Archive for July 2014
Abominable Abodes
Today’s housing numbers stank! Starts for Jan-June 2014 are up 6% compared to 2013, single-family starts up 1%! Multifamily is up 18%. With these numbers a premature rate hike will kill single-family construction. Yes, weather was bad, prices are up, financing is hard, incomes are down, student loans hurt and there’s no labor, but in…
Read MorePeppy Profits
Tax inversion deals, where a US firm buys a foreign-based firm in a low tax nation and then locates the merged firm’s headquarters overseas, are particularly appealing for drug and computer chip makers. It’s because both generate substantial overseas profits that face heavy taxation if repatriated. Better yet, the US acquirer lowers its tax rate…
Read MoreMixed Messages
While the unemployment rate, inflation rate, and job creation numbers are starting to improve, GDP growth, wage growth, labor force participation, labor productivity and home building remain weak. It’s as if the economy is schizophrenic! Since the Fed has no idea how this unfolds, it cannot provide any assurances as to the timing or magnitude…
Read MoreTroubled Timing
While the CBO projects the Export-Import Bank will make a profit of $14 billion through 2024 if it continues borrowing at the subsidized US Treasury rate, at market interest rates the Bank will post a $2 billion loss. While hardly gargantuan, the Bank isn’t a profit center! That said, closing it now as Republicans propose,…
Read MoreHurricane Henrietta
The Friday File: While Atlantic hurricane names have alternated between the sexes since 1979, it turns out hurricanes with women’s names are much more deadly. While names don’t matter for low-damage hurricanes, for high-damage storms the more feminine the name the more deadly the storm! People just don’t take hurricanes with women’s names as seriously!…
Read MoreSorry Settlement
While Citi will soon pay $7 billion to settle with the DOJ over mortgage abuses, and BNP Paribas just paid $9 billion for violations of US sanctions, and recently JP Morgan paid $13 billion over various residential-backed mortgage securities, the problem is bankers don’t do time! These fines, large as they are, have simply become…
Read MoreHighway Happenings
In a display of bi-partisan common sense rarely seen on Capitol Hill, short-term financing to help the virtually depleted Highway Trust Fund (HTF) through next year seems likely. The HTF is financed by a gas tax of 18.4 cents/gallon that hasn’t been increased since 1993. Adjusted for inflation, it would be 30 cents. The tax…
Read MorePopping Prices
With bank lending very weak outside of commercial and industrial loans, global growth lackluster, Europe on the verge of deflation, a slightly appreciating US dollar and the number of unemployed workers still elevated, conditions don’t suggest a rapid rise in inflation. That said, the most likely place for systematic inflation to appear would be healthcare,…
Read MoreGuessing Growth
Q2 GDP will come in below 3%. While inventories were a killer in Q1 they will help in Q2, as will a return to normal weather. There will also be extra spending due to rebounding demand following the Q1 cold snap. The major problem, trade! Because the USA is (with few exceptions) growing faster than…
Read MoreExceptional Eaters
While started in 1972, 1979 marked the start of the “modern era” of the Nathan’s Hot Dog Eating Contest. The winner that year, Thomas Stash, stashed 19 in 10 minutes. By 2000 the record was 25.125. In 2001 the great Takeru Kobayashi (who won six straight championships) obliterated the record by eating 50. Since 2007…
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