The Big Picture

Stephen Colbert Signs Off
Succinct Summations of Week’s Event’s 12/19/14
Climate Change in Perspective
The Lessons of Mr. Market, Philosopher in Chief
10 Friday AM Reads
W113: Mercedes-Benz 230 SL Pagoda

Posted: 19 Dec 2014 04:30 PM PST

On his late night show on Comedy Central, Stephen Colbert made fun of news, and he made news. New York Times journalists bid farewell to the blow-hard character he created.

Goodbye, Stephen Colbert

Succinct Summations of Week’s Event’s 12/19/14

Posted: 19 Dec 2014 12:30 PM PST

Succinct Summations week ending December 19th

Positives:

1. Standard & Poor’s 500 Index had the biggest daily back-to-back gains since March 2009.
2. Despite last week's selloff — the biggest in over two years — the S&P 500 is up for the month of December.
3. Industrial production rose 1.3% vs expectations for a 0.7% increase. This was the biggest monthly increase since May 2010
4. Initial jobless claims came in at 289k vs the 295k expected.
5. Capacity Utilization came in above 80% for the first time since 2008.
6. U.S. manufacturing output rose 1.1% last month and surpassed its pre-recession peak.
7. CPI fell 0.3% m/o/m and rose 1.3% y/o/y.

Negatives:

1. Markit US manufacturing came in at 53.7, the lowest reading since October 2013.
2. Empire manufacturing came in at -3.6, a big miss relative to the 12 expected. This was the lowest reading since January 2013.
3. Markit services PMI fell to 53.6, the lowest reading since February.
4. Housing starts came in at 1.028mm and single family starts fell 39k.
5. Philly Fed manufacturing came in at 24.5 vs 26 expected.

Thanks, Mike.

Climate Change in Perspective

Posted: 19 Dec 2014 09:30 AM PST

Amazing interactive Climate Change infographic is jaw droppingly beautiful:

click for awesome interactive graphic

via Bloomberg

The Lessons of Mr. Market, Philosopher in Chief

Posted: 19 Dec 2014 06:30 AM PST

Once again, the markets prove that nobody knows nuthin’.

Following a bit of oil-driven turmoil the past few weeks, financial markets took off on Wednesday and Thursday. The Standard & Poor’s 500 Index had the biggest daily back-to-back gains since March 2009. Underinvested fund managers, short-sellers and even long-only, fully invested money managers worried that they didn’t have enough global equities.

Once again, Mr. Market has confounded so many of the world’s smartest investors.

Capital markets are thought of as a mechanism for buying and selling long-term debt or equity-backed securities, but that definition falls short. Mr. Market is a philosopher, a patient teacher to those who come to class aware of the wisdom on offer. The lessons for those who pay attention to this graduate-level philosophy class are rich, deep and highly counterintuitive.

As you read the many predictions for 2105, do you remember how many strategists were forecasting a collapse in crude oil prices at the start of the year? That's right, precisely zero.

Recall the beginning of 2014, when 72 out of 72 economists were anticipating higher rates and lower bond prices. How did that work out?

Exactly.

Continues here

10 Friday AM Reads

Posted: 19 Dec 2014 04:30 AM PST

The week is coming to an end, as is the calendar year. I am off to sunnier climes for a few weeks, and probably wont have much to say until the new year. Here is one of our last morning train reads to round out the year:

• How North Korea, one of the world’s poorest countries, got so good at hacking (Vox) but see Wait, North Korea DIDN'T do it? (Media Equalizer)
• Buffett and Munger on How to be a Hack (Wealth of Common Sense)
• Norris: What happens when you turn over regulatory responsibilities to people who think there is really no need for regulation? Crises (NYT)
• Cheap gas makes suburban houses more valuable (Washington Post) see also Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields (Bloomberg)
• The Perils of Short-Term Bias and the Importance of Feeding the Brain (TraderFeed)