Archive for December, 2010
Want to Get Your Kids into University? Let Them Play, and Other Weekend Reads
Friday, December 31st, 2010
Here are this New Year’s Eve’s reading diversions for your personal enlightenment. Enjoy yourself tonight, and be safe.
Happy New Year Quotes, New Years Eve Sayings
Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;
Ring out the false, ring in the true.
~Alfred, Lord Tennyson, 1850
Exercise Calories: 10 Winter Exercises That Burn The Most Calories
It’s important to change your workout routine and engage different muscles to ensure your body is constantly developing and improving instead of adapting to a regular routine that results in a less effective workout.
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Judith Acosta: Manipulated Against Our Natures: When Good People Do Bad Things
It is an archetypal scenario: innocent nave falls victim to the chicanery of a malevolent, urbane and –most importantly — seemingly innocuous predator.
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Want to get your kids into college? Let them play
We’re not talking about preschool children. These are Harvard undergraduate students whom we teach and advise. They all know how to work, but some of them haven’t learned how to play
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The simple secret to great sleep
You already know that pregnancy pains and hot flashes can keep you tossing and turning at night. But there’s a host of other, less-heralded health concerns that may be silently interfering with your shut-eye. Here’s how to deal with these stealth sleep stealers, decade by decade.
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Doctor Offers Tips to Cure a New Year’s Hangover
But forget the coffee to heal a hangover. According to Michelfelder, B vitamins and exercise may be the best way to get out from under the effects of too much drinking. “B6 and B12 are crucial in the healing process for brain cells,” says Michelfelder.
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7 Foods That Should Never Cross Your Lips
The problem: The resin linings of tin cans contain bisphenol-A, a synthetic estrogen that has been linked to ailments ranging from reproductive problems to heart disease, diabetes and obesity. Unfortunately, acidity (a prominent characteristic of tomatoes) causes BPA to leach into your food. Studies show that the BPA in most people’s body exceeds the amount that suppresses sperm production or causes chromosomal damage to the eggs of animals. “You can get 50 mcg of BPA per liter out of a tomato can, and that’s a level that is going to impact people, particularly the young,” says Vom Saal. “I won’t go near canned tomatoes.”
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Bone Health: 8 Workouts That Strengthen Your Bones (PHOTOS)
Strong bones take work. Aside from adequate vitamin D and calcium, bones require challenging, weight-bearing exercise to remain sturdy. Easy, light workouts won’t do the trick.
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Top 15 Weekend Reads of 2010
Friday, December 31st, 2010
Here are your top 15 Most Read Weekend Reads of 2010
1. 10 Surprisingly Unhealthy Kids Foods, and other Weekend Reads
2. 5 Kids Meals to Avoid at All Costs, and other Weekend Reads
3. If You Want to Age Gracefully, Don’t Eat This, and other Weekend Reads
4. How to Treat a Cold with Dr. Pepper, and other Weekend Reads
5. The World’s Best Travel Spots, and other Weekend Reads
6. Be Careful with Caffeine, and other Weekend Reads
7. 3 Anti-Aging Foods You Should Eat to Stay Young, and other Weekend Reads
8. 14 Ways to Have a Ton of Energy, and other Weekend Reads
9. How to Raise Lucky Kids, and other Weekend Reads
10. Why Do Smart People Make Dumb Decisions, and other Weekend Reads
11. Fake Louis Vuitton Bags Don’t Fool Anyone, and other Weekend Reads
12. The Silent Killer in Your Kitchen, and other Weekend Reads
13. We Are All Fat and Have Cancer, and other Weekend Reads
14. The 5 Worst Punctuation Mistakes, and other Weekend Reads
15. Pesticide in Your Toothpaste, and other Weekend Reads
Tags: Anti Aging Foods, Best Travel, Caffeine, Cancer, Dr Pepper, Dumb Decisions, energy, Fake Louis Vuitton, Fake Louis Vuitton Bags, Fool, Kids Meals, Louis Vuitton Bags, Lucky Kids, Pesticide, Punctuation Mistakes, Silent Killer, Toothpaste, Travel Spots
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The 10 Economic Factors in the World Outlook for 2011 – and the 3 Dominos
Friday, December 31st, 2010
Apart from geo-political risk-taking coming to a head around the 28th March, there are a number of negative headwinds building in the international economy, particularly in the United States and Europe. Despite bullish sentiment currently in ascendance in the stock markets, it is clear to many economists that the world is in for a turbulent time in 2011.
Of course, there is no one-to-one correlation between the economy and the stock market, and they tend to do their own thing for extended periods of time. However, this time around the magnitude of the approaching storm will not escape the stock market, in part because QE3, QE4 and QE5 are not likely to happen. Even if they do, the effect will be insufficient to maintain stock prices in the face of waves of indogenous and exogenous shocks to the US economy.
Additional QE shots will also be utterly useless to the economy when the macro-economic tectonic plates shift on a magna scale. In my analysis, the salient world economic and social developments coming in the next two years are going to happen due to the following tensions building to the point of explosion:
1 The sovereign debt crisis in Europe is putting great pressure on the EU financial system and is contributing to the difficulties in achieving growth in large parts of the EU. Although the EU ruling class is slowly beginning to conduct changes in the EU financial sector, it is taking far too long and it does not have the necessary political perspective and understanding to see that the structural imbalances in the eurozone are now moving to rip the eurozone apart.
Although EU institutions and their leaders are successively building what amounts to a federal system for loans to weak eurozone countries, it is more and more becoming evident that they have no real idea of the convulsions they are throwing the weaker eurozone countries into. The ECB and the European Reconstruction Bank are simply not intending to supply ailing nations with credit at reasonable rates, and the whole EU project is in great danger of failing altogether through mounting debt. There is an overhanging risk that the debt will cascade through emergency package after package until collapse and default of a debtor country is a fact, accompanied thereafter by huge social upheavals across the 16 eurozone nations and ultimately across the entire EU of 27 countries as well.
The object of the latest 750 bn euros support fund is to end the despicable scenes when the bond vigilantes, in cahoots with the rating agencies, pick off one weak EU economy at time and extract extortionate rates of interest, a fate hitherto experienced by Greece, Ireland and now Portugal. Once operational, this fund is intended to go a long way to eliminating the debt crisis in Europe altogether. Given the financial headwinds about to hit, this arrangement has not come a moment too soon. But will it be enough? The Stockholm professor, economic analyst, and author on economic growth, bubbles and crises, Stefan de Vylder, does not think so. He foresees the demise of the eurozone (see link).
China has lost confidence in the dithering US political and economic system, prone as the latter is to delays, lobbying, partisan interests and pork-barrel politics and has declared a willingness to assist Europe with support if necessary to achieve sovereign financial stability. The EU is an important export market for China and it is in the interest of China to assist the EU to weather its current sovereign debt crises.
On the face of it, the EU looks set to weather the approaching financial storm with much greater robustness than the US, even though the EU will, like most economies, be affected by any double dip in the US. But again, will the Chinese assistance be enough given the wide cracks fast developing in the EU? Furthermore, what will happen when China itself runs into great problems, which it is heading towards at rapid speed? I will continue with China later under factor 9.
2 The US first-time unemployment rate is as high as ever, 9.8%, while the real number out of work is estimated to be over 17 million people. Without any significant growth in the US economy (i.e. at least 6% per annum) these numbers are going to remain high for many years, perhaps a decade or more.
3 Every 400 000 new people out of work in the US puts further downward pressure on the US housing market as they default on their mortgages a few months down the line. Unsold US residential housing inventory is now close to four million homes and the average time to a sale 24 months. The market has 25% further down to go.
4 US large banks are still under pressure because they are still carrying toxic assets on their books (or off them) and are unwilling to lend to businesses, making it difficult for them to expand. A number of the larger banks are also being sued by other companies, for example Bank of America by PIMCO for fraud in relation to the value of the sub-prime mortgage-backed securities sold to them three years ago. Regional banks are also under pressure and another 500 are estimated to hit the wall in 2011.
5 Over 40 US states are bankrupt and will have a combined deficit of $200bn in 2011. How is the US going to deal with this? If more money is printed then the national debt will increase.
Click here for the full article.
Source: Paul Sandison, December 29, 2010.
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Paul Krugman: The New Voodoo
Friday, December 31st, 2010
via Mark Thoma, Economist’s View
December 31, 2010
Republicans used to claim that tax cuts paid for themselves so that they could rail against the deficit and cut taxes at the same time. Though some in the GOP still resort to this defense of tax cuts, now that the “tax cuts pay for themselves” myth has been exposed, Republicans are turning to a new defense of simultaneously cutting taxes and giving “impassioned speeches denouncing federal red ink” that is every bit as flimsy as the old one:
The New Voodoo, by Paul Krugman, Commentary, NY Times: Hypocrisy never goes out of style, but, even so, 2010 was something special. For it was the year of budget doubletalk — the year of … railing against deficits while doing everything they could to make those deficits bigger. …
In the first half of 2010, impassioned speeches denouncing federal red ink were the G.O.P. norm. And concerns about the deficit were the stated reason for Republican opposition to extension of unemployment benefits, or for that matter any proposal to help Americans cope with economic hardship.
But the tone changed during the summer, as B-day — the day when the Bush tax breaks for the wealthy were scheduled to expire — began to approach. My nomination for headline of the year comes from the newspaper Roll Call, on July 18: “McConnell Blasts Deficit Spending, Urges Extension of Tax Cuts.”
How did Republican leaders reconcile their purported deep concern about budget deficits with their advocacy of large tax cuts? Was it that old voodoo economics — the belief, refuted by study after study, that tax cuts pay for themselves — making a comeback? No, it was something new and worse. …
2010 marked the emergence of a new, even more profound level of magical thinking: the belief that deficits created by tax cuts just don’t matter. For example, Senator Jon Kyl of Arizona — who had denounced President Obama for running deficits — declared that “you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.”
It’s an easy position to ridicule. After all, if you never have to offset the cost of tax cuts, why not just eliminate taxes altogether? But the joke’s on us because … the incoming House majority plans to make changes in the “pay-as-you-go” rules … that effectively implement Mr. Kyl’s principle. Spending increases will have to be offset, but revenue losses from tax cuts won’t. Oh, and … any spending increase must be offset by spending cuts elsewhere; it can’t be paid for with additional taxes.
So if taxes don’t matter, does the incoming majority have a realistic plan to cut spending? Of course not. Republicans say that … defense, Medicare and Social Security — all the big-ticket items — are off the table. So they’re talking about a 20 percent cut in what’s left, which includes things like running the judicial system and operating the Centers for Disease Control and Prevention; they have offered no specifics about where the cuts will fall.
How will this all end? I have seen the future, and it’s on Long Island, where I grew up.
Nassau County — the part of Long Island that directly abuts New York City — is one of the wealthiest counties in America and has an unemployment rate well below the national average. So it should be weathering the economic storm better than most places.
But a year ago, in one of the first major Tea Party victories, the county elected a new executive who railed against budget deficits and promised both to cut taxes and to balance the budget. The tax cuts happened; the promised spending cuts didn’t. And now the county is in fiscal crisis. …
Nassau County shows how easily responsible government can collapse in this country, now that one of our major parties believes in budget magic. All it takes is disgruntled voters who don’t know what’s at stake — and we have plenty of those. Banana republic, here we come.
Mark Thoma is Professor of Economics at University of Oregon, and is author of the highly regarded and widely followed economics blog, Economist’sView.
Copyright (c) Mark Thoma, Economist’s View
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Every Year it is Something; This Year it’s Rare Earths
Friday, December 31st, 2010
by Trader Mark, Fund My Mutual Fund
Usually during holiday trading there is some nonsense sector that gets bid to the stratosphere by the daytrading community only to come crashing down to earth a few months later. It could be biotechnology stocks
with no revenue, it could be Chinese solar stocks, it could be dry bulk shippers, it could be dot coms. You name it, they’ll find something to move to the stratosphere on a news story or “theme” that sounds great in principle but will eventually end in tears. This year’s flavor are rare earth metal stocks. Many of these don’t even have a mine open but have “prospects”…. others are related to rare earths like you are related to Kevin Bacon… perhaps 4 degrees rather than 6. My favorite is Qiao Xing Universal Resources (XING)…. the name looked familiar but the ticker is one that stands out. I looked at this name perhaps 2 years ago when it was a ….. telecom related company. Now, I see in that short span of time they have reinvented themselves as a mining company…. somewhere in China a few guys have to be laughing at how easy it all is. But all that matters is money and not reality – so for those of you who caught yesterday’s 80% move in China Shen Zhou Mining (SHZ) I raise some gadolinium to you.
Molycorp (MCP) and an Australian company named Lynas (LYSCF) are the only 2 that really have any near term prospects (by near term I mean they will actually be opening mines by end of 2011 or first half 2012) and actually deal with rare earths… and even the rare earths they deal with apparently are the ‘less rare’ ones. But no need for facts, it is holiday trading and the dot coms of 2010 are here. (I know, I know there is a “real theme” behind these companies just as there was a real theme behind Chinese solar, and internet taking over the world, and the huge increase in global trade and Iomega)
As for the market, one wonders why it is open. 1/4th the normal volume, and an index that crawls up or down 1-3 S&P points a day. Just open the rare earth metal stocks and let everyone else take the week off.
No position
Copyright (c) Trader Mark, Fund My Mutual Fund
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Must See: Howard Davidowitz Destroys The Recovery Illusion, Debunks The Consumer Renaissance
Friday, December 31st, 2010
Today’s must see TV comes from the following interview of Pimm Fox on the consumer and the economy with retail expert Howard Davidowitz, who in 10 minutes provides more quality content and logical thought than we have seen from CNBC guests in probably all of 2010 (except of course for that one time when Erin Burnett kicked out Mike Pento, but that’s a different story). Where does one start? Probably at the end: “I am not surprised by the strength of retail sales, because i knew that 30% of consumers are responsible for retail sales, and these 30% did much better because of the performance of capital markets. I don’t think it is indicative of anything going forward. I don’t think the economy is going to get any better. If you look at our fiscal and monetary policy, we went two trillion in the hole last year. Two trillion… to produce this… and unemployment went up to 9.8%! We’ve spent two trillion we’re printing money we’re going bananas. Our balance sheet, we’ve got $2.6 trillion on there, and what;s on there government securities, and MBS.” And here is the kicker for the world’s biggest hedge fund, which at least one person besides Zero Hedge appears to get: “If interest rates go up a point Bernanke’s bankrupt. Everything he’s bought is underwater. All the MBS are underwater, the whole country is underwater.” Does anyone see the issue now with why rising interest rates, aside from predicting a “recovery”, may also, courtesy of its now $2 billion DV01, “predict” the insolvency of the Federal Reserve?
Some other observations on the retail “renaissance”:
- Walmart is 10% of US retail sales, has 150 million customers, and its stock it is down 6 consecutive quarters;
- Sears is the largest department store in America: “their stock is terrible”
- Best Buy had a huge earnings miss
- Toys’R'Us loss increased last quarter
- A&P filed bankruptcy
- Loehmann’s filed bankruptcy
- Charming Shoppes is going to close 100 stores
- TJMaxx just liquidated AJ Right
And in addition to dissecting the collapse of Sears, Davidowitz observes what should be a loud glaring alarm signal for the likes of Ackman and all those who are betting on the resurgence of the US mall storefront and the likes of General Growth: the bulk of store traffic is moving online (where incidentally the only jobs created are those of packagers and QC line people either in China or in soe warehouse in TX, CA or FL). To wit:
Online sales have to lead you to question the whole retail selling strategy. We have 21 square feet of selling space for every man woman and child in this country. We already have double of what we need. With the explosion of online sales, what happens to all these retail malls and shopping centers which are marginals? Huge changes are going to be taking place as people continue shopping online…. In the end what do you do with the retail space…This is going to be a huge question for retail in the next ten years, that’s why Walmart is starting to build smaller stores, that’s why Walmart is building more overseas than they are building here. It’s going to be the biggest retail change that we’ve ever seen.”
The biggest losers: commercial real estate landlords. Read REITs:
Landlords better start figuring it out pretty quick because they already have occupancy problems, rent problems and everything else right now. I don’t think the CRE problems are fixed by any means. That’s why we are going to close hundreds of community banks going forward, we are going to close hundreds more. Those CRE debts are coming due and they will not be able to be rolled over. We’ve got lots of problems still coming up in the banking system, and the problems in the real estate issue is here for a long time.
In other news, Kool Aid to be served in aisle 5 of the next door Sears box from now until permanent closing time.
Full must watch video after the jump (we are looking for an embeddable version).
h/t etrader
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Johnny-come Lately Investors Switching from Bonds to Stocks
Friday, December 31st, 2010
Positive sentiment in the week through December 21 resulted in investors reversing course, with U.S. equities regaining favor and bonds experiencing selling pressure.
After an eight-month period of withdrawals from U.S. equity mutual funds, investors channeled $335 million into domestic equity funds, according to estimates from the Investment Company Institute. Prior to this inflow, a total of $90 billion was liquidated from these funds since the flash crash of May.
Inflows into foreign equity funds continued unabated with $3.6 billion finding a home abroad.
Interestingly, having seen inflows every week since the middle of December 2008, bond funds experienced outflows of $3.53 during the third week of December.
Source: Investment Company Institute, December 29, 2010.
The Bloomberg video below provides a summary of the of the mutual fund flow estimates. Click here or on the image to view the clip. (Please note that more text follows below the video image.)
Source: Bloomberg, December 30, 2010.
As usual with retail investors, it would seem that the change in strategy comes rather late in the cycle, with Treasury yields having bottomed in December 2008 and U.S. equities in March 2009. But the thinking is perhaps rather late than never, especially as the economy is growing again and the equity bull market, in the assessment of the masses, has not even been running for a full two years, whereas all 10 bull markets of the past 60 years made it into a third year (via MarketWatch). Additionally, there could be the hope that the third year of the presidential cycle will again be positive for stock markets.
These reason may have merit, but I will remain cautious until the overbullish and overbought condition of stock markets has been worked off through a short-term mean-reversion correction, which I believe is overdue (also see my post “Yes, stocks are overdue for a correction”.)
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Investment Fads for 2011
Thursday, December 30th, 2010
How to be ahead of 2011’s biggest investment fads, with Josh Brown, writer of the The Reformed Broker blog.
Source: CNBC, December 29, 2010 (hat tip: The Big Picture).
Bill Gross Bullish on Munis in 2011
Thursday, December 30th, 2010
Bill Gross, co-CIO of Pimco, tells CNBC why he thinks muni bond yield returns are attractive.
Source: CNBC, December 28, 2010.
