Monday, November 3, 2014

Election, Earnings, Economy

Plenty of “E’s” to go around this week: The midterm elections will set the tone for national politics for the next two years. In all likelihood grid lock will continue in Washington. Many ballot initiatives up for a vote throughout the country involving, drilling for oil, gay marriage, water, public spending, and Indian gaming, finally thirty six state governorships are at stake, with many undecided as we write this afternoon. Polling continues to suggest America is split right down the middle, but almost everyone agrees politicians are useless.

Election Day nears and U.S. is rattled: Poll shows anxiety over Islamic State, Ebola, fewer jobs. As Election Day nears, America is the Land of the Fearful.  In the worst-case scenario, the next two years of the Obama administration could look as bad as, or worse than, the past two: a (most likely) Republican-controlled House and Senate at odds with the Democratic White House and a new low number of bills enacted into law. The West Wing is already brainstorming potential areas of agreement with new GOP allies on the Hill, and new House Majority Leader Kevin McCarthy has promised an early emphasis on productivity.

Corporate earnings (profits) have never been better, but wage earners in America are losing ground. It is an “arms race” in terms of employment, BA’s, MBA’s, Ph.D’s, Ed.D’s. LL.D’s M.D.’s are all fighting for the same jobs. Corporate profits up, American worker’s share of those profits are down. Weak wages stir voter ire at Obama amid growing concern: The discontent simmers even as growth shows signs of accelerating. .... The lingering dissatisfaction is largely stoked by weak wages: Weekly earnings for full-time workers are lower than in the period just before the recession. The buying power of that worker's paycheck is no higher than it was in 1999.

The economy is growing but at a too slow rate, not fast enough to fund solid growth in good paying jobs. The dollar is strong but foreign markets are weak. The middle class is shrinking while student debt and public dissatisfaction is rising. The United States economy expanded at a healthy rate this summer, growing 3.5 percent from July through September. This growth — as robust as it is — is unlikely, however, to influence how the president’s party fares this week at the polls. Midterm election results are not as directly related to objective economic conditions as presidential election outcomes are.

But the two types of elections have one thing in common when it comes to the nation’s economy: People’s assessments of how the economy is doing are equally related to vote choice in both midterm and presidential elections, even though objective economic conditions correlate much more strongly to presidential outcomes.

ESCAPE PLAN  -  With the U.S. Affordable Care Act’s insurance mandate for employers set to kick in next year, many companies are trying to circumvent the law’s penalties. Some, for example, are pursuing strategies such as enrolling employees in Medicaid to avoid fines and hold down costs—a controversial maneuver that has been a political flash point in some states. Another tactic is to offer bare-bones, or “skinny,” health plans that cover preventive care but exclude major benefits such as hospital coverage. Skinny plans don’t meet the federal standard of covering 60% of the cost of medical care, so they can still leave an employer vulnerable to a different fine—about $3,000 for each worker who opts out and instead gets a plan through an insurance exchange. Some employers are mixing strategies to hold down costs, and at least a few companies are resigned to paying penalties but doing what they can to minimize the bite.

PRIVATE SPACE TOURISM DREAMS TAKE A HIT — Sir Richard Branson’s Virgin Galactic is battling to keep alive its dream of putting tourists into space as accusations surfaced that the company had ignored safety warnings, and its dwindling finances came under scrutiny. The head of the company rejected accusations that it had taken risks with its novel rocket propulsion system and said that it could have a new spacecraft ready to fly next year. … George Whitesides, Virgin Galactic chief executive, said that claims from others in the space industry that Sir Richard Branson’s space tourism company was running high risks marked a difference of professional opinion rather than valid warnings.

At the same time, Sir Richard’s Virgin Group confirmed that it was supporting the day-to-day expenses of Virgin Galactic out of its own pocket after the money for the initial financing for the project, including $400m put up by an Abu Dhabi government investment vehicle, had been exhausted. The possibility of further delays and the danger of cutbacks by Virgin were being watched nervously at the Mojave spaceport, a collection of hangars alongside a dusty strip of diners and cheap motels that has become a focus for the new private space industry.

FAREWELL TO BEN -- WashPost, "GOODBYE TO A GOOD LIFE: The editor who transformed the Post is recalled as inspiring, irreverent, brave and full of joy: "A bugler sounding taps from high in the Gothic rafters, and then, because this was Mr. Bradlee who was being celebrated, a sharp break from the stately and solemn: The band struck up Sousa's jaunty 'The Washington Post' march and Ben Bradlee left the building as he had departed his newspaper on so many nights through the 26 years he led it: electrifying the room just by sweeping through it.”

"Mr. Bradlee's funeral ... at Washington National Cathedral was an exercise in high Episcopal ritual, but also a statement of the man's irreverence and verve, a joyful cataloguing of the ingredients he used to transform his paper into one of the best: a zest for the great story, a certain swagger and above all, a belief that if ain't fun, it ain't worth doing. ... After the funeral, Mr. Bradlee's family gathered at Oak Hill Cemetery in Georgetown, where he was laid to rest in a crypt in the chapel, awaiting burial in a family mausoleum being built nearby, not far from where Katharine and Philip Graham, The Post's owners through much of Mr. Bradlee's career, are buried.

WOODWARD and BERNSTEIN byline on WashPost Style cover, "Ben Bradlee: An Appreciation ... THE TRUTH-SEEKER -- Bob Woodward and Carl Bernstein's view of Ben Bradlee from the Watergate trenches: 'A great general ... with the love and affection of his troops'": "Four decades ago, Ben Bradlee told us his general theory of newspapering and life: 'Nose down, ass up and moving steadily forward into the future.' He understood the past and its importance, but he was utterly liberated from it. ... He was not a man of regret - ever, it seemed. He was never cynical, but persistently skeptical. And the thread that ran through his life - remarkably, without self-righteousness - was reverence for the truth."

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Adam Ant (60), Glenn Frey (66), Art Garfunkel (73), Rickie Lee Jones (60), Matthew McConaughey (45), Justin Poore …famous financial planner.


As we begin a new NBA season our thoughts turn to Kobe Bryant of the Los Angeles Lakers, a very talented player, perhaps one of the best of all time, but still a Jack Ass. IF ONE COMMON denominator has persisted throughout Bryant's tenure with the Lakers, it is this: The blame lands elsewhere, and usually with teammates. Shaquille O'Neal -- at times a mentor to Bryant, at other times freestyle-rapping to a packed club in Manhattan, "Yo, Kobe, tell me how my ass taste" -- is one in a long line of Bryant's teammates who've struggled to stick to a single script in describing the singular man. Bynum, Gasol and Howard have each been at turns coy, reticent, warm or biting. And, in turn, each has taken massive doses of blame in the media without Bryant meaningfully coming to their rescue.

"I've had a lot of clients in the last five years, good players, who didn't want to play with Kobe," says an agent who has had numerous NBA stars. "They see that his teammates become the chronic public whipping boys. Anyone who could possibly challenge Kobe for the spotlight ends up becoming a pincushion for the media. Even Shaq."

So we honor Kobe, the man, the myth, and the Jack Ass this month.

COLLEGE FOOTBALL PICK OF THE WEEK – Saturday 11/8, 8:00 PM ET, ABC; #16 Ohio State Buckeyes (7-1) at #8 Michigan State Spartans (7-1), Huge game in East Lansing, State wins 24 – 17. Season to date (5-5)

SMALL COLLEGE FOOTBALL PICK OF THE WEEK – Saturday 11/8, 1:00 PM ET, Bravo; #8 Hobart Statesmen (8-0) at St. Lawrence University Saints (7-1). The biggest game at Leckonby Stadium, Canton New York in years. The Liberty League title and a potential playoff berth are on the line. The Saints in an upset, 24 – 21. Season to date (4-5)

1.      Arizona Cardinals
2.      New England Patriots
3.      Philadelphia Eagles
4.      Denver Broncos
5.      Dallas Cowboys

NFL PICK OF THE WEEK – Thursday 11/6, 8:25 PM ET, NFL; Cleveland Browns (5-3) at Cincinnati Bengals (5-2-1). Battle of Ohio in the AFC North, Bengals prevail 32 – 24. Season to date (5-4)


(NCAA, Nov. 8) #10 Notre Dame Fighting Irish (7-1) 30 at #14 Arizona State Scum Devils (7-1) 28

(NCAA SCIAC, Nov. 8) Pomona-Pitzer Sagehens (1-6) 21 at La Verne Leopards (1-6) 35

(NHL, Nov. 8) San Jose Sharks (7-4-2) 2 at Dallas Stars (4-3-4) 4

(NFL, Nov. 9) Miami Dolphins (5-3) 21 at Detroit Lions (6-2) 24

Season to date (64 - 54)

MARKET WEEK - Stocks launch into November at record highs, with October seeming like a bad dream. But the volatility may not be over, with midterm elections tomorrow and the October jobs report Friday.

DRIVING THE WEEK – There's some votin' goin' down on Tuesday with GOP expected to pick up the six seats needed to (narrowly and kinda not really) control the Senate while gaining a dozen or so House seats. Still, we may not know the final outcome until December or even January ... Other big event this week is the October jobs report out on Friday expected to show a gain of 230K with no change to the 5.9 percent jobless rate and hourly earnings up just 0.2 percent ... President Obama meets with economic advisors this morning and Federal Reserve Chief Janet Yellen this afternoon to discuss the U.S. and global economy ... Yellen joins IMF's Christine Lagarde and other senior policy makers at a conference in Paris on Friday ... ISM manufacturing today at 10:00 a.m. expected to dip to 56.3 from 56.6 ... ADP private employment at 8:15 a.m. Wednesday expected to show a gain of 218K ... ISM non-manufacturing at 10:00 a.m. Wednesday expected to dip to 58.0 from 58.6 ... Alibaba reports earnings on Tuesday for the first time since going public in September ... Treasury Secretary Jack Lew this afternoon chairs a meeting of the Financial Stability Oversight Council at Treasury ... European Commission on Tuesday releases fall economic forecasts.

Next week: words of the month and Dear Rink Rats.

Until Next Monday, Adios.

Claremont, CA

November 3, 2014
#V-29, 238

CARTOON OF THE WEEK – The New Yorker, Sinilass

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