Taleb’s Turkey
I wonder if this is accurate…
The "leading evangelist and architect" of Bidenomics, Jared Bernstein, is dealing with “confusion, guilt” and “cognitive dissonance.”
Finally, an op-ed with the revelation that “average inflation targeting” is a concept so stupid it could only have come from PhD economists:
“Because inflation targeting has boosted returns to capital over labour, it may have also contributed to increasing income inequality. This disparity has probably played a role in the rise in populism in many countries.”
Former St. Louis Fed President and current idiot Jim Bullard explains:
To be fair, there were one or two cranks who objected back in 2020:
Isn't this literally the plot of Snowpiercer?
“To get started it only takes one person to say, “I have 100 million quid, I have a business jet, let’s go. History will judge whether that’s a good thing or a bad thing.””
Thanks again to the paid subscribers who are a source of encouragement, even though this is mostly a labor of love.
And to everyone, Happy Thanksgiving.
Munger in an interview said, “You have to be prepared in public equities a few times every hundred years for the market to fall 50%, and if you don’t have that disposition, you don’t deserve the great rewards that public equities offer.”
For future historians:
"With the S&P 500's 2024 performance, bears are now extinct in Wall Street - the only place you'll find them is in the zoo, wondering what went wrong."
Michael Kao
“Because we have this unevenness in transmission of monetary policy, and unevenness more importantly in the amount of fiscal Red Bull that we're pouring onto the economy, I think the time is coming very soon where Powell is going to be stymied. It might even come as early as December. I think there's a decent chance that they're going to pause in December because of hot inflation data, and if that happens, that is going to - and I've written about this many times - this global competitive cutting cycle is going to wind up turning into the global bait and switch, and I think you're seeing that manifested in the US dollar just spiking…”
“even with all of those financial sanctions, it'll be very very difficult to dislodge the role of the dollar, but why encourage that search when we don't even have to?”
Corporate Bond Spreads have dropped to the lowest level in 26 years
Mike Green: “We need to consider Buffett's allocation to equities VERSUS what it would have been if he was fully invested. And on that basis, he is "underinvested" to near the greatest extent in history”
Buffett Details Plans for Fortune as Berkshire Hathaway Stock Hits a Record “…his three children, Howard, Susan, and Peter Buffett, would be responsible for giving away his wealth, which consists almost entirely of about $148 billion in Berkshire stock…the donation decisions after his death need to be unanimous among his three children….“Those who can distribute huge sums are forever regarded as “targets of opportunity.” This unpleasant reality comes with the territory. Hence, the ‘unanimous decision’ provision. That restriction enables an immediate and final reply to grant-seekers: ‘It’s not something that would ever receive my brother’s consent.’ And that answer will improve the lives of my children.”
Andrew Bary wrote the above piece. He’s written some amusing things over the years. Some examples:
Basically matching the S&P 500 this century. It’s today #8 in the index weighting.
Savings
June 2024
Yet another example of altered government data I came across (always to make things look less bad). Notice how the 2024 dip shown above has been “revised” away?
Housing
New Home Sales Plunge 17.3 Percent, Largest Decline Since July 2013
“The seasonally-adjusted estimate of new houses for sale at the end of October was 481,000. This represents a supply of 9.5 months at the current sales rate. Note the margins of error in this report of 12 to 19 percent.”
“Of the alleged 481,000 homes for sale, 103,000 have not been started.”
“Important: Sales in October were impacted by the hurricanes.”
“New home sales were below pre-pandemic levels.”
“The months of supply increased in October to 9.5 months from 7.7 months in September. The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020. This is above the top of the normal range (about 4 to 6 months of supply is normal).”
Since I mentioned Michael Saylor and Microstrategy the other day…
This is from Porter Collins:
“This is how unregulated financial markets destroy themselves, much like the GFC. Leverage on leverage, combined with options and 0% converts. This is what Wall Street loves to do. Turn a simple trade (BTC) is to total f*cking mess.”
Collins was referring to this post by Cluseau Investments:
Have no clue if / when it will happen, but $2 Billion in MSTU [T-Rex 2X Long MSTR Daily Target ETF] and $1.7 Billion in MSTX [Defiance Daily Target 2x Long MSTR ETF], think that is a combined $9.1 Billion position once accounting for leverage. Anyone remember the VIX blowup of 2018? Back when XIV (no longer around) and $SVXY / $UVXY had to rebalance in the final minutes, and the cumulative effective of rebalancing causing more rebalancing caused a massive disaster close.
Anyways, if MSTR is ever down 10 or 15%, would result in $600M to $1B in selling that would occur in the final 10 minutes, because the banks providing the swaps need to reset the swaps to 3x at precisely 4:00 PM, thus causing the rebalancing activity right around then. There's usually 2 Million shares of volume in the final 5 minutes, but give it a -20% day and the auction will be horrendous. You kinda saw this last Thursday, when everyone realized the swaps would have to sell and they banged it in the final hour despite Bitcoin being relatively unchanged.”
“Europe has a set of primary interests, which to us have none or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence therefore it must be unwise in us to implicate ourselves, by artificial ties, in the ordinary vicissitudes of her politics or the ordinary combinations and collisions of her friendships or enmities.”
"It is also a habit of tyrants to prefer the company of aliens to that of citizens at table and in society; citizens, they feel, are enemies, but aliens will offer no opposition."
Simon Hunt with Grant Williams
“In Washington, this old perception that Iran is a backward, uneducated country run by a bunch of mullers and that attacking Iran will be a piece of cake. Well, anybody in the military who knows their facts, and there are some that I listen to all the time, say quite the opposite.
Iran, for the last twenty odd years, has been making preparations for America to attack them. So they probably have some of the most advanced ballistic missiles, including hypersonic. Russia has provided them with S-400s and more recently, the latest electronic radar jamming equipment. When Israel, in October, launched a strike on Iran, this system came into play. And Israel’s, F-35s and 15s suddenly found they were locked on, and in fact never got nearer than 70 odd miles to Iran’s coast, fired their missiles indiscriminately and did practically no damage at all. But what was also interesting is that when Israel command center saw what was happening, they canceled the second wave of attack bombers that were due to follow the F-35s and 15s. But of course, Israel PR and Washington PR, “Oh, we attacked Iran successfully. Destroyed X, Y and Z,” whereas quite the opposite, they had to turn tail.
So where does this lead us now? I think there’s a big debate in Tehran. Do we once and for all teach Israel a hard lesson and we launch an attack designed to destroy instead of design to send a message that we can penetrate yours and America’s defenses? My guess, putting the dots together, is that there is a high risk of an escalation in the conflict between Israel and Iran next year. And if that happens, the risk is that it will escalate into a war across the region. So that’s one part of the world.”
“The US economy, in reality, is far weaker than the stock market is assuming it to be. I happened to read a brilliant report produced by the Brownstone Institute, the conclusion of which was America started to be in recession in 2023 primarily because inflation has been understated, which we all know has been the case. But then when you log in the real inflation that they come up with, which instead of averaging four odd percent since 2019, average eight odd percent. And when you input that into personal incomes, GDP, you come up with a completely different picture”
That Brownstone Report is worth reading. It would explain a lot of why we’re where we are:
“According to our adjustments, cumulative inflation since 2019 has been understated by nearly half. This has resulted in cumulative growth being overstated by roughly 15%. This is a large amount for just 5 years – for perspective, peak-to-trough drop in real GDP during the 2008 crisis was 4%.
Moreover, these adjustments indicate that the American economy has actually been in recession since 2022.
These conclusions are in stark contrast to the establishment narrative that the US economy is enjoying robust growth that for some reason the public is incapable of perceiving. Indeed, our results are consistent with the perceptions of the American public, of whom a majority believe we are in recession.”
I guess Paul Krugman was wrong.
Once you realize that CPI and PCE are nonsense math models that have very little correlation to Americans' real-world lived experience, a lot of things make sense.
Barry Knapp
“There's a whole section of the economy that's really struggling, and you see this in the Atlanta Fed wage tracker, as well. The lowest quartile - they got a big bump for a year or so - but it didn't even keep up with the price level jump of consumer prices, and now their relative wage growth has just collapsed to below where it was pre-pandemic, so there really is a part of the economy that truly is under the cosh.”
“Transfer payments as a percent of disposable income are 120 basis points above where they were pre-pandemic”
Someone in the Circa NFL survivor pool, who'd survived 11 weeks, and was one of just 96 entrants left out of 14,266 entries, somehow did not enter a pick.
https://americanaffairsjournal.org/2024/11/america-china-and-the-death-of-the-international-monetary-non-system/
Sorry Rudy - Gotta cut back on my subscriptions. Thank you for all you do. We're gonna put your work in the Smithsonian one day.
BVG