What is the most dangerous investing decision you can presently make?
Your choices are these:
California is a mess; no secret there. But the degree of decline that befalls it, and the quickness with which that decline is moving, seems to be largely ignored, particularly by Californians themselves. The nation's most populous state, and arguably its most naturally beautiful, is falling apart virtually everywhere we look. Yet state and local governments not only insist on moving forward with leftist policies, but continually double down by moving even farther left, and the state's voters return them to office with ever-increasing electoral margins. California's current approach to virtually all aspects of society — the economy, environment, legal system and culture — is unsustainable, and the time for reckoning is rapidly approaching. Read More
09.23.20- The Layoffs Are Just Beginning
UNEMPLOYMENT skyrocketed in March and April, during the worst stage of the pandemic and the lockdowns that followed.
The unemployment rate approached 15% in April and total initial claims for unemployment benefits exceeded 59 million between March and August.
This was the worst episode of unemployment since The Great Depression in the early 1930s. Read More
Stocks went down yesterday, which is generally considered to be a very, very bad thing that needs some serious “Don’t worry, this won’t last” headlines from Bloomberg. Not my bag, however. Let’s go a whole different route: gestalt.
Gestalt psychology is a school that emphasizes organisms perceive entire patterns or configurations, not merely individual components. The view is sometimes summarized using the adage, "the whole is more than the sum of its parts." Within global markets where the psychology is that sums are made by only looking at the parts, not the whole, I often want to cry “Oy gestalt!” Read More
International Man: Thanks to the shutdowns, economic activity on main street is at a standstill. Government, corporate, and personal debt is skyrocketing. Yet, the stock market is in a mania. Has the stock market become out of touch with reality, and if so, what are the consequences of that?
David Stockman: Both ends of the Acela Corridor have lost their marbles. This year, Uncle Sam borrowed $4 trillion in six months, the Fed printed $3 trillion in three months, and Wall Street drove the S&P 500 to 52X reported LTM earnings in the context of a deeper economic plunge than occurred in the worst quarter of the 1930s. Read More
09.19.20- This Is How Long the Bubble Will Last
THE underlying economy (U.S. and global) has a strong deflationary bias. Central banks can’t tolerate deflation, so they respond with inflationary measures such as money printing, zero rates and guarantees of all major securities markets.
Those policies won’t actually cause inflation, for reasons explained below. But, they will cause bubbles in certain asset classes, especially stocks.
There’s a serious question as to whether the central bank “inflationary measures” will actually work. They won’t. Read More
09.18.20- China is killing the dollar
In the wake of the Fed’s promise of 23 March to print money without limit in order to rescue the covid-stricken US economy, China changed its policy of importing industrial materials to a more aggressive stance. In examining the rationale behind this move, this article concludes that while there are sound geopolitical reasons behind it the monetary effect will be to drive down the dollar’s purchasing power, and that this is already happening. More recently, a veiled threat has emerged that China could dump all her US Treasury and agency bonds if the relationship with America deteriorates further. This appears to be a cover for China to reduce her dollar exposure more aggressively. The consequences are a primal threat to the Fed’s policy of escalating monetary policy while maintaining the dollar’s status in the foreign exchanges. Read More
Unfortunately, we are living in a world where facts don’t matter much anymore. For instance, the wildfires that have swept across the western United States over the past few weeks are being almost universally blamed on climate change, even though the facts tell otherwise.
The fires in California and Oregon are not due to climate change. They are due to arson and sheer stupidity on the part of many, including those who are responsible for the environmental stewardship that is supposed to prevent them in the first place. Read More
Long way to go, after 6 months of Pandemic.
The US economy is completing the sixth month of the Pandemic. So how is the recovery going, as seen by the near-real-time indicators that have sprung up as a result of the Pandemic? The raw unadjusted data of these indicators compare daily or weekly data this year to how it was just before the Pandemic, or how it was at the same time last year.
There is some roughness in this data. For example, this year, Labor Day fell on September 7; last year, it fell on September 2 (prior week). So there are some wild fluctuations as Labor Day data gets compared to non-Labor Day data. Independence Day was similar. But that’s raw data. Read More
09.15.20- Isn't It Obvious We Need a New System?
Why do we tolerate such a corrupt, undemocratic, exploitive, elite-dominated system? Because we have no other choice? No, we do have a choice.
Isn't it obvious that we need an alternative economic system that isn't controlled by corporations, the government and the central bank for the exclusive benefit of insiders and elites? Isn't it obvious that the current system has failed the majority of participants, and hence the ubiquitous sensations of: Read More
“Only a psychopath would ever think of doing these things, only a psychopath would dream of abusing other people in such a way, only a psychopath would treat people as less than human just for money. The shocking truth is, even though they now have most if not all of the money, they want still more, they want all of the money that you have left in your pockets, they want it all because they have no empathy with other people, with other creatures, they have no feeling for the world which they exploit, they have no love or sense of being or belonging for their souls are dead, dead to all things but greed and a desire to rule over others.” - Arun D. Ellis, Corpalism Read More
Late last year, the FAANG companies - Facebook, Apple, Amazon, Netflix,
In 2018, they shivered, as fears of trade war escalation took a big chunk out of their profits.
These are just two recent examples of many that have caused uncertainty for the FAANG stocks. Yet so far, nothing has really impacted them. Which leads us to today…Read More
09.10.20- A September Stock Market Crash?
Many of us have been waiting to see what surprises the month of September would bring, and it appears that a stock market crash may be one of them. Even the most ardent market optimists were admitting that the absurd bubble that had developed over the course of the summer was completely unsustainable, and the only real debate was over when it would finally burst. So is this it? Stock prices have certainly plunged quite dramatically over the last several trading sessions, but it is always possible that things could stabilize for a little while. But whether it happens in September, October, November, December or next year, the truth is that everyone knows that a crash is coming. Read More
The global pandemic has plagued the economy with uncertainty for nearly half a year. Despite early reports of a miracle vaccine, doubts and re-infections have once again cast skepticism on returning to what life once was. The unpredictability of the pandemic coupled with the mounting tensions between the US and China have seesawed asset classes—sinking the world’s reserve currency, the US dollar to a two-year low. In contrast, gold prices soared past US$2000, reaching an all-time high as concerns of the spread of the virus weighed on the world. Read More
09.08.20-Sound Money Is Key to Defending Our Liberties
The title of this article epitomizes what the Austrian economist Ludwig von Mises (1881–1973) called the “sound money principle.” As Mises put it:
The sound-money principle has two aspects. It is affirmative in approving the market’s choice of a commonly used medium of exchange. It is negative in obstructing the government’s propensity to meddle with the currency system.1
It is impossible to grasp the meaning of the idea of sound money if one does not realise that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of right.2 Read More
09.07.20- Holiday Rant: “Are ‘we the people’ going to let that happen?”
It's always the same plot: an economy gets into trouble and the Bolsheviks show up. They come with different names: National Socialists (Nazis), Bolsheviks (Russia), but the commonality is a hungry populace. The WW1, Treaty of Versailles destroyed the German economy, making a path for Hitler who, not long before he became chancellor, was the head of an insignificant party. Same with the Bolsheviks—they had a couple percent of the vote. And China, devastated by the Japanese in WW2, turned to Mao. Read More
09.05.20- Weekend Rant: The Hard Math of Demography
Demography is destiny, they say.
The early classical economists — Smith, Ricardo, Malthus, Mill, Marshall, and others — were keenly interested in the role that the young and the aged played in building wealth.
Living at a time when birth rates were high and populations were expanding, they wanted to determine how demographic growth changed wages, savings, and output; which classes benefited; and whether a larger population was a long-term blessing. Read More
Over the past several months we have been witnessing one of the most gloriously irrational stock market rallies in U.S. history. Even CNN is admitting that this is “the worst economic crisis of our lifetimes”, but stock prices have just kept going higher and higher until this week. Several months ago the Federal Reserve decided to do whatever it took to rescue the financial markets, and their exceedingly reckless behavior fueled a speculative boom that is unlike anything that we have ever seen before. But now it appears that the boom may be ending. The Dow Jones Industrial Average was down 807 points on Thursday, and it appears that Friday could be another very challenging day for Wall Street. Read More
09.03.20- Negative Interest Rates Have Arrived
We are often warned that negative interest rates are an approaching menace — not an immediate menace.
Yet are negative rates already reality in the United States? Has the unholy day already arrived?
Today we don the sleuth’s cap, step into our gumshoes… and unearth evidence that negative interest rates are not the future menace… but the present menace. Read More
United Airlines joined American Airlines in the latest round of massive job cuts as the virus pandemic continues to batter the travel and tourism industry.
Over the weekend the Centers for Disease Control dropped a bombshell report on coronavirus/COVID deaths:
The rest had on average 2.6 serious additional diseases, with the addition in most cases of extreme advanced age. Read More
08.31.20- Much Worse Is Coming
It has been heartbreaking to watch what has been transpiring on the streets of America in recent months. Our founders intended for us to be united by a common set of values, but now our differences are literally tearing our nation to pieces. Americans are fighting other Americans in the streets, and that should make all of us incredibly sad. Does anyone out there actually believe that all of this violence will be resolved by the upcoming election? If anything, rising political tensions are likely to make the violence even worse, and if the result of the presidential election is contested by either side that could easily take things to an even higher level. We have entered such a dangerous chapter in American history, and I am extremely concerned about the months ahead. Read More
“I’m not buying it. Things like that don’t happen in America. If anything, the dollar will be the last man standing. You guys are going to lose a lot of money.”
That was the response of a friend in the investment industry who reads my work. He obviously took issue with my claim about what’s driving all asset prices.
That what you’re witnessing in financial markets is the decline of paper money relative to precious metals. This “monetary regime change” is driven by government debts over 100% of GDP and rising annual government deficits. Read More
08.28.20- America's Coming Double Dip
Soaring financial markets are blithely indifferent to lingering vulnerabilities in the US economy. But the impact of consumers' fear of COVID-19 on pandemic-sensitive services are unlikely to subside, undermining the case for the uninterrupted recovery that investors seem to expect.
The double dip is not a dance. It is the time-honored tendency of the US economy to relapse into recession after a temporary recovery. Over the years, it has happened far more often than not. Notwithstanding frothy financial markets, which currently are discounting the nirvana of an uninterrupted V-shaped recovery, there is a compelling case for another double dip in the aftermath of America’s devastating COVID-19 shock. Read More
"No man can taste the fruits of autumn while he is still delighting his scent with the flowers of spring."
Stock markets continue to grind higher. Why? There are reasons to be cheerful – global earnings haven’t been a bleak as feared, economies are posting some stronger than expected numbers, and the absolute numbers around the pandemic are improving in terms of better outcomes and fewer deaths. There are even a few analysts claiming we’re still headed towards a V-Shaped Recovery – although it won’t now be until mid 2021 – which sounds pretty much their best-case scenario is one year missing from Global Growth. Read More
In our recent article It’s Time To Position For The Endgame, Chris Martenson explained how the US Federal Reserve and its sister central banks around the world have been engaged in the largest and most egregious wealth transfer in all of history — one that has been drastically exacerbated by the covid-19 pandemic.
The official response, tremendous monetary stimulus by the central banks paired with massive fiscal stimulus from national legislatures, has been pitched as “saving the system”. Read More
08.25.20- Beloved Country. Unloved Hedge.
I usually love writing. I get up early every morning, make a cup of coffee, put on my headphones, and look forward to discovering what my subconscious will surprise me with.
Not this time.
I hated every minute I spent working on this article.
There are many reasons for this.
A few times, as I wrote, I got close to a line I don’t like to cross – the politics line. I rarely discuss politics even with my friends. I have occasional political discussions with my kids (I try to show them all sides). I don’t allow broadcasts of political debates in IMA hallways. They don’t have the intellectual rigor we require in our research. They bring unwanted toxicity, resolve nothing, and nobody’s mind ever gets changed. Read More
Misguided lockdowns have destroyed the global economy and the impact is likely to last for years.
The fallacy of the “lives or the economy” argument is evident now that we see that countries like Taiwan, South Korea, Austria, Sweden or Holland have been able to preserve the business fabric and the economy while doing a much better job managing the pandemic than countries with severe lockdowns. Read More
A mystery for months is how it is that so many governments in so many different places on earth could have adopted the same or very similar preposterous policies, no matter the threat level of the virus, and without firm evidence that interventions had any hope of being effective.
In the course of two weeks, traditional freedoms were zapped away in nearly all developed countries. Read More
More than a million Americans were not supposed to be losing their jobs every week by the time we got to the middle of August. By now, vast hordes of unemployed Americans were supposed to be returning to their old jobs and economic activity was supposed to be returning to normal levels. But it hasn’t happened that way. Instead, the U.S. economy continues to unravel at a steady pace. Every week more businesses go under, more layoffs are announced and more people get behind on their bills. What we have already been through has been far worse than anything that we experienced during the last recession, and it appears that this new economic downturn is entering yet another new phase. On Thursday, we learned that another 1.106 million Americans filed new claims for unemployment benefits last week… Read More
As the Bubble Slowly Pops, the Economic Chain Reaction Is Now in Progress
Much has been written about the economic consequences of covid-19, yet, just as in many of the analyses of the Great Depression and the 2008 crisis, the years of accumulating debt preceding the event do not attract the attention they deserve. Covid-19—or to be more precise, the lockdown—has initiated a cascading liquidation of the debt bubble that has been building for a generation. From the early 1980s, each recession has been responded to with iteratively lower interest rates. Read More
“Never has our future been more unpredictable, never have we depended so much on political forces that cannot be trusted to follow the rules of common sense and self-interest—forces that look like sheer insanity, if judged by the standards of other centuries.” ― Hannah Arendt, The Origins of Totalitarianism
And so it begins again, the never-ending, semi-delusional, train-wreck of an election cycle in which the American people allow themselves to get worked up into a frenzy over the misguided belief that the future of this nation depends on who we elect as president. Read More
Can Donald Trump, against all odds, still win in November?
It would be a remarkable political feat, on par with his stunning upset in 2016. A global pandemic (however statistically dubious) ravages the country, while riots ravage major US cities. The US economy produces a third less than it did a year ago, 40 million people are out of work and dependent on federal benefits, and 60 percent of all restaurants may go under. Millions of Americans will not pay rent, mortgages, or credit card bills for the foreseeable future. Millions of their kids will not go to school at all, or will simply stare at their teachers on Zoom. Others wear face shields and sit behind plastic screens at their desks. College football, a religion in America, may well be canceled altogether. Trump’s own Manhattan is a ghost town. And the media is intensely aligned against him. Read More
Thomas Jefferson has valuable things to say about two key criticisms of the free market. I learned about these from reading C. Bradley Thompson’s America’s Revolutionary Mind (Encounter Books, 2019) Thompson has done an immense amount on research on the thought of the leading figures of the American Revolution, and I urge everyone to read this excellent book. Read More
I hadn’t planned on writing about the very sharp selloff that started yesterday (Tuesday) in gold and silver, but can’t imagine anything more on investors’ minds – mine included. No amount of prior mental foresight fully prepares most for the type of selloff underway – no declarations of an overbought technical condition, warnings of increase price volatility or of big shorts’ being backed into a corner and not giving up without a fight. Here, I would bow to that noted philosopher, Mike Tyson, “everyone has a plan until he’s punched in the face.” Read More
08.14.20- An Unexpected Systemic Crisis Is for Sure
08.13.20- Could Wall Street Lose the Election?
Two simple regulations would drive a stake through Wall Street's corrupt, evil heart.
While the corporate media is focused on the presidential election, perhaps the more interesting question is: could Wall Street Lose the election? That is, could Wall Street face potentially fatal restrictions regardless of who wins?
If this seems farfetched, consider the history of abrupt social-political-financial turn-arounds that surprised the mainstream. Off the top of my head I would point to Big Tobacco and environmental controls on Big Industry. Read More
08.12.20- This Isn’t Going To Be Good At All
By now I am sure that you have heard the news. Joe Biden has chosen Kamala Harris as his running mate, and the mainstream media is lavishing her with praise. Of course the focus of the election coverage will soon return to Biden and President Trump, but the American people will want to keep a very close eye on Harris, because she could soon be the president of the United States. And I am not talking about in 2024 or 2028. At this point, Joe Biden’s mental and physical health are declining so rapidly that there is absolutely no guarantee that he will even make it to November. And even if he makes it to November and is able to win the election, there is no guarantee that he will be able to make it through his first term. Read More
08.11.20- The Economy Is Mortally Wounded
A fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially.
We all know the movie scene in which the character is wounded but dismisses it as no big deal, and then lurches into the closing sequence where we discover the wound was not inconsequential, it was mortal, and the character expires.
That's a fair depiction of the economy--both the U.S. and the global economy.The rapt audience is assured it's just a flesh wound and the character will soldier on, teeth nobly gritted, and that sets up our surprise when he/she tragically expires in the climatic scene. Read More
Who Pulled the Plug?
This morning’s opening quote isn’t an independent assessment of the Morning Porridge – but is lifted from a newspaper article on Artificial Intelligence. It ends on a very scary tag: the AI is asked if it is conscious and responds:
08.08.20- The Origins of the Dollar's Value
Why does the dollar bill in one's pocket have value? The value of money is established, according to some experts, because the government in power says so. For some commentators the value of money is on account of social convention. What this implies is that money has value because it is accepted. And why is it accepted? …because it is accepted! Obviously this is not a good explanation of why money has value.1
Let us try another approach. Demand for a good arises from its perceived benefit. For instance, people demand food because of the nourishment it offers them. Likewise, people demand money not for direct use in consumption, but in order to exchange it for other goods and services. Money is not useful in itself, but because it has an exchange value—it is exchangeable in terms of other goods and services. Read More
Raoul Pal, CEO and founder of Real Vision, says Bitcoin may soon become his only asset for long-term investments.
CEO and founder of Real Vision Raoul Pal says his “conviction levels” in Bitcoin are rising on a daily basis as he compares the crypto asset to traditional investments on various timescales.
Applying economic cycle theory in a series of charts posted to Twitter on Aug. 6, the former Goldman Sachs fund manager stated that although many investors choose gold as an alternative to fiat, Bitcoin (BTC) has been the only asset in the world to “offset the growth of the G4 balance sheet.” The G4 refers to the Bank of England, the Bank of Japan, the Federal Reserve, and the European Central Bank. Read More
08.06.20- The Unraveling Will Accelerate
Since the first news of pandemic in late January, I’ve been discussing potential accelerants to the unraveling of our fragile financial system.
The system appears stable until a catalyst pushes it off the cliff.
Catalysts come in a variety of forms, from the apparently modest “straw that breaks the camel’s back” to a broad awakening that the status quo simply isn’t capable of adapting successfully to new realities. Read More
The world is rightly shocked today by the terrible explosion that devastated Beirut, and our thoughts go out to the people of Lebanon. The cause is still unknown, but visual evidence and official government statements suggest it was a tragic accident due to storing fireworks next to up to 2,750 tons(!) of ammonium nitrate. Despite denials from daggers-drawn Israel and Hezbollah, even a region rife in conspiracy theories had dismissed thoughts of this being either (Lebanese) politics or regional geopolitics (indeed, Israel has offered medical assistance given Beirut’s hospitals are overflowing)…until US President Trump blurted out his generals had told him it looked like a bomb and “attack” of some kind. Speculation or confidential information? Either way, it’s explosive. Read More
08.04.20- The Dollar Standard
Should confidence in the dollar begin to evaporate, all fiat currencies will sink in tandem – as G20 Central Banks are bound by the same policies as…
As commentators focus on the hospitalisations of two Gulf monarchs, and permutate likely succession issues, they may miss the wood for the succession trees: Of course, the death of either the Emir of Kuwait (91 years old) or King Salman of Saudi Arabia (84 years old) is a serious political matter. King Salman’s particularly has the potential to upturn the region (or not). Yet Gulf stability today rests less on who succeeds, but rather on tectonic shifts in geo-finance and politics that are just becoming visible. Time to move on from stale ruminations about who’s ‘up and coming’, and who’s ‘down and out’ in these dysfunctional families. Read More
A new month and what new madness for markets is the question? Non Farm Payrolls is the big one due on Friday… What will it tell us about the state of the US economy and indicate for the globe? Read More
For a very long time we have been warned that a U.S. economic collapse was inevitably coming, and now it is here. Fear of COVID-19 and unprecedented civil unrest in our major cities have combined to plunge us into a historic economic downturn, and nobody is exactly sure what is going to happen next. On Thursday, we learned that U.S. GDP was down 32.9 percent on an annualized basis last quarter. That officially makes last quarter the worst quarter in all of U.S. history, and many people believe that this new economic depression is just getting started. But of course not all areas of the country are being affected equally. According to USA Today, states such as Hawaii, Nevada, Michigan and New York were hit particularly hard last quarter… Read More
Back in 2014, hundreds if not thousands of conservatives and liberty movement activists converged on a farm in rural Clark County, Nevada. The purpose was to protest the incursion of federal government agents onto the property of the Bundy family, who had defied pressure from the Bureau of Land Management to stop allowing their cattle to feed on “federal land” in a form of free ranging. It was a practice that had been going on for decades and one that was required for the Bundy farm to survive, ended by environmental laws protecting a tortoise. Read More
07.30.20- Why Are There so Few Female CEOs?
It’s for the same reason there are so few women on death row
Despite all the efforts of equalization, women in high-ranking corporate positions are still exceedingly rare. But they are almost as rare in the dredges of society – and the reasons for both run deeper than sexism.
It is more than passing curious that at a time when women constitute roughly half the workforce, and are in the actual majority in terms of earning college degrees, there are still so few female CEOs. The distaff side accounts for CEOs in only 167 out of 3,000 large companies, which translates into a rather modest 5.5 percent of the total. Read More
07.29.20- Silver’s Biggest Weekly Gain in 40 Years
The best performing precious metal for the week was silver, up 17.79 percent. Silver had its biggest weekly gain in nearly 40 years and could keep soaring. The metal hit its highest level since 2013. Mike McGlone, commodity strategist at Bloomberg Intelligence says the white metal could eventually climb to $30 an ounce amid a broad-based bull market for precious metals. McGlone predicts the metal will stay between $20 and $25 for an extended period before moving higher. The Global X Silver Miners ETF had a ninth straight day of inflows and the iShares Silver Trust saw five consecutive days of money flows. Read More
Per-person consumption of soft drinks in Mexico is the highest in the world. But due to link of obesity to Covid deaths, sugary drinks now face their nemesis.
When billions of people are forced to hunker down at home for months on end, unable to visit their favorite restaurants, bars, nightclubs, theme parks or other leisure venues, they tend to drink fewer soft drinks, as the Coca-Cola Company can attest. In the second quarter, when roughly a third of the world population was put through some form of lockdown, the company’s global revenues slumped 28% year-over-year, to $7.2 billion. It was its largest drop in quarterly revenue in more than 30 years. Read More
The “European Project” was designed with something like the current crisis in mind.
The adoption of a common currency was just the first, politically easiest, step in a process that would eventually – its architects hoped – culminate in something like the United States, where a bunch of different geographic and cultural entities are subordinate to a central government that handles war, diplomacy, and finance. Read More
07.25.20- A Lost Year – Where Do You Go From Here?
The point of no return may have been reached. The effects of the government-mandated shutdowns due to Covid-19 on businesses — especially small businesses — may not be known for months, even decades, but anyone who is paying attention is beginning to realize we are somewhere new. A place no one could’ve predicted at the beginning of 2020 when onlookers were just anticipating an ugly election year. They got more, much more. Read More
Even though economic conditions were absolutely awful, during the month of June the mainstream media kept insisting that the U.S. economy was “recovering” and the stock market kept surging on every hint of good news. But now the “economic recovery” narrative is completely dead, because the numbers clearly show that the U.S. economy is rapidly moving in the wrong direction. On Thursday, the Labor Department announced that another 1.416 million Americans filed new claims for unemployment benefits last week. Read More
07.23.20- “Don’t Fight the Narrative”
It’s widely believed that the stock market looks ahead and discounts the future. But consider this November’s presidential election…
Joe Biden has a substantial lead over President Trump in the polls. But Biden’s platform is not what you would call market friendly. For example, it calls for a 39.6% tax rate on dividends and capital gains.
But the stock market is near all-time highs again, with the Dow Jones Industrial Average nearing 27,000, the S&P over 3,200 and the Nasdaq actually at record highs. Read More
The title of Thomas J. DiLorenzo new book, The Problem with Lincoln, is an understatement. Lincoln was far more than a problem. He was the worst disaster ever to befall the United States.
Lincoln destroyed the federal republic established by the founding fathers, and he destroyed the Constitution that protected it. He violated every provision of, and every Amendment to, the Constitution. He then rewrote, in effect, the Constitution and left the 10th Amendment out. Read More
07.21.20- Brown Weeds, Not Green Shoots
Remember “green shoots?”
That was the ubiquitous phrase used by White House officials and TV talking heads in 2009 to describe how the U.S. economy was coming back to life after the 2008 global financial crisis.
The problem was we did not get green shoots, we got brown weeds.
The economy did recover but it was the slowest recovery in U.S. history. After the green shoots theory had been discredited, Treasury Secretary Tim Geithner promised a “recovery summer” in 2010. Read More
07.20.20- Welcome To The Crazed, Frantic Demise Of Finance Capitalism
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud's basic machinery--speculation funded by "money" conjured out of thin air--has reached a level of denial that can only be termed psychotic.
When scams start unraveling, the scammers become increasingly frantic to maintain the illusion of legitimacy and the delusion of guaranteed gains that are the lifeblood of every scam. One sure sign that the flim-flam is about to collapse is the manic rise of FOMO, fear of missing out, as the scammers jam the Ponzi scheme's stellar returns to new extremes. Read More
07.18.20- Humpty Dumpty System is Irreparable
What does it take to break the global financial system? Well, we obviously know what it takes since the system is already broken. Broken by debts, broken by deficits, broken by a fractured financial system, and broken by false markets as well as fake money.
So just like Humpty Dumpty, the system has already had a big fall. But the world still believes that this is all a fairytale with a happy ending. No one wants to recognise that Humpty is totally broken and irreparable. Read More
07.17.20- Calibrating The Craziness
After a record drawdown in the first quarter and a record rebound in the second quarter, no one is disputing that the first half of 2020 has been memorable. What is open for question is whether the first or the second quarter is a better portent for the foreseeable future.
There is no doubt that public policy is part of the equation. While overwhelming policy responses to the Covid-19 related lockdowns certainly affected the markets, the Fed didn’t force anybody to do anything either. The key to managing through this is understanding what has happened and why. Read More
Another wave of lockdowns has begun, and that is really bad news for the U.S. economy. The first wave of lockdowns resulted in the permanent closing of more than 100,000 U.S. businesses, colossal lines at food banks around the nation, and the loss of tens of millions of jobs. Needless to say, this new wave of lockdowns will make things even worse, and some are speculating that this is precisely what Democrats want. If the U.S. economy continues to fall apart as we approach the election in November, the thinking is that this will make President Trump look bad and will make it more likely that people will cast votes for Democrats. Read More
07.15.20- Where Markets are Still Free
07.14.20- A Serious Message From Chris Martenson
Time is running short to brace for impact
Like a windstorm toppling a hollowed-out tree, SARS-CoV-2 didn’t cause the current recession so much as it exposed how rotten things already were.
Even before SARS-CoV-2, households were struggling. Far too many were limping along without any savings at all, one crisis away from financial ruin. Read More
“I pledge allegiance to the Flag of the United States and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.”
- Pledge of Allegiance, with a revision made in 1923
07.11.20- The Insane U.S. Budget Deficit
In recent years, as the government has run annual deficits nearing $1 trillion, they’ve continued to hit the debtceiling, which is supposed to keep spending in line. But each time, Congress has voted to raise the ceiling so they could continue paying obligations.
These actions are not without controversy, and you’re about to read one reason why…
The recent pandemic and the resulting lockdowns have added a new dimension to this year’s federal deficit. Uncle Sam has had to go on a spending binge to keep things afloat. But nothing like the “spending binges” of the past few years. Read More
07.10.20- ‘What Were You Thinking?’ Part Deux
At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking? Read More
07.09.20- Total Market Insanity: Toyota vs. Tesla
The present market insanity reminds me of the similar mentality of Americans right before the 1929 stock market crash and the pre-1999 Tech Bubble. However, the big difference today is that technology has destroyed the ability of investors to understand the meaning of VALUE. The notion that technology makes the world better fails the test of time, especially when you read Joesph Tainter’s book, THE COLLAPSE OF COMPLEX SOCIETIES. Read More
The recession of 2008 and 2009 was bad, but it was nothing like this. Even though this new economic downturn is only a few months old, we are already seeing numbers that we haven’t seen since the worst parts of the Great Depression of the 1930s. More than 48 million Americans have filed new claims for unemployment benefits over the past 15 weeks, well over 100,000 businesses have permanently closed their doors, and civil unrest has turned quite a few of our major cities into war zones. But not all areas of the country are being affected equally. Read More
07.07.20- Investing in a World Gone “Covidious”
How do you invest in a world gone covidiously cuckoo?
In Agora founder Bill Bonner’s take: wandering through life facelessly suspended “between six feet apart and six feet under?”
In a country that locks down its healthy and productive citizens, while refusing even to bother, let alone lock up, crazed mobs of masked arsonists and burglars in the streets? Read More
07.06.20- Year Zero
On America's birthday, celebrating the corporate-sponsored revolution
It’s the Fourth of July, and revolution is in the air. Only in America would it look like this: an elite-sponsored Maoist revolt, couched as a Black liberation movement whose canonical texts are a corporate consultant’s white guilt self-help manual, and a New York Times series rewriting history to explain an election they called wrong. Read More
07.04.20- Important Update: ER Doc –
07.03.20- Prices are going to rise - and fast!
With stockmarkets barely ruffled, few are thinking beyond the very short-term and they are mostly guessing anyway. Other than possibly the very short-term as we emerge from lockdowns, the economic situation is actually dire, and any hope of a V-shaped recovery is wishful thinking or just brokers’ propaganda. But for now, monetary policy is to buy off all reality by printing money without limit and almost no one is thinking about the consequences. Read More
By the mid-1990s, the economy of Zimbabwe was in serious trouble.
The national government under its dictator Robert Mugabe had spent years confiscating private property– real estate, businesses, factories, bank deposits, etc.
And unsurprisingly, this had a disastrous effect on the economy. Read More
Can leftists and conservatives of our modern era peacefully coexist within the same society? If someone asked me this question only ten years ago I would have said “Sure, it’s possible”. Today, the answer is a resounding “No way”. The political divide has become so vast that there is simply no chance for the two sides to reconcile or come to reasonable terms, and make no mistake, this is not a two-sided disaster; the majority of the damage is being done by one side of this equation. Read More
06.30.20- Forget the V, W or L Recovery: Focus on N-P-B
The only realistic Plan B is a fundamental, permanent re-ordering of the cost structure of the entire U.S. economy.
The fantasy of a V-shaped recovery has evaporated, and expectations for a W or L-shaped recovery are increasingly untenable. So forget V, W and L; the letters that will shape the future are N, P, B: there is No Plan B.
All the hopes for a recovery were based on a quick return to the economy that existed in late 2019. All the bailouts and stimulus programs were based on this single goal: a quick return to The Old Normal. This was Plan A. Read More
According to news sources at least one COVID-19 coronavirus vaccine may be licensed by the Food and Drug Administration before the November 2020 election.
The decision to vaccinate will likely be the biggest healthcare decision any American will ever make in their lifetime. Will Americans voluntarily line up and get immunized against the COVID-19 coronavirus? The vaccine will have been rushed to market. All of its side effects won’t be known till millions of Americans have been vaccinated. Read More
The last week of June marks the time when investors lost hope for a V-shaped economic recovery as confirmed COVID-19 cases are exponentially rising in Texas, Florida, and California, and the Tri-state area imposed quarantine restrictions on travelers. Reopening in some of these states has also been delayed as retailers close up brick and mortar shops for a second time.
With that being said - the V-shaped recovery narrative is imploding - as many on Wall Street indiscriminately bought stocks (some used picking Scrabble letters to buy) as their belief in the Federal Reserve's money-printing would lift the economy out of one of the worst downturns since the 1930s. Read More
06.26.20- The Looming Bank Collapse
NEW YORK (AP) — Americans are likely to see more “for rent” signs in the coming months as many businesses devastated by the coronavirus pandemic abandon offices and storefronts and potentially end a long boom in the nation’s commercial real estate market.
Hotels, restaurants and stores that closed in March have seen only a partial return of customers, and many may fail. Commercial landlords have already reported an increase in missed rent payments. They expect vacancies to rise through the end of the year. Read More
06.24.20- Not a silk purse…
“We need to ensure financial support is available to companies so they can afford to remain shut.”
Stock markets are determined to surge. The World Bank’s Carmen Reinhart is warning about the dangers of confusing rebound with recovery. European PMIs rose spectacularly, but remain far below normal. JP Morgan is talking about the sharpest, deepest and shortest recession on record. The US Treasury head is pontificating about further fiscal stimulus. There is a massive bubble around Tech stocks – a bubble within a bubble within a bubble as some describe it. Every single senior market talking-head is warning of dangers ahead. The new-minted day-trading hot-shots scream buy, buy, buy! (Which will likely morph into: “bye, bye!” fairly soon.) Read More
Stephen Roach, a Yale University senior fellow and former Morgan Stanley Asia chairman, tells MarketWatch that his forecast for a sharp deterioration of the U.S. dollar could be a very near-term phenomenon, not an event that looms off in the distance.
“I do think it’s something that happens sooner rather than later,” the economist told MarketWatch during a Monday-afternoon interview. Read More
George Floyd was not killed by police. According to the toxicology report, Floyd died from a concentration of Fentanyl in his blood three times the fatal dose. Fentanyl is a dangerous opioid 50 times more potent than heroin. You can read the analysis here. A link is provided to the autopsy report.
Think about this for a minute. What becomes of a society in which facts do not matter? The US media, Democrat Party, white liberals, and the sorry excuse for a leftwing are so primed for “white racism” that they jumped to their desired conclusion and egged on riots and looting that resulted in massive property damage in multiple cities, some deaths, many injuries, and much damage to racial relations. Read More
05.20.20- The crisis goes up a gear
The most important mistake economists and financial watchers make is to assume events and prices tomorrow are simply projections of those of today. It is the basis of all economic and financial modelling. Yet despite the hard lessons of experience economic forecasters persist with their misleading models.
Nowhere is the failure of linear projection from the past more important than in the lifeblood common to everything. While knowing that state-issued currencies change in their utility over time, almost no one expects their demise, other perhaps at some point in the far distant future. But what if this generally linear expectation is as wrong as all other forecasting models? Read More
It was only a few generations ago that most people spent their entire lives within a few miles of where they were born.
They grew up, lived, worked, and retired, all in the same place. And that was normal.
Travel and relocation didn’t really become commonplace until after World War II. But even then, the most common reason people moved was because of a job. Read More
06.18.20- Retail Sales Headlines Are
06.17.20- Trust No One
The title of today’s post is not meant to be taken literally. I trust plenty of people. I trust friends who’ve demonstrated their trustworthiness over the years. I trust my family. Having people in my life I love and trust makes everything far more meaningful and pleasant. I hope people reading this likewise have a circle of trust they’ve built over the years.
On the other hand, you should never trust anyone or anything that hasn’t given you good reason to do so, and if someone or something gives you good reason not to trust them, you should never forget that. The more power a person or institution has in society, the less trustworthy they tend to be. I don’t say this because it’s fun to be cynical, I say this because my life experience has demonstrated its accuracy. Read More
06.16.20- A dollar crash is virtually inevitable, Asia expert Stephen Roach warns
Many of the emergency economic measures that were put into place to support the American people financially throughout this pandemic are about to disappear, and that means that big trouble is on the horizon. Right now, we are in the midst of the deepest economic downturn since the Great Depression of the 1930s. Economic activity has fallen dramatically, more than 100,000 businesses have permanently closed, and more than 44 million Americans have lost a job so far in 2020. Read More
06.13.20- “Trash Stock” Speculation Signals Dangerous Trend
While not perfect, we can add an increase in “trash stock” speculation as another potential signal for the peak of the market cycle.
That signal may have arrived, according to ZeroHedge:
In nearly every market cycle, speculation in low-quality, virtually valueless and literally bankrupt stocks, marks a market top. Read More
06.12.20- Rabobank: So Silly It Hertz
“Do we get the emergency Fed meeting today or next week?”
I joke, of course. Yet that is what a host of financial market participants new and old will be thinking or hoping as they wake following a trading session which saw the Dow -6.9%, 10-year Treasury yields down 17bp at one point (now up 3bp to 0.70%), and the USD surge the most in two months against many crosses. Read More
2020 has been quite a year so far. It has been one nightmare after another, and yet the economic optimists continue to insist that economic activity will soon snap back to normal levels somehow. So the economic optimists aren’t really alarmed by the fact that the core areas of our major cities have been torched, gutted and looted by rioters, because they assume that all of this violence is just a temporary phenomenon and that any damage that has been done can be repaired. And they aren’t really alarmed by the fact that the COVID-19 pandemic is starting to escalate again. In fact, over the last seven days we have seen the number of newly confirmed cases around the globe hit levels that we have never seen before. Read More
06.10.20- A Crash in the Dollar Is Coming
(Bloomberg Opinion) -- The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. Then French Finance Minister Valery Giscard d’Estaing coined that phrase in the 1960s largely out of frustration, bemoaning a U.S. that drew freely on the rest of the world to support its over-extended standard of living. For almost 60 years, the world complained but did nothing about it. Those days are over.
Already stressed by the impact of the Covid-19 pandemic, U.S. living standards are about to be squeezed as never before. At the same time, the world is having serious doubts about the once widely accepted presumption of American exceptionalism. Currencies set the equilibrium between these two forces — domestic economic fundamentals and foreign perceptions of a nation’s strength or weakness. The balance is shifting, and a crash in the dollar could well be in the offing. Read More
Whirlpools and Whirlwinds
The S&P is now up for the year. Which is pretty much what one would expect against the backdrop of the World Bank calling a deep global recession, the worst US economic downturn since the 1930s, and the worst civil unrest since 1968. Regardless, companies with no income but cool names are up. Openly bankrupt firms are being panic bid. Retail money is pouring in to the market; risk parity funds are pouring in too as volatility comes down; and market shorts have largely been covered, while soon we will get the next leg-up as we actually go long. Read More
After falling 35% in less than 30 days in February and March, the S&P 500 rallied 35%. It’s now down about 1.6% for the year.
Where next? How about an 80% crash from here on the S&P 500? Maybe you think the Federal Reserve won’t let that happen. But consider this…
Wall Street Perversity
The initial down moves from the 1929 and 2000 crashes were matched by almost identical up moves. It was only after those huge dead cat bounces that the real bear market took hold. Read More
Let’s look at three recent developments.
Big Bank Bets Against the Dollar
International Man: The bond super bubble continues to get bigger. Interest rates seem to be headed even lower from here. Is this the blow-off top in the bond market?
What do you think will cause central banks to lose control and for interest rates to head higher?
Doug Casey: Even with the Fed bailing out major institutions—which it will continue to do, just like back in 2008–2009—the fundamentals underlying many businesses are so bad that a lot of them are going to collapse. I’m not just talking about the obvious candidates—retail, restaurants, airlines—but across the board. Read More
While all the expressed outrage on Twitter and Instagram about police brutality produce temporary endorphin feelings of satisfaction, the reality is that opinions in the absence of action change nothing. Punishment that acts as a deterrent and accountability are the keys to ending police brutality. These are two keys that provide the foundation to ending any type of criminality in any industry, whether that industry is law enforcement, healthcare, or banking. Without both, and without the punishment focusing on personal punishment enforced upon the individual perpetrator, criminality will always remain rampant and/or systemic in whichever corrupt industry reform is attempted. Read More
As the United States enters the fourth month of a combined public health and economic crisis, data on the state of the economy and the personal finances of individuals have gone weirdly inverted—and may do so again.
The inversion came in the form of figures showing Americans’ collective income rising by double-digits, even as tens of millions of people lost jobs, incomes, and businesses. It’s a statistical oddity caused by Congress’ massive infusion of cash into the economy. It suggests that the economy may be even more precarious than previously believed, because when government help dries up, there will be less purchasing power supporting the broader economy. Read More
Just about everyone thinks the coronavirus pandemic slammed global stock prices in February and March. Entire countries shut down; businesses closed up shop; unemployment soared. People stopped spending money beyond the essentials, so conventional wisdom would indeed expect stocks to slide as a result. Yet consider the below chart of the Shanghai Composite, China's primary stock index. Far from prompting a new bear market, the chart shows that the novel coronavirus appeared in Wuhan after a dozen-plus years of net decline in Chinese stock prices. Did the bear market instead prompt the pandemic? Read More
Our ruling elites, devoid of leadership, are little more than the scum of self-interested, greedy grifters who rose to the top of America's foul-smelling stew of corruption.
The Founding Fathers were wary of institutional threats to liberty and the citizenry's sovereignty, which included centralized concentrations of power (monarchy, central banks, federal agencies, etc.) and the tyranny of corruption unleashed by small-minded, self-interested, greedy grifters who saw all elected offices and positions of government influence as nothing more than a means to increase their own private wealth. Read More
05.30.20- Weekend Rant: As The World Burns
Personal safety & security are quickly becoming more important in this era of growing social rage
Decades of unfairness are now boiling over in the United States in the form of protests, riots, burning buildings and violence.
Minneapolis is on fire – literally – and the unrest has spread to numerous other major cities. Read More
What we have been witnessing on the streets of Minneapolis is just the beginning. Our nation is so deeply divided, and a large portion of the population is losing faith in the basic institutions that govern our society. Personally, I don’t know how anyone can watch the video of what happened to George Floyd without having an emotional reaction. Police brutality has been a massive problem in the United States for many years, and it has gotten to the point where most of the country no longer has faith in the police. Of course the rioters are not helping their cause by burning down the communities that they are supposedly defending. And after causing so much chaos on Wednesday night, protesters were back in the streets of Minneapolis on Thursday… Read More
The fragile ice shelf of speculative bets and debt clinging to the mountainside is making strange creaking sounds– will you listen or will you ignore it because ‘the Fed has our back’?
Feast your eyes on the chart below of the Nasdaq 100 stock market Index, which is dominated by the six FAAMNG stocks: Facebook, Apple, Amazon, Microsoft, Netflix and Google which now account for over 20% of the U.S. stock market’s capitalization. Read More
“… and when we look back on this in two years time, from the ruins of our economy and the ruins of our liberty, we will want to see some kind of justice, that the people who made this decision should pay a penalty for what they’ve done.” Peter Hitchens
Economic activity across the country has collapsed, GDP is shrinking at the fastest pace on record, and the economic data is worse than anytime in history. Every sector of the economy is contracting and every economic indicator is pointing down. According to economist Nouriel Roubini, the country is headed towards a decade of “depression and debt”, and that is probably an understatement. Read More
05.26.20- America Is Dead and Buried
You have no right not to be vaccinated, you have no right not to wear a mask, you have no right to open up your business… And if you refuse to be vaccinated, the state has the power to literally take you to a doctor’s office and plunge a needle into your arm.”- Alan Dershowitz, Harvard law professor
You have no rights.
That’s the lesson the government wants us to learn from this COVID-19 business.
Well, the government is wrong. Read More
As technical traders and researchers, we’ve been paying very close attention to the GREEN ARC Fibonacci resistance level on the SPY as a key level for the US stock market and any hope of a continued upside price rally. The SPY has traded near this level for the past three weeks and appears to be attempting a bit of an upside breakout right now. Yet, we understand a long holiday weekend is upon us in the US, Memorial Day, and after a big upside GAP on Monday, the US stock market has stalled over the past few days. Read More
Post-coronavirus pandemic, nobody really knows what the real estate market will look like. Will people travel less? Will we work from home more often? Will commercial and residential real estate be able to keep their respective bids once current leases run out?
We've found at least one investor who doesn't want to stick around and find out. Read More
The worst part about spending $6 trillion or more on coronavirus recovery isn't what's in it. The worst part is what happens if it doesn't destroy us.
How many articles have you read lately that started off with a variation of the phrase, “These are strange times”? It’s the understatement of the millennium. Before the coronavirus crisis, if we saw someone in a grocery store wearing a face mask, we might casually wonder, “What’s wrong with him?” Today, if you walk into a grocery story without a face mask, people will indignantly wonder and sometimes ask out loud, “What the hell’s wrong with him?” Read More
At precisely 9:26pm this past Friday night, May 15th, the House of Representatives in the United States passed the “Health and Economic Recovery Omnibus Emergency Solutions Act.”
For short, they call it the HEROES Act.
And yes, it’s as ridiculous as it sounds.
Bear in mind that Congress passed the first bailout bill– the “Families First Coronavirus Response Act” on March 14th. That set the taxpayers back $1.3 trillion. Read More
05.18.20- Our Indefensible Media
Dispatch columnist David French has written an article defending the mainstream media, asserting that much of the criticism coming from precincts on the Right is “lazy and cheap,” “outright dishonest,” and “marked by wild and imprecise generalizations that impose collective punishment for individual failings.” He adds, “Moreover, media critics frequently ascribe evil motives to members of the press and pretend that the press has greater capabilities than it really does — thus rendering it even more culpable when it inevitably makes mistakes.” Read More
Even if local and state governments hadn’t shut down businesses in attempts to mitigate the coronavirus, the U.S. economy was still set up to take on a number of economic challenges.
But now, there’s one additional challenge being considered by billionaire David Tepper: over-inflated stock prices:
05.15.20- The Biggest Economic Threat Today
Kind heaven, no! A fresh economic scourge is upon the land. Announces CNN:
Is a higher evil possible? Thus we are informed:
05.14.20- Total Catastrophe of
As the Nasdaq makes a new high for the year, the world outside the stock market timebomb is falling apart. For example the UN agency, The International Labour Organisation (ILO) reports that 1.6 billion jobs are at risk in the global economy. That is half of the global workforce of 3.3 billion. Particularly vulnerable are the 2 billion people in the informal economy. For most of these vulnerable people, this means no income, no food and no security reports the ILO. This is a human tragedy on a massive scale and most people in the Western world are totally unaware. Read More
No one gets spared the anguish, fear and heartache of living under the shadow of an authoritarian police state.
That’s the message being broadcast 24/7 with every new piece of government propaganda, every new law that criminalizes otherwise lawful activity, every new policeman on the beat, every new surveillance camera casting a watchful eye, every sensationalist news story that titillates and distracts, every new prison or detention center built to house troublemakers and other undesirables, every new court ruling that gives government agents a green light to strip and steal and rape and ravage the citizenry, every school that opts to indoctrinate rather than educate, and every new justification for why Americans should comply with the government’s attempts to trample the Constitution underfoot. Read More
05.12.20- Five Viral Lessons
We live in truly historic times. “There are decades when nothing happens, and weeks when decades happen,” says a quote usually attributed to Vladimir Lenin. It certainly fits now.
For thousands of years, people who lived through what we call “history” didn’t realize it. We are the exceptions. We’re seeing history and we know it. The Vietnam War was certainly historic, but the coronavirus killed more Americans in the last two months than died in that long conflict. The Great Depression was historic but by some indicators we are well on the way to matching it. The Manhattan Project and the Apollo missions were historic, but right now even more massive, world-changing technology and biotechnology are being hastily developed under pressure. Read More
05.11.20- The Worst Jobs Report in History
The good news first:
Today’s unemployment figures were not as cataclysmic as feared. Consensus came in at 22 million.
Here is the bad news:
Today’s unemployment figures were cataclysmic nonetheless. Read More
What did they do to the news? Walter Cronkite asks from the grave.
The nanny state, aided and abetted by a corporate news media thirsty for scared viewers confined to their homes, is about to jumpstart the nagging micro-management to level-10 warp speed – with the help of the neoliberal propaganda arms of the establishment formerly known as the free press. The rotten neoliberal 4th estate and the soulless cowards that staff them have to go. Read More
05.08.20- 52% Of Small Businesses "Expect To Be Out Of Business Within Six Months";
05.07.20- Don’t Bet on America
“Never, ever bet against America,” says the Oracle of Omaha, perhaps exaggerating.
Countries, like individuals, make mistakes. And they have their seasons. It was a bad idea to bet against America throughout most of the 20th century. That, of course, is when Warren Buffett got the idea.
But this is the 21st century. America’s capital industries are losing value. Its GDP growth is slowing. Its government – technically insolvent already – prints $1 million PER SECOND to cover its deficits. Its military is engaged in pointless meddles all over the world. Its menfolks’ life expectancy is falling. Its Swamp is rising. Read More
05.06.20- This “Cure” for the Economy
The economy remains under lockdown, although some states are beginning to relax restrictions. As with so many other aspects of American life, there’s been a red state/blue state divide.
Red states are generally more willing to reopen their economies, while harder-hit coastal blue states are generally more reluctant to open theirs. Read More
05.05.20- Stocks Bottomed and Rallied 30%
If you’ll recall, on March 23rd 2020, the Federal Reserve stated that it would begin buying both U.S. Treasuries and corporate bonds with unlimited funds.
The announcement was historic in nature: never before in its 107-year history had the Fed bought corporate bonds before. IN fact, it was technically illegal for the Fed to do this as the Federal Reserve Act of 1933 expressly forbid the Fed from buying corporate bonds and other risk-assets. Read More
04.04.50- Why Assets Will Crash
This is how it happens that boats that were once worth tens of thousands of dollars are set adrift by owners who can no longer afford to pay slip fees.
The increasing concentration of the ownership of wealth/assets in the top 10% has an under-appreciated consequence: when only the top 10% can afford to buy assets, that unleashes an almost karmic payback for the narrowing of ownership, a.k.a. soaring wealth and income inequality: assets crash. Read More
05.02.20- The Market Isn’t Done Falling
As early as January 2017, I said to expect “a stock market collapse at least as severe as 1929 or 2008.” And, “I think there’s a very high chance of a stock market crash of historic proportions before the end of Trump’s first term.”
It wasn’t a lucky wild guess, but the conclusion I came to after putting together the different pieces to see the big picture, which is what we do at Crisis Investing. Read More
I am deeply uneasy about what’s happening in financial markets
The Coronavirus has completely turned the global economy on its head. It will create the most profound changes to the way we live and our future prospects – we are all beginning to realise that. There is not going to be a V-Shaped recovery. Many lives will be shattered and ruined in its wake.
Yes, what I saw yesterday confirms two terrible truths we’ve long denied: Read More
After the 2008 financial crisis, huge companies like AIG asked for billions in bailout cash, claiming they would close up shop if they didn’t get the funds.
The truth of the matter is that they had screwed up and wanted U.S. taxpayers to foot the bill. This situation left a bad taste in the mouths of most Americans. Read More
04.29.20- The Coming Greater Depression of the 2020s
While there is never a good time for a pandemic, the COVID-19 crisis has arrived at a particularly bad moment for the global economy. The world has long been drifting into a perfect storm of financial, political, socioeconomic, and environmental risks, all of which are now growing even more acute. Read More
A White House economic adviser said Tuesday that the Trump administration is “studying very carefully” whether to provide another round of stimulus checks beyond the one-time, $1,200 direct payments, which he said could be part of a Phase 4 deal.
White House economic adviser Kevin Hassett told reporters on the White House driveway that those who qualify could receive another check. Read More
CMBS get to eat it all: Amid overvalued vacant collateral, there is a new thingy: Tenants delaying rent payments and landlords asking for forbearance.
The office segment of the commercial real estate market – and the debt and the commercial mortgage-backed securities (CMBS) that are backed by it – are going through serious gyrations on a combination of factors. Companies have figured out how to make work-from-home manageable. Other companies are moving out, leaving buildings vacant, or are deferring rent payments. Read More
04.25.20- Weekend Rant:
Conservative magazines have pretty much disappeared along with conservatives in education, popular culture, politics, publishing, media, and Hollywood. Magazines that helped to sustain stable families, good manners, the value of integrity, moral behavior, tending to one’s own garden, and Christian virtues such as compassion have been replaced by neoconservatives advocating war for American hegemony.
One magazine that lingered, Chronicles, was a mild and not very exciting voice, but recent issues under the new editorship of Paul Gottfried have resurrected trenchant writing and analysis of America’s perilous degeneration into a Tower of Babel. Read More
04.24.20- Business Owners Understand Why the Economy Can't Just Be "Reopened"
04.23.20- Trump Says "No" To World Money
Over the course of 13 years as a media commentator and nine years as a bestselling author, I’ve had frequent occasion to state the following:
This was more than just rhetoric. It was a clinical description of a pattern of worsening crises on an approximately 10-year tempo, along with escalating bailouts. Read More
04.22.20- "Negative" Oil?
Please note, this article was posted for subscribers Monday morning after suggesting “negative oil” on Saturday’s weekly call.
I made the comment on Saturday’s call, “we had negative interest rates, now we wait for negative oil prices”. I received a few questions because the negative price of anything makes no sense right? Well actually it does. Because demand has dropped so precipitously and production has continued unabated, supply is piling up. In the real world this is a huge problem because the oversupply must be stored somewhere. Oil is now being stored on previously empty tankers because land based storage facilities are overflowing. Read More
From California to New Jersey, Americans are protesting in the streets. They are demanding an end to house arrest orders given by government officials over a virus outbreak that even according to the latest US government numbers will claim fewer lives than the seasonal flu outbreak of 2017-2018.
Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…
Today I’m going to write about how private equity is reacting to the pandemic and the bailouts. PE is heavily indebted, and therefore is at high risk in a shock. I’m going to explore PE’s vulnerability, and how the industry is engaged in a political strategy to repurpose the Federal Reserve to its ends. I’ll also explore whether their strategy can work. Read More
SAN MARTIN, ARGENTINA – The liberal establishment press – The New York Times, The Washington Post – maintains that Dr. Fauci is the voice of reason and science. Donald Trump they regard as a paragon of prejudice and ignorance.
Fox News and the right-wing media trust Trump’s instincts. They believe the medical bureaucrats are trying to bring him down. But we are in a credulous age. People are ready to believe anything. Read More
04.17.20- The looming derivative crisis
The powerful forces of bank credit contraction are at the heart of a rapidly evolving financial crisis in global derivatives, whose gross value is over $600 trillion; an unimaginable sum. Central banks are on course to destroy their currencies through unlimited monetary expansion, lethal for bullion banks with fractionally reserved unallocated gold accounts, while being dramatically short of Comex futures. Read More
At some point, the economy is no longer controlled by individual citizens in the marketplace but by government “planners,” who find they have only one of two alternatives: stop “stimulating” and permit a full-scale credit collapse, or continue stimulating until the dollar loses all value and society breaks down.
Depending on which they choose, we will have a depression characterized by deflation or by hyperinflation. Read More
The coronavirus pandemic is one of the biggest and unprecedented seismic shifts in the global economy that we’ve ever seen in modern history, and it’s just getting started.
Already, economies around the world are shutting down. The federal reserve has pumped trillions into the United States economy in just a matter of days. Global supply chains have collapsed as entire Chinese industries went dark. And this is just the first stage. We’re heading into a year’s long recession that will have far-reaching consequences, some of which we can predict with near certainty, and some of which will be entirely unpredictable. Read More
Covid-19 driven collapse of global supply chains, demand and mobility will painfully spawn next great tech-led economic models
Is the world on a collision course with the financial and economic equivalent of a meteor impact with shock wave? Fractal illustration: AFP
Nobody, anywhere, could have predicted what we are now witnessing: in a matter of only a few weeks the accumulated collapse of global supply chains, aggregate demand, consumption, investment, exports, mobility. Read More
04.13.20- Buy The Tumor, Sell the News
The fictitious valuation of the stock market will eventually re-connect with reality in a violent decline.
No, buy the tumor, sell the news ™ is not a typo: the stock market is a lethal tumor in our economy and society. Buy the rumor, sell the news encapsulates the old traders’ wisdom that markets rise on the sizzle of hope, promises, projections, Federal Reserve pimping (see below), tax cuts, etc. etc. etc., not on the actual steak of sales and profits. Read More
04.11.20- Markets and Black Swans
I began studying complexity theory as a consequence of my involvement with Long-Term Capital Management, LTCM, the hedge fund that collapsed in 1998 after derivatives trading strategies went catastrophically wrong.
After the collapse and subsequent rescue, I chatted with one of the LTCM partners who ran the firm about what went wrong. I was familiar with markets and trading strategies, but I was not expert in the highly technical applied mathematics that the management committee used to devise its strategies. Read More
A Hyperinflationary Depression has always been the inevitable end to the biggest financial bubble in history…
A Hyperinflationary Depression has always been the inevitable end to the biggest financial bubble in history. And this time it will be global. Hyperinflation will spread from country to country like Coronavirus. It could start anywhere but the most likely first countries are the US and the EU or ED (European Disunion). They will quickly be followed by many more like Japan and most developing countries. Like CV it will quickly jump from country to country with very few being spared. Read More
Michael J. Burry is mostly known for predicting the 2007 mortgage crisis months in advance and for inspiring the movie “The Big Short”. In the midst of COVID-19 panic, this financial genius (who usually values his privacy) created a Twitter account to communicate one single message: End the lockdown
The movie The Big Short was inspired by the true story of Michael J. Burry, the weird and slightly autistic hedge fund manager who shorted the mortgage bond market in 2007 (his role was played by Christian Bale). Read More
04.08.20- The Greatest Idiot...
In the early 1980s, doctors and medical researchers around the world were confounded by the growing number of young, otherwise healthy patients who were dying of rare infections that typically only occurred in people with very weak immune systems.
The situation was so alarming that the CDC in the United States set up a special task force in 1982 to study the condition. Read More
04.06.20- The JackPot Chronicles Scenario 1: Force Majeure
Force Majeure means:
We are frequently told that there exists some manner of “Social Contract” to which we are implicitly bound by virtue of being alive. This implied Social Contract confers legitimacy upon the institutions that order our world, the national governments, the central banks, the miltary and police. And by extension certain communication outlets and media are endowed with a status of official curators over the narratives around institutional power. Read More
04.04.20- Government and Economics
There are only two types of governments. Two. That's it. There are those where the people control the government and those where the government controls the people. Likewise, there are only two types of economic systems: economies where free markets control commerce and economies where bureaucrats control commerce.
It's that simple. Really. Read More
04.03.20- What Is America Going To Look Like With Tens Of Millions Of Unemployed Workers?
04.02.20- Italy's Communist Recipe for Disaster
Montecalvo, Lombardy, Italy . “As I sit here in my involuntary isolation, it was just reported that overnight 743 more people died and 5.249 new cases have been reported. This brings the total cases of infection to 69,176 and the body count to 6,820. We take relief in knowing that 8,326 people have recovered so far. (Numbers as of 3/24, 8:30pm in Italy)
Most towns here in Italy, from the upper reaches of the Alps to the ancient shores of Sicilia and Sardenia, while not deserted, are closer to being ghost towns than the bustling centers of tourism, business and daily life they were just a few weeks ago. Read More
Eventually, the coronavirus will subside; but what will America look like when it does?
As the lockdowns across Europe began to bite, the U.S. Establishment began its ‘wobble’. The more elegant amongst élite circles pointed to a dangerous mis-match in timelines: The medical advice has been: ‘lockdown until the virus begins to subside’, but that advice encompassed too, the possibility of Covid-19 returning later in the year in a Phase Two, thus requiring further personal distancing. Hands shot high in absolute horror amongst some business and Wall Street leaders: Could the U.S. economy sustain such a prospect? Might not a long shutdown inflict permanent damage? Would there even be an economy left – to resurrect – in the wake of ‘peak Coronavirus’? Read More
It appears that we are heading into the worst economic downturn of the post-World War II era, and that is going to be true no matter how this coronavirus pandemic ultimately plays out. There are some that believe that this virus will only kill thousands, and there are others that are warning that it could kill millions, but everyone can agree that this outbreak is causing an unprecedented amount of fear. And even once this pandemic starts to fade, a certain percentage of the population will continue to be afraid to go to restaurants, bars and other small businesses that are open to the public. Read More
03.30.20- Forced Liquidation
Historians of the future, pan-roasting fresh-caught June bugs over their campfires, may wonder when, exactly, was the moment when the financial world broke with reality. Was it when Nixon slammed the “gold window” shut? When “maestro” Alan Greenspan first bamboozled a Senate finance committee? When Pets.com face-planted 268 days after its IPO? When Ben Bernanke declared the housing bubble “contained?”Read More
Those who never predicted a financial collapse in the first place are now edging closer to the swamp to dip their toes into the water. Now they are suggesting, perhaps we could have a recession."
Forget that. You cannot have every supply chain in the world chopped in two and have a recession. A depression was baked into the cake before the Corona popped out of the six-pack. The US government dumping a $6 trillion dollar bailout for their buddies that has more pork in it than the butt of a two-ton pig is the proverbial pissing up a rope. We are in a depression. The entire financial system, education system, medical system, political system, hell, the entire artifice needs a total reset. Read More
To fight the coronavirus at home, France is removing all military forces from Iraq.
When NATO scaled back its war games in Europe because of the pandemic, Russia reciprocated. Moscow announced it would cancel its war games along NATO’s border.
Nations seem to be recognizing and responding to the grim new geostrategic reality of March 2020: The pandemic is the real enemy of us all, and while we fight it, each in his own national corner, we are in this together. Read More
03.26.20- Professor Malinen: The Euro Won’t Survive This Crisis
To better understand the economic consequences of the Corona pandemic, I wanted to interview an expert on economic crises. Namely, Tuomas Malinen.Malinen is the CEO and Chief Economist of GnS Economics, a macroeconomic consultancy. He’s also an Adjunct Professor of Economics at the University of Helsinki. He has studied economics at the University of Helsinki and New York University. His focus is on economic growth, economic crises, central banks, and the business cycle. Read More
I haven't written any market updates in some time, and was quite surprised to be receiving requests for one. I am going to attempt to go over as much as possible without devolving into a rant. There is so much happening to analyze and consider, everything from the markets, to politics and of course the corona virus pandemic, and every bit of it is interconnected and affecting the outcomes of everything else. I am going to break this into individual sections analyzing the important issues, markets, and ending with a feasible investment and savings plan for people to follow as we navigate through some of the most volatile markets in this country's (and the world's) history. Read More
Updated March 22, 2020: As the novel coronavirus (COVID-19) has spread across the United States, its impact can be seen in every community. Businesses and schools are closed, the stock market is exceptionally volatile, and store shelves are empty as the American public has scrambled to prepare for the worldwide pandemic and social distancing prescribed by the WHO and CDC. Read More
03.23.20- This Is Not a Recession
Economists and Wall Street analysts are using the word recession to describe the looming plunge in output in the US economy. We’ll just make the point early that economists, exhibiting the typical emptiness of their failed science, can’t even agree on the definition of recession.
Last November, in an article titled ‘The Economic Crash So Far: A Look At The Real Numbers’, I outlined the reality of statistical fraud by governments and central banks to hide the ongoing economic downturn. The Everything Bubble, perhaps the biggest debt fueled bubble in history, has been propping up the global economy for several years, but began to waver dramatically at the end of 2018, as the Federal Reserve tightened liquidity conditions into economic weakness (just as they did in 1929 and in the early 1930’s as the Great Depression took hold).
In that article, I warned: Read More
On November 6, 2000, then US presidential candidate George W. Bush told a crowd of cheering supporters, “they misunderestimated me.”
Now, if English is not your native language, allow me to clear the air: ‘misunderestimate’ is not a word. But then again, George W. Bush was legendary for hilarious slip-ups like this.
There are entire books dedicated to his ‘Bushisms,’ the ridiculous made-up words and incomprehensible sayings that became routine for the 43rd US President. Read More
03.19.20- Quantum Computing. Honeywell
This is a really important story that was shared by K.J. (to whom a big thank you!). Honeywell, it seems, has created the world’s most powerful quantum computer, replacing Google’s claim. Or at least, that’s the story. And we’ve all been seeing these stories for some time now, about how quantum computers are the next leap forward, able to handle orders of magnitude more calculations than ordinary Tray super-computers, and do so much faster.
So what’s the big deal here? Why another story about quantum computing and “the latest breakthrough”? Read More
It started out ugly Sunday night and ended uglier today. Sunday evening, stock futures plunged 5%, hit limit down, and trading was halted. Futures remained pinned at limit down without further trading. When stocks started trading in the morning during regular hours, the S&P 500 Index opened at 2,490, down -8.1%. This was below the limit down rule during regular hours where trading should stop for 15 minutes if the index drops 7%. But it had blown through this limit-down from the first moment. Read More
“Well, it has to happen. Because if it doesn’t happen, we hit the wall next week. We’re already in breach.”
Happy St Patricks day.
Meanwhile… back in Today
Yesterday was another nasty day – uncertainty, panic and fear fuelling the worst fears for the market. The scale of capitulation was massive – Treasuries heading for zero percent, stocks biggest down day for 33 years, and gold sliding because investors literally have nothing else to sell to meet margin calls. If you aren’t out yet, you are stuck. Forget liquidity – it’s impossible to exit even liquid index ETFs. Read More
“Only a psychopath would ever think of doing these things, only a psychopath would dream of abusing other people in such a way, only a psychopath would treat people as less than human just for money. The shocking truth is, even though they now have most if not all of the money, they want still more, they want all of the money that you have left in your pockets, they want it all because they have no empathy with other people, with other creatures, they have no feeling for the world which they exploit, they have no love or sense of being or belonging for their souls are dead, dead to all things but greed and a desire to rule over others.” ~ Arun D. Ellis, Corpalism Read More
03.13.20- Predictions are hard. But here goes…
We certainly live in extraordinary times.
Even people who have been irrationally dismissive of the Corona pandemic up until this point finally had to wake up and smell reality yesterday. The NBA. Tom Hanks. European travel ban.
Our human brains, while magnificent and inspiring, are also wired in bizarre ways. We’re filled with countless ‘cognitive biases’ which affect our judgment, usually for the worse. Read More
03.12.20- The Butterfly Effect
The market is waking up to not just the viral contagion of coronavirus, but also to financial, economic, and geopolitical contagion.
If I had written a commentary on how 4,000 people dying from the flu would topple global financial markets, I think I would have been deemed insane. Yet today that is exactly the story. Read More
“We’re faced with the most critical time since the financial crisis.”
This we have on the grim authority of money man Sven Henrich.
Last evening prepared us for this morning’s hells…Read More
We haven’t seen anything like this since the last financial crisis erupted in 2008. Wall Street has been gripped by a tremendous amount of fear, and the volatility that we are witnessing would have been unimaginable just a couple of months ago. On Monday, the Dow Jones Industrial Average fell 2,013 points. To put that in perspective, the largest single day decline that we witnessed in 2008 was just 777 points. A disagreement between Saudi Arabia and Russia about oil prices coupled with increasing concern about the coronavirus pushed many traders into panic mode, and the result was absolutely stunning. Hopefully stock prices will bounce back throughout the rest of this week, but many experts are warning that this is just the beginning of the carnage. The stock market crash of 2020 is here, and the losses are already staggering. Just consider these facts… Read More
Around mid-January I started including coronavirus news in the daily Automatic Earth “Debt Rattle” news aggregators, and wrote the first essay on the topic on January 29. Tons of people since have asked why, but I thought the virus had “potential”. Though not everybody would agree, I still think that. So the Debt Rattles are full of coronavirus these days.
For a proper understanding, we must remember that China was 4-5 weeks too late in reporting the disease, and after that the west was 4-5 weeks late in acting on the news. This happens simply because a politician who cries wolf will have a short career, and reporters, certainly today, follow that same model. Read More
If you have a financial advisor, you’ll probably want to fire them after you read this.
You see, many Wall Street firms won’t tell you the truth about bitcoin – at least, not yet.
Merrill Lynch, Morgan Stanley, and JPMorgan ban their financial advisors from talking about bitcoin. Wells Fargo advisors can only hand out research “primers” on bitcoin – if their clients ask about it. Read More
The term “black swan event” is increasingly being used to describe this coronavirus outbreak, and many are concerned that what we are headed for will be much worse than what we experienced in 2008 and 2009. Already, we have witnessed a staggering drop in global demand, Wall Street has had to deal with the wildest week in eight years, and people all over the globe are hoarding toilet paper, face masks and hand sanitizer. That may sound like a plot from one of my books, but it is not. This is actually happening, and it appears that we are still only in the very early chapters of this crisis. Read More
The Federal Reserve on Tuesday gave the market a double-dose of exactly what it thought the market needed, and the market just about died! On the theory that, if a little is good, more is better, the Fed gave a double cut of interest. It did not go as planned.
At first, the medicine hit like nitroglycerin tablets, and the patient’s heart leaped. You can see how instantly the patient bolted up on the operating table in the graph, but the double dose the Fed administered was too much, and by the end of the day the patient’s vital signs were down 785 points. Read More
03.04.20- Peniaphobia Prevails
Sector expert Michael Ballanger charts tumbling markets amid the scare of a coronavirus pandemic.
(Peniaphobia: fear of poverty)
This weekend, newsletter writers the world over are scrambling to explain to their paid subscribers why they are now showing losses in portfolios that were supposed to be showing gains, and especially because it was only two weeks ago that the S&P 500 hit all-time highs at 3,393.52. Without going into a long diatribe over the multiple warnings I issued in January, Mother Nature (or a bioweapons lab) has provided the pinprick that has now popped the global equities bubble, triggering a gargantuan rush to the exits and liquidity. Read More
With last week's collapse in the stock market, the internet has been set ablaze with discussion of a new crash looming on the horizon (even with today's record-breaking point-gain in the Dow). The fact that such a chain reaction collapse was only kept at bay due to massive liquidity injections by the Federal Reserve’s overnight repo loans should not be ignored. Read More
03.02.20- Globalization and Our Precarious Medical Supply Chains
The grave risks and dangers in the process of worldwide out-sourcing and so-called globalization of the past 30 years or so are becoming starkly clear as the ongoing health emergency across China threatens vital world supply chains from China to the rest of the world. While much attention is focused on the risks to smartphone components or auto manufacture via supplies of key parts from China or to the breakdown of oil deliveries in the last weeks, there is a danger that will soon become alarmingly clear in terms of global health care system. Read More
02.29.20- Market Meltdown Update
Sentiment has snapped. Did the 10-year bull market just end?
We’ve been covering the spread of the coronavirus so intently over the past 30 days that we’d understand if you might have forgotten that, actually, we usually focus on many other topics on this website than global pandemics. Read More
02.28.20- The Great Melt-up Melt Down
That didn’t take long. Just a month ago, I wrote, “Stock Market More Overpriced and Perilous Than Anytime in History,” stating that the market was poised for a big fall because “some of the market’s most fundamental valuation metrics are now printing at levels never seen before…. This market is tripping on some pricy hallucinogens.”
And here we are! A single black swan has knocked the legs out from under the bull. It’s not a full-blown correction yet (requiring indices fall by, at least, 10%) or a crash (20% or more), though it looks like it could hit that mark by the end of today. That would be a full correction in just four days. Read More
Exactly a month ago I warned that the Corona Virus outbreak was going to pop the “Everything Bubble.” I did something fairly subtle. I buried my main message under a whole heap of cow manure. It doesn’t make a rat’s ass if I was right or wrong about calling for a market crash in October or the Fed dumping piles of new crisp $100 bills onto a bonfire in September. Read More
02.26.20- “1984” Has Come to China
You’re probably familiar with George Orwell’s classic dystopian novel Nineteen Eighty-Four; (it’s often published as 1984). It was written in 1948; the title comes from reversing the last two digits in 1948.
The novel describes a world of three global empires, Oceania, Eurasia and Eastasia, in a constant state of war.
Orwell created an original vocabulary for his book, much of which is in common, if sardonic, usage today. Terms such as Thought Police, Big Brother, doublethink, Newspeak and memory hole all come from Nineteen Eight-Four. Read More
In the year 1520, exactly 500 years ago, a German scholar named Johan Schoner completed a map of the world that was widely considered to be humanity’s most advanced understanding of geography at that time.
To us, Schoner’s map is pretty amusing.
There’s scarcely any American continent. Instead he drew some amorphous blobs to mark Brazil and the ‘West Indies’. And there’s a very narrow body of water where the Pacific Ocean is supposed to be, separating Brazil and India. Read More
02.24.20- Coronavirus Slams Chinese Economy
Here are the official statistics on the coronavirus (technically COVID-19) as of today: There are 75,685 confirmed infections worldwide, with 98% of that total in China alone. Of those cases, 82.5% are in the single province of Hubei, mostly centered in the city of Wuhan, with 11 million residents.
Of the over 75,000 worldwide cases, there have been 2,236 deaths; that’s a mortality rate of roughly 2.5%. If a 2.5% mortality rate sounds low, it’s not. That’s roughly comparable to the Spanish flu pandemic of 1919–20 that killed 50 million people by some estimates. Read More
Older Americans looking to retire may want to reassess their investment portfolio before the next market downturn.
There are many strategies to invest for retirement, but if they include loading up on stocks in your old age, they’re dangerous, says Raoul Pal, former hedge fund manager and chief executive officer and co-founder of financial media company Real Vision. Read More
That things go down as well as up… and get worse as well as better… is blindingly obvious to everyone over 55. But it will come as a rude shock to today’s investors.
So will today’s insight: that there are hard seasons in human life as well as soft ones. Read More
Here’s our little cottage:>>>
But even down here in the tropics, our Dear Readers’ comments reach us. Here’s one:
With the Democratic primaries underway, the candidates’ rhetoric has started to feel like a posturing contest. They all seem to think that voters want to back the candidate who’s most interested in raising taxes, so they try to outdo each other with talk about fantastical “wealth tax” constructs that will wipe out everyone’s debt.
As impressive as this showmanship is, a thriving economy and a balanced budget are already within our reach – no redistribution of wealth required. We just need to stop leaving money on the table. The legal and fiscal mess that currently surrounds legal marijuana proves this point. Read More
Yesterday we showed readers a remarkable statistic from the latest Weekly Kickstart report by Goldman's David Kostin: according to the chief Goldman US equity strategist, whereas modest S&P500 earnings growth in Q4 was set to finally end a 4 quarters-streak of negative EPS growth, with S&P earnings per share set to rise by a modest 2% Y/Y, virtually all of the earnings upside came from just the top 5 biggest companies: Facebook, Amazon, Apple, Microsoft and Google (aka FAAMG), which collectively saw their EPS rise by a whopping 16% (mostly on the back of record stock buybacks which reduced the number of shares outstanding thus lowering the denominator in the EPS calculation). Read More
02.17.20- Coronavirus and credit – a perfect storm
This article posits that the spread of the coronavirus coincides with the downturn in the global credit cycle, with potentially catastrophic results. At the time of writing, analysts are still trying to get to grips with the virus’s economic impact and they commonly express the hope that after a month or two everything will return to normal. This seems too optimistic.
The credit crisis was already likely to be severe, given the combination of the end of a prolonged expansionary phase of the credit cycle and trade protectionism. These were the conditions that led to the Wall Street crash of 1929-32. Given similar credit cycle and trade dynamics today, the question to be resolved is how an overvaluation of bonds and equities coupled with escalating monetary inflation will play out. Read More
Guggenheim Partners' Scott Minerd warned in a new market outlook titled "Peace for Our Time: The coronavirus is a looming economic problem" that the Covid-19 outbreak in China is the latest red flag for investors could prick the corporate debt bubble.
Minerd says, "cognitive dissonance in the credit market is stunning." He compares today's uncomfortable and eerie stillness in the corporate bond market to the late 1930s, right before the Nazis started bombing Britain. Read More
Poetic Justice Coming For The 1%
To understand just how grim the coming decade is likely to be for the world’s super-rich, let’s start with three premises: Read More
02.13.20- Our "Come to Mao" Reckoning and the Next Cultural Revolution
Let's start our "Come to Mao" reckoning with the obvious:
To the U.S. stock market:
02.12.20- The Forces That Degenerate an Empire
BALTIMORE, MARYLAND – Day by day, the empire ages… drooping unto death.
Yesterday came news that Bernie Sanders narrowly won the New Hampshire primary. Read More
In mid-December 2019 we published a list of the 11 worst performing names in the S&P 500. The purpose of that exercise was twofold. First, buying the laggards at the end of a calendar year into tax loss selling anticipating a bounce in the New Year is a common hedge fund strategy – a turbo-charged play on the January Effect. Second, any big loser that does not rally once that selling stops is in real trouble. Read More
The Trump administration has just granted its Commerce Department sweeping powers to slap tariffs on countries it decides are manipulating their currencies to the detriment of the United States and its exporting companies.
For some this will come as news; at AOTH, it is confirmation that our earlier warning, reported here, has come true. Read More
According to Investopedia, "Froth refers to market conditions preceding an actual market bubble, where asset prices become detached from their underlying intrinsic values as demand for those assets drives their prices to unsustainable levels." Read More
02.07.20- When Trust Evaporates
Now, I’m not going to get into which virus wins the “I killed more faster”, (thus far, it was SARS with a fatality rate of 9.6% vs 2.8%). Or which is more infectious (SARS again, though Coronavirus can spread while still incubating). Or join the silly debate of whether we should eat bats (they carry the disease, so ummm…NO). Rather, I’m going to focus on what’s been different in terms of the reaction globally…and why this is important. Because let’s face it, statistically, you’re still far more likely to be killed by some dolt crossing the centerline while watching his Insta feed…and nobody is running around like chickens screaming…don’t drive, don’t drive. Read More
The primary driver of stock prices is supposedly earnings, right? So how is it that earnings as a percentage of GDP have been falling since a peak in late 2014, and yet the major averages like the DJIA and SP500 are up 60% since then?
This week’s chart looks at some data which is buried deep within the Bureau of Economic Analysis’ report on National Income and Product Accounts. You can find it here, then go to table 1.10, line 15. Like I said, it is deep. Read More
It is a rare thing to witness a truly iconic moment happen on live television, but that is precisely what tens of millions of Americans had the opportunity to do on Tuesday night. At the conclusion of President Trump’s State of the Union address, House Speaker Nancy Pelosi ripped her copy of Trump’s speech in half in front of a nationwide audience. We have never seen anything like that before in the entire history of this country, but of course so many unprecedented things have taken place during Trump’s presidency. Pelosi is claiming that she did not plan in advance to rip the speech in half, and at that moment she probably wasn’t doing much thinking at all, but it is a moment that will live in all of our memories for the rest of our lives. Read More
Twitter permanently banned the libertarian financial website Zero Hedge from the platform on Friday—January 31st after it published an article questioning the involvement of a Chinese scientist in the outbreak of the deadly Coronavirus.
02.03.20- Coronavirus Creating Worries of an Economic “Black Swan”
Originating in Wuhan, China, the virus moved from animals to humans at a local food market. Since then, it has since spread to other parts of China and beyond.
Could it be possible that this coronavirus outbreak will be the trigger that finally bursts the biggest stock market bubble in U.S. history? As I have discussed previously, stock prices in the United States were the most overvalued that they have ever been during the month of January, and our stock market has never been more perfectly primed for a huge meltdown. But stock prices are all about what investors believe will happen in the future, and if they remain convinced that the future is bright then perhaps this stock market bubble could persist for a while longer. Unfortunately for Wall Street, this coronavirus outbreak is starting to create a wave of fear in the financial community. In fact, concern about the coronavirus pushed the Dow Jones Industrial Average down more than 600 points on Friday, which represented the worst day for the Dow since last August... Read More
01.31.20- Estimating the shape
We don’t know what will trigger the crisis, but a likely candidate is foreign selling of US dollars combining with a collapse in the US government’s finances. Perhaps the coronavirus will turn out to be a black swan event, but the underlying conditions for an economic and monetary crisis already exist.
We’re just a few days away from month two of what’s shaping up to be quite the tumultuous new year, and researchers from the United Kingdom are now warning that the number of coronavirus cases is about to turn exponential.
In a model assessing the potential fallout from this highly contagious outbreak, this team of experts is expecting that more than 250,000 Chinese people will contract coronavirus by the turn of February – a number significantly higher than the roughly 6,200 cases that are currently being reported. Read More
NEW YORK (Reuters) - A closely watched bond market phenomenon has again flashed yellow, but investors are loathe to give it much weight.
Yields on the 10-year Treasury note briefly fell below those of the 3-month bill early Tuesday for the first time since October, on concerns over the economic impact of the coronavirus. An inverted yield curve has historically been an indicator of looming recession as it tends to reflect worries over future growth among bond investors. Read More
01.28.20- The Black Swan Event Begins
As the Asian markets opened on late Sunday, traders expected a reactionary price move related to the threat of the Wuhan virus and the continued news of its spread. The US Dow Jones futures markets opened close to -225 points lower on Sunday afternoon and were nearly -300 points lower within the first 25 minutes of trading. Gold opened $10 higher and continued to rally to a level above $15 higher.
If this is early price activity, or a reactionary price move, related to fear of what may come, then the warnings signs are very clear that global traders and investors believe this virus outbreak may very well turn into a major Black Swan event. Read More
Inflation is always and everywhere a rip-off.
BALTIMORE, MARYLAND – The nice thing about inflation, at least from the feds’ point of view, is that it doesn’t leave fingerprints.
Today’s dollar, for example, is worth only three cents of the pre-1971 dollar. But who dunnit? Who stole 97 cents out of every dollar? Read More
01.25.20- Irrational fears of deflation
The benefits of a deflation of prices brought about by a combination of sound money and markets free from government intervention have been demonstrated to be the best economic environment, the denial of which in favour of inflationary financing has led to repeated monetary and systemic failures.
01.24.20- Don’t Mess With the U.S. (Financially)
I’ve been documenting financial warfare in my articles for years, but it still doesn’t get the mainstream attention it deserves.
Because as you’ll see below, it can directly impact your wealth.
Financial warfare tools include account seizures and freezes, expulsion from global payment systems, secondary fines and penalties on banks that do business with targeted entities, embargoes, tariffs and many other impositions. Read More
There are two subjects that the mainstream media seems specifically determined to avoid discussing these days when it comes to the economy - the first is the problem of falling global demand for goods and services; they absolutely refuse to acknowledge the fact that demand is going stagnant and will conjure all kinds of rationalizations to distract from the issue. The other subject is the debt bubble, the corporate debt bubble in particular. Read More
The year was 1990, and the Soviet Union was on the verge of collapse. The Berlin Wall was still in the process of being destroyed, and East and West Germany were set to reunify later in the year.
Nelson Mandela was released from prison in February, and the South African government began talks to end Apartheid soon after.
Iraqi dictator Saddam Hussein invaded Kuwait in August. Read More
01.21.20- Swift Impeachment Trial and Acquittal Coming Up
The Trump impeachment trial starts Tuesday. It rates to be a swift one.
The Hill reports McConnell Proposes Compressed Schedule for Impeachment Trial.
2019 was an incredible year for technology…
5G wireless networks went live in cities around the world on a weekly, sometimes daily, basis. Artificial intelligence accelerated faster than anybody predicted. And precision medicine technology is on the cusp of rewriting health care as we know it today.
This is such an exciting time to be a technology investor. And we have a lot to look forward to in 2020. Read More
David Rosenberg, Chief Economist & Strategist of Rosenberg Research, doesn’t believe in the sustainability of the stock market rally, and warns that investors may be disappointed at the end of the year. He is bullish on energy stocks - and predicts that the gold price will surge to $3000.
Mr. Rosenberg is also the author of Breakfast with Dave, a daily distillation of his economic and financial market insights. Read More
The drama in Virginia has escalated again as Governor Ralph Northam declares an official State of Emergency before January 20th’s “Lobby Day” protests.
Citing violence that erupted in Charlottesville during a Unite the Right rally in 2017, Northam said that there are credible threats that “armed militia groups plan to storm the Capitol” during Monday’s rally. In an executive order, he announced he is banning all weapons from Capitol Square for the day. Read More
01.16.20- Instability Rising: Why 2020 Will Be Different
In 2020, increasing monetary and fiscal stimulus will be the equivalent of spraying gasoline on a fire to extinguish it.
Economically, the 11 years since the Global Financial Crisis of 2008-09 have been one relatively coherent era of modest growth, rising wealth/income inequality and coordinated central bank stimulus every time a crisis threatened to disrupt the domestic or global economy.
This era will draw to a close in 2020 and a new era of destabilization and uncertainty begins. Read More
In Part One of this article I detailed my inability to predict the timing of events during this Fourth Turning, while maintaining the catalysts of debt, civic decay, and global disorder continue to drive the world towards a cliff.
“A shocking crime was committed on the unscrupulous initiative of few individuals, with the blessing of more, and amid the passive acquiescence of all.” - Tacitus, Publius Cornelius
The shocking crime being committed during this century under the unscrupulous initiative of a few evil men is ongoing and no longer hidden from those willing to open their eyes and see the truth. As conspiracy theorists have proven to be right through the sacrifice of Snowden, Assange, and other patriots for truth, the Deep State psychopaths have double downed and are blatantly flaunting their power and control over the levers of government, finance and media. Read More
01.13.20- Surf’s Up!
The wave of change is finally here. Are you prepared to ride it?
Nothing seems right anymore.
In whichever direction we choose to look, things are unraveling at a quickening pace.
Welcome to the Fourth Turning; and with it, a profound loss of trust in institutions and government.
Such lack of social cohesion is a hallmark of a Fourth Turning. Sadly, it’s happening at a time when society desperately needs to pull together, set aside our differences, and make some really big decisions. Read More
01.11.20- Predictions for the 2020s
While many commentators see it fit to publish their predictions for the year ahead, I find a single year to be too fine-grained for any meaningful forecast. For me, plus or minus five years is about the right size of the error bars to place on any prediction with regard to timing, making it possible to time any major change to within a couple of decades. And it just so happens that another decade has gone by since I published my last set of predictions for the United States in the 2010s and it is therefore time to come up with a new set, for the 2020s. Read More
01.10.20- Sex, Drugs & Reality Distortion
It’s 1972, the US is withdrawing from Vietnam and the Godfather has just been released.
A Reed College dropout is on his way to meet a new student at his dorm-room to sell him a typewriter.
After knocking on the buyer’s door, eager to get the deal done, he tries the handle and steps inside only to find his would be buyer enthusiastically mid-coitus. Read More
[Editor’s note: This letter was written by Sovereign Man team member Joe Jarvis, who recently moved to Puerto Rico.]
Local Puerto Ricans invariably tell me I’m overpaying on rent, and that I could have found a cheaper place to live.
I’m sure that’s true. But somehow I’m not upset about my gorgeous view over the ocean and private roof deck.
Beautiful beaches are right in front of me, along with three pools, a gym, and tennis courts. Read More
01.08.20- A New Gold Standard:
Over the past century, monetary systems change about every 30 to 40 years on average. Before 1914, the global monetary system was based on the classical gold standard.
Then in 1945, a new monetary system emerged at Bretton Woods. I was at Bretton Woods this past summer to commemorate its 75th anniversary.
Under that system, the dollar became the global reserve currency, linked to gold at $35 per ounce. In 1971 Nixon ended the direct convertibility of the dollar to gold. For the first time, the monetary system had no gold backing. Read More
One does not see malinvestment at the time of money printing. Price increases are delayed and uneven, due to the Cantillon Effect whereby the early receivers of new money are able to purchase goods and services at existing prices. Later receivers or those who do not receive the new money at all suffer higher prices and a reduction in their standards of living. Even then most people do not link higher retail prices with a previous expansion of the money supply.
It would be hard to invent a more effective method for the destruction of modern society.
– “The Hidden Link Between Fiat Money and the Increasing Appeal of Socialism” by Patrick Barron Read More
“World War Three!” is trending on social media the day I return to work after two weeks off deliberately not reading any news for once: ironic given my reputation for being bearish about geopolitics. Markets, of course, have failed to react much: Middle-East bourses closed down 2-4% on Sunday, which is not exactly end of the world stuff; WTI futures are up around 3%, again not a real panic; while US 10-year yields were down from 1.94% intraday Thursday to 1.79% as of the Friday close - but the weak US ISM survey (47.2 headline; 46.8 new orders; 45.1 employment) could be to blame for that alone. Read More
International Man: Trump’s America First economic policy seemed to help him win the 2016 election. He promised to renegotiate America’s trade deals and bring jobs back to the United States.
As president, Trump has used tariffs and other protectionist measures to try to reduce the trade deficit.
What do you think of Trump’s trade policies and tariffs? Read More
01.03.20- New Rules for the New Decade
My centre is giving way, my right is retreating, situation excellent, I am attacking. – Marshal Ferdinand Jean Marie Foch
BALTIMORE, MARYLAND – A new year! A new decade! And it’s going to be great.
Back in the 18th century, people went to insane asylums to laugh at the crazy people. Today, we only have to turn on the TV or read the news.
That’s progress! And it just gets better and better.
But we need to put it in perspective… Read More
If this is what “the good times” look like, how nightmarish are “the bad times” going to be? In America today, more than 500,000 of us are homeless, about 40 million of us are living in poverty, 50 percent of all workers make less than $33,000 a year, and 70 percent of us have cried about money. But at least the economy has been “growing”, right? Well, in this article I would like to address that. Even if you believe that the highly manipulated economic growth numbers that the government puts out are legitimate, they still show that we are in one of the worst economic stretches in all of U.S. history. Read More
While pondering the current economy that is becoming more of a conundrum every day, I stumbled upon an analogy I would like to share. The global economy is like a giant "Rube Goldberg" machine.It is a ridiculously complicated contraption built to perform what should normally be a simple task. Rube Goldberg machines often mimic the real world in that they are goal-oriented with many parts comingtogether to complete a task. Read More