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Off The Cuff: When The Bond Market Fails, Everything Will Fail With It

Why financial collapse is all about the credit markets
Thursday, June 25, 2015, 7:37 PM

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

  • Bonds Are For Dough
    • The size of the risk in the credit market is staggering
  • The War On Cash
    • Will going cashless help the credit bubble live longer?
  • Greece & Derivatives
    • How a Grexit could trigger Armageddon
  • The End Of Confidence
    • When it arrives, the collapse will happen swiftly


The Price of Everything & The Value of Nothing

Is all we know in a bubble-driven market
Tuesday, June 23, 2015, 3:50 PM

My view is that the stock market is simply pegging itself to the idea that the central banks have backed themselves into a corner and that there’s no other option but to keep the liquidity spigots open. I cannot fault that view, as it has been right for the past 6 years.

However, it cannot be true forever. And we all know that a day of reckoning is out there somewhere.  » Read more


The Warning Indicators To Watch For Trouble In The Bond Market

The signals that will tell when the rout is on
Friday, June 19, 2015, 11:50 AM

Executive Summary

  • Liquidity is drying up
  • Volatility is returning
  • HFT has dramatically increased crash risk
  • The key takeaways for investors

If you have not yet read Part 1: Credit Market Warning available free to all readers, please click here to read it first.

Financial assets are worth what someone will pay for them.  A corollary of this is that you’d much rather be trying to buy or sell in markets that are deep and liquid.  Thin markets provide bad prices at best, and no bids or offers at worst.

Low trading volumes are worrisome because they are usually accompanied by higher volatility. And those two can easily become dance partners that whirl each other ever faster. 

There are numerous warning signs coming from all asset markets, but especially from the bond markets.

Low Liquidity

The issue of low liquidity really jumped out at me roughly a year ago with the news that the utterly broken Japanese government bond (JGB) market had gone an entire 36 hours without a single trade(!!).

Japan bond market liquidity dries up as BoJ holding crosses ¥200tn

Arp 15, 2015

The Bank of Japan’s massive purchases of government debt hit a milestone this week, sucking liquidity out of the market to such an extent that the benchmark 10-year bond went untraded for more than a day, the first time in 13 years.

The current 10-year cash bonds saw its first trade of the week yesterday afternoon, having gone untraded for more than a day and a half.

Trade volume in the benchmark cash bonds so far this month dropped to less than one trillion yen, down about 70% from the same period last year.


Thus comes the law of unintended consequences.  The main reason for buying JGB’s by the Bank of Japan (BoJ) was to inject a lot of liquidity into ‘the system’ in hopes that the Japanese economy would take off.

While that may have happened to some (slight) extent what also happened was that ... » Read more



Off The Cuff: More On The War On Cash

Plus the growing threat of Greece & the bond markets
Thursday, June 18, 2015, 1:48 PM

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

  • The War On Cash
    • Why governments are so interested in a cashless society
  • Grexit
    • Why the EU power structure fears it
  • The Bond Bomb
    • This one will be for all the marbles
  • Too Many Risks
    • There's little gain to remaining long in this market

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more


When To Be In Joy

Hint: it’s always the right time
Tuesday, June 16, 2015, 9:11 AM

I'd like to take a break for a moment from the weakening stock market, the unfolding disaster that is Greece, etc... and share my experience from this past weekend.

I presented at the New Story Festival in CT with my wife Becca. We discussed the importance of nature connection and community, myself covering the essential knowledge that serves to light a fire to ‘do something’ and with Charles Eisenstein eloquently covering the essence of being alive in these times. » Read more



What To Do With Your Cash Savings

Options for reducing your risk
Friday, June 12, 2015, 11:06 AM

Executive Summary

  • Which power groups will determine how the war on cash is waged?
  • Is it better to hold cash in savings/checking accounts, or securities accounts?
  • What will likely happen with retirement accounts?
  • Ways to diversify your cash risk

If you have not yet read Part 1: The War on Cash: Officially Sanctioned Theft available free to all readers, please click here to read it first.

In Part 1, we reviewed the basic elements of the war on cash, and how it benefits banks and governments but not households that don’t already own productive assets.

In Part 2, we’ll review the downside of imposing capital controls and eliminating physical cash, and discuss strategies to protect our financial assets from bail-ins and negative interest rates/fees on cash.

What Will The Wealthy And Politically Powerful Tolerate?

One of the key dynamics in this discussion is: what will the wealthy and powerful tolerate? Any policy that inhibits or harms the wealthy and politically powerful is a non-starter, and so if we align our strategies accordingly, we are less likely to suffer any negative consequences.

The wealthy and politically powerful have little need for physical cash (President John F. Kennedy famously carried no cash), so eliminating cash will probably not generate any resistance in the financial elite.

But other forms of capital control, such as requiring retirement accounts to hold Treasury bonds and limiting transfers to other nations’ banks might... » Read more


Zdorov Kirill Vladimirovich/Shutterstock

Off The Cuff: A Time Of Tears

Why the next downturn will be more painful than 2008
Thursday, June 11, 2015, 12:42 PM

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

  • Rumor-driven Markets
    • Head-fakes and sentiment matter most today
  • Sovereign Debt Weakens
    • A recent example of how sentiment can shift quickly
  • Pundit Predictions
    • The take from Jim Rogers & Steen Jacobsen
  • A Time of Tears
    • A big crash is coming, but those that caused it won't bear the brunt of the cost

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more



G7 Nations Agree To Phase Out Fossil Fuels

Is this news for real?
Tuesday, June 9, 2015, 10:20 AM

Yesterday saw a promising headline: at a recent G7 gathering, the leaders apparently agreed to the impossible: cutting carbon emissions by 40%-70% by 2050.  The only real way to do this, obviously, is to cut the use of fossil fuels. And that’s what they apparently agreed to do. » Read more


Everett Collection/Shutterstock

The Central Banks Are Losing Control Of The System

Evidence is multiplying
Friday, June 5, 2015, 10:46 AM

Executive Summary

  • What the NACM Index and the Atlanta GDPNow are telling us about the odds of returning to recession
  • Bond market volatility is picking up
  • Are central banks are losing their control?
  • Why monitoring credit markets will be our best indicator of the next downturn

If you have not yet read Part 1: As Goes The Credit Market, So Goes The World available free to all readers, please click here to read it first.

That indicator is the current level of the National Association of Credit Managers Index.  Although not wildly well known, the National Association of Credit Managers Index is an indicator deserving of attention and monitoring immediately ahead.

As per the National Association of Credit Management (NACM), the Credit Managers Index is a monthly survey of responses from US credit and collections professionals rating factors such as sales, credit availability, new credit applications, accounts placed on collection, etc.  The NACM tells us that numeric response levels above 50 represent an economy in expansionary mode, which means readings below 50 connote economic contraction.  For now, the index rests in territory connoting economic expansion, but the index is also sitting quite near a 6 year low.  We’ve been here before in the current cycle as the economy has moved in fits and starts in terms of the character of growth:

In a prior discussion, I mentioned the slowing in the US economy in the first quarter of 2015.  I highlighted the Atlanta Fed GDPNow model that turned out to be very correct in its assessment of Q1 US GDP.  While the Atlanta Fed was predicting a 0.1% Q1 GDP growth rate number, the Blue Chip Economists were expecting 1.4% growth.  When the 0.2% number was reported, it turns out the Atlanta Fed GDPNow model was virtually right on the mark.  As of now, the Atlanta Fed GDPNow model is predicting a... » Read more


B Calkins/Shutterstock

Off the Cuff: Eventually Fundamentals Win Out

Despite the system doing everything it can to prevent it
Thursday, June 4, 2015, 5:08 PM

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

  • Senseless Markets
    • Today, they only serve as a "liquidity gage"
  • Negative Data Everywhere
    • Economic growth is moribund despite the historic stimulus
  • Setting The Market Free
    • 100% in our best interest, but will be fought the entire way
  • Eventually Fundamentals Will Win Out
    • You can bend the laws of nature for a time, but you can't break free of them

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today.  » Read more