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There is a huge CBS/NYT poll and article (Poll Finds Tea Party Backers Wealthier and More Educated) about the tea party members.

I was not surprised to read they skew older, white, Republican, better educated and higher income than the average American. I was surprised to read they favor Social Security and Medicare.

Towards the end of the article, I read a shocking data point. In the orgy of coverage of this poll and article generated, no one seemed to mention this:

The percentage holding a favorable opinion of former President George W. Bush = 57%

A substantial majority of Tea Party members hold a favorable opinion of the man that history will very likely deem the worst president in American History (Presidential Historians disagree as to whether he is in the bottom 3 or 5 as of today).

Its all you need to know about the Tea Party.

Some of the more interesting reads today:

• Merrill Lynch’s $50 billion feud (Fortune)

• This Market Has Its Freq On (WSJ)

• Forget Newsweek — Roubini’s popularity may be a contrary indicator (Ekonomi Türk)

• My favorite headline of today: ‘Jerk’ Insurance Soothes Property Sellers Amid Recovery Signs (Bloomberg)

• Defaults Rise in Loan Modification Program (NYT) See also Federal aid is forestalling only a fraction of foreclosures, report says  (Washington Post) Is anyone still surprised by this?

• A Partisan Scrum on Fannie, Freddie (WSJ)

• Puget Sound Business Journal Live blogs the WaMu hearings

• How not to choke when the big game is on the line (Frontal Cortex)

• Video games: the addiction (Guardian)

• Welcome to DotComArchive.org… If you created or worked at an internet technology company during the 1990s, we invite you to tell us about your experiences

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Henry Blodget interviews Dan Gross on the Newsweek cover:

America’s Back! Let’s Just Hope Newsweek Doesn’t Jinx the Recovery

America is Back!, Newsweek declares this week.

Cover-story author Daniel Gross says the economy is making a strong comeback, defying the odds and surprising the naysayers. “The turnaround we’ve had since [Lehman Brothers' bankruptcy], while not completely satisfying, has been pretty remarkable,” he tells Henry Blodget in the accompanying clip.

A combination of unprecedented government intervention matched by rapid restructuring and increased productivity in the private sector has resulted in an economy stronger than anyone would have imagined just 18 months ago, Gross argues. Although the National Bureau of Economic Research – the official tracker of recessions – continues to wait to officially declare its end, Gross dismisses their hesitation, saying economic forecasters “have consistently underestimated the rate of economic growth.”

With just weeks away from the expiration of the home buying tax credit, the April NAHB homebuilder sentiment index was 3 pts better than expected at 19 and up 4 pts from March. It’s at the highest level since Sept. Most of the gain was led by the Present condition component which rose 5 pts. Future expectations were up just 1 pt and likely reflects the uncertainty of what will happen to demand when the tax credit expires. Prospective Buyers Traffic rose 4 pts to 14 with gains in the South and Midwest. The Northeast was flat and the West saw a decline of 2 pts.

I was at a book party last week, and I overhear a conversation where someone (literally) is introduced as “the guy who put Jeff Bezos on the cover of Time (December 1999) as the man of the year.”

I immediately butt into the conversation, saying “That cover made me tons of money– thanks!” We then proceed to discuss the magazine cover indicator, and what it means for the markets.

Which leads me to my buddy Paul of Infectious Greed. I think he commits a contrary indicator faux pas (S’okay, We’re Good. America’s Back) when he calls the Newsweek cover “a classically contrarian magazine cover indicator.”

I beg to disagree.

The magazine cover contrary indicator works when it reflects a fairly long lasting, well understood concept that is reaching a climax. By the time the editors of a major non business publication recognizes the well established trend, it is has already peaked. The grand daddy of all of these is BusinessWeek: The Death of Equities — after a 15 year bear market.

Have a look at the June 13 2005 Time Falling Home Price Magazine Cover in which they explain “Why we’re gaga over real estate.” That was as close to the ringing of the real estate bell at the top as you will ever see.

So why isn’t this a contrary indicator after a 75% market rally? Three reasons:

1) It refers to an economic turnaround — not the stock market

2) It does not follow a trend that has been in place for a long time

3) It does not represent a broad societal belief

I suspect some of you disagree; feel free to explain your positions in comments.

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Here’s the Newsweek cover in question:

Update: Henry Blodget interviews Dan Gross on the Newsweek cover here.

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Previously:
BusinessWeek: The Death of Equities (August 13th, 1979)
http://www.ritholtz.com/blog/1979/08/the-death-of-equities/

Understanding Contrary Indicators (May 31st, 2008)
http://www.ritholtz.com/blog/2008/05/understanding-contrary-indicators/

Falling Home Price Magazine Cover (August 12th, 2009)
http://www.ritholtz.com/blog/2009/08/falling-home-price-magazine-cover/

Ken Auletta, a columnist for the New Yorker, discusses his book, ‘Googled: The End of the World As We Know It.’

Airtime: Thurs. Apr. 15 2010 | 7:10 AM ET

Initial Jobless Claims totaled 484k, a large 44k above expectations and up from 460k last week. Again though, a Labor Dept official is saying there are lag effects from the Easter and Cesar Chavez holiday in California so I don’t know what’s real and what’s administratively distorted. Continuing Claims, which stretch to 26 weeks, rose by 73k and were 59k above expectations. Extended benefits rose a net 162k and the absolute level of those still collecting benefits remain very elevated. Bottom line, while we can’t read too much into the rise in initial claims data over the past 2 weeks because of the difficult seasonal adjustments around this time, the extended benefit data still shows a muted hiring environment but hopefully on the cusp of getting better as the economy does.

The April NY manufacturing survey, the 1st April industrial # out, was a solid 31.9, almost 8 pts above expectations and up from 22.9 in March. It’s at the highest level since Oct ’09 and just shy of the highest since March ’06. New Orders rose to 29.5 from 25.4 but Backlogs fell to -3.8 from +4.9. The Employment component rose 8 pts to 20.3, the highest level since March ’06. Inventories also got built as this component rose to 11.4 from 4.9, the most since this question was asked in July ’01. Prices Paid spiked to 41.8 from 29.7 to the highest since Sept ’08 but mfr’s couldn’t pass it on as Prices Received fell to 6.3 from 8.6. The 6 month outlook on Business Conditions rose a touch to 55.7, 2 pts but is below the recent high in Nov ’09. Bottom line, manufacturing is the key source of strength in this recovery and today’s figure confirms that.

Foreign purchases of US assets in Feb totaled $47.1b, $17.4b above expectations and up from a revised $10.2b in Jan. Treasury purchases totaled $48.1b but our biggest holder, China, again cut its exposure by $11.5b and has been a net seller for a 4th straight month. Japan, the 2nd biggest holder did buy a net $3.1b. Foreign purchases of Gov’t agency paper rose $2.4b. Foreigners bought $12.9b of US stocks but sold $12b of corporate bonds and have been sellers for the 10th month in the last 11. US investors bought a net $4.2b of foreign stocks and bonds. Bottom line, because the data is somewhat dated it does not have an influence on the US$ but the treasury data and holders of it is interesting to keep an eye on.

March Industrial Production was surprisingly weak, rising only .1% vs expectations of a .7% gain, partially offset by a .2% upward revision to Feb. There is a big but though within the data as the utilities output category fell by 6.4%, as the weather was likely a culprit, weighing on the overall figure. IP elsewhere was good as production of motor vehicle/parts rose 2.2% and is now up 24.3% y/o/y vs the easy comparison. Machinery production was up 1.2%, computer/electronics rose by 2% and mining jumped 2.3%. Capacity Utilization did rise to 73.2% from 73% and now is at the highest level since Nov ’08 but remains well below the long term average of 80% and is a key data point feeding the Fed’s large output gap thesis in keeping inflation low.

The Philly Fed survey was about in line with estimates at 20.2 vs 18.9 in Mar. The recent high was 22.5 back in Dec and the low in the late ’08 panic was -38.8 so we’ve obviously come a long way. New Orders rose 4.6 pts to 13.9 but is below the spike level of 22.7 back in Feb and Shipments, which follow orders, fell by 8 pts to the lowest since Sept ’09. Backlogs remained negative for a 3rd month but rose 4 pts. Inventories rose for the 2nd month in the past 3. Employment was positive for a 5th straight month but fell 1.1 pts to 7.3. Similar to the NY survey, Prices Paid rose 4.1 pts to 42.7, the highest since Aug’ 08. Prices Received rose 1.4 pts to +1 but not enough to offset the rise in prices paid. The Business outlook 6 months out fell almost 8 pts to 44.2 but is the 2nd highest figure dating back to Sept ’09. Bottom line, as I said with the NY #, manufacturing remains the key source of strength in this recovery and today’s data confirms that.

Count me among those who believe there are some serious structural problems with our economy that may well force us to live with an unacceptably high level of unemployment for some time to come.  Today’s Unemployment Insurance claims “unexpectedly” spiked to 484k vs. a 440k consensus, and were 24k higher than last week.

That said, week after week we’ve been treated to — let’s call them what they are — excuses as to why the weekly claims for unemployment insurance are not dropping as quickly as everyone would like.

Today, for example, we see the following (via the WSJ, sub. required):

A Labor Department economist said this latest rise can be pegged to lag effects from the spring holidays, including Easter and Cesar Chavez Day, which is celebrated in worker-heavy California.

Cesar Chavez?  Really?  Are you kidding me?  Is the Journal being punk’d?

Thanksgiving, Christmas, MLK Jr. Day, snow storms, Easter, Cesar Chavez.  Upcoming next week are Administrative Professionals Day and Take Your Children to Work Day, so fear not when UI claims breach 500k again.

Adding a clarification:  In my haste to get this post published today, perhaps I sent an unintended message, and for that I apologize.  My post was in no way whatsoever intended to diminish, belittle, or besmirch the life and accomplishments of Cesar Chavez.  The point was to highlight the absurdity of attributing today’s jump in unemployment claims to the Chavez holiday.  Isn’t this what seasonal adjustments are all about?  Was it not on the calendar for all to see?  Snow storms and other weather-related problems cannot be accounted for in advance.  But holidays?  Give me a break.  Again, the point had nothing to do with Chavez per se, and I’m sorry if I was unclear about that.

The IRS puts out an interesting tax document each year, looking at the returns of the nation’s 400 highest income tax paying people. The most recent year of complete data is 2007, when 143 million individuals filed tax returns.

Some of the data is quite astonishing:

• The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007 — 3X the p% they got in the 1990s.

• The top 400 paid 2.05% of all individual income taxes in 2007.

• Only 220 of the top 400 were in the top marginal tax bracket.

• Average tax rate of the 400 = 16.6% — the lowest since the IRS began tracking the 400 in 1992.

• Minimum annual income to make the top 400 =  $138.8 million.

• Top 400 reported $137.9 billion in income; they paid $22.9 billion in federal income taxes.

• 81.3% of income was from capital gains, dividends or interest. Salaries and wages? Just 6.5%.

• The top 400 list changes from year to year: 1992-2007, it contained 3,472 different taxpayers (out of a maximum 6400).

Happy tax day to you to!
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Thanks to David Wessel for the tip!

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Sources:
The 400 Individual Income Tax Returns Reporting the Highest Adjusted Gross Incomes Each Year, 1992-2007
http://www.irs.gov/pub/irs-soi/07intop400.pdf

A Look at the Tax Returns of the Top 400 Taxpayers
David Wessel
WSJ, FEBRUARY 17, 2010
http://blogs.wsj.com/economics/2010/02/17/a-look-at-the-tax-returns-of-the-top-400-taxpayers/

With the ferocious market rally over the past month that has taken the S&P 500 to the highest level since Sept ’08 at the same time the US economy continues to heal and corporate America keeps knocking the ball out of the park, I can’t keep but wondering how much of the improvement in all of the above is due to zero nominal and negative real interest rates and how much is due to the natural order of the economic cycle. There is no question it is a combination of both but is a zero interest rate environment a proper gauge of what’s real and what’s artificial, what’s organic growth and what’s juiced by easy money all over again. The question will only be answered for sure when short rates (likely coincident with long rates) start to rise again and when the US economy has to be left on its own without the crutch of cheap money. Until then, party on Wayne, party on Garth!

A WSJ report quoting a Greek official saying “fact is there is no strong interest in the US for Greek debt” and that Greece may cancel plans for a global dollar bond deal if they can’t sell the minimum necessary has sent Greek bonds lower again. They are off their lows though after a Greek Finance Ministry official said they will still go forward with a US road show. Outside of the continued problem in Greece, Portugal debt is feeling the contagion as yields there are rising to the highest since late Feb. China’s Q1 GDP rocked with a better than expected 11.9% gain but it immediately came with concerns of more tightening steps to prevent overheating even though March CPI was less than forecasted. They did raise down payment requirements on 2nd homes to 50% from 40%.