Archive - Sep 2015

Just like in 1929, The Dow just dropped 13%, bounced, and is retesting the lows...as all the 'experts' comfort a restless investor crowd. So what happens next?

Thousands of investors with stop-loss orders on their ETFs saw those positions crushed in the first 30 minutes of trading last Monday, August 24th. Seeing a price blow right through your stop is perhaps the worst experience in all of investing because it seems like such a betrayal. “Hey, isn’t this what a smart investor is supposed to do? What do you mean there was no liquidity at my stop? What do you mean I got filled $5 below my stop? Wait… now the price is back above my stop! Is this for real?” Welcome to the Big Leagues of Investing Pain.

Back in May we highlighted a study from Georgetown that endeavored to show which college majors were most likely to help students land high-paying jobs upon graduation. The report was unequivocal. To wit: "STEM (science, technology, engineering, and mathematics), health, and business majors are the highest paying." Here's where to look for lucrative STEM employment.

"The room to ease policy further, i.e., to adopt counter-cyclical policies, is now much more limited than in the past. To the contrary, in some cases monetary tightening may be needed (despite weaker real business cycles) in order to continue to attract foreign capital, anchor domestic currencies and preserve the integrity of the respective inflation targeting frameworks. Hence, we may soon enter a period of weaker FX and higher policy and market rates: i.e., market dynamics that would resemble more the 1997 Asian Financial Crisis."

The most incredible aspect of Hillary’s e-mail scandal is the media’s total dismissal of a simple fact — Hillary DID NOT use the government’s e-mail system — she used her own. She claimed she was unaware that you could have two e-mails on one phone. That alone shows that she is not qualified to be president.

Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero interest rates policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.  A rate hike with a stroke ends this era.

"Time will tell who is right. But remember that we live in an era where computer trading dominates the American stock market. The "robots" that are making a lot of trading calls aren't sitting around pondering China's economy. They are paying attention to whether stocks fall below key levels. What are those levels? No one knows exactly. But these two metrics are worth watching. If these thresholds are crossed, both computer and human traders will consider it a game-changer point."

Sunday night looms...

We can look at official statistics to get a sense of inflation, but these numbers are totally meaningless. When I was a kid, my father earned enough money to support his family with a single salary. We had a house, a car, an occasional vacation, and we never missed a meal. All on one income. But those days are long gone. Now it’s almost obligatory to live in a dual-income household just to make ends meet. The official statistics never paint this picture.

In yet another somewhat surreal twist in The Donald's path to The White House, Fox Business reports the long, sometimes contentious relationship between Donald Trump and Steve Wynn has taken another turn, with the Las Vegas casino magnate serving as an unofficial adviser to Trump’s presidential campaign. Having known each other for 30 years, Fox's Gasparino notes that they have clashed in the past (Wynn on Turmp in 1998 "He's a fool," and Trump on Wynn "he's a very strange guy.") but in recent years both have been critical of the leftward tilt of the Democratic Party and president Obama.

Things were already bad enough for emerging markets going into August. Persistently low commodity prices, slumping demand from China, depressed global trade, and a “diminutive” septuagenarian waving around a loaded rate hike pistol in the Eccles Building had served to put an enormous amount of pressure on the world’s emerging economies. And then, the unthinkable happened.

For most of us, the image of a serial number on a forearm conjures up indelible images of 1940s Germany, but it seems this is not the case for the Czech police, who adopted the controversial practice earlier this week.

Early last month, we noted the irony inherent in the fact that Saudi Arabia, whose effort to bankrupt the US shale space has been complicated by the Fed's ZIRP, was set to opportunistically tap the debt market in an effort to offset a painful petrodollar reserve burn. As Bloomberg reports, Qatar is now doing the same, "raising money from local banks as the slump in oil prices buffets the finances of the Middle East’s largest oil and gas exporters."