Archive - Oct 21, 2015 - Story

“If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than 25% of Americans have collectively that is.”

Global Capitalism is trapped in its own Prisoner’s Dilemma; fourty four years after the end of the Bretton Woods System global central banks have manipulated the cost of risk in a competition of devaluation leading to a dangerous build up in debt and leverage, lower risk premiums, income disparity, and greater probability of tail events on both sides of the return distribution. Truth is being suppressed by the tools of money. Market behavior has now fully adapted to the expectation of pre-emptive central bank action to crisis creating a dangerous self-reflexivity and moral hazard. Volatility markets are warped in this new reality routinely exhibiting schizophrenic behavior. The tremendous growth of the short volatility complex across all assets, combined with self-reflexive investment strategies, are creating a dangerous ‘shadow convexity’ that will fuel the next hyper-crash.

Since either NIRP, or QE, or most likely both, are about to cross the Atlantic and make landfall in the US before the Fed is forced to launch the monetary helicopter, those who want to know what is really coming - no, not rate hikes - are urged to read this.

We've been harsh on Citi in the past, but we admit there is a certain honor among bailoutees when the "smartest people in the room" not only admit they suck at predicting the future, but poke fun at their own forecasting skills. Case in point: the chart below.

We just got more evidence that the middle class in America is dying. According to brand new numbers that were just released by the Social Security Administration, 51 percent of all workers in the United States make less than $30,000 a year.

The last time John Thain departed as a CEO under some duress, it was just after Merrill had received a taxpayer bailout (which was used among other things to pay for Thain's bonus) and also after Thain had spent $1.22 million of corporate funds to renovate two conference rooms, a reception area, and his office, $131,000 for area rugs, $68,000 for an antique credenza, $87,000 for guest chairs, $35,115 for a gold-plated commode on legs, and $1,100 for a wastebasket. Moments ago, the 60-year-old quit for the second time in the past 7 years, this time as CEO of CIT which he joined in February 2010, and luckily no bailouts have been required. Yet.

Later this month, the supreme court of Mexico will review the country’s current prohibition of marijuana, as well as the possibility of legalizing the plant for medical and recreational use. Medical marijuana is currently legal in Mexico, but the black market drug trade in the country continues to cause widespread violence, drug cartel, and gang activity, just as it does in America.

Most cats bounce at least once when they die, but not this one.

"The decline of fixed income liquidity in 2015 can be seen as a gap between supply and demand. Banks are supplying less liquidity, yet investors are still demanding more of it. The result? Potentially severe losses in fixed income."

Other than glad-handing and managing whatever undeclared wars he's been let in on, President Sanders won't change anything important because he can't change anything important. Neither can any other president. Political theater is just that--theater. Fans of Obama learned the hard way that hope and change are quietly dumped the moment you enter the Imperial Presidency.

"With disinflationary global conditions and sluggish pay growth, most advanced economies are likely to remain locked into low-flation, and we expect headline and core inflation rates will continue to run below target and below central bank forecasts next year. Against this backdrop, we expect further near-term easing from the PBOC, RBA, BOJ and ECB and forecast only very gradual and delayed tightening by the Fed (starting around March 2016) and BoE (starting around end- 2016)."

Valeant Pharma is halted for the 4th time today, this time for news pending, as the stock has lost 40% of its value since the open...