Every day I get emails with interesting stuff to read, most of it comes courtesy of Ed Steers at Casey Research, who does his own aggregation that I sometimes borrow from. Here’s what hit my inbox today…
-An article about the capital losses that the Fed would incur if it had to mark its Treasury portfolio to market. Of course, it’s an academic exercise since the Fed can just print more money…until it isn’t. And the notion that it would ever unwind its balance sheet seems like a laughable proposition anyway.
-The NY Times reports on the precarious fiscal situation in Chicago as a result of underfunded public pension plans. Again, why does GDP focus on the promise?
-You’ve heard about the strikes and violence in South Africa by mine workers and unions. This article details the recent move in Kenya to revoke certain licenses so the government can get a bigger piece of the revenue stream. All of which is to say that more regulation and red tape and lower grades are going to increase the cash cost to extract minerals – if they get extracted at all. How is that bad prospectively for commodity prices?
-Zero Hedge presents data on the decrease in exercise amongst Americans this year versus last. They take it in a different direction from where my head went. My interest relates to the general thesis that we will need more and more “health care” over time.
-The weekly commentary from John Hussman does not provide any astounding revelations, but it does offer a good explanation of the dynamics at play, all while invoking Hyman Minsky. Here is a good excerpt: “The central effect of QE is not on the real economy, but on financial speculation. The Fed purchases Treasury and mortgage securities, and creates new base money (currency and bank reserves) as payment. This results in a huge pool of zero-interest assets that someone in the economy has to hold at any given point in time. This zero-interest money is a “hot potato” that creates discomfort and encourages a tendency to “reach for yield” in more speculative assets. Undoubtedly, the universal attention to Fed actions has already created a mob psychology where, to use Kindleberger’s words, ‘virtually each of the participants in the market changes his or her views at the same time and moves as a herd.’”
