Morally Bankrupt @morallybankrupt - Tumblr Blog

Random portfolios have the power to revolutionize fund management. There is no convincing evidence that more than a handful of funds have consistently outperformed. This should tell every active fund manager on the planet that the present form of performance measurement is inadequate. Performance measurement via a benchmark is hopelessly noisy — it takes decades to get a real answer. A fund manager that can outperform should do better when the tracking error constraint is removed. Much better to use random portfolios to measure the performance of active funds to see if they are adding value. Funds should be judged with minimum tracking error constraints. It is in the investor’s best interest for the active funds they invest in to be as uncorrelated as possible with the indices that they invest in passively. That means a large tracking error.

Patrick Burns

(edited and amalgamated by me, without adding anything substantial)

If the mopping of reserves was ever to become necessary in anticipation for a rate-increase, any credible attempt would begin with the Fed’s latest gender-bender toy, the Full Allocation Fixed Rate Reverse Repo Facility (FAFRRRF, or “Death Star” to the initiated), which promises to to provide the invisible floor IOER failed to and bridge us as we take the leap of faith across the impassable ravine from quantity to price.

What’s that lever over there marked “rates” do?

fucktheory

The Task of Philosophy, Pt. III

Pull vs push policy

A huge amount of your personal economics that is actually applicable to today boils down to whether you think it is the government’s responsibility to create an environment that facilitates the unemployed being able to find a way to find productive employment or whether you think it is the government’s responsibility to directly or indirectly (through spending) employ the unemployed

Thinking about he flat corporate tax rate as a source of structural unemployment: incentivizing investment through a sloped corp income tax rate structure. Slope can be through marginal corporate income tax rates that promote SME formation or eliminating dual tax in favor of income pass-through Thinking about incentivizing capital formation and giving traction to SMEs by making investment and entrepreneurship more attractive vs rentierism and asset accumulation.

muni CEF dashboard snapshot for close of 5/31/2013

Index relative value snapshot for May 6th, 2013. Dow, S&P 500, Nasdaq 100, Russell 2000, S&P 400 Midcap

Muni CEF aggregate universe update as of March 15th close

#Cef

Largest 90 active municipal bond CEFs. not quite there to March 2012 levels, but getting close

I get a lot of questions about break-even inflation rates on twitter. i am sick of answering the same ones over and over again. So here is some stuff for you to look at. draw your own conclusions.

Presented: scatter plots of TIPS break-even rates and their subsequent forward realized CPI headline inflation rates.

Let's please put to death the ridiculous myth perpetuated by lazy hacks that break-evens or expectations (they are not the same thing) can create or affect inflation, it is simply untrue.

This one goes out to all the crazed teenagers shorting bonds today in wait of The Great Rotation. Good luck with that, bro. (click image for larger version)

HY and Levered Loan CEF discount snapshot for 2013-01-29

...the path that we’re basing these numbers on is one that assumes, first of all, as you anticipated, assumes an increase in the funds rate first occurring some time after unemployment goes below 6½ percent, but does not necessarily assume a rapid increase after that. And I—what we said in our statement is that we would take a balanced approach. In other words, you know, once we get to that point, we may or may not raise rates at that point. We’ll look at the situation. But assuming that inflation remains well controlled, which I fully anticipate, I think that the rate of increase in rates would be moderate.

Chairman Bernanke, in response to Jon Hilsenrath. Page 13-14. FOMC Press Conference Transcript, December 12, 2012