If You Think Life Was Better 50 Years Ago, You’re Voting Republican. Or Democratic.

New York Times staffer and author of The True American: Murder and Mercy in Texas Anand Giridharadas posted the above to Twitter this morning.

You never want to ascribe too much meaning to a single point, especially one made on Morning Joe, but the implications here are not only pretty clear, but pretty striking, particularly on the Republican side. Of course conservatives think things were better 50 years (or 100 years ago, or 25 years ago, depending on the personality and age of the person in question). That’s pretty much the definition of conservatism, isn’t it? That it “stands athwart history, yelling Stop,” or at least begging, Slow Down.

So it’s not surprising that supporters of the two candidates who inveigh against political correctness, want to make the country more homogenous by kicking out (mostly Mexican) illegals and stop immigration more broadly, and invoke American Greatness like they’re being paid by the mention are fonder of the past than the present.

More interesting to me are the barely optimistic responses by supporters of Sanders and Clinton. Even they cannot muster much fun feelings about the present. Are they too young to remember 50 years ago or too senile not to remember? Either way, there is simply no reason to believe that life was better in 1966, despite an absolutely killer year in music (more on this in a moment).

To be fair, the presumption that those good old days were a) much better than today and b) gone for good is such a feature of the American psyche that it predates the founding of the country. The settlers in New England were convinced that things were going to shit about 15 minutes after docking at Plymouth Rock. By the late 1600s, pastors were already proposing “half-way covenants” to second-generation puritans who were drifting into secularism and a generation before the American Revolution we were already “sinners in the hands of an angry God.”

Throughout the 1990s—those glorious, go-go years when even those of us who didn’t become tech gazillionaires saw our wallets fatten up and our life possibilities expand geometrically!—Reason published a never-ending stream of rebuttals (like this and that) to people proclaiming the death of the American Dream and invoking that old, horseshit-covered chestnut that “this next generation may be the first to have a lower standard of living than its parents…”

So to me, what’s most striking to the chart above isn’t the spread between Trumpists and Clintonistas (though it is stunning, to be sure), it’s that only a bare majority of the latter feel things are better now than they were 50 years ago.

In such a tepid response to the present, you see the failure not of America to deliver on the promise of a better, richer, freer life for those of us lucky enough to wash up on these shores before they are barricaded against foreign people and foreign goods (all the remaining Dem and GOP candidates are to varying degrees protectionist against both), but the failure of politics and the two major parties.

I don’t mean to scant the authenticity of respondents and their feeling of despair, but c’mon already and get a grip. By orders of magnitude, we are all richer, smarter, and better off. We are more educated, we live longer, we smell better, we DIE LESS. In terms of lifestyle and speech, we are freer to express ourselves; we are objectively less racist, homophobic, sexist, and generally uptight. There are many serious problems in today’s world and this country: We document those several times an hour at Reason.com, in fact, and offer ways to remedy many of them.

As Matt Welch and I argued in The Declaration of Independents, in most aspects of our lives—our personal lives, cultural lives, work lives—things are in fact improving. It’s in the areas of our lives governed by politics that things are stagnant, declining, or barely improving. The only large parts of our lives that haven’t gotten obviously better over the past 50 years include areas like K-12 education (where we spend about 2.5 times as much money to achieve exactly the same results), government spending (the government spends vastly more money per person and is succeeding mostly only in bankrupting future generations via old-age entitlements and dampened economic growth), and foreign policy (in 1966, we were in Vietnam; in 2016, we’re everywhere but Vietnam).

You leave the hothouse sphere of politics—harder and harder to do, for all sorts of reasons—and most people suffer not from too few choices and opportunities but too many. That’s where our lives should be lived, far away from the madding crowd filled Team Blue and Team Red tribalists who vote on what kind of food we can eat, dope we can smoke, sex we can have. Party identification is “at or near historic lows” not because America has failed but because politics and politicians and partisanship have failed. Once we fully understand, accept, and act on this and create a government that is smaller, more effective, and less intrusive, who knows? We might actually start realizing that the present beats the past but pales in comparison to our future.

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It’s the Worst Day on the Internet, Reddit Removes ‘Warrant Canary’ From Transparency Report, Milo Yiannopoulos ‘Does Not Exist’: A.M. Links

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The Chalking Continues: U. Mich Students Call Police Over ‘Trump 2016’ and ‘Stop Islam’ Messages

TrumpStudents at another university are furious about a spate of chalk scribblings that appeared on campus this week. “Trump 2016,” “Build the Wall,” and “Stop Islam” were among the messages that made some members of University of Michigan community feel unsafe enough to actually call the police.

UM is a public university, unlike Emory University and Scripps College, and its students enjoy broader free speech protections under the First Amendment. The chalkings, which appeared on the Diag—a public square frequently inhabited by activists of various causes—seem even less out of place here than at Emory. As a graduate of UM, I can testify to the fact that the campus is highly politically active and frequently inhabited by demonstrators, littered with flyers, and yes, even covered in chalk.

And yet you would think—based on this story in The Michigan Dailythat UM students are so sheltered they have never encountered an opinion that offends them. How else can anyone explain why a group of student-activists were so spooked by obvious political speech that they overcame their natural aversion to the police and actually called for help?

“I’ve been getting bounced around from one person to another, and I understand it’s after hours, but there should be some kind of emergency number besides the police because a lot of students of color don’t feel comfortable calling the police,” one irate student, Banen Al-Sheemary, told The Daily. “They’re our only resource and that I think is ridiculous.”

What’s ridiculous is that the students wasted the authorities’ time at all. The chalkings weren’t an emergency: they were protected expression, and neither the police nor the university is under any obligation to remove them.

Chalk messages are easily erased, of course, and the students were able to cleans the Diag easily enough with a few buckets of water. Al-Sheemary described this as “a really difficult process” and lamented that the administration’s inaction “perpetuates these really racist and hateful stereotypes that turn into violence and turn into students of color feeling unsafe on campus.”

UM did release a statement. “Attacks directed toward any member or group within the University of Michigan community, based on a belief or characteristic, are inconsistent with our values of respect, civility and equality,” said UM spokesperson Rick Fitzgerald, referencing the “Stop Islam” message.

I understand the sentiment being expressed here, but is it really the case that “attacks”—if that is indeed what these messages are—directed toward adherents of certain religions are off limits? Islam is an ideology, not a race. It seems like a university is fine place to speak out against systems of belief that one thinks are harmful, including various religions.

Imagine if right-leaning students had taken offense at a message that read “Stop Conservatives” or “Stop Republicans.” Should the cops do something about pro-Bernie Sanders students if they chalk “Stop Hillary”?

Criticism is not an act of violence, no matter how fervently the campus left insists that it is.

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Payrolls Rise 215K In March, Above Expectations; Average Hourly Earnings Rise

And so the confusion remains: why did Yellen go uber dove three days ahead of a day in which the BLS reported that in March not only were 215K jobs created, more than the consensus 205K, if below last month’s 245K, but in which average hourly earnings rebounded a solid 0.3%, above the 0.2% expected, and well above last month’s -0.1% decline.

 

Wages rose:

 

However, the fly in the the ointment was that the unemployment rate picked up modestly from 4.9% to an above expectations 5.0%, while manufacturing payrolls dropped 29K, far below the 2K increase expected, and below last month’s -18K. Additionally, the energy recession is finally trickling down with oil and gas extraction payrolls falling 19,200 from a year earlier.

And the last notable point: average hourly hours worked were flat at 2 year lows, which bodes poorfly for both productivity growth and for GDP.

 


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Stocks Entering Weakest Quarter Of The Presidential Cycle

Via Dana Lyons' Tumblr,

The 2nd quarter of election years has the worst average historical return of the 4-year Presidential Cycle.

For centuries, observers have attempted to identify patterns, or cycles, occurring in market prices. In the U.S. stock market, perhaps the most widely cited cycle is the 4-year Presidential cycle. As the name implies, the cycle has to do with the market’s behavior vis-a-vis the 4 years during a presidential term. Researchers have discovered that, for whatever reason, stocks tend to do better during some parts of the cycle and worse during others. Of course, some periods almost have to out-perform and other periods almost have to under-perform. However, the disparity between the historical “have’s” and “have not’s” is quite remarkable. And we just so happen to be entering the “have not”-est quarter of the cycle.

Using the Dow Jones Industrial Average (DJIA) since 1900, the 2nd quarter of election years (i.e., “year 4″) has the lowest average return (-1.2%) of any quarter in the entire cycle. Here are the average quarterly returns of the 4-year cycle in sequential order:

image

 

Here is the same data in order of historical performance:

image

 

Again, every year is unique and “averages” are, by definition, made up of higher and lower figures. Therefore, a poor 2nd quarter is far from a sure thing for stocks. However, the historical odds do not favor a very robust quarter.

And, as mentioned, the disparity between the average performance among some of the quarters is quite alarming. For example, the upcoming quarter is the only one of the cycle that has averaged a loss of over 1%. Meanwhile, there are 5 quarters in which the DJIA’s average performance is over +4%. The asymmetrical return distribution suggests that there is something to the cycle’s historical tendencies.

On a slightly brighter note, while the 2nd quarter of year 4 has the worst average return, it has actually shown a positive return just as often as all but 5 other quarters in the cycle. The culprit, obviously, has been in the size of some of the historical losses in the quarter. For example, the quarter owns the record for the all-time biggest quarterly loss in Presidential cycle history at -41.6% in 1932.

Lastly, some folks argue that these types of cycles or tendencies are really relics of the past and not very useful anymore. We would agree that many of these seasonal tendencies get arbitraged away over time to the point where there is very little practical utility in them. We would also agree with the notion of placing greater emphasis on more recent events as tendencies do evolve.

Neither of these qualifiers appear to allay the traditionally negative effects of the upcoming quarter, however. Consider the year 4, 2nd quarter returns during the previous 4 cycles:

  • 2Q 2000:   -4.3%
  • 2Q 2004:   +0.8%
  • 2Q 2008:   -7.4%
  • 2Q 2012:   -2.5%

But for the small gain in 2004, the last 4 cycles have seen the quarter close in the red. This suggests that perhaps the cycle is still a relevant force rather than some relic like President Lincoln’s mountain bike pictured above (that’s not really him, by the way).

Once again, this doesn’t guarantee a rough quarter coming up. These seasonal trends should be treated as either a slight headwind or tailwind for the market, not as an excuse liquidate or leverage up one’s portfolio. And if the historical tendency holds true, the wind may be slightly in the face of stock investors over the next 3 months.

*  *  *

More from Dana Lyons, JLFMI and My401kPro.


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Saudi Arabia is Freezing Oil Production By Default (Video)

By EconMatters

When you are already pumping as much oil as you possibly can – by default – you are forced to freeze production, or agreeing to a production freeze.

 

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Market Breaks – AMZN, GOOG Trading Suspended On NYSE ARCA

Who could have seen that coming? Ahead of potentially the most important data point of the year – now that The Fed lost its China excuse overnight – NYSE Arca reports a ‘glitch’

  • *NYSE ARCA CITES TECHNICAL ISSUE ON TRADING SYMBOLS SUSPENDED
  • *NYSE ARCA TICKERS AFFECTED: AMZN, AZO, GOOG, GOOGL, ISRG, MKL

We are sure it will all be fixed by the time the market opens and the ramping algos have taken back control.

Source: NYSE

 

Interestingly, futures markets are falling after this ‘break’…


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Your Last Minute Payrolls Preview: What Wall Street Expects (And Why It May Be Disappointed)

At 8:30am Eastern, the BLS will report the March payrolls report: the median forecast calls for a March nonfarm payrolls gain of 205k vs 242k in Feb., the high estimate is 250k, the low is 100k. The number is released three days after a particularly dovish Yellen speech, which prompted many to ask “what does the Fed know” – today’s payrolls report will either provide the answer, if it is a big miss, or it will add to the confusion: if payrolls are surging, why is the Fed so concerned.

This is the breakdown of NFP expectations by bank:

  • DB 175k
  • BNP 180k
  • HSBC 185k
  • MS 205k 
  • Citi 215k
  • GS 220k
  • JP 225k
  • UBS 230k

The whisper number for today’s print has meandered modestly lower in recent hours as a result of an analysis by Bloomberg showing that in 7 of the past 8 years, March payrolls have missed expectations. From the source:

March is the cruelest month for U.S. nonfarm payrolls as the published data came below estimates in seven of past eight years. From 2008, actual release numbers fell short of the median in Bloomberg survey forecasts by an average of approximately 53,000.

 

Since 2000, March headline total nonfarm payroll numbers missed estimates 67 percent of the time by an average of approximately 69,000. In March 2015, the headline number was 119,000 below estimates, the biggest miss since 2001.

 

While the usual confusion prevails among sellside reports, two stand out. The first out is from Citi’s Steven Englander who writes that “bad news is bad news, good news is ‘who cares?

NFP – bad news is bad news because investors do not believe that the Fed has enough tools to deal with a significant slump. Markets probably will not over-react to a modest shortfall in NFP. But if the numbers came in soft and were revised down heavily in prior months (say in line with GDPNow’s 0.6% GDP forecast), it is unlikely that investors will be sufficiently convinced of the adequacy of the Fed’s tools. Neither we nor our economists expect this such a weak outcome, but her insistence of the power of the Fed’s tools sound more like an effort to jolly asset markets into reducing the weight placed on downside tail scenarios.

 

Good news is ‘who cares?’ because the Fed will just argue that low rates were responsible for the continued good economic outcomes and will use it as vindication of policy, rather than as a contradiction.

On the surprising side, we have Joe LaVorgna, formerly the biggest Wall Street permabull, with the lowest forecast among the big banks. Here is DB:

Current market expectations for nonfarm payrolls are sitting at 205k which compares to the 242k number we got back in February. The unemployment rate is expected to hold steady at 4.9% and average hourly earnings are expected to rise +0.2% mom during the month. With all the chatter from recent Fed speakers and also Yellen on the importance of evidence of further signs in wage inflation it will be the key to keep an eye on the latter in particular. Our US economists are a little more cautious ahead of today’s release and despite the trend like ADP reading, have a below consensus 175k forecast for payrolls. They note that this would have the effect of lifting the unemployment rate back to 5.0%, while they are also slightly less optimistic with regards to the earnings data (expect average hourly earnings growth of +0.1% mom).

 

They note that their forecast for below-trend employment is consistent with their meagre Q1 real GDP growth projection of 0.5%. Another interesting point they make is that they have noticed a recent tendency for the median consensus forecast for March to overestimate the initially-reported March payroll gain. In fact, they highlight that the median forecast for March has over-predicted the initial payroll figure in five out of the last six years.

Which would not help Goldman’s most latest case about the delay of the “Yellen Call“, according to which good news should now be good news. Speaking of Goldman, this is its forecast:

We expect a 220k gain in nonfarm payroll employment in March, above consensus expectations for a 205k gain. Labor market indicators improved on balance from February to March. Jobless claims declined, the employment components of both manufacturing and non-manufacturing business surveys improved, and favorable weather conditions should also provide a boost to job gains. Payroll employment grew 242k in February, in part reflecting a lift from seasonal factors that had depressed reported gains in January, and has risen at an average pace of 228k over the last three months and 223k over the last year.

 

Arguing for a stronger report:

  • Service sector surveys.
  • Manufacturing surveys.
  • Jobless Claims.
  • Weather.

Arguing for a weaker report:

  • Online job ads. 
  • Job cuts.

Neutral factors:

  • Job availability.
  • ADP.

We expect the unemployment rate to remain unchanged at 4.9% in March, but see the risks as tilted slightly to the downside. The headline U3 unemployment rate was unchanged in February at an unrounded 4.92%, about 0.2 percentage points (pp) above our estimate of its structural rate. The broader U6 underemployment rate fell 0.2pp to 9.7% in February, 1pp above our estimate of its structural rate. We expect the labor market to return to roughly full employment by the end of this year.

 

The unemployment rate has fallen only slightly in recent months despite very large gains in employment reported in the household survey. The reason is that the labor force participation rate has rebounded by 0.5pp since its September low, with increases seen across all age groups. The largest contributors to the rebound have been, in descending order, declines in the share of the population in school, retired, disabled, and not wanting to work. At this point, we see the cyclical “participation gap” as nearly closed. While some groups of non-participators could be drawn into a very hot labor market, our baseline expectation is that the participation rate will decline by 0.25pp per year from its current level.

 

Average hourly earnings for all workers should rebound from a surprisingly soft February print of -0.1%, but negative calendar effects are likely to provide an offset. Overall, we expect average hourly earnings to rise at a trend-like pace of 0.2% in March. A 0.2% increase would result in a 0.1pp decline in the year-on-year rate to 2.1%, somewhat below the broader trend in wage growth captured by our wage tracker, which currently stands at 2.5% year-on-year.

* * *

Finally, courtesy of Bloomberg, this is how the market reacted to job reports in the past half year: of the last 6 employment reports, 5 most recent spurred selloffs, 1 previous triggered rally.

Feb. data released on March 4: NFP rose 242k vs 195k est.

  • 10Y yield rose as much as 6.7bp to 1.900%, then retreated as U.S. equity futures failed to hold gains; closed higher by 4bp
  • SPX rose 0.33%

Jan. data released on Feb. 5; NFP rose 151k vs 190k est.

  • 10Y yield rose as much as 5.5bp as report was viewed strong enough to keep alive possibility of another rate hike this year; closed lower by 0.4bp at 1.836% amid selloff in U.S. equities and oil
  • SPX fell 1.85%

Dec. data released on Jan. 8; NFP rose 292k vs 200k est.

  • 10Y yield rose as much as 6.5bp to 2.211% and closed lower by 3bp at 2.116% amid declines in U.S. stocks and oil
  • SPX fell 1.08%

Nov. data released on Dec. 4; NFP rose 211k vs 200k est.

  • 10Y yield rose as much as 4.3bp to 2.356% as report set stage for Dec. 16 Fed rate increase, then erased increase and fell 4.4bp amid oil plunge
  • SPX rose 2.05%

Oct. data released on Nov. 6; NFP rose 271k vs 185k est.

  • 10Y yield rose as much as 11.5bp to 2.347% and closed near session high while 2Y yield touched highest since May 2010 as market priced in higher odds of Dec. rate hike
  • SPX fell 0.03%

Sept. data released on Oct. 2; NFP rose 142k vs 201k est.

  • 10Y yield fell as much as 13.5bp to 1.902% and closed down by 4.3bp while 5Y yield fell as much as 19.5bp as market priced in a lower chance Fed would begin rate hikes this year
  • SPX rose 1.43%

The answer will be revealed in half an hour.


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Movie Review: Everybody Wants Some!! – New at Reason

Everybody Wants Some!!Richard Linklater’s 1993 Dazed and Confused pitted sadistic jocks against their oddball prey at a Texas high school on the cusp of the summer of 1976. The movie was loose and spirited, goosed along by period rock hits, and it’s now revered as a classic. Everybody Wants Some!!, which the writer-director calls a “spiritual sequel” to that earlier film, moves along to college at the end of the summer of 1980. There’s still a lot of music in the air, but now we mostly have only the jocks for company. They’re a more likable crew than the previous bunch, but the movie is even looser than its predecessor, and its non-story is sometimes talky and bland. There’s no predicting these things, but it doesn’t feel like a classic, writes Kurt Loder.

View this article.

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Police Raid Offices Of Monaco Firm Accused Of Bribing World’s Oil Producers

Two days ago we brought you excerpts from a Huffington Post investigative report on Unaoil, a previously obscure Monaco company that allegedly functions as a kind of Bribery Incorporated for state actors looking to curry favor with the world’s oil exporters.

A treasure trove comprising “hundreds of thousands” of leaked e-mails and documents led Huff Post and Fairfax Media to publish an expose on the “jet-setting Ahsani clan” which apparently has links to nearly every producing country on the planet and knows just which palms to grease when Western governments need to make inroads.”They rub shoulders with royalty, party in style, mock anti-corruption agencies and operate a secret network of fixers and middlemen throughout the world’s oil producing nations,” Huff Post wrote, on the way to documenting the Ahsani family’s connections to Bashar al-Assad, Muammar Gaddafi, and the regime in Tehran, among other governments.

Pictured below are Ata Ahsani and his two sons, Cyrus and Saman. Apparently, the family is worth more than $200 million which Huff Post reckons makes them part of the “global elite.” The shady family business has been certified by anti-corruption agency Trace International which the Post rightly says “raises serious questions about the worth of such international accreditation.”

On Friday, we learn that the Ahsanis’ homes as well as Unaoil’s offices have been raided by authorities at the request of Britain’s Serious Fraud Office. “Authorities in Monaco have raided the headquarters of an oil company, as well as the homes of some of its bosses, as part of a British-led investigation into a corruption scandal implicating businesses all over the world,” The Guardian writes. “In a statement released on Thursday, it said that the Monaco-based firm Unaoil was at the centre of the inquiry and that officials had acted after an urgent request for assistance from the UK’s Serious Fraud Office (SFO).”

“These searches and interviews were carried out in the presence of British officials as part of a vast, international corruption scandal implicating numerous foreign oil industry firms,” Monaco said in a statement. “The information collected is going to be examined by the British authorities as part of their investigation.” 

The company’s executives were interrogated interviewed earlier in the week, but the SFO isn’t ready to say whether or not they’re “interested” in the investigation.“We are aware of the allegations but can neither confirm nor deny our interest in the matter,” a statement reads. “Due to recent developments it would be inappropriate for the company to comment at this time,” a Unaoil spokesman remarked.

British police are reportedly working with authorities in Australia as well as the US DoJ and FBI to investigate Huff Post and Fairfax’s claims. 

The problem, of course, is that this is essentially a case where governments will be investigating themselves. While the original investigative report implicates “Western companies” – i.e. multinational energy conglomerates – it seems like a foregone conclusion that this was a two-way street when it came to dealing with state actors. That is, if the Ahsanis were dealing with governments in oil producing countries they were probably working with Western officials as well and may function as a back channel in all manner of clandestine dealings. Perhaps police “accidentally” destroyed a document or two while ransacking the offices.

“[The company creates] political instability, turns citizens against their own governments, and fueled the rage that would erupt during the Arab Spring – and be exploited by terrorist groups like Al-Qaeda and the Islamic State (IS, formerly ISIS/ISIL),” Huff Post claims. In other words, they do exactly what the US government does – only they don’t screw it up.


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