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  • The Fed Waited Too Long: Here Comes Inflation [View article]
    The R
    I'll expand on your 1st point - health care spending sucking down more of consumption will be a constant drag for demand.
    Feb 28, 2015. 12:44 AM | Likes Like |Link to Comment
  • Why Take A Chance? [View article]
    Larry, in the extreme, I'd agree with your statement. ".....and the expectation that they will continue to decline - discourage investment..."
    But the fearful obsession with increased purchasing power vs reduced purchasing power seems like a lame concern to me, given the pressure to increase prices-margins-profits with every transaction on the planet;

    Investment: Price discovery, high-lo or lo to highs, is critical for sustainable capital allocation. ZIRP & QE ARE "monetary interventions" that skew normal price discovery and hence capital allocation.

    Two things in regards to consumption;
    Deflation in a sector would suggest supply should decline.

    When gas was below $2/gal (countering my 'extreme' statement), I didn't wait to top the tank off in expectation of lower prices. In-elasticity of (gas-utility) demand aside, if chicken is super cheap relative to red meat, we'll see more volume of poultry sold.

    I suppose fear(s) shapes much of our policy. IMO the real fear should be the high level of interventions that skews market forces vs the technocrats efforts to manipulate price.
    Feb 26, 2015. 12:25 PM | Likes Like |Link to Comment
  • Chekhov's Gun [View article]
    Privatize more infrastructure spends.....?
    Feb 24, 2015. 04:02 PM | Likes Like |Link to Comment
  • A Tale Of Two Debts: Japan Vs. Greece [View article]
    Just saw a chart yesterday showing corp. significant debt at all time highs - some I'm sure reflected in corp cash balances....
    Feb 24, 2015. 12:34 PM | Likes Like |Link to Comment
  • Stocks Will Roar Once Greece Is Cured [View article]
    agreed hoop - cured??
    Feb 20, 2015. 03:59 PM | 1 Like Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    all good
    until your 'current valuations' have a normal reversion to the mean channel(s). Again, all good (for you & the top 20%) for a segment of the pop. invested in equities, until a reversion sets in.

    On a macro sense, you've avoided derivatives risk/exposure and 'that' leverage that currently supports 'current' valuations. All is good, until its not.
    Feb 19, 2015. 09:30 PM | 1 Like Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    ditto on the dangers e141

    *on average* the temperature is 'just fine', even when one foot is in boiling water and the other foot on dry ice.
    Feb 19, 2015. 04:28 PM | 1 Like Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    what conventional investments, for the majority of the pop., are producing "*normal* behavior of the asset value top line of the US household sector is to increase by about 7% per year", the past 7-8 years?
    Equities yes - until it doesn't. Not RE, simple/non-junk bonds.

    Debt levels have been increasing exponentially the last 30 years with a dip in the past few. So, lower incomes and level/slighter higher asset valuations (ex equities,) in general keep up with debt service? And when an AIG, Lehman, energy funds, et al, get collateral/margin calls when a sector valuation tanks, I think the house of cards is more vulnerable at higher debt levels even though the ratio of debt to assets is similar.

    We're more so on thin ice when derivative exposure is considered. Current valuations on spot market levels can quickly evaporate (i.e. oil), destroying
    those 'safe' debt/asset ratios. We've seen this in recent memory for various sectors and they play out now in different countries. Lots of opp's to catch a cold if/when EU, China, EM's, Japan etc sneezes. Maybe you're saying we're only exposed to a cold/flu vs pneumonia.

    Feb 19, 2015. 02:34 PM | Likes Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    well said
    Feb 19, 2015. 09:33 AM | 1 Like Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    IMO and I think I'm hearing you say the same, leverage needs to be reduced. That seems like a function of risk management between the parties (vs more reg's). I'd think the fed should be clear about targeting an increase - and they should increase.

    ZIRP has laid the groundwork for poor risk mgt w/ the chase for yield in a zirp world... I guess it's bothersome to me that you're indicating the FRB should stay in the zirp realm because of the huge riskk to leveraged positions....
    Feb 18, 2015. 09:50 PM | 1 Like Like |Link to Comment
  • FOMC minutes: June rate hike not a slam dunk yet [View news story]
    Your emphasis on assets doesn't reflect the ill-liquidity of a large % those assets. If liquididation is required to service debt, the domino's begin to fall quickly and those valuations are reduced in short order.

    june mentioned derivative exposure...the net exposure might seem manageable (to some degree) but again, if those collateral positions are questioned, the domino's role.

    Global debt is up ~40% since 4th qtr 2007
    Since 2007, global debt levels have increased by $57 trillion, reaching $200 trillion in total by the second quarter of 2014. In the fourth quarter of 2007, total debt as a share of GDP stood at 269 percent and this increased to 286 percent by the second quarter of 2014. China in particular has experienced skyrocketing debts. They quadrupled over the past seven years, fuelled by real estate and shadow banking. In 2007, Chinese debt stood at approximately $7 trillion and this reached $28 trillion by the middle of 2014.

    IMO, you're minimizing the amount of debt and the danger of deflated valuations when liquidations/margin calls collateral calls occur - when only comparing debt to 'current' asset valuations.

    EU's hyper-leverage of re-hypothecation of collateral (vs U.S. tighter leverage requirements), is a clear example of the risk of default that could or would be a tsunami of collateral calls.

    Are you suggesting 'all is well' with debt levels?
    Feb 18, 2015. 09:19 PM | 2 Likes Like |Link to Comment
  • The Next Real Estate Crash [View article]
    well said Darren
    You mentioned and I'd like to highlight - higher ed.
    Price distortions from the FRB and Fed gov also effecting commodities, U.S. oil production in particular right now.

    Gross miss-allocations of capital created by FRB/Fed gov interventions
    Feb 18, 2015. 04:26 PM | Likes Like |Link to Comment
  • China's Monumental Debt Trap - Why It Will Rock The Global Economy [View article]
    ditto David

    Pretty much Stockman's point - they're at peak debt or beyond - loaning/spending ~$14T the last 6 years to GET an additional ~$5T in GDP..... isn't sustainable.
    Feb 16, 2015. 05:13 PM | 1 Like Like |Link to Comment
  • China's Monumental Debt Trap - Why It Will Rock The Global Economy [View article]
    yes - but how did nat gas & oil become so attractive to get that private investment?
    I'd say the huge liquidity from the FRB put $ on the PM trading desks chasing yield - and oil was one of the commodities that was inflated from the yield chase.

    So - get gov't involved in the markets and the skewed price discovery creates mal-investments - heavy oil/nat gas infrastructure being one.

    My point was the gov't deficit spend has been ~33% of the budget. Mis-directed no doubt, but if we're asking for fiscal stimulus, we've been getting gobs of it.

    Gov't can facilitate some big projects that private investment wouldn't otherwise do. Some of those things (bridges, highways, defense....) are needed desperately.... I suppose the transfers have contributed to the massive deficits - but 'digging ditches and re-filling them' to the tune of multi 00's of billions in defict spend, sure hasn't panned out. The gov't isn't a creator of sustained economic growth.

    So - w/out proof-links-charts, I'll say gov't deficit spending is crowding out private investment - except as you say where fossil fuel cap ex have boomed. But again, if it wasn't for the FRB liquidity fueled bubble, we wouldn't see the level of investment and now contraction in the sector.
    Feb 15, 2015. 01:58 AM | Likes Like |Link to Comment
  • Negative Interest Rates: Capital's Reproduction Problem [View article]
    not seen all the background to your discussion, but seems to me when gov't actions effect price discovery, you will get more of; " and the latter stemming from their occasionally getting things quite wrong in the short run"

    The meddling of price discovery brings mal-investment of capital....the boom/bust cycles are altered and exasperated.
    Feb 13, 2015. 10:17 PM | Likes Like |Link to Comment