Wednesday, August 5, 2009

Continued Stimulus

From Briefing.com: "Reuters reports China will stick to its loose fiscal policy for at least three years despite a growing budget deficit, a government economist said in comments published on Wednesday. "Even by conservative estimates, the timeframe for this round of proactive fiscal policy should cover at least three years," Gao Peiyong, a researcher with the Chinese Academy of Social Sciences, wrote in the People's Daily, the ruling Communist Party's mouthpiece. Gao said China's economic recovery was not yet on a solid footing, so an early end to the stimulus now coming from tax cuts and massive fiscal spending could lead to a new downturn. "It is both necessary and urgent to seek stable economic development at the cost of fiscal imbalance," Gao said. "It is inevitable that China's fiscal situation will run into difficulties in the not-too-distant future."

I wonder what that last sentence means ? Perhaps that China will print more renminbi / yuan ? Or run a deficit and be no longer able to buy US Treasuries or any other foreign currency ? That's something to ponder.

And this from the WSJ: "WASHINGTON -- Stimulus spending on infrastructure projects is moving slowly and many projects won't get started before the summer construction season ends, complicating the Obama administration's efforts to tout the impact of the $787 billion economic recovery act. ... The White House Recovery Office said Tuesday that government agencies have decided how to spend about $31 billion of the $73 billion going directly to construction projects, but it couldn't offer a figure on how much has actually been spent. "The Recovery Act was designed to ramp up over time with more spending later this year and early next, ensuring that we're steadily laying the foundation for a real, long-term recovery," said Ed DeSeve, senior adviser to the president for implementing the recovery act." "

In other words, those expecting a double dip recession might find they are wrong. The long, time-delayed stimulus spending here and in China would tend to lessen the growth off the bottom, but then give more staying power to keep going until the negative behavior of the private sector changes to positive outlooks. That would mean sustained growth and no double dip.

Markets

Surprisingly, stocks held over S&P 1000. If they can hold for a few more days to the end of the week, sidelined bears will surely be sweating terribly.

Word of the Day

"Transhumance" - noun [$10]
Transhumance means the seasonal moving of livestock to a different region.
Sentence (metaphorical usage): Study of the transhumance of beefer elephants in the stock markets can be a rewarding. On what do they graze ? Where are their water holes ? In the boom of the 1990s, their sustenance were technology stocks. In the 2003-2007 rebound, financial, energy and commodity stocks provided their feed and water. Will those alpine pastures be re-used or will new pastures be found over other ridges?

Verbum Diei

"Turba, -ae" - noun, feminine; first declension.
Turba mean the crowd.
Sententia: Vitate turbam.
Sentence: Avoid the crowd.

33 comments:

Bud said...

Bman what is the situation in your agressive fund ?? are you back in ..........or still 80% cash

Bud said...

come on Bman...........you are the one that always tells me i need to be more skeptical of what i read in the papers

do you really believe yhe 787B was a jobs stimulus bill ?? maybe 10 %........90% was a pent up 8 year payback to the democratic constituents.......the better title for it would have been 'Obama-Pelosi Victory Bill'

Bud said...

Bman is currency trading an asset class ??

Bud said...

Bman have you ever invested in a hedge fund ?? have you ever been solicited by a beefer.........surely some of your ex-classmates and ex co-workers from your days on wall street work at beefers.............and surely you stayed in touch with some


you mean to tell me you were never curious or interested in putting money with them...........i find that hard to believe

Bud said...

Bman are you long any regional banks ??

Bud said...

'stocks like NVAX disgust me'


yeah..........stox that go from 2 to 5 in a few weeks sure are disgusting


great job mern

Bunkerman said...

my speculative Obama fund of mostly cash now. After my Obama dump error in early July, I have not fel tcomfortabl ebuying much, except FCX for that flip and some MT I still hold.

I still fear that Obama will not re-appoint Ben, so do not want to get too aggressive.

My Fido fund (which is rather aggressive, too, but with bigger names) is about 70% long now, after the partial sale of HBC.

Bunkerman said...

no, currency trading is not; it's a net zero balance.

Investing in foreign currency bonds is.

Or diversifying $ cash balances into other currencies.

Bunkerman said...

yes, I have been solicited by hedge funds.

no, I have never invested in one.

My partner has, with some success and some failure. He has done very, very, very well with a commodity investment manager for over 20 years.

Bunkerman said...

no re regional banks.

Bunkerman said...

Frankly, I don't see why anyone rich would take risks just to get more money.

Trusting some hedge fund manager is just stupid and greedy. Get a good dog like Krypto, pay her dog biscuits for asset allocation and keep the risks balanced and the money unde rone's own control.

My partner's success in commodities is via a friend that he'd known for many years and even he started out small to see how the technique worked.

Bunkerman said...

From what I've seen of hedge funds (via offers to me and through my partner and others) is that they are mostly bs to get fees. And the big time brokers are the same with their managed accounts.

mfl59 said...

By that logic why dont governements simply spend in perpetuity for long lasting economic growth? Keynes was gay you know....

Bunkerman said...

I'm happy with my 10% per year average in Krypto and the 50% I try to make in my much smaller speculations (which a bit of fun). that's enough for me.

Bunkerman said...

there's more to life than making more money (esp. once one has enough to stop working).

Bunkerman said...

diminishing returns in good times cuts the value of extra government spending to nil.

It only works in bad times or for structurally separated areas of a nation or economy.

Bunkerman said...

oh, of course most the "jobs" bill was a massive payoff for the Obama-Pelosi crowd. I've said that before.

But what was stimulus (maybe $200B) is spread out.

mfl59 said...

UTA lmaoooo...that was the easiest short pick of the year....

danke vielmals....

Bunkerman said...

sold JPM in Fido - hard to see much more ups for while; sort of like my sale of BHP.

Maybe 20% more, but willl probably follow market from here.

Got about 85% gain on it.

Bunkerman said...

it seems to me that other sectors need to lead the next more to S&P 1200.

Bud said...

Bman is Calpers a beefer ??


cuz i been reading that they engaged in certain 'very complex financial transactions' with some ......ummmm....beefers

Bud said...

Bman are FIG and BX beefers ??


are the stocks FIG and BX an assett class ??

Bud said...

MTG


'nailed it' 'highfive'


holy smokes.......a cool point overnite


danke vielmals jim !!!!!!!!!!!



100points over 2years my ass

Bunkerman said...

Some of Calpers portfolio is invested in a beefers ... not all.

Bunkerman said...

use your brain, Bud ... a fund management company's stock is equity in a company. FIG and BX aren't any different than BEN or other fund managers like Blackrock. They are part of the Wilshire 5000 universe of US equity. That entire universe of US equity is an asset class. Single companies are just ... single companies in that large class.

Private equity [the actual investmentt]could represent a bit of that large asset class IF one knew its value after fees.

mfl59 said...

"use your brain, Bud"

its not that simple Bunky....

jim holds the remote control....Bud simply does what the remote programs him to do...individual thought not an option

Bud said...

GS goin to 200 ???


someone gonna be singin in the rain if that happens


Bman what your favorite version of that song ?

Bunkerman said...

Gene Kelly, Debbie Reynolds & Donald O'Connor, of course. As in teh movie.

Bud said...

BX

'nailed it' 'high five'

remote control indeed


danke vielmals jim !!!!!!!!!!

Bud said...

RDN

'nailed it' ' high five'


i love this remote control !!!!



danke vielmals jim !!!!!!!!!!!!!!!!!!!!!!

Bunkerman said...

I wonder why Bud always thanks "Jim" in German ? Hmmm ...

Bunkerman said...

perhaps the master-slave relationship ?

;)

Bud said...

lmaoooooooooooooooo Bman