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The Great Market Tide Has Now Shifted To Risk-Off Assets

A global sea-change in risk appetite & sentiment
Friday, July 8, 2016, 3:03 PM

In the conventional investment perspective, risk-on assets (i.e. investments with higher risks and higher potential returns) such as stocks are on a see-saw with risk-off assets (investments with lower returns and lower risk, such as Treasury bonds). When risk appetites are high, institutional managers and speculators move money into stocks and high-yield junk bonds, and move money out of safe-haven assets such as gold and U.S. Treasuries.

But recently, markets are no longer following this convention. Safe haven assets such as precious metals and Treasuries are soaring at the same time that stock markets bounced strongly off the post-Brexit lows.

Risk-on assets (stocks) rising at the same time as safe-haven assets is akin to dogs marrying cats and living happily ever after. 

What the heck is going on? » Read more

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Why The Fed’s Efforts Will End Badly

We've been down this road before. Quite recently, in fact
Wednesday, June 1, 2016, 2:26 PM

It’s no secret that I've taken the contrarian position for seven long (and frequently frustrating) years.

Look, we’ve been down this road before, and the sheer stupidity of our current situation is that we’ve been down it recently enough to know better.  It worked out poorly for us in 2000, again in 2008, and will soon enough again. That's why I'm currently short the US stock market and plan to increase that short position as time goes on.

I'm quite familiar with, and even sympathetic to, the idea that the central banks will not... » Read more

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Close To The Tipping Point

Can you feel it?
Monday, April 25, 2016, 1:19 PM

There’s something in the air: people are edgy and worried. But about what, exactly?

Despite allegedly rosy economic statistics and endless cheerleading about how the markets have bottomed and how growth is poised to come roaring back, our heads and our guts instead tell us something is very wrong.

People everywhere can feel it. They're expressing varying levels of dissatisfaction: ranging from mildly concerned, to very worried, to downright pissed off.

We see it broadly in the hostility and opinion canyons of the election cycle. Perhaps we’ve experienced it personally, through the ending of a relationship that no longer works as we need it to.

These are the signs of tipping points. The human animal senses the coming tsunami and reacts from a very deep, visceral place where emotions hold sway and reason stumbles.  We are social creatures; and not all of the cues to which we react are visible or quantifiable. » Read more

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The War On Cash Intensifies

Negative interest rates. A ban on cash. Pick your poison.
Monday, September 21, 2015, 9:45 PM

The central planners are setting the stage for the next round of officially sanctioned theft and this time they mean to assure that you have no way(s) of escaping.

They’re coming for your cash. This is a risk that Charles Hughes Smith explored for us back in June in a very well-received analysis.

Once a fringe idea, this concept is now being openly discussed and debated at the highest levels publicly. Which means it is being hotly discussed behind closed doors, and likely has been for a long time. » Read more

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In Denial: We Pursue Endless Growth At Our Peril

A requiem for planet Earth
Friday, May 29, 2015, 10:09 AM

As we've been discussing of late here at PeakProsperity.com, humans desperately need a new story to live by. The old one is increasingly dysfunctional and rather obviously headed for either a quite dismal or possibly disastrous future. One of the chief impediments to recognizing the dysfunction of the old story and adopting a new one is the most powerful of all human emotional states: Denial. » Read more

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Off the Cuff: Economic Growth Is Dead

But no one is willing to admit it
Thursday, April 30, 2015, 5:15 PM

In this week's Off the Cuff podcast, Chris and John Rubino discuss:

  • Economic Growth Is Dead
    • Though world governments fear admitting that
  • The War On Cash
    • Rumors abound cash may eventually be outlawed
  • Crisis Inevitability
    • A crash is coming, whether we're too exhausted for it or not
  • Civil Rights Are Casualty #1 Of Our Failing System
    • Baltimore is just the latest flashpoint in many more to come
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Has The Fed Already Lost?

Growth is dying & the Fed has few options left
Friday, April 17, 2015, 3:36 PM

Increasingly we live in a world of Now. Instantaneous access to digital real time data and news has simply become a given in our lives of the moment.

You may be surprised to know that the Federal Reserve has taken notice. » Read more

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If We're Going To Borrow Against The Future, Let's Borrow To Invest

The are much better ways to spend the next $1 Trillion
Thursday, April 2, 2015, 12:21 PM

We are at an important juncture as a global society: either we immediately prioritize a new trajectory focused on creating a positive, functional future or -- by continuing the consumptive, extractive, exploitative status quo -- we will default into a nasty nightmare. » Read more

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When This Ends, Everybody Gets Hurt

And the end is uncomfortably close
Wednesday, January 21, 2015, 11:45 PM

Central bank credibility (as fictitious as that may be) is essential to maintaining the current narrative, BUT central banks are rapidly losing their credibility (which should have happened simply via deductive reasoning a long time ago) and the strains are showing.

Their actions are increasingly wild and extreme, and it's our view that 2015- 2016 will mark the end of this long run of overly-ambitious central bankers and over-complacent markets. » Read more

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The Consequences Playbook

What will happen as central banks lose control
Wednesday, January 21, 2015, 11:45 PM

Executive Summary

  • Desperate central banks are dangerous central banks
  • Why wealth disparity will get worse
  • The list of what comes next as central banks lose control
  • What you should do in advance

If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.

What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain.  Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.

It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.

So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades -- which would have required a lot of very painful belt-tightening -- the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’

Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.

Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.

And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where... » Read more