Dr. Keynes Was Right

It's the Distribution, Stupid
DECEMBER 18, 2014 8:23PM

I Loves Olive Oyl

The problem with being dependent on data to make decisions:  what do you do when there is no data?  Well, punt.  Let's turn our attention to the oil patch.  Crude is quoted at $61/barrel (and change) today, and the blue-eyed Arabs in the Red states are whining poor mouth.  Al… Read full post »

DECEMBER 17, 2014 12:55PM

Putin on the Schitz [update 2]

Incentive.
Incentive.
Incentive.

As always, when there's a disruption in the process which created the time series the quant relies on to forecast future values, ignore the time series and look to the changed incentive proposal.  

By now all but the most self-absorbed Fox News watcher is aware that… Read full post »

DECEMBER 15, 2014 9:39PM

Ides of December Nudge

Another in the desultory reminders that you need to read this guy.

DECEMBER 14, 2014 4:46PM

Matter Over Mind

It's deep into sports season.  NFL is winding down to the last few games, Heisman is today along with the Army-Navy game, NBA is at the ¼ mark.  Johnny Manziel is described as a midget.  Adrian Peterson doesn't get off Scott free for beating his kid.  Baseball teams swap pl… Read full post »

DECEMBER 13, 2014 11:22AM

Crazy Schizo Quants

OK, so back in 2012 the Right Wingnuts were blaming Obambi for hiking gasoline prices (and, by necessity, petro price).  The lobbyer doesn't have a link to the advert, anymore, so here's the quote of note:

Since Obama became president, gas prices have nearly doubled. Tell Obama we can't afford h… Read full post »
DECEMBER 9, 2014 3:42PM

Widget Wonderland

Three semi-related posts went past my eyeballs today.  The thread which hangs them together is the value of value.  How do we figure it?

First, Blankenhorn takes on Amazon, among my favorite fubar companies.  As is often the case, the comment stream is as significant as the post. … Read full post »

DECEMBER 4, 2014 2:02PM

Prometheus Unbound [update]

The mainstream pundits, and the blogosphere too, continue to be perplexed by the refusal of open market interest rates to rise as they had hoped/wished/needed.  So, it falls to moi to yet again 'splain some more.

The notion of moolah as commodity rests on the base assumption of trade in real good… Read full post »

DECEMBER 3, 2014 8:42AM

A Rock and a Hard Place

From the first time I recall seeing him, I've been convinced of Chris Rock's cerebral approach to comedy.  Yes, he is foul mouthed, but the fundamental ideas are sound.  He is of course, a high school drop out.  Stay in school kids.

So, it comes as no surprise that he and I… Read full post »

DECEMBER 1, 2014 11:35AM

60 Seconds

That appears to be how much time and effort went into last night's "60 Minutes" piece on consumer credit card and ATM and such hacking.  If you accepted the statements made, then you believe:
1) retailers and banks are doing everything humanly possible
2) Eastern European hackers are the Smartest… Read full post »

NOVEMBER 25, 2014 4:18PM

Play to the Front Row

The pundit class has been wondering, in print, how it can be that we have increasing income/wealth inequality, but, if one believes the data, a recovery from The Great Recession and general growth.  

The answer, in a nutshell, is Apple.  Apple has made a living by ignoring the bottom 80% (or… Read full post »

NOVEMBER 19, 2014 8:49AM

A Dirty Little Secret [update]

The quants operate, oft times unknown to themselves, based on a dirty little secret.  "What might that be", called from the Peanut Gallery??  The notion that the risk-free, inflation-free interest rate is equal to homo economicus' "rate of time preference", i.e. homo econ will lend you one… Read full post »

NOVEMBER 18, 2014 12:22PM

Make It a Double

When I was growing up there were three categories of lushes:  the crude drank bourbon, the smooth drank scotch, and the sissies drank screwdrivers (so Mom couldn't tell; she still could, of course).  Seems to be still the case.

There's been a push, and some pushback, for artisinal bourbons.&… Read full post »

NOVEMBER 13, 2014 12:39PM

Booooooiiiiiiiiinnnnnnngg

It appears to be an article of faith, among the New Age capitalists such as Jobs/Cook of Apple fame, that one need only target the few, at a high price, to be success in business (without, of course, really trying).  In other words, as you learned in Econ. 101, demand is… Read full post »

NOVEMBER 12, 2014 7:49PM

What Are The Odds?

The initial title was going to be something like, "Marty McFly is Grounded", since the subject is Matt Martoma, and yes, it's a bit of a stretch for an allusive pun.

Mathew Martoma, a former portfolio manager at billionaire Steven A. Cohen's SAC Capital Advisors LP hedge fund, on Wednesday lost… Read full post »
NOVEMBER 7, 2014 1:56PM

Just A Taste

One of the continuing themes of these endeavors is that quant isn't always the best guide to the future; moreover, the data which is ground, finely, through the mill stones isn't always understood for what it is.  This is particularly vexing for the macros in the crowd.  The micro folks ten… Read full post »

NOVEMBER 1, 2014 1:13PM

Time Loves a Hero

Well they say time loves a hero
But only time will tell
If he's real, he's a legend from heaven
If he ain't he was sent here from hell
-- Barrere, Payne, Gradney (from "Time Loves A Hero", Little Feat)

Yesterday was a bit different, schedule wise, in that this is deemed to be a Windy… Read full post »

OCTOBER 26, 2014 11:39AM

You Don't Have to Believe Me

Recent musings, motivated by continued discontinuity between real world finance time series and micros/quants insistence on predicting past the data, have been devoted to this problem.  The world is not linear (Dr. McElhone), and is mostly driven by incentive modifications rather than historical… Read full post »

OCTOBER 16, 2014 9:07PM

One Life to Live

It was raining cats and dogs this morning here in South Fireplug, CT (although not nearly what my beloved, yet benighted, Bermuda faces tomorrow), so I postponed my daily stroll to get the dead trees NYT and a cuppa joe until it let up.  In the meantime, I spent some time… Read full post »

OCTOBER 11, 2014 10:22PM

I Have No Interest in You, Anymore

Regular reader should recall that I've been pestering the macros, micros, and quants (especially those who're in love with time series) about The Giant Pool of Money, corporate moolah hoards, the limits of knowledge (once you know the Laws of Nature, there's little left to discover), and such. … Read full post »

With its usual panache`, the Sunday NYT has more on-point material for the macros, micros, and quants than one short blog can reasonably deal with.  I'll limit myself to two pieces, which share a minor thread.

First, is the situation with container ships.  This a full page and a half on the… Read full post »

OCTOBER 1, 2014 2:02PM

Birds of a Feather, And All That

Steven Davidoff Solomon makes a run at corporate boards in his piece on Darden Restaurants, today.  He closes the piece with:

Absent a last-minute, face-saving compromise, the likelihood of a full-scale ouster raises the glaring question: Why would the board pointlessly and perhaps foolishly inv… Read full post »
SEPTEMBER 24, 2014 9:52AM

Welcome Back Gumby

Some time back, I predicted that the flip phone would rise, Phoenix like, from the mire of smartphone muck.  These 5+ inch behemoths just won't work very well.  Some curved screens have appeared, but now we get word that the 6/6+ are spontaneously bending.  I told you so.  There a… Read full post »

SEPTEMBER 15, 2014 4:05PM

Up The Down Staircase

I'm not a fan of David Stockman, to say the least.  But recent punditry on the subject of interest rates, asset prices, and bubbles led me to the obvious question:  is it true, as it appears, and in the data; that corporations (that is to say, their capital allocators) are executing… Read full post »

SEPTEMBER 5, 2014 12:41PM

Alice In Wall Street

Financial engineers, despite their pronouncements of math/stat/coding wizardry, are really just some truffle pigs and cockroaches.  The truffle pigs snuffle in the ground, generally around trees in deep parts of the forest, for the scent of the black truffle.  A valuable fungus, that black… Read full post »

AUGUST 28, 2014 12:51PM

Reservations for ... 8 billion??

Quite recently, in various versions of these endeavors, there was an essay dealing with the Old Gold vs. New Gold situation.  Not for the first time.

The hidden truth:  the country with the reserve currency of the global economy will always, in fact must, run trade deficits.  Think abo… Read full post »