WHY STOCKS WILL CRASH IN TWO CHARTS

86 comments

Posted on 26th May 2015 by Administrator in Economy |Politics |Social Issues

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

“Things always become obvious after the fact”Nassim Nicholas Taleb

“Facts do not cease to exist because they are ignored.”  – Aldous Huxley

The S&P 500 currently stands at 2,126, fractionally below its all-time high. It is now 300% above the 2009 low and 34% above the 2008 and 2001 previous highs. Most people believe this is the new normal. They are comfortably numb in their ignorance of facts, reality, the truth, and the inevitability of a bleak future. When the herd is convinced progress and never ending gains are the norm, the apparent stability and normality always degenerates into instability and extreme anxiety. As many honest analysts have proven, with unequivocal facts and proven valuation measurements, the stock market is as overvalued as it was in 1929, 2000, and 2007.

Facts haven’t mattered, as belief in the infallibility and omniscience of Federal Reserve bankers, has convinced “professionals” to program their high frequency trading supercomputers to buy the all-time high. If central bankers were really omniscient and low interest rates guaranteed endless stock market gains, then why did the stock market crash in 2000 and 2008? The Federal Reserve’s monetary policies created the bubbles in 2000, 2007 and today. There was no particular event which caused the crashes in 2000 and 2008. Extreme overvaluation, created by warped Federal Reserve monetary policies and corrupt Washington D.C. fiscal policies, is what made the previous bubbles burst and will lead the current bubble to rupture.

Benjamin Graham and John Maynard Keynes understood how irrational markets could be over the short term, but eventually they would reach fair value:

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Graham

“The market can stay irrational longer than you can stay solvent.” – Keynes

Graham’s quote reflects the difference between hope and reality. This explains the ridiculous overvaluation of Amazon, Shake Shack, Twitter, Linkedin, Tesla, Google, and the other high flying new paradigm stocks. Story stocks soar because the herd believes the stories peddled by Wall Street and company executives. Five of these six stocks don’t have a PE ratio because you need earnings to calculate a PE ratio. In the long run the market will weigh the value these companies based upon profits and cashflow. It is the same story for the market as a whole. There is no question who is to blame for what now amounts to a three headed hydra of bubbles poised to burst.

(more…)

Stop Wasting Time!! (Cuz You’ll Be DEAD Before You Know It)

120 comments

Posted on 24th May 2015 by Stucky in Economy

,

“How we spend our days is, of course, how we spend our lives.” — Annie Dillard

How much water is left in YOUR fishbowl?

 

Imagine that the moment you are born that your number of allotted years is represented as a fishbowl of water. For some, the bowl of water represents 90 or more years. Sadly, others only get a day. Most of us are allotted days somewhere in between. But, the fact of the matter is that the quantity is quite finite. In more morbid terms, we all march inexorably to our deaths from the moment we enter this world.

Now, this is a most unsettling thought! So unsettling, in fact, that most of us can’t handle it. Sure, we all know we’re going to die – in a 21st century intellectually rationalist sort of way. But, we really don’t BELIEVE it – nosiree, not with the same conviction that we believe, for example, that the sun will rise tomorrow. Seneca tells us as much when he writes;

 “You live as if you would live forever; the thought of human frailty never enters your head, you never notice how much of your time is already spent.” ———— Seneca (quotes in green)

I don’t know about you … but, that pretty much sounds like me. I rarely give my fishbowl much thought.

SENECA – THE VERY RICH STOIC

Seneca states that not only do we refuse to come to terms with our very brief time on earth but, even worse, we waste away the precious little time we do possess. He goes into considerable detail showing how we shackle ourselves to our labors and our professions. He laments that we give so much of ourselves – in terms of time – to those who do nothing but waste our time. He considered it a tragedy that too many die as if they were children, never having learned to live a full life. In modern terms he would say we’re all too happy that etched on our tombstones is our greatest accomplishment; “He filled out all his expense reports on time.”

(more…)

MIDDLE CLASS LEFT ON THE SIDE OF THE ROAD

0 comments

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

, ,

Via Zerohedge

How Healthcare Is Dooming the U.S. Economy (In Just 3 Charts)

1 comment

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

,

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

As it stands now, U.S. healthcare will bankrupt the nation and doom it to permanent stagnation and recession.

That healthcare alone is dooming the U.S. economy is not news to Of Two Minds readers, as I have been covering the catastrophic consequences of our runaway healthcare system for the past decade.
Three charts crystallize the healthcare dynamics that are dooming the U.S. economy. The first depicts the runaway growth of healthcare costs–a rapid expansion that is a permanent feature of U.S. healthcare, regardless of which party is in office or what reforms are instituted.
This expansion of costs has many drivers, most of which result from the system’s perverse incentives for fraud, overbilling, marginal treatments and defensive medicine.Technological and medical advances offer more options for treatment, and can push costs up–but advances can just as readily push costs down, too.
The primary drivers of rapidly increasing costs are:
1. The cartel/crony-capitalist structure of U.S. healthcare
2. Defensive medicine to stave off litigation
3. Profiteering from needless or ineffective tests, procedures and medications
4. Fraud and overbilling
5. The concentration of expenditures in a small sector of the population
6. America’s inability and/or unwillingness to have an adult discussion over end-of-life care for the elderly.
Here is a chart of the rising cost of U.S. healthcare, which is far outstripping the growth of GDP, which is another way of saying healthcare costs are outstripping our ability to pay for healthcare.

(more…)

The Message from Last Week’s Headlines: Don’t Dare Sell Your Gold!

0 comments

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

,

The Message from Last Week’s Headlines: Don’t Dare Sell Your Gold!

By Jeff Clark

Have you noticed the trend in mainstream headlines over the past week?

The gold price may be stagnant, but forces behind the scenes signal that something big is gelling.

What conclusion would you draw from this rundown of recent headlines?

China Creates Gold Investment Fund for Central Banks. China announced a new international gold fund. Over 60 member countries have already invested. The fund expects to raise 100 billion yuan ($16 billion). It will develop gold mining projects in the new Silk Road economic region.

China Could Send Gold Up At Least $200. Saxo Bank’s Steen Jakobsen says China’s multibillion-dollar Silk Road Initiative will prompt Beijing to pull money out of Europe and the United States for infrastructure investments elsewhere. This could send commodities higher and push Europe into recession. As a result, his 2015 price for gold is $1,425 to $1,450, more than $200 higher than its current level.

Red Kite Launches New Base and Precious Metals Fund. The fund has already deployed almost $1 billion in equity, loans, and royalty streams into at least 17 junior mining firms. It hired a physical metals trader to handle all the supply. The fund will likely fund underserved juniors that have struggled to get funding.

Texas Senate Passes Bill to Establish Bullion Depository for Gold and Silver Transactions. A bill to make gold and silver legal tender in Texas passed in the state senate by an overwhelming 29–2 vote. The bill essentially creates a way to transact in precious metals. It will allow citizens to deposit precious metals in the state depository and then use the electronic system to make payments to any other business or person who also holds an account.

(more…)

CHESSUS CHRIST

1 comment

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

,

Via Knuckledraggin


Thoughts from the Frontline: World War D — Deflation

1 comment

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

Thoughts from the Frontline: World War D—Deflation

By John Mauldin

 

Everywhere I go I’m asked, “Will there be inflation or deflation? Are we in a bull or bear market? Is the bond bull market over and will interest rates rise?”

The flippant answer to all those questions is “Yes.” And that can be the correct answer as well, but it depends on what your time frame is and what tools you use to measure the markets and inflation. One of the newer members of the Mauldin Economics team is Jawad Mian, who writes a powerful global macro letter from his base in Dubai. He has been making the case for the “end of the deflation trade” (or more properly the return of a reflationary period) and the knock-on effects that would cause. Longtime readers know that I am in the secular deflation camp and ask me why there’s such a seeming difference my views and Jawad’s.

The answer is that Jawad and I are more or less on the same page over the longer term; the difference lies in the time frame of our perspective writings. I tend to think and forecast about longer periods of time, whereas Jawad’s main audience is portfolio managers and traders who are focused on the next 6 to 18 months. I tend to think in secular cycles, while Jawad is focused on the cyclical horizon. When you read the section below that Jawad writes, you will find a fairly upbeat analysis.

And that difference opens up a very important discussion for this week’s letter. I will start off by explaining why I think we are still in a long-term secular bear market in US stocks, even while I can clearly see that we are also in a powerful cyclical bull market. It is important to know both, because there are quite different investment approaches that are appropriate for different combinations of secular and cyclical cycles.

Then we turn to Jawad, who will discuss why we could see a reflationary macro regime emerge in much of the developed world and where the resulting opportunities might lie. I will finish up with why I think that this reflationary period will be temporary, with a potential for a serious round of deflation further out in the future, even though I readily acknowledge that “temporary” could mean a few years. But the looming reality over the longer term is that the coming war over a return of deflation will be fought by central banks everywhere. It will truly be World War D.

Why start with equity markets when we are talking about deflation and inflation? Because we need to see the connections!

(more…)

The Coming Cashless Society/Greek Tragedy

12 comments

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

, , , , , ,

Electronic-Euro

Now you are watching newspaper and TV shows all preparing the public for the coming cashless society. This is a marketing campaign and this may be indeed what October 1st, 2015 is all about – 2015.75. I doubt that the USA will be able to move to a cashless society as easily as Europe. The dollar is used around the world and cancelling that outstanding money supply would bring tremendous international unrest. Additionally, the USA is not in crisis financially as is the case in Europe.

Europe, on the other hand, has an entirely different problem. The failure to have consolidated the debts of member states meant the reserves of the banks were constituted of a politically-correct mixture of debt. Instead of fixing the problem, politicians who are lawyers always move one step forward with laws. To them the logical solution is to eliminate cash to protect banks from a panic run that would collapse Europe and take Brussels with it.

This is a deliberate marketing campaign now. I know who these things work and just pay attention. They are selling this idea everywhere and that is the preparation for the inevitable action. With the speed at which they are moving, it certainly appears they are gearing up for October 1st on out model. It is also interesting that some German press misquoted our date as October 17th. I was not sure why they would do that, but perhaps that was intentional as well. This is very curious for when they take that final step, it will most likely be sudden and overnight. This would announce it and give everyone some time period to take your paper currency and deposit it into you bank account.

(more…)

BORDERS

5 comments

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

, ,

Via Investors.com

QUOTE OF THE DAY

0 comments

Posted on 28th May 2015 by Administrator in Economy |Politics |Social Issues

“This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.

That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.

We desire both to be respectable and to be respected. We dread both to be contemptible and to be contemned. But, upon coming into the world, we soon find that wisdom and virtue are by no means the sole objects of respect; nor vice and folly, of contempt.”

Adam Smith, Theory of Moral Sentiment


Our Enemy, the Neocons

1 comment

Posted on 28th May 2015 by Zarathustra in Economy |Politics |Social Issues

, , , ,

www.non-intervention.com

America has no enemy more dastardly and lethal than the Neoconservative

Those men who wrote our Constitution made it perfectly intelligible to anyone who cared to read it. They also left some flexibility in its articles to ensure that as time passed and circumstances changed the document would remain viable as the indispensable protector of the republic they created and of the liberty of citizens who delegated a limited amount of their sovereign power to the national government through its provisions. And after a long and often  angry ratification debate, the first congress added a bill of rights to the Constitution as that document’s first ten amendments. These amendments were fully as clear as the text — perhaps more so — but less flexible than the body of the document because they dealt with the tenets of republican liberty which, if regularly and deliberately violated by the national government, would require that Americans, to paraphrase Jefferson, demolish the existing government and erect a new one that would better safeguard their liberties and their republic’s security.

(more…)

Prepare Your Homes And Neighborhoods For The Violence That Is Going To Sweep America

25 comments

Posted on 27th May 2015 by Administrator in Economy |Politics |Social Issues

, , ,

Crime - Bloody Handprint - Public DomainThe thin veneer of civilization that we all take for granted on a daily basis is beginning to disappear, and a new era of chaos and anarchy is coming to our cities.  I don’t know if you have noticed, but violence is increasing on the streets of America.  Over Memorial Day weekend, 29 people were shot in Baltimore and 55 people were shot in Chicago.  But of course the trend that I am talking about is much broader than that.  According to the FBI, the number of police officers “feloniously killed” in the line of duty rose by an astounding 89 percent in 2014.

We live at a time when Americans are becoming extremely angry and extremely frustrated, and this is only going to intensify as economic conditions worsen.  But already we have seen some of this anger and frustration boil over into violence in Ferguson and in Baltimore.  And you know what?  The vast majority of Americans expect more of the same in the coming months.  According to a Wall Street Journal/NBC News survey that was recently released, 96 percent of all Americans believe that there will be more civil unrest in America this summer.  What we have seen up until now is just the warm up act.  The main event is still to come.

If things are this bad already, how bad will they be when the next great economic crisis hits this nation and unemployment skyrockets and poverty is everywhere?

That is why I am encouraging people that currently live in the heart of our major cities to consider moving.  Unfortunately, most Americans are completely dependent on the jobs that they currently have, so moving is not really a practical option for a lot of people.

(more…)

CELEBRATING MEMORIAL DAY IN CHICAGO

8 comments

Posted on 27th May 2015 by Administrator in Economy |Politics |Social Issues

, ,

Via Knuckledraggin


Who Would Win A Conflict In The South China Sea: The Infographic

86 comments

Posted on 27th May 2015 by Administrator in Economy |Politics |Social Issues

, ,

Tyler Durden's picture

As regular readers are no doubt aware, the US and China are racing towards a maritime conflict stemming from Beijing’s construction of what Washington has condescendingly called “sand castles” in the Spratly archipelago.

Atop these man-made islands are cement plants, air strips, and soon-to-be lighthouses, as China boldly asserts its territorial claims on what are heavily-contested waters though which trillions in seaborne freight pass each year.

Now, with Beijing set to enforce what is effectively a no-fly zone over its new sovereign ‘territory’ we bring you the following graphic from WSJ which shows that when it comes to sheer size, China’s air force and Navy are beyond compare.