What Could Possibly Go Wrong

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 →

Continue ReadingIs Slowing M2 Money Supply Signalling Another Stock Market Crash?

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 →

Continue ReadingFed links leveraged ETFs to 1987 crash

U.S. Pulls Out of Egypt’s Bright Star War Game Over Massacres

"President Obama on Thursday cancelled the U.S. military’s participation in next month’s Operation Bright Star in Egypt – a biennial training exercise with the Egyptian military – following Cairo’s brutal crackdown on opponents that left more than 500 dead the day before. Continuing the charade – that the U.S. needs to continue to cooperate with Egypt to improve things there – would have been bizarre. The notion that such military cooperation can give the U.S. influence over a foreign military is dubious, despite the $1.3 billion in military aid the U.S. gives to Egypt annually, a bounty for signing the Camp David accords with Israel in 1978." Continue reading →

Continue ReadingU.S. Pulls Out of Egypt’s Bright Star War Game Over Massacres

Obamacare Provision: “Forced” Home Inspections

"The Health and Human Services’ website states that your family will be targeted if you fall under the 'high-risk' categories below: Families where mom is not yet 21; Families where someone is a tobacco user; Families where children have low student achievement, developmental delays, or disabilities; Families with individuals who are serving or formerly served in the armed forces, including such families that have members of the armed forces who have had multiple deployments outside the United States. In 2011, the HHS announced $224 million will be given to support evidence-based home visiting programs to 'help parents and children.'" Continue reading →

Continue ReadingObamacare Provision: “Forced” Home Inspections

Math Advances Raise the Prospect of an Internet Security Crisis

"The encryption systems used to secure online bank accounts and keep critical communications private could be undone in just a few years, security researchers warned at the Black Hat conference in Las Vegas yesterday. The NSA has for years recommended ECC as the most reliable cryptographic protection available. Implementations of ECC were pioneered and patented by a company called Certicom that is now a subsidiary of the phone manufacturer BlackBerry. Although the U.S. government has purchased licenses, other companies that want to use ECC will need to make expensive deals with Certicom to avoid lawsuits." Continue reading →

Continue ReadingMath Advances Raise the Prospect of an Internet Security Crisis

‘Run and hide’ is Obama administration’s clever plan for next school shooting

"The U.S. Department of Education’s 'live-shooter' section doesn’t recommend that schools arm teachers or employ armed guards. It doesn’t even advise schools to add door locks for classrooms. Instead, the section counsels teachers and students to 'run,' 'hide' and then 'fight' — but only 'if neither running nor hiding is a safe option.' Arne Duncan, the Secretary of Education, does not explain how this guidance differs from the very unsuccessful actions attempted by the 26 victims of Adam Lanza, the lone gunman who attacked Sandy Hook Elementary School. Twenty of those victims were children who were six and seven years old." Continue reading →

Continue Reading‘Run and hide’ is Obama administration’s clever plan for next school shooting

Obamacare: “Let’s Just Make Sure It’s Not A Third World Experience”

"We begin today by checking our premises: In order to imagine something working forever, it must begin to work in the first place. When asked last Friday about what the future holds for the Affordable Care Act, Senate Majority Leader Harry Reid said, 'What we’ve done with Obamacare is a step in the right direction, but we’re far from having something that’s going to work forever.' The law takes full effect Jan. 1, 2014, and the online exchanges launch on Oct. 1, 2013. But lofty expectations are being played down as logistical problems become worse and worse." Continue reading →

Continue ReadingObamacare: “Let’s Just Make Sure It’s Not A Third World Experience”