Morning Report – Initial Jobless Claims percent lowest since the 60s 8/15/14

Stocks and Bonds are up small on no real news. MBS are flat.

The Empire Manufacturing Survey weakened in August, but is still at reasonably strong levels. Industrial Production rose .4% and Manufacturing Production rose 1% in August. Capacity Utilization ticked up to 79.1%. All-in-all, reasonably strong numbers.

Inflation at the wholesale level remained muted in July, with the Producer Price Index rising .1% month-over-month and 1.7% year-over-year. Lower energy prices depressed the headline number – ex food and energy, we were up .2%, still well below what the Fed would like to see.

Consumer Confidence dipped in August, according to the University of Michigan.

Bloomberg has a good article on the contradictory indications in labor market. Initial Jobless Claims as a percent of the population are about .12% of the population, which is the lowest since the late 1960s. Yet the labor force participation rate is stuck at levels we haven’t seen since the 1970s. Separately, the JOLT job openings rose to 4.7 million, the highest since early 2001. So you have a situation where the numbers are saying one thing, yet common sense tells you the labor market is still very weak. As a result, the hawks have a much different view of what is going on than the doves. The best summation is from Edmund Phelps, a Columbia University Professor: “The difference of opinion is whether we’re in a state that’s about as good as it’s going to get or whether we’re in a very poor state, but with good policies and a bit of luck we’ll be able to do a lot better.” This is essentially the “speed limit” conundrum – has the Great Recession basically lowered the speed limit for the economy? If it has, then there really isn’t much more the Fed can do, and keeping rates at the zero bound is the wrong thing to do. On the other hand, liberal economists want the Fed to keep rates as low as possible for as long as possible, arguing that the Fed can easily deal with inflation if and when it ever comes up.

St. Louis Fed President James Bullard would like to see the Fed start hiking rates in Q1.

40 Responses

  1. Can’t we have one discussion without reverting to our trenches. And it’s not like i’m defending the police here.

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  2. Can’t we have one discussion without reverting to our trenches. And it’s not like i’m defending the police here.

    No, it’s why we cant have nice things.

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  3. Considering deficit spending that’s going to go up along with the constant debt refinancing, and Yellen’s seeming preference for Keynesian lies, will that broad really have any interest in raising interest rates? Wouldn’t that make it harder to achieve her goals of MOAR government spending?

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  4. Earth hasn’t been warming for over a decade and the NYT is finally on it.

    http://www.nytimes.com/2014/08/12/science/in-the-ocean-clues-to-change.html?_r=0

    Fuckin’ Deniers!1!!11!!!1!!1

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  5. You should see this broad’s booking video.

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  6. Here it is, in all it’s Don’t You Know Who I Am glory.

    BTW, she blew a .23 BAC.

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  7. Like

  8. Mark, what’s your take on the Perry indictment?

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  9. I heard she took some investigating advice from OJ.

    http://ow.ly/AoeZR

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  10. Sublime.

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  11. I cannot fathom why we as a country continually pass up opportunities to expand fraud, er, Medicare!

    http://www.nytimes.com/2014/08/16/business/uncovering-health-care-fraud-proves-elusive.html?_r=0

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  12. What a Bagger!

    The first issue of evidence we should consider is whether there is any evidence that large, complex economies such as those of Japan or the United States are in fact manageable through the blunt instrument of politics.

    http://m.nationalreview.com/article/385373/economic-lessons-unlearnt-kevin-d-williamson/page/0/1

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  13. The fundamental problem with the idea that the government can manage the economy is that resources are allocated according to political fiat and not any sort of market-driven logic.

    I can see why politicians love the idea of Keynsianism – it is their political cover to shovel home the pork. I can see why liberal statists like Krugman like it – it is a “scientific” justification for more wealth redistribution.

    But, the evidence doesn’t lie: Japan took their debt to GDP ratio to 2.2x following the Keynsian playbook to the letter and they have had little to no economic growth for a generation.

    If you look at the economic numbers from the Great Depression, the New Deal didn’t work either.

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  14. What worked was 1.) WWII full employment, 2) Nothing to buy for 5 years, 3) Reduction of tax rates on investments post WWII 4) Truman and a Republican Congress’s reduction in central planning post WWII economy and 5) Literally no competition as the rest of the world layed in ruins.

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    • For anyone interested in Amity Shlaes’ biography of Coolidge, the kindle edition is on sale today for $2.99.

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  15. Just wanted to let you guys know; my Grandma was the most important person in my life for many, many years. I’m going to miss her. . .

    My grandma died this afternoon at about 3:00. She was 99 years, 10 months and six days old. She is the person who taught me what love, kindness, and caring for others really means.

    She was the grandma who let me eat a quart of strawberry ice cream for dinner, just because it sounded like a fun thing to do. She let me stay up until midnight so that I could hear her mantel clock chime 12 times in the middle of the night. She taught me how to play Rook and Yahtzee, as well as how to paddle a canoe, play badmiton, sew a straight, strong seam, and identify wildflowers.

    She taught me strength in the face of adversity, and how to find peace in the midst of sadness. She taught me how to live in the moment, but also to take pictures with my mind so that I would always have memories; she outlived her husband, all of his siblings, and all of hers—and yet she never felt alone, because she was alive with memories. The last time I saw her the first thing she asked me was if I had a boyfriend yet, and the second thing was how my writing was going.

    She is survived by two daughters, three grandchildren, six great-grandchildren, and two great-great-grandchildren, and more love than the world can hold.

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  16. My condolences for your loss

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  17. My sympathies Michi.

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  18. Michi, as a Grandmother myself, she is exactly the kind I want to be. Count your lucky stars you enjoyed her for as long as you did. I had a truly amazing Grandmother as well, who unfortunately died when I was only sixteen, at the tender age of 66.

    Sending well wishes from California!

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  19. Just back from a three day trip to the beach and the early part of the week getting Solar installed. We should be up and running by the end of this coming week.

    Got in two big swims, yesterday and today, as the weather, ocean current, and water temp were perfect.

    Also, just thought I’d mention that if the Angels win tonight, and Oakland loses, the two teams will be tied for the best record in all of MLB, followed closely by the Dodgers!

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  20. On the other hand, the economists are at this moment called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies which the majority of economists recommended and even urged governments to pursue. We have indeed at the moment little cause for pride: as a profession we have made a mess of things.

    http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/hayek-lecture.html

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  21. Innerestin’.

    Didn’t think of it this way.

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  22. Just finished reading this piece on the history of mood altering and anti-anxiety/depression drugs. It was an interesting read. I’ve never really been into drugs, legal or illegal, at all but I’m certainly familiar with most of this stuff via friends and family members. My mom was definitely a librium addict. Looks like prozac et al are possibly on the way out now but marijuana is on the ascent with legalization in some states. I smoked pot and hash a little in college but didn’t like either one so didn’t last long in that scene…………………….LOL. I’m both prescription and illegal drug free as well, for now!

    In the meantime, we can anticipate the excesses likely to come with the legalization and spread of marijuana. Today, in Colorado, you can already buy marijuana elixirs (sparkling peach, red currant, blueberry, pomegranate), foods (chocolates, cheesecakes, hard candies, candy bars, sodas), botanical drops (cinnamon, ginger-mango, vanilla, watermelon), capsules, balms, pills, and old-fashioned smokables, including hash, in different flavors no hophead of yesteryear could imagine: Lemon Skunk, True Purple, Mother’s Poison, and Black Bubba, to name just a few. Financial stocks in weed production and marketing have shot up in Colorado and Washington (where pot is also legal), and there is now a growth industry, not only in pot sales, but in books and financial services to people who want to invest in the cannabis sector of the economy. Are we on the verge of another best-drug-ever bubble? Is America a capitalist country? Do Americans like mind-altering drugs?

    http://www.alternet.org/drugs/falling-love-again-truly-amazing-history-marketing-and-wide-legal-use-todays-most-dangerous?page=0%2C0

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  23. Oh and the Angels actually do have the best record in all of major league baseball this morning.

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  24. The penny stock bubble in MJ stocks came and went about six months ago. For a while, there were stocks that went from 4 cents a share to 35 cents a share over the course of a month. Of course there were no revenues, let alone earnings.

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  25. Brent, I don’t really have a dog in this fight but are you saying there will be no financial gain via Wall Street investments with the legalization of pot?

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  26. This was somewhat interesting on that question Brent. It’s not something I would invest in regardless………………..just curious about which way the wind is blowing. The only drug company I’m invested in is what used to be Watson Pharmaceuticals, a local generic manufacturer originally.

    http://investorplace.com/2014/06/marijuana-stocks-gain-lose/#.U_Dx96N8HXQ

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  27. Eyewitness video in the aftermath of the shooting in Ferguson, with Brown’s body still sprawled in the street.

    http://www.theblaze.com/stories/2014/08/17/does-this-video-vindicate-the-officer-who-shot-michael-brown/

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  28. Sorry to hear that Michi.

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  29. Lulu, there may be a way to play it. FWIW, we were offered a piece of a company that had one of 3 MMJ licenses in CT. I analyzed it and we turned it down.

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  30. Fascinating glimpse of Rick Perry’s Special Prosecuter.

    http://m.mysanantonio.com/news/local/article/Defense-lawyer-DA-spar-at-contempt-hearing-5154150.php

    He was defending a drunk driver who had killed 2 people.

    Really.

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    • I assume he is a gunner who wants to boost his name. He should get his azz handed to him and be referred for discipline.

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