Jumat, 18 Oktober 2013

Inequality According to Reich


Inequality for All, Robert Reich's recently released documentary detailing his views on the state of income distribution in America, is best understood when considering that its perspective comes, ironically, from a man whose diminutive physical stature is firmly rooted within a statistically rare outlier region of the normal distribution.
 
But before you jump to accusations of insensitivity or mean spiritedness, Reich’s height, while not the centerpiece of his movie by any means, is routinely referenced throughout the film and even used as a device to, quite dramatically, communicate his motives for standing up for the little guy and against the bullying of social inequality.

In fact, the film plays somewhat like a Keynesian policy junkies version of Al Gore’s Inconvenient Truth, in that it concerns itself more with Reich’s own character and background than the topic it is purported to address, leaving the viewer with little more than a fabricated sense of heroism for Reich and a smattering of contrived charts and statistics.

Further, while Reich does a reasonable job framing issues surrounding income inequality and, in particular, identifying globalization and the demise of a legitimate manufacturing workforce in the U.S. as being some primary instigators, many of his explanations for this major structural trend were deceitful and preposterous.

With literally no mention of the impact of the 1990s Clinton-era push for free trade (NAFTA, GATT, etc.), Reich ignores the policies of the administration he served under, only to blame the demise of union influence on the Regan-era handling of the air traffic controllers strike… a outlandish line of faulty logic only made sensible when considering Reich’s commitment to his particular ideological bent.

Make no mistake; Reich is a statist of the worst order, committed to twisting any sample of economic data, academic study or anecdotal experience into his supposedly sound reasoning for ever more “solutions” by the central government.

And therein lies a bit of a rub for this film in that Reich offers scant new “solutions” of his own, instead advancing the typical lip service themes of “investing in the people”, by providing more public funding for education, more social benefits and ultimately more redistribution of wealth.

Considering that Federal Government overspending has generated a national debt of roughly $17 trillion ( … with about $7 trillion of that racked up in just the last five years) blowing way over 100% debt-to-GDP and requiring an $85 billion monthly injection of “new” money from the Federal Reserve each and every month just to keep the ship-of-state afloat, this “under-investment” theme should fall flat for most clear thinking viewers.

Bottom line, inequality is a fact of life in a free society and short of instances of systemic illegal unfairness (nepotism, red-lining, bribery, etc.) there is no solution to the Bell Curve as it relates to economic matters.

The normal distribution is more than a statistical quirk; it’s a mathematical certainty that should argue strongly against enacting endless absurd schemes that seek to “spread the wealth” in an effort to thwart reality.

Like Reich’s own minuscule size, there are aspects of life that we all must accept, for better or worse, as luck of the draw… and while most personal economic circumstances can be naturally overcome by individual effort on one hand or temporarily ( … and artificially) mitigated by blunt state policies rife with unintended consequences on the other, there will always be winners and losers.

Kamis, 17 Oktober 2013

Extended Unemployment: Initial, Continued and Extended Unemployment Claims October 17 2013

Today’s jobless claims report showed decreases to both initial and continued unemployment claims as seasonally adjusted initial claims continued to trend below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 15,000 to 358,000 claims from 373,000 claims for the prior week while seasonally adjusted “continued” claims declined by 43,000 claims to 2.859 million resulting in an “insured” unemployment rate of 2.2%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.37 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.47 million people that are currently counted as receiving traditional continued unemployment benefits, there are 3.85 million people on state and federal unemployment rolls.


Rabu, 16 Oktober 2013

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings October 2013

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity eased in October with the composite HMI index falling to 55 while the "buyer traffic" index slumped to a level of 44.

It's important to note that while the last few months results have suggested a pullback of sorts for home builder activity, the latest trend has been very strong and consistent with the overall recovery seen in the nation's housing markets.  

Looking at the data, it is fairly clear that the last year of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.




Reading Rates: MBA Application Survey – October 16 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 3 basis points to 4.31% since last week while the purchase application volume declined 5% and the refinance application volume increased 3% over the same period.

As a result of Fed Chairman Bernanke's abrupt turn-around on the "tapering" issue, rates appear now to be pulling back notably after weeks of explosive increases that saw a rise of over 100 basis points.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




Kamis, 10 Oktober 2013

Extended Unemployment: Initial, Continued and Extended Unemployment Claims October 10 2013

Today’s jobless claims report showed a notable increase to initial unemployment claims and a decline to continued jobless claims as seasonally adjusted initial claims jumped to 374K level.

Seasonally adjusted “initial” unemployment claims increased by 66,000 to 374,000 claims from 308,000 claims for the prior week while seasonally adjusted “continued” claims declined by 16,000 claims to 2.905 million resulting in an “insured” unemployment rate of 2.2%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.44 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.51 million people that are currently counted as receiving traditional continued unemployment benefits, there are 3.95 million people on state and federal unemployment rolls.


Reading Rates: MBA Application Survey – October 10 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined a 6 basis points to 4.28% since last week while the purchase application volume declined 1% and the refinance application volume increased 3% over the same period.

As a result of Fed Chairman Bernanke's abrupt turn-around on the "tapering" issue, rates appear now to be pulling back notably after weeks of explosive increases that saw a rise of over 100 basis points.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




Selasa, 08 Oktober 2013

Hong Kong Bubble?: Hong Kong Residential Property Prices July 2013

The latest release of the University of Hong Kong's Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in July, the price of residential properties increased 0.08% since June rising 17.95% above the level seen in July 2012.

Clearly, the slight pullback in prices seen late 2012 has been completely surpassed by another, notable leg up.

With the prior late-90s era peak having been bested handily by the latest price run up, it will be interesting to see how long this period of house price inflation can run.

The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.

Kamis, 03 Oktober 2013

ISM Non-Manufacturing Report on Business: September 2013

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity slowed in September with the overall non-manufacturing index falling to 54.4 from last months reading of 58.6.

At 55.1 the business activity index plunged since last month declining 7.55% below the level seen a year earlier.

This month, service industry respondents are sounding a bit down with respondents citing slowing activity, flat business and uncertainty over healthcare costs:

"Overall business conditions are slowing — small manpower decrease of 5 percent." (Construction)

"Business levels continue to be strong. Shifting from transient to group travelers." (Accommodation & Food Services)

"Increased activity following summer vacations, but several postponements as well. Clients still unsure about the economy and business costs (e.g., healthcare)." (Professional, Scientific & Technical Services)

"The federal government's spending is increasing greatly as agencies execute their final budgets and utilize fiscal year 2013 appropriated funds prior to their expiration on September 30th. This has caused a major increase in procurement activity for goods and services. Budgets are uncertain for fiscal year 2014, so some items requiring funding in future years are not being purchased." (Public Administration)

"Business has leveled off — not much in the way of growth." (Retail Trade)

"Some pick-up in sequential sales growth, but still flat with last year." (Wholesale Trade)

Extended Unemployment: Initial, Continued and Extended Unemployment Claims October 01 2013

Today’s jobless claims report showed a increases to both initial and continued jobless claims as seasonally adjusted initial claims remained over the 300K level.

Seasonally adjusted “initial” unemployment claims increased by 1,000 to 308,000 claims from 307,000 claims for the prior week while seasonally adjusted “continued” claims increased by a notable 104,000 claims to 2.925 million resulting in an “insured” unemployment rate of 2.3%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.47 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.46 million people that are currently counted as receiving traditional continued unemployment benefits, there are 3.93 million people on state and federal unemployment rolls.


Rabu, 02 Oktober 2013

ADP National Employment Report: September 2013

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in September as private employers added 166,000 jobs in the month bringing the total employment level 1.88% above the level seen in September 2012.

Look for Friday’s (possibly postponed) BLS Employment Situation Report to likely show somewhat similar trends.

Reading Rates: MBA Application Survey – October 02 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined a notable 12 basis points to 4.35% since last week while the purchase application volume declined 6% and the refinance application volume increased 3% over the same period.

As a result of Fed Chairman Bernanke's abrupt turn-around on the "tapering" issue, rates appear now to be pulling back notably after weeks of explosive increases that saw a rise of over 100 basis points.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).




Selasa, 01 Oktober 2013

ISM Manufacturing Report on Business: September 2013

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity improved in September.

At 56.2 the purchasing manager’s composite index (PMI) rose 0.5% from August and climbing above the level seen a year earlier giving an indication of improving conditions for manufacturing.

Respondent assessments still appear to be hopeful with several noting strength and positive outlook:

"Global sales generally trending moderately higher." (Textile Mills)

"Slight increase in demand. Forecast looks better. 4Q looking better than 3Q — should begin to see demand increase in October/November." (Food, Beverage & Tobacco Products)

"Raw materials shortages continue. General trends are up, which enhances shortage issues." (Wood Products)

"Overall business is flat to down across the board." (Machinery)

"Housing continues to improve, resulting in improved conditions for our industry." (Furniture & Related Products)

"Rising costs of China labor has us re-evaluating our current position in that country." (Computer & Electronic Products)

"Steady increase in work this month." (Primary Metals)

"Overall business is picking up." (Transportation Equipment)

"Outlook remains strong with housing market and customer orders." (Electrical Equipment, Appliances & Components)

"Labor rates along the Gulf Coast are rising with the increased activity of construction and maintenance projects." (Chemical Products)