Sunday, November 30, 2014

Cyber Weekend Madness: Honey vs. Thingamabob

As is the case everyday, we "spent" some quality time with our pets.

Real prosperity, baby. That's what I'm talking about.

A Question for the Optimists: Where Did 5 Million Jobs Go?

The following chart shows the 2-year moving average of the employment level of those with no more than a high school education.

Click to enlarge.

In 2007, there were at least 48.5 million jobs that did not require more than a high school education.

In 2014, there are only about 43.5 million jobs that do not require more than a high school education.

So here is my rhetorical question for the optimists. Since overall employment levels have recovered, then where did these missing 5 million jobs go?

Don't you dare answer that the jobs are now being filled by recent college graduates. Trust me on this. I will start spouting student loan statistics and what it could mean to the future of housing in response. In fact, my spouting may never cease.

Don't you dare answer that the jobs have been automated. Once again, trust me on this. You don't want to go there. I'm likely to blow a fully automated spouting gasket.

Don't you dare mention leisure and hospitality employment as a fraction of all employment. That would definitely not be a good debate tactic.

Got gopher moat?

I learned that a one inch deep gopher moat won't contain a bear. Oh, I'm sorry. I already knew that. That's your lesson! You could have used your powers to turn into a dinosaur or another bear to fight him off, or you, an ice cage, but instead you did a gopher moat and now my son is dead.

Source Data:
St. Louis Fed: Custom Chart

Parabolic Trend Failure of the Day: Real Equity Capital for Commercial Banks (Musical Tribute)

The following chart shows the 5-year moving average of real equity capital for commercial banks.

Click to enlarge.

Source Data:
St. Louis Fed: Custom Chart

A Magic 8-Ball Guide to Business Leader Acumen

Magic 8-Ball

The Magic 8 Ball is a toy used for fortune-telling or seeking advice, manufactured by Mattel and developed in the 1950s. It is often used in fiction, often for humor related to it giving very accurate, very inaccurate, or otherwise statistically improbable answers.

The following chart shows the 12-month moving average of the future business activity diffusion index as determined by the business leaders survey.

Click to enlarge.

Business leaders apparently tend to be optimistic when all hope is lost and pessimistic when things can't get much worse. This explains why business leaders must always be paid the big bucks.

Acumen and future prosperity, baby. That's what I'm talking about.

Source Data:
St. Louis Fed: Custom Chart

Saturday, November 29, 2014

Brick and Mortar Stores' Worst Nightmare

The following chart shows the 2-year moving average of nonstore retail employment.

Click to enlarge.

I have good news, bad news, and a worst nightmare for the brick and mortar retailers.

First, the good news. Few Americans read Canadian Living. You therefore don't have to worry too much about consumers using smart phone apps that will cost you money. Hey, I'm just trying to start off on an optimistic note. It's the best I can do.

Next, the bad news. Nonstore retail employment was growing parabolically. That just can't be good for you over the long-term.

And now, the worst nightmare. The nonstore retail employment parabolic trend failed this year. Normally, you'd think a failure here would be good news, but, well, I don't really know how to put this, it kind of failed to the upside. Sorry about that.

We should not dwell on the negative though. This is fantastic news for our economy. Nonstore retailers have added 2,300 jobs since the peak in 2000. Hooray!

So what if  440,000 jobs have been cut by department stores since the peak in 2001? The employment bleeding can't go on forever, right? Over the long-term, we certainly can't lose more than 15.4 million retail jobs overall. That's just right out.

A tragic or comic plot is not a straight line: it is a parabola following the shapes of the mouths on the conventional masks. - Northrop Frye

Now would probably be a good time to once again point out that no economic parabola can grow forever, even ones which fail to the upside. It will more than likely end in tragedy and/or comedy someday, perhaps much sooner than most expect. In fact, the term "blow-off top" comes to mind.

Source Data:
St. Louis Fed: All Employees: Retail Trade: Nonstore Retailers

Music Employment (Musical Tribute)

The following chart shows the 5-year moving average of musical groups and artists employment per capita.

Click to enlarge.

It would seem that we're still winding down the party. Wasn't it a good one though?

March 27, 2014
The Consequences of Curtailing Music Education

If you have any attachment to music in the schools, you don’t need research or investigative journalism to know that things are in tough shape, not only here in the U.S., but across the developed world. The story has played out with some regularity for decades — economies boom and bust, school budgets get squeezed and music and the other arts take the first hits. The global economic downturn of the past two years has taken an especially hard toll on arts programs. Many school systems will have no music specialists serving elementary schools by next year.

Global economic downturn? Two years? Say what?

Fully automated robotic musical overlords, I beg you to take me to my illusionary happy place!

Thanks! That was a close one.

Source Data:
BLS: CES Database
St. Louis Fed: Population

Crude Oil Seems Broken

The following chart shows the 261-week moving average (~5 years) of the price of crude oil (WTI).

Click to enlarge.

The nearly perfect parabola giveth and the new nearly perfect parabola taketh away.

November 29, 2014
US crude oil price fall worst in 5 years

Saudi Arabia’s oil minister told fellow OPEC members on Thursday they must combat the US shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers.

Source Data:
St. Louis Fed: Crude Oil Prices: West Texas Intermediate (WTI)

Parabolic Trend Failure(s) of the Day: An Insurance Twofer

The following chart shows real household and nonprofit life insurance reserves per capita.

Click to enlarge.

This probably goes without saying, but the 1980s and 1990s are over.

Have no fear though. We've ushered in a whole new era of global insurance services exports!

Click to enlarge.

There has never been a better time, in all of recorded history, to bravely venture out into this financially innovative new world!

September 22, 2012
Fearless Man Bravely Ventures Out Into U.S. Economy

“One false move could bankrupt him or, God forbid, something worse,” he added. “Tax codes, mortgage lenders, health insurers—if he loses his footing for even a moment, he could plunge into bottomless debt.”

Agreeing that each transaction he makes puts him at further risk and brings him closer and closer to financial oblivion, leading economists nonetheless acknowledged a grudging respect for the single-minded courage of Ordway’s “outright suicide mission.”

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

Friday, November 28, 2014

The Sarcasm Report v.195

November 28, 2014
Cramer says bye-bye to bonds for retirement

Jim Cramer knows first hand that there is no such thing as a get-rich-quick scheme that can create sustainable long-term wealth; the most reliable way to make your money grow is to do so slowly and with prudence. But too much caution is also bad news.

That means that when it comes to retirement, you can't hide your money and cling to safety, just assuming you will have enough money when you retire. A little risk in stocks with higher returns will ensure that you retire wealthier.


A penny saved is a penny earned.

Save a penny, have a penny. Work an hour to fix a broken pipe, that's one less hour you'll need to work to fix a broken pipe. Work two hours now, save yourself at least two hours later. See how that works?

Teach your children these life lessons and they should probably do okay in life.


A penny invested is a dollar earned.

If we assume a yield of 10% over the long-term and assume inflation will be 2% over the long-term like many pension funds once assumed, then there will be a real yield of 8% over the long-term.

For each penny we invest as a baby is born, we can safely assume that the baby will have $1.01 when it reaches 60 years of age. All that from simply assuming a little bit of stock market risk! Early retirement, baby. That's what I'm talking about.

$0.01 x 1.08^60 = $1.01

I therefore suggest that college is a complete waste of time. As responsible parents, simply invest $20,000 at birth and the child will have $2.02 million at age 60 for retirement purposes (in today's dollars). Wow! This will also relieve a lot of the burden and expense of a good education. College is not cheap! Just set the children up in front of video game consoles until then and let the them enjoy life doing what they want to do. $20,000 each and you're done! There's no reason to push them. Let the investment passively do its work.

This assumes that the initial assumptions about investment returns are valid. And why shouldn't they be? Although past performance is not necessarily indicative of future performance, that's 100+ years of exponential growth history we're talking about! What are the odds these assumptions ever fail? Exponential trend failures are very rare events! I haven't personally seen and documented more than a few hundred of them since starting my blog! Okay, maybe a thousand. I have no idea really. Who's counting?

What's the worst that could possibly happen? Other than ZIRP, a debt addiction, anemic civilian labor force growth, and struggling real estate construction, we're nothing at all like Japan! Oops. I didn't mean to mention Japan in the optimistic part of my post. Sorry about that. Why don't you just assume that it doesn't matter. Many do!

Equity Market-Related Economic Uncertainty (Musical Tribute)

The following chart shows the 200-day moving average of the natural log of the equity market-related economic uncertainty index. A detailed description of this index can be found here. Once again, when using natural logs, constant exponential growth can be seen as a straight line.

Click to enlarge.

As seen in red line of the chart, the uncertainty floor was decaying exponentially heading into the dotcom bust.

So where are we now? As seen in the blue line of the chart, for as far back as this data goes, we have never been more certain about the equity markets (over a 200 day period)! Isn't that wonderful? We are even more certain than we were heading into the Great Recession. This must be a sign of everlasting prosperity for all!

For the first time in recorded history, the Fed has permanently put a stop to bad things happening to risk assets! That's right, just keep moving into risk-free risk assets and nobody gets hurt!

Keep moving? Ah, yes. That's exactly what the Hong Leong Bank of Malaysia wants us to believe. There's even a video! Run! Jump! Bike! Just don't stop or you'll sink.

Running, jumping and biking on 8,000 litres of non-newtonian fluid in Kuala Lumpur, Malaysia! Brought to you by Mach by Hong Leong Bank together with We are KIX.

What will those crazy banks think up next!

Seems like excessive sarcasm again? Seriously? It most certainly is not. It is the precise and appropriate level of sarcasm I assure you.

Don't believe me? Look, if I was going for excessive sarcasm then I would have played the following video instead.

When it happened again, the world called on him once more, and no one saw it coming... three... more... times. Now, the one man who made a difference five times before... is about to make a difference... again... only this time... it's different. Tugg Speedman... Scorcher VI... global meltdown... here we go again... again.

Source Data:
St. Louis Fed: Custom Chart

Parabolic Trend Failure of the Day: Employment Life Preserver vs. Towel

The following chart shows the 12-month moving average of the civilian labor force of those aged 65 and over.

Click to enlarge.

Those aged 65 and over are clinging to the life preserver.

The next chart shows the 12-month moving average of the civilian labor force of everyone else.

Click to enlarge.

Everyone else has thrown in the towel.

September 30, 1997
The Onion: Local Man Might As Well Just Give Up

Polk said that Ludauer recently embarked on an unsuccessful campaign to improve the quality of his life through a series of consumer purchases, which only served to compound his misery.

Source Data:
St. Louis Fed: Civilian Labor Force
St. Louis Fed: Civilian Labor Force - 65 years and over

A Well-Seasoned Labor Force of Future Prosperity

The following chart shows the 12-month moving average of the employment level of those aged 55 and over divided by the employment level of those aged 16 to 19.

Click to enlarge.

It's nothing but up from here! Woohoo!

Don't let it concern you that we're at the bottom of the rising channel again. I know that only happens during recessions but I have it on good authority that the Fed has permanently put a stop to them. Woohoo!

So what does this mean? As the oldest generations continue to work, the youngest generations can enjoy all that retirement has to offer. How cool is that?

As a long-term video game and pinball addict who remembers playing many, many hours of Asteroids, Battlezone, Black Knight 2000, Missile Command, Star Castle, Phoenix, Tempest, Defender, Scramble, Burger Time, Joust, Moon Patrol, Tron, Zaxxon, Robotron 2084, Missile Command, High Speed, Star Wars, Karate Champ, Sinistar, Bonzai Run, and Mad Planets (to name but a few) while in high school and college, I'd call that a win win!

And get this, I actually had to leave the house to play! You know, as an introvert, I was forced to interact with society at some basic level. Maybe even own a car and burn some gasoline in the process! That is no longer needed in this modern and financially innovative new world though! Woohoo!

Grand Theft Auto V

Grand Theft Auto V broke industry sales records and became the fastest-selling entertainment product in history, earning US $800 million in its first day and US $1 billion in its first three days.

One Rich Mother F*cker! - Grand Theft Auto 5 (15.4 Million Views So Far)

One rich virtual reality mother f*cker of prosperity, baby. That's what I'm talking about. Everything we could ever want, and more!

Not buying my theory? Ye of little faith! Let's zoom out to see the big picture.

Click to enlarge.

Unprecedented future prosperity! The future's so bright I gotta wear VR goggles!

October 29, 2013
The Onion: 27-Year-Old Lies About Every Single Aspect Of His Life To Keep Parents From Worrying

Rather than explain that he spent the past weekend alone in his apartment sleeping until the late afternoon and then playing video games, Hewitt went on to say that he has “been seeing all the sights in Boston,” claiming that he has already visited a museum and that he went to a Bruins game the other week.

Source Data:
St. Louis Fed: Custom Chart

Thursday, November 27, 2014

Banks Continue to Disbelieve the Rising Interest Rate Story

It is time for an update to a chart I did earlier this year.

March 21, 2014
Banks Don't Believe the Rising Interest Rate Story

Click to enlarge.

The data in black shows the interest rate spread between the typical 5-year CD and the 3-month CD on non-jumbo deposits. This series does not pay much attention to every little detail spoken by a Fed Chairman apparently. Just look how smooth and orderly the data moves.

The data in blue shows the interest rate spread between the 5-year treasury and the 3-month treasury. This series apparently loves to pay attention to every little detail spoken by a Fed Chairman. Just look how chaotically the data moves.

Based on the chart, banks sure aren't buying the rising interest rate story. Perhaps it might have something to do with the growing deposit glut. No matter how much lip service the rising interest rate story gets, banks still look at their deposits and no doubt wonder where the rising interest rates will ultimately come from. It's not like they are going to suddenly offer 5% CDs on a whim, now are they?

It's been 8 months. Let's see where we are now.

Click to enlarge.

Nothing has changed. Complete disbelief continues. Big shocker.

While we are here, we might just as well take a peek at the growing deposit glut. The following chart shows real deposits at all commercial banks per capita (October 2014 dollars).

Click to enlarge.

We're right on track.

Commercial banks now have more than $32,000 in deposits for every man, woman, and child in this country. Why would they need to raise interest rates when so much money is being deposited at low interest rates? Does anyone really believe banks are running a charity service? Can't you just picture Jamie Dimon saying, "I'd really like to give something back to the depositors today. I don't need to do it. I just think it would be a nice gesture. Let's raise CD interest rates by 1% across-the-board. So what if it cuts into our profit margins?" Yeah, right!

Perhaps I'm missing something, but rising interest rate environment my @$$. It would be one thing if all this money was finding its way to the poorest among us, but the growing deposit glut doesn't actually cause price inflation (at least not any time soon). Many things can cause the price of canned soup to rise, but hoarded money is not one of them. The money would need to be spent in order to make an impact. And from what I can tell, the richest among us can't eat any more soup than the poorest. No, I'll take that back. The richest probably don't even eat canned soup at all. Let them eat Kobe Beef!

This is not investment advice.

This update inspired by this post at Credit Bubble Stocks.

See Also:
The Growing Deposit Glut

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

Parabolic Trend Failure of the Day: Property Taxes per Capita (Musical Tribute)

Click to enlarge.

This parabolic trend failure is a Thanksgiving Day miracle!

Some of us may actually be able to stay in our homes over the long-term after all!

Thank you! Thank you! Thank you! Thank you!

I should probably temper my enthusiasm, lest state and local government employees storm my house looking for property tax leftovers. In fact, let's just keep this little secret to ourselves. Okay?

I've probably said this before, but were you aware that parabolic growth is not sustainable?

Source Data:
St. Louis Fed: Custom Chart

The Housing Geysers of Prosperity

The following chart shows the 2-year moving average of household owners' equity in real estate divided by the net worth of households and nonprofit organizations.

Click to enlarge.

February 14, 2013
Is Relying On Home Equity For Retirement A Good Idea?

Of Americans aged 50 to 70, 47% have reported that they are relying on home equity to fund their retirements, according to a survey conducted by Ameriprise Financial. This figure is an increase from the 39% that provided that response prior to the economic downturn. In addition, 37% responded that they are not currently on track to have their mortgages paid off prior to retirement.

Source Data:
St. Louis Fed: Custom Chart

Thanksgiving Fright Fest: Real Disposable Personal Income per Capita (Musical Tribute)

Last month I posted the following chart and commentary.

October 31, 2014
Halloween Fright Fest: Real Disposable Personal Income per Capita (Musical Tribute)

Click to enlarge.

As we head into the Christmas season, what's the worst that could happen?

Something bad definitely happened, although I doubt many noticed. Here is the new revised chart with one more month of data and a few bonus surprises (seen in blue) for the optimists.

Click to enlarge.

6 months of data has apparently been downwardly revised. I probably wouldn't have noticed had I not just done this chart last month. The data in blue shows the revisions. That's certainly one interesting way for the parabolic trend in red to fail. I did not see that coming, but then again, who could? Is it any wonder the typical investor and/or financial expert cannot spot a recession happening real-time?

Even though the data has been revised, I think I'll double down on my original commentary and go with the same musical tribute! Stick with what works I say!

As we head into the Christmas season, what's the worst that could happen?

And on that note, Happy Thanksgiving everyone!

It's a time to be thankful for all we have left! Um, I mean, thanks to the Fed permanently putting a stop to all future recessions, nothing bad can ever happen again! We therefore have an infinite number of reasons to be thankful! We have a thankful economy, with creativity and thankfulness! Thank you! Thank you! Thank you! Long-term thankfulness and prosperity and turkey and sarcasm, baby. That's what I'm talking about.

In all seriousness, Happy Thanksgiving. Hope everyone has a very pleasant day and can be as thankful as I really am. I am truly thankful that I was born when and where I was. That's just luck, pure and simple. I am most thankful for ample food, water, shelter, clothing, health, and preferably a hot bath or shower each day. Anything more than that is just a bonus to me, for it really is all I should ever need to be happy.

Source Data:
St. Louis Fed: Custom Chart

Wednesday, November 26, 2014

Revolving Credit (Musical Tribute)

The following chart shows the annual change in total revolving credit owned and securitized.

Click to enlarge.

Just when you think there is some hope, here we go again.

Forehead. Desk. Whack. Whack. Whack.

Source Data:
St. Louis Fed: Custom Chart
Versus: Where Politics and Culture Do Their Time in Rhyme

Housing: A Hair of the Dog That Bit Us

The following chart shows the 12-month moving average of the real median price of new homes sold (October 2014 dollars).

Click to enlarge.

Hurray! We're back in the trend channel at last!

The Ten Step Channel Sustainability Plan

1. Enormous income increases for the 1%!
2. Even bigger homes!
3. More custom heliports!
4. More olympic-sized hot tubs!
5. More luxury yacht moorage!
6. More granite! Walls, ceilings, and roofs!
7. More vacation homes for the richest!
8. More apartments for the poorest!
9. Dispatch the national guard! Contain the subprime!
10. Pray.

Sustainable prosperity, baby. That's what I'm talking about.

This post inspired by Exurban Nation's Sore Thumb Sticks out in New Home Sales.

Source Data:
St. Louis Fed: Custom Chart

Shopping Mall Anchors (Musical Tribute)

Anchor Store

Malls with anchor stores have consistently outperformed those without one, as the anchor helps draw shoppers initially attracted to the anchor to shop at other stores in the mall.

The following chart shows real monthly department store sales (excluding leased departments) per capita (October 2014 dollars).

Click to enlarge.

October set a new record low. Score one for anchor stores.

The legend lives on from the JCPenney on down
Of the big mall they call King of Prussia
The mall, it is said, never gives up or dreads
When the sales of November turn gloomy
With a load of Chinese goods twenty-six thousand tons more
Than this famous shopping mall weighed empty
Those discounts were true, just some bones to be chewed
When the sales of November came early

The mall was the pride of the American side
Was located in our Philadelphia
As the big malls go, it was bigger than all
With so many employees well seasoned
Concluding some terms with a few investment banks
Meant it was fully loaded for Christmas
But later that night when out went the lights
Could it be a last gasp they'd been feelin'?

The desperate sales made a tattle-tale sound
When Thanksgiving traffic was flailing
And every bank knew, and consumers did too
Was the loot of November worth stealin'?
The dawn came late so the turkey had to wait
When the prices of November came slashin'
When afternoon came it was squeezing pain
In the bills of a credit card headwind

When suppertime came, the old mom said her peace
Sayin' "Fellas, don't leave, I can't feed ya."
At seven PM the main meal was just cooked
She said, "Fellas, just where the @#$% are you?"
The son called and said, "Have a TV comin' in!"
But the good son and friends were in peril
And later that night with extreme trampling and fright
Came the wreck of that famous shopping mall

Does anyone know where the love of greed goes
When the raves turn the minutes to hours?
The searchers all say they'd have made this debt pay
If they'd had fifteen dollars behind it
They might have bought more or they might have all tried
They may have gone broke, underwater
But all that remains is the faces and the names
From the moms of their sons and their daughters

Tiffany has more platinum rings
In the rooms of that ice-water mansion
Deflation it screams like a young man's dreams
Its aisles and halls are for gamblers
And farther below, must Sears really go?
Takes in what few shoppers can send her
But the anchor stores go as the mariners all know
With the sales of November remembered

In a musty old mall in Detroit they prayed
In the big store once called Sears Cathedral
The church bell chimed 'til it rang twenty-nine times
For each advertised sale in the flyer
The legend lives on from the JCPenney on down
Of the big mall they called King of Prussia
"Superior!", they said. "Never gives up or dreads!"
When the sales of November turned gloomy

Source Data:
St. Louis Fed: Custom Chart

Tuesday, November 25, 2014

Dividends! (Musical Tribute)

Click to enlarge.

Source Data:
St. Louis Fed: Corporate Profits after tax with IVA and CCAdj: Net Dividends

Mount Shafta: The Ownership Society Is Over

The following chart shows the 5-year moving average of wages and salary accruals divided by rental income of persons.

Click to enlarge.

Things just haven't been the same since the volcano erupted.

Can nothing stop the pyrocashtic flow (a fast-current of hot money)?

Source Data:
St. Louis Fed: Custom Chart

Great News: We Have Solved All of Life's Mysteries

The following chart shows the 24-month moving average of physical, engineering, and life sciences research employment.

Click to enlarge.

The naysayers thought this economy couldn't create parabolic growth in hard science research again? This chart proves they were wrong! Parabolic growth indeed! Prosperity, baby. That's what I'm talking about.

In all seriousness, now that we have solved all of life's mysteries, we can usher in a new dark age of innuendo, hearsay, rumors, speculation, gossip, whispers, laundry balls, secrecy, suspicions, conspiracies, closed door meetings, eye witness testimony, faith, beliefs, Dianetics, intelligent design, opinions, trust, confidence, assurances, suppositions, conjectures, guesswork, presumptions, assumptions, astrology, séances, crystal healing, bloodletting, snake oil, colon cleansing, urine therapy, psychic surgery, channeling, ESP, ancient astronautics, perpetual motion, free energy, brainwashing, parapsychology, superstitions, paganism, rituals, sacrifices, old wives' tales, fishermen stories, chance, coincidences, mystic arts, the dismal sciences, illusionary prosperity, Mad Money, Fast Money, and last but not least, misinterpreted sarcasm!!

Whew! *deep breath*

Doesn't that sound wonderful?

November 25, 2014
The Onion: Nation Doesn’t Know If It Can Take Another Bullshit Speech About Healing

“I honestly don’t know if I’m physically capable of listening to another community leader recite the same unbearable garbage about how it’s time for an open and honest dialogue.”

Source Data:
BLS: CES Databases

My Nomination for Invidious Consumption Quote of 2014: "It will probably be outdated within a year."

Conspicuous consumption

Moreover, invidious consumption, a more specialized sociologic term, denotes the deliberate conspicuous consumption of goods and services intended to provoke the envy of other people, as a means of displaying the buyer’s superior socio-economic status.

Without further ado, let's get right to the nomination.

November 25, 2014
Behind Black Friday's giant, cheap TV deals

While a TV might function for 10 years, "it will probably be outdated within a year," says Louis Ramirez, a senior feature writer for

Back in my day, I recall watching a box that displayed moving pictures. That box was called a television.

Although it is true that the moving images have been getting better and the box has been getting wider and thinner over the years, I do not believe that the TV is going to magically transform itself into a fountain of youth within the next year.

Let me sum up what I require of my primary television. It needs to display moving images. That's it.

1. It doesn't need speakers.
2. It doesn't need Wifi.
3. It doesn't need an antennae.
4. It doesn't need a keyboard.
5. It doesn't need a coat rack.
6. It doesn't need a set of highly polished chrome wheels.
7. It doesn't need a vacuum with a variety of hose attachments.
8. It doesn't need a pop-out murphy bed.
9. It doesn't need a diamond and gold encrusted luxury enclosure.
10. It doesn't need a video camera tracking my every movement. It most definitely does not need that.

And yet, even without any of these things I am still able to watch shows live or on demand, play console games on the Internet, and binge watch Netflix until I risk becoming severely dehydrated. What more could I possibly want from a TV?

Keep in mind that these are just the opinions of a random anonymous old school retired codger who has chosen to inconspicuously consume as little as possible lest his nest egg run dry, lol. Sigh.

Real State and Local Personal Income Taxes: Third Time's the Charm!

The following chart shows the 12-month moving average of state and local government personal income taxes adjusted for inflation.

Click to enlarge.

There is one bit of good news here. The parabolic trend that's guaranteed to fail one way or another, hasn't failed yet. But before we become too euphoric over this taxation plan's long-term prospects, perhaps it would be best to think up a few alternatives now rather than later.

Plan B must be the property tax. That worked until it didn't, although one needs to give state and local governments credit for not giving up on the idea entirely.

Plan C must be the sales tax. Using "cheap" debt to entice people to consume more than they make while simultaneously cranking up the tax rate might work for a bit, but long-term? At the very least, a 100% sales tax rate does tend to slow consumption somewhat, especially in a world with stagnant wage growth. Just a thought.

Plan D must be state lotteries. If we can miraculously convince the richest among us to willingly embrace voluntary taxation, then it's a win win for everyone! How hard can that be?

Plan E could be a daily telethon. Just think of the entertainment value! Do it for the children! That's right, I'm thinking inside the TV box! Turn the government pleas for revenue into a 24/7 infomercial. On every TV channel! Until their daily goal is met! Prosperity, baby. That's what I'm talking about.

Plan F could be doing nothing. Just let the chips fall where they may. This really shouldn't be an option though. Trust me on this. An underfunded government is a dangerous government.

June 6, 2014
The Onion: New Law Enforcement Robot Can Wield Excessive Force Of 5 Human Officers

“We have done extensive testing with the AP-12 and we can say that these units are capable of carrying out everyday police work just as proficiently as any member of our force,” said police spokesman Gerald McClintock, who explained that the machine can be deployed to nearly any scene to which law enforcement officials typically respond, be it dispersing peaceful protesters by blasting a 14-nozzle pepper spray cannon or reacting to reports of suspicious behavior by immediately striking the knees, face, and throat of a potential suspect up to 10 times harder than its human counterpart.

Source Data:
St. Louis Fed: Custom Chart

Exponential Trend Failure of the Day: Motor Vehicle Loans vs. Wages

The following chart shows the 10-year moving average of motor vehicle loans owned and securitized divided by wages and salary accruals.

Click to enlarge.

If we want any kind of long-term financial stability, then there should be no growth in this chart at all, much less exponential growth. This is just insanity.

I therefore claim that someday this unsustainable trend channel must fail and we'll have a hell of a time getting back into it and staying there. Someday.

November 24, 2014
We're in an auto bubble: Here's how to play it

Brad Lamensdorf, portfolio manager at Ranger Alternative Management, tells Yahoo Finance that we’re absolutely in another bubble. He points to low quality loan exposure and artificially high auto sales because of easy credit.

I am a complete believer in the bubble theory. For what it is worth, I shall not be playing it though. I never play these things. I am content in long-term inflation protected treasuries and I-Bonds held to maturity, just like I was heading into the subprime housing bust. Been there, done that.

This is not investment advice. It is depressing though, I'll give it that. Don't worry, it could be worse.

August 4, 2008
The Onion: Nation To Try Its Luck Out West

Leaving behind the woes of their bustling cities, small mining towns, large auto-manufacturing towns, suburbs of auto-manufacturing towns, and the economically stagnant state of Nebraska, the pioneers will set out across the vast Western expanse with nothing but the promise of opportunity and a few old resumés. Although it remains unclear what they might find in that savage territory, some sources indicate the move may bring a significant boost in self-employment, prevent thousands of bankruptcies, and allow settlers an opportunity to learn agricultural techniques from the Mexican folk who sometimes wander over the border.

Source Data:
St. Louis Fed: Custom Chart

Monday, November 24, 2014

Janitorial Services Employment: Work Smarter!

The following chart shows the 12-month moving average of janitorial services employment as a percentage of nonfarm payrolls.

Click to enlarge.

As seen in the chart, I'd say a person with the right college degree should be able to "clean" up in our modern and financially innovative society over the long-term. And when I say long-term, I really mean until robots do the work of course. Sigh.

January 30, 2012

September 16, 1998
The Onion: Top-Paid Janitors

Who are the highest paid janitors in America?

Source Data:
BLS: CES Databases
St. Louis Fed: All Employees: Total Nonfarm

What Happens in Vegas...

October 2, 2014
Las Vegas economic recovery called ‘steady, plodding’

“It’s very clear that there’s a very steady, fairly broad recovery underway in Las Vegas, and it’s distributed across a lot of industries,” Muro said. “Las Vegas is piling up a series of quarters of pretty decent performance.”

In fact, over the course of human history, there has never been a surer bet!

The following chart shows the coincident economic activity index for Nevada.

Click to enlarge.

Ignore the short-term commentary in blue! Ignore the long-term parabolic channel in red! Ignore how we fell out of it both to the downside and then whipsawed to the upside! This "sure thing" is very clear and very steady! Can't lose! Lever up, bitches!

Prosperity, baby (needs new shoes). That's what I'm talking about.

Please forgive my "bitches" comment. I got carried away in the post-apocalyptic desert wasteland euphoria.

Source Data:
St. Louis Fed: Custom Chart

The Education Battle of the Sexes

The following chart shows the 12-month moving average of the number of women with master's degrees divided by the number of men with master's degrees (in the civilian labor force aged 25 years and up).

Click to enlarge.

When it comes to the workforce, women now hold 17% more master's degrees than men.

Men, what's our hope from here?

1. Construction employment will miraculously rebound?
2. Professional sports will need us more than we need them?
3. Prisons will expand?
4. Global nuclear war?
5. Beer?

Throw me a bone here! What's our plan!

Women, why are you doing this?

1. Want a better life?
2. Not buying the optimistic projections of future prosperity?
3. Still holding a grudge over the past several thousand years?
4. Tired of violent crime?
5. Or is it something else?

What is it! Inquiring minds want to know!

Source Data:
St. Louis Fed: Custom Chart

Burn, Baby, Burn

Click to enlarge.

To put this in perspective, each Btu can heat one pound of water by one degree Fahrenheit. There are approximately 632 billion pounds of people on this planet composed mostly of water. If we were to burn all of that energy at once each year, then we could heat every person on the planet by roughly 823 degrees Fahrenheit.

I suggest that we do not do this though, but instead continue to act responsibly when it comes to energy usage. You know, much like locusts act responsibly as they feed.

For what it is worth, I am no better than any other locust. I'm burning energy to create this post. I burn energy to heat my home. My car often has only one person in it, as does my girlfriend's car.

I doubt any of us truly believe that there won't be long-term consequences, if not necessarily for us then for those who come after us. And yet, we do it anyway. The desire to swarm remains high.

Speaking of the desire to swarm, Black Friday is only a few days away. Enjoy the plague!

December 6, 2010
Black Friday's plague

The problem with Black Friday, and all the black days to follow until the Christmas buying spree has run its course, is that it confirms the notion that our economic health depends on a continuously extracting materials from the Earth's diminishing supply. Planetary sustainability is threatened when we shop. Yet retailers depend on it.

Source Data:
EIA: International Energy Statistics

Work Smarter!

There are now more than 50 million people aged 25 years and up in the civilian labor force with a college degree or higher.

How much is the "or higher" part? The following chart shows the 12-month moving average of the percentage of college graduates who have more than a bachelor's degree (in the civilian labor force and are aged 25 years and up).

Click to enlarge.

As seen here, there were 12.4 million "or higher" in 2000. That number has grown to 18.7 million today.

My worry is that we seem determined to create very highly educated and very highly indebted coffee shop baristas. Perhaps I'm just imagining things.

March 27, 2013
Why a BA is Now a Ticket to A Job in a Coffee Shop

A new paper from Paul Beaudry, David Green, and Benjamin Sand argues that these worried kids--and their worried parents--are not just imagining things. The phenomenon is all too real. Skilled workers with higher degrees are increasingly ending up in lower-skilled jobs that don't really require a degree--and in the process, they're pushing unskilled workers out of the labor force altogether.

This whole economy is being Spackler'd. That's my opinion and I'm sticking to it. Sigh.

Source Data:
St. Louis Fed: Custom Chart

Sunday, November 23, 2014

Extreme Corporate Risk Taking

October 12, 2007
The New York Times: Maybe It’s Time to Restructure Executive Stock Options

The reasons for the poor performance of option-laden bosses seem obvious. An option holder will get rich if the stock soars, but he is no worse off if it falls a lot rather than a little. So a project with a huge possible profit may seem attractive even if a big loss is also possible, or even probable.

Kudos to the New York Times for publishing this article just before the Great Recession hit. Well done I say! Seriously, the timing was impeccable.

So let's try and imagine what an option-laden boss might be thinking now. We've seen the dotcom bust. Times have changed. Investors want dividends (especially during ZIRP). Well, fine. If that's what they want then that's what they'll get. The incentive to boost them would seem irresistible, at almost any cost. Hell, burn the seed corn if necessary! Right?

The following chart shows the 1-year moving average of corporate net dividends divided by corporate net cash flow.

Click to enlarge.

Other than another return to the median, what's the worst that could possibly happen? I'm speaking on behalf of option-laden bosses looking to cash out before it happens, of course.

Let's zoom in for a closer look.

Click to enlarge.

To infinity and beyond! Well, once we get these stupid dividend (chart) and net cash flow (chart) spigots oiled up. Both seem to be getting sticky again. The temporary prosperity must flow!

Lever up! If you engage in extreme risk taking by borrowing money to invest in extreme corporate risk taking then just think of all the money you could make! That's what makes parabolas (y = x²)! And if/when it all comes crashing down again, don't go blaming the option-laden bosses. Unlike you, the bosses stand to lose nothing if the risk doesn't pay off. That's what makes it such a sound business decision for them. Woohoo!

This is definitely not investment advice. There may be the tiniest hint of sarcasm though. But what's new?

Source Data:
St. Louis Fed: Custom Chart

Jobs of the Future: No Puppy Left Behind!

The following chart shows the 12-month moving average of pet care services employment (excluding veterinary).

Click to enlarge.

Career Outlook

1. Parabolic growth!
2. Perfect for recent college graduates!
3. It's the one job that can never be automated! Motivation

If a pretty poster and a cute saying are all it takes to motivate you, you probably have a very easy job. The kind robots will be doing soon.

Source Data:
BLS: CES Databases

Groundbreaking New Research in Computer Science Offers Hope for a More Prosperous Future

November 20, 2014
Journal Accepts Paper Reading “Get Me Off Your Fucking Mailing List”

A paper that largely consists of the words “Get me off your fucking mailing list” repeated 863 times has been accepted by a journal that claims to be peer reviewed. The move might appear to offer hope to scientists struggling to get marginal work published, but really just exposes the extent of scam publications pretending to be contributing to science.

Claims to be peer reviewed? For what it is worth, I reviewed the publication in its entirety. It seems like solid research to me. My only critique would be that the research is not comprehensive enough. I had hoped that it would apply to the Do Not Call list as well.

The move might appear to offer hope? Oh, I think it definitely offers hope. Anything that could get me off mailing lists would be a welcome change.

Exposes the extent of scam publications? I think not. As seen within the link above, the paper includes two very useful charts. I think charts can offer compelling evidence at times. Further, we may not trust either one of the charts individually, but as a group they should really make us think about mailing lists and how nice it would be to get off of them.

International Journal of Advanced Computer Technology (IJACT)

The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence.

I would provide you with a link to their site, but in the name of science I feel that it is probably best that I alone take the risk of visiting it. Think of me as your own personal "scientific excellence" firewall. Put another way, I wouldn't want your computer to get IJACT'd.

Prosperity and sarcasm, baby. That's what I'm talking about.

Exponential Trend Failure of the Day: Real Exports of Financial Services

The following chart shows the 3-year moving average of real monthly exports of financial services (September 2014 dollars). I have added two trend lines for your consideration.

Click to enlarge.

What a beautiful transition from one trend (in blue) to the other (in red)! I assure you that the data in black is actually there. You just need to look really closely for it.

I have bad news, good news, and more bad news.

1. The blue exponential growth trend failed.
2. Parabolic trends are even better!
3. Unless they're upside down.

So, on that note...

Hey world! We ain't done financially servicin' you yet!

Get over here!

What's it going to take to get you interested in buying the very finest modern and financially innovative services that our strong and resilient economy can provide again?

Limited time offer! Buy one global financial crisis at the regular price and get a second global crisis absolutely free! Just pay separate processing and handling. Limit 5 free crises per caller.

Source Data:
St. Louis Fed: Custom Chart

Saturday, November 22, 2014

Parabolic Trend Failure(s) of the Day: Real Nonfinancial Noncorporate Business Net Worth per Capita

The following chart shows the 10-year moving average of real proprietors' equity in nonfinancial noncorporate business (net worth) per capita (June 2014 dollars).

Click to enlarge.

$28,000+ for every man, woman, and child in this country? Perhaps I'm too cynical, but there are only two things that I genuinely trust on this chart.

1. Epic parabolic trend failure Tweedledum (r² = 0.9991).
2. Epic parabolic trend failure Tweedledee (r² = 0.9991).

Tweedledum and Tweedledee (comics)

Tweedledum and Tweedledee officially have no superpowers, but their fat bodies enable them to bounce and roll as they please.

Have I mentioned lately that I don't trust nonfinancial corporate business equities much either? Perhaps that stems from working at a company that experienced a massive accounting scandal, all under the watchful eye of the SEC.

September 27, 2007
Report: Cendant’s Silverman Knew about Fraud

Silverman, currently chairman and CEO of Realogy, a privately held real estate holding company spun off from Cendant, first learned of troubles at CUC on March 6, 1998, when Scott Forbes, then Cendant’s accounting chief, told him that he had been asked earlier that day to “help [CUC] creatively justify” $165 million in accounting entries, according to The Post.

Isn't that special?

Cendant’s accounting fraud was the largest before Enron and WorldCom. When the fraud came to light, Cendant’s market cap plunged by $14 billion in one day.

What's $14 billion among friends?

SEC: The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation

The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.

I'd start with, "Can I trust your accounting?" Follow it up with, "Do you creatively justify any of it?" Since you might not get straight answers, I'd also suggest using hidden thermal imaging tools.

February 2011
Thermal imaging as a lie detection tool at airports.

We tested the accuracy of thermal imaging as a lie detection tool in airport screening. Fifty-one passengers in an international airport departure hall told the truth or lied about their forthcoming trip in an interview. Their skin temperature was recorded via a thermal imaging camera. Liars' skin temperature rose significantly during the interview, whereas truth tellers' skin temperature remained constant.

Hey, just trying to think outside the box! I bring it up because your competition is definitely using cameras. If you don't have cameras too, then you are already losing the battle. Seriously.

November 26, 2010
This Black Friday, Somebody’s Watching While You Shop

The satellites snap pictures of hundreds of shopping malls, and analysts painstakingly count the cars in the parking lots of each one, looking to pin down the fill rates of each parking lot.

And people wonder why the average day trader loses money?

An Introduction To Day Trading

News provides the majority of opportunities day traders capitalize on, so it is imperative to be the first to know when something big happens. The typical trading room contains access to the Dow Jones Newswire, televisions showing CNBC and other news agencies, as well as software that constantly analyzes various other news sources for important stories.

I have never had nor will I ever have any desire to become a day trader.

This post was a journey. One thing kept leading to another. I better stop here or I risk going off on an H.P. Lovecraft tangent.

“It was from the artists and poets that the pertinent answers came, and I know that panic would have broken loose had they been able to compare notes.” - H.P. Lovecraft

Oops. Too late. :)

Source Data:
St. Louis Fed: Custom Chart

Future Employment Growth Index (Musical Tribute)

I believe that today's employment growth is being fueled to a large degree by putting people back to work. Once they are back to work, employment growth will slow considerably.

As such, I'm making an attempt here to come up with an index that can show the theoretical effect and see how this effect would compare to previous business cycles.

Future Employment Growth Index

1. There is a positive effect for a civilian labor force that is growing. As the civilian labor force grows there are more people able to work. It doesn't mean more people will work, it just means there is potential for it. The first part of the index is therefore the annual increase in the civilian labor force divided by the population.

2. There is a negative effect for an unemployment level that is falling. As fewer people become unemployed there are fewer people who could be put back to work. The second part of the index is therefore the annual decrease in the unemployed divided by the population.

3. I then combine the two effects and use a 24-month moving average to smooth out much of the volatility.

The following chart shows the results and hopefully offers some historical perspective on where we are now.

Click to enlarge.

What does it mean to be below 0%? Well, we're shrinking our unemployed faster than we're growing our civilian labor force. Clearly the employment growth we're seeing now is not sustainable. If the trend continues, we will simply exhaust our unemployment reserves and then employment growth must slow dramatically. We've done this in the past, but never to this degree (at least over the past 60 years anyway).

I really don't think "love drunk" investors will enjoy all the drama of exhausting the unemployment reserves, especially since I don't think many even realize what it would mean. It is common knowledge that the lower the unemployment rate is, the better our future economy will do. This ignores the fact that when things are as good as they can get, then things can't actually get any better. Further, things can actually get worse and often do.

I'm a start some drama
You don't want no drama
No, no drama
No, no, no, no drama

We can hope that as the labor market tightens, more people will feel compelled to join the civilian labor force again. There is therefore some hope that some of the drama can be mitigated to some degree. Yes, that's a sentence that uses the word "some" three times. Nobody can accuse me of being an optimist!

The following chart shows the 12-month moving average of the annual percentage change in the civilian labor force.

Click to enlarge.

If you can tell me where that data is headed from here then we'll both know. Let's hope it is up from these very anemic levels. I wouldn't even care to guess. I will say this though. One wonders how much of that recent decline was due to the taper tantrum and what the next tantrum might do.

October 8, 2014
Fed Worried About Triggering Another ‘Taper Tantrum’

“This likely reflects the scars from the ‘taper tantrum’ last summer,” when then-Fed Chair Ben Bernanke signaled that asset purchases might be scaled back sooner than investors expected, according to a note to clients from Bank of America Corp. Bernanke’s comments caused a jump in Treasury yields.

If I was the pilot on a cargo plane filled with expensive irreplaceable artifacts, the plane was very low on fuel, my company was optimistically pleading with me to perform a soft landing, all I could see in all directions was mountains and trees, and I was the sole person on the plane, then I would definitely consider alternatives to the soft landing idea. Performing a parachute tantrum might be one of them. But, hey, maybe that's just me, lol. Sigh.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

Friday, November 21, 2014

Quote of the Day: "Fed Has Boxed Itself In" (Musical Tribute)

November 20, 2014
Fed’s Bullard: Fed Has Boxed Itself In When It Comes to June Rate Hike

“The probabilities about when the Fed would move off the zero bound are all piling up on this June meeting” because the U.S. central bank has led observers to believe major policy actions can only happen at meetings with a press conference to explain what just happened, Mr. Bullard said. The Fed’s talk about “being data dependent isn’t as credible as it should be” given this situation, he said.

The following chart shows MZM own rate (the interest rate the $12.8 trillion liquid money supply is earning).

Click to enlarge.

The market is suggesting that the interest rate is reaching a bottom. For the first time since the Great Recession, I am therefore inclined to believe that the rate hike may actually be coming as predicted.

If so, this red parabola will fail, as all economic parabolas eventually do. The failure would be to the upside next year. I don't expect there to be a lot of fireworks the instant it happens though.

That said, I don't have much faith that the Fed will engineer a soft landing. Oddly enough, knowing that Janet Yellen's first major interest rate hike decision will be made from inside a box does not bring me any additional comfort. I intend to have the clown horn standing by just in case hilarity ensues, lol. Sigh.

As a holder of long-term treasuries (with intent to hold to maturity), how concerned am I about the rate hike? I'm not concerned at all. I welcome it wholeheartedly. I have a bond maturing in January of 2016 (purchased in 2006) and I would like to reinvest it. I therefore hope that the economy can avoid a recession between now and then. I'm just not holding my breath.

Source Data:
St. Louis Fed: MZM Own Rate

Exponential Trend Failure(s) of the Day: Real Dividends per Capita

The following chart shows the 4-quarter moving average of real dividends per capita (September 2014 dollars).

Click to enlarge.

The red trend was growing at a 17.9% annual rate before it failed. This compares very favorably to the mere 12.0% growth rate of the blue trend before it failed.

As seen in the r-squared values, the red trend was also much, much more of a "sure thing" than the blue trend. Well, before both trends failed anyway.

I remain a permabear. Some bulls seem to think it is a derogatory comment intended to shame me into submission. I own it. It is what it is. I have no desire to buy stocks again in my lifetime. Based on my long-term beliefs about the direction of this economy, I just can't imagine the conditions that would make me want to do it. I'm retired. I value safety.

Based on the contents of the chart, is it really a big shocker that the long-term treasury market has had a good year?

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

Thursday, November 20, 2014

Parabolic Trend Failure of the Day: The Rainbow of Prosperity (Musical Tribute)

The following chart shows the 5-year moving average of the natural log of the 3-month treasury bill yield. When using natural logs, constant exponential growth can be seen as a straight line.

Click to enlarge.

It’s a magical rainbow of hope and wonder!

See Also:
Charlie the Unicorn

Source Data:
St. Louis Fed: Custom Chart