Archive - Nov 1, 2015

Central banks can’t afford a big correction to take place as it goes counter to their mandate, a stable growing economy, hence they interfere every single time a correction of size is about to unfold. And any threat to the global economy must be prevented. Now that fiscal year end mark-ups are over for many funds buyers have to prove how committed they are to driving markets higher. Price will ultimately confirm how this will play out, but altogether this chart is an amazing construct of symmetry and, as fans of structures and symmetry, it certainly has our attention. We can’t recall ever seeing such a precise structure.

"Russia and Iran have very similar objectives in that they both want to eject U.S. influence from Iraq. Any success that the militias have bolsters that goal."

While redistributive social spending in the US is indeed different from many other countries, the overall magnitude is actually greater (both proportionally and in absolute terms) in the US than in almost all other countries measured. One can argue that the way that the wealth is redistributed through public policy in the US is "wrong" or "suboptimal." But, to argue that there is less redistribution as a result of public policy in the US than elsewhere is simply wrong.

• There have been 606 global rate cuts since LEH
• $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
• The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
• $6.3 trillion global government bonds currently yielding <0%
• $20.0 trillion global government bonds currently yielding <1%

In a shockingly quick confirmation of our gravest concerns, Admiral John Richardson, chief of naval operations, told The FT that the navy was reassessing its global posture in the face of the Russian activity, which stretches from the Black Sea and Mediterranean to the Pacific. Amid China's island-building in the South China Sea (30% of global trade), and Russia's highest level naval activity in 20 years in The Mediterranean (20% of global trade), Richardson warns, rather ominously, the "ambiguous motivations" of China and Russia raised fears about the health of a global system that ensures freedom: "It again perturbs that global system," he said, adding that "the current model... has been threatened?"

The now immortal line spoken by Clint Eastwood as "Dirty Harry" (1971 Warner Bros.) has never fit as a descriptor these financial markets more so than it does today. For if you believe you’re investing as opposed to gambling? These markets are now poised to show everyone the difference.

Epic fail...

The investment thesis for gold has never been limited to popular relationships, such as CPI-type inflation, financial meltdown or political instability. We prefer to focus on the irretrievable gap between financial assets (claims on future output) and productive output (GDP). In essence, the most compelling reason to own gold is that financial assets have lost their underpinnings to sustainable productive output.

With the trick-or-treat-fest over, Americans will be shocked to open their credit-card statements at the end of the month and find it considerably higher than normal for this time of year. As American's consumer comfort has tumbled and economic data has plunged, it appears the 'average joe' has turned to one thing to make it all better - candy. Having soared 5.7% in September alone - the biggest jump since April 2012 - as broad CPI was unchanged, Candy prices in America have never been higher as, yet again, greed is good (especially when every part of your 'dream' is falling apart).

Booms powered by credit, new markets and speculation are followed by busts as night follows day. This creates a very difficult test for every nation-state facing the inevitable bust: how does the leadership deal with the end of the boom? As the world is about to learn once again, the "fix" may make the next bust even more destructive.

Either i) state-sponsored terrorism is effective at scaring the electorate, ii) the vote was fixed, or iii) both...

From best bank to totally broke and freezing clients’ accounts in less than one year. Could this happen in the US?

The most anticipated economic release over the weekend was the early glimpse into China's manufacturing and non-manufacturing sectors via the two key PMI surveys released by China's National Bureau of Statistics, to get a sense if the slowdown across China is stabilizing or, as some have suggested, rebounding. It did not: overnight the NBS reported that the manufacturing PMI remained unchanged in October at 49.8 missing consensus estimates of a modest rebound to 50.0, its third consecutive month in contraction territory.