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change is the only constant

change is the only constant
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  • Complacency? Don't Worry, Be Happy! [View article]
    Cam-

    The Josh Brown/Eric Peters story is priceless. A big difference between street smart and school smart is running a game in the dorm room REALLY has to get out of control for the cops to be called. University structure supports a little excess. But (metaphorically, maybe?) somebody has called the cops.

    Health Care (combined with the on-shore taper) scare seems to hold all the seeds for a GDP growth shock. A one off.... it may be. Or is it enough to warrant telling the chauffeur to warm up the car now?

    Boy scout's motto here.
    Jul 7 10:35 AM | Likes Like |Link to Comment
  • This Will End In Tears, But When? (Part 1) [View article]
    Cam-

    You are making the Hussman case better than Hussman. The comparison to the internet stocks of the last century is not unfounded, however, knowing the reason why (the bubble burst) is (often) more important than theory.

    Obsolescence catching up with promise is A LOT (but not exactly) like debt catching up with risk. The debtor's tipping point depends on how he (invested, consumed, gambled, or frivolously puttered away?) used his money. Neither inventor nor investor knew Netscape from Google.

    A nation's (or even planet's?) tipping point assumes (maybe erroneously?) a zero sum game. Just because you know you are waiting for Godot does not mean you know how to enjoy the party while it lasts. Indeed, foreboding FEELINGS (may) ruin perfect execution.

    Midnight was Cinderella's hard and fast rule. It was the ugly step-sisters' path that ended in tears.
    Jul 1 10:38 AM | 1 Like Like |Link to Comment
  • Could China And Russia Be Trying To Kill The Petrodollar Standard? [View article]
    Author-

    The difference between moving to a multi-standard from single standard system seems like a great idea, until you get the point of "floating" standard. A floating single standard is much more predictable than a floating multi-standard.

    So what? A barrel of oil is pretty standard. You would see arbitrage run amok if large amounts of multi-standard currency trading for barrels of oil emerges. Traders would have a field day buying oil in one currency, wheat, corn and soybeans in another; and the hunt for arbitrage would rule them all.

    Talk about volatility!

    I think you may be misreading this (Russia and China) trading in other currency's change. These countries have a high value reserve portfolio NOT KICKING OFF enough DOLLARS (cash) to support their other import (like food) needs may be what's driving this.
    Jun 30 07:53 PM | 1 Like Like |Link to Comment
  • A Surprise Recession? [View article]
    Michael-

    A 2nd quarter GDP (if health care related) surprise would (make sense) follow. The escape velocity meme just got hit by the unintended consequences of (nationally) lower health care costs. And how GDP is calculated. It does not have to be as big as the first quarter (-1%) to be negative growth.

    Technical recession? The FED cannot print echo-cardiograms (and the fees) that are not needed because somebody got preventative care. If it (reduced costs) does happen, its a structural shift in GDP input and output.

    If GDP drops in the 2nd quarter too (I read Katrina only changed GDP by .7% as a reference) Its a Game changer in both fiscal and monetary policy.
    Jun 30 10:28 AM | 3 Likes Like |Link to Comment
  • Declining Liquidity Could Mean Trouble Ahead... [View article]
    Author-

    Seems slim on the data side (two data points is kind of like a Ripley's believe it or not post); but a recession did happen within a year of those margin peaks and S&P tops. And I am pretty sure you are not saying a that stock market margin debt extremes cause recessions.

    Low beta stocks (even better!) in 6 months maybe? If the 2014 first quarter GDP is followed by a surprise 2nd quarter drop too, then luck is a lady to you (because recession, and most likely market top it is)! I am not criticizing your call, (I am suspicious of these market heights too) it just seems like the data connection is not too solid.
    Jun 27 10:32 PM | Likes Like |Link to Comment
  • China's New Paper Tiger? [View article]
    Cam-

    This article is pure brilliance. You have aptly described a money machine where differences in interest rates (not economic needs) drive expansion. A financier's paradise. The $4T reserve covers all. As long as the interest rate differential exists, expansion will continue.

    How is Currency risk managed? Closed system.

    China's growth can continue as long as there are people buying the bonds, and the Chinese government can service the debt. It is not (any one of) china's companies that must go under, it is the PBOC. It is the ultimate in privatizing gains and socializing the losses.

    Getting rich arbitraging government debt is wealth without risk. Money can actually be LOST on the providing of goods and services AND the enterprise is profitable due to (asset leverage and) interest rate arbitrage.

    Indeed, this is all possible because China is a "closed" system. Would Mao think China is a worker's (or banker's) paradise today?

    Paper tiger....(or trojan horse?)... indeed. I am not sure if Mao or Marx should be rolling over in his grave; or maybe its Adam Smith dancing on both of theirs'.
    Jun 25 07:40 PM | 2 Likes Like |Link to Comment
  • Apocalypse Later [View article]
    Cam-

    It appears the central banks have solved the liquidity problem.

    If (When?) all the global (long) bonds slowly begin the approach one percent (as they slowly approach each other) and the conspiracy has worked; the risk free rate will be the same everywhere. Currency risk is all that will remain. And currency risk is the (central) bankers purview. Arbitrage is at the center of (all global) trade. And/but the carry trade falls apart. Unlikely?

    The physical world slowly falls apart, but the financial markets continue as if the end of the world is not possible. Liquidity (loss) a necessary condition for collapse maybe? Point? You are right (or at least we agree) it all seems apocalyptic. The last few years are not rumors of wars. The last few years (and today!) are actual wars. Now we have a new world order where bankers are (the real) rulers. Trumping economic dogma to boot. Maybe, it was always this way......
    Jun 16 01:28 PM | 1 Like Like |Link to Comment
  • Is Opportunity Bubbling In Oil Pricing? [View article]
    @rajprasad-

    I iz! The key word in "yur txt' is expert. The key word in mine is whipsaw. The key word in the author's text is "future".

    You can send a kid to school, but you can't learn em an education.
    Jun 15 02:51 PM | 1 Like Like |Link to Comment
  • Market Lessons From Iraq, Bergdahl And Cantor [View article]
    Author-

    You said:

    "For if such issues are left unchecked and unmonitored, we can find ourselves with an even worse problem than had previously existed"

    That about sums up Iraq, Bergdahl and Cantor.

    Knowing the difference between the greater good and the lesser evil means knowing the difference between good and evil. It is only when you don't know you don't know that you see the result of choosing (what you think is) the greater good becoming a (the) greater (as opposed to doing the original lesser) evil.

    And who among us knows they know (the difference between good and ruinous)? Most don't know they don't know. I know I do not know, means only being conscious of a greater good becoming a greater evil. Problems/solutions that require constant (involvement to make better?) monitoring to not return to (or worse than) the way you found it means you did not understand the problem in the first place.

    Point? The FED being the (front and) center of market activity and does not improve the lives of Americans, the non-market participants must ask is the (wall street) cure the (main street?) disease?

    If Wall street has (now) become permanently more important than main street, absolute power, (has) corrupt(ed)s absolutely; and America has entered a permanent depression.

    If true, our nation is no longer of the people, by the people and for the people; and self-evident truths of the founding fathers have become lost in a modern day paper chase.
    Jun 15 02:27 PM | Likes Like |Link to Comment
  • Is Opportunity Bubbling In Oil Pricing? [View article]
    Past spikes in oil prices are rarely (never?) fundamental in cause. The rebound/crash IS always how fundamental demand has re-organized itself (conservation, substitution and innovation) and how quick supply/demand (re)adjusts.

    Point? playing oil here (positively or negatively) is like asking 'please whipsaw me'. If you are already in.....selling into the spike or thinking it will only keep going up (fear and greed) is where knowing your emotions can stop irrational.

    But I agree with the author.......there is a (for the nimble) momentum trade. But its not (going to be) in oil. Its going to be what rises when oil falls, and falls when oil rises.
    Jun 15 12:22 PM | Likes Like |Link to Comment
  • The Government Debt Ponzi [View article]
    Author-

    Interesting. I am reminded of two classics: Eli Goldenratt's the goal and "Herbie" the fat kid. Once Herbie moves at his best possible pace, everyone else can get in step. And the other is waiting for Godot......as long as somebody (anybody!) is waiting, because it is a perpetual conflict.......the story is never-ending.

    Point? As long as the ponzi's scheme's protagonists are in collusion with each other, the emperor wears a fine suit seen (and described) by blind men groping in darkness. The bond vigilantes have gone extinct. And there is only one version of (any) government truth. Its own. A version Globally affirmed by other ponzi practitioners.
    Jun 10 03:34 PM | 4 Likes Like |Link to Comment
  • Time To Override The Trend Model? [View article]
    Cam-

    Good article. Thanks for sharing your approach; as it is rare somebody can craft a narrative that both speaks quant-talk with meaningful macro without sounding like an (and on the other hand) economist. You do a great job.

    The full approach (in my humble opinion) gets down to never going against your model and never going against your gut, because fine tuning your gut and the model are becoming (roughly) the same thing. When each is fine tuned to the highest degree possible (and they differ) doing nothing is the luxury that you cannot afford not to take.
    Both are learning both instantaneously and contemporaneously.

    When both (a finely tuned) model and (its architect's) gut are students, then you are in a place of profound meaning. The (timing) question is that which cannot be repeated cannot be modeled, but it does not mean these things (swans?) cannot happen.

    Again, my humble opinion. Taleb's work explains more than I ever could. Sometimes knowing (something you think is impossible is going to happen) why intuitively is a (emotion?) gift.

    The swan is (either) timing the market's crash (that everyone expects) or (knowing why) the market never goes (meaningfully) down again (which nobody expects).

    Sorry for rambling my humble opinion; I agree (FWIW) never go against your gut.
    Jun 10 02:52 PM | Likes Like |Link to Comment
  • Risk Assets: 'Nothing Can Go Wrong' [View article]
    Good article.
    Jun 5 04:38 PM | Likes Like |Link to Comment
  • Watch Out For The Buyback Taper [View article]
    Daniel-

    Great research, excellent read.

    This article is way ahead of the curve. Far, far ahead. Which means I am printing it now and will slowly absorb its implications as the next 24-36 months unfold.

    The thesis is simple and powerful: capital (borrowed) used to reduce the outstanding number of shares does not fundamentally create (shareholder) value. It (however, paradoxically) raises share price. Its a sugar high and will wear off.

    Both the financial and political classes are in a box. Production constrained (stag)inflation, monetary (liquidity) surplus, government spending constrained by debt and/but no wars - is the new (however unstable) normal. And the demographic implications of social security and the baby boomers (if that was not enough) retirements and global wage competition the new normal's future.

    The limit appears: if/when (revenue first; followed by earnings) per share metrics begins to drop, the sugar has run its course. Running in place can't be sold as progress. Multiple expansion in this environment is like getting set-up to hold the (higher priced shares) bag.

    You are (metaphorically) delineating a door slowly closing. The risk premium is what, (in the near term) however, will keep money cycling (rotating) through the market averages. And that is what keeps (un)fundamental stock prices from falling. When/if rates rise, the door slams shut. Equity's return cannot pay off (this) debt.

    Its an equilibrium of instabilities. But I know, I do not know what would cause this to break. They are titan-like forces.
    Jun 4 12:23 PM | 6 Likes Like |Link to Comment
  • Ecuador: Resource Nationalism Has Predictably Failed [View article]
    Author-

    Good article. Great research.
    Jun 3 09:05 AM | 2 Likes Like |Link to Comment
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