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  • No, the debt ceiling brouhaha does not make the U.S. a "laughingstock" - it's "exactly what America needs" to face the hard choices it must make, Evan Newmark writes. "Ask yourself... Would I rather have my politicians fighting each other in Washington over the debt ceiling today, or my neighbors fighting each other in the streets when the nation goes bankrupt five years from now?"   [View news story]
    Preach it, Wyatt.
    Aug 2, 2011. 12:51 PM | 1 Like Like |Link to Comment
  • Money Supply Growth Alert  [View article]
    Flow, can you. please explain that (the answer to iban) or point me to articles?

    I thought m2 was synonomous with bank reserves, to which reserve ratio is applied, limiting banks when they effectively create money by originating loans.

    I'm fairly new to the realization that money is debt and the whole money creation process. Any guidance is welcome.
    Jul 16, 2011. 09:43 PM | 1 Like Like |Link to Comment
  • Can Copper Prices Really Be a Market or GDP Predictor?  [View article]
    I went back and had a quick look at copper futures vs SPY since 2002, and from 35,000 feet any correlation is hard to find. Maybe by looking more closely at the data something would come up. It might be that correlations are much easier to find when working in more detail. I think The Ratio was useful over the last 5 years, and even those correlations are hard to spot when the information is weekly and not daily.

    Here's a link to a photo of the chart (red is The Ratio, purple is SPY) since 2002:
    Jun 30, 2011. 11:08 PM | Likes Like |Link to Comment
  • Can Copper Prices Really Be a Market or GDP Predictor?  [View article]
    I looked back over the last five years and, using a JJC/SPY ratio (The Ratio) as my comparison against SPY, found that the trend direction of The Ratio tended to provide some insight into the direction of SPY over the following period. I would define period as 1-4 months.


    It's obviously not a rigorous study, but it might be worth seeing if The Ratio proves to be useful indicator over the longer haul. It also might be useful to break the data down into weeks so there is more detail available when trying to determine trend.
    Jun 30, 2011. 10:51 PM | Likes Like |Link to Comment
  • Today in Commodities: Summer Doldrums  [View article]
    Support is broken in DBA, DBC, JJG... Be short. AGA and DEE get it done. Though volume is so thin, it's almost be non-existent.

    Especially if USD break above resistance... north of 76.70 or so.
    Jun 24, 2011. 11:47 PM | Likes Like |Link to Comment
  • Techs (XLK -1.7%) are pulled broadly lower by last night's earnings announcements (I, II) from Oracle (ORCL -4.1%) and Micron (MU -13.3%), but analysts generally seem to remain optimistic on both. Underperformance in Oracle's hardware is not a big concern as long as software licenses stay strong, and Micron's DRAM weakness is just a hiccup.   [View news story]
    "Analysts remain optimistic"

    ...Noooooooo, really? Don't they have "Sell" recommendations on more than 50% of the stocks out there? Oh... wait...
    Jun 24, 2011. 03:47 PM | 1 Like Like |Link to Comment
  • If the restraints on the economy are temporary, why did the Fed lower its medium-term outlook? "They're groping," Economist's Greg Ip writes. While Bernanke's effort to actually answer questions rather than recite talking points is "refreshing," the actual answers disappoint: "His admission of ignorance reflects genuine puzzlement with the economy’s failure to reach what he likes to call escape velocity.”   [View news story]
    Any chance he and the Fed heads re-examine whether the Keynesian playbook is the right one?


    But I'm sure both Austrians and credit cycle deflationists like Prechter (what economic theory box would Prechter fall into?) are barfing incredulously at Bernanke's mystification.
    Jun 24, 2011. 10:47 AM | 4 Likes Like |Link to Comment
  • In a landmark deal cutting public employee benefits, New Jersey's public workers will soon pay more for health benefits and receive smaller pensions under a state bill that received final approval last night. The changes could save $120B over 30 years, but even that sum may not completely fix New Jersey's $54B budget shortfall in its pension system.   [View news story]
    Rock on, Christie. At least, as an NJ resident, I get to vote for him. Plus I get to do it as a registered Democrat, and it's always fun to switch isles, if only to baffle the pollsters.
    Jun 24, 2011. 10:23 AM | 8 Likes Like |Link to Comment
  • Fed's soon-to-end bond buying likely aided economy 
    "The only direct effect of QE2 was to push down long-term bond rates."

    That might be the only direct effect, but the indirect effect - and the intended effect - was to raise asset prices (equities, commodities, unfortunately for the Fed home prices didn't play along). Ironically, this also drove the long term rates higher as the normal buyers of Treasuries headed for riskier pastures. It is only since the market has started pricing in the end of QE2 that rates have fallen again along with equity prices. By putting an explicit "Bernanke put" out there under the market, Bernanke gave an overt "risk on!!" signal to the market. That was the primary purpose of QE2, imho. A PR job to heighten confidence. I suspect the long term damage will significantly outweigh the short-term benefits.
    Jun 22, 2011. 12:48 AM | 1 Like Like
  • As expected, Greek PM Papandreou survives a confidence vote in Parliament. The euro remains around the same level as before the vote, $1.4412.   [View news story]
    Good old fashioned "sell the news."

    Plus, the Euro is still doomed, imho. They are making pretty noises about straightening out Greece without a default, but it can't be done within in the parameters of the Euro.

    1) Greek economy is slowing, and austerity will slow it further.
    2) Greek insolvency is getting worse, not better. Meaning if all goes well and the austerity measures pass and Greece gets another bailout... they will almost certainly need to do this whole song and dance against next year. The Germans and other European (and American, thanks to the IMF!) citizens will get fed up at some point and boot the politicians playing along with this bankers bailout... the polling revolt has started already.
    2) Deep social unrest from both within Greece and from the nations bailing them out, will continue to heighten. *Should* the austerity measures pass in Greece, they will just lead to deeper economic distress and heightened social unrest. My aunt and uncle, who have owned and operated a rental property on the outskirts of Athens for 20 years are spending this summer in Canada because of the violence and anarchy in Athens.

    With a world full of crappy currencies, the Euro has got to be the crappiest, imho.
    Jun 22, 2011. 12:42 AM | Likes Like |Link to Comment
  • Greek PM Papandreou may be putting conditions on his offer to step down, but just making the offer means he's in no position to demand anything. While the debt crisis looks to have claimed another European government, policies towards bank balance sheets have yet to change - perhaps a larger power is in charge.   [View news story]
    Good analogy, Mr. Grey. And new to my ears/eyes.
    Jun 15, 2011. 02:52 PM | Likes Like |Link to Comment
  • Wilbur Ross blames Washington for many of the U.S. economy's problems, from policies that have extended the housing slump to the administration's attempt to block Boeing (BA) from building a plant in a right-to-work state. "Who in American business is going to have confidence to build a new factory, add employees, if you're not even sure you can build the factory where you want to?"   [View news story]
    The Boening story is just crazy. Outside of Union bosses, I can't imagine who else thinks barring a company from building a plant in a right-to-work state is a good idea. That's a great way to provide just one more incentive for companies to move production out of the country.
    Jun 14, 2011. 09:55 AM | 5 Likes Like |Link to Comment
  • "I can't imagine the Fed would do $2T of QE ... and say, 'look guys, we tried, you're on your own,'" says Jim Bianco reflecting on the weakening economy. "There will be QE3 and 4 and 5 ... QE is all about trying to prevent pain in the marketplace."   [View news story]
    Sad but true.
    Jun 1, 2011. 02:32 PM | 2 Likes Like |Link to Comment
  • Lost in the debate over the effect of the end of QEII and when the Fed might raise rates is the growing likelihood of QEIII, writes Scott Minerd. Likely fiscal tightening in 2012 and the break in commodity prices will give Bernanke the political cover to continue pumping the money supply. QE might just be getting started.   [View news story]
    The Fed is not obligated to do the bidding of Congress, but people like Paul in Congress can absolutely put pressure on the Fed. An audit of the Fed would put pressure on them. Publicly highlighting their actions puts pressure on them. The general public does not want or like the printing presses to run endlessly (even though I think the general public has no idea why it is good or bad, intuitively they don't like it). And believe it or not, the Fed, like every other human institution, is vulnerable to public pressure.
    May 19, 2011. 12:08 PM | 1 Like Like |Link to Comment
  • Lost in the debate over the effect of the end of QEII and when the Fed might raise rates is the growing likelihood of QEIII, writes Scott Minerd. Likely fiscal tightening in 2012 and the break in commodity prices will give Bernanke the political cover to continue pumping the money supply. QE might just be getting started.   [View news story]
    He won't be able to do it under the cover of night as long as Ron Paul is chairing Congressional oversight of monetary matters. He won't be able to do it undercover. At the very least, the Bernank will have an adversary in Congress who would be frowning on such action, which would make it much more difficult to pull off.
    May 19, 2011. 10:15 AM | 2 Likes Like |Link to Comment