Tag: finance

Thanks to the repression of the world's central banks, investors have exited cash and piled into "everything else," but while this is no surprise to most, Citi's Matt King warns of the possibility of an "entrance with no exit" as investors reach for yield has distorted primary and secondary markets, forced risk-averse investors into alternative asset classes, distorted markets beyond any fundamentals, and left markets incredibly illiquid. This, he concludes, sets up a problem that we are already seeing as investors are disillusioned one asset at a time…

Via Citi's Matt King

Out of Cash and into everything else… investors have been reaching for yield…

With Emerging Markets the most popular destinations… (which could be a problem as it is very crowded still)

But broad investment grade credit markets have exploded as demand beget supply and firms have doubled their outstanding debt

which fits perfectly withgout recent dream-crushing discussion of the rise in cash on corporate balance sheets
 

 

 

US companies are carrying far more net debt than in 2007

 

Another curiosity is this notion that US companies have substantially reduced their debt pile and are therefore cash rich. The latter is indeed true. Cash and equivalents are at historically high levels, but rarely do those who mention the mountains of corporate cash also discuss the massive increase in debt seen over the last couple of years.

 

In fact, debt levels have been growing to such an extent that net debt (i.e. excluding the massive cash pile) is 15% higher than it was prior to the financial crisis.

Too much money chasing too few assets… (not just increased demand but reduced supply)

Which has left credit amrkets totally distrorted…as Fundamentals are no longer the driver

and equity markets…

Bu, it would appear, that investors are losing faith…

 

 

The big question is – who's next?

via Zero Hedge http://ift.tt/1hkz8kW Tyler Durden

Submitted by Jim Quinn of The Burning Platform blog,

“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.” 

– Strauss & Howe – The Fourth Turning

 

“In the need to develop a capacity to know what potential enemies are doing, the United States government has perfected a technological capability that enables us to monitor the messages that go through the air. Now, that is necessary and important to the United States as we look abroad at enemies or potential enemies. We must know, at the same time, that capability at any time could be turned around on the American people, and no American would have any privacy left such is the capability to monitor everything—telephone conversations, telegrams, it doesn’t matter. There would be no place to hide.

If this government ever became a tyrant, if a dictator ever took charge in this country, the technological capacity that the intelligence community has given the government could enable it to impose total tyranny, and there would be no way to fight back because the most careful effort to combine together in resistance to the government, no matter how privately it was done, is within the reach of the government to know. Such is the capability of this technology.

I don’t want to see this country ever go across the bridge. I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision so that we never cross over that abyss. That is the abyss from which there is no return.” – Frank Church on Meet the Press regarding the NSA – 1975

Ever since Edward Snowden burst onto the worldwide stage in June 2013, I’ve been wondering how he fits into the fabric of this ongoing Fourth Turning. This period of Crisis that arrives like clockwork, 60 to 70 years after the end of the previous Fourth Turning (Civil War – 66 years after American Revolution, Great Depression/World War II – 64 years after Civil War, Global Financial Crisis – 62 years after World War II), arrived in September 2008 with the Federal Reserve created collapse of the global financial system. We are now five and a half years into this Fourth Turning, with its climax not likely until the late-2020’s. At this point in previous Fourth Turnings a regeneracy had unified sides in their cause and a grey champion or champions (Ben Franklin/Samuel Adams, Lincoln/Davis, FDR) had stepped forward to lead. Thus far, no one from the Prophet generation has been able to unify the nation and create a sense of common civic purpose. Societal trust continues to implode, as faith in political, financial, corporate, and religious institutions spirals downward. There is no sign of a unifying regeneracy on the horizon.

The core elements of this Fourth Turning continue to propel this Crisis: debt, civic decay, global disorder. Central bankers, politicians, and government bureaucrats have been able to fashion the illusion of recovery and return to normalcy, but their “solutions” are nothing more than smoke and mirrors exacerbating the next bloodier violent stage of this Fourth Turning. The emergencies will become increasingly dire, triggering unforeseen reactions and unintended consequences. The civic fabric of our society will be torn asunder.    

In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

Debt

The core crisis element of debt is far worse than it was at the outset of this Crisis in September 2008. The National Debt has risen from $9.7 trillion to $17.5 trillion, an 80% increase in five and half years. It took 215 years for the country to accumulate as much debt as it has accumulated since the start of this Crisis. We continue to add $2.8 billion a day to the National debt, and the president declares it is time for this austerity to end. The total unfunded liabilities of the Federal government for Social Security, Medicare, Medicaid, government pensions and now Obamacare exceeds $200 trillion and is mathematically impossible to honor. Corporate debt stands at an all-time high. Margin debt is at record levels, as faith in the Federal Reserve’s ability to levitate the stock market borders on delusional. Consumer debt has reached new heights, as the government doles out subprime auto loans to deadbeats and subprime student loans to future University of Phoenix Einsteins. Global debt has surged by 40% since 2008 to over $100 trillion, as central bankers have attempted to cure a disease caused by debt with more debt.

All of this debt accumulation is compliments of Bernanke/Yellen and the Federal Reserve, who have produced this new debt bubble with their zero interest rate policy and quantitative easing that has driven their balance sheet from $935 billion of mostly Treasury bonds in September 2008 to $4.2 trillion of toxic mortgage garbage acquired from their owners – the insolvent Too Big To Trust Wall Street banks. This entire house of cards is reliant upon permanently low interest rates, the faith of foreigners in our lies, and trust in Ivy League educated economists captured by Wall Street. This debt laden house of cards sits atop hundreds of trillions of derivatives of mass destruction used by the Wall Street casinos to generate “riskless” profits. When, not if, a trigger ignites this explosive concoction of debt, the collapse will be epic and the violent phase of this Fourth Turning will commence.

Civic Decay

The core crisis element of civic decay is evident everywhere you turn. Our failed public educational system is responsible for much of the civic decay, as a highly educated critical thinking populace is our only defense against a small cabal of bankers and billionaires acquiring unwarranted influence and control over our country. Our children have been taught how to feel and to believe government propaganda. The atrocious educational system is not a mistake. It has been designed and manipulated by your owners to produce the results they desire, as explained bluntly by George Carlin.

“There’s a reason that education sucks, and it’s the same reason it will never ever ever be fixed. It’s never going to get any better, don’t look for it. Be happy with what you’ve got. Because the owners of this country don’t want that. I’m talking about the real owners now, the big, wealthy, business interests that control all things and make the big decisions. They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest.”

The urban ghettos become more dangerous and uninhabitable by the day. The inner cities are crumbling under the weight of welfare spending and declining tax revenues. The very welfare policies begun fifty years ago to alleviate poverty have hopelessly enslaved the poor and ignorant in permanent squalor and destitution. The four decade old drug war has done nothing to reduce the use of drugs. It has benefited the corporate prison industry, as millions have been thrown into prison for minor drug offenses. Meanwhile, millions more have been legally addicted to drugs peddled by the corporate healthcare complex. The culture warriors and advocates of new rights for every special interest group continue their never ending battles which receive an inordinate amount of publicity from the corporate media. Class warfare is simmering and being inflamed by politicians pushing their particular agendas. Violence provoked by race and religion is growing by the day. The fault lines are visible and the imminent financial earthquake will push distress levels beyond the breaking point. Once the EBT cards stop working, all hell will break loose. Three days of panic will empty grocery store shelves and the National Guard will be called out to try and restore control.  

Global Disorder

The core crisis element of global disorder is evident everywhere you turn. The false flag revolution in the Ukraine, initiated by the U.S. and EU in order to blunt Russia’s control of natural gas to Europe, has the potential to erupt into a full blown shooting war at any moment. The attempt by Saudi Arabia, Israel and the U.S. to overthrow the Syrian dictator in order to run a natural gas pipeline across their land into Europe was blunted by Russia. Iraq is roiled in a civil war, after the U.S. invaded, occupied and destabilized the country. After 12 years of occupation, Afghanistan is more dysfunctional and dangerous than it was before the U.S. saved them from the evil Taliban. Unrest, violent protests, and brutal measures by rulers continue in Egypt, Turkey, Thailand, Venezuela, Bahrain, Brazil, and throughout Africa. American predator drones roam the skies of the world murdering suspected terrorists. The European Union is insolvent, with Greece, Spain, Italy and Portugal propped up with newly created debt. Austerity for the people and prosperity for the bankers is creating tremendous distress and tension across the continent. A global volcanic eruption is in the offing.

It is clear to me the American Empire is in terminal decline. Hubris, delusion, corruption, foolish disregard for future generations and endless foreign follies have set in motion a chain of events that will lead to a cascading sequence of debt defaults, mass poverty, collapsing financial markets, and hyperinflation or deflation, depending on the actions of feckless bankers and politicians. There is no avoiding the tragic outcome brought on by decades of bad choices and a century of allowing private banking interests to control our currency. The “emergency” QE and ZIRP responses by the Federal Reserve to the Federal Reserve created 2008 financial collapse continue, even though the propaganda peddled by the Deep State tries to convince the public we have fully recovered. This grand fraud cannot go on forever. Ponzi schemes no longer work once you run out of dupes. With societal trust levels approaching all-time lows and foreign countries beginning to understand they are the dupes, another global financial crisis is a lock.

The Snowden Factor

With ten to fifteen years likely remaining in this Fourth Turning Crisis, people familiar with generational turnings can’t help but ponder what will happen next. Linear thinkers, who constitute the majority, mistakenly believe things will magically return to normal and we’ll continue our never ending forward human progress. Their ignorance of history and generational turnings that recur like the four seasons will bite them in the ass. We are being flung forward across the vast chaos of time and our existing social order will be transformed beyond recognition into something far better or far worse. The actual events over the coming decade are unknowable in advance, but the mood and reactions of the generational archetypes to these events are predictable. The actions of individuals will matter during this Fourth Turning. The majority are trapped in their propaganda induced, techno distracted stupor of willful ignorance. It will take a minority of liberty minded individuals, who honor the principles of the U.S. Constitution and are willing to sacrifice their lives, to prevail in the coming struggle.

Despite fog engulfing the path of future events, we know they will be propelled by debt, civic decay, and global disorder. Finding a unifying grey champion figure seems unlikely at this point. I believe the revelations by Edward Snowden have set the course for future events during this Fourth Turning. The choices of private citizens, like Snowden, Assange, and Manning, have made a difference. The choices we all make over the next ten years will make a difference. A battle for the soul of this country is underway. The Deep State is firmly ingrained, controlling the financial, political and educational systems, while using their vast wealth to perpetuate endless war, and domination of the media to manipulate the masses with propaganda and triviality. They are powerful and malevolent. They will not relinquish their supremacy and wealth willingly.

Snowden has revealed the evil intent of the ruling class and their willingness to trash the Constitution in their psychopathic pursuit of mammon. The mass surveillance of the entire population, locking down of an entire city in pursuit of two teenagers, military training exercises in major metropolitan areas, militarization of local police forces by DHS, crushing peaceful demonstrations with brute force, attempting to restrict and confiscate guns, molesting innocent airline passengers, executive orders utilized on a regular basis by the president, and treating all citizens like suspects has set the stage for the coming conflict. Strauss & Howe warned that history has shown armed conflict is always a major ingredient during a Fourth Turning.

“History offers even more sobering warnings: Armed confrontation usually occurs around the climax of Crisis. If there is confrontation, it is likely to lead to war. This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war. If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken, and leaders captured.” – The Fourth Turning – Strauss & Howe -1997

It appears to me the Deep State is preparing for armed conflict with the people. Why else would they be utilizing Big Brother methods of surveillance, militarization of police forces  and Gestapo like tactics of intimidation to control the masses? This doesn’t happen in a democratic republic where private individuals are supposed to know everything done by public government servants, not vice versa. They know the cheap, easy to access energy resources are essentially depleted. They know the system they have built upon a foundation of cheap energy and cheap debt is unsustainable and will crash in the near future. They know their fiat currency scheme is failing.They know it is going to come crashing down.

They know America and the world will plunge into an era of depression, violence, and war. They also know they want to retain their wealth, power and control. There is no possibility the existing establishment can be purged through the ballot box. It’s a one party Big Brother system that provides the illusion of choice to the Proles. Like it or not, the only way this country can cast off the shackles of the banking, corporate, fascist elites, and the government surveillance state is through an armed revolution. The alternative is to allow an authoritarian regime, on par with Hitler, Stalin and Mao, to rise from the ashes of our financial collapse. This is a distinct possibility, given the ignorance and helplessness of most Americans after decades of government education and propaganda.       

The average mentally asleep American cannot conceive of armed conflict within the borders of the U.S. War, violence and dead bodies are something they see on their 52 inch HDTVs while gobbling chicken wings and cheetos in their Barcalounger. We’ve allowed a banking cartel and their central bank puppets to warp and deform our financial system into a hideous façade, sold to the masses as free market capitalism. We’ve allowed corporate interests to capture our political system through bribery and corruption.

We’ve allowed the rise of a surveillance state that has stripped us of our privacy, freedom, liberty and individuality in a futile pursuit of safety and security. We’ve allowed a military industrial complex to exercise undue influence in Washington DC, leading to endless undeclared wars designed to enrich the arms makers. We’ve allowed the corporate media and the government education complex to use propaganda, misinformation and social engineering techniques to dumb down the masses and make them compliant consumers. These delusions will be shattered when our financial and economic system no longer functions. The end is approaching rapidly and very few see it coming.

Glory or Ruin?

The scenario I envision is a collapse of our debt saturated financial system, with a domino effect of corporate, personal, and governmental defaults, exacerbated by the trillions of currency, interest rate, and stock derivatives. Global stock markets will crash. Trillions in paper wealth will evaporate into thin air. The Greater Depression will gain a choke-hold around the world. Mass bankruptcies, unemployment and poverty will sweep across the land. The social safety net will tear under the weight of un-payable entitlements. Riots and unrest will breakout in urban areas. Armed citizens in rural areas will begin to assemble in small units. The police and National Guard will be unable to regain control. The military will be called on to suppress any and all resistance to the Federal government. This act of war will spur further resistance from liberty minded armed patriots. The new American Revolution will have begun. Leaders will arise in the name of freedom. Regional and local bands of fighters will use guerilla tactics to defeat a slow top heavy military dependent upon technology and vast quantities of oil. A dictatorial regime may assume power on a Federal level. A breakup of the nation into regional states is a distinct possibility.

With the American Empire crumbling from within, our international influence will wane. With China also in the midst of a Fourth Turning, their debt bubble will burst and social unrest will explode into civil war. Global disorder, wars, terrorism, and financial collapse will lead to a dramatic decrease in oil production, further sinking the world into depression. The tensions caused by worldwide recession will lead to the rise of authoritarian regimes and global warfare. With “advances” in technological warfare and the proliferation of nuclear warheads, this scenario has the potential to end life on earth as we know it. The modern world could be set back into the stone-age with the push of a button. There are no guarantees of a happy ending for humanity.

The outcome of this Fourth Turning is dependent upon the actions of a minority of critical thinking Americans who decide to act. No one can avoid the trials and tribulations that lie ahead. We will be faced with immense challenges. Courage and sacrifice will be required in large doses. Elders will need to lead and millennials will need to carry a heavy load, doing most of the dying. The very survival of our society hangs in the balance. Edward Snowden has provided an example of the sacrifice required during this Fourth Turning. How we respond and the choices we make over the next decade will determine whether this Fourth Turning will result in glory or ruin for our nation.

“Eventually, all of America’s lesser problems will combine into one giant problem. The very survival of the society will feel at stake, as leaders lead and people follow. The emergent society may be something better, a nation that sustains its Framers’ visions with a robust new pride. Or it may be something unspeakably worse. The Fourth Turning will be a time of glory or ruin.” – Strauss & Howe – The Fourth Turning

Click these links to read the first two parts of this three part series:

Do No Evil Google – Censor & Snitch for the State

Google, China, the NSA and the Fourth Turning

via Zero Hedge http://ift.tt/1o3F326 Tyler Durden

We are sure it is just coincidence – and awkward combination of luck and suspicious timing – but Vedomosti reports that Viktor Zubkov, the Chairman of Russia’s massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible.

 

 

Via Vedomosti (Google Translate),

The Chairman of the Board of Directors “Gazprom” Viktor Zubkov has sold his stake in the company, it follows from the monopoly.

 

The change in share occurred February 11, 2014, the issuer learned about it on March 13.

 

Now Zubkov 0% stake in the company.

 

…

 

Thus, Zubkov sold his shares prior to the collapse of the Russian stock market on March 3.

It’s good to have friends running the country eh? Thank you Mr. Putin. This is important as so many Western watchers believe a crumbling Russia stock market will prompt Putin to back away… it appears his Oligrach friends already got the nod…

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

Submitted by Simon Black of Sovereign Man blog,

One of the key lessons we can take away from history is that the global financial system changes… frequently.

[12]

 

In ancient times, Roman coins were used across the region by Romans and non-Romans alike who engaged in trade and commerce.

Given how destructively successive Roman governments debased their coins, however, the reserve burden eventually fell to the Byzantine Empire, whose gold solidus coin became the dominant currency in world trade.

Over the centuries, this standard changed several more times. The Venetians, Florentines, Spanish, French, British, etc. each issued the world’s dominant currency at one point or another.

But the fundamentals of those currencies changed. Governments engaged in wanton debasement, mismanaged their economies, and accumulated massive debt levels. And eventually the world shifted to new currencies.

Since the end of World War II, the US dollar has been the dominant currency in the world.

And even though Richard Nixon ended the dollar’s convertability to gold and unilaterally abandoned the US government’s obligations under the Bretton Woods system back in 1971, the world has still clung to the dollar for the past 43-years.

But this is changing rapidly.

The Chinese, which have their own economic issues to deal with, are starting to dump Treasuries in record numbers.

Central banks are buying up more gold. Foreign countries are entering into bilateral currency swap arrangements with one another. And world governments are starting to (rather embarrassingly) demand that the US get its budget and fiscal house in order.

Most tellingly, though, member nations of the International Monetary Fund are starting to revolt.

As one of the major organizations spawned from the post-war financial structure, the IMF’s original goal was to ensure the smooth development of a new global financial system.

Over 180 countries have since become members of the IMF. But the organization runs on a quota system, with each member nation having a certain percentage of the IMF’s overall votes.

The US, for example, has the most power by far with a 16.75% share of the vote. Japan is a distant second with a 6.23% share.

This puts the US in the driver’s seat. And it’s been that way for decades.

But most of the other 180+ nations have had enough. And they’re pushing the United States to massively overhaul the current quota system.

Even typical allies are breaking ranks. Australian Treasurer Joe Hockey recently told reporters at a financial conference that they will “actively lobby” the US to reform the IMF quota issues, and that “Congress must understand that it is in the interest of the US to reform the IMF. . .”

India. China. Just about everyone imaginable is pushing for major IMF reform. Everyone except the Land of the Free. The US government seems to like things the way they are. And Congress has been very intransigent in adopting any planned reforms.

These people have their heads buried in the sand so deep that they can’t even hear the rest of the world SCREAMING for a new financial system.

This is going to happen, whether the US wants it to or not.

And while no foreign government wants a collapse of the dollar, they do very much want an orderly rebalancing of the financial system. This is already under way.

The US government may pretend that everything is fine and dandy. But given the overwhelming objective evidence out there, folks who aren’t on board with this major trend are ignoring it at their own peril.

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

Just out from the State Department, which in the aftermath of the most recent failure by John Kerry to resolve the Ukraine situation, appears to be escalating to populism and engaging the general public. The best part in the warning is the following clarification: “all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional).” Somehow we have a feeling we may be seeing a spike in “accidental military clashes” over the next week.

From the State Department:

Russian Federation Travel Alert – Events in Ukraine

The U.S. government currently has no information concerning active military conflict inside Russia as a result of regional tensions or of any threat specific to U.S. citizens.  However, all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional), or other violence, and the potential for threats to safety and security.  Media accounts note there has been a sizable Russian military build-up in those regions and there are reports of an increased presence of Russian neo-Nazi and radical nationalist and extremist groups in those regions.

U.S. citizens considering travel to Russia should evaluate their personal security situation in light of current political tensions and the possibility of violence or anti-U.S. actions directed against U.S. citizens or U.S. interests.  

The Department of State advises that U.S. citizens should avoid all public demonstrations, whether properly authorized by local officials or not, and avoid any large crowds and public gatherings that lack enhanced security measures.  Demonstrations related to the conflict may appear anywhere throughout Russia, at any time.  These demonstrations may increase the possibility of confrontation and violence.  Review your personal security plans, remain aware of your surroundings, including local events, and monitor local news stations for updates.  Maintain a high level of vigilance and take appropriate steps to enhance your personal security.  

We strongly recommend that U.S. citizens traveling to or residing in Russia enroll in the Department of State’s Smart Traveler Enrollment Program (STEP).  STEP enrollment allows you to receive the Department’s safety and security updates, and makes it easier for the nearest U.S. embassy or U.S. consulate to contact you in an emergency.  If you do not have Internet access, enroll directly with the nearest U.S. embassy or consulate.

via Zero Hedge http://ift.tt/1o37gWO Tyler Durden

"Had the thing been armed it would have let out a 200-metre blast…You could be talking about a major loss of life," one source noted as The Telegraph reports British military chiefs have launched a major investigation after a Royal Navy warship accidentally fired a torpedo at a nuclear dockyard. Workers watched in disbelief as the tube-shaped projectile flew through the air before blasting a hole in a security fence and slamming into a storage container. "Someone has obviously pushed the button, presumably by accident – the big question is who," as the Royal Navy stiff-upper-lippedly stated "during a training exercise, an inert Test Variant Torpedo unexpectedly jettisoned onto the wharf. There was no explosion and no casualties." Perhaps they should stay away from the Black Sea for a while – just in case.

 

Via The Telegraph,

HMS Argyll was moored at Devonport Naval base in Plymouth when the 9ft missile suddenly shot out of its starboard side during a training drill.

 

Workers watched in disbelief as the tube-shaped projectile flew through the air before blasting a hole in a security fence and slamming into a storage container.

 

The torpedo was an unarmed version used for testing drills so it merely thudded into the metal container and did not explode.

 

Nobody was hurt but shocked Navy bosses ordered an urgent investigation into the incident that took place inside a high security area where Britain's nuclear submarines are refuelled and repaired.

 

…

The comments from onlookers are stunning and perhaps somewhat comical:

"The torpedo came shooting out of the side of Argyll and flew through the air before going straight through a security fence.

 

"It's carried on going before hitting a storage container. If anyone was inside it they would have a had a nasty shock – the whole side of the container was stoved in.

 

"Had the thing been armed it would have let out a 200-metre blast. You could be talking about a major loss of life.

 

"The Navy guys and the civilian dock workers are understandably appalled by what has happened.

 

"Someone has obviously pushed the button, presumably by accident – the big question is who."

The Navy stated:

"We can confirm an incident occurred onboard HMS Argyll on Wednesday 12th. The ship was alongside at Devonport Naval Base in Plymouth.

 

"During a training exercise, an inert Test Variant Torpedo unexpectedly jettisoned onto the wharf. There was no explosion and no casualties.

 

"An investigation is now under way to determine the cause of the incident. The torpedo is not an explosive hazard.

 

"The specific details of the incident are subject to further investigation and it would be inappropriate to comment further.

Adding that…

torpedo system test firing alongside in the naval base has been suspended subject to completion of the investigation

Let's just delay any torpedo-testing until this whole Russia-Ukraine thing blows over, eh?

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

Submitted by Lance Roberts of STA Wealth Management,

This past week has seen the market struggle due to continued weak economic data, rising tensions between Russia and the Ukraine and an extended bull market run.  As I discussed in yesterday's missive, the market internals are showing some early signs of deterioration even though the longer term bullish trajectory remains intact.  Therefore, this week's "Things To Ponder" wades through some broader macro investment thoughts from the safety of your investments to how market tops are made.

1) The Delusions Of Real Returns by Brett Arends, WSJ

This is a topic that I discuss very often with clients.  Past performance is no guarantee of future results, and making investment decisions based on such is likely going to leave you very disappointed.  Extrapolating 110 year historical average returns going forward is extremely dangerous.  First, you won't live 110 years from the time you start saving to achieve those results, and starting valuation levels are critical to your expected returns.  Brett does an excellent job discussing this issue.

"Money managers point to historical data going back to the 1920s to show that in the past stocks have produced total returns of about 10% a year over the long term and bonds, about 5%—meaning a standard "balanced" portfolio of 60% stocks and 40% bonds would earn just over 8% a year. (Naturally, their legal departments quickly add that the past is no guide to the future.)

 

Are these forecasts realistic? Are they sensible? Are they even based on actual logic or a correct reading of the past data?

 

A close look at the data reveals a number of disturbing errors and logical flaws. There is a serious danger that investors are deluding themselves and that returns from here on may prove far more disappointing than many hope or believe.

 

This has happened before. Money invested in a balanced fund of stocks and bonds at certain points in the past—such as in the late 1930s, or during the 1960s and 1970s—ended up losing money for many years, after accounting for inflation.

 

Far from making an annual profit, investors went backward in real, purchasing-power terms. And those losses were even before deducting costs or taxes."

2) Lessons From The Bull Market by Jason Zweig, Joe Light and Liam Pleven

If you do nothing else this weekend – read this article.  There are simply too many nuggets of wisdom for me to summarize, but here are a couple of my favorite points.

"Every day, in the newspapers, on financial-news shows and online, dozens of market strategists make bold predictions about the direction stocks are heading.  Take their forecasts with a mound of salt. After all, current prices already reflect the sum of stock-market buyers' and sellers' opinions. If one investor is bullish, there must be another investor on the other side at the current price."

 

"In a speech about intellectual honesty 40 years ago, Nobel Prize-winning physicist Richard Feynman said, 'The first principle is that you must not fool yourself—and you are the easiest person to fool.'

 

What they should be asking is this: Am I fooling myself into remembering my losses as less painful than they were? Am I itching to take risks that my own history should warn me I will end up regretting? Am I counting on willpower alone to enable me to stay invested and to rebalance through another crash?"

 

"Investors who hear the phrase 'bull market' might decide it is time to get in on the rally. On the other hand, investors who hear the current bull market in stocks has been running for five years might worry it will soon end. In either case, investors would do better to tune out the chatter. The definition of a bull market is arbitrary, and the term tells investors little about what will happen next."

3) How Market Tops Are Made by Barry Ritholtz via Bloomberg

This is a great follow up to my articles this past week on "10 Signs Of Exuberance" and "Market Internals."  Barry interviews Paul Desmond, the Chief Strategist and President of Lowry's Research, who has spent the past five decades analyzing markets.  From Barry:

"I spoke with him [Paul Desmond] recently, chatting about his work in identifying market tops. Rather than focus on the usual noise, Desmond suggests anyone concerned about a top should be watching for very specific warning signs. He notes the health of a bull market can be observed by watching internal indicators that provide insight into the overall appetite for equity accumulation.

 

These four include:

 

1. New 52-Week Highs

2. Market Breadth (Advanced/Decline Line)

3. Capitalization: Small Cap, Mid Cap, Large Cap

4. Percentage of Stocks at 20 percent or greater from their recent highs"

4) New All Time Highs = Secular Bull Market? by Cam Hui via Humble Student Of The Markets Blog

I wrote an article recently entitled "Correcting Some Misconceptions About A New Secular Bull Market" as the markets pushed toward new highs at the end of 2013.  At that time, there was a flurry of articles suggesting that the markets had entered into a new secular bull market.  However, my argument against this thesis revolved around the fact the no secular bull market in the history of the known universe has ever started from peak market valuations.  Cam Hui brings forward an excellent point:

"Here is a difficult question for those in the secular bull camp. What's the upside from here? Ramsey of Leuthold Weeden Capital Management projects limited upside under a secular bull scenario, even assuming that everything goes right:

 

If the current cyclical bull unfolds into a secular one that is perfectly average in duration and magnitude (a very tall achievement, in our book), the annualized total return over the next ten years will still be a bit below the long-term average return of 10%. Frankly, we don't find this all that compelling, considering all that must go according to plan for the market to achieve it (i.e. sustained EPS growth at a healthy 6% and an inflated terminal P/E multiple).

 

He added some of these gains depends on assuming the resumption of a stock market bubble:

 

Based on the relative positions of these time-tested measures, secular bulls seem to be implicitly betting on the reflation of a multi-generational stock bubble less than 15 years after it popped. The pathology of 'busted bubbles'—which we've detailed at length in the past—doesn't support that bet.

 

When he puts it all together, my inner investor thinks that, if we are indeed seeing a new secular bull market, the extraordinary measures undertaken by global central banks in the wake of the Lehman Crisis has front-end loaded many of the gains to be realized in this bull."

5) Does Shiller's CAPE Still Work? by Bill Hester, Hussman Funds

It is becoming more difficult for more mainstream commentators, analysts and managers to justify their arguments for a continued bull market when having to contend with rising valuation levels.  However, as would be expected, at the peak of every major bull market in history there have always been those that have suggested "this time is different."  In 1929, stocks had reached a new permanent plateau.  In 1999, old valuation measures didn't matter as it was about "clicks per page."   In 2007, subprime credit was "contained" and it was a "goldilocks economy."  In 2014, old valuation metrics simply don't account for the new economy.  We have always heard the same "sirens song" during every major bull market cycle and, as the sailors of the past, we are ultimately lured toward our demise.  Bill Hester does an excellent job breaking down the arguments against Shiller's CAPE valuation metrics.

"More recently the ratio has undergone an attack from some widely-followed analysts, questioning its validity and offering up attempts to adjust the ratio. This may be a reaction to its new-found notoriety, but more likely it's because the CAPE is suggesting that US stocks are significantly overvalued. All of the adjustments analysts have made so far imply that stocks are less overvalued than the traditional CAPE would suggest.

 

We feel no particular obligation defend the CAPE ratio. It has a strong long-term relationship to subsequent 10-year market returns. And it's only one of numerous valuation indicators that we use in our work – many which are considerably more reliable. All of these valuation indicators – particularly when record-high profit margins are accounted for – are sending the same message: The market is steeply overvalued, leaving investors with the prospect of low, single-digit long-term expected returns. But we decided to come to the aid of the CAPE ratio in this case because a few errors have slipped into the debate, and it's important for investors who have previously relied on this ratio to understand these errors so they can judge the valuation metric fairly.

Importantly, the primary error that is being made is not even the fault of those making the arguments against the CAPE ratio. The fault lies at the feet of a misleading data series."

EXTRA:  Just Good Stuff To Know

I use Google for just about everything.  Email, picture uploads, all of my spreadsheets that I use for blogging, analysis, newsletters, etc.  From my phone to my computer, Google has just about all of my data. 

That makes me a little more than uncomfortable. If you are like me, then you will find the following links very useful in adjusting things from what Google knows about you to archiving the stuff you put on the site.

Here are 10 important links that every Google user should know.

Have a fabulous week.

via Zero Hedge http://ift.tt/1cGTo35 Tyler Durden

If anyone ever said John Kerry – arguably the worst Secretariat of State in recent US history – didn’t know how to look regal in photo ops of failure after epic failure, they obviously have never this picture. Such majesty, such posture, such a shiny coat. Just don’t look him in the mouth.

 

And just in case the SoS felt bad about abusing taxpayer funds for a completely meaningless, if quite luxurious, trip to London where the Russians once again schooled the US Department of State, here comes Venezuela’s foreign minister who just called Kerry a “murderer.” From Reuters:

Venezuela’s foreign minister lambasted U.S. Secretary of State John Kerry on Friday as a “murderer” fomenting unrest that has killed 28 people in the South American OPEC member nation.

 

“Mr. Kerry, we denounce to the whole world, you encourage the violence in Venezuela … We denounce you as a murderer of the Venezuelan people.”

 

“In Guatemala, you said to me ‘you have to lower the tone’,” Jaua added in his speech. “We are not going to lower the tone to any empire until you order your lackeys in Venezuela to cease the violence against the people.”

 

“Every time we’re about to isolate and reduce the violence, Mr. Kerry comes out with a declaration and immediately the street protests are activated.”

Probably a good, if blunt, way to summarize Kerry’s job performance. The good news: after a week like this, things can only get better for the Swift botox expert. Unless they don’t.

h/t @Neringa25

via Zero Hedge http://ift.tt/1fGger3 Tyler Durden

We started the week exuberant wearing the cleanest dirty shirt scoffing at the weakness of 'foreign' markets. By the end of the week, the Dow has dropped 5 days in a row in a week for the first time since May 2012 and the Nasdaq had its work week in 9 months. The S&P dropped back into the red for 2014 – despite a late-day ramp effort – tracking AUDJPY all day long once again. VIX surged above 18% (and term strcuture steepest since US downgrade) and credit spreads blew wider. Treasury yields tumbled 10-14bps on the week – the biggest drop since June 2012. Gold prices rose over 3% on the week to 6-month highs. Copper saw its biggest 2-week drop in 30 months. The USD slipped lower on EUR and JPY strength (JPY +1.9% – biggest surge in 7 months).

 

AUDJPY was in charge once again..

 

The S&P joins the Dow back in the red for 2014…

 

As All but Trannies and Russell lose post-Putin gains

 

Seems like credit markets were right – whocouldanode?

 

Treasuries soared

 

Gold ripped as copper plunged…

 

Protection was in big demand in the afternoon into the event-risk-prone weekend…

 

VIX surged and the term structure steepened to its highest since the US downgrade…

 

 

 

Charts: Bloomberg

Bonus Chart: Gold nears the golden cross (50DMA >> 200DMA)…

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