Wednesday, January 28, 2015

Why large corporations suck

This Marketwatch headline exemplifies what is wrong with large corporations, and generally most corporations:

Citrix Systems beats profit expectations, to cut 900 jobs
Citrix also said fourth-quarter earnings per share, excluding non-recurring items, rose to $1.10 from $1.04 a year ago, and exceeded the FactSet consensus analyst estimate of $1.03. Revenue rose 6% to $851 million, topping analyst forecasts of $844 million.
Well done, Citrix employees and contractors. You not only hit all revenue and EPS targets, you exceeded them! Thank you for your hard work. Now, we are going to fire 900 of you so we can buy back more stock and pay bigger bonuses to the CEO that already makes $11.5 million per year and 150 times as much as you. Don't forget to buy a government health care plan now that you don't have a job, or you will pay a tax penalty.

Sunday, January 18, 2015

California Unemployment Insurance Trust Fund


source: http://www.edd.ca.gov/about_edd/pdf/qsui-Fund_Balance.pdf

The trust fund continues to look not-so-trusty with a negative $8 billion balance. Before the Great Mortgage Fraud Recession, it maintained an average balance around +$2 billion. It was completely wiped out in 2009 and bottomed at negative $11 billion in 2011. The state has only been able to pay unemployment benefits with enormous loans (at interest) from the federal government. At the current polynomial recovery rate, it will become solvent again around August, 2016 as long as there is no recession between now and then. If there is a recession before it recovers, well, let's not go there.

Thursday, January 15, 2015

Swiss Central Bank loses big


via MarketWatch:
LONDON (MarketWatch) — The Swiss National Bank took financial markets by surprise on Thursday, when it scrapped its euro exchange cap and lowered interest rates.
The move sent shock waves through the currency and stock markets, with the Swiss franc CHFUSD, +13.92% rallying more than 30% against the dollar and euro CHFEUR, +15.78% at one point.
According to Citibank's Stephen Englander,
By our calculation the FX reserves portfolio on FX alone will have lost in the region of 60bn CHF, assuming EURCHF at 1.03 and USDCHF at 0.88. Though some of this is likely to have gained on bond holdings, as per our above example, this would be far outweighed by losses on FX.
That's about $66 billion cost for another central planning failure.

Wednesday, January 14, 2015

WSJ: Radio Shack preparing bankruptcy



Somewhat delayed reaction to the Edifice complex, but not surprising. And no, you can't have my zip code and phone number.

Wednesday, January 7, 2015

S&P 500 vs. Oil smashes records



Over the last few months, there has been a big disconnect between the S&P 500 stock index and the price of Cushing crude oil.



The previous big disconnect was in 2008, but stocks crashed first as oil continued to rise, only later catching down to stocks in 2009. This time, it is crude oil that is crashing first. The obvious question is, will oil rebound and catch up to stocks, will stocks catch down to oil, is there a permanent disconnect between stocks and oil prices, or is the correlation only a coincidence?

Saturday, December 13, 2014

U.S. Debt vs. Gold Price



I haven't posted a debt vs. gold chart in a long time and thought I'd dust off the data. A few observations:

- Gold is cheaper now (compared to US debt) than it was when Nixon decoupled the dollar from gold in 1971
- It is still slightly above the exponential trend, which appears to flatten around 0.5
- The 2011 bubble was nothing compared to 1980. Wowza!
- I haven't bought gold in a while, nor have I sold it
- still holding enough to catch the last plane to Guangzhou if the whole US goes Ferguson

Monday, December 8, 2014

For he's a jolly good fallow


source: St. Louis Fed

I updated my graph of M0 and M1 money stock to use hot colors (red and orange) since they are hot, hot, hot. The velocity of M1 and M2 use cool colors (blue and green) because they are cool and getting colder. We have lots of money and money potential, but no one wants to move it around. To bankers everywhere, I offer congratulations by singing "For he's a jolly good fallow".