Thursday, August 11, 2016


I was listening to CNBC this morning when Little Paulie Krugman came on.  "Wait a minute...that's not Little Paulie," said I.  "That's Donald Trump!"  If one couldn't recognize the voice one could not have told told the difference.  There was Trump parroting all of Paulie's column in the Times earlier this week.  Gobsmacked.  Then it dawned on me:  what is the real estate developer's First Commandment?  "Thou shalt not use thy own money."  What an idiot.  Of course Trump will gear up the good ol' US of A just like he geared up everything else in his life including himself.  In short, said me to my self, "we're doomed."

I wandered around in a daze until lunch time then when out with a classmate of mine and had a couple of beers.  Another not-so-good idea.  Home for a nap and woke up...refreshed!  That lasted about 1/2 hour.  Flipped the TV on and discovered that the DOW, the S & P and the NASDAQ were a RECORD highs!  Wait a minute, hadn't it been announced that there had been a record outflow from equity funds this year and a record inflow into bond funds?  Quick research...yep, sure had.  So how...why...well of course. It's a totally trader's market, which in the past would have meant that this thing is so overbought as to be...well, I don't know what...but this isn't the past.  Then again, if you had bought the ten year in December you're up 30%.  Want to make more money?  You should have bought the Long Guilt at the same time.  You're up 50%.  Want to keep it going?  Buy any currency--any--against the dollar and you are a winner.  Want to do even better?  How 'bout the Ruble.  Hell, there about to invade the Ukraine again.  Just a go along with the Turkish Bonds of yesterday.  Just keep in mind that when the entire world seems to be in a negative interest rate environment, it is the U.S. Dollar--the currency with the highest yielding fixed income obligations--that is the cheapest.  Which also means if you think about it that this is all going on without the "carry trade" because the currency risk will kill you.

Something's happening here; what it is ain't exactly clear, but the little economics and monetary theory with which I grew up has been turned on it's head.  Now either we are in a whole, new world  or if this thing ever decides to return to what is supposed to be normal, it is not going to be a gradual thing.  It's going to be a mess akin to what He Who Knows All Things referred to the other day as when the guy yells "FIRE" in the crowded theater.  In the mean time I'm depressed.  Not so much that I'm giving up but enough to take the day off tomorrow and enjoy the Dog Days.  Too much barking every where else.


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