Tag: finance

Ebola is one of the deadliest diseases on Earth, with a fatality rate as high as 90%. It causes bleeding from the eyes, ears, mouth and rectum and a bloody full-body rash leading to a quick demise. It’s one of a handful of diseases that are so deadly that governments consider it a threat to national security. Luckily, so far the cumulative death toll from Ebola has been limited to sporadic epidemics in Africa, although that may change. Here, courtesy of Blooomberg, is a map of Ebola’s African outbreaks in recent history.

This map is relevant because as has been reported previously, In March, Ebola was reported in Guinea and neighboring Liberia, killing 93 people out of 151 suspected cases in the worst outbreak in seven years. While previous epidemics have affected larger populations, what’s unusual this time is how the disease has spread. Originating in small towns in southeast Guinea, the virus traveled 660 kilometers (410 miles) to the coastal capital of Conakry. Earlier outbreaks have been in remote locations. The spread of the disease is fueled by poor health infrastructure and hygiene practices. Western Africa has an acute shortage of doctors; Guinea has just 0.1 physicians per 1,000 people, among the lowest ratios in the world. International aid groups such as Doctors Without Borders sent specialist teams with biohazard suits to set up isolation units and contain the outbreak. Ebola jumps to humans from infected animals that live in the rainforest through contact with blood and other secretions from chimpanzees, gorillas, bats and other species. It spreads among humans the same way. Sick people begin to erupt with symptoms two to 21 days after exposure, leaving health-care workers and family members the most at risk. To prevent the disease from spreading, Guinea has forbidden the sale and eating of bats. Senegal closed its southern border with Guinea and governments around the world are on high alert 

Researchers think fruit bats are the most likely host of Ebola, which was first identified in 1976 near the Ebola River in what is now the Democratic Republic of Congo. Outbreaks have also been reported in Congo Republic, Uganda and Sudan and are typically contained within a few months. Prior to the current wave, a total of 2,387 cases had led to 1,590 deaths, according to the World Health Organization. There are no drugs or vaccines approved to treat or prevent Ebola. The rarity of the disease and its prevalence in rural areas of poor African nations doesn’t provide enough incentive for big drugmakers to tackle the virus. Instead, smaller biotechnology firms and government-funded labs have taken up the challenge. The quick and horrible death of Ebola victims and the potential threat of an epidemic was captured in the 1994 best-selling non-fiction thriller “The Hot Zone.” It’s also considered a possible vehicle for terrorism. The U.S. Centers for Disease Control and Prevention lists the virus as a Category A bioterrorism agent, alongside anthrax and smallpox, compelling an expensive search for remedies.

Ebola doesn’t travel through the air, making it harder to transmit than other pathogens, such as influenza, as long as adequate health-care practices are followed. Other diseases kill many more people. Influenza kills up to half a million people a year around the globe, and resurgent diseases such as tuberculosis and the growth of antibiotic resistance are a bigger focus for global public health organizations. While Ebola is unlikely to leave Africa, the stigma and fear associated with it can prompt people to flee to hospitals outside the affected area, spreading the disease across borders and around the continent. That panic gives governments an excuse to impose travel and trade restrictions on the affected countries each time Ebola emerges from the forest.

And the latest news in the ongoing underreported epidemic, explianable considering the major US “news” outlet refuses to shift from its 24/7 coverage of the disappearance of flight MH370 (which may have been discovered today), is that an Ebola isolation center in Guinea was attacked by the public which has decided to take vigilante order into its own hands.

From BusinessWeek:

Officials in Guinea are condemning an attack on a health center where Ebola patients are being isolated from the public.

In a government statement issued Saturday, authorities said the support of aid groups such as Doctors Without Borders is essential to controlling the deadly disease.

The violence took place in the town of Macenta in southern Guinea where at least 14 people have died.

A total of 86 people have died so far from Ebola in Guinea and two other confirmed deaths have been reported in neighboring Liberia.

Aid workers have tried to inform people about how the disease is spread, though rumors and misinformation have led to panic amid the first outbreak ever in Guinea.

via Zero Hedge http://ift.tt/1hrD1CZ Tyler Durden

The dollar’s technical tone has improved against the complex of European currencies, but it remains soft against the dollar-bloc.  There are a few macro-fundamental developments, like Draghi’s hint that the ECB may be getting closer to taking non-conventional measures and somewhat stronger US data that weighed on the euro.

Against the yen, the outlook is less clear. After making new 10-week highs before the weekend, the dollar slipped lower and closed below the previous day’s range. This potential key reversal warns of additional backing and filling after the dollar rallied about 2.5% over the past seven sessions.

Dollar Index: With the gains in the second half of last week, the Dollar Index completed a retracement objective near 80.55, which seems to correspond to a neckline of a potential head and shoulders bottom. The measuring objective is near 81.75. Some short-term technical indicators are a bit stretched and a pullback toward 80.20 could be a better buying opportunity than chasing the market, if one shares the constructive outlook.

Euro: The losses before the weekend put the single currency at its lowest level in a little over a month. Although the Dollar Index is heavily weighted toward the euro (and currencies that move in its orbit), the head and shoulders pattern we see there is not as clear in the euro chart. There is a band of support ($1.3640-80) that may limit the losses in the near-term, though a break of it would be significant. On the upside, the $1.3740-60 should cap upticks.

Yen: The market rebuffed the dollar’s foray above JPY104. Pressured by the decline in US yields and then by the sharp sell-off in equities the dollar retreated to JPY103.20,a retracement objective of the run-up since the March 27 low near JPY101.70. A break of it could spur a move toward JPY102.60. Technically, it does look as if the move above JPY104 completed some technical phase.

Sterling: It was largely sidelined after the US jobs data and the euro and yen stole the spotlight. Still, sterling recorded lower highs for the fourth consecutive session before the weekend. Support near $1.6540 was approached. The next important level of support is seen near $1.6440. The technical indicators we look at are not generating strong signals presently.

Canadian dollar: After seven sessions of flirting with support near CAD1.10, the US dollar fell through there before the weekend. The strength of the North American employment data gave the Canadian dollar (and the dollar-bloc, more generally) a lift. The US dollar fell to the bottom of its Bollinger Band (CAD1.0955). In consolidative activity at the beginning of the new week, the US dollar is likely to find resistance in the CAD1.1000-CAD1.1020, but a move above CAD1.1050 would likely signal the end of the Canadian dollar’s recovery.

Australian dollar: The Canadian dollar was the strongest of the major currencies last week, gaining 0.7% against its US counterpart. The Aussie was second with about a 0.4% gain. That was sufficient, thought, to lift it to its best level since late last November. It has been knocking on the $0.9300 ceiling for several sessions. It has moved above it twice, but unable to close above it. At the same time, pushback has been modest, with $0.9200 holding. It is possible, as we have noted, that the Australian dollar has carved out a head and shoulders bottom. It projects toward $0.9500.

We have recently identified a head and shoulders top in the euro against the Aussie. The neckline was at A$1.50 and projected to around A$1.42. After approaching the neckline from underneath (~A$1.4965), the euro posted another leg down to finish the week near A$1.4760 and below its 200-day moving average for the first time since last April. Some of the technical indicators are warning that additional near-term losses may be difficult to sustain without some consolidation.

Mexican peso: The peso gained about 0.5% against the US dollar last week. The greenback was pushed below MXN13.00, albeit briefly for the first time since mid-January. The peso and Mexico’s Bolsa were amazingly resilient in the face of the large slide in US equities before the weekend. Additional dollar declines are possibly, but a move to MXN12.95 would likely produce over-stretched technical readings and increase the risks of a dollar bounce.

Observations from the speculative positioning in the CME currency futures: 

1.  There were four speculative positions that were adjusted by more than 10k contracts.

The gross short yen position rose by more than a quarter to 110.8k contracts. Speculators had been covering short yen positions through the first quarter. These new shorts though were in weak hands and many may have been forced to cover before the weekend.  

Gross long Canadian dollar positions were cut by a third to 27.5k contracts. 

Gross long Australian dollar positions increased by 11.0 contracts to 35.4k.  Speculators have not be net long Aussie futures since last May.   

Gross long peso positions more than doubled to almost 50k contracts and this was enough to swing the net position long by 21.8k contracts  

2.  It was the second consecutive weekly reporting report during which net long euro positions were trimmed.  It was the third consecutive week that net long position was increased.

3.  Gross short currency positions were generally increased.  The exceptions were the Australian and Canadian dollars.  The gross long positions also were mostly added too.  The exceptions were the euro, Swiss franc and Canadian dollar.

via Zero Hedge http://ift.tt/1hMHSDd Marc To Market

Submitted by David Stockman via Contra Corner blog,

The world’s official economic institutions are run by people who believe in monetary fairy tales. The 70 words of wisdom below from IMF head Christine Lagarde are par for the course. She asserts that a new jabberwocky expression called “low-flation” is the main obstacle to higher economic growth in Europe and the DM areas generally and that it can be cured by more central bank money printing.

The first obstacle is… the emerging risk of what I call “low-flation,” particularly in the Euro Area. A potentially prolonged period of low inflation can suppress demand and output—and suppress growth and jobs. More monetary easing, including through unconventional measures, is needed in the Euro Area to raise the prospects of achieving the ECB’s price stability objective. The Bank of Japan also should persist with its quantitative easing policy.

Now there is not a shred of credible evidence that prolonged low CPI inflation causes workers to produce less, businesses to invest less or entrepreneurs to invent less. Since these are the fundamental ingredients of economic growth on the free market, the question recurs as to why Keynesian Kool-Aid drinkers like Lagarde (and the huge staff of IMF economists she lip-syncs) apparently believe that eroding the value of savings by say only 1% per year vs. 2% will “suppress demand and output”.

Obviously, even they can’t believe that falling prices alone cause “demand” to falter. After all, the price of flat-screen TVs, iPads and iPhones have plunged during the past several years, but demand has soared. During the past 27 months, for example, Apple’s revenues have surged from $29 billion to $58 billion per quarter.

And its not just tech gadgetry, either. Wal-Mart has been driving down the price of furniture, toasters and house-paint for years now, but it has never once complained that its revenue growth–which has been relentless for decades—-has been impaired because its customers are holding-off for even lower everyday prices next period.

Indeed, at the product and commodity level the “low-flation” notion is positively ridiculous. US auto sales of 17 million annually in 2005 plummeted to about 11 million by 2009, but that was due to falling incomes and impaired credit status among marginal car buyers. During that period auto prices were not falling but steadily rising.

In general, the old rules have not been repealed: demand flows from income; income follows production; rising prices except among the most inelastic commodities tend to discourage demand; and falling prices tend to stimulate it.

Only in the Keynesian world of regression model aggregates do we get a polar-reversal. There, baskets of prices (i.e. price indices like the CPI) which are rising somewhat slower than trend allegedly cause that mysterious ether called “aggregate demand” to falter. Needless to say, the professors have never identified the transmission mechanism whereby the consumer’s logical behavior to buy more goods with falling prices at the micro-level— causes the sum of all consumers to defer spending in the face of weakening inflation at the aggregate level for the entire basket of goods and services.

No time needs be spent on puzzling about this conundrum because the missing link is easy to see. The mysterious Keynesian ether is simply credit expansion in excess of income growth. That happened for about four decades prior to the financial crisis, and it did goose GDP as measured by the ”spending and income” accounts published by the government’s statistical mills.

Designed by primitive Keynesians in the 1930s and 1940s these ledgers were a marvel of aggregation, cross-walks and accounting identities, but, alas, they suffered from a irremediable flaw. Namely, the GDP accounts contained no balance sheets; it was all about flows which meant that there was no history, and that each quarterly accounting period was a fresh start.

As it happened, the US economy fresh-started its way straight up a parabolic debt-to-income curve after the 1970s. The aggregate credit market debt-to-national income ratio had been stable at 1.5X for nearly a century, but climbed nearly continuously to 3.5X by the eve of the financial crisis in late 2007. As I have demonstrated elsewhere, this extra two turns of debt amounts to about $30 trillion of incremental debt burden.

In the household sector, the debt ratchet was equally dramatic. With each new business cycle, household debt climbed to a new plateau. It ultimately rose from 80% of wage and salary income in 1970 to a peak of 210 percent in 2007—before falling back slightly to about 180% at present owing to the  liquidation of unsustainable or defaulted mortgage and credit card debt.

The short of it is that we have hit peak debt, and the one-time ratchet to spending based on rising debt ratios is over. The Keynesians never saw this coming because their DSGE models never saw a balance sheet—let alone the de facto LBO which occurred on the nation’s aggregate balance sheet over the past 40 years.

And so they persist in insisting that more of the square peg of debt be pounded into the fully saturated round hole of income. That’s the essence of the mad money printing being undertaken by all of the world’s major central banks.

Keynesian policy-makers at these central banks labor to once again levitate demand in the time-worn manner, but fail to see that the credit transmission channel of monetary policy was a one-time expedient, and that it is now exhausted and done. After nearly five years of failing to achieve “escape velocity”, therefore, they now desperately need an explanation for that failure, and have simply invented one: “low-flation”.

It goes without saying that this particular variant of the Keynesian catechism is especially dangerous. It gives the central banks a license to define and redefine “optimum” inflation—a figure that is already creeping up from 2% toward 3% and even 4% among some of the more aggressive doves.  Since the phony inflation numbers published by the government mills–riddled as they are with imputed rents, geometric means and hedonic adjustments— will always fall short of these arbitrary inflation targets, the central bankers have essentially invented a pretext for endless monetary expansion.

Unfortunately, that means that the Wall Street finance channel will be injected with ever more juice for the carry trades until the resulting financial bubbles reach their natural asymptote and come crashing down once again. The scary thing is that the world is being run by central bank, IMF and national government apparatchiks, who, like Christine Lagarde, are clueless about the fact that momentary doctrines such as “low-flation” are simply made-up claptrap.

Too be sure, the Keynesian recipe for the debt elixir was not always this specious. Once upon a time this Keynesian RX was at least quasi-honest because the debt magic was held to operate mainly through fiscal policy. According to the great thinker, the masses had an unfortunate habit of saving too much—-so the solution was for the fiscal authorities to sop-up these fetid pools and cycle them back into the economy through government deficits.

In turn, these fiscal booster shots in the form of transfer payments, public works, war equipment and even holes dug and refilled would generate fiscal multipliers—that is to say, money borrowed from society’s stagnant savings pool and spent by recipients of government outlays would become new income to shovel suppliers and food vendors, who would re-spend their proceeds and fuel a virtuous cycle of growth.

Moreover, this type of prosperity from the issuance of government bonds and bills was to be pursued aggressively until the macro-economy had absorbed every single idle worker and capital resource, and had thereby achieved a Keynesian nirvana called “full employment”. Only then was the borrowing to stop, allowing the budget to swing into full-employment surplus. At that point, the macro-economic bathtub would be full to the brim and the elixir of debt would have done its job.

It didn’t work out that way. Johnson’s “guns and butter” fiscal policies caused the macroeconomic bathtub to flood, unleashing a decade of the Great Inflation. Unemployment dropped below 4% for 40 months running in the late 1960s, giving rise to virulent wage pressures that fueled an inflationary cost spiral.

Likewise, the excess domestic demand feed by the Keynesian doctors of the Kennedy-Johnson White House spilled over into the international market, inducing a massive inflow of imports and current account deficits. Soon there was a monetary crisis. Nixon then pulled the plug on the gold-backed money that J.M. Keynes had designed at Bretton Woods, thereby permitting Milton Friedman’s monetary wise men to run the nation’s central bank by the seat of their pants.

In time, the excess savings hobgoblin disappeared–with the US household savings rate falling from 11 percent to barely 3%, but that didn’t matter. The Keynesian baton had already been passed to the Greenspan era central bankers. As suggested above, the latter proceeded to fuel massive credit-driven expansion until balance sheets were fully exhausted.

At the end of the day, therefore, the grand Keynesian idea of the debt elixir has now been reduced to mindless money printing by the central banks. And the myth of excess savings and under-consumption has been reduced to something even worse—bureaucratic slobbering about “low-flation”.

via Zero Hedge http://ift.tt/1q2znES Tyler Durden

As Daniel Kay Hertz explains, the goal of these maps is not merely to depress you (you’re welcome!), but to suggest just how dramatically the reality of Chicago’s “two cities” has changed over the last few generations, how non-eternal its present state is, and that a happier alternate reality isn’t just possible, but actually existed relatively recently.

Daniel Kay Hertz goes on to note, he feels relatively comfortable telling the story of how Chicago came to be so segregated by race; but is much humbler about his ability to explain this, except inasmuch as the ever-widening ghetto of the affluent could not exist without, yes, radically exclusionary housing laws.

…

One last piece: the obvious and immediate reaction to these maps is to see them as a direct consequence of rising income inequality. There is some truth to that, but the researchers from which much of this data came have already discovered that income segregation has actually risen faster than inequality. So that’s not the end of the story.

Anyway, here you go: the disappearance of Chicago’s middle-class and mixed-income neighborhoods since 1970, measured by each Census tract’s median family income as a percentage of the median family income for the Chicago metropolitan region as a whole.

Read more here

via Zero Hedge http://ift.tt/1jMugsp Tyler Durden

Submitted by Michael Snyder of The Economic Collapse blog,

How long can America continue to burn up wealth?  How long can this nation continue to consume far more wealth than it produces?  The trade deficit is one of the biggest reasons for the steady decline of the U.S. economy, but many Americans don't even understand what it is.  Basically, we are buying far more stuff from the rest of the world than they are buying from us.  That means that far more money is constantly leaving the country than is coming into the country.  In order to keep the game going, we have to go to the people that we bought all of that stuff from and ask them to lend our money back to us.  Or lately, we just have the Federal Reserve create new money out of thin air.  This is called "quantitative easing".  Our current debt-fueled lifestyle is dependent on this cycle continuing.  In order to live like we do, we must consume far more wealth than we produce.  If someday we are forced to only live on the wealth that we create, it will require a massive adjustment in our standard of living.  We have become great at consuming wealth but not so great at creating it.  But as a result of running gigantic trade deficits year after year, we have lost tens of thousands of businesses, millions upon millions of jobs, and America is being deindustrialized at a staggering pace.

Most Americans won't even notice, but the latest monthly trade deficit increased to 42.3 billion dollars…

The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.

 

The deficit increased to $42.3 billion, which was 7.7% above the January imbalance of $39.3 billion, the Commerce Department reported Thursday.

When the trade deficit increases, it means that even more wealth, even more jobs and even more businesses have left the United States.

In essence, we have gotten poorer as a nation.

Have you ever wondered how China has gotten so wealthy?

Just a few decades ago, they were basically a joke economically.

So how in the world did they get so powerful?

Well, one of the primary ways that they did it was by selling us far more stuff than we sold to them.  If we had refused to do business with communist China, they never would have become what they have become today.  It was our decisions that allowed China to become an economic powerhouse.

Last year, we sold 122 billion dollars of stuff to China.

That sounds like a lot until you learn that China sold 440 billion dollars of stuff to us.

We fill up our shopping carts with lots of cheap plastic trinkets that are "made in China", and they pile up gigantic mountains of our money which we beg them to lend back to us so that we can pay our bills.

Who is winning that game and who is losing that game?

Below, I have posted our yearly trade deficits with China since 1990.  Let's see if you can spot the trend…

1990: 10 billion dollars

1991: 12 billion dollars

1992: 18 billion dollars

1993: 22 billion dollars

1994: 29 billion dollars

1995: 33 billion dollars

1996: 39 billion dollars

1997: 49 billion dollars

1998: 56 billion dollars

1999: 68 billion dollars

2000: 83 billion dollars

2001: 83 billion dollars

2002: 103 billion dollars

2003: 124 billion dollars

2004: 162 billion dollars

2005: 202 billion dollars

2006: 234 billion dollars

2007: 258 billion dollars

2008: 268 billion dollars

2009: 226 billion dollars

2010: 273 billion dollars

2011: 295 billion dollars

2012: 315 billion dollars

2013: 318 billion dollars

Yikes!

It has been estimated that the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas, and according to the Economic Policy Institute, America is losing about half a million jobs to China every single year.

Considering the high level of unemployment that we now have in this country, can we really afford to be doing that?

Overall, the United States has accumulated a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.

As a result, we have lost tens of thousands of businesses, millions of jobs and our economic infrastructure has been absolutely gutted.

Just look at what has happened to manufacturing jobs in America.  Back in the 1980s, more than 20 percent of the jobs in the United States were manufacturing jobs.  Today, only about 9 percent of the jobs in the United States are manufacturing jobs.

And we have fewer Americans working in manufacturing today than we did in 1950 even though our population has more than doubled since then…

Many people find this statistic hard to believe, but the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

Millions of good paying jobs have been lost.

As a result, the middle class is shriveling up, and at this point 9 out of the top 10 occupations in America pay less than $35,000 a year.

For a long time, U.S. consumers attempted to keep up their middle class lifestyles by going into constantly increasing amounts of debt, but now it is becoming increasingly apparent that middle class consumers are tapped out.

In response, major retailers are closing thousands of stores in poor and middle class neighborhoods all over the country.  You can see some amazing photos of America's abandoned shopping malls right here.

If we could start reducing the size of our trade deficit, that would go a long way toward getting the United States back on the right economic path.

Unfortunately, Barack Obama has been negotiating a treaty in secret which is going to send the deindustrialization of America into overdrive.  The Trans-Pacific Partnership is being called the "NAFTA of the Pacific", and it is going to result in millions more good jobs being sent to the other side of the planet where it is legal to pay slave labor wages.

According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.

So what will this country look like when we lose tens of millions more jobs than we already have?

U.S. workers are being merged into a giant global labor pool where they must compete directly for jobs with people making less than a dollar an hour with no benefits.

Obama tells us that globalization is good for us and that Americans need to be ready to adjust to a "level playing field".

The quality of our jobs has already been declining for decades, and if we continue down this path the quality of our jobs is going to get a whole lot worse and our economic infrastructure will continue to be absolutely gutted.

At one time, the city of Detroit was the greatest manufacturing city on the entire planet and it had the highest per capita income in the United States.  But today, it is a rotting, decaying hellhole that the rest of the world laughs at.

In the end, the rest of the nation is going to suffer the same fate as Detroit unless Americans are willing to stand up and fight for their economy while they still can.

via Zero Hedge http://ift.tt/PAmXc2 Tyler Durden

Following the March Jobs Report, ConvergEx's Nick Colas got to thinking about the composition of employment growth rather than just the headline number. Is every new job created really the same when it comes to overall economic impact? Consider that the average household income in Maryland is $69,920, versus $39,592 in Mississippi. Or that Mining and Logging jobs pay, on average, $28.77/hour and Retail Trade positions average only $14.22/hour. To expand on this point, Colas came up with three 'Ideal' marginal hires, when considering which jobs bring the most "bang" for the wage/employment "buck". 

They are:

• a construction job for a middle aged male with an 11th grade education in Texas,
• an upgrade to full time status for a single mom who is a teacher in Pennsylvania, and
• new job at a tech company for a recent college grad in Colorado. 

All three offer excellent multipliers for the national economy, highlighting that at this point in the cycle we should be focused on job quality as much as quantity.

Via ConvergEx's Nick Colas,

After +20 years looking at capital markets, I have found that making the complex seem simple is an underappreciated discipline.  It is easy to revel in the complexity of modern high finance, but cutting the Gordion’s knot of excess data with a sharp stroke does make life easier and leads – generally – to better decisions.  It is a double edged sword we’re using, yes, and small mistakes can mean a nasty cut.  Still, even just the process of trying to distill the complex into the understandable is usually worth the effort.

By way of example, consider a large multinational automotive company like Ford or General Motors.  How do you get a handle on whether earnings estimates should rise or fall through a quarter?  Both companies operate in scores of countries, manufacture on multiple continents, have full product ranges from tiny cars to large SUVs, and set pricing through constantly changing dealer and consumer incentive programs.  Your earnings model can run into the thousands of line items if you pull every financial item from the 10-Q in your quest to build the perfect forecasting tool.  I know – I did exactly that for a decade as a brokerage analyst covering the sector.

Or, you can think at the margin – what single high volume product has an outsized impact on incremental earnings?  Consider that large pickup trucks are still very popular in the U.S., with Ford F-Series and Chevrolet Silverado selling a combined 1.2 million units last year. Not surprisingly, therefore, they are the #1 and #2 best-selling vehicles in the country, with #3 (Toyota Camry) and #4 (Honda Accord) selling only 775,000 units combined.  Add to these unit volume numbers the fact that pickups are still very profitable vehicles for any automaker, with contribution margins of $4,000 or more (often a lot more) versus $2,000 or so for passenger cars.  And where is the biggest pickup truck market in America?  Yep.  Texas.

Therefore, when it comes right down to it, the single most important thing to know about a U.S. car company is: “How are pickup truck sales in Texas?”  If they are doing better, it will take a lot of screw ups elsewhere in the system for the company to disappoint on earnings.  And if they are dropping unexpectedly, well, watch out below.

While many of my economist friends may bridle at the comparison, I think we can do a little ‘Pickups in Texas’ style analysis on the U.S. labor market and how job growth translates into overall economic expansion.  Just as the profits from a small car are different from those on a fully loaded Crew Cab, not all jobs are created equal when it comes to their impact on the broader economy.  Consider the following (with several accompanying tables and charts after this text):

Unemployment might be 6.7% nationally, but the spread is wide on a state-by-state level.  North Dakota is the lowest, at 2.6% and Rhode Island anchors the other end of the spectrum at 9.0%.  Even large states can be outliers – California still suffers from an 8.0% unemployment rate.

 

State-by-state wages vary widely as well.  In Maryland, the average household pulls in $69,920 annually. In Mississippi that number is $39,592.  Yes, the cost of living is radically different, but where would you rather see jobs added if all you care about is GDP growth?  It’s not down on the bayou.

 

Wages by profession are also quite different.  Land a gig in a retail store, and the average job pays $14.22/hour.  Get a job in the Information Technology sector and your hourly wage is more than double that, at $28.77.

So where are the “Pickups” in this data, or (in other words) what kinds of jobs will most quickly increase total economic growth?  It’s not just a matter of what and where; you have to consider “Who”.  While it might be tempting to say that one more hedge fund analyst job paying $500,000 in New York City would help the U.S. economy the most, it’s probably not true.  That person is likely married, needs to save a lot for either an apartment or a child’s college education, or perhaps both.  Wealthier people don’t actually make great consumers – they are generally more focused on maintaining and investing their income and savings.

You want someone who will basically spend all the money they get from their new job – that’s the best economic bang for the buck when it comes to marginal employment.  While there are many answers for where these newly employed high-impact workers might be, we offer up three examples here as a way to expand on the core idea:

Single, 23, living in Colorado, with a new job in Information Technology.  Younger workers have had a tough time in the current economic environment, and the unemployment rate for the 20-24 year old cohort is still 11.9%.  That puts many of them at home, living with their parents, even after a four year college degree.

 

In this scenario, a college grad gets a good full time job in IT making the going wage in the sector, roughly $60,000.  They finally move out of their parent’s house and into their own apartment.  That household formation has a large multiplier effect, as they buy everything they need for their new life.  As long as they aren’t flooded with college debt – the national average is just over $15,000 – much of what they make will quickly flow back into the national economy.

 

And why Colorado?  It has a good combination of high household income ($60,180) and average unemployment at 6.1%.  Job growth in a troubled area of the country may not yield as many benefits as healthier parts, with local job cuts offsetting the incremental benefit of the marginal worker.

 

Married, middle aged, construction worker in Texas who did not complete high school.  The last five years have been toughest for workers without a high school degree.  Even now, their unemployment rate is 9.8% and there are over 1 million unemployed in this cohort.  Construction is one career where on-the-job experience trumps formal education, and it pays well: $24.57/hour on average.  Our marginal worker would be married with kids, and therefore likely to spend his new income on necessities and child-rearing.

 

Why Texas and not, say, Florida?  The housing market in the Lone Star State has fully recovered from the Financial Crisis, and our construction worker’s house is now worth more than ever.  In Florida, we would run the risk that he would use his income to catch up on his mortgage payments or credit card bills (run up because he had no equity in his house and no income).

 

Single mom, school teacher, moving from a part time to full time position in Pennsylvania.  There are still over 7 million Americans working part time jobs even though they would like full time employment.  Yes, this is down from the +9 million in this group in 2010, but this pool of workers represents a lot of dry powder for an accelerating U.S. economy.  Pennsylvania’s average income is right in the middle of the national distribution, at $51,245.  Teaching pays well, at $21.60/hour on average.

 

Why did we make her a single mom?  Women who maintain families continue to have a higher unemployment rate than their married peers.  It’s not even close.  Single moms have an unemployment rate of 9.1% versus 4.2% for married women with their spouse present in the household.  If promoted to full time status, there is no doubt our mom would spend all the incremental income on their family.

To sum up, we should focus much more on the kinds of jobs being created than on the raw number of additions.  It’s not just wages that matter, either – a whole range of factors go into the equation.  To harken back to our automotive analogy, we need a “Big pickup” recovery.  All we ever seem to get is a compact car, however.

via Zero Hedge http://ift.tt/1jcZDeN Tyler Durden

It seems two states is not enough for billionaire investor George Soros (who is ranked the 9th most influential marijuane user in the US). As The Washington Times’ Kelly Riddell reports, advocacy groups are leading the campaign to crush marijuana prohibition from coast-to-coast, and 83-year-old Soros is helping line the pockets of those making that push. “Through a network of nonprofit groups, Mr. Soros has spent at least $80 million on the legalization effort since 1994, when he diverted a portion of his foundation’s funds to organizations exploring alternative drug policies, according to tax filings,” Riddell notes, adding that the Soros-affiliated Foundation to Promote an Open Society donates roughly $4 million annually to the Drug Policy Alliance.

As RT notes,

On the heels of the approval of two of the United States’ first recreational laws in Colorado and Washington, other locales across the country are considering implementing policy changes that could decriminalize pot, ease penalties for users or eliminate weed laws altogether. Advocacy groups are leading the campaign to crush marijuana prohibition from coast-to-coast, and 83-year-old Soros is helping line the pockets of those making that push.

 

On Wednesday this week, Kelly Riddell at The Washington Times pulled back the curtain to reveal details about some of the roles that Soros has played in the pro-weed debate, and helped explain how the billionaire’s many foundations are fighting the war against pot prohibition.

 

“Through a network of nonprofit groups, Mr. Soros has spent at least $80 million on the legalization effort since 1994, when he diverted a portion of his foundation’s funds to organizations exploring alternative drug policies, according to tax filings,” Riddell wrote.

 

The Soros-affiliated Foundation to Promote an Open Society donates roughly $4 million annually to the Drug Policy Alliance, Riddell added, a nonprofit group that describes itself as the nation’s leading organization promoting drug policies that are grounded in science, compassion, health and human rights. Soros is among the group of board members who help steer policy reform efforts undertaken by that organization, which has contributed to the successful attempts in both Colorado and Washington state to legalize recreational marijuana, as well as in Uruguay where last year the South American country became the first in the world to allow for the regulation, distribution and sale of weed to legal adults.

 

Records obtained by the Times also reveal that Soros cuts other substantial checks annually to the American Civil Liberties Union, “which in turn funds marijuana legalization efforts,” Riddell wrote, as well as the Marijuana Policy Project which funds state ballot measures. In 2013, the MPP ranked Soros as the ninth most influential marijuana user in the US, behind President Barack Obama, television host Oprah Winfrey and a handful of other politicians and celebrities.

Soros has not just donated money but has been publicly outspoken:

Ahead of an attempt in November 2010 to legalize weed in California through the failed Proposition 19, Soros wrote an op-ed for the Wall Street Journal in which he called the since-failed initiative “a major step forward.”

“In many respects, of course, Proposition 19 already is a winner no matter what happens on Election Day,” Soros wrote then. “The mere fact of its being on the ballot has elevated and legitimized public discourse about marijuana and marijuana policy in ways I could not have imagined a year ago.”

And Soros is not done yet…

“In Florida, Mr. Soros has teamed up with multimillionaire and Democratic fundraiser John Morgan to donate more than 80 percent of the money to get medical marijuana legalization on the ballot through its initiative ‘United for Care, People United for Medical Marijuana,’” Riddell wrote, and the MPP is “focusing a lot of time and resources passing bills” in Delaware, Hawaii, Maryland, New Hampshire, Rhode Island and Vermont, according to her report.

via Zero Hedge http://ift.tt/1hediDT Tyler Durden

Submitted by Chris Martenson via Peak Prosperity,

via Zero Hedge http://ift.tt/1qakpOR Tyler Durden

For a few weeks there, as the Baltic Dry Index rose, talking-heads were ignominous in their praise of the shipping index as a leading indicator of an awesome future ahead for the world economy. The last 9 days have smashed that ‘hope’ to smithereens (and yet the talking-heads have gone awkwardly silent, having moved on to some other bias-confirming meme). The Baltic Dry is down 25% in the last 2 weeks, back near post-crisis lows, and has just suffered the worst start to a year in over a decade. But apart from that, seems global trade is all-good and about to take off any minute now…

The worst start to a year in over a decade…

As Baltic Dry has fallen 9 days in a row, down 25%, and is back near post-crisis lows…

It seems the demand for shipping dry bulk is not strong…

via Zero Hedge http://ift.tt/PzQF0I Tyler Durden