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Can two senators end ‘too big to fail’?

Can two senators end ‘too big to fail’? Barry Ritholtz Washington Post, May 10 2013     Last month, an unlikely pair of senators — Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican — introduced a non-binding resolution calling for the end of the implicit subsidies that “too big to fail” (TBTF)…Read More

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Best Stock Market Indicator Ever: Unchanged at 96%; Secondaries Confirm ’Tradable’


May 18, 2013 John F. Carlucci 

Click to view The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money. See Is This the Best Stock Market Indicator Ever? for a discussion of this technical tool.

The charts below are current through this week’s close.
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S&P 500: Up 1001 Points


May 17, 2013 Doug Short 

Click to view Pre-market futures pointed higher and the S&P 500 obligingly rose at the open. This morning’s Michigan Consumer Sentiment surprised to the upside, and the Conference Board’s Leading Economic Index also rose more than expected. The index didn’t initially react to these reports. But around 2 PM, when the index was up about 0.49%, the buyers took charge and lifted the 500 to its closing gain of 0.95% for the day and 1.95% for the week. In round numbers today’s close at 1667.47 is 1001 points above the devilish intraday low of 666 on March 9, 2009.
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Liveblogging World War II: May 18, 1943

NewImage

Sturmbannfuehrer Gricksch for SS-Col. von Herff and Reichsfuehrer-SS Himmler:

The Auschwitz camp plays a special role in the resolution of the Jewish question. The most advance methods permit the execution of the Fuehrer-order in the shortest possible time and without arousing much attention. The so-called “resettlement action” runs the following course:

The Jews arrive in special trains (freight cars) toward evening and are driven on special tracks to areas of the camp specifically set aside for this purpose.

There the Jews are unloaded and examined for their fitness to work by a team of doctors, in the presence of the camp commandant and several SS officers. At this point anyone who can somehow be incorporated into the work program is put in a special camp.

The curably ill are sent straight to a medical camp and are restored to health through a special diet. The basic principle behind everything is: conserve all manpower for work. The previous type of “resettlement action” has been thoroughly rejected, since it is too costly to destroy precious work energy on a continual basis.

The unfit go to cellars in a large house which are entered from outside. They go down five or six steps into a fairly long, well-constructed and well-ventilated cellar area, which is lined with benches to the left and right. It is brightly lit, and the benches are numbered.

The prisoners are told that they are to be cleansed and disinfected for their new assignments. They must therefore completely undress to be bathed. To avoid panic and to prevent disturbances of any kind, they are instructed to arrange their clothing neatly under their respective numbers, so that they will be able to find their things again after their bath.

Everything proceeds in a perfectly orderly fashion. Then they pass through a small corridor and enter a large cellar room which resembles a shower bath. In this room are three large pillars, into which certain materials can be lowered from outside the cellar room. When three- to four-hundred people have been herded into this room, the doors are shut, and containers filled with the substances are dropped down into the pillars.

As soon as the containers touch the base of the pillars, they release particular substances that put the people to sleep in one minute. A few minutes later, the door opens on the other side, where the elevator is located. The hair of the corpses is cut off, and their teeth are extracted (gold-filled teeth) by specialists (Jews). It has been discovered that Jews were hiding pieces of jewelry, gold, platinum etc., in hollow teeth.

Then the corpses are loaded into elevators and brought up to the first floor, where ten large crematoria are located. (Because fresh corpses burn particularly well, only 50-100 lbs. of coke are needed for the whole process.) The job itself is performed by Jewish prisoners, who never step outside this camp again.

The results of this “resettlement action” to date: 500,000 Jews. Current capacity of the “resettlement action” ovens: 10,000 in 24 hours.

Schedule for Week of May 19th

The key reports this week are the April existing home sales on Wednesday, and the April new home sales report on Thursday.

On Wednesday, Fed Chairman Ben Bernanke will provide testimony on the Economic Outlook, before the Joint Economic Committee, U.S. Congress. Also on Wednesday, the FOMC minutes for the most recent meeting will be released.

----- Monday, May 20th -----

8:30 AM ET: Chicago Fed National Activity Index for April. This is a composite index of other data.

----- Tuesday, May 21st -----

No economic releases scheduled.

----- Wednesday, May 22nd -----

7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

Existing Home Sales10:00 AM: Existing Home Sales for April from the National Association of Realtors (NAR).

The consensus is for sales of 5.00 million on seasonally adjusted annual rate (SAAR) basis. Sales in March were at a 4.92 million SAAR.   Economist Tom Lawler is estimating the NAR will report a April sales rate of 5.03 million.

A key will be inventory and months-of-supply.

10:00 AM: Testimony by Fed Chairman Ben Bernanke, Economic Outlook, Before the Joint Economic Committee, U.S. Congress

2:00 PM: FOMC Minutes for Meeting of April 30-May 1, 2013

During the day: The AIA's Architecture Billings Index for April (a leading indicator for commercial real estate).

----- Thursday, May 23rd -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 345 thousand from 360 thousand last week.

9:00 AM: FHFA House Price Index for March 2013. This was original a GSE only repeat sales, however there is also an expanded index that deserves more attention. The consensus is for a 0.9% increase

9:00 AM: The Markit US PMI Manufacturing Index Flash for May. The consensus is for a decrease to 50.8 from 52.0 in April.

New Home Sales10:00 AM: New Home Sales for April from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the March sales rate.

The consensus is for an increase in sales to 425 thousand Seasonally Adjusted Annual Rate (SAAR) in April from 417 thousand in March.

11:00 AM: Kansas City Fed regional Manufacturing Survey for May.  The consensus is for a reading of minus 2, up from minus 5 in April (below zero is contraction).

----- Friday, May 24th -----

8:30 AM: Durable Goods Orders for April from the Census Bureau. The consensus is for a 1.1% increase in durable goods orders.

SIFMA recommends 2:00 PM market close on Friday in Observance of the Memorial Day Holiday.

Weekly Indicators: more of the month of ‘meh’ edition


 - by New Deal democrat

April monthly data reported this past week included significant declines in industrial production and capacity utilization, declines in several regional manufacturing indexes, and a big decline in both monthly consumer and producer prices. due mainly to declining gas prices. Retail sales were positive. Michigan consumer sentiment, mainly as to present conditions, reached a multiyear high, while future expectations remained in the basement. Due mainly to soaring building permits, the April LEI rose 0.6. Housing starts had a big decline.

Let's start our look at the high frequency weekly indicators again with transport:

Transport

Railroad transport from the AAR
  • +0.6% carloads YoY

  • +0.5% carloads ex-coal

  • +3.9% intermodal units

  • +2.1% YoY total loads
Shipping transport Rail transport had a second decent week, after turning negative for three recent weeks.  The Harpex index continues to improve slowly from its January 1 low of 352, and the Baltic Dry Index remains above its recent low.

Consumer spendingGallup's YoY comparisons have generally been extremely positive since last December, and were so again this week.  The ICSC varied between +1.5% and +4.5% YoY in 2012, so this was an extremely poor week. By contrast, the JR report this week also rebounded the upper part of its typical YoY range for the last year.

Employment metrics

Initial jobless claims
  •   360,000 up 37,000

  •   4 week average 339,750 down 3,000
American Staffing Association Index
  • 93 unchanged w/w, down -0.1% YoY
Initial claims spiked, but remained well within their recent range of between 325,000 to 375,000.  The ASA is still running slighty below 2007, but now essentially unchanged from last year as well. In other words, the comparison has been generally deteriorating on a YoY basis.

Housing metrics

Housing prices
  • YoY this week +6.8%
Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase makes another new 6 year record.

Real estate loans, from the FRB H8 report:
  • down 18 or -0.5% w/w

  • up 7 or +0.2% YoY

  • +2.1% from its bottom
Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  In the last several months the comparisons have softened significantly.

Mortgage applications from the Mortgage Bankers Association:
  • -4% w/w purchase applications

  • +10% YoY purchase applications

  • -8% w/w refinance applications
This year purchase applications have finally established a slightly rising trend, and this week's number was the best in 3 years.  Refinancing applications were very high for most of last year with record low mortgage rates, but decreased slightly since then.

Interest rates and credit spreads
  •  4.65% BAA corporate bonds up +0.13%

  • 1.70% 10 year treasury bonds up +0.13%

  • 2.82% credit spread between corporates and treasuries unchanged
Interest rates for corporate bonds have generally been falling since being just above 6% two years ago in January 2011, hitting a low of 4.46% in November 2012.  Treasuries have fallen from about 2% in late 2011 to a low of 1.47% in July 2012. Spreads have varied between a high over 3.4% in June 2011 to a low under 2.75% in October 2012.

Money supply

M1
  • -2.3% w/w

  • +2.5% m/m

  • +11.9% YoY Real M1

M2
  • unchanged w/w

  • +0.2% m/m

  • +5.8% YoY Real M2
Real M1 made a YoY high of about 20% in January 2012 and has generally been easing off since.  This week's YoY reading increased sharply.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It has increased slightly in the last couple of months.

Oil prices and usage
  •  Oil $96.02 down -$0.02 w/w

  • Gas $3.60 up +$0.06 w/w

  • Usage 4 week average YoY -3.1%
The price of a gallon of gas, after declining sharply in March and April, has risen again in May. The 4 week average for gas usage remained negative after previously spending nine weeks in a row being positive YoY.

Bank lending ratesThe TED spread recently increased again, but is still near the low end of its 3 year range.  LIBOR remained at its new 52 week low and is close to a 3 year low.

JoC ECRI Commodity prices
  • down -0.75 to 124.83 w/w

  • +3.81 YoY
After months of gradual deterioration, last week there were no negatives in the weekly indicators. This week was a great big "meh."

Positives included house prices, and YoY purchase mortgage applications. Money supply was positive. Overnight bank rates are somnolent. Consumer spending as mesured by same store sales were mixed, with two strong positives and one very week reading. Rail traffic had a decently positive week in over a month.

Negatives included commodities, real estate loans, mortgage applications, and the Baltic Dry Index, but these were all minor. The only real negative was the spike in initial jobless claims, which may or may not portend anything.

All in all, Meh. Have a nice weekend.

Noted for May 18, 2013

Leon Trotsky: Trotsky's Last Article (1940): Bonepartism, Fascism, and War | Bonapartism and Fascism (1934) | Leon Trotsky: The German Catastrophe (1933) | The Tragedy of the German Proletariat (1933) |

  • James Galbraith on Michael Kinsley: "Kinsley writes that all the ways of looking at the national debt 'lead to varying degrees of panic'. But obviously there is no panic where it matters, among those who lend money to Uncle Sam…. Nor is the present public debt close to being a record. In relation to our annual output it was much higher in 1946…. Did calamity follow? No. For a third of a century after the war, the debt-to-output ratio just gradually declined…. It's true that we have got big economic problems right now. But the budget deficit and the public debt aren't among them…. As for [Kinsley's] notion that a "typical" American surviving spouse leaves a cool half-million behind, only someone too lazy to distinguish a mean from a median could believe that. In 2004 according to the Federal Reserve mean family net worth for households with a head aged 65-74 was $690,900--I couldn't find where Kinsley got his $1 million--and the median value was only $190,100. This includes housing wealth, and those values would be lower today. Numbers are numbing, as Kinsley said. Is intellectual laziness a Boomer vice? I think not. It's a pundit vice, induced by easy access to choice venues for the publication of one's thoughts. The pity of Kinsley's essay is that we Boomers will, in fact, leave problems: for starters we burned the oil and we've warmed the planet. Those are grave matters and Kinsley might have written about them. But no: he chose to waste our time on a topic he hasn't troubled to learn the first thing about. Unemployment, on the other hand, is a real problem…"

  • Scott Lemieux: Great Moments in Self-Refutation: "Rarely does a (at least once-) respectable pundit face-plant as badly as Michael Kinsley re-proving Krugman’s points about austerity mongers while attempting to refute them. While it’s impossible to summarize an argument this incoherent, the key point seems to be that if you can’t tell the difference between Barack Obama and David Cameron (a problem that, admittedly, does afflict a handful of people on the American left) it’s hard to know what opponents of short-term austerity want…. Kinsley is one of those people who’s been haunted by the specter of inflation for years, and the fact that he’s been consistently wrong doesn’t seem to have taught him anything. And why should it — as he essentially concedes himself, the case for austerity is about overclass morality, not about economics."

Saturday links: harvesting hype

The weekend is a great time to catch up on some long form items that we passed up on during the week. Thanks for checking in.

Investing

Meet Dylan the day trader.  (Washington Post also TRB)

Is capital loss harvesting overhyped?   (Nerd’s Eye View)

Bad things happen in the markets.  (Morningstar)

Asset allocation, indexing and rebalancing.  (25iq via @researchpuzzler)

Education

How to be a better consumer of the news.  (Learn Bonds)

Seeing is not believing: on the use of charts and R-squared.  (Enterprising Investor)

Research

Does Wikipedia usage presage stock market moves?  (SSRN via @quantivity)

A study looking at the tradeoff between spending rates and shortfall risks in retirement.  (SSRN)

Finance

Just how useless is the asset management industry?  (Justin Fox)

The global securities lending industry is in flux.  (Economist)

When too much due diligence is counterproductive.  (A VC)

Economics

The Fed should care about blowing bubbles for the sake of the little guy.  (Dealbook)

The changing nature of work.  (Pieria)

Estimating trend growth using the CFNAI.  (Big Picture)

It takes companies and government to affect working conditions in the developing markets.  (New Yorker)

Jamie Dimon

Why JP Morgan Chase ($JPM) needs to split the Chairman and CEO roles.  (The Epicurean Dealmaker)

Why Jamie Dimon is the “indispensable man.”  (Businessweek)

Jamie Dimon needs a boss.  (Felix Salmon)

Facebook

The Facebook ($FB) IPO one year in.  (WSJ)

Morgan Stanley ($MS) has done pretty well one year after the Facebook debacle.  (Fortune)

Psychology

On the importance of framing.  (Above the Market)

Our decision making ability is affected by a range of effects.  (The Psy-Fi Blog)

Why rituals work.  (Scientific American)

Society

Are Millenials ever going to drive as much as their parents?  (The Atlantic)

Philanthropy is getting more quantitative.  (WSJ)

Are MOOCs the future of education?  (New Yorker)

How hipsters became so crafty.  (Newsweek)

Health

Your microbiome is more important than you think.  (NYTimes)

On the health hazards of loneliness.  (New Republic)

Why is Indian generic pharmaceutical maker Ranbaxy still in business?  (Fortune)

The Office

Do you remember when The Office was truly great television?  (Grantland)

27 lessons learned from The Office.  (Esquire)

Mixed media

An excerpt from Annalee Newitz’s Scatter, Adapt and Remember: How Humans Will Survive Mass Extinction.  (Newsweek)

Social networks as evolutionary game theory.  (FT Alphaville)

Baseball is not boring.  (American)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

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10 Weekend Reads

My longer form weekend reading material:

• How the Case for Austerity Has Crumbled (NYRB)
• The changing nature of work: Increasing automation is fundamentally shifting the nature of work away from ‘making stuff’ towards personal services. (piera)
That’s a ‘Depression’: Europe’s Double-Dip Is Officially Longer Than Its Great Recession (Atlantic)
• This Is Your Brain, On: How our minds work their way through the maze of consciousness (BookForum
• Dirty medicine: Epic inside story of long-term criminal fraud at Ranbaxy (Fortune) see also Meet the career con man who made a fortune selling illegal pharmaceuticals online—and pulled off a federal sting that forced Google to pay $500 million. (Wired)
• Jaron Lanier: The Internet destroyed the middle class (Salon)
• Welcome to the Programmable World (Wired)
• The Possibilian: The mysteries of time and the brain.  (The New Yorker)
• Secret Rocks: The $10 billion jewels industry is shrouded in beauty—and mystery. Is change about to come? (WSJ)
• The Dark and Starry Eyes of Ray Bradbury (The New Atlantis)

What’s up for the weekend?

 

Tepid Profits, Roaring Stocks
MI-BW020A_MKTLE_G_20130516183604
Source: WSJ

Links 5/18/13

Mediocre Poison Eaters And The Imperfection of Evolution National Geographic

Washington gets explicit: its ‘war on terror’ is permanent Glenn Greenwald, Guardian

“Astoundingly Disturbing”: Obama Administration Claims Power to Wage Endless War Across the Globe Democracy Now

U.S. authorities seize accounts of major Bitcoin operator Reuters

Senator calls for U.S. to join oil price probe USA Today

Wells, Citi Halt Most Foreclosure Sales as OCC Ratchets Up Scrutiny American Banker (SW) “Question No. 1, for example, is ‘Is the loan’s default status accurate?’” [boggles].

Sen. Warren demands to know why criminal bankers aren’t being locked up Raw Story (SW)

DOJ to press: “If you preempt my ability to spin out a story the way I want to, I’m going to ruin your source base” – Marcy Wheeler on Scott Horton Show Wheeler on AP (with more on biometrics).

Bulls vs. Bears

“Give the Market the Benefit of the Doubt” and Invest in Stocks: Barry Ritholtz Daily Ticker. Ritholtz: “WISH @YahooFinance STAYED AWAY FROM MAD HEADLINES”

In which Downtown Josh Brown destroys the 1999 comparison The Reformed Broker

Too Much Talk About Liquidity Paul Krugman, Times

Retiring Wall Street Strategist Gives Amazing Investment Advice Just Before He Quits Henry Blodget, Business Insider

Is This Another Bubble? We Can’t Know Without Better Data Editors, Bloomberg

Hans Rosling: the man who’s making data cool Guardian

Spotting Black Swans with Data Science Online WSJ

A Simple Graph That Should Silence Austerians and Gold Bugs Forever Atlantic. As if.

Global economy lacks strong source of demand growth FT

May consumer sentiment highest in nearly six years Reuters

Maersk Warns of Subdued Demand OnlineWSJ

As Greece Struggles with Debt Crisis, Its Shipping Tycoons Still Cut a Profit Time

China exporters at risk as buyers delay paying South China Morning Post

No, It Looks Like the House Has Not Unintentionally Eliminated the Debt Ceiling After All Dan Kervick, New Economic Perspectives

What Principles? Eschaton. Because #MintTheCoin. Also too.

Covering facts versus the ‘narrative’ CJR

Michelle Rhee and the Washington Post Taking Note

Sponsored Content Pretty Fucking Awesome America’s Finest News Source

Rob Ford in ‘crack cocaine’ video scandal Toronto Star. Ford is Mayor of Toronto.

Report: Canada could see indigenous uprising  Al Jazeera

The Baby in the Well New Yorker. “The case against empathy.”

Book Talk: Of apes and atheists – is empathy evolution? Reuters

Pope blames tyranny of capitalism for making people miserable The Age

What Do You Desire? n+1 (see also). NSFW (the acronym, not the media empire).

What about Marx? Understanding Society

Antidote du jour (furzy mouse)”

apes