1. GJS Current Yield Differential Compared to the Other Goldman Sachs' Floaters: A reader disagreed with my assessment of just a .1% penalty per year over the next 25 years for GJS. After all, the current yield difference is close to 3%. This issue relates to the my analysis of the GS floaters in the prior post. Analysis of Prior Question about Goldman Sach's Floaters I did not explain why I assessed such a small penalty and I sent him an email explaining my rationale which I will quote in my blog in pertinent part:
. Ground Beef: The article in the NYT on Sunday about the ground beef industry is just another exhibit that safety of the food supply has never been a priority of the government. Meat packers can legally refuse to sell to anyone who tests their product. Better not to test for deadly pathogens otherwise you might have to do an expensive recall. The assertions by meat packers about their desire and efforts to protect the public from deadly pathogens is just a bunch of PR. I did not know until I read that article the lengths that firms who package the beef will go to earn an additional few cents a pound, by mixing different grades of beef from several slaughterhouses. Possibly, one could argue in good faith that some progress has been made since Upton Sinclair published "The Jungle" in 1906. But, after reading the NYT article about the ground beef industry, it would be impossible to argue that the FDA is protecting the food supply in any meaningful way. The emphasis is not on safety of the food supply but protecting the profits of the food suppliers. In that sense, the seal of approval by the FDA (“U.S. Inspected and Passed by the Department of Agriculture”) is just another part of the PR spiel by the food industry.
3. Goldman and Large U.S. Banks: GS raised its opinion on large U.S. banks to attractive from neutral.
4. "Intellectuals" & Crimes Against Women: The French "intellectual" Bernard Levy referred to Roman Polanski's admitted act of having sex with a 13 year old girl, after drugging her with a Quaalude and some champagne to be a "youthful" error by a 43 year old man. Harvey Weinstein referred to that criminal act as a "so called crime" An article in the NYT on Sunday places that kind of comment in an appropriate context. The European intellectuals rallied around a French Marxist philosopher who strangled his wife to death, later claiming that it was an accident. He was just giving her a neck massage. Another man deemed to be an artist by the intelligentsia beat his girlfriend to death, and he claimed that was an accident too. Needless to say, the "Les People" or crypto-intelligentsia rallied around him too. I would suggest that the comments of Harvey Weinstein, Levy, and their ilk have nothing to do with intelligence, just a lack of a moral compass and a less than enlightened view of appropriate behavior towards women, call it a medieval or middle eastern male attitude.
5. Coal Ash in School Carpet/ Water Supply: Another failure of the government to make any effort to safeguard public health was revealed in a 60 Minutes story about coal ash.
6. Ten Year TIP Auction: I will start to be more aggressive in buying the 10 year TIP at the auction when the coupon moves closer to 2.5%. The coupon for the TIP is commonly referred to as the real yield. I would agree with the commentator who wrote the article in Seeking Alpha that the attractiveness of the TIP improves significantly at that yield compared to where it is now. The real yield rose late last year because the breakeven number went to around zero, as the market priced no inflation over 10 years in late 2008 when I bought the TIP ETF at $93. That was not exactly rational in my book. I discussed my opinion of other factors that may impact the pricing of the TIP, both the real yield and the breakeven spread, in a prior post: Advantages and Disadvantages of Treasury Inflation Protected Securities: I now have about a $80 profit in the 2 TIP bonds bought at the last 10 year auction in the ROTH, and I am just buying 1 bond at today's auction. I will discuss the results of that auction tomorrow.