It's been a while since we compiled a Friday Features linkfest, but we've got some great posts and news items to share with you today. Set a spell and enjoy our "Features of the Week".
1. Wikileaks confirms what we already know: Saudi oil reserves are overstated. (Al Jazeera).
2. Egypt unrest: how Mubarak's end came. (BBC News).
3. Mubarak resigns, but will he hold on to his estimated $70 billion stash? (FP blog).
4. The Perils of Intervention and a humbler American foreign policy. (C4Liberty).
5. An interview with Pimco CEO Mohamed El-Erian. (Der Spiegel).
6. Inflation is so much worse than we're told: Chris Martenson. (Financial Sense).
7. Q&A: Michael Lewis on the politicians that sank Ireland. (Vanity Fair).
8. Shades of 2006? Exchange fever takes hold as LSE-TMX merger followed quickly by NYSE- Deutsche Borse deal. (FT.com)
9. G.C. Selden trading psychology: hunches and gut feelings. (Tischendorf Letter).
10. Howard Lindzon interviews red-hot blogger, James Altucher. (StockTwits TV).
You can follow all our updates and tomfoolery in real-time via Twitter and StockTwits, or subscribe to the Finance Trends RSS blog feed and stay up to date with all our posts.
Have a great weekend.
Friday, February 11, 2011
Wednesday, February 9, 2011
New weekly high on S&P 500 $SPX
Today the SPX is down a bit midday, but as you can see from the weekly chart posted above, we're seeing a fresh weekly high in the S&P 500 as the index moves above its August 2008 resistance at the 1313 level.
Your take on the continued bullish action?
Monday, February 7, 2011
Obama and the Middle Class
In his speech today before the US Chamber of Commerce, Obama lectured his audience that gains must be shared with the middle class. He points to the eroding take-home income of middle class Americans.
But, there is nothing business can do about the plight of the middle class. That is pretty much determined by Congressionally imposed mandates on businesses. Imagine that you pay an employee $ 40,000 per year and that productivity improves enough to pay that employee $ 50,000 per year. Why wouldn't you do it? Because, in the meantime, Congress has passed a law permitting that employee to sue you for millions of dollars if another employee makes an off-color comment to another employee at the water fountain (or for that matter, off company premises and after hours....it doesn't matter under the law). Now the employee isn't worth $ 50,000 to you. Business has to factor in the potential cost of litigation (and, of course, they do). In fact, the litigation threat may be so costly to your business that you may simply terminate the employee, even though, absent the litigation benefits enacted by Congress, you would have been more than happy to pay the employee $ 50,000 (and hire more of them to boot).
Congress has punished the middle class with employer mandates. Congress has made much of the middle class economically toxic to American business. Obama need look no further than into the mirror to see the group that is responsible for damaging the prospects of the American middle class.
But, there is nothing business can do about the plight of the middle class. That is pretty much determined by Congressionally imposed mandates on businesses. Imagine that you pay an employee $ 40,000 per year and that productivity improves enough to pay that employee $ 50,000 per year. Why wouldn't you do it? Because, in the meantime, Congress has passed a law permitting that employee to sue you for millions of dollars if another employee makes an off-color comment to another employee at the water fountain (or for that matter, off company premises and after hours....it doesn't matter under the law). Now the employee isn't worth $ 50,000 to you. Business has to factor in the potential cost of litigation (and, of course, they do). In fact, the litigation threat may be so costly to your business that you may simply terminate the employee, even though, absent the litigation benefits enacted by Congress, you would have been more than happy to pay the employee $ 50,000 (and hire more of them to boot).
Congress has punished the middle class with employer mandates. Congress has made much of the middle class economically toxic to American business. Obama need look no further than into the mirror to see the group that is responsible for damaging the prospects of the American middle class.
Knocking Down Barriers
President Obama, speaking before the US Chamber of Commerce today, said that he would "knock down" barriers that hamper economic growth.
Well, for starters, how about repealing all of the enacted legislation from the 2009-2010 Congress. That would be a good beginning. In the process, away would go FinReg, Credit Card Reform, and Obamacare among other things.
If the president is serious, then the road is clear. All he needs to do is a complete about face. Anything else is just politics as usual.
Well, for starters, how about repealing all of the enacted legislation from the 2009-2010 Congress. That would be a good beginning. In the process, away would go FinReg, Credit Card Reform, and Obamacare among other things.
If the president is serious, then the road is clear. All he needs to do is a complete about face. Anything else is just politics as usual.
Saturday, February 5, 2011
Unintended Consequences
The economic recovery in the US is stillborn. All the various "initiatives" enacted by the Congress since September of 2008 have virtually guaranteed that the economy cannot have a robust recovery, the kind of recovery that, from previous recessions brought the economy back to full strength. Instead, the new credit rules, the new financial regulations, the new health care mandates, the new tax gimmicks, and the business-demonizing atmosphere of the Obama Administration all serve to slow down economic recovery and to create long term stagnation in employment and economic growth.
The Administration seems truly puzzled by all of this. The lame duck session, extending the Bush tax cuts for two years, simply avoided disaster. The tax cut extension, since it is a temporary two year extension, cannot possibly stimulate the economy in any meaningful way. Changing the rhetoric in the White House is certainly an improvement but is totally inadequate given the enactment of legislation in 2009 and 2010 that shackles businesses and makes adding employees prohibitively expensive.
Businesses can be seen as growth engines and employment generators or they can be seen as purveyors of social causes. They can't do both. More and more,American business is expected to avoid profit maximizing behavior and be good citizens, promoting various social causes. Being good social citizens and promoting social causes inevitably means growing slower, hiring fewer employees and being less dynamic. That's where we are. The "green jobs" rhetoric is nothing more than rhetoric.
It is time to set aside "feel good" rhetoric and create a business environment favorable to jobs creation. So far, the President doesn't seem to get it. He seems genuinely surprised that American business, reeling from the blows of his policies and rhetoric, isn't racing to create jobs and rescue his presidency.
If your main economic banner is "no tax cuts for the rich," then economic stagnation is probably your future. What is needed is the elimination of the numerous barriers to economic prosperity that the Obama Administration and a compliant (and long gone) Congress put in place. What is needed is no less than a complete dismantling of the legislation passed in the last two years by the Congress. Then and only then can a truly vibrant economy take over.
The Administration seems truly puzzled by all of this. The lame duck session, extending the Bush tax cuts for two years, simply avoided disaster. The tax cut extension, since it is a temporary two year extension, cannot possibly stimulate the economy in any meaningful way. Changing the rhetoric in the White House is certainly an improvement but is totally inadequate given the enactment of legislation in 2009 and 2010 that shackles businesses and makes adding employees prohibitively expensive.
Businesses can be seen as growth engines and employment generators or they can be seen as purveyors of social causes. They can't do both. More and more,American business is expected to avoid profit maximizing behavior and be good citizens, promoting various social causes. Being good social citizens and promoting social causes inevitably means growing slower, hiring fewer employees and being less dynamic. That's where we are. The "green jobs" rhetoric is nothing more than rhetoric.
It is time to set aside "feel good" rhetoric and create a business environment favorable to jobs creation. So far, the President doesn't seem to get it. He seems genuinely surprised that American business, reeling from the blows of his policies and rhetoric, isn't racing to create jobs and rescue his presidency.
If your main economic banner is "no tax cuts for the rich," then economic stagnation is probably your future. What is needed is the elimination of the numerous barriers to economic prosperity that the Obama Administration and a compliant (and long gone) Congress put in place. What is needed is no less than a complete dismantling of the legislation passed in the last two years by the Congress. Then and only then can a truly vibrant economy take over.
Friday, February 4, 2011
Is QE fueling commodity, food price inflation?
Is the Federal Reserve's quantitative easing policy fueling inflation in asset prices, including the price of commodities and foodstuffs?
That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population.
The recent situation recalls the commodity and grain price surges of 2007-2008, when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices.
Image via: FAO Food Price Index.
So what about the role of quantitative easing and increased money creation by the Fed and other central banks? Might that sort of liquidity operation be fueling a rise in asset prices across the globe?
Or are prices rising due to demand from increased populations and rising wealth in emerging nations as Fed Chairman Ben Bernanke would have it?
Last night, while reading through some interesting reactions to this topic on Twitter, I decided to do a little quick research and see what sort of answers I could find. As rising food prices and global inflation have been a big theme with economists and macro analysts in recent months, it didn't take long to find some worthwhile articles and posts addressing this topic.
One particularly interesting article from October 2010 anticipated a great deal of what we currently see unfolding in the world. Here's an excerpt from, "Bernanke sets the world on fire":
"...In 2007-2008, Bernanke's loose monetary policy fueled unprecedented commodity price inflation. But Bernanke put the blame on China and on oil producers.
So far in 2010, the price of crude oil has jumped by 27%, of corn by 63%, of wheat by 84% , of sugar by 55% , and of soybeans by 24%. Without the Fed's unprecedented loose monetary and near-zero interest rates, it would have been highly unlikely for commodity prices to increase at these alarming rates...
...The frightening food price inflation has raised the specter of another food crisis and food riots... Since liquidity for commodity price inflation is abundant and cheap, food price inflation could run up, stall world economic growth and spread social unrest. "
Certainly many other factors, including the use of food for ethanol, growing populations, increasing standards of living (changing diets), weather events, and gradual loss of prime arable land to urbanization are playing a large role in ongoing food price rises.
Still, is it possible that the role of cheap money flowing into asset markets (including commodities) is an under-acknowledged spark fueling higher prices?
Related articles and posts:
1. Bernanke says policies boost stocks, not food prices - Barron's.
2. Countering the myth that "World is running out of food" - Big Picture Ag.
3. FAO food price index and reports - United Nations, FAO.
That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population.
The recent situation recalls the commodity and grain price surges of 2007-2008, when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices.
Image via: FAO Food Price Index.Or are prices rising due to demand from increased populations and rising wealth in emerging nations as Fed Chairman Ben Bernanke would have it?
Last night, while reading through some interesting reactions to this topic on Twitter, I decided to do a little quick research and see what sort of answers I could find. As rising food prices and global inflation have been a big theme with economists and macro analysts in recent months, it didn't take long to find some worthwhile articles and posts addressing this topic.
One particularly interesting article from October 2010 anticipated a great deal of what we currently see unfolding in the world. Here's an excerpt from, "Bernanke sets the world on fire":
"...In 2007-2008, Bernanke's loose monetary policy fueled unprecedented commodity price inflation. But Bernanke put the blame on China and on oil producers.
So far in 2010, the price of crude oil has jumped by 27%, of corn by 63%, of wheat by 84% , of sugar by 55% , and of soybeans by 24%. Without the Fed's unprecedented loose monetary and near-zero interest rates, it would have been highly unlikely for commodity prices to increase at these alarming rates...
...The frightening food price inflation has raised the specter of another food crisis and food riots... Since liquidity for commodity price inflation is abundant and cheap, food price inflation could run up, stall world economic growth and spread social unrest. "
Certainly many other factors, including the use of food for ethanol, growing populations, increasing standards of living (changing diets), weather events, and gradual loss of prime arable land to urbanization are playing a large role in ongoing food price rises.
Still, is it possible that the role of cheap money flowing into asset markets (including commodities) is an under-acknowledged spark fueling higher prices?
Related articles and posts:
1. Bernanke says policies boost stocks, not food prices - Barron's.
2. Countering the myth that "World is running out of food" - Big Picture Ag.
3. FAO food price index and reports - United Nations, FAO.
Wednesday, February 2, 2011
Jim Simons of RenTec speaks at MIT
Jim Simons of Renaissance Technologies gives a talk at MIT about his background in mathematics, how he got his start in business, and the "secret sauce" of running a hedge fund with a quantitative bent.
As Paul Kedrosky notes on his blog, it's not often that you get to hear from Simons, so have a look at this video and hear what he has to say about his work, the importance of getting young people involved in math and science, and following your entrepreneurial drive.
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