- How the NSA has changed your Google searches… and how to reclaim your power
- No there’s not a “flight to safety” in stocks. Here’s what’s actually happening…
- Dow reaches for another record… but there’s a fly in the emollient
- The strongest currency so far in 2014… the woman who could destroy the makeup industry… readers sound off on subsidized homeownership… and more!
“This is the first academic empirical evidence of a chilling effect on users’ willingness to enter search terms that raters thought would get you into trouble with the U.S. government,” says MIT economist Catherine Tucker.
Tucker and the privacy-activist group Digital Fourth teamed up recently for a study. At issue: Have the Edward Snowden revelations prompted people to self-censor their Google searches? Are they less likely to use search terms that include words like “bomb” or “plague” or “gun” — words on Homeland Security’s watch list?
The researchers asked nearly 6,000 people to rate the sensitivity of a bunch of keywords. Then they ran those words through Google Trends, the company’s publicly available search data. Sure enough, high-sensitivity keywords have seen a drop-off in the year or so since Snowden handed over NSA files to the media.
The study is not ironclad proof the NSA revelations are prompting people to self-censor… but it’s compelling evidence they might be. Tucker herself began the study skeptical of any chilling effect. “While it’s not what I was expecting, I believe what the data are telling me.”
There’s a much easier and more sensible workaround than self-censorship — found in the pages of our incredibly useful and ridiculously cheap book A Man’s Right to Happiness.
All you need to do is open your browser’s settings and change the default homepage and search engine to a more secure site — DuckDuckGo.
DuckDuckGo looks much like Google. Your results will look much like Google. The difference? “While Google regularly tracks browsing history and uses it to compile a better picture of their users (as well as provide a way for the government to record metadata of users), DuckDuckGo doesn’t store anything. It’s a lot like other privacy and encryption programs that place privacy at the top of their priorities.”
Best of all, it’s available on any device you use, and there’s no software to install.
The privacy section of A Man’s Right to Happiness is chock-full of similar ideas…
- The single biggest privacy mistake most people make every single day, opening themselves up for hackers and prying eyes… without ever realizing it. (Page 39.)
- A surprisingly cheap mobile phone app you can use to block the NSA from listening in on your calls! (Page 35.)
- A laughably simple way to use your cellphone without your location being tracked. (Page 38.)
And it’s not only the NSA you can put in its place after reading the book. You can also keep the IRS at bay and insulate yourself from the worst of ACA (Affordable Care Act).
Did we say it’s ridiculously cheap? Yes, we did. Here’s where you can get your copy.
The Dow industrials and the S&P 500 are reaching into record territory this morning. As we write, the Dow sits at 16,675 and the S&P at 1,892.
Turn on business television lately and you hear a lot of chatter about a “flight to quality” — money fleeing momentum names in favor of stodgy blue chips.
The truth of the matter is more subtle… and more interesting. “What we’re in the middle of now,” says Jonas Elmerraji of our trading desk, “is a ‘flight to yield.’
“Money isn’t flowing into safe stocks necessarily — it’s flowing into stocks that pay dividends (since the biggest blue chips all pay fairly large yields right now, it’s easy to confuse the two). The biggest hint that we’re in a flight to yield comes from the fact that ‘less safe’ income investments like junk bonds, emerging-market debt, highly leveraged utilities and REITs are all performing very well in this environment.”
Yet another way the Federal Reserve’s zero interest rate policy is distorting markets everywhere…
“I think the market is going to run into an earnings problem soon,” chimes in Chris Mayer.
“The numbers rolling in have been weak overall,” he says — further undercutting the flight-to-quality thesis.
Consider this from a FactSet report Chris spotted: So far, 24 of the 30 companies in the Dow Jones industrials have reported their first-quarter numbers. The “blended” earnings growth rate — combining actual results from companies that have reported and estimates for companies that haven’t — is negative 3.3%.
If that figure holds once all the numbers are in, that will be three out of the last four quarters in which earnings have declined year over year.
And yet the Dow might set a record by day’s end. Go figure…
“Bad things happen to expensive stocks,” says 5 PRO editor Dan Amoss, turning the Wall Street aphorism “Good things happen to cheap stocks” on its head.
Note well: Five years into the bull market, good companies might well have expensive shares. One Dan has been following for a while is Whole Foods Market (WFM). It delivered an earnings disappointment last week and got whacked 20%.
“WFM is a well-run, shareholder-friendly company,” says Dan, illustrating his point. “Its entire organization runs on a disciplined program called ‘economic value added,’ or EVA. The stock’s valuation just got too extreme.
“If the long-term earnings story at Whole Foods is deteriorating, what does that tell us about the rest of the market?
“The broad market — especially consumer discretionary stocks — has run up to expensive valuations on hopes of perpetually high profit margins and earnings.”
Gold is creeping back toward $1,300, the bid at last check $1,298.
The Midas metal appears to be the weakest player in the entire metals sector this morning, precious or base. Silver’s up 2%, to $19.55 an ounce, copper up nearly 2%, to $3.13 a pound.
The strongest currency so far this year? The Brazilian real.
“The real is now in solid control of first place,” says EverBank’s Chuck Butler. “The recent rise has been largely due to a couple of reasons, one of which being recent rate hikes by the central bank.
“The other reason, which is probably responsible for its most recent rise, is growing speculation that the Brazilian government will be more tolerant of currency appreciation as a way to control inflation. Economic growth in Brazil really isn’t in a position to handle higher interest rates, so currency appreciation would go a long way to curb inflation.
“While the Brazilian real has appreciated over 7% so far this year, history tells us that
can change on a dime.”
Could a $300 device destroy the $170 billion global cosmetics industry?
“The makeup industry makes a whole lot of money on a whole lot of bulls***,” Grace Choi recently told a conference. “They do this by charging a huge premium on one thing that technology provides for free, and that one thing is color.”
Choi, a recent Harvard Business graduate, has unveiled a specialized 3-D printer called Mink. “The inkjet handles the pigment, and the same raw material substrates can create any type of makeup, from powders to cream to lipstick.”
Grace Choi: Could she destroy an industry?
“Simply by grabbing the color code from a photo and hooking the small device up to your computer,” says an enthusiastic article at Huffington Post, “you have an endless supply of lipsticks and eye shadows in any shade.”
“We’re going to live in a world where you can take a picture of your friend’s lipstick and print it out,” says Choi. In her live demo, she generated a pink eye shadow in 40 seconds.
We’re still keen on the 3-D printing sector, even — or maybe especially — as it’s going through an overdue corrective phase. To learn about other mind-bending things the technology makes possible… and how you can profit… check this out.
“The government should not be in the business of subsidizing homeownership,” reads the first item in a bulging mailbag, “either through lower interest rates or the mortgage interest deduction.”
We got a lot of response to Thompson Clark’s Overtime briefing on Friday reporting from Berkshire Hathaway’s annual shareholder meeting. Warren Buffett and Charlie Munger are all for government programs that allegedly make homeownership more “affordable.”
“Mr. Buffett,” says our reader, “now owns a nationwide real estate brokerage firm (Berkshire Hathaway HomeServices), so he should clearly be in favor of anything that helps sell homes. What’s good for Warren may not be good for America, but that’s not Warren’s problem, that’s America’s!
“Keep up the good work.”
“Artificially low interest rates are purely a subsidy,” writes another.
“Government subsidies, though initially stimulative in creating activity in certain perceived undercapitalized economic areas or industries, cause the eventual stratification and ultimately destruction of every industry they touch: viz. American steel, textiles, shoemaking, ocean shipping and shipbuilding, sugar, even farming, to name a few, over the past 60 years.
“They do so by stifling competition, innovation and efficiency, enlarging bureaucracies, and end up reducing the beneficiaries of their largess to a very politically connected precious few, thus reinforcing class distinction and income disparity between the privileged and the masses.
“Fannie and Freddie actually worked fairly well until the Clinton administration encouraged them to throw out the bath water and the baby by relaxing due diligence and mortgage standards. Raising the homeownership rate in the U.S. from 63% to 69% seems like a paltry return on investment in a system that has eventually caused such an enormous amount of damage.
“Giving millions of households the opportunity to ‘buy’ their own house, when in fact they cannot afford to pay the loans, means that they are just renting those homes from different landlords, viz. the banks. And banks are generally not known for their expertise in human and social relationships.”
“The only people who really benefit,” writes a third, “are the elite, the banks, the hedge funds, people like Blackstone Group, corporations, REITs, banks and investment bankers, on and on.
“The public lost their ass across the board in all phases of this catastrophic meddling instituted by the government through manipulated interest rates and money printing and laws and mandates pushing home ownership.
“It seems that the public does not understand the real cost of manufactured interest rates. They do not understand that these rates have devastated the country, created unemployment and stolen their savings and values and their future.
“The entire system is a destruction of value and undermining the middle and lower class. The hardworking average Joe does not have a chance in this system. He is being stolen from daily.
“The government in cahoots with the Fed and investment bankers and mortgage companies have raped the American public. They pushed the mortgage bubble to the extreme, engineered a bailout, destroyed the real estate market and now have gone out and purchased billions of dollars in distressed properties at pennies on the dollars with high leverage and government-induced low interest financing and again are leaving the public with the long-term bill.
“How long this house of cards can endure I do not know. But a day of reckoning will come.”
“The question is should mortgage costs be artificially capped? The answer is a very firm no.
“Interest rate suppression may boost housing sales but it keeps prices higher than they would
otherwise be — thus justifying the low rates and requiring their continuance.
“It’s a circular phenomenon, and a bureaucrat’s dream, but there’s a far simpler solution to
high prices: the free market.
“Throughout history, when people can’t afford to buy something, the seller has had to reduce
the price or go out of business. This still works perfectly well for the sale of shoes, cars, iPhones, and potatoes — why not for housing ?”
The 5: We suspect your question is rhetorical, but we’ll advance a couple of answers anyway: (1) None of those other items has the same emotional tug as homes, and (2) none of those other industries have lobbies as powerful.
Result: The median home price in the United States is $188,900 — 3.7 times the median household income of $51,017. At the peak of the housing bubble, the ratio was 5.1 times.
Even with low, low rates, we’re not sure how the Millennials still servicing their student loans are going to scrape together a down payment to take houses off the hands of boomers who want to downsize…
Cheers,
Dave Gonigam
The 5 Min. Forecast
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