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  • A comparison of the last 2 FOMC statements shows little difference except in the key area of inflation. November: "Inflation appears to have moderated." Today: "Inflation has moderated." If elevated inflation is one of the roadblocks in the minds of FOMC members to additional QE, it was removed today.  [View news story]
    The Fed looks only at core CPI (i.e. inflation ex food and energy), which means, until gas prices make its way into consumer products made from crude oil (or transportation costs reflected in product prices), as far as the Fed is concerned, there is no inflation.

    $4 per gallon gas does take real money out of consumers' pockets, but the Fed ignores them for the purpose of measuring inflation (which they should, since food and energy prices are too dependent on external events that have little to do nor can be helped by the Fed's monetary policies).
    Dec 13, 2011. 05:38 PM | Likes Like |Link to Comment
  • Dennis Gartman fires up another prediction for gold, saying this time that the bear market is here after an 11-year run of higher prices. He finds the progression of lower highs and the "confirmation" that the new interim low is below the previous low is all the evidence he needs to see. "We have the beginnings of a real bear market, and the death of a bull." [View news story]
    Whatever his motivation, the timing is about right. The 10-year bull run was preceded by the 20-year bear market for gold. Absent other global forces, one would've expected a bear market for gold fairly soon based on timing alone.

    But, then again, a non-cyclical fundamental event can mess up the timing.
    Dec 13, 2011. 01:25 PM | Likes Like |Link to Comment
  • What did survey respondents say was the least-satisfying big bank for consumers? No surprise: It was Bank of America (BAC), according to the latest American Customer Satisfaction Index. Of the biggest U.S. banks, Citigroup (C) and Wells Fargo (WFC) tied at the top with 73 out of 100, but overall ratings for big banks continue to fall further behind credit unions and smaller banks.  [View news story]
    I don't know about others, but I do like big banks; I've had fairly bad experience with checking account at my local credit union (not to mention terrible credit card rates, limits, and lack of rewards program).

    It's just BofA (and Citibank, to a lesser degree) that I don't like.
    Dec 13, 2011. 11:19 AM | 2 Likes Like |Link to Comment
  • European shares close on the lows, answering Friday's "why are risk markets rallying?" question by giving it all back and more. Stoxx 50 -3%, Germany -3.4%, France -2.4%, Italy -3.6%, Spain -3%, U.K. -1.7%. Euro -1.2% to $1.3216, and near a 2-month low.  [View news story]
    Um, in today's correlated-and-synchro... markets, how can you say that? U.S. market *also* has given back all of Friday's gain.
    Dec 12, 2011. 11:43 AM | Likes Like |Link to Comment
  • 2:30 is the new 7:30 as European events becoming the driver of financial assets across the planet force traders to monitor their screens throughout the pre-dawn hours. "We have a new credo: carpe noctem - seize the night," says Doug Kass. "Who would have thought we would have to be looking at Italian sovereign debt yields to figure out what Morgan Stanley's stock will do," says Mike Mayo. Market Currents is on the job then too; do check out our coverage.  [View news story]
    That would be between 4 p.m. and 6 p.m. There is no market open during that hour; even the futures market is typically quiet between 4:15 p.m. and 6 p.m. EST.

    Thank God for the Pacific ocean.
    Dec 11, 2011. 08:21 PM | 1 Like Like |Link to Comment
  • "(Merkozy) have more or less bulldozed Britain out of the EU for the sake of a treaty that offers absolutely no solution to the crisis at hand," writes Ambrose Evans-Pritchard. "The system will lurch from crisis to crisis until it blows up in acrimony ... As for Britain, let us seize the moment of liberation, and enjoy it."  [View news story]
    And of course, this would be the perfect time to start a trade war, if you want a global depression.
    Dec 9, 2011. 02:35 PM | 1 Like Like |Link to Comment
  • Warren Buffett tells 60 Minutes he wants his son Howard, a farmer, to succeed him at Berkshire Hathaway (BRK.A) as "non-executive chairman" because he understands the "values" of the company. The unpaid position has no role in directing the investment strategy or day-to-day operations of the firm.  [View news story]
    Unpaid position with no role in decision making? Is it anything but an honorary position?
    Dec 9, 2011. 02:10 PM | Likes Like |Link to Comment
  • The S&P 500 has tacked on nearly a hundred points since Thanksgiving, but amid the holly jolly mood in equities, keep an eye on volatility, as the VIX has floated up 21% in the past week and closed over 30 for the first time since October. BBH: "Should the VIX continue its rise, equities will more than likely struggle to hold ground."  [View news story]
    Well, VIX is the *implied* volatility, not actualized volatility. To some extent, it reflects *expected* volatility (and may cause the market to be more volatile, given how it usually acts on expectations).

    Anyways. The argument I've seen advanced is that for the large institutional investors (pension funds, etc.) to go long on equities, VIX would have to come down, so that they are not seen as putting people's life savings in front of a moving train.
    Dec 9, 2011. 11:59 AM | Likes Like |Link to Comment
  • Deep into the middle of the night in Brussels, EU leaders are still at work, but what has emerged doesn't sound good. Reuters reports diplomats saying treaty change for all 27 states isn't happening, but is still alive for the 17 nations that use the euro. A sizable rally in stock futures has reversed, with the S&P down a hair after being up about 0.8%. The euro gives up about a 40 pip gain since the NY close.  [View news story]
    and if you listen to people who claim that no company can have higher credit rating than its home country, U.S. getting downgraded to AA+ was like having *all* U.S.-based companies getting downgraded to AA+ (never mind that many private companies held onto the nominal AAA rating). That can't benefit risk assets, and we all know what that ends up benefiting (ironically).
    Dec 8, 2011. 11:52 PM | Likes Like |Link to Comment
  • Rumor time: The G-20 is considering a $600B IMF lending program for Europe, reports the Nikkei news service.  [View news story]
    Well. For once it's not FT peddling the rumour.
    Dec 7, 2011. 03:47 PM | Likes Like |Link to Comment
  • Sarkozy: "Retirement at 60 and the 35-hour workweek were grave mistakes ... that we must repair ... France is paying a heavy price."  [View news story]
    Unemployment doesn't have to cost society money---don't let people (especially those who haven't paid into unemployment insurance) collect unemployment benefits, extended to an extraordinary degree (at least in U.S., but I figure welfare state in France is worse).

    Get rid of minimum wage, and see all those young people find work as it becomes necessary for them to work (at any wage) to support themselves.
    Dec 1, 2011. 02:00 PM | Likes Like |Link to Comment
  • Sarkozy: "Retirement at 60 and the 35-hour workweek were grave mistakes ... that we must repair ... France is paying a heavy price."  [View news story]
    That logic works only if you think "retirement" is free. Retirement costs the society money, as retirees draw pension benefits.

    If by "earlier retirement" you mean people should stop working, say, at about 55 but wait until 65 or perhaps even 70 before they start drawing pension benefits, then, sure. But then, what will they live off of for 5, 10, 15 years?

    Labor is not a zero-sum game. In the classical view, labor is the only way in which real wealth is created (much of what the financial world does is collecting rent, not creating real wealth). The longer people create wealth and the shorter people live from wealth they created earlier in life, the richer the society will be (remember Social Security was itself designed with a retirement age equal to life expectancy of the time, as in half the people who put money into Social Security didn't live to collect retirement benefits from it).
    Dec 1, 2011. 01:30 PM | Likes Like |Link to Comment
  • Despite approving AT&T's (T) request to withdraw its T-Mobile (DTEGY.PK) application, the FCC yesterday issued a blistering 109-page report saying the deal would limit competition in virtually every U.S. city. Though the report carries no legal weight, the FCC says it released it for the sake of transparency.  [View news story]
    T-mobile has been looking to sell itself (or rather, the German parent company has been looking to divest itself of the American operation) for a long time. I'm a happy T-mobile customer, but I don't expect them to stay in the business over the long term.

    From a current T-mobile customer perspective, my long term prospects are better if AT&T buys out T-mobile (my plan will probably get grandfathered in for a while), rather than T-mobile going bankrupt (or merging with someone smaller who, in turn, might go bankrupt or need to sell itself again).

    And since everything FCC does these days seem to be benefiting Sprint, I need to say this: Sprint does not offer any plan that I'd like (mostly price-wise), so as it is, Sprint does not offer meaningful competition; I don't know how propping them up will help market competition (at least in the areas I care about).
    Dec 1, 2011. 12:45 PM | Likes Like |Link to Comment
  • AAII's Charles Rotblut offers perhaps the most understandable explanation of what yesterday’s coordinated central bank action means for investors: It doesn't resolve the sovereign debt crisis, but it prevents a meltdown by providing more liquidity to keep banks afloat. There's even a bit of advice: "Don’t wait for Mr. Market to give you the 'all clear' signal, because he won’t give it until well after stocks have rallied."  [View news story]
    Yap. As the advice goes, start small and add to winning positions (or what might amount to dollar-cost averaging for those who aren't actively trying to time the market). If the rally turns out to be a head fake, you won't have risked too much, and if it turns out to be durable, you'll have some gain to show for it.
    Dec 1, 2011. 10:18 AM | Likes Like |Link to Comment
  • Amazon (AMZN +2.2%) supports an "even-handed" federal framework for collecting online sales taxes as long as it's all-inclusive, according to testimony at a House hearing today. The idea being pushed by voter-conscious politicians is to help put local mom-and-pop stores on the same playing field as online retailers when it comes to taxes. The relatively complacent attitude from AMZN on online taxes that are sure to cut into its pricing advantage isn't tied to any sense of fairness - but focuses on a larger strategy with its battle vs. EBAY and its army of small online sellers. [View news story]
    I've heard this before and I find the argument rather unconvincing. If the idea is that this will hurt small online sellers more than large online sellers, Amazon (through its exposure via Amazon Marketplace and commissions generated from there) will be hurt just as much as eBay would be.

    For certain items (like used books), Amazon might move more merchandise than eBay does, even.
    Nov 30, 2011. 01:13 PM | Likes Like |Link to Comment