Tag Archives: usa

FED, Trading, USA

A Checkpoint with this Week’s Expected End of QE

 

What’s New: With the curtain falling on the Fed’s QE. let’s take a look at what’s been happening of late for US Treasuries. The yields on the 10-, 20- and 30 year Treasuries have generally trended downward since the end of 2013.

The latest Freddie Mac Weekly Primary Mortgage Market Survey last Thursday puts the 30-year fixed at 3.92%, well off its 4.53% 2014 peak during the first week of January and its lowest rate since June 2013.

 

Here is a snapshot of the 10-year yield and 30-year fixed-rate mortgage since 2008.

A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of “stagflation” (economic stagnation with inflation). I’ve drawn a trendline connecting the interim highs following those stagflationary years. The red line starts with the 1987 closing high on the Friday before the notorious Black Monday market crash. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday.

Here is a long look back, courtesy of a FRED graph, of the Freddie Mac weekly survey on the 30-year fixed mortgage, which began in May of 1976.

A Perspective on Yields Since 2007

 http://www.advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php

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  • Notes from #FOMC from 9-Apr-2014
    73
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    61
    Here’s what to look for from the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole,Wyoming, which runs Aug. 21-23. -- Yellen’s keynote: The highlight will be Fed Chair Janet Yellen’s speech Aug. 22 on labor markets at 10 a.m. New York time. She’ll probably reiterate the Fed’s view…
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China, Trading, USA

Jack vs Jeff: The two biggest ecommerce billionaires in the world are total opposites

 

In 1990, Jack Ma was teaching English to a group of university students at Hangzhou Dianzi University. Who would have thought that, 24 years later, he would be China’s richest man?

In that same year, Jeff Bezos was working at D.E. Shaw & Co., an investment management firm based out of New York City. After graduating summa cum laude from Princeton university with a Bachelor’s degree in computer science and electrical engineering, there was no doubt Bezos would end up in tech, it was just a matter of time.

Years later, both of them would come up with similar names for their companies. Bezos wanted Cadabra, a name that signified magic. Ma wanted Alibaba, hoping that the name would open doors with an “open sesame”. But that might be as similar as they can get: ecommerce and magic.

These origin stories are tell-tale signs of two diverging philosophies and the companies they gave birth to. And yet they meet in some inroads. Just one month after Alibaba’s IPO, let’s take a deeper look at the two founders and the companies that are destined to shape the future of online retail.

Putting customers first?

Amazon is notorious for its obsession with customers. In fact, it’s Bezos’ go-to mantra and arguably his number one rule when it comes to how the culture of Amazon should be set. Bezos is a customer-centric founder:

We have so many customers who treat us so well, and we have the right kind of culture that obsesses over the customer. If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.

But Jack Ma has a slightly different angle. Ma told CNBC newscasters, minutes after Alibaba listed on the New York Stock Exchange on September 22, “Customers first, employees second, and shareholders third.” What the newscasters didn’t realize was that when Ma thinks of customers, he’s not talking about everyday consumers in the same way as Bezos. To Ma, his customers are the small businesses that use the firm’s Taobao and Tmall marketplaces. Speaking at Stanford in 2013, Ma outlined this clearly:

Alibaba is not a company for consumers […] I knew that we didn’t have the right DNA to become a consumer company. The world is changing very fast, and it’s hard to gauge consumers’ needs. Small businesses know more about the needs of their customers. We had to empower our power sellers and our SME’s to support their customers.

This divergence is profoundly clear when you dig into stories about Amazon’s dealings with small businesses. In 2006, Amazon throttled the sales of a 200-year-old German business selling knives. In 2007, when Amazon released the Kindle, it didn’t reveal the US$9.99 price to publishers until the day of the release. And just this year, Amazon is making it harder for customers to buy books from publisher, Hachette, all because, as Forbes notes, “Amazon wants a bigger piece of its suppliers’ profit margins to purportedly pass on to its customers in the form of lower prices.” Amazon functions like a monopolistic empire.

You just won’t see this kind of behavior at Alibaba. The philosophy is poles apart from Amazon’s. This is what Jack Ma had to say on this very topic at Stanford in 2011:

I believe in the internet time, there is no empire thinking. I hate the empire. Empire thinking means join me or I’ll kill you. And I don’t like that model. I believe the ecosystem. […] I believe everybody should be helping each other, connecting each other. It’s an ecosystem. So Taobao become so big, so fast, and I worry about that. Give the industry some opportunity, give the competitors some opportunity.

See: Jack Ma’s Last Speech as Alibaba CEO
## No money, no technology, and no plans

When you dig deeper into the business philosophies of these two giants, you start to see even deeper discrepancies. When Ma spoke again at Stanford in 2013, he outlined some peculiaritiesof Alibaba’s founding story.

The ignorant are not afraid. There were three reasons behind our success. They were very valid points. First, we had no money. Second, we didn’t understand technology. Third, we never planned.

Alibaba started with RMB 50,000. That’s about US$8,150. When Amazon started out, Bezos got US$300,000 from his parents.

Ma was an English teacher before starting his entrepreneurial journey. Bezos graduated from an Ivy League school.

In contrast to Ma’s “no plan” (he goes into it much deeper here), Bezos is the meticulous planner. In a short video in 2009, following the acquisition of Zappos, Bezos outlines the “only things he knows.” The list includes: obsessing over customers, inventing, and thinking long-term. Bezos adds:

Any company that wants to invent on behalf of customers has to be willing to think long-term. And it’s actually much rarer than you might think. I find that most of the initiatives that we undertake may take five to seven years before they pay any dividends for the company […] It requires and allows a willingness to be misunderstood.

But in one or two ways, these tech titans are growing. Today, Ma’s net worth is US$21.8 billion, making him the 37th richest person in the world. Bezos is worth US$30.5 billion, putting him 21st on the list.

Epilogue: Beyond Alibaba, beyond Amazon, beyond money, beyond humanity

https://www.techinasia.com/jack-ma-jeff-bezos-amazon-alibaba-billionaires-ecommerce/

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USA

The US debt level of over $17.9 trillion would take more than 398 million years to pay off.

Debt-Chain-Slavery

October 22, 2014
Santiago, Chile

The US government’s debt is getting close to reaching another round number—$18 trillion. It currently stands at more than $17.9 trillion.

But what does that really mean? It’s such an abstract number that it’s hard to imagine it. Can you genuinely understand it beyond just being a ridiculously large number?

Just like humans find it really hard to comprehend the vastness of the universe. We know it’s huge, but what does that mean? It’s so many times greater than anything we know or have experienced.

German astronomer and mathematician Friedrich Bessel managed to successfully measure the distance from Earth to a star other than our sun in the 19th century. But he realized that his measurements meant nothing to people as they were. They were too abstract.

So he came up with the idea of a “light-year” to help people get a better understanding of just how far it really is. And rather than using a measurement of distance, he chose to use one of time.

The idea was that since we—or at least scientists—know what the speed of light is, by representing the distance in terms of how long it would take for light to travel that distance, we might be able to comprehend that distance.

Ultimately using a metric we are familiar with to understand one with which we aren’t.

Why don’t we try to do the same with another thing in the universe that’s incomprehensibly large today—the debt of the US government?

Even more incredible than the debt owed right now is what’s owed down the line from all the promises politicians have been making decade after decade. These unfunded liabilities come to an astonishing $116.2 trillion.

These numbers are so big in fact, I think we might need to follow Bessel’s lead and come up with an entire new measurement to grasp them.

Like light-years, we could try to understand these amounts in terms of how long it would take to pay them off. We can even call them “work-years”.

So let’s see—the Social Security Administration just released data for the average yearly salary in the US in fiscal year that just ended. It stands at $44,888.16.

The current debt level of over $17.9 trillion would thus take more than 398 million years of working at the average wage to pay off.

This means that even if every man, woman and child in the United States would work for one year just to help pay off the debt the government has piled on in their name, it still wouldn’t be enough.

Mind you that this means contributing everything you earn, without taking anything for your basic needs—which equates to slavery.

Now, rather than saying that the national debt is reaching $18 trillion, which means nothing to most people, you could say that the debt would currently take almost 400 million work-years to pay off. Wow.

When accounting for unfunded liabilities, the work-years necessary to pay off the debt amount to astonishing 2.38 BILLION work-years…

And the years of slavery required are only growing.

As an amount alone the debt is meaningless, but in terms of your future enslavement it can be better understood.

To put this in perspective even further—what was the situation like previously?

At the end of the year 2000, the national debt was at $5.7 trillion, while the average yearly income was $32,154. That’s 177 million work-years.

Submitted by Simon Black of Sovereign Man blog,

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Economy, USA

12 Charts That Show The Permanent Damage That Has Been Done To The US Economy

Most people that discuss the “economic collapse” focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing.  In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago.  The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed.  In fact, many of them continue to get even worse year after year.  But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems.  They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead.  Hopefully this article will be a wake up call.  The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching.

http://theeconomiccollapseblog.com/archives/12-charts-that-show-the-permanent-damage-that-has-been-done-to-the-u-s-economy

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Central Bank, FED, Trading, USA

THINGS TO WATCH IN FRIDAY’S JOBS REPORT

The Labor Department’s initial estimate of August job growth on Friday is expected to show another solid month of hiring. Economists surveyed by The Wall Street Journal forecast the economy added 225,000 jobs, which is roughly in between the 12-month average of 214,000 and the 3-month average of 245,000. The unemployment rate is expected to drop to 6.1% after ticking up to 6.2% in July. Beyond those headline figures, here are five things to watch on Friday.

Read the 5 things to watch here :  http://blogs.wsj.com/briefly/2014/09/04/5-things-to-watch-in-fridays-jobs-report-2/

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Economy, Europe, USA

French finance minister blasts USD dominance

After the U.S. imposed a fine of US$9 billion on BNP Paribas as the latter had helped countries like Sudan to avoid sanctions launched by the U.S., French finance minister Michel Sapin appealed that rebalancing of currencies used in international payments is possible and necessary; BNP’s punishment case should raise the awareness of all nations that it is necessary to use various currencies, Financial Times reported. 

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NoTrading

June 2014: Echoes of June 1914?

This week marks the centenary of the assassination of Archduke Franz Ferdinand of Austria – the key trigger for WWI leading to a conflict between European powers soon enough. A hundred years later, the world has similar echoes of the early 20th century with a major shift in global power once again occurring.

The power has shifted from the global North to the South with Asian countries such as China being primary beneficiaries, as opposed to Germany and Russia. The geo-political tensions are once again challenging key elements of the U.S-led international order. This is partly driven by rising economic power resurrecting nationalism and claims for resources shown by disputes between China, and neighboring countries.

It is in Asia where the most tension and insecurity lies in terms of potential for a great power war: there is focus on the Syrian conflict and rise of Islamic extremist group ISIS in Iraq. China’s rise is then unsettling the region and the world with dangers of miscalculation growing because of military build-ups. Even the Japanese Prime Minister has drawn parallels in the geopolitical landscape in Asia today and Europe in the eve of war in 1914. Philippine President compared Beijing’s track record of belligerent behavior with Germany expansionism in 20th century by questioning which point is actually the stopping point.

In Asia, the tensions between Japan and China, as well as between Taiwan and China, are potential triggers of conflict.

However, there exist differences making the war impossible. The memories of the two wars linger quite strongly; the emergence of Communism in Russia, and seeds of Nazis leading to WWII. The presence of nuclear power is a great brake on major power conflict. Both revisionist nations, China and Russia, and status-quo powers all possess nuclear power. Post war international institution presence, like the United Nations, is another determinant to stopping any major war from occurring. Lastly, there is a difference in the gap of power in the leading powers today which again has a great role to play.

Since WWI, when United States emerged as a super power, the country has gone through decline. purchasing power parity has shown that China is to become the biggest economy of the World. There are indications that U.S power will remain resilient for decades to come buoyed by factors such as the energy revolution which has far reaching consequences.

Overall, while another major war can not be ruled out, the prospect of this for the foreseeable future is not as high as it was 100 years ago.

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Economy, USA

How a US decision to allow oil exports could change the world’s energy balance

America has allowed its oil companies to export oil as announced in private letters to oil companies. This will, for sure, cause a stir in the global oil markets and lead to lower prices. Global oil prices previously soared due to the fall in the supply of oil- stoppage of oil exports by Libya, and broad turbulence in Nigeria. About 3.5 million barrels, out of the total 90 million barrels of oil consumed daily, were taken off the market. The US decision to allow the export of condensate (an extremely light oil) by two Texas companies, could have a dramatic impact if the Commerce Department provides a broader definition of what is condensate for export purposes. The type of crude oil being produced in US is too light for American refineries to process. If all of this light oil is exported, it would surpass the exports of Iraq seriously undermining oil prices. 

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FED, USA

Four Dimensions of the FOMC Meeting

The FOMC meeting is the week’s highlight even though policy outcome seems a foregone conclusion. It will continue with the tapering course that Bernanke put on the Fed on before he left. However, there are more moving parts than usual, and it is worth reviewing.
Essentially, there are four elements of the FOMC meeting: composition, statement, forecasts and press conference.
  • Composition
  • Statement
  • Forecasts
  • Press Conference

http://www.marctomarket.com/2014/06/four-dimensions-of-fomc-meeting.html

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NoTrading, USA

Wolf of Wallstreet is paying back everyone this year.

Jordan Belfort, whose memoir “The Wolf of Wall Street” was turned into a film by Martin Scorsese, expects to earn more this year than he made at his peak as a stockbroker, allowing him to repay the victims of his fraud.

“I’ll make this year more than I ever made in my best year as a broker,” Belfort told a conference in Dubai today. “My goal is to make north of $100 million so I am paying back everyone this year.”

Belfort, a motivational speaker, will use his earnings from a 45-city speaking tour in the U.S. to repay about $50 million to investors. That was his share of the fine, he said.

U.S. stockbrokerBelfort spent 22 months in jail for money laundering and securities fraud in the 1990s after his Long Island-based Stratton Oakmont Inc. defrauded investors out of more than $200 million. That story was retold last year in a blockbuster film starring Leonardo DiCaprio.

http://www.bloomberg.com/

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