Why are these rats jumping ship?

Why are these rats jumping ship? Let's keep a nice list:

Oct 2013 FED Chairman Bernanke

Sep 2014 Charles Plosser - FED  president

Sep 2014 Bill Gross - head of PIPMCO

Sep 2014 Eric Holder - Attorney General

Oct 2014 Argentina's Central Bank Governor Resigns After Long Rift

Oct 2014 Secret Service Director Julia Pearson

At a time of soaring profitability, US companies have piled up huge amounts of cash, much of it parked offshore. Yet investing it in long-term growth is the last thing on their mind. According to Barclays, US companies have lavished more than $500bn in the past year on stock buybacks – a multiple of what most are spending on research and development and other capital investments. In the first six months of the year, buybacks surged to $338.3bn – the largest half-yearly volume since 2007. The rationale is simple. By reducing the volume of outstanding shares, chief executive officers increase earnings per share. That in turn lifts their pay, which is heavily tied to short-term stock performance. If you need an explanation for why the top 0.1 per cent is doing so well, start with equity-based compensation.

Haha good point

McArthur10 hours ago

Plenty of CEO's have been turfed for poor execution of capital projects.  Few have been turfed for returning cash to shareholders.  Case closed.



Across the drought stricken Texas highway
Flowers squeeze through scorched cobblestone medians
The star spangled banner flutters in the crimson summer wind
Boxer gallops off the Greyhound from Fort Hood
He's not dim-witted. Calls himself Jeremy now.

What I'm Reading - Aug. 2014

http://www.thestreet.com/story/12844318/1/walmarts-dreary-outlook-should-be-of-grave-concern.html
Where were sales not the strongest? U.S. supercenters. Walmart U.S. President and CEO, Greg Foran, who officially began his new position on Aug. 9, stated: "In Q2, our supercenter fleet had a comp decline of approximately 30 basis points. We recognize the need to improve the performance and standards of this format to meet customers’ expectations. We plan to open, relocate, or expand about 115 supercenters for the fiscal year." 

http://en.itar-tass.com/economy/744830

Shale gas production in Europe could be possible in Europe not earlier than in 2016-2018, Gazprom said in a quarterly report released on Wednesday.

Had a colleague tell me one of the benefits an economist saw for N. America was the demographic profile--this means more young people vs retirees (as compared to other parts of the world).

If wages are competitive (low compared to other countries) i guess more labor is good. In Mexico, low wages are part of their existing structure but in the US it creates huge issues for citizens that are similarly low-skilled workers. Perhaps the wages paid for unskilled labor were unsustainable and the work would be offshored but can the US handle a class that is paid less than anything, in inflation adjusted terms, than what we've seen in the past 100 years? i don't think it will work and this is a prime reason why: http://www.usccr.gov/pubs/IllegImmig_10-14-10_430pm.pdf

Failing Repo transactions in US Treasury market ?

Job market tilting toward workers

http://www.crossville-chronicle.com/community-news-network/x864265646/Job-market-tilting-toward-workers

The vacancies data for June are scheduled for release Tuesday. Average hourly earnings, in contrast, increased just 2 percent in July from a year earlier, barely keeping up with the rise in inflation. Employers in general have been "pretty stubborn" about increasing wages, said Jeffrey Joerres, executive chairman of ManpowerGroup, a Milwaukee-based staffing company with $20.3 billion in revenue last year. That may be about to change as the pool of available candidates shrinks. "You can see a little anxiety among employers," he said. "I can feel the inflection point is coming."

What inflation? Where?

About a year early but may be starting Wage Inflation in the US?

The truth behind the last 15 years is starting to become clearer to everyone

Labor arbitrage has stolen demand by not creating wealth in a one to one  or 1+ fashion by exporting technology.

"The crux of the problem is income inequality.Reducing rates won't make much difference.Inflation can be raised by giving handouts to the poor,they r sure going to spend it.Reducing rates won't help as long wealth is concentrated.2-3 long decade of globalization resulted in a surge of labour supply from asia as people moved from rural to urban or industrial centres.This structural change kept wage inflation low ,but owners of capital gained a lot.The savings glut that AEP keeps talking in a simultaneous environment of credit binge is due to this structural inequality.The have nots kept on piling credit and the haves did not know what to do with surplus wealth ,of course apart from lending to those who cannot pay.Thankfully this cycle has run its course.As labour market tightens in Asia and costly fuel makes transportation a significant cost the abnormal competitiveness gap would reduce giving labour bargaining power.The focus should be on fiscal policy rather than monitary policy."

Time to sell Leveraged Loans and High Yield Bonds, exited 1-3yr bonds and 5 yr intermediate

I've exited short term bonds SHY (1- 3yr) and some medium term CIU and SHY.

Fed will raise rates before it makes any significant move in reducing QE and/or unloading its balance sheet.

Now it looks like it's time to exit leveraged loans EFR and high yield bonds HYG too.

http://www.ft.com/cms/s/0/f9992ce2-e11e-11e3-b59f-00144feabdc0.html#ixzz32TdpEY6P

The search for yield is creating a dangerous environment for investors, with less call

Financial markets are reaching a tipping point and typically that means most financial asset prices will decline.

Increasingly it seems developed countries will get closer to balanced budgets, tax offshore havens to do this, in coordination.

In short term I like treasuries 7yr+ and cash. i like my house, real assets.

it's worth considering the possibility of a crash, brief deflation, followed by high inflation shortly thereafter.  in essence that's my portfolio 7yr+ treasury will appreciate in a crash as will optionality of cash and trade weighted FX value of USDs. Then a quick shift to equities and assets that do well in an inflationary period. Inflation is such a vague word however. Not sure if i'm a realist or an optimist or a fool but we may see a very tight labor market in the US in coming years.

That global company profit margin reversion to the mean from 12% to 6% in addition to the transfer of wealth from an aging generation will mean, a lot, lot of money to spend.

What will do well? Labor. you can't print labor, you can't import it, there will be less of it. What do workers get paid in dollars. What will everyone want when SHTF, cash, the optionality of cash is increasing rapidly.

Many that have left the workforce will not return. Those that will, will take years to retrain.

Retail Store Space Closures 2005 - 2014

Does this look like a strong recovery? I know we shop at Amazon and online more but, this is a slowdown in spending.

i know where the smart money flow is going and i think i was there first...CLY