John Hussman wrote a must-read essay titled: “Three Delusions: Paper Wealth, A Booming Economy and Bitcoin (link).” The crypto/blockchain delusion has exceeded the absurdity of the dot.com and housing bubble eras. I was shorting fraud stocks happily in both eras. I’m short a company now called Riot Blockchain. If you look at its description in Yahoo Finance, it bills itself as a developer of technologies applied to animal (“non-human”) medicine. It recently changed its name to Riot Blockchain from Bioptix Inc. Prior to calling itself Bioptic Inc, it called itself Venaxis. Read More
United States Secretary of Treasury Steven Mnuchin has a sweet gig. He writes rubber checks to pay the nation’s bills. Yet, somehow, the rubber checks don’t bounce. Instead, like magic, they clear. How this all works, considering the nation’s technically insolvent, we don’t quite understand. But Mnuchin gets it. He knows exactly how full faith and credit works – and he knows plenty more. Read More
Suppose you have the opportunity and the means to create a gold mine, and decide to undertake the challenge; you invest in the building and installations of the gold mine, and in all the related salaries to carry out the building of the mine, by paying for all expenses in gold; finally the gold mine is selling the gold it produces, in exchange for dollars. So now you have an abundant income in dollars, because your mine has been a successful venture. Hurray!
There are many people who don't agree with these bears. PIMCO analyst Joachim Fels, for one, finds a recession to be unlikely over the next 12 months, Barron's reports. However, he adds that a global recession within the next five years has a 70% probability, based on history. Barron's also notes that the forecasting prowess of Jim Rogers and Marc Faber is questionable. They have been wrongly bearish for years, and those who followed their advice in the recent past would have missed out on the bull market. Additionally, Barron's notes that Nobel Prize winning economist Robert Shiller of Yale University, whose models indicate an overpriced market, nonetheless believes that stocks may climb yet higher. (For more, see also: Stocks Could Rise 50%, Says Yale's Shiller.)
And while bear markets typically don't last long (most bear markets in the past have only lasted around 10-15 months), they can mean big losses. Bear markets are not the same as market corrections -- when the market drops 10% from a previous high -- but they can be started by a market crash (which happens when prices drop 10% in one or two days).
If we look back at the history of bear markets in the United States, then they were usually preceded by lengthy, strong bull markets. Those bull markets encouraged most investors to pile into the stock market and into high-yield corporate bonds, with the highest concentrations close to the tops. We can see that recently with all-time record inflows into U.S. equity funds--especially passive equity funds including ETFs--in 2017. Thus, as each bear market begins, people have huge percentages of their money in the stock market.
JOIN PETER at the New Orleans Investment Conferencehttps://neworleansconference.com/conference-schedule/Ominous OctoberToday was the end of the month of September; it's also the end of the third quarter we are now beginning the final quarter of the year. When we come back to trading next week, we will be in the month of October, and as I mentio ...…
Economic cracks big enough to drive a car industry into are opening up all over the globe. Trade gaps are opening up between major allies. Widening spreads between the dollar and other currencies are shredding emerging markets. As we start into summer, these cracks and several others described below have become big enough to get everyone’s attention, just as I said last year would become the situation.
As with many other industries, the reality of supply and demand impacts every aspect of the financial market. It is predicted that in 2018 the United States Treasury will have net new issue of $1.3 trillion in treasury bonds and the national debt will continue to rise. This new influx of debt will need to be purchased by the market, but the Federal Reserve is reducing the amount that it’s purchasing – their bond holdings will decrease by 10% over the next year. International buyers will become an even more important cog in the wheel, and David comprehensively explores the global supply and demand structure on this episode of Money For the Rest of Us. You also don’t want to miss his bear market investment suggestions, so be sure to listen.