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Hot Love on the Freelove Freeway

A post by Barry reminded me that I haven’t watched The Office since it was The Office, and this classic video from the BBC original with Ricky Gervais is a great reminder why. How do you do better than this?

 

Readings: Gold bugs, California, H1N1, and Fed Fallacies

 

Today in Trade Deficits

There is little doubt the U.S. trade deficit, having declined a great deal already this year, is going to decline further over time. But the nutty fixation with bingo-calling and over-interpreting its every move drives me nuts.

Case in point, today's smaller than expected trade deficit for August, which came in at $30.7-billion versus a forecast of $33-billion. So far this year up and down deficit months have oscillated fairly nicely. Reading overmuch into it strikes me as nuts.

trade

 

A Brief Self-Promotional Note

I have a piece over at TechCrunch about my fondness for venture capitalists. How do I love them, let me count the ways, etc. That sort of thing.

 

A Financial Tale of Two Golf Worlds: PGA vs LPGA

Let's compare the latest recession-ravaged numbers in men's and women's professional golf. Here is the ratings/prize situation in men's golf's PGA with Tiger Woods back:

Well, that doesn't seem so bad, does it. Prize money is still impressive, and ratings are solid.

Here, however, is the ratings/prize situation in women's golf's LPGA:

Blame whatever suits you, but the LPGA seems in very big trouble. These aren't yet Professional Women's Bowling Association numbers, but the the recession has made a bad situation much worse.

More reading:

"Amid turmoil, LPGA makes cuts", NYT 10/8/2009

"Woods revives PGA Tour ratings," SportsBusiness Journal, 10/5/2009

"Total prize money dips on PGA Tour for first time since 1970s", SportsBusiness Journal, 8/3/2009

 

Fed vs Fed vs NYT

The NYT has an article out tonight saying that "fissures are developing" at the Fed about when and how much to start raising interest rates and sticking a straw into liquidity programs. That dishy opening suggests we are going to hear about insiders, unnamed sources and the ever-present "officials with knowledge of the situation" who think Ben Bernanke is a naughty boy.

But we don't. Instead we are told about various speeches from various Fed officials over the last few months, echoing speeches from the same people over the few months before that, saying the same things now as they said then. Newsflash: Inflation worriers are worried about inflation!

The NYT tries to defuse this by saying that this argument goes beyond the "traditional split" between inflations "hawks" and "dove", but it's not at all clear that it does. I'm not saying there isn't a split, but it seems like the same one at the Fed as ever.

More here.

 

The Unhappy 30-Year Treasury Auction

The closely-watched 30-year treasury re-opened bond auction today was, in John Jansen's words, "sloppy"

The auction stopped at 4.009% vs a 100PM of  3.98%, so bidding was not
aggressive.

The bid/cover ratio was 2.37.  The YTD bid/cover has averaged 2.37, but has
averaged 2.63 since the June 1 change in auction bidding rules coming into
today’s auction.

For those of you not up on your treasury/Jansen/bond lingo, a quick primer:

Check the rest of Jansen's post here, as well as his always-savvy reader comments. it's worth checking his end-of-day post too. Oh, just go read the whole damn site -- John's good.

 

Readings: Armstrong, Simons, Levitt, Babe Ruth, etc.

 

What Optical Illusions Tell Us About Us

 

Readings

 

Vanity Fair, and Anderson vs Anderson

It is one of those fun little ironies of technology & media that there are two unrelated people named Chris Anderson in the business, both high profile and both with publishing backgrounds. One Chris Anderson runs the prominent TED conference, and one Chris Anderson writes books (like “The Long Tail”) and runs Wired magazine. The two look nothing alike, and both are friends of mine, but simply having the same name is the source for lots of merriment & regular confusion.

Today’s example? Vanity Fair’s new list of The Next Establishment which includes the TED Chris Anderson’s bio, and even says he is not to be confused with the Wired Chris Anderson, but still has the Wired Chris Anderson’s photo.

anderson-vf

 

Readings

 

Reason #2,354,817 Why Advertisers Can’t Add

A new Citi report makes clear why many mainstream advertisers badly need to be disintermediated or bankrupted or beaten or something. Consider the following three points:

And then consider this:

Did you get that? Advertisers underallocate badly to online based on time spent with the media, a situation made more embarrassing by the underperformance of offline versus online. Yeesh.

Granted, these are squishy numbers, as are all things in marketing (hence the high expense budgets and all the time spent golfing), but assuming they are even in the ballpark advertisers have some ‘splainin’ to do.

 

Emerging Markets, and the Global Monetary Merry-go-Round

Good new report from HSBC out making a variant on the emerging markets decoupling case, while launching an emerging markets index (EMI). They argue that the global monetary merry-go-round continues to spin – for while.

I’m less sanguine than they are about decoupling – in the absence of a safety net it is hard to see how domestic consumer spending ramps up in China – but the monetary point is a fair one. Read on:

emiOur optimistic views on the emerging world are also based on what we call the monetary merry-go-round. Low US interest rates typically encourage capital to flow into the emerging world. Attempts by emerging nations to limit the resulting exchange rate appreciation lead to offsetting capital outflows in the form of rising foreign exchange reserves which are often invested in US Treasuries. Higher demand for Treasuries keeps yields low and, hence, leaves US interest rates low, thereby allowing the merry-go-round to repeat, seemingly ad infinitum.

The merry-go round leaves the global cost of capital too low.  A hunt for yield develops. Before the credit crunch, this hunt led to huge investments in mortgage-backed securities which, in turn, fuelled the US housing boom. Post-credit crunch, however, the hunt for yield has gone elsewhere. Investors are now keen on the emerging nations with their strong secular economic prospects.

The implications are simple. Emerging currencies will be under upward pressure, their asset markets should appreciate and their sources of growth should switch from exports towards domestic demand, thereby helping to narrow their, in some cases, large current account surpluses. Indeed, the EMI shows that total order books are rising at a faster pace than exports, supporting the view that recoveries are domestically-led. 

In the absence of an imminent upward move in US interest rates, the merry-go-round should be able to spin a few times more. There are, however, limits to this process.

 

Shhh, I’m Trying to Listen to My Heartbeat Here

Funky new study showing that people more aware of their own heartbeat make better risk decisions:

Enhanced cardiac perception is associated with benefits in decision-making

Abstract

In the present study we provide the first empirical evidence that viscero-sensory feedback from an internal organ is associated with decision-making processes. Participants with accurate vs. poor perception of their heart activity were compared with regard to their performance in the Iowa Gambling Task. During this task, participants have to choose between four card decks. Decks A and B yield high gains and high losses, and if played continuously, result in net loss. In contrast, decks C and D yield small gains and also small losses, but result in net profit if they are selected continuously. Accordingly, participants have to learn to avoid the net loss options in favor of the net gain options. In our study, participants with good cardiac perception chose significantly more of the net gain and fewer of the net loss options. Our findings document the substantial role of visceral feedback in decision-making processes in complex situations.

Source: Natalie S Werner et al., “Enhanced cardiac perception is associated with benefits in decision-making,” Psychophysiology (June 22, 2009), http://www.ncbi.nlm.nih.gov/pubmed/19558399.

[via Lerner]

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