Sunday, July 26, 2009

Sunday Olio

This post is a potpourri of links to interesting articles and reports I have seen in the past two days.

FIRST, a data-rich summary of the economy, "Rail Time Indicators", is worth a read for anyone who would like a relatively straight review of the economy in graphic form, drawn from a variety of sources. Scroll down beyond railroad data to general data. Anyone who would like to see why the current (just ended?) economic downturn is a depression (or Volcker's euphemism, the "Great Recession"), will see the amazingly deep nature of this downturn. The fact that this has not become as bad as the 1929-32 and beyond Great Depression experience does not change the fact of the severity of the current economic banana. When you read this, you will see why yours truly does not care if the recession is over in valuing stocks and bonds. When things fall as far as they have, even 3 years of 20% growth would still leave the real economy below where it was on certain important metrics. So, big whoop.

NEXT, it's not clear what the correlation of Presidential popularity is with the economy, but there certainly is a general correlation that helped Presidents Reagan, Clinton and Bush II win re-election. Here is a graph showing what percent of likely voters have strong feelings about the President. This is NOT a general approval rating, but Real Clear Politics shows that Mr. Obama's positive minus negative approval spread has diminished from 45 points from his inauguration to 13 points, and I would think that the Gates/Cambridge police controversy will shave a few more points from that ratio. If you go to, you will find that
respondents just don't see their companies hiring, they are not personally spending more money, and they can't feel the enthusiasm for the economy that traders of corporate stocks and bonds have felt for several months yet. I suspect that the falling ratings of the President reflect the problems in the real economy, and that Wall Street is at best ahead of matters if not completely out of touch.

THIRD, EBR recommends a fascinating though somewhat unfocused article about the new leader and strategy of the Taliban in Afghanistan, America's New Nightmare from Newsweek. EBR believes that if the U. S. can cut a "Peace with Honor" deal in the Af-Pak region and get out, we will enjoy a prolonged, non-inflationary period of economic growth. Reading this article left me fearing another Viet Nam but also realizing that the Taliban has its own internal problems.

FOURTH, if you have any doubt that media sentiment has moved wildly pro-stocks, go to Look at the headlines of the feature articles. On second thought, if you haven't clicked through, don't bother. Here are the topics:

1. Lead article: Bullish on California muni bonds
2. The Four Cheapest Plays in Emerging Markets; choosing the right emerging market
3. Bullish on the apartment REIT AvalonBay
4. Bullish on Mastercard's stock
5. Hello, 9000! The Dow's Run Is Far From Over
6. Bullish on Plantronics (it's going to play a role in the office of the future, it would appear)
7. Bullish on OSI, a biotech
8. Bullish on cyclical stocks
9. Bullish on Citigroup stock
10. A money manager few have heard of, who has a "system" for consistent stock gains with limited risk
11. Last but definitely not least: "Cambodia calls"; checking out Cambodia's nascent economy.

How can you curb your enthusiasm about becoming an expert on emerging markets? All within reach simply by paying Barron's a pittance to share all this information! Quelle bargain . . . NOT!

(There is one bear article on a retailer called hhgregg and an apparently neutral article on Netflix.)

FINALLY, the New York Times ran on op-ed today under the imprimatur of Joe Biden, who as usual makes some questionable statements. The first is the title, "What You Might Not Know About the Recovery". Actually, the op-ed does not claim that the economy is actually in recovery yet; the topic is actually a defense of the American Recovery and Reinvestment Act of 2009 ("ARRA", "stimulus" bill; "Recovery Act"). The second relates to the following sentence fragment:

Projects are being chosen without earmarks or political consideration . . .

The idea that a White House that represents Chicago East has borrowed hundreds of billions of dollars for local construction projects has no interest in the politics of who gets what part of this honeypot is one that strikes this author as unlikely.

OK! Open-book quiz to follow . . .

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