Archive - 2014

“Radioactive gigantism of the risk scrotum"!

US Treasury yields broke down sharply Friday, confirming a near-term, potentially medium-term, turn in trend; and, as BofAML's Macneil Curry notes, this Treasury turn should prove to be a headwind for select USD pairs, (although BofAML remains bigger picture USD bulls); particularly USDJPY. However, the weakness in the Canadian USD - which was the only currency not to rally against the greenback on Friday - suggests the downtrend in the Loonie has significant legs. Precious metals - most notably silver - could also benefit from the Treasury trend change.

In the last 3 years, the volume of options quotes (not trades) in the first few seconds of the US equity market's open has exploded. From around 1 million quotes in the first second of the day in 2011, Nanex' detailed animation shows that volumes are now reaching 4 million quotes. Does this quote spam look like it provides liquidity? Wondering why the opening price action in US equity markets has become incredulous in recent months - with vertical dump-and-pumps - wonder no more... 'efficient' markets indeed...

Following Japan's proclamations that it will take over another 280 'disputed ownership' islands, it appears the increasingly dis-approved of Prime Minister Shinzo Abe's path of militarism and provocation is working. As China Daily Mail reports, citing experts, China intends to take back Zhongye Island - 'illegally' occupied by the Philippines, according to the Chinese. The Chinese navy has drawn a detailed combat plan to seize the island and the battle will be restricted within the South China Sea. Philippines military is building up on the island and the Chinese see as 'intolerable' the "arrogance" relying on US support. It seems the Obama administration may have to 'not take sides' in another fight soon.

... We have created an apparently wonderful economic model that seems to provide us with so many benefits. When you consider the incredible feats of technology and the global consumerist lifestyle we enjoy it is easy to marvel at what has been achieved. Of course what may be less obvious is the dark side of the growth economic model which is deeply inequitable, restricting its benefits to the relative elite in the western world and trapping the rest of the world in poverty. Most dangerous of all is the unsustainability of the model and where it is taking us in the future. There is now a perfect storm gathering that includes economic indebtedness, resource shortages, population pressures, and climate change that is guaranteed to derail civilisation. Despite this the political and economic mainstream are largely in denial about what is happening– like the hapless engineer and politician in the story everyone agrees that we must restart the ‘growth economy’ and continue to progress down the business as usual pathway. Very few people are taking the long term view and watching the direction towards doom that this pathway leads us. Too invested in the benefits of our current lifestyle, no one wants to hear the counsel of the philosopher who sees the disaster that looms ahead.

With tensions raging in Asia (and the Middle East) and the anniversary of the start of World War I drawing closer, we thought it contextually useful to look at World War II from a different (and more broad) perspective. This History Channel documentary shows - using an all-seeing CGI eye - a satellite view of the conflicts, allowing you to experience it in a way that places key events and tipping points in a global perspective. By re-creating groundbreaking moments that could never have been captured on camera and by illustrating the importance of simultaneity and the hidden effects of crucial incidents, the war's monumental moments in never- before-seen context. And with new information brought to the forefront, you'll better understand how a nation ranked 19th in the world's militaries in 1939 emerged six years later as the planet's only atomic superpower.

As we embark on a new year, it's important to keep the really big elements of our global predicament squarely in mind. At the heart of the resource depletion story that Peak Prosperity tracks so expertly is the number of people on earth competing for those resources. The global population is more than 7 billion now and headed to 9 billion by 2050. If world population continues its exponential growth, when we will hit planetary carrying capacity limits with our key resources (or are we already exceeding them)? What are the just, humane, and rights-respecting options that are on the table for balancing the world’s population with the ability of the earth to sustain it? Population management is an inflammatory issue. It's nearly impossible to discuss without triggering heated emotions, and rare is the leader who's willing to raise it. And by going unaddressed globally, the risk of problems created by overpopluation grow unchecked. War, poverty, starvation, disease, inequality...the list goes on. Simply put - We are eating into the capital to sustain the growing population.

Doing some detective work. 

When work is punished and the only policy tools left for a nation of must-sustain-the-credit-is-growth-Keynesian-state-wreck-status-quo believers, there can be only one outcome in the war on poverty in America... "promise zone" or no "promise zone"...

If you’ve ever sought advice from a financial advisor, you probably asked the question: “How much of my portfolio should I hold in stocks?” Somewhere in the answer, you were probably offered long-term return estimates. These estimates probably placed stock returns at approximately inflation plus 5 or 6%. But what if standard estimates are too optimistic, as they were in the 1990s when advisors typically predicted double-digit long-term returns? Shouldn’t this change your investment allocations? We’ll argue that the usual estimates are overoptimistic, and that investment allocations should be based on more realistic expectations. Worse still, the discrepancy has reached enormous proportions.

Rising U.S. inflation expectations ... suggesting inflation is around the corner. But we're not buying it just yet.

Is it all about expectations about tapering, again?

With over 1,000 new merchants adopting Bitcoin every week, it is perhaps not surprising that, as NY Post reports, the first Bitcoin ATM is about to debut in New York City. Following success in Canada and Europe, Brooklyn native Willard Ling, 30, is set to introduce the first bitcoin ATM to New York City at the East Village bubble tea shop 'Just Sweet'. State regulators with the Department of Financial Services are expected to hold hearings later this month to discuss how the digital currency should be regulated; and until then, Ling’s bitcoin ATM will sit in his apartment.

Do I hold my nose and just buy, or do I get out now and protect myself from the Fed inspired asset bubble that inevitably gets pricked? 

Do I hold my nose and just buy, or do I get out now and protect myself from the Fed inspired asset bubble that inevitably gets pricked?