Monday, August 11, 2014

Financial Sarcasm Roundup for 08/11/14

I have yet to find a financial expert on the Internet who is more sarcastic than me.  David Stockman's Contra Corner comes pretty close but he doesn't do haiku.

Russia thinks it can win a sanctions war against the West.  America sends a paltry amount of exports to Russia but Russia imports a huge portion of its food.  The Russkies will be hard pressed to find substitute exporters in Asia and Africa, unless of course they want to eat boatloads of rice.  The good news is that fewer Russians will get drunk on vodka if they have to eat their potato crops instead of ferment them.

Europe doesn't like US high yield bonds anymore.  The phrase "impending selloff" is really cute.  That is exactly what triggered pricing chaos in the financial markets back in August 2007 as an early warning that fixed income securities were mispriced and illiquid.  A whole bunch of shaky US companies are going to watch their cash reserves dwindle as investors turn down their junk bonds.  stock prices.  Watch out below.

China's moderate inflation stats got the West's attention.  The West ignores the low quality of China's source data, focusing on headline numbers.  Wall Street still does not comprehend the extent of fictionalization in Chinese economic statistics.  Even surveys of economic activity from private media outlets are suspect.  "Forget it, Jake, it's Chinatown."

The US Treasury is reconsidering its view of MLPs.  The Kinder Morgan restructuring may be a prescient move to get out ahead of any future regulatory rollbacks.  America's tolerance for proliferating tax shelters is reaching an apotheosis.  It was fun while it lasted but Uncle Sam needs to broaden the tax base in ways that don't frighten major donors.  Word will eventually trickle out to upper middle class tax donkeys through their tax accountants.

The best item above is the high yield debt warning from Europe.  I will be overjoyed to watch a whole bunch of yield-chasing hedge funds implode when they can't sell their synthetic securities.  Bring it on.