31st July Weekender - lousy GDP, waiting for debt deal

Summary: Developed world-macro situation looks bleak. GDP revisions show that the previous stimulation has been undersized and partly explains the weak recovery. Further action from the Fed is possible, especially in case of new signs of economic weakness.

Views: Stocks: Still bearish on stocks: historically heavy insider selling and margin debt, historically low show of earnings guidance from corporations, historically high portion of corporate earnings vs. GDP, August is historically a weak month, technically a narrow trading range that looks and feels like a downside break is more probable.

Short-term bull factors include beginning of month-effect and possible happy reaction to the imminent debt ceiling deal. Hire me. Should global macro data worsen further, markets might start expecting QE3, so paradoxically the worst news will be the best news.

EURUSD – my gut feeling is that the current range trading since last April is about to end and a breakout is going to happen in the coming weeks. As the pair is currently near the top of the range, I would favor shorting euros near 1.45, with stop around 1.46, targeting around 1.4100 and, long-term-, possibly an eventual breakout even lower. I expect more future strength from safe havens like JPY and CHF, but believe they will take a breather next week. However, in case of central bank interventions in either currency, opportunistic JPY or CHF longs should be taken. Study previous interventions to get the game plan right.

Plans: I’m thinking about putting some of my own analysis here. 1) FX return factors, 2) hedge fund style indices’ price mean reversion and 3) crisis indicators and early warning systems are some recent stuff I've been working on. I am not happy to share stuff that I put value upon, but hey, hire me!

EURO CRISIS

30-page report covering Greece’s economy, Apple, debt ceiling etc. Recommended.

(pdf) Things that make you go hmmmm… - The Trader

“step-out clause in this scheme that allows any guarantor to withdraw, if market rates on their bonds rise above rates charged to Greece.” Spain and Italy?

Turn on, tune in. Step out, bail out. Blow up – alphaville / FT

As IMF and eurogovs have already committed to PIIGS, it is difficult to force PIIGS bond holders for a large enough restructuring. Also, bond owners now are more heterogeneous than in past crises.

Rescuing sovereigns: Why it was easier then – The Economist

Spain Faces Moody’s Downgrade Risk on Regions Budget Concern – BB

Toothless CDS blamed for failing to stop sovereign contagion – Reuters

“It seems preferable either not to back a debt restructuring at all, resulting in a probable default by Greece, or alternatively, to explicitly back a more credible debt restructuring proposal, which would lead to much lower post-exchange discount rates, and thus to much lower bailout costs.”

Greece’s 2nd bailout: Debt restructuring with no debt reduction? – Cabral via voxeu.org

http://www.voxeu.org/index.php?q=node/6818

FINANCIAL CRISIS

Deal or No Deal? ABC Says Tentative Deal to Raise Debt Ceiling Reached; White House Aid Denies Report; Does it Matter? – Mish’s Global Economic Trend Analysis

Money getting tighter in U.S., which is the exact opposite of what is needed

Contingency planning in six charts – alphaville / FT

Krugman wonders why people are still listening to Greenspan and why he still wants to speak.

The Malevolent Ex-Maestro – Krugman / NYT

How insurance improves living standards – Felix Salmon column Reuters

Mortgage industry fights new rules that might force banks to use common sense and underwriters to hold a min. 5% of risky underwritings. Key spokesperson: David Stevens, the president of the Mortgage Bankers Association, still last March the federal housing commissioner at the Department of Housing and Urban Development. A true case of the revolving door policy…

Some Bankers Never Learn - NYT

Citigroup’s notes: debt ceiling impasse is a vaudeville compared to the tragedy that could await

Buiter on the 1% chance the US gets it right – alphaville / FT

An Economy at Stall Speed, Is There a Recession in Our Future?, What I Told the Senators, Escalating Eurozone Interbank Liquidity Crisis: Dollar-Euro Impact?, Time for Friends, Fish, and Wine

An Economy at Stall Speed – John Mauldin via The Big Picture

As the duration of a lot of public debt is low, it is hard to inflate it away. Also roll overs are a constant pain. A lot of this relates to Europe’s situation as well – and soon other parts of the world.

America's debt: Repress, then inflate – The Economist

Tri-party repo market still vulnerable and one of the biggest possible origins of future systemic risk. Lots of quotes from Financial Stability Oversight Council’s reports. I’ve previously linked to some FSOC-papers.

JPM and BoNY exposed during debt-ceiling crisis – RepoWatch

Downward revisions to past and recent U.S. GDP growth estimates were bad, but old news. The recession was deeper than previously thought and the stimulation of the economy was smaller compared to the true output gap. First link a good roundup of views from several sites. Then John Mauldin’s letter that also discusses other things. Other GDP-related articles follow.

US GDP: It was all worse – New$ to use

An Economy at Stall Speed – John Mauldin via The Big Picture

U.S. Economy: Growth Trails Forecasts as Consumers Retrench – BB

Visualizing GDP: The Consumer Is Key... and at the Razor's Edge – dshort.com

US GDP fails in the past, present and futures – alphaville FT

GDP Q2 Advance Estimate: A Stunning 1.3 Percent – dhort.com

Yet another discouraging GDP report – Econbrowser

The US GDP revisions aren't as bad as you think. They're much worse.  - WCI

Meanwhile, Back in the Economy – NYT

GDP Report: What It Tells Us About the Debt – The Curious Capitalist / Time

Disastrous GDP numbers make double dip scare real – Credit Writedowns

America's economy: Distress signal – The Economist

Economic Indicators: 2011 Q2 GDP and Annual Revisions – U.S. Department of Commerce

G.D.P. Shocker: U.S. on Verge of Double-Dip Recession – The New Yorker

Friday’s GDP figures-How can any of the current data be used to create meaningful Federal monetary or fiscal decisions? – The Trader

“Not that much extra, mostly necessities, especially given the crisis”

The Truth About Federal Spending – Krugman / NYT

“The poor stay poor and the rich stay rich. That’s how it goes, everybody knows.”

Corporate profits’ share of pie most in 60 years – MarketWatch

BOE’s Haldane takes a stand against high frequency trading

Time to take stock – Macro Business Superblog

EMERGING

Week ahead: August 1- August 5 – beyondbrics FT

OPERATORS:

Speculation that S&P’s sudden pre-emptive worry is caused by SEC and Dodd-Frank to look into credit agencies’ role in the mortgage crisis

Is Standard and Poor’s Manipulating US Debt Rating to Escape Liability for the Mortgage Crisis? – naked capitalism

Ex-SAC Manager Gets 2½-Year Jail Term in Insider Case – Dealbook / NYT

HF leverage decreased prior to crisis, while investment banks’ leverage increased.

Why Hedge Funds Are an Unlikely Large Source of Systemic Risk – Columbia Business School

“By diversifying its risks, a bank lowers its own probability of failure. However, if many banks diversify their risks in similar ways, then the probability of multiple failures can increase.”

The Regulator’s Dilemma - Alea

Soros Shows How Hard It Is For Hedge Fund Managers To Retire – Institutional Investor

OTHER:

Tax Burdens Around the World – Infectious Greed

Insiders selling at unusually fast pace – Market Watch

Full GS weekly U.S. kickstart

Goldman Weekly Chartology: "Investors In Full Risk Off Mode – Zero Hedge

DIVERSION

Spain’s default in 1575. Fascinating!

Default More Than 400 Years Ago Leaves Scars: Christophe Chamley – BB

Web site saying Yes or No, with a link to daily Treasury statements. Currently says ‘no’

Are we broke yet?

Depression in Command: In times of crisis, mentally ill leaders can see what others don't  – WSJ

(PDF) The Dark Side of Optimism – The Conference Board of Review

Visualizing the Expansion of the Universe: The Most Accurate Measurement Yet – Brain Pickings

29th JULY

Summary: The two first euro crisis links are really worth the time. I will take a break for couple of days from these regular updates, have a great weekend. I know there are some regular followers, and it would be nice to get some feedback on what you like and what you would like to see here. Send a mail or leave an anon-comment.

EURO CRISIS

System relies on moral hazard, high integration leads to contagion, lack of governance. Authors see three scenarios: all-it-takes, end of moral hazard or limbo, leading to disorderly end game.

Europe on the Brink – Peterson Institute for International Economics

ex-chief economist from IMF: EU just muddling through, not solving anything.

Which Is in Worse Shape, U.S. or Europe? - NYT

and Krugman comments the above

The Halt and the Lame - NYT

Six reasons Europe's debt crisis isn't over – Time

Greece’s new bail-out helps, but should have gone further – The Economist

Merkel can probably push through the latest bailout in parliament, but the inevitable follow-ups are going to be hard sells.

Subscription required: Germany and the euro: Angela the dragon non-slayer – The Economist

Spain Placed on Downgrade Review by Moody’s – BB

Moody’s puts Spain on review for downgrade – alphaville FT

Should the Greek bonds be impaired on balance sheets or not?

Greece as a test for auditors – alphaville / FT

Large part of Germany’s boom is because of demand from the periphery. Nasty feedback cycle that has now collapsed.

A light in the storm – the German economic boom – Bond Vigilantes

Greek Bondholders May Shun Rescue as Potential Losses Top 21%: Euro Credit – BB

FINANCIAL CRISIS

Roundup of headlines from NYT, WSJ, CNBC

Debt Ceiling Charade impacting Short-Term Credit Markets – Calculated Risk

Rich world governments can’t stop stimulating but can’t add to debt either. Either option could lead to nasty negative feedback.

Running out of options – The Economist

“America and Europe are flailing because their leaders are failing. They seem to be too small for the tasks at hand, too petty, and too myopic.”

Policy failure on a massive scale – The Economist

The Outlook for the Economy and Monetary Policy – S.F. Fed

Fed blog article highlights the U.S.’s GDP diff to real potential GDP and suggests full recovery will take a long time.

Are We There Yet? – Economist’s View

Once Unthinkable, Breakup of Big Banks Now Seems Feasible – Dealbook / NYT

EMERGING

China Regulator Said to Tell Banks Provisions for Bad Loans Are Inadequate – BB

New Challenges for Argentina’s Monetary Policy - EconoMonitor

DIVERSION

The Nine Stupid Things Investors Do, According to the Library of Congress – Wealthfront Blog

The road to investment losses… – Economic Musings

Experimental markets, elusive equilibrium/steady state and the connection to behavioral finance

Perpetual Novelty, Santa Fe Style – The Psy-Fi Blog

28th July LATE

EURO CRISIS

Taboos still left: Eurobonds and reintroduction of national currencies

Europe’s Last Taboos – Project Syndicate

“..markets seem to be seeing is disaster on the periphery and the Japanification of the core. And I can’t say they’re wrong.”

Eurofail – Krugman / NYT

Another European Market Implosion On Weak Italy Auctions, Tremonti Resignation Rumors, Deteriorating Economic Data And Earnings Misses – Zero Hedge

Italy Bonds Smacked in Selloff, Yields Now Approach Spain; Vote of "No Confidence" on Debt Plan – Mish’s Global Economic Trend Analysis

Nouriel Roubini’s good, concise column: “...quite generous to banks, and does not provide enough enhanced debt sustainability to Greece.”

Greece Financing Offer: I Am Not Going to Say I Told You So, But… – EconoMonitor

Long and  somewhat technical piece that is of interest to only headstrong FI people trying to understand Greek bond swap.

A Greek bond swap oddity – alphaville / FT

FINANCIAL CRISIS

All That Matters: Today's DC Agenda – Zero Hedge

Highlights Nomura’s piece on what has happened to sov bonds after the AAA’s gets downgraded: yields fall (But is U.S. different?)

Chart of the Evening – Stone Street Advisors

What the final deal is likely to look like – Washington Post

Chinese credit rating agency says will cut US rating in any case early next week

Dagong Says Will Cut US Rating As Early As Monday – Zero Hedge

Long story, briefly: if they can’t solve this when it is peanuts, how can they solve the debt/fiscal mess when in a decade or two it has become serious?

Why the Debt Crisis Is Even Worse Than You Think – Businessweek

PIMCO’s chief executive and co-chief investment officer

After the debt-ceiling standoff is resolved – Washington Post

 

Financial Stability Oversight Council’s 2011 Annual Report actually makes good points (warning about ETF’s, HFT, structured notes, collateralized commercial paper, repo market). I think I’ll read this.

A year in financial instability – alphaville / FT

OTHER

High level of margin debt, just like during previous market tops. I know, I posted the same chart yesterday. But you didn’t check that, did you?

2007 deja Vú? – the trader

Implied volatilities are bearish?

IV Skew Updated - MacroStory

HSBC May Cut More than 10,000 Jobs – Advanced Trading

EMERGING / COMMODITIES

India’s former finance/foreign/defense minister says nothing interesting but admits, as the headline says, that the road currently traveled will not accommodate future growth     

Asia’s BRICs Hit the Wall – Project Syndicate

Highlights from Citi’s piece point to Central and Eastern European countries being at most risk. How about all those cheap CHF mortgages for households?

Emerging Europe and eurozonitis – beyondbrics / FT

“Emerging markets are almost entirely the source of this increased demand, with China accounting for 41 percent of demand growth over that time period, the IEA forecast says”

The Freight Train That is Chinese Oil Demand …. – Pragmatic Capitalism

July 28th EARLY

Notice the search box in the upper right corner on this page. It opens up a selectable tab, which allows you to search all the pages linked from here. Cool, eh?

Summary: yields up, stocks tumble, banks get hit by bad news from the past and the future. Traders postponing holidays to watch the U.S. and probably after that to watch the euro show. Long time to Christmas.

View: Surprised to see that Fed agrees with my previous view on housing, and MS agrees with my yesterday’s private chat with a Head of X on the current ignorance of household debt over the more pressing sovereign trouble. I also don’t like the rising correlations of S&P 500 constituents to the index and am bearish for the next months. Hire me.

EURO CRISIS

Charts of household and non-financial corporation debt levels in euro area countries. Even Germany is deleveraging, but Finnish household are still acting like it’s 1999.

Credit growth in the euro area - seriously, where is it? – newsneconomics.com

Greek bail-out was a one-off, says German finance minister Wolfgang Schaeuble – The Telegraph

Hoi polloi are not happy with 40% youth unemployment. I wish lots of luck with implementing any kind of austerity programs.

Spanish Protesters are back – The Trader

Probably banks will have to recognize large balance sheet impairments on the Greek bond holdings. Includes Citi’s comments and a graph on who holds how much and which maturity.

Ready, set, impair those Greek bonds! – alphaville / FT

This should probably be put in ‘Diversion’ J

Spanish Bank Puts Cristiano Ronaldo Up As Collateral For ECB Loans – Business Insider

FINANCIAL CRISIS

Spread Between July 28 And August 4 Bills Hits 12 Bps, Widest Ever On Default Risk – Zero Hedge

Includes links to Fed and BIS papers on topic + a Fed presentation. Good read for people not familiar with shadow banking. I guess that makes it everybody.

Nomura: US Downgrade May Cause Repo Market Liquidity Freeze – Zero Hedge

MS’s report highlights household leverage

Around the world, in leverage – alphaville / FT

New paper surprisingly agrees with my yesterday’s gut feeling call of when housing turns around

SF Fed: Residential Construction Won't Fully Recover Until 2014 – Economist’s View

ISDA’s FAQ on what, when and who says a credit default has happened (hint from aleablog.com)

Greek Sovereign Debt Q&A (Update) – ISDA

CDS on US Sovereign Debt Q&A – ISDA

CAD strengthening, CAD-US yield spread falling: this could continue for a while

Hide in Canada? – Humble Student of The Markets

OPERATORS

Credit Suisse Q2 net down 52%, axing jobs, Statement and Report, via FT

Credit Suisse Plans to Cut About 2,000 Jobs – BB

UBS Sued by U.S. Over $4.5 Billion in Mortgage Securities – BB

EMERGING / COMMODITIES

China is starting to export inflation and this comes at an inconvenient time for the global macro cycles.

Guest post: The end of ‘Made in China’? – beyondbrics / FT

Can mathematics explain China’s soaring wage bill? – beyondbrics / FT

U.S. Sovereign Credit Rating Cut Would Threaten Trade in Asia, ADB Says – BB

China should move from investment-led model to consumption driven model.

China’s crumbling infrastructure model - MacroBusiness

Yes says the post.

Guest Post: Should I Buy Gold At Its All-Time High? – Zero Hedge

OTHER:

Correlation of S&P 500 constituents to the index are rising, again just like in 2^nd half 2008, 2^nd half 2010. I don’t like the stock market right now.

More S&P 500 correlation – Portfolio Probe

Illiquid assets exist to illustrate high yields to non-knowledgeable and to pay large commissions to providers.

The Costs of Illiquidity — II – The Aleph Blog

The Evolution of Overconfidence – Infectious Greed

July 27th LATE

Summary: Debt ceiling show continues, Spain/Italy yields up and stocks down to pre-meet levels. U.S. macro disappoints again, big time.

View: When the U.S. situation is cleared, there is no excuse for the euro yield uptick. Then the markets will become really worried. Hire me. I’m still bearish on Brazil.

How come the IMF already warns that they will lower their participation the next time PIIGS come begging, as our beloved eurocrats are publicly fully convinced that everything is now ok? Tons of articles coming out on the euro situation and now everybody and their grandmothers know that euro is a goner.

I think we are reaching a tipping point – anyone long PIIGS risk cannot later explain that they had “sound positions and the unexpected just happened”. Participants will start dumping their holdings right now, since there is no excuse anymore to be caught holding them.

Joke of the day: “With the IMF and the ECB assuming that Greece will have a sustainable primary surplus from 2012, Greece is likely to “master” its debt after implementing economic policy changes”  – German Finance Minister Wolfgang Schaeuble

EURO CRISIS

Holiday season in Europe at least leaves contradictory statements from eurocrats away from the picture. But sometimes

Les grandes vacances and the financial crisis – A Fistful of Euros

“Bankers and many journalists convey the impression that we face a choice between a full sovereign bailout and a catastrophic banking crisis.”

Europe's €200 billion reverse wealth tax explained – Hau via voxeu.org

Greece Will Default on Debt After EU Plan: S&P – BB

¨

…but in the same comm he told the joke of the day above, so take his opinion with a lot of salt.

Schaeuble Says European Union Must Prevent Uncontrolled Euro Member Exits - BB

Italian, Spanish Bonds Slump on Concern European Aid May Not Be Sufficient – BB

“EFSF is massively vulnerable to sovereign default correlation, as we all know, and the stresses are starting to become apparent even in the senior tranches.”

These aren’t the eurobonds you’re looking for – alphaville / FT

Eurozone debt crisis resurfaces as markets punish Italy and Spain for Merkel delay on bailout package – The Telegraph

Vote of No Confidence: Deutsche Bank Dumps 70% of Spain, Portugal, Ireland, Greece, Italy Debt – Mish’s Global Economic Trend Analysis

Cumber’s chief economist is polite and thinks at least eurocrats are admitting something, and going in the right direction – but very vaguely doubts if that will be enough.

Stress in the Eurozone – A Follow-Up – The Big Picture

Ecuador went through a debt buyback in 2008. Well written, with good points: “Only the probability of a default – and the goal of avoiding even deeper haircuts – can induce investors to liquidate their positions at a discount. But the buyback can succeed only if the market perceives it as the last chance before a unilateral debt restructuring.”

 A Greek Catch-22 – Yeyati / Project Syndicate

Interesting – IMF announces that next time they will lower their participation.

IMF Seeks to Limit Greece Exposure - WSJ

FINANCIAL CRISIS

In 1979 Treasury missed bill payments because of the debt ceiling show. Dollar dropped only 0.6%.

What Happened The Last Time The USA Missed a Bill Payment – Pragmatic Capitalism

End futile wars, stop bailouts, prosecute the guilty and repossess their loot, slash pensions, end Bush tax cuts.

There’s Only One Way to Avoid a Downgrade to U.S. Credit – The Big Picture

ex-Assistant Secretary of Treasury is not saving words. Basically he lists the same points as Big Picture above.

An Economy Destroyed – Paul Roberts via CounterPunch

“Read the writeup, ignore the rating.”

Downgrade Jitters – The Aleph Blog

Before Dodd-Frank CRA’s were exempt from selective disclosure regulations. Now they are not exempted, but are still doing it.

Has S&P Become Our Rupert Murdoch? – Naked Capitalism

"A Perfect Case Study of Flawed Incentives" – Economist’s View

EMERGING

Former member of the monetary policy committee of the Peoples' Bank of China talks about the inflation situation.

China’s Inflation Muddle – Yongding / Project Syndicate

Inflation Drives Brazil Stocks to Bear Market – BB

Roach and Roubini: Chinese Have Lost Confidence in America’s ‘Dysfunctional Economic Stewardship’ – EconoMonitor

China’s SMEs: hurting – beyondbrics / FT

China’s plan is to rely on consumers in the future.

Read China’s Lips – Roach / Project Syndicate

Has links and discussion on the household debt situation.

Brazil Charges 1% Tax on Bets Against US Dollar, Threatens 25% Tax; Brazilian Real Overvalued, FDI Will Reverse – Mish’s Global Economic Trend Analysis

OPERATORS

Hedge funds closing to escape Dodd-Frank, family office is the new hedge fund

SAC's Steve Cohen To Close Flagship Fund – Institutional Investor

George Soros and the Feudal Future of Hedge Funds - CNBC

Hedge Fund Regulation Is Backfiring: SAC Capital Edition - CNBC

Soros Fund All in the Family - WSJ

Soros Investment Chief’s Departure Comes Amid Poor Performance – WSJ Blogs

Life After ‘Other People’s Money’ – WSJ Blogs

Hedge Fund Bigs Close Shop Ahead of New Regulation – Advanced Trading

OTHER

Ritholtz’s presentation on investing, market cycles and price drivers has few entertaining slides

(scribd) Agora Financial Investment Symposium Presentation – The Big Picture

When 10% of population holds an unshakeable belief, majority will adopt it.

Minority Rules: Scientists Discover Tipping Point for the Spread of Ideas - ScienceBlog

July 27th EARLY

Summary: eurosclerosis, debt ceiling overhang continue, lots of regulatory news. Artemis vol report today's most interesting link.

EURO CRISIS

Shows PIIGS exposure breakdown by country and quarterly evolution

Banking Sector Exposure to Euro Peripherals – The Trader

Larry Summers interview

'It Was Always Understood the European System Would Evolve' – Der Spiegel

Italian, Spanish Yield Spreads to Bunds Widen After European Debt Auctions – BB

Sovereign, Corporate Credit-Default Swap Indexes Fall in Europe – BB

Euro Zone Rescue Effect Appears to Peter Out – NYT

FINANCIAL CRISIS

Live Blog: The U.S. Debt Battle – WSJ

A Reading List for Following the Debt Ceiling Drama - ProPublica

(pdf) S&P/Case-Shiller Home Price Indices Press Release – S&P

Royal Bank of Canada’s report is pessimistic

Demographics and destiny, US housing edition – Alphaville FT

Now that there is no risk-free anymore, ideas for purchasing power-preservation

Where to Hide? – The Aleph Blog

US CDS curve inverts for first time ever [updated] – Alphaville FT

Leonhardt’s ‘farewell’ column takes a step back and looks what we know and don’t know about the economy. Bottom line is that there is little consensus in economics how to solve the biggest problems and virtually no political will.

Lessons From the Malaise - NYT

OPERATORS

Did Rating Agencies Give Preference to Big Banks? – Freakonomics

“a system to monitor the behavior of high- frequency trading firms and hedge funds under new reporting standards for the most active market participants”

SEC Will Track Biggest Traders’ Activity - BB

So now even SEC is a sad panda.

S.E.C. Removes Credit Ratings From Regulations – Dealbook / WSJ

Basel: “sovereign risk should be included in incremental risk capital charge”

Questions not to ask – sovereign risk edition – Deus Ex Macchiato

10 Things Every Trader Needs to Know About the Changing Regulatory Landscape – Advanced Trading

EMERGING & COMMODITIES

What to make of the Turkish government’s statements? – EconoMonitor

“Only solution is higher rates”

The lira and Central Bank of Turkey’s options - EconoMonitor

Foreign investment in Brazil market dives 70% in first half of 2011, India’s FDI inflows falling

London headlines – beyondbrics FT

Brazil’s Bovespa: backpacker’s choice? – beyondbrics FT

Morgan Stanley's Q3 Outlook On Gold, Silver, Rare Earths And Every Other Metal Under The Sun – Zero Hedge

Charting David Rosenberg's Thesis: "No Gold Bubble Until $3,000" – Zero Hedge

OTHER

Includes a link to Artemis Vol Report

On Broken vol, skew and implications on the Markets – The Trader

VG short blog on the % of companies that provide no earnings guidance. When the crisis began, the % increased, and during the last 12m bull the % decreased. Now, in Q2, the number suddenly rose to a higher level than ever – this could be bad for stocks and a very interesting indicator for other uses.

No Guidance Is Better Than Bad Guidance – Bespoke Investment Group

One chart: Comparison of 2010 asset allocations of pension funds in different countries. Australia and US equity-heavy, while Koreans have almost zero eq risk.

Hey, It’s Like Selling Stocks to Koreans – Infectious Greed

“The dirty secret of the retail asset management business at brokerage firms is that their profits depend on treating you badly.”

Quelle Surprise! Banks Don’t Want to be in IRA Business if They Can’t Treat Customers as Stuffees – Naked Capitalism

There’s zero accountability in economics – Dean Baker opinion / Reuters

Economic specialization is a feature, not a bug – Larry Summers opinion / Reuters

DIVERSION

Douglas ‘Dilbert’ Adams

How to Tax the Rich - WSJ

July 26th LATE

View: Not much will happen in broad U.S. economy before housing picks up. That is why everybody is so anxious about the housing starts, building permits, new home sales, blah blah. Every tick pushes people to argue that house prices have finally bottomed/still falling/stabilized/politicians’ indecision has made them more volatile. My gut feeling for a major turn in housing is 3-5 years. Just because at that time, everybody in the market will know that housing sector is a dead horse and parents are teaching their kids never to get large mortgages.

$1B outside money, almost $24b of Soros family money.

Soros to End Hedge-Fund Career, Return Money – BB

SAC Up 9.2% YTD, Paulson Heart Boehner, And Other Hedge Fund Observations – Zero Hedge

Nice looking charts from 1995 to now showing how large margin debt and bull peaks go hand-in-hand.

NYSE Margin Debt and the S&P 500 – dshort.com

“ISDA is rapidly deteriorating to rating agency status when it comes to credibility”

ISDA, Which Refuses To Declare Greece In Default, Has Given The US A 3 Day Grace Period Before A CDS Trigger – Zero Hedge

Societe Generale Undermined by Greek Debt Crisis After Kerviel - BB

Long and detailed look at the earnings cycle and where we are now. Bearish.

Converging On The Horizon – Crestmont Research via The Big Picture

Nice charts, quick read

How does the growth of U.S. health-care costs compare internationally? – Washington Post

Low yields push people to dubious investments.

The Law of Unintended Consequences, Part 657 – The Reformed Broker

DIVERSION

Recommended, some very pretty and effective tricks

Visualize This: How to Tell Stories with Data – Brain Pickings

Practicioners vs. academics connection has been lost, but will it be found?

A great divide holds back the relevance of economists – Reuters