Archive for the ‘economics’ Category

Trend Forecaster Predicts: “Bitcoin Will Soar Over $100,000… It’s The Gold Standard Of Digital Currency”

December 15, 2017 Leave a comment

Mac Slavo

Recent reports that Bitcoin and blockchain technologies are in a bubble may be inspired by the fact that crypto currencies stand to completely upend the global financial systems that have been in place for hundreds of years. And while it’s easy to draw parallels to Tulip Mania and suggest Bitcoin prices may be reaching a top because of the rapid and meteoric rise of cryptocurrencies in recent months, what tulips didn’t have that Bitcoin and other blockchain technologies do, is access to, quite literally, every single human on the planet who has a a cell phone, computer or other smart device.

According to a recent short film by Future Money Trends, we’re just in the opening stages of a revolution that will eventually lead to the death of centrally printed paper currencies. And along the way, many early adopters will become very rich as increased use of the technology leads to soaring prices:

All this talk of a bubble is ignorance or malicious talk from competitors like the banks who collect trillions in middleman fees worldwide… We see Bitcoin soaring past $50,000… and then over $100,000 because the simple fact is that there are only going to be 21,000,000 coins outstanding…

It’s being used all across the globe… to put it simply in the world of crypto currency, Bitcoin is the gold standard… Bitcoin is the gold of digital currency.

Extinction: Paper Currency DEATH – Rise of Blockchain:

And while Bitcoin is the gold, Ethereum is a whole different animal, demonstrating just how versatile blockchain technology really is:

Name a price that’s much higher than you think and that’s where it could be headed… It’s not even the silver to the gold… it’s the copper. It’s what’s going to help transform and build up blockchain technology worldwide.

This is the crypto currency that’s being used by Fortune 500 companies today… and what many don’t know is that even other crypto currencies are using Ethereum to support their own platforms.

Behind the currencies, says Future Money Trends, is the infrastructure that makes it all happen and one that stands to impact the lives of every person on the planet:

The backbone behind the entire blockchain is the mining companies… the warehouses full of computers solving math problems, to support the blockchain and be rewarded with freshly minted digital currency.

Mining itself has become big business, with numerous mega-miners like Genesis Mining and Hive Blockchain Technologies taking advantage of rising prices by hoarding virgin mined cryptocurrencies as global usage among the populace for real-world applications increases exponentially:

Billions of people would agree that they trust cryptocurrency more than their national currencies… People in China, India, Venezuela, Argentina and all throughout Africa are already making Bitcoin their medium of exchange.

This specifically included the two billion unbanked people that happen to have a smart phone, which is all that’s needed for a Bitcoin wallet… Cryptocurrency is already a better way for payments and transferring money. The blockchain self validates and the fees are nil compared to banking fees.

This isn’t going to happen overnight but the path for cryptocurrency to dethrone the central banks is certainly on the table over the next five years.


For more videos like the one you just watched visit Future Money Trends

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November nonfarm payrolls rise 228,000 vs. 200,000 est.

December 8, 2017 Leave a comment

The U.S. economy created 228,000 jobs in November while the unemployment rate held steady at 4.1 percent, according to a Labor Department report Friday.

Economists surveyed by Reuters had expected nonfarm payrolls to grow by 200,000.

Wall Street also was watching wage data closely. Average hourly earnings were estimated to rise 0.3 percent for the month or 2.7 percent for the year, and the final results disappointed in that regard.

Earnings rose 0.2 percent for the month and 2.5 percent for the year.

Federal Reserve policymakers have been concerned over the lack of income growth, though they are still expected to raise the central bank’s benchmark interest rate a quarter point next week.

This is a breaking news story. Please check back here for updates.

The Last Time These 3 Ominous Signals Appeared Simultaneously Was Just Before The Last Financial Crisis

November 18, 2017 Leave a comment

Michael Snyder

We have not seen a “leadership reversal”, a “Hindenburg Omen” and a “Titanic Syndrome signal” all appear simultaneously since just before the last financial crisis. Does this mean that a stock market crash is imminent? Not necessarily, but as I have been writing about quite a bit recently, the markets are certainly primed for one. On Wednesday, the Dow fell another 138 points, and that represented the largest single day decline that we have seen since September. Much more importantly, the downward trend that has been developing over the past week appears to be accelerating. Just take a look at this chart. Could we be right on the precipice of a major move to the downside?

John Hussman certainly seems to think so. He is the one that pointed out that we have not seen this sort of a threefold sell signal since just before the last financial crisis. The following comes from Business Insider

On Tuesday, the number of New York Stock Exchange companies setting new 52-week lows climbed above the number hitting new highs, representing a “leadership reversal” that Hussman says highlights the deterioration of market internals. Stocks also received confirmation of two bearish market-breadth readings known as the Hindenburg Omen and the Titanic Syndrome.

Hussman says these three readings haven’t occurred simultaneously since 2007, when the financial crisis was getting underway. It happened before that in 1999, right before the dot-com crash. That’s not very welcome company.

In fact, every time we have seen these three signals appear all at once there has been a market crash.

Will things be different this time?

We shall see.

If you are not familiar with a “Hindenburg Omen” or “the Titanic Syndrome”, here are a couple of pretty good concise definitions

  • Hindenburg Omen: A sell signal that occurs when NYSE new highs and new lows each exceed 2.8% of advances plus declines on the same day. On Tuesday, they totaled more than 3%.
  • Titanic Syndrome: A sell signal triggered when NYSE 52-week lows outnumber 52-week highs within seven days of an all-time high in equities. Stocks most recently hit a record on November 8.

You can see the other times in recent decades when these three signals have appeared simultaneously on this chart right here.

Once again, past patterns do not guarantee that the same thing will happen in the future, but if the market does crash it should not surprise anyone.

10 days ago, I published an article entitled “The Federal Reserve Has Just Given Financial Markets The Greatest Sell Signal In Modern American History”. I pointed out that this stock market bubble was created by unprecedented central bank intervention, and now global central banks are reversing the process that created the bubble in unison. There is no possible way that stock prices can stay at these absolutely absurd levels without central bank help, and if global central banks stay on the sidelines a market decline would seem to be virtually inevitable.

Meanwhile, we are also witnessing a very alarming flattening of the yield curve

Hogan said the market is nervous about the “flattening” difference between the 2-year yield and the 10-year Treasury yield, which have been moving closer together. The curve dipped to 68 basis points Tuesday, a 10-year low. Hogan said 70 has become a line in the sand, and when it falls below that traders get nervous.

flattening curve can signal that the curve will invert, which historically means a recession is on the horizon.

If the yield curve does end up inverting, that will be a major red flag.

But the experts assure us that we have nothing to worry about.

For example, just check out what Karyn Cavanaugh of Voya Financial is saying

“Now that the earnings season is wrapped up, markets are more beholden to macro data. Weakness in oil prices and skepticism about the passing of the tax bill are also weighing on sentiment,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

Despite the drop on the day, major indexes remain within 1.5 percentage points of record levels.

Any pullback at this stage should be viewed as an opportunity to buy, however. Earnings outlook for U.S. stocks, especially with the synchronized global growth environment is still good,” Cavanaugh said.

And U.S. consumers continue to pile on more debt as if there is no tomorrow. This week we learned that U.S. household debt has almost reached the 13 trillion dollar threshold

Americans’ debt level rose during the third quarter, driven by an increase in mortgage loans, according to a Federal Reserve Bank of New York report published on Tuesday.

Total U.S. household debt was $12.96 trillion in the three months to September, up $116 billion from the prior three months. Debt levels were $605 billion higher than during the third quarter of 2016.

The fundamentals do not support this kind of irrational optimism.

What the fundamentals have been telling us is that in the absence of central bank support we should see the markets start to decline, and that it is quite likely that a painful recession is on the horizon.

As the next crisis erupts, the mainstream media is going to respond with shock and horror. But the only real surprise is that this ridiculous bubble lasted for as long as it did.

The truth is that a market decline is way overdue. If central banks had not pumped trillions upon trillions of dollars into the global financial system, there is no possible way that stock prices would have ever gotten so high, and now that the central banks are removing the artificial life support we shall see how the markets do on their own.

The Single Biggest Threat To The Global Economy

November 7, 2017 Leave a comment

Ian Jenkins

Cybercrime attacks are expected to cost us $6 trillion a year by 2021. In a single year, cyber terrorism could cost us three times more than the entire U.S. housing and real estate industry is currently worth.

The Chairman of IBM calls it the “greatest threat to every profession, every industry, every company in the world”. Cisco cites a report saying it will be more profitable than the global trade of all major illegal drugs combined. ATT calls it the greatest transfer of economic wealth in history.

The response? A desperate scramble to ramp up spending to protect their businesses, and another massive opportunity for investors.

With an estimated 4,000 cyber-attacks a day —and counting—the solution has to be serious. It has to be military-grade. And one little-known company has emerged with a unique military-grade cyber defense solution that even small- and medium-sized business can afford.

Hill Top Security Inc. is one of the world’s first cyber security companies that has met the U.S. Department of Defense’s rigorous FIPS-FIAR standard for financial transactions. Hill Top is currently in the process of being acquired by Big Wind Capital Inc. (CSE: BWC; OTC:BGGWF).

And if they can reach a mass market with affordable solutions, they’ll be on track to become a market leader.

Right now, this is only on the radar of elite cyberdefense circles.

Soon, it will be on everyone’s. Not least because it is soon to be acquired by Big Wind Capital and it just partnered with Guardsight, a specialist in Managed Security Services and Tactical Cyber Security Operations for Fortune 1000 companies.

Here are 5 reasons to watch Hill Top/Big Wind Capital (CSE: BWC; OTC:BGGWF) closely, at the climax of a security threat that is more materially damaging than any other form of terrorism the world has ever seen:

#1 Welcome to World War III

World War III has already been declared, and it’s going down in cyber space.

Cyber criminals are now running organized cartels on the dark web to launch highly sophisticated and coordinated attacks.

The WannaCry cyber-attack is now infamous. The virus managed to take over 300,000 personal computers and demand $90 million in ransom. But that could have been just a test run, and $90 million is just a drop in the bucket.

Most recently, the U.S. was shaken by the Equifax hack. The personal data of more than 145 million Americans was stolen from Equifax credit-reporting agency. Now almost half of the country’s population is at risk of identity theft, bank account theft and credit destruction.

It is the Equifax attack more than anything that brings the cybercrime picture into full view. Anyone who thought it was a futuristic threat will now think again. It’s already hit half the country, and it’s likely not over yet.

And that was one of only three major breaches in the past two months. Hackers even breached the Securities and Exchange Commission (SEC) in late September, with stolen data likely used for illegal stock trading. Just days later, Deloitte disclosed a cyber-attack on its systems that breached its blue-chip clients’ non-public information.

  • The average cost of each breach of data was $4 million in 2016, according to a global study by the Ponemon Institute. But in the U.S., as indicated in that study, the average cost has soared beyond that to $7 million.
  • Right now, theft of trade secrets is costing nations between 1 percent and 3 percent of their entire GDP, or anywhere from $749 billion to $2.2 trillion every year, according to an IDG survey.
  • There are roughly 4,000 cyber-attacks every day—and counting.
  • In just four years, we’ll be looking at a global cost of $6 trillion every year in cybercrime damages. Just a year ago it was $3 trillion.
  • 60 percent of small businesses close down within 6 months of a cyber-attack.

The bottom line? For criminals, this blows the illegal drug trade away. For investors in the crime-fighting side of things, it’s a $200-billion-plus opportunity over the next few years and Hill Top/Big Wind Capital (CSE: BWC; OTC:BGGWF) is primly positioned to be an important player in the sector.

#2 Cyber Security Spending Soaring

The problem is epic, and it calls for an epic solution—and epic spending.

Cyber security spending is set to go over $1 trillion per year by 2021. Information security is only one tiny sub-set of the cyber security beast, and spending in this microcosm is expected to reach over $86 billion this year. Next year, spending in this tiny sub-sector is expected to hit $93 billion.

Basically, our digital networks can be breached in many ways. Each new tech trend, Forbes notes, creates new weaknesses, from cloud computing and big data to the Internet of Things (IoT) and beyond. The more we spend on new technology, the more we spend on cyber security, so this is only going in one direction— and fast.

And we’re not keeping up with the criminals. It’s prohibitively expensive, but cyber-attacks are even more expensive, especially for small- and medium-sized businesses.

JP Morgan spent upward of $500 million in 2016 on cyber security, according to Forbes. Only the biggest of the big can afford this, and even they are not thwarting attacks fast enough.

The government is spending, too. Major data breaches at the Office of Personnel Management and the IRS prompted Trump in May to sign an executive order for all federal agencies to review and update their old security systems.

#3 First Affordable Military-Grade Solution

Businesses across every industry, everywhere in the world, are under assault, and smart investors are finding profits in the companies that show the toughest line of defense.

Hill Top Security/ Big Wind Capital (CSE: BWC; OTC:BGGWF) offers a unique, proven platform—and it is one of the first in the world to give small and medium businesses the ability to protect themselves and their clients in the cyber space using military-grade solutions.

And this is military-grade cyber security. In fact, the same people behind Hill Top were hired by the U.S. intelligence community to build the auditing platform to keep track and detect financial anomalies.

There’s nothing like it in the world, and now it’s being opened up to SMBs, giving them access to a unique platform that can get them back in business and fully operational and fully secured after a severe cyber-attack.

But it’s not just a reaction to cyber-attacks, it’s also preventative. Hill Top’s artificial intelligence (AI) predicts threats for you, and alerts you to any suspicious activity. And their platform is secure enough to have gained the trust of the U.S. Defense Department.

Hill Top’s Vauban DNA system was originally developed as a global logistics solution for massive parallel events (think UPS). But then it added an intelligence-gathering element with military-grade security for the U.S. government. Now it’s also the new breed of financial security, with cryptocurrency tech incorporated to support market trading and transactions.



The three elements combined make this a powerhouse of mainstream cyber security.



It’s also made Hill Top a takeover target, catching the eye of Big Wind Capital (CSE: BWC; OTC:BGGWF). In July, Big Wind announced it would acquire Hill Top, and just last week this deal was concluded for this premier military-grade cyber security company.

This is the company that’s planning on taking real cyber security mainstream.

And the competition is lacking.


#4 Cyber Security for Trillion-Dollar Cryptocurrency

Hill Top/Big Wind Capital (CSE: BWC; OTC:BGGWF) is also becoming a player force in one of the hottest industries on the planet right now—cryptocurrency, because it is uniquely positioned to secure and track crypto coins.

With Bitcoin hitting $6,000 per coin on 21 October, and breaking new records as its adoption surges, cryptocurrency is no longer just a game for individual miners with fast computers. It’s now about industrial-scale mining and billionaire backing. It’s also about industrial-scale security.

Hackers necessarily love cryptocurrency. The top Ethereum exchange was hacked in July, and since 2011, there have been dozens of crypto coin heists. In just two recent cases, hackers stole $32.6 million and $40 million, respectively.

With governments also looking at cryptocurrency and ways to regulate the trade, security is beyond paramount, and Hill Top already has a proven background in auditing, tracking and managing cryptocurrencies without compromising owner anonymity.

Now it’s also taking the crypto world to the massive mining industry.

Hill Top’s MineCoin system is a new advanced-stage development. It’s an industry-specific cryptocurrency application developed with Blockchain technology and is designed to give mining industry traders a highly secure cryptocurrency platform where they can buy, sell and exchange precious metals across international borders. With MineCoin, users will be able to exchange their own currency for cryptocurrency and purchase or sell precious metals on the open market.

#5 Defense Sector’s Top Cyber Minds

Behind Hill Top, and now Big Wind (CSE: BWC; OTC:BGGWF), we’ve got some of the defense industry’s top cyber security minds with military and commercial experience in everything from the U.S. Army and Marine Corps to Wall Street and Silicon Valley.

These are mission-critical figures, and they’ve already proven they can deliver.

  • Dave DiEugenio, on the Hill Top advisory board, is a Marine Corps Recruiting CIO and VP and Director of Imperatis Corp. cyber solutions group.
  • Tom Gilmore, Hill Top’s COO, is a veteran information systems security officer, engineer and ethical hacker. He’s also a former U.S. Marine whose worked with the FBI, the U.S. State Department, the U.S. Army and the U.S. National Guard.
  • Hill Top CEO, Corby Marshall, is an entrepreneurial executive, West Point grad and former U.S. Army officer with extensive experience in distributed computing analytics and software development. He’s got a proven track record for delivering large-scale, mission critical applications. His genius has been tapped by the U.S. Army, Informatica and Headcase, among others.
  • Hill Top CTO, Neil Wright, is yet another West Point grade and former U.S. Army officer, with NYSE experience, Treasury experience and an impressive track record with UPS Lead Architect and Rare Medium.
  • Kim Pease, in charge of Hill Top’s SVP Product Management, is a senior architect with mission-critical deliverable experience working for Informatica, ESPN and JP Morgan.

This is where Wall Street and the Defense industry come together best.

The timing is key. Right on the edge of a breakout after being acquired by Big Winds, Hill Top’s route to market is that of a potential multi-million-dollar white label. Why? Because it’s already in advanced negotiations with two major U.S. firms for multi-million-dollar contracts. And it’s already got existing government and commercial customers which company guidance estimates will bring in $2.3 million-plus in revenue in three years.

That’s three distinct cyber security services that could corner this market:


Now it’s targeting SMBs, which number over 27 million in, and has revenue from its first public sector clients is coming online, which is expected to eclipse revenues from government contracts at a fast pace.

When you’ve got a trillion-dollar problem and a unique solution is offered up by a Who’s Who in military cyber defense, confidence runs at an all-time high. But news flow on this one is expected to be fast-paced. This elite set-up is about to hit the mainstream radar, so for early-in investors, it’s ‘mission-critical’.

What Could Pop The Everything Bubble?

November 1, 2017 1 comment

Charles Hugh Smith

I’ve long held that if a problem can be solved by creating $1 trillion out of thin air and buying a raft of assets with that $1 trillion, then central banks will solve the problem by creating the $1 trillion out of thin air—nothing could be easier.

This is the lesson of the past eight years: if a problem can be solved by creating new money and buying assets, then central banks will solve that problem.

Problem: stock market is declining. Solution: create new money and buy, buy, buy stock index funds. Problem solved! Market stops falling and quickly rebounds as “central banks have our backs.”

Problem: interest rates are inhibiting lending and growth. Solution: create a few trillion units of currency and buy enough sovereign bonds to drop interest rates to near-zero.

Problem: nobody’s left who can afford to buy the new nosebleed-priced flats that underpin China’s miracle-grow economy. Solution: create new currency, lend it to local government agencies who then buy the empty flats.

Problem: stagnant employment and deflation. Solution: create a trillion in new currency, buy a trillion in new government bonds that then fund infrastructure projects, i.e. bridges to nowhere.

And so on. Any problem that can be solved by creating a few trillion out of thin air and buying assets will be solved.  The mechanism to solve these problems—creating currency out of nothing—is like a perpetual motion machine: there are no intrinsic limits on the amount of new money that can created at near-zero interest, as the interest payments can be funded by new money.

Even better, the central bank (the Federal Reserve) buys Treasury bonds with the new currency that generate income, which is then returned to the Treasury: a perpetual-motion money machine!

The policy of creating trillions in new currency and buying trillions in assets has inflated an everything bubble, a bubble in all the asset classes being supported or purchased by central banks and their proxies.

Many observers wonder what, if anything, could pop the everything bubble.

This leads to an interesting question: what problems can’t be solved by creating another trillion and buying assets?

What Problems Can’t Be Solved by Creating Another Trillion and Buying Assets?

The past eight years have created the comforting illusion that essentially all problems in the modern era of globalized, centralized, debt-based, state-cartel capitalism in all its flavors (Chinese, Japanese, European, American, etc.) can be solved by creating as many trillions as are needed (whatever it takes) and buying assets or issuing guaranteed lines of credit with the new currency.

But there are some structural problems that can’t be solved by this mechanism. Some are primarily economic, some are primarily political-social, but all of them affect the entire system, not just the financial realm.


We’re told that inflation—the loss of purchasing power of a currency—is near death and this greatly saddens the globe’s central bankers, who desperately need inflation to push wages higher and reduce the burden on debtors.

So let’s say, just as a thought experiment, that central banks get their much-desired inflation, but it runs hotter than their 2% annual target.  Once inflation is embedded in expectations and the supply chain, printing another trillion and using it to buy stocks, bonds, empty flats, etc. won’t make inflation go away.  Rather, the inflation in asset valuations generated by endless central bank buying if assets ends up feeding real-world inflation as all this new currency doesn’t actually produce more goods and services; it simply expands the supply of currency sloshing around the world looking for speculative yield.

The chorus of voices advocating for Universal Basic Income (UBI) is growing, and central banks will increasingly be pressured to issue new currency to fund UBI and its equivalents—what’s known as helicopter money, as the central bank issues currency that then funds deficit spending, i.e. the government dropping cash into the real economy.

Helicopter money comes in a variety of forms: debt forgiveness, negative tax rates (i.e. tax rebates to those who owe no income taxes), and cash stipends such as UBI. In every case, this helicopter money doesn’t expand the supply of goods and services; all it does is expand the funds available for consumption.

While China may be able to export deflation in goods that are tradable, that is, commoditized goods that can be made anywhere and shipped to markets elsewhere, nontradable goods and services such as local government services, housing, groceries, fast food, most healthcare services, haircuts, education, etc.—the bulk of the real economy—soar in price as the supply of money expands faster than the supply of these goods and services.

This is why inflation is already running extremely hot in nontradable sectors (which are often dominated, funded or controlled by the public sector/government), while deflation is still visible in tradable goods such as TVs, software, etc. I covered real-world inflation rates in The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016))

Much of the real-world inflation in sectors such as healthcare is invisible to protected classes because it’s being absorbed by employers and the government, a topic I covered in Inflation Isn’t Evenly Distributed: The Protected Are Fine, the Unprotected Are Impoverished Debt-Serfs (May 25, 2017)

Real-world inflation is also distorted by hedonics and substitution, tricks that lower the official rate of inflation but don’t change the reality that the average prices paid for vehicles have risen substantially, despite the official claim that vehicle prices have been flatlined for years, a topic I addressed in About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service(October 11, 2017)

Be Careful What You Wish For: Inflation Is Much Higher Than Advertised (October 5, 2017)

As political pressure on central banks mounts to fund QE for the people, QE for Main Street, etc., that is, helicopter money in one form or another, the introduction of new currency into the real economy has the potential to make real-world inflation undeniable.

Once inflation is undeniably in the 5% to 7% range, who will be willing to buy a negative-interest rate bond, or a bond paying 1%?

Another potential engine of inflation that’s widely discounted is global shortages of key commodities such as oil, grain, fresh water, etc. The global economy has come to view cheap, abundant commodities as the natural and permanent state of affairs, but history tells us that abundance and low prices are not permanent.  Since essential commodities are integral to the global supply chain, any price increases due to scarcity or supply disruption quickly feed inflation into the entire supply chain.

Inflation is a problem that creating another trillion won’t solve; creating and distributing another trillion or two will actually make the problem worse.

Rising Social Disorder Due to Soaring Wealth-Income Inequality

Famed financer Ray Dalio recently penned a commentary labeling the divergence of the wealthy elite from the bottom 90% The Most Important Economic, Political And Social Issue Of Our Time.

This is a topic many alt-financial bloggers have covered for years; I’ve penned dozens of essays on the topic, most recently The Fading Scent of the American Dream (October 16, 2017)

This chart depicts the inconvenient reality: central bank currency-creation-asset-buying has enriched the top of the wealth-power pyramid, with limited trickledown to the top 10% and negative effects on the bottom 90%.

The consequences of this outcome of central bank stimulus-for-the-already-wealthy can manifest in all sorts of ways.

Political pressure on central banks may grow, forcing policy changes or even limiting the scope of central bank largesse to banks and financiers.

Social movements demanding UBI and other income-distribution policies may become mainstream, a dynamic that as described above will add to the inflationary pressures building in the real world.

Once again, creating another trillion and buying more assets held by the wealthy won’t fix this problem—it will only make it worse.

Fragmentation of the Elites

As I have often noted, historian Michael Grant identified profound political disunity in the ruling class as a key cause of the dissolution of the Roman Empire. Grant described this dynamic in his excellent account The Fall of the Roman Empire, a book I have been recommending since 2009.

The chapter titles of the book provide a precis of the dynamics Grant identifies:

The Gulfs Between the Classes

The Credibility Gap

The Partnerships That Failed

The Groups That Opted Out

The Undermining of Effort

I’ve discussed profound political disunity in dozens of essays since 2009, for example, When Did Our Elites Become Self-Serving Parasites? (October 4, 2016)

The Real Trouble Begins When Rising Inequality Splinters the Elites (October 22, 2015)

There are a number of manifestations of profound political disunity we can discern:

— The splintering of the technocrat class as soaring wealth and income inequality narrows opportunities for financial security for the class that considered security and wealth a birthright.

— The fragmenting of the Deep State, the unelected, permanent leadership of the Establishment, a subject I’ve addressed since 2014: The Age of Disintegration: Political Disunity and Elites At War.(November 21, 2016)

— The fragmentation of the two political parties into warring camps that have little common ground in a struggle for control of the rising tide of populism.

— The splintering of the social order into conflicting classes of Haves and Have-Nots, a topic I covered in America’s Nine Classes (April 13, 2015).

Once again, creating another trillion and buying assets—a policy that enriches the financial elites at the expense of every other class and elite—doesn’t solve the problem, it only makes it worse.

Popping the Everything Bubble Created by Central Bank Currency Creation-Asset Buying

As central bank creation of currency and asset purchases fail to solve the problems outlined above, these dynamics will undermine the status quo rather than prop it up.  As central bank policies are increasingly fingered by the mainstream as the source of soaring wealth-income inequality, central bank policies supporting credit/asset bubbles will either be limited or cut off, and at that point all the credit/asset bubbles will pop.

In Part 2: What To Invest In When The Everything Bubble Bursts, we lay out our how to best prepare for the social discord, political disorder and financial upheaval that will result when the central banks inevitably lose control of the system.

As today’s bubble-drunk asset prices start plummeting, what investment opportunities will offer the best returns?

Dow posts first 8-quarter win streak in 20 years

October 1, 2017 Leave a comment


The S&P 500 closed at a record Friday, helped by gains in technology stocks on the last trading day of the quarter.

The tech-heavy Nasdaq composite rose more than half a percent to post its 50th record close for this year. The Dow transports and small-cap Russell 2000 also hit record highs.

The Dow Jones industrial average closed up nearly 24 points, within 0.1 percent of its record high. Goldman Sachs contributed to the most to gains in the index.

The index posted quarterly gains of 4.9 percent its eighth straight quarter of gains for the first time since 1997.

The S&P 500 rose nearly 4 percent in the quarter, also its eighth straight quarter of gains. The Nasdaq composite gained almost 5.8 percent for the quarter, its fifth straight positive quarter since 2015.

Information technology was the best performing stock sector in the S&P in the third quarter, up 8.3 percent in a fifth-straight quarter of gains. Consumer staples was the only sector to fall in the third quarter.

The S&P and Dow rose about 2 percent in September, while the Nasdaq gained about 1 percent for the month.

“The SPX has broken out of its consolidation phase, generating a bullish “pop” in the daily stochastics,” BTIG Chief Technical Strategist Katie Stockton said in a Friday morning note. “This supports near-term positive follow-through, and suggests it will take at least a couple of weeks before ‘overly bullish’ sentiment gives way to a pullback.”

“Importantly, the Russell 2000 Index has confirmed a breakout above final resistance at its July high, reflecting the expanding breadth behind the rally,” she said.

Several major biotech stocks fell after the U.S. Food and Drug Administration made it easier for the public to search for drug side effects through a database.

The CBOE Volatility Index (.VIX), widely considered the best gauge of fear in the market, traded lower near 9.5.

DJIA Dow Industrials 22405.09
23.89 0.11%
S&P 500 S&P 500 Index 2519.36
9.30 0.37%
NASDAQ NASDAQ Composite 6495.96
42.51 0.66%

The average daily range for the S&P 500 this month was 0.4 percent, the least volatile September on record, according to Ryan Detrick, senior market strategist, LPL Financial.

Meanwhile, trading volume has fallen. Tabb Group data showed average daily volume in September of 6.3 billion marked an 11 percent decline from the prior year.

October is setting up to be a good month for stocks, according to the Stock Trader’s Almanac.

In years following a presidential election, the Dow Jones industrial average has been up 11 times with an average gain of 0.7 percent, the almanac said, citing 17 years. But the almanac also warned that in the last three such years ending in “7,” October was when the stock market plunged: 2007, 1997 and 1987.

The S&P and small-cap Russell 2000 index closed at a record Thursday after the release of the GOP’s highly anticipated tax reform framework Wednesday.

“The tax framework, I think, it’s a lot of noise. Very few specifics for markets and investors to make decisions on,” said Craig Bishop, lead strategist, U.S. Fixed Income Strategies Group at RBC Wealth Management. The proposal’s release does mark an “opening salvo for discussions to begin,” Bishop said.

However, the Republican party has struggled to repeal and replace the Affordable Care Act this year despite having a majority in Congress. The tax framework released this week also contains some highly debatable proposals such as raising the tax rate for the lowest income earners while reducing the rate on wealthy individuals, contrary to what polls show Americans prefer.

Closing Bell Exchange: Stocks on track for first positive September since 2013

Closing Bell Exchange: Stocks on track for first positive September since 2013  

In economic news, the Federal Reserve’s preferred measure of inflation posted its slowest pace of annual increase since November 2015. The personal consumption expenditures index, excluding food and energy, rose 1.3 percent in the 12 months through August, according to the Department of Commerce.

The Chicago PMI unexpectedly rose to 65.2 in September. The final read on consumer sentiment from the University of Michigan showed a slight decline from to 95.1 in September from 96.8 in August.

Treasury yields rose after the PMI report and after news former Federal Reserve Governor Kevin Warsh met with President Donald Trump and Treasury Secretary Steven Mnuchin Thursday. It’s not yet clear what they discussed, but The Wall Street Journal, citing a White House source, said the meeting was to discuss the job of heading the Federal Reserve. Fed Chair Janet Yellen’s term expires in February.

“Warsh is believed to be on the more hawkish side,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie.

Later Friday afternoon, The Wall Street Journal, citing a White House source, said Trump has also spoken to Governor Jerome “Jay” Powell for the Fed chair position.

“If anyone other than Yellen [gets appointed] he’s probably going to have more of a deregulatory impulse,” said Eric Stein, co-director of global fixed income at Eaton Vance Management.

The 2-year yield traded near 1.48 percent, around nine-year highs hit earlier in the week. The yield climbed amid hopes of tax relief and after encouraging reports on business spending and Fed Chair Janet Yellen’s remarks that indicated the Fed will maintain a gradual pace of monetary policy tightening.

The 10-year Treasury yield traded near 2.33 percent, near its highest since July 13.

The U.S. dollar index traded near 93.06 after hitting Thursday its highest since August 18. The index is still more than 2.5 percent lower for the third quarter, tracking for its third-straight quarterly loss since 2008.

The euro weakened after hitting $1.1803, its highest against the dollar since September 26.

U.S. crude oil futures settled slightly higher at $51.67 a barrel after the weekly oil rig count rose by 6 rigs to 750. Oil rose 12 percent in the third quarter, its best in more than a year.

Gold futures for December delivery fell $3.90 to settle at $1,284.80 an ounce. Gold fell 2.8 percent in September for its worst month since November.

The German DAX gained 4 percent for the quarter for its first five-quarter win streak since 2014.

The iShares MSCI Emerging Markets ETF (EEM) closed up 1.2 percent, its first positive day in eight. EEM gained 8.3 percent for the quarter.

Global stock markets have climbed as underlying economic growth around the world has been solid.

It’s the “synchronized global recovery,” Ben Pace, chief investment officer at HPM Partners, said of stock markets’ run higher. “I don’t think there’s any meaningful economy in the world that’s in recession right now.”

Putin Ends US Dollar Trade At Russian Seaports

September 24, 2017 Leave a comment

(The American Vagabond) Whether in response to rising scorching tensions with the US, or simply to provide support for the ruble, on Tuesday Russian President Vladimir Putin instructed the government to approve legislation making the ruble the main currency of exchange at all Russian seaports by next year, RT reported citing the Kremlin website.

The head of Russian antitrust watchdog FAS Igor Artemyev, many services in Russian seaports are still priced in US dollars, even though such ports are state-owned. So, in order to “protect the interests” of dockworkers and their complyees with foreign currency obligations, the government was instructed to set a transition period before switching to ruble settlements.

The proposal to switch port tariffs to rubles was first proposed by Putin a year and a half ago, but it was mothballed only to pick up speed again in recent days.

Originally, the idea was rejected by large transport companies, which said they prefer to keep revenues in dollars and other foreign currencies due to sharp fluctuations on the volatile ruble. However, the Russian anti-trust watchdog said the decision would force foreigners to buy Russian currency, which would stabilize rates and be good for the ruble.

In 2016, Artemyev’s agency filed several lawsuits against the largest Russian port group NMTP.

”According to FAS, the group of companies set tariffs for transshipment in dollars and raised tariffs from January 2015 “without objective grounds.”

The watchdog ruled that NMTP abused its dominant position in the market and imposed a 9.74 billion rubles fine, or about $165 million at the current exchange rate. The decision was overturned by a court in Moscow in July this year.

While Russia’s stated motive for the unexpected redenomination of trade at some of its largest trading hubs has to do with domestic economic policies, there is speculation that the timing of this decision has been influenced by the recent diplomatic fallout between the US and Russia, the result of which would be an heightened demand for the ruble, especially since it is rather complicated to find alternative sources for Russia’s largest export by a wide margin: crude.

And while it is still early to discuss whether Moscow has launched the “Petrorouble”, Putin’s rejection of the Petrodollar in yet another aspect of economic life will raise quite a few eyebrows around the globe.

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