Friday, July 29, 2016


Gotta be my age to remember that one.  Anyway, this is what happened.

The Democrats had their convention.  Big whoop.

The Fed did nothing (and will do nothing).  Bigger whoop.

The Bank of Japan did bery little.  Bit of a surprise, leading some people to believe that it has decided that it has run out of bullets.  The Yen strengthens.  Ouch!

The ECB announced the results of their stress test which wasn't really a test at all because there were no markers set up and no one really knew or understood what was being tested.  Therefore, nobody failed except that Monte di Paschi (there's a shocker), DeutscheBank (another mind-blower) and Barclays (Hummm) were cited as not being in the best of shape capital-wise.  Quality of assets?  Sorry, don't look at those things.  Portugese and Greek banks?  None of your business.  We'll keep that among us boys.  In short, a complete nonsense.

And the U.S. economy...absolutely worse than anyone expected with the first quarter revised downward to 0.9% and the second quarter coming in at 1.2%  It was so bad that some were taken to argue that things were really looking up because inventories fell meaning that when rebuilt, up will go the GDP again.  Of course missing from this piece of economic genius was the fact that this was the fifth consecutive month in which inventories fell...a feat unmatched in about 70 years.  Somehow, consumer spending looked quite good which may bode well for the future...or may not if incomes remain relatively flat and the job participation rate stays in the crapper.  I'm sure Little Paulie Krugman will have an answer for this next week.  I hope someone does.  

Yale University announced that they are going to begin a Masters Program in systemic risk.  Among the "faculty" will be Tim Geithner and just about everybody else from the good ol' days.  Now some of us  were confused at all of this as there are clearly people around who must have at least one if not more Ph.D's in systemic risk having contributed so much to the creation of the  same over the years but I guess this program is designed to keep it from happening again...and to generate oodles of cash for old Eli.  Might I suggest that a Masters in Critical Thinking and Analysis might be of more lasting value?  Want to know how to prevent systemic risk?  Stop doing stupid things.  Like setting up systemic risk Master's programs and thinking you have contributed to the solution.  Or flooding the world with money, destabilizing markets and demolishing any basis for the pricing of risk.  Oh, the 10 year closed at 1.45% today.  Flat yield curves are just great.


On Monday we are going to take a look at the remarkable internal report from the IMF regarding it's actions in Greece which has received absolutely no review Over Here and practically none anywhere else except for the Telegraph in London.  It is devestating.  In the mean time, we here in the Fly Over are trying to dry out.  We got two inches in an hour yesterday afternoon and more expected today.  

And That Was The Week That Was.

Have a great weekend.

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