►VIX, volatility and ETFs/ETNs:
Vix and More blog: “While I was out of pocket for a few days, Barclays had the temerity to launch a new VIX ETN. Not only that, but this new volatility product is the first inverse VIX ETN to hit the market. It goes by the formal name of Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN and has a ticker of XXV.”
‘YA JUST CAN’T MAKE THIS STUFF UP FILE…
Today’s New York Times has a story about Italian automaker Fiat and its efforts to “make its workers more productive.” What’s priceless is one of the accompanying photos (see below), which shows a Fiat employee wearing a T-shirt that may inspire something less than optimism when it comes to expectations about boosting productivity, a decidedly capitalistic notion. Namely, the worker is wearing a shirt with a hammer and sickle, the international symbol of communism. The story also quotes a factory worker who worries that the push to improve productivity will “impose American-style standards” on the workforce. Oh, no–not that! The worker concludes that ““too much work is going to kill our workers.” Yes, folks, things are tough all over.
A worker of the world unites
JOBLESS CLAIMS & HISTORY
Yesterday’s post about the trendless trend in new jobless claims inspired one reader to complain that I wasn’t paying sufficient attention to the history for this data series and therefore drawing unnecessarily dark conclusions.
MORE WORRIES WITH NEW JOBLESS CLAIMS
Well, that didn’t last long. Today’s weekly update on new jobless claims dashed hopes for the moment that the previous downturn in this series was the start of something new in the way of positive momentum for the labor market. Indeed, the numbers were sufficiently encouraging a week ago to inspire asking: Is the dip real? We now have the first installement on an answer. It’s not necessarily the last word, but so far the response is discouraging.
BERNANKE’S TEPID TESTIMONY
Fed Chairman Bernanke’s Senate testimony yesterday offered little reason to expect that the central bank was about to embark on a bold, new plan of monetary stimulus to offset the recent signs that deflationary pressures were bubbling anew. As Bloomberg News reported, “the Fed chief devoted a bigger portion of his prepared testimony to how the Fed would eventually withdraw its unprecedented credit expansion.”
MID-MONTH PERFORMANCE UPDATE FOR THE MAJOR ASSET CLASSES
Misery loves company, but returns for the major asset classes show no sign of wear this month from the economic worries of late. If anything, the chatter about deflation and the potential for a double-dip recession has emboldened the bulls in July. Save for TIPS, prices are higher across the board, and by more than trivial amounts for most broadly defined asset classes
TREASURIES ARE HOT…STILL
The Treasury market’s 10-year inflation forecast slipped last week, and more of the same looks likely for today. The yield spread between the conventional and inflation-indexed 10-year Treasuries dropped to 1.71% on Friday, down 10 basis points from the week before and well below late-April’s 2.45%–the previous peak. The debate about deflation—is the risk rising?—is likely to be front and center this week. That’s likely to fuel more buying in Treasuries.
FUNNY PAPER & THE FUNNY PAPERS…
What happens when Austrian economics meets Monopoly? One possibility…
MONETARY POLICY GETS NO RESPECT
The cover story in Time’s current issue summarizes what everyone already knows. The economic rebound has lost strength recently. The story goes on to report that the policy responses at this late date aren’t encouraging, largely because political support for more fiscal stimulus is weakening faster than the economy. Strangely, the article makes no reference to the possibilities for additional monetary stimulus. The not-so-subtle suggestion is that if the economy needs additional help, new government spending programs are the only game in town and this door is closing fast because of political considerations.
STILL WONDERING ABOUT DEFLATION
John Makin, a visiting scholar at the American Enterprise Institute, recommends in today’s Financial Times that the Federal Reserve and other major central banks “announce firm price level targets that imply rapid money creation through more aggressive asset purchases.” The counsel follows his essay published earlier this month that warns of the “rising threat of deflation.”