Hard science, like physics, has rules you can’t break. The law of gravity makes for very specific physical behavior that can be mathematically modeled. Economists want us to believe that their own models are as reliable as the law of gravity. But the real world is a complex, dynamic, out-of-balance mess that doesn’t fit inside anyone’s model. You can’t model a system that is as chaotic and unpredictable as an economy in an Excel spreadsheet or even in the latest and greatest statistical software.
The coming gold and silver surge is guaranteed. It is not a question of IF but only WHEN. Initially, the imminent revaluation of the precious metals will have nothing to do with an investment mania but with the total mismanagement of the world economy. A spectacular rise in the metals is just a reflection of the mess the world is in. But as the paper market fails in gold and silver, there will be panic and manic markets.
The past few days have highlighted nervous investors are sensitive to policy changes by the European Central Bank and the Bank of Japan, widely viewed as the most accommodative central banks in the world. Treasurys came under pressure earlier in the week after the Bank of Japan trimmed its monthly buying of long-dated government paper, drawing speculation that the move could herald a tapering to its assets purchases.
As contentious as the US midterm elections were, there was never a scenario in which they mattered. Any possible configuration of Republicans and Democrats in the House and Senate would have yielded pretty much the same economy going forward: Ever-higher debt, upward trending interest rates and (through the combination of those two) rising volatility.
"We believe we are in a 'rolling bear market,' a market where risk assets across sectors and geographies reprice to account for the removal of central bank provided liquidity," Morgan Stanley strategist Mike Wilson told TheStreet in September. "Less central bank liquidity support as we near the end of an economic cycle should bring higher volatility, as risk assets and markets lose some of their ability to absorb shocks. Our call is not for a simultaneous and large repricing across risk assets, but for a bear market that rolls through different assets and sectors at different times with the weakest links (Bitcoin, EM debt and equities, BTPs, funding spreads, base metals and early cycle industries like home builders and airlines) being hit first/hardest."
Wall Street owns the country. That was the opening line of a fiery speech that populist leader Mary Ellen Lease delivered around 1890. Franklin Roosevelt said it again in a letter to Colonel House in 1933, and Sen. Dick Durbin was still saying it in 2009. “The banks—hard to believe in a time when we’re facing a banking crisis that many of the banks created—are still the most powerful lobby on Capitol Hill,” Durbin said in an interview. “And they frankly own the place.”
I suspect there’s a hidden agenda behind the announcement in The Wall Street Journal op-ed by former Hillary Clinton aide Mark Penn that the Ole Gray Mare is actually eyeing another run for the White House in 2020. No, it’s not just that she would like to be president, as she averred on video last week in a weak moment, or that she has decided late in life to go full Bolshevik policy-wise. It is to establish her in the public mind as a serious candidate so that when she is indicted a hue-and-cry will arise that the move is a purely political act of revenge by the wicked Trump. Read More
Globalization has lost its political support, and that raises an important question about the future of the global economy. If globalization has fallen out of favor with large swaths of the voting public, what does the future look like for the American-led order which has promoted economic liberalization and liberal values around the world since the end of WWII?
It's true that Treasuries rallied last week, as yield-starved foreign investors poured into the market following the Fed's rate decision and equity markets tumbled on the Trump administration's tariffs targeting Chinese exports. But the most telling part of the action was the 10-year Treasury yields only managed to drop a measly three basis points on the week as the Dow Jones Industrial Average tumbled more than 1400 points in its worst decline in more than two years.