Sorry, No More Fear For Us, We’re Canadian

Canada’s fear index blew up today on too much fear:

TMX Group, Canada’s main stock market operator, along with the Standard and Poor’s launched the S&P/TSX 60 VIX index last October, promising it would offer investors a “powerful” tool to gauge investor sentiment. But on a day when jitters were acute, the so-called fear index couldn’t be calculated because the necessary pricing information wasn’t available. In effect the market was to [sic.] volatile for the volatility index.

via Live Blog: The U.S. Ratings Downgrade, Reaction and More – MarketBeat – WSJ.

We Heart GLD

Eye-popping stuff: August GLD in-flows already approach full-month July totals.

Flows into GLD this month now total $2.5 billion, just shy of the $2.68 billion that flowed into GLD in July, an official at Boston-based State Street Global Advisors said in a telephone interview.

via GLD Creations Reach $1.3 Billion On Aug. 8.

A Study in Central Banks

As I’m over-fond of pointing out, the ECB hasn’t expanded its balance sheet materially since 2009, and every time it tries to lighten now it causes a crisis in Europe. First Greece, then Italy, etc.  With that in mind, the following graphic compares the balance sheets at the ECB (EBBS) and Federal Reserve banks (FARBAST) over the past year. Whatever your belief about what central banks should be doing right now, a study in contrasts of how a dynamic system responds to external forces.

Central banks

Made in the U.S. of China

Eye-opening numbers on U.S. component of “Made in China” products:

Thus, on average, of every dollar spent on an item labeled “Made in China,” 55 cents go for services produced in the United States. In other words, the U.S. content of “Made in China” is about 55%.

via FRBSF Economic Letter: The U.S. Content of “Made in China” (2011-25, 8/8/2011).

Wherein Paul Krugman Drives Me Mad

I am no anti-Krugman Krank, and think the Nobel-winning economist continues to write some of the best practically-minded economic commentary out there, but this sort of thing from him drives me mad.

S&P declared that US debt is no longer a safe investment; yet investors are piling into US debt, not out of it, driving the 10-year interest rate below 2.4%. This amounts to a massive market rejection of S&P’s concerns.

via Aaauuuggghhh! Market Commentary Edition – NYTimes.com.

C’mon Paul. You know that’s utter bullshit.

Banks & Brokers, Without Commentary

Banks

Morgan Stanley on Complexity and Unintended Consequences

From Morgan Stanley’s 10-Q, about the most succinct statement possible of the potential unintended consequences of the U.S. debt downgrade:

Concerns regarding downgrade of the U.S. credit rating and the sovereign debt crisis in Europe could have a material adverse effect on our business, financial condition and liquidity.

On August 5, 2011, Standard & Poor’s lowered its long term sovereign credit rating on the United States of America from AAA to AA+. While U.S. lawmakers reached agreement to raise the federal debt ceiling on August 2, 2011, the downgrade reflected Standard & Poor’s view that the fiscal consolidation plan within that agreement fell short of what would be necessary to stabilize the U.S. government’s medium term debt dynamics. This downgrade could have material adverse impacts on financial markets and economic conditions in the United States and throughout the world and, in turn, the market’s anticipation of these impacts could have a material adverse effect on our business, financial condition and liquidity. In particular, it could disrupt payment systems, money markets, long-term or short-term fixed income markets, foreign exchange markets, commodities markets and equity markets and adversely affect the cost and availability of funding and certain impacts, such as increased spreads in money market and other short term rates, have been experienced already as the market anticipated the downgrade. In addition, it could adversely affect our credit ratings, as well as those of our clients and/or counterparties and could require us to post additional collateral on loans collateralized by U.S. Treasury securities. Because of the unprecedented nature of negative credit rating actions with respect to U.S. government obligations, the ultimate impacts on global markets and our business, financial condition and liquidity are unpredictable and may not be immediately apparent.

via Form 10-Q.

QotD: From Oral History of “The Dana Carvey Show”

“I’ve always wanted to pay a superhero, let alone one of “The Ambiguously Gay Duo.”

via An Oral History of the Rise and Fall and Rise of “The Dana Carvey Show”: Movies + TV: GQ.

Return of the Global Savings Glut

From a paper arguing that the global savings glut remains an overlooked force in lower yields worldwide, this graphic:

Savings

Taller Euros

From a new voxEU paper, average height of male Europeans by country birth-cohort over time:

HattonFig1