Archive for August, 2018

Notes From Underground: Fresh FRA Podcast

August 23, 2018
Here’s another podcast from the Financial repression Authority I recorded with Richard Bonugli and Peter Boockvar. The ability for readers to listen to a free exchange of ideas is well worth the price paid to read Notes From Underground. Before you listen, I want to call your attention to an article from the Tuesday edition of the Financial Times, which of course, received little attention from the purveyors of PABLUM.

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Notes From Underground: Trump Moves Markets Without Moving His Fingers

August 21, 2018

The noise just keep on coming and each are disrupting the markets in its own way and the president. Monday’s headlines from the financial press had large impacts on GOLD, COPPER, EQUITIES, and, of course, CURRENCY markets. Let’s look at the substance of the comments.

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Notes From Underground: Depending On the Outcome of Rational Actors?

August 19, 2018

So much of social science is dependent on various actors making rational decisions. Economics has regularly proven that “actors” certainly fail to act rationally as manias, crashes and panics in repeated form are proof (see Charles Kindleberger). In the realm of politics, the dependence on nation-states to behave rationally has led to many major policy errors. During the Cold War the balance of nuclear weapons prompted both super powers to remain reticent to embark on direct confrontations and avoid an unthinkable shooting war. The fear of world destruction also meant that the USSR and UNITED STATES would leash their “allies” to prevent any direct conflict between the two major hegemonists.

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Notes From Underground: Will He Or Won’t He? (Only His Son-In-Law Knows)

August 14, 2018

On Monday, Rick Santelli and I unpacked a great deal in the few minutes we were allotted on CNBC. The Turkish story remains a key to the global financial markets. The U.S. equity markets interpreted that as all-clear, and the narrative of a dynamic U.S. growth story sustains itself.

(Click on the image to watch me and Rick talk Turkey.)

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Notes From Underground: The World Is Talking Turkey

August 12, 2018

For a long time now, we at NOTES FROM UNDERGROUND have been discussing the danger of Turkish President Erdogan in his role as a potential disruptor to stability in the Middle East. Last week’s violent action in Turkey’s stock and currency markets is just one element of the instability for which Erdogan can be held responsible.

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Notes From Underground: In Light of Declining Volume and Volatility … A Repost

August 7, 2018

The markets remain locked into the latest tweet from either politicians or CEOs. Whether it’s about tariffs or taking a company private, the Twittersphere has the ability to move markets for a nanosecond. Regardless of the algos and the continued march of passive investing NOTES FROM UNDERGROUND believes that Hyman Minsky has entered the room. A Minsky moment occurs when complacency leads to increased risk-taking while using increasing leverage. It is not market valuations that disrupts markets but rather the amount of debt that needs to be serviced. Can future cash flows ensure that the vast amount of debt can be managed? Leverage is a great aphrodisiac but if priapism results the exit strategy can elicit great pain. The markets are built on record debt.

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Notes From Underground: Chairman Powell, Ask the Wizard for Some Courage

August 1, 2018

The FOMC issued a very bland statement on Wednesday after its two-day meeting. Why did they bother convening for two days to deliver a policy statement that they phoned in last month. In my opinion, Jerome Powell missed a perfect opportunity to flex the FED‘s independent muscles by NOT RAISING RATES. The recent GDP data, inflation measures and robust jobs market provided ample evidence that the market is in need of another interest rate hike.

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