Before we embark on more pertinent market viewpoints it is my pleasure to offer up two podcasts I recorded last week with the Financial Repression Authority’s Richard Bonugli. The first is with Lacy Hunt of the Hoisington Letter. The second is what I refer to as the four horsemen of the apocalypse: Jim Bianco, Peter Boockvar and David Bernstein. We discuss many areas relevant to the past four weeks.
Enjoy the podcasts and please take some time to engage with thoughtful responses for investment possibilities. The world is asunder but opportunities exist all around. It is a classic case of 2+2=5 as the financial system is very unbalanced as volatility increases all around.
Tags: 2+2=5, Coronavirus, podcasts
March 1, 2020 at 6:32 pm |
At 7 PM EST (Sunday) the S&P which was down 60 ish was “only” down 30. On the close Friday the Transports closed below the 5/31/19 closing low of 9,783.03. But the Industrials refused to close below 24,815.04 ( the closing low of 5/31/19). This non confirmation should be strong enough to give us some upside. If not, Katie bar the doors (in time)
During last week the high of gold above $1,680 was at the top of a 14 month ascending channel. The black boxes, the mining houses and yes the PPT saw this and sold. At 7 PM EST gold was 1580 in the middle of the ascending channel. As a very minimum gold should re-test last weeks low of $1,562.50 (in time).
Thanks to Yra and our crew for their continue work!
March 1, 2020 at 8:16 pm |
That was a terrific discussion. The street is looking for a mid-week coordinated central bank ease Wednesday. The brain trust seems to have a consensus for a big rally to nowhere. The trade will continue to be fast and opportunistic. Yra thanks for all you do!
March 2, 2020 at 1:46 pm |
Yra,
Excellent discussion with Lacy Hunt. You two have reminded us all that there is more value in the historical lessons of Hume, Schumpeter, and Kindleberger than our “leaders” could ever comprehend.
March 2, 2020 at 10:53 pm |
As Jim Grant brilliantly said “ money is distilled work “… clearly what we all have been witness to is the transition of Keynesian Economics ( deficit spending to stimulate demand) born in the 1930s depression and the end of WWII into a distorted binge of deficit financed consumption. Debt creation to fund true enterprise that generates a return to carry and pay off the debt can create real wealth. Today we practice nothing of the sort. We are binging on debt creation to fund pure consumption and as Ira and Dr Hunt concede , we are close to a historic watershed termination of that process. Simply put the world is saturated with debt and there is no longer any productive way to extinguish it. Consumption is now the primary reason debt is perpetuated and expanded. Wealth creation is only an afterthought. Central Banks are now merely a tool being used to continue the process…. they exist now simply to be the last resort source of funding for consumptive debt creation
March 3, 2020 at 12:18 am |
Great post Fred. The monumental crash that is about to take place will be blamed on Corona and maybe even Mike Pence. However, this is really just the sad end to a failed financial experiment.
March 3, 2020 at 11:07 am |
My old mentor Hyman Minsky in his financial instability hypothesis segregated debt into three types, hedge, speculative, and ponzi.
Generally, hedge debt is “good debt” as it invests in assets that produce a return sufficient to not only pay the interest, but also repay the principal. Spec debt moves out on the risk axis where cash flow is only sufficient to pay the interest, the principal needs to be refinanced (extend and pretend). Ponzi debt goes to finance the belief that the asset value will rise enough to be able to be sold at a sufficiently high price to repay the principal, the interest, and leave a profit.
Fred and Trader B now remind us of the folly of borrowing to finance consumption. I offer the term “existential debt” to add to my mentor’s three classifications.
March 10, 2020 at 6:29 am |
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