The Market Ticker
Commentary on The Capital Markets
2017-03-10 07:51 by Karl Denninger
in Employment , 316 references
[Comments enabled]  

So the first "Trump" jobs report is now in....

Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining.

So who lost?  Retail.  Hmmm.....

Let's have a look inside at the non-adjusted numbers:

Quit sucking off Trump eh?  Yes, the monthly (blue line) change is quite solid.  Where's the red (annualized rate of change) line -- that is, unadjusted but on a same-month basis?  It's down compared to last month.

Now is it bad?  No, it's not.  But it's not a rip-snorting number for February compared against last February.

Second, while the unadjusted number is 1.067 million last February was 1.023 million, statistically identical to what we just printed.

Trump bump?  Bull****!  Who was President in February of 2016?

Incidentally "not in labor force" dropped last February too, just like it did this time, and last year it dropped by a larger gross number than this February.  In other words what you're seeing here is a normal seasonal move, not some "Trump-inspired" confidence.

Argue otherwise and the facts say you're lying -- unless you can somehow magically transport Trump into office for 2016.

Now here's the other interesting chart:

As usually happens (and which I noted had better happen this month) employment:population tipped upward this month.  It usually does.  The last few months had threatened a change in trend, but true to form we got a 4-tick upward move there.  Again, not a "Trump bump" as exactly the same 4 tick upward move happened last year.

On the internals there has been no uptick in workweek, but the trend in average hourly earnings continues, which isn't bad.  But again, this isn't a "Trump" thing, it is continuation of what was seen for the last year or so.  Meh, in other words.

Everyone in the so-called "business media" is trying to attribute this to "animal spirits" in the entrepreneurial area and "Trump."  CNBS was running that crap this morning and and it is a factual and knowing lie.  The figures from last February, when Obama was in office, make this clear and it is only through a willful and intentional refusal to look at last year's figures to compare by which such a statement can be made.

Enjoy whatever "bump" you get in the market from this today; if you are in any way influenced in your behavior by the so-called financial media make damn sure that if it turns out to be crap you hold them accountable for their lies down the road.

/Long kneepad manufacturers for those of you lined up for your turn.

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2017-03-09 06:00 by Karl Denninger
in Editorial , 567 references
[Comments enabled]  

This last week marks four separate instances of something that has broken here at the house which I could have "called someone" and would have likely cost me a ton of money during the last few months -- but in each case the cost of the repair was either nothing or just a few dollars.

The first was my oven, right around the holidays.  It stopped heating, which is a real bitch when you're in the middle of making food.  Usually that's the heating element, which is typically $25 or so to buy (and can be changed by anyone who can successfully use a screwdriver in under 30 minutes.)  The element in this case was in fact bad, but in addition there was a fuse in the back of the oven which had also "cooked."

It didn't fail from overcurrent (a short) it failed from a bad connection which heated it up enough for it to pretty-much catch the fuse holder on fire.  Cost of the repair?  $5 for a new fuse holder and $25 for a lower element.  The "snowflake" solution would have been to buy a new $1,000 range/oven combination.

Next up was my pool pump.  It had a small leak in the center section between the motor and pump body.  If you call the pool guys they'll come out and replace the pump.  If you don't fix the leak promptly, incidentally, you will be buying a new motor because the water will get in there and destroy it.  Well, a few years ago I put a VFD drive motor in, which (incidentally) has cut my power consumption for the pool by some 80% -- but that damn motor is expensive!  A complete pump assembly, with motor?  $1,000 -- plus the pool guy's labor to put it in, which is a couple hour job with wiring and pipe.

The actual problem is a $20 shaft seal.  A full kit of seals, including the O-rings you disturb to get to the shaft seal, costs about $30.  Time to repair?  An hour, since I didn't have to unwire anything and the last time I had the plumbing apart I intelligently put unions in so I could disconnect the pump and filter with reasonable ease.  The "snowflake" solution would have easily topped $1,000 with labor - probably $1,200 or so.

Next up was about a week ago.  The dishwasher stopped running mid-cycle with a "door open" fault shown on the display -- but the door was latched.  Most of the time this is bad news; the control board is usually dead, and they're not cheap.  Well, the unit is 10+ years old, so I expected the worst.  Opening up the control board area I found a bad connection that (again) overheated and had cooked one of the wires and the trace on the board it plugged into.  But it was salvageable: A short length of tinned (marine-grade) stranded wire, my soldering iron, some shrink wrap and hot glue to tack it all back in place and then disassembly of all the other connectors to tighten them up so I don't get a repeat because the next incident will definitely fry the controller board beyond repair and the dishwasher is back in business.  Cost?  $0, plus about an hour of my time.  Snowflake solution?  New dishwasher: $500+.

And then there was the most-recent.  I have my home automated and when I go to bed I push a button and it drops the temperature in the house by a few degrees, since I like a cool house to sleep.  Well, a few hours later I wake up and the AC is running.  Uh..... that's not good, considering that I don't feel particularly cold air coming out of the vents and in fact I'm warmer than I should be -- and no, I'm not drunk.  I wait a few minutes and it's still running.  Step outside and find the outside unit has the fan running but no compressor.  Crap.  Shut it off at the disconnect, go to bed, deal with it in the morning.

Next morning I opened it up, expecting very bad ($$$$$$$$) news.  See, if the fan is running on the outside unit then power is good and so is the ($10) contactor -- which means you're odds-on to have an open in the compressor motor itself (inside the sealed part) which totals the outside unit.


One of the wires from the contactor to the run condenser had apparently succumbed to corrosion internally (untinned wire, thanks for nothing you jackasses!) and, once it got compromised it burned up.  In the process of trying to light itself on fire that wire burned the insulation on a few other wires, but fortunately the manufacturer was kind enough to leave sufficient length to cut off the damaged part and reterminate them.  I had to make up one jumper, but I happen to have some 14 fully tinned marine-grade wire to do that with, plus crimp-on disconnects and the proper crimping tool.  Total cost of the repair?  $0.  The "snowflake" solution could have been anywhere from an honest repairman charging a couple hundred bucks for the service call and a crazy markup on the replaced wiring to something really awful, $3-4,000, if you got a dishonest guy who claims the condenser is bad -- a ruse that utterly nobody who failed to check it out themselves would detect.

So let me see if I can count this up: That's under $100 worth of actual repairs and somewhere between $2,000 and $5,000 in avoided expense because I'm not a "snowflake."

Let's put this in perspective for you:

For the average family that's roughly 10% of their annual disposable income.

These sorts of "emergencies" aren't all that uncommon.  In fact they're routine.  Most households have at least one "good one" a year, whether it be the range, the microwave, a water heater, car, washing machine or similar.  Another "good one" for you to get screwed by is the rotary spring on your garage door; they break, and cost about $30-40. I've seen $500 repair bills to change one which is a pure rape job given that I can replace one in under an hour, but the garage door places get it from people who are afraid of doing it themselves because when the spring breaks your car is trapped inside the garage!  The newer 4-stroke weed whackers require a valve adjustment roughly annually -- a 15 minute task if you know how to do it and a $100 bill from the local small-engine guy if you don't.  A material percentage of the failures in appliances and similar are due to manufacturer decisions to save 15 cents when the item is made but most of the time they're fixable for very little money if you know how.  If not they can be very reliable budget-wreckers.

All of this expense comes because we got rid of shop class, the average 18 year old can't change his own oil and has no idea how to use a voltmeter or a soldering iron.  Instead of using one's head and looking into things we now just "call someone" and play around on Facebook and Snap.

Look, if you like buying a new range every 10 years or so (when you can easily get 20+ out of one), a new dishwasher five years earlier than you should need to or worse, a new AC unit at half of the lifetime it should be expected to last then go right ahead and be stupid.

They'll be happy to take your money.

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So it's out..... well, at least sort-of-out.

And let me point out a few things about this bill, at least as far as I can determine from reading and cross-referencing it:

  • Idoes not repeal the "penalty."  It instead moves it to the back end; if you don't have insurance (by choice) and then buy it, you get hammered with a 30% penalty for a year.  For most people that's far more than the ACA penalty for not having insurance -- it could easily be $3,000 or more!  This is outright fraud on the part of the GOP which said it was repealing the penalty.  Paul Ryan, Donald Trump and the rest are all ****ing liars.

  • Medicaid expansion is essentially ended and cost-pickup for the states is capped to CPI-U's medical expenditures inflation index on a forward basis.  This will detonate State budgets within about 10 years as the current spend is expanding at ~9% a year but the CPI-U index is less than half that.

  • It does not repeal the prohibition on discrimination in price (or denial) for pre-existing conditions, but it does increase the multiplier for age to 5 (from 3.)

  • IT IS NOT A REPEAL OF THE ACA -- not even close.  The vast majority of the ACA remains intact.  The "mandate" is gone but the penalty remains, just shifted to the back side and for many will be far worse than the penalty would have been.  The restriction on what plans you can sell is gone, subsidies are cut, indexed only to age and paid to HSAs instead of directly to insurers. It does repeal many of the "add-on" taxes that paid for the program previously as well.

Repeal and replace? More like bend over, grab your ankles and bite down on a big stick so you don't chomp your tongue off.

When it comes to the media and their "lead-in" to the bill you have pieces like this, which sound awfully good when you read them until you realize there's exactly zero being said about the how.

Remember, it's who, what, when, where, why and how (sometimes stated as "with what?")

These are the 5 Ws (and one H, or sometimes 6 Ws) that form the basis of journalism.


Where's the examination of that last one: How?


As an example you have laments like this from a physician:

Republicans ran on a platform of repealing and replacing a failing ObamaCare system. 

Democrats touted ObamaCare as an overwhelming success.  Neither party has really addressed the issues surrounding the law—patients are experiencing higher costs, diminished access and poorer quality care.


I have seen my patients go without medicines, miss important preventative care milestones and struggle to find access to high quality care. Copayments continue to increase—deductibles are rising (more than $12,000 in some cases) to the point where an average family simply cannot utilize insurance except in catastrophic circumstances.

There's a hell of a screed in that article but as I read it what kept going through my head is that this is a physician who's complaining that Washington has failed to fix this and that, lawmakers are putting "their own interests" ahead of the public and so on.  Complaint after complaint after complaint leveled against both political parties.

But nowhere in that article is found any discussion about the how -- that is, how is this individual physician prevented from putting a stop to that crap for his customers right damn now!

In other words how is it that he can't charge $100/hour (a quite-reasonable wage, all things considered -- that would be $200,000 for 50, 5-day-a-week 40 hour weeks of work in a year with 2 weeks off) in cash for his patients and given that most patients actually see said doctor for about 15 to 30 minutes per visit you then get to explain why someone who has a $12,000 deductible shouldn't just pay $50 for 30 minutes of said doctor's time with said physician seeing said person under his terms (and none of the nonsense being complained about.)

Is the problem that you can't just pay the $50 because said doctor has been prohibited from holding out his hand for you to stuff a Grant into it?  What law prevents him from doing that?  Why is that all of these "escalating costs" and "administrators" have resulted in actual physicians kneeling before Zod instead of them telling everyone trying to mandate that crap to stick it up their ass?

In short did someone make the current model something he's forced into rather than chooses and if so who did it with what law(s) (specifically) and why is doing so legal especially when every doctor in a given area has the same "problem"?  If there's no competition due to collusive behavior in a place where competition would obviously make someone richer at the other competitor's expense then you have a very solid case that felony violation of the law is taking place among all those who are doing the colluding!  If extortion (that is, some sort of threat) is involved then it's even worse.  I remind you that in 1979 insurance companies and pharmacies tried to claim that their collusion was exempt from anti-trust law and lost at the Supreme Court.

There are only two possibilities: This physician is part of the scam voluntarily or he is being forced involuntarily.  He's either a protagonist and thus willingly engaged in the offense or he's a victim of it.

Which is it and why isn't that the center of the a whole lot of journalistic attention?

You know.... the old "How" question that is supposed to be central to journalism?

Start asking that question and you will find yourself in two places at once.  The first is here, where we can remove $400 billion a year from the federal budget alone by cutting the crap on just one disease -- by putting sufferers of same first and prescribing health instead of expensive drugs that do not resolve anything.  The second is found in making The Surgery Center of Oklahoma the model for all medical practice exactly as it is for a car repair shop; that is, mandatory posting of prices and charging of the same price for the same product or service to all who come in the door for same.

Neither Democrat or Republican members of Congress will do either, and neither will Trump -- and journalists will not poke at why physicians have not revolted en-masse and destroyed this demonic system from within by simply putting out their hand and demanding a Grant to see them for 30 minutes of their time, ending the rampjob on the front end, at the local medical office, with finality while demonstrating that obtaining medical advice need not bankrupt you or be complicated.

As a result of all these actors serving those who are colluding to jack up the price by a factor of five to ten over what it should be for medical care in this country and the complete unwillingness of both Congress and the press to call those parties out and put a stop to it the federal budget is on a path to implosion along with all of the pension systems in the United States within the current President's term.

In 2009 I gave you a fairly simple "how" in these very pages, and have followed through with far more since, including more-complex ideas, all centered on the rule of law -- specifically, law that has existed for more than 100 years and does apply to health care.

You might want to go back and read that piece again. Then read this one.

Make sure you note the dates on both....

As for Trump, Price and the GOP?


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2017-03-05 05:00 by Karl Denninger
in Consumer , 488 references
[Comments enabled]  

How's that for a headline?

It's true, by the way.

Here's how the numbers work -- Facebook says that the "average" American user produces about $25/quarter in revenue, or $100/year per-person.  Facebook makes nearly all of its revenue from ads.  It sells those ads to various product and service producers, whether it's a local bar or an auto manufacturer.

In order for such an ad to be worth it to the buyer it must produce more in net profit than it costs.

We can therefore determine the average cost to the American consumer who is on Facebook by taking that $100 in "revenue" and dividing it by the net profit margin of the businesses advertising, on average, then adding to it some sort of premium (since doing something that gains nothing is not worth it; ergo, it must return more than mere cost.)

The net profit margin has to be guessed at in aggregate, but 10% is probably quite reasonable.  Some places (e.g. a grocery store) make far less, some make more, and remember that it's only net margin that matters, not gross.

Now ask yourself this: If you're an "average" family you have 2.53 people in it, as of 2016.  In that average household there are probably two Facebook accounts, so the average family has a cost of using Facebook of at least $2,000/year.

If the average family has $50,000 worth of income (about right) then Zucker****er manages to take about 4% of your gross (pre-tax) family income.  If you're poorer on a percentage basis he probably gets even more.

The worst part of it is that he gets his cut of it, roughly 10%, without you realizing that you've spent the money.

Your auto insurance might be "uprated" without you even knowing it, due to your Facebook activity.
Your HOME insurance might also be.
Health insurance?  Might be.
Job offer with a lower salary (or not offered at all)?  Quite possibly.
But the real 900lb Gorilla is that you are nearly certain to be buying products and services you would not otherwise buy, at all, or for which you could have done better in price and quality absent your presence on Facesucker.

This has to be true or Facesucker would be out of business!

Folks, you may think $2,000 each and every year is a not-so big amount of money.  Anyone who doesn't want that $2,000 is welcome to send it to me; I'll buy rounds of drinks for everyone in my local pub with it until it's gone and the people there will get more value out of it than you will.

Further, I remind you that there are some of us who spend exactly zero as a result of Facesucker yet are on the system, and ARPU is an average so for each of us who spend zero someone else spends $2,000 per person instead of $1,000!

How can you stop bleeding from the ass like this?


Oh, this goes for all the other "social media" sites too - - Twatter, Instragram (owned by Facebook), Snap, etc.

No, you can't avoid it by using a pseudonym, a VPN or whatever.  Your behavior will give you away, and these days it's trivially easy for firms with access to "big data" (Zuckerpig Frankenstein is certainly one of them!) to figure out exactly who you are with a very high degree of reliability.

If you do delete your account and pay attention a few months later you'll likely notice that your wallet -- and bank account -- are both fatter.

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2017-03-04 06:00 by Karl Denninger
in Health Reform , 502 references
[Comments enabled]  

The byline on this article is misleading -- probably because of where it's published.

Salim Yusuf says new evidence fails to support many major diet recommendations.

There is no such "new evidence."

Yusuf presented evidence that many of the most significant and impactful nutrition recommendations regarding dietary fats, salt, carbohydrates, and even vegetables are not supported by evidence.

There was never evidence to support those "recommendations"; there was industry gaming, there was outright fraud (the "7 nations study") and there was and still is lobbying by various organizations.

The results from PURE will likely add fuel to the ongoing fiery debate over carbohydrates and fats. Yusuf displayed data showing that the incidence of cardiovascular disease in the PURE population increases as carbohydrate intake (as a percentage of total calories) rises.


"We actually found that increasing fats was protective," he said. Low consumption of total fat was associated with increased risk.

In other words exactly backward from what has been promoted by your doctor.

These "guidelines" and "recommendations" have killed millions of Americans.  They have led to more than half of all adults being overweight or obese.  They have caused millions of cases of Type II diabetes and uncountable human suffering.

Do not believe for a second that any of this is or ever has been a "mistake." These are alleged experts; doctors and nutritionists.  How do we know they're full of crap -- either on purpose or via gross negligence? Basic physiology tells us how carbohydrates are processed in the human body.  Learning the basic physiology of humans is part of becoming a doctor or nutritionist and it's not an optional part either. In short these are people who claim to be experts, who as part of their "degrees" must, by definition, learn the basic facts of physiology and yet they then go on to set recommendations that make utterly no sense unless they are intentionally ignoring what they learned.

These people are directly responsible for roughly $400 billion a year in federal spending and countless more through private health plans, virtually all of which can not only be avoided in the future but stopped right now.

There has not been one bit of accountability applied to any of them.

The "recommendations" did not come about as a result of honest mistake they were made on the basis of economic desire by the lobbying parties and require, in order to be made, intentional denial of basic physiological facts. These "recommendations" have in turn inured to the benefit of physicians, drug companies and hospitals who have made trillions of dollars off the disease, suffering and death in the population following those recommendations cause.

These **********s are just like a "fire department" full of firemen who commit mass-arson and then demand huge amounts of money to put out the fires they set, refusing to pay the bill to restore or replace the smoldering ruins they created, and they manage to dodge prosecution for killing the people who die in said fires, all by claiming to be those who do good for society.

Not only should all of the wealth these individuals and corporations stole via this fraud be confiscated every one of those individuals who has been involved in or profited from this scam need to be indicted, tried and sentenced for each human case of disease or death they caused -- and since mass-homicide is often a death penalty offense, it should be considered.

I argue we ought to being back the gallows and carry out those sentences in public.

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