Tuesday, October 6, 2015
It's midterms this week.
I had a stats midterm last Friday and did well, though I know now that I got one question wrong. The sample test only took me 15 minutes but then the real test was a lot longer: I dunno if it's a problem with sleep deprivation or a problem with writing a test in a Quonset hut.
Yesterday was intermediate micro. It was yet another case of the real test being harder than the sample test: I got out after 40 minutes and I was only the third or fourth person to leave. Poor kids are getting killed on these tests.
Thursday is intermediate macro, and just by looking at the sample tests I have a crapton of studying still to do.
Oh well. The gold miners are finally making an upmove, and Whitey seems to have finished puking US equities, so everything's back on set-and-forget while I do my studying.
Next week school is out, but I'll be at work. No problem for you, I still post when at work.
Here's some news:
New Deal Demoncrat - weekly indicators. Industrial recession but with US consumer expansion. The yoy housing numbers are stunning and M1 and M2 are still fantastic: that means consumer capital and velocity of money are accelerating, and those are two huge portions of the US economy.
Calculated Risk - prime working-age population growing again. And that provides a 0.5% boost to US growth.
Streetwise Professor - people get a grip! Glencore is not the next Lehman, and the fear that it is could well be the bottom-tick of the whole mining market right there.
Krugman - on Blanchard. Personally, I agree that Blanchard should be criticized for allowing the "fiscal multiplier = 0.5" bullshit out into the wild: essentially he sent the entire European economy back into recession by encouraging neocon philosophy. But Kruggers thinks he's great cos he admitted his error. Oh well. Blanchard is still a true macroeconomist, which means university professors have even less justification for using a textbook from that clown Mankiw when Blanchard's (and Bernanke's and Krugman's) are available.
Bron Suchecki - sucking silver through a straw. Only a goldbug (or silverbug) is dumb enough to confuse stocks and flows. No, you won't break the Comex by buying silver rounds, dumbass, because the silver rounds manufacturing sector is too small a flow to affect bullion stocks.
Worthwhile Canadian Initiative - could monopoly power explain declining interest rates? This is too wonkish even for me. And probably wrong, since it's based on the silly oversimplified models of economics. I would think that the whole institutional economics field (start with Galbraith, kid) already addressed this decades ago. You just never read them because your profs wouldn't let you.
Monday, October 5, 2015
And same for FXI. Challenging the SMA(50), even.
I dunno, maybe Wall Street Whitey has realized Shanghai only dropped back to where it was in the winter, and it doesn't feel like dropping anymore, and it's actually well-valued if you assume 6-4% growth for the next ten years?
Or maybe he realizes that there's a bifurcation in the EMs, and while dumps like Brazil and Turkey are collapsing under their own sociological ineptitude and their reliance on commodities whose production is easily expandible, China and India have still been growing quite well, as evidenced by the fact that both the yuan and rupee have remained strong. And thus, for example, Chinese and Indian USD-denominated corporate debt isn't even remotely threatening, since USD has depreciated against these local currencies.
I wouldn't exactly be buying China and India right now, but I'd maybe be looking at some sort of thing that's in demand in these countries, whose future outlook is dependent on continued Indian and Chinese wealth formation.
Y'know, like maybe some sort of yellow metal that they together buy 2000 tons of every year.
I'm only saying....
Darn, I forgot to clear out my inbox this weekend.
New Deal Demoncrat - gloat gloat gloat. He says he told you job growth was going to weaken.
FT Alphaville - global risk appetite in panic mode. Yes, indeed let's crack each other's heads open and feast on the goo inside.
Mark Thoma - market power and labour share of income. Quote:
[...]businesses with more market power are able to charge higher markups on their goods and services, meaning their pricing is higher than the cost of producing an additional goods or services compared to pricing in a perfectly competitive market. So in this situation where markups are high, goods and services are being produced less efficiently, with the increased profits going to the owners of capital.But if it's all down to Cobb-Douglas exponents changing due to neocon anti-labour strategies, then what to make of the ten trillion dollars hidden in offshore bank accounts not being reinvested in the world economy?
Vollrath argues that this is how measured productivity growth is affected by the decline of the labor share of income. Market power is important for thinking about measured productivity growth because, as Vollrath says, it “dictates how efficiently we use our inputs.” ... Impeding the most efficient use of capital and labor via marked-up prices will reduce measured productivity. ... Perhaps this could explain some of the reason why measured productivity growth looks so meager in the seeming age of innovation...
FT Alphaville - assessing Abenomics re corporate capex. The real point is to shake the money out of corporate Japan's pockets, and it ain't happened yet.
FT Alphaville - negative rates and the death of banking. Izzy Kamizzy on rent extraction killing the hand that feeds it. I still say the entire glut-of-savings problem is the result of right-wing ideology. When will anyone listen to me?
Friday, October 2, 2015
Gold popped on jobs numbers, for little reason, and GDX seems finally to be following:
And wow, these charts look interesting, at least in that GLD failed to make a lower low these past few months, and GDX also failed to make a lower low these past few months.
There was no lower high either, which meant there was constant selling pressure (in case the surge in volume since July isn't obvious to you).
So does Wall Street Whitey suddenly have to reverse his position on gold? I mean, now that China is reporting central bank gold purchases every month, and the Chinese are still importing gold via Hong Kong, and Indians are still buying gold for wedding season?
GDX's chart looks to me like it'll have to make an attempt at a higher high soon, because otherwise its chart needs to break down and collapse. It's the ugly kind of chart that should break down and collapse. And GDX has no reason to break down now that Whitey's cleaned out his cupboards, should it? I mean, what with impending economic doom and all, right?
This'll be interesting to watch for a few days, anyway. Keep your fingers crossed, goldbugs: you might be able to make some serious coin before Xmas.
And if you do, Wall Street Whitey is going to look at you all jealous given his own losses this year in US equities, and then he might decide to start buying back the miners that he's only just finished dumping.
Thursday, October 1, 2015
I haven't been getting any Cookie Monster news recently because my old email address finally got sent to the glue factory.
So this morning I went looking on YouTube for recent Cookie interviews, and found both an interview with Vanessa Collette and one with Daniela Cambone.
So let's get this over once and for all: who's the supreme junior mining hottie? Judge based on interviewing skills, rapport, or fashion sense, I don't care.
Place your bets now!
And no, Teresa Matich, you don't get a title shot this year. If that's a problem, take it to Vince McMahon.
Bunch of stuff for you:
Conversable Economist - exchange rate moves in historical terms. Hey, if you've been listening to all that blather about EM currency collapse, can you tell me if they've told you that the rupee and yuan have both appreciated in the last year? So, in other words, dollar-denominated debts in these two countries have worked out well for their corporations? Really? So there's no reason to worry about dollar-denominated debt in China and India? Really?
FT - making the China numbers add up. A lot of chatter about various measures of China GDP, so that you don't get stuck listening to the uninformed crap of some hedge fund cokehead who read once about the Li Keqiang index.
Oh and by the way, September China consumer sentiment came in at 118.2, strongest reading since May 2014. Gee, that really sounds like the Chinese are panicking about their equity market "collapse", eh?
Reuters - India's final monsoon total: 14% deficit. Well, Skymet sure pooched that call. Nevertheless, it takes more than a 14% deficit to truly dent Indian farm yields.
Bloomberg - China continues spending on high-speed rail. And everyone uses it too. So don't believe any stories about "ghost trains":
The 1,318-kilometer (819 miles) Beijing-Shanghai high-speed line started turning a profit last year, three years after opening, according to state media.And, just so you economics newbies understand why they're doing this:
A line from Beijing to downtown Tianjin, a 39 minute express, has proven so popular that a second line will now be built.
China enjoys clear "catch-up" advantages versus developed nations, which see smaller marginal gains from infrastructure spending, said Mark Williams, chief Asia economist at Capital Economics Ltd. in London. That’s why China’s investment may pay off more than Japan’s in the 1990s, he said.This heavy infrastructure spending is why China sees productivity gains year after year, while India is forever stuck in the 1920s.
Mining.com - China central bank adds to gold reserves. Really? So gold is still worth something to the Chinese? Hm... so does that mean we should sell them all the gold we have?
Tuesday, September 29, 2015
FT Alphaville - diminishing petrodollar flows. Quote:
Nigel Sillitoe, chief executive of financial services market intelligence company Insight Discovery, said fund managers estimate that Sama has pulled out $50bn-$70bn over the past six months.To me, the big question is how much money the Saudis had in gold miners. And for how long they'll continue to withdraw.
“The big question is when will they come back, because managers have been really quite reliant on Sama for business in recent years,” he said.
Since the third quarter of 2014, Sama’s reserves held in foreign securities have declined by $71bn, accounting for almost all of the $72.8bn reduction in overall overseas assets.
WSJ RTE - is wealth inequality hidden in tax havens? Probably, yeah, to the tune of at least $6 trillion. Why don't you figure out what that does to your classical model of the open economy, Dr. Mankiw? Hm? Wanna maybe address this in the next edition of your shitty macro textbook, maybe? No?
FT Alphaville - a history of leverage and the mining industry. The impending wipeout of Glencore has made it to the pages of the FT. Are we calling a bottom yet, or is this expected to continue for a while?
Mining.com - watch an excavator right a dump truck. This simply confirms that all mining people played with toy trucks as children, and just never grew out of it.
And yeah, when I was a kid my dad bought me a toy articulated grader. Kinda like this:
|but smaller of course|
But graders are fucking boring.
Monday, September 28, 2015
Thought I'd take studying a bit more seriously, so I'll be posting even less. But still, here's some news:
New Deal Demoncrat - weekly indicators. Same as last week basically: his thesis is still US consumer expansion simultaneous with a worldwide industrial recession.
Calculated Risk - vehicle sales still good, quit piddling your panties. Though there's a calendar effect.
WSJ RTE - top US financial diplomat's view on China. But then he pipes in about commodities:
But as low prices and anemic growth prospects cause stagnation in exploration and production investment, the amount of superfluous supply, or excess capacity, should gradually thin.So quit piddling your panties, goldbugs!
And “with over 1 billion Chinese and over a billion Indians looking for Western kinds of lifestyles, I think over the medium and long run, there will be ample demand for commodities,” Mr. Sheets said.
Reuters - VW scandal exposes cozy ties between auto industry and Berlin. More on the endemic corruption in Germany. Quote:
But there is one constant: the clout of the auto industry in German politics.That sounds like corruption to me, Germany! So when are you going to clean up your corrupt kleptocratic regime?
This relationship, which some describe as symbiotic, bordering on incestuous, is in the spotlight now, as Volkswagen (VOWG_p.DE), the country's largest carmaker, reels from an emissions scandal that has forced out its long-time CEO Martin Winterkorn and sent its stock careening lower.
But authorities in Germany and elsewhere in Europe had known for years about the widening gap between emissions values measured in official laboratory tests and those recorded in a real-world environment.
Yet, critics say, Berlin fought hard to shield its carmakers from closer scrutiny and, in a high-profile clash with its European partners two years ago, from tougher emissions targets. Merkel has defended the stance as necessary in order to protect jobs in the sector.
Some see the VW scandal as symptomatic of a deeper problem in which German car companies have been allowed to do as they please without oversight or fear of reprisals from Berlin.
Calculated Risk - Yellen still sees raising rates before end of year. In her talk at UMass Amherst (where someone who I went to highschool with is a professor of economics, interestingly; and btw it's also apparently a heterodox school so that might tell you something about Yellen's common sense) she made mention of the "special factors" causing inflation to be temporarily below target.
For example, oil really started to plummet last October, and got serious in November. Now, did you know that CPI and the Deflator are year-over-year measures? Well, that means the deflationary shock of low oil prices will have worked its way through the system entirely by next January. The CRB index will still be -10% at that point, but at least it won't be -30%. These may positively impact the inflation rate by January, at which point the Fed has to already be raising rates to make itself look ahead of the curve.
Saturday, September 26, 2015
Here's some news, then it's off to either doing homework or avoiding doing homework:
Gavyn Davies - financial conditions for the Fed. The main takeaway is that exogenous conditions alone have
resulted in a reduction in US GDP growth of 0.5 per cent (year on year); and this drag will increase to 0.8 per cent by 2015 Q4.However, the Fed members (or at least the ones who aren't idiots) determine when to raise based on its expectations of where things will be going a year from now.
Calculated Risk - Q2 GDP revised upward to 3.9%. But you go ahead and keep dumping stock based on some supposed coming armageddon, Whitey!
US BEA - the Q2 GDP NR. Here, let's quote some stuff:
The increase in real GDP in the second quarter primarily reflected positive contributions from PCE, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.Is that good? Well, why don't you ask some clown with a doomer blog somewhere to explain it to you?
New Deal Demoncrat - new home prices psf show an affluent-centred market, not a bubble. They still aren't building homes for poor people.
The Krugginator - Chinese spillovers. K-dog goes into some basic international trade economics to 'splain how even a 5% drop in Chinese GDP wouldn't be a world-shaking event and therefore Willem Buiter should quit piddling his frilly little pink girl-panties. He includes a picture of a giant New-York-destroying tsunami as a hat-tip to Business Insider who would never publish any insightful opinion from anyone anyway.
BTW, I would suggest that P-to-the-K should read Joe Stiglitz's Globalization and its Discontents for a boots-on-the-ground explanation of how the 1998 Asian crisis unfolded: in fact, most of the contagion was caused by IMF policies, and now enough people over there have heard of Mahathir Mohamad that they'll be more cautious today in accepting the incompetent bullshit that White-ass honky slave-dealers pass off as "competent advice".
Global Times - NDRC defends credibility of China GDP data. Quote:
A Bloomberg report on August 18 suggested that the Chinese economy was growing more slowly than the official data had indicated, citing a survey it conducted among 11 economists.With the caveat that of course the Chinese government would say this. Still, I'd rather hear opinion on China data from the mouth of a proper economist who actually compiles and analyzes data, instead of from some coke-snorting hedge fund kleptocrat who once read an article on BI about the "Li Keqiang index".
The survey indicated that the first half growth rate was 6.3 percent, rather than the official 7 percent, according to Bloomberg.
The NDRC's post on Wednesday dismissed such media reports and surveys as being "too arbitrary."
The NDRC also noted that electricity usage, volume of freight and other goods indexes can not determine whether the Chinese economy is growing more slowly, because the services sector and the pharmaceutical, electronic, telecommunications and high tech industries account for an increasing proportion of the Chinese economy.
Zhong Dajun, director of the Beijing Dajun Institute for Economic Observation, also said that measuring China's economic growth just by looking at energy consumption and other "old economic indexes" is not accurate.
"As China's economy is moving toward being more high-tech and energy-efficient, those indexes we used before can't draw a full picture of the economy anymore," Zhong told the Global Times Wednesday, adding that the official GDP data was "reasonable and accurate."
However, Zhong noted that for a country "as large as China, and with an economy as complex as China's, it's normal that economic statistics have a margin of error."
Xu Hongcai, an expert at the China Center for International Economic Exchanges, said it is true that energy consumption, exports and some other indexes are falling, but booming industries such as e-commerce and the services sector should not be overlooked.
"As China continues to optimize its economic structure, we need to look at it differently," Xu told the Global Times on Wednesday.
"We should also look at the new industries and take new technologies and innovations into account," Xu said.
I would link to a Jim O'Neill article, but my opinion on him has gone downhill now that he works for that douchenozzle crypto-Nazi with the eminently-punchable face, George Osborne. Don't ever come back to Manchester, Jim: they won't want you now that you're a traitor.
Chronicles of Brodrick - OMG gold chart breakout!!!!1! Uh, no, Sean. At best all you can say is the brutal downtrend of the summer has slowed. Up/down volume bars still look fucking horrible.
Friday, September 25, 2015
WSJ RTE - new economic uncertainty on loss of Boehner.
Yeah I couldn't help myself.
As for the government shutdown bugaboo, it's yet another arrow in the quiver of the market permadoomers. I'm bored. None of the Republican presidential candidates is going to want to have to explain why their idiot party shut the DMV down. Between them they have enough power to beat the mouth-breathers into line.
I have no prediction on how this will affect the dong, though.
GDX has been banging into the SMA(50) for the past month, then falling back. And the SMA(50) is a magical TA line with mystical properties.
There's been nice volume down at this level too. GDX and the miners now have a bunch of new holders who are in at a lower price, and that's good for the market in gold miner stocks.
My own oogity-boogity rule is that the third time something happens, it'll end differently than the first two times.
It might be a great place to get into GDX if you think the miners are done crashing!