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David at Imperial Beach

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  • Tesla Motors beats by $0.03, misses on revenue [View news story]
    Why is delay of the Model X a "HUGE problem"? It's not the $30-40k sedan that "ordinary" people will buy. It's just a way to double their addressable luxury car market. It's the Model 3 that is the car for the masses. And the Model X delay doesn't affect the Model 3. The Model 3 is being developed in parallel with the Model X.
    Nov 6, 2014. 03:38 AM | 1 Like Like |Link to Comment
  • Tesla Motors beats by $0.03, misses on revenue [View news story]
    Say What? FUD stands for Fear, Uncertainty and Doubt. Overoptimism, by definition, is not FUD.
    Nov 6, 2014. 03:23 AM | Likes Like |Link to Comment
  • Investors Turn Against Gold After Price Decline [View article]
    China is not alone.
    Nov 5, 2014. 11:15 AM | 1 Like Like |Link to Comment
  • Peak What? Dancing With The Devil [View article]
    Oil below production costs (and other commodities below production costs) is not good. It implies that there is lack of demand in the economy to take up any excess production. If such prices persist, oil producers will have to cut back or face bankruptcy. Even now, many are taking on debt to cover their losses. Cut backs will eventually result in shortages. Shortages result in spiking commodity prices and may lead to hyperinflation.

    Low commodity prices are good only when they are sustainable, when they allow producers to still make profits, though perhaps not as much as they would like.
    Nov 4, 2014. 11:06 AM | 1 Like Like |Link to Comment
  • Android Gets A Black Eye From Apple [View article]
    Tesla said not long ago that it had surpassed Apple in sales per square foot, but your point is still made if Apple is now in second place.
    Nov 1, 2014. 11:33 PM | 2 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    What Japan really needs is not foreign tourists, but foreign workers who want to live in Japan and pay taxes. But they're too xenophobic for that.

    Failing that, they should use their wealth to buy income-producing assets outside Japan. In the past they bought US treasuries, but now US treasuries are not paying enough interest.
    Nov 1, 2014. 10:56 PM | 3 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    You don't know what you're talking about. In 2010 the top 1% of the US population (1% of 309,330,000 = 3,093,300) had an average net worth of $16,439,400 each, which multiplies out to $50,851,996,020,000 or 50.851 trillion dollars versus the Fed's 4 trillion.
    Nov 1, 2014. 10:53 PM | 4 Likes Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    It's a race to see which currency dissolves into nothingness first, the yen, the euro, or the dollar. Before the BoJ made its move, the euro looked like it would die first. Now it's a toss-up. The dollar is probably going to be the last one standing, but it too shall fall.
    Nov 1, 2014. 09:43 PM | 1 Like Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    Once you get to the hyperinflation stage the money is worthless and people start using some other currency, usually dollars and gold.
    Nov 1, 2014. 09:39 PM | 2 Likes Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    You have it backwards. 1 Yen is now worth less than a penny, and it's shrinking in value with every yen they print. The BoJ is making it more and more worthless.
    Nov 1, 2014. 09:36 PM | 1 Like Like |Link to Comment
  • Judge's Comments Put GT Advanced Technologies' Settlement With Apple In Doubt [View article]
    The problem was that Apple was too involved and didn't give enough control to GTAT.
    Nov 1, 2014. 09:08 PM | 5 Likes Like |Link to Comment
  • Judge's Comments Put GT Advanced Technologies' Settlement With Apple In Doubt [View article]
    My reading highlights Apple's micromanaging the entire operation from Cupertino and setting up GTAT to assume all the risk and none of the profit. GTAT expected to move into a facility especially built for them (on which they had not been consulted) that was incorrect and unusable enough that it caused a three month delay and much inconvenience. The power supply was never adequate and failed several times. On top of that Apple selected inadequate fab equipment that had to be replaced. GTAT filed for bankruptcy protection because they realized they could never make a profit under the agreement and any of Apple's alternative offers.
    Nov 1, 2014. 09:05 PM | 12 Likes Like |Link to Comment
  • Gold And QE: Setting The Record Straight [View article]
    As demonstrated today, influences that negatively impact currencies other than the dollar (yen today, euro more typically) are bearish for gold because they are bullish for the dollar. Deteriorating Russian-Western relations, for instance, negatively impacts the euro more than the dollar.

    Asians are happy to buy our gold whenever we put it on sale. Even before today, physical gold was in short supply: GOFO rates went negative on Monday. This indicates that the current price is unsustainable unless we get another stampede from GLD like we did last year. But most of those investors are "smart" money and unlikely to be intimidated by this price drop. At least, they were not intimidated by the three previous drops to $1180.
    Oct 31, 2014. 04:48 PM | Likes Like |Link to Comment
  • Tracking The Fed Down A Perilous Normalization Path [View article]
    "...what is loaned is the credit created by the CB..." Deposits at banks don't just sit there (usually). They typically get loaned out, up to 100% in the case of time deposits and 90% in the case of demand deposits. The remaining 10% of demand deposits is the fractional reserve that must be deposited at the Fed. The problem comes when banks are unable to make enough loans because it can't find enough suitable borrowers, and also can't find any assets it wants to buy. In that case, less than 100% (90% respectively) gets lent out (or spent) and the excess reserves sit at the Fed earning the FFR, but since these reserves are not in the economy and not being spent for goods and services, their velocity is zero and they cannot contribute to inflation.

    Presumably at some point the bank will find borrowers to lend to or assets to buy and those excess reserves will get into the economy where they will have a nonzero velocity and they can contribute to inflation.

    It should be noted that in the situation we are in where paper assets are in a bubble and commodities are not, there is the potential for an inflation shock just like the author posited. Commodity producers will be under pressure because prices are too low to make a profit, so they cut back on production (or go bankrupt). This will result in a commodity shortage, which in turn will result in a dramatic spike in prices. Investors rush out of paper assets to invest in the commodity, exacerbating the shortage. Do that across not just one, but several commodities, and all of a sudden you've got a commodity-led inflation, and possibly even a hyperinflation that the Fed can't control. Note that the money is already in the economy because paper assets have been bid up so high. All that it takes is for some of that money to start chasing real assets that can't easily be produced at will.
    Oct 31, 2014. 04:27 PM | Likes Like |Link to Comment
  • The Cheat Sheet For Whether The Fed Will Raise Rates [View article]
    Bernanke outlines some aces up the Fed's sleeve if it needs to goose the economy while rates are zero:
    Oct 31, 2014. 02:23 PM | Likes Like |Link to Comment