Dumb Money

The Biggest Short

Some reversals of financial trends prove so momentous they define the generation in which they occur. The stock market crash in 1929 kicked off the Great Depression, which ushered in the welfare and then the warfare state and redefined the relationship between government and citizens. Bonds and stocks began their bull market runs in the early 1980s. Now, those markets are fonts of optimism increasingly unhinged from reality. The US has come full circle. The New Deal and World War II marked a massive shift of resources and power to the federal government. Conversely, financial reversal will fuel a virulent backlash against the government and its central bank.

Yellen, Draghi, Kuroda: Deranged Lab Rats

It’s sad that “we the people” continue to allow deranged captured academics, under the complete command of the banking cabal, to control the destiny of our country. They have failed for 103 years, but we continue to bow down to these central bankers as if they knew what they were doing. They do know how to debase the currency, obfuscate true inflation, prop up financial markets through monetary manipulation, and generate prodigious amounts of propaganda and misinformation to coverup their true purposes. The people will sit idly by until these deranged rats destroy the world.

...Until The Bubble Bursts

Critics of today’s fiat currency/fractional reserve banking world have (for what seems like forever) made the common sense point that when debt rises faster than cash flow, bad things are bound to happen. In every cycle since 1980 this has been dismissed by the vast majority who benefit from inflating bubbles - until the bubble bursts. And here we go again.

Attention Finally Turns To Saudi Arabia's "Secret" US Treasury Holdings

If you were wondering how much US debt Saudi Arabia holds, you're out of luck because as it turns out, that's a state secret protected by a decades old "unusual Treasury blackout." “It’s mind-boggling they haven’t undone it. The Treasury didn’t want to offend OPEC [but] it’s hard to justify this special treatment at this point.”

The Fed-Induced Farce

The Fed has created a dead end street for everyone not in their .1% clientele... We’re all muppets to the banking cabal running this morally and financially bankrupt military empire of debt.

The Housing Mega-Bubble Is Definitely Not Different This Time - It's Much More Of The Same

To believe this isn’t a bubble is to believe that all of the hot momo money from insti’s, high/biotech, flipper, flappers, fraudsters, and foreigners buying houses is fundamental and here to stay, which is exactly what everybody thought in 2006. Or, to believe that interest rates will keep falling 1% per year going forward, which would lend an element of support to prices.

Goldman 'Explains' This Is Not A "Low Quality" Rally, It Is "Macro-Free" - So Don't Worry

It appears even Goldman Sachs was surprised by the recent rally in US equities - especially in light of the explicit hawkishness of The Fed yesterday. In a trading note this morning, the bank says that market risks are real and rising (but are not overwhelming) as it explains, we assume with no intent at humor or sarcasm, that they "prefer to think of the recent equity rally as 'macro-free' rather than 'low quality'," reiterating their view of the cycle and of markets as "fundamentally upbeat." They do, however, admit over the last month, the likelihood of a drawdown in the US equity market further increased, and remains at mildly elevated levels.

3 Things: "You Should Buy, Professionals Need To Sell"

Every day when you flip on the media, there is someone telling you that now is the time to "buy" into the market. Of course, if you are buying, then who is selling? The only "net buyers" of equities this year have been "individuals," while "professional" firms have been "net sellers." This is the epitome of the classic "smart money/dumb money" analysis where individuals are used by institutions to offload positions that are no longer optimal. The question is with corporate profits and earnings declining, weak economic data, and the threat of tighter monetary policy - will individuals once again be left "holding the bag" while institutions derisk portfolios in advance of the next decline?

The Death Of Hopium

The "engine of our economy", the "cradle of innovation", the "land of tomorrow" -- whatever breathless hyperbole the fawning media is using this week -- is a sham. Silicon Valley has become a factory of hype, funneling gobs of early-stage capital into whatever half-credible concepts it can think of, and then pimping the artificially-inflated initial results of those tarted-up ventures to whichever "greater fool" is willing to acquire it or buy its IPO. Let that idiot figure out if it will ever turn a profit...

Shale Oil's "Dirty Little Secret" Has Been Exposed

"The shale sector is now being financially stress-tested, exposing shale’s dirty secret: many shale producers depend on capital market injections to fund ongoing activity because they have thus far greatly outspent cash flow."

China's Richest Traders Are Rushing To Dump Their Stocks To The Retail Masses, Just Like In The US

As it turns out it is not just in the US that the "smart money" is bailing out as fast as it can: according to Bloomberg, the wealthiest investors in China’s stock market are also scrambling for the exits. To wit: "The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June."