

World View & Market Commentary.
Forest first; Trees second.
Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.
Highlights
Inflation pressure from imports is easing, reflecting the dip back from the April peak in oil prices. Import prices rose only 0.2 percent in May, by far the smallest increase of the last nine months. Prices for petroleum imports fell 0.4 percent for the first decrease also in nine months. Pressure, though very modest, does appear for finished goods with import prices of consumer goods rising 0.3 percent, which extends a seven-month trend, and import prices of capital goods rising 0.2 percent.
The export side also shows a 0.2 percent headline rise which is by far the smallest increase in 10 months. For the first time in 10 months, prices of agricultural exports fell, down 2.0 percent.
Commodity-based inflation pressures, whether prices of oil-related imports or agricultural-related exports, may have already peaked which is good news for policy makers who have to keep their eye on inflation as they try to stimulate demand. Today's report points to little trouble for next week's producer and consumer price reports.
"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.
Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies -- eroding the wealth of creditors including China, Guan said.
Highlights
Initial jobless claims aren't coming down but they're stable and at lower levels than they were a month ago. Initial claims came in at 427,000 in the June 4 week vs a revised 426,000 in the prior week and 429,000 the week before that. The four-week average of 424,000 is down 2,750 in the week and is down nearly 15,000 from a month ago.
Continuing claims in data for the May 28 week fell 71,000 to 3.676 million with the unemployment rate for insured workers ticking down one tenth to 2.9 percent.
There are no special factors in this report which is mildly positive for the economic outlook. It would be nice if claims were under 400,000 as they were in March but it's the June to May comparison that's most important right now and this report offers an early indication of improvement.
Unemployment benefits fading away
NEW YORK (CNNMoney) -- Even though the nation's jobless rate is on the rise, millions of people could see their unemployment checks stop coming at the end of the year.
Nearly all Americans who find themselves out of work starting next month will likely receive only 26 weeks of state unemployment checks -- at most.
Why? Because the deadline to file for extended federal benefits expires at the end of the year.
"Most people who lose their jobs after July 1... won't be eligible for federal unemployment benefits," said George Wentworth, senior staff attorney at the National Employment Law Project.
And as Washington prepares to pull back, a growing number of states are cutting their share of benefits. South Carolina is poised to become the fourth state this year to reduce state benefits to 20 weeks, while Arkansas and Illinois have shorn one week off their unemployment insurance coverage.
Earlier this week, President Obama broached the idea of extending the federal safety net in detailing steps Congress has taken to help unemployed Americans and the overall economy. His comments came just a few days after the government reported surprisingly weak employment growth for May, when the jobless rate rose again to 9.1%.
"One of the things that I'm going to be interested in exploring with the members of both parties in Congress is how do we continue some of these policies to make sure that we get this recovery up and running in a robust way," Obama said Tuesday.
Jobless discouraged by weak economy
To help the jobless get by during the downturn, Congress extended federal unemployment benefits in 2008 to a maximum of 73 weeks. However, those looking for work have to periodically file for additional benefits to qualify for the full 73 weeks. The deadline to file for those extensions is Jan. 3, 2012.
To help the jobless get by during the downturn, Congress extended federal unemployment benefits in 2008 to a maximum of 73 weeks. However, those looking for work have to periodically file for additional benefits to qualify for the full 73 weeks. The deadline to file for those extensions is Jan. 3, 2012.
At the moment, Congress not thinking much about unemployment insurance. Lawmakers are wrestling with raising the debt ceiling and how to cut the budget -- not spend more.
Highlights
The trade deficit shrank more than expected in April, largely on a dip in oil prices. The April trade gap shrank to $43.7 billion from a revised $46.8 billion in March (originally $48.2 billion). The shortfall was less negative than the median forecast for $49.0 billion. Exports rose 1.3 percent after jumping 4.9 percent in March. Imports slipped 0.4 percent after gaining 4.2 percent the prior month.
The improvement in the trade deficit was led by the petroleum gap which narrowed to $26.1 billion from $30.2 billion in March. The nonpetroleum goods differential expanded to $31.2 billion from $30.2 billion the month before. The services surplus grew to $14.4 billion from $14.3 billion in March.
Looking at end use categories for goods, exports increased 1.6 percent while imports dipped 0.5 percent in April. The boost in exports was led by a $2.0 billion gain in industrial supplies, with increases also seen in capital goods excluding autos (up $1.2 billion) and consumer goods (up $0.3 billion). Auto exports fell $0.8 billion while food, feeds & beverages dipped $0.2 billion.
The decline in goods imports was led by a $2.8 billion drop in auto exports with industrial supplies falling $1.5 billion. Consumer goods imports rose $2.1 billion, capital goods ex autos increased $0.6 billion, and foods, feeds & beverages advanced $0.4 billion.
On a not seasonally adjusted basis, the April figures show surpluses, in billions of dollars, with Hong Kong $2.6 ($2.7 for March), Singapore $1.2 ($0.9), Australia $1.1 ($1.1), and Egypt $0.5 ($0.4). Deficits were recorded, in billions of dollars, with China $21.6 ($18.1), OPEC $9.6 ($10.8), European Union $7.5 ($9.0), Mexico $5.5 ($6.2), Germany $3.8 ($4.6), Japan $3.6 ($6.1), Ireland $3.0 ($2.6), Venezuela $2.8 ($3.0), Nigeria $2.5 ($2.5), Canada $2.5 ($2.6), Taiwan $1.2 ($0.6) and Korea $1.0 ($0.6).
The latest trade number is technically favorable (in GDP accounting) toward GDP but part of the improvement likely was due to lower imports from Japan which actually constrained U.S. output, especially for autos (meaning a net negative effect on Q2 GDP). However, the downward revision to March should add to Q1 GDP.
Highlights
The volume of mortgage applications to purchase a home fell 4.4 percent in the June 3 week, a week that closes out a flat month of May and starts June off on a weak note. Purchase volumes aren't going to be boosting expectations for home sales. Unlike purchase volumes, applications for refinancing have been on the climb and relative to purchase volumes are at their highest point since the beginning of the year. The refinance index rose 1.3 percent in the week and is getting a solid boost from low mortgage rates, at 4.54 percent for 30-year loans for the lowest level since November.
Jamie Dimon gripes to Bernanke
NEW YORK (CNNMoney) -- JPMorgan Chase CEO Jamie Dimon is still griping about financial reform, and this time, he took his complaints straight to the top official at the Federal Reserve.
"I don't personally buy the argument that because it was a financial crisis it has to take a long time coming out," Dimon said in a Q&A session following a speech by Ben Bernanke at the International Monetary Conference in Atlanta Tuesday.
Dimon blames financial reform for stifling growth. He gave the Fed Chairman a laundry list of ways regulators have already cracked down on the banking system, after the Dodd-Frank financial reforms were passed last year.
"Most of the bad actors are gone," "off-balance-sheet businesses are virtually obliterated," "money market funds are far more transparent" and "most very exotic derivatives are gone," he said.
Bernanke: Jobs still weak
Dimon, who is known for his vocal opposition of many of the Dodd-Frank reforms, said he fears those reforms may be hindering, rather than helping, the recovery.
"Has anyone bothered to study the cumulative effect of all these things?" he asked Bernanke. "Is this holding us back at this point?"
Economy makes people sick, literally
NEW YORK (CNNMoney) -- In 2009, the stress caused by the recession sent Katie Pfledderer to the hospital.
Her income as an advertising executive was cut by 20% and her workload increased. To make ends meet, she had to take an additional part-time job, but the strain was more than she could bear.
"I was tired all the time and then one morning I started crying and I couldn't breathe."
Pfledderer suffered a panic attack and was taken to the emergency room. She said she had been living in fear of losing her job in the midst of the Great Recession. "It was constant concern about what's going to happen next," the 28-year-old account executive said.
As the recovery sputters, many Americans, like Pfledderer, continue to struggle in the face of sluggish job growth and falling home prices -- and that's taking a toll on their overall well being.
Thirty-five percent of middle class Americans said they or someone in their household has experienced a physical symptom of stress related to the economy, according to a recent report by First Command Financial Services, a financial service provider.
Most common were anxiety, changes in weight, sleeplessness, low energy and irritability. "These are health conditions that we want people to be aware of," said Kathryn Power, director of the Center for Mental Health Services, a division of U.S. Department of Health and Human Services.
Power said that at the start of the recession there was a sharp uptick in the number of calls to the Center's suicide hotline. "About 30% of the calls we get are related to economic distress," she said. "They were having emotional difficulties because of fear of their financial situation, fear they would lose their job, lose their home."
White House & NRC Recommend 50 Mile Fukushima Evacuation, Yet Insist US Safe With Only 10
Our inaction in this regard is just another example of corporate capture and that capture clearly jeopardizes all our safety. Again, these problems are all interrelated, as the captured economy is feeding the money producers at everyone’s expense. This is a situation that is not sustainable and therefore change on a major scale is coming – hopefully sooner than later.