Archive for August 2014
Delightful Divergence
While the Bank of Japan is engaging in expansionary monetary policy and the ECB probably will in early 2015, the Bank of England will likely raise rates by 4/15 with the Fed following soon thereafter. While this monetary policy divergence reduces global growth, it keeps commodity inflation down and reduces the chances of a massive…
Read MoreWorld Wide Wine
The Friday File: The #1 wine producing nation in 2013 was Italy with 1.2 billion gallons (BG). Spain followed with 1.13 BG then France with 1.1 BG. Collectively, these three nations produced 46.8% of all wine. Rounding out the top five was the USA with 581.2 million gallons and Argentina at 396 million. In 2012,…
Read MoreSimply Supply
In 2012, in the midst of a terrible drought and skyrocketing demand from China, front-month wheat futures went as high as $9.35/bushel and soybeans for as much as $17.94/bushel. Today, a combination of flat demand and perfect weather have farmers expecting a record crop for both corn and soybeans. The downside: front-month corn futures are…
Read MoreNeutral Numbers
On one hand, small business optimism is at a post-recession high, the budget deficit at 2.8% of GDP is at its lowest level since 2008, and job openings are back at pre-recession levels. On the other hand, retail sales disappointed for a second straight month, inventories look a bit high, and first time mortgage applications…
Read MoreBusiness Boost
GDP growth over the next year will be largely determined by the rate of growth in gross private domestic investment. It’s composed of spending by firms on tools, machinery and factories, as well as residential construction and inventory changes. Inventories have been very volatile and unhelpful; residential construction remains weak. But there’s high hope for…
Read MoreWages & Wealth
A major reason why new home building has not substantially recovered is because outside of the upper classes real wages have been stagnant since the end of Great Recession. Worse, despite a rising stock market, a majority of Americans own no stock. Lastly, among households headed by individuals under 40, net worth is still, on…
Read MoreMoving Mission
The Friday File: Dividing the number of persons moving to a state by those moving to and moving from the state give the percentage of in-migrants. Using this method, Oregon is the most popular state with 61% of movers moving there while just 39% moved away. Rounding out the top five are SC at 60%,…
Read MoreUnusual Unemployment
Last week’s first time claims for unemployment insurance came in at 289,000, the second lowest reading since May 2000. Importantly, the claims numbers from three weeks ago, which came in at 279,000, were the absolute lowest since May 2000 (yes, 14 years ago). The less volatile 4-week moving average now stands at 293,500, the lowest…
Read MoreProgressive Percentiles
The poorest fifth of all households earn 3% of aggregate income and pay 0.4% of all federal taxes. The next quintile earns 7.6% of income and pays 3.8% of taxes. The middle quintile earns 12% and pays 9.1%, the 4th quintile earns 18.2% and pays 17.6% while the top fifth earns 59.2% and pays 68.8%.…
Read MoreDependable Dollar
A cornerstone of international trade is nations that run trade surpluses can be confident that the money they acquire by running trade surpluses, almost always US dollars, will hold its purchasing power over time. If there is a move away from a dollar-based system to Argentinian Pesos, Russian Rubles or Chinese Yuan, trade will weaken…
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