Sunday, May 17, 2020

Sunday Night Links

  • The chart peaked in 2000, which was really the peak in worldwide optimism. Not just tech stocks, but world peace, world trade, and a bunch of everything else. Then the optimism faded for over a decade amid terrorism, war and a financial crisis. The ratio started rising again in late 2011 which is also when the U.S. housing market started to rebound. What's also interesting -- and clear in retrospect -- is that the optimism cycle that started in 2011 didn't just come to a screeching end in early March. The optimism cycle ended in the middle of 2018. This was in the wake of the tax cuts (late 2017) and the early 2018 budget deal, which actually boosted spending substantially. Not only did the stocks/gold ratio peak then, but so did the Russell 2000 small cap index, which never regained its 2018 peak. An overlay of the stocks/gold ratio against small cap stocks is shockingly consistent. [Joe Weisenthal]
  • Black had a pretty good theory of the business cycle. A boom is a period when the pattern of production is a good match for the pattern of demand. A bust is a period when the match is bad. It means that people are working in the wrong sectors, producing the wrong mix of goods and services. Fortunately, price signals will encourage a shift to the right pattern of production (at least if the economy is left alone.) [CBS]
  • What I notice right now is that investors buying the dip are excited because things seem cheaper than they have in a while... but they are looking at TTM earnings because those are all that is available. It takes a long time for economic activity (and corporate profits) to come back after a recession. After the 2008 recession, total vehicle sales did not return to the 2005 peak for a decade. Same with total private construction spending, it took a decade to recover. [CBS]
  • The most obvious difference between real essays and the things one has to write in school is that real essays are not exclusively about English literature. Certainly schools should teach students how to write. But due to a series of historical accidents the teaching of writing has gotten mixed together with the study of literature. And so all over the country students are writing not about how a baseball team with a small budget might compete with the Yankees, or the role of color in fashion, or what constitutes a good dessert, but about symbolism in Dickens. With the result that writing is made to seem boring and pointless. Who cares about symbolism in Dickens? Dickens himself would be more interested in an essay about color or baseball. [Paul G]
  • Percentage infected in the US has to be lower than in Spain: I'd guess something like 3%. So far, 80,000 dead out of that 3%. What can we expect if A. we let it rip and B. herd immunity is at ~70% ? The people arguing that it had already spread very far and had a very low mortality were wrong, like I said a while ago. Obviously wrong, to me, and to a few others that could actually do the required back-of-the-envelope calculations. This means, by the way, that the IFR was 1% in Spain. Not obvious to the authors of that Stanford study, though: I thought that surely they had been paid off, but they were apparently just dense. [Greg Cochran]
  • My 800-hour-SR22-pilot friend says that one of his main complaints with the plane is how difficult it is to trim for straight-and-level flight. "The plane really needs a micro-trim switch," he says. His CFI confirms this impression and notes that the plane is much easier to fly if you back your hands away from the yoke and don't grip the control. "Just fly with pressure from your fingertips," he says. My first efforts were very unsuccessful. What seemed to me like the smallest nudge forward put the SR20 into a 300 fpm dive. The smallest nudge backward and it was in a 300 fpm climb. The smallest nudge left or right and the airplane was in a half-standard-rate turn. After 20 hours I was able to trim the plane for a hands-off straight-head 500 fpm climb through some clouds in Quebec. An airline pilot buddy of mine flew one vectors-to-ILS approach in the SR20 and said "My arm is tired; our Embraer regional jet has a trim speed that varies depending on airspeed; this plane really needs that." [Phil G]
  • As you proceed north from Alberta and British Columbia, do prepare yourself for a reduction in services at airports. After you land in a typical Lower 48 airport the line guy from the airport gas station (FBO) runs out to park your airplane, tie it down, top off the tanks with gas. Would you like to borrow the courtesy car to go into town? Would you like some fresh-baked cookies? To take a shower in the pristine bathroom? A typical Alaska experience involves pumping your own gas from some self-service pumps, peeing into the weeds, and discovering that only a handful of the tiedown rings have any ropes attached, all of them frayed. In the Lower 48 airplanes are for rich people and rich companies. The average small plane that comes in will be a $5 million jet delivering the CEO's kids to their horseback-riding camp or a plastic surgeon goofing around in his brand-new $300,000 Cirrus. These are people who value their time and comfort and don't mind paying an extra 5 cents per gallon for fuel. In Alaska by contrast the average plane is a 40-year-old Cessna piloted by a plumber. For him the $35,000 airplane is the only way that he can get to his customers and he doesn't want to pay for a lot of extra services. Imagine visiting an automobile parking lot circa 1920. Cars were for rich people and you'd expect the attendants to run out, wash the car, gas it up if necessary, etc. But today everyone has a car and if you pulled your Ford Pinto into a downtown lot you wouldn't expect the attendant to speak English, much less perform any services beyond taking your money. [Phil G]
  • The coronavirus pandemic heralds the end of the long 20th Century. For it was then that modernity climaxed and began the descent toward today. Just as the year 1913 can never be assessed in its own terms away from what happened the year after, so it is for 2019. The Covid 19 disease itself scornfully taunts us with this fact, being the only disease with the year of its origin enclosed within its common name. The virus lives on the interstices between then and now, between what we call the 20th and the 21st Centuries. It was the last day of 2019 when China contacted the WHO to admit of 'cases of pneumonia of unknown etiology' in Wuhan. The early spread of the disease exploded with the Chinese New Year on 21st January. Before the 21st year of the 21st Century in 2021, the last remnants of the 20th are being stamped out in 2020. An unthinking malevolence against this past is displayed by the way Covid 19 works. It targets people who were born in the 20th Century. The further back into that century you come from, the more at risk you are. The more you belong to that century, the more Covid 19 will target you. [Jacobite]
  • One of my bored-in-quarantine activities is mocking Facebook friends for their faith in various Utopian government-run schemes for winning the war against the evil coronavirus. Most of these schemes require a perfectly efficient government, the elimination of the Constitutional rights of healthy young people, and a perfectly compliant population (including the 22 million undocumented). Usually they respond by defriending me, because the only thing more offensive than someone who doesn't hate Donald Trump is a Holocough Denier. Occasionally, however, they'll ask "What would you do, then?" [Phil Greenspun]

1 comment:

Stagflationary Mark said...

The chart peaked in 2000, which was really the peak in worldwide optimism. Not just tech stocks, but world peace, world trade, and a bunch of everything else. Then the optimism faded for over a decade amid terrorism, war and a financial crisis. The ratio started rising again in late 2011 which is also when the U.S. housing market started to rebound.

Here’s one part of a bunch of everything else that has yet to recover at all, and I doubt the virus does it any favors.

Peak Faith-Based Construction Optimism