…the real issue is the way the laws have been written to encourage the Venture Capitalists to basically take a ton of money out of companies leaving the taxpayer to mop up the mess.
http://www.newyorker.com/talk/financial/2012/01/30/120130ta_talk_surowiecki
“The real reason that we should be concerned about private equity’s expanding power lies in the way these firms have become increasingly adept at using financial gimmicks to line their pockets, deriving enormous wealth not from management or investing skills but, rather, from the way the U.S. tax system works. Indeed, for an industry that’s often held up as an exemplar of free-market capitalism, private equity is surprisingly dependent on government subsidies for its profits.”
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Indeed, for an industry that’s often held up as an exemplar of free-market capitalism, private equity is surprisingly dependent on government subsidies for its profits.”
I don’t know enoug about “privatey equity” to know whether that is true. However, if true, I can’t think of a better criticism, particularly to the extent that it applies to Romney.
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