Archive - Aug 4, 2015

The truly incredible thing about US foreign policy outcomes is that there are seemingly no limits on how absurd they can be. Indeed, Washington’s uncanny ability to paint itself into policy corners and create the most thoroughly flummoxing geopolitical quagmires in the history of statecraft knows absolutely no bounds. 

Political attacks on short-termism, and reforms to fix it, are beyond confused. They ignore financial market participants’ clear incentives to take future effects into account. They are clueless about what provides evidence of short-termism. There is little to Clinton’s criticism and alleged solutions beyond misunderstanding and misrepresentation. We should recognize, with Henry Hazlitt, that “today is already the tomorrow which the bad economist yesterday urged us to ignore,” and that expanding government’s power to do more of the same is not in Americans’ interests.

"The costs of executing the collateral are very high unless creditors send pirates from Algeria to go and get the vessel."

"I haven't got a computer, but I was told about Facebook and Twitter and am trying to make friends in the real world applying the same principles..."

Japan's all important real wages, even those including bonuses and special payments, once again failed to keep up with inflation, and in June crashed by a whopping 2.9% reflecting a 0.5% yoy increase in the CPI excluding imputed rent. As the chart below shows, there has now been 24 consecutive months without a single Y/Y monthly increase in real wages. What's worse is that when one adjusts the inflationary surge from the consumption tax hike last April, which has now been fully anniversaried and is no longer part of the base effect, this was the largest decline in Japan's real wages since December 2009, or the biggest monthly plunge in 6 years!

Just days after China bans Citadel (and its high frequency trading) from trading Chinese markets, US Treasury and Federal Reserve officials have been forced to admit they "need to consider whether the race for speed, at this already advanced stage, helps or hurts market functioning." As WSJ reports, Fed governor Jerome Powell and Antonio Weiss, a senior counselor to U.S. Treasury Secretary Jacob Lew, said Monday that the government should re-evaluate the structure of U.S. markets in light of recent events. They are growing more concerned about signs that financial markets have grown more volatile with the growth of fast trading. As Weiss concludes, "the constant pursuit to save one more millisecond not only consumes resources potentially better invested elsewhere, but increases the pressure on the plumbing of the system to handle ever-increasing speeds and messaging traffic." The pre-emptive blame-mongery is beginning...

Overly myopic investors/creditors will continue to be confident in various drillers, based on the numbers of initial production (IP) data extrapolations and balance sheets, but will in the near future spend sleepless nights wondering why such good IPs and strong balance sheets produces poor or no profits and/or why they do not fully receive the money lent. Their worries will gradually morph from being focused on return on investment to return of investment. The mysteries created by Nature’s lack of cooperation with the balance sheets will surpass any other existential questions.

"Priced in?" Atlanta Fed's Lockhart is the un-Bullard as he proclaims that September would be "appropriate time" for rate hikes to begin... Stocks have roundtripped from initial excitement to lows of the day, short-end bonds are ugly as the curve flattens dramatically and the USD index is surging...

We've ALWAYS Been at War with Eastasia!

The American system of government is nothing like what we are told in school and via the oligarch-owned mainstream media. The country has become so captured and corrupted by sociopathic oligarchs, that a neo-feudal modern serfdom is emerging where the opportunities to enjoy rising standards of living for the vast majority of people was rapidly becoming a pipe dream. The Dark Ages almost look democratic by comparison.

How many times have we been told "excluding oil-related firms" everything is awesome? Well, we have one question, why did Factory orders ex-transportation just plunge a depression-like 7.5% YoY - the worst since the great recession in 2009...?

Now it is time for Merkel to face the unpleasant truth. Her aiming for a pain-free solution has failed. Now, she sits in the lower left box with unlimited costs for Germany, a tarnished reputation in Europe and a soon-to-come domestic backlash.

"It's all noise," squeaks Laszlo Birinyi, deflecting concerns about revenues, earnings, Europe, China, commodities, and rates as he unleashes his latest extrapolation. "If we continue to grow at 11bps per day, the S&P will be at 3,200 within 2 years," he warbles as he hopes his ruler - which missed its 2013 projection by 1100 points - is forecasting better this time.

Forget the broke window fallacy, meet the broken Brooklyn utopia. We are sure Mayor De Blasio will be cock-a-hoop this morning that a giant sinkhole has appeared in one of his boroughs - swallowing an entire intersection - as what is better for the economy than filling in holes created by a total lack of infrastructure spend with other people's money...