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Red Screen At Morning, Investor Take Warning

It's time for safety. And it's beginning to pay better, too
Friday, February 9, 2018, 9:12 PM

Growing up as I did in coastal New England, this old rhyme was drilled into us as children:

Red sky at night, sailor's delight;

Red sky at morning, sailor take warning.

I'm reminded of this rhyme because the markets are giving us a clear "red sky" warning right now. One that comes after (too) many years of uninterrupted fair winds and smooth sailing.

 
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It's Looking A Lot Like 2008 Now...

Did today's market plunge mark the start of the next crash?
Friday, February 2, 2018, 9:57 PM

Economic and market conditions are eerily like they were in late 2007/early 2008.

Remember back then? Everything was going great. Home prices were soaring. Jobs were plentiful.

The great cultural marketing machine was busy proclaiming that a new era of permanent prosperity had dawned, thanks to the steady leadership of Alan Greenspan and later Ben Bernanke. And only a small cadre of cranks, like me, was singing a different tune; warning instead that a painful reckoning in our financial system was approaching fast.

It's fitting that I'm writing this on Groundhog Day, as to these veteran eyes, it sure has been looking a lot like late 2007/early 2008 lately... » Read more

Insider

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China Says “No More Treasurys!”

Is the 30-year bond bull market now dead?
Wednesday, January 10, 2018, 1:04 PM

The big news early this morning is that Chinese officials have publicly announced that they are considering halting the purchase of additional US Treasurys.

This news initially sent shock waves though the “markets” (still in quotation marks because they are no longer true markets, distorted beyond recognition by ten years of coordinated central bank intervention) with both bonds and stocks selling off.

Naturally, “stabilizing” forces showed up almost immediately; purchasing US equities in the futures market while also selling gold. But the fear in response to China's declaration remains evident. » Read more

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Earn More On Your Cash Savings (With Less Risk)

Explaining the TreasuryDirect program
Friday, November 3, 2017, 9:35 PM

Interested in getting over 16x more interest income on your cash savings? » Read more

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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

Podcast

Bud Conrad: The Bursting of the Bond Bubble Is Now Upon Us

And the results will be calamitous
Saturday, October 12, 2013, 2:55 PM

At the recent Casey Research conference in Tucson, AZ, Casey chief economist Bud Conrad stepped up to the podium, reached into his pocket, and pulled out a balloon, which he proceeded to inflate. As it grew, it become clear the word "BONDS" was written across it. For dramatic effect, Bud continued inflating the balloon until it popped. He then looked at the audience and said, "I hope I'm making a point." » Read more

Insider

The Forces That Will Reverse Housing's Recent Gains

Get ready for the "poverty effect"
Monday, February 25, 2013, 5:56 PM

Executive Summary

  • Intervention in the housing market by central planners is experiencing diminishing returns
  • The four major trend reversals most likely to depress housing prices in the coming future
  • The power deflationary force of reversion to (or perhaps below?) the mean
  • Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals: » Read more

Featured Discussion

Fed Now Buying 75% of All New US 30-yr Treasurys

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Fed Now Buying 75% of All New US 30-yr Treasurys

It's ridiculous the rest of the world is ignoring our obvious insolvency