The Rodney Dangerfield Effect as the Best Case for the 2014 NY Giants

     The Giants will insist that they are not surprised how well they've played after a bad start-they've won 3 in a row and actually played a lot better in the Cardinal game even if they lost; they hadn't wiped out their mistakes then-but if this is true they were alone. No one else believed the Giants had a prayer.

     Before the season started I certainly wasn't surprised that they weren't expected to win 12 games and be a super bowl contender. However, I was surprised that all the experts seemed to vie with each other to offer the most bearish prospects for the Giants possible. On Mike and Mike, one of the Mikes-I think Gallick-had them going 6-10 while Mike Goldberg had them at 4-12 which definitely seemed like overkill to me. Most prognosticators were similarly bearish.

     Now there has been some notice as Eli has proven all the critics wrong and mastered the West Coast offense scheme, well, masterfully. However, there's still a lot of bearishness-I see that the power rankings put out by Bleachers, still has them ranked only 20th out of 32 teams with a worse ranking than the Saints, something I just can't understand.

      http://bleacherreport.com/articles/2176247-nfl-power-rankings-where-does-every-team-stand-heading-into-week-6/page/18

     Ralph Vacchiano looked at the Giants along with Dallas and the Eagles as 3 teams in what is shaping up as a very interesting NFC East race. Still, this comment by him irked me a little:

       "Nearly left for dead after a 0-2 start, their offense kicked into gear as they rolled off three straight wins against inferior opponents."

        That was in today's-Wednesday, October 8, 2014-NY Daily News, pg. 49. I couldn't find the exact quote online.

         This jibe-'inferior opponents'-gets me going a little bit. None of these teams were considered inferior when the Giants played them. Now the Redskins are considered inferior-they actually got a lot of credit for only losing by 10 points at home to Seattle-but they were supposed to be a pretty good team before the season started and were a favorite against the Giants before they shocked the world by demolishing them 45-14.

          Actually the fact that Washington was so highly regarded before the season gets me going just a little too. I mean this team had lost their last 8 games last year to finish 3-13 and the Giants swept them-the G-Men did start last year 0-6 but at least finished the year respectably at 7-9. So why were the Giants treated like the 3-13 team?

         The Giants other two wins were against Houston. Are the  Texans an inferior team? When they played the Giants were 0-2 and the Texans were 2-0-understandably the Texans were favored. This last week the Cowboys blew a double digit lead and had to outlast the Texans in overtime. As for the third team the Jints have beaten, the Falcons, Atlanta too was much more highly regarded than the Giants to start the year. The point is that none of these teams were considered inferior teams to the Giants when they played. In fact the Bleacher Report has the Giants at 20th while Atlanta is 16th and the Saints at 15th.

         I do see that Fancy Stats ranked at 6th which would seem to be too optimistic but I think the way they calculate power rankings is very intuitive and might make more sense than how many of these rankings are compiled.

         http://www.washingtonpost.com/news/fancy-stats/wp/2014/10/07/nfl-power-rankings-colts-packers-move-up-in-the-fancy-stats-rankings-after-week-5/

           They focus not just won-loss records but margins of victory both of a team and its opponents. If they're right then the Giants may have some more surprises in store for all the naysayers.

        As far as 'inferior opponents' are concerned-the Cowboys haven't played a better class of teams. They struggled to beat a Houston team that Vacchiano considers inferior while the Giants blew them out-so Fancy Stats would give the Giants big points relative to Dallas on Houston. Meanwhile who else have the Cowboys beaten? New Orleans at home-the Saints are a terrible road team-the Tennessee Titans and St. Louis.

         Here is the bullish case for the Giants. They were picked to be awful in 2007 and 2011 as well.

         I continue to have much more luck making predictions and bets in football than in the market, certainly lately. I did get the market move this week basically right. I was skeptical that Friday's strong nonfarm payroll numbers would end the market selloff and that has proven correct. At the end of the day we already knew the fundamentals of the US economy are strong.

        http://diaryofarepublicanhater.blogspot.com/2014/10/what-september-nonfarm-payroll-surprise.html

      The worry was a slowing Europe-getting whacked on Russia-Ukraine. Today's numbers were again terrible for Germany which has been the engine of European growth.

       http://www.cnbc.com/id/102068805

        Then we also have Ebola, a slowing China, a disapapointing Japan, Abenomics notwithstanding. Another one of Scott Sumner's 'victories.'

        UPDATE: We;ll see how the market responds to the next to big events: the Fed minutes today at 2 p.m. and Alcoa profits. Charles Evans talked today about leaving interest rates at zero until 2016. I guess if the Fed did go that way it could be bullish. Alcoa (AA) will give the market some clues as to whetther and how much the multinationals are being hurt by a falling euro-and so a rising dollar.

     

NFL Week 5, Knowing When to Say When, and How the Giants can Make the Playoffs

     I know rational expectations says that no one can beat the market long term-I think Sumner has chalked Warren Buffet to just luck. This seems to be what people mean when they say that he makes unfalsifiable statements. I mean if you say that no one can beat the market long term and someone points to someone who has and you say that's just luck then the question begs how could you possibly falsify the claim that no one can long term beat the market?

      I guess I'm arrogant or foolhardy enough to always think I at least could beat the market-that as it's not logically impossible maybe it's actually a viable possibility. I have at times but true I certainly haven't yet been able to do it long term. For the latest on the market see here.

      http://diaryofarepublicanhater.blogspot.com/2014/10/what-september-nonfarm-payroll-surprise.html

      http://diaryofarepublicanhater.blogspot.com/2014/10/ben-bernanke-cant-get-loan_3.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29

      I'll be interested to see if tomorrow really has marked a bottom for the market. If it is-and for all I know it may be-it's still ironic that the fundamentals of the US economy are going to  get the market bullish again as the fundamentals were always sound to begin with and the market wasn't selling off because of any proof the the economy has fallen off a cliff. The things that were worrying the market-Russia-Ukraine, weak growth in Europe, a slowdown in China-and now the Hong Kong protests what Jim Cramer calls a bear market in commodities-the weakness in oil certainly not helped out with Saudi Arabia now wanting to cut rather than raise prices-a Japan still disappointing despite Abenomics, along with a sense that although the Macro picture looks good, prices in the market may have gotten ahead of earnings-is still there.

      Still, I agree there is nothing fundamental about the U.S. economy to justify the selloff we've seen-if anything maybe we are just technically oversold. We'll see what happens this week.

      However, lately I've been quite unlucky in the market-ever since it started selling off a few weeks ago. Until then buying dips had been something you could count on as you have been able to since 2009. I haven't really done badly on what I've thought would happen but the timing has killed me. We'll see if this changes this week.

      However, where I have had much more luck on lately is betting on the NFL something I had always said I'd never do-I just started at the start of this season. At this point after 5 weeks, I've had only 1 week in which I lost money on net and with a very solid day today, I'm now up over 100% on the year. Today all the teams I bet on actually won their games but I bet the spread and there I was 4-2 which was enough to put me up $1200 for the week .

    I had 5 picks at 1 pm Eastern time-the Eagles over the Rams at home favored by 7, the Giants-I did well with my team last week so I went with them again today-over the Falcons favored by 4; the Saints over Tampa giving 10 1/2; the Steelers favored by 6 1/2 against the Jaguars.

    I went to Applebees as they have these games on so you can watch them all at once. The Eagles seemed a slam dunk all day building a 34-7 lead and then giving up 21 points late and letting it get to 34-28 at the last minute. Meanwhile the Giants trailed 20-10 in the second half, the Saints blew a 13 point lead at home and the Steelers at this point were just up 10-9.

   So the sure thing failed me and I didn't have any game sewed up. The Giants rallied though and scored the last 20 points of the game, the Steelers scored a TD and covered me 17-9,  the Saints failed me as they went from 13-0 up to 13-24 down, they did win in overtime 37-31 but that came nowhere near covering. So that's 2-2 but the Browns actually came back from trailing 28-10 in the first half to win 29-28. Pretty amazing: my sure thing in Philly dissipated with under 5 minutes left, but the game I assumed I'd lost all day turned my way at the last minute. This put me up $600; at 4 I just took the Charges over the Jets which was the big slam dunk of the day, as the Chargers simply demolished Jets. 31-0. The good news for Jets fans, is Rex Ryan has promised to start Geno Smith again. Well, he's earned it. In truth, though, they did try Vick in the second half and he was even worse statistically than Geno.

     This put me up by $1200 for the day, and I for once practiced something that is perhaps not my strongest virtue: restraint. I had strongly considered taking the Bengals over New England but I figured I should just lock in my gains for the week. After all, I am going with the Seahawks over the Redskins tomorrow so why not just do one more $600 bet so that I can end up at least $600 up for the week even in the rather unlikely  chance of the Redskins covering.

    The Pats have dominated the game so far tonight, making me very glad I did say when. However, at 20-3 to start the second half it's not an insurmountable lead with the Andy Dalton led Bengals.

    UPDATE: The Bengals just got a big point return and then got a touchdown on the very next play so it's just 20-10. See how fast things can change in an NFL game?

    The Pats clearly came out the gate with a sense of urgency, but after taking a quick 14-0 lead, the Bengal defense has actually quieted things down. If they can continue this, the Bengals still have a shot.

    The Giants now being a very touch 6 game stretch-they are on the road the next two weeks at Philly and then Dallas who are both 4-1 and a game ahead of the G-Men. Then they come back home to play the Colts and then they go out to what is considered the toughest place to play-Seattle. Then the 49ers visit and then the Cowboys come in.

    Very tough schedule! However, it is a chance to show if they're for real. However, we do see a road to the playoffs and even the NFC East title. They need to just split these 6 games. If they can, there is a light at the end of the tunnel as they then begin a 4 game stretch where they play at Jacksonville and then Tennessee, host the Redskins who they already decimated in week 4, then visit the Rams. If they then follow the 3-3 record in the next tough 6 games with running the table in these 4 against also rans, then they go into the final game of the season with the Eagles at home with a 10-5 record and probably with at least a chance to win the division-maybe that game will decide the division.

    I think I'm reasonably conservative with my 3-3 record projection in the next 6. I think they could win 4 of 6 in which case they should be a shew in for the playoffs. A likely way it could happen is that they win 2 of the 3 games against Philly and Dallas, lose to the Colts and Seahawks and beat the Niners-who though I they won a good game against KC this week, I'm not wholly convinced of just yet.

     UPDATE: Since my last UPDATE the Bengals have fumbled and bumbled themselves into a 34-10 hole. Yep, I dodged a bullet this time.

     Truth is, the Colts and Seahawks are obviously very tough games but I do think the Giants may do ok against the Eagles and Cowboys. While both are 4-1, neither have a defense likely go scare Eli and company on offense. Indeed, both the 'Boys and 'Birds had a real dogfight with the Rams. The Rams new starting QB has a 96.8 QB rating in 3 games and a lot of this comes form a 34-31(OT) loss to Dallas-where they did take a 21-0 lead before bending- and a 34-28 loss today to the Eagles where they almost came all the way back from 27 down.

      I think it's fair to say that the Dallas and Philly secondarys are a lot more afraid of Eli than he is of them. The Eagles are 29th against the pass, 28th in total defense, and 25th against the pass.

      Actually, now that I think about it the Rams may actually be better now that Austin Davis has become the starter. However, they better bet a lot better as they have a beast of a schedule coming up where they're going to play the Niners twice, the Seahawks twice, the Cardinals twice, as well as Kansas City, San Diego, and Denver. With all that losing the Rams do, you'd think they'd be rewarded with a much easier schedule. Unfortunately they are in a very tough division. But, they are playing the AFC West this year for their AFC games: couldn't they at least get to play the AFC East?

       UPDATE: Did I mention I dodged a bullet in not taking the Bengals?
      

What September 'Nonfarm Payroll Surprise' Means to the Market Going Forward

      While the numbers were very good, the one thing I disagree with, is everyone keep calling it an 'earnings surprise.' Why was it a surprise? I think for the most part the fact that nonfarm payrolls are expanding by over 200,000 jobs every month was pretty much baked into the cake.

      I don't see this number as unexpected. Expectations going in was for a number of 205,000. I personally would have been very surprised if we saw another number well beneath 200,000 again like August. I mean it was pretty clear that August was the outlier with all the noise. Yesterday confirmed what we basically already knew. Yes we did beat the 205,000 estimate handily, but we've averaged 213,000 per month for the last year and the 248,000 for September is not a record for the last year.

      I would think that's baked into the cake. Cramer is saying that this shows that a recession is off the table, but for what market watcher was it actually on the table? I guess maybe some really believed it was but I didn't think so. At most, perhaps in time the weakness of Europe, the slowdown in China, the protest in Hong Kong, and the Russian-Ukraine conflict could drag us down but I didn't think that had happened yet if it happens at all.

      So yes, the fundamentals of the U.S. economy remain strong. However, what we're focusing here is not the economy but the market. The equity market will fall hard if the economy falls into recession, but another reason you can see the market fall into correction mode is that valuations have gotten ahead of earnings. I don't know at this point whether they have nor not just that I think this fear has had more to do with the recent market weakness than a belief that the economy is now falling off a cliff.

     It is a good sign that it didn't selloff on a good number which is what it did a year ago-on the perverse worry that good numbers meant the end of Fed accommodation. Still in reality the things that sunk this market aren't gone. We still have the Russia-Ukraine problem. I do see that Putin now has a challenger-a billionaire who wants to move power from the President to the legislature and the judiciary.

    http://online.wsj.com/articles/putin-foe-mikhail-khodorkovsky-aims-to-remake-russia-1412383620?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond

    I wonder if the market will notice and like this story. For now though we have Putin Problem and the selloff in commodities at least partly due to this-Saudi Arabia exacerbated it this week with their decision to actually drop oil prices. Many argue that the Saudis will finally have to relent as the price drops and drops-$80 oil is believed to be the bottom where if it were to drop below, would make it unprofitable for the drillers.

    Only if and when that happens will the energy stocks be good again. Then we have what seems to be a big bear market in gold brewing. I'm thinking that shorting the gold ETFs could be a good play. Overall, we'll have to see if the market continues what it started Friday or that was just a one day thing-after the market had sold off a lot in the previous 9 days and as Art Cashin said, part of the rally was just relief that for one day, Europe looked ok after dropping so hard on Thursday.

   What if Europe is down again next week. Overall, even if the market does come back it seems that we may have a little more volatility going forward and to win on the up side of stocks you may have to be a bit more strategic.

      

Ben Bernanke Can't get a Loan?

     I guess we know what it looks like when credit conditions get too tight. 

     “Just between us,” he said on stage at a conference in Chicago on Thursday, according to Bloomberg News, “I recently tried to refinance my mortgage and I was unsuccessful in doing so.”

       http://www.nytimes.com/2014/10/03/upshot/why-ben-bernanke-cant-refinance-his-mortgage.html?_r=0&abt=0002&abg=0

       I love that anecdote from Bernanke-whether it was true or not. I mean whether it's true or not I love that he told it and really whether it's true or not it's still reflects the fact that it's still tough out there. Obviously if it's true that's crazy but even if it isn't it shows that it's bad enough for him to feel the need to make up such an anecdote. 

       I tried to trace out how I thought the market might react today to the payroll report and got it wrong. 

      http://diaryofarepublicanhater.blogspot.com/2014/10/tomorrows-nonfarm-payroll-numbers-hunt.html

       I guess the market got its Goldilocks on payroll-245,000 new jobs was in the sweet spot between too little, giving more legs to the idea the economy is slowing, and too high, thereby worrying investors that the Fed is going to cut interest rates sooner rather than later and by too much too quickly.. I won't pretend to know what this move up today means. It could be the end of the broad sell off in equities we've seen the last few weeks. On the other hand, even with this big move up today, the market still had it's worst week in about 6 months. Before the triple move up today on the Dow it was it's worst week in 2 years. 

      So where to from now? I always thought that the fundamental U.S. economy is pretty good. In the land of the blind-the world economy-we remain king. Europe worries about a triple dip-compared with Draghii how great does Bernanke look? 
  
      If predicting the market is just about American fundamentals I think we're in pretty good shape. The only worry I guess is that with China apparently accepting lower growth for now and with Europe so weak and with the Russia-Ukraine conflict and all it's potential collateral damage for Europe and with Japan still not looking so great despite Abenomics, can the U.S economy remain strong within such a 'Sea of Weakness?'

     For now we very well may. However, what you can't help but notice is that even with today's up move in the market it was still a horrible week on top of a horrible week last week. On a technical basis, the S&P remains well beneath what had been it's long term support and 50 day moving average until last week-1980. 

     Indeed some on CNBC wondered if today's up move isn't kind of week on top of such a strong payroll number. Right now the Dow is up 140-it was up as much as 170 earlier and it may well rally back to that level and beyond by the end of today. However, at the end of the day I don't really think today's payroll number is big news. I mean we had one aberration-in August with 142,000. Was the reason the market has been under pressure simply because of that August number which was clearly an outlier? 

    No, It was about a litany of other things. Jim Cramer always insists that the Russia-Ukraine conflict is the big driver which is hurting Europe and killing commodities. 

   There's also the worry about the slowdown in Europe and a less rapidly growing China. None of this changes because of today's number. In fact, I deny that today was a surprise. I think it's confirmation of the status quo. 

    So the market may not be out of the woods yet especially with the S&P so far beneath 1980 still. Another guest on CNBC today pointed out that 2 things about the U.S. economy will drop the market. One is obviously a bad economy. He agrees that the economy is strong. The other reason is if stock prices have gotten ahead of earnings. He thinks that has happened. I don't know for sure myself but I know this is a common worry on the Street. 

    Finally, there is still worry that this payroll number might mean the Fed is behind the curve and that a couple more like it would mean they have to move quicker on interest rates although it was also pointed out on CNBC that a year ago the market would have sold a strong number like this out of fear of the Fed tightening. 

    P.S. Again, I did miss my guess about the market reaction this morning and the market looks like it will be up sharply today. Man do I wish I hadn't gotten out my BAC $17 Oct 10 calls yesterday as it spiked up from $16.88 to $17.20. I''d been doing very well going long BAC since it came to an agreement with the DOJ but I got hurt the last week as BAC got dragged down with the rest of the market. Just when I cry uncle it snaps all the way back. 

     I came into the day short. However my shorts haven't gotten killed as they were XLE-the energy ETF-and Caterpillar (CAT). CAT opened up over $98 but is now up just $.10 cents. As we noted above, a lot of the problem is in Europe, China and Japan. CAT is kind of a proxy for the world economy and with all its exposure in Europe and China, it's not surprising that it's not going through the roof because we learnt what we already knew about the U.S. economy. 

     As for XLE it started up in sympathy with the rest of the market but with oil now today another $2 it is now down for the day-though not enough yet for me to make any money on it. Hopefully next week...

     For now, as for as making money in the market I've had more luck in the first 4 weeks in the NFL-this is hte first year I've tried it; of course its' the first year I could afford it-in 4 weeks I'm 9-6 on my picks and am up 40% or $1700 bucks. 

    This week I'm breaking my rules again on the Giants. Let's face it this rule is over. 


     I like them giving 4 against the Atlanta Falcons. I got the Philly Eagles giving 7 against the Rams. If the Eagles can't be the Rams by 8 points there's something wrong. I think the Falcons defense will be picked apart against the Giants. It was something to see the Vikings team that beat them 41-28 on Sunday get dismantled by the Packers last night, 42-10. 

    I have to think that the Saints will come back  this week with the Bucs at home. If they can't beat them by 11 at home they've truly lost their edge. I do think they may have lost their edge some but surely not this much. If they can't cover here that's a very bad sign. 

    Likewise I got to think the Steelers come back and cover a 6 point line at Jacksonville. The Jaguars at this point are flat out the worst team in football on both sides of the football. If Pittsburgh can't cover here they truly are pretenders. 

     I'm also considering the Browns. Yes, they're 1-2 but they lost by 3 to the Steelers on the road and by 2 points to the Browns. The Titans on the other hand have been blown out three straight weeks. According to Fancy Stats that's very important in figuring a team's power rankings. 

     http://www.washingtonpost.com/news/fancy-stats/wp/2014/09/30/nfl-power-rankings-giants-ravens-move-up-in-fancy-stats-rankings-after-week-4/

      I also have the Charger over the Jets giving 7, the Seahawks over the Redskins Monday night giving 7. I'm also tempted to take the Bengals over the Pats on Sunday night. The Bengals were actually originally 2 1/2 point underdogs but the Pats' 41-14 Monday night loss flipped it and now the Bengals are favored by 1-so there's no difference between taking them straight up and against the spread! 

     

      

Tomorrow's Nonfarm Payroll Numbers: the Hunt for Goldilocks

      Market expectations for tomorrow's payroll numbers to be released at 8:30 are as is typical lately, is treacherous. The market definitely doesn't want another weak number like we saw in August with only 142,000 new nonfarm jobs. The market definitely wants to see more than 200,000 jobs.

      However, they don't want the number to be too strong either. A really strong number over 250,000 or so would make the market worry that the Fed will see these numbers and raise interest rates too quickly and too fast.

      My prognostication. As I said earlier I have finally been pushed out of the long side for the market for now. I am convinced that for now at least buying the dips which has worked so well for so long is over.

      http://diaryofarepublicanhater.blogspot.com/2014/10/the-market-tanks-gopro-sells-off-and.html

      So I'm going into tomorrow's number net short. I bought some puts in both the energy ETF, XLE, and Caterpillar (CAT).  I sold some Alibaba stock (BABA) to raise money to buy the puts but left most of the position still on, which for one day actually worked out as BABA was actually one of the few stocks that did well today. It has behaved very well since the first day of the IPO. It's very surprising how little volatility there has been in the stock so far.

      My best guess is this. The Dow futures will be up tomorrow morning.

      UPDATE: I just checked the futures and they are up 34 points right now.

      Anyway, they will be up tomorrow until the payroll number. My guess is even if you get the 'Goldilocks' the market in that case may open in the green but by 10, it will already be selling off. The market just seems to want to sell off right now. Even if they initially like the payroll numbers before you know it the market will focus on something else they think spell doom. This is just a bad market for now. The question is how long the correction goes on for. Maybe it will last the whole of October.

     Oil for now at least is in trouble with Saudi Arabia vowing to protect their market share-rather than trying to put a floor on prices. .Cramer argued tonight on Mad Money that this is being done to hurt American oil companies by raising the cost of doing business in the US-by bringing prices down below the level the American companies can turn a profit.

     As oil dipped beneath $90 today it seems a decent bet to at some point push $80 which would put even ore pressure on oil stocks. 

The Market Tanks, GoPro Sells Off and Someone Had Today's Paper Yesterday

      It's a great line-'someone today's paper yesterday' made by Jon Najarian on 'Fast Money Halftime Report' today at 12 on CNBC regarding the big selloff in GoPro (GPRO) today that was driven by the loophole some some executives discovered in the self-imposed lockout in GPRO shares.

     The stock dropped over 11 bucks today. As the analysts said, it turns out that a big part of GPRO's big up move was having a small float.

      I've been bullish for a long time and got some good calls lately in Bank of American (BAC) and Gilead (GILD) but I've been won over to the short side at least for now. I don't think this is like 2008 when the world was genuinely about to end, but it's clear that for whatever reason, this market wants to go lower.

     After such a big selloff yesterday and last week today it should have been able to at least give us a little bounce. Weekly unemployment claims came in at just 282,000 but this didn't help the market which is down a lot again today.

     I got  into 10 puts for CAT at the $97.50 strike for Oct 18 and it has been working so far for me as I'm up $500 so far.

     I did leave most of my position on in Alibaba-I actually bought stock outright on that and while I took off 30 shares this morning I left on 60 and now the stock is actually up today. While yes I like many bought the stock at the top on the IPO Friday morning the stock really has behaved very well since with only a very mild decline since. After getting under $86 briefly, it has snapped back to over $87.

     I do think that what has worked for so long-buying on dips-has broken down. Luckily I got out of my BAC calls this morning. From here on out I'm presuming a market that will go lower short term. In the long term? I don't really think the fundamental U.S. economy seems pretty sound. Certainly it's in better shape than the EU and even China seems a little soft lately.

     Tomorrow morning we'll have what is a big moment every month-nonfarm payrolls. Last month was disappointing with a number of only 142,000, I don't know what the number will be but my guess is it will be higher. Jim Cramer says one month on payroll can never be a trend-that only if we get another bad number tomorrow will there be a trend. My guess the number will be at least decent, maybe good.  I think it's quite possible to be over 200,000, maybe well over.

      The trouble with the market right now is that good fundamentals don't seem to help. The market wants to sell off and seems to always find an excuse to do so every day right now. My guess is even a good payroll number won't lift the market. This isn't surprising when you remember that the selloff was never chiefly about fundamentals anyway; Cramer thinks the Russia-Ukraine problem is driving the market more than anything which is hurting commodities which is hurting Europe and hurting the market. As he also puts it we're in a 'bear market in commodities.'

      So tomorrow the X factor may be the payroll numbers. However, the Y factor may be what is decisive this time; at the end of the day this market seems to want to sell off. I don't know that this will be long term to say nothing of the start of a genuine bear market but my guess is it goes on for at least a few weeks. Maybe as September and October are supposed to be weak months anyway at the end of October buying the dip will work again. For now though, it seems to have broken down. 

Scott Sumner Sinks to Matt Brueing's Level

      I say that tongue in cheek. Actually one of Sumner's own conservative readers advised him to stop letting Brueing bait him 

      "Scott, Don’t allow this clown to continue to bait you. Further volleys in this vein can only diminish you and elevate him. moveon.org."

       http://www.themoneyillusion.com/?p=27684

       Sumner himself has promised not be further 'baited' as the name of this last post was 'Last Reply to Matt Brueing.'

       Will Sumner leave it there if Brueing replies again? It's out of character-usually he keeps going and going-I still remember the time he argued with Simon Wren-Lewis for a month over the use of the phrase 'consumption smoothing' and what the identity S=I means. 

       I kind of hope this won't be the end of the debate. I don't think there's too much worry about Sumner actually being mature as he answered Brian Donohue quoted above like this:

       "But it’s so much fun to shoot ducks in a barrel, especially annoying ducks."

        Anyway, this debate seems to be over the welfare state and it's effect on U.S. poverty. Sumner is claiming that Brueing has no basis to claim that poverty would be higher without welfare. One of the problems with this debate is properly defining what is meant by this loaded term 'welfare.'

        Brueing tries to critique Sumner's style which he calls 'Grandpa Sumner.' There's some truth in it but another characteristic of Sumner is the No True Scotsman defense-he usually claims that anyone who criticizies him is too stupid to understand him. 

        "Matt seems to have forgotten to take his meds, as his newest post is one of thesilliest I’ve ever read.  Here’s an example:"

War On Poverty Backtrack
You’ll recall Grandpa Sumner’s initial argument for why transfers don’t net reduce poverty went like this:

1. Since the War On Poverty started, poverty hasn’t fallen at all. I know this because aint that what them dat gum progressive bloggers say?

2. Because poverty hasn’t declined, then that means anti-poverty transfer incomes only crowd out market incomes. Else, you would have seen poverty decline.

3. Therefore transfers don’t reduce poverty.

     "I was surprised to read this, because I believe exactly the opposite, that poverty has declined, and that transfers have reduced poverty, especially among the elderly."

     "So I looked for the passages where I made those claims, and all I could find is this:"

In fact, we spent trillions on the War on Poverty.  Unfortunately, poverty won and we lost.  Don’t believe me?  Isn’t the blogosphere full of progressives complaining that the poverty rate is just as high as in 1967?  I’m actually more optimistic about the living standards of most poor people than the typical progressive. Their living standards have risen with the general population.  But if “non-market income” actually explains the gains made by the poor, then this suggests that non-market incomes have merely crowded out market incomes.

It’s absurd to claim that it’s “easy” to solve a problem like poverty.  Yes, it’s easy if you are dealing with a group of people for whom you don’t have to worry about work disincentives.  Obviously it’s easier to reduce poverty for the elderly, since they are mostly retired.  Nixon did that.  That would also be true of the disabled, if we could accurately measure disability.  (The fact that we cannot partly explains the huge surge in disability, even as Americans are healthier than ever before.)

     "I guess Matt doesn’t understand sarcasm, or the phrase: “I’m actually more optimistic about the living standards of most poor people than the typical progressive. Their living standards have risen with the general population.” Or “Nixon did that.”  Nor has he read my post entitled “The Amazing Decline in American Poverty.” I presume he didn’t understand the sarcasm in the last sentence of my first paragraph, which in context was referring to what must be true if the progressive claim about no decline in poverty since the late 1960s were true.  Then I found this:

Again and again, he has called wealth inequality data “nonsense on stilts” because it ignores the fact that wealth inequality is just a life-cycle phenomenon.

    "Did I really say it was just a life cycle phenomenon?  Only a fool would believe such a thing.  Wealth inequality reflects many factors.  I searched and searched and could not find where I had said that.  Matt didn’t help me, as he linked to posts that did NOT say that.  Conclusion; Matt just made it up."

      http://www.themoneyillusion.com/?p=27684

      Brueing didn't make it up. Many others in the comments section have made the same point about Scott trying to boil down inequality to being mostly just about life cycle effects-he often claims that at some point in their lives most people are in all 5 income levels which obviously rests on the life cycle argument. 

       Now it's possible that Brueing somehow misunderstood Sumner. but if so, a lot of other people have made the same mistake which might suggest that Sumner is not overly endowed with the gift of clarity. Here is where I read him as talking about life cycle effects. 

    

       "I’ve done many posts explaining why public opinion polls of Americans on numerical questions are utterly meaningless.  The public is horrible at math, and their answers tell us almost nothing about what they actually believe.  One bogus poll that keeps getting touted by liberals claims to show that the American public has views on income distribution that are far to the left of those of Mao, perhaps even to the left of Pol Pot.  I don’t really know why liberals want to tout these poll results, as if this sort of policy regime were actually implemented we would all starve to death, just as many tens of millions starved in Cambodia and China under much less extreme attempts to impose equality."

       "Jordan Weissmann is the latest liberal to be sucked in by this nonsense:

Subjects estimated that the top 20 percent of U.S. households owned about 59 percent of the country’s net worth, whereas in the real world, they owned about 84 percent of it. In their own private utopia, subjects said that the top quintile would claim just 32 percent of the wealth. In fact, the ideal looked strikingly like Sweden.

      "If every single America had EXACTLY the same wealth at each age (i.e. all 20 year olds had identical wealth, as did all 55 year olds) then wealth inequality would still exceed the figures that Americans supposedly prefer, purely due to life cycle effects."

       http://www.themoneyillusion.com/?p=27648

      If that last paragraph has nothing to do with life cycle effects, I challenge you to tell me why. Brueing himself started a post with this missive:

       "I am not really sure what Scott Sumner is all about these days. Many years ago, he was like “monetary policy should utilize an NGDP target” and people were like “that’s an interesting thought.” But now, he’s kind of gone into mission creep mode where he comments on things that he’s not so knowledgeable on."

        http://mattbruenig.com/2014/09/29/cutting-poverty-is-super-easy/

        You know I'm not a Sumner fan, but I find this a rather superficial reading of him-much like Krugman dismissing Market Monetarists as not politically relevant. I might wish Krugman were correct but I think he's only defining relevance in a superficial way. 

       I don't think Sumner has really changed. I think this was always his modus operandi. He's always been quite explicit that his goal is to 'make the world safe for Neoliberalism again'-he uses this term which makes him a bit unique-not many Neoliberals actually call themselves a Neoliberal. 

           I don't think there's any 'mission creep'-as the mission was never simply to advocate monetary policy and let fiscal policymakers do what they will. His claims of a zero multiplier-or even negative multiplier-along with full monetary offset mean that he's not just a monetary advocate but a fiscal advocate as well. His argument is that if you follow his monetary prescriptions then we by default will end up with conservative supply side policies. This was always the playbook. That Brueing believed otherwise shows that Sumner is pretty good as he fooled him too. 

           Sumner's argument here is mostly quibbling.  Brueing is right when he points out that Sumner likes to confound the issue of poverty and middle class and median wage stagnation. I pointed out to Sumner that the War on Poverty was never really tried but was aborted in its infacy with the election of Nixon. His answer: 'so you're saying Brueing is wrong?'

           Another facile comment there. My point is neither to advocate nor take issue with Brueing but discuss the issue of the welfare state and poverty.  I don't think Brueing says that the welfare state has expanded since Reagan. If he did then he's wrong.