Ray Dalio Tells Investors: “Don’t Trade Against Pros Like Us, You Will Lose… Own Gold”

Before his presentation to the University of Texas, Bridgewater’s Ray Dalio gave a far-ranging interview to Bloomberg’s Erik Shatzker which we will have more to say about in the coming days, but the overarching theme was what to expect from markets going forward. He said that while there are “asymmetric” risks to the downside, asset prices will correct to a point where risk premiums return and investors come back, and predicted that equities will return about 4% in the long term. The concern he had was whether the slowdown in markets will have negative repercussions for the economy at a time when central bank policy is becoming less effective.

Repeating comments he has given before, Dalio said that the “next big move I believe will have to be toward quantitative easing, rather than a big tightening,” he said in the interview. The recent developments have surprised the Fed, because it is not paying enough attention to the long-term debt cycle, adding that “If you look around the world, our risk is not inflation and our risk is not overheating economies”, something all too clear to the nearly 30% of global economies currently blanketed by negative interest rates.

He also had some rather dire comments on China which we wil get back to in a future post, but what caught our attention was the following exchange in which Dalio discussed whether ordinary investors have a chance of making money in the current market when faced with institutional behemoths like Brigewater which as the world’s biggest hedge fund manages over $150 billion.

His honesty was refreshing.

SCHATZKER: Broadly speaking, what’s going to work? And what is working, perhaps more appropriately, today?

 

DALIO:  I think there are two ways that the average investor should think of investing.  One is, are you going to create a good strategic asset allocation mix that is a balanced portfolio, that means you will not go to the betting table and bet against active investors like me? Look, I’m scared to be wrong in the markets.  It is not easy to win in the market.  It is more difficult to win in the markets than to compete in the Olympics.

 

SCHATZKER:  Hang on a second.  Hang on a second. You guys have an extraordinary track record of winning.  Is it harder to compete in the markets today than it been since you founded Bridgewater?

 

DALIO:  No, I don’t think so.

 

SCHATZKER:  Really?

 

DALIO:  Not the way we do it.  And the reason I’m saying not the way we do it is we do not take systematic biases.  I think for a lot of people, they are systematically long everything. And so when the world gets bad, it’s bad for them. In 2008, it was great for us.  I don’t know, we had nearly 10 percent return in 2008. So we have the opportunity to go either way.  We just my be wrong.

 

DALIO:  So I’m so scared about being wrong that it has help reduce my chances of being wrong because I’m so scared.  I won’t take bets that I don’t feel good about.  And we diversify our portfolio.  And that is how we got the track record.  So you asked me about investors.  So I’m trying to go back what investors should do.

 

SCHATZKER:  And what you think is appropriate for your investors.

 

DALIO:  I want to just convey to investors, I think in the average investor, most everybody, do not compete against pros like ourselves or other people; do not making tactical asset allocation bets or moving around in the markets, because you will probably lose.

It is worth noting that Dalio does not suggest that investors will lose because he thinks markets are rigged, something we and Eric Hunsader have been noting for years, instead Dalio’s point is that ultimately directional, “tactical” bets will rarely work.

If you’re talking about tactical bets, in other words, I could come on the show and I can say, I think this is good.  But then what happens is if I come a month later and I then change my mind because something has happened, then I will mislead people.  So the tactical bets, I don’t think, are going to be helpful.

Granted, Dalio is pitching his “All Weather” portfolio, and yet this statement is perhaps one of the more honest admissions of how the market “works” or rather doesn’t, because unlike the  empty suits who come on TV to pitch any given stock who ultimately have no idea what will happen and are merely flipping a coin (and who are never heard from again when the trade goes against them) Dalio is warning to give up on hopes for quick “long” (or short) bets leading to major winnings, and instead stick to broader market returns in the form of a diverisifed portfolio. Then again, since for most “ordinary” investors the stock market is merely an chance to strike it rich, fast, we doubt his advice will be heeded.

But the surprising moment of biggest honesty came when Dalio laid out what should comprise a properly diversified portfolio:

I would say that we are in an environment where it is very important to have a well-diversified portfolio, and that’ll include assets gold.  In other words, what could I tell investors, try to achieve balance in various ways.  That’s a whole subject about how to do it.

 

And also I think that gold at 5 percent of your portfolio, 5 percent or 10 percent of your portfolio, under the circumstances, would be also a prudent thing to doPrudence is the important thing to do.  The reason I’m also referring to that is we have a situation where a debt is money. In other words, we have a fiat monetary system, too.  And so we are having problems as these central banks operate.  And so  think of it as another form of cash and when cash now has zero or 0 percent interest rates or less, think of it as one of those possibilities in terms of how do you create diversification.

Debt is indeed money, and so is gold, and unlike debt whose yield increasingly more central banks are now artificially pushing into negative territory and will soon do everything in their power to eliminate physical money so that electronic money is subject to the same “financial repression” as every other asset, gold has and always will be an inert metal with intrinsic value, with zero counterparty risk, zero “central banker policy risk”, and whose only real risk is being confiscated through another presidential executive order.

Yes, Bridgewater may have gone through a rough patch recently as we exclusively revealed a few weeks ago, but we applaud Dalio for the intellectual honesty and telling the truth.

Full interview below


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Kim Jong Un Orders Nuclear Weapons Made Ready For Use

Korea’s official news agency reports North Korean leader Kim Jong Un has ordered the country’s nuclear weapons be made ready for use. This action follows the firing of a volley of short-range projectiles into the sea to the south after the UN Security Council unanimously passed sanctions targeting North Korea’s banks, mineral exports and cargo vessels.

  • *KIM JONG UN VOWS TO BOLSTER NUCLEAR DETERRENT, KCNA SAYS
  • *KIM CALLS FOR PREPARING NUCLEAR WARHEADS FOR USE AT ANY MOMENT

The international community is seeking to tighten the screws on North Korea’s economy. But, as Bloomberg explains, with Kim Jong Unmotivated mostly by his quest for prestige at home, tougher United Nations sanctions may not dampen his nuclear ambitions.

Hours after the UN Security Council unanimously passed sanctions targeting North Korea’s banks, mineral exports and cargo vessels, the regime fired a volley of short-range projectiles. It had already urged its people to prepare for the impact of the penalties and called for greater economic self-reliance.

 

At the heart of North Korea’s defiance — as shown in its January nuclear test and February long-range rocket launch — is Kim’s ultimate goal of forcing the world to recognize his country as a nuclear power. That could ensure him a place in the annals of Kim family rule and the respect of the elite, including military chiefs. It would also help him consolidate the power he’s been seeking primarily though a series of bloody purges.

 

“One part of the nuclear test and rocket launch activity is about Kim Jong Un boosting his domestic profile, giving him accomplishments that he can use for internal retail politics,” said Michael Madden, North Korea Leadership Watch blog editor and a contributor to 38 North, a Johns Hopkins University website. “A lot of the veneration around him is for internal audiences, specifically for indoctrination of certain populations.”

North Korea’s government calls its nuclear arms a “precious sword of justice” that would prevent it from being toppled like regimes in Iraq and Libya. Shortly after the nuclear test, North Korea urged the Obama administration to “get used to North Korea as a nuclear-armed state.” What would president Trump do?


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Smith & Wesson Hits All Time High Thanks To Record Gun Demand

Two months ago we presented what we thought was a “very troubling”chart, one showing the latest data on FBI background checks, a proxy for gun purchases. The chart had just hit an all time high.

 

Since then, the progression has escalated and gun sales have continued to soar as the following update showing gun sales for the month of February over the past decade:

 

However, as we also noted, what was most troubling about the charts above is that the one single biggest catalyst for soaring gun sales across the U.S. is a simple one, as shown the following chart courtesy of the NYT:

 

The chart shows that while the soaring gun sales are the effect, the cause is simple: president Obama.

As we said two months ago, “the concern is that with one more year under Obama’s term, gun sales
over the next 12 months are certain to surge to new all time highs as
Obama’s crusade to crush the second amendment slowly picks up steam in
order to cement his “anti-gun” legacy, and as the population rushes to
buy as many as it can before Obama makes such purchases illegal.”

We were right, and we were also right when we said that “It’s not all bad news though: gun makers could not have asked for a better president”

Moments ago we got proof of just that when Smith and Wesson reported third quarter financial results. They not only smashed estimates…

  • 3Q adj. EPS 59c, est. 41c
  • 3Q sales $210MM, est. $179MM

… but have an outlook that is literally off the consensus estimates’ charts:

  • Sees 4Q adj EPS 51c-53c, est. 47c
  • Sees 4Q net sales $210m-$215m, est. $195.8m
  • Sees yr sales $712m-$717m, saw $650m-$660m, est $666m

And the commentary from CEO couldn’t be more glowing of Obama’s anti-gun agenda:

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, said, “The combined strength of our firearms and accessories businesses delivered an exceptional performance, driven by healthy consumer demand across our growing portfolio of firearm and outdoor lifestyle offerings. During the third quarter, the Adjusted National Instant Criminal Background Check System (NICS) data, which serves as an indicator of consumer purchases, reported a significant increase in growth versus the prior year, especially in handguns. In addition, our product sell-through at distribution was much stronger than we had anticipated.  Our flexible manufacturing model, combined with our ability to successfully utilize the internal inventories we had built in anticipation of potential sell-through strength, allowed us to capture incremental sales in the third quarter.  Despite the fact that we entered our fourth quarter with lower inventories, we are focused on increasing the production rates of our key products during the fourth quarter and we are therefore increasing our guidance for the full fiscal year.

The result: SWHC just hit all time highs:

 

Thanks Obama, but rest assured: there is much more to come.


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For Those Rushing To Move To Canada Under “President Trump”, A Few Warnings

Submitted by Robert Appel via ProfitConfidential.com,

How to Move to Canada

A Zerohedge headline that shocked the world this week showed net searches for “moving to Canada” are up more than 1,000% since the “Trump bump.” The same report said that the Immigration Canada web site (one of the most boring sites on the planet) was blown because of excessive access. (Source: “Canada Searches Up 1000%,” Zerohedge, March 2, 2016.)

If you are one of the many Americans thinking of making the switch to Canada, our exclusive “Canadian insider” offered these tips and answers about making the move to Canada and what you can expect when you arrive:

1. Are Canadians as polite as the jokes say?

In fact they are. One joke that even Canadians laugh at goes, “How do you get 47 Canadians out of the pool as quickly as possible?” The answer: simply yell, “Get out of the pool!”

2. Is the weather in Canada as bad as the jokes say?

No; it is actually worse. The beautiful East Coast becomes an ice cube in the winter—an endurance test equaled only by the weather in the capital, Ottawa, where the main distraction (aside from watching your breath freeze) is skating on the central canal, which freezes solid during winter. The prairies are no better. The outdoor parking spots accompanying most condos and hi-rises each have a built-in electrical outlet. No, not for your orbital buffer; they’re for your block heater. (If you don’t know what a block heater is, perhaps the Dominican Republic should really be your first choice for bugging out…?)

3. Of course, there is always Vancouver, which experiences the best winters in the country (like Seattle, but with fewer serial killings).

Keep in mind, however, that Vancouver currently has the largest housing bubble on the planet. (Source: “This is Freaking Nuts — House sells $750K above Asking,” Zerohedge, March 1, 2016.)

4. Canada has cross-country “value added tax” (VAT), called HST, that can add about 13% to a typical purchase in the mere blink of an eye.

If you are in business, you may be able to reclaim it. Most Canadians just pay it. Americans will find this unsettling. Of course, the whole idea of a VAT is that it theoretically obviates the need for income tax. Unfortunately Canada has not figured this out yet. They introduced income tax right after WWI, swore it was just temporary, and yet it is still here…? If, however, you are seeking the comfort and nostalgia of politicians who say one thing and then do another, Canada could be a dream come true.

5. Speaking of politics, the wise voters of Canada just threw out the most conservative leader in decades (that is “conservative” with BOTH a small “c” and a capital “C”).

This was mainly because they were bored with his conservatism, and (the irony!) they felt he was too close to the U.S.

6. Social medicine will be a kick if you are making the journey north.

It has its plusses and minuses. If you are in dire need, it is there. I have a friend who recently received a lung transplant, did not pay a nickel, and now loves Canada so much he moved back to Toronto from the Czech Republic. On the other hand, if you are looking for a simple MRI in a non-urgent situation, be prepared to wait several months or (more irony!) be prepared to cross into a U.S. border town and pony up cold hard cash.

7. Supermarkets will be a shocker.

Imagine that 70% of all the products you have come to know and love disappeared in the blink of an eye, like in a sci-fi movie, and, in many cases, they were replaced by brands you have never heard of. Your first time grocery shopping may possibly bring a tear to your eye. Good news? They do stock Kleenex, just like in the U.S.

8. No, you don’t have to learn French, in spite of the millions of dollars a year Canadians spend translating and labeling everything that moves or squeaks into the official “second language.”

Learning French is mainly useful only if you plan to live in Quebec or run for federal office. And if you learned history via U.S. textbooks, be prepared for some revisionism. Turns out that France did not lose the war for Canada to the Brits at the Battle of the Plains of Abraham. It was actually a “draw.” (Luckily, nobody bothered to tell the British or every province in Canada would have two tax systems and two levels of government, just like those freethinkers in Quebec.)

9. The thing you will notice the most?

Well, the whole money thing will be uncomfortable. First of all, everything in Canada costs more, ceteris paribus, than the equivalent item in the U.S., even before taxes. Why? Mainly because of the higher costs of labeling and moving goods in the sparser geography (hey! those French labels don’t put themselves on the items, do they…). Next, if you factor in the weaker loonie, well, let’s just say that as a Canadian newbie, your first experience with socialized medicine might be for anti-depressants. The good news? The doctor’s visit, and part of the cost of your meds, will be picked up by the very same country that depressed you in the first place!


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Chart Of The Day: It’s The Earnings Stupid

The S&P 500 is trading around 1950. It has traded at that level numerous times in the last 18 months.

During that time, consensus earnings expectations for the S&P 500 have plunged…

 

In fact – since the start of the year – when stocks were at exactly this level, earnings expectations have tumbled almost 3% non-stop??

It appears the mother's milk of markets is rapidly drying up.


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National Security vs. Trump, John Kasich Will Not Go Home, Florida Reforming Death Penalty Laws: P.M. Links

  • KasichRepublican national security leaders released an open letter declaring they could not support Donald Trump as the nominee. Trump dismissed it on Good Morning America this morning.
  • Gov. John Kasich of Ohio refuses to drop out of the race and insists he’s going to win his home state and head to the convention where … I guess the underpants gnomes are involved at this point (or veep offers?). He pointed out that personal attacks against Donald Trump are not going to work.
  • The Texas state trooper who pulled over and arrested Sandra Bland has been formally fired. Bland became national news after a minor argument led to her arrest, and she was subsequently found hanged dead in her jail cell in what has been ruled a suicide.
  • Florida legislators are overhauling the state’s death penalty regulations in order to get them declared constitutional again. The new bill would require at least 10 jurors out of 12 to favor execution.
  • Boston is addressing the competition between ride-sharing services and taxis not by trying to further regulate Uber and Lyft but by loosening the rules for taxi drivers. Good for them!
  • The nanny accused of beheading a 4-year-old in Moscow said it was revenge for Russia’s involvement in strikes against Syria.
  • Dave Navarro tweeted that he’s a libertarian.

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

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How Mitt Romney Is Totally Wrong About Donald Trump

As Peter Suderman has noted, Mitt Romney has weighed in on Donald Trump, mustering all the nastiness a Mormon can summon without resorting to cursing in public. “Donald Trump is a phony, a fraud,” declared the one-term governor of Massachusetts and failed 2012 GOP presidential candidate. “His promises are as worthless as a degree from Trump University.”

To which Trump responded thus:

The easy rejoinder to Romney is to say he’s accurate but his timing is too late to matter. Indeed, as Trump’s march to the Republican nomination proceeds, this is fast becoming the conventional wisdom among GOP activists, whether they are part of the #NeverTrump crew or are coming to terms with having the guy at the top of their ticket. As longtime Republican consultant, no in-the-tank Trump loyalist Alex Castellanos recently wrote

Donald Trump whipped the establishment and it is too late for the limp GOP establishment to ask their mommy to step in and rewrite the rules because they were humiliated for their impotence.

If Trump is going to be our nominee, as I believe he is, it is our mission to support Trump and make him the best nominee and president possible.

What both sides—conservatives who say they will NEVER vote for Trump under any circumstances and conservatives who will grudgingly fall in line—misunderstand is that Trump isn’t a fraud perpetrated on the Republican Party, nor on the throngs of Republican primary voters who have propelled him to victory all over the place.

Put simply, Trump is the distallation of conservative Republican politics for all of the 21st century. He’s not the cause of a GOP implosion, but the final effect of an intellectual and political hollowing-out of any semblance of commitment to limited government, individual rights, and free markets.

Yes, as Romney stated, The Donald has shifted positions on all sorts of issues over the years (immigration, outsourcing, abortion, whatever). As if that isn’t a clearer indictment of the Republican Party when it ran both houses of Congress and the White House in the early part of this century. Winning the most-contested election in the history of the United States, George W. Bush campaigned on reducing the size, scope, and spending of government—and then proceeded to kick out the jams on constraints on government outlays.

Leave aside massive increases in defense spending for the moment. With help of “conservative” and “establishment” legislators (it’s far from clear what either of these terms really means except to the GOP Mensheviks and Bolsheviks tossing them at each other like Molotov Cocktails), the Republicans pushed No Child Left Behind, the single-biggest expansion of the federal government into education in decades, and the creation of a budget-busting prescription-drug entitlement for seniors. They signed off on Sarbanes-Oxley, a dumb regulatory response to the Enron scandal and bursting of the tech bubble, which helped push IPOs to London and foreign capitals. Bush and the GOP signed off on protectionist measures against foreign steel and timber when it suited them while completely bungling federal responses to natural disasters such as Hurricane Katrina.

Then there was the Republican response to foreign policy. The Republican Congress signed off on The Patriot Act, which vies with Hillary Clinton’s latest memoir for the title of least-read (even by the authors) doorstop of this century. They created not just the demonstrably useless Transportation Security Administration but an entirely new and sclerotic cabinet agency, The Department of Homeland Security (DHS). And now as conservatives and Republicans whine about Donald Trump’s desire to “open up the libel laws,” recall what Republican Attorney General John Ashcroft said to anyone who dast dissent from Total Information Awareness

“Those who scare peace-loving people with phantoms of lost liberty,” he inveighed before Congress, “your tactics only aid terrorists.”

When it came to actually prosecuting the wars in Afghanistan and Iraq, the GOP was anything but fiscally responsible. Rather, they deliberately to fund (still) ongoing activites via “emergency supplemental” spending procedures, so they didn’t really have to fully explain to the public how much loot they were spending. That underhanded process only stopped once Barack Obama took office, in the brief moment when he and the Democrats deigned to actually produce and write budgets. Having succeeded with passing tax cuts, the Republicans—despite constantly bashing the Democrats as big spenders and deficit whores—never bothered to discuss how to pay for massive increases in military spending. Or Medicare spending or any other sort of outlay that ballooned under Bush and the Republican Congress.

Who created TARP and which party’s 2008 candidate suspended his campaign so that he could race back to Washington to bail out the big banks and, eventually Chrysler and GM? On his way out the door (and after a last-ditch $100 million stimulus plan that is largely forgotten to all but the nation’s debtors), George W. Bush actually said, “I’ve abandoned free-market principles to save the free-market system.” Like much of what Donald Trump says today, of course, this is a lie, or at least an exaggeration, to the extent it pretends that George W. Bush, whose greatest business deal involved family connections and eminent domain, ever embodied free-market principles.

But what’s past is past, right? And today’s conservatives all hated Bush and the GOP Congress, right, even if they did endorse them George W. and company, except when he tried to privatize Social Security or, even worse, pass immigration reform.

In 2008 and 2012, the Republican Party ran such paragons of principle and consistency as John McCain and Mitt Romney for president. What was notable about McCain, besides his reflexive war-mongering, was that he ultimately flipped from being actually kind of open-bordersy to cutting TV commercials demanding that we “complete the danged fence.” As for Romney, who now sits in smug judgment of Donald Trump, he was that GOP guy who “evolved” on abortion and gay rights (even though Republicans don’t believe in evolution) and, oh yeah, created the program that became the model for Obamacare.

But let’s not just look at the top of Republican tickets to see the ideological rot and hypocrisy that hollowed out the conservative Republican “brand” like a wet log teeming with termites. At least since Barry Goldwater and certainly since Ronald Reagan’s success, the GOP has always billed itself as the party not just of “limited” government but of small government—or at least smaller government than whatever the Democrats were yapping about.

Consistently though, conservatives and Republicans translated that call for smaller government into a standing demand to increase military spending regardless of actual threats to America or demonstrated outcomes of interventions abroad (the government is incompetent at everything, don’t you know, except for rebuilding civilizations in central Asia and the Middle East). Also, conservatives, like their left-wing hero George Orwell, praise plain language, except when it comes time to describe torture (by which I mean “enhanced interrogations”) and they want power taken away from the White House (as long as a Democrat is living there). Otherwise, welll you know the drill.

When it comes to personal responsibility and following the law, conservatives are all for it, unless you want to smoke a joint rather than drink whisky, or if you’re Scooter Libby or Conrad Black or some famous conservative type who gets caught doing something he shouldn’t have been doing. 

We hear this all the time, don’t we: Conservatives just hate it when Democrats and liberals divide us into groups based on race or sex, but how dare you claim that foreigners, especially Spanish-speaking mestizos, who are uniquely incapable of assimilation, be allowed to work legally in this country! Kim Davis, the great gay-marriage refusenik was feted by Ted Cruz and Mike Huckabee and became a conservative hero for refusing to do her government job. Why, because the state should discriminate against individuals…when conservatives want it to.

Because—and this is very important to the rise of Donald Trump—conservativism and Republicanism have no real fixed definition or even ultimately a coherent set of principles. Sometimes they are for limited government, sometimes they want a maximal state. They’re against the individual mandate for Obamacare, except when they invented the concept (thanks Heritage Foundation). They are for small, tiny government except when they are not. They are for FREEDOM (all caps), except when they believe opening up the borders or letting women wear pants or giving ex-felons the right to vote will destroy EVERYTHING. They are against political correctness (like Trump!) because it allows a “hate group” such as Black Lives Matter besmirch the reputation of police, but WTF Donald Trump, you’re just vulgar and a bully!

As Natonal Review’s Jonah Goldberg has written

Conservatism isn’t a single thing. Indeed, as I have argued before, I think it’s a contradictory thing, a bundle of principles married to a prudential and humble appreciation of the complexity of life and the sanctity of successful human institutions.

Maybe it’s just me, but when I think of high-profile professional conservatives, the last word I think of is humble. Rush Limbaugh, Newt Gingrich, Sean Hannity are anything but humble, either in their demeanor or their willingness to speak Truth with a capital T. But Goldberg has put together a pretty good definition, especially the part about conservatism (and by extension, the Republican Party) being a “contradictory thing.” You add partisan politics into the mix and what you get is a huge mess of contradictory things that ultimately make no sense, at least if you prize philosophical or systematic consistency in any way, shape, or form (oh, the curse of the libertarian mind!). The key thing about conservatives and Republicans is that they have created an identity from which they can depart whenever the hell they feel like it.

So bailouts and stimulus spending are good or at least defensible when George Bush wants them but bad if Barack Obama wants them. The state shouldn’t discriminate, except against gays, or weed, or whatever. As Ted Cruz can tell you, federal officials should enforce ALL THE LAWS against immigrants, but Kim Davis is a hero for refusing to do her job. Mitt Romney was for abortion before he was against it, so fuck you Donald Trump, you’re no conservative (we know this because you used to be very into abortion). Don’t you realize that Donald Trump presents a unique threat to the Constitution when he denounces birthright citizenship but it’s OK when Ted Cruz says exactly the same thing, or suggests that Supreme Court justices face “retention elections”? Do I contradict myself, asked the famously gay (and racist) poet Walt Whitman. Verily, indeed. What’s the problem?

Having situational ethics and situational public policies makes it easy to change your stance on this or that (and let’s not pretend that liberals and Democrats don’t do the same thing). But unless you’re part of the shrinking tribes of conservatives and Republicans, the effect is profoundly alienating. And it’s even more boring than watching that episode of the old, original Star Trek where Frank Gorshin and the other guy with half-black/half-white faces hate each other until you realize…they’re faces are mirror images of one another.

People—even or especially Trump supporters—aren’t idiots. They know political grandstanding when they see it, and they fully understand that conservatives and Republicans don’t really believe in the things they talk about. Or, same thing, that everything can and will change in the blink of the eye or in ways that just don’t make sense. Didn’t Mitt Romney beg Donald Trump for an endorsement a few years ago? Romney, whom every conservative news org endorsed and approved, ran for president by attacking Obamacare and the incumbent for spending too much money. He also promised to keep the parts of Obamacare “he liked” and refused to name a single big-ticket spending program he would cut or even trim. Upon becoming Speaker of the House after a million years in waiting, John Boehner was incapable of naming a single program or department he would get rid of.

You can hear it already: But…but…but…Romney and Boehner and all the rest aren’t real conservatives or Republicans or whatever. No, that would be Paul Ryan, whose first big act as Boehner’s replacement was to sign off on a deal that increased spending on defense and social programs. Whatevs, buddy, whatevs. Conservatives and Republicans have wielded total power and didn’t just fail to do anything with it; they actively undermine their rhetoric and their credibility. And then tell you that you’re nuts for noticing.

And now they are just coming across as bitter losers (Trump’s language infects us all) who are seeing a businessman come in at the last moment and buy up their company at a fraction of its former valuation (hey, isn’t that a good thing when Bain Capital does it? Shouldn’t we have let Honda do that to GM?). In equating Mexican immigrants with rapists and drug dealers and calling for mass deportations, Trump brought xenophobia back to the forefront of U.S. politics but National Review assails him for being soft on immigration (really: Trump obviously buys into “the dismayingly conventional view that current levels of legal immigration are fine,” say the editors). When not agitating for military intervention, The Weekly Standard has spent much of its existence denouncing China as a rogue state whose trade policies are on a collision course with U.S. interests. But when Trump runs with that argument, well, he’s got it all wrong!

In the 2016 election season, Trump alone among the Republican candidates has brought energy and a sense of invicibility. For those of us who actually believe in limited government, reducing federal spending and debt, and getting the government out of people’s lives, this is not good. But for all the darkness of his despicable vision of immigrants (“They’re bringing drugs. They’re bringing crime. They’re rapists.”), he is also optimistic even as modern-day millenarians and xenophobes such as Ted Cruz only promise endless fights on the edge of the lake of fire.

To the extent that conservatives and Republicans are mostly complaining that Trump isn’t a real Republican or conservative, they are simply acknowledging that his policy positions (such as they are) are fully in line with whatever Ted Cruz, Marco Rubio, and John Kasich are selling (and whatever Mitt Romney offered up in 2012). And to the extent that say he’s a “contradictory thing” who changes his position from one day to the next, well, they’re just admitting that he is a real conservative after all.

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Gold Jumps, Dollar Dumps As Trannies Squeeze Higher

Services economy cliff-dives and we squeeze higher again… sure why not…

 

Another day another huge short squeze – the last 3 days are the biggest rise in "Most Shorted" stocks since Black Monday week's bounce…

 

And The McClellan Oscillator is screaming overbought…

 

Trannies and Small Caps ripped on the day…Nasdaq closed red

 

As Small Caps lead the week…

 

This is the 15th day in a row where The S&P has closed at either its high or low of the day.

 

Energy stocks are now green for the year…

 

Because nothing says sell Vol like "the most important jobs number" ever…everything is awesome…

 

Bonds ain't buying it…

 

Nor is FX Carry…

 

Treasury yields tumbled today as repo marksts shake out with the long-end outperforming…

 

The USD Index tumbled today – following the weak US data – led by EUR and JPY strength…

 

The USD weakness sparked strength in almost every comodity today but PMs were best (crude made lots of noise but ended unch)…

 

Gold soared to a 13-month high close…

 

Finally NatGas was clubbed like a baby seal again… 1999 lows for Nat Gas (with all eyes on oil, we suspect the massive writedowns coming will shock many)

 

Charts: Bloomberg


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“No Signs Of Recession” Says Agency That Always Fails To Predict Recession

Submitted by Simon Black via SovereignMan.com,

In the middle of a heated battle against my jetlag yesterday, I finally decided to exercise the nuclear option and turn on CNBC in order to stay awake.

I figured someone would say something completely ridiculous, and it would get my blood boiling enough to power through the next couple of hours.

Within minutes I saw a top economist for Moody’s (one of the largest rating agencies in the world) saying that there are absolutely zero signs of recession.

Boom. I was suddenly so wide-awake it was like that adrenaline scene from Pulp Fiction.

I couldn’t believe what I had just heard. Moody’s. No recession. Seriously?

In addition to being criminally complicit in committing widespread fraud that fueled the housing bubble ten years ago, Moody’s takes advantage of every opportunity to show the world that they don’t have a clue when it comes to economic forecasts.

It’s like what Churchill said about democracy– it’s the worst form of government, except for all the others.

Well, Moody’s is the worst rating agency and economic forecaster… except for all the others.

These are the same guys (along with their colleagues at S&P, Fitch, etc.) who totally missed the boat on the housing market and slapped pristine credit ratings on subprime mortgage bonds.

They also missed the boat on the subsequent banking crisis, giving strong ratings to Lehman Brothers and AIG right up through September 2008.

Lehman, of course, went bust that month. And AIG had to be bailed out by the taxpayer.

Moody’s and the gang also missed the rest of the global financial crisis, the collapse of Iceland, Greece’s bankruptcy, and just about every other significant financial event since… forever.

These guys are so drunk on their own Kool-Aid that in October 2007, Moody’s announced that “the economy is not going to slide away into recession.”

In December 2007, they called the bottom in the housing market, suggesting that prices would not fall any further.

Of course, the following year, the entire world was engulfed in the biggest financial crisis since the Great Depression.

Moody’s didn’t see it coming. Wall Street didn’t see it coming. The Federal Reserve didn’t see it coming. Governments didn’t see it coming.

Everyone assumed that the good times would last forever.

So when the agency that consistently fails to predict recession predicts that there will be no recession, you can pretty much guess what’s going to happen next.

This is what virtually assures negative interest rates in America.

Central banks almost invariably cut interest rates amid economic slowdown.

And over the last seven recessions in the Land of the Free, the Federal Reserve has cut interest rates an average of 5.68%.

The smallest cut was in the 1990 recession when the Fed lowered rates by 2.5%. The greatest was in 1982 when the Fed slashed rates by a massive 9%.

Think about it– rates right now are just 0.25%. So even with a tiny cut the Fed is almost guaranteed to take interest rates into negative territory in the next recession.

We can see the effects of this in Europe and Japan where negative interest rates already exist.

Negative interest rates destroy banks. They eat into bank profits and force them to hold money losing toxic assets.

Bank balance sheets become riskier, and people start trying to withdraw their money as a result.

In Japan (which just recently made interest rates negative), one of the fastest selling items is home safes, which people are buying in order to hold physical cash.

In Europe (where negative interest rates have existed for a while longer), bank controls have already been put in place to prevent people from withdrawing too much of their own money out of the banking system.

This is a form of capital controls– a tool that desperate governments use to trap your savings within a failed system and steal your prosperity.

Wherever you see negative interest rates you are bound to see capital controls close behind.

In light of this data there are fundamentally two courses of action.

1) Hope. Pretend that everything is going to be OK until the end of time.

 

2) Action. Take sensible steps BEFORE any of the metaphor hits the fan.

One of the easiest things you can do is withdraw some physical cash out of the banking system.

Buy a safe and hold 50s and 20s (they might ban the Benjamins, so avoid $100 bills). And don’t take out more than a few thousand dollars at a time.

It’s hard to imagine you’re worse off for keeping a safe full of cash.

Even if nothing bad ever happens in the banking system, you can still use the cash. And all you’re missing out on is 0.01% interest in your checking account. Big deal.

*  *  *

Even The Fed is forced to admit that recession probabilities are risinmg fast…

The latest reading from last November is higher than all but 3 months (in the last 50 years) when a recession did not immediately proceed.

 


via Zero Hedge http://ift.tt/1Tc3Fbt Tyler Durden