What others miss

… after all there is no such thing as Chinese “economic data”: it is whatever the central committee agrees on… [More here]

From Christopher Wood:

.. interesting point about US financials is the real quality of their stated books. An interesting anecdotal insight on this point was provided by the purchase of a regional bank, Wilmington Trust, last week when the tangible book value was written down by 51.5%, following due diligence from the acquirer, another regional bank M&T Bank. The main problem here appears to have been commercial real estate loans. …

… at last the American President finally made it to his former home of Jakarta this week at the third time of trying though his visit had to be cut short by two hours allegedly because of volcanic ash  from the erupting Mount Merapi! Given the bizarre nature of this excuse, GREED & Fear cannot but wonder if the president’s minders did not want media coverage of the American President visiting his former school in Jakarta because of paranoid conspiracy theories apparently rampant on the internet that the American president was not born in the USA!

Source: Greed & Fear, Nov. 12, 2010 (available only for clients of CLSA)

John Mauldin in his weekly missive (‘First let’s lower the bar), shares an important information:

I was sitting in London when the employment numbers came out last Friday, and I didn’t have time to really get into the data. I did send you Lacy Hunt’s quick analysis as to why it was weaker than it appeared, but something else did not seem right. I follow a few people who are pretty good at predicting the employment numbers (like Philippa Dunne of The Liscio Report). Most were expecting numbers in the 60,000 range. Most unusual for there to be such a big miss from these guys. I read the press release and saw nothing to raise my eyebrows.

And then Alan Abelson in Barron’s gave us the following, after reciting the headline number: “Happily, the always astute Stephanie Pomboy of MacroMavens provided a quickie explanation: “‘The seasonal bar which the payroll data must jump was (inexplicably and dramatically) lowered from prior Octobers. ” ‘Thus, in October 2009, the BLS set the bar at 870,000 jobs, similar to the 840,000 it anticipated in October 2008. This year, by contrast, it lowered the bar to 768,000. Mumbo, jumbo, payrolls presented “an upside surprise” of 100,000.’ “According to John Williams at Shadow Government Statistics, the BLS’ fiddling with the figures via what he calls ‘seasonal-factor games’ actually created 200,000 phantom jobs last month. John cites such finagling as the reason his prediction of an October decline and a rise in the jobless rate was wrong. It also explains why seasonally adjusted payrolls were revised upward by 110,000 in September, including 56,000 in August.”

Lastly, even though this piece by Edward Hugh is nearly a month old, it is a neat analysis of why QE2.0 in the US was inevitable (of course, he has been proven right) and of the extent of underlying and structural problems that need to be overcome in the developed countries. He is referring to an interesting work by Deutsche Bank economists in that post. Hope to check it out in the coming days:

For reasons which aren’t worth going into now, I’m reading through a recent report by Deutsche Bank Global Markets Research entitled “From The Golden To The Grey Age” this afternoon. The report (all 100 pages of it, many thanks to researchers Jim Reid and Nick Burns who produced the thing) looks at the extent to which a variety of macro indicators – like GDP growth, inflation rate, equity yields, etc – may have been influenced by demographic forces over the last 100 years or so. It is certainly one of the most systematic reports of its kind I have seen, and well worth losing a Saturday afternoon to read.

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