Stocks took a major dive on Monday, one which I did not expect. This was due to January manufacturing numbers coming in and being very disappointing. However, by the end of the week stocks had substantially recovered, more or less as I predicted. Even a stopped clock is right twice a day... You may recall last week I mentioned that due to the entire country being under snow, my sales have been very slow. Now the big question is, the January slow down, is it weather or a new recession? I think it's weather. I continue to think the US economy is doing decently. However, I'm switching my views on the market, I think the slow end of QE means the market trend is likely to be down for much of this year. I dunno, somehow I feel compelled to make these calls on the market, but if I let my dog roll dice I think perhaps he'd do better.
Iran, apparently tired of putting up with US aircraft carriers and destroyers in the Persian Gulf, is sending a destroyer and helicopter ship to drive around near the US coast on a three month mission. If you're in Virginia or N.Carolina be sure to wave. I still maintain that the planets have all lined up and we're going to wind up friends with Iran again.
Switzerland, a country which is apparently examining their culture closely, recently voted to pass a law limiting immigration. The EU is livid, saying that "regrets" the Swiss vote, which "goes against the principle of free movement of persons between the EU and Switzerland," and that Switzerland cannot cherry-pick among EU advantages. There are 400,000 Swiss living in various other European countries, and over 1,000,000 Europeans living in Switzerland.
The economic demi-god of the left, Nobel Laureate Paul Krugman, has been urging governments all around the world for the last 7 years to run massive deficits to restore our pre-crash economies. Few governments have listened to him; however a couple that have are Venezuela and Argentina. Both of those economies are near collapse now. Last year St.Paul wrote, "Matt Yglesias, who just spent time in Argentina, writes about the lessons of that country's recovery following its exit from the one-peso-one-dollar "convertibility law". As he says, it's a remarkable success story, one that arguably holds lessons for the euro zone." Well, now that Argentina is near collapse, like any good liberal, Krugman blames them for getting it wrong, accusing them of "macroeconomic populism." Now he says that Argentina must curb deficits and control inflation - "the effects of economic policies, and the appropriate policies to follow, depend on circumstances." Apparently if you follow Krugmans advice, follow it to the point where he says the European Union can learn from you, then later you will be guilty of not responding to changing circumstances; those circumstances being that his policies led your economy into collapse. The economic father of deficit spending theory, Sir John Maynard Kaynes, was famous for arguing a position passionately, then sometimes mere hours later arguing the opposite position just as passionately. When accused of inconsistency, he famously said, "When the facts change, I change my mind. What do you do, sir?" Mr.Krugman is obviously diligently carrying on the traditions of Mr.Keynes.
The Jobs report came out; unemployment fell from 6.7% to 6.6%, and the labor participation rate rose from 62.8% to 63%. 113,000 jobs were created. This all looks like cooked books to me: it takes about 200,000 - 250,000 new jobs each month just to keep up with US population growth.
Driving continues to decline in the US. The explanation for this is not obvious. Gas is not all that expensive - when you factor in new cars getting better mileage, it's about the same price per mile as ten years ago. The economy isn't it, some of the worst hit states are seeing their miles driven increase, while states doing better are decreasing mileage. Part seems to be our aging population, people over 60 don't drive as much, people over 65 even less so. But that's not all, there's other things happening: in my generation, most of us were eligible for a learner's permit at age 15½ and we got it more or less that very day. These days nearly half of teenagers have no interest in driving. Compared to previous trends, total US miles driven is short almost a trillion miles in the last eight year - enough miles to get us to Mars and back 10,000 times. This is helping our trade deficit as we bring in less oil and it's good for pollution. The money not spent on cars and gas apparently is frequently spent on phones and XBoxes. It's less good for Detroit, Volkswagen, Toyota. And one has to wonder, if no one is in cars where will the next generation be conceived? (There's an app for that...)
Japan's stock market is down about 13% on the year, well into correction territory. Hong Kong is down 10%. Ours is down about 5% on the year, not yet into correction territory. Emerging markets are being hit even worse. At some point, soonish, I believe Japan and the US will be a buy; I think emerging markets are going to be an avoid for an extended period.
How are the lower classes doing under Obama, The Chosen One? Very decently, if you think they aspire only to more hand outs. The non- partisan Congressional Budget Office (CBO) estimates that Obamacare will result in the loss of 2 million equivalent full time jobs by 2017 and a lowering of GDP growth of between .5% and 1%. This could result GDP being 10% lower a decade from now, and a cumulative loss of as much as half a year of GDP over the next decade. More conservative economists like professor Casey Mulligan, University of Chicago say 5,000,000 lost jobs will prove more correct. Those losses will come through a combination of layoffs, reduction in hours worked, and workers choosing to drop entirely out of the labor force to get free health care. Liberals are already writing that this is a feature, not a bug: if old people drop out of the workforce, there will be more jobs for young people. Also, as more people go part time and buy their own insurance, it's claimed they will have increased bargaining power with their employers as they're no longer dependent on their job for health care. And finally, liberals tell us, "thanks to ObamaCare Americans can finally quit the salt mines and blacking factories and retire early, or spend more time with the children, or become artists." Of course this loss of GDP and working hours will result in even more concentrated wealth among the educated and hard working, and liberals will scream even louder for more programs to even out the wealth, producing yet more inducements to quit work.
In the last two weeks, Apple bought $14 billion worth of their own stock, about 3% of all outstanding shares. They're sitting on about $160 billion in cash, so that's roughly 10% of their hoard. Some take this as a negative: all that cash and creative talent, and the best use of their capitol is to buy stock? Twitter shares dropped 24% on Thursday, as people seemed shocked that a company that has no model for making money actually made no money.
Sony has been losing money for quite a while, and they've decided to act. They're selling off their Viao PC division and their TV division; the TV division hasn't made money since 2004. They're also cutting 5000 jobs. I think the world has passed them by - I bought a new TV lately, I didn't even look at Japanese brands, I went straight to the Koreans. Same for phones. Computers, I buy Taiwan brands.
Like your credit cards? Too bad, they'll be history soon. Over the course of the next two years all your credit cards will be replaced with the new system: no magnetic strips, an imbedded chip instead. You hold your card over the reader, you don't swipe it. Then you enter your PIN code - yup, everyone will have their own magic 4 numbers to type in. Get used to it. They're already doing this in Europe with great success on cutting back on fraud - in fact the recent thing where a few million cards were stolen from Target was a bunch of Europeans who thought it was easier to rip off Americans because of our low-tech card system.
All week Google has had a logo in the gay pride rainbow. In Canada they're running a TV ad saying the Olympic games were "always a little gay." The point of all this? Russia recently outlawed passing out "gay propaganda" to minors. OK, they've decided to have gay marriage in Canada, and apparently we've almost decided to have it here. Last time I remember anyone asking me I voted against it, but votes on this topic don't count. Now, however, we're lecturing and haranguing other countries about gay rights. I find this disgusting: imho, Russia gets to decide their own laws and culture, and if I don't like it, I won't go there. Muslims believe with even more fervor that the entire world should stone gays and victims of rape, condone and encourage polygamy, limit universities to teaching the Qu'ran, and keep women uneducated. How is it obvious that muslims are wrong and US liberals are right? How can I tell that one of these is a religion and one is not? And which is which?
Looking to retire somewhere pleasant? Kelly Norton got 28 years of weather data and averaged it out, making an interactive map. For each zip code in the US, he counted the average number of pleasant days, defined as mean temperature between 55°F and 75°F, the minimum temperature was above 45°F, the maximum temperature was below 85°F and there was no significant precipitation or snow. This is pretty much prime motorcycle weather, whatever you may think I think his criteria is pretty decent. He produced an interactive map where you can wander with your mouse or type in a zip code. Norton lives in Atlanta GA which does not come off as great living, so this is not home boy propaganda. Speaking as a motorcyclist, it's true nearly every day in LA is a decent riding day, however you have to ride through four days of sweltering desert and plains to get anywhere else. The snowbirds have it right: winter in Tampa Bay or Phoenix, summer near the Great Lakes. The winners and losers:
|5 Most Pleasant Places||5 Least Pleasant Places|
|LOS ANGELES, CA 183 days/yr||MC ALLISTER, MT 14 days/yr|
|SAN DIEGO, CA 182 days/yr||NORTHEAST OF RENO, NV 15 days/yr|
|OXNARD, CA 166 days/yr||CLANCY, MT 15 days/yr|
|SIMI VALLEY, CA 156 days/yr||DOUGLAS, WY 15 days/yr|
|SAN FRANCISCO, CA 153 days/yr||EAST OF CEDARVILLE, CA 16 days/yr|
|Rank||City||Per 100,000 people|
|21||Kansas City, Mo||23||53||355|
|20||New Haven, Cn||13||42||650|
|15||Baton Rouge, La||29||28||446|
|14||Little Rock, Ar||23||70||412|
|7||St. Louis, Mo||35||62||558|
|5||New Orleans, La||53||37||293|