Thursday, April 10, 2014

Back to regularly scheduled programming: market market market

Thursday morning and the big question is what's going on.  The past few days/weeks the word of the day was rotation -- away from bond towards equities.  Looking at the bond market 10y & 20y and its yields have returned to their mid 2013 levels, you begin to wonder what rotation?

I still see Europe as a disaster in waiting (maybe not really waiting), the markets are touting normalization because sovereign bond rates are down in the 7% range (from 15%) but then that's what happens when the ECB buys everything and anything.

News out of China is that they are having some success with deflating the investment balloon.  There have been only a few, and largely insignificant, bankruptcies so far (most of the insane to start with high yield variety).  Michael Pettis (a very smart guy) who has been an impartial China watcher for several years seems to think that they are on the right track.  So that could be good news, although its still a mighty big ship to turn around.

News out of the US continues to be "strange"  new mortgage applications are at an all time low -- we've got to go back to the early 90s to see these types of number again because refinance are included the stats are hard to understand (the stock of refinancing is a very large percentage of total mortgage applications and with stable interest rates there's not much refinancing activity).  New jobs are trending in the wrong direction, as they say the trend is your friend and the trend is not positive.

Corporation continue to increase profits -- clearly on the back of the labor force since wages are stagnant.  The events around Volkswagen and its union vote in Tennessee are just unbelievable -- the State government appears to have conspired to "bribes" VW to  not certify the UWA, while proclaiming their non-involvement in the process.

An amusingly  story out of congress where the Republicans insist that inflation was "DC math" invented by the government to give bigger benefits to the poor (they love that fight), in turn the Democrats produced an amusing "real math" situation showing BigMac inflation of 5.5% per annum between 2004 and 2014.  Still mighty amusing.

Finally, you cannot satisfy the FOX talking heads:  Noah the movie opened to great financial success (I will not see this movie).  Apparently, the crazies at FOX are complaining both that there are not enough religious movies or that they are misinterpreting the Bible (e.g. Noah); the two main crimes (a) that Noah got shit faced (actually he did Genesis 9:21), and (b) that the movie never mentioned God -- really 'cause the creator is not enough?  I mean, and this is not the first time -- do these people read the Bible.


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