Archive - Nov 6, 2014

"The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better." - Ron Paul

Yesterday higher oil prices were the catalyst for higher stock prices. Today lower prices - after OPEC slashed growth expectations - were "unequivocally" positive for Americans and sent Trannies soaring.  Of course, it was Draghi's promise that there's more to come that sustained USDJPY's levitation and thus stocks. Treasury yields slid 2-4bps higher on the day as the USDollar surged to +1.2% on the week after Draghi's chatter slammed EURUSD below 1.24. Gold and silver were flat (despite USD strength) as oil prices dipped to $78. HY credit diverged notably after EU closed as managers appeared to protect bond positions into the jobs data. VIX pumped then dumped and cracked back to a 13 handle as stocks closed at record highs (right before the uncertainty of tomorrow's NFP).

What a difference a day makes...

Saudi Arabia’s move to cut the cost of its oil to US customers has injected fear into the oil markets, bringing the price of OPEC crude below $80 and suggesting to some observers that the cartel is preparing for a global price war.

Every now and then a person comes along who completely redefines the concept of "buying sight unseen." That someone is longtime Cape Coral resident William Wilson who, at a foreclosure auction on Monday, purchased the house on SE 19th Lane with rusted iron gates on each window and every entrance. Four dead-bolts were chained at the front door. He paid $96,000.  So far so good. He arrived the next morning to evaluate his purchase, trim the hedges and mow the lawn. What he found inside was a body.

Riot police clashed with demonstrators in the Belgian capital of Brussels on Thursday amid a massive protest against government plans to reform the country’s welfare system. This comes on the heels of violent French, Italian, and Spanish youth protests in recent weeks as the citizens of the non-Germanic European Union decry the 'austerity' they have been crushed by. What is odd, though, is externally, there has been 'no' austerity with debt loads rising for all these nations and debt/GDP at record highs for most. So where is the disconnect between a people under increasing financial pressure and a sovereign issuing more and more debt at will? The Telegraph has the stunning answer: an audit, published this morning, found that £109 billion out of a total of £117 billion spent by the EU in 2013 was "affected by material error”. Brussels accounts have not been given the all clear for 19 years running. In other words, Brussels 'embezzles' billions of euros per year, and blames it on austerity. Is it any wonder, Europe is burning?

It there is a better anecdote for everything the IMF stands for than the hedge fund of its former head, disgraced Dominique Strauss-Khan, going broke days after his partner, Thierry Leyne, 49, commits suicide in Tel Aviv under mysterious circumstances as reported previously, and subsequent revelations exposing at least one instance of fraud at the financial firm, we have yet to hear it.

Not paying attention to the symptoms, failing to diagnose the problem and not taking any defensive actions will ensure that investors fall victim to the full-blown effect of any 'illness'. Even minor colds can have a lasting impacting on portfolio performance over time, and making up previous losses has never been a prescription for long-term financial health. Is this a "suckers rally?" Maybe, but only time will tell. However, taking some action in portfolios to reduce risks, take some profits, and rebalance your allocation model is always a great way to prevent coming down with a "cold."

Fun-durr-mentals...

"Olive branch" or "death stare"? We noted the agenda that is on The Repuiblicans' minds last night, now Speaker Boehner puts Obama straight...

Being 2 for 2 in losses this week (The US Election and Time's "world's most powerful person), it appears President Obama has fallen back on his regulatory army to take the fight to Vladimir Putin. As WSJ reports, U.S. prosecutors have launched a money-laundering investigation of billionaire Gennady Timchenko - a member of Putin's inner circle. The allegations are that Timchenko (who was among the first Russian businessmen to be sanctioned by the U.S. following Russia’s intervention in Ukraine’s Crimea region) transferred funds linked to allegedly corrupt deals in Russia through the U.S. financial system. The probe is also examining whether any of Mr. Putin’s personal wealth is connected to allegedly illicit funds. Timchenko warned in August, "there are reasons to be seriously afraid of provocations from the U.S."

At the end of 2008, the U.S. Federal Reserve embarked upon a monetary policy so extreme and so reckless that it had to invent a (new) euphemism for what it was doing, since if it simply used the old euphemism, even the puppet-politicians of the U.S. government would have rebelled at this monetary insanity.

Confused how your cost of living increase is always orders of magnitude above the "inflation" reported by the BLS' Consumer Price Index? Then prepare for your daily dose of Keynesian epiphany, with this step by step guide from the BLS of how to use the Hedonic Quality Adjustment to turn a 400% price increase into a 7.1% decline.

In the old days, maybe 6 or 7 years ago, there was a reason high-yield bonds had a high-yield... because they were 'risky'. Now, thanks to the transformative efforts of the world's central banks, there is no risk anymore and Rwanda has figured that out. As AllAfrica reports, Rwandan sovereign wealth fund money is being invested in high-yield instruments so that it can grow and be used to fund the country's development projects. "This way, the Fund will grow faster and will be used to support development projects sooner," says the fund's CEO. What could possibly go wrong?

"Central bank policies are no longer about the general state of an economy, or about jobs numbers, they’re about the threat of specific price levels. Now, I think that unlike the western press, Yellen and Draghi and other central bankers are acutely aware of what Kuroda stated yesterday. But perhaps I give them too much credit."