Bits & Pieces (Tuesday Night Open Mic)

Speaking of Calvin and Hobbes:

Other than that, I got nothing. Floor’s yours.  — KW

GOP Politicians vs GOP Voters

One of the continuing disconnects for me–since about 2004 or so–is what I hear from my Republican relatives and what I hear from the national Republican party and politicians. It turns out that I’m not alone, and while Steve Benen and Greg Sargent have both posted on this before, now I’m an administrator and can write my own post about it! Plus, while we don’t always agree, I do have respect for the opinions–and how they’ve been formed–of the folks on the other side of the aisle from me who post on this blog. So I’d like you to try to help me understand why the GOP seems to not be listening to their voters.

Here is the post from Benen on Political Animal this morning, and this is the pdf of the CNN/ORC poll he’s talking about. Four out of the five components of the American Jobs Act that were broken out and asked about individually were supported by Republicans (note: my wording, not exactly how it was asked in the poll. Favor cutting the payroll tax 58% – 40% opposed, favor providing federal money to states to hire teachers and first responders 63% – 36% opposed, favor increasing federal money for some infrastructure projects 54% – 46% opposed, and favor increasing taxes paid by millionaires 56% – 43% opposed). So why then, when Mitch McConnell or Eric Cantor or John Boehner, for example, talk about their opposition to these components do they always start their sentence with “the American people oppose X, Y and Z”? Do they not read the polls? Do they not believe the polls? Do they not care what their constituents think? Do they not know about crosstabs and think that it’s just generic Americans saying these things and not their fellow party members (and if they think that, shouldn’t they wonder about why they’re in the minority when it comes to those opinions)?

To quote Benen:

I mention this in part to show just how mainstream the American Jobs Act is, but also to note the chasm between Republican voters and Republican policymakers. With 63% of the GOP’s rank-and-file supporting, for example, aid to states to protect teachers’ and first responders’ jobs, it’s tempting to think at least some GOP lawmakers in Washington would support the idea. But in reality, that’s just not the case — literally zero Republicans on Capitol Hill are willing to even allow a vote on a popular jobs idea, during a jobs crisis, that even their own party’s voters strongly support.

Why? Is it Greg’s dreaded Beltway Feedback Loop? And why do they keep saying “the American people oppose” when that’s demonstrably not true?

Morning Report

Vital Statistics:

S&P Futures 1196.9 3 0.25%
Eurostoxx Index 2295 -20.890 -0.90%
Oil (WTI) 86.71 0.330 0.38%
US Dollar Index (DXY) 77.271 0.073 0.09%
10 Year Govt Bond Yield 2.15% -0.01%

The earnings parade continues. Bank of America (BAC) posted 3Q income of 56 cents a share, mainly on one-time items and accounting gains. They continue to deleverage – they shrunk the balance sheet $42B QOQ and have increased Tier 1 capital to 8.65%. I don’t see any mention of Durbin and the dreaded $5.00 debit card fee in the press releases. Maybe they will talk about it on the conference call. The stock is up a couple of percent pre-market.

Goldman reported a loss for the quarter. Writedowns on investments drove a lot of the losses. Sales and Trading revenues were lower as well as investment banking. Given that the stock market rolled over early in the quarter, these numbers should not have been a surprise. GS is up a buck pre-open.

Other companies reporting today: JNJ, KO, MRO, UNH, EMC, CROX

In economic data, the Producer Price Index came in higher than expected. China’s GDP came in slightly lower than estimates.

The WSJ has a story this morning talking about the lack of liquidity in the equity and bond markets. Decreased liquidity is a bear-market phenomenon, as lower prices beget lower activity. Hedge funds are sitting on their hands waiting for redemption notices at the end of the month. The overall decrease in sales and trading commissions means that banks aren’t going to take risk to facilitate customer orders for all but their best customers. Perhaps we are seeing the downside of the changes made in the late 90s – the balkanization of stock exchanges, the reduction of bid/ask spreads to pennies, and the decrease in commissions. In bull markets, people can move in and out of the market with ease, and these liquidity providers (market makers, the NYSE specialist) are viewed as unnecessary costs of trading. However, in a bear market people start to miss them. IMO, the flash crash would have been an unlikely phenomenon under the old regime. Is there any chance that we go back to the days of 1/16 bid – ask spreads, 3 cent commissions, and the NYSE specialist? Probably not. But it is becoming clearer that we gave up something in order to get penny spreads and sub-penny commissions.

What is the new battleground stock these days? Green Mountain Coffee Roasters. David Einhorn (who got it right about Lehman Brothers) was at the Value Investing Congress with a 110 page presentation ripping GMCR. This is one of those classic big battles in the markets – the value-driven hedge fund manager vs mutual fund managers starved for a growth story. We have seen this battle before in major flame-outs like Krispy Kreme and Enron. I don’t have the slides, but here is the WSJ story.

Further to yesterday’s energy discussion: WSJ It’s Official: ‘Age of Shale’ Has Arrived Money quote:

“You certainly have to record the discovery and the exploitation of resources from both oil and gas shales as one of the great wealth creators in American history,” said Ralph Eads, vice-chairman of investment bank Jefferies & Co., which has advised on more than $75 billion worth of shale deals over the last three years. “It looks to be the economic equivalent to any of the big technology innovations.”

Could be. And as more and more countries eschew coal and nuclear for electricity generation, the US could be shipping LNG all over the world and not only become energy independent, but a net energy exporter. Middle East geopolitics are going to change in a big way.

Would This Be Acceptable?

Miss Jane Doe recently decided her fat ass wouldn’t fit into the Whitehouse . . .

Or, Miss Jane Doe has thrust her impressively large bosoms into the campaign for governor . . .

From comes this observation:

“Last week, Christie (dramatically) took his big body out of the chase for the GOP presidential nomination.”

Okay, enough of that. The article is interesting, asserting that due to a new redistricting plan authored by state Democrats, the Legislature will be controlled by the Democrats in four weeks and Christie will be hobbled. Could be. If Christie has a number of losses in New Jersey over the next several years, that might not be the most auspicious background from which to start a 2016 presidential campaign.

The most exciting news in electric cars ever in the history of the world has been announced.

The guy who current owns the DeLorean Motor Company (and all the old inventory) has been servicing and rebuilding DeLorean’s for years. But now he might actually be making brand new DeLoreans (the photos are are of the prototype, which uses existing Delorean components for the body and interior, but the actual production cars will supposedly be all new fabrication).

More on the future awesomeness of the DMCEV. BTW, the batteries for the DMCEV are coming from a company called Flux Power. Could it be any more perfect?

Expect many updates from me as this story progresses. Suck it, Leaf.

The most. Exciting. And. Awesome. Electric. Car. Evah!

— KW

I think that somehow covers most of our feelings.


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