Narbonne where I'm staying is a fine place. With the beach and all...
But more than the quality of the setting itself, it's simply the change of setting that I'm seeking here. Always reinvigorating to break your little habits.
No change in my activity though: coding my own online "bookmarking" service, and more.
So no much time for blogging nor trading these days.
Regarding the DSK's scandal, I'm glad to see that you're not wasting time "debating" about it.
You can imagine it's everywhere here in the French media. EACH new little detail, second by second. That's simply ridiculous. I'm not sure if the American media are overdosing their people with this story too.
As for myself, I don't care about this stuff. Crimes happen everyday, everywhere.
Granted, this particular case involves a man from "the top". And that's exactly why I prefer not discussing it, anything I would say would tend towards hatred.
More generally, I'm trying to take a (little) break from all things "elites". Negatives seems to always far outweighs positives when it comes to these pigs, and the debates they inspire get toxic for your heart and mind in the long run.
Something I'd like to talk about and get opinions on is what happens next.
I'm thinking the next events will be "an excuse to sell". I heard that on Bloomberg quite a lot lately. They even said that about some miniscule event that happened yesterday, now I forget what that was.
I've also heard that the Fed and others are saying the buying will continue after QE2 is up, that the private sector will take over and continue.
I'm guessing the market will correct now, in preparation for the QE2 ending, so when QE stops, it will be a non-event for the market, and the pudits will say, "see the private sector has picked up the buying".
I think thatwill not be the case. Most of the QE2 money went to lower long-term yields so that money would be invested in riskier assets, like the market. I think some went to the market, but I also think some is being held by European banks in the event of defaults or perhaps Euro Demise.
So I don't think private money will replace the Fed's buying. First, Sovereign debt is too risky for low-risk, so people aren't going to buy Treasuries from the US, or Whatevers from PIIGS. Already we've seen a lot of corporate debt issuance, with even negative returns (IBM's). I think when the fed stops buying, the price of Treasuries (and all sovereign debt) will drop, and the yields will go up. Doesn't this make the dollar appreciate? I think so.
Second, if the dollar appreciates, doesn't that make OIL and other commodities fall? I think so.
Third if the dollar appreciates and commodities fall, doesn't that reduce inflation pressures? I think so.
Fourth: If commodities fall, and the dollar appreciates, won't that start to unwind the market's dependence on low long term debt interest? I think so.
Doesn't that mean the market will head back to somewhere between where we are now and last August when QE2 was announced? I think so.
I think we have to look at the trends. The trend for Treasuries (IEF) is still up, since last April/M. The fed is still buying.
Rock - I have some fairly primitive thoughts for you and hopefully later today I will be able to expound on them.
First "Private Sector"? If the term "Private Sector" Refers to anyone who is not a business or a goberment, then where is the demand going to come from to buy stocks?
I saw an article the other day that said used car prices have gone up 30% in the last year or so.
Gas prices are up, so are food prices, goberment spending programs will need to be paid for, so taxes are next to go up.
Unemployment remains steady around 9ish% and underemployment around 17ish%
So there is a lot less money in the economy, let alone in 401k's
The debt load consumers had been willing to carry is decreasing as more and more people hopefully are wising up to taking on stupid debt.
I am not saying it could not happen, but I just do not see where the "Private Sector" even cares enuff what goes on on Wall Street - Hell I really believe most of "Private Sector" would rather put food in their bellies then GE in their portfolio.
Hopefully at least some of that made sense and I would like to add to it later.
Rock after all that happens, fear of inflation tamed. QE3 can then begin.
Mutt: Consumer is not back. When I made my statement that consumer credit was growing and there was hope. Seems most of the growth was due to student loans. Invictus posted a detail breakdown on BP. Probably the worst possible type of growth you can imagine. There may be student loan debtor prisons somewhere in the future since you can not discharge that debt ever.
I think what we see for economic activity is about all we'll see. No blowouts, only blowups.
Bingo Todd. My thoughts exactly. Time to bring the markets back a bit (as well as commodities) to pave the way for yet another round of QE, and then another, and another, and another. Japan but in a different shade.
@Todd: I think that quasi-stagflation is upon us and that what we see for economic activity is about as good as it will get for many years. The world's top 1% will do VERY VERY well, as usual, though, and that's all that matters to TPTB. Very shortsighted, if you ask me.
Rock, about your question. I think I agree with you, much of the impact of QE2 ending will already be baked into the markets by the time it ends. I'm less concerned with QE2 ending than I am with the (apparently) rapidly slowing world economy. I don't think TPTB are going to allow everything to float on it's own after June because they know that the end result of doing nothing would most likely be massive political and social unrest. They'll do everything they can to keep things afloat because honestly, I really do believe that if they don't, and if things keep getting worse, and Joe Six Pack becomes even more aware of how he's being raped and robbed by the Plutocracy, that heads will literally roll.
There's still a part of me that believes that when all of this is finished, when historians write the history of these times, that that history will include the removal and imprisonment of many many of the "leaders" in the world today.
Basically agree with you there. But what happens in Ems? If commodities go down, inflation goes down in China and India, they bring down rates, demand picks up for commodities again.
Also there is huge demand for cheap credit in India. Carry trade will be on. Japan, and U.S. multinationals will be rushing in again to provide cheap credit.
Timing is everything. If you can time deflation/inflation, you are a winner. Savers are screwed!
Chindia cann't affort to deflate. EMs together have HUGE FX reserves. They need to keep their people emplyeed and once people get use to a certain lifestyle.... There is no going back.
But, I am out of the risky assets. Waiting to see what happens after June 30th. I do have a utility - TRP.to.
Also, if rates don't rise, why should people sell shares and deposit money in CDs? But money coming out of commodities will go somewhere. Perhaps treasuries? Perhaps PMs?
Remember please that it's not profitable to make profits in the US. Too much tax. (Of course, Dss disagrees, but fact is companies are not trying to optimize profits in the US, they are trying to optimize them overseas). So what you are seeing in EMS is the big multinationals moving in and taking over. I either posted or commented about that some time ago.
What else do you want to know about Ems? The multinational corporations will own them simply by reinvesting their profits overseas and not in the US.
Capital is borderless. It used to be people knew what was going on in their own country, and made decisions based on that info.
How does one know what another country's monetary policy will be? I.e. if Japan prints, how does that affect me in Canada? or all that money coming to Vancouver from China. or MENA?
@Thor: T-Paw, despite his best shameful attempts at pandering to the base with transparent, dishonest, idiocy, is probably the most reasonable of the GOP field right now. Not saying much, I know, but it's always amusing to see these guys change their stripes to try to pander to the groups they need to at any given time. They either must chuckle to themselves about the absurdity of this little game or simply lack any conscience whatsoever. Not sure which trait I prefer.
Socialist Prime Minister Jose Luis Rodriguez Zapatero decided on Thursday to support the demonstrators while he was out campaigning.
"It's a peaceful protest, it deserves our respect," Zapatero told a Socialist Party rally in northwest A Coruna. In a TV interview, he said politicians "must listen because there are reasons for the discontent."
The Take the Square protest group will continue the protests through election day "because we do not back any political party," said its spokesman, Santiago Roldan.
Spain is only now recovering, albeit very slowly, from nearly two years of recession, and its jobless rate has soared to a euro-zone high of 21.3 percent. Youth unemployment is more than 40 percent in Spain, and prospects for significant economic growth soon are slim.
Todd (10:56) – Excellent point on the Student Loans and unfortunately those types of payments usually do not produce much back into the economy, but to do it through a loan only makes matters worse.
I am all for an education and believe as a society we are obligated to give the younger generations at least a basic education so they can hopefully think and provide for themselves. Traditionally the burden of offering a k-12 education has been spread throughout the entire communities in the form of taxes and what not’s - But that education does not produce anything tangible.
In the end very little of the cost of an education is put back into the economy at the time the education is being earned, the hope is that the student has learned enuff to be productive, get a job, buy a house and pay their taxes, so the next generation can become educated.
But when the only way for the average person to get a college education is to become loaded with debt, is wrong. And as you state, this debt can not be discharged, it is either paid off or it owns you forever.
Personally I do not believe they will have student loan debtor prisons, but will have “Public Service” programs. You work here, doing this and that for 7 year and Uncle Sam discharges your debt.
On Bloomberg, the DBS currency chief economist was on, and said "be cautions but go long the Euro".
I didn't understand his reasoning, but I'm sure he's smarter than me. I mean, with the solid foundation of the Euro, who couldn't go long?
I'll bet DBS owns a lotta Euros. Right after that guy, Bloomie had another guy on that said "go long the Bucky, short the Euro, and exit equity positions with strong European ties".
KFC is opening restaurants all over here. Last trip to China, they told me KFC was all over China and starting a new restaurant every day. No mistype. Every Day.
Manny - ah ok, thank you for that! So then it sounds like TPaw wasn't as much of a right wing nut job when he was running Minnesota as he sounds now?
Denise - Thanks for checking in! Funny how we seem to have a knack for vacationing in places with major events in the pipeline. Volcano's, Revolutions, Protests. Watch out world, we are traveling to your country soon! ;-)
Pretty sure our next "big" trip is going to be in March and it's to China. We can probably plan for an implosion there shortly after or before our arrival!
Greg - We just passed an important milestone at work last week. We are now more than 50% Mac! When I came to work for this company in 2007 they had 8 Macs, we now have over 250.
The Executives are now all getting iPads. They're giving up their laptops (Dell and Apple) and are replacing them with a MB Air, and an iPad. They find the iPads indispensable now, they all take them to meetings, they can easily follow along on presentations, all look at the same web sites together, read and respond to important emails. I still get a chuckle out of the people who think this is all just a fad.
Love?
ReplyDeleteSend to the IMF. They need a little, just now.
Narbonne where I'm staying is a fine place. With the beach and all...
ReplyDeleteBut more than the quality of the setting itself, it's simply the change of setting that I'm seeking here. Always reinvigorating to break your little habits.
No change in my activity though: coding my own online "bookmarking" service, and more.
So no much time for blogging nor trading these days.
Regarding the DSK's scandal, I'm glad to see that you're not wasting time "debating" about it.
ReplyDeleteYou can imagine it's everywhere here in the French media. EACH new little detail, second by second. That's simply ridiculous. I'm not sure if the American media are overdosing their people with this story too.
As for myself, I don't care about this stuff. Crimes happen everyday, everywhere.
ReplyDeleteGranted, this particular case involves a man from "the top". And that's exactly why I prefer not discussing it, anything I would say would tend towards hatred.
More generally, I'm trying to take a (little) break from all things "elites". Negatives seems to always far outweighs positives when it comes to these pigs, and the debates they inspire get toxic for your heart and mind in the long run.
Anyway. See you soon. Happy trading.
ReplyDeleteSomething I'd like to talk about and get opinions on is what happens next.
ReplyDeleteI'm thinking the next events will be "an excuse to sell". I heard that on Bloomberg quite a lot lately. They even said that about some miniscule event that happened yesterday, now I forget what that was.
I've also heard that the Fed and others are saying the buying will continue after QE2 is up, that the private sector will take over and continue.
I'm guessing the market will correct now, in preparation for the QE2 ending, so when QE stops, it will be a non-event for the market, and the pudits will say, "see the private sector has picked up the buying".
I think thatwill not be the case. Most of the QE2 money went to lower long-term yields so that money would be invested in riskier assets, like the market. I think some went to the market, but I also think some is being held by European banks in the event of defaults or perhaps Euro Demise.
So I don't think private money will replace the Fed's buying. First, Sovereign debt is too risky for low-risk, so people aren't going to buy Treasuries from the US, or Whatevers from PIIGS. Already we've seen a lot of corporate debt issuance, with even negative returns (IBM's). I think when the fed stops buying, the price of Treasuries (and all sovereign debt) will drop, and the yields will go up. Doesn't this make the dollar appreciate? I think so.
Second, if the dollar appreciates, doesn't that make OIL and other commodities fall? I think so.
Third if the dollar appreciates and commodities fall, doesn't that reduce inflation pressures? I think so.
Fourth: If commodities fall, and the dollar appreciates, won't that start to unwind the market's dependence on low long term debt interest? I think so.
Doesn't that mean the market will head back to somewhere between where we are now and last August when QE2 was announced? I think so.
I think we have to look at the trends. The trend for Treasuries (IEF) is still up, since last April/M. The fed is still buying.
Rock - I have some fairly primitive thoughts for you and hopefully later today I will be able to expound on them.
ReplyDeleteFirst "Private Sector"? If the term "Private Sector" Refers to anyone who is not a business or a goberment, then where is the demand going to come from to buy stocks?
I saw an article the other day that said used car prices have gone up 30% in the last year or so.
Gas prices are up, so are food prices, goberment spending programs will need to be paid for, so taxes are next to go up.
Unemployment remains steady around 9ish% and underemployment around 17ish%
So there is a lot less money in the economy, let alone in 401k's
The debt load consumers had been willing to carry is decreasing as more and more people hopefully are wising up to taking on stupid debt.
I am not saying it could not happen, but I just do not see where the "Private Sector" even cares enuff what goes on on Wall Street - Hell I really believe most of "Private Sector" would rather put food in their bellies then GE in their portfolio.
Hopefully at least some of that made sense and I would like to add to it later.
Mangy Mutt
@Rock: I'd tend to agree with your 9:03.
ReplyDeleteKeep in mind, this is ZH, but this certainly is eyebrow-raising, no?
ReplyDeletehttp://www.zerohedge.com/article/norway-stops-aid-payments-greece
Rock after all that happens, fear of inflation tamed. QE3 can then begin.
ReplyDeleteMutt: Consumer is not back. When I made my statement that consumer credit was growing and there was hope. Seems most of the growth was due to student loans. Invictus posted a detail breakdown on BP. Probably the worst possible type of growth you can imagine. There may be student loan debtor prisons somewhere in the future since you can not discharge that debt ever.
I think what we see for economic activity is about all we'll see. No blowouts, only blowups.
But these people must never, EVER, EVER have their taxes raised under ANY circumstance.
ReplyDeletehttp://www.zerohedge.com/article/rich-are-about-get-very-very-rich-study-finds-global-millionaire-wealth-set-more-double-2020
I hope they are ready for the consequences of this.
Bingo Todd. My thoughts exactly. Time to bring the markets back a bit (as well as commodities) to pave the way for yet another round of QE, and then another, and another, and another. Japan but in a different shade.
ReplyDelete@Todd: I think that quasi-stagflation is upon us and that what we see for economic activity is about as good as it will get for many years. The world's top 1% will do VERY VERY well, as usual, though, and that's all that matters to TPTB. Very shortsighted, if you ask me.
ReplyDeleteMorning all! Rock, will answer your question when I get into the office.
ReplyDeleteGas is falling here!
Rock, about your question. I think I agree with you, much of the impact of QE2 ending will already be baked into the markets by the time it ends. I'm less concerned with QE2 ending than I am with the (apparently) rapidly slowing world economy. I don't think TPTB are going to allow everything to float on it's own after June because they know that the end result of doing nothing would most likely be massive political and social unrest. They'll do everything they can to keep things afloat because honestly, I really do believe that if they don't, and if things keep getting worse, and Joe Six Pack becomes even more aware of how he's being raped and robbed by the Plutocracy, that heads will literally roll.
ReplyDeleteThere's still a part of me that believes that when all of this is finished, when historians write the history of these times, that that history will include the removal and imprisonment of many many of the "leaders" in the world today.
Manny - and yeah! You get to be our resident Tim Pawlenty expert ;-)
ReplyDeleteFinish green?
ReplyDelete@Rock,
ReplyDeleteYour 9:03,
Basically agree with you there. But what happens in Ems? If commodities go down, inflation goes down in China and India, they bring down rates, demand picks up for commodities again.
Also there is huge demand for cheap credit in India. Carry trade will be on. Japan, and U.S. multinationals will be rushing in again to provide cheap credit.
Timing is everything. If you can time deflation/inflation, you are a winner. Savers are screwed!
ICan
ICan - good point, that hadn't occurred to me.
ReplyDeletegood points actually - I hadn't thought of western banks rushing out to deliver cheap loans abroad either.
ReplyDelete@Thor,
ReplyDeleteChindia cann't affort to deflate. EMs together have HUGE FX reserves. They need to keep their people emplyeed and once people get use to a certain lifestyle.... There is no going back.
But, I am out of the risky assets. Waiting to see what happens after June 30th. I do have a utility - TRP.to.
ICan
@Thor,
ReplyDeleteBut there is always competition for cheap loans. So when do rates rise, if no one is printing? And what about staginflation in the develop countries?
ICan
Also, if rates don't rise, why should people sell shares and deposit money in CDs? But money coming out of commodities will go somewhere. Perhaps treasuries? Perhaps PMs?
ReplyDeleteI just trying to clear my mind.
ICan
@Anonymous, Thor; regarding Ems
ReplyDeleteI saw Citi is moving into Iraq.
I saw a report where Citi feels that Iraq will be the next big expansion area.
http://uk.reuters.com/article/2011/05/16/citigroup-iraq-idUKLDE74F18Z20110516?rpc=401&feedType=RSS&feedName=governmentFilingsNews
And
http://www.iraq-businessnews.com/2011/05/18/citigroup-hires-diplomat-to-spearhead-iraq-expansion/
Remember please that it's not profitable to make profits in the US. Too much tax. (Of course, Dss disagrees, but fact is companies are not trying to optimize profits in the US, they are trying to optimize them overseas). So what you are seeing in EMS is the big multinationals moving in and taking over. I either posted or commented about that some time ago.
What else do you want to know about Ems? The multinational corporations will own them simply by reinvesting their profits overseas and not in the US.
And if cost of capital do rise, what happens to TBTF banks like BAC, and C? Bail them out again?
ReplyDeleteWhat a mess Greenspan and Bernanke created.
Who created BRICS? Goldman's Jim O'Neal, cheap western credit, and the western multinationals at the expense of western factory workers.
ICan
ICan - excellent analysis, I admit that I don't often think as much about international economics as perhaps I should.
ReplyDeleteRE Citi,
ReplyDeleteWhy did Citi CEO, Bandit got paid millions in bonuses? I thought Citi was bankrupt? No?
ICan
@Thor,
ReplyDeleteCapital is borderless. It used to be people knew what was going on in their own country, and made decisions based on that info.
How does one know what another country's monetary policy will be? I.e. if Japan prints, how does that affect me in Canada? or all that money coming to Vancouver from China. or MENA?
ICan
@Thor: T-Paw, despite his best shameful attempts at pandering to the base with transparent, dishonest, idiocy, is probably the most reasonable of the GOP field right now. Not saying much, I know, but it's always amusing to see these guys change their stripes to try to pander to the groups they need to at any given time. They either must chuckle to themselves about the absurdity of this little game or simply lack any conscience whatsoever. Not sure which trait I prefer.
ReplyDeleteA bit of news from Madrid:
ReplyDeleteFunny pictures from Spain, despite the rhetoric:
Spain Protests
This is literally two blocks from our hotel. Notice the happy people sitting in their tents.
http://news.yahoo.com/s/ap/20110519/ap_on_bi_ge/eu_spain_protests
Socialist Prime Minister Jose Luis Rodriguez Zapatero decided on Thursday to support the demonstrators while he was out campaigning.
"It's a peaceful protest, it deserves our respect," Zapatero told a Socialist Party rally in northwest A Coruna. In a TV interview, he said politicians "must listen because there are reasons for the discontent."
The Take the Square protest group will continue the protests through election day "because we do not back any political party," said its spokesman, Santiago Roldan.
Spain is only now recovering, albeit very slowly, from nearly two years of recession, and its jobless rate has soared to a euro-zone high of 21.3 percent. Youth unemployment is more than 40 percent in Spain, and prospects for significant economic growth soon are slim.
@Denise: For a "protest", they actually look kind of happy about it, like they're camping or on vacation or something.
ReplyDeleteTodd (10:56) – Excellent point on the Student Loans and unfortunately those types of payments usually do not produce much back into the economy, but to do it through a loan only makes matters worse.
ReplyDeleteI am all for an education and believe as a society we are obligated to give the younger generations at least a basic education so they can hopefully think and provide for themselves. Traditionally the burden of offering a k-12 education has been spread throughout the entire communities in the form of taxes and what not’s - But that education does not produce anything tangible.
In the end very little of the cost of an education is put back into the economy at the time the education is being earned, the hope is that the student has learned enuff to be productive, get a job, buy a house and pay their taxes, so the next generation can become educated.
But when the only way for the average person to get a college education is to become loaded with debt, is wrong. And as you state, this debt can not be discharged, it is either paid off or it owns you forever.
Personally I do not believe they will have student loan debtor prisons, but will have “Public Service” programs. You work here, doing this and that for 7 year and Uncle Sam discharges your debt.
Mangy Mutt
On Bloomberg, the DBS currency chief economist was on, and said "be cautions but go long the Euro".
ReplyDeleteI didn't understand his reasoning, but I'm sure he's smarter than me. I mean, with the solid foundation of the Euro, who couldn't go long?
I'll bet DBS owns a lotta Euros. Right after that guy, Bloomie had another guy on that said "go long the Bucky, short the Euro, and exit equity positions with strong European ties".
KFC is opening restaurants all over here. Last trip to China, they told me KFC was all over China and starting a new restaurant every day. No mistype. Every Day.
KFC's parent is YUM. I own no YUM, yet.
No green today, folks. At least I don't think so.
ReplyDeleteManny - ah ok, thank you for that! So then it sounds like TPaw wasn't as much of a right wing nut job when he was running Minnesota as he sounds now?
ReplyDeleteDenise - Thanks for checking in! Funny how we seem to have a knack for vacationing in places with major events in the pipeline. Volcano's, Revolutions, Protests. Watch out world, we are traveling to your country soon! ;-)
Pretty sure our next "big" trip is going to be in March and it's to China. We can probably plan for an implosion there shortly after or before our arrival!
Greg - We just passed an important milestone at work last week. We are now more than 50% Mac! When I came to work for this company in 2007 they had 8 Macs, we now have over 250.
ReplyDeleteThe Executives are now all getting iPads. They're giving up their laptops (Dell and Apple) and are replacing them with a MB Air, and an iPad. They find the iPads indispensable now, they all take them to meetings, they can easily follow along on presentations, all look at the same web sites together, read and respond to important emails. I still get a chuckle out of the people who think this is all just a fad.