Tuesday, August 02, 2011

Global Economy Links for Tuesday

1. From Serbia to Cape Cod.  In Provincetown, Massachusetts, foreign workers are saving the tourism industry. 

2. From Aberdeen, Washington to China.  The 100-year-old Port of Grays Harbor in Washington state is bouncing back, thanks to China's surging demand for U.S. products. (HT: Nick Schulz)


At 8/02/2011 10:36 AM, Blogger morganovich said...

here's another good global datapoint:

"JPM Global Manufacturing PMI Fell - The JPMorgan global manufacturing PMI tumbled 1.7 points in July to a level consistent with a stall in economic activity within the industrial sector. The index has slumped to its lowest level since the start of the global recovery. Each of the headline components contributed to the month’s decline. Most notably, the output component slid further to a two-year low of 51.0, a level that suggests global industrial output was effectively unchanged in the three months through July."

seems the US is not alone in its PMI woes.

At 8/02/2011 10:44 AM, Blogger Clayton in Mississippi said...

Please fix -- both links point to the same article (Aberdeen Washington), neither points to the article re: Provincetown

At 8/02/2011 12:21 PM, Blogger Benjamin Cole said...

News Flash:

For the first time in history, the Daily Treasury Real Long-Term rate has fallen below one percent.

See here: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=reallongtermrateYear&year=2011

Investors say inflation is dead.

At 8/02/2011 12:55 PM, Blogger morganovich said...

bubble bunny-

you've made it manifestly clear that you have no idea what finincial terms or market actions mean.

no need to keep driving the point home.

we get it.

using a 3.6% CPI as a deflator to claim that inflation is dead is dumb even for you.

i feel like i have been saying that a lot lately.

did you get kicked in the head by a horse or something? you seem to be losing what little brainpower you had.

At 8/02/2011 1:03 PM, Blogger Benjamin Cole said...


Okay, climb down from your flying saucer and you tell me.

When investors will lend for 5 years at a nominal 1.28 percent (what US 5-year notes were selling for yesterday), are they anticipating inflation?

What rate of inflation would you say they are anticipating?

Do you find it odd that large institutional investors will lend at money for five years at 1.28 percent?

At 8/02/2011 1:23 PM, Blogger morganovich said...


first off, your first comment was about real rates.

real rates could be 1% with 99% inflation and 100% rates.

so that was provably, irretrievably stupid, even more so than when you try to use unit labor costs calculated with cpi to prove that inflation is low.

it's just another mathematical tautology.

now you are moving the goalposts.

however, you are still wrong and just demonstrating you lack of understanding of how markets work.

the fed will lend to banks at historically low rates.

this creates what is called arbitrage. banks can also use leverage to get more out of this arbitrage.

thus, 10:1 gearing on a 5 year makes the return 12%. if you can borrow at 25bp, that's a helluva deal.

why do you think bank earnings have been so good?

it's a huge giveaway by the fed.

12% return can cover an awful lot of inflation.

banks are the buyers, not individuals. anyone buying unlevered us govvies right now is an idiot. there's a reason pimco won't own them.

unlevered real interest rates are negative all the way out to the 20 year.

you are also ignoring the fact that not all US bonds are bought with return in mind. that's not what china is doing. they are manipulating a currency and trying to sterilize inflows to keep inflation out of the double digits.

lots of banks had to buy more as tier 1 recs went up.

others are just looking for a liquid safe haven where they won't get too badly hurt as they wait for the euro issue to resolve.

where else are they going to hide?

not china. illiquid and unconvertible.

not brazil. illiquid and overvalued.

where do you park a trillion dollars of capital flight other than the US?

this has all been explained to your repeatedly.

it's not a UFO. it's called MATH. perhaps your tribe will invent it one day.

until then, i'd stay away from financial markets. you're a lamb looking to get slaughtered.

At 8/02/2011 1:25 PM, Blogger morganovich said...

"Do you find it odd that large institutional investors will lend at money for five years at 1.28 percent?"

again, you are missing the key issue: leverage.

no one but money market funds are lending at 1.28% unlevered.

unlike you, i actually participate in these markets and can speak from first hand knowledge.

stop sniffing the varnish buddy, it's killing your brain cells.

At 8/02/2011 1:50 PM, Blogger Benjamin Cole said...

This comment has been removed by the author.

At 8/02/2011 1:52 PM, Blogger Benjamin Cole said...

Morgan Frank:

You participate in these markets?

You mean you have an Internet hook-ups on your Flying Saucer? Or that they have financial markets in the Alpha Centauri system also?

You are aware that China has cut back on buying US Treasuries?

BTW, on your way past Mars, can you pick up some moon-milk and dilithium crystals?

At 8/02/2011 2:47 PM, Blogger morganovich said...


wow. what an amazing lack of an answer.

is that because you cannot speak to the facts?

of course it is. i've actually started a cut and paste answer book for your repeated stupidity as answering the same dumb point over and over is tiresome.

you have nothing to add to a debate, just ad hominem and appeals to authority, the hiding places of the stupid and uniformed.

and yes, unlike you, i trade debt and know lots of other people who do. i don't know anyone interested in unlevered us govvies for any sort of financial reasons.

maybe you know dumber investors than i do.

china has cut back, but they rebuy all the time as existing issues expire. they are still huge buyers. they are just hiding it better and using fronts to do it. but, of course, someone as conversant in marklets as you claim to be must already know this...


they have been buying over 35% of auctions. if that's not heavy buying, i don't know what is.

this is called a FACT. those of us able to think use them to describe the world. you should try getting some before you open your mouth and make yourself look like a fool again.

so are lots of other big trade surplus countries.

on this planet, the dollar is the reserve currency. demand for our bonds is a function of international trade.

i have no idea where you learned your finance (assuming you ever did), but you should get your money back.

no number of star trek references can mask just how ignorant you are.

At 8/02/2011 4:36 PM, Blogger Benjamin Cole said...

Beam me up, Morgan!


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