Twittersphere Welcomes Fed; Wen Jiabo Gives Price Target; Loan Growth Hints at Inflation

March 15, 2012

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“There is nothing so dangerous as the pursuit of a rational investment policy in an irrational world” ~ #Keynes.

“While the economic laws might hold in the long run, in the short run the political beast must be fed.”~  #Dylan Grice   

“Historically, inflation becomes a crisis in the developing world when the dollar turns around and appreciates.” ~ #Andy Xie

peonage: “the use of laborers bound in servitude because of #debt.”

Central Banks:

#Federal Reserve begins to tweet on monetary policy; twittersphere welcomes with open arms:

  • Thanks to the @FederalReserve arrival, the value of all tweets will collapse by 98% in a few years: @zerohedge
  • @FederalReserve. Reminder. Tweets are not money @convert_trade
  • Eliot Spitzer:”The FED is a #Ponzi Scheme. Run by Banks” @WillLynch
  • We want tweets from benny the printer himself @FinancialSpy
  • Q. Uldis on Bernanke: “Hey would you print $2 trillion of someone else’s money to protect your 200k job?”
  • A. HS:  ”Leaders will do whatever it takes to stay in power” predict accordingly – game theorist Bruce Bueno de Mesquita
  • “Not by wrath does one kill, but by laughter.” ~Friedrich Nietzsche
  • Foreign holders dumping Treasuries, banks and Fed buy @brucekrasting
  • Central banks: Heavy inflation spark, trade and capital flow barriers, and lengthening of maturities needed to complete financial repression bloomberg.
  • By #Bernanke’s ‘transitory’ logic, the internet and housing bubbles reverted to the mean #operationnewbubble – HS

US:

  • US Index of Economic #freedom is down to 76.3 from 81.2 in 2007 on regulations and expenditures, now 40% of GDP. Freedom from #Corruption score has dropped to 71.0 from 76.0 as regulations and bigger guv budgets aggrandize rent seeking behavior.
  • #Dick Bove on banks: ’2011 3rd largest profits, highest capital as a % of assets since 1938, and #C&I loans + 16%(!) #operationnewbubble $xlf
  • Carnegie Mellon Professor #Allan Meltzer: ‘look for sustained bank lending as the catalyst for higher inflation.’ HistorySquared
  • In Pictures: How Much the Top Earners Already Pay in Taxes Heritage
  • Peer to Peer lender Prosper grew# loans by 178% last year; wreaks of trouble Credit Writedowns
  • #Research: Industrials, Materials, and RE are historically most vulnerable to high oil prices Consumer Staples, Utilities,Telecom defensive- HSBC
  • For 3 years, economists have expected a #housing market recovery that never materialized. Why 2012 could be different: FactSet
  • Ever wondered what an FBI terrorism search warrant application for Facebook user data looks like? PDF
  • #Elevation Partners #Roger McNamee says #Twitter is the second coming of the now defunct Pointcast: poor management killing a great idea $TWIT
  • Three disturbing trends in commercial banking: first time in 75 yrs no new banks; the big get bigger; government control Reuters
  • #Sentiment Wall Street Strategists Remain Bearish, suggests room to upside says bespoke
  • Nudge symposium proceedings: neuroethicscanad
  • Research says #PE ratios will compress over the next 20 years as baby boomers exit public markets NY Federal Reserve

China:

  • $JPM: Chinese Economy Already in ‘Hard Landing,’ Car sales, #cement, #steel production, construction stocks down $FXI bloomberg
  • #Wen Jiabo gives price target for housing collapse: “reasonable home prices should have a correlation with income and developers profit” Shanghai Daily
  • #Wen Jiabo signals next stimulus package to be environmentally friendly and import tariff cuts under discussion.  GM says import taxes double cost to produce cars.
  • “#Tofu Projects” : New #China bridge falls apart - China Daily , HistorySquared
  • Old foe to reenter #currencywars Wen Jiabo: Yuan up an adj. 30% since 2005, offshore market shows equilibrium Shanghai Daily
  • 70% of Maccau’s gaming revenue comes from <s>money launderers, corrupt party/SOE heads on junkets, credit<strike>VIPs $WYNN $LVS
  • #China’s Wage Hikes Ripple Across Asia #inflation WSJ
  • #China: Bain study: 60% of China’s wealthy looking emigrate away from China: 40% to US, 37% to Canada. Education cited Bloomberg
  • #China: Fitch questions Dim Sum Bonds on governance concerns; 7 of 39 of 2011 issues had an international rating myIris , HistorySquared

World:

  • Top 5 year housing market performance: #China 111%, #Hong Kong 94%, #Israel 55%, #Singapore 50%, #Columbia 39%, #Taiwan 30%, #Norway + #Canada 29%
  • #Brazil: Private property investment has cooled quickly and leading indicators such as sales and new housing starts remain weak. Nomura
  • “The #Iran War Clock” tradewithpete
  • #John Mauldin: A primer on a Euro Breakup Market Oracle

 

 #Models:

  • “Essentially, all #models are wrong, but some are useful,  says ” George E.P. Box They are simplifications that leave out information.
  • “You’ve got to have models in your head. You’ve got to array your experience—both vicarious and direct—on this latticework of models”#Charlie Munger
  • Be Entertained by the Stories; Trust Only the Data Above the Market
  • The “narrative fallacy” is our tendency to create false unsupported stories in an effort to legitimize our pre-conceived notions.  #Nasim Taleb #behavioral
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