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  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Another one from June 2013.

    Well, I have to say, I put 2 million to work with some agency bullets. I'm thinking about nibbling whenever I can at about a 2 million pop each time we go over 2.40. Time will tell.

    some more
    Oct 21 09:11 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's another one from June 2013.

    " Some have now waited 4 years , they chose not to play the cards , instead they chose to blame the Fed for what has turned out to be their mistake.. "

    Yeah, you have to realize that there is always a real economy out there. Gov action can severly distort it, and alot of people can be hurt, but if you recognize what is going on, then you can not be one of them.

    The history of gov intervention is boom and bust. Severe gov intervention can create a Cuba or N Korea, but even in these places there is still a rich ruling elite. The US doesn't really face that extreme, so what we have here is a monetary system that will go to the mattresses to protect equities markets.

    As long as the US economy is the highest deck on the sinking ship, the world will come to us. This doesn't mean we will be as prosperous as we could be, but it does mean that some sort of collapse into a Mad Maxx scenario is highly unlikely.

    Don't get me wrong, I'm not defending anything here, I'm just saying it is what it is. Look at it this way. Imagine an equity market as an index for aristocracies. If you don't push the peasants too far, the aristocracy index will reflect the rising wealth of the aristocracy. If there is a dip, the aristocracy via their central bank can keep tapping the general productivity of the peasants and transfer that to themselves. The equity index (the aristocracy index) will reflect that transfer and show a recovery.

    This is very similar dynamic to what is going on now. If you recognize this, you can invest in the aristocracy index and share in their gains.

    some more
    Oct 21 09:11 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's another one from June of 2013.

    "If the Fed ends, tapers QE, I think the bond markets are wrong if they think rates will go up. Rates will fall. "

    a few more
    Oct 21 09:10 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's one from June of 2013.

    "Also, keep an eye on Europe. France seems to be on the path to becoming the new Greece, and if the cameras get turned back on in Europe, more capital flight to safety will ensue, and we could see the 10yr move back down below 2%. "

    The 10 yr touched 1.86 last week.

    and another
    Oct 21 09:10 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's a comment of mine from Feb 2013. I was a bit conservative here, so early into the year, but the general direction was correct.

    "Stimulus ramped up in 2009, QE, PDCF, TALF, TARP, ZIRP all began in 2008 with QE and ZIRP starting right near the end of 2009. S&P bottomed out in the first part of 2009 and the 10yr was close to 2% at the end of 2008. By the first part of 2010 the S&P went over 1200 and the 10 yr was right around 4%. Then QE stopped by mid 2010, the S&P drops down near 1000 and the 10 yr falls to the mid 2s.

    At the end of the day, the only thing a gov can do when its not fulfilling its legitimate role, is subsidize consumption. Since we look at spending (GDP) as our measure of the economy, spending subsidies can make GDP go up which make the markets think the economy is growing and asset values go up assuming future cash flows will be higher thus a higher PV.

    Since we don't measure change in aggregate capital, what we don't see is that the subsidized spending is eroding capital. When capital shrinks the offsetting entry is assets. In other words the whole balance sheet shrinks, or in other words it recedes. This is why we have recessions after these periods subsidies.

    A better way to look at the economy is via the lens of net Fed note creation. Additional Fed notes in the economy translates to additional notes existing to bid up asset prices. When you have net Fed note destruction either via out right taxation that takes those notes out of the system or indirect taxation via gov regulations that renders the notes less effective, those notes won't bid up asset prices.

    Right now it seems that monetary policy is going to win out over fiscal policy, with the result being net Fed note creation. Something will derail the consumption subsidies, but it could be years. Obamacare and Dodd Frank could do it, or taxing the rich could do it, or it could be $5/gal gasoline. Either way, it needs to be a large macro event to either destroy or render ineffective the Fed notes.

    Fear not though, the dip will be a buying opportunity, as the Fed will come to the rescue yet again and create more Fed notes that will be used to bid up asset prices yet again. This can go on for decades. So long as fiscal policy doesn't totally destroy productivity, their will always be wealth that the Fed can transfer to equities. I can see 1600 on the S&P by years end and maybe 2.30 on the 10 yr. 2014 could produce the dip as Obamacare and Dodd Frank represent large macro policy changes that will be clandestine taxes that will render Fed notes less effective. 2014 will be the time to reassess, but 2013 should see consistent rising of asset prices."

    and some more
    Oct 21 09:09 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's a comment of mine from July of this year.

    "What this says to me is that we can expect the taper to continue. If it continues along its current trajectory, it should end in Sept/Oct. We can also expect the ECB QE to continue, so the Fed will work at odds with the ECB with regards to risk-on.

    Last year I was thinking we would break 2000 on the S&P and we are darn close. However, I thought taper would probably make 2000 improbable. However, ECB QE changes that. Its still a possibility. With ECB QE and Fed tapering I think we hold in a range for the 10 yr between 2.60 and 2.80, with occasional dips into the 2.50s, just as we have seen recently.

    There are still lots of risk-off factors to still come into play. There have been talks about the FDIC cracking down on small banks (rules they tend to apply to big banks are often not as rigourously enforced on smaller banks - looks like this may end - the natural incentive for any regulatory body is to get rid of smaller players - they all want to live year round in bigger cities and not have to travel). New rules are about to go into effect for HELOCs to prevent interest only and make them all amortizing. That will eat up some discretionary spending. Estimates by insurance companies for increased premiums for 2014 are just guesses at this point. In 2015, they should have harder data, and premiums should go way up.

    So, there are still lots of reasons for hurdles for the risk-on scenario. "

    more to come
    Oct 21 09:08 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    And here is one more comment from the next day, Aug 8.

    "I just saw 2.37 on the 10 yr. What's really ironic, is I am on my way to the same eye doctor I went to back when LTRO was coming to an end. I can remember sitting in the doctor's office staring at they eye chart placing orders for bonds on my phone because the 10yr was peaking out at 2.39. I say peaking because LTRO was coming to an end, and the way I look at things, the less central bank notes in this environment (subsidy mix), then the less risk-on there is. So, when the ECB was going to bring LTRO to an end, then risk-off was going to return. I bought about $25 million in that round, and took gains when the 10 yr went back down to around 1.40. At that point, all we had was Twist, and Twist didn't grow the balance sheet, so that wasn't risk-on, since there wasn't new Fed notes.

    Taper is not eliminating notes, its just a reduction in the amount of new notes being created. Combine that with air strikes, trade sanctions because of Russia, etc, and that subsidy mix overrides the muted risk-on of taper. The result is a net risk-off, so rates down and equities down.

    If all the air strikes etc continue and QE3/4 ends in the fall, then that will be major risk-off, and thus we could fall below 1800 and 2%. "

    More to come
    Oct 21 09:06 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Here's a comment of mine from Aug 7 2014.

    "I would say that's a good plan. A big piece of the subsidy mix right now is geo-political turmoil. You've got Ukraine, Israel, Portugal banking, and Italian recession. Combine all that with Taper, and you've got a good bet for a continued flight to quality. I could see us dipping into the 1800s for the S&P and the 2.30s for the 10yr, but remember, taper should have only slowed the growth in equities and interest rates, so if any of the geo-political stuff resolves itself, we could get back up into the 2.50s - 2.60s for the 10yr and then back into the mid 1900s on the S&P. Then when taper is over and the Fed is only maintaining the size of the balance sheet, that's when I could see settling into the 1800s and the 2.20s to 2.30s, and staying there until the Fed either QEd again or shrunk the balance sheet. "
    Oct 21 09:05 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    "Greed doesn't pay"

    Then I expect you to give away all your claimed gains.

    "Just remember Barack means "BLESSED", as the stock market rebounds before the Mid-Term elections. "

    This is what I was talking about. You came in at the end of the conversation, and are now assuming this is all about you. I will say, you are indeed one of my favorite targets because you get so upset and I think that's funny, but this time I was pointing out the lack of logic displayed by the first guy, which is clearly motivated by a political agenda. My advice to you is to learn to control your feelings. You have to be able to listen to harsh things and not get upset. Don't uncheck some thread just because your confirmation biases get challenged. Being able to listen to harsh things in a critical fashion is how you can learn some of life's most valuable truths.

    "I deplore what the Zionist-Neocons have done abroad, and I deplore the Wealth Gap which is at 1929 levels (if not worse)."

    Well, you were talking about realism before, and now you want to talk about cliches. The so called wealth gap (which is not as bad in the US as some claim), but however does tend to occur, but does so in two different scenarios. In a free market, everyone gets richer. In a gov regulated/protectionist market the rich get richer and the poor get poorer. Its basically the economics of artistocracy. That's what we have now. That's why stock markets can go up, while people's incomes stay flat. The job of gov regulation is to protect existing wealth from competition. Its JB Colbert all over again (do you know who that is). The success of the protectionism gets measured in equities, just like it can be measured in the wealth of an aristocracy (to which Colbert was attached). Thus, if you could have invested in Colbert as a French peasant, you could have gotten back some of what was stolen from you via gov regulations. That's my message to people now. Its how they can learn to protect themselves and realize that the ups and downs in the markets aren't as mysterious as they have been led to believe. In fact, they become quite predictable.

    So, since you love reality so much you should learn to appreciate what is really going on and drop the cliches which make no sense at all.

    "but because I see the failures of Western governments as being the fuel for a continued market ascent."

    How can that be. We were told that by letting the "experts" take over, all the chaos would end, and there would be no more economic downturns. Well, the "experts" did take over, we have central banks the world over, gov regulates banks from top to bottom and stem to stern and you can't even buy a gallon of milk without some sort of gov price control and yet you are still complaining and we are still having booms and busts? Why it was no less than Owen himself (do you know who that is) that promised us the Fed reserve would end economic downturns.

    Investors need to stick to reality, and I suggest that is what you and everyone else does. All these promises by someone who has no interest in you that they are going to take care of you if you just let them control you are a setup so they can transfer your wealth away. My goal is to get others to understand this, and then realize that it is this gov control that causes these big swings in asset prices. Once they understand what the regulators are doing, then they too can predict the ups and downs of markets and thereby protect themselves.

    "And by the way, it is bad manners to boast about how much you are earning, whether correct or false."

    Well, that's your problem not mine. If I say something that upsets you, that's your fault, not mine. You don't have to read what I write, and you don't even have to respond to it. I comment for my benefit and no one else's. If they can learn from my comments, then I benefit from that. If they don't, well, that's not going to stop me from expressing my views. Like I said, they can ignore them if they want to.

    Its up to them, not me.
    Oct 21 08:57 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    "The market is not going to do what you want just so you can maximize your returns."

    Which goes to my point, and illustrates the weakness of your attack.

    The proper response in this event should have been one of disappointment since the point of investing is to maximize your returns, that is of course, unless, the point of the comment is to make a clandestine political statement, which clearly it was.

    I find it interesting that these guys were surprised by this downturn when it seems they clearly understand the ability of the Fed to inflate asset prices and not the economy.

    I for one called the 10 yr at 3% last year, since I too understand the gov's ability to engage in consumption subsidies and run up asset prices and yields (even though the stated point of QE was to lower rates, which the exact opposite happened), and thus put about $10 million to work in anticipation of rates falling in 2014 (which again, we were all told rates were going to go up). Which means I was doing the opposite by buying into higher rates when everyone else didn't want to buy because they were sure rates were going to go up based on the dogma everyone is taught about a central bank. My understanding has served me well. I would say since 2010 it has helped me earn an additional $12 million.

    So, I was just pointing out the obvious (or perhaps not so obvious, until I pointed it out) contradiction in the reaction above. So again, we should have hoped for a crash, because then we would have been able to buy a bigger dip, and then count on the CBs to reinflate and transfer massive wealth our way. So instead of saying "booyah", this guy should have said "rats", but clearly he doesn't really understand how it works either. It appears there is more of a political agenda going on here.

    Really, you need to learn what this game is all about, and its not about supporting failed political ideologies. Reality will serve you even better.
    Oct 21 07:48 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Is The Stock Market Correction Over? [View article]
    Ecb has just started Qe, but it looks like its starting off small, and we don't know about Fed extending Qe yet.

    It's stupid to be excited unless your just a political idealoque. It would have been much better for more effective wealth transfer if the Fed had ended QE and the Ecb had waited. Then the S&P could have fallen to 1600, and we could have bought in there. Then both the ECB and the Fed could have started fresh QEs, and run the S&P all the way up to 2200 and the 10 yr to 3.15. Now we won't get that chance.
    Oct 21 06:23 AM | Likes Like |Link to Comment
  • Could The S&P 500 Fall To 1,625? [View article]
    "I agree that it will happen at some point; but I don't expect it to hit us anytime soon. "

    Yeah, Mark is right on this.

    For the time being, the US is the highest deck on the sinking ship. That means there is demand for US notes. High interest rates and higher inflation are a sign of credit risk. Credit risk occurs when investors have better alternatives. Even though the US is doing some really stupid things, there are other out there that are doing even dumber things. That all translates to demand for Fed notes and Treas notes, thus low inflation and low interest rates.

    This could go on for a long, long time. What would change it would be communist China giving up on communism and going totally free market or Europe giving up on socialism and also going totally free market. If they did that, then they would become the haven for capital and labor for the world, then there would be an alternative to the US notes, our credit risk would be revealed and then inflation and interest rates would skyrocket, and we would find ourselves in the same boat as Greece.
    Oct 20 07:31 PM | 1 Like Like |Link to Comment
  • Stability Of The European Union June 2, 2014 To ??? [View instapost]
    "Like a stock price, it is partly based on trust. "

    Indeed, and consider this, a private company must be price sensitive in order to create its notes (stocks). If a company has a tendency to dilute its stock, people will till to shun it. Thus, there is a market force that makes private notes more valuable than gov notes.

    Govs still have the market to contend with, but a market correction for a fiat currency is often expressed in war or private revolt. The point of free market discipline is to avoid blood shed corrections.

    Also, understanding this also illustrates why stock markets tend to do well in money printing. There is a natural tendency to move out of the undisciplined gov notes and into the more disciplined private notes. Hence, during QE equities go up and rates go up, as people leave bonds and chase the return of equities. This is why, ironically, rates go up during QE even though the point of QE was to lower rates.

    From this I derive the risk-on during QE, equities up and rates up. When QE wanes, stops, or even gets reversed, risk-off returns, which is equities down and rates down.

    Which is what we have seen in Europe as the ECB's balance sheet has shrunk, and what we are seeing being threatened in the US as we even get a whiff that QE might be over. Of course, look at the 10yr since December. We were told all last fall that Taper meant rates would go up. Since Taper began in Jan of 2014, the 10 yr has fallen. It even touched 1.86 last Wednesday.

    People have been conditioned to think a rising equity market means a rising economy, and it certainly can, but if you give people notes that you can create without price sensitivity, then you invoke what I said above, and presto, you get rising equity markets without necessarily having a rising economy. Then the politicians get to say, "look what I have done".

    This is why this system is favored so much by politicians. Its a cheat, but if you understand the cheat, you can make money from it.
    Oct 20 07:21 PM | 5 Likes Like |Link to Comment
  • Could The S&P 500 Fall To 1,625? [View article]
    "Members of the Fed are supposed to be neutral politically, but they are beholding to some degree to those who put them in power."

    "as shown in a recent piece by Robert J. Shapiro,to leave no doubt that the Fed's open-market operations are usually tailored to support the Treasury's funding needs ona month-to-month basis."

    There are those doing work to show that the Fed is far more political than what we have been led to believe. It really should be no surprise.
    Oct 20 07:08 PM | Likes Like |Link to Comment
  • Could The S&P 500 Fall To 1,625? [View article]
    "It isn't what the Fed can or cannot do that matters. It is what the perception of what the Fed can do that drives the market"

    Amen. People's behavior isn't just shaped by reality. Its also shaped by by what they think reality is. For the rest of us, even though we know what they think reality is, isn't real. Their behavior on their perceptions will be real. That is, if you really know what I mean.
    Oct 20 07:01 PM | 1 Like Like |Link to Comment