Archive - 2013

If political protests focused on the real culprits of economic instability within their countries, then they could be immensely successful in bringing about real change. However, as long as they focus on distractions and the players of the game rather than the real culprits, politicians will continue to sell all of us "hope" and "change we can believe in" and continue laughing behind our backs all the way to the bank.

The world economy has experienced another year of subdued growth, having failed to meet even the most modest projections for 2013. Most developed economies continued trudging along toward recovery, struggling to identify and implement the right policies. Meanwhile, many emerging economies encountered new internal and external headwinds, impeding their ability to sustain previous years’ economic performance. Nonetheless, some positive developments in the latter part of the year are expected to gain momentum through the coming year. But the global economy is still subject to significant downside risks. In short, while the global economic outlook for 2014 has improved, policymakers worldwide must remain vigilant about downside risks and strengthen international cooperation. Developments in 2013 provide strong incentive for policymakers to do so.

While the US consumer is rushing to spend what little savings they have left and grab that last for 2013 "X% off" deal from the local inventory-clearance bin on plastic Made in China trinkets or marked-down clothing, Chinese consumers are likewise scrambling to buy products. Only, unlike in the US, the object of China's affection is not some gizmo that will end up in the local landfill within 3-6 months. China News Network shows what it is.

With an ever-rising number of 1%-ers in the public eye for less-than-god's-work-like behavior, Town and Country magazine knows it can be tough dressing for court when nothing in your closet is off the rack! Here are some fashion strategies for the wealthy and notorious as they approach the bar... the dock is the new red carpet and one must, must find the balance between Brioni and bankruptcy... or Couture over Kevlar...

While some individual stocks (cough TWTR cough) may have reached irrational bubble territory, the US equity market is undergoing a seemingly 'rational' bubble. However, as John Hussman illustrates in the following chart, the probability of a stock market crash is growing extremely rapidly.

The diva is already singing, the only question is how long they hold the note...

Propaganda, phony fixes and more debt can only cover the widening gap between fiscal reality and official fantasy for so long. So what else besides the potential for another global financial meltdown bears watching in 2014? Here are a few worthy prospects... as we doubt the same illusions and tricks will get the global economy through 2014-2015 unscathed.

Government intervention, no matter what its form or intention, causes iatrogenics — unintended negative consequences that hurt the very people they’re intended to help. Nowhere is this better exemplified than with Obamacare, a policy intended to bring insurance to all that has in effect taken it away from many. Perhaps the growing coalition of people recognizing this paradox will take this revelation and apply it to other policy arenas as well. For the affected classes, we can only hope.

The end of the year is peak trash season across America as the Environmental Protection Agency estimates Americans produce around 25% more waste around the holidays than other periods. As the WSJ notes, Christmas isn't so pretty on the back end. The additional garbage—which adds up to over one million tons of waste—includes food scraps, cutlery, wine bottles, wrapping paper and Christmas trees; but Online sales add a thickening layer of refuse. In recent years, as more consumers have taken to buying online, the volume of corrugated cardboard boxes, air-filled plastic pockets and Styrofoam pellets in trash has grown. The rise is unprecedented as corrugated cardboard boxes account for as much as 50% of the paper product waste from some nearby towns, versus less than 20% a decade ago.

Money is only as useful as to what it can purchase. The Fed has created a system where debt is now equal to money.  This is why big purchases like cars, housing, and even going to college are only feasible by mortgaging your future for many decades. Since the payments are broken down into tiny monthly installments many people pay little attention to the true cost of things over their lifetime. Yet, as MyBudget360 shows, over time, the U.S. dollar has lost a tremendous amount of purchasing power due to inflation. Inflation slowly eats away at your purchasing power yet having access to debt has given the middle class the false impression that they are still protected from the unraveling impacts of inflation. They are not...

The "do-nothing Congress"?

We are happy to announce that the job market is officially improving. It was almost exactly a year ago when we reported that Delta Airlines received 22,000 applications for about 300 flight attendant jobs in the first week after posting the positions outside the company. The applications arrived at a rate of two per minute. Said otherwise, the precious few lucky hires had overcome an acceptance ratio of 1.3%. Putting this into perspective, the acceptance ratio at Harvard, the lowest of any university, is 5.9%. Fast forward to today and once can clearly see an improvement: over the weekend, Southwest Airlines Co. which last hired flight attendants from outside the company in 2011, received applications at a rate of only 80 a minute, getting a paltry 10,000 resumes for 750 openings.

Despite the mainstream media's premature exuberance over the 10Y yield breaking above 3.00%, it didn't (according to Bloomberg) but that didn't stop it from closing as close as it can get to the high yields of the year (and back to July 2011 levels) at 2.9905%. The USD drifted getly lower with GBP and EUR strength the biggest drivers. Commodities saw Gold and even more Silver jump at the open then drift while copper and oil limped higher. Volume in stocks was 20% below last Boxing Day which provided the perfect recipe for a VIX smack-down, slow meltup rally to new record-er highs.

It seems not only is the "market" adhering to the lower-left-to-upper-right mentality of newsletter-writers a little too literally but it it would appear we have found the limit of Birinyi's ruler... Behold the Dow Jones Industrial Average on the straight-and-narrow. Because, when there's no dip to buy, you BTFATH...

Imagine, if you will, that you and your 15 closest unarmed, civilian friends are celebrating a young couple who has just started their lives together, and are on your way to their wedding party, when all of a sudden a remote-controlled US killing machine drops several air-to-surface tactical missiles on your group and kills you before you have a chance to blink. Macabre as it sounds, this is precisely what happened in the conflict-torn (courtesy of the CIA) republic of Yemen last month when a US drone mistakenly killed 15 people.