Some interesting reads to start your morning:

• Wall Street Bonus Withdrawal Means Trading Aspen for Coupons (Bloomberg)
• Q&A: What’s Going on With Gasoline Prices? (MoJo)
• Fed Shrugged Off Warnings, Let Banks Pay Shareholders Billions (ProPublica)
• Economy Picks Up Pace, but Risks Remain (WSJ) see also Surprise! The Case for QE3 Is Stronger Than Ever (The Atlantic)
• The Ben Bernanke Congressional Variety Hour (MarketPlace)
• A Call for Beijing to Loosen Its Grip on the Economic Reins (NYT)
• The Media Did Not Hype Fukushima (New Yorker)
• Twitter, the Startup That Wouldn’t Die (Businessweek)
• Economics: A Million Mutinies Now (The American)
• Nassim Taleb’s Big Idea: Transforming Debt Into Equity (The Trader)

What are you reading?


Investors’ Sell Signal: Surging U.S. Stocks

Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

28 Responses to “10 Friday AM Reads”

  1. rd says:

    Re: Banks paying dividends

    I think Obama will go down in history as missing a huge opportunity to commence a major clean-up of the financial crisis.

    As an incoming President, he had an opportunity to recapitalize the TBTF banks by issuing new equity held by the Federal government initially. This would have been accompanied by replacement of the management. he would then have come in tough with a clean slate to work with. Instead, he brought in TurboTax Timmy and Larry Summers (both of whom were major players in the cause of the crisis) and we have been stumbling along ever since with the constant specter of under-capitalized banks collapsing in a potential new crisis.

    I am not a big Bernanke fan, but I do appreciate that he has been forced to operate almost solo over the past three years as the Administration and Congress have been MIA regarding significant actions to resolve fundamental problems.

    If Obama had taken the actions that he needed to in 2009, we probably wouldn’t be talking about income inequality today as much of that would have been resolved along with bank instability.

  2. rd says:

    Doug short has his latest 4-factor valuation chart out:

    These factors are 40%-50% overvalued which is very high compared to the past 100 years with the exception of 1929, 2000, and 2007 (and we know what happened after those years). Have we moved in “greater fool” territory for the stock market? It appears that most of the bullish arguments these days are focused more on market technicals than anything else.

    Your chart of individual investor outflow shows increasing outflows in 2010 and 2011 when the market had risen substantially from the lows in 2008-09. Would it normally be considered dumb to cash out of something that has risen 50%+ in value to levels where valuations appear to be historically high?

    I think Wall Street is getting concerned because they are having a problem getting the “dumb money” come in to take their holdings off their hands. As a result, we are seeing public trading getting dominated by HFT with numerous actual investing transactions occurring off-line in “dark pools.”

  3. VennData says:

    Judge asks for probe after sending racist Obama e-mail

    “A little boy said to his mother, ‘Mommy, how come I’m black and you’re white?’ His mother replied, ‘Don’t even go there Barack! From what I can remember about that party, you’re lucky you don’t bark!’”

    1) Why is this funny?

    2) It’s great that at least someone is being humiliated for these moronic emails, we should pay YOUR gov’t tax dollars every time thy find out one of these GOP Media Machine lying emails.

    3) This guy is investigating himself? Is that how they do it there in “freedom-loving” Montana?

    4) His excuse is He’s “not a fan of the President” Hey, Asshat, you’re a judge. STFU

    5) He’d be showcased and applauded wildly in the GOP debates with nonsensical, positively Ginrich-esque nonsense like this “reasoning” “I didn’t send it as racist, although that’s what it is. I sent it out because it’s anti-Obama.” Huh? So you’re not a fan, is that his mom goes to beastialty sex parties? Thanks. Your kids like that? Your friends like that? What an enriching life.

    6) You should team up with with the aircraft carrier admiral in Wyoming.

    7) And Rush Limbaugh…

    8) and the Gaffe Girls, Romney and Santorum…

    9) Even the Girl Scouts are fodder for their cracker-barrel blather.

    10) And the hate-filled screeds (which see this blog’s comments) about Warren Buffett because he wants to get tax rates THE SAME FOR EVERYBODY! Nice… we wouldn’t want that now, would we GOP voter

    The GOP Media machine really does a number on your mind GOP. Your free to think what you want, and FEEL what you want. Thanks for being the good, moral part of American society. ROFL.

  4. Arequipa01 says:

    The goal is to re-establish slavery:

    Keeping telling yourselves that this is merely an outlier, a fluke really. And if you just sharpen your arguments and gather more and more evidence the Federal Government will respond, enforce the law, and formulate good and effective policy, etc. And if you click your heels just so, you’ll get back to Kansas and Auntie Em.

  5. VennData says:

    Three year anniversary of the Commander-in-Chief showing you leadership, showing you the way…

    It’s time to stop hating him because he was right and start admit it. Admit he saved American, killed bin laden, and didn’t take away your guns …socialize your family farm, business or church.

    If you can’t admit it, then you do not deal in facts.

  6. tradethisway says:

    That chart seems misleading? The march higher in the Dow relative to flows out of mutual funds. How about inflows into ETFs? or into individual stocks? Mutual funds are completely out of favor with pretty much anyone who has been paying attention to their portfolios in recent years.

  7. GeorgeBurnsWasRight says:


    You’ve got a point about the decline of mutual funds, which may be irreversible. Why pay someone 1% or more to underperform the S&P when you can just buy an ETF with a fraction of the fees that by definition will match the S&P.

    Also missing from all of these figures is some idea how much the outflows are in percentage terms of the total invested in mutual funds. It can’t be that much or else after 38 months of continuous withdrawals there would be little left in mutual funds.

    Finally, you’d expect a pattern of net withdrawals just based upon the Boomers retiring, since their stock investment totals outweigh the deposits from those who are younger.

  8. AHodge says:

    Debt to equity? Duhhh
    though I dont buy talibs immediate and forceble conversion idea– yet
    there is only so much cash flow in the globe to service investment
    it is what it is- its moderately cyclical with possibilities of loss–its not “fixed”
    some debt is possible in that mix
    and folks like that, as supposedly being stable and “risk free”
    maybe more save and invest with that “liquidity transformation” the concept has been around at least since keynes, and relatively liquid and risk free
    BUT levering anything up with debt the first claim makes the equity residual more and more risky. 30 1 would be insane if you marked it–mr toads wild ride
    AND we financial geniuses then also say the debt is too boring and play all kind of games w that
    finance need not be that complicated, somebody gets ownership of all the basic cash flows out there–unlevered “equity”
    and we wont have to pay 14% of our global resources for “finance”
    and periodically watch it blow up- after fooling ouselves in a bubble over what its worth
    its only worth–repeat after me geniuses– what the underlying cash flows produce ?

  9. VennData says:

    Why on earth does he think “we’re” buying them? He is just another uniformed Republican, spreading uninformed lies.

    I’m not paying for her contraception, Rush. You’re not paying for her contraception Rush. You’re listeners aren’t either. Get that through you abiotic-oil-loving, Clinton-will-lose-the-war-in-Serbia, fired-from-NFL-announcing, “mind.”

  10. AHodge says:

    so what do we have then? Islamic finance ha ha
    i favor some straight debt
    but you shoud keep in mind what the F.. you are doing

  11. AHodge says:

    or George washington finance neither a borrower or a lender be

  12. By Dan Gallagher, MarketWatch

    SAN FRANCISCO (MarketWatch) — Technology stocks managed some mild gains on Friday morning, mostly on the back of strong performances from two of the sector’s newest entrants — Yelp Inc. and Zynga Inc.

    Yelp YELP +63.43% shares surged more than 60% in early trades following the online review site’s initial public offering. The company priced 7.15 million shares at $15 per share late Thursday, coming in above the expected offering price range of $12-$14 per share, to raise about $106 million in the deal. Read full story on Yelp’s IPO. …”

    and, to “Arequipa01″‘s be afraid to check out..

    that is, if you have time, left over, after harvesting that ‘bumper crop’ on ‘Farmville’ ..~

  13. VennData says:

    Obama is not bluffing, the President of the United States doesn’t need to bluff.

    “…”The way the question was asked was confusing,” campaign spokeswoman Andrea Saul said in an email blasted out to reporters after Romney’s became the subject of a flurry of tweets. “Gov. Romney supports the Blunt Bill because he believes in a conscience exemption in health care for religious institutions and people of faith….”

    He doesn’t even know what bill they’re asking him about. He wants us to let him go toe-to-toe with Iran? With Putin? With China? LOL.

    Maybe the Bulls will Three-peat while Obama’s President.

  14. SOP says:

    WSJ – Gingrich’s Energy Charge

    For decades the nation has deadlocked over America’s supposedly limited natural resources, fighting over whether high gas prices made it worth touching, say, the supposedly pristine Alaskan wilderness. It’s been a debate in the context of scarcity.

    Mr. Gingrich’s savvy has been to grasp that this is over, done, passé. America is embarking on a seismic energy shift…

    The new, rebooted argument is that America is primed to become the largest energy producer in the world, with all the money, jobs and benefits that come with it.

  15. …to be afraid to check out…

    was to be …don’t be afraid…

  16. willid3 says:

    federal deficit. not as bad as claimed. but it is threatened by SS and Medicare. but not exactly for the reasons as advertised. Medicare is threatened by the same cost explosion that is impacting private medical insurance. and by the increasing number of claimants (seems that as we get older, health care costs start to climb, and really start to grow after age 70). and SS is threatened by the increase in the number of participants. but we knew that back in 1986, its why we increased the amount for SS, to over pay long before baby boomers were going to arrive. and not really sure that while there will be bumps in enrollments (some time for reasons other than older than 65, like taking early retirement because of the lack of jobs). and while we live longer, its less than 5 years longer, and thats mostly because we die off as soon as we use to. and its a guess as to how long some one will live in retirement. and try save for it? just what number are you aiming for that will actually work (used to be the theory was that you could live on less in retirement than when you were working. not so. if you need to live with help, you will likely need more than what you made at work.

  17. rd says:

    One other thought on stock mutual fund outflows.

    Most 401ks and IRAs have stock mutual funds as primary options. High unemployment and under-employment over the past couple of years probably means more people either pulling money out of their retirement accounts or cashing them out entirely as they need to tap financial resources. this combined with increased numbers of retirees relying on their savings for cash flow may mean an extended period of individual investor outflows.

  18. rd says:


    I think you identified the pink elelphant in the middle of the room regarding Medicare. I have been baffled by all of the blathering about “privatizing” Medicare to make the problem go away. The private employer health insurance system has had similar cost increases as Medicare over the past couple of decades, so merely making something private sector instead of public sector does not automatically solve the world’s ills.

  19. I never thought I’d see the day, but it looks like the Fed is actually trying to end Too Big to Fail (going forward):

  20. jus7tme says:

    How about bond inflows from individual investors? They must be waaay up, judging from the anecdotal evidence, and how many times my brokers have pestered me to by bonds in the last 2 years.

    This can only mean one thing:

    Bonds are about to make a major dump, and the sheeple will be slaughtered, AGAIN. Those who survive will buy stocks at the top, and then get slaughtered again.

    Systemic insider frontrunning of the individual investor. Who would have thunk that?

  21. Greg0658 says:

    1st Taleb thread captured my thinking cap …

    jus7tme from a laborers & a small business pov: a laborers paycheck with extra float cash* goes where ? to help who ? the system is cash starved but labor has some strength over capital flow – since labor needs the feeling of saving for the future … straight bonds or certificates of deposit – because of the return of principle plus some interest minus losses due to inflation … as opposed to the good ole days of earning a good return plus the principle returned / providing corporations growth cash on their terms … but the days of country first are gone with globalization – most labor is anchored into a country … bottom line corporate stocks benefited corporations 1st – investors 2nd – general populace Last .. some would say as it should be / except Labor really built the corporate bottom line in the 1st*place .. Labor get a gentle fist .. stop getting sheared and/or slaughtered

  22. Julia Chestnut says:

    GOD, can we please have a moratorium on the rich people bitching about their downgraded lifestyles?

    “People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”

    People in this country every single day cut their kid’s pill in half to stretch their meds. People every single day forgo medical treatment, haven’t been to a dentist in years, don’t have money for school supplies for their children who attend public school!! Does this guy have any idea that public school teachers are paying for granola bars and pretzels out of their pitiful salaries to keep for kids who are too hungry to pay attention in class?

    Where I lived, there was a family of kids who rotated through school – each one got to go one day a week. On the other four days, they were working in the fields. In part, when they went to school, they were eligible for free meals – so at least one day a week, they were fed. We would sit at the lunch table with these kids and silently pass them our food – nobody had to say anything. The truancy officers never bothered the migrants because they would just disappear – and then no one was in school and no one was getting fed.

    If these assholes haven’t seen people living — in the U.S. — without running water and electricity, eating dandelion greens and road kill, I simply do not want to hear their bullshit. NYC poor just does not have any connection to rural poor – and these people with vacations in Connecticut wouldn’t know poor if it carjacked them on the Turnpike. I saw organic dandelion greens in the Whole Foods the other day and I didn’t know whether to cry or laugh.

    I really just don’t know what to say sometimes.

  23. Lariat1 says:

    @ Julia: When I read that article this morning, I had to double check that I was reading Bloomberg and not the Onion! I am about 40 minutes west of Kent, Ct. and among the pockets of wealth, there is still real rural poverty. We have an old trailer park neighborhood, two towns over that became famous on You Tube, when Westchester County kids would come upstate to drive through the secluded very poor area and film it for laughs. You know what? Nobody up here thought it was funny.

  24. Greg0658 says:

    QE# disperses to stirs-commodities-stocks-bonds
    disperses to survive & make a living
    stirs = a tax of facilitators/defacilitators = bankers accountants lawyers investigators
    commodities are inflated by printing
    stocks are inflated by printing
    bonds are diluted by printing

    (again) I see stocks / bonds as 2 supernovas fighting each other to pull stars into their realm

  25. StillAboveWater says:

    From the Kling piece:

    “As economists, we remind people of some unpleasant truths. Such unpleasant truths are deserving of respect, even if not all economists are.

    One unpleasant truth is that resources are finite.”

    I would laugh if this wasn’t so sad. Yes, natural resources are obviously finite, but WHERE, pray tell, are the economists reminding us of this unpleasant truth? If there are actually any economists grappling with this rather important problem, they are silent voices in the wilderness.

    As long as the majority of economists assume that growth will proceed ad infinitum without resource constraints, it will be impossible for me to take economists seriously.

  26. Greg0658 says:

    our green green grass of home continent CanNot be primarily the business of entertainment and pushing product
    imo NIMBY won’t work without major reductions in local population and continued world enslavement

  27. Julia Chestnut says:

    Thanks, Lariat. I should know there is real poverty everywhere – even where the vacation homes are. I also thought the piece was hugely Onionworthy — and yes, that needs to be a word.

  28. redcharlie says:

    Why do you even bother linking to something at AEI? You know you don’t have to read them to know what their conclusions are.

    Yeah, sure, EMH in it’s weak form (you can’t beat the market) is true, but it’s also rather meaningless. Just because you can’t guess asset prices tomorrow doesn’t mean you can’t make intelligent policy decisions, like economics is nothing but asset prices (that was Greenspan’s schtick, anyway). It’s kind of like saying just because you can’t predict weather, flood insurance should cost the same in Death Valley as it does in New Orleans. It’s just daft.