I’ve known Bob Mnuchin on and off for thirty years, I suppose – maybe longer. Notwithstanding that he was close to the top of Goldman Sachs in the bad old days of Gus Levy, he’s a cultivated, decent guy, obviously smart, with a good eye. How he could have spawned an idiot, tone-deaf son like our Secretary of the Treasury beats me!
We’ve been watching Ken Burns’s “The Vietnam War” very closely. There’s a lot there, but the good, saintly stuff overwhelms the bad and villainous – and there was a lot of that. Hard to disagree, significantly, with this: http://www.theamericanconservative.com/articles/ken-burnss-vietnam-war-is-no-profile-in-courage/
My wife, coming from her UN job via ferry, calls to say the boat is being held at South Williamsburg. No explanation. A little online research by me yields the probability that riverwise shipping is being held up because of the threat to navigation posed by a giant turd: “8:45 PM Depart Wall Street Landing Zone en route to John F. Kennedy International Airport.” (From President Dickhead’s schedule for today. My wife’s destination is one stop away from the Wall Street dock.)
Even if the mere thought of reading about trading strategies causes your eyes to glaze, I think this is a MUST, if only for the glimpses it gives of a Brave New World: https://www.bloomberg.com/news/features/2017-09-27/the-massive-hedge-fund-betting-on-ai?cmpid=BBD092717_TECH&utm_medium=email&utm_source=newsletter&utm_term=170927&utm_campaign=tech
Give me a break! https://news.artnet.com/art-world/so-whats-really-going-on-with-that-disturbing-dog-video-at-the-guggenheim-1100417?utm_content=from_&utm_source=Sailthru&utm_medium=email&utm_campaign=US%20newsletter%20for%209/29/17&utm_term=New%20US%20Newsletter%20List
Here’s my friend Dizard stressing what he thinks (as do I) will crack the Recovery Bull Market: inflation. The Ft operates behind a firewall so I’m simply cutting and pasting: FT 09/29/17 by John Dizard “There seems to be something wrong with our bloody ships today.” Admiral David Beatty at the 1916 Battle of Jutland after two British warships exploded
Federal Reserve chairwoman Janet Yellen’s remarks last week on “Inflation, Uncertainty, and Monetary Policy” were not quite as sharp as Admiral Beatty’s. She used the words “may” or “may have” 26 times in describing how the Fed’s models have not been working very well. She made clear, though, that the consequent uncertainty, if not queasiness among the board members, should not lead to any significant change in course. After Jutland, the supposedly rigid Royal Navy did make changes in ammunition handling, shell manufacture and training, but the Fed appears to be more set in its ways. The same problematic analyses and actions we saw in 2000 and 2007 are repeated with a few tweaks. Excessively loose monetary conditions are allowed for too long, followed by an untimely series of planned tightenings, which is interrupted by a panicked reversal after asset price crashes . . . you feel like fiddling with your programme and yawning. Based on past form we can be reasonably sure that five years from now the dynamic stochastic general equilibrium model that central bankers worship like Baal will still be there. There will be a few changes to the parameters, and maybe a constraint or two added like temple lamps, but apparently they never learn. As a mere humble observer of passing macro events, rather than a model builder, I have been noticing a series of unexpected supply-side shocks coming in one business after another. Unlike the technology and globalisation changes of the previous two decades, these are leading to one set of price increases after another. All of these rises can be explained, for a while, as idiosyncratic, isolated supply-chain issues against a deflationary backdrop. At some point, though, you have to wonder if there is something wrong with our bloody ships. Within the past month, for example, the cost of adjusting property losses for US insurers has roughly doubled. To send an adjuster to look over a damaged house in Houston cost the underwriter $2,000 in July and $4,000 today. Overall, what the insurers call the loss adjustment factor has increased from about 9 per cent of losses in the recent past to something closer to 20 per cent. On top of that, the cost of used cars is going up as people need to replace ones destroyed in one hurricane or another. Tiki torches and replacement palm trees for Florida, Texas and Caribbean hotels are going through the roof, if there is one left. Those are called “post-event price surges”. Insurers say that will probably lead to reinsurance premium increases of 25 per cent for US wind, and a general increase of 5 per cent for reinsurance across all lines in the country. They want their capital back, and they believe the price rises will stick. Of course the impact of three major storms in one season should be an unusual coincidence, one of those idiosyncratic causes. Or was risk underpriced thanks to inefficient capital markets? Then there is the increase in dry cargo rates, roughly measured by the Baltic Dry index. Economists and macro speculators used to watch the BDI as a leading indicator. It received less attention in recent years as shipping rates dragged lower and lower below the operators’ costs. Starting last year, though, the BDI has been on a tear. It has risen by more than 60 per cent this year, and has continued to increase even as prices for dry cargoes such as iron ore and coal have slipped from recent highs. Apparently there just are not as many ships to go around, after banks and government agencies pressed owners to scrap more tonnage after years of forbearance. Big steel ships are a legacy technology, of course. Then we have inflation in the price of the technologies of the future, such as electric cars. Cobalt, used inNo comment: tensively in lithium-ion batteries, has more than doubled in price over the past year. Again, an unexpected supply-side constraint, as environmental mandates in China, Europe and the US have come up against the long lead time required for new mines. Then there is the big daddy of all supply-side constraints: skilled labour. It now appears that it is not that easy to turn media studies graduates into IT department coders, even if the latter are paid three times as much as the former. At one time it seemed as though there was an unlimited supply of well-educated Indian software engineers, but no. And do not ask about pipeline welders, particularly sober ones who turn up on Monday. Maybe the Fed’s economists are right, and we should not be paying too much attention to these one-off signs. The free-market commercial paper rate has already reacted, though, rising like the BDI, cobalt or propane (a yearly rise of around 80 per cent). So perhaps you should raise your commodities hedge ratios, or shorten bond duration. And build your next beach house out of cement and steel.
Well argued – although I can’t get out of my mind that the raising or presentation of the flag at the time the National Anthem is played carries a certain patriotic resonance. I vividly remember being in Yankee Stadium on October 28, 1962, Giants v. Redskins. The Cuban Missile crisis had just ended with Khrushchev’s announcement that morning that Soviet armaments would be removed from Cuba. When the National Anthem was played, the entire Big Ballpark erupted with a single voice, triumphant and yet edged with relief. Still: https://www.nakedcapitalism.com/2017/09/gaius-publius-american-flag-stands.html
No comment necessary: https://newrepublic.com/article/144940/trump-tv-post-literate-american-presidency?utm_source=esp&utm_medium=Email&utm_campaign=The+Long+Read+-+Collections+2017&utm_term=245896&subid=23770632&CMP=longread_collection
Absolute BS on this level is so rarely encountered, it must be cherished: https://www.theguardian.com/news/2017/sep/29/we-should-have-seen-trump-coming?utm_source=esp&utm_medium=Email&utm_campaign=The+Long+Read+-+Collections+2017&utm_term=245896&subid=23770632&CMP=longread_collection
Good to see that technology isn’t winning all the battles. WSJ (paywall) reports that in Australia wedge-tail eagles, a protected species, are attacking and knocking drones out of the sky. Not since the RAF did for Jerry over Britain has a more heart-warming account of aerial combat been published.
A contrarian view that makes a compelling overall point. Being a person who has his hair cut every month, I’ve been a regular reader of Playboy, along with Clubman Talc an indispensable appurtenance for every tonsorial parlor worth its clippers, for ever so long. Fellow members of one of my clubs (nice touch that, eh?) curse with me the scoundrel who pinched from our barbershop the most memorable single issue ever published by any magazine:the December 1988 Playboy (I checked the date online) starring Olympic champion Katarina Witt in the altogether – and I mean altogether! When I heard that the issue was no more to be savored along with the tang of witch hazel, gone for a Burton, the first words that flew into my mind were Joe Welch’s famous riposte to McCarthy: “At long last, is there no decency!” Anyway, I think Douthat has a point, and he might have added one grace note: a large number of Hefner encomia published in recent days dwell on how reading Playboy got many a brave lad through Vietnam. True perhaps, but I wonder how much the current attention being paid to the Burns-Novick multipart documentary put this on the front burner. Anyway, here’s Douthat: https://www.nytimes.com/2017/09/30/opinion/hugh-hefner.html?ribbon-ad-idx=5&src=trending&module=Ribbon&version=context®ion=Header&action=click&contentCollection=Trending&pgtype=article
City Hall lends its hand to the ongoing war on the poor: http://gothamist.com/2017/09/29/affordable_housing_study_nyc_2017.php
As if the human toll in Las Vegas isn’t terrible and tragic enough, there’s this: https://www.bloomberg.com/news/articles/2017-10-02/fake-news-fills-information-vacuum-in-wake-of-las-vegas-shootingMoney Quote (from a spokes person for what we should designate as a new category, First Disseminator): “Unfortunately, early this morning we were briefly surfacing an inaccurate 4chan website in our search results for a small number of queries,” a Google spokeswoman said in an emailed statement. “Within hours, the 4chan story was algorithmically replaced by relevant results.This should not have appeared for any queries, and we’ll continue to make algorithmic improvements to prevent this from happening in the future.” Years ago, in what must have been the worst-attended monthly talks at a club to which I belong, I argued that letting computers drive and determine the style and content of our thinking could pose terrible dangers. “Algorithmic improvements, anyone”?
As we appear to be living in a Golden Age of Agnotology, it helps to be up on that very useful word: http://ritholtz.com/2016/06/frightening-global-rise-agnotology/