Wednesday, October 4, 2017

Yellen and Kashkari

Two newsbits:

Jared Bernstein - Trump's best move is to reappoint Yellen. He has a very good point:
There’s an interesting way in which a more hawkish Fed chair–and most of the top candidates other than Yellen fit that bill–would be a double whammy for Trump.

First, raising rates would slow growth, which presidents never like. Second, higher rates strengthen the dollar, making our exports less price competitive, which this particular president really wouldn’t like.
So let's see if President Piddles has the sense to reappoint Yellen.

Neel Kashkari - my take on inflation. I didn't understand the appointment of a lower-level functionary with an MBA, but it turns out that Kashkari has the most sense of the lot - probably because he has no economics background, so he falls back on empirics.

Tuesday, October 3, 2017

Well, you voted Trump....

Vox - Puerto Rico is all our worst fears about Trump becoming real. Quote:

“People on TV news shows spoke significantly fewer sentences about Hurricane Maria than about Hurricanes Harvey and Irma,” he writes, and “the spike in conversation about Puerto Rico right as the hurricane hit was also much smaller than the spike in mentions of Texas and Florida.”

Cable producers surely had their reasons for this. But something anyone in the media could tell you is that cable producers’ news judgment is not an infallible guide to the substantive importance of various stories. In particular, a broad range of issues — potentially including natural disasters in outlying US territories — have an asymmetrical quality to them, where if handled appropriately most people won’t care that much, but if botched it eventually becomes a big deal.

This is why traditionally presidents have relied upon staff and the massive information-gathering capabilities of the American government for information rather than letting television set the agenda. Trump has a different philosophy, however, and spent the post-storm Saturday glued to his television and letting the hosts of Fox & Friends drag him into an ill-advised Twitter spat with NFL stars.

Because Trump wasn’t paying attention, the situation evolved into a catastrophe. And because the situation evolved into a catastrophe, it eventually ended up on television.

The Washington Post reports that by Monday, Trump “was becoming frustrated by the coverage he was seeing on TV.”


A president who was focused on his job could have asked in advance what the plan was for a hurricane strike on Puerto Rico. He would have discovered that since Puerto Rico is part of the United States, FEMA is the default lead agency, but it’s the US military that has the ships and helicopters that would be needed to get supplies into the interior of a wrecked island. And he could have worked something out. Instead, he didn’t get worked up about Puerto Rico until more than a week after the storm hit, when he saw the mayor of San Juan lambasting him on television. He lashed out with his usual playbook — one that will only make things worse.


Retired Gen. John Kelly’s background and experience are unusual for a White House chief of staff, but as it happens, his final military assignment was as commander of American military forces in South America, Central America, and the Caribbean basin — basically perfect preparation for the crisis that happens to have struck.

It’s of course entirely possible that things would be going even worse if Reince Priebus were still in charge, but on its face, Kelly’s experience does not seem to be doing any good. And that should be a stake through the heart of the notion that some stable of “adults in the room” are going to save the country from having made a spectacularly inappropriate choice of chief executive.

The one thing we can say for sure is that it’s essentially inconceivable that the next objectively difficult crisis that Trump fumbles will be more in Kelly’s wheelhouse than a disaster requiring a military response in the Caribbean. We’re witnessing the Trump administration at peak performance, and it’s appalling.

Well, as President Truman once said, "the American people know what they want, and they deserve to get it good and hard".*

*yeah I know it was probably someone more like Mencken

A quick market comment....

US equities:

SPY is RSI=74, +2SD. IWM is >2SD, RSI=85. QQQ, however, is not overbought.


GLD is -2SD, RSI=36. SLV is about -1.8SD, RSI=35. GDX is ~-1.5SD, RSI=42. Gold and the miners are at a thick band of price, so they should have support here. Copper is failing to break down below its SMA(50). GDX is supported at its weekly SMA(50).

Would you go short S&P, long gold miners right here?

Monday, October 2, 2017

Monday news

Seems like the market's climbing a wall of worry again... everyone's doubting it as it continues to scale all-time highs.

In other news, I got 84% on my first Metrics 2 test, which is okay, so I'll be sticking at it.

Here's some high-class reading for those of you who think multisyllabically:

New Deal Demoncrat - weekly indicators. Everything's still hunky-dory.

IPE Zone - can US stocks still rise? Yes, because there's nowhere else for the tens of trillions of world wealth to go.

CFR - the world's China problem. They just can't get it through their fucking heads that China has figured out that macroeconomic orthodoxy is only one possible solution, and that a strong enough state can do what it wants.

Tim Taylor - demography rebalances Asia. I know for a fact that wealthy old people don't spend down their wealth. And as for India, it's a clusterfuck: the only way it grows is by (1) exporting goods via satellite because their transportation network is a disaster, or (2) generating fake numbers for their real estate values. Neither of those is a recipe for success.

WSJ paywall - many students around the world can't read. As it turns out, the growth economist's assertion that "education spending raises human capital" is bullshit. You have to actually have teaching, not just spending.