10 Tuesday AM Reads

Well, THAT was interesting. let’s see if we can do something else today, starting with the best morning train reads in the land:

• Hulbert: U.S. investors are dumping stocks for the wrong reason (Marketwatch)
• Chinese Stocks Surge After Posting The Biggest Intraday Swing Since 1992 (Bloombergbut see A Shortage of Tools for Betting Against China (WSJ)
• Custodians’ payments to RIAs for fund picks raise eyebrows (Investment News)
• 5 reasons billionaires should hate runaway wealth inequality (Eclecta Blog)
• Study Suggests That Google Has Its Thumb on Scale in Search (NYT)

Continues here



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  1. rd commented on Jun 30

    Chinese stocks appear to be rising because local government pension funds will be allowed to invest up to 30% of their assets in stocks for the first time. Most western pension funds invest in stocks, but if Chinese stocks are in a bubble, trying to prop it up with local government pensions could be disastrous.

    I still think that the US’s secret weapon to bring China to its knees would be to send Goldman Sachs, JP Morgan etc. over there to provide their local governments with “assistance” using interest rate swaps etc. similar to that provided to many US local governments.


    (The BI link appears to reference yesterdays news but it really is todays with stocks rising – minor technical glitch)

  2. Iamthe50percent commented on Jun 30

    Re fees (kickbacks) to RIA’s. It has been said that free advice is worth what you paid for it. Now it seems that paid advice is worth even less.

  3. VennData commented on Jun 30

    Carlos Slim scraps Donald Trump project after Mexico insults


    No need to wonder if your racism, sexism, and other isms are holding you back. They are. It’s not those “highest tax rates in the world” Americans like you suffer in imaginary math land. It’s your ignorance that’s holding you back.

    • VennData commented on Jun 30

      “…Naturally, both fracases stem from Trump’s presidential announcement speech in which he referred to Mexican immigrants as “rapists,” thus fashioning an unholy coitus between two topics Republicans should never, ever, ever under any circumstances talk about: rape and race. Either one of those topics alone is toxic for even the most skilled Republican, but Trump jumped in rug first…”


      And make his name smaller on his town in Chicago please.

    • bear_in_mind commented on Jul 1

      Trump richly deserves his come-uppance by people who no longer have to kowtow to his disrespectful sobriquets. He’s a boorish buffoon who’s milked his ’15 minutes of fame’ far beyond any reasonable measure. I don’t know if his kids deserve to take the hit for Daddy Dearest’s loose lips, but they had to know that The Donald would become a liability at some point with his motormouth.

  4. Molesworth commented on Jun 30

    Aren’t RIAs supposed to have fiduciary duties to their clients? Accepting fees for owning owning higher expense funds doesn’t pass the smell test.

  5. WickedGreen commented on Jun 30

    Hulbert is generally worth a read; I think in this case he’s right about the relative import of the Greek tragedy of the day, but …

    … more generically, these sorts of ‘keep calm and carry on’ admonitions are at times reminiscent of the ‘everything is fine’ / well contained language of not-so-long-ago.

    One proxy that worked out in 2007? Watching Bill Gates unload … you could have done worse than just to watch his selling activity and adjust your market exposure accordingly.

    • rd commented on Jun 30

      Sam Zell and Steve Schwarzmann selling off their companies was an even better tell.

  6. rd commented on Jun 30

    The reason that productivity isn’t improving:


    One of the advantages that manufacturing, farming etc. have over services is that productivity is fairly easily measured at the micro-scale: units produced; quality measures; cost per unit etc. This is much harder to do with services and requires more thought, whether they are teaching, medical, engineering, human resources, etc.

    So I think we have seen the rise of crappy management with useless memos, endlessly changing org charts etc. Who even pays attention any more to the person a couple of layers above you; they are usually rotating in and out of those positions every 6 months with just enough time to make a change that doesn’t get followed through.

    We see it in teaching where teacher evaluation policies are put in place but the actual materials aren’t developed until late fall, so that the baseline testing and new teaching materials are rushed but still show up between Halloween and Thanksgiving when a quarter of the year’s teaching has already occurred. A rational, competent approach would be to do a good job developing all of these things, roll them out in the summer, and have everything positioned before the teachers walk in the door for the new school year. Based on my wife’s experience, this never happens. Instead, you end up with crappy materials introduced at the wrong time, and applying a whole new layer of unnecessary stress on the people who are actually in contact with the customers. This approach is rampant in most service sectors which is why we are astonished and grateful when we run into competent companies providing quality customer-based service with happy employees (think shopping at Wegmans or Trader Joes compared to Wal-Mart or most airlines).

    • bear_in_mind commented on Jul 1

      @rd: Not sure where you’re pulling the “productivity isn’t improving” factoids, as the information I’ve seen indicates it’s still on an upward projectory, one far outpacing median wage growth, but it’s not showing Y-O-Y record pace, that’s true.

      As for being overworked, yeah, there’s a lot of that because of layoffs,”rightsizing”, outsourcing, proliferation of part-time employment (screw-you and your benefits!), etc. It’s a witches brew of all that plus the oft-poorly implemented application of technology of which you allude, creates labor frictions and inefficiences. Can’t tell you the volume of poorly crafted and executed software applications that are floating around the business commons.

      All of these factors provide great leverage to employers and leave laborers with not-so-many options unless you’re in one of today’s go-go sectors. Fact is, you may become tomorrow’s (or 2016’s) barista, depending on what the macro-economy provides.

    • Iamthe50percent commented on Jun 30

      The houses were there long before the jets. They used to try to avoid the westerly takeoffs, but in the 1980’s they decided that nobody lived there. Entire towns like Bensenville and Bloomingdale became officially nobody. They published an 800 number for comment. My daughter tried to get through for the whole monthly comment period as only a teenage girl can work a telephone. At the end of the comment period they announced that no one had commented. Probably left the phone off the hook (phones used to have hooks). Started to distrust the Democratic Party at that time.

  7. RW commented on Jun 30

    The “Hangover Theory” of the 2008-2009 Crash Fails Because of Timing

    …two people this past weekend have soberly informed me of what they call a “hard truth”: that nationwide employment simply had to go down in 2008 and 2009.

    You see, they said, we had to move people out of me industry of building houses and the occupations connected to that industry, and it was impossible to do that without lowering employment.

    …No. That collapse in residential construction starts in the fall of 2005. Residential construction is back to its normal-trend share of economic activity by the summer of 2006. Residential construction is 5/6 of the way down to its current–highly depressed–level of today before the fall in the nationwide employment-to-population ratio gets underway.

    …sectoral reallocation is a very different thing from …macroeconomic depression. And the fact that people since before Schumpeter have erroneously tried to conflate them does not mean that we should. ….

    NB: I never believed macroeconomics offered reliable investment tactics yet so many investors (and their advisers) were clearly getting it wrong and, not only getting it wrong but expending (sometimes considerable) effort developing supporting narratives for error, that I believed getting it a bit closer to right was essential to a contrarian strategy.

    Shorter me: I bless the day I bought Paul Krugman’s The Return of Depression Economics (1999) while on protracted layover during the crash of 2000.

  8. VennData commented on Jun 30

    Orthodox Christians Must Now Learn To Live as Exiles in Our Own Country


    No, not until you stop doing business with women who have abortions, and men who were involved. Once you REALLY live by your values then we can talk.

    But you people talk the abortion money. And you take money from people who drink and smoke pot and swear.

    Come on you pure people. If you’re not pure, then how can you be exiled?

    • Jojo commented on Jul 1

      There are a lot of stories circulating about high rents in many parts of the country these days. Always accompanying these stories are statistics about people paying 30, 40, 50 or more percent of their income for rental housing and a roof over their head.

      What no one seems to write about is the quality of life issues these excessive rents bring on, which include more people crammed into apartments/houses with less privacy, more garbage/water use due to excessive crowding, more cars and parking issues in neighborhoods and so on.

      The articles all seem to believe that these insane rents are being paid by a double-income family that would love to buy a house if they could (btw: the average priced home in San Mateo, CA is around $1.6 million!). Sorry, it taint so.

      Out here in the SF Bay Area, it is not uncommon to find 3-4 unrelated people sharing a one bedroom apartment with two people in the bedroom, one in the dining room and one in part of the living room. Or 7 people living in a 3-4 bedroom house. It’s the real way that people pay these high rents when they are not employed by tech companies.

      Landlords don’t seem to care about apartment or neighborhood overcrowding as long as they get their rent number. Local services and food stores are happy to increase their prices because there is more money circulating in a neighborhood that now has twice the number of people it would have had 10 or 20 years ago. Neighbors might complain about these problems to local politicians but they do nothing because they are afraid to step on the landlords toes.

      This is not at all dissimilar to what happened starting back in the 1980’s when outsourcing our manufacturing in return for lower priced products seemed like such a harmless idea. Except that we lost our middle class, destroyed opportunity for so many middle to lower class people and enabled huge income inequality.

      We never seem to consider the big picture or unintended consequences until it is too late. These high rents are just the tip of the proverbial iceberg.

    • bear_in_mind commented on Jul 1

      Try finding a rental in San Francisco (or most of the Bay Area, for that matter) that doesn’t fall under that 50% umbrella. Fat chance.

    • CDizzle commented on Jul 1

      Plenty of affordable R/E available here in sunny St. Louis. Trade-offs, yo.

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