Heisenberg on ECB QE

note: if you are unfamilar with the terms above, you probably will want to skip this post

There are two points in the excellent post that I found worth making a mental note.

First, quote:

“But beyond that, BofA’s Barnaby Martin notes that one “overlooked” aspect of QE is the way in which it “‘transforms’ sovereign debt-to-GDP ratios by moving bonds from risk-averse investors towards more risk-tolerant central banks”.

Central banks are actually sequestering fixed rate risk. That surely makes it easier for investors to stretch out their risk beyond what under non-QE times would be irrational.

Second quote: (my bold)

“Indeed, the ultimate manifestation of new era stimulus (MMT) requires close coordination between fiscal and monetary policy, something Stephanie Kelton will be more than happy to tell you all about. Additionally, Martin describes central banks as “buy-and-hold”, which pretty much by definition means these asset purchases are arm’s length deficit financing, one step removed from MMT. (He doesn’t say that, nor does he advocate for it, we’re just doing some common sense extrapolating.)”

It seems politicians have been spineless to make the needed fiscal policy decisions and debt financing needs exceeded traditional methods … so put in some QE and you get a) ‘off the Treasury books debt financing’ and a risk floor for both investors and politicians. Sounds fishy to me and one has to ask just how stable this would be with another major global financial uh oh? … CB folks have a tough row to hoe.

Mr Toad’s Interest Rate Ride – oh my!

August was this long steep slide, and September so far is a BIG bounce up … hold on to your hats ladies and gentlemen and welcome to a new level of stability and predictability – the next big news will be if the 10yr crosses over 3m and even louder will be the 2yr crossing back over the 10yr.

Too many meetings?

So many of us have lived this and so many of us keep living it. You do not have to, nor should you. Meetings can be effective, efficient and successful. It just takes a bit of effort …

Here’s one set of ideas

https://www.inc.com/robbie-abed/microsoft-found-that-banning-this-1-thing-led-to-happier-employees.html

Here is another set of ideas

https://www.inc.com/scott-mautz/linkedin-ceo-jeff-weiner-says-this-1-simple-rule-will-eliminate-useless-meetings.html

It’s spreading …

Daily Skimm posted an article today that shows tribialism is alive and well across the globe in the guise of nationalism. I ask myself … is this just hate of others or fear? What is the root of that fear, if it is? Then I ask, what are we as gloabal citizens doing to help? Sigh … not much.

Quote below from daily email:

The Story

There is major tension between Africa’s two biggest economies.

And those would be…

Nigeria and South Africa. Earlier this week, people started mass rioting in places throughout South Africa, including Johannesburg and Pretoria. In what people are calling xenophobic attacks, many foreign-owned shops were looted. At least 10 people have been killed. Hundreds of others were arrested.

Whoa. Why is this happening?

The unemployment rate in South Africa is high – 29% – and rioters there are accusing immigrants of taking their jobs. Many of the businesses that were targeted are Nigerian-owned. Other foreigners attacked reportedly come from Zambia, Kenya, and Ethiopia. Many in Nigeria are outraged.

Tell me about that.

In response to the riots, South African telecom and retail businesses in Nigeria have been the target of arson and other retaliatory attacks. All of this has taken a toll on diplomatic relations between the two countries.

What’s the latest?

South Africa has closed diplomatic missions in Nigeria to protect its citizens. Nigeria has recalled its representative to South Africa. And dropped out of this week’s World Economic Forum meeting there. One Nigerian airline is offering to transport any Nigerians out of South Africa for free. Other countries – including Zambia, Tanzania, and Madagascar – have reportedly done things like cancel soccer matches or flights to South Africa because of the violence.

So what happens next?

South Africa says it’s doing everything it can to protect foreigners in the country. Human rights groups aren’t too sure that’s true. Meanwhile, Nigeria is assuring people that it’s protecting foreign businesses there. But all of this has put extra pressure on South African President Cyril Ramaphosa, who’s simultaneously trying to address concerns from protesters over gender-based violence in the country. And trying to convince other African countries at the World Economic Forum to work together on trade.

theSkimm

This isn’t the first time there’ve been xenophobic attacks in South Africa. But the rise in violence is pointing to how major economic strains there can exacerbate social tensions – and lead to deadly consequences.”

A plausible bleak scenario

Scenario planning across many domains works for me – thanks to my early study of Shell’s work. I think thru the different scenarios and try to weed thru Plausible, Probable and Unlikely. From that, plans and contingencies and mitigations are created.

Portfolio managers in today’s environments can easily be overwhelmed with the different scenarios birthed by the seemingly irrational events surfacing around the world.

However, that does not mean you can dismiss them without considering the scenario plausible or probable. This scenario posted today is plausible – tho it bothers me greatly.

Thanks to Heisenberg report for diligently working through this over the last few weeks … it’s not crazy, but it’s scary. How do we plan for it is the key question.

EV & Heavy Metals

I previously posted about EV heavy metal impacts with the intent of balancing out the ‘environmental costs’ of selecting an EV (which most people think is the less evil compared to combustion engine vechicles).

A post today has another angle on heavy metals in batteries – concentrated supplies in countries with their own issues. In this case, nikel and batteries and Indonesia. I am not looking at this as investment or trade (commodities are way beyond my comfort zone today), but as another clue in building a solid plan on EV investing (and perhaps my own purchase when trucks are available at value pricing).

Quote: “The country of Indonesia, which reportedly accounts for 27% of the world’s nickel supply, announced last week that it was accelerating its export ban for the metal. The original plan was to stop exporting nickel after 2021, but there were thoughts recently that the timeline would be moved up perhaps a year or so. Last week’s shocking news was that the ban would start after December 2019, partly an effort to stop the country’s rising government deficit. “

https://seekingalpha.com/article/4289627-tesla-growing-nickel-problem

For Tesla stock investors, I think this is just one more big red flag waving in the wind.

PCT & Yoran Lake Trail – again but better

Last year, i did a shorter version of this hike, but part of Yoran Lake trail was in poor condition and I stayed on PCT – this year, the trail has been updated some, so a great hike! All in all, a 18 mile hike with 2800 ft elevation gain – it’s mostly following PCT between 6500 and 7000 ft elevation.

For most of the hike, north / northeast of this

Past Yoran Lake trail on PCT, there is a side trail / spur you take up to this rock outcropping that pokes out like a stone thumb

I hiked up most of it with 3 other guys and 2 big dogs. I got to almost the top and decided that the risk of going further was too high – it was really steep and sliding rock and scree the last 200 yards or so. The guy w/ the dogs turned around with me as it was just too much risk for the dogs – i did not want to be caught below the dogs if they slipped. The dog guy was great about looking out for his dogs and left his friends … i met him later and he had a great time w/ the dogs in the lakes.

But the view from that stone thumb was tremendous

I traveled on south on PCT and had lunch at great spot beneath this

Looking out more north

And the little lakes (or Maine Ponds) are plentiful

There were just the right number of other hikers for a holiday weekend on PCT … all in all, it was a perfect hike for the last long pass-eleveation hike of the 2019 season. I also came up with my next season inspiration (later)!

Sometimes, things are just simply beautiful

here is the All Trails recording

Mr Toad’s Wild Interest Rate Ride – July & August

There has been so much ink spilled and shared on interest rates recently and almost everybody i talk to mentions rates and / or the inverted curve. Negative rates too ….

4 Week rolling averages are now

30 year – 2.085
10 year – 1.598
2 year – 1.557
3mo – 1.979

My opinion is that between now and the next FED meeting, rates will bounce on the news of the day … and unless swings prompt my investment scavenger instincts (value), I will wait for any further rate dependent capital allocation until both EU and FED have given there September actions.

Gallup on US Important Issues

Infographic: The Most Important Issues Facing The U.S. Today | Statista

Posted today https://www.statista.com/chart/10278/the-most-important-issues-facing-the-us-today/

Number 1 is a double edge sword given all the rhetoric ink spilled on it; without it, growth slows to nearly 0 and a host of other unintended consequences financially … and that’s nothing compared to what it does to the richness of the American social fabric.

Number 2 is obvious, but I was surprise at how high it actually is … the times we live in are not normal.

Mazama Caldera, aka Crater Lake

We recently visited Crater Lake National Park with good friends and one of the things I learned (and should have known) is that we’ve been using the wrong geological name all this time … it’s not a crater, it’s a caldera. (or at least that’s what the Park Ranger told us). Over 7000 years ago, Mount Mazama changed dramatically. – note: there are links to slide shows on different topics – poke around.

This adventure was different from 2 years ago due to an absence of fires and this year taking a boat ride around the lake and spending several hours on Wizard Island. One thing that hit me like a ton of bricks is the magnitude of it all (the lake is 5×6 miles) – staying up on the crater rim just does not have same impact – if you go, take a boat ride!

The lake

The water is amazingly clear … drinkable too (we all had some from the middle of lake – ranger filled everybody’s water bottle). If you doubt me, this pic is in 40 feet of water – let that sink in.

Here is a slide show with standard resolution pics of more Crater Lake water

After the water, the geology of the caldera is beyond amazing.

Here is a slide show with standard resolution pics of more some geological features.

Two of the most popular geological features are Wizard Island and the Phontom Ship; and the above pic shows the ship in forground and the island in background.

The ship

The island

While on the island, we hiked to the top – which IS a crater. Some of us hiked down into the core of the island crater – an odd feeling. A quick swim was also in order but the water was COLD! All the pics in this movie are from the island.

If you’ve read any of my adventure posts here, plants and their beauty and perservance are always interesting … Crater Lake has its share of fabulous creatures.

Another set of plant pics from the lake, the island and all around

The park is one of those amazing places on this wonderful planet … good planets are hard to find!

Interesting 5G data point

SA posted a quick update on SK Telecom 5G users and data usage – quote (bold is mine, and there is no more to the SA post):

SK Telecom (SKM -1%) says it’s built up 1M 5G subscribers just four months after launching service. That’s twice as fast to a 1M milestone as SK accomplished with its 4G launch in 2011. The South Korean company says the 5G subscribers are using 33.7 GB of data each month, vs. 20.4 GB from 4G subscribers. The million subs make up about 3.6% of the total subscriber base of 28M.

This will be an important indicator to watch as deployments roll forward beyond ‘super / power users’ … data usage will be critical to the narrative behind data center, network and storage companies’ future. This one data point suggests >50% increase in data usage … extrapolate that one out!

An hour of work & GDP productivity

Infographic: How Productive is an Hour of Work? | Statista

From those wonderful data dogs, Statista.

What is it about Ireland? They seem to be head/shoulders more productive than the rest … all those EU countries with better social services and progressive (per US standards) governments, seem to be doing better than USA.

CBO on Budget

The non-partisan CBO published their regular budget update report. Heisenberg referenced in a post this morning, so I will not recopy the salient points as Heisenberg did a great summary.

Some of these points are very important for investors and every US voter. At minimum, please read Heisenberg’s post.

Update 8-22 – IHS PMI print this morning throws a bit of cold water on CBO estimates (even as bad as they were) – Heisenberg put a good narrative around this and waxed a bit political (deservedly). Here is the key point to my update – quote:

Moore called the August numbers “a clear signal that economic growth has continued to soften in the third quarter”, and said the data “collectively point to annualized GDP growth of around 1.5%”. That is woefully short of the administration’s lofty 3% goal, and lower than CBO’s estimate which accompanied the group’s worrisome budget forecast released Wednesday.

Needless to say, a good phrase here would be: Uh Oh!

South Sister 2019

If you missed the earlier post – Traveling to South Sister – check it out.

My 3rd hike up this hill in the last 4 years (last year’s), and sadly, this was the least enjoyable – not the mountain, the weather, my legs, my equipment, inadquate water, nor bad pictures. There were just too many people; i have never seen this many people on a Cascades hike in over 30 years of hiking.

The destination

I took the same route as before – straight up from Devil’s Lake with a full parking lot (and i hiked up the trail 1/4 mile and realized i left my forest pass in the ‘g)love box’ … so back to the car and repeat) … some views were the same as before, but the camera found different objects

the color of this lake blows me away – every time

Sadly, with all of the people, too many missed this sign … i even saw people with a dog swimming in one of those most precious and fragile lakes like above …

Once on the summit this year, i spent my time on the southeast side of the rim … the views were quite different from last year’s north side. This year, I also hiked to top in short sleeves & shorts – last year was chilled in long sleeves and shorts (wind).

GIven all the people … i won’t go back

Traveling to South Sister

I planned my 3rd South Sisters hike in 4 years to catch the full moon setting on my way to the trailhead. Getting up in time to be on the road by 04:00 is not that tough, when you have this to look forward to seeing …

The next post will be from South Sister hike