There is a small cadre of Economists — original thinkers, contrarians, out of the box theorists — whom I respect a great deal. It is a modest list ranging from Richard Thaler to David Rosenberg to Robert Shiller, with lots of smart econ wonks in between.
This morning, [...]
Sometime later this week, you will come to the realization that you are either travelling to or hosting a *Thanksgiving dinner. As these tend to be large family affairs, there may be some tensions, arguments and other social problems.
My advice to you is to start drinking heavily.
I suggest lubricating [...]
“Our conclusion is that if small firms aren’t captured well in the advance GDP data, the economy may be growing less quickly than suggested by the recent official data.”
-Jan Hatzius, Goldman Sachs economist
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This certainly comes as no surprise to us:
“The U.S. government is having a tough time guesstimating how many [...]
Whenever I travel, I like to do a full economic assessment of the locale, a post-trip post-mortem. Oftentimes, it is not worth writing up, but Berlin was fascinating enough to jot some thoughts down.
Quite a few things were memorable from this trip. (I’ll post some photos later below)
Berlin is a [...]
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Some good learnin’ here:
This web site stems from a personal interest in critical thinking and is a collection of links to articles and sites pertaining to numeracy and critical thinking. Links should be good for at least the date posted. After the posting date, link reliability [...]
The WSJ’s Greg Zuckerman has a new book out titled, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.
Here is an excerpt from his recent WSJ column on lessons on the subject:
1 Don’t Rely on [...]The Quote of the Day comes to us via Bloomberg’s Alice Schroeder:
“We’re in the midst of a deflationary trend that is temporarily being masked by inventory restocking and free lunches like Cash for Clunkers. Consumers are done with borrowing. They’ll keep refueling the deflation by going through their attics and [...]
There are so many thing here that require an ass whupping I just don’t know where to begin:
• Why is there even such a thing as a Microsoft Store?
• Is this an example of their innovation?
• Why is the staff being forced to clap rhythmically — did they [...]
1. Most Blues begin, “Woke up this morning.”
2. “I got a good woman” is a bad way to begin the Blues, ‘less you stick something nasty in the next line, like “I got a good woman, with the meanest face in town.”
3. The Blues is simple. After you get the [...]
Compared to historical norms, Nasdaq market capitalization is significantly above median levels relative to GDP.
The Nasdaq’s median percentage of GDP has averaged 61.8%; its now over 100%. As the chart below shows, the big aberrational periods have been due Fed bubble inflation: first in 1998-2000; then more recently in 2006-07. [...]
Phil Gramm, the former Republican Senator from Texas who co-wrote the act that undid Glass-Steagall, has our DQotD:
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“I’ve never seen any evidence to substantiate any claim that this current financial crisis had anything to do with Gramm-Leach-Bliley. In fact, you couldn’t have had the assisted takeovers you had. More institutions [...]
Why aren’t we listening more to this font of common sense and logic?
“A proposal to give banking regulators authority to block accounting standards is “a terrible idea,” Paul A. Volcker, a former chairman of the Federal Reserve Board, said Monday.
Mr. Volcker has been an outspoken critic of “mark to market” [...]
Interesting stuff:
• China’s Blunt Talk for Obama (WSJ)
• China vs United States by the Numbers (NYT)
• Riding on China’s coat-tails (Business Spectator)
• Hong Kong to U.S: Please Don’t Blow our Bubbles (Real Time Economics)
• The Tokyo Hot List: 20 people to watch (Tokyo)
here’s another cool interactive map, via the Detroit News:
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click for ginormous graphic
This is one of the things I will be discussing at the Berlin Conference:
Comparing the 1982 Bull Market with the 2009 Rally>
Rally Comparison 1982 2009 P/E Multiple 8X 26X Dividend Yields 6% below 2% Book Value Discount to Book 2X Premium Monetary Policy Reducing money growth and inflation rates Creating money growth and inflation rates Fiscal Policy Aimed [...]President Obama visits China at a time when the world’s two most powerful economies face very different fortunes.
A humbled United States is slowly recovering after sparking the global financial crisis. China, on the other hand, has handled the downturn with ease and appears to be leading the world out of [...]
I’m off to give my presentation, but before I go, here is a quick chart on Single Family Housing Starts, which disappointed:
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New Privately Owned Housing Units Started (NSA)click for bigger chart
Source: Census Bureau
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Thanks, RM!
[...]
While everyone remains focused on Gold, I suggest checking out other Precious metals.
Over the past year, Palladium, Platinum and Silver have been kicking Gold’s shiny yellow ass!
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Chart courtesy of Ron Griess of The Chart Store.
I meant to get to this yesterday, but travel plans got in the way:
Those regular Sarbox bashers forget that it is all about keeping management honest when it comes to accounting.
The penalties for restated earnings is that management forfeits bonuses and stock options during the period in question.
That is precisely [...]
Unfriend was the New Oxford American Dictionary Word of the Year for 2009.
Check out the list of runners up below:
Technology
hashtag – a # [hash] sign added to a word or phrase that enables Twitter users to search for tweets (postings on the Twitter site) that contain [...]
I post this to NOT make any political statement whatsoever — George Bush’s face can be superimposed on Obama’s and the cartoon will still have the same impact.
Rather, it highlights that relying on foreigners to finance half of our debts can last without consequence until it doesn’t. It also highlights [...]
At the Kellogg Distinguished Lecture Series, Kellogg School of Management, Northwestern University, Evanston, Illinois
November 16, 2009
I titled my talk “Policy Challenges for the Federal Reserve.” I did that before I knew what I was going to discuss, because just [...]
Some interesting reads:
• Recovery Can Only Go So Far Without Jobs (Market Talk)
• Paul Farrell: Wall Street’s 2012 meltdown sweepstakes (Marketwatch)
• Lessons from the crisis: Re-educate the geeks (Reuters) British quant seeks to reform financial risk-takers
Nice infoporn via Mint, showing the breakdown by income level. To put this into context, as of 2007, the median annual household income rose 1.3% to $50,233.00 according to the Census Bureau.
David Rosenberg asks the question: Is Gold a bubble?
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Gold Prices Relative to the S&P 500 (ratio)>
I am not sure the above chart is determinative, but it sure is interesting . . .
[...]Some interesting stories to start off your week:
• China has now become the biggest risk to the world economy (Telegraph)
• Hedgies Unhinged (New York Magazine)
• Gold prices are a dead giveaway (Independent)
• The Debt Economy (James Surowiecki)
• Coming Soon: Jobs! (Slate)
I expect over the next few years, we will hear all manner of suggestion as to how to close the Federal deficit. Sin taxes already exist on alcohol, tobacco, gambling — they filled a revenue void when passed.
How long is it before the next few taxable products get taxed: First [...]
Over at Clusterstock, John Carney takes a look at the CRE mess, and assigns lots of blame to lots of people, government agencies, central banks and investors.
He did a yeoman’s job on this overview. I cannot say I am on board with everything he trashes, but he gets a [...]
A recent study shows people are twice as likely to seek information that confirms their beliefs than they are to consider evidence that contradicts thems. WSJ Intelligent Investor columnist Jason Zweig tells Kelsey Hubbard how this “confirmation bias” can influence their financial decisions.
[...]I found this announcement amusing:
Goldman Sachs CEO Lloyd Blankfein may have had his tongue in his cheek when he said his bankers were doing “God’s work,” but the company’s critics aren’t laughing.
In fact, a couple hundred of them — led by Service Unions International Union president Andy Stern — plan [...]
All too often, pundits, financial writers and commentators look at markers, they try to create an “If Then” causation narrative.
This typically creates a false impression that X caused Y. It is difficult to disprove, because we lack the counter-factual, i.e., where the X event did not occur under the exact [...]
U.S. Week Ahead: Retail Results, Economy In Focus 11/13/2009
Retailers including Home Depot and Target will report results and key economic data will include retail sales and industrial output. Meanwhile, nine speakers from the Federal Reserve will offer their views on the economy. Stacey Delo reports.
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Asia’s Week Ahead: Obama [...]
There is a substantial take-down of pedantic bore Ayn Rand in GQ. They tease it thusly:
2009’s most influential author is a mirthless Russian-American who loves money, hates God, and swings a gigantic dick. She died in 1982, but her spawn soldier on. And the Great Recession is all their [...]
Cool graphic, from Information is Beautiful:
chart courtesy of Information is Beautiful
[...]Interesting New York Times article about the overall markets’ valuation:
“Market valuations are another consideration. By almost every measure, stocks are far cheaper at Dow 10,000 today than at Dow 10,000 in March 1999.
Back then, the price-to-earnings ratio for domestic stocks stood at a very high 41.4. That’s based on [...]
Richard Ambrose is the author of some amusing financial humor. He is the original author of The Lloyds Prayer that was widely circulated without proper attribution last week (my apologies, Richard!)
His most recent work takes a poke at one of my favorite CNBC curmudgeons, Mark Haines:
How To Be An [...]Sapolsky’s outstanding Stanford lecture on “The Uniqueness of Humans”
Stanford primatologist and anthropologist Robert Sapolsky scores big with this grad lecture on “The Uniqueness of Humans,” a humbling, inspiring and sweet 30 minutes on what it is about humans that makes us unique from our animal cousins, and how many of [...]
One of the weirder things about writing for an outside publication is that the Headlines to your articles are typically written by someone else.
Whether its a bored, detached editor, or just the opposite — someone trolling for salacious spin to capture page views — very often the title slants the [...]
November 13, 2009
By John Mauldin
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No one goes into Wal-Mart and asks to pay extra sales tax. Thus sales taxes are reasonable [...]
Floyd Norris channels Dickens to discuss the Worst of Times (employment wise):
“The overall unemployment rate, which reached 10.2% on a seasonally adjusted basis last month, remains below the post-World War II peak of 10.8 percent, reached in late 1982. But the proportion of workers who have [...]
This morning’s Barron’s references Randy Zisler, who runs a RE investment fund out of his office Zisler Capital Associates in Marina del Rey, California.
Zisler has been a real estate investor for some time, and correctly called the top in RE in 2006. His firm recently put out a report entitled [...]
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This is truly a Friday Night Jazz: Via the NYT, we learn that Wolfgang’s Vault has a substantial collection of pristine audio recording from the Newport Jazz Festival.
Some of the recordings will blow you away — I suggest the Count Basie concert, but [...]
Some reading for a Friday afternoon:
• Is Gold a six thousand year-old bubble? (FT)
• Market Ignorance is Bliss (The Street.com)
• The Real Danger of ‘One Big Regulator’ (WSJ) What if those in control don’t believe in oversight?
• The ‘Real’ Unemployment Rate (Market Talk)
Terrific Article in the FT on Fed Hawks & Doves:
STRONG DOVES
Janet Yellen, president, San Francisco Federal Reserve
Leading dove on the committee. A heavyweight former senior economic adviser in the Clinton White House who recently joined the Group of 30 leading global policymakers. Expects the recovery will [...]
Getting trader’s edge from the NYSE, with Art Cashin, UBS Financial Services.
Fri. Nov. 13 2009 | 8:58 AM ET
Here is yet another rally comparo — this one looking at all major market rallies of the last 109 years.
The Dow has begun a major rally 27 times over the past 109 years which equates to an average of one rally every four years — most major rallies (73%) resulted [...]
Long standing readers of TBP know I like to try to slip in a lesson or two. The humor and money making market commentary is used as a device to keep you coming back and learning, despite yourself.
Today, I require no pretense for the edumacation. Instead, I will demonstrate one [...]
While researching Bailout Nation, I learned one of the causes of the disconnect between financial firms and the subsequent meltdown: Corporate governance.
Or the lack there of.
Boards of Directors have historically been a collection of business associates, cronies and golfing buddies, with interlocking memberships between companies.
Board members are nominated by [...]
So much for the Housing Rebound:
“Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit.
The Mortgage Bankers Association’s index of applications to buy a house dropped 12 [...]
“We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic. It’s almost certainly going to be a loss.”
-Neil Barofsky, TARP Watchdog
Anyone surprised at all about this?
“Neil Barofsky, the federal watchdog for the $700 billion financial industry bailout, said the program will “almost certainly” [...]
Neil Barofsky, the U.S. Troubled Asset Relief Program’s special inspector-general, talks with Bloomberg’s Matt Winkler about the probability that TARP will “almost certainly” result in a loss for U.S. taxpayers.
click for video
00:00 Cook introduces Neil Barofsky.
00:39 Outlook for loss on TARP repayments
04:09 Paulson [...]
Pretty neat infographic, via Visual Economics:
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click for ginormous graphic
[...]Calculated Risk has a fascinating and detailed look at an UNSOLICITED Principal Reduction Loan Modification (pdf) offer from BofA.
A few background details:
The homeowner bought the house in May 2005 for $420,000. The homeowner refinanced in March 2006. This included a negatively amortizing adjustable rate mortgage (NegAM ARM) first with [...]via Bill King, we get this modest variation of The Lord’s Prayer:
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THE LLOYD’s PrayerOur Chairman,
Who Art At Goldman,
Blankfein Be Thy Name.
The Rally’s Come. God’s Work Be Done
On Earth As There’s No Fear Of Correction.
Give Us This Day Our Daily Gains,
And Bankrupt Our Competitors
As [...]
Yesterday, we discussed the NYU paper on how Market Timing beat Buy & Hold over the past few decades.
The WSJ reviews this idea today; They make some subtle distinctions about the idea of timing:
“A study from New York University’s Stern School of Business suggests market-timing can work [...]
Here’s a interesting take: marx Faber says that Gold has permanently eclipsed the $1,000 level:
“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & [...]
Wow, I did not see that one coming!
Anything else worth discussing?
What say ye?
[...]Now that I am back at my desk, here are some quick reads:
• Chanos Condemns ‘Monstrous Idea’ That Banks Love (Bloomberg)
• Under Attack, Fed Chief Studies Politics (NYT)
• Rosenberg: U.S. unemployment rate headed for 12.0-13.0% (Credit WriteDowns)
• Attention Lloyd Blankfein: The Public Purpose of Banking (Marshall Auerback, [...]
WSJ Developments is live blogging the Toll Brothers conference call.
Here are a few highlights:
• For the year ending Oct. 31, contracts fell 16%, deliveries declined 37% .
• Company has $1.81 billion of cash
• Firm is gaining market share
• 84% of its land is owned (the rest is optioned)
• There [...]
Thank you, Tom [Granger], for that kind introduction.
Coming in from [...]
Here is an interesting item: MS is filling the void left by Lehman’s annual Uncommon Values best ideas list:
Morgan Stanley U.S. Equity Research launched its inaugural North America Best Ideas List on October 1. The list represents the group’s nine leading investment ideas. Additions and removals of stocks are [...]
The synchronized rally seems to be all about the American Peso as it slides to a 15-month low.
Bloomberg observes that shares of U.S. companies who get a majority of their sales overseas are out performing their domestic focused brethren.
The chart below shows shares of S&P500 companies generating more than half [...]
Release Date: November 10, 2009
For immediate releaseThe Federal Reserve Board on Tuesday announced the availability of a collection of brief articles that examine ways to improve the availability of housing options for low-income renters.
The publication, commissioned in conjunction with the Community Affairs staff at [...]
At the Institute of International Bankers Conference on Cross-Border Insolvency Issues, New York, New York
November 10, 2009
Proposals for the creation of a special resolution process for large financial firms have rightly assumed prominence in the wake of the financial crisis. [...]
So.
Here I am.
Winging my way back from a long business trip – I left 10 days ago, and with any luck, will finally stumble home some time in the wee hours Wednesday.
The experience was a whirlwind tour of the best and worst airports, airlines and aircraft the friendly skys have [...]
I am sitting in the Upper Class Lounge of Virgin in San Francisco International airport, waiting to be called for my flight (more on my airline experience later).
What could be more appropriate while I wait than to take a look at how California, trashed though it is financially, is deploying [...]
How very British: Hector Sants, the head of Britain’s financial industry regulatory body, chides the industry for refusing to step up to the plate and mea culpa:
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“There remains, I believe, an absence of the acceptance of collective responsibility for what has happened. I remained unconvinced that all senior management have [...]
One last pair of charts, showing the impact of recessions on tax data, via the Rockefeller Institute of Government. These two shows the impact of recessions on general tax receipts, and on retail sales.
In both charts, the current contraction is the worst on record for the time periods (1973, [...]
University of Utah’s Learn Genetics site has this terrific animation showing relative size in the micro world:
click for interactive chart:
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Previously:
Science: It Works, Bitches (November 4th, 2009)
http://www.ritholtz.com/blog/2009/11/science-it-works-bitches/
Floyd Norris points us to one of the foibles of seasonal adjustments: How SA can make things look better or worse at various times of the year. He is referring to the Non-Farm Payrolls data from Friday. Comparing non seasonal apples to apples, the data was somewhat better than [...]
The Wall Street Journal polled its readers as to where the Dow Jones Industrial Average would be at the start of 2010.
I wonder if the polling results were somewhat skewed by yesterday’s market action? Human Psychology suggests that most people are not comfortable bucking the crowd, and might be [...]
Via the Rockefeller Institute of Government, an independent research firm focusing on state and local governments, we get some nasty data and fugly charts.
The overview paints a picture of state and local governments in economic distress:
• State tax collections for the second quarter of 2009 showed a record drop [...]
Governor Daniel K. Tarullo
At the Money Marketeers of New York University, New York, New York
November 9, 2009
Systemic crises typically reveal failures across the financial system. The crisis that unfolded over the past two years is no exception, [...]
Regular readers might notice that Charlie Rose video links have become less common.
The reason is that the site disabled embedding. But its more than that — the entire CRS site has become far less functional — Firefox wont play video, the calendar seems to glitch out on me when I [...]
“If an institution is too big to fail, it is too big to exist. We should break them up so they are no longer in a position to bring down the entire economy.”
-Senator Bernie Sanders, (I, Vt)
“It’s the natural action of capital to grow and exceed. Now we’re going to [...]
These are the papers presented at the conference discussed earlier:
Chair: Kenneth Ryder (NAPA)
“Measuring the Impact of Trade in Services: Prospects and Challenges,” J. Bradford Jensen (Georgetown University and Peterson Institute for International Economics)
“Measuring Success in the Global Economy: International Trade, Industrial Upgrading, [...]
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers. We have no idea how to measure the occupations being offshored or what is being inshored.”
-Susan Houseman, senior economist at the W.E. [...]
Wow, that’s an impressive number.
Our intermediate target for the yellow metal is $1350
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Chart via CBOT
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Previously:
Gold Passes $1,000 (September 8th, 2009)
http://www.ritholtz.com/blog/2009/09/gold-passes-1000/
Gold Inflation Adjusted (October 7th, 2009)
http://www.ritholtz.com/blog/2009/10/gold-inflation-adjusted/
The Recent History of Gold, 1954-2009 (February 10th, 2009)
http://www.ritholtz.com/blog/2009/02/the-recent-history-of-gold-1954-2009/
Floyd Norris puts the auto industry into context of the larger US economy, in a few simple charts:
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click for larger charts
graphic courtesy of NYT
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Source:
Car Buyers Come Back, but Not in Droves
FLOYD NORRIS
NYT, November 6, 2009
http://www.nytimes.com/2009/11/07/business/economy/07charts.html
“I’m sorry. These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.”
-John S. Reed, retired Chairman and CEO of Citibank, on why the Congress was wrong to repeal the Depression-era Glass- Steagall Act in 1999
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A fascinating mea culpa from former Citi [...]
This morning, I reread a fabulous piece on Journalism & Newspapers by Clay Shirky. A reader had sent this to me sometime last year, and it is one of those essays that contains a sprinkling of magic dust.
Shirky always seems to find the heart of an issue and contextualize [...]
