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Monday, April 23, 2012

More on Sarkozy and Le Pen...

...from (1) Christopher Dickey and Tracy McNicoll, whose Daily Beast article, 'French Election: Four Ways Nicolas Sarkozy Got Screwed' is highly entertaining as well as informative, and (2) Richard Waghorne of The Daily Mail (U.K.), who, prior to the election, opined that, 'Despite her flaws, the only responsible vote in France next Sunday is one for Marine Le Pen'.

Waghorne's piece was so cogent that by the closing paragraph I found myself humming The Marseillaise, and felt compelled to share as much of it as possible with you, dear reader.

Can't get enough of yesterday's French Elections ?

Then check out election data from the French Ministry of the Interior and from the website Regards Citoyens assembled by Simon Rogers of The Guardian, , and a vote map supplied by Google Politics and Elections.

Interestingly, in much of the news media, Hollande's first place finish and Sarkozy's survival to soldier on in the second round were both overshadowed by the strong third-place showing by Marine Le Pen of the National Front (pictured at right).

For instance, BusinessWeek's Tara Patel and Mark Deen by-pass any mention of the first-round victors at the top of their story,
'Anti-Euro Le Pen’s Record Vote to Weigh on French Election', quoted below.
Almost one in five French voters cast their ballots for National Front leader Marine Le Pen’s call to abandon the euro and turn her country into an anti- immigrant fortress. 
While that wasn’t enough to propel her into the final round of the presidential election, her party’s record 17.9 percent showing make her supporters key to the May 6 runoff between President Nicolas Sarkozy and Socialist Francois Hollande.
“We have blown apart the monopoly of the two parties of banking, finance and multinationals,” Le Pen said last night, declining to endorse either candidate. “Nothing will ever be the same.”
Similarly Angelique Chrisafis of The Guardian reports, 'François Hollande on top but far right scores record result in French election' :   
François Hollande has moved a step closer to becoming the first Socialist president of France in a generation by beating the incumbent, Nicolas Sarkozy, in the first round of elections. But the surprisingly high vote for the extreme-right candidate, Marine Le Pen, boosted the overall figures for the right and meant that the final runoff vote on 6 May remains on a knife edge.
Partial results showed Hollande – a former Socialist party leader, rural MP and self-styled Mr Normal – with a clear lead at more than 28%, compared with Sarkozy on 27%. It is one of the left's best ever results and will raise momentum for next month's final runoff where only the two candidates will compete against each other. The Socialist party is seeking to return to the presidency for the first time since François Mitterrand's re-election in 1988. 
Sarkozy's total will be seen as a personal failure. It is the first time an outgoing president has failed to win a first-round vote in the past 50 years and makes it harder for Sarkozy to regain momentum. The final vote between Hollande and Sarkozy now depends on a delicate balance of how France's total of rightwing and leftwing voters line up.
 Hollande told cheering supporters in his rural fiefdom of Corrèze in south-west France that he was best-placed to lead France towards change, saying the vote marked a "rejection" of Sarkozy and a "sanction" against his five years in office. He said France clearly wanted to "close one page and open another". He reiterated his opposition to austerity alone as the only way out of Europe's crisis: "My final duty, and I know I'm being watched from beyond our borders, is to put Europe back on the path of growth and employment." 
A key victory of the night was for the Front National's Le Pen, who came third with around 18% of the vote, beating her father Jean-Marie's record success in 2002, and placing herself firmly at the heart of rightwing politics in France. She said "the battle of France has just begun" and "nothing will be the same again". 
The lawyer and twice-divorced mother of three had presented herself as the modern face of her party, trying to strip it of unsavoury overtones after her father's convictions for saying the Nazi occupation of France was not "particularly inhumane". 
She had initially stressed economic issues, calling for France to leave the euro, but in recent days returned to her hard-right stance on curbing immigration. At her final rally in Paris, supporters had shouted: "This is our home, our country!" 
Sarkozy's chances now hang on bringing over voters from Le Pen. However, not all her voters will automatically turn out for Sarkozy in the second round; there is a strong anti-establishment feeling among many.

And now, on this soggy Monday, some completely different things no particular order, from various organs of the BBC.
See #1, above. 

1.  Surf Argot for the novice (or 'kook').

2.  Ethel the Frog : The Piranha Brothers (I).

3.  Ethel the Frog : The Piranha Brothers (II).

4.  The Ministry of Silly Walks.

5. (and in honor of the French Presidential Election) La Marche Futile.

Sunday, April 22, 2012

Belatedly I post Rita Wilson's Column on 'Greek' Easter in the Washington Post

Rita Wilson and husband, whatsisname.
Rita Wilson’s Big fat Greek Orthodox Easter
By Rita Wilson

Here are some of the things that non-Greeks may not know about Greek Easter: We don’t do bunnies. We don’t do chocolate. We don’t do pastels.

We do lamb, sweet cookies, and deep red. The lamb is roasted and not chocolate, the sweet cookies are called Koulorakia and are twisted like a braid, and our Easter eggs are dyed one color only: blood red. There is no Easter Egg hunt. There is a game in which you crack your red egg against someone else’s red egg hoping to have the strongest egg, which would indicate your getting a lot of good luck.

Holy Week, for a Greek Orthodox, means you clear your calendar, you don’t make plans for that week at all because you will be in church every day, and you fast. Last year, in addition to not eating red meat and dairy before communion, my family also gave up sodas for the 40-day Lenten period.

During one particularly stressful moment, there were many phone calls amongst our kids as to whether or not a canned drink called TING, made with grapefruit juice and carbonated water was, in fact, a soda and not a juice, which our then 10-year-old decided it was, so we had a Ting-less Lent.

No matter where I find my self in the world I never miss Easter, or as we call it, Pascha. I have celebrated in Paris, London, New York City, Los Angeles, and in Salinas, California at a small humble church that was pure and simple.

When we were kids, our parents would take us, and now as parents ourselves we take our children to many of the Holy Week services including the Good Friday service where you mourn the death of Jesus by walking up to the Epitaphio, which represents the dead body of Christ, make your cross, kiss the Epitaphio, and marvel at how it was decorated with a thousand glorious flowers, rose petals and smells like incense.

Some very pious people will crawl under the Epitaphio. I have always been so moved to see this. There is no self- consciousness in this utter act of faith. There is no embarrassment to show symbolic sorrow at the death of our Saviour.

French Presidential Election Update

As expected, it'll be Sarkozy vs. Hollande in the second round.  For detail on Hollande's first-place showing, let's go to the report of Joseph Bamat of France24.

Socialist presidential challenger François Hollande topped the first round of France’s presidential election on Sunday with 28.4 percent of votes, while incumbent Nicolas Sarkozy finished second with 25.5 percent, according to exit polls. Those figures set up a widely expected run-off between Sarkozy and the candidate of France’s main opposition party who led most voter intentions surveys before the first round. 
Exit polls announced at 8pm showed Marine Le Pen, leader of the far-right National Front party, had conquered third place with 20%. Far-left candidate Jean-Luc Melenchon took 11.5%, and centrist François Bayrou 8.5%, the Ipsos polling agency said. The placement of the two leading candidates in the election were in line with dozens of opinion surveys published before Sunday’s ballot, but Le Pen’s figures were well above any of those forecasts.
However, Le Pen’s surprise score and doubts about who supporters of Bayrou would ultimately back promised to make the second round a nail-biting election.
For diverse (and terse) views of the outcome, check out Reuters' report, 'Analysts' view: Hollande tops Sarkozy in French vote'. And for live updates of the results, check out The Guardian (U.K.).

Special French Election Edition !!!

President Sarkozy (right) and his chief rival, Francois Hollande (left, in more ways than one)
It's not too late to inform oneself about the French Presidential Election, the first round of which is proceeding, even as I type.

'First round' ? How many rounds are there, you ask ?

For the skinny on how it works, check out Angela Diffley's succinct article on the Radio France Internationale website.

Apparently turnout is ramping up, according to France24.

Who is favored to win, according to the exit polls ? Well, that's something of a problem--and issue--in France, where publication of such info is illegal, and could even result in nullification of the election.

No kidding.

Look, if you don't believe me, read France24's piece, 'Row over exit polls engulfs French presidential election', which I excerpt below, for the irremediably lazy.

Prefer non-Gallic coverage of the vote ? Check out BBC Online.

* * *

A row over the publication of exit polls is threatening to mar the run up to the French presidential elections.

With less than 24 hours before France goes to the polls in the first round of voting, authorities have issued threats of legal action against anyone who intends to flout a ban on the publication of exit polls.

In France, exit polls - which are taken as an accurate reflection of the election result - are available shortly after 6pm when voting stations close in small towns and villages across the country.

But under current rules, French media are barred from publishing the surveys or even partial results until 8pm, the time when voting stations in big cities like Paris and Marseille officially shut.

If there is a widespread breach of the ban, France could even face the possibility of the elections being annulled as candidates have the right to call for a revote if they feel electors have been unduly swayed by the leaks.

The ban is designed to prevent late voters from being influenced by exit polls which could persuade them to change their preference or even dissuade them from voting at all.

But with the advent of social media, many believe the law is outdated and predict the exit polls will inevitably be leaked and published online by some of France’s millions of Twitter and Facebook users.

The waters are muddied further because foreign media sites are exempt from the law, and some such as Belgium-based newspaper Le Soir have vowed to do “their journalistic duty” and publish the exit polls as soon as possible.

Websites of several Swiss and Belgian newspapers crashed in 2007 under the weight of French online visitors wanting to know the results before their own media had published them.

Earlier this week leftwing French daily Liberation added fuel to the fire by insisting it “reserved the right” to publish predicted results of Sunday’s first round vote at 6.30pm. It invited viewers to visit the site at 6.30pm hinting that it would breach the law.

Authorities in France hit back Thursday vowing to fine any media outlet, including social media users, €75,000 if they breach the law.

Francois Molins, France’s chief prosecutor warned that those who publish polls or predictions before 8pm “in whatever form” would be prosecuted.

Saturday, April 21, 2012

Haven't taken your RDA of cynicism ?

Are you a member of the 99% ?  And are you aware that it's nearly fatal not to take your recommended daily allowance of cynicism ? But where can one get said RDA, for free ? Permit me to recommend Phil's StockWorld. What's Phil Davis' take on the U.S. Financial Markets, our Government, and the Fed ? Just check out these indicative graphics from his website.


Thursday, April 19, 2012

More info on Gold Demand in India

...provided by goldbug GoldCore, in his SEEKING ALPHA post, 'Central Banks Favour Gold As IMF Warns Of 'Collapse of Euro' And 'Full Blown Panic in Financial Markets'  (see first excerpt below), and from Christian Magoon, in his SEEKING ALPHA post, 'Will Gold Dodge These 2 Bullets?' (see second excerpt below).

BTW, the IMF warning which GoldCore headlines ? It's not prominent in the April 2012 IMF World Economic Outlook Report, but cited among 'Several trail risks' that 'are hard to quantify but merit attention'. For the skinny on the WEO Report, click here. For the full report, click here

* * *

India's central bank is further debasing the Indian rupee which will lead to further safe haven demand for gold, and is still the world's largest buyer of gold.
India has had its first rate cut in 3 years and was cut by a higher than expected 50 basis points to 8%.
This comes despite inflation being higher in March compared to last month surging to 9.47%.
The recent tax increase on gold was a futile attempt to curtail gold demand - as Indian policy makers realised accelerating inflation would lead to further gold demand.

Wedding season is at its peak in India now and Akshaya Tritiya, a large gold buying festival, happens later this month. There are forecasts of a 25% increase in demand during the Hindu festival next week after demand was curtailed during the gold jewelers strike (see Other News below).
Deepening negative real interest rates in India and the risk of an inflation spiral will see Indian demand remain robust and it may even accelerate if inflation deepens - contrary to suggestions that Indian gold demand will fall precipitously

* * *


There are two nations that lead the world in gold consumption - India and China. Both countries have strong cultural ties to gold and heavily support the number one driver of gold demand: jewelry. However, now both countries are showing symptoms that could materially impact their consumption of gold thus firing a shot at gold prices. China has publicly revised its economic growth expectations downward. India is expected to do so as well after recent discouraging GDP data. These economies which were significant growth engines - even during the financial crisis - are slowing down. That will weaken gold demand and thus prices.

In addition, India has now targeted gold with a move to double the tax on imported gold. While a 21 day national jeweler's strike in reaction to increased gold taxation recently ended, it seems likely that the doubling of taxes on imported gold will occur. This is a negative influence on gold demand in the largest consumer of gold in the world as of the 2011 calendar year.

So can this demand bullet be dodged? The answer is yes. China's economic slowdown could occur in a soft enough way to minimize impact. In addition, its central bank could use weakened gold prices as an opportunity to purchase more reserves to back up its massive exposure to paper currency including the U.S. Dollar and Euro. India is trying to jumpstart its slowing economy by cutting interest rates and the cash reserve ratio for banks. This excess liquidity has the potential to boost economic growth and thus demand for gold. In addition it also has the potential to strengthen the rupee, a currency that has weakened due to repercussions from the EU debt crisis. A stronger rupee makes gold more affordable to the second most populated country on Earth.

The second bullet [threatening the price of Gold] is the strengthening of the U.S. Dollar. Gold is primarily denominated in U.S. Dollars so a stronger dollar means gold is worth less dollars. What's behind the threat of a stronger U.S. Dollar? Simple, the EU debt crisis. Recently Spain has elevated this threat, with France potentially right behind it. In late 2011 it was fueled by the flare up in Greece. Gold swooned versus the U.S. Dollar during that period as investors went "risk off" and jumped into greenbacks. (see chart near the end of the article) Now as Spain heats up and pivotal elections near in France, this bullet seems to have gained in size and velocity.

So can this bullet be dodged by gold? The answer is not entirely, or in other words no. Gold has already been impacted by drama in Spain, but substantial damage has not occurred yet. If Spain can be contained and bailed out by the EU establishment, the impact on gold could be similar or less to Greek crisis. Remember markets have been through this event not that long ago.

The big concern is not Spain but an implosion of France. The debt to GDP ratio in France officially is 86% - more than Spain or Britain. Unofficial calculations put that figure closer to 150%. Perhaps that's why the markets are making France pay almost twice the borrowing costs of EU partner Germany. Don't tell that to the Socialist party in France however, as they dislike austerity and instead want to spend their way out. (more on that below from the BBC) In addition, this party predictably has issues with Germany's austerity push within the EU community. President Sarkozy, under election pressure, has even begun to break with the Germans and the ECB.

Wednesday, April 18, 2012

Blogger DJ wants to jump right to summer...

...and the beach, with these sand-surf-and-sun selections.

The Beach Boys -  California Girls, Good Vibrations, Help Me Rhonda, Little Deuce Coupe, Fun Fun Fun, Surfin' USA

Dick Dale & The Del-Tones - Thunder Wave

Dick Dale and Stevie Ray Vaughan - Pipeline

The Sandals - Theme from 'The Endless Summer

Is your ETF or ETN an endangered ETP ?

Check out the list of at-risk ETP's on Ron Rowland's April 2012 ETF Deathwatch, which "has topped 300 [products] for the first time".

India's Rate Cut : Good News for Gold ?

Yes, argues Avery Goodman, in a SEEKING ALPHA post, excerpted below.

* * *

India is the world's largest consumer of gold and silver jewelry, and is a rapidly increasing force in platinum jewelry sales as well. Jewelry there, however, is viewed not only as a thing of beauty as it is in the West, but also as an investment. People buy it, in many cases, to preserve their wealth.
On Tuesday, the Indian Central Bank surprised everyone by lowering interest rates by a full half-percent, which was more than expected. India's inflation rate is quite high at nearly 7% per annum. The Central Bank seems to be ignoring this and concentrating on growth even in the face of higher inflation. While some commentators have interpreted the central bank's comments about inflation to indicate that this is a one-off cut, I doubt it. It would be rare and unusual for a central bank to do a "shock and awe" rate cut like this one without intending to do more of them.

This may be a pattern many other emerging market central banks will follow. All of them are very worried about bolstering local economies against the turmoil in Europe, which is the biggest export market in the world. Other central banks are likely to lower rates in spite of high inflation. The natural response of Indians and others all over the world will be the traditional one. They will probably trade in their rupees, yuan, pesos and so on for hard currency like gold and silver as they have always done. Nowadays, in India at least, they'll also trade them in for platinum.

This interest rate cut is probably the first in a series of rate cuts, perhaps in response to economic turmoil in India's export markets (EU). Whatever may be motivating it, interest rate cuts will stimulate buying activity not only in the jewelry sector, but also in the overall Indian economy, as cheaper money always does. That means increased demand for platinum, palladium and silver in the industrial sector as well.

So, who is next? Will China be the next emerging BRICs nation to ease monetary policy in order to stimulate its economy? It is already close to surpassing India as the biggest precious metals purchaser. How about Russia and Brazil? The current leveling off in precious metals demand has been brought about partly by rate hikes and policy tightening. A sharp reversal of such policies should also bring about a sharp increase in demand.

In the short run, the prices will be governed, as always, by the capricious whims of banks and hedge funds. Prices may be profoundly affected by opportunistic short sellers who take advantage of some entities that desperately need to raise cash. Such liquidations this time around, however, will be tempered by intense physical demand, at least in gold. Emerging market central banks are buying gold on all big dips. Bullion banks might otherwise like to play hard ball with paper market speculators. But they are going to have trouble with that when forced to supply physical gold to Asian buyers.

If there are any significant price dips, long-term investors should buy them. If platinum, palladium or silver experience bigger price dips than gold, you can be sure that part of the reason will be the greater ease by which those other metals can be manipulated. It is probably smart to shift your dip buying preference to those secondary precious metals if the swings are much bigger than the swings in gold.

The start of an interest rate cutting cycle in India, the probability of more rate cuts there, and the likelihood that other emerging market central banks will probably follow suit will be very positive for precious metals prices over the long haul. With upcoming intense turmoil in currency markets, the probability of more LTRO giveaways in Europe, and new quantitative easing episodes in America the picture becomes even better.

* * *

For Goodman's specific ETF and Stock recommendations, reference his article.

Monday, April 16, 2012

Which Euro Banks Are Most Exposed to PIIGS Debt Woes ?

Distilling information which the European Banking
Authority (EBA) published in July 2011 after stress-testing
91 banks, financial blogger Katchum offers these conclusions :
The exposure to Spain primarily came from the Spanish banks themselves...  BBVA [ Banco Bilbao Argentaria ], Banco Santander (STD), La Caixa, BFA-Bankia, Banco Popular Espanol. What is striking here is that on average, all of these Spanish banks had exposure greater than their equity [emphasis mine]. This means that a government default would have significant consequences for the solvency of these Spanish banks. Also note that Barclays (BCS) has significant exposure to Spanish debt. It is advisable not to have these banks in your portfolio during a debt collapse in Spain.
Commerzbank [Germany] is exposed to Spain, Greece and Italy. In total, it has 24 billion USD exposure to the PIIGS, while it has a book value of 31 billion USD (77%). In a worst case scenario, Commerzbank will be almost insolvent.
BNP [BNP Paribas, France] has exposure to Spain, Portugal and Italy. It has 46 billion USD exposure to the PIIGS in total, while it has a book value of 96 billion USD. The exposure to the PIIGS is very significant (50%), especially due to its exposure to Italy.
Credit Agricole [France] is another bank that pops up regularly. Credit Agricole has exposure to Spain, Portugal and Italy. It has 21 billion USD exposure to the PIIGS, while it has a book value of 54 billion USD. The PIIGS exposure is very significant (40%) compared to its book value.
Barclays [U.K.] is the last in the list and has exposure to Spain, Portugal and Italy. In total it has 26 billion USD exposure to the PIIGS, while it has a book value of 84 billion USD. This exposure is significant (30%).
For the relative size and importance of the aforementioned institutions, check out's 'Top Banks and Banking Groups in Europe, Ranked by Total Assets'. 

U.S. not alone : France has an education crisis too

according to Geert De Clercq of REUTERS, whose dispiriting article, 'Young, French and desperate' is excerpted below.

* * *

Some 150,000 pupils leave France's ruthlessly selective education system every year with no diploma whatsoever. Many end up in bleak suburbs around the big cities, where youth unemployment is high and crime is rife.

Those who do have diplomas face the barrier of a rigid labor market that overprotects the older generation and offers young people an endless series of temporary contracts, forcing them to delay mortgage and marriage for years.

In December, Gallup International's annual survey of 51 countries found that France is the most pessimistic country in the world about the economic outlook, and the French are more downbeat than they have ever been in the past 30 years.

The only politician who has put youth front and centre of his platform is Socialist challenger Francois Hollande, running neck-and-neck with Sarkozy in voting intention polls for the first round, and leading him for the May 6 runoff.

"If I am elected president, I want to be judged against one and only one objective: whether young people will have a better life at the end of my mandate in 2017 than in 2012," Hollande said in a keynote speech in January.

This may be even harder than balancing the state budget, another of his campaign promises.
His first priority is to reform schools. France has a meritocratic tradition dating back to the creation of a uniform, free and secular public education system in the 1880s. Children are tested from primary school onwards, with the aim of selecting the best students and directing them to top schools.

Those who do best in exams go on to top high schools such as the Henri-IV and Louis-le-Grand Lycees in Paris, and continue via even more selective "prepa" classes to the "grandes ecoles" that train a few thousand elite students per year.

The very best vie for the Ecole Nationale d'Administration (ENA), which takes only about 100 students a year, who become top civil servants, ministers and CEOs of large companies. Hollande himself is an "enarque", as ENA graduates are called.

A system that guarantees success for so few produces failure for many, especially those whose parents do not have the means or the knowledge to help their children play the game.

In "La machine a trier" ("The Sorting Machine"), published last year, four researchers describe the French education system as one that continually classifies and eliminates, condemning the bottom part of every class to perpetual failure.

Olivier Galland, one of the authors, said that in a society with mass access to education, schools need a northern European focus on individual ability, teamwork and success for everyone.
"In a way, French school is a continuation of the Ancien Regime where the diploma replaces the nobility title," he said, referring to the period before the 1789 revolution.

All candidates in this year's election agree the education system is sick, but they prescribe different remedies.

Hollande says he will create 60,000 new jobs in education, pledges to halve the number of students who leave school without a diploma and plans to give every youngster between 16 and 18 some form of training or assistance.

Reversing a Sarkozy decision, Hollande also plans to add half a day to the school week - without adding subject matter - to give children more time to learn.

Friday, April 13, 2012

Turned off by 2012 U.S. Presidential Election ?

You're in good company. So too are Dem pollsters Pat Caddell and Douglas Schoen, who convincingly explain why in their POLITICO piece, 'The empty election', which is liberally (no pun intended) excerpted below.

* * *

What has happened to the 2012 campaign?

This should be the most important election of our lifetime. But it’s clear that something is seriously wrong. How can we be having such an underwhelming, uninspiring and irrelevant election campaign at such a critical juncture?

The very fact that 2012 is being carried out as if it were no different from any other election, at an extraordinary moment — when profound international challenges loom, and serious national crises have gone unaddressed — speaks to the ultimate disconnect between the people and their elected leaders

Never before have voters people had more opportunities to participate in the political conversation; share and disseminate information, and speak directly to our political leaders. Yet the dialogue coming from both parties is as dysfunctional and corrosive as it has ever been in a campaign.

Three-quarters of voters now believe that our elected leaders in Washington govern without the consent of the people, a majority of Americans think that the nation is in decline and believe that their children will not be able to achieve the American Dream, according to Gallup.

There is broad consensus in the electorate about the centrality of promoting economic growth— specifically, the need to promote economic growth at home and remain competitive both here and overseas.

The American people want a government that will, at the very least, be a neutral arbiter that allows everyone to reach their full potential – without favoring any strata, particularly the very rich and powerful. Neither party is addressing these issues seriously, nor offering any overarching vision of national purpose. Instead, lawmakers on the left and right continue to offer an approach that is out of touch with our increasingly disenfranchised and disillusioned electorate.

Neither side has acknowledged that until they offer a real opportunity for businesses to grow, create jobs and expand the economy, we can’t cut the debt and reduce the deficit.

Thursday, April 12, 2012

Fed Up with BLS and its CPI BS ?

Like, say the Bureau of Labor Statistics' latest Consumer Price Index Summary ?
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in February on a seasonally adjusted basis, the U.S.  Bureau of Labor Statistics reported today. Over the last 12 months,  the all items index increased 2.9 percent before seasonal adjustment.
Then check out the American Institute for Economic Research (AIER), and its EPI (Everyday Price Index).
The Everyday Price Index increased 1.3 percent in January 2012 and another 1.1 percent in February. During 12 months ending in February, it increased 4.9 percent. This is somewhat slower than the increase over the same time last year. During 12 months ending in February 2011, the EPI increased 6 percent. All numbers are before seasonal adjustments.
The EPI, a new proprietary index developed by the American Institute for Economic Research, reflects prices of goods and services people tend to buy frequently such as food, utilities, and fuel. It stands in contrast to the more widely known Consumer Price Index, which is issued by the Bureau of Labor Statistics and includes a comprehensive set of prices of all consumer products and services, including big-ticket items such as cars, appliances, and housing.
The recent increase in the EPI is driven primarily by increases in the cost of motor fuel. Motor fuel prices increased 3.5 percent in January and another 4.8 percent in February.
Another category of goods that posted consistent and substantial increases is prescription drugs. Prices went up 0.9 percent in January and 1.1 percent in February.
At the opposite end of the spectrum, personal care products and services, which include items such as toothpaste and haircuts, hardy increased in price at all: 0.1 percent in January and no change in February.
For the AIER's more detailed analysis, 'The EPI Reflects Basic Economic Change', click here.

Wednesday, April 11, 2012

Is it time to re-invest in Japan ?

I don't think so, not after reading Bruce Kasting's piece in
Financial Sense, 'Betting on the Race to the Bottom',
excerpted below.

* * *

 As bad as Euroland appears, and as shaky as the USA looks, Japan looks like it might end up winning the race to the bottom.

There are two very big issues that Japan is confronting; energy and taxes. Both of these issues will come to a head over the next sixty days. I don’t see a soft landing.

Fourteen months ago Japan had 54 operating nukes. Today it has one. By the end of May, it will have none.

There are two significant consequences of the shutdowns: (A) soaring imports of expensive hydrocarbons (LNG, oil and coal), and (B) this summer, there will be as much as a 12% shortfall in electricity to to cool homes and run factories.

The shutdown of the nukes has already led to a major turnaround of Japan’s external trade position. In 2011 Japan reported its first annual trade deficit in over 30 years. The shortfall came to Y2.5T ($32B). In 2012 that number could be as large as $100B.

The shortage of “juice” this summer will cause cut backs in supply to big industry. As a result, industrial production will fall. Depending on the severity of the summer slump, Japan could face negative GDP growth for the full year. This will translate into more red ink in the national budget (already 10+% of GDP). More debt will have to be issued to cover the gap. Japan’s already insane Debt to GDP (230%) has nowhere to go but up.

Japan is leading the world into trouble as far as demographics go. The Social Security and medical costs of its aging population are exploding.

Unlike in the USA, most of the Japanese leaders have acknowledged that the country's position is un-sustainable.

Sunday, April 8, 2012

Chasing Yield from Floating Loan Funds ?

With interest rates on conventional bonds touching rock bottom, you wouldn't be the only investor searching for yield wherever it can be found, like, say, from floating rate loan or bank loan funds.

What are these vehicles, and what are the risks and rewards of investing in them ?

Glad you asked.

Check out the articles cited below.

BTW, both Fidelity and T Rowe Price have open-end mutual fund offerings in this area,  the respective ticker symbols being FFHRX and PRFRX.

* * *

Investopedia - 'Floating-Rate Mutual Funds: Rewards And Risks'

Vanguard - 'Promise of bank-loan funds tempered by credit risk'

Vanguard - 'A Primer on Floating Rate Funds'

Wall Street Journal - 'Are 'Floating-Rate Loan' Funds Still a Smart Move?'

Wall Street Journal -'How Much Will 'Floating Rate' Funds Really Float ?'

Forbes - 'Are Floating Rate Funds The Wrong Answer To Rising Rates?'

FINRA News Release - 'FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds'

FINRA - 'The Grass Isn’t Always Greener—Chasing Return in a Challenging Investment Environment'

Seeking Alpha - Russell Bailyn - 'Floating Rate Bank Loans: An Asset Class Suited to This Environment'

Seeking Alpha -Michael Terry - 'Loan-Based Closed-End Funds: Current Income And Inflation Protection'

Seeking Alpha - Steve Bavaria - 'After Proving Themselves in the Crash, Loans Now Seen as 'Third Asset Class''

Saturday, April 7, 2012

Who'll be Romney's VP ??? And which party will run Congress after the election ?

As it becomes obvious that Mitt Gumby--I mean Romney--will be the GOP's candidate in 2012, one's curiosity naturally turns to question of his running mate. Will he necessarily choose a big-state Republican ? On this topic generally--the choice of VP in modern U.S. politics--Joel Goldstein has written a detailed and persuasive analysis in Crystal Ball : 
One of the persistent ideas regarding vice presidential selection holds that presidential nominees seek running mates from large, competitive states. Guided by that assumption, the Great Mentioners invariably include many politicians from such states on the lists of prospective vice presidential candidates that they compose every four years. The premise seems to be that a running mate can minimally, at best, affect the national election returns but that a popular favorite son or daughter may help swing an important electoral block.

This conventional wisdom regarding vice presidential selection practice encounters one significant problem: It’s wrong. It simply does not reflect the behavior of recent presidential candidates. Presidential nominees presumably know something about electoral politics and are strongly motivated to make politically rewarding choices. Yet in modern times they almost never choose a running mate based on the assumption that he or she can swing a state with a lot of electoral votes. The running mate often comes from a state with few electoral votes and/or a safe state and, when he or she has recently come from a state rich in electoral votes, that fact has played little, if any, role in the selection.
 So who might Mitt choose ? Politico's Maggie Haberman opines :
... Mitt Romney’s vice presidential pick will ultimately come down to two basic choices: whether he wants a running mate who helps him govern or one who helps him politically.

Which imperative reigns won’t be clear until at least the summer, as the GOP convention approaches, and after the fall landscape solidifies. Given Romney’s background and personality, there is little question about the kind of No. 2 he would prefer — someone with whom he could form a strong governing partnership and with whom he would personally be compatible. 
Right now, the name on the lips of most GOP strategists is Ohio senator and former George W. Bush administration official Rob Portman. Second on a number of lists is Tim Pawlenty, a former Minnesota governor who was an early Romney endorser after pulling the plug on his own race, and who would be something of a comfort-zone pick for the GOP front-runner.

After that, the list of potential Romney ticket-mates goes on: New Jersey Gov. Chris Christie, Florida Sen. Marco Rubio, House Budget Committee Chairman Rep. Paul Ryan, Pennsylvania Sen. Pat Toomey, South Carolina Gov. Nikki Haley and New Mexico Gov. Susana Martinez (who has repeatedly said she doesn’t want the job). There’s also Virginia Gov. Bob McDonnell, who presides over a swing state but is seen as badly damaged by the flap over a bill requiring women seeking abortions to receive an ultrasound beforehand.

Mike Huckabee also gets mentioned as someone who would appeal to the conservative wing of the party as well as the evangelical voters who have thwarted Romney in Southern states. For the same reason, Santorum is also name checked.
Finally, the Washington Post's George Will weighs in on 'What Romney needs in a running mate' :
Romney’s running mate should have intellectual firepower, born of immersion in policy complexities, sufficient to refute Obama’s meretricious claims and derelictions of duty. Here are two excellent choices: 
Ryan already is at the center of the campaign and is the world’s foremost expert on the Ryan-Romney plan. No one is more marinated in the facts to which Obama is averse. Ryan has not yet honed his rhetorical skills for communicating complexities to laypersons, but he is a quick study. One drawback is that he is invaluable as chairman of the Budget Committee and in 2015 might become chairman of Ways and Means.
Louisiana’s Gov. Bobby Jindal, 40, was a 20-year-old congressional staffer when he authored a substantial report on reforming Medicare financing. At 24, he became head of Louisiana’s Department of Health and Hospitals, with 12,000 employees and 40 percent of the state budget. Back in Washington at 26, he was executive director of the National Bipartisan Commission on the Future of Medicare. In 1999, he became president of Louisiana’s state university system, which has 80,000 students. In 2001, he served as an assistant secretary of health and human services. He became governor after three years in Congress.
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Which party will dominate the House and the Senate ? In Crystal Ball, Alan I. Abramowitz gives us
'The Early Outlook for the 2012 Congressional Elections: A Forecasting Perspective ':
Based on the most recent polling results, which show a near tie on the generic ballot and a net presidential approval (approval minus disapproval) of close to zero, the House forecasting model predicts a very small Democratic seat gain (2-3 seats) in the House but not nearly the 25 seats Democrats would need to take back control of the House.  On the other hand, the Senate forecasting model gives Republicans a good chance to regain control of the Senate with an expected pickup of 6-7 seats.  That is due almost entirely to the fact that Republicans are defending only 10 Senate seats this year while Democrats are defending 23 seats.

The Senate forecast especially should be interpreted cautiously because the Senate model has a fairly large error term due to the small number of seats in each election.  And of course, it is still early and both the generic ballot and the presidential approval variables could change over the next few months.  However, both have been fairly stable in recent weeks.  Based on these results, it would be surprising if Republicans did not hold onto their majority in the House in 2012 and gain at least a few Senate seats.

Friday, April 6, 2012

I'm rooting for fellow grey-hair Fred Couples to win the Masters

Click here to access the official leaderboard

Co-leading after two rounds, Couples is the only golf elder to survive the cut, which claimed Jose Maria Olazabal, Bernhard Langer, Tom Watson, Craig Stadler, and Ben Crenshaw.

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Looking for a book to give a golf-crazed friend or relative ? 

You can't go wrong with John Feinstein's A Good Walk Spoiled : Days and Nights on nthe PGA Tour, which covers the 1994 PGA Tour, from Q-school on.

Interested in the history of American Golf ?

Try James Dodson's Ben Hogan : An American Life.  Dodson's bio recreates a by-gone era, when pros eked out a living on the tour, a time before TV,  huge product endorsement deals, million-dollar purses.

Another fine choice would be the collection of Herbert Warren Wind's essays in Following Through.

My favorite is Wind's account of the epic 1964 U.S. Open, when Ken Venturi battled not only a young Arnold Palmer but also oppressive heat and humidity for the 36 holes played on the Open's final day (back then) at the Congressional.

Even More 80's, from Blogger DJ

...with some 70's and 90's thrown in, for good measure.

The Police - Roxanne
The Police - Message in a Bottle
The Police - Walking on The Moon
The Police - Can't Stand Losing You
The Police - Every Little Thing She Does Is Magic
The Police - Don't Stand So Close To Me
Phil Collins - In The Air Tonight
Phil Collins - Take Me Home (I Don't Mind)
Phil Collins - Don't Lose My Number
Phil Collins - Sussudio 
Phil Collins - Easy Lover
Tina Turner - Private Dancer
Tina Turner - What's Love Got To Do With It
Tina Turner - Typical Male
Flashdance - She's A Maniac
The Eurythmics - Sweet Dreams
Culture Club - Do You Really Want To Hurt Me
UB40 - Red Red Wine
Cyndi Lauper - Girls Just Want To Have Fun
Wham! - Everything She Wants
George Michael - A Different Corner
A-Ha - Take On Me
Wang Chung - Dance Hall Days
Michael Jackson - Don't Stop 'Til You Get Enough
Bryan Adams - Run To You
Steve Winwood, Eric Clapton - Can't Find My Way Home
Dire Straits - Sultans Of Swing
Dire Straits - So Far Away
Dire Straits - Local Hero
Dire Straits - On Every Street
Dire Straits - Calling Elvis