Tuesday Tune-up

Dum Dum Girls, "Bedroom Eyes"

Quote for the Week, December 29, 2013-January 4, 2014

Concentrated power is not rendered harmless by the good intentions of those who create it.
--Milton Friedman

Tuesday Tune-up

Rolling Stones, "Paint It Black"

Quote for the Week, December 22-28, 2013

Big government inevitably drives an upward distribution of wealth to those whose wealth, confidence and sophistication enable them to manipulate government.
--George Will

Tuesday Tune-up

Beatles, "Day Tripper"

The Comeback Kid

S.I.'s Sports Person of 2013

Quote for the Week, December 15-21, 2013

Human salvation lies in the hands of the creatively maladjusted.
--Martin Luther King, Jr.

Such a Deal

Former OMB Director David Stockman
on the bipartisan plan to delay federal spending cuts:

The can has now been kicked into "low-earth orbit."

Tuesday Tune-up

Silver Trees, "She"

Quote for the Week, Dec. 8-14, 2013

Human beings, when given means and motive, have a rather poor history of eschewing the easy profit in favour of doing the right thing.
--Grant Williams

Tuesday Tune-up

Paul Simon, "Gumboots" & "Whispering Bells"

Quote for the Week, Dec. 1-7, 2013

Think of how stupid the average person is, and realize half of them are stupider than that.
--George Carlin

Tuesday Tune-up

Tift Merritt & Andrew Bird, "Drifted Apart"

Quote for the Week, November 24-30, 2013

Let's just make sure it's not a third-world experience.
--Henry Chao, deputy chief information officer, CMMS, six months before the roll-out of Healthcare.gov

RCA Sold to You

Fifty years ago today, 1:30 p.m.,
floor of the New York Stock Exchange. 
More here.

Tuesday Tune-up

Over the Rhine, "Sacred Ground"

JFK Retrospective on PBS

Lest we forget.

Quote for the Week, November 17-23, 2013

Punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.
--U.S. District Judge Jed Rakoff

Tuesday Tune-up

Heart, "Stairway to Heaven"

Quote for the Week, November 10-16, 2013

Everybody, they just don't get it and they think it's crazy.  But I think what I was doing is crazy.
--John Moffitt on his unexpected mid-season retirement from professional football

Football was fun but my head hurts-haha kidding roger goodell. I'm on to new things, thanks to everyone along the way!!!
— John Moffitt (@Moffitt74) November 5, 2013

Election Day 2014 Minus 364

Back sticker sentiment. LePage rally. #mepolitics pic.twitter.com/PtSofmfGHy
— Scott Thistle (@thisdog) November 5, 2013

It's official:  Paul LePage will run for re-election.

And the 38-percenters haven't gone anywhere.

Tuesday Tune-up

Lily & Madeleine, "In the Middle"

A Step Closure

V-B Day! #RedSox #Champions #NeverForget #BostonStrong pic.twitter.com/TzdkhWuwyw
— Obnoxious Boston Fan (@realOBF) November 2, 2013

Quote for the Week, November 3-9, 2013

The difference between genius and stupidity is that genius has its limits.
--Albert Einstein

Red Sox Go 3 for 10

Exclamation point.

Tuesday Tune-up

Chick Corea, "Armando's Rhumba"

Quote for the Week, October 27-November 2, 2013

Is it time to disappear?
Oh babe, can we just get out of here?
You and me love and no one near
Walk me to the edge of the world
Meet me at the edge of the world
I'm waiting at the edge of the world
--song by Over the Rhine

QE Is Destroying Wealth

"The failure of investors to learn from experience isn’t just an inconvenience – the constant misallocation of capital resulting from these speculative episodes is gradually destroying our nation’s economic potential for long-term growth and job creation. We measure our standard of living by the amount of output that an individual is able to command for a given amount of work. We measure our productivity by the amount that an individual is able to produce for a given amount of work. Over time, these two must go hand in hand. Policies that misallocate savings away from productive investment and toward unproductive speculation are the same policies that do long-term violence to our nation’s standard of living. Although the members of the Federal Reserve undoubtedly mean well, their actions are at the center of the assault."

--John Hussman, weekly market commentary (10-21-13)

Tuesday Tune-up

André Rieu, "The Emperor Waltz"

Quote for the Week, October 20-26, 2013

That field, never shall I forget it.  From a selfish point of view it would be so much easier to die than to see all that suffering.
--William Potwin Morgan, officer in the American Expeditionary Forces, following the Battle of Soissons, July 1918

Tuesday Tune-up

Lucy Schwartz, "Gravity"

Grown Men Behaving Deliriously

Watch the dugout empty.

Quote for the Week, October 13-19, 2013

The future is already here--it's just not evenly distributed.
--William Gibson

Tift Merritt Performs in Ann Arbor

@billhine I think he told me this story in person! THANK YOU BOTH!
— Tift Merritt (@tiftmerritt) October 12, 2013

Tuesday Tune-up

Rachel Platten, "Nothing Ever Happens"

Quote for the Week, October 6-12, 2013

The United States is a country of amnesia.  It is obsessed with its future, and Europe is paralyzed by its past.
--George Friedman

Tuesday Tune-up

The Byrds, "Turn, Turn, Turn"

Quote for the Week, September 29-October 5, 2013

I don't know whether we will make history tomorrow, but we will certainly change geography.

--British General Sir Herbert Plumer, June 6, 1917, the night before setting off one million pounds of explosives under enemy trenches on the Western Front

Debt Cycles for Dummies

Bridgewater's Ray Dalio gives us a short, simple lesson on how the economy works.  If thirty minutes is not short enough for you, zip ahead to the 7:00 mark, where begins a four-minute explanation of debt cycles and the difference between good and bad credit.

Dalio makes the case toward the end that deleveraging can be "beautiful."  Color me skeptical.

Tuesday Tune-up

John Denver, "Annie's Song"

Quote for the Week, September 22-28, 2013

A volatile market of gyrating currencies and grasping governments shrinks the horizons of the economy and reduces it to high frequency trading and arbitrage in a hypertrophy of finance.
--George Gilder

Tuesday Tune-up

Gordon Lightfoot, "If You Could Read My Mind"

Quote for the Week, September 15-21, 2013

It is extremely dangerous to encourage people to see themselves as exceptional.

--Vladimir Putin, President of Russia

Tuesday Tune-up

Roy Orbison, "Only the Lonely"

Quote for the Week, September 8-14, 2013

War is never a solution; it is an aggravation.
--Benjamin Disraeli

Tuesday Tune-up

Traveling Wilburys, "Handle With Care"

Quote for the Week, September 1-7, 2013

Some cause happiness wherever they go; others, whenever they go.
--Oscar Wilde

Focus on the Fed

Funny money: When the Laughing Stops

Tuesday Tune-up

Jay Ungar, "Ashokan Farewell

Quote for the Week, August 25-31, 2013

There can be few fields of human endeavor in which history counts for so little as in the world of finance.
--John Kenneth Galbraith

Tuesday Tune-up

The Milk Carton Kids, "Snake Eyes"

Quote for the Week, August 18-24, 2013

This was not a tempest in a teapot but rather a perfect storm of individual misconduct and inadequate internal controls.
--U.S. Attorney Preet Bharara on the failure of upper management at JPMorgan Chase to rein in rogue traders of derivatives

PDO Means We're SOL

Cyclical climate change over the Pacific Ocean is likely to lead to the following:

1. write-downs of homes in some fire-prone areas;
2. brown-outs in the Pacific Northwest;
3. diminished irrigation in California's Central Valley;
4. slow-downs in shipping traffic on the Great Lakes;
5. mark-ups for property insurance along the Atlantic seaboard.

Read the whole story here.

Tuesday Tune-up

Emily Wolfe, "Lion Heart"

Quote for the Week, August 11-17, 2013

All persons who work for an unselfish purpose for little or nothing are incomprehensible to persons who never work for nothing, and who can be hired to work for anything.
--John Reed (1887-1920)

Tuesday Tune-up

Leo Kottke, "Little Martha"

Quote for the Week, August 4-10, 2013

We have a pretty smart group of guys, which is a positive.  Hopefully, they will keep being smart.
--N.E. Patriots quarterback Tom Brady on this year's crop of rookies

Tuesday Tune-up

Escondido, "Black Roses"

Quote for the Week, July 28-August 3, 2013

Start every day off with a smile and get it over with.
--W.C. Fields

Bromance, Unrequited

Tom Terrific & 'friend'

Tuesday Tune-up

The Wailin' Jennys, "Beautiful Dawn"

Quote for the Week, July 21-27, 2013

America has no functioning democracy.
--Former U.S. President Jimmy Carter

Tuesday Tune-up

Mount Moriah, "White Sands"

Quote for the Week, July 14-20, 2013

If you live in South Florida and you're not building a boat, you're not facing reality.
--Harold Wanless, Department of Geological Sciences, University of Miami

Beijing State of Mind

rapping at the Great Wall (and other hot spots)...

Cameraman Taken Out

Chilling video from Egypt
[story here]

Tuesday Tune-up

Tift Merritt, "Sweet Spot"

Quote for the Week, July 7-13, 2013

Preach the Gospel at all times and, when necessary, use words.
--attributed to Saint Francis of Assisi

Quote for the Week, June 30-July 6, 2013

War should only be declared by the authority of the people, whose toils and treasures are to support its burdens, instead of the government which is to reap its fruits.
--James Madison

Tuesday Tune-up

2Cellos, "Fields of Gold"

More Snapshots from China

Father and son.  No, really.

Tiananmen Square, Beijing

[06-06-13]

Ceramic wall decoration,

Imperial Palace, Beijing

[06-06-13]

Cathy learned how to make dumplings.

[06-09-13]

Beachfront development in Haigang district,
Qinhuangdao
[06-10-13]

Construction boom in downtown Qinhuangdao.
[06-11-13]

Brett had a tennis buddy with connections.
Result: a gratuitous "lunch" while Wall-hopping,
Shanhaiguan district, Qinhuangdao
[06-12-13]

The Great Wall ascending Jiaoshan Mountain,
Shanhaiguan
[06-12-13]

Jiumenkou
[06-14-13]

Jiumenkou

[06-15-13]

Stop the tea party--we needed a coffee fix.
Tony [left, with Brett, Alex and Cathy] found just the right spot.
[06-17-13]

Cathy's still life by the Bohai Sea
[06-18-13]

Bird sanctuary, Beidaihe district
[06-18-13]

Quote for the Week, June 23-29, 2013

It is getting to the point where the mark of international distinction and service to humanity is no longer the Nobel Peace Prize, but an espionage indictment from the U.S. Department of Justice.
--Julian Assange

More From Brett's Laptop

Great Wall, Jiumenkou
Qinhuangdao
[06-14-13]

Mongol tourists want photo-op with Americans,
Brett goes Genghis.
[06-14-13]

Tuesday Tune-up

Itzhak Perlman & Yo Yo Ma, Dvorak's "Humoresque"

Quote for the Week, June 16-22

There are decades when nothing happens and there are weeks when decades happen.
--Vladimir Ilyich Lenin

Scenes from China, June 2013

Posting photos in anything close to real time has been difficult, as a virtual private network is required to access blogspot.com here in China.  Internet access from a hotel room just won't cut it.  Here are a few photos from Brett's laptop.

one of the Forbidden City palaces,

Beijing

[06-06-13]

Brett (top center) hosting a gaggle of girls from his English class (and his parents),
Qinhuangdao
[06-08-13]

Beach walk, Qinhuangdao
[06-10-13]

Tuesday Tune-up

Elton John, "Moon River"

First Full Day in China

left-most of nine dragons, ceramic mural,

Forbidden City, Beijing

[06-06-13]

[click to enlarge]

Quote for the Week, June 9-15, 2013

All progress is precarious, and the solution of one problem brings us face to face with another problem.
--Martin Luther King, Jr.

Tuesday Tune-up

Vanessa Paradis & Suzanne Vega, "Blowin' the the Wind"

Quote for the Week, June 2-8, 2013

Mistakes are the portals of discovery.
--James Joyce

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"

Do the Math

[48:45]

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."]

Abenomics: A High-Risk Wager

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

Gross: The BoJ dominates asset markets for better or worse. Watch JGBs, the Yen and the exodus from each.
— PIMCO (@PIMCO) May 26, 2013

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

Grisly Market Action This A.M.

He's ba-a-ack.

Tuesday Tune-up

The Piano Guys, "Rockelbel's Canon"

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.

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

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."

Stockman Ch12 by zerohedge

Tuesday Tune-up

The Doors, "Riders on the Storm"

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

QE a Double-Edged Sword

[9:32]

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.

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:

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"

Quote for the Week, May 5-11, 2013

People.

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

Tuesday Tune-up

Eva Cassidy, "Songbird"

Quote for the Week, April 28-May 4, 2013

Stop feeling sorry for yourself, find the silver lining and get to work with the same belief, same drive and same conviction as ever.
--Kobe Bryant, hours after rupturing his Achilles tendon in an NBA game

Footloose

[enlarge]

China's Mississippi River

[2:25]

Forget what you learned as a child about the Yangtze River being a remote backwater serving snails to that cute little duck Ping from the boat with the two wise eyes.  Continued economic development--and Chinese unification itself--depends on the world's third-longest river.

The Strategic Importance of the Yangtze River is republished with permission of Stratfor.

Full report here.

Beware Bulls on Pogo Sticks

Rule o' Thumb:  When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, it's probably about time to cash in the chips...[T]he endgame of overvalued, overbought, overbullish, overleveraged markets is forced liquidation.

--John Hussman, in his weekly market comment

Tuesday Tune-up

David Choi & Kina Grannis, "The Way You Are"

The Week That Was

...starting one week ago:

[courtesy Boston Globe]

Quote for the Week, April 21-27, 2013

The quickest way to extreme wealth in this world is to attach oneself to giant piles of institutional money like public pension funds...[you] don't actually do anything, other than shave cuts off of other people's money.
--Matt Taibbi

Like Thoreau, But More So

"Walden Pond:  Part Deux"

Mismatch

Dzhokhar tries to ram this with a dry-docked motor boat.

And loses.

Euroskeptic Channels Lady Thatcher

[3:02]

Margaret Thatcher said it wouldn't work.

Now Nigel Farage says that it hasn't worked:

"This European Union is the new communism.  It is power without limits.  It is creating a tide of human misery, and the sooner it is swept away the better."

Farage, a member of the European Parliament and the leader of the UK Independence Party, is "looking plausibly like the heir to Thatcher."

One World

Tuesday Tune-up

Marlene Dietrich, "Lili Marleen"

Scream Tunnel 2013

No, not the one at Wellesley College.

Finish line on Boylston Street, Boston Marathon, earlier today.

Quote for the Week, April 14-20, 2013

For decades the U.S. economic growth engine that we all love to brag about has really just been an exercise in consuming stuff we didn't need with money we didn't have.  This generational trend is now in reverse and potentially so massive that it transcends monetary and fiscal policy.
--Vince Foster

Doctor's Rx For What Ails Us

Dr. Ben Carson's keynote address,
61st annual National Prayer Breakfast

Bank Q1 "Earnings" Start to Roll In

$JPM reports earnings of "Whatever the hell we thought our loans were worth March 31st + or - internal hedges being hidden somewhere"
— Jeff Macke (@JeffMacke) April 12, 2013

JPMorgan Chase has kicked off earnings season this morning with its announcement that it "made" $6.5 billion in the first quarter of 2013.  Looking under the hood, $1.2 billion of that consisted of "old" earnings retrieved from the firm's loan-loss reserve. The earning's presentation can be found at the company's website here.  Some quick observations:

• Total revenue was down $900 million (over 3%) from the year-earlier quarter (page 2).
• The Consumer and Community Banking division had revenue that was down 6% from both the prior quarter and 1Q2012 (page 4).
• The Net Interest Margin dropped another 3 basis points  from 4Q2012 (page 13).
• Net Interest Income for the fiscal year is expected to drop 1% from 2012 (page 14).
• Over $5 billion of "profits" from the last four quarters have come from the loan-loss reserve (page 19).

In sum, organic business is growing more slowly than JPM's stock price (which is down half a buck in early pre-market trading).  And how about this:  JPM's own analysts have just issued a report saying that Tier I investment banks are "un-investable"--not what the boss wants to hear.

ZeroHedge has a chart showing how our two-tier economy works these days.  Loans from JPMorgan Chase to the real economy are flat-to-declining.  Loans from depositors to JPM are burgeoning.  JPM invests the difference in the canyons of Wall Street, hidden from the light of day.  Money, like manure, works best when it is spread around--and stinks when it is piled up in one place.

[click here to enlarge]

Wells Fargo also released quarterly earnings today (summary here).  Same story as JPM:  nice bottom line, but total revenue was down $300 million year-over-year and twice that from the quarter just prior (page 2); net interest margin was down 8 bps from 4Q2012 (page 3); and in the Community Banking segment (which includes mortgage lending) revenue was down 4% YoY and 6% from the prior quarter.

In this short video [5:06] Christopher Whalen explains to Jeff Macke of Yahoo Finance why banks must shrink their businesses and why some might be getting out of mortgage lending altogether.