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Friday, September 30, 2016






Here I am getting a degree in economics when maybe I should have just started taking alpha-PHP up the poop chute like John McAfee, and then started posting crazy prophecy shit on Youtube.

Which I'm absolutely certain Jeff Berwick doesn't do.

Take alpha-PHP up the boyhole, I mean.

Certainly not.

The above video is him when he's completely drug-free and sober.


More Deutschefreude

Frankly if the market is going to puke on one stupid bank that was just as shitty months ago when nobody cared, it's a really stupid market.

Which, of course, is nothing new when the market is moved by a bunch of cokeheaded 25-year-old snowflakes of the suburban petit-bourgeoisie.


Dan Davies - Deutschebank 'splainer. Cos dumb-ass cokehead Wall Street snowflakes need some good 'spainin':

Hedge funds moving excess derivatives collateral or prime brokerages is … hmm, it looks like this explainer needs an explainer.

Basically this is surplus cash that hedge funds have which isn’t invested, or surplus treasury bills that they don’t need to pledge against their trades, but have hanging around in their collateral account anyway. Big hedge funds always have more than one prime broker, and they’re always moving their surplus around. It’s pretty much zero cost to shift it away from a bank that’s in the headlines and it allows you to tell your boss or your investors that you’re doing something.

But because these balances are so volatile, they’re basically unusable by the bank as a funding source. The excess cash is just invested in cash, the excess securities aren’t re-pledged or borrowed etc. The business is, frankly, garbage for the bank, not worth having except that it’s part of the service provided to a big client. No real funding for Deutsche has been pulled, so far, only excess balances.

[...] If I saw corporate, retail or payments system accounts being moved, I’d worry, because these balances very much are part of the funding of Deutsche Bank’s business, and they do rely quite a lot on “behaviourally stable funding” (basically, in an overnight transactions account, it’s a different set of dollar bills every day, but the aggregate amount across the whole book of a big provider of transactions accounts is surprisingly stable). So far, nothing there.


In Lehman Brothers, the accountants’ joke was true: “On the left side of the balance sheet (assets) nothing’s right and on the right side of the balance sheet (capital) nothing’s left”. That’s not the case in Deutsche. The uncertainty, substantial as it is, all relates to the right-hand side of the balance sheet. The capital might not be sufficient, and the equity might be impaired by a big charge for DoJ fines. Both of these threats come from somewhere other than the left hand side of Deutsche Bank’s balance sheet (one of them is, literally, a number chosen by a regulator, which rather starkly points out how not “out of control” the situation is compared to 2008). If you are a secured creditor — which is to say, someone who looks not to the quality of Deutsche Bank, but to the quality of the individual collateral placed specifically with you — you’ve not seen anything in the last six months to particularly change your mind.

Finally, Deutsche isn’t Lehman Brothers and it isn’t 2008. There are so many more ways for a bank to get hold of short term liquidity than a broker-dealer, and so many more ways for a bank to get hold of short term liquidity in 2016 than there were in 2008. And the global network of central bank swap facilities now means that if Deutsche can fund in Euro, it can fund in any major currency of the world. This matters because in Euro, all of the collateral concessions and facilities created by the ECB for the benefit of small Italian and Greek banks are also available for Deutsche. I am actually finding it hard to think of any asset of Deutsche Bank, now that it has sold the Cosmopolitan Resort & Casino in Las Vegas, which couldn’t be pledged at the ECB for funding.

So don't believe the anti-western FUD that Vladimir Putin pays Daniel Ivandjiiski to publish at Zerohedge. The world's not going to end: Deutschebank is just going to crumble into a smoking ruin.

Kinda like Berlin in 1945.

Those wacky Germans love repeating history.

Friday videos: you're from the 70s but I'm a 90s bitch

Charli XCX live:

Thursday, September 29, 2016

What's German for Schadenfreude?

So Zerohedge is all aflutter about Deutschebank's systemic risk, and how it's Lehman all over again.

Except that 2008 was a general run caused by systemic mortgage origination fraud, while DB shares are dropping because of news that they have to pay a fine. Oh, and ten hedge funds moved money out of DB.

This is the same Russian-sponsored propaganda website, of course, that says Reuters is part of a conspiracy to give Clinton inflated poll numbers.

Anyway, Frances Coppola's also waded in, but you don't have to read that article either, since she usually doesn't know what she's talking about, and anyway Forbes expects you to allow over a dozen fucking third-party scripts to view their website.

The basic idea is:

1) Deutsche doesn't (effectively) have $14B.
2) Germany won't bail them out because reasons.
3) thus their shares are going to $0.
4) so they can't raise capital by share dilution, so they'll have to bail in creditors, which causes a systemic hypercollapse.

Which is all fine, except steps 1-4 are all utter horseshit.

Germany certainly can bail out DB. Yes, they've spent the past 5 years insisting that EZ governments aren't allowed to use taxpayer money to bail out their banks, but we know that that rule only applies to swarthy Mediterraneans. Coppola says it'd be "hypocritical" for Germany to bail out Deutsche: I retort that she obviously hasn't met a German in her life, because if it's one thing Germans love to be it's hypocritical.

Will a bailout kill the EZ's existing bank policy? Yes. But it's stupid anyway; it deserves to die. Anyone with sense knows that: just not Weidmann or Schauble.

But all that is moot anyway. The way I'd fix this, if I was the American in charge of collecting the fine, would be to offer Deutsche a payment schedule: say, $1.4B/y for 10 years, plus interest at half above prime.

Deutsche can certainly pay that and stay liquid, since they lose that much money a year on outright management stupidity and gross trading incompetence anyway; Merkel wouldn't have to bail them out; the EZ bank resolution mechanism would stay alive to continue destroying the Mediterraneans; the US gets to book the fine; and, best of all, Deutsche spends the next ten years limping around the banking system like a fat Irish asshole who got kneecapped for picking a fight with the wrong crowd.

And that last bit would be a great way to enforce compliance in the rest of the world's banking system. Cripple the fuckers for ten years and suddenly all the other banks will start paying attention.

Everyone wins.

But what'll probably happen instead is Merkel will bail them out with German taxpayer money, probably taken out of infrastructure spending and welfare payments; but not before their share price collapses, because after all if it's one thing Germans don't really do it's act promptly when a crisis hits, because it takes so long to pull such big, square heads out of such tight, constipated asses.

After that, she'll insist that yes, no other country is allowed to bail out their banks, just Germany, because they're special.

That's my bet.

In any case, quit piddling your fucking panties, everyone. This isn't Lehman, there's no trillion-dollar mortgage origination fraud.

Quit getting your fucking news from ZH.

DOOOOO... wait, what?

And now, the DOOOOOM news:

Calculated Risk - ATA trucking index increased sharply in August. Therefore, sell everything! DOOOOOM!

Bespoke - AAII still screaming a buy. Because individual investors get their news from Zerohedge.

Wednesday, September 28, 2016

Everything's alright forever

Calculated Risk - renter share of single-family market finally starting to decline. And again, that is a good forward indicator for the US economy.

Bespoke - confidence among low income consumers surges. That's because they're finally getting better jobs that pay more, plus a minimum wage hike in the first time since ever. And since consumption is driven by the bottom half of the income set, this also is a good forward indicator for the US economy.

Calculated Risk - chemical activity barometer indicates solid growth. Again.

Bonddad - Steve Hayward of Powerline is still a jackass. Well, he works for a site called "Powerline", so what do you expect?

Tuesday, September 27, 2016

Clinton and Texas: it is to be hoped

Oh, and by the way:

A recent poll showed Clinton getting competitive (i.e. within 5 points or so) in Texas.

This is something that some smart pundits warned about 8 years ago; the hispanic population in Texas has been growing, and it's staunchly Democrat.

And if the Democrats start winning Texas, man oh man oh man is that going to change the USA! Texas sets the idiotic school textbook standards for the US: among other things, Texas Republicans are the ones responsible for undergraduate economics textbooks being a worthless pile of Murray Rothbard horseshit.

A Democrat Texas will change the entire US mainstream political narrative.

And that would be very good for the world.

And now you understand why the Republican party hates Mexicans.

Trump/Clinton debate results

No, I didn't watch the debate. I had better things to do.

I'm reading thru various news sites looking for a handle on who the press has declared the winner, and I'm trying to avoid the sites that I know will be pro-Clinton.

But more than someone being declared the winner, what's important is who provided the lamestream media with new talking points and soundbites.


Because a debate only happens once, but a good soundbite can keep giving for weeks.

And I think Clinton won in the soundbite department. All Trump did was re-hash old Republicunt talking points; Hillary, however, scored some new ones that (you'd think) should tilt reality-TV newsmedia in her favour.

On the subject of his tax returns: "There's something he's hiding."

On women: "This is a man who has called women pigs, slobs and dogs."

On Obama's birth certificate: "racist lie".

On Trump's mental instability: "A man who can be provoked by a tweet should not have his fingers anywhere near the nuclear codes."

And Trump helped her too. On his not paying any taxes, he said "That makes me smart." That will certainly fly well with the Republican mass, who hate paying taxes; but maybe it loses him some votes with moderates.

Then again, the US might have reached the point of Greece, where the biggest tax-cheat is the most respected. The anti-tax narrative has had a long time to run.

Anyway, the big thing to watch over the next few weeks will not be the post-debate polls: after all, Trump still has two more chances to expose his genitals in public. The big thing to watch is going to be whether Hillary's soundbites get traction.

She's already won the Democrats' votes, and she doesn't have to bother trying to win the Republicans' votes: she just has to convince everyone with the possibility of sentient thought that they need to vote for her and quit with the "I like Trump because he's sticking it to Washington" nonsense.

Calculated Risk on new home sales

Calculated Risk - a few words on new home sales. I could quote from his post, but I'd rather just reprint his chart:

Housing this year is way better than it was last year, and the housing cycle is the US economic cycle. So quit being a pantywaist sissy and buy.

Saturday, September 24, 2016

Kraftwerk's "Hall of Mirrors"

And apropos to the previous, here's Kraftwerk's "Hall of Mirrors":

Nice when a TV show's soundtrack uses not just a Chromatics song, but also a totally forgotten Kraftwerk track.


In case you missed it, at the very end of season 2 of Mr. Robot, Elliot got shot because he thought Tyrell was another hallucination.

Turns out Tyrell has been alive all this time, and he's real.

So now all the people who didn't believe Reddit's "Tyrelliot" theory are getting all in our faces, saying they be all that and yo mama and such.

But ffs, it was the right thing to do to assume Tyrell was just a hallucination. All frickin' season, Sam Esmail has been screwing with our heads:

 - The "Elliot's been in prison all along" mindfuck of the first half of the season.

- For several episodes in the second half, he put "inconspicuous man" and "inconspicuous woman" in the credits, then purposefully put them in the blurry background of half a dozen scenes so that the more rabid fans would find them and start asking what was going on.

- Having Cisco and Darlene gunned down in the third-last episode, except the blood-spatter that seemed to come from Darlene was actually from an exploding ketchup bottle if you watched frame-by-frame, and when the sign on the diner blew up it went from reading "Lupe's" to reading "Lies".

- When Tyrell gets into the cab in the second-last episode, Elliot asks the cab driver if he's really there and the cab driver doesn't respond.

- A bunch of other stuff, I forget.

- Tyrell also looked different and talked different in that second-last episode.

- And most importantly, we were told several times that Mr. Robot killed Tyrell, and we've already got a lead character who hallucinates people.

Given all of the above, why shouldn't we have believed Tyrell was just a hallucination?

So now we find it's not true, Tyrell was alive all season and hiding out in a warehouse planning Stage 2 (which, as it turns out, definitely does not involve time travel). And Elliot got shot for reading Reddit. And Sam Esmail is cackling in the background.

Oh well. More broadly speaking, we were all worried before the finale that Esmail was piling on far too many twists and the show was turning into a bullshit mindfuck like Lost; so it's nice that Esmail did tie off so damn many loose ends in the final episode (Tyrell's alive, Scott Knowles was the one phoning Tyrell's wife and sending her presents, Darlene is alive, Stage 2 is blowing up the records building, fat guy and Iranian girl made it out of town alive, the inconspicuous duo were working for Whiterose and not the FBI). Even nicer, he tied much of it off in the first 15 minutes.

After cleaning up much of the old storyline, though, Esmail did still give us a few questions to ponder over the winter: is Leon about to kill fat guy & Iranian girl? Is Angela working for Whiterose now? Do the FBI have enough to arrest everyone? But at least the show hasn't turned into Lost. And there's no fucking time travel, thank god.

And personally, I think the Reddit drama of the past few weeks is proof that Esmail and his friends are on Reddit, anonymously posting mindfuck theories to drive their obsessive fans to watch the show over and over looking for clues.

Thursday, September 22, 2016

More news

Well, I made a quick ~12% shorting $VIX futures. But I dumped that position today because an intraday below 12 is where I sell, not where I hold or buy.

I mean, maybe I can make money shorting time premium, but I'd rather just put that money back into an S&P index ETF, now that I have 12% more of it. But for the time being, I think I'll hold cash til I can figure out whether the S&P wants to blow through its high, or turn back again.

Meanwhile, here's some news:

Calculated Risk - all the FOMC commentary you'll never read. Just read Ritholtz instead:

Ritholtz - income liftoff shows the recovery is real. This is all very, very good, so you should definitely buy S&P and hold right now...

Bespoke - bears rule the roost. That's even better. Working people are finally experiencing improvement in income, which means we're facing a good long period of consumer-driven growth - but yet bearish sentiment is still high. Damn, I can imagine we'll be getting one heck of a Santa rally this year!

Global Times - does high China debt signal an imminent crisis? He notes that Chinese debt is going towards different things from other countries' usual debt. I would add that before people shoot off their fucking mouths about $25T in Chinese debt, they should perhaps consider that this means somewhere there are $25T in savings collecting interest.

The Intercept - John Boehner now working as lobbyist for China. Which I guess is typical for Republicans: make a few million robbing the US, then go get a paid job committing treason against your nation.

BBC - Trump uses Skittles photo taken by refugee to argue against refugees. Good reason for kids to study Magritte, I say.