The Transparency Trap Tell Us What You Think We Want to Hear A Very Soft GDP Number Central Banks: A High-Wire Balancing Act What Does It All Mean? A Few Thoughts on LTRO Greek Exhaustion Syndrome Cape Town, Stockholm, Geneva, Paris, and London This week we take a brief pause in our series on...
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According to Caterpillar the US and Global economy will not go into recession. Should we consider their opinion important?
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Most U.S. portfolio managers seem to view the EU sovereign debt crisis as they would a pesky mosquito that refuses to fly away. If only the mosquito would leave, the asset managers could concentrate on the U.S. where the economy is said to be showing so much improvement and stocks are incorrectly perceived...
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We have two bits of commentary from Kyle Bass today. First he gave his usual straight forward views to CNBC this morning. Second his latest letter. Unfortunately I cannot find a version of the letter that can be printed or downloaded, so you will need to read it online.
From the Interview
“If you get out a blank piece of paper and have a look at it, that’s the plan they’re working from right now. Everything is an agreement in principle. There are no details. It’s very difficult to arrange such a disparate group of people, and get them all to cede their fiscal sovereignty to call it a central taxing authority, and in the absence of that, it won’t work.
…I think that if you look at this last agreement, from the last summit, it’s somewhat of a doomsday machine. What they’re talking about, are the ECB and governments guaranteeing the debts of the banks which in turn buy the debts of their country that’s making that guarantee, pledging it at that central bank and getting more money to go buy more debt of those countries.
It’s somewhat sophomoric if you ask me. It is a circular reference that I don’t think institutional investors around the world are going to buy, they might hoodwink some retail investors into buying these things. When you look at the periphery today, there are no buyers of peripheral bonds.”
Some of the best commentary I have read on the Euro, and from several different directions, from Gavekal. Truly a must read.
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This week we saw a coordinated effort by central banks to use their bazookas to head off another 2008-style credit disaster. The market reacted as if the crisis is now over and we can get on to the next bull run. Yet, we will see that it wasn't enough. Something more along the lines...
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From Naufall Sanaullah of Shadow Capitalism we get a nice overview of the world economy and markets.
Niels Jensen looks at the debt situation in the developed world, the implications for Europe and the potential opportunity in European equities and corporate bonds.
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We have, and will, post a lot of information showing why we are concerned about China experiencing a material slowdown. Today though we have a presentation from the Dragonomics team at Gavekal, a firm that I respect a great deal. This presentation looks at the long run positives for China’s growth, which for the most part looks right. I think their final conclusions also seem correct. I think they are missing some key points about why a financial and economic crisis is a very real threat in China, and we will look at those over time, but understanding what is in this presentation is an important part of grasping the long-term story in China that will loom over the investment world from now on.
GK Seminar HK Arthur China
Van Hoisington and Lacy Hunt expect an out and out contraction to begin again over the next two quarters.
Cullen Roche has attempted to develop a model to explain the current deleveraging cycle, or Balance Sheet Recession. Surprisingly he found that it has acted as a leading indicator of recessions in general, while he had assumed the environment we are in now was so unique that the model wouldn't have much to say...
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Bloomberg has an excerpt from Sylvia Nasar’s new book on the history of economics. It deals with the years when Hayek and Keynes were considered rivals. The two men were not as far apart as many believe, in fact Keynes was a hero of Hayek’s and this short piece illustrates that:
“One year after Bretton Woods, the Cold War had started,“The Road to Serfdom” was on American best-seller lists, and Hayek went on a wildly successful book tour around the U.S. Along the way, to the annoyance of his conservative sponsors, he spoke up in favor of the Bretton Woods treaty and the framework of international government cooperation that Keynes had done so much to bring about.”
Murray Rothbard would be horrified.
If you missed the 4 minute history of economic ideas I posted earlier here it is again:
From The Author of “A Beautiful Mind
Noah Smith gives three possible answers as to why Japanese unemployment is so low (and ends up dismissing one.) I think his last is the main reason, falling real wages:
But maybe there will be no double dip according to ECRI’s Lakshman Achuthan. He believes this will be a longer lasting slow down than last Summer (“several quarters”) but more data will be necessary before a double dip is considered likely or ruled out.
Adding more fuel to the concerns over growth in the economy, the Philly Fed Survey has gone negative. Doug Short has more.
We finally got a mixed bag on the employment front this month, a welcome change from the purely awful. However, with everyone focused on “creating” jobs I think this quick synopsis attacking the unrealistic expectations of when and where jobs will come from is well worth reading. This chart gives you an idea of...
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A very cool animated Graphic showing the change in unemployment over the last two years. Click Image for Animation Download article as PDF
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