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Macro and Cheese

 
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  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    Exactly. The irony of the Volcker Rule is that it seems to have been perverted along the way. Prop trading has nothing to do with the financial crisis, which was a subprime debt implosion for the most part. Banks got out of prop trading years and years ago, by and large. The forces that drove down the financial sector were credit-related--the very aspect the Volcker Rule fails to address, because that is the bread and butter of banking. It's absurd.

    The only way to protect the system is to break up the banks, or make them pay TBTF insurance based on the size of their balance sheets. You want to be $2 trillion: Fine, 20bp on your assets. Pay to insure your own risk.
    May 11, 2012. 09:02 PM | 2 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    JPM lost $2 billion (said to be $800 mm net) on earnings of more than $15 billion annually, if I am reading their numbers correctly.

    Let's be fair here: What would their earnings have been WITHOUT this sort of operation? What would their risk have been WITHOUT these sorts of hedges, even though, as Dimon claimed, this one went awry?
    May 11, 2012. 04:12 PM | 3 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    It was a hedge for a portfolio. It was not a hedge without an offset. It is only not a hedge according to the strict and limited language of the Volcker Rule. Portfolios are not hedged line by line, that is inefficient.
    May 11, 2012. 04:10 PM | 1 Like Like |Link to Comment
  • Weekly Unemployment Claims: Sight Drop From An Upward Revision [View article]
    Hi Doug,

    Thank you as always for the great charts.

    Do you have an opinion as to the spike up that we saw a few weeks ago? It seems to have been an aberration.
    May 11, 2012. 10:54 AM | Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    Thank you for the info SD
    May 11, 2012. 09:07 AM | Likes Like |Link to Comment
  • Bonds The Biggest Bubble: The Barbell Strategy [View article]
    Hear hear. This is the point I was trying to make. I agree 100%.
    May 11, 2012. 08:59 AM | 1 Like Like |Link to Comment
  • Do Panic Over Europe [View article]
    If you don't see a connection between low birth rates and funding the population's retirement, it's shocking you've taught a course in economics.
    May 11, 2012. 08:48 AM | 1 Like Like |Link to Comment
  • JP Morgan Chase $2 Billion Derivatives Loss Illustrates Toxicity Of Casino-Banking [View article]
    Banks may be many things, but they're not managed like casinos. This characterization is sensationalist and wholly unhelpful. There is no way to know the facts in the few hours between the time the news transpired and the time you posted this editorial. This is populist rhetoric that will no doubt sell well in the blogosphere, but is naive and from the hip at best.
    May 11, 2012. 07:25 AM | 3 Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    Thanks JH
    May 10, 2012. 04:06 PM | Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    I agree that life will go on, and that's why I'm a moderate short for the moment rather than a pedal to the metal, bet the ranch short--which is really not my style in any case. I remember the crash of '87 thinking, woah, this is going to get ugly, and it never did. (But it taught Greenspan his one trick pony trick of cutting rates.) My base case scenario as I alluded to is not a crash so much as a sawtooth downward trend with lots of countertrend rallies along the way.
    May 10, 2012. 04:06 PM | Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    Not a debt bomb, a carpet bomb.

    Who knew.
    May 10, 2012. 04:02 PM | Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    Are you sure about that? I would have thought there's been a real extension in life expectancy beyond infant mortality.
    May 10, 2012. 04:01 PM | Likes Like |Link to Comment
  • Do Panic Over Europe [View article]
    I tend to get inured to the events over there. Then when I unwind my investments and go on vacation (early April this year) the magnitude hits me. Your extend and pretend scenario to me is the upside. Japan hasn't grown in 10 years beyond tracking error. That to me is about what we'll get.
    May 10, 2012. 04:00 PM | Likes Like |Link to Comment
  • A Take On Labor Force Participation And The Unemployment Rate [View article]
    Dave,

    Thank you for your piece, as you know this is quite a controversial topic.

    Two points:

    1) I can see your point about demographic changes and have no problem accepting that reasoning as a partial explanation, but that explanation seems to be in question if you consider the rate of the drop from 2008 (that's some serious demographics going on), and the fact that the acceleration coincides with the severe downturn in the economy.

    2) To me, the LFPR seems rather moot, especially given the fact that those who exit the labor force can re-enter. I have a hard time understanding the purpose. Last month's number was a case in point: there were 115,000 jobs created, but 180,000 new entrants into the labor force, and yet the unemployment rate went down. I'd be interested in hearing how you use/interpret these numbers.
    May 10, 2012. 03:45 PM | Likes Like |Link to Comment
  • Bonds The Biggest Bubble: The Barbell Strategy [View article]
    I bring it up because I was trading yen bonds at the time they broke below 2% and came to a similar conclusion that you have on treasuries. But believe me, it was not a cheap mistake. There are indeed differences between Japan and the US but I think if you're waiting for this bubble to pop, you're going to be waiting a long time. Which begs the question as to what a bubble is. I think of them as inherently unstable and short-lived.

    I love bonds and thought last year was a great time for them, and it was. Now I don't classify them as a bubble, just a waste of time, unless you're doing relative value or as a (poor) proxy for the economy.
    May 10, 2012. 03:23 PM | 2 Likes Like |Link to Comment
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