Category: US & Canada

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A Land Without Guns: How Japan Has Virtually Eliminated Shooting Deaths – Max Fisher – The Atlantic

Max Fisher describes why Japan has one of the lowest rates of firearm-related deaths in the world: 0.07 per per 100,000 population in one year, compared to 9.20 for the US.

To get a gun in Japan, first, you have to attend an all-day class and pass a written test, which are held only once per month. You also must take and pass a shooting range class. Then, head over to a hospital for a mental test and drug test (Japan is unusual in that potential gun owners must affirmatively prove their mental fitness), which you’ll file with the police. Finally, pass a rigorous background check for any criminal record or association with criminal or extremist groups, and you will be the proud new owner of your shotgun or air rifle. Just don’t forget to provide police with documentation on the specific location of the gun in your home, as well as the ammo, both of which must be locked and stored separately. And remember to have the police inspect the gun once per year and to re-take the class and exam every three years.

via A Land Without Guns: How Japan Has Virtually Eliminated Shooting Deaths – Max Fisher – The Atlantic.

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Canada: TSX Composite approaches 12500

The TSX Composite continues to range between 11200 and 12800, but 13-week Twiggs Money Flow oscillating above zero reflects long-term buying pressure.  Breakout above 12500 would signal a primary advance, while follow-through above 12800 would confirm, offering a target of 14000*.

TSX Composite Index

* Target calculation: 12500 + ( 12500 – 11000 ) = 14000

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S&P 500 retraces

The S&P 500 is retracing to test medium-term support at 1400 on the daily chart. Respect would signal an advance to 1475, while failure would indicate a test of primary support at 1350. Reversal of 21-day Twiggs Money Flow below zero would warn of selling pressure, but a higher trough (above/below zero) would suggest continuation of the advance to 1475.

S&P 500 Index

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The Alarming Corruption of the Think Tanks

Bruce Bartlett writes:

Rather than being institutions for scholarship and research, often employing people with advanced degrees in specialized fields, think tanks are becoming more like lobbying and public relations companies. Increasingly, their output involves advertising and grassroots political operations rather than books and studies. They are also becoming more closely allied with political parties and members of Congress, to whom they have become virtual adjuncts.

Historically, think tanks like the Brookings Institution were universities without teaching. Indeed, Brookings was originally established as a university and it still has a dot-edu web address. Its goal was to bridge the gap between academia and the policymaking establishment.

In the 1970s, this model began to change with the founding of the Heritage Foundation. Unlike Brookings, Heritage was not especially interested in research; its goal was to directly influence policy, especially on Capitol Hill……

Read more at The Alarming Corruption of the Think Tanks.

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Labor productivity can be misleading

We are frequently bombarded with labor productivity statistics such as output per hour worked and unit labor costs — normally accompanied by political hand-wringing exhorting us to improve productivity — but how accurate are these statistics and what do they mean?

First let’s look at GDP per capita. This should tell us how well we are doing compared to our neighbors. Norway and Singapore lead the pack, ahead of the US, while Australia is comfortably in the middle.

Measuring in Purchasing Power Parity (PPP) adjusts for comparative price levels in different countries. Australia and Norway are most expensive, with relative price indices (PPP/exchange rate) of 1.61 and 1.58 respectively; while Singapore (0.83), Czech Republic (0.80) and South Korea (0.74) are cheapest.

Demographics such as an aging population or high birth rates, however, may distort per capita figures.

Index

Norway also leads when it comes to GDP per hour worked — which should alert us that productivity of resource-rich economies such as Norway and Australia may be inflated by profits earned from extraction (mining, oil and gas). Ireland surprisingly beats the US, while Singapore slips to near bottom of the table when measured by hours worked.

Index

Workers in Singapore and South Korea work far longer hours than most other OECD countries, while those in powerhouse Germany work even less than their counterparts in France.

Index

But hours worked can also give a distorted view of employee welfare. Compare the 3 or 4 hours that workers in Sydney, London or New York may spend commuting to and from work each day to a Korean assembly worker who lives in a housing estate adjacent to the assembly plant. If we compare GDP (adjusted for PPP) to employed persons, rather than hours worked, we get a slightly different picture. The real surprise is again Ireland, ranking third behind Norway and the US — and well ahead of Australia, Germany and the UK.

Index

What do we learn from this? It pays to live in a resource-rich country such as Norway (or Australia). It also pays to work clever — high-tech manufacturing like Germany and Ireland — rather than hard. Combine this with a low-tax jurisdiction — such as Singapore or Ireland — and you can become a world-beater.

Read more at BLS: International Comparisons of GDP per Capita and per Hour

Labor productivity

Labor productivity is measured as Output / Input

Where Output is the total of goods and services produced, normally measured by GDP.

And Input is the time, effort and skills of the workforce, measured either as:

  • total hours worked by the workforce; or
  • total number of employees.

Via OECD: Labour Productivity Indicators | Rebecca Freeman

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WPR Article | Strategic Horizons: U.S. Must Change Its Thinking on Conflict in Asia

Steven Metz writes on China’s growing air-sea battle capability (or “high-intensity, regional military operations, including anti-access and area denial (A2AD) operations” in defense-analyst-speak):

Military capability is only part of the equation: China also has the motivation to use its growing military power. It has long-standing and unresolved territorial disputes with a number of Asia-Pacific nations. It remains dependent on imported energy and has shown a willingness to flex its muscle to protect access to its sources. And most of all, China seems determined to replace the United States as the dominant power in the Asia-Pacific region. To do this, it must negate U.S. military power and fill the ensuing vacuum with its own.

Read more at WPR Article | Strategic Horizons: U.S. Must Change Its Thinking on Conflict in Asia.

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Risk Seen in Fed Bond Buying | WSJ.com

KRISTINA PETERSON at WSJ writes:

The Federal Reserve should stop buying bonds, even as the central bank is poised to purchase more, according to a narrow majority of economists in a new survey by The Wall Street Journal……”It’s distorting market prices and creating problems in the future,” said John Silvia, chief economist at Wells Fargo Securities, who said the Fed’s bond-buying was making long-term Treasurys too expensive without significantly easing problems in the labor market. “The Fed needs to back away and let interest rates rise just a little bit,” he said.

If past performance is anything to go by, Fed quantitative easing (or bond buying) is ineffectual in lifting the employment rate. And the lower that they drive bond yields, the greater the backlash when yields eventually rise. Yields are likely to spike up rapidly as bond-holders attempt to offload positions in order to avoid massive capital losses.

via Risk Seen in Fed Bond Buying – WSJ.com.

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Fed’s numerical thresholds are a bad idea

The Fed effectively tied its monetary policy to a balloon bobbing in the wind. Pedro da Costa writes on Reuters:

The Federal Reserve on Wednesday took the unprecedented step of tying its low rate policy directly to unemployment, saying it will keep rates near rock bottom until the jobless rate falls to 6.5 percent. That’s as long as inflation, the other key parameter of policy, does not exceed 2.5 percent.

Both unemployment and inflation are moving targets. Unemployment primarily because results are highly dependent on the participation rate: disheartened job seekers who give up looking for work are excluded from unemployment figures. Likewise, inflation measures are highly subjective. Weightings require constant adjustment because of advances in technology and changes in consumption patterns, while cost of housing estimates, which make up 39 percent of core CPI, seem to have little connection with reality. Scott Sumner points out:

The problem seems to be that, according to the Bureau of Labor Statistics, housing prices did not fall. On the contrary, their data shows housing prices actually rising between mid-2008 and mid-2009, despite one of the greatest housing market crashes in history. And prices did not rise only in nominal terms; they rose in relative terms as well, that is, faster than the overall core CPI. If we take the longer view, the Bureau of Labor Statistics finds that house prices have risen about 8 percent over the past six years, whereas the famous Case-Shiller house price index shows them falling by nearly 35 percent…..

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Ray Dalio Explains The Rare Set Of Circumstances That's Making Him Bearish On Markets | Business Insider

Joe Weisenthal reports on hedge fund guru Ray Dalio’s outlook:

His novel set of circumstances he sees is an economy that faces austerity (due to the Fiscal Cliff, etc.) coupled with a Fed that’s mostly blown its bazooka, and can’t get much more juice out of QE.

  • Yields can’t go down anymore.
  • Austerity is coming.
  • Economy is running out of steam.
  • QE is losing its efficacy.
  • Rate turn probably finally coming late in 2013.

Read more at Ray Dalio Explains The Rare Set Of Circumstances That's Making Him Bearish On Markets – Business Insider.

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S&P 500 hesitancy continues

The US remains hesitant under the uncertainty of fiscal cliff negotiations. The S&P 500 broke medium-term resistance at 1425 but a tall shadow on today’s candle indicates short-term selling pressure. Expect a test of the new support level before further advances signaled by medium-term buying pressure on 21-day Twiggs Money Flow (holding above zero). Respect of 1425 would signal an advance to the September/October high of 1475.

S&P 500 Index

* Target calculation: 1475 + ( 1475 – 1350 ) = 1600

The Nasdaq 100 weekly chart is testing medium-term resistance at 2700. Breakout would signal an advance to 2800/2900. Falling 63-day Twiggs Momentum, however, warns of a primary down-trend; strengthened if the indicator reverses below zero.  Profit-taking on stocks like AAPL, to recognize capital gains ahead of fiscal cliff measures, may be adding to selling pressure.

Nasdaq 100 Index

* Target calculation: 2450 – ( 2900 – 2450 ) = 2000

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