Category: Fed Policy

Redacted Version of the June 2014 FOMC Statement

Redacted Version of the June 2014 FOMC Statement

Posted on by David Merkel
April 2014 June 2014 Comments
Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. The FOMC has constantly overestimated GDP growth, They forecast badly because they serve their political masters, who demand optimism to delude the public.
Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated. No significant change.? What improvement?
Household spending appears to be rising more quickly. Business fixed investment edged down, while the recovery in the housing sector remained slow. Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow. Shades household spending down, raises their view on business fixed investment.

The FOMC needs to stop interpreting every short-term wiggle in the data.? They whipsawed on business fixed investment over the last three periods.
Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. No change.? Funny that they don?t call their tapering a ?restraint.?
Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. No change.? TIPS are showing slightly higher inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is near 2.46%, up 0.05% from April.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. No change.
The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. No change.
The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. No change.? CPI is at 2.1% now, yoy.? Hey, above the threshold, and no comment from the FOMC?
The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. No change.
In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in May, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $20 billion per month rather than $25 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $25 billion per month rather than $30 billion per month. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month. Reduces the purchase rate by $5 billion each on Treasuries and MBS.? No big deal.

 
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. No change
The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. No change.? But it has almost no impact on interest rates on the long end, which are rallying into a weakening global economy.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. No change. Useless paragraph.
If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. No change.? Says that purchases will likely continue to decline if the economy continues to improve.
However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. No change.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. No change.
In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. No change.? Monetary policy is like jazz; we make it up as we go.? Also note that progress can be expected progress ? presumably that means looking at the change in forward expectations for inflation, etc.
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. No change.? Its standards for raising Fed funds are arbitrary.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. No change.
The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. No change.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Narayana Kocherlakota; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo. Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Narayana Kocherlakota; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo. Stanley Fischer is an interesting addition to the FOMC, because he would be capable of an independent opinion, not that he will ever do that.? Brainard and Mester are sock puppets.? If we see a dissent out of them, I will be shocked, and revise my opinion.

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Comments

  • Small $10 B/month taper.? Equities and long bonds both rise.? Commodity prices rise.? The FOMC says that any future change to policy is contingent on almost everything.
  • They shaded household spending down, and raised their view on business fixed investment.? Don?t know they keep an optimistic view of GDP growth, especially amid falling monetary velocity.
  • The FOMC is ignoring rising inflation data.
  • The FOMC needs to chop the ?dead wood? out of its statement.? Brief communication is clear communication.? If a sentence doesn?t change often, remove it.
  • In the past I have said, ?When [holding down longer-term rates on the highest-quality debt] doesn?t work, what will they do?? I have to imagine that they are wondering whether QE works at all, given the recent rise and fall in long rates.? The Fed is playing with forces bigger than themselves, and it isn?t dawning on them yet.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and much of the unemployment rate improvement comes more from discouraged workers, and part-time workers.
Post 2500: What is the Aleph Blog About?

Post 2500: What is the Aleph Blog About?

Posted on by David Merkel

Every hundred or so posts, I take a step back, and try to think about broader issues about blogging about finance. ?Tonight, I want to explain to new readers what the Aleph Blog is about.

There have been many new followers added to my blog recently, ?through e-mail, RSS, and natively. ?This is because of this great article at Marketwatch, which builds off of this great article at Michael Kitces’ blog.

I am humbled to be included among Barry Ritholtz, Josh Brown, and Cullen Roche, and am genuinely surprised to be at number 4 among RIAs in social media influence. ?Soli Deo Gloria.

What Does the Aleph Blog Care About?

I’m writing this primarily for new readers, because I’ve written a lot, and over a lot of areas. ?I write about a broader range of topics than almost all finance bloggers do because:

  • I’m both a quantitative analyst and a qualitative analyst.
  • I’m an economist that is skeptical about the current received wisdom.
  • I like reading books, so I write a lot of book reviews.
  • I’m also a skeptic regarding Modern Portfolio Theory, and would like to see it discarded from the CFA and SOA syllabuses.
  • I believe in value investing, in both the quantitative and qualitative varieties.
  • I believe that risk control is a core concept for making money — you make more money by not losing it.
  • I believe that good government policy focuses on ethics, not results. ?The bailouts were not fair to average Americans. ?What would have been fair would have been to let the bank/financial holding companies fail, while protecting the interests of depositors. ?The taxpayers would have been spared, and there would have been no systematic crisis had that been done.
  • I care about people not getting cheated. ?That includes penny stocks, structured notes, private REITs, and many other financial innovations. ?No one on Wall Street wants to do you a favor, so do your own research and buy what you want to own, not what someone wants to sell you.
  • Again, I don’t want to see people cheated, so I write about ?insurance. ?As a former actuary, and insurance buy-side analyst, I know a lot about insurance. ?I don’t know this for sure, but I think this is the blog that writes the most about insurance on the web for free. ?I write as one that invests in insurance stocks, and generally, I buy the stocks because I like the management teams. ?Ethical, hard working insurance management teams do the best.
  • Oddly, this is regarded to be a good accounting blog, because as a user of accounting statements, I write about accounting issues.
  • I am a skeptic on monetary and fiscal policy, and believe both of them tend to sacrifice the future to benefit the present. ?Our grandchildren will hate us. ? That brings up another issue: I write about the effects of demographics on the markets. ?In a world where populations are shrinking in developed nations, and will be shrinking globally by 2040, there are significant economic impacts. ?Economies don’t do well when workers are shrinking in proportion to those who are not working. ?(Note: include stay-at-home moms and dads in those who work. ?They are valuable.)
  • I care about the bond market. ?There aren’t that many good bond market blogs. ?I won’t write about it every day, but I will write about i when it is important.
  • I care about pensions. ?Most of the financial media knows things are screwed up there, but they do not grasp how bad the eventual outcome will likely be. ?This is scary stuff — choose the state you live in with care.

Now, if you want my most basic advice, visit my personal finance category.

If you want my view of what my best articles have been, visit my best articles category.

If you want to read about my “rules,” read the rules category.

Maybe you want to read some of my most popular series:

My blog is not for everyone. ?I write about what I feel most strongly about each evening. ?Since I have a wide array of interests, that makes for uneven reading, because not everyone cares about all the things that I do. ?If that makes my readership smaller, so be it. ?My blog expresses my point of view; it is not meant to be the largest website on finance. ?I want to be special, even if that means small, expressing my point ?of view to those who will listen.

I thank all of my readers for reading me. ?I appreciate all of you, and thank you for taking the time to read me.

As one final comment, I need to say this. ?I note people unfollowing my blog at certain times, and I say to myself, “Oh, I haven’t been writing about his pet issue for a while.” ?Lo, and behold, after these people leave, I start writing about it again. ?That is not intentional, but it is very similar to how the market works. ? People buy and sell investments at the wrong times.

To all my readers, thank you for reading me. ?I value all of you, and though I can’t answer all e-mails, I read all e-mails.

In summary: the Aleph Blog is about ethics and competence. ?I want to do what is right, and do what gives the best investment performance, in that order.

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Market Impact?

  • Giving Yourself an Investing Makeover?http://t.co/u1MmwlWiKP?@jasonzweigwsj describes Guy Spier & his efforts 2b a more rational investor $$?May 24, 2014
  • The Bearish Signs Junk Buyers Reject in Stoking ?14 Rally?http://t.co/xsYEJeKTnU?BBs beat CCCs amid a falling Russell 2000 index $$ #odd?May 23, 2014
  • Penny Stocks Like Latteno Foods Rally, Fueling Big-Dollar Dreams?http://t.co/IiqCWeAyOW?Fascinating 2c this amid a pullback in small caps $$?May 23, 2014
  • Buffett Too Rich for Buffett Is Sign Bargains Are Gone?http://t.co/cbjQ0MDmSR?I’m still finding some cheap stocks but they r unusual $$ $SPY?May 23, 2014
  • For Sale: 20% Stake in Hedge Fund. Terms: Complicated.?http://t.co/kDoik1H4LT??You don?t want to be wearing someone else?s underwear.? $$?May 23, 2014
  • Boomers Cash In as Bull Market Aids Exodus From Workforce?http://t.co/uKRIfO4qMQ?Asset illusions delude Boomers who think they r rich $$?May 23, 2014
  • Wall Street Finds New Subprime With 125% Business Loans?http://t.co/USvBIvP5Vj?The businesses would get better rates on Prosper $$ #dumb?May 23, 2014
  • Debt Rises in Leveraged Buyouts Despite Warnings?http://t.co/6T8TIpdxWc?Debt makes financial systems less flexible; depend on fixed pmts $$?May 21, 2014
  • Chasing Yield, Investors Plow Into Junk Bonds?http://t.co/lWFufDu7Hy?Yields have never been lower 4 CCC-rated debts $$?May 21, 2014

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Rest of the World

  • What China Property Crash? Economists See Growth Bump?http://t.co/kcXGitJH1l?Economists c new empty buildings & mark up GDP $$ $FXI #FTL?May 23, 2014
  • Putin?s Singapore Dream Costs Crimea Banks and Burgers?http://t.co/OmmtpYDB7G?Singapore is not so much created by laws but by ppl culture $$?May 23, 2014
  • Russia, China Sign $400B Gas Deal After Decade of Talks?http://t.co/4k8PSE5NrM?The infrastructure must b created 2 make this work; not ez $$?May 23, 2014
  • Brazil World Cup Win Risks Stock Drop in Boon to Rousseff?http://t.co/dPb8GVbtSZ?Brazil wins, Rousseff win odds rise, stocks will fall $$?May 23, 2014
  • BlackRock Has Cut Portugal Bond Holdings Over Past Couple of Weeks?http://t.co/U3CuYpUu81?Some Emerging-Market Debt > Euro-Zone Bonds $$?May 23, 2014
  • Norway Loses Reputation as Stable Investment as Firms Recoil?http://t.co/fqQkiM2H3k?Tax 2 highly & businesses run away $$?May 21, 2014
  • It’s a Good Time to Globalize Your Stock Portfolio?http://t.co/8pqTAwFbqj?Many foreign companies r trade cheaper than US stocks $$ $SPY $EFA?May 21, 2014
  • UK House Prices Rise to Record High in April?http://t.co/vo6gYZNlAQ?B sure 2add wealthy foreigners buying in London as investment/hedge $$?May 19, 2014
  • Bank of England’s Mark Carney Highlights Housing Market’s Threat to UK Economy?http://t.co/5XOwH0cIsJ?100% of all UK mtges r short-dated $$?May 19, 2014
  • Good Time To Be A Farmer In China??http://t.co/04V9YEmSQm?China aggressively pushing crop insurance, & larger scale agriculture $$ $FXI $SPY?May 19, 2014

Energy

  • Without Keystone XL?http://t.co/qpDcgET7J3?Economic & public health costs of forgoing a new oil pipeline $$ {Sound of oil train derailing}?May 24, 2014
  • Secrecy of Oil-by-Train Shipments Causes Concern Across the US?http://t.co/knapJHOx1k?Butane, propane & ethane should be removed b4 shpng $$?May 23, 2014
  • Oil Nations Put Out Welcome Mat for Western Companies?http://t.co/cvarvyMDCt?If u make the cost of drilling2high, fewer bbls get produced $$?May 19, 2014

 

US Politics & Policy

  • How Timothy Geithner failed his stress test?http://t.co/qSu9V6oZvX?When @rortybomb & I agree on something, that is notable $$ #housingbubble?May 23, 2014
  • Meet Jessica Rosenworcel, the FCC Swing Vote?http://t.co/VtIzieSnqI?Marches to her own drummer, willing to cut deals 4 the greater good $$?May 23, 2014
  • How to Turn Homes Back Into Piggy Banks?http://t.co/fB9PTlBwxZ?Housing Personal Savings Acct & Equity Principal Tax Credit; elim mtge ded $$?May 23, 2014
  • NJ Gov. Christie under fire for cutting pension payments to state workers?http://t.co/rGwAKla3aT?Definite mistake; cashflows compound $$?May 23, 2014
  • BlackRock?s Fink Says Housing Structure More Unsound Now?http://t.co/xeMYQmjYGG?GSEs took too much default risk pre-crisis, returning $$?May 21, 2014
  • GOP’s Business Wing Sends Tea Party a Chilling Message?http://t.co/W5QCHBrJrW?Business fights small government GOP candidates $$?May 19, 2014
  • Why Republicans Should Take Rick Santorum Seriously?http://t.co/wN7tUmnhbV?Represents the middle class populist part of the GOP $$?May 19, 2014
  • California’s Drinking Problem?http://t.co/GZnmdInHGY?California does not have enough water for Ag, Industry, People, w/o right incentives $$?May 19, 2014

 

US Monetary Policy

  • New Faces Behind Fed Dots Seen Roiling Markets as Forecasts Move?http://t.co/M2AcqPEQTX?Y publish estimates if u don’t want us 2read them $$?May 23, 2014
  • Bubble States Underemployment Rates Haunt Yellen?http://t.co/fRzLYozafe?Monetary policy is impotent w/debt defation; Fed on wrong track $$?May 23, 2014
  • New Faces Behind Fed Dots Seen Roiling Markets as Forecasts Move?http://t.co/M2AcqPEQTX?Y publish estimates if u don’t want us 2read them $$?May 23, 2014
  • Yellen Adds Disadvantaged to Full-Employment Definition?http://t.co/10PSrxYI9c?Alas, monetary policy is weak when dealing e/employment $$?May 21, 2014
  • Fed’s Rate-Change System Up for Revamp?http://t.co/srqZoDDMhK?The Fed is lost. The Fed is lost. The Fed is lost. The Fed is lost… $$ $TLT?May 19, 2014

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Companies & Industries

  • Google Developing Tablet With Advanced Vision Capabilities?http://t.co/ABO9NObY1h?Will b interesting 2c what new apps get developed $$ $GOOG?May 23, 2014
  • Planting Corn at Warp Speed Using High-Tech Tools?http://t.co/tDF9EaJoy6?Astounding application of technology transforms planting seed $$?May 23, 2014
  • Golf Market Stuck in Bunker as Thousands Leave the Sport?http://t.co/ju7aFEx2lp?Costs 2 much $$ takes up 2 much time, but growing in Asia?May 23, 2014
  • Family Dining Offers Barometer of Middle Income?http://t.co/5IzzOFfS3j?Ugly valuations means stocks will fall if sales don’t rise 4%/yr+ $$?May 23, 2014
  • Silicon Valley’s Laundry-App Race?http://t.co/GyvIWxd5ux?Long article on the efforts to turn laundry into a scalable attractive business $$?May 23, 2014

 

Personal Finance

 

  • Dueling Strategies for 401(k)s, IRAs and Your Other Retirement Funds?http://t.co/DGzSDVhDZ6?Do what maxes long-term purchasing power $$ $SPY?May 23, 2014
  • 40 Financial Things You Should Know by 40?http://t.co/8qqFlp1TUB?2013 article, but I thought it covered the personal financial basics $$?May 19, 2014

 

Other

  • New Study: Is No Degree Better Than A Liberal Arts Degree??http://t.co/MOYUZTngoD?Depends. It helps in getting some jobs, but not all $$?May 21, 2014
  • BBC News – ‘Biggest dinosaur ever’ discovered?http://t.co/Yg2qTuS27T?Interesting b/c it probably was once much warmer in Patagonia $$?May 19, 2014
  • Haverford Speaker Bowen Criticizes Students Over Protests?http://t.co/QXkWoAh0iE?Former Princeton President calls them “immature.” Bingo! $$?May 19, 2014

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Wrong

  • Overrated: Russia, China sign deal to bypass USD?http://t.co/YNgu6bwK7H?What matters is where u invest the proceeds from goods exported $$?May 23, 2014
  • Wrong: Investing: The herd isn’t always dumb?http://t.co/dt0xuXKNCJ?Then explain y dollar-weighted returns underperform buy & hold $$ #panic?May 23, 2014
  • Wrong: Cutting Off Emergency Unemployment Benefits Hasn?t Pushed People Back to Work?http://t.co/3GwlHcvq70?We run unsustainable deficits $$?May 23, 2014
  • Wrong: Ikea Economics Lure Central Bankers Seeking New Tools?http://t.co/peVUXrPpKs?Don’t try negative interest rates; will b a disaster $$?May 23, 2014
  • Wrong: The Retirement Apocalypse That Isn’t Coming?http://t.co/ILYSCOzKTm?I might buy this if we weren’t running large deficits $$ $TLT $SPY?May 21, 2014

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Retweets, Replies & Comments

  • ‘ @DGenchev I am analyzing the investors as a group, thus what % of the mkt cap is relevant. I go to EDGAR and copy XML files into Excel?May 24, 2014
  • If I were doing your project, I would not have chosen any of your “governance experts.” I would have chosen a group?http://t.co/XWlYm8HaVD?May 22, 2014

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Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

US Politics & Policy

  • The Potential Bubble the Federal Reserve Cares Most About http://t.co/tp1Ug7YcaR?Worrying about a bubble in the bond mkt $$?May 03, 2014
  • The Weekend Interview: The Investors at War With Political Power?http://t.co/MuEvV0DQcC?Courts protect our liberties from bureaucracies $$?May 03, 2014
  • Detroit Homeowners Gun Down Burglars as Police Wait for Cars?http://t.co/Dkg7YEct4g?This is the future of many US cities w/tight budgets $$?May 03, 2014
  • Railway exec: Keystone debate not about rail versus pipes?http://t.co/bVKjkcvnq0?Aiming 4 safer tank cars & separating out natgas liquids $$?May 02, 2014
  • Xerox CIO Fixing Nevada Health Exchange, as Tough Decisions Loom?http://t.co/brbP5LD0Ru?Bad job by $XRX but at least they trying 2 fix it $$?May 02, 2014
  • For Now, Justice Ginsburg’s ‘Pathmarking’ Doesn’t Include Retirement?http://t.co/xduXEt5OUV?Interesting piece on liberal SCOTUS leader $$?May 02, 2014
  • The Supreme Court’s EPA Ruling Dims Lights on Coal Power Plants?http://t.co/eAIlagHyqe?This will eventually be reversed when shale fails $$?May 02, 2014
  • The Coming Two-Tier Health System?http://t.co/xpIMjPnvhc?The longer PPACA goes on the more people will c benefits limited & costs rise $$?May 02, 2014
  • California City of Torrance Grapples With Toyota Relocation to Texas?http://t.co/OljCzROHlq?Despite denials this happened b/c hi CA taxes $$?May 01, 2014
  • The Missing Benghazi Email?http://t.co/amNnz6KAWT?New evidence that Ben Rhodes told Susan Rice and Hillary Clinton to blame the video $$?May 01, 2014
  • Shifting Demographics Tilt Presidential Races in US Burbs $$?http://t.co/Ut6WAHwu91?Demographic effect politics will shift when OASDI chokes?May 01, 2014
  • Half of people living in Illinois and Connecticut want to get out?http://t.co/ewsu2wu8HT?Maryland #3 b/c of high taxes $$ $SPY $TLT?May 01, 2014
  • Yellen Concerned Fed Model Fails to Predict Price Moves?http://t.co/P1NXGaHY6w?Been true 4 a long time; Neoclassical Macroeconomics fails $$?May 01, 2014
  • U.S. on Highway to Flunking Out?http://t.co/yvRybDP3Bp?@Ritholtz Maybe US gasoline taxes could b dedicated to infrastructure & fix this $$?May 01, 2014
  • Property-Tax Collections Rising at Fastest Pace Since US Crash?http://t.co/GoC12zZltE?My, but that was a short respite from hi prop taxes $$?May 01, 2014
  • Student-Debt Forgiveness Plans Skyrocket, Raising Fears Over Higher Tuition?http://t.co/ZaHVqZG6ft?Forgiveness programs abused 2milk Govt $$?May 01, 2014
  • Lawyers Sue Stock Market for Being Rigged?http://t.co/ntCxkptCw8?@matt_levine tells us about a plaintiff suing every broker & exchange $$?Apr 30, 2014
  • Will the Fed s Capital Rules Interfere with Monetary Policy??http://t.co/UpWnLNwIff?Leverage affects banks short-run-> margins adjust up $$?Apr 30, 2014
  • The Economic and Environmental Costs of Wasted Food?http://t.co/3YqsPbZzJv?Difficult to avoid; need for inventories, transport costs high $$?Apr 23, 2014

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Financials

  • Treasuries Irresistible to America?s Banks Awash in Cash?http://t.co/wHjk3cRPn2?Clip a small interest margin, take little risk $$?May 03, 2014
  • Big US Banks Make Swaps a Foreign Affair?http://t.co/5DD7en8pBG 5 banks intermediate 95% of derivatives $$?May 03, 2014
  • Fidelity Reaps Rewards as Banks Lose Bond Muscle?http://t.co/mSTelgwh0d?If the sell side does not provide liquidity, the buy side will $$?May 03, 2014
  • Bank of America Lost $2.7B in a Maze of Accounting?http://t.co/K05aIQBhQE?Acctg gets screwy when you mix fair value & book value elements $$?May 02, 2014
  • Traders Join Exodus as Forex Probes Add Pressure on Costs?http://t.co/Aqlsb6vElW?Difficult to dominate such a big mkt, but maybe they did $$?May 02, 2014
  • Warren Buffett Does Not Understand the J.P. Morgan Derivatives Positions?http://t.co/poMfOnAhOS?He acts to protect Berkshire vs bad debts $$?May 02, 2014
  • Fed Citing Wall Street Lapses Leads Drive on Bonds as Pay?http://t.co/Ad2DOnjZYl?Light version of the old “double liability” regime $$ $XLF?May 02, 2014
  • Stress Tests Forecast $190B in Losses at $FNMA, $FMCC in Severe Downturn?http://t.co/UA9S5Jj13a?also this article http://t.co/Wh2QlFzqZh $$?May 02, 2014
  • Traders Denied M&A Payday as Firms Use Cash?http://t.co/hSw2BGNjWh?Global firms buy assets in native currency, thus don’t need FX traders $$?May 01, 2014
  • Fixed-income houses double down?http://t.co/1rm6QHbjgc?Less yield to fight over makes the fight all the tougher $$ $TLT?May 01, 2014
  • Easier Homeowner Credit Compelling $WFC?http://t.co/AzcGHepiJJ?Cut min credit score 4borrowers of $FNMA & $FMCC loans 660->620 $$ FD: + $WFC?May 01, 2014
  • Wall Street Bond Dealers Whipsawed on Bearish Treasuries Bet?http://t.co/S6X2QhUgRV?Caught leaning the wrong way as US economy weakens $$?Apr 30, 2014

?

China

  • Chinese Bad-Loan Ratio Rises ?Significantly,? Huarong Says?http://t.co/Eu5AAeyGp5?Costs of prior malinvestment weigh on China $$?May 03, 2014
  • Xi?s Squeeze Leaves China?s Heartland Missing Boom?http://t.co/Bt0L96guqH?Efforts to constrain bad bank loans slows Chinese economy $$ $FXI?May 03, 2014
  • Wealthy Chinese replace Russians as top apartment buyers?http://t.co/zEWVg7dOOC?Better to buy in NYC than Shanghai, Hong Kong, Singapore? $$?May 02, 2014
  • How Women Lost as Out China’s Property Market Boomed?http://t.co/MXkG2udq0t?China lacks law protecting married women’s property interests $$?May 02, 2014
  • Green Batteries? Graphite Adds to China Pollution?http://t.co/rxZufzpj9H?Buy a $TSLA or a $HMC Prius, send polluted rain to China $$ $SPY?May 01, 2014

 

Rest of the World

  • Poland?s Tusk Proposes Energy Union 2 Break Russian Hold on Gas?http://t.co/CzDr3evIhe?Wishful thinking as infrastructure 2 deliver lacks $$?May 03, 2014
  • More Italian Women Are Choosing to Have No Children?http://t.co/fSghk0oKwP?A nation that does not have children is irrelevant $$?May 03, 2014
  • Portugal Grabs Cheap Bond Deal With Eye on Bailout Exit?http://t.co/9gEDWEIuYh?Debt problems r not resolved, but mkts feel better 4 now $$?May 03, 2014
  • German Ship Captain Swamped in Debt Underscores Bank Risk?http://t.co/eP7Xhvj67X?Current EU economic policies hide bad debt risks $$?May 03, 2014
  • GoldenTree Goes Bold in Buying Russian Corporate Bonds?http://t.co/d0nvYJ7Ah2??Russia, it?s a strong credit in a difficult environment,? $$?May 03, 2014
  • One Missing Jet, One Sunken Ferry, Two Responses?http://t.co/I1ZgkwQyLo?@WilliamPesek compares Malaysia & S. Korea & responses 2 disaster $$?May 02, 2014
  • Turkey’s Erdogan: 1 of the World’s Most Determined Internet Censors?http://t.co/12ALhoW2i3?#twitterisblockedinTurkey $$ #internetchangesall?May 02, 2014
  • German Businesses Urge Halt on Sanctions Against Russia?http://t.co/bJho1CvvIP?Is business so global that major wars can’t be fought? $$?May 02, 2014
  • How Canada?s Flirtation w/a China Oil Market Soured?http://t.co/h5HPS7pnM8?Why Canada will NEVER ship crude to China via a Pacific port $$?May 02, 2014
  • Georgia Pushes for Fast Path 2 NATO on Russian Threat?http://t.co/bYY8LK1pla?Is Georgia worth annoying Russia? Avoid entangling alliances $$?May 02, 2014
  • US sanctions raise concerns for foreign investors?http://t.co/XWbwvPXyir?Or, maybe not: http://t.co/rhsqIHCafl $$?May 02, 2014
  • Google Warning on Russia Prescient as Putin Squeezes Web?http://t.co/pVedAtqcAx?Social Media has its downsides if Govt uses it against u $$?May 02, 2014
  • Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm?http://t.co/bhWlb1EjxQ?Curbing speculation has led 2 decreased bond liquidity $$?May 02, 2014
  • Israelis Without ABCs Unready2Power Startup Nation?s Economy?http://t.co/q2V1IwGrIZ?He that doesn’t teach his son a trade teaches him2rob $$?May 01, 2014
  • Tokyo Inflation Quickens to Fastest Since 1992?http://t.co/khjhBvHgWT?Worth watching, as inflation is not the friend of Japan ultimately $$?May 01, 2014

 

US Economy?

  • Colleges, Employers Rethink Internship Policies?http://t.co/RMievOB82U?Unpaid internships often don’t lead to jobs, just use your time $$?May 03, 2014
  • Apprenticeships Help Close the Skills Gap. So Why Are They in Decline??http://t.co/pCnZCgXqAr?If they weren’t tied 2 labor unions… $$?May 03, 2014
  • Calculated Risk: Ranking Economic Data?http://t.co/l4X9wcjrEw) Bill McBride gives his opinions on what economic data is most important $$?May 03, 2014
  • Union Blasts Staples-Run Postal Outlets?http://t.co/qmmc4iXhIS?Of course, they don’t want the competition $$?May 03, 2014

?

Energy

  • Energy Future Junior Creditors Test Bid for Fast Bankruptcy Deal?http://t.co/ZFgWCteuh0?A warning to those doing big LBO deals in a boom $$?May 03, 2014
  • Shale Drillers Feast on Junk Debt to Stay on Treadmill?http://t.co/qG9WwN63V0?Fascinating look many junk-rated E&P companies paying 5.4% $$?May 02, 2014
  • Valero to Suncor Shun Overseas Imports in Eastern Canada?http://t.co/dco5QQdox4?Oil imports falling in Eastern N.America, Brent spd eases $$?May 02, 2014
  • Berkshire Hathaway Energy Buys AltaLink Power-Transmission Company?http://t.co/K95RDCbYM8?Buffett wants long-lived infrastructure assets $$?May 02, 2014
  • Shale Revolution Lures Trading Houses 2US Energy Assets?http://t.co/6WTGDZNLzl?If u can understand physical flows, there?s a value chain $$?May 01, 2014
  • Drones Are Becoming Energy?s New Roustabouts?http://t.co/e2OBYmeV48?Can cover more area and c things that a person could not c & record $$?May 01, 2014
  • Challenges Lie Ahead for North American Oil Production?http://t.co/m7vvemlw6m?We’re running out of cheap crude oil $$?Apr 22, 2014


Market Impact

  • Defensive Value ETF Races to New Highs?http://t.co/KOKo14nkDk?This isn’t defense; many people throw $$ at stocks that offer dividends?May 03, 2014
  • Chile CEF?s Premium a Case of Yield Lover?s Mirage?http://t.co/blhZjCHLzN?Be wary: not all distributions indicate recurring yield $$?May 03, 2014
  • Hedge Funds Short Small Caps Most Since ?04?http://t.co/2hLYbzM521?Dangerous trade, b/c mkt can b insane longer than u remain solvent $$?May 03, 2014
  • Howard Marks’ Brilliant Observation On What It Takes To Be A Great Investor?http://t.co/yeJnpION8s?Be different, & right often enough $$?May 02, 2014
  • Junk Loans Pulled as Buyers Say No After Fed Voices Worry?http://t.co/lCDRdfFvV6?Junk-loan MFs had their 1st outflow in week ended 4/16 $$?May 02, 2014
  • Why This Bull Market Feels Familiar?http://t.co/8JXl7JGwMe?Low earnings in tech IPOs, momentum & loose monetary policy $$ $SPY?May 01, 2014
  • Why Investors Love Hedge Funds?http://t.co/uFjN76R9KT?@Ritholtz teaches us about high fees, & decrasing effectiveness as they grow large $$?Apr 30, 2014

?

Companies

  • Ballmer Becomes Largest Individual Microsoft Shareholder?http://t.co/DvWSRZAb1Z?Bill Gates always had an exit strategy from $MSFT $$?May 03, 2014
  • Apple Sells $12B of Bonds to Keep Cash Overseas?http://t.co/FiSK8eJS5C?Avoiding the tax hit is more important leverage across borders $$?May 03, 2014
  • Berkshire Meeting, Now ?Woodstock for Capitalists,? Had Humble Start?http://t.co/wbYCcKc8yr?Nobody goes there anymore; it’s too crowded $$?May 02, 2014
  • Buffett Wants Tough Questions? How About These??http://t.co/m36vBV6VIe?Ask him about the Harney Investment Trust, his shadowy creation $$?May 02, 2014
  • Verizon Loses Cellphone Customers for First Time?http://t.co/6DbXOm993W?Interesting, wonder if it is a trend… $$ $VZ?May 01, 2014
  • IBM End to Buyback Splurge Pressures CEO to Boost Revenue?http://t.co/D657Dc27mX?Buybacks can only do so much; organic growth needed $$ $IBM?May 01, 2014
  • FM Global CFO: Know Your Supply Chain?http://t.co/dBTc6MYXXY?Real disasters happen when multiple things go wrong at the same time $$ $SPY?May 01, 2014
  • ‘I Think Google’s Pretty Dangerous and Thuggish. I?ve Always Said That.’?http://t.co/jYZBaewNjZ?Trying 2 defend yourself; not saying much $$?Apr 28, 2014

 

Personal Finance

  • Does Anyone Play It Straight in Markets??http://t.co/MRZY1ro2as?@ritholtz warns u that many in the mkts r trying to separate u & your $$?May 03, 2014
  • Feeling Cool About A Hot Personal Finance Book?http://t.co/hwFULepE8v?When someone tries to sell u insurance 4 a savings need, go away $$?May 03, 2014
  • 4 Alternatives to Reverse Mortgages?http://t.co/6Wmd2kYQmz?Refinance, Home Equity Loan, Sell the Home (maybe to your kids) $$ #sell?May 02, 2014
  • Work and Live, Retire and Die @Ritholtz?http://t.co/t1YWHoG6NO?People plan to retire later than they actually do & life interferes $$ $SPY?May 02, 2014
  • How to Choose the Right Mutual Fund?http://t.co/4kvyh8rZZK?Omits active share, good mutual funds typically look un-indexlike $$?May 01, 2014
  • If You’re Not Saving, You’re Losing Out?http://t.co/QtG87rNHPF?It’s not the money u make, it’s the money u keep that counts $$ $SPY $TLT?May 01, 2014

 

Other

  • The Questionable Link Between Saturated Fat and Heart Disease?http://t.co/32pwYj4Z6i?There has never been more disagreement over food $$?May 03, 2014
  • Will That Golfer Choke? New Field of Mental Analytics Tees Up Answer?http://t.co/B8dxIYL1Jf?Can analytics make u think better in sports $$?May 03, 2014
  • Cyber security: business is in the front line?http://t.co/RXkfEDaPu0?This isn’t a soft cost anymore; the need to secure IT is vital $$?May 03, 2014
  • Remember Life Before Antibiotics? No? Wait, It’ll Come to You?http://t.co/g9uQajBJJL?Antibiotic resistance grows, obsoleting some drugs $$?May 02, 2014
  • How the ‘Jesus’ Wife’ Hoax Fell Apart?http://t.co/Kdswi39oZr?Hoaxes & apochrypha have circulated since the Apostles. They always crumble $$?May 02, 2014
  • Why Some MBAs Are Reading Plato?http://t.co/ltj9Y8QYyV?Schools Try Philosophy to Get B-School Students Thinking Beyond the Bottom Line $$?May 01, 2014
  • Does Baseball Have to Be So Slow??http://t.co/8PRcoei9Ua?Dawdling by batters & pitchers, & an increase in strikeouts makes games drag $$?May 01, 2014
  • The world’s smallest magazine cover is 2,000 times smaller than a grain of salt?http://t.co/o4H7mfHCDE?Nanotech: we do it because we can $$?May 01, 2014
  • Why Militaries Mess Up So Often?http://t.co/39NKx6YPUn?Officers trained during peacetime tend not to take the risks necessary in wartime $$?May 01, 2014

 

Wrong?

  • Wrong:Nontraded REIT returns: Where to put cash now??http://t.co/EPykRK8e7S?Avoid illiquidity unless u r paid 4 it. Avoid big commissions $$?May 03, 2014
  • Wrong: China’s Century Starts Now @BloombergView?http://t.co/UUziinXlqJ?Wait until after the banking crash & recovery, then write this $$?May 01, 2014
  • Wrong: Money-Market Funds As Safe as Banks, Except When They’re Not?http://t.co/7S2TEDpk7Q?Banks fail more often & losses r more severe $$?May 01, 2014

?

Retweets, Replies, and Comments?

  • “Ask Buffett about the Harney Investment Trust:http://t.co/KUHnslWBFv…” ? David_Merkel http://t.co/bLVAj6OY7O $$?May 02, 2014
  • Commented on StockTwits: Whoops, and I should have gotten that one right?http://t.co/nB9lRK14kb?May 01, 2014
  • “Paul, try valuing BRK off of increase in book value per share, and the metric comes out to a more?” ? DavidMerkel?http://t.co/cm2Rdhkzfn?$$?May 01, 2014
  • “Now try to explain how long yields fell the last time the Fed tightened.” ? David_Merkel?http://t.co/MwJL3d6KQX?$$ FD: + $TLT?May 01, 2014
  • “If citizens are not created/educated by 18, you won’t have good citizens.” ? David_Merkel?http://t.co/TzfQsJULED?$$ http://t.co/eiOLPqNuub?Apr 29, 2014
  • “This may be a game of “Who has the stronger balance sheet?” $HLF or Ackman?” ? David_Merkel?http://t.co/2QCjheaJjd?$$?Apr 29, 2014
  • @Peter_Atwater @Minyanville @Socionomics Thanks, Peter. Means a lot coming from you.?Apr 28, 2014
  • @ReformedBroker @ritholtz feel free to repost it (w/credit to me) if you like?Apr 28, 2014
  • RT @felixsalmon: For the record, I never said, nor do I believe, that text is over. I?m still going to be writing lots of text!?Apr 28, 2014
  • RT @victorricciardi: @researchpuzzler @AlephBlog @jciesielski @tobyshute Tom Great meeting you Thanks for your ideas for promoting my new b??Apr 25, 2014
  • RT @researchpuzzler: thanks to CFA Society Baltimore @AlephBlog @victorricciardi @jciesielski @tobyshute for the great exchange of ideas?Apr 25, 2014
  • RT @ppearlman: summer must read – “@reformedbroker: CLASH OF THE FINANCIAL PUNDITS: COUNTDOWN BEGINS NOW!?http://t.co/iZqYTs8OFt“?Apr 25, 2014
  • RT @abnormalreturns: Had to Google ?cable network Fusion??RT @felixsalmon: It?s out: I?m going to Fusion?http://t.co/B1EK0eJmc8?Apr 24, 2014
  • RT @ChemistryVines: Mercury(II) thiocyanate (Hg(SCN)2)?https://t.co/Ar2yhIlOwo?Apr 23, 2014
  • @Calvinn_Hobbes I don’t know. We all want to grow up, until we do grow up. Only the foolish regret growing up.?Apr 22, 2014
Redacted version of the April 2014 FOMC Statement

Redacted version of the April 2014 FOMC Statement

Posted on by David Merkel
March 2014 April 2014 Comments
Information received since the Federal Open Market Committee met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions. Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Weather is always a weak reason for a bad result.? You almost never see anyone claim good weather boosted results.

Didn?t they see today?s weak GDP report?
Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. No significant change.? What improvement?? Note: this is the one remaining place where they mention the ?unemployment rate.? Shh.
Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. Household spending appears to be rising more quickly. Business fixed investment edged down, while the recovery in the housing sector remained slow. Shades household spending down, lowers their view on business fixed investment.
Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. No change.? Funny that they don?t call their tapering a ?restraint.?
Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. No change.? TIPS are showing slightly lower inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is near 2.41%, up 0.15% from March.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. No change.
The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. No change.
The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. No change.? CPI is at 1.5% now, yoy.
The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. No change.
In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in May, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $20 billion per month rather than $25 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $25 billion per month rather than $30 billion per month. Reduces the purchase rate by $5 billion each on Treasuries and MBS.? No big deal.

 
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. No change
The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. No change.? But it has almost no impact on interest rates on the long end, which are rallying into a weakening global economy.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. No change. Useless paragraph.
If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. No change.? Says that purchases will likely continue to decline if the economy continues to improve.
However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. No change.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. No change.
In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Monetary policy is like jazz; we make it up as we go.? Also note that progress can be expected progress ? presumably that means looking at the change in forward expectations for inflation, etc.
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. No change.? Its standards for raising Fed funds are arbitrary.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. No change.
The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. No change.
With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee’s guidance does not indicate any change in the Committee’s policy intentions as set forth in its recent statements.   That sentence lasted only one month.? Note that the phrase ?unemployment rate? is close to being banned by the FOMC.? The dual mandate is not so dual, at least in the old sense.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo.

 

 Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Narayana Kocherlakota; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo. Kocherlakota rejoins the majority, even with no change to the ?fifth paragraph? of the March statement.
Voting against the action was Narayana Kocherlakota, who supported the sixth paragraph, but believed the fifth paragraph weakens the credibility of the Committee’s commitment to return inflation to the 2 percent target from below and fosters policy uncertainty that hinders economic activity.   Thus ends the lamest vote against an FOMC decision that I have ever seen.? The differences between the last statement?s fifth and sixth paragraphs were minuscule.

Comments

  • Small $10 B/month taper.? Equities and long bonds both rise.? Commodity prices fall.? The FOMC says that any future change to policy is contingent on almost everything.
  • They shaded household spending down, and lowered their view on business fixed investment.? Don?t know they keep an optimistic view of GDP growth, especially amid falling monetary velocity.
  • At least they are abandoning the unemployment rate as their measure of labor conditions.
  • They missed a real opportunity to simplify the statement.? More words obfuscate, they do not clarify.
  • In the past I have said, ?When [holding down longer-term rates on the highest-quality debt] doesn?t work, what will they do?? I have to imagine that they are wondering whether QE works at all, given the recent rise and fall in long rates.? The Fed is playing with forces bigger than themselves, and it isn?t dawning on them yet.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and much of the unemployment rate improvement comes more from discouraged workers, and part-time workers.
Miscellaneous Notes

Miscellaneous Notes

Posted on by David Merkel

When I was writing at RealMoney.com, I would often do little posts in the Columnists Conversation, and title them “Notes and Comments,” or something like that. ?I don’t normally do that here, but I would like to tie up some loose ends.

1) I received the following e-mail six weeks ago, and I feel it is worthy to be shared with readers:

Hi David,

I follow?the Aleph blog from time to time. I run value and special situations oriented hedge fund whose goal is to purchase businesses that sell for at least 50 cents on the dollar. It seems that we are like minded in investment terms. I have an extensive investment checklist which that I believe can add value to investors. It took me a few years and I derived it by reading stacks of annual reports from Buffett, Klarman, etc?

If it adds value to your readers, more than happy to share the 90+item investment checklist.

http://www.brarifunds.com/wp-content/uploads/BIF-Checklist.pdf

Regards,

Pope

Pope Brar, Managing Partner/Founder

Brar Investment Funds

I’ve read through the checklist and it is a good one. ?It has all of the elements of my processes (though I am not as rigorous) and much more. ?His checklist is worth a read. ?Have a look at it.

2) From last night’s post, a reader asked:

Lots of insurers here.? Given your expertise in that area, I’d be curious to know if you think this screen is turning up names that are on the riskier end of the spectrum.

I wrote a seven part series on this, and here are the summary ideas, and the links:

  1. Shrinking the share count
  2. Growing Fully Convertible Book Value per Share
  3. Price Momentum and Mean-Reversion
  4. On Conservative Management & Reserving
  5. Some Things Can’t Be Underwritten
  6. Analyzing Insurance Sub-Industries and the PB-ROE model
  7. Insurance Accounting and Miscellaneous Insurance Insights?

I’ve been decreasing my insurance shareholdings lately because:

  • Pricing is weak for most P&C coverages, and
  • I don’t trust the reserving for secondary guarantees in life and annuity policies.

Here’s the insurance companies from last might’s article in decreasing order of earnings yield:

Company Ticker Industry Country B/P E/P ROE
Imperial Holdings, Inc. IFT 0709 – Insurance (Life) United States ?1.38 ?37.03 ?26.83
Greenlight Capital Re, Ltd. GLRE 0715 – Insurance (P&C) Cayman Islands ?0.90 ?19.45 ?21.61
Assured Guaranty Ltd. AGO 0715 – Insurance (P&C) Bermuda ?1.18 ?18.59 ?15.75
American Equity Investment Lif AEL 0709 – Insurance (Life) United States ?0.86 ?16.77 ?19.50
Everest Re Group Ltd RE 0715 – Insurance (P&C) Bermuda ?0.88 ?15.35 ?17.44
Validus Holdings, Ltd. VR 0715 – Insurance (P&C) Bermuda ?1.00 ?13.30 ?13.30
Axis Capital Holdings Limited AXS 0715 – Insurance (P&C) Bermuda ?1.01 ?13.20 ?13.07
Endurance Specialty Holdings L ENH 0715 – Insurance (P&C) Bermuda ?1.31 ?12.55 ?9.58
CNO Financial Group Inc CNO 0709 – Insurance (Life) United States ?1.29 ?12.39 ?9.60
American International Group I AIG 0715 – Insurance (P&C) United States ?1.34 ?12.00 ?8.96
Montpelier Re Holdings Ltd. MRH 0715 – Insurance (P&C) Bermuda ?0.99 ?11.83 ?11.95
Allied World Assurance Co Hold AWH 0715 – Insurance (P&C) Switzerland ?1.00 ?11.73 ?11.73
XL Group plc XL 0715 – Insurance (P&C) Ireland ?1.12 ?11.72 ?10.46
Argo Group International Holdi AGII 0715 – Insurance (P&C) Bermuda ?1.27 ?11.55 ?9.09
Platinum Underwriters Holdings PTP 0715 – Insurance (P&C) Bermuda ?1.02 ?11.25 ?11.03
Allianz SE (ADR) AZSEY 0715 – Insurance (P&C) Germany ?0.92 ?11.08 ?12.04
ACE Limited ACE 0715 – Insurance (P&C) Switzerland ?0.84 ?10.92 ?13.00
ProAssurance Corporation PRA 0715 – Insurance (P&C) United States ?0.87 ?10.86 ?12.48
MBIA Inc. MBI 0715 – Insurance (P&C) United States ?1.45 ?10.86 ?7.49
National Western Life Insuranc NWLI 0709 – Insurance (Life) United States ?1.63 ?10.85 ?6.66
Partnerre Ltd PRE 0715 – Insurance (P&C) Bermuda ?1.23 ?10.75 ?8.74
Old Republic International Cor ORI 0715 – Insurance (P&C) United States ?0.88 ?10.53 ?11.97
Employers Holdings, Inc. EIG 0706 – Insurance (A&H) United States ?0.93 ?10.46 ?11.25
United Fire Group, Inc. UFCS 0715 – Insurance (P&C) United States ?1.05 ?10.30 ?9.81
Maiden Holdings, Ltd. MHLD 0715 – Insurance (P&C) Bermuda ?0.93 ?10.11 ?10.87
EMC Insurance Group Inc. EMCI 0715 – Insurance (P&C) United States ?1.02 ?9.88 ?9.69
Investors Title Company ITIC 0715 – Insurance (P&C) United States ?0.86 ?9.85 ?11.45
Protective Life Corp. PL 0709 – Insurance (Life) United States ?0.92 ?9.76 ?10.61
Lincoln National Corporation LNC 0709 – Insurance (Life) United States ?1.07 ?9.76 ?9.12
FBL Financial Group FFG 0709 – Insurance (Life) United States ?0.96 ?9.73 ?10.14
Assurant, Inc. AIZ 0709 – Insurance (Life) United States ?1.00 ?9.67 ?9.67
Kemper Corp KMPR 0715 – Insurance (P&C) United States ?0.95 ?9.64 ?10.15
Aspen Insurance Holdings Limit AHL 0715 – Insurance (P&C) Bermuda ?1.12 ?9.61 ?8.58
Horace Mann Educators Corporat HMN 0715 – Insurance (P&C) United States ?0.91 ?9.60 ?10.55
Unum Group UNM 0709 – Insurance (Life) United States ?0.98 ?9.55 ?9.74
WellPoint Inc WLP 0706 – Insurance (A&H) United States ?0.89 ?9.52 ?10.70
ING Groep NV (ADR) ING 0709 – Insurance (Life) Netherlands ?1.14 ?9.46 ?8.30
Axa SA (ADR) AXAHY 0709 – Insurance (Life) France ?1.19 ?9.46 ?7.95
Hanover Insurance Group, Inc., THG 0715 – Insurance (P&C) United States ?0.99 ?9.44 ?9.54
Baldwin & Lyons Inc BWINB 0715 – Insurance (P&C) United States ?0.98 ?9.42 ?9.61
American Financial Group Inc AFG 0715 – Insurance (P&C) United States ?0.87 ?9.15 ?10.52
Alleghany Corporation Y 0715 – Insurance (P&C) United States ?1.01 ?9.15 ?9.06
American National Insurance Co ANAT 0715 – Insurance (P&C) United States ?1.40 ?8.99 ?6.42
HCC Insurance Holdings, Inc. HCC 0715 – Insurance (P&C) United States ?0.82 ?8.92 ?10.88
Allstate Corporation, The ALL 0715 – Insurance (P&C) United States ?0.82 ?8.75 ?10.67
Symetra Financial Corporation SYA 0709 – Insurance (Life) United States ?1.23 ?8.64 ?7.02
Selective Insurance Group SIGI 0715 – Insurance (P&C) United States ?0.90 ?8.51 ?9.46
White Mountains Insurance Grou WTM 0715 – Insurance (P&C) Bermuda ?1.07 ?8.49 ?7.93
Fortegra Financial Corp FRF 0712 – Insurance (Misc) United States ?1.28 ?8.18 ?6.39
Cna Financial Corp CNA 0715 – Insurance (P&C) United States ?1.10 ?8.15 ?7.41
Stewart Information Services C STC 0715 – Insurance (P&C) United States ?0.83 ?7.96 ?9.59
Navigators Group, Inc, The NAVG 0715 – Insurance (P&C) United States ?1.09 ?7.68 ?7.05
Reinsurance Group of America I RGA 0706 – Insurance (A&H) United States ?1.08 ?7.49 ?6.94
Safety Insurance Group, Inc. SAFT 0715 – Insurance (P&C) United States ?0.84 ?7.39 ?8.80
State Auto Financial Corp STFC 0715 – Insurance (P&C) United States ?0.83 ?6.92 ?8.34
Genworth Financial Inc GNW 0709 – Insurance (Life) United States ?1.72 ?6.87 ?3.99
First American Financial Corp FAF 0715 – Insurance (P&C) United States ?0.87 ?6.75 ?7.76

Now, let me list for you the companies I would avoid on this list: IFT, GLRE, AGO, AEL, CNO, AIG, XL, MBI, LNC, FBL, AHL, ING, AXAHY, AFG, GNW. ?That does not mean that I endorse the others. ?In general, those that I say to avoid have poor underwriting skills or a bad business model.

3) Another letter from a reader, on a very different topic, the FOMC:

thanks again – I always look forward to this update.

My thoughts are, they are increasing their flexibility in one direction (towards??accommodation?).? While they did move the point about??after the purchase program ends? to a spot perhaps better suited to a discussion of that point, I also took it to mean that there may be less commitment to end QE.? (Although, so long as the deficit keeps declining, they really have no choice but to dial back purchases to keep the supply and the non-Fed demand in line.? This is the overlooked reason, I believe that long rates appear to be moving independently of Fed action.? Their demand is not the only variable).

?Final thought -?to what extent do you think that the Fed?s great misunderstanding is their inherent bias towards lowest rates possible under any economic conditions: i.e. for any given level of inflation, that Fed policy is best that reflects the lowest level of non-inflationary?interest rates [because this presumably encourages credit expansion and therefore economic growth]?

?To my way of thinking, the difficulty with this is that it assumes that credit always has to expand FASTER than the economy overall.? I don?t mean that credit expansion is not important, it is a big component of growth, just that credit can?t grow faster than income forever and at some point, we have to find a model that enables income to grow fast enough to increase living standards without overleverage.

?To me, this is the central policy challenge of the 21st century, because a) globally, credit has surged relative to national income and has reached a limit, b) populations are aging and must therefore favor lower levels of credit – and consumption – overall and c) the bills associated with 1 and 2 are now coming due.

?The Fed, however, seems stuck on the idea that their job should be to inflate rapid credit expansion regardless of the creditworthiness of the borrowers.? This strikes me as dumb, or perhaps more like wishful thinking that if credit expands, growth will drive incomes higher and somehow these will catch up (with some acceptable lag).

?Notice that no one at the Fed talks about things like the household savings rate any more?? I would be ok with QE if the Fed could explain that they were facilitating an orderly deleveraging: in which case Household Debt/Equity (which indicates potential for end-consumer final demand) would be a better metric than unemployment.

?As it is, I believe that what they are really targeting (large) bank balance sheets, and that QE is really a massive backdoor subsidy to money center banks to guarantee enough operating income to allow them to write off bad loans while increasing capital reserves to comply with Basel III.? (Full disclosure, I have a significant portion of my assets in a large US bank that was trading well?below the strike price of the warrants issued against its shares to Berkshire Hathaway at the time I purchased the shares, which bank shall remain nameless).

?Politically, I suppose, saying,??well, we need to ensure banks are profitable so as to ensure the solvency of the payments system? looks disturbingly like a bailout for the 1% and is out of touch with a more populist America.

?Anyway, sorry for the diatribe, but curious to get your thoughts.? I think I am less reflexively sceptical about the efficacy of the Fed?s policy (but I fully agree with your view that they are not supporting employment with it).

?Thanks again for all the work you do.

The central idea I would like to comment on is that incremental easing has had less and less effect on the economy, at least in the short-run. ?Aside from energy companies, willingness to invest in the business has been light, while willingness to buy back stock has been high. ?That doesn’t produce growth in the economy.

The Fed doesn’t realize that it can’t stimulate the economy at the zero bound. ?QE is ineffective, and may become fuel for high inflation if the banks start to lend aggressively. ?Inflation is not the goal, and I think many policymakers are confused — the goal is real growth.

We can protect the payments systems by protecting the regulated subsidiaries of banks, and letting the holding companies bear the losses, which is what we failed to do in 2008-2009.

All that said, we have a punk economy, but what will happen if we get a large increase in bank lending, leading to inflation. ?What will the Fed do then?

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Federal Reserve

 

  • Why Central Banks Should Be Vague?http://t.co/iVO9s9l3il?They would b better off saying nothing, as their ability 2analyze future is poor $$?Mar 21, 2014
  • Yellen and the Curse of Forward Guidance @BloombergView?http://t.co/kAWJg4vrEN?Better the Fed should shut up & let the market adjust $$ $TLT?Mar 21, 2014
  • Yellen and the Fed Go Dark?http://t.co/M70bG02KZ3?@M_C_Klein tells the truth, better the FOMC should say nothing, words don’t mean much $$?Mar 21, 2014
  • Yellen Punt Prompts Panic?http://t.co/ztlpEuEGp6?Interesting to be quoted in the article above. Author liked my comment on the weather $$?Mar 20, 2014
  • Essentially Yellen said monetary policy will b the same as before, only more so. But the forecasts show a faster removal of accommodation $$?Mar 19, 2014
  • Level of Central tendency of FOMC Fed Funds forecasts 2014-6, LR — 0.30%, 1.13%, 2.42%, 3.88% Change -0.04%, 0.07%, 0.25%, -0.01% $$?Mar 19, 2014
  • Level of Central tendency of forecasts for when the Fed first starts tightening Fed funds: October 2015, change from prior January 2016 $$?Mar 19, 2014
  • Level of Central tendency of FOMC PCE Inflation forecasts 2014-6, LR — 1.55%, 1.80%, 1.84%, 2.00% Change 0.04%, 0.03%, -0.03%, 0.00% $$?Mar 19, 2014
  • Level of Central tendency of FOMC Unemp forecasts 2014-6, LR — 6.21%, 5.73%, 5.41%, 5.45% Change -0.24%, -0.20%, -0.13%, -0.08% $$?Mar 19, 2014
  • Level of Central tendency of FOMC GDP forecasts 2014-6, LR — 2.81%, 3.04%, 2.76%, 2.21% Change -0.13%, -0.09%, -0.08%, -0.05% $$?Mar 19, 2014
  • Low-Wage Workers Are Finding Poverty Harder to Escape?http://t.co/RQP18XOPQA?Low Marketable Skills plus divorce or no marriage w/kids $$?Mar 18, 2014
  • Fed set to roll out new low-rate pledge?http://t.co/WXYH7aiBcK?Fed spends 2much time on words, not enough on long-term efficacy of policy $$?Mar 18, 2014
  • Yellen should take away the punch bowl?http://t.co/VzkzJZr83D?Fed will never do that; doesn’t like 2 take actions that point back @ them $$?Mar 18, 2014

?

Rest of the World

 

  • Bloomberg Hints at Curb on Articles About China?http://t.co/q1R6Xsa8fF?Bloomberg makes its $$ by renting out terminals; wants more China biz?Mar 21, 2014
  • CPI Credibility Lasts 34 Days as Doubts Return?http://t.co/qtUNozXPnZ?Well, that was quick – guess Argentina doesn’t want 2 pay more out $$?Mar 20, 2014
  • Putin?s Tools of Sabotage Beat Urgency of Ukraine Invasion?http://t.co/Yv3rRkrdnd?Putin ready 2 play a rougher game, understands politics $$?Mar 20, 2014
  • Putin Is No Madman to Russians as Power Play Trumps Economy?http://t.co/hOPPmnCF5u?We shouldn’t fight over this, Crimea is Russian $$ $RSX?Mar 19, 2014
  • ?Nobody Knows Anything??http://t.co/WTlzkgXvkM?Knowledge lost as Cold War Generation gone from foreign policy: C: http://t.co/0KvkZIqlHW $$?Mar 18, 2014
  • How China’s official bank card is used to smuggle money?http://t.co/2PIMdctQu5?Between Macau Casinos & UnionPay, wealthy get $$ out of China?Mar 18, 2014
  • China to Spend More Than $162B on Shantytowns?http://t.co/l0HKesS6lr?Herding people into cities, but what will they do for work? $$ $FXI?Mar 18, 2014
  • Alibaba Confirms It Will Begin IPO Process in US?http://t.co/jkdScz12kQ?Could be valuable 4 $YHOO who owns ~24% $$?Mar 18, 2014
  • The Welsh dairy farmers who bought 320 buy-to-let properties in Sweden?http://t.co/haGuwFQXGn?Worry when it seems easy 2 make $$ in housing?Mar 18, 2014
  • Chinese Companies Caught in Yuan Riptide?http://t.co/BnKss6ZQvN?What was once viewed as “free money” proves to have a cost, panic ensues $$?Mar 18, 2014
  • Musk Jab at Rival Shows US Space Reliance on Russia?http://t.co/NBun2inY5Q?Interesting how we rely on Russia 4 manned space flight $$?Mar 18, 2014
  • Nigeria Overtaking South Africa Masks Poverty Trap?http://t.co/Bf2ZGIXuHl?When economy is mostly resource extraction inequality common $$?Mar 18, 2014
  • Putin?s Motives Rooted in History Remain a Mystery Abroad?http://t.co/ckRcNaYgUj?Should b happy that most of Ukraine is allied w/West $$?Mar 18, 2014
  • Chinese Developer Bonds Sink in Secondary Trade Amid Collapse?http://t.co/LDVrHVdptU?Test 4 Govt: how much bad credit will u bail out? $$?Mar 18, 2014
  • Japan Analysts Split on Fiscal Crisis Time as Tax Looms?http://t.co/9VQPhtQaoD?Testing the limits of how much a govt can borrow b4 crisis $$?Mar 18, 2014

New Businesses

?

  • Rock-Climbing Generation at Foot of US Startup Ascent?http://t.co/dQjCDlYNVL?Example of an unusual business catering to exercise wants $$?Mar 21, 2014
  • Zuckerberg, Musk Invest in Vicarious?http://t.co/C5avwXQ0mi?Part of brain that sees, controls the body, understands language & does math $$?Mar 21, 2014
  • Personally, I think Artificial Intelligence won’t succeed w/ that. No surprise that Vicarious is trying, though — would save lotsa time $$?Mar 21, 2014

?

Finance

 

  • Credit Card Data Security Standards Don’t Guarantee Security?http://t.co/Kky2011rLb?Antiquated technology relatively ez2hack, no surprise $$?Mar 21, 2014
  • Why Do High Frequency Traders Never Lose Money??http://t.co/V3CdYpzVZx?Why do auctioneers & brokers rarely lose money facilitating trades $$?Mar 21, 2014
  • How to Decide on Your Investment in Bonds?http://t.co/9ApVxQkxyG?When rates are so low you should b extra careful, stay short & hi qual $$?Mar 21, 2014
  • Shadow Banking Deals Prompt SEC Plan to Cap Broker Leverage?http://t.co/6CKxLVDYT5?SEC does not go far enough, repo mkts should b ended $$?Mar 21, 2014
  • SEC to take another look at ETF regulation?http://t.co/pKPQeUvVqU?Should leveraged products & inverse products b allowed? Lousy returns $$?Mar 20, 2014
  • Junk Bonds at $2T as Gundlach Pulls Back?http://t.co/CMRM6cLF6E?Markets always seem large when they are overvalued, Gundlach is right $$?Mar 20, 2014
  • Seth Klarman warns of impending asset price bubble?http://t.co/oa49IEj68A?When he runs out of safe places 2 put $$ the red lights flash?Mar 18, 2014
  • ARM Loans?a Vestige of the Housing Bubble?Are Making a Comeback?http://t.co/BrrfQlDwni?True 4 wealthy & those with prime credit scores $$?Mar 18, 2014
  • Buffett gets the better of everyone, version 4,762?http://t.co/uCq0dE1Uo8?Parts w/his holdings of $GHC, retires shares of $BRK.A & $BRK.B $$?Mar 15, 2014

 

Politics & Policy

 

  • Uneven Wage Gains Restrain Recovery?http://t.co/LD5h31WFxO?Article has a lot of interesting data on what jobs r available to semi-skilled $$?Mar 21, 2014
  • Obama Keystone Choice Pits Donors Against At-Risk Senate?http://t.co/jCNbOFTg0w?Kind of a no-win situation 4 Obama; should ok the deal $$?Mar 20, 2014
  • Young Invincibles Are Killing Obamacare?http://t.co/AcNg9p83d7?Obamacare destroys the healthcare system as healthy young people leave $$?Mar 20, 2014
  • Christie Counts on Revenue Surge Not Seen in Most States?http://t.co/dfOkM7gy8V?A Reaganesqe flaw: relying on the rosy scenario w/Dems $$?Mar 20, 2014

 

Companies & Industries

 

  • Phillips 66 Considering Splitter at Sweeny Refinery?http://t.co/9g7NefuiTJ?New trend: Partial refining. Those products can b exported $$?Mar 21, 2014
  • TV Subscriptions Fall for First Time as Viewers Cut the Cord?http://t.co/M984bGpJfr?It is cheaper to not have a cable subscription $$ $SPY?Mar 21, 2014
  • A Sour Bean Sweetens Cocoa Supply?http://t.co/AsUOr8cBlM?Fascinating story of a high-yield bean that is more sour than low-yield beans $$?Mar 21, 2014
  • Buffett Cuts Tax Bill, Tells Others Not 2 Complain?http://t.co/bbjxWcyy8i?If Buffett weren’t so sanctimonious on taxes this would b small $$?Mar 20, 2014
  • IBM’s Watson to help in brain cancer research?http://t.co/EozXiEIXq8?Fascinating 2c Watson sequencing DNA of cancer & suggest treatments $$?Mar 20, 2014
  • TED Winner Launches Campaign to Unmask Shell Companies?http://t.co/g7FXj6ca2I?Ambitious effort 2unmask those using shells 4 bad purposes $$?Mar 20, 2014
  • Windows XP: What to Do When Microsoft Ends Its Support?http://t.co/MSKGTC0ofU?Article agrees w/my answer; get a copy of Windows 7 $$ $MSFT?Mar 20, 2014
  • Fannie Mae Wind-Down Deemed Threat to Home Recovery?http://t.co/L8Bg5wd7bz?It will be painful, but we need to delever housing $$?Mar 19, 2014

 

Other

 

  • IFRS could be stripped of accountancy watchdog role?http://t.co/zxcHHBaUcW?This would be very good. US GAAP is far superior to IFRS $$ $SPY?Mar 19, 2014
  • Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website?http://t.co/p9J5FOb6kx?Of John Babikian & the misnamed AwesomePennyStocks $$ $SPY?Mar 18, 2014
  • Behind The Scenes With Dream Team, CytRx & Galena?http://t.co/xFC3DgsVT9?He gets inside firm paid/undisclosed promotions 4 $CYTR & $GALE $$?Mar 18, 2014
  • Individual investors Lose Money When Using Technical Analysis?http://t.co/dVLgjWUOk8?I can hear it now, “But they’re doing TA wrong!” $$?Mar 18, 2014
  • The Hidden Rot in the Jobs Numbers?http://t.co/R0FHIrKaVt?Here’s another way 2c it: http://t.co/KtoClJngXF $$ $TLT $MACRO?Mar 18, 2014
  • Want Success? Choose the Right Parents?http://t.co/AverC5lySd?Not sure I believe it, but interesting thesis $$?Mar 18, 2014
  • Pssst! Everything’s a Conspiracy?http://t.co/cFUH0dK9eo?Tough 2hold a significant conspiracy together, high incentives 2eventually reveal $$?Mar 18, 2014
  • To Make an Airplane Disappear, Start by Getting Through the Cockpit Door?http://t.co/AVcMjSG1LY?How difficult it would b2 take over a 777 $$?Mar 18, 2014

 

Wrong

 

  • Late: City vs. Country: How Where We Live Deepens the Nation’s Political Divide?http://t.co/lDKNT0bOjx?This isn’t news; no surprises here $$?Mar 21, 2014
  • Wrong: ?Ring of Death? Throttles Georgia as Small Banks Close?http://t.co/g9VGMPkKx0?Lent 2 much on overvalued properties, their fault $$?Mar 20, 2014
  • Weak: Why gaining from value investing is hard?http://t.co/hGY8Xnr6p7?Value investing typically does better on other side of mkt peaks $$?Mar 18, 2014
  • If We?re Going to Take Budget Forecasts Seriously, Then This is a Good Way To Present Them?http://t.co/yk9asr52HT?Kinda naive about stats $$?Mar 18, 2014
  • Wrong: Why equities sold off despite a dovish Fed?http://t.co/pyUW8FebAB?Fed was not dovish. Yellen’s comments & Fed forecasts bearish $$?Mar 21, 2014
  • Weak: Robert Shiller On The Tech Economy?http://t.co/tvvo8uzgot?Some innovations save labor; others create demand 4labor through new svcs $$?Mar 21, 2014

 

Replies, Retweets & Comments

 

  • The bigger change was the shift in the time tightening is likely to happen. That shifted up 3 months on…?http://t.co/dIxt1tcxgB?Mar 19, 2014
  • “Interesting to be quoted in the article above. If you want to see the other things I wrote about?” David_Merkel?http://t.co/k0NyUsgTzG?$$?Mar 20, 2014
  • RT @treehcapital: Credit investors like the elves in LOTR~when they leave Middle Earth, time to pay attention “Gundlach Pulls Back” http://??Mar 20, 2014
  • @treehcapital That’s a great analogy. I’ve lightened up as well, time to do more.?Mar 20, 2014
  • We’ve been through periods like this before in human history. Inventions that save labor in an area…?http://t.co/ajY9DJwns6?Mar 21, 2014
Tightening Starts When?

Tightening Starts When?

Posted on by David Merkel

This will be short, because in this case, as picture is worth a thousand words. ?What sent the market lower today? This:

central tendency_1915_image001

The likely time for FOMC tightening shrank today, despite the many words saying that nothing was different. ?This is the first time since the Fed started giving enhanced guidance that the time for tightening actually moved backwards (closer to the present). ?Should we be surprised that long bonds fell, and equities less so?

Redacted Version of the March 2014 FOMC Statement

Redacted Version of the March 2014 FOMC Statement

Posted on by David Merkel
January 2014 March 2014 Comments
Information received since the Federal Open Market Committee met in December indicates that growth in economic activity picked up in recent quarters. Information received since the Federal Open Market Committee met in January indicates that growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions. Weather is always a weak reason for a bad result.? You almost never see anyone claim good weather boosted results.
Labor market indicators were mixed but on balance showed further improvement. The unemployment rate declined but remains elevated. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remains elevated. No significant change.
Household spending and business fixed investment advanced more quickly in recent months, while the recovery in the housing sector slowed somewhat. Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. No significant change.
Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. No change.? Funny that they don?t call their tapering a ?restraint.?
Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. No change.? TIPS are showing slightly lower inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is near 2.56%, up 0.02% from January.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. Unemploys the concept of the Unemployment rate as the sole measure of labor conditions.? Maybe aggregate wages would be better.
The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. No significant change.
The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. No change.? CPI is at 1.1% now, yoy.
Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee continues to see the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. Drops the language on fiscal retrenchment.? Continued overestimate of economy and labor conditions.
In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in February, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $30 billion per month rather than $35 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $35 billion per month rather than $40 billion per month. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. Reduces the purchase rate by $5 billion each on Treasuries and MBS.? No big deal.

 
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. No change
The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. No change.? But it has little impact on interest rates on the long end, which are rallying into a weakening global economy.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. No change. Useless paragraph.
If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. No change.? Says that purchases will likely continue to decline if the economy continues to improve.
However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. No change.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate.

 

 No change.
The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.   Drops the contentious sentence locking themselves into a policy.
In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Monetary policy is like jazz; we make it up as we go.? Also note that progress can be expected progress ? presumably that means looking at the change in forward expectations for inflation, etc.
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. Makes its standards for raising Fed funds more arbitrary.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. No change.
  The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. New sentence.? Says loose policy will stay longer than needed.
  With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee’s guidance does not indicate any change in the Committee’s policy intentions as set forth in its recent statements. New sentence.? Says loose policy will stay longer than needed.? Also, disregard any change in policy that you might have seen here.? We still felt the need to change the statement, but really, nothing has changed.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Richard W. Fisher; Narayana Kocherlakota; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.

 

 Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Richard W. Fisher; Sandra Pianalto; Charles I. Plosser; Jerome H. Powell; Jeremy C. Stein; and Daniel K. Tarullo.

 

 Bernanke is gone.? Good.? Yellen is Chair. Bad.
  Voting against the action was Narayana Kocherlakota, who supported the sixth paragraph, but believed the fifth paragraph weakens the credibility of the Committee’s commitment to return inflation to the 2 percent target from below and fosters policy uncertainty that hinders economic activity. This is perhaps the lamest vote against an FOMC decision that I have ever seen.? The differences between the fifth and sixth paragraphs are minuscule.

?

Comments

  • Small $10 B/month taper.? Equities, commodities, and long bonds both fall.? The FOMC says that any future change to policy is contingent on almost everything.
  • They have an optimistic view of the economy, especially on labor.? At least they are abandoning the unemployment rate as their measure of labor conditions.
  • They missed a real opportunity to simplify the statement.? More words obfuscate, they do not clarify.
  • Current proposed policy is an exercise in wishful thinking.? Monetary policy does not work in reducing unemployment, and I think we should end the charade.
  • In the past I have said, ?When [holding down longer-term rates on the highest-quality debt] doesn?t work, what will they do?? I have to imagine that they are wondering whether QE works at all, given the recent rise and fall in long rates.? The Fed is playing with forces bigger than themselves, and it isn?t dawning on them yet.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and much of the unemployment rate improvement comes more from discouraged workers, and part-time workers.
Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Bitcoin

 

  • Mt Gox: The brief reign of bitcoin’s top exchange?http://t.co/9jSwvxrzOJ?What happens when u neglect basic acctg & programming controls?Mar 01, 2014
  • Bitcoin Exchange Mt. Gox Files for Bankruptcy Protection?http://t.co/aobpHTmsYi?B wary of opaque transaction systems, clever may steal $$?Mar 01, 2014
  • Where Did the Bitcoins Go? The Mt. Gox Shutdown, Explained?http://t.co/0OkksL8TPG?Currencies can’t exist apart from legal systems $$ $BTCUSD?Feb 26, 2014
  • The Bitcoin Collective Delusion?http://t.co/t51GGmuWbw?Inevitable that gov’ts get involved in currencies & trade 4 punishment of fraud $$?Feb 26, 2014

 

Companies & Industries

 

  • Wall Street Hates JPMorgan Fee 4 $1T Junk Loans?http://t.co/laoAXelOIr?It is a private market; if the distortions r bad enuf, biz will leave?Mar 01, 2014
  • Line Builds $15B Value With Teddy Bears, Wicked Witches?http://t.co/ccGFjIVQsQ?Freemium model applied to Asian messaging, watch 4 IPO?Mar 01, 2014
  • Old Mutual Plans IPO of US Unit After Profit Increases?http://t.co/a28VUvS23r?The final reconciliation of a decade-plus of mis-investment $$?Feb 28, 2014
  • Oil Giants Sell Pipelines as Shale Strength Drives Deals?http://t.co/OBVZ66Tm5y?They expect oil prices 2rise as they c cheap oil scarcity $$?Feb 28, 2014
  • Dream of US Oil Independence Slams Against Shale Costs?http://t.co/eFRnOdt0aX?If debt funds a large part of drilling, time 2b nervous $$?Feb 28, 2014
  • $MSFT ‘s Culture Is Like ‘ $IBM Circa 1990,’ New Chairman Says?http://t.co/gzy5NzCaAX?Use MSFT Office/Windows Cash Cow 2build new biz $$?Feb 27, 2014
  • What is ‘Forbes’ worth??http://t.co/mHpDgpfkpi?The Internet chgs everything; formerly important publications get digitally hollowed out $$?Feb 26, 2014
  • Rolls-Royce Drone Ships Challenge $375B Industry?http://t.co/CCC9L0rynT?Problems here r considerable- control in bad weather, piracy, etc $$?Feb 26, 2014
  • US Issues Emergency Testing Order To Crude Oil Rail Shippers?http://t.co/bU5AuY7Ixd?Reasonable precautions 4 general safety $$ $UNP $CSX?Feb 26, 2014
  • Japan Post Prepares for IPO?http://t.co/yE7k137VjT?Lotsa assets, but the Q is what can be done w/them. Fuzzy situation w/no hurry $$ $EWJ?Feb 26, 2014
  • Zuckerberg Dines With Phone Frenemies Fretting Over Profits?http://t.co/NMga2US13J?Monet 2b made in solving mobile payments problem $$ $FB?Feb 26, 2014
  • Rising Premiums May Hit Small Firms?http://t.co/nBA1wjigHP?The lies told by the administration regarding cost control r astounding $$?Feb 26, 2014
  • Saudi?s Allure Undimmed for Bechtel to DaVita Amid Fallout?http://t.co/ikppxlukf3?Someone has 2 buy from the US; $DTA helps w/diabetes $$?Feb 26, 2014
  • $BAC Reaches Deal With Buffett on Preferred Stake?http://t.co/bLpgqOMJzT?Buffett gets better call protection, divs can b waived in crisis $$?Feb 26, 2014
  • Woes of Megacity Driving Signal Dawn of ?Peak Car? Era?http://t.co/npHTO6NtcJ?It may take ~10 yrs, this will right itself, w/fewer cars $$?Feb 26, 2014
  • Google Buses Fuel Inequality Debate as Boom Inflates Rents?http://t.co/CaQ4msqBnW?I f you can’t afford living in San Francisco, move out $$?Feb 26, 2014
  • How ARM Holdings Dominates the Chip World?http://t.co/CCFJDitgh1?$ARMH vs $INTC – 2 clever approaches that r utterly different. Who wins? $$?Feb 26, 2014
  • Health Law Already Has Impact on Bottom Lines?http://t.co/o4k5u6uWgB?Fitting that health insurers r getting hosed 4 cooperating w/Obama $$?Feb 26, 2014
  • Repsol Agrees to $5B Deal W/Argentina on $YPF?http://t.co/piwKwxqS70?$REP decides half a loaf is better than none, nondefaultable bonds $$?Feb 26, 2014

Rest of the World

?

  • China’s Yuan Slides Against US Dollar?http://t.co/VLBVTrLPEf?The Yuan is still a rigged market, we need 2c it float to ascertain value $$?Mar 01, 2014
  • Bulgaria?s Currency Board versus Ukraine?s Chaos?http://t.co/w1lAYExWuF?A currency that is anchored leads 2 better results in many ways $$?Feb 28, 2014
  • China’s Central Bank Engineered Yuan’s Decline?http://t.co/WmwpCa0H4L?It remains 2b seen where the yuan will trade when it freely floats $$?Feb 28, 2014
  • War Crimes Evident in South Sudan, Human Rights Watch Says?http://t.co/1AfsvPMYmG?Easiest way 2 call off dogs of war is not 2 loose them $$?Feb 27, 2014
  • Abe?s Southeast Asia Push Adds to US Ties Amid China Rift?http://t.co/3BDgdNznN4?Example of entangling alliances: Will US defend Asia? $$?Feb 26, 2014
  • Ortega?s Zara Fashions Tax Avoidance by Shifting Profits to Alps?http://t.co/RGBMJ4Xmzc?Govts have an interest in unifying tax policy $$?Feb 26, 2014
  • Crisis Gauge Rises to Record High as Swaps Avoided?http://t.co/hLKrltiEVk?Chinese corp spreads widening, same for their TED spread $$ $FXI?Feb 26, 2014
  • Investors Mount Attack on Norway in $20B Oil, Gas Row?http://t.co/VOPMQgMZKE?Norway becomes less predictable, may chase developers away $$?Feb 26, 2014
  • Ukraine Pledges to Protect Deposits as Kiev Rally Called?http://t.co/iMGsdLODA2?Must ring hollow in Cyprus as EU moves 2 support Ukraine $$?Feb 26, 2014

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US Politics & Policy

 

  • How ADA, a Chemical Used in Rubber, Got Into 500 Food Products?http://t.co/moZqNNco85?Just because it’s not natural doesn’t mean it’s bad $$?Mar 01, 2014
  • Federal audit calls new school lunch rules a failure?http://t.co/RyEd0JpP7j?Missing middle ground where kids get yummy nutritious food $$?Mar 01, 2014
  • Study Finds SEC Staff Sold Shares B4 Cases Made Public?http://t.co/8xRzyCfIgx?SEC staffers don’t know what 2 buy, they know what 2 sell $$?Feb 28, 2014
  • GOP Targets Hillary Clinton With Obamacare Attacks?http://t.co/QKlHYwHUeG?It is fair to ask her what she would do differently than Obama $$?Feb 27, 2014
  • Here’s How Much People Are Actually Paying for Health Insurance?http://t.co/AeC4xs3y2d?Interesting, not sure what to make of it $$?Feb 27, 2014
  • Busted State Obamacare Websites Haven?t Caught Up to Healthcare gov?http://t.co/LLee1ovP2y?OR, MA & OR r worse than Fed’l website 4 PPACA $$?Feb 27, 2014
  • What Does Eric Schneiderman Know That the Rest of Us Don’t??http://t.co/aI4Crec3EZ?Oversteps his bounds, but gets sellside firms 2 stop $$?Feb 27, 2014
  • Dave Camp: How to Fix Our Appalling Tax Code?http://t.co/lx4VM2kHNz?Complex tax codes allow the wealthy 2 eliminate taxes that poor can’t $$?Feb 26, 2014
  • When the Minimum Wage Goes Up, the Menu Price Also Rises?http://t.co/ukEWzIjoje?The pain has 2go somewhere, including reducing employment $$?Feb 26, 2014
  • America’s 10-Year Experiment in Broadband Investment Has Failed?http://t.co/hjGuuu7JA0?We need to free up competition in the “last mile” $$?Feb 26, 2014
  • How Dodd-Frank Might Kill the CLO Market?http://t.co/ztV9PMdums?& we won’t miss it, b/c securitized credit is not accounted 4 properly $$?Feb 26, 2014
  • High-Priced Hydrogen Cars to Challenge Electrics?http://t.co/3akLFwjJuG?Hydrogen is not the solution, it is just fossil fuels in disguise $$?Feb 26, 2014
  • Truth About Hydrogen Power?http://t.co/McG32mWHyT?Old article, explains y hydrogen is no panacea b/c it takes fossil energy 2 produce it $$?Feb 26, 2014
  • The same is true of fusion power. The costs of creating Tritium at a scale needed to power a city would be astounding. $$?Feb 26, 2014
  • A Surprise Guest at the SEC’s Annual Gathering?http://t.co/R15fMul7CU?@mcuban shows what a measured & classy guy he can b @ SEC meeting $$?Feb 22, 2014

 

US Economics & Monetary Policy

?

  • Foreclosures Climaxing in New York-New Jersey Market: Mortgages?http://t.co/NPQeYY7Rc3?Judicial foreclosure states catching up rest of US $$?Feb 26, 2014
  • Home Prices in 2013 Notch Biggest Annual Gain Since 2005?http://t.co/FjTjdA7YcU?Demand from investors pads purchases, rates higher now $$?Feb 26, 2014
  • America?s Hottest Housing Market Has Suddenly Cooled Down?http://t.co/00uIJ4gSo3?Phoenix RE rises out of ashes on speculative demand $$ $Z?Feb 26, 2014
  • March 4 Hearing for Three Fed Nominees?http://t.co/McV2Tt7p29?One bullet & 2 blanks in the gun. Stanley Fischer will bring some wisdom $$?Feb 26, 2014
  • Fed Crisis Transcripts Highlight Futility of FSOC Crystal Balls?http://t.co/XComU1xA5K?Bureaucrats can’t/won’t predict disaster coming $$?Feb 26, 2014
  • The Fed knows less than average?http://t.co/cnA4nBBwU0?& http://t.co/5wG84hxPGi & http://t.co/C5y3re8ajV 2008 Transcripts show clueless $$?Feb 26, 2014
  • How to Profit from the Yellen Fed?http://t.co/4oAiBUdXDr?Yellen is core 2 the M.O. of the Fed, it’s like jazz, they make it up as they go $$?Feb 26, 2014

?

?

Market Impact

 

  • Banks Averting Bond Losses With Accounting Twist?http://t.co/VC83ByMGNC?Switching bonds from available 4 sale 2 held 2 maturity $$?Feb 26, 2014
  • The switch limits flexibility b/c u can’t change back w/o poss changing all back; also doesn’t change economics, moves losses 2 future $$?Feb 26, 2014
  • Greed Turning Losers to Leaders in Russell 1000 Index?http://t.co/vpGTVXkD9t?Could this b a harbinger of a change in the markets? $$ $SPY?Feb 26, 2014
  • Outcome or process ? what investment focus succeeds over time??http://t.co/edXLqAX9pg?@Ritholtz tells us to focus on process not results $$?Feb 26, 2014
  • Social psychology: Market madness?http://t.co/BtaVXAYWYZ?This is y the 1st priority of investment is risk control; can’t sleep @ night $$?Feb 26, 2014
  • 10 Value Investing Blogs You’d Be Crazy Not To Follow?http://t.co/mt8tZkGRAq?Happy 2b featured among this great group of blogs $$ Thanks!?Feb 26, 2014

 

Other Business

 

  • Harvard Brainpower Joins MIT Fueling Boston Sports Teams?

Titles?http://t.co/OZNC8wCIJi?Bright guys using math2analyze sports in Beantown $$?Feb 28, 2014

  • Big Data Comes to the Farm, Sowing Mistrust?http://t.co/ayBsxp8qAt?Farmers worry that data used to help them will b used against them too $$?Feb 28, 2014
  • Corporate Economists Are Hot Again?http://t.co/DUn5O7Idjz?An alternative would b actuaries, they r usually better at practical models $$?Feb 27, 2014
  • Dwindling Midwest High School Grads Spur College Hunt?http://t.co/iVURNV69EU?Demographics now fight against colleges, many weak will die $$?Feb 26, 2014
  • The Joy and Freedom of Working Until Death?http://t.co/wkGRoRSJIg?Find something that u enjoy doing that supports u & yours well forever $$?Feb 26, 2014

 

Medical

 

  • Dad May Join Two Moms for Disease-Free Designer Babies?http://t.co/yiXUO0sLok?Designer babies:many embryos die in order 2 produce 1 child $$?Feb 26, 2014
  • Your Heart May Be Older Than You Are?http://t.co/46PbtkWQ7h?Cute way 2 get people to take care of themselves; may have false negatives $$?Feb 26, 2014
  • Mystery Medical Symptoms Hit a Surprising Number of Patients?http://t.co/6DoJnAjt6w?Stress can trigger pains; this teaches stress control $$?Feb 26, 2014

?

Pimco & Bill Gross

  • Pimco’s Gross: ‘U don’t always produce productive family by sweet talking&always being inclusive’?http://t.co/sjKnhN76jh?Allianz happy w/him?Mar 01, 2014
  • Counterpoint: It?s time for Bill Gross 2 retire?http://t.co/UB1ikZhTlI?Everybody Should Get Off Bill Gross’s Back http://t.co/hbbAYRXuBN $$?Feb 26, 2014
  • Inside the Showdown Atop Pimco, the World’s Biggest Bond Firm?http://t.co/kVtk8Zf5d8?Gross developed the theories guide Pimco & he stays $$?Feb 26, 2014

 

Wrong

  • Wrong: Templeton Braving China?s Housing Bubble?http://t.co/rjVSQUXoAe?China looks like Japan in 1989, or the developed world in 2007 #avoid?Mar 01, 2014
  • Wrong: NASA Scientists Discover 715 New Planets?http://t.co/6KhRpp2Y5A?Life is finely tuned on Earth +/- 10% in size of Earth -> no life $$?Feb 27, 2014
  • Wrong: Fed s Tarullo Eyes New Tools to Limit Interest Rate Risk?http://t.co/fA4l6omDVi?Dreams 2 undo effects of bad policy w/o undoing it $$?Feb 26, 2014
  • Wrong: It Takes How Much Water to Grow an Almond?!?http://t.co/u8kpW7kJFj?Misses the idea that water does get reused many times: rain $$?Feb 26, 2014
  • Wrong: Can Amazon Dominate in Insurance, Too??http://t.co/zAP8GkunSx?Except 4 simple products, Insurance is too complex 4 people to pull $$?Feb 24, 2014

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Comments, Replies & Retweets

  • @jasonzweigwsj @AlexRubalcava I wrote an article on the problems w/zero cost investing recently?http://t.co/ALu1ijgVev?”sand in the gears”?Mar 01, 2014
  • RT @AlexRubalcava: Zero commission stock trading sounds like a product tailor made to amplify investors? behavioral finance mistakes.?Mar 01, 2014
  • “Currencies & trade cannot exist in a vacuum apart from legal systems, because fraud is a crime?” ? David_Merkel?http://t.co/7fJX26SEyP?$$?Feb 26, 2014
  • ‘ @GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator)?http://t.co/S1NVy13sZn?I don’t get out much, 1st I’ve heard of this $$?Feb 26, 2014
  • “Regarding First Data, many might think it quite desirable to step out of the spotlight @ $JPM &?” ? David_Merkel?http://t.co/COHGctym2A?$$?Feb 26, 2014
  • . @dpinsen The ancient retirement tripod of course?http://t.co/k06EUCbHa1?unless the modern one works. $$?Feb 26, 2014
  • @dpinsen That was icky, and more… gotta go wash my brain out… brrr.?Feb 22, 2014
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