Thursday links: nuanced voices

Tom Brakke, “Myopia is the enemy of the investor.  Structured myopia makes no sense whatsoever, for the individual investor or for the biggest firms in the world, but you find it everywhere.”  (the research puzzle)

The stocks analysts love (and hate).  (Bespoke)

Forget the PIIGS.  Mexican bonds are where it is at.  (The Money Game)

Spain is the epicenter of the Euromess.  (WSJ)

Sprint Nextel (S) has found a friend in Phil Falcone’s Harbinger Capital.  (market folly)

KKR might finally come public in the US.  (WSJ)

Some companies that may feel some blowback from the Toyota Motors (TM) crisis.  (footnoted)

Smaller dark pools may close or merge as regulation (and brokers) tighten up.  (Reuters)

What role do short-sellers play in keeping markets fair?  (Deal Journal)

The new short selling regulations explained.  (MarketBeat, NYTimes)

Short sellers didn’t kill Lehman Bros. and Bear Stearns.  (Big Picture)

Harry Markopolos doesn’t have good things to say about the SEC.  (Dealbreaker, Fortune)

Bernanke compares Fannie and Freddie to a platypus.  (Real Time Economics)

Mike Konczal, “what has this huge financialization of the economy brought us?”  (Rortybomb)

Container ship owners are bringing their ships out of mothballs.  (The Money Game)

Decent growth in trucking volume in January.  (Calculated Risk)

On double dip watch as economic indicators come in worse than expected. (Money Supply)

On the use of housing as a leading economic indicator.  (Calculated Risk)

The pieces are in place for a second wave down in home prices.  (Felix Salmon)

Umair Haque, “The real roots of the crisis aren’t about liquidity requirements, reserve ratios, or monetary transmission mechanisms. No amount of regulation or rule-making can fix it. And mere “growth” in GDP, as we’re discovering, isn’t a cure for it.”  (HBR)

Simon Johnson, “It is in the interests of both the United States and global economic prosperity that China discontinues its massive intervention in the market for renminbi.”  (Baseline Scenario)

The municipal financial crisis is spreading.  (Distressed Volatility)

China may have its own muni crisis.  (Curious Capitalist)

Ten things James Altucher learned trading with Victor Niederhoffer.  (Financial Adviser)

Commission-free trades are no bargain if it changes your trading.  (Forbes)

Can the Startup Visa Act become law?  (A VC)

Adventures in PR.  Getting credit for doing what you are already doing.  (peHUB, Infectious Greed)

Why “nuanced voices” are persona non grata at CNBC.  (Big Picture)

Ten financial blogs you need to bookmark now.  (WSJ also Abnormal Returns)

Social media can help established media brands like The New York Times.  (The Big Money)

The problem with reading non-fiction on the Kindle.  (Felix Salmon)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Message to Visitors

I've been approached in the past about speaking and consulting gigs, but other obligations have often precluded me from getting involved. However, I've recently wrapped up a time-consuming commitment and am open to discussing other possibilities. For those who are interested in thoughtful insights and the unadulterated truth, feel free to get in touch.


Wednesday links: confidence chilled

February was a bad month for consumer confidence.  (The Money Game, EconomPic Data, Zero Hedge)

What happens to the stock market after consumer confidence tanks.  (Big Picture, Bespoke)

Mark Hulbert, “It turns out, in fact, that consumers are a great contrarian indicator. They feel the best at the end of economic expansions, just when they should be becoming more cautious. And they feel their worst at the depth of recessions.”  (Marketwatch)

The many myths of Warren Buffett.  (The Pragmatic Capitalist, Kid Dynamite)

Why the IPO market has stunk it up in 2010.  (peHUB)

Top stock holdings of hedge funds.  (market folly)

Hedge funds have fallen out of love with technology stocks.  (The Money Game)

Now that is a share buyback program.  Sears Holdings (SHLD) has shrunk its shares outstanding 30% since 2005.  (Bespoke)

Citigroup (C) is looking to get out of the hedge fund of funds business.  (WSJ)

The SEC votes to halt short sales in stocks already down 10% on the day.  (BusinessWeek)

NBBO is not all that matters for brokerage costs.  (Bloomberg)

Legg Mason (LM) is joining the rush to launch actively managed ETFs.  (Morningstar)

Fees on fees.  The the new PowerShares CEF Income Composite Portfolio (PCEF).  (IndexUniverse)

Another notable portfolio manager is entering the go-anywhere mutual fund game.  (WSJ)

The effect of corporate news on stock prices.  (CXO Advisory Group)

Why do prices cluster around round numbers?  (The Psy-Fi Blog)

Why the stocks of obviously bankrupt companies don’t trade at $0.  (DFA)

Good work if you can get it.  CSFB bankers clean up with “toxic bonuses.”  (WSJ)

Japan is operating under a “false axiom” that will one day end.  (Contrarian Edge)

Why you still need to keep an eye on the Nikkei.  (The Money Game)

The US dollar was left for dead.  Why it is still the world’s #1 currency.  (Curious Capitalist)

Ken Rogoff is not optimistic about the Chinese economy.  (Bloomberg)

The IMF cannot help Greece.  (Baseline Scenario)

Felix Salmon, “But buying CDS protection is not really equivalent to shorting a stock — it’s much closer to buying a put option on a stock.”  (Reuters)

How one hedge fund won betting against Europe.  (WSJ)

Joshua Brown, “One of my favorite reforms instituted by Mary Shapiro’s new SEC is the curtailing of the Broker Proxy Vote.”  (The Reformed Broker)

The Volcker Rule we hardly knew ya.  (naked capitalism)

Terrible existing home sales figures.  (DJ Market Talk, Money & Co., Bespoke)

More looks at the Case-Shiller home price data.  (Calculated Risk, Atlantic Business)

The price-to-rent ratio “suggests that house prices are still a little too high on a national basis. But it does appear that prices are much closer to the bottom than the top.”  (Calculated Risk, ibid)

24% of residential home loans are underwater.  (24/7 Wall St.)

With the US flush with natural gas, Canada now has a oversupply problem.  (The Money Game)

Can California be trusted to spend its funds on high speed rail?  (Fortune)

In defense of financial speculation.  (WSJ)

Momentum, market underreaction and sports betting.  (SSRN)

Happy third blogiversary to David Merkel.  (Aleph Blog)

Who knew they still published SmartMoney?  (DealBook)

James Surowiecki, “The real problem is not complex: there’s too much venture capital, and there are too many venture capitalists, for the industry to be really profitable.”  (Technology Review)

How the Google algorithm rules the Web.  (Wired)

The paradox of toil.  (Infectious Greed)

Are great investors night owls or morning larks?  (Simoleon Sense)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Tuesday links: volatility contraction

A volatility contraction implies a big move soon.  (Quantifiable Edges)

Earnings have normalized but stocks are no longer cheap.  (Big Picture)

How one hedge fund is betting on agriculture.  (market folly)

Why Brookfield Asset Management (BAM) is the likely buyer of General Growth Properties.  (Value Plays)

Rising short term interest rates will be a negative for mortgage REITs.  (Barron’s)

When is the best time to own options in the expiration cycle?  (OptionsZone)

Enough already with the media adulation of Warren Buffett.  (DJ Market Talk)

Brett Steenbarger, “The motivation to trade? Everyone has that. The motivation to be more than who you are: that’s what makes winners. “  (TraderFeed)

The bull case for Treasuries.  (Trader’s Narrative)

A 30 year TIPS auction allows us to calculated long term inflation expectations.  (WSJ)

Repos help explain what happened in the shadow banking market?  (Marginal Revolution, Real Time Economics, Felix Salmon)

Commercial real estate prices are down some 40% from the peak.  Is the worst over?  (Calculated Risk contra Mish)

The Fed may stop buying MBS but Fannie and Freddie’s blank check allow for continued market support.  (Clusterstock)

The Case-Shiller figures show the pace of deterioration in home prices slowing.  (Big Picture, Real Time Economics)

Goldman Sachs (GS) created some of the most toxic CDOs.  (Bloomberg, Big Picture, Atlantic Business)

Goldman Sachs’ spokesman Lucas Van Praag has become part of the story.  (DealBook)

Ken Rogoff sees more sovereign defaults coming.  (naked capitalism)

Why did consumer confidence fall off the table?  (FT Alphaville also Crossing Wall Street)

The big banks want you to think they are lending to small businesses.  (Baseline Scenario)

A continued slump in state tax revenues presages further job cuts.  (Calculated Risk)

Why isn’t the “innovation economy” creating more jobs?  (Mandel on Innovation)

Factors are lining up for higher coal prices.  (Bloomberg)

On the benefits of high speed rail to the economy.  (The Atlantic)

On the correlation between CNBC ratings and the VIX.  (Zero Hedge)

Five different kinds of checklists, including the “discipline list.”  (HBR)

Has Toyota Motors (TM) past the PR “point of no return”?  (24/7 Wall St.)

Why is Wal-Mart (WMT) buying Vudu and not NetFlix (NFLX)?  (Deal Journal)

Surprised the CFTC would approve futures on movie box office receipts.  (Reuters, New Rules of Investing, The Wire)

Twitter announced that users generate 50 million tweets per day.  (GigaOM)

Can Twitter make money?  (Technology Review)

What is it about blogging that drives wages down (to zero)?  (EconLog)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Monday links: record steepness

Emerging markets have underperformed during this most recent rally.  (Bespoke)

Mixed market performance YTD.  (StockCharts Blog)

How should we read the record steepness of the yield curve?  (The Money Game, Mish)

The case for higher interest rates.  (The Pragmatic Capitalist, The Money Game)

Rydex market timers are bearish on equities.  (The Technical Take)

Want volatility?  Look at the iShares Dow Jones U.S. Home Construction Index Fund (ITB).  (WSJ)

Howard Simons, “While individual managers can and do outperform the averages, the simple fact remains currency trading is a zero-sum game.”   (Minyanville)

Hedge fund replicators are turning their sights on traditional active managers.  (Pensions & Investments)

Whitney Tilson, “Buy and hold isn’t what it used to be.” (Kiplinger’s)

How Warren Buffett looks at Berkshire Hathaway’s inclusion in the S&P 500.  (Jeff Matthews)

Is Bloom Energy going to change the way we generate electrical power?  (CBS News, earth2tech, peHUB, engadget, TechCrunch)

Merger Monday is back.  Schlumberger (SLB) agrees to acquire Smith International (SII).  (NYTimes also Deal Journal, DealBook)

James Altucher on why Yahoo! (YHOO) is cheap.  (Financial Adviser)

Roger Ehrenberg, “The issue isn’t derivatives; it’s all financial transactions whose objective is to deceive or to weaken financial transparency.”  (FT Alphaville)

Has Treasury Secretary Tim Geithner been “captured” by the big banks?  (Big Picture)

Former Treasury secretaries back the Volcker rule.  (Reuters, The Reformed Broker, Big Picture)

What financial innovations did more harm than good?  (Economic Principals)

Leverage kills.  The only question at what level?  (Atlantic Business)

Okun’s Law is broken as businesses push even more “pain” onto workers.  (Economix)

Is Japan the next Greece?  (Bloomberg)

What China can (and cannot) do with its massive currency reserves.  (Michael Pettis)

A look at the sad state of the US economic recovery.  (VIX and More)

The Chicago Fed National Activity Index showed a nice jump in January.  (Calculated Risk, Real Time Economics)

Is price targeting a superior strategy to inflation targeting?  (Real Time Economics)

CPI measured three ways show little in the way of inflation.  (Calculated Risk)

Why it took $642 million in fees to wind-up Lehman Bros. (24/7 Wall St.)

A new blog focused on merger arbitrage.  (Merger Arbitrage Investing)

Amazon (AMZN) is the most trusted brand in America.  (GigaOM)

Contrary to popular belief does the US produce too many scientists?  (Scientific American)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Sunday links: bond blog blues

The case against emerging markets.  (The Psy-Fi Blog, The Reformed Broker)

The surprising state of the high yield bond market.  (IDD via TheStreet)

Just because a closed-end fund has a high yield does not mean it is a good deal.  (WSJ)

A new ETF to track the closed-end fund universe.  (InvestmentNews)

Equity sentiment at week-end.  (Trader’s Narrative, The Technical Take)

Hedge funds hate the Euro.  (market folly)

The Harvard endowment loves iShares.  (IndexUniverse)

Brett Steenbarger, “Of the factors contributing to trading success, creativity is one of the least appreciated.”  (TraderFeed)

Barry Ritholtz, “The lesson to be learned is that billionaires invest differently than you and I. They have very different goals and objectives. They are not concerned with saving for retirement. One should consider that before chasing their most recent buys.”  (Big Picture)

They say casinos never lose.  Well they did in 2009.  (Calculated Risk)

Should the Fed stay in the bank regulation business?  (macroblog)

How should we interpret the Fed’s decision to raise the discount rate?  (Econbrowser)

Long-term unemployment is the story of this recession.  (NYTimes)

Loan modifications just put off the inevitable.  (Calculated Risk)

Ugh.  The New York Times plans to put their blogs behind a paywall.  (Felix Salmon)

Why is so hard to maintain a good bond blog?  (Aleph Blog)

How the Apple iPad will help transform the financial industry.  (Howard Lindzon)

Measuring traffic on the Web is no easy matter.  (WSJ)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Friday links: a tightening cycle

Ian Salisbury, “In 2009, ETFs missed their targets by an average of 1.25 percentage points, a gap more than twice as wide as the 0.52-percentage-point average they posted in 2008..”  (WSJ)

On the benefits of fundamentally weighted bond indices.  (IndexUniverse)

Do hedge funds thrive in periods of market chaos?  (All About Alpha)

Equity sentiment has shifted back to neutral.  (The Pragmatic Capitalist)

Everybody talks their book, everybody.  (Abnormal Returns)

Why were Goldman Sachs (GS) executives dumping stock in 2008?  (Opinionator)

What happens to the stock market when the Fed commences tightening?  (Trader’s Narrative)

Bank profits may come under pressure as the Fed begins raising rates.  (NYTimes)

The Federal Reserve raises the discount rate.  Did the news leak?  (MarketBeat, Clusterstock, EconomPic Data, Calculated Risk, FT Alphaville)

The US trails Asia in terms of the tightening cycle.  (NYTimes)

Core consumer inflation drops for the first time since 1982.  (WSJ, Calculated Risk, DJ Market Talk)

Why the US can’t inflate away its debts.  (Economix)

If you look at Wal-Mart (WMT) results there is little prospect for inflation.   (Breakingviews)

Still no rebound in rail traffic.  (DJ Market Talk)

Where the LEI goes the economy usually follows.  (EconomPic Data also Big Picture)

Short sales (of homes) are rising.  Expect even more.  (Calculated Risk)

Is a jobs tax credit the next step to create “jobs, jobs, jobs”?  (WashingtonPost)

Will the deficit commission actually accomplish anything?  (Economist, A Dash of Insight)

Turkey catches a sovereign upgrade while most of Europe trembles.  (24/7 Wall St.)

Countries hold the Olympics at the risk of their debt rating.  (Clusterstock)

Google (GOOG) gets into the electricity business.  (24/7 Wall St., earth2tech)

On the parallels between judging a dog show and picking stocks.  (the research puzzle)

The journey Michelle Leder traveled to the ultimate sale of footnoted.org.  (Poynter also Investor’s Consigliere)

The beta release of StockTwits garners some reviews.  (TechCrunch, The Reformed Broker)

The curator’s dilemma.  (Jeremy Stein)

Data visualization using Twitter data.  (HBR)

Interesting discussion with Julio DiPietro on his new film set in the world of finance “The Good Guy.”  (FINS also Bloomberg)

Ryan Sager, “When we shell out on a bottle of wine, in other words, the bullshit is what we’re buying.”  (SmartMoney)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Thursday links: affect hypothesis

Defensive sectors have underperformed during the most recent rally.  (Bespoke)

A summary of where we stand from a technical standpoint.  (The Pragmatic Capitalist)

Why the 200 day moving average matters.  (Trader’s Narrative)

Hedge funds down in January but best major asset classes.  (DealBook)

Paolo Pelligrini is short America and long commodities.  (market folly)

Do you want to get a piece of John Paulson’s hedge fund?  (Clusterstock)

Individual investors are warming to ETFs and the brokers have noticed.  (WSJ)

Novel ETF structures generate new tax issues.  (Morningstar)

To short or not to short?  Two different views.  (Finance Trends Matter)

Ten things I learned from trader Brian Shannon.  (SMB Training)

Can you improve on good old fashioned price momentum in a sector rotation strategy?  (CXO Advisory Group)

What is the “affect hypothesis” and how does it mislead investors in glamour companies?  (SSRN)

An extended piece on the risk and rewards of high-frequency trading.  (FT also Zero Hedge)

Social networks that used to inform individual financial behavior have broken down.  (The Psy-Fi Blog)

How greater use of exchange-traded “vanilla options” could transform the derivatives business.  (Rortybomb)

David Rosenberg is looking for a better entry point for commodities. (Fortune)

Is the big for General Growth Properties a sign that retail has bottomed?  (Economist)

Matt Taibbi, “The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown.” (Rolling Stone also Big Picture, Crossing Wall Street)

“Intentional or not, however, Goldman’s current PR strategy is truly dangerous. It does not take into account that Goldman is simply too big, too interconnected, and, yes, too successful to behave like an arrogant Big Swinging Dick toward everybody.”  (Epicurean Dealmaker)

Wasn’t AIG supposed to be broken up and sold off to help repay the Feds?  (naked capitalism)

Remove the Fed from bank supervision at your own risk.  (Dealbreaker)

Stunning graph of the ratio of cash assets to business loans at US commercial banks.  (Free exchange)

Mike Konczal, “..the fact that [the GSEs] it might have been ready to go as a garbage bag for the private sector’s bad bets, a bag taxpayers have to eat out of, has been the most surprising, and terrible, thing about it in this crisis.”  (Rortybomb)

Apparently everyone in Euroland is cheating on their debt levels.  (The Money Game)

The collective inability of governments to manage their budgets or reform their financial systems is predictable (and depressing).  (DJ Market Talk)

Did the stimulus help?  (Baseline Scenario, Slate, Econbrowser)

A Pew Study fails eight states on their underfunding of retiree benefits.  (Pew, NYTimes, Mish)

More cities are weighing bankruptcy protection.  (WSJ)

Nathan Myhrvold, “I believe that invention is set to become the next software: a high-value asset that will serve as the foundation for new business models, liquid markets, and investment strategies.”  (HBR, NYTimes)

A new modular technology allows for the wider use of nuclear power.  (WSJ)

Does the extraction of oil actually change the spinning of the planet itself? (Infectious Greed)

StockTwits is all new.  What should you do on your first visit?  (StockTwits Blog, Howard Lindzon)

Do you want to feel happier?  Schedule a vacation.  (Science Blog)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Wednesday links: shaky prospects

Doug Kass makes the macro case for a continued underweighting of equities due to the “shaky” prospects for global growth.  (TheStreet)

Is it time to go nuclear now that the Obama Administration has weighed in?  (The Money Game also WashingtonPost, Atlantic Wire)

Mark Hulbert, “So it’s comforting to know that the insiders have not been aggressively selling the market’s recent correction”  (Marketwatch)

According to the expectations ratio the profits picture still looks good.  (The Pragmatic Capitalist)

What Warren Buffett sold to buy Burlington Northern.  (Bloomberg)

Some consolidation in the ETF management business.  (IndexUniverse)

Big hedge funds love the stocks of the too big to fail banks.  (FINalternatives)

Do as I do, not as I say.  George Soros has been buying gold while warning of a bubble.  (MarketBeat also The Reformed Broker)

David Einhorn loves Boston Scientific (BSX). (market folly)

Why can’t James Simons’ Renaissance Technology turn performance at its Institutional Equities Fund around?  (FINalternatives)

Calculating the real costs of holding a crude oil or natural gas ETF.  (IndexUniverse)

The Simon Group (SPG) offer for General Growth Properties is a one-off, not a sign of a change in commercial real estate.  (The Deal also DealBook, WSJ, The Money Game)

Michelle Leder, “If you thought that Google (GOOG)was immune to the sluggish economy in 2009, think again.”   (footnoted)

Brett Steenbarger, “A good part of what we call luck may involve intuitive access to information that unlucky people lack.”  (TraderFeed)

Old guys on Wall Street think there needs to be tigher regulation.  (NYTimes also DJ Market Talk)

Has China started selling US Treasurys?  If so, what does it mean?  (EconomPic Data, Minyanville, FT Alphaville)

Is sovereign debt the second wave of the credit crisis?  (Big Picture)

European banks would be looking good, if it weren’t for that whole PIIGS problem.  (Economist, WSJ)

Did Goldman Sachs (GS) go too far in helping Greece fudge its debt figures?  (naked capitalism)

Greece should leave the Euro behind, but it can’t.  (Crossing Wall Street)

Barry Ritholtz, “One of the oddest things to come out of the entire credit crisis, recession and muddling recovery has been the sudden re-emergence of deficit hawks.”  (Big Picture)

Is there a case for a VAT?  (Marginal Revolution)

Tentative turns in a couple economic indicators.  (Calculated Risk, EconomPic Data)

Colorado is experiencing a transition into a “power-sector state.”  (Gregor Macdonald)

What does it mean when big companies like Wal-Mart (WMT) can’t get their 401k plans right.  (Baseline Scenario)

Do we need broader fiduciary duties to help “build better brokers“?  (Curious Capitalist, Atlantic Business)

“Anthropomorphizing” market moves is decidedly unhelpful.  (Felix Salmon)

An introduction to value investing.  (ValueHuntr via Simoleon Sense)

A master class in behavioral economics.  (Farnam Street)

An interview with Howard Lindzon on the future of StockTwits.  (peHUB)

Community will power the curated web.  (Jeremy Stein)

Five sensible yet entertaining investment blogs.  (Globe Investor)

It’s cool when our understanding of the world changes so radically.  (NYTimes via kottke)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Tuesday links: austerity outlook

Matthew Lynn, “There are several good reasons for expecting currency trading to be the focus for financial markets this decade.”  (Bloomberg)

Rising risk premiums and the state of the corporate bond market(s).  (Distressed Debt Investing)

Is there any place to hide in the bond markets?  (EconomPic Data)

The TIPS market is telling us inflation is less of a problem.  (The Money Game)

The S&P 500 is trading at 13.7x estimated 2010 earnings.  (Crossing Wall Street)

Newsletter writer bullishness evaporated during this market correction.  (Marketwatch)

Five dirty little secrets about some popular ETFs.  (ETF Database)

Why lumber prices are up 32% this year.  (WSJ)

Why did hedge fund of funds underperform underlying hedge funds in 2009?  (All About Alpha)

Andrew Hall of Phibro fame has launched a hedge fund to give investors a chance to invest like the commodity firm.  (DealBook, FINalternatives, Clusterstock)

A review of A Trader’s First Book on Commodities by Carly Garner.  (CXO Advisory Group)

What traders can learn from Olympians.  (CSS Analytics)

Why is it that low volatility stocks have outperformed high volatility stocks?  (SSRN)

Global capital markets should be on notice that China is tightening monetary conditions.  (Minyanville)

Interesting presentation on what overinvestment may have wrought in China.  (market folly contra FinancialNews)

Is Bangladesh the next new hot emerging stock market?  (FT Alphaville)

Is a Simon Group (SPG) takeover the end to the General Growth Properties bankruptcy?  (WSJ, Deal Journal)

Joshua M. Brown, “The new buzzword out there is Austerity.  It is the new global zeitgeist.”  (The Reformed Broker)

Do we need a higher inflation target?  (Free exchange)

Will foreign buyers fill the void left by the Fed when it stops buy MBSs?  (WashingtonPost)

More foreclosures are coming and we shouldn’t fight it.  (Big Picture)

Don’t look now but retail sales are improving year-over-year.  (VIX and More)

For those willing to bottom fish in Greece, three candidates from James Altucher.  (DailyFinance)

Greece may not be in the predicament it’s in if people actually paid their taxes.  (Bloomberg)

Is the Greek crisis going to pull Europe together or pull it apart?  (Project Syndicate, ibid)

Is the UK at risk of coming under a sovereign credit attack?  (Telegraph UK)

Americans trust in government seems to be related to the strength of the economy.  (Daniel Drezner)

Facebook has surpassed Google (GOOG) as a traffic generator for some sites.  (GigaOM)

Google vs. Facebook is “the ultimate battle for the control of the internet.”  (Telegraph UK)

HBO and Netflix have converging business models.  (Atlantic Business)

Where Toyota (TM) went wrong.  They tried to be both a “high fidelity” and “high convenience” company.  (DailyFinance)

The guys behind the technology in Minority Report are planning to revolutionize the way we interact with a computer.  (Bits, TechCrunch)

Steve Jobs is reportedly working on a biography with Walter Isaacson.  (NYTimes, Atlantic Wire, The Big Money)

Art prices were down last year, but a recovery in the financial sector provides some hope for 2010.  (DealBook)

Better ideas trump faux followers on the social web.  (Seth Godin)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Monday links: mirrored models

A reversal of the risk trade as investors sell junk bonds.  (naked capitalism also FT Alphaville)

2009 was a banner year for hedge funds as assets under management rebound to $1.6 trillion as 2000 funds close up shop.  (Fortune)

“Credit crisis” hedge funds are closing up shop.  (Crain’s NY via Dealbreaker)

UK fund managers don’t trust private equity (and their IPOs).  (FinancialNews)

Eddy Elfenbein, “The Fed is moving away from its basic function of being a central bank.”  (Crossing Wall Street)

On the benefits of following using a “mirroring” investment model.  (New Rules of Investing)

The efficient markets hypothesis needs a new more descriptive name.  (Rajiv Sethi via Economist’s View)

A “financial expertise arms race” may have led to an overinvestment in financial technology.  (SSRN)

A great deal of chatter about how the “era of high joblessness” is going to transform America?  (The Atlantic also Baseline Scenario)

What happens when the Federal government stops supporting the housing market?  (NYTimes)

State budgets have been a persistent drag on output, offsetting much of the discretionary boost from stimulus.”  (Free exchange)

How good is retail sales at forecasting GDP?  (Big Picture)

Why Germans will not dip into their pockets to bail out Greece.  (FT Alphaville, NYTimes also The Money Game)

Is Goldman Sachs (GS) at risk in Euroland due to its dealings with Greece?  (Baseline Scenario)

Paul Vigna, “The Greeks have spent a decade trying to live as part of the Eurozone, but they squandered the benefits it brought and now the masquerade’s about over.”  (DJ Market Talk)

Is China poised to revalue the renminbi by up to 5%?  (FT Alphaville)

Steve Randy Waldman, “Both globally and within most nations, the patterns of consumption required to sustain existing social arrangements are inconsistent with the distribution of the fruits of production”  (Interfluidity)

Hank Paulson doesn’t think the Volcker Rule will work.  (Telegraph UK)

There is plenty of outrage to go around when looking at corporate boards of directors.  (Fortune)

Very funny.  Match the headline with the blog.  (The Reformed Broker)

The growing gap between college enrollment rates and graduation rates.  (Economix)

How many of your Facebook “friends” do you count amongst your “real life social circle of support”?  (The Frontal Cortex)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Sunday links: round numbers

Historical analysis of what the stock market does after President’s Day.  (Bespoke)

Futures speculators have given up on the Euro.  (Sentiment’s Edge)

Risk aversion is appearing once again in the bond market.  (TraderFeed)

Investment grade corporate bonds are no longer cheap.  (WSJ)

Investor sentiment at week-end.  (Trader’s Narrative, The Technical Take)

More evidence that companies manipulate earnings results.  (WSJ, Big Picture, DJ Market Talk)

Acts of omission and data mining.  (EconomPic Data)

To what degree do portfolio managers copy off each other?  (World Beta)

Mutual fund investors were poor market timers this past decade.  (Morningstar)

John Bogle sees no real alternative to indexing.  (DailyFinance)

Jason Zweig, “For individual and professional investors alike, more trading doesn’t ensure higher returns.”  (WSJ)

Options market makers may lose a coveted tax break.  (Barron’s)

On financial reform, “..after decades of getting exactly what they want, I just can’t believe that the banking lobby is now going to end up getting exactly what they don’t want.”  (Felix Salmon)

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal.”  (NYTimes)

Homeowners are finding it difficult to refinance their mortgages.  (Calculated Risk)

The Federal government may have to consider a VAT to plug the long-term hole in the budget.  (NYTimes)

The Federal government can’t do much about jobs growth in the short term.  (Curious Capitalist)

Why round numbers loom large in our decision making.  (WSJ, Big Picture)

“Why would an iPhone Verizon be so important?”  (Ultimi Barbarorum)

Ten issues facing Apple (AAPL).  (Apple 2.0)

More thoughts on what Google Buzz and the backlash against it.  (A VC, Howard Lindzon, Silicon Alley Insider)

What Morningstar (MORN) hopes to accomplish with its acquisition of footnoted.org.  (Benzinga)

Would newspaper sites do better if they put the reader first and looked more like Craiglist?  (WSJ)

Content vs. Aggregators vs. Curators:  a debate.  (Abnormal Returns also The Reformed Broker, Leigh Drogen)

On the economics of happiness.  (Qn via Freakonomics)

El Bulli to close permanently.  (Diner’s Journal also Marginal Revolution)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Friday links: debt levels matter

David Merkel, “Ignore anyone who tells you that debt levels don’t matter.”  (Aleph Blog)

Rydex market timers have abandoned precious metals.  (Trader’s Narrative)

Corporate stock buybacks have ticked up.  Beware. (Marketwatch, Minyanville)

Why is a defensive sector like the utilities down so much YTD?  (Afraid to Trade)

Jeff Miller’s own set of sentiment indicators show fear.  (A Dash of Insight)

Can a simple trading strategy like the 4×2 system beat the hedge funds at their own game?  (Financial Adviser)

The fund fee debate just heated up.  (WSJ)

Hell freezes over.  Berkshire Hathaway (BRKB) enters the S&P 500.  (WSJ)

“Simply put, Paulson & Co is betting on the devaluation of the US dollar. They see inflation in the cards for the future and are positioning themselves accordingly.”  (market folly, ibid)

What happens to oil prices when the Fed is increasing interest rates?  (UpsideTrader)

The pitfalls (and potential benefits) of breaking your own trading rules.  (Kirk Report)

How long is the long term?  (Morningstar)

How Apple (AAPL) could add $5 in earnings.  (Tech Trader Daily)

Unfavorable demographics” could lead to a doubling in long-term government bond yields in the US and UK.  (FT Alphaville)

Beware fund marketers pushing the relationship between economic growth and equity market returns.  (FT Alphaville)

Of course Goldman Sachs (GS) and other investment banks front-run their clients.  (Clusterstock also Deal Journal)

Yves Smith, “But why in God’s name does Goldman want or need to be a bank?”  (naked capitalism)

Keep an eye on the Claymore/AlphaShares China Real Estate ETF (TAO).  (VIX and More)

China is trying to cool its economy.  (Bloomberg also Atlantic Business)

On Greece, the EU is “all words and no action.”  (Mean Street also WashingtonPost, Baseline Scenario, Telegraph)

Sovereign risk is out of the bottle. There is no easy way of putting it back in.”  (Economist)

On the parallels between Greece and Bear Stearns.  (DealBook)

Why is European economic growth so slow:  “consumers within the euro zone are not spending enough and the strong currency is making it hard to tap demand in the rest of the world.”  (Economist)

Retail sales expand based on easy comparisons.  (Calculated Risk, EconomPic Data, DJ Market Talk)

How often should we expect a financial crisis?  (Big Picture)

Great graph of how the entire financial sector got too big for the overall economy.  (Economix)

Is “uncertainty” hurting bank lending or is it something more than that?  (peHUB)

How is Toyota like Citigroup and Goldman Sachs?   (Big Picture)

A talk with Scott Patterson author of “The Quants.”  (Tech Ticker, ibid)

Brett Arends, “Even before looking at all the transaction costs, diamonds have proven an absolutely disastrous investment for decades.”  (ROI)

Aggregators can’t extract value from your content if it is ordinary, because it is already worthless.  (Leigh Drogen)

Om Malik, “When I look at the iPad, I see a clean slate to reinvent pretty much how we think of media, information and in fact the whole user experience.”  (GigaOM)

Umair Haque, ” I think Google Buzz is actually really, really cool — it’s just not yet a meaningful service.”  (HBR)

The myth of efficiency and how purveyors of technology like Blackberry have profited.  (Baseline Scenario)

Do e-readers cause eye strain?  (Bits)

Spray-on liquid glass sounds cool.  (kottke)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Thursday links: jobs, jobs, jobs

Bullish sentiment has turned tail in this correction.  (Bespoke)

Keep an eye on volatility to help determine trading size and profit targets.  (OptionsZone)

Why the copper/gold ratio might help forecast equity prices.  (Trader’s Narrative)

Long-short hedge funds have “de-risked” to a large degree.  (market folly)

Hedge fund returns in January were a mixed bag.  (EconomPic Data, FINalternatives)

Jeff Miller, “As interest rates move higher, it is a sign of strength.  It will signal P/E multiple expansion.”  (A Dash of Insight)

Higher economic growth does not equal higher equity market returns.  (FT Alphaville)

Some evidence that the mutual fund liquidity ratio does have some merit.  (CXO Advisory Group)

Is excess cash on corporate balance sheets going to draw unwanted populist criticism?  (Bloomberg)

The importance of indices is highlighted as the Dow Jones index business is sold to CME Group (CME).  (Reuters, WSJ)

In case you didn’t have access to enough leverage, ProShares launches eight new triple-leveraged ETFs.  (VIX and More)

Why shorting stocks is not for me.  (Joe Fahmy)

Ten reasons traders lose their discipline.  (TraderFeed)

Megan McArdle, “I don’t think I need to convince many people that high-risk, high-return investments are a bad way for public pensions to try to deal with their massive unfunded liabilities.”  (Atlantic Business)

Crisis derivatives are a really, really bad idea.  (Clusterstock, Big Picture)

Bernanke on how the Fed will tighten, just not the when.  (Calculated Risk, Mark Thoma, WashingtonPost, Bloomberg, DJ Market Talk)

Widespread indifference to the Greek “bailout” plan.  (FT Alphaville, Mish)

The US is still the world’s “best debtor”, for now.  (Clusterstock)

How Australia largely sidestepped the economic crisis.  (EconomPic Data)

Just how easy will it be to lengthen the average maturity of US government debt?  (Credit Bubble Stocks)

Strategic non-foreclosure has become official policy.  (Big Picture)

It is not always the big names on Wall Street that take home the biggest paychecks.  (DealBook)

The focus of the economy is:  jobs, jobs, jobs.  (Felix Salmon also Curious Capitalist)

Add diesel fuel to the list of economic indicators showing a punk economy.  (USA Today also Calculated Risk)

The Burlington Northern acquisition could be a home run if the Chicago chokehold could be solved.  (Bloomberg)

Blackstone Group (BX) is having problems bringing its portfolio companies public again.  (WSJ)

Just how important Jeffrey Grundlach was to TCW Group.  (BusinessWeek, Money & Co.)

Why is Google (GOOG) getting into the high-speed broadband business?  (MarketBeat, ars technica, NYTimes, Minyanville, GigaOM)

MySpace, RIP.  (GigaOM)

Seriously, you don’t want to take investment advice from journalists.  (Felix Salmon)

Behavioral finance is built on experiments.  Should we be skeptical of the results?  (The Psy-Fi Blog)

Sports statistics show how our subjective feelings of risk interfere with decision making.  (The Frontal Cortex)

Say goodbye to one of the few good bond blogs.  (Accrued Interest)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Wednesday links: shifting landscapes

The market can’t fall much farther if you want to continue calling it a bull market.  (Trader’s Narrative)

John Roque on why this market needs to go lower to become truly oversold.  (Tech Ticker)

John Paulson has only raised $90 million of outside capital for his gold-focused hedge fund.  (WSJ)

There is a rally in truly distressed debt out there.  (Clusterstock)

Bond ETFs had a stellar 2009.  Will that continue in 2010?  (Morningstar)

Fundamental indexing comes to the bond market.  (WSJ)

A history of the PEG ratio and why it is widely misunderstood.  (the research puzzle)

Are CTAs an asset class?  (Morningstar)

Is it worth the time and effort to try and identify actively managed funds even in so-called inefficient markets?  (Capital Spectator)

The latest ETF Death Watch is shrinking.  (greenfaucet)

You can’t keep Lenny down!  (Daily Options Report)

David Merkel, “Liquidity derivatives are not a reasonable product.”  (Aleph Blog)

On the fundamental nature of risk and the too big to fail problem. (voxEU via EconLog)

Does breaking valuation ratios into short and long-term components add value?  (CXO Advisory Group)

Private equity seems to have a beneficial effect on the industries in which it invests.  (SSRN)

A handy sovereign risk table.  (FT Alphaville)

As monetary policy begins to shift and fiscal policy remains imprudent the landscape is shifting.”  (The Pragmatic Capitalist)

How the Fed might use interest on excess reserves to manage the transition from monetary easing.  (DealBook)

It is time for Goldman Sachs (GS) to revamp its board.  (Felix Salmon)

It is hard to blame “market efficiency” for the crisis when almost no one believes in it.  (SSRN)

Who is going to buy all those MBS the Fed is planning to sell?  (Atlantic Business)

Use National Bank of Greece (NBG) as a proxy for the situation in Greece.  (VIX and More)

Germany could bail out Greece, but should it?  (The Reformed Broker, 24/7 Wall St., money supply, WSJ)

Rail traffic is still not demonstrating any strength.  (Calculated Risk)

Will the demand for (or supply of) consumer credit affect future economic growth?  (macroblog)

Cap rates for commercial real estate jumped in Q4 2009.  (Calculated Risk)

Will John Thain be able to keep his hands off his new “hideous” office at CIT Group (CIT)?  (Dealbreaker)

Will Google Buzz gain any traction against Twitter and Facebook?  (The Big Money, Silicon Alley Insider)

Will the tablet computers like the iPad give magazines one more “bite of the apple”?  (Fortune)

Why implementing a pay wall after having charged nothing before is so difficult.  (Predictably Irrational)

Times are tough when the WSJ has a column up touting the financial benefits of clipping coupons.  (WSJ)

What the footnoted acquisition says about the state of blogonomics.  (Felix Salmon, Big Picture, Reuters)

The good news about the beneficial effects of beer on bone density.  (DailyFinance)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Tuesday links: broken equity culture

Rydex market timers are getting bearish.  (The Technical Take)

The stock market is as oversold as it was back in March 2009.  (Bespoke)

What is mutual fund cash telling us about the market?  (Marketwatch)

Is America’s “broken equity culture” ultimately going to lead to lower returns down the road?  (Barron’s)

Distressed debt and arbitrage strategies had positive returns in January.  (FINalternatives)

Marking the top in the high yield bond market.  (Distressed Debt Investing)

Are investors piling into the BlackRock iShares TIPS ETF (TIP) going to be disappointed?  (IndexUniverse, ibid)

Does Pimco have a better way of weighting a global bond index?  (Morningstar)

Investors are pulling back from the emerging markets.  (The Money Game)

Five themes that play off of the divergence between industrialized and emerging economies.  (market folly)

Exotic ETFs do not have the tax efficiency of plain vanilla index ETFs.  (DailyFinance)

Institutional money managers trade more than they tell clients they will.  (WSJ)

Berkshire Hathaway (BRKB) is entering the S&P 500 on Friday.  What to expect?  (Barron’s)

Don’t overlook the benefits of portfolio rebalancing.  (Capital Spectator)

In defense of the management of the United States Oil Fund (USO).  (FT Alphaville)

Apparently the coast is clear for private equity dividends again.  (NYTimes)

Goldman Sachs (GS) responds to its critics, blog-style.  (Huffington Post, Felix Salmon, Gapper Blog, Deal Journal)

The US dollar is going down, on an inflation-adjusted basis, whether Bloomberg says it is or not.  (Finance Trends Matter)

Howard Simons, “Just because the value of paper money is declining doesn’t mean the value of a static asset has to be increasing at an equal and opposite rate.”  (Minyanville)

Is the Fed making it too easy to borrow short and lend long?  (The Money Game)

The good news coming from the temporary job market.  (Atlantic Business)

How the Federal Reserve plans to mop up the excess liquidity sloshing around the financial system.  (WashingtonPost also Fox Business)

Elizabeth Warren takes Wall Street to task for throwing away their customer’s trust.  (WSJ also Baseline Scenario)

Are the wise old men back in charge of fiscal policy?  (Guardian)

Given its relative size why are we so worried about Greece?  (Free exchange)

Venture capital went from “cottage industry” to “asset class.”  What now?  (Institutional Investor)

On the relationship between fear and loss aversion.  (Reuters also Scientific American, TraderFeed)

How is neuroeconomics changing economics?  (The Psy-Fi Blog)

Morningstar (MORN) acquires the excellent footnoted.org blog.  (footnoted)

What induces people to e-mail a New York Times story?  (NYTimes)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Monday links: global margin call

“(A)ny timer of the U.S. stock market who did not beat the market during 2000-2009 has some explaining to do.”  (CXO Advisory Group)

“It may be hard to believe, but 35% of the S&P 500’s gains since the start of 2009 have now been erased over a span of less than 14 trading days.”  (Bespoke)

Is the secular bull market in bonds coming to an end?  (Big Picture)

Why haven’t higher sovereign CDS rates been reflected in bond yields?  (FT Alphaville)

PIMCO favors emerging market (and German) bonds.  (WSJ)

Peaks in leading economic indicators are not great for market returns.  (The Money Game also FT Alphaville)

Why is lumber continuing to power higher?  (The Pragmatic Capitalist)

Listening Nouriel Roubini would have been a mistake last year.  (Telegraph UK)

The volatility of the VIX has surged.   (Daily Options Report also WSJ)

ETFs have joined the rest of the mutual fund complex in a battle of branding.  (New Rules of Investing)

Some Bogleheads are anxious that Vanguard is getting into alternative investments.  (FT)

Roger Nusbaum, “Investment products aren’t greed-causing or speculative in and of themselves. They may create the means with which to express those behaviors.”  (TheStreet)

“For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago.”  (Bloomberg)

Where will the Euro bottom?  (VIX and More)

Simon Johnson, “The euro depreciates, the dollar strengthens, and our path to recovery starts to run more uphill.”  (Baseline Scenario)

Is Greece the first step in a “global margin call“?  (naked capitalism)

John Thain takes over CIT Group (CIT).  (NYTimes, naked capitalism, FT Alphaville)

Felix Salmon, “It’s crucial, in financial markets, that investors walk into risky asset classes with their eyes open, rather than kidding themselves that they can simply hedge those risks away by buying a fancy financial product from Citigroup.”  (Reuters also Risk)

Bryan Caplan, “None of this means that mood is the whole story.   Mood, market conditions, and policy all interact.”  (EconLog)

Deflation is back on the table.  (Econbrowser)

Males aged 25-54 are increasingly not employed.  (Brad DeLong)

Is a value-added tax or VAT the inevitable fix to the budget deficit?  (CNNMoney)

Economic populism is a function of the poor economy.  (New Yorker)

Is Canada facing its own housing bubble?  (WSJ)

“I take issue with Krugman’s “partisanization” of economics – if I could coin a new word”  (Kid Dynamite)

“Despite all my jurisprudential research, I have been unable to locate a statutory basis for the right to cheap insurance.”  (finem respice)

How winning streaks end:  “Winners become sinners when confidence turns into complacency and arrogance.”  (HBR)

Jeff Jarvis, “If you are selling a scarcity — an inventory — of any nonphysical goods today, stop, turn around, and start selling value — outcomes — instead. Or you’re screwed.”  (Buzz Machine)

Ten reasons Sherlock Holmes is the ideal VC.  (peHUB)

Check out who made this “all star team of online finance.”  (New Rules of Investing)

Abnormal Returns Now is the real-time component of this site.  Check it out.


Sunday links: symbiotic investments

Joshua Brown, “China and Brazil are quite possibly the most symbiotic investment story going right now.”  (The Reformed Broker)

More oversold readings.  (Bespoke)

Investment sentiment at week-end.  (Trader’s Narrative, The Technical Take)

Doug Kass thinks it might be time to start getting greedy again.  (TheStreet)

Nobody’s perfect. Paulson’s gold-focused hedge fund reportedly lost 14% in January.  (BusinessWeek also Clusterstock)

David Merkel, “(Y)ou can’t take illiquid assets and make them liquid.”  (Aleph Blog)

More iShares country ETFs are coming.  (ETF Trends)

Is this the beginning of a wave of fund conversions into actively managed ETFs?  (WSJ)

Where Burton Malkiel puts his own money.  (DealBook also Random Roger)

Why your time frame matters.  (A Dash of Insight)

Fund companies now realize their target date funds were a tad too aggressive.  (WSJ)

How can faith be restored in Wall Street?  (WSJ)

An awesome idea.  Pay bankers with subordinated debt.  (Clusterstock)

Goldman Sachs CEO Lloyd Blankfein only earns a $9 million bonus in 2009.  (FT, Deal Journal, Felix Salmon)

“It’s a hell of a lot harder to build a new set of railway tracks than it is to set up a new website.”  (Psy-Fi Blog)

Short-selling bans, at best, had a neutral effect on stock prices.  (voxEU)

Five ways to improve your trading including;  “Improving risk-adjusted returns is as important for a long-term career as improving absolute returns.”  (TraderFeed)

The US dollar is still king, for now.  (Real Time Economics)

The three (not so great) ways out of the PIIGS problem.  (Rolfe Winkler also The Money Game)

Can the US stand by while Europe deals with its own fiscal problems?  (Baseline Scenario, ibid)

Can there be investment banks without conflicts of interest?  (Justin Fox)

Oh, the irony.  (DJ Market Talk)

Floyd Norris, “A global recovery in manufacturing appears to be accelerating.”  (NYTimes)

An unprecedented contraction in consumer credit continues apace.  (Calculated Risk)

David Altig, “What are we to make of the productivity gains in the United States relative to other countries?”  (macroblog)

Five myths of job creation.  (WashingtonPost)

What David Wessel (and Daniel Gross) learned from Hank Paulson’s book.  (Real Time Economics also Washington Post)

Gregor Macdonald, “21st century energy prices overlaid on a 20th century economy? That’s no fun at all.”  (Gregor)

The returns to writing a book, aka Bookonomics, are pretty dismal.  (Big Picture)

The economics of supermarkets prior to a blizzard.  (EconLog, Marginal Revolution)

Abnormal Returns Now is the real-time component of this site.  Check it out.


‘The Single Most Drastic Error in Policy in Modern History’

PBS Newshour has posted a brief but fascinating interview with David Stockman, Director of the Office of Management & Budget during the Reagan era. Despite -- or, perhaps, because of -- his political and financial industry background, he pulls few punches in his remarks about the financial crisis and its aftermath. Here are a few excerpts:

On the relationship between Wall Street and Washington --

DAVID STOCKMAN: ...we have gotten into this syndrome, I think, over the last 20 years, where policy of the Treasury and of the Fed has been dictated by Wall Street, that, if Wall Street threatens to have a hissy fit, or the stock market is going to go down, the Fed has basically capitulated and is creating a very unstable and dangerous financial system in our economy.

On the AIG bailout --

DAVID STOCKMAN: The fact is, the heart of the bailout was AIG. That was $80 billion worth of CDS that was going to go sour.

[PBS Newshour business and economics correspondent] PAUL SOLMAN: CDS meaning?

DAVID STOCKMAN: Credit default swaps, OK? And we weren't bailing out AIG. We were bailing out the banks, because the banks had bought a lot of low-caliber or subprime loans, wrapped some insurance around it from AIG, and said, presto, we have a AAA, a security on our balance sheet.

They didn't. They had garbage on their balance sheet. And the bailout was to make sure that they didn't suffer multi $10 billion write-downs on that AIG-supported loan.

PAUL SOLMAN: So, if you had been in the administration after Lehman Brothers, you wouldn't have supported bailing out AIG?

DAVID STOCKMAN: No, absolutely not. It was the single most, you know, drastic error in policy in modern history, going back to the 1930s. This was exactly the wrong thing to do.

It's destroyed any basis for fiscal discipline in the United States. I was a member of Congress, and I know how they think. And they think by analogy. If you did it for John, you have got to do it for Bob. There is no way that any congressman is ever going to vote against farm subsidies or ethanol subsidies or housing subsidies or anything else, refrigerator subsidies, once we have made this tremendous bailout for Wall Street, and we stepped into AIG.

On the outlook for tax rates --

DAVID STOCKMAN: I think the lesson of the last 25 years is that it doesn't work. You can keep cutting taxes until you reach the point where this year -- or the year just ended, we spent $3.6 trillion, and we only collected $2.2 trillion.

So, we are now so far out of kilter that it's irrelevant. Taxes are going to have to be raised. And the beast needs to be trimmed back. But it can't be starved enough to even begin to cope with our fiscal problem. And this is where I think all the politicians are faking in both parties, but the Republicans especially.

The Republicans think their mission in life is to cut taxes. Sorry, game -- game over. We're now in the tax-raising business. And we're going to be in the tax-raising business for the next decade.

To read the full transcript, click here.

Otherwise, here is the video:


Friday links: shadow banking

The percentage of stocks trading above their respective moving averages are getting close to solidly oversold levels.  (Trader Mike, Bespoke also Quantifiable Edges)

Bearish sentiment is on the rise.  (The Pragmatic Capitalist)

Pullback or new bear market?  (VIX and More)

Adam Warner, “Well, you don’t need a chart to tell you volatility is percolating.”  (Daily Options Report, ibid)

Post BGI, Blackrock (BLK) is now the largest money manager in the world.  (Morningstar)

Some interesting discussion about how multi-strategy was the best hedge fund structure to take advantage of alpha opportunities.  (market folly)

Which Nassim Taleb “investment advice” should we listen to?  (Felix Salmon)

Just what the MAVINS all about? (Wall St. Cheat Sheet)

Ten investment trends including:  “Diversification will remain key.”  (Capital Spectator)

The Burlington Northern acquisition costs Berkshire Hathaway (BRK-A) its AAA rating. (24/7 Wall St.)

Jeff Matthews on how the Burlington Northern deal will transform Berkshire Hathaway (BRK-A).  (Tech Ticker)

Kraft (KFT) had no problem raising funds via debt to close the Cadbury acquisition.  (Breakingviews)

Commission-free trading of ETFs IS a great deal for smaller investors.  (IndexUniverse)

Can Microsoft (MSFT) become a “very different company”?  (GigaOm)

Does GlaxoSmithKline (GSK) have the right formula for improving research productivity?  (Gapper Blog)

A new paper argues that high frequency traders need to have controls in place to avoid high-speed errors.  (Real Time Economics)

Neat graphics on the shadow banking system and what the Volcker Rule might cover.  (Rortybomb)

Goldman Sachs (GS) continues to claim it did not need government assistance.  (Atlantic Business)

Tim Duy, “In this environment, I don’t see how the Fed is interested in substantially tightening policy – but I can see how some policymakers could perceive that their hand was forced if they see a string of upside surprises in growth indicators..”  (Economist’s View)

Anal_yst, “We must accept the fact that the crisis wasn’t caused just by bad actors on Wall Street, but by Main Street, as well.”  (Atlantic Business)

Carmen Reinhart, “..historically, following a wave of financial crises especially in financial centers, you get a wave of defaults. You go from financial crises to sovereign debt crises. I think we’re in for a period where that kind of scenario is very likely.”  (Real Time Economics)

No wonder the US CDS prices have risen so much.  (Fund My Mutual Fund, Bespoke)

Drop in unemployment rate aside, this has been the worst post-War employment recession.  (Calculated Risk also The Reformed Broker, The Pragmatic Capitalist, EconomPic Data, Economix, Big Picture)

Will 5%+ mortgage rates scare off potential home buyers?  (24/7 Wall St.)

Brett Steenbarger, “Market technician Joe Granville famously asserted that if it’s obvious, it’s obviously wrong.  That’s the salience principle, and it’s why impulsive trades so often are losers.”  (TraderFeed)

On the difference between process and outcome.  (Farnam Street)

Bonuses affect activity, not necessarily performance.  (Wired UK)

A review of James Picerno’s new book “Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor.”  (CFA Institute)

This season what NFL teams generated the most “alpha”?  (Analytic Investors via InvestmentNews)

Abnormal Returns Now is the real-time component of this site.  Check it out.