Category: Fed Policy

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

China

 

  • Chinese Cities Hooked on Land Revenue Fuel Housing Costs http://t.co/8SXwubzUjk Ppl invest in what they think they ctrl; no alternatives $$ Sep 28, 2013
  • Amway Bankrolls Harvard Course?For Chinese Cadres http://t.co/XVk5MXV2eh May not b pyramid, but successful sellers mostly recruit sellers $$ Sep 26, 2013
  • Chanos Undeterred by China Growth as O?Neill Bullish http://t.co/xwvC9mOFHa China will become the biggest windshield bugsplat ever seen $$ Sep 25, 2013
  • Party Will Pay the Price for China?s Rebalancing http://t.co/inQ5BHYMdn The Day has arrived: Michael Pettis is on Bloomberg. Go Michael! $$ Sep 25, 2013
  • China?s Generation Winnebago Avoids Traffic in RVs http://t.co/Q8z41qGv1j New Chinese status symbol: RVs. Rest while your driver works $$ Sep 24, 2013
  • China + Gold = 9 Million iPhones Sold http://t.co/DfIAopLDLV Gold may do nothing, but it is beautiful, & beauty drives much marketing $$ Sep 24, 2013
  • Michael Pettis, in his current newsletter, reminds us that loan growth outstrips ability to repay in China, recent “growth” is a fake-out $$ Sep 24, 2013

 

Companies & Industries

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  • Meet Hummingbird: Google Just Revamped Search To Answer Your Long Questions Better http://t.co/mtAf5pxGIA Improved Search Engine $$ $GOOG Sep 28, 2013
  • JC Penney Is on the Brink http://t.co/UtMX5sa3ZT Now $JCP has liquidity, @ a cost, but can they transform their business model? $$ #unlikely Sep 28, 2013
  • Penney’s Share Offering Prices at a Discount http://t.co/CWVp8dOKln $JCP Danger Will Robinson! Stock price does not hold secondary level $$ Sep 27, 2013
  • Kat Cole, Former Hooters Waitress, Runs Cinnabon’s $1B Empire http://t.co/sOe9WKUB1v Ppl go gaga 4 Classic Roll. 60% more cals vs Big Mac $$ Sep 27, 2013
  • Oaktree group to sell US foreclosed homes http://t.co/dUuGn768TI Too many investors chasing residential RE vs owner occupiers $$ #badsign Sep 24, 2013
  • Meet Prem Watsa: The Man Riding to BlackBerry?s Rescue http://t.co/flg4xn1MkX A case of regret, throwing good $$ after bad $BBRY Sep 24, 2013
  • Banks Prove Safer Than Industrials in Bond Rally http://t.co/B2t3pbaNGd I would b willing 2 overweight industrials now; they r safer $$ Sep 24, 2013
  • Do Amazon’s Lockers Help Retailers? Depends on What They Sell http://t.co/Pbd2cPK6zl Works if $AMZN doesn’t sell what u sell, &vice-versa $$ Sep 23, 2013
  • FireEye Takes Off as Shares Rise 80% in IPO Debut http://t.co/fnY1YkvvD1 Score processes on weirdness, share info globally 2 stop malware $$ Sep 23, 2013

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Rest of the World

 

  • Irish Billionaire Has ?Boatload? of Customers for Spanish http://t.co/GhyDzrhkhk Get your own Spanish Villa while supplies last! $$ Sep 27, 2013
  • Debt Disaster Seen Unless VAT Rises to 20% by 2020 http://t.co/fXyeptRNJZ Japan is a bug in search of a windshield; 20% would kill econ $$ Sep 26, 2013
  • Merkel?s Cold Embrace Leaves SPD Wary of Coalition Talks http://t.co/6pCmU9KgCf If SPD doesn’t compromise, cud a minority government form $$ Sep 24, 2013
  • Believing Data Not Required W/GDP Warrants http://t.co/36SKEKLcha Do u think Argentina is fudging GDP #s up? Buy Argentine GDP Warrants $$ Sep 23, 2013
  • For Migrants, New Land of Opportunity Is Mexico http://t.co/jy3XaZeRCA Immigrants r moving to Mexico as the economy deregulates a little $$ Sep 23, 2013
  • Czechs Yearning for Growth Set to Abandon Merkel Path http://t.co/sU8mxocTL7 No natural political coalition 4 austerity, even when right $$ Sep 23, 2013
  • Greece Plans Foreclosures to Meet Bailout Demands http://t.co/W7Ryxvv6J6 Inability 2 foreclose gums up Greece’s financial system $$ Sep 23, 2013

 

Central Banking

 

  • Richard Koo says ‘vicious cycle’ taking hold as Fed faces ‘QE trap’ http://t.co/se3uPY5eP1 Similar to my arguments in Easy in, Hard out $$ Sep 27, 2013
  • Constitutional Money by Richard Timberlake http://t.co/iipZBfnFqm “Treaties may become inapplicable because of changes in circumstances” $$ Sep 25, 2013
  • US Fed Shouldn’t Give Forward Guidance, Former Bank of Israel Head Fischer Says http://t.co/ZzbTLqTEU9 Correct. Fischer 4 Fed Chair $$ Sep 24, 2013
  • Why we listen to former FOMC members who r partisans of the Fed, rather than skeptics of central banking, like James Grant, amazes me $$ Sep 24, 2013
  • Yellen Would Bring Tougher Tone to Fed http://t.co/xoNY2kKWqa Academic economists, like Yellen, do not understand how the economy works $$ Sep 24, 2013

 

Housing/Mortgages

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  • Mortgage Bonds Without Government Backing Face Tough Time http://t.co/MrtGxmynes Tough 2 mkt private label RMBS, not enough excess spread $$ Sep 28, 2013
  • Subprime bond bounces back, leaving behind a subprime borrower http://t.co/x7KRB8Rp9n Long article about a deadbeat & his subprime loan $$ Sep 27, 2013
  • There have been a scad of articles like this, but the guy did not do “due diligence” on the loan, and did not have to buy the house $$ Sep 27, 2013
  • Home gold rush is over http://t.co/AASXbe14zc Too many investors vs owner occupiers creates an imbalance as smarter players start 2 sell $$ Sep 26, 2013
  • FHA, Facing Losses, Likely to Tap Treasury http://t.co/Hdpqqdplri Shortfall for Fiscal Year Could b at Least $1B, Early Projection Shows $$ Sep 26, 2013

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Financial Sector

 

  • BATS Prepares to Take On Big Bell Ringers http://t.co/x8PjU05xE9 NYSE + Arca > BATS + Direct Edge > NASDAQ $$ Graph: http://t.co/rDV3hY7uzf Sep 28, 2013
  • Shine a Light on Repo http://t.co/KrF4MtaA7Y Did u know that repos r 96 years old? Learn about obscure corner of the fixed income market $$ Sep 27, 2013
  • The bank that rejects the most mortgages http://t.co/JxD3xhvlY4 $JPM highest rejection rate, $STI lowest, $WFC biggest lender, avg 20.6% $$ Sep 27, 2013
  • Covenant-Lite Loans Need Uniform Definition http://t.co/RbEywreAEC It would help, but there is always nonstandard data in securitizations $$ Sep 26, 2013
  • Wells Fargo: New CLO Regulations May Lead to Issuance Slump http://t.co/FcK5NLQvba Forcing securitizers 2 take first losses ruins profits $$ Sep 24, 2013
  • The VC Secret: 3 Out of 4 Start-Ups Fail http://t.co/jjFrQc9JNP Ratio sounds high, but when VC-backed firm wins, it pays 4a lot of losers $$ Sep 24, 2013
  • That’s the way 2 manage pension assets if u r big enough. In-source, build up expertise, & keep adding smart people 2 addl asset classes $$ Sep 23, 2013
  • In-Sourced, Fully Funded, Public, and American http://t.co/ISUDgDvGhC! South Dakota Retirement System manages 65%-70% of assets in-house $$ Sep 23, 2013
  • America’s latest financial crisis? It’s incredibly personal. http://t.co/yHLcIm7xuR People do NOT understand how to save or handle cash $$ Sep 23, 2013
  • Value Investor Charles de Vaulx On China, Gold, Apple And Berkshire Hathaway http://t.co/4LgwGyzI7g Longish good interview. $$ $STUDY $BRK.B Sep 23, 2013
  • Fidelity sued by employees over its own 401(k) plan http://t.co/yo5h32QQD6 Biting hand that feeds them, they object 2 high fees 4 funds $$ Sep 23, 2013
  • Inside Nasdaq’s succession planning process http://t.co/6uOUsgrpuQ $NDAQ trades at a discount 2 peers; it needs a merger or better mgmt $$ Sep 22, 2013

 

Other

 

  • Billionaires Battle as Bezos-Musk Companies Vie for Launch Pad http://t.co/jEOhw4xXac Fight over a launchpad @ Kennedy Space Center $$ Sep 28, 2013
  • Supersonic Drones Can Outmaneuver Humans. So Why Do We Still Need Pilots? http://t.co/J5N9FhDVbH Pilots fly better in complex situations $$ Sep 28, 2013
  • Postal rate hike proposal faces Senate scrutiny http://t.co/aq7gKcDnm1 First Class would go to 49 cents, as internet slowly eats USPS $$ Sep 26, 2013
  • This Year’s SAT Scores Are Out, and They’re Grim http://t.co/04jtzUJMtL <50% of 2013 graduating seniors got “college-ready” SAT scores $$ Sep 26, 2013
  • Little GAAP Could Drive Accounting Simplification http://t.co/Ti24zRMFY2 If the acctg is 2 complex, biz is probably 2 complex as well $$ Sep 26, 2013
  • Work is not waiting for a job. If you don’t have a job, start your own business. http://t.co/pkUXupCOJg Sep 25, 2013
  • Investors Are Buying High, Yet Again http://t.co/PaTcowZvk8 Opportunities are fewer now, listen to Buffett & Klarman & trim back risk $$ Sep 25, 2013
  • Tweet tips: Most effective calls to action on Twitter http://t.co/PrcHMiNDMc! U could also ask them to favorite your tweet $$ $TWTR Sep 24, 2013
  • Death Dinners at Baby Boomers? Tables Take on Dying Taboo http://t.co/68nxd534eB Good 2 talk about death, but r u ready 4 the afterlife? $$ Sep 24, 2013
  • Here Are The Best Fundamental Investors To Follow On StockTwits http://t.co/a72aV98KUo A good list of resources & teachers; I’m listed #5 $$ Sep 23, 2013
  • A Backdoor Roth IRA for a High-Income Couple http://t.co/79fYNIF5d6 Invest in regular IRA, convert 2 Roth, repeat process annually $$ Sep 23, 2013

 

PPACA / Obamacare

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  • Will Obamacare hurt job creation and marriage? http://t.co/n7h7BEkrXK Belief in Obamacare is akin 2 belief in magic; resources r free $$ Sep 27, 2013
  • Prices Set for New Health-Care Exchanges http://t.co/J4VFjvF5HR Younger Buyers May Face Higher Insurance Premiums $$ Obamacare #FTL Sep 26, 2013
  • Best of the Web Today: The Young and the Clueless http://t.co/3GbWYOqipM ObamaCare may work, provided no one responds to its incentives. $$ Sep 26, 2013
  • Young Invincibles Caught in Crossfire Over Obamacare Cost http://t.co/hgyCGtZMaj Note how Obama packs the gallery w/young people $$ Sep 24, 2013

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Municipal Debt / Detroit

 

  • Stockton to Unveil Plan Including Cuts for Creditors http://t.co/zBj3ngCXMz Trying to preserve pensions may draw lawsuit from bondholders $$ Sep 28, 2013
  • Detroit spent billions extra from pensions http://t.co/UBdb3GaqtI That’s what u get 4 having 1-party rule, w/no 1 to look over shoulder $$ Sep 27, 2013
  • Orr proposes freeze for Detroit pension funds http://t.co/sSFtqADV23 Unions don’t get that they destroyed the finances of Detroit $$ Sep 27, 2013
  • Judge Rules Retiree Health Protected Like Pension http://t.co/xg7bcR28oM! Loopy ruling sets Los Angeles on a course 2 bankruptcy $$ Sep 25, 2013
  • Hands off DIA, pensions, Detroiters say in poll http://t.co/dHmp2qjc5n! Detroit is an example of a complex system self-destructing $$ #dying Sep 23, 2013

 

Energy

 

  • Pipeline Billionaire Ready for Next Round of Deal Making http://t.co/KhTwsdBDRs $ETP CEO thinks there is room to consolidate pipelines $$ Sep 28, 2013
  • Six Myths About Renewable Energy http://t.co/G0dB1SJ2aU Balanced article. 3 myths pro, 3 myths con. It will b a minority of total energy $$ Sep 23, 2013

 

The Economic views of Ray Dalio

 

  • One more note, this slideshow put together from BI moves a lot faster than Dalio’s video or the… http://t.co/ytGIHQEaxP Sep 24, 2013
  • And for those that want to read Ray Dalio’s economic template book, it is free here: http://bwater… http://t.co/f1AVlDufxo Sep 24, 2013

 

US Politics & Policy

 

  • Texas Counties Lead in Job Growth, Lag in Wage Gains http://t.co/XdyNF4ZEJt No surprise, but biz leaves CA & there is high unemployment 2 $$ Sep 27, 2013
  • CHRISTIE KEEPS PENSION PROBE RECORDS FROM PUBLIC VIEW AS GOVERNOR EYES 2ND TERM http://t.co/NmnbLRxRwd! Running mate has pension scandal $$ Sep 24, 2013
  • Open-Government Laws Fuel Hedge-Fund Profits http://t.co/P5vZBpkiDq Hedge funds file FOIA requests 2get FDA reports on drugs, etc. $$ Sep 23, 2013
  • At 77 He Prepares Burgers Earning in Week His Former Hourly Wage http://t.co/jQJaWTiQd3 Example of “failed 2 save” Don’t let it happen 2u $$ Sep 23, 2013
  • Self-Driving Vehicles Progress Faster Than Rules of Road http://t.co/1lFAmdlJKz Regulations, laws, insurance all need 2b revised 4 this $$ Sep 23, 2013
  • The Hidden Classified Briefing Most of Congress Missed http://t.co/eSBnz0uPxd How intelligence gets disseminated w/o getting disseminated $$ Sep 23, 2013
  • How the NFL Fleeces Taxpayers http://t.co/OeG5kRTM2O Longish article on how they get free stadiums, pay no federal or state taxes, etc. $$ Sep 23, 2013
  • Facebook ?Likes? Are Now Legally Protected Speech http://t.co/Oi7XQkYVlB Political speech is protected by the 1st Amendment even “like” $$ Sep 22, 2013

 

Wrong

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  • Over the Top: Jordan R. VanOort Earns Prestigious CFA Designation http://t.co/jRMcdyRq1R CFA designation is good, but prestigious? $$ Sep 28, 2013
  • & really, when there are over 100,000 of us, does receiving your CFA Charter really rate a press release? Tougher to become an Actuary $$ Sep 28, 2013
  • Wrong:Pimco shook hands with Fed – & made a killing http://t.co/gBlELQ6U7p 2 notes: agency MBS r easy 2 understand, & TBA mkt not obscure $$ Sep 27, 2013
  • Point: Fed could have easily done this internally. What! They can’t find any among their 1000s of Ph.D. economists to get simple mkts? $$ Sep 27, 2013
  • It is probable that enough data on what the Fed would do escaped over the transom 2 give PIMCO & the other firms insider info. $$ Sep 27, 2013
  • Wrong: New idiots, same as the? actually these idiots might be worse http://t.co/Xa5jGmbQII US economy grew faster under balanced budgets $$ Sep 27, 2013
  • Wrong: Reduce working week to 30 hours, say economists http://t.co/HiI7Zmhimo More work means more production means more GDP, Consumption $$ Sep 27, 2013
  • Loony: Detroit Union Seeks 2 Revive `13th’ Pension Check Policy http://t.co/Lf5YMVBKxW Practice that continues 4 28Y is a tacit agreement $$ Sep 27, 2013
  • Wishful thinking: Let ObamaCare Collapse http://t.co/n3yNizNAfP Until the US itself fails, no entitlement has ever been eliminated $$ Sep 26, 2013
  • Wrong:Shinzo Abe: Unleashing the Power of ‘Womenomics’ http://t.co/R00AN5pUEH This comes from nation w/a shrinking population. Ridiculous $$ Sep 26, 2013
  • Wrong: How Sensitive Is Public Pension Funding to Investment Returns? http://t.co/hSeoOLsvrc! Should use mkt-based assmptns not historic $$ Sep 25, 2013
  • Wrong: US city, county public pension levels sank in 2012 http://t.co/o2JUwsi5JF! 2 optimistic, b/c risk assets bottomed in late 2002 $$ Sep 25, 2013
  • Wrong: Don?t Be Alarmed by Obamacare?s Failures http://t.co/fS63xQpaaP PPACA doesn’t make actuarial sense, young people won’t participate $$ Sep 24, 2013
  • Wrong: Yellen Isn?t a ?Knee-Jerk Dove,? Kroszner Says http://t.co/0aeTM6BIiB Favoring negative interest rates == ?Knee-Jerk Dove? $$ Sep 24, 2013

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Replies, Retweets & Comments

 

  • Thanks @TightTalk @BabyFreshNuggz @X9T_Trading for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Sep 27, 2013
  • “Here is part of my solution: accounting for repos should be bifurcated, so that is not treated ?” ? David_Merkel http://t.co/caWGlbe3eL $$ Sep 27, 2013
  • Loonies, Detroit is dead MT @ToddSullivan: RT @AmyResnick: just wow. Detroit Union Seeks to Revive `13th’ #Pension http://t.co/u3XJAER0bi $$ Sep 27, 2013
  • Believe MT @ReformedBroker: You’re not gonna believe this – but Detroit’s pension doled billions left and right http://t.co/9i5MinpGAX $$ Sep 27, 2013
  • RT @ezraklein: Perhaps if President Obama makes the House GOP 300 sandwiches, they’ll agree to lift the debt ceiling. Sep 27, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Sep 27, 2013
  • ‘ @allstarcharts @jfahmy The 1st discipline of investing/trading is humility; even if you know more, the timing/environment can be tough $$ Sep 27, 2013
  • Commented on StockTwits: I think Watsa can be trusted. Aside from financials in the old days that were dodgy, I th… http://t.co/dJ8g2rVKmK Sep 27, 2013
  • Thanks @abnormalreturns @dpinsen for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Sep 26, 2013
  • “I never directly pay for research… most of it is freely available on the web. What is not, I?” ? David_Merkel http://t.co/EAk37XXNdJ $$ Sep 26, 2013
  • “This is already known by those that study the statistics. Look at year over year figures, you ?” ? David_Merkel http://t.co/5J46Rm19vo $$ Sep 26, 2013
  • I just left a comment in “We’ve got bubbles, we’ve got troubles – MarketWatch” http://t.co/P11awJw1KQ Sep 26, 2013
  • ‘ @Reddy Cummings is my gerrymandered rep. He is by far one of the most intellectually underpowered members of the House, & that says a lot Sep 25, 2013
  • @moorehn @ReformedBroker @SimoneFoxman @SallyPancakes @kensweet @jennablan They r favorites of mine. $$ Sep 25, 2013
  • Entitlements will have to be reduced; it is only a question of how and when. Druckenmiller’s presentation:… http://t.co/BsA9S78RTI Sep 24, 2013
  • Thanks @MarshaCollier @EdmundSLee @rwohlner for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Sep 24, 2013
  • Thanks @researchpuzzler @pelias01 for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Sep 23, 2013

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Monetary Policy

 

  • Buffett Calls Fed History?s Greatest Hedge Fund http://t.co/vToZwL7D21 Buffett great on practical business economics, lousy on politics $$ Sep 21, 2013
  • Bernanke Faith in Housing Seen Shaken in Bonds http://t.co/F0xtRsM13v The Fed never had control of the long end of the yield curve $$ #barmy Sep 20, 2013
  • The Fed has lost all credibility http://t.co/NhXbQjxiNa For an institution that values clear communications, things have been murky $$ Sep 19, 2013
  • Excellent question on financial regulation from the lady from the American Banker. $$ Sep 18, 2013
  • Good question from @pdacosta on the labor force participation rate and unemployment. $$ #Fed Sep 18, 2013
  • Less Tapering Becomes Tightening Credit No Matter What Fed Says http://t.co/rQMp900dxA Q: what total pkg does 2 forward rate expectations $$ Sep 17, 2013

 

 

Janet Yellen (we get what we deserve)

 

  • White Houses Urges Democratic Senators to Defend Yellen http://t.co/pBd1U1dz7u She seems like a lock: to QE Infinity & Beyond! $$ #FTL Sep 21, 2013
  • Yellen Chances Grow as Obama Aides Test Senate Support http://t.co/kbDdWmlX4L “She will make Bernanke look like a hawk.” Marc Faber $$ Sep 19, 2013
  • White House official says Yellen front runner for Fed chair http://t.co/wGor8xIJoI This is to make us oppose the uber-dove #anyonebutyellen Sep 19, 2013
  • Yellen No Lock for Fed Chair Despite Summers Exit http://t.co/ycEBcedvTe “This was an unprecedented struggle for leadership of the Fed.” $$ Sep 17, 2013
  • Yellen Now Front-Runner for Fed Chief http://t.co/H4xh8vmot1 Yellen means no change from the current failed policies $$ #anyonebutyellen Sep 17, 2013
  • Fed Leader Doubt Erodes Low-Rate Message as QE Taper Looms http://t.co/CgyxacYaap Can’t appoint Yellen now, lest it look like a loss $$ Sep 16, 2013
  • Why Larry Summers Bailed on the Fed http://t.co/lVn10kgYIL Bring on Don Kohn, better still, bring on that monetary dissident John Taylor $$ Sep 16, 2013

 

Rest of the World

 

  • Bermuda’s Search for New Wealth http://t.co/LPMJJvD6QE I like Bermuda a lot, & learned a lot here. No paparazzi, much privacy $$ #humble Sep 20, 2013
  • Rebel-on-Rebel Violence Seizes Syria http://t.co/LsZUvpQTuo Two player games r easy; Three-or-more player games r tough & confusing $$ Sep 20, 2013
  • What Happens When the US Isn?t the Biggest Gas Guzzler? http://t.co/pl8X9TkOUM 1 reason y I am long energy stocks: rising global demand $$ Sep 20, 2013
  • Olympic Athletes in Tokyo Risk Hottest Weather in 120 Years http://t.co/4E9MnDTzv5 Same for FIFA in Qatar, but humidity in Tokyo is a factor Sep 19, 2013
  • Why Even the Worst Bloggers Are Making Us Smarter http://t.co/PhztCBG6kP It is amazing how many people are writing their ideas on the web Sep 19, 2013
  • China?s Choking Cities Means Job Cuts at Steel Town: Commodities http://t.co/3Xmz1Z7zqh China has over-invested in heavy industry #japan1989 Sep 19, 2013
  • In Post-Tsunami Japan, Homeowners Pull Away From Grid http://t.co/kPUIVdYq8b Power is now less reliable, some move to solar & fuel cells Sep 19, 2013
  • What Egypt Wants: Cheaper Bread http://t.co/S8NE6Zo8JU Demand for Subsidized Food Vexed Ousted President and Pressures Interim Government Sep 19, 2013
  • Obama Rifts With Allies on Summers-Syria Limit Debt Dealing http://t.co/M8f1f1fPm6 Weakened by bad choices but he is the President! $$ Sep 18, 2013
  • How Did Advanced Economies Get in So Much Debt? http://t.co/QGF1acUQf8 They absorbed bad private debts, rather than letting them fail $$ Sep 18, 2013
  • On Putin, his NYT editorial: http://t.co/eb45qkGBq1 Peggy Noonan responds: http://t.co/qwFRsk83cR Avoid interfering in foreign wars $$ Sep 18, 2013
  • Canadian Household – Drowning in Debt http://t.co/hJz8057OMF Total Canadian Household Debt-to-Income Ratio Rises to Record 165.6% @ 6/13 $$ Sep 17, 2013
  • $$ @paulvieira Point taken. Q: If someone bot an avg house in Canada 2 rent it out, would he make money; if arb is neg, Canada faces probs Sep 17, 2013
  • Eleven Countries with Soaring Inflation http://t.co/xl6Ivzr5bx Soaring means >6%/yr; leading the parade are Venezuela, Argentina & Egypt $$ Sep 17, 2013
  • Political Risk: What Should Investors Know About China’s Interest In Peru? http://t.co/85wGZJ1x3W Biz in Peru means negotiate w/locals $$ Sep 17, 2013
  • Smallest Ships Profitable Again as Logs Feed China Boom http://t.co/YsPOJMW9ul Chinese demand for wood raises freight 4 small ships $$ Sep 17, 2013
  • Vladimir Putin, the Richest Man on Earth http://t.co/bpLFDXtPWw Who needs wealth when you control a country? Putin makes his cronies rich $$ Sep 17, 2013
  • China Reins in Popular Voices With New Microblog Controls http://t.co/0tlX38uI1q The internet is a threat & an aid 2 every government $$ Sep 17, 2013
  • No Confidence in China Markets Inflates Housing Bubble http://t.co/G8qgXC8OEW Distrust other assets leads Chinese 2 invest in real estate $$ Sep 17, 2013
  • Germany’s Migrating Seniors http://t.co/Bhsqr6TePo Good care cheap, but you have to move 2 Poland to get it. Solves some old age problems $$ Sep 17, 2013
  • Germans Export Grandma to Poland as Costs, Care Converge http://t.co/e9w45mHkQe But where will the Poles export their Grandmas? $$ #long Sep 17, 2013

 

US Politics & Policy

 

  • Benghazi investigators gave Hillary Clinton heads-up on findings http://t.co/6Oimx1LhSx Mrs. Clinton appointed 80% of the review board $$ Sep 21, 2013
  • Weeds amidst the ivy |http://t.co/nvMFuNioFN A long & relatively thorough analysis of for-profit colleges & how they milk student loans $$ Sep 21, 2013
  • House GOP Ties Government Funding to Health Law http://t.co/rcNBBl2c6m This is a Q of short- vs long-run. Balancing budget best 4long-run $$ Sep 20, 2013
  • Big Insurers Skip Health Exchanges http://t.co/JWvGJSYVdQ Y deal w/ markets that attract sick people w/limits on underwriting & pricing? $$ Sep 20, 2013
  • What caused the financial crisis? The Big Lie goes viral http://t.co/1qFMg1BYGo The crisis was not merely caused by bad regulation Sep 19, 2013
  • The Queen Mary of macro trends: Rising rates http://t.co/OSgaYzIQkg Less certain than article says, as the economy weakens, no loan growth Sep 19, 2013
  • Walgreen will drop its traditional health insurance and instead give its 160,000 workers payments 2buy plans http://t.co/dpvbC8IigC via @WSJ Sep 19, 2013
  • National pension group challenges Pew?s work http://t.co/iiZROFHzRy! Cash balance plans give lower benefits, but maybe that’s affordable Sep 19, 2013
  • Puerto Rico can only cover 11.2% of pension costs http://t.co/wdnQJFniEF! Puerto Rico exists 2 make Illinois think it is prudent $$ Sep 19, 2013
  • Obama Feels a Pinch From Congressional Democrats http://t.co/d78z6b9a2c Obama gets constrained by the Left as much as the Right $$ Sep 18, 2013
  • Republicans Weigh Defunding Health Law, Avoiding Shutdown http://t.co/cbiqo2vBoW Ignore the economists, they don’t know anything, & cut! $$ Sep 18, 2013
  • Republican Newcomer Influence in Congress Risks Shutdown http://t.co/dtdHcg59po 3-player games r much less stable then 2-player games. $$ Sep 18, 2013
  • The Financial States of America http://t.co/xGQ8c6uajo Clever infographic; click a state 2c how it ranks; click on categories 4 diff maps $$ Sep 17, 2013
  • States With The Most Zombie Homes http://t.co/Dj6hphkUrM >20% of foreclosed homes vacant: Indiana, Nevada, Georgia, Florida, MD, AZ, SC $$ Sep 17, 2013
  • Heroin Pushed on Chicago by Cartel Fueling Gang Murders http://t.co/GmuhpbSxIk Getting a receipt from the Indiana police 4 forfeited cash $$ Sep 17, 2013
  • Armed EPA raid in Alaska sheds light on 70 fed agencies w/armed divisions http://t.co/90YKg3TWB2 Interesting how many have police units $$ Sep 16, 2013
  • Obama stands firm on refusal to negotiate over US debt ceiling http://t.co/kUDp9Q4ZL2 Nothing bad happened from sequester; do it again $$ Sep 16, 2013
  • How the SOPA law got defeated politically http://t.co/X3ZJiTiJ48 Creation of a website to highlight & affect legislative markups was key $$ Sep 16, 2013
  • Health Law Faces Skepticism http://t.co/AYf9IjdUL9 Complex laws typically don’t work well; Obamacare/PPACA is the epitome of complexity $$ Sep 16, 2013

Market Impact

 

  • The Long, Sorry Tale of Pension Promises http://t.co/6Pi2V0yiPA It started w/accounting rules allowing2much flexibility4funding/valuation $$ Sep 21, 2013
  • ING CEO Says Stress Tests Without Safety Net Bring Risks http://t.co/Bi7IKXvuYK If u fail the stress test, y would anyone recapitalize u $$ Sep 21, 2013
  • Challenging the Imperial Boardroom http://t.co/VW6IrzKIF9 @Carl_C_Icahn argues 4 mgmt transparency, competence, & shareholder orientation $$ Sep 20, 2013
  • Money Market Funds Ready for Battle with Regulators http://t.co/1VIxWqfVLE Floating NAVs will kill money market funds; better solutions $$ Sep 20, 2013
  • Banks? $10B Sweet Spot Sets Off Buying Spree for Lenders http://t.co/2oDNEEqEdY Bank capital rules r helping create medium-large banks $$ Sep 20, 2013
  • Avoid ?Dividend Yield Traps?, Look To Releveraging Stocks http://t.co/0k3Qs4mJHx 2 risks: higher bond yields compete; free cash flow 2low $$ Sep 20, 2013
  • Longevity-Proof Your Future http://t.co/0MB5S7Yx5S The main point is that you need to save. Beyond that, invest well, but savings r capital Sep 19, 2013
  • Novogratz to Burbank See Stocks Surviving First Fed Taper http://t.co/Xeig2UVtvT So what? We already know “Three steps and a stumble.” Sep 19, 2013
  • How Social Responsible Investing Can Be Irresponsible — Pension Fund To Sell Energy Stocks? http://t.co/JE6g2S8hHC Vacuous city council Sep 19, 2013
  • Remembering the families at the center of the financial crisis http://t.co/ICSLkY2TcD If finances were related 2 finance/housing it hurt $$ Sep 19, 2013
  • Judge Dismisses Bank Lawsuit Over Mortgage Foreclosures http://t.co/aJ5VmA64x2 Richmond needs supermajority 2 use eminent domain $$ Sep 17, 2013
  • Dr Copper & his funny friends disagree tremendously with SP500 level http://t.co/uNpdfvlbC9 On the divergence of stocks & commodities $$ Sep 16, 2013
  • Is Fiscal Austerity Good for the Economy? http://t.co/gQif4JHXqc “austerity is costly in the short run, it can provide long-run benefits” $$ Sep 16, 2013
  • Gross?s Trade Sours as Bonds Lose Faith in Fed Guidance http://t.co/YGZgvVries Depends on level of future GDP growth, keep watching $$ Sep 16, 2013
  • Montepeque of Platts Caught in Battle Over Oil Assessments http://t.co/4o0wvVyCEz All human systems r gamed, just a question of how much $$ Sep 16, 2013
  • Wall Street trading in US fuel credits hurts consumers http://t.co/8hZ8shAIJJ Very difficult 2manipulate prices in long run: sup/dem chgs $$ Sep 16, 2013
  • Uh oh. People buying houses fear rising prices http://t.co/FWAAeHwKdz Bubbles persist until financing costs more than implied rents $$ Sep 16, 2013

 

Companies & Industries

 

  • Twitter announces IPO: The Pricing Game begins http://t.co/GlR7MWJz4X Daring Damodaran gives a value 4 $TWTR w/out having any financials $$ Sep 21, 2013
  • Secret Rocks and Gem Hunters http://t.co/4Dpm6jGavk Colored gems r like small cap stocks, they r unique & illiquid mkts w/odd characters $$ Sep 20, 2013
  • Companies Seize on Rate Reprieve to Issue Bonds http://t.co/qQJzknEqhp Many think rates will go higher, & so they issue debt now $$ Sep 20, 2013
  • Google May Stop Using ‘Cookies’ to Track Web Users http://t.co/MgvZtEHo1Q Could concentrate marketing power in hands of a few companies $$ Sep 20, 2013
  • How ?Cord Never? Generation Poses Sales Drag for Pay TV http://t.co/10M73Td7jL Once you get used to not paying for your video, u don’t pay Sep 19, 2013
  • Verizon Pays $5.1 Billion in Extra Interest http://t.co/om7PsDAwzO That was the price of getting a big deal done in the short-run. Sep 19, 2013
  • Companies are increasingly choosing to generate their own power, delivering a jolt to utilities http://t.co/brVyNOWokp Disintermediation Sep 19, 2013
  • For TV Shows, It’s a Seller’s Market http://t.co/eja7JEhl1t Producers have many more outlets for content & networks must pay up 4 content $$ Sep 18, 2013
  • Capstone Metering Provides Smart Water Management Solution, Powered By Verizon Wireless Network http://t.co/0xd77Bnz0q fascinating tech $$ Sep 17, 2013
  • Berkshire Billionaire Found With More Shares Than Gates http://t.co/wqoceUXHJW Tales of old buyers of $BRK.A & cpmny sellers taking stock $$ Sep 17, 2013
  • Retailer REI Ends Era of Many Happy Returns http://t.co/0xDYFXDV95 Abuse leads REI to end returns on items bought more than one year ago $$ Sep 16, 2013
  • Wildcatter Hunch Unlocks $1.5T Oil Offshore US http://t.co/4lTsK10aj0 Longish story of how a hunch led2 deepwater drilling, amid failures $$ Sep 16, 2013
  • How Did Wal-Mart’s IPhone Discount Defeat Apple’s Price Controls? http://t.co/F3ZuYFvbWM $WMT takes a low margin on sales of $AAPL phones $$ Sep 16, 2013
  • Home, Sweet (Crude) Home in Fort McMurray, Alberta http://t.co/GpuUq289T8 Economies based on resource extraction flourish 4 a time & die $$ Sep 16, 2013

 

Economics

 

  • Women Waiting Tables Provide Most of Female Gains in US http://t.co/eoetZdyRAi Not so much demand 4 workers w/degrees in certain majors $$ Sep 20, 2013
  • Martin Feldstein: How to Create a Real Economic Stimulus http://t.co/bH2e2Z67mb Suggests mild entitlement reform; we need retirement @ 72 $$ Sep 17, 2013
  • Want Marital Bliss? Pool Your Money http://t.co/mJQb3XEkZn The more things r shared in marriage the better/tighter the bond becomes $$ Sep 17, 2013
  • Mysterious Disappearance of James Duesenberry http://t.co/LD3GfjTyka Old article on relative income hypothesis. Ppl r envious not greedy $$ Sep 16, 2013
  • Explanation of the discrepancy is that poverty is relative. Ppl r not maximizers & economists resist this b/c the pretty math falls apart $$ Sep 16, 2013
  • & if the pretty math falls apart, economists can’t publish & there goes their jobs. That is y they would rather hang onto a wrong theory $$ Sep 16, 2013

 

Other

 

  • The Time a Cleveland Newspaper Divulged Manhattan Project http://t.co/mFDKvhJTlW Fascinating tale; clever reporter http://t.co/o5CzDU61nL $$ Sep 21, 2013
  • Our Chat With Jeremy Grantham http://t.co/FSlADefGi0 In general, need 4 technological change has driven technological change; we will win $$ Sep 21, 2013
  • Marc Faber’s Biggest Mistake http://t.co/Dui1ZehA09 Really pretty minor. Interesting guy who gets things right, but speaks bearish Sep 21, 2013
  • Pope Warns Church Focusing Too Much on Divisive Issues http://t.co/2yEMa3O89I More than other Popes, this one is a slave2 liberal opinion $$ Sep 20, 2013
  • How a 91-Year-Old Geek Helped Keep the Aged Independent http://t.co/GD1AmUK6OQ Small cheap sensors monitor oldsters, watching their needs Sep 19, 2013
  • Say Goodbye to the Password http://t.co/pTnQ4ng2Xn New technology aims to offer security that is more convenient and more effective $$ Sep 18, 2013
  • Veggie-Heavy Stress Reduction Regimen Shown to Modify Cell Aging http://t.co/b3KNrSOdSY Cooking from scratch improves your life & health $$ Sep 17, 2013
  • Jonathan Jacobs: As Education Declines, So Does Civic Culture http://t.co/tk7WHue1mS Biggest complaint about new analysts: can’t write $$ Sep 17, 2013
  • Gonorrhea Among Drug-Resisting Germs Sickening Millions http://t.co/Fbgw14Q4ZQ Add C. difficile & E. coli; resistance 2 antibiotics grows $$ Sep 17, 2013
  • Twitter Co-Founder Evan Williams Lays Out His Plan For The Future Of Media http://t.co/e7nv4u8Z0T Need the equivalent of @abnormalreturns $$ Sep 16, 2013
  • Google?s Boss and a Princeton Professor Agree: College Is a Dinosaur http://t.co/ffUTIQFxdV True, but what do we do 2prove knowledge then $$ Sep 16, 2013

 

Replies, Retweets, & Comments

  • Thanks @MarshaCollier @EdmundSLee for being top new followers in my community this week 🙂 | insight by http://t.co/sern3wLA13 Sep 20, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Sep 20, 2013
  • @dpinsen I almost never read fiction. Sep 20, 2013
  • RT @interfluidity: the Fed has learned the trick about stretching your feet out beyond the covers then pulling them back in to feel warm. Sep 19, 2013
  • RT @BloombergNews: Sold for sex at puberty is village girls’ fate in wealthier India | http://t.co/oZsp9d2LcV Saddest article I have read Sep 19, 2013
  • @ppearlman Congratulations, Phil. One of my favorite websites is going to get better still. Sep 17, 2013
  • $$ @joebrusuelas Wrong. Yellen is an imitation of the policies of Bernanke & QE. They don’t work. Summers — rejection of the Rubin clique. Sep 17, 2013
  • @rj_trades Worked 4 me. Don’t know what’s wrong… Sep 16, 2013

?

Some Graphs on Fed Policy

Some Graphs on Fed Policy

Posted on by David Merkel

I don’t want to spend a lot of time on the Fed.? I do want to shine a light on their lack of forecasting abilities.? You have to understand, they are cheerleaders for the US economy, and usually (though not now) defenders of fiscal policy.

The following figures are based off my weighted average estimates taken from the Fed’s guidance.

Let’s start with their forecasts of GDP growth.

central tendency_10374_image001

Note that GDP estimates have been wildly optimistic, and have come down over time.? Why should these people have charge over monetary policy?? They don’t show any competence.? It’s as if they have one failed theory that they share — neoclassical economics.

central tendency_22274_image001

Yes, the unemployment rate has come down, but much of it it due to discouraged workers. Also, younger people are having a hard time finding work, while oldsters are having to work to survive.

Now let’s look at the hyper-optimistic PCE deflator:

central tendency_26254_image001

Inflation has been falling as the PCE measures it, and CPI also.? Asset inflation has taken the place of goods and services price inflation.? Eventually, that will switch, when the relative need to consume rises, as it did in the ’70s.

Now let’s look at the expectations for the Fed Funds rate:

central tendency_29831_image001

Fed funds continually moves down over time. The Fed overestimates when they will tighten, because the economy is far weaker than they expected (go back to graph 1). The final graph confirms this:

central tendency_1915_image001

Thus the futility of the Fed. After almost two years of giving guidance, they are no closer to tightening than when they started.? Tightening is 27 months away, if their estimates are right, same as they thought in January 2012.? Tightening seemed further away when more aggressive QE was introduced, but that quickly abated, like a drug addict adjusting to higher doses.

Lousy Forecasters

The Fed’s ability to forecast, since it began communicating more under Greenspan, has never been good.? They are always too optimistic, and assume the powers of monetary policy are high, when they are low.? This applies double to abnormal policy like QE.

Perhaps the Fed could do us a favor.? Stop the shenanigans, and let the yield curve get a normal slope between 2- and 10-year Treasuries, around 1%.? Also end QE.? Then tell Congress that the ball is in their court, and the Fed won’t do any more “stimulus.”? Then Congress would have to face their own shortcomings, and decide if they are Keynesians or Austrians, and act.? Congress dallies because the Fed acts.? Voters can punish Congress; they can’t punish the Fed, much as it deserves it.? If we need a recession to clear away bad debt, so that we can grow again, let’s have it, and stop the asset inflation that the Fed engenders.

As it is, I don’t think QE is doing much good at all for the US, unless monetizing the debt is something good, which historically leads to high inflation.

Redacted Version of the September 2013 FOMC Statement

Redacted Version of the September 2013 FOMC Statement

Posted on by David Merkel
July 2013 September 2013 Comments
Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Shades their view of GDP growth up.
Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Adds weasel words because the participation rate is falling, and wages are stagnant.
Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Shades their view of housing down.? The Fed hasn?t learned that they can?t control the long end of the yield curve
Partly reflecting transitory influences, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Little change.? TIPS are showing similar inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is near 2.45%, down 0.05% from July.
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 growth will pick up from its recent 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 growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. No change.Emphasizes that the FOMC will keep doing the same thing and expect a different result than before. Monetary policy is omnipotent on the asset side, right?
The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. Does not take credit that the tightening of financial conditions happened largely because of FOMC communications.
The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates 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, but it anticipates that inflation will move back toward its objective over the medium term. No change.? CPI is at 1.8% now, yoy.? It may be closer than they think.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. The notable paragraph, saying that the ?taper? is not starting because fiscal policy is not as stimulative as the Fed wants.
the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. 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. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. 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 real change.Operation Twist continues.? Additional absorption of long Treasuries commences.? Fed will make the empty ?monetary base? move from $3 to 4 Trillion by the end of 2013.

 
Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. Taken together, these actions 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 will closely monitor incoming information on economic and financial developments in coming months. The Committee will closely monitor incoming information on economic and financial developments in coming months No change. Useless comment.
The Committee 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. 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 real change.
The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Drops the concept that they might increase the pace of purchases.? Aside from that, this section says about the same thing as July.
Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases. New sentence, but it really doesn?t add much.? Didn?t we know that already?
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 will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. No change.Promises that they won?t change until the economy strengthens.? Good luck with that.
In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate 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. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate 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. Not a time limit but economic limits from inflation and employment.Just ran the calculation ? TIPS implied forward inflation one year forward for one year ? i.e., a rough forecast for 2014, is currently 2.39%, up 19 bp from July.? Here?s the graph.? The FOMC has only 0.11% of margin in their calculation.

 
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 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. No change.
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.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Two doves leave the FOMC
Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. George continues to make her point that is the same as mine in my piece Easy In, Hard Out; that the Fed may have greater problems as a result of its abnormal policies, whatever they do in the future.

?

Comments

  • No taper yet.? Equities, long bonds, and gold rally.? The FOMC says that any change to policy is contingent on almost everything.
  • They shaded their views of housing down and GDP up.
  • Longer statement.? They think that if they use more words, they will be clearer.? Longer statements are harder to parse and understand.
  • 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 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

 

Rest of the World

 

  • Chinese Buy Sydney Homes at Unprecedented Rate, McGrath Says http://t.co/EsRV6O2E99 Stylish flight capital does not come cheaply, mate $$ Sep 14, 2013
  • Rajan Hailed as Swings Drop Amid Gundlach Warning http://t.co/Cxn6tDBDqe Rajan has courage to defend the Rupee & slow the Indian economy $$ Sep 14, 2013
  • Aniston?s Salad Isn?t Enough as Quinoa Farmers Reap Golden Crop http://t.co/CkkKzTR5lC Bolivian farmers rejoice growing quinoa makes $$ Sep 14, 2013
  • Catalan Separatists Pull Off Human Chain But Referendum Is Harder http://t.co/Yy15a6AfPW Reaching the limits of bad policy, risking wars $$ Sep 12, 2013
  • Norway Pledges to Limit Oil Spending http://t.co/IzVJKwunbq Probably smart, because it is easier 2 overspend an endowment than underspend $$ Sep 12, 2013
  • Shipping Rates Seen at 2010 High on Record Ore to China http://t.co/rCXg6JUlzf Means China is likely not rebalancing to consumption yet $$ Sep 10, 2013
  • Youngest Japan Boards Beating Oldest With Stocks Rising 139% http://t.co/JDXARNyCku Returns were 52% for other firms over the last 3yrs $$ Sep 10, 2013
  • Syrian Christians Pack Passports Fearing Islamist Onslaught http://t.co/vcaHMVzJpz More Coptic churches in US, next comes Syrian Orthodox $$ Sep 10, 2013
  • Russia to Brazil Intervention Adds to U.S. Debt Distress http://t.co/wPiBAG35Z7 The real Q is what they are buyingw/the $$ they sell? Sep 09, 2013
  • Syria Vote May Derail Obama?s Agenda in Congress http://t.co/oGoHtSGUzD Argues that Obama has to win the Syria vote 2 avoid looking weak $$ Sep 09, 2013
  • Ancient Golden Treasure Found Near Jerusalem Temple Mount http://t.co/tLRWZfsNEm Byzantine coins dating from 4th – 7th centuries $$ menorah Sep 09, 2013
  • India?s Middle Class Hit as Rupee Plunge Pushes Up Prices http://t.co/AlN4xRJKI3 Another example of how inflation hits the poor hardest $$ Sep 08, 2013
  • Tokyo Defeats Madrid, Istanbul for Rights to 2020 Olympics http://t.co/gikYyiO4pY Tokyo wins the prize to build Olympic white elephants $$ Sep 08, 2013

 

US Politics & Policy

 

  • US Faces Long-Term Care Crisis, Report Says http://t.co/uu68sNvNWz Unsolvable unless we rein in costs, redefine what Medicare will cover $$ Sep 14, 2013
  • States Face Decision on Saving Trains http://t.co/Ps5L9Wk631 Federal subsidies end on short Amtrak routes, will states pick up tab? $$ #bus Sep 14, 2013
  • Walmart Wins in DC http://t.co/ixe7uC1U6C “Mayor Gray has chosen jobs, economic development and common sense over special interests” $$ Sep 14, 2013
  • Republicans Holding Next Fed Chairman?s Fate Stay Quiet http://t.co/k7oIqCtP6w GOP sits & grins over no-win situation 4 democrats & Obama $$ Sep 14, 2013
  • How Wal-Mart?s Waltons Maintain Their Billionaire Fortune http://t.co/duLt9Ogtod This is y defining income more important than tax rates $$ Sep 12, 2013
  • How to Preserve a Family Fortune Through Tax Tricks http://t.co/xHI585uI8W Graphic showing how GLATs, CRATs & Family LPs work $$ #lowertaxes Sep 12, 2013
  • Even a Railway Line Can?t Dodge the Keystone XL Controversy http://t.co/ykz7FdFdoS Given the delay, new projects replace the need 4 K-XL $$ Sep 12, 2013
  • New York Mayor Race Worries Business http://t.co/AQUazQsdYa De Blasio pursues policies that made Detroit the great city it is now $$ #FTL Sep 12, 2013
  • California city backs plan to seize negative equity mortgages http://t.co/LmTGRhptuK Fail: loss of financing for city & new homeowners $$ Sep 12, 2013
  • GE, IBM Ending Retiree Health Plans in Historic Shift http://t.co/Plbc1CK4fG Obamacare leads large corporations 2shed retiree healthcare $$ Sep 12, 2013
  • Fraud Stealing $100M Shows Flaws in US Crop Insurance http://t.co/zTEg7Z0UG4 System relatively easy2cheat.Graphic: http://t.co/GkJ8RT0BLn $$ Sep 12, 2013
  • NSA Violated Privacy Protections, Officials Say http://t.co/b4cEoloHz5 Much as it would unemploy my friends, we need 2 end the NSA $$ Sep 11, 2013
  • Five Revelations From New NSA Documents http://t.co/khGGuAsqpU Government violated its own rules repeatedly, showing no respect 4the law $$ Sep 11, 2013
  • Intel clashes w/Obama’s election-year al Qaeda claims http://t.co/r6vM2wtjMz The successes against al Qaeda undone by spread 2 new areas $$ Sep 10, 2013
  • Kerry’s ‘Gaffe’ Beats Military Strikes http://t.co/Il4bA172Y1 Hey, getting the chemical weapons out of Syria is @ least a small win, yes? $$ Sep 10, 2013
  • Crop Insurers? $14 Billion Some See as Money Laundering http://t.co/39r6zZQrcz Difficult 4 crop insurers 2 lose as US Taxpayers foot bill $$ Sep 10, 2013
  • DeVry Lures Medical School Rejects as Taxpayers Fund Debt http://t.co/Ek4gXsIkHB Long article on how Caribbean med schools compete w/US $$ Sep 10, 2013
  • The Terrorism Risk Insurance Act: Time to End the Corporate Welfare http://t.co/NPlTkozP4n There is no need to subsidize terror insurance $$ Sep 10, 2013
  • Taxpayers Turn US Farmers Into Fat Cats With Subsidies http://t.co/aLE07PrkFt Crop insurance sends all the risk of farming to taxpayers $$ Sep 09, 2013
  • In Conversation With Michael Bloomberg http://t.co/dtJ4WJZnaZ Long somewhat hostile article asking Bloomberg his views, plans, etc. $$ Sep 09, 2013
  • Dear NSA, Thanks for Making Us All Insecure http://t.co/3sfMaeyR1L NSA weakens security 4all, harms interests of US Internet Corporations $$ Sep 08, 2013
  • it also lowers global trust in the US, fragments the internet, & encourages nations that censor & monitor the internet by US bad example $$ Sep 08, 2013

 

Financial Sector Today

 

  • Why looser lending standards won’t help you http://t.co/p36wvJj6YC Lending standards fall in markets hit by crash & now prices r rising $$ Sep 14, 2013
  • Berkshire, AIG Join Battle Over Lucrative Business http://t.co/P87xoC3YZp $BRK.B roils industry expanding in excess-and-surplus insurance $$ Sep 14, 2013
  • House Talk: When an HOA Forecloses http://t.co/7Auan3ZFg2 Yes, your homeowners association can foreclose if you don’t pay your dues $$ Sep 08, 2013
  • Upside: Emerging-Market Bond Bargains http://t.co/2wIcJ5a8r5 They look cheap, but Q is how they adjust 2 tighter world monetary policy $$ Sep 08, 2013

 

Financial Crisis Fifth Anniversary

 

  • TARP didn’t save banks, it ruined them: Kovacevich http://t.co/o6BjBjNqbK Contradicts Paulson who said the TARP funds were voluntary $$ Sep 14, 2013
  • By every measure, the big banks are bigger http://t.co/nmfyAJ2CG9 The top 6 banks hold 67% of all assets in the banking industry $$ Sep 14, 2013
  • A Toxic Subprime Mortgage Bond’s Legacy Lives On http://t.co/NdJy3NLyih Story of CWABS 2006-7 Borrowers, Investors & Others Touched by It $$ Sep 14, 2013
  • Lehman’s Cold Dead Hand Is Still Reaching Out For Money http://t.co/tbqVCB32LV Many games can b played w/derivatives of a BK counterparty $$ Sep 14, 2013
  • Five years after Lehman, risk moves into the shadows http://t.co/9hootI4MGa Bank runs still possible due2 repo, margining, putable debt $$ Sep 12, 2013
  • 2008-2013: The Financial Crisis in 9 Charts http://t.co/2JmO98tqzA GDP, S&P500, Finance profits, employment, income, cars, homes & more $$ Sep 12, 2013
  • Lehman Brothers Abyss Had Paulson Seeking Prayer Amid Crisis http://t.co/y5ucZK5dNX I’m getting tired of seeing Paulson in the news $$ #long Sep 12, 2013
  • Embracing Wynne Godley, an Economist Who Modeled the Crisis http://t.co/dEm8njuXmT The right answer involves Minsky and the Austrians $$ Sep 12, 2013
  • Financial Crisis: Lessons of the Rescue, A Drama in Five Acts http://t.co/EIdEVqnkWa John Taylor blames Govt policy for creating crisis $$ Sep 09, 2013
  • Henry Paulson Defends Fannie Mae Bailout http://t.co/Rtvjlv8vsF As a result, we have maintained an overleveraged economy, more govt debt $$ Sep 09, 2013

 

Central Banking

 

  • Why Michael Woodford Thinks the Fed Should Taper http://t.co/Lyy1oLnhfC Contends that we need more safe assets in the financial system $$ Sep 14, 2013
  • Is the Demographic Shift Weakening Monetary Policy Effectiveness? http://t.co/SDaTi4zItG Older ppl react less 2changes in interest rates $$ Sep 10, 2013
  • Fed wants yet another tool in its swelled policy kit http://t.co/5BvNPM0ro6 fixed-rate, full-allotment overnight reverse repo agreements $$ Sep 09, 2013

 

Other

 

  • Detroit?s Bankruptcy and Pension Solution Depends More on its Planned Recovery and Rebirth – Not Just Cutting Costs http://t.co/RbkP5qNbeo! Sep 14, 2013
  • The prior article tweeted I disagree with. There r many high sounding words, amounting 2 “If we all clap, Tinkerbell will live!” $$ #nohope Sep 14, 2013
  • Insight: In Silicon Valley start-up world, pedigree counts http://t.co/tg1ox11QsK The school u went 2 or the firm u worked 4 matters $$ Sep 13, 2013
  • MIT?s Williams Decodes Economics of Gene Sequencing http://t.co/jPeJXSGK7d Economist connects intellectual pprty & incentives 2 research $$ Sep 12, 2013
  • Intergovernmental Panel On Climate Change Admits Global Cooling? http://t.co/qZCWogzNwD Climate changes; it always changes $$ Sep 12, 2013
  • Financial Secrets Revealed! (Just Don?t Ask Where They Came From) http://t.co/5U6tugKpWV @retheauditors tells journos&readers2check facts $$ Sep 11, 2013
  • Fate or Destiny? http://t.co/FyEmhLLK0K @reformedbroker goes on hiatus? My but I will miss him. The financial blogosphere will miss him $$ Sep 11, 2013
  • The Weak Recovery Explains Rising Inequality, Not Vice Versa http://t.co/5fWR45Z3gi When growth was strong, incomes more even $$ Sep 10, 2013
  • Alcoa, H-P & Bank of America to Be Replaced on DJIA http://t.co/lDsl4dYVTL Nike, Visa & Goldman Sachs enter $$ $V $GS $NKE $AA $HPQ $BAC Sep 10, 2013
  • 10 ways to wipe out your retirement savings http://t.co/HjTw5raXEd Complexity, leverage, low diversification, self-custody, slick-talkers $$ Sep 09, 2013
  • Are the Baltic Dry Index Telling Us to Expect Stronger Economic Activity? http://t.co/5xZSe3HvTT BDI has been turning up lately, so maybe $$ Sep 09, 2013
  • http://t.co/Ti2RuDFD37 Did you read the deal terms? Looking at a special dividend of ~$5/share plus ~0.23 shs of $VZ per sh of $VOD. $$ Sep 09, 2013
  • AT&T Gets Tentative Approval to Fund Pension With Preferred Stock http://t.co/FS7tWqkxo8 In BK, pref stock worth little;PBGC holds bag $$ $T Sep 08, 2013

 

Verizon Bond Deal

  • How to Borrow $49B with a Stroke of a Pen http://t.co/v4djHDzgjh Bond deal of $VZ had weak covenants versus most investment grade deals $$ Sep 12, 2013
  • Verizon Nets $2.09 Billion Windfall for Bond Sale Buyers http://t.co/3EWb3AvE6z In order to get the deal done $VZ had to offer 4%+ gift $$ Sep 12, 2013
  • Verizon Pays Premium to Top Apple Bond Record http://t.co/VqnMkvWvn4 I would b wary of holding much long $VZ debt. Who doesn’t own it? $$ Sep 12, 2013
  • Verizon Plans $20B Debt Sale http://t.co/uwWhFrvlwY Biggest ever, & on top of $48B+ of existing debt, will have 2have juicy yields $$ $VZ Sep 10, 2013
  • Verizon may boost size of bond offering: sources http://t.co/CGF0NsXD24 $VZ gets ready 2 issue biggest USD corporate bond deal EVER $$ $25B+ Sep 10, 2013

 

Wrong, Etc.

  • Gundlach Says Fed Is Mistaken in How It?s Ending Easing http://t.co/LPAZUFia7n This article does not make clear what Gundlach objects to $$ Sep 12, 2013
  • 4 investment tips that you should never use http://t.co/hjfumLxV3u Mixed analysis where the author knocks down falsehoods and straw men $$ Sep 12, 2013
  • Confused: Buffett?s investing advice is a portfolio killer http://t.co/nQF65PRnaD More a criticism of Peter Lynch than Warren Buffett $$ Sep 12, 2013
  • Wrong: Systemically Important Banks in the Post-Crisis Era http://t.co/seuYEsF5L4 Long, and misses liquidity issues like repo financing $$ Sep 10, 2013

 

Retweets, Replies, and Comments

  • @munilass I read this and thought that things haven’t changed much since Heraclitus and Parmenides. Would like to hear his thoughts on Godel Sep 14, 2013
  • @jeffdanoff1 Of course I know that. I detest Paulson’s 5-year anniversary self-justification obfuscation. Kovacevich shoots straight. Sep 14, 2013
  • RT @munilass: Feynman’s lectures are now available online (Volume 1) http://t.co/K4TfrMkQuD (via @jtc_19) Sep 14, 2013
  • @munilass @BarbarianCap I too have appreciated your writings. They are worth keeping. If you don’t want to pay to do it, I could host them Sep 14, 2013
  • I just left a comment in “Buffett?s investing advice is a portfolio killer – Jeff Reeves’s Strength in Numbers – Ma?” http://t.co/6oyVHvcKgK Sep 12, 2013
  • Thanks @munilass | I knew u had written about this in the past. I’m a generalist w/bonds, so I thought I would show it 2u4 your thoughts $$ Sep 12, 2013
  • Hey @munilass — I would b interested in your opinion on this from The Committee For A Responsible Federal Budget http://t.co/GwHTQNSzfy Sep 11, 2013
  • Commented on StockTwits: @Financial_Iceberg Saw that & tweeted it yesterday. The question is how long China can c… http://t.co/b7dmG6PvE3 Sep 10, 2013
  • I just left a comment in “David Einhorn was right about this stock – MarketWatch” http://t.co/koU5CehwBZ Sep 09, 2013
  • @mcuban @howardlindzon Here is my reply, 2 large for twitter: http://t.co/qSgjjTYFRe Yes, most retail investors r dumb, but money can b made Sep 07, 2013
The Rules, Part LIII

The Rules, Part LIII

Posted on by David Merkel

The tech market washes out about every eight years or so.? The broad market, which is a more robust beast, washes out far less frequently.? My question: are these variants of the same phenomenon?

I wrote this back in early 2003.? I can now answer my own question: No.

I’ve looked at this question many times, and debated the answer, but there are a few things that have made me decide “No.”

  • Sectors often move independently of the market as a whole, particularly growthy sectors that lose their growth.
  • The big moves of the market as a whole have usually been correlated with credit crises, which are part of the financial sector, not the tech sector.
  • The tech sector grows more slowly as a whole now, and hasn’t washed out for a while.
  • The financial sector fails because of financial leverage, the firms are too levered, and take too much credit risk.? The tech sector fails because market players bid up the prices of stock assuming permanently high rates of growth.? These are fundamentally different reasons for over-valuation, because most tech stocks have little debt.

Credit crises lead to big overall declines in market values, particularly with financial stocks, but affecting all other stocks, because when credit conditions are tight, things slow for all firms.

When tech stocks are overbid, it is more of a local mania where market players overestimate the degree of growth the sector can achieve.? There is little collateral damage to the market.? A seeming exception to this is 2000-2002, where the market went down with tech, but financials were less affected. In that drawdown, tight Fed policy drew everything down, and tech more than everything else.? Remember the NASDAQ over 5000?? Still hasn’t returned there, while the Dow, S&P 500, and Russell 2000 have hit new highs.

Here’s the summary: financial stress tends to be pervasive, affecting everything.? Stress from growth expectations that disappoint tend to be sector-specific, and don’t drag down the market as a whole.

And so the answer to my question that I asked 10+ years ago is “no.”

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Companies & Industries

 

  • Falling gas prices this Fall http://t.co/EQkgsyKoSm Pollution requirements fall, people drive less, overcomes geopolitical effects $$ Aug 30, 2013
  • Wal-Mart vs Costco, Why My Critics R Wrong http://t.co/2eBuKkJ8G2 $WMT offers more variety vs $COST | thus more people lower wage rates $$ Aug 30, 2013
  • Brazilian Billionaire Who Controls Your Beer, Condiments, & Whopper http://t.co/CbfdxNQLAP Long piece on Jorge Lemann $$ #Heinz $BRK.B Aug 30, 2013
  • New York to Seattle Buyers Tap Brakes After Rates Rise http://t.co/uU0NS9CiCU Rising prices & mortgage rates mean loan payments 2 high $$ Aug 30, 2013
  • US Bank Legal Bills Exceed $100B Bloomberg http://t.co/BklYyebbFV Just think how profitable they will be when the dust settles 😉 $$ Aug 29, 2013
  • Cheap Corn Deters Buyers in US Sugar-for-Ethanol Plan http://t.co/sAYPAt1G9g Corn scarcity becomes corn glut, reinforcing sugar glut $$ Aug 29, 2013
  • Why Wal-Mart Will Never Pay Like Costco http://t.co/EPVjeV0OvF $WMT has much wider diversity of products, so more workers @ lower pay $$ Aug 29, 2013
  • Why Is Chicken More Expensive? Ask McDonald’s http://t.co/iU7OzuIF8f When $MCD adds a new ingredient to their menu, drives prices higher $$ Aug 29, 2013
  • Xerox Can Fix Number-Switching Scanners, but Not Altered Docs http://t.co/6HfzO8IqtV Could b a lot of work 2 re-scan originals if u havem $$ Aug 27, 2013
  • JPMorgan Worth 30% More If Broken Up, KBW Says http://t.co/b5eJc14Lio Pure play financial institutions always get better valuations $JPM $$ Aug 24, 2013
  • Apple, Samsung, IBM, World’s Universities in Graphene Gold Rush http://t.co/riFRiMHAzN Crystalline Carbon 1 atom thick sheets are amazing $$ Aug 24, 2013
  • College is like gasoline, demand for it is inelastic. Thus any subsidy gets captured by the college, & taxes get eaten by gas consumers $$ Aug 24, 2013
  • The Real Reason College Costs So Much http://t.co/NJNV3Ksovg Richard Vedder explains how federal subsidies push up the price on college $$ Aug 24, 2013
  • djco_corresp-031513.htm http://t.co/VwvVLv7mZi Munger’s law firm explains y $DJCO shouldn’t b viewed as an investment company. Well done! $$ Aug 24, 2013

US Politics & Policy

 

  • Obama Is About 2Undermine His Mideast Doctrine http://t.co/VveJslt6LM Obama has mostly tried 2disengage US from Mideast, this reverses it $$ Aug 30, 2013
  • The Rising Cost of Social Security Disability Insurance http://t.co/4sEVmFKDfc SSDI’s trust fund runs out is 2016; 2EZ 2get on disability $$ Aug 29, 2013
  • And Next Year There Will Be an Eighth Budget ?Showdown? http://t.co/2nflqEZLPM Rate of budget growth slowed, but scope of govt expands $$ Aug 29, 2013
  • Regulators Ease Mortgage Rules http://t.co/LuEU9uY1Hz Swiss cheese regs destroy direct incentives 4 originators 2 produce quality loans $$ Aug 29, 2013
  • Regulators Back Away From Tougher Mortgage Rules http://t.co/4WQwGVNnF9 More capital needs to be held against exotic mortgage loans, good $$ Aug 29, 2013
  • Obama Meets Panel Reviewing US Surveillance Programs http://t.co/kjDsoD3K7D Repeal the Patriot Act; modifications r not enough $$ Aug 28, 2013
  • College Leaders Wary of Obama Plan Linking College Aid to Rank http://t.co/jw7K3X29TV Plan could hurt the very parties Obama wants 2 help $$ Aug 25, 2013
  • Samantha Power on the Duty to Intervene http://t.co/B4ttOrPB3T This argues that the US should be the cop of the globe 4 the worst things $$ Aug 25, 2013

?

Rest of the World

 

  • Sinopec-Apache Deal Shows China’s Resource Appetite http://t.co/90Yr1G9aUN China learns how 2negotiate minority stakes in oil properties $$ Aug 30, 2013
  • Hollande Draws Heat From Biz 4 Tax-Driven Pension Revamp http://t.co/62E5lKMHqr France?s tax burden is ~46% of GDP, 3rd highest in Europe $$ Aug 30, 2013
  • Scandinavia?s Weakest Nation Finds Welfare Habits Too Costly http://t.co/UCNH3umT7p Denmark looks forward, realizes it must cut welfare $$ Aug 30, 2013
  • The Abenomics Mirage: In Reality, Too Many Challenges? http://t.co/542B5V4JHw Japan imports on net so a lower yen doesn’t help much $$ Aug 30, 2013
  • Schaeuble Snubs Greek Plea for Direct Bank Recapitalization http://t.co/lCStBdF3Qc Perhaps Greece needs 2 establish effective taxation $$ Aug 29, 2013
  • Spaniards Fleeing Jobless Scourge Seek Jobs in Morocco http://t.co/pZZexcIzCY Can’t earn as much but can earn something as Spain shrinks $$ Aug 29, 2013
  • Start-Ups Fill Void Left by Spain?s 26% Unemployment Rate http://t.co/9a2RqRUG6i If u can’t work 4 someone else u can work 4 yourself $$ Aug 28, 2013
  • Czech Zero Percent Lending Rate Feeds Home-Buying Frenzy http://t.co/cWZ24eKjxb Bad things happen when there is seemingly free $$ available Aug 28, 2013
  • Vietnam Rises as Middle Power at Defense Summit http://t.co/tHVz8Yn4SP Wants to stay neutral btw the US & China, while protecting itself $$ Aug 28, 2013
  • Teachers Roil Mexico Capital http://t.co/qrQif3mpsY Maybe it’s time 2 move the capital out of Mexico City, to someplace more hospitable $$ Aug 28, 2013
  • Emerging-Market Rout Intensifies on Syria Jitters http://t.co/U4upWVYVAE Jitters affect oil mkt & it spills over in to weak emerging mkts $$ Aug 28, 2013
  • Fed Officials Rebuff Coordination Calls as QE Taper Looms http://t.co/kTaFgn7CwT Emerging markets whipsawed as US monetary policy shifts $$ Aug 28, 2013
  • Veteran Saudi Power Player Prince Bandar Works To Build Support to Topple Assad http://t.co/cXFO7hLG9W Islamic proxy war continues $$ Aug 27, 2013
  • Emerging Europe Is a Haven in Selloff http://t.co/OErr8eqJjt Hard to damage nations w/more orthodox fiscal policies, but still part of EZ $$ Aug 27, 2013
  • Emerging market slump highlights Fed’s global reach http://t.co/mxmfLY6ya2 The US sneezes & the world catches cold, again $$ Aug 27, 2013
  • Charlene Chu Interview with Goldman on China?s Credit Bubble http://t.co/ytHhrZYm7H Excellent Interview showing future China weakness $$ Aug 27, 2013

 

Other

 

  • Scientists Shed New Light on Black Holes http://t.co/oNyfGEJKHM The speed w/which gas is pulled toward a black hole repels some entering $$ Aug 30, 2013
  • Is It Evil to Send Your Kids to Private School??http://t.co/SljCeNm7qq Parents will always find ways 2keep children out of subpar schools $$ Aug 30, 2013
  • Age-Related Forgetfulness Tied to Diminished Brain Protein http://t.co/fFe2U2eqQw This may have some promise in reducing dementia $$ Aug 30, 2013
  • Definitive merger agreement between 2 business journalists http://t.co/Pup53ksizg Do some R&D, & create subsidiaries that will b spun off $$ Aug 30, 2013
  • How Haute Vegetables R Conquering $500 Tasting Menus http://t.co/QTAxKlwm1S Borage is a well-known medicinal herb; interesting 1st course $$ Aug 29, 2013
  • Six Reasons the US Will Dominate http://t.co/ZreqluzZJS Immigrants, more workers, entrepreneurship, labor flexibility, <Financing, strong $$ Aug 28, 2013
  • P2P lending pulls in big investors – should you bite? http://t.co/jyg3kdaSrr Soon 2 come, a peer2peer lending closed-end fund $$ #ohno #FTL Aug 28, 2013
  • Shoeshines Keep Wall Street in the Black (or Maybe Brown) http://t.co/LQNtODrhcP A unique institution stays alive on Wall Street $$ Aug 27, 2013
  • Sometimes I think Federal education policy is designed to weigh down the system, making it easier 4 private & home schools 2 outperform $$ Aug 27, 2013
  • Biggest Changes in a Decade Greet Students http://t.co/BIgJHbqiLN Some Teachers, Parents Push Back on New Standards “Common Core” $$ Aug 27, 2013
  • Home Births on the Rise for New York Families http://t.co/MYxaaeEWua Fascinating trend, though I think the best is a midwife @ a hospital $$ Aug 27, 2013
  • Midwives provides far better care than doctors w/normal deliveries, & they r cheaper. Being @ a hospital provides insurance if trouble $$ Aug 27, 2013
  • Are You Ready for the Post-College SAT? http://t.co/WyscN8A7W6 College is not valuable to some employers -> a new test 2 show your smarts $$ Aug 27, 2013
  • Regarding that last tweet, could testing replace college? Credentialing is important, but do we need to waste four years to credential? $$ Aug 27, 2013
  • Jail Becomes Home for Husband Stuck With Lifetime Alimony http://t.co/Mb4Q8Q0PjH Debtors prison returns in a new form $$ long article Aug 27, 2013
  • Muriel Siebert, First Woman to Buy Seat on NYSE, Dies at 84 http://t.co/qzeE9csU2K Used to have an account w/her firm; good company $$ Aug 27, 2013
  • Ben Franklin Gets a Makeover http://t.co/Rxm3ipFY0g Ben Franklin owned slaves?! Whouda thunk it! New presentation about a complex guy $$ Aug 25, 2013
  • Dishwashers Beat Clothes as US Moms Use Hand-Me-Downs http://t.co/cbcn0ENrp1 People buy things w/longer-term value, reduce luxuries $$ Aug 25, 2013

 

PPACA / Obamacare

 

  • A New Kind of Insurance Head-Scratcher: Estimating Future Income http://t.co/YeW19BKNhf Incentive will b2 under-report until checked $$ Aug 30, 2013
  • The Young and the Healthy http://t.co/PuODKsJBSZ One more calculator 4 Obamacare subsidies 4 young & not well-paid $$ Old win, young lose Aug 30, 2013
  • Senior Discounts http://t.co/Do37iNPq7I Interesting illustrative calculator on premium subsidies under Obamacare. Incentives to earn less $$ Aug 30, 2013
  • Thus PPACA will have an incentive 2 destroy working, & the exchanges will fail, as they will only attract the sick, young ppl stay away $$ Aug 30, 2013
  • Also, look at this graphic http://t.co/WTV8HAcVVZ As incomes go from 25K to 55K, subsidy is lost & an implied 17% tax from the loss $$ Aug 30, 2013
  • Subsidies for Older Buyers Give Health Insurers a Headache http://t.co/0eOfVj33XU Subsidies will will older poor in2 exchanges, not young $$ Aug 30, 2013

 

Harbinger Group Life Insurance IPO
?? Falcone Insurer Said to Seek $1 Billion Valuation in IPO – Bloomberg http://t.co/RoHy0ODzQu & my tart comments: http://t.co/JSu9QvtXhf $$ Aug 30, 2013

  • Harbinger’s insurance unit files for $100M IPO http://t.co/72DBoMSG6C $HRG pays itself a dividend; dig the 28pp of risk factors @ the SEC $$ Aug 29, 2013

 

Market Impact

 

  • Pimco Sees Taper in Worst MBS Slump Since 1999 http://t.co/UdXVCkajVo Bond market summary, particularly noting taper effect on MBS market $$ Aug 30, 2013
  • Some IPOs Aim for Small Investors http://t.co/3hh47lfQ6K Keep your hand on your wallet, alternative stock distribution methods untested $$ Aug 30, 2013
  • Currency Spikes at 4 PM in London Provide Rigging Clues http://t.co/fyG78r3RhI All human systems r gamed; need 2 acct 4 that w/benchmarks $$ Aug 28, 2013
  • How ?black squirrels? infested Wall Street http://t.co/6CIVfJcpAF Efforts to level playing field made it more opaque & hazardous $$ #complex Aug 27, 2013
  • Cyclical Stocks Looking Historically Cheap http://t.co/FomqlE3ZDq Yes, cheap. What will happen 2 cyclical earnings if the economy slows? $$ Aug 25, 2013

 

Central Banking

 

  • Fed’s IG says central bank violated document rules http://t.co/YCtbIbhfAJ Issued minutes of policy meeting a day b4 the scheduled release $$ Aug 30, 2013
  • Did Fed?s Forward Guidance Backfire? Paper Says Probably http://t.co/C4Ew7T2AXR The idea that clear Fed communication works is unproven $$ Aug 25, 2013
  • Summers as Obama Voice of Authority Rides Car Rescue in Fed Race http://t.co/EKKOnRhvq1 Good piece on y Obama may pick Summers 4Fed Chair $$ Aug 25, 2013

 

Wrong, Etc.

  • Wrong: CLO Rule Aimed to Pass Retention to Banks Won?t Work, RBS Says http://t.co/KkQQ8l2lqw Will shrink the # of issuers, that’s not bad $$ Aug 29, 2013
  • Bad title: Why Is Vladimir Putin Acting So Crazy? http://t.co/ILtxIFNOSO He’s acting rationally in response to changing conditions $$ Aug 29, 2013
  • Wrong:Will Obama Make the Fed Even Worse? http://t.co/YZblnIKzOe Not well argued. More about his view $$ policy is 2 tight, less about Obama Aug 27, 2013
  • Sort of: The Strong Case for Optimism About US Growth http://t.co/5LJgQuli4v Except it is optimism after 5 more years of deleveraging $$ Aug 27, 2013

?

Retweets, Replies & Comments

  • RT @EddyElfenbein: Happy 83rd Birthday to Warren Edward Buffett @WarrenBuffett. The Dow was at 240.42 eighty-three years ago. Aug 30, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Aug 30, 2013
  • Thanks @OGMarcusC @Metalbanker for being top new followers in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 30, 2013
  • @ledbetreuters If you had your own website, & had a Google Page Rank over 5, u would get around two of those per week. Very pesky. Aug 30, 2013
  • RT @azizonomics: Nobel War Prize Aug 30, 2013
  • RT @ianbremmer: Knock knock. Who’s there? The international community. The international community who? Precisely. Aug 30, 2013
  • RT @treehcapital: Yet another reason to love New Zealand @pkedrosky: New Zealand bans software patents http://t.co/6ah7N84QtA Aug 29, 2013
  • Thanks @researchpuzzler @AndreCimini for being top engaged members in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 26, 2013
  • @alisonforns And I see the glass as 70 fewer than 140. What a wonderful world! Aug 26, 2013
Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Obamacare

 

  • Boehner Tells Caucus House Will Keep Fighting Health Law http://t.co/VZeSkA5Jrq If the company mandate is delayed, y not the individual 1 $$ Aug 24, 2013
  • California Health Exchange Might Face Online-Enrollment Delay http://t.co/5nTQeDFEAR More glitches as we get closer to Obamacare fiasco $$ Aug 24, 2013
  • Jeffrey Singer: The Man Who Was Treated for $17,000 Less http://t.co/dTGoBndvj1 You have to understand how negotiable medical costs are $$ Aug 23, 2013
  • UPS to End Insurance Coverage for 15,000 Working Spouses http://t.co/Ndp3ptfaUD This is the future as Obamacare comes into existence $$ Aug 22, 2013
  • Jeffrey Singer: The Man Who Was Treated for $17,000 Less http://t.co/ymcmo3b8dg First party payment reduces health costs, not ins/govt $$ Aug 22, 2013
  • Republicans in Echo Before Big Burn Defy Affordable Care http://t.co/DwuUuc7FvL In this era, it probably helps the Reps, LBJ’s era not $$ Aug 22, 2013
  • Obamacare exemption ? none dare call it treason http://t.co/TdZ8z7sTIk Congress and Administration r exempt from the PPACA $$ #FTL Aug 20, 2013
  • GOP keeps needling Obamacare in key Senate states http://t.co/rXg2MsHiJe Complexity of PPACA makes it its own worst enemy; ez 2 thwart $$ Aug 19, 2013
  • Norquist Says Obama to Take Health Delays, Avoid Shutdown http://t.co/lKKhe0I8zo House can block things, Senate cooperation unlikely $$ Aug 17, 2013
  • Obama Suspends the Law. What Would Lincoln Say? http://t.co/uxQRHyhFtM Article made me sympathize with Lincoln. Could Obama be Impeached? $$ Aug 17, 2013

 

Wrong

 

  • Wrong: Why the US Power Grid’s Days Are Numbered http://t.co/sSjDoiXi0T Overstates the green case. More difficult to dismantle grid $$ Aug 24, 2013
  • Wrong: How To Invest Like Carl Icahn http://t.co/61croVtW0J U can’t invest like Carl Icahn b/c u can’t b big enuf 2 bully mgmt teams $$ $IEP Aug 23, 2013
  • Word to Fed: Less Talk, More Action http://t.co/EuWfo30Ilg When u have 2 re-explain what u r doing a # of times, u probably don’t get it $$ Aug 22, 2013
  • Wrong: Janet Yellen called the housing bust and has been mostly right on jobs http://t.co/wHq8SyYUT2 Yellen did not call housing bust $$ Aug 19, 2013
  • Wrong: Summers-led Fed might raise rates faster than Yellen http://t.co/GBD0jd2X0N Forces being dealt w/r larger than individual ideas $$ Aug 19, 2013

 

Politics & Policy

 

  • Has Eric Holder Found Wall Street?s Nightmare? http://t.co/spsgAgaFGq 2 early 2 say; tough to prove that people had bad motives vs stupid $$ Aug 24, 2013
  • Ivory Tower Types Fall for Bigger Inflation Fix http://t.co/alOdKibbY0 Inflation is tough to eliminate once it gets entrenched $$ Aug 22, 2013
  • Obama to Propose College Ratings System on Bus Tour http://t.co/9W4oHqAZuE Haven’t we distorted incentives on college enough already? $$ Aug 22, 2013
  • Secret Court Faulted NSA for Collecting Domestic Data http://t.co/u5ZfLMGSgt If govt can’t tell us about it, they shouldn’t b doing it $$ Aug 22, 2013
  • Why Science and Politics Don?t Mix http://t.co/yfpdWVgsD1 Science is compromised when observers cease 2b neutral & overstate conclusions $$ Aug 22, 2013
  • Justice Department Plans New Crisis-Related Cases http://t.co/S8CkRvgUS8 nothing serious here, just late grandstanding & posturing $$ Aug 21, 2013
  • New Details Show Broader NSA Surveillance Reach http://t.co/YheueW5yH0 Giving up liberty 4 security means that we will have neither $$ Aug 21, 2013
  • More Than Half of U.S. College Students Get Federal Aid http://t.co/mWuvnqKdUp If we reduced the aid given 2 students, tuition would fall $$ Aug 20, 2013
  • Fannie Mae, Freddie Mac Ignoring Write-Offs, Report Says http://t.co/DFpqBCQg8M Reported earnings may b overstated, as dud loans persist $$ Aug 20, 2013
  • Raising Kids? Your Taxes Are Far Too High http://t.co/DxMfAii5rQ Especially counting value of kids future contributions 2 entitlements $$ Aug 20, 2013
  • http://t.co/8hiwajBdQY Congress gets a bunch of general and basic nostrums about how financial risk modeling is done and implemented $$ Aug 20, 2013
  • Fed Finds 18 Large Banks Weak in at Least One Capital Area http://t.co/js2t2GA4QD Fed’s study shows moderate knowledge of risk mgmt $$ Aug 20, 2013
  • Greenwich Stilt Houses Foreshadow Impact of New FEMA Maps http://t.co/k1NCEJu3QH Think of the taxpayer subsidy from premiums that r2 low $$ Aug 20, 2013
  • Treasury Faces Coupon Conundrum With 5Yr Sale, Wrightson Says http://t.co/BlkOiDQUc2 We have computers now, not everything has 2b eighths $$ Aug 20, 2013
  • Last Bernanke Years Shows No Sign of Buyer?s Remorse http://t.co/Fxn65Dplc6 Why should he? Providing liquidity easy; taking it back hard $$ Aug 20, 2013
  • The other part of the story is that people who work have a purpose, and that makes them happier. Shame about younger people not employed $$ Aug 20, 2013
  • Mailman at 72 With America?s Longest Route http://t.co/dO83WuaDhl Long story showing future, where old people keep working til they die $$ Aug 20, 2013
  • NSA broke privacy rules thousands of times per year, audit finds http://t.co/ktru7qsjpP NSA search abuses r not rare; we need to end NSA $$ Aug 17, 2013
  • The Baby Penalty http://t.co/JrFZ7FdznR Female PhDs who have children lose opportunities. True 4 all who take time from work 4 family $$ Aug 17, 2013
  • Teachers Face License Loss http://t.co/xwUNt0eXi5 This almost never happens. The teachers’ unions always find a way 2 protect their own $$ Aug 17, 2013

 

 

Rest of the World

 

  • It Looks Like 1998 Again in China http://t.co/7iMW87Dwi7 Excess capacity to export what world doesn’t need plus high financial debts $$ Aug 22, 2013
  • ‘Leftover women’ in China face tough choices in looking for love http://t.co/AFcEc1jNy5 Women like2marry up, which means many won’t marry $$ Aug 21, 2013
  • Who Is Ali Khamenei? http://t.co/sRFb9Vx1Bw Long & nuanced article on the supreme leader of Iran – History, views, influences, & theories $$ Aug 20, 2013
  • Mexico’s Pemex Looks to Tap U.S. Shale http://t.co/pNybLXhEkl This doesn’t look like a smart idea; most good business is incremental $$ Aug 20, 2013
  • Allies Thwart America in Egypt http://t.co/MaZFQgiytT Israel, Saudis and UAE Support Egyptian Military Moves $$ #choosefreedomvsdemocracy Aug 20, 2013
  • Israel Boosts Ties With Egyptian Army as US Mulls Cuts http://t.co/kCEBsYkn9r Politics makes strange bedfellows $$ Aug 20, 2013
  • Al Qaeda ‘rat line’ from Syria to Iraq turns back against Assad http://t.co/HZT5GIq1Tv Actions taken against US in Iraq now harm Assad $$ Aug 20, 2013
  • Bankers Supplanted by Elves as Iceland Chases Cash http://t.co/0Y5VaiARla A place where allowing banks to fail worked well $$ Aug 20, 2013
  • Central-Bank Moves Blur the View http://t.co/jHDD9J3YNK Bodes well 4 their bonds, tough 4 the stocks of their exporters, importers ok $$ Aug 24, 2013
  • Potash Rift Seen Lasting as Asia Sales Said to Rile Uralkali http://t.co/ZukaWiW93y Interesting article reviews potash cartel history $$ Aug 22, 2013
  • Gold Rout Seen Bottoming by Analysts as China Buys http://t.co/mMaG8Jaknq & China Gold-Mine Deals at Record http://t.co/vONBXclnCB $$ Aug 22, 2013
  • Regulatory Concern Grows along with Surge in Interbank Business http://t.co/Y0oLNP3PK1 Surge in China Interbank lending is worrisome $$ Aug 20, 2013
  • Egypt’s Former President Mubarak May Be Freed http://t.co/YbrJ7Poanv A logical outcome, 1 that shows the Army is playing “for keeps” now $$ Aug 20, 2013
  • In classified cyberwar against Iran, trail of Stuxnet leak leads to White House http://t.co/WqTyDR1dqV Will this lead 2 anything negative $$ Aug 19, 2013
  • Last of Zuma?s Main Critics Sidelined as Vavi Suspended http://t.co/ngu2QOw2pq South Africa traded one oligarchy for another $$ Aug 17, 2013
  • The Dutch, Europe’s apostles of austerity, feel the economic pain http://t.co/W9ikIwOHN8 Paying the piper 4 taking on 2 much debt $$ Aug 17, 2013
  • Easy Credit Dries Up, Choking Growth in China http://t.co/7eazmWiqGK Payoff 4 malinvestment may b arriving. Japan 1989 -> China 2013 $$ Aug 17, 2013

Market Impact

 

  • Market Size Complex Systems = More Glitches http://t.co/6Gkq77izIJ We can reduce glicthes if we reduce complexity & choice 4 large $$ mgrs Aug 24, 2013
  • Americans don?t know anything about interest rates & portfolios http://t.co/V2rqmydGq1 Investment returns r magic 2retail $$ @reformedbroker Aug 22, 2013
  • Hedge Funds Severely Underperforming This Year http://t.co/PLQBp1ssb1 Net exposure relatively high, but heavily shorted stocks rally 33% $$ Aug 22, 2013
  • Low-volatility ETFs may not be what they used to be http://t.co/p4zpWCdQRj Any investment strategy can b overused, & returns vanish $$ Aug 21, 2013
  • Looking for value: When the child outperforms the parent http://t.co/gmylpI7pC8 Spinoffs r underanalyzed companies w/incentive 2 focus $$ Aug 21, 2013
  • Bond Trading Hampered as Buyers Retreat to Crowded Exits http://t.co/EBj9OFkhqW Overstates the degree dealer inventories affect prices $$ Aug 21, 2013
  • CLO Refinancings at $50 Billion Seen Rewarding Riskiest Issues http://t.co/Ld77dfXKxB Feels like 2006 in credit craziness $$ Aug 20, 2013
  • Repo Market Decline Raises Alarm as Regulation Strains Debt http://t.co/fFydHkauRI Repo market getting less liquid, that’s not so bad $$ Aug 20, 2013

 

 

Companies & Industries

?

  • Buyout of $AIG Unit Is On the Rocks http://t.co/zb7EftICWg Difficult to overstate how sensitive ILFC profits r2 cheapness of financing $$ Aug 22, 2013
  • Water + Sunshine = Fuel as Lab in California Chases Dream http://t.co/Nqd5eVn6Ar Dream indeed. Call me a skeptic on the science here $$ Aug 22, 2013
  • A New Spate of Deaths in the Wireless Industry http://t.co/EEVOPXlUc7 Every death is tragic, but w/deaths <20/yr, that doesn’t seem high $$ Aug 22, 2013
  • Kodak Reorganization Approval Affirms Move From Cameras http://t.co/wUX4KrfsGR Unsecured creditors get 4-5% of their claims, stock gets 0 $$ Aug 21, 2013
  • Problem for Bezos: Mall Becoming Cheaper Than Amazon http://t.co/tYs8IFQ48Q Who knows? Maybe $AMZN will have to earn $$ to exist. #nonprofit Aug 20, 2013
  • The busiest acquirer you haven’t heard of http://t.co/RMHEieOBCW Many acquisitions in a short time is usually a recipe for disaster. $$ Aug 20, 2013
  • Shale Grab in U.S. Stalls as Falling Values Repel Buyers http://t.co/BYEQHshJ8T Anytime there is a boom, prices overshoot, then writeoffs $$ Aug 20, 2013
  • What Tim Cook and Apple should do with all that cash http://t.co/xHA5hdDGmv Harder than it sounds, most of the $$ trapped abroad, bond deal Aug 20, 2013
  • The 1975 Buffett memo that saved the Washington Post’s pension http://t.co/Qqz2IaMJni Buffett was always a smart guy; prescient in 1975 $$ Aug 19, 2013
  • Cisco and the Search for New Life http://t.co/C2lqAabQvb Companies w/strong core businesses have a hard time expanding into new business $$ Aug 17, 2013
  • Rail-Truck Shipments Reveal Holiday Sales Clues http://t.co/fEWjKfTd13 Holiday sales may rise, higher volume of goods transported in 2013 $$ Aug 17, 2013
  • Fixed Indexed Annuities Merit Caution http://t.co/kdT27o1bMC Law should give contractholders right 2 full value withdrawal if transferred $$ Aug 17, 2013
  • Oil-Pipeline Cracks Evading Robotic ‘Smart Pigs’ http://t.co/c7d8qMuP6f If cracks r along the welds, they don’t get detected easily $$ Aug 17, 2013

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Other

 

  • JPMorgan Sub-New Normal Growth Seen Vexing Next Fed Chief http://t.co/gFB1O6s6o0 New Fed Chief will face economy traveling @ stall speed $$ Aug 23, 2013
  • Economists Need to Admit When They?re Wrong http://t.co/GSX4QDPKuf Crisis caused by a huge rise in private debt; economists missed that $$ Aug 22, 2013
  • Green Bay: More Legends Than Streets http://t.co/eGukXTOlvd Smallest franchise city has more heroes than streets to append their names $$ Aug 22, 2013
  • Abandoned Dogs Roam Detroit in Packs as Humans Dwindle http://t.co/AJd1lBtxKG This is strangely fitting; Detroit slowly becomes 3rd world $$ Aug 21, 2013
  • Eating of Sausages http://t.co/Nwp7mpZZvY “no Christian is bound to do those things which God has not decreed.” Of Calvinism old & modern $$ Aug 20, 2013
  • Seth Lipsky: Ben Bernanke’s Anger and the AIG Case http://t.co/EIxoFh4jwu Questionable legal ground4the Fed’s takeover of AIG 2b explored $$ Aug 20, 2013
  • Why An M.B.A. Isn’t Good Enough Anymore http://t.co/P6JKKWoP8R High costs, changing demographics, technological change-> reinvent the MBA $$ Aug 20, 2013
  • Broker Audits Marred by Conflicts of Interest, Watchdog Says http://t.co/00kRqPx3xm Deficiencies >95% of brokerage audits it reviewed $$ Aug 20, 2013
  • What’s Ailing America’s Cattle? http://t.co/eTaMLTK1zc Scientists Suspect Livestock-Feed Additives Are Behind Distress $$ Be careful Aug 20, 2013
  • Student Test Scores Rose When Teachers Retired Early http://t.co/su46ULkSKm Teachers peak in effectiveness after 5-10 yrs of experience $$ Aug 20, 2013
  • Hybrid Bond Gamble Pays Off as Stimulus Spurs Gains http://t.co/O2KMEkGHDm Paid off for now, but these hybrids sting w/higher probability $$ Aug 17, 2013
  • John Laporte, T. Rowe Price Manager Who Beat Peers, Dies at 68 http://t.co/DcVjjdwE8w Pretty certain I met him @ Baltimore CFA, good guy $$ Aug 17, 2013
  • Are College Costs Reaching a Breaking Point? http://t.co/jF7uod3s6q Possibly, if Federal aid drops & fewer people go to college $$ Aug 17, 2013
  • New Software Forces You to Pay Attention During Company Training http://t.co/KMDa0N54Ju Next, they’ll give you drug that makes u like it $$ Aug 17, 2013
  • Price Manipulation Includes Silver and Gold http://t.co/n1GDExJFz4 When prices r fixed by survey or transactions, games will b played $$ Aug 17, 2013
  • Francis Ouimet’s U.S. Open Victory That Changed the Game Forever http://t.co/I6Gg0BIBmU Meet Francis Ouimet, the amateur who won US Open $$ Aug 17, 2013
  • A Chance to Own a Home for $1 in a City on the Ropes http://t.co/b6InU728br Get your own home in Gary, Indiana for $1 $$ Aug 17, 2013
  • How a Black Hole Really Works http://t.co/H80JnUplKE Scientists watch black hole at center of Milky Way eat a cloud of gas $$ Aug 17, 2013

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Comments, Replies, and Retweets

  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Aug 23, 2013
  • Commented on StockTwits: ILFC very different than NetJets. $BRK.B capable of buying ILFC, but Buffett won’t pay to… http://t.co/wa4vHaf3I6 Aug 22, 2013
  • Thanks @dpinsen @ReformedBroker for being top engaged members in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 22, 2013
  • Thanks @pelias01 @TopInvestBlogs for being top engaged members in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 22, 2013
  • Thanks @howardlindzon @moneyscience for being top engaged members in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 22, 2013
  • Thanks @brasil247 @JerseyDemic for being top new followers in my community this week 🙂 | insight by http://t.co/sern3wLA13 Aug 20, 2013
  • “Many acquisitions in a short time is usually a recipe for disaster.” ? David_Merkel http://t.co/6Qch6bCndG $$ Aug 20, 2013
  • @pdacosta FWIW, I thought the document was amateur in discussing financial risk management http://t.co/ncoMMMv3oG Open 2other thoughts $$ Aug 20, 2013
  • @buzzmerk @StevStiffler @truedat157 @pcyansee the greater Q is why the Mars Corp hasn’t sued him for trademark infringement- ruins the brand Aug 20, 2013
  • Thanks @AboveAvgOdds @Nonrelatedsense for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • Thanks @japhychron @The_Analyst for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • Thanks @GaelicTorus @AndreCimini for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • Thanks @ReformedBroker @dpinsen for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • Thanks @pelias01 @TopInvestBlogs for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • Thanks @howardlindzon @moneyscience for being top engaged members in my community this week 🙂 | insight by http://t.co/V4fE5CrHI4 Aug 19, 2013
  • “Buffett would have made a very good actuary, and with a bonus: he can communicate complex concepts?” ? Merkel http://t.co/IMKXael1nL $$ Aug 19, 2013

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Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Companies & Industries

 

  • Odyssey Hits Wall as Honda Redesigns Minivan to Ace Test http://t.co/6VyK2N2EcO $HMC goes all out to reduce crash injuries 4 2014 Odyssey $$ Aug 16, 2013
  • Fairholme Fund May Increase Bet on Fannie, Freddie http://t.co/EOj8Z9SCzg BB reopens fund 2 get more buying power 4 F&F. Wouldn’t do it $$ Aug 16, 2013
  • Warren Buffett Stake in Suncor Energy, Much More Than It Seems http://t.co/ULDMXqYAnt $SU will be producing high cost oil 4a long time $$ Aug 15, 2013
  • Mall Owners Entice Hispanic Shoppers http://t.co/k42J96Nhxc Temporary stopgap 4 malls being hollowed out by retail over the internet $$ Aug 15, 2013
  • Losing Faith in Gold From Ghana to Vancouver Proves Rout http://t.co/K6VcC7Duyj More high cost mines come out of production as gold falls $$ Aug 15, 2013
  • The iCahn Effect: Apple’s Market Cap Jumps by $17B After Tweets http://t.co/8qb0rUWjCR Don’t c how $1B should move a stock $17B $$ $AAPL Aug 14, 2013
  • Y Food Companies Are Fascinated by the Way We Eat http://t.co/NhIRtprRWj Do u like 2 chew, crunch, smoosh or suck? Food companies study u $$ Aug 14, 2013
  • Financials near to regaining S&P 500’s top spot http://t.co/fgSKGOrfyC We do not learn, we do not learn, we do not learn, we do not learn $$ Aug 13, 2013
  • Endurance Welcomes Fred Cooper 2Head US Financial Institutions Insurance Practice http://t.co/XpQcxwYwJS Picking up nickels… $$ FD: + $ENH Aug 13, 2013
  • Heinz announces layoffs in Pittsburgh and Canada http://t.co/VG3WI8OTfs Now that the merger has closed, the cost rationalization begins $$ Aug 13, 2013
  • Funny in a way: pricing rationality & profits flow to hard disk makers once the industry consolidated down to three players $$ Aug 13, 2013
  • WD? Founds New Storage Association To Promote The Critical Role Of Magnetic Storage Technologies http://t.co/4jKYDyGGb2 FD: + $WDC $$ Aug 13, 2013

 

Rest of the World

 

  • India Shares Slump, Rupee Sinks to Fresh Low http://t.co/cfEnRd5EjQ Central Bank tightens credit conditions- Rupee still falls & stocks2 $$ Aug 16, 2013
  • How Mexico Ended Political Gridlock With a Pact http://t.co/GjNEfA0Ela How the PAN & PRI managed to work together & get most mutual goals $$ Aug 16, 2013
  • What Obama Misunderstands About Egypt http://t.co/UAKXAQBOPs No one worthy of support here, as Egypt slides into a situation like Syria’s $$ Aug 16, 2013
  • Cayman to Singapore Gain as Rules Stump Clinics http://t.co/giudbhHATR Medical Tourism looks elsewhere as India makes things hard $$ Aug 14, 2013
  • Petrobras Downgrade Looms as Slump Sinks Rating Outlooks http://t.co/EpRahHggSF Brazilian corporate sector got too aggressive w/debt $$ $PBR Aug 13, 2013
  • Death of 75-Year Monopoly Can?t Come Soon Enough: Mexico Credit http://t.co/wqfnynnYkP PEMEX monopoly lasts 75 yrs, dies in a few weeks? $$ Aug 13, 2013
  • Japan Inc. Profit Doubles to Add Support to Economic Rebound http://t.co/xv5dPxlRHO Sends $$ from consumers 2 exporters 2 invest abroad Aug 13, 2013
  • Mexico Plans Oil Reserve Sweetener to Lure Exxon, Chevron http://t.co/Ol0sGlse9h Will allow companies 2count reserves from profit-sharing $$ Aug 14, 2013
  • Buffett-Style Dinner Auctions Lure Chinese Seeking Just Society http://t.co/7dK9W52Yhe Long article on odd business seeking a freer China $$ Aug 14, 2013
  • What Brazilian Slowdown? Petrobras Maxes Out Refining Capacity&Imports Oil2Meet Demand http://t.co/0FsI0V6V27 $PBR Milked by Brazil govt $$ Aug 13, 2013

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Bond Markets

?

  • Confident Consumers Step Up Their Borrowing http://t.co/QkD3Xss4NS Auto Loans Post Largest Gain in 7Yrs, as Total Consumer Debt Declines $$ Aug 16, 2013
  • California Sells $5.5B in Bonds http://t.co/TbUGTpmTk7 Better fiscal mgmt, maybe, at least it is not Michigan. Liquidity is abundant $$ Aug 16, 2013
  • Muni Investors Make Michigan Pay http://t.co/zCWMx5Ba2a To get a muni deal done in Michigan, you need extra yield & guarantees/covenants $$ Aug 15, 2013
  • Summer Lull Draws Investors to Riskier Debt http://t.co/08H0vfFj1b Feels like time to begin peeling back credit risk $$ Aug 13, 2013
  • Bond Hubris Overwhelms Fed in Riskiest Credit-Market Sectors http://t.co/WUKgfpse77 No free lunch; Fed’s asset inflation will mean-revert $$ Aug 13, 2013
  • Michigan Safety Net for Boomers Frays on Bankrupt Detroit http://t.co/tTso4JMxTR What happens when u make 2 many promises vs tax base $$ Aug 13, 2013

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Central Banking

 

  • Fed’s Yellen Says Stance on Banks Hardened http://t.co/KZIfgPncaN Yellen tries 2 differ from Summers, but bank regulation was weak 2003-8 $$ Aug 13, 2013
  • Next Fed Head Should Meet the Bernie Sanders/Elizabeth Warren Standard http://t.co/xM9MF71dvM Questions aren’t realistic about $$ policy Aug 13, 2013
  • Yellen, Fischer Among Participants at Jackson Hole This Year http://t.co/MBui5Hfc3y Bernanke not attending as he slips into the shadows $$ Aug 13, 2013
  • Rand Paul on Republicans’ Voter Appeal and the Federal Reserve http://t.co/oVdaavHWsj Can we find another Reagan, who united the GOP? $$ #no Aug 13, 2013

 

Market Impact

?

  • Hundred-Dollar Stocks Double as US CEOs Dismiss Splits http://t.co/OOmXdpWSrU With trading costs so low, y do we need splits anyway? $$ Aug 15, 2013
  • How to Invest Like Seth Klarman http://t.co/JDxW9VbROs Easier said than done. Who has the conviction 2 sit on $$ when opportunities r poor? Aug 13, 2013
  • Greater &lesser rotations http://t.co/XZ6D4CgIZq “no evidence that retail investors r very overweight bonds or very underweight equities” $$ Aug 13, 2013
  • Will Mom and Pop investors blow it again? http://t.co/95lZYtIZ6u @BrettArends on retail $$ coming back into stocks; time 2b careful Aug 13, 2013

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Politics & Policy

?

  • What We Lose if We Give Up Privacy http://t.co/ZOddurR51k When 4th Amendment rights erode, 1st Amendment rights follow, eg, free speech $$ Aug 16, 2013
  • Free Work Entices Businesses to Hire Long-Term Unemployed http://t.co/Lhemn5JIWp Try b4u buy lets employers figure out who they like $$ Aug 15, 2013
  • Problems With Authority http://t.co/JjIgnIJVEh Obama ignores unusual writ of mandamus, which compels the govt 2fulfill a legal obligation $$ Aug 14, 2013
  • Everything you know about immigration is wrong http://t.co/UpHiI0Wwfd Militarizing the border did not stop the flow in, did stop flow out $$ Aug 13, 2013
  • Encryption App Silent Circle Shuts Down E-Mail Service ‘To Prevent Spying’ http://t.co/95KCJt80mH Destroying data 2 preserve secrecy $$ Aug 13, 2013
  • Eric Holder Owes the American People an Apology http://t.co/07JtmV95QA Vastly overstated the efficacy of mortgage relief programs $$ Aug 13, 2013

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Housing

 

  • Report: Half of All Homes Are Being Purchased With Cash http://t.co/p9GF4dOBUz Good sign. More equity means greater sustainability $$ Aug 15, 2013
  • Baltimore Foreclosures Surge Again as Legal Logjam Breaks http://t.co/xphbxvRXjv Foreclosures take longer 2work out in judicial states $$ Aug 15, 2013
  • Why Home-Price Growth Will Slow http://t.co/IZaE08udfI Prices up, mortgage rates up, fewer distressed homes available 4 sale $$ Aug 13, 2013

 

Other

 

  • Mom, Dad, Sorry I Was So Expensive http://t.co/VakZSkmE3r If u think having children is expensive, imagine the $$ of a society w/out them Aug 15, 2013
  • DNA Sequencing of Tumors Brings Hope of New Lung-Cancer Drugs http://t.co/YRul3Gfiva Costs high, distinguishing between diff cancers worx $$ Aug 13, 2013
  • Companies Ease Up on Non-Compete Agreements http://t.co/iEhtgQ7qjq Restraint of Trade laws also make it difficult to enforce non-competes $$ Aug 13, 2013
  • Overhaul Proposed for Annual Audit Reports http://t.co/8LAgJf5rrU Could b good 2 get past the the present binary pass/fail $$ Aug 13, 2013
  • Stocktwits ? Happy 5th Anniversary http://t.co/AQ8vI1kOsC @howardlindzon extols efforts made as they r the premier social investing site $$ Aug 13, 2013
  • Browser wars: Chrome rules the web http://t.co/QoGqVlVNcI The sun never sets on the Empire of Google’s Chrome; IE dying, Firefox choking $$ Aug 13, 2013

 

On Fiduciaries

  • On brokers as fiduciaries, choose: mixed advice, paid for by commissions, best advice, but u have to pay more 2a fiduciary, or no advice $$ Aug 13, 2013
  • You Can’t Afford Your Broker, at Any Price http://t.co/C46ndiTx6U by @asymmetricinfo on holding brokers 2a fiduciary standard $$ Aug 13, 2013
  • Look Who?s Locking Horns Over Retirement Accounts http://t.co/xSRFtbFndD @jasonzweigwsj tells us 2 act as our own fiduciaries or hire one $$ Aug 13, 2013

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Wrong

  • Wrong: Don?t Kill Fannie Mae http://t.co/JqDk0kNJM5 People forget the incredible losses on prime mortgages when housing prices fell $$ Aug 15, 2013
  • Dumb: Retirees in Enemy Territory Go Door-to-Door on PPACA http://t.co/4xSgHH2qNL Won’t work unless young & healthy sign up on exchanges $$ Aug 14, 2013
  • Wrong: Your mortgage documents are fake! http://t.co/rErbfMzP7B Mistakes procedural justice 4 real justice. U don’t pay, U get foreclosed $$ Aug 13, 2013
  • Wrong: In defense of the 30-year mortgage http://t.co/cc9kgtRJpM Over-investment in housing & levers up the economy, creating fragility $$ Aug 13, 2013

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Replies, Retweets, & Comments

  • RT @TheLimerickKing: QE has not led to inflation It’s now a much worse situation Velocity’s low But risk assets grow So now it’s just wealt? Aug 15, 2013
  • Commented on StockTwits: No, I don’t. Ultimately all assets boil down to their cash flows. This doesn’t change th… http://t.co/xjshS62La2 Aug 14, 2013
  • A shout-out to DarkCloud @p0stk0m for being my 8,000th Twitter follower. Thanks a lot, & thanks to all who follow me $$ Aug 14, 2013
  • @marketfolly @EquityNYC That is a very good point, and I internally noted it, but did not comment. I should have. 🙁 $$ Aug 14, 2013
  • “Congratulations, Howard. Well done, particularly the way you survived Twitter’s $ grab.” -Merkel http://t.co/tOlvvEqy0P @howardlindzon $$ Aug 12, 2013

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Against Government-Subsidized 30-Year Mortgages

Against Government-Subsidized 30-Year Mortgages

Posted on by David Merkel

I don’t think that those who disagree with me are dumb.? It is often that the person in question is bright, but has presuppositions that disagree with mine.? I am for the most part a libertarian.? Thus I don’t often agree with liberals, or the pro-big-business wing of the Republican party.? Most of the time, I also favor regulation of financial companies, because when too many of them borrow short and lend long, something horrible happens to the economy as a whole.

That is the main reason why I think government encouragement of 30-year mortgages should end.? It increases leverage in the economy, and makes it more susceptible to crises.? Societies that have a lot of debt tend to be more fragile.? We forget how certain we were that Fannie and Freddie could never fail.? I was one of the few people that argued the opposite at RealMoney.com.? (Sadly, those posts are lost.)? F&F assumed that there would never be a sustained period where housing prices would fall across the US as a whole.? When prices began to fall, their business model was destroyed, because they were levered very high.

30-year mortgages allow some to buy houses that they should not buy.? If you have to have a 30-year mortgage instead of a 15-year mortgage, you are buying too much house for your income.? We spend too much money as a society on housing, and we take on too much debt as a result, leading to fragile financial systems.? Debt-based systems are fragile relative to equity-based systems.

If there are to be 30-year mortgages, let them be purely private, like Alt-A, Jumbo, and Subprime loans.? Don’t let the government place any guarantee on them.? If we have to guarantee mortgages, do it from 15 years and shorter.? Reduce the amount of leverage in the economy as a whole.? Make the system stronger, against those who think that encouraging borrowing is a free lunch.

What is the cost to my proposal?? Fewer people buy houses, and fewer houses get built.? Good.? We are over-housed already.? Far better that investment should go to production rather than consumption in the US (opposite in China).? We already subsidize mortgage lending through the tax code, which we should eliminate.? Why should we favor one class of borrowing over another?

Let the apartment REITs house people.? They borrow over a wide maturity spectrum, and do not rely on long-term finance.? Loss of government guarantees on 30-year mortgages will not affect them.

Now, I am responding to this article of Mike Konczal.? Here is one thing that he said:

The second [reason] is that providing macroeconomic stability is a legitimate and important function of the government. After the crash, the government had to step in, prevent a banking crisis and run the entire mortgage market after private capital disappeared. As such, the government holds the tail risk of the mortgage market imploding already; why not make this insurance explicit, while also regulating and pricing it?

Sorry, that’s not the way it works.? The Fed provided too much liquidity, and F&F provided too much lending up to 2007.? Now we suffer the bust from having over-stimulated housing demand.? The government rarely makes things more stable; they are pro-cyclical, and make things less stable.? That’s the way politicians are, because no one will oppose a boom.

We need to move to a less-levered system, where debt is discouraged, to create a system that is not fragile.? After two failures due to high debt levels (current and the 1930s), we should learn that high levels of debt lead to economic failure, and move to a system where interest in not tax-deductible, but dividends are.? This will lower debt levels, and our economy will become more stable.

 

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