It is official, bad news is now permanently good news. I am not sure how this happened or why this happened, but this is the case as CNBC just confirmed that 454,000 initial claims were below expectations and continuing claims declined by 224,000. This sounds like great news until you realize that, well, continuing claims fell off because Congress did not reauthorize extended unemployment benefits, which has happened before I might add, and initial claims came in light because of the holiday week, just as I thought. Nevertheless, how we can be 3 years into this thing and think a print of -454,000 on initial claims with over $1T in stimulus spending is a good thing is disingenuous and, in all honesty idiotic. However, this is what we are being told by the talking heads, 454,000 initial claims are a good thing in the new normal.
One must trade the market that is in front of them regardless of what the data says, even though one knows the data smacks of a double dip or at least a massive slowdown at the least. Retail sales figures came in as well and if you were paying attention only the nice figures were making headlines, like JW Nordstrom +14.1% vs. 9% est. and Abercrombie +9% vs. 2.8% est., but these numbers were not encouraging as total expectations were for retail sales to come in at 3.2% and they came in at 2.8%. The really sad news is that these numbers were reduced in recent weeks because analysts knew the figures would be weak and the stores had pretty good sales as well. Consumers just are not buying the way they were used to and I know the argument is going to be, well this is June and the numbers are always weak in June. Sure, I will give you that, but the analysts know this and adjust accordingly and, more importantly, the chains know this and run deeper discounts to drive traffic. Look what happened, not very encouraging.
The discounters were even a mixed bag, Target missed estimates by 1% to the downside, Kohl’s missed by .5% to the downside, TJX missed by 1.2% to the downside, BJ’s Wholesale was off by 1.2%, the Gap was off by 3.4% and Costco was off 2.6%. I guess the bright spot was the high end retailer who had some solid numbers, Macy’s beat by .4%, Saks beat by .5%, Nordstrom’s beat by 4.5%, the Limited beat by 2.8% and Dillard’s, not really high end, but throwing it in, beat by 3%. This is a pretty big disparity between the discounters and the higher end retailers which raises the question of why the difference is so large.
The answer is pretty simple, first the wealthy shoppers are still wealthy and are more than likely taking advantage of deeper discounts at the high end stores. Don’t kid yourself, the high end retailers are cutting prices to drive traffic, everyone is including Walmart. Second, the discounters customers who were relying on their unemployment benefits had the rug pulled out from under them in some cases or knew it was coming so they cut back even more. The wealthy shopper can spend more and the less wealthy are still tightening their belts and this trend will continue for the foreseeable future.
Overall, this was one month of data, but the trend is on track, frugality. Same store sales did disappoint and I am a little surprised, actually I am not, that no one is mentioning the overall miss of .4% (overall expectations of 3.2% versus actual of 2.8%). Instead expect to hear about Nordstrom’s all day long today as the beacon of light in the retail world as the consumer comes flooding back to the stores as if they don’t have a care in the world. Even though some 454,000 just got their pink slip last week before our nations fabled birthday, for the record, last week’s claims were revised UP to 475K and the 2 week total for Americans receiving their pink slips were 929,000. So, congratulations all you lucky people, the world is turning around because apparently you being fired is great news for the economy, or just Wall Street. We officially live in Bizarro World now.
As I have stated before this women is a piece of work and has little working knowledge of free markets or no clue how free markets actually work. She is a devote Republican, not that there is anything wrong with that, but most Republicans do not understand how free markets work either, and thinks that markets are fine on their own. She thinks that banks basically did nothing worn to begin with, which shows how much of an idiot she actually is.
I am not sure if silicon poisoning is the problem or not, but clearly something is wrong with her. I am referring to her op-ed piece on CNBC.com were she defends her blatant attack on the California AG’s lawsuit against State Street Bank as being politically motivated. It is not as if she asked, gee is this all because you might be exploring a big to become governor? It was an attack that was poorly orchestrated and executed that ended up making her look pretty stupid, as usual. In my opinion, whatever that is worth, this women has no redeeming qualities about her except for her heaving chest, which a quick Google search will confirm as suggested searches all revolve around her cup size, not her IQ.
Here is what she says about the lawsuit:
“But on closer inspection this looks more like a naked attempt at boosting a Brown run for Governor than it is about protecting fire fighters’ retirement funds.
Let me give you some other numbers. Calpers, the California Public Employees’ Retirement System has $173 BILLION in assets. Calsters, the California State Teachers Retirement System, has $114 BILLION in assets.
I don’t question the merits of the suit, and yes, $56 million is a lot of money (with penalties, California is seeking $200 million from State Street). But in the context of a state that is $26 billion in the hole, and state pension funds of nearly $300 BILLION in assets, this smacks of Attorney General Brown trying to make headlines.
$56 million over 8 years? In a state of 36 million people, that works out to 19 cents per person per year. Brown wants another $144 million in penalties too. That’s another 50cents. Shoot, in his heyday, Elliot Spitzer would have used this lawsuit to wipe his nose after sneezing. Can’t you hear Spitzer now?: “Jerry, how quaint. Let me show you how it’s really done when you want to be governor.””
So, she has no idea what the contract between the state and State Street says, but she dismisses it as political theatrics. The case could be a slam dunk, but that is irrelevant because the AG filed papers to explore a bid for a run at the governor’s office. I guess that if there was fraud involved that because the AG wants to further his career he should not pursue it because suing for fraud might benefit his citizens and his political future, got it Michelle.
Here is what I found hilarious:
“Because Brown’s office started leaking the night before that he would be making a BIG announcement Tuesday about a lawsuit against a “major bank” which had committed “massive” fraud. His office wouldn’t say which bank; it was a big secret to be revealed at a press conference. But we took him at his word and invited him on CNBC. You’d do the same thing if you were running a business-news network and an attorney general says he’s going to file suit against a major bank.
So he shouldn’t have been surprised when I asked about his political motives for making such a big show about this suit. It is politically expedient to go after “major banks” right now in this economic climate, especially when exploring a run for governor. Public officials have no right to expect a walk in the park regardless of who did the “inviting.””
First, is CNBC really a business-news network anymore? Seriously, they overlook and provide free passes to businesses everyday and even frame news in the most positive light to prop up stocks. She has consistently shown disregard for the facts for her own personal views and agenda, whatever that might be. She claims that he doesn’t deserve a walk in the park regardless of who invited him on what show, but CNBC routinely gives free passes to CEO’s who misled investors in the past. Hell, they let Cramer revise history all the time to put himself in the most positive light possible.
If you do “invite” a political or AG on your show, for the love of God show them some sort of respect. They don’t all deserve it, i.e. Barney Frank who is a asshole, but some do and he did not provoke you in anyway. You also had not even seen the contract and you are passing judgment on the case, which is bullshit since you are not a lawyer. Furthermore, you are breaking down the $200M by the amount of people in the state? How about by the number of participants in the plan? That actually has some relevance versus by the number of people in the state. Not only that, if there was fraud the dollar amount and the size of the pension is kind of irrelevant, but $200M is kind of sizable in relation to the size of the pension fund, in my opinion.
What you can’t stand is the fact that someone might be fighting back against Wall Street. I honestly believe that is her problem, even though it is Wall Street that blew up the entire world a year ago and never mind the fact that you and I and our kids, and if Michelle can ever find anyone to breed with her she and her kids as well, will all be paying for Wall Street’s bailout for decades to come. So I say, sue the hell out of them if they broke their contract. If there was no fraud, then the courts will throw it out, end of story.
Until then, we will be left trying to figure out if Michelle is suffering from straight up stupidity, silicon poisoning, mental retardation or is just given marching orders from the ear piece, who the hell knows. Actually, who cares since most people do not listen to what she has to say, again Google her name to see what I am talking about. What is really funny is that I never trusted her because she talks out of the side of her mouth, a big no-no in sales and, as my wife pointed out, she has a nose that looks like a penis. Just a simple observation and if she can call me an idiot, I can call her a dick nose and feel pretty OK about it.
He actually said that gold is going up in all currencies not just in US dollars. He makes me want to smack my head against the wall and why someone would pay him $1,000 a year for “advice” I will never understand. However, look at gold in CAD or Euro’s or other currencies and you will see it is not going up, its pretty simple to see that actually. It is going up the Sterling, because they are going down the same path we are with quantitative easing and perhaps this is the only currency Ron is looking at, but in most other currencies gold is relatively flat.
I am certainly no rocket scientist, but man, this guy…
CNBC dislikes gold for the obvious reason, it doesn’t advertise on its station and is the anti stock play, for the most part. Every day you will hear a rant from someone on the station on why gold is a bad investment from the station. Mostly from Rick Santelli, who I respect immensely I might add, mostly because they say it is a poor investment against inflation, which is not true.
Typically, the argument goes like this, the inflation adjusted high price of gold is $2,044, or somewhere close to there, and it is at $1,040 currently. Clearly equities have outperformed gold because the S&P 500 has done so much better because it has appreciated so much more since the 1980’s. That is only somewhat true. The point I would first like to make is this, gold is the only investment that is ever inflation adjusted in order to be judged as a good investment. It is also the only investment that is judged from its all-time high to its current price and judged to whether or not it is a good investment or not.
Perhaps we should do that with the NASDAQ? No, that wouldn’t be fair not would it. Sorry, back to the facts. If we look at the price of gold from when Americans could legally buy the metal it has done very well, it started trading at about $35 an ounce and is now at $1040 an ounce, not too shabby. So, it is fair to say that it has kept up with inflation over that time period, but if you bought it at the absolute high and sold it at the absolute low you would have done poorly, just like with stocks. That is why, like with any investment, you need to have a strategy and a long-term time horizon.
Now, since everyone wants to inflation adjust gold to judge it as a good or bad investment I figured that what is good for the goose must be good for the gander. So, I looked far and wide for an inflation adjusted chart of the S&P 500 over the long-term. Well, I found one and you may be surprised by what you see. Actually, what makes it even worse is it does not include the 2008 crash or taxes which would have significantly impacted the rate of return, much lower I might add.
It might be kind of tough to see, so I apologize, but I was shocked and if you don’t believe what you see, Google it yourself. However here is what it says. The S&P 500 from 1966 to the present (2007 when this was made) had a nominal annual rate of return of 6.9%, but your real rate of return was only a mere 2.2%. The most bullish period of time, 1982 to 2007, for the S&P 500 would have a nominal return of 11.4%, but your real return was only 8%.
Again, minus taxes from this equation and the picture gets even worse. So why is it that inflation only seems to impact gold, but not equities? It makes no sense at all that we do not look at the impact that inflation has on all of our investments and not just a select few investment options. Not to mention that it is clear that the Fed is clearly pushing investors into riskier assets in order to keep up with the rate of inflation which should begin to worry everyone, especially since the value of the dollar is being questioned more and more every day.
So, the next time someone says gold is a bad hedge against inflation, tell them they do not have the facts. Even with all of today’s new investment options available that supposedly fight inflation at the end of the day they mean nothing if the value of the dollar is being called into question or if they do not have a real track record during inflationary times. Gold works, it has worked for thousands of years and while the value will fluctuate it is safe to assume all asset values fluctuate, but it is one of those investments that will certainly never go to zero and will always have value.
This was the solution uttered by none other than Jim Cramer a week or so ago on CNBC. This was his solution to not raise taxes in the near-term, but, as usual, this makes absolutely no sense whatsoever. Not only could the US probably not even place $1T in 30 year paper, Cramer himself admitted a top to the treasury market last week, but that would just add more long-term debt that the US cannot afford.
To think that issuing more debt is the solution so the government does not have to raise taxes is probably one of the more ridiculous things I have ever heard. Sure, if you look skin deep it makes sense, but if one does the math and realizes that $1T at 4.4% interest would cost an additional $44B annually and $1,320,000,000,000 in interest payments over 30 years, well you can see where I am going with this. Statements like those make me wonder how Mr. Cramer did so well as a manager for all those years because clearly numbers are not his strong suit.
The interest payments are just part of the problem as we have an already crippling amount of debt on the books already and higher taxes are a must, not that I am happy about it, but come on reality is here folks. Let us not forget about those 2 huge programs, Social Security and Medicare, which account for much of the $55T in unfunded liabilities the US has yet to save a penny for. Those immediate issues alone mean higher taxes, oh and universal healthcare will certainly add to the deficit and mean higher taxes of some sort, regardless of what they are telling us.
Frankly, anyone advocating higher debt for the US needs to have their head examined or did they forget about last year already. Debt, is not good in large amounts, I am not even convinced it is good in small amounts, but it is inevitable to have some sort of debt, usually a mortgage. Our taxes are already where they are because of our debt load and based on our current wasteful spending it is a certainty that taxes will go higher. To advocate more debt to postpone taxes is irresponsible because you need to pay interest on that debt and record low interest rates is no excuse to go crazy issuing more paper as it will eventually drag down GDP as our debt service payments grow and the dollar plummets.
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