My afternoon train reading:

Bridgewater’s Dalio: ‘Game Changer’ as Money Shifts (Bloomberg)
• The great ETF mega-war (Fortune)
Are you a value investor? Take the Apple test (Musings on Markets)
• Immigration reform could boost U.S. economic growth (Reuters) see also Bartlett on Employment: Outsourcing, Insourcing and Automation (Economix)
• Economics and the maximization of profit (and lies). (Dan Ariely)
• How Public Power Jump-Started the New Deal (Echoes) see also One Investment That Can Reduce Our Long-Term Debt (The Fiscal Times)
Attention shoppers: Retailers can now track you across the mall (ITWorld)
• Americans Most Satisfied With Military, Least With Economy (Gallup) see also Consumer Confidence in U.S. Falls to Lowest Level Since 2011 (Bloomberg)
• Solar: It’s about to be a whole new world. (Noahpinion)
• Risks of Hurricane Sandy-like Surge Events Rising (Climate Central) see also Why Greenland’s Melting Could Be the Biggest Climate Disaster of All (Mother Jones)

What are you reading?


REBALANCE: This Year, Getting Knocked Off Balance May Be a Good Thing

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.

31 Responses to “10 Tuesday PM Reads”

  1. VennData says:

    “…Americans Most Satisfied With Military, Least With Economy…”

    GREAT! Let’s go into even MORE debt making our military a popular place for poll voters! Then maybe the economy will improve with that vast array of high return investments in tanks!

  2. rd says:

    Re: Economics and Maximization of Profits.

    Night club fires are an excellent example of the private sector maximizing short-term profits at the expense of long-term things, including lives. Night clubs have lots of potential problems maximizing short-term profits if they have unlocked fire exits that people can easily get out of or open to let other people in. Meanwhile, they need to attract large crowds, so displays of things like pyrotechnics help draw in revenue. The night club owner will often not be thinking that it will be his night club that will go up in flames with people trapped in it as this is a relatveily rare occurence, so they focus on the short-term profits similar to our beloved financial sector. Meanwhile a weak regulatory system will not be making sure that the fire exits are available for use, so when the rare conflagration results, the results are devastating. Unfortunately, bailing out the night club owners won’t bring the people back although it could make sure that the night club owners don’t go bankrupt similar to the way we made sure the bankers didn’t go bankrupt after they blew up the financial system with their financial pyrotechnics.

  3. VennData says:

    Naghma, the Afghan girl sold to be a child bride

    Hey but look how low their tax rates are: No income tax! only 2-5% VAT and 20% corporate rate!

    Sign the Norquist Pledge! Give me my money back! I did it myself!!!

  4. Moss says:

    Regarding the Solar economics;

    Home Depot is offering a deal whereby they pay all set-up and maint. costs to install Solar on house roof. Any savings are split with homeowner 50/50. While I have not looked over any contract in detail I did have them assess a house in NY.

  5. TacomaHighlands says:

    King of bad home loans Shawn Portmann sentenced to 10 years for mortgage fraud

    The News Tribune, Tacoma, WA – U.S. District Judge Benjamin Settle sentenced Pierce County’s king of bad home loans to 10 years for a mortgage fraud scheme that brought down a local bank, ensnared nine of Shawn Portmann’s former employees and left dozens of families in foreclosure.

  6. mad97123 says:

    BR, any chance you would comment on Dalio’s “cash on the sideline” theme and Hussman’s comments yesterday about someone having to hold the cash, and the fact that stocks can’t be underowned as they are always owned by someone at every point in time?

    I can understand people leveraging up to buy more stock, but I just don’t follow the cash on the side line arguements. Even at S&P 666 or 1,600 there would still be the same amount of cash on someone’s sideline.

  7. slowkarma says:

    The “Noahpinion” on solar power piece was somewhat interesting, but the comments were more interesting.

  8. James Cameron says:

    > King of bad home loans Shawn Portmann sentenced to 10 years for mortgage fraud

    Settle said he decided on the lesser sentence in part because of the nearly two dozen letters he received attesting to Portmann’s character, hard work and generosity.

    Portmann, the judge said, pursued the American Dream with vigor but at some point forgot that success should be tempered with a sense of responsibility, respect for the law and the spirit of service to others.


    Good character? Pursued the American Dream with vigor? Are . . . you . . . kidding?

  9. S Brennan says:

    If you want to read rehashed dribble I recommend you read Bartlett on Employment: Outsourcing, Insourcing and Automation (Economix).

    And when you are done remind yourself that US Labor Dept just released a report that showed over 50% of US employees are over qualified…Bruce Bartlett could be living on another planet…and so too the New York Times editors.

  10. dsawy says:

    “A Bottom-Up Account of Occupy Wall Street in New York City”

    Basic summary: OWS was organized and planned carefully by groups with prior protest and political activism experience. Highly educated young people were over-represented in the OWS-NY ranks.

  11. VennData says:

    To Open Eyes, W-2s List Cost of Providing a Health Plan

    “…Jay J. Makled, a union steward for the United Automobile Workers at the Ford plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: “It’s quite expensive. I was surprised to see how much the company was paying for that benefit…”


    Oh it’s terrible to let people know all this information! Obamacare MUST BE STOPPED!


    Current and former members of Congress, journalists, and policy experts participated in a role-playing simulation. They responded to hypothetical scenarios related to the global economy, sequestration and the debt ceiling

    Confirmed players include:
    -Former U.S. Senator Bob Bennett (R-UT), Senior Fellow at the Bipartisan Policy Center
    -Journalist, author and blogger Farai Chideya
    -U.S. Representative Donna Edwards (D-MD)
    -The Atlantic National Correspondent James Fallows
    -Former Hewlett Packard CEO Carly Fiorina
    President of the Bipartisan Policy Center, Jason Grumet
    -Former Mayor Pam Iorio (D-Tampa, FL)
    -Former Governor Bill Richardson (D-NM)
    -U.S. Representative Scott Rigell (R-VA)
    -President, Center for American Progress Neera Tanden
    -Former U.S. Senator Fred Thompson (R-TN)

    Emmy award-winning journalist Frank Sesno will moderate the event.

    If you like your ‘Clown Show’, seriously, Transparent and Undiluted..

    “A Thing of Beauty”

  13. stonedwino says:

    Graham and Dodd are laughing from their graves at anyone who thinks that a “Value Investor” si even remotely defined by buying a stock priced at $450 per share, Apple or not… WTF are you people smoking man?

  14. rd says:

    RBS must have REALLY pissed somebody off over Libor rate fixing. I assume JP Morgan or Goldman Sachs lost a bunch of money over this since the US is pushing for RBS to plead guilt to criminal charges:

    Considering that HSBC was money laundering for drug cartels, banks were committing fraud against millions of homeowners, etc. and all have escaped pleading guilty to criminal charges, it is pretty unusual that rigging Libor would be the thing on the same scale as Madoff.

  15. Concerned Neighbour says:

    “Amazon Earnings, Outlook Miss; Revenue Jumps”

    Stock surges 9% after hours. And really, why wouldn’t it?

    AMZN has roughly $11 per share in net tangible book value and is basically breaking even right now in the hyper-competitive industry of retail sales. The description of of a $284 per share stock if I’ve ever heard one.

    No bubbles being blown here. And if there were, we can all be confident the central bank (aka the bubble blowers in chief) wouldn’t possibly let it get out of hand. I’m sure their spreadsheets are telling them AMZN is worth $1,000 a share at least.

  16. Concerned Neighbour says:

    mad97, you are correct. Cash can’t possible move from the sidelines into the secondary market. For every buyer there must be a seller. The fact our financial journalists can’t understand this basic mathematical fact should tell you something about what you read from them.

  17. bonzo says:

    The cash on the sidelines argument, stated thusly, is idiotic. A more intelligent argument is as follows. If there is normally a X to Y ratio between money supply and stock market valuation, then if the money supply doubles, stock market valuation must also double to keep the ratio constant.

    This is a restatement of the money equation (MV=PT), which says that inflation is always and everyone a monetary phenomenon and nothing but a monetary phenomenon. Since the money supply has exploded in recent years, however you define money (this, of course, is the root problem with the money equation, namely no one knows how to define money and velocity can’t be measured and so ends up being used as a residual to make the equation work as a tautology), we should have massive price inflation. But in fact price inflation has been fairly mild.

  18. Greg0658 says:

    in my new hat “artist” I’m not getting the W2 any longer
    thanks Venn for the info at:

    “The tax-free treatment of employer-provided health benefits is the largest tax break in the tax code, costing the government roughly $180 billion a year in lost revenue, or 80 percent more than the home mortgage interest deduction, according to the administration.”

    in my jack of many trades master of none shoes .. that statement not taken out of context (but read their whole piece)
    FIRST I think that’s an excellent move on our governments part – remind labor what they are getting in the background .. life is a slog and folks forget things as they work to feed their kids .. to be the next batch of consumer-laborers
    SECOND “tax break…costing” .. that is a write-off to the corporate balance sheet owners of the profits – if there is a profit .. so who is gaining / who is costing?
    THIRD are we to start thinking that the employees should be paying the taxes on these HC benies?


    On this subject:
    “Cash can’t possibly move from the sidelines into the secondary market.”
    I disagree some – the 18 primary dealers* can poof cash into an instrument
    * I think its at #18 – haven’t been looking for awhile

    “if the money supply doubles, stock market valuation must also double”
    I’m in – if you just say market or instruments (facilitated with a cash transfer) .. these white paper agreements are another story


    welcome to Filtersville Melvis x5 .. 2 then 3 a minute – wow thats a fast copy/paste/submit .. or do you have an HFT machine with a fat finger

  19. Greg0658 says:

    ps – FOURTH – HC as currently in practice is a ball & chain of employee to employer

  20. danm says:

    “if the money supply doubles, stock market valuation must also double”
    I’m in – if you just say market or instruments (facilitated with a cash transfer) .. these white paper agreements are another story
    IMO, we are on the verge of witnessing a great disinvestment. Most boomers don’t have guaranteed pensions, will keep on working and forget about retirement saving. Those retired will be selling their investments not increasing them. Furthermore, unfunded DBs will get converted to DCs which carry less equity and get liquidated even faster. The young are loaded with debt and/or barely working. And if they do have a good job, it’s probably better to buy a house at these levels than investing in these markets.

    It’s hard to believe that equities would soar in such a context. Maybe inflation could stoke it but in the initial stages, margins compress and earnings drop. Therefore, in the early stages of inflation, stocks would suffer… early 70s?

    So IMO, if the equity market takes off it will be one unstable bubble market!

  21. rd says:

    The median forecast of 83 economists surveyed by Bloomberg called for a 1.1 percent gain in GDP. Projections ranged from 0.3 percent to 2.1 percent.

    The actual number was -0.1 percent. NOT ONE ECONOMIST GOT CLOSE TO THIS ACTUAL NUMBER! Why do economists have a treasured place in our society with media waiting breathlessly for their every pronouncement? These people are less accurate than sportswriters who usually have even odds in predicting an outcome. At least the sportwriters generally have fun with their predictions knowing that they have a 50% chance of being wrong but at least hoping to look credible at the end of the event.

    The talking heads are already burbling about how the economy is more resilient than this number shows etc. so the small investor should continue to rotate from bonds into stocks.

    It will be interesting to see what the GDP revisions look like over the next couple of months and whether the revised GDP magically grows again.

  22. Concerned Neighbour says:

    danm, “if” the equity market takes off it will be unstable bubble market.

    I’d argue it already is a massive bubble market. But it’s certainly not unstable. Its’ near impossible for it to go down, retail participation or no, since the Fed is pumping a net $85 billion a month.

  23. danm says:

    Concerned Neighbour :

    It’s stable until it isn’t. I wait for entry points… they always come.

  24. Concerned Neighbour says:

    danm, have central banks ever exerted this much control? Are they ever likely to relinquish this control? Is the entry point you speak of DOW 36K?