Monday, October 01, 2012

Financial Sarcasm Roundup for 10/01/12

September flew by with no market crash, no default from Greece (or Spain, or Italy), no eurozone breakup, and no U.S. hyperinflation.  I'm disappointed.  I'll have to find more things to get sarcastic about.

The head of the SF Fed defends QE3 in his own words.  I get the argument for a natural unemployment rate of 6% but it needs to be defined as primarily for those in transition from one job to another.  I don't get the claim that real unemployment is only 8.1%.  The Fed folks are glad U-6 isn't published anymore because they know it would embarrass them with a high double-digit unemployment rate.  This guy also trots out the deliberate underestimation of inflation at under 2%.  *Sigh.*  He needs to do more of his own grocery shopping so he can see the price of canned tuna is over $1.00 a can.  I remember when it was $0.45 per can a decade ago when I was in graduate school.  Nowhere in the speech does he specify just how monetary stimulus will reduce unemployment.  That sleight-of-hand trick won't fool markets for much longer.

Bank of America is paying off the last of the irate shareholders who didn't like getting saddled with Merrill Lynch's problems.  The $2.4B bill will cause a $1.6B charge against earnings, and BAC had net income of just over $2.4B last quarter.  That leaves very little cushion for any other bad news coming out of this bank.  Maybe I should take out a loan from BofA just for kicks in case they can't survive.  Nah, I'm not that mean and BofA isn't in that much trouble (yet).  Full disclosure:  No position in BAC.

China's exports are rapidly collapsing.  A less intense contraction is still a contraction.  I'm glad I sold the last of my China position to herald the end of the China bull story.  Note that this survey of purchasing managers by a private bank is more pessimistic than the Chinese government's official survey of purchasing managers.  China can no longer avoid getting caught lying about its economy.  The plan to turn China into a nation of middle-class consumers hasn't come fast enough and probably never will given that country's demographics.  Staying away from Chinese investments is probably the patriotic American thing to do anyway, given Beijing's increasingly bellicose attitude towards its neighbors.  I expect nothing but trouble from that country for the next couple of decades.

The Financial Planning Association is in denial about the chances it can reach middle class investors.  I remember the rounds of interviews I went through as an aspiring financial adviser in 2005 with branch managers who were convinced that 401(k) rollovers into IRAs would be the industry's growth story.  Fast forward to today, with the average retiree having less than $30K in assets.  Great job, FPA.  Keep wasting time touting the middle class's nonexistent wealth so you can send people like me on wild goose chases.  That's how rich people (and their financial advisers) amuse themselves.