17 August 2018

Thought For The Day - 17 August 2018

As if one needed yet more reporting on Turkey basting and the US Buck's supremacy. Not to mention all those trillions looking for hefty returns at low risk, we get some briefing.com words(7:55):
Looking at other markets, the Turkish lira is down 4.2% against the U.S. dollar this morning, on track to end its three-day rebound, but still remains a ways above its all-time low, which it hit on Monday. Meanwhile, U.S. Treasuries are higher, pushing yields into the red, with the benchmark 10-yr yield down two basis points at 2.85%.

Or, as we say (or so I'm told) in the Navy, "Dive motherfucker!! Dive!!!" Yeah, there's no advantage to being the world's reserve currency.

15 August 2018

New Gold - Part the Sixth

The Manchurian President continues braying that the USofA is the victim of bad the international monetary and trade deals. Day after day. While these missives have explained why it is that the US Buck being the world's reserve currency actually gives us the royal flush in spades hand. The Manchurian President is either too stupid to figure that out, or he's just lying to cover his ass. Blame the global elites and their Democratic enablers. And so on.

Well, today brings yet more reporting that the USofA is gutting lots of the world.
A crumbling currency inflicts many damaging consequences: Companies that borrowed in dollars — the global reserve currency — have to come up with steadily more money in their local currencies to repay U.S. dollar debts. Having to do so also raises risks for the banks that lent to them.

That's the kind of squeeze that ignited the catastrophic 1997-1998 Asian financial crisis. A currency disaster in Thailand infected the entire region, and East Asian economies absorbed devastating damage.
[my emphasis]

We're the victims. Yeah, sure.

And, how might other countries manage this:
And emerging-market countries learned lessons from the debacle two decades ago. Many piled up reserves to fend off speculative assaults on their currencies. At the start of 1997, emerging-market countries' reserves amounted to barely 6 percent of their economic output. Now, they equal nearly 18 percent, according to the Institute of International Finance, a banking trade group.

Guess what?? All the US Buck reserves came from our current account trade deficit. No trade deficit, no expanding New Gold stock, no expanding world market, world market deflation. You don't want to live in that kind of world. Arithmetic doesn't lie. Yummy.

13 August 2018

New Gold - Part the Fifth

Here we go again. There are upsides and downsides to the US Buck being the world's Reserve Currency, aka New Gold. One of the side-effects, in both directions, is on domestic interest rates. Many's the time these missives have called out the repercussions of rate inversion. Well, here's some more reporting on where we are.
It has been a long bull run for both stocks and bonds, and borrower defaults have been at historically low levels for years. As has the spread -- the difference between the yields -- of Treasury-backed securities and riskier bonds. But as interest rates continue to rise, and some companies and other borrowers fail to meet their debt obligations, defaults will inevitably increase along with the spreads.

The implication, of course, is that longer term private debt has been written at artificially low rates, and thus high prices. Again, there's nearly $2 trillion in idle money just on corporate balance sheets (see recent missives). Not to mention the 1% and .1%. All seeking 10% and no risk.

So, that reporting was a few days ago. Today we hear another siren, sounding in Turkey, of all places. Much the same as China over the last decade or so, lots of real estate building. As the saying goes, there's only so much time and so much land. You'll never get the former back once it's gone, and there's no more of the latter. Easy money in real estate.
Mr. Lee noticed that Turkish banks were borrowing in dollars to make other loans to fast-growing Turkish companies. He also saw that, over all, Turkey's economy was growing more reliant on financing from foreign investors. It struck him as similar to what had happened to Thailand in the years before the Asian financial crisis in 1997.

Gold giveth and gold taketh away. As with the Great Recession, lots of idle money, unable to find productive homes in physical capital, chases real estate.

09 August 2018

Blues for Donald in D# Major

The most important news out of Tuesday, not widely discussed that I've seen, is that right-to-work got drowned by a blue tsunami in Missouri, the 'Show Me State'. It seems that lots o folks there have figured out that The Manchurian President has been lying all the time. As Rachel Maddow tells us, "watch what they do, not what they say".

The Manchurian President keeps taking from the many poor and giving to the few rich. "Vote for George O'Brien, get Charley off the MTA".

Real growth can only happen if aggregate demand grows, and that has never happened while income and wealth concentrate as they have over the last few decades. Rich people don't buy/spend as much of their moolah, per dollar, as the poor. They chase instruments, and they've had a big appetite for high-return/low-risk such; not that such actually exist, naturally. Which gave us the Great Recession. What will be next? I don't have a firm answer. May be soon.

Along that line, we have this reporting that Treasuries are inching toward 3%, and the pundits are losing their minds. Let's see. Warren is sitting on $116 billion. How much is corporate America sitting on? $1.9 trillion as of the end of 2017. The Smartest Guys in the Room can't figure out how to make real investment. In due time, not much IMHO, they'll go back to chasing Treasuries and driving up price once again. Rates will collapse.

Why? Well, my frenemy Neil Irwin reveals why he's sorta, kinda Luddite.
I think most digital technology is more mature than we think. People have been using personal computers since the 1980s, and smartphones for more than a decade. And the thing about a mature product is that improvements tend to be marginal rather than transformational.

What these missives have been naming, 'The Asymptote of Progress' for a long while. Marginal 'improvements' don't generate significant growth or return, naturally. The latest iPhone doesn't have the impact of the steam engine. That pesky asymptote gets flatter by the day.

02 August 2018

Fool's Goal

Are you old enough to remember pets.com? Cute Lamb Chop-ish sock puppet spokescritter. Lots o fun to watch the adverts. Didn't last all that long.
It began operations in February 1999 and liquidated in November 2000.
[the wiki]

Before I looked it up just now, I hadn't realized just how short its life was. Poor doggy. Got hit by bus.

Today's missive is about a similar ploy: dinner over the internet. There's in the neighborhood of half a dozen such outfits. Today's report is for (7:09)Blue Apron:
Reports Q2 (Jun) loss of $0.17 per share, in-line with the Capital IQ Consensus of ($0.17); revenues fell 24.6% year/year to $179.6 mln vs the $188.51 mln Capital IQ Consensus.

Customers decreased 24% year-over-year and decreased 9% quarter-over-quarter as the Company progresses through the aforementioned transition period. Average Revenue per Customer was $250 in the second quarter of 2018 compared to $251 in the second quarter of 2017, and $250 in the first quarter of 2018.

Going the way of the sockpuppet doggy? Only time will tell.

26 July 2018

Words Have Meaning?

Them Cheatin Canadians

Well, I suppose the truth had to come out eventually. Turns out the seat of Tech Growth isn't where you might expect, if you drink The Manchurian President's Flavor Aid. It's Toronto. Those wily Canadians are using currency manipulation and open border to drain our precious bodily fluids. We must attack before it's too late. Once a friend, now an enemy.
The capital of Canada's Ontario province created 28,900 tech jobs last year, up 14 percent from 2016. Toronto's more than 241,000 tech employees represent a 52 percent increase during the last five years, according to CBRE.