Janet Yellen and Mario Draghi took to the microphone in Jackson Hole but neither created any market moving headlines.

Market Statistics

Janet Yellen could have been named Janet Greenspan or Janet Bernanke for all the good her speech did the market. Yellen, known for her dovish views, appeared to move to the center as she lectured on the state of the labor market. The speech was more like a lecture by a professor where she laid out the case using arguments from all sides and then ending it with a "what do you think" type of close.

Analysts did not want to be given the opposing positions and then forced to draw their own conclusions. They wanted Yellen to tell them where she stood so they could then formulate an investment thesis based on her position.

Spending 45 minutes talking around the subject without really saying anything suggests she has finally grown accustomed to the role of Fed chairman and she was channeling her predecessors Greenspan and Bernanke.

Art Cashin said it best. He called it "A speech fit for a medieval philosopher. We got everything but angels dancing on the head of a pin." Full text here.

Yellen continued to claim the job market has "yet to fully recover." Although there has been "considerable progress" there is still "considerable slack" in the labor markets. She said the unemployment rate may not be telling the right story and the Fed should consider the 35 year low in the labor force participation rate and the problem of forced part time employment along with the pace of hires and quits. She said the Fed would take a more holistic view of the labor market in determining the pace of the recovery.

One thing Yellen did do was try to explain in Fedspeak that the current method of calculating the unemployment rate was producing incorrect results. Of course everyone reading these pages for very long already knows that but the common folk are oblivious. She tried to shed some light on the reality of the broader U6 unemployment rate, currently 12.6%, but explaining it in Fedspeak is the equivalent of talking in Latin. I give her credit for trying but her education and position got in the way.

The new casino SLS Las Vegas opens this weekend and it is a prime example of Janet Yellen's unemployment quandary. The 1,600 room hotel/casino hired 3,400 people to run the business and they received 117,000 applications. The City Center development hired 12,500 people to open a couple years ago and they had 62,000 applications. There are far too many people looking for jobs than there are jobs.

Yellen said if progress in the labor market "continues to be more rapid than anticipated" a rate hike could come sooner than currently expected and further increases could be more rapid. Conversely, "if the Fed's goals of full employment and stable prices remain elusive, policy would be more accommodative." That is actually a more balanced assessment than she gave in prior quarters and suggests a move to the middle in her policy stance.

Her comments did not change the consensus view of the first rate hike in late Q1 or early Q2. However, she did not appear as dovish as in the past and that could suggest she is moving closer to a neutral position on future hikes. Since she was the most dovish person on the FOMC that means the overall view of the committee may be moving to rate hikes sooner rather than later.

In any case nobody expects hikes before Q1 with the last Fed meeting in the quarter on March 18th the first date likely. It will probably be done at an end of quarter meeting that is followed by the Chairman's normal press conference. If nothing happens at that meeting the next possibility would be June 17th. Nothing prevents them from using a non-quarter end meeting to raise rates but they will want to use the normal press conference to answer the hundreds of questions that will be raised by the decision and try to quell the worries the Fed is going to ramp up quickly. This will tame the market response rather than just drop the bomb in a post meeting announcement with no explanation.

The low key presentation on Friday did not give the market any reason to rally or to sell off. It was a confusing factor rather than an illuminating speech. Volume was very low and volatility was nonexistent.

There were no economic reports of note to move the market on Friday. The Risk of Recession declined from 15% to 12%. Yawn! The ECRI Weekly Leading Index was flat at 134.3 and Household credit rose +1.6% in July after a +1.3% rise in June. All of this data was ignored.

The economic calendar for next week starts the normal monthly series of regional Fed activity reports with the Richmond Fed Survey the first on the calendar. The national manufacturing ISM is on Friday.

The next revision of the Q2 GDP on Thursday will be closely watched by the market. The Q1 GDP showed a drop of -2.93% and the last release of the Q2 GDP showed +3.95% growth. Obviously if you average those two you get +0.51% growth year to date. However, the consensus estimate for this revision has fallen to +2.6% and averaging results in -0.33% contraction for the first half. Analysts were all bubbly after the prior 3.95% print saying continued growth at 3% or better for the rest of the year would still be on trend for a slowly growing 2% economy BUT a sharp drop in the Q2 estimates will derail those hopes. This is going to be a pothole for the market to dodge on Thursday.

The market will be closed next Monday for Labor Day and volume is going to be extremely light all week.


Mario Draghi, also speaking at the Fed's Jackson Hole conference begged central bankers and politicians to play their part in safeguarding the EU recovery. Draghi has pledged to "do whatever it takes" including QE but so far he has failed to follow through on his promise. The EU recovered from recession a year ago but is on the verge of falling back into another one. Inflation is the weakest in five years and unemployment remains near a record high. The sanctions against Russia are going to be a major drag, which will put even more pressure on Draghi to act. Eventually the markets are going to call Draghi's bluff if he does not deliver on his promise.

If it is Friday it must mean Russia is in the news. The markets opened lower after the Russian aid convoy streamed into the Ukraine without permission and without Red Cross monitors. Putin finally gave up trying to find a way around the Red Cross inspection and/or offloading onto Ukrainian trucks and instead just plowed across the border towards the rebel held area of Luhansk. Putin strongly warned the Ukraine not to interfere with their transit through the Ukraine.

Ukrainian officials did not attack the trucks for multiple reasons. Attacking trucks loaded with food and medical supplies would have been a public relations disaster. Ukraine still believes the trucks also contain military supplies but they could not be stopped and verified without incurring Putins' wrath. The government called it an invasion and a "flagrant violation of Ukraine's sovereignty" and warned Russia there would be additional sanctions if the convoy was not immediately removed. I am sure Putin was laughing about that threat.

Since the convoy of aid went directly to rebel controlled areas it was impossible to determine if other "non aid" material was on the trucks but you can bet there was an ulterior motive. Putin did not hastily repaint 280 army trucks white and rush them to the border with stops at four military bases without some ulterior motive.

NATO secretary General Anders Fogh Rasmussen said the alliance has observed an alarming buildup of Russian ground and air forces on the border with Ukraine. They also monitored transfers of large quantities of advanced weapons including tanks, armored personnel carriers, artillery and anti-aircraft missile systems to the rebels in the Ukraine. The U.S. administration said it was "very concerned" about the buildup and violation of Ukrainian sovereignty and if Russia did not withdraw there would be additional "costs." I bet Putin got a good laugh out of that wimpy warning. Putin is playing chess while the rest of the world is playing checkers.

As has been the case the prior two weeks the Russian headlines had the most impact on the markets.

In stock news Keurig Green Mountain (GMCR) scored another win on a deal with Kraft to make their coffee brands available for the Keurig brewers. This includes Maxwell House, Yuban, Gevalia and McDonald's McCafe brands. They already have deals with Starbucks, Dunkin Brands, Peet's Coffee, Nestle's Coffee-mate, Costco's Kirkland Signature, Target's Archer Farms and many others. Kraft had been a hold out and the addition of their brands is a real plus for GMCR. The company recently scored a partnership with Coke (KO) for its carbonated beverage dispenser due out in the next couple months.

With nearly 10% of GMCR shares sold short the news caused a +13% spike in the stock.


Gamestop (GME) reported earnings of 22 cents that beat estimates of 18 cents. Revenue rose +25% to $1.73 billion. Same store sales rose +21.9%. They credited the strong sales to demand for new Xbox One and Playstation 4 game consoles. Hardware sales more than doubled and sales in the mobile and consumer electronics segment were up +85%. The company forecast earnings for the current quarter between 58-64 cents compared to analyst estimates for 58 cents. Sterne Agee said 2015 is likely to be a breakout year for the industry with potential double digit growth in new software. They recommended GME because of their lead on these next generation positions. Shares of GME had been depressed since peaking in November.


Discount retailer Ross Stores (ROST) reported earnings of $1.14 compared to forecasts of $1.05-$1.09 and analyst estimates of $1.09. The gains came from aggressive cost controls and better than expected gross margins. Net sales rose +7% to $2.729 billion. Same store sales rose +2% compared to +4% in the year ago quarter. Margins improved 70 basis points to 14.3%. They opened 53 new Ross outlets and 14 discount stores. They plan on adding 95 new stores for the full year with 28 in Q3.


The Gap Inc (GPS) reported earnings of 70 cents compared to estimates of 69 cents. Revenue income rose +9.6% to $332 million and revenue rose +2.9% to $3.98 billion. Same store sales were flat system wide but the Old Navy chain rose +4% and Gap branded stores declined -5%. Online sales rose +11%. The Gap is opening its first Gap store in India in 2015 with pans to have 40 stores in the country.


Intuit (INTU) reported a loss of 14 cents, 9 cents more than the year ago quarter. The predicted a Q3 loss of 36 cents compared to -4 cents in Q3-2013. The company said the losses came from a continuing restructuring effort, acquisitions and the effort to expand its tax services business in India. Intuit shares declined on the news as shareholders are getting tired of the never ending restructuring losses.


Foot Locker (FL) posted earnings that rose +39% to 64 cents. This beat estimates of 54 cents. The company is improving performance by closing underperforming stores, revamping store layouts and merchandising and adding more running shoes, which are the best part of the athletic-footwear market. Citigroup said the restructuring was working along with strong inventory management. The analyst said Foot Locker was excelling in a "challenging mall environment." Revenue rose +13% to $1.64 billion and same store sales rose +7%. Analysts were only expecting a 5.4% gain. Shares of Foot Locker rallied to an all time high but based on the chart it may be time for a rest.


We had a major yearend estimate revision on Friday by Barry Bannister at Stifel Nicolaus. Bannister revised his yearend target for the S&P from 1,850 to 2,300, a whopping +450 point increase. That takes him from one of the three major analysts tied for the low at 1,850 to the highest estimate in the 19 analysts tracked by Bloomberg. That implies a +17% rally by yearend and +24% gain for the year.

To explain his change in the forecast he pointed to a picture of the Four Horsemen of the Apocalypse. LINK He said the market is handling the Four Horsemen much better than he expected. The Four Horsemen in his way of thinking are the Federal Reserve (conquest), war (war), economic disparity/recession (famine) and bear markets (death).

He said the absence of recession triggers such as an overheating economy and inverted yield curve should lengthen the growth cycle. He reminded that the strongest and least risky returns in the equity market occurred in the first 65% of the economic cycle. However, he believes those returns were already made since March 2009 and the +191% gain in the S&P. He still believes there are a lot of bullish stragglers that will push the market higher but it will be accompanied by an increase in volatility. Bannister said bull markets are made up of three phases, intrepid, mainstream and stragglers. We are in the straggler phase now. He said the three previous bull markets that lasted more than six years each "coalesced at this exact point before moving higher," which means the sideways market this summer appears to be following the playbook. The current bull will turn 6 in March. "Those four horsemen just can't keep up with this raging bull." He expects foreign investors to buy more U.S. equities because of the uncertainty in their home markets.

Others don't share his optimism. Jonathan Gilonna of Barclays said overseas markets are generating too little demand for the S&P to end the year any higher than current levels. Barclays recently upgraded their forecast from 1,900 to 1,975.

I updated my forecast table with the latest revisions. The shaded entries have all revised their yearend numbers. The original forecast follows the analyst name.

Note the average of all the forecasts is 1,998 and just under the psychological 2,000 level. That suggests we could see some decent selling when that level is hit.


Bank of America Merrill Lynch said there were inflows of $17.9 billion into equity funds for the week ended Wednesday. That was the most in one week since October. There was another $3.1 billion that flowed into high yield bond funds so the high yield risk is back on along with equities. This was the biggest inflow into high yield in 2014. Lipper said there were outflows of $7.1 billion the week ended August 6th and $12.6 billion over the four weeks leading up to last week.

When the Fed starts raising rates it will have to borrow "hundreds of billions" from money market mutual funds in order to anchor the federal funds rate. St Louis Fed President James Bullard said it would take "several hundred billion" in loans to keep rates from taking off. The Fed will do this with reverse repos where the Fed borrows cash overnight from counterparties like money funds. In exchange they give the funds collateral like treasuries. The next day the Fed returns the cash and reclaims its collateral.

The Fed has been testing this program with a limited number of counterparties since February. So far in August the Fed has borrowed an average of $128.1 billion a day. The Fed pays 0.05% interest for the loans. The Fed had to come up with a tool to anchor the Fed funds rate after U.S. banks increased their capital on hand after the recession. The new rules require a lot more capital and the banks no longer need to borrow from the Fed funds window.

In other words if the Fed hikes the Fed funds rate next year and nobody is borrowing from the Fed then the hike has less value. Real rates will still go up just because the Fed raises the benchmark rate but without an anchor for that rate there could be a lot of volatility.

The Fed plans to use the rate of interest it pays on excess reserves deposited at the central bank as the "primary tool used to move the Fed funds rate into its target range" with only a "temporary use" of the overnight reverse repo facility.

The Fed admits it does not know if it will need the reverse repo strategy until they actually start raising rates. Charles Plosser warned about creating a program that could become too big to manage and its unexpected impact to the financial system. "We want to be cautious about creating a facility that we can't get ourselves out of."

The volume last week was minimal but the internals were solidly positive. Friday's volume was 4.3 billion shares and the lowest day of the week. It was also the lowest volume day of the year other than the holiday shortened July 3rd session.

The new highs were rising through Thursday but the last time the S&P was at a new high back in early July the individual new highs were over 800. There is far less conviction today than there was back in early July. Volume in July was over 6 billion shares.

However, the AAII Investor Sentiment Survey last week showed that 46.11% of retail investors were bullish. That is the highest level of the year.


Next week is a holiday week. Labor Day is not until the following Monday but the entire week will have holiday volume. This is the last week of summer and very few traders will be sitting in front of their PCs. In theory we should see a melt up but the Yellen speech may have soured sentiment. The biggest economic speech of the summer was a disappointment. Yellen could have given some solid guidance but instead she reverted into Fedspeak to keep the markets off balance.

That could mean some lethargic markets for next week. We do have some important economic reports but there will not be many traders around to hear them.

Technically we saw the S&P spike over the prior resistance high at 1988 and close at 1992 on Thursday. That was not enough of a breakout to be convincing. However, Friday's decline closed right on that 1988 level, which should now be support. If that support holds on Monday we could see buyers come back into the market. I am pretty sure there are quite a few shorts that did not cover on that slight close over 1988 on Thursday. With Yellen on tap and the potential for a foot in mouth event they probably held their shorts. When the market weakened on Friday they may have even added to those shorts.

Next week could be choppy if Monday starts off bad. The dip buyers are still there but their numbers will be diminished because of the holiday week. There may not be enough buyers around to push the market to new highs and even if there are buyers there is a huge sell signal hanging on 2000. This highly visible round number, especially when it is the average analyst target for all of 2014, makes it an inviting target for sellers. I wish I could see into all the brokerage accounts this weekend to see how many have sell orders waiting at 1998-1999 in anticipation of a profit taking event.

I think putting a sell trigger on the SPY at 199.95 is a very valid strategy. The September 199 put option on the SPY had volume of 19,904 contracts on Friday against open interest of 43,033. Nearly half the open interest was traded on Friday. I can't tell without a lot of work how much of that volume was new positions but I would bet it was the vast majority.

If we get a decent bout of profit taking initial support is 1960 followed by 1940.


Like the S&P the Dow is closing in on serious resistance between 17,075-17,140. It closed at 17,039 on Thursday and gave back -38 points to close at 17,001 on Friday. This was a fingernail grip on the cliff face but it held in spite of the Russian invasion of Ukraine and Yellen's confusing speech.

The Dow is very over extended with a +640 point gain over the last two weeks. We could stand to give back a few points and then take a new run at the resistance highs. Support is 16,600 but that is -400 points from Friday's close. I doubt the dip buyers would let us slip that far before they showed up in volume.

Historically, most low volume holiday periods tend to post gains. For some reason there are fewer sellers than buyers in the days leading up to holidays. Let's hope that holds true next week.



The Nasdaq continued its climb but the rate of ascent slowed over the last several days. The NDX stuck like glue to the red uptrend resistance line. I love it when the price action reacts to the lines exactly the way it should.

Like the Dow the Nasdaq is over extended and needs at least an intraday bout of profit taking to ease the pressures. Normally a breakout to decade highs on any security does not come on minimal gains like the Nasdaq over the last four days. Normally breakouts tend to catch fire and run. However, I am encouraged there was no material dip on the Russian headlines. That suggests everyone holding longs are content with their positions and expect higher highs.

The narrow range over the last several days did establish initial support at 4515 and that give us a clear line in the sand for market direction. A break below that level could gain speed as sell triggers are hit.




The Russell 2000 is not setting the world on fire with its blazing speed but it is moving higher. The index has been really choppy since the August 1st low but the direction has been up.

The 1160-1165 level has returned as resistance but there is a pattern of higher lows that suggests that resistance will be broken.



Despite the overextended conditions the historical trend favors a continued move higher next week. I would be surprised if it was dramatic and I do expect some choppy trading due to lack of volume.

This is a week when program trading is likely. Some hedge funds like to push the market around in thin volume when they think they can trigger a significant move. Be prepared for a highly directional day. If it is to the downside I do expect the dip buyers to appear.

Random Thoughts

I am sure you have heard that ISIS is going to bring its terror attacks to the USA. You probably ignored those comments like most everyone ignores the headlines about Russia driving aid trucks into the Ukraine. However, the ISIS threat is real. If you doubt it you only need to scan the videos from Ferguson Missouri for the homemade ISIS signs and Muslim flags.

On Friday the U.S. government issued a security bulletin to all U.S. law enforcement warning them of potential ISIS threats. On Twitter (#AmessagefromISIStoUS) there is a picture of the Old Republic Building at 307 N Michigan Ave in Chicago and of the White House with a person holding up a handwritten note saying, "We are in your state. We are in your cities. We are in your streets. You are our goals anywhere." Having an individual hold the handwritten notes in front of these landmarks is proof there are individuals in the U.S. that would like to do us harm. They are just waiting for the right time and place.

Chicago has become a top target for international terrorists according to security expert Ross Rice, a former FBI agent. It is known as Obama Town and high on the list of targets as payback for President Obama's various acts against al-Qaeda and now ISIS.

With discarded Korans and prayer rugs repeatedly found along the border with Mexico it does not take a leap of faith to understand there is a growing army of terrorists in the USA. If you don't think life as we know it will change, just wait until there is a string of car bombings in the U.S. targeting our business districts and shopping centers. When that happens the resulting bear market will be the least of our worries.


One reply posted on the #AmessagefromISIStoUS thread was:

Armed, Patriotic Americans are:
In our states
In our cities
In our streets.
You are our #1 enemy. Bring it!

Relations with Russia are declining so how is the administration's pivot to Asia going. On August 19th a Chinese J-11 fighter jet flew within 20 feet of a U.S. Navy P-8 surveillance aircraft. The fighter pulled to within 20 feet of the wingtip and then lifted its wing to show that it was armed with missiles. The plane then executed a barrel roll around the U.S. plane at a distance of 45 feet. The incident took place 135 miles east of Hainan Island at the southernmost tip of China. The pentagon reported there have been several close encounters over the sea since March. The U.S. called the incident a serious provocation and complained strongly to Beijing.

In 2001 a Chinese fighter collided with a U.S. Navy surveillance aircraft on Hainan Island. The collision, caused by similar stunts by the Chinese fighter, caused the Chinese plane to crash killing the pilot and forced the U.S. plane of make an emergency landing on the island where it was impounded by China.


The Pentagon said Russian artillery units manned by Russians and previously firing into Ukraine from Russian territory have now moved into Ukraine and they are using their new location to fire deeper into Ukrainian territory. NATO said this was evidence of "direct Russian involvement" and represents a serious escalation of the conflict.

The U.S. warned Russia to immediately remove its aid vehicles and military equipment from Ukraine or face further costs and isolation. With Putin's favorability ratings now in the high 80% range the odds of him doing anything to reduce his "costs" are about zero. Like Crimea the eastern Ukraine is gone. Russia is occupying it and nobody can do anything against them. The provinces of Luhansk and Donetsk are heavily populated by ethnic Russians and they have never been fans of the Ukrainian government. Putin has given them a way to separate from Ukraine and ally themselves with mother Russia.

By sending the aid convoy into Ukraine without permission Putin has called the West's and Ukraine's bluff. Putin knew Ukraine would not fire on the convoy or risk an even larger pretext for Russia attacking Ukraine forces. Putin knew the U.S. and EU are not going to intervene because they are trying to calm the situation not escalate it. Putin has won the war against the eastern Ukraine. Now all he has to do is run out the clock.

However, Putin's goal is a land route to Crimea and the Black Sea deepwater port of Sevastopol. Even if he does get control of Luhansk and Donetsk there are still two more provinces between Russia and Crimea. Those are Zaporizhzhya and Khersonska. In the map below Russia is in gray. Crimea = Respublika Krym.


Russia closed four McDonalds stores in Moscow on Wednesday for "health reasons" in the latest retaliation against the Russian sanctions. By shutting the stores in the heart of Moscow they are making a statement to the Russian people that Putin can't be bullied and the people should refuse to be bullied by the West. There are 431 other McDonalds stores in Russia but they are not in the high profile locations like Moscow's Pushkin Square. Closing stores on the square made a public statement without making a lot of consumers mad.

Forming an inclusive government in Iraq just became even more difficult. Sunni lawmakers quite talks on forming a new Iraqi government after gunmen from a Shiite militia killed at least 73 Sunni men, women and children at a mosque in the village of Bani Wais. The slaughter came after a gathering of Shiites was targeted by roadside bombs. The odds of getting a truly inclusive government are practically zero. The odds of the Sunni-Shia violence continuing are about 100%. The Shiite militias are growing in response to the Sunni population joining with ISIS terrorists against anyone that is not Sunni. Don't expect an end to the violence in Iraq any time soon, if ever.

Bank of America, Merrill Lynch, Countrywide, et al, added another settlement to its monster penalty locker. They agreed to pay $16.65 billion for an assortment of misdeeds during the mortgage crisis. Most of the problems were related to their acquisition of Countrywide Mortgage, an acquisition that will live in infamy forever. This brings their total announced mortgage settlements to just under $70 billion according to Bloomberg's calculations. That number is mind numbing. How does a corporation pay $70 billion in fines and settlements and continue in business? Why are shareholders being penalized for "reported" misdeeds of the company instead of the people in charge of the deeds going to jail? Obviously it all has to do with penalizing Wall Street for their sins. That makes good political headlines and the results of the fines and penalties on shareholders are ignored.

The main person in the Countrywide fiasco is 75 year old "tan man" Angelo Mozilo. His constant deep tan earned him the nickname tan man. Despite him paying $67.5 million to settle a prior SEC action against Countrywide he is next up on the firing line. The Justice Department is preparing a civil case against Mozilo that is sure to strip him of many more millions. According to his lawyers Mozilo is suffering from a serious illness and may not be able to stand trial.


Apparently flat markets have been outlawed. Mike Harris at Price Action Lab produced this chart showing 10 V-shaped recoveries over the last 414 days for a net gain in the S&P of +42%. In other charts he went back to the 1990s and 2000s and illustrated the numerous periods where markets corrected and then traded sideways for weeks or months before resuming their upward moves.

He speculated this market action is due to the increased number of funds chasing alpha and causing the V-shaped dips and recoveries because they are all doing the buying and selling at the same time. I believe it is the result of the Fed and QE removing the incentive to invest in bonds and treasuries. This is the result of the "There is no alternative" or TINA trade. If equities are the only place to get a decent return on your money then all the money managers are going to buy equities. That makes any dip a buying opportunity.

This trend is going to change very soon. Once a decent yield begins to return to the bond market a lot of money is going to flee the coming post QE volatility in equities and head for the safety of treasuries.

Mike Harris at Price Action Lab Chart

Humor from Eddy Elfenbein. "The vicious bear market that rocked Wall Street for a full two weeks has finally come to an end. Measuring from close to close, the S&P 500 plunged for a massive 3.94% loss between July 24 and August 7."

Janet Yellen's move from super dovish to the middle of the Fed's outlook for rates would seem to be a step towards their eventual rate hikes. She can't go from rates will stay at zero forever to we are hiking rates next week without some gradual steps in between. This was step one towards hiking rates in early 2015. So why are treasury yields holding near 12 month lows? In theory Draghi is going to eventually launch QE to rescue the EU from the coming depression. That means rates in the EU are going lower, a lot lower. Investors moving money out of Europe are buying U.S. treasuries because our low yields are still better than no yields in Europe. The German two-year bonds recently traded with a negative yield of -0.004%. Despite the negative yield Germany sold 4 billion euros of those bonds and the demand was more than 8 billion.

The Fed is still buying massive amounts of treasuries every month and will continue to do so until at least the end of October. With the Fed buying $25 billion a month they are still the dominant buyer in the market.

Also, while some people believe the U.S. is on the road to recovery there are others that see that road leading to a cliff. The weekly economic reports are far from consistently positive and macro events are growing increasingly negative. With economic cycles typically lasting 5 years we are already overdue for an economic slump and the Fed has no ammo left in its gun. Yields are holding at the lows because the economic recovery is far from assured. Inflation is nonexistent and the GDP for the first half of 2014 could be negative. Add in geopolitical risk from multiple directions and a 2.4% yield starts to look like a good deal. Compared to the rest of the developed world that is a good yield.



109,631,000 Americans live in households that received benefits from one or more federally funded "means-tested programs" - also known as welfare - in Q4-2012. The data was released by the Census Bureau on Tuesday. That equates to 35.4% of the 309,467,000 people living in the U.S. at that time. If you add in the people getting benefits from non-means-tested federal programs like Social security, Medicare and unemployment the total rises to 150,026,000 or 48.5% of the population. 82,679,000 of the people receiving benefits lived in households where people were on Medicaid. 51,471,000 were on food stamps. 22,526,000 were on the Women, Infants and Children (WIC) program. 20,355,000 were in households where Supplemental Security Income (SSI) benefits were paid. 13,267,000 received housing subsidies or lived in public housing. 5,442,000 received Temporary Assistance to Needy Families. 4,517,000 received other forms of federal cash assistance. In Q4-2012 there were 103,087,000 full time American workers. That is 6,544,000 less workers than there were welfare takers.

Enter passively and exit aggressively!

Jim Brown

Send Jim an email

"If you could kick the person in the pants responsible for most of your trouble, you wouldn't sit for a month."

Theodore Roosevelt