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Saturday, July 23, 2016

Weekend reading

I think I got badly buttraped on that calc test Wednesday, so I'm going to have to try and study more for the next 2 weeks so I can rescue my mark on the final.

Then again, I'm pretty sure that everybody found that test to be harder than the first one, and the class median on the first one was 58%, so maybe I'll get rescued by the bell curve? I mean, I'm pretty sure they don't fail half the class in a first year math summer school course.

Anyway, here's some stuff:

Calculated Risk - existing home sales run to 5.57M. Existing homes don't contribute to the US economy, really. But what it means for inventory is potentially a big deal.

Reuters - Goldman Sachs in spotlight in Malaysian fund scandal. Just out of curiosity: if one single country's elite can steal $2.5 billion through one single bond issuance, then what does the possible aggregate of all such theft worldwide mean for the loanable funds model? Hm? How many trillions of dollars of stolen money are sitting in bank accounts looking to earn interest? Maybe a zero interest rate is just what you get after kleptocracy gains supremacy over the world economy?

Bloomberg - China faces WTO complaint over metals export curbs. Huh... an export curb on copper? I guess China feels they're going to need yet more metal in the years to come? I guess Chinese demand hasn't disappeared? I guess this'll become a mainstream narrative again?

WSJ China Realtime - China's busiest high-speed rail line makes a fast buck. This is why Chinese investment in physical capital was a good thing:
The link’s biggest shareholder, China Railways Corp., has never released the financial performance of the line, which cost $33 billion to build. Recently, a bond prospectus issued by a minor shareholder offered a glimpse into the rail link’s financial performance.

According to Tianjin Railway Construction & Investment Holding (Group) Co., a regional railway builder, the Beijing-Shanghai high-speed rail link last year recorded a net profit of 6.6 billion yuan, or about $1 billion. It’s the first time it made a profit, said Tianjin Railway, which owns a 4.5% stake in the link. Chinese state media has often touted the line as the most profitable high-speed rail route in the world.
The Chinese government has 10,000 economists, and they've all studied emerging market success and failure stories, and so they knew that China needed to spend money on infrastructure development so that it could continue to grow into a developed market. And guess what? Government investment in capital can indeed yield a permanent growth dividend that more than pays for the upfront costs, despite everything the paleoconservative kleptocrat apologists in American universities want us to believe.

But no, you guys go ahead and invest in India, where the port system is in gridlock, the rail system is operating beyond capacity, and what few roads they have kill 1/10th of the population. Invest in India just because Modi's a kleptocrat Thatcherite. Go ahead. See where that gets you.

The Krugginator - Donald Trump, the Siberian candidate. Apparently his campaign manager is in thick with Putin via his connection with Yanukovych:
We do know that Paul Manafort, Mr. Trump’s campaign manager, has worked as a consultant for various dictators, and was for years on the payroll of Viktor Yanukovych, the former Ukrainian president and a Putin ally.

And there are reasons to wonder about Mr. Trump’s own financial interests. Remember, we know nothing about the true state of his business empire, and he has refused to release his taxes, which might tell us more. We do know that he has substantial if murky involvement with wealthy Russians and Russian businesses. You might say that these are private actors, not the government — but in Mr. Putin’s crony-capitalist paradise, this is a meaningless distinction.
Vote Putin, America!

Wednesday, July 20, 2016

SMBC on other life and its douchiness

Getting caught up on SMBC today instead of studying for my test.

This one's funny:

Tuesday, July 19, 2016


Studying for yet another calculus test, goddamn rotating parametric equations about the x-axis and all.

Here's some news:

New Deal Demoncrat - industrial production shows March was the bottom.

Bespoke - post-Brexit record breadth. That means buy.

WSJ RTE - student debt helps the economy. Because it's investment in future productivity. Now just think how much smarter that investment would be if it were financed with 1.6% UST10s instead of fucking 5% student loans.

Gavekal - morons. Apparently the people working at Gavekal are idiotic morons and you should ignore them from now on:
And all that fits nicely with central government spending as a percent of GDP having exploded to 27%, which is fully 4 percentage points higher than a year ago and well into all-time high territory.
Except, Bryce Coward you fucking tool, government spending as % of GDP increases as a country develops. But I guess they don't teach this in business school, do they? Tell you what: you're supposedly a CFA, so how's about you shut the fuck up about developing markets and stay with bean-counting, you useless sack of shit? Hm?

New Yorker - here's the guy you can blame for Donald Trump becoming president. And here's what passes for contrition nowadays:
He went on, “I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization.”
Typical liberal media type: a traitor to his own children's future, for just a few bucks.

Monday, July 18, 2016

Some Monday hilarity

So apparently Erdogan wasn't being overthrown, he was just pretending to be overthrown so that he can jail all his opposition and turn Turkey into an Islamic state. Oh, that's good to know.

Anyway, here's a bit of market news:

New Deal Demoncrat - weekly indicators. Everything's fine, the market should go up from here.

Henry Blodget's Filthy Minimum-Wage Clickwhores - it's a conspiracy! But all the traders who were short, thinking a new recession was around the corner, are now making excuses for why they were caught flat-footed. Hey, dumbasses: maybe you should just watch the economic indicators from now on?

Friday, July 15, 2016

Hey, remember that guy with the gold shirt? Yeah, about him....

Hey, remember this guy? The guy with the gold shirt?:

BBC - guy with gold shirt beaten to death. Quote:
An Indian man who bought one of the world's most expensive shirts made entirely of gold has been allegedly battered to death, police said.

Datta Phuge shot into the global limelight in 2013 when he bought a shirt made with more than 3kg of gold and worth $250,000 (£186,943).

A money lender based in western Pune, Mr Phuge was called "the gold man".

Four persons have been detained for questioning. Police suspect a dispute over money have led to the murder.

The police said some 12 people attacked Mr Phuge, 48, in Pune on Thursday night.

One of the suspects had invited Mr Phuge and his 22-year-old son to celebrate a birthday at an open ground in Dighi area when the men attacked him with stones and a sharp weapon.

Police said the son had witnessed his father being murdered and had been spared by the alleged killers.

"However, we are investigating how Mr Phuge reached the open ground where he was murdered," Dighi police station inspector Navnath Ghogare told the Press Trust of India news agency.

Mr Phuge often wore gold all over his body: his knuckles, neck, and wrists were weighed down by signet rings, chunky bracelets, and a medallion.

"Some people ask me why I'm wearing so much gold but it was my dream. People have different aspirations. Some elite people want to own an Audi or Mercedes, and have big cars. I chose gold," he told the BBC in 2013.
Schadenfreude: it's not just for existentialists anymore.

oh and also Erdogan's being overthrown

Oh and also Erdogan is being overthrown in Turkey right now.

Whether by the Russkies or by the Americans we'll have to wait to find out.

Some Friday evening news

And some Friday reading:

Calculated Risk - retail sales increased 0.6% in June and industrial production increased 0.6% in June. Looks like the slowdown is over.

Tim Duy the economics guy - data dump. Quote:
Bottom Line: Generally solid data sufficient to keep the prospect of a rate hike or two alive for this year. But soft or mixed enough on key points to lean policy closer to the former than the latter.
So quit piddling your panties.

der Spargel - EC knew for years about emissions fraud. Because of course they did. But at least now they can lay the blame on the Spaniard who let it slide instead of the Germans who committed massive fraud.

Friday Videos: Saint Etienne

Saint Etienne:

Wednesday, July 13, 2016

Some Wednesday evening news

God damn, a whole day of doing calculus homework.

Let's wind down with some news:

WSJ RTE - foreign investment in the US soars - because of a tax loophole. The useful puppets of the kleptocracy at WSJ couch that with a "partly", but you know I'm no puppet:
Expenditures by foreign investors to acquire, establish or expand U.S. businesses reached $420.7 billion in 2015, a 68% jump from the prior year, the Commerce Department’s Bureau of Economic Analysis said in a report out Wednesday.

But the figures were distorted by corporate inversions—the process through which a U.S. company takes a foreign address, typically via a merger with a smaller firm, to lower its tax bill.

Underscoring the the impact of inversions, relatively tiny Ireland ranked as the top source of new direct investment last year at $176.5 billion.
This is a big fucking deal from an international trade economics standpoint: the tax loophole is so gigantic that it will impact current account and currency. But I don't expect that I'll learn the first thing about this at university.

Brad Setser - can Europe declare fiscal victory and go home? No. No they can't:
In the face of the Brexit shock, standard (MIT?) macroeconomics says that a region that runs a current account surplus, that has a high unemployment rate, that has no inflation to speak of, that cannot easily respond to a short-fall in growth by lowering policy interest rates (policy rates are, umm, already negative, and negative rates are already, cough, adding to problems in some banks), and that can borrow for ten years at a nominal interest rate of less than one should run a modestly expansionary fiscal policy.

The eurozone as a whole clearly has fiscal space. The eurozone’s aggregate fiscal deficit is lower than that of the United States, Japan, the United Kingdom, and China. Adjusted for the cycle, the IMF puts the eurozone’s overall fiscal deficit at about 1 percent of GDP (without adjusting for the cycle, the eurozone’s overall deficit is around 2 percent of GDP). Even without any cyclical adjustments, the eurozone now runs a modest primary surplus, and simply refinancing maturing debt at current interest rates should lead to a lower headline deficit.

But the eurozone isn’t a unified fiscal actor. Right now the countries that could run a bigger fiscal deficit without violating the eurozone’s rules have said they won’t, and the countries that are already running deficits that violate the rules are facing new pressure to comply with the rules. The aggregate fiscal stance of the eurozone thus is likely to be contractionary.

Germany of course is the best case of a country that the market wants to finance. Germany actually did do a fiscal expansion in 2016. It had a fiscal surplus of almost a percent of GDP in 2015, and in 2016 it is projected to be in balance. (See the IMF Article IV report) But on current plans Germany won’t do more in 2017 as more would mean a deficit. The fiscal impulse from here out is thus likely to be flat, barring a major policy shift.

The Dutch have, by any reasonable estimate, enormous fiscal space (massive current account surplus, low gross debt, tons of pension assets, and, the market is willing pay the Dutch government to borrow, at least for maturities shorter than ten years). But the Dutch too do not seem to want to use their fiscal space. The European Commission lauded the Netherlands fiscal policy precisely because it was committed to bring a 2 percent of GDP fiscal deficit down to between 1 and 1.5 percent of GDP in 2017. With a structural deficit estimated to be a bit over 1.5 percent of GDP in 2015, the commission believes further consolidation is required to get the Dutch structural deficit down to the target of half a point of GDP. No matter that there has been a persistent problem with demand in the Netherlands.

France has somewhat higher debt levels than Germany or the Netherlands. But a country that currently can borrow for ten years at twenty basis points, a rate well below the interest rate the market charges the United States, also doesn’t need to consolidate today. Consolidation now—if you believe Fat├ís and Summers—might well raise debt to GDP levels. But that doesn’t seem to be the commission’s view. The commission’s 2015 report emphasized that France had failed to do enough structural consolidation in 2015, and argued it wasn’t planning to do enough in 2016 either. It is hard to see the commission changing its tune for 2017.
But no, you guys go ahead and buy European stocks. Go ahead. No, seriously, if Schauble's fiscal hawkishness gives you such a screaming erection, then you just go ahead and invest in European stocks and see where that gets you.

Polemic's Pains - Brexit bounce. Here's an interesting tidbit that he buries at the end:
With bonds and equities all pushing highs we could summarise everything simply as long cash positions being stopped out.
"Long cash stopped out" is kinda a more elegant version of what I was thinking these past few days, what with everything including gold flying to new highs.

and as far as a British trade deal with India goes:
I am impressed at the speed with which Osborne has started peddling UK Inc in the US and Sajid Javid’s trip to India. However we do need a dose of reality over the likelihood of positive outcome from that India trip. The EU has been negotiating a trade deal since 2007. I was wondering if the UK could pip them to a deal from a standing start but I was educated last night by twitter friend 'Brahman @_Financeguy' whose tweets I aggregate here -

"India won't agree FTA without free movement of IT personnel. EU negotiations stalled on UK objections to that. India also seeking equivalence in recognition of professional qualifications - law, medicine under Mode 1 with rights of Indian qualified professionals to practice freely in the EU (for these purposes the UK) . U.K. resisting this too. India also seeking recognition of its data protection regime as equivalent to that if the EU for privacy etc. India also seeking recognition of its IPR (eg for pharma ethical drugs and generics) as equivalent to EU & lastly India seeks recognition of its whisky as equivalent. All these resisted by UK on its own or with one or two others. Point is that ex-UK India-EU deal more likely with India competing with UK to supply some services to EU market”

So don’t expect anything soon. That bit about the whisky equivalents really surprised me.
Yeah, I sincerely doubt that the Cons will follow a "kick out the Pakis" vote with a trade deal that allows in a million Indians. Then again, it's not like England has much of an IT industry anyway... I doubt all these Indians will be moving to Newcastle to do call centre work.

Matheus Grasselli on Piketty's "Capital"

Here's the guy I want to do my Ph.D. with, doing a talk on Piketty:

a shiny new virgin market

The nice thing about when gold drops due to Wall Street Whitey's selling and taking profits...

is that Whitey has forgotten all about silver. So this chart will let you know which direction gold will go when Whitey's done.

Monday, July 11, 2016

Liz Ann Sonders' latest

Liz, please forgive me! I've been ignoring you! Blame Jeffrey Kleintop's bullshit for driving me away! But now you're being allowed to write on your own again without his crap mixed in, so I'll link to you again!

Liz Ann Sonders - weekly market comment. Everything is fine and all. Curiously, she suggests adding some EM to your port, which would normally make sense if we're seeing a second-half commodity boom.

Then again, what EMs? Do you really want to own Brazil right now? Russia? India's a negative with Rajan quitting and anyway it's not as if they have any capability to export anything; and what, now you want to own China again?