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The Last Boomer

The Last Boomer
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  • What If Lowflation Isn't A Trap? [View article]
    The fastest growing and most oppressive type of debt now are student loans. Unfortunately students cannot refinance their loans to take advantage of lower rates. Low inflation environment combined with high legacy interest rates on existing student loans is a deadly combination not only for the students but for the society as a whole. Debt that is increasing in real terms (low wage growth, low inflation, high legacy interest rates) works as a heavy dead weight around the neck of the most dynamic and potentially productive age cohort.
    May 11, 2014. 10:17 AM | 4 Likes Like |Link to Comment
  • How Much Are Yields Going To Rise? [View article]
    Tack, I did not choose the words well. I was thinking about the "dot-plot" with the Fed's projections for rates to rise to 1% in 2015.
    May 3, 2014. 12:50 PM | Likes Like |Link to Comment
  • How Much Are Yields Going To Rise? [View article]
    Contrarianadvisor, I am not sure that we are headed for a global deflationary contraction. This looks more like disinflationary environment with low growth and low inflation. This is how Larry Summers sees it, I believe, and some other economists.
    I like Michael Pettis' take on the phases in the global financial crisis. He believes that US is mostly out of the woods, Europe is just starting to find its way out, while the developing world led by China is just about to enter it. This is the third phase of the global financial crisis that has been unfolding since 2007. If Pettis is right, this implies global disinflation and low growth. And it will all depend on how well the US does. If the locomotive of the global economy stalls, we may be heading towards deflation. But until then, my bets are on a muddle-through scenario as Cullen Roche defines it. This scenario still favors long-duration bonds.
    May 3, 2014. 09:27 AM | Likes Like |Link to Comment
  • Consolidation Continues As Investors Take Profits And Rotate Into Value [View article]
    This analysis is very balanced and fact-based. I believe that watching money flows is absolutely critical in order to understand market direction. Some other analysts look at the decline in momentum stocks and small caps in isolation and based on this alone predict unavoidable correction. Not necessarily true as this analysis shows.
    I am a follower now.
    May 3, 2014. 09:02 AM | Likes Like |Link to Comment
  • How Much Are Yields Going To Rise? [View article]
    Someone smarter than me thought that institutions that hold bonds as part of their portfolio were simply getting out of the short end of the curve and replacing with bonds on the long end. At the same time the high inflation premium that was embedded in the bonds during the QE era is coming down. Both factors may be contributing to the seemingly strange decline in the long rates. I think the bond market is telling us that the subpar economic performance is here to stay. Low inflation is here to stay. Let's see if the Fed will read the tea leaves in a similar way and slow down the rate increase at the short end of the curve. Otherwise all they may accomplish is to flatten the curve prematurely.
    May 2, 2014. 10:46 PM | Likes Like |Link to Comment
  • Q1 GDP growth revised sharply lower [View news story]
    Calculated Risk has a great chart of the contribution of different components to GDP. One thing that struck me is that only once in the last 40 years residential investments has had such negative impact on GDP without a recession following in the next year or so. Now, Bill makes one good point: residential investment is still such a low percent of the economy that the two consecutive declines should not be of big concern. I want to believe him; I don't know if I really do though. At this point I see the decline in residential as only one little canary and I'll need to see many more things going bad to believe that recession is imminent. Chicago PMI was great.
    Apr 30, 2014. 12:53 PM | 1 Like Like |Link to Comment
  • MBA Mortgage Applications: [View news story]
    When the turnaround in housing began, sales picked up first, prices followed. Prices are very backward looking. The drop in mortgage applications is palpable. I was able to get yesterday financing (30-year fixed) below 4%. The lenders were falling over each other to offer better rates. The seller was also willing to make concessions, and this in the red hot DC area. As a buyer, I liked it. As an investor in real estate stock, not so much.
    Apr 30, 2014. 09:35 AM | Likes Like |Link to Comment
  • Q1 GDP growth revised sharply lower [View news story]
    Winter was cold, spring is rainy, summer will be hot. All this had, has, and will have negative impact on GDP growth. Only if we could get the perfect weather, GDP would soar. On a more serious note, weather was a somewhat valid explanation for some of the weakness. The real problem is the consecutive decline in residential investment: 5.7% decrease in Q1 2014, and about 7% decrease in Q4 2013. As the New Deal Democrat pinpoints, the decline of the share of residential fixed investment in GDP is often a precursor to a recession 5 quarters out. I really hope that the high frequency indicators of residential fixed investment pick up ASAP.
    Apr 30, 2014. 09:20 AM | 7 Likes Like |Link to Comment
  • Business Investment Still Lackluster [View article]
    For a smart guy like CBP, the explanations for the lackluster business investment are quite unconvincing; rather ideological than real economic analysis.
    Apr 24, 2014. 10:07 PM | 2 Likes Like |Link to Comment
  • Increased Interest Rates, Asking Prices Taking Serious Bite Out Of Home Sales [View article]
    Interest rates combined with higher house prices cause demand to decrease. Isn't it an economic law that when the price of something goes up, demand for it goes down?
    Apr 23, 2014. 09:15 PM | 1 Like Like |Link to Comment
  • U.S. To Foreign Officials: Stop Buying Treasuries [View article]
    The interest rates on the long end of the yield curve are barely impacted by the Fed purchases and it is unlikely that they will "rise or surge". The reason for this is that aggregate demand is unlikely to grow by more than 3%. The 10-yr and the 30-yr Tsys are following closely the aggregate demand growth. The other reason is that the inflation premium goes down as the excess bank reserves grow at a slower pace. The reduction of the inflation premium puts downward pressure on the long-term interest rates. The most likely move is that holders of short-term treasuries will sell them and replace with long-term Tsys which also will keep the interest rates on the long end low.
    Apr 18, 2014. 09:17 AM | 1 Like Like |Link to Comment
  • U.S. To Foreign Officials: Stop Buying Treasuries [View article]
    The people who say if not for the Fed buying US treasuries, nobody would buy them, should read this article. The world wants US treasuries in increasing quantities. QE tapering won't do anything to decrease the demand for treasuries.
    Apr 16, 2014. 11:26 AM | Likes Like |Link to Comment
  • Amazon: Are We There Yet? [View article]
    1 positive comment out of 30. If SA's comments are really predictive, it is not a good time to buy AMZN. But what do I know? I remember buying AMZN at 177 a few years back, selling at 220 a few months later thinking I got out while the going was good, and then watching with disbelief as the stock almost doubled.
    Apr 7, 2014. 11:54 PM | Likes Like |Link to Comment
  • HFT, QE... Does Anyone Know What's Going On? [View article]
    " The market is simply too complex, too filled with irrational participants, too multi-temporal and too uninformed to respond in any manner which might be deemed "right" most of the time."
    This is mostly how I think about the market, just could not phrase it that well. With one exception: I think the market is always right. If the market thinks today PLUG is worth $10, then this is what PLUG is really worth; and if the market decides two weeks later that $5 is the right price for PLUG, then this is really the right price for PLUG. There is no one objective, REAL, price for any asset. Value is in the eyes of the bipolar beholder.
    Apr 6, 2014. 05:42 PM | 1 Like Like |Link to Comment
  • Economic Outlook For Rest Of 2014: Acceleration [View article]
    Accelerating investment is the key. Tons of cash on the corporate balance sheets, cheap credit, aging capital stock: all the ingredients are here. If the corporate chieftains finally start spending, the good times may keep rolling.
    James, do you have any advice how to play the accelerating business expenditures from an investment perspective?
    Apr 4, 2014. 03:46 PM | 1 Like Like |Link to Comment