Friday, January 28, 2011

Superbowl tickets for $288K (parking not included)

I just love this stubhub seller. They've got 23 seats in an owners club suite at Cowboys Stadium for the Superbowl. Fully catered for the big game. Asking price? Just $288,400.

Who knows maybe Mark Zuckerberg is a huge Packers fan or something and he's dying to take 22 of his other "friends" to the Superbowl (sidenote: that would actually be a pretty great promotional gimmick for Facebook - Friend Mark and have a chance to join him at the Superbowl).

While down in the seller comments it does include a note that 4 parking passes are included, the actual bid price states that PARKING of $15 is not included. You know if you pay $288k for Superbowl tickets you'd think they would through in the parking, right? Not in Jerrah's world :)

Lots of reading

* GDP numbers were below expectations.

* Ford, Microsoft and Amazon all missed expectations.

* The Baltic Dry Index (a measure of shipping demand and global economic activity) fell another 4% today and is at it's lowest level in 2 years. This might be due to some external factors like additional capacity coming online, but it doesn't jive with the "robust global growth" story we keep hearing.

* If you're not following the action in the middle east I'd suggest you get up to speed really fast. These are some serious actions and I'd love to be a fly on the wall inside the US State Department right now. For example in Egypt we have a long-time US ally that is suddenly in a world of trouble. We want to support a person's right to peaceful demonstration, but now that the Muslim Brotherhood has apparently stepped in and joined the protest do we want the government to fall? They have that little canal over there that pulls about 1 millions barrels of crude through it every day (and a large pipeline that runs through Egypt with another 1.1 mm barrels per day). Now there is talk that Syria has cut off Internet service and there are rumblings in Jordan. I don't think I'd be sleeping to well in the house of Saud tonight. Oh, and as things get dicey over there, $4 gas might look like a bargain in another 6 months.

* Not to be outdone, Spanish and Portuguese bonds are back at record levels (indicative of higher perceived risk in the market for these bonds) as Spanish unemployment hits 20%.

The stock market is showing it's first cracks in about 2 months on all of this news and more. Typically, the computers have shown up around noon to "buy the dip" so we'll see if they ride to the rescue once again (all of the geopolitical news might make it hard to be long over the weekend).

Cheers!

Wednesday, January 26, 2011

Remember the flash crash?

Well, we apparently don't care when it's on the other side - a flash explosion to the upside caused by a computer error is apparently a good thing.

"IBM, which makes up 10 percent of the share-price weighted Dow average, jumped to $164.35 on an order for 200 shares on the New York Stock Exchange at 3:18:15 p.m. New York time, according to data compiled by Bloomberg. The stock traded at $160.89 during the same second, followed by five trades for a combined volume of 19,600 shares at between $163.22 and $164.35."

A trade happened at roughly $3.50 over the current price for 200 shares. Clearly it's a mistake but before anyone can bust the trade the computers come charging in. Before long the rest of the computers that trade based on market direction (again remember IBM is 10% of the Dow) start racing into the market and suddenly we had a melt up back to unchanged on the day.

One or two flawed "upside" trades in monster stocks like IBM, Apple or Exxon can effectively move the market in a matter of minutes. Again, when this happens on the downside there are Congressional inquiries but when it's causing prices to rise - it's all good.

Until the merry-go-round stops one day.

Tuesday, January 25, 2011

Really cool maps...

I've mentioned before I'm a sucker for cool data presentation. Check out these maps that use census data to show the most popular surnames in the US and London.


You can play around with the interactive version of this map at the National Geographic website.





You can see the London map here. You can really see the influence of recent Southeast Asian immigration in London on their map. I think it would be really neat to see a map of surnames change over the past century in London.

There's also a pretty cool search tool here where you can search for your own last name and where it is highly concentrated around the world.

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Oh, and while we're talking tonight about high speed rail (again) in the US, China's building the world's largest city that will be 26 times the size of London. Yep, that sounds about right.

"The goal of the new city will be to integrate China’s manufacturing base, which will include the cities of Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing.

Together, according to the Telegraph, they account for nearly a tenth of the Chinese economy."

Cheers!

Food inflation and exploding stars...

There's been a meaningful uptick in food prices around the globe over the past few months. For the most part these increases have been modest but some fresh fruits and vegetables have even seen sharp jumps in the US. For example:

Grapes - normally $1.67/lb are $2.67/lb
Strawberries - normally $1.99/lb are $4.50/lb

However, because the average US consumer spends only about 10% of their household budget on food, even a huge 10% jump in prices would only add about 1% to family expenses.

In the developing world this is another story. In China up to 40% of the average family budget is devoted to food purchases (this is somewhat skewed by the fact that for most workers there is no income or property taxes and housing costs are negligible). If food prices jump 10% in China that's an additional 4% off the families bottom line. There have been scattered reports of food prices doubling overnight in some parts of China. If that happened the implications for a society with over 1 billion people living in rural poverty could be dramatic.

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Okay, if this happens expect the lunatic fringe to go even CRAZIER next year.

"According to Dr Brad Carter, senior physics lecturer at the University of Southern Queensland, daylight may be unbroken after the explosion of Betelgeuse.

"This old star is running out of fuel in its centre,’ he remarked to Australian website news.com.au.

‘This fuel keeps Betelgeuse shining and supported. When this fuel runs out the star will literally collapse in upon itself and it will do so very quickly.

‘This is the final hurrah for the star. It goes bang, it explodes, it lights up - we’ll have incredible brightness for a brief period of time for a couple of weeks and then over the coming months it begins to fade and then eventually it will be very hard to see at all."

Two weeks of day light after this star goes supernova? Sounds like a party to me!

Cheers!

Education stats

I expect we'll hear a good deal about our nation's renewed commitment to education tonight during the President's State of the Union speech. I've seen bunch of interesting education stats lately that I thought I'd pull together in one post.

1. The top 5 states in education in the US: Massachusetts, Vermont, New Jersey, New Hampshire, and Minnesota. Those darn northeast elites......

2. The bottom 5 states in education in the US: Oklahoma, Louisiana, New Mexico, West Virginia, and Mississippi.

Perhaps the most disturbing stat in the entire article though was that Massachusetts (our nation's leader in education) only had 5% of their students that read at an advanced level in the 8th grade.

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This entire article from the former CEO of Lockheed Martin is worth a read but I'll put out some choice quotes.

"In China, eight of the top nine political posts are held by engineers." I think that collective roar you just heard was from all the NYAB readers cheering in unison :)

"Already, 70% of engineers with PhD’s who graduate from U.S. universities are foreign-born. Increasingly, these talented individuals are not staying in the U.S – instead, they’re returning home."

"Many of those teaching math and science have never taken a university-level course in those subjects.

I’ve always wanted to be a teacher; in fact, I took early retirement from my job in the aerospace industry to pursue a career in education. But I was deemed unqualified to teach 8th-grade math in any school in my state. Ironically, I was welcomed to the faculty at Princeton University."

I can echo this experience myself. I feel that the strong math background I gained in a small rural school in NNY helped me to achieve a level of success in my career that I could have never dreamed possible. I thought it would be nice to pay it forward by helping others understand the beauty of mathematics. Despite the fact that I have degrees in finance and management science, a graduate level financial charter and have worked with advanced mathematics for most of my career, when I began to look into the prospect of teaching I was told that the state would deem me as unqualified. Maybe Princeton would take me :)

"U.S. consumers spend significantly more on potato chips than the U.S. government devotes to energy R&D.


In 2009, for the first time, over half of U.S. patents were awarded to non-U.S. companies."

"The World Economic Forum ranks the U.S. #48 in quality of math and science education."

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This is just one final stat that jumped out at me when watching a documentary on the success of the S. Korean students on international tests.

"The average South Korean family spends 10% of their after-tax income on "after school" tutoring."

Imagine if we spent half of the money we spend on skating lessons, dance, piano, swimming, karate, football camps, etc, on after school tutoring? Maybe we could close the innovation gap that is growing between us and the rest of the world.

Cheers!

Monday, January 24, 2011

Job outlook rises?

I really wish that one day I could wake up and view the world through the same rose-colored glasses as everyone else. Today. while waiting for news on school closures (ot: it's already warmed up to -15 degrees here, is that really cold enough to close school for the day??) I was struck by the steady stream of news stories covering an obscure survey from NABE that said "US Jobs Outlook Hits Decade High!".

Well, that sounds pretty sweet and is no way correlated to tomorrow night's State of the Union that will focus on Jobs, Jobs and more Jobs.

Hidden way, way, way down at the bottom of the article on the suddenly resurgent US economy are the details of this "survey".

"Eighty-four NABE members responded to the survey, conducted between Dec. 17, 2010, and Jan. 5."

As Tina Fey would say "What the what?". 42% of respondents said they planned on adding staff in 2011, but to be clear this is 35 NABE member companies. I think they teach you in Stats 101 that this would not be considered a robust data set. However, apparently our role is not to question the quality of the information but to swallow it whole.....

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Architect Billings jumped to their highest rates since 2007. "The American Institute of Architects (AIA) reported the December ABI score was 54.2, up from a reading of 52.0 in November. This is the highest level since December 2007."

This is a measure of commercial activity and it seems to be centered on multi-family dwellings (people are broke and losing their homes so maybe there is demand for more affordable apartment complexes?), but it is a signal of some growth coming in the commercial construction industry. I also suspect that there is a growing proportion of US billings coming from foreign buyers (a weak dollar drives global firms to seek out US architects), but I can't confirm this with data.

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While the news is just coming out about the bombing in Russia this has been my fear for some time. A bomber attacking a crowd prior to getting to the screening area. Get ready for the TSA to enact new pre-screening screening areas that will be located 20 miles from the airport. After your pre-screening screening, you will be screened again and board a bus which will take you to the airport where you will begin the regular TSA patdown process.

(sarcasm off).

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I think this is kind of an interesting twist on the traditional gym membership business model. The more you miss the gym, the more you pay. Skip a day at the gym and you'll get billed $5, make all of your planned workouts and you're membership is free.

I see a couple of natural extensions of this model, but I think I'll keep them to myself for the time being :)

Cheers!

Sunday, January 23, 2011

Weekend wrap-up

I love the way GE owns the many markets in which they compete and it was one the first stocks I bought out of college. Their CEO Jeffery Immelt has been a solid replacement for the iconic Jack Welsh and continues to steady the ship through difficult economic times. However, when I heard last week that President Obama had tapped Mr. Immelt to head a job creation panel my first reaction was "huh?". I was pretty sure that GE has been shedding jobs steadily over the past decade and really dumping US jobs over that time period, but I didn't have any data to back me up.

Thankfully, Dow Jones pulled the data for me....

"Immelt runs a big company, but Immelt has shown more skill at cutting jobs, frankly, than creating. GE finished 2009 with 18,000 fewer US workers than it had at the end of 2008, and US headcount is down 31,000 since Immelt's first full year in 2002. During his tenure, GE workers based in the US as a percentage of total employees has fallen to 44% from 52%."

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The two best China-related quotes of the weekend.

"The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China as not just a crutch but a springboard out of the recession. It’s crazy.”


"There have been academics and analysts who have argued about the dangers of China’s economy overheating for some time. But for many, the fact that hedge funds, particularly those with track records on previous crises, are launching specific funds is the sign that the bubble is close to bursting.

One academic said: “Economists have contrarian views all the time. But these hedge funds have their shirts on the line and do their analysis carefully. The flurry of ‘distress China’ funds is a sign to sit up.

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Two for the road:

1) Students take a field trip - not news. Is it a field trip to the science center or nature preserve? Nope, it's a trip to the opening of the new SuperWalmart.

2) Note to self: if your fuel pump stops working do not, I repeat, do not pour gasoline from an open bucket directly into your carburetor.

Cheers!

Global air traffic

This video of global air traffic is just dazzling to watch. The increasing amount of air travel in Asia is interesting to note.



Cheers!

Thursday, January 20, 2011

Random info

* The Philly Fed data came in a little light but the story continues to be rampaging wholesale prices. The prices paid index jumped to it's highest level since 2008. As costs continue to rise and companies have limited pricing power we could see margin pressure throughout 2011.

* Corn prices have spiked to 30 month highs and beef prices have followed hitting multi-year highs. Remember there is no inflation when you're paying higher prices for gas, groceries and everything else.

* A pretty significant strategist called for market top earlier this week and so far he looks to be right on. I think it's still remarkably hard to fight the Fed's intentions, but the momentum traders are getting spooked (take a look at F5 Networks symbol FFIV today - Yikes!).

* Way more information about lake effect snow than you'll ever need.

World-record point snowfalls from the Great Lakes region include:
12.0” in 1 hour at Copenhagen, New York on Dec. 2, 1966
17.5” in 2 hours at Oswego, NY on Jan. 26, 1972 (My grandfather still talks about this storm)
22.0” in 3 hours at Valparaiso, Indiana on Dec. 18, 1981
51.0” in 16 hours at Benetts Bridge, New York on Jan. 17-18, 1959

and the granddaddy of all snowfalls: the 77.0” in 24 hours reported in Montague Township on the Tug Hill Plateau of New York on Jan. 11-12, 1997.

* Latest scam coming to a phone or email address near you -- Wikileaks threats.

"A caller reported she received an automated phone call telling her that her computer and IP address had been noted as having visited the Wikileaks site, and that there were grave consequences for this, including a $250,000 or $25,000 fine, perhaps imprisonment. It left an option for leaving a message as to how she was going to handle this and the fine payment. She figured it was a scam, and did nothing but hang up. It gave a number on caller ID of 852-604-4799."

* This seems to make perfect sense - Tennessee will pay for gastric bypass but not for dietary consulting to help people eat better. Facepalm.....

Cheers!

Tuesday, January 18, 2011

Wow, just 79.99% interest?

The 2010 list of some of the worst credit cards has some unbelievable offenders. Taking your first born child would be a deal compared to these terms from these credit card companies.

* First Premier MasterCard with "an astonishing 79.99 percent A.P.R." (cited for having the highest interest rate).

* the Applied Bank card offered no grace period, meaning that interest begins accruing on your purchase the moment you swipe your card.

However, the PenFed Visa which offers 5% cash back on gas purchases is a good option if you rack up lots of miles driving.

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Hmmm, do you think this is a sign of a booming global economy? Shipowners are now paying shippers to use their ships.

"Shipowners facing a lack of business in the Pacific Ocean covered more of their customers’ costs to get their vessels to the Atlantic.

Costs on the C11 journey for shipments to Europe from Asia fell to minus $1,046 a day today from $958 on Jan. 14, according to the Baltic Exchange in London."

So the average cost per day is now a NEGATIVE $1,046/ship. In effect, you make $1,000 by renting a ship from Asia to Europe. I imagine Goldman will soon corner the market in ship rentals :)

When coupled with other shipping charts that show traditional shipping rates falling to their lowest levels since February 2009 this has some concerned that the global inventory restocking might be coming to an end.

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News:

1) Jobs taking a leave from Apple - The timing of the announcement is not a coincidence in my opinion. Apple's earnings come out tonight and they clearly hope another 25 million people buying iCrap will offset the market's concerns about losing Mr. Jobs.

2) Citi missed expectations but the financial media seems to be taking the other angle. The headlines are "Citi reports an annual profit". The entire banking industry is still on shaky ground in my opinion and banks are recording profits by reducing their loss reserves while the number of people behind on their mortgages continues to grow. Sounds shockingly similar to stories from 2008, right? This will end well, I'm sure.

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Quote of the day:

“The economy remains on government-assisted life support, and the government has been very successful in creating the illusion of economic prosperity. It is doing this to buy time and help preserve social stability as the adjustment towards housing deflation, consumer deleveraging, and chronic unemployment takes its toll on the growth rate in organic final demand.”
-David Rosenberg

Cheers!

Friday, January 14, 2011

Best data of the week

The cost of college in the US continues to spiral out of control with little correlation to the value of college education. Why?

Why, did the housing market explode and then collapse? Increased access to cheap money allowed many people to buy a first home and many more to trade up into the McMansion of their dreams.

Well, much the same has occurred in the education market. Instead of demanding a better product (a degree that can lead to a job that justifies the cost), increased access to cheap money has allowed college pricing to spiral out of control.

Consider these stats:

* The median U.S. home price is currently $170,600, down 26% from its peak of $230,200 in July of 2006.

* The Dow Jones is currently 11,672, down 18% from its peak of 14,198 in October of 2007.

* The US has lost roughly 3.8 million since the start of the recession.

* Yet, the annual tuition for a private four-year college in America is now $27,293, up 29% from five years ago.

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The initial jobless claims data spiked earlier this week which was a surprise, but the data around the holidays tends to be a little screwy. However, remember when the data unexpectedly dipped before Christmas it lead to great rejoicing :)

However, again I'd point to the Nonseasonally adjusted data for the scary data of the week. These are the raw numbers before they are smoothed for statistical purposes.

While the seasonally adjusted claims number was 445k new claims, the nonseasonally adjusted number was a huge 770k new claims in the first week of January. These are the actual number of out of work people filing claims and while this number always spikes after the holidays it is a big number that warrants watching.

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NJ Governor Christie is looking to cut rising healthcare costs.

"Christie wants benefits changes that make the health insurance system more like the private sector or the federal government, with employees paying about one-third of the costs of whatever benefits plan they choose. The government picks up the other two-thirds.

That would amount to a significant increase from the 1.5 percent of salary employees now pay. A teacher earning $60,000 now pays $900 a year toward a plan that costs $22,000, Christie said. Under his proposal, that teacher would contribute $7,333 a year for an identical plan.

The changes also could result in inferior benefits, as some workers would be forced to accept plans with higher deductibles and copays or limited choice of doctors, to keep down costs.

Christie said health benefits for current workers and retirees cost New Jersey taxpayers $4.3 billion a year and growing. He said the state cannot afford to have worker benefits eating a larger and larger portion of state, local and school budgets."

These are not going to be popular decisions, but these are the sort of decisions that may be coming to NY as well.

Wednesday, January 12, 2011

Mini-flash dip

Not many noticed it because the markets rebounded sharply yesterday but there was a brief moment yesterday that felt like May 2010.




The markets can get interesting when the computers decide not to play nice. The talk was that a large market order hit to sell futures in one block and that created the downdraft.

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Another cautionary tale about racing into the "green industrial revolution" comes to us from Massachusetts.

"Evergreen Solar took $58 million to open a factory in Massachusetts for solar panel manufacturing in 2008. Yesterday they announced they were closing the plant because they can't compete with overseas manufacturers.

"Evergreen Solar Inc., which received $58 million in state aid to open a factory in 2008 at the former military base in Devens, announced today it would shut the plant and let go 800 workers by the end of this quarter.

The solar-panel plant is a cornerstone of Governor Deval Patrick's efforts to make Massachusetts a hub for the emerging clean-energy industry.

But Evergreen has been struggling in face of weak prices and competition from cheaper operations in China, where the government has offered solar companies generous subsidies to locate there. Evergreen itself has a partnership with a company based in China and previously announced plans to shift some work to the overseas location. "

I'm generally a proponent of new energy technologies, but I think they should be market driven innovations and not based on who can get the largest state or federal aid package.

When coupled with a local story about a high school that couldn't buy a windmill with funds granted from the American Reinvestment and Recovery Act because they could find a suitable product made in the US, I start wondering if the green revolution has already passed us by.

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A couple of positive data points yesterday:

* Diesel fuel index jumped again back to it's highest levels since May 2010
* Rail traffic index rebounded as well (vs. 2009) but remains at much lower levels than 2006/07.

Further evidence that the ADP employment data was just white noise.

* Small business optimism declined in December. If you remember the bulk of the jobs reported on last week's ADP report were small business jobs (270k of 292k reported) however, small businesses don't seem too excited about their prospects going forward so the odds that they are driving a hiring boom just doesn't seem realistic.

Monday, January 10, 2011

Oil pushing higher again

Just when it seemed like gasoline prices had stabilized in NNY at the $3.30/gallon level comes news that supplies may be constrained further in the coming weeks after a shutdown of the Trans-Alaska pipeline due to a leak at a pump station.

Since 12% of the US crude production passes through this pipeline we could see a material uptick in prices if the shutdown persists. At this point, it sounds like it is a relatively easy fix, but there will be numerous hurdles that must be cleared before the pipeline re-opens. Oil is pushing $90/barrel again it wouldn't take much from a technical stand point to approach $100/barrel.

At some point, a sustained period of $3.30+/gallon for gas is going to be a concern for the US economy.

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Thechartstore.com put out the best chart I've seen yet summarizing why this "recovery" feels so different. If you look at the 11 recessions since World War II and create a composite of job growth after the recession you get the blue line in the chart below. Contrast that with the red line representing the 2007 recession.


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Alcoa always gets a fair amount of coverage given it's role as the first company in the Dow to report earnings. They also lifted spirits locally when they announced plans to re-open a local aluminum plant.
Earnings were a little ahead of expectations but revenues were light and higher input costs impacted results.
The stock is off about 2% after hours but that could reverse by the am.
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The market continues to be very resilient in the face of bad news. Global markets were very weak overnight again (continuing a trend that we've seen lately) and the US market opened lower and slowly gained ground all day.
There seems to be a steady rotation out of bonds going on right now and that money has to go somewhere and stocks seem to be the place right now. Europe seems to be getting ready to bailout Portugal which means another country that "doesn't need money" will suddenly take the bailout. Spain will be on deck next week.
Cheers!

Friday, January 07, 2011

Jobs Report

Once again ADP proves to be wildly off base with their report. Last night one bank was out with an estimate that the jobs report would post over 400k new jobs. Ooops. The total add of 103k was again well below estimates and concentrated in leisure and hospitality and temporary help.

The good news was the sharp drop in the unemployment rate but I suspect that this is tied to the plummeting participation rate which is at multi-year lows. The participation rate measures the number of people in the economy that are working age that are employed or unemployed and looking for work.

I think I ran through this exercise before but it's worth reviewing. If you had a country of 100 working age people and 10 are unemployed, your unemployment rate would be 10%. If in the following month one of the unemployed just stops looking for work your numbers change to 99 people and 9 unemployed and your unemployment rate tumbles 9.1% (9 divided by 99).

This is probably how the unemployment rate dipped so sharply despite a modest increase in jobs.

Despite the fairly weak jobs report the stock market appears to be heading up right now. While the consensus among the talking heads will be "Markets are up because the unemployment rate went down" don't believe that hype. If the markets go up today it's based on the expectation that the Fed will continue to keep the economy going on life support. More money from the Fed, weakens the US dollar and props up commodities including stocks.

I'll follow up after I read through the complete report.

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Sorry for the late update. It appears that roughly half of the drop in the unemployment rate was due to people dropping out of the workforce.

In summary this was a mixed view of the labor market:

The Good:

* The unemployment rate fell to 9.4% (but as I said about half of that is due to less people looking for work).
* October's jobs # was revised up by 38k.
* November's jobs # was revised up by 32k.
* Avg earnings ticked up 3 cents/hour.

The Bad:

* The declining participation rate is disturbing and at it's lowest level in 20+ years.
* The 103k jobs created was sharply below expectations.
* Long-term unemployed and part-time for economic reasons continue to climb.

These are the two most troubling stats in my opinion -

* Among the unemployed, 44.3 percent had been jobless for 27 weeks or more in December, up from 40.1 percent a year earlier.

* The unemployment rate has now been above 9% since May 2009, or 20 months. That is the longest stretch at such an elevated level since the Second World War.

I'd also note that the seasonal adjustment was unusually large this year - this is a stat geek item, but it really causes havoc when the seasonal adjustments are have tripled or quadrupled in a 20 years without a corresponding change in population levels.

Thursday, January 06, 2011

Wild data

If you remember last month, the ADP jobs report was wildly off the mark and I asked if we could please stop paying attention to this crazy piece of data. The ADP jobs data has been such a terrible predictor of the BLS jobs report that it's laughable at this point.

So what happens in December? Economists expect ADP to publish a number showing 100k private sector jobs added. Instead they say 297,000 jobs were added in December blowing every estimate out of the water.

Now that's the headline but there were a variety of caveats that no one noticed. For example, the vast majority of the "jobs created" were created at small businesses, and 270k of the 297k jobs created were in the service sector.

Conveniently enough later in the same day the ISM service index was released and that report came in roughly as expected --- with one exception --- the employment index fell again. So ADP says there was a massive uptick in service jobs but the service industry is reporting that they are laying people off.

Tomorrow's job report will hopefully sort this out a bit. Estimates for this number have spread all over the map after the ADP report and the expectation now is for 175k jobs added (but I've seen numbers in 500k range). It should be interesting.

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Can you imagine if two nuclear powers came to blows over onions? I'm not saying it will escalate that far, but there is some serious upheaval in India right now over the price of onions. There were some weather issues related to the crops but the main issue seems to be that India's merchants have decided they have a captive audience that likes their onions so they will charge whatever they feel like charging. Prices have risen in recent days to roughly $1/lb which might not sound bad to you but in a nation where roughly 500 million people survive on less than $2 per day $1 per pound of onions is probably like you paying $75 for a gallon of milk.

Pakistan didn't help it's image in India today when it stopped a convoy of onion deliveries from passing through the border to India.

Now prices are skyrocketing for tomatoes as well. As someone who is very familiar with the basic ingredients of India cooking (tomatoes, potatoes, onions, rice, wash, rinse, repeat) I'd say that this is a story worth watching.

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Ah, the giant monster mega banks continue to succeed at destroying their image at every turn. Consider this case -

1. Your blind Grandmother gives you a small check for Christmas.

2. She used a red pen because she can't see so well.

3. The bank's scanners can't read the red ink so do they

a) call you to verify?

b) call your Grandmother to verify ?

or c) shutdown your account, stop all deposits into your account, close the account and accuse you of fraud?

If you're paying attention I think you'll know the answer but here's the full story.

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I hope you're having fun working on your life lists. Here's your next topic:

3 best things I ever made – This can be hard for non-creative types like yours truly, but I'm sure some of you would have a hard time keeping the list at just 3 things.

Cheers!

Tuesday, January 04, 2011

Happy stories from the homefront

I don't have much to add to these stories.

1) Susan G. Komen for the Cure is spending up to $1 million per year on lawyers to chase down other charities that use the term "for the Cure" in their fundraising efforts. Wow.

"In addition to raising millions of dollars a year for breast cancer research, fundraising giant Susan G. Komen for the Cure has a lesser-known mission that eats up donor funds: patrolling the waters for other charities and events around the country that use any variation of "for the cure" in their names.

So far, Komen has identified and filed legal trademark oppositions against more than a hundred of these Mom and Pop charities, including Kites for a Cure, Par for The Cure, Surfing for a Cure and Cupcakes for a Cure--and many of the organizations are too small and underfunded to hold their ground."

"It's never our goal to shut down a nonprofit," he said, "and we try very hard to be reasonable, but it's still our obligation to make sure that our trademarks are used appropriately so there's no confusion in the marketplace over where people's money is going."

Blum told HuffPost that legal fees comprise a "very small part" of Komen's budget, but according to Komen's financial statements, such costs add up to almost a million dollars a year in donor funds.

"I think it's important that charities protect their brand, but on the other hand, I don't think the donors' intent in giving their money was to fund a turf war," said Sandra Minuitti, a spokesperson for Charity Navigator."

2) A firefighter in charge of helping the department "better plan, distribute and manage overtime through improved work scheduling controls on a shift-by-shift basis" managed to rack up 2,500 overtime hours over the past 2 years and earn $153k in overtime pay in Washington, D.C. -- What is it they say about having the fox guard the hen house?

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Your going to hear a great deal of bluster out of Washington about the need to "CUT THE SPENDING". The Republicans have already put it out there that they want to cut $100 billion from the budget ASAP (with some caveats).

Here's the breakdown:

Total Federal Spending - $3,552 Billion (I'll refer to this in Billions because Trillions are too hard for us to work with)

Seems like it would be easy to find $100 extra billion in there right?

Well, not so fast. $2, 184 Billion of that spending is off limits because it's mandatory spending (Social Security, Medicare, Medicaid, Interest on our Debt, other mandatory spending).

Okay, well that still leaves $1,368 Billion of discretionary spending that we can chop through, right?

Well, $664 Billion of that is defense spending and that's off limits and another $53 billion is Veteran's Affairs spending that has been ruled out.

Uh, oh. So now we're left with "just" $651 billion of Federal spending that can actually be cut.

Do you think you can cut $100 billion or 15% of the budgets of the Dept of Health and Human Services, the Dept of Transportation, the Dept of State, Housing and Urban Development, Education, Homeland Security, Energy, Agriculture, etc?

Good luck with that.

Cheers!

Monday, January 03, 2011

Well, at this rate the stock market should be up 260%+ by next year :)

Stocks shot up at the beginning of trading as new money went back to work (funds tend to slowly sell some stocks in December to rebalance their portfolios on 1/1/11). There was no real news around the world today so it was off to the races, but the markets did drift lower throughout the day.

Stat of the day: According to one market data source, the average stock in the US is now held for a whopping 22 seconds. The average currency position? 30 seconds. All perfectly sustainable :)

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The Restaurant Performance index fell in November and signaled contraction in the Restaurant industry. This was the first decline in 3 months and it is worth watching. Did consumers shift discretionary dollars from Applebee's to Target to buy gifts for the kiddies? Something to keep on our radar.

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I finally found the link to NY State's nonseasonally adjusted unemployment data for the past 20 years. Last month's unemployment rate in Jefferson, Lewis and St. Lawrence counties spiked pretty sharply and while we normally experience a winter spike in unemployment the November numbers seemed high to me when they first came out.

As a refresher:

Jefferson County: November Unemployment - 9.9%

Lewis County: November Unemployment - 9.2%

St. Lawrence County: Nov. Unemployment - 10.3%



After looking at the historical data back to 1990 we see that in Nov 2010:

Jefferson County had the highest November unemployment since 1994.

Lewis County had the highest November unemployment since 1992.

St. Lawrence County had the highest November unemployment in 20 years.


Now consider what new budget cutting moves might mean for government employees in prisons, the postal service, school districts, Ft. Drum, etc., and you get a potentially scary employment picture for NNY in the coming two years.

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I only made through about half of my "Ten people that most helped me in my life" list last night. Hopefully, you were more efficient than I was. If so, here's your next task -"The Ten Most Memorable places I've visited".

Think outside the box and remember that special sunrise or something that others might sleep through. Walking through Wall St. at 5am on a Sunday is an amazing experience and that might make my list.

Hopefully, if you share these experiences with your kids they might gain a renewed sense of adventure.

Cheers!

Sunday, January 02, 2011

Welcome Back!

The New Year started off with temperatures in the 50's in Northern NY so you won't hear me complaining about that. I'm saving all of my complaining for the Cowboys, who managed to win a meaningless game in the last minute against the 2nd string of the Eagles. The win probably cost the Cowboys 6 spots in the upcoming draft. Only the Cowboys could mess up that situation.

Anyway, the markets had another great year and the few carbon based lifeforms that don't live in CNBC's Fort Lee studio continue to scratch our collective heads. Business profits have stabilized as a result of cost cutting and a weaker US dollar that has bolstered some exports. However, sales volumes remain weak, the US job market is dismal and the US housing market continues to weaken.

I'll try to touch on many of the big themes for 2011 in the coming weeks.

The NY Times did another good piece on the increasing influence of electronic traders on the stock market. I think we need to remember why we have public securities and a stock market. Stocks provide capital to companies and investors get to share in the profits of those companies when they declare dividends. The electronic traders could give a $%@! if a company ever earns a penny or pays a dividend. They are only concerned with buying a stock at $31.1825 and selling it 0.0028 seconds later for $31.1875.

"A SUBSTANTIAL part of all stock trading in the United States takes place in a warehouse in a nondescript business park just off the New Jersey Turnpike.

One new strategy is to use powerful computers to speed-read news reports — even Twitter messages — automatically, then to let their machines interpret and trade on them.

By using such techniques, traders may make only the tiniest fraction of a cent on each trade. But multiplied many times a second over an entire day, those fractions add up to real money. According to Kevin McPartland of the TABB Group, high-frequency traders now account for 56 percent of total stock market trading."

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One of the more valuable data providers I used to follow when I worked for a big bank was the information put out by TrimTabs. TrimTabs keeps track of stock market money flows - who is buying, who is selling, etc.

Well, on Christmas Eve when no one but the most degenerate stock junkie was watching CNBC TrimTabs CEO went on CNBC and dropped some bombshells. Basically, he pointed out that yes the stock market has exploded over the past 2 years but here's the thing - he can't figure out who is buying.

* Corporate America has sold over $130 billion since the start of April.

* Retail investors have hardly bought any U.S. equities - just $17 billion since April

* Foreign investors have provided some buying power - purchasing $109 billion in U.S. stocks from April through October.

* Pension funds - All the anecdotal evidence we have indicates that pension funds have not been making a huge asset allocation shift.

Interesting stuff.

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There was a good deal of press coverage last week when the seasonally adjusted unemployment claims data dipped below 400k for the first time in two years.

"In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week’s revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week’s revised average of 426,500."

In general, I say you have to take the data as presented but sometimes things are so far off they need a little further investigation. The non-seasonally adjusted number for the week of 12/25 was 522k claims (almost 133k more than the reported number). Here's the thing while the seasonally adjusted number helps us compare this December with every other December, the extra 133k people that were "adjusted" away are actual humans that are out of work. If you add up all of the seasonal adjustments in December you get an extra 440k people that are not working actually. It's just something to watch.

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I came across a great idea the other day on the web. It was called the Ten lists everyone should make before they die. Some of the ideas were a little cheesy but in general, I think these are great conversation starters within your family. If you have young kids fill out these lists and share them with your children as they grow. My resolution is to fill out my 10 lists by Jan 31st.

Here's your first topic:

"The 10 people who most helped me in my life. – each of us meet people as we go through life, many of them help us or have an influence upon us. Sometimes we may not realise their influence at the time. Quite often we forget or do not get a chance to thank them. This list is an opportunity to acknowledge those people and to express your thanks."

Maybe it's an old teacher, an old boss, a coach or a friend, but writing this list and maybe even writing to acknowledge their help in shaping your life is a great idea.

Cheers!