Ex-Food, Ex-Energy, Ex-Americans
I would have sworn I saw a headline in the online Journal yesterday trumpeting "IBM buyback and $100 oil boost stocks!" Huh? If IBM's management wants to boost the share price, one can hope that they are doing it for some reason other than compensation tie-ins, but how does oil over $100 boost stocks? The story, which I glanced at, seemed to indicate that it helped oil stocks. I suppose since "core" inflation is ex-food, ex-energy, it makes sense to ignore the potential effect of energy costs on other stocks. NOT. It does mean that I've lost about 8% in a week on my DUG ETF, despite the fact oil has barely budged in price. Unfortunately, a lot of speculators have decided their portfolios should be ex-energy shorts, so DUG has decoupled from the oil price.
But my real reason for posting today was to link to the written testimony of Nouriel Roubini in front of the House Financial Services Committee. Nouriel does a terrific job of summing up the way many of us have felt about the economy, and in specific the housing market, for many years. The FED can't manage an economy out of a housing, equities and debt bubble just by lowering away on the funds rate. All they can do is temporarily prop up the stock market, giving the short term player and managed wealth a a chance to get out of the way before all the long term retirement account holders get burned.
As a citizen of Massachusetts, I'm seeing the beginnings of the negative selection in citizenry caused by the health mandate. Negative selection is a term used in the insurance industry to describe the inevitable consequences of a policy that encourages people who will derive a financial benefit from a decision taking that decision, as in moving to Massachusetts for free or heavily subsidized health insurance, while those who carry the penalty of the decision opt out. I'm actively planning a move to neighboring New Hampshire this year, I've had all the Massachusetts communism I can handle, but I don't have any intention of joining the ex-Americans, like many of our corporations that flee to tax havens. But I'm sure as the bills for the future pile up on young people entering the workforce, some negative selection of an ex-American character will occur on a national basis. Why should they hang around for "One Nation, For The Old".
But my real reason for posting today was to link to the written testimony of Nouriel Roubini in front of the House Financial Services Committee. Nouriel does a terrific job of summing up the way many of us have felt about the economy, and in specific the housing market, for many years. The FED can't manage an economy out of a housing, equities and debt bubble just by lowering away on the funds rate. All they can do is temporarily prop up the stock market, giving the short term player and managed wealth a a chance to get out of the way before all the long term retirement account holders get burned.
As a citizen of Massachusetts, I'm seeing the beginnings of the negative selection in citizenry caused by the health mandate. Negative selection is a term used in the insurance industry to describe the inevitable consequences of a policy that encourages people who will derive a financial benefit from a decision taking that decision, as in moving to Massachusetts for free or heavily subsidized health insurance, while those who carry the penalty of the decision opt out. I'm actively planning a move to neighboring New Hampshire this year, I've had all the Massachusetts communism I can handle, but I don't have any intention of joining the ex-Americans, like many of our corporations that flee to tax havens. But I'm sure as the bills for the future pile up on young people entering the workforce, some negative selection of an ex-American character will occur on a national basis. Why should they hang around for "One Nation, For The Old".
posted by Morris Rosenthal | 2:20 PM
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