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Showing posts from February, 2017

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…

Steve Bannon: He said what?

Earlier today (Friday) Bannon was speaking at CPAC, and he said:  "The cabinet secretary were selected for their task of "deconstruction of the administrative state"

I mean looking at Trump cabinet you feel that those appointed hate their job and department; turns out they were selected for that very reason -- the destruction of the organ of state.  This is truly amazing that a senior White House official and confident to the President that the entire decision of selecting the cabinet is to ensure the destruction of these departments.  It also explains why so few of the confirmation required jobs have been filled -- there will be no job to take over.   If the intent is destruction (and quickly at that -- the mid term elections are just around the corner), then they have to move quickly.  Already on February 3rd legislation has been introduce to eliminate the EPA. Education has to be next, Social Security administration (since it will be pawned off to Wall Street), Depar…

French Elections a primer


Don't read Zero Hedge or the other right wing  about the French presidential elections!

The French have many political parties and they wanted their president to be elected with an absolute majority.  The solution:  Presidential election with two votes, the first will take place on April 23 2017 and if the winner has less than 50% of the vote, the top two candidates will have a run-off election on May 7th -- two weeks later.

Now, Marine LePen is polling at 27%, which gives her the lead, but doesn't make her the president, because most French detest the far right party that is anti-europe, anti-immigation and basically racist.  So the runner up at 20% is Macron, an ex-socialist (economy minister) that was considered too far to the right (of the socialist party) then you have Fillion at 17% and the others somewhat less than that.

The key here is who is going to be #2.  Everyone believes that slightly more than 1/4 of the French electorate are pro-Front National, but that sti…

Unintended consequences part II

Alternative energy

This week The Economist has a long spiel on Alternative energy and how it generate grid issues. While this is true to some extent the reason is not entirely what the Economist thinks is the problem. There is no doubt that someone has to pay for potential power.  But, and this is important, the nature of the competition is changing.  Rooftop solar is a problem because the houses are empty during the day and full at night.  Its a problem because rules are such that utilities have to buy the power when its available, not when its needed.

But again technology is at the rescue.  In countries where the obligation of the utility of buying rooftop solar is low (and that battery technology is now emerging as a cost effective solution) then there is the potential for true shift in production away from polluting technologies.  I am happy to pay for the nearby potential power from the gas powered station if, and only if, the utility is also happy to pay me for potential power -…

34 of 549

This is a short one, but telling:  There are 549 US government jobs that are subject to Congressional conformation.  So far Trump has nominated 34 (not passed, nominated), it means that there are 515 jobs that require congressional approval that have yet to have a name associated to taking over.  Granted its early days, but Trump and friends have had from November 9th to January 20th to find these people -- so far only 34 have been found.

Its not that the White House is chaotic, its just not taking care of business...

Enemy of the People!

This is no longer about "alternative reality" it is about power and the ability to control the agenda. Trump and republican congress have for years worked on the premise that their vision of the world is correct, and that the press are "lying liars"! So far, they've been supported by FOX news, Breitbart and Alex Jones (and many many others). It was funny at first, Americans thought that this was going to pass, and that eventually the American people will figure out that they were being lied too!

Reality is otherwise, poorly informed, scared of the world, getting their news from "alternative news sources" that has a different agenda -- selling fear. The arrival of Trump is the first instance where the Right has a chance to really change things around, with a majority in Congress they can make substantive changes that will be permanent; shutting down the Education department and the EPA (now that they know that the Energy department is mostly about supe…

Greece: The fun continues & Spain

So of all the billions that were borrowed by Greece over the past 4 years, how much was "new money" and how much was refinancing old existing debt?  Most finance people I spoke to said that they thing that between 15/20% of all funds borrowed by Greece over the past 3 years was "new money" to support the economy.  The population at large believes that its 100%.  What is the real figure?  Well in fact, the number is a little lower; the total new money that Greece raised over the past 3 years is about Euro 300 billion, of which slightly less than Euro 24 billon was "new money" or about 8%.  Although truth be told Greece's debt has shrunk from Euro 360 billion to Euro 300 billion between 2012 and 2017...  The goal for the ECB was to refinance the European banks loan to Greece -- socializing the debt.  The exercise is now largely completed, so the next tranche of money will be harder to obtain -- as Germany keeps on reminding everybody.

The reality is tha…

National Security & Trump

Well this takes the cake!

Flynn fell on his sword (you knew it was going to happen when "the President supports Michael Flynn" line came across the wire). The implication is potentially very serious. There is no doubt that the FBI took their sweet time in investigating this problem. The problem is this: When did the President know and what did he know (these words made famous by the Watergate scandal).

Right now Flynn is gone, fine and good, but one has to wonder why he would have gone to the Russian on his own without the approval of his boss. Today, Zero hedge, a news site that has known "pro-Russia" positions when to some length to say that "there is no evidence" provided by the media that the relationship between the Trump campaign and Russia was anything real/bad or that the Russians were giving orders to the Trump camp.

Hmmm, a news site "bitching" about the lack of "proof" from the media! Journalists have hatted Trump from the v…

Uncertainty: the law of unintended consequences

A new administration always brings change to the economic/politics landscape and it's inevitable. The work of Trump and his crew falls well within the scope of what other presidents have done. As en example Obama's first executive order was to close Guantanamo Bay prison -- 8 years on its still there, so although the act was serious (and to many American was a terrible idea) it remained that many executive orders go nowhere.
Now, Trump has a way with words and seems generally undiplomatic, the fact that he seems to have difficult conversations with several world leaders -- and even hung up on the Prime Minister of Australia says more about Trump then them! This is an unusual situation that has consequences -- Trump will receive little respect from world leaders when he needs to negotiate with them.  Trump cancelled the TPP -- its his right, but if he was looking for a way to "manage" China -- the TPP was a good way of getting started.  
However, Trump's recent t…

So life goes on. Two weeks of Trump

you've got to hand it to Trump; he has managed in less then 2 weeks to pissoff Mexico, China, Germany, France, and the Uk.  Plus to add more fun he's manage to pissoff the takes some effort to achieve that level of success.

So far he's made the Canadians happy; by reopening NAFTA (to teach the Mexicans a lesson I guess) and Israel.  The Canadians cannot believe their good luck...they've been furious as virtually every single car plant in Canada has been shut, and Canada has a large trade deficit with the US -- a real opportunity for the solf lumber industry and some of Canada's dairy producers that have been kept out of the US market.  Trump must had wondered what all that cheering was when he starts his little fight with the Mexicans!  As for Israel, they were best buds until Israel pointed out that moving the Embassy to Jerusalem was maybe not the best idea, and then that add insult to injury the right wing press (in Israel) have been saying unki…