Archive - Jun 2015

This is an eventful period for EU-Russia gas relations. How should the most recent evolutions of the Russian waltz of pipelines be interpreted? There are three possible scenarios...

One of the most stunning data points of the ponzi bubble called Chinese Stock Markets has been the greater-than-exponential rise in the opening of new retail stock trading accounts in the last few months. If ever there was a better indicator of speculative excess or a government policy out of control, it was the pace of new account openings. So... when we discover that after 8 years of weekly data provision, China Securities Depository & Clearing (CDSC) Corp has decided to discontinue the time series - it is clear China is getting very worried.

Any economic intervention, no matter how slight, causes unintended consequences. There are things that you cannot see, that the planner cannot anticipate. There are also easy ones...

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

White? check. Woman? check. "Poor Progressive"? hhmm....

The Greek case offers quite a relevant view into the world of 21st century monetary alchemy, because that is what it really amounts to.  What is left, however, is the worst of all cases; no recovery, no lending and now just more financial imbalance piled onto the same negative pressures and imbalances that never really went away. What is amazing is how short the attention of “investors” may be, and how they allow themselves to think monetary complexity passes for proficiency or even expertise despite all and continued observation otherwise.

There has been an odd trend of late in stock sentiment readings. Despite major averages that are near all-time highs, sentiment has dropped considerably across many of the measures we track. One such example comes from options trading on the VIX. The interesting thing about present conditions in VIX options is that the Put/Call Ratio (using a 21-day average) is at the lowest level since the summer of 2008. That means that there are more bets on a rising VIX versus bets on a falling VIX than we have seen in 7 years. And again, a rising VIX is associated with bad markets. Contrarians would say this is extremely bullish but history shows it is anything but...

Why the Beveridge Curve has shifted..

We decided to do a little research to find out the size of different investable asset classes globally, to try to get some color on the money flows in this extraordinary period. The data is from various dates from 2013 to 2014, but the differences don’t matter much.

Strong Conviction + Low Volatility + High Levels/Low Costs of Leverage [irrespective of Dodd-Frank] + More Absolute Capital at Risk + Increased Concentration of “At Risk” capital + “Doing the Same Thing" = combustible market cocktail.

Trying to make sense of the global capital markets.

Amid criticism from Washington, Beijing has embarked on a propaganda campaign to show that despite attempts by the US and its regional allies to cast aspersions, island life in the Spratlys is all about girls, gardening, puppies, and pigs.

All of this babying creates incompetent, fearful adults. Our children have been enveloped in this softly padded culture of fear, and it’s creating a society of people who are fearful, out of shape, overly cautious, and painfully politically correct. They are incredibly incompetent when they go out on their own because they’ve never actually done anything on their own. Raise your hand if you survived a childhood in the 60s, 70s, and 80s that included one or more of the following, frowned-upon activities...