Posts Tagged ‘Mainstream’
Jim Grant on Bernanke’s Continuing “Grand Manipulation”
Thursday, June 7th, 2012
In preparation for what we are about to receive from the Charmain of the Fed, may we be truly grateful, Jim Grant offered CNBC’s Maria B the forthright advice last night “prepare for platitudes but watch what they are doing not what they are saying”. The ever outspoken Grant notes that the Fed’s balance sheet has been contracting (unlike Maria’s mainstream perspective); for the past three months the Fed’s balance sheet has contracted at an annualized rate of 10% – even as Fed-head after Fed-head talk up QE and so on. So unless they continue buying securities – since the short-dated positions will continue to roll off – the Fed’s balance sheet will continue to contract and therefore the stimulative effect will fall. Grant does expect QE3 since it is the fun-drug that we have been using for 4 or 5 years and that Bernanke will need little pushing to continue the Grand Manipulation. He ends on a rather interesting note that the Wisconsin win and the potential for an Obama loss in November may be more of a positive driver for stocks since markets begin to revert to a free market once again – we suspect this is not the case given the donors/beneficiaries under Romney’s wing. But rest assured – the bespectacled bear ends on the chilling note that ‘the long-term implications are bad’ for the ongoing manipulation that is now the status quo.
and from Goldman, if there was any doubt of Grant’s comments on the implicit tightening – or inverse flow – as they present the embedded tightening opportunity cost for the Fed it does nothing.
The bottom line here is that if the Fed does nothing then there is an implicit 5-10bps of rate-hike tightening per quarter implicit in the balance sheet roll-down (50bps in next 3 years) – so when considering the Fed’s actions, discount the effect of this automatic tightening before buying the S&P at 2000…
Tags: 3 Years, Amp, Balance Sheet, Beneficiaries, Bernanke, Bottom Line, Charmain, Cnbc, Donors, ETF, ETFs, Fed Head, Gold, Goldman, Jim Grant, Mainstream, Manipulation, Opportunity Cost, Platitudes, Qe, Rate Hike, Term Implications, Three Months
Posted in Markets | Comments Off
Arnott: Look Outside Mainstream Stocks and Bonds (Morningstar)
Wednesday, September 28th, 2011
Arnott: Look Outside Mainstream Stocks and Bonds
Investors need to broaden their horizons and consider alternatives and tactical bets if they want to achieve respectable returns in the coming years, says Research Affiliates’ Rob Arnott.
The 3-D Hurricane Hurtling Toward the Economy
A combination of deficits, debt, and demographics will weigh on the U.S. economy for the next 10-15 years, says Research Affiliates’ Rob Arnott.
Arnott: Apple Pretty Darn Expensive
Research Affiliates’ Rob Arnott thinks it is unlikely Apple deserves it’s place as the largest market-capitalization company in the country and that investors shouldn’t expect outsized returns.
Tags: Apple, Bets, Bonds, Demographics, Economy, Horizons, Hurricane, Investors, Largest Market Capitalization, Mainstream, Morningstar, Research Affiliates, Rob Arnott, Stocks And Bonds, Stocks Bonds
Posted in Bonds, Brazil, Markets | Comments Off
The Best Explanation Of Why Rare Earths Are A Bubble Just Waiting To Explode
Friday, December 17th, 2010
Once again, the rare earth companies are exploding higher today, thanks to a big media push from MolyCorp (NYSE:MCP). Before you get excited though…
There are really good reasons to be skeptical of the mainstream thinking.
This presentation from economist Ed Dolan provides the best, most-concise explanation of the issue that we’ve seen.
It basically comes down to this:
- Yes, China (NYSE:FXI) does control 95% of rare earth production.
- But that’s mainly because it has the loosest environmental regulations. They are in abundance all around the world.
- Rare earths aren’t really that rare… they’re more prevalent than gold.
- And demand over the long-run is elastic. Companies are in fact finding alternatives to them.
So before you jump into the rare earth ETF (NYSE:REMX) to ride the bubble, at least get some background.
China’s monopoly is fragile.
Image: Ed Dolan’s Econ Blog
The latest scare started in the dispute between Japan and China
Image: Ed Dolan’s Econ Blog
What are rare earths?
Image: Ed Dolan’s Econ Blog
They’re not that rare, really.
Image: Ed Dolan’s Econ Blog
And China hasn’t always been so dominant
Image: Ed Dolan’s Econ Blog
But China has been very loose with environmental regulations
Image: Ed Dolan’s Econ Blog
And its cost basis is very low
Image: Ed Dolan’s Econ Blog
The environmental looseness is a big deal
Image: Ed Dolan’s Econ Blog
In the long-run supply will be rather elastic, though for now it is indeed tight
Image: Ed Dolan’s Econ Blog
In the long run, we can actually find alternatives
Image: Ed Dolan’s Econ Blog
Prices are likely to stay volatile in the short-run
Image: Ed Dolan’s Econ Blog
So China is dominant today, but it could collapse
Image: Ed Dolan’s Econ Blog
Tags: Abundance, Blog, China, concise explanation, cost basis, Dolan, Economist, Fxi, Gold, Hasn, Image, Japan, Looseness, Mainstream, Mcp, Monopoly, Nyse, Rare Earth, Remx, Scare
Posted in ETFs, Gold, Markets | Comments Off
