Monday, June 2, 2014

Some Monday morning news

Here's a cavalcade of thingies for your consideration:

BI - US consumer spending just hit a six-year high. I don't know how any clown with a newsletter can possibly call a top when data like this is staring him in the face. For god's sake, it's even made it onto Business Insider, how do you miss this?

BI - Ed Yardeni says Dow Theory is bullish. As above. How are new highs in the Transports bearish in any way whatsoever? Seriously, even a kindergarten dropout would see this. Please ask your local newsletter writer or blogger why he didn't see it.

Bloomberg - unstoppable bond market renders models useless. Apparently this is an insightful article, so read it if you want. Personally, I'm still sticking by my own theory that bond yields are going down because there's more money than there are peasants able to rent it. That's the upshot of the American 30-year war against labour.

BI - deflation in Germany. Yeah, but Germans want deflation. They worship deflation. So watch them not care.

Project Syndicate - Roubini on the great anti-capitalist backlash. He writes an op-ed on the economists' pop-culture topic of the day, which should both surprise nobody and interest nobody. And he proves himself a clueless dumbass by talking right past the real problem - it's not the victory of capitalism that the masses are rebelling against, but rather the victory of the plutocratic elite against redistributive policy and the rule of law.

Nouriel, when you reduce government spending, eliminate support programs, and institute policies to transfer trillions of dollars out of workers' pockets into the pockets of billionaire bankers, eventually the masses realize that they no longer are seeing a benefit from the system. Ultimately they will attack the system. First they will vote to attack the system, and when that's not sufficient they'll attack it directly.

FT beyond brics - Modi's challenges. To what extent is the economic outcome in India dependent on the secular bear market in EMs, instead of on whoever is leading the country? Modi can't prevail over gross secular trends, can he? When's the last time a neoliberal successfully fought the tide of a secular EM bear, increasing growth while reducing inflation? Neoliberal policies are probably needed in India, sure, but will Modi be able to do more than just treading water? - Warren Bevan sticks a fork in gold. Y'know, the problem with calling "gold $1000" based on charts is that 1) anybody can do TA, 2) if it's one thing TAs do well it's make a prediction and then change their mind the minute they're proven wrong, 3) gold went down on OpEx so I'd wait for follow-through before taking $1245 gold as indicative of a trend, and 4) people will need to sell physical gold to get it to $1000; you need a supply glut. Where is the gold to sell? Is he saying Western central banks are about to start dumping gold?

Absent a crop failure in India or a liquidity collapse in China, I just can't see $1000 gold. Hey, maybe it is possible, maybe I'm wrong; but I can't imagine a market mechanism that takes gold to $1000, other than a major crisis.

As far as his $700 gold call, that's even more unbelievable to me. To me, that price would mean the end of all gold mining. To get to $700, it would require the entire world - from Indian farmers to Indian temples to the US Federal Reserve to Chinese businessmen - deciding that gold isn't worth owning anymore.

Hey, maybe we could see that over the next 40-50 years: generational change could bring it about. But in an investing timeframe? I really don't see it.


  1. That Bevan guy has changed his tune pretty radically in the last year or two. He was about one shiny yellow brick short of being a full blown goldpocalypse doooomer not long ago; see

    Now he's all "ahh, fuck gold, who has time for that useless shit?"

    It's kinda funny, actually.

  2. You pegged Roubini. More like stuck a knife in his eye. Too bad he would never listen to such obvious reasoning.

    His musings don't matter because he is pop econ's favorite fashion model. The content is irrelevant, just remember to mention the Label, "Dr. Doom", the name the media made famous! He's about three o's short of a full doooomer load, lol.