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Wednesday, May 17, 2017

Wednesday noos


I guess people are selling S&P 500 today because they think Trump is about to be impeached? Is that it?

Anyway, here's some great reading for you:

New Deal Demoncrat - is the rental affordability crisis abating? If rents have quit increasing in the US, that'll mean more money in the pockets of the poor, which is how you build a sustainable economy. But I'm sure Trump will fuck that up somehow.

FT Alphaville - healthy pickup in capex predicted, again. Last time it was predicted, it didn't happen. Will this time be different? Not if you read some of the economic theory stuff I've been reading: the reason we're in capex stagnation is because more and more corporate earnings are being captured as rents by the power elite - the same reason government bond yields are at silly lows, btw.

Macro Tourist - the $VIX article no-one will like. Quote:

The narrative overwhelmingly embraced by most of the street is that there is a monster VIX short position out there, and that this volatility selling is a disaster in waiting. This camp has some impressive alumni. For the past year, the smart as a tack Jesse Felder, has been writing pieces about this risk. If you want to understand his point of view, check out the article from last summer - “The Short Vol Trade has gotten completely out of hand”. I love Jesse’s writing, and taking the other side of his trade gives me pause, but I respectfully suggest he might be wrong on this one.

He takes the "every seller is matched with a buyer" assumption and runs with it, arguing that there's a monster $VIX long position out there. The kill-shot comes when he notes it's actually the Vix long ETF that has built the monster position: apparently XIV's shares outstanding has been collapsing! That's convincing enough for me.

AEON - human capital theory was a cold war propaganda campaign. Really interesting long essay about how the Ayn Rand club invented the term "human capital" as a counterweight to Soviet communism. I'm skeptical of the whole Mont Pelerin Society conspiracy theory, but I also know that people like Milton Friedman were propagandists and not economists. In fact, if you decide to model human capital, you'll find that a monopsonist employer will use their market power to underpay for it - in which case worker exploitation simply becomes more obvious.

BBC - Avril Lavigne is dead again. The old "Avril Lavigne died in 2003 and was replaced by an exact replica" story has returned. Oh, and entirely parenthetically, her new album comes out this year.



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