Posts Tagged ‘Chris Martenson’

Bill Fleckenstein: The Race To the Bottom Will Be Won By the Dollar

Courtesy of Chris Martenson

Bill Fleckenstein"This printing money is going to lead to huge trouble. It’s going to lead to higher interest rates. It’s going to lead to more inflation, and at some point there is going to be a train wreck in the currency and the bond market."

Market commentator and money manager Bill Fleckenstein sat down for a recent interview with ChrisMartenson.com and excoriated the Fed and the monetary policy it’s pursuing. He and Chris discuss the factors that enabled Bill to be one of the first to accurately identify and warn of the housing and credit bubbles – and how history is now repeating itself via the profligate printing of US dollars. The interview covers a wide range of topics meaningful to the investor trying to make sense of where things are headed from here – including central banking culture, bubble psychology, high-frequency trading, inflation/deflation, and the true relative value of the dollar vs the Euro.

Click the play button below to listen to Chris’ interview with Bill Fleckenstein:

In this podcast, Bill sheds light on why: 

  • The culture of the Fed reinforces a belief in its infallibility. This blinds it to the fact that its interventions cause market players to adopt irrational behavior leading to misallocations of capital that eventually need to be corrected by the system (e.g., busts). 
  • Correlation between asset classes is the highest it’s been in 60 years. This is a result of the Fed flooding the market with liquidity. It makes it very hard for investors to be anything besides speculators.
  • The SEC has been asleep at the switch for the past 15 years, leaving the system vulnerable to exploitation – of which HFT programs are just the latest example.
  • A funding crisis looks inevitable: At some point the bond market or the currency market will revolt, resulting in a weak dollar and increasing bond rates – despite whatever the Fed wants.
  • It’s perverse for the US to be rewarded for using a printing press indiscriminately without making any fiscal changes, while Europe is painfully adopting austerity and getting penalized.

In Part 2: Outlook for 2011 (for enrolled ChrisMartenson.com members - click here to enroll), Bill gets specific about what he predicts will happen in the bond and currency markets, as well as his specific outlook for 2011.


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Chris Martenson Podcast On Surviving And Resilience

Chris Martenson Podcast On Surviving And Resilience

Introduced by Tyler Durden at Zero Hedge

Chris Martenson is one of the few visionaries who has long been warning about the disastrous effects of out of control spending and debt monetization (as well as unmasking the shell game the government has been engaging in for the past two years as it attempts to sequester foreign MBS holdings and exchange them for Treasury securities by tracking the TIC-custody account divergence), and his blog should be required reading for all interested in the intricacies of Fed intervention in rates. Today, Martenson has a post which, however, touches on something completely different: survival.

In his words: "I was interviewed by Jack Spirko of The Survival Podcast. We had a meaty exploration of the core tenets of the Three Es (Economy, Energy, Environment) in light of recent developments, then delved pretty deeply into strategies for building personal resilience, which is the main focus of Jack’s regular podcasts. I enjoyed myself and think the discussion is worth listening to." Yet this is not a bunker survivalist manifesto: "A note on TSP: while it has a "survival" theme, it’s not "survivalist" in its approach. Jack is focused on helping his audience learn how to increase their degree of personal preparation – much in the same way we’re focused on it here at CM.com. His mantra is "Helping you live the life you want, if times get tough, or even if they don’t." Like me, he’s interested in guiding people to take steps that will improve their quality of life no matter how things unfold in the future. Speaking with him before and during our interview, I found him to be thoughtful, measured, and passionate about making a positive difference."

Martenson’s podcast interview is now posted on TSP. Click here to listen to it.

Additionally, for those who are interested in delving deeper in the topics presented by Martenson, Chris has posted links to his ongoing ‘What Should I Do? The Basics of Resilience’ series which offers more detailed guidance than provided in the podcast:


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The Shell Game Continues…

The Shell Game Continues… 

Scallop shells lined up on desk, one shell lifted to reveal bean

Courtesy of Chris Martenson

Executive Summary

  • Record-breaking Treasury auctions continue to go off without a hitch, thanks to massive foreign participation.
  • However, the amounts reported to be bought in the auction results do not match the Custody Account or TIC report amounts.
  • The Fed is allegedly all done buying MBS and Treasury paper.  This cuts off an important source of liquidity for the Treasury, commodity, and stock markets.  
  • How will these markets respond to a liquidity drought?

The end of March is upon us.  I need to take a moment to re-analyze the data to see what might happen now that the stimulus money has worn off, and, more importantly, now that the Federal Reserve’s massive Mortgage Backed Security (MBS) purchase program is over.

This is important for a variety of reasons.  The first is that the enormous flood of liquidity that the Federal Reserve injected into the financial system has found its way into the Treasury market, supporting government borrowing and also lowering interest rates for the housing market.  How will the Treasury market respond once the liquidity spigot is turned off? 

The second is that this flood of liquidity has supported all sorts of other asset markets along the way, including the stock and commodity markets.  What will happen to these when the flood stops?  Will the base economy have recovered enough that the financial markets can operate on their own?  Will stocks falter after an amazing run?  Or will the whole thing shudder to a halt for a double-dip recession?

Back in August of 2009, I wrote that the Federal Reserve was basically just directly monetizing US government debt by buying recent Treasury issuances as well as Mortgage Backed Securities (MBS).

Here’s the conclusion from that report: 

The Federal Reserve has effectively been monetizing far more US government debt than has openly been revealed, by cleverly enabling foreign central banks to swap their agency debt for Treasury debt.  This is not a sign of strength and reveals a pattern of trading temporary relief for future difficulties.

This is very nearly the same path that Zimbabwe took, resulting in the complete abandonment of the Zimbabwe dollar as a unit of currency.  The difference is in the complexity of the game being played, not the substance of the actions themselves.

When the full scope of this program is more widely recognized,


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Austerity or Money Printing?

Austerity or Money Printing?

Courtesy of Chris Martenson

New 1996 Currency Security Upgrade

I was asked to write a once-a-month Market Observation for Financial Sense.  Here’s the first one (posted today, Feb 10): 

From time to time, I think it’s a good idea to stop squinting at the short-term market wiggles and pull our heads back for a wide-angle view.  Now would be a good time, so that’s what we’re going to do. For the record, I also happen to believe that close-up market analysis loses some of its potency during times of immense official intervention.  As with any subsidy program, prices become distorted and often fail to tell the real story, which is absolutely true with respect to interest rates and, by extension, the risk premium for stocks.

Back to the story.  Where the current crisis has been described using millions of words in thousands of articles packed with arcane acronyms (such as TALF, CDO, and CMBS), perplexing regulatory lapses and with a degree of complexity that dwarfs the Apollo moon mission, I can explain why the whole thing happened using just three words.

Too.  Much.  Debt.

Total credit market debt in the US doubled between 2000 and 2008, while incomes stagnated and jobs were not created.

When your debts are skyrocketing, but your means of servicing those debts are not, you are on a path to a credit crisis.  And that’s exactly what we got.

That’s all there is to it, and we’d have a better shot of crafting an enduring recovery if we better understood the difference between causes and symptoms.  Too much debt was the cause; virtually everything else was either a symptom or a contributory factor.  The main contributory factor was Alan Greenspan’s monkeying around with interest rates between 2002 and 2004 to create ultra-cheap money to fight the effects of his prior monetary and regulatory mistakes.

Which entirely explains why I am so dismissive of world efforts to stoke an economic recovery by deploying even cheaper money and even more debt.  As earnest as these efforts are, they spring from the very same flawed thinking and practices that got us into the mess in the first place.  Plus, they’ve never worked before.

I’ve analyzed this situation nearly to death, and I arrive at this one very simple conclusion:  The US is insolvent (and so are many other governments around the world).

We all know the…
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Big Ideas at the Commonwealth Club

Chris Martenson – who is he and what is he thinking?

Big Ideas at the Commonwealth Club (Transcript)

Courtesy of Chris Martenson

Chris MartensonLast night (Tuesday January 26th, 2010) I gave a talk at the Commonwealth Club in San Francisco to a sold-out audience. The crowd was excellent and I was thrilled to have the chance to deliver our message at this venue.

I say ‘our message’ because so many of you helped to shape the talk and, most importantly, practically forbade me from doing anything but delivering a no-holds-barred message. So that’s what I did.

Here’s a couple of observations. Five years ago I was delivering a version of this message in the basement community room in a local bank in Brattleboro VT to very small audiences. Yesterday, a half hour before the talk began there were ~30 people waiting in a side room for a small chance at one standby ticket.

Five years ago the audiences were all ‘of an age’ and now they include many more younger people and represent a much broader cross section of society, beliefs, professions and income levels.

My impression is that the tide is shifting, powerfully, and yesterday’s response proved to me that ideas matter, that people care, and that getting our collective act together is a rapidly ascending priority for a growing group of people.  Whoever says that there’s no interest anymore in big ideas is flat-out wrong. 

So thank you to everyone that came and, if you couldn’t make it in, I’m sorry and I hope that we get a chance to meet soon elsewhere. If you can make it to the Sonora event, tomorrow night (Thursday, 6-9:30) I’d love to see you there.

Below is the speech I gave (not an exact transcript, but very close).


Thank you for that kind introduction.

I am pleased and excited to have this opportunity to speak to you. I want to thank the commonwealth club and its members for making this talk possible.

I want everyone here to know that I thought long and hard about exactly how to say what I am going to say tonight. We are going to be discussing really BIG IDEAS, and, truthfully, I struggled with how much to say.

My final decision was to trust the intellect and instincts of this crowd and be as clear, clean, and direct as I can..…
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Market Recap – Ridiculous Productivity

Chris comments on the strange activity of the markets and the stranger near perfect trading record of Goldman Sachs. – Ilene

Market Recap – Ridiculous Productivity

Courtesy of Chris Martenson
[Nov. 6]

After digging around and sifting through the things both said and not said, I have come to the conclusion that what we are seeing are the likely effects of a rescue operation.

By this I mean a large injection of stabilizing cash to one or more parties, possibly related to the recent large bankruptcies.  Two of my friends, who have been actively trading for more than 20 years between them, threw in the towel this week, as their patterns and methods are no longer working.

Their conclusion is the same as mine; this market is not trading like it used to.  It is trading chaotically, counterintuitively, and as if there’s some sort of distorting influence involved.

First, we might just wonder if this isn’t the impact of a rogue firm with entirely too much power moving the market for its own benefit.

When we examine the results of Goldman’s latest quarterly trading results, obviously we have a strong suspect.

Goldman Benefits from Trading Bonanza

Traders at Goldman Sachs recorded only one daily loss in the third quarter, highlighting the trading bonanza sweeping Wall Street as central banks continue to pump billions of dollars into the financial system.

The performance – revealed on Wednesday in a regulatory filing – compares with two losing trading days in the previous quarter and confirms that the authorities’ drive to revive markets after the crisis is yielding huge windfalls for some banks.

Before the crisis, banks regularly recorded trading losses on several days in a quarter.

Goldman made more than $100m in profits on 36 of the 65 days in the three months to September and recorded more than $50m in profit on more than eight out of 10 trading days, the filing shows.

Only one day with trading losses out of the entire quarter?  A 98.5% win-rate?  Sorry folks, this is so far beyond the realm of statistically possible that we must search for other reasons.  There can be no doubt that Goldman is enjoying an advantage not shared by the rest of the market.

Goldman is a company largely housed in a single glass building in Manhattan, vacuuming up $100 million…
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Insatiable Demand For US Debt, or Something Else?

Courtesy of Chris Martenson

Chris Martenson

Recently the Fed reiterated that their $300 billion program of buying long-dated Treasury Bonds would end on schedule, meaning as soon as it hit $300 billion.  Well, that’s been achieved so according to recent Fed statements, the program is over.

This is a critical development because the ability of the US government to continue to fund its massive deficits (at favorable rates) requires that each Treasury Auction be "well bid."  The Fed has been a major participant, and so we might reasonably wonder who will fill the Fed’s shoes.

This is critical because the US government continues to float weekly auctions of Treasuries in quantities that just a few short years ago would have been unthinkable.

Exhibit A:  Next week’s schedule:

Monday (Oct 5), 10 year TIPS: $7 billion

Tuesday (Oct 6), 3-Year notes: $39 billion

Wednesday (Oct 7), 10-Year notes: $20 billion

Thursday (Oct 8), 30-Year Bonds: $12 billion

That’s $78 billion dollars over the course of just four days.

While not record-breaking compared to amounts offered (and snapped up) in early 2009, for perspective $78 billion is equivalent to the entire yearly economic output of Bangladesh, a nation of some 160 million souls. Let’s be honest, $78 billion is a lot of money, it really is, although I will understand these days you’ve become numb to such staggeringly large numbers.  I know I have.

If we go to the Federal Reserve website we can see that over the course of 28 weeks the Federal Reserve has already accumulated slightly more than $300 billion in its Long-Term Treasury Purchase Program:

(Source)

So according to its recent statements the Fed is all done buying long-dated Treasuries. I say ‘apparently’ because the Federal Reserve website just announced its next raft of Long-Dated Treasury Purchases.

(Source

I am still baffled as to why the Fed is both showing that it has bought more than $300 billion in Treasuries and has scheduled more purchases.  I assume there’s some sort of clever distinction that excludes some purchases (TIPS perhaps?) from the "official total" of the Long-Term Treasury Purchase Program. 

It’s either that or the Fed (as predicted here long ago) is going to continue buying Treasuries and other US paper assets in whatever amounts


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A Stimulating Train Wreck

stimulating train wreckOne of my favorite outfits is Sprott Asset Management, located in Toronto Canada, because their analyses tend to be quite data-rich and "reality-based" as well.

In this excellent, short-and-sweet report, the case is made that a 3.5% boost to GDP from government stimulus spending alone will hit in the third quarter of 2009.

This means that whatever reading is turned in, you should mentally subtract 3.5% from it, because "growth" resulting from government deficit spending is not real growth at all, it is merely consumption borrowed from the future.

Are you stimulated yet? We hope you are, because we’ve just witnessed the largest economic stimulus in the history of the world. Never before have so many government dollars been thrown at the economy to prevent a depression. When added together, the combined financial, monetary and fiscal stimuli in the US are more than the cost of the two World Wars and “The New Deal” combined.

Stimulus spending worldwide has taken the form of a combination of tax cuts, transfer payments (free money) and infrastructure investments on roads, schools, railroads etc. In the US, the financial and stimulus contributions have been especially impressive in scale.

According to CNN’s bailout tracker, the various US government departments have committed to stimuli worth $11 trillion dollars and have issued cheques totaling $2.8 trillion dollars thus far in 2009.

Neil Barofsky, the Special Investigator General for the TARP program, has estimated that the total cost to the US taxpayer could be as high as $23 trillion.

The vast majority of this stimulus has been directed at the financial sector – a complete waste of money in our opinion, supporting a segment of the economy that never deserved to be bailed out.

Nonetheless, the US taxpayer has spent massive sums, committed to promises worth even more and may ultimately owe debt in the double-digit trillions when all is said and done. Nice of them to spend so generously, wouldn’t you say?

Although the stimulus has been fantastic for the stock market, it has generated very little benefit for “Main Street”. To make matters worse, the effects of the stimulus packages have already started to wear off.

To explain why, we must mention the American Recovery and Reinvestment


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The Shell Game – How the Federal Reserve is Monetizing Debt

Fascinating!  H/t to Zero Hedge for finding this excellent article by Chris Martenson. (See also Tyler Durden’s "Is The Fed Enabling Foreign Central Banks To Swap Out Their Agency Debt Into Treasuries?")  And welcome to Chris Martenson of ChrisMartenson.com!

The Shell Game – How the Federal Reserve is Monetizing Debt 

Courtesy of Chris Martenson

Executive Summary

  • The Federal Reserve and the federal government are attempting to "plug the gap" caused by a slowdown of private credit/debt creation.
  • Non-US demand for the dollar must remain high, or the dollar will fall.
  • Demand for US assets is in negative territory for 2009
  • The TIC report and Federal Reserve Custody Account are reviewed and compared
  • The Federal Reserve has effectively been monetizing US government debt by cleverly enabling foreign central banks to swap their Agency debt for Treasury debt.
  • The shell game that the Fed is currently playing obscures the fact that money is being printed out of thin air and used to buy US government debt.

The Federal Reserve is monetizing US Treasury debt and is doing so openly, both through its $300 billion commitment to buy Treasuries and by engaging in a sleight of hand maneuver that would make a street hustler from Brooklyn blush. 

This report will wade through some technical details in order to illuminate a complicated issue, but you should take the time to learn about this because it is essential to understanding what the future may hold. 

One of the most important questions of the day concerns how the dollar will fare in the coming months and years. If you are working for a wage, it is essential to know whether you should save or spend that money.  If you have assets to protect, where you place those monies is vitally important and could make the difference between a relatively pleasant future and a difficult one.  If you have any interest at all in where interest rates are headed, you’ll want to understand this story.

There are three major tripwires strung across our landscape, any of which could rather suddenly change the game, if triggered.  One is a sudden rush into material goods and commodities, that might occur if (or when) the truly wealthy ever catch on that paper wealth is a doomed concept.  A second would occur if (or when) the largest


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Phil's Favorites

Are Stock Buybacks Driving Wealth Inequality?

 

Are Stock Buybacks Driving Wealth Inequality?

Courtesy of 

 

 

It’s not lost on me that we’re posting this on a day where the S&P 500 trades above 3100 for the first time…

Ben Hunt joins Michael Batnick and Downtown Josh Brown at The Compound to explain what he’s so angry about – he sees wealth inequality as being driven by hijacked narratives about capitalism, stock buybacks, central banks and the managerial overclass orchestrating it all.

Fo...



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Zero Hedge

The Inevitable Finale Of The Nord Stream 2 Saga

Courtesy of Venand Meliksetian, OilPrice.com

Europe is quickly becoming one of the most important export destinations for gas exporters. Production is decreasing quickly due to political and technical developments. The next few decades are promising for exporters. Nord Stream 2 is arguably one of the most contentious projects currently under development. Denmark recently granted the last necessary permit to start construction activities in its EEZ and analysts now agree that the project’s completion is only a matter of time. In reality, the pipeline’s future was decided long before construction even started due to external factors such as Poland’s decision to d...



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The Technical Traders

What happens To The Global Economy If Oil Collapses Below $40 - Part II

Courtesy of Technical Traders

In the first part of this research article, we shared our ADL predictive modeling research from July 10th, 2019 where we suggested that Oil prices would begin to collapse to levels near, or below, $40 throughout November and December of 2019.  Our ADL modeling system suggests that oil prices may continue lower well into early 2020 where the price is exp...



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Insider Scoop

What Wall Street Thinks Of Google Cache

Courtesy of Benzinga

Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google announced a new partnership with Citigroup Inc (NYSE: C) to launc...



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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

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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