August 11, 1943

Previously Mark Clark had been promoted to Lt. General by Ike for his outstanding service in North Africa. Now he was to be the American commander of the Fifth Army for the Mediterranean push into Italy, the first Allied incursion onto mainland Europe. Thus, it was with great hope for the liberation of Europe that my dad named me “Mark” on August 11, 1943. Although he had to cover the naming with its relationship in Hebrew to someone else long dead in our family, I, like thousands and thousands of American male children, was named after a WW2 USA warrior.

Years later when I talked to my dad about it, he pointed out that after Salerno there was a big drop off in babies named “Mark”. That would have been in September of ’43. Salerno didn’t go so well. Missed that by a month. And the “Patton” craze died down after the stories of his slapping shell shocked casualties in hospital care went public. So it goes.

Clark was later criticized for taking Rome while allowing a German army to escape to the north. However, I have it on the authority of the late Cecil Cates, then a Captain in Army Intelligence in the invasion force, that encircling the retreating Germans would have been tactically impossible and the symbolism of taking Rome was worth a great deal to the Italian partisans, who harassed the retreating Wehrmacht.

My mother in law, then a farm girl in Calabria, remembers when the Germans first swept south through Italy, foraging from the fields and stealing as they came. They were hated. Before dementia caught up with her, she told the story of how her father hid their Jewish cousins in the barn when the Germans came. We think there were no Jewish cousins, but that her father, like many Italian farmers, hid local Jews when the Nazis came, and referred to them as “cousins” within the family so that no one would slip up and mention guests who were not relatives. That was a common practice in Italy to the point that almost all of Italy’s Jews survived the Holocaust, and the ones who died were generally young persons fighting with the partisans, or the oldest ones who refused offered hiding.

So that is what I am musing about, 10 days into retirement, on my 72d birthday.

Morning Report: Worrisome trends in inventories 8/11/15

Markets are lower this morning after China devalued the yuan overnight. Bonds and MBS are up.

Wholesale inventories rose 0.9% in June, while wholesale sales rose only 0.1%. The ratio of inventories to sales rose to 1.3. This is a worrisome signal. A rising inventory to sales ratio is a harbinger of a cyclical recession. While there is a possibility that the West Coast Port strike from earlier this year is messing with the data, the trend is unmistakable.

Productivity rose less than expected in the second quarter, and unit labor costs were higher than expected, which was disappointing. The first quarter numbers were revised better (productivity up and unit labor costs down), however Q1 productivity was still flat and unit labor costs were higher than inflation. These two numbers can be volatile, so it makes sense to look at a moving average. The 12 month moving average for productivity is about 0.25%. The 12 month MA for unit labor costs is about 2.1%. Anyway, flat productivity and 2% wage inflation is not symptomatic of a great labor market, despite what the numbers say.

Small business optimism rose in July, according to the NFIB. Expectations for the economy accounted for about half the rise. Employment was flat. Increasing labor costs (not only wages, but regulatory burden) are depressing the bottom line as profits fall. In fact, most are reporting that the increase in labor costs is due to mandated benefits, not wage increases. This again speaks to the bifurcated market: the big S&P 500 companies are doing well, but much of that is due to (a) rock bottom interest rates and (b) overseas exposure. Those circumstances don’t really apply to the local dry cleaner. Which is why liberals can claim: “These hugely profitable companies refuse to pay a “fair” wage” and conservatives can claim “Regulation is strangling small business and those costs are manifested in stagnant wages.” Liberals are focusing their ire at the big multinationals and conservatives focus their ire at government. There is a bit of truth in both viewpoints.

Speaking of regulations, the American Enterprise Institute crunched the numbers and it turns out that Seattle lost about 1,300 jobs from Jan – June. Of course it is still early days, but it looks like the laws of supply and demand are still applicable in the labor market, regardless of what politicians think.

Completed foreclosures fell to 43k in June, according to CoreLogic. This is up 4.8% from May but down 14.8% from a year ago. The foreclosure inventory remains the highest in the Northeast, where the judicial states are still working through their backlog.

Google is now going to be known as Alphabet. They are re-organizing into a holding company structure.  The Street seems to like it.

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