The Last 1,000 Marker, Nov 21
Dec 5 '14 Dow almost reaches 18,000 (17,991 high) for the first time. 506 trading days
later the Dow closed at 17,888 on Nov 4 '16. Now 11 trading days later, the Dow closes
at 18,956, right at its 19,000 level.
With the headlines - or should I say headwinds - below, would it really be that surprising
if after taking almost 2 years to reach Dow 19,000, that this was the final 1,000 marker
in the central bankers' bubble?
Janet Yellen Says Interest Rates Could Rise "Relatively Soon", Fox Business, Nov 18
Saudis, China Dump Treasuries; Foreign Central Banks Liquidate A Record $375 Billion
in US Paper, Zero Hedge, Nov 17
"Big Short" Investor Steve Eisman is Worried About European Bank's Non-Performing
Loans, Business Insider, Nov 18
Italy's Referendum Holds The Key To The Future of the Euro, FT, Nov 20
Gold Price Skyrockets in India After Currency Ban, Jayant Bhandari, Acting Man, Nov 9
Treasury Yields, Mortgage Rates Rising At Record Pace, The Street, Real Money, Nov 19
What Will Investors Do When Suppression of Risk Doesn’t Hold?, Sept 28
1>40, Dana Lyons' Tumblr, Sept 12
Deutsche Bank in Free Fall, Shares, CoCo Bonds Plunge. Merkel Gives Cold Shoulder
on Bailout. Bank Denies Everything, Wolf Street, Sept 26
Chart Shows China Debt Bubble Larger Than Subprime Bubble, MarketWatch, June 1
State Street: "Move Over Zero Hedge, There is a New Bear In Town", Zero Hedge, 9/23
Some of the world's largest institutions - World Trade Organization, United Nations, and
Bank of International Settlements - keep sending out warnings that don't match the "no
fear here" U.S. stock markets.
Global Trade To Grow At Slowest Pace Since Financial Crisis, Zero Hedge, Sept 27
UN Fears Third Leg of the Global Financial Crisis with Prospect for Epic Debt Defaults,
Ambrose Evans- Pritchard, Uk Telegraph, Sept 22
China facing full-blown banking crisis, world's top financial watchdog warns, UK
Telegraph, Ambrose Evans-Pritchard, Sept 19
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found in The Investor’s Mind. Deception has never been higher. Constant vigilance and
critical thinking never more needed when change is a constant at the trading and system
level.
Will the Federal Reserve and Bank Of Japan Turn Markets Back To Calm?, Sept 14
The signals are coming from everywhere now. The showdown between who is stronger,
central bankers or history, is once again on the block. A time to stay alert for big changes.
Stocks Trading Range Now Beyond Compare, Dana Lyons' Tumblr, Sept 6
JPM Explains Why Everything Is Dumping:"The Market Has a BoJ Problem", VaR Shock
Returns, Zero Hedge, Sept 12
Paul Singer: 'It 's a Very Degernous Time in the Global Economy', Business Insider, 9/13
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found in The Investor’s Mind. Deception has never been higher. Constant vigilance and
critical thinking never more needed when change is a constant at the trading and system
level.
High Level Warnings; Is Main Street Listening or Trusting Central Banks?, Aug 31
With 5 major US equity markets reaching all time highs this month, yet none even 3%
above their 2015 all time highs,are Main Street investors exiting now or developing a sell
strategy with their advisor? Why would anyone sail into these dangerous waters without
a plan for the next big bust phase like 2008?
Many European Banks Have Lost Half Their Value, CNN Money, Aug 2 ‘16
US Bank Stocks Surge To 2016 Highs Despite Collapse in Yield Curve To 9 Year Lows,
Zero Hedge, Aug 29
Bill Gross: The Fed Has Mastered Market Manipulation, CNBC, Aug 31 '16
[Stanley] Drunkenmiller: Get Out of the Stock Market, Own Gold, CNBC, May 4 ‘16
Carl Icahn is Betting Big on Stock Market Crash, Fortune, May 16
Jim Grant (Grant’s Interest Rate Observer): “This Will Turn Out To Be Very Bad For
Many People”, Zero Hedge, Aug 23 ‘16
Deutsche Bank’s Shocking ECB Rant: Warns of Social Unrest and Another Great
Depression, Zero Hedge, June 9 ‘16
Citigroup is About To Relive Its 2008 Derivatives Nightmare, David Stockman, Aug 22
Bank of Japan Prepares for Crash Triggered by Fed Tightening, Wolf Street, Aug 26
“It’s Gone”: Why Foreign Demand For US Treasuries Has Disappeared, ZH, Aug 23
Former Fed President: All My Very Rich Friends Are Holding A Lot of Cash,
Forbes, June 9
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level
Unlimted Rescues Brings Limited Ethics, July 29 '16
If We Can't Be Honest, No Solution Is Possible, Charles Hugh Smith, July 21
Denial of the Obvious, Praise For Lies, Mish Shedlock, July 24
It would seem that the theme among the big global central banks right now is to keep the
US stock indices at “all time highs”, and global equity markets from stalling again no
matter what it takes to keep up this view of “investment utopia”. Is this a monetary policy
or political? Is the problem financial or ethics?
Japan Sees Weaker Consumer Spending, manufacturing in June, The [Japan] Mainichi,
July 29
Nikkei Whipsaws After BoJ Disappointment; Yen Surges Against Dollar, CNBC, July 29
GDP Shocker: US Economy Grew Only 1.2% in Second Quarter; Q1 Revised to 0.8%,
Zero Hedge, July 29
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level
Could Too Much "Assitance" Be a Bad Thing?, July 14 '16
Look at the two articles below, the two charts, and my most recent article, The Soaring
Risk of Flying in Bernanke's Helicopter. Do you see a big problem?
The Market Should Not Be At Record Highs - CEO of World's Largest Asset Manager
CNBC, July 14
"It's Prohibited By Law" - A Problem Emerges for Japan's "Helicopter Money " Plans,
Zero Hedge, July 14
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
Brexit Deflationary Bear Begins, June 27, '16
The Brexit contagion: How France, Italy, and the Netherlands now want their
referendum too, UK Telegraph, June 23
Brexit cost investors $2 trillion, the worst on day drop ever, CNBC, June 26
'This is the Worst', Alan Greenspan Says of British Breakup Events, CNBC, June 26
Looking to Hike? Yellen Finally Admist Stocks ARea Overpriced, Daily Bell, June 23
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
World Records, S&P 500, and Global Financial Organizations: Peak Warnings Of The
Switch From Risk On To Risk Off, June 13 '16
Is the 10- Year German Bund Yield About To Turn Negative, MarketWatch, June 9
“Everything’s still on the road for deflation,” said Hideo Shimomura, the chief fund investor
at Mitsubishi UFJ Kokusai Asset Management in Tokyo, which oversees about $106
billion. “Investors are forced to buy. There are no other options.”
German 10-Year Sovereign Bond Yields Turn Negative For First Time, CNBC, June 14
El-Erian Yen Nightmare Helps Send Japan Bond Yields To New Lows, Bloomberg,
June 9
Ultimate Market Timer Sam Zell: “Know What the Problem Is?”, Wolf Street, May 27
World Bank Cuts Global Growth Forecast on Weak Demand, Commodity Prices, Financial
Express, June 7
Act Now, Or Risk Another Deep Downturn, OECD Warns Policymarkets, Yahoo Finance,
June 1
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
Algo Games Can Stall, Not Stop Decline, May 17 ‘16
The clock is ticking down on how many games can be played to stall the largest bust on
record. Once again, we find no shortage of warnings.
Bull Market Losing Biggest Ally As Buybacks Fall Most Since 2009, Bloomberg,
May 15
Soros Fund Outlines New Allocations, CNBC, May 17
Goldman: The Median Stock Has Never Been More Overvalued, Zero Hedge, May 15
“Markets Have No Purpose Any More” Mark Spitznagel Warns “Biggest Collapse In
History” Is Inevitable, Zero Hedge (from Financial Times), May 16 ‘16
If someone tells you, “they” have things in place to protect your investments, tell the
individual to read the article below.
High Frequency Trading: ‘Circuit Breaker’ Remedy Aimed At Avoiding Flash Crash
Debacles Caused Market Mayhem In Sell-Off, Int’l Business Times, Aug 26 ‘15
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
The “Assisted” Dow 18,000 Bubble, April 25 ‘16
Eric Hunsader: The Financial System is “Absolutely, Positively Rigged”, An Interview with
Chris Martenson, Peak Prosperity, April 18, 2016
If you have received a $750,000 whistleblower award from the SEC and have over 74,000
followers on twitter and are recognized as a world authority on high frequency trading, you
don’t need to listen to this interview. Otherwise, make time to listen to this interview soon.
Other world issues that the 2600 point, 10 week rally in the Dow is currently not reflecting.
Why should we take advice from a president who has surrendered the world to chaos?
UK Telegraph, April 25 '1
Saudis threaten to sell $750 Billion US Assets If Congress Passes Bill That Would Let
9/11 Victims Sue Saudi Arabia, Business Insider, April 16,’16
China Debt Load Reaches Record High As Risk To Economy Mounts, Financial Times,
CNBC, April 24 ‘16
In a Shocking Finding, The Bank of Japan Is Now A Top 10 Holder In 90% of Japanese
Stocks, Zero Hedge, April 25 ‘16
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
Nosebleed US Stock Levels Meet Buyback Blackout Period, March 23 '16
Buyback Blackout Period Leaves U.S. Stocks On Own Prior To Earnings, Bloomberg,
March 23 '16
Bullish or bearish for stocks as we head toward April? I keep looking across all markets
at various time intervals. The story only grows louder.
Click here to join those gaining specific insight from the ongoing paid research found in
The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
Draghi’s “Bazooka” Fizzles Out As Dow Reaches 200 Day, March 10, 2016
The image of “King” central banker met strong headwinds today, and this was anticipated
as a big positive for stocks. Of course, anyone looking across world markets at various
timeframes would have known already the central bankers are losing out to financial
reality the longer this game continues.
When looking at the charts above and the articles below, does this look more like the
last state supported rally at these levels, or the start of another major bull?
As Foreign Central Banks Quietly Park $250 Billion In Cash At The Fed, A Mystery
Emerges, Zero Hedge, Feb 22
Deutsche Bank Declares War on Mario Draghi, Any Further QE Will Push Stocks Lower,
ZH, Jan 22
Someone Isn’t Buying This Rally: The “Smart Money” Sells For Five Consecutive Weeks
As Buybacks Soar, ZH, March 1
Failed Trades in 10-Year Treasury Soar as Note Stays “Special”, Bloomberg, March 8
China February Exports Post Worst Fall Since 2009, Reuters, March 8
Moody’s Sees Junk Defaults Reaching Highest Since 2009, Bloomberg, March 1
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
The Thin Line Between Reality & Fiction, Feb 26 ‘16
This week has been one of the most intense weeks I have watched since I started
tracking and providing commentary on major market moves in 2007. Price movements
between major global markets have been almost surreal, as though finding the bullish or
bearish pea in the shell game were being played out right before our eyes. This is so
much larger than US stocks.
Sound a little over the top. Then read the headlines below, and ask yourself, “Why after 4
rallies at or back up through the August 24, 2015 bottom in the S&P 500 is the index
down less than 10% today from its all time high last May, now 9 months ago? YET the
very same index was down 12.5% at the August 2015 low and September 2015 low?
What is really taking place to keep the illusion of “strength” when we examine articles like
these?
Citi: Risk of Global Recession Rising, CNBC, Feb 25
It’s All A Short Squeeze – Goldman Expects a 20% Drop Before Markets Rally, Zero
Hedge, Feb 24
Fed’s Lockhart Says Rising Rates to Create Risk for U.S. Banks, Bloomberg, Feb 25
Don’t Expect “Crisis Response” From G-20, Treasury Secretary Lew Says, Marketwatch,
Feb 24
China’s Commercial Banks Face HK $1.45 Trillion in ‘Non-Performing’ Loans; Bad
Debts Rise to Highest Level Since 2009, South China Sea Post, Feb 16
Fantasy and Magic: A New Central Bank Approach, WSJ (Fidelity link), Feb 23
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The Investor’s Mind. Deception has never been higher. Constant vigilance and critical
thinking never more needed when change is a constant at the trading and system level.
Dow 16,000 Being Fought, Seeks To Ignore Currency War Reality - Feb 4 '16
Pictures of the Financial Cliffs
US Dollar, Dow, Channels in Russell and Transports, and Money Velocity - Spans Century
Tom Lee – No Recession, It Just Feels Like It, CNBC, Jan 4 ‘16
It would seem we would all be wise to do our own thinking, rather than look for headlines
to merely make us feel good now.
Toxic Loans Around the World Weigh on Global Growth, NY Times, Feb 3 ‘16
Why BofA Remains A Seller Until "A Coordinated And Aggressive Global Policy Response"
Emerges, Zero Hedge, Feb 4
Stocks Are Getting Riskier, Because Consumers Are Spending Less, World Financial
Digest, Feb 4
DAX Plunges To 1 Year Lows As Deutsche Bank CoCos Crash, Italian Bank Stocks Slide,
ZH, Feb 5
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at the trading and system level is a constant. 2015 is over. 2016 is unleashed.
The Global Bear and Roller Coaster Are On; Time For Another Delay? Jan 20 '16
A "One World" Rally Since 2011. A Global Decline Since Q2 '15. Now a "Team" Bounce?
Is China's "National Team" Now Bailing Out US Markets, Zero Hedge, Jan 20
Most Shorted Stocks Suddenly Spike As Biotech Soar, ZH, Jan 20
Harry Reid Urges "Calm" Despite Stock Drop, ZH, Jan 20
ECB's Mario Draghi Hints At More Stimulus in March, WSJ, Jan 21
What Should Really Concern Investors and Politicians?
Saudi Arabia Severs Ties With Iran, Expels Iranian Diplomats, CBC News/ World, Jan 3
China Shakes The World Again, For What It Is Worth; Evergreen/Gavekal, Jan 15
RBS Is Telling Traders To "Sell Everything", The Independent, Jan 12
Amazon And The Fantastic FANGs __ A Bubblicious Breakfast Of Unicorns And Slippery
Accounting , David Stockman, Jan 13
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at the trading and system level is a constant. 2015 is over. 2016 is unleashed.
Stay Awake: The Global Liquidity and Currency Devaluation Panic Is On As The S&P
500 Seeks To Squeeze out 2015 Gain, Dec 30
How much credit panic will it take to hit the algorithms playing artificial games with US
stocks attempting to produce a gain for the year? 2016 starts in a credit crisis, not a
recovery.
Algorithmic picture of the “calm” S&P 500 - December 30, 2015
Last day of 2015 could not hold above 12/31/14 close.
Global credit stress points:
The Bail-Ins Are Back! Portugal Slaps Senior Note Bondholders With € 2 Billion Loss,
Zero Hedge, Dec 30
Something Just Snapped in Saudi Arabia, ZH, Dec 29
Puerto Rico To Default on $37 Million Bond Payments Due Jan 1, Bloomberg, Dec 30
The Russia Ruble Just Tumbled To A Record Low, Business Insider, Dec 17
China capital Outflows To Top $500 Billion In 2015; Institute of International Finance,
Reuters, Dec 12
Get Your Money Out Of Italian Banks Now! Austerity and Bailins Fan Populist Flames,
Mish’s Global Economic Analysis, Dec 29
No Investment Grade Corporate Bond Issuance Due To Rate Hike, Market Realist,
Dec 22
Investment Grade Bonds Funds Witnessed Record Outflows Last Week, Market Realist,
Dec 22
The Dollar Shortage Has Arrived: Africa Runs Out of Dollars, ZH, Dec 23
The Credit Crunch Is Back: Banks Scramble To Collateralize Loans To Record Levels,
ZH, Dec 27
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at the trading and system level is a constant. 2015 is over. 2016 starts next week.
Liquidation Problems, Start Raising Rates, Big Options Friday – Don’t Expect Calm
Dec 12
When traders or writers focus on what started the 2007 credit collapse, I have found
the most common event mentioned is the problem two Bear Stearns hedge funds had
with liquidating assets before going under. I still remember writing about this event
that summer.
Anyone looking at options expiration week knows that this is a critical week for the big
financial institutions backing these highly leveraged trades.
Now throw in the fact the short end of the credit markets are reflecting Yellen’s “Ripe
for a Raise” dialogue, and the week is set for the possibility of yet another flash crash.
The Eerie Echo of 2007: It Really Is Bear Stearns All Over Again, Zero Hedge, Dec 12
Is This What Happens On Monday?, Zero Hedge, Dec 11
Janet Yellen Says Economy is Ripe For Fed Interest Rate Increase, NY Times, Dec 2
Make sure and read my latest public article, The Investor’s Great Divide; Crossing the
200.
Click here to join those subscribing to The Investor’s Mind research, where watching for
changes in "the crowd" at the trading and system level is a constant.
A Perfect Market; What Could Go Wrong In December?, Nov 24 '15
A Wall Street Journal Survey finds 92% of economists believe the Federal Reserve
will raise interest rates for the first time hike in 7 years since the Fed Funds rate went to
0-0.25% on Dec 16, 2008. The S&P 500 still hangs less than 2% from its all time high
on May 20, 2015. So what could possibly break this almost perfect centrally planned
nirvana?
Economists Overwhelmingly Expect Fed to Raise Rates in December, WSJ, Nov 12
Insiders Sending an Ominous Market Signal, CNBC, Nov 23
David Stockman Interview: Central Banks Are Out Of Dry Powder, Another Financial
Crisis Is Unavoidable, Contra Corner, Nov 23
Global Trade Just Snapped: Container Freight Rates Plummet 70% in 3 Weeks, Zero
Hedge, Nov 21
The 1% Is Rolling Over, John Rubino, Dollar Collapse, Nov 17
China Imports Fall 19%, Financial Tribune, Nov 9
Japan Economy Contracts 0.8%, Returning to Recession, NY Times, Nov 15
BofA Looks At Europe’s Record € 2.6 Trillion in Negative-Yielding Debt, Is Shocked by
What It Finds, Zero Hedge, Oct 29
“Sell in December and Go Away” – Why Goldman Sees The Market Going Nowhere in
2016, Zero Hedge, Nov 24
Goldman Says US Corporates Have Re-leveraged, Oxford World Financial Digest, Nov 11
Gold Drops Toward 6 Year Low on Dollar, US Rate Hikes, Yahoo Finance, Nov 23
Stocks Close Higher; NASDAQ 100 at Record, CNBC, Nov 3
If you believe that the "perfectly calm" markets will continue into the next Fed meeting on
December 16th as a sign that we can dismiss any “negative” economic and financial
headline, stop here. However, since you are reading this post, you, like myself, must
see something very wrong with this picture.
Sign up for The Investor’s Mind, as we navigate the ever widening world of financial
illusion and economic reality.
We Did IT! NASDAQ 100 Makes New Closing High! Only Takes 15 years and 7
Months To Recover Its 83% Loss While National Debt Increases 230%.
Success? Sustainable?
Should Everyone Be Listening to Warnings Like These?, Nov 5, 2015
Fed Williams: Low Neutral Interest Rates A “Warning Sign”, CNBC, Oct 30
Carl Icahn Warns of a Fed Minefield Ahead, CNBC, Nov 3
The Unsuspecting Public is Being Lead Into Immense Financial Destruction, John
Embry, Kings World News, Nov 4
The S&P 500 Buyback Index Signaled A Market Top In 2000 and 2007 – And Its Falling
Again, David Stockman’s Contra Corner, Nov 3
Bernanke Says Economy Needs To Crash Periodically So We Can Be Sure We’re
Pushing Hard Enough, Zero Hedge, Oct 23
The Ominous Chart Pattern Lurking In the S&P 500 Index, Marketwatch, Nov 2
One Analyst Says China’s Banking Sector Is Sitting on $3 Trillion Neutron Bomb,
Zero Hedge, Nov 2
This Is The Worst U.S. Earnings Season Since 2009: Biggest Quarterly Drop Since The
Aftermath of the Financial Crisis, Bloomberg, Nov 4
Bank of America Looks At Europe’s € 2.6 Trillion in Negative Yielding Debt, Is Shocked
At What It Finds, Zero Hedge, Oct 29
Relatively Few Big Stocks Bearing Weight of This Rally, Dana Lyons’ Tumblr, Oct 30
Global Trade In Freefall; China Container Freight At Record Low; Rail Traffic Tumbles,
Trucking Slows Down, Zero Hedge, Nov 4
While recent headlines like the one below feed the addiction for more central banking
intervention to “save our rally”, the fact that it took more than 15 years and 7 months for
the NASDAQ 100 to close above its March 27, 2000 level should have millions of
investors and advisors questioning their sanity to sit complacent at the height of the
largest financial bubble in history rather than EXITING the casino at these algo driven
levels.
Stocks Have Best Month In 4 Years, Time/Money, Oct 30
What will you do when THE final top in US equities rolls over? Subscribe now as
the NASDAQ 100 is in the 83rd month of its bull market that began in November 2008.
Remember, someone is going to make money on the next big shift toward reality, and
away from "all time high".
Wave 1 Down Is Over. When Wave 2 Up Ends, Wave 3 Down Begins, October 20, 2015
Since the NASDAQ Composite reached its highest level in history on July 20th, the entire
global picture has shifted. The fight to convince the public that this old bull will never die,
has the public about as unprepared as ever for the reality shock that is coming soon.
QE schemes, algorithmic games, and constant market interference have created the
ultimate disconnect from the global economic reality. However, over 79 months have
passed since the March 6, 2009 bottom. The tech bubble bull burst in March 2000
after 72 months, and the October 2007 was after a 60 month bull run. We are way into
this bull's overtime.
Here are more warnings that a bust phase comes after the boom. They can be delayed,
NOT stopped. The economic picture continues to slow as the NASDAQ 100 climbed 10%
in 14 trading days.
As World “Recovers”, China’s Economic Weakness Spreads Wider & Deeper in
September, Zero Hedge, October 9
At US Ports, Exports Coming Up Empty, Wall Street Journal, Oct 13
Corporate Layoffs Surge to Q3 2009 Level, Stock Buybacks At Record Levels, David
Stockman’s Contra Corner, October 3
Comptroller: Springfield Stalemates Puts Pension Payments on Hold,
Chicago Tribune, Oct 14
If the majority of the public are still not considering a powerful phase where financial
assets deflate like the previous two busts since 2000, what warning are they waiting for
to prove that we have a serious problem in front of us?
Click here to subscribe to BMI's most up to date research as we watch the global markets
daily in seeking to separate illusion from reality.
If you are a financial advisor or fiduciary, make certain you read this recent release on
the use of spoofing to mislead other investors in our markets. As I continue to say,
manipulating markets is not a conspiracy theory, it is an ongoing fact.
SEC Charges Firm and Owner With Manipulative Trading, US Securities and Exchange
Commission, Oct 8
Moving From FOMO (Fear of Missing Out) to FOBI - "Fear of Being In", Sept 26
FOMO, Urban Dictionary
Do You Have FOMO: Fear of Missing Out, Forbes
FOMO Addiction: The Fear of Mising Out, Psych Central
We have been trained to HOPE that more central banking intervention will always lead
to more artificially inflated assets prices, and debt will have no consequences.
This is why I believe that "FOBI" could become even more powerful in the near future.
September 25th - Chart of the Dow Jones Industrials & Dow Jones Global
Japan Falls Back Into Deflation For First Time Since 2013, Financial Times, Sept 25
"Everyone Is Praying But No One Is Believing" - The 'Fed Put' Is Dead, ZH, Sept 25
China Slowdown Is Already Hurting Europe, CNN Money, Sept 3
As Xi Jinping Visits The United States, China's Economy is At A Tipping Point,
The Economic Times, Sept 26
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daily trading reports.
Waiting for OZ to Raise Rates or Leave Them the Same; Forget the Fed, the REAL
World Continues Pulling Back the Curtain on Central Bankers, Sept 10.
Charts - Death Cross In German DAX, Hanging at the 200 in QQQ
Suddenly The Bank of Japan Has An Unexpected Problem on Its Hand, Zero Hedge,
Sept 3
David Stockman Sums It All Up in 3 Minutes, Zero Hedge, Sept 9
Chart of the Day: Distribution of $12.5 Trillion Global Stock Market Loss Since June 14,
Stockman’s Corner, Sept 8
PBOC Governor Admits China Bubble “Burst” at G20 Meeting, Want China Times, Sept 6
Brazil Cut To “Junk” Credit Rating By Standard & Poor’s, BBC News, Sept 10
Import Price Plunge Gives Yet Another Reason For Fed to Delay Hikes, Marketwatch,
Sept 10
"The bell curve fits reality very poorly...Theory suggest that over time there should be 58
days when the Dow moved more than 3.4%; in fact, there were 1,001...And index swings
of more than 7% should come every 300,000 years; in fact, the 20th century saw 48 such
days. Truly, a calamitous era that insists on flaunting all predictions. Of perhaps, our
assumptions are wrong." - The (Mis) Behavior of Markets: A Fractal View of Risk, Ruin,
and Reward (2004) World famous mathemetician, Dr. Benoit Mandelbrot, pg 13
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trading reports.
This is History, Not a "Pullback", Sept 1
The Dow and S&P 500 have now produced clear signals, that we are coming off
the top of the largest financial bubble in history. Click the links and review the "new
normal".
Are you growing or losing money as the bust sets in? Most individuals and the majority
of investment platforms were not designed to grow money during the bust phase
from the greatest central banking debt schemes in history. Click here, to learn how big
AND small investors can grow money as globally assets deflate, and the global
economy slows in the weeks and months ahead.
"A crash is a collapse of the prices of assets, of perhaps of assets, or perhaps the
failure of an important firm or bank....The system is one of positive feedback. A fall in
prices reduces the value of collateral and induces banks to call loans or refuse new
ones, causing mercantile houses to sell commodities, households to sell securities,
industry to postpone borrowing, and prices to fall stll further." - Manias, Panics, and
Crashes: A History of Financial Crises(2000), Charles Kindleberger, pg 105-106
Crosing the 200 Day Moving Average, August 20 [Click Each Link for Chart]
United States - Dow Industrials, S&P 500, NASDAQ Composite, & Russell 2,000
United Kingdom, Germany, China Shanghai, China Hong Kong
Japan [Below 200 on Aug 24]
How Much Longer Can West Ingore China? August 19
“A currency war, fought by one country through competitive devaluations of its currency
against others, is one of the most destructive and feared outcomes in international
economics.” Currency Wars: The Making of the New Global Crisis (2011) James
Rickards, p37
China’s devaluation of the yuan this month has started a new chapter in the battle to
“make the S&P 500 look stable”. How much longer can "assistance" avoid reality?
Take a look at these challenges facing China, the US...and the world.
What China’s Devaluation Means to the US Economy, Wall Street on Parade, Aug 11
Import and Export Prices Back to Deflation, Even Before China Devalued,
24/7 Wall Street, Aug 13
Currency Wars and the Threat of Deflation, Al Jazeera America, Aug 19
China’s Richest Traders are Rushing to Dump Their Stocks To Retail Masses,
Just Like in US, Zero Hedge, Aug 18
Largest Chinese, Russian Naval Exercise Kicks Off This Week, US Naval Institute, Aug 1
Are you preparing for the future or trusting in more slumber US stock experiences like
we have seen so far in 2015? Click here to subscribe to The Investor’s Mind, as history
changes markets and our plans. Time continues running out on trusting the bubble.
The “Death Cross” Forms on the Dow Chart, Bloomberg Business, August 11
More Warnings As Dow 18,000 Fights for Its Life, July 31
Kimble Charting Solutions: Chart of Dow From 1890 to 2015;
Chart of Dow from 1970 to 2015; Commodities at Critical Line, July 2015
IMF’s Christine Lagarde: Global Downside Risks “On the Horizon”, CNBC, July 29
These Six Stocks Are Doing All The Heavy Lifting For the Market Right Now – And
Experts Are Nervous About It, Business Insider, July 27
Bill Gross Explains (In 90 Seconds) How Its All A Big Shell Game, ZH, July 29
The Bankruptcy of the Planet Accelerates – 24 Nations Are Currently Facing A Debt
Crisis, The Economic Collapse, July 16
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Nothing Can Stop Manipulators & Decline, July 10 ’15/Updated July 15
Is it possible, that speed of light computer trading and news algorithms are totally
misleading "the sheep" until “nirvana” is broken? You decide.
Equity Markets7/15/15 - China, UK, Japan, Germany, US, Wilshire 5000/1 hour intervals
"Is The Unthinkable Becoming Routine?", Abstract from the 85th Annual Report
by the Bank of International Settlements, June 28, 2015
"Short term gain risks being bought at the cost of long - term pain."
Greece, Problems Almost Over or Dead Ahead?
Greece Debt Crisis: IMF Attacks EU Over Bailout Terms, BBC, July 15
Even the Economists Is Mocking Central Planning, ZH, July 9
What Happens If Greece Defaults On Its IMF Loans, UK Telegraph, June 30
U.S., IMF Step Up Calls for Europe to Restructure Greece’s Debt, WSJ, July 8,
Default Seen Averted In Swaps By Greek Failure To Pay IMF, Bloomberg, June 30
Greece Shuts Markets Through July 13 As Officials Debate Bailout, Bloomberg, July 9
Germany Crushes All Hope of Greece Getting Debt Relief, ZH, July 8
IMF Bolsters Greek “No” Vote, Says Country Needs Much Bigger Debt Haircut, ZH, July 2
Tsipras Sells Out Referendum ‘No’ Vote Ahead of Weekend Deadline, ZH, July 10
Greek Banks Prepare To Raid Deposits To Avert Collapse, FT, July 4
Cyprus. Greece and Beyond,: The “Bail-In” and Confiscation of Bank Deposits: The
Birth of the New Financial Order, Global Research, July 8
China, Problems Almost Over or Dead Ahead?
The Really Worrying Financial Crisis Is Happening in China, Not Greece,
UK Telegraph, July 9
China Stocks Plunge As State Support Fails to Revive Confidence, Bloomberg, July 7
China Makes Selling for Big Investors Illegal, ZH, July 8
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest,
Global Stocks Surge, July 9
The Latest Thing In China: Brokers Refusing To Sell, ZH, July 10
China’s Real Economic Problem Is Way Bigger Than The Stock Market, Vox World, July 9
What Does The Most Recent BIS (Central Bankers' Bank) Annual Report See?
World Defenseless Against Next Financial Crisis, Warns BIS, UK Telegraph, July 28
Never has vigilance and skepticism been needed in the minds of investors, advisors,
and frankly, everyone. Sadly, it would appear that the headlines above are still being
ignored by the majority as mere noise, as long as another algorithm driven rally presents
the image of “there is no risk, go back to sleep.”
Click here to subscribe to The Investor’s Mind and trading reports.
Greece: Could Weekend Bring Capital Controls?/ Texas: Bring Home
The Gold, June 18
Greek Capital Controls Baked In As Firms Store Cash Abroad, Bloomberg, June 16
Greek Bank Bonds Plunge To Record Lows, As ELA Haircut Looms, ZH, June 17
Greek Debt Committe Just Declared all Debt to The Troika, "Illegal, Illegitimate,
and Odius, ZH, June 17
"Lehman Weekend" Looms For Greece As Europe Readies "Emergency" Sunday
Meeting , ZH, June 16
Lagarde Warns No Leeway for Greece on June 30 Payment, Bloomberg, June 18
Tsipras to Meet Putin Over Bailout Loan As Fears of Greek Exit From EU Mount,
The Guardian, June 17
Writing's On The Wall: Texas Pulls $1 Billion in Gold From NY Fed, Makes It
"Non-Confiscatable", ZH, June 14
Governor Abbott Signs Legislation To Establish State Bullion Depository, Office of
the Governor Greg Abbott, June 12 '15
Gold Bullion Worth $1 Billion To Be "Repatriated" From NY Fed To New Texas
Bullion Depository, GoldCore, June 16
How much longer can the "Dow 18,000" image hold?
Click here to subscribe to The Investor's Mind newsletter & trading reports, as we watch
the clash between market intervention and the natural lessons from history unfold.
Cracks Widen as Central Banks Juggle Between Stock & Bond Bubbles, June 8
Click each title. The charts are unreal, especially as a group.
Retail Money Market Assets Divided by S&P 500_35years, Eric Horne, Apr '15
China markets plunge in record turnover as margin traders take fright, Reuters, May 28
“Go East, Young Firm’: Chinese Companies Drop New York and Return Listings,
Return Home, Zero Hedge, June 7
NYSE Margin Debt Hits A New Record High, Doug Short, May 29,
Corporate Profits Tanked, Business Insider, May 29
Dow Jones Transports and Utilities Are At Critical Point, Chris Kimble, June 8
Greek Banks On Verge of Total Collapse: Bank Run Surges "Massively" As Depositors
Yank 700 Million Today Alone, Zero Hedge, June 5
Comparing Bubble Bursting Potential, Alhambra Investment Partners, June 6
Percent of Unprofitable IPOs in Last 6 Months Reaches Record, Sundial Capital
Research and Sentimentrader May 2015
Investors In Hot IPOs are Overlooking Serious Risks, Bloomberg, May 1
Click here to subscribe to The Investor's Mind newsletter & trading reports, as we watch
the clash between market intervention and the natural lessons from history unfold.
Liquidity Crisis and Slowdown Do Not Equal Dow 18,000, May 12, 2015
Question One – Is there any proof of a liquidity problem in global markets after over six
years of “unlimited liquidity” was suppose to solve this problem?
The $900 Billion Influx That’s Wreaking Havoc In U.S. Bills, Bloomberg, May 10
The Treasury Market’s Legendary Liquidity Has Been Drying Up, Bloomberg, Feb 1
ECB Faces Liquidity Challenge in Bond Buying, Financial Times, Jan 26 ‘15
Central Banks Warn: Liquidity May Evaporate When Investors Finally Remove Blindfolds,
Wolf Street, March 27
Kuroda Approaching Limit on JGB Buying, Says Ex-BOJ Official, Bloomberg, March 1
Japan Bond Market Liquidity Dries Up As BOJ Holding Hits 200 Trillion Yen, Reuters,
April 15 ‘14
Why Liquidity Is Drying Up In the Currency Market, MarketWatch, March 25
Question Two - Are there signs of a global slowdown in the REAL global economy, which
continues to be totally disconnected from the FOMO (fear of missing out) by investors
in global stocks and bonds?
Is Current Commodity Glut a Transitional Aberration?, The Desert Sun, March 13
Baltic Dry Index Plunges At Fastest Pace Since Lehman, Hits New 29 Year Low, Zero
Hedge, February 2
U.S. GDP Gained a Sluggish 0.2% in First Quarter 2015, Forbes, April 29
Japan’s Inflation Gauge Halts At Zero In February, Bloomberg, March 26
Why China’s Economy Is Slowing, The Economist, March 11
So, how does the Dow stay above 18,000 since its first attempt in history at this level
on December 5, 2014? Not even Chairwoman Janet Yellen at the Federal Reserve
can break the obsession that the computer algos have over equity markets…for now.
Yellen Says Stock Valuations ‘Quiet High’, Bond Yields Low, Bloomberg, May 6
What a train wreck is coming when the algos hit the sell signal. They will then join the
lack of liquidity AND real global slowdown that we have been watching build for almost
a year, and this, after 6 years of unprecedented “liquidity” (i.e. debt) schemes.
Click links below to view charts of these markets:
Dow Jones Industrial – 5 Day, 3 minute intervals – May 12, 2015
TLT- US Treasury Prices – 5 Day, 3 minute intervals – May 12, 2015
Dow Jones Industrial – 7 month look – 18,000 level – May 11, 2015
US Macro Data Has Never Collapsed This Fast, Zero Hedge - May 6 '15
US Macro Surprise Chart; US Macro vs S&P 500 - ZH - May 6 '15
Click here to subscribe to The Investor's Mind newsletter and trading reports.
Look Who Is Warning Of The Slowdown and Declining Asset Values, March 25 ‘15
Chart of NASDAQ Composite, Chart of FTSE 100 - March 25, 2015
Philly Fed Suffers Worst Run in 3 Year, All Sub-Indices Collapse, Zero Hedge, Mar 19
“Market Is Hyper-Overpriced” Warns Retiring (Dallas) Fed President; “Significant
Correction Coming”, Zero Hedge, Mar 20
Mortgaging the Future?, Federal Reserve Bank of San Francisco, Mar 23
Atlanta Fed’s Forecasting Model for US GDP, Signaling Sharp Slowdown, Ambrose
Evans Pritchard @ Twitter, and GDP Now, Federal Reserve Bank of Atlanta, Mar 7
Richmond Fed Manufacturing Survey Collapses to 2- Year Lows, Zero Hedge, Mar 24
Raise Rates or Face "Devastating Bubbles", Says Fed Official, Financial Times, or Fed
Warns of "'Devastating Bubbles", Oxford Financial Digest, Mar 24
Alan Greenspan Warns Stocks Are “Without Doubt, Extremely Overvalued”, Zero
Hedge/CNBC, Mar 6 ‘15
Bank of England Warns of Further Financial “Short Sharp Shocks”, The Guardian, Mar 13
ECB Warns of Market Froth, Insufficient Grip on Shadow Banks, CNBC/Reuters, Feb 13
Central Bank Prophet Fears QE Warfare Pushing World Financial System Out Of Control:
Former BIS Economist Warns that QE Europe Is Doomed To Failure, and May Draw the
Region into Deeper Difficulties, UK Telegraph, Ambrose Evans Pritchard, Jan 20 ‘15
"They (central bankers) have created so much debt that they may have turned a good
deflation into a bad deflation after all." – Former BIS Economist William White
Are you constantly watching for a massive shift across global markets, or trusting in more
intervention by central banks to keep things “normal”? Click here to subscribe to The
Investor’s Mind newsletter and trading reports, and join us as we come through the next
six months of history.
Two 15 Year Double Tops Meet QE Europe: Who Will Win? March 11 '15
The NASDAQ 5000 Composite broke above 5,000 on March 2, 2015 for the first time
since March 10, 2000. The FTSE 100 broke past its Dec 30, 1999 high on March 2, 2015.
Both finished last week back under their respective 2000 and 1999 highs. Based on
more and more signs that the financial bubble and the economic slowdown grow closer
to collision with every passing week and central banking scheme, these two markets
should be watched closely as we continue through March.
Are these warnings to advisors, managers, and investors; “Have you been preparing for
change?” The Charts That Matter post (3/6/15) on Zero Hedge is great. Make sure you
go over the charts and share with others
Mark Cuban: We Are In a Tech Bubble and It Is Worse Than 2000, Bloomberg, Mar 5
Lord Rothschild Warns Investors: “Geopolitical Situation Most Dangerous Since WWII”,
Zero Hedge, Mar 7
Are Central Banks Creating Deflation? (Citi’s Matt King), Zero Hedge, Mar 1
Raise Rates of Face ‘Devastating Bubbles’, Says Fed Official
Maersk (World’s Largest Container Shipping Group) Warns Of Slowdown in Global
Trade, Financial Times, Mar 1
Lew To Congress: US Hits Ceiling March 16, Needs To Be Raised ASAP, CNBC, Mar 7
Click here to sign up for a 6 months subscription to The Investor’s Mind newsletter
and trading reports if you are a skeptical thinker and looking toward the next financial
trends, seeking to protect assets and grow capital.
Deflation Coming; Monetary Inflation Failing, Feb 6‘15
QE III was closed on October 30th. The Federal Reserve’s assets, according to the H.4.1
release, stood at $4,450 billion on Oct 29, '14. 3 months later, on Jan 29, '15, it was
slightly higher at $4,468b. 1 year earlier, on Jan 30, '14, this balance was $4,058b.
Three quarters averaged $130 billion as QEIII came to an end in Oct ’14. The first quarter
without QE, ending Jan '15, increased asets by only $18 billion.
Can equity markets continue to inflate without the addiction for more debt from the
Federal Reserve?
If your trading, investment, and business strategy is not factoring in this rare economic
development across global business and financial markets, something Americans have
no experience with nationally over the last 40 years other than 2007-2009, wouldn’t it
make sense to start thinking about it now?
US Deflation Surges to Level Last Seen in October 2008, Zero Hedge, Feb 2 ‘15
Why Is Wage Growth So Slow? The Big Picture, Jan 9 ‘15
The Global Economic Challenge: Slow Wage Growth, BBC News, Dec 5 ‘14
US Oil Rigs are Shutting Down Like Crazy, Business Insider, Dec 29 ‘14
German Economy Succumbs to Slowdown, The Telegraph, Nov 11, ‘14
Debt Mountain Sparks Fear of Another Crisis, Financial Times, Feb 5 ‘15
“Equities Markets Will Be Devastated”, Crispin Odey Warns, Looming Recession Will Be
“Remembered for 100 Years” ZH, Contra Corner, Jan 27 ‘15
Bankruptcies Caused by Weakening Yen Set New Record in November, The Japan
Times, Dec 5 ‘14
Baltic Dry Index Freight Index Plummets Amid Commodities Slump, Index Hits Lowest
Level Since July 1989, Wall Street Journal, Feb 5 ‘15
Why Investors Accept Negative Yields, Oxford World Financial Digest, Jan 29 ‘15
ECB Pulls The Trigger: Blocks Funding to Greece Via Debt Collateral, ZH, Feb 2 '15
So while the Dow has provided a wild party for day traders since December 5th, these
800 to 1,000 point swings in just days are not building confidence for long term investors.
I continue to believe that independent thinking has never been more valuable, after so
many have placed so much trust in unlimited money and stock rallies by central bankers.
Click here to sign up for a 6 months subscription to The Investor’s Mind newsletter and
trading reports.
Deflation and Inflation Schemes Collide, Jan 20 '15
“Most normal individuals believe these basic truths:
We cannot borrow our way out of debt,
We cannot spend our way into prosperity,
We cannot tax ourselves into wealth.
Gary Christenson, The Korelin Economics Report, Jan 6 ‘14
The public at large somehow seems convinced today that given enough debt, academic
and central banking planners, and constant intervention into what we use to call “free
markets”, they will keep markets from "deflating " again. Feb 9th will be 71 months since
the March 9, 2009 bottom in the S&P 500, tying with the 1994-2000 run.
Their next and greatest challenge since the great monetization experiment began in
2009 comes up on Thursday, January 22nd. As shown below, QE Europe is seen as
a done deal.
Europe on Brink of Deflating, Needs Stimulus – Larry Summers, Reuters, Jan 20 ‘15
QE Is Coming, But On German Terms, The Economist, Jan 20
Draghi Will Win on Economic Stimulus, Bloomberg, Dec 15 ‘14
Whatever is announced on Thursday, the battle by central financial socialist planners to
overcome the three basic truths listed above by Christenson, continues to grow weaker
with each passing scheme.
Headwinds to consider past the hype of "We CAN borrow our way out of debt" CB plans:
Swiss Franc Soars As Switzerland Abandons Euro Cap, BBC News, Jan 15 ‘15
China Shares Dive As Regulators Claim Down on Margin Trading, ABC News, Jan 19
U.S. Rig Count Falls By Most In 6 Years as Oil Stays Below $50, Zacks, Jan 19
IMF Cuts Forecasts, Says Slowdowns in Europe, Japan, BRICS, Outweigh Boost from
Cheap Oil, Fox News, Jan 19
The Biggest Problem for European Stocks in One Chart, Zero Hedge, Jan 20
The Stock Market Is Overvalued Any Way You Look At It, MarketWatch, Jan 13
China Economy Grows At Slowest Pace in 24 Years, CNBC, Jan 20
World Economy Worst In Two Years, Europe Darkening, Deflation Lurking, Global
Investor Poll, Bloomberg, Nov 13 ‘14
Central Banks Create Deflation, Not Inflation, Charles Hugh Smith, Dec 8 ‘14
If you are not a subscriber of The Investor's Mind, 2015 is the year to start. Click here
to sign up. The recent extreme volatlity continues to warn us all, that contrarians
are rewarded when long trends come to an end, and new ones start.
Watch the Wilshire 5,000, Listen to the Best Minds, Nov 12 '14
The Wilshire 5000 has already leaped more than 2,300 points in 20 trading days from
the Oct 15th bottom. It clocked in 2,040 points in the final 23 trading days to the top of
the 2000 bubble on March 24th.
Click here for a chart of the Wilshire 5,000 found in my latest public article, Destroy
A Currency, Extend A Rally (Nov 7). Check out these two charts of the Wilshire as of
Nov 12th. Last 6 months. Last four days.
I sincerely hope you are sharing this information with others. This is HISTORY!
The reasons for acting like a true contrarian keep coming in.
UBS To Settle Allegations Over Precious Metals, Financial Times, Nov 10
The Great Volatility Crush, Mauldin Economics, The 10th Man, Nov 6
European Bank Deals Nearly Double, Financial Times, Nov 9
Six Banks to Pay $4.3 Billion in First Wave of Currency-Rigging Penalties,
Bloomberg, Nov 12
China's Replica of Manhattan Is A Ghost Town, NBC News, Nov 10
Former Goldman Banker Reveals The Path To The Next Depression And Stock Market
Collapse, Zero Hedge, Nov 11, Submitted by Nomi Prins.
Books released this year I have read and would recommend to everyone:
The Big Reset: War on Gold and The Financial Endgame, Willem Middelkoop, Jan '14
The Death of Money: The Coming Collapse of the Monetary System, James Rickards,
April 2014
All The President's Bankers: The Hidden Alliance that Drive American Power,
Nomi Prins, April 2014
Money: How The Destruction of the Dollar Threatens The Global Economy,
Steve Forbes, June 2014
If you are not a subscriber of The Investor's Mind, I can not think of a better time to sign
up. The first issue was released in January 2006, and I still refer back to lessons
learned over the last decade. Best Minds Inc started in 2005.
.
QE Ends. Markets Face Real Risks Without QE "Assistance", Oct 29 '14
"The Committee judges that there has been a substantial improvement in the outlook for
the labor market since the inception of its current asset purchase program. Moreover,
the Committee continues to see sufficient underlying strength in the broader economy
to support ongoing progress toward maximum employment in a context of price stability.
Accordingly, the Committee decided to conclude its asset purchase program this month."
[Federal Open Market Committee Press Release, Oct 29 '14]
The following is a chart from a Zero Hedge article, shows the "improvement in the
outlook of the labor market".
Labor Participation Rate Drops to 36 Year Low; Record 92.6 Million Americans Not In
Labor Force, ZH, Oct 3 '14
Can the Dow 17,000 "wealth effect" hold much longer?
If you have yet to read my latest public article, The Gallery of Crowd Behavior: Goodbye
All Time Highs (Oct 24), I would encourage you to take 10 minutes and read it now.
What is your investment strategy, when central planners and political leaders can not
protect this global house of cards that looks ready to deflate?
The Chart That Crushes All the ECB's Latest Stress Test, Zero Hedge, Oct 24
"ECB avoided modelling a deflation scenario for southern Europe which explains why
the capital shortfall was so small for many banks." Hans-Werner Sinn, head of
Germany’s IFO Institute, speaking of the recent European Central Bank stress tests
on European banks.
25 European Banks Set to Fail Health Checks, Yahoo, Oct 24
Burst Chinese Housing Bubble Leads to First Annual Price Decline Since 2012;
Price Drop in Record 69 Cities, Zero Hedge, Oct 24
China "Ghost Town Index" - Here are China's "Ghastliest" Cities, ZH, OCt 28
Junk Market Stressed by Fed Stress Test as Banks Cut Debt, Bloomberg, Oct 27
Jim Rickards: Coming Economic Depression by Money Morning, August 27
[* Investment comments by Rickards are his own, and may or may not reflect those
of Best Minds Inc.] Chart of dollar of US GDP growth per US dollar of debt.
Have you made changes in your investment strategies? Are you ready to shift when
world markets shift? Click her to subscribe to The Investor’s Mind newsletter and trading
reports, and download the October 23, '14 Special Edition: At The Top of the World.
If you find individuals who don't believe they are living in a full blown
mania, ask them if they know how to make $700,000 in a day!
Kim Kardashian's Game Makes $700,000 a Day, CNN Money, July 31 '14
US Stocks in Holding Patterns, Risk Overload Lights Flashing, Sept 5
The following is one more collection of the contrast between US stock indices in
holding patterns, seducing the public that higher prices are ALWAYS ahead, while “risk
overload” warnings continue pouring in.
Of course, maybe it is I who is reading all of this wrong, still remembering ever so faintly
the year 2008. Seems so long ago, yet so destructive.
Prices Chart of the Dow Over the Last Two Weeks
10:57 EST, Friday, September 5, 2014
End of Day, Friday, September 5, 2014
Spain Sells First 50-Year Government Bonds, Bloomberg, Sept 1
[Chart of 10 Year Spanish Government Bonds over the last 5 years, Bloomberg, Sept 5]
[Chart of rising Spanish Debt levels since 2008, Contra Corner, Sept 2]
Italy, Spain, Irish yields at record lows on fresh ECB largesse, Reuters, Sept 5
[Chart of 10 Year Italian Government Bonds over the last 5 years, Bloomberg, Sept 5]
[Chart of rising Italian debt levels since 2008, Contra Corner, Sept 2]
Argentina Defaults on Its Debt…Again, Forbes, Aug 1
Argentina’s Abnormal Default Still Hurts as Losses Swell, Bloomberg, Aug 29
[Chart of Argentina stock market. Note period after default, Stockcharts, Sept 5].
Russia Blasts NATO’s “Pre-Emptive Deployment” Plan For Undermining Peace Process,
Zero Hedge, Sept 5
NATO Approves Plans For Rapid Response Force Aimed At Deterring Russia, Fox
Sept 5
Europe's Fantastic Bond Bubble: How The Central Banks Have Unleashed
Monumental Speculation, Contra Corner, Sept 2
Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing
For The Plunge, Zero Hedge, Sept 3
The Most Gated Rally Ever? Zero Hedge, Sept 3
What Could Possibly Go Wrong Now?, Aug 14, 2014
When you have the highest value in US publicly traded stock wealth (Wilshire 5,000)
attained on the same day the oldest fear indicator (VXO) hit its lowest fear/highest
complacency reading on record, every manager, trader, advisor, and investor, should be
EXPECTING change, instead of hoping for even more extreme behavior.
By the way, that date was July 3, 2014.
Dow 17,000 is critical moving forward.
So as traders wait for guidance from the high speed computer games, pictures in "The
Gallery " continue to reveal that cheap credit and bureacratic planning has totally
disconnected financial markets from economic and business reality, thus producing
highly unsustainable conditions.
Amazon's Operating Profits and Net Income Have Declined for 5 Years
[Source -Zero Hedge,7/24]
Amazon Stock Moved up 285% between 2010 Low and 2014 High
[Source - BMI, 8/11]
Argentina Stock Market Goes Parbolic. Climbs 208% in Year Before Debt Default
[Source- BMI, 8/7]
Argentina Defaults on Its Debt...Again
[Source - Forbes, Aug 1]
Italy's GDP (Gross Domestic Product) Has Declined Steeply Since 2007
[Source - Zero Hedge, 8/7]
Dow Jones Italy Stock Index - 2 and 4 Year View, and 15 Year View
Italy to Include Cocaine And Prostitution Revenue In Its GDP
[Source - European CEO, 5/23/14]
High Yield Bond Funds Smashed With Record $7.1 Billion Outflows
[Source - Zero Hedge, 8/7]
High Yield Bond Issuance Hits Record in June, As Yields Reach New Lows,
[Source -Forbes, July 2]
S&P 500 Exchange Traded Fund Outflows Soar To Biggest Since 2008
[Source - Zero Hedge, 8/6]
Have you prepared your investment strategies for the next major shift? Bulls become
bears and bears become bulls. Click here to subscribe to The Investor’s Mind for the
next 6 months, where the study of computer & human herding is followed weekly
through the lens of world markets. Specific market commentary is provided as we
navigate the most intervened markets of our lives.
Hoping for no change in direction is not an option. What is artificially inflated, must
come down.
Even Central Bankers Are Now Warning Investors and Managers. Are We Listening?
July 14, 2014
The mesmerizing trance of Dow 17,000 holds millions in mental lockdown. Yet, even the
global and central banking community have started warning about excessive risk taking
in recent weeks.
Should one consider selling now, or continue placing faith in Draghi’s asset
backed securities scheme scheduled to start in September?
BIS Chief Fears Fresh Lehman From Worldwide Debt Surge, UK Telegraph, July 13
"Credit spreads have fallen to wafer- thin levels. Companies are borrowing heavily to
buy back their own shares. The BIS said 40 % of syndicated loans are to sub-investment
grade borrowers, a higher ratio than in 2007, with fewer protection covenants for
creditors."
Yellen: Seeing Pockets of Increased Risk Taking, CNBC, July 2
Yellen: Fed Could Raise Rates to Pop Bubbles, USA Today, July 2
IMF Tells Britain to Act on Housing Bubble Risk, Reuters, June 6
World Bank Cuts Global Economic Forecast, The Guardian, June 20
I See Speculative Bubbles Like in 2007 [Interview with former BIS Chief Economist
William White], Finanz and Wirtschaft, April 11
BIS Slams “Market Euphoria” Finds “Puzzling Disconnect” Between Economy and Market,
Zero Hedge, June 29
“As history reminds us, there is little appetite for taking the long-term view. Few are ready
to curb financial booms that make everyone feel illusively richer. Or to hold back on
quick fixes for output slowdowns, even if such measures threaten to add fuel to
unsustainable financial booms. Or to address balance sheet problems head-on during
a bust when seemingly easier policies are on offer. The temptation to go for shortcuts is
simply too strong, even if these shortcuts lead nowhere in the end.” [Bank of International
Settlements' 84th Annual Report, June 29, 2014]
And of course, there are a variety of dominoes teetering on the edge even now that just
may kick-start a change from the illusory “feeling richer” picture that has been
produced worldwide for over 5 years now.
Portugal Banking Crisis Sends Tremors Through Europe, UK Telegraph, July 10
As Deadline Looms, Argentina Moves Closer to Another Default, Reuters, June 30
Hottest Five Stock Markets in the World, From Argentina to Dubai, CNN Money, July 1
The Dubai Market Dropped 25 Percent. It’s Still Overvalued, Bloomberg Businessweek,
June 27
Behind the Leviation, Powerline, June 30
Chart of the Day: “Holy $340 Billion in Quarter-End Window Dressing, Batman”, Zero
Hedge, June 30
Chinese Bad Loans Rise Most Since 2005 as Economy Slows, Bloomberg, May 15
Let me encourage you to share this information with others, and invite you to subscribe to
The Investor's Mind as use lessons from history as we come through the rest of 2014.
Do You See Any Warnings That Millions of Investors are Still Ignoring? May 23, '14
Click the pictures in the gallery below and share with anyone who will listen.
Social Benefits As a Percentage of Real Disposable Income is the Highest on Record.
Rare Extremes in Complacency (low volatility) versus All Time High in S&P 500.
Consensus Forecast of GDP (Growth) Over the Last Two Quarters and Reality.
Margin Debt 1990-2014 – Third Peak in Borrowing in 15 years. Highest on Record.
Four Major World Stock Indices – All Squeezed into the Same Corner As of May 2014China’s Economy in Sharp Contraction, As Is Japan’s.
Coming Into May Retailers Were Buying US Equities As Institutions Continued Selling
When the S&P 500 Have Been This Short Before, Stocks Have Crashed.
If you have to read my latest two public articles, Two World’s Collide: Financial and
Political Manipulation Accepted (May 8), and Two World’s Collide, The Financial/Political
Elephant (May 19), I would strongly encourage taking the time to do so.
Manipulation is a limited game. To embrace it and bury our heads in the sbecomes more dangerous with each passing week.
The Dow few investors ever see. Click here.
Economic Takeoff or Take Down: One is Wrong - May 5 '14
Fed to Keep Trimming Stimulus As Economy Shakes Off Stall, Bloomberg, April 30
Retail Store Closures In 2014: At Highest Pace Since Lehman, ZH, April 21
US Economy Grows Just 0.1% in Last Quarter, The Guardian, April 30
If It Wasn’t for Obamacare, Q1 GDP Would Be Negative, ZH, April 30
Flood of Students Demanding Loan Forgiveness Forces Administration Scramble,
ZH, April 22
The American Middle Class Is No Longer the World’s Richest, NYTimes, April 22
Existing Home Sales Fall To Lowest Rate Since July 2012, Fox Business, April 22 Overseas events that are NOT positive for the “recovery” Fed view
The Richest Man in Asia is Selling Everything in China, Sovereign Man, April 16
China's 'Property Bubble' Is Financial At A Bursting Point, Malaysia Chronicle, April 9
Abenomics Agony: Japanese Based Wages Tumble By Most In 2014 (22nd
Consecutive Monthly Drop), ZH, April 29
EU Commisioner Warns 'Any Sensible' Person Should Oppose Further Russia
Sanctions, May 2, 2014
IMF: Ukraine Crisis Could Slow Down Growth In Eastern Europe, Hispanic Business,
April 29
What will it take to change the religiously held view of "buy and never sell"?
The Great(est Fool) Rotation: Who's Buying, And Who's Selling?, ZH, May 1
If you know someone - manager, advisor, or investor - sitting on a large stock position,
you might encourage them to review this chart. Then encourage them to subscribe
to The Investor's Mind, the cost of which is less than 1 hour of college credit at
their nearest university. Six months from now, it may prove to be the best money they
ever spent.
"I pledge to artificially inflate stocks markets, until everyone believes the economy
is good...or I am forced to admit our policies of unlimited money failed as stocks
collapse under the weight of so much debt" - Central Bankers' Pledge - April 9 '14
Socialism and the State: A Good Long Term Investment Strategy?
What's next for the Fed? A hint comes (came 4/9) this week, CNBC, 4/6
“Because at the end of the day, the Fed is still in complete control of the S&P 500.”
CEO of a money management firm
I thought we needed free markets for capitalism to flourish? Who will take over,
when the Fed loses “complete control of the S&P 500”? This statement is nuts.
Cracks in the Fed Pledge & Europe Moves Toward Chinese Yuan
When Even Goldman Complains About HFT (High Frequency Trading), ZH, 3/21
Triple Whammy Shocker: Goldman Shutting Down Sigma X?, ZH, 4/8
This Time Better Be Different, ZH, 4/7
It’s Not Just the Stock Market That is Rigged: the Entire Status Quo is Rigged, of two
minds, 4/3
Russia’s Secret Weapon: Crashing US Economy by Collapsing Petrodollar,
Voice of Russia, 3/28
Bank of England Signs Yuan Clearing Agreement with China’s PBOC, Bloomberg, 3/31
Germany, China Say Renminbi Hub in Frankfurt will Boost Trade, Yahoo, 3/29
More pictures from "the gallery" revealing extremes as of April 9, 2014.
Tale of Two Dows, of two winds, 4/3/14
Comparing Stock on Credit at 1/00, 10/07, and 2/14, dshort.com, March 2014
Pressure Continues to Build on the "All Time High " Illusion - Mar 25 '14
United States -
Wealthy Chinese Home Buyers Boost Suburban LA Housing Markets, LA Times, Mar 24
Dot.Com 2.0 Visualized (or Peak Greater Fool), Zero Hedge, Mar 11
China -
What a Bank Run in China Looks Like: Hundreds Rush To Banks Following Solvency
Rumors, Zero Hedge, Mar 25
The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes in
Scramble for Cash, Zero Hedge, Mar 19
Russia -
Ousted by G-8, Russia Determined to Prove It Can Thrive Without West, Washington
Post, Mar 25
World Leaders Gather for Hague Nuclear Summit, Washington Post, Mar 23
General Dempsey: US Ready for Military Response to Russia if Crimea Conflict
Escalates, KyivPost, Mar 12
Israel -
Israel Has Two Billion Pound Fund for Possible Attack on Iran, Jewish Chronicle, Mar 25
Israel Closes Embassy Around the World As Diplomats Strike, Reuters, Mar 23
United Kingdom -
IMF’s Property Tax Hike Proposal Comes True with UK Imposing ‘Mansion Tax’ As
Soon as This Year, Zero Hedge, Mar 22
With this many variables to juggle, is it really possible for a small group of central
banking bureaucrats to keep stock markets levitated as we go into Q2, 2014?
A few more thoughts outside the mainstream financial industry as we close out March.
The Incompetence of the Federal Reserve and Deep State is Unavoidable, Economist
Charles Hugh Smith, Mar 25
Fisher Outs Bubbles Ben: QE Was a Massive Intended Gift to the 1%, David Stockman's
(former White House OMB Director) Contra Corner, Mar 24
FDIC Sues 16 Large Banks for Allegedly Rigging Global Interest Rate,
The Spokesman – Review, Mar 15
Jeremy Grantham: The Fed is killing the recovery, Fortune, Mar 24
How Much Longer Can US Markets Ignore the Global Economic/Political Picture?
- Mar 13 '14
Yen-Pinching Undercuts Japan's Push Against Years of Deflation, NYTimes, Mar 10 '14
Rickards:The China Bubble is Bursting, Darien Times, Feb 22 '14
Russia Warns Could 'Reduce to Zero' Economic Dependency on US, Yahoo, Mar 4 '14
US and China Stand In Agreement on Ukraine - And That Is Very Bad News for The
United States, The Economic Collapse, March 3 '14
To Understand What's Really Happening in Ukraine, Follow the Gas Lines on This
Map, PolicyMic, Mar 10 '14
The U.S. Has Installed a Neo-Nazi Government in Ukraine, Michel Chossudovsky,
Global Research, Mar 2 '14
EU and US Poised to Implement Sanctions on Russia, Irish Times, Mar 12 '14
US, G-7 Allies Won't Recognize Crimea Election Results, The Hill, Mar 12 '14
G7 Not To Recognize (March 16) Crimea Referendum, Xinhua News, Mar 12' 14
Chairman of Joint Chiefs: US Ready for "Military Response" in Ukraine, Zero Hedge,
Mar 12 '14
Change Course in Crimea or Face Costs, West Warns Russia, CNN, Mar 13 '14
Why Is so much history being Ignored? Click here to see what we all lived through in
March 2000, and click here to compare a recent snapshot of the same US index in
March 2014.
Could speed of light computer trading have anything to do with this alternate reality?
The Holy Grail of Trading Has Been Found: HFT Firm Reveals 1 Losing Day in 1238
Days of Trading, Zero Hedge, March 10 '14
Do you have an exit plan for when this bubble blows?
Parabolic move: $1.3 trillion made in 13 trading days to new "all time high". Time to
take casino chips off the table? - February 25, 2014
Are things getting better, or worse? Pick your media source.
Home Prices in 2013 Notch Biggest Annual Gain Since 2005, WSJ, 2/25/14
Case Shiller Has Second Consecutive Decline, Warns of "Bleaker Picture for Housing",
Momentum Gone, Zero Hedge, 2/25/14
Budget Cuts to Slash US Army to Smallest Since WW II, Fox Business,2/25/14
$3,000 Hike Slated for Military Family Grocery Bills, CNN Money, 2/25/14
Europe Futures Slide with Metals as China's Yuan, Shares Plunge, SF Gate, 2/24/14
Russia Will Withhold Loans to Ukraine for the time being,LA Times,2/23/14
Is the 14 YEAR picture from widely used financial data warning us? You bet it is.
Stock Wealth vs US National Debt - 14 years
US Publcly Traded Stock Wealth (Wilshire 5,000) - 2000 to 2007 top
US Stock Wealth - 2000 top to 2009 bottom
US Stock Wealth - 2000 top to Feb 2014
US Stock Wealth - Last 3 months - $1.3 trillion in 13 trading days. 6 TIMES the monthly
average since March 6, 2009...
...and the tapering of QE (quick and easy) money has begun.
Fed Cuts Bond Buying to $75 (down $10) Billion, CBS Market Watch, Dec 18, '03
Federal Reserve Continues to Taper, Cuts Monthly Purchases to $65 Billion, US News
and World Report, Jan 29 '14
Yellen Sees Few Risks to Divert Fed From QE Tapering Strategy, Bloomberg, Feb 11 '14
No Taper; Oz Has Spoken. Leave Your Brain at Home - September 18, 2013
Today, The Federal "Oz" announced to the world, "We will not slow down fueling the
stock market Ponzi scheme. When it blows, it will blow, risk be damned".
Forget headlines like the ones below. Real world risk have no bearing...today.
Jerusalem Post, Aug 29
- Obama: Syria Chemical Attack “A Challenge to the World”, CBS News, Aug 30
- Toxic Leaks At Fukushima Reach Lethal Levels of Radioactivity, Forbes, Sept 3
- China Sends Warships To The Coast of Syria, Infowars, Sept 5 '13
- 10- Year Treasury Yield Tops 3% For the First Time Since July 2011, CBNC, Sept 5
- US, Russian Naval Deployment Near Syria - Update, Zero Hedge, Sept 9
- Syria 'Welcomed ' Russian Proposal to Destroy Chemical Weapons, ABC
News, Sept 9
Sept 15
Daily, Sept 16
to Raise Debt Limit, CBS News, Sept 17 ‘13
Fortunately, we know that our financial leaders, who failed to see the 2008 collapse, are
still at the helm and are our "heroes".
- “There is bound to be volatility,” Paulson said in an interview with Tom Keene on Bloomberg Television today. “When you have a big, ugly, messy problem, there is never going to be a perfect, elegant solution.”… Paulson praised Bernanke for bringing the U.S.economy back to growth while reducing the level of household debt and stabilizing the financial system. “I believe that Ben Bernanke has been a hero,” Paulson said [Source, Paulson Says QE Exit Causes Volatility With Bernanke Hero, Bloomberg, Sept 12 ‘13]
Change is coming. I agree with Paulson; “There is bound to be volatility”. I don’t
agree that Bernanke or he are heroes. Click here to subscribe to The Investor’s Mind;
independent thinking, not propaganda.
Watching Debt Signals, Not Just Stock Prices: When Nirvana Breaks - August 16 ‘13
On July 24, 2013, I released my latest public article, The Nirvana Trade. Today, the Dow
closed again right at its 100 day moving average. Will it go up next week? Will it go
down? Frankly, this is NOT the big question. The bigger questions are: Where are we
when right now, when looking back over the last 20 years in US stocks? Where are we
when looking at various risk indicators through the lens of newly created debt that has
been used as the fuel to foster the rally since early 2009? How will rising borrowing
costs, as reflecting in rising bond yields since early May impact the larger economy?
Once you move away from the daily game, a very different view from “this could go on
much longer” starts to set up. The older the rally; the weaker the rally. In fact, the
monster rally since 2009 may be over, and history has already started the next major
destructive bear decline, whether we start next week with a US stock rally or not.
Deutsche Bank Hopes “Not All Margin Calls Come At Once In Case of a Sell Off”, ZH,
8/13/13
Stock Market Bubbles and Record Margin Debt: A (Repeating) History of Ignoring All
Warnings, ZH, 8/9/13
Mortgage Applications Fall by 4.7% (off May high by 53%), The Motley Fool, 8/14/13
Treasury Yields At Two-Year High; Stocks Head for Weekly Loss, Reuters, 8/16/13
If you are seeking insights on how to navigate the major bear market ahead,
click here to subscribe to The Investor’s Mind. A subscription takes you through a
six-month period, and conditions are ripe for some of the largest up and down moves
across global markets that we have seen yet.
US Stocks Markets Don't Like Fed Releases - July 31 '13
Maybe it is time for investors and advisors to start developing a plan of action AFTER
the omnipotent Fed can not levitate US stocks? Oh that's right, they can only make us
believe they are gods.
Review these pictures of the S&P 500 on May 22nd, June 19th, and July 31st. Then
take a look at the movements of the S&P 500 over the last 3 months. Does this
inspire confidence in the crew that brought you the "we can always print more debt "
scheme?
If you are preparing for a sea change in global financial markets, consider a
6 month subscription to The Investors Mind.
Always keep reading and thinking.
Economics Can Not Trump Mathematics, Zero Hedge, 7/27/13
Bankers Own The World (And Are Ulimately Destroying It), Chris Martenson, 7/24/13
The Astonishing Collapse of Work in America, American Enterprise Inst., 7/10/13
Up, and ...Away?, July 10 '13
Am I crazy, or does there seem to be a disconnect from the financial world, as seen
through the eyes of these investment pros, and those making financial decisions
outside of the U.S. stock markets?
Bernanke: Highly Accomodative Policy Needed for 'Foreseeable Future', July 10 '13
Up, Up, and Away for Stocks, Acampora, CNBC, July 9 '13
Equities To Move Higher, Despite Fed Taper Talk: Pros, June 20 '13
A Weak U.S. Economy Means Fewer Babies (At Least For Now), July 9, '13
Only 47% of Adults Have a Full time Job, July 5 '13
Student -Loan Default Rates Rise Above Graduation Rates, July 8 '13
The evidence continues to reveal that stock values, built on high levels of debt for
"investing" (more accurately, daily speculating) are the illusion, and these larger
trends OUTSIDE the U.S stock markets continue to tell the REAL financial story.
Recommended Readings: Bull: A History of the Boom:1982-1999(2003), When
Genuis Failed: The Rise and Fall of Long Term Capital Mngt (2000),or
Infectious Greed: How Deceit and Risk Corrupted the Financial Markets(2003).
Films: Inside Job, & Wall Street: The Speed Traders.
If you desire to understand the changing financial world and markets, and you believe
as I do that being a true contrarian still has value, click here to subscribe to The
Investor's Mind. "All Time Highs" are the best time for thinking rather than
following the crowd.
Fed's Speak, US Stocks Drop, Week 25, June 19 '13
Since the spring of 2009, market participants have grown to believe that there is only
one factor one needs to know. If the almighty Federal Reserve announces they
are starting or continuing a "stimulus" program, then you can count on higher
stock prices, no matter what takes place in the real world.
Wednesday, May 22nd and Wednesday, June 19th, have placed a severe crack in this
thesis. Click below for daily charts of these two "Fed speak" days.
Chart of the Dow on May 22, 2013; Chart of the Dow on June 19, 2013.
When we place both of these days in context of a larger view of the Dow, one can see
that computer selling could change the mood of the markets very quickly at current levels.
It would also seem that central bankers are having problems discerning how to
discuss financial markets that differ wildly from their underlying economies.
IMF: World Markets Upbeat Compared to Slow Economy, Yahoo News, 6/4/13
World Bank Cuts Global Outlook as Europe Contracts, China Slows, Live Mint, 6/13/13
Fed Keeps $85 Billion Pace of Bond Buying, Sees Risks Waning, Bloomberg, 6/19/13
Breaking 15,000: Up Then Down, Week 23, June 5 '13
The mainstream financial media is always touting the next 1,000 mark in the Dow on
the upside, celebrating this arrival as though "this time it is different". However, with all
the excitement of "you have to get in now!", why is the commentary on the rapidly rising
RISKS much more sparse until we have experienced declining markets?
This chart of the Dow was released on my April 15, '13 post.
This chart of the Dow was developed for my post today, June 5 '13.
In order to keep from being completely blindsided in the weeks ahead, we must
remember that unlimited debt for more speculation is a limited game. We must also
remember what while high speed computers can give the impression that everything
has become more stable as US equity markets rose steadily, when markets rise and
decline rapidly, the probably of a panic is rising quickly too.
Financial Markets Are At Risk of a 'Big Data' Crash, Financial Times, May 20, '13
The following are books I have read recently. Never stop learning, and never trust
your thinking to the mainstream media.
Broken Markets: How High Frequency Traders and Predatory Practices on Wall Street
are Destroying Investor Confidence and Your Portfolio (2013) Sal Arnuk & Joe Saluzzi
Currency Wars: The Making of the Next Global Crisis (2011) James Rickards
Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock
Market (2012) Scott Patterson
Bailout: An Inside Account of How Washington Abandoned Main Street While
Rescuing Wall Street (2012) Neil Barofsky
To enjoy a wide range of opinions and sources as the easy options leave the
investment landscape, click here for a 6 month subscription to The Investor's Mind.
Waking From the "No Risk" Financial Market Illusion, Week 16, Apr 15 '13
As the Dow came within 113 points on Thursday, April 11'13 of its 15,000 level, and
the S&P 500 came within 3 points of 1600, both being "first time in history" events, did
you not get the feeling that US equiity markets had come to a place where they were
not going to decline again? Was today's (4/15/13) hard sell off across global stock
markets a warning short that the the tide was going out again, or one more pull
back?
Our EXPERIENCE for 18 months has been that US stocks don't sell off hard more than
a day or hours before a "rescue" starts taking us back higher. This would not be
possible without high speed trading platforms, controlling the direction of prices. While
this may sound like we have reached Nirvana, it has actually lulled the public into an
illusion that is extremely unhealthy regarding risk and reality.
Read my October 27, 2011 public article, Darwin's Deceptive and Dangerous
Devices, then view the video , Wall Street: The Speed Traders by 60 Minutes, released
on June 5 '11. Click this link to view a daily chart of the S&P 500, produced one day after
the S&P 500 reached 1597, its highest level on record. Notice how controlled the day
appears. Now click this link to view a daily chart of the S&P 500, produced two days after
the S&P 500 reached 1597. Was there a great deal of warning for investors?
I would also encourage you to read the article, To Fast to Fail:Is High-Speed Trading
the Next Wall Street Disaster. The chart and video alone make it clear that risk
is rising swiftly, as so much money has been pushed long and short to extremes
in the last three months across global markets.
Nothing tells the story of the full blown mania better than a chart of the Dow.
It really is amazing how quickly things can change.
Cyprus and the S&P 500, Week 12 '13
In the last week, we have watched two pieces of history. The S&P 500 came within 2
points of its October 9, '07 all time closing high of 1565, and 13 points of its all time
intraday high of 1576. In the Mediterranean, just south of Turkey, the nation of Cyprus,
one of the 17 members of the EU, makes the news as an EU bailout attempt tries
"taxation without representation" on ALL bank depositors.
After Cyprus Bank Bailout, Depositors Race to Withdraw Their Cash. Is the Rest
of Europe Next?, The Daily Beast, 3/17/13
Cyprus Races To Rework Savings Tax After Closing Banks Til Thursday, The Guardian,
3/18/13
Cyprus Lawmakers Reject Bank Tax Bill, CBS News, 3/19/13
Cyprus Seeks Russian Rescue, EU Threatens Cutoff, Reuters, 3/20/13
How much longer can the facade of "more debt and global banking schemes is leading
to recovery" hold? Are there any other signs that being PREPARED for change is
prudent, rather than waiting for a warning from your friendly central banker before taking
any action? [See Week 8 '13 before examining the list below.]
The U.S. Can't Afford a Chinese Economic Collapse, Reuters, 3/7/13
Bubble on the Margin, Zero Hedge, 3/1/13
European Banks Slide As Cyprus Levy May Threaten Ratings, Bloomberg, 3/18/13
Fed Injects Record $100 Billion Into Foreign Banks Operating In the US in Past Week,
Zero Hedge, 3/9/13
Click here for a chart of the S&P 500 over the last 25 years, the Japanese Nikkei over the
same period, and several major equity indices over the last 4 months.
Now is the time to start preparing for the "After the Top" markets. There is no doubt now
that the next six months should be extremely different from the last six. I can not think
of a time since starting The Investor's Mind (Jan '06), when thinking OUTSIDE the box has
had more critical. Click here to subscribe.
After 14,000, Where Next?, Week 8 '13
I have made it a point since the May 2012 top in the Dow, to slow down the pace of my
post to the Weekly page of the Best Minds Inc website. In a full blown mania, less seems
to be more. If you have yet to read my Jan 23, 2013 public article, When Everyone Sees,
I would strongly encourage you to do so before February options expire on Feb 15.
To remind each of us that markets DO top, and that looking for historic prices extremes -
a topic that IS NOT the focus of mainstream media outlets - is very important for the
millions of investors who are seeking to understand RISK and OPPORTUNITIES at these
major turning points.
Below, are three such turning points I have written about since opening Best Minds Inc
in 2005; releasing Riders on the Storm: Short Selling in Contrary Winds with the launch
of The Investor's Mind: Anticipating Trends Through the Lens of History in January 2006.
Now check out the following articles, and decide for yourself; isn't it about time to start
looking for opportunities where markets look too fearful or too greedy?
- Sentiment More Bullish Than 99% of All Prior Readings, Zero Hedge, 2/12/13
- Europe's Next Challenge, A Strong Euro, CNN Money, 1/30/13
- High Yield Bond ETFOutflows Spike to Record, ZH, 2/8/13
- Four Charts To Panic The "Money to the Sidelines" Hopers, ZH, 2/2/13
- The 75 Year Trendline Holding Back Stocks (For Now), ZH, 1/30/13
.
Clearly, the Dow, the most watched indicator in the world, that as of 2/19/13 has
only closed 12 days in its 117 year history above 14,000, should be of concern to all
investors and managers right now....especially with all the other balls that must be kept
elevated or suppressed in order to maintain the illusion of "recovery". I can not think of a
better time to start thinking rather than following the crowd! Click here to join the
readers of The Investor's Mind. As of today, 2/13/13, the trading report, included with a
six month subscription, has once again changed its name. The new name;"After 14".
When Markets Don't Rise From Negative Economic News, Week 48 '12
It's Official: Eurozone Enters Second Recession in Three Years, 11/15/12, Time
Japan Economy Enters Contraction, 11/11/12, Rocket News
Slowdown Set to Take Toll on US Earnings,10/7/12, Financial Times
Money- Maybe Too Much -Pours Into Junk Bonds, 11/30/12, Huff Post Business
Obama's 'Fiscal Cliff' Proposal: $1.6 Trillion in Tax Increases, 11/29/12, CNBC
We have been groomed since the October 2011 bottom in US equity markets to believe
that the "new normal" for financial markets is to rally on headlines like the ones above.
Declines are now slow, while rallies are fast. Does anyone remember August
2011, much less September and October of 2008?
The evidence is there for those knowing where to look, that capital markets
are very close to returning to the "old normal".
I would stongly encourage each of you to read Charles Hugh Smith's great article
An Iceberg Called Bernanke. If you have yet to see the documentary Inside Job,
I can not think of a better time to view this film.
If you are ready for the "old normal" bear market, then consider a subscription to
The Investor's Mind. 2013 starts in 1 month.
What if Markets Started Reflecting These High Risk Trends?, Week 43 '12,
43rd Month since March 2009 Bottom
Social Unrest
Thousands march in Paris against Austerity in Show of Support for
Beleaguered EU Partners, 9/30/12, Yahoo News
Riots in Spain - Sept 25 '12 Spanish Protest the Proposed European Austerity,
You Tube
Welcome to the World Revolution in the Global Age of Rage, 7/30/12,
Andrew Gavin Marshall
Wars
Growing Tensions Between China and Japan Fuel Concerns Over Potentional
War, 9/17/12, The Globe and Mail
Confrontation Between China and Japan: Naval Deployments in East China
Sea, 10/24/12, Global Research
Turkey Strikes Targets in Syria in Retaliation for Shelling Deaths, 10/3/12, CNN
Iran Pours More Troops into Syria, ready to Target Israel from Syria and
Lebanon, DEBKA, 9/20/12
Could the U.S. Face 'Cyber Pearl Harbor'? Protecting Banks from Hacker
Attacks, Speech by CIA Chief Leon Panetta, PBS NewsHour, 10/18/12
Look at the headlines above. Have any of these events had a powerfully negative
impact on our markets over the last few months? No. Why? Because we have
grown dependent on central bank interventions to stop the impact of these major
world events. Is it healthy for managers and investors to dismiss this level of
geopolitical risk, and place their trust in these "debt til we drop" schemes?
My last post was 13 weeks ago, the week the President of European Central Bank
stated, "whatever it takes" to save the euro. Six weeks ago, on Sept 13th, Bernanke
announced that he would print up more debt in order to purchase an additional
$45 billion per month in mortgage backed securities.Since Sept 14th,
have US equity markets shown than they "appreciated" this supposedly good news?
We are at a major crossroads in markets right now, and possibly, the lack of fear in
markets to respond to these major geopolitical risks?The chart behind
"major crossroads", was released yesterday to those subscribing to The Investor's Mind.
To break the addiction of trusting in central bankers, click here for a six month
subscription to The Investor's Mind. We all need ideas as we seek to navigate the
incoming storm, which most certainly will be worse than 2008.
The Tower of Basel: Will Lies Ever Hurt Me? Week 30 ‘12
Why China is Likely to End in a Disorderly Economic Collapse, 4/6/12
China’s Economic Slowdown: Why Stimulus Is a Bad Idea, 7/26/12
Earnings Season Can’t Fix The Global Economy: Downside Risk Growing, 7/26/12
Libor Fraud May Be the Mother of All Bank Scandals, 7/23/12
The Sovereign Default Dominoes Are Falling in Europe, 7/24/12
When global central bankers tell us, “the ECB will act”, while bankers in Europe are
finding it extremely challenging to raise capital, mortgage lending declines rapidly in the
UK, and the Federal Reserve raises capital requirements (by its nature a deflationary
action) for US banks, what continues to fuel the belief that US equity markets will not
decline again? Has the 13,000 level in the Dow become a hypnotic drug to remove us
from what must certainly come? Are the talks of “we will act”, nothing more than a ruse
to continue kicking the can down the road as reality grows closer with each passing day?
Does anyone seriously expect a central banker to every tell you, “Hey, we fostered 2
credit bubbles that have burst in the last 20 years. Don’t you realize this one will pop
too?” Are we so gullible, with so many warnings signs, that we actually expect these
money “gods” to tell us when the bubble is about to pop?
On March 13th, the Dow closed above 13,000 for the first time since the crash of 2008.
After today’s rally (7/26/12), where the Dow soared 211 points, the Dow closed
at…..12,887.
If there is one thing that we don’t need, it is more debt. The US national debt stood at
15,524 billion on March 31st. Yesterday, July 25th, it stood at 15,874 billion. Even
better, does anyone remember that on May 2, 2011, the Dow hit its 2011 high of 12,876,
just 11 points lower than it did today almost 15 months later! In the meantime, the rocket
engines of the US burned through one trillion, five hundred and fifty four billion in
increased national debt alone. The simple fact is that our financial markets have
becoming nothing more than a crowd control mechanism, keeping us entertained and
ignorant of the growing risk to our very way of life.
Truly, this will be one for the history books when manias are written about in future
generations.
American Equity Markets: Isolated from the World?, Week 21 '12
Chinese Entities World's Biggest Economic Spies: Pentagon, Reuters, 5/19
China Can Now Monetize US Debt Directly, Zero Hedge, 5/21
Fed Clears China's U.S. Bank Takeover, Bankkok Post, 5/10
Bank Loans to Rise as Debts Come Due, People's Daily, 4/23
Chanos: Beware of China's 'Epic' Property Bubble, CNNMoney, 5/2
Fear of Bank Runs Mount in Southern Europe, Spiegel, 5/18
Greeks Withdraw $894 Million in a Day: ...the Beginning of a Run on the
Banks?, MSNBC, 5/16
Fukushima Will Be Radiating Everyone for Centuries, 60 Minutes Australia, 8/23/11
Japan Left With One Nuclear Reactor After Shutdown, BBC News, 3/26
Fukushima's Estimated Radiation Leak Doubles Vs Government, Bloomberg, 5/24
I wonder how many of my fellow Americans have placed their faith in a global socialist
institution, the Federal Reserve, to "keep markets up into the elections". If your "news"
is only about the upcoming Presidential election in November, or American markets,
you are sorely in need of expanding your horizons to the world outside the U.S. of A.
America is not a island. We depend on the rest of the world for our own futures.
Questions we all should be asking right now:
1- As China slows from a historical debt and property bubble, and the Pentagon is
informing Americans that Chinese entities have become the world's biggest economic
spies, why has the Federal Reserve and the Treasury Department given the most
powerful communist nation in the world major inroads into the US financial system
this May?
2- Should investment advisors and money managers in the United States be discussing
the bank runs that are taking place across the pond in Europe? Has the slow decline
in U.S. equity markets in the last 2 month's given Americans the impression that
these issues are Europe's, and will not impact their own financial lives?
3- We have heard very little about the worst nuclear disaster in history at Fukushima
since Japan's devastating Tsunami last March. Are we to believe that no news is good
news?
I can not think of a more critical time to be asking questions and watching world events.
Could History Repeat?: The Dow 13,000 Level, Week 19 '12
US 'Flash Crash' Measures Suffer Delay, Financial Times, 5/6
Hollande: My Election Is A Rejection of Austerity, Sky News,5/7
Greek Voters Punish Voters Over Austerity, France 24 , 5/7
Merkel Loses Power In State Election, The Local, 5/6
Spain Is Headed for a Major Economic Crash, Forbes, 4/11
Payroll Survey Signals U.S. Jobs Slowing As Orders Drop: Economy, 5/2
Equity Fund Redemption Are Largest In 17 Years, Bloomberg, 4/27
The Dow is arguably the most watched stock index in the world. It moved past 13,000
for the first time since March '09 bottom on Feb 21st. That day, it's intraday high was
13,005. Today, Monday, May 7th, the Dow closed at 13,008, closing out 11 weeks since
the Feb 21st ascent above 13,000.
As the EU continues to erode, with Spain moving BELOW its 2009 BOTTOM last week,
and retail investors continuing to pull tens of billions out of US stock funds, would it
come as a surprise if we were to see a May 2012 flash crash? Remember, history
reveals that 2 years ago, on May 6, 2010, the Dow lost more than 1,000 points during
its historic intraday swing.
Fragile World Markets: Trust, Hard to Find - Week 16 '12
CME To Confer with Angry Traders, Chicago Sun-Times, 4/12
Europe's Troubles Suggest Imminent Global Recession, 3/12
The Shocking Truth About Unemployment in America in One Chart, 4/10
Why I am Leaving Goldman Sach, by Greg Smith, NY Times, 3/14
MF's Corzine Ordered Funds Moved To JP Morgan, Bloomberg, 3/23
"The only way to build trust professionally and personally is by being trustworthy"
Gerard Arpey, CEO, American Airlines [The Speed of Trust: The One Thing that
Changes Everything (2006) Stephen M.R.Covey, pg 49]
The greatest negative force facing global investors is the breakdown of integrity
and trust at the highest levels in our financial markets. This is being reflected
in prices across world markets. Discussions of more short term debt schemes are
nothing more than fuel to foster distrust, as investors realize that adding trillions in debt
over the last 4 years has only made the long term economic picture even more unstable.
How much longer will the euro and US dollar dance sideways, postponing a major
correction?
It would appear from the recent Executive Order, March 16th, titled National
Defense Preparedness Order, that someone is thinking about the need for
even more government "in peactime and in times of national emergency." Do most
Americans think the President is consulting the National Economic Council when they
read the title to this executive order? They should.
Sea Change- Back to the Real World - Week 10 '12
George Osborne, UK Has Run Out of Money, 2/26/12
The Mainstream Media Still Doesn't Get the ECB Greek Debt Swap, 3/6/12
Greek Debt Is Best Offer, Venizelos Says, 3/5/12
Worst Day in Europe Since Rally Began, 3/6/12
European Banks Now Face Huge Margin Calls as ECB Collateral Crumbles, 3/6/12
Punk Economics 2, David Williams - good short film on Greece & Europe debt crisis
Eventually, reality sets in, and gravity takes told. If you have yet to read "Making Our
Lives Stable", released on 3/2/12, I would encourage you to do so.
Only Blue Skies and Stability? - Week 9 '12
The Dow has risen 42 straight days since the open of 2012 without one signal day
closing down more than 100 points. Are such calm waters a harbinger of a sharp decline
in March? Could any of these developments impact world equity markets?
Russian Elections: US and Europe Must Rethink 'Reset', 3/2/12
Iran Cuts Down to 6 Weeks Timeline for Weapons-Grade Uranium, 2/22/12
China Continues to Gleefully Hack U.S. as Govt Efforts Sunk by Partisanship
Eurozone Delays Athens Rescue Funds, 3/2/12
Just a Few World Events that Could Derail a Parabolic Tech Rally - Week 7 '12
Moody's Adjusts Ratings of 9 European Sovereigns to Capture Downside
Risks, 2/13
Obama Proposes $800 million in Aid for "Arab Spring", 2/13
10% of Trades on NYSE Involve a Signal Notorious Company, 2/14
Greek Economic Deterioration Accelerates as Q4 GDP Slides by 7%,
Unemployment over 20%, 2/14
Iran Presses Ahead with Dollar Attack, 2/12
Qatar Financing Wahhabi Islam in France, Italy, Ireland, and Spain, 2/9
Yep, nothing but blue skys here. Stocks have nothing to do with world events
anymore, right?
An Economy to Match the Market Mania - Weeky 5, 2012
Job Report Lifts Dow to Highest Mark Since '08, Fox News, Feb 3 '12
Trim Tabs Explains Why Today's "Very,Very Suspicious" NFP Number Is Really
Down 2.9 Million in Past 2 Months, Zero Hedge, Feb 3 '12
Euro Zone Unemployment Climbs To Highest Level Since 1998, MercoPress,1/31
Which of these headlines explains the "reason" that not only the US, but British and
German stock markets exploded higher today? Does news even matter any more?
Do true numbers even matter?
Well, we are back at the May 2011 high.
In 31 days, the Dow climbed 1177 points into its all time high in 2007.
Today, Feb 3rd, the Dow has climbed 1134 days in 31 days. Is this important when
the state can manufacture news and rallies?
Riots in the Streets, Capitalism No Longer Fits, Markets Yawn - Weeky 4 of 2012
World Economic Forum Founder, Capitalists Have 'Sinned', Manufacturing, 1/24
George Soros Predicts Riots, Police State, and Class War for America, RT, 1/25
China to Aid Saudi Arabia in 'Peaceful' Nuclear Power Development, Minyanville
Israel to Give Obama 12 Hours Notice on Attacking Iran, Israel Nat'l News, 1/22
India to Pay Gold Intead of Dollars for Iranian Oil, Debka, 1/23
Greek Default is Simply a Given: S&P, CNN Money, 1/24
World headlines about world level meetings that could have dire consequences
on equity markets. Yet equity markets yawned. Why does this level of news no longer
seem to move markets?
If you have not read my Oct 27, '11 article, Darwin's Deceptive and Dangerous
Devices, I would encourage you to do so. Never has so much power been placed
in such few hands.
To keep from getting trapped when "the tide goes out", review the comments
of these 12 industry leaders, in Bloomberg's Jan 13th Slideshow: Apocalypse How?
Dire '12 Forecasts.
More Debt, Less Truth - Week 2 of 2012
The Never Ending MF Global Story: Regulators Block the Truth, Forbes, Jan 9 '12
The Dismal Economic Outlook for the New Year, Paul Craig Roberts, Personal
Liberty Digest, Jan 10 '12
Welcome to the Paranormal: Bill Gross Warns of Financial Market Implosion and
the End of Economic Life as We Know It, Business Insider, Jan 4 '12
When information is suppressed about a bankrupt primary dealer, a GAO
audit reveals that the Federal Reserve made $16.1 trillion in secret loans to banks
between Dec '07 and June '10, and the manager of the world's largest bond fund
states that there is too much paper and too little trust, then why are many investors,
advisors, and market pundits still optimistic about high prices for financial assets in '12?
Did we not learn from 2008 that credit bubbles from cheap debt bring crashes?
The Start of 2012 - How much longer can market prices evade real world events?
Economic
China Housing Bubble Deflating; More Declines Seen in '12, Forbes, 12/19/11
Banking Crisis Will Spark Deflationary Sprial, Big Government, 12/23/11
Geopolitical
US Sanctions on Iran's Central Bank. Tehran has called this an act of war,
Debka, 1/1/12
Iran Test Fires Missiles in Strait of Hormuz Exercises, CNN, 1/2/12
Societal/Political
After Struggle on Detainees, Obama Signs Defense Bill, NY Times, 12/31/11
Guantanamo Forever?, NY Times, 12/12/11
Random or Planned: Christmas 2008, Doug Wakefield
From Time Immemorial: The Origins of the Arab-Jewish Conflict Over Palestine
(1984), Joan Peters
The Nativity Story, 2006
The Daniel Project, 2011
Jerusalem: City at the Crossroads of History, Oct 2009, Doug Wakefield
After 8 years of research, I believe the two biggest lies of the 20th century are that we
can move towards global financial stability by ever increasing amounts of debt controlled
by a few players at the global level, and that through historical revision and global
political meetings and treaties, we will find peace in Jerusalem.
Today, as millions around the world will celebrate Christmas in 2011, how many of
those same individuals are watching the focus of world leaders, Jews, and Arabs,
surrounding Jerusalem. What insights could anyone gain from examining the
ancient writings of the Jews and Arabs? What makes this city unique?
If we are ignorant of the world around us, and wish to stay isolated from world trends,
we can either wait for the day that our glass house is broken, or we can break it today,
in an attmept to find the truth. As Charles Hugh Smith so aptly stated in an article
this month, the truth hurts and heals.
"In the Absence of A Credible Plan We Will Have a Global Financial Meltdown
in Two to Three Weeks"- IMF Advisor, Zero Hedge, Oct 6 '11
G20 Tells Eurozone to Fix Debt Crisis, Reuters, Oct 15
S&P 500 Extends Best Month Since '74, Euro Rises, Oct 27
What just went down? Was there a real crisis, or was this just hype? Read on.
To understand how massive the world of trading and investing has changed in just
the last 5 years, you should watch this report released by 60 Minutes in June, Wall
Street: The Speed Traders. You may also wish to review the SEC/CFTC Report,
Findings Regarding the Market Events of May 6 '10 as well as this white paper by
Themis Trading, Toxic Equity Trading Order Flow on Wall Street (12/17/08).
My current public article, Darwin's Dangerous and Deceptive Devices, explains why
our financial markets continue to move further away from reality, and why stability is
gone.
Investors Lose A Trillion Dollars in One Day, CNN Money, August 8 '11
Fat tail events rarely happen, but when they do, they leave us speechless.
Geithner Warns of Catastrophic Consequences if Debt Limit is Not Raised, 5/15
Obama in Moves to Avert Economic "Armageddon", Vanguard, 7/6
President Obama signs debt-limit bill into law, The Washington Post, 8/2
....and yet just 3 days after the bill was finished and signed on August 2nd by the
President, the Almighty Dow swings down 700 points to Friday's low, and world
leaders are calling for emergency talks. Clearly, the markets of the world are revealing
that substantial losses in capital markets were NOT going to be stopped by the passage
of this one bill, nor should any sane individual expect another G7 "rescue" meeting to
provide a long term solution. Only when the "global debt kings" stop demanding that
everything must be sold to pay them, will the global economy find a true economic
bottom. More debt printed by central bankers will only bring more pain, and less long
term gain.
The Sharpest Rally Since 1644, of two minds.com, July 9
Ireland's Bonds Downgraded to Junk, WSJ, July 13
Europe Stocks Fall on Chinese Interest Rates, Portugal Downgrade, July 6
Moody's Warns of a Downgrade for US Debt, Business Insider, July 14
debt will rescue
Unreported Soros Event Aims to Remake Entire Global Economy, WSJ, Mar 29
Egypt Protests Enters Final Friday, RTT News, Feb 4 '11
Hosni Mubarack Resigns as President, Al-Jazeera, Feb 11 '11
International Monetary Fund Director Dominique Strauss- Kahn calls for
NewWorld Currency, UK Telegraph, Feb 10, '11
Libya:MuammarGaddafi fires on His Own People, UK Telegraph, Feb 21 '11
Tsunami Hits Japan, Kyoto News, Mar 11 '11
Explosion at Quake Damaged Fukushima Nuclear Power Plant in Japan, Mar 12
Saudi Tanks Roll in Bahrain Amid Unrest, India Today, Mar 15 '11
Supreme Court Lets Fed Bailout Records Release Stand, CNBC, Mar 21 '11
"Stocks Look Bullish Again"
European Ministers Consider Boosting {$1 trillion} Bailout Fund, Jan 14 '11
How and Housing Slump will Slow Jobs Train, Jan 12 '11
Banks Still Suffering , Jan 13 '11
December 21 '10 - A Time of Reflection
For some, this has been a very rewarding year. For others, this has been a time of
painful trials. But in a world, where so much emphasis is on ourselves, we fail to
recognize that each of us are part of a larger story known as history.
For this reason, I would like for each of us to consider three questions as we move into
2011. Each question is linked to videos and/or music I was sent and reviewed.
Is there a Divine authority above man, who rules above the political and financial elite,
and who holds each man accountable for the actions towards his fellowman?
Are the rights of our fellowman and the nation state of greater value than power and
celebrity status given by the global market state?
If history is of tremendous value, especially at critical turning points, would it not be of
value to understand the events surrounding the birth of the individual from which the
holiday Christmas, and our Gregorian dating system (calender), originated?
I hope you will encourage your family, friends, and colleagues to discuss this material.
While there are no cookie cutter answers, the problem of unsustainble debt as a
"solution" are evident to all. 2011 is setting up to bring about major changes to
our thinking, our lives, and our finances.
Bank of America is in Deep Trouble, AlterNet
Even the Affluent are Stretched, Reuters
Roubini Maps out Nightmare Scenario of Domino Debt Collapse in Europe CNBC
Municipal Bond Funds Have Biggest Withdrawal Since 1992, Yahoo
Read the headlines above. Now I ask you, when GM pulls off the biggest IPO ever on
November 18th, it this a sign of sanity or a market topping? Could this be yet
another warning shot for investors?
Biggest UK Defense Cuts Since Cold War, Financial Times
Hard-Pressed American States Face a Crushing Pension Bill, The Economist
Mortgage Investors Put Pressure on Bank of America, Reuters
When the Fed governors meet on November 2-3, and the G20 meets on Nov 11-12,
will they bring about solutions for the unsustainable debt burdens we continue to
watch unfold? Will we see a change in the world, or will current imbalances only
grow worse?
Maybe Ben Bernanke is right, when he recently quoted economist Herbert Stein,
"If something can not go on forever, it will stop."
If you are seeking to avoid "herd thinking", you may wish to consider a
subscription to The Investor's Mind.
The Dow Notches Its Best September in 71 Years, Daily Finance
IMF Warns of Danger of Currency Wars, The Syndey Morning Herald
US Household New Worth Drop, Reuters
Insider Selling May Threaten Rally, CTV News
Look at the headlines above. Read the articles. Then determine which one does not
belong with the rest. With the waves of destruction that have come from bubbles that
have collapsed due to unlimited amounts of cheap credit, are there really any fools who
believe NEXT TIME IT WILL BE DIFFERENT?
Depressing: Unemployment His 70 Percent in some areas of Greece, Frugal Cafe
Afghan Women Building Lives Among Rubble, The World
Pension Fraud by New Jersey Cited by S.E.C. , NY Times
Bank Profits: A Sign of Economic Sickness Not Health, Nake Capitalism
When human lives in Greece and Afghanistan live daily with 70 percent unemployment
while we learn of the the SEC's first ever filing against a state for its misuse of funds,
funds that were designated for many of its own citizens, then more profits for banking
giants is certainly a sign of moral decline, a trend that history continues to reveal warned
each of us prior to the 2008 global credit collapse.
Understanding money and finances for the period ahead will require milliongs to
rethink deeply held beliefs on investing and money, and yes, the value of human life.
China Said to Test Banks for 60% Home-Price Drop, Bloombergs, Aug 4
Housing Market a "time bomb", says Investment Legend, The Australian
Global Housing Bubble....Which Countries Are the Bubbliest, Mish Shedlock
When the Bank of England announced this week that they were facing a "choppy
recovery", and with US unemployment rates [U6 that is] continuing to hang above 16%,
should the articles above give us comfort that the global economy is in "recovery"?
On a lighter note, just be glad you did not make the news this week for racking up a
world - record speeding fine.
Dow May Crash if 10,600 Not Breached, July 15 '10
Magazine Mania Monday: Run For Cover?, July 19 '10
Vacant Office Space Hits 17 year High, July 6 '10
Is TARP Hurting Small Banks?, July 14 '10
FDIC backing 8,000 Banks W/ $13 Trillion in Assets
with Negative Deposit Insurance Fund
As the fundamental view of the US economy continues to reveal the deflationary forces
impacting the private sector, the size of government spending and debt continues to
soar to ever larger and more unsustainble levels. In an environment like this, market
pablum which feeds our desire to "postpone tomorrow" is worst that worthless, it is
highly destructive in PREPARING for the future. If the Dow cuts through the 10,000 level
again in the near future, should we expect another quick rally, like those seen since
May? If not, how fast could financial wealth be destroyed? What will it take for the
public at large to wake up to the fact that we are not returning to yesterday?
The Investor's Mind: Whose Got the Power - July '06
The last 3 months have produced 1000 point swings, both up and down in the Dow.
The speed of swings this size in both directions makes this a unique period in market
history. It also makes it a period when investors and advisors are paralyzed about
the future. For this reason, I decided to pull this issue from the archives and offer it for
a free download. I believe it is more pertinent today than it was 4 years ago.
If you are interested in accessing all current reports and newsletters, as well as
our archives, click her to subscribe.
Dow Theorist Richard Russell: Sell Everything, You Won't Recognize America By
The End of the Year, May 18 '10
After the Flash Crash, the Crash Camp Takes Over, May 19 '10
Global Macro's Raoul Pal: Here's Why A Crash Is Coming in Two Days-To-Two
Weeks, May 18 '10
Big Bills Leaving the Senate, May 21 '10
With the Senate passage of the Dodd financial "reform" bill on Thursday, why are
these seasoned hedge fund mangers and market technicians so dire? Could it
have anything to do with real world data and events that alluded markets for 13 months?
If you don't have a great team of thinkers and traders around you, I would encourage
you to consider jumping in now to The Investor's Mind. The severity of the next major
decline leaves no room for pride about "past performance" for any of us.
Goldman Sachs Has First Quarter with No Trading Losses, May 10th
Goldman's Perfect Quarter Indicates Game is Fixed, May 10th
Goldman Can Create Shorts Faster than Europe can Create Money, May 10th
When I read headlines like the ones above, and contrast them with a May 12th
article in TIME titled, Mutual Fund Investors Not Rattled by Selloff, I can only wonder
what level of pain the next downturn will have to inflict on retail and institutional
investors before they stop trusting that the casino owners like Goldman are really in
place to foster the "free markets".
At an even deeper level, if you have never been able to ask some of the world's most
powerful political/financial leaders a question directly, you may wish to learn from
someone who has been doing that for 16 years. Check out Joan Veon's
May 7th article, What In the World Is Going On ?
Dow Plunges Most Since 1987 Before Paring Losses; Euro Tumbles, May 6 '10
Stocks' Skid Deepens, May 6 '10
Dow Down 3% After Deepest Intra-day Plunge, May 6 '10
Gloom Over Europe as Crisis Shadow Intensifies, May 6 '10
While I have written about the science of an unsustainable system, when you watch
a day like today, it still takes your breath away. Click the links below, for some lessons
I have given before, and two charts of today's historic market movements.
Chart of the Dow & Wilshire 5000. Section 4 of Riders on the Storm, Traits of the
Excellent Manager, addresses the lessons one could learn from the 1987 crash
(pgs 28-34). For a complete copy of Riders on the Storm [Jan '06], access to our
archives, and our latest research, click here to subscribe to The Investor's Mind.
Federal Reserve Gets Political, Sends Congress Veiled Message, April 6 '10
Advice to the Financial Crisis Inquiry Commission: How to Question Alan
Greenspan on April 7th, Frederick Sheehan's Blog, April 5 '10
Fed Empowerment Act, March 25 '10
While the media on the left and the right focuses everyone's attention on the
monumental health care bill, the public, by and large, continues to be completely
oblivious to the Federal Reserve's constant march toward MORE power. As you consider
the links above from our modern world, contrast them with these words written by
President Woodrow Wilson, in his 1913 work, The New Freedom.
"Since I entered politics, I have chiefly had men's views confided to me privately. Some
of the biggest men in the United States, in the field of commerce and manufacture, are
afraid of somebody, are afraid of something. They know that there is a power
somewhere so organized , so subtle, so watchful, so interlocked, so complete, so
pervasive, that they had better not speak above their breath when they speak in
condemnation of it." [pg 18]
Sadly, most Americans have no knowledge of America's monetary history, and don't
care to learn. That will change in the months ahead.
China in Midst of 'Greatest Bubble in History', Rickards says, Mar 17 '10
Budget Deficit in U.S. Widens to Record $221 billion, Mar 10 '10
When one reads the headlines above, and considers the enormous scope of
CFR member Dr. Niall Ferguson's recent article in the LA Times, America, The Fragile
Empire, how can anyone with an ounce of intellectual honesty say we are in "recovery"?
I know, the markets have spoken again today, and price tells all. Or does it?
Beijing Seen Vacant for 50% as Chanos Predicts Crash, Feb 12 '10
Foreign Demand for US Treasuries Falls by Record Amount, Feb 23 '10
BOE's [Bank of England] King: Economic Recovery Fragile, Feb 23 '10
Number of Banks in Danger of Failure Hist Highest Level since '93 , Feb 23 '10
We can either look at the headlines above and come to the conclusion that these
problems are "normal", and just part of the ups and downs of markets, or that we
are at a turning point in history. If one reads Charlie Munger's "Basically It's Over",
then you come to the conclusion that we are leaving a period of credit mania, which
has lasted for decades, and that the changes coming will alter our lives down to the
societal level.
Wall St. Helped Mask Debt Fueling Europe's Crisis, Feb 13 '10
Wall Street tactics similar to Enron and those that caused the subprime crisis are now
being used in Greece, Italy, the UK and (undoubtedly) the US. Dr. Richard Koo notes that
real estate bubbles are far more destructive than stock bubbles because they involve so
much more debt. We see 50 percent vacancies in Chinese office towers, U.S. Commercial
Mortgage delenquencies on the rise, and UK fears of the same, as a U.S. Congressional
Oversight Panel warns,
"a significant wave of commercial mortgage defaults would
trigger economic damage that could touch the lives of nearly every American." But, the
almighty Dow cannot be bothered, as it is bolstered above 10,000.
AIG and NY Fed Under Fire for Hiding Bailout Facts, Jan 27 '10
Now I ask you, is it really all that difficult to see why consumers are very uncomfortable
with the state of the economy, when they continue to learn that highly unethical
conduct at financial institutions like AIG were not only allowed to continue, providing
better deals to their best banking clients after they were bailed out, but that the New York
Fed, the most powerful of the 12 branch banks that comprise the Federal Reserve,
actually instructed AIG "not to disclose more than a dozen controversial couterparty
transactions to the SEC"? Maybe revelations like these have something to do with the fact
that since the Jan 13th post below, equity markets on a global basis have fallen quickly,
and investors, seeking safety, are willing to purchase 4 week Treasury bills at zero
percent interest.
Investors Turn Bullish on Stocks from US to Japan, Bloomberg, Jan 13 '10
The Fed Finger: More Observations on the ESHO Incident, Jan 13 '10
When the crowd has seen a market that "can only go up", is it that hard to fathom that
eventually they would come to believe that "the worst is behind us", thus pushing the
S&P 500 to reach a bullish sentiment extreme of 54.7, "only the second time the reading
has exceeded 50"? Sadly few understand that big market players are "assisting" their
confidence by gaming the markets. At this stage in history, this is perfectly legal, but
the "integrity" of the system is being destroyed.
Eurozone faces 2010 debt crisis, AFP, Jan 3 '10
Cost of Insuring Icelandic Debt Rises, Reuters, Jan 6 '10
California Debt Default 'increasingly likely' LA Times Dec 16 '09
Global Bear Rally will Deflate as Japan leads world in sovereign debt crisis, Jan 4
PIMCO Executive: 80% Risk of UK Downgrade, Jan 5 '10
What is clear from headlines like these, is that the "debt will always produce stability" lie
continues to lengthen Pinocchio's nose. No matter how many times our illustrious
leaders say low interest rates don't cause bubbles, seeking to brainwash the public into
believing that more debt will lead to sustainable economic recoveries, the headlines from
around the world present reality for anyone willing to look past the current bubble.
Bernanke: Don't Tamper with the Fed, CNN Money, Nov 28 '09
Fed Rage Boils Over on Capital Hill, CNN Money, Nov 28 '09
Just days before his Decmeber 3rd confirmation hearing, Bernanke makes the following
statement in the first CNN article above:
"Now more than ever, America needs a strong, nonpolitical and independent central bank
with the tools to promote financial stability and to steer our economy to recovery without
inflation."
And, while a truly independent bank might exist somewhere, in her book, The Web of
Debt, attorney Ellen Brown, points out our Fed's obvious conflict of interest:
"The 'Federal' Reserve is actually an independent, privately owned, corporation. It
consists of twelve regional Federal Reserve banks owned by many commercial banks,
which hold Federal Reserve stock in an amount proportional to their size. The Federal
Reserve Bank of New York holds a majority of shares in the Federal Reserve System (53
percent). Its largest sharedholders are the largest commerical banks in the district of
New York." (Page 125)
As the Fed persists in its refusal to provide details on the hundreds of billions of bailout
money it has given to the banks that own it, fighting tooth and nail to avoid being
audited, how can we be expected to trust that it is acting for the average person's benefit?
Small Business Loans: $10 Billion Evaporate, CNN Money, Nov 17 '09
Interest on US Debt, CNN Money, Nov 19 '09
Should Treasury Secretary Be Fired?, LA Times, Nov 20 '09
Most individuals today can not understand why equity markets show no concern when
headlines like the ones above and the ones below continue to come out every week.
I encourage you to read the Forbes article, The New Masters of Wall Street to gain a
better understanding of the few who play at a totally different level than the vast majority
in our "public markets". Then remind yourself of Newton's 3rd Law of Motion, "For every
action there is an equal and opposite reaction."
U.S. Unemployment Rate Hits 10.2%, Highest in Ten Years, NYTimes, Nov 6 '09
Summers: US Economic Recovery on Track, Reuters, Oct 21 '09
The Dow has climbed 56% in 7 months, and the Dow Jones World Stock Index is up 74%
over the same time. And once again, one of our government officials assures us that,
thanks to the $787 billion stimulus package, the US economy is on the right track. At the
same time, the St. Louis Fed shows that commercial and industrial loans peaked when
the TARP stimulus was passed one year ago. While the media directs our attention to
the weekly swings in initial jobless claims, we ignore the bigger unemployment picture.
With a deficit three times the size of last year's record national deficit, the US government
must once again raise its national debt ceiling. With the non-partisan Center for
Responsible Lending calling for 8.1 million foreclosures over the next 4 years, are we
really expected to believe we are watching a sustainable economic recovery?
Briefing by Treasury Secretary Tim Geithner on G20 Summit, Sep 24 '09
While Geithner speaks of "optimism about prospects for global recovery" and "a
common, shared commitment" from "finance ministers and central bank governors from
around the world," Beijing sees it differently. Russia wants the yuan, ruble, and gold to be
components of the SDR, and they, with the world's largest oil producing and consuming
nations, are calling for the IMF's Special Drawing Right to replace the dollar as the global
reserve currency.
All this while the US unemployment rate hits a 26-year high and commodities rise 29
percent on increasing inventories. Is it any wonder that overriding one's emotions to
search for the next contrarian move, before it begins, is so difficult?
Dubai Real Estate Collapse, Socio-Economics History Blog, Jan 09
US Being Sucked into Civil War in Yemen, UK Telegraph, Sept 10 '09
US Consumer Credit in Record Plunge, AFP, Sept 09 '09
G20: Inflating The Global Economy to Prosperity, Seeking Alpha, Sept 11 '09
Does the story of Dubai support the repeated lesson from history that flooding easy
credit is not a long term sustainable strategy? If you are then flooding credit for a war in
Afghanistan, what could happen to expenses if the US became involved in a new war
in the Middle East? What if at the same time, the availability of credit continued to
collapse for the consumer? Would all of these support the G20's attempt to create
another bubble of "prosperity"? I know, "the worst is behind us".
Job Losses Moderate, but Unemployment Rate Hits 9.7%, WSJ, Sept 4 '09
Broader Unemployment Rate Hits 16.8% in August, WSJ, Sept 4 '09
Strapped Cities Lay Off Workers, Cancel Projects, CNN Money, Sept 1 '09
Now, let's see. Should the financial markets focus on the 9.7% or the 16.8%
unemployment rate? If 9 out of 10 cities are forced to cut spending, due to sales and
property tax declines, isn't that negative for equity markets? Regardless of which
unemployment rate we choose to acknowledge, aren't both higher than the worst case
unemployment rate, of 8.9%, the bank stress test assumed this past spring?
So, once again we see that the real economy has very little to do with the markets. Sadly,
most individuals still don't understand how the "financial casino" works these days, and
why risks levels are much higher now that we are in a "recovery." Feel free to visit the
Recent Updates section of our homepage to read our latest public article, Please Don't
Wake Me. To gain access to our most comprehensive research, click here to sign up for
a six month subscription to The Investor's Mind.
Number of Troubled Banks Rises to 416, August 27 '09
Federal Reserve Says Disclosing Loans Will Hurt Banks, August 27 '09
"In fact, so far the FDIC has covered all deposits, regardless of the amount, in
the large banks that have failed, such as The Republic Bank of Dallas, Chicago's
Continental Illinois Bank, and the Bank of New England. The reason is simple: the
government fears that if any depositors lose money in a large bank's failure there could
be a run on the deposits of other large banks that would spark a major bank collapse.
After all, any bank is only as safe as you or I think it is."
The Coming Economic Earthquake (1994), Larry Burkett, pg 134
Debt a threat to growth, IMF says, August 10, 2009
China's hidden debt problem, July 27, 2009
Spainish Unemployment Rate Rises to Decade-High 17.9 %, July 24, 2009
Dubai's Property Market Crumbles in Crisis, August 16, 2009
As we continue to hear chearleading governments around the globe, commending
themselves for enacting so much stimulus (creating more debt) so quickly to save the
economies and getting the global "green shoots" growing, some of the harsher
economic realities seem to be going unnoticed. Even in such difficult times, we can still
find relief in helping others, like those in Tiawan's mudslides and floods.
The Bank Killer, August 3, 2009
Fed Audit Will Show What They're Hiding, August 1, 2009, Ron Paul
Before we get fleeced for another round of bad bank bets, we should follow Ron Paul's
counsel and let "our" elected representatives know that the Fed is in dire need of an
audit. The fallacy of the necessity of the "official secret" for our benefit must give way to
verification of those who have proven untrustworthy. Indeed, the Fed has begun to require
stricter standards for banks who desire to lend to commercial borrowers, setting our
economy up for the latest in the Fed-engineered crises. So, where is all the bail-out
money going again?
Bernanke: The Economy Will Bounce Back Stronger, July 27 '09
US, China Pledge to Ensure that Recovery is "Secured", July 28 '09
Hidden From Sight, Debt Creeps Up on China, July 28 '09
Experts Float Debt Bubble Fears, July 22 '09
UK GDP Shrinkings More than Expected, July 24 '09
Strong statements continue to be made by political leaders regarding their confidence
that a massive increase in national debt levels will "secure" economic recovery. And
yet, we as individuals, across a wide range of cultures, have always been taught that
paying down debt and increasing savings were positive financial actions. Was Solomon
wrong when we wrote these words over 2900 years ago?
"The rich rules over the poor, and the borrower becomes the lenders slave."
Proverbs 22:7 [NASB]
Is Larry Summers Taking Kickbacks From the Banks He's Bailing Out, July 16 '09
SSA Bureaucrats have a Party...And Taxpayers pick up a $700,000 Tab, Jul 16
CIT Hires Bankruptcy Specialist As Bond Access Wanes, July 11 '09
Japan wholesale prices tumble, BOJ seen cautious, July 9 '09
While our government leaders line their pockets and throw parties - on the backs of
Americans - the troubles in the economy and market continue to mount. By the way,
which one of these articles supports the explosive rally we saw this week?
The SEC Needs Your Feedback, ZeroHedge, June27 '09
NYSE Halts Transparency, Feels Goldman Program Trading Disclosure is
Unnecessary, June30 '09
If you have any money in US equity markets, read the information Zero Hedge presents in
the links above. The NYSE released Information memorandum (09-31) on June 24 in
which they note the last day they will report daily program trading will be July 10th. Having
written about the negative impact a similar change, occurring in June 2006, would have
on assessing weekly NYSE program trading volume, I encourage each of you to contact
the SEC and the NYSE. Since information is power, withholding that to which we were
previously privy, is a divestiture thereof.
New Foundation, New Stability, White House Blog, June 17 '09
The following excerpt is from President Obama's June 17, 2009 speech:
"..it will require strong vibrant financial markets, operating under transparent, fairly-
administered rules of the road that protect American consumers and our economy from
the devastating breakdown we've witnessed in recent years."
Scripted speeches do not change the facts. When the current rally is over, those who've
invested based on how they feel, will regret their lack of skepticism.
More than 300 Banks on 'Watch Lists', May 27
GM Bankruptcy 'Inevitable' as Bondholders Spurn Offer, May 27
Treasurys Sink, 10 Yr Yield Hits Fresh High Amid Mtge Related Selling, May 27
Barack Obama, "We're Out of Money", May 24
Do the links in this area concur with the most optimistic readings in 8 months in the most
recent, May 27th, Consumer Confidence stats? Is the worst of the "recession" is behind
us, or is the optimism due to the recent bullish run in equity prices?
Moody's May Cut Rating on 34 Spanish Banks Amid Economic Slump, May 20
Japan Economy Shrinks at Record 15.2% Pace, May 20
US Housing Starts Drop on Apartments, Condominiums, May 20
Geithner's Gift to Wall Street, May 18
After reading these articles, would you want to buy the markets of Spain, Japan, or the US
housing sector? What if you learned that when the top 19 banks passed their stress test,
a few weeks ago, Wall Street had been given some help to encourage us to take risks?
If, after you review this information, you, like me, think the March bottom did not mark the
end of our markets' woes, I encourage you to consider joining the readers of our best
research, The Investor's Mind.
Regulators Said to Plan Stress- Test Disclosures May 7, May 1
Government Offers Details of Bank Stress Test, Feb 25
These two pieces are best understood in the context of the last few entries on this page,
and the Special Invpector General's April 21 2009 Report to Congress, on the Research
page. Is there a disconnect between the banking index over the last 2 months and the
importance of the stress test? Why are the results being delayed a few more days?
Commercial Real Estate Time Bomb Goes Off But No One Notices, Mish Shedlock
Let Insolvent Financial Firms Fail: Fed's Hoenig, April 21, 2009
In the first article above, you will notice that the stress test results are suppose to be
released on May 4 '09. And yet, even the Financial Times, like the article below, reveals
that this information has already found its way into the public domain. At the close
of business on Wednesday, April 22nd, the overall markets don't seem concerned.
Comptroller of the Currency,
Susan Boyle - Singer -Britain's Got Talent 2009
After watching the most rigged market rally in the banking sector history and joining my
fellow Americans in the Tea Party rallies on April 15, my wife shared this encouraging
video with me today.
London Summit, G20, Leaders' Statement, April 2, 2009
FASB approves more mark-to-market flexibility, April 2, 2009
SEC to mull 4 short-selling rules, April 6, 2009
Gordon Brown, a "new world order emerging", April 2, 2009
The IMF's international currency, the Special Drawing Right (SDR), was expanded fivefold
to $250 billion. And while we hearing that bank leaders will be held to tougher standards,
FASB has relaxed the way Wall Street banks value their toxic assets. Those who decided
to short sell, to protect themselves from this ongoing parade of recklessness, now have
additional restrictions placed on them. Will these measures build trust? Though history
shows otherwise, we are being asked to believe that more government is the key to
"financial stability. The risk to investor only grows larger by the week.
G20 Financial Policy Makers Statement, March 14, 2009
Thousands Rally Downtown Against Government Spending, March 15, 2009
As Tea Party demonstrations expand around the US, global government leaders support
what appears to the greatest explosion of government spending, backed by ...you
guessed it....more debt, which of course, we are told, leads to "price stability."
"Interest rates have been cut aggressively in most countries, and G20 central banks will
maintain expansionary policies as long as needed, using the full range of monetary policy
instruments, including unconventional policy instruments, consistent with price stability."
( Point #4 from G20 Statement)]
Soros Sees No Bottom for World Financial "Collapse", Feb21, 2009
CNBC Rick Santelli's Chicago Tea Party, Feb 19, 2009
The American Power Structure,Congressman Ron Paul, 1988
Whether we listen to one of the world's most famous hedge fund managers,a former Fed
Chairman, or the anger brewing on the floor of the Chicago markets, global investors
have been repeatedly forewarned of sharply lower market prices right in front of us. But,
this 1988 interview with Ron Paul shows that the problem has been building for a long,
long time. If we are to understand future trends and the viability of the proposed solutions,
we must take a critical look at the history of money.
U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs, Feb9
With All Due Respect Mr. President, That is Not True, Cato Institute, Feb9
Clearly, we are watching the end of all sanity in our nations leaders. Thank
goodness there are those like the Mises Institute and the CATO Institute, who
understand that getting behind the largest expansion of the state in our
history is horrible political and fiscal policy. If you are a corporate,
political, academic, or religious leader in the US, I would encourage you to
speak out against the continued destruction of our financial structure, and
ultimately, our freedoms. 1835 US Debt - $33,733. Sept 2008 - $8.5 trillion.
One of my subscribers sent me a link to a two minute video titled,
"Are you going to finish strong?" Everyone that thinks the only answer for
our lives today is a massive government built on trillions in monopoly money,
needs to see this film. If you are becoming apathetic, watch this film.
U.S. Stocks Rally on Speculation Jobs Data to Spur Stimulus, Feb6
Job Loss: Worst in 34 Years, Feb6
Officials Say Tentative Stimulus Deal Reached, Feb6
CBO: Obama Stimulus Harmful Over Long Term, Feb6
After watching one more rigged political rally today, in order to give investors the
appearance that the continuation of massive socialization of the US is a good
investment idea, I would strongly encourage you to read any of the material
prepared by the Pete Peterson Foundation on our total debt. Where have we
come, when our only solution is "You are driving too fast on this mountain
highway. The only way to get down safer is to drive faster!"
Brazil to Counter Meltdown with More State Aid, Jan12
Wen Urges Steps to Reverse Slowdown Trend, Jan 20
Swan Waiting on Data Before Deciding on Stimulus for Australia, Jan20
S&P Downgrades Spain's Credit Rating, Jan20
As we have watched the banking sector in the US decline sharply, once again,
we all must remember, that this is a global condition. In order to understand
this period in history, we must recognize that the expansion of the state's role
in the US economy, is the same strategy being implemented around the world.
US Banks Stay Mum on Bailouts, Dec 23
Treasury Must Divulge Details on Bailout, Panel Says, Jan 9
In the last few weeks, equity markets have been very complacent in the US, and
have shrugged off almost every piece of painful economic reality thrown at them.
Does this complacency bode well considering the lack of transparency coming
from the ground level of our financial system?
In June 2006 issue of The Investor's Mind, we addressed why the great trust
that has been given to the banking cartel known as the Federal Reserve, is a
confidence few question during market booms. As we enter 2009, I have decided
to release that issue for the general public. If you have an interest in our best
research, and learning from a host of experts and charts, click here to subscribe.
I have found that only by continuing my own learning as history changes the
very world I live in, can I increase my odds in this highly deceptive time.
Auto Bailout Collapses, Markets Down in Asia, Dec12
Auto Aid Plan revived as White House Mulls Loans, Dec12
This morning, US history was made once again. The executive branch of the
US government stepped in and overruled last night's US Senate's decision. At
11:30 EST last night, the US futures market was down more than 4%. Yet, at
today's open investors saw a quick recovery, finishing the day with a gain. ( Asia,
Europe, US, Prices from www.cnnfn.com)
So, how can the President overrule the Senate? By the powers created through
the Executive Order, "National Security and Homeland Security Presidential
Directive."
While, this halted the decline in US stocks that would have most likely ensued,
should so much power reside in one branch of US government?
While the Federal Reserve continues to refuse disclosure the contents of the $2
trillion worth of garbage it has received as collateral from the financials and the
bond markets reflect severe concern for short-term liquidity, what does this tell us
about the revered Efficient Markets Hypothesis's second assumption?
"Information is readily available, and costless to obtain."
Even more, with so much interference by so few in the government, how will our
markets ever divest themselves of inefficient investments and companies?
Wall Street In Late Day Rally, Dec5
As we finish Friday, Dec 5th, investors are greeted with a 259 point increase on the Dow. This is even more rewarding for those investors who thought that Monday's
680 point decline was triggered when a government agency stated that they finally
knew we had been in a recession since December 2007. Thanks for the "quick"
conclusions guys.
Many mainstream market pundits are espousing, "just hold on", and that this is a
"buying opportunity". Since Tuesday, learning that in the near future Americans
may be hit with a Value Added Tax, already found in Europe, the hedge fund
industry is expected to have lost 45% of its assets between June08 and Nov08,
and today, finding out that November job losses were the worse in 34 years, and US
foreclosures were up 76% from a year ago, that group of individuals commonly
referred to as "investors", actually pushed the Dow up again to close the week,
just 2% lower than it opened Monday. Is this real or another bear trap?
If you believe that something very deceiving is unfolding, I would encourage
you to join our group of subscribers. I have found they have a commonality.
They are all highly skeptical and voracious readers. They understand that
in this highly dangerous period, strategic thinking from a variety of minds is
critical to keep your sanity and capital.
Citigroup Gets U.S. Rescue From Losses, Cash Infusion, Nov 24
As of today, November 26, investors in the US have seen a substantial rally off
of the 6-year low last Friday, accompanied by massive bailouts: first, there was
Citicorp, on Monday, and then consumer, student, small business, and mortgage
loans on Tuesday.
Since our leaders have gone mad, creating trillions of new debt, in their attempts
to bring stability, let's consider how our founding fathers saw paper money. This
film by Dr. Larry Parks should be taught at every college and presented by every
major news station.
Fed Defies Transparency Aim in Refusal to Disclose, Nov 10
With the $2 Trillion the Fed has loaned to various financial institutions since
September 14th, Bloomberg filed suit to force the Fed to disclose the recipients of
the funds and the collateral it has accepted. Though the Fed and Treasury said
they would divulge such information, its refusal to do so should come as no
surprise:
"The Federal Reserve System virtually controls the nation's monetary system, yet it
is accountable to no one. It has no budget, it is subject to no audit, and no
Congressional Committee knows of, or can truly supervise its operations."
This statement comes from a short film produced by the Ludwig von Mises
Institute in the 1990s. Begun in secrecy (18:12), the Fed has fought every call for
its transparency (34:30). If you cannot watch the whole film, be sure to view the
segments around the minute marks (noted in parentheses) above.
9 Banks Including Citi, JP Morgan in Treasury Program, Oct 14
Treasury: First Nine Banks to Get Funds This Week, Oct 27
Dow Retakes 9000 in Furious Rally, Oct 28
After a history making explosive rally, our emotions would want to see this
as a very bullish sign for equity markets. But considering the fact that
$250 billion dollars of new debt was created for the largest banks on Oct 14
and Oct 27, are value investors leading these explosive one day rallies? Are
these structural positives for the health of our financial markets?
Click here and view charts on the Dow and a Banking Index over the last 3 weeks.
Baltic Dry Index Drops Below 1,000 for the First Time in Six Years, Oct 28
Dubai Property Market on Edge Amid Global Slowdown, Oct 28
When one looks at global shipping, and the hot Dubai real estate market along
side the performance of one of its major financial indices, you get a very different
picture than "the worst is behind us." Sorry, but these don't seem like indicators
one would find at a credit contraction bottom. If you have lost a great deal of money
over the last year, I strongly encourage you to consider reading, Traits of an
Excellent Manager. This research,[ Section 4 of our historical research paper
on short selling, Riders on the Storm ( Jan06)], contains interviews with some of
the most recognized short sellers in the world. It could never be more timely for
investors, advisors, and traders, around the globe. If you wish to see our ongoing
comments regarding HOW to navigate this global storm, consider becoming a
subscriber. Considering the size of losses I have heard from individuals
contacting us in October, I believe you will find the cost extremely low.
There will always be a bottom. The question I have been asking since 2004, is
not WHEN will we be there, but how to avoid massive losses along the way as
our human tendency is to seek information we want to hear, versus arguments
based on hard data that we need to see and hear.
Alan Greenspan: I made a mistake, Oct 24 '08
The "Maestro" states today that he made a mistake in how he perceived banks
would protect their shareholders believing that it would have been in their interest
to do so. His mistake was that there was " a flaw in the model that I perceived
is the critical functioning structure that defines how the world works."
Can you imaging holding the what is arguably the highest financial position
in the world and NOT understanding the relationship between fostering
cheap credit through a fiat currency, with the results that your actions
fostered the largest credit bubble in history? Can you imagine having this post
and NOT studying the long string of credit bubbles as far as back as
John Law's Mississippi Scheme in France during the 18th century?
The following is a quote from Mr. Greenspan in Ayn Rand's Capitalism: The
Unknown Ideal [1967]. This book states that it is "a collection of essays on the
moral aspects of capitalism:
"The abandonment of the gold standard made it possible for the welfare statists
to use the banking system as a means to an unlimited expansion of credit. They
have created paper reserves in the form of government bonds which - through
a complex series of steps - the banks accept in place of tangible assets and
treat as if they were an actual deposit, i.e., as the equivalent of what was formerly
a deposit of gold. The holder of a government bond or of a bank deposit created
by paper reserves believes that he has a valid claim on a real asset. But the fact
is that there are now more claims outstanding than real assets."
(Alan Greenspan, Gold and Economic Freedom Essay, first published in
the July '66 issue of The Objectivist.)
"Government regulations do not eliminate potentially dishonest individuals, but
merely make their activities harder to detect or easier to hush up. Furthermore,
the possibility of individual dishonesty applies to government employees fully
as much as any other group of men. There is nothing to guarantee the superior
judgment, knowledge, and integrity of an inspector or bureaucrat - and the deadly
consequences of entrusting hum with arbitrary power are obvious. Capitalism is
based on self-interest and self -esteem; it holds integrity and trustworthiness
as cardinal virtues and makes them pay off in the marketplace." (Alan Greenspan,
The Assualt on Integrity, first published in the Aug '63 issue of The Objectivist)
From my years in this business, and from reading Greenspan's comments
for 2 decades, I can come to no other conclusion than the man is either
delusional or a pathological liar.
I would also encourage anyone seeking to understand Mr. Greenspan's true
record, to read Dr. Larry Parks book, What Does Mr. Greenspan Really Think?,
and Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve by
William Fleckenstein.
Dow Sees Biggest RunUp Ever, Oct13,
Bank Stocks Miss the Rally, Oct 13
As central bankers around the world are ready to guarantee every deposit on
the planet, and hundreds of billions in new paper money (debt) is coming
from Europe to the US, why would the largest bank in the US, NOT join today's
party? Why would the banking index LAG the rally?
Germany Moves to Shore Up Confidence in Economy
Financial Crisis: Asian Countries Join Global Push to Cut Interest Rates
Financial Crisis: £500 Billion Bailout Helps Stabilise Banks
Iceland Suspends Trading After Banking Seizures
Putin May Boost Russia's Power as Iceland Seeks Loan
Gordon Brown Seeks Legal Action Against Iceland
U.S. May Take Ownership Interest in Banks
Oct 5 - Oct9 '08
Over the last year, investors have been inundated with the term "credit crisis".
Sadly, I am finding more and more investors who never understood that
these were the signs of market declines to follow. The headlines above,
reflect that credit and markets are also shifting international alliances.
Blue-Chip Stocks Suffer Worst Single-Day Point Decline, Sept 29
Feds Pump $630 Billion into [Global] System, Sept 30
Dow Rebounds 485 points in Session, Sept 30
No Bailout; House Blocks 700 Billion Deal, Sept 29
Ray of Hope as US Shoots for Bailout II, Oct 1
Now I ask you, is it really all that hard to see who is in control?
Nouriel Roubini's: Paulson's Plan A Disgrace, Sept26, by Mish Shedlock
An Action plan for Americans today and Sunday. Since we have been told
Washington must ram this "rescue plan" through as soon as possible,
then "We the people" should go into action. While I don't think this will stop
the passage of what history will look back on as the worst piece of legislation
forced on the public, we can at least tell our children and grandchildren we
voiced our opposition to this increased concentration of powers, i.e. the new
office of US Treasury Czar, and the next step toward the destruction of our
capitalistic way of life. When Barclays in the UK can buy the North American
operations of Lehman Brothers, the largest underwriter of municipal bonds
before they filed bankruptcy, for $1.5 billion, and save 10,000 jobs, are we
certain that the only way to halt the enormous demand for cash infusions by
banks is to allow the US Treasury to raise the national debt almost
a trillion dollar in one bill? Oh, and where is the clear explanation for why the
hundreds of billions in bailouts over the last year have yet to regain "investor
confidence"?
Hedge Funds Wrestle with Short Sell Ban, Sept 25
In their rush to act, paper the world in fiat, and declare market declines
unlawful and immoral, by restricting those "evil short sellers," our illustrious
leaders must have forgotten that market makers, attempting to offset their risk
by maintaining a neutral stance, and hedge funds who run
long-short strategies based on math models, comprise the majority of short
selling volume. So if a politician or media pundit tells you that short selling must
be banned, tell them you have a better idea, let's ban their ability to destroy
our money. Oh, and did you know there was no ban placed on a CEO of these
same companies being able to dump their own stock during the temporary ban
on those seeking to short their stock?
The Unraveling of the Shadow Banking System moves to Hedge
Funds, Dr. Nouriel Roubini, Sept 23
Bernanke: Approve Bailout or Risk Recession, Sept 23
Mad as Hell - Taxpayers Lash Out, Sept 21
Letter From Edward Yingling, President and CEO of the American
Bankers Association, to Fed Chairman Ben Bernanke, Sept 19
Letter to Congress, Three Fatal Pitfalls, Signed by 66 Economics
Professors, Sept 24
"The origins of all quakes are essentially the same. The action always starts
when the rocks along a tiny segment of a fault begin to slip. How big the quake
turns out to be depends not on the triggering event, but on where it happens; on
whether it trips only a short chain of slipping events in the rocks farther afield, or
taps into one of the long 'fingers of instability' that runs a long way through the
crust."
SEC Halts Short Selling of Financial Stocks to Protect Investors and
Markets, Sept 19
Are we to believe that legal short sellers were the only downward influence on
stock prices? Or has anything happened in the last 12 months that would cause
rational investors to want to sell their financial stocks? If prohibiting short selling
is the way to stabilize financials, then why not do the same in tech, medical,
housing, retail, etc? Or, maybe this is not about short selling. All we need to do
is look at opening prices to see that it is NOT what is happening during regular
trading hours that is causing these companies their greatest declines.
UK Regulators Stops Short Selling of Bank Shares, Sept 18
FSA statement on short positions in financial stocks, Sept 18
With options expiring tomorrow, it looks as though something had to be done
after the SEC's new "naked short selling" rules failed to initiate a strong rally,
especially in financials, as can be seen in these charts: Dow, Brokerage Index,
Banking Index. Or was just a random event on another ordinary day?
SEC Stiffens Short Selling Rules Amid Market Turmoil, Sept 17 '08
SEC Issues New Rules to Protect Investors Against Naked Short
Selling Abuses, Sept 17 '08
In the heat of a market meltdown, we should stop and ask, "Are the markets
dropping as the natural consequence of destroying the dollar for decades and
the collapse of trillions in complex, opaque, illiquid debt instruments or because
of the 'naked short sellers?'"
In Riders on the Storm, our research paper on short selling, we addressed this
very accusation, noting that when shorting rules were revised in 2006, the door
was left open for those who short illegally. If today's action is an honest attempt
to restore the integrity of our markets, we applaud the SEC's efforts. But, with
this change, like the emergency order of July 15th, being initiated within days
of options expiration, we cannot help but ask, "Why now?" It is far more likely that
the markets' turmoil of the last 2 weeks is the result of long investors making
sell decisions on real financial information.
A Bailout for Lehman? Not Likely, Sept 12 '08
Washington Mutual Shares Sink Below $2 on Capital Concerns, Sept 11
After the largest bailout in history on Monday (Fannie and Freddie), institutional
investors and fund managers holding financial stocks were met with the more
bad news from a 158 year old investment house and the largest credit union in
the country. And still the Dow closed the day less than 1.8% below its January
2008 bottom of 11,634. What's wrong with this picture?
SEC paves way for switch to international accounting system, Aug 28
FDIC: 117 troubled banks, highest level since 2003, Aug 28 ‘08
UK House prices face a plunge of 10.5%, Aug 29 ‘08
Bank of China flees Fannie-Freddie, Aug 28 ‘08
As we head into a relaxing Labor Day weekend, the SEC seeks to change from a
national to an international accounting system, the FDIC notes the largest
number of troubled US banks since 2003, the UK housing market is in its
sharpest price decline in 18 years, and China’s fourth largest bank is selling
$4.6 billion in Fannie and Freddie bonds. Is globalization progressing smoothly?
Will nations share each others pains with the same fervor as they shared gains?
I.O.U.S.A.: Live with Warren Buffet, Pete Peterson, and David Walker
On Thursday, August 21st, this documentary will be shown in over 400 theatres
around the US. If you're in a position of leadership or if your decisions have a
financial impact on others, I encourage you listen to the perspectives from some
of the highest levels of leadership in the US.
Dow Gets 331-point Boost, August 5, 2008, CNN Money
Sadly, many market pundits look for a story that fits the market's daily direction,
since they have no time to do any research. The article must go to press almost
instantly after the markets move. If the markets move up or down the next day,
they look for a new story to explain that day's movements. This has created
an environment where comments have no connection with a series of events or
any longer term trends.
If you look at the history of the NASDAQ, you will find that the most powerful up day
in the history of the NASDAQ was not in 1998 or 1999, but almost 9 months into
Paulson Sees Fannie, Freddie Share Purchase, 'Only If Necessary', July 15
Paulson Seeks Authority to Shore Up Fannie, Freddie, Bloomberg,
July 13, '08
"Treasury Secretary Henry Paulson swung the weight of the Federal Government
behind Fannie and Freddie.." Now with a weekend of intense talks about what
needed to be done to stop the hemorrhaging at two Government Sponsored
Entities, both stocks went from opening up 32 and 16 percent respectively, to
closing by the end of the day down 5 and 8 percent. Yes folks, that was the stock
fluctuation on two entities that hold or back 5 trillion in mortgages, about half the
outstanding mortgage debt in the United States. Now contrast that number to the
total outstanding public debt in the US. Finally contrast these numbers with the
through the Lens of History.
Goldman Sachs Does it Again, CNN Money, June 17, 2008
According to this article, Goldman Sachs has the Midas touch. But, those
concerned with future earnings may want to consider little details - like
"leveraged loan issuance falling 74% in the first quarter while loans backing LBOs
plunged 88 percent." Or, consider Doug Noland's June 13th Prudent Bear article,
noting "Asset Backed Securities Issuance is running at 27% of its comparable
level from 2007. Home Equity ABS Issuance is running at $303 million compared
to 2007's $184 billion. Year-to-date CDO issuance of $13.8 billion compares to the
year ago $208 billion."
Citigroup leads drive to hurt Taxpayers, Bloomberg, May 9, 2008
Banks Say Auction Rate Investors Can't Have Money, June 9, '08
When city and states have to pay $5 to $10 million to Wall Street to get out of
investments they were sold by Wall Street, while banks and brokers prohibit
individual investors from selling "safe-as-cash" investments the investors were
sold by the same, should we be confident? What other questions are investors
not asking because they are afraid to investigate?
Crisis of Confidence Includes Consumers, March 17, 2008, Gallup
When you read that one of the largest brokerage firms in the US experienced
"an old fashioned 'run on the bank' ", and that the Fed is working to "stabilize" the
situation by expanding the government's role as fast as the debt markets are
losing money in the private sector, is there a reason to be quickly looking at other
investment strategies besides buy and hold?
If you have not changed from your basket of buy and hold investments, you may
want to consider the following:
- Are you asking tough questions to your bank regarding the safety of you cash reserves? If not, why not start now?
- If fashions change, tides come in and out, and weather changes, would it not be prudent to look for trends to come to an end?
- With almost every economists now espousing that we are either in or going into a severe recession or even a depression, how long will it take you to gain back your investments in the months ahead should markets decline sharply as history teaches?
- If your advisor is not familiar with the tool known as short selling, then just have them call Goldman Sachs after reading this article we posted
- last fall. In fact, do some homework, and google "inverse or bear funds."
As Bill Fleckstein stated recently in Gretchen Morgenson's column in the NYTimes, "We are a Bailout Nation". I don't know about you, but that does
not sound sustainable. To subscribe to a publication that has been
asking questions since Janaury 2006, click here. Our content has moved
to weekly from monthly as of March 1, 2008 due to the speed of
government intervention, and the extreme loss of historical perspective.
JPMorgan Scoops up troubled Bear, CNN Money, March 17, '08
Foreign Investors Veto Investors,International Herald, March 17, '08
According to the OCC, JP Morgan has the largest derivatives exposure of any US
bank. When a company like this purchases Bear Stearns, one of the US's top
five brokerage houses for $2 a share, when Bear traded at $170 a share in
January of '07, should we be surprised if the Dow or the S&P 500 drops
substantially in the next few weeks or months? Destroying the dollar looks to be
running out of favor with the international community. Those that haven't started
asking some very hard questions of their money managers may pay the ultimate
financial costs.
Syria Vows to Strike Back at Israel, February 15, 2008, DEBKAfile
On February 13,
Mughniyeh, one of the most lethal terrorist of the last twenty
years, was killed in a car bomb. In reaction, Lebanese, Iranian, and Syrian
leaders call for a war on Israel. If the "humanitarian crisis" in Gaza looked like
war preparations, Mughniyeh's death is the excuse to start it. The last three
weeks contain many parallels to the weeks leading up to the Six-Day War in
June 1967. As we seek to stay abreast of this developing crisis, I encourage
you to compare your news sources with those of www.debka.com. As this
situation heats up, those living in a democracy or republic should investigate
Walid Phares latest book, The War of Ideas: Jihad against Democracy.
Trading in CDOs slows to a trickle, February 11, 2008, Financial Times
"Just three CDOs worth a total of $1.3bn were sold last month - one in the US and two in Asia - compared with 37 deals worth $22 bn in January 2007,
according to analysts at Morgan Stanley."
In the June 2006 issue of The Investor's Mind we stated the following
with a chart on the derivatives growth from the Office of the Comptroller
of the Currency: " The credit derivatives market has grown at 75 percent per
annum from $55 billion to $5,472 billion in little over eight years. The OCC's
stated objective is, 'To ensure the safety and soundness of the national
banking system.' The more we find out about the derivatives market, the more
likely we are to question whether they're achieving their goal."
If you are just now coming to grips with the foundational problems in our
capital markets, and have never taken a hard look at the history of the financial
world, let me strongly encourage you to take a crash course by reviewing our
more than 2 dozen lessons written since Jan. 06. A current subscription,
allows you access to the past 2 years of our research. Denial of our current
juncture is only going to become more costly.
Societe Generale trader wanted to be a star, officials say,
January 28, 2008, International Herald Tribune
With the January 22nd and 23rd window of relief, pundits have tried to explain
our previous steep sell off. Some suggest the $7 billion a trader at a French
Bank lost, triggered the sell off, while others contend that it was the bailout of
two of the largest bond insurers in the industry, who together insure more than
$2.5 trillion in debt. Or maybe these are simply two more stories reflecting an
ongoing credit contraction that is unresponsive to cheap credit. In fact, this
Sacramento article shows that the more bureaucrats try to intervene by lowering
rates, again, the more they compound the problem they helped to create.
U.S. Stock Futures Point to Major Decline on Re-Open, January 21,
2008, CBS Marketwatch
As investors continue moving from greed and complacency to fear, only a few
market commentators have discussed the possibility of accelerating declines.
Similar to the logic-defying force of the crowd on the way up, are the downside
adjustments that coincide with the crowd's realization that the force of nature
has never been overcome by new financial schemes.
The following quote, by Dr. Benoit Mandelbrot, discoverer of fractal geometry,
is found in our September 2006 newsletter, "Too Costly To Bear:"
"The size of price changes clearly cluster together. Big changes often come
together in rapid succession, like a fusillade of canon fire; then come in
minor changes, like the pop of toy guns."
If you are accepting anyone's opinion of what the market will do in the future
without critically questioning that opinion (this includes us, too), you are setting
yourself up for failure. 2008 is already proving how unforgiving markets can be.
UBS to launch global warming derivatives index, January 9, 2008,
Financial Times
Those who think global warming is just a political discussion, fail to understand
Wall Street's product manufacturing mentality. The more debt central bankers
produce, the more new products roll off the shelves. We shouldn't be surprised
by their lack of familiarity. Nor should we be surprised by the many investors who
claim they never understood all the risks that came with the highly-rated and
highly-leveraged credit instruments that have been unraveling since mid-2007.
China Property Bond Risk Rises to Record, January 11,2008, Singapore
Property Press
With all the negative US real estate market headlines, it is easy to miss the fact
that this great credit mania has dramatically impacted property values and risks
from China to New Zealand to England to such off-the-beaten-path places as
Kazakhstan.
Fed to Lend $60 Billion to Ease Credit Crunch, January 4, 2008,
CNNMoney.com
With the markets rattled and fear rising, the Fed announces that they
will increase more short term loans starting with the next auction on January
14th. Investors should also note the much larger extension of short term
loans announced today by the European Central Bank.
RBI Permits Shortselling by Foreign Investors, January 1, 2008, Hindusta
Times
Much like the elimination of trading curbs and the short-sell, plus-tick rule in the
second half of 2007, in the US, India is now allowing institutions to sell short on
a limited basis. While the efforts of legal short sellers improve the quality of
information on companies they investigate, our research, in "Riders on the
Storm," considers the timing of these changes? Whether one employs short
selling or not, knowing the history of short selling, during and after prior manias,
will prove useful to us all.
The Shadow Knows, Bill Gross, December 2007 Investment Outlook
When Blackstone, one of the largest private equity dealers in the world, notes
a "reluctance of big banks to lend," and the world's largest bond manager, Bill
Gross, states that "Fed ease has lowered Treasury yields, but for the rest of the
market — the segment that influences the bottom line of U.S. corporations,
homeowners, and consumers — not much has changed," we can be sure that
a crisis is upon us. When we consider the effect this is already having on state
and municipal revenues, we begin to glimpse how widespread the impact from
the credit mania turned bust will be. our Fear & Perception article, suggests that China's trend is nearing its end.
"These Are Not Normal Times," LA Times, December 20, 2007
When Treasury Secretary Paulson uses the words "market failure" seven times,
while President Bush urges Wall Street to come clean on the amounts of their
mortgage related losses, while Wall Street's biggest banks decide they don't
need the superfund that was necessary to maintaining liquidity only two months
ago, we can all agree with Paulson's observation: "these are not normal times."
Citi moves $49 billion onto balance sheet, December 13, 2007,
CNN Money
China, Playing It Safe, December 11, 2007, RiskCenter
Hog Wild for China, Fortune, December 24, 2007
"In 2007, [China's] current account - a broad trade balance - will register a $400
billion surplus, about 12 percent of gross domestic product. That's up from $21
billion, or 1.7 percent of GDP, in 2000.
As a share of GDP, China's surplus is
'triple Japan's level in the 1980s when Japan-bashing was at its peak.'"
Though I respect Jim Rogers' long-standing public criticism of the credit bubble,
our research of global equity markets, manias and operational problems, see
As they simultaneously try to address overvalued markets and contracting credit,
central bankers’ have taken dramatic actions in the fall of 2007. In an attempt to
maintain our current market and economic circumstances, the U.S. Federal
Reserve has cut the Fed funds rate three times since September 17th, while, for
CDOh no!, November 8, 2007, The Economist
In our September 2006 newsletter, we used sand pile studies to discuss the
inter-dependence of individuals within the markets, noting that "the motion in
one grain can induce motion in thousands of others." As default rates on
subprimes continue to accelerate, banks, brokers and insurers are taking huge
losses and bond issuance has fallen 65 percent from last year. When we are
overwhelmed our natural tendency is to deny that our corner of the world will be
impacted. We must not allow this tendency to go unchecked.
Subprime Panic Freezes $40 Billion of Canadian Commercial Paper,
September 25, 2007, Bloomberg
As we noted in our public article, "What Lies Beneath," defaulting mortgages
are causing the commercial paper market to seize. Many companies who lent
their money in the commercial paper market are not receiving their principal
back upon maturity. As potential lenders lend less or not at all, this will intensify
the liquidity crisis.
Goldman pulls off profit despite subprime woes, September 20, 2007,
MarketWatch
One thing most investors forget when talking about the short side of the
market is that your big brokerage houses use short hedging strategies as part
of their market operations. Evidently, some players know how to do this better
than others.
Paulson Sees No End To Credit Turmoil, September 11, 2007, Reuters
How can the US Treasury Secretary state, "This is far and away the strongest
global economy I've seen in my business lifetime," on July 11th, and then state
that he sees the current credit crisis impacting confidence longer than any
previous shock of the past two decades? Does this include the Long Term
Capital's 1998 implosion and the stock market meltdown from 2000-2002?
Panicked Customers Rush to Withdraw Savings from Northern Rock,
Sept 14, 2007, International Herald Tribune depositers
A Liquidity Squeeze - Banker's Mistrust, August 16th, The Economist
With the inability to distinguish good borrowers from bad ones, many banks
have become unwilling to lend to each other. It's not just the risky hedgies they
must worry about, but money market funds nowadays. As the Fed and central
banks the world over, continue to inject liquidity and the Big 4 step to the Fed
window to take it, a panic rush to safety still ensues. Nouriel Roubini gives an
excellent explanation as to why the uncertainty continues, with his last three
paragraphs showing the extent of the leverage employed and how some money
markets have assumed severe risks.
"There seems to be a natural tendency in markets for past successes to lead
to more-risk taking, more leverage, more funding, higher prices, more collateral
and, in turn, more risk-taking."
Is adding liquidity a short term band aid, or a long term solution? If you think
this is just academic theory, I implore you to check out Riders on the Storm:
Short Selling in Contrary Winds. Can you think of a more timely item to learn?
With the intense emotional feelings that occur during large price swings, I would
encourage you to download and read this piece by Dr. Janice Dorn, The Trading
Doctor. Dr. Dorn was interviewed for the December 2006 issue of The Investor's
Mind.
Booming Equity Markets Attract More Money, August 9, 2007, China Daily
Let's connect the dots from a real world perspective. Our human nature is
to buy in AFTER the good numbers are posted, and the better the numbers, the
fewer the questions. Let's look at one of the most explosive markets of the world
in the last two years and see if we can see this pattern. The money supply,
that is, the debt that can be created out of thin air by a central bank, has grown
by 18.5% as of July 2007 on a year-over-year basis. This has forced consumers
to use more of that freshly printed credit to purchase items, due the mystery of
"inflation". But that's not all. Since investors have the innate ability to buy based
on stories of PAST returns, what better story to sell that the Shanghai's rise
over the last 2 years, a major beneficiary of the credit boom. At some point the
reality to this scheme starts to sink home, that an explosion of credit has some
very painful side effects when markets return to earth, and skeptical thinking
becomes more vogue than the feeling from mania wins in the "casino".
Subprime Loan Crisis May Impact Some Chinese Banks, August 8, 2007,
China Daily
BNP Paribas [a French bank] Suspends Funds Because of Subprime
Problems, August 9, 2007, International Herald Tribune
Credit Risk- The US Subprime Collapse Spreads Into Germany,
August 9, 2007, Risk Center
China Threatens "Nuclear Option" of Dollar Sales, August 8, 2007,
UK Telegraph
Young Going Crazy For Credit, July 19, 2007, China Daily
"A survey conducted by Daily Business News showed that by the end of this year
China will have 60 million credit cards, 80 percent issued after 2005." Note the
connection between the growth of China's money supply over the last five years,
as noted in the Asian Development Bank's Outlook 2007, the Shanghai Stock
index's explosion since the summer of 2005,and the People's Bank of China's
decision to raise rates for the third time this year.
Bear Stearns Tells Investors No Value Left, July 18, 2006, Bloomberg
Today, after the fifth largest brokerage firm in the country stated that $20 billion
in 2 of their hedge funds, containing securitized subprime mortgages, collapsed
such that one has no value and the other only 9 cents on a dollar, most investors
and advisors are still unaware of the effect this will have on our markets.
Iran Asks Japan to Pay Yen for Oil, July 13, 2007, Bloomberg
For those who were familiar with the material contained in our March 2006
issue: Oil and Water Do Not Mix, this event came as no suprise. However,
the history of oil and money in Iran [Persia] has a long history prior to the
development of the petrodollar in 1973. An overview of this history was
presented in our January 2007 issue: Persia-Fuel for the Fire.
The Greatest Economic Boom Ever, July 12, 2007, CNN Money
"'This is far and away the strongest business economy that I have seen in my
lifetime,' U.S. Treasury Secretary Hank Paulson declared on a recent visit to
Fortune's office." Compare this statement to that made by former Bank of
England Governor, Eddie George, as noted in the March Investor's Mind.
"In the environment of global economic weakness at the beginning of this
decade ...external demand was declining, and related to that, business
investment was declining. We only had two alternative ways of sustaining
demand and keeping the economy moving forward- one was public spending
and the other consumption.
We knew that we had to stimulate consumer spending. We knew we had
pushed it up to levels which couldn't possibly be sustained into the medium
and long term. But for the time being, if we had not done that, the UK
economy would have gone into recession just as the US did."
Dow spikes 283 points, July 13, 2007, ContraCosta Times
While various media pundits try to explain the reason for the Dow's recent
explosive day and move towards 14,000, what should investors and advisors
make of the fact that Standard & Poor's stated that it would lower the rating of
612 bonds, and Moody's stated that it would downgrade 399 bonds, before the
explosive day. The sad reality is that it was not a mystery.
Looking for Contagion in All the Wrong Places, July 2007, Bill Gross,
PIMCO Investment Outlook
Paulson: Housing 'at or near bottom', July 2, 2007, CNN Money
BIS Warns of Great Depression from Credit Spree, June 25, 2007,
UK Telegraph
"Virtually nobody foresaw the Great Depression of the 1930s, or the crises
which affected Japan and southeast Asia in the early and late 1990s. In fact,
each downturn was preceded by a period of non-inflationary growth exuberant
enough to lead many commentators to suggest that a 'new era' had arrived."
For more details, see the Conclusion to Bank of International Settlement's 77th
Annual Report on our Research page.
SEC: 12 Debt Probes Underway, June 26, 2007, CNN Money
"The Securities and Exchange Commission has opened 12 investigations
into collateralized debt obligations (CDOs) linked to the sinking subprime
mortgages." With the recent developments at Bear Sterns, is this a harbinger
of higher markets? If we're in the early stages of investigating the CDO markets,
the developments that led to the Sarbanes-Oxley Act could be instructive. Bear in
mind, the month Sarbanes-Oxley was signed into law, was also the month that
saw the largest stock fund redemptions in the 2000 to 2002 crash. But hey, why
study history, right?
Merrill Sells Assets Seized from Bear Sterns, June 21, 2007, CNN Money
Bear Stearns' Hunt for Big Cash, June 13, 2007, BusinessWeek
In what looks like another crack in the sub-prime dam, Bear Stearns is
attempting to sell $3.86 Billion worth of mortgage-backed bonds to raise the
cash it needs to bail out its own
High-Grade Structured Credit Strategies
Enhanced Leverage Fund. In a case of he-said-she-said, after a questionable
first quarter, this fund, with leverage of 3 to 1, is down 23 percent for the year and,
with investors looking to withdraw half the fund's assets, suspended investor
redemptions. For those who wonder how this mess will turn out, we need look
no further than Kevin Duffy's most recent article.
G8 Agrees to Reach Global Warming Agreement, June 10, 2007,
Environmental Leader
Though global warming gains more and more headlines, is this trend in the
earth's temperature really that unusual? As big business and global government
lead the charge to stop CO2 emissions before we "destroy" the world, no one
seems to be asking whether this is the most pressing issue facing the U.S. and
the globe. Yet, with all these [in]vested interests, I am sure that this issue is here
to stay.
Greenspan warns China stocks primed to fall, May 24, 2007, CNN Money
"It is clearly unsustainable. There's going to be a dramatic contraction at some
point." China's national stock exchange grew at an annualized pace of 70
percent, then contracted, then grew at an annualized pace of 291 percent, then
contracted, and has most recently grown at a annualized pace of 526 percent. So,
why should Greenspan's comments be considered anything out of the norm?
Today, May 30th, 2007, the Shanghai Composite closed down 6.5 percent. A
number of days ago, this same index suffered a one-day decline of 8.8 percent.
Now I ask you, was this decline a result of my May 23rd, 2007article on parabolic
rises, Greenspan's comment on March 24th, or, more likely, just one more grain
of sand on a large, unstable sand pile built by mammoth amounts of credit?
Not the Markets of the 1990s, May 18, 2007, Doug Wakefield
Dow Jones Islamic Global Indices , Chicago Climate Exchange,
Weather Futures: Chicago Mercantile Exchange,
NewsFutures Prediction Market, TradeSports Exchange
These markets didn't even exist in the 1990s, yet we need to be aware of
them. As the rampant expansion of credit fosters “financial innovation,” a whole
new group of markets has come online with which no individual, institution,
market maker, or government has any long-term experience. This flood of new
financial alternatives certainly doesn't fit with the traditional buy and hold
investment models.
Disclaimer: Since I have no experience with any of these specialty markets, this
is not intended as "investment" advice for these exchanges or their products, or
their appropriateness as part of a "balanced" portfolio.
Stock Buying Fever Grips China, May 10, 2006, China Daily
Since the Dutch Tulip Mania of the 1630s, parabolic rises have always ended
badly.
Jeremy Grantham: All the World's a Bubble, April 27, 2007,TheStreet.com
The World Islands, Ten Real Estate
New Jersey Diverts Billions of Dollars From Pension Fund, April 4, 2007,
China View
The Richest City in the World, March 12, 2007, CNN Money
A-Share Accounts Daily Opening at 90,000, January 26, 2007, China Daily
The China Securities Depository and Clearing Corporation noted individuals are
opening an average of 90,000 new accounts a day, compared to an average of
2,708 new accounts per day in January 2006. The Shanghai Stock Exchange
Composite Index rose from 998, on June 6, 2005, to 2993, on February 15, 2007.
Does this have an effect on the number of new accounts?
Merrill Lynch Sounds Alarm on Global Liquidity, February 6, 2007,
Telegraph
When I took my first course from the College of Financial Planning, in 1985, an
illustration of economic cycles was part of our basic teaching on risk. Yet
throughout the '90s and since 2000, I'd not seen an illustration on economic
cycles. It was as though, in the forum of "conventional" finance, cyclicality had
ceased to exist. Seeing the chart in this article took me back to 1985.
World Economic Forum
Modern Marvels: Engineering Disasters - Teton Dam, History.com
What could financial engineers learn from talking with civil engineers? Does
nature have any lessons for market participants today?
New "Warehouse" for Derivatives, November 17, 2006,
Ellen Silverman, Risk Center
"It is the first time that a centralized 'warehouse' of this type has been
created in the 'over-the-counter' derivatives sector," which will make it
possible to "record, monitor, and help process trades in the credit
derivatives markets." With the new CDO's, in the article below, and a $26
trillion credit derivatives market, I am glad that someone has finally been
able to put together a 'centralized warehouse.' Better late than never. You
may also want to read the July issue of The Investor's Mind.
New CDO Uses Leverage to Counter Narrow Spreads
Inside Moody's: Structured Finance, Winter 2006
Just when you thought leverage couldn't expand any further, the boys in
product development roll out some new toys. Read this and the "Global
Derivatives Explosion" article under our Research tab, and then ask
yourself if this tool is suitable for any investor, sophisticated or otherwise.
Near a Housing Bottom? November 8, 2006, Paul Kasriel
David Lereah, Chief Economist for the National Association Realtors,
states that the recent NAR survey results indicate a stabilizing market.
Lereah states, "the worst is behind us as far as a [real estate] market
correction." Riders on the Storm contains an August 2005 LA Times
Lereah quote, stating "If you paid your mortgage off, it means you
probably did not manage your funds efficiently over the years. It's as if you
had 500,000 dollar bills stuffed in your mattress - very unsophisticated."
GAO Chief Warns Economic Disaster Looms, October 28, 2006,
Matt Crenson
David Walker, Comptroller General of the United States and chief of the
Government Accountability Office (GAO), is touring the nation in a
Fiscal Wake-UpTour to try to draw attention to the unsustainability of our
nation's current fiscal policy.
"The ship of state is on a disastrous course, and will founder on the reefs
of economic disaster if nothing is done to correct it."
Market Risk - World Regulators Focus on Derivatives October 4,
2006, Ellen J. Silverman, RiskCenter
“Officials from Britain’s Financial Service Authority, the Federal Reserve
Bank of New York and SEC want to tighten up derivatives markets, where
explosive growth in recent times has fueled fears of potential financial
disaster.”
Raising the Volume: The Explosive Growth of Exchange-Listed
Options in the U.S. September/October 2006, Jim Binder
“After a year of no growth at all in 2002, year-over-year options volume
rose by 16% in 2003, 30% in 2004, and 27% in 2005. In contrast, the
combined stock trading volume of the New York Stock Exchange and
NASDAQ actually declined by 3% in 2003, then rose by just 6% in 2004,
and 4% in 2005. More recently, stock market trading accelerated in the
first half of this year, with volume up 16% over the same period last year.
That still falls far short of the growth rate in the options business, which
rose 45% in the first half of 2006.”
An Inflection Point in China's Banking Problem, June 6, 2006,
Dr. George Friedman, Stratfor
China's booming economy has lead many to overlook the "small"
problem of its non-performing bank loans. This changed in May, when
some highly visible organizations came out with reports revealing the size
and scope of bad loans in China's banks. Clearly, China's banking
industry has reached "an inflection point."
A 'Fiscal Hurricane' is on the Horizon, November 14, 2005, USA Today
Comptroller General of the United States, David Walker states, "we face a
demographic tsunami" that "will never recede." It seems gloom and doom
is no longer relegated to the lowly. Indeed, pessimism has reached a
lofty perch.
Federal Reserve Statistical Release, Discontinuance of M3,
November 11, 2005
Effective March 23, 2006 the Federal Reserve will stop reporting M3. Since
this measure of the money supply has expanded by $1.2 trillion in the last
24 months, and $430 billion in the last 5 months, it is not difficult to guess
why this has occurred. Never fear. We can still extrapolate the information
from the governments quarterly flow of funds report which contains 93
other reports.
The King of Real Estate's Cashing Out, October 25, 2005,
CNN Money
"Tom Barrack, arguably the world's greatest real estate investor, is
methodically selling off his U.S. real estate holdings as prices drive the
market to nosebleed levels." Just one more warning signal for those
caught by the mania.
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