Investment & Finance Thread (week July 27 - August 2 edition)

Weekly investment & finance thread ^ | July 27, 2014 | Freeper Investors

[expat_panama]

While this past week may have been pretty much nothing in the way of general asset growth (metals flat off --stocks flat in market under pressure), it's been a great week for geek number thingees, in fact we updated the link list to include Business Insider's Chart page (hat tip to Wyatt's Torch) and we've been into the income shifts that have turned the Great Recession into the gift that keeps giving.

 Chgogal gave us the headsup to the  NYTimes piece "The Typical Household, Now Worth a Third Less" and Wash. Post Chart study Median household incomes have collapsed since the recession (more here).

Seems that even the NYT and WaPo are talking about middle class money problems and they included the Census Br's Real Median Household Income crash that's been raising so many eye brows lately.

 

They focused on the trend since 2000, but what we need to remember is that (if you believe the Census Br.) we had growth before the early 2000's--

 

--and that contrasts with the steady growth of average incomes reported by the Bureau of Economic Analysis.  (Lots of agencies w/ lots of numbers for lots of our tax dollars).

 

Some folks say the problem we got is too much inequality --rich are richer but suddenly the rest of us are getting left behind.  No so; at least that "suddenly" part; it's actually a long term trend and the percent median of the average has been falling at a steady rate for decades.

What we got new in '09 is flat out income loss for all.

mho.

 

This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--

Open invitation continues always for idea-input for the thread, this being a joint effort works well.   Keywords: financial, WallStreet, stockmarket, economy.

[Wyatt's Torch]

+4%

[Wyatt's Torch]

ADP +218K

[expat_panama]

OK, +4.0. going back to bed...

[Wyatt's Torch]

:-)

BEA: Real GDP increased at 4.0% Annualized Rate in Q2

by Bill McBride on 7/30/2014 08:30:00 AM

From the BEA: Gross Domestic Product: Second Quarter 2014 (Advance Estimate) Annual Revision: 1999 through First Quarter 2014

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 4.0 percent in the second quarter of 2014, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised).
...
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The advance Q2 GDP report, with 4.0% annualized growth, was above expectations of a 2.9% increase. Also Q1 was revised up.

Personal consumption expenditures (PCE) increased at a 2.5% annualized rate - a decent pace.

Private investment rebounded with residential investment up 7.5% annualized, and equipment up 5.3%. Change in private inventories added 1.66 percentage points to growth after subtracting 1.16 in Q1.

Overall this was a solid report. I’ll have more later on the report and revisions.

[1010RD]

Imagine what it would have been without a Cook County Democrat in the WH. The economy is coming back. The opportunity areas are going to be urban and particularly urban poor. Too many billionaire elites are enamored with Africa’s prospects when we’ve got mini Africas in every city and by that I mean entrenched generational poverty, not a race.

This is a big opportunity for popular conservatism to make inroads into traditionally Democratic strongholds. If you want to keep labor productivity growing you have to deregulate and reduce taxes on urbanites. You have to move people off welfare into some type of productive work, even with a subsidy to a business. If half the welfare rolls earned half their welfare via real productive work, the benefits to the nation would be enormous.

Chicago has a 107 page pamphlet on how to build a porch. 107 pages on a porch you could build yourself without plans for the entire history of the city, but now it’s deemed too dangerous. You need an architect and an over-engineered plan. It’s nuts. http://www.cityofchicago.org/content/dam/city/depts/bldgs/general/Porch/Porch2011/RevPorch_Guide52611_Secured.pdf

That’s how Cook County Democrats view the world. One in which every detail must be planned out. It’s a soviet model in America and it doesn’t work.

[1010RD]

Sadly, Q2 is partly a carryover from delayed spending in Q1. That Q1 shrank is a tragedy and one caused by Democratic policies. Blaming Obama isn’t factual. He’s just pushing normal Democrat policies to the limit.

[expat_panama]

It will be revised down

Q2 is partly a carryover from delayed spending in Q1. That Q1 shrank is a tragedy and one caused by Democratic policies...

You may be right; what we know for sure is that Q1 was revised up to -2.1 so the average of the first 1/2 of 2014 was just under 1%.   We'll see how Q2 gets revised and if it makes the average negative, but no matter what we should never underestimate the economic power of the American People.

[Wyatt's Torch]

but no matter what we should never underestimate the economic power of the American People.

Amen.

[Chgogal]

Big sigh of relief. Yippee. Good news IS good news.

[Wyatt's Torch]

FOMC highlights:

Cut taper to $25B/month
Leave rates
Removed “unemployment is elevated” language
Probability of persistent <2% inflation has diminished

[Wyatt's Torch]

Death of a talking point: About America’s ‘part-time job economy’

In a new research note, First Trust economists Bob Stein and Brian Wesbury engage in a bit of economic mythbusting. In the June jobs report, according to the Household Survey, part-time jobs increased by 799,000 out of total job gains of 407,000. That means full-time jobs fell. And that led to lots of hysterical headlines and analysis about ‘part-time America.” But it simply isn’t true. Stein and Wesbury:

The problem is that monthly employment statistics, especially from the household survey, are incredibly volatile. For example, just two months earlier, in April, part-time jobs were down 398,000 while full-time jobs were up 412,000! In other words, please be careful when playing with these statistics.

[Indeed], most jobs added in this recovery have been full-time jobs. In 2013 alone, 1.5 million full-time jobs were added while 188,000 part-time jobs were lost.

June was what statisticians call an outlier. If we look at the first five months of 2014, January through May, total jobs rose 1.23 million, while part-time jobs fell 153,000. And, during the twelve months ending in June, total jobs are up 2.15 million, with only 10,000 of them being part-time.

In other words, focusing solely on June data is a misdirection. According to Bureau of Labor Statistics data, total part-time jobs were 19.2% of all jobs in June 2014. Back in 2009, total part-time jobs averaged 19.5% of all jobs.

And, just to be clear, we do believe that Obamacare and other regulatory actions, higher taxes and more government spending in the past decade have created a less dynamic economy and more part-time jobs. We just don’t agree with spinning one month’s worth of data into an entire world view. It’s not appropriate, it’s a misuse of data and it’s probably politically motivated rather than any attempt to get a handle on the real economy.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

[Chgogal]

Probability of persistent <2% inflation has diminished

What does that mean? It sounds like the probability of persistent >2% inflation has increased? I'm wrong, right?

[Chgogal]

Don't get me started! And what about all those damn speed mountains and stop signs everywhere? And don't forget all those speeding and red light cameras everywhere. But it is all for the children, ya know.

[Wyatt's Torch]

They were worried about deflation (at best disinflation). Their target is 2%.

[xzins]

Participation rate in June is 62.8%, the lowest in, iirc, 4 decades. That means a lower percentage of people working was bumped up by a very high part-time numbers for the percentage of people working. Compared to other part time rates as a percentage of participation rates, I’m thinking that would make it a higher part time rate.

Also, if the economy was revised down to -2.9%, then if 4th quarter 2013 is the standard, we are now just 1.1% above the 4th quarter 2013.

In other words, did the economy grow ONLY in relation to its low point of -2.9? If they had not revised that -1% decline to -2.9% decline, then the new GDP would be negligible growth over 4th qtr, FY2013.

If I have 17 and drop to 14, but then come back to 18, I’ve treaded water, really, but I can say I’ve gained 4.

If I have 17 and drop to 16, but then come back to 18, I’ve really done no better, and I’ve only added 2.

The question for me is, if my baseball team scores 5 runs, but then drops to 2 runs, am I justified in saying after a 6 run win that they’ve improved 300% in terms of scoring.

[expat_panama]

That "myth bust' is at best specious and most probably mendacious --about what we'd expect from a NYT writer.  Example: "...most jobs added in this recovery have been full-time jobs..."   Back on the Planet Earth this is what is:

We got part time employment up 12% while full time work has yet to recover to pre recession level--and we haven't begun to look at millions in population growth.  Sure, he can say most jobs added since mid-'09 were full time, but a recovery is usually supposed to surpass pre-crash levels, not simply show a 'dead-cat-bounce' off the floor.

[expat_panama]

Just checked the numbers. Since the beginning of the recession four million full-timers became part-timers, total employment is still not quite back where it was, and the working age population has increased by 15 million.

Folks can call it what they want but we're not where we want to be yet.

[Wyatt's Torch]

Private has surpassed prior peak. Government is down... People here do NOT want to know that.

[expat_panama]

A very happy end-of-the-month to all!  Metals --still at the flat base we've had for 1-1/2 months and this morning's futures are looking up; stocks finished mixed (NASDAQ up in lower volume, S&P flat, DOW down in higher volume) while the view today is bearish --all ahead of another big report day:

Challenger Job Cuts
Initial Claims
Continuing Claims
Employment Cost Index
Chicago PMI
Natural Gas Inventories

My stack'o'stuff:

• Associated Press World stocks drift after US Fed stays course  Global stock markets were uninspired by an upbeat report on the U.S. economy, with most drifting lower Thursday after the U.S. Federal Reserve said it would make further cuts to its monetary stimulus.
• No deal: Argentina in default as talks fail   CNNMoney - 17 hours ago Argentina has defaulted for the second time in 13 years after officials failed to come to an agreement with the country's bondholders.
• Samsung earns $6.1 billion last quarter but shares plunge: Here's why Fox Business - an hour ago SEOUL, South Korea - Samsung earned $6.1 billion last quarter but investors were dissatisfied, sending its share price down 4 percent.
• Behind the Fed's promise about short-term rates CBS News - an hour ago Can promises about the future have an effect today? That's the theory behind the Federal Reserve's statement following Wednesday's monetary policy meeting.
• Eurozone Inflation Continues Its Slide New York Times - 31 minutes ago FRANKFURT - Inflation in the eurozone fell in July to its lowest level since 2009, according to an official estimate released Thursday.
• Probe exposes flaws behind HealthCare.gov rollout
• Why McDonald's CEO Supports A Higher Min. Wage - Dompe & Smith, IBD
• Cut World's Highest Tax Rate to Curb Inversions - Laffer/Moore, Investor's
• Clashes With Russia Point to Globalization's End - Mark Leonard, Reuters

[Wyatt's Torch]

yeah I’ve posted that chart numerous times. It’s in response to the “they are all part time jobs” that the crazies on this site always spout. It’s just ignorant BS. I don’t even have to look at the numbers. This chart clearly shows that the majority of jobs are full-time since the end of the recession.