Shake & Bake and Pension Woes, One Man's Thoughts From the Frontline

This week I take a departure from form. After a few brief words around the Fed’s Shake and Bake maneuver and a very quick look at Food Stamp data, I return you to the capable hands of John Mauldin to dive into the Pension woes. We are honored that Mr. Mauldin based his work on DIVER’s data and some of our tools. If you decide to follow John’s advice around your city, let us know if we can help. Be sure to check out the “Data Released this Week” as our data team was hard at work.

The Fed’s Shake and Bake

Ben and team have done Ricky Bobby proud. Taper talk was all we heard about and all most anyone expected as evidenced by the dramatic rise in the price of bonds. The market expectation was not unfounded. After all, the Fed had not only signaled taper but they told us that the bond buying program would enter the taper phase and it would likely be in September, so long as the economy continued its improving trajectory.

Enter the Fed’s Shake and Bake. After months of “the economy is improving” and, on the fifth anniversary of the Lehman Brothers collapse, the President telling us how much better things are, the Fed says “I don’t think so.” There is your Shake. Now, realistically, none of us should have been terribly surprised – at least by the reality that the economy is “sluggish” or the recovery “uneven.” This commentary and many others I read have routinely discussed the not so wonderful details of employment, income, poverty and housing data. So rates comedown, the bond and stock market rally for all the wrong reasons – because the economy is “sluggish” and growth projections have been revised downward.

But wait, now we get the Bake. On Friday, Federal Reserve Bank of St. Louis President James Bullard reminded markets that the Fed has repeatedly emphasized that decisions on the pace and timing of tapering depend on incoming macroeconomic data and that tapering is just around the corner. We all know what happened to the markets after Mr. Bullard spoke.

We have been told that the macroeconomic data is driving monetary policy (and the markets) and, therefore, something less than had been expected over the past month or so would be the primary reason why tapering was put off. My issue is that the macroeconomic data just doesn’t seem to have changed all that much over the past few months. In the coming weeks, I will continue to dive into the details. In the meantime, remember to “look beyond the headlines” and beware of the Shake and Bake.

Food Stamp Participation – Maybe What Caught the Fed’s Eye

A quick visual for you before I leave you in John’s capable hands – Food Stamp Participation Change at the State level over the past year. Blues and green are the only States that did not see growth in participation. There are only seven of them!

DIVER Analytics, Map Module; US Dept. of Agriculture.

With no further ado, the link to Rich City, Poor City by John Mauldin.

Have a great week.

Gregg L. Bienstock

CEO & Co-Founder, Lumesis, Inc.

Data Released Last Week:

  • NEW: Unfunded Liability as % GDP, State, 2010 – 2012
  • NEW: Unfunded Liability as % Liability, State, 2010 – 2012
  • UPDATED: Percent of ARC Paid, State, 2012
  • UPDATED: ARC as % of General Fund Revenue and Expenses, State, 2012
  • Unemployment and Unempl. Rank Change, Aug 2013, State
  • Weekly Initial and Continued Jobless Claims, State, 9/07/2013
  • Median Home Value, State, County, 2012
  • Prop. Tax Paid, Median, County, 2012
  • Prop. Tax Paid as % Home Value, County, 2012
  • Median Household Income, State, County, 2012
  • Median Household Income Change, County, 2012
  • Median Household Income % Change, State, 2011-2012
  • Median Household Income Change (3 Year), State, 2009-2012
  • Food Stamp Part. Change (Households), State, County, 2011-2012
  • Public Assistance Receipts, State, County, 2012
  • Violent Crime, State, 2012UDPATED: Funded Ratio, Pension Plan, State, 2012
  • Health Coverage - Uninsured, State, 2012
  • Commuting - Inter-County Rates, County, 2012
  • Commuting - Average Time to Work, State, County, 2012
  • UPDATED: Bankruptcy Filings - Issuers, State, County, 2013
  • UPDATED: Default Filings - Issuers, State, County, 2013

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