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Wesley Mouch

Wesley Mouch
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  • Assessing the Chances of a Severe U.S. Economic Slowdown [View article]
    Economic Slowdown? You presented a good case for it, but I see things differently.

    Why will we have increased growth? Social Media. That is the future. Do you have any idea how powerful it is? Yesterday's investors were right to drive LinkedIn to the moon. Take a look at the value:

    300 Million Americans x $10 K each that could be spent on consumer goods that is currently not being spent, but will be spent because social media will unleash demand that has nowhere to go; we all know that the American consumer currently has no access to goods and is not really aware of the products available to him/her = $30 Trillion Dollars.

    It is clear to economist that the American consumer is incredibly well funded and has an excellent balance sheet. This thinking is clear every time a politician espouses the job creating power of small business; demand is infinite, it just needs to be tapped. Social Media is that tap. Based upon this thinking, Twitter, Facebook and LinkedIn should be worth a trillion each!

    Can we find a way to securitize social media? Now you are talking about value! Take their accounts, and parse them into tranches. The really active accounts (people who tweet or update status 20 times a day to tell the world about their puppy or toddler) would be the equivalent of AAA rated. "Lurkers" who only peruse hot girls they knew in high school would be junk. A large squid-like organization could sell the tranches to marketers and spammers (clearly the future of retail) for a premium. Deutsche Bank equivalents could buy marketing rights to the lower tier accounts while the squid sells the same traunch short. Seems obvious, right? Anyway, create Non Consuming Default Swap (CDS: If the traunch does not actually purchase products marketed to them, the holder would be entitled to compensation) for each security, and away we go. 5% growth per year, homes in the Hamptons double, a new government agency is created to provide oversite, and every single American would be properly "served" the marketing to which they are entitled.

    Global slowdown? Hardly.
    May 20, 2011. 12:52 PM | 4 Likes Like |Link to Comment
  • Bonds Worry About Rising Inflation [View article]
    Frustratingly well researched per usual. However, I feel like we have been over this Mr. Pundit. Making claims about what the market is anticipating does not work unless the market has perfect information about all of the forces that drive monetary policy (inflation is everywhere and always a monetary phenomena, or so said some smart guy), borrowing, etc. Therefore, the market does not really know; you allude to this in your comparison of the treasury market's historic performance at anticipating inflation.

    Instead, if the market consisted largely of one guy, who knew which direction interest rate pressures would be forced, then you would have a good measure..... wait, I just checked the federal reserve balance sheet, and I stand corrected. The market (fed) has pretty good information about interest rates. Carry on.

    Things are so manipulated right now that I think methods such as those employed in your analysis will be misleading.
    Apr 5, 2011. 07:33 PM | 1 Like Like |Link to Comment
  • A Stark Peak Profits Warning from Capital & Crisis's Chris Mayer [View article]
    Mr. Mouch is offended by your statements. All is well indeed in Washington! Maintain large stores of fiat currency versus other assets. Remember, it is not like they can just print more.
    Apr 5, 2011. 08:03 AM | Likes Like |Link to Comment
  • Bonds: A Bubble or a Sure Bet? [View article]
    You know, every bond article I have read recently concludes the same thing: Bonds are still worth looking at, even at these prices, because inflation is no where to be seen.

    What about solvency? How about the borrower's ability to make the payment? Anyone checked our dear Uncle's balance sheet recently? How about the controller of our currencies track record on maintaining its purchasing power?
    Aug 18, 2010. 07:33 AM | 2 Likes Like |Link to Comment
  • Do the Bonds Have It Right? [View article]
    I just wanted to communicate what an uncommonly good deal the long bond is right now. I mean, what entity on the globe has such a good long term balance sheet as the US treasury? Couple that with the amazing track record of the Federal Reserve in maintaining the purchasing power of the dollar, and you have a blue light special right there in your treasury direct account. Furthermore, Ben's academic papers highlighting the incredible benefit of a good, deep deflationary bout to bring prices back into alignment just highlight my thoughts: Drive the 30 year treasury yield to 1%!

    Even if I am wrong, I can exit my 30 year position with amazing deft! As a small investor with no preferred access to any trading platforms, Fed windows and exchange programs, I have equal footing with the Wall Streeters! I simply put in my stops at -0.5% and Walla, Free Money! I will be out of a treasury collapse quicker than an FHA loan closure.
    Aug 17, 2010. 09:52 AM | 3 Likes Like |Link to Comment
  • Record Fed Kickback: Taxpayers Get $46.1B [View article]
    I could not disagree with a thesis more. To ensure I am criticizing the right argument, I believe you are saying that the FED's "smart" purchases of treasuries and other assets are generally good for the taxpayer?

    There is almost nothing good for the average taxpayer coming from the FED's actions. The mass purchase of treasuries, MBS, agency products, etc have been carried out at an intentionally high price. These activities have driven rates to un-natural lows, hurting those taxpayers living on fixed incomes. Further, the loss of eventual purchasing power through dollar debasement will be the "gift" that just keeps giving when the velocity of the newly printed money picks up. The FED is not helping the taxpayer through its actions, it is supporting asset prices to stop a collapse of the banking system. The average taxpayer is too far downstream to see a benefit.

    What is the exit strategy for the 2 trillion-dollar FED balance sheet? A sale of the FED's assets to the private sector will compete with new borrowing. It is too early to declare the FED's actions an overall success for the economy as a whole; but I fear that the pain to the taxpayer will be evident soon enough.
    Jan 13, 2010. 09:08 AM | 1 Like Like |Link to Comment
  • 11 Predictions for 2010 [View article]
    When I read analysis like this, I am lead to believe that economists think that the average American household is flush with cash, and is simply struggling with a lack of confidence.

    Although debt levels are wonderfully trending down at the household level, we are nowhere near ready for aggregate cash purchases of large assets, or 20% down payments on houses.

    Any perceived strength in housing right now is due to warp speed, ridiculous, unsustainable, shockingly low rates supplemented by federal reserve purchasing of MBS. If the ten year rises to the levels the author discusses, and the fed exits the mortgage market due inflationary pressure, what will the mortgage rate be, and who would lend to buyers with little down payment?

    The signs of strength are due to monetary policy, and when tightening occurs, the signs of strength will exit with the low rates.
    Dec 30, 2009. 08:45 AM | 20 Likes Like |Link to Comment
  • What Does the Yield Curve Say About ETFs? [View article]
    There are two reasons for yield curve steepening. The first, as noted by the author, is money searching for returns from higher risk investments. This is good, as it signals confidence and strength in the economy as a whole. High volume in riskier assets reflects this reallocation.

    The second, is money fleeing really poor fundamentals. After all, the yield curve would be pretty steep if it was generally believed that longer dated products would expire worthless, or would be repayed in drastically devalued currency. This is bad, as it reflects a lack of confidence in the borrower or manager of the money supply as a whole.

    So, with this current steepening, which is it? Probably not all of the first, but certainly some of the second.
    Dec 28, 2009. 12:27 PM | 2 Likes Like |Link to Comment
  • One-Month Treasury Bill: A 'Blutarsky' [View article]
    I have a proposal. Let's turn the US treasury into the world's largest carry trader.Follow this: The treasury should announce a 1 Trillion auction for 1 month t-bills. Because investors and the rest of the world don't seem to concerned about debt supply, the bid to cover will probably be 2:1. Successfull auction!

    Now, Timmy should use his new funds to buy very short term sovereign debt around the world. We should be able to pick up a couple of tenths of a percent of yield, as Timmy's new found cash will drive up prices around the world in his search for yield. Friendly governments will be rewarded for borrowing some short term prosperity, showing that they have read all of the Keynes required to run a modern fiat based free government. However, Timmy will need to distribute the purchases around so that prices are not too drastically affected; pay Goldman a hefty fee to assist in the malay, which will inturn improve your re-election funding. Maturity arrives, we collect from afar and pay anear, and pocket the difference! A money machine.

    What, dear reader? You say that this wouldn't work, as the the auctions would not be successful due to the hedgish nature of the operation? Foolish reader, if the current fundamentals (trillion dollar deficits) result in a 5:1 bid to cover, this scheme is automatic.
    Dec 9, 2009. 08:24 AM | 3 Likes Like |Link to Comment
  • Existing Home Sales Going Strong [View article]
    I would clarify the argument of this piece as follows: We have not found the price that clears the market, we have found the monthly payment that clears the market. To get to that monthly payment, it took a big price drop and a large rate reduction.

    These housing discussion should lead with the reminder that it has taken threat to currency interventions from the FED to find the rates we currently enjoy. The FED now is the housing market.

    Why should we then pretend as if the market is functioning? It has ceased. Done. Over. Kaput. The FED finances housing purchases at rates that make non-printed capital throw up in its mouth.

    We have reached equilibrium under the current arrangement. But Bernake and company will eventually have to leave the room. Then what? What will be the rate? What will be the price of the houses sold today? The house sales that this article just celebrated will join the legacy property underwater. What will we do then?

    Optimism is good and healthy, but let's start talking about our exit strategy.
    Nov 23, 2009. 12:59 PM | 7 Likes Like |Link to Comment
  • Securitization Market Maker: The U.S. Government [View article]
    "What happens if the government tries to exit these markets? Do they collapse?"

    Yes, or at least the rate of return for owning the underlying instruments begins to align with the risks of ownership. What rate of return is required to hold a basket of mortgage backed securities that were issued by a loan officer who has no financial tie to how the loans perform? It is higher than 5%.
    Oct 8, 2009. 12:37 PM | 3 Likes Like |Link to Comment
  • Whether Deflation or Inflation, Things Are Going to Change [View article]
    Mr. Disconnect,

    My investing plan for the $20,000: I would get a GMAT study manual ($50), and practice grammar (I clearly need it) and the other topics on the Graduate Management Admission Test (GMAT). I would sit for the exam ($200), and do the best I could.

    With a decent GMAT score in hand, I would research my heritage and find someone in my family who attended a top 10 MBA program. Also, I would try to find some element of my heritage that would allow me preferential treatment. I would than apply to the top 10 programs, highlighting my GMAT score, my legacy status, and my 1/18th ethnic advantage ($1,000 application fees). There may need to be a kickback to one of the programs as well ($5,000), and judging by the ethical behavior of the graduates from the top programs in the last 5 years, this strategy is wholly in play. I would be accepted.

    Next, I would borrow all of the funds for my MBA ($80,000). While getting my MBA, I would drink ($10,000), and discuss Keynesian and Austrian economics in the bars for two years. I graduate with a newly minted MBA. My emphasis: financial products and financial engineering. I would write a paper on how to sell complex debt products to government entities.

    Siting my fine academic work, I would get a top management job on wall street. I would never really work again, and would focus on really sticking it to the taxpayer. I would rightfully be rewarded. I would pay off all of my debts, and live well beyond my means generating new debts. Eventually, I would be fired, and I would take my huge severance package to the islands for mai tai's. Return on investment: 10,000,000%
    Oct 1, 2009. 08:34 AM | 3 Likes Like |Link to Comment
  • Market Outlook: Investors Ignore the Real Economy [View article]
    Thanks for the article Greg.

    But we need to talk. You seem like a smart, well read investor who communicates very well. That is why I feel the need to tell you this right away so that you can correct your thinking and enjoy the kool aid with everyone else.

    This has nothing to do with the real economy. It hasn't for some time. This is only about appearances now. Think derivatives and leverage. Help wall street and the media help you. As a financial journalist and economist, you need to find ways to obscure the measurable. For example, stop talking about things that can be directly observed (i.e. vacancy rates). Instead, make up a new metric 5x removed from the process you are writing on (i.e. define a new metric called "CRE congressional interest" as the number of times a member of the house or senate says "commercial". Report on it. Track it. Claim its bullish when it increases. When it drops, say that its third derivitive is looking encouraging)

    Stop reading earnings reports so thoroughly. Let CNBC do the analysis for you! "CB Richard Ellis sees a time when businesses may want to inhabit office space again".

    Focus on the government statistics. Worry not about seasonal adjustments, enjoy CPI, PPI, and GDP as rawly reported. Debt level scare mongers are just right wing nut jobs who hate America. Express deficits as a fraction of GDP, implying that we could somehow tax the elements of the GDP to increase governmental revenues.

    I am glad we could talk, and good luck!
    Jul 30, 2009. 08:41 AM | 6 Likes Like |Link to Comment
  • Betting on Hurricanes Gains Traction [View article]
    Thanks for the information Ravi.

    The article fully illuminates what is wrong with our current group think. Using a market structure to predict hurricans? Really? Breaking this down, we are going to take a group of human beings, all of whom have no insight (weather conditions in one month will approach randomness) into hurricane future conditions, and have them wager on future hurricanes. The sum of ignorance is something else than ignorance?

    All of that is fine and good, but why then do we expect a market structure to work for any other system? Because market participants have some knowledge (many have insider information not available to the public. Snap! did he just say that? How can that be? CNBC told me that markets were divine, and free market capitalism is the best path to prosperity), and take positions accordingly. If we talk ourselfs into thinking that weather futures are a good idea, it will reinforce my belief that the only real winner will be the firms that facilitate the market.
    Jul 30, 2009. 08:25 AM | Likes Like |Link to Comment
  • No Capex Recovery Yet [View article]
    Thanks for the chart and the analysis.

    You say:

    "Still, as the chart shows, a big increase in capital spending is not a necessary condition for a recovery. The economy rebounded strongly in the second half of 2003, yet capital spending had not increased meaningfully by that time."

    Based on how things turned out, do you still think that the economy really rebounded in the second half of 2003, or do you now think that a monetary-policy-induce... is all that occured? I think the latter; sustainable recoveries will require capital spending, IMHO.
    Jul 30, 2009. 07:56 AM | 1 Like Like |Link to Comment