Archive for February 2015

Despite sharp rhetoric to the contrary, the GOP will nevertheless fund the Department of Homeland Security after 2/27/15 and will raise the debt ceiling when it becomes necessary later this year because doing otherwise will make them look profoundly stupid. And President Obama and the Republicans will agree to increase equally defense spending and discretionary…

The Friday File: After peaking at 19.6 billion catalogues mailed in the US in 2007, (that’s 65 catalogues per/person and 163/household) the number of catalogues shipped rapidly fell to 11.8 billion in 2012, but rose slightly to 11.9 billion in 2013, or 38 catalogues/person and 94/household. It turns out that customers who enjoy catalogues spend…

This week, Apple’s market capitalization surpassed $720 billion. While a truly mind-boggling amount, equivalent to roughly $2,200 per person in the USA, or three iphones, it also ranks Apple as the 24th largest nation on the planet based on GDP. At present Apple is just above Netherlands and just behind Argentina. Up next, Poland with…

Last Friday’s employment report was sizzling. Net job creation in January came in at a better than expected 257,000, December employment growth was revised upwards to 329,000 and November’s to a whopping 423,000, the most since 5/00. Better yet, the unemployment rose to 5.7% from 5.6% as improving employment prospects lured hundreds of thousands of…

Two weeks ago, the Department of Labor reported that private sector employee compensation rose 2.3% Y-o-Y, the highest level since the start of the Great Recession but quite low. Last Thursday, the DOL reported that unit-labor-costs, a measure of worker wages adjusted for changes in worker productivity, rose just 1.5% Y-o-Y. Finally last Friday the…

If US long-term interest rates are falling because long-run inflation expectations are dimming, the Fed should wait before raising short-term interest rates. But what if our long-term rates are declining primarily because foreigners are pouring money into our long-bonds because rates in Japan and Germany are profoundly low? If it’s the latter, it might create…

The Friday File: This past Monday, Punxsutawney Phil the weather-predicting groundhog from Pennsylvania regrettably saw his shadow. This means winter will last six more long weeks. But don’t give up hope. Since 1887, Punxsutawney Phil has seen his shadow 80% of the time; he likes it cold. Perhaps because of this, his predictions are accurate…

Under normal conditions central banks alter short-term interest to change economic activity. During the Great Recession, short-term rates hit zero so the Fed began to reduce long-term interest rates via quantitative easing (QE). QE works in two ways. By driving down long-term rates, QE pushes up asset prices (stocks, bonds) thus boosting spending. And, by…

While all oil-producing nations are suffering as oil prices collapse, the hardest hit nation is Venezuela. It’s getting crushed as oil prices collapse since oil accounts for 95% of export earnings, 45% of budget revenues and 12% of GDP. If oil prices don’t rebound soon, Venezuela will default on its $35 billion in foreign debt,…

In 2015 about 500,000 households that lost their homes to foreclosure or a short sale back in 2007 will, if their finances are sufficiently solid, be able to again qualify for a conforming home loan. In all, over seven million such households will be added back to the pool of potential home buyers between now…