10 Friday AM Reads

It’s Friday already! Busy week snuck by when we weren’t looking. No worries, our morning train reads are primed to go:

• Relative to bonds, S&P 500 companies may be about as cheap as they’ve ever been. (Housel)
• Draghi: “There must be a statute of limitations for those who say there will be inflation” LOL  (Calculated Risk)
• McDonald’s fixes its marketing, Chipotle fixes its product (Fortune)
• Alternative Assets Approach $7T Despite Headwinds (Chief Investment Officer) see also After Hedge Funds, CalPERS Eyes Private Equity Cuts (Chief Investment Officer)
• Best Books for Investors: A Short Shelf (Total Return)
• The Senate is pretty clearly a hoax (Voxsee also By 98 to 1, U.S. Senate passes amendment saying climate change is real, not a hoax (Science)
•  A New Way to Explode a Star? (National Geographic)
• Meet the woman who can’t feel fear (Washington Postsee also World With No Fear (NPR)
• Apple App’s store is Bigger than Hollywood  (Asymco)
• Hands-on: Microsoft’s HoloLens is flat-out magical (Ars Technica)

What are you reading?


The Real Reason Oil Prices Plunged

Source: Fox Business


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  1. RW commented on Jan 23

    Economist magazine appoints its first female editor

    Zanny Minton Beddoes has been appointed editor of the Economist, the first female to land the role in the publication’s 170-year history.

    NB: I initially misread her first name as Zany and thought, “that’s unfortunate” (my bad). Promoting a woman to a top position is a milestone for a notably very conservative company but the real task before its new Editor is the reclamation of analytic integrity the magazine lost under previous Editors: Catering to elites and those who serve them develops a bias that can become a problem for a publication’s reputation; it can also become a problem for the field that publication purports to survey …

    Why people hate economics, in one lesson

    … Enthusiasm for the market is supposed to be one of the conclusions of economic analysis, not one of its presuppositions. If you present it as one of the basic assumptions, then people who are not already disposed to accept that point of view will simply tune out the whole thing. …

    I’ve had a lot of conversations with economists who are struggling to understand why it is that they do such a bad job of promoting their discipline. Part of the problem is certainly that so many are unable to present the methodological foundations of the discipline in a way that is morally and politically neutral. Instead, they wind up taking their contempt or condescension towards morality, as well as their enthusiasm for the free market, as though it were …“baked into the cake.” Unfortunately, if students get fed moral skepticism and right-wing ideology …on the very first day of class, many will conclude that economics as a whole is unworthy of their attention.

    Can’t close on this topic without acknowledging the wisdom of Josh Brown. Explains more than the bias of a magazine and implies an important question: just what (or who) is an economy or market “for?”

  2. rd commented on Jan 23

    Unfortunately, I think it is going to be difficult to differentiate between headlines in The Onion and the MSM regarding Congress over the next few months.

  3. VennData commented on Jan 23

    Florida voted and got a travelling salesman.

    “…Rubio plans to skip all votes in the Senate next week and instead take a campaign fundraising swing through California with events in Beverly Hills, Newport Beach, Rancho Santa Fe and Costa Mesa…”


    Marco parrots his daddie and the old men of Florida to keep things the same with Cuba. It’s like watching a Saudi succession with these old Cubans.

  4. rd commented on Jan 23

    My math skills are a bit fuzzy. How does a 15% rise in the dollar = 50% decline in oil price?

    • Willy2 commented on Jan 23

      It’s quite simple. The chart makes perfect sense. Commodities are all around the world priced in USD. If one is “long” commodities then one is automatically “short” USDs. Guess what happens when the price of oil goes “down the drain”.

      (Rumours say that the price of oil was knocked down DELIBERATELY to punish Russia. But the flipside is that shale oil production here in the US got hit as well.)

    • rd commented on Jan 23

      I have heard of elastic pricing, but it is pretty rubber bandy if a 15% change in the dollar cause a 50% change in oil price in dollars. There is a lot more going on in the oil market than the US dollar.

    • DeDude commented on Jan 23

      Unfortunately the human brain is not very well suited for a multifactorial reality. We love our narratives and the simpler the narrative the more love we bestow upon them. We want the explanation not the explanations. As you point out the rise in dollar may explain part of the rise in oil as priced in dollars. but oil has also fallen substantially in Euro’s (Rubble not so much). The classic supply and demand has to be taken into account for most of the changes.

    • willid3 commented on Jan 23

      not sure that supply and demand has that much to do with oil prices. demand has been down for a while now, even when the price of oil was going up. and even when ‘buyers’ of oil were parking tankers of oil off shore because the demand wasnt there, oil still went up. and part of the problem is that oil supply is very hard to determine, as you actually have to watch tankers as they sail to see if they are full. demand is some what easier, but then how much of the oil that is bought in the US actually ends up in products (gas,diesel, etc) that is exported? we really dont know. its not a market that is easy to figure out (and seemingly on purpose too). and some rumors of events impact prices, even if they really dont impact supply and demand

    • DeDude commented on Jan 23

      Yes supply and demand has become very difficult to judge and each term been broadened. Supply has to take into account that it is not just what is produced by must be adjusted for manipulations to get at the actual available on market “supply”. Similarly demand has to be adjusted for the fake demand created by speculators.

    • kaleberg commented on Jan 23

      Re: “Rubble not so much”

      I like your new name for Russian currency whether the misspelling was intentional or not.

  5. Concerned Neighbour commented on Jan 23

    The problem with the legion of articles comparing the dividend yield to the bond yields is that one underlying asset class carries significantly more risk (or used to in the olden days, anyways) than the other. When short term rates go negative – as some are already – are these authors advocating we price stocks that pay a dividend to infinity and beyond? On the surface that seems to be precisely what they’re implying, which is absurd.

    Interesting that Europe is surging 2% today. These “efficient markets” sure take their time in pricing things in. Indeed as I’ve said before I suspect the EU QE won’t be fully priced in until September 2016. Or perhaps “markets” are surging due to bellwether’s UPS outlook, Dr. Copper flirting with $2.50/pound, and WTI touching a $45 handle once again. After all, this only accelerates the delivery of QE4 in 2016.

  6. Willy2 commented on Jan 23

    “Relative to bonds, S&P 500 companies may be about as cheap as they’ve ever been.”

    When one looks at yields only, then I certainly would agree. But guess what happens to stock valuations when those pesky rates only would double (from the current ~ 2% up to say ~ 4%) ?? Then for stocks “to be cheap” again those prices would go down 40, 50 or 60%.

    And I am NOT convinced rates will stay this low for the next weeks, months, quarters & years. I see too many things in the bond market I don’t like.

    • Willy2 commented on Jan 23

      Correction: I should have written “……. again those “cheap” (???) stock prices would have to come down 40, 50 or 60%.”

    • rd commented on Jan 23

      Look at pre-1950s stock market valuations and dividend yields compared to bond yields. The past 60 years are the mirror image of the previous 60 years.

    • willid3 commented on Jan 23

      well obviously we are living to well. who needs to have water thats safe, or air thats safe. or expect that we can afford buy safe food. or actually get health care. these are just for the 1%. course most of us cant afford to own a private jet either.

    • VennData commented on Jan 23

      Another American business ruined by Obama and his Obama phones!

  7. romerjt commented on Jan 23

    Feeling so smart as I finally heard on the TV business show one of my favorite points – that the improved efficiency of autos could be a pretty big factor in the demand for oil. Somebody finally did the math, 25mpg vs 20mpg is 20% – holy shit!

  8. Willy2 commented on Jan 23

    ” Draghi: There must be a statute of limitations for those who say there will be inflation”.

    The mere fact that Draghi has announced the european equivalent of QE made the Euro tank against the USD & Yen. He created instantly (price) inflation. Think what happened to the price of oil in EUR !!!! And it means there’s less (price) inflation in the US & Japan.

  9. VennData commented on Jan 23

    “. .not sure that supply and demand has that much to do with oil prices…”

    LOL The wingnuts get to dispense with Supply and Demand to support their wacky theories.

  10. rd commented on Jan 23

    You simply cannot make this type of stuff up. The Republicans have discovered income inequality and it is all Obama’s fault! Obama’s policies are causing the 1% to have their income and wealth rise while the typical American is suffering. Of course, the obvious conclusion is that more tax cuts for the wealthy will solve this.





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