Tuesday, May 28, 2013

QE Or Not QE

"All of us would like to observe lower unemployment, but the belief that quantitative easing will materially contribute to this outcome is unsupported in both theory and evidence. The present course of Fed policy is destabilizing the global economy by contributing to a financial environment that encourages the allocation of scarce savings toward speculative activity, not productive investment. When 'QE' and the 'Bernanke put' are the sole focus of the financial markets – not productivity, not innovation, not sound policy options, not careful intermediation of capital, and certainly not the plight of the elderly that have been starved of interest income – it should be obvious that things have gone too far.

"This experiment has played out long enough. Establishing the largest fiscal and monetary imbalance in U.S. history has certainly created a pleasant environment for speculators, but it does not create employment, and it sows the seeds of the next collapse. The Fed is stepping on a gas pedal in the hope of making the wheels go faster, and instead the gasoline is spurting out of the tank and feeding speculative flames, because a reliable transmission mechanism does not exist."

--John Hussman, Ph.D., in his weekly market comment (includes an open letter to the Federal Open Market Committee)

Tuesday Tune-up

Ludovico Einaudi, "Walk"

Monday, May 27, 2013

Do the Math


Or let Grant Williams do it for you.

Your assignment:  watch this video.  But if you are ADD-constrained, at the very least watch Grant's Problem #1, the disconnect between equity valuations in the U.S. and macro-economic reality, a 9-minute piece starting at the 7:30 mark.  Now class, begin.

Takeaway #1:

"Massive central bank intervention makes traditional value investing virtually impossible."

which leads to Takeaway #2:

"Beware suppressed volatility."

[n.b.--"suppressed volatility" is econo-speak for "mindless herd-like behavior."]

Sunday, May 26, 2013

Abenomics: A High-Risk Wager

Lower liquidity, higher volatility.
Get ready for massive market dislocations.

Quote for the Week, May 26-June 1, 2013

Oh, I gotta get rid of my goddamn Halliburton stock.
--Lyndon Johnson on the phone from the Parkland Hospital to his tax lawyer, just after JFK was pronounced dead

Thursday, May 23, 2013

Tuesday, May 21, 2013

Tuesday Tune-up

The Piano Guys, "Rockelbel's Canon"

Monday, May 20, 2013

Getting the Lead Out

[click to enlarge]

Maine Legislature to vote on LD 730:
An Act to Protect Maine's Loons By
Banning Lead Sinkers and Jigs

Act now.

Sunday, May 19, 2013

Quote for the Week, May 19-25, 2013

Certainly, European imperialism brought misery to the world.  But the world was making itself miserable before, and has since.
--George Friedman

Thursday, May 16, 2013

David Stockman's Latest

David Stockman,
author of The Great Deformation

"The combination of free markets and freely printed money gave rise to a toxic financial deformation; namely, the vast financialization of the world economy and the rise of endless carry trades, massive arrangements of speculative hedging, and monumental daisy chains of debts, owned by debts, owned by still more debts."

Tuesday, May 14, 2013

Tuesday Tune-up

The Doors, "Riders on the Storm"

Sunday, May 12, 2013

Quote for the Week, May 12-18, 2013

Thus the metric system did not really catch on in the States, unless you count the increasing popularity of the nine-millimeter bullet.
--Dave Barry

Thursday, May 9, 2013

QE a Double-Edged Sword


Dallas Fed President Richard Fisher points to the risk of "overkill" in the Federal Open Market Committee's current policy of QE∞.  Trimming a $4 trillion balance sheet, when the time comes, may be nigh impossible.  Fisher likens the challenge to that facing the Hunt Brothers when they tried (unsuccessfully) to exit the silver market in 1980.  When you are the market, to whom can you sell?  Meanwhile, the U.S. economy pokes along, unresponsive to all that quantitative easing.  Fisher calls it "the best-looking horse in the glue factory."  Faint praise, indeed.

Wednesday, May 8, 2013

It's a Mad, Mad World

[click to enlarge]

The S&P 500 over the last twenty years.

Think  of all that dough under the Big W:

Tuesday, May 7, 2013

Robert Caro Visits Colbert

Pulitzer Prize-winning author talks about LBJ's legacy.
(And reveals who "Jumbo" is.)

Tuesday Tune-up

George Harrison, "Let It Be Me"

Sunday, May 5, 2013

Quote for the Week, May 5-11, 2013

--Grace Coolidge, First Lady, when asked what her favorite books were.