Quixey Makes Sense Now

The main drag here in Palo Alto is University Avenue, which is lined with pricey restaurants and retail. One city to the south of us, Mountain View, has their own main drag, and it’s called Castro Street (not to be confused with the gay mecca in San Francisco, half an hour’s drive north). I’ve walked […]
Slope of Hope

A Crude Sense of Humor

While Wednesday was my best day of the entire year, today has been my worst day of the week. The explanation can be explained quickly and simple with one image: The above hit the wires on Tuesday, and the damage to energy bears (like me) has been horrendous. Here’s what crude oil is doing…….. My […]
Slope of Hope

Does it make sense for the government to be responsible for health insurance given how much the government has distorted the market?

Typically I am in favor of having a larger part of the U.S. economy be market-based rather than centrally planned (right now the ratio is about 50/50). Central planning might work for some countries, but in the U.S. it seems that we aren’t very good at it. I’m wondering if health care is a legitimate exception at this point. In my 2009 health care reform piece I argued that taxpayers should fund a fixed amount per citizen per year and let the market take care of the rest. Instead we went in the opposite direction with Obamacare where (a) the cost could not be budgeted in advance, and (b) the government told insurers what to cover and how to cover. The current proposal in Congress (“Republicare”?) seems mostly ridiculous from an Econ 101 standpoint (and barely distinguishable from Obamacare), but maybe there is a rationale to the apparent madness? (New York Times offers a chart summarizing the changes; it does restore Americans’ freedom to decline to purchase the products of this massively distorted industry and, for example, fly or drive to a foreign country when they need non-emergency procedures that are expensive here)

What if we declare that, due to 50 years of heavy government intervention, there is in fact no market for health care services in the U.S. The government works with doctors to make it practically impossible for qualified foreign doctors to sell their services here and to limit the supply of U.S.-trained doctors. The government has been showering the industry with tax dollars to the point that no private individual has enough money to be a valued customer. The government helps pharma companies print money via (a) granting patent protection, (b) restricting approvals, and (c) blocking Americans from buying drugs on the world market.

An analogous situation is food stamps (SNAP). The government distorts the food market so that prices are higher than they otherwise would be. Then they have to give taxpayer-funded handouts to nearly 50 million Americans.

Americans would wet their pants in fear if either agriculture or health care were returned to the market sector of the economy. So there is really no way to get rid of food stamps or something that is the functional equivalent of Obamacare.

Congress is supposed to vote on this today? By when could the Republicare plan actually be a done deal?

Philip Greenspun’s Weblog

Why does it make sense for one company to own all of the ski resorts?

Vail Resorts bought Whistler last year for about $ 1 billion. This year they bought Stowe (Denver Post) for $ 50 million. Why does this make economic sense? Where is the economy of scale in running a ski resort? Especially when they are not geographically proximate. Vail doesn’t manufacture lifts, skis, or boots. They have a pass program that is good for multiple mountains across North America, but that could be arranged by agreement among resorts owned by separate companies.

I don’t think this is how it works in other parts of the hospitality industry. There is an economy of scale in establishing a hotel brand, but individual hotels are usually owned by separate groups of investors (i.e., two “Four Seasons” or “Marriott” hotels are unlikely to share ownership).

What’s different about skiing? Could it be that it is actually not that different? One reason why hotel owners contract ot Marriott or Four Seasons is that those companies are good at training people. So maybe it is the same for ski resorts? The big operator can send people from an already-efficient mountain like Vail or Beaver Creek to Stowe and achieve operating efficiencies via better-trained employees? But if so, why does the company that trains and markets also have to physically own the mountain, the lifts, etc.?

Philip Greenspun’s Weblog

Dog with a strong fashion sense

Here’s why I still need to check Facebook… “Dog attacks family trying to dress it in sweater, 3 hurt” (Miami Herald):

Police in Florida say an angry dog sent three people to the hospital after one tried to put a sweater on it.

Tampa police say the pit bull mix named Scarface bit a 52-year-old woman who was trying to dress him on Friday and her husband was attacked while trying to pull the dog off of her. Police say the couple’s 22-year-old son was attacked while trying to stop the dog by stabbing it in the neck and head.

(Thanks, Tara!)

Let’s hope that Mindy the Cripper forgets this tale prior to Halloween 2017…

Philip Greenspun’s Weblog

Does it make sense to draw an analogy between today’s migrants and European Jews in the 1930s?

It is common in our media and on Facebook to see analogies drawn between migrants from Syria, Afghanistan, and other war-torn regions and Jewish refugees from Germany in the 1930s. Initially the analogy seems apt. After the National Socialists were elected to power, Germany became a dangerous place for Jews, though the full scope of the danger wasn’t clear until the 1940s. For at least the 500,000 Jews who lived in Germany prior to the electoral victories of Hitler (or the roughly 250,000 who were still there just prior to World War II), in retrospect it seems to at least some Americans that we should have accepted them as refugees. People who live in Syria today are also in danger. Therefore we should accept them as refugees because we might regret it 70 years later if we do not.

If we are going to look back to the World War II era in Europe, are Jews the correct group to serve as an analogy and talking point? Jews constituted just one percent of the German population and were a minority group elsewhere in Europe. They were being targeted for discrimination, random violence, and ultimately institutional death camps due to their ethnicity/religion. Most of the migrants seeking admission to Europe and the U.S., however, don’t fit this description. Perhaps Christians who have remained in Muslim countries would be analogous to the Jews of Europe circa 1935 or 1940 (depending on whether there is an active shooting war near their home), but a Muslim citizen of a Muslim country that has become a war zone? Wouldn’t the more appropriate analogy be to a Christian living in a war-torn part of France, Germany, Poland, Ukraine, or Russia? Or to a Christian living in London during the German bombing campaigns? Or even to a soldier in any of the armies fighting during World War II? The average soldier certainly did not choose to go to war and would have preferred to be resettled in Minnesota.

This doesn’t necessarily affect the question of whether or not it makes sense to offer U.S. or EU citizenship to anyone currently living in a war zone. Perhaps it would have made sense to bring 50, 75, or even 100 percent of the European and Russian population in the 1940s in order to protect them from World War II (i.e., potentially hundreds of millions of people). If there are only a handful of places on Planet Earth where people can live without killing each other, why not have everyone live in those places? However, people keep saying “Jews” and “Holocaust” in the context of “Should we accept a refugee who is of the same religion and ethnicity as most other people in a country having a civil war?” If the analogy is inapt then presumably the conclusions that people are drawing are wrong.

[Separately, if Americans are in fact enthusiastic about Jewish refugees, we could take in the entire population of Israel under the proposed new standards for migrants/refugees. The states of the Arab League declared war on Israel in 1948 and only Jordan and Egypt have subsequently agreed to peace treaties. Thus Israel is an official war zone and everyone there is theoretically subject to the risk of violent conflict at any time the Arab countries (plus Iran as a new belligerent) feel strong enough to initiate new battles. (Arab citizens of Israel and Arabs living in the adjacent territories are equally at risk from any conflict, so they would qualify as refugees entitled to U.S. residency as well.)]

Philip Greenspun’s Weblog

Gold Has Officially Gone Crazy – How to Make Sense of it

Gold surprised both bulls and bears with high volatility and “gappy” price movement this week.

Let’s put the rapid price action in a bigger context and highlight what to do about it.

Here’s Gold “Gone Wild” on the 15-min intraday chart:

On the intraday chart, we see gold downtrending from the $ 1,85 level (early December) to the current new low under $ 1,050.

In the middle of this downtrending move, price has gapped higher, lower, reversed on a dime, and just generally given traders a fit.

Yesterday saw a large upside gap and one-day swing from $ 1,060 to the $ 1,077 level in mere hours.

The post-Federal Reserve volatility was choppy and preceded today’s gap-down and collapse under $ 1,050.

Only you can determine what is too volatile and when to stand aside from a particular market.

In the context of high and seemingly random volatility, it’s often helpful to rise to higher timeframes and decrease position size.

Here’s the broader perspective as seen from the Daily Chart:

We cover gold in much more detail in the Weekly Intermarket Membership – check it out for more information.

Let’s start with the realities of gold’s chart at the moment.

1.  Gold is Downtrending

Price continues to form a series of lower lows and lower highs in a downtrending environment.

2.  Gold is Challenging a Key Support Pivot

The $ 1,050 level is the focal point for traders at the moment just like $ 1,080 was in July 2015.

Ultimately, buyers will see value and step in, boosting the price higher “up away from” this pivot or the alternate scenario would be that bears (sellers) overpower buyers, resulting in another breakdown under support.

If $ 1,050 fails to hold as a key support level, then look for another breakdown impulse toward $ 1,000.

Finally, realize that gold is behaving erratically in terms of price action on the lower frames.

Tighten stops, reduce position size, and consider trading from the higher timeframes as solutions.

As always, be safe.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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Afraid to Trade.com Blog

Why does it make sense for Comcast and Time-Warner to merge?


I’ve been reading about the proposed merger of Comcast and Time-Warner (example from The  Guardian). Comcast is the monopoly Internet supplier here in Cambridge, Massachusetts. They provide a sluggish service that no tech enthusiast in Romania, Latvia, Israel, South Korea, or Japan would pay for (see Figure 15 in this Akamai report). If they have enough money to pay investment bankers, management consultants, etc., wouldn’t they be better off improving their service in order to compete with Time-Warner and Verizon? Could it really cost more to offer Latvian-grade Internet to American consumers than to merge two cable monopolies?

[Alternatively, if Comcast can’t figure out how to deliver Latvian-grade services to Americans at a reasonable cost, maybe it would make more sense to merge with a Latvian cable/phone/Internet provider?]

Related: This BBC article on broadband costs worldwide; it turns out that Latvians pay very little for their luxurious Internet service.

Philip Greenspun’s Weblog

Does Google’s acquisition of Motorola make sense?

Does it make sense for Google to spend $ 12.5 billion on Motorola? I can see only downsides to this deal:

  • Google doesn’t know how to make and sell hardware or manage a company that does
  • Handset makers that compete with Motorola (i.e., all handset makers other than Motorola!) will now be reluctant to adopt Android, a formerly neutral software product
  • Hardware can be sourced from hardware companies as needed; if Google wanted its own handsets it could have had HTC, Samsung, Motorola, et al., build them for it. A contract to build a few million mobile phones would have cost a lot less than $ 12.5 billion.

I don’t get this one. If it is a smart deal for Google, why didn’t Microsoft buy Dell or Compaq a long time ago? What am I missing?

Philip Greenspun’s Weblog