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 | 1327.5 | 1.3 | 0.10% |
| Eurostoxx Index | 2179.6 | 31.4 | 1.46% |
| Oil (WTI) | 84.02 | 0.1 | 0.13% |
| LIBOR | 0.468 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 81.91 | -0.078 | -0.10% |
| 10 Year Govt Bond Yield | 1.59% | -0.05% | |
| RPX Composite Real Estate Index | 179.8 | 0.3 |
Markets are slightly better on speculation of further stimulus measures out of the world’s central banks. We are seeing a tightening across the board with Euro sovereigns, particularly Greece. The US 10-year is yield is lower as well, with MBS up a few ticks. Today is Triple Witching, with the expiration of options and futures.
The Empire State Manufacturing Survey came in well below expectations, and dropped precipitously from May’s number based on a steep drop in shipments. Overall, the report suggests that business activity is still expanding (slightly) but optimism is waning. Separately, capacity utilization fell from 79.2% to 79% and industrial production fell .1%.
Harvard’s Joint Center for Housing Studies released their State of the Nation’s Housing Market Survey yesterday. Punch line: The housing market appears to have turned the corner, however further economic weakness could stall it again. They note that housing construction is finally a positive contributor to GDP. They also include a chart showing that the relative attractiveness of owning vs renting is as high as it has been since the early 70’s:
As if we didn’t have enough to worry about on the horizon, an ex-Soros advisor warns us about Japan, where he envisions a Japanese government bond default by 2017. The IMF is forecasting the Japanese debt to GDP ratio will increase to 245% by 2014. “The yen and the JGB market are in a bubble,” Fujimaki said. “With the gigantic debt Japan has accumulated, a thin needle, or even a gentle breeze may pop this. Events in Europe can possibly trigger this to blow up.” While some people bemoan that we are potentially following the European track, Japan is the final stop on the track they propose.
Filed under: Morning Report |
All Things in Moderation 
Boys and girls, it’s a day for risk taking, quadruple witching.
Remember fortune favors the bold!
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Anybody remember this snarky Suzy Khimm piece:
“Ron Paul has an investment portfolio that’s worth anywhere between $2.44 million and $5.46 million, and the Wall Street Journal has taken a closer look at his holdings. Paul’s investments wildly diverge from the typical portfolio: Sixty-four percent of his investments are in gold and silver-mining stocks, and he holds no bonds and almost no business stock funds.
That’s not a surprise for the nation’s most prominent goldbug. But it’s also an extremely risky strategy in the current economy, where gold, silver and precious metals have dropped precipitously in the last few months of 2011. Here’s what one Connecticut investment manager told the Journal about Paul’s portfolio:
Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says. There are many possible doomsday scenarios for the U.S. economy and financial markets, explains Mr. Bernstein, and Rep. Paul’s portfolio protects against only one of them: unexpected inflation accompanied by a collapse in the value of the dollar.”
That was December of last year. Here’s the hcart that must be pissing off Mr Bernstein’s investment clients:
http://incakolanews.blogspot.com/2012/05/gold-gld-vs-s-index-spx-12-month-chart.html
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“Consumer sentiment fell in early June to a six-month low on worries about deterioration in the jobs market and Europe’s festering debt crisis, a survey released on Friday showed. ”
Since in my view this is the ultimate contrarian indicator, excellent news!
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“This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds”
I remember that line.
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Much better writer than financial advisor as is so often the case.
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“Boys and girls, it’s a day for risk taking, quadruple witching.
Remember fortune favors the bold!”
Quadruple witching – are there really single stock futures?
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Interesting article, although I would argue an ultimately unsuccesful marketing approach because of the price tag:
“Apple Fuels Tesla’s Retail Drive”
http://www.cnbc.com/id/47830305
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brent
Actual question or snark?
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banned… actual. do they really trade?
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since 2002
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10 Reasons to Be a Bull, From a Stock Market Bear
http://www.cnbc.com/id/47828924
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Entertaining quote from the past with regards to today’s announcement by Obama on immigration:
“President Obama’s decision today to bypass Congress is especially interesting in light of comments he made back in March of 2011 at a Univision townhall:
MR. RAMOS: Mr. President, my question will be as follows: With an executive order, could you be able to stop deportations of the students? And if that’s so, that links to another of the questions that we have received through univision.com. We have received hundreds, thousand, all related to immigration and the students. Kay Tomar (ph) through univision.com told us — I’m reading — “What if at least you grant temporary protective status, TPS, to undocumented students? If the answer is yes, when? And if no, why not?”
THE PRESIDENT: Well, first of all, temporary protective status historically has been used for special circumstances where you have immigrants to this country who are fleeing persecution in their countries, or there is some emergency situation in their native land that required them to come to the United States. So it would not be appropriate to use that just for a particular group that came here primarily, for example, because they were looking for economic opportunity.
With respect to the notion that I can just suspend deportations through executive order, that’s just not the case, because there are laws on the books that Congress has passed — and I know that everybody here at Bell is studying hard so you know that we’ve got three branches of government. Congress passes the law. The executive branch’s job is to enforce and implement those laws. And then the judiciary has to interpret the laws.
There are enough laws on the books by Congress that are very clear in terms of how we have to enforce our immigration system that for me to simply through executive order ignore those congressional mandates would not conform with my appropriate role as President.
That does not mean, though, that we can’t make decisions, for example, to emphasize enforcement on those who’ve engaged in criminal activity. It also doesn’t mean that we can’t strongly advocate and propose legislation that would change the law in order to make it more fair, more just, and ultimately would help young people who are here trying to do the right thing and whose talents we want to embrace in order to succeed as a country. (Applause.)”
http://dailycaller.com/2012/06/15/flashback-obama-said-he-wouldnt-do-executive-order-on-deportations-weve-got-three-branches-of-government/#ixzz1xsrBGc3k
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JNC, POTUS and DHS have not changed the law, just the enforcement priorities.
I remember when then Chief Bob Miles told the APD not to arrest MJ smokers unless they blew smoke rings in the officer’s face or possessed enough to make a salable quantity. That was about forty years ago. MJ possession remained a felony in TX. It was simply a resource allocation issue for law enforcement.
I represented an officer at his disciplinary hearing for having busted 26 UT students one night for possession. I kept his job for him, but he later became chief of a suburban force nearby, after he was told he should look for other work.
Its like that.
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Pretty good piece by David Brooks:
“What Republicans Think
By DAVID BROOKS
Published: June 14, 2012
Democrats frequently ask me why the Republicans have become so extreme. As they describe the situation, they usually fall back on some sort of illness metaphor. Republicans have a mania. President Obama has said that Republicans have a “fever” that he hopes will break if he is re-elected.
I guess I’d say Republicans don’t have an illness; they have a viewpoint. Let me describe it this way: In the 1950s, Dwight Eisenhower reconciled Republicans to the 20th-century welfare state. Between Ike and George W. Bush, Republican leaders basically accepted that model. Sure, they wanted to cut taxes and devolve power, but, in practice, they sustained the system, often funding it more lavishly than the Democrats.
But many Republicans have now come to the conclusion that the welfare-state model is in its death throes. Yuval Levin expressed the sentiment perfectly in a definitive essay for The Weekly Standard called “Our Age of Anxiety”:
“We have a sense that the economic order we knew in the second half of the 20th century may not be coming back at all — that we have entered a new era for which we have not been well prepared. … We are, rather, on the cusp of the fiscal and institutional collapse of our welfare state, which threatens not only the future of government finances but also the future of American capitalism.”
To Republican eyes, the first phase of that collapse is playing out right now in Greece, Spain and Italy — cosseted economies, unmanageable debt, rising unemployment, falling living standards.
America’s economic stagnation is just more gradual. In the decades after World War II, the U.S. economy grew by well over 3 percent a year, on average. But, since then, it has failed to keep pace with changing realities. The average growth was a paltry 1.7 percent annually between 2000 and 2009. It averaged 0.6 percent growth between 2009 and 2011. Wages have failed to keep up with productivity. Family net worth is back at the same level it was at 20 years ago.
In America as in Europe, Republicans argue, the welfare state is failing to provide either security or dynamism. The safety net is so expensive it won’t be there for future generations. Meanwhile, the current model shifts resources away from the innovative sectors of the economy and into the bloated state-supported ones, like health care and education. Successive presidents have layered on regulations and loopholes, creating a form of state capitalism in which big businesses thrive because they have political connections and small businesses struggle.
The welfare model favors security over risk, comfort over effort, stability over innovation. Money that could go to schools and innovation must now go to pensions and health care. This model, which once offered insurance from the disasters inherent in capitalism, has now become a giant machine for redistributing money from the future to the elderly.
This is the source of Republican extremism: the conviction that the governing model is obsolete. It needs replacing. ”
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“markinaustin, on June 15, 2012 at 12:51 pm said:
JNC, POTUS and DHS have not changed the law, just the enforcement priorities. ”
Yes, but he’s also just invalidated his previous excuse:
“With respect to the notion that I can just suspend deportations through executive order, that’s just not the case”
He just did exactly that.
It’s the same excuse he gives on cracking down on medical marijuana when he doesn’t want to take responsibility for his own policies. I view the priorities that are set on how and on whom to enforce the law as part and parcel of executive branch policy making.
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so the politics of this immigration decision — is he just writing off working class whites?
admittedly, this isn’t an issue I follow, but i can’t imagine this plays well in rust belt states.
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“novahockey, on June 15, 2012 at 1:01 pm said:
so the politics of this immigration decision — is he just writing off working class whites?
admittedly, this isn’t an issue I follow, but i can’t imagine this plays well in rust belt states.”
Yep. His team can read the poll numbers. It’s going to be a turn out your base election. Get ready for a lot more “Politics as Usual” and a lot less “Change We Can Believe In”.
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JNC:
“America’s economic stagnation is just more gradual. In the decades after World War II, the U.S. economy grew by well over 3 percent a year, on average. But, since then, it has failed to keep pace with changing realities. The average growth was a paltry 1.7 percent annually between 2000 and 2009. It averaged 0.6 percent growth between 2009 and 2011. Wages have failed to keep up with productivity. Family net worth is back at the same level it was at 20 years ago.”
A ridiculous basis for comparison.
Also the family net worth thing is almost solely related to real estate values.
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banned:
Are you optimistic about America’s economic future?
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Looks like traders are afraid to be short going into the weekend. that’s a welcome change.
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scott:
Hmmmm, ok yes, because to be either an investor or trader is an automatic confirmation of that is it not? (perma-bears aside)
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banned:
because to be either an investor or trader is an automatic confirmation of that is it not?
I don’t think so. Investing involves relative judgments – is this better than that – not necessarily absolute judgments, ie this will be good and that will be bad. Having a negative outlook on US economic prospects doesn’t mean that everything will be bad or that one should stop investing altogether.
I just wasn’t sure whether or not to take your criticism of Brooks as disagreement with his conclusion or just disagreement with the thought process.
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“perma-bears”
i’ve never heard that, but that cracks me up. i imagine a trading floor full of Eeyores.
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“It’s going to be a turn out your base election.”
I don’t think his base is big enough.
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All his base are belong to us..
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nova:
There are some notorious one out there like Nouriel Roubini and Marc Faber but also some solid investors too like David Rosenberg.
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Keep in mind Brooks isn’t necessarily agreeing with the argument, just pointing out why Democratic hopes that an Obama reelection will break the Republican “fever” and make them rediscover their support for the welfare state are misplaced.
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Oh the Brooks thing!
No I was suggesting in shorthand that the economic situation of the US vis a vis the world comiing out of WWII totally distorts the comparison.
We are a matrue economy that no longer trades in low wage labor and abundant easily reachable natural resources. Those countries anywhere in the world that have those advantages will always be in the lead in economic growth.
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banned:
Ah, I gotcha.
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OT unless you want to link this to unemployment numbers…but i read this article and had a few thoughts on it given the discussion on public education the other day:
————–
Sixth-grade teacher Michelle Apperson passed down a simple message to her students.
“My favorite teachers growing up were the ones who challenged me to go out of my comfort level a little bit, strive for the stars, and work hard,” the veteran California educator wrote on her school’s bio page.
But her own hard work wasn’t enough to keep her employed.
Despite just being named Sacramento’s “Teacher of the Year,” Apperson was laid off as part of a massive budget cut.
“It hurts on a personal level because I really love what I do,” Apperson, who taught all subjects, told KXTV-News 10. “But professionally and politically or economically, I get why it happens.”
Her pink slip comes just days after President Barack Obama prodded Washington lawmakers to help cash-strapped states with education funding.
The Sacramento City Unified School District has suffered approximately $143 million in budget cuts in recent years. School spokesperson Gabe Ross told News 10 that who gets laid off is mandated by state law and is based on seniority, not performance.
“It’s an awful situation,” Ross said. “It’s another sign of how education’s funding really needs an overhaul.”
According to her bio, Apperson’s goal was to teach her students “how to solve problems with peers, other adults, and the world around them.”
Now they know firsthand how difficult that can sometimes be.
—————
Thought 1 – Shouldn’t the state law maybe get an overhaul instead of education’s funding? Is there a reason why the decision should not be made on performance instead?
Thought 2 – This is another terrible article that is missing key bit of information that might be useful to help a reader determine what is really going on. Why is there a massive budget cut? Is it proportionally greater on education than other services? What is their definition of ‘massive’? 2%? 20%? 50%? 143 million out of what? There are any number of other ways to cut the ed budget (I know in Fairfax county VA they did quite a number of things a couple years ago – significant layoffs were not one of them…and we kept our high school “gormet cooking” classes).
Thought 3 – School people seem to think that they should have basically an unlimited amount of money to work with. My county School Superintendent said that the amount of taxes county residents pay should not be a fixed percentage – they should just pay whatever for the class of schools they want. So when I was addressing the school board, I said I wanted the best school system in the world – should the county simply take all our money to fund it? The school systems I have seen and been involved with cannot or will not distinguish between wants and needs. We can’t seem to get kids fluent with science yet heaven forbid we charge activity fees for kids that want to play a sport. We can fund high school gormet cooking classes but look to in crease class size and not implement full day kindergarten.
Thought 4 – this is a very one-sided article..
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Dave:
Shouldn’t the state law maybe get an overhaul instead of education’s funding? Is there a reason why the decision should not be made on performance instead?
I had precisely the same thought as I read that.
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dave:
I don’t have anything to add, but I wanted to let you know I read it.
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+1
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Dave, is that the entire article, or is there more? It’s not really much of an article otherwise except for highlighting another individual experience of suffering at the hands of the CA budget crisis. There are many more like that. Education funding as far as what goes into classrooms and to the benefit of students has been suffering for years in CA. Most of the school funding comes from local property taxes and between Prop 13 passing years ago and more recently the housing crash as well as pension liabilities our students aren’t getting nearly the same education they received when I was a kid or even when my 40 year old son was a student. I spend a lot of time with my grand children as do their parents making sure they’re well prepared for the future.
Your thoughts are appreciated.
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Ezra Klein makes the same point:
“Andy Stern, former president of the Service Employees International Union, put the problem to me bluntly. Unions “seem like a legacy institution and not an institution of the future,” he said. “And legacies get shed.”
Here’s an example of what he means: State budgets are in worse shape than Charlie Sheen. With federal aid running out and local economies still struggling, the next few years will require deep cuts in spending. And where do states spend much of their money? On education – which is to say, on teachers.
The prospect of firing tens of thousands of teachers is bad enough. But, as a chilling report (pdf) from the New Teacher Project explains, about 40 percent of the nation’s teachers work in states where their contracts don’t allow administrators to take performance into account when making layoffs (graphic here). That is to say, they cannot try to lay off the bad teachers while saving the good ones. Instead, they’re forced to use the “last-hired-first-fired” mechanism. The newest teachers get the pink slip, no matter how good they are. This will turn a crisis into a catastrophe. And let’s be clear, it’s the fault of the teachers unions.
That’s not just a problem for schools, children, taxpayers and teachers. It’s also a problem for the labor movement as a whole. Americans don’t care what most unions are up to. But Americans do care, a lot, about what their child’s teacher is up to. And if they think that teachers unions – which are public-employee unions, for the record – are standing in the way of good schools and good teachers, then their verdict will be much worse than “not an institution of the future.” They will see unions as hurting our future – and their children.”
…
“If unions are to not just survive, but to actually flourish again, they need to create an identity beyond being a protection service for people who aren’t very good at their jobs. For too long they’ve been defending individuals at the expense of the collective. Every time an incompetent teacher or overly aggressive cop hides behind a union, unions in general become a bit less attractive to everyone else. Next year, when a slew of beloved and decorated teachers are fired not because they were worse than the teachers who kept their jobs but because they were younger, good people everywhere will find themselves that much less sympathetic toward organized labor.”
http://voices.washingtonpost.com/ezra-klein/2011/03/column_how_unions_can_be_more.html
The graphic he referenced showed that California only allows seniority to be taken into account for layoff decisions.
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