Salient

"I get nervous because the next move in China is going to be a political move, and political moves are never well anticipated by markets. The Beijing regime is going to take steps to defend itself, or at least insulate itself, from the growing Narrative that they are incompetent. Heads will roll. Literally, in all likelihood. But the incompetence genie is very hard to stuff back into the bottle, and depending on whose head is on the chopping block, regime stability can deteriorate very quickly. Now that's what will make me change my bullish stance on China fundamentals, and that's what will make the US market swoon of last August look like a gentle spring rain."

"The bottom line is that people around the world, regardless of their nationality, should know that the United States is not spying on ordinary people who don’t threaten our national security, and that we take their privacy concerns into account in our policies and procedures.  This applies to foreign leaders as well." - Barack Obama, January 17, 2014

101 years after the Christmas truces along the Western Front there is still no peace on earth. And the long suffering American taxpayers, who foot the massive bills generated by the War Party’s demented and destructive policies, have no clue that Imperial Washington is the principal reason.

There is a Category 5 deflationary hurricane forming off the Chinese coast as Beijing accelerates the devaluation of the yuan against the dollar under the guise of “reform”. I say forming … the truth is that this deflationary storm has already laid waste to the global commodity complex, doing trillions of dollars in damage. I say forming … the truth is that this deflationary storm has driven inflation expectations down to levels last seen when the world was coming to an end in the Lehman aftermath. And now the Fed is going to tighten? Are you kidding me?

Wall Street’s proclivity to create serial equity bubbles off the back of cheap credit has once again set up the middle class for disaster. The warning signs of this next correction have now clearly manifested, but are being skillfully obfuscated and trivialized by financial institutions. Nevertheless, here are ten salient warning signs that astute investors should heed as we roll into 2016.

There is little question that bullshit is a real and consequential phenomenon (especially popular in the financial markets and central planning arena). Indeed, as the following scientific study finds, given the rise of communication technology and the associated increase in the availability of information from a variety of sources, both expert and otherwise, bullshit may be more pervasive than ever before. Despite these seemingly commonplace observations, we know of no psychological research on bullshit. Are people able to detect blatant bullshit? Who is most likely to fall prey to bullshit and why?

"Emerging economies’ growth prospects look damaged in several respects. The central fact facing EM is the negative external shock that results from weak global trade growth and the collapse of Chinese import growth. This brings to an irreversible end the period of rapid, investment-led Chinese growth and strong global trade growth which had supplied EM with a once-in-a-generation positive external shock during the years between 2002 and 2013."

Even despite the saturation criminality that readers have already seen, many will still argue that we “need” these Big Banks, and that we even “need” fractional-reserve (no reserve) fraud.

There are so many strands of lies and distortions that it is now almost impossible for Official Washington to disentangle itself from all the false narratives that the neocons and the liberal hawks have spun in support of their various “regime change” strategies. So, the American people are left with the mainstream U.S. news media endlessly repeating storylines that are either completely false or highly exaggerated. Official Washington’s many false narratives about Russia and Syria have gotten so tangled that they have become a danger to the struggle against jihadist terrorism and conceivably a threat to the future of the planet.

Bombing wont stop them; it will just make more of them. Ironically, what can stop them is the Assad government and the ground forces of its Hezbollah and the Iranian Republican Guard allies. Its time to let them settle an ancient quarrel that has never been any of America’s business anyway. But Imperial Washington is so caught up in its myths, lies and hegemonic stupidity that it can not see the obvious. And that is why a quarter century after the cold war ended peace still hasn’t been given a chance and the reason that horrific events like last week’s barbarism in Paris still keep happening.

"What does this mean for investors? It means that at some point in the next year or two, I think we are all going to have a Henry Hill “Goodfellas” moment, where we think that we understand the conversation going on around us, where we think that we’re engaged with our social system in the usual way … and then everything will go sideways in a split second, and we will suddenly and with extreme clarity realize that we don’t understand anything at all except that we’re sitting at a table with a maniac."

Many of the systems we take for granted are historical accidents. Either based on legacy systems hundreds of years old (higher education) or assembled in a short-term, ad hoc fashion (post-1940 national defense/ national security), these systems have expanded into vast patronage systems that are completely out of touch with 21st century needs, costs or realities. The U.S. healthcare system was not planned; it is largely accidental.

"A handful of these so-called unicorns will become the great, enduring companies of tomorrow. But a good number seem the flimsiest of edifices. There is also a false sense of security provided by the private markets... some of these valuations are illusory ...Most of the leaders of the subprime unicorns who continue to enjoy the fruits of the private market delude themselves..." -Michael Moritz, Chairman, Sequoia Capital

You’re doing yourself a disservice if you don't have a basic working knowledge of what, say, a volatility surface means. We're not saying that we all have to become volatility traders to survive in the market jungle today, any more than we all have to become game theorists to avoid being the sucker at the Fed’s communication policy table. And if you want to remove yourself as much as possible from the machines, then find a niche in the public markets where dark strategies have little sway. Muni bonds, say, or MLPs. The machines will find you eventually, but for now you’re safe. But if you’re a traditional investor whose sandbox includes big markets like the S&P 500, then you’re only disadvantaging yourself by ignoring this stuff. Ignorance is not bliss...

Oil price collapse: Have the central bankers painted themselves into a corner?