Wednesday, August 28, 2013

New York City: Street Art - Centre-Fuge/Cycle 9

(Drivebycuriosity) - New York City would be way less glamorous without the work of her ubiquitous street artist. One of the most fascinating sat groups is the Centre-Fuge Public Art Project (centre-fuge). I have been reporting about this collective of street artists several times (driveby).

You can spot now their newest project, which the call "Cycle 9". They had invited a group of artists to present their different styles and ideas.

As in the former cycles they used a trailer on East First Street - a satellite office for Second Avenue Subway workers - at First Street East which goes east-west between Bowery and First Avenue along Houston Street East (between the East Village and Lower East Side). You could see more art works on a wall in the "First Park", a tiny playground on East First Street and First Avenue. There also are some installations.

According to their website the new cycle is shown from July through September 2013. They have already collected ideas and artists for their forthcoming "Cycle 10". I am looking forward to it.


Movies: Ain't Them Bodies Saints

(Drivebycuriosity) - Hollywood likes outlaws. Movies like "Bonnie & Clyde", "Pat Garrett and Billy the Kid" and "The Assassination of Jesse James by the Coward Robert Ford" belong to the finest productions of Tinseltown. The exquisite film "Ain't Them Bodies Saints" continuous this tradition (imdb). Wikipedia describes the complex story, that is set and shot in Texas, as "a tale of an outlaw who escapes from prison and sets out across the Texas hills to reunite with his wife and the daughter he has never met." (wikipedia)

Writer and director David Lowery, a newcomer in Hollywood, knotted a psychological study about sacrifice, passion, competition, stubbornness and violence. Lowery put the action scenes into the background and focused on a slowly developing drama which focuses on three characters who are knotted by fate.

The superb cinematography (Bradford Young) magnifies the intense of the film by keeping most of the scenes in dark and painting them often in ocher or in blue. The rare use of bright light works like an alarm underlining the power of the story.
Rooney Mara ("Social Network",  "The Girl with the Dragon Tattoo" , "Side Effects") proved again that she one of the brightest stars in Hollywood. Her intensity and the power of eyes gives the audience a special experience.  Casey Affleck fascinated me again with his very special way of speaking as he did in "The Assassination of Jesse James by the Coward Robert Ford". Ben Jonson, the third element in this triangle, gave the plot a kind of stabilizing element.

"Ain't Them Bodies Saints" got what it takes to became a classic and a cult movie.

Monday, August 26, 2013

Economy: Has Driving Peaked?

(Drivebycuriosity) - The media love peaks. You could find headlines about "peak oil", claiming that the global oil production will soon reach its peak and will start shrinking, "peak live expectancy", claiming that the average life span in the U.S. is already sinking, "peak income", "peak wealth" and more (driveby).

Recently I found another peak: "peak car" (theatlanticcities). The magazine "The Atlantic" uses this term to unite terms as "peak driver’s license" "peak registered vehicle", "peak gas consumption", "peak miles traveled". They refer to statistics that show falling numbers for driver licenses, registered vehicles and more car related topics in the U.S.

I believe that most of those peak claims are wrong and just a tribute to the gloomy zeitgeist. And the recent reports that the U.S. car sales are booming again don´t confirm this "peak car" thesis. (Don´t those Atlantic journalists read the news?). But anyway, those statistics have some interesting tidbits.

The statistics show that in the U.S. car related numbers, for instance miles driven per car or per household, have peaked in the year 2004 and have been falling since then. This was exactly the year when the price of oil - and gas at the pump - started their steep rise (crude-oil). Today oil and gas cost around 3 times their average price in the 1990!

It would be surprising if the consumer would not respond to this triple and would not drive less.

And there could be more responses. Studies show that people have started to migrate back from the rural areas to the cities, reversing a trend that has been popular for decades (driveby). This could be a reaction to the gas price explosion.

High gas prices work like a tax on commuting from rural areas to working places, shops and leisure spots. Today´s gas prices make living in cities more attractive because the commuting ways are much shorter - and cheaper. Some people, who migrate to the cities might even give up their cars.

Until last year I had lived in the periphery of Bonn, a sleepy town in Germany. There I needed a car for going to the gym, shopping in discount markets and spending leisure time in the centers of Bonn and the nearby Cologne (Köln). Now I live in Manhattan, New York City. I don´t need a car anymore because there are a lot of shops, cafes & restaurants around the corner and the gym is just  7 minutes walking time away. For longer distances I use the dense and cheap public transportation network (subway & buses).

I don´t think that the more than 100 years old success story of cars has found a sudden end. But as long as oil & gas stay expensive they will slow down the demand for cars and their use.

Wednesday, August 21, 2013

Movies: Lovelace

(Drivebycuriosity) - The 1960s and 1970s are classified as the era of the sexual revolution. The biopic "Lovelace" shows an episode of this time (imdb). The movie focuses on around 3 years of the life of Linda Lovelace and the making of the hard core porn flick "Deep Throat" (1972) that transformed her into the world`s most famous porn star and into an icon of the sexual revolution.

The story is shown in 2 versions. First the audience sees a sugar coated tale about an adventurous and generous girl who - with the guidance of her husband - uses her sexual talents for a steep movie career. Then Linda´s real story follows, based on her autobiography. Now the audience experiences how a naive young girl gets coerced into pornography and prostitution by an abusive and violent husband.

The sex scenes are decent and in a comedic style to make the film acceptable for a broad audience. According to Wikipedia, Linda and her movie lover used a popsicle to simulate one of the scenes that made "Deep Throat" and Linda so famous (wikipedia). But the film also has dramatic parts thanks to the malevolent and ruthless husband.

Amanda Seyfried in the leading role shows Linda`s evolution from a cheery girl into a woman embossed by her harmful experiences. Movie husband Peter Sarsgaard as a charming monster is the congenial partner. The rest of the fine cast, including Sharon Stone, Robert Patrick, Juno Temple, James Franco and Chloë Sevigny, convinces too.

"Lovelace" is a well-made study about an abused woman and delivers a perfect mixture of entertainment, provocation and thoughtful reflection.

Tuesday, August 20, 2013

Economy: Have More Sex, Make More Money?

(Drivebycuriosity) - "Employees that have sex more than four times a week receive 5% higher wages". That is the result of an academic study from University of Cambridge, England (marketwatch). Conversely, those who don’t have any sexual activity earn 3% less in wages than those who are sexually active, tells us the same study. According to MarketWatch, a Brazilian study published in 2009 found a positive correlation between sexual frequency and wages for Brazilian employees (marketwatch).

Those results should be taken with a grain of salt. They are based on interviews which cannot be verified. People can say what they want, especially in such a delicate case. Nobody checks if the interviewee really says the truth. People are not laboratory mice that are all the time under surveillance.

And the alleged correlation between the frequency of sex and the development of wages could be pure coincidence. Those "post hoc ergo propter hoc" studies (Latin for "after this, therefore because of this" wikipedia ) are therefore controversial. 

But the results are plausible anyway. People who have more sex are usually less frustrated. They are more balanced and have less incentive to burn spare energy through arguing with colleagues and superiors. They even might smile more often. Therefore people with a high frequency of sex could be more cooperative and more popular, attributes which could lead to wage gains. 

MarketWatch also quotes a psychiatrist, who says that people with higher self-esteem and self-confidence, could attract more sexual partners and more work opportunities. In this case a higher sexual activity is not the cause of better wages, rather wages and sexual frequency are both results of a third factor, the self-esteem and self-confidence.

Anyway, I recommend to test this thesis and to have more sex. Even if that doesn´t result in a wage raise it certainly leads to more fun. Post hoc propter hoc.

Sunday, August 18, 2013

Stock Market: The China Pessimism Bubble Revisited

(Drivebycuriosity) - Stock Markets worldwide are hovering close to all-time highs. But there is one major exception: China. The Shanghai Composite Index, which represents the Chinese stock market,  dropped 9% year to date. This index has tumbled 43% since its temporary peak in 2009, wrote Bloomberg (bloomberg).

Today Chinese stocks are much cheaper than shares elsewhere. According to Bloomberg the Shanghai Composite Index is valued at 9.1 times estimated earnings, compared with multiples of 13.04 for the MSCI Asia Pacific Index (Asian stocks in general) and 15.02 times for the Standard Poor’s 500 Index, that represents the U.S. stock market (bloomberg).

This is the result of a gloomy sentiment for China (driveby). China bears like Jim Chanos, a hedge fund manager and notorious short seller, have been banging the "China crash drum" for years. Even the influential New York Times (Krugman column) joined the crowd, that predicts a "hard landing" of the Chinese economy. The majority of fund managers and other professional portfolio managers seems to believe them.

They all are ignoring that China´s growth didn`t fall below 7.5% in the recent 10 years. They are also ignoring signs that China`s economy is getting stronger again. Factory output, exports & imports and industrial electricity demand all grew faster in July (driveby).

I reckon that the extremely low valuation and the backlock compared to the global stock markets are an invitation to invest in Chinese stocks.

Saturday, August 17, 2013

Movies: Elysium

(Drivebycuriosity) - Today many places have "gated communities" or "gated cities" where the wealthy live sheltered and protected (wikipedia). You can find them in California, but also in Brazil, Argentina and other countries. The dystopian film "Elysium" developed this concept further (imdb). The rich live on a protected space station in a close orbit around the earth, the rest of the humanity spends their life on an impoverished earth.

It could have been an interesting topic, as for instance the Justin Timberlake thriller "In Time" (2011) showed. But Neill Blomkamp  wasted the theme. The scriptwriter and director of this botch delivered just an action movie to entertain unaspiring adolescent.

You don´t learn much about Elysium and the alleged superior technology & lifestyle. Instead the flick is full of fight scenes in the dust. Elysium isn´t science fiction, there is no gram science in it, the audience instead gets a bad rip off of "Mad Max".

Elysium also shows the greed of Hollywood brand names like grand dame Jodie Foster and Matt Damon who used this crap to stockpile their banking accounts.

Watching "Elysium" is a waste of time.

Friday, August 16, 2013

Movies: Europa Report

(Drivebycuriosity) - I am a connoisseur of science fiction. This genre speculates about the future by appreciating scientific possibilities. That separates science fiction from fantasy which manages without science. Unfortunately, today most of the so called science fiction books and movies are fantasy and not science fiction because they neglect science.

The movie "Europa Report" is one of the rare science fiction films and also one of the best (imdb). The thriller describes a human expedition to the Jupiter moon Europa with dramatic consequences.

The plot is based on real science and partly on data acquired by the NASA.  "Starting in 1995, NASA`s Galileo probe began a Jupiter orbiting mission that lasted for eight years, until 2003, and provided the most detailed examination of the Galilean moons to date", writes Wikipedia (wikipedia). Europa`s "surface is composed of water ice and is one of the smoothest in the Solar System.…… The apparent youth and smoothness of the surface have led to the hypothesis that a water ocean exists beneath it, which could conceivably serve as an abode for extraterrestrial life" (wikipedia).

Director Sebastián Cordero and script writer Philip Gelatt developed these insight into an inspiring drama showing the bliss of deep space travels but also the risks. The movie, that was shot entirely in a Brooklyn, New York City, studio, looks very realistic thanks to advanced digital effects. "Europa Report" also is an homage Kubrick´s "2001: A Space Odyssey" (1968) and Tarkovsky`s "Solyaris" (1972).

The cast -  Anamaria Marinca, Karolina Wydra, Michael Nyqvist, Christian Camargo and more - performed as believable scientists in an extremely stressful situation.

"Europa Report" is a role model for a perfect science fiction movie and I hope to see more of this quality - and the makers of this movie - in the future. The film is a must for every real science fiction fan!

Wednesday, August 14, 2013

Media: Why TV Is Getting Better & Better

(Drivebycuriosity) - It seems TV is getting better & better. For a longtime I believed movies were the real thing. I thought TV had a lower quality and was just a kind of distraction. But now I am addicted to series like "Breaking Bad" and "Homeland". I suppose those productions beat Hollywood movies like "The Great Gatsby" and ""Now You See Me" easily.

Today`s top-notch TV quality - at least for the premier productions - doesn´t come out of nowhere, of course. I guess it started in the 1980s with "Miami Vice" and "Twin Peaks". Neither really matched top movies like "Amadeus" or "Blade Runner" but they were definitely much better than the TV average. TV got stronger in the 1990s with "NYPD Blue" and "Sopranos". After the turn of the millennium series like "Rome" and "Lost" lifted the bar again. And then came "Mad Men".

As an economist, I am asking myself, why is that? I think the advance of TV is a part of the general evolution process. Everything gets better over time. Those who are around a while might remember how the world looked 4 or 5 decades ago. 

1. Since WW II the world has changed considerably and the wealth of most countries has been rising. People worldwide have much more money left to spend for their leisure activities compared to decades ago. Therefore a growing percentage of climbing incomes have been flowing to media companies, including TV channels.

Today producers of TV films and series have much higher revenues and profits and therefore much more money to spend than decades ago.  They can now invest a lot more money in writers, directors, cameras, actors, post production and more, lifting the quality of the productions.

2. Helpful are ongoing globalization and technological progress. Both trends have been creating new markets, enhancing the number of potential viewers. Today TV producers can sell their productions to a lot of foreign TV stations, as DVDs and as downloads.  Online companies like Netflix and are unlocking viewers, who don´t bother to subscribe to TV channels like AMC and HBO.

Therefore the markets for TV productions are getting bigger and bigger. Now it makes sense for the TV producers to invest in their premium series as much money as Hollywood studios do with their aspiring blockbusters.

3. The high quality of TV productions also is a result of rising competition. A lot of US and foreign channels are wrestling now for viewers. With the help of Netflix & series like "Breaking Bad" and " Homeland" are rivaling  U.S. and foreign productions like "Rectify" (Sundance Channel), "Game of Thrones" (HBO) and "The Fall" (BBC). 

4. Technological progress is also helping TV producers as it helps everyone.  Digital post production especially is reducing production costs and gives the producers more possibilities to realize their ideas.

Rising TV quality is also owed to a general human attribute: The capability and the will to learn with the aim to get better, the foundation of general evolution. Just like everybody, TV producers are learning from older productions, from their competitors and their own mistakes.

I am looking forward to the future and the TV series to come.

Sunday, August 11, 2013

Global Politics: Basel III - Poison For The European Economy?

(Drivebycuriosity) -  Politics is often the enemy of the economy. "Basel III" is an infamous example for that. The term "Basel" refers to the regulation of European Banks by the European Community which is coordinated by the Bank of International Settlements in Basel, Switzerland. "Basel III" covers banking regulations that will be implemented in the coming years. 

According to the Financial Times, banks in the EuropeanUnion will need to reduce their balance sheets by €3.2 trillions and raise nearly €50 trillions in capital over the next five years in order to comply with Basel III (seekingalpha  ). That means that European banks have to trim back their credits by around €3 trillion in the coming years.

Holy cow! Europe is already in a recession. When the banks there will have to cut back their loans this could choke off the fragile upswing we are now spotting in Europe.

Cutting back credits to companies endangers their existence, at least it could hold them back from investing, challenging the whole European economy which is already frail.

Cutting back credits to consumers could stall the already weak consumer spending which could lead into a new recession.

Basel III is another example that politicians and especially the European Union are economically blindsighted and harmful for the economy.

Saturday, August 10, 2013

Stock Market: China - When Does The Pessimism Bubble Burst? - An Update

(Drivebycuriosity) - Yesterday the price of oil jumped 2.5%. According to Bloomberg the energy market responded to economic news from China (bloomberg). Factory output there increased 9.7% in July. The acceleration in Chinese factory output followed a series of positive figures, Bloomberg also wrote (bloomberg). Retail sales climbed 13.2% in July, other indices showed that the sectors manufacturing & services both grew faster recently (businessinsider driveby). All data are signals that China is gathering speed again.

The stock market in China barely blinked. Yesterday the Shanghai Composite Index, which represents the Chinese stock market,  gained mediocre 0.36%. Year to date it dropped 9.6%. According to Bloomberg this index has tumbled 43% since its temporary peak in 2009 even that China´s growth didn`t fall below 7.5% in the recent 10 years (bloomberg).

It seems that China´s stock market is trapped by a gloomy sentiment (driveby). China bears like Jim Chanos, a hedge fund manager and notorious short seller, have been banging the "China crash drum" for years. Even the influential New York Times (Krugman column) joined the crowd, that predicts a "hard landing" of the Chinese economy (driveby). The majority of fund managers and other professional portfolio managers seems to believe them.

Hence pessimistic speculation overtrumps the positive facts. This is typical for a bubble where prices don´t reflect the fundamentals and instead are dominated by opinions. In this case the pessimistic herd caused a pessimism bubble.

I reckon that this bubble will increasingly be tested by more good news. China is benefiting from the Internet that lowers the cost of information significantly. Hence the world wide net helps the nation to catch-up quick to the Western standards.  "Industries including leisure, e-commerce and transportation are becoming a bigger part of the economy, supporting the government’s efforts to shift the focus of growth away from investment and exports", writes Bloomberg (bloomberg).

I would not be surprised if the China pessimism bubble would pop through the end of the year and the deeply depressed the Shanghai Composite Index would follow the upswing of the global stock markets.

Culture: A Visit To The Metropolitan Museum Of Art, New York City

(Drivebycuriosity) - Large cities offer many things to do. The museums you could find there are an important part of these delights.

Yesterday my wife, some friends and I visited the Metropolitan Museum of Art in Manhattan (metmuseum). This is a huge palace which contains a lot of impressive collections, a reflection of the enormous wealth which is accumulated in New York City. 

The entry fee is optional - my wife and I spend just 2 bucks. The very limited costs are an invitation to pick just a part of the ample selections and to come more often for other exhibitions.

Yesterday we focused on their nice collection of European Masters. We enjoyed the work of Gustave Courbet, Henry Lerolle, William Bouguereau, Caspar David Friedrich and many more.

The museum wasn´t crowded, another advantage of the summer time, which gives free access to the paintings.

A visit there is highly recommended.

Friday, August 9, 2013

Movies: The Canyons

(Drivebycuriosity) - Hollywood movies cost usually 20 million dollars and more. Director Paul Schrader had only 250.000 bucks to make his film "The Canyons" (imdb). This project brought together 3 former Hollywood stars whose careers have been struggling. Paul Schrader, who once directed "Cat People" and wrote the script for "Taxi Driver", didn´t have any successful films in the recent years.  The author Bret Easton Elis, once famous for  "American Psycho", was almost forgotten and Lindsay Lohan made more headlines with scandals than with her movies.

My wife didn´t like the "The Canyons". She found plot and characters not interesting. Most of the professional reviewers and bloggers hated the film. But I found "The Canyons" passable.

Schrader & Elis (book & script) tell the story of Christian, a young and bored man, who lives from the money of his rich family. He is obsessed with sex and likes to play cruel games with other people. I think the plot is believable. The American culture has many hyper-wealthy families with a huge political influence. I guess they parent a lot of spoiled kids who consider life just as a game and other people as toys. This reminds me of Senator Edward Kennedy who once caused the death of a woman and got away with it (wikipedia).  The plot also reminded me of "American Psycho", just with less violence and more sex instead. Btw, "American psycho" was way less plausible.

According to the media, "The Canyons" was the first feature length movie for porn actor James Deen out of his genre. Deen is no Christian Bale ("American Psyho"), but he played a convincing Christian, because he was able to show the attitude of this kind of playboy.  Lindsay Lohan was a disappointment. I don´t get it why this boring actress attracted so much fame and why Schrader casted her.

"The Canyons" is a watchable movie but not good enough to restart the careers of Schrader, Ellis or Lohan.

Thursday, August 8, 2013

Stock Market: China - When Does The Pessimism Bubble Burst?

(Drivebycuriosity) - This morning we got news that China`s economy is getting stronger. In July exports rose 5.1%, imports jumped 10.9% (marketwatch). Both numbers were much better than the economists had expected. Last week we learned that China`s manufacturing & service sector both accelerated their growth (driveby).

But the Chinese stock market doesn`t care. Today the Shanghai Composite Index, which represents the Chinese stock market, closed again in the red. According to Bloomberg this index has tumbled 43% since its temporary peak in 2009. It is funny that the U.S. stocks rose on the China trade numbers today (bloomberg).

It seems that Chinese stock prices are imprisoned by the bad sentiment. Good news is constantly ignored. There is a huge pessimism bubble bloated by the China bears. Blowhards and swashbucklers like Jim Chanos, a hedge fund manager and notorious short seller, and recently New York Times correspondent Paul Krugman, have been banging the "China crash drum" (driveby). According to them, China is suffering from huge structural problems like too high debts and too huge investments into real estate which would cause a "hard landing" of the Chinese economy. The majority of fund managers and other professional portfolio managers seems to believe them.

I reckon that the bear´s view is heavily biased. The pessimists are overstating the problems and are ignoring positive news. China`s growth story stays intact, thanks to the secular catching-up process which is fueled by the still extreme income & wealth differences from the US and other Western nation standards. The Chinese government already started reforms to stimulate consumer spending and is investing massively into infrastructure (railways, telecommunication etc). The recently reported faster growth of the service sector is an early sign that this strategy is working.

Like the Western economies, China gets a lot tailwinds from  technological progress. The country is benefiting from the Internet that makes information much cheaper and easily available which helps the nation to catch-up fast to the Western standards.  "Industries including leisure, e-commerce and transportation are becoming a bigger part of the economy, supporting the government’s efforts to shift the focus of growth away from investment and exports", writes Bloomberg (bloomberg). Fast growing giants like Alibaba (e-commerce) , Tencent (IT-holding) and Baidu (Internet search) are spearheads of China´s advance.

History shows that any bubble has to burst sometime. Therefore it is just a matter of time until the China pessimism bubble pops. I reckon that we will get more positive news from China´s economy in the coming weeks which could be needles in the bubble.

Wednesday, August 7, 2013

Stock Market: Could An Oil Price Collapse Really Derail The Rally?

(Drivebycuriosity) - It seems there is always a season for scare mongers. Some analysts from the Deutsche Bank claim, that a "perfect storm" of structural, demand, and supply-driven factors could cause a "major pullback" in oil prices (businessinsider). This could "derail the rally in the U.S. stock market" (businessinsider).

I reckon that their conclusion is totally wrong.  A sudden drop of the oil price would work quite to the contrary and should be a boost for the rally on the stock market.

There is indeed a bubble on the oil market which is caused by continuous speculation of possible supply disruptions from the Middle East (driveby). Speculative purchases of oil futures by hedge funds and other players lead to a price that isn`t justified by the fundamentals. Because of the high oil prices consumers have been reducing their oil demand (demand destruction) while suppliers have been pumping more oil.

Todays oil price, which is around three times as high as in the 1980s and 1990, is slowing the global economy (driveby). A sharp drop of the oil price would work like an enormous global tax cut. Consumers worldwide would have more money to spend for other goods and services. Hence a major pullback of the oil price would boost global consumer spending which is the engine of world economy. The majority of companies would benefit. Companies also would operate with fewer energy costs and hence generate higher profits.

Sharply falling oil prices also would cause even lower inflation rates that would lead to reduced interest rates.

A sudden drop of the oil price also could demoralize the oil speculation. Billions of dollars which are now invested in oil futures could flow into the stock market.

Movies: Blue Jasmine

(Drivebycuriosity) - Sometimes there is just a thin line between comedy and tragedy, said once W.C. Fields, an American comedian, actor & writer (wikipedia). Many novelists, playwrights and movie makers played with this topic. The movie "Blue Jasmine", Woody Allen´s newest opus, is a felicitous example for this genre (imdb).

The master tells the story of "Jasmine" who´s world had fallen apart. The sophisticated and highly spoiled lady, who had been a part of Manhattan´s elitist society, is now destitute. She tries to kickstart a new existence with the help of her step sister who lives in San Francisco´s red neck environment.

The movie is a dark tale about conflicting philosophies of life,  mental problems, self-deception & self-destruction. It seems that Woody Allan, who is a product of New York City himself, was reckoning with Manhattan´s culture of blowhards and praised instead the common people of the West Coast.  "Blue Jasmine" also is a homage to Polanski´s "Repulsion" (1965, Catherine Deneuve ) and "Falling Down" (1993, Michael Douglas). In spite of the dark topic the film is shot in friendly colors and told in a blitheful style with hilarious scenes.

Cate Blanchett as "Jasmine" proves again why the she is one of Hollywood´s goddesses. It`s fascinating how she impersonated this human wreck with a high attitude. Pink Floyd´s "Shine On You Crazy Diamond" (devoted to their late founding member Syd Barrett) could have been written especially for this character.

Sally Hawkins, as the easy going and cheery step-sister "Ginger", played the earthbound antagonist. The centrifugal forces of this dissimilar relationship are one of the main drivers of the movie.

If there is any Academy Award for the most hilarious and sleazy hair design, Bobby Cannavale should easily earn it. His character as Ginger`s red neck boyfriend seems to shower with olive oil.
The teddy bear like Alec Baldwin convinces as Jasmine´s ex-husband and con-artist, a replica of "Bernie" Madoff.

"Blue Jasmin" is very dark chocolate for cineasts. Highly recommended!

Tuesday, August 6, 2013

Stock Market: Welcome Again, Taper

(Drivebycuriosity) - The stock prices dropped today. According to the media the market responded to new talk about the taper, meaning the gradually reduction of the Federal Reserve Bank stimulus program QE3 (massive purchase of government bonds). At least one Fed official declared today that tapering is "quite likely by year-end" (marketwatch). The topic appeared already in June as the Fed announced that QE3 could end through summer 2014 (driveby).  Since then the stock market responded ungracious when any Fed official reminded to the tapering announcement, but stock prices gained in this time around 3% anyway.

I welcome tapering. The economy doesn`t need massive stimulus measures anymore. It seems that the U.S. is now growing faster as in the first half of the year (driveby). The service sector, which has the lion share of the economy, accelerated in July and manufacturing also gathered speed. A continuous massive stimulation of the economy could lead to a overheating.

Today we already got a positive response to the taper announcement. The price oil price fell around 1%. In the recent weeks hedge funds and other speculators had pumped billions of dollars into oil futures and had driven the oil price from $95 to §110 because they speculated on more stimulus by the fed. It seems the taper talk gives the oil speculation a break.

Sunday, August 4, 2013

Economy: A Tale Of 3 Engines

(Drivebycuriosity) - It looks like that the U.S. economic upswing is gathering speed. At least last week`s economic news is very encouraging. We learned that U.S. consumer spending, the backbone of the economy, rose 0.5 % in June (calculatedriskblog). We also got reports that U.S. manufacturing and service sector both grew faster in July (

The data show that the economic upswing in the U.S. got more sustainable. The economy benefits from a continuously rising consumer spending, which is driven by 3 engines:

1. Steady growth of the job market:  We learned that the U.S. economy grew 162.000 new jobs in July and that jobless claims fell last week to 326.000 — the lowest level since January 2008! (  Hence the disposable incomes are rising and are animating more spending (income effect).

2. The stock market climbed to a new all-time high. The continuous stock market gains - the S&P 500 rose almost 20% year to date -
are increasing the wealth of most Americans and encourage them to consume more (wealth effect 1).

3. Home prices in the U.S. are recovering: Year-over-year, home prices climbed by 12.%. Home owners feel wealthier and get another inspiration to spend more money for consume (wealth effect 2).

Politics: Are Edward Snowden`s Backers Hypocrites?

(Drivebycuriosity) - There is much ado about Edward Snowden and his disclosure of top-secret United States (NSA) and British government mass surveillance programs. I really don´t like that any government is sniffing around in my personal affairs, but I think the outcry is overdone and the Edward Snowden backers are hypocrites.

1. People who have accounts on Facebook, Twitter and similar web services want to be public. There is no privacy on those sites. The Internet is a system where data packages (any statement) are sent around the world. The tight web that connects all Internet related computers makes them accessible to hackers.

And everybody should know that e-mails aren´t secret. In 2003  the U.S. Securities and Exchange Commission charged Henry Blodget, a former stock analyst at Merrill Lynch, with civil securities fraud (.wikipedia). The New York State Attorney General Eliot Spitzer had published Blodget`s private e-mails to friends where he had described stocks as garbage, stocks that he had recommended to buy as a Merrill Lynch analyst. Nobody is safe.

Publishing on social networks and expecting full privacy is like writing a letter with the line: "Hereby I am ignoring you" .

2. Government surveillance isn't new and isn't constrained to the Internet. There are already government agencies which don´t care much about privacy: The IRS and the tax authorities in other countries (in Germany "Finanzamt") have been sniffing in private matters, especially banking accounts, for a long time. There is not much that is private from the IRS. Do the Snowden backers criticize this privacy loss too?

For years crooks have been breaking into Swiss bank accounts and stealing private data from their customers. The German government (and the governments of federal German states) have been conspiring with the law breakers and thieves and have purchased that stolen data for millions of Euro (foxnews). Do Snowden backers complain about those invasions of privacy?

3. Last week Snowden got asylum in Russia and is backed by the Putin administration. He is now cooperating with a government which doesn`t care much about human rights or privacy and he prefers to live in a country where government opponents are easily thrown into prison.

Saturday, August 3, 2013

Stock Market: China - A Hidden Treasure?

(Drivebycuriosity) - Stock Markets all over the world are rising and are reaching new all-time highs. But there is one major market that missed the global rally: China.

The Shanghai Composite Index, which represents the Chinese stock market, lost around 11% year to date and around 5% in the recent 12 months (google). According to Bloomberg this index has tumbled 43% since its temporary peak in 2009 (bloomberg).

China stocks have been suffering from a gloomy sentiment.  "Bets on declines in the largest Chinese exchange-traded fund are surging to the highest level since 2007", wrote Bloomberg last April (bloomberg). It looks like that sentiment hasn´t improved yet.

Public opinion is heavily influenced by notorious China bears such as Jim Chanos, a hedge fund manager and notorious short seller, and recently New York Times correspondent Paul Krugman (nytimes  drivebycuriosity). They all have been banging the "China Crash" drum. The China haters, including many hedge funds and other speculators, are betting on a so called "hard landing" of the Chinese economy.

The fundamentals say otherwise. In the recent 10 years, China´s growth rates have´t fallen below 7.5% (the growth rate in the second quarter of 2013), in spite of the notorious "China Crash" calls. It looks like China`s growth is accelerating again, at least a bit. This week we got news that China`s manufacturing and service sectors both are gaining speed again (bloomberg). Bloomberg also writes, that "industries including leisure, e-commerce and transport are becoming a bigger part of the economy, supporting the government’s efforts to shift the focus of growth away from investment and exports".

I believe in China and in its stock market. The growth story stays intact, thanks to the secular catching-up process which is fueled by the still extreme income & wealth differences to the US and other Western nation values. The Chinese government already started reforms to encourage economic growth and stimulate consumer spending. The faster growth of the service sector is an early sign that this strategy is working.

Beijing also implemented a huge infrastructure program, including ample investments in railway systems and highways, to support the economic growth. And the Chinese monetary policy becomes more accommodating because the risks of inflation are constrained - at least for now.  

Hence I reckon that China´s stock market is a hidden treasure after the multi-year fall. The value of China´s stocks is buried under a heap of rubble like negative rumors and scare mongering. This situation reminds me of spring 2009 as global panic drove the U.S. stock market into a ridiculous deep hole. Since then the U.S. stock market has been rallying and gained 150%, rewarding all who stayed confident.

I believe the Chinese stock market is ripe for a recovery rally. There is even a chance that China might repeat its temporary rally from 2009. According to Bloomberg, the Shanghai Composite Index then doubled in 10 months through August 2009 (bloomberg). Anyway, China´s long term growth perspective should reward any patient investor amply.

Thursday, August 1, 2013

Economy: How High Oil Prices Shape The World Around Us

(Drivebycuriosity) - The price of oil is rising again. It seems that the low energy prices, which had bolstered the global economy in the 1990s, are history (.wikipedia  gasprice). Now the world around us is getting shaped by the increasingly expensive energy .

Gas prices at U.S. pumps are close to $4 for a gallon. This is a response to the oil price which is hovering north of $100 a barrel. In the year 2004, after almost 2 decades of cheap energy, the price of oil started its sharp rise and peaked at $147 in 2008 (forecast-chart). After a severe setback in the second half of 2008 the oil price jumped again. Today oil costs around 3-times its average price in the 1990s!

The high oil price is slowing down the global economy because consumers have less money to spend for other goods, thanks to gasoline bill, heating and transportation costs which make many goods more expensive.  And companies have to deal with higher costs. Hence the expensive oil is partly to be blamed for the lamented slow recovery of the world economy since the 2008/09 recession.

But there are other outcomes that even might be positive:

Less Driving

A new study by the University of Michigan shows that American motoring - as measured by miles driven - peaked in 2004 ( Hence this number started to fall in the same year as oil & gas prices began their steep climb. I reckon that this is not a coincidence. High gas prices spoil the fun of driving, they also make driving less affordable. At least people with a tight budget have to cut back driving.

But there are some positive outcomes. Less driving reduces the emission of car exhaust which is good for the whole environment and the health of everyone. It also prompts less accidents and people have more time for other things. Hence less driving might lead to a higher quality of life.

Back to the cities

Another study shows that the population of rural and small-town America contracted over the past two years (drivebycuriosity). An analysis of US Census Bureau data by the Department of Agriculture also found that people in their 20s and 30s were migrating away from the rural areas and were moving to large cities.

I reckon that the high energy costs are - at least parlty - the cause that people are returning to the cities. In the 80s and 90s -  as gas was cheap -  it was affordable to move into the suburbs and to commute to working places, shops and leisure spots far away. Now the high gas costs are punishing the population in the suburbs and the rural areas. 

In a time of high gas prices it pays to return to a metropolis like New York City, where the commuting ways are much shorter and public transportation systems (buses & subways) are relatively cheap.

If high oil prices lead to denser cities (to avoid commuting costs) they could be a remedy for the suburban sprawl, that transforms greenland into vast concrete areas.

Both trends, less driving and the return to the cities, could ease the negative effect of high oil prices on the wallets and could mitigate the headwind for the global economic growth in medium-term.