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  • Sep. Empire State Survey: Manufacturing -10.41 vs. -2.0 expected, -5.85 prior. [View news story]
    Corresponds with last weeks weak Industrial Production data which was more or less ignored when BB brought out the bazooka.
    Sep 17, 2012. 11:47 AM | Likes Like |Link to Comment
  • Is Joe Sixpack Better Off Today? [View article]
    bbro,

    Is Intrade legal for US residents?

    If so, I will take that bet!
    Sep 16, 2012. 04:02 PM | Likes Like |Link to Comment
  • Is Joe Sixpack Better Off Today? [View article]
    Alan,

    I have huge out of pocket deductibles to try to control costs so if I factor those in then I am really sucking a hind teat as one my old friends would say :)

    $16k for a family of 4 is probably about right whether you pay it outright or do it the way I do it.
    Sep 16, 2012. 03:53 PM | Likes Like |Link to Comment
  • Is Joe Sixpack Better Off Today? [View article]
    bbro,

    Just saw this today on the WSJ blog:

    http://on.wsj.com/Sru9RJ
    "Median household income, adjusted for inflation, fell 1.5% in 2011, to $50,054. That’s 8.1% lower than before the recession and 8.9% lower than in 1999."

    On a personal level, I can tell you that paying for my own health insurance is quite revealing when it comes to medical inflation. My costs have risen from $345/mth in 2009 to $584/mth now so if you aren't part of a corporate plan these cost increases will make you gag.
    Sep 16, 2012. 03:28 PM | 2 Likes Like |Link to Comment
  • Is Joe Sixpack Better Off Today? [View article]
    Steven,

    JoeSixPack cares about the cost of things, how much money they make, how easy it is to find a job for themselves and their kids, and the "future" (right track/wrong track and budget of the country) of this country. These are simple numbers that Joe Sixpack understands.

    Every President begins their tenure on a specific day and as a result all of these metrics can be calculated without resorting to esoteric measures to define their current standing.

    Bill O'Reilly gets the Joe Sixpack idea:

    "Take a look at this chart. When President Obama took office, unemployment was at 7.8 percent. After three and a half years, it stands at 8.3 percent. Median income when the President took over, about $55,000; now, $51,000. Gasoline prices in January 2009, $1.84 per gallon; now, $3.82 a gallon. That's painful to working folks and is largely ignored by the President.
    National debt, $10.6 trillion when Mr. Obama took over the oath of office. It is now more than $16 trillion, an astronomical and dangerous rise. And finally the budget deficit, President Bush's last year, $458 billion in 2011; under President Obama, it had risen to nearly $1.3 trillion."

    Read more: http://fxn.ws/RV2UUt

    The value of Joe Sixpack's house has also fallen substantially during the President's tenure as well. Unemployment is "down" to 8.1% because people have given up.

    So the stock market is up big, corporate profits are up big, and GDP has recovered to its prior peak. Does Joe Sixpack care about these things in the same way?

    Those are some nice positives but do they translate in the same way as the other metrics?

    Who Joe Sixpack blames for the above will determine how he votes in November.
    Sep 16, 2012. 11:47 AM | 5 Likes Like |Link to Comment
  • Richmond Fed President Jeffrey Lacker has explained that he opposed QE3 because it's unlikely to boost growth, but if it does, it will lead to higher inflation. The FOMC's sole dissenter added that any improvement in unemployment appears to be held back by impediments that monetary policy can't offset. Finally, buying MBS's, or providing credit to particular economic sectors, "is an inappropriate role" for the Fed and is "the province of the fiscal authorities." [View news story]
    "Finally, buying MBS's, or providing credit to particular economic sectors, "is an inappropriate role" for the Fed and is "the province of the fiscal authorities."

    Funny there was a time when the "Plunge Protection Team" was in the realm of the tin-hat brigade but now you have to wonder. If they have publicly announced this who knows what they have done in private?

    Maybe there is something to that auditing the FED idea that's floating around.
    Sep 16, 2012. 11:15 AM | 2 Likes Like |Link to Comment
  • It appears that many investors are commemorating the fourth anniversary of the bankruptcy of Lehman Brothers by telling themselves that any Lehman-like danger has passed, and staging a huge rally in its honor, says Mark Hulbert. Actually, he quips, the real impetus was that the Fed basically concluded that the economy is in such horrible shape that it needs even more life support. This all goes to show how inscrutable — and, therefore, ultimately unpredictable — the markets can be. [View news story]
    The re-election of Barack Obama and the House going Democrat :)
    Sep 15, 2012. 12:24 PM | 2 Likes Like |Link to Comment
  • "Do you know what the loss would be on a 30-year Treasury if it went back ... just to the yield in force in 2011?" asks Jeff Gundlach, incredulous anybody would buy one (answer: 37%). If you need safety and yield, he says, buy Campbell Soup (CPB) instead. Listen to why the hot-shots at his firm would rather day-trade Facebook than divine the Treasury market. [View news story]
    I am a big holder of Gundlach's Total Return Fund (DBLTX) and he puts his money where his mouth is because he is also a substantial owner of his fund. Right now he has the lowest duration in the history of the fund at 1.2 which means he is expecting interest rates to rise. The MBS portion of the fund acts like "negative" duration because of FED buying and rising interest rates making it more valuable.

    He is the most sophisticated bond investor in the industry and when it comes to bonds you want an active manager. Passive management (indexes) can get you killed if you don't pay attention to how they are structured. The Barclays' universe of bonds has become so weighted with Treasuries that on a historical basis it does not resemble anything close to what it looked like 10 years ago.

    It was like the composition of the S&P500 prior to the 2000 dotcom bomb where a couple of stocks comprised a huge portion of the overall value of the stock index which meant that individual company/stock risk had increased dramatically but was masked by the fact it was an "index".

    This is definitely a challenging time to be an investor.
    Sep 15, 2012. 12:21 PM | 4 Likes Like |Link to Comment
  • Something's up in the Spanish bond market, where yields are shooting higher, the 2-year +24 bps to 3.19%, the 10-year +18 bps to 5.81%. ECB bond purchases won't begin until Spain submits to a bailout, and Spain won't submit to a bailout as long as bond yields remain contained, ergo, another peripheral bond panic almost certainly lies ahead. [View news story]
    Tack,

    English was not his first language.

    This article was interesting:

    http://bit.ly/Pqwa0f

    Replace ponzi units with "houses/stocks/precious metals" whatever you like and the quote is self-explanatory.

    Ponzi means worthless so some portion of the asset value is pure air which is exactly what the increase in house prices was prior to its implosion - the wealth evaporated because it wasn't real. Risk-free money leads to ponzi style investing regardless of the fundamentals - stability leads to instability.

    The FED is trying to make money/cash worthless so as to make other assets more attractive. I don't recall that being a part of their mandate. Stocks have solid fundamentals underlying their prices just like houses did, however, what is happening now is that a speculative/ponzi unit value is starting to be added on to that underlying value. This is what the FED believes and this is also what some market participants believe. The question is whether this is sustainable long term.

    I also don't recall Price/Earnings multiple expansion being a part of that mandate. The FED will not be able to extricate itself from this mess without significant damage in the future so we are trading stability today for instability and greater damage in the future.

    This is not our Father's economy anymore.
    Sep 14, 2012. 01:29 PM | 1 Like Like |Link to Comment
  • There's No Longer A Bernanke Put [View article]
    I think the FED has destroyed/transformed (your choice) our economic system. It has taken what was the single best wealth creator in the history of the planet and turned it into a parody of itself.

    We are no longer operating a capitalist system in which there is a price signal that is determined by the market. The "price of money" is zero which implies that future value of money is now meaningless.

    People who had an incentive to buy anything based upon the fear of rising rates will no longer have the pressure to buy anything now.

    Why buy a house now when mortgage rates are supposed to be falling in the future?

    In the quest to fight deflation, the FED has created a recipe for further deflation in my opinion.

    I don't believe that the FED has reduced risk by making everything less risky I believe what Hyman Minsky said here:

    "... over a protracted period of good times, capitalist economies tend to move from a financial structuredominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently,units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values."
    -- Hyman Minsky

    So when the FED unravels itself from this Gordian Knot it has created, I don't think any asset class will be safe. In the short/medium or longer term, I believe stocks will continue to rise as the outlet for all this monetary excess/experimentation.

    I shudder to think that Marc Faber might actually prove to be right one day.
    Sep 14, 2012. 01:12 PM | 3 Likes Like |Link to Comment
  • Something's up in the Spanish bond market, where yields are shooting higher, the 2-year +24 bps to 3.19%, the 10-year +18 bps to 5.81%. ECB bond purchases won't begin until Spain submits to a bailout, and Spain won't submit to a bailout as long as bond yields remain contained, ergo, another peripheral bond panic almost certainly lies ahead. [View news story]
    Tack,

    My comment was more directed at the fact that I think the FED has destroyed/transformed (your choice) our economic system. It has taken what was the single best wealth creator in the history of the planet and turned it into a parody of itself.

    We are no longer operating a capitalist system in which there is a price signal that is determined by the market. The "price of money" is zero which implies that future value of money is now meaningless.

    People who had an incentive to buy anything based upon the fear of rising rates will no longer have the pressure to buy anything now.

    Why buy a house now when mortgage rates are supposed to be falling in the future?

    In the quest to fight deflation, the FED has created a recipe for further deflation in my opinion.

    I don't believe that the FED has reduced risk by making everything less risky I believe what Hyman Minsky said here:

    "... over a protracted period of good times, capitalist economies tend to move from a financial structuredominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently,units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values."
    -- Hyman Minsky

    So when the FED unravels itself from this Gordian Knot it has created, I don't think any asset class will be safe. In the short/medium or longer term, I believe your position is correct, stocks will continue to rise as the outlet for all this monetary excess/experimentation.

    So that's what I see as having been blown up by the FED.

    Good luck.
    Sep 14, 2012. 12:20 PM | Likes Like |Link to Comment
  • Anti-Western protests continue to spread. Protesters have scaled the walls of the U.S. Embassy in Tunisia and replaced the American flag with a black flag. The Embassy is reportedly on fire. Earlier, the German and British Embassies in Sudan were rushed. The University of Texas orders its buildings be evacuated after a bomb threat from a caller claiming to be with Al-Qaeda. [View news story]
    We are expected to believe that a coordinated attack on our embassies in the Middle East on Sept 11th was a coincidence? It just happened spontaneously?

    Just imagine if they were organized (sarcasm).

    What has happened to the media in this country?
    Sep 14, 2012. 11:54 AM | 1 Like Like |Link to Comment
  • Richard Barley has a kind word for bonds (currently in the midst of a savage sell-off), saying the global growth outlook continues to be dismal despite the Fed and ECB. Could the curve get steeper still? Sure, but the date of any increase in short rates keeps getting pushed further into the future, which should help anchor the long end. [View news story]
    It is literally amazing that the policy of QEfinity whose stated purpose is to lower long-term rates has had exactly the opposite results since the announcement yesterday especially compared to a month ago. WTF?

    Is the FED trying to trigger a bond selloff?
    Sep 14, 2012. 11:39 AM | Likes Like |Link to Comment
  • Something's up in the Spanish bond market, where yields are shooting higher, the 2-year +24 bps to 3.19%, the 10-year +18 bps to 5.81%. ECB bond purchases won't begin until Spain submits to a bailout, and Spain won't submit to a bailout as long as bond yields remain contained, ergo, another peripheral bond panic almost certainly lies ahead. [View news story]
    In the immortal words of Charlton Heston from "The Planet of the Apes":

    http://imdb.to/QYP6IX
    [last lines]
    George Taylor: Oh my God. I'm back. I'm home. All the time, it was... We finally really did it.
    [screaming]
    George Taylor: You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!

    I miss Charlton :)
    Sep 14, 2012. 11:33 AM | Likes Like |Link to Comment
  • Something's up in the Spanish bond market, where yields are shooting higher, the 2-year +24 bps to 3.19%, the 10-year +18 bps to 5.81%. ECB bond purchases won't begin until Spain submits to a bailout, and Spain won't submit to a bailout as long as bond yields remain contained, ergo, another peripheral bond panic almost certainly lies ahead. [View news story]
    The FED has removed all risk from the world. There is nothing to see here.
    Sep 14, 2012. 11:18 AM | Likes Like |Link to Comment
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