The first Monday of a new year means the grind starts afresh for cubicle wage-slaves. I celebrate my freedom from such drudgery by unleashing sarcasm tinged with LOL photos. Taste the rainbow of sarcasm. Taste the flavor of Alfidi Capital.
A bunch of washed-up economists are mouthing off about rosy economic growth. Any economist who anticipates continued US growth in 2014 is either incompetent or on the Fed's payroll. I anticipate the US falling off a cliff at some point for several reasons. Corporate earnings are at all-time highs and must revert to mean. Personal indebtedness sustains consumer spending and uncontrolled government spending sustains the rest of the economy. The US's official GDP reached a new level of absurdity last year after the BEA recalculated it to include money already spent. Puh-leeze. Magical thinking about markets won't make them levitate in the face of reality.
Central banks will have trouble keeping a unified consensus for more stimulus. The developed nations' central banks have stimulated themselves into a corner, and everyone knows it. "Decoupling" was a big financial meme a couple of years ago when asset managers started worrying about which global sector would head down first. They all headed down more or less together in 2008 until central bank stimulus propped them back up. Now with competitive currency devaluation they all face variations on the Prisoner's Dilemma. The first one to defect from monetary stimulus will reap a more valuable currency, should they wish to attract FDI, and will set off a shockwave roiling currency markets. I'm hedging this madness with positions in currencies I trust not to play the game.
China faces a double-whammy. Western multinationals are moving production away from China and back to their home countries. Chinese local governments have rising default risk due to their reliance on the shadow banking system. This means that China's goose is cooked, so the only question is whether they'd like it medium rare or well done. China's perma-bulls still claim that learning Mandarin is a smart educational move. I hope they learn to file bankruptcy claims in Mandarin. I blogged a log time ago that China's rare earth element export quotas were set disingenuously low. Beijing's central planners can look forward to revising other data down from politically-determined highs.
My new year is getting off to a nice little sarcastic start. I am confident that the human race, and the finance sector in particular, will keep me supplied with amusing news items.
A bunch of washed-up economists are mouthing off about rosy economic growth. Any economist who anticipates continued US growth in 2014 is either incompetent or on the Fed's payroll. I anticipate the US falling off a cliff at some point for several reasons. Corporate earnings are at all-time highs and must revert to mean. Personal indebtedness sustains consumer spending and uncontrolled government spending sustains the rest of the economy. The US's official GDP reached a new level of absurdity last year after the BEA recalculated it to include money already spent. Puh-leeze. Magical thinking about markets won't make them levitate in the face of reality.
Central banks will have trouble keeping a unified consensus for more stimulus. The developed nations' central banks have stimulated themselves into a corner, and everyone knows it. "Decoupling" was a big financial meme a couple of years ago when asset managers started worrying about which global sector would head down first. They all headed down more or less together in 2008 until central bank stimulus propped them back up. Now with competitive currency devaluation they all face variations on the Prisoner's Dilemma. The first one to defect from monetary stimulus will reap a more valuable currency, should they wish to attract FDI, and will set off a shockwave roiling currency markets. I'm hedging this madness with positions in currencies I trust not to play the game.
China faces a double-whammy. Western multinationals are moving production away from China and back to their home countries. Chinese local governments have rising default risk due to their reliance on the shadow banking system. This means that China's goose is cooked, so the only question is whether they'd like it medium rare or well done. China's perma-bulls still claim that learning Mandarin is a smart educational move. I hope they learn to file bankruptcy claims in Mandarin. I blogged a log time ago that China's rare earth element export quotas were set disingenuously low. Beijing's central planners can look forward to revising other data down from politically-determined highs.
My new year is getting off to a nice little sarcastic start. I am confident that the human race, and the finance sector in particular, will keep me supplied with amusing news items.
