Saturday, September 10, 2016

New Deal Demoncrat - the next US recession is now further away.

New Deal Demoncrat - the next US recession is now further away. Facts:

A few months ago, I wrote that a reasonably likely road map to the next recession looks like this:

1. Interest rates continue to fail to make new lows.

2. House prices and stock prices stop meaningfully appreciating.

3. Inflation picks up to 2% or more as energy prices begin to go up again.

4. Maybe - the Fed raises rates in response to increased CPI readings, perhaps enough to invert the yield curve.

5. Corporate lending stalls, housing turns down, and consumer spending begins to turn down, resulting in a recession.

Since that time, Brexit caused treasury and corporate bond yields to reach new lows -- but, tellingly, not mortgage rates:

House prices acceleration has weakened, but a surge in new home sales makes me think that appreciation will resume soon:

The stock market has also made new highs:

Energy prices may well have bottomed, as the YoY change in gas prices has abated to less than -5% (compared with -15% or -20% a year ago):

And commodity prices in general as measured by the PPI have increased, although the CPI is still nowhere near 2% or higher:

The Fed is again sounding hawkish, although a September rate hike seems to be off the table.

So you guys go ahead and keep selling the S&P. I'll buy it off you a few more points from now.

Friday, September 9, 2016

It's catching up

Gotta catch up on all the news I haven't been giving you, or else you'll think this blog has been closed down in favour of a more professional blog on economics somewhere else or something.

Here's Schauble being a clueless rightwing fuckstick, yet again:

Reuters - German industrial output drop steepest in two years. Here's the reality:

German industrial production fell the most in 23 months in July, data showed on Wednesday, another sign that Europe's largest economy is set for a slowdown.

Wednesday's data, published one day after a surprisingly weak rise in industrial orders, added to worries that the German economy is losing steam, as exports suffer from lower demand in emerging markets and concern grows about Britain's decision to leave the European Union.

"Companies in the industry sector continue to adopt a wait- and-see approach because of sluggishness in the global export markets," the Economy Ministry said in a statement.

Industrial output fell by 1.5 percent in July from June, the data showed, far below the consensus forecast in a Reuters poll for an increase of 0.2 percent.

and here's the magical unicorn-arse rainbows world of Schauble's fucking clueless reaction:

Finance Minister Wolfgang Schaeuble, a conservative, has promised tax cuts for low- and middle-income households after the 2017 election. But he has ruled out new debt to finance investments, sticking to his balanced budget policy until 2020.

Germany can borrow at 0.5% for thirty fucking years. There is no reason to fixate on debt reduction when German demand is collapsing and their EU "friends"' demand has collapsed even worse.

If you're not investing when you're offered 0.5%/y for 30 years, you're a clueless fuckstick.

Schauble is not investing when he's 0.5%/y for 30 years, so therefore Schauble is a clueless fuckstick.

Keep on Trumping!

BBC - Trump tells Russian propaganda cable station that he doubts Russia is hacking democrat computers. Also, he thinks Vladimir Putin is way sexxay:

Donald Trump, back when he was just a larger-then-life real-estate developer and New York socialite, was a regular on King's programme. It's not entirely surprising then that the Republican nominee accepted an interview request from his long-time friend.

That, however, is when Mr Trump's staff should have done a bit of research, found out the interview would be broadcast on RT and told their candidate to come up with a scheduling conflict and politely pull out. Given the heat Mr Trump has taken recently for showering praise on Russian President Vladimir Putin, Russian-owned RT is the last outlet he should be on.

This is either another example of the Trump team's questionable advance work or - perhaps more troubling - its judgement. No matter the explanation, the story re-enforces the politically damaging perception that Mr Trump is uncomfortably chummy with the Russian government.

His team is really so stupid that they let their candidate go on a Russian propaganda network.

Then again, when you remember how stupid and ignorant Bush Jr.'s team was, this isn't really that much of a change for the Republican party.

Barry Ritholtz - try paying people more

Ritholtz - try paying people more. Despite all the blather you read on proven Russian propaganda website Zerohedge, the US actually looks pretty good:

But looking at job openings only provides half of the equation; the other half is the number of unemployed who are seeking work. By looking at this ratio, we can get a rough idea of the balance between labor supply and employer demand. When the ratio is high, there is lots of supply and that acts as a natural cap on wage increases. When the ratio is low, it means demand is catching up with supply. That suggests that price increases in the form of wage gains could be in the offing.

The chart below shows the ratio between these two numbers:

This chart is revealing. As of yesterday’s Jolts data, the ratio is closing in on 1 to 1. This is the lowest since January 2001.

I find it difficult to look at this chart and not see both a robust labor market and an increasing likelihood of rising wages. Ed Yardeni, writing before the latest Jolts numbers, observed that “August’s consumer confidence survey found the percentage of respondents who said that jobs are plentiful rose to 26.0%, the highest since August 2007. The percentage saying that jobs are hard to get was 23.4%, near recent cyclical lows.”

All of which raises an interesting question about why there are few signs of pay increases so far.

I have a simple theory about this: Employers are both wary and a little bit spoiled. They are wary because they don’t know how long low interest rates will hold down the cost of capital; many businesses have been prudently running lean, keeping expenses and overhead in check. It isn’t a surprise that we still see lingering signs of post-credit-crisis stress.

They are also a little spoiled, because so many workers were desperate for jobs for so long and weren’t in a position to bargain for higher pay. That period seems to be ending. The low ratio of job seekers to openings suggests that if employers want to hire -- and keep their existing employees -- they might have to increase wages sooner rather than later.

For the economy as a whole, this is a potentially positive development.

But no, you guys go ahead and puke the S&P 500. I want another 20% one-week win from shorting $VIX futures.

Yay! Another chart!


That makes today's selling look like little more than a selloff of nonfinancials to prepare for rotation into financials.

Which would mean people are betting that there's a Fed rate hike in September, I'd think.

Yay! I can post charts again!

Hey, it looks like I can post charts again! All I have to do is allow a bunch of javascripts, which means Google intends to make my internet surfing more unsafe!


I wonder if this is a one-day freakout, or the beginning of a breakdown through the SMA(50)? If the latter, I should be able to earn another 5 figure profit shorting $VIX futures when it's done. I'll hold my single-long position for the time being, cos it's so easy to sell it and go double-long later, or go short $VIX futures later.

For the time being, the $211 area looks like a possible target for the TAs.

I wonder what the Bloombergbot will blame as the reason for the drop, later today? It can't be "Trump victory fears", since he's only got a 6% chance of winning right now.

As an aside, I'm hoping the first presidential debate will be epic at the level of Biden's merciless destruction of Sarah Palin. I mean, Hillary is no pushover, and with her disability (i.e. having a vagina) she does need to prove that she can kick ass with the best of them.

Anyway, back to charts.


Amazing how GDX stopped advancing right at the Bollinger mean and MACD crossover, eh? That kinda tells me that GDX is being traded according to TA. Will it stop its decline at the cluster of support at $25, or fall farther to its stronger support at $20? Either way, that also sets up a chance to make another 20-30% going double-long miners when the time comes.

I kinda suspect that with GDX's recent drop to RSI<30, failure to move forward past RSI=50, and self-fulfilling prophecy of a reversal at the Bollinger mean, that the downward move will turn out to be fairly aggressive.

And here I thought I was done making money this year.

The only ipHone review you ever need to read

Polemic's Pains - the only iphOne review you'll ever need to read. This guy is just hilaire:

Stereo speakers - Unless they produce 150db each, can be spaced 10ft apart and have 12+ inch bass units I don’t care.

The new camera has optical image stabilisation - Useful for the caffeine or 'morning after' DTs.

 6 element lens with f/1.8 aperture. 60% faster than previous iPhones. The iPhone 7 has a single lens camera; the 7 Plus has a dual lens camera (wide angle and telephoto)Useful, I guess, for wedding photographers.

iPhone 7 Plus: New 'portrait' effect on the camera to add depth of field to photo
- No Interest, not a selfie fan.

Water and dust resistant -
Excellent - caught up with Samsung.

Longer battery life - Good, but still would prefer replaceable and will still probably die after 2 years.

Comes in jet black, black, gold, silver, rose gold - I'm not a 14yr old girl.

Headphones will connect via the lightning port. A free set comes with the phone, plus an adaptor for traditional 3.5mm jack headphones
 - Backwards step. Buggered if you lose your adapter or headphones. Can’t borrow others. Go long Chinese copy adapter makers.

And AirPods - wireless headphones (with a microphone) that have infrared sensors that detect when they're in your ear and only play then. W1 chip connects the AirPods to your other Apple devices. The batteries last for 5 hours and the Airpods come with a charging case that holds 24 hours of charge -
We tried this with Bluetooth headsets. No one can be bothered with devices that need separate charging and if you do use them you'll look like a dodgy limo driver. Drawer fodder, or more likely lost on first outing. San Francisco drains will be full of them. A wire stops you losing them.

A10 Fusion chip with a 64-bit four core CPU -
Should I be excited? Or even know what that means?

Storage: 32GB, 128GB, 256GB  - A 256GB Micro SD card is about £140, how much is your upgrade?

Cost: $649, $769 -
or £649 £769 in UK money. A lot for a better camera you can drop in your beer.

Friday video: good god damn, Xiu Xiu and Deerhoof covering Joy Division

Good god damn, Jamie Stewart from Xiu Xiu is the one person in the world who can do Ian Curtis better than Ian Curtis:

There's literally nobody Ian Curtisier.

Thursday, September 8, 2016

All Trump, all the time

Having fun back at school, sort of. My international trade prof is the first prof I've found in economics so far that actually lectures instead of just reading crap off slides. And my stats prof used to be a quant at TD.

I guess you just have to get past 2nd year before you are allowed to be taught as if you're at a university.

Meanwhile, Trump's been having fun:

WaPo - Donald Trump happy to destabilize Mexico. Derp:
Trump insinuates very clearly that his goal was to shake up the Mexican government. "And if you look at what happened, look at the aftermath today where the people that arranged the trip in Mexico have been forced out of government. That's how well we did," he said.

The United States' ally and neighbor to the south will probably be surprised to hear that Trump's aim in visiting their country was to undercut its leaders and force them to resign -- particularly a close confidante of Peña Nieto's like now-former finance minister Luis Videgaray. Trump hadn't previously indicated that this was his goal in visiting the country. And Peña Nieto, embattled as he is, surely won't appreciate the idea that this trip was planned with the hope of sparking further upheaval in his administration.
He's not exactly Reagan, is he?


Reuters - Gary Johnson asks "what is this thing called Aleppo?" Derp:
"What would you do, if you were elected, about Aleppo," Johnson was asked.

"About Aleppo. And what is Aleppo?" he responded.

"You're kidding?" the MSNBC interviewer said.

"No," Johnson said.

"Aleppo is in Syria. ... It's the epicenter of the refugee crisis," the interviewer said.

"OK, got it. Got it," Johnson said.
This is the level of outright ignorance and stupidity that characterizes the loony right-wing in the US, and yet people equivocate this gross incompetence with some chick running an email server.

Sunday, September 4, 2016

Some weekend reading

Calculated Risk - prime working-age population growing again. Frankly, between this and wage growth above inflation, I don't see why we can't have a good ten years of growth from here. After all, the rentiers are being euthanized, and the consumers have access to free money.  That is what grows an economy.

Desperately Seeking Economics - Chris Dillow on incompetence. My new favourite blog:
I have an incentive to become a Premier League footballer or Nobel laureate, but you’d be ill-advised to bet on me becoming either.
That in one sentence sums up the major fallacy of microeconomic models: just because there's an incentive doesn't mean anyone is able to respond, or respond beyond a certain level.

Eschaton Blog - Long Island University locks out their facu- wait, what? This is just hilarious:

I've never heard of a lockout of university faculty before, especially one announced the week before classes start.

The reason this is so unusual, which is a nice way of saying "so goddamn crazy," is that most institutions of higher education are aware that it is impossible to function as an institution of higher education if you don't actually have a faculty.

LIU administration is telling all of their students that their tuition money entitles them to be taught by hastily hired replacements.

Thus, on the one hand, any LIU student who demands an immediate tuition refund is absolutely correct. On the other hand, the can of worms LIU has just opened up as regards federal regulations regarding financial aid is a very big can full of very big worms. On the third hand, LIU has essentially told its regional accrediting body, Middle States, to piss up a rope.

If the LIU administration had decided instead to simply set fire to its Brooklyn campus, that would have been a more comprehensible course of action.

Then again, maybe it's about time the bourgeois silver-spoon brats of LIU faculty learn what it's like to be working class with the jackboot of power bearing down on your neck all your life. Working people don't get to live off of fucking Social Sciences grants.

WaPo - surprise, the North Carolina voter registration law was exactly what it looked like. Yes, the libby-libs were right all along, it really was intended to reduce the number of blacks who vote in elections, and here's the emails to prove it:

The emails to the North Carolina election board seemed routine at the time.

“Is there any way to get a breakdown of the 2008 voter turnout, by race (white and black) and type of vote (early and Election Day)?” a staffer for the state’s Republican-controlled legislature asked in January 2012.

“Is there no category for ‘Hispanic’ voter?” a GOP lawmaker asked in March 2013 after requesting a range of data, including how many voters cast ballots outside their precinct.

And in April 2013, a top aide to the Republican House speaker asked for “a breakdown, by race, of those registered voters in your database that do not have a driver’s license number.”

Months later, the North Carolina legislature passed a law that cut a week of early voting, eliminated out-of-precinct voting and required voters to show specific types of photo ID — restrictions that election board data demonstrated would disproportionately affect African Americans and other minorities.

Critics dubbed it the “monster” law — a sprawling measure that stitched together various voting restrictions being tested in other states. As civil rights groups have sued to block the North Carolina law and others like it around the country, several thousand pages of documents have been produced under court order, revealing the details of how Republicans crafted these measures.

A review of these documents shows that North Carolina GOP leaders launched a meticulous and coordinated effort to deter black voters, who overwhelmingly vote for Democrats. The law, created and passed entirely by white legislators, evoked the state’s ugly history of blocking African Americans from voting — practices that had taken a civil rights movement and extensive federal intervention to stop.

Yup, they really do craft laws specifically to block black people from voting, they do it intentionally, and they do it because they don't like the idea of black people voting, because black people aren't citizens, because black people aren't human beings. This is the thought pattern of white Americans, and it's about time someone fucking said it, and frankly it'd be a step in the right direction if the Panthers came back and started gunning down these Nazi fuckers in the streets.

BBC - Franz Beckenbauer is being investigated for corruption. Oh, but it's only the swarthy Mediterraneans who are corrupt, not the noble and pure German race!