From a Chuck Klosterman piece at Grantland, Led Zeppelin at Knebworth from 1979.
- Peak oil is here — it’s just not evenly distributed http://earlywarn.blogspot.com/2011/06/peak-oil-is-not-synchronous.html
- Is Brazil real estate a bubble ready to burst? http://www.bbc.co.uk/news/business-13932991
- [Big Picture] Music and mud: Glastonbury Festival 2011 http://dlvr.it/YDwkX ->
- Paul Mason: Fears of “The ATM ate my card” has Greeks ready to Pass & Pretend on austerity. http://bbc.in/jzstCj ->
- Kessler: Greece should be headed for “Brady Bund” solution – http://on.wsj.com/kPW8X5 ->
I’m deep in the camp that says QE3 — otherwise known as last week’s announcement of eventual release of reserve oil supplies from (mostly) the U.S. — will backfire. It will convince people that economies are weakening, and that sovereigns are just as suspicious as the rest of the us about Saudi’s ability to deliver swing supply when needed.
I see today that I have company:
But at Deutsche Bank, oil analyst Paul Sankey said the United States has effectively injected itself into the equation as another speculator, and the result will not be as intended. “Every oil market comment from the White House will [now] become a market-moving event,” Sankey writes in a note to clients. “In short, this move has added to oil markets’ fear of volatility.
Oil analyst Stephen Schork told Bloomberg that the move will backfire and in fact convince traders that there is something very wrong in the market, which will be reason for them to push prices back up.
From Michael Cembalest at JP Morgan, an exam. Part I today, on the U.S. fiscal situation. As he says, no cheating and Google-ing the answers. [-]
1. What might it take to stabilize the US federal debt, and return to a 3% budget deficit in 2015?
- 2001 Bush tax cuts expire for everyone; agreed-upon cuts to physician Medicare reimbursement get implemented; AMT relief ended; personal exemption phase-outs and itemized deduction haircuts applied as previously agreed
- Forget about tax hikes and spending cuts, go for growth: achieve 6.5%-7.0% annual nominal growth (without interruption)
- Eliminate all non-defense discretionary spending
- Any of the mutually exclusive choices shown above
2. Current US Federal debt held by the public is around $10 trillion. In a speech Richard Fisher of the Dallas Fed gave in 2008, he estimated the present value of all unfunded entitlement obligations (e.g., the debt of the future) to be:
- Another $10 trillion
- A “gazillion
- Another $99 trillion
- Same as the maximum damages the recording industry is suing Limewire for, $75 trillion
3. Debt ceiling talks have reportedly broken down again over differences regarding the need for higher taxes. Partisanship in the House and Senate, measured by the frequency of legislators only voting for their own party’s bills, is now:
- High, but not as high as during the Nixon era (recall that Nixon sent his Enemies List to the IRS so they’d be audited)
- Medium, and considerably lower than during the Great Depression when the gap between rich and poor widened
- High, but lower than the period following the Civil War, an internal conflict with 6x the casualty rate as WWII
- Higher than at any time since 1879
4. While the profits boom in the US has been impressive, it is heavily reliant on two things: weak labor markets, and rising non-US demand linked to abnormally low policy rates in the emerging world. During the 1980’s and 1990’s, post-recessionary profits recovered at 4x the rate of nominal US GDP growth. In the current recovery, that ratio peaked at:
- Infinite, since there has been no recovery in nominal GDP
5. During the recession, 75% of all high yield bonds traded below a dollar price of $80. Strong corporate balance sheets and easy Fed policy then contributed to a massive rally in credit. The percentage of HY bonds now trading below $80 is:
- 0%, since with interest rates at zero, anything with a coupon must be worth par
6. Household debt, which was 90% of disposable income in the year 2000, peaked at 130% of disposable income in 2007. After the last 3 years of defaults and de-leveraging, this ratio is now:
7. Some suggest a tax holiday for companies repatriating offshore profits (taxing them at 5% instead of 35%). When a tax holiday was enacted in 2004 (American Jobs Creation Act), the # of jobs created per $1 million of foregone tax revenue was:
- negative; repatriating companies cut jobs in a rising job market & raised dividends
[Update] I have now posted answers here.
Speaking as a hater of gum-chewers, this is depressing:
Effects of chewing gum on cognitive function, mood and physiology in stressed and non-stressed volunteers.
Recent research suggests that chewing gum may improve aspects of cognitive function and mood. There is also evidence suggesting that chewing gum reduces stress. It is important, therefore, to examine these two areas and to determine whether contextual factors (chewing habit, type of gum, and personality) modify such effects.
The aims of the present study were: (i) to determine whether chewing gum improved mood and mental performance; (ii) to determine whether chewing gum had benefits in stressed individuals; and (iii) to determine whether chewing habit, type of gum and level of anxiety modified the effects of gum.
SUBJECTS AND METHODS:
A cross-over study involving 133 volunteers was carried out. Each volunteer carried out a test session when they were chewing gum and without gum, with order of gum conditions counterbalanced across subjects. Baseline sessions were conducted prior to each test session. Approximately half of the volunteers were tested in 75 dBA noise (the stress condition) and the rest in quiet. Volunteers were stratified on chewing habit and anxiety level. Approximately, half of the volunteers were given mint gum and half fruit gum. The volunteers rated their mood at the start and end of each session and had their heart rate monitored over the session. Saliva samples were taken to allow cortisol levels (good indicator of alertness and stress) to be assayed. During the session, volunteers carried out tasks measuring a range of cognitive functions (aspects of memory, selective and sustained attention, psychomotor speed and accuracy).
Chewing gum was associated with greater alertness and a more positive mood. Reaction times were quicker in the gum condition, and this effect became bigger as the task became more difficult. Chewing gum also improved selective and sustained attention. Heart rate and cortisol levels were higher when chewing which confirms the alerting effect of chewing gum.
Overall, the results suggest that chewing gum produces a number of benefits that are generally observed and not context-dependent. In contrast to some previous research, chewing gum failed to improve memory. Further research is now required to increase our knowledge of the behavioral effects of chewing gum and to identify the underlying mechanisms.
From the results of a UBS survey of $9-trillion worth of sovereign wealth managers on the outlook for the dollar. If you believe this, and it’s fairly striking, you would expect an even more significant shift in the dollar to have already happened as investors acted accordingly. That means they aren’t acting according to the views they’re professing here, which means that this is more their rhetoric than their reality.
Michael Mauboussin of Legg Mason on the merits of doing less, and on why investing is getting harder.
I’m at Aspen Ideas later this week, and some of the sessions there are livestreaming here.
Good stuff from my tireless and prolific friend Mark Suster on the changing nature of venture capital:
The venture capital industry has changed over the past 5 years in ways that I believe will be lasting rather than temporal change. We are in the process of our own creative destruction with new market entrants and new models of innovation at the precise moment that our industry itself is contracting.
When the dust settles, although we will have fewer firms, each type well end up more focused on traditional stage segments that cater to the core competencies of that firm. The trend of funding anything from the first $25,000 to funding $50 million at a $1 billion-plus valuation is unlikely to last as the skills and style to be effective at all stages are diverse enough to warrant focus.
I will argue that LPs who invest in VC funds will also need to adjust a bit as well.
Some recent venture data from CalPERS here.
Remarkable data in U.S. Census projected country populations through 2050. Check the rise of Nigeria, versus the collapse of Russia and disappearance from the list.