Further Reading: Chicken and Waffles Edition

September 19, 2011

On this day in history: New Zealand women gained the right to vote, 1893

What is America’s most important competitive edge? Could it be our sense of design?

Looking more broadly, James Hamilton looks at what America has been good at and what we can be good at going forward?

When it comes to Chicken and Waffles for breakfast, it would be hard to do better than John Besh’s Luke. They don’t seem to be on the menu at the moment, but the waffles are a revelation. Anyway, this picture of a plate of the aforementioned combination sent me down memory lane.

Has America really suffered job loss from trade and too much openness, or is it because we have reduced our willingness to be open and we are falling behind the rest of the world in openness?

Do today’s ridiculously high profit margins effect what policy choices make sense?

Speaking of which, here is a look at the next bubble to burst, the corporate profits bubble. As we keep pointing out, we don’t need a recession for that to pop, but like most bubbles its popping will likely lead to a recession. If we get a recession that just hurries up the process:

Paul Volcker warns that “A Little Inflation can be a Dangerous Thing.” I would add that if inflation were to move even to 4% or 5% on a sustained basis equities would perform horribly.

Extended read of the day, Buying the Future. A wonderful and entertaining journey down the history of mankind’s sense of the future and how markets interact with it. Like markets and speculation it is filled with wisdom, folly, grand characters and wit. Sample quote:

In 1897, Joseph Leiter tried to corner Chicago’s wheat market, buying up 22 million bushels worth of futures and 18 million bushels of wheat. His adversary, however, was Philip Armour, who had the resources (he was a meat-packing patriarch) and determination (he was furious) to ship grain over from Minnesota, deploying icebreakers to keep the channels open. When prices collapsed, Leiter lost $10 million, was sued by his creditors, bailed out by his father, and had his travails fictionalized in Frank Norris’ novel The Pit. No matter how many wheat farmers were ruined by his busted corner, however, Leiter most assuredly wasn’t. In 1902, he founded the city of Zeigler, Illinois, which he ran as a barony. He had “2902” carved into the cornerstone, explaining that he was a thousand years ahead of his time.

No one knows the future of course, but we have warned that calculating how cheap the market was using forward operating assumptions was silly, since they rarely are anywhere close to correct (and one year of earnings is pretty meaningless anyway.) Today we see that earnings growth estimates for this quarter have been slashed and look like they are headed even lower. Of course, Earnings estimates will end up being beaten, because they always are lowered until they will be:


Tim Duy surveys the reasons he, and I agree, doesn’t believe monetary policy is the answer in Rearranging the Deck Chairs.

Meanwhile over at Bonddad blog we have a good rundown of recent leading economic data. It isn’t looking good, but there are some bright spots. One thing to watch as typically a positive is the explosion in the money supply. He discusses the various potential reasons for this, and frankly I am not sure. I lean toward a panic move for liquidity as the explanation. Whatever the case, we saw similar action right before the collapse in the fall of 2008, so it is certainly not a good reason to believe that we will not see significant issues over the next six months to a year.


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