31 December 2015

Is Life a Cabaret?

There's the signature song from the musical "Cabaret", "Money", as in it makes the world go round. I've had a recent confrontation with a certain Seeking Alpha rightwinger over the notion that there is, or isn't, a profit recession and whether it matters. As I've mused a number of times, financial quants have a problem these days: Beijing does what it pleases with its economy. Math/quant models that so much as touch China tread carefully.

A more recent (today, actually) piece looked at NVIDIA's exposure to China. The comments express a contrary view to the piece. But, the fact is, what Beijing does with the yuan/renminbi is opaque. Which led me to an October Fortune story, which came to the same conclusion at the macro level. Just what these endeavors have been saying for some time. Data is the product of arbitrary human decisions. Not the other way round.

To the extent that profits are down a tad, over-supply of petro and gaming of foreign currencies against the Almighty Buck, are the reason.

This overvaluing of the the U.S. dollar relative to the Euro, yen, and Chinese yuan has led to a huge trade deficit and was one of the drivers of the global financial crisis, as foreign savers piled into overvalued, "safe" dollar-denominated assets, like U.S. mortgage debt. Though global regulators have made strides in making the international banking system safer, the fundamental drivers of global trade imbalances have been largely ignored.

Such a nice quote; I feel the warmth of shared authorship. Coming to a preamble near you real soon now.

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