Author: admin

By Chris at http://ift.tt/12YmHT5

If I was to watch the world news every day I would be filled with a burning desire to build myself a hut in the hills, don my hazmat suit and wait for the impending collapse of humanity.

I met a guy who’d done pretty much that. He was Welsh and drunk most of the time. But once, in the local pub he’d decided to venture into after spending a year living in solitude, he confided in me that all the things that had driven him to his fearful state didn’t seem all that important any longer.

He told me this as he glanced occasionally at a TV above the bar, where David Attenborough was magically making a previously boring looking swallow seem like the most amazing creature you’d ever seen. Perhaps he realised that the world in fact wasn’t in quite so terrible a state as it seemed to be if you took your information from the 6’o clock news.

Indeed, media studies indicate negative news reports outweigh positive news reports by 17 to 1!

Given a 17:1 barrage of mayhem, death, destruction, and Tony Blair this poor miserable Welshman was on the brink of hanging himself, and a little quiet time providing perspective had brought him back from the brink. Sure it hadn’t cured his drinking problem but then again he was Welsh.

I bumped into him again a month or so later and he’d taken up a regular spot in the pub playing his guitar. Apparently he was pretty good because the bartender told me he’d spent the previous night being ridden around his bedroom by some South American backpacker wearing a cowboy hat who must have mistaken him for Jon Bon Jovi. He had a glint in his eye that wasn’t there before. This perspective and media diet had clearly changed his world for the better.

The reason for this poor sod’s previous state of fear can be explained by an almond-shaped mass of nuclei deep in the brain’s temporal lobe – the amygdala. According to men in white coats who play with rats and still wear Brylcreem this highly sensitive part of our brain contributes heavily to threat detection.

From an evolutionary and neuro-scientific perspective we are hardwired to look for dramatic and negative news and when we find it, we share it.

The clansman who spotted a sabre-toothed tiger would immediately share the information with his clan. Being eaten was a pretty big deal and you didn’t want to be the guy explaining to Joey’s wife as she sat grieving over his mauled body that, “Ah yeah, now you mention it, I did see that horrid beast up on Woolly Mammoth point just yesterday. I guess I should have mentioned it to him. Sorry about that.” 

Social sharing of danger was therefore immensely important.

Today, however, we don’t wait to catch up with Billy for a drink on the weekend to tell him about the car crash on the highway that we just drove past. We snap it on our smartphone and post it on a dozen social media sites where it is then re-posted and shared by hundreds of others, thus amplifying the visibility of the crash.

The fact is that unless you live in Kandahar, or maybe Detroit, unusual scary things just don’t tend to happen that often to most people. If you live in a small town of a few hundred thousand people it’s a big deal when someone is murdered.

On the other hand, when you have a murder in a city of a million plus people it’s just a fact that you’re more likely to hear about it. Take a city like New York and London with over 8.5 million people, or Shanghai with 25 million; there are a few murders going down and they will be blasted all across the 6 o’clock news.

Many studies have shown that we care more about the threat of bad things than we do about the prospect of good things. Our negative brain tripwires are far more sensitive than our positive triggers. We tend to get more fearful than happy. Clearly taken to its extreme this can result in radical emotion driven decisions which don’t produce positive results.

An Experiment

In a now-famous experiment done by two researchers, Amos Tversky and Daniel Kahneman, they examined how people make decisions involving risk. These gents were working in an area of research known as behavioral finance but the results can be extrapolated to any actions involving risk.

In their experiment subjects where provided the following scenario:

• Suppose you have been given $1,000 and must choose between a sure gain of another $500 or, alternately, a 50% chance to gain $1,000 and a 50% chance to gain nothing.
• Another group of subjects were given a different scenario: You are given $2,000 and must choose between a sure loss of $500 or, alternately, a 50% chance to lose $1,000 and a 50% chance to lose nothing.

Both situations are identical in terms of the net financial benefit to the individuals but Tversky and Kahneman found that most members of the first group chose the sure gain of $500. A majority of the second group, however, opted for the gamble between a loss of $1,000 and loss of nothing.

The simple phrasing of the question – the fact that one is presented in terms of gain and the other in terms of loss – is what causes them to be interpreted differently?

The conclusion of the experiment, which has been proven many times since was that people are willing to run greater risks to avoid losses than they are to make gains. 

Next week I’m going to discuss how this ties into another mathematics principle uncovered centuries ago by an Italian mathematician and how most investors focus on the completely wrong sectors and asset classes at the wrong times.

We’ll top if off with asubscriber-only report on the 8 investment biases that screw with your investing that a good friend of mine and part of our global network put together.

Until then, have a fantastic weekend!

– Chris 

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via Zero Hedge http://ift.tt/1PtDKLy Capitalist Exploits

Submitted by Robert Parry via ConsortiumNews.com,

A curious reality about Official Washington is that to have “credibility” you must accept the dominant “group thinks” whether they have any truth to them or not, a rule that applies to both the mainstream news media and the political world, even to people who deviate from the pack on other topics.

For instance, Sen. Bernie Sanders may proudly declare himself a “democratic socialist” – far outside the acceptable Washington norm – but he will still echo the typical propaganda about Syria, Russia, Iran and other “designated villains.” Like other progressives who spend years in Washington, he gets what you might called “Senate-ized,” adopting that institution’s conventional wisdom about “enemies” even if he may differ on whether to bomb them or not.

That pattern goes in spades for former Secretary of State Hillary Clinton and other consciously “centrist” politicians as well as media stars, like NBC’s Andrea Mitchell and Lester Holt, who were the moderators of Sunday’s Democratic presidential debate. They know what they know based on what “everybody who’s important” says, regardless of the evidence or lack thereof.

So, you had Mitchell and Holt framing questions based on Official Washington’s “group thinks” – and Sanders and Clinton responding accordingly.

Regarding Iran, Sanders may have gone as far as would be considered safe in this political environment, welcoming the implementation of the agreement to restrain Iran’s nuclear program but accepting the “group think” about Iran’s “terrorism” and hesitant to call for resumption of diplomatic relations.

“Understanding that Iran’s behavior in so many ways is something that we disagree with; their support of terrorism, the anti-American rhetoric that we’re hearing from their leadership is something that is not acceptable,” Sanders said. “Can I tell you that we should open an embassy in Tehran tomorrow? No, I don’t think we should.”

Blaming Iran

In her response, Clinton settled safely behind the Israeli-preferred position – to lambaste Iran for supposedly fomenting the trouble in the Middle East, though more objective observers might say that the U.S. government and its “allies” – including Israel, Saudi Arabia and Turkey – have wreaked much more regional havoc than Iran has.

“We have to go after them [the Iranians] on a lot of their other bad behavior in the region which is causing enormous problems in Syria, Yemen, Iraq and elsewhere,” Clinton said.

Yet, how exactly Iran is responsible for “enormous problems” across the region doesn’t get explained. Everybody just “knows” it to be true, since the claim is asserted by Israel’s right-wing government and repeated by U.S. pols and pundits endlessly.

Yet, in Iraq, the chaos was not caused by Iran, but by the U.S. government’s invasion in 2003, which then-Sen. Clinton supported (while Sen. Sanders opposed it). In Yemen, it is the Saudis and their Sunni coalition that created a humanitarian disaster by bombing the impoverished country after wildly exaggerating Iran’s support for Houthi rebels.

In Syria, the core reason for the bloodshed is not Iran, but decisions of the Bush-43 administration last decade and the Obama administration this decade to seek another “regime change,” ousting President Bashar al-Assad.

Supported by Turkey, Saudi Arabia and other Sunni powers, this U.S.-backed “covert” intervention instigated both political unrest and terrorist violence inside Syria, including arming jihadist forces such as Al Qaeda’s Nusra Front and its close ally, Ahrar al-Sham and – to a lesser degree – Al Qaeda’s spinoff, the Islamic State. [See Consortiumnews.com’s “Hidden Origins of Syria’s Civil War.“]

The desire of these Sunni powers — along with Israel and America’s neoconservatives — was to shatter the so-called “Shiite crescent” that they saw reaching from Iran through Iraq and Syria to Lebanon. Since Assad is an Alawite, a branch of Shiite Islam, he had to be removed even though he was regarded as the principal protector of Syria’s Christian, Shiite and Alawite minorities. [See Consortiumnews.com’s “Did Money Seal Saudi-Israeli Alliance?’]

However, while Israel and the Sunni powers get a pass for their role in the carnage, Iran is blamed for its assistance to the Syrian military in battling these jihadist groups. Official Washington’s version of this tragedy is that the culprits are Assad, the Iranians and now the Russians, who also intervened to help the Syrian government resist the jihadists, both the Islamic State and Al Qaeda’s various friends and associates. [See Consortiumnews.com’s “Climbing into Bed with Al Qaeda.”]

Blaming Assad

Official Washington also accepts as undeniably true that Assad is responsible for all 250,000 deaths in the Syrian civil war – even those inflicted by the Sunni jihadists against the Syrian military and Syrian civilians – a logic that would have accused President Abraham Lincoln of slaughtering all 750,000 or so people – North and South – who died in the U.S. Civil War.

The “group think” also holds that Assad was behind the sarin gas attack near Damascus on Aug. 21, 2013, despite growing evidence that it was a jihadist group, possibly with the help of Turkish intelligence, that staged the outrage as a provocation to draw the U.S. military into the conflict against Syria’s military by creating the appearance that Assad had crossed Obama’s “red line” on using chemical weapons.

Mitchell cited Assad’s presumed guilt in the sarin attack in asking Clinton: “Should the President have stuck to his red line once he drew it?”

Trying to defend President Obama in South Carolina where he is popular especially with the black community, Clinton dodged the implicit criticism of Obama but accepted Mitchell’s premise.

“I know from my own experience as Secretary of State that we were deeply worried about Assad’s forces using chemical weapons because it would have had not only a horrific effect on people in Syria, but it could very well have affected the surrounding states, Jordan, Israel, Lebanon, Turkey. …

 

“If there is any blame to be spread around, it starts with the prime minister of Iraq, who sectarianized his military, setting Shia against Sunni. It is amplified by Assad, who has waged one of the bloodiest, most terrible attacks on his own people: 250,000-plus dead, millions fleeing. Causing this vacuum that has been filled unfortunately, by terrorist groups, including ISIS.”

Clinton’s account – which ignores the central role that the U.S. invasion of Iraq and outside support for the jihadists in Syria played in creating ISIS – represents a thoroughly twisted account of how the Mideast crisis evolved. But Sanders seconded Clinton’s recitation of the “group think” on Syria, saying:

"I agree with most of what she said. … And we all know, no argument, the Secretary is absolutely right, Assad is a butcher of his own people, man using chemical weapons against his own people. This is beyond disgusting. But I think in terms of our priorities in the region, our first priority must be the destruction of ISIS. Our second priority must be getting rid of Assad, through some political settlement, working with Iran, working with Russia.” [See Consortiumnews.com’s “A Blind Eye Toward Turkey’s Crimes.”]

Sanders also repeated his talking point that Saudi Arabia and Qatar must “start putting some skin in the game” – ignoring the fact that the Saudis and Qataris have been principal supporters of the Sunni jihadists inflicting much of the carnage in Syria. Those two rich countries have put plenty of “skin in the game” except it comes in the slaughter of Syrian Christians, Alawites, Shiites and other religious minorities.

Blaming Russia

NBC anchor Lester Holt then recited the “group think” about “Russian aggression” in Ukraine – ignoring the U.S. role in instigating the Feb. 22, 2014 coup that overthrew elected President Viktor Yanukovych. Holt also asserted Moscow’s guilt in the July 17, 2014 shoot-down of Malaysia Airlines Flight 17 despite the lack of any solid evidence to support that claim.

Holt asked: “Secretary Clinton, you famously handed Russia’s foreign minister a reset button in 2009. Since then, Russia has annexed Crimea, fomented a war in Ukraine, provided weapons that downed an airliner and launched operations, as we just did discuss, to support Assad in Syria. As president, would you hand Vladimir Putin a reset button?”

While noting some positive achievements from the Russian “reset” such as a new nuclear weapons treaty, help resupplying U.S. troops in Afghanistan and assistance in the nuclear deal with Iran, Clinton quickly returned to Official Washington’s bash-Putin imperative:

“When Putin came back in the fall of 2011, it was very clear he came back with a mission. And I began speaking out as soon as that happened because there were some fraudulent elections held, and Russians poured out into the streets to demand their freedom, and he cracked down. And in fact, accused me of fomenting it. So we now know that he has a mixed record to say the least and we have to figure out how to deal with him. …

 

“And I know that he’s someone that you have to continuingly stand up to because, like many bullies, he is somebody who will take as much as he possibly can unless you do. And we need to get the Europeans to be more willing to stand up, I was pleased they put sanctions on after Crimea and eastern Ukraine and the downing of the airliner, but we’ve got to be more united in preventing Putin from taking a more aggressive stance in Europe and the Middle East.”

In such situations, with millions of Americans watching, no one in Official Washington would think to  challenge the premises behind these “group thinks,” not even Bernie Sanders. No one would note that the U.S. government hasn’t provided a single verifiable fact to support its claims blaming Assad for the sarin attack or Putin for the plane shoot-down. No one would dare question the absurdity of blaming Assad for every death in Syria’s civil war or Putin for all the tensions in Ukraine. [See, for instance, Consortiumnews.com’s “MH-17’s Unnecessary Mystery.”]

Those dubious “group thinks” are simply accepted as true regardless of the absence of evidence or the presence of significant counter-evidence.

The two possibilities for such behavior are both scary:

either these people, including prospective presidents, believe the propaganda…

 

or that they are so cynical and cowardly that they won’t demand proof of serious charges that could lead the United States and the world into more war and devastation.

via Zero Hedge http://ift.tt/1ni4fGW Tyler Durden

For those who enjoy truncating 24 hour blocks into 45 seconds or less, here are four time lapse videos of winter storm Jonas, a/k/a Snowmageddon, dumping near-record amounts of snow across the northeastern United States.

First here is a clip showing 24 hours of footage, from 12:30 pm on January 22 to 12:30 pm on January 23. It consists of nearly 3000 photos.

 

Next is the WSJ’s visual summary of how New York City was blanketed in what ended up being the third biggest snow accumulation in history:

 

Here is one from across the river, in the middle of Brooklyn:

 

Finally, here is timelapse somewhere in Pennsylvania, this time caught on Twitter:

Time lapse: My iPad took a picture every 3 minutes for the last 24 hours or so! Started it about 4pm Friday?????? http://pic.twitter.com/4nktcJ802o

— Gino Mollica (@gmollica98) January 24, 2016

via Zero Hedge http://ift.tt/1lIqGDX Tyler Durden

Is “The Bear” back from the dead…

 

Source: Townhall.com

 

You decide… 

 

 

As the business cycle beats the centrally-planned committee’s manipulation once again.

via Zero Hedge http://ift.tt/1ZLP8C2 Tyler Durden

Yesterday we felt like a brief moment of gloating was deserved, when we noted that, based on the WSJ’s reporting, the somber mood among Davos “prominent investors” and billionaires was “irritated, bordering on affronted, with what they say has been central-bank intervention that has gone on too long…. from this anecdotal sampling, at least, that has created growing distortions in nearly all asset prices—from stocks to bonds to real estate.”

In other words, precisely what we have said all along. But there is much more work to do before the victory lap, most importantly in explaining what happens next.

Well, since it is now common knowledge that it is all about central bank and rigged markets, the next logical step is to predict what happens to markets when looking at “asset prices” from a purely central bank liquidity standpoint, aka the Austrian money flow perspective.

Here, we remind readers that in early 2013, just as the BOJ was preparing to unleash an epic QE episode in order to offset the lost liquidity injections which the Fed’s upcoming taper would lead to, we explained that instead of looking at central banks as standalone entities operating within their own liquidity domains, one has to look at global liquidity as a coordinated whole, one in which every central bank is now an integral cog and where inside money liquidity is not only globally fungible, but transferable from point A to point B at the push of a buy or sell button.

And while for the longest time many, including us, were focused on DM central banks, over the past year a new market participant emerged: Emerging Markets, whose $7 trillion in reserve assets had become a source of reverse liquidity, or “quantitative tightening” as dubbed here over the summer, as numerous nations have been forced to liquidate USD-denominated assets to compensate for the loss of trade exports and oil revenue in the aftermath of the death of the Petrodollar which initially was noticed on this site alone and subsequently everywhere else.

Which brings us to the topic of this post, namely “why are markets all falling down?” and the answer by Citigroup’s iconic, and one of Wall Street’s very best, analyst Matt King who adds that “many investors have been struggling to explain the magnitude and violence of the recent sell-off. Why are EM and commodity price weakness proving such negatives for DM as a whole?”

The answer, hopefully not a surprise to our readers, is as follows:

The violence of the recent sell-off has left many an economist struggling for an explanation. The question is not so much whether oil prices will hit $20, and whether China will have a hard landing. It is why such prospects are having such a profoundly negative effect on developed markets. After all, every economic model says that DM is not particularly exposed to EM, and that lower commodity prices ought in principle to be a net positive for commodity-consuming countries, and at worst neutral for the world as a whole. Does the market know something the economists’ models don’t, or is this an exceptional buying opportunity?

 

Answering this question has proved hard, in large part because of the potential for circularity. Strategists are basing their market view on what economists tell them about the fundamental outlook. But economists are increasingly anxious that the fundamental outlook is susceptible to the moves in markets.

 

We think there are three reasons EM and commodity weakness will continue to matter for DM… They suggest that markets have been following global rather than domestic central bank liquidity, and that it may be difficult for them to stabilize without significant further central bank stimulus.

 

As we have argued for a while, it is not that we are straight bearish, and that these developments can only be resolved in a new crisis. Rather, it is the profound uncertainty, which comes in part from the potential for a regime change, and in part from the circular feedback loops at work in markets, which we have found it so hard to reflect in point forecasts and yet argued should be the central feature of investors’ portfolio positioning. What is concerning at present is that some policymakers still seem in denial about how interlinked everything is.

We hope that after they see the following chart, which shows not only DM net liquidity injections (i.e., q-easing), but also EM net liquidity outflows (i.e., quantitative tightening) and which explains not only the recent selloff, but also shows how to trade global central bank and sovereign wealth fund and reserve manager flows, all confusion and denial will end.

Or perhaps not. As King himself pessimistically concludes, “Perhaps if this sell-off fizzles out by itself, as it did last October, central banks will again be spared the need to face up to the distortive effect they have had upon markets, and can continue the pretence that markets are still following fundamentals. After all, for many of them, this has been the sell-off which ‘isn’t supposed to be happening’.”

We couldn’t have said it better ourselves.

via Zero Hedge http://ift.tt/1nI8igg Tyler Durden

On Friday, we noted that at least some local businesses in Texas are sympathetic to the pitiable plight of the state’s beleaguered oil patch workers.

Houston-based Gramercy Cleaners on Richmond avenue, we observed, is demonstrating their compassion for the imploding energy sector by offering service discounts.

Much like Calgary and many other oil boom towns north of the border, many a Texas city is feeling the squeeze of rock bottom crude prices. As we documented in “The Next Chicago? Houston Faces Pension Crisis In Latest Example Of Local Government Fiscal Folly,” Houston is staring down a $3.2 billion funding gap and reduced revenue from oil and gas ops isn’t doing anything to help.

“Home sellers are slashing prices and offering incentives to keep buyers from walking away from contracts as an 18-month oil slump buffets this city’s once-booming housing market,” WSJ wrote last week, underscoring the impact “lower for longer” is having on the city. “Home-construction permits in the area plunged 26% from a year earlier in the third quarter, while December sales of existing single-family houses fell nearly 10% from the same month of 2014.”

In short, a year of crude carnage has wreaked havoc upon what, until last year anyway, was the engine driving the “robust” US labor market. 

As we showed in November, layoffs in Lone Star land far outrun job losses in any other state:

“The Texas recession is only in its early innings,” we said on Friday, because we are just now beginning to witness the bankruptcies and shut-ins that will soon become endemic and sweep across the entire US oil patch as revolvers are reigned in and Wall Street suddenly refuses to finance uneconomic producers’ funding gaps.

So what happens when the pain really begins to hit home in Texas, you ask? And what are the implications for the broader economy considering the state has for years served as a kind of counterbalance to a job market that increasingly resembles a feudal system as opposed to the manufacturing-led middle class utopia American enjoyed five decades ago?

Here with some answers is Goldman who sets out to address the US oil patch’s burning question: “How bad can Texas get?”

*  *  * 

From Goldman

The historical episode most similar to today’s ‘lower for longer’ environment is the oil bust of the 1980s, when WTI oil prices fell from $31/bbl in 1984 to $10/bbl in 1986. Given its high exposure to the energy sector, Texas experienced significant stress in the 1980s. The unemployment rate in Texas rose sharply to 9.2% in 1986, an all-time high for the state. Real house prices fell 30% peak to trough, and the number of bankruptcy filings (including both business and non-business filings) more than doubled from 1984 to 1986.

The experience of the 1980s has naturally raised concerns over oil and Texas today. When banks reported their 2015Q4 earnings recently, bank executives stated that they are increasing reserves in anticipation of losses in the energy sector. In this Global Markets Daily, we compare the experience of households and businesses in Texas during the two oil busts. We find that damages in Texas have been significantly more contained thus far relative to the 1980s.

Loans backed by properties in the oil-producing states of Texas, North Dakota, Oklahoma and Louisiana comprise 10% of US commercial mortgage-backed security collateral, so the performance of commercial real estate in these areas is in focus for structured product investors. The office vacancy rate in Houston increased sharply in the early 1980s, likely driven by a combination of two recessions, elevated supplies and the oil price plunge. In 2015, the vacancy rate of Houston office properties also moved up, but remains far below the levels seen in the 1980s. We expect the vacancy rate to climb further over the next few quarters, posing downside risk to loans backed by Houston commercial properties. But we do not think default rates will match the 1980s experience.

Turning to the residential sector, the 2014 oil price decline has so far manifested itself in the housing market quite differently from the 1980s experience. The right panel of Exhibit 1 shows that the share of residential mortgages in foreclosure in Texas increased sharply after the 1985 oil price peak. In contrast, the Texas foreclosure inventory has continued to edge down over the past year. One explanation for this difference may be that the housing market is still recovering from the 2009-2011 foreclosure crisis. The impulse from the healing process so far outweighs the shockwaves from lower oil prices.

The Texas housing market may be more resistant to mortgage defaults and foreclosures than other states in the US. Even with the large house price decline in the 1980s, foreclosure inventory in Texas peaked at below 2%. In contrast, foreclosure inventory surged to 6% in Arizona and California in 2009 and over 10% in Florida and Nevada in 2010. One reason for this difference may be the home equity restrictions in place in Texas. Texas residents are generally prohibited from taking out cash-out refinancings or second liens that would raise the total loan-to-value ratio to above 80%.

Five quarters after oil prices peaked, business and non- business bankruptcy filings increased 30% and 70%, respectively, in the 1980s. In contrast, both types of bankruptcy filings fell by about 10% from 2014Q2 to 2015Q3. In the case of non-business filings, the more limited response in the current episode may partly be due to effects of the 2005 US bankruptcy legal reform, which introduced tighter eligibility requirements for consumers filing for bankruptcy. 2015Q4 US bank earnings releases featured increases in loss reserves, in anticipation of possible future losses on energy exposures. However, the losses experienced by the banks to date have so far been limited. Our bank analysts believe the recent sell-off in bank equity is pricing in a worse loss scenario than is likely.

*  *  *

In other words, things are going to get bad but not, Goldman figures, as bad as they could be.

Muppets should take that with a grain of salt because as Scott Merovitch, Houston division president for builder Chesmar Homes told WSJ, Texas may have figured out “how to diversify [its industry makeup] a lot, but it’s still going to ebb and flow with oil and gas.”

via Zero Hedge http://ift.tt/1PtpZfR Tyler Durden

Authored by Mark St.Cyr,

There’s been a consistent theme of retort from many across the financial media. It consists of a two-sided response. The first sounds something like this: “How long have you been saying things were dire while the markets have continually risen?” This is a backhanded way of dismissing anything one has said previously, currently, as well as followup during the discussion. i.e., You’ve been labeled a scare monger. And a poor one at that.

The other is the outright or, blatant dismissive. It sounds something like this, “Well that’s your opinion. I should state there are many more who take the opposite view.”

Well, yes there are. However, that doesn’t mean they are either correct in their assumptions or, can argue why their view is correct. Yet, this is what’s done when someone wants to invalidate your point. It’s a snarky little way to dampen any legitimacy to one’s argument without further discussion. It’s a technique that’s used by many across the financial media as well as others. It’s subtle, however, to a trained ear – it speaks volumes about the user.

Personally I’ve had such things thrown at me and I detest them, for they’re vapid statements made by people who have either lost an argument they can not win or; think they are so smart they openly tout they don’t need deodorizers in their bathrooms. When I’ve been faced with the latter response my knee-jerk reaction has been to cite something similar to following:

“Well, that may be the case. But let’s just remember: Many a bull or pig believed based on valid assumptions that indeed; the farmer has their best interest at heart. After all who could argue otherwise based on all the free food, room, and board they receive? Unless you’re one of the few that escaped the “stock” yard and seen where the happy-trail ends. The one’s remaining in the yard can argue the other side all they want – it doesn’t mean they are right or, have a valid argument. Does it?”

Usually that’s when the conversation truly ends. There’s no further follow-up except for the ensuing stink-eye I’ll then be showered with. However, at least it ends with the snark now being called into question rather, than the other way around. (I know N. N. Taleb uses the turkey analogy which I’m of the same idea. It’s just my roots began in the beef business.)

Remember: These are techniques used or employed as to invalidate legitimate arguments with vapid reasoning. Once you understand and can discern them in real-time – you’ll never see an argument or discussion in the same light again. And these forms of discussions are now coming across both the financial airwaves, as well as print, at a fast and furious pace.

Why you might ask? Easy: everything you were told by that media that should no longer happen – is happening – at – an ever-growing fast and furious pace. So much so the “everything is awesome” crowd are now looking more like “deer in the headlights” with every passing market movement.

Let me illustrate it using the first line or technique I started with. The line of: “How long have you been saying things were dire while the markets have continually risen?” Well, let’s look at the most current example to show just how “dire” these markets truly are shall we?

As of today just how much worth (as well as wealth) has been wiped out as I iterated “at a fast and furious pace?” Suddenly, over the last 6 months; Trillions of $Dollars in market cap have been wiped out across the U.S. capital markets alone. If one uses a global index the wealth destruction is now double-digit Trillions. (e.g., $17 Trillion and rising) To put that into context:

In the last few months more than half, repeat, 50% plus, of the “wealth” affect everyone was so keen on singing its praises reminiscent of “happy times are here again” from 2011 till now globally: has been evaporated. i.e., gone, wiped out, you don’t collect $200 for passing Go. Thanks for playing.

All of this is happening against the backdrop where both the so-called “smart crowd” along with the Ivory Towered set expressed; a 25 basis point rate hike in the current climate was a non issue. In effect it was touted: It’s a good thing because the economy is in much better shape to withstand it. Or best yet, “just do it.” Suddenly all that “much better – just do it” emphasis has turned into “Please make it stop – things are going from bad to worse!”

This isn’t conjecture. To think 50% plus of capital being evaporated within months wiping out years of profits, principal, as well as interest assumptions for carry trades, let alone solvency concerns of counter party exposures or, currency upheavals throughout the global financial world won’t result in far more volatile market swings within the U.S. going forward, let alone what has already transpired just this year alone is nonsensical at best. Idiocy at worst. We just happen to be the laggard as to feel the full brunt of what is transpiring throughout the global markets in my opinion.

Something that was scoffed at as “unimaginable” is suddenly not only the opposite – it’s arriving on our shores with voracity to what appears a totally unprepared market. All taking place against the backdrop the so-called “smart crowd” touted for years things like this – were behind us. So much so that even the “smart crowd” is beginning to openly worry or, raise concerns. So, with that in mind: do you think things are about to get better or more stable? Let’s postulate that using the following:

Remember the above analogies? Who do you think has the valid argument? An escapee from the “stock” yard? Or, the bull that’s currently sitting with his fat profits, and snarky demeanor currently holding his position tagged at #436 in the middle of the line? After all, it would seem more agree with him than does you. So: Think he has a valid point? Again, as proof to bolster his argument he’ll also throw out, “Look at you! You’re now so skinny compared to him. How many meals have you missed since getting out?”

See what I mean? Doesn’t sound so “smart” or “definitive” as to back up any “everything is awesome” based argument any longer once you understand does it? Yet, that won’t stop many across the media from positing such an argument. While as much as the above may represent those remaining in the “stock” yard. What truly should be unnerving for many a bull is that the owners of those yards (i.e., the current guest list flying home via private jets from Davos) are themselves frantically trying to explain (or plead) why “everything is awesome” is not turning into a bona fide shite storm.

Premier hedge-funds are closing at an alarming rate. Once seemingly “can’t lose” funds (see Ray Dalio’s “All Weather” for clues) and strategies are doing exactly the opposite. Some funds have needed to gate their investors entirely until further notice. And there’s a whole lot more. And when has all this taken place? Or, better yet: what has been the catalyst for all this mayhem? The one thing people like myself and others have banged our fists and keyboards to anyone that would listen. The ending of the only thing that made up this “market.” QE (quantitative easing) along with a protracted stranglehold to remain at the zero bound. (e.g., ZIRP)

Over these ensuing years of Fed. interventionist monetary policy, all the one’s that donned their investing “genius” or, monetary policy analytic “brilliance” caps were the first and loudest to the TV cameras, microphones, or keyboards to denounce people like myself and others as “conspiracy whack jobs,” “gloom crew,” “tinfoil hatted kooks,” and a whole lot more. However, today?

Unlike many a financial guru, next in rotation fund manager, Ivory Leagued or, Towered academic that touted their economic brilliance or, stock picks ad infinitum to anyone still listening. People like myself and others have consistently argued against the validity of manipulated data points (see “double seasonally adjusted” for starters) and expressed the consequences that would follow to anyone foolishly doing the opposite.

Again, unlike those aforementioned: We didn’t argue why adulterated data should be believed. We didn’t argue why people should take solace in the current employment picture of 5% as “a good jobs number.” We wouldn’t submit to the relentless brow beating or, ambush styled financial reporting (see any Bill Fleckenstein or a Peter Schiff CNBC™ interview for clues) handed out on many a financial channel and others. Quite the opposite. Regardless how high the “market” kept ascending.

What is currently transpiring in the markets today is exactly what the “everything is awesome” crowd stated wouldn’t happen – and exactly what people like myself and others argued – was inevitable. And, suddenly it is they who are finding out the rarefied air of “brilliance” the Fed. enabled them to breathe has indeed been shut off – and all that’s left to inhale is their own exhaust fumes.

I recommend this might be a good time they stock up on that much dismissed deodorizer. Because, in my opinion – they’re going to need it by the time this rout is over in the coming weeks and months. Unless it leaves them scared sh–less much like the poor investors and others that continued to believe their assertions are currently finding themselves.

via Zero Hedge http://ift.tt/1ZX80Dp Tyler Durden