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Dale Franks

Dale Franks’ QandO posts

Economic Statistics for 29 Sep 11

Today’s economic statistical releases:

The Commerce Department’s final estimate for second quarter GDP was revised upwards to 1.3% annualized, compared to the previous estimate of 1.0%. It’s a mediocre revision to an unimpressive number.

A big 37,000 decline in initial jobless claims last week pushed the total down to 391,000. Claims seem to have been inflated by Hurricane Irene’s aftermath in prior weeks.

The National Association of Realtors reported that the pending home sales index fell 1.2 percent to 88.6. Credit and appraisal problems are on the rise, which indicates future weakness, as well.

Corporate profits in the second quarter were revised upwards to an annualized $1.470 trillion, up 0.3% on a year-over-year basis.

The Bloomberg Consumer Comfort Index dropped to -53 in the period ending Sep 25. That’s the second-lowest reading ever for the index. Confidence by homeowners and part-time workers fell to the lowest level since 1990.

The Kansas City Fed’s Manufacturing Index improved slightly to 6 in September from 3 in August. Readings above 0 generally indicate expansion in activity.

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Dale Franks
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Economic Statistics for 28 Sep 11

Today’s economic statistical releases:

Last week, mortgage rates dropped, and the Fed announced a switch to longer term treasuries. This sparked a rush of refinancing, as well as new mortgage applications. The Mortgage Bankers Association reports that mortgage applications rose by 9.3%, led by a 11.2% rise in re-fis, and a 2.1% increase in purchases.

Durable goods order fell –0.1% last month, both overall and ex-transportation,  though they were still 12.3% higher than last year.

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Dale Franks
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Economic Statistics for 27 Sep 11

Today’s economic statistical releases:

ICSC Goldman reports retail sales slowed for the 2nd consecutive week, down 0.2% for the week, with the year-on-year rate down to 2.7%. Meanwhile, Redbook reports slightly below trend retail sales growth of 4.2%.

The S&P Case-Shiller Home Price Index held steady for the last week, with no change in prices from last month, on a seasonally-adjusted basis. Year-over-year, however, the price index is down -4.1%.

The State Street Investor Confidence Index, despite a rough couple of weeks, shows a boost in confidence to 89.9 from August’s revised 88.1.

The Richmond Fed Manufacturing Index shows the third consecutive drop to -6 from last month’s -10, as manufacturing in the Richmond Fed’s district continues to contract.

The Consumer Confidence Index rose to 45.4 from 44.5 last month. Despite this, consumers report deteriorating current conditions, which bodes ill for the September employment report. On the other hand, the 6-month outlook rose, while inflation expectations fell, bringing the overall index higher.

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Dale Franks
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Economic Statistics for 26 Sep 11

Today’s economic statistical releases:

New home sales fell to a 295,000 annual rate, compared to 302,00 in July. This is a nine-month low for new home sales. Of course, without any serious mortgage lending by banks, we can expect home sales to remain depressed.

The Dallas Fed’s Texas Manufacturing Outlook Survey index of general business conditions slipped to -14.4 from last month’s -11.4. The production index rose, however, from 1.1 to 5.9 as factory activity increased.

The Chicago Fed National Activity index fell to minus 0.43 in August from plus 0.02 in July. Employment-related indicators fell to -0.08, and consumption & housing slipped to -0.35.

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Dale Franks
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Observations: The QandO Podcast for 25 Sep 11

In this podcast, Bruce Michael, and Dale discuss the Republican presidential field, and the apparently inevitable Greek default,

The direct link to the podcast can be found here.

Observations

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The Deniers rear their ugly heads again

Researchers at CERN, the big European physics laboratory, have released some interesting findings that, if true,would  cast doubt on a fundamental conclusion made by Einstein’s theory of relativity.

From 2009 through 2011, the massive OPERA detector buried in a mountain in Gran Sasso, Italy, recorded particles called neutrinos generated at CERN arriving a smidge too soon, faster than light can move in a vacuum. If the finding is confirmed by further experiments, it would throw more than a century of physics into chaos.

For over a century, since Albert Einstein published the Special Theory of Relativity (SRT)—buttressed further in 1916 by the General Theory—it has been settled science that the speed of is nature’s ultimate speed limit.  As an object approaches the speed of light, its mass increases. At the speed of light—were it possible to reach it—the object’s mass would be infinite. That would require, of course, an infinite amount of energy to propel the object.  Hence, moving faster than the speed of light is a physical impossibility.

Since 1905, through direct experimentation, mathematical modeling, and, later, measurements taken during the space program, as well as computer models, science has time and time again proved that the Special Theory of Relativity does, in fact, accurately model the way the universe works. The entire foundation of modern physics is built upon SRT. It has been proven correct over and over again. Clearly, SRT is settled science. An attempt to overturn it is, essentially, an attempt to overturn the entire body of physics that has been so painstakingly established over the past century.

Obviously, SRT is true.  Its conclusions are beyond questioning. Again, the science is settled, and there is almost universal scientific consensus about the truth of SRT.

Since that is so, one wonders what purpose the experiments at CERN might be. SRT needs no further validation, so there must be other motives. Who is funding this experimentation? Why are they so interested in denying SRT? If SRT is overturned, the implications throw cosmology in general into disarray. Out would go the Big Bang theory. Is this new experiment real science, or is it just another ploy of Big Plasma to overturn the settled view of cosmology?

These "scientists" at CERN say that more experimentation is needed to validate these results. But, they are so clearly wrong, it’s difficult to see what purpose further experimentation along these lines would serve. This transparent attempt to return physics to the limited and primitive world of physical experimentation, rather than the modern use of sophisticated mathematical models, is deeply subversive.

Now, there are calls for trying to replicate this experiment—at US taxpayer expense—at the Fermilab, here in the US. I see no reason to risk the scientific integrity of our premier physics laboratory pursuing the dreams of these SRT deniers at CERN.

SRT’s proof is incontrovertible, and any attempt to prove otherwise is a perversion of science. The science is settled. Consensus is almost universal. So, let’s not pursue these silly, pointless experiments. The important thing to remember about science is that, once you question the received wisdom proven repeatedly in the past, the result is chaos. It is vitally important that we do not throw all of modern physics and cosmology into disarray over some odd experimental results that really have no real-world application.

That would just be silly.

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Dale Franks
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Economic Statistics for 22 Sep 11

Today’s economic statistical releases:

Well, this really isn’t a statistic, as such, but the Dow slipped -300+ at the open, on a pessimistic economic outlook for the US and EU, weak data for the euro zone,  and a negative outlook on the US economy from the Federal Reserve. Why the markets are reacting as if any of this is a surprise is beyond me.

Initial claims for unemployment fell -9,000, to a still-unpleasantly-high 423,000. Meanwhile, last weeks claims were revised upward by another 4,000.

The Bloomberg Consumer Comfort Index dropped to –52.1,  the worst since the recession "ended" in June, 2009. Note the scare quotes around the word "ended".

The Index of Leading Indicators rose 0.3% last month, though mainly on money supply gains as investors bailed out and went to cash. Which actually isn’t a good sign.

The FHFA home price index in July rose 0.8%. That’s the fourth month in a row the index has risen, so not everything is a complete disaster. We take our good news where we can find it, I guess.

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Dale Franks
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Economic statistics for 21 Sep 11

Today’s economic statistical releases:

The market was shocked into stupefaction at an Existing Home Sales release that was stronger than expected. Sales rose by 7.7% to an annual rate of 5.03 million. On a year-over-year basis, sales were up 18.6 %.

The Mortgage Bankers Association reports that purchase applications fell –4.7%, while re-fi apps rose by 2.2%, resulting in a composite index up by 0.6%.

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Dale Franks
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Economic statistics for 20 Sep 11

Today’s economic statistical releases:

ICSC-Goldman reports that retail sales fell by –1.2% for the latest week, though the year-on-year rate is on trend at 3.4%. Meanwhile Redbook’s same-store year-on-year sales came in at the low end of the trend at 4.1%.

Housing starts fell -5.0% in August to a lower-than-expected annualized pace of 0.571 million. But, building permits increased by 3.2%, signaling a bit more health in the future. Overall, housing still remains a drag on the larger economy.

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Dale Franks
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Economic Statistics for 19 Sep 11

Today’s economic statistical releases..well, "release", actually…is the Housing Market Index, which fell one point to 14. It’s been stuck around this level since the Home Buyer Tax Credit expired last June. Even the decline in mortgage rates over the last year hasn’t helped at all.  This is also an index where the break-even point is 50, i.e, anything above that is an expansion, while below it is contraction. So, 14 is…bad.

Of course, part of the problem is that, not matter how low mortgage rates are, that doesn’t really help if the bank is demanding to see $200k in cash as security before they give you a $200k loan. Being unable to get a loan, unless you’re so credit-worthy that you don’t need a loan kind of defeats the purpose of mortgage lending.  Foreclosures are still high, so banks are still scared to loan money.

Welcome to the world of bad debt overhang.

Note to progressives:  Taxing The Rich™ won’t solve this problem. In case you were wondering.

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