My early morning reads:

• Regrets? The Maestro Has None (Barron’s) see also Wall Street’s Fed fixation (LA Times)
• What to Do with Small Caps? (Mebane Faber)
• I know that we the New Slaves (Reformed Broker) see also Slaves of the Internet, Unite! (NY Times)
• Munis Make the Shopping List (Barron’s)
• Wal-Mart Now Draws More Solar Power Than 38 U.S. States (Bloomberg) see also Mystery of the ‘Missing’ Global Warming (Bloomberg)
• Pros and Conflicts: Whose Side Is Your Broker On? (WSJ)
• Disruptions: Are Eager Investors Overvaluing Tech Start-Ups? (NY Times) see also Twitter’s white lie to investors: We’re profitable (Quartz)
• Marty Sullivan figured out how the world’s biggest companies avoided billions in taxes. Here’s how he wants to stop them. (Washington Post)
• Outsider Whose Dark, Lyrical Vision Helped Shape Rock ’n’ Roll (NY Times) see also Lou Reed, Velvet Underground Leader and Rock Pioneer, Dead at 71 (Rolling Stone)
• 18 Striking Images from Space Show Earth’s Rich Tapestry (Twisted Sifter)

What are you reading?


Change in Income Distribution, 1988 – 2008

Source: FT Alphaville

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.

16 Responses to “10 Monday AM Reads”

  1. RW says:

    Is that a change in the zeitgeist I detect?

    In Fed and Out, Many Now Think Inflation Helps

    Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

    • willid3 says:

      well inflation can be a tax if its out of control. problem, is without some inflation, all you can get is stagnation. since without growth (which is inflation) you can have nothing else. but then some can ignore some parts of inflation (that cost of gas, because it changes daily, hourly) or you can ignore the deflation thats happening ( the falling incomes of the 99%).

  2. hue says:

    Nearly 50% Of All Home Sales Now Cash, As Institutional Investor Activity Hits New High (Forbes)

    The Gladwell Pivot (Language Log)

    Sweet Jane (Lou Reed)

  3. winstongator says:

    You pay a P/E premium for small-cap stocks because they are capable of growth that large & mega cap stocks are not. Take a company with a $100M mkt cap. They can 1000X their cap to a $100B company. You get a lot more 100X-ers to the $10B range. Then look at a company already at $100B mkt cap. Maybe they can 10X to $1Tln, but the closest anyone is today is about half that. They definitely can’t 100X to $10T as the US is the only economy with GDP above that.

    You’ll get more down-all-the-way-to-zero’s with small caps, but you’ll also get a lot more (infinitely more) 100X-1000X home-runs.

  4. willid3 says:

    why isnt inflation lower?

    with high unemployment, low wages and low demand, why isn’t inflation lower ?

  5. Internet Tourettes says:

    Treasuries Risk Shown as Fed Distorts Stocks Correlation – Bloomberg

    “U.S. government bonds are acting more like equities than any time since before the credit crisis, making Treasuries a hidden risk to investors becalmed by the prospect of the Federal Reserve prolonging stimulus into 2014….”

  6. willid3 says:

    while i think we are the last gram of impulse that pushes global climate change, has any body noticed that we have had a world wide semi depression? seems to me that if we had no impact, then us having that semi depression should have had no impact on the climate change. but since we have seen some minor variance in global climate change. not that i really expect any body to do any thing until it becomes so drastic that even the 1% are being hindered.

    and i suspect that the internet has made almost all of slaves. and the reason that those who contribute content to it have trouble making money from it, is because the 99% have less and less income. and adding a new expense is really hard. do they do without if it comes down to it. and that applies to health care. many will just live with their problems as they can do nothing else about it

  7. rcumming says:

    “But they’d be embraced by future generations, cementing the Velvet Underground’s status as the most influential American rock band of all time”

    Rolling Stone on Lou Reed. For all you that debated weather they were top five American band.

  8. rd says:

    It appears that while institutional investors are snapping up single-family home to rent out, actual people (there still are some out there) are now viewing home purchsases differently than they did earlier in the decade:

    Surveys indicate that the flip mentaility is going away as people are grasping what Shiller has been saying for a while, namely that housing is not a great investment and it should be purchased for, well, housing purposes not long-term investment.

    One by one the jigsaw puzzle pieces are falling into place for attitude changes towards income, expenditures, and investments that will reset everything for the next couple of decades or more. Wall Street and the Federal government are two of the last holdouts as they try to cling to their good old days. We missed our opportunity to clean that out in 2009-10, but I suspect that they are creating a new opportunity to clean house as record margin debt and valuation indicators are flashing signals that they may get trampled when everybody rushes for the exits.

  9. willid3 says:

    its not that all US education is bad. its that some parts are really bad while others aren’t.
    sort of fits with other things too. some states have good health care, others aren’t any better than developing countries. some states have reasonable labor incomes, others arent to much better than that third world country.

    • rd says:

      My wife teaches in an urban school district.

      Poverty and broken families are the key issues. There is not much a teacher can do when the parents are largely absent from the kids’ lives and 8 year olds are having to figure out how to live and get to school largely on their own. The outside in the school playground at recess and lunch is often the only time of the week that some of the kids play outside because their neighborhood is too dangerous. nearly all of the children in my wife’s classroom get free lschool lunches every year because fo the low family incomes.

      There are often grants for new technology tools etc. for incorproation into the classroom. However, every one of the teachers in that school would give up all of the technology and use an old chalk blackboard if it could be exchanged for a few hours every week of a second adult body in a room with 25 elementary school children for more one-on-one work.

      Our children went to a very good suburban school district. THe parents of that district would have been rioting in the streets if the conditions there had been similar to the school district that my wife teaches in.

  10. romerjt says:

    Reading – A Short History of Everything

  11. neddyj says:

    Barry – I get the sense that the stock market is perceived by the investing public as being ‘less risky’ than the bond market at this point. I don’t doubt that rates have nowhere to go but higher, and i’m fully aware what happens to bond prices in periods of rising rates. However, it seems dangerous to me that the rationale i often hear about investing in the stock market is “there’s nowhere else to invest to get a return”. It’s not even that I disagree with that argument – it’s that it doesn’t address risk. I’ve seen several articles and have heard several pundits note that ‘asset allocation is dead’ because you shouldn’t have much if any bond market exposure at this point. But the implication is that you should have more stock market exposure as a result. With the Fed pushing rates so low and committed to keeping them low, I do also ‘get’ the hunt for yield leading to dividend paying stocks….it just seems a little dangerous to me. Last I checked, there was no obligation of a dividend paying stock to pay you back your principal on a particular date in the future…

    So my questions for you are – do you think asset allocation is dead?

    Do you think there has been or will be a rotation out of bonds and into stocks, or do you think it’s been more a rotation out of cash and into stocks – with cash that used to be in stocks before the financial crisis?

    the ‘where else are you going to invest’ argument to me smacks of ‘it’s different this time’…

  12. mpetrosian says:

    Nothing wrong with getting paid for speaking engagements and writing articles. Get all you can! But lets please not pretend that the exposure you get doesn’t translate into many new fee paying customers a year.

    All this is ultimately your prospecting method. And I’m not knocking it. In fact, its the most brilliant and classy way of going about it that I’ve ever seen.


    BR: We have developed a different model — all of our clients come to us from word of mouth and referrals.

    I’d like to say I am so smart that I dream it up whole clothe — but I didn’t. It just kinda happened.

  13. constantnormal says:

    I’m apparently too simple-minded to be able to interpret the chart from FT Alphaville, or maybe it is missing an axis … here’s a question that exemplifies my problem:

    Using only the data presented in that chart, re-draw the chart with time as the x-axis, real % increase as the y-axis, for lines of the different percentiles of global income.

    You see my difficulty in interpreting it? There are three dimensions being represented on a 2-dimensional view. A “Flatland” view of economics data.

    • constantnormal says:

      An alternative question that runs afoul of the same problems, without re-drawing the chart, would be “What were the % changes in real income in 1988 for the 5th percentile as compared to the %changes in real income in 2008 for the 5th percentile?” Or pick any other percentile and try to compare the changes in income for two different years.

      And even if one adds another dimension to this chart to capture the missing perspective, the data points need to be distributions of nations comprising each percentile at each point in time to be able to properly appreciate the changing economic picture it purports to convey.

      Sometimes a picture is too complicated to fit into a static, 2-dimensional view, and some sort of animated, multidimensional model is required.