Friday, April 3, 2015
Wednesday, April 1, 2015
While IKN maintains stone silence, I'll cop to the April Fool.
Anyway, here's a chart:
Gold is still going up ex-US, and even without the break above an admittedly tight upper Bollinger in the above chart, today's still a significant move:
Because all the pissant bloggers out there thought the droop earlier this week was the endgame of a gap fill. Turns out maybe it's not. At the very least it's threatening a higher high in this month's trend.
Ladies and gentlemen, an announcement: It's been an interesting way to watch four years go past and balancing it all out, it's been a lot of fun too, but today sees the last ever post at Market Narrative.
I'll admit that wrapping up the blog has been on my mind for a while, but the catalyst came last week when I was offered a new job. Part of the package of this new job, which I have now accepted, means my continued writing will be at the new gig. To that end, I'll be taking a couple of weeks off before joining Jeff Berwick at The Dollar Vigilante as his new "class war" correspondent.
Finally, a warm thank you goes out to all you Market Narrative readers who've come over and come back so often, you're greatly appreciated. Hopefully I'll see you all soon at the new site.
I've often wondered how the last post would turn out. Thanks and goodbye from Market Narrative, Otto
Tuesday, March 31, 2015
So, in an attempt to inoculate myself against Mankiw for when I have to read his textbook this summer, I've been looking for everything Krugman has to say about him.
And boy oh boy it's not good. It's not just professional disagreement: phrases are used such as "bogus claims", "deliberate obtuseness", "oddly oblivious", "pretending to be stupid", "assuming your conclusions", "either remarkably ignorant or simply disingenuous", "smuggled in on the pretense", "inequality’s apologist", "crusade of cockroaches", and even "Has Greg been living in a cave since 2006?".
Not that I have anything wrong with Krugginator's attitude, because as it turns out Mankiw really does believe in Mitt Romney's program of re-enslaving the masses under a new feudalism to provide more soylent green for the capitalist plutocratic class.
So here's a smattering of Krugger's opinion pieces mentioning Mankiw:*
24 Aug 08 - the Tax Foundation is not a reliable source.
3 Mar 09 - roots of evil.
21 Jun 09 - live long and prosper.
28 Jun 09 - health care is not a bowl of cherries.
12 Aug 09 - concern trolls.
28 Aug 09 - heredity, environment, justice.
2 Nov 09 - no saving grace 2.
23 Jun 11 - a fit of peaks.
23 Jul 11 - profiles in un-courage.
22 Jun 13 - Greg Mankiw and the Gatsby Curve.
16 Feb 14 - Iron Men of Wall Street.
27 Mar 14 - too much faith in models, capital taxation edition.
22 Apr 14 - inequality 1992.
24 Jun 14 - sympathy for the trustafarians.
* - and note that I can read as many NYT articles a month as I damn well want - thanks to Ghostery, Adblock Plus and NoScript.
EWJ has dropped to approximately the Bollinger mean twice before in this uptrend, so let's see if it can rebound a third time.
Shaoul's been saying that the recent strong performance of the Nikkei has occurred with little to no US participation, and therefore this is the sort of time when you want to buy Japanese equities.
Also, Japanese economic data has been getting less and less moribund.
So let's see what happens here.
Oh btw, CNBC this morning had some talking head warning about poor earnings when companies start to report. (Oh look, they're even mentioning it on their website.) So we'll have to see if that inspires a S&P market dump going into the first couple weeks of April.
Personally, I think most of the dumping has already happened these past two months, so I'm agnostic until the chart tells me to get out. Which... might be today, judging by the failure to keep the Bollinger mean and EMA(10) and the continued nonconfirming weakness in the $TRAN chart. We'll see.
Monday, March 30, 2015
Here's one of Clarkson's first appearances on Top Gear, in 1988, being a total Bolshie and actually taking seriously the idea of public transit for others:
This is hilarious.
Viewpoint - here's why Oisin Tymon didn't report Jeremy Clarkson. A summary of social media comments on the unknown face recently punched by Jeremy Clarkson, which re-earn my respect for the British, including:
Oisin Tymon you irish twat I can say I'm irish too cop the hell on grow up you knew what Jeremy was like big pussy
— jigglyass (@jigglyass1) March 25, 2015
So Oisin Tymon got a slap for being lairy then drove himself to A&E then squealed like a bitch... thats a coward right there
— British Baldy (@chrisbrennan10) March 25, 2015
@BBC_TopGear Oisin Tymon is a complete pussy bitch, he went to a&e cause of a burst lip. Grow a set of balls u stupid dog dick licking bitch
— Peter richardson (@peter_oz1985) March 25, 2015
I have one question... what the hell is "lairy"?
I agree btw with mocking someone going to emergency with a split lip. Why not leave emergency for heart attack and stroke victims, you selfish cunts? Shit, I walked off a torn ACL/MCL/meniscus once and a broken elbow another time. What the fuck are they teaching their children today in Ireland?
Some light reading for Monday:
Calculated Risk - Yellen's speech. Too bad absolutely nobody in the market will read it because they all think they're so much smarter than the Chairman of the Federal Reserve.
New Deal Demoncrat - weekly indicators. He's now incorporated the Billion Prices Project. His summary:
At the beginning of this year, I forecast positive growth for the year, subject to the corporate profits report for the 4th quarter of 2014. The decline in corporate profits means I cannot rule out the economy rolling over in the final quarter of this year, although the positivity of the other long leading indicators in the 4th quarter of 2014 make that unlikely. Still, as the housing improvement from late last year and the decline in gas prices feed through into the economy this year, I still am positive on the next 6 months.Whatever happened to Joey the Weasel, btw? You know, the guy who would take one isolated indicator and turn it into doomporn despite all the other indicators disagreeing?
Mining.com - Fed minutes turned the tide. Linked to only cos his data confirms that whitey was short gold heading into the Fed. Which certainly was a stupid plan.
Slate - did the Illuminati force Zayn Malik out of One Direction? Was it because he felt something so wrong, doing the right thing? But everything that kills him makes him feel alive! Baby, I've been - I've been losing sleep!
Various tangentials about economics:
1. I live in a city that has/had a decent library system - though strangely now they've gotten rid of a lot of their books and seems to be loaning out electronic versions instead - and the entire library system has one actual economics textbook. Intermediate macro, I think.
All the rest of the books in the "economics" section are just opinion and blather, usually on the most ephemeral topics, most of which have long passed their sell-by date. 90% of them aren't even written by economists, but rather just talking heads and professional rabble-rousers.
2. I winced a bit when I saw my Intro Micro/Intro Macro textbook is going to be Mankiw, because I remember him being criticized as a right-wing wackaloon.
OK, apparently Mankiw's textbook is recognized by his peers in academia as about the best intro textbook out there. And he is apparently respected in his field. And most other intro econ textbooks from the US seem to be written for ten-year-olds. But this guy was economic adviser to Bush the Dumber, and then economic advisor for Mitt "47% of American citizens are our enemy and must be crushed and enslaved" Romney's presidential campaign.
But who else could the neocons even bring in as an "economic adviser"? Most of them get their "economics" from the back cover of an Ayn Rand novel, if not straight out of the mouth of the Koch brothers. That's scary - an entire half of the US political spectrum is utterly ignorant.
3. Ain't it funny how so many hedge fund talking heads got the trajectory of US interest rates wrong over the past few years? They were all screaming about imminent inflation, and yet no such thing happened.
Kruggers says the low inflation/threat of deflation environment was completely predictable for anyone with an economics education, which seems to suggest that none of these hedge fund clowns know the first thing about economics - in which case maybe they should stay the hell away from the bond market, you think?
Put those three facts together, and it suggests that at least half the brains participating in the equity market are utterly uninformed and ignorant.
That is scary.
Ben Bernanke's beard has a blog now, contrary to initial reports there are no kitten gifs, and he's basically handing you a free education in Intro Macro so you should read it to inoculate yourself from the wharrgarbl of clowns who get their edumacation from some fucking right-wing wackaloon website.
I know one blogger in particular who will never read Bernanke, because it'll teach him that the garbage he's been spouting off in his worthless newsletter and blog for the past 5 years is all hilariously incorrect, and that's why he was still playing junior miners and preaching hard-money bullshit for a full-year 2% gain while the fucking S&P popped 20% in 2012.
Ben Bernanke's Beard's Blog - why are interest rates so low? Here's a quote of something like 90% of the post, which should be no problem copyright-wise because the exact same can be found in the lecture notes of every Intro Macro prof across the world:
If you asked the person in the street, “Why are interest rates so low?”, he or she would likely answer that the Fed is keeping them low. That’s true only in a very narrow sense. The Fed does, of course, set the benchmark nominal short-term interest rate. The Fed’s policies are also the primary determinant of inflation and inflation expectations over the longer term, and inflation trends affect interest rates, as the figure above shows. But what matters most for the economy is the real, or inflation-adjusted, interest rate (the market, or nominal, interest rate minus the inflation rate). The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited. Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.
To understand why this is so, it helps to introduce the concept of the equilibrium real interest rate (sometimes called the Wicksellian interest rate, after the late-nineteenth- and early twentieth-century Swedish economist Knut Wicksell). The equilibrium interest rate is the real interest rate consistent with full employment of labor and capital resources, perhaps after some period of adjustment. Many factors affect the equilibrium rate, which can and does change over time. In a rapidly growing, dynamic economy, we would expect the equilibrium interest rate to be high, all else equal, reflecting the high prospective return on capital investments. In a slowly growing or recessionary economy, the equilibrium real rate is likely to be low, since investment opportunities are limited and relatively unprofitable. Government spending and taxation policies also affect the equilibrium real rate: Large deficits will tend to increase the equilibrium real rate (again, all else equal), because government borrowing diverts savings away from private investment.
If the Fed wants to see full employment of capital and labor resources (which, of course, it does), then its task amounts to using its influence over market interest rates to push those rates toward levels consistent with the equilibrium rate, or—more realistically—its best estimate of the equilibrium rate, which is not directly observable. If the Fed were to try to keep market rates persistently too high, relative to the equilibrium rate, the economy would slow (perhaps falling into recession), because capital investments (and other long-lived purchases, like consumer durables) are unattractive when the cost of borrowing set by the Fed exceeds the potential return on those investments. Similarly, if the Fed were to push market rates too low, below the levels consistent with the equilibrium rate, the economy would eventually overheat, leading to inflation—also an unsustainable and undesirable situation. The bottom line is that the state of the economy, not the Fed, ultimately determines the real rate of return attainable by savers and investors. The Fed influences market rates but not in an unconstrained way; if it seeks a healthy economy, then it must try to push market rates toward levels consistent with the underlying equilibrium rate.
This sounds very textbook-y, but failure to understand this point has led to some confused critiques of Fed policy. When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings.
I was concerned about those seniors as well. But if the goal was for retirees to enjoy sustainably higher real returns, then the Fed’s raising interest rates prematurely would have been exactly the wrong thing to do. In the weak (but recovering) economy of the past few years, all indications are that the equilibrium real interest rate has been exceptionally low, probably negative. A premature increase in interest rates engineered by the Fed would therefore have likely led after a short time to an economic slowdown and, consequently, lower returns on capital investments. The slowing economy in turn would have forced the Fed to capitulate and reduce market interest rates again. This is hardly a hypothetical scenario: In recent years, several major central banks have prematurely raised interest rates, only to be forced by a worsening economy to backpedal and retract the increases. Ultimately, the best way to improve the returns attainable by savers was to do what the Fed actually did: keep rates low (closer to the low equilibrium rate), so that the economy could recover and more quickly reach the point of producing healthier investment returns.
A similarly confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates “artificially low.” Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate. There is absolutely nothing artificial about that! Of course, it’s legitimate to argue about where the equilibrium rate actually is at a given time, a debate that Fed policymakers engage in at their every meeting. But that doesn’t seem to be the source of the criticism.
Good point, Ben: the source of the criticism is the fact that right-wing wackaloons aren't even getting a basic edumacation in economics - they think that they can just poke around the "Ludwig von Mises Institute" website and watch a few Max Keiser videos, listen to the blather from a couple ignorant hedge fund clowns who've never once beaten SPY's returns, or maybe even read Atlas Shrugged, and that will give them all they need to know to make macro calls.
Sunday, March 29, 2015
So up here in Canada, thanks to Prime Minister Pedosmile Sweatervest's decade-long effort to make Alberta the center of the Canadian economy, the recent collapse in the Canadian dollar has left us consumers to be fucked up the ass. Prices have already gone up 25% or more at the grocery store, since there are no longer any Canadian manufacturers of foodstuffs due to Conservative party policy.
Well, so imagine my surprise when I saw 1kg jars of honey on sale for $6.99! That's half the price of what we have to pay for American honey, or for Canadian honey that prices itself at the same price as American honey.
And it turns out, this honey is made in Greece.
I guess Europeans have a fantastic chance right now to undercut American goods at the stores, since their Euro has dropped just as much as the Canadian dollar.
So, I'm happy to support Greek beekeepers with my shopper's dollar, similar to how I've already been supporting Portuguese and Spanish winemakers except that now the fucking LCBO seems to have placed punitive taxes on Spanish and Portuguese wine in an attempt to make their prices more "competitive" with cheap Ontario garbage that I would never touch in a fucking lifetime.
As for the rest of the world: see if you can export more goods to Canada, okay? Our food manufacturing industry has been completely eliminated, so it's not like we can produce our own products anymore; and American goods have now become especially uncompetitive in our stores, so here's your opportunity to exploit a brand new market!