Freight News: Lots of Positive Signs

1. Passenger traffic at Los Angeles International Airport (LAX) increased by 4.1% in September above last year, and 5.2% above September 2008.  The 4.7 million passenger count in September was the highest for that month since the 4.8 million passengers in September 2007.  

Freight traffic at LAX in September was 8.1% higher than last year, and 10.3% above the same month in 2008.  The 157,466 tons of air freight this year was 8.6% below the 172,238 tons in the pre-recession month of September 2007. 

2. "The volume of containers handled by the Port of Savannah in October increased 16.7 percent to 273,296 20-foot equivalent units compared to the same month last year.The overall total of freight handled by all Georgia ports reached a new monthly record of 2,347,260 tons, which represented an increase of 9.8 percent compared with last October."

3.  The ports of Los Angeles and Long Beach recorded strong growth again in October, indicating that the peak-shipping season in the trans-Pacific this year had some staying power.  Containerized imports in Long Beach were up 33.5 percent compared to October 2009. Imports were up 5 percent over September 2010.  Imports in Los Angeles increased 3.19 percent compared to October 2009, which was the strongest month for imports last year. Imports in Los Angeles were down 7 percent from September 2010. 

October was the busiest month of the year so far for exports from Long Beach. Exports increased 26.3 percent compared to October 2009, and they were up 9 percent over May, which was the previous high point in 2010. Exports in Los Angeles were flat compared to October 2009, but exports were up 8 percent from September 2010.  See related post here by Scott Grannis.

4. Shipping volume at the Port of Seattle was up by 18.5% in October compared to the same month last year, following double-digit percentage gains in every month this year.  The number of fully loaded outbound containers in October of 55,552 was the highest for the year, and the highest in a single month going back to at least 2008. 

5. Total tonnage at the Port of Portland increased in September by 14% above last year, and year-to-date total tonnage at Portland is 36% above last year.

Oct. Retail Sales Back Close to Pre-Recession Levels

Given the strong increases in year-over-year sales tax collections in October for many states like Virginia (6.5%), Georgia (7.4%) and Texas (6.6%), it shouldn't be surprising that retail and food sales increased by 7.3% in October above last year (see bottom chart above).  The October increase in retail sales follows a similar 7.4% increase in September, suggesting that consumers are gradually gaining confidence and starting to spend again.  

Compared to a year ago, spending in all major categories have improved, with especially large gains in motor vehicles (14%), building materials (12.2%) and sporting goods (6.7%).  The $373 billion in consumer spending in October was the highest monthly total since August of 2008, more than two years ago (non adjusted for inflation).  October retail sales were only 2% below the $380 billion peak in November 2007 before the recession, and at this pace, retail sales will be above pre-recession levels within the next few months.     

Markets in Everything: Handwritten Notes for $3

You knew this was inevitable....

Handwritten thank you notes are truly remarkable in this age of IMs and emails. But who has time to sit down and write them? The ThankThank company helps busy professionals send handwritten notes to customers efficiently for $3 per note (see sample above). 

Schumpeterian Creative Destruction: 10 Products, Businesses Being Destroyed by the Smartphone

The following are the 10 products which smartphones are killing.

1. PDAs

2. Flip video cameras

3. MP3 Players

4. Digital cameras

5. Handheld video games

6. GPS

7. Regular cell phones

8. PCs

9. Watches

10. Remote controls

HT: Instapundit

The Pending 26% Tax Hike on the Middle Class

In today's "The Gartman Letter" Dennis points out what will happen if the "Bush Tax Cuts" expire:

1. All income tax rates will go higher with the bottom rate moving up from 10% to 15% while the top rate shall go up from 35% to 39.6% (see chart above comparing 1999 and 2008 tax rates).

2. The tax credit for children will drop from $1000/child to $500. 

3. The standard deduction for married couples will be cut. 

4. Capital gains taxes will go up from 15% to 20%.

5. Dividends, which now are taxed at a lower rate than earned income will rise to that same level. 

6. The one year “exemption” in estate taxes ends but with a $1 million exemption, and the tax rate goes to 55%.

The chart below is from The Tax Foundation and compares annual individual income taxes paid before and after the "Bush tax cuts" by various income groups:

Despite all of the political rhetoric about "tax cuts for the rich," this analysis shows that federal income taxes have fallen for groups at all income levels as a result of the Bush tax cuts, compared to the 1999 tax rates under Clinton.  And therefore, taxes for all groups would go up if the current tax rates expire at the end of the year (see percentage increases in taxes for each group above). 

And in fact, the group in the chart above that would experience the largest percentage increase in taxes would be the married taxpayers with $50,000 of household income (clearly middle class by most definitions) - they would pay 26.7% more in taxes if the Bush tax rates expire. By contrast, "rich" single taxpayers with income of $125,000 would pay only 10% more in taxes. In other words, some middle-class taxpayers received twice the tax cut on a percentage basis as some of "the rich" under the Bush tax rates, and that group would suffer the most with higher taxes if the current federal income tax rates expire.  

Consumer Greed Causes Trade Deficit With China

"What about the argument that American producers are undercut by cheap goods imported from low-wage countries like China? Whose fault is this? The answer is easy. If American consumers refused to buy goods produced in China, there would be no Chinese-made goods on store shelves. 

American consumers who prefer lower prices to higher prices are the true enemy of American companies and their unions whining about "free but fair trade." They should show up in front of Walmart and other sellers of foreign products and denounce American consumers who buy foreign-made products. That would be honest. The "free trade but fair trade" lobby finds it more effective to pursue their agenda by stealth — namely intimidate and bribe congressmen into enacting tariffs and quotas."

~Walter Williams

From the CD Comments: "Grammar Hall of Shame"

Here's some background, here's the rule:

1. The State of Maine has decided it must insure that all of it's dairies make a profit.

2. India's inflation rate is about 14% and it's agricultural tariffs average 32%.

3. When Apple moves it's $4 production cost to Vietnam… 

4. They’ve just released a fantastic report on China and it’s emerging cities.

5. It may not make sense, but a country that can print it's own money should never default on it's debts.

6. ….recognizing it's shortcomings would serve us all well.

7. Nuclear has it's own set of disposal issues….

8. Vast land areas would have to be converted to it's growth to replace any meaningful amount of gasoline…

9. China has no "communist" system today.  It's Communist Party is that in name only.

10. Nearly all technology is highly dependent on public funding for it's existence.

What's up with the "growing misuse of that puny piece of punctuation," which Arianna Huffington called "America's Apostrophe Catastrophe?"

Quantitative Easing Explained

HT: Mike Carlson

Successful Bakken Drilling Technology May Start to Go Global: That's Why "Peak Oil" is "Peak Idiocy"

I reported earlier today on the ongoing oil boom in North Dakota's Bakken region, which has set fresh oil production records in six out of the last seven months and now produces 6% of America's crude oil.  And all of this is taking place in an area that was never expected to produce so much oil, despite the 4.3 billion barrel estimate of reserves there, because the dense, nonporous rock in the Bakken region makes extraction extremely difficult and costly.

That all changed when advanced horizontal drilling and hydraulic fracturing techniques started successfully tapping Bakken oil two miles below the surface in 2006.  After some initial success with the new technology, the original estimates were for peak Bakken production of only 220,000 to 280,000 barrels per day, but daily production went above 280,000 in April this year by September had reached 341,384 barrels.  Oil production is expected to hit 400,000 barrels per day by next year, and remain at that level or higher for the next 10-15 years.

Now the Bismark Tribune is reporting that:

"Know-how gained from North Dakota's once-perplexing Bakken shale formation is being used to exploit other onerous oil plays across the globe.  Oil companies and countries a world away have taken notice of North Dakota's success, said Lynn Helms, director of the state Department of Mineral Resources.

Companies say they are aiming to apply technology learned from the Bakken to geologically similar shales in China, France, Poland, Canada and in some U.S. states, including Wyoming, Utah and Colorado. Companies already have used Bakken technology to successfully tap the rich Three Forks-Sanish formation, directly below the Bakken."

MP: New, advanced techniques for drilling oil have revolutionized the domestic oil industry in North Dakota in ways that couldn't have even been predicted just a few years ago, and will likely also open up new oil production in other parts of the world in the near future (like the Alberta Bakken in Canada) that also would have been unimaginable before this year. That's one reason that "peak oil" is peak idiocy: it always underestimates the ultimate resource - human capital (i.e. human ingenuity and the resulting innovation, advances, new technology) - which is endless and boundless, and will never peak.

World Stock Markets Set Record Three-Month Gain

For the third month in a row, the World Federation of Exchanges reported a significant gain in world stock market capitalization for the month of October, with a $1.6 trillion increase that pushed the total value of world stocks to $51.8 trillion (see chart).  The October increase follows gains of $2.8 trillion in August and $3.8 trillion in September, for a cumulative three-month gain of $8.2 trillion from August-October, one of the largest three-month gains ever.  From the cyclical low of $26.6 trillion in February 2009, the world stock valued has almost doubled to just under $52 trillion last month, and provides further evidence of a worldwide economic recovery and global bull market rally.   

Sept. Bakken Boom: ND Sets Another Oil Record

North Dakota pumped another record amount of oil in the month of September, producing more than 10 million barrels in a single month for the second month in a row and beating the previous record set in August by almost 50,000 barrels (see chart above, data here). Compared to September of last year, oil production has increased by 43.4%, and oil production in North Dakota has doubled in a little more than two years - from slightly fewer than 5 million barrels in June of 2008 to more than 10 million barrels in both August and September this year.  North Dakota's rich oil fields now produce 6% of America's domestic crude oil production, up from less than 2% in 2006 (data here).  

Partly because of its ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest unemployment rate at 3.7% in September, almost 6 full percentage points below the nation's average 9.6% rate. The oil boom has fueled an employment boom for oil workers in North Dakota (data here) - the number of oil-related jobs has grown from fewer than 4,000 at the beginning of 2005 to almost 9,000 in September of this year.

Through September of this year, North Dakota has already produced more oil (81 million barrels) than all of last year (79.7 million barrels), and is on a pace to produce about 112 million barrels in 2010, which would be almost twice as much as 2008 (62.8 million barrels) and almost three times as much as 2007 (45.1 million barrels).  In recent years, North Dakota has surpassed oil production in Oklahoma, Louisiana, New Mexico and Wyoming, and North Dakota, and has gone from the 9th highest producing oil state to the #4 rank now, behind only Texas, California and Alaska.

Virginia's Tax Collections Improve 3.7% in October

"Virginia Gov. Bob McDonnell announced Friday that October revenue collections increased by 3.7 percent over the prior year.  This is the seventh month out of the last eight in which state revenue collections exceeded the previous year’s amount. The revenue increase was primarily driven by individual withholding (+4 percent) and sales tax (+6.5 percent) collections."

McDonnell notes, “We have now seen seven of the last eight months feature increases in revenue collections, and this has occurred in tandem with a slight decrease in our unemployment rate. Clearly, these are signs of a modest turnaround in Virginia’s economy."

Other highlights: It was the first time in three years that Virginia's tax revenues have grown three months in a row, and the first time since April 2008 that income tax withholding taxes have increased for six consecutive months (source).

Chinese Workers Build 15-story Hotel in Just 6 Days

Yahoo! News -- "A construction crew in the south-central Chinese city of Changsha has completed a 15-story hotel in just 6 days. The work crew erected the hotel -- a soundproofed, thermal-insulated structure reportedly built to withstand a magnitude 9 earthquake -- with all prefabricated materials. In other words, a crew of off-site factory workers built the sections, and their on-site counterparts arranged them on the foundation for the Ark Hotel project.

Despite the frenetic pace of construction, no workers were injured -- and thanks to the prefab nature of the process, the builders wasted very few construction materials. Above is a time-lapse video that shows the hotel being built from the ground up in less than a week."

HT: My co-author Seyed Mehdian, who asks "Would this have been possible under central planning and communism?"

From Darren in the comments: "I see this as a testament to how well capitalism has worked. Does anyone doubt that the technology to enable such a thing was created through a free market system that rewards innovation? The fact that a totalitarian regime has embraced capitalism at a pace and degree to which no one 10 years ago would have predicted just reinforces the power of free markets."

Making the Case for More Nuclear Power

From yesterday's Detroit News:

To be sure, we also need to consider all forms of renewable energy as they become cost-effective, but the unavoidable truth is that nuclear plants occupy a small fraction of the land required for solar and wind power. And while nuclear plants produce electricity about 90 percent of the time, wind turbines generate power, on average, only 30 percent of the time and require back-up electricity from fossil fuel turbines on days when the weather isn't cooperating. Solar energy is less efficient, providing electricity only 20 percent of the time.

Nuclear power, therefore, must play a larger role in maintaining our nation's energy security and reducing atmospheric pollution and acid rain. Nuclear power also has economic benefits, as it provides a stimulus for new jobs and revenue.

The Saudis can build nuclear plants. The Turks can build nuclear plants. We can, too. The enormous power at the heart of the atom promises to benefit economies worldwide.

Toast Yourself

Upload a photo and toast yourself.

6 Blogs That Will Help You Understand Economics

Link. 

Five Ways the Cell Phone Is Changing the World

From Newsweek:

1. Exposing state secrets in repressive regimes like N. Korea.

2. Advancing democracy in places like Iran and China.

3. Enabling commerce in many African countries and in India.

4. Distributing medicine and helping to identify which critical medicines (penicillin, anti-malaria medicine) are out of stock in isolated clinics in Africa.

5. Waging war - both NATO forces and the Taliban are strategically using cell phones  in Afghanistan .   

This website adds a few more ways the cell phone is changing the world, including profoundly improving the lives of millions of deaf people.  

Five More States Report Improvements in October

1. Georgia's economy continued to show signs of improvement as state tax collections rose in October, the fifth straight month they have climbed.  Tax collections for the month are up 8.2 percent from the same month a year before, an increase of almost $93 million. Individual income tax collections -- considered an important economic indicator -- rose 4.1 percent. Sales tax collections jumped 7.4 percent. Corporate income taxes dipped 10.5 percent. Motor fuel taxes increased 14.1 percent.

2. Kentucky's general fund tax collections rose 8.1 percent in October from the same month a year ago, the best monthly improvement in two years but one that the state's budget director says isn't sustainable. Thanks in part to last month's strong performance, revenue collections have risen 5.3 percent for the first four months of the fiscal year. The 8.1 percent revenue upswing was the state's best monthly improvement since April 2008.

3. Texas sales tax receipts grew 6.6 percent in October compared to the same month a year ago. The $1.6 billion jump marks the seventh consecutive month of growth following a 14-month slump.

4. Tennessee's tax revenue grew 6.4 percent in October compared to the year before, a sign that the state may be starting to feel an economic recovery. It was the third straight month of year-over-year gains.

5. October tax collections for Minnesota were $46 million ahead of earlier projections, as the individual income tax, sales tax and corporate tax were all better than expectations.

Is The U.S. A Currency Manipulator?

The U.S. dollar has depreciated by about 30% over the last 8 years, and during that time period U.S. exports as a share of GDP increased from about 9% in 2002 to 13.2% in mid-2008, and then fell through early 2009 as a result of the recession and a stronger dollar (see chart).  Since early 2009, the dollar's decline has continued, and exports as a share of GDP have been increasing. Is the U.S. guilty of manipulating its currency to increase exports? 

Note: The chart has been updated to reflect U.S. exports as share of GDP on a quarterly basis.  I previously divided quarterly exports by annual GDP, and have corrected the data and chart above.  Thanks to Scott Grannis. 

Protecting Toads To Keep Private Land Private

NPR -- "A small environmental miracle has occurred in Beatty, Nev., a former mining town that sits on the eastern edge of Death Valley between Jackass Flats and Sober Up Gulch. The people of Beatty have helped revive the Amargosa toad, a warty, speckled, palm-sized creature that's unique to the area and, just a few years ago, seemed headed for extinction. But this is not your typical story of environmental action — the toad owes its comeback to an unlikely coalition that includes ranchers, miners, off-road racers, opponents of big government and the local brothel.

"What you're seeing tonight are the results of active land management, active habitat management," says rancher David Spicer. He has run miles of underground pipe around his property to create breeding pools and wet habitat for the toads. Spicer grew up with the toads and wants to preserve them, he says. But here's the surprising thing: Another reason, and perhaps the major reason Spicer has gone to such lengths is because he really, really does not like the Endangered Species Act.

"Nobody trusts the government anymore," Spicer says. "Nobody wants to work with the government. The government always wants to take something from you." So Spicer got worried more than a decade ago when some scientists declared that there were only a few dozen Amargosa toads left. Soon after that, when a group petitioned the federal government to add the toad to the endangered species list, Spicer came up with a plan.

Spicer feared the government would try to protect the toads by telling him he couldn't raise cattle or ride off-road vehicles on his own property. So he helped start a group called STORM-OV, which stands for Saving Toads thru Off-Road Racing, Mining and Ranching in Oasis Valley.

It's a quirky kind of environmentalism. But it seems to be working. This year's toad counts show that their numbers remain in the thousands. And earlier this year, the U.S. Fish and Wildlife Service rejected the latest petition to place the Amargosa toad on the endangered species list."

Jobless Claims (4-Week Avg.) Fall to Two-Year Low

(Reuters) - "Claims for unemployment benefits fell more than expected and a moving average fell to a two-year low, pointing to some relief in the weak jobs market, a government report showed on Wednesday. Initial claims for state unemployment benefits fell to a seasonally adjusted 435,000 in the week to November 6 from a revised 459,000, the Labor Department said. Analysts were expecting claims to slip to 450,000 from an initially reported 457,000. The four-week moving average of claims, considered a better measure of underlying market trends, eased to 446,500, the lowest since September 2008 (see chart)."

Highly Paid Federal Workers Making $150,000 Or More Increases More Than 10 Times In Just 5 Years

"The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds (see chart above).  Federal workers earning $150,000 or more make up 3.9% of the workforce, up from 0.4% in 2005.

The fast-growing pay of federal employees has captured the attention of fiscally conservative Republicans who won control of the U.S. House of Representatives in last week's elections. Already, some lawmakers are planning to use the lame-duck session that starts Monday to challenge the president's plan to give a 1.4% across-the-board pay raise to 2.1 million federal workers."

Illinois Loses 1,000 More Union Jobs, and Another Manufacturing Plant to Right-to-Work Mississippi

EAST ALTON, ILLINOIS -- "Some union workers were making plans Wednesday to hit the bricks to look for new jobs after Olin Corp. announced it will move its Winchester Centerfire Operations and 1,000 jobs from Illinois to Oxford, Miss.  The company made the announcement one day after members of District 9 of the International Association of Machinists (IAM) and Aerospace Workers rejected a contract that would have frozen wages for seven years.

The company told the union leaders in August that it was considering relocating to Mississippi to make the operation more competitive. The company and union leaders negotiated a concession deal for two months.

"Our focus always has been on ensuring that we continue producing high-quality products for our customers in an increasingly competitive marketplace," said Joseph D. Rupp, chairman, president and chief executive officer of Olin Corp.

"While I am disappointed that employees represented by IAM chose to reject a proposal that would have allowed us to remain competitive in East Alton, we look forward to expanding our existing operations in Mississippi," Rupp said."

HT: Steve Bartin

Even The Michigan Economy is Coming Back

DALLAS/November 9, 2010 – "Comerica Bank’s Michigan Economic Activity Index rose two points in September to a level of 89, the highest Index reading since June 2008. September’s reading is up 14 points from the year-ago level, and up 18 points, or 25 percent, from the Index cyclical low (see chart). September marks the seventh month of consecutive double digit year-on-year increases in the Index. Year-to-date the Index has averaged 11 points, or 15 percent, above the Index average for all of 2009."
 

“Over the three months through September, our Index showed a renewed uptrend after having stalled from February through June,” said Dana Johnson, Chief Economist at Comerica Bank. “My sense is that Michigan’s economy was re-accelerating along with the national economy as the summer drew to a close. Looking ahead, the Michigan economy should continue to make modest gains over the last quarter of 2010, against a background of sluggish but sustained national growth.”

MP: In another sign that the Michigan economy is slowly coming back, average statewide home prices increased in September by 6.9% compared to last year, and year-to-date home prices through September have increased by 9.3% compared to 2009.   

Another Company That Might Leave California

158 companies have left California this year to relocate to other states, and here's a new story about another one that is seriously considering leaving after evaluating six key issues of concern. 

Debunking Pro-Tax Increase Propaganda

Oct. Monster Employment Index Europe Up By 23%

The Monster Employment Index Europe increased by 23% on an annual basis to a level of 122 in October, a strong improvement from the 99 index level last October, and an increase from the 21% gain in September.  There was relatively strong online recruitment activity across most European Union countries, with especially strong growth in Germany (30% growth in October, the largest gain in online recruitment demand since late 2005), Sweden (36% annual gain in hiring activity). By sector, transportation (+50%), manufacturing (+44%), tourism (32%) and automotive (30%) registered the largest annual gains in hiring activity.  

Overall, a very positive report for a steadily improving European labor market that is gaining strength and momentum as the European economies recover. In related news, Reuters reported recently that German unemployment in October fell to its lowest level (2.945 million) in 18 years (since October 1992).  

Sneaky Trick Football Play

Markets in Everything. Or Not: Criminal Barbering

Orlando Sentinel -- "As many as 14 armed Orange County deputies, including narcotics agents, stormed Strictly Skillz barbershop during business hours on a Saturday in August, handcuffing barbers in front of customers during a busy back-to-school weekend.

It was just one of a series of unprecedented raid-style inspections the Orange County Sheriff's Office recently conducted with a state regulating agency, targeting several predominantly black- and Hispanic-owned barbershops in the Pine Hills area.

In "sweeps" on Aug. 21 and Sept. 17 targeting at least nine shops, deputies arrested 37 people — the majority charged with "barbering without a license," a misdemeanor that state records show only three other people have been jailed in Florida in the past 10 years."

HT: Stuart Anderson

NY Fed Reports Q3 Declines in Consumer Debt, Delinquency Rates, Foreclosures and Bankruptcies

Some highlights from the NY Fed's quarterly report on "Household Debt and Credit," released today with third quarter updates:

1.  Aggregate consumer debt continued to decline in the third quarter, continuing its trend of the previous seven quarters. As of September 30, total consumer indebtedness was $11.6 trillion, a reduction of $922 billion (7.4%, and almost $1 trillion) from its peak level at the close of 2008Q3.

2.  Total household delinquency rates declined for the second consecutive quarter in 2010Q3. As of September 30, 11.1% of outstanding debt was in some stage of delinquency, compared to 11.4% on June 30, and 11.6% a year ago. Compared to a year ago, delinquent balances are down 8.2%, and serious delinquencies have fallen 4.6%.

3. About 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010, a 5.5 percent decrease from the second quarter and a 6.4 percent drop from a year earlier.

4. The number of new bankruptcies noted on credit reports fell 16 percent from the previous quarter (from 621,000 to 522,000), but is 1 percent higher from a year earlier.

5. The proportion of current mortgage balances that transitioned into delinquency rose slightly from 2.6 percent to 2.7 percent, after about a year of decline. Given the similar pattern observed in the third quarter of 2009, one might suggest this is a seasonal effect.

MP: Except for the slight, seasonal  uptick in mortgage delinquencies, there are a number of positive trends reported for household debt and credit in Q3 that provide further evidence of an economy that is gradually recovering.   

One Vote Can Decide Outcome

A "wet-dry" vote in Alabama was decided by a single vote: 219-218. 

HT: Division of Labour

Percent of Population on Facebook By State

Via Google Fusion Tables, showing that the percent of state populations on Facebook ranges from 16.04% in New Mexico to 40.45% in Kansas.

Financial War - continued

Financial War - Man versus Nature

This weekend we include "part two" in our academic interlude. We hope to continue these more intellectual discussions as time permits over the upcoming weekends.

We have already stated that November will be far different than October or September, as we expect cyclical changes will come later in the month. We will be back again tomorrow with regular updates as time permits. Enjoy.

Man – The Invader and Coy Interventionist for Profit

No matter how our human species originated, one thing is clear, Mans existence on our precious planet Earth is jointly shared with an infinite number of Earth’s delicate systems and resources. Hence, one could observe a duality of purpose and interaction; one part mother Earth, and one part human.

At first glance, the vastly infinite intricate interactions between the two might appear to be inconsequential. But what happens when Man interacts or upsets a system balance beyond a tipping point? Do we simply ignore the side effects or do we even notice them? What happens when money and profit is involved?

Some of our planets systems being used everyday are closed-end, such as the finite carbon based fossil fuel supply. Other’s such as forests are semi-renewal, while some of our planets assets appear almost open ended, such as water being replenished with rain.

The impact between Man and Mother Nature and her cycles, and her resources can be described and studied using the sciences, but generally, empirical evidence and all science begins with man’s sense of gaining information and awareness by observation.

Money is a powerful motivator and the root of capitalism.

It is also the universal form of exchange created by a competitive Man living in organized Nations for the barter and exchange of resources. Unless one is of arrogant rare wealth, all humans, academics, and sovereign Nations agree that money too is thus scarce, of value, and for efficiency should flow freely and even be shared.

But has Man a hidden agenda? Has Man's ego, power and competitive nature to control scarce resources gone too far?

It is fact that, one of the most broadly accepted academic definitions of Economics - is the study of scarce resources. In this feature we will briefly look at Keynesian Economics and some of the consequences.

So our question posed herein; is what happens when Man believes he can trick or outwit his fellow humans as well as nature (and the business cycle of expansion and recession), and thus potentially impact the many intertwined interdependent balances when he decides to manipulate money for some tactical advantage.

Keynes perhaps more than any man, changed economic history in 1936 with his theories as published in “The General Theory of Employment, Interest and Money.”

Keynes detailed emphatically, that key relationships exist in whole economies and between individuals and businesses. In our modern age, Keynesian economists routinely interpret, correlate, and extrapolate a multitude of data sets.

Although in a short blog, it is impossible to entertain a detailed Keynesian debate, the notion is that a better insight of Keynes and intervention economics will aid in understanding the mindset of Ben Bernanke, the FED and Central Banks everywhere, whose aim is to manipulate and interact with business cycles for some advantage.

We thus recommend investors and those whom enjoy such academia, especially read chapter twelve (The General Theory - Keynes) regarding long term economic expectations.

Here are a few brief quotes from Chapter 12 for brief insight

1. Or, to change the metaphor slightly, professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs. The prize is awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but rather those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view.

2. This is another way of saying that, when he purchases an investment, the American is attaching his hopes, not so much to its prospective yield, as to a favorable change in the conventional basic of valuation. That is, in the above sense, he is a speculator.

3. A collapse in the price of equities, which has disastrous reactions on the marginal efficiency of capital, may have been due to either a weakening of the speculative confidence or a weakening of the state of credit.

4. Thus we must also take account of the other facet of the state of confidence, namely, the confidence of the lending institutions towards those who seek to borrow from them; sometimes described as – the state of credit.

Keynes was without any doubt of immense genius. He had a brilliant insight into humanity in abundance, and he possessed a depth of understanding into social-psychological-monetary workings that are rare.

However, we are not sure that his teachings and ideas have been used ethically, correctly, or implemented as he intended.

As you read and learn more about Keynes and Keynesian economics, if you are like many, you may increasingly believe that it has falsely become a school of economics, whereby whitewashing the truth to a population (brainwashing the citizens of a nation via government statistics and propaganda to exert control over confidence and credit) is freely endorsed via intentionally intervening in society’s affairs.

Worse, it is being done under the false assumption that educated men called economists know more than the unintelligent investor, speculator or worker, or citizen - whose capital should be accessed for economic and society’s purposes (profit).

Frankly, we say such intervention-like economics of any kind, and equally the economists who practice such thinking get too much credit, know far less than what is popularly believed, use a considerable amount of flawed, limited or manipulated data, and extrapolate and correlate data in ways they were not designed for, and most important, are interpreted in methods and ways that could be procedurally and systemically flawed.

When economics is used in a convoluted way, as Keynes often implies, it is much like ordering a worker (society - the training a mule) to give up complete control over their life and savings, and to hand over all of their income and productivity for life, for use by the state and bankers.

This is not free enterprise, a freely traded market or commodity, the study of a scare resource, or even capitalism. Rather, it is a hidden agenda of control and manipulation by government economists and their fellow bankers under the auspices of capitalism. Further, it suggests strong evidence of a premeditated and obvious ongoing merger between state and corporate power.

If propagation of this act is to succeed indefinitely, the trained Keynesian action an economist must place above all else is the maintenance of credit and confidence to maintain investment flow. As Keynes points outs – if you take away either – the convention or notion of economics immediately fails.

This is what gives the economist and the state, the mechanism of control (for profit) over the money of others.

Sadly, this school of economic control and intervention completely fails to recognize the potential for highly serious side effects of monetary manipulation and intervention (for every action there is an equal and opposite reaction), as it equally fail to predict what could or might happen when economic escalation develops between competitive men within Nations, as they manipulate to elevate or control money for a selfish benefit.

Last, such an economic intervention attempt to control or manipulate for profit, forgets about the free will and stubborn nature of Man, or the freedom that humanity in groups should possess, and is more ethically and honestly owed.

Coming Next Weekend Laissez-Faire Economics

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

Chart of the Day: The True Size of Africa

The land area of Africa would include the entire U.S., China, India, Japan, U.K., Eastern Europe and much of Western Europe, see chart above (click to enlarge), link here.  

Global Stock Market Rallies to 25-Month High

The MSCI World Stock Market Index closed at a 25-month high on Friday of 1,264.73, which was the highest level for world stock markets since late September 2008.  Emerging markets have been doing especially well lately, with one-year returns 72.5% in Thailand, 67% in Colombia, 56% in Chile, 57.5% in Turkey, 48% in Indonesia, and 47.8% in the Philippines.  

Exhibits of Coming Change

Hello BBTL Blog Readership,

My time is short at the end of this current trading week, so perhaps I will follow up later over the weekend.

It was a trading week of surprises that was saved by the Federal Reserve. We believe this is a temporary fix.

As I have hinted before, we are essentially in a financial war of Man-Made monetary stimulus versus Nature's cycles.

The great W.D. Gann educated a century ago that the financial markets are governed by Science and Natural Law. After thousands of hours of research KRTT has followed in Gann's giant footsteps and confirmed the truth of his work.

Further, given the modern computer age that Gann lacked, KRTT has been fortunate to expand upon Gann's work, especially in areas of cyclical insights in market behavior.

We believe if Gann were here here, he might say "November is NOT over."

Yes, there are cycles of change coming soon and we will soon find out if Man or Nature wins. Although we cannot say how far Bernanke or the PPT will go to rig the markets, we can say that Nature does not take time off.

We believe using our Gann like cycles that next week should be relatively mild (although some volatility is expected) and thus most will see it as an overall a continuation of bullish hysteria as experienced this week.

Yet later in November things will change and heat up tremendously.

It was well known that Gann used and applied Astrology to the financial markets. So, we too have included two exhibits below, showing a time span of just two weeks apart, to suggest and demonstrate how the Astro-sky will soon change.

I hope to expand more on this theme later.

In the meantime, enjoy your weekend. Check out the graphical exhibits below.

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

Why Can't Chuck Get His Business Off the Ground?

 
From the Institute for Justice.  

More Than 1 Million Jobs Added So Far This Year, Strongest 10-Month Gain in More Than 3 Years

Private-sector payroll jobs increased in October for the 10th straight month, as private employers have added 1,115,000 jobs so far this year, according to today's BLS report (see chart above). The last time there were 10 consecutive months of private employment gains was in the 2006-2007 period before the recession started, which was also the last time that more than 1 million jobs were added in a 10-month period.   

The Pickup Truck Indicator: The Recovery is Real

In October, overall vehicle sales increased by 13.4% compared to October 2009, but that increase was largely because light truck sales increased by 23.5%, more than six times the 3.9% increase in passenger car sales.  Year-to-date, truck sales are up by 16.7%, more than three times the 5.3% increase in passenger car sales so far this year.

What does that signal? The economic recovery is real.  Here's some background: 

AutoNation Chairman and CEO Mike Jackson (featured on a CD post in June): "I've always said, when you want to know when this economy is going to turn, just watch the pickup sales.  All those sales are small businesses and entrepreneurs, and when they see the prospect for better business, they're going to go out and finally buy a new pickup truck. So this is a key indicator of what's going on in the U.S. economy.  This is small business America saying that the worst is over, I see opportunities in the future, I feel confident enough to go out and buy a new truck.    

Pickup trucks are bought by small business entrepreneurs who have their finger on the pulse of the U.S. economy. It's an expression of confidence in future of economy. They don't buy until they see the prospects for business are brighter."

From an AP story yesterday:

"Trucks outsold cars by the highest margin in nearly five years in October, a sign the economy may be starting to improve. These trucks aren't the tractor-trailers that haul freight. They're pickups, SUVs, minivans and smaller SUVs. The category — known as light-duty trucks — made up 54 percent of all new U.S. vehicle sales last month, compared with 46 percent for cars, according to industry tracker J.D. Power and Associates. 

It's the biggest difference since December 2005, when trucks accounted for 56 percent of sales. Strong truck sales make economists giddy because they mean people are willing to spend money again. Small business owners feel comfortable enough to buy a new pickup truck or delivery van for their company; and regular folks are confident enough in their jobs and finances to take on beefy SUV payments."

HT: John Jarrard.  

Bull Markets: Taxi Medallions and Fine Art

1. Taxi medallions in New York City reached an all-time record high of $614,000 in October for indvidual licenses. 

2. Reuters -- "Less than two years after a precipitous fall, the art market is flexing its muscles again, emboldened by recent auction records and an influx of determined international collectors rich with cash. Hordes of wealthy new buyers, ready to spend and anxious to build collections, are injecting life into a market hard-hit by the global financial crisis, experts said.

"The whole market has changed," said Philip Hoffman, chief executive of The Fine Art Group, a London-based art investment house. "There's a huge new group from six or seven countries who are shifting the market." New collectors from Russia, India, China and Hong Kong, and Mideast wealth centers such as Qatar and Abu Dhabi have made fortunes in oil, gas or commodities such as gold, he said."

Emerging Markets Rally to 29-Month High

Bull Market Rally for the Emerging Markets: The MSCI Emerging Markets Index reached a 29-month high today of 1151.08, the highest level since early June 2008 (see chart). 

Coming Soon to a Pharmacy Near You: The “Retailization” of the Nation’s Health Care System

"Walgreens chief executive officer Greg Wasson this morning said the drugstore chain will step up investments in services to help Americans manage chronic diseases, saying the company wants to capitalize on what he called the “retailization” of the nation’s health care system.

The Deerfield, IL.-based pharmacy giant, meeting with Wall Street analysts and investors, said it wants to continue to expand its network of medical care providers and the services they provide. Walgreens increasingly has been lobbying to give pharmacists a greater role in medical care such as providing immunizations in its stores as well as establishing retail health clinics staffed by nurse practitioners. 

Wasson and his team say they see a booming market of aging baby boomers, citing one in three Americans who will turn 65 in the next decade. He said Walgreens pharmacies are trying to establish their pharmacists and other health professionals as an option to help provide certain primary medical care service amid a national shortage of primary care doctors.

Walgreens pharmacists, he said, can help patients “manage” their chronic conditions like diabetes, hypertension and high cholesterol. The health care overhaul law will bring more than 30 million Americans coverage in the next four years and therefore give these uninsured people money to buy Walgreens services."

Weekly Rail Traffic Continues To Improve

WASHINGTON, D.C. – "The Association of American Railroads (AAR) today reported that weekly rail traffic continues to gain over 2009 levels with U.S. railroads originating 292,884 carloads for the week ending Oct. 30, 2010, up 6.3 percent compared with the same week last year. AAR will no longer report 2010 weekly rail traffic with 2008 weekly comparison data since October 2008 marked the beginning of the recession-related downturn in rail traffic.

Intermodal traffic for the week totaled 232,717 trailers and containers, up 14.2 percent compared with the same week a year ago, with container volume up 15.7 percent and trailer volume up 6.5 percent."

Whimpy - Bernanke

My apologies for the late in the day editing of this blog, but I decided to change and expand the earlier version somewhat. Those who may have read it earlier in the day, may wish to re-read it to understand the important message it delivers.

Hello BBTL readership,

I had a few minutes this morning to post a chart update. It is self explanatory with our usual educational mark-up comments.

I have educated for many years following in the footsteps of the great W.D. Gann, R.N Elliott, and others. As they first educated and led us to the truth, the financial markets are NOT ruled by Ben Bernanke (nor any man), but rather are ruled and governed by Science, Natural Law and Cycles that frankly, are well hidden to much of the world.

Trust me when I say that those cycles are there. I have witnessed them in their simplicity and complexity. Perhaps read some of the paid client comments available here on the blog, or simply over time let the track record here speak for itself.

Since this blog just recently opened it has been bullish since day one, and effectively since the late-summer low of September 01, 2010.

Yes, there was a one day exception to that bullishness - yesterday. There on that day I predicted the cycle should change trend to down. I was using my Natural Cycles in that forecast. I also did that same forecast a full day in advance - without knowing what the FED would do.

Yet now, just one day later, I am bullish again. I explained this in yesterdays blog and I have taught the reasoning in this blog before. So for now I am bullish short term. Why?

It is due to my insights and knowledge into natural Cycles, and inverted cycles or inversions.

Elliott did not know how to explain these phenomena, so he simply called them wave extensions or wave failures. Currently in my view, we have now entered into a dangerous EW 3 extension. As these types of abnormal extended trends terminate, - they should not be merely considered as simply an overbought market - they become and are - extremely overbought with undesirable consequences.

Essentially, the FED and QE2 has managed to flip or invert an otherwise natural cycle yesterday (thus a cycle inversion), to now continue the trend up for a while longer.

They used the power of financial media, their usual FED-speak propaganda, the PPT, and what most are saying is about a $600 Billion future taxpayer liability, and the typical incessant money-printing antics of Ben Bernanke.

It seems no common sense anywhere in America can stop this powerful man, and the massive debt run-up and eventual liability he and America are accumulating. The past negative consequences of the incessant money-printing expansionary US FED has already cost America tremendous lost prestige and considerable real wealth in decline of their currency. Frankly, the primary fiduciary duty of any Central Bank is to protect their Nation's monetary unit. Yet no one, and I do mean no one, (other than Ron Paul, Republican - Texas and his few followers) seems to understand the coming consequences. What a shame that brilliant Americans such as W.D. Gann and today's Ron Paul seemingly lack a voice that can be intellectually heard - instead of being ignored.

Laissez-faire economists too, whom have a far greater understanding of natural cycles and economics, and the dire consequences of money-printing, have been telling the likes of Greenspan and Bernanke for decades to stop intervening in the economy.

Yet somehow these two FED leaders, their patsy banker followers, and their massive Wall Street fellowship of "I am rich and powerful and who cares" ego, has led to a near lunatic monetary expansion, in an effort to overly stimulate and create what should be easily seen as an artificial wealth.

The monetary bubbles that these two USA Central Bank leaders have thus manufactured, back to back are undeniable. More important, by my Natural Law financial education and forecasting abilities, I believe that society at large will soon suffer more inevitable pain from the continued and cumulative FED antics which must also lead to more ugly bubble-breaking and thus economic suffering again.

By example, the set-up for commodities like gold and others to rapidly unwind and deflate, and an inverse-like revolt in the Central Bank manipulated global bond market, now at all-time historically low interest rates - is indeed massive.

I educate by using many financial methodologies, but above all, I consider as the great W.D. Gann taught - Natural Law and Cycles - including those found in the stock market and other financial instrument cycles. I now say and predict that in the coming weeks and months, the equal and opposite consequences of this past artificial FED stimulus will begin to play out - in a rather harsh ending.

Essentially the FED and their latest QE2 action, is just another artificial monetary stimulus created by Man, that is intentionally interfering in a very tired and overstimulated natural economic cycle.

Today's money printing pleasure will invariably bring us deferred and equally bearish pain later. The natural cycle yesterday should have been down.

Man will reap that which he sows. If you sow to the wind, you will eventually reap the whirlwind. If you sow wisely, you will reap a bounty. This was the great W.D. Gann's message, as well as mine now, having followed in his enormous footsteps.

So what is being done now, in my view, - will soon become undone by nature. Why? Because that is exactly the way and law that natural cycles rule - eventually. Mother Nature can teach us the easy way, or if we are stupid and foolish - the hard way. One day Man and the greedy and foolish Keynesian economists of Wall Street will become wiser, as they slowly realize the far better way of the Laissez-faire economist. They will in the end, either the easy or the hard way - come to learn of and understand Natural Law and Cycles including financial cycles.

So, to lighten up the scenario and educate using another style of word picture, I am getting tired of the former Helicopter Ben moniker, and wondered about renaming Bernanke - as Whimpy?

Remember Whimpy from the olden golden Popeye days?

He was the fat and lazy friend of Popeye, who was always trying to take the fast and easy way out.

Like fat-cat Bernanke and his prankster-bankster friends, Whimpy too was always deferring pain until later. Whimpy was essentially cheating, by thinking he could somehow avoid paying the price.

Remember the famous saying of Whimpy - "I will gladly repay you Tuesday, for a Hamburger today"?

This is exactly what Ben Bernanke did yesterday. As a result, just like a free hamburger, we will have immediate short-term pleasure, but an even bigger pain eventually coming down the road when the costs must be paid .

By my ongoing cycle accounts, I say now you will not have to wait long for evidence. Look at my wave count if nothing else.You had better get prepared for the coming financial whirlwind.

This morning, the market gapped up and then, within seconds trended exactly to the 1209 level mentioned yesterday on the blog - all in the first minute this morning. I am sure Ben Bernanke felt pleased as he swallowed and chewed on his hamburger.

The fact that the SP500 index has now gotten through the 1209 level immediately is significant and sets up a new time and price target - shorter term. At least until Whimpy starts to feel indigestion (coming EW four).

For Elliott Wave enthusiasts, it means we are now in a Wave Three - extension. For the bulls these are like a deluxe hamburger - and better yet - in this case a free deluxe burger.

More on the coming side effects later, but for now, the new price target I am using is the SP 5900 level of 1228 - 1232 which is slightly higher than the previous yearly high last April. Double tops usually get taken out by a minor amount. If we happen to get above that level which at present I do not forecast, it will become potentially more unstable and dangerous. That is what is called a runaway market. These are insane markets built on fear.

Alas - but Gann gave us an even greater clue. Time is the master control factor. Cycles work not by price - but via time. Assuming my time cycle calculation are correct (and I think they are) November is going to get very interesting.

We may even get a whirlwind.

See the chart below.

Lesson Learned - Remember, borrowing today for your Hamburger purchase as Whimpy and Bernanke mentality seem to think they can, will be painful later.

For now consider the very-short term trend is higher - by way of a cycle inversion, or expressed as in Elliott Wave lingo - an Elliott Wave Three Extension.

Again, these do not usually have happy endings. As implied, the deferred pain will come in this case - sometime just days later. So, enjoy that burger and also the ride up now to about the 1228 - 1232 level, as it will take at least a few more days to digest. After all it was a deluxe burger.

But then......to be continued (hint EW 4)

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom