About that New York Times Arkansas Senate poll

A new poll by the New York Times has Sen. Mark Pryor 10 points ahead of Rep. Tom Cotton, 46-36. Even with that result, the RCP average (which includes three additional polls taken since February) has Pryor ahead by only 2.2 points.

Thus, the Times poll is, by definition, an outlier. But does it nonetheless reflect the current state of the race?

I don’t think so. As Bill Kristol points out, the sample used by the New York Times contained an almost equal number of Romney and Obama voters. Yet Romney carried Arkansas by 24 points.

Has public opinion in Arkansas shifted this strongly in Obama’s favor since November 2012? There is no reason to think so. Obama’s approval rating among Arkansans remains quite low. FiveThirtyEightPolitics recently estimated it at 30 to 33 percent.

If Romney and Obama would run neck-and-neck in Arkansas today, Tom Cotton is in big trouble. If Arkansans would vote roughly as they did in 2012, Tom faces a tough but winnable race.

The New York Times’ Arkansas survey also contains a high percentage of respondents — 32 percent — who say they didn’t vote in the 2012 presidential election. I wouldn’t assume that non-voters in 2012 will show up for a mid-term election. Thus, a survey one-third of whose respondents say they didn’t vote in the last presidential election strikes me as a poor indicator of how a 2014 Senate race will go.

Don’t Look Now But . . .

I follow the stock market fairly closely, always have Barron’s on the top of my weekend reading pile, and, as a conservative, incline toward Benjamin Graham-style value investing.  But I never give stock market advice, even when friends ask.  That’s a good way to risk a friendship if they followed your advice and things went sideways.  If I wanted to “invest other people’s money until there’s nothing left” (as Woody Allen put it in one of his long-ago roles), I’d have become a stockbroker.  Hence, I almost never discuss the market here on Power Line.  If nothing else, I figure the SEC has better things to do than determine whether this site should be a registered adviser or something.

So I’ll break this rule slightly right now to say: I hate the current market.  I always hate the stock market when it reaches close to a record high, even though of course you have to reach a record high to break through to new highs, which is the long-term story of the stock market.  I love the kind of market you have in March 2009, when everyone is panicking and you can pick up stocks for a song.  Not for the faint of heart, to be sure.  And especially when you have Obama still finding out how to get to the men’s room in the West Wing.

There are lots of warning flags out right now that the market is overvalued.  The good folks at SeekingAlpha.com (annoying registration required), borrowing from the very fine Alhambra Investment Partners, point out some ominous trends in corporate revenues.  In short, revenue growth among the S & P 500 companies has slowed precipitously over the last year.  The first chart shows that McDonald’s sales growth has nearly flatlined (I don’t just love to eat at McDonald’s–I love their stock, too; it has moved very nicely over the last decade):

McDonalds copy

This same shift is seen across the S & P 500:

Alhambra 1 copyThis erosion is actually worse than the run-up to the Great Recession in 2007-2008:

Alhambra 2 copy

What’s going on here?  SeekingAlpha analyst Jeffrey Snider says:

McDonald’s latest results confirm that something is very much amiss on the consumer side. Total global revenue grew only 1% Y/Y, including new store launches and acquisitions. However, as has been the pattern since 2012, U.S. comparable store sales lagged markedly. The rate of contraction in Q1 was actually the worst in more than a decade.

Even if you believe that the cold and snow of January and February played a role, it could not have explained that comparison. There is simply no way that anything other than consumer exhaustion can create the chart above.

This doesn’t necessarily mean the economy is headed toward another recession (auto sales are going strong for now, as are some capital equipment categories), but it likely means the recent bull market is unlikely to continue and economic growth will continue to be pathetic.  Perhaps something worse could happen.  Odds for a continued QE policy from the Fed is likely.

P.S.  I’m keeping my McDonald’s stock.  So should you.  I’m still lovin’ it. I expect they will keep hiking their dividend even if revenue growth remains sluggish.  But S & P put options are starting to look attractive, too.

The Dems Are In Trouble In Oregon

In Oregon, little-known Senator Jeff Merkley is running for re-election. His opponent is Dr. Monica Wehby, a pediatric neurosurgeon. I don’t know much about Dr. Wehby, but she is playing for keeps. Check out this ad; it is pure dynamite:

If Oregon wasn’t in play before, it is now.

Media Alert

I will be on Hugh Hewitt’s radio show this afternoon at 6:20 EST, 5:20 CST, talking about the epic hypocrisy of Tom Steyer, which Hugh commented on here. If you are not sure where to find Hugh on your radio dial, you can listen online here.

The Genius of John Kerry

The short video below captures our alleged secretary of state John Kerry in full.  He speaks about the “bipolar” world of the Cold War, but it really isn’t a very good idea for a person of his limited mental capacities to use the word “bipolar.”  More to the point: it takes a lot of moxie to talk about how foreign relations during the Cold War were “easier” or “simpler” than today.  Back in the day, it was left-liberals like Kerry who complained endlessly that the Cold War was “complicated,” and disdained Ronald Reagan for his supposed simplicity in pointing out the simple fact that we were dealing with an evil empire that needed to be put in the course of ultimate extinction.  You need to see this, not to believe it:

Kerry said What copy

JOHN adds: To be fair to Kerry, he has been relatively consistent. During the Cold War, he took the position that things were clear and stark–the United States and its armed forces were evil.

Earth Day After Action Report

The indefatigable Roy Spencer offers a roundup of Earth Day cartoons yesterday on his site DrRoySpencer.com, reminding us along the way that folks who drove their cars to tree-planting ceremonies undoubtedly released more CO2 than the tree will ever absorb, before inevitably dying someday and releasing most of that CO2 into the atmosphere again anyway.  This one is especially good:

Earth Day Cartoon 1 copyBut this is not satire: in the “Life-Imitates-Art” Department, behold the mess at Fort Mason park in San Francisco after last year’s Earth Day festivities:

Earth Day Mess copyMeanwhile, enjoy some other helpings from Dr. Spencer’s stash:

Earth Day Heretics copy

Earth Day Twitter copy

Because, you know, the Internet and wireless communications don’t use any coal at all.

How Bad Is the Economy? This Bad

I have often said that in order to understand how bad our economy truly is, you have to have children at an age where they and their friends are getting out of school and looking for jobs. After five years of ostensible recovery, the job situation is brutal for young people. This was confirmed once again by a study of recent Minnesota graduates that was covered in yesterday’s Minneapolis Star Tribune. The data are even worse than I would have expected:

The post-college job market is still very tough.

Three of five Minnesotans with a bachelor’s degree don’t have a full-time job in their second year after graduation. Neither do two out of three Minnesotans with a new associate’s degree.

Think about that: sixty percent of young Minnesotans who graduated from college in 2011 still didn’t have a full-time job in their second year post-graduation. One shudders to think what the numbers would be for high school graduates.

Some degrees, of course, are more conducive to employment than others. But here too, the numbers are bleak. Even among graduates with a four-year accounting degree, nearly 30% don’t have a full-time job after two years in the market.

The dearth of employment opportunities extends to those with what would seem to be highly salable technical training:

Among two-year degrees, precision metal working gave graduates the best chance of having a full-time job 12 months after graduation – about 45 percent.

Here is the chart; click to enlarge:


The comments on the Strib article are interesting. Even in deep blue Minnesota, some people connect the dots. For example:

It’s quite clear we need to dramatically increase the number of H-1B visas as well as bring in 30 million new immigrant workers (of various skill levels) over the next decade. Not surprisingly, that is how the politicians are interpreting the data.

STEVE adds: This chart, based on Federal Reserve data, tells the same story.

Reagan v Obama copy