Archive - 2009 - Blog entry

The changes within the indicators are noteworthy, but there is still nothing noteworthy regarding the indicators.

“The real question investors need to ask themselves is this: if we truly are in the middle of a Fed-induced liquidity rally where the fundamentals simply don’t matter, do you buy now or wait it out for the inevitable bust?”

"Simon Johnson, an MIT professor and former chief economist at the International Monetary Fund, reckons there should be caps of roughly $100 billion on the assets of financial institutions and "serious criminal consequences" if firms are caught trying to get around such limits."

I've been meaning to write a piece on Ludwig von Mises, the greatest economist who ever lived, and, if you will, a hero of mine. This is a piece on Mises from the Op-Ed page of the Wall Street Journal by Mark Spitznagel. Spitznagel is the head of Universa Investments and is a protege and partner of Nassim Taleb of Black Swan fame. Those of you who have been following my blog know of my admiration of Mr. Taleb. He and Mr. Spitznagel were also "right," and Universa made a lot of money for their investors from our economic crisis.

The Fannie tax deal is an indication that Washington is well aware of the risks they face with an angry population. No more insider deals for the 'Fat Cats'. I am just wondering what that might cost us

Uh-oh...

Investors are basically rational, right?

In fact, as many studies have demonstrated, the answer is no.

In order to understand the present state of the U.S. economy you have to understand that there are two things happening at once. For the most part they are in conflict with each other, in that one track can negatively impact the other. Lest I be accused of putting out conflicting information, there is evidence that the economy is recovering in some fashion, but not because of the reasons most economists and politicians think. There are still substantial prevailing winds blowing against the kind of recovery most commentators are hailing as fact. But economies have a tendency to repair themselves unless the feds derail the process.

In this interview with CNBC on Nov. 4, 2009, Dr. Nouriel Roubini, professor of economics at the Stern School of Business, New York University and chairman of RGE Monitor, cautions investors of the coming asset bubble and crash caused by the dollar carry trade, and at the same time shared his views on the economy and housing.

This is the second time in many weeks that Dr. Roubini warned of a growing dollar carry trade and threatening to cause a global implosion. The following is a summary of his CNBC interview along with my comments.

Let me put it more crudely. A senior portfolio manager in public markets once told me "when you're writing $100 or $200 million tickets to private funds, they all want to blow you."

Fiddling while Rome burns ...

That tax deal with Fannie that was recently leaked was actually old news. Fannie signed the deal prior to September 30. So why the recent press? Some one was trying to put some muscle on the "deciders' before the talks were made public. Is this that "opaque government" we were expecting?

We commented yesterday on the absurd (or threatening) hypothesis that the Fed would drain all $1 trillion in excess reserves by the end of March, 2010. Today, we reenter the fascinating world of JPM, Goldman and Pimco Treasury advisors, where inflation is relegated to a mere marketing device, and passing the buck to the last bondholder is a game unto itself.

In our latest piece (within a series of analyses that detail both the technical and fundamental landscapes of gold, silver, copper, oil, the CRB (Commodity Index), the US Dollar, the EURO and the remaining major currencies of the G8 in relation to one another), we at Fibozachi present an initial look into the technical composition of gold.

For a change, this week I decided to only comment on links that suggest that everything in the world is rosy and that the US is already in the middle of an impressively sound V-shaped recovery. Too bad I couldn’t find anyone who argued either of those points credibly. Oh well, guess everyone will have to settle for yet another dose of reality.