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September 23, 2021 | China’s ‘Controlled’ Credit Explosion

This report gives a good overview of the global interconnections in our highly levered financial markets and economies. Deflation in the global property sector is needed.  It will be painful but also helpful longer-term in redirecting capital from realty speculation to more productive investment. Real Vision’s Roger Hirst uses Refinitiv’s best-in-class data to look at […]

September 22, 2021 | Bubbling Assets Need More Buyers–Stat!

While some wait breathlessly for self-enriching US Fed members to hold forth on their next policy tricks, this chart shows the relative size of US financial assets at 5.5x US gross domestic product today compared with 3.5x at the tech bubble top in 2000, and less than 3x from 1950 through the mid-1990s. Looks about as […]

September 21, 2021 | China’s Ponzi scheme in global spotlight again

There are parallels here for other economies like Canada, which have enabled an unhealthy reliance on debt and realty bubbles. “If you want to teach a lesson you have to cause pain.” China Beige Book CEO Leland Miller joins Yahoo Finance Live to discuss why China property fears are concerning investors.  Here is a direct video […]

September 20, 2021 | Lethal Levels of Financial Leverage are Highly Contagious

As I discussed last week in Ponzi Markets Unravelling Once More, global asset markets have never been more over-valued, leveraged and interconnected in our lifetimes.  This presents a massive instability risk for all of us, whether we appreciate it or not. This is why insolvency in one major company (Evergrande) or sector (like Chinese realty) can quickly […]

September 17, 2021 | Revolving Door Project: Trading Fed Governors Must be Put on Leave

Today, Revolving Door Project Executive Director Jeff Hauser called on Federal Reserve Board of Governors Chair Jerome Powell to place Boston and Dallas bank presidents Eric Rosengren and Robert Kaplan on administrative leave while the Federal Reserve investigates possible insider trading. Read Hauser’s letter to Powell here.  Hauser also issued this statement about Fed Chair Powell: […]

September 16, 2021 | Decelerating Global Economy Strained by Rising Greenback

As the global economy continues to decelerate, the US dollar is rising and key commodities (priced in dollars) are tumbling.  Iron ore, silver and lumber are all back to where they were before COVID-19 vaccines spurred reopening euphoria in November 2020. As shown below in my partner Cory Venable’s chart, the commodity-centric Canadian dollar (FXC) […]

September 15, 2021 | Former SEC Prosecutor on Why Law Enforcement has Failed in Finance

This 2019 speech should help to provoke a new regulatory enforcement regime, not just in America.  Until we, the people, insist, nothing is going to change. James Kidney explains how the SEC and the Department of Justice fumbled the prosecutions of Wall Street bankers after the crash of 2008 and explains how the SEC and […]

September 14, 2021 | Who Gives a Damn?

Disclosures report that at least two of the US Federal Reserve’s 12 regional bank presidents (Kaplan and Rosengren) used inside knowledge of central bank policy decisions to enrich themselves through millions of dollars in individual stock trades since 2020.  The profits were on top of the $183,000 average annual salary received (2019 number). After public […]

September 8, 2021 | El Salvador’s Bitcoin experiment

Being paid in highly volatile digital currencies that are pumped and dumped by speculators hourly, is a risk that workers cannot afford.  After rebounding nearly 75% since July, Bitcoin fell 10% in an hour yesterday and the Bloomberg Galaxy Crypto Index, which tracks some of the largest digital tokens, lost as much as 19 percent.  […]

September 1, 2021 | Canada’s Economy Contracts in Q2

Canada’s economy unexpectedly shrank 0.3% in the second quarter for an annualized contraction of 1.1% versus the consensus forecast of a 2.5% gain.  Declines in home resale activities and exports were the largest negatives.  Homeownership transfer fees shrank 17.7%.  Constraints in the auto sector led to a 4% decrease in exports. Business inventories, government expenditure, […]

August 31, 2021 | SEC Investigating “Gamification and Behavioral Prompts” in Financial Markets

These obvious admissions are ridiculously overdue, but public comments by the new Securities Exchange Commission (SEC) Chair Gary Gensler offer a glimmer of regulatory hope. Gensler admitted this week that payment for order flow — the back-end payment brokerages receive for directing clients’ trades to market makers — has “an inherent conflict of interest”  and that banning […]

August 24, 2021 | Stock-Linked Executive Pay and Buybacks: a Destructive Combo

A new report from the Institute for Policy Studies finds that half of the 100 S&P 500 firms with the lowest median worker wage revised their pay rules in 2020, such that the median worker pay declined 2%, while CEO pay rose 29%.  Sixteen of those companies lost money in 2020 while having the highest […]

August 19, 2021 | Spending Splurge Bill Coming Due

The good news, as shown below, is that Spain, Canada and the UK are on track to have 70% of their populations fully vaccinated against COVID-19 within weeks (green shows the percentage with both shots and grey those with the first).  On the other hand, most of the global population remains possibly years (?) from […]

August 18, 2021 | Priced Out

Friday, it was news that US consumer confidence fell 13% from July into August to 70.2 (vs 81.3 expected), the lowest since 2011. Yesterday, it was news that US retail sales for July—purchases at stores, restaurants and online—fell 1.1% compared with June.  Today, we learn that US mortgage applications for new homes fell for the second consecutive week (19% lower […]

August 17, 2021 | Spanish Engineer Extracts Drinking Water from Air

Powered by electricity (which can now be derived cheaply from solar and wind) this is what productivity-enhancing innovation looks like. AQUAER water condenser and engineer Enrique Veiga explained his invention this month in a Reuters video here: “What our machine does is to replicate the cycle of water. It uses the air in the environment, our […]

August 16, 2021 | Optimism and Drownproofing are Two Halves of a Whole

Life is full of risk every day in every way.  Acknowledging this is not pessimistic; it allows thinking people to be proactive.  Risk management requires that we hope for the best while trying to drownproof an uncertain future. Cultivating health is job number one.  Beyond our bodies and environment, this means minimize debt, keep costs […]

August 13, 2021 | Speculation: Tale as Old as Time

As Ben Graham pointed out in 1959, the typical experience of the speculator is one of temporary profit followed by ultimate loss. Yet, those who buy corporate securities without regard for valuation are speculating, whether they know it or not. Another generation is learning old lessons the hard way; see How Millennial Investors lost Millions on […]

August 12, 2021 | Dis-Inflating into 2022

Inflation has always been a lagging economic indicator and as transitory as financial bubbles. In the last forty years, the National Bureau of Economic Research (NBER) reports that the low in inflation readings occurred an average of 15 quarters (3.75 years) after the end of each recession. The average number of years from the beginning […]

August 11, 2021 | Market Scams and Fraud ‘Top to Bottom’

This discussion offers insight into the present ‘investment’ landscape dominated by scams, fraud, deception and participants that are oblivious or apathetic and speculating anyway. Not just in China…Whatever people are doing here, it’s not investing.  Gaming perhaps; but it’s not a game.  Individuals have everything to lose. Carson Block, chief investment officer of Muddy Waters […]

August 10, 2021 | Stock-linked Pay Driving Destabilizing Trends

A new analysis by the Economic Policy Institute finds that CEOs of publicly traded companies in the United States saw their compensation rise by 1,322% between 1978 and 2020—while the pay increase of the typical worker was just 18% during that same period.  See Since 1978 CEO pay has risen 1,322%. As shown below, in 2020, […]

August 9, 2021 | Typical Speculator Experience: Temporary Profit and Ultimate Loss

John Hussman’s August letter The Folly of Ruling Out a Collapse is historically illuminating, as always, and includes some timeless quotes on the distinction between investing and speculation from the father of value investing, Ben Graham.  Here’s one excerpted from December 17, 1959: Speculators often prosper through ignorance; it is a cliché that in a roaring bull […]

August 5, 2021 | Doing Today What will Benefit Us in the Future

The U.S. government is working toward a bipartisan plan for $550 billion in infrastructure spending over the next five years (you can see the details and how it will be financed here.) It’s a tiny start on the trillions in this type of investment needed. Today’s test for all developed economies is how to transition the […]

August 4, 2021 | Bank Lending Flatlines as Investment Prospects Dim

As we discussed in our July client letter “Tapped Out”, and here in Slowing Growth is Natural Product of Debt Hangover, a weakening credit impulse globally continues to bode poorly for economic momentum for the foreseeable future. As shown below since 2016, the change in the flow of credit (commercial loans taken) has stalled over the […]

August 3, 2021 | Slowing Growth is Natural Product of Debt Hangover

In 1933, Irving Fisher, one of America’s most influential economists, noted that economic growth declines in highly indebted economies because debt increases current spending in exchange for a decline in future expenditures unless the debt is self-financing, i.e., helping to generate an income stream that repays the principal and interest.  Thus, debt borrowed for personal consumption, […]

July 30, 2021 | Inflation and Interest Rates: All Roads Lead Back to Rome

A. Gary Shilling’s excellent August Insight is out today (subscription only); some takeaways can be found in his recent Bloomberg Quint article here: With bond yields, something has to give, here’s the punch line: The yield on the benchmark 10-year U.S. Treasury note averaged 0.79% from 2007 through last year after adjusting for inflation as measured by […]

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