• 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...]


Buenos Bonds


Should Argentina not pay its bondholders by Friday, it will default for the second time in 13 years. Argentina is paying investors who swapped their previously-defaulted bonds for new, less valuable bonds, but isn’t paying investors who refused the swap. A US judge is now prohibiting Argentina from … [Read more...]


Pot Percentage


The Friday File: Since recreational marijuana first became legal in Colorado on 1/1/14, an estimated 485,000 Coloradans, or 9% of the state’s population of 5.4 million, consume marijuana at least once a month. Of those 485,000 consumers, 30% or 145,500 persons, smoke pot or consume edibles more than … [Read more...]


House Holdings


Prior to the recession, the average homeowner’s equity percentage in their home was 60%. That percentage is now 53.64% and has been rising steadily since bottoming out at 36.6% in Q1/09. This suggests we are quite close to fully recovering. The catch: house prices are still 15% lower than they were … [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...]