"This last 1900 point Dow Jones push upwards - and the Ebola events leading into it - it was so orchestrated and heightened at critical points but the ascent and push straight up in price, and sideways nonreaction after was completely unlike anything I've seen before. After going up for a record-breaking amount of time the last five or so years, in a nonlinear exponential mania type of ascent, there should normally be tremendous volatility that follows... After this year and especially this last 1900 point Dow run up in October, and post non-reaction, that I am 100 percent confident that that one buyer is our own Federal Reserve or other central banks with a goal to "stimulate" our economy by directly buying stock index futures."
Lately, we hear a lot about Orwell’s “1984? and Rand’s “Atlas Shrugged” but perhaps the best crystal ball to our current state of affairs is Plato’s Republic. You see both Rand and Orwell were describing a world outside of themselves. A world they couldn’t understand or accept. And while those works are brilliant and incredibly prophetic, I expect that to understand a world borne of narcissistic sociopathy one must examine the construct of such a world by a narcissistic sociopath.
Looking for answers to both financial safety as well as financial freedom in the same light or viewpoint where it seems one only needs to “think like a billionaire” or “tweak” or “slightly modify” perceptions on how one approaches these financial markets today – will hurt more than it will help. The Wall Street everyone believes they are dealing with today is just in name and memory. What made sense just 6 years ago not only doesn’t but rather if you try to apply any sense that resembles “common sense” you might as well be asking the Cheshire cat for a more straight answer. "How exactly are you handling the stresses and strains having to basically push sound fundamental theories or market underpinnings aside and now trade and position money at risk based solely on what some Central Bank will do next?" This is the avenue I wish Tony had driven or sought.
In the final part of Hugh Hendry's 3-part (part 1 and part 2 here) interview with MoneyWeek's Merryn Somerset the Sanguine Scot, perhaps surprisingly to some given his previous negativity - though fitting with his world view of fiat currency destruction - believes "to bet against China or Chinese equities, or the Chinese currency is to bet against the omnipotence of central banks. One day that will be the right trade, just not ready or sure that that is the right trade today."
As The West shows its fortitude (and apparent philanthropy) with mere 32-degree Fahrenheit ice-bucket-challenges, Russian chemistry professor Yury Zhdanov goes 290-degrees better...
Since 1987, all of the positive equity returns have accrued during these seven trading days, and the average returns during the rest of the month have been negative.
"The situation has become so bad... that a middle-aged investor, fearing that a local developer wouldn’t be able to make his promised interest payments, threatened to commit suicide in dramatic fashion last summer. After hearing similar stories of desperation, city officials reminded residents that it is illegal to jump off the tops of buildings."
Because nothing says "living The American Dream" like looting an abandoned Doritos truck in the middle of a Buffalo, NY snow storm...
"There is the risk that our exponential money system will cease to operate in a world of declining energy surplus. It is designed for a world without limits – a world of endless growth. And there is the risk that our society will be forced to become less complex - a loaded statement if ever there was one."
If anyone needed proof that golf and economics don't mix, it is the following two back-to-back tweets, one just sent out by Obama (or rather his teleprompter) attempting to do economics in under 140 characters, and the other describing what Obama is doing this very moment during his Las Vegas weekend trip.
The news this week of China's largest corporate bankruptcy - Haixin Iron & Steel Group - amid crashing iron ore and steel prices was followed by analysts noting it "will be followed by others," as the major flaw of producers of iron ore, the most traded commodity after oil, is they tend to be "over-bullish." Distressed debt funds are starting to circle in preparation for what they expect to be a bloodbath as Bloomberg reports, bad debts in China are well underestimated because authorities persist in propping up weak companies and bailing out local investors, according to DAC Management, "we've yet to see it because if you look at corporate defaults, they keep getting covered by the government. At some point, they can’t cover every single one." Most worryingly though, as KPMG points out, "when you see restructuring advisers getting hired by SOEs... you know it's coming."
The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.