Friday, September 23, 2016


Equity markets traded off today for no particular reason although the drop in oil was blamed.  It was a good week, however, as the free money faction won out once again and traders kept busy trying to drive up asset prices in a market that all the geniuses will tell you is fully and richly priced whilst urging everybody to but more stocks because that's the only place to make money.

Well, maybe not.  There are alternatives.  The Russians today sold $1.25 billion of ten year Eurobonds at a yield of 3.99% through an outfit called VTB Capital based in London.  This is significant for a couple of reasons.  It's the Russians first and foremost; you know these are the guys that are picking fights all over the place, "stuck in a quagmire" in Syria, mobilizing at the gates of Kiev and having a gay ol' time releasing hacked Democratic Party Emails to the world.  The biggest buyer?  U.S. investors to the tune of 53% of the issue.  Vladimir, as Obama likes to call him must be having a real chuckle over that.

Then again this thing gets issued by VTB, a Russian owned house.  Now back in the good old (read: days of sanity) days, investors often looked at the underwriting and management group to judge the quality of an issue and more importantly, to rest assured that there would be a market made in the same.  Think you have an assurance of an orderly after market with VTB or the availability of a bid if things get a bit creaky?  Don't care?  Well, how about a nice little piece of a Syrian issue yielding 10% managed by Damascus Securities?  Honest to God, I think I could sell some of that.  It's dangerous out there.

The other thing I was thinking about today was the little economic hand grenade thrown into her discussion with the press by Ms. Yellen.  Going practically unnoticed (and unmentioned) was that the Fed has lowered its GDP expectations quite significantly from a 3% figured bandied about as near as six months ago to 1 1/2-2% from now until 2019.  That's a pretty significant change that seemingly attracted no interest in the popular press emphasizing once again that even the guardians of truth have no interest in anything with a half-life of more that 36 hours.  Everybody has become a trader which may be the reason we muddle on and accept the nonsense that is thrown at us such as the 5.2% growth in median income that was released by the Census Bureau last week,  and which we will deal beginning Monday.  A thought until then:  the CENSUS BUREAU?  Warning: I don't have the ability to gather data so I will be relying on other folks but it is quite a tale they tell.

Have a great weekend.

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