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Private industry wages and salarie rose 3.1% YoY in September, the highest since 2008.
And not surprisingly, the biggest increase in benefits (also 3.1% YoY) is for … State and Local Government workers. Apparently, they don’t believe that there is a public pension fund crisis … or don’t care.
On February 12, 1999, the Bank of Japan announced that it was going full zero. Japan’s central bank would from that day forward push the overnight uncollateralized lending (interbank) rate to the zero lower bound. Further, it pledged to keep it there until Japan’s economy recovered.
The economic slump in the nineties had been by 1999 almost a decade in length. As the Japanese economy ground to a halt, unmovable and completely resistant to being restarted by any of the orthodox techniques tried up to that point, there came to be an institutional bid for government paper. It was the perfect illustration of Milton Friedman’s interest rate fallacy – low interest rates signal tight money in the real economy. The bid was pure liquidity risk, having nothing to do with the “fundamentals” of bonds.
ZIRP was intended to try and change that condition. The mere rumors about it all the way back in 1998 had kicked off a BOND ROUT!!! From September 1998 through February 1999, it seemed as if the so-called bond bull market had finally been broken. Central bankers would ride to the economy’s rescue with non-standard “accommodation.”
We are in a time when “normal” relationships are not working, and when any slight hint of misperformance is getting punished. So it is fascinating to see that AAPL’s normal quarterly price behavior pattern is still “working”, something I discussed here back in August.
AAPL’s share price has a pretty regular pattern which plays itself out over each calendar quarter. Apple Corp. releases its quarterly earnings report usually on the 1st day of the month, one month after the end of the calendar quarter, and so the next one is due out Nov. 1.
In the low yield, low interest rate, low expected return, and low liquidity premium world, cash has flooded into alternative investments such as hedge funds, infrastructure, property, and of course private equity. Asset allocators see these increasingly mainstream “alternative assets” as saviors of sorts, providing lofty return expectations with apparently low volatility.
And it has been a long time since these sometimes little understood asset classes have faced a real test.
But that could be changing.
An obscure index – in truth, a subset of private equity (and some may even call it a misnomer) – the S&P Listed Private Equity Index has undergone a major breakdown. Gliding through its 200 day moving average and slicing through well defined support levels, there is open air before the next logical support level comes into play.
Once a bear, always a bear. I sold my longs this morning, all profitably. I am tip-toeing my way back into shorts. Here are eighteen I just shorted. I have zoomed in what I consider the most salient portions.
There is a popular notion, at least among American libertarians and gold bugs. The idea is that people will one day “get woke”, and suddenly realize that the dollar is bad / unbacked / fiat / unsound / Ponzi / other countries don’t like it / <insert favorite bugaboo here>. When they do, they will repudiate it. That is, sell all their dollars to buy consumer goods (i.e. hyperinflation), gold, and/or whatever other currency.
Redemptions Balanced With Deposits
No national currency is gold-backed today. In a gold backed currency, each currency unit begins life with someone who chooses to deposit his gold coin in exchange for the paper currency. And it ends life with someone redeeming the paper to get back the gold coin. A good analogy is bone in the human body. One process is constantly removing bone material. And another process is growing more. What seems to be a static bone, with fixed length and mass, is constantly being torn down and rebuilt. The seemingly stable bone is actually in equilibrium between two opposing forces.
So it is with the gold standard. Some people are redeeming paper to get the gold coin. Others are depositing gold coins to get paper. The seemingly stable gold standard is actually in equilibrium between two opposing processes.