The Big Picture

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• Bill Murray on Howard Stern
• Succinct Summations of Week’s Events 10.10.14
• U.S. Stocks Erase the Years Best Rally: What’s Next?
• Wherein I Correct Nobel Laureate Daniel Kahneman’s Math
• 10 Friday Reads
• Media Appearance Bloomberg TV (8:00-9:30 am)
• Lamborghini Asterion LPI 910-4 (Hybrid!)

Bill Murray on Howard Stern Posted: 10 Oct 2014 04:30 PM PDT

Succinct Summations of Week’s Events 10.10.14 Posted: 10 Oct 2014 01:00 PM PDT Succinct Summations week ending October 10th Positives: 1. Despite the recent bout of volatility, the S&P 500 is just under 5% off its all-time highs. 2. The national price of gasoline fell to $3.24, the lowest since December 2013. 3. Initial jobless claims came down to 287k while the 4 week average is at the lowest levels since '06. 4. MBA refi applications rose 5% w/o/w as mortgage rates hit a 4-week low. 5. Japanese machine orders rose 4.7% m/o/m, above the 0.5% expected advance. Negatives: 1. It was a bad week for the global stock market. The MSCI ACWI has a three week losing streak for the first time in 14 months. 2. Rough data out of Germany sent the Dax and other indices tumbling as they missed expectations on exports, industrial production and factory orders. 3. Japan consumer confidence fell to a 4-month low. 4. Eurozone retail PMI fell to 44.8, glued below the neutral levels. 5. Volatility is back, the S&P 500 was up/down 1% in six of the last eleven sessions. 6. The Russell 2000 is down for the sixth straight week, just one away from a record.

U.S. Stocks Erase the Years Best Rally: What’s Next? Posted: 10 Oct 2014 09:00 AM PDT Stocks fell around the world, and oil extended declines after entering a bear market on mounting concern that global economic growth is slowing. Source: Bloomberg, Oct. 10 2014

Wherein I Correct Nobel Laureate Daniel Kahneman’s Math Posted: 10 Oct 2014 06:30 AM PDT I am a fan of Morgan Housel, columnist at the Motley Fool. His writings evince a strong understanding of behavioral issues, and he has a gift of sifting through the nonsense to get to what really matters. Only on rare occasions do I get to disagree with him. Today is one of those times. Housel has been sporadically posting notes on books he has read. This week, he discussed “6 Things I Learned From the book ‘Thinking Fast and Slow,’” by Princeton psychologist Daniel Kahneman. Most of the column is solid, with five interesting bullet points. But one of Kahneman's points leapt out at me as having a small math error: The most important things in life are unpredictable: The idea that large historical events are determined by luck is profoundly shocking, although it is demonstrably true. It is hard to think of the history of the twentieth century, including its large social movements, without bringing in the role of Hitler, Stalin, and Mao Zedong. But there was a moment in time, just before an egg was fertilized, when there was a fifty-fifty chance that the embryo that became Hitler could have been a female. Compounding the three events, there was a probability of one-eighth of a twentieth century without any of the three great villains and it is impossible to argue that history would have been roughly the same in their absence. The fertilization of these three eggs had momentous consequences, and it makes a joke of the idea that long-term developments are predictable. I have no problem with the random aspect of history — yes, many important things in life are unpredictable. The problem with this analysis is that it is mathematically one-sided. As is so often the case, the counterfactual provides insight. Continues here

10 Friday Reads Posted: 10 Oct 2014 05:00 AM PDT Time flies when the market swings — and today looks rough as well. Your morning reads have arrived just in time: • Why did the stock market plummet Thursday? (TRB)  see also  Stocks Worldwide Extend Selloff as Brent Falls With Metals (Bloomberg) • Monetary policy: An unconventional tool — The Fed's quantitative easing raises questions about whether it has worked and its legacy (FT) • Bill Gross’ 1st Investment Outlook at Janus (Janus) see also Gross Sees a 'Happy Second Life' After Pimco Exit (WSJ) • Investors Say Political Discord Hurts Investment Climate; Income Inequality also mentioned as a negative factor (Gallup) Continues here

Media Appearance Bloomberg TV (8:00-9:30 am) Posted: 10 Oct 2014 04:45 AM PDT Bloomberg Surveillance   I am going to be appearing on Bloomberg TV this morning with Matt Miller from 8:00 am – 9:00 am. Subjects we are discussing: 1. Markets: Signs of a Bull Market Turning Bear 2. Interview: Elon Musk 3. China and the changing world economy . . . The live TV streams here.

Lamborghini Asterion LPI 910-4 (Hybrid!) Posted: 10 Oct 2014 03:00 AM PDT From Classic Driver: Lamborghini has just unveiled its first plug-in hybrid car at the Paris Motor Show, but this is no radical hypercar. Designed as a 'technology demonstrator' for now, the Asterion LPI 910-4 is reminiscent of the Estoque concept, which also debuted at Paris back in 2008… Source: Classic Driver Lamborghini is best known as a guardian of grunt, but it has unveiled something entirely different at the Paris Motor Show: a plug-in hybrid. The Asterion is Lambo’s most powerful hypercar ever, but even the head designer took some convincing the way to go was electric.   Video: Most Powerful Lamborghini Ever Built Is a Hybrid Source: Bloomberg

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