EMPLOYMENT COST INDEX - JUNE 2010

Compensation costs for civilian workers increased 0.5 percent, seasonally adjusted, for the 3-month period ending June 2010, the U.S. Bureau of Labor Statistics reported today.

Wages and salaries (which makeup about 70 percent of compensation costs) increased 0.4 percent while benefits (which make up the remaining30 percent of compensation) increased 0.6 percent.

Steve Ballmer on the iPad: The transcript

clipped from tech.fortune.cnn.com "We'll talk about about slates and tablets and blah, blah, blah, blah." "They [Apple] sold certainly more than I'd like them to sell" "We've got everything on our side if we do things really right." "Some of you will say, well, when? When? And I say, As soon as they're ready." "It is job one urgency around here. Nobody is sleeping at the switch." "We're coming full guns. The operating system is called Windows." The webcast of his performance is available here. We've taken the 12 iPad-related paragraphs from the transcript and pasted them below:

Popular ‘Zero Down’ Mortgage Program Makes Comeback

Upfront fee folded into the mortgage...now that is real zero.

clipped from blogs.wsj.com One of the nation’s last sources of no money down financing for home loans appears to be making a comeback: Legislation that restores a Department of Agriculture home-buying program is headed to President Barack Obama’s desk for signature. The legislation makes the USDA’s Single-Family Housing Guaranteed Loan Program self-sufficient, the National Association of Realtors reports. Borrowers will have to pay a higher “guarantee fee” of 3.5%–essentially upfront mortgage insurance–but the fee can be folded into the mortgage.

The Work Of Depressions

Interesting stuff and perspective.

clipped from krugman.blogs.nytimes.com I’ve been surprised by a lot of things since the financial crisis broke, few of them good. One of the truly amazing things, however, is the return of full, 1930s-type liquidationism — the idea that a slump serves a useful purpose, and that stimulating the economy, even through monetary policy, is a mistake. And so we have Raghuram Rajan in today’s FT arguing that with 9.5 percent unemployment, long-term unemployment at record levels, and falling inflation, we need to … raise interest rates: This is all familiar to students of the history of thought; there’s virtually no difference between what Rajan is saying now and what Schumpeter said in the midst of global economic collapse:

RGE on the European Bank Stress Tests

We've been digesting the results of European bank stress tests, which appear to have made neither markets nor analysts less stressed. According to the Committee of European Bank Supervisors (CEBS), only seven banks failed to pass muster out of the 91 tested. The CEBS also announced on July 23 that the recapitalization needs of the failures—five Spanish cajas, Germany's Hypo Real Estate (HRE) and Greece's ATEbank—amounted to €3.5 billion (US$4.5 billion).

Money Supply, M2, Comparison Chart

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Apple's iPhone 4 Bumper Giveaway May Cost $175 Million

clipped from www.pcworld.com To allow for giving away iPhone 4 bumpers, Apple will set aside $175 million of iPhone 4 revenue in the September quarter, according to Apple CFO Peter Oppenheimer. The issue with the antenna in the iPhone 4 has lately been causing Apple a fair few problems, but now the company have announced a temporary way to fix this; by giving away free Bumpers. Apple's free Bumper deal will only be available until September 30, suggesting Apple may be working on a more permanent solution for phones sold after that date. After the press conference where Apple announced the free Bumper fix, Consumer Reports said: "We look forward to a long term fix from Apple. As things currently stand, the iPhone 4 is still not one of our recommended models."

Total Market Capitalization as % of GDP

Stocks aren't cheap based on this measure.

clipped from www.ritholtz.com US Stock market capitalization (NYSE + Nasdaq) is now larger than US GDP.

Is Bearish Sentiment High? (Chart)

You decide.

clipped from www.bespokeinvest.com As shown in the top chart below, bearish sentiment among investment advisers (Investors Intelligence) increased this week and is now tied for its highest level since April 2009 (35.6%).  While bearish sentiment among individual investors (AAII) is not at a one year high, we did see an increase as the percentage of investors considering themselves bearish now stands at 45%.

Recession Imminent? This Indicator Says Yes

ECRI Leading Indicator Breaches Critical -10 Threshold, Hits -10.5

clipped from www.zerohedge.com If in addition to 85% of the economic data releases in the past month coming below expectations was not enough, the ECRI leading indicator has just came below the critical threshold of -10%, which according to Rosenberg has virtually assured recessions based on data from the past 50 or so years, hitting an annualized rate of -10.5%. And since even the index creators (and Ivy League tenured professors) are openly refuting the adverse implications of their own index (when they, and everyone were praising it when it topped out at 27.80 a year ago), one can be sure this is a rather dramatic data point.

Lost Income, Lost Friends -- and Loss of Self-Respect

clipped from pewresearch.org The Impact of Long-Term Unemployment Long-term unemployment takes a much deeper toll than short-term unemployment on a person's finances, emotional well-being and career prospects, according to a new Pew Research Center survey that explores the attitudes and experiences of workers who have lost jobs during the Great Recession. Of those who have experienced an unemployment spell of at least six months, more than four-in-ten (44%) report that the recession has caused "major changes" in their lives. By comparison, fewer than a third (31%) of those who had been unemployed less than six months and 20% of adults who were not unemployed during the recession say they were similarly affected.

Steve Cook -- The Morning Call - July 23

By Steve Cook
Strategic Stock Investments

The Market

Technical

The Averages (DJIA 10322, S&P 1093) put in a great day yesterday busting through the upper boundary of the April to present down trend (9027-10226, 951-1080) authoritatively. In fact, yesterday’s move qualified this break based on distance. Given the extreme volatility of late, I would like at least one more day of time. In addition, while it is clearly a positive that stocks have made that higher low (than 9645, 1009), it would bring great comfort to have the Market make a higher high--which is not that far away (10413, 1099).

What’s the SEC to do about 436(g)? Call a time out?

clipped from ftalphaville.ft.com The securitization industry has reacted to the decision by rating agencies to step back from allowing their ratings to be used in prospectuses and registration statements by declaring the end of the world.

The Sacred Religions of Wall Street

Good attitude.

clipped from blogs.wsj.com Here are some of the religions that have developed on Wall Street and their main characteristics. The Church of AAPL: Its adherents believe Apple can do no wrong, and I more or less agree with this belief.  The Church of One True Gold: Do NOT mess with these guys. I posted an article on why I think Gold is the worst investment ever and my inbox immediately filled up with hate mail.  The Ron Paul Creed: Basically, people who worship at the altar of Ron Paul think the dollar is going to zero. Their argument is that the dollar has fallen straight down since 1913: “It’s lost 97% of its value,” The PermaBear Faith. You can find a lot of these guys on the zerohedge.com message boards. I like the zerohedge site. Almost every post contains some seed of how the world could potentially end. The PermaBull Faith. Many think I’m in this group. I do admit that I think the market will go higher from here.

The United States of...China?

clipped from money.cnn.com The United States of...China? China's great outward march of investing into the United States is turning into a mad dash. Chinese investments into the U.S. rose 360% in the first half of this year compared to last year, according to Chinese government figures released Tuesday. The Ministry of Commerce in Beijing has not yet released actual figures except to say that the total of its global overseas investments had reached $55.2 billion by the end of June, compared to $43.3 billion for the entirety of 2009. Last year, Chinese companies announced new direct investments in the U.S. of close to $5 billion -- up from an average of $500 million a year previously, according to economic consultancy the Rhodium Group.

Bernanke Semiannual Monetary Policy Report to the Congress

In all likelihood, a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009. Moreover, nearly half of the unemployed have been out of work for longer than six months. Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers' employment and earnings prospects.

To Fix Sour Property Deals, Lenders 'Extend and Pretend'

Hocus, Pocus...

clipped from www.wallstreetjournal.com Some banks have a special technique for dealing with business borrowers who can't repay loans coming due: Give them more time, hoping things improve and they can repay later. Banks are applying it, in particular, to commercial real-estate lending, where, during the boom, optimistic borrowers got in over their heads to the tune of tens of billions of dollars. Restructurings of nonresidential loans stood at $23.9 billion at the end of the first quarter, more than three times the level a year earlier and seven times the level two years earlier. While not all were for commercial real estate, the total makes clear that large numbers of commercial-property borrowers got some leeway.

Need Proof that BigLaw Summer Hiring Is Down? Here You Go

Don't kids every look at the trends? They should have studied geriatric medicine, and if not smart enough nursing.

clipped from blogs.wsj.com The lead from the blog’s report just about says it all: “Law school students faced one of the roughest hiring seasons ever this summer, as firms cut their summer classes by an average of 44 percent.” But via bullet-points, let us further enumerate the carnage: Skadden’s hired only 79 summer associated this year, down from 223 last year; Cravath’s summer class shrank by 81 percent; Ballard Spahr cut its summer program entirely.

Roubini on Gold

For the better part of 10 years running, all that glitters has, in fact, been gold. Since 2001, the precious metal has outperformed all of the core asset classes, gaining an average 15.3% per year in dollar terms since January 2001.

Meanwhile, in the Chinese property market…

Interesting skinny on China's real estate sector.

clipped from ftalphaville.ft.com Much of the increase in prices is occurring in land values. Using data from the local land auction market in Beijing, we are able to produce a constant quality land price index for that city. Real, constant quality land values have increased by nearly 800% since the first quarter of 2003, with half that rise occurring over the past two years. State-owned enterprises controlled by the central government have played an important role in this increase, as our analysis shows they paid 27% more than other bidders for an otherwise equivalent land parcel.

Housing Starts New Privately Owned Housing Units Started (Graph)

549,000 housing starts versus 578,00 a month ago, 679,00 two months ago, and 583,000 a year ago.

The most recent housing peak occurred during June, 2006 with starts at 2,273,00.

Your Own Tropical Island Made Out of Plastic Bottles (Video)

Off track, but what the heck.

Thinking about packing it in? Consider this idea.

This man has given up his job, family and possessions to build an island that floats on plastic bottles he’s found and used as buoys. He created his own tropical paradise out of trash.

You have probably envisioned yourself living like this more then once.

Median Duration of Unemployment (Chart)

How bad is the current unemployment situation?

Source U.S. Department of Labor: Bureau of Labor Statistics

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Consumer Price Index (Charts)