More on the G8 Deepression!

So, here we go, this just adds more ammunition to the obsolescence of human capital.  For those keeping score at home, 25% unemployment is depression level...

The Jobless Effect: Is the Real Unemployment Rate 16.5%, 22%, or. . .?

By PALLAVI GOGOI Posted 12:00 PM 07/16/10 Economy, Careers

Comments: 151 Print Text Size A A A

EmailMore

Raghavan Mayur, president at TechnoMetrica Market Intelligence, follows unemployment data closely. So, when his survey for May revealed that 28% of the 1,000-odd households surveyed reported that at least one member was looking for a full-time job, he was flummoxed.

"Our numbers are always very accurate, so I was surprised at the discrepancy with the government's numbers," says Mayur, whose firm owns the TIPP polling unit, a polling partner for Investors' Business Daily and Christian Science Monitor. After all, the headline number shows the U.S. unemployment rate today is 9.5%, with a total of 14.6 million jobless people.

However, Mayur's polls continued to find much worse figures. The June poll turned up 27.8% of households with at least one member who's unemployed and looking for a job, while the latest poll conducted in the second week of July showed 28.6% in that situation. That translates to an unemployment rate of over 22%, says Mayur, who has started questioning the accuracy of the Labor Department's jobless numbers.

Even Austan Goolsbee Has Been Skeptical

Mayur isn't alone in harboring such doubts, nor is he the first to wonder about inaccuracies. For years, many economists have pointed to evidence that the government data undercounts the unemployed. Economist Helen Ginsburg, co-founder of advocacy group National Jobs For All Coalition, and John Williams of the newsletter Shadow Government Statistics have been questioning these numbers for years.

In fact, Austan Goolsbee, who is now part of the White House Council of Economic Advisers, wrote in a 2003 New York Times piece titled "The Unemployment Myth," that the government had "cooked the books" by not correctly counting all the people it should, thereby keeping the unemployment rate artificially low. At the time, Goolsbee was a professor at the University of Chicago. When asked whether Goolsbee still believes the government undercounts unemployment, a White House spokeswoman said Goolsbee wasn't available to comment.

Such undercounting of unemployment can be an enormously dangerous exercise today. It could lead to some lawmakers underestimate the gravity of the labor market's problems and base their policymaking on a far-less-grim picture than actually exists. Economically, and socially, that would make a bad situation much worse for America.

"The implications of such undercounting is that policymakers aren't going to be thinking as big as they should be," says Ginsburg, also a professor emeritus of economics at Brooklyn College. "It also means that [consumer] demand is not going to be there, because the income from people who are employed isn't going to be there."

Indeed, it will add additional stress to an already strained economy. Businesses that might start ramping up after seeing the jobless number drop could set themselves up for disappointment when customers don't appear or orders don't flow in.

College Grads Serving Fries

Plus, having a job today is quite different from what it was just a few years ago: Many Americans have had their hours cut and are working for less pay. A Pew Research survey found more than half of all adults in the labor force had either lost a job or suffered a reduction in income because of the recession.

Ginsburg says the biggest source of undercounting comes from people who can't find a full-time job that they're qualified to do, for instance recent college graduates who take part-time jobs at fast-food joints or retail stores. Today, the Labor Department estimates that 8.6 million people are in this category.

The federal government counts such people as employed. However, polls show that these folks actually consider themselves "unemployed" and "looking for a job," and probably accounted for a large chunk of TechnoMetrica's respondents.

Jobless Workers Who Disappear

Another major source of undercounting is the unemployed who've given up looking for jobs. The Bureau of Labor Statistics headline number counts as unemployed only people who have actively looked for a job in the previous four weeks. About 2.6 million people had pursued jobs in the past 12 months but, discouraged by the lack of opportunity, had stopped looking altogether.

"Isn't it interesting that if you stopped looking for a job, you evaporate as a jobless person and are just not counted," says Gerald Celente, director of Trends Research Institute in Kingston, N.Y. Celente believes this kind of undercounting has suited the government politically. "It's what government does: Downplay disasters and amplify success."

According to the Pew Research Center, a large number of people are out of jobs for a longer period during this economic downturn. The typical unemployed worker today has been out of work for nearly six months. That's almost double the previous post-World War II peak for this measure, which was 12.3 weeks in 1982-83.

Indeed, if all of the truly unemployed were counted, the rate would be significantly higher. The BLS, in a data point titled "U-6," says it counted the total unemployment rate in June at 16.5%.

Misreading Americans' Anxiety

However, John Williams, founder of Shadow Government Statistics, says when accounting for the long-term unemployed, the jobless rate runs up to as much as 22% currently. Williams's newsletter, which analyzes flaws in government economic data, points out that such a rate isn't that far from the 25% it hit during the Great Depression.

Both Celente and Ginsburg believe lawmakers' not-dire-enough view of unemployment is one reason why they didn't extend federal unemployment benefits. Of course, party politics is another deterrent. Ginsburg says the Administration's decision to tackle the health care reform over unemployment reflects its lack of priority.

By taking his eye off one of the most fundamental issues affecting the country, President Obama has seen his popularity sink. The most recent Public Policy Polling survey says 45% of voters approve of the job he's doing, while 52% disapprove -- the first time Obama's disapproval ratings have exceeded 50% in this survey.

It's obvious that Americans view unemployment more urgently than either lawmakers or the president. And if pollsters like Mayur or economists like Ginsburg and Williams are right, it will take longer to fix this hole because it's already bigger than Washington thinks.

Tagged: Austan Goolsbee, bureau of labor statistics, employment, jobless recovery, joblessness, jobs, Labor Department, real jobless rate, unemployment, unemployment benefits, unemployment benefits extension, unemployment rate

Print

EmailMore

Read more >>

Goodbye Human Capital You Are Obsolete

Summary

Joblessness has been a stubborn stain on the fabric of the world economy. No matter how hard you rub it just keeps reappearing. Now the fabric is so stressed it's in danger of tearing. Let's face it a patch on this garment, is well... a patch, much like the "Toughskin" jeans budget conscious Moms with ruffian boys that wore out knees in two days flat bought. Heck it took about a month before you could even bend those pants at the knee, and the only thing left of the jeans after full use was the patch. OK... well I digress.

 

Joblessness is pervasive and it's not going to get better, and we better figure out a better way to deal with it or, it will undo the us humans. When you think about the reasons it is so prevalent I always hear the symptoms, but the public debate on the disease is non-existent. We've heard over and over again everyone lament the arrival of the personal computer in the mid 80's and how it was going to make humans obsolete. Then when the 90's came it was wow they are actually creating more jobs. It's the new economy, things are going to be grand our future's so bright we have to wear shades. Well Sunshine the last ten years in case you haven't noticed technology has been hard at work making jobs, or human capital obsolete, and in this next decade I predict that we are going to lose even more.

 

Introduction

Several years ago perhaps even a decade ago I took a very personal interest into learning about Japan. It's customs, history, the present and it's likely future. It is still a subject and a country and people I admire and follow with great interest. Many things struck me about the Japanese culture and the prophecies about its future, which ten years ago were relatively dire. One in particular caught my eye. If you know anything about the culture, know this they have 120 Million people in a country roughly the size of California, of which less than 1% can be described as resident immigrants.

 

Japan has also been in a state of zero to negative population growth, for at least 15 years perhaps even more. With a rapidly aging population and a dwindling younger work force, Japan was heading for a reef in a gale. An article I read at that time posited, with grave concern, that at some point the Japanese would have to open up their borders more and allow more immigrants into it very insular society in order to keep their economic engine going. I was intrigued as this represented a huge opportunity in seeing a culture assimilate diversity, something it really didn't have to do even with the arrival of "The Black Ship" as it is referred to in their history. Although, outside looking in it might have well been the "good ship lollipop". This was no doubt the makings of a grandiose anthropological social study of sorts. Although five years ago I after waiting for this impending disaster I began to see a different outcome. It has been ten years, since I read that doom and gloom on the Japanese and I'm still waiting, but I know now that it will not happen.

 

The reason why you ask was strangely prophecied in the Styx song Mr. Roboto, and the phrase Hello Arigato Mr. Roboto. This song was popular in the eighties, and strangely the lyrics fit so well to our current situation and Japan. 

http://www.answers.com/topic/mr-roboto

 

Non human automation is permeating our world.

When I call on a new company or companies I am amazed that 85% of the time (anecdotally of course) I don't get a real person I get an auto-attendant. Before I even get to a real person I have to go through an auto-attendant. I'm not complaining, I can't really, because my home phone system has one too available with either a French, Spanish, British, English or Japanese language menu and voice to choose from. I paid $400 for mine and I don't need a receptionist. The idea of a secretary today is obsolete, now it is best to describe a personal assistant as an executive assistant and they are required to do a lot of things and one of them isn't short hand. A great deal actually requires that they spend a lot of time looking and gathering readily available stuff on the internet and synthesizing it so that I can consume it quickly and easily, without having to do it myself. However, once it was done I had to make up stuff to justify the salary I was paying. When business got slow I found I had more to keep up and could get along without the help. It was a luxury not a necessity.

 

I don't have to go through the thousands of examples but technology and yes robots are building cars, fixing and dispatching people, i.e. wars (drones), oil drilling, exploring, mapping, trading, manufacturing, acting and mining. We have probably already retired the last human fighter ace as unless a big war breaks out the next generation fighters will be pilotless. The pace of change and impact to our world is accelerating and is already moving faster than are political and financial systems can react.

 

Are we beyond paving the cow path?

In my view 90's, particularly from 1988-2000 was more or less paving the cow path, and the decade since was straightening the meandering path and making it into a two lane road in either direction. We can expect the next decade to be eight lanes in either direction, i.e. the proverbial technical super highway. By way of cow path's, we had these great pastures of green fields, i.e. mainframes, pc's and the introduction of the early internet from which we had to rely on a cow path of human and technologically less convenient ways to connect and reach each other through communications and commerce. With the advancement and "ubiquity" of the internet and robust adoption and lower cost of entry we have made great strides at eliminating the inefficiency in the cow path and we have paved an eight-lane super highway.

 

In many respects we could probably do better to recognize this advancement for what it is worth, a great potential for social upheaval and re-invention. Case in point, at another critical time in our financial history, e.g. the Depression of the 1930's we were embarking on a similar trajectory the beginnings of the industrial revolution. Its promise was sold during the roaring twenties, but with it came a huge displacement of worker resources the likes we haven't seen until now. It took nearly a decade and a half for the newly available human resources to be soaked up, but it also relied on the heavy intervention of Uncle Sam and a major world war.

 

The promise of the technological age and the fears of the computer displacing jobs as was predicted in the mid- 1980's and roaring nineties is now upon us, and the pace of technological impact is increasing in velocity and breadth. We are well past the point of having paved the cow path. For the last ten years road crews have been straightening and widening the path to carry commerce and services to new places. Remember that with every new highway, built or augmented for higher speeds and more traffic a town or cottage is threatened while new ones rise to become the new stop to commerce.

 

Back to Japan

Of course the pundits had it wrong, they commented on Japan without really understanding its culture. Japan will at all cost avoid the scenario of having to open its borders to more immigrants, they have staved this off to some degree by moving manufacturing offshore to other countries to find cheap and plentiful labor, however at the same time they poured amazing amounts of energy and resources into robots. Robots are Japan's answer to their cultural zero-negative population growth, and it's beginning to show. Toyota, recently announced plans to reduce the cost of their cars by 30% in the next three years. Their admitted strategy was to eliminate this cost by redesigning 165 components that can be shared across platforms. However, reading between the lines the bigger advantage is looking for common components that can assembled easily and reliably by robots. Believe that this is an effort to completely eliminate the need for human assembly. They recognize this and rather than come out and say it they are likening it to single sourcing components.

 

We are a victim of our own success...

I marvel at the ability of anyone with an idea for a product or services to start a cottage industry, be it blogging, or an online store like www.thriftyscrimper.com which sells new money saving ideas like making your own commercially viable cigarettes or home use soda for one tenth of what you would pay at the grocery store. Making cigarettes for $.80 a pack certainly has it's cachet, especially when the recent tax increase made a pack of smokes $11 in NYS( not the city). Soda another targeted health hazard in NYS for taxes can be had for .10 a glass, once again. These two ideas alone if you drink two glasses of soda a day per family member and smoke a pack a day can easily save a typical American family a substantial amount of money equivalent to a luxury car payment a month.

 

I know I appear to be meandering here but what I wish to point out is that the companies selling these products are on the internet and they are not mom and pop stores, they are one person shows. The video production and editing featuring the products on this site may not be standard commercial quality, but if you looked to do the same task ten years ago it was very much a commercial endeavor most likely requiring a budget in the tens of thousands. It can all be accomplished now in an afternoon with a small investment of just a few hundred dollars. A whole studio of equipment for recording, the how to create rich and informative content and the conduit for distribution to your target audience can be had for free, via you tube and your free web store with PayPal.

 

A published brochure as slick as any company can put together can be accomplished with the barest literacy skills and technical know how. We are in the age of commoditization. Nothing is now sacred everything can be mass produced and done with a particular target market segment in mind. Even down to the individual. We were striving for cookie cutter, which we accomplished. The next challenge was making my cookie with sprinkles and Susie's with chocolate chips, that day is here. What used to take ten people to accomplish 25 years ago now takes one.

 

 

So now that we are here now what.

Well this is indeed a conundrum. We are now faced with jobs the most highly skilled and coveted jobs are being targeted and annihilated at a radical breakneck pace, and its going faster. Our local hospital just announced its new addition to the surgical team, a robot. Making simple to even complex surgeries cookie cutter, repetitive, unremarkably consistent and cost effective. Look at this video of the Da Vinci surgical system from 2007, I dare you to tell me that three years later that we aren't even further along.

 

What would likely take two or three doctors working together and a bevy of support personnel now takes 1/3 the resources and with very consistent outcomes and extremely positive and quick recovery scenarios.

 

 

What is next?

Clearly we are at an inflection point in human history where humans are rapidly approaching a point in time where we have more leisure hours than work hours, all the drudgery of work is being replaced, by the skillful application of technology. That was the end result of the last ten years, which resulted in the displacement of the support staff surrounding high skilled and trained resources. The next seven years the focus is on replacing highly skilled jobs the jobs with the higher wages and costs. This is clearly the cartoon of the ladder burning up to the top rung, before the character teeters onto the ash of what was once a sturdy structure. Corporate profits have been surging as technology has trimmed the costs dramatically in all aspects of productions and services. CEO's have taken the credit with a few as being in the right time and place have been compensated quite well. Even shareholders have benefited as dividends has been robust save for that scary period of 2008.

 

But now the dawn of realization is upon us. We have created a huge issue not just for ourselves, but for even countries like China with rich resources of human capital which are on the verge of being made obsolete. This is a huge issue for China as they are already struggling to transition from a rural feudalistic mindset to that of an industrial powerhouse. Goods no longer can be produced cheaply and reliably with high quality with human labor as cheaply as a robot. So do they themselves invest in robots or do they continue to keep throwing people into the mix. The trend of the manufacturing assets being located in third world countries is past. The manufacturing assets coming on line in the last five years require mature and robust infrastructure. This is great news for the US. With a more reliable infrastructure and access to highly technical industrial complexes, than most up and coming emerging markets the manufacturing will likely start to drift back to western shores. Unfortunately it doesn't help the jobless, but it does help the economy.

 

Razors edge…

The balancing act required now centers on what to do with a persistent and chronic idle workforce. Twittering, You Tubing and Facebooking are keeping them engaged now, but how long will this last. The new industries (green energy, education and healthcare) as part of Obama's vision will take at least five to seven more years to make a meaningful commercial impact, the natives are restless now.

 

What is left but to expand social programs to fill the gap, but where does the money come from. We have a deficit of which didn't exist in the last Depression. This is increasingly looking like some really hard decisions will be coming down the pipe. For instance, think about how in the Depression, that era called for the outlawing of private citizens owning and exporting meaningful quantities of Gold. Could this even happen today? If the government were to attempt to do this we would have a civil war.

 

Today, the US has the largest gold reserves of any one country in the world, this is quintessentially a direct result of a seemingly dictatorial, authoritative and socialistic move made by FDR. We are much better off for having done this and secured the nation's future as a bedrock of financial stability.

 

The alternative that we will tax the companies more and close loopholes and fund these expanded government programs to provide for the idle working class, this is a really bitter pill one that could also result in a pretty unsavory outcome.

Perhaps this is the medicine we must now take to get better.

Another alternative is to stay the course. This sounds draconian but I'm betting as it seems the US government is too, that infrastructure is the trump card, as is a stable political system and a robust means with which to defend itself and the interests of its citizens (companies included). We have that, and no one else in the world has what we have. The robots and high technology need this or they are useless. We have the edge and will continue to expand this edge, but it's not the companies role to do this, it is the governments role.

 

Another alternative is to shrink government drastically and declare everyman for himself. Which will be translated to take to the streets and let's fight it out. Either solution has it's hair on it, either side is an extreme, and middle ground is a razors edge. This is evident in the debate permeating our financial and political commentary. No one side is happy, as there are now good alternatives, more socialism or more unbridled capitalism. This is an inflection point, there is no good room with a view. We must remember that united we stand divided we fall is a concept that made us impervious to ruin and right now we are divided. What we need is for everyone to pitch in and do their part to make this a collective effort.

 

What are the hard choices now. We can't go on spending, we can't increase taxes and we can't decrease spending. We are what is commonly described in sailing vernacular as being stuck in "irons" heading into the wind waiting for the wind to make the decision for us as to which direction to go. We need to pick a direction with which to move forward and stick with it for more than "ten minutes" and if we are wrong we can double back at least we will have eliminated what we shouldn't do.

 

Read more >>

The Case for DOW 4500 WATCH IT Unfold! - Week 10

Well, at this level we could expect follow through to 10,200 up to 10,300 as a this minuscule relief rally forces shorts to take some profits.  It will be interesting once Europe vacations start up how the market will react.  10,138 as evidenced by the chart is a critical level where that and the aforementioned levels represent huge confluence Fibonacci levels.  I would keep watching the European and IMF statements about the dollar, as there have been major efforts to talk down the dollar in the past month, as remarked upon in my Token vs. Economy articles.

As far status on the massive 20 head and shoulders of which we are at week 10 since the Goldman Top, we are still on target, for DOW 4500.  I continue to be an advocate of selling all rallies, as the economy still has a significant of gravity pulling it down.  10,197 is a minor Fibonacci retracement line, however being that this is a monthly chart it is still pretty significant.

Read more >>

Huh?..? More hedge Funds Launches... or Losses

So if I am to understand the first article we can expect more fund launches in 2010... and this statement is basically factual, as new funds are always launched.  What matters most, is how many funds close during the same period and what is the net.  Given the last two, of the three articles, written by the same author.  It appears to negate the relevance of this survey which is likely strongly biased as hedge fund managers clearly hope that more investment money is coming in.  The twenty percent that called for more funds to close this year than last are the ones I 'd like to have manage my money.

Hedge fund managers predict more fund launches in 2010

By Emily.perryman

Created 07/07/2010 - 06:05

A survey of senior managers at hedge fund firms suggests the industry continues to recover from the global market crisis, as more than 82 per cent of respondents predict that there will be more fund launches this year than in 2009.
The survey of 381 managers by professional services firm Rothstein Kass also found that fewer than 20 per cent of survey participants believe that more funds will close this year than in 2009.
"While nearly 70 per cent of hedge fund professionals we polled still expect 2010 to be a difficult year, there are signs that conditions continue to improve. However, it is clear that the crisis has had a profound impact on the sector and its practices. Stung by fundamental misunderstandings regarding the nature and objectives of hedge fund capital pools, the community has responded by taking steps to offer greater transparency and enhance educational initiatives," says Howard Altman, co-chief executive and co-managing principal of Rothstein Kass.
"Though more than 73 percent of those polled agreed that the pace of redemptions will continue to slow this year, the industry continues to absorb lessons from a period of intense demand for liquidity. For many funds, a wave of redemption requests served as a reminder of the importance of attracting aligned investors with objectives and risk tolerances that are consistent with those of the fund."
The report also found that more than 67 per cent of hedge funds surveyed plan to raise additional investment capital this year.
"Examination of the likely sources of capital points to the continued institutionalization of the hedge fund business, with larger established funds more likely to attract assets from pensions, endowments and benefit plans drawn by the sector's track record of delivering superior, long-term results. High-net worth individuals and families seem to be gravitating toward the family office model when considering allocations to alternative investments, recognising the advantages of pursuing alternative investments as a component of an overarching wealth management strategy," says Altman. "In addition, the slower pace of redemptions has alleviated immediate liquidity concerns and restored fund stability, allowing funds to devote more substantial resources to core portfolio management activities and to evaluating operational best practices."
The research was conducted by Russ Alan Prince, a counsellor on private wealth, and Hannah Shaw Grove, an expert on behaviours and finances of wealthy individuals.

 

Hedge funds record lowest performance since November 2008

By Emily.perryman

Created 21/06/2010 - 06:51

The Credit Suisse/Tremont Hedge Fund Index lost 2.76 per cent in May, its lowest performance since November 2008.
Nine out of ten strategies in the index posted negative returns in May as market volatility increased amid continued European sovereign risk fears.
Dedicated short bias gained 5.84 per cent and was the only strategy to post positive returns for the month. This positive performance was characteristic for the short-oriented strategy which typically outperforms when markets are down.
Global macro was the second-best performer, finishing down 0.63 per cent for the month as managers benefited from their ability to perform tactical trades in primarily liquid instruments.
Fixed income arbitrage also performed well relative to other strategies as managers continued to reduce their risk and leverage levels while staying active in the market.
Directional strategies largely struggled to find profitable positions amid the market volatility and the largest drag on performance was caused by exposure to cyclical sectors.

 

Hedge funds drop 247 per cent as net outflows reach USD11.05bn

By Emily.perryman

Created 28/06/2010 - 13:52

Despite hedge funds successfully navigating a gloomy macro scenario and concerns over Greece’s fiscal position, the industry recorded negative net flows for first quarter 2010, research by Lipper Tass shows.
Redemptions filed at the beginning of the quarter to cash in profits and portfolio reallocation decisions drove investors’ consideration of alternative investments.
Money flows of the hedge fund industry for first quarter 2010 dropped 247 per cent from the net inflows of fourth quarter 2009 to USD11.05bn.
First quarter 2010 marked a polarization of money flows across hedge funds; larger funds tended to post relatively larger and positive money flows, while smaller funds recorded relatively smaller and negative outflows.
On a four-quarter rolling-period basis net money outflows of the hedge fund segment amounted to USD55.45bn—an amount accounting for more than 15 per cent of the sum of all negative quarterly money flows to the industry since first quarter 1994.
Despite the net outflows reading for first quarter 2010, global hedge fund assets are estimated to have increased quarter on quarter—from USD1.34trn at the end of December 2009 to USD1.39trn at the end of March 2010.
With the exception of fixed income arbitrage and managed futures, which both flipped the sign of fourth quarter 2009’s money flows, net outflows for first quarter 2010 resembled the pattern observed in fourth quarter 2009.
The bulk of net outflows in the first quarter were concentrated in selected hedge fund strategies, namely equity market neutral, event driven, managed futures, and multi-strategies.
Cumulative net inflows for the first quarter accounted for 0.91 per cent of the beginning-of-quarter assets; it was 0.64 per cent for the fourth quarter.

Read more >>

We're not dead yet....

Ivy and UBP, between them 2.2 Billion Exposure to Madoff...  Ivy with the lowest exposure to Madoff shriveled in on itself and died, while UBP with the largest gets to see another day.  Not sure how hiring Larry from Ivy, helps, but I suppose the logic is that it was a damn sight better than UBP previous risk managers.

Larry Morgenthal named chief executive of UBP Asset Management

By Emily.perryman

Created 06/07/2010 - 14:48

Union Bancaire Privée has appointed Larry Morgenthal as chief executive of UBP Asset Management, the group’s US business.
He also assumes the role of chief investment officer of alternatives.
Morgenthal will spearhead the renewed activity in the company’s fund of hedge funds platform, following the reinforcement of its investment and risk management teams since 2009. UBP has been investing in hedge funds since 1972.
“The case for hedge funds and their alpha-generation potential is undisputed,” says Richard Wohanka, chief executive of asset management and alternative investments at UBP. “It is time to look at hedge funds in a new way: as core portfolio holdings, rather than as a small part of an alternatives segment. UBP has the right infrastructure to offer clients funds of hedge funds that can enhance the opportunity set for balanced portfolios, and for traditional equity and fixed income investments. Larry has a long track record of building alternative businesses through an understanding of client priorities and I am delighted that he will be leading the alternatives division at UBP.”
Morgenthal has 18 years of direct involvement in alternative investing and business development, having started his career managing the assets for two large US pension funds, NCR and Asea Brown Boveri.
He has held senior positions in Bank of America’s alternative investment group, where he headed the overall business and chaired the investment committee, as well as at Opus Capital Group, where he was managing partner, and Ivy Asset Management (BNY Mellon), where he held the roles of chief operating officer and later chief executive.

Read more >>

No one even has any money to buy guns!

Even, the threat of O'Bama...  whatever "they" say he is/was going to do, isn't enough to boost demand for weapons of personal, convenient and ultralight mass destruction. 

 

Smith & Wesson 4Q Falls 64% On Higher Expenses, Charges 

 

Smith & Wesson Holding Corp.'s (SWHC) fiscal fourth-quarter profit slid 64% as higher overhead expenses and acquisition-related charges masked higher sales and margins.
Still, shares rose 5% to $4.30 in after-hours trading, as the results topped expectations.
But the gun maker also projected total revenue of $92 million to $96 million for the current quarter, with firearms contributing $75 million to $78 million and perimeter security making up the rest. That view fell short of the $101 million total Wall Street had expected, according to a poll by Thomson Reuters.
For the full year, total sales are expected to be $430 million to $445 million, generally higher than analysts' view of $431 million, with firearms sales expected to total $355 million to $365 million.
Smith & Wesson's shares jumped earlier this week after the U.S. Supreme Court said the right to bear arms is a fundamental right that states are bound to protect, in a ruling that was certain to lift enthusiasm for gunmakers. Gun control legislation and election results only partially impact the company, as a third of its sales are to police and other professionals.
President and Chief Executive Michael Golden said although the period of heightened consumer demand subsided at the end of the company's fiscal year, Smith & Wesson was able to grow firearm sales, supported by a broad product portfolio that was strengthened by new products. Diversification through the company's acquisition of Universal Safety Response last year also helped results, Golden said.
For the quarter ended April 30, Smith & Wesson posted a profit of $2.7 million, or 4 cents a share, down from $7.4 million, or 14 cents a share, a year earlier. The latest quarter included 4 cents of acquisition-related charges. Analysts expected an adjusted profit of 4 cents.
Net sales climbed 4.3% to $103.8 million, above the company's downbeat March forecast of $97 million to $101 million.

Gross margin widened to 31.3% from 31.1%.

Firearms sales were down 9.3%, falling from a stellar quarter a year ago when industry wide firearm sales peaked following the inauguration of President Barack Obama. Perimeter-security sales were up 25% at $13.6 million, although the result was under the company's expectations, primarily due to one customer's deferral of a significant order into future quarters, and generally longer sales cycles.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

Read more >>

Whoa Nellie!

Ok so maybe I jumped the gun here, I don't want a Python moment when we're bringing out the dead and the guy's still breathing.  It's a remote possibility a brief rally point could start from here on this double bottom... this is really just to keep us shorts honest, and not back up the dump trucks, just yet. 

Read more >>

I Christen Thee.... The G8 Deepression!

Remember you heard and saw it hear first!  Wow, June was a bust... and it fought so valiantly, with everything it had and then in the last two days it gave up the ghost, and broke a critical level and stayed below it. 

Read more >>

Jeez! Everyone's worrying about the high frequency machine trader when...

it's the drunk ass trader who puts on his trade muscles and thinks he is channeling Jesse Livermore, you have to watch out for.  

Those not familiar with Jesse Livermore, he was the John Paulson (Trader not Sec'y) of the previous until now great Depression as compared to what we have now, the Great Deepression.  He reportedly made $100,000,000 in just one day, a staggering amount for 1929.  If he had turned in that paper currency and bought gold at the set rate of $35 an ounce, his heirs would have @ $1,200 per troy ounce $3,428,571,428.57 in gold today.  Or 28 571 428.57 troy ounces = 979.591837 short tons which is more gold than the UK, Turkey and Greece combined. No wonder Paulson, bought a gold mine, at least he won't end up with a Ohio Bus Station bathroom stall with his grey matter adorning the cold mottled institutional mosaic floor.

How a broker spent $520m in a drunken stupor and moved the global oil price

PVM Oil Futures trader Steve Perkins bought 7m barrels of crude in late-night trading binge on his laptop, driving the oil price to an eight-month high. 

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7862246/How-a-broker-spent-520m-in-a-drunken-stupor-and-moved-the-global-oil-price.html

 

Read more >>

Aha, I guess these guys read my Token Economy Article... too!

Dollar should be replaced as international standard, U.N. report says By Gabriella Casanas and Mick B. Krever, CNN STORY HIGHLIGHTS U.S. "dollar has proved not to be a stable store of value," report says Dollar under increasing scrutiny since U.S. entered recession U.N. report supports proposal to create standardized international system Under proposal, countries would no long have to buy up foreign currencies RELATED TOPICS Economic Issues International Monetary Fund Asia New York (CNN) -- The dollar is an unreliable international currency and should be replaced by a more stable system, the United Nations Department of Economic and Social Affairs said in a report released Tuesday. The use of the dollar for international trade came under increasing scrutiny when the U.S. economy fell into recession. "The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," the report said. Many countries, in Asia in particular, have been building up massive dollar reserves. As a result, those countries' currencies have become undervalued, decreasing their ability to import goods from abroad. The World Economic and Social Survey 2010 is supporting a proposal long advocated by the International Monetary Fund to create a standardized international system for liquidity transfer. Under this proposed system, countries would no longer have to buy up foreign currencies, as China has long done with the U.S. dollar. Rather, they would accumulate the right to claim foreign currencies, or special drawing rights, or SDRs, rather than the currencies themselves. The special drawing rights would be backed by a basket of currencies, which would make them less susceptible to volatility in any one currency. And because the value of a special drawing right is defined by the IMF, changes in the value of any one currency could be adjusted for. These initiatives, supported by U.N. Secretary-general Ban Ki-moon, are meant to help sustain the international trade and financial systems that will allow less-developed countries to participate and integrate into the global economy. In addition to the proposed reforms regarding international currency, the survey also offered guidance on increasing social well-being. The survey said that "the number of the poor in the world living on less than $1.25 a day decreased from 1.8 billion in 1990 to 1.4 billion in 2005, but nearly all of this reduction was concentrated in China." The number of poor increased in sub-Saharan Africa and South Asia over the same period. Income inequalities within countries have increased since the early 1980s with few exceptions, the report said. "There's too little aid being provided, it's too fragmented, and it's too volatile in terms of the resources that are flowing to countries," said Rob Vos, director of the development policy and analysis division of the U.N. The survey projects that by 2050 the population will be at 9 billion, with 85 percent living in developing countries, and the global economy will have to sustain a system that will allow for "decent living." By 2050, one of every four people living in a developed country and one in every seven in countries now being developed will be over age 65. The fast ageing of the population will call for proper pension and health care systems that are sustainable.

Read more >>

What the...??? So now they tell us after they sold everything.

Is it different this time they ask?  This article is mainly what I have been writing about since April, 2010 and believing since 2001.  This just kind of creeps up on you until you end up like the guy in Stephen Kings novel Creep Show as a pile of vegetated matter.  The action governments need to take is devaluation of currency.  The first one to bite it will likely cause a domino effect the scale and rapidity of such will make your head spin.  Don't get lulled, by the almost making it back up in the market.  Get your 401k your money out, and buy a farm or Rhodium.

Is It Different This Time?

AFP/Getty Images

The U.S. Federal reserve building.

The evidence is accumulating that the U.S. economy is heading into a double dip, if it isn’t there already.
Sure, the various red flags could be wrong; it could be different this time. But the weight of probability is definitely on the downside.
The importance of the fiscal and monetary infusions following the credit crunch are becoming clear. The 11% deficit relative to GDP the U.S. government ran during 2009 managed to generate only around 2.5% GDP growth in the year to the end of the first quarter. This pales next to the rebounds that followed previous economic revivals.
Zero interest rates and quantitative easing worth around another two percentage points off the Fed funds rate have done all they can.
The current stimulus program is starting to wind down, so the net effect of new spending is tailing off. This has already become painfully apparent in the housing market, where the ending of buyer tax credits has seen housing sales numbers fall off a cliff to register even lower lows than anyone thought possible.
What’s more, it looks clear the inventory cycle rebuild is also beginning to run out of steam. And that’s important. Inventories generated around two-thirds of U.S. growth last year. By contrast, real final sales have been running at a mere 1.2%, the lowest for the year following the end of a recession in least 50 years, according to David Rosenberg of Gluskin Sheff.
Regional Federal Reserve bank surveys of business activity point to a slowdown, all during a period when employment growth seems to have stagnated.
No wonder longer-dated Treasury bond yields have tumbled, to where the curve is beginning to look uncannily like Japan’s did in the early stages of its lost decades–before, that is, the JGB curve turned completely flat.
As glum as the domestic picture looks, the international one is looking downright depressing. European austerity will not only limit U.S. exports to the region, but the euro zone will undoubtedly also look to the U.S. market to trade its way out of trouble. Meanwhile, the Chinese economy looks increasingly unhinged. Should its domestic real-estate bubble burst, you can expect China to look to ramping up its exports to the U.S. as a way of mitigating the pain.
John Hussman, of Hussman Funds, reckons the evidence suggests “the U.S. economy is most probably either in, or immediately entering, a second phase of contraction.”
Given the growing popular resistance to yet more fiscal stimulus–some policymakers are worried about triggering a sovereign-debt crisis in the U.S., while a vocal body of voters doesn’t want an even bigger government–the burden will fall on the Federal Reserve to get the U.S. economy out of trouble. Andrew Roberts, head of credit at Royal Bank of Scotland, figures  the Fed will start a flood of QE.
History shows this seldom ends well. Kenneth Rogoff and Carmen Reinhart’s instant classic tome on debt crises, “This Time Is Different”, shows that banking defaults tend to be followed by sovereign defaults that tend to be followed by emergency monetary responses that result in uncontrolled inflation.
Paul Krugman warns that if governments don’t act, the global economy is heading towards its third serious depression of the past century and a half. And yet, if they act too much, they’ll destroy the very cornerstone of modern economies, government-issued currency.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com

Read more >>

Gold, in them there vaults!

Glad to know I was missed!

Sorry for the long hiatus, I took a couple of days off for Father's Day weekend and ended up stretching into a week due to a nasty microsoft virus which i finally gave up trying to fight and just wiped and reinstalled...  there has to be a better way.  My daughters' MAC nary an issue, expensive, but money well spent!

I'll be catching you all up from this point forward.  For now this is a good thing to know.  The more Gold goes up the better off the dollar as I said in Token Economy.

Curiously the UK is not on the list and they should have made it, just to highlight the disastrous trade Gordon Brown executed while Exchequer.

http://williamtellstradecraft.blogspot.com/2010/05/token-economy-system.html

Where's All the Gold? Start with the Federal Reserve

By DAN BURROWS Posted 11:00 AM 06/23/10 Investing, Currency

Comments: 82 Print Text Size A A A

EmailMore

The bull market in gold shows no signs of abating, as investors big and small pile into bullion, coins, mutual funds and exchange-traded funds (ETFs) -- and who can blame them? With the world awash in more than $200 trillion in household, corporate and government debt, it's not unreasonable to question the long-term value of fiat currency like the almighty dollar.

It sure looks like a bunch of country's central banks have caught the gold bug. The dollar might be the world's reserve currency, but something about the U.S. being $13 trillion in debt -- or roughly the equivalent of its gross domestic product -- has other nations taking on greater reserves of the yellow metal.

Central Bank Gold Reserves Are Growing

Gold reserves held by countries now total 27,069 metric tonnes, up from 26,356 a year ago, according to the latest findings of the World Gold Council, an industry group that tracks all things gold-related. Gold futures, meanwhile, hit a record closing high of $1,258.30 an ounce last week on the Comex division of the New York Mercantile Exchange (CME), up 35% year-over-year, making some big central bank moves look pretty canny, indeed.

The U.S. government remains by far and away the world's biggest hoarder of gold, with more than 8,100 tonnes in reserve, according to the World Gold Council. (The Fed still stores much of this wealth at the U.S. Bullion Depository in Fort Knox, Ky. And as anyone who's seen Die Hard: With a Vengeance knows, the world's biggest gold vault sits 50 feet below sea level under the Federal Reserve Bank of New York. You can even take a tour.)

After the U.S., governments holding the biggest gold reserves are Germany, Italy and France. The central banks of Germany and Italy made no changes to their gold reserves over the last year, while France pared its holdings by about 15 tonnes, according to World Gold Council data (see chart below).



Most interesting is the rapid rise of China and India as gold bugs. The Middle Kingdom's gold reserves presumably held steady at 1,054 tonnes year-over-year, according to the World Gold Council, but then secrecy is one of the communist government's strengths. It was just little more than a year ago when China revealed it had quietly purchased 454 tonnes of gold over a six-year period. That's roughly equivalent to the current holdings of Turkey, Greece, Romania and Poland combined.

India, the world's largest consumer of gold, made a splash when its central bank bought 200 tonnes from the IMF back in November. Russia, meanwhile, has been stocking up on gold for years, boosting its reserves by about 132 tonnes in just the last 12 months.

Tagged: China, Federal Reserve, gold, gold futures, gold reserves, India, record gold prices, Russia

Print

EmailMore

Read more >>

If Hedge Funds can't make money than who can?

Blackstone's Wien Says Fund Returns May Shrink by Half to Protect Capital


By Tom Cahill - Jun 15, 2010 Email Share

Vice chairman of Blackstone Group's advisory services division Byron Wein. Source: Blackstone Group LP via Bloomberg

Byron Wien, vice chairman of Blackstone Group LP’s advisory services division, said hedge fund returns may shrink by half as firms seek to protect investors’ capital.



Returns may drop to 10 percent from 20 percent as funds lose their “zeal,” Wien, 77, told the GAIM International hedge fund conference at Monaco’s Grimaldi Forum today.



“I’m worried that by trying to protect capital on the downside they give up too much on the upside,” he said. “The concept of hedge funds was to produce equity-like returns with bond-like volatility. The danger is we get bond-like returns with equity-like volatility.”



Hedge funds lost an average of 2.6 percent in May, the worst month since November 2008, according to the HFRX Global Hedge Fund Index. The S&P 500 retreated 8.2 percent, the biggest monthly drop since February 2007.



Wien called for a stock market rally in the U.S. last week, saying that Europe’s debt crisis caused too much pessimism in the U.S., where profits for companies in the Standard & Poor’s 500 index are projected to rise 17 percent this year. He forecasts the S&P 500 will climb to 1,300 from 1,089 before ending the year around 1100, where it started.



In April, he forecast that oil would go to $100 a barrel. At the time it was trading at $87, and is now trading at $75.25.



Wien called last year’s rally in stocks, oil and gold correctly. He incorrectly predicted that the dollar would fall to $1.65 against the euro. It fell to $1.51 in November 2009 and is now trading at $1.22.



Wien was chief strategist at hedge fund Pequot Capital Management Inc. from 2005 to 2009. He was a senior strategist at Morgan Stanley before joining Pequot.



To contact the reporter on this story: Tom Cahill in London at tcahill@bloomberg.net

Read more >>

Not surprised to see WFC which was my favorite stock to trade.

Here is the Link:

http://www.businessinsider.com/25-stocks-being-manipulated-by-high-frequency-traders-2010-6

Read more >>

Head Fund Watch - May 2010

Now we have roughly 1,000 more funds reporting returns for May than we had on the 11th (1818) notice that the return edged lower and this is probably the first half and likely to be the best of the bunch.  Expect this week a continued slew of bad numbers, and soon we should here from the few that are making a killing.

Read more >>

William Tell's Daily Aimed Market Forecast - For 6/16/2010

A complimentary copy of William Tell's Daily Aimed Market Forecast (Excerpts below) can be downloaded from the William Tell sharesite found through the side menu... enjoy! WT

Read more >>

William Tell's Daily Aimed Market Forecast - For 6/15/2010

A complimentary copy of William Tell's Daily Aimed Market Forecast (Excerpts below) can be downloaded from the William Tell sharesite found through the side menu... enjoy! WT

Read more >>

Hedge Fund Watch - May 2010

Notice the that only 1818 funds reporting their returns for May by June 11.  This isn't unusual as many don't report until this week. 

Expect this week a slew of bad numbers.

Read more >>

Jun 14, 1777: Congress adopts the Stars and Stripes - Flag Day

Gee ya think maybe if they added one or two more stripes we'd be better off?  i mean Thirteen is unlucky isn't it?  Nothing to trade here, just good ol' fashioned historical trivia.

During the American Revolution, the Continental Congress adopts a resolution stating that "the flag of the United States be thirteen alternate stripes red and white" and that "the Union be thirteen stars, white in a blue field, representing a new Constellation." The national flag, which became known as the "Stars and Stripes," was based on the "Grand Union" flag, a banner carried by the Continental Army in 1776 that also consisted of 13 red and white stripes. According to legend, Philadelphia seamstress Betsy Ross designed the new canton for the Stars and Stripes, which consisted of a circle of 13 stars and a blue background, at the request of General George Washington. Historians have been unable to conclusively prove or disprove this legend.




With the entrance of new states into the United States after independence, new stripes and stars were added to represent new additions to the Union. In 1818, however, Congress enacted a law stipulating that the 13 original stripes be restored and that only stars be added to represent new states.



On June 14, 1877, the first Flag Day observance was held on the 100th anniversary of the adoption of the Stars and Stripes. As instructed by Congress, the U.S. flag was flown from all public buildings across the country. In the years after the first Flag Day, several states continued to observe the anniversary, and in 1949 Congress officially designated June 14 as Flag Day, a national day of observance.

Read more >>