Archive for July 2015
Madoff Money
The Friday File: Over the past 6.5 years, trustee Irving Picard has recovered almost $11 billion of the $17 billion stolen by Bernard Madoff. But this work has been costly. At $413.30/hour after a “public interest” discount of 10%, the 97,115.5 hours Picard’s team billed in just Q1/15 came to $40 million! All totaled, Picard…
Read MoreIncipient Inflation
While the inflation rate is about 0%, the price of goods is falling at 3.3%/year while services inflation is running at 2%/year. Goods are falling in price due to cheap imports, a strong dollar, excess capacity, and falling raw material prices. Services, like a haircut, cannot be imported and increases in the minimum wage impact…
Read MoreRate Reluctance
While the Fed did not raise rates at today’s just concluded interest rate setting meeting, they removed any semblance of date guidance and again told us that the data will determine when the first rate rise since 2006 occurs. No more training wheels. If both labor reports between now and mid-September are strong, I bet…
Read MoreHeading Home
Dropping Diesel
The cost of diesel is below the price of gasoline for the first time since 2009. Gasoline prices peak in spring/summer due to driving, while diesel demand peaks in autumn and winter due to agricultural activity and winter heating. Therefore, the price gap is widest in January and smallest in summer. Additionally, global demand for…
Read MoreMeaty Measurement
The Friday File: Assuming exchange rates and prices eventually adjust to make the same item equally priced everywhere, the Big Mac Index was developed. In Switzerland, a Big Mac is a whopping $6.82, its currency is hopelessly overvalued. In Russia, $1.88. Putin, clearly a meaty monetary master. These numbers should be taken with a grain…
Read MoreHigh Housing
June existing home sales hit their highest number since 7/06, and while the median sales price hit a record-high of $236,400, an inflation-adjusted price comparable to 7/06 would be $270,014. Part of the picture is that the number of distressed sales keep falling and the price index doesn’t adjust for the mix of homes sold.…
Read MoreGloomy Gold
Since hitting a high of $1,889/oz. on 8/21/11, gold has steadily declined and is now about $1,100/oz. Investors sought gold out of misplaced fears that inflation would run wild due to lax monetary policy. Now that the economy is out of the doldrums and rates are about to rise, gold is weak. This is very…
Read More‘Mazing Multifamily
While housing starts and permits are rising smartly, it’s entirely due to multifamily (2 or more units). Last month, multifamily starts enjoyed their best month since 4/88 and their best first half of the year since 1989! Moreover, in June multifamily starts were 41.6% of all starts, the highest percentage since 12/85. As for multifamily…
Read MoreHola Hispania
There are about 41 million persons age five and older in the US that speak Spanish at home. This makes the US the 4th largest fourth largest Spanish-speaking nation behind Spain at 46 million, Colombia at 48 million and Mexico at 121 million. If you add children under 5 and those who speak some Spanish,…
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