Wednesday, February 3, 2016

A few newsbits

Some stuff before the opening pantypiddle in US stocks:

Bonddad - another sign the US industrial recession is bottoming. With a lot of Fred charts.

Olivier Blanchard - are US stocks overvalued? Read what he says:
the deviations of the P/E from its historical average are in fact quite modest. But suppose that we see them as significant, that we believe they indicate the expected return on stocks is unusually low relative to history. Is it low with respect to the expected return on other assets? A central aspect of the crisis has been the decrease in the interest rate on bonds, short and long. According to the yield curve, interest rates are expected to remain quite low for the foreseeable future. The expected return on stocks may be lower than it used to be, but so is the expected return on bonds.
Like I've constantly fucking said: there is one heck of a lot of ownership of UST10s yielding 1.88%. Why would you do this when you can own GE yielding 3.24%? Or how about AT&T yielding 5.32%? Or even McDonalds yielding 2.87%? Stocks, when viewed as yield instruments, are cheap relative to bonds, and a screaming deal if you have the slightest fucking clue about what a leading indicator of recession is. But now, don't listen to Olivier Blanchard, listen to Kyle Bass.

Money and Banking - an interview with Narayana Kocherlakota. Unfortunately he's not all that bright, since he calls for significantly less regulatory oversight for global finance, which will only mean yet more money drawn out of the productive economy by the ruling kleptocrats and buried in tax-haven accounts in USTs.


  1. The problem is, forward earnings estimates for the S&P 500 are going down. Therefore, while I am a buyer of stocks, I think you need to be very selective. I don't think buying the S&P 500 works here.

    1. Do you mean forward earnings estimates from companies? Or from panty-piddling analysts who are telling everyone to sell, who can't bother to look at leading economic indicators, who think the US dollar is going to go up forever, and who can't see any earnings upside to $1.45-$1.90 gasoline?