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Are you anchored to the absurd? Are you ready for a complete rethink?

Since 2000, growth has become increasingly dependent on explosive growth in Federal Debt. GDP Minus Annual Federal Debt, is turning down again. While anchoring is a very understandable behaviour or condition, it can place investors in a highly dangerous situation of overconfidence. Readmore...

Petrodollar Power Plays

Some pictures make you stop and think. Last month King Salman became the first king of Saudi Arabia to travel to Moscow and he bows to Putin. He also brought key advisors with him to make bilateral deals.   Clearly there is a strengthing alliance between these two countriesReadmore...

Q3 2017 Review And Outlook

The chart above shows the extraordinary extent of the rally from 2009 both in time and magnitude . The ratio of the S&P 500 to its own volatility, VIX, shows the cycles in a new way. As rallies typically come with lower volatility, the cycles are accentuated by this ratio. This serves Readmore...

Investment Management: Why You Need A Complete Rethink. (short version with links)

  Part 1 – The best assessment of Investment Management is not Returns. Chasing past returns can be disastrous. So just looking at historical returns can lead to big problems. ​                   Readmore...

Investment Management: Why You Need A Complete Rethink. Part 4 – Active Asset Management. Further Steps To RVAR Improvement.

In Part 4 I will show what I believe is the path to further improvements to RVAR through making a shift to Active Asset Management with tactical allocation models. The case for a further improvements in RVAR from Active Asset Management can be shown from even a simple Active Asset ManagReadmore...

Investment Management: Why You Need A Complete Rethink. Part 3 – Money Management Alone Can Substantially Improve RVAR.

In Part 2 I showed a weakness of one of the most frequently recommended passive investment allocation strategies, simply between stocks and bonds. I showed one potential remedy to the problem, but there are additional components to consider. In this note, I focus on one of the most impoReadmore...

Investment Management: Why You Need A Complete Rethink. Part 2 – Stock/Bond Passive Allocation Strategies Are Nonsense!

In Part 1 I formulated a clear metric for analyzing investment returns - Repeatable Volatility Adjusted Returns (RVAR). In part 2 I take a look at allocation strategies. Now that we know what metric to look for the job of assessing asset strategy should be a lot easier. The first stage Readmore...

Why You Need A Complete Rethink. Part 1 – The best assessment of Investment Management is not Returns.

Investment Management: Why You Need A Complete Rethink. Part 1 – The best assessment of Investment Management is not Returns. How can you judge whether your returns or any investment manager's returns demonstrate superior asset management either compared to a benchmark or another asset Readmore...

"Bubble or Recession: The Fed Must Choose"

Credit Growth Weak This Cycle And Now Falling Number of OECD countries with inflation below 2% is continuing to trend higher! How can the Fed possibly unwind QE? Jim Rickards believes the next recession is already on the way "Bubble or Recession: The Fed Must Choose" The FedReadmore...

Financial System Fragmentation. China Transformation.

Our financial system Is driving fragmentation Further centralization no longer provides benefits Recession signal from Loans and Deliquencies The burden of debt rises with falling inflation Carmegeddon Central Banks losing their fight with degrowth. Lost in their obviously fReadmore...

H1 2017 Performance Report

Central Bank domination of Economic policy and markets continues and accelerates Creates escalating economic and market dysfunction Unprecedented challenge for long term investment Yield curve and TIP suggests policy is already overly tight While the market is indicating that iReadmore...

5 Vital Steps To Choosing A Financial Advisor

Should you talk to a Financial Advisor? Ask for Financial Planning? Asset Management? Wealth Management? Investment Management or an  investment manager? Investment Adviser or Registered Investment Adviser? What really matters to the client is not immediately apparent from any of theReadmore...

The Supernova Model Of Financial Collapse

​Every unsound investment has a very bad ending sooner or later Central Banks have made the global financial system unsound through excessive leverage  Central Banks Weakened The Economy To The Point Of No Return, With Massive Uncontrollable leverage Just Like LTCM Already the lasReadmore...

Launching Quant Agora

TradeStops have recently announced a new level of portfolio management capability that they call "Pure Quant". This technology takes their already highly successful "Stock State Indicator" (SSI) and makes it easy to apply to a wider range of investment ideas than ever before to create aReadmore...

"Shocking Truth" About Policy, Central Banks, and Markets

Central Bankers are the source of the instability they themselves are supposed to remedy. Central Banks are supporting mind boggling leverage in the system to fuel market support, compounding the instability. Central Banks then "solve" that problem too - Market Intervention lowers voReadmore...

How China Could Change The Global Financial System.

Bank lending stopped growing immediately Trump was elected. Capital One's charge-off rates are climbing steeply from Q3 2016. What happens when the old debt starts decaying faster than new sugar shot debt can offset? "objectives can only be achieved by China replacing the dollar aReadmore...

Stagflation Is Coming. US Investors Completely Unprepared. Missing Half The Policy Duality.

US bank loans peaked at the lowest level of any cycle going back to 1967 and have now rolled over. $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, "the largest CB buying on record." "Liquidity Supernova is the best expReadmore...

Creditism Meets Collapse In Loan Creation.

"loan growth in the US has not only ground to a halt but, for the all important Commercial and Industrial Segment, has dropped at the fastest rate since the financial crisis, some (until recently) economic optimists, such as Bank of America's Ethan Harris, are only now start to realize thaReadmore...

Trade Confusion, Asia, And The Dollar. Wake Up For The Most Important Financial Moment Of Our Lives.

Asian gold demand goes exponential. At the same time as US debt has also gone exponential. Trump's Disastrous Trade Policies Can only Accelerate The Trends G20 Dumps Free Trade At Trump's Insistence US Investors Pile Into US Equities At The Fastest Rate And The Highest ValuatioReadmore...

Why the 60/40 Stock/Bond Portfolio Could Ruin You. Think Cycle Dynamics.

Why The 60/40 Stock/Bond Portfolio Could Ruin You. Think Cycle Dynamics. "We will only prosper if we relentlessly search for the truth, otherwise the truth will find us through volatility." - Chris Cole Financial advisers have recommended for decades that investors put 60% of their mReadmore...

Not Growth. Desperate Policy Extremes And A Debt Supernova. Only For Tactical Investors.

Since 2008, the growth in government debt has exceeded economic growth every single year! "If government debt had not grown like this, the economy would have contracted every year!" Richard Duncan. So clearly all policy makers had left in an even weaker year in 2016, was more governmReadmore...

Zero Projected Real Return For the Next 12 years From Standard Portfolio Allocation.

It is probably generous to call this a projected zero real return. "Reason is slave to the passions" Perhaps, investors should calm their emotions before reading on. "When Speculators Prosper Through Ignorance" If investors don't understand the facts of the past, what chance doReadmore...

Near Zero Growth. Exponentially Rising Debt. Static Investment Gambles.

Growth in the US over the last 10 years has simply collapsed At this point global policy makers only seem to only have one plan - more debt Debt keeps on having to rise at a much faster rate than the economy It's not even close to working The only area where the debt illusion iReadmore...

Global Creditors Leave The Dollar. Central Banks Continue Buying Gold.

Holdings of US assets by the largest dollar creditors have fallen at an accelerating rate over the last 2 years. Is this a signal that the current US Dollar based  monetary system is falling out of favor internationally? Where would that capital go? None of the current paper alternReadmore...

Tax reform, Trade, And The Dollar.

Trumponomics is heavily focused on a jobs revival AND trade adjustment through a Border Adjustable Tax (BAT). Here is some very timely insight into the latest policy thinking. "My associate Patrick Watson and I spent two weeks doing a really deep dive into the proposed reforms. I Readmore...

How Debt Drives Everything. Stocks, Economies, Policy.

Why everyone has become economically uneasy   In 2008 the Fed created $29 Trillion debt, or around 9 years of total tax revenues.   It matters little that Dow Jones revenues have declined over the last 5 years.   S&P 500 has nothing to do with S&P 500 revenues.    With a Readmore...

80% of central banks buying more stocks. Trumponomics Trade Contradiction.

"within a few years the world's monetary authorities who are tasked with "financial stability", will have acquired a majority of the world's equity tranche, effectively nationalizing it."   A narrowing of the trade deficit is clearly negatively correlated with rising growth.   WithReadmore...

Markets Break Away From Data

S&P 500 Throws Away The Earnings Connection   Total Tax Receipts Send A Message Last Seen In 2008   The Message Complicates Trump's Growth Strategy   Junk Bonds Throw Away Default Rate Connection   ECRI Explains Why Trumponomics Is Almost Certainly An Illusion   FirReadmore...

Bubbles Impoverish Investors Who Can't Resist Them. Examining The Debt Bubble

The 3000 biggest US companies have never been more leveraged. Just this fact alone should concern most investors, but, as we have shown in previous notes, its much worse than that because this leverage is happening at a time when: 1. 10 year growth per capita in the US Readmore...

Trump. Trade And Growth Challenges.

The great problem with Trump's trade policy is that it conflicts with his 4% growth target. Just on its own the 4% growth target will be challenging enough, as discussed below. However, it seems that there is confusion about the consequences of Trump's trade policies, which will comeReadmore...

8 Reasons Why Trumponomics Will Flop

Junk Bonds 2 Year Negative Divergence Signal. Echoes of 2000 and 2007.   Trump post election rally breaks the records. Echoes 2000   Trump Record Euphoria and Advisors Hugely Allocate To Equities for 2017   What Really Changed With Trump?   Fed's latest forecast, post TruReadmore...

Economic Fantasies and Cycles

  The chart above shows very clearly stock market behavior that has never happened before.  Dow Most Overbought in 20 years   “single most extreme syndrome of “overvalued, overbought, overbullish” conditions”   Shiller warns stocks are partying like its 1929    Is theReadmore...

Historic Inflection Points ..."There Are No Markets" ... "Money System is a "Trickle Down" Racket" .... 3 Investment Choices

The relationship between stocks and bonds has reached a triple major historic inflection point.   7 reasons for a new paradigm - Reason 1: Inflation At A Quadruple Inflection Point?   Reason 2: US Labor market conditions could be too tight and will get tighter in the current Trump Readmore...

"Voodoo Two Won't Do". US Stocks - Divergence Everywhere.

US Equities - Divergence Everywhere Record levels of bullishness A lower high in new highs versus new lows   Volume not confirming either   Not long before higher bond yields hurt US equities - Goldman Sachs   US is short of savings for Trumponomics. Achilles Heel for sReadmore...

Trump Trade Will Accelerate Historic Credit Bust

  The biggest credit boom in history US corporate cash flow/debt collapses as CFOs leverage balance sheets While real investment collapses CFOs just focus on stock prices No Wonder S&P credit downgrades explode this year The next bust period in the credit cycle hReadmore...

The Trump Bubble Narrative. Mainstream Will Be Wrong Again.

Mainstream out of touch again Now on to the Trump Bubble The repeating flaw in the narrative Charles Gave also weighs in on this idea, looking at the UK and France In the meantime the downtrend in the real economy is relentless This week the focus is on autos, Toyota and NisReadmore...

Economic Reality Returns. Many investors going "passive" at a dangerous time.

"Reality in Politics"? Economic Reality Returns But the Federal Reserve still has a different narrative So ... bizarre conditions where Stocks AND Bonds AND commodities trade down Cyclical downtrend continues. Health CPI + Rent CPI lead consumer discretionary stocks ADP EmplReadmore...

Dynamic Asymmetry. NY Fed Recession Probability Highest Since 2008

Reaching a "Critical Point" in the complex financial system Reality Check from professor Kotlikoff - also a presidential candidate! Dr Lacy Hunt explains that debt AND growth are about to get much worse at an accelerating rate Foreign Central Banks are liquidating Treasuries at a Readmore...

How To "Buy Humilation, Sell Hubris". Perception vs Reality.

What Client's Must Know: "Perception versus Reality" Stock market heaven or hell? Or now just different versions of economic depression? "Fed risks repeating Lehman blunder as US recession storm gathers" Beyond the Minsky Moment: altered state of low real returns. "Buy HumiReadmore...

‘It’s Literally A Lie’ To Say US Growth Isn’t Slowing

"Literally a Lie" Here is Janet Yellen's favorite composite labor market indicator. Or can you see a trend in aggregate hours worked over the last 2 years? "A Force For Lower Interest Rates. "Dr. Lacy Hunt. Why the Federal Reserve and Bond Bears have been completely wrong. "CeReadmore...

"Worst Return Prospects In History For Diversified Portfolios"

Time for every investor to understand the investment predicament Central bank market dislocation Central bank policy failure Ray Dalio talks to the NY Fed. Time limit on the "Big Squeeze" And now a recession is coming The central banks have reached the point of "Money IllusReadmore...

$356 Billion Fund Manager: "Now Is The Most Treacherous Time Ever"

"Now is the most treacherous time ever" Dangerous bubbles in plain sight "Federal Reserve Board are just dope dealers on speed-dial." US GDP - according to the NY Fed - is set to grow a paltry 1.4% for the entire year. This would be the lowest growth rate since the financial criReadmore...

Banks Or Fiduciaries? John Oliver, Warren, Prins, Black

John Oliver explains the key importance of the Fiduciary standard. Elizabeth Warren shreds the CEO of Wells Fargo "You should resign...You should be criminally investigated" Nomi Prins explains how bank legislation been going since the 2008 collapse and before Bill Black explains Readmore...

Timely Investment Wisdom. Dalio. Singer. Farrell.

Ray Dalio explains the policy and economic predicament Paul Singer experiences the arrogance and failure of policy makers Bob Farrell's illustrated 10 investment rules   Ray Dalio explains the policy and economic predicament Ray Dalio seems to agree with Stan Readmore...

Economic Implosion, Central Banks, Asset Allocation

10 year earnings growth in Europe now negative and the World not far behind GDP growth per capita has collapsed to close to zero "Serious indictment" of policymakers actions This week ISM services collapsed to a 6 year low, in line with everything else Taxes withheld have alreaReadmore...

Roadmap Through Repeat Fed Policy Error

Fed never learns, back to 2015's epic blunder WSJ: "Years of Fed Missteps Fueled Disillusion With the Economy and Washington" Bill Gross has a stinging criticism of the Fed "Raising Rates now will lead to economic slowdown" Keith McCullough World Exports show the dreadful sReadmore...

QE Cancelling Debt, Dominating Markets, Escalating Risk

  For the first time in at least 5000 years we have driven interest rates below the zero marker Negative yielding bonds used to be considered impossible.Now they are metastasizing beyond $13.4 Trillion along with central bank policies. A quarter of the world economy already lReadmore...

"Fed's Credibility Is Gone".

"Fed Knows policy doesn't work anymore but won't admit it" "If you're the Fed, Wednesday was the day the music died." - Jim Rickards Fed's Williams calls for an overhaul of monetary and fiscal policy St Louis Fed searches for a new approach Meanwhile the central banks continuReadmore...

Out-performing Manipulated Insanity

"Impossible" divergence between S&P 500 and two key growth indicators Biggest ever gap between S&P 500 and productivity Last week"s NFP jobs number was miraculously boosted by an astonishing change in the seasonal adjustment. Even at face value all the job growth over theReadmore...

Real Income Collapse Offset By Debt And Asset Bubbles

Corporate Profits And Margins Peaked In 2014 Last 50 Years: This Decline In Earnings Always Led To An Equity Bear Market The Latest GDP Data says something very similar about recessions Ex-Consumption Nominal GDP Is Already In Recession As Real Income and Savings Collapse FaReadmore...

Depression They Call A "Recovery"

  Central Banks "Let's Pretend" Social Fragmentation Suits The Powers That Be "policymakers have been calling a depression a recovery for nearly a decade" This morning BOJ wonders about policy. Chaos follows. Luxury Real Estate In Trouble Deutsche Bank Profit Falls 9Readmore...

Helicopter Money. Power. Privilege. Insanity.

Bernanke meets Abe this week. What did Einstein say about insanity? Fed's Mester Says Helicopter Money "The Next Step" In US Monetary Policy After All The Fed Has a 100 year money devaluation record to uphold Why be constrained? How about unlimited asset purchases? "Crisis Is UReadmore...

Investment "Head Of The Snake" From "Crazy" Neofeudalism

  Hussman explains investment "head of the snake - the poisonous gap between paper wealth and real wealth" How far has the Fed put the S&P 500 off the map? Historic 5 year divergence with bond yields Bonds yields seem better aligned with US and China import trends BondReadmore...

The Bigger Banking Crisis

IMF: "Deutsche Bank Poses The Greatest Risk To the Global Financial System" Central banks (BIS) say their actions have "started to backfire" Recent rise in US delinquency rates on bank loans is shocking Chimerica in Crisis Good Time to Read the 144 page annual gold report from Readmore...

Janet Whiffs Again. Blind To The Economic Cycle.

Blind to the economic cycle ECRI explains how far they are off the economic cycle map They are completely off on the credit cycle too China's hard landing has already begun Negative government bond yields in Japan, Germany and Switzerland. There could be a problem. US industReadmore...

Why Investors/Advisors Underperform. Good Time to Check!

  Dalbar Report. Psychological factors are the main contribution to poor returns. Bad Math. Bad Investment Advice. Steve Keen explains bad economic policy in yesterday's interview Why not add in the most extreme and unstable world market conditions? Yellen's favorite laReadmore...

Better Policy Requires Acceptance Of Complete Failure

"Central bankers must accept the complete and utter failure of their policies if we are to move forward." Natural Capital Formation is being destroyed Unsurprisingly, new business formation has fallen off a cliff  Investment Billionaires have already lost patience. Sam Zell Readmore...

Fed Up With The Fed.

Fed Up With The Fed Central Banking has been contentious for centuries “The Bank is trying to kill me, but I will kill it.” — President Andrew Jackson Now the whole world is in thrall to central banks and their epic policy failure The most expensive asset prices in history. Readmore...

Flawed Assumptions. Grand Experiments. Stan Druckenmiller Goes Unequivocal.

  The current economic cycle is remarkably normal. Policy not so much. "Flawed Assumptions and Grand experiments" But the New Normal is anything but normal; "All the readings of artificial life-support and manipulation are off the charts." "central bankers have lost thReadmore...

Passive Cycle Dynamics. 2 Simple Investment Transformations.

Two Simple Investment Transformations Transformation 1: Cycle Dynamics A simple example shows the first transformation Transformation 2: Money management with "Tradestops" Cycle Dynamics and Tradestops can now be combined with other models to create an outstanding investment prReadmore...

Gold's Huge Investment Advantage

  Gold is widely misunderstood "you're likely ignoring your single greatest advantage as an investor." A simple example shows why Gold has returned to long term uptrend criteria just as stocks and bonds are reaching historical limits. Is a high equity allocation justifiReadmore...

Exploding Debt. Declining Cashflow. "Saving" Stocks.

Are "central bank policies going to bankrupt corporate America?" Debt diverges from cashflow GAAP earnings have fallen 18% over the last 15 months, back to 2012 levels Earnings will fall much further The best equity allocation right now Small business: "There Is No Exuberance, No OptimReadmore...

Q1 2016 Investment Performance. How And Why CBIM Is Different. Be Clear About The Investment Challenge.

CBIM out performance in Q1   Portfolio volatility less than 25% of US equities   Slight Negative correlation to US equities Yet Most Active Managers Just Had Their Worst Quarter In 18 Years Central Bank failure a game changer for most European banks crashing   Yet US iReadmore...

"System Based On Fraud". Survive And Thrive Anyway.

Bill Black Devastating Consequences On Middle Class Corporate Credit - 15 Year Low World Trade - 10 Year Low No locomotive For Global Growth GDPnow Collapse Corporate Profits Collapse "Markets" Versus Real Economic Cycle Back To Black Winning Strategies. No MatteReadmore...

10 Steps To Foolproof Investing. "Finance Is No Longer Productive".

  "The investor's chief problem - and even his worst enemy - is likely to be himself." - Benjamin Graham. The money management edge is just the beginning. "Finance is no longer productive" Just 3 Charts Unprecedented smart money sell Subprime auto Joke of the YearReadmore...

Rickards: Gold $10,000? Fed/Dollar yields to the Economic Cycle.

Dollar breaks uptrend vs gold The belief system is breaking down ECRI explains the deeply entrenched nature of persistently weaker growth Industrial production recessionary Retail Sales recessionary Inventory levels recessionary Wage growth weak 2016 GDP expectations cReadmore...

Central Bank Casino. Equity Buy/Write Allocation.

  Central Bank Casino European Central Bank president Draghi's huge policy package is a bust S&P 500 could be 60% inflated versus global equities S&P 500 could be 60% inflated versus High Yield Bonds Could the S&P 500 inflation be justified by economic growtReadmore...

Why central banks are on their longest gold buying spree in over 40 years

  Global manufacturing rolling over World trade falls 13.8% in dollar volume US trend growth weak getting weaker US slowdown now hitting service sector Income and spending cycles remain in a downtrend "Great corporate earnings fraud" Forward earnings expectationsReadmore...

Raising Cycle Dynamic Systems Allocation

Static or Dynamic Allocation? Financial System instability as central bank policy fails. Stephen Roach David Stockman "The Most obvious "Black Swan" ever! " - Mark Spitznagel Global policy failure also means extreme economic instability. 2 branches of the Fed flash recessReadmore...

United States Policy - No "Gas In The Tank"

Are you paying attention? US industrial production leaves little doubt about recession risks Japanese Trade Data Collapses, Crushes "Devalue Our Way To Prosperity" Dreams Data strongly suggest global recession Banking is not fixed Federal Reserve is lost and self-contradictoReadmore...

Central Bank Policy Humiliation. NIRP "Hail Mary". Two 5 year trend breaks?

Fed's Interest rate rise wiped out within 2 months New BOJ NIRP policy backfires in 2 days How did Japanese QE work out? Fail. ECB QE Plus NIRP Failing Too! Even sovereign credit risk is deteriorating at a rapid rate. US financials are catching down with credit deteriorationReadmore...

Gold. The Big Reset.

35 years of exponential debt growth and lower interest rates Markets wipe away the Fed's December interest rate rise Gold reversing trend relative to the S&P 500? Fed can't cut interest rates by 5% this time! "Major advanced economies are now all slowing in concert" The Readmore...

Fed Ignores Deepening Cyclical Downturn

  Bad timing and intransigence Nominal GDP and Non-financial profits trending down Global profit estimates are in their steepest decline since 2009. 85 year high in US crude inventories Record debt and the credit cycle "The Fed doesn't look at reality, they look at tReadmore...

Fed Rate Rise Blunder Signals "Central Banks Are Out Of Tricks"

  George Soros joins the rate hike blunder chorus Ray Dalio is already in the Choir Could there have been a worse time to raise rates? Fed is stuck in the wrong paradigm. Epic policy Failure. "The Central Banks Are Out Of Tricks" Central Banks losing control of markeReadmore...

Understanding Risk And Control. "It's not the economy (or fundamentals) - It's The Fed!"

  "It's not the economy (or fundamentals), stupid - It's The Fed!" Decaying Control System 5 Crucial Questions For Investors Short Term Outlook Conclusion ---------------------------- "It's not the economy (or fundamentals), stupid - It's The Fed!" http://www.zReadmore...

"We Frontloaded A Tremendous Market Rally" Former Fed President Admits, Warns "No Ammo Left"

"We frontloaded a tremendous Market Rally" US stock prices have been inflated far above fundamental valuation ISM manufacturing has now fallen below 50 for 2 months in a row. Factory orders signal US economy in a recession.  Gap between sales and inventories continues to widen Readmore...

2015 Policy Failure And Market Abuse

"The Fed is perpetuating a promise that stocks can't go down." Keith McCullough "The problem arises because the Fed, like other major central banks, has now become a creature of financial markets rather than a steward of the real economy. Today's Fed inherits the deeply entrenched moReadmore...

"One Of The Great Blunders Of Fed History" Jim Rickards

This isn't transitory its cyclical Yield curve reflects weak economy/deflationary risks Recession forecasts for 2016 Meanwhile the data still comes in weak Bubble outperformance has lost momentum Investors need a tired bubble strategy, not a performance chasing strategy As for the Readmore...

Pronounced, Pervasive, Persistent. Data and Markets Reflect Economic Weakness/Stress.

  Cycle experts disagree with the Fed Pronounced, Pervasive, Persistent weakness in the data Latest data shows weakest ex-auto retail sales for 6 years Markets reflect economic weakness too Globally, including the US, stock markets are not doing well. New 5 year low in ChReadmore...

What's Normal?

Everywhere you look the economic warning signs are overwhelmingly evident. Atlanta Fed GDPNow Collapsing Corporate earnings are also showing recession warning signals The Credit Cycle is confirming corporate earnings weakness "We're approaching a period of vast credit default" PorterReadmore...

Policy Ease Or Recession.

How many US recession signals? How many global recession signals? "Bubble right in front of our faces" If we don't change the way money is created. 9 challenges for the world economic system Nomi Prins "Entirely rigged political/financial system" Conclusions ----------Readmore...

How Investors Win As Policy Defies The Economic Cycle

Continuing economic down cycle. Offset by yet more debt. But take a look! Extreme long term return-to-risk condition. Conviction the key to a winning strategy. Bubbles can be beaten and with very low volatility. ------------------------------------------------- As invReadmore...

Decaying Control System.

Markets Disassociate. Look under the hood. No real equity bull market. Fed is compounding dysfunction. Unavoidable Conversation Now. Even on Bloomberg. "Collapse begins when real reform becomes impossible". 8 reasons why the Fed is wrong. Investment implications. -----Readmore...

Investor? Or Federal Reserve Minion?

"We're all minions now of the stock market" QE has no impact on Nominal GDP growth Interest rates now insensitive to liquidity excess Banking Lending mainly for capital markets not economy S&P 500 at new low 12 year expected return Interest rate hike talk fuels further dReadmore...

S&P 500 Earnings Recession. Policy Panic.

Q3 earnings look like confirming an earnings recession Caterpillar results indicate a global industrial depression But what do earnings have to do with stock markets? Buybacks USD/JPY China Too! Policy ever more desperate, even less effective Low Risk and Some Real AssReadmore...

Investment Management. Clarity and Transparency.

Clarity and Transparency Static allocation from MPT to AW NAAIM says 95% of advisor funds remain in Static Allocation Strategies Adaptive Selective Allocation Cycle Dynamics Macro models, Bayesian models, and combinations with static allocation Human judgment still necessReadmore...

Federal Reserve In The Caboose.

  Simple behavioral explanation for Fed policy statements. Fed never had an exit strategy. Documented. Astonishing 82% of "Economisseds" are still following the Fed. Effective cycle and macro models left the train months ago. Successful investing is proactive and not dependReadmore...

Two Solutions to "QE Infinity Paradox" and "Triffin's Dilemma"

Earned Income as a percent of GDP has declined for 45 years. Debt, however, has risen exponentially for 45 years Earned Income Capitalism was overwhelmed by the bank credit system The "QE Infinity Paradox" has extended not resolved  the problem Closer to a timeout on this extenReadmore...

"I Don't Get It." Ray Dalio On Fed Policy.

Fed "credibility in shreds"? One hour Bloomberg interview with Ray Dalio Short or long term debt cycle? Central bank policy options shrinking fast Economic policy starts yielding to cycles again ------------------------------- Fed "credibility in shreds"? The Fed will Readmore...

Mission Impossible Isolates The Federal Reserve

Nominal GDP reveals the failure of economic policy  Germany's Finance Minister explains Guardian Suggests Central Banks stand aside Growing list of dissenters isolates the Fed on rate rises ECRI explains that the economic cycle turned down 9 months ago Crucial to allocate acReadmore...

Central Bank Checkmate? Fragility And Cycle Solutions.

Seven lean years for world growth Is Japan reaching the limits of QE? Is devaluing the Euro the only option left for the ECB? Global chess game? Or pass the potato? Does the US now have the potato? If you can't pass the potato, is that checkmate? "Manipulation = FragilityReadmore...

Cycles or Central Banks? Investment Challenge Needs A Process.

Nomi Prins explains "economic" policy in 2 sentences. Keith Weiner tears down central bank mythology. Volatility explosion is a crack in the facade of "economic" policy. Break-even inflation levels show Federal Reserve policy is inconsistent and incoherent. Ray Dalio and CharleReadmore...

Looking Beyond "Can Kickers United"

Fed missing again, backtracking again "Can Kickers United" Fed now criticizes the Fed! What is the Fed really doing? The car market accident begins Retail Zombies Equity risk - Corporate cash flows more leveraged than ever before What does an investor do? ----------Readmore...

China. ZIRP Zombies. "Bank Alchemy" or Gold.

China confirms and accelerates the global economic crisis. All economies are becoming "ZIRP Zombies" as currency wars continue. The "Bank Alchemy" monetary system, started in 1968, is rapidly unravelling. "ZIRP Zombies" may be forced to choose again between "Bank Alchemy" and goldReadmore...

Federal Reserve Collision Course. S&P 500 Revenue Recession.

Each day appears to have become a kind of dysfunctional "groundhog day". The economic data continues to show increasingly pervasive economic weakness, while the Federal Reserve sounds ever more confident that the economy is doing so well that interest rates can be raised very soon. ThesReadmore...

Dollar Currency War? Quad 4 Intensifies. Social Security Review.

"Hayden agreed with me that financial war will be a primary means of warfare in the twenty-first century"  Jim Rickards. Only one person has ever been Director of both the National Security Agency and the Central Intelligence Agency. That person is retired Four-Star General Michael HaydReadmore...

Trapped In Artificial Finance. Nomi Prins. Earnings.

The chart above shows the rapidly declining internals within the S&P 500, which in the past has signaled significant declines in the S&P 500. While many big cap stocks continue to hold up, most stocks have begun to struggle. I will return to this subject below because the startiReadmore...

Diminishing Returns From Policy Extremes. Treasury Bonds Or Stocks?

"We are in the endgame of central planners' attempts to keep the lid on the simmering stew of profound imbalances that characterize the status quo. Maintaining the Illusion of Stability Now Requires Ever Greater Extremes of central-planning policies." Charles Hugh Smith http://www.ofReadmore...

Fragile Power Losing Control As Growth Slows.

"We’ve finally reached the beginning of the end of this grand policy experiment. As a politician, all you can do now is panic & print. No, you can’t print growth. I think that’s why the plannings, panics, and printings are all accelerating again. Global growth is slowing."  - KeiReadmore...

BIS Explains Global Financial Incoherence

The Bank For International Settlements annual review, out last Sunday, reveals  the reasons for the current state of global financial incoherence. At last a major policy institution has stated the obvious. “Beneath the surface, though, the medium-term risks and tensions have increased, Readmore...

Institutional Failure. Historic Investment Decisions.

“Americans’ confidence in most major U.S. institutions remains below the historical average for each one,” a Gallup spokesman said in a news release. All in all, it’s a picture of a nation discouraged about its present and worried about its future, and highly doubtful that its institutionsReadmore...

Inevitable Instability As Banking Dystopia Overwhelms Markets

“He doth bestride the narrow world like a Colossus; and we petty men walk under his huge legs, and peep about to find ourselves dishonorable graves.” Shakespeare (Julius Caesar, Act 1, Scene 2) The banking system has now become a Colossus. The "narrow world" of finance has come to beReadmore...

Earned Consumption Recession. Bond Decoupling And Debt Fragility.

The chart above  shows that Personal Consumption Expenditure (PCE) after auto loans, student loans, and personal government subsidies "has been trending down for 5 years and has now gone negative.  And this doesn’t filter out revolving credit or it would be even uglier.  Now when was the lReadmore...

Surviving Financial Repression

  The distortions and dysfunction in markets have reached a point where it has become essential to recognize that the financial system has become a system of financial repression (FR). While this viewpoint has been openly discussed for some time, as described below, I have preferred to Readmore...

Fundamental Flaws Fading The Fed

"Don't Fade the Fed!" has been the most successful trading and investing strategy for over 6 years. This simple recipe has been driven by the Federal Reserve, and other central banks, as their "market activities" have expanded to dominate markets, and have increasingly targeted the stock mReadmore...

Twilight Zone For Markets And Monetary Policy

  Is it possible for a stock market to trade at all-time highs even as the underlying economy plunges into a deflationary recession with record levels of debt? Until recently I would have said “No Way”. Today, however, it not only seems possible, it seems to be where we might be goReadmore...

US Now Tracking A Technical Recession.

  The Atlanta Federal Reserve GDPnow model is quickly growing a reputation for the most accurate advance estimate for GDP. It is now tracking a negative growth rate for GDP over the first half of 2015. http://www.zerohedge.com/news/2015-05-13/q2-gdp-forecast-cut-07-atlanta-fed Readmore...

Transitory Denial. Umbrellas don't cause rain.

The one clear message from the Fed meeting this week, was that any economic indicators that did not fit their narrative were just "Transitory". Having been consistently wrong in their forecasts for 6 years or more, this lack of humility and degree of denial is becoming increasingly remarkaReadmore...

Is the US dollar uptrend over?

This week the downside break of the US Dollar uptrend seems to have been confirmed. As the direction of the US dollar is central to allocation across all asset classes this is worth a closer look. If you get the direction of the US dollar right you get a great deal else right too. As thReadmore...

Recession Watch

We now have 4 major economic indicators that are falling year-on-year at levels that have never been seen outside of a recession. http://www.zerohedge.com/news/2015-04-15/four-chartsmen-recession Furthermore, the Atlanta Federal Reserve’s GDPnow model is currently projecting Q1 GDP aReadmore...

"the set of financial market conditions that we deem" - NY Federal Reserve President Dudley

Central banks have created a new kind of bubble that is far more complex than technology stocks in 2000, or house prices in 2006/7. Those were hard enough for most investors, but now separating out what is real or fake, what the central banks can do and where their limits are, is no easy tReadmore...

How To Improve Bond Returns with Cycle Dynamics

Improving systemic approaches to markets is a never-ending iterative process of back-testing and building on previous experience. Fortunately, every once in a while, it can be highly rewarding. With enough time, testing and good fortune a major breakthrough happens and a spectacular improvReadmore...

"Recovery"? Fake And Failing.

No matter how much the media, Federal Reserve, or academic economists tell us about the current economic "recovery", it still rings hollow on main street. On closer examination it doesn't even stack up. Economics can be so interpretive that plausible arguments can be made for almost anyReadmore...

Never Smile At A Crocodile. Extreme Valuations Accelerate.

Never smile at a crocodile. No, you can't get friendly with a crocodile. Don't be taken in by his welcome grin. He's imagining how well you'd fit within his skin. Never smile at a crocodile. Never tip your hat and stop to talk awhile. Never run, walk away, say good-night, not good-day. CleReadmore...

"Everything Is Awesome" Negative Feedback Loop

  Last Friday the Non Farm Payroll (NFP) monthly data release was met with an “Everything Is Awesome” interpretation across the media. Just 2 headline statistics produced this euphoria. The “unemployment rate” fell to 5.5% and the “jobs created” headline was up 295k for the month. Readmore...

5 Essential Investment Perspectives

5 Essential Investment Perspectives In any game how could you win if you don’t know the rules? Even if you do know the rules how likely are you to win if you don’t understand how the game really works? Once you understand the game you may still have to work at it, but at least then you Readmore...

Dollar Strength. CPI Deflation. Earnings Downgrades.

The Federal Reserve's continuing preoccupation with raising rates makes the dollar look very attractive worldwide and has created a strong tailwind that started in the second half of 2014. However, it has created two very important feedback consequences.   The chart above shReadmore...

Extend And Pretend Debt Catastrophe

"In a time of universal deceit - telling the truth is a revolutionary act." - George Orwell For the last 18 months world GDP has been falling like a stone.   However, massive central bank buying has inflated stock prices around the world. The duration and scale of the resReadmore...

Fed or Fiction? Charts Are Clear

Even though the Federal Reserve continues to talk about raising interest rates sometime this summer, it is clear that the economic data continues to show remarkable weakness. The chart below shows that in terms of overall macro data, this has been the weakest start to any year since the 20Readmore...

Beware Media Hype Days

  It is now just as important to understand the source of financial and economic information as the information itself. Otherwise, if you are an analyst who examines the data you could go mad. This is because when you scratch the surface of the information and try to reconcile the Readmore...

Federal Reserve Unchanged But Policy Mocking Begins

The FOMC statement this week suggests that the Federal Reserve is choosing to ignore an avalanche of problematic information. Why? As the mismatch between the data and the so called “data dependent” Federal Reserve narrative grows, the credibility of policy makers continues to be questiReadmore...

4 New Central Bank Credibility Issues

Building on last week’s theme of crumbling credibility in the world’s current Fiat Money system, there was a great deal more evidence on view this week. There were 4 new issues that came up under the following headings: Swiss National Bank Deflation myths Gallup vs Bureau of Labor Readmore...

Volatility Rising As Instability Of Fiat Money System Grows.

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford "Whoever controls the volume of money in any country is absolute master of all industry and commercReadmore...

2014 Review. 3 Questions. Best Strategy For 2015.

Are bank deposits now unprotected backstops for bank trading losses? Are US stocks right and all other markets wrong? Does declining income and weak capital generation no longer matter for the economy or markets? Unprecedented circumstances require creative solutions. Best strategReadmore...

Altered State. Stock Market Disconnect.

  Stock markets started disconnecting from the economy in the first half of 2013. This served multiple purposes. Disguising policy failure is just one. Economic impact is obvious from the chart above. Markets now reflect 2 narratives that are in opposition. “QuaReadmore...

US Priced For Deflation! Riding The Tiger?

US Priced For Deflation! Riding The Tiger? There was a day in October when central banks needed an urgent discussion. The S&P 500 had just fallen almost 10% in just a few days. The S&P 500 was barely positive for the year and just about everything else was negative except TreasuReadmore...

The Cycle Dynamics Portfolio

The Cycle Dynamics portfolio bridges a gap in investment management between the All Weather approach and trend following systems.  A quick review of the All Weather and trend following methodologies reveals the distinctions. The All Weather system attempts to create a static portfolio tReadmore...

Absurd Economic Intervention. The System Trading Investment Solution.

Fundamental data, news, and financial markets are supposed to be highly related in a way that makes sense and can be read by skilled financial experts, and converted into profitable investment and trading actions. To a great extent that used to be case, but in 2014 Bloomberg reports that hReadmore...

New Model Portfolio Structure

As the investment outlook becomes increasingly uncertain, it is worth testing the limits of portfolio construction to see how much of this risk could be automatically handled at the allocation stage. Can a portfolio be created that would automatically readjust its asset allocation betweReadmore...

QE Lives? Bank Manipulation Library. Risk Management.

It turns out that QE did not really end last month. Only officially. It is more than likely that the big banks are now operating a "shadow QE". So much for policy transparency, accountability, etc.. It is becoming harder than ever to draw any line between the Federal Reserve and the big baReadmore...

Ritual Incantation. GYEN Bellwether. Trend Supremacy. Adaptive Allocation.

The ramifications of last week's Halloween raid by the Bank of Japan have only just begun. Japan is leading the grand monetary experiment and this was a new acceleration in central bank policy, which will have ramifications far beyond Japan itself. The time for subtlety is surely over fReadmore...

#CrackUpBoom Investment Solution: Adaptive Allocation

This week it became clearer where the central banks are taking us all. No matter how much QE has repeatedly failed to produce a sustainable recovery, at least to many, it looks like success if it forces the stock markets higher. Central banks essentially have 2 modes of behavior, which Readmore...

Corporate Debt Red Flag

Over the last month Junk bonds have begun to underperform Treasuries: http://finance.yahoo.com/q/bc?s=HYG&t=1m&l=on&z=l&q=l&c=ief Many corporations have been abusing their balance sheets in recent years, and will soon have to rollover a mountain of accumulated debReadmore...

The central banks are the problem not the solution

This chart shows clearly how the Federal Reserve has driven US equity markets to an altered state: http://www.zerohedge.com/news/2014-06-06/whats-wrong-picture No question the relationship between equities and bonds has materially changed over the last 2 years or so. In particular, hReadmore...

The Fed Has Failed and Reality Will Return

This chart below shows that the Fed's policies since 2007 have been a complete failure as regards the broad economy. There never has been a real recovery and the Fed can only create an illusion that benefits a small minority at everyone else's expense. The Federal Reserve's post 200Readmore...

2014 Reality Returns

For investors, 2013 was a year like no other. Relentless one way market trends and yet confusion at the same time. Here are three examples of economic phenomena that are hard to reconcile: 1.How can the US stock markets rally so persistently while emerging market equities fall? This chaReadmore...

Financial Warfare

2013 was the year where trend dominated to the exclusion of everything else. Factoring in fundamentals was likely more a hindrance rather than a help. In fact it has been some time since fundamentals like valuation and underlying economic health have been much of a factor. As David StockmaReadmore...

When will gold price setting on comex come to an end?

Pre-market slams have become the norm in the comex gold market. Here is what happened this morning: http://www.zerohedge.com/news/2013-11-20/furious-gold-slamdown-leads-third-consecutive-20-second-gold-market-halt What has become very clear over the year is that precious metals markeReadmore...

QE Insanity and Liquidity Illusions

QE is a "Feast for Wall Street". QE is very clearly and directly correlated with the rise of US equities. QE impact on economic growth is minimal at best. Headline economic data has become increasingly unreliable. The disconnect between financial markets and the real economy coReadmore...

7 Red Flags For US Equities

John Mauldin's weekly article, http://d21uq3hx4esec9.cloudfront.net/uploads/pdf/131102_TFTF2.pdf, entitled "Bubbles, Bubbles Everywhere" is very well timed. There are now so many signs of extreme conditions in financial markets that investors now need a careful review. Unfortunately, as thReadmore...

2 Timing Signals In The Anatomy Of A Pre-Crash Bubble

Status quo habits and inertia are formidable forces. So it can be remarkably hard to estimate when a change in direction is likely to happen. Charles Hugh Smith does a great job of describing this process: http://charleshughsmith.blogspot.com/2013/11/why-is-predicting-crisisreset-so.htmReadmore...

John Hussman's Chart

"We never expected to find ourselves in an environment like this again, given the savings that were lost when the internet bubble popped." David Einhorn Q3 2013 quarterly review. David Einhorn has arguably the best hedge fund track record over the two decades and this time the situationReadmore...

Investment Strategy Through the current "Crack Up Boom"

At this stage it is clear that the financial system is becoming increasingly distorted and unstable. Perhaps even more so than during the stock market peaks in 2007 or 2000. Those were difficult times for most investors as the euphoria of the boom turned quickly into collapse. Very few peoReadmore...