Archive - Apr 2015

What could possibly go wrong? Clearly having not learned their lesson from 'interfering' in free markets (and all the deflation-creating over-supplying, crony-capitalizing, taxpayer money-wasting malinvestment that goes with it), NBC News reports, The White House has announced a goal to train 75,000 workers in the solar industry by 2020, many of them veterans. In a sentence only President Obama could utter, he explains "these are good-paying jobs that are helping folks enter the middle-class." Climate 'fixed', folks 'fixed', veterans 'fixed' middle-class-economics 'fixed'... and we are sure it will be unequivocally good for America (until trade wars pick up once again).

While equity futures are modestly higher compared to Friday's early 9:15 am close, where only a short, 45 minute long bloodbath was allowed on Good Friday after the worst jobs report in two years, the one asset class that has moved the most by far this evening is gold, which has spiked by 1.5% and is on the verge of breaking out above the resistance level that has proven a tractor beam to any momentum breakout over the past 2 months.

"This is not going to be a 1921-style two-year recession that we bounce back from after a little bit of pain and unpleasantness. After a 50-year global economic boon involving what is now a $59 trillion expansion of credit in 50 years, this isn’t going to be a one or two-year hard recession. This is going to be a multi-decade global depression and I’m not sure that anyone alive today would live long enough to see the recovery."

"Vacation-home sales account for one-fifth of all home sales and 'that should more or less rise over the next five to 10 year' as the income and number of vacation-home buyers increases," Moody's tells WSJ. That's good news because with America's "supervisory" wages on the rise and with Russian oligarchs dissatisfied with their domestic situation, a healthy market for "secondary" residences may prove critical.

There are times when not only truth is stranger than fiction, but also, when serendipity coincides with moments that are branded into the pages of history where they become the allegory of the times. Sometimes its hard to judge or pick just one. Reason being they’ll seemingly come one right after another instead of that just one, almost surreal, moment. There’s no better illustration of these than the dreaded “front page magazine cover” proclaiming not only that the good times are here; but rather, the far more important underlying premise: they’re here to stay and will only get better! All the while insinuating – to worry about anything is a fool’s errand. i.e., “everything is awesome!”

Got Pen, Will Govern Dictate...

The higher financial markets rise, the harder they fall. It would be one thing if stocks were soaring because the U.S. economy as a whole was doing extremely well.  But we all know that isn’t true. The warning signs are there – if you are willing to look at them.

Dmytro Yarosh, leader of ‘Pravyi Sector’ (aka Right Sector) political party, whose ideology has been described as nationalist, ultranationalist, neofascist, right-wing, or far right, was just appointed as Advisor to Chief of General Staff. Yesterday, Colonel General Viktor Muzhenko, Chief of General Staff, and Dmytro Yarosh agreed the format of cooperation between ‘Pravyi Sector’ and the Ukrainian Armed Forces. In other words, the Ukraine army just launched a joint-venture with the local neo-fascist groups.

"I want to believe that there is no such risk," says Cypriot President Nikos Anastasiades, but in a shock to the Greeks, their close 'ally' in Cyprus, as KeepTalking Greece notes, openly joined the international Grexit propaganda club, as Anastasiades said his country had a backup plan to deal with the fallout of a possible Greek exit from the eurozone.

Surprisingly, the flow of crude oil is still accelerating, much like the money going into crude oil funds. Three of the largest crude oil funds include USO, OIL, and UCO. UCO is unique due to the fact that it’s an exchange-traded fund that uses leverage, mostly in the form of derivatives, to correspond to twice (200%) the daily performance of its underlying benchmark, the Bloomberg WTI Crude Oil Sub-index. Many large financial institutions have large stakes in UCO and thus are still betting that crude oil can make a comeback beginning in 2015.

With 30% of the 'money' in Chinese stocks officially 'dumb money' and leverage of epic proportions, it is hardly surprising that the wealthiest of wealthy are - allegedly - taking advantage. As the broad Chinese stock market has surged, Hanergy Holding Group - the world's largest solar power company - has seen its stock price triple in a few months with late-day surges driving a lot of the gains. Amid accusations from the industry, Hanergy's chairman, Li Hejun - among China's wealthiest - has denied manipulation of its stock price, suggesting the public's recognition of the thin-film power generation's prospect is the reason... sure...

With China's economy facing an imminent hard-landing unless it succeeds in stabilizing its housing sector, what is China doing? The same thing that the US has been doing over the past 7 years using such traditional propaganda pathways as mainstream media and Financial TV outlets such as CNBC, however with an emphasis on real-estate instead of stocks: it has unleashed an unprecedented propaganda onslaught by its "Department of Truth" urging China's population to drop everything and back the truth up with a brand new Chinese house... or second... or third. Because unless it succeeds to get the local population to jump right back on the housing bandwagon, the hard landing beckons.

It is impossible to overstate the magnitude of the warfare-state revolution that transformed the federal government and American society after World War II, but  modern-day Americans continue to remain convinced that their system of government has never changed in a fundamental way. They continue to play like their governmental system is founded on the same constitutional principles as when the country was founded. It is a supreme act of self-deception. The truth is that America has now had two different governmental systems: One without a national-security apparatus and one with it. It seems to us that it’s a no-brainer as to who was right and which system was better in terms of freedom, privacy, peace, prosperity, and harmony.

The amount of non-GAAP addbacks boosting the S&P "earnings" to their latest quarterly high has never been greater. In fact, the last time the absolutely notional value of pro-forma addbacks was anywhere near this close was in the Lehman "kitchen sink" quarter, when companies took advantage of the biggest bailout in capitalist history, to square their fudged income statement and balance sheet with accounting reality, resulting in an addback that was greater than the actual GAAP print!

A dispassionate look at the drivers of the investment climate in the week ahead.