When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.
Q. What are traders talking about at the present time here at the New York Stock Exchange?
Cashin: We are concerned about two questions. First, how will the Fed do in keeping money reasonably easy without causing inflation? Second, where do we stand with the current geopolitical challenges? For now, these challenges seem to be short term concerns. But should we begin to see a financial contagion and pressure building on banks in Europe, perhaps out of the Ukraine situation, things could theoretically turn into what I call a «Lehman moment». That is when markets come under pressure but seem to be under control, and then things change suddenly.
Just when we thought that the Fed is pulling an Obama and has "no strategy" to deal with what not some fringe blog but Deutsche Bank itself proclaimed was the bubble to end, or rather extend, all bubbles, when it said that "the bubble probably needs to continue in order to sustain the current global financial system" they surprise us once again when they report that, drumroll, the Fed has formed a committee led by the former head of the Bank of Israel - best known for using de novo created fiat money to buy AAPL stock as part of "prudent monetary policy" - Vice Chairman Stanley Fischer, to monitor financial stability, which according to Bloomberg is "reinforcing the Fed's efforts to avoid the emergence of asset-price bubbles."
The bottomline: higher rates are coming… and an entire generation of investment professionals are unprepared for it.
What will $1 million buy in New York City? A diamond-encrusted Cartier men’s watch. A small fleet of 2014 Bentley Continentals. Or maybe your very own parking spot in SoHo... "Parking is in serious demand and has proven an excellent investment with no sign of a decline."
A paradigm shift for the Eurozone...
While hardly able to match the wit, sophistry or, allegedly, satire of yesterday's MarketWatch grandslam in market insight "Why This Stock Market Will Never Go Down", we are confident readers will enjoy the following interview from none other than the Nobel prize winner in Keynesianomics, Paul Krugman, who in this interview with Princeton Magazine, had some comments on bubbles, inflation, student loans, minimum wages, artificially low rates, the Fed's dual mandate, and, of all things, Bitcoin.
Every three years the Federal Reserve releases a survey of consumer finances that is a stockpile of data on everything from household net worth to incomes. A major mainstream media theme has been that the surging stock market, driven by the Federal Reserve's monetary interventions, has provided a boost to the overall economy. However, given that the bulk of the population either does not, or only marginally, participates in the financial markets, the "boost" has remained concentrated in the upper 10%. The Federal Reserve study breaks the data down in several ways, but the story remains the same...
Mission Accomplished, military-industrial complex scaremongers...
Yesterday, former Fed Chairman Alan Greenspan was the keynote speaker at KPMG’s 2014 Insurance Industry Conference Tuesday, where he answered questions such as 1) where the economy is going, 2) why, and 3) when (if ever) is it likely to improve. The answers, as reported by Property Casualty 360, are: 1) nowhere fast, 2) because nobody is willing to invest, and 3) eventually, but nobody can tell when. He listed 9 specific reasons why the "economy stinks", although surprisingly, nowhere did he mention the fact that the current and future economic disaster is all a direct result of his ruinous reign at helm of the Fed where as a result of his "great moderation" and the Fed's catastrophic monetary policies conceived mostly under Greenspan himself, the economy is now perpetually stuck in a boom-bust cycle, and where every time a bubble bursts another has to replace it or else the entire western way of life will be gone in a heartbeat.
Last week, Adam Hartung qualified for the "Mark Twain Award" if there was such a thing. In his article, "Obama Outperforms Reagan On Jobs, Growth & Investing," Adam goes to some length to try and show that unemployment rate, the S&P 500 and economic growth are currently better under the current administration than they were during the Reagan administration. Unfortunately, that is not the case. When considering that President Obama has been able to achieve real economic growth of just 2.04% annually despite historically low levels of inflation and interest rates combined with massive government interventions and balance sheet expansions; it makes his overall performance even more disappointing.
It all started in Stafford, Virginia in 1782, when Thomas Jefferson documented the first gold discovery himself. Since then, Americans have been searching for gold far and wide. The California Gold Rush brought hundreds of thousands of people to the West in search of new found wealth. Years later, many more ventured into Alaska’s wilderness to hit it rich. Even today, there is a modern gold rush in Nevada, where the five biggest gold mines (by contained oz) are located. While it is true that there have been some hiccups along the way, such as Roosevelt’s confiscation of gold in 1933, it is unlikely that America’s fixation on gold will end any time soon.
In a report that was just released entitled "Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances", the Federal Reserve revealed that small business ownership in America "fell substantially" between 2010 and 2013. Even in the midst of this so-called "economic recovery", small business ownership in America has now fallen to an all-time low.
- Showtime for Apple: Big phones, smart watches and high expectations (Reuters)
- Bank of England Gov. Mark Carney Signals Spring Rate Rise (WSJ)
- Quebec Shows Scots Question Returns Even If Answer Is No (BBG)
- Hush money with a 9 year vesting period: Ex-SAC Fund Manager Martoma Sentenced to Nine Years in Prison (BBG)
- Dreams on hold, Brazil's 'new middle class' turns on Rousseff (Reuters)
- Fed to Hit Biggest U.S. Banks With Tougher Capital Surcharge (WSJ)
- Egypt court sentences Brotherhood leader, cleric to 20 years in jail (Reuters)
"...what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status...The privilege of having the world’s reserve currency is one America can no longer afford."
- former Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.