Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1349.1 | 8.5 | 0.63% |
| Eurostoxx Index | 2495.7 | 14.9 | 0.60% |
| Oil (WTI) | 100.32 | 1.6 | 1.67% |
| LIBOR | 0.5026 | -0.003 | -0.67% |
| US Dollar Index (DXY) | 78.775 | -0.229 | -0.29% |
| 10 Year Govt Bond Yield | 1.99% | 0.01% |
World markets are rallying on the positive Greek austerity vote over the weekend. European finance ministers will meet on Wednesday to approve the second bailout plan. Does this mean the crisis in Greece is over? Not really. Bondholders have to accept the proposed haircuts and if there are holdouts (and the holdout trade is a staple of distressed hedge funds), there will still be risk of default.
Heard on the Street has a good piece on corporate profit margins and what that means for the economy. Productivity has been falling, and that perversely can portend good things. After the financial collapse, companies dramatically cut their workforces and held off on capital spending unless it was absolutely necessary. As demand returned, companies squeezed as much output as they could from existing resources. They held off hiring and making investment in productivity-increasing capital. Stocks have reacted positively to growth in profit margins as revenues increased while costs stayed stagnant. This was reflected in the productivity numbers (which measure amount of output per input). Lately, productivity increases have been smaller and smaller, meaning that effect has largely been played out. This means if companies want to meet increased demand, they have to hire – their existing workforces are maxed out. Which bodes well for unemployment and wages. What does that mean for corporate profits and stocks? It means that the top line (revenues) will have to drive profit growth. Tepid economic growth will mean stagnant profits.
The SEC has launched an “informal inquiry” into the private equity industry. What a shock. It must be nice to have government agencies with subpoena power to conduct oppo research. (Couldn’t the NYT find a more menacing picture of Henry Kravis?)
No economic data today. I am very interested to see the minutes of the FOMC meeting on Wednesday.
Filed under: Economic data, Economy | Tagged: private equity, productivity |
All Things in Moderation 
Brent, I asked earlier this morning if anyone knows whether Greek-Americans are sending aid to Greece. You are the person who would most likely have picked up on this if it has been reported, so I am asking you in this abbreviated comment.
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Mark, I have no idea…
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Gotta run – will look in later. Unless SEC received a bunch of investor complaints or even one major investor complaint its investigation of private equity firms seems – uh – overreaching. Did someone like TIAA-CREF complain? Did a bunch of church and synagogue funds complain? Did the insurance industry or the UT Permanent Fund complain? I will withhold judgment until I know, but if no one complained, this sux.
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Not to be OT already but I saw this article from an Insty link. It doesn’t paint a pretty picture of Greg Sargent, it seems obvious now where Greg’s tremendous “scoop” about AquaBuddha came from.
This is the link to the article.
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By the way, what’s Greece’s demographic trend? Will there be more or less Greek population in the future to pay off these bonds?
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A little noticed auto bailout story for you we’ll call your tax dollars at work:
“GM May Build 7 Billion Yuan (1.1 billlion US) China Factory”
http://www.bloomberg.com/news/2012-02-10/gm-set-fo…
The approval aactually came through over the weeknd.
It’s certainly a relief that we bailed out the “American auto industry”. otherwise, those damn foreign automakers might be investing even MORE money in the US building new plants to make cars here!
“Audi Latest Automaker To Plan North American Assembly Plant”
http://autos.aol.com/article/audi-american-plant/
Americans are the most gullible people in the world. You have to at least promise a Muslim 72 virgins to get them to give up everything they have!
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Quotes from Troll’s DC story:
“The entire progressive blogosphere picked up our stuff,” says a Media Matters source, “from Daily Kos to Salon. Greg Sargent [of the Washington Post] will write anything you give him. He was the go-to guy to leak stuff.”
“If you can’t get it anywhere else, Greg Sargent’s always game,” agreed another source with firsthand knowledge.
Staffers at Media Matters “knew they could dump stuff to Ben Smith, they knew they could dump it at Plum Line [Greg Sargent’s Washington Post blog], so that’s where they sent it.”
We’ve pushed stories to Eugene Robinson and E.J. Dionne [at the Washington Post].
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Everyone who has an interest in the above sort of thing should read the book about Ahmed Chalabi “Arrows of the Night”.
It details exactly how he used people like Jim Hoagland of the WAPO as a conduit for stories about Iraq. In other words the exact same thing going on in the WAPO about Iran right now.
Fred Hiatt is a neocon’s best friend.
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Fred Hiatt ran an intriguing article this morning dividing liberals into “nostalgia” liberals who support old-school big government and “accountability” liberals he can con into supporting school vouchers. Any advice form Hiatt to liberals needs to be taken with as much salt has Karl Roves frequent suggestions to Obama to tack right.
http://www.washingtonpost.com/opinions/different-liberal-camps-divide-progressives/2012/02/10/gIQA8K8V9Q_story.html
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The Daily Caller hit piece on Media Matters (and I am no fan of that organization) is brutal on Sargent but quickly devolves into rumor mongering and innuendo. It would be far more convincing if it had tried to stay a little more high-minded.
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Banned, isn it more accurate to write that the WaPo serves the institution of government rather than some “evil neocon” boogeyman? Clinton didn’t hesitate to use troops when it suited him, as I recall, and the neocon boogeyman really didn’t exist until 2011/12.
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I think the worst thing you can call a journalist is a scribe. The DC basically said that Greg is no different than a court stenographer. And he didn’t comment? I’d sure have something to say.
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troll:
If by serving the government you mean assisting certain elements within the government and in foreign governments who are waging a campaign of disinformation against other elements within that govenrment who have more accurate and truthful information . . . then yes!
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I think virtually everybody on this board would be aware of this, but just on the off chance:
“New Rule Puts a Wrinkle in Figuring Taxes on Stock Sales”
http://www.cnbc.com/id/46367220
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No comment from Greg as yet. If we get one, I doubt it will be very illuminating.
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Banned,
Which foreign governments, do you think? This has the gulf oil kingdoms fingerprints all over it, no?
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Oh no, the current disinformation campaign over Iran is coming straight from Israel by way of the hard right wing. For instance they planted this bit of nonsense in teh Christian Scince Montior:
” Is Iran Trying to Develop a Missile That Could Reach America?”
http://www.cnbc.com/id/46250139
or this one:
“Iranian official lays out attack plan to destroy Israel in nine minutes”
http://freebeacon.com/iranian-official-lays-out-attack-plan-to-destroy-israel-in-9-minutes/
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I’m finding the gulf sheikdom’s lack of criticism of Israel ‘s perceived existential threat from an Iranian nuke and their apparant cooperation with Israel in allowing overflight telling. They are as scared of an Iranian nuke as the Israelis.
Do you think the Saudi ‘s feel threatened by a possible Iranian nuke?
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By a nuke? Maybe in there’s not in mine.
An Iranian nuke sent anywhere would give the Israelis an excuse to fire some of there’s and wipe out Iran. You know the old, we detected the launch preparation and didn’t have time to wait to see where it was going excuse.
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Banned,
I actually think the Israeli’s will use tactical nukes against Iran long before the “fueling missiles on launch pad” stage. There is no other way to stop their program do to their now hardened production fascilities.
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An Israeli attack on Iran is a win-win-win situation for them. Fortunately you can hedge that even in the options market.
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That Netanyahu keeps beating this drum in the face of the entire IDF command structure telling him it is suicidal indicates to me that this is just bluster, John.
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Besides Iranian civilians, what’s the downside to a coordinated Iraeli / gulf sheikdom attack ?
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The downside beyond civilian casualties is that Iran would engage the Kingdom in a long and costly war in which oil production and shipping will suffer enormously. Where did you get the idea that Saudi airspace is open to Israel?
Israel does not have the ability to get its subs into the Persian Gulf or the ability to refuel its planes without Saudi support, so it becomes a huge deal if the Saudis have opened their air space to Israel. Where did you read that? If it was a London Times article from last year, that has been debunked.
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The auto industry is global. GM sells an enormous number of cars and makes large profits in China. Likewise, for Hyundai and here. Employment in the U.S. is up since the bailouts. Stripped of the bailout comment, it sounded like a liberal, protectionist complaint.
Why do you think Ford strongly supported the bailouts? After all, as the last “American” auto manufacturer, they would have been positioned to take up a large amount of market share. The reason being that GM and Chrysler going down would have taken down their supply chain. Which would have dragged down Ford.
On the matter of taxes, yesterday’s Sunday Times (Glasgow edition) had an interesting set of articles. There were a few regarding executive pay that I skipped. There were some very interesting ones about how Google structures its finances so as to minimize tax payments to about 20% of profits. They cut the tax rate to 3% on UK taxes through use of an Irish subsidiary that doesn’t tax foreign earnings. Facebook is about to undertake similar actions. Note: this isn’t written with any axe to grind against these companies. It is an interesting look at how companies are handling taxation and food for thought in designing a tax system.
The article is, unfortunately, behind a pay wall. I got it by reading the dead tree edition.
Greetings from Glasgow!
BB
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Thanks for summarizing, FB. Enjoy the trip.
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FB:
Ford did NOT support the bailout. They settled for it because they got the same concessions from the UAW that the toher two did.
Also your comment about the supply chain is incorrect. Why didn’t any of the foreign auto makers worry about THEIR supply chain?
As for the global part, yes, we reward the “American auto makers” who invest in China, and ignore the “foreign auto makers” who invest in the US. Here’s a quick quiz. How many foreign companies have built US plants since the last US auto maker did so?
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mark:
Ok which way to bet?
For instance the chance that your house will suffer a catastrophic loss at anytime is miniscule. Yet, you spend $1000-2000 every year on hazard insurance.
Consider that the price of brent crude has essentially “burned down the house” three times in the last ten years, I would say it makes sense for any investor to spend at least as much on options aganst a big move in the price of brent crude as they do on fire insurance for their house.
The worst that could happen is that you lose $1500, which will be more than compensated elsewhere if crude doesn’t rise. The best that could happen is that one of your kids gets a free college tuition if the Israelis DO bomb. (and they will)
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Bet against an Israeli strike of any kind, although a cyberstrike might be possible. Nothing short of Israel using its nuke tipped IRBMs can do any lasting damage to Iran.
If you set the time frame as the year 2012, I will bet you a dinner on me in Austin or on you where you live.
Mark
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Mark,
Great question but I have absolutely no supporting evidence other than a gut feeling. In my opinion, the Saudi monarch fears the Iranians (and an Iranian nuke) as much as, and probably more than the collective Israeli psyche. It would therefore make sense for them to cooperate. When the Israeli’s attack, there’ll be no mystery about how they got there and back w/out overflight/landing refueling authority.
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OT but this proposed bill in Arizona is beyond stupid:
A. If a person who provides classroom instruction in a public school engages in speech or conduct that would violate the standards adopted by the federal communications commission concerning obscenity, indecency and profanity if that speech or conduct were broadcast on television or radio:…
The law doesn’t appear to be restricted to the time period when the person is providing classroom instruction and it extends to both speech and conduct. So to summarize, if you teach in a public school in Arizona you can never swear or have sex.
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mark:
You miss the point. They don’t HAVE to knock out the nuclear program. They only have to incite retaliation sufficient to draw the US in.
In the conversation before WWI between General Sir Henry Wilson and Marshall Foch about joint French and British interests, Wilson asked Foch: “What is the smallest British military force that would be of any practical assistance to you?” Foch replied: “A single British soldier – and we will see to it that he is killed.”
The Israelis will make sure that an American gets killed, somehow somewhere.
Take the money for the dinner, and buy options on brent crude. You will be able to afford to fly me roundtrip, and the best hotel room in Austin as well.
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OK, I’ll play along.
1] Why would the USA be drawn in beyond keeping the Straits open? Israel is sadly mistaken if it thinks a defensive strike against it would be met with the political will of this nation to go to combat in the Middle East again.
2] Suppose Israel draws the US in? To what end? What does it gain?
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Ash — I have a friend who works for an AZ senate committee. will have to make fun of her. I’ve been on her to get off the JV squad and move to DC.
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I’ve been on her to get off the JV squad and move to DC.
At first I was going to point out that writing a law that appears to prohibit teachers, among others, from having sex in the privacy of their own should not get you on the JV squad. Then I remembered how terrible our varsity team is and think that’s pretty accurate.
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speaking of WWI
http://www.telegraph.co.uk/news/worldnews/europe/germany/9074336/German-soldiers-preserved-in-World-War-I-shelter-discovered-after-nearly-100-years.html
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“Gas Approaching $4 a Gallon This Summer: Gulf CEO”
http://www.cnbc.com/id/46368004
You have been warned!
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you know banned, there’s a school of thought that thinks gas prices should be much higher.
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nova:
Should, could, would, it’s all the same to me (no offense). They will be. (sound of a dead horse being beaten)
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Usually gas prices peak in the late spring and decline, sometimes slowly, over the course of the rest of the year.
Here’s a good link.
Last year it was Libya causing the problem. Previously China’s gas subsidy’s, this year it’s the Israeli’s. Considering that gas prices rise and peak in the late spring, are we sure we want to go all in on the Israelis vs its inevitable yearly price cycle?
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mark:
Again, it’s not the strike but the retaliation that’s the problem. Iran has no contiguous border with Israel. It’s either a missile strike or the Straits.
It gets Obama out of office in November. Do they need more than that? Ok here’s more. Israel has started production of shale oil in which they believe that have a potential bonanza. Inflating the market price helps, not hurts them.
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Hye, I understand the reluctance to accept the premise. All we have to do is wait and see. By summer, i will be very right, or very wrong.
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Banned,
I’m still not seeing how Obama inhibits Israrli FP? What has he stopped them from doing? Also, it would be helpful for our shale oil production to shut down the Straights, why haven’t we?
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“Gas Approaching $4 a Gallon This Summer: Gulf CEO”
Meh. What’s the big deal with $4 gas? We’ve seen it before; people will complain and little else. At $5 we’d see behavioral changes.
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troll:
scratching my head over your last, sorry, maybe it’s me.
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Sorry banned, my bad. You have written that the Israeli government wants Obama out because it interferes with its foreign policy (the FB of my previous) but I wonder why they would risk that considering that, by your own admission ( the Israeli’s will strike Iran this year ) the Obama administration has done nothing to inhibit Israeli foreign policy, nor has the Administration even hinted at, for example, reducing US military aid to Israel. Why then would the Israeli’s want him out of office?
Also, if a motivator for Israel is revenue, as in shale oil production, is that in addition to fearing an attack from an Iranian nuke, independent of (because you don’t, for example think they actually fear an Iranian nuke [i just don’t know your position on this] their idea of self defense or in addition to their idea of self defense.
Finally, if shale oil production is a reason to attack Iran and therefore have them shut down the Straight, one would think we’d have done it on our own (shut down the straight ) to help our own shale oil production, no?
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George, Israel is five years away from major oil production and gets most of its natural gas from Egypt. We have to keep the Straits of Hormuz open not so much for North America, but ultimately for Europe. Of course, a lot of Saudi and Kuwaiti crude is refined on the Gulf coast, and shipped out as gasoline to Europe.
John thinks Netanyahu and Likud are so in bed with the neocons and fundamentalists that they will do anything to destabilize our elections. That would be a stupid bet on their part, but John thinks they are a bit crazy, I guess.
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troll:
They never wanted him in office in the first place. I have previoulsy posted links to stories of how the Israelis wanted to get the Bush administration ok to bomb Iran before Obama even took office, but he turned them down. They plainly view him as hostile, whether ot not we do.
If I implied that increased revenue was the key, the error is mine. What I really meant was that they had nothing to fear from rising prices due to their exploitation of their new finds. The higher the price of oil, the more economic it is to exploit their shale oil.
Finally, the US doesn’t have shale oil production only Canada does. We have supposed enormous amounts in colorado, but nothing has been done about it. Why would we shut down the straits and raise the price of oil we import?
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correction on my last about the shale oil I edited out the part that said “significant amounts” of shale oil production by mistake
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BTW, AAPL closed over $500 today. Zoiks! That’s ~$80 in the last couple of weeks.
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Troll crappily written last comment. I will do better tomorrow
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Banned,
Thanks for the thoughtful response. While you and I obviously disagree on whether the relationship between chief executive of the US and Israel ever has any reall effect on the nature of the alliance (I assert that it does not, much like the US/UK chief executive relationship has little to no bearing on the US/UK alliance), since you think it does, your premise is that the Israelis did not want to see an Obama win in 2008. Since Obama’s been in office however, in what way has he been able to inhibit Israel’s foreign policy that they want to see him, and are willing to intervene to the extent that they can, not be respected?
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Mark, are the fundamentalists referenced in your last post of the religious apocalypse kind looking for the establishment of a Jewish state as some sort of fufillment of religious doctrine that would bring about the end times? If so, what’s your opinion on the % of the population that subscribes to that belief?
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Maybe 600k fundamentalist Jews. So maybe 10% of Christians, too? I dunno. And I don’t know how many believe in the Apocalypse, etc.
But they have a huge impact on Israeli politics now. It is a center of activity for them, fundamentalist Jews and Christians alike.
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I’ve worked with Israeli, Egyptian and Saudi chemical officers (or their military’s equivalents) in the past, and none of them were crazy enough to be lobbing nukes around–and any of them still in would be General Officers by now.
But I know nothing about Netenyahu, other than what I read about him that scares the shit out of me.
But the area of the world that still makes me the most nervous is Pakistan/India–I worked with their officers, also, and they are crazy enough to throw nukes around given the excuse. I’m personally convinced that the only thing that has kept them out of a nuclear exchange (ironically) is us going into Afghanistan 11 years ago and distracting Pakistan.
Somebody bookmark this comment thread–I’ll either be proven to be more prescient than anybody since Nostradamus or wildly, wildly (and profoundly sadly) wrong.
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I bookmarked this comment thread as you asked, ‘Goose. That was the most important comment I ever read here, I think. I remember when the Pakistani general officers were publicly saying thinning the subcontinent’s population would be a good thing during the P-I crisis. I thought that was foolish bluster, but you make it sound like a belief held within their military.
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Mark–thanks
My Dad and I have been going back-and-forth about this for years (he’s a FP expert, due to his line of work. in Middle Eastern politics, I consider myself, due to my experience with the officers, a FP expert in India/Pakistan). I was prescient about Iraq, I hope I’m not now.
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Banned:
It is a falsehood that Ford did not support the bailout. You are entitled to your own opinions, but not your own facts. There is an 80% overlap of the supply chain of Ford with those of Chrysler and GM. If you want to have a discussion, please do me the favor of checking your facts before slamming me.
http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-on-bailouts/
As to your second assertion, it is irrelevant. If you care to assert that Hyundai, Toyota, Honda, or others share the same supply chains, then please supply the evidence. I will not be doing your opposition research.
As for the quick quiz, you have access to search engines. If you wish to build a case based upon evidence, then please look up said evidence yourself. I don’t do quizzes. I give them (well, I once did).
I suspect you didn’t pay attention to GM’s operations in the UK (Vauxhall) and continental Europe (Opel) in the past. Ford uses the same brand throughout, though they sell some variants (such as the Ka, a styled Fiesta). Once GM and Chrysler accepted government funds, then you’re all over them. How liberal.
BB
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Banned – I’ll leaven that a bit. It’s frustrating when I start with what I consider to be a demonstrated fact (Ford supported the bailout). Several, actually. The collapse of the supply chain would have damaged Ford deeply. CEO’s of the American subsidiaries of Toyota, Honda, Hyundai, etc. didn’t show up at those hearings. The CEO of Ford did. In the reading that I did around the time (the Post, WSJ, and the Economist mostly), it was entirely logical that since Ford shared the same supply chain, Ford stood to lose a lot.
Have you taken shots about Apple doing assembly by Foxconn? For that matter, would you take shots at any other US based company opening a manufacturing plant outside CONUS? Are GM and Chrysler forever forbidden from opening facilities outside the US? You’re taking shots at Obama, but I don’t think you realize the target that you’re hitting.
In recent posts, I think Quarterback has been a brilliant writer. [No, really, dude. We disagree intensely, but I have been impressed with the quality of the writing and agree with you on a few matters.] I am more than willing to concede differences on matters of opinion. Definitional matters are tricky, but it helps to clarify the discussion.
Ford’s CEO did support the bailout. With good reason. We can argue whether or not it was right. Romney is presently arguing that a structured bankruptcy was necessary. The only issue is the injection of govt. funds. Bitching about US owned automakers opening plants abroad plays into the hands of those who oppose any international operations of US-based companies.
BB
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