Category Archives: Investing

When Do Governments Steal – Ahem – NATIONALIZE – Retirement Accounts? By Aden Tate

Posted on April 8, 2022 | Leave a comment

Don’t think it can’t happen here. From Aden Tate at theorganicprepper.com:

As the American debt reaches record levels on a daily basis, currently being in the trillions of dollars and literally impossible for America to ever pay off, there is a very juicy nest egg that politicians are going to begin to eye at some point: retirement accounts.

retirement accounts

By nationalizing retirement accounts, a sudden influx of cash would appear in DC’s coffers, helping to make the country look better on paper and potentially last just a little bit longer.

You may think that the nationalization of retirement accounts would never happen here in America, but there have been a lot of things that have happened over the last few years that we never believed could happen on American soil.

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Posted in Crime, Debt, Economy, Government, Investing, Morality, Pensions, Politics, Propaganda

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What is the Strike Price of the Powell Put? by MN Gordon

Posted on March 18, 2022 | Leave a comment

The level of the stock indexes may be far below where there are now for the Federal Reserve floods the system with liquidity, because past such infusions are already fueling raging price increases. From MN Gordon at economicprism.com:

The Federal Reserve, through a multi-decade series of shady practices, finds itself in a very disagreeable place.  Policies of extreme market intervention have positioned the economy and financial markets for an epic bust.

Price inflation.  Unemployment.  Interest rates.  Stock market valuations.

These metrics are presently situated in such a way that the “Powell put” will be impossible to successfully execute for the foreseeable future.

Price inflation is at a 40 year high.  The unemployment rate is 3.8 percent, which is near its low.  The 10-Year Treasury note is yielding 2.15 percent.  While this key interest rate is certainly trending higher, it’s still near a historical low.

And for all the wild price swings and gnashing of teeth over the last two months, the S&P 500 has hardly slipped.  In fact, as of market close on Thursday March 17 of 4,411, the S&P 500 is down only 7.83 percent from its all-time record close of 4,786 reached on January 3.  It still has another 12.17 percent to fall before reaching official bear market territory.

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Credit Has Cracked, And Now The CLO Defaults Begin, by Tyler Durden

Posted on March 15, 2022 | Leave a comment

We’ve seen this movie before, 2007-2009. From Tyler Durden at zerohedge.com:

Last Friday we reported that credit is “cracking”, quoting from the ominous words of BofA strategist Michael Hartnett who chose to describe the bond markets currently, and as we noted, “it is a very ugly picture indeed – for both price… and flows.”

Since then, credit has only gone from bad to worse, and amid Monday’s rout, junk bonds (HYG) finally took out the psychological level of 80, a level last hit during the depths of the covid crash (just before the Fed stepped in and started buying bonds).

But while the collapse in junk is ominous, the first real casualties in credit took place in Europe, where we just observed the first CLO defaults this year, which as Bloomberg’s Tatiana Darie says, echoing out earlier observations, are “adding to signs of stress in junk-rated credit markets, which remain frozen, and could further spook investors already concerned about the worsening economic outlook.”

What happened? Three issuers across CLO portfolios were classified as defaulted in 2022 so far, according to Deutsche Bank. That compares to a total of six for the entire year in 2021, and 39 in 2020, the bank’s data show.

To be sure, while the overall exposure to the CLO asset class is small, at less than 0.03%, and one of the three issuers is based in the U.S., but half way through last year’s count in less than three months, and before any real impact from Ukraine’s war is seen, it undermines the bullish case for CLOs – which are critical to support demand for the leveraged loan market – underpinned by ultra-low defaults and benign forecasts going forward. And yes, it may come as a shock to some but rates in the US are still at zero.

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Posted in Banking, Business, Collapse, Debt, Financial markets, Investing

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Russia’s Invasion Of Ukraine Will Benefit China, by Gregory R. Copley

Posted on March 11, 2022 | Leave a comment

Here’s an unusual assessment of the beneficiaries of the Ukraine-Russian war from Gregory R. Copley at oilprice.com:

  • China has, in recent years, become increasingly isolated on the global stage and was considered a major foreign policy concern for the United States and its allies.
  • Russia’s invasion of Ukraine has not only reignited geopolitical tensions in Europe but has also pushed Russia towards China and ensured the entrenchment of a new Eurasian bloc.
  • China will be watching the development of Russia’s invasion closely, searching for parallels and lessons for its potential invasion of Taiwan.

Russia’s war with Ukraine has, for the time being, saved the Communist Party of China (CPC) and therefore the People’s Republic of China (PRC).

The isolation of Russia as part of the US-led global information warfare campaign has completed the process of driving Russia “back into the arms of Beijing”. This was occurring at a time when the economy of the PRC was imploding and the CPC, under General-Secretary Xi Jinping, was attempting to retain global power while essentially ring-fencing its economy from outside influence.

The situation does not guarantee the PRC’s revival as a wealthy power, but, even though it now becomes more dependent on Russia, it does at least allow the Communist Party of China to survive.

The PRC, as the world’s largest importer of food and energy, and now with diminishing foreign currency reserves, sees that Russia has nowhere else to go except to elevate the PRC to the position of Moscow’s most important trading and security partner.

And because this is literally an issue that could save a declining PRC, Beijing’s assessment of the ongoing conflict between Russia and the West over Ukraine has to be along far more pragmatic lines than Western assessments, which tend to be either based around irrational fear or euphoric optimism.

General Secretary Xi and his team are, as a result, evaluating ongoing lessons from the current Russian military conflict against Ukraine, and the new phase of the Russian strategic war with the US. Their assessments cannot follow the unrealistic views being promulgated by Western analysts.

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Posted in Collapse, demographics, Economics, Economy, Energy, Geopolitics, Governments, Investing, Military, War

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Is Your Wealth Durable? By MN Gordon

Posted on March 11, 2022 | Leave a comment

If you’re banking on pieces of paper and computer entries for your kids college educations or your own retirement, you might want to reconsider. From MN Gordon at economicprism.com:

“Money is not the definition of wealth.”

– Unknown

America’s Oldest Family Farm

John Tuttle arrived in the New World from England in 1632.  He was not empty handed.

He had a land grant from King Charles II.  It was for a small, 20 acre plot of land located between the tidal waters of the Bellamy and Piscataqua rivers, in what became Dover, New Hampshire.  There, the Tuttle family farm expanded and prospered for over three centuries.

Along the way, the Tuttle’s withstood many tests.  Revolutionary and civil wars, the industrial revolution, economic depressions, financial panics, relentless competition, plagues, droughts, government encroachment, and countless other assaults to prosperity.

For a business to survive nearly 380 years in the same industry, with the same family owners, is a remarkable achievement.

Started in 1632, Tuttle Farm became America’s oldest continuously operated family farm, passed down across 11 generations of Tuttles from father to son.  What was their secret?

The Tuttle family, from its beginning in the New World, chose a productive path.  The second Tuttle, also John, born in 1646, owned a sawmill, had an ownership interest in several sailing vessels, and served for a time as judge of an early colonial court.  All this was in addition to his efforts running the family farm.

Yet the Tuttle’s success wasn’t without setbacks.  The third generation, also John, was the casualty of an Indian attack at a sawmill on the Upper Falls in 1712.

Still the family continued to prosper.  According to local legend, Tuttle maple syrup was purchased by Abraham Lincoln.

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Posted in Investing, Money, Morality, Philosophy

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Stocks in Germany, the UK, France, Italy, and Spain Plunge Below Year 2000 Levels: Buy-and-Hold Horror Shows, by Wolf Richter

Posted on March 6, 2022 | Leave a comment

If you bought stocks in the above countries in 2000 and still own them, you haven’t made any money. From Wolf Richter at wolfstreet.com:

Food for thought in light of the biggest stock market bubble in the US ever.

Major European stock indices plunged below their bubble highs from over two decades ago. This is not to say that they plunged that much this week, but that they had finally risen past their prior bubble highs from over two decades ago, powered by money printing, and then they plunged.

German stocks. The most widely cited German stock market index, the DAX, is a total return index that includes dividends and is therefore not comparable to a price index such as the S&P 500 Index, which does not include dividends. But the less-often cited DAX Kursindex (DAXK) is a price index, and does not include dividends, and is comparable to the S&P 500 Index and most other major stock indices. So that’s what we’ll use here.

The DAXK plunged by 4.4% on Friday, and by 10.1% for the week, to 5,517. Since the all-time closing record of 6,873 on January 5, 2021, it plunged 19.7%. But wait… that all-time closing high was up only 10% from the bubble high in March 2000 – yup, that bubble that imploded 22 years ago. And on Friday, the index closed 11% below the bubble high of March 2000. Note the gigantic volatility investors went through over these 22 years to end up below where they’d started.

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Who Bought the $6.5 Trillion in Treasuries Piled on the Incredibly Spiking US Debt in 22 Months? Who Holds the $30 Trillion? By Wolf Richter

Posted on February 18, 2022 | Leave a comment

The banks and the Federal Reserve have been absorbing Treasuries, and virtually guaranteed losses. From Wolf Richter at wolfstreet.com:

The question is particularly hot because Treasuries are now ugly instruments with the worst punishment yields ever.

In face of the incredibly spiking US gross national debt that just hit $30 trillion after having spiked by a mind-boggling $6.5 trillion since March 2020, the steamy-hot question is this: Who the heck is buying and holding all these Treasury securities?

The question is particularly hot because these are very unattractive instruments: Yields are still well below 1% for most short-term Treasury bills, and even the 10-year Treasury maturity yields only around 2%, while CPI inflation has blasted off and hit 7.5%, creating the worst punishment yields ever. To top it off, the most reckless Fed ever is still repressing interest rates and is still, though at a much slower pace, printing money.

The whole thing is a tragic clown-show, and yet every single one of the Treasury securities was bought and is held by some entity. Who are they? This is my quarterly update on who is holding this debt, and it’s an increasingly important question for increasingly iffy times.

Foreign Creditors of the US government.

Foreign holders of Treasuries: $7.74 trillion, a record, up by $790 billion (+11%) since March 2020, and up 9.5% year-over-year, according to the Treasury Department’s Treasury International Capital (TIC) data.

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Posted in Banking, Debt, Financial markets, Government, Investing

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The Zombification of the Economy, by Schiffgold

Posted on February 16, 2022 | Leave a comment

Too much debt enervates and eventually destroys an economy. From Schiffgold at schiffgold.com:

Another hotter than expected CPI print in January put even more pressure on the Federal Reserve to do something about inflation. Suddenly, there is talk of a 50 basis point interest rate hike at the next FOMC meeting.

But “doing something” is is easier said than done, particularly in this zombie economy.

The Fed has gotten itself into a tight spot. Raising rates will expose another major economic problem that lurks just under the surface.

The world is buried in debt.

Economist Daniel Fernández Méndez described the 21st century as the “decade of debt.”

And if things continue the way they are, it could well be called the century of the great debt default.”

We’ve talked a lot about the massive levels of debt piled up by the federal government during the pandemic. But that’s just the tip of the iceberg. In 2021, US consumer debt grew at the fastest pace in five years. And then we have corporate debt and the proliferation of “zombie companies.”

Could this lead to a “Minsky Moment” — the point at which it becomes impossible for debtors to pay off their debts?

Daniel Fernández Méndez thinks it could.

The following was originally published by the Mises Wire. The opinions expressed are the authors and don’t necessarily reflect those of Peter Schiff or SchiffGold. 

More and more economists and finance specialists are warning of the potential arrival of a new “Minsky moment.” The last time this term was used with such conviction was in 2008 at the onset of the Great Recession. It seems that 2021–22 could have some parallels with the world’s last severe recession.

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Here’s Why This Metal Is Prone to Crisis-Driven Manias… And the Next One Is Coming Soon, by Nick Giambruno

Posted on February 2, 2022 | Leave a comment

Silver may not run up immediately, but it’s a pretty good bet that it will over the next few years. From Nick Giambruno at internationalman.com:

inflation

The media hated them.

Big Business, numerous federal agencies, and politicians of all stripes hated them too.

Tiffany’s, the famous jewelry company, vilified them in a full-page advertisement in The New York Times, calling them “unconscionable.”

The villains everyone loved to hate were the Hunt brothers. They were critics of the fiat money system and advocated hard money based on commodities.

At the time, private ownership of most gold was illegal in the US. So the Hunt brothers turned to the next best thing: silver.

From the late ‘70s to 1980, they stockpiled silver. And unlike other investors who settled their silver trades in cash, the Hunts took physical delivery. This often meant flying the silver to Switzerland for storage.

It squeezed the supply… and helped push up the silver price. It went from around $6 in the late ’70s to over $50 in 1980.

But were the Hunts really the bad guys everyone made them out to be?

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Shares of Online Used-Car Dealers Vroom & Carvana Collapsed as Market Turned its Back on Money-Losing “Disruptors”, by Wolf Richter

Posted on January 30, 2022 | Leave a comment

Fad businesses are biting it, especially the ones that consistently lose money (most of them). From Wolf Richter at wolfstreet.com:

That they lost gobs of money every year didn’t matter until suddenly it did. But now there’s a new challenge heading for them. 

On its first day of trading after its IPO in June 2020, shares of Vroom [VRM], an online-only used-vehicle dealer that has lost piles of money every year, more than doubled from its IPO price of $22 a share, amid enormous hype on Wall Street. It then proceeded to skyrocket to $73.87 by September 1, 2020. And then the hype started to leech out, and on Friday, shares closed at $7.06, down 90.4% from the closing high (price data via YCharts):

Looking at a chart like this gives me the willies because it proves that there is something seriously wrong with how money-losing companies in well-established profitable industries, such as selling used vehicles, are hyped to retail investors and even asset managers as disruptors that are going to change the world, and these disrupters don’t need profits because who cares about profits when you’re changing the world.

And then the Big S hits the fan, after Wall Street banks and the insiders made huge amounts of money. That’s when other folks get cleaned out, having bought into the hype, and some unknowingly by having invested in funds that held these shares. This is now happening with hundreds of companies.

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Posted in Business, Financial markets, Investing

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