Quote of the Day

March 8, 2015
Bonds: How firm a foundation?

Companies issued $1.43tn of corporate bonds in the US last year, 27 per cent more than was sold in 2007 at the height of the credit bubble.

Building prosperity castles in the sand, baby. That's what I'm talking about.

Rising Interest Rate Pressure Stymied by Falling Interest Rate Pressure

March 8, 2015
Bond Market Tells Savers: Higher U.S. Rates to Disappoint

Now, savers counting on higher rates to lift returns are being stymied by regulations designed to make the financial system safer. The rules are pushing firms to park more excess cash into Treasury bills that yield next to nothing, squeezing money-market funds that buy the short-term debt. JPMorgan Chase & Co. says demand will jump as much as $900 billion in the next 18 months, equal to about 60 percent of the total outstanding.

$0.9 trillion here. $0.9 trillion there. At some point we're talking serious money.

So much cash. So few places to put it. Have I mentioned my long-standing theory about how it is getting harder and harder to make money off of money lately? Once again, investors can pry the long-term TIPS and I-Bonds from my cold dead fingers. I continue to have every intention of holding to maturity. Treasury bond bubble my @$$.

As a side note, what would happen to all that excess cash if firms were not being forced to buy Treasury bills with it? Is there some sort of firm couch where the money would otherwise be stored? You know, some sort of firm couch of last resort? Everyone loves safety cushions! That's especially true if the cushions are packed with cash! And how about safety cushions filled with cash that also double as flotation devices? Nirvana!

Or does all that excess cash just magically vanish? Inquiring minds want to know!

In all seriousness, too much cash chasing too few Treasury bills does not a rising interest environment make in my opinion, contrary to the popular belief that long-term rates must rise due to all this money printing. Or better still, long-term rates must rise just because everyone seems to believe they should. Talk about a crowded belief trade. Perhaps the magic only works if everyone truly believes. I hate to disappoint you, but this saver remains extremely skeptical, especially concerning inflation protected long-term bonds over the long-term.

Call me silly if you will, but the idea of locking in acceptable real yields has always appealed to me. If there is one lesson to be learned from falling off the gold standard, it is that things can always get worse for savers. There is no limit when it comes to financial pain and economic oppression.

This is not investment advice.

1.8% Missing Prosperity

May 12, 2014
TV networks load up on commercials

In 2009, the broadcast networks averaged 13 minutes and 25 seconds of commercial time per hour. In 2013, that figure grew to 14 minutes and 15 seconds.

(14 x 60 + 15) / (13 x 60 + 25) = 1.062

(45 x 60 + 45) / (46 x 60 + 35) = 0.982

That's 6.2% real growth for the broadcast networks, their executives, and shareholders. Hurray! That's also 1.8% less prosperity for each and every one of the rest of us (potentially excluding those who claim they never watch TV of course).

No idea why prosperity inequality is rising. I'm sure this is just a fluke, an anomaly, an errant data point. I wouldn't read too much into it (unless you are barraged by popup ads while making the attempt, that is).

Work harder! Work smarter! Enjoy the prosperous recovery! And if, by chance, you get a moment of euphoria lasting more than 4 hours then please contact the U.S. Department of Corporate Propaganda. They are always on the lookout for heartfelt testimonials.

See Also:
How cable networks speed up shows to squeeze in more ads

How You Too Can Become Flush with Cash!!

Simply swamp your credit card company with cash advances! If borrowing works for Corporate America then surely it can work for you too!

March 3, 2015
Treasuries Drop as Corporate-Bond Issuance Swamps Debt Markets

“Treasuries will be sold to make room for new issuance,” said Michael Lorizio, senior trader at Manulife Asset Management in Boston. “It provides a Treasury alternative if it’s very highly rated.”

Very highly rated by the same very highly rated ratings agencies that brought us the very highly rated mortgage backed securities and very highly rated structured investment vehicles no doubt! I mean, that pretty much goes without saying.

What's the worst that could possibly happen again? So what if Treasuries are backed by a printing press and corporate bonds are not? If you can't trust a senior trader at Manulife then who can you trust? Risk off, baby. We've finally reached a new permanent plateau of prosperity! Woohoo!

This is not investment advice.

The Swiss Cheese Higher Interest Rate Theory

March 8, 2015
SNB considering higher negative interest rates: Schweiz am Sonntag

Citing sources close to the SNB, Schweiz am Sonntag said "a rate of minus 1.5 percent is being considered".

As far as Switzerland is concerned, there are definitely holes in the higher interest rate theory.

It would seem that once rates go negative, higher rates means they go even more negative. Who knew? No wonder economists are so worried about the zero lower bound. It's an event horizon for interest rate black holes. Reality shifts as the boundary is crossed.

Perhaps savers should start thinking about the -100% "higher" bound. That's a level that should never be breached, at least in theory. In practice though, perhaps a properly determined government could actually tax your losses, lol. Sigh.

"Says here that you lost 100% of your money. Can you afford the taxes on that or would you like to take out a loan at one of our prestigious private commercial banks? Just doin' our part to stimulate the strong and robust global credit economy! Thanks for participating!"

Illusion of Prosperity Infects Virtual Prosperity World

I've been playing quite a bit of Real Racing 3 on my iPhone. It's a free to play game and last night I received the following exclusive offer.


Click to enlarge.

$250,000 in virtual currency not enough? Try $250,000!
66 in virtual gold not enough? Try 66 gold!

Yes! 0% more value! It's an exclusive offer just for me! Hahaha!

In the game's defense, the offer actually bumped up to 50% more when I went looking for it. So this screen shot is simply a bug. The virtual currency and gold would set me back $14.99 plus tax. Not interested. The currency is easy to earn while enjoying the game and I have built up 914 virtual gold right now. Don't need more any time soon.

I'm loving these free to play games that simply require a bit of patience.

To summarize, I earn virtual currency and virtual gold virtually gaming and just received a virtual exclusive offer that I chose to refuse. Can't you just feel the long-term virtual prosperity rolling in?

I've spent $4.99 plus tax in total for about 90 hours of game play. That works out to about 6 cents per hour so far. I don't see myself paying any more than that. The cents per hour should therefore fall from here.

Special thanks to those subsidizing my gaming in this new and improved virtually prosperous world!

And don't even get me started on The Sims FreePlay. Fun game. Haven't spent any real money on it yet. I have earned virtual currency willingly watching daily advertisements for other free to play games, so that's something I guess.

How many developers are making even more free to play games right now? Can't wait to almost pay for them when they come out! Strong job market! Best ever!!

This Is Not the 1950s

Just thought I'd mention it for those who are confused.

March 4, 2015
A Blueprint for a Bond Bear Market?

A much better comparison, if you want to make one, would be the 1950s. At the start of 1950 the 10 year yielded 2.3%. It rose throughout the decade and finished at 4.7%.

We know this isn't the 1950s because, as seen in the following link, we aren't coming out of World War 2.

February 12, 2015
CHECK IN TO JAPAN’S CREEPY ROBOT HOTEL

The robot will check you in, take your bags, and escort you to your room in a new Japanese hotel that hopes to free itself of human employees.

When one starts with the premise that a bond bear market will soon unfold then one can can find all sorts of interesting rationalizations to support one's theory.

Might just as well rule out another theory while I am here. As much as many might wish to see a 1950s Elvis reappear, I'm sorry to say that we're more than likely stuck with Bieber.

Billionaire Predicts 100+ Years of Robotic Stagnation

February 11, 2015
Robots won't pose a threat to middle class jobs for at least 100 years, maybe never, says PayPal founder Peter Thiel

Robots may well replace factory workers over the next decade, but they don’t pose a threat to middle class jobs for at least one hundred years, claims billionaire venture capitalist Peter Thiel

And if you believe that one then I've got another one for you.

"There is no reason for any individual to have a computer in his home." - Ken Olsen, Founder and Former CEO of Digital Equipment Corporation, 1977

As a side note, I was under the impression that factory workers are part of the middle class and that these middle class workers do feel a bit threatened by tasks robots can already do and how fast they can do them. My bad. I stand corrected. Special thanks to billionaire Peter Thiel for setting me straight on all of this.

Forehead. Desk. Whack. Whack. Whack.

Sarcastic Monday is getting off to a fantastic start! This bodes well for the week ahead! Woohoo!