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  • Why Take A Chance?  [View article]
    @David de los Angeles

    It has been a couple of years since Jim Grant gave this speech at the NY Fed: Piece of my mind
    Instructive to read his account of the 1920-21 depression and the contrast with the policy response to the GFC of 2008.

    And here are John Hussman's thoughts on ZIRP:
    "..the only form of economic activity that has proved responsive to zero-interest rate policy are those activities where interest itself is the primary cost of doing business: financial speculation and leveraged carry trades."
    Good economic policy acts to ease constraints that are binding, and monetary policy can clearly be useful in that regard – particularly during liquidity crises. At present, QE acts by massively loosening a constraint that is not binding at all, drowning the economy with idle bank reserves that aren’t even desired. That’s going to have negative consequences.

    Again, Hussman: Closing Arguments on QE
    Some excerpts:
    “..QE has not increased the value of equities. It has only increased the price, but that increase in price has no significant fundamental underpinning.
    To see this, first consider cash flows. Imagine that instead of attempting to boost stock prices indirectly through QE, the Fed took the candy-land approach of literally handing the $85 billion directly to stockholders to reward them for owning stocks. How much would that direct cash distribution benefit a stock market with a $17 trillion market cap? Do the arithmetic. Only 0.5% a month. Yet investors have chased prices at a far more rapid pace as a result of QE.
    ..What about the benefit of lower interest rates? Domestic nonfinancial corporate debt is presently $8.6 trillion. Even a 4% reduction in interest rates comes to $344 billion a year. Assume that benefit accrues strictly to publicly traded companies, and extend that benefit over 5 years. It’s still only worth 10% of marketcap. As a side note, lower interest rates also suppress income from corporate investments, particularly with large amounts of cash on corporate balance sheets. And though it has become a fad to subtract out cash from marketcap, it is a profoundly incorrect fad. If it was correct, a company with a billion dollars of market cap could issue a billion dollars of debt, hold the proceeds in cash, and the stock could be considered "free."
    ..during the 2008 market plunge, following aggressive monetary easing throughout the year, the Fed initiated its first program of QE. While the market’s rebound actually took a good part of a year to emerge (and which appears to have been most closely related to a change in FASB accounting rules that suspended "mark-to-market accounting") investors associated that rebound with ongoing QE. When the next decline occurred in 2010, QE was again initiated, and with investors conditioned to expect QE to produce rising stock prices through some poorly-understood mechanism, the market recovered the loss it had experienced over the preceding 6-month period. Same for the “Twist” in 2011, which was also initiated after a spike in risk premiums. But just as Pavlov’s dogs became conditioned to salivate at the sound of a bell even when they were presented with no meat, investors have now become conditioned to buy stocks in the presence of QE, even without any preceding spike in risk premiums, and even when there is no fundamental basis for doing so.”
    Feb 25, 2015. 03:28 PM | 3 Likes Like |Link to Comment
  • What Can You Expect From A Greek Exit From The Euro?  [View article]
    Thoughts on this NYT piece today?

    Greek Debt Vastly Overstated, Investor Tells the World

    About the big, bold bet by vulture investor Paul Kazarian.
    Maintains the debt is just a tenth of the bandied figure of 318 billion euros.
    Don’t see mentioned if he is holding sovereign or private debt but claims he has not sold a single bond to date. And, “But it would not be a lie to say that we are one of the larger investors in Greek bonds.”

    If his assessment is correct, how would one play it?

    The article ends with:
    Eventually, he is convinced, they will see the light and write down the value of their loans. “You are suffocating a country with a figure that has no relevance,” Mr. Kazarian said. Greece’s creditors, he says, should just take the loss and move on.

    Doesn’t that mean his own holdings will also take a haircut?
    Feb 21, 2015. 09:43 PM | 1 Like Like |Link to Comment
  • Why You Should Sell Your TICC Shares Today At $7.60  [View article]
    @William Packer
    By all means you should feel free to change your mind when the facts change, but at the same time you ought to have explained the reasons like you have done above and not have left your readers befuddled at your seeming flip-flop as evident from the many comments here.
    Anyway, thanks for clearing things up.
    Feb 20, 2015. 06:35 PM | 1 Like Like |Link to Comment
  • Why You Should Sell Your TICC Shares Today At $7.60  [View article]
    @learning to be patient with

    "..he is a day/hourly trader .."

    But his analysis and projections convey the impression that this is a medium to long-term assessment of its prospects, when he makes pronouncements like:

    "...I am projecting that TICC will cut their dividend by the end of this year..."

    "...but ACSF will see a benefit when the fed raises interest rates and TICC is expected to see a significant decline in net investment income. MCC will also benefit from rising interest rates after fed funds rise beyond 2%..."
    Feb 19, 2015. 08:16 PM | 1 Like Like |Link to Comment
  • Beyond The Dismal Science  [View article]
    Can you please elaborate on your wrap-up illustrative example of "Buy Intuit/Sell Netflix" ?
    Feb 7, 2015. 03:22 PM | Likes Like |Link to Comment
  • My Take On's Q4 2014 Earnings  [View article]
    Gap from 24-July-2014 @358.52 is now filled.
    Let's see it it now takes a little rest!
    Jan 30, 2015. 02:10 PM | Likes Like |Link to Comment
  • Update: Going Neutral On Altisource Asset Management Corporation  [View article]
    Can you share your opinion on AAMC's one-time parent OCN and the "other" Altisource:ASPS?
    Dec 24, 2014. 11:47 AM | Likes Like |Link to Comment
  • How Could They?  [View article]
    " If one takes his chips off the table where do those chips go?"
    When you place your chips, i.e. making a liquidity preference for stocks in place of cash, isn't there a counter-party who is doing the opposite i.e. giving your their chips for you to play with for your cash?
    Dec 7, 2014. 12:04 AM | 4 Likes Like |Link to Comment
  • The Unbearable Over-Determination Of Oil  [View article]
    Thanks Ben for sharing your variant views which I find educational and refreshing.

    Don't mean to be snarky, but didn't you call a "Top" on "CB Narrative Omnipotence" a few articles ago? But the recent market reaction to even the empty calorie bloviations of "Anything it Takes" Draghi, let alone the more credible Chinese or Japanese CBs, makes me wonder whether your call might have been premature?
    Nov 25, 2014. 01:51 PM | 1 Like Like |Link to Comment
  • The Pure Income Portfolio Alternatives: BDCs And Royalty Trusts  [View article]
    How do Royalty Trusts compare to LLCs (K-1s) in terms of tax filing hassles?
    Also, any issues holding them in an IRA (something like the UBIT - the Unrelated Business Income Tax issues with LLCs in an IRA).
    Nov 24, 2014. 10:42 PM | 1 Like Like |Link to Comment
  • Abengoa Yield PLC IPO Quiet Period End Switches On A Great New Buying Opportunity  [View article]
    Don -
    Drop in both ABY & ABGB in connection with the bond fiasco buying opp?
    Nov 14, 2014. 10:34 AM | Likes Like |Link to Comment
  • Why Do Banks Want Our Deposits? Hint: It's Not To Make Loans  [View article]
    Doug L. –
    Could you or other knowledgeable posters on this thread please clarify the following:

    (1) If I start a bank with say $10 million, do regulations like Dodd-Frank/Basel III limit the total amount of deposits I can gather to a certain multiple “N” of the $10 million capital?

    (2) Is the maximum amount of loans I can write against these deposits determined by the reserve ratio, I guess 10% at this time, meaning, maximum of 10x the total amount of deposits the bank has on its books can be loaned out by the bank and, from (1), is the maximum loan portfolio that the bank can hold will then be 10 x N x $10 million of capital?

    (3) Some of the foregoing comments (and the article) talk about a bank making a loan and the borrower depositing the loan amount back with the bank. Isn’t that more like extending a line of credit (like the maximum credit available on my credit card), and the “loan” or borrowing actually happens only when the borrower actually draws against it?
    Oct 28, 2014. 12:44 AM | 1 Like Like |Link to Comment
  • Signs Of A Stock Market Crash...  [View instapost]
    JNK:LQD spreads widening and used to be correlated to SPY but not anymore !
    May 8, 2014. 01:02 PM | Likes Like |Link to Comment
  • High-Yield Global Income Funds Offer Stability During Times Of Market Uncertainty  [View article]
    DIA Mar-17 opening gap.
    Do you use adjusted or unadjusted data in monitoring the gaps?
    DIA had paid out a 0.282 divvy on Mar-21.
    Either way, there is still a sliver of a gap left to fill.
    Apr 5, 2014. 05:52 PM | Likes Like |Link to Comment
  • Derma Sciences: A Not Well Followed Growth Company With Solutions For Diabetic Foot Ulcers  [View article]
    Continued its ascent post-your writeup and then relentless weakness for over a month now!
    Now at around $12, bottomfishing candidate?
    Apr 2, 2014. 02:27 PM | Likes Like |Link to Comment