Last week more than a handful of subscribers alerted me to Jim Rickards’ beliefthat China has pegged the SDR (an IMF reserve currency) Gold price from 850-950 SDR/oz and this is what is impacting the Gold price. Rickards writes that the peg is too cheap given the scarce supply of Gold and that the IMF will print trillions of SDRs during the next global financial crisis. Read More
Jan 15, 2018 KEY to the current TOPPING. Two attempts to break through resistance, finally breaking through on the 3rd attempt. In the long, Map of the Market by Magnitude above, notice the aqua circle at the top right, shows the short distance between the current Dow price, and the min upside required to breach the upper parallel, just as in 1929, before a CRASH can occur. Most likely first a false breakdown, as we had in BREXIT, should allow us to sell shorts and re-position at a more advantageous level before the upper parallel is breached. We are at that juncture NOW.
Jeffrey thinks that we are headed into a much tougher environment because “the Central Bank balance sheets will stop growing at the beginning of 2018, [and] the liquidity that’s helped drive the market is going to reverse. That is not favorable for risk markets.” As such, Jeffrey and his team at DoubleLine have been de-risking their portfolios and have cautioned investors to do the same.
The $3 trillion that Vanguard has invested in index funds might indicate stability as, according to Vanguard, the best way to invest is to invest in index funds. But such a statement isn’t true at all. The positive performance Vanguard’s index funds have achieved in the last 35 years, which is now the main factor in attracting new funds, is just a result of many factors that has lead the S&P 500 to grow 23 times since 1980.
When all four of these pieces of information are observed together, they provide a pretty good sense for how much risk exists in the market at any given time.  If the long term trends are up, every pullback (-3-5% drop or so) and every correction (-5-15% drop or so) should be treated as a clearance sale - an opportunity to buy at short-term low/discounted prices - and an opportunity to rotate out of lagging asset classes and sectors and into stronger ones.
Conventional economics holds that it is incentives—carrots and sticks—which drive individual economic actors to do what they do, and thus leads to economic growth. Although incentives are important, they are not the main driver of growth. The Neanderthal in his cave had the same incentive to eat and access to the same raw materials as we do today. Yet, our economy is vastly more advanced, why?
At first he was called Hotfoot Teddy, but he was later renamed Smokey, after the icon. New Mexico Department of Game and Fish Ranger Ray Bell heard about the cub and took him to Santa Fe, where he, his wife Ruth, and their children Don and Judy cared for the little bear with the help of local veterinarian Dr Edwin J. Smith.[29] The story was picked up by the national news services and Smokey became a celebrity. Many people wrote and called asking about the cub's recovery. The state game warden wrote to the chief of the Forest Service, offering to present the cub to the agency as long as the cub would be dedicated to a conservation and wildfire prevention publicity program. According to the New York Times obituary for Homer C. Pickens, then assistant director of the New Mexico Department of Game and Fish, he kept the cub on his property for a while, as Pickens would be flying with the bear to D.C.[30][11] Soon after, Smokey was flown in a Piper PA-12 Super Cruiser airplane to the National Zoo in Washington, D.C.[11] A special room was prepared for him at the St. Louis zoo for an overnight fuel stop during the trip, and when he arrived at the National Zoo, several hundred spectators, including members of the Boy Scouts, Girl Scouts, photographers, and media, were there to welcome him.[31]
Unless one thinks Trump is another Eisenhower. Ike also believed in Infrastructure spending and military preparedness. The Truman-Eisenhower bull market lasted from 1947 all the way to 1957, when the DJI fell 20%. But where Ike was very popular, Trump is much less so. Where Ike was cautious and trusted his advisors. Trump is the opposite. And unlike Trump, Eisenhower never courted bankruptcy.
Wild rumors spread of bear raids, of fabulous profits made by short-sellers, and of political conspiracies hatched by foreigners interested in bringing down the market, the dollar and the U.S. economy. In early 1932, the Philadelphia Public Ledger maintained that “European capitalists had supplied much of the cash needed to engineer the greatest bear raid in history. These proverbially open-handed and trusting gentleman had accepted the leadership of New York’s adroit Democratic financier, Bernard Baruch.” Baruch, the best known short-seller in the country, shrugged off the charge.

Every once in a while the trading action in a given market breaks through its historically normal boundaries and starts exploring new territory. This can mean one of two things: Either something fundamental has changed, creating a “new normal” to which participants will have to adapt. Or the extreme move is a temporary aberration that will eventually be corrected by an equally extreme snap-back into the previous range. Read More
Panic of 1901 Panic of 1907 Depression of 1920–21 Wall Street Crash of 1929 Recession of 1937–38 1971 Brazilian markets crash 1973–74 stock market crash Souk Al-Manakh stock market crash (1982) Japanese asset price bubble (1986–1991) Black Monday (1987) Rio de Janeiro Stock Exchange collapse Friday the 13th mini-crash (1989) 1990s Japanese stock market crash Dot-com bubble (1995–2000) 1997 Asian financial crisis October 27, 1997, mini-crash 1998 Russian financial crisis

After the financial crisis and bear market of 2008-09, the Employee Benefit Research Institute did a study of how typical Americans fared with their retirement plan accounts at work. The study found that the average 401(k) account balance plunged by more than 25% during 2008, reflecting stock ownership in most plans. But those who kept participating consistently through 401(k) contributions reaped the rewards of the recovery, as the median balance rose at an impressive 16% annual pace over the four years following the bear market low.
I live in San Diego and observed a very interesting phenomenon recently in the local real estate market. It looks like in early 2011, one or more banks sent out a small flood of properties on the market. And these properties sat there for a while and got a few price cuts as it became apparent that the demand was just not there. Eventually most of those properties have disappeared (presumably sold, or maybe delisted). And since then, NOTHING. I mean virtually NOTHING has hit the market recently. I assume that potential sellers and banks saw what happened and have decided not to shake loose any more shadow inventory.
Furthermore, at their December meeting, the Fed hinted that they are willing to let inflation run a little over their 2% target. Although they upgraded GDP growth, their forecast for three hikes in 2017 remained unchanged. Given that Janet Yellen once said, “To me, a wise policy is occasionally to let inflation rise even when inflation is running above target,” this is no surprise.
“The economic fundamentals remain favorable,” said Bruce Bittles, Robert W. Baird’s chief investment strategist, after Wednesday’s sell-off. Bittles was also cautious on stocks ahead of the current rout. “Given the strength in the labor markets and confidence levels among small businesses, the odds of a business turndown are unlikely. We remain bullish on the U.S. economy.”
Our US Regime Model, a quantitative framework for stock-picking, suggests we are in the mid to late stages of the market cycle and in this stage, momentum is the best way to invest. As contrarian value investors, this is not an easy call to make. But if this bull market is closer to over, our analysis of factor returns indicates that late-stage bull markets have been dominated by stocks with strong price momentum and growth, while value, analyst neglect, and dividend yield have been the worst-performing factors.

As a savvy investor, you should be especially wary of inappropriate holdover patterns from the long Bull Market. Perhaps you sense that it may be time to take back control of your finances, in the same way legendary hedge fund manager, George Soros, came out of retirement to rescue his own fortune. Like him, you will be able to sleep soundly, knowing your living standards are secure. 
The market is not fair, but it also does not fail to show us what lies ahead if we look at its internal action very closely. This is because these market internals show us what “Big Money” is doing with their money, not what they are saying. Of course, their spokesmen and “talking heads” will try to soothe investors’ fears now. But we should vow to “follow the money”, I’d suggest. See what the Big Money is doing. We want to “anticipate the anticipations” of others (as Keynes said). But as Keynes also said, the market tends to go to extremes. At times, it is ruled by “animal spirits” rather than rationality. And as he would agree, capitalism by its very nature produces big disparities of wealth and therefore under-consumption and over-production. I would say, we are back in the 1920s again, at least in terms of Trump’s economic policies (de-regulation, tax cuts for the rich and tariffs). These are very similar to Coolidge’s main economic policies. The bull market back then lasted 8 years, August 1921 to August 1929. Our has lasted almost nine years, March 2009 to January 2018. So, a bear market is due….
         I feel that the market is at it’s worst as far as the quailty of available homes at “Fair” prices – we realize that we will lose money, that’s a fact! Also, the sale will unfortunatly bolster the false values of the market. As the Doc’s readers know far too well, the stars have aligned and the wave is comming soon, prices will move further downward to a point of equalibrium with incomes, inventory, supply and demand. It looks like the banks will fight the whole way down delaying a natural correction. Folks have far too much debt into thier properties to make Short sales, preforclosers, forclosures sales work and finding folks who’ve lived many years in the same home with a good amount of equity to negociate with are very rare and thier homes are seldom Gems. 
In the days ahead, markets are awaiting potential announcements on the Trump administration's plan to curb Chinese investments in U.S. technology, although messaging on those measures from the White House has proven conflicting. The U.S. is also set to impose an additional 25 percent tariff on $34 billion in Chinese imports on July 6, with duties on a further $16 billion in Chinese goods in the works.
Repayment schedules differ with the type of bond issued. Municipal bonds typically pay interest semi-annually. Shorter term bonds generally pay interest only until maturity; longer term bonds generally are amortized through annual principal payments. Longer and shorter term bonds are often combined together in a single issue that requires the issuer to make approximately level annual payments of interest and principal. Certain bonds, known as zero coupon or capital appreciation bonds, accrue interest until maturity at which time both interest and principal become due.

Michael Wilson, the chief U.S. equity strategist at Morgan Stanley (MS - Free Report) , added that “over the past two months, the U.S. equity market has moved decidedly more defensive and value is showing more persistent performance versus growth.” This move toward defensive sectors and value strategies indicated that the market is concerned about growth fading later this year and next.
Hindsight is the most exact of all sciences. Most people who live their life backwards have a miserable life. Having been around for a while, I tend not to look back, especially not at negative events. Much better to embrace uncertainty since everything going forward from here is uncertain. We can’t do anything about the past but we certainly have more control over our future. And looking at the next few years, it does seem that these are going to be extremely turbulent both economically, socially and politically.
JOIN PETER at the New Orleans Investment Conference Women Screaming in AgonyBrett Kavanaugh, over the weekend was confirmed by the Senate, and there were some Democrat women in the gallery watching the vote and they were just screaming in agony; that this was such a terrible thing. I ...…

“The economic fundamentals remain favorable,” said Bruce Bittles, Robert W. Baird’s chief investment strategist, after Wednesday’s sell-off. Bittles was also cautious on stocks ahead of the current rout. “Given the strength in the labor markets and confidence levels among small businesses, the odds of a business turndown are unlikely. We remain bullish on the U.S. economy.”

By staying out of this overvalued market, the only thing we can get is sore while the believers get rich. As it’s impossible to time the market, getting out now can be costly for a while, but is the smartest thing to do in the long run. Getting out of the S&P 500 will be extremely rewarding when the $2 billion daily inflows into Vanguard reverse and become outflows. With nobody buying, the drop will be huge.
When the U.S. economy began to move forward once again, municipal debt continued its momentum, which was maintained well into the early part of the twentieth century. The Great Depression of the 1930s halted growth, although defaults were not as severe as in the 1870s.[7] Leading up to World War II, many American resources were devoted to the military, and prewar municipal debt burst into a new period of rapid growth for an ever-increasing variety of uses. Today, in addition to the 50 states and their local governments (including cities, counties, villages and school districts), the District of Columbia and U.S. territories and possessions (American Samoa, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the U.S. virgin Islands) can and do issue municipal bonds. Another important category of municipal bond issuers which includes authorities and special districts has also grown in number and variety in recent years. The two most prominent early authorities were the Port of New York Authority, formed in 1921 and renamed Port Authority of New York and New Jersey in 1972, and the Triborough Bridge Authority (now the Triborough Bridge and Tunnel Authority), formed in 1933. The debt issues of these two authorities are exempt from federal, state and local governments taxes.[8]
This all seems pretty gloomy. There is one key element missing, however, and that is exuberance. Bear markets usually start when there has been a mania of some kind. Bitcoin might count, but it remains a small area of financial markets, and elsewhere there is relatively little enthusiasm in evidence. There is no "suspension of disbelief" in mainstream equity markets, which would suggest that there could be further to run if some of the immediate concerns were allayed.
Niall last spoke at my conference two years ago. He was bullish on the global economy at a time when almost everybody—including me—was bearish. I really don’t know what Niall is thinking about right now, or what new insights he has in store for SIC attendees. I am truly excited to welcome him back and I hope you can be there with me to experience it, first-hand. If you would like to learn more about attending the SIC 2018, and about the other speakers who will be there, you can do so here.
But what about your question?  What if the weight of the evidence leans toward the market rolling over into a full-fledged bear market (-20% or more drop in value)?  After all, it happens every 7-10 years and the average market crash is right around -42%.  Who wants to participate in watching their hard-earned retirement portfolio lose almost half its value?!
We are nearly a year into Donald Trump’s presidency, and the economic numbers continue to look quite good.  On Monday, we learned that U.S. retail sales during the holiday season are projected to be way up compared to 2016.  Yes, there are all sorts of economic red flags popping up all over the place, and I write about them regularly.  And without a doubt, 2017 has been one of the worst years for brick and mortar retail stores in a very long time.  But when something good happens we should acknowledge that too, and many are giving President Trump credit for the fact that retail sales are projected to be up 4.9 percent this holiday season compared to last year... Read More
I think of velocity as a machine which money has to go through to produce economic activity. If the machine is on a low setting, it doesn’t matter how much money you put in—you won’t get growth. The falling velocity of money, which is at its lowest point since 1949, is another reason why growth has remained subdued in the post-financial crisis world.

It was a "binary" stock market for 5 years, and as the monster rally went on, it became even more so as more and more equity sub-sectors and asset classes faded away, with "the market" powered by fewer and fewer large-cap growth stocks. Investors either won big investing in large-cap Tech and growth, or you went nowhere with value funds, emerging markets, and small and mid-cap investing styles.
The drastically slowing economy is threatening both corporate earnings growth and the bull market. If GDP grows at an anemic 2% average annual rate through 2019 and a 1.8% rate longer term, as forecasted by the Federal Reserve (per the Wall Street Journal), stock prices are likely to lose steam and tumble. Five famed investors see a bear market around the corner, and recently gave their views on how the downturn will begin and how low it might go, as reported by, a division of Time Inc. The five include Tom Forester, Jim Rogers, Marc Faber, Bill Gross and Rob Arnott.
It’s important to remember that a bull market is characterized by a general sense of optimism and positive growth which tends to catalyze greed. A bear market is associated with a general sense of decline which tends to instill fear in the hearts of stockholders. As Rule #1 investors, we act opposite of the investing public – when it comes to bull vs bear markets – and capitalize on their emotions by finding quality stocks at low prices during bear markets and selling during bull markets when they’ve regained their value.
In the following Nasdaq chart, as seen through the Powershares QQQ Trust QQQ, +2.32%  you can recognize that market is much earlier in the process of a correction, but has begun nonetheless. The data here only goes as far back as 1997, so it is possible that the Nasdaq does retest its highs before continuing down. That's not a risk I am generally taking. In looking at the risk range, we see that the Nasdaq could be in line for another 40% to 50% correction. Again, I don't think that is the likeliest outcome, but it is possible. I do expect a significant correction and if I had to pick a number, I'd say about 30% off of its top.
Feb 26, 2018 Of all the Timing Systems in these Public Stockcharts, only the Exceptional Bear Channel accurately forecasts the whip-saw reversals at the turning point. Most timers are now Bearish, just when a reversal is well in process, to a new all-time high in the major indexes. A better reason to follow me does not exist. There are multiple, head-fakes at the irregular Top
Years after the Civil War, significant local debt was issued to build railroads. Railroads were private corporations and these bonds were very similar to today's industrial revenue bonds. Construction costs in 1873 for one of the largest transcontinental railroads, the Northern Pacific, closed down access to new capital.[5] Around the same time, the largest bank of the country of the time, which was owned by the same investor as that of Northern Pacific, collapsed. Smaller firms followed suit as well as the stock market. The 1873 panic and years of depression that followed put an abrupt but temporary halt to the rapid growth of municipal debt.[6] Responding to widespread defaults that jolted the municipal bond market of the day, new state statutes were passed that restricted the issuance of local debt. Several states wrote these restrictions into their constitutions. Railroad bonds and their legality were widely challenged, and this gave rise to the market-wide demand that an opinion of qualified bond counsel accompany each new issue.
For Smokey’s 40th anniversary in 1984, he was honored with a U.S. postage stamp that pictured a cub hanging onto a burned tree. It was illustrated by Rudy Wendelin.[50] The commercial for his 50th anniversary portrayed woodland animals about to have a surprise birthday party for Smokey, with a cake with candles. When Smokey comes blindfolded, he smells smoke, not realizing it is birthday candles for his birthday. He uses his shovel to destroy the cake. When he takes off his blindfold, he sees that it was a birthday cake for him and apologizes.[51] That same year, a poster of the bear with a cake full of extinguished candles was issued. It reads, 'Make Smokey's Birthday Wish Come True.'[52]
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

The active December contract expires next week, and 233,000 contracts will have to be liquidated or rolled forward. But if the shorts are reluctant to roll positions forward, then a bear squeeze should ensue. Traders will be looking for news and rumour for guidance, and ahead of the G20 meeting in Buenos Aires, there are likely to be plenty. Read More
A great example of what we can expect can be taken from Japan. In 1989, the Japanese stock market index (Nikkei) was at 38,916 points with a P/E ratio of 60. This is almost double the valuation of the S&P 500, but if we apply the S&P 500’s current P/E ratio of 26.14 to the Nikkei in 1989 it would be at 16,954 points. Fast forward almost 30 years and the Nikkei is at 18,331 points for an imaginary total return of 8% if equal the current S&P 500 P/E ratio.
Municipal bonds have traditionally had very low rates of default as they are backed either by revenue from public utilities (revenue bonds), or state and local government power to tax (general obligation bonds). However, sharp drops in property valuations resulting from the 2009 mortgage crisis have led to strained state and local finances, potentially leading to municipal defaults. For example, Harrisburg, PA, when faced with falling revenues, skipped several bond payments on a municipal waste to energy incinerator and did not budget more than $68m for obligations related to this public utility. The prospect of Chapter 9 municipal bankruptcy was raised by the Controller of Harrisburg, although it was opposed by Harrisburg's mayor.[19]
Michael J. Panzner, author and 25-year Wall-Street veteran, says that "the real reasons behind the sell-off ... include the bursting of history's biggest housing bubble, which triggered a shockwave of wealth destruction that has wreaked widespread havoc throughout the economy, as well as the unraveling of a multi-trillion-dollar financial house of cards built on greed, ignorance, and fraud."[15]
Unlike new issue stocks that are brought to market with price restrictions until the deal is sold, most municipal bonds are free to trade at any time once they are purchased by the investor. Professional traders regularly trade and re-trade the same bonds several times a week. A feature of this market is a larger proportion of smaller retail investors compared to other sectors of the U.S. securities markets. Some municipal bonds, often with higher risk credits, are issued subject to transfer restrictions.
Pullbacks have been extremely rare over the past year, to the point where the S&P 500 hasn’t experienced a decline of at least 3% since November, its longest such stretch since the mid-1990’s. Stocks have throughout the year been supported by strong corporate earnings and economic data, as well as the prospect of tax reform out of Washington, which has helped traders shrug off the impact of geopolitical uncertainty and devastating hurricanes.
The second important institutional change is the growth in the mutual fund industry since the mid-1980s, which resulted from the changes in the retirement plans as well as from the individual small investor’s demand for an inexpensive means of acquiring a diversified investment in the capital markets. Households’ investment in stock and bond mutual funds (not including those held indirectly through pension funds) grew from about 1% of total financial assets in 1984 to 9% in 2002. To be sure, with the increased prominence of pension funds and stock and bond mutual funds, direct holdings of stocks and bonds as a share of financial assets has declined from about 37% in 1960 to 22% in 2002. Nevertheless, the potential cost advantage and portfolio diversification available through financial intermediaries facilitates household investment in stocks and bonds. Therefore, the availability of pension and mutual funds should tend to work in consort with the underlying economic fundamentals affecting households’ demand for stocks going forward.
The pattern of boom and bust has continued in the post- war years. Inevitably the bears have been blamed during every major downturn…Japanese authorities complain[ed] that mysterious foreign interests were responsible for the decline in their stock market, following the great boom of the bubble economy. (In 1998, the Japanese imposed restrictions on short-selling in an attempt to shore up their market).

Eleven GOP members of Congress led by Rep. Ron DeSantis (R-FL) have written a letter to Attorney General Jeff Sessions, Attorney John Huber, and FBI Director Christopher Wray - asking them to investigate former FBI Director James Comey, Hillary Clinton and others - including FBI lovebirds Peter Strzok and Lisa Page, for a laundry list of potential crimes surrounding the 2016 U.S. presidential election.

Presidential Tweets Express Anger at the FedThe catalyst today was more tweets from President Trump where he is expressing anger, not only at the Federal Reserve, and at the ECB and at the Bank of China, because he is accusing both Europe and China of being currency manipulators; taking advantage of us by weakening their currencies. He's saying ...…
Same thing with the hiring of Bolton, a bellicose fire-brand who never met a war he did not want to enjoin, even though (or because) he himself never served in combat. He replaces a combat veteran, McMaster, who was expected to restrain Trump. Will Trump, who also never served in combat, might just want to start a quick little war some place to shore up his low approval ratings? This, too, worries Wall Street, which likes military preparedness a lot more than the uncertainties of actual war.
High unemployment and high inflation will have negative impact on home prices IMO – it is coming. Will the fed fight Stagflation like Paul Volker fed did with high fed fund rates? Will supply and demand market forces wrest the shadow inventory from the bankers in the next 5 years or will the supply chain remained clogged with squatters and inflated balance sheets?
The benchmark Shanghai composite closed officially in bear market — referring to a decline of at least 20 percent from recent highs — on Tuesday. The smaller Shenzhen composite moved into bear market territory in February this year. The Shanghai and Shenzhen composites were down around 22 percent and 26 percent, respectively, from their 52-week highs, as of Asia afternoon trade on Wednesday.
The past two years have seen a rather aggressive change in corporate policies toward the very customers they used to covet. Not long ago, CEOs tended to keep their political views mostly in the closet. Companies remained publicly neutral because their goal was first and foremost to make money. When they wanted to influence politics or social norms, they bought politicians — you know, the good old-fashioned way. The big banks still do this by funneling cash to both Republicans and Democrats alike
The primary reason why stock prices have been soaring in recent months is because corporations have been buying back their own stock at an unprecedented pace.  In fact, the pace of stock buybacks is nearly double what it was at this time last year.  According to Goldman Sachs, S&P 500 companies spent 384 billion dollars buying back stock during the first half of 2018.  That is an absolutely astounding number.  And in many cases, corporations are going deep into debt in order to do this.  Of course this is going to push up stock prices, but corporate America will not be able to inflate this bubble indefinitely.  At some point a credit crunch will come, and the pace of stock buybacks will fall precipitously. Read More
However, other indicators suggest an intermediate-term bottom is in place. Bullish sentiment among ordinary investors is even lower than that seen at the 2009 market lows, while Merrill Lynch’s latest monthly fund manager survey shows institutional investors are holding more cash than at any time since 2001 – an “unambiguous buy” signal, says Merrill. Allocations to equities have plunged to levels unseen since the market bottoms of mid-2011 and mid-2012. All this indicates last week’s rally may have legs. However, a multi-week or even a multi-month rally would not mean the danger has passed. Fat Pitch blogger Urban Carmel last week noted there were seven bear market rallies in 2008-09, with three lasting six to eight weeks. Stocks always gained a minimum of 7-8 per cent, twice bouncing by at least 20 per cent.
RATE AND REVIEW this podcast on Facebook! the Capital Gains Tax?If we simply had no capital gains tax, but wen are still taxing the worker on the value of his labor without any deductions whatsoever, I just don't think that's a fair system. That's one of the reasons I would not want to just ab ...…
At around the same time, the English had witnessed the startling rise and collapse of the South Sea Company, which had risen from around ?100 to nearly ?1000 in the first six months of 1720, only to fall back to where it started in the autumn of the same year. Some thirteen years later, a bill was brought before parliament by Sir John Barnard, M.P. Its aim was to “prevent…the wicked, pernicious, and destructive practice of stock-jobbing [speculation] whereby many of his Majesty’s good subjects have been directed from pursuing their lawful trades and vocations to the utter ruin of themselves and their families, to the great discouragement of industry and to the manifest detriment of trade and commerce.”
There is a quiet revolution taking place in the monetary vacuum that’s developing on the back of the erosion of the dollar’s hegemony. It is perhaps too early to call what’s happening to the dollar the beginning of its demise as the world’s reserve currency, but there is certainly a move away from it in Asia. And every time the Americans deploy their control over global trade settlement as a weapon against the regimes they dislike, nations who are neutral observers take note and consider how to protect themselves, “just in case.”Read More
All international problems are currently suspended, awaiting the results of the US mid-term elections. The partisans of the old international order are gambling on a change of majority in Congress and a rapid destitution of President Trump. If the man in the White House holds fast, the protagonists of the war against Syria will have to admit defeat and move on to other battle fields. On the other hand, if Donald Trump should lose the elections, the war on Syria will immediately be revived by the United Kingdom. Read More

At around the same time, the English had witnessed the startling rise and collapse of the South Sea Company, which had risen from around ?100 to nearly ?1000 in the first six months of 1720, only to fall back to where it started in the autumn of the same year. Some thirteen years later, a bill was brought before parliament by Sir John Barnard, M.P. Its aim was to “prevent…the wicked, pernicious, and destructive practice of stock-jobbing [speculation] whereby many of his Majesty’s good subjects have been directed from pursuing their lawful trades and vocations to the utter ruin of themselves and their families, to the great discouragement of industry and to the manifest detriment of trade and commerce.”
The accompanying chart shows the losses of the median newsletter’s model portfolio in the 1987, 2000-02, and 2007-09 bear markets. For context, consider that the average bear market since 1900 has produced a 31% loss for the Dow Jones Industrial Average DJIA, +1.46% The median newsletter’s losses in those more recent three bear markets have been minus 23%, minus 28%, and minus 43%, respectively.
Rebalancing back to 50-50 2x and cash daily will have provide the closest tracking, but the costs will kill. You can rebalance much less frequently, perhaps at 40% bands (when the weights have declined below 30%/risen above 70% for instance) and achieve similar general reward as the 1x with much less rebalance frequency (once every year or two perhaps), but likely with some tracking error – that has 50-50 probability of being better or worse.
The current sell-off comes as a shock to investors who have grown accustomed to the eerie market calm and steady gains during much of the administration of President Trump. But this volatility is something you should get used to because it’s more typical of the advanced stages of a bull market, says Robert Bacarella, founder and chairman of Monetta Financial Services, who helps manage the Monetta Fund MONTX, -0.52%  and the Monetta Core Growth Fund MYIFX, -0.67%

In the current issue of Grant’s we have in the headline of the front pages today “Xi Jinping’s Poisoned Chalice.” This is the Xi Jinping (whose name I think I am butchering in pronunciation) is of course the new president for life. And our sense is that one-term presidencies in China are better than two terms, and that better than either would be emigration. So we think that Xi Jinping is the president for life in the wrong country.