I can’t help but be depressed by the graph. I realize there may be factors non-obvious to this increase, but the fact remains: Over 14% of all Americans use food stamps. That is over 45 million people! The obvious interpretation is that the financial situation of millions of households is so dire that they need increasing assistance to provide basic food. I increasing leniency / lower standards in an effort to “boost” the economy may have something to do with it. Either way…sad.
Graph by Bespoke
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I thought I’d give a current snapshot in graphical form of what the economy currently looks like. Graphs, like pictures, being more fun.
1) Auto sales: Things are looking good. Back to levels not seen before the financial collapse in late 2008 (except for the 2009 spike, as in the graph below, caused by the U.S. “cash for clunkers” program that provided huge tax incentives for people to upgrade to new cars). Definitely a good sign.
Thanks to Bespoke Investments
2) Rail traffic: No complaints here. Goods ship mainly by rail. When more people buy, more goods ship, rail traffic goes up. That simple. Rail traffic continues to expand. Not indicative of strong growth, but growth, and that’s key in the backdrop of recession fears.
Thanks to Pragmatic Capitalism
3) Unemployment: You would think that with car sales growing, rail traffic (and thus shipment of goods) continuing to expand, employment conditions would be getting better. If you did, you’d be right. The unmeployment rate had remained sticky for some time, but is slowly starting to come down. Last week we learned that the U.S. unemployment rate dropped from 9.0% to 8.6%. Similar to the other two figures above, the number of jobs being created is more consistent with slow grow rather than fast recovery. That’s a point I’ve harped on in the past. To beat a dead horse, however, growth is growth, and that’s a good thing.
Thanks to streettalklive
In addition to other decent economic developments, the above have helped equity markets stage a pretty solid rally last week. Check out the graph below from our good friends at Bespoke. The last part of that graph is almost all green. Green is good.
All this is happening in the backdrop of major developments from Europe. The situation is dire, but better news has arose recently, with the probability of a worst-case financial crisis #2 scenario being reduced pretty substantially. That, however, is a topic for another time.
When I watch football, I often PVR the first hour, and then fast forward through all the commercials, with the goal of catching up to live TV at the exact time the game ends. I’ve noticed that after a touchdown, I usually start fast forwarding even before the extra point. Now I know why – it’s become automatic. Field goals aren’t far behind. See below for a great post, and great suggestion, regarding NFL extra point and field goal kicking (thanks to Crossing Wall Street for the great thought).
Remember when NFL kickers used to miss?
Well, they still miss of course, but kickers miss a lot less than they used to. Nowadays, a field goal attempt from anywhere less than 40 yards out is assumed to be automatic. But it wasn’t always so.
We’re nearly halfway through the season and kickers have made a stunning 85.9% of their field goal attempts. In just ten years, kickers have increased their accuracy by nearly 10%.
Not only that, but they’re kicking longer as well. So far this season, kickers have made 78% of their attempts between 40 and 49 yards. That’s better than the NBA’s league-wide accuracy from the free throw line (76.3%).
And the numbers from attempts over 50 yards out are even more impressive. This season, kickers have nailed 45 of their 63 attempts from 50 yards or more. That’s more accurate than the league was from any distance 25 years ago. Since 1994, long-range accuracy has doubled and long-range attempts-per-game are up by more than 63% from just five years ago.
Improved kicking is rapidly changing football strategy. In fact, this season is on track to be the highest-scoring season since the AFL-NFL merger, and kickers deserve a lot of the credit. Touchdowns-per-game are nearly identical to where they were 30 years ago, but field goals-per-game are up by 45%.
This high-octane accuracy is completely new to football. In 1974, the first year when the uprights were placed at the back of the end zone, kickers made just four of 30 field goals from 50 or more yards. Jan Stenerud, the only pure placekicker in the Hall of Fame, made 66.8% of his career field goal attempts. Today that’s good enough for 105th place in career accuracy. Nearly every player in the top 30 for career accuracy is currently active.
It’s not just field goals, either. NFL kickers have only missed two of their 546 extra-point attempts this year. That’s a success rate of 99.63% which would also be a league record. Think about this: There will probably be one-tenth as many missed extra-points this year as there were 25 years ago.
Can it really be called a sport when a play is more accurate than the purity of Ivory Soap? I don’t think so. Perhaps it’s time to narrow the goal posts from 18 feet 6 inches to 15 feet.
Hey everyone…I do apologize for my lack of posts. I’ll try to be a tad more consistent. Thanks for checking in today.
Finance news
World population reaches 7 billion, growing exponentially
Finance news simplified
The headline itself is pretty self explanatory. It’s more in the implications that we should be concerned (opportunistic?) Take a look at the graph below (from U.S. Global Investors). Yes, the globe hit 7 billion people, which sounds like a massive number of people, and it is. But that is the past, and we always look forward. Notice the curve, which is more telling.
What we find is the following:
Time to go from 1 billion to 2 billion people: 123 years
Time to go from 6 billion to 7 billion people: 12 years! That is a huge acceleration of population growth, meaning the population increases are happening faster and faster.
At this rate, we hit 10 billion people around 2045…that’s a lot of mouths to feed, cars to fuel, factories to power, etc.
I get it…so what?
One of the biggest investing themes of the past 10 (maybe 30) years has been peak everything. Peak oil, the most popular, is the theory that global oil production has already peaked and will slowly decline until there is nothing left. When resources (like oil, copper, water) are scarce, they rise in value. This can be pretty clearly seen in the price of oil over the past 10 years (you could argue there are other factors, which may be true, but many arise from this premise)…
Even without the huge swing during the financial crisis, we see a steady rise.
What will be the next big commodity boom? Food is often touted as becoming more and more scarce, with particular focus on grains such as corn, wheat, soybeans, etc. One of the ways investors are taking advantage of this is through the fertilizer space. How do you get more out of your crops? Apply more fertilizer, and companies such as Potash Corp. have been performing strongly because of it.
What industries do you think will be most affected? Obviously if the population is growing, everything is affected, but pay particular attention to industries where products are scarce or finite (such as commodities), or where the population is growing the fastest (developing countries).
Good luck!
Good morning – thanks for checking in.
Finance news
American Express profit and card income rise
Simple finance news
A bit of background – American Express is a well known credit card provider, but quite different than its larger rivals Visa and Mastercard. The latter two are in f act only credit card processors. They provide the infrastructure that allows consumers to use Visa or Mastercard branded credit cards to make purchases. What they do not do is take any credit risk – they don’t loan their users any money. That is why you’ll always see the logo of a bank on your Visa or Mastercard – it is that bank loaning you the money. American Express, on the other hand, needs no bank partner because they act as the lender themselves.
Remember that when trying to forecast where the economy or the stock market is heading, we look for
Good morning everyone – thanks for checking out Joe Blow Finance.
Finance news
Reports quote Germany and France agreeing to expand Euro area rescue fund to 2 trillion euros
Simple finance news
If you read here often, you’ll know my feelings on Europe. It is a major problem. I’ve talked about it here, here, here, and likely in other posts as well. Put simply, the fear around the world is that European countries have high deficits and too much debt, eventually forcing them to default on those loans (not be able to pay them back). The main holders of such loans are banks, and in particular, European ones. When banks lose money, they make fewer loans to businesses; those businesses can’t expand or buy new inventory, which causes a recession. This reduces demand for North American, Chinese, and other goods from around the world. Recessions happen elsewhere…bad.
Hey everyone – sorry for the absence…back at it now.
Finance news
It’s earnings season (a time of year when many companies report their earnings for the latest fiscal quarter), and it ain’t looking good. Earnings are rearward looking indicators. They are a picture of what happened in the past. The stock market, however, is forward looking – investors being concerned with the future. There is a clear disconnect. No one feels good when reading headlines such as:
“IBM Q3 revenue misses estimates on Slow Demand”
“Banks Slump as Wells Fargo, Citigroup Say Revenue Falls on Economy, Europe”
They indicate a poor economy. Maybe one in recession, maybe not, but that is purely a matter of semantics. The fact remains that when companies take in less in revenue, they cut costs. In corporate terms, costs equal employees. When employees make less money / get laid off, they spend less. When they spend less, those same companies earn even less revenue than before. The negative feedback loop continues.
This could be a good sign for the stock market…
Oct 11
7
U.S. economy “chugging” along
Good morning, thanks for checking out Joe Blow Finance.
Finance news
Rail traffic growing slowly, but growing
Simple finance news
Many people are concerned about a potential recession. And understandably so. Economists have devised all sorts of calculations that purport to indicate whether such a recession may be coming. Sometimes they’re right, other times wrong. What a recession comes down to, however, is the economy turning from growing larger, to shrinking. That’s it. So what does a shrinking economy actually mean? It means that fewer goods (services) are being produced / purchased (offered) than before. Quite simple. There are various ways of calculating the total value of goods and services and then comparing to previous periods to determine the economic situation. Shortcuts, however, are easier and quicker.
A great way to get a feel for the economic “pulse” is to look at rail traffic. Though surprising to many, rail is still the preeminent way of transport for goods across the U.S. And rail traffic is not contracting. It is growing compared to 2010. Not by much, but growing. Remember a recession occurs when economic activity decreases, not slows.
I get it…so what?
As you can see in the chart below, traffic compared to 2010 is still expanding, albeit quite slowly. We already know the economy is sluggish, and this confirms it. What it also indicates, however, is that it is likely not contracting.
The same can be said for industrial products (notice the orange 2011 line above the blue 2010 line)…
…as well as for petroleum products (notice same orange and blue lines).
Market reaction
Markets have rebounded strongly over the last few days on the hopes that leaders of European governments are getting together to solve the debt problem. If you’ve been reading, you’ll know that I believe the debt situation is a “symptom” of the “euro problem“, but for now, I digress. That aside, the release of the rail traffic numbers will add another data point to show investors the apocalypse is not here. No one can says whether it will come, but for now, no reason to head for the shelter.
See here for full rail report.
Oct 11
6
Steve Jobs – A Financial Tribute
Steve Jobs, after a lengthy battle with cancer, passed away last night. He will no doubt be remembered for the ingenious products that grace the desks, laps and pockets of millions of individuals. This is a finance site, however, so let’s take a look at Apple’s financial performance during his tenor.
After returning to Apple, Jobs was named interim CEO in the fall is 1997. We will therefore compare the company between his first fiscal year, which ended September 26, 1998 and the latest 12 month period, ending June 25, 2011. See below.
Summary: It was a good idea to stick with Jobs.
He grew Apple sales by 25%. Per year. For over 12 years. $6 billion in 1998; $100 billion today.
Apple’s stock market value increased by 39%. Per year. For over 12 years. Apple is now the most valuable company in the world. Let’s put that into perspective. If you had taken $10,000 and invested it over that period, you would now have $651,000. Not bad. How would you have fared if you had invested in the S&P500? Your $10,000 would now be worth $9,312. An annualized return of -0.6%. Ouch.
See below for Apple’s stock chart – enough to make any CEO cry with joy.
Steve Jobs – well done sir.
Finance news
Bigger losses possible for holders of Greek debt
Simple finance news
This is, in a way, the news everyone has been waiting for. First some background. Greece is on life support. The only way it is surviving is through an agreement it made with other European governments. Those governments would support Greece (provide it loans) in exchange for Greece adopting pretty severe austerity measures (combination of tax increases and spending cuts) with a goal of reducing Greece’s government deficit. That agreement also stipulated that existing bondholders would be taking a 21% haircut (this means that for every 100 loaned to Greece, lenders will only be recovering 100 – 21 = 79) on loans already outstanding.
Now there is talk that in order for the next payment to Greece to go through, a deeper haircut will be required. Two European officials, unnamed of course, have confirmed that talks have been held where debt write-downs of up to