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  • A Recession Signal Flashes Red [View article]
    The smart money is mostly in cash, waiting for the inevitable, if not imminent, shake-out in equities.

    The pros are trading - like always, win some - lose some.

    The greater fools are investing in common equities, which allows the smart money to cash out on rallies and the pros to win more than they lose.

    For the record: Dow closed today @ 12,823 / S&P @ 1,363

    You're welcome.
    Jul 20, 2012. 10:59 PM | 6 Likes Like |Link to Comment
  • The Supreme Court healthcare opinion "is a classic example of why Prediction markets have minimal value," writes Barry Ritholtz as Intrade gets it wrong again by predicting that the court would invalidate the act. "Futures markets are really a focus group unto themselves: When the group is something less representative of the target market, they get it wrong with alarming frequency."  [View news story]
    More importantly, the Supreme Court healthcare opinion is a classic example - that the rule of POLITICS now trumps the rule of LAW in this country.

    If this doesn't change, alpha eventually won't be worth seeking.
    Jun 28, 2012. 01:13 PM | 5 Likes Like |Link to Comment
  • Emperor Bernanke, 3 Castles, And An Inevitable Unwind [View article]
    So, what if the Fed later forgives all of the debt it purchases from Treasury?
    Voila! Everybody's happy!

    (You heard it here first.)
    Sep 15, 2012. 12:53 PM | 4 Likes Like |Link to Comment
  • The Greek De Facto Default [View article]
    I essentially agree; but, rather than corporatism, what you and Avery Goodman are describing is "capitolism", a politically corrupted form of capitalism.
    Feb 14, 2012. 11:10 AM | 4 Likes Like |Link to Comment
  • Emperor Bernanke, 3 Castles, And An Inevitable Unwind [View article]

    It's either what I have laid out or war - so, I'm being optimistic.

    To add to your "not the slightest chance in the world" list:

    Concurrent with the cancellation of UST's by the Fed and the creation of a US dual currency scheme, the commercial banking system will be nationalized.

    This is absolutely inevitable and will happen soon. While most market participants are focused on quantitative-based monetary policy, the more consequential policies currently in force are qualitative. That is, gross bank regulatory forbearance has been extended beyond the point of no return, and will absolutely result in the nationalization of the US banking system.

    Remember, we are no longer governed by the rule of law (upholding contracts, regulations and such); we are now governed by the rule of politics.

    The "new normal" is still evolving...

    Sep 16, 2012. 02:29 PM | 3 Likes Like |Link to Comment
  • Emperor Bernanke, 3 Castles, And An Inevitable Unwind [View article]

    I don’t watch much CNBC, so I missed Edelman’s comments and therefore don’t know the context within which they were made.

    I am not being facetious when I say that the Fed will eventually forgive/cancel the payment obligations of its Treasury holdings.

    Timing? This will occur around the time when the lack of confidence is manifest by the capitulation of (primarily foreign) UST holders.

    Concurrent with the Fed’s cancellation of UST debt will be the establishment of a dual US currency: a domestic, note-based currency and a foreign, mostly gold-backed currency.

    Thanks for letting me know about Edelman’s comments; however, I doubt he’s figured out what follows. So, for the record, you heard a more complete (and actionable) explanation here first.

    Sep 16, 2012. 01:56 PM | 3 Likes Like |Link to Comment
  • An Open Letter To ETF Regulators [View article]
    Thanks for this well-written and substantive article.

    The misrepresentation and downright fraud that the "regulators" have allowed to infest our financial markets drastically limits the investment choices for prudent, passive investors.

    Other than the SEC, what other agencies bear responsibility for the lack of disclosure that you cite?

    The "political capture" by large, out of control financial institutions has all but fully corrupted the very financial system to which the US Treasury and the Federal Reserve have allocated trillions of dollars to save.

    Perhaps a 2008 financial meltdown would have been better for market participants and stakeholders after all.

    I would like to submit this article to my congressmen and will expect a written response from them.

    Thanks again for this highly actionable article.
    Mar 30, 2012. 10:58 AM | 3 Likes Like |Link to Comment
  • Said The Fed: "Damn The Accountants...Full Speed Ahead!" [View article]
    CAS, Thanks for another insightful and well-documented article.

    untrusting investor - The “logic to the article” seems to strike at the very heart of the Fed’s stated purpose – to maintain monetary and financial stability within the US economy. According to Fed Chairman Bernanke, to accomplish that, the Fed must maintain the confidence of key market participants and stakeholders.

    The author is documenting the Fed’s unacceptable rationalization for making up its own financial reporting rules as it goes along, thereby opting out of being accountable to the very market participants from whom the Fed requires confidence in order to be effective. A lack of accountability – or worse, the pretense of accountability when we know it is lacking – undermines the integrity of FOMC operations and ultimately, confidence in the Fed.

    The Fed’s lack of accountability regarding its financial condition – as documented by the author – demonstrates the Fed’s lack of integrity which always undermines confidence; and, if continued, could ultimately render the Fed even more ineffective in accomplishing its stated reason for existence.

    So yes, absolutely – evidence that (1) the Fed is unwilling to disclose material aspects of its financial condition, or (2) that it is willing to misrepresent its financial condition (e.g., the MBS account) will most likely “affect the Fed in a.. significant way” by undermining the confidence of market participants.
    Mar 24, 2012. 01:10 PM | 3 Likes Like |Link to Comment
  • BofA (BAC) is close to settling a DoJ probe into whether Countrywide violated fair-lending practices, Bloomberg reports. The speculation comes as the White House increases scrutiny on banks to prevent redlining - excluding borrowers in low-income or minority neighborhoods - and pricing discrimination.  [View news story]
    Under current regulations, legitimate banks and mortgage companies simply cannot price subprime loans sufficiently high enough to compensate for the related risks. Accounting rules will, however, allow higher risk loans to appear profitable as the overall portfolio shows sufficient growth. When the high-risk portfolio ceases to grow, and there is no greater fool upon which to offload the portfolio, it is not cash flow sustainable and the losses will eventually become manifest.
    Dec 21, 2011. 10:52 AM | 3 Likes Like |Link to Comment
  • A Recession Signal Flashes Red [View article]
    R-j- :

    The smart money is MOSTLY in cash. “Mostly” means 50+%; which reflects the prioritization of protecting investment principal rather than taking the “risk-on” bait being promoted by the Fed.

    At a minimum, the author makes a very compelling case that the risks associated with common stock investing at this time are not commensurate with projected returns when applying rational, objective standards.

    Plenty of smart money is invested in corporates; however, the most favorable entry points have passed for now.

    Also please name the particular "corporate bonds, flush with cash ... paying upwards of 8%" (and the current pricing) so that we may share in your prosperity.
    Jul 21, 2012. 11:19 AM | 2 Likes Like |Link to Comment
  • Peregrine Financial Group: Another Futures Firm Implodes (And What Regulators Should Do) [View article]
    "The auditor was obviously in on it as well..." True - they were paid with stolen money for 20 years.

    "... or grossly incompetent." Actually, willfully ignorant - for the right price, of course.

    "I just wonder how many other criminal operations like this are out there." Many - especially if you include the auditors/accounting firms.

    "This can't be all there is." True and correct.
    Jul 15, 2012. 09:41 PM | 2 Likes Like |Link to Comment
  • The Stock Market: Update On Increasing Risks And Possible Implications [View article]
    Good article based on solid logic.

    Irresponsible political influence preempted prudential financial regulatory policy and enforcement, which resulted in uncontainable market disequilibrium (a/k/a the “financial crisis”) in 2008, causing the attendant financial system instability.

    Rather than address financial system instability with measures that would facilitate market equilibrium, policy makers chose to mask market disequilibrium with artificial financial stimuli.

    Market makers have attempted to mask market disequilibrium primarily by implementing fraudulent accounting rules and “quantitative easing” measures, as well as irresponsible asset purchases.

    (In addition, one of the most significant and under-reported measures undertaken to mask excessive market imbalances has been to implement unprecedented regulatory capital forbearance, which will inexorably lead to the nationalization of a significant segment of the banking industry.)

    By responding to the destabilizing effects of synthetic financial instruments with artificial financial stimuli, policy makers have succeeded in creating virtual financial markets.

    Regardless of the form or amount of artificial financial stimuli that policy makers employ to mask market disequilibrium, prudent investors will not be fooled.

    Market disequilibrium duration correlates directly with risk/reward disequilibrium.

    Only the “market makers” and the “greater fools” will seriously participate in this virtual market place.

    Now that virtual financial markets dominate, technical and fundamental analyses have even less predictive value than they may have had before.

    The inevitable “regression to the mean” will manifest itself with a market crash, as referenced in this article – but the timing is only as predictable as the next black swan event.
    Apr 20, 2012. 05:05 PM | 2 Likes Like |Link to Comment
  • The President's plan to chill supposed oil manipulation: Increase by 6-fold the surveillance and enforcement staff at the CFTC. Increase spending on surveillance technology. Increase civil and criminal penalties for manipulation from $1M to $10M. Give the CFTC authority to increase margins (presumably now only the domain of the exchanges). Crude +1.4% to $104.84.  [View news story]
    Politics – yes. Smart politics- no.

    Two of the most basic and fatal mistakes a politician can make are: 1) interfering with the “politically correct” as defined by the MSM; and, 2) interfering with the moneyed interests.

    Regarding #2, the Obama administration has been poking the energy industry in the eye from day one; and this may be the straw that breaks the camel’s back.

    Audacious arrogance - mixed with ignorant, incompetent or irresponsible policies – leads to the worst of outcomes…
    Apr 17, 2012. 12:41 PM | 2 Likes Like |Link to Comment
  • Little Upside Left In Bank Of America [View article]
    daro – you are correct with respect to purchase money mortgages.

    Notwithstanding “re lingo” or what someone with super-duper credentials or a college "re degree" may declare, a purchase money mortgage is not in any way limited to seller or owner financed transactions.

    A purchase money mortgage is a loan which is extended by any bank, or other lending institution (or third-party individual for that matter) where the proceeds of the loan are used to purchase real property and the transaction is properly recording pursuant to relevant state statutes.

    The distinction between a purchase money mortgage and a non-purchase money mortgage is important in determining lien priority, usually between the IRS and the mortgagee.
    Mar 28, 2012. 12:20 AM | 2 Likes Like |Link to Comment
  • Why The Fed Won't Save You From The Next Bear Market [View article]
    The article applies a historical perspective to today’s equity market trends; and, although well-presented and thoughtful, if in fact we are in a “new normal”, I’m not as convinced as many are that buying dips will be the way to go in response to the next significant market correction.

    Obviously, there are many metrics to consider in determining proper equity allocations, entry and exit points – to each his own. Since I’m not smart enough to call tops and bottoms using either technical or fundamental analyses, I plan to be “under-weighted” equities when (not if) clearing houses are designated as SIFI’s (TBTF) by the Fed, et al in the near future.

    At the next inevitable financial crisis, “clearing house” will take on a new meaning for market participants.

    Also, for those who rely on “stop orders” for protection, they need to ask their brokerage firm, asset manager, etc. how effective SO’s are in a “fast market”.
    Mar 11, 2014. 05:25 PM | 1 Like Like |Link to Comment