• fast-fashion

    Poor Productivity

    During Q1 2014, GDP declined at an annualized rate of 2.9% while employment growth increased at a rate of 1.5% meaning more workers produced less stuff and labor productivity collapsed. The last time GDP fell this much and employment increased was Q1 1974, after OPEC quadrupled the price of oil … [Read More...]

  • TR007241

    Wonky Wages

    Seattle’s decision to boost its minimum wage to $15/hour, the highest anywhere, is bad policy. Unlike a rise in the federal minimum wage which affects all employers, this increase only applies inside the city. Thus, employers in low-wage industries in Seattle will be at a distinct financial … [Read More...]

  • The newspaper  GOOD NEWS  and coffee

    Nice News!

    On Monday we learned that existing home sales in May jumped 4.9% to a rate of 4.89 million/year, the best pace since last October. Better yet, yesterday we learned that new home sales jumped from a rate of 433,000/year in April to 504,000/year in May, the best activity level since 5/08 and that … [Read More...]

  • euro

    Mediocre Monetary Meddling

    Rather than using a cannon, last week the ECB used a popgun. By reducing the rate it charges banks on loans and by charging banks on deposits held at the central bank, the ECB hopes to spur lending. It won’t happen. Separately, it’s also finally injecting liquidity into the banking system. What … [Read More...]

  • percentage-dice

    Rotten Returns

    Why are rates so low? Let me count the reasons: flight to quality due to rising geopolitical risk, the Fed’s promise to keep short-term rates low for a long time, Japan’s massive monetary stimulus, the ECB’s decision to start printing money, weaker than expected US growth, no evidence of commodity … [Read More...]


Strengthening Sales


While existing home sales fell 2.3% in 6/14 to 5.04 million from 5.16 million a year earlier, don’t worry. Sales are at their highest level in eight months, and more importantly distressed sales are down from 15% of all sales in 6/13 to 11% of sales in 6/14. As a result, the number of non-distressed … [Read more...]


BRICS Banking


Other than their collective animosity towards the World Bank and IMF, the five BRICS nations, despite having little in common, being geopolitical rivals, and disagreeing on fundamental issues, have created a Shanghai-based Development Bank. While undercapitalized, the Bank’s major role will be to … [Read more...]


Troubling Trade


While the labor market, consumer spending, and capital expenditures are slowly improving, net exports are slightly weakening. When the Great Recession began, exports were flat while imports collapsed as our economy weakened much faster than the rest of the globe. Now, oil shipments are dramatically … [Read more...]


Alien Activity


The Friday File: Since 1974, there have been almost 90,000 reported UFO sightings worldwide, most in the USA! Washington State is number one in sightings per capita (and number two in total sightings behind California) followed closely by Montana and Vermont. Other states with relatively high per … [Read more...]


Abominable Abodes


Today’s housing numbers stank! Starts for Jan-June 2014 are up 6% compared to 2013, single-family starts up 1%! Multifamily is up 18%. With these numbers a premature rate hike will kill single-family construction. Yes, weather was bad, prices are up, financing is hard, incomes are down, student … [Read more...]


Peppy Profits


Tax inversion deals, where a US firm buys a foreign-based firm in a low tax nation and then locates the merged firm’s headquarters overseas, are particularly appealing for drug and computer chip makers. It’s because both generate substantial overseas profits that face heavy taxation if repatriated. … [Read more...]


Mixed Messages


While the unemployment rate, inflation rate, and job creation numbers are starting to improve, GDP growth, wage growth, labor force participation, labor productivity and home building remain weak. It’s as if the economy is schizophrenic! Since the Fed has no idea how this unfolds, it cannot provide … [Read more...]


Troubled Timing


While the CBO projects the Export-Import Bank will make a profit of $14 billion through 2024 if it continues borrowing at the subsidized US Treasury rate, at market interest rates the Bank will post a $2 billion loss. While hardly gargantuan, the Bank isn’t a profit center! That said, closing it … [Read more...]


Hurricane Henrietta


The Friday File: While Atlantic hurricane names have alternated between the sexes since 1979, it turns out hurricanes with women’s names are much more deadly. While names don’t matter for low-damage hurricanes, for high-damage storms the more feminine the name the more deadly the storm! People just … [Read more...]


Sorry Settlement


While Citi will soon pay $7 billion to settle with the DOJ over mortgage abuses, and BNP Paribas just paid $9 billion for violations of US sanctions, and recently JP Morgan paid $13 billion over various residential-backed mortgage securities, the problem is bankers don’t do time! These fines, large … [Read more...]