Diary of a Financier

Top Newsstuffs (November 19-25)

In Bookshelf on Sun 25 Nov 2012 at 06:15

Never bitter…

Google Fiber: GOOG’s assault on cable television | BTIG
Free installation, comes with a free Nexus 7 tablet as a remote, streaming $70/month (regular TV an additional $50), internet integrated & 75-100x faster than cable internet.

Brazil: Resource rich, not riches | Jim Chanos (Ira Sohn Conference)
Chanos presented his two favorite shorts: Petrobras (PBR) & Vale (VALE).

Rail traffic weekly: Trend growth back on track | Association of American Railroads (AAR)
Carloads -3% and Intermodal +3.4 (cumulative ytd volume); -4.3% and +2.4 respectively (vs. this week last year).
8 of 20 carload groups posted gains: Petroleum products +54.2%, motor vehicles +16.3 & forestry +14.8; grains -15.8 & metallic ores -13.4.
[Trend growth recaptured in the wake of Hurricane Sandy.]

The truth about that “ballooning fiscal deficit” | Investors Business Daily (IBD)
“From fiscal 2009-12, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP” fastest of any postwar period. “In fact, outside of that post-WWII era, the only time the deficit has fallen faster was when the economy relapsed in 1937 [Great Depression].”

Video: Kyle Bass (Hayman Capital) says Japan lies at the end of the Debt Super-Cycle | ZeroHedge
“It’s naive to think I can call the end of a 70-year debt-super-cycle with any precision,” but all the ingredients are there:
As total global debt/GDP pushes 350% ($200T/$60T), US & Europe could see negative nominal rates, changing the dynamics of the FX carry trade (traders cover short JPY funding leg in favor of cheaper USD). Japanese demographics have collapsed, crashing exports [to China] have led to a trade deficit, the current account may slip into deficit, GDP annualizing -3.5-4.0% & the BOJ has lost its independence.
Bass’ book has core exposure to high yield credit (for low duration), long/short equity & long Japanese credit convexity (outperforms if rates drop/underperformance muted if rates rise).

The history of gold trading: The ultimate charting market | Peter Brandt

Profile: Tom DeMark (Market Studies LLC) and his golden ratio | Bloomberg
DeMark is an advisor to the biggest names in money management (Paul Tudor Jones, Leon Cooperman & Steven Cohen), and his technical system depends on wave theory–particularly Fibonacci sequence.

Interview: Arthur Berman on the US energy independence counterfactual | OilPrice.com
Essentially, the shale gas bubble is bursting and the US energy independence story is overblown, extrapolating data trends beyond physical limits: Eagleford shale’s wells have a decline rate of 42% per year, which means we need thousands of wells ($10-12B) to maintain production supply; despite an all-out effort in shale, the US domestic supply was only 6Mb/d in 2012 vs. 15M demand. (In 1970s, US production peaked at 10.6Mb/d.)

France: The time bomb at the heart of the Eurozone | The Economist
French getting quietly sucked into Southern Europe’s vortex: 90% Debt/GDP, 52% government spending/GDP, 10% unemployment (~23% for youths, which has always hovered over 15%), implacable unions… what’s not to love?!

Tim Geithner says budget deal is “within our grasp” | Bloomberg
After the White House’s meeting with Congress, Treasury Secretary said, “I think this [fiscal cliff] is doable within several weeks… you need to make sure you have a balanced deal to get this back to the point we’re living within our means. That’s going to require a substantial amount of revenue, we think in the neighborhood of $1.5-1.6T.”

  1. […] Yes, the rapidly shrinking federal deficit | Jan Hatzius (Goldman Sachs) GS estimates that US federal budget deficit was just 4.5% of GDP in 1q13 (down from 10.1% peak in FY09). Reduction attributed to: 1. Lower government spending- -4% average annual decline since 2011 (first ever such decline in post-war era) 2. Higher receipts- federal taxes +$120B annualized in 1q13 (0.8% GDP) & +7% annualized since 2009 [Previously: The deficit will fix itself & The fastest postwar deficit reduction] […]


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