I'll be back on Monday; NDD will be here over the weekend.
Friday, 20 September 2013
Read the whole thing.
From the NY Times.
The old textile mills here are mostly gone now. Gaffney Manufacturing, National Textiles, Cherokee — clangorous, dusty, productive engines of the Carolinas fabric trade — fell one by one to the forces of globalization.
From the NY Times.
The old textile mills here are mostly gone now. Gaffney Manufacturing, National Textiles, Cherokee — clangorous, dusty, productive engines of the Carolinas fabric trade — fell one by one to the forces of globalization.
Just as the Carolinas benefited when manufacturing migrated first from the Cottonopolises of England to the mill towns of New England and then to here, where labor was even cheaper, they suffered in the 1990s when the textile industry mostly left the United States.
It headed to China, India, Mexico — wherever people would spool, spin and sew for a few dollars or less a day. Which is why what is happening at the old Wellstone spinning plant is so remarkable.
Drive out to the interstate, with the big peach-shaped water tower just down the highway, and you’ll find the mill up and running again. Parkdale Mills, the country’s largest buyer of raw cotton, reopened it in 2010.
Bayard Winthrop, the founder of the sweatshirt and clothing company American Giant, was at the mill one morning earlier this year to meet with his Parkdale sales representative. Just last year, Mr. Winthrop was buying fabric from a factory in India. Now, he says, it is cheaper to shop in the United States. Mr. Winthrop uses Parkdale yarn from one of its 25 American factories, and has that yarn spun into fabric about four miles from Parkdale’s Gaffney plant, at Carolina Cotton Works.
Gold's monthly chart is still very negative. Prices broke their multi-year uptrend earlier this year and fell to the 50% Fib level from the long rally. However, the recent move higher uses the Fib fan trend lines as resistance, indicating the bounce is a technical one. Also note the declining momentum and weak CMF readings.
Prices are going lower.
Thursday, 19 September 2013
- by New Deal democrat
There's been something of a Doomgasm since the Census Bureau's annual median household income data came out a few days ago.
As I predicted two months ago, it basically went sideways from 2011 to 2012. This also means that it is below 2009, below 2007, and below 1999, which remains the peak. The reason it went sideways is because real median wages have stalled, and there the ongoing decline in the employment to population ratio even since the late 1990s also stalled. And one more reason I'll discuss below. Since people who are unemployed or retired bring in much less, or no, income, the median household income is dragged down as well.
I don't mean to suggest that median household income isn't a valid measure. With 70% of the economy being consumer spending, if households have less money, then consumer spending will suffer accordingly, especially since lower income households spend a higher percentage of their income. It's simply important to realize that this doesn't necessarily reflect a decline in real wages.
Nevermind. The Doomer mind is obsessed with the fact that we can't be in an economic recovery because household income insn't recovering, at least through the end of last year. Of course, by the same standard, with the exception of one year, we never really recovered from the 1973-74 recession until 1986, and we haven't recovered from the bursting of the tech bubble in 2000 at all.
That's just semantics. The real problem with this obsession is that it overlooks *why* median household income continued to fall even after the unemployment rate, and the employment to population ratio both bottomed in 2009. As I've pointed out numerous times over the last couple of years, that has everything to do with the continued high price of gasoline, which went over $3 a gallon apparently permanently in 2010, after a secular rise from $0.92 a gallon in early 1999.
We have an incredibly wasteful transportation system, which forces people to use cars even where a well designed mass transit system would work efficiently, save time and aggravation, and save travelers lots of money. Up until the last few months, we had once-in-lifetime low treasury bond rates. We could have made use of those rates to build, or rebuild, lots of infrastructure, including a transportation infrastructure that helped consumers in the face of likely permanently high gas prices. Or, as Atros puts it simply, SUPERTRAINS!
The Doomer obsession with "green shoots!", "printing fiat money!", airquote "recovery!", and the like means they fail to see - in fact, don't want to see - how important the price of gas has been in holding back ordinary consumers, and how important it is for this country to break free of the Oil choke collar.
So Doomers hate Supertrains. I know math is hard, but maybe if they really learned how to do it, they could see how much it would help the people they claim to champion if they focused on the reasons why some measures of average Americans' well-being haven't improved.
- by New Deal democrat
This week for the second week in a row we got extremely low initial jobless claims, but marred by computer glitches, mainly in California. That doesn't mean we can't make a reasonable approximation of what those claims would be had there been no glitches.
Last year I was able to show that, ex-Superstorm Sandy, initial claims were probably still declining, by digging into the internals of the state by state reports. It looks like the same thing is happening this year, i.e., there is a real decline, but it is being masked by the computer problems.
Here's the way the calculation works. One week after the initial report, the DOL gives a state-by-state breakdown of non-seasonally adjusted, and seasonally-adjusted, claims for the prior week. So, this week the DOL gave the breakdown behind last week's 292,000 number (revised to 294,000 this week). What we do is, we take out the claims from the affected state, in this case California, and make the assumption that had there not been a glitch, California's claims would have reflected the same trend as in the other 49 states.
Last year in the affected week 299,700 claims were reported on an NSA basis. The SA number was 381,000. Of the NSA claims, 42,900 were from California and 256,800 were from the other 49 states. This year in the same week the other 49 states reported 210,400 initial claims NSA. So, this year compared with last year, the number of NSA claims dropped by 18.07% for those 49 states (or, put another way, were 0.8193% of last year's number)
If California actually followed the same trend as the other 49 states, then all we need to do is multiply last year's SA number of 381,000 by 0.8193, which gives us a little under 318,000. That's probably pretty close to what last week's number of intial jobles claims would have been had there been no computer glitches.
Since the DOL told us that California and Nevada were still "working through" their computer issues, that probably means that they have caught up on some but not all of their backlog. In other words, this week's number 0f 309,000 is probably a lot closer to the real number than last week's. This adds to my confidence that initial claims probably have continued their recent declining trend, even if not by as much as the raw reports suggest.
We'll find out next week.
From Wonkblog:
The Federal Reserve shocked the world Wednesday with the decision to, well, keep doing what they've been doing for a year now. That is, the central bank is buying $85 billion in bonds every month, and will keep buying $85 billion a month for now.
So the money will keep flowing, the "taper" is postponed for another day, and the stock market is euphoric. But why? One reason is that interest rates have risen in global financial markets in the past few months, in part due to Fed signaling about the taper, which may slow growth. But for another key answer, walk out the front door of the Fed's headquarters on Constitution Avenue, turn left, and walk 20 blocks until you run into the United States Capitol.
And indeed, Ben and the Fed went on to blame Congress. First, they noted, "Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth." And that is exactly what we've seen, as shown by this chart from the BEA:
Over the last 10 quarters, government spending has subtracted from growth in all but two quarters.
The Fed goes on to say:
Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy.
Here's the bottom line: Washington and its constant shenanigans are detracting from overall growth. It's that simple.
The Federal Reserve shocked the world Wednesday with the decision to, well, keep doing what they've been doing for a year now. That is, the central bank is buying $85 billion in bonds every month, and will keep buying $85 billion a month for now.
So the money will keep flowing, the "taper" is postponed for another day, and the stock market is euphoric. But why? One reason is that interest rates have risen in global financial markets in the past few months, in part due to Fed signaling about the taper, which may slow growth. But for another key answer, walk out the front door of the Fed's headquarters on Constitution Avenue, turn left, and walk 20 blocks until you run into the United States Capitol.
And indeed, Ben and the Fed went on to blame Congress. First, they noted, "Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth." And that is exactly what we've seen, as shown by this chart from the BEA:
Over the last 10 quarters, government spending has subtracted from growth in all but two quarters.
The Fed goes on to say:
Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy.
Here's the bottom line: Washington and its constant shenanigans are detracting from overall growth. It's that simple.
As I noted last week, Latin America has sold off as a result of the Fed tapering talk. However, this is not an overall reflection of the region's economies which have done a great deal to improve their respective competitiveness over the last 10-20 years.
Chile has been slowing, but that's a relative term.
In Chile, GDP grew 4.1% in the second-quarter, confirming its slowdown. The natural resources sector’s annual growth rate dropped more than two points compared with the previous quarter, primarily because of reduced mining production early in the quarter, but also because of a sharp drop in fishery. Sectors other than natural resources performed below trend in the second
quarter. GDP growth was driven mainly by trade and construction, while other branches related to investment slowed. The use of installed capacity has declined accordingly
Here's a table from the same report:
The numbers above are still impressive from a Y/O/Y perspective.
And inflation is still well-contained
In their most recent policy announcement, the Central Bank of Chile kept rates at 4.25%. Here's how the described the current economy:
Domestically, recent output and demand figures continue along the lines of previous months: moderate growth in output and strong private consumption. Headline inflation is still within the tolerance range, while core measures continue to hover around 1% annually. Inflation expectations have remained near the target in the policy horizon.
Let's take a look at the ETF:
The Chilean ETF has been selling off all year. The first move lower occurred between February and early June, with the second far sharper sell-off starting in May. However, over the last few weeks, prices have rebounded and yesterday's action is encouraging. Also note that prices are now above the shorter EMAs with a rising MACD.
Chile has been slowing, but that's a relative term.
In Chile, GDP grew 4.1% in the second-quarter, confirming its slowdown. The natural resources sector’s annual growth rate dropped more than two points compared with the previous quarter, primarily because of reduced mining production early in the quarter, but also because of a sharp drop in fishery. Sectors other than natural resources performed below trend in the second
quarter. GDP growth was driven mainly by trade and construction, while other branches related to investment slowed. The use of installed capacity has declined accordingly
Here's a table from the same report:
The numbers above are still impressive from a Y/O/Y perspective.
And inflation is still well-contained
In their most recent policy announcement, the Central Bank of Chile kept rates at 4.25%. Here's how the described the current economy:
Domestically, recent output and demand figures continue along the lines of previous months: moderate growth in output and strong private consumption. Headline inflation is still within the tolerance range, while core measures continue to hover around 1% annually. Inflation expectations have remained near the target in the policy horizon.
Let's take a look at the ETF:
The Chilean ETF has been selling off all year. The first move lower occurred between February and early June, with the second far sharper sell-off starting in May. However, over the last few weeks, prices have rebounded and yesterday's action is encouraging. Also note that prices are now above the shorter EMAs with a rising MACD.
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