Perspectives on economics and finances with GFD

Are U.S. and World Unemployment Sending a Signal to the Fed?

The Unemployment Rate in the United States is of primary concern not only because it is an important measure of labor markets, but because it influences the Fed’s decision on whether to raise the Fed Funds Target, which has remained near zero since the beginning of the Great Recession. Although the Fed is hesitant to raise interest rates because of the impact it has on the economy, the graph below shows that 2014 provided a crucial development for the U.S. economy from a technical point of view.

Between 2009 and 2013, the United States Unemployment Rate (U-3) was above the average Unemployment Rate for the World, as calculated by the World Bank. This was an important change because between 1987 and 2009, the Unemployment Rate in the United States was below the global average, with the exception of a period in 1991 and 1992 when the US rate was slightly higher than the global average. For this reason, the Fed was well justified in keeping interest rates low to fight unemployment and foster growth. Things changed in 2014. While the World Unemployment Rate continued to decline in 2014, falling marginally from 6.7% to 6.5%, the US Unemployment Rate plummeted from 6.7% to 5.6%. The March 2015 measure for the U.S. Unemployment Rate was at 5.5%. In 2014, the U.S. Unemployment Rate went from being equal to the World Unemployment Rate to being significantly below it. Given the fact that this graph covers almost 30 years of data for World and U.S. Unemployment, it seems unlikely the U.S. Unemployment Rate will rise above the Global Average for years to come. The combination of a declining World Unemployment Rate, a declining U.S. Unemployment Rate, and the fact that the U.S. Unemployment Rate is below the World Unemployment Rate makes you wonder what signal the Fed is waiting on to raise interest rates. In every period in the past where the United States Unemployment rate was declining and below the World Unemployment Rate, the Fed raised the Fed Funds Target Rate in order to reduce the inflationary pressure on wages. Several major chains, such as Walmart and McDonalds have recently advertised that they plan on raising the wages of their employees. Although falling oil prices and a stronger dollar kept inflation low in 2014, these two factors are unlikely to continue through 2015. Given all this, could 2015 could be the year in which the Fed finally raises interest rates?

GFD CAPE Ratio Additions

Global Financial Data has added 250 CAPE Ratios to its database. The GFD CAPE Ratios are drawn from over 40 countries and include global indices such as World excluding USA index. The GFD CAPE ratios are updated on a monthly basis. The CAPE Ratio is the cyclically-adjusted price-to-earnings ratio, also known as the Shiller P/E, which was developed by the Nobel Prize winning economist Robert Shiller. GFD’s CAPE Ratios are a moving average calculated as the inflation-adjusted price of the stock index divided by an average of ten years of inflation-adjusted earnings for the index. Graham and Dodd, in their classic book, Security Analysis, argued in favor of smoothing out P/E Ratios to avoid the volatility inherent in the ratio.
Several new CAPE Ratios have been added for the United States, including CAPE Ratios by sector and by Capitalization. New United States CAPE Ratios: S&P 400 Midcap, 600 Small Cap and 1500 Supercomposite Dow Jones Transportation and Utilities Average S&P Financials and Utilities The CAPE Ratios which Robert Shiller calculated used a 10-year moving average. Some analysts feel that a 10-year moving average may be too short or too long to capture the CAPE Ratio most accurately. For this reason, GFD has added CAPE Ratios for 3 years, 5 years, 7 years, 20 years and 30 years. Subscribers can use these different moving averages to test their models and see which CAPE Ratio best fits their market analysis. To create the GFD CAPE Ratios, a new interactive tool is available from GFD Finaeon that allows you to choose the country and the moving average for the CAPE Ratio you want. When you log into GFD Finaeon, go to the Tools section under the Finaeon Tree. There you will find the CAPE Ratio tool. After choosing the country and moving average, you can create the CAPE Ratio you need for your analysis. You can then download the data or generate a custom Aeon Graph. The CAPE Ratios for the United States have the longest histories, starting in 1881 for the S&P Composite and in 1929 for the Dow Jones Industrial Average. CAPE Ratios for the United Kingdom begin in 1937, and CAPE Ratios for Canada and Japan begin in 1966. CAPE Ratios for many other developed countries begin in 1979 and those for emerging markets begin in 1998. Global Financial Data has added a Main Indicator for the CAPE Ratios so you can easily access the data.

To access GFD’s CAPE Ratios, to get a list of GFD’s CAPE Ratios, or if you have any questions about these additions, call today to speak to one of our experts at 877-DATA-999 or 949-542-4200.

Mickey Mantle Strikes Out, Then Hits a Homer

A previous blog discussed Wilt Chamberlain’s unsuccessful attempt at following up on his successful basketball career with a successful IPO. Wilt Chamberlain wasn’t the only sports star to go into the restaurant business. Few people realize it, but Mickey Mantle set up restaurants twice, once in Texas in the 1950s when he struck out, and a second time in the 1980s in New York City when he hit a home run. Mickey Mantle played for the New York Yankees between 1951 and 1968 and is one of the few baseball players to hit over 500 home runs during his career, and believe it or not, without the aid of any steroids. Many consider Mantle to be the greatest switch hitter of all time, a skill which enabled him to hit for both average and for power. His lifetime batting average was 0.298 and he hit some of the longest home runs in history, one measuring 643 feet at Tiger Stadium in 1960.
Mickey Mantle replaced Joe DiMaggio in centerfield in 1952, appeared in 12 World Series, helped the Yankees win seven of them, and played in sixteen All-Star Games. Mantle was Most Valuable Player three times and by 1961 he was the highest paid player in baseball.  

Country Cooking Without the Sizzle

Mickey Mantle incorporated Mickey Mantle’s Country Cookin’, Inc. in Texas on April 22, 1968 during his last year of his baseball career. The company authorized 2,000,000 shares, and 1,000,000 shares were outstanding on July 11, 1969. Mickey Mantle’s Country Cookin’, Inc. offered 200,000 shares at $15 per share on July 11, 1969 through Pierce, Wulbern, Murphy, Inc. of Jacksonville, Florida and through D.A. Campbell Co., Inc. in New York. The restaurant’s menu focused on country vittles, including Chicken & Dumplins’, Ham and Lima Beans, Country Beef Stew, Country Fried Chicken, Texas Chili, Catfish Filets, Chili & Beans, Chicken Fried Steak, a Country Smoked Ham Sandwich and a Country Pork Sausage Sandwich. Meals were $1.25 and the sandwiches were $1.00. If you wanted to go all out, you could get an eight-piece Chicken Bucket for $3.25. The first Country Cookin’ restaurant opened up at 3651 Martin D. Love Freeway. Company-owned restaurants were also located in San Antonio and in Irving, Texas. Mickey Mantle franchised the restaurant and ones soon popped up in Florida, Louisiana and Texas. In 1970 the company tried to acquire 35 Best Steak Home restaurants, but the deal fell through. Largely because of law suits, overextension and poor management, the restaurants did not do well. Shares in Mickey Mantle’s Country Cookin’, Inc. traded over-the-counter, and as you can see by the graph below, the shares steadily declined in value. Offered at $15, shares fell below $10 by the end of the month and were down to $1 a year later. The company received more income from franchise fees than from sales, and this could only spell long-run trouble for the restaurant. As a sign of its problems, the company changed its name to Invesco International, Inc. on June 30, 1969, and reincorporated in Nevada where it became a coal mining company.
The 1952 Topps Mickey Mantle #311 rookie baseball card sells for over $10,000, but if that is beyond your budget, hundreds of souvenirs remain from the Mickey Mantle’s Country Cookin’ restaurant and can be purchased on Ebay. Souvenirs include postcards, china, coffee mugs, carrying trays, menus, chairs, pot holders, ordering pads, stock certificates and prospectuses. Souvenirs are also available from Mickey Mantle’s Holiday Inn located in Joplin, Missouri, including bars of soap, post cards, matches and even room keys, though they probably don’t work anymore.  

Mantle’s Business Career Booms

The Country Cookin’ restaurants weren’t Mickey Mantle’s only business venture. As mentioned above, he ran a Holiday Inn in Joplin, Missouri. Mantle also created real estate and land developments (WIllowwood and Arbolado), the Mickey Mantle Billiard Center in Milwaukee, Wisconsin, and the Mickey Mantle Bowling Center at 200 Exchange Park North in Dallas from which some cigarette lighters survive. In 1988, Mickey Mantle’s Restaurant and Sports Bar was opened in New York at 42 Central Park South at 59th Street. Although Mantle made frequent appearances at the restaurant, he let others run the business. The sports bar continued to operate successfully for over 20 years, perhaps because it focused on a single theme, avoided expansion, and Mantle acted as promoter rather than manager. For the record, Mantle’s favorite food was the chicken-fried steak, usually topped off with some drinks from the bar. Mantle died in 1995 and the sports bar closed on June 2, 2012 after failing to pay rent for several months. Though the sports bar remains closed, it has a Facebook page for the curious. Mickey Mantle was an entrepreneur throughout his life, and the success of the sports bar shows that he learned from his first time at bat in the restaurant business.

3000 New Data Sets Added to the Global Financial Database

GFD has added 3000 new data sets to the GFDatabase which calculate the Annual Percentage Change. These files focus on economic data for which users are more concerned about the rate of change than the actual number, such as the Consumer Price Index and Real GDP. Although GFD provides the annual percentage change as a choice when downloading the raw data, there are several advantages to providing the annual percentage change as a separate file. First, users can download the rate of change directly. Second, users can use the Annual Percentage Change files in our new platform, Finaeon, to generate comparative graphs between different countries.
Finaeon offers comparison graphs where indicators such as the inflation rate or GDP growth can be compared directly to each other. Finaeon also offers the opportunity to generate current and historical bar graphs where intercountry comparisons of rates of growth would be beneficial. You can easily generate a graph of the inflation rate in the G-7 countries in 2014 and in 2000. Annual Percentage Change files end with an APC. If you know the file name for the original file, just add APC to the end and you will get the Annual Percentage Change file. So the Consumer Price Index for the United States is file CPUSAM, and the Annual Inflation Rate for the United States is CPUSAMAPC. The Annual Percentage Change files are included in the Main Indicators for ease of access. Among the economic topics that are included are Consumer and Producer Prices, GDP, Monetary Aggregates, Balance of Payments, Imports and Exports, Debt, Government Budget, Industrial Production, Population and others. The data are currently available to all subscribers through the GFDatabase. To obtain a full list of the new files, call today to speak to one of our experts at 877-DATA-999 or 949-542-4200.

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