Archive - Apr 2015 - Story

Surprisingly, the flow of crude oil is still accelerating, much like the money going into crude oil funds. Three of the largest crude oil funds include USO, OIL, and UCO. UCO is unique due to the fact that it’s an exchange-traded fund that uses leverage, mostly in the form of derivatives, to correspond to twice (200%) the daily performance of its underlying benchmark, the Bloomberg WTI Crude Oil Sub-index. Many large financial institutions have large stakes in UCO and thus are still betting that crude oil can make a comeback beginning in 2015.

With 30% of the 'money' in Chinese stocks officially 'dumb money' and leverage of epic proportions, it is hardly surprising that the wealthiest of wealthy are - allegedly - taking advantage. As the broad Chinese stock market has surged, Hanergy Holding Group - the world's largest solar power company - has seen its stock price triple in a few months with late-day surges driving a lot of the gains. Amid accusations from the industry, Hanergy's chairman, Li Hejun - among China's wealthiest - has denied manipulation of its stock price, suggesting the public's recognition of the thin-film power generation's prospect is the reason... sure...

With China's economy facing an imminent hard-landing unless it succeeds in stabilizing its housing sector, what is China doing? The same thing that the US has been doing over the past 7 years using such traditional propaganda pathways as mainstream media and Financial TV outlets such as CNBC, however with an emphasis on real-estate instead of stocks: it has unleashed an unprecedented propaganda onslaught by its "Department of Truth" urging China's population to drop everything and back the truth up with a brand new Chinese house... or second... or third. Because unless it succeeds to get the local population to jump right back on the housing bandwagon, the hard landing beckons.

It is impossible to overstate the magnitude of the warfare-state revolution that transformed the federal government and American society after World War II, but  modern-day Americans continue to remain convinced that their system of government has never changed in a fundamental way. They continue to play like their governmental system is founded on the same constitutional principles as when the country was founded. It is a supreme act of self-deception. The truth is that America has now had two different governmental systems: One without a national-security apparatus and one with it. It seems to us that it’s a no-brainer as to who was right and which system was better in terms of freedom, privacy, peace, prosperity, and harmony.

The amount of non-GAAP addbacks boosting the S&P "earnings" to their latest quarterly high has never been greater. In fact, the last time the absolutely notional value of pro-forma addbacks was anywhere near this close was in the Lehman "kitchen sink" quarter, when companies took advantage of the biggest bailout in capitalist history, to square their fudged income statement and balance sheet with accounting reality, resulting in an addback that was greater than the actual GAAP print!

Everyone is reportedly "out of danger"...

Confused as to whether good news is bad news, bad news is good news, or no news matters whatsoever, this brief clip summarizing every mainstream media report on the economy explains it all...

There’s no getting away from it. Banks create money out of nothing when they extend loans and then charge borrowers interest on this newly created capital. The result is an ongoing multi-billion pound/ dollar subsidy breaking the basic rules of capitalism. Galbraith was right. Governments should be more pragmatic. Politicians should stop hiding behind the skirts of ‘the market’ and make some judgement calls. As many have said, we need banking but we don’t need banks, at least not banks like this.

Earlier this morning, RT reports that Saudi Arabia rejected Russia’s amendments to a Security Council draft resolution which would see an all-inclusive arms embargo on all parties in the Yemeni conflict. Saudi stocks did not like the news and began to tumble - now down over 3%, back at January lows as the fighting continues to spiral out of control with civilian death toll climbing. At least 185 people were left dead and more than 1,200 wounded as a result of fighting in Aden, a medical official told AFP Saturday, three-quarters of them civilians. In the meantime, Reuters reports The Houthis are gaining ground in Aden, despite the onslaught of airstrikes; and the Saudi ambassador to the United States, said sending ground troops remained "on the table."

Today’s clueless Keynesian central bankers essentially believe that they can keep the pedal-to-the-metal until a 1970’s style inflationary spiral arises. But none is coming because  the worldwide central bank money printing spree of the last two decades has generated massive excessive capacity and malinvestment all around the planet. What is coming, therefore, is not their father’s inflationary spiral, but an unprecedented and epochal global deflation. So the central banks just keep printing, thereby inflating the asset bubbles world-wide. What ultimately stops today’s new style central bank credit cycle, therefore, is bursting financial bubbles. That has already happened twice this century. A third proof of the case looks to be just around the corner.

When you’re running an epic socialist experiment while simultaneously attempting to preserve the legacy of a now-deceased “anti-imperialist” geopolitical legend and your country’s most valuable asset has unexpectedly become a liability, it’s sometimes necessary for the common man (and woman) to make sacrifices...

With a long weekend upon us, ConvergEx's Nick Colas takes the opportunity to wax a bit philosophical.  The question for the day: "How do you survive middle age while working on Wall Street?"  After polling a few friends of a similar vintage to his own 25 year history on the Street, he has come up with a Top 10 list of dos and don’ts.  The key take away from all these thoughts is pretty simple – the journey never stops, so keep investing in yourself, your friends, and your allies. These may not guarantee success, but ignoring them surely leads to failure. 

From little black dresses to big white pussies; Fashion designer and photographer Karl Lagerfeld claims his chic cat, named Choupette made $3.22 million last year from just two modeling gigs. Unbelievable, perhaps; but as the insanely wealthy Lagerfeld explains, "she is the center of the world. If you saw her, you would understand."

As the world awaits the outcome of next Iran "deadline"- the June 30 conclusion of the finalization of the Iran deal - the US is already hedging its bets. According to the WSJ, the Pentagon has "upgraded and tested the largest bunker-buster bomb in the U.S. arsenal, senior U.S. officials said, readying a weapon that could destroy or disable Iran’s most heavily fortified nuclear facilities should a nuclear deal fall apart and the White House decide to take military action."

There is only one way to value gold, and that is to quantify the expansion of the fiat currency in which it is priced.