The Decline Of Small Business And The Middle Class

It is not coincidental that the middle class and small business are both in decline. Entrepreneurial enterprise and small business have long been stepping stones to middle class incomes and generational wealth, i.e. wealth that is passed down to future generations rather than consumed. As the headwinds to entrepreneurial enterprise and small business rise, the pathway to middle class prosperity narrows.

Highlights From The Ukraine Civil War: Mariupol Soldier Firing RPG Caught On Tape

When it comes to people-vs-tank videos, Tienanmen Square reigns supreme; but as tensions escalate hyperbolically in Eastern Ukraine, the following clip of a Mariupol soldier taking things into his own hands - and firing an RPG into the face of two oncoming tanks - confirms this nation's divide is growing wider by the day....

THREE DEAD, 25 WOUNDED IN MARIUPOL CLASHES, LOCAL GOVT SAYS

As RT reports, the Victory Day 'celebrations' spilled over into deadly clashes between police and pro-Russian separatists after Kiev’s forces are using heavy weaponry and tanks in the eastern city of Mariupol. Sadly, we suspect, Mariupol may become the next Odessa this weekend.

Putin Warns "Other Countries Must Respect Russia"

Hours ahead of Donetsk' planned referendum this weekend, Russia's President Vladimir Putin - speaking from a recently reclaimed Sevastopol (and denounced for being their by Ukraine's acting government) - has made anything but the market's much-needed diplomatic comments...

  • *PUTIN SAYS OTHER COUNTRIES MUST RESPECT RUSSIA: INTERFAX
  • *PUTIN SAYS OTHERS MUST RESPECT RIGHT TO HISTORICAL JUSTICE: IFX
  • *PUTIN SAYS NATIONS MUST RESPECT SELF-DETERMINATION RIGHT: IFX

In other words, while he publicly asked for the referendum to be postponed; the people are demanding it and he will live by their will... and if they choose independence, he will enforce it. On a day when 20 have already died in clashes, is it any wonder event risk concerns this weekend are surging.

US Postal Service Loses $1.9 Billion; Needs $10 Billion Bailout Or Pensions Get It

Revenues are up modestly for the US Postal Service as First-class Mail volumes continue to tumble "extremely" but package volumes are rising; however, USPS records a $1.9 billion loss in the last quarter, despite efforts to streamline efficiency and cut costs. The rise in package volumes appears related to a "Sunday delivery" deal with Amazon.com who "found a great fit with USPS' capability and desire." However, USPS says it needs $10 billion for deferred investments (i.e. Capex) and warns if it does not get its bailout:

  • *USPS SEES UNABLE TO MAKE $5.7B RETIREE PAYMENT W/OUT REFORM

Given USPS says no new employees have been hired and flexible scheduling used for Sunday delivery, we wondered who exactly is benefiting from the taxpayer funded desperation of the USPS to do anything for even loss-making revenues?

BofA Revises Long-Term GDP Forecast, Sees No US Recession During Next Decade

In what should be the biggest joke of the day, Bank of America has just released its GDP forecast not for the next several quarter, but making a mockery of the IMF's 2022 Greek GDP forecast, it predicts US growth for the next decade! The punchline: after expecting a surge in growth to 3.4% in 2016, the bailed out bank tapers off its forecast which evens off at 2.2%... some time in 2025. And throughout this period its crack economist team headed by Ethan Harris anticipates precisely.... zero recessions. Indeed, in what will be a first time in history, the US is expected to grow for 16 consecutive years since its last official, NBER-defined recession (which "ended" in the summer of 2009) without entering a recession.

 

March Wholesale Inventories Surge In Boon To Negative Q1 GDP, Bust To Q2 GDP Forecasts

Wall Street has a problem. In all their excitement about how terrible Q1 was - and ths how awesome Q2 and beyond will be - it forget to check in with the firms that were busily stacking inventories in their snow-covered factories around the nation. Wholesale inventories rose 1.1% in March (which is still in Q1 remember) - smshing expectations for the 3rd month in a row (all in Q1 remember) and the 2nd biggest spike in 2 years. Each time we have seen such a spike, the following months saw a notable decrease. Desk chatter is already of a 0.3% boost to Q1 GDP and a 0.2% cut to Q2 GDP - just as hope was getting going once again.

The Early Verdict Is In: Apple Is Down Almost Two Beats

Immediately 'excretive'? It seems the early sentiment regarding Tim Cook's decision to purchase private company Beats is that it is not helping... (likely more crucially... it's $3.2bn that is not going to buybacks and the market is upset about that). It's early yet though...

The Bubble Expands: "No Money Down" Loans Come To Asia

Remember all of those credit card and loan offers you used to receive in the mail? Bad credit? No credit? No problem.  0% APR for the first six months. Free balance transfers. No money down. And my personal favorite– no credit check. These were all classic signs that the mother of all liquidity bubbles was upon us. Looking at the expansion of credit across the West, though, it’s happening again. Fool me twice, shame on me. But this is a worldwide phenomenon now.

Russia Celebrates Victory Over Nazi Germany, Putin Visits Newly "Acquired" Crimea, Ukraine Cries Foul

A day after Russia shocked the world with an impressive demonstration of military preparation for what it dubbed was a "massive nuclear attack", the country is celebrating its traditional May 9 national holiday which marks the Soviety victory over Nazis in World War II. Among the people watching the traditional and impressive military demonstration on Red Square was Russian president Vladimir Putin. However it is not Putin's presence as the rally that was notably, but what he did after, when hours after the he watched the tanks rumble on Red Square Putin flew to Crimea for the first time to oversee Russia's newest territorial expansion. This happened even as both Ukraine, Germany and the head of NATO all voiced strong objections to such a visit by Putin which not only formalizes the expansion, but spits in the eye of Western attempts to contain the Ukraine conflict and/or de-escalate

Humiliated On Its Q1 GDP Prediction, Goldman Doubles Down, Boosts Q2 Forecast To 3.9%

Goldman, it would appear, are desperate to not be forced to admit they are wrong once again. On the heels of their dramatic and humiliating swing from expectations of a +3.0% Q1 GDP growth rate at the start of the year to a current -0.6% expectation, the hockey-stick-believers are out with their latest piece of guesswork explaining how growth will explode to 3.9% in Q2 (a full percentage point higher than their previous estimate).The platform for this v-shaped recovery - "consumer spending will probably grow strongly, while the housing market should gradually improve." So 'probably' and 'should' it is then.

 

A Complete History Of Apple's Corporate Acquisitions

For those who believe they can predict the Apple's acquisitive future based on the company's historical M&A pattern, here is a summary of the company's acquisition history over the last two decades.

Frontrunning: May 9

  • Omnicom, Publicis call off proposed $35 billion merger (Reuters)
  • Apple in talks for $3.2bn Beats deal (FT)
  • Alibaba IPO Grew Out of ’80s Chaos and Guy From Goldman (BBG)
  • Nigeria's president at WEF pledges to free kidnapped girls (Reuters)
  • JPMorgan Joins Wells Fargo in Rolling Out Jumbo Offerings (BBG)
  • It's 1999 all over again: Young Bankers Fed Up With 90-Hour Weeks Move to Startups (BBG)
  • ECB stimulus talk knocks euro, peripheral yields (Reuters)
  • Deutsche Bank Currency Crown Lost to Citigroup on Volatility (BBG)
  • London Taxis Plan 10,000-Car Protest Against Uber App Use (BBG)
  • Pfizer Holders Could Face Tax Hit in a Deal for AstraZeneca (WSJ)

Futures Fail To Ignite Overnight Ramp In Quiet Session

It has been a very quiet session so far, and despite the slow-mo levitation in the USDJPY, its impact on US equity futures has been minimal if not negative. In fact, following yesterday's latest late day tumble, which Goldman summarized as follows, "Equities tried and failed again to break 1885, it continues to be the level that we can’t escape"... it would appear we are increasingly changing the trading regime, and as Guy Haselmann explained simply, markets are slowly but surely coming to the realization that the Fed's crutches are being taken away (that they may well return following a 20%, 30%, or more drop in the S&P is a different matter entirely) and that the economy will not grow fast enough to make up for this. Perhaps the most notable "event" is the sheer avalanche of banks pushing up their forecasts for an ECB rate cut (and or QE start) to June following Draghi's yesterday comments. And so the 1 month countdown begins until the end of forward guidance, or until the ECB "shatters" its credibility as expained yesteday.

Where Are America's 49 Million Hungry - An Interactive Map

As of 2012, the most recent year for which data are available, there were about 49 million Americans who, sadly, describe themselves as "food insecure," meaning they have limited access to sufficient amounts of food, according to the U.S. Department of Agriculture. Interviews with several food banks around the country suggest things haven't really improved since then. A new report from the hunger relief charity 'Feeding America' throws the nation’s struggle with hunger into an even starker light. The report, titled "Map the Meal Gap 2014," breaks the USDA’s data down county by county, giving a more nuanced picture of food insecurity. As the Interactive report below reveals, HuffPo notes that there are 16 counties in the U.S. with more than 100,000 "food insecure" children -- a number you might expect to see in a developing country rather than the world’s wealthiest nation.

 

 

David Stockman Pulls The Plug On Janet Yellen’s Bathtub Economics

Some people are either born or nurtured into a time warp and never seem to escape. That’s Janet Yellen’s apparent problem with the “bathtub economics” of the 1960s neo-Keynesians. As has now been apparent for decades, the Great Inflation of the 1970s was a live fire drill that proved Keynesian activism doesn’t work. That particular historic trauma showed that “full employment” and “potential GDP” were imaginary figments from scribblers in Ivy League economics departments—not something that is targetable by the fiscal and monetary authorities or even measureable in a free market economy. Even more crucially, the double digit inflation, faltering growth and repetitive boom and bust macro-cycles of the 1970s and early 1980s proved in spades that interventionist manipulations designed to achieve so-called “full-employment” actually did the opposite—that is, they only amplified economic instability and underperformance as the decade wore on.

Visualizing The Broken Window Fallacy

In our busy days, it is all too easy to fall into the trap of hearing (and believing) the latest headline and its associated spin. For some reason, three minute videos can quickly and easily remove these 'spins' without the need for a PhD. And so we decided to dust off today's 3:06 un-spin clip, addressing the broken-window-fallacy  as the seen versus unseen impact of the idiocy of a broken-window's (or war, or destroying homes, or...) positive impact on an economy is explained in cartoon style. The sad fact is that this fallacy remains at the core of mainstream policy-making and as the video notes, the government's 'creation' of jobs via public works programs (or any number of stimulus-driven enterprises) it does so at the expense of the tax-payer via higher taxes or inflation and that 'spending' which would have otherwise gone to new fridges or iPads is removed and this does nothing to significantly improve aggregate demand (should there be such an amorphous thing) and in fact (as we recently noted here and here) leaves us more and more dependent on the state for corporate profit margins leaving any organic growth a dim and distant memory.

Russia And The Ukraine – The Worrisome Connection To World Oil And Gas Problems

The US approach to the Russia/Ukraine situation reflects a serious misunderstanding of the situation. Russia has little choice but to try to raise the price of products it is selling, any way it can. It needs to cut out those who cannot afford its products, including the Ukraine. If Europe increasingly cannot afford its products, Russia needs to find customers who can afford them. There is little chance that the United States is going to be able to help Europe with its natural gas needs in any reasonable timeframe. Our best chance at keeping the global economy “working” for a little longer is to try to keep globalization working as best we can. This will likely require “making nice” to countries we are unhappy with, and putting up with what looks like aggression. Policymakers like to think that the US has more power than it really does, and like to encourage stories suggesting great power in the press. Unfortunately, these stories are not true; we need policymakers who understand our real situation

Art Bubble Also Cracking As 21 Of 71 Works Fail To Sell At Latest Sotheby's Auction

With the Biotech bubble busted and social media stocks slaughtered, it seems disappointment is spreading for the world's wealthy living off the fat of the Fed. As NY Times reports, on Wednesday, many in the art world converged upon Sotheby’s for the sales of Impressionist and modern art... but nearly a third of the art went unsold. The mediocre results followed an unexciting night at Christie’s on Tuesday and suggest that yet another central-bank-fueled excess-money-has-to-spill-out-of-our-silk-lined-pockets-somewhere trickle-down bubble is bursting. With Chinese property prices tumbling and PBOC cracking down on Macau money-laundering, it is perhaps no surprise that what demand Sotheby's saw was Asia buyers.