Archive - Oct 2014 - Story

It's sad to say with such finality, but a universal fact of existence is that most of the people you meet in this life are fundamentally and functionally ignorant. Entire nations have fallen throughout history because of this terrible weakness... By extension, such ignorance is not just an inherent disease but also an easily exploitable disease. The disease of ignorance leaves us vulnerable to many other plagues, including literal plagues like the Ebola virus. When we take the establishment at its word concerning the threat of Ebola outbreak, we make ourselves vulnerable. When people assume that the worst could never happen to them, history shows us that it inevitably does.

Investors worldwide poured a net $15.8 billion into bond funds in the week ended Oct. 8. As Reuters reports, this is the biggest inflows in dollar terms since records began in 2001, according to EPFR Global. Money market funds also saw the biggest inflow since October 2013 as it appears the real great rotation is from stocks (biggest outflows in 9 weeks) into 'safe' assets. The up-in-quality, and up-in-capital-structure trade is alive and well, as BofA notes, investment grade inflows exploded as high-yield spreads widened further - now at one-year wides (despite small inflows). "Money is flowing out of PIMCO," warned one analyst but as BofA notes, PIMCO flows are reported monthly and so it is unclear as to the extent these flows are "overstated."

Back in the 1980s, Irwin Schiff, anti-tax activist, political prisoner, and father of free-market pundit Peter Schiff, wrote a marvelous comic book titled How an Economy Grows and Why It Doesn’t, which teaches economic principles through a light-hearted story.

The comic starts with three islanders - Able, Baker, and Charlie...

While the memory of a financial market participant can be measured in nanoseconds, it appears that the average American has also become goldfish-like as RealtyTrac reports a total of 797,865 home equity lines of credit were originated nationwide, up 20.6% from a year ago and the highest level since 2008. As Jim Quinn so eloquently notes, after a two year Wall-Street-engineered fraudulent boost in home prices in the exact markets that led the bubble in 2003 through 2007, the delusional dolts are now acting like the increase in home equity is real: As RealtyTrac's Blomquist exudes, "this recent rise in HELOC originations indicates that an increasing number of homeowners are gaining confidence in the strength of the housing recovery."

Physical gold is being accumulated and used in exchanges but very discretely as of now. The geopolitical and economic environment in the last few months was in my view the calm before the storm. Both the economic and political environments are uncertain and will surprise the complacent markets.

The S&P is 5.5% off its all-time record (triple the 666 lows) highs (and still positive year-to-date) and this happened...

Too soon?

We have documented the history if individual metals before and we have also visualized their annual production. However, we have not seen all of the metals on one timeline before such as in this infographic. Worth noting is gold’s prominence ever since the beginning of history. Because the yellow metal is one of the rare elements that can be found in native form (such as nuggets), it was used by the earliest of our ancestors.

Despite the reassuring narrative from The West that Russia faces "costs" and is increasingly "isolated" due to sanctions for its actions in Ukraine, the most recent data suggests reality is quite different. First, capital outflows slowed dramatically in Q3 (from $23.7 billion in Q2 to $13 billion in Q3) with September seeing capital inflows for the first time since Sept 2013. Second, Russia's current account surplus was significantly stronger than expected ($11.4 billion vs $8.8 billion expected) driven by increased trade. Third, and perhaps most crucially, Russia paid down a massive $52.8 billion in foreign debt as Putin "de-dollarizes" at near record pace, reducing external debt to the lowest since 2012.

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You see?” - Lewis Carroll, Alice's Adventures in Wonderland

Six ambulances have surrounded a plane this morning at McCarran International Airport amid reports that a passenger on a Delta flight from New York is showing symptoms similar to Ebola, according to NBC3 local news. A passenger on board said via Twitter, there are "two sick passengers, woman and child, came from Africa and have a fever," and "CDC is now on the scene."

"We are at a crossroads. The tree has been cut. Which way will it fall – authoritarian or democracy? We have a great convergence coming. It is nothing to be afraid of and it is nothing we can ignore. Yes a Mad Max event is possible."

It was heinous. It was underhanded. It was beyond the bounds of international morality. It was an attack on the American way of life. It was what you might expect from unscrupulous Arabs. It was “the oil weapon” -- and back in 1973, it was directed at the United States. Skip ahead four decades and it’s smart, it’s effective, and it’s the American way. The Obama administration has appropriated it as a major tool of foreign policy, a new way to go to war with nations it considers hostile without relying on planes, missiles, and troops.  It is, of course, that very same oil weapon.