There’s a paradox at the heart of global finance. The U.S. share of the world economy has drifted lower for decades, and now President Trump is retreating from the American chief executive’s traditional role as Leader of the Free World. Yet the U.S. dollar remains, as the saying goes, almighty. “American exceptionalism has never been this stark,” Ruchir Sharma, head of emerging markets and chief global strategist for Morgan Stanley Investment Management, said at a Council on Foreign Relations symposium on Sept. 24. Read More
Or perhaps more accurately these blogs are the counterpoint. The Conservative “bias” (perspective) is clearly stated up front. The so-called “main stream media” feigns objectivity but is a propaganda tool of the Left/Democrat Party/Communists/Socialists. I don’t know if there is a source that is truly “objective” (everyone has a point of view). At least here at TCTH facts are laid out & source material is provided & one can dig as deeply as they want into the rabbit hole. We are not spoon fed drivel like the “MSM” provide for the useful idiots who believe they get the straight story from straight shooters.
The fundamental principal of information theory is that all information is surprise; only surprise qualifies as information. Sound familiar? George recognized the tie between entrepreneurial surprise and information theory: “Claude Shannon defined information as surprise, and Albert Hirshman defined entrepreneurship as surprise. Here we have a crucial tie between the economy and information theory. For the first time, it became possible to create an economics that could capture the surprising creativity of entrepreneurs.
Water in faults vaporizes during an earthquake, depositing gold, according to a model published in the March 17 issue of the journal Nature Geoscience. The model provides a quantitative mechanism for the link between gold and quartz seen in many of the world's gold deposits, said Dion Weatherley, a geophysicist at the University of Queensland in Australia and lead author of the study. Read More
Or perhaps more accurately these blogs are the counterpoint. The Conservative “bias” (perspective) is clearly stated up front. The so-called “main stream media” feigns objectivity but is a propaganda tool of the Left/Democrat Party/Communists/Socialists. I don’t know if there is a source that is truly “objective” (everyone has a point of view). At least here at TCTH facts are laid out & source material is provided & one can dig as deeply as they want into the rabbit hole. We are not spoon fed drivel like the “MSM” provide for the useful idiots who believe they get the straight story from straight shooters.
I have preached, in fact I have over-preached, on staying agile in tough markets. Remember, when the beat-down comes your way, I want you all to cover the P/L on your screen with a post-it. This one little trick is something I do myself. By doing this, the trader allows him or herself to make tough, reasoned decisions without the constant distraction that one's profit/loss number can be.
2008 had already had more than its share of financial turmoil. In the months leading up to 9/15/2008, Bear Stearns, Fannie/Freddie, and AIG had already had major blowouts. The stock markets were very itchy and everyone was on edge. Most who worked in the industry knew it was just a matter of time until something much more systemic took place. Up until this time, the contagion had been mostly limited to the US, with some minor external collateral damage. We were both heavily involved in the financial/economic landscape at this time. Andy was running his investment advisory and economic consultancy firm and Graham was a strategy analyst for a major G7 central bank. We had already both come to independent conclusions that this was going to be a long emergency as coined by James Kunstler. This was not going to be a 3 or 6-month event and then it would be roses and cherries and cream for the whole world. Read More
It's been so very long. I certainly did not miss them, but I knew that I would see them again. Though I would not mind if they never showed their face in these parts again. That said, here they are... the Four Horsemen. The fact is that when these four all show their faces at one time, it may already be too late to seek shelter... you are going to have to fight from where you now stand. They are:
Since January, gold futures speculators have been trending from extremely bullish to scared short. And in the week ending last Tuesday (the most recent data available) they appeared to capitulate, adding a massive number of short positions while marginally cutting their longs. They’re now about as close to neutral as they’ve ever been. Based on the history of the past decade this is hugely bullish, since speculators tend to be wrong when they’re fully convinced they’re right. Read More
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Municipal bonds are securities that are issued for the purpose of financing the infrastructure needs of the issuing municipality. The financed infrastructure needs vary greatly but can include schools, streets and highways, bridges, hospitals, public housing, sewer, water systems, power utilities, and various public projects. Traditionally, municipal bonds are issued and sold to bond holders through a complex network of financial and legal professionals.
In short, don’t imagine that the era of managing interest rates is over. It isn’t, not by a long chalk. And in fact, I suspect that if anything could give us the “melt-up” outcome, it’s central banks making it clear that they are going to ignore above-target inflation. The idea that they’re not only not taking the punchbowl away, but spiking it with rocket fuel, would be just the ticket for a final blowout.
Unlike the last credit crisis when the dollar rose sharply in a general panic for safety, on the next crisis, the dollar is likely to fall substantially. The reason is that foreign ownership of dollar investments (typically in US Treasuries) appears greatly overextended, and an additional $4 trillion of liquidity is in the wrong (non-US) hands. This is likely to be unloaded during a general credit crisis, driving the dollar lower. Read More
By now, hopefully, Americans have put two and two together and figured out that it isn’t the Chinese government that will pay for Trump’s tariffs, but the Chinese consumer. Much like the American government will not pay for China’s tariffs, it will be the American consumer. Those costs are passed on directly to the public in the form of higher cost of goods. Read More
First, more NYSE stocks are bought on margin now than at any time since the 1950s, and Faber interprets this as a sign of overvaluation. Indeed, he finds that stock prices are "out of control," per Money, with the market P/E ratio nearly double its historical average. Once a selloff begins, Faber expects it to become an avalanche in which "asset holders will lose 50% of their assets [and] some people will lose everything," as Money quotes him.
Lost in the largely meaningless political Kabuki theatre being staged on Capitol Hill is the fact that the economy is deteriorating. Real average weekly earnings in July declined for production and non-supervisory workers. It was down 0.01% from June to July and down 0.22% from July 2017. For all employees, real average hourly earnings declined 0.20% from June to July but was flat year over year. Read More
We are barely out of the gates in 2018 and the S&P 500 is up over 4%. From just looking around me it is clear entrepreneurs and consumers are optimistic about the future. For much of the last decade the general public wouldn't touch equities with a ten foot pole. Now people are taking on debt to buy as much cryptoassets as possible. I don't share this optimism and primarily look for investments outside of the U.S. and in special situations and investments that may have low or negative correlation to the general direction of the market. Seven reasons why I want to be very careful going into 2018: Read More
I wonder if one approach for your nervous friend would be to allocate say 10% of his portfolio to such a short, but to ask his broker/platform to trigger the purchase when the FTSE has dropped to a certain price (almost like a spreadbet). At the time of writing the FTSE100 is 5827, so the trigger could be a price of 5700 or whatever number scares your friend. I think one problem is working out the relationship between the FTSE’s value and the short ETF’s price.
A major difference between the current bear market and the long bear market of the 1970s is the economic environment. During the 1970s, the growth rate of productivity fell by nearly half, while inflation reached double-digits. These factors contributed significantly to the poor performance of the stock market during that period. However, during the current bear market, productivity has held up well, while inflation is not seen to be a significant threat in the near future. In hindsight, it is clear that the sharp decline in the stock market over the past two years was driven in large measure by excessive optimism in the value of high technology to the economy, at least in the near term. This zeal likely contributed to a period of overinvestment by businesses, particularly in the computer and telecommunications sectors, which suffered substantially in the last recession and have been slow to recover. However, the long-run benefits of technological innovation to the economy should be a positive factor for corporate equities, particularly if inflation remains low. If this proves to be true, households should begin to weight stocks more heavily in their asset holdings, making it unlikely that we will see a replay of the protracted bear market of the 1970s.
And it isn't just expectations of future inflation that are changing - current inflation is picking up as well. In the U.S., annual core inflation (less food and energy) currently sits at 1.8 percent - up from 1.6 percent in the 12 months through January - and wages are rising. Even if oil prices remain flat over the next 12 months, year-over-year inflation comparisons in the Eurozone will turn positive in the fourth quarter, with expectations of annual inflation of 1.6 percent. As has happened in the U.S., Credit Suisse also thinks that investors may soon start questioning just when the ECB will taper quantitative easing. That, too, would be bad for bonds. Without the ECB as a big-time buyer, the supply of bonds will increase, pushing down prices.
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