Broad range of company stocks soar after Trump election win

Remember the claims by Justin Wolfers and Eric Zitzewitz that a Trump win would crash the stock markets? Well, the opposite has occurred.

You get an idea of the types of industries that have been most harmed by President Obama and which ones will be helped the most by Trump see the stocks that have gone up the most.

From USA Today:

Small stocks are logging big gains largely because tiny companies generate most of their sales and profits domestically, where Donald Trump's economic agenda is seen benefiting the most.

Trump’s call for lower taxes, fewer regulations on businesses and government-financed infrastructure projects are viewed as a boon for smaller companies. . . .

From the Wall Street Journal:

Shares of banks, industrials and health-care companies propelled the Dow Jones Industrial Average to 19000 on Tuesday. The bets on those sectors largely reflect investors’ expectations of looser regulation, and higher growth and interest rates under a Trump administration. . . . 

Goldman Sachs Group Inc. (contributed 240.99 points to the Dow industrials since Nov. 4) and J.P. Morgan Chase & Co. (73.76 points) 

The two banks have been big factors in the blue-chip index’s rally this month, largely because of the improved outlook for bank earnings and the rebound in long-term bond yields, which can make lending activity more profitable.That has particularly helped J.P. Morgan, the largest bank in the nation by both assets and market value. Since the presidential election, bond yields have risen and the gap between long- and short-dated debt has widened. That should help banks’ income because it increases the difference between what lenders charge on loans and pay out on deposits. . . . 

UnitedHealth Group Inc. (99.64 points) 

The largest U.S. health insurer has struggled to eke out profitability from its Affordable Care Act plans. UnitedHealth Group has said it intends to withdraw from nearly all of the health-law marketplaces next year amid anticipated annual losses of about $850 million on ACA plans. Other insurers have also pulled back from their coverage areas under the law, leaving many counties with only one participating insurer and increased premiums. President-elect Donald Trump has pledged to “repeal and replace” the Affordable Care Act. Still, the law has also resulted in a Medicaid expansion, bringing new customers to the insurer. In its latest quarter, the company added 9% more Medicaid members.  . . . 

Caterpillar Inc. (77.45 points) . . .

More evidence that Obama doesn't have a clue about basic economics: Impact of the Keystone XL pipeline on gas prices

President Obama doesn't seem to understand that there is a worldwide market for gasoline.  If you lower the price in Europe, it will lower the price in the US.  Oil companies will ship gasoline to the place where they can get the higher price and they will keep doing that until the prices in all the places are the same.  From Bloomberg:

“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land down to the Gulf where it will be sold everywhere else,” the president said yesterday during a visit to Yangon, Myanmar. “It doesn’t have an impact on U.S. gas prices.” . . .

Median family income has fallen during the Obama "Recovery" by about as much as it did during recession, for poorer families the "Recovery" has been worse

Family income for the poorest families has fallen continually during the Obama "recovery."  Indeed, the drop in family income for those in the 10th and 20th percentiles is larger during the recovery than during the recession.  The drop in family income for the 40th percentile and the median is about as large for the recovery as it was during the recession.  Only the wealthiest families those in the top 10 percent have seen their incomes go up, but even then their incomes are lower than before the recession started.  The Current Population Survey data is available here.

Take the same time period after the Reagan Recovery started

Median Household Income still much lower today than it was when the recession ended!

Click figure to enlarge.  The original figure is available here.

It is one thing to say that the economy is worse than before the recession hit.  It is another to say that we are lower now than when the "recovery" started.

So can the bad winter storms during the first quarter of 2014 explain the shrinking economy?

The Obama administration has blamed the slow growth on the “historically severe winter weather, which temporarily lowered growth.”  Jason Furman, the chair of Obama’s Council of Economic Advisors, made this assertion again on July 3^rd. 

In a list of the worst United States winter storms since 1888, Epic Disasters, using National Weather Service data, lists five of the ten worst occurring since 1947.  Four of the five saw economic growth.  Only during the fifth worst storm did the economy shrink.  

Obama administration upset because Hobby Lobby prevents women from getting "free contraceptive coverage," Obama doesn't understand economics, clearly nothing is free

White House press secretary Josh Earnest: "Well, as the constitutional lawyer who sits in the Oval Office would tell you is, he would read the entire decision before he passed judgment in terms of his own legal analysis. What we have been able to assess so far ... is that there is a problem that has been exposed, which is that there are now a group of women of an indeterminate size who no longer have access to free contraceptive coverage simply because of some religious views held, not by them necessarily, but by their bosses.   We disagree and the constitutional lawyer in the Oval Office disagrees with that conclusion from the Supreme Court. And that's why we--primarily, because he is concerned about the impact it could have on the health of those women."

The notion that "contraceptive coverage" is free is absurd.   If an insurance company completely covers 100% of the cost of RU-486 or other contraceptives, that costs the insurance company something and means that the premium is going to have to be higher.  Even worse, Obamacare forces up the premiums for younger people (those who are obviously most likely to use contraceptives) relative to older ones.  If Obama was concerned about the relatively small costs of contraceptives, why doesn't he first not raise young people's premiums so dramatically?  This is the reason that Obamacare needs a lot of young people signing up to keep the premiums down, they cross subsidize the others getting insurance.

The incredible 3% drop in GDP can't be blamed on the cold weather

The Obama administration suggests that it was unusually cold weather that explains the drop, but looking it is hard to see any relationship between abnormally low temperatures and GDP growth.

Click on figures to enlarge them.

US GDP growth falling farther and farther behind trend as the Obama recovery continues

Click on figure to make it larger.

With the final measure of GDP growth during the first quarter of 2013 just being released (2.6%), I thought that I would graph out how GDP growth has preformed during the Obama "recovery."  As economists know, during previous recoveries GDP growth grows much faster than the trend growth rate until GDP growth catches back up to trend.  This is the first recovery where that isn't the case.  As you can see from the above figure, GDP growth in the current recovery keeps growing more slowly than the trend rate.  

Real GDP increased by only a paltry 1.9 percent in 2013.  It was down from the already weak 2.8 percent in 2012.

Obama destroys yet another internship program

Boy, aren't these young people lucky not to have these internships?  It is fortunately that the Obama administration is protecting them.  As someone who has had a lot of interns over the years, the notion of paying interns is nice, but they might as well insist on getting paid by their universities to attend there.  Internships often take a lot more work on the part of those running them then on the students produce.  From the New York Post:

They work until 11 at night, lug 40-pound garment bags throughout the city and get scolded for not adhering tape to mood boards correctly. And yet being a Condé Nast intern remains one of the most coveted, sought-after unpaid jobs in town. 

To an aspiring media-ite, a Condé internship is a stiletto stacked in prestige wrapped in promises of opportunity. It is a fancy incubator for future media power players: Fashion designer Whitney Port, author Lauren Conrad and beauty blogger Emily Weiss all got their start interning at the media mammoth. 

So you can imagine the surprise when, last month, Condé Nast announced it was terminating its internship program. Starting in 2014, Condé publications including Vogue, The New Yorker and Vanity Fair will no longer give students the opportunity to toil — and learn — in their hallowed halls. 

The bold decision came on the heels of a lawsuit filed in June 2012 by two former Condé interns: Matthew Leib, who interned at The New Yorker in 2009 and 2010, and Lauren Ballinger, who worked at W magazine in 2009. 

The two sued the media conglomerate for failing to pay them minimum wage  . . .

“The Federal Fair Labor Standards Act and New York Labor Law do not allow employers to allow workers to work for free — even if the workers give their consent,” says Leib and Ballinger’s attorney, Rachel Bien at Outten & Golden. . . .

So much for the claim that Obama administration didn't interfere with business decisions by GM

The amazing detail of the government's business decision making is provided in the quote below.  During the Q&A session, former GM President Bob Lutz had this to say (at 2:14:12 to a question from a guy from the Chicago area):

I have been asked that question many times.  The Feds basically wanted to get GM down to Cadillac and Chevrolet. They said, "you don't need all these brands. You need one prestige brand, and one mass-market brand." And we said "well we can't get rid of Buick because Buick is important in China, and if Buick becomes an orphan in the United States then the Chinese are no longer gonna be interested in it." And the Feds said "Fair enough, but everything else goes." We said well we'd also like to keep GMC. They said "well, GMC is basically just like Chevrolet," and we said "that may be true, there may be a lot of shared components, but GMC has an entirely different image, a different customer base, and people are willing to pay different prices for a GMC, and here's the profitability," and the Feds said "whoops, okay, keep GMC." 

So now we had Buick, GMC, Cadillac, and Chevrolet, and then, I wanted, badly wanted, to keep Pontiac, because Pontiac was on its way back, and it had been mismanaged for a number of years, you know, with 'rebuild excitement,' and the excitement was only in the plastic body cladding, mechanically there was nothing about Pontiac in the 90s that would make your heart beat faster. And with the solstice and solstice coupe, and with the Pontiac G8, which was a great car. We were embarked on a strategy of making pontiac different from the rest of GM in that Pontiac wouldn't get any front wheel drive cars, they would all be rear-wheel drive, and the next G6, was going to use the architecture of the cadillac ATS, it was going to be a 3-series sized rear-wheel Pontiac, with basically the Cadillac ATS 'de-premiumized,' obviously, a lot of the cost taken out, but still fundamentally that architecture.  

That was going to be the next G6, and I think we could've moved pontiac away from every other American volume brand and really started positioning it as attractive US alternative to some of the, and obviously at much lower prices than the european rear-wheel drive cars, but the Feds said "yeah, let's just, how much money have you made on pontiac in the last 10 years?" and the answer was "nothing." So, it goes. And, when the guy who is handing you the check for 53 billion dollars says I don't want pontiac, drop pontiac or you don't get the money, it doesn't take you very long to make up your mind. 

But I think it is a shame, Pontiac was on its way back, and it was killed before it, before the plant could really sprout blossoms, you know, it was well on its way. So, I agree with you, I think Pontiac was a great, wonderful history, mismanaged for a number of years in the 80s and 90s and it was clearly on its way back, and we were starting to see a very good customer base in solstices and especially in the G8, which was favorably compared in a lot of road tests to the BMW 5-series, people would say dynamically the car is as good and it's more powerful and way cheaper, but that was too bad. but you can't go through Chapter 11 without some really harmful effects. . . .

Gallup: Obama's Economic Approval Slips to 35%

There is a positive side for Obama in these numbers.  He had an even worse approval rating for the economy during the summer of 2011.  

While Obama's job rating on the economy is down from June, and on the low end of the range Gallup has recorded since 2012, it is still better than the 26% it fell to in the summer of 2011. That period represents a recent low point for Americans' views of both Washington leaders and the economy, owing to the clash between Obama and the Republicans in Congress over raising the federal debt ceiling in July 2011. . . .

A Fox News poll indicates that even most Democrats don't believe that Obama is offering any new ideas to finally get the economy going.  Overall, only 20 percent of Americans think that Obama is offering new ideas (click on next two figures to make numbers larger).

 The Fox News poll also has Obama obtaining the lowest approval rating of his presidency.

"Obama’s approval rating on economy drops to 35 percent"

From The Hill newspaper:

A new poll finds President Obama’s approval rating on the economy dropping to 35 percent, even as he travels across the country delivering policy speeches and pushing proposals to boost job growth and investment.
The survey from Gallup, released Thursday, finds a 7-point drop in support for Obama’s handling of economic issues, down from 42 percent in June.
His rating on taxes and the deficit also dropped 5 points from last month’s poll. Thirty-six percent approve of Obama’s handling of tax issues and 26 percent approve of his approach to the deficit.
Gallup noted that Obama’s ratings on the economy fell alongside a slide in Americans’ overall economic confidence over the same period.
The president’s overall approval dropped 3 points to 44 percent. . . .

Washington Post: "Obama administration pushes banks to make home loans to people with weaker credit"

Obama has apparently learned nothing from the recent economic collapse.  I have pointed to evidence on this previously and of course Obama has some complicity in creating that collapse (on this last point see the first chapter in my book Debacle).  But now here is a story from the Washington Post.

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession. . . .

Obama administration pushing legalize cellphone unlocking

Sure people like to own cell phones without restrictions on the network that you can use them on.  But the Obama administration apparently doesn't realize that without locking phones to a particular network they never would have gotten AT&T to adopt the iPhone.  This type of action by the Obama administration could stop future iPhone break throughs from occurring.  See also here.

Gallup: "U.S. Small-Business Owners Pessimistic Post-Election"

From Gallup:

U.S. small-business owners are pessimistic post-election, with the Wells Fargo/Gallup Small Business Index plunging to -11 in November from 17 in July. This is the most pessimistic that owners have been about their operating environment since July 2010, when the index stood at -28. . . .

George McGovern explains why it is important for politicians to have some business background

Possibly this is something Mitt Romney should point to when Obama attacks him for being a businessman.  From the WSJ in 1992:

. . . In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut's Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility--complete with an experienced manager and staff. 

In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn's 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender. . . .

Newest Fox News piece: Four ways Romney must hold Obama accountable for the economy

My newest Fox News piece starts this way:

Are you better off today than four years ago? Tonight's presidential debate, with its focus on domestic policy, is Mitt Romney’s chance to put President Obama on the defensive, to make him answer for his abysmal economy policies. 

Without a doubt, the economic performance during Obama’s presidency has been sluggish and GDP growth has been getting even slower. The new jobs added to the economy have merely offset the jobs that have been lost, with no increase in total employment. Obama has overseen the weakest economic recovery ever. 

But the media has largely glossed over the continued slump and painted an unjustifiably rosy picture of the economy. It’s Romney’s job tonight to focus on the important economic issues. 

Obama’s strategy is clear: blame Bush and claim the economic problems he inherited were much worse than anyone could have known at the time. But such a line of arguing should be a hard sell if Romney plays his cards right in tonight’s debate. Romney only needs to remind us of Obama’s continuing overly optimistic predictions. . . . .

The first product of Obama's working group on the 2008 financial crash is an unjustifiable lawsuit. What do you expect from lawyers?

Well, what did you expect from a bunch of lawyers?  JP Morgan buys Bear Stearns at the request of the  government and now the government repays that effort by suing them.  So much for the claim that Fed was absorbing the risk on Bear Stearns balance sheet.

The New York Attorney General has sued JP Morgan Chase for allegedly defrauding investors who lost more than $20bn (£12bn) on mortgage-backed securities sold by Bear Stearns. 

JP Morgan bought the investment bank Bear Stearns in March 2008. 

It said that it would contest the allegations. 

This is the first action to come out of a working group created by US President Barack Obama looking into the causes of the 2008 financial crash. 

JP Morgan said: "The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the US government. This complaint is entirely about historic conduct by that entity." . . . .

Donald Boudreaux discusses Obama's "you didn't build that" comment

In his Tribune piece, Don Boudreaux makes the point too often overlooked in analyzing Obama's comment:

. . . Yet Obama’s plea that successful business people now be forced to pay higher taxes as a kind of royalty payment for government-supplied infrastructure is no different than if he would plead to force successful business people to bail out inefficient oil companies. 

History speaks with crystal clarity, saying that, if property rights are secure and culture is friendly to commerce, people are more prosperous as government’s role is more limited. History also teaches that roads, bridges and many other species of infrastructure can be — because they in fact often have been — supplied by private enterprise. 

Among the kinds of infrastructure that have, in fact, been supplied successfully by private businesses are city streets, highways, sewage systems, formal education, policing, money and commercial law. Government provision of such infrastructure, therefore, cannot be read as evidence that government’s role on this front is necessary. 

If government failed to build highways to connect, say, Atlanta to Pittsburgh, private firms almost certainly would. (It’s easy to collect tolls from drivers who use highways.) And likewise for nearly any other pair of cities in America. So in what way is any actual, government-built highway necessary for any private entrepreneur’s economic success? None — if (as is likely) private enterprise would have done what government instead did by crowding out private efforts. . . .

His whole piece is useful.  The only point that I would add, and it is a small point, is that historically we in fact did see all these things built privately.  For other pieces by Don see here.

Chicago Folds on Teachers' Union demand on tying pay to evaluations

This is very disappointing.  The pay increases seem like a secondary issue to making sure that public school teachers have the right incentives.  The media reports on whether the pay increases will be 4% a year or the agreed to 3%, 2%, 2%, and 3%.  From the LA Times:

In one of the central disagreements of Emanuel’s proposed reforms, the union says it preserved so-called “step and lane” pay increases for teachers, in which teachers receive raises for each year of service. The district had hoped to tie teacher compensation to student scores on standardized tests; the union says only 30% of teachers’ evaluations will come from student test scores, the minimum under Illinois state law. . . .

In other words,  the unions gave up nothing.  The minimum agreement was what the union had to agree to under state law.

Will the media ever note that about 40% of public school teachers in Chicago send their kids to private schools?  Probably not.

UPDATE: A slightly different notion of what is in the contract is available from the Associated Press:

Emanuel, who did not personally negotiate the deal but monitored the talks through aides, has pushed hard for a contract that includes ratcheting up the percentage of evaluations based on student performance, to 35 percent within four years. The union contends that is unfair because it does not take into account outside factors that affect student performance such as poverty, violence and homelessness. . . .

Is this all that Chicago was asking for?  To go from 30 to 35% over four years?  I suppose that I thought that more was being asked for.

UPDATE: The increase in work time is trivial and still leaves Chicago teachers the best paid, least worked teachers around.

Mayor Rahm Emanuel did win a longer school day—to seven hours from five hours and 45 minutes. But the city had already agreed to a union demand to hire 500 additional new teachers to help fill the longer school day, and the average teacher will work a mere 15-20 minutes more per day.

UPDATE: From NRO

Emanuel got rolled by the CTU. Their “concessions” are laughable: Student achievement now accounts for 30 percent of teacher evaluations, but the State of Illinois already requires 25 percent. Teachers will receive raises of 3 percent, 2 percent, and 2 percent over the next three years, on top of automatic step-and-lane pay hikes that are already set in stone. And the school day will be longer, but teachers won’t be teaching any more hours; the city is required to hire hundreds more teachers to fill out the longer school days. All told, the deal will cost Chicago hundreds of millions of dollars in the coming years. This is a resounding defeat for Rahm Emanuel and the education reform movement. . . .