Saturday, June 4, 2016
New Deal Demoncrat - May jobs report sucked. His takeaway is that "this should stop the Fed dead in its tracks." Well, if people are leaving the workforce because they can't get raises because there's no such thing anymore in the US as worker bargaining power, then yeah, I guess we'll never see wage-based cost-push inflation, and thus interest rates will remain at zero forever. Ain't it nice how the kleptocratic rentier class is getting exactly what they want, right hard up the ass?
New Deal Demoncrat - btw I told you so. Quote:
Every now and then, I like to remind you that you are reading the right blog. Because if I don't pat myself on the back, nobody else is going to, so please bear with me.Or, you could have kept it simpler and just said that labour market condition is a lagging indicator, and the US fell into an industrial recession months ago, and that's why we should have expected bad jobs reports by now. In any case, yeah, the Fed's argument was that cost-push inflation from wages would be the reason for raising rates, and this report kinda scuppers that position now.
Anyway, the weakness in jobs growth was clearly forecast by a downturn in the Labor Market Conditions Index since last summer. I'm not just talking in retrospect, because I made exactly this forecast.
Calculated Risk - good years have bad months too. Some perspective based on past data. Just in case, y'know, you're reading some clown TA who feeds you news headlines as if they're his analysis.
Simon Wren-Lewis - yeah about that whole fear of Brexit thing. So Brits really believe leaving the EU will harm them economically? Really?:
the argument that there will be long term costs with Brexit has not, as yet, convinced most voters. In this poll, which is not unique, only 22% of voters thought they would be worse off as a result of Brexit.Believe a blog, or facts. Up to you.
WSJ Moneybeat - hold your nose and buy Europe. Jason Zweig's thesis is that since European stocks are trading at 40% lower price-to-book, and 69% higher dividend yield, you should buy Europe.
I would respond to him that when you buy US stocks you buy superior growth potential. Meanwhile, European leadership has explicitly come out in favour of continuing a deflationary collapse: that is what's being reflected in relative valuations, you clown.
But don't believe me: name one single European stock that yielded a higher return than its US competition over the past ten years.
Friday, June 3, 2016
FT - negative-yielding debt surpasses $10 trillion for first time in history.
Sounds like there's at least $10 trillion more in savings than the world needs for investment, no?
How much of that $10T, by the way, is corporate money stashed away in tax havens like Luxembourg or the Channel Islands?
And how much of that $10T is the savings of the worldwide kleptocratic elite, smuggled out of their countries and held in secret bank accounts?
How much added future productivity growth would $10 trillion buy with increased physical capital (roads, rails, ports, communication systems, water, sewer) and human capital (via education) if only governments weren't fixated on generating a deflationary spiral to enrich the rentiers at the expense of the working class, despite this incredibly loud signal that the market demands more high-quality government debt?
How much consumption spending would $10T buy if only the working class had enough power to bargain for a better share of profits?
And most importantly:
Why is it that the Federal Reserve, the US Treasury, IMF, OECD and G-20 have never bothered to determine what is the optimum amount of world savings necessary to produce positive rates, and then implement economic management policies to produce the optimum?
I mean, we learned S=I and the market for loanable funds in 2nd year macro; it's not fucking rocket surgery or anything.
Thursday, June 2, 2016
While we wait for the entire investing world to SOGOTP, here's a bit of news:
Calculon's Frisk - US light vehicle sales still okay. No recession, obviously.
New Deal Demoncrat - ISM shows shallow industrial recession bottomed in March. So there's nothing to worry about.
Reuters - Best Korea loves Trump. Wow, this guy is already the choice of Kim Jong-Un and Darth Putin! Sounds like the perfect candidate for the Republican Party, no?
Tuesday, May 31, 2016
Star Tribune - losing your middle class is the first step on the path to imperial collapse.
As an aside: why are interest rates so low? It's because all net wealth creation of the past few decades has enriched the kleptocratic elite. Who then want to earn money on their savings but can't, because there is no demand from the masses.
And as a second aside: know why growth is so low? Because the US federal, state and local governments used to contribute 3% to GDP growth in the 50s, then 2% in the 80s, and now they're contributing only 1%.
And why's that? Because the kleptocratic elite want to eliminate government, because less government means less taxes on the rich.
Well imagine my surprise when I see today that 2L grapefruit juice, normally $3, is on special for $1.44.
And 1L honey, which was going for $10, has now been cut to $6.99.
And Minute Maid FCOJ, normally $1.50, is on special for 79 cents. I haven't seen these sorts of prices for years.
Over the past year we've seen Canadian groceries go up in price tremendously, but now they're coming back down. What happened?
Well, when oil crashed, the Canadian dollar crashed with it too. Our groceries seem to all come from the US nowadays, so all the American suppliers must have decided to jack up their Canadian grocery prices by a third to make up for the one-quarter drop in CAD.
But guess what? The value of CAD didn't drop because of inflation: it dropped because the price of oil dropped, so there was less demand for CAD.
Canadian consumer staples purchasing power, in other words, didn't go up by a third as CAD dropped. In fact, the drop in oil was a recessionary shock for us: purchasing power has actually decreased in CAD terms in some parts of the country, and Canadian consumer staples purchasing power in USD terms has still dropped by a quarter.
So the American suppliers who jacked up our prices by a third to maintain profitability in USD terms saw their demand dry up. The only people buying their shit anymore were idiot yuppies who don't know how to manage their grocery bill. Meanwhile, I guess the Americans didn't bother to scale back production, or cut exports to Canada, so e.g. in the case of FCOJ, they're now stuck with a billion cans of frozen Minute Maid sitting in storage in an Oakville food terminal just as this year's crop of oranges is coming down the pipe.
And the substitution away from higher-priced goods has caused a loss in consumer utility that isn't warranted in purchasing power terms: I guess you could call it a temporary disequilibrium in utility? No-name producers see that there is potential demand still there, the prices are just too high: so then they brutally undercut name-brand producers to gain market share, to clear out their own inventory backlog. Suddenly we get a race to clear backlog across all brands.
And prices go back down.
To where they should have been all along, because Canadian consumer staples purchasing power never changed.
I can't wait til Canadian apples and peaches hit market: at that point all American fruit will have to drop in price to maintain market share, or else all demand will switch to Canadian fruit growers.
Well, my actuarial math class is getting fun: now all of a sudden we're learning IRR, NPV, discounted payback period, and so on. Turns out all that "discounted present value of an annuity due" tedium was just basic background, and now we can build useful stuff on that.
This was the stuff I really wanted to learn in economics; but instead, economics class has been all about idiotic classical theory invented by 19th-century British armchair philosophers.
I might still continue on in econ: I want to see what the 3rd year international trade and finance classes are like. They're taught by a couple new young profs from overseas, so I'm hoping we get to learn sensible grown-up econ from them instead of more Classicalist stupidity.
But if I continue to be disappointed, I'll dump econ and get a degree in Actuarial instead. It'd mean a guaranteed $100K/yr Toronto job, and an Actuarial degree can also still get me into a decent graduate program in Economics.
Problem is, about the only grad school I'd want to go to is Berkeley.
Berkeley's got a Murderer's Row of econ faculty: Maurice Obstfeld, Barry Eichengreen, David Card, Emmanuel Saez and Gabriel Zucman, Romer & Romer, George Akerlof, Alan Auerbach, Hal Varian whose micro textbook is godly, and Brad DeLong whose website looks like crap.
I can just imagine some retard from Chicago pitching against that order. He wouldn't make it out of the inning.
Honestly, so far I've found no other faculty in the world that has so many top names. UC Berkeley is like an army of aliens, swooping through the field of economics to collect prize human specimens for some sort of economics human zoo.
UofT and McGill economics look like third-world dumps compared to Berkeley, and those are Canada's top schools. Fuck, I'd rather go to CUNY and be in the same building as Krugman once a year, rather than failing to learn anything pertinent in Toronto.
Problem is, grad school at Berkeley would cost me about $75k/yr CAD. That's just too damn much, even if I weren't on a TSA list due to all my past terrorist affiliations.
So I guess I'll never go to Berkeley.
Sunday, May 29, 2016
As a positive, Bespoke says that whenever stock market sentiment has been this low, there have been outsized gains for the following year.
That's the good news.
Then there's this:
BBC - Trump has caught up to Clinton. Ha ha, Clinton's fucked, and so is the USA.
BBC - ex Nevada governor Johnson to run as Libertopian candidate. Hey, maybe he can siphon away some Republican votes, then?
BBC - UK will vote for Brexit, and then the Conservatives will implode, handing power to UKIP. Well, I've always wanted to see V for Vendetta become a documentary. And here's what fascists usually do to their country:
Bloomberg - typical for a Putin ally, Hungary's been handing central bank money to Orban cronies. I especially like this part:
“Checks and balances are a U.S. invention that for some reason of intellectual mediocrity Europe decided to adopt,” Orban told Bloomberg in 2014So I guess Hungarians are fucking ass-stupid to have voted him in, then. OK, fine, we'll soon see the US and UK become as stupid as fucking Hungarians.