Friday, June 6, 2014

Today's links

1---Russians' disapproval of US actions hits all-time high, RT

Almost three quarters of Russians have a bad opinion of the United States according to research by an influential independent pollster.

The Levada center survey shows 71 percent of Russians are upset with US policies, the highest figure in modern Russian history. In the early 1990s the number of Russians unhappy with US policies was under 10 percent. Huge peaks of dissatisfaction were registered in 2003 and in 2009, but this is the largest ever.

The attitude to the EU is also the worst in decades with about 60 percent of respondents saying they had a negative attitude towards it

2---European Central Bank cuts interest rate below zero, wsws

The European Central Bank (ECB) slashed one of its interest rates to negative territory and unveiled a €400bn loan package for Europe’s banks in response to the ongoing economic slump and the threat of deflation.
At its meeting in Frankfurt Thursday, the central bank cut its main lending rate to 0.15 percent from its current historic low of 0.25 percent, and its overnight deposit rate from zero to minus 0.10 percent, becoming the largest central bank to lower rates to below zero.

The move is an expression of the fact that, nearly six years since the collapse of Lehman Brothers, the world economy remains mired in deep crisis, for which the world’s central banks have no solution outside of pumping trillions into banks and financial firms. While trillions are handed out to the banks, workers throughout the continent are told that there is “no money” to pay for pensions, social programs, and healthcare benefits.

3---A Simple Solution To America's Woes: Huge Raises, HP

For much of American history, worker productivity and wages rose in tandem, which made economic sense. But that changed in the past half-century. Worker productivity began climbing a lot faster than worker wages. ...Not everyone suffered, however: A tiny minority of the U.S. benefited from these productivity gains. That group was the top 1 percent of earners, whose wages have grown a lot faster than the rest of ours....

Those who haven't benefited quite as nicely include the middle class, people living at or near the poverty line, blacks and Hispanics.

So what gives? Is China responsible, by taking all of our good middle-class jobs? Or are robots the culprit?

Not quite, according to the EPI report. The real problem is that our elected leaders are stifling economic growth.

The EPI report lists a number of specific government policies to blame. One is the minimum wage: At $7.25 an hour, the federal minimum wage is "currently more than 25 percent below its peak in 1968," when adjusted for inflation, according to the report. Indeed, as other research has pointed out, the federal minimum wage would be around $10 if it were pegged to inflation. Or about $22 if it kept up with increases in productivity.

4---Even The Record Stock-Market Bullishness Is Fake , Testosterone Pit

Risk is no longer priced into anything. Volatility has gone to sleep. Uniformity of thought has taken over the stock market. Complacency has reached a point where even central banks have begun to worry about it: the idea that markets can only go up – once entrenched, which it is – leads to financial instability because no one is prepared when that theory suddenly snaps.

Even the Fed is frazzled by the absence of frazzles.

By practically guaranteeing with their verbiage and their trillions for the past five years that asset prices would rise forevermore, the Fed made sure that markets have become a one-way bet, that risks are eliminated from the calculus, that everybody is comfortable with that, and that therefore volatility has settled on record lows.

So it’s ironic that New York Fed President William Dudley would suddenly, as he said last week, be “a little bit nervous that people are taking too much comfort in this low-volatility period.” He was worried that these folks would “take more risk than really what’s appropriate.” Others have chimed in. “Low volatility I don’t think is healthy,” explained Dallas Fed President Richard Fisher, concerned about “a little bit too much complacency

5---No More Risk: VIX Plunges Below 11 For The First Time In Years, zero hedge

6---US Finally Recovers All Jobs Lost Since 2007 While People Not In Labor Force Increase By 12.8 Million, zh

7--About Those Forecasts Of Eternally Rising Corporate Profits..., of two minds

8---Abenomics' Legacy: Japan's Greatest "Misery" In 33 Years, zh

9--Americans fared better after Great Depression than today, David Kay Johnson

10--The Myth of Wage-Led Inflation

Josh Bivins at the WSJ:
... Much recent discussion about potential price inflation seems to take as a given that it would be sparked by a pickup of wage growth. But looking at data from the non-financial corporate sector–which accounts for well more than half of all private-sector economic activity and for which rich data are available–what’s really striking about price growth since the end of the Great Recession is how much of it has been driven by rising profits, not rising labor costs. In fact, labor costs have been essentially flat between the end of the Great Recession and the first quarter of 2014. Profits earned per unit sold, on the other hand, have been rising at an average annual growth rate of nearly 9% since the recovery’s beginning. To the degree that there is any inflationary pressure in the U.S. economy over that time, it is surely not coming from labor costs.

11---10-year inflation expectations, FRED (Wow!)

12---Why is a calm market so scary?, MSN Money

The last time investors were this blasé about a record-breaking stock market, things were about to get very ugly

13---The Relentless Bid’s impact on volume and volatility, reformed broker

Trading volume on the major U.S. exchanges last month tumbled to its lowest level for May since the financial crisis. A daily average of 5.7 billion shares changed hands, the least for the month since 2007, according to Credit Suisse Trading Strategy.
The decline comes despite six record closes last month on the S&P 500, extending a trading slowdown that started after the financial crisis. Daily average U.S. stock-trading volume last year was down 37% from the peak hit in 2009, Credit Suisse data show.
This year, the Dow Jones Industrial Average has made just one daily move of 2% or more. The Dow made moves of 2% or more 10 times by this time of year in 2010 and 33 times in 2009 in the same period.
What then hell is going on?
It’s very simple – the wirehouse firms, which control 50% of all invested household wealth in America, have successfully pushed the majority of their advisors’ practices toward more hands-off investing approaches. At the same time, do-it-yourselfers have made Vanguard, State Street and BlackRock’s iShares three of the world’s largest asset managers – and they are primarily purveyors of passive indexing products.

No one is picking stocks, no one is doing much trading. That kind of activity has largely moved itself to the options markets, if anything. 

Most of the daily activity you see is the creation-redemption process taking place as money is allocated toward ETFs from people who aren’t even paying attention anymore. Hence, the Relentless Bid.

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