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Posts Tagged ‘Jim Grant’

Jim Grant on the New Federal Reserve Governor Nominees; Economic Groupthink

(Video’s back in working order.)

Jim Grant on the New Federal Reserve Governor Nominees; Economic Groupthink

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Organizations, whether it be a club or a profession or a department, too often over time develop a sort of intellectual inertia, a bureaucratic mindset that tends to perpetuate and validate a certain view of the world amongst its members, particularly if they share other elements in background and world view.

This works to its advantage when they are right, and when the scope of the tasks which they must address are limited to largely operational concerns, without significant risk in the classic sense of the term.

But when the situation becomes different, the environment changes, this organizational mindset not only stifles innovation and adaptation, it can literally reach out and strangle it, well beyond its members, using the entrenched power of its tenure. We see this tendency clearly in organizations that have enjoyed long periods of organizational growth under the leadership of strong personalities, such as the FBI under Hoover, and the Federal Reserve under Greenspan.

We can see this same tendency on a micro level in our daily life on chatboards, in clubs, in our company departments, in civic organizations. It is a tribalistic instinct, that urges the adoption of a consensus view, often influenced and promoted by articulate and single minded individuals, which then musters and focuses the energy and vitality of the group in the execution of its mission.

When it is right, it brings success. But when it goes wrong, when it feeds on itself, becomes defensive and inwardly focused, when perpetuation of the group view overtakes all other considerations, when tribal loyalty and sameness is valued over results, it leads to a cult like behaviour, inbred thinking, that may be inimical to the best intentions of the group, and the sort of behavioural anomalies which we have seen in the tragedies of Watergate, the latter stage Hoover FBI, and even Jonestown.

Economics is in the grips of such a period in its development. One of the primary causes of this problem has been the rise of a few well funded think tanks, universities, and of course the Federal Reserve, that have become powerful influencers, and guardians, dogmatisers of the status quo. The petty sniping among the schools notwithstanding, the current debate of stimulus versus austerity serves to show how anemic, how self…
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JIM GRANT SAYS THE FED KNOWS NOTHING

JIM GRANT SAYS THE FED KNOWS NOTHING

Courtesy of The Pragmatic Capitalist 

Oh the ironies!  The man who believes the U.S. has a Greek problem also believes the Fed has no idea what it’s doing….At least he gets part of the argument right.  Unfortunately, the “brightest” and most respected minds in this country have just about no clue how things work in the real world.  Is it any surprise that the economy is a total mess when everyone listens to these “experts”?

Source: Bloomberg TV 


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Jim Grant is Confident QE 2.0 Is Just Around the Corner

Jim Grant Is Confident QE 2.0 Is Just Around The Corner

Courtesy of Tyler Durden

Jim Grant, one of the most respected voices in the financial industry, joins Zero Hedge and others, who see that the only choice the Federal Reserve has now that the temporary and shallow reprieve from the clutches of the deflationary depression is over, is to print more money in the form of another iteration of QE. Whether this will be another $2.5 trillion, like last time, which was the price of an 18 month delay of the inevitable, or a $5 trillion concerted global effort, as Ambrose Evans-Pritchard believes, is irrelevant: the only option the central printers, pardon, bankers, have left is to flood the market with yet more worthless paper (keep an eye out on the doubling in the price of gold the second QE2 is publicly announced, which will also double as the obituary for all fiat paper).

In an interview with Bloomberg TV, Grant says that the first order of business tomorrow when the Fed’s new additions officially join their new groupthink perpetuating employer will be "to try once more to print enough dollars to make something happen in the U.S. economy.” The ever-sarcastic Grant manages to completely skewer Janet Yellen, Steve Diamond and Sarah Bloom Raskin, to ridicule the Fed’s 100% track record of not only focusing on the wrong thing time after time, but getting the response consistently wrong with 100% precision, and also manages to makes fun of the Fed’s credentialed WSJ lackeys, who courtesy of the Fed’s "editorial" control over the reporting process, get a direct line into leakable Fed strategy.

Grant’s thoughts on new Fed additions:

"I think the first order of business will be to try once more to print enough dollars to make something happen in the U.S. economy.”

On San Francisco Fed President Janet Yellen:

“Janet Yellen has had 36 opportunities to vote on monetary policy at the Federal Open Market Committee and she has voted ‘Aye, yes’ 36 times. 36 for 36 times. Now, has the Fed been right 36 consecutive times? No. I think that Janet Yellen is a well credentialed, consensus-hugging economist straight out of the Fed HR department. She is ideal from the point of view of the Fed bureaucracy. She will make not one ripple.”

On MIT economist Steve Diamond and Maryland
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Jim Grant Takes On David Rosenberg And The Bond Bulls, Warns The Fed Chairman: “Watch Your Back Ben Bernanke, Cycles Turn”

Jim Grant Takes On David Rosenberg And The Bond Bulls, Warns The Fed Chairman: "Watch Your Back Ben Bernanke, Cycles Turn"

Courtesy of Tyler Durden

In one of the most erudite, intelligent, and insightful conversations on the Bond bull/bear debate, David Rosenberg and Jim Grant go all out at each other, trading blows in this "Great Debate" which is a must see by all. As we pointed out yesterday, Grant is very bearish on bonds, and in a self-made prospectus has decided to downgrade the US, since the rating agencies, which have long been thoroughly incompetent, corrupt and afraid to disturb the status quo, will not do so until it is too late. Jim’s point is simple: you can’t resolve massive debt with more debt, and says Treasuries, which he calls "certificates of confiscation" are a surefire way to lose one’s money. He points to the record supply of US Treasuries, makes fun of the SEC (who doesn’t), and in a stunning move, cautions the Fed Chairman, whose ongoing dollar debasement, was once considered treason by the US. His conclusion: "watch your back, Ben Bernanke. Cycles turn" could not have come at a more opportune time. As a contrarian, Rosenberg discusses the McKinsey report looking at sovereign debt, and the Reinhart and Rogoff studies on debt default and highlights that there is a major disconnect between theoretical applications of sovereign default models and practice: in essence the US is still deleveraging as private debt is decreasing and public debt is surging but to a slower degree. In essence, David claims, the second largest monthly debt issuance in March of $333 billion is merely a side effect of ongoing deleveraging, which is a leading and/or coincident indicator of deflation: an environment in which the long bond thrives (Japan is a good reference point).

Agree or disagree, the fact that two of the smartest economists in the world can present very persuasive cases for either side indicates precisely the conundrum we are in, and is precisely why the Fed will pretend it is operating in the shadow of a so-called Goldilocks economy, even as it prints record trillions of new debt until one or the other is proven wrong. If, as many expect, Grant ends up being correct, than Bernanke will have gambled and lost the future of the United States.

Some…
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Reflections on “The Last Bear Standing”

Reflections on "The Last Bear Standing"

bearCourtesy of Mish

Bill Bonner is one of my favorite columnists. On Friday he was discussing The Last Bear.

As they say on Wall Street, a rally ends when the last bear gives up. An old friend had been a source of inspiration for tech bears for many years. He suddenly saw the light and gave up in 1999. Shares he had formerly scorned – often dotcoms with no revenue and no business plans – were suddenly added to his own portfolio. This also heralded a big change – the end of the tech bubble. Tech stocks collapsed. Most disappeared. Then, Stephen Roach became vaguely bullish in 2007, after a long period of doubt and misgivings.

Now it is Jim Grant who has changed his mind. A generation of investors has gotten used to Grant’s ‘doom is nigh’ warnings. Now, he says, it’s a boom that is nigh.

What is remarkable about the Grant conversion is that his vision gives off so little heat and light. His WSJ article shillyshallies around; rehearses the history of previous recessions and comes to rest in front of a flickering match: “The deeper the slump, the zippier the recovery.”

But facts are survivors. They will tell whatever tale their interrogators want to hear. As for opinions, after six months of a stock market rally, the once half empty glass has become half full. We predicted it ourselves. But we’ll let Robert Prechter say, ‘I told you so.’ Even before the rally began, Prechter foretold its story:

“Regardless of extent, it should generate feelings of optimism. At its peak, the President’s popularity will be higher, the government will be taking credit for successfully bailing out the economy, the fed will appear to have saved the banking system and investors will be convinced that the bear market is behind us.”

As to Mr. Obama’s popularity, Prechter was wrong. But 4 out of 5 ain’t bad.

turning bullishWhat will happen next, we don’t know. But if we turn bullish on this economy and urge you to buy stocks, it will surely be time to sell them.

Enjoy your weekend,

Bill Bonner
The Daily Reckoning

From Deflation to Inflation

With the above in mind I note with interest Martin Weiss, a prominent deflationist has changed his stance. Please consider From Deflation to Inflation.

Step by step,


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Rosie Debunks Jim Grant Rosyness

In case you missed it, David Rosenberg offered thoughts about James Grant’s seemingly odd switch from his generally bearish positioning to cautiously bullish over the weekend. Here’s what David has to say, courtesy of Tyler at Zero Hedge.

Rosie Debunks Jim Grant Rosyness

Much has been made of Jim Grant’s piece in the WSJ over the weekend in which he implicitly professes his conversion from a bear to a bull. Some have already voiced their argument for why Grant, usually a very in depth analyst of historical and prevailing themes, may have otherwise cut some corners in his explanation of the ongoing seemingly unstoppable 6 month long market move. In his Breakfast with Dave, Rosenberg shares his two cents on why Jim’s evaluation is not quite up to snuff. One hopes that Grant’s Interest Rate Observer subscriptions do not suffer as a result of what could become a bear war (or alternatively, that a subscription "issue" was not one that caused the rather dramatic shift in perception).

IS JIM GRANT THE LATEST TO BE DRINKING THE KOOL-AID?

The Weekend Journal ran with an article by James Grant, which admittedly took us by surprise (he is a true giant in the industry, as an aside) — From Bear to Bull and in the article, he relies mostly on the thought process from two economic think-tanks — Michael Darda from MKM Partners and the folks over at the Economic Cycle Research Institute.

We highly recommend this article for everyone to read to understand the other side of the debate. But we have some major problems with the points being made.

1. Mr. Grant starts off by saying that “as if they really knew, leading economists predict that recovery from our Great Recession will be plodding, gray and jobless.” Well, frankly, it doesn’t really matter what “leading economists” are saying because Mr. Market has already moved to the bullish side of the debate having expanded valuation metrics to a point that is consistent with 4% real GDP growth and a doubling in earnings, to $83 EPS, which even the consensus does not expect to see until we are into 2012. We are more than fully priced as it is for mid-cycle earnings.

2. Nowhere in Mr. Grant’s synopsis do the words “deleveraging” or “credit contraction” show up. Yet, this is the cornerstone of the bearish viewpoint. Attitudes


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You’re All Wrong, There’s No V-Shaped Recovery Coming

Joe, like me, is having a hard time embracing the V-shaped recovery belief. He makes a good point about economics not being either physics or history, and if we’ve seen anything over the last few years, it’s perhaps how wildly the operative economic principles of the day have failed. – Ilene

You’re All Wrong, There’s No V-Shaped Recovery Coming

Courtesy of Joe Weisenthal at Clusterstock

farm depression farming agriculture heartland crops midwestWell, well. It’s suddenly become very hip to believe in a V-shaped recovery, and to slam the pessimists for not knowing their history. As Jim Grant argued yesterday in the Wall Street Journal, the severity of the slump predicts the severity of the recovery — it’s just like physics!

But economics isn’t physics. And don’t worry about not knowing your history, because economics isn’t history either.

Here’s why we’re not in for a v-shaped recovery.

First, the pax economica that preceded the current slump was artificial. Large swaths of the economy had stopped doing anything productive, while the rest of the economy was buoyed by rising home values that allowed for spending on a level that was disconnected from what people were actually bringing in via income. Of course, you know this part of the story, but the key is that this is meaningfully different than the situation heading into previous economic slumps.

The other reason why we’re not in for a "V" is that the economy, even without the credit-collapse, is still in the midst of violent changes in the economy. New technology and new business models are uprooting old businesses (whether it’s media, manufacturing, or commercial real estate), throwing labor and capital into disarray. Ultimately the transition will be good, but in the meantime, displaced workers will face an unusual amount of lag in finding new work, if only because the industries that were they yesterday have gone and disappeared, requiring extensive levels of retraining.

There are other aspects too, such as the size of government and demographics that look increasingly unfavorable.

Curiously, Jim Grant’s admonition to remember history only mentions past slumps in the US. We don’t see the word "Japan" mentioned once in the whole article? But unless the laws of economics are different there than they are here, then we can certainly point to examples of bad busts that weren’t followed by a quick snap back.…
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Jim Grant: Ringing the Bell at the Top?

Jim Grant: Ringing the Bell at the Top?

ringing the bell, Jim GrantCourtesy of Michael Panzner at Financial Armageddon

In the following Wall Street Journal commentary, "From Bear to Bull," a long-time critic of the excesses and wayward policies that brought this country to its knees suggests the outlook for the economy is brighter than many people, especially the pessimists, believe:

James Grant argues the latest gloomy forecasts ignore an important lesson of history: The deeper the slump, the zippier the recovery.

As if they really knew, leading economists predict that recovery from our Great Recession will be plodding, gray and jobless. But they don’t know, and can’t. The future is unfathomable.

Not famously a glass half-full kind of fellow, I am about to propose that the recovery will be a bit of a barn burner. Not that I can really know, either, the future being what it is. However, though I can’t predict, I can guess. No, not "guess." Let us say infer.

The very best investors don’t even try to forecast the future. Rather, they seize such opportunities as the present affords them. Henry Singleton, chief executive officer of Teledyne Inc. from the 1960s through the 1980s, was one of these enlightened opportunists. The best plan, he believed, was no plan. Better to approach an uncertain world with an open mind. "I know a lot of people have very strong and definite plans that they’ve worked out on all kinds of things," Singleton once remarked at a Teledyne annual meeting, "but we’re subject to a tremendous number of outside influences and the vast majority of them cannot be predicted. So my idea is to stay flexible." Then how many influences, outside and inside, must bear on the U.S. economy?

Though we can’t see into the future, we can observe how people are preparing to meet it. Depleted inventories, bloated jobless rolls and rock-bottom interest rates suggest that people are preparing for to meet it from the inside of a bomb shelter.

The Great Recession destroyed confidence as much as it did jobs and wealth. Here was a slump out of central casting. From the peak, inflation-adjusted gross domestic product has fallen by 3.9%. The meek and mild downturns of 1990-91 and 2001 (each, coincidentally, just eight months long, hardly worth the bother), brought losses to the real GDP of just 1.4% and 0.3%, respectively. The


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Zero Hedge

Japanese Bond Yields Spike Most In 2 Years On Return From Golden Week Holiday

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As Japanese markets re-open after Golden Week, the bond market is extremely active (which in itself is unusual given its total lack of liquidity). Playing catch up to the rest of the world's igniting bond markets, 10Y JGB yields are up over 6bps (and even the 20Y is trading). The last few days have seen yields spike from 28bps to 43bps - a colossal move only seen before in May 2013 (after the initial euphoria of QQE).

Biggest absolute yield swing in bonds since May 2013...

Which drags yields to 2-month highs...

...



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Phil's Favorites

The Greatest Trick the Devil Ever Pulled

The Greatest Trick the Devil Ever Pulled

Courtesy of Joshua M Brown

…was convincing investors that volatility and risk were the same thing.

This idea that risk cannot truly be measured by looking at volatility (as measured by standard deviation) is well-trod territory in the financial blogosphere so I won’t go into it at length again.

But I do feel as though more than half of all the terrible products, funds and newsletters available to investors make their living by confusing (conflating?) risk and volatility. It’s how Wall Street makes a lot of its money on the wealth management side (upside without fluctuation!) and its why the hedge fund industry is a $3 trillion behemoth (we&rsquo...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

Is the Fed losing control of interest rates?

Courtesy of Chris Kimble.

Is the Fed losing control over interest rates? I’ve heard a rumor that the Fed is in control of interest rates.

If this is true, is Janet raising rates and not telling anyone? The table below looks at the performance of the yields on the 10 & 30-year notes and TLT over the past 90-days. As you can see yields are up nearly 20% in 90 days!

CLICK ON CHART TO ENLARGE

If Janet and the Fed aren’t raising rates right now, is it possible that “Billions of Free Thinking People” are causing rates to move higher?

The chart below takes a look a...



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Insider Scoop

Goldman Sachs Initiates Titan International With Neutral

Courtesy of Benzinga.

Related TWI Earnings Scheduled For February 26, 2015 Top Performing Industries For February 3, 2015 Can the Rally in Titan International (TWI) Shares Continue? - Tale of the Tape (Zacks)

Analysts at Goldman Sachs initiated coverage on Titan International Inc (NYSE: TWI) with a Neutral rating.

The target price for Titan International is set to $...



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Chart School

S&P 500 Snapshot: Selloff Day Two

Courtesy of Doug Short.

Before the market opened, the ADP Employment Report for April disappointed expectations. The S&P 500 opened higher and rose to its 0.43% intraday high about four minutes later. It then zigzagged a bit before settling into a steady continuation of yesterday's downtrend to its -1.03% intraday low. The index rallied during the final hour to a more modest loss of 0.45%. Of particular interest was Federal Reserve Chair Janet Yellen's comment that "equity valuations at this point generally are quite high." She made this remark at a DC conference sponsored by Institute for New Economic Thinking (more here).

Is the equity market overvalued? See our latest overview ...



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Sabrient

Sector Detector: Bulls hold the line as market coils in anticipation of a bigger move

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

After posting record highs the previous week, stocks closed last week slightly down overall. But the major indexes held their psychological levels, including Dow at 18,000, S&P 500 at 2100, NASDAQ at 5,000, and Russell 2000 at 1200. Although the bulls continue to find reliable support levels nearby, strong overhead technical resistance and neutral-to-defensive rankings in our SectorCast fundamentals-based quant model continue to suggest that a major upside breakout is not quite imminent, although a selloff doesn’t seem to be in the cards, either. Overall, stocks appear to be coiling ever tighter while awaiting...



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OpTrader

Swing trading portfolio - week of May 3rd, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Digital Currencies

Why Bitcoin's male domination will be its downfall

Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.

More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved. 

Why Bitcoin's male domination will be its downfall 

By Felix Salmon

Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Pharmboy

2015 - Biotech Fever

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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