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Seth Walters

 
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  • How Gold Investment Hurts The Economy And Becomes A Self-Fulfilling Prophecy [View article]
    I believe that the party line is that the main purpose of quantitative easing is actually to counteract *deflation*, and that Bernanke can remove the excess liquidity simply by performing the reverse process. If asset inflation is able to cause a little bit of wage inflation while CPI stays steady, that would be great. It's definitely better to have asset inflation than CPI inflation, but the danger is that the bigger you blow them up, the harder they can fall. That's what happened with the housing bubble. And ultimately, that's the problem I see with nearly all asset classes right now as a whole. The reason why I think gold is an especially bad one is that, unlike an equity, it has no chance of growing or generating income. And indeed, since I wrote this article, gold (GLD) has been moving generally down and is currently about 5% down.
    Dec 16, 2012. 03:49 PM | Likes Like |Link to Comment
  • How Gold Investment Hurts The Economy And Becomes A Self-Fulfilling Prophecy [View article]
    Well if you mean CPI by inflation, then buying any financial asset as opposed to a consumer good shouldn't affect CPI. That is why we don't have inflation now, despite the money printing. The printed dollars have been used to buy financial assets rather than consumer goods. If Bernanke was printing money and using it to buy goods and services inflation would skyrocket. What we've had instead in my opinion is a skyrocketing of financial assets - including at this point gold, bonds, stocks, equities, farmland... all up at the same time.
    Dec 15, 2012. 04:28 AM | Likes Like |Link to Comment
  • How Gold Investment Hurts The Economy And Becomes A Self-Fulfilling Prophecy [View article]
    At any given moment in time, the total amount of cash value of everything in the world is the same. If the amount of cash value of gold at a certain moment in time is 10 trillion in Scenario #1 and at that same moment in time is 5 trillion in Scenario #2, the amount of cash value of all of the other assets in the world is reduced by 5 trillion in Scenario #1 relative to Scenario #2. This should tend to have a depressing effect on things like equity prices, meaning that all corporations are able to raise less cash for operations or expansion by selling shares.

    That is how I look at it.
    Dec 14, 2012. 05:19 PM | Likes Like |Link to Comment
  • Describing his decision to again dissent from the FOMC decision, the Richmond Fed's Jeff Lacker paints a picture of a man with views 180 degrees different than his fellow board members. "A single indicator cannot provide a complete picture of labor market conditions," he says, wondering how a group of learned men and women can derive major policy decisions from the headline unemployment rate. Lacker is out as a voter on Jan. 1. [View news story]
    "A single indicator cannot provide a complete picture of labor market conditions,"

    Well yeah. Plunging labor participation gets us to a lower unemployment rate the same as more jobs. It should be *terrifying* to market participants that he is the only one to acknowledge something this obvious. They clearly all know it well.
    Dec 14, 2012. 07:43 AM | 4 Likes Like |Link to Comment
  • This Hedge Fund Is 'All In' For The Commodity Rally [View article]
    http://bit.ly/Irfoya
    ^^^^^
    These are dropping

    http://bloom.bg/yrMkxw
    ^^^^^^^^
    So is this
    Dec 14, 2012. 06:48 AM | 1 Like Like |Link to Comment
  • "Let the fiscal cliff happen and reduce the deficit very substantially as a consequence," quips GOP advisor Bruce Bartlett. The combination of spending cuts and tax hikes will eventually strengthen the economy. Conversely, he says, the Republicans refusal to raise taxes will actually hurt the economy. Baby boomers are due to retire in droves over the next few decades, and government spending has to rise. If we don't raise taxes we'll just have to borrow more from abroad, thereby increasing interest payments on the debt. (video[View news story]
    That spending you're talking about? Yeah, that was corporate revenue. If you owned stocks while they were doing that spending, they put cash money in your pocket by making the corporations you owned more valuable. They helped create an economy in which you could get hired at a certain rate of pay. The reason the economy sucks now is that those people are no longer spending anything, except paying 30% annual interest on credit card debts they surely did not mean to run up.

    This is a Chinese finger trap. If we pull hard against it we will never escape. We must give a little first to pull our way out of this one.
    Dec 14, 2012. 03:34 AM | 1 Like Like |Link to Comment
  • "Let the fiscal cliff happen and reduce the deficit very substantially as a consequence," quips GOP advisor Bruce Bartlett. The combination of spending cuts and tax hikes will eventually strengthen the economy. Conversely, he says, the Republicans refusal to raise taxes will actually hurt the economy. Baby boomers are due to retire in droves over the next few decades, and government spending has to rise. If we don't raise taxes we'll just have to borrow more from abroad, thereby increasing interest payments on the debt. (video[View news story]
    Depends what the rates are set at. Anyway, the important thing is to get consumers spending again. Consumers will not spend when they are loaded down with excessive debt. The economy cannot recover and America cannot be strong again until this debt is gone. It would take 30 or 40 years to pay it off, but it could be gone tomorrow at the stroke of a pen... and then we could get the economy going again and people spending and working.
    Dec 14, 2012. 12:10 AM | 1 Like Like |Link to Comment
  • "Let the fiscal cliff happen and reduce the deficit very substantially as a consequence," quips GOP advisor Bruce Bartlett. The combination of spending cuts and tax hikes will eventually strengthen the economy. Conversely, he says, the Republicans refusal to raise taxes will actually hurt the economy. Baby boomers are due to retire in droves over the next few decades, and government spending has to rise. If we don't raise taxes we'll just have to borrow more from abroad, thereby increasing interest payments on the debt. (video[View news story]
    Honestly though, high income earners should pay more for at least a while. The government can securitize consumer debt and student loan debt and then use surplus tax revenues to pay for them so they can be cancelled. Then, we can look at why educational costs are so high and how to prevent predatory lending practices that create bubbles in the future.
    Dec 13, 2012. 09:09 PM | 1 Like Like |Link to Comment
  • "Let the fiscal cliff happen and reduce the deficit very substantially as a consequence," quips GOP advisor Bruce Bartlett. The combination of spending cuts and tax hikes will eventually strengthen the economy. Conversely, he says, the Republicans refusal to raise taxes will actually hurt the economy. Baby boomers are due to retire in droves over the next few decades, and government spending has to rise. If we don't raise taxes we'll just have to borrow more from abroad, thereby increasing interest payments on the debt. (video[View news story]
    Full rollback to Clinton era rates on everything is a good start.
    Dec 13, 2012. 09:06 PM | 2 Likes Like |Link to Comment
  • "I'm so bearish, I'm bullish," writes BAML chief equity strategist Michael Hartnett. "Fourteen economies, with a combined equity and bond market cap of $65T, now have zero interest rates." Roll that one around in your mind for awhile. Hartnett's firm has made headlines of late for having one of the higher 2013 S&P targets on the Street. [View news story]
    Everybody party like it's 1929!
    Dec 13, 2012. 04:55 PM | 3 Likes Like |Link to Comment
  • Mario Draghi takes a victory lap for saving EMU in an FT interview, calling 2013 "the year when the ECB has stepped in to remove tail risks." "You don't lose sovereignty when you share it, but you actually regain it. Countries with high debt and deficits should understand they have lost sovereignty a long time ago over their economic policies in a globalized world." [View news story]
    Wow. Unbelievable arrogance.
    Dec 13, 2012. 04:54 PM | Likes Like |Link to Comment
  • Did we miss a major central bank tightening overnight? The precious metals sector is lit up bright red following the Fed's addition to QE and what looks like the promise of ZIRP for at least 2-3 more years. GLD -1.1%, SLV -2.2% premarket. Copper and oil join in, the red metal -1.4%, and WTI crude -0.6%[View news story]
    Well, inflation above 2.5% won't be tolerated without tightening. Any real spending at all at this point would cause some inflation, so the wealth effect has a very limited window to work in.
    Dec 13, 2012. 07:23 AM | Likes Like |Link to Comment
  • Which Way Wednesday: So Close To Our 1,450 Goal [View article]
    "It's a very simple concept - bringing the Corporate Tax Rate back to 4% of GDP would allow us to cut Income Taxes in half and be revenue neutral. What would be better for America - especially our struggling middle class? 3% of GDP is $480Bn a year - that by itself would put a huge dent in our deficit and think about how much this lack of collection has caused our National Debt in the first place! I am thrilled to see this ridiculous Corporate Entitlement program finally being put on the table - it's about time our Corporate Citizens began paying their fair share."

    So the current rate paid is less than 10%, and you want to increase it to 40%. That means a huge hit to EPS for every company, which would cause the stock market to take a huge hit. Dividends would have to fall a lot as well.
    Dec 12, 2012. 11:50 AM | Likes Like |Link to Comment
  • The real long-term budget challenge, according to Bruce Bartlett: interest on the debt. Interest rises from 6.1% of the federal budget in 2012 to 12.9% in 2020, 21% in 2030 and 59% if current projections are maintained through 2082. Federal entitlement programs pale in significance, he says, and "the idea that we are facing a crisis is complete nonsense" - it's all about the interest. [View news story]
    If the Fed buys all the debt, it won't matter what the interest is - it will all be circular. The consequences would be large, though.
    Dec 12, 2012. 11:14 AM | 1 Like Like |Link to Comment
  • When Good Enough Is Good Enough [View article]
    I think the smartphone replacement cycle will be determined by when people are eligible to upgrade vis a vis when new phones come out. I really like my iPhone 4S, but I will upgrade to the best phone on the market (or soon to be on the market) when I am eligible. It's insane to imagine myself paying over $1,000 a year for a cell phone contract and not paying $200 every so often to get the latest and greatest version.
    Dec 11, 2012. 07:18 PM | 2 Likes Like |Link to Comment
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