Good morning. Here’s my reading for the morning commute:

• This is how history should judge Ben Bernanke (Washington Post), see also Farewell QE, you have been a magnificent success (Telegraph)

• Fees, and fees, and fees (Research Puzzle Pix)

• When a Good Indicator Goes Bad (Morningstar), but see CAPE Fear (Mebane Faber)

 

Continues here

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.

10 Responses to “10 Thursday AM Reads”

  1. RW says:

    Wonkbook: Congress gets to undermine Ben Bernanke one last time

    The Fed’s tiny taper is getting all the attention. But Ben Bernanke didn’t just pull back his monthly bond buy yesterday. He also extended the Fed’s primary stimulus policy of incredibly low interest rates. …

    “That’s the right call,” says Matt Yglesias, “and it means Ben Bernanke will be wrapping up his term as Fed chair with a move in the right direction.”

    But Congress is wrapping up Ben Bernanke’s term as Fed chair with a move in the wrong direction. The Fed’s lower rates are supposed to allow Congress to borrow more money right now to help the unemployed. Instead, Congress is letting unemployment benefits lapse at the end of this month. Ben Bernanke can lead a horse to water. But he can’t make them stop screwing the unemployed.

    Can’t make the Republican led congress (pace <a href="http://www.ritholtz.com/blog/2013/12/2013-festivus-airing-of-grievances-ive-got-a-lot-of-problems-with-you-people/"Kasriel) stop screwing the economy either.

  2. Bob is still unemployed   says:

    If you think you can watch the digital movies you have purchased anytime you want, think again.

    Amazon takes away access to purchased Christmas movie during Christmas (boingboing)

    “Bill sez, Last “December I bought some favorite Christmas specials for my kids with the idea they could watch them every year. Went tonight to watch one (‘Disney Prep and Landing 2′ if you’re curious) and it was gone from our library and couldn’t be found on the site at all….”

    Amazingly, amazon.com simply removed the purchased movie from the customer’s library.

    Oddly, I have never heard of the ability to view a pirated movie being revoked, not that I am in favor of piracy.

    But this episode yet again shows the stupidity of the current business model being used by Hollywood — it punishes those who want to purchase and view media legally, while it rewards those who acquire the media illegally.

  3. 873450 says:

    Departing NYC Mayor Bloomberg invokes Ike during farewell speech warning against “labor-electoral complex” threatening economy.

    http://www.nytimes.com/2013/12/19/nyregion/collegiality-fading-bloomberg-and-de-blasio-offer-clashing-views-on-fiscal-future.html?ref=nyregion

    “Mayor Michael R. Bloomberg, in a swan-song speech to a corporate audience in Manhattan, trumpeted the balanced budget that his administration has left for its successor. But in a clear message to Mayor-elect Bill de Blasio, he warned that the self-interest of politicians and union leaders — the “labor-electoral complex,” as he deemed it — could quickly lead to devastating fiscal consequences.”

  4. GeorgeBurnsWasRight says:

    re: Adam Grimes on chart folly

    I think he missed another glaring problem with the chart. The price of the S&P 500 has no boundary and can go up to any level that buyers and sellers take it to, so it’s not necessarily cyclical. The consumer confidence index presumably has an upper and lower boundary and thus is cyclical.

    Comparing any cyclical data with any non-cyclical data has problems.

  5. farmera1 says:

    Jack Bogle puts out his favorite chart, that oldie but goodie DJiA to Book ratio. Per this metric things don’t seem to be overvalued.

    http://www.businessinsider.com/jack-bogle-most-important-chart-of-the-year-2013-12

    • rd says:

      The market can more than double from here before it hits the peak valuation heights of 2000 which are now the gold standard for defining the potential top of a bull market.

      The focus on trying to discredit CAPE is raising my concern that we are moving into a bubble as redefining valuation measures is one of the things that happens at the tail end of secular bull markets (1999-2000 was a classic example in the tech sector). I stil think that the primary bubble now is confidence that the monetary authoriies have everything under control and that nothing can upset the apple cart. A major break in the markets or financial sector could shatter confidence that everything has been fixed if it turns out the bezzle was not fixed after 2008-9.

      All of the major valuation measures that I track (CAPE, Tobin Q, Total Market Cap to GDP, Bogle’s DJIA to Book Value, S&P 500 dividend yield, GMO’s 7-yr expected real returns) all point out that we are significantly above average in valuation and have been for 15 years. However, the long grinding path to lower valuations usually takes a long time (@16 yrs) historically from a peak. The primary exception was 1929 when the financial crisis turned into a major economic crisis and the DJIA plunged 90% and the valuation peak to trough was less than 3 years.

      However, lower valuations don’t necessarily mean substantially lower nominal values as the 1970s and early 80s proved where the big valuation decline occurred in an inflationary period so the stock market wasn’t keeping up with inflation but largely treaded water on a nominal basis.

      But maybe this time is different and we have finally attained Irving Fisher’s “perpetually high plateau of prices” for the stock market.

      • jnkowens says:

        Well said rd.
        After reading the Morningstar piece I was struck that their “takedown” on CAPE concludes that stocks are merely “on the higher side of normal”. Not exactly a smoking gun.

  6. RW says:

    Is the Safety Net Just Masking Tape?

    It’s easy for liberals to explain away setbacks to programs and policies that they favor — ranging from infrastructure investment to food stamps to increased education budgets — as a result of the intransigence of the Republican Party …

    But that explanation is too facile.

    …Some progressives argue that the Democratic Party stood by and let it happen passively; others suggest that key segments on the left simply sold out to Wall Street. …

    The shift of the Democratic Party from economic to “pity-charity” liberalism has put the entire liberal project in danger. It has increased its vulnerability to conservative challenge and left it without a base of politically mobilized supporters.

    • ilsm says:

      Everything is fine, both parties are and have been in thrall to Wall St, and the pentagon.

      What went wrong: Reagan and the monetarists began ruining the US economy; the New Deal and Great Society focus on treating the symptoms is no longer enough as the financialization disease has progressed to chronic degradation of the lot of the 98%.

      No one in power is going to seriously take any part of the 40% of US government outlays called discretionary for crony (Wall St, and the pentagon) capital to address the disease. Much less tax anyone other than the lower quintiles.

      The ‘dialog’ will whine about moochers and whether entitlements take anything from the pentagon trough that might threaten anything other than the contractors profits.

      Pope Francis is a Marxist will be the tone.