Archive - Dec 2015 - Story

Do you feel "safe" now?

More signs that the economy is actually not all that well. It may yet recover on its own (believe it or not, but from a historical perspective the data in their totality are not yet decisive), but we think this is a very low probability scenario at this stage. There is likely already way too much malinvested capital in need of a significant purge.

We know, we know... "pent-up demand" and "buy the dip!"

While popular perception holds that debt-ridden, broke millennials are the ones driving the rental market, the truth is far more nuanced... and depressing for those who still cling breathlessly to The American Dream. The truth is millions of Americans were reduced to neo-feudal serfs by the financial crisis, and how those who ruined the economy profited handsomely from the process.

“Hedge funds have cost the states tens of billions in opportunity costs the last five years."

"Taxpayers and those who count on government services and investments will pay the price.”

If you said just more of the same, with corporate management teams buying back their own stock in near record quantities (boosting their own stock-linked compensation in the process) and serving as the biggest marginal buyer in the market, then give yourself a pat on the back.

The number of radical Salafists in Germany has more than doubled over the past five years, according to a new estimate by German intelligence officials. And now, Salafists disguised as aid workers are canvassing German refugee shelters in search of new recruits from among the nearly one million asylum seekers who have arrived this year from Africa, Asia and the Middle East. Some Salafists are offering gifts of money and clothing, with literature saying "Come to us. We will show you Paradise."

"... a default cycle in commodity-related areas at this point is unavoidable, and the only real question here is whether it stays contained to those areas or extends itself to other sectors."

With prices below $50, what is a stripper to do?

After yesterday's 3 Year auction saw a blistering surge in Direct bidder demand (as a result of a substantial negative rate in repo), we were not at all surprised to see that today's 10 Year reopening auction of $21 billion was a likewise solid (even if tailing fractionally to the When Issued 2.232%) issue printing at 2.233% with 23.93% allotment, with the bid to cover rising from 2.58 to 2.64, the highest since September.

With global freight costs collapsing, as China trade dries up, status-quo-hugging talking heads have point to America's car sales and picture some islandic isolation that means investors in US equities are immune. Well that little dream just burst. Rail freight carloads tumbled 5.1% in October, dramatically accelerating the 1.6% drop in Q3 as a strong dollar crimps exports, retailers whittle down excess inventory and energy investment stalls. Until recebtly, the one bright spot in rail traffic was auto shipments... but even that just plunged and is now at the seasonally weakest since 2008.

 The analogy is as if you notice an ember smoldering in a combustible forest you might be only somewhat cautious, perhaps even rationalizing it away.  But if you then notice a second ember smoking up...

The “war on drugs” costs Americans a staggering amount of money every year that it persists. Despite the billions they receive, federal, state and local law enforcement have a proven inability to stem the flow of drugs on the nation’s streets.

Well that escalated quickly...

“I don’t think we’ve seen the last of this trend. When I trained as an economist, negative rates weren’t in the textbooks. But that’s the world we live in now, and it hasn’t stopped turning."