Daily Reading – Thursday, April 28, 2011

Econbrowser: Economy still growing and still disappointing

The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.8% during the first quarter of 2011. Not exactly what the doctor ordered for a still very sick patient.

The Big Picture: Q1 GDP medicore

The Big Picture: Bank Arbitrage (JPM, C)

Rather than put insolvent institutions into reorg, we have allowed the hang on slowly getting better through a massive back door bailout: Borrowing from the Fed at near 0%, and lending it right back to Treasury at 2-3%. This is more politically acceptable than just writing them checks for $100s of billions of dollars.

Reuters: What’s on Ben’s mind?

We’ve created a quick and dirty word cloud of what Fed Chairman Ben Bernanke said in his historic press conference this afternoon. Words he used more often are larger than less-used words. For bonus points try to find the word “jobs” in there…

FT Alphaville: Meanwhile in China…

At one point the index of China’s foreign currency denominated shares was down as much as 7 per cent, before recovering to close 2.8 per cent weaker — but still at a five-month low.

The reason?

Speculation that the Chinese authorities might impose a capital gains tax on the foreign-currency denominated stocks, which can be bought and sold by foreign and domestic investors.

FT Alphaville: And now for Chinese zinc shenanigans

FT Alphaville has already alluded to the fact that it isn’t just copper that has been subject to Chinese inventory financing shenanigans.

FT Alphaville: Chinese bonded warehouses’ copper inventories still rising

Having flagged the problem in the first place, it was natural for Standard Chartered to follow up on the state of China’s bonded warehouse copper inventories this month.

FT Alphaville: Copper, the re-export factor

That is, what happens when the government attempts to rein in innovative Chinese financing schemes like those using copper as collateral?

In one (hyphenated) word: Re-exports.

In other words, more copper shenanigans.

FT BeyondBRICs: China property: to burst, or not to burst?

Commerzbank’s Ashley Davies takes many of the China bubble arguments head on.


After trying to call the top in equities every other week for the last two years, David Rosenberg has finally thrown in the towel on the bearish calls.

WSJ The Source: Is It Different This Time Round?

Four of the scariest words an investor will ever hear are: this time it’s different.

Most of the time, it’s not different. But because they think it is, they fall into traps, manias and bubbles.

But sometimes—very rarely, but nonetheless sometimes—things really are different.

And that’s what Jeremy Grantham, of the $100 billion-plus GMO fund, thinks. Resources, he argues, are running out.

MarketWatch: Buy gold

There’s no risk. It never loses value. Except in 1915-20, 1941, 1947, 1951-66, 1974-76 1981, 1983-85 1987-2000 and 2008. In inflation-adjusted dollars, gold cost $4,000 an ounce 30 years ago. Inflation is for dollars.

The Economist: Daily chart: which countries hoard the most gold?

America’s 8,134 tonnes of bullion is the largest reserve in the world. But shown per head of population, Switzerland and Lebanon’s hoards look the largest.

New York Post: From rags to Internet riches, in 3 months

In every coffee shop and Internet café in Silicon Valley, tech hotshots dream about turning their ideas into a million-dollar winner.

Few, though, probably think they can do it in three months.

But that is exactly what happened to Adam Cahan. Just 12 weeks ago, he started IntoNow, a social-networking tool that allows TV viewers to identify shows they are watching and tell their friends.

Yesterday, he sold the company to Yahoo! for between $20 million and $30 million — including costs to retain the seven-person staff, according to people familiar with the matter.

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