Friday, May 2, 2014

Market To Drop 30%? Q1 Growth Fell Into Negative Territory, Margin Debt Takes A Turn From All-time High Levels, Treasury Yields Tumble To 11-Month Lows

Margin debt takes a turn from all-time high levels. Be concerned?
It doesn’t matter until it matters! Will a decline in margin debt from all-time highs matter this time? Doug Short each month does an excellent analysis on margin debt and the latest update is now out.  (see current info here) 
In the past margin debt at historical levels didn’t seem to matter, until margin debt started decreasing. The above chart highlights that at each (1), margin debt was at historical highs and then turned south and the S&P 500 soon followed.
In my humble opinion one should not look at margin debt as the holy grail to portfolio construction. It has been a good tool in helping to know when to overweight and underweight towards risk assets.
Margin debt has been swiftly pushing higher for the past 8 months in a row and now slipped a little this past month. IF….IF margin debt should start decreasing swiftly, history would suggest something different is taking place in the mind of aggressive investors.
NYSE Margin Debt Slips For The First Time In 8 Months
The Markets Just Sounded the Death Knell For QE
Globally Central Banks have kept an eye on the Bank of Japan, which announced the single largest QE program relative to its GDP in history. That one single QE program announced in April 2013 is equal to over 20% of Japan’s GDP. But things turned sout…
Everyone’s Q1 GDP Estimates Turn Negative
Yesterday, the BEA announced Q1 GDP climbed just 0.1%. 
This afternoon, Wall Street is saying it’s even worse.
Citing weak construction spending data, several firms’ GDP tracking models now show Q1 growth fell into negative territory.
“Residential construction was a bright spot, rising 0.7% on the month and standing 15.2% above year-ago levels,” noted Barclays’ Cooper Howes. “Nonresidential construction fell 0.1%, however, and there were downward revisions to February and January. On the whole, this lowered our GDP tracking estimate three-tenths, to -0.2%.”
Macroeconomic Advisers, a widely cited source for GDP estimates, said its model fell 10 bps to -0.1%, also weaker-than-expected construction spending below BEA assumptions.
If It Wasn’t For Obamacare, Q1 GDP Would Be Negative
Here is a shocker: for all the damnation Obamacare, which according to poll after poll is loathed by a majority of the US population, has gotten if it wasn’t for the (government-mandated) spending surge resulting from Obamacare, which resulted in the biggest jump in Healthcare Services spending in the past quarter in history and added 1.1% to GDP …
Treasury Yields Tumble To 11-Month Lows; Stocks Hold Near Record Highs
It was not a Tuesday, and it was not a Fed day – so stocks closed red. Volume was dismal. TheRussell 2000 tested its 200DMA once again (and bounced) but was unable to sustain that strength. Once again the biggest news was the continued collapse in Treasury yieldsas a combination of massive spec positioning short “because rates have to go up” and the ugly reality of macro weakness combined to send rates to 2014 lows (and 11-month lows for 30Y yields). This is the biggest year-to-date drop in 30Y yields since 2000. The Dow’s weakness meant it lost its gains for 2014. Despite ongoing USD weakness (driven by GBP and EUR strength), commodities traded lower with silver worst today (red for 2014), copper weak, and gold and oil flat to modestly lower. VIX was pummeled down to almost 13 midday (which makes perfect sense ahead of NFP – why would anyone hedge that?) but leaked higher as bond market reality set in during the afternoon. The ubiquitous very-late-day VIX slam pulled stocks higher in a buying panic but failed to get the S&P, Dow, or Russell green on the day.
Small Caps fell 30%+ twice when this took place…its back!
When the Russell has been hot on a 5-year annualized basis, it has cooled off… to the tune of 30%+ declines in 1999 and 2007.
Now the Russell has had a higher 5-year annualized return than the 1999 and 2007 peaks! Also the Russell is back at the top of its rising channel, where it has found some resistance.
Will it be different this time? From a 5-year annualized performance, “it is different this time” as it has been hotter than the 1999 & 2007 peaks.
What will the results be? Above my pay grade. Premium Members shorted the Russell 2000 several weeks ago due to this situation, with a stop at resistance.
Stock Market Headed for a 1987-Style Crash
Like it or not, bad luck is just around the corner for investors.
After stacking up five years of gains, the stock market is starting to look awfully wobbly. And the likely result will be a crash as bad or even worse than what was seen in 1987.
That’s what analyst Marc Faber believes, anyway: “I think it’s very likely that we’re seeing, in the next 12 months, an ’87-type of crash,” he recently told CNBC. “And I suspect it will be even worse.”

Federal Reserve: What GDP Data? Things Are Swell!

Today’s Fed statement apparently didn’t sit too well with Brian. Check out today’s show to hear his latest rant about the Central Bank’s “increasingly convoluted approach to supporting the U.S. economy.”

Fed fueling century’s ‘greatest bubble’: Stockman

“I think the Fed is now inflating the greatest and third bubble yet of this century,” Stockman said. “The Russell 2000, even though it’s come off a little bit, is still trading at 80 time trailing earnings. That’s crazy, and you can say that about many other sectors of the market.” 

Mandatory Drug-Testing in Cleveland Area Catholic High Schools Motivated By Profit?

One of the big news items this week has to do with St. Edward High School, St. Ignatius High School and Gilmour Academy all kicking off a mandatory drug-testing program for their students in the fall. It's an interesting story because no other schools in Northeast Ohio presently test their students for drug use.
Another interesting point of fact is that the president and CEO of Massachusetts-based Psychemedics - the company that will be conducting the tests - is Raymond Kubacki, brother of St. Edward High School President James Kubacki. The former is a St. Ignatius grad himself and a member of that school's athletic hall of fame.
Since 1991, Raymond Kubacki has helmed Psychemedics, and he's now posting $7+ million in revenue on a quarterly basis. The intersection of private schools and the drug-testing market is a budding one. He told the Worcester Business Journal in December 2013, "Our primary focus is workplace drug testing. Secondarily would be emerging markets and one of those would be schools and colleges."
K.C. McKenna, vice president of admissions and marketing at St. Edward High School, says the decision to work with Psychemedics came after several years of research led by an internal committee.
"Really, this came about as a proactive, preventative measure. There was nothing in our own community that necessarily prompted this. This is not a reactionary endeavor by any means," he tells Scene. "Our committee, which included members of our board of trustees, a member of our faculty and other members of our administration, looked at the issue as a whole and arrived at the Psychemedics decision. Certainly, Jim knew a little more about the process because of his brother being involved, but his brother being CEO of that company in no way led to us making the decision to use Psychemedics."
On the ground, the Psychemedics initiative will affect about 980 students at St. Ed's (along with 340 at Gilmour and 1,500 or so at St. Ignatius). The hair testing costs $39 to $50 a pop
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The American Empire Crumbles Before Our Eyes Right Here at Home

As America‘s new economy starts to look more like the old economy of the Great Depression, the divide between rich and poor, those who have made it and those who never will, seems to grow ever starker. I know. I’ve seen it firsthand.
Once upon a time, I worked as a State Department officer, helping to carry out the occupation of Iraq, where Washington’s goal was regime change. It was there that, in a way, I had my first taste of the life of the 1%. Unlike most Iraqis, I had more food and amenities than I could squander, nearly unlimited funds to spend as I wished (as long as the spending supported us one-percenters), and plenty of U.S. Army muscle around to keep the other 99% at bay. However, my subsequent whistleblowing about State Department waste and mismanagement in Iraq ended my 24-year career abroad and, after a two-decade absence, deposited me back in “the homeland.”
I returned to America to find another sort of regime change underway, only I wasn’t among the 1% for this one. Instead, I ended up working in the new minimum-wage economy and saw firsthand what a life of lousy pay and barely adequate food benefits adds up to. For the version of regime change that found me working in a big box store, no cruise missiles had been deployed and there had been no shock-and-awe demonstrations. Nonetheless, the cumulative effects of years of deindustrialization, declining salaries, absent benefits, and weakened unions, along with a rise in meth and alcohol abuse, a broad-based loss of good jobs, and soaring inequality seemed similar enough to me. The destruction of a way of life in the service of the goals of the 1%, whether in Iraq or at home, was hard to miss. Still, I had the urge to see more. Unlike in Iraq, where my movements were limited, here at home I could hit the road, so I set off for a look at some of America‘s iconic places as part of the research for my book, Ghosts of Tom Joad.
Here, then, are snapshots of four of the spots I visited in an empire in decline, places you might pass through if you wanted to know where we’ve been, where we are now, and (heaven help us) where we’re going.
On the Boardwalk: Atlantic City, New Jersey
Drive in to Atlantic City on the old roads, and you’re sure to pass Lucy the Elephant. She’s not a real elephant, of course, but a wood and tin six-story hollow statue. First built in 1881 to add value to some Jersey swampland, Lucy has been reincarnated several times after suffering fire, neglect, and storm damage. Along the way, she was a tavern, a hotel, and — for most of her life — simply an “attraction.” As owning a car and family driving vacations became egalitarian rights in the booming postwar economy of the 1950s and 1960s, all manner of tacky attractions popped up along America’s roads: cement dinosaurs, teepee-shaped motels, museums of oddities, and spectacles like the world’s largest ball of twine. Their growth paralleled 20 to 30 years of the greatest boom times any consumer society has ever known.
Between 1947 and 1973, actual incomes in the United States rose remarkably evenly across society. Certainly, there was always inequality, but never as sharp and predatory as it is today. As Scott Martelle’s Detroit: A Biography chronicles, in 1932, Detroit produced 1.4 million cars; in 1950, that number was eight million; in 1973, it peaked at 12 million. America was still adeveloping nation — in the best sense of that word.
Yet as the U.S. economy changed, money began to flow out of the working class pockets that fed Lucy and her roadside attraction pals. By one count, from 1979 to 2007, the top 1% of Americans saw their income grow by 281%. They came to control 43% of U.S. wealth.
You could see it all in Atlantic City, New Jersey. For most of its early life, it had been a workingman’s playground and vacation spot, centered around its famous boardwalk. Remember Monopoly? The street names are all from Atlantic City. However, in the economic hard times of the 1970s, as money was sucked upward from working people, Boardwalk and Park Place became a crime scene, too dangerous for most visitors. Illegal drug sales all but overtook tourism as the city’s most profitable business.

China's exceptional growth has been fuelled by massive debt and government subsidies

China's exceptional growth has been fuelled by massive debt and government subsidies as Robert Peston reports from Wuhan
Unless you are an aficionado of the great moments of Chinese Communist history, you probably won't have heard of Wuhan (it is the site of Chairman Mao's legendary swim across the Yangtze).
But perhaps more than any other Chinese city, it tells the story of how China's remarkable three decades of modernisation and enrichment, its economic miracle, is apparently drawing to a close, and why there is a serious risk of a calamitous crash.
In Wuhan I interviewed a mayor, Tang Liangzhi, whose funds and power would make London's mayor, Boris Johnson, feel sick with envy. He is spending £200bn over five years on a redevelopment plan whose aim is to make Wuhan - which already has a population of 10 million - into a world mega city and a serious challenger to Shanghai as China's second city.
The rate of infrastructure spending in Wuhan alone is comparable to the UK's entire expenditure on renewing and improving the fabric of the country. In this single city, hundreds of apartment blocks, ring roads, bridges, railways, a complete subway system and a second international airport are all being constructed.
submitted 7 hours ago by Triplen01

IMF Demands Ukraine Risk World War 3 in Return For Bailout Money

Paul Joseph Watson
The IMF has told Kiev that if it doesn’t defend eastern areas of Ukraine against pro-Russian forces, or in other words risk going to war with Russia and starting World War 3, that a planned $17 billion dollar bailout package will have to be “redesigned”.
IMF head Christine Lagarde said that the global body would “check regularly” to see if Ukraine was keeping up with its commitments on which the loan deal is dependent. One of those commitments includes a vow to use military forces to repel Russian influence in the east of the country.
The IMF has told Kiev that the money spigot could be cut off if Kiev “loses control over (the) East of the country”.
“Which, roughly translated, appears to mean go to war with pro-Russian forces (and thus Russia itself if Putin sees his apparent countrymen in trouble) or you don’t get your money!,” notes Zero Hedge.
Innumerable analysts have warned that if Russia and Ukraine engage in a full blown conflict, regional and even world war could eventually ensue. The IMF is seemingly so desperate to make Ukraine another one of its loan shark client states that it is willing to risk the annihilation of billions of people to achieve such a scenario.
The fantastic “deal” that the Ukrainian people are getting in allowing the post-coup government to sell out to the IMF vampires includes a 50% hike in energy prices, a halving in pensions, crippling inflation, huge tax hikes and a freeze in the minimum wage.
Ironically, a huge chunk of that money will be used to pay Russian-owned natural gas supplier Gazprom, with whom Kiev is behind on its bills.
As we have documented, asset stripping of troubled countries, achieved by means of onerous austerity measures imposed on the poor and middle class, is standard operating procedure for the IMF, which pulled the same stunt in numerous other countries including Greece and Cyprus.
Paul Joseph Watson is the editor and writer for and Prison He is the author of Order Out Of Chaos. Watson is also a host for Infowars Nightly News.

In Spite of Corporate Lobbyists, Vermont Residents Organize to Raise the Wage

While legislators in the Vermont State House seem to more often be swayed by Koch-funded lobbyists than the concerns of their constituents, The Vermont Workers’ Center and other activist groups are organizing to win livable wages in the state.
Montpelier, Vermont, with its two main streets, nary a McDonald’s, ringed with restive hills of raw milk co-ops and back to the land communes, suffused with narratives of leading the country, is generally not the sort of town most people would imagine the Koch brothers having much sway over. Vermont legislators, as with statehouses across the country, have been overcome with a public inequality discourse fomented by images of erupting subaltern indignation from the US’ poorest and most precarious introduced not one but four bills this year to raise Vermont’s current $8.73 minimum wage to either $10.10, $12$12.50 or $15 per hour. Yet a familiar constellation of corporate lobbyists employing a playbook used from Seattle to Washington DC to Annapolis: slow implementation, low as possible wage increases, carve outs of tipped workers and younger workers, and recasting large corporate front groups as the tiniest of businesses.
In the face of this, a movement of low wage Vermont residents are building power, sharing their stories and flooding the statehouse in an attempt to take back their democracy. “After testifying to a committee like you in 2007, I reached the breaking point and I filed for bankruptcy,” said Heather Pipino. “Decades later, I’m still at this table testifying for the need for livable wages and paid sick days, which wasn’t even considered this session. It’s shameful to still be having this conversation when worker productivity has steadily increased over my lifetime, but wages are stagnant and declining. You have a duty to represent those who are scrambling to get by and have frankly given up on democracy.”
Vermont social movements have so fundamentally shifted power that, “Awareness of the need to raise the minimum wage is so prevalent that Republicans have given up on fighting it and instead are looking for ways to make the change comfortable and reasonable for business.” Whether the corporate lobbyists are successful limiting the final political expression into what organizers call a “poverty wage” or whether social movements are able to lay the groundwork for a livable wage will be decided in the coming days.
Corporate Lobbyists Versus Work With Dignity
In its current form (H.552) in Senate Appropriations, Vermont’s minimum wage would only surpass the $10.10 mark in 2018 when it rises to $10.50. Travon Leyshon of the Vermont AFL-CIO, describes this as, “a poverty wage.” According to the Vermont Legislative Joint Fiscal Office, the 2012 Vermont Livable Wage was $12.48 per hour.
Recapitulating national corporate lobbyists’ talking points George Malek, President, of the Central Vermont Chamber of Commerce urged Mullin’s economic development committee, “not to raise the minimum wage above the schedule already in statute. If you must do so, please keep the increase to the lowest level and phase it as slowly as possible.” Shayne Spence, Outreach Coordinator for the free market think tank, The Ethan Allen Institute (which receives funding from the climate change denying, Charles Koch founded Cato Institute) cautioned the Committee about having any sort of minimum wage at all. Instead, Spence proposed carve outs from this ground floor for working class Vermont residents. “I would suggest that you go the other way,” said Spence, “and provide an exemption in the minimum wage for those below 18.”  In a House General Committee hearing Spence detailed his concerns about gains made by raising the minimum wage would go to those who making more than the Federal poverty line of $11,670 per year for one person; people who, in Spence’s opinion, “don’t really need it.”
Sean Crumb, Chairman of the Vermont Campground Association, asked that the bill “not be forwarded to the floor for further debate,” effectively asking the committee to kill not only any minimum wage increase, but also kill the conversation about whether to raise the wage. Jim Harrison, lobbyist for the Retail and Grocers Associations, who helped defeat paid sick days this year, asked for multiple carve outs to the current minimum wage, to not increase wages in subsequent years relative to the increasing costs of household goods (Consumer Price Index), and an expansion of the high school student exemption to 22 years old.
The National Chamber of Commerce’s provocative lobbying against climate change legislation and fighting to preserve CEO payouts for taxpayer bailed out corporationshave caused even monolithic entities such as Nike and Apple to turn on it. While local Chambers don’t always adopt similar corporate-friendly lobbying efforts, George Malick of the Central Vermont Chamber of Commerce, channeled a controversial full page Wall Street Journal ad in his House General committee testimony. Intimating the same technology-will- replace-workers theme should something approaching a living wage be passed, Malick said, “Snow blowers can replace snow shovelers; automated voice messages can replace receptionists.”
Economic Development for Whom?
Republican State Senator Kevin Mullin of Rutland, Vermont being named the powerful Chair of the Vermont Senate Economic Development committee was controversial for Peter Shumlin, who has adroitly distilled the sentiments of social movements for single payer healthcare and ending nuclear power into an electoral mandate. Mullin is the Vermont Chair of the American Legislative Exchange Committee (ALEC), a scandal-plagued, Koch Brother-funded corporate lobby group described by Bill Moyers as “one of the most influential and powerful [organizations] in American politics” for its flood of over a thousand model bills tailored by corporations, for corporations and introduced in statehouses nationwide annually. A sampling of ALEC bills isn’t exactly redolent of progressive Vermont values: Stand Your Ground which George Zimmerman claimed as a legal rationale for killing black teen Trayvon MartinRepublican Wisconsin Governor Scott Walker’s controversial economic and social programs which dismantled public sector unions and limited non-white voter participation – and SB 1070 legislation to mandate racial profiling in Arizona. Yet in an interview with Truthout, Mullin describes ALEC as a “moderate” group. According to Mullin, during the debate on minimum wage, he “grabbed five copies” of an ALEC study Rich States Poor States and brought them into Senate Economic Development. “This whole fear of ALEC is absurd. It’s beyond me,” said Mullin.
In justifying why he sees minimum wage as the wrong solution for Vermont, a state which saw the fastest growth of income inequality of all states for 15 years before 2007, Mullin cites people like investment banker, venture capitalist, Sugarbush ski resort owner and former Merrill Lynch Executive Vice President, Win Smith. With one of the highest net worths in the world, Smith told Mullin how, “if we pass the house bill, he would immediately lay off 50 people. So we’re taking a more phased-in approach.” This phased-in approach is one of the most often used demobilization strategies corporate lobbyists are whispering in legislators’ ears.
Interestingly, unlike the former Merrill Lynch Executive Vice President, small business owners like Phil Merrick of Burlington’s August First bakery support going beyond Governor Shumlin’s proposed $10.10 an hour to a livable wage. “I see it as such an obvious thing we should be doing, raising the minimum wage,” said Merrick. “I think $10.10 is still ridiculously low. It’s going to cost me money, but it’s the right thing to do. ”
“We Can’t Afford to Wait”
Audra Rondeau, lives in Franklin County and describes friends getting jobs at local gas stations at $8.73 per hour as looking like they won a million dollars. As one of 7,500 low wage homecare workers employed by the state of Vermont, a profession notorious for the intersection of gender and poverty, Rondeau knocked on doors across the country and around the state to help score the largest labor victory in the US in 2013. Now, as the State of Vermont displays a marked reluctance to raise Rondeau and her fellow homecare workers out of poverty, Rondeau found herself in Mullin’s committee, pleading for action. “We can’t afford to wait; people are losing their homes. I’m $1600 behind on my mortgage. We’re dying out there as it is. If we wait, more people are going to lose their homes; more families are going to be split up,” she said.
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Jim Rogers - U.S. Dollar Is a Terribly Flawed Currency -

Speculating With Credit Like There’s No Tomorrow, Bloodbath For Stocks Dead Ahead.

In recent years, the financial markets have become completely and totally divorced from economic reality, and that is a state of affairs that cannot last indefinitely.
Many have compared the current state of affairs to 2008, but to me what is happening right now is eerily reminiscent of 2007.  The Dow soared to record heights quite a few times that year, but there were constant rumblings of economic trouble in the background.  Stocks began to drop steadily late in the year, and 2008 ultimately turned out to be an utter bloodbath.
I believe that what is happening right now is setting the stage for another financial bloodbath.  I truly believe that we will look back on this two year time period and regard it as a major “turning point” for America.
As sellers outnumber buyers on any stock the price of that stock axiomatically falls correspondingly and the amount of money any buyer is willing to pay a seller becomes lower and lower until a price is reached at which the next buyer is willing to part with their money to the seller to purchase a stock.  Market capitalizations (the total value of all outstanding shares of particular stocks times their market valuation per share) fall accordingly.
When stock markets crash it is because of an EXCESS AMOUNT OF SELLERS COMPARED TO BUYERS and the bid prices for stocks plunge as sell orders go unfilled until they drop to lower prices.  When sell orders substantially exceed buy orders then the MARKET MAKERS assigned to each stock have to step in and buy stocks on their own accounts to support clearance of stock sell orders.  In the first case above, money to clear stock sales and cash out the sellers comes from other buyers in the markets.  In the second case above, money to clear stock sales comes from the MARKET MAKERS from their own cash accounts.
Chas Caldwell

International Workers’ Day (May 1) and the New Class: Mobile Creatives

by Charles Hugh-Smith
The Mobile Creative credo: trust the network, not the corporation or the state.
In America’s Nine Classes: The New Class Hierarchy, I described a “wild card” new class of workers that doesn’t fit the conventional paradigms: Mobile Creatives. I use the word mobile here not to suggest mobility between physical places (though that is one factor in this class’s flexibility) but mobility between sectors, tools and ways of earning income.
The key characteristic of the Mobile Creative class is that they live by this credo: trust the network, not the corporation or the state. The essence of neofeudalism is debt penury and wage-slave loyalty to the New Nobility that owns the debt.
The essence of state-cartel capitalism (the dominant form of capitalism) is the state dismantles all social connections and wealth between the state and the atomized individual recipient of state welfare so the individual depends entirely on the state for his/her identity and essentials of life.
Where once existed a complex ecosystem of public life, social capital and networks of reciprocity and economic meaning, now lies a wasteland, stripmined by the state to leave nothing but the state and its ever-growing armies of dependents.
The global corporation profits from this same wasteland: the ideal arrangement to maximize debt-based consumption is an atomized individual who has no identity or self-worth other than consumerist worship of brands and corporate-supplied convenience, in other words, a permanent adolescent driven by insecurity, fear and impulse-driven consumption.
The Mobile Creative class operates outside these two states of dependency. It also operates outside the conventional labor-management divide of Marxism and socialism. Since global capital is mobile, and the state enforces central banking and cartel pricing, the class of “owners” and the state are one entity.
You either resist the entire state-cartel system or your resistance is nothing but meaningless gestures aimed at chimera.
Longtime correspondent Kevin Mercadante (Out of Your Rut) noted that being a Mobile Creative isn’t just a different mode of livelihood–it’s a different way of living, thinking and being.
Mobile Creatives” describes me to the letter – I felt as if I was reading a script of my own life (at least since the financial meltdown). It also takes in a few of my friends, so it’s a very real category.
This is beyond the scope of the article, but one of the things I’ve found to be a revelation is that the mobile creative lifestyle extends well beyond career and workstyle. Once you adopt it, everything else in your life falls in behind it.
Because of the creativity and independence that the lifestyle provides, there’s less need for high cost entertainment. Vacations and weekends are less important – there’s joy and adventure to be had every day. You’re less concerned with retirement. You develop a sense that you’ll survive what ever happens. You see more opportunities and fewer obstacles. At the same time, you’re also painfully aware that things don’t always work out. But you also learn that failure isn’t terminal. That’s huge.
Spending patterns change too. You find less expensive ways to do everything – to buy food and clothing, to fix your car, and even to entertain yourself. Free thought expands, and you find yourself drawn to other mobile creatives. Conversations with others are deeper and more meaningful – when you meet to discuss work, you’re really paying attention, always on high alert for new opportunities and potential joint ventures.
On the surface, being a mobile creative is less secure than traditional careers, but I wouldn’t trade it. I’ve been in so-called stable careers, only to discover that they’re only secure until the big picture game changes. Being a mobile creative enables you to adapt to change, rather than getting rolled over by it.
By giving this emergent class a name, you’re contributing to it’s survival and growth.Mobile creatives could be the class that finally replaces the factory- and service-workers classes as the new “backbone” of American socio-economic life. That’s what’s been missing for at least 15 years. By giving the class a name you’re formally declaring its existence, providing a framework for the lifestyle, and even establishing it as a legitimate goal.
Thank you, Kevin, for describing the Mobile Creative class better than I could. Who better to describe this way of living better than one who is living it every day?
In essence, my new book Get a Job, Build a Real Career and Defy a Bewildering Economyis a blueprint for becoming a Mobile Creative.

The Markets Just Sounded the Death Knell For QE

by Phoenix Capital Research
The Central Bank intervention fiasco continues to unravel before our eyes.
Globally all Central Banks have kept an eye on the Bank of Japan, which announced the single largest QE program relative to its GDP in history. That one single QE program announced in April 2013 is equal to over 20% of Japan’s GDP.
Japan experienced two brief quarters of improved economic activity, before things turned south again. Turns out that printing trillions of dollars to buy bondsdoesn’t create growth.
The latest example is Sony, the Japanese electronics giant which just announced a 70% COLLAPSE in its profit outlook. Sony’s CEO had stated previously that a weak Yen, caused by the Bank of Japan’s QE program was actually a “disadvantage.”
We now have concrete proof as Sony’s profits outlook evaporates.
This is the death knell of QE. We now know for a fact that the Fed and other Central Banks are aware that QE doesn’t create jobs nor does it improve the broader economy.
All that leaves is stocks… which have benefitted enormously from QE, with the S&P 500 rising to new record highs boosted by the Fed’s money printing.
However, ultimately stocks react to profits. And as Sony has proven, QE hurtsrather than helps profits. Indeed, Sony’s stock is down over 1.5% on the earnings outlook drop. And it’s essentially breakeven since the Bank of Japan announced its massive QE program.
To continue reading today’s article…
Phoenix Capital Research

Despite robust Obamacare numbers, many GOPers reignite repeal debate

It may be time for the GOP to adopt a new midterm campaign strategy.
While the Obama administration botched the rollout of, just a few months later, the Affordable Care Act is undoubtedly rebounding. Indeed, the president announced last week that 8 million people have signed up for health insurance through the federal exchanges – surpassing the administration’s 7 million goal. Still, Republicans aren’t loosening their grip on what they see as one of their most winning midterm issues.
Republican National Committee (RNC) Communications Director Sean Spicer said over the weekend that Obamacare “is still the number one, number two and number three issue going into this election.”
RNC spokesman Raffi Williams added, “President Obama may be content to take a victory lap, but Americans are still left with more questions than answer when it comes to the true impact of ObamaCare. How many of the 8 million have actually paid their premiums? How many Americans will be hit with skyrocketing premiums next year? And what relief does President Obama have for the millions of Americans who have lost their doctors, their existing health plans, and their economic opportunities due to ObamaCare? With so many questions waiting to be answered, it’s no wonder the President’s signature law remains so unpopular.”
The RNC also released a web video Friday after Obama’s announcement of the new numbers, in which the commander-in-chief said it was time for Republicans to “move on” from his health care legislation and on to more pressing matters. The GOP’s spot titled “Not Time To Move On” contrasts Obama’s desire to put the program’s troubles in the rearview mirror to reports of Americans who lost their coverage or saw their premiums jump under the legislation.

Disrupt With Karen Finney, 4/19/14, 4:44 PM ET

GOP vs. Dems on ACA: will the fighting stop?

Similarly, Republican Sen. Ted Cruz of Texas – who spearheaded a move last year to defund Obamacare and in the process drove a government shutdown – tweeted Friday, “The repeal debate is far from over. #FullRepeal.” House Majority Whip Kevin McCarthy said in a statement that “Republicans cannot and will not accept this law.” And House Majority Leader Eric Cantor indicated he was skeptical about the numbers, releasing a statement Friday saying, “If the president is so confident in his numbers, there is no reason not to release transparent and complete enrollment data.”
It’s not hard to see why the GOP doesn’t want to let go of Obamacare. For years, Republicans have trounced Democrats in the messaging wars over the health care law, and as a result, polls have continually shown that Americans are skeptical about the program. But surveys also indicate that more Americans would rather keep the legislation than throw it out completely.
According to a new Kaiser study, six in 10 Americans said Congress should either improve Obamacare or keep it the way it is. Less than three in 10 wanted to repeal the law or replace it with a GOP-endorsed plan.
So, is going full steam ahead against Obamacare – as the GOP did in the 2012 and 2010 election cycles – still a smart strategy? The GOP-controlled House has unsuccessfully tried to repeal or change the health care law more than 50 times. Now that Obamacare is here and millions have signed up, is threatening to take that insurance away a good move?
Political analyst Stuart Rothenberg, who’s also editor and publisher of the non-partisan Rothenberg Political Report, told CNN on Sunday that it’s difficult to see how the GOP can run an entire campaign against Obamacare. “I think the cake has been baked [on Obamacare],” he said. “I don’t think there are a bunch of people changing their opinions now … they’ve got to talk about growth and jobs.”
There are signs Republican Sen. Mitch McConnell of Kentucky – who’s up for re-election in a competitive race – is softening his tone on the issue in a state where sign-ups for Obamacare have surpassed the 400,000 mark. Yes, McConnell has repeatedly called for repealing the law, but during a talk with health care workers in his state last week, McConnell acknowledged that a repeal was unlikely under Obama and instead focused on improving the law. “We’re going to figure out a way to get this fixed,” he said, according to The Madison Courier.
Of course, the 2014 strategy depends on where you live. Purple-state Democrats in tight races, like Sen. Mary Landrieu of Louisiana, put forth legislation to make Obamacare “work better.” And in blue Oregon—which has had a shaky Obamacare rollout – Republicans are seeing an opening, hoping to take advantage with pediatric neurosurgeon candidate Monica Wehby to unseat Democratic Sen. Jeff Merkeley. Wehby has made her opposition to Obamacare a cornerstone to her campaign.
But it’s difficult to argue for repealing and replacing Obamacare without an alternative road map.
According to a poll from Reuters/Ipsos released last week, 32% of respondents said they trust Democrats more on health care plans, policy, or approach compared to 18% for Republicans. From February, that’s an increase for the Dems and a dip for the GOP.
Ipsos pollster Chris Jackson said “Democrats have not managed to have a huge lead over Republicans so much as Republicans have managed to damage their own position and stay behind Democrats. That’s because people don’t view the Republican Party as standing for any particular health care system.”

What do you think?

How will Obamacare be remembered in history?

10323 votes

The Debate Over Obamacare Is Not Over… What Obama Doesn’t Want You To Know

“The debate over repealing this law is over. The Affordable Care Act is here to stay.”
That’s what Barack Obama has declared, so I guess we’re supposed to agree.

The problem is that the president is either a liar, or he’s completely out of touch with reality. In actuality, the Obamacare program is more unpopular with the public than ever; and rather than being finished, the debate is just beginning.
For example, Department of Health and Human Services Secretary Kathleen Sebelius may have resigned in disgrace… but Americans remain unhappy with the effects of her Frankenstein creation, the Obamacare website.
And to demonstrate just how disconnected he is from reality, Obama continues to crow about this “achievement.”
The Year of the Lie
All of this posturing is intended to cover up the administration’s countless lies. In fact, the healthcare team has told so many by now that one Congressman is calling 2014 “The Year of the Lie.”
Not surprisingly, a recent poll found that American citizens also believe Obama to be a liar. After all, this is the man who had the audacity to say that “you can keep your doctor,” and “you can keep your plan.”
Obama has also claimed at various times that 7.1 million Americans have signed up for private insurance plans through the Obamacare marketplaces.
But even The New York Times says that this statistic is misleading. To get that figure, Obama is counting everyone who selected a plan on the website, regardless of whether they actually became a customer. But that’s incredibly inaccurate, as The New York Times is reporting that at least 20% of enrollees aren’t paying the first month’s premium.

On top of that, Obama continually distorts reality by inferring that people who signed up didn’t have insurance before. But that doesn’t jive with the fact that no fewer than five million people had their plans killed by Obamacare.
And how about the doozy that Obamacare is holding down costs? Most experts believe premium prices have tripled as a result of Obamacare. And that makes sense, since many plans with caps or exclusions and co-pays outside of the Obamacare framework cost less for insurance companies. But if, for example, birth control pills are now free instead of being offered at a nominal cost, you’d expect the plans to cost more.
Don’t tell that to White House Press Secretary Jay Carney, though. He says that even though Obama’s statements have been proven to be untrue, they weren’t actually lies. You see, the president believed them to be true when he said them, so it’s okay!
Of course, this is truly a disingenuous defense. Ask any criminal prosecutor… detachment from reality is not a valid excuse. Prisons are full of con artists who swore at trial that they believed the stories they told. The law requires people to check the truth before making claims.
Meanwhile, Obama’s claims might be excusable if he was more humble. But listen to his words carefully… he never offers an apology. American families have been tragically hurt by paying greatly increased premiums or losing insurance entirely. Folks have lost access to their longtime doctors. People are unable to go to the hospitals closest to their homes. These are real damages.
The least Obama could offer the affected is a little solace.

Baby boomers moving back home with mom and dad from the silent generation? 2 million adults live with parents in California and those 50 to 64 moving in with parents has surged.

House horny Californians try to avoid the overarching statistics starring them directly in the face. Many Californians are all hat and no cattle. We already know that many Millenials are moving back home with mom and dad because they simply cannot afford to rent or buy a home in the golden state. The golden sarcophagus with nice granite countertops is getting a little more crowded for baby boomers. A recent analysis actually found that many baby boomers as well had to move back in with mom and dad. No, they are not trying to save for a down payment or take care of mom and dad. The vast majority are moving in because of economic hardship. So much for the theory of pent up demand. The buyers of the last few years came from Wall Street, cash investors, foreign buyers, and house lusting people leveraging every penny they have to buy a home. So it is no surprise that more than 2 million adults are now living back home in the rooms they once occupied as teenagers. I actually dug up Census data and highlight why the flood of buyers is not materializing. This also points to more locked up housing units as boomers move in with those from the silent generation. Just more evidence highlighting the transformation of California into a feudal state and largely a rental focused market.

Boomers moving back home
The story about adults living at home is no surprise. I caught a clip of Conan O’Brien joking about older Californians moving back home with their parents. So I dug up the latest data on this trend and found some interesting information:
“(LA Times) For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.
The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.”
This is an incredibly big jump that was hidden in the midst of Millenials moving back home. In total, more than 2.3 million adult children in California are living at home with their parents since the Great Recession hit, a 63 percent increase. This is why household formation in California has been so pathetic. First, take a look at a projection from the California Association of Realtors (CAR) put out two years ago in 2012:
household projections
Source: CAR
You can see the “pent up demand” argument here. According to more normal times, you would expect household formation to grow with population growth. This simply did not happen. Given the wickedly low sales volume in the state, having 575,000 or 696,000 additional households would certainly add to demand assuming people could actually afford to buy at current prices (which they can’t). The buyers have largely come from the investor crowd.
So what did happen? I went ahead and pulled up recent Census data and this is how the chart would look like today:
household projections updated
California’s population is now over 38.3 million but look at household formation. Household formation actually fell over this period of time! Why? Because these folks moving back home are largely doing it because of financial struggles, they are not trying to save cash to out compete some house horny home shoppers:
“The numbers are pretty amazing,” Wallace said. “It’s an age group that you normally think of as pretty financially stable. They’re mid-career. They may be thinking ahead toward retirement. They’ve got a nest egg going. And then all of a sudden you see this huge push back into their parents’ homes.”
Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data.”
It is fairly clear that this is the primary reason why household formation in the state stinks. Now with investors pulling back, you are seeing inventory pick right back up and sales plunge. Lemmings continue to buy houses but what is new? You are starting to see more data showing how incredibly overvalued some areas of California have become. More and more people are simply stretching their budgets and pouring more of their net income to housing costs.
In some cases, even higher rents are pushing people back home:
“As with Rohr, those in their 50s move in only as a last resort. Many have exhausted savings. Some have jobs but can’t shoulder soaring rents in areas such as Los Angeles or San Francisco.”
This is not a positive trend especially since the fastest growing group in California is the baby boomer group:
Many of these boomers realize that there is no way their kids are going to have the funds to keep this party going (some are “gifting” funds to their kids but this is not the majority for the state). Some think that these boomers will unlock equity and fund their kids. Hah! Most are trying to pay the bills and many are seeing their kids move back home. The study found an astonishing 42 percent of those living at home work (as in 58 percent have no jobs). Forget about buying, these folks can’t even afford rent:
“(CS Monitor) There were 433,000 older adults, age 65 and over, who housed approximately 589,000 of those adult children,” the researchers said in the report released by the UCLA Center for Health Policy Research. Those figures were generated from federal census statistics, said the report’s lead author, Steven P. Wallace.
Of those adult children living with older parents, researchers found that only about 42 percent were employed, putting a significant strain on the parents to provide not only housing, but also necessities like food, medical care, and transportation for them. To do so for just one adult child, the study found, costs the average couple about 2 1/2 times more per year than they would pay just to take care of themselves.”
Giant pools of stashed hidden cash? For some but certainly not the larger trend here. If that were the case we would be seeing sales volume surge, wages going up, and a flood of buyers in the overall market. That simply is not happening. The trend is clear and what is left of the middle class in California is getting priced out. I’m sure some will talk about how Newport Coast or Malibu will always be prime but that has always been the case. It isn’t like middle class Californians were targeting these beach cities to begin with. Yet looking at the bigger picture, these macro trends don’t point to a pent up demand of households ready to buy.

With 1 In 3 Homes Unaffordable, Freddie Mac Prepares To Enter The Trailer Home Loan Market

Submitted by Mike Krieger of Liberty Blitzkrieg blog,
I can’t say this is surprising. After all, with average peasants, I mean citizens, now priced out of the domestic housing market (Zillow recently showed 1 in 3 homes are unaffordable) due to billionaire financiers and foreign oligarchs buying up all real estate in cash purchases, American serfs now will find out where the “elites” think they belong. In trailer homes, naturally.
Oh, but the story gets better, a lot better. As is generally the case in the USSA these days, crony capitalist oligarchs have perfectly positioned themselves to benefit financially from the final transition of Americans to neo-feudalism. Recall that in my post from last October titled, Carlyle Group’s Latest Investment…Trailer Parks, it was noted that trailer park owners share the following attractive quality:
Our customers have no alternative shot at homeownership, nor do they [normally] even have the credit scores and quality to seek anything better…They never leave the park they are in, and the revenues are unbelievably stable as a result.
Sure, we know from the Dark Ages that peasants on the land stay put. Same concept here. However, it gets even better than this. America’s number one hypocritical, crony capitalist, Warren Buffett is also positioned to benefit.
From Bloomberg:
Want to buy a trailer park? Freddie Mac wants to give you a loan.

The unit of the government-owned mortgage giant that funds apartment buildings is set to begin financing manufactured-housing communities, the company said in a statement today.

The firm is broadening its reach in the multifamily segment of the housing market as it seeks to fulfill its mandate to provide affordable options for low-income families. The McLean, Virginia-based lender will work with established companies in the industry across the U.S., said David Brickman, the head of multifamily operations at Freddie Mac.

“It’s rounding out our ability to touch the affordable housing space,” Brickman said today in a telephone interview. “Manufactured housing is a big piece of rural affordable housing.”

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., lamented the punitive rates charged to purchase factory-built homes in his 2009 annual letter to shareholders. Berkshire owns Clayton Homes Inc., a builder of manufactured housing.

Screen Shot 2014-04-30 at 2.17.55 PM
Serfs up!
Full article here.


“These investments will directly create an additional 1,000, and tens of thousands of jobs indirectly, all for the Israeli middle class.”
What about creating tens of thousands of jobs for unemployed workers in the U.S.A.???

Israel, Intel announce $6B deal set to create over 1,000 jobs 

A $6 billion investment from Intel will expand Kiryat Gat factory; government to provide 300-600 million dollars for project. Lapid: This is a vote of confidence for the Israeli economy.
Avital Lahav FOR
American technology giant Intel announced its intentions on Wednesday to invest six billion dollars in upgrading its plant in Kiryat Gat where the company plans to add 1,000 employees to its workforce.
Representatives from Intel informed Finance Minister Yair Lapid and Economy Minister Naftali Bennett of the plans. Israel in turn agreed to cover 5-10 percent of the costs of renovation, amounting to anywhere from 300 to 600 million dollars.
Intel didn’t confirm the statements made by the Israeli government, which put the full cost of the project at six billion dollars. The final business plan is set to be delivered to the ministers on Thursday.
The company has spent the last two years examining which of their factories should be upgraded with the latest and most advanced technologies. Its choice of renovation in Israel means that it sees its future of production in Israel which could lead to additional factories.
According to Israeli sources, if Intel had chosen to invest in a country other than Israel, the Israel factory would likely be closed in the near future due to ageing facilities and all the jobs it currently holds would be lost.
“This is excellent news for Israel and an excellent gift for its 66th birthday,” Bennett told Ynet. “This is one of the biggest investments that have ever been made in Israel and the significance for the periphery and technological education is tremendous.”
Photo: AP
Photo: AP
Bennett, who lead negotiations on the deal with Intel said: “There are also demands for industrial cooperation. I also want to take this opportunity to thank Yair Lapid who took this journey with me.”
Lapid also welcomed the successful conclusion of negotiations, saying: “We will continue to promote investments in advanced industries in Israel. This is a vote of confidence for the Israeli economy.”
“These investments will directly create an additional 1,000, and tens of thousands of jobs indirectly, all for the Israeli middle class,” said Lapid.
Prime Minister Benjamin Netanyahu welcomed the investment and said, “the plans for this investment are the result of a process that we’ve been working on for a few years already. Israel is a world center of technology and investing in it yields profits both for the investors and for the citizens of Israel.
“I call on additional international companies to expand their investment in Israel, and for those who still haven’t taken advantage of the benefits of the Israeli market to come and invest here,” said the Prime Minister.
Director of Intel in Israel and Vice President of Intel Maxine Fassberg, said, “Over the last 40 years, Intel’s exports added up to 35 billion dollars and most of that came from Intel’s production factories in Kiryat Gat.”
“During 2013, Intel’s factory in Kiryat Gat won Intel’s prize for prestigious quality, the Intel Quality Award (IQA)… Intel is committed to continuing the sequence of achievements in qualitative results of operations in Kiryat Gat,” said Fassberg.
The Fab28 Intel factory in Kiryat Gat produces 22 nanometer technology chips and the company is interested in beginning to produce the more advance 10 nanometer chips in Israel.
Intel’s first factory in Israel was built in 1996 at the cost of 1.7 billion dollars of which the government paid 680 million or 40 percent of the cost. The second Intel factory built in 2011 came at a cost of 2.7 billion and the government paid 200 million or seven percent of the investment.