Saturday, November 30, 2013

Median Duration of Unemployment Turns Up

source: Federal Reserve of St. Louis (FRED)

After peaking in June, 2010 at 24.8 weeks, the median duration of unemployment appears to be in a bottoming process. The low was 15.7 weeks in July, 2013 and it has not approached that level over the last three months. Zooming in on 2013 makes it more clear.

Red line is the moving average, green line is the upper trend

The median needs to drop below the upper trend line again. Outside of recessions, the median duration is typically below 8.0 weeks. A rising median duration is a seriously bad sign for the economy, indicating a recession 6 out of the last 6 times.

Tuesday, November 19, 2013

Black Friday Sale starts now!

This is not my idea. This was the subject of an email I received today from Dell. The exact subject line was:

★ We couldn’t wait for Black Friday! ★ Black Friday Sale starts now!

I was OK with waiting, but apparently Dell could not wait. The big stars in the subject were a nice touch, though it smacked of desperation. We are exactly 10 days away from the actual Black Friday. I can only guess that Dell is worried that not enough people will be shopping on Black Friday without a push. With the stock market at new record highs every day, I can't imagine people would not want to spend some of their new found and permanent wealth.

I looked at Dell's deals, but nothing seemed even slightly interesting. I think I'll wait until Black January.

Thursday, November 14, 2013

ObamaCare: Panic, Arbitrary Enforcement, Chaos

Six weeks after the launch of and the beginning of the ObamaCare implementation, it is starting to degenerate into chaos. Has any administration and Congress combination been so dysfunctional since the Civil War?

Let me try to grasp the key events of the last three months.
  1. Republicans try half a dozen legal efforts to delay the individual mandate in ObamaCare
  2. Republicans threaten to shut down the government and allow the country to default on its debt to stop it
  3. Democrats put up a united front and threaten to allow the country to default on its debt if any changes are made to ObamaCare
  4. launches in the middle of the fight and is an complete disaster, allowing only 6 people to enroll the first day
  5. Republicans partially shut down the government, then fold with nothing gained
  6. Deeper issues are exposed on, Obama deflects the "glitches" and promises to have the site fixed by the end of November
  7. Millions of individual health policies that don't meet the requirements of ObamaCare are cancelled
  8. Obama claims that cancelled policies were defective and inferior and people will have better plans if they are ever able to get through the bug ridden system
  9. The few that can find replacements on the health exchanges find much higher prices
  10. First month total enrollment in all states totals 106,000 (even counting those with an unpurchased plan in their shopping cart)
  11. Democrats start to abandon Obama, his approval ratings tank to all time lows
  12. Obama panics and tries to unilaterally undo the millions of cancellations for 2014, effectively delaying the individual mandate in ObamaCare! (see bullet point 1). Hey, King George could change any laws he saw fit as supreme ruler, why can't Obama?
  13. The Insurance Commissioner for Washington state rejects undoing the policies and claims it will will destabilize the insurance market
The people that rammed the health care law through in 2010 now don't like key elements of it. The main exchange for 36 states remains bug infested 6 weeks after launch. The supreme leader picks and chooses which parts of the law to uphold based on the how the political winds are blowing each day. In the Health Care games, may the odds be ever on your side.

State insurance commissioner rejects Obama’s proposal to extend canceled policies

Lawlessness: what this morning’s Obamacare announcement means

Thursday, November 7, 2013

Twitter Fritter v.1

Fritter verb. 1. To reduce or squander little by little: frittered his inheritance away. See Synonyms at waste.

Today was the IPO of Twitter, Inc., a dotcom company that lets you send short messages and read the short messages of many others at once. The stock had a monster opening day closing at $44.90 per share giving Twitter a market capitalization of $24.93 billion. Good for Twitter!

I did not participate in the euphoria, partly because Twitter is a company that has never made a profit in 7 years of operation. It has consistently lost money every quarter of its existence. The current earnings per share are -$1.11 (negative). They can probably make it up in volume. What Twitter has, like many dotcom companies of the late 1990s, is eyeballs. Yeah, that is the true measure of value when picking a stock, how many eyeballs do they have? (sarcasm alert).

Now that they are public, the lucky investors will get to see quarterly reports of the revenue, expenses, and profits, if any ever materialize. Of course, nothing matters now for the owners if they were smart enough to sell massive shares into the euphoric IPO. They can retire and walk away. For fun, I plan to track the total profits of Twitter for the life of the company and see how it compares to the market valuation of $24.93 billion. I am hoping that the first quarterly report will show at least $1 billion in profits, but I am somewhat skeptical. I will make inflation adjustments annually.

To be fair, I won't count any of their last 7 years, or 28 straight quarters of losses. We'll start with a clean slate of zero. Good luck, Twitter!