If you were raised in a religious household, or were sent to a Catholic school, you have heard of the seven deadly sins. These transgressions -- wrath, greed, sloth, pride, lust, envy and gluttony -- are human tendencies that, if not overcome, can lead to other sins and a path straight to the netherworld. In the investing world, these same seven deadly sins apply. These "behaviors," just like in life, lead to poor investing outcomes. Therefore, to be a better investor, we must recognize these "moral transgressions" and learn how to overcome them.
Central bank stimulus is not leading to virtuous circles but to vicious ones. How can we get out? – Only by changing our attitudes to monetary interventions fundamentally. Only if we accept that interest rates are market prices, not policy levers. Only if we accept that the growth we generate through cheap credit and interest-rate suppression is always fleeting, and always comes at the price of new capital misallocations. The prospect for such a change looks dim at present. The near-term outlook is for more heavy-handed interventions everywhere, and the endgame is probably inflation. This will end badly.
- Ukraine Shifts to Defense Against Russian Incursion (WSJ)
- U.S. forces carry out operation against al-Shabaab in Somalia (Reuters)
- Bond Markets Tilt Toward Frankfurt as Draghi Negates Fed (BBG)
- Another "unexpectedly" - Swiss Economy Unexpectedly Stalls as Euro Area Takes Toll (BBG)
- Japan's 'Abenomics' feared in trouble as challenges build (Reuters)
- Germany Imposes Nationwide Ban on Uber's Cab-Hailing Service (WSJ)
- Japan's 'forward guidance', the GPIF, has "already begun a highly anticipated portfolio reshuffle" (WSJ)
- Detroit Brings Bankruptcy Plan to Court With Billionaires (BBG)
- Burger King has maneuvered to cut U.S. tax bill for years (Reuters)
The dirty little secret that everyone (and we mean everyone) wants to act as if it no longer exists is: These prices are only representative of anything worth value if they can be sold. We are now at heights where even the so-called “Uber Bulls” are beginning to get a little nervous in the hoof. For just who is going to buy when the first major dip goes stampeding past? There’s no true true economic recovery picture to be bought.
These Fake Rallies Will End In Tears: "If People Stop Believing In Central Banks, All Hell Will Break Loose"Submitted by Tyler Durden on 06/24/2014 15:11 -0400
Investors and speculators face some profound challenges today: How to deal with politicized markets, continuously “guided” by central bankers and regulators? In this environment it may ultimately pay to be a speculator rather than an investor. Speculators wait for opportunities to make money on price moves. They do not look for “income” or “yield” but for changes in prices, and some of the more interesting price swings may soon potentially come on the downside. They should know that their capital cannot be employed profitably at all times. They are happy (or should be happy) to sit on cash for a long while, and maybe let even some of the suckers’ rally pass them by. As Sir Michael at CQS said: "Maybe they [the central bankers] can keep control, but if people stop believing in them, all hell will break loose." We couldn't agree more.
6 Years After the Financial Crisis Hit, The Big Banks Are Still Committing Massive Crimes
“Rarely Does A Monthly Report On The United States Job Market Look So Terrific On The Surface While Being So Disappointing Underneath”
And Then There's This: "The Oceans Will Rise; Nuclear Winter Will Be Upon Us; And The World As We Know It Will End"Submitted by Tyler Durden on 05/01/2014 19:06 -0400
As U.S. Justice Department prosecutors begin to bring the first criminal charges against global banks since the financial crisis, they are facing dire warnings of uncontainable collateral damage from none other than the sell-side's banking analysts... "Don’t play with matches," warned Brad Hintz, bringing up the specter of Enron (somehow suggesting we would better if that had not been prosecuted?) “The mere threat of requiring a hearing could cause customers to lose confidence in the institution and could cause a run on the bank,” warns a banking lawyer (well isn't that how it's supposed to be?). Too Big To Prosecute is starting to tarnish a little as Preet Bharara begins to bring the heat, adding, somewhat humorously that, banks have a "powerful incentive to make prosecutors believe that death or dire consequences await."
There is much new info in the just released Bloomberg profile on the infamous ex-JPMorganite Blythe Masters, among which the disclosure that she had made it clear that she had wanted to go along with the disposable JPM physical commodities unit (which as was reported recently, was sold to Swiss commodities giant Mercuria) and "and continue as the group's chief", a plan which did not work out as she had planned since she has no plans to "join the unit’s purchaser" (although joining Glencore is another matter entirely, and one which looks increasingly plausible) but what we find most striking is the following revelation: "Masters is under investigation by federal prosecutors in Manhattan, according to two people with knowledge of the matter. That probe was opened following a settlement with regulators that alleged JPMorgan manipulated power markets in the Midwest and California."
File this one in the "you can't make it up" category. Over two years after the MF Global collapse, in which the primary dealer headed by Jon "I don't recall" Corzine all but admitted it had engaged in the cardinal sin of any financial intermediary, i.e., commingling money, to cover up a trade gone horribly bad and which resulted in the disappearance of some $1 billion in client funds until such time as the bankruptcy process managed to "liberate" funds from other part of the company, MF Global has suddenly figured who is at fault: not the CEO, not his brown-nosing lackey, not some janitor meant to be scapegoated precisely in a situation such as this, not even the infamous "glitch" - no, the party that is accountable for the firm's theft of client funds, and horrible investing decisions that led to its bankruptcy, are the accountants.
We thought today's newsflow and "market action" ranked pretty high on the absurd surrealism scale. And then we saw this.
BLYTHE MASTERS TO JOIN CFTC GLOBAL MARKETS COMMITTEE
JPMORGAN’S BLYTHE MASTERS TO JOIN CFTC ADVISORY COMMITTEE
It's almost as if they are explicitly telling the handful of people who still care about this entire charade a resounding "fuck you."
How does the Federal government explain this scramble to hand over the "sole-sourced" healthcare.gov IT contract (to a company made possible thanks to Enron) so late in the process? Simple: the usual mutually assured destruction tactic used so "effectively" in all other recent rushed decisions. As the Hill reports, unless Accenture finishes (and fixes) the back-end of the HealthCare.gov portal by mid-March, the healthcare law will be jeopardized, according to a procurement document posted on a federal website. The punchline: "It says insurers could be bankrupt and the entire healthcare industry threatened if the build out is not completed." In other words, a newly retained consulting company has less than three months to fix all the errors of coding by a different company, and make sure healthcare.gov is working properly... all 500 million lines of healthcare.gov's code?
Overstock CEO Patrick Byrne goes to town on Keynesian Crony Paul Krugman in this brief interview. Byrne blasts Krugman for everything from his "unethical" involvement in the Enron debacle to his present day view that "the market failed so we need more government; or freedom failed so we need more government." Noting that Krugman may have done "some great work before he went crazy," he rants against the Fed apologist for his "bitcoin is evil" comments adding that he hopes "Bitcoin can destroy central banking." Byrne pulls no punches in his attack on Krugman and his "Keynesian magic money tree theories," as he explains why the so-called 'economist' would be against a 'bounded currency'.
Delighted by the Goldman Sachs et al commodity cartel hoarding aluminum inventory in one of their warehouses and pushing prices artificially higher? Happy that JPM is reprising the role of Enron (without admitting or denying it) and creating "schemes" with which to boost prices for end consumers (and have FERC furiously slap its wrist in response)? Ecstatic by that whole "precious metals" manipulation 'thing' by assorted unnamed banks (aside from the London fix of course - that has now been confirmed)? Then take this opportunity to tell the Fed how happy you really feel.
“The only thing we have to fear is fear itself.”