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  • Finance 0

    EU Session Bullet Report – Oil Slumps As Demand Cools, USD Leading The Way

    Oil recovered slightly yesterday and is currently trading above $38 per barrel although the black gold remains under pressure. Soft trade numbers from China on Tuesday highlighted the struggle facing the worlds’s 2nd largest economy, only serving to confirm concerns over cooling demand. Asian stocks were trading slightly lower this Wednesday morning reflecting current sentiment amongst the world’s fiancial markets. Commodity currencies continue to be worst hit with USD/CAD trading at 11.5 year highs. AUD/USD recovered from its 0.7186 low yesterday, currently trading around the 0.7225 mark. EUR/USD remains bullish, currently trading back a...
    On December 9, 2015 / By
  • Finance 0

    When Does The Demographically-Related Pension Ponzi Scheme Blow Up?

    Reader “GM”, an actuary student in Malaysia pinged me with an accurate observation on demographics, but missed the boat on a solution.  GM writes ….   I thought I would point out the reason for this monetary madness, which I believe you had brought up before. Aging populations consume less, and have different consumption patterns to working populations. Retirees consume less food, autos and real estate compared to young working couples. They use more healthcare instead. Also, aging populations take on less debt. These factors combined make the economic effect of lowering interest rates and printing money less pronounced t...
    On December 9, 2015 / By
  • Finance 0

    EC Negative Interest Rates Are Due To Bad Theory

    If something very strange happens and continues over an extended period, people get accustomed to it and come to view it as normal. That’s especially so when the strange set of circumstances is the result of a policy that, as a result of devotion to a wrong theory or strategy, is widely considered to be a reasonable response to a problem. A good example is the “Patriot Act”, which was introduced in the wake of the 911 attacks. This act dramatically increased the legal ability of the US government to violate individual property rights in the name of greater security and was widely viewed as extraordinary when it was first proposed, but i...
    On December 9, 2015 / By
  • Finance 0

    Euro/Dollar: Technical Picture Contradictory

    Yesterday’s Trading: By the end of Tuesday, the euro was up against the dollar by 60 points to 1.0891. The Swiss franc was also stronger against the USD. The Aussie and the pound were down. The market is undergoing a correctional phase after the ECB meeting and Draghi’s words. Main news of the day (EET): 09:00, German balance of trade and payments for October; 17:30, US oil reserves; 22:00, RBNZ interest rate decision and press conference. Market Expectations: I don’t see any readiness on the market for simultaneous, unidirectional movement of currency pairs. I think that the correction will continue until Thursday. If I were to pick th...
    On December 9, 2015 / By
  • Finance 0

    Corporate Loan Charge-Offs And Delinquencies Surge

    Another Bump Higher In one of our recent updates on the weakness in the manufacturing sector we have mentioned the surge in the sum of charge-offs and delinquencies of commercial and industrial loans at US banks (hat tip to our friend BC, who inspired the chart below). As we were arguing at the time, this is a sign that inflationary US bank credit expansion to businesses will likely continue to stall and as a result US money supply growth should continue to decelerate. It turns out that this particular growth rate has recently increased further: Growth in charge-offs and delinquencies in commercial and industrial loans (black line, left hand ...
    On December 9, 2015 / By
  • Finance 0

    The Latest Look At Long-Term Trends In Employment By Age Group

    The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent. The first chart below splits up the LFPR since 1948 in two ways: by age and by gender. For the former, have the 25-64 age cohorts to represent what we traditionally think of as the “productive” (pre-retirement age) work force. The BLS has data for ages 16 and over, but the historical...
    On December 9, 2015 / By
  • Finance 0

    Behold The Deflationary Wave: How China Is Flooding The World With Its Unwanted Commodities

    Between commodity-backed financing deals and the centrally-planned mal-investment boom-driven excess capacity, China has a lot of ‘liquidation’ to do to normalize from a credit-fueled smoke-and-mirrors world to a painful reality. As Bloomberg notes, there’s no let-up in the onslaught of commodities from China. While the country’s total exports are slowing in dollar terms (as we noted last night), shipments of steel, oil products and aluminum are reaching for new highs, flooding the world with unwanted inventories. China’s de-glutting is now the rest of the world’s problem as the deflationary tsunami grows ...
    On December 9, 2015 / By
  • Finance 0

    What Assets Should You Have In Your Moderate Portfolio?

    Ibbotson Associates provides asset allocation guidelines that span the risk spectrum from conservative to aggressive. The moderate portfolio consists of roughly 42% in U.S. Stock, 18% in Non-U.S. Stock, 35% Fixed Income and 5% in Cash. It follows that the static Ibbotson model might employ the following ETFs to achieve its moderate growth and income aim:   With flat to slightly negative returns, one could make the case that diversification is working just fine. On the other hand, the more that one has minimized the downside risk of investment canaries in the financial mines – high yield credit, emerging markets and smaller corporations ...
    On December 9, 2015 / By
  • Finance 0

    Guess What Happened The Last Time Junk Bonds Started Crashing Like This? Hint: Think 2008

    The extreme carnage that we are witnessing in the junk bond market right now is one of the clearest signals yet that a major U.S. stock market crash is imminent. For those that are not familiar with “junk bonds”, please don’t get put off by the name. They aren’t really “junk”. They simply have a higher risk and thus a higher return than other bonds of the same type. And yesterday, I explained why I watch them so closely. If stocks are going to crash, you would expect to see a junk bond crash first. This happened in 2008, and it is happening again right now. On Monday, a high yield bond ETF known as JNK crashed through the psychol...
    On December 9, 2015 / By
  • Finance 0

    Can Google’s Recently Launched YouTube Red Take On Netflix?

    YouTube Red is a disruptive product created to take on Netfix and Spotify. Rising Netflix and Spotify subscribers shows that there is certainly a market for YouTube Red. Google/Alphabet has everything in place to ensure that YouTube Red is a roaring success. Alphabet Launches YouTube Red Alphabet Inc-C (NASDAQ:GOOG) recently released YouTube Red in the United States, and has plans to roll it out globally. YouTube Red is a disruptive streaming offering and combines the following into a neat package: 1) An ad-free YouTube experience- YouTube Red subscribers won’t see a single ad while on YouTube. 2) Access to 30 million+ songs through ...
    On December 9, 2015 / By