The Dow Jones Industrial Average surged past its all-time record, bringing its gain to more than 13% for the year.
"The market is getting increasingly convinced that the Fed will do whatever it has to do…," a leading money manager told the Boston Globe.
Oops, sorry, the numbers and quote are from Oct. 2, 2007.
*****
The above 3 lines appeared in the WSJ today page C16. :-)
Also appearing in the WSJ today is an inflation adjusted chart of the DJIA which shows that the 2007 peak was below the 2000 peak, and the current DJIA price is below the 2007 price -- so it's still a bear market in "real" money.
Research has shown that the largest gains come from stocks with low valuations *and* low investor expectations -- i.e. an attitude that there is "no reason to own" the stocks.
3 Moves To Make On The Verge Of Market Panic [View article]
> there is still fear in the market
One of the standard measures of fear is the VIX, and it has been screaming happy talk for a while. There is rarely a surplus of fear after a multi-year bull run. Look at a 5-year VIX chart.
Wal-mart reported problems with spending from their customers some time ago. Today, Target warned of a flat Q1 of spending from their customers. Keep in mind that Wal-mart's average customer has a household income of about $45k, and Target's average customer household income is about $65k -- over 40% higher.
So the economic slowdown has moved up the income chain, and that will be bad for corporate profits, which have been at record highs. There is lots of room for disappointment.
Approaching A Major Inflection Point In The QE3 Trade [View article]
> The latest such program - daily U.S. Treasury purchases as part of the Fed's QE3 program - got underway on January 4.
...and both the 10yr Note and 30yr Bond yields have *risen* since then (from 1.8% to 2.0%, and 3.0% to 3.2%, respectively).
In fact, both yields are in an 8-month uptrend -- counter to purchases having any effect on lowering yields.
So why the heck does everyone think the Fed is manipulating the stock market when they can't even manipulate the bond market?
And one more scary thing (to me), I just got back from getting my hair cut, and the barber had the stock market channel on his TV. I have never seen the stock market on his TV before.
> They don't need to sell any holdings, they just let them mature.
So what happens if the government continues to run deficits year after year, and government debt keeps getting larger and larger (i.e. Congress gets addicted to the Fed buying), isn't there some point at which any reasonable person would say that the Fed can never let them mature?
"It’s a tale of two continents. While temperatures have remained above normal all winter long in the U.S. and North America, much of Europe recently flipped from a mild pattern to its coldest in 20 years." -- Washington Post, Feb 9
Anti-Hype In Lithium-Ion Batteries Foretells Doom For Electric Cars [View article]
I think that there is no way to predict which people will benefit from electric drive at this point. The benefits of anything subsidized are uneven by definition. If the government subsidizes FedEx and UPS to buy electric drive trucks then who (exactly) benefits? Only the delivery companies? Them and their customers? Others who later buy electric drive vehicles that make use of the charging infrastructure created by the utilities to support the delivery companies? It isn't really clear. It's difficult to predict.
Avoiding Wind Power Stocks: Geographic Diversity Debunked [View article]
> wind power will never be stable or reliable enough to serve the needs of an industrialized society
1) If we characterize *demand* mathematically -- i.e. energy per day, ramp rates, power peaks, etc (remember statistics are required for all of it, nothing is exact) then we get a demand model.
2) If we statistically subtract wind/solar supply models from the demand model, and that resulting model statistically maps right back to something that looks like the original demand model (but with distributions at lower expected energy and more frequent ramps) then wind/solar can be simply viewed as "negative demand".
So the question then basically becomes: is that demand offset "worth it"? Some estimates are 2X the current cost, other estimates are closer to break even. It's different in different places it seems.
Perhaps some brilliant factory designers of the future will simply figure out how to run their production whenever the wind blows and the sun shines? Essentially re-defining the stable and reliable "needs of an industrialized society"?
Axion Power: Time Is Right for Gas Guzzlers to Dual Mode EV Conversions [View article]
> "rapid implementation of Axion's gas-guzzler to dual-mode EV conversion initiative"
At a recent meeting of the Calif Air Resources Board, conversion companies were reminded that modifications to existing vehicles (which affect the behavior of emissions systems) violates California State laws covering "tampering" of vehicle emissions systems (due to the potential to cause more "cold starts"). A123 has the only state sanctioned exemption to this law (for 500 vehicles).
My guess is that vehicle manufacturers have enough lawyers to prevent widespread conversion of old vehicles using environmental F.U.D. tactics and other regulatory/legal terror.
CARB doesn't even have a definitive plan for testing the emissions of *new* vehicles that can run sometimes fully in EV mode, and may potentially have multiple "cold starts".
Jeremy Grantham Believes In High Oil Prices: Thinks Oil Sands Producers Are Bad Investments [View article]
> Mr. Grantham, who is a brilliant man… wise
I agree, in the context that Grantham’s wisdom has been driven by his adherence to SIMPLE measures of values that have repeatedly stood the test of time – e.g. house-price to income ratio, stock market to GDP ratio, and so on.
As written here, he “expect[s] the continuous rise in the price of hydrocarbons” due to fundamental measures related to the cost of extraction, the finite nature of the resource, and so on. Grantham has expressed the same SIMPLE expectation regarding the price of copper.
Where I have trouble agreeing is around the COMPLEX issues of substituting alternative energy for liquid fuels, or the COMPLEX process of getting the socio-political system to enact a carbon tax, or the COMPLEX models of global temperatures.
In similar vein, conventional oil production is getting increasingly complex, while the tar sands resource is so large (about the size of North Carolina) that its extraction should get no more complex for a very long time. My only question is when the Canadians will build a nuclear plant to replace the consumption of natural gas currently used in the process.
Is It Time For The Next China Growth Scare? [View article]
As Jim Chanos has pointed out, three *years* ago China was constructing enough new real estate for a 5' by 5' space for every man, woman, and child in the country.
Currently he says, China is constructing enough new real estate for a 5' by 10' space for every man, woman, and child in the country.
This amounts to approximately $2T worth of real estate under construction in an $8T economy. What could possibly go wrong?
The deeper question is: when it starts falling apart what will the Chinese authorities do to contain social discord?
Lithium-Ion Batteries Were A Bust, But Advanced Lead-Acid Batteries Are Booming [View article]
> hysterical opposition to nuclear energy
It's Friday, so for fun...
German thinker Jurgen Habermas has a theory of communicative rationality -- that there are 3 modes of reasoning: technical, moral, and emotive.
1) Perhaps nuclear energy can be made technically risk acceptable.
2) And nuclear energy reduces CO2 emissions, which could perhaps assist in mankind's moral desire to preserve nature.
3) The problem with nuclear comes with the "emotive" reasoning of mankind. People can't seem to avoid being in fear of it. A nuclear accident happens, and quickly some government official rushes to reassure us that "everything is OK". Folks don't feel as if they have any control of a nuclear situation -- versus, say, the risks of travelling by car or train. Some people "fear" airplane travel for somewhat related so-called "irrational" reasons. But flying is so safe! ... they are told. I guess people feel that their steering wheel allows them avoid most accidents, or imagine themselves jumping from a train window in time?
Somehow the engineers, or philosophers, or somebody has to bridge this "hysterical" emotive reasoning level. Tough problem.
Dow Today Versus Its 2007 Peak [View article]
"The market is getting increasingly convinced that the Fed will do whatever it has to do…," a leading money manager told the Boston Globe.
Oops, sorry, the numbers and quote are from Oct. 2, 2007.
*****
The above 3 lines appeared in the WSJ today page C16. :-)
Also appearing in the WSJ today is an inflation adjusted chart of the DJIA which shows that the 2007 peak was below the 2000 peak, and the current DJIA price is below the 2007 price -- so it's still a bear market in "real" money.
Why America Must Focus on Domestic Energy Solutions Instead of Imports [View article]
And in both heaven and hell your attorney is American. :-)
Coal Is Dead [View article]
Research has shown that the largest gains come from stocks with low valuations *and* low investor expectations -- i.e. an attitude that there is "no reason to own" the stocks.
Plug-in Vehicles: Toyota Tells the Unvarnished Truth [View article]
> we're not sure
I have to agree. It's all rather uncertain:
a) only 600 vehicles, so no big commitment
b) a battery big enough to warrant a plug, but not big enough to give much electric range
c) if it's plugged in regularly then the mileage number will be awesome, but if it's not then the mileage number will be disappointing
d) no hint at ultra fast charge, which is the most convenient way to offset short ranges
BMW experimented with EV Minis before refining their "Megacity" concept. Experiments are often useful.
3 Moves To Make On The Verge Of Market Panic [View article]
One of the standard measures of fear is the VIX, and it has been screaming happy talk for a while. There is rarely a surplus of fear after a multi-year bull run. Look at a 5-year VIX chart.
Wal-mart reported problems with spending from their customers some time ago. Today, Target warned of a flat Q1 of spending from their customers. Keep in mind that Wal-mart's average customer has a household income of about $45k, and Target's average customer household income is about $65k -- over 40% higher.
So the economic slowdown has moved up the income chain, and that will be bad for corporate profits, which have been at record highs. There is lots of room for disappointment.
Approaching A Major Inflection Point In The QE3 Trade [View article]
...and both the 10yr Note and 30yr Bond yields have *risen* since then (from 1.8% to 2.0%, and 3.0% to 3.2%, respectively).
In fact, both yields are in an 8-month uptrend -- counter to purchases having any effect on lowering yields.
So why the heck does everyone think the Fed is manipulating the stock market when they can't even manipulate the bond market?
And one more scary thing (to me), I just got back from getting my hair cut, and the barber had the stock market channel on his TV. I have never seen the stock market on his TV before.
The Stimulus Trap [View article]
So what happens if the government continues to run deficits year after year, and government debt keeps getting larger and larger (i.e. Congress gets addicted to the Fed buying), isn't there some point at which any reasonable person would say that the Fed can never let them mature?
Coal Substitution Is Temporary [View article]
"It’s a tale of two continents. While temperatures have remained above normal all winter long in the U.S. and North America, much of Europe recently flipped from a mild pattern to its coldest in 20 years." -- Washington Post, Feb 9
http://wapo.st/MWMovj
Anti-Hype In Lithium-Ion Batteries Foretells Doom For Electric Cars [View article]
Avoiding Wind Power Stocks: Geographic Diversity Debunked [View article]
1) If we characterize *demand* mathematically -- i.e. energy per day, ramp rates, power peaks, etc (remember statistics are required for all of it, nothing is exact) then we get a demand model.
2) If we statistically subtract wind/solar supply models from the demand model, and that resulting model statistically maps right back to something that looks like the original demand model (but with distributions at lower expected energy and more frequent ramps) then wind/solar can be simply viewed as "negative demand".
So the question then basically becomes: is that demand offset "worth it"? Some estimates are 2X the current cost, other estimates are closer to break even. It's different in different places it seems.
Perhaps some brilliant factory designers of the future will simply figure out how to run their production whenever the wind blows and the sun shines? Essentially re-defining the stable and reliable "needs of an industrialized society"?
Why America Must Focus on Domestic Energy Solutions Instead of Imports [View article]
If we cannot get route based fleet vehicles like delivery trucks, buses, and taxis off of oil then we have no hope with passenger cars.
The list of companies seems tilted toward passenger cars, but it is not wholly off the mark.
Axion Power: Time Is Right for Gas Guzzlers to Dual Mode EV Conversions [View article]
At a recent meeting of the Calif Air Resources Board, conversion companies were reminded that modifications to existing vehicles (which affect the behavior of emissions systems) violates California State laws covering "tampering" of vehicle emissions systems (due to the potential to cause more "cold starts"). A123 has the only state sanctioned exemption to this law (for 500 vehicles).
My guess is that vehicle manufacturers have enough lawyers to prevent widespread conversion of old vehicles using environmental F.U.D. tactics and other regulatory/legal terror.
CARB doesn't even have a definitive plan for testing the emissions of *new* vehicles that can run sometimes fully in EV mode, and may potentially have multiple "cold starts".
Jeremy Grantham Believes In High Oil Prices: Thinks Oil Sands Producers Are Bad Investments [View article]
I agree, in the context that Grantham’s wisdom has been driven by his adherence to SIMPLE measures of values that have repeatedly stood the test of time – e.g. house-price to income ratio, stock market to GDP ratio, and so on.
As written here, he “expect[s] the continuous rise in the price of hydrocarbons” due to fundamental measures related to the cost of extraction, the finite nature of the resource, and so on. Grantham has expressed the same SIMPLE expectation regarding the price of copper.
Where I have trouble agreeing is around the COMPLEX issues of substituting alternative energy for liquid fuels, or the COMPLEX process of getting the socio-political system to enact a carbon tax, or the COMPLEX models of global temperatures.
In similar vein, conventional oil production is getting increasingly complex, while the tar sands resource is so large (about the size of North Carolina) that its extraction should get no more complex for a very long time. My only question is when the Canadians will build a nuclear plant to replace the consumption of natural gas currently used in the process.
Is It Time For The Next China Growth Scare? [View article]
Currently he says, China is constructing enough new real estate for a 5' by 10' space for every man, woman, and child in the country.
This amounts to approximately $2T worth of real estate under construction in an $8T economy. What could possibly go wrong?
The deeper question is: when it starts falling apart what will the Chinese authorities do to contain social discord?
Lithium-Ion Batteries Were A Bust, But Advanced Lead-Acid Batteries Are Booming [View article]
It's Friday, so for fun...
German thinker Jurgen Habermas has a theory of communicative rationality -- that there are 3 modes of reasoning: technical, moral, and emotive.
1) Perhaps nuclear energy can be made technically risk acceptable.
2) And nuclear energy reduces CO2 emissions, which could perhaps assist in mankind's moral desire to preserve nature.
3) The problem with nuclear comes with the "emotive" reasoning of mankind. People can't seem to avoid being in fear of it. A nuclear accident happens, and quickly some government official rushes to reassure us that "everything is OK". Folks don't feel as if they have any control of a nuclear situation -- versus, say, the risks of travelling by car or train. Some people "fear" airplane travel for somewhat related so-called "irrational" reasons. But flying is so safe! ... they are told. I guess people feel that their steering wheel allows them avoid most accidents, or imagine themselves jumping from a train window in time?
Somehow the engineers, or philosophers, or somebody has to bridge this "hysterical" emotive reasoning level. Tough problem.