Monday, May 19, 2014

Tuesday May 20 Housing and Economic stories


1 in 5 rely on food stamps - (money.cnn.com)  Nearly one in five people are on food stamps in five states, a stark reminder that the Great Recession continues to be a drag on the nation's poorest. In Mississippi, Oregon, Tennessee, New Mexico and Louisiana, food stamp use ranges around 20% of the population or more, according to January government data recently analyzed by nonprofit Food Research and Action Center. Nationally, about 15% of Americans are on food stamps. And as the economy has improved, nationwide use of the safety-net program for the most vulnerable has edged down to 46.5 million in January, about 1.2 million fewer than a year earlier, according to the U.S. Department of Agriculture. However, food stamp use in the five hungriest states has barely budged since the height of the post-recession period in 2012, when food stamp use was between 20 and 23% of the population in those states. The historic norm is far lower. During the 1990's recession, when food stamp usage spiked in 1994, just 10% of the population was on food stamps.

If Russia goes over the cliff, it won’t go alone - (www.cnbc.com) Secretary of State John Kerry last month tried to explain the complexity of the decision-making process surrounding sanctions on Russia. The U.S. and E.U. have already announced very targeted sanctions against Russia as a penalty for its takeover of Ukraine's Crimean peninsula and it's threatening posture toward eastern Ukraine. However, what's been implemented so far is only a taste of what a full-on sanctions regime, such as the one imposed against Iran, might mean for the Russian economy. But in testimony before Congress last month, Kerry noted that Russia is a major player in the world economy, and said that damaging the Russian economy will also have effects on U.S. businesses operating in Russia and on U.S. exports.

Junket Figure's Disappearance Shakes Macau's Gambling Industry - (online.wsj.com) The disappearance of a Macau junket figure believed to owe up to 10 billion Hong Kong dollars ($1.3 billion) is roiling the world's largest casino market and putting a spotlight on the opaque network of middle men who drive nearly two-thirds of the Chinese territory's gambling revenue. Unlike other gambling hubs like Las Vegas, Macau depends on junkets for many of its customers. These companies bring high-spending gamblers to the casinos from mainland China, issue them credit and collect players' debts in exchange for commissions. The system took root there because the Chinese government imposes restrictions on how much cash its citizens can take out of the mainland and because gambling debts aren't considered valid inside China. Huang Shan, a junket operator active in Macau's gambling industry for around four years, disappeared sometime last month, according to several senior casino and junket industry executives investigating the matter. Mr. Huang's disappearance leaves investors struggling to recoup up to $1.3 billion, they said.

LABOR FORCE PARTICIPATION RATE PLUNGES - (www.businessinsider.com)  The April jobs report beat expectations today. U.S. companies added 288,000 nonfarm payrolls, which was much stronger than the 218,000 expected by economists. The unemployment rate tumbled to 6.3% from 6.7% a month ago. But much of the change in the unemployment rate is due to labor force participation rate, which fell to 62.8% in April from 63.2% in March. Bloomberg reports this matches the lowest level since 1978. The LFPR has been falling for a number of reasons including an aging workforce consisting of retiring baby boomers and growing numbers of young folks heading to school.

The Last Two Times This Happened, The Stock Market Crashed - (www.testosteronepit.com) The last two times when margin debt reversed and fell after a record-breaking spike, all hell broke loose. In 2000, it was simultaneous. In 2007, it was delayed by a few months. Today, on the surface, everything is still hunky-dory. The Dow is just fractions below its all-time high that it set on Wednesday. But beneath the surface, parts of the stock market are already coming unglued, and holders of momentum stocks have been eviscerated. The Nasdaq Biotech Index had beautifully shot up along an exponential curve. Then the hot air hissed out of it, and it swooned 21% in six weeks. The index includes big players, like Biogen, not just startups with big dreams and no drugs. After some buying on the dip, the index closed on Thursday down "only" 15%. But that hasn’t saved smaller momentum stocks: Exelixis is down 58% from its 52-week high and 92% from its all-time high shortly after its IPO in early 2000; Halozyme is down 60% from its high in early January. And so on. In the social media space, the bloodletting has been ugly. The Social Media ETF SOCL is down 23%, but stronger stocks like Facebook (down 16% from its high a month ago) paper over individual fiascos, like Twitter, which has plummeted 48% from its peak last year to below its IPO price.





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