Cash 4 Gold

This is already making its way around the internet and thus may be entirely unoriginal to many of you but it is so absolutely hilarious I had to repost it in case you hadn't seen it.

Tiburon Ride

Tyler and I rode out to Mill Valley and Tiburon this morning. Having a scone and hot cocoa at Caffe Acri before heading back.

Sent from my iPhone

Labor Share of Income

This is why your 401k may do well the next few years but you may not see a raise.

Why is the output gap such a powerful predictor of subsequent profit growth?  The most important reason is likely to be the impact on the distribution of income.  Empirically, a large amount of slack in the economy—and specifically in the labor market—tends to reduce the share of output going toward labor costs, which make up about 60% of total business costs on a consolidated basis (that is, using value-added rather than gross output as the denominator).  An illustration is given in the chart below, which plots the output gap against the year-on-year change in labor’s share of income in the nonfarm business sector.  Eventually the pendulum is likely to swing back toward a higher labor income share, which in turn will weigh on profit growth.  However, the chart suggests that this will probably not happen until the output gap has shrunk substantially and unemployment is much closer to normal levels. - Jan Hatzius GS Economist