After The Flood Comes The Freeze: "Tens Of Thousands Need Housing" Says Cuomo, As Nor'Easter ApproachesSubmitted by Tyler Durden on 11/04/2012 - 11:19
First the flood, now the freeze (and the lack of fuel and gas and heating just making it much worse). And for tens of thousands of residents of New York and New Jersey this means that as many as 40,000 will need to find alternative housing, especially ahead of Wednesday when a Nor'easter formation is expected to hit the Tristate area and bring even more freezing rain and cold to the region. From Reuters: "Tens of thousands of people affected by superstorm Sandy could soon need housing as cold weather descends on the state of New York, Governor Andrew Cuomo said on Sunday. Cuomo, in a televised press conference nearly a week after the storm hit the U.S. East Coast, said the fuel shortages are improving but problems will persist for "a number of days."" Elsewhere, and also from Reuters: "Victims of superstorm Sandy on the U.S. East Coast struggled against the cold early on Sunday amid fuel shortages and power outages even as officials fretted about getting voters displaced by the storm to polling stations for Tuesday's presidential election. Overnight, near-freezing temperatures gripped the U.S. northeast. At least two more victims were found in New Jersey, one dead of hypothermia, as the overall death toll from one of worst storms in U.S. history climbed to at least 112. Fuel supplies continued to rumble toward disaster zones and electricity was slowly returning to darkened neighborhoods after a storm that hit the coast last Monday. New York Mayor Michael Bloomberg said it would be days before power is fully restored and fuel shortages end."
A week ago we reported that as part of the surge in the Italian anti-austerity movement, the time had come for none other than that forced exile (courtesy of the ECB's bond yield tactics) whose political career ended prematurely precisely one year ago, Silvio Berlusconi, to announce not only his political ambitions, but his desire for vengeance when he made it clear he is willing and ready to scuttle Mario Monti's cabinet. It appears that in the April elections, Silvio may now be challenged by none other than Ferrari head, Luca de Montezomolo, boss of the Scuderia, who Ansa reports "has hinted he might rethink his recent No to stepping into the political ring after April elections."
In the aftermath of yesterday's better than expected jobs number there have been many analyses in the media on both sides of the aisle, either attacking or defending Obama's track record in creating jobs. All have come up with arguments which according to their authors, are solid and defensible. There is one analysis, however, which is missing, and that is a follow up of what we showed yesterday in "Chart Of The Day: America's Geriatric Work F(a)rce." In it we demonstrated the very much "under the radar" schism of America's workforce since the NBER-defined official end of the recession in June 2009 into the "haves", or those above 55, who have been able to get a job since the end of the recession, and the "have nots", or all those in the labor force who have not been able to find a job. So how does this data look when extended to the beginning of Obama's term, or the 46 full months starting with his inauguration in January 2009, and continuing through the latest, October 2012 data point. The chart is presented below; you decide.
Whilst the economic data shows at least some signs of an anaemic turnaround, China’s corporate results are demonstrating just how difficult things have been. During a slowdown, it is common for payments to be delayed as everyone hangs on to cash. Some companies, though, can be tempted to avoid curtailing production by offering reluctant customers much easier credit to encourage sales, the hope being that the slump will soon end and “natural” demand will pick up again. The trouble of course is that if the slowdown is prolonged, or the recovery weaker than expected, these accounts receivable (A/R) might turn “un-receivable”, and thus have to be written down as losses. An increase in A/R is expected, but such a large increase suggests that some companies have been staying in operations through this vendor financing. In the struggling coal sector, at the end of June, accounts receivable had jumped 52.8 % for the 90 biggest coal firms. The need for a stronger turnaround is becoming more and more urgent!
It appears that the Bundesbank has never heard of the saying: when in a hole, stop digging (neither has any Keynesian in the history of humanity, but that's a different story). From Buba to Goldman's (and now new York Fed's) Bill Dudley: "you can be assured that we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk.... While gold is important, we have to combat a crisis of confidence in the euro area. This is the task we need to concentrate on. And we will do so."
Self-sufficiency matters. Bridgewater's Ray Dalio sees this logical concept as consistently an important ingredient for individuals, and even more so for societies as a whole, to become successful. As he notes in a recent missive, "self-sufficiency encourages productivity by tying the ability to spend to the need to produce," adding that is likely not controversial to state that people spend money they earn differently than money they are given (i.e. the connection between working hard and spending is a healthy one). By quantifying 'self-sufficiency' as one of the parts of 'the formula for economic success', Dalio shows that "Societies in which individuals are more responsible for themselves grow more than those in which they are less responsible for themselves." The nine-factor gauge of self-sufficiency provides some interesting insights into those nations most likely to experience above-average growth going-forward and those that are not; as European countries, notably Italy, France, Spain, and Belgium, all ranking at the very bottom on self-sufficiency. Perhaps, in order to encourage growth, these nations must enable their citizens' self-sufficient animal spirits by removing their pacifying nanny-state support?
With only three days to the big unveiling, the candidates are essentially tied for the Presidential election. The Reuters/Ipsos daily tracking poll released this morning has (of likely voters) 47% backing Obama and 46% backing Romney. The two statistics fall within the realm of statistical noise implying there is no difference and that is why so much time is now being spent in the battleground states; especially since the same poll has Obama leading on electoral college votes and such a huge swathe of 'undecideds' who remain very balanced. The closeness of the race does raise the concern about Bush-Gore-like hanging-chad discord and as we have discussed in the past (the 70-percent, the 3.5 class society, and the Political Black Swan). The chances of social unrest at a close decision are non-negligible in the current environment and should not be dismissed; though we are not sure that Bill Maher's 'comedic' sentiment is really helping: "If you're thinking about voting for Mitt Romney, I would like to make this one plea: black people know who you are and they will come after you."
While top-down macro headlines, anchoring-biased surveys, and election-oriented government-aided statistics suggest a world of unicorns and teddy bears where everyone and their pet rabbit 'Dave' should be buying stocks with both hand and feet for the 'upside' when the fiscal cliff is 'solved' and 'Bernanke has got your back'; why-oh-why is every rally faded? In Size? Perhaps this is the answer? Goldman Sachs Analysts Index (GSAI) - a quantified bottom-up look at firm-by-firm views of the current and expected economic reality aggregated across all of the company's analysts - is bad and getting worse in a hurry. The main index slumped to 32.9 in October from 44.1 in September, with all sub-components falling 'suggesting depressed business activity from the bottom-up'. Perhaps worse, the employment index remains weak and price indices suggest a deflationary future. This index of real economic activity is its lowest since the 2008-9 recession and sends a considerably more pessimistic message than many of the business 'surveys' from the Philly Fed or Chicago PMI. Perhaps it is this reality on the ground that is stalling the wealth-building stock-levitation that is so economically required by our central planners - as it seems the broad improvement in September was transient.
We can only hope that the chart below, which shows a rather disturbing linkage between consumption of chocolate (in kg/yr/capita) and Nobel prize laureates per 10 million of population, is simply a good confirmation of the old adage which everyone these days seems to forget (especially those who look at "black box" models and predict the outcome of the presidential election with 75.304% accuracy in hopes of signing even better book deals) that correlation most certainly is not causation. Of course, for the vast majority of people who have no idea where statistics ends and heuristics begins, there is nothing greater in life than a high R-squared, which is why we expect that the next generation of Americans will be even fatter (if that is even possible) for one simple reason: their proud parents will fed them intravenous chocolate in hopes of creating the next Economics Nobel prize winner.
For many, the collapse of the housing bubble was the trigger that began the era of economic slowdown Americans find themselves mired in. But recently there have been growing reports in the media of a housing "recovery." So we've invited Patrick Killelea, founder of the popular housing site Patrick.net and author of The Housing Trap: How Buyers Are Captured and Abused and How to Defend Yourself, to clarify the situation. The short answer is this: While there are some markets where home prices are back in line with both fundamental and historic norms, buyers still need to exert caution when making a purchase. Patrick also shares insights from his analysis of years of national home purchases. These include: don't sell too often (the transaction costs will kill your returns), don't upgrade too frequently (it's more costly than you think), and it's worth it to transact without an agent if you're able to do so.
With everyone's attention focused on the aftermath of hurricane Sandy, some may have forgotten that the Middle East is the proverbial powder keg, just waiting for an Archduke and a lit match, not necessarily in that order. Moments ago, Israel's military reminded us of just that when it reported that 3 Syrian tanks have entered the Golan Heights DMZ. Because it appears that the absolutely deranged and insane (or at least that's how it will be portrayed) Syrian regime is not satisfied with provoking the humanistic Western media with "offensive" measures taken against both Turkey and Lebanon, it now has decided to enter the lion's mouth, and is begging, just begging, for a UN-endorsed retaliation. How soon until Syria floats a submarine into New York harbor where it explodes but only after leaving a convenient note saying "Death to the Infidels, Love Syria." Or something just as realistic.
On October 30, the day after the worst natural disaster in New York history struck and flooded virtually all of downtown, Governor Andrew Cuomo tweeted the following dramatic picture of Whitehall station, which was then completely submerged underwater. A few days later, Whitehall station is almost dry. Watch this MTA video to see how they did it in 3 short days.
Mitt Romney has a credibility problem. He changes his beliefs like laundry (abortion, medical insurance, whether Bin Laden was worth killing, attacking Iran), refuses to disclose his tax returns, and won't explain how he could possibly pay for the tax cuts he proposes. But there is another scandal in Romney's campaign -- namely Glenn Hubbard, Romney's chief economic advisor, who was chairman of the Council of Economic Advisors under George W. Bush, and is now Dean of Columbia Business School. I interviewed Hubbard for my documentary film Inside Job, and analyzed his record again for my book Predator Nation. The film interview became famous because Hubbard blew his cool after I interrogated him about his conflicts of interest: "This isn't a deposition, sir. I was polite enough to give you time, foolishly I now see, but you have three more minutes. Give it your best shot." But the really important thing about Hubbard isn't his personality; it's that as an economist and an advisor, he is a total, unmitigated disaster.