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Frontrunning: August 4
- Personal spending rose 0.4% in June. Incomes fell 1.3%, biggest drop in four years. Max out those credit cards while you can. (Bloomberg)
- China has become a giant ponzi scheme - Chinese stocks are 50-100% overvalued (Andy Xie, via Ritholtz)
- Must read: from plasma physicist to Citadel's nemesis - profile of Misha Malyshev (Crains)
- Bernanke's exit dilemma (WSJ)
- Federal tax revenues plummeting (AP)
- Bankrupt in all but name Jefferson County fires two thirds of its employees (Reuters)
- Och-Ziff loss widens as AUM falls (MarketWatch)
- Banking bonuses are bubble that is yet to burst (Bloomberg)
- UBS' Gruebel says client withdrawals may persist (Bloomberg)
- Goldman employees told to reel it in (Reuters)
- Intercontinental Exchange Profit falls 15% as revenue ramps up on higher volume (WSJ)
- Profiting from the tooth fairy (Hussman Funds)
- The great global rebalancing (Alhambra Investments)
- More on the Cash For Clunkers subsidy (Forbes)
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Don't worry about the federal taxes, they just doubled the number of employees at the Cash 4 Clunkers headquarters, Obama, once again, has created more economy saving jobs, and it will only cost $2bn. *hawk ppt* DEAL!!!
I'm sure the tax revenue thing is a lagging indicator anyway... Who needs revenues, I think the market has already proven that to be an antiquated business fundamental.
Hey Andy Xie, so is the US.
Ponzi must be one proud man. The world is converging into one giant Ponziism. Capitalism be gone, Communism be gone, Socialism be gone.
He only forgot to have the term "Ponzi Scheme®" registered as a trademark.
Chinese stocks overvalued, just like they are in the US then!
I know this is very hard to believe, but the personal spending numbers for May were revised downward from .3% increase to .1% increase. who woulda thought it!
Re: Fed's exit strategy "To be sure, the Fed has had its good years. It financed the 20-year period of low-inflation growth and prosperity that began in 1983 when the Reagan tax cuts became fully effective."
What these yahoos never mention is that we had an 18 year bear market in commodities during the same time period. The stock market rallied but commodities didn't rage with the machine due to an all out cyclical bear market, oil ending in 1999, gold in 2001, etc. It's ridiculous not to have low inflation in that scenario. Why does a dementia ridden actor that didn't understand one economic principle and had to defer to Cap Weinberger when asked to explain Kudlow like pee down your leg economics get credit for this? And I might add that Greenspan was "God" for managing it all so well--that is until January 2000.
Question of the day from Bloomberg's Betty Looooooooooo:
"If the Cash for Clunkers progam is so successful shouldn't they consider making it permanent?"
She makes Erin and Missy seem intelligent.
the fellow in the interview did say that he expects the program to add 1.5% to GDP in Q3/4 but that it is simply borrowing growth from 2010 -- thus Betty Looooo's probing question. The fellow did suggest that funding of the program was probably the reason it wouldn't be permanent (obviously forgetting that the printing presses are on auto drive). Maybe Betty Looooo is on to something.
But will you be even mildly surprised if the program lasts another year, funded to whatever amount is required?
I smell bear trap this a.m. - careful of the bots.
Yup. No volume. Up by close. Guaranteed.
RE: Consumer spending
This contradiction between income and spending always puzzles me. Either people are maxxing the credit cards as Tyler suggests or the majority of consumer spending is done by the top 10% whose incomes have increased while that of the lower 90% have fallen. There is also probably a seasonal component - more people spend in the summer.
That's right folks. Consumer spending down 2.2% YoY, with personal incomes down 3.4%.
We're SO BONED. We were already 6 months into the recession in June 2008.
what kills me is you can take a correspondence course in backass Russia and then stomp on "fair markets". Does a plasma PhD own the francise to the donation places??
What would WSP say about this?
The proprietary code, worth millions of dollars, lets the firm do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,” prosecutors said in court documents. Facciponti said a person misusing the code might be able to “manipulate markets.” -Bloomberg News
BUT THEN GS HAS ALREADY ACKNOWLEDGED THE FACT THAT THEY have all the resources to manipulate the market.
drrascal
wsj website says personal spending increase due to increased gasoline prices.
here's a goodie from tim guy @ fedwatch
http://economistsview.typepad.com/timduy/2009/08/never-underestimate-the...
People spending beyond their means again, party on dudes!
Simon says...
FFO a penny 'better than estimates.' Green shoots all over the place, especially at their new openings and expansions.
Let's turn that red frown upside down this morning...
WSJ:
"Mr. Bernanke’s assurances to the contrary, there can be doubts about whether his tools are really adequate to deal with the powerful inflationary pressures the politicians are in the midst of creating in the form of a mountainous and rising federal deficit."
DUH. Do these guys get paid a lot to write these revelations? Bernanke is trapped. There is no political will to become magically fiscally prudent. I'd say "it (fiscal reponsibility) will not happen until it's too late", but it's already too late. The housing bubble was merely another reflationary episode of kicking the can down the road. It's always worked in the past. Each time it worked reinforced their belief they could keep doing it, and that's why they're trying to do it again.
The obvious USDX stresses cause everyone to shorten maturity. When the Treasury market blows up, borrowing costs skyrocket, and the now seemingly-tame interest portion of the federal budget blows up right along with it, reinforcing the above stresses. Add to this of course the accelerating demand for federal money for various stimuli, extended UE benefits, etc etc.
I have only one wish remaining, and that is that TBT didn't decay so fast. Otherwise it would fit right into my "buy and hold" portfolio.
Washington Post Staff Writer
Tuesday, August 4, 2009; 11:25 AM
General Electric has agreed to pay $50 million to settle federal charges that it committed accounting fraud by reporting false financial results, the Securities and Exchange Commission said Tuesday.