Thursday, November 20, 2014

Some reading


Some news for you:


Calculated Risk - the GS model for market cycles. Quote:

The likelihood of the economy showing late-cycle behavior or being in recession by the middle of 2015 is very low, according to the model. However, we expect a transition from early- to mid-cycle over the next half year. ... since early 2010 the model has characterized the economy as "early-cycle." This reflects the high degree of slack, a solid growth rate of activity, subdued inflationary pressure, and financial market outcomes consistent with an easy stance of monetary policy. ... Over the past year, the signal strength has declined considerably, showing that the choice between early- and mid-cycle has become more difficult. While mid-cycle behavior is qualitatively similar in many ways to early-cycle behavior, key differences include (1) smaller output and employment gaps, (2) slightly firmer inflation outcomes, (3) a trough in credit spreads and stock market volatility, and (4) a higher fed funds rate and related flattening in the yield curve led by the front end.

Either you can believe Goldman Sachs, who probably have 1 or 2 people who've taken university-level economics courses, or you can believe the incompetent blather of some idiot blogger who repeatedly warns of an upside blow-off in US equities and insists that only gold is money. Up to you.


Bloomberg - S&P 500 companies spend 95% of earnings on buybacks. And that is why there is no economic growth - corporations aren't investing in it. Quote:

CEOs have increased the proportion of cash flow allocated to stock buybacks to more than 30 percent, almost double where it was in 2002, data from Barclays show. During the same period, the portion used for capital spending has fallen to about 40 percent from more than 50 percent.

The reluctance to raise capital investment has left companies with the oldest plants and equipment in almost 60 years. The average age of fixed assets reached 22 years in 2013, the highest level since 1956, according to annual data compiled by the Commerce Department.

I'm going to be uber-bearish here and point out that you can't get a lasting US secular bull market until the idiot US government forces these corporate fuckers to spend money on growth. Til then, yes share buybacks are a kind of special dividend to investors; but they don't grow the US economy.


FT beyond brics - EM corporate hard-currency debt sucks. And that is yet another element of a secular bear market in EMs. And that is why you don't listen to Manhattan cracker clowns who tell you to increase EM exposure.


Permashave Dave - doing some Christmas shopping. He seems to think the bottom is in for the miners, and so he bought Timmins, Silvercrest, and some stuff that I've never even heard of. Which makes me feel better that I haven't bought them. Dude, just because it's down doesn't mean you buy it! You're supposed to buy the stuff that's already started going back up!


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