Investment/Trends

Larry Kotlikoff: Detroit Today, Washington Tomorrow

"The debt Uncle Sam publicly acknowledges is now $12 trillion. But the true measure of our debt -- the one suggested by economic theory -- is the fiscal gap, which totals $222 trillion. The fiscal gap is the present value of all future expenditures, including servicing outstanding official federal debt, minus the present value of all future receipts. Detroit's main means of hiding its true liabilities was discounting its future obligations at a rate far higher than appropriate, thus giving the appearance that less saving was needed to cover the shortfall. Washington's dirtier trick has been to keep virtually all of its future liabilities off the books." Continue reading →

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This amazing, animated chart shows the aging of America

"This is a mesmerizing little animation created by Bill McBride of Calculated Risk. It shows the distribution of the U.S. population by age over time, starting at 1900 and ending with Census Bureau forecasts between now and 2060. As McBride points out, you can see a big 'baby bust' before and during the Great Depression, right before prosperity returns and the Baby Boom strikes. (You can also see the bulge of Baby Boomers ripple through the charts in the latter half of the 20th century.)" Continue reading →

Continue ReadingThis amazing, animated chart shows the aging of America

Robert Kiyosaki: I Don’t Trust the Financial System, But I Do Trust Gold

"Financial expert Robert Kiyosaki points out, 'The rich are getting richer than ever before, but the middle class is shrinking . . . . Both Obama and Romney promised to save them, and when politicians promise to save your butt, you know your butt is gone.' Kiyosaki, author of the mega best seller, 'Rich Dad/Poor Dad,' goes on to say, 'If you trust Obama or the Republicans or the Democrats, then you don't need to buy gold. But I don't trust them. I don't trust Bernanke. I don't trust the financial system, but I do trust gold." Continue reading →

Continue ReadingRobert Kiyosaki: I Don’t Trust the Financial System, But I Do Trust Gold

Investors euphoric as US margin debt reaches ‘danger’ levels

"Bank of America’s monthly survey of investors showed a dramatic rise in confidence in August, with a net 72pc expecting growth to accelerate over the next year. It is the highest in reading since 2009. Almost everybody expects bond yields to rise as deflation fears evaporate, with just 3pc still worried about the risk of an economic relapse. Managers have slashed their bond allocation to a 28-month low. The exuberant mood comes as margin debt on Wall Street hovers near $377bn, just below its all-time high and well above peaks before the dotcom crash and the Lehman crisis." Continue reading →

Continue ReadingInvestors euphoric as US margin debt reaches ‘danger’ levels

U.S. 10 Year Bond Yields in Perspective (1790-Present)

"The move in the 10 year yields has led to all sorts of speculation as to the underlying cause. Since none of this is within our my control, all we can do is look at this from a longer term perspectives to put this into broader context. Three takeaways: 1) Bond Yields can be driven to extreme son the upside and on the downside. 2) It takes many years or decades to unwind a move like that 3) Rates could go appreciably higher if the 30 year bond bull market is over. Looking at yields from an historical perspective, there is still plenty of room for yields to rise if they simply 'normalize.'" Continue reading →

Continue ReadingU.S. 10 Year Bond Yields in Perspective (1790-Present)

International Investors Dump $40.8 Billion in Treasuries, the Most Ever

"Foreign holders dumped a whopping $40.8 billion in long-term Treasuries, the biggest exodus from bonds in the history of the U.S. Worse, June was actually the third month of mass dumping in the past four, for a total of $79 billion. It wasn’t just government bonds, either. Foreigners dumped $116 million of bonds made up of packaged U.S. mortgages. They sold $5.2 billion of Fannie Mae, Freddie Mac and Ginnie Mae bonds, and $5 billion in corporate bonds. And they unloaded $26.8 billion of U.S. stocks. More international capital flowed out of U.S. markets than at any time in history, worse even than at the depths of the 2008 credit crisis." Continue reading →

Continue ReadingInternational Investors Dump $40.8 Billion in Treasuries, the Most Ever

Is Slowing M2 Money Supply Signalling Another Stock Market Crash?

"According to Austrian Business Cycle Theory, when a central bank slows its money printing that has fueled a manipulated stock market boom, the stock market is very vulnerable to a crash. Murray Rothbard in his book America's Great Depression explained how it occurred before the October 1929 crash. The money supplied slowed before the October 1987 crash. It slowed before the 2008 September Financial Crisis. And it is slowing again now." Continue reading →

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Fed links leveraged ETFs to 1987 crash

"Federal Reserve economist Tugkan Tuzun has warned leveraged exchange-traded funds could be the next problem for the stock market and could trigger a crash similar to that in 1987. Leveraged ETFs set out to generate multiples of daily index returns by gearing their portfolios twice or three times over. Turzun points to portfolio insurance, generally blamed for triggering the 1987 crash. Thanks to their trades, and their gearing, leveraged ETFs can have an outsized impact on the market. Tuzun argues that a 1% move in broadly-based market indices can produced rebalancing flows totaling $1 billion." Continue reading →

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15 reasons why Bitcoins are better than gold

"Technology is literally at the point where it is disrupting almost everything and this week has been a prime example of this trend. On the one hand Google co-founder Sergey Brin was revealed as the investor behind growing synthetic meat in a lab in order to disrupt the cattle business and Elon Musk proved he can disrupt the auto market with his successful launch of Tesla Motors and the recent public acceptance of his company’s vehicles which surpassed analyst estimates. Can you disrupt a commodity though? After some consideration I would assert you can and this post will explore the top reasons why Bitcoins are better than gold." Continue reading →

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