The "Free Lunch" Weight Loss Plan v.019

All things considered, it's been a pretty good month. I continue to climb a minimum of 20 extra flights of stairs each day.


Click to enlarge.

I started the month off at 204, which is my lowest weight in years. I ended at that same weight. Go figure.

I can really feel the seasonal effects. For the most part I managed to offset them (either consciously or subconsciously, not exactly sure which).

On the one hand, my girlfriend made 6 pies since Thanksgiving. Since there are just two of us, I think it would be safe to say that roughly 3 of them went into me, lol. The Tillamook ice cream sales this month at the local grocery stores did some damage as well. I'm particularly fond of chocolate and peanut butter with chocolate syrup on top. As I've said from the beginning, this is not a diet plan. I eat what I want and when I want. In my opinion, life's too short to be eating rice cakes.

On the other hand, I walked more than 150 miles outside. Just like last month! It was very enjoyable. Our dog would strongly agree. I also did 3 marathon sessions on the indoor stair climber. On the 5th of December, I set what I think is a new all-time personal best of 44 minutes and 57 seconds to climb 200 flights of stairs. As far as my legs and cardiovascular system go, I consider myself to be in relatively good shape right now.


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I walked outside a minimum of 1.5 miles each and every day since November 1st (averaging about 5 miles per day). I thought it was just a November thing, but I can't seem to stop. Maybe it's turning into a new habit too. Exercise begets exercise.

Once again, it all started with baby steps.

Here's a fun fact. It takes about a minute to climb up and down 5 flights of stairs. I have never regretted doing it afterwards. Something is still better than nothing. Give it a try sometime. You might like how you feel. You've got nothing to lose (except excess weight).

I'll consider jogging if I ever see a jogger smiling. - Joan Rivers

Considering walking! In the rain! With an umbrella! It apparently works for me. I may not be singing in the rain, but I'm smiling more often than not. :)

And lastly...

Happy New Year!

See Also:
The "Free Lunch" Weight Loss Plan v.000

Exponential Trend Failure of the 21st Century (Musical Tribute)

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Gongol.com: December 25, 2012

Fear and panic have chased people out of the stock market for no sensible reason. - Gongol.com

Don't get me wrong. I enjoy reading what Brian Gongol has to say. I visit his website often. The "no sensible reason" argument is a bit difficult to stomach though. Not one sensible reason? Not one? Seriously? I'll certainly give it a shot. Let's talk about Japan.

In hindsight, Japan's investors certainly haven't felt that their stock market was risk free even over the long-term. Note what's happened to their stock market since the early 1990s. That's when their housing bubble popped. They've replaced much of that prosperity with excess government debt. Sound familiar? How did that work out for them so far? How will it work out for them in the future?

The President plans to appoint the co-chief investment officer of Pimco to chair a global development council. Pimco isn't exactly a sunshine-and-lollipops kind of operation. They're the ones who talk about "the new normal", which looks to a future of low returns and high levels of regulation. - Gongol.com

I became a permabear in 2004. I was and am a strong believer the "new normal" theory. The 5 Charts I Shared with My Tax Preparer sum up my reasoning. The old normal's math is absolutely unsustainable. Exponential growth is *always* doomed to failure (think the end stages of a locust swarm). That's just basic math.

In my opinion, those who think we're going to rocket back to the old normal exponential growth curve (as seen in the red trend line of the chart above) are going to find themselves in a world of ignorant pain. I would bet every last penny of my nest egg that it is not going to happen.

Keep in mind that I'm generally not known for taking excessive risks. I would definitely make the bet though. I wouldn't even need favorable odds. Bet it all to win 10%? Absolutely. There will be no economic rocket. There will be no satellite of economic love. Mere words cannot adequately express how strong my opinion is on this. The party ended in 2000. All we can do now is adapt to the new reality. Sigh.



Source Data:
St. Louis Fed: Real DJIA (November 2012 Dollars)

Trend Channel of the Day (Musical Tribute)

Here's a chart of new private housing units authorized by building permits divided by the number of civilians employed.


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As seen in the chart, we're currently attempting to recreate the prosperity of the 1990s!

If you think I'll sit around as the world goes by
You're thinkin' like a fool cause it's a case of do or die
Out there is a fortune waitin' to be had
You think I'll let it go you're mad
You've got another thing comin'

Source Data:
St. Louis Fed: Custom Chart

Extreme Initial Claims Danger v.29

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Red line? Blue Line?

When choosing between two competing theories, pick the one that doesn't involve a magic spell. - Emo Philips

See Also:
Extreme Initial Claims Danger v.28

Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims

Something to Feast Your Christmas Eyes On

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NAFTA couldn't get us to 100%? Shocking! Shocking I tell you.



What Christmas would be complete without a feast, a chart, an exponential trend failure, some sarcasm, and a video?

Source Data:
St. Louis Fed: Custom Chart

Peak Vehicle Miles Traveled per Capita (Musical Tribute)

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Source Data:
St. Louis Fed: Vehicle Miles Traveled per Capita

Merry Christmas! (Musical Tribute)

The Treasury Bill Vigilantes Are Alive and Well

They just aren't doing what most people expect them to be doing.


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The Fed raised rates to 6.5% in 2000. What did the treasury bill vigilantes say?

"Oh no you didn't!"


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The Fed attempted to maintain 5.25% in 2007. What did the treasury bill vigilantes say?

"Oh no you didn't!"


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The Fed attempted to once again reach the "lofty" goal of just 0.2% in 2012. What did the treasury bill vigilantes say?

"Oh no you didn't!"

The following chart shows ZIRP in all its grandeur. The Fed is frozen near 0%. The treasury bill vigilantes are too. So is the spread between them. That's deer in headlights kind of frozen and there's long-term death of real yields written all over it.


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Things are going to get really interesting and/or terrifying if we enter the next recession with this as our starting point. Why can't more people seem to understand this? I am more bearish right now than I have ever been (and I've been a permabear since 2004). In my opinion, this is an awful time to be swinging for the fences.

And lastly, the Fed really dropped the ball on the housing bubble. Just look at that 1% spike in the last chart. Apparently Ben "There Is No Housing Bubble to Go Bust" Bernanke was dwelling on the wrong things as the treasury bill vigilantes ran for the relative safety of the bunkers. Go frickin' figure.

This is not investment advice.

Source Data:
St. Louis Fed: Effective Federal Funds Rate
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate

Extreme Initial Claims Danger v.28

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The trend in red is over. It's probably best to put away the party hats.

The next chart shows initial claims divided by nonfarm payrolls.


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It's just an opinion of course, but those who think Hurricane Sandy and the "fiscal cliff" are fully responsible for the end of the downward trend must also believe that magical unicorns inhabit our nation's many national parks.

See Also:
Extreme Initial Claims Danger v.27

Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims
St. Louis Fed: Initial Claims / Nonfarm Payrolls

Housing Starts

The following chart shows the number of single unit housing starts divided by the number of housing starts with 5 units or more.


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The "ownership society" is in serious trouble.

The term appears to have been used originally by President Bush (for example in a speech February 20, 2003 in Kennesaw, Georgia) as a phrase to rally support for his tax-cut proposals (Pittsburgh Post - Gazette, Bush OKs Funding Bill for Fiscal '03, Feb 21, 2003 Scott Lindlaw). From 2004 Bush supporters described the ownership society in much broader and more ambitious terms, including specific policy proposals concerning home ownership, medicine, education and savings.

Source Data:
St. Louis Fed: Custom Chart

Spain's Chart of the Day (Musical Tribute)

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Source Data:
St. Louis Fed: Harmonized Index of Consumer Prices: Actual Rentals for Housing for Spain

Stair Climbing Study

December 13, 2012
The cheat's guide to exercise: Taking the stairs one at a time burns MORE calories than leaping up them

Lead researcher Rodney Kennedy said: 'Given that such improvement resulted from less than 30 minutes per week of moderate exercise, stair climbing in the workplace should be promoted as a health-enhancing physical activity.'

I'm a believer in "baby step" theories. Doing something is definitely better than doing nothing. It doesn't take much of a behavior change to make a big difference if one just sticks to it.

Starting in June of 2011, I have been climbing at least 20 flights of extra stairs each and every day. These days, I generally break it into 4 sets of 5 flights. Now that I'm in relatively good shape, they take about a minute each. That's roughly 28 minutes per week. No big deal!

It took so little to feel so much better. I'm about 20 pounds lighter than when I started. I'm generally doing a lot more activity per day than just 20 flights of stairs though. Exercise begets exercise. 20 flights is still my minimum. It's enough to keep me in the game, so to speak. Some days I just do the bare minimum. No big deal!

No stress. No eating rice cakes. No pain, no pain. I've been doing a lot of walking around the neighborhood in recent months. And I mean a lot! I honestly enjoy it. Rain? Shine? It's all good. That's what umbrellas are for. It all started with baby steps on the stairway.

“Focus on the journey, not the destination. Joy is found not in finishing an activity but in doing it.” - Greg Anderson

That's the difference this time. I'm doing what I think I can do every day for the rest of my life, and not because I feel the need to do it. I do it because I enjoy how it makes me feel.

And on that note, I'm off to walk a 1.5 mile loop around the neighborhood. It's a beautiful night. The air is crisp. I won't have to ask my dog to join me more than once. Dogs somehow inherently know that walking can be fun. And yet it is we humans that need to be trained? Go figure! :)

Thanks to Rik in the comments of this post for bringing the article to my attention.

ZIRP: How Long?

Click to enlarge.

I'm not suggesting that World War III will soon break out, but I am suggesting that ZIRP may be here for far longer than most think possible. We're currently "only" four years into the chart.

November 18, 2009
Fed official: Rates could stay put until 2012

Federal Reserve Bank of St. Louis President James Bullard said policy makers may not start to raise rates until early 2012 while facing a “too low for two long” argument that may “weigh heavily” on the central bank.

August 17, 2011
Plosser Says Federal Reserve May Have to Increase Rates Before Mid-2013

Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said the Fed will probably need to raise interest rates before mid-2013 and that policy makers should have waited to see how the economy performed before pledging to hold rates at record lows for two years.

January 25, 2012
Fed: Benchmark Rate Will Stay Low Until ’14

Federal Reserve officials said their benchmark interest rate will stay low until at least late 2014 and anticipate that unemployment will remain high and inflation “subdued.”

December 12, 2012
Fed Officials Forecast Main Rate to Stay Near Zero Until 2015

A majority of Federal Reserve officials don’t expect to raise the main interest rate until 2015, when they forecast the jobless rate will fall to between 6 percent and 6.6 percent.

The date of the interest rate hike is a procrastinator's dream. It *always* appears to be about 2 years away. You know what they say. Never put off for tomorrow what you can do two years from now! This is no doubt a big shocker to the ivory tower crowd.

For what it is worth, this has definitely been one of my better calls since starting this blog.

January 31, 2008
The Death of Real Yields Continues

If I had but one prediction, it would be that it will grow increasingly difficult to make money off of money going forward. That's why I continue to track what I call the death of real yields.

Source Data:
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate

More Retail Employment Pain

The following chart shows nonstore sales divided by department store sales.


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It doesn't take a rocket scientist to see where department store employment trends are headed, although rocket science might help in establishing the exact trajectory. Sigh.

November 17, 2012
The Softer Side of Sears (Musical Tribute)


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See Also:
Retail Employment Pain
The Productivity Miracle of Nonstore Job Destruction (Musical Tribute)

Source Data:
U.S. Census: Retail Trade

Retail Employment Pain

Click to enlarge.

As seen in the chart, there was an exponential trend change starting in October of 2001.

See Also:
The Productivity Miracle of Nonstore Job Destruction (Musical Tribute)

Source Data:
U.S. Census: Retail Trade

Extreme Initial Claims Danger v.27

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The former trend in red continues to be very elusive.

See Also:
Extreme Initial Claims Danger v.26

Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims

The Sarcasm Report v.175

December 11, 2012
Give Away Your Money Before 2012 Ends

Done. Now what?

The World's "Bond" Is Not Enough (Musical Tribute)

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Source Data:
St. Louis Fed: Cash surplus/deficit (% of GDP) for the World

Imports: China vs. Mexico

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It looks to me like China's competitive advantage relative to Mexico has peaked. It happened during the Great Recession and we're well below that point now. I can't say with any certainty if the peak is permanent or simply temporary. I am willing to call it an exponential trend failure though.

In any event, I wonder what the savvy Chinese have to say about that?

Source Data:
St. Louis Fed: Custom Chart

All Your Source Base Are Belong to Us (Musical Tribute)

Click to enlarge.

Tombstone Generator

You have no chance to survive make your time.

Source Data:
St. Louis Fed: St. Louis Source Base

Institutional Money Funds vs. Equities

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Look at all that money patiently waiting for a miracle to occur.



This post inspired by the comments of Luke Smith which can be found here.

Source Data:
St. Louis Fed: Custom Chart

Household Net Worth vs. GDP

December 9, 2012
Gongol: Household net worth rises in America

That's good -- it's up to $64.8 trillion. But if the national GDP is $13.6 trillion a year, then we only have a national price-to-earnings ratio of 4.8. On Wall Street, that would be abominably low. Something here suggests that we're not pricing our work correctly, not pricing our net worth correctly, or doing an absolutely abysmal job of managing our household balance sheets. Or perhaps there's some other explanation to be found.

1. He's a bit off on GDP. It's actually closer to $15.8 trillion.

2. GDP isn't earnings. GDP represents economic activity. It's an opinion, but I'd say GDP is more like sales than earnings.

If one sticks with the business analogy, then that puts our price-to-sales ratio at a whopping 4.1 to 1. That seems pretty darned high to me, especially if one factors in our massive debt.


Click to enlarge.

If I was a gambling man, then I'd offer a long-term return to the median theory. Heck, I might even offer it if I wasn't.

And lastly, those who believe that the ratio should be over 4.4 must believe many more economic bubbles are on the way (in addition to the dotcom and housing bubbles which got us there before). High real interest rates would seemingly have little hope of doing it. That ship has sailed.

Source Data:
St. Louis Fed: Custom Chart

Real S&P 500 (October 2012 Dollars)

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There were clearly better times in all of recorded history to swing for the fences. For example, 1982 looks pretty darned good in hindsight. Got time machine?

As a retired saver, I cannot afford to take big risks with my nest egg. I have no job to fall back on if the gambling doesn't pay off.

This is not investment advice.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Real S&P 500 Index (October 2012 Dollars)

The Three Little Pigs

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BLOW IT DOWN... BUT, MAKE IT LOOK LIKE AN ACCIDENT.

Source Data:
St. Louis Fed: Custom Chart

Sears: The Best Tool for "Made in America"

December 7, 2012
Sears accused of misleading public on Craftsman line

Costello declined to say how many Craftsman tools were made in the U.S. and Hart, who filed suit against the retailer in 2004, isn't sure either. After the suit was filed, Sears took Craftsman tools off the shelves and blacked out the words "Made in America," she said.

The best tool for the job is apparently a black marker. Sigh.

See Also:
The Softer Side of Sears (Musical Tribute)
Our Pillars of Retail Strength

Married Workers per Capita

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In addition to changing demographics, rising divorce rates, and a poor economy since 2000, there's also the following.

October 9, 2012
As Protestants decline, those with no religion gain

"Protestant" is no longer America's top religious umbrella brand. It's been rained out by the soaring number of 'Nones' -- people who claim no faith affiliation.

For what it is worth, I'm a nonbeliever in a great many things. The resilience of the economy? The claims of politicians? A one true religion? You name it.

Rev. Albert Mohler, president of the Southern Baptists Theological Seminary in Louisville, saw a welcome clarity in the report, even if he didn't like the new picture in focus.

"Today, there's no shame in saying you're an unbeliever, no cultural pressure to claim a religious affiliation, no matter how remote or loose," Mohler says. "This is a wake-up call. We have an incredible challenge ahead for committed Christians."

Candy Mountain

Shun the nonbeliever. Shun. Shun.

Got kidney?

See Also:
Skepticism

Source Data:
St. Louis Fed: Custom Chart

41.0 Million Missing Jobs

Long-Term


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@#$%!


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@#$%!


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@#$%!

Short-Term


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@#$%!


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@#$%!


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@#$%!

Let's take it back to 1984 yet again.


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@#$%!

See Also:
40.8 Million Missing Jobs

Source Data:
St. Louis Fed: All Employees: Total nonfarm

The Layoff Lottery

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All things being equal, the odds of being laid off in a given week are currently 360 to 1. Employees haven't been this "safe" since the dotcom bubble and the housing bubble. Hurray.

Every nonfarm payroll worker gets a chance to play this game each and every week. Households with two workers get to play twice. It's just like playing Powerball. The odds are so much better though!

At 360 to 1 odds per week, the chance that a single worker can go 5 years without a layoff is 49%.

(359/360)^(52*5) = 49%

The chance that both workers in a two-earner household can go 5 years without a layoff falls to a much lower 24%.

(359/360)^(52*5*2) = 24%

That poses a serious problem for households which require two incomes to make the mortgage payments. Who thinks banks factored this math in when making the mortgage loans? I sure don't. Sigh.

And lastly, I strongly believe that we will return to the blue median trend line at some point in the not too distant future (and quite possibly well below it). Factor in that I've been a permabear since 2004. Your opinion may vary.

Disclosure: I've seen the unemployment lines twice in my life, which is pretty much par for the course. Look how many times I dodged the bullets though.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

Extreme Initial Claims Danger v.26

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I don't see how it is possible to blame all of this on the hurricane.

See Also:
Extreme Initial Claims Danger v.25

Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims

The Quote of the Year

November 21, 2012
Macau grapples with booming casino economy

“Macau is a complete illusion of prosperity because what we are building is only casinos, rooms and some shops with famous brands,” said lawmaker Jose Coutinho.

Good thing we know better!

Quote of the Day

December 4, 2012
Olive Garden parent cuts view on restaurant sales drop

Darden's promotions did not "resonate with financially stretched consumers as well as newer promotions from competitors", Otis said in a statement.

The Yule Backlog

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These are the stories that the Dogs tell when the fires burn high and the wind is from the north. - Clifford D. Simak

Source Data:
St. Louis Fed: ISM Manufacturing: Backlog of Orders Index

Manufacturing Construction Spending per Manufacturing Employee

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See Also:
Candy Mountain Revisited

Source Data:
St. Louis Fed: Custom Chart

The Health of Retail Trade Employment

First, let's go with what we are told.

BLS: Retail Sales Workers: Job Outlook

Employment of retail salespersons has traditionally grown with the overall economy, and this trend is expected to continue. Population growth will increase retail sales and demand for these workers.

Although consumers are increasing their online retail shopping, they will continue to do most of their retail shopping in stores. Retail salespersons will be needed in stores to help customers and complete sales.

Now that we've read that and have no doubt turned optimistic, let's go look at some actual charts to back the theory.


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Oh, yeah. That's looking real good long-term. We're not done yet though. Let's keep digging.


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When it comes to hours worked per week, we never did bounce back from the 1970s.


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Did I mention that we never did bounce back from the 1970s? Further, it would seem we've recently been attempting to duplicate the effect with high real oil prices and the added bonus of increased retail automation.

As seen in the following link, we apparently have some of the most educated retail workers in the history of our country. And yet, real hourly earnings have declined and continue to do so. If this isn't an illusion of prosperity then I don't know what is.

July 08, 2012
College Grads Find Retail a (Meager) Route to Job Market

Students with advanced degrees have been unable to find jobs consistent with their skill set, leading to a heavy influx of overqualified young people in retail positions that typically require no more than a high school diploma.

Source Data:
BLS: Current Employment Statistics
St. Louis Fed: CPI

Real Office Construction per Employee Added

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The line in black shows the money spent on office construction per month adjusted for inflation (October 2012 dollars, in billions). If one adds up all the monthly data and adjusts for inflation, there has been $588 billion spent on office construction since the year 2000.

The line in blue shows nonfarm payrolls. There have been 2.97 million employees added since 2000.

Since 2000, $198,000 has been spent on office construction per nonfarm payroll job added.

$588,000 million / 2.97 million = $198,000

Using hindsight, does that appear to be money well spent?

On the one hand, not every payroll employee added actually works in an office. On the other hand, not every office building that existed in 2000 still exists today. Sigh.

Is it really any wonder that office construction has been in a downward trend for the last decade or so? When job growth began to fail, so too the need to build new offices.

Source Data:
St. Louis Fed: Custom Chart

Fake Prosperity?

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Update:

Rob Dawg wished to see an exponential trend from 1961 to 1991.


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The chart above sums up why there was a question mark in my first chart. If the true trend is an exponential growth curve then we're right on trend for the most part. I just find it hard to believe that the dotcom bubble and the housing bubble got us there.


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And lastly, this chart captures the spirit of Rob Dawg's point. It's a fairly good fit. If this is the true trend then there is a bit more fake prosperity than the first chart shows (since the true long-term trend would be bending downwards).

Source Data:
St. Louis Fed: Custom Chart