The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

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Source:
Bloomberg Brief
January 24, 2012

If you missed yesterday’s discussion on Correlation at the Dow Jones Expert series lecture, the powerrpoint is here

Last reads of the week:

• An investor’s worst enemy? Their brain (The Globe and Mail)
• The 2012 Stock Rally Has Erased Bearish Sentiment (WSJ) see also ‘Bailout Nation’ Author Says Correlation Killing Volumes (Traders Magazine)
• Fighting Bernanke Hazardous in Gundlach View of Housing Market (Bloomberg)
• Josh Brown: Perhaps I’ve Been a Bit Too Harsh with Wire Houses … (WSJ)
• Banks Face Bind Over Cash Pile (WSJ) see also Europe could learn from US debt scramble (FT.com)
• In Punishing Year for Hedge Funds, Biggest One Thrived (DealBook)
• GM was the “good” bailout: Jobs, Jobs and Cars (NYT)
• Pic reunites Monty Python members (Variety)
• Supply-side economics at core of Gingrich plan (Washington Post)
• Apple and Google as Creative Archetypes (NYT)

What are you doing this weekend?

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Source: WSJ

All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE

The degree to which central banks around the world are printing money is unprecedented.

The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB).  Noted on the charts are significant events or growth rates.

Shown is the size of each respective balance sheet in its local currency.  Note that all are exploding higher as every chart goes from the lower left to the upper right.  Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.

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Click to enlarge:

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My train reading:

• Economists vs. Americans (Real Time Economics) see also Not all jobs are equal (LA Times)
• China’s Connectivity Revolution (Project Syndicate) see also The paradox of prosperity (Economist)
• New-home purchases fall, 2011 worst ever for sales (Yahoo Fiannce)
• Adding Weapons to ATM Defenses (WSJ)
• Amazon’s Hit Man (Businessweek)
• Romney Can Thank The Supreme Court For Newt Gingrich’s Extended Campaign (TPM)
• Apple vs. PC Shipments: “PC” Decline Worse Than Reported (The Small Wave) see also In China, Human Costs Are Built Into an iPad (NYT)
• Oldest dinosaur nest site found (BBC)
• Meet the Marriage Killer (WSJ)
• “What if…” Movies reimagined for another time & place… (Behance Network)

What are you reading?

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On Sunday, we looked at how the iEconomy Shifts Labor Trends. I lamented about a a fantastic graphic in the print edition, showing changes in Manufacturing versus Service Jobs from the 1960a; it was nowhere to be found online.

Huzzah! After discreet inquiries, we managed to free the Kraken from its print prison:

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click for enormo version (at bottom of jump):

Source: NYT

zombie debtor: n. An indebted consumer who is only able to pay the debt interest each month.

Example Citations:

“There’s a new term being coined for payday borrowers who are able only to pay the interest on their loans — zombie debtors — so that the principal debt just rolls on, and while there’s talk of those institutions having a code of conduct introduced, that’s only in the pipeline at present and we want people to know that there is an alternative in the shape of Scotcash,” he said.

—Joan McFadden, “Loan service launches attack on the zombies,” Herald Scotland, December 30, 2011

It is feared that 3.5m people will turn to payday lenders in the next six months but research shows that nearly two-thirds will regret the decision.Many will be unable to pay off the loan and risk becoming “zombie debtors“, only able to pay off the interest on what they owe.

—Nick Sommerlad, “Church of England ban on payday investments,” Daily Mirror, December 19, 2011

Via Word Spy

A preview of this afternoon’s discussion on correlation:

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Click to enlarge:

Source: Bianco Research

My morning reading material:

• Analysis: Bernanke paves the way for QE3 (Calculated Risk) see also Bernanke Makes Case for More Bond Buying (Bloomberg)
• Why Home Prices Have Much Further To Fall (Advisor Perspectives) see also Don’t Count on Housing Market to Lead Recovery (Bloomberg)
• A Who’s Who of Davos Absentees (DealBook)
• Bank of America Settlements Impede Fraud Probe, Arizona Says (Businessweek) see also Activists Call for Breakup of Bank of America (DealBook)
• Suing JPMorgan over MBS? Say thanks to bond insurers (Reuters)
• California calls $25-billion mortgage settlement ‘inadequate’ (LA Times) see also Eric Schneiderman promises aggressive financial fraud probe (LA Times)
• Uncanny Valley: The Real Reason There Are No Skyscrapers in the Middle of Manhattan (Observer)
• How (not) to defend entrenched inequality (Crooked Timber) see also Romney’s Tax Bill, European Style (Economix)
• How a late night talk show works (Storify)
• Turn off, tune in, drop out (Science News) see also Neural correlates of the psychedelic state as determined by fMRI studies with psilocybin (PNAS)

What’s on your to read list?

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I am the keynote speaker today at the Dow Jones event: Correlation Nation: What happens when all markets and asset classes are in correlation?

As markets trade on headline risk versus pure fundamentals, finding a winner is more challenging than ever before.  Kelly Evans hosts a panel discussion afterwards, with a reception to follow.

NOTE: You need to register for the event to attend.

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To register, sign up here: