“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 [...]
November 20, 2009
By John Mauldin
From ghoulies and ghosties
And long-leggedy beasties
And things that go bump in the night,
Good Lord, deliver us!
–Old Scottish Prayer
Where the Wild [...]
Most investors know that the S&P 500 hit a record high in October 2007 and a (the?) low in March of this year. But when you break it down by sector, things are a bit more complicated.
Otherwise, for those who are wondering whether there is more [...]
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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 [...]
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Jim has run Bianco Research out of Chicago since November 1990. He has been producing fixed income commentaries with a circulation of hundreds of portfolio managers and traders. Jim’s commentaries have a special emphasis on: money flow characteristics of primary dealers, mutual funds, hedge funds, futures [...]
Asian currencies continue to sell off vs the $ on the heels of the news yesterday that South Korea said they will look into hot money inflows stemming from the $ carry trade and the Bank of Indonesia said they are looking into the foreign buying of bills. This follows [...]
OK, it’s not quite the “magazine cover indicator”…
…but surely this must be telling us something about the gold market (lol)?
Hat tip LOLFed
Source:
Cats for Gold
[www.catsforgold.com]
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 [...]
Evan Newmark writes a regular column on the WSJ’s Deal Journal. His stock in trade is contrarian takes on the markets and politics. To the extent that he represents an extreme version of the Wall Street world view, he’s a bellwether.
Yesterday, he may have run the bell a bit too [...]
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. [...]
The Nov Philly Fed manufacturing survey was 16.7, 4.5 pts above expectations and up from 11.5 in Oct. It’s the highest since June ‘07 but the figure measures the direction of change, not the degree. New Orders jumped sharply to 14.8 from 6.2 but Backlogs fell 4 pts to -5.4. [...]
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 [...]
Initial Jobless Claims totaled 505k, in line with estimates and flat with a revised 505k last week. Continuing Claims, which covers the first 26 weeks of benefits, fell by 39k but were slightly above forecasts. Emergency Unemployment Compensation which takes us past 26 weeks rose by 101k which makes clear [...]
The US$ index is rising to a one week high and the US$ is also higher against emerging market currencies such as Brazil, Taiwan, and Indonesia, so the bounce is broad based. Whether it was Bernanke uttering the dollar word in terms of its impact on commodity prices and inflation [...]
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” [...]
Picture du Jour: Plunging dollar erodes non-US investors’ returns
With the US dollar falling down a precipice, spare a thought for non-US investors invested in US stocks and bonds.
The graph below shows the performance of US 10-year Treasury Notes since the beginning of March in both US dollar [...]
(Reuters) New York: Having inoculated its employees with H1N1 vaccine dosages usurped from pregnant women and children, Goldman Sachs has increased its vigilance against the contagious virus by banning employee contact with spare change.
An internal memo outlines steps staff should take to avoid becoming ill, starting with the eradication of [...]
Today’s Outside the Box comes to us from England. My European partner Niels Jensen from time to time sends me some of the best letters he reads from the hedge fund world. He is an excellent filter for me, and this week’s Outside the Box offering is no exception. Below [...]
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 [...]
Those who believe the rally in gold is sending the wrong message on inflation might take comfort from the fact that the price of the yellow metal relative to that of the 30-year Treasury bond is approaching a 30-year high.
Perhaps not coincidentally, the earlier run-up marked the peak of hysteria about [...]
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!
[...]Oct Housing Starts totaled 529k annualized, well below forecasts of 600k and down from 592k in Sept. It’s the lowest level of starts since April and the drop in Permits show that it won’t pick up so soon. Permits were 552k annualized, 28k below forecasts and down 23k from Sept. [...]
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.
The purchase component of the weekly MBA data reflected no bounce after the Nov 6th extension of the home buying tax credit. It fell 4.7% for the week and is lower for 6 straight weeks at the lowest since Nov ‘97 even as the average 30 yr mortgage rate fell [...]
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
While the US Treasury market is having another impressive day that is sending yields down to 3.32%, the lowest since Oct 8th on a closing basis, the 5 yr CDS in US government debt is rising today to 30 bps, the highest since July 29th when the 10 yr bond [...]
The Nat’l Assoc of Home Builders sentiment index for Nov was 17, 2 pts below expectations and flat with the Oct reading which was revised from 18. Present conditions remained unchanged but future expectations did rise 2 pts. Prospective Buyers Traffic remained punk at 13 for the 2nd straight month. [...]
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 $50,233.00 according to the Census Bureau.
David Rosenberg asks the question: Is Gold a bubble?
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Gold Prices Relative to the S&P 500 (ratio)>
I am not sure the above chart is determinative, but it sure is interesting . . .
[...]
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November 13, 2009
Special Update
StocksIn a Special Update after the close on October 14, I made the following assessment. “The overall technical health of the market is in good shape. The advance/decline line is making new recovery highs along with market averages, and the number of stocks [...]
I send this to NOT make any political statement whatsoever because George Bush’s face can be superimposed on Obama’s and the cartoon will still have the same impact. I send it to highlight that relying on foreigners to finance half of our debts can last without consequence until [...]
Some interesting stories to start off your week:
• China has now become the biggest risk to the world economy (Telegraph)
• Hedgies Unhinged (New York Magazine)
• Gold prices are a dead giveaway (Independent)
• The Debt Economy (James Surowiecki)
• Coming Soon: Jobs! (Slate)
I expect over the next few years, we will hear all manner of suggestion as to how to close the Federal deficit. Sin taxes already exist on alcohol, tobacco, gambling — they filled a revenue void when passed.
How long is it before the next few taxable products get taxed: First [...]
Fed Pres Fisher is also speaking on the economy today and the Federal Reserve and one comment specifically stands out. He said that a goal of the Fed is to maintain the purchasing power of the US dollar. To quantify the success of this or lack thereof, one should look [...]
Outside of talking about the economy, the improved financial conditions with still “significant” challenges remaining and the labor market, he actually talks about the US$ in his discussion about inflation. He concludes that “inflation seems likely to remain subdued for some time,” the same wording we saw in the last [...]
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 [...]
David R. Kotok co-founded Cumberland Advisors in 1973 and has been its Chief Investment Officer since inception. He holds a B.S. in Economics from The Wharton School of the University of Pennsylvania, an M.S. in Organizational Dynamics from The School of Arts and Sciences at the University of Pennsylvania, and [...]
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 [...]Words from the (investment) wise for the week that was (November 9 – 15, 2009)
“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe. Although very little commentary is [...]
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 [...]
The Euro region officially grew again in Q3 on a q/o/q basis for the first time since Q1 ‘08 as both Germany and France saw growth for a 2nd straight quarter, albeit a touch less than expected. Overall, the Euro zone grew .4% q/o/q, .1% less than expected and because [...]
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 [...]
The record $16b 30 year bond auction was light as the yield was a few bps above where the when issued was trading and the bid to cover at 2.26 was the weakest since May and below the ‘09 average of 2.43. Indirect bidders totaled 44% which is about in [...]
Pretty neat infographic, via Visual Economics:
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click for ginormous graphic
[...]David A. Rosenberg is Chief Economist & Strategist at Gluskin Sheff, with a focus on providing a top-down perspective to the Firm’s investment process. Mr. Rosenberg has earned both Bachelor of Arts and Master of Arts degrees in Economics from the University of Toronto. Prior to joining Gluskin Sheff, [...]
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 [...]
Initial Claims totaled 502k, 8k less than expected and its the lowest level since the 1st week of Jan when it was 488k (Oct ‘08 was time before that where claims were below 500k) and down from 514k last week which was revised up by 2k. Continuing Claims fell 139k [...]
The MBA said weekly purchases fell 11.7% to the lowest level since Dec ‘00 as the uncertainty over whether the home buying tax credit would be extended clearly froze activity. With it now being resumed into the spring, purchases should tick up again but we’ll get to see how much [...]
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, [...]
The back page of section C of today’s WSJ talked about the recent rise in the CDS of sovereign Japan and its recent rise. As of today, 5 year CDS for Japan is at 72 bps (costs $72k per $10mm of notional value), just a few bps off the highest [...]
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 [...]
Peter Boockvar, Barry Ritholtz, David Kotok, Prieur du Plessis, Guest Author, John Mauldin, Jim Welsh, Bill King, Marion Maneker, Chris Whalen, James Bianco, David Rosenberg, Kent Thune, Josh Rosner, Michael Panzner, Rick Ambrose
