Archive - May 24, 2013 - Blog entry

The market’s performance Thursday and Friday are misleading since there is so much destruction in many sectors globally. But the media depends on selling what’s going on with the DJIA. It’s just window dressing for the tourists frankly.

The data coming out on home prices is rather clear. Home prices are moving up steadily in the last year now increasing at a rate last seen in 2006. Of course, little of this is coming from wage growth but more from easy access to debt, investor demand, and historically low supply. One thing that people fail to remember is that during the last housing bubble, people were supplementing a lack of income growth with easy access to debt to add fuel to the housing market. This time, the easy money is being supplied to banks and hedge funds that are simply chasing higher yields. Anyone that has a hand in the housing business, especially in the grind it out rental business understands that it is no hands off endeavor. This is why it is surprising to see how much money is now being funneled into the market by brand new small time investors, especially in places like California. You know things are getting frothy when new money is willing to chase the rental business.

Mervyn King gave a speech in Helsinki Finland today just before he takes retirement from the Bank of England in which he said that both austerity and growth were at fault of grossly exaggerated statements to purely political ends:  "This debate has been vastly exaggerated by people who want to make political arguments”. He went on to add that it was a time for common sense.

So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.

Drone On  Debt Bro, Drone On!

Everyone has heard of Marie-Antoinette screaming from her balcony at the Palace of Versailles in the early hours of the French Revolution: “if there’s no bread, then let them eat cake!”. Right!

What was that single that soul singer Otis Clay brought out in 1980? Oh yeah, ‘The only way is up’! Well, if ever there were a more fitting signature tune these days for CEOs in the USA, then that’s what I’d be betting (my bottom) dollar on!

...understand the national threat that is our fragmented and perverted equity market microstructure that is driven by such esoteric order-types such a Post No Preference Blind Limit Order created through the buddy system of exchange/order volume producer.