Matt Taibii quotes Zero Hedge. Apparently 89% are underperforming the S&P and facing franchise risk. Almost all have bought Apple.
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From Politico:
“There is a kind of ideological amnesia here on the part of Paul Ryan,” Gregory said on MSNBC. “He represents this new generation, a new strain of the Republican Party which at its core is about fiscal rectitude and responsibility, and yet he did not stand up to the Bush administration on two wars, on major areas of entitlements, as Tom [Brokaw] suggested, on the prescription drug benefit.” Great summary article on the oil complex. Expect oil price volatility to be significant for the foreseeable future. Of course, I am in the China hard landing camp. Thanks for the tip, Brent.
On Charlie Rose.He is a voting member of the FOMC.
Offers a remarkably candid critique of the Fed's handling of the financial crisis of 2008. Many of his opinions are similar to those expressed on these pages. Including: Too much expectation that the Fed can be the Saviour in any situation. Inflation becomes unanchored when it rises above three percent. It is important to maintain this anchor. The banking crisis was dealt with incorrectly (Banks were coddled).This has dangerous negative consequences for the future. Fed policy has inappropriately crossed the line from Monetary to Fiscal policy. The Fed has reached the limits of what it can do for employment. Pettis on why it is an important part of the negative self reinforcing cycle. He takes 'The Economist' to task on their China investment/debt analysis.
"The most worrying, but expected, fact was the amount of capital fleeing the afflicted countries. I cited an article in Spiegel that claims that in the past year an amount equal to nearly 30% of Spain’s GDP had left the country. Flight capital is both a major result of declining credibility and a major cause of further declining credibility, and because it is so intensively reinforcing it is a major warning signal. This matters for China for at least two reasons. First, a worsening Europe will make it harder than ever for China to rebalance growth away from investment, and second, China itself is experiencing capital flight." That's what I said. Exports to Europe and China are way down.
"By region, exports to the European Union plunged 25.1 per cent year-on-year amid the debt crisis. Imports from the EU rose 10.6 per cent, leaving Japan with a deficit of 95.2 billion yen with the embattled economic zone. Exports to China fell 11.9 per cent against a 3.3 per cent rise in imports, making Japan's deficit with its biggest trading partner nearly double that in June at 250.1 billion yen." Looks like Hugh Hendry's CDS are moving steadily into the money. The dominoes are Europe, China, Japan - in that order. To me, it looks like the narrative I have discussed continues to play out. Look for short term appreciation of the yen as Japanese corporates repatriate cash. Meanwhile, the market rallies and oil breaks $100/bbl..... I have said for the most part what I have wanted to say on these pages. I still think the Eurozone is doomed to a disorderly disruption. I still think the US will mark a recession as having started in May or June of this year. I still think the stock market is overvalued. I still think that China will come in for a hard landing and that Japan will follow with a bond crisis. I still think we are primed to see a massive deflationary event next year. I still think structural unemployment is a Trojan horse issue that will lead to substantial political upheaval in the developed world over the course of the next decade. And I think we are in for a decade of trade wars.
But I realize the market for ahead of the curve analysis is limited. Potential employers either think you are crazy or too smart to be able to do anything with you. (Once you are proven right, it is usually both) So I am refocusing my energies on my academic career. It recently revised a resubmitted a technical paper on how oil price volatility impacts industrial production indices in the US. (If published this will be my fifth publication) I have a full teaching load for the next school year and one more paper to go to finish my doctorate. As a result, I will be spending less time on these pages. Happy Birthday to the ground! Game Theory has been rocked. Thanks for the tip Brent.
From FT.
"Import figures may appear confusing to investors. For example, China’s imports of copper and copper products rose 19.5% y/y and 5.9% m/m in July, to 366.5kt; this implies that refined copper imports should have been around 264kt in July, up 36% y/y. These are very strong readings. However, investors should be wary of linking import data to China’s real demand, as the vast majority of imports are based on one-year term contracts rather than spot buying. Our understanding is that many imports are not destined for end-consumers. Instead, larger imports lead to larger stockpiles, though this could be absorbed by the market when strong demand returns." Does an analysis and concludes:
"Grossly Distorted Statistics Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers. Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate." There are lies,great lies and then there are statistics. |
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