Could Non-Citizens Determine the Outcome of the Midterm Elections?

Here's the question of the day: Could Non-Citizens Determine the Outcome of the Midterm Elections?

Some elections, especially for Senate are so close, the unfortunate answer is "yes" as the following video insight from Insight from the Libre Institute explains.



Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Job vacancy rate is back to pre-crisis level

Nikkei Futures Up Limit, Yen Collapses, Dollar Up, Gold Down as BoJ Pledges "Unwavering Determination" to Get 2% Inflation

"Whatever it Takes" Japanese Style

It's a world truly gone mad.

In a surprise move today, the Bank of Japan announced further quantitative easing, dominated by long-term Japanese government bonds. The BoJ also announced it  and would triple annual purchases of exchange traded funds and property investment trusts.

BoJ governor Haruhiko Kuroda defied objections from four fellow board members, arguing that a tax-hit economy and a lower oil price have led to “a critical moment” in the country’s bid to escape from deflation.

The Financial Times quotes Kuroda as follows: The extra action “shows our unwavering determination to end deflation. There was a risk that despite having made steady progress, we could face a delay in eradicating the public’s deflation mindset. This is a pretty drastic step, so I think there will be a significant effect [on the economy].”

Stunning Market Reaction

• Nikkei futures up lock limit (1160 points)
• S&P 500 up 1.0% (new all-time high)
• Yen plunges 2.5%
• Dollar rises 0.9%
• Gold sinks 2.75%
• Oil down 1.1%

Nikkei Futures



S&P 500 Futures



Yen Futures



US Dollar Futures



Gold Futures



Oil Futures



One of my top two trade ideas worked today: Long the Nikkei hedged with a short-yen position. Gold certainly didn't. I still have faith central bank madness will eventually light a fire on my second key idea.

Buyer of Only Resort

Not only is Japan's population in decline, the remaining population is aging. Somehow, Japan believes its economy ought to grow anyway. In addition, Japan wants 2% inflation even though that is the last thing Japanese savers need.

Given that Japanese pension funds are now net sellers of Japanese government bonds, and given Japan's pledge to destroy the Yen to fight deflation, the buyer of only resort of Japan's government bonds is the Bank of Japan.

Currency Crisis Awaits

Japan's government debt is over 250% of GDP. Japan's debt is so high that an interest rate of somewhere between 2 and 3 percent will consume 100% of tax revenue.

Amusingly, the central bank wants 2% inflation and 0% bond rates. How's that going to work?

The answer is "It's not".

Today's message is clearly "get the hell out of the yen".

Somewhere down the line, a global currency crisis awaits. I am willing to hold gold indefinitely until that happens.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

J.Crew Snowbound Puffer Coat in Navy, XXS

This is a JCrew Snowbound Puffer coat that I bought at the end of winter in 2012, then never really wore much.  It's a lovely down coat that is NOT too shiny, puffy or noisy, and I love the soft lambswool collar.  Selling because I need to make room for more babywearing-friendly coats now that I have a little one.  

description and pics (of a different color) are still on the Jcrew website though the coat is long sold out: https://www.jcrew.com/womens_category/outerwear/jcrewcollection/PRDOVR~54270/54270.jsp

description from J. Crew:
Stay sleek with this slim-silhouetted take on the traditional puffer coat. Carefully crafted in highly water-resistant fabric and finished with military-inspired touches, including a removable sherpa-lined collar for extra-blustery days, it's the perfect piece for adding that rugged-chic element we love. Down-filled cotton/nylon. Snap closure. Long sleeves. Patch pockets with snap closure. Hits at midthigh. Import. Machine wash. Online only.

material: cotton/nylon.  The cotton means it is not shiny, nor is it swishy sounding like many down coats.  stuffed with down,  lambswool collar
color: navy outer, brown wool collar
size: XXS (I usually wear a size 0 or petite 0 or 2 in Jcrew for reference) and this fit perfectly, even with a sweater underneath (though a super bulky sweater would probably have been tight in the sleeves)

paid: around $200 i think
asking: $75 plus $5 shipping to continental US

ends November 7, 2014
good luck! thanks!

RELIST & REDUCED: Erin Smith for Ship & Shape necklace

{posted on behalf of rose}

Fun multi-colored terra-cotta necklace with leather and rope by artist
Erin Smith. I've owned this for a while and not worn it nearly enough
so it's time for it to find a new home.

Length: 30"

Purchased for: ???
was asking: $100
now asking: $60

ends November 7, 2014
good luck!!

RELIST & REDUCED: Long sleeve shirt with gathered shoulders by WHIT

{posted on behalf of rose}

I love this amazingly soft cotton-linen blend shirt but it shrank in
the wash and now it's too small for me. My loss is your gain. This is
a classic, well made piece.

Info: From designer Whitney Pozgay's first WHIT collection, Fall 2010.

Shape: Long sleeve with the cutest shoulder gathering
Material: 85% cotton // 15% linen
Size: L (but fits M)

Chest: 20"
Length: 22"
Sleeves 24"

Bought at Steven Alan in NYC.

Purchased for: ???
was asking: $80
now asking: $40

ends November 7, 2014
good luck!!

Steven Alan Sydney Blouse

First two photos are mine, and the last (pink) one is from the website to give a better idea of what the blouse is like.

I bought this top from Steven Alan's website awhile back. I loved the woven fabric print and even though they didn't have it in my size, I thought possibly a small would fit (learned my lesson, I'm always a medium, no matter what). So my loss is your gain. It's made from nice woven cotton. Not your typical oxford stripe fabric, it has this little square embroidery-type design. 

Size small

Retails $198

Paid $100

Selling price $80 (w/ shipping to the US, $5 extra to Canada for shipping and insurance)

Leave your e-mail below and if any questions, comment and I'll reply.

Thanks.

RELIST & REDUCED: Stretchy Marni t-shirt

{posted on behalf of rose}

This shirt shrank in the laundry and no longer fits me. Hopefully I
can find it a happier home.

Material:
Condition: Lightly used.

Front Length: 17"
Width: 15"

Cost: ???
was Asking: $50
now asking: $30

ends November 7, 2014
good luck!!

Current/Elliott The Skinny, 29

Current/Elliott "The Skinny" jeans in excellent condition. The denim is substantial, not too much stretch, great medium wash. Size 29. The tag lists the style as "A great eighties skinny jean that hugs every curve." True to size.

Brand: Current/Elliott Jeans
Paid: $200+ new
Asking: $45 plus $5 shipping

If interested, please leave your name in the comments or email jessiegaskell@gmail.com. Listing ends one week from today.

NWT Coach Leather Wallet

Cute zip-around wallet in pebbled leather. Color is a pearl/pink - classy and versatile. Lots of inner compartments and pockets. Brand new with tags! $258 new. Received as a gift but I need the money.

Brand: Coach
Condition: New with tags
Material: Leather outer
Asking: $75 plus $5 shipping

If interested, leave your name in the comments or email jessiegaskell@gmail.com. Listing ends one week from today.

nwt Mayle Black Wool Cotton Blend Gaucho Pants / Size 4

• purchased a while back but never worn (i think i'm too short to pull off this silhouette..)
• brand new with tags
• fits true to size 4
• retail 495$
• great way to mix up your pants rotation!

asking 75$ shipped within the US, in'tl shipping costs extra

please email Karen at poke.the.cloud@gmail.com if you have any questions!

Kai-Aakmann Black Twist Strap Racerback Tunic Dress / Size Small

• loose-fit minimalist tunic top / dress (depending on your height)
• two hidden side pockets
• length 33"
• open racer-back detail
• in great condition

asking 30$ OBO shipped within the US, int'l shipping costs extra

please email Karen at poke.the.cloud@gmail.com if you have any questions!

Looking for a Good Education at a Low Price, Perhaps Free? Head to Europe

On June 7, 2014 I wrote Looking to Drastically Reduce College Costs? Study Abroad!

Yesterday, a writer for the Washington Post expressed the same opinion.

Please consider 7 countries where Americans can study at universities, in English, for free (or almost free).

Since 1985, U.S. college costs have surged by about 500 percent, and tuition fees keep rising. In Germany, they've done the opposite.

The country's universities have been tuition-free since the beginning of October, when Lower Saxony became the last state to scrap the fees. Tuition rates were always low in Germany, but now the German government fully funds the education of its citizens -- and even of foreigners.

What might interest potential university students in the United States is that Germany offers some programs in English -- and it's not the only country. Let's take a look at the surprising -- and very cheap -- alternatives to pricey American college degrees.

Germany

Americans can earn a German undergraduate or graduate degree without speaking a word of German and without having to pay a single dollar of tuition fees: About 900 undergraduate or graduate degrees are offered exclusively in English, with courses ranging from engineering to social sciences.

Finland

This northern European country charges no tuition fees, and it offers a large number of university programs in English. However, the Finnish government amiably reminds interested foreigners that they "are expected to independently cover all everyday living expenses." In other words: Finland will finance your education, but not your afternoon coffee break.

France

There are at least 76 English-language undergraduate programs in France, but many are offered by private universities and are expensive. Many more graduate-level courses, however, are designed for English-speaking students, and one out of every three French doctoral degrees is awarded to a foreign student. "It is no longer needed to be fluent in French to study in France," according to the government agency Campus France.

Sweden

This Scandinavian country is among the world's wealthiest, and its beautiful landscape beckons. It also offers some of the world's most cost-efficient college degrees. More than 300 listed programs in 35 universities are taught in English. However, only Ph.D programs are tuition-free.

Norway

Norwegian universities do not charge tuition fees for international students. The Norwegian higher education system is similar to the one in the United States: Class sizes are small and professors are easily approachable. Many Norwegian universities offer programs taught in English.

Slovenia

About 150 English programs are available, and foreign nationals only pay an insignificant registration fee when they enroll.

Brazil

Some Brazilian courses are taught in English, and state universities charge only minor registration fees. Times Higher Education ranks two Brazilian universities among the world's top 400: the University of Sao Paulo and the State University of Campinas. However, Brazil might be better suited for exchange students seeking a cultural experience rather than a degree.

That excellent information (more in the above link) is from Washington Post foreign affairs writer Rick Noack.

I believe it's near-crazy to pay $30,000 (or far more) in the US for what can be had in Europe for free.

Eventually costs will crash in the US for the simple reason, they must. Online education ensures that outcome.

For details, please see Future of Education is At Hand: Online, Accredited, Affordable, Useful

Here's my more recent followup post: Teaching Revolution: Online, Accredited, Free; Start Learning Now!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Sympathy for the Monsanto: An Unenviable PR Job

Anti-Monsanto campaigners have fun with Photoshop.

Environmentally-conscious readers will no doubt be aware of the controversies surrounding Monsanto. If there ever was a poster child for The Evils of Big Ag(riculture), Monsanto would be it. Heavy pesticide use. Genetically modified organisms. Terminator seeds. Monoculture. As if things were not bad enough with environmentalists already, Monsanto also has to deal with the next generation of food consumers who are generally more picky about what they eat. Largely unfamiliar with agriculture, millennials are susceptible to being swayed mostly by overwhelmingly negative press about modern agriculture.

Given such a scenario, think about being a millennial tasked with generating positive PR for Monsanto. Whereas most wouldn't go near the company without a hazmat suit, NPR has a fascinating interview with Vance Crowe, "director of millennial engagement" over at Monsanto. Here are some Q&As:

You have an interesting job title. How did the job come about, and when did you start?

It's been pretty clear for a long time that Monsanto has been really good at talking to and selling seeds to farmers and talking to Wall Street about our progress and growth. But in between those two poles are consumers, and the company didn't have a robust strategy for talking to them. It's clear consumers have some strong feelings about how food should be produced and what sustainability is. And the tenor has gotten kind of loud.

If you are a big company, you can't take a piece of poster board and say, "We're open to talking!" You have to have a plan for where the conversation is going on, and how to engage. The company decided it would find somebody to join the conversation in ways it might not naturally think of. I started in June.
 
Why exclusively millennials? Is there a director of boomer engagement, too?

Millennials are looking to how they're going to fit into the economy and culture, and they have a new set of ideas that need to be incorporated into all aspects of global life. We use the term "millennial," but it really has to do with new ideas out there, and listening to them.

How is Monsanto's conversation with millennials different from how it might engage with other groups?

In the U.S., many people living in cities are several generations away from farms. Monsanto is clear that millennials in cities are paying attention to where food comes from, but that they don't have a direct connection to farming the way that generations in the past did. One of the things we have a connection with is farmers. We are trying to invite farmer customers to come to places and actually meet people and talk about their stories and how Monsanto is helping them solve some of their challenges.

While GMOs are not as ostracized in the US as they are in Europe--nearly all corn and soy in America is now of the GM variety--these are not permanent victories. There are propositions in left-leaning states like Oregon and Colorado for a GMO labeling law to be passed. (Which, if I may say, would be redundant in the case of the plentiful corn- or soy-containing foodstuffs since almost all will have GMO content.) Regardless of where you fall on the GMO debate--as a scholar of world development, I remain keen on its potential to increase productivity and help alleviate hunger--attitudes of next-generation consumers will be interesting to watch as to whether GMOs and Monsanto by implication survive and thrive.

Earnings Cheating Season: Is Your Favorite Company Cooking the Books?

In his latest Global Strategy Report, Albert Edwards at Societe Generale discusses "earnings season" which he calls "cheating season".

We have always found that swings in analyst earnings expectations mirror the economic cycle quite well, but because of the weekly frequency, swings in analyst earnings optimism often act as a timely leading indicator for the economic cycle. If that is still the case, the recent data for the US should be worrying. Despite the soothing Q3 headline earnings reports as US companies ‘game’ the system, all is not well once you look into the ‘MUC’ (Manipulated Underperforms Conservative).

Remember the so-called Fed model? We were told that the extraordinarily high PEs were justified by low bond yields. The key plank of the Ice Age theory was that this positive correlation would break down and that equities would de-rate in absolute and relative terms compared to government bonds thereby inverting the close positive correlation between bond and equity yields.

What this also means is that in an Ice Age world, the equity cycle will more closely correlate with economic and profits cycles. Most correlation analysis finds virtually no post-war relationship between economic growth and the stock market.

But, this does not hold true during the Ice Age. Indeed, we knew from Japan that the equity market would start to track the economic and earnings cycle closely.

In the Ice Age, equity investors need to pay close attention to economic and earnings cycles and not be comforted by lower bond yields. If that is the case equity investors should be getting nervous NOW as earnings optimism starts to fall away sharply.

Earnings Upgrades vs. Downgrades as Percentage of Changes



We have long believed that the US reporting season should in fact be called the US cheating season as companies game the market to ramp earnings down ahead of company announcements only to beat analysts estimates by 1¢ on the day!

Apparently companies believe the feel-good news headlines of a earnings beat will offset the negative impact of downward guidance ahead of the report. In fact the evidence suggests otherwise: my colleague Andrew Lapthorne has shown that those companies that engage in earnings manipulation underperform those that do not. He developed a very useful MUC Score, Manipulated Underperforms Conservative.

(An update of the MUC is being delayed while Andrew works on an update of a more comprehensive earnings quality score, formally called the cheating, or C-score. Developed by my former colleague James Montier, Andrew changed the name as companies got mighty shirty when they appeared on this list!)

I rely on Andrew for this timely weekly data which he highlights every Monday in the Global Equity Market Arithmetic.

This week, he notes that “despite being in the US reporting season, which typically delivers manufactured surprises and therefore an improvement in US earnings momentum, we have been surprised by the complete lack of a bounce in upgrades versus downgrades. Not only has there been zero bounce, but next year's expectations continue to be downgraded with 65% of all estimate changes to 2015 currently coming through as downgrades. Meanwhile European earnings momentum has also collapsed. Hardly an inspiring environment for pushing equities further upwards.”

US Earnings Momentum



European Earnings Momentum




We need to be watching this weaker than expected earnings optimism data closely. Certainly the front page chart shows the apex of weakness globally is in the US and it is entirely plausible that the deflationary winds blowing around the world are washing up on US shores with the situation worsened still by the stronger dollar. A sharp decline in EPS optimism since 2009 has been consistent with previous hiatuses in financial markets. In other words, there may be more to the recent flash-crash than just one weak retail sales datum a deeper malaise surrounding weak profits may be driving events.

Is Your Favorite Company Cooking the Books?

In addition to his own excellent analysis, Albert linked to Montier's C-Score: Are your favourite stocks cooking the books?.

To help decide, Montier came up with six questions. The answer is binary: yes or no.

1. Is there a growing divergence between net income and operating cash-flow? Management has less flexibility to alter cash flow, whereas earnings can be stuffed for all sorts of "funnies".
2. Are Days Sales Outstanding (DSO) increasing? If so (i.e. accounts receivable are growing faster than sales), this may be a sign of channel stuffing.
3. Are days sales of inventory (DSI) increasing? If so, this may suggest slowing sales, not a good sign.
4. Are other current assets increasing vs. revenues? As some CFOs know that DSO and/or DSI are usually closely watched, they may use this catch-all line item to help hide things they don't want investors to focus upon.
5. Are there declines in depreciation relative to gross property plant and equipment? This guards against firms altering their estimate of useful asset life to beat earnings targets.
6. Is total asset growth high? Some firms are serial acquirers and use their acquisitions to distort their earnings. While this may be justified in some circumstance, generally it has been shown that high asset growth firms underperform.

Does It Work?

As a shorting tool, Montier suggests using the C-Score in combination with some measure of over-valuation. This was on the basis that high-flying and generally more expensive stocks that are tempted to alter their earnings in order to maintain their high growth status. He used a threshold price to sales ratio of 2 and found that this drove the absolute return down to -4% in both the US and Europe!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Ebola "Turning Point" and Perspective

Last Week the Huffington Post reported Ebola.com Sells For More Than $200,000 -- Including 19,000 Shares Of Cannabis Sativa Stock.

Two Las Vegas entrepreneurs attempting to sell the rights to Ebola.com succeeded in selling to the highest bidder -- literally.

Chris Hood and Jon Schultz paid $13,500 for the rights to Ebola.com back in 2008 and have just sold it to a company called Weed Growth Fund.

The terms of sale call for Hood and Schultz to get $50,000 in cash and 19,192 shares of Cannabis Sativa, Inc., a company run by former New Mexico governor Gary Johnson that hopes to market legal cannabis products throughout the world.

The stock is currently trading under the CBDS ticker symbol at $8.55 share, which means the value of the shares sold to Hood and Schultz is $164,091.

Add it up and they received $214,091. That's quite a profit, but the sellers made even more on LasVegasRealEstate.com and PayDayLoans.Com.

There is certainly a lot of attention on the disease. But what are the real risks?

The following chart of number of ebola cases and the country of origin from The Guardian will add a much needed perspective.

Ebola Cases



Turning Point

Admittedly the disease is very scary. About 70% of the people who contract the disease die from it. But according to  Dr Jeremy Farrar of Wellcome Trust and as reported by The Guardian in Ebola ‘May Have Reached Turning Point’

The Ebola epidemic in west Africa may have reached a turning point, according to the director of the Wellcome Trust, which is funding an unprecedented series of fast-tracked trials of vaccines and drugs against the disease.

Writing in the Guardian, Dr Jeremy Farrar says that although there are several bleak months ahead, “it is finally becoming possible to see some light. In the past 10 days, the international community has belatedly begun to take the actions necessary to start turning Ebola’s tide.

“The progress made is preliminary and uncertain; even if ultimately successful it will not reduce mortality or stop transmission for some time. We are not close to seeing the beginning of the end of the epidemic but [several] developments offer hope that we may have reached the end of the beginning.”

Farrar’s comments come as the World Health Organisation confirmed that the number of Ebola cases in Liberia has started to decline, with fewer burials and some empty hospital beds. But the WHO warned against any assumption that the outbreak there was ending.

“I’m terrified that the information will be misinterpreted,” said Dr Bruce Aylward, assistant director-general in charge of the Ebola operational response. “This is like saying your pet tiger is under control. This is a very, very dangerous disease. Any transmission change could result in many, many more deaths.”

“The danger is that instead of a trend that takes us down to zero, we end up with an oscillating pattern,” he said. Getting to zero will involve grindingly hard work, identifying every Ebola case and tracing all the contacts. Without that effort, Ebola will remain at a lower but still dangerous level.

Balanced Risk Assessment 

Dr Jeremy Farrar does a good job of expressing cautious optimism,  yet mentioning the risks without the customary fearmongering and hype we have seen in other articles.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

The Latest from Merle Hazard

A.P.C. sweatshirt

A.P.C. coffee bean print sweatshirt in navy, size Medium. Fits true to size. New, with tags. I bought this on a whim, and am now trying to pare down.

Asking: $75.00 shipped within the U.S.

please e-mail if you have any questions: dncvlss(at)hotmail.com" 

OAK NY Silk Grid Print Boxy Fit Blouse / Size XS

• slinky pale gray silk top from OAK NY
• size XS but has a very roomy/boxy fit, can accommodate a size Small easily
• unlined but is opaque
• in great condition

asking 25$ shipped within the US, int'l shipping costs extra

please email Karen at poke.the.cloud@gmail.com if you have any questions!

Maison Scotch Leather Cropped Jacket / Size 2 / Small

• stunning buttery soft leather jacket from Maison Scotch
• has a hidden inner pocket
• marked size 2, roomy enough for a sweater though. 
• sleeves can be cuffed or left as is
• retailed on Shopbop for 495$
• "This collarless leather jacket features an off-center zip and 4-snap closure. Welt hip pockets and ribbed bottom hem. Long sleeves. Lined.
  
  * 19" long, measured from shoulder.
  * Fabrication: Washed leather.
  * Shell: 100% sheepskin.
  * Body lining: 100% cotton.
  * Sleeve lining: 100% polyester."
• still in excellent like-new condition

asking 200$ OBO shipped within the US, int'l shipping costs extra

please email Karen at poke.the.cloud@gmail.com if you have any questions!

Vintage Rachel Comey Style Floral Dolman Sleeve Blouse / Size Small

• pristine vintage item from designer "Maygene"
• minimalist design with subtle dolman sleeves 
• semi-sheer material
• fits true to size Small / 4 / 6
• great colors! 
• perfect with high waist bottoms, very Rachel Comey in cut and print
• button front

asking 20$ shipped within the US, int'l shipping costs extra

please email Karen at poke.the.cloud@gmail.com if you have any questions!