Monday, August 20, 2012

Monday Links

Hussman: "The present confidence and enthusiasm of investors about the ability of monetary policy to avoid all negative outcomes mirrors the confidence and enthusiasm that investors had in 2000 about the permanence of technology-driven productivity, and in 2007 about the durability of housing gains and leverage-driven prosperity. Market history is littered with unfounded faith in new economic eras, and hopes that 'this time is different.' Those periods can be difficult, at least for a while, for investors who are less willing to abandon evidence and lessons of history, not to mention basic principles of economics and valuation. We endured similar discomfort in periods like 2000 and 2007, before hard reality set in."

Good question about the government's term structure: "[W]hy in the world has the US Treasury Department not lengthened the maturity of the US debt? More importantly, why has the US Treasury Department allowed the average maturity of the debt to decline? In July 2011, 10.4% of the US debt was in 10-year Notes or longer. As of March, the latest data available, that was down to 9.4%. Back in mid-2001, 20% of the debt had a maturity of 10 years or more. We should be heading back in that direction, and quickly."

Where are the hurricanes? "Hurricane Andrew struck Florida twenty years ago this week, the last category five hurricane to hit the US. It has also been seven years since any hurricane hit Florida, the longest hurricane-free period on record."

More peak oil: "The IMF's paper sets out to test the idea that the recent 10-year rise in the oil price - it hit a low of $10 a barrel in the late 1990s - can be explained by geological constraints. The team took an approach which expresses mathematically the idea that oil becomes harder to produce, the less there remains to be produced - the basis of peak oil theory. This is clearly right: why would we be scraping out tar sands if there were easy oil left?"

Niall Ferguson on Obama: "The voters now face a stark choice. They can let Barack Obama’s rambling, solipsistic narrative continue until they find themselves living in some American version of Europe, with low growth, high unemployment, even higher debt—and real geopolitical decline."


ChrisD said...

Do you make broader economic assumptions? You post Hussman, but do you agree with him?

CP said...

Generally I agree with stuff that is posted, although I may post interesting counterpoints on matters that are unsettled - such as peak oil or climate change.

I would rather have Hussman and Prechter manage my money than anyone who advertises on CNBC.

It's hard to fight reflation and the inflationists, which is why most of the trade ideas posted now are market agnostic.