Diary of a Financier

Top Newsstuffs (June 25-July 1)

In Bookshelf on Sun 1 Jul 2012 at 04:13

Boooooom!  And here’s the news from this week.


Era of Deleveraging Ends with “Great Rotation”: Long-Term Trends in Financial Markets Since 1800 | Merrill Lynch
Looks at every asset class & country since 1800, “the catalyst for a decisive change in secular market leadership (or “Great Rotation”) awaits a good bear market in bonds caused by real estate, labor and banking markets ending the current Era of Deleveraging.”

EU Summit: Innovation, Solutions by Baby-Steps | BBC
Leaders agree on:
1. €120b Troubled Country Relied Program (TCRP) to promote growth, including €10b injection going to EIB.
2. Single, supranational bank supervisor.
3. EFSF & ESM direct bank recapitalizations, waiving senior creditor status for funds.

The Debt-Dependent Status Quo | Charles Hugh Smith (Of Two Minds)
Debt growth has fueled GDP growth since 1950s. Debt would have to grow 35%/year this decade to maintain trend GDP growth, but stagnant incomes can’t support that.

Title V: Vacant Homes for the Homeless | Business Insider
US has 5 vacant homes for every homeless person, and Title V required the government to make the “underused” homes it owns available to homeless advocate groups.  But, when cities tax foreclose on houses, they prefer to put them in the hands of developers who refurbish them.

15 Frontier Markets for Adventurous Growth Investors | Citigroup.Regulators Approving Gold As Tier 1 Asset | Washington’s Blog
At haste of OCC & FDIC, BIS considering adding Gold to Basel III as 0% risk weighting for commercial banks (equal to cash).

Supreme Court Upholds Obamacare: Q&A about the Ruling on American Healthcare | The Wall Street Journal

Consumer Deleveraging to End in Two Years | Deutsche Bank
DB extrapolates household debt/GDP trend (1953-2003), which expects a return to trend by 3q2013. Since consumers tend to overshoot, they forecast a conservative 2014 start for releveraging.

Stockton, CA: Largest Every Bankruptcy of a US City (Chapter 9) | ZeroHedge

Homeprices Stabilizing, New Home Sales Bottomed | Calculated Risk
Homeprices have stabilized, but won’t rise rapidly since the shadow inventory will constantly replenish visible inventory. New Home Sales have bottomed though.  Total sales should normalize ~800k/year (under 1.2mm 2005 peak).

The Most Amazing Bowling Story Ever | D Magazine
Bill Fong’s 3 consecutive perfect strings: 36 strikes, 900 pins… er, 899.

On the Verge of a Historic Inversion in Shadow Banking | ZeroHedge
In December 1995, shadow bank liabilities surpassed traditional banks’ (deposit-bearing institutions) for the first time.  Since a high of $21t in March ’08, they’ve fallen to $15t now, about to drop below traditional banks’. Consolidated financial liabilities have $3.8t higher to go before filling the gap up to alltime highs ~$33t, which is when reflation will be complete.

Interview: German Finance Minister Wolfgang Schäuble on the European Fiscal Union Germany Envisions | Der Spiegel
“In an optimal scenario, there would be a European finance minister, who would have a veto against national budgets and would have to approve levels of new borrowing. It would be up the individual countries to decide how to spend the approved funds.” [Later denied.]

The Decreasing Impact of QEs & Operation Twists | The Big Picture
Decreasing marginal return.

The Consequences of a Euro Break-Up | Der Spiegel
Country-by-country forecast changes in economic output, unemployment & consumer prices were the EMU to dissolve.

Jobs: Obama’s First Term v. Bush’s First Term | Invictus
Private-sector employment recovered quicker in Obama era (from financial crisis) than in Bush (from tech crisis). The huge difference is public employment, which “socialist” Obama has pared massively.

Distracted by Eurocrisis & Fed, Investors All Missed Downward EPS Revisions | Goldman Sachs
Companies reduced 2q12 EPS guidance by median 4% (range 2-20%), and nobody seems to have noticed due to other, macro distractions. [Sign of Capitulation by management teams?]


  1. […] President Barack Obama is either a Liberal Republican or a Conservative Democrat | The Big Picture Barry Ritholtz nails it: As if his management of the 2008/9 crisis didn’t prove it, nor the 2012 election vs. his kissing cousin (Mitt Romney), nor his war policy, Obama is at least a moderate, which fiscal cliff tax resolution affirms. [In its power struggle, the far right could only nit-pick social issues or blame Obama for the weak economy he inherited, which is a far more structural & implacable phenomenon than anyone knows/cares to acknowledge. He may be right of Clinton. Previously] […]


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