Tag Archive: bubble

Are Stocks Overvalued, Report 24 Dec 2018

We could also have entitled this essay How to Measure Your Own Capital Destruction. But this headline would not have set expectations correctly. As always, when looking at the phenomenon of a credit-fueled boom, the destruction does not occur when prices crash. It occurs while they’re rising.

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Three Years Ago QE, Last Year It Was China, Now It’s Taxes

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart here from 54.3 the month prior to 54.8 last month.

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Necessity is the Mother of Invention – Retirees Desperate Reach for Yield

Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees...

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All In The Curves

If the mainstream is confused about exactly what rate hikes mean, then they are not alone. We know very well what they are supposed to, but the theoretical standards and assumptions of orthodox understanding haven’t worked out too well and for a very long time now. The benchmark 10-year US Treasury is today yielding less than it did when the FOMC announced their second rate hike in December.

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Chinese Philosopher Kings, Losing their Yuan FX Religion?

It took a while, but the world are slowly coming to grips with the simple fact that the red-suzerains in Beijing are not the infallible leaders en route to a new superior economic model as they thought they were. All the craze that emanated from the spurious work of Joshua Cooper Ramo, which eventually led to works like “How China’s Authoritarian Model Will Dominate the Twenty-First Century,” are slowly catching up to reality.

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How to Invest in the New World Order

In our latest Toward a New World Order, Part III we ended by promising to look closer at investment implications from the political and economic shift we currently find ourselves in; and that story must begin with the dollar.

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Toward A New World Order, part III

A new world order is coming of age and the transition is painful to accept for a Western middle class with a deep-seated sense of entitlement. We showed how the West feels threatened globally in Toward a New World Order and followed up explaining how this translate into domestic politics in Toward a New World Order Part II. We will now continue this series by showing how gross economic mismanagement have created the new political class that we...

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Do our money managers really believe this will end well?

An economic bubble is essentially an economic activity that cannot sustain itself without a continuous influx of new money and credit to bid away real resources from self-funding endeavors. Financial bubbles are obviously closely related as financial...

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What Happens When Credit Is Mispriced?

Keith Weiner explains what happens when credit is mispriced. The rich are privileged because they can profit on the volatility and the bubbles the cheap credit createes.

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Why Can’t The Fed Spot Bubbles?

The topic of whether the Federal Reserve can see bubbles in advance, and what they can do about them, is hotly debated. The price of an earning asset depends directly on the interest rate. This is because of time preference. It is better to have your cash today than tomorrow. The Fed’s problem is that the calculation depends on a rate of interest that it heavily influences. Its analysis is therefore circular and self-fulfilling. It’s like taking a...

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2002-2011: Boom of Emerging Markets and Commodities



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