Tag: finance

For the first time, in addition to anecdotal evidence that the first several days of the Obamacare rollout (with 248 enrollees in the first two days) have been an abysmal failure, and the days since have been no better, HHS Secretary today finally admitted that over a month after the rollout of healthcare.gov, the enrollment figures have been “very low.” Of course, being able to qualify the number didn’t mean she could or would actually put it in numeric terms – it would have been simply too humiliating and may have forced her to finally do what so far nobody in the Obama administration has done: take responsibility for one after another failure (after all, for everything else, there’s “Mr. Chairwoman getting to work”) and resign. One thing, however, is certain, the “very low” number whatever it may be, is orders of magnitude below Obama’s mission critical goal of enrolling 494,620 people in October, and another 706,600 for November.

Why is this critical? Because like any other Ponzi, this particular welfare program needs an influx of new registrants, especially young ones, to keep the funding coming in and succeed. Otherwise, not even all central bank chairmen getting to work around the globe creating wealth effects for a few hundred thousand people, or all false-flag, YouTube justified diversionary wars around the world, will do much to deflect attention from how the supposedly crowning achievement of Obama’s two-term presidential career has disintegrated before everyone’s eyes.

Politico has more on Sebelius’ testimony before the Senate Finance Committee:

“We intend to give you as much information as we can validate,” Sebelius said of the enrollment figures being released next week. She said the numbers will include both Medicaid and health plan enrollment in the new insurance exchanges. She said the numbers will cover “the first month of enrollment,” which began on Oct. 1.

She also intends to give more figures that she can fabricate but there is neither here nor there. All that matters is that she has her job. Kinda like Greece and the Euro.

Curiously it was not just republicans crucifying the HHS Secretary…

Republicans chastised Sebelius for what they called misleading testimony that the website would be working when it went live Oct. 1, and a broken promise that consumers could keep their coverage.

 

Sen. Pat Roberts, a Republican from Sebelius’s home state of Kansas, repeated his call for her to resign because of her poor leadership. Sebelius did not respond.

 

The top Republican on the committee, Sen. Orrin Hatch (R-Utah), said Sebelius’s earlier testimony to the committee about the website’s readiness was “at best, misinformed.” He predicted more problems ahead and called for Sebelius to visit the committee once a month with status updates.

 

Several Republicans questioned the security and testing of the website, but Sebelius said that neither security consultants nor the administration felt those concerns warranted halting enrollment.

 

“No one suggested the risks outweighed the importance of moving forward,” she said, “including Mitre, who made recommendations to CMS as is required.” Mitre is a federally-funded nonprofit that handles much of the marketplace’s security.

… it was democrats as well – supposedly those facing stiff competition in the upcoming elections.

In the Finance committee, Democrats expressed vast “frustration” with the website. But they also had harsh words for the contracters tasked with building HealthCare.gov.

 

“I want you to burn their fingers and make them pay for not being responsible,” Sen. Bill Nelson (D-Fla.) told the secretary.

Just don’t burn your own Madame Secretary: after all it is well-known that in Obama’s administration the buck never stops with whoever is in charge – you see, they were never aware of the failures, ever. They only had full supervision over the successes, if any.

Of course, she wouldn’t work for Obama if she didn’t end it on a Hopiumy note:

Sebelius told the committee that the site will be repaired by the end of the month amid a “couple of hundred” functional fixes that have been identified. “We are into the list but we are not where we need to be,” she said. She also said the experts who have looked at the site and its problems have advised making repairs, not taking the site down completely.

Well, maybe not hopiumy enough.

But going back to the original issue, and a far deeper problem with Obamacare than the ongoing website debacle, is that the targeted core constituency of Obamacare, young people under 35, are nowhere near the fastest enrolling population group, with that distinction instead going to the oldest group, people 55 and over, which also happens the be the biggest use of funds within Obamacare. From the WSJ:

 

Insurers say the early buyers of health coverage on the nation’s troubled new websites are older than expected so far, raising early concerns about the economics of the insurance marketplaces.

 

If the trend continues, an older, more expensive set of customers could drive up prices for everyone, the insurers say, by forcing them to spread their costs around. “We need a broad range of people to make this work, and we’re not seeing that right now,” said Heather Thiltgen of Medical Mutual of Ohio, the state’s largest insurer by individual customers. “We’re seeing the population skewing older.”

 

…the numbers demonstrate a real-world fallout from the digital snafus: Less-healthy customers are more likely to persevere through technical obstacles to gain coverage, insurers say. Younger, healthier customers who feel less need for insurance—but whose widespread participation is important to the financial success of the system—could be quicker to give up.

Naturally, the central-planners had a response ready for this too:

A White House official said the Obama administration expects most young, healthy enrollees to wait until the last minute to sign up, citing research showing that pattern when Massachusetts embarked on a similar health overhaul in 2007. People have until Dec. 15 to enroll in coverage starting Jan. 1, with open enrollment for coverage during the year lasting through next March.

Because, you see, young people are so busy watching the Kardashians, working part-time jobs (if they are lucky), and hunting the rats in their parents’ basement, they just can’t afford to figure out how to complete a sign up form.

Finally, even assuming all these quirks are resolved, the worst case as most know by now, is that Obamacare is actually launched albeit with a several month delay. Because the hit to broader discretionary income will be so big, the Fed will have no choice but to engage in precisely the kind of NGDP targeting, read literal paradropping of cash, that we said would happen over a month ago now that the central bank’s back is against the wall and nothing else has worked so far.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YbxyuYJFGOw/story01.htm Tyler Durden

Authored by Bob Shiller, originally posted at Project Syndicate,

I am one of the winners of this year’s Nobel Memorial Prize in Economic Sciences, which makes me acutely aware of criticism of the prize by those who claim that economics – unlike chemistry, physics, or medicine, for which Nobel Prizes are also awarded – is not a science. Are they right?

One problem with economics is that it is necessarily focused on policy, rather than discovery of fundamentals. Nobody really cares much about economic data except as a guide to policy: economic phenomena do not have the same intrinsic fascination for us as the internal resonances of the atom or the functioning of the vesicles and other organelles of a living cell. We judge economics by what it can produce. As such, economics is rather more like engineering than physics, more practical than spiritual.

There is no Nobel Prize for engineering, though there should be. True, the chemistry prize this year looks a bit like an engineering prize, because it was given to three researchers – Martin Karplus, Michael Levitt, and Arieh Warshel – “for the development of multiscale models of complex chemical systems” that underlie the computer programs that make nuclear magnetic resonance hardware work. But the Nobel Foundation is forced to look at much more such practical, applied material when it considers the economics prize.

The problem is that once we focus on economic policy, much that is not science comes into play. Politics becomes involved, and political posturing is amply rewarded by public attention. The Nobel Prize is designed to reward those who do not play tricks for attention, and who, in their sincere pursuit of the truth, might otherwise be slighted.

Why is it called a prize in “economic sciences,” rather than just “economics”? The other prizes are not awarded in the “chemical sciences” or the “physical sciences.”

Fields of endeavor that use “science” in their titles tend to be those that get masses of people emotionally involved and in which crackpots seem to have some purchase on public opinion. These fields have “science” in their names to distinguish them from their disreputable cousins.

The term political science first became popular in the late eighteenth century to distinguish it from all the partisan tracts whose purpose was to gain votes and influence rather than pursue the truth. Astronomical science was a common term in the late nineteenth century, to distinguish it from astrology and the study of ancient myths about the constellations. Hypnotic science was also used in the nineteenth century to distinguish the scientific study of hypnotism from witchcraft or religious transcendentalism.

There was a need for such terms back then, because their crackpot counterparts held much greater sway in general discourse. Scientists had to announce themselves as scientists.

In fact, even the term chemical science enjoyed some popularity in the nineteenth century – a time when the field sought to distinguish itself from alchemy and the promotion of quack nostrums. But the need to use that term to distinguish true science from the practice of imposters was already fading by the time the Nobel Prizes were launched in 1901.

Similarly, the terms astronomical science and hypnotic science mostly died out as the twentieth century progressed, perhaps because belief in the occult waned in respectable society. Yes, horoscopes still persist in popular newspapers, but they are there only for the severely scientifically challenged, or for entertainment; the idea that the stars determine our fate has lost all intellectual currency. Hence there is no longer any need for the term “astronomical science.”

Critics of “economic sciences” sometimes refer to the development of a “pseudoscience” of economics, arguing that it uses the trappings of science, like dense mathematics, but only for show. For example, in his 2004 book Fooled by Randomness, Nassim Nicholas Taleb said of economic sciences: “You can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.”

But physics is not without such critics, too. In his 2004 book The Trouble with Physics: The Rise of String Theory, The Fall of a Science, and What Comes Next, Lee Smolin reproached the physics profession for being seduced by beautiful and elegant theories (notably string theory) rather than those that can be tested by experimentation. Similarly, in his 2007 book Not Even Wrong: The Failure of String Theory and the Search for Unity in Physical Law, Peter Woit accused physicists of much the same sin as mathematical economists are said to commit.

My belief is that economics is somewhat more vulnerable than the physical sciences to models whose validity will never be clear, because the necessity for approximation is much stronger than in the physical sciences, especially given that the models describe people rather than magnetic resonances or fundamental particles. People can just change their minds and behave completely differently. They even have neuroses and identity problems, complex phenomena that the field of behavioral economics is finding relevant to understanding economic outcomes.

But all the mathematics in economics is not, as Taleb suggests, charlatanism. Economics has an important quantitative side, which cannot be escaped. The challenge has been to combine its mathematical insights with the kinds of adjustments that are needed to make its models fit the economy’s irreducibly human element.

The advance of behavioral economics is not fundamentally in conflict with mathematical economics, as some seem to think, though it may well be in conflict with some currently fashionable mathematical economic models. And, while economics presents its own methodological problems, the basic challenges facing researchers are not fundamentally different from those faced by researchers in other fields. As economics develops, it will broaden its repertory of methods and sources of evidence, the science will become stronger, and the charlatans will be exposed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/GhS2MDPp5E0/story01.htm Tyler Durden

Authored by Bob Shiller, originally posted at Project Syndicate,

I am one of the winners of this year’s Nobel Memorial Prize in Economic Sciences, which makes me acutely aware of criticism of the prize by those who claim that economics – unlike chemistry, physics, or medicine, for which Nobel Prizes are also awarded – is not a science. Are they right?

One problem with economics is that it is necessarily focused on policy, rather than discovery of fundamentals. Nobody really cares much about economic data except as a guide to policy: economic phenomena do not have the same intrinsic fascination for us as the internal resonances of the atom or the functioning of the vesicles and other organelles of a living cell. We judge economics by what it can produce. As such, economics is rather more like engineering than physics, more practical than spiritual.

There is no Nobel Prize for engineering, though there should be. True, the chemistry prize this year looks a bit like an engineering prize, because it was given to three researchers – Martin Karplus, Michael Levitt, and Arieh Warshel – “for the development of multiscale models of complex chemical systems” that underlie the computer programs that make nuclear magnetic resonance hardware work. But the Nobel Foundation is forced to look at much more such practical, applied material when it considers the economics prize.

The problem is that once we focus on economic policy, much that is not science comes into play. Politics becomes involved, and political posturing is amply rewarded by public attention. The Nobel Prize is designed to reward those who do not play tricks for attention, and who, in their sincere pursuit of the truth, might otherwise be slighted.

Why is it called a prize in “economic sciences,” rather than just “economics”? The other prizes are not awarded in the “chemical sciences” or the “physical sciences.”

Fields of endeavor that use “science” in their titles tend to be those that get masses of people emotionally involved and in which crackpots seem to have some purchase on public opinion. These fields have “science” in their names to distinguish them from their disreputable cousins.

The term political science first became popular in the late eighteenth century to distinguish it from all the partisan tracts whose purpose was to gain votes and influence rather than pursue the truth. Astronomical science was a common term in the late nineteenth century, to distinguish it from astrology and the study of ancient myths about the constellations. Hypnotic science was also used in the nineteenth century to distinguish the scientific study of hypnotism from witchcraft or religious transcendentalism.

There was a need for such terms back then, because their crackpot counterparts held much greater sway in general discourse. Scientists had to announce themselves as scientists.

In fact, even the term chemical science enjoyed some popularity in the nineteenth century – a time when the field sought to distinguish itself from alchemy and the promotion of quack nostrums. But the need to use that term to distinguish true science from the practice of imposters was already fading by the time the Nobel Prizes were launched in 1901.

Similarly, the terms astronomical science and hypnotic science mostly died out as the twentieth century progressed, perhaps because belief in the occult waned in respectable society. Yes, horoscopes still persist in popular newspapers, but they are there only for the severely scientifically challenged, or for entertainment; the idea that the stars determine our fate has lost all intellectual currency. Hence there is no longer any need for the term “astronomical science.”

Critics of “economic sciences” sometimes refer to the development of a “pseudoscience” of economics, arguing that it uses the trappings of science, like dense mathematics, but only for show. For example, in his 2004 book Fooled by Randomness, Nassim Nicholas Taleb said of economic sciences: “You can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.”

But physics is not without such critics, too. In his 2004 book The Trouble with Physics: The Rise of String Theory, The Fall of a Science, and What Comes Next, Lee Smolin reproached the physics profession for being seduced by beautiful and elegant theories (notably string theory) rather than those that can be tested by experimentation. Similarly, in his 2007 book Not Even Wrong: The Failure of String Theory and the Search for Unity in Physical Law, Peter Woit accused physicists of much the same sin as mathematical economists are said to commit.

My belief is that economics is somewhat more vulnerable than the physical sciences to models whose validity will never be clear, because the necessity for approximation is much stronger than in the physical sciences, especially given that the models describe people rather than magnetic resonances or fundamental particles. People can just change their minds and behave completely differently. They even have neuroses and identity problems, complex phenomena that the field of behavioral economics is finding relevant to understanding economic outcomes.

But all the mathematics in economics is not, as Taleb suggests, charlatanism. Economics has an important quantitative side, which cannot be escaped. The challenge has been to combine its mathematical insights with the kinds of adjustments that are needed to make its models fit the economy’s irreducibly human element.

The advance of behavioral economics is not fundamentally in conflict with mathematical economics, as some seem to think, though it may well be in conflict with some currently fashionable mathematical economic models. And, while economics presents its own methodological problems, the basic challenges facing researchers are not fundamentally different from those faced by researchers in other fields. As economics develops, it will broaden its repertory of methods and sources of evidence, the science will become stronger, and the charlatans will be exposed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/GhS2MDPp5E0/story01.htm Tyler Durden

Presented with no comment…

 

 

(h/t @Not_Jim_Cramer)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/znXoz3Bfr54/story01.htm Tyler Durden

On a below average volume day, there were three intriguing divergences across asset classes today. Thanks to CVX (and a few others including MSFT) the megacaps of the Dow Industrials lurched to new record highs as the Transports dropped their most in a month and the momo names (led by TSLA) took high-beta NDX and RUT down on the day. Another divergence was oil (which surged notably) and copper (which was pummeled) as gold and silver limped higher (on weaker USD ahead of tomorrow's rumored 'no cut' ECB meeting). The last notable divergence was in the Treasury complex where the long-bond continues to push higher in yield while 'forward-guidance' belief is dragging the front-end lower in yield (5s30s now 10bps steeper on the week).

 

Dow Industrials hold most of their gains to close at new record highs… but Trannies (worst day in a month) and Nasdaq (TSLA) stumbled… chatter is that the big tech momos were sold to make room for TWTR – not so sure…

 

In Treasury land, the curve is steepening rather notably since Goldman's Taper/forward-guidance/threshold-adjustment note…

 

In commodities, the divergence between copper (ungrowth) and oil (growth/flation) was notable – as gold/silver limped higher…

 

The short squeeze of the "most shorted" names into last night's TSLA earninsg appears to have imploded and today saw "most shorted" names dropped the most in a month…

 

 

Note – only 1 of 16 IPOs rose on the day today…

 

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/v3aC71u2miI/story01.htm Tyler Durden

On a below average volume day, there were three intriguing divergences across asset classes today. Thanks to CVX (and a few others including MSFT) the megacaps of the Dow Industrials lurched to new record highs as the Transports dropped their most in a month and the momo names (led by TSLA) took high-beta NDX and RUT down on the day. Another divergence was oil (which surged notably) and copper (which was pummeled) as gold and silver limped higher (on weaker USD ahead of tomorrow's rumored 'no cut' ECB meeting). The last notable divergence was in the Treasury complex where the long-bond continues to push higher in yield while 'forward-guidance' belief is dragging the front-end lower in yield (5s30s now 10bps steeper on the week).

 

Dow Industrials hold most of their gains to close at new record highs… but Trannies (worst day in a month) and Nasdaq (TSLA) stumbled… chatter is that the big tech momos were sold to make room for TWTR – not so sure…

 

In Treasury land, the curve is steepening rather notably since Goldman's Taper/forward-guidance/threshold-adjustment note…

 

In commodities, the divergence between copper (ungrowth) and oil (growth/flation) was notable – as gold/silver limped higher…

 

The short squeeze of the "most shorted" names into last night's TSLA earninsg appears to have imploded and today saw "most shorted" names dropped the most in a month…

 

 

Note – only 1 of 16 IPOs rose on the day today…

 

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/v3aC71u2miI/story01.htm Tyler Durden

 

The market is overpriced, to be sure. I’m gauging this on the single most important valuation metric in finance: the cyclically adjusted price-to-earnings ratio or CAPE ratio.

 

Generally speaking, most investors price a company based on its current Price to Earnings or P/E ratio. Essentially what you’re doing is comparing the price of the company today to its ability to produce earnings (cash).

 

However, corporate earnings are heavily influenced by the business cycle.

 

Typically the US experiences a boom and bust once every ten years or so. As such, companies will naturally have higher P/E’s at some points and lower P/E’s at other. This is based solely on the business cycle and nothing else.

 

CAPE adjusts for this by measuring the price of stocks against the average of ten years’ worth of earnings, adjusted for inflation. By doing this, it presents you with a clearer, more objective picture of a company’s ability to produce cash in any economic environment.

 

I mentioned before that CAPE is the single most important metric for long-term investors. I wasn’t saying that for impact.

 

Based on a study completed Vanguard, CAPE was the single best metric for measuring future stock returns. Indeed, CAPE outperformed

 

1.     P/E ratios

2.     Government Debt/ GDP

3.     Dividend yield

4.     The Fed Model,

 

…and many other metrics used by investors to predict market value.

 

So what is CAPE telling us today?

 

 

Today the S&P 500 has a CAPE of over 24.  This means the market as a whole is trading at 24 times its average earnings of the last ten years.

 

Put another way, if you bought the entire stock market today, it would take you roughly 24 years to make your money back.

 

That’s expensive. Indeed, the market has only been this expensive a handful of times in the last 100+ years. Every time we’ve been closer to a market top than a new bull market run.

 

For a FREE Special Report outlining how to protect your portfolio a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards,

 

Phoenix Capital Research

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UFR6lAvtqg0/story01.htm Phoenix Capital Research

 

The market is overpriced, to be sure. I’m gauging this on the single most important valuation metric in finance: the cyclically adjusted price-to-earnings ratio or CAPE ratio.

 

Generally speaking, most investors price a company based on its current Price to Earnings or P/E ratio. Essentially what you’re doing is comparing the price of the company today to its ability to produce earnings (cash).

 

However, corporate earnings are heavily influenced by the business cycle.

 

Typically the US experiences a boom and bust once every ten years or so. As such, companies will naturally have higher P/E’s at some points and lower P/E’s at other. This is based solely on the business cycle and nothing else.

 

CAPE adjusts for this by measuring the price of stocks against the average of ten years’ worth of earnings, adjusted for inflation. By doing this, it presents you with a clearer, more objective picture of a company’s ability to produce cash in any economic environment.

 

I mentioned before that CAPE is the single most important metric for long-term investors. I wasn’t saying that for impact.

 

Based on a study completed Vanguard, CAPE was the single best metric for measuring future stock returns. Indeed, CAPE outperformed

 

1.     P/E ratios

2.     Government Debt/ GDP

3.     Dividend yield

4.     The Fed Model,

 

…and many other metrics used by investors to predict market value.

 

So what is CAPE telling us today?

 

 

Today the S&P 500 has a CAPE of over 24.  This means the market as a whole is trading at 24 times its average earnings of the last ten years.

 

Put another way, if you bought the entire stock market today, it would take you roughly 24 years to make your money back.

 

That’s expensive. Indeed, the market has only been this expensive a handful of times in the last 100+ years. Every time we’ve been closer to a market top than a new bull market run.

 

For a FREE Special Report outlining how to protect your portfolio a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards,

 

Phoenix Capital Research

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XAvBFXBFGpE/story01.htm Phoenix Capital Research

If ever there was a symptom of the instant gratification meme of the new normal (why wait when you can have it all now?), it is ‘vice’. That is why Southbay Research’s Vice Index (composed of prices paid, volume, and frequency of sales in liquor sales, gambling, and prostitution) is so worrisome, as WSJ reports, “it’s signalling that consumer spending growth is about to drop and stay subdued for a few months.” Southbay’s Zatlin notes that measuring this kind of discretionary spending provides a window into the true state of the economy – which fits with recent macro data on retail sales (and forecasts for the holiday season as hope of the ‘second-half’ recovery fade quietly into next year.

 

 

Via WSJ,

Looks like it’s not going to be such a hot holiday season for liquor companies, casinos, and prostitutes – at least according to the latest reading of the “Vice Index.”

 

The index – a concoction from SouthBay Research’s Andrew Zatlin measures actual spending levels – yes, on vices – and uses the numbers to show where the economy is headed.

 

…

 

“It’s signalling that consumer spending growth is about to drop and stay subdued for a few months,” he wrote in a note to clients.

 

The index measures spending on things like prostitution, liquor sales, and gambling; it measures prices paid, the volume and frequency of sales (Mr. Zatlin doesn’t disclose exactly how he tracks these). Measuring this kind of discretionary spending, he says, provides a window into the true state of the economy.

 

…

 

The vice index seems to jibe with recent government data. The September retail sales report from the Census Bureau showed spending had slipped from August, and was up about 3% from a year ago. Along with recent reports on business spending, it all points to a pretty languid economy, and certainly not the “second-half recovery” that had been bandied about back in the spring.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vgLIahpPYfw/story01.htm Tyler Durden

Venezuelan President Maduro is on the wires confirming that all is well in the nation – nothing to see here…

• *VENEZUELA’S MADURO ANNOUNCES ‘NEW PHASE’ TO STABALIZE ECONOMY
• *VENEZUELA’S MADURO SAYS HE’LL MAKE ECONOMIC ANNOUNCEMENTS
• *BLACK MARKET FX RATE IS HARMING VENEZUELA ECONOMY: MADURO
• *VENEZUELA TO START OPERATION AGAINST SPECULATION, MADURO SAYS

Yep, so after a 475% rise in the Caracas Stock Index YTD, he sees ‘speculation’ and will announce some ‘economic fixes’… this should be good…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5NiW-j2iW2k/story01.htm Tyler Durden