Archive - Jan 14, 2016

A financial oligarchy has seized control of the country, and, since it can't control its own appetites, is running it into the ground. Thus, it would make sense for it to have some sort of back-up plan for when the whole financial house of cards falls apart. Ideally, this plan would effectively put down any chance of revolt of the downtrodden masses, and allow the oligarchy to maintain security and hold onto its wealth. Peacetime is fine for as long as it can placate the populace with bread and circuses, but when a financial calamity causes the economy to crater and bread and circuses turn scarce, a handy fallback is war.

It's been a roller coaster year for China's legions of semi-literate day traders who have seen the heights of feast and the depths of famine with Chinese equities over the past 12 months. Now, in the wake of more volatility, many Chinese retail investors are throwing in the towel. 

Just when Hillary Clinton thought her political fiascoes would be the worst of her ongoing troubles as she glides through the Democrat primaries, and then takes on Trump sure to find a Warren Buffett-funded victory, suddenly everything appears to have gone wrong in what is most important to the scandal-ridden former Secretary of State and presidential contender: her second - and final - campaign for president.

"The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better."

"The Alberta Public Service is made up of hard working and dedicated women and men who do valuable work each and every day in the service of Albertans. However, to maintain stability and protect jobs within the public service, we must deal with the economic realities we’re facing.”

Having made its warning to the Fed loud and clear ("if you hike or otherwise push the USD any higher, we will crush your markets by devaluing the Yuan against everyone but mostly the USD"), the PBOC continued the fragile ceasefure between the world's two most powerful central banks, when moments ago it kept the onshore Yuan virtually unchaged, by weakening today's fixing by 0.03% to 6.5637. However, as can be seen on the chart below, this has barely even registered.

Periods of transition between “rising powers” and “declining powers” have been described in terms of the so-called Thucydides Trap, when fear within a static or declining power (historically, Athens) of a rising power (historically, Sparta) makes war seemingly inevitable. The phenomenon today applies not only to the China-U.S. dynamic - as has been widely remarked - but to the Middle Eastern imbalance, the “north-south” imbalance, and so on. Accompanying this sliding vertical scale of strategic power balance is the sliding horizontal scale of population volatility and movement, characterized by the breakdown of the Westphalian nation-state concept.

When markets begin a "bear" cycle, they can remain in an oversold condition for extended periods. There is an important 'truism' to remember - "Markets crash when they’re oversold."

"Your fund made 5.6% net last month, to finish the year up 20.45% net. Gains came from the short book.... Your fund remains long bonds, short equities."

"You see a big destruction in the income of the oil and commodity producers," exclaims on analyst but, as Bloomberg notes, while oil prices flashing across traders' terminals are at the lowest in a decade, in real terms the collapse is considerably deeper. Adjusted for inflation, WTI is its lowest since 2002 and worse still Saudi Light Crude is trading at below $17 (in 1998 dollar terms) - the lowest since the 1980s...

Santelli rages "the notion that a small group of people should control the price of money should be under review," adding that "if stocks are rallying because The Fed is retreating, we certainly will turn into Japan."

Following a comprehensive review of China's housing market, we now realize it's much worse than the consensus understands.

• Don’t let the Bear send you into a panic frenzy
• Using a typical hedge strategy with options and futures
• Taking advantage of lower prices to rebalance your portfolio

Bear markets when they happen are never a pleasant event for any investor. Long only investors especially tend to be the worst hit. If you are wealthy enough to invest in Hedge Funds you may be damaged less, if you chose the right managers and the right strategies.