Archive - Oct 2015

Much has been made about the impressive gains in efficiency and productivity in the shale patch, as new drilling techniques squeeze ever more oil and gas out of new wells. But the limits to such an approach are becoming increasingly visible. The U.S. shale revolution is running out of steam.

Never, in the history of man, has so much 'wealth' been created, by so few, for so few, by doing so little...

The mainstream view that central banks have suppressed tail risk is absurd and runs counter to common sense. Policy makers have done the opposite. Central banks have taken asset returns from the future and brought them to the present… they have taken tail risk from the present and shifted it into the future… that have turned private risk into public risk. The risk is not gone... do not fool yourself.

Did the age of central bank omnipotence just come to an end?

The Man Who Drinks His Own Kool Aid...

The bottom line is that the "internationalization" and an increasing free float of the Yuan is bearish. And since the currency urgently needs even more devaluation as today's PBOC rate cut confirmed, this may just be the IMF's way of greenlighting even more devaluation for China's currency. And since any devaluation would lead to a surge in capital outflows, what the IMF is doing is merely blessing the Yuan's weakness while pretending it is in a position of strength, in an attempt to slow down the capital outflow as much as possible.

Consumer debt culture has completely and utterly taken over the West.

Why is wealth/income inequality soaring? The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own. If conventional labor and finance capital have lost their scarcity value, then the era in which financialization reaped big profits is ending.

It's been a tough week for Pershing Square and Bill Ackman. First, Valeant gets eviscerated; and now, another major holding - Platform Specialty Products - plunged as much as 15% on news that the CEO is retiring.

Roughly ONE THIRD of the advisory firms the SEC examined failed to meet custody rule requirements.

Having become an overnight social and industry outcast, at least Turing Pharma's Martin Shkreli had one thing going for him: a business model that afforded him solid margins, because despite promising to cut the price of the scandalous Daraprim, Turing did not do that. Now, however, even that may be in jeopardy following news that San Diego-based specialty drug maker Imprimis Pharmaceuticals, says it can make a close, customized version of Daraprim for a paltry $1 a pill, NBC reports. That's a big contrast to the $750-a-dose that Shkreli said Turing was going to start charging for the same drug. 

"My mentor, Dale Jorgenson [of Harvard], used to say — and Larry Summers used to say this, too — that, ‘If you never miss a plane, you’re spending too much time in airports.’ If you absolutely rule out any possibility of any kind of financial crisis, then probably you’re reducing risk too much, in terms of the growth and innovation in the economy.”

Having stabilized at 2-year lows in September, October's preliminary US Manufacturing PMI printed 54.0 (smashing expectations of a small drop to 52.7). Despite collapse regional Fed surveys, and widespread job cuts across the manufacturing sector, Markit claims US Manufacturing is the strongest since May. Both output and new orders surged as input costs fell, as Markit notes, despite cycle high inventory levels, today's data "indicated a robust and accelerated expansion of production levels across the manufacturing sector." December rate-hike odds are risisng...

Great news... US equity market investors (judging by the S&P 500) have now lost no money this year (and have made no money). All it took to get stocks "back to even" for 2015 was... no Fed hike, more ECB QE and more negative rates, China rate cuts, and negative EPS growth. What more do you need to BTFD?

One of the more tedious drivellers of popular economic thought is former Treasury Secretary Larry Summers.  He’s smarter than you and he’ll make sure you know it.  There’s hardly a questions he doesn’t know the answer to.  So, too, there’s hardly an answer he doesn’t know the question to.