Archive - 2011 - Blog entry

The general public had stocks foisted on them in the 80s with the introduction of stock-based retirement plans (401ks and IRAs). They became further enamored by this asset class with the creation of online discount brokerages, which seduced the DIY spirit. Stocks have become so popular that there are entire peripheral industries have been built surrounding them: investing books, investing seminars, investing TV shows, etc. And yet no one has ever asked whether investing in stocks is actually a good thing.

What this record global population means for the civilization. Food prices to soar, regional conflicts increase, and countries fight it out for natural resources. Expect a permanent rise in volatility. Will the “one child” policy work in time? Next stop, 9 billion?

President Obama's budget proposes to raise premiums the Pension Benefit Guaranty Corp. charges employers by $16 billion over ten years and, in a significant policy shift, would levy higher premiums on the riskiest companies...

Today we have a plethora of major news events that could effect retail positioning dramatically. With German GDP, UK CPI, German ZEW, USD Retail Sales and US TIC coming out today all within a 8 hour window, any major deviations could have powerful implications. Going into the news events the report is fairly settled with most pairs in the neutral zone. GBPUSD has slipped a tiny bit back in the Long zone, with GBPJPY back in the neutral zone.

The latest job Obamatunity in a promising field...

Social unrest has already unseated several regimes in the Middle East. And the same formula that created those situations (tons of poor, repressed folks no longer able to afford food) exists today in China as well. With that in mind, expect the relationship between the US and China to deteriorate in the coming months. The flirtation underlying trade tensions (steel and tires) we’ve already seen will erupt into full-scale trade wars. We could very well even see an actual physical war the way things are heading.

Renowned behavioral economist debunks another myth ...

We've known for a LONG time that too much inequality leads to crashes ...

Two percent!
That’s how much the price of EVERYTHING has gone up IN AMERICA since Christmas Day, just 6 weeks ago.

Remember, Wall Street is nothing more than an exchange: a place where deals of hundreds of varieties are made. In this sense it’s nothing more than a corporate-scale version of Facebook or some other social network platform. That’s it. Wall Street doesn’t generate any real goods. It doesn’t produce drugs that cure illnesses. It doesn’t design cars or vehicles needed to get around. It hasn’t invented ANYTHING of real value in decades (unless you count make believe crap like derivatives and CDOs as goods).

On February 12, 1973, after the second Treasury announced devaluation of the dollar, George Shultz said, “there is no doubt that we have achieved a major improvement in the competitive position of American workers and American business.” Translated, a weak dollar would stoke an exporting bonanza for U.S. businesses that would need to hire new workers to help fulfill all the demand driven by the dollar’s debasement. That Shultz was soon enough revealed as tragically incorrect is a classic understatement. Needless to say, the dollar’s devaluation predictably unleashed a lost decade of inflation and economic misery for the U.S. and the world.

Up for more searches of private property without notice, free reign of government access to your private business records, roving wiretaps without true search warrants, or covert access to your electronic data without any due process or oversight? No? Well get on the phones...

Will people die unnecessarily? You better believe it.

When scientists get further along with epigenetics, they may discover the Chinese have two unique DNA: a gambling gene, and another for hospitality. The first, of course, explains why Macau is odds-on favorite for replacing Vegas as No. 1 world gambling champion. The second suggests why few escape the lure of a Chinese campaign to win visitors’ hearts and minds.

China, as an investment, is important for three reasons. They are:

1) The Chinese economy is believed to be leading the world into recovery
2) The Chinese stock market has lead the S&P 500 for years
3) The Chinese/ US monetary relationship

I’ve covered #’s 1 & 3 several times before and I’ll providing an update of my analysis in tomorrow’s edition of Gains Pains & Capital. So today we’re focusing on #2.