Wall Street Journal

Amid the 16 (yes sixteen!) candidates for Republican Presidential nominee, there is one, and only one, that stands above the rest in terms of sheer un-filtered, un-political, and some would say un-presidential outspoken-ness. In an oustanding aggregation of abuse, The Hill has documented Donald Trump's Top 30 insults (so far in the 2016 campaign alone).

With the FBI and DoJ now involved in yet another Hillary Clinton scandal - that she sent confidential emails from her personal email server - it seems the 'presidential' former Secretary of State has felt pressured to come somewhat clean. While some might argue "what difference does it make?" The Washington Post reports that Hillary Rodham Clinton will testify on Oct. 22 before the House select committee investigating her role in connection with the deaths of four Americans in Benghazi, Libya. The testimony - before the committee formed last year - will be in a open setting (apparently against the wishes for privacy that committee chairman, Rep. Trey Gowdy initially requested).

"German banking regulator Bafin cleared former Deutsche Bank AG co-Chief Executive Officer Anshu Jain of misleading the Bundesbank about his knowledge of the company’s role in attempts to manipulate benchmark interest rates," Bloomberg reports. This comes just three months after the very same regulator said that "Mr. Jain has been proven to have learned about discussion in the market concerning the susceptibility of the LIBOR to manipulation in 2008."

It's not that Donald Trump needed much help in his juggernaut campaign across the GOP presidential primary with his lead at last check in the double digitts, but moments ago the flamboyant billionaire got an unexpected present from the WSJ which may have just crippled the chances of his biggest democrat competitor as well, Hillary Clinton. WSJ reports that according to an internal government review Hillary Clinton, as former Secretary of State, "sent at least four emails from her personal account containing classified information during her time heading the State Department."And now, at long last, it appears that both the FBI and the DOJ are finally getting involved.

China will be a net buyer, and a net importer of physical gold for years to come. In and of itself that won’t necessarily cause a sharp rally in gold prices anytime soon, but gold acquisition from the Chinese state and her citizens, as well as emerging market central banks the world over will continue to provide support for the physical gold market. Those that have sold gold in the past few days (and there have been plenty in the ETF and futures markets) as a result of the “disappointing” number out of China may have just caused the capitulation event that typically marks the bottom of any bear market.

In almost all cases, including the most recent rise, the intermittent change in psychology that drove interest rates higher in the short run, occurred despite weakening inflation. There was, however, always a strong sentiment that the rise marked the end of the bull market, and a major trend reversal was taking place. This is also the case today. Presently, four misperceptions have pushed Treasury bond yields to levels that represent significant value for long-term investors. While Treasury bond yields have repeatedly shown the ability to rise in response to a multitude of short-run concerns that fade in and out of the bond market on a regular basis, the secular low in Treasury bond yields is not likely to occur until inflation troughs and real yields are well below long-run mean values.

China matters after all. As recently as three weeks ago, Bridgewater - the world's largest hedge fund - was among the most effusively bullish on China deflecting fears of the stock market drop on the basis that its "movements are not significant reflective of, or influential on, the Chinese economy." However, that meme that has been spewed by endless talking heads protecting their assets under management, has evolved. In his latest letter to investors, Ray Dalio warns, "our views on China have changed... there are no safe places to invest." As WSJ reports, the move adds to a growing chorus of high-profile investors who are challenging the long-held view that China’s rise will provide a ballast to a whole host of investments, from commodities to bonds to shares in multinational firms, as they realize, "it appears that the repercussions of the stock market’s declines will probably be greater."

The manipulative smash on the gold price on Sunday night has once again led to a surge of buying of gold coins and bars across the globe. Both the Wall Street Journal and Reuters report on how bullion dealers are seeing a spike in demand for gold coins and bars in  India and China and indeed Europe, Australia and the U.S.

"My faith is that governments and central banks will continue to run up debt and debase currencies until a crisis brings the whole experiment to a disastrous conclusion. There is simply no historical precedent to reach any other conclusion. I also have faith that human beings will always prefer a piece of gold to a stack of paper. Separate a paper currency from its perceived value and you just have a stack of paper and ink. However, if they would just print it on softer and absorbent stock and put it on rolls, it might have some intrinsic value if we run out of toilet paper."

The UK has dropped an investigation into a Swiss OTC products broker which allegedly won business from the Ghadafi regime by hosting "no sperm left zone" parties in Morocco. The reason the case was dropped: the firm determined that "the benefits of a successful prosecution will be outweighed by the damage which will be done to it in the course of a prosecution." 

"They are going to be toast. It will be one of our first levels of shorting the moment we start to see cracks, because it’s ripe with retail, emotional investors."

Large caches of data stolen from online cheating site AshleyMadison.com have been posted online by an individual or group that claims to have completely compromised the company’s user databases, financial records and other proprietary information (including profiles with all the customers’ secret sexual fantasies). The hacker group "The Impact Team" manifesto concludes, "too bad for those [37 million] men, they’re cheating dirtbags and deserve no such discretion."

The power, if not necessarily the Truth, resides primarily with the bulls right now or at least it does in certain parts of the market. The NASDAQ broke out last week to new highs but the S&P 500 and even the more speculative Russell 2000 did not. The market’s advance continues to narrow, to concentrate among fewer and fewer names. Bulls will tell you that this is just a pause and the advance will broaden out. And if enough people believe that and there isn’t any convincing reason to sell, they might be right for a while. But at some point the rose colored glasses will come off and someone might wonder aloud why Celgene paid $7 billion for a company with trailing 12 month revenue of $4.5 million. Someone might wonder why Netflix is worth $48 billion and CBS is only worth $27 billion with more than twice the revenue, better margins, a higher ROE and the ability to produce positive cash flow. Until then it’s just a dream within a dream and somebody keeps hitting snooze on the alarm clock.

The divergence theme is not longer being eclipsed by the Greek drama and the Chinese stock market slide.  See how this week's developments fit into the bigger picture.  

Last week, former Secretary of Education and US Senator Lamar Alexander wrote in the Wall Street Journal that a college degree is both affordable and an excellent investment. He repeated the usual talking point about how a college degree increases lifetime earnings by a million dollars, “on average.” That part about averages is perhaps the most important part, since all college degrees are certainly not created equal. In fact, once we start to look at the details, we find that a degree may not be the great deal many higher-education boosters seem to think it is.