Market's Got Legs; Crude as World's Future Currency? [View article]
You point to all those times in history where various oversold indicators were screaming a buy signal. Those conditions exist today.
One thing we have not been used to in that "history" you speak of, the collapse of the financial system in Europe. So when you introduce something that has not been seen before you will get some surprise results. Don't expect this market to behave the way it has in the past. We are on new and shaky ground.
Citigroup: A Simple Analysis of a Terribly Complex Company [View article]
Interesting analysis. I would take issue with your approach. I think we entered a 'new world' sometime in 2008. Everything we thought about re bank earnings and ratios has gone out the window.
Looking at how the market valued C eight or ten years ago has little value as a predictor of the future for me.
Do the Facts Back Up Bernanke's QE II Claims? [View article]
Advantage Bernanke you say? Have you looked at the long bond of late? It has been in a free fall eve since Ben made his move on 11/3. You think that is just a coincidence i assume. You're wrong to think that.
My bet for you. QE2 will go down as one of the worst policy blunders in history. It will create more bubbles (I hope you see that, the evidence is as clear as a bell). The bubbles will burst (they always do). When they do burst QE and your boy Ben will be blamed. Rightfully so. The result will be that the Fed will be marginalized.
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
Pundit, Have you watched the gold price since the Fed decision to restart QE? Nice up move. The conclusion is that gold is not trading with inflation expectations. It is trading as an alternative to bad money policies. People do not want to hold money and they do not want to hold the pieces of paper (stocks/bonds) that you can by with money. So they buy gold instead.
You are living in the past. This is not the market you grew up in. The rules have changed. Gold has a role today because people do not trust the system, not that they believe inflation will be higher. Understand that you might have a different view of the world. The correct view I might add.
The Employment News Is Better Than It Looks [View article]
Scott, you say:
"The unemployment rate is still hovering at relatively high levels"
Hello. When in our history have we had 9.7% unemployed? A few months in the 80's is it in the post war period. Now it will be close to 10% for at least another year. And you call this "relatively" high. I think you make these observation because you have no clue how painful this is to a big portion of our population. You need to find you social compass.
How The Federal Reserve Is Monetizing Debt [View article]
Nice article. Excellent graphics. A few comments:
The deal to buy Agency MBS was not a slight of hand as you suggest. The Asian Central Banks put a gun to Bernanke last year and said, "Buy this stuff back at par or we will never buy a dime of T notes again."
So Paulson/Bernanke said, "Okay, but you have to agree that for every dollar of Agency junk we take back you have to take an equal (or greater) amount of Treasury paper.
So that was the deal.
The purchases of Agency Paper are being funded by the excess reserves that the Fed has created. This is why the Fed started paying interest on reserves. So that it would attract sufficient money to allow it to buy up all of the junk. (This is the QE process)
On the dollar. You make a pretty good case for a flow of funds that argues for a lower dollar. That may happen, but it is not a sure thing. The dollar has had an uphill battle on the fundamentals for decades. We have always run a current account deficit that had to be financed by 'willing' foreign central banks. Because of the weak economy our imports are down and the traded deficit has actually improved a bit.
There are two factors for the dollar. Flow of funds and sentiment. The flow of funds is an important element in the equation but in the short term is overshadowed by sentiment which is not negative today. This is a reflection of the Store of Wealth factor for any reserve currency. Which currency is the best Store of Wealth? That is a hard question to answer. They all stink. The Euro has a huge set of problems. Possibly more significant than we face. The Yen looks like a standout in that but who cares? It is a very expensive currency today and on an economic Store of Wealth Basis is probably worth 110 vs 95.
So the % looks stable because there is no legit alternative. Keep in mind that to be a reserve currency you must have lots of debt for those reserves to be invested in. So while the third tier currencies (A$,C$,Sterling and CHF) may look attractive it is unlikely that they will get much in the way of reserve diversification.
We are going to get a run on the dollar at some point as a result of all of what has been done. But I would not bet on it happening anytime soon. Things have to get much worse in the USA for that to happen. It also has to evolve that some of the alternatives to the dollar truly start to look better.
The Pundit says: Bottom line: the past offers little if any guidance
He is right. The past does not tell us the future. What bothers me is that the Pundit uses the exact opposite thinking 4 times a week.
He is always showing us a graph of the past and projecting it on to the future. That does not work. If you rely on the past to make predictions of the future you will more than likely be surprised and disappointed.
The Good News Behind the June Trade Deficit [View article]
Pundit, All those imports you love just take away from US GDP. That second Q GDP of 2.4% will be cut to 1% in part because of all these imports you like. Face it Pundit, the economy stinks. We will have negative growth in the second half. And you are crowing what a success it is.
Federal Debt Is Not Even Close to 100% of GDP [View article]
Wow! I have been writing about SS for sometime and can tell you there are many out there who would take you to task if they read this piece. I hope they find it and send you their wrath.
You do not add in the intergovernmental account when considering what is the debt position? That is lunacy.
The government account series (GA) is legally parri passu with public debt. It is just as good as Treasury bonds. We pay a ton of interest on this debt. More than we pay for the public debt. Last year it came to~$160 billion! And you think it does not exist?
You are all alone in thinking this way. Check with your pals at Treasury or the Fed. They would put the GA debt right next to the public debt. Ask the folks at Social Security. They will prove that you are wrong.
In less than one year the US will pass the 100% debt to GDP level. The pundit is the only one who thinks this is not true. No wonder he always bullish. He magically makes $4.5 Trillion of debt go away.
Why Fear Isn't Likely to Kill the Economy [View article]
"But isn't that the case with the early stages of any bull market?"
Question: What planet do you live on? Equities have rallied 80% in the past year. We are just starting a bull market? It looks more likely that we are in the process of ending one, not starting one.
Goldman Sachs, The SEC and the Question of Timing [View article]
I have been watching markets for too long.I am going to disagree with you. If you wan to put out a notice and hope that it does not impact market you do it after the close on Friday.
Alternatively, if you wanted to have a very big and visible splash you would release the information on Friday morning. That way the market could react during the day and everyone has the weekend to worry about it. Maximum value with and AM roll out. And that is what they did.
Market: Spooked Today, But Panic Attack Is Likely Temporary [View article]
You checked the market indicators and did not find anything wrong? We just had a 60% move in the S&P. Interest rates are at historical lows because of Fed intervention. Several big banks are basket cases waiting to fall into a hole. We can't sell a house or a car without a subsidy. The dollar is just a few days from a rout. We are looking at ten years of $ trillion dollar deficits. Commodities are rising as a result of a weak dollar.
Before shorting WTI crude one should look what America is paying for crude. Consider the cash price for crude at the Gulf of Mexico. Last night it closed at $119.
Don't short futures at 100 when the cash cost is 120, unless you want to lose some money.....
Market's Got Legs; Crude as World's Future Currency? [View article]
One thing we have not been used to in that "history" you speak of, the collapse of the financial system in Europe. So when you introduce something that has not been seen before you will get some surprise results. Don't expect this market to behave the way it has in the past. We are on new and shaky ground.
Citigroup: A Simple Analysis of a Terribly Complex Company [View article]
Looking at how the market valued C eight or ten years ago has little value as a predictor of the future for me.
Do the Facts Back Up Bernanke's QE II Claims? [View article]
My bet for you. QE2 will go down as one of the worst policy blunders in history. It will create more bubbles (I hope you see that, the evidence is as clear as a bell). The bubbles will burst (they always do). When they do burst QE and your boy Ben will be blamed. Rightfully so. The result will be that the Fed will be marginalized.
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
You are living in the past. This is not the market you grew up in. The rules have changed. Gold has a role today because people do not trust the system, not that they believe inflation will be higher. Understand that you might have a different view of the world. The correct view I might add.
Mortgage Refinancing: Rumors of News; News of Rumors [View article]
So we (taxpayers) will pay the full price on this.
If the banks take losses, that will be a reduction of taxable income as you suggest.
Either way, we pay.
The Employment News Is Better Than It Looks [View article]
"The unemployment rate is still hovering at relatively high levels"
Hello. When in our history have we had 9.7% unemployed? A few months in the 80's is it in the post war period. Now it will be close to 10% for at least another year. And you call this "relatively" high. I think you make these observation because you have no clue how painful this is to a big portion of our population. You need to find you social compass.
How The Federal Reserve Is Monetizing Debt [View article]
The deal to buy Agency MBS was not a slight of hand as you suggest. The Asian Central Banks put a gun to Bernanke last year and said, "Buy this stuff back at par or we will never buy a dime of T notes again."
So Paulson/Bernanke said, "Okay, but you have to agree that for every dollar of Agency junk we take back you have to take an equal (or greater) amount of Treasury paper.
So that was the deal.
The purchases of Agency Paper are being funded by the excess reserves that the Fed has created. This is why the Fed started paying interest on reserves. So that it would attract sufficient money to allow it to buy up all of the junk. (This is the QE process)
On the dollar. You make a pretty good case for a flow of funds that argues for a lower dollar. That may happen, but it is not a sure thing. The dollar has had an uphill battle on the fundamentals for decades. We have always run a current account deficit that had to be financed by 'willing' foreign central banks. Because of the weak economy our imports are down and the traded deficit has actually improved a bit.
There are two factors for the dollar. Flow of funds and sentiment. The flow of funds is an important element in the equation but in the short term is overshadowed by sentiment which is not negative today. This is a reflection of the Store of Wealth factor for any reserve currency. Which currency is the best Store of Wealth? That is a hard question to answer. They all stink. The Euro has a huge set of problems. Possibly more significant than we face. The Yen looks like a standout in that but who cares? It is a very expensive currency today and on an economic Store of Wealth Basis is probably worth 110 vs 95.
So the % looks stable because there is no legit alternative. Keep in mind that to be a reserve currency you must have lots of debt for those reserves to be invested in. So while the third tier currencies (A$,C$,Sterling and CHF) may look attractive it is unlikely that they will get much in the way of reserve diversification.
We are going to get a run on the dollar at some point as a result of all of what has been done. But I would not bet on it happening anytime soon. Things have to get much worse in the USA for that to happen. It also has to evolve that some of the alternatives to the dollar truly start to look better.
Paul Krugman Is Wrong: The United States Could Not End Up Like Greece [View article]
My thoughts: (hogwash)
brucekrasting.blogspot...
Inflation Over the Past Century [View article]
Bottom line: the past offers little if any guidance
He is right. The past does not tell us the future. What bothers me is that the Pundit uses the exact opposite thinking 4 times a week.
He is always showing us a graph of the past and projecting it on to the future. That does not work. If you rely on the past to make predictions of the future you will more than likely be surprised and disappointed.
The Good News Behind the June Trade Deficit [View article]
Federal Debt Is Not Even Close to 100% of GDP [View article]
You do not add in the intergovernmental account when considering what is the debt position? That is lunacy.
The government account series (GA) is legally parri passu with public debt. It is just as good as Treasury bonds. We pay a ton of interest on this debt. More than we pay for the public debt. Last year it came to~$160 billion! And you think it does not exist?
You are all alone in thinking this way. Check with your pals at Treasury or the Fed. They would put the GA debt right next to the public debt. Ask the folks at Social Security. They will prove that you are wrong.
In less than one year the US will pass the 100% debt to GDP level. The pundit is the only one who thinks this is not true. No wonder he always bullish. He magically makes $4.5 Trillion of debt go away.
That is simply not correct.
Why Fear Isn't Likely to Kill the Economy [View article]
Question: What planet do you live on? Equities have rallied 80% in the past year. We are just starting a bull market? It looks more likely that we are in the process of ending one, not starting one.
Goldman Sachs, The SEC and the Question of Timing [View article]
Alternatively, if you wanted to have a very big and visible splash you would release the information on Friday morning. That way the market could react during the day and everyone has the weekend to worry about it. Maximum value with and AM roll out. And that is what they did.
Market: Spooked Today, But Panic Attack Is Likely Temporary [View article]
And you think everything is Ok?
It's Time to Short Crude Oil [View article]
Don't short futures at 100 when the cash cost is 120, unless you want to lose some money.....
www.bloomberg.com/apps...