Financial Sarcasm Roundup for 02/02/16

There are always voters in an election year who think a politician can make the stock market go up. There's always a politician ready to pander to those voters. They are all stupid.

Bond yields are tanking in Japan. The two-year yield dropping to -0.11, even less than the BOJ's -0.10 rate for excess reserves, is totally crazy. How can they be profitable on any product with a duration of less than two years? This totally scrambles overnight lending to businesses. I want every hedge fund manager who jumped on the Japan bandwagon to be blown out of the water. Forcing the dumbest fund managers out of business will be a shock to the really dumb investors who trusted in non-existent genius.

Now the Federal Reserve is thinking about negative rates. The rest of the world sometimes laughs at America for the dumb things we often do here. Now we have the chance to be as dumb as the rest of the world in monetary policy. The shock of initiating NIRP may lift the US stock market as investors leave cash and enter riskier equities. The rush should last for about six months, the typical duration of monetary policy's lagged effects. After that, the deflationary death spiral across multiple asset classes will be impossible to prevent. Lethargic Americans will wonder what happened.

Leading financiers want better public company shareholder relations. Anything with Warren Buffett's approval will probably work. JP Morgan's involvement indicates confidence that its balance sheet will survive long-term turmoil. Better corporate governance is an imaginary prophylactic against corporate raiders. Private equity firms will target well-run firms anyway if they're undervalued. The best corporate governance policy would be an electric shock device attached to a board member's chair, activated if they fall asleep during a quarterly meeting.

Vote for panderers and they will do absolutely nothing for you. I promise. You can't vote for me because I work for myself.

Financial Sarcasm Roundup for 01/29/16

People take self-identification to new extremes in the digital age. I self-identify as sarcastic, which ought to be a distinct personality type.

Japan's central bank goes for negative interest rates. That should pry the last yen out from under savers' mattresses and push Japanese investors into riskier territory. The positive feedback loop from such a nonsensical policy will never solve Japan's structural problems. Switzerland did this for a while but they had a strong currency. Japan's results will be worse.

Puerto Rico expects to issue new debt. The old debt isn't working out too well, so the new stuff will have to pay junk-bond type interest. Paying out 5% just isn't going to cut it with investors who got burned. No one likes taking a valuation haircut. I am so glad I never owned Puerto Rico bonds. They will make very nice wallpaper after several re-issues.

Theranos keeps having one problem after another. Specious tech claims and poor lab conditions should not justify a multi-billion dollar private market valuation. A whole bunch of top-shelf VC firms have staked their reputations on a business they never understood. I can imagine the panicked phone calls up and down Sand Hill Road about what desperate measures anyone can take to keep this unicorn from tipping over. Save the energy for the post-mortem court cases, people.

I may try self-identifying as a housecat just to see how people react. Nah, just kidding.

The Limerick of Finance for 11/15/15

Japan falling back in a hole
Nothing made the economy whole
Abenomics can't lift
A demographic shift
Central bankers should find a new role

The Haiku of Finance for 09/07/15

Abenomics roll
Some new flavor of sushi
Tastes like a failure

Financial Sarcasm Roundup for 09/07/15

One great thing about this blog is that visitors from the future can see how sarcastic I was at this point in history. I will be just as sarcastic in the future.

Japan's Q2 GDP is still down, no matter how you slice the inventory numbers. Maybe they could slice up some sushi rolls to go with those numbers. I'll have the dragon roll and California roll, please, because one plate is never enough. Abenomics is still in vogue over on that side of the Pacific Ocean. It will probably survive until a round of hyperinflation ruins the ability of ordinary Japanese to purchase very expensive imported foodstuffs for their sushi.

China is rapidly selling off its foreign exchange reserves to support its stock markets and currency. The US is not at all prepared for a sudden run on the dollar, but that is now very likely as more central banks follow China's path. Janet Yellen and Stanley Fischer are going to have some sleepless nights at the Eccles Building running scenarios on how to mitigate a dollar run. I expect pizza delivery services in Washington, DC will work overtime when the Federal Reserve starts pulling all-nighters.

Global supply and demand keep pushing oil prices down. Gas-guzzling Americans can enjoy a few more months of easy motoring. It's premature to call a bottom as long as financially weak oil service firms have access to cheap lines of credit in the US. I await the high yield debt market's collapse and the de-listing of multiple oil companies before I consider the sector a bargain.

If this blog were food, it would probably taste like vinegar.

Financial Sarcasm Roundup for 05/11/15

The foxes are in the hen-house, the inmates run the asylum, and perversity remains a hallmark of the financial sector.  Here I sit in my San Francisco sanctuary, pondering it all.

Japan's public debt continues to balloon out of control.  Abenomics is no more sane than the Bernanke/Yellen paradigm.  How many yen Japan will have to print to hyperinflate the debt mountain away is anyone's guess.  I won't guess the number of yen I should hold; it will be precisely zero until Japan wises up.

Fitch raised the latest alarm about real estate collateral under Chinese banks.  No one really listens to Fitch anyway because they're the smallest of the three main ratings agencies.  It's good that they went on the record so Moody's and S+P will look bad in hindsight for not badmouthing China.

China is eager to do business with Russia.  Sanctions are for law-abiding countries, not single-party kleptocracies.  Russia knows it's the junior partner here and doesn't care as long as it gets cash up front.  Expect Putin's circle to steal that cash and leave Russian infrastructure to languish further.  The scheme will come back to haunt Russia in about a decade when Chinese colonists try to slice off Siberia.

The ECB is getting excited about the prospect of QE driving up inflation.  The stupidity is so hot it just burns.  Runaway inflation will destroy the value of whatever bonds the ECB and others are buying.  Choosing fiscal sanity is the furthest thing from the ECB's planning process.  They instead prefer a junkie's rush into a bond-buying addiction.

In other news, I'm sure someone did something nutty in San Francisco today.  I'm just as sure it wasn't me.

Financial Sarcasm Roundup for 02/16/15

Stock markets march on despite Europe's woes, and Americans roll over on Presidents' Day.  Sarcasm has a role to play amid such madness.

Japan says its recession has ended.  I do not believe that for a New York minute, or a Tokyo minute if you prefer.  Japan's official economic statistics are about as reliable as the politically gamed stats from US agencies.  Revisions in the next quarter can invalidate Japan's claim to be out of the woods.  US statistical revisions do that all the time to our own country's economic numbers.

The European Union is finally moving towards a capital markets union.  They should have done this years ago when Greece and other weak economies gained admittance to the eurozone.  Now it's too late.  The zone's likely shrinkage means the benefits of a future capital markets union will be confined to the strong economies that remain in the euro after the weaklings are kicked out.  Germany and its northern friends can handle this by themselves.

Greek PM Tsipras promises his country will be completely different in six months.  LOL!  His citizens have no idea what's coming.  Recent polling shows they really believe they can both stay in the euro and get a better debt deal from Europe.  America no longer has the lock on low-information voters now that ordinary Greeks have weighed in.  Here's the hard slap of reality.  The Greek finance minister stunned today's Eurogroup meeting by flatly rejecting their negotiating position in record time.  Europe can now either take the Greek red lines seriously and open the ECB's quantitative easing floodgates, or give Greece the boot.  Greece will then be different, alright, and a lot sooner than six months from now.

I will make one more comment about today's national holiday.  Presidents' Day used to be two different holidays celebrating the birthdays of George Washington and Abraham Lincoln.  It went from two days to one day for some gawd-awful reason.  IMHO it should not be a national holiday because most Americans can't pick either of those two gentleman out of a lineup.  Americans have too many days off anyway.  National holidays just encourage laziness.  Get back to work.

The Limerick of Finance for 02/15/15

Greek exit contingency plan
It pays to have one in the can
Athens won't agree
They want money free
Europe should have eased like Japan

Financial Sarcasm Roundup for 02/09/15

History's infrequent inflection points bring the breakdown of ancien regimes.  They also bring sarcasm.

Greek PM Tsipras once again threw an anti-austerity brick at the EU.  He even upped the ante by demanding WWII reparations from Germany.  The conventional wisdom is that a eurozone breakup is impossible.  It's obvious to me that the new Greek government is buying time to put a post-euro contingency into place if they can't extort another bailout from Brussels.  Angela Merkel must be getting tired of this charade.  Credit ratings agencies are already sick of it, with Standard and Poor's downgrading Greece.

Japan's weakening current account surplus is bad news for Abenomics.  They'll have to sell a lot more sushi and Kobe beef to make up for these numbers.  Trashing the yen with monetary stimulus was supposed to boost exports, not reduce them.  Japan's two-decade experiment with economic retardation shows no sign of ending.  Economic stagnation is a gift to long-dormant militarists who are now beginning their push to re-arm Japan.  I expect them to hire one of the more frightening Pokemon characters as a cheap scare tactic until they can afford serious weaponry upgrades.

Gallup told the truth about how the USDOL miscounts unemployment statistics.  At least one CEO in America is willing to speak out; too bad he backtracked later on TV.  Labor statisticians know the real numbers but their political appointee bosses won't allow them to speak out.  Ordinary Americans suspect the numbers are false but don't mind as long as they can collect unemployment benefits.  Lying goes a long way in this country for liars who can throw money around.

The three narratives above reflect ancien regimes that subscribe to "extend and pretend" debt rollover fantasies.  The crackups needed to bring them all back to reality will be harsh but necessary.  Bring on the great unwinding.

The Limerick of Finance for 11/16/14

Japan's heading back down a hole
Abenomics played dominant role
Recession restarts
It's in all the charts
Sales tax did not achieve its goal

The Haiku of Finance for 11/01/14

Japan breaks the bank
Tempting fate with inflation
Yen falls off a cliff

The Haiku of Finance for 09/07/14

Hard Japan quarter
Everyone cut back a lot
Shocking therapy

The Haiku of Finance for 05/29/14

Japan inflation
Highest in last two decades
Sales tax made it rise

Financial Sarcasm Roundup for 04/14/14

I am seriously pressed for time this week.  Someday you'll find out why but I don't care to disclose it today.  Suffice it to say that I'm doing something very important in the short term.  I can still make a minimally sarcastic effort.

Japan hints that Europe should follow its example in fighting deflation.  I say Japan is nuts for saying this and Europe is nuts for taking it seriously.  Deflation isn't so bad if it forces indebted businesses into bankruptcy so more efficient businesses can take charge.  The generation that comes of age in a hyperinflationary Japan or Europe will never forgive the modern leaders who destroyed their national currencies.

American shareholders are demanding that their companies acquire for growth.  They do this because they are stupid.  They should instead ask for huge special dividends to get that cash back.  The few hundred corporate CFOs in the country who sit on trillions of dollars of uncommitted cash know how insanely high any NPV would have to be in these pumped markets to justify any acquisitions.

I've read a bunch of brief news items lately about what nouveau riche twentysomethings want from a financial adviser.  It's all really impressionistic and contradictory stuff, but the general sense is that today's young rich enjoy throwing money away and want advisers to praise them for throwing even more away.  The cleverest and most dishonest advisers will step up and take as much as they can in fees while praising these young idiots for their nonexistent brilliance.  I will enjoy watching these preppies and their advisers starve in the gutter.

The most sarcastic thing I can say today is that people in Japan, Europe, and America are all getting a lot dumber about money.  I am living on the wrong planet, or the wrong time period on the right planet.  

The Limerick of Finance for 03/09/14

Japan's big trade deficit grows
All while its economy slows
Abenomics did this
Policy went amiss
When this will crash, nobody knows

The Limerick of Finance for 02/09/14

Abenomics is hurting Japan
Their trade surplus went down the can
Devalue the yen
With stroke of a pen
Collapse wasn't part of that plan

Financial Sarcasm Roundup for 10/07/13

My busy schedule in the real world has put my online lulz on the back burner.  Let's see what the LOLmemes have to say about some recent financial headlines.

The Treasury Secretary is mouthing off about the risk of a debt default.  He's only going through the motions.  Washington drama requires the principal actors to demonstrate sufficient drama so the narrative can distract the folks at home.  The two parties have probably already reached some sort of deal to fund the Affordable Care Act in exchange for unspecified cuts somewhere else, most likely to welfare programs.  The high-profile shuttering of popular national attractions that don't even need operating hours, like some of the war monuments in D.C., is a shameful sideshow.  The federal government is nowhere near a debt default because it has plenty of cash to pay its bondholders.  We are nowhere near dodging a bullet.

The World Bank is reducing its Asia growth forecasts.  They could have read my blog for advance warning that China's growth is fraudulent but no, they just couldn't disrupt the bull case at the height of consensus excitement.  Export-driven economies work great when your trading partners in the US and Europe go into debt to buy your stuff.  The four Asian tigers were the talk of the 1980s and '90s.  Now they're turning into big pussycats.

Japan is making progress towards its stated inflation target of two percent in two years.  They could easily overshoot and hit 20% in two months but no one seems to care.  The average German or Austrian had no love lost for the Weimar Republic once its hyperinflationary policies destroyed their savings.  Abenomics will travel a similar path in Japan and the average saver won't notice until their savings are counted in millionths of a yen.

I hope you all enjoyed reading my sarcasm as much as I did making it.  Nah, just kidding.  I don't care what you idiots think.  If lulz gets you excited about reading my stuff then have at it.  

Financial Sarcasm Roundup for 05/13/13

Kick it off.  Sarcasm ahoy.

The G-7 is getting worried about Japan's devaluation experiment, though not in so many words.  They were the ones egging Japan on and now they feel guilty.  Great.  Central bankers play games with our livelihoods and only think about the consequences after they really get going.

Worry isn't the G-7's only job.  They also want bank rules that allow for swift resolution of bad banks before  they melt down everything.  The Cyprus dry run worked and the US/UK joint plan will now go global.  The idea is pretty close to what I and others advocated in 2008.  The policy elites should give credit where it is due.

Mexico's financial reform plan is winning plaudits.  I wonder if this plan is a bunch of eyewash like our own Dodd-Frank regime.  Transparency rules are nice but expanding credit is not a cure-all.  We learned that north of the border.  Expanding small business credit means more Mexicans can open Taco Bell franchises instead of fighting drug gangs.

IPOs are through the roof again.  I've noticed lots of market high-water marks in recent weeks.  Margin debt is back.  Junk bonds are at record valuations and volumes.  Now companies are grabbing IPO cash while they can.  I shake my head at the suckers who think this can go on forever.  No one wants to be the last one circling the chairs when the music stops but I'm already out the door.

Mickey still has no clue, nor do his apologists.

The Limerick of Finance for 02/17/13

Japan has devalued the yen
The Nikkei has risen again
Devaluation's a race
Currencies will keep pace
Until they all crash in some pen

Financial Sarcasm Roundup for 12/26/12

It's one day after Christmas and I'm not any less sarcastic than I was yesterday.

The fiscal cliff is approaching and the relevant parties just can't stop launching trial balloons to impress the folks back home.  Both parties want to lower corporate tax rates in the name of competitiveness.  There's no way such a complicated reform will get done this year but that won't stop the preening and posturing.  Lowering the corporate tax rate while eliminating deductions probably won't raise revenue but it will make CFOs' jobs easier, so maybe some grateful corporate treasuries will step up their giving to super-PACs.

Japan is going nuts.  Their ruling political coalition has voted specifically to destroy the yen with monetary stimulus.  That's like putting some anemic patient on a cocaine diet in the hope that it will accelerate their metabolism.  Forget about structural reforms.  I'm so glad I don't own Japanese stocks or yen.

Some New Jersey union pension fund is suing to block the NYSE-ICE merger.  Come on already.  They should be grateful anyone wants to buy an American exchange at what is likely the high point of the U.S. equity market.  That means ICE is probably at its high-water mark too, and competition from dark pools and internal crossing networks make this merger all the more fortuitous for both exchanges' shareholders.

Here comes the mother of all re-fis.  The Administration is considering a refinancing handout to even more borrowers, along with nationalizing the rest of the secondary mortgage market.  I knew all along that Washington was going for it but it's still thrilling to see my suspicions confirmed in print.  I invite my readers to search my blog articles throughout 2011 and 2012.  You'll find several articles where I propose that large-scale mortgage modification programs would be a transmission mechanism for a wage-price spiral if the federal government flooded them with cash.  If this latest policy boondoggle is enacted, the necessary mechanism to launch hyperinflation will be in place.

The primary Treasury dealers are dumber than ever.  They're hoarding bonds and reducing sales to the Fed. This is the wrong thing for a dealer to do with the U.S. bond market at an all-time high.  The smart thing to do is unload winning positions onto the last sucker in the room - the Fed, of course - and shift the bank's business lines into things like non-dollar debt from emerging markets.

Shoppers didn't come through for retailers this year.  I've been waiting for a downturn in retail activity and this one's been a long time in coming.  Better late than never.  The average American probably has enough unused stuff in their closets and storage sheds to equip several emerging market households, and yet buying more stuff is in our cultural DNA.  The silver lining to any hyperinflationary period is that ordinary folks will be cured of their impulse to consume with abandon.

Finally, the SEC gets my Alfidi Capital award of the day (okay, there's no such thing but it sounds generous) for innovation.  The agency charged with regulating our capital markets is finally acquiring a system that allows it to watch the capital markets.  Funny, I've been using ordinary financial websites and online brokerages for almost two decades.  In true government contracting fashion, they bought a complete system rather than subscribe to terminals and feeds from Bloomberg and Dow Jones.  I recall reading during the financial crisis of 2008 that the Treasury Secretary had the ability to monitor credit markets in real time from his desk.  I don't have to name the Wall Street players who have a vested interest in the keeping the SEC blinded, in exchange for future private employment for the agency's top investigators.  In that context, I expect the SEC's new market monitoring system to work exactly as intended, especially since initial access to the system will be limited to a handful of people.  Read between those lines.