Tuesday, April 30, 2013

On Paper Gold.

The Wall Street Walk

Corporations exist to profit from a product.

Markets exist to imbue ownership in corporations.

HFT exists to facilitate trade in markets.

Traders exist to furnish markets a directional bias.

Governments exist to protect the liberties and borders of their constituents.

Individuals exist to pursue their ends and sustain the species.

Recalling Sicily

Graft or Circumstance?

Gaming Consumer Confidence

(link to The Conference Board PR)

Monday, April 29, 2013

Repost from ValueWalk

S&P 500 Valuation Based on Inflation Data

Since 1978 the SP500 Intrinsic Value Index calculated using the “Prevailing Rate” (Real GDP Rate + 12mo Trimmed Mean PCE Rate) as a capitalization rate for the mean earnings for the SP500 has been a helpful indicator in judging SP500 under/over valuation levels.

Wednesday, April 24, 2013

Couldn't make it up if I wanted to.

These kids had responded to a Craigslist ad my wife put up for a couple of chairs.  When exchanging info the young lady who wants these things so badly explained that they work for the church, and are also following Dave Ramsey.  The deal is already done when an hour later this text comes through:
We were asked to fill the truck up with gas in order to borrow it, would you be willing to take 350 instead of 375?
Am I a sucker buying a bunch of excuses?  Maybe, but I don't think so.  And that's the point about the current situation in our economy.

Oil companies, with their 30% profit margins, are taking all the marginal money that would otherwise go to consumer outlets, especially in light of wage stagnation.  This is the daily economy of everyone else.  The one that serves the other side of the gulf in socio-economic classes.

$25 lost per deal x 300 MM citizens = $7.5 billion lost in principal commerce

Thursday, April 18, 2013

Saw this on SMB Capital's Blog

I don't get it.

For years here and elsewhere I have been advocating a neo-WPA or some other organization to put government money to work hiring people to construct projects benefiting the American people - we got ARRA, an uninventive act funneling money into state Departments of Transportation for fixing potholes.  Generally, though, we are propping markets on the outlook for future growth, stuffing the individual 401k's and pension funds with stocks that now stand to get sideswiped immediately after tax season.

Unsurprisingly, consumer growth could not happen between corporations maximizing profit by laying employees off, and crude furnishing the oil companies with 40% margins effectively starving the rest of the economy of a revenue stream.

All of this has played out in slow motion so plainly, that I feel like everyone sees it, and yet, no one does anything about it!  But finally we have crude backing off to a more sustainable economic level and the market faces unrelenting sell pressure.  I don't get it.

We are early in the consumer credit cycle with home and credit debt refinancing, and the home remodeling and resale market in full swing.  The cost to the consumer of gasoline should come down to a new, higher level than previous good times, increasing vehicle mileage, while lowering expenses to merchandise providers of all stripes.

Falling oil is not prima facie evidence of deflation, just as trailing consumer data isn't prima facie evidence of a weakening economy if on the back of a rising crude spot.  Because merchandise providers don't need to change pricing policies with greater discretionary income coming from fuel economy, the prospects for broad benefit to the American and world economies improve imminently.  A good deal is still a good deal.

I guess the principal purpose of this writing is to declare resentment for the way the market has behaved lately.  It is clear to me that a battle rages in the world between white and black hats.  Now that this economy's millstone has finally been lifted - crude - the market is dumping trailing data.  Why?

Now that a realistic prospect for consumer spending is here, it's hit the bids out of the gate.

I don't get it.

Monday, April 15, 2013

April 15, 2013

(spreadsheet from businessinsider, link)

see also:  link to China Balance of Trade histogram

(chart from zerohedge, link)

Saturday, April 13, 2013

Three Charts

(link to last chart at Hofstra Dep't of Economics)

Friday, April 12, 2013

On Gold, Briefly.

1.  The World Economic Forum hosts an annual meeting in Davos, Switzerland.

2.  Swiss National Bank faces Referendum over Gold Sales - 3/21/2013
The Swiss National Bank (SNB) could be prevented from selling its gold, after the Swiss People's Party (SVP) secured enough signatories for its proposals to trigger a national referendum on the matter.
The proposals – dubbed the ‘gold initiative' – seek to prohibit the central bank from selling gold, force it to hold at least 20% of its total assets in gold and ensure all bullion holdings are stored physically in Switzerland.
Members of the SVP, the largest party in the Swiss National Council, yesterday released a statement revealing they had accumulated 105,279 signatures in support of their proposal, enough to trigger a public referendum.
A spokesperson for the SNB said the central bank has "considerable concerns with regard to the monetary policy implications of the demands in the initiative".
The article goes on to explain that the Swiss would like their Central Bank to reverse from selling to buying, bringing its balance sheet weighting up to 20% from the current 10%.

update:  On 3/24/2013 zerohedge posted a letter from ABN AMRO changing the handling and delivery of gold settled contracts.

Trading Time Machine

While growing from a trading pollywog in the swamps of the OTC I compiled message board posts that pointed to dirty laundry.  See how many indicators you can spot while reading Bitcoin related rubbish.

(as always, you can click to enlarge)

Thursday, April 11, 2013

Kyle Bass on Japan

Kyle Bass presentation, Coming Crisis in Japan, given to the University of Chicago Booth School of Business on March 3rd, 2013.

14:56 - The quantitative analysis that I go through is, in my opinion, irrefutable.  You can't even argue the numbers that I give you because the numbers are the numbers. What you can argue are the qualitative perceptions of the participants, and how they're likely to act going forward. . . . It's just a question of when. When does some qualitative input change the participants behavior? Because when that switch is flipped it happens all at once.

Wednesday, April 10, 2013

Authors as Bumpers, Buffers

Yesterday I saw Kyle Bass on zerohedge.

Commentary via twitter:

Then today Buttercup and I are having a conversation and she has to remind me about the premise of The Hunger Games.  I had heard about this book an anomalously frequent number of times, and so saw the movie.  It didn't stick.  Afterward I visit wikipedia to get the scoop on this franchise.
Collins has said that the inspiration for The Hunger Games came from channel surfing on television. On one channel she observed people competing on a reality show and on another she saw footage of the invasion of Iraq. The two "began to blur in this very unsettling way" and the idea for the book was formed.  The Greek myth of Theseus served as a major basis for the story...
Then I wonder, "How does a story become a social bumper, pushing us away from distasteful outcomes like Brave New World?  Or become a buffer, cushioning the social conscience against bitter, but eventual outcomes like Nineteen Eighty-Four?

Friday, April 5, 2013

Grab some orange slices and your juice box, it's Story Time.

A family member guested their way into an Easter supper fraught with tension.  Apparently, one of the gals on board had recently been in "la bastille" for writing herself percocet prescriptions, as well as doing the same for a paramedic in a neighboring county.

Facts of the case:
  1. Gal was a nurse authorized to use the pad.
  2. Gal's husband worked in a faraway land, near Iowa.
  3. Husband came home once monthly.
  4. Gal managed the finances.
  5. Couple were falling behind on bills and couldn't seem to "dig out."
  6. At peak consumption Gal topped 15 pills per day.
  7. Estimated quantity of pills acquired 20000+.
  8. Bail cost Gal's folks almost $4000.
Mind you, this information is at least 3rd, and probably 4th hand.

Libertarian Conclusions:
  1. On face, prescribing yourself medications and then taking them should not be legally wrong.  Until the story advanced further, I found myself thinking, "this a typical case of the government protecting people from themselves."  When Gal provides scrips to Paramedic-in-Neighboring-County (PiNC), she becomes a Distributer-of-Controlled-Substance (the bad kind of DoC).
  2. A DoC ruins lives because they do not furnish information about the downside risks to end users.  A DoC may never know the end users, therefore, they harm the end users.
  3. At 15 pills per day, this Gal likely used pills recreationally while on the job as a nurse.  Obviously a callous, dangerous, and risky prospect.
Dad Conclusions:
  1. Without a target (focused personal desire for something), our efforts (waking up and doing work) have no aim (steps to accomplishment), and therefore, no meaning (personal satisfaction).  reference Once, On a Fishing Trip.
  2. The world is tough and lonely.  A virtue of our existence is the combination of a man and a woman, for at least long enough to convince her to "get busy."  Everyone needs someone to be there for them because no one cares about you or your ends until it affects them.  That's reality.  A someone can be a spouse, a fishing buddy, a mentor, a parent, or even a psychologist.  Children cannot and should not be given this responsibility.  Heaping love or frustration on a child is escapism.
  3. Pleasure seeking behavior is also a form of escapism.  What this gal was escaping from we cannot know for sure.  We can be sure that she wasn't going to find the answer in the bottom of a percocet bottle and that people driven by self-satisfaction are less likely to seek crutches.
  4. Don't consolidate your financial assets in the hands of one person.  Also, have a complete understanding of how your efforts are being converted into wealth, and how that wealth is being converted into security.
  5. If you willfully harm other people (eg - feelings, finances, trust) you are an asshole worthy of being socially isolated.
Final Word:  It's never too late to restore balance to your personal universe.  One of this lady's goals can be to pay off the bail debt promptly (righteous) and another to reform her opioid ways (personally useful).  Accomplishing these tough, though manageable goals, will inspire confidence to aim for and achieve still bigger targets.

In the end, if reckless pleasure seeking must be the only way to live then die happy in a rented sports car driven over a cliff.  Don't put yourself or your family through the cycle of angst brought about with dependence.

Want something - Get it.

Thursday, April 4, 2013

Notes from SMB Webinar.

Mike Bellafiore of SMB Capital hosted a webinar this afternoon, Are you a Pro or a Piker?
  • "When they study people who are successful they tend to have strong, successful social networks."
  • "When you see an A+ trade you should be risking at least 30% of your intraday stop.  For a swing trader maybe 2-5% of your account."
  • "I can't stand when I see guys on my desk looking at an A+ trade and don't get enough on with that.  I don't care if you lose money, GET IN A GOOD TRADE."
  • "If you see a trade that you like, take it.  Your job is to take risk."
  • "Not making enough when you're right is what's holding you back."

Monday, April 1, 2013

Once, On a Fishing Trip.

Two kids, maybe 15, drove by in a snazzy little Boston Whaler and I thought, " I would have killed to have that boat when I was their age."  Then I thought, "what would I kill for today 10 years from now?"