Jim Rogers: Turmoil Is Coming

Predictions on the markets, gold, Greece & more
Saturday, June 20, 2015, 12:11 PM

Two years since his last interview with us, investor Jim Rogers returns and notes that the risks he warned of last time have only gotten worse. In this week's podcast, Jim shares his rational for predicting:

  • increased wealth confiscation by the central planners
  • a pending major financial market collapse
  • gold's return as the preferred safe haven investment
  • more oil price weakness, followed by a trend reversal
  • Russia's rebound
  • a China bubble reckoning
  • agriculture's long-term value

James Steidl/Shutterstock

In Denial: We Pursue Endless Growth At Our Peril

A requiem for planet Earth
Friday, May 29, 2015, 9:09 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



David Stockman: The Global Economy Has Entered The Crack-Up Phase

And will be characterized by these 4 developments
Sunday, February 15, 2015, 2:42 PM

Few people understand the global economy and its (mis)management better than David Stockman -- former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.

David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments: » Read more


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2014 Year in Review: Part 2

Will 2015 be the year it all comes tumbling down?
Friday, December 19, 2014, 11:27 AM

This year has been all about risk—existential risk. Some of it seemed to dissipate and some lingers.  Market valuations remain risky—regression to the mean could easily provide a 50% haircut and more if we observe regression through the mean. This has not come to pass, but the risk is very real.

Those who seek risk in markets will eventually find it. » Read more



Deflation Is Winning

And central banks are running scared
Wednesday, December 10, 2014, 10:21 AM

Remember in the early part of the last decade, long before he was appointed the Chairman of the Federal Reserve, Ben Bernanke penned an article that caught widespread public attention entitled, “Deflation: It Can’t Happen Here” ?

Bernanke was referring to the deflationary pressures Japan had been dealing with for more than a decade. In the article, Bernanke laid out a game plan for how the Fed would respond if the US ever faced deflationary pressures. His miracle antidote for battling deflation? Printing money. Lots of it.

Little did anyone know at the time that this game plan would become the Fed’s exact response to the credit market crisis and deflationary impulse that erupted in 2008 and 2009. » Read more



Off the Cuff: 2015 Will See A Return To Global Recession

The unsustainable sugar-high of the past 5 years is ending
Thursday, November 13, 2014, 9:14 PM

In this week's Off the Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Bankers Behaving Badly
    • Fraud should be expected when there's no punishment for it
  • Rudderless Leadership
    • It's no wonder voters are 'throwing the bums out'
  • The Japan Time-Bomb
    • Guaranteed to blow up the global economy. But when?
  • 2015: The Year Of Return To Global Recession
    • Charles and Chris make the call


The Consequences of a Strengthening US Dollar

It actually creates destabilization
Wednesday, November 12, 2014, 10:21 AM

In early September, I made the case for a rising U.S. dollar. Since then the dollar has continued its advance, and is now breaking out of a downtrend stretching back to 2005—and by some accounts, to 1985.

So what does this mean for the global economy? » Read more



Why The Strengthening Dollar Is A Sign Of The Next Global Crisis

It causes the weaker parts of the system to fail faster
Wednesday, November 12, 2014, 10:21 AM

Executive Summary

  • Understanding the two different ways money flows into the US dollar
  • How currency crises elsewhere can send the dollar skyrocketing
  • Why yen, yuan and euro printing are not the same as dollar printing
  • How these accelerating money flows are creating the next global crisis

If you have not yet read The Consequences of a Strengthening US Dollar available free to all readers, please click here to read it first.

In Part 1, we surveyed the key dynamic that is playing out across the globe: the problems revealed by the Global Financial Meltdown of 2008-2009 were not addressed; they were in effect shifted into the foreign exchange (FX) market. Now the risk bubble is in the FX market.

The complexity of the feedbacks into the FX market is nothing short of mind-boggling, and rather than attempt a comprehensive survey, I’m highlighting the dynamics that hold the greatest risks of triggering instability, not just in finance but in geopolitics, trade and commodities.

Two Kinds of Dollar Flows

Let’s start by differentiating between the two kinds of money flows into the dollar:

  1. Money converted from periphery currencies into dollars to pay back loans denominated in dollars
  2. Money flowing out of periphery economies and into dollar-denominated assets such as stocks, bonds, real estate and dollar-denominated bank accounts.

Broadly speaking, both of these capital flows are “risk-off,” but they have different effects.

In the first case, money borrowed on the cheap in dollars and invested in high-yield periphery bonds earned a tidy profit as the dollar weakened. The trader picked up a double profit: the arbitrage on the interest rates (borrow at .25% and earn 4+%) and the FX profit from the rise of the periphery currency and the decline of the dollar.

This currency-arbitrage profit reverses when the dollar starts rising, and it quickly wipes out the entire interest-rate profit as it leaps higher.

The carry trade is “risk-on” because money is being borrowed to speculate in interest-rate arbitrage. Deleveraging this trade is “risk-off” because the only way to stem the potential losses as the dollar strengthens is to... » Read more


John Hussman: The Stock Market Is Overvalued By 100%

Expect prices to drop by 50% (or more)
Saturday, November 8, 2014, 4:04 PM

John Hussman is highly respected for his prodigious use of data and adherence to what it tells him about the state of the financial markets. His regular weekly market commentary is widely regarded as one of the best-researched, best-articulated publications available to money managers.

John's public appearances are rare, so we're especially grateful he made time to speak with us yesterday about the precarious state in which he sees global markets. Based on historical norms and averages, he calculates that the ZIRP and QE policies of the Fed and other world central banks have led to an overvaluation in the stock market where prices are 2 times higher than they should be. » Read more


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Off the Cuff: The Importance Of Global Capital Flows

More responsible for prices than any other current factor
Thursday, November 6, 2014, 9:56 PM

In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:

  • Japan's Halloween Massacre
    • The most glaring sign yet that the central banks are desperate
  • Capital Flows Are King Right Now
    • The reason we have record-high markets despite crummy fundamentals
  • Musical Chairs
    • Every (market) player has fun until the music stops
  • Throwing The Bums Out
    • As our lifestyles contract, we vote out the incumbents