Day: September 6, 2014

Remove The Cancers From Your Life

Jon Leave a comment

It appears that despite my essay In Closing a substantial part of those who comment on my blog have failed to read for comprehension — or somehow think that they’re going to change my mind on the essence of why I write for public consumption at all.
I speak specifically of the never-ending parade of people who appear to have one — and only one – interest in the content of my thought process when it comes to the economy: How do I exploit what is going on to get “mine”?
The unsaid part of the question, however, is the most-important part. The real question, stated as a full sentence, is this:
How do I exploit what is going on to get “mine” while screwing everyone else in the ass: My neighbors, my associates, MY CHILDREN AND GRANDCHILDREN.
And yes, that is your question.
How do I know this? Because I put the exact same question before people in my family some 15 years ago over a holiday dinner, and it marked a point where I pretty-much literally walked out for quite some time afterward when the answer was simply, in the end analysis: I deserve it so **** you and yours.
Well guess what folks — I am certainly no more tolerant of that crap coming from people I know only because of their presence on a message board than I was from my own family.
You want the answer? I’ll give it to you here and now, because it’s simple, if that’s your goal.
Find the asset classes with the largest delta in P/E and P/S that have positive momentum and go all-in on maximum margin with a moderate stop under each position. Pick at least a dozen but no more than 20 names and move the stops up to maintain the same percentage gap between price and the stop at least once a quarter; monthly or even weekly is better if you have the time for it. You will get stopped out plenty of times but the ones that hit and run due to the use of leverage will be home runs. Do not replace the losers. This is the very simple model I ran in 2006 and cleared right around 30% on the at-risk funds .vs. ~11% for the SPX on the year, and I was only exposed for six months of the time. You do the math on the IRR for that strategy.

This post was published at Market-Ticker on 2014-09-04.

From TDV’s Senior Analyst…

Jon Leave a comment

Confidence in the precious metals trade has ebbed going into the fall, and our bottom hypothesis is about to be tested. It is an irony in light of what many of the central banks are doing to their currencies these days. But you have to remember that most investors are sheep, chasing yesterday’s returns.
A confluence of factors has nevertheless conjoined to make me potentially wrong about a few things: stocks, bonds and the dollar. If I turn out to be wrong about these things I may be wrong about gold.
What We’re Wrong About So Far
I’ve been advocating a limited short against US government bonds (at least as a hedge) since gold prices first crossed over $1500 in 2011.
I tried very hard to avoid that trade for many years, but with the price of gold in parabolic mode it began to look appealing. An initial allocation of 5% was recommended in August 2011, only a month before the Fed launched ‘operation twist,’ driving bond values to record postwar highs.
I doubled up on that short (through the proshares ETF, TBT) on the idea that the rally on Wall Street would undermine bond values just before the Fed was going to taper.
Nevertheless, my timing is still clearly early.
This trade is down 40% after averaging out the two purchase prices, and continues to look weak.
My call on stocks is half right. I withdrew my remaining short-term bullish calls on US equities, as of the end of 2013, but have avoided recommending a short. I don’t know if equities have peaked out yet or not but I am confident that ‘US’ equities have peaked in performance relative to the foreign equities.

This post was published at Gold-Eagle on September 7, 2014.

Keiser Report: Monkey Money (E650)

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The following video was published by RT on Sep 6, 2014
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the monkey behaving like a central banker throwing stolen money to holidaymakers, who, in turn, act like housing speculators and investment bankers – never asking from where the stolen money comes. In the second half, Max interviews games developer, Steve Favis, about crowdfunding Banksters, gamifying London and watching Twitch. TV.

The last time this happened, the US went to war to ‘defend’ its interests.

Jon Leave a comment

September 6, 2014 Santiago, Chile
In 1974 Richard Nixon struck a deal with Saudi Arabia that might go down as the biggest scam in US history.
In exchange for weapons and protection, the Saudis would sell their oil for US dollars, then reinvest those dollars back in the United States.
This was a matter of life or death for the dollar at the time; Nixon had closed the gold window three years before, and a massive devaluation of the dollar ensued.
Ensuring that the world’s most traded commodity would only be priced and settled in US dollars was absolutely critical in propping up the currency.
Looking back, it was a brilliant strategic move. The rest of OPEC followed, and this sealed the deal for US financial, political and military supremacy for decades.
The petrodollar was born.
Today, oil remains the most widely traded commodity in the world. And since EVERY nation either buys or sells oil, it means that every nation holds US dollars.

This post was published at Sovereign Man on September 6, 2014.

On The Brink Of A Major Crisis: ‘This Will Be A Literal Collapse of the Entire Global Monetary System’

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Discussions of the possible collapse of the U. S. dollar often center around how such an event will affect the domestic economy. But the dollar doesn’t just operate inside of a bubble. It is the world’s reserve currency for a reason. Some sixty-six countries world-wide either utilize it as their primary currency or peg their own currencies to its exchange rate. What this means, as noted by Future Money Trends in the micro documentary below, is that if and when the dollar does come under attack the fallout will be everywhere. The collapse will happen simultaneously and affect billions of people worldwide.
This is 33% of the nations of the world all submitting their currency sovereignty to the US Federal Reserve.
If and when the U. S. loses its currency status this will be a literal collapse of the entire global monetary system… A system that is built on lies, fraud and theft.


This post was published at shtfplan on September 5th, 2014.

Our Obsession With Monetary Stimulus Will End in Disaster

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The following is a commentary I wrote for The Forum section of London business-paper City A. M. It was published yesterday. The link is here.
It is now six years since the collapse of Lehman Brothers, and considering that the U. S. economy has officially been in recovery for the past five years, that equity indexes have put in new all-time highs, and that credit markets are once again ebullient to the point of carelessness, it is worth contemplating that monetary policy remains stuck in pedal-to-the-floor stimulus mode. Granted, quantitative easing is (once again) scheduled to end, and the first rates hikes are now expected for next year, but the present policy stance certainly remains highly accommodative. A full ‘exit’ by the Fed is still merely a prospect.
Expectations appear to be for the U. S. economy to finally emerge from its long stay in monetary intensive care healthier and fit for self-sustained, if modest, growth. I think this is unlikely. The lengthy period of monetary stimulus will have saddled the economy with new dislocations. And if central bank intervention did indeed manage to arrest the forces of liquidation that the crisis had unleashed, then some old imbalances will also still hang around.
‘Easy money’ is – contrary to how it is frequently portrayed – not some tonic that simply lifts the general mood and boosts all economic activity proportionally. Monetary stimulus is always a form of market intervention. It changes relative prices (as distinguished from the ‘price level’ that most economists obsess about); it alters the allocation of scarce resources and the direction of economic activity. Monetary policy always affects the structure of the economy – otherwise no impact on real activity could be generated. It is a drug with considerable side effects.

This post was published at FinancialSense on 09/05/2014.

Personal Responsibility and Free-Market Entrepreneurship

Jon Leave a comment

A recent, little discussed article about Russia’s signing of US FATCA legislation contained a surprising confessionary note – and an important one.
The main news was simple enough, of course. Vladimir Putin has signed Russian legislation mandating potential cooperation with US taxing authorities.
It was reported he did not do so willingly – and indeed, the RT (formerly Russia Today) broadcast network presented the news in that context.
Here’s part of the RT report:
Russia sees serious threat in FATCA … Russia’s financial system is “threatened” by America’s new tax law that demands foreign banks report on all American citizens’ banking activities, the Russian Federal Financial Monitoring Service said Thursday.
The head of the financial monitoring authority Yury Chikhanchin likened the one-sided data exchange to turning Russian banks into spies for the Americans. “Essentially, our financial institutions are becoming tax informants for the American economy. As similar systems start spreading to other countries, they can bring serious risks to our financial system,” Chikhanchin said at a banking forum in Sochi.
FATCA requires foreign banks to provide information on American clients, who have over $10,000 in deposits, to the US Internal Revenue Service (IRS). If a bank does not comply; it can be subject to a 30 percent fine. Before client information is sent to America, it will pass through the Central Bank of Russia and other local financial or government agencies, which still have the right to keep the information private.
On June 30, just before the deadline, Russia signed a law that allows Russian banks to share the tax data of American clients with US tax authorities, but does not mandate participation. The law simply gives Russian banks the ability to work with FATCA while not making it obligatory.
So far, this is unsurprising. The report and Russia’s dissatisfaction with FATCA didn’t get a great deal of play in Western media, any more than the signing itself.

This post was published at The Daily Bell on September 06, 2014.

Goldman Flip-Flops Again – Upgrades Stocks, Bunds, & High-Yield Credit

Jon Leave a comment

Just 2 months ago, the illustrious muppet catchers at Goldman Sachs stated that both stocks were 30-45% overvalued but lifted its year-end target in what we subjectively described as ‘moronic drivel’. Then, 2 short weeks after that ‘upgrade’, the same thought-provoking sell-side strategist downgraded stocks on the basis that a ‘sell-off in bonds could lead to short-term weakness in stocks’. Now, with the S&P 500 closing at new record highs on the worst employment data of the year, Goldman is at it again -upgrading equities to overweight for the next 3 months, rolling index targets forward, and piling investors into high-yield credit. Welcome to muppetville…
First – BUY!
July 12th 2014: Goldman Admits Market 40% Overvalued, Economy Slowing, So… Time To Boost The S&P Target To 2050 From 1900 Then – SELL!
July 26th 2014: Two Weeks After Upgrading Stocks, Goldman Downgrades Stocks Now – BUY AGAIN!!
September 5th 2014: Upgrading Equities

This post was published at Zero Hedge on 09/06/2014.

China Banking Crisis “Almost” Certain Says Senior International Economist; Global Banking Crisis “Is” Certain Says Mish

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The Sydney Morning Herald warns about a ‘clear and present danger’: Australia to be Hit as Chinese Economy Unravels
Speaking at a conference on Thursday, the federal government’s former top resources forecaster Quentin Grafton said the iron ore price was unlikely to recover quickly, leading to a painful downturn in the Australian economy in 2015.
“This isn’t about doom and gloom, it’s about looking at the risk and numbers. It’s a clear and present danger,” Mr Grafton said.
He said the Reserve Bank of Australia should prepare for a difficult ride as the overpriced property market and high dollar created a challenging economic environment as coal and iron ore prices dropped.
Mr Grafton’s comments join an increasingly vociferous choir of concern about the Chinese economy, with investor fears stoked by a Chinese residential property market that is experiencing its worst slump on record.

This post was published at Global Economic Analysis on Saturday, September 06, 2014.

Why a Market Correction Now Would be the Best Scenario

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Current market projections are diverse.
Nobel Laureate in economics Jeremy Siegel says he is still not concerned with valuations and has upped his previous projection of 18,000 for the Dow by year-end to “possibly 19,000″.
However, Nobel Laureate in economics Robert Shiller is very worried, noting that the market is 65% overvalued based on the Shiller CAPE10 P/E ratio, the market’s main fuel now being ‘irrational exuberance’.
Newsletter writers and retail investors are very bullish, while corporate insiders and famous billionaire investors are increasingly pessimistic.
For instance, George Soros has significantly increased his positions in put option bets against the S&P 500, while Warren Buffett is holding a record amount of cash.
Billionaire investor Sam Zell says, ‘Something has to give here. The stock market is at an all-time high, and economic activity is not.’
Peter Schiff, economist and CEO of Euro Pacific Capital, says, ‘The 2008 market collapse was not the real crash. The real crash is coming.’
Jim Paulsen of Wells Capital Management, one of the biggest bulls during the last five years, is now telling clients to ‘shift out of U. S. stocks and into international markets.’
They are not only concerned about the high market valuation and age of the bull market. They speak of how the extremely aggressive actions of the Fed over the last five years resulted in only an anemic economic recovery. Yet the market, always looking ahead, will soon have to begin anticipating those actions being reversed; the unloading of the unprecedented $4 trillion in mortgage-back securities and U. S. Treasury bonds on the Fed’s balance sheet, raising the record low interest rates back to normal, and so on.

This post was published at FinancialSense on 09/05/2014.

Feel Like Betting On Life Expectancy? There’s A Derivative For That

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Think CDS were the scourge of humanity, think again. As Pension360 reports, several Wall Street firms are selling securities backed by longevity risk – the risk that retirees receiving benefits will live longer than expected (and thus incur a higher cost on their retirement plan). As Ted Ballantine notes, ‘no one ever said Wall Street wasn’t creative’; but one wonders just how the banks are mitigating this risk…

More from Institutional Investor:
Sovereign wealth funds, educational endowments and ultrahigh-net-worth individuals are the target investors for longevity derivatives, which package the risk that retirees drawing annuities will outlive actuarial expectations. The roots of this nascent market date back to 2006, when small monoline insurance companies such as U. K.-based Lucida (purchased by Legal & General in June 2013) and Paternoster (bought by Goldman Sachs Group in 2011) began taking longevity risk off European pension funds through bulk annuity buyouts.
These buyouts entail a company selling pension assets earmarked for all or some of its plan participants. The assets are converted to annuities that the sponsor can keep on its books or off-load to the insurer.

This post was published at Zero Hedge on 09/06/2014.

Jobs Report Makes Huge Miss

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The market seems to be cheering the surprisingly weak jobs report in the hope that it will lead to a more favorable Fed policy. But in order to reach that conclusion, you first need to believe this jobs read. And I find it extremely hard to believe it.
A total of 142K jobs were created in the economy, materially below consensus estimates of around 225K and below the 212K average of the preceding 12 months. To add to the surprising nature of this jobs read, the tallies for the prior two months were revised lower by a total of 28K. It is very hard to square this jobs data with other economic readings like the ISM surveys, motor vehicle sales, weekly initial jobless claims and anecdotal evidence from the corporate sector in general.
In terms of industries, the August gains were in the professional and business services and healthcare industries while retail lost ground. The manufacturing sector was unchanged following the 28K gain in July. Construction added 20K jobs in August, roughly in-line with the preceding 12-month run rate of about 18K.
[See: Proof of a Structural Change in the U. S. Workforce] The average workweek remained unchanged at 34.5 hours for the 6th month in a row, while average hourly earnings edged up 6 cents to $24.53. Average hourly earnings have increased by 2.1% over the past year. The labor force participation rate was 62.8%, essentially unchanged since April. The unemployment rate remained unchanged at 6.1%, down 1.1% over the preceding 12 months.

This post was published at FinancialSense on 09/05/2014.

Financial system looking for a crisis to take the blame for global debt defaults

Jon Leave a comment

As time passes and the world becomes more chaotic — and poor, with the exception of the uber-wealthy, whose income and worth just keeps rising no matter what happens around the globe — more and more financial experts and economic analysts have become uber-pessimistic, especially about the financial future for the debt-ridden United States. You can add financial analyst and writer Bill Holter to that list. In a recent interview with Greg Hunter’s USA Watchdog, Holter says he believes that the elite power brokers in the U. S. and around the world are well aware of the fragile nature of the economic system and are set to play a major blame game when — and he says when – the coming crash hits.“I believe that they know the financial system is upside down and there is no bringing it back, so they do need to have something to point at,” he told Hunter. “It could be a war with Russia. We are trying as hard as we can to create a war, and it looks like Russia, and Mr. Putin, is trying as hard as he can [to not] have a war.”Holter continued: “There could be any number of things to point at. It could an Ebola virus outbreak. It could be the Saudi Arabians accepting euros, gold, rubles, yuan, what have you. It could be anything. There are dozens of topics.”

This post was published at Natural News on Saturday, September 06, 2014.

But Who the Heck Is Going to Buy all these ‘Overpriced’ Homes?

Jon Leave a comment

With home prices rising for three years in much of the country, and soaring at dizzying rates in a number of metro areas, the inevitable is happening: sales stalled. But prices have continued to rise, even as sales have deteriorated further. Something has to give. And it’s not going to be maxed-out American consumers. They’re not going to all suddenly inherit enough money to buy these mid-range homes that have moved beyond reach.
But something else is happening.
In the Las Vegas-Paradise metro area, one of the epicenters of the former housing bubble, and one of the epicenters of Housing Bubble 2, the ratio of homes sold to absentee buyers (mostly investors) as a percent of total sales in July plunged by a quarter year-over-year, according to DQNews, a division of CoreLogic. The ratio of homes sold to cash buyers plunged by a third. The ratio of homes flipped swooned. Total home sales have dropped year-over-year for the past 10 months; in July, they were down 11.8% to 4,260 units, the lowest for any July since crisis-year 2008.
And the median price? $190,000, up 9.6% year-over-year. The highest since November 2008. It has now booked 28 months in a row of year-over-year gains that reached up to 36.5%. Crazy! But July was the first month in two years with ‘only’ a single-digit gain.
These price increases have moved homes up the price ladder across the board, and potential buyers looking at the lower end found their American dreams evaporate: the number of homes that sold for less than $100k plunged 32%; the number of homes that sold for less than 200k plunged 21%; but the number of homes selling for over $500k rose 11%.

This post was published at Wolf Street by Wolf Richter ‘ September 6, 2014.

Stocks Have Reached a Permanently High Plateau

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A permanently high plateau of stock prices is a marvelous innovation.
Somebody said this before, of course, but one glance at a chart of the S&P 500 tells us that stock prices have reached what looks like a permanently high plateau. How can we identify a permanently high plateau? One sign is price never touches the 50-week moving average (MA), much less the 200-week MA: prices just keep marching higher in a volatility-free permanently rising plateau.
It’s almost like a film set, where the special effects department (i.e. the Financial Singularity) has been called in to get rid of pesky volatility and fluctuations.
Memo to Head Office: Done. The MACD indicator has been locked into a permanently high plateau as price marches higher in an orderly fashion.
A permanently high plateau of stock prices is a marvelous innovation: you can practically set your watch to the steady tick of new all-time highs, and all you need to plan your retirement or cash-out of your stock options is a ruler and a pencil–just extend the price line as far forward as you want, and calculate your wealth.
The only downside of this permanently high plateau of stock prices is that it eliminates the need for the financial punditry and the workforce of money managers. With bearish influences and volatility both eradicated, there is nothing left to talk about except the upward slope of the permanent plateau.

This post was published at Charles Hugh Smith on SATURDAY, SEPTEMBER 06, 2014.

ROFL! Crap Jobs Number, Futures 10?

Jon Leave a comment

This is your stock market.
This is your stock market on heroin.
This is your market’s heart, addicted to a woman that should be in prison, and a clown-car stuffed with 535 critters that have ignored violations of their own laws, and in fact cheer them on, for 100 years — and thus should also be in prison.
Note: The “benefit” from being on heroin is temporary and the intermediate and longer-term impact is catastrophic.
Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U. S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services and in health care.
That’s a crap number.
What’s worse is that the unadjusted number from the household survey is negative 618,000!

This post was published at Market-Ticker on 2014-09-05.

Weekly Gold Trend Analysis: EU Quantitative Easing Takes Center Stage

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The big story this week regarding gold shifted away from political issues as the market digested the lessening of tensions in Ukraine following negotiations between Russia and Crimea over a ceasefire.
What was a brief gold price recovery as the dollar weakened lagged during the week. A dollar drop provided some bargain hunting and short covering that lifted prices on Friday, but generally, the trend was down. In the near term, the dollar will likely retain strength against gold, though long term, analysts seem more hopeful.
As Reuters pointed out:
Weak demand has shaken the seasonal strength and outlook for the yellow metal remains sluggish in the near term … On the global front, gold succumbed to heavy offloading from hedge funds and investors following robust US macro data even as optimistic view of the economy amid Fed rate hike concerns prompted selling.
The Week’s Monetary and Industrial Trends
On the financial front, the big news was the surprise announcement by Mario Draghi that the European Central Bank would cut its benchmark interest rate. But of even more import was Draghi’s position regarding ECB stimulus. Draghi intends what amounts to an almost US$1 trillion stimulus for the EU, according to reports.
Draghi’s action included a rate cut but he also indicated a broadening of asset-backed securities. He intends to “significantly steer” the ECB’s balance sheet to 2.7 trillion euros up from 2 trillion euros today. Whether he can accomplish his goals via quantitative easing remains questionable given German resistance, which is based on legal facilities embedded in duly signed EU documents.

This post was published at The Daily Bell on September 06, 2014.

Report: It’s YOUR Fault: Fed Says Americans Who ‘Hoard Money’ Are To Blame For Poor Economy

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Despite arguments to the contrary from the Obama administration, mounting evidence suggests that the U. S. economy is rapidly falling back into negative growth territory. More Americans are out of the workforce than ever before, median household incomes are at levels not seen since 1967, and consumer spending is coming to a veritable standstill. The crisis is apparently so significant that a Federal Reserve governor recently said U. S. policymakers are crafting regulations that will force bank depositors to cover any losses should their financial institutions fail.
The question that many are asking is, how did this happen? How, after six years of recovery efforts and trillions of dollars printed, is it possible that the economy is not booming again?
This week the Federal Reserve published a report that claims to have figured it out and it turns out that the renewed economic downturn has nothing to do with foreign outsourcing, high taxation, increased health care costs for business or rising consumer prices for food and energy.
No, according to the Fed it is your fault. Apparently, you are not spending enough money. In order for the economy to recover you need to stop hoarding cash now and get out there and start buying more homes, cars, vacations, and electronics. Otherwise, you’ll only have yourself to blame when the system comes unhinged.
From the St. Louis Federal Reserve:
The issue has to do with the velocity of money, which has never been constant, as can be seen in the figure below . If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation.

This post was published at shtfplan on September 6th, 2014.