admin – Page 21613

A Tale Of Two Job Markets (Or Why The Elites Couldn’t See A Trump Win Coming)

Via The Economic Cycle Research Institute,

With the economic expansion in its eighth year, over 15 million jobs added since the post-recession low in employment, and a steady decline in the jobless rate from its recessionary high of 10% to under 5%, many mainstream economists were convinced that the U.S. economy was in good shape. That misconception, at least where jobs are concerned, is a key reason so many were stunned by this month’s election verdict.

Looking beneath the headlines, it is important to appreciate how unevenly distributed the job gains have been during the current business cycle. We pointed out nearly five years ago that, over the first two years of the jobs recovery, Whites accounted for less than 59% of the job gains, even though they made up over 81% of the labor force. Meanwhile, Blacks and Hispanics, who made up “about a quarter of the labor force, accounted for around five out of every eight jobs added” (USCO, February 2012).

Last month, we again emphasized the skewed nature of this jobs recovery, noting that, “for seven long years, the majority of less-educated non-Hispanic White adults has not been employed. No wonder there is such angst in the lead-up to this presidential election” (USCO Essentials, October 2016).

A striking picture of this lopsided reality is evident from the shares of the total job gains since the November 2007 pre-recession peak in employment. As the chart shows, of the five-million-plus net jobs added since that high-water mark nine years ago, some 56% went to Hispanics (rightmost green bar), about quadruple their 14% share of the labor force at the time (rightmost blue bar). Meanwhile, 29% of those job gains went to Asians, i.e., about six times their 5% share of the labor force (second set of bars from left). Moreover, 25% of those job gains went to Blacks, i.e., more than double their 11% share of the labor force (third set of bars from left).

In sharp contrast, Whites, who made up over 81% of the labor force in 2007 (leftmost blue bar) accounted for negative 9% of the net job gains (red bar). While the percentage shares for these four groups add up to more than 100% because White Hispanics are double-counted as both White and Hispanic, and Black Hispanics are double-counted as both Black and Hispanic, the reality is stark. Whites actually have fewer jobs than nine years ago, while Hispanics, Blacks and Asians together gained all of the net jobs added, and more.

Part of the reason may be that these jobs, predominantly in services, were created in metropolitan areas, rather than in rural areas and small towns where factories were shuttered as the manufacturing jobs disappeared. There is little reason to expect that those jobs will come back to those areas away from the urban centers.

Stepping back from the current outlook, as students of the business cycle, we are well-positioned to discern what is cyclical and, by elimination, what is not cyclical but structural. Digging deep into data that do not conform to cyclical patterns, we have been able to promptly highlight structural anomalies that economists wielding fancy macroeconomic models overlook for extended periods. The details of the data, properly scrutinized, have long revealed the sources of anger and despair with the way the 21st century has sorted winners and losers.

President-elect Trump’s proposed tax cuts, along with major infrastructure spending, could well invigorate business activity, but are unlikely to take effect for at least a year or so. Thus, they are unlikely to affect the economy’s prospects over the coming months. To that extent, our cyclical outlook remains unchanged.

Of course, a reduction in regulations could have a nearer-term impact. The President also has the power to make major changes with regard to trade and tariffs in relatively short order. All in all, these could have positive or negative effects, though it is too soon to tell. But in any case, we will keep a close eye on our cyclical leading indexes for early objective indications of a shift in the outlook.

In any event, it will be difficult to change the plight of Mr. Trump’s supporters from outside the metropolitan areas. They remain at the mercy of powerful winds of structural change that continue to sweep the globe.

via http://ift.tt/2gzeZ1v Tyler Durden

A Second Look At The OPEC Deal: Here’s What Can Go Wrong

Defying numerous skeptics, today’s historic OPEC decision to cut production, a first since 2009, marks a clear turning point in cartel, and especially Saudi Arabian, politics: individual country quotas have been allocated to all members, a third-party production verification process has been established, and the world’s largest crude oil producer Russia has committed to freeze production.At least, that’s what the deal looks like on paper.

For those who missed today’s fireworks, which saw oil soar as much as 10%, here are the key details.

The OPEC deal features explicit country level production adjustments that target a reduction in OPEC crude production to 32.7 mb/d, down 1.2 mb/d from October (as measured from secondary sources). Libya, Nigeria and Indonesia (an oil importer) are exempt from any adjustment and apart from Iran, the remaining country production decline is 4.6% vs. October (September for Angola). Iran’s participation, while essential to this deal, still leaves questions unanswered with the agreement allowing for a 90 kb/d increase in production when compared to October OPEC secondary sources, but requiring a 180 kb/d cut from October production when measured through direct communication. While no details were provided, non-OPEC countries are expected to join this deal with a target of reducing supply by 0.6 mb/d and Russia expected to commit to a 0.3 mb/d production cut. While Russia embraced the deal, it made it clear it would be very slow in cutting production due to “technical issues”, and refused to explain from what level it would make the 0.3mb/d cut – Russia previously suggested it may cut from a projected budget output level for 2017, suggesting Russia won’t actually cut production at all.

OPEC and Russia have agreed to cut production to 32.5 mb/d and 0.3 mb/d respectively

The ultimate goal of the OPEC production cut is to normalize excess inventory levels but not to target outright high prices, as that would prompt a surge of shale production. As the Nigerian oil minister Kachikwu admitted in Vienna today, OPEC sees $60/bbl as the “perfect” price for oil as at this price “it would not bring too much shale oil.” As Goldman further explains, normalization of inventories is key to low-cost producers as: (1) it generates backwardation which removes hedging gains from high-cost producers and helps low-cost producers grow market share, and (2) it reduces oil price volatility which increases the valuation of the debt and equity they are issuing. In our view, the goal of normalizing inventories should however not target elevated oil prices as the flattening of the oil cost curve and the unprecedented velocity of the shale supply response would likely make such an endeavor rapidly self-defeating above $55/bbl. This is consistent with today’s OPEC press conference and official statement which focused on rebalancing the oil market and explicitly mentioned excess inventories, but not higher prices.

In other words, OPEC is hoping for higher prices, but not too high: anything above $55 defeats the purpose of today’s deal. This is the first risk, because should the latent short interest in the future trading community continue its panicked covering, there is a distinct possibility oil may spike above $55 merely on technicals, precipitating a much faster than expected arrival of shale oil. To be sure, US production has been rising for 6 of the past 7 weeks as is, however a spike in price will accelerate it notably.

* * *

Another key risk to emerge to the deal, as revealed in a statement issued moments ago by Mexican oil company Pemex, which according to Bloomberg said it isn’t planning further output cuts in 2017, in stark refutation of a comment by the abovementioned Nigerian oil minister that Mexico would cut production by 150k b/d after the OPEC deal. Earlier in the day, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told reporters in Vienna that Mexico is expected to reduce by 150k b/d, however this is clearly not the case. This suggests that OPEC has been parading non-OPEC production cuts without any actual verification, and since the Russian production cut will likely be mostly a myth, there is risk that the follow up meeting in Doha next week could be a material disappointment in which OPEC and non-OPEC nations (which now include Indonesia) fail to reach an agreement.

There is further risk of non-OPEC compliance. While Russia is expected to cut production by 0.3 mb/d production, Russia’s track record in participating in OPEC production cuts is mixed. It complied well in 1998 to the two proposed cuts but instead increased production in April 1999 and January 2002. As a result, Goldman’s base case remains that Russian crude oil production will be flat.

Other non-OPEC participants likely include Oman, which has stated that it would match the OPEC cut (implying a 46 kb/d cut). Other past participants to non-OPEC cuts include Mexico, which we now know will not participate, and Norway which has also stated that it would not participate this time. Kazakhstan could be another contributor although it is currently expected to increase production by 140 kb/d. As a result Goldman says that it views details on this non-OPEC 0.6 mb/d additional cut as necessary for prices to meaningfully rally from here.

* * *

Further jeopardising the deal is actual implementation. With the deal agreed to in principle and country level quotas established, focus will now shift to implementation. As Goldman explains, the deal is effective as of January and it will take three weeks of shipping data to get a sense of how well the deal is implemented, suggesting that the full upside to oil prices will likely only materialize by late January.

Looking at the last 17 production cuts (1982-2009), observed production cuts have typically come in at 60% of the announced cuts, as measured by the change in secondary source production vs. the decline announced as calculated by the difference between pre-cut production levels and the announced quota levels. Assuming the historical 60% compliance by OPEC members means the cut declines to just over 700,000 barrels from what are already record production levels.

The key to the remaining upside in oil prices will be determined by the compliance to the announced quotas

Historically, observed production cuts have fallen short of initial targets

* * *

Another risk emerges not on the supply but demand side. As Bank of America writes, we continue to expect annual global oil demand growth to average 1.2 mn b/d, but we are concerned about higher US interest rates and a disorderly CNY depreciation. BofA also points out what we noted above, namely that it is also possible that non-OPEC ex Russian crude oil production recovers faster than we are currently expecting. Whether it is easier regulations in the US or continued production efficiency gains, it is worth keeping in mind that technology is at the heart of this oil price war. Despite the deal that OPEC just agreed to, technological advances will keep the members of this unlikely alliance on their toes. As a reminder, Goldman expects healthy US production growth at $55/bbl.

Goldman’s scenarios for US oil production under various annual oil prices (5% lower reinvestment rate at $45/bbl

* * *

In sum, OPEC has so far managed to fool the market, and send the price of oil surging off all time lows hit in early 2016 even as OPEC output has reached record highs, and the just concluded deal may end up eliminating just a small fraction of this excess supply. There is also risk that demand – most notably out of China – will continue to decline, delaying the so-called market equilibrium even assuming full OPEC and non-OPEC compliance. And, courtesy of Modi’s ridiculous “demonetization” attempt, India’s economic outlook is suddenly in jeopardy: should Indian oil import demand decline as a result, OPEC will have to double its daily production cuts just to catch up to the drop in global demand.

In any case, it will take at least 3-4 months – some time in February – before the world has a sense of how OPEC is implementing and supervising its own production cuts, even as non-compliant non-OPEC members, especially shale, scramble to steal OPEC’s market share. Perhaps the best forecast at this point is that the price of oil will remain rangebound between $45 and $55. Below that and more jawboning will emerge; above it and concerns about shale output will dominate.

Finally, it is safe to say that this is OPEC’s final attempt to prove it is still relevant in a shale-driven world after the “2014 Thanksgiving massacre” when Saudi Arabia essentially unilaterally crushed the organization, and the price of oil. Should OPEC blow this, it will likely be game over for any future attempts to artificially prop up the oil price by the world’s oil exporters.

via http://ift.tt/2g8guTu Tyler Durden

That Moment Mitt Romney Realized He Wasn’t Invited TO Dinner…

During the presidential campaign, no mainstream GOP figure was more outspoken in his criticism of Donald Trump than Mitt Romney. The 2012 Republican Party standard-bearer called Trump, among other things, a “fraud,” a “phony,” and a poseur who had inherited his wealth. Romney, who publicly flirted with the idea of voting Libertarian due to the presence of fellow former Massachusetts Gov. Bill Weld on the ticket, counseled anyone thinking about voting for Trump to remember “the bullying, the greed, the showing off, the misogyny, the absurd third grade theatrics” of the reality-TV personality.

And then Mitt Romney sat down to dinner with Donald Trump and Republican National Committee chairman Reince Priebus last night. Here’s a picture of the gathering, as distributed CNN’s Chris Mooney. I like to caption this “The Moment Mitt Romney Realized He Wasn’t Invited TO Dinner but that He WAS Dinner.” Many folks, with no real evidence, are theorizing that Trump is toying with Romney, who’s been named as a possible secretary of state, the better to humiliate him publicly when Romney is dismissed as a candidate.

http://pic.twitter.com/sa4SpkMeY5

— Chris Moody (@moody) November 30, 2016

Will this be one more shiv from Donald Trump? Who knows.

So far, he’s been more than happy to fill his cabinet with insiders rather than outsiders and there doesn’t seem to be any real method to his madness. But whatever happens in the end, Romney’s willingness to entertain joining Trump’s cabinet further erodes all of our beliefs that sometimes principles are more important than partisanship and personal gain. A few months ago, Gallup released its annual survey of confidence in major U.S. institutions and found that we trust such things at historically low rates. For the third year in a row, in fact, the average trust in 14 major institutions (churches, government, the military, etc.) was below 33 percent.

The reason for that isn’t because Americans have suddenly become incapable of or unwilling to trust authority. It’s because authority, especially as it relates to government, has relentlessly driven down expectations through rotten behavior. Romney’s dinner with the president-elect—”main course, Priebus & PEOTUS had prime sirloin a citrus glaze and carrots. Romney lamb chops with mushroom bolognese sauce” according to New York Times’ reporter Eric Lipton—will only help keep the number of Americans who trust the government to do the right thing for the right reasons at or near historical lows. If that simply turns the United States into a low-trust nation that demands more and more regulation, we’ll be sorry.

But maybe, just maybe, what the Trump era will usher in is righteous indignation at pols who have no scruples and a movement to limit government control over our lives, our futures, and our pocketbooks. The two legacy parties have near-record low rates of voter identification and Americans generally refused to come out in large numbers to back either candidate (indeed, it seems to be the case that while Trump only pulled around as many votes as blah Mitt Romney did four years ago, Democrats just couldn’t be bothered to hustle to the polls for Hillary Clinton). Beyond lack of voter enthusiasm, there are grounds for cautious optimism that some aspects of a Trump presidency will be OK to better-than-OK. Education, transportation, regulation, health-care, and even foreign policy look somewhat promising, even as the bad stuff (immigration, trade, and more) look truly terrible.

All those outcomes, though, ultimately are in our hands and are on our shoulders, as we will ultimately pay for them, literally and figuratively. Which reminds me: This is Reason’s annual webathon, during which we ask people who read our website and watch our videos and listen to our podcasts to consider supporting our efforts with a tax-deductible donation. If you like the way we think about and cover the world, please help us stay strong during 2017.

from Hit & Run http://ift.tt/2gWpOhs
via IFTTT

In Apology Letter to Reddit Users, Huffman Calls The Donald Users ‘Toxic’, ‘Behaving Badly’, Threatens Action and Outright Ban

A little more than a week ago, it was revealed that the CEO of Reddit, Steve ‘Cannibal’ Huffman edited user comments that were mean to him. While he might’ve thought his actions were cute and funny, the community, especially in the very popular and active The_Donald subreddit, went apeshit and the people turned on him, in the most acrimonious ways possible.

For those unfamiliar, The_Donald subreddit has grown into a community of truth seekers, delving into all sort of topics, ranging from John Podesta’s alleged child trafficking ring (Pizzagate) to Donald Trump’s cabinet appointments. In many ways, it has become ground zero for news and information — often scooping stories first before the legendary Matt Drudge.

Head Cuck and Chief of Reddit, Steve Huffman, isn’t interested in any of that success and in a letter out today threatened an outright ban on The_Donald, in addition to announcing the corporate overlords at Reddit have identified many ‘troublesome users’ and will be taking action soon.

Additionally, The_Donald will no longer enjoy the privilege of having their content featured on the r/all page — due to uncivil and troll like behavior.

tl;dr: I fucked up. I ruined Thanksgiving. I’m sorry. I won’t do it again. We are taking a more aggressive stance against toxic users and poorly behaving communities. You can filter r/all now.

Hi All,

I am sorry: I am sorry for compromising the trust you all have in Reddit, and I am sorry to those that I created work and stress for, particularly over the holidays. It is heartbreaking to think that my actions distracted people from their family over the holiday; instigated harassment of our moderators; and may have harmed Reddit itself, which I love more than just about anything.

The United States is more divided than ever, and we see that tension within Reddit itself. The community that was formed in support of President-elect Donald Trump organized and grew rapidly, but within it were users that devoted themselves to antagonising the broader Reddit community.

Many of you are aware of my attempt to troll the trolls last week. I honestly thought I might find some common ground with that community by meeting them on their level. It did not go as planned. I restored the original comments after less than an hour, and explained what I did.

I spent my formative years as a young troll on the Internet. I also led the team that built Reddit ten years ago, and spent years moderating the original Reddit communities, so I am as comfortable online as anyone. As CEO, I am often out in the world speaking about how Reddit is the home to conversation online, and a follow on question about harassment on our site is always asked. We have dedicated many of our resources to fighting harassment on Reddit, which is why letting one of our most engaged communities openly harass me felt hypocritical.

While many users across the site found what I did funny, or appreciated that I was standing up to the bullies (I received plenty of support from users of r/the_donald), many others did not. I understand what I did has greater implications than my relationship with one community, and it is fair to raise the question of whether this erodes trust in Reddit. I hope our transparency around this event is an indication that we take matters of trust seriously. Reddit is no longer the little website my college roommate, u/kn0thing, and I started more than eleven years ago. It is a massive collection of communities that provides news, entertainment, and fulfillment for millions of people around the world, and I am continually humbled by what Reddit has grown into. I will never risk your trust like this again, and we are updating our internal controls to prevent this sort of thing from happening in the future.

More than anything, I want Reddit to heal, and I want our country to heal, and although many of you have asked us to ban the r/the_donald outright, it is with this spirit of healing that I have resisted doing so. If there is anything about this election that we have learned, it is that there are communities that feel alienated and just want to be heard, and Reddit has always been a place where those voices can be heard.

However, when we separate the behavior of some of r/the_donald users from their politics, it is their behavior we cannot tolerate. The opening statement of our Content Policy asks that we all show enough respect to others so that we all may continue to enjoy Reddit for what it is. It is my first duty to do what is best for Reddit, and the current situation is not sustainable.

Historically, we have relied on our relationship with moderators to curb bad behaviors. While some of the moderators have been helpful, this has not been wholly effective, and we are now taking a more proactive approach to policing behavior that is detrimental to Reddit:
We have identified hundreds of the most toxic users and are taking action against them, ranging from warnings to timeouts to permanent bans. Posts stickied on r/the_donald will no longer appear in r/all. r/all is not our frontpage, but is a popular listing that our most engaged users frequent, including myself. The sticky feature was designed for moderators to make announcements or highlight specific posts. It was not meant to circumvent organic voting, which r/the_donald does to slingshot posts into r/all, often in a manner that is antagonistic to the rest of the community.

We will continue taking on the most troublesome users, and going forward, if we do not see the situation improve, we will continue to take privileges from communities whose users continually cross the line—up to an outright ban.

Again, I am sorry for the trouble I have caused. While I intended no harm, that was not the result, and I hope these changes improve your experience on Reddit.

Steve

PS: As a bonus, I have enabled filtering for r/all for all users. You can modify the filters by visiting r/all on the desktop web (I’m old, sorry), but it will affect all platforms, including our native apps on iOS and Android.

The_Donald users aren’t happy at all by Huffman’s ‘coming together’ letter of healing.

via http://ift.tt/2fFmveg The_Real_Fly

The War On Cash Is Happening Faster Than We Could Have Imagined

Submitted by Simon Black via SovereignMan.com,

It’s happening faster than we could have ever imagined.

Every time we turn around, it seems, there’s another major assault in the War on Cash.

India is the most notable recent example– the embarrassing debacle a few weeks ago in which the government, overnight, “demonetized” its two largest denominations of cash, leaving an entire nation in chaos.

But there have been so many smaller examples.

In the US city of New Orleans, the local government decided earlier this month to stop accepting cash payments from drivers at the Office of Motor Vehicles.

As I wrote to you recently, several branches of Citibank in Australia have stopped dealing in cash altogether.

And former US Treasury Secretary Larry Summers published an article last week stating that “nothing in the Indian experience gives us pause in recommending that no more large notes be created in the United States, Europe, and around the world.”

In other words, despite the India chaos, Summers thinks we should still curtail the $100 bill.

The conclave of the high priests of monetary policy almost invariably sings the same chorus: only criminals and terrorists use high denominations of cash.

Ken Rogoff, Harvard professor and former official at the International Monetary Fund and Federal Reserve, recently published a book blatantly entitled The Curse of Cash.

Ben Bernanke’s called it a “fascinating and important book”.

And, shockingly, a number of reviews on Amazon.com praise “brilliant” Rogoff’s “visionary concepts” in his “excellent book”.

Rogoff, like most of his colleagues, contends that large bills like the $100 or 500 euro note are only used in “drug trade, extortion, bribes, human trafficking. . .”

In fact they jokingly refer to the 500-euro note as the “Bin Laden” since it’s apparently only used by terrorists.

Give me a break.

My team and I did some of research on this and found some rather interesting data.

It turns out that countries with higher denominations of cash actually have much lower crime rates, including rates of organized crime.

The research was simple; we looked at the World Economic Forum’s competitive rankings that assesses countries’ levels of organized crime, as well as the direct business costs of dealing with crime and violence.

Switzerland, with its 1,000 Swiss franc note (roughly $1,000 USD) has among the lowest levels of organized crime in the world according to the WEF.

Ditto for Singapore, which has a 1,000 Singapore dollar note (about $700 USD).

Japan’s highest denomination of currency is 10,000 yen, worth $88 today. Yet Japan also has extremely low crime rates.

Same for the United Arab Emirates, whose highest denomination is the 1,000 dirham ($272).

If you examine countries with very low denominations of cash, the opposite holds true: crime rates, and in particular organized crime rates, are extremely high.

Consider Venezuela, Nigeria, Brazil, South Africa, etc. Organized crime is prevalent. Yet each of these has a currency whose maximum denomination is less than $30.

The same trend holds true when looking at corruption and tax evasion.

Yesterday we wrote to you about Georgia, a small country on the Black Sea whose flat tax prompted tax compliance (and tax revenue) to soar.

It’s considered one of the most efficient places to do business with very low levels of corruption.

And yet the highest denomination note in Georgia is the 500 lari bill, worth about $200. That’s a lot of money in a country where the average wage is a few hundred dollars per month.

Compare that to Malaysia or Uzbekistan, two countries where corruption abounds.

Malaysia’s top cash note is 50 ringgit, worth about $11. And Uzbekistan’s 5,000 som is worth a paltry $1.57.

Bottom line, the political and financial establishments want you to willingly get on board with the idea of abolishing, or at least reducing, cash.

And they’re pumping out all sorts of propaganda to do it, trying to get people to equate crime and corruption with high denominations of cash.

Simply put, the data doesn’t support their assertion. It’s just another hoax that will give them more power at the expense of your privacy and freedom.

Do you have a Plan B?

via http://ift.tt/2fFfTMU Tyler Durden