Mish's Global Economic Trend Analysis

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• Investor Bets in Risky vs. Safe Assets Hits Record High
• Hosed at the Pump: Where are the Highest Gas Taxes in The Nation?
• Smoke and Mirrors Hide the Collapse in Corporate Profits

Investor Bets in Risky vs. Safe Assets Hits Record High Posted: 03 Jun 2014 11:38 PM PDT The June 3rd issue of SentimenTrader contains an interesting writeup on risk taking. Investor Bets in Risky vs. Safe Assets click on chart for sharper image Excerpt (below) and chart (above) by permission... Periodically, we check in on a ratio that first started to become concerning last year. At the time, the ratio of assets invested in equity mutual funds and ETFs had eclipsed the assets stashed in safe money market funds by a factor of 3. That was on a par with the levels only seen in 2000 and 2006/2007. At the time, and subsequent to that, we've discussed the fact that the ratio is not necessarily bounded by any limits, and it could "grow to the sky". The reason it was notable is because it had been bounded during the past 15 years, as stocks traded within a broad range. Now that it was broken out above its previous peaks, there is no telling how stretched the ratio can go. As of April, the latest data available, there was $4.05 invested in stocks for every $1 stored in money markets. That is 31% above what was seen in 2000 and 19% above the peak in 2007. That's not too far above and beyond what the S&P 500 has done, so like the growth in margin debt, it seems reasonable given how well stocks have done. That the ratio is so far above the 2000 and 2007 peaks seems like it should be market-negative, but we haven't considered it to be for quite a while, due to its in-line rise with stock prices, and the fact that the ratio has broken out above its previous peaks and we don't know where the next logical place would be to consider it extreme. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Hosed at the Pump: Where are the Highest Gas Taxes in The Nation? Posted: 03 Jun 2014 03:11 PM PDT The Tax Foundation posted the following map of gasoline taxes. The Tax Foundation says "Gas taxes are generally used to fund transportation infrastructure maintenance and new projects. While gas taxes are not a perfect user fee like tolls, they are generally more favorable than other taxes because they at least loosely connect the users of roads with the costs of enjoying them. However, some of our recent analysis shows that many states do not rely on gas taxes and tolls as much as they could, and instead fund substantial amounts of transportation from other sources like income and sales taxes." Not That Simple States with high gas taxes do not necessarily have lower taxes elsewhere. Illinois and California are certainly cases in point. Property taxes in Illinois are over $14,000 on something like a $500K home. The Tax Foundation notes "rates shown do not include Federal excise taxes of 18.4 cents per gallon." Nor do they include applicable sales taxes or local gas taxes or Cook County gasoline taxes. Illinois also has "home rule" sales taxes for various locations within a county. For example, and in addition to special gasoline taxes in Cook County, the Illinois Department of Revenue Tax Bulletin shows that Cicero (in Cook County), has a sales tax of 9.75%, while Dolton (also in Cook County) has a sales tax of 8.75%. Why Are Chicago Gas Prices So High? Indiana radio station WBWZ 91.5 asks the question: Why Are Chicago Gas Prices So High? Customers may also have a desire to blame gas station owners for the high price of gasoline. But Beth Mosher, spokeswoman for AAA Chicago Motor Club, says it's not their fault. "Everybody wants to take it out on their local gas station owner why these prices are so high," Mosher said. "But the reality is when the prices are this high the profit margins for these gas stations are so thin, they are going to make more from a bag of doritos that they are selling you than they are the gas." Mosher says the final factor for high gasoline prices can be pinned on the tax man. "First and foremost, we have to talk about the high taxes in Chicago," she said. "About 70 cents on the gallon is what people pay in Chicago for gas taxes, really, really a high number, especially given the statewide average is 49 cents on the gallon." Our NW Indiana reporter bravely goes where no Hoosier (willingly) has gone before: a Chicago gas station. Hosed at the Pump An Illinois Policy Institute report "Hosed at the Pump" will put things in proper perspective. That graphic is from August of 2012. Rest assured taxes are higher today. And Illinois is one of only seven states that charge a sales tax at the gas pump! Illinois is #8 according to the Tax Foundation, but in reality, Illinois is near the top of the list, especially Cook County. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Smoke and Mirrors Hide the Collapse in Corporate Profits Posted: 03 Jun 2014 10:15 AM PDT Did you notice the collapse in corporate profits? John Hussman, Steen Jakobsen, and Albert Edwards at Society General did. Hussman tweeted the following chart this morning. Steen Jakobsen, chief economist at Saxo bank passed on the above tweet this morning along with an attachment from Albert Edwards and this comment: "John – who I met at the Wine Country Conference – is not only great economist and fund manager, but also a remarkable Gentleman who lives to support Autism. This is his link Hussman Funds." From Society General - No Link Available Smoke and Mirrors Stop Us Seeing a Slump in US Profits During the excitement of the downward revision of Q1 US GDP from +0.1% to -1.0% investors seem not to have noticed a $213bn, 10% annualised slump in the US Bureau of Economic Analysis's (BEA) favoured measure of whole economy profits, defined as profits from current production. Also known as economic profits, the BEA makes adjustments to remove inventory profits (IVA) and to put depreciation on an economic instead of a tax basis (CCAdj). We show below the stark difference between the BEA's calculation for post-tax headline profits (up 5.3% yoy) and economic profits (down 6.8% yoy). In this note we try to explain what is happening and why the 10% annual slump in economic profits really does matter. Having spent the best part of 25 years following US whole economy profits I feel I have a good understanding on what exactly is going on. I was however most surprised at the divergence in the two key series shown on the front page chart. After a very long chat with a very helpful person from the BEA, she emailed me to "note this quarter, there is a substantial difference between profits from current production (that include IVA and CCAdj) and profits before tax (that exclude IVA and CCAdj) due to the expiration of investment incentives that allowed companies to accelerate depreciation over the past several years. As provisions of the tax acts from 2002, 2003, 2008, 2009, 2010, and 2012 expire, and as no new provisions are introduced, businesses are now expensing less depreciation for tax purposes. As a result, tax based depreciation expense, measured as CCA, is falling, while economic depreciation expense, measured as CFC, continues on a steady growth trend (see charts below). The difference between these two measures is the CCAdj. With economic depreciation expense higher than tax based depreciation expense, BEA's measure of corporate profits with CCAdj shows a decline, while profits excluding CCAdj show an increase." So headline reported profits are currently artificially inflated upwards to show a roughly 5% yoy increase, which is incidentally the same pace that the MSCI trailing reported stockmarket profits are rising by – both are misleading investors as to the underlying strength of profits. Net cashflow with IVA ($bn) The BEA press release itself describes net cashflow with IVA as "the internal funds available to corporations for investment (calculated as after tax profits with IVA and CCAdj, net of dividend payments but plus depreciation on an economic basis (CFC))". We can see from the chart above that this decreased by $132bn in Q1 following a decrease of $43bn in Q4. This key measure of internal funds available for investment has stalled badly over the last two years (see chart above). No wonder US business investment has been struggling recently. The bottom line is that the US profits margin cycle has begun to turn down at long last (see chart below). It is doing so from elevated but not unprecedented levels – especially the nonfinancial part of the economy (my former colleague Leo Doyle always told me I had to add depreciation into the profits numerator as the denominator GDP was also measured gross of depreciation – i.e. the G in GDP!) Thanks to Albert Edwards via Steen Jakobsen for the above charts. There is more in the report, including a discussion of why a renminbi (yuan) devaluation will crush US and European corporate profits. If I can get an online link I will post it. Wine Country Conference Videos Here is a link to the 2014 Wine Country Conference Videos. Steen Jakobsen's, Chris Martenson's, and my presentation will be out later this week. Inquiring minds should also take a look at Hussman's post today, Market Peaks are a Process. John speaks of the Wine Country Conference Presentations and the cause. Here is John's blurb on the cause. Last month, the second annual Wine Country Conference was held in Sonoma California, this year to benefit the Autism Society of America. As many of you know, my 20-year old son JP has autism, so the cause is close to my heart. The conference website has both PowerPoint slides and videos of the presentations and Q&A sessions (and more will be added over the coming weeks). The title of my presentation was "Very Mean Reversion" My hope is that if you appreciate the conference materials, you'll consider making a donation – in any amount at all – to the Autism Society of America. The proceeds of the conference will go to support programs and chapters at the local level throughout the United States (we've also put up a $50,000 matching grant to encourage donations). I appreciate your generosity. Thanks – John Please Consider Making a Donation More presentations are yet to come! And if you enjoyed the presentations (or even if you didn't), please Make a Donation to the Autism Society. On behalf of John and the Autism Society, thanks to all who make donations. Any amount helps. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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• See The Cast Of X-Men 14 Years Ago
• The Science of Gay [Infographic]
• She Dropped 130 Pounds Now She Looks Brand New

See The Cast Of X-Men 14 Years Ago Posted: 03 Jun 2014 02:38 PM PDT What a difference 14 years makes.

The Science of Gay [Infographic] Posted: 03 Jun 2014 11:52 AM PDT This infographic provides a deeper look into the science behind homosexuality. Click on Image to Enlarge.

She Dropped 130 Pounds Now She Looks Brand New Posted: 03 Jun 2014 11:36 AM PDT This woman made an incredible transformation as she dropped 130 pounds in a year. Now she looks like a whole new person.

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The President Heads to Europe

Here's what's going on at the White House today.         DAILY SNAPSHOT Tuesday, June 03, 2014             Featured The President Heads to Europe Early this morning, President Obama landed in Poland -- his first stop on a four-day trip to Europe. The President will also travel to Belgium and France, participating in bilateral meetings with world leaders, as well as the G-7 Leaders' Summit, and ending the week by commemorating the 70th anniversary of D-Day in Normandy, France. Learn more about the President's trip to Europe:       Top Stories Raw Video: President Obama Talks with Young Asthma Patients Last week, President Obama taped his weekly address at the Children's National Medical Center in Washington, D.C. While at the medical center, he visited children whose asthma is aggravated by air pollution. READ MORE Weekly Address: Reducing Carbon Pollution in Our Power Plants In the President's weekly address, he discussed new actions by the Environmental Protection Agency to cut dangerous carbon pollution, a plan that builds on the efforts already taken by many states, cities, and companies. These new commonsense guidelines reduce carbon pollution from power plants while leading the world in building a clean energy economy. READ MORE President Obama Speaks on the Recovery of Sgt. Bowe Bergdahl: "It's a Good Day" In the White House Rose Garden on Saturday evening, President Obama spoke about the recovery of Sgt. Bowe Bergdahl -- an American solider who spent nearly five years in captivity during the war in Afghanistan. READ MORE       Today's Schedule All times are Eastern Time (ET) 3:50 AM: The President arrives Warsaw, Poland 4:15 AM: The President and President Bronislaw Komorowski of Poland meet with U.S. and Polish airmen 4:55 AM: The President arrives at Belweder Palace 5:10 AM: The President participates in a bilateral meeting with President Bronislaw Komorowski of Poland 6:30 AM: The President holds a joint press conference with President Bronislaw Komorowski of Poland 7:30 AM: The President arrives at the Chancellery of the Prime Minister 7:40 AM: The President participates in a bilateral meeting with Polish Prime Minister Donald Tusk 8:25 AM: The President and Polish Prime Minister Donald Tusk deliver statements to the press 9:05 AM: The President and President Bronislaw Komorowski of Poland greet participants of the meeting with Central and Eastern European Leaders 9:15 AM: The President and President Bronislaw Komorowski of Poland host a meeting with Central and Eastern European Leaders 10:45 AM: The President joins the Central and Eastern European Leaders for a photo 1:30 PM: The President attends a Solidarity Dinner   Facebook     Twitter    |   More Ways to Engage Did Someone Forward This to You? Sign Up for Email Updates This email was sent to e0nstar1.blog@gmail.com Unsubscribe | Privacy Policy Please do not reply to this email. Contact the White House The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

Announcing MozBar 3.0: the Free, Completely Redesigned SEO Toolbar

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Announcing MozBar 3.0: the Free, Completely Redesigned SEO Toolbar Posted: 02 Jun 2014 05:14 PM PDT Posted by jon.white Today we are thrilled to announce version 3 of the MozBar browser extension. The SEO toolbar is now available for Chrome users. Expect the Firefox version to be available in a few weeks. What is the MozBar? The MozBar is a free browser extension that provides on-page access to Moz's link metrics and site analysis tools. Over the years it has gained a very popular following and saved a ton of time for SEO's and Inbound marketers alike. Whilst there are certain features that are only available to Pro subscribers, we try to keep as much as possible free. We think this is the TAGFEE thing to do, plus it really helps people as possible to get acquainted with our brand and our tools. The MozBar, since its inception in 2008, solves three main problems for its users: SERP analysis Site/competitor research Link profile analysis Here's how those features work in version 3! SERP analysis As you search Google, Yahoo or Bing, the MozBar instantly shows you valuable statistics about each of the results you see. This new version of the MozBar makes deconstructing SERPs faster than ever. Create search profiles for different engines and locations If you are working in local search, the MozBar allows you to create search profiles for specific regions and cities. This allows you to easily switch between a search for "pizza" in Chicago and Seattle without changing your search query. Export the SERP to a CSV As you search, easily export into a CSV key data about each SERP including: URL Page Title Description Detailed link metrics See Moz authority and search metrics next to each search result You'll get an overview of the most important statistics for each result on a SERP without even having to click through to those results. Site/competitor research This is another area where we've added a significant number of improvements, from on-page analysis to new structured data and markup detection. See Moz authority and link metrics For every URL you visit, the MozBar instantly shows you the link metrics at the top of the page, including MozRank, Domain Authority, subdomain metrics and more. Highlight followed, nofollowed, external, and internal links Easily spot which links are followed or nofollowed without having to dig through source code. See important page attributes and elements on the page The page analysis tools make up some of the strongest features of the MozBar. They allow you to perform an instant on-page audit of any URL you visit. With just a couple of clicks, instantly see important on page factors like title tags, meta description, canonical tags, page load time, HTTP status and more. Link profile analysis Detailed information about a page's inbound links, including quick comparisons to the site's domain and subdomain, are available at a glance. What's new in version 3? Those of you familiar with the MozBar will notice that version 3 has a new look and design. The redesign is a result of a bunch of customer and design research and has been optimized around the tasks and use cases it is designed to solve. It is also much faster and more reliable. Some exciting new features for v3 include: See social activity No more hunting for that social sharing bar on pages you visit: MozBar now includes social statistics from Facebook, Twitter, and Google+ right on the page. Validate and preview semantic markup You'll get an at-a-glance look at any semantic markup present on a page. Want to make sure a Twitter card is properly set up? No need to send a test tweet; just preview it in the MozBar. View keyword difficulty on the SERP  One of our most-requested features was the ability to make it easier to check keyword difficulty. Now you can get a keyword's difficulty on the fly for any search query with a click of the button, right from the search page. Note: This feature is only available to Pro subscribers. Pro tip: MozBar obscuring your page? Hit Shift+Ctrl+Alt+M to show / hide the bar! Get version 3 now! If you already have the MozBar installed, you don't need to do anything. The Chrome Store will update to the new version automatically. If you don't already have it, download it at the link above! Or maybe you are feeling a bit nostalgic? Check out how the MozBar has evolved over the years! (And what better way to travel back in time than with a carousel and a cool gradient overlay?) :-) ‹ › Looking for the Firefox version? We are still ironing out some last-minute issues in the Firefox version, and will launch it as soon as it's ready. For now, don't worry; you can still use version 2.65. Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

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