10 Thursday AM Reads

Yesterday’s snapback looks to continue today, if early futures can be believed. Despite single digit temps in NYC, we have your early morning train reads warmed up to go:

• 20 Heartbreaking Cartoons From Artists Responding To The Charlie Hebdo Shooting (Buzzfeed) see also It Is Sadly Unclear Whether This Article Will Put Lives At Risk (The Onion)
• Four Funds Key to Vanguard’s Growth (WSJ)
•  Why Oil Is Dragging Down the S&P (Bloomberg) see also “I Knew It All Along” (Housel)
• AdvisorHUB is the Most Important Site in Finance (Reformed Broker)
• I am Elon Musk, CEO/CTO of a rocket company, Ask me anything (Reddit)

Continues here





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  1. rd commented on Jan 8

    I assume the Kansas success story will embolden the Republican-controlled Congress to follow its policy lead as it is achieving the ultimate Grover Norquist goal of reducing tax collection.

  2. Concerned Neighbour commented on Jan 8

    Under the “emergency, temporary” stimulus in perpetuity and the “markets can’t go down files”, some interesting reads today.

    1. “Grand Central: Could Lower 10-Year Yields Spark A More Aggressive Fed?” – Hilsenrath

    “When lift-off occurs, the pace of monetary policy normalization will depend, in part, on how financial market conditions react to the initial and subsequent tightening moves. If the reaction is relatively large—think of the response of financial market conditions during the so-called “taper tantrum” during the spring and summer of 2013—then this would likely prompt a slower and more cautious approach.”

    2. “Evans Says Fed Shouldn’t Rush Rate Rise as Inflation Undershoots”

    “Later in the presentation Evans said such a move to tighten too soon would be a ‘catastrophe.'”

    I happen to agree with Evans. The US economy is still so incredibly fragile that higher interest rates simply can’t be sustained. As Das pointed out, the excessive debt problem hasn’t been solved; not by a long shot. And studies show debt crimps the economy, especially when it’s at high levels.

    It’s pretty clear the central banks won’t tolerate a correction in the “markets” (anyone who calls them true markets anymore IMO is doing themselves a disservice). You need only read what they say, and note when they say it (when the “markets” are down marginally from all-time highs). There is no down. I fully expect the S&P to trade with a trailing P/E in the low 20’s by the time the year is through. I also expect rates will remain where they are, and that the Fed will have dropped significant hints of QE4 by the close of the 4th quarter.

    I hope I’m wrong, but I’ve been right about this absolute farce since QE started.

    And in case VennData is reading, I have never been a gold bug, Tea Partier, or hyperinflationanista. So criticize on some other basis.

  3. romerjt commented on Jan 8

    Does this make us feel any better? “Fascinated, Cronise began a regimen of cold showers and shirtless walks in winter, and he lost 26.7 pounds in six weeks. He began measuring his metabolism during and after cold exposure, and found that his body was burning a tremendous amount of energy. Rather than storing energy as fat, his body was using it to sustain his core temperature.”


    • ilsm commented on Jan 8


      See “Through the Looking Glass”. Humpty Dumpty defines the words, the Cheshire cat is in charge of directions, and if they could get it in the budget flamingoes make effective (per Humpty) weapons.

      The policy of the pentagon to spend all the money each year so you get at least as much next year (since I was a 2Lt) has “nothing to do with defending America”.

      Keeping the same number of airmen fixing jets, adding huge numbers of contractors for the F-35, getting an airplane that cannot support the grunt, and spending more money in total with a lot for the contractors has “nothing to do with defending America”.

      Congress adding money to the F-35, and the other 99 top 100 pentagon “major systems” “nothing to do with defending America”.

      If you get inside the I395 beltway you have gone down the rabbit hole, nothing inside the beltway “anything to do with defending America”.

      The pentagon trough,with $450B in contracts each year has “nothing to do with defending America” but is a huge source of PAC money for republcians and dems.

      The A-10 can be re-capitalized and fly for longer and better than whatever F-35’s that may be taken away from inconsequential missions that have “nothing to do with defending America” to do close air support for army and marines in close combat.

  4. rd commented on Jan 8

    Vanguard Lifestrategy and Target Date funds are bundled combinations of four funds, US total Stock Market, Total International Stock Market, Total Bond Market, and Total International Bond Market. Vanguard just manages the ratios between the funds in order to create those “one-stop” funds. So it is not a surprise that they would be their biggest inflows as anybody investing into those umbrella funds would be buying the sub-funds as well as investors buying them separately.

    Clearly, the ratios of the actual inflows indicate that people are buying some of them, like International Bond, outside the umbrella funds but there is probably a substantial base flow of money coming in through the Lifestrategy or Target Date funds. The other Vanguard funds would generally have to be bought specifically on an individual basis.

  5. RW commented on Jan 8

    Today’s Essay at Trying to Understand Current FedThink

    …If falling yields are a reflection of diminishing inflation prospects… it ought to prompt the Fed to hold off on raising short-term interest rates…. If… lower long-term rates are a reflection of investors pouring money into U.S. dollar assets, flows that could spark a U.S. asset price boom, it might prompt the Fed to push rates higher sooner…. The latter interpretation is less conventional, but it is one that New York Fed President William Dudley made….

    …Dudley seems to be chasing down a red herring. The interpretation he wants to put forward ought to be this:

    [Today Ms. Market expects inflation over the next ten years to be 0.9%/year less than it expected it to be back in June 2013. But we know better: the economy is actually much stronger than Ms. Market thinks.]

    Coming from a Federal Reserve that has overestimated the future strength of the economy in every single quarter since the start of 2007, that is not a terribly reassuring posture for it to take.

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