The Accountable Capitalism ActElizabeth Warren unveiled her new idea in an op-ed in the Wall Street Journal. It is her new bill, called the Accountable Capitalism Act. Of course, I have said this before, there is no truth in advertising when it comes to legislation. Whenever Congress passes a bill, the name of the bill is generally the opposite ...…
Trade-related uncertainties between the United States and its major trading partners have kept investors on the edge, as a potential trade war could have negative implications on global economic growth. The grilling of tech executives by U.S. lawmakers increases volatility. At the same time, a stock bear signal hits a four-decade high, while a sub-4% unemployment rate indicates that a recession is not far off.
So we have concluded (perhaps) the bull market in bonds that began in 1981 and that maybe ended in the early days of July 2016 (I think). So it might just be that interest rates are going up because they are going up. It sounds a little bit mysterious and indeed fatalistic, but I’m a little bit less inclined than others to assign causation to people and policies.
I am primarily a value investor. For me, the algorithms serve as a way to monitor whether my view about valuations is becoming accepted by other market participants. As I have mentioned, I believed earlier this year that we were in the late stage of a cyclical bull market. The markets are finally agreeing and turning the late-cycle bull into an early cycle bear.
In our regular gold trading alerts, we focus on the short- and medium-term outlook and we rarely discuss the very long-term issues or price targets. The reason is simple – the long-term issues and price targets don’t change often, so usually there’s little new to say about them. Consequently, it’s been a long time since we last discussed our view on gold’s explosive upside potential. In fact, it’s been so long that those who do not take the time to read our analyses thoroughly and those who have been reading them for only a short while may think that we are bearish on gold in the long run. Or that we’re perma-bears. Naturally, it’s nonsense and those who have been diligently following our articles know it. What we’re aiming for is to help investors position themselves to make the most of the upcoming rally in the precious metals market and one of the best ways to do it is to help people prepare for the final bottom in gold. Read More
With the massive net short position in both gold and silver Comex paper precious metals, offset by the historic net long position of the “commercials” (banks, mining companies, users, hedgers), numerous rumors are swirling around the precious metals market. For certain, the availability of physical gold bars in London that can be delivered to the large eastern hemisphere buyers who demand delivery is growing tight. Apparently the retail silver coin/bar market is starting to feel supply strains. Read More
It wasn’t the RNC. It was the Free Beacon and was directed at at least a couple of Republican primary candidates beyond just Trump. When it became clear that Trump was going to win the nomination they withdrew from the process. That is when the DNC (Hillary’s campaign) took over and then along with Fusion GPS brought in Steele to compile what is now known as the dossier. Two completely separate processes which the media always tries to conflate.
I recently ran across a terrific chart in Grant’s Interest Rate Observer that got me thinking about Hyman Minsky and The Financial Instability Hypothesis. After remaining relatively unknown during the course of his lifetime, Minsky really came to fame in the immediate aftermath of the financial crisis as his hypothesis helped to explain what left most economists baffled: the fundamental cause of the crisis. Clearly, though, he has been forgotten just as quickly because, considering where we stand today, it’s obvious the economists with the greatest power to prevent another crisis have still not adopted his insights into their frameworks. Read More
RATE AND REVIEW this podcast wherever you listen.Turkey is the Epicenter of Emerging Market ConcernsRight now, the epicenter of the concerns about the emerging markets is coming from Turkey. What is the problem with the Turkish lira? Turkish President Erdogan is veering off into some very dangerous territory with his stance with the Central Ban ...…
RATE AND REVIEW this podcast on iTunes!U.S. GDP Growth Reported at 4.1%Today we finally got the highly anticipated first look at U.S. economic growth, or really GDP growth, because the GDP is not that great a barometer of the economy. Nonetheless, thats the one that everybody uses to measure it, and that's the one that we're going to talk about ...…
The environment surrounding the historic expansion of the U.S. economy from March 1992 through March 2001 mirrors in many ways the expansion of the 1960s. After a somewhat subdued start, productivity perked up to average 2.4% per year from 1995 onward. This improved productivity growth was accompanied by strong economic growth and a surging stock market, while inflation remained relatively low. Returning to Figure 1, we see that a bottom for the (inflation-adjusted) stock market occurred in October 1990, followed by a “bull” market that accelerated rapidly after 1994, fueled by the high-tech boom. From December 1994 to its peak in August 2000, the stock market increased in value by $9.7 trillion, with the S&P 500 rising by an extraordinary 226%, or by 40% per year, for an average annual increase after adjusting for inflation of 34%. (See Lansing 2002 for a discussion of these valuations.) From 1994:Q4 to 2000:Q3, the inflation-adjusted net worth per capita of households increased by over 8% per year, with financial assets regaining prominence in households’ asset portfolios. By 2000:Q3, they comprised slightly more than 70% of the total. The market peaked in August 2000, and over the next two years, the inflation-adjusted value of the S&P 500 fell more than 43%.
While the precious metals are totally off the radar by the majority of investors, silver is setting up for one major bull market. Yes, it’s hard to believe as the gold and silver prices have been trending lower while the broader markets grind up higher, but if we look at the fundamental and technical indicators, the stock market and precious metals are now at extreme opposites.
A new survey of 375 US chief financial officers, which is in the latest Financial Analysts Journal, found earnings’ “misrepresentation” tended to be large, approximating to 10 per cent of reported earnings. Usually, companies exaggerate earnings, although profits are deliberately lowballed in a third of cases; by establishing “cookie jar reserves” that reduce current profits, firms can later boost earnings by releasing reserves.
Debt, my man, debt. In the rush to FIRE economy how could anything be better than DEBT? Particularly if you get the debtors to re-contract for that debt, and more, every so many months, resetting the terms of their interest payback to the beginning of the curve each time? As Ron said, this was all Monopoly money…that people agreed to pretend was real. The problem with speculation is that once you have more than a few people dancing atop the Milk the Suckers ponzi pyramid, it ceases to be a pyramid shape….
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Traffic in Knoxville, Tennessee, can be a bear anytime, but in late spring the slowdowns on Neyland Drive are often caused by Canada geese. — Joelle Anthony, Audubon, November-December 2004 True, the rally has been around the corner since Memorial Day. But bears have dominated market sentiment for so long since the Federal Reserve Board raised interest rates last February, that traders feel the market is headed for a major tectonic shift … — Anthony Ramirez, New York Times, 19 July 1994 Hikers in the woods are far more likely to wear a bell to deter bears than to take precautions against bees. But bears kill two to seven people in North America annually, bee stings kill 600 to 900. — Allan J. Davison, Chemical & Engineering News, 15 Mar. 1993 a mother bear and her cubs The bears outnumbered the bulls on Wall Street today.
Jeffrey is a truly independent thinker who is never afraid to make bold, out-of-consensus calls. That’s why I know when he takes the stage at the SIC, he will provide insight into much more than the secular bond bull market. I’m really excited to welcome Jeffrey back to the SIC, 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.
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
The Spanish government is about to fall after the Ciudadanos party decided to join PSOE (socialist) and Podemos in a non-confidence vote against PM Rajoy. Hmm, what would that mean for the Catalan politicians Rajoy is persecuting? The Spanish political crisis is inextricably linked to the Italian one, not even because they are so much alike, but because both combine to create huge financial uncertainty in the eurozone.
Once upon a time, there was a little-known energy company called Enron. In its 16-year life, it went from being dubbed America’s most innovative company by Fortune Magazine to being the poster child of American corporate deceit. Using a classic recipe for book-cooking, Enron ended up in bankruptcy with jail time for those involved. Its shareholders lost $74 billionin the four years leading up to its bankruptcy in 2001.
Sorry this is all over the place, but there are multiple converging streams here. And as DHB constantly reminds us, there is absolutely no reason to believe that in an economy built on gambling, scamming, and computer automated profit skimming, ANYTHING is going to accrue bubble-type benefits to just you and me, anytime soon. Least of all your house.
Americans are now so polarized that they “no longer share basic sympathies and trust, because they no longer regard each other as worthy of equal consideration.” Codevilla blames the progressives and their attitude of moral superiority, but his explanation is independent of who is to blame. I blame both sides. The Constitution and our civil liberties took a major hit from the “conservative” Republican regime of George W. Bush. Read More
This week’s collapse of the Turkish lira has dominated the headlines, and it is widely reported that this and other emerging market currencies are in trouble because of the withdrawal of dollar liquidity. There are huge quantities of footloose dollars betting against these weak currencies, as well as commodities and gold, on the basis the long-expected squeeze on dollar liquidity is finally upon us.
2. Assuming NO appreciation on the house, and ignoring my monthly home payments (only looking at initial deposit (investment) and my ending house value 30 years from now), I get approximately 5% real return in almost every scenario on the initial deposit. Varying inflation from 0% to 10% annually has wide impacts on nominal rates and final house values (assuming house keeps up with inflation), but the real value stays almost 5% annually in most case.
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?
Anya Parampil reports on the US stock market downturn which began on Wednesday, finding that the mini-crash has rippled throughout international markets. Anya talks to Peter Schiff, CEO of Euro Pacific Capital, and Bart Chilton, Host of RT’s Boom Bust, to discuss what’s behind the meltdown and whether or not it could evolve into something to more severe.
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
The economies of the world are at an inflection point. Enough data points have now presented themselves to be able to see the outlines of a major shift in the markets of the world. We are at a pay attention moment. There comes a time when a successful investor must make some hard decisions to position himself to be able to take advantage of opportunities down the road. The markets are telling us now is such a moment.
RATE AND REVIEW this podcasthttps://www.facebook.com/PeterSchiff/reviews/What About Employers' Day?Labor Day is coming up on Monday it it annoys me that we just have a Labor Day and we don't have an Entrepreneur Day. We don't have a day to celebrate the employer. Why is that? The entrepreneurs are the unsung heroes of the American economy. I'm ...…
syn: bear, stand, endure refer to supporting the burden of something distressing, irksome, or painful. bear is the general word and suggests merely being able to put up with something: She is bearing the disappointment quite well. stand is an informal equivalent, but with an implication of stout spirit: I couldn't stand the pain. endure implies continued resistance and patience over a long period of time: to endure torture.
Of course, in that event, the FED will probably stand ready to provide liquidity to market makers and banks, but now, after the shame of the 2007–2008 bailouts, they would face much more political heat if they do try to prop up the market now. So, they will likely hesitate and that means there first must be a panic… Unless Powell surprises me and preempts this and says next week that the FED will stand by to stabilize the markets.
Erik: I want to come back to something you said earlier where you described if Treasury yields were to double that would obviously double the government’s cost of debt service. And the cost of debt service was about the same as it is now, ten years ago. But it was half as much debt. So with twice as much debt, if we go back to ten-years-ago Treasury yields, we would double the cost.