Good Sunday morning. Here are some reads that surfaced since the market closed Friday you may find worthwhile:

• in which Downtown Josh Brown destroys the 1999 comparison (TRB) but see Felix Zulauf Developing Euphoria (Itau)
• GE gets back to basics (Fortune)
• Libor in a barrel: Oil markets fall under the suspicion of price-fixing on a global scale  (Economist)
• As a Reminder, the Fed Is NOT Printing Money (Jesse’s Cafe Americain) see also The end of QE? (FT Alphaville)
• How Nonprofits Became Tax-Exempt (Echoes)
• The Facebook IPO, One Year Later (WSJ)
• Be a Smart Investment News Consumer (Learn Bonds)
• GAME OVER: Morgan Stanley Publishes Brilliant Note About GDP, Investing, And Why Bill Gross Is Wrong About Stocks (Business Insider)
• Gorillas Agree: Human Frontal Cortex is Nothing Special (Scientific American)
• ‘Star Trek’s’ Damon Lindelof on Brad Pitt, Having Power as a Writer and His Agony Over ‘Lost’ (Hollywood Reporter)

What’s for brunch?

 

Euro Crisis Mires Continent in Longest Slump Since War
WO-AN786_Euecon_G_20130515190023
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.

19 Responses to “10 Sunday Reads”

  1. call me ahab says:

    Bing releases translation tool for Klingon

    ’bout damn time!

    Hard finding people to talk to (or even admit they talk Klingon)- this guy was a ringer and even he was shy about admitting he knew how to talk Klingon: http://www.youtube.com/watch?v=0heeMs1eG9M

  2. rd says:

    Price-fixing in the oil markets? Who would have thunk? I thought that was the whole point of OPEC. since OPEC has been weakening in that area, then obviously somebody would need to step in to keep oil prices elevated to maintain revenue for dictators and global corporations.

    On 1999 vs 2013. It is pretty obvious that the two have little in common other than similar price levels and relatviely high valuations (1999 way off the scale, 2013 simply unusually high). In 1999, tech was 40% of the S&P and there was a mania that meant that companies didn’t need profits and barely needed revenues to skyrocket in value. The South Sea bubble was probably the last major one that was this crazy. However, the rest of the market was largely ignored – my value focused funds did quite well until 2002 when they dipped in a mild bear market

    This time around, everything has gone up in value so that there are no real bargains out there – some things are less unattractively priced but usually not by much. Shiller’s CAPE and other valuation metrics are telling us we are in relatively over-valued compared to history but, so are the alternatives such as bonds. We haven’t gotten to 1999 levels where negative returns were indicated to be likely, so any likely postive return still beats cash.

    The mid 1800s was the onset of the Industrial Revolution, the 1920s-30s was the transformation to the oil economy where industrial activites could be done anywhere, including industrialized agriculture, and now we are in the post-industrial transformation. I am with Bernanke in that I think we are going to come out of this with many technological advances that will improve out lot but there is always a painful 20 years transition that we are in the middle of this. Another 5-10 years of employment pain and financial markets gyrations await us but we will be fine once we hit the other side of the transformation. I just hope we don’t do the usual thing and get into a major war before its over.

  3. DeDude says:

    A very nice summary of the underlying issue of the IRS scandal:

    http://www.latimes.com/news/politics/topoftheticket/la-na-tt-real-scandal-20130514,0,3072138.story

    Political organizations can get tax exempt status under other statutes (and none of them have much profit anyway). It had nothing to do with not paying taxes. The rush for these political organizations to become approved as 501(c)(4) or “social welfare” organizations was because 501(c)(4) provided a loop-hole around having to reveal the names of their donors. The sad part is that none of them should ever be approved as 501(c)(4), but now they all will, and again our democracy is the victim as the man behind the curtain remains behind the curtain.

  4. Bob is still unemployed   says:

    Whilst munching on brunch, I wore my tin-foil hat….

    Skype with care – Microsoft is reading everything you write.

  5. Petey Wheatstraw says:

    Systemic Malfunctioning of the Labor and Financial Markets

    http://www.nakedcapitalism.com/2013/05/systemic-malfunctioning-of-the-labor-and-financial-markets.html

    Might be confirmation bias, but this conversation seems to get to the heart of what bothers me so much about our current “recovery.”

    Reiteration: The backlash to our economic imbalances will be social. Eventually, the middle class will take this situation VERY personally.

    • rd says:

      Economics and political science professors at universities around the world have set up a massive global multi-variable statisctical experiment to see what combinations of unemployment, inflation, deflation, income inequality, imprisonment, and torture will cause riots and eventual revolution and civil war.

      Their experiment produced a lot of useful data during the Arab Spring but they haven’t been able to get the conditions right in Asia, Europe or the Americas yet to generate a statistically complete data set, so I think they got grant money to continue the experiment for another decade.

  6. swag says:

    The Gerard Minack piece is great. FT Alphaville looks at a different portion of the swansong:

    http://ftalphaville.ft.com/2013/05/17/1506732/this-is-lake-wobegone-upside-down/

    Kind of admits that the profession is bullshit:

    “None of this would matter if achieving index returns was extremely difficult. But an industry’s been built on indexed funds that seem capable of replicating index returns at relatively low cost. The good news for the professionals is that many amateurs persist in trying to beat the market and, in aggregate, they seem to do a significantly worse job than the professionals.”

  7. [...] commenter DeDude at Ritholtz, David Horsey in the [...]

  8. James Cameron says:

    “Seventeen years removed from his NFL career, ex-quarterback Don Majkowski says he can no longer hold down a job. He can’t stand for long periods, and sitting is also tough. He has undergone nearly 20 surgeries related to football, including 11 on his ankle, three on his shoulder and two on his back. He has a 12-inch scar on his stomach, and he can’t walk very far because his left foot is fused with his ankle by a pair of metal plates and 13 screws . . . For all of that, Majkowski, 49, counts himself one of the luckier ones . . . ”

    Do no harm: Retired NFL players endure a lifetime of hurt (WAPO)

    http://goo.gl/5pXYT

  9. VennData says:

    http://www.nytimes.com/2013/05/19/nyregion/boom-in-luxury-towers-is-warping-new-york-real-estate-market.html

    “….Only 10 floors have been completed in what is intended to be the tallest residential building in the Western Hemisphere — a slender, 84-story tower on Park Avenue at 56th Street in Manhattan. But the top penthouse is already under contract for $95 million. Other buyers have snapped up apartments on lower floors for prices that are almost as breathtaking. While their identities are not known, it is likely that many are the rootless superrich: Russian metals barons, Latin American tycoons, Arab sheiks and Asian billionaires…”

    I guess the GOP was wrong when they said people would leave the country, stop investing in the US under Obama’s deficit reduction plan. You know, the one that is reducing the deficit. I guess it’s smart for them to go-Glenn-Beck on these “scandals” rather than admitting they were wrong, and to follow through with Obama’s plan when their campaign contributors want stopped.

    My question to you, non-top .1% GOP voter, is why do YOU want support what is entirely against your own self-interest? You cannot buy a $95M dollar apartment and you never will.

  10. hue says:

    Google Glass & The Men’s Room Urinals (CNET)

    Quinn Sullivan, 14-Year-Old Blues Prodigy, Impresses the Masters (RollingStone)

    Bring On the Cup Cake Deflation! (CNNMoney)

  11. DeDude says:

    CNN also nailed it:

    http://www.cnn.com/2013/05/17/opinion/colinvaux-irs-taxes/index.html?hpt=po_t1

    The real question is not about tax excempt status but to get it such that the CEO of a company secretly can use company money to support specific political purposes and candidates. Thereby denying me the right and ability to recognize this money trail and refuse to support his personal political preferences by refusing to purchase anything from his company. Apparently that kind of enlightenment shall be denied as it could hurt the 1%’ers.

  12. Theravadin says:

    Re. QE and “printing money”… it’s been printed, and it hasn’t been inflationary, at least not so as we would notice. The logical next step is for the Fed to simply write off all of the Treasuries they hold. That would nicely reduce the debt, and take a big hunk of the argument for austerity out of the picture. All of the arguments for why this would be bad are essentially already over.

  13. Jojo says:

    How Much Would It Cost to Build the Starship Enterprise?
    Eric Limer 5/17/13

    So you want to build the Enterprise. Don’t we all! Well good news: according to some quick, messy, napkin math, it’s possible. Kind of. The bad news? It’s going to be stupid expensive. But not unfathomably so! Start scrounging up your space-pennies.
    One little constraint

    Since we can’t predict the future, or even come close to gauging the cost of development for revolutionary new inventions or substances like warp and impulse drives, shields, and teleporters, we’re going to stick to what we know. It might not make us a real Enterprise, but it’s about as close as you’re going to get.
    So where do we start?

    First we have to pick our Enterprise. Obviously, with Star Trek: Into Darkness coming out, we’re going to go with the one from that universe, from a size perspective anyway. According to some stats we got back when the original Star Trek reboot came out a few years ago, we know the new Enterprise–or as the Star Trek wiki calls it: USS Enterprise (Alternate Reality)–is 725.35 meters, 2379.76 feet, or roughly half a mile long. So, huge. And while the exact measurements vary, other sources give us a height of 625 feet, and a saucer diameter of 1,000 feet. She’s a big girl.

    ….

    http://gizmodo.com/how-much-would-it-cost-to-build-the-starship-enterprise-506174071

  14. VennData says:

    The Chicago Tribune: Going against Google Glass

    http://www.chicagotribune.com/features/books/ct-prj-0512-biblioracle-20130510,0,4741538.story

    John Warner claims “So you’re wrong, so what?”

    What a ridiculous statement: Warner doesn’t care about the facts, just what he feels. ROFL!

    How horrific to have a mind like John Warner of the Tribune replete with lies, misconceptions, frauds, and pseudo science. Looks like another vote in the GOP column.

  15. DeDude says:

    The piece in “Jesse’s Cafe” brings up something I still have never found an answer to:

    “And the Fed purchases of Treasury debt at non-market prices is just dandy as long as it passes through the hot little hands of the likes of a friendly bank like JPM, who take their vig and then some”

    Why is it that a simple transaction of paper between the Fed and the Treasury is allowed to go through bankster middlemen so they can suck a huge chunk of taxpayer money out of it? Are those transactions put out for bid so the lowest bidder get to have the honor of the doing the 5 minute worth of work?

  16. Quid says:

    Mr. Ritholtz,

    That Felix Zulauf, a man I’d long admired, could preach the knee-jerk “supply side” “cut taxes for rich ‘job creators’” dogma of a Tea Party hack was most disappointing and I’d welcome your thoughts on Zulauf’s comments.

    I did not read the long version of the piece so his thinking may be more nuanced than it first appears, but as presented his complaints about taxes and ‘taxing the rich’ do not seem to me supported by the facts. There may be nations where taxes are too high; I think France’s ‘millionaires’ tax is excessive and counter-productive. But as you have observed at this site, wealthy individuals and corporations in the U.S. are not heavily taxed; indeed, I believe taxes in the U.S. are lower than those of all other industrialized nations. Greece and Italy don’t suffer from excessive taxation of the wealthy but massive tax evasion, especially by the wealthy.

    So what has transformed the brilliant Felix Zulauf into a self-serving Mitt Romney?

    Thanks,

    Quid