The Big Picture |
- Global Warming Debate is No Debate At All
- Thursday PM Reads
- Chanos on China’s Debt and PC Makers’ Failures
- Tom Tomorrow, March 15, 2001
- Sell Side Indicator
- Better US housing data
- 10 Thursday AM Reads
- Bad Lip Reading: THE NFL
- More Ideological Excuse Making for Bad Banks
- The Trading Profits of High Frequency Traders
| Global Warming Debate is No Debate At All Posted: 17 Jan 2013 04:30 PM PST Funny thing happens sometimes when you look at who the witnesses are in a public policy debate . . .
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| Posted: 17 Jan 2013 01:30 PM PST My afternoon train reads:
What are you reading?
China Begins to Lose Edge as World’s Factory Floor | ||||||||
| Chanos on China’s Debt and PC Makers’ Failures Posted: 17 Jan 2013 12:00 PM PST Famed short seller Jim Chanos, founder and president of Kynikos Associates, tells Impact Players host Robert Wolf that China is struggling under a massive debt load. Chanos also says explains why he’s shorting the entire personal computer sector. Wolf is an outside adviser to President Obama. Chanos on China’s debt and PC makers’ failures – Impact Player ~~~ Famed short seller Jim Chanos says the battle over Herbalife between billionaires Bill Ackman and Dan Loeb will turn on whether the company’s products are being used or simply sitting on distributors’ shelves. Chanos handicaps Herbalife battle – Impact Players | ||||||||
| Posted: 17 Jan 2013 11:30 AM PST A classic blast from your investing past, courtesy of Invictus:
click for full size comic
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| Posted: 17 Jan 2013 08:30 AM PST Sell Side Indicator Model: Wall Street proclaims the death of equities This chart from Merrill Lynch suggests that there remains a tremendous skepticism about equities. It is on the opposite side of the argument from the Fund flows and the VIX, | ||||||||
| Posted: 17 Jan 2013 08:00 AM PST Australian employment declined by -5.5k in December, much worse than the +17k rise in November and a +4k rise expected. The unemployment rate ticked up by +0.1% to 5.4%. The data is yet another indicator that the RBA will cut rates at its next meeting; The Japanese deputy finance minister will attend the BoJ meeting next week. He added that the current administration will not abide by the cap on debt sales imposed by the previous administration – no great surprise. The Japanese Economy Minister was clearly talked to – he stated earlier today that the Yen was still in the process of correcting from excessively strong levels. The statements, which quite frankly were a repetition of comments yesterday, resulted in a material weakening of the yen against the US$ and the Euro, in particular. He stated that "the media didn’t report my full remarks and that caused a reaction in the markets". The opposition has stated that they may not support the current administration's candidates for the BoJ board, in particular, the governor. The Japanese PM stated that he would confer with the opposition as to the candidate; The Indian government has allowed for increases in diesel prices, thereby cutting subsidies. The threat of a credit downgrade still looms. The finance minister wants to cut the budget deficit to just -5.3% of GDP this fiscal year – a big ask; The EU, Mr Ollie Rehn, the EU Economic and Monetary Affairs Commissioner Mr Rehn, has advised France that it needs to do more to implement structural reforms. In addition, the EU warns France over its serious imbalances ie budget, trade and current account deficits Competitiveness needs to be restored, together with dealing with persistently high unemployment. Clearly right, but France is France. The situation will get worse; US industrial production rose by +0.3% in December. Manufacturing output rose by +0.8%, as compared with an upwardly revised +1.3% in November. Capacity utilisation was up +0.1%, slightly below long term averages. The data suggests that capex spending will increase in coming months (once the spending cuts/debt ceiling debate ends – hopefully sensibly). Furthermore, the US housing market recovery continues, though homebuilder sentiment declined marginally to 47, from the 48 expected; The FED Beige book reported that all 12 districts witnessed "modest" or "moderate" growth. Retailers saw "some growth"in consumer spending, with inflation largely unchanged. Businesses dependent on Europe and/or the defense industry were cautious. All districts that reported on home prices, confirmed that prices had increased; US housing starts rose by +12.1% in December to an annual rate of 954 k, higher than the rise to an annual rate of 890k expected and +28% higher Y/Y. Construction of homes rose to 780k homes last year, up from 608k in 2011. I continue to believe that housing will improve, with access to credit becoming somewhat easier and with buyers eager to buy ahead of potential increases in mortgage rates. Home prices are also rising. Building permits rose to 903k, a +0.3% increase above the 900k annual pace in November; Jobless claims declined by -37k to 355k in the week to 12th January, the lowest amount since January 2008 and below forecasts of 369k. The less volatile 4 week moving average declined to359k from 366k previously; The Brazilian Central Bank kept interest rates on hold at 7.25%, though acknowledged that inflation remained a problem, whilst growth was disappointing. In addition, the Central Bank indicated that monetary policy would remain unchanged for the foreseeable future. Remain of the view that Brazil will experience higher inflation with low growth; Outlook Japanese stocks reversed earlier losses and closed marginally higher as the Yen weakened on remarks from the Economy Minister that his previous comments were misinterpreted. Other Asian markets were mixed, though the Indian Sensex closed higher on the news of lower diesel subsidies – quite frankly not going to make a tremendous reduction in the budget deficit. European markets are higher, in particular following the better US data with US markets also up. A lot of Chinese economic data out tomorrow. On balance should be positive, with the caveat that it is Chinese data !!!. The Euro is trading at US$1.3339 with the Yen at Yen 88.29 against the US$, up over 100 bps from its lows earlier today. Spot gold is trading at US$1673, off somewhat following the better US data, with March Brent at US$110.62, up following the US data. Kiron Sarkar 17th January 2013 | ||||||||
| Posted: 17 Jan 2013 06:45 AM PST My morning reads:
What are you reading? > | ||||||||
| Posted: 17 Jan 2013 05:15 AM PST So THAT’S what they were saying… | ||||||||
| More Ideological Excuse Making for Bad Banks Posted: 17 Jan 2013 04:26 AM PST Remember that housing/derivatives/credit crisis that almost destroyed the global economy? Some of the people whose ideas helped to create it are still busy trying to duck responsibility for what they did. (This is true for what occurred both before and after the Great Recession). The radical deregulation of derivatives, the waiving of leverage limits, the separation of depository and investing banks, were all part of a 30 year long effort to let Wall Street self regulate. It was a miserable failure, and the ideas behind have been, for the most part, discredited. But that has not stopped the continual attempt to deny reality and rewrite the history of what occurred. We’ve seen this from people ranging from the rational to the batshit crazy. Take for example Edward Pinto, who in a frenzy to blame anyone but the banks has tried to pin the crisis on: Acorn, the FHA, Community Reinvestment Act, (aka the CRA), Fannie Mae and Freddie Mac. There is no intellectual consistency or honesty here, just an ideologicial flailing he seems to have learned from his AEI colleague, Peter Wallison. The cognitive dissonance caused by the collision between facts and previously held ideas, beliefs, or ideologies overwhelms the brain. The dissonance occurs when the facts are discarded in order to preserve the newly disproven belief system. This leads to some genuinely odd outcomes as reality gets discarded in order to protect a narrative which become increasingly irrational. Which brings me to this column today: 'Mortgage Nanny' Added to Lender Job Description. I usually love Caroline Baum’s approach to shredding bad thinking. We both agree that the latest bank regulations are not helpful and won’t prevent a new crisis. Indeed, the banks, via their ownership of congress, made sure to neuter most of the new rules. Where she gets caught in a trap today, however, is this bit of AEI silliness:
No. That is Wrong. It so wrong on so many many levels that I have to stop what I was going to be doing this morning and respond to this silliness instead:
Left to themselves, most humans would borrow much more money than they can reasonably handle. This is not a political statement, it is an observation about Human Nature. Banks and other credit sources know this — that is why they review income and FICO scores and past payment history and debt load and employment record and tax returns. It is to verify the credit worthiness of the applicant. No, this isn’t an exercise in due diligence — “Hey, figure out what you can afford, and we will check your work for you.” That is not what maintaining Lending Standards means. This is why the no doc, no credit check, liar loans were destined to fail. To reduce what banks do to a mere “due diligence” exercise in validating the home owners decision is not only wrong, it may be the single silliest thing Ms. Baum has ever written. Further, the column was caught in a classic false equivalency. Ms. Baum could not help herself to bring up the usual bugaboos: “Without re-litigating the cause of the housing bubble — greedy bankers or government housing policy” — that’s because that debate is over, and the Peter Wallisons and Ed Pintos of the world overwhelmingly lost it. The only reason to go back to that debate — as was done repeatedly in the column — is because the outcome of that disagrees with your ideology. The statement “Government housing policies caused the crisis” is enormously useful, however, as it signifies cognitive dissonance on the part of its proponent.
Previously: Why is AEI Scrubbing Wallison's Name From AEI's Financial Deregulation Project? (December 2010) Dogma Versus Reality (December 2010) Source: | ||||||||
| The Trading Profits of High Frequency Traders Posted: 17 Jan 2013 03:00 AM PST | ||||||||
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