Using Veritas to Construct the "Per…

29-04-2017 Hits:82241 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:77843 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:77418 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:82157 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:78749 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:81039 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:47924 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:79752 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:79264 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:79818 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:84827 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:81753 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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A recent zero-hedge article rightly questioned the reliability of the reported unemployment figures by comparing the reported increase in the unemployment benefits paid with the reported increase in the number of insured unemployed. According to the figures reported by Department of Labor (DOL), the total number of insured unemployed in the US has risen by nearly 400% since September 2007 and has reached nearly 10.5 million as of Dec 19, 2009. However, if we look at the monthly withdrawals on the unemployment insurance account (according to the Daily Treasury Statement prepared by the Financial Management Service), the expenditure has risen by nearly 550%. The difference has been widening since April 2009 (coincidentally, right about the time the S&P 500 rocketed skywards, and the housing market made several month to month gains [see If Anybody Bothered to Take a Close Look at the Latest Housing Numbers..."]) and has increased substantially in Dec 2009.

 

With no reason to believe that the average payouts increased dramatically (that could have otherwise explained this variation), the article rightly points out the huge discrepancy that is creeping in the reported figures. According to Zero-hedge, the insured unemployed are understated by 32% and estimate the insured unemployed at nearly 14 million. The Bureau of Labor Statistics reported the total number of unemployed at 15.6 million and the unemployment rate at 10% in Dec 2010. With serious doubts being raised about the reported figures of the insured unemployed that forms a substantial portion of total unemployed (nearly 69% in Dec 2010, based on reported figures), the total unemployment figures reported by the government is most likely severely understated.

image005.png

The grave unemployment situation not only undermines the economic health and recovery hopes, but is also acting as a major source of financial strain on the Fed's books. The Fed has been spending huge amounts of money in the form of UI (unemployment insurance) benefits. In 2009, the government paid about $139 billion in UI benefits. Based on the figures for total unemployed by Bureau of Labor statistics and total insured unemployed by DOL, the total insured unemployed which are being supported by the government under the various state and federal programs have risen to 69.0% of the total unemployed as of Dec 2009 from just 29.0% in Sep 2007. Further it is observed that the Fed has been taking in huge deficits on its books because of UI programs. The total UI withdrawals on Fed books in 2009 were $139 billion against deposits of just $31 billion received from states for unemployment. While the withdrawals in 2009 have increased by 320% when compared with withdrawals in 2007, the deposits have declined by 6.6%. The deficit has increased to nearly $107 billion from nearly no deficit, two years ago.

      image009.png

image001.png

The increased pressure on the Fed books can be largely explained when we look into UI programs that are currently being administered by the government. There are two major UI programs - Regular state programs and Emergency Unemployment Compensation (EUC). While the former has to be funded through tax collection by the state (with any deficit financed by the Fed through loans), the latter is 100% funded by the Fed. EUC is a Federal, temporary extension of unemployment compensation for unemployed individuals who have already collected all regular state benefits for which they were eligible. The program was started in June 2008 and was due to expire in December, 2009. The claims under the program have risen at a phenomenal rate and now accounts for nearly 50% of the total insured unemployed claims. Thus, the Fed has been financing the extension of UI benefits of those which are no longer covered under the regular state programs. As per the last reported figures as of Dec 19, 2009, while the claims under the regular state programs have come down due to the expiration of claims, the same was more than offset by the massive jump in insured unemployed under the federal EUC program. The claims under the regular state programs were down 4.3% (y-o-y) while the claims under EUC were up nearly 200% which led to a nearly 51% increase in total insured unemployed. Insured unemployed are not able to get jobs and with claims expiring under the regular state programs, they are increasingly applying to the Federal's EUC program for extended benefits.   

image003.png

Looking at the initial job claims under the regular state programs, while the markets rejoiced the decline in seasonally adjusted figure, the non-seasonally adjusted figures (which are the actual claims) continue to inch up. For the week ended Jan 02, 2010, the initial jobless claims (NSA) increased 88,000 (w-o-w) to reach 645,571. Looking at the two year trend of the seasonal adjustment does call into question the validity and accuracy of the adjustments, no?

image007.png

With the total number of insured unemployed (under the state and federal programs combined) continuing to increase as well as no respite coming from the initial jobless claims (looking at the real figures which are not seasonally adjusted), the unemployment situation is far from improving. Further, with serious questions being raised about the validity of the reported number of insured unemployed, the gravity of the situation is definitely underrated. The Fed is pumping in enormous sums of money to underpin the problem - an amount that may rival the TARP. However, with claims expiring under the regular UI state programs and the temporary aid provided by EUC expected to taper in the coming months, unemployment is going to increasingly weigh on aggregate demand and further delay the economic recovery.

I have seen no evidence of the federal emergency benefits being extended into 2010. What, pray tell, happens when those on this program run out of rope? Although it may not show up in the initial claims and average numbers, it will damn well show up in the bottom line of most companies. Contrary to popular belief, companies really do need people to spend money in order to make money.

Update:  The EUC program was set to expire in December 2009 which means that it was the last date for establishing the claims under this program. Individuals establishing benefit entitlement as of this date can collect the remainder of this entitlement through May 31, 2010. However, with a subsequent Act passed on Dec 19, 2009, the date for establishing the claims has been extended to Feb 28, 2010 and the last date for collections to July 31, 2010. The Act also provides for increasing the weekly UI benefits by $25 in the form of Federal additional compensation.

And the latest info released today directly from the Department of Labor:

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT

          SEASONALLY ADJUSTED DATA

In the week ending Jan. 9, the advance figure for seasonally adjusted initial claims was 444,000, an increase of 11,000 from the previous week's revised figure of 433,000. The 4-week moving average was 440,750, a decrease of 9,000 from the previous week's revised average of 449,750.

The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 2, a decrease of 0.1 percentage point from the prior week's unrevised rate of 3.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Jan. 2 was 4,596,000, a decrease of 211,000 from the preceding week's revised level of 4,807,000. The 4-week moving average was 4,855,000, a decrease of 151,500 from the preceding week's revised average of 5,006,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.448 million.  

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 801,086 in the week ending Jan. 9, an increase of 156,165 from the previous week. There were 956,791 initial claims in the comparable week in 2009.

The advance unadjusted insured unemployment rate was 4.6 percent during the week ending Jan. 2, an increase of 0.4 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,988,940, an increase of 503,924 from the preceding week. A year earlier, the rate was 4.4 percent and the volume was 5,855,855.

Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin during the week ending Dec. 26.

Initial claims for UI benefits by former Federal civilian employees totaled 1,466 in the week ending Jan. 2, a decrease of 187 from the prior week. There were 1,454 initial claims by newly discharged veterans, an increase of 73 from the preceding week.

There were 25,959 former Federal civilian employees claiming UI benefits for the week ending Dec. 26, an increase of 193 from the previous week. Newly discharged veterans claiming benefits totaled 36,116, an increase of 1,742 from the prior week.

States reported 5,002,180 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Dec. 26, a decrease of 141,279 from the prior week. There were 1,666,412 claimants in the comparable week in 2008. EUC weekly claims include first, second, third, and fourth tier activity.

The highest insured unemployment rates in the week ending Dec. 26 were in Alaska (7.4 percent), Oregon (6.6), Idaho (6.2), Wisconsin (6.2), Michigan (5.9), Montana (5.7), Nevada (5.7), North Carolina (5.6), Pennsylvania (5.5), and Washington (5.4).

The largest increases in initial claims for the week ending Jan. 2 were in New York (+22,810), North Carolina (+20,942), Georgia (+11,172), Wisconsin (+9,938), and Alabama (+5,748), while the largest decreases were in Illinois (-6,928), Florida (-6,523), Kansas (-3,701), Maryland (-2,309), and California (-2,284).


UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS

image011.png


 

Advance

 

 

 

Prior1

WEEK ENDING

Jan. 9

Jan. 2

Change

Dec. 26

Year


Initial Claims (SA)

444,000

433,000

+11,000

432,000

535,000

Initial Claims (NSA)

801,086

644,921

+156,165

556,517

956,791

4-Wk Moving Average (SA)

440,750

449,750

-9,000

460,250

523,750

 

 

image012.png

 

 

Advance

 

 

 

Prior1

WEEK ENDING

Jan. 2

Dec. 26

Change

Dec. 19

Year


Ins. Unemployment (SA)

4,596,000

4,807,000

-211,000

4,979,000

4,487,000

Ins. Unemployment (NSA)

5,988,940

5,485,016

+503,924

5,088,864

5,855,855

4-Wk Moving Average (SA)

4,855,000

5,006,500

-151,500

5,100,500

4,454,250


Ins. Unemployment Rate (SA)2

3.5%

3.6%

-0.1

3.8%

3.4%

Ins. Unemployment Rate (NSA)2

4.6%

4.2%

+0.4

3.9%

4.4%


 

INITIAL CLAIMS FILED IN FEDERAL PROGRAMS (UNADJUSTED)


 

 

 

 

Prior1

WEEK ENDING

Jan. 2

Dec. 26

Change

Year


Federal Employees

1,466

1,653

-187

1,434

Newly Discharged Veterans

1,454

1,381

+73

1,543


PERSONS CLAIMING UI BENEFITS IN FEDERAL PROGRAMS (UNADJUSTED)


 

 

 

 

Prior1

WEEK ENDING

Dec. 26

Dec. 19

Change

Year


Federal Employees

25,959

25,766

+193

19,710

Newly Discharged Veterans

36,116

34,374

+1,742

25,937

Railroad Retirement Board

10,000

10,000

0

7,000

Extended Benefits

302,272

296,580

+5,692

1,640

EUC 20083

5,002,180

5,143,459

-141,279

1,666,412


FOOTNOTES
SA - Seasonally Adjusted Data
NSA - Not Seasonally Adjusted Data
1 - Prior year is comparable to most recent data.
2 - Most recent week used covered employment of 130,128,328 as denominator.
3 - EUC weekly claims include first, second, third, and fourth tier activity.

UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 01/02/2010 


STATES WITH A DECREASE OF MORE THAN 1,000 


State

Change

 

State Supplied Comment

IL

-6,928

 

Fewer layoffs in the construction, trade, and manufacturing industries.

FL

-6,523

 

Fewer layoffs in the construction, trade, service, and manufacturing industries, and agriculture.

KS

-3,701

 

No comment.

MD

-2,309

 

No comment.

CA

-2,284

 

Fewer layoffs in the construction and service industries.

NV

-1,113

 

Decrease due to a shorter workweek.


STATES WITH AN INCREASE OF MORE THAN 1,000 


State

Change

 

State Supplied Comment

MA

+1,166

 

Layoffs in the transportation, warehousing, and manufacturing industries.

AR

+1,779

 

Layoffs in the trade, service, and manufacturing industries.

IA

+1,871

 

Layoffs in the manufacturing industry.

MN

+2,142

 

No comment.

MI

+2,166

 

No comment.

NJ

+2,477

 

Layoffs in the transportation, warehousing, trade, service, public administration, and manufacturing industries.

OR

+2,939

 

No comment.

OH

+3,032

 

Increase due to holiday shutdowns.

SC

+3,414

 

Layoffs in the textile industry.

TX

+3,474

 

Layoffs in the trade, service, transportation, and manufacturing industries.

CT

+3,895

 

No comment.

TN

+4,609

 

Layoffs in the service and manufacturing industries.

PA

+5,427

 

Layoffs in the transportation, primary metals, and industrial machinery industries.

AL

+5,748

 

Increase due to seasonal shutdowns , as well as layoffs in the apparel and service industries.

WI

+9,938

 

Layoffs in the construction, trade, service, transportation, warehousing, and manufacturing industries.

GA

+11,172

 

Layoffs in the construction, trade, service, and manufacturing industries.

NC

+20,942

 

Layoffs in the construction, transportation equipment, textile, furniture, rubber/plastics, and lumber/wood industries.

NY

+22,810

 

Layoffs in the construction, service, and transportation industries. Figures are based on a five day processing week.