Archive - Oct 31, 2014

When it comes to Ebola, the story that the government is telling us just keeps on changing. At first, government officials were claiming that it was very difficult to spread the Ebola virus. Some of them were even comparing it to HIV. We were given the impression that we had to have “direct contact” with someone else’s body fluids in order to have any chance of catching the virus. But of course that is not true at all. Now authorities are admitting that Ebola is “aerostable”, that it can be “spread through droplets”, and that it can remain on surfaces for up to 50 days. That is far different information than we have been getting up until this point.

At what point does revolution take place? In our review of history, the probability is low but for the economic trend. In other words, turn the economy down and the percent of discontent rises exponentially. So beware – not ghosts and goblins, but politicians going forward. The problem is not that Americans are ignorant, they are being fed nonsense by the media to sell newspaper and TV advertising. We have fallen into a cycle of Yellow Journalism that was begun by Pulitzer. So perhaps Americans will wise up only when the economy turns down and the Internet provides a greater proportion of real news compared to mainstream media.

When central bankers go wild...

Marty Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it was known as the "junk bond" market — and he sees as much as $1.6 trillion in high-yield defaults coming in a surge he expects to begin soon... “And this is not based on an apocalyptic forecast,” he warns.

Amid record unemployment, even recorder youth unemployment, and politicians willingly breaking EU treaties (with apparently no consequences), it appears - just as in the US - police brutality in France was the straw that broke 'Le Camel's back. As RT reports, another anti-police brutality protest turned violent in the French city of Rennes, with masked youths and police engaging in running street battles. The unrest follows the death of a young environmental activist earlier this week. Overnight Thursday, protesters in the northwestern city lobbed flairs at police and flipped over cars, some of which they set ablaze. Police responded by firing tear gas. We hear guillotines are still cheap on ebay.

“Kuroda loves a surprise - Kuroda doesn’t care about common sense, all he cares about is meeting the price target,” Folks, look-out below.  As George W. Bush said in another context... this sucker is going down!

Back in late September, we posted what Albert Edwards thought at the time was "The Most Important Chart For Investors" which was quite simply, a chart of the USDJPY.  Considering the BOJ's overnight move, he was absolutely correct. So for all those who missed it, here it is again, because it explains not only where the Yen is headed next, but why, sadly, this could well be the end of Japan and the mirage of a recovery that has had everybody hypnotized for the past 6 years.

Over the last 2 days, more than two dozen Russian military aircraft, in four groups, were tracked and intercepted conducting aerial maneuvers around Europe, according to NATO. As The Wall Street Journal reports, this activity is on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown. "There is a troubling trend... of sabre rattling" warned The White House, noting that NATO has intercepted over 100 incursions by Russia year-to-date to which the US Army chief of staff ominously warned, this is "Russian aggression," and "we have to reassure our allies."

"We are all wrong so often that it amazes me that we can have any conviction at all over the direction of things to come. But we must." - Cramer

"Seek not the favor of the multitude; it is seldom got by honest and lawful means. But seek the testimony of few; and number not voices, but weigh them." - Immanuel Kant

An offshoot of 'Occupy Wall Street' is taking the $1.2 trillion student loan bubble, debt servitude dilemma of America's youth into its own hands... bit by tiny bit. As The BBC reports, activist group 'Rolling Jubilee' wants to "liberate debtors" by buying student-debt-bundled ABS on the secondary market (where they trade at significant discounts) and writing off the underlying loans. As Rolling Jubilee notes, "your debts are on sale... just not on sale to you," until now.

Bankruptcies in Japan more than doubled in the first nine months of 2014 compared with the same period a year ago. Japan has embarked on a radical monetary experiment to spur inflation. But it may backfire and lead to stagflation and in a worst case scenario a German ‘Weimar’ style hyperinflation ...

As faces are filled with chocolate on All Hallow's Eve, we thought this evening's reading list should maintain the focus of "scary" ponderances now that the Federal Reserve has ended their latest monetary iterations.

Remember, it's for your own good...

From a market perspective the move today was almost perfectly timed coming on the heels of a Federal Open Market Committee meeting which ended quantitative easing and expose the big difference on future monetary paths between the BoJ and the Fed. There is, however, a dark side to this big move.. telling a story of how central banks, even the desperate ones like BoJ, are and remain one-trick-pony institutions: "this is the final round – Japan was ALWAYS going to give it one more shot – now it happened."