Tobacco Users on the Decline | 2020 US Federal & State Min. Wage Rates | Most Common Job Types by County | 2019 Market Returns by Asset Class

Bloomberg: WHO – Number of Male & Female Tobacco Users 12/18/19

WSJ – Daily Shot: the Balance – 2020 Minimum Wage by US State 1/1/20

WSJ – Daily Shot: Tableau – Most Common Job Types by American County 1/2/20

WSJ – Daily Shot: Charles Schwab – 2019 Stock Relative Stock Returns 1/2/20

Not So Healthy US Job Market

Bloomberg – The Jobs Market Isn’t as Healthy as It Seems – Daniel Alpert and Robert Hockett 12/19/19

A hallmark of the U.S. economy’s record expansion has been steady growth in employment. Judging from the jobless rate, in fact, the labor market is the best it’s been in half a century. But what is missing in the focus on the numbers is a severe and troubling deterioration in the quality of jobs created.

A close look at labor trends in recent decades reveals that while the U.S. jobs market has expanded, the caliber of the positions created in the largest chunk of the workforce has steadily and significantly declined, leaving Americans working fewer hours on average, and in lower-paying positions. These changes to what we call job quality as distinguished from quantity — which largely align with the growth in the service economy at the expense of manufacturing — account for much that now ails the American economy and, as a consequence, society more broadly. 

The most prominent change to the U.S. private sector job situation in recent decades is the dramatic loss of goods-producing jobs – something that most Americans are at least intuitively aware of. Back in the 1960s, 42% of  private-sector production and non-supervisory jobs (the largest part of the labor market) involved manufacturing, construction, or mining and logging – in short, making things. Today, that figure stands at a mere 17% of these P&NS positions.

Increasingly, a greater share of job gains are occurring within the lowest quality job subsectors – in particular retail, leisure and hospitality, administrative, waste management, and health-care and social assistance services. While not all the positions in these subsectors are low quality, both the average job and the vast majority of the positions in these subsectors offer less than the mean weekly income of all U.S. P&NS jobs. In fact, the percentage of P&NS jobs created in just these four subsectors corresponds almost exactly to the percentage of goods-producing jobs lost in America from 1990 through today. We have, in other words, replaced most of our highest quality jobs not merely with lower quality jobs, but with lowest quality jobs.

One particularly telling comparison is emblematic of the change: In 1990, with 80 million fewer people than today, the U.S. had 12.7 million manufacturing jobs (not including construction and natural resources) and 5.9 million jobs in eating and drinking establishments. Today, with a population one-third larger than in 1990, the country has only 9 million manufacturing jobs and 10.7 million jobs preparing and serving food and beverages. The average weekly income yielded by these jobs is $373, compared to $922 for manufacturing.

Taken together, the large and still growing number of low-quality jobs offer an average of only 30  hours of work a week, while the dwindling number of high-quality jobs offer an average of 38.3 hours of work per week. It is worth thinking about what this implies in the aggregate: Were all current low-quality jobs offering the same number of hours per week as high-quality jobs, it would be the equivalent of creating 12.6 million new jobs (11% of the existing P&NS jobs base).

In other words, headline unemployment might be low, but effective under-employment of Americans, measured by the quality of their jobs in the private sector, is rampant and still worsening. U.S. labor is in this sense being devalued via systemic underutilization. And, unsurprisingly, this devaluation has fallen hardest on the holders of low-quality jobs – now the majority cohort. If you wonder where flagging effective demand, growing private-sector debt, and still worsening inequality and populist outrage are coming from, you need look no further.

This underutilization is showing up in increasing income inequality. In earlier periods, incomes of the low- and high-quality cohorts grew at roughly the same rate, however disparate their levels relative to each other. But beginning around 2003, the growth in income of the ever-smaller high-quality cohort took off and is currently still accelerating relative to incomes from lower quality jobs. Even with hourly wages in the lower-quality sectors recently showing some welcome signs of life relative to those in high-quality sectors, the increasing number of low-quality jobs with limited hours is a big drag, which shows up in our job quality index. 

What led us here? Globalization and outsourcing of manufactured goods is certainly one culprit. But our decades-long curtailment of federal spending on repairing and building new domestic infrastructure, with all the well-paying construction and materials manufacturing jobs that such spending entails – certainly hasn’t helped. Whatever the causes, they should concern us all. When workers are denied access to real full-time employment, they find themselves direly deprived even of basic security, let alone dignity.

US Shale Producer Cashflows and Debt Maturities | US Federal Debt v GDP Growth | 2019 Box Office Receipts

WSJ – Daily Shot: Quill Intelligence – Cashflow of US Shale Producers 12/18/19

WSJ – Daily Shot: Quill Intelligence – Upcoming Debt Maturities for US Shale Producers 12/18/19

WSJ – Daily Shot: Real Investment Advice – US Growth in Federal Debt vs GDP 12/18/19

WSJ – Daily Shot: statista – 2019 Worldwide Box Office Receipts 12/18/19

Low to Negative Mortgage Rates in Europe Have Distorted Property Markets

NYT – Mortgage Rates Below 1% Put Europe on Alert for Housing Bubble – Liz Alderman 12/17/19

Money is so cheap — a 20-year mortgage can be had in Paris or Frankfurt at a rate of less than 1% — that borrowers are flocking to buy apartments and houses. And institutional investors, seeing a chance for lucrative returns, are acquiring swaths of residential real estate in cities across Europe.

In some parts of Europe, said Jörg Krämer, the chief economist at Commerzbank in Frankfurt, valuations have already returned to or exceeded levels that preceded the Continent’s debt crisis a decade ago, igniting concerns that the property boom could end badly.

“The risks are real, because negative interest rates in Europe are cemented,” Mr. Krämer said. “What’s important for the economy as a whole is to prevent the emergence of a dangerous new bubble.”

Demand has surged in the five years since the European Central Bank pushed one of its benchmark interest rates below zero, a step never before tried on such a scale. Prices jumped at least 30% in Frankfurt, Amsterdam, Stockholm, Madrid and other metropolitan hot spots, and are up an average of over 40% in Portugal, Luxembourg, Slovakia and Ireland.

While low rates helped produce a rebound in the eurozone, economists say the policies now appear to be doing more harm than good, clouding the bank’s efforts to reverse inequality. They have not resolved fundamental problems like weak business investment. Nor have they revived inflation — which helps lift wages — anywhere but in the housing market.

The Bundesbank, Germany’s central bank, said recently that real estate in German cities had been overvalued by 15 to 30% — in other words, that there is a bubble. The UBS survey cited Munich, Frankfurt, Amsterdam and Paris as cities at risk. And a study by the global accounting firm Deloitte & Touche cautioned that average house prices “will exceed pre-crisis levels” if the European Central Bank keeps interest rates at zero, as planned.

Housing prices have risen sharply in the United States as well. But there, the boom has been driven by individual buyers, household debt has been held in check and lending standards have remained relatively tight — all factors that reduce the chance of another collapse. Moreover, while benchmark interest rates in the United States have been kept low, they were never negative — and have now been above zero for several years.

The scarcity of affordable housing is fueling resentment and political strife. In Madrid and Barcelona, home prices have jumped more than 30% since 2016, pushing rents up as landlords sought bigger returns. Prime Minister Pedro Sánchez capped rents in Spain this summer at the rate of inflation, now 0.4%, limiting income for property owners.

In Paris, where 70% of residents are renters, Mayor Anne Hidalgo imposed new rent controls. While rents are limited by strict housing regulations, they have risen 40% between 2000 and 2018. As property prices keep climbing — they recently broke a record of 10,000 euros on average per square meter, or about $1,000 per square foot, one of the highest prices in Europe — Ms. Hidalgo is taking other steps to prevent the city from becoming a “ghetto for the rich.” Her plans include building subsidized housing that families with modest incomes can purchase at half the market rate.

Few places have felt the impact as sharply as Berlin. Since the fall of the Berlin Wall 30 years ago, workers, artists and students have increasingly been displaced by an influx of young professionals with families. But property prices and rents have skyrocketed in recent years as home buyers and investors double down.

The city imposed a five-year rent freeze, the toughest in Europe, in the summer after rents jumped more than 50% in five years, and gave tenants the right to demand reductions if rents go too high. German real estate stocks have slumped since the ruling.

In Denmark, which is not part of the euro but closely tracks E.C.B. monetary policy, benchmark interest rates have been negative for seven years. Seeking greater returns, some Danish pension funds are buying large holdings of prime real estate and new buildings to offer for rent. But rents have grown so high that the city is considering capping them, which could cut into those investments.

At the same time, rates are so low that bargains being offered by banks are hard to pass up. In August, Jyske Bank of Denmark began offering 10-year fixed-rate mortgages at negative 0.5% interest before fees, meaning the amount outstanding on the loan will be reduced each month by more than the borrower has paid. Nordea Bank is offering 20-year loans at zero interest.

Feral Pigs on the Roam and Biogas (aka Natural Gas from Manure)

NYT – Feral Pigs Roam the South. Now Even Northern States Aren’t Safe. – Jim Robbins 12/16/19

Ranchers and government officials here are keeping watch on an enemy army gathering to the north, along the border with Canada. The invaders are big, testy, tenacious — and they’ll eat absolutely anything.

Feral pigs are widely considered to be the most destructive invasive species in the United States. They can do remarkable damage to the ecosystem, wrecking crops and hunting animals like birds and amphibians to near extinction.

Wild pigs occupy the “largest global range of any nondomesticated terrestrial mammal on earth,” researchers in Canada recently concluded. They have roamed parts of North America for centuries.

But in recent decades, the pigs have been expanding their range — or more accurately, people have been expanding it for them.

“It’s not natural dispersion,” Dr. Nolte said. “We have every reason to believe they are being moved in the backs of pickup trucks and released to create hunting opportunities.”

In the United States, their stronghold is the South — about half of the nation’s six million feral pigs live in Texas. But in the past 30 years, the hogs have expanded their range to 38 states from 17.

Why the worry? The harm caused by snuffling, gobbling wild hogs is the stuff of legend. The damage in the United States is estimated to be $1.5 billion annually, but likely closer to $2.5 billion, Dr. Nolte said.

“Nature’s rototillers,” experts have said. Feral pigs don’t browse the landscape; they dig out plants by the root, and lots of them. Big hogs can chew up acres of crops in a single night, destroying pastures, tearing out fences, digging up irrigation systems, polluting water supplies.

“Pigs will literally eat anything,” said Dr. Ryan Brook, a professor of animal science at the University of Saskatchewan in Canada.

“They eat ground-nesting birds — eggs and young and adults,” Dr. Brook said. “They eat frogs. They eat salamanders. They are huge on insect larvae. I’ve heard of them taking adult white-tailed deer.”

A recent study found that mammal and bird communities are 26% less diverse in forests where feral pigs are present.

Feral swine have caused extensive damage to cultural and historical sites. The invaders cause $36 million a year in damage to vehicles alone.

“Hitting a two- or three-hundred-pound pig on a highway is not that much different than hitting a two- or three-hundred-pound rock,” Dr. Nolte said. Two F-16 fighter jets have crashed after they hit pigs on the runway.

The swine are also reservoirs for at least 32 diseases, including bovine tuberculosis, brucellosis and leptospirosis. Outbreaks of E. coli in spinach and lettuce have been blamed on feral hogs defecating in farm fields.

In the United States, pig hunting is a popular sport, but biologists caution that it is not always the solution to the nation’s feral pig problem.

In states where populations are not established, hunting creates an incentive for people to distribute feral pigs for sport. Hunting makes the animals warier and scatters sounders, or family groups, which go on to multiply in new family groups.

But where pigs are already well established, hunting can reduce their numbers. Gunning feral pigs from helicopters with semiautomatic weapons is a popular sport in Texas. (There are no hunting seasons for feral swine in the state; the animals, which cause $400 million in crop damage in the state annually, can be shot year round.)

WSJ – Dominion Energy Turns to Cow Manure in Gas Pact – Ryan Dezember 12/11/19

Bottomline – biogas companies are striking arrangements with farmers and agricultural companies to capture and distribute gas from animal waste.

Cigarette Sales | Annual Change in Global Car Sales | Diabetes on the Rise in China

WSJ – Daily Shot: Our World in Data – Sales of Cigarettes per Adult Per Day 12/13/19

WSJ – Daily Shot: Fitch – Annual Change in Global Car Sales 12/13/19

Economist – As China puts on weight, type-2 diabetes is soaring 12/12/19 Edition

Some US Stock Market Perspective

Bloomberg – Don’t Expect the Roaring ’10s for Stocks to Repeat in the ’20s – Nir Kaissar 12/12/19

WSJ – Daily Shot: BlackRock – US Corporate Profits over the Business Cycle 1965-2019 12/12/19

Generational Investment Preferences | Rising Japanese Government Bond Yields |Cannabis Stock Performance

To each their own.

WSJ – Daily Shot: Charles Schwab – Top Ten Investments as Percentage of Assets by Generation 12/10/19

While you weren’t looking…

WSJ – Daily Shot: Japan Government Bond Yields 12/10/19

And some context of the wild ride that has been cannabis stocks.

Visual Capitalist – The Dramatic Rise and Fall of Cannabis Company Stocks – Iman Ghosh 12/10/19

Australian Air Quality is Suffering | China Pork and Beef Prices are Up

Bloomberg – Politicians Fiddle While Australia Burns – David Fickling 12/10/19

A symptom of the swine fever that ravaged the China pork population.

WSJ – Daily Shot: China CPI YoY – Pork & Beef 12/10/19

Global Unrest

Bloomberg – A Year of Protests Sparked Change Around the Globe – Alan Crawford 12/5/19

Alan Crawford does a bang up job of identifying various hot spots of unrest around the globe that led to political change. Does not include other areas of unrest, i.e. Xianjiang and Jammu and Kashmir.

Economies on the verge of collapse, a yearning for greater democracy, revulsion against corruption and inequality–the grievances that drove people into the streets in 2019 were consistent across continents. Some marched peacefully, others clashed violently with security forces, and in at least five places the unrest helped topple government leaders.

Below is a breakdown of protests around the world, by region, and the main reasons behind them.


A defining movement of 2019 was the worldwide push for more urgent government action against what scientists and activists call a climate emergency. Demonstrations took place around the globe, many inspired by the 2018 school strikes started by Swedish teenager Greta Thunberg.

① Puerto Rico

After a hurricane, bankruptcy, and probes into corruption, Puerto Ricans ousted Governor Ricardo Rosselló in July.

② Venezuela

Hyperinflation and hunger have driven opposition to the repressive regime of Nicolás Maduro. So far, he’s dug in.

③ Colombia

President Ivan Duque promised to lower taxes for the poorest quintile of the country after unrest led to the deaths of at least four, including a teenager.

④ Ecuador

When fuel subsidies ended, chaos ensued. The government rescinded the price hikes days later.

⑤ Bolivia

President Evo Morales presided over economic growth but ignored term limits. He wasforced out on Nov. 10.

⑥ Chile

Anger at increases in public transport costs grew into a broad-based movement protesting inequality.

① Scotland

More than 200,000 marched through Edinburgh in support of independence from the United Kingdom.

② U.K.

Britain has seen mass demonstrations both for and against Brexit, which is destined to define the country’s future.

③ France

A year into the yellow vest protests, the demonstrations have waned in size, but the grievances remain.

④ Catalonia

The impasse between Catalonia and Spain’s government in Madrid flared anew, with no resolution in sight.

⑤ Czech Republic

Prime Minister Andrej Babis, one of the country’s richest men, was a target of the biggest protests since 1989.

⑥ Slovakia

Slovaks took to the streets in October to demand investigations into crimes and the rooting out of government corruption.

⑦ Russia

Moscow has been the center of the largest antigovernment rallies in seven years.

① Algeria

Algeria’s president, Abdelaziz Bouteflika, sought a fifth term, prompting unrest. He resigned in April.

② Lebanon

A levy on WhatsApp calls sparked pent-up anger, forcing Prime Minister Saad Hariri to resign in October.

③ Iraq

Prime Minister Adel Abdul-Mahdi quit after hundreds died in protests against government corruption and influence from Iran.

④ Iran

Fuel-price hikes resulting from U.S. sanctions sparked protests that led to more than 200 deaths, Amnesty International said.

⑤ Sudan

Omar al-Bashir crushed dissent during his 30-year presidency, but discontent over prices led to unrest that forced him out in April.

⑥ Malawi

Allegations of election rigging prompted tens of thousands to take to the streets of Malawi’s cities in August.

⑦ South Africa

Poor government services and a lack of housing were the primary reasons for violent demonstrations that broke out in April.

① South Korea

Tens of thousands protested the appointment of Cho Kuk as minister of justice. He left after five weeks on the job.

② Hong Kong

A June rally against a proposed law allowing extradition to China morphed into a broad anti-China movement.

③ Indonesia

October protests raged against the government’s program, including controversial changes to the criminal code.

④ Papua

In Indonesia’s easternmost region, clashes between separatists and government forces in August and September resulted in many deaths.