...
Negative interest rates are very worrisome, for various reasons (including the obvious ones). THE most obvious one is that the economy must be pretty damned weak if we are even talking about it at all...
CNBC's Rick Santelli mentioned about noon (US ET) that "things get very weird" when interest rates are very close to zero. A related thought is that raising Fed funds rate 0.25% is a HUGE rate hike, percentage-wise (from 0.12%, say, about where it is now (midpoint of 0.00% - 0.25%, that would be a 200% hike!)
In various branches of math, we see unusual phenomena when ZERO gets plugged into equations.
Interest rates are a fascinating study of their own. Lots of unusual things can and do happen. This guy wrote the book:
The History of Interest Rates, Sidney Homer
* * *
Negative interest rates also create perverse incentives (pay bills fast, delay receiving payments). ZH had an article (where I imagine you got the graph, lyth0s) here:
http://www.zerohedge.com/news/2015-09-18/fed-opens-negative-interest-rate-pandoras-box-what-happens-next
Banning CA$H. Forcing us into electronic money...
Topic: Lyth0s' Economic Troubles Thread (Read 7343 times)
No fed rate hike today (not surprising). Maybe NIRP or QE4 incoming soon. FOMC had one person state possible NIRP, which is a new thought circulating in the FOMC that Yellen is currently downplaying. What is really most interesting though is that US stock markets actually went down a little today (S&P 500 down 0.26%) whereas they normally would have seen a nice gain after investors worries about a rate hike are diminished. Very interesting.
Usually a very good association between Dow Transports and US stock market:
But the Dow Transports has been decreasing and we are now back to August 2014 levels, downhill since the start of 2015:
Graphs in terms of % changes.
But the Dow Transports has been decreasing and we are now back to August 2014 levels, downhill since the start of 2015:
Graphs in terms of % changes.
...
lyth0s
Nice charts showing exuberance (perhaps even irrational?) in the financial markets today. Especially Shanghai, although it looks pretty normal to me
.
To me the markets look high, esp. S&P 500 and China. But, I do read conflicting opinions from writers I trust (that is, whose analyses make sense, not that their predictions are very good), and some say that we could be in for MOAR BULL (markets could still go up for a while) until we get a crash...
For those who have been in the S&P 500 (or otherwise have nice long term gains -- paper gains), it would not hurt at all to sell some, take some profits... I plan to sell some ETFs soon (tickers VB and VO, these track small cap stocks and mid caps) soon.
lyth0s
Nice charts showing exuberance (perhaps even irrational?) in the financial markets today. Especially Shanghai, although it looks pretty normal to me
.To me the markets look high, esp. S&P 500 and China. But, I do read conflicting opinions from writers I trust (that is, whose analyses make sense, not that their predictions are very good), and some say that we could be in for MOAR BULL (markets could still go up for a while) until we get a crash...
For those who have been in the S&P 500 (or otherwise have nice long term gains -- paper gains), it would not hurt at all to sell some, take some profits... I plan to sell some ETFs soon (tickers VB and VO, these track small cap stocks and mid caps) soon.
Here are some interesting graphs.
Shanhai index looks like completely normal growth to me
Nasdaq growth looks slightly more legit than the 2000 tech bubble (not completely vertical)
S&P 500 growth shows how strong the economy is right now
This is basically the roaring 20's all over again, let the good times roll.
Also to note GDP growth has been adjusted to -0.7% from its earlier 0.2%.
http://www.nytimes.com/2015/05/30/business/economy/us-economy-gdp-q1-revision.html?_r=0
Shanhai index looks like completely normal growth to me
Nasdaq growth looks slightly more legit than the 2000 tech bubble (not completely vertical)
S&P 500 growth shows how strong the economy is right now
This is basically the roaring 20's all over again, let the good times roll.
Also to note GDP growth has been adjusted to -0.7% from its earlier 0.2%.
http://www.nytimes.com/2015/05/30/business/economy/us-economy-gdp-q1-revision.html?_r=0
...
Rgr that, 10-4 re Chinese bubble indicator.
* * *
There is so much going on re economic troubles (and more worrying for me: "Economic Totalitarianism") that I am actively fishing for even MOAR practical ideas on financial self-preservation. And I have done a fair amount of "preparing" over the years...
I really hate that our .gov and the ultra-wealthy & ultra-powerful have so corrupted our system.
Have we REALLY gotten to the point where it is now (or will be soon):
-- Gold
-- Bearings (our small business run by my in-laws in Peru, our "Plan B" country)
-- Bitcoin (mix them and hide them well)
-- Bullets
that will preserve us as individuals?
Ugh. As they write at Zero Hedge, the guillotines are getting hungry.......
Rgr that, 10-4 re Chinese bubble indicator.
* * *
There is so much going on re economic troubles (and more worrying for me: "Economic Totalitarianism") that I am actively fishing for even MOAR practical ideas on financial self-preservation. And I have done a fair amount of "preparing" over the years...
I really hate that our .gov and the ultra-wealthy & ultra-powerful have so corrupted our system.
Have we REALLY gotten to the point where it is now (or will be soon):
-- Gold
-- Bearings (our small business run by my in-laws in Peru, our "Plan B" country)
-- Bitcoin (mix them and hide them well)
-- Bullets
that will preserve us as individuals?
Ugh. As they write at Zero Hedge, the guillotines are getting hungry.......
Keep me updated on what other financial self-preservation ideas you have in the future, it's also something I'm interested in.
News for today 5/10/15
Denmark to stop printing cash next year? http://fusion.net/story/131568/the-government-of-denmark-wants-people-to-stop-using-cash/
Sales to price ratio hasn't been this bad since the dot com bubble: http://www.multpl.com/s-p-500-price-to-sales
S&P 500 P/E ratio now past 20 suggesting overpricing of stocks compared to the ideal "15" *: http://www.multpl.com/
*not sure about the 2009 spike
...
Rgr that, 10-4 re Chinese bubble indicator.
* * *
There is so much going on re economic troubles (and more worrying for me: "Economic Totalitarianism") that I am actively fishing for even MOAR practical ideas on financial self-preservation. And I have done a fair amount of "preparing" over the years...
I really hate that our .gov and the ultra-wealthy & ultra-powerful have so corrupted our system.
Have we REALLY gotten to the point where it is now (or will be soon):
-- Gold
-- Bearings (our small business run by my in-laws in Peru, our "Plan B" country)
-- Bitcoin (mix them and hide them well)
-- Bullets
that will preserve us as individuals?
Ugh. As they write at Zero Hedge, the guillotines are getting hungry.......
Rgr that, 10-4 re Chinese bubble indicator.
* * *
There is so much going on re economic troubles (and more worrying for me: "Economic Totalitarianism") that I am actively fishing for even MOAR practical ideas on financial self-preservation. And I have done a fair amount of "preparing" over the years...
I really hate that our .gov and the ultra-wealthy & ultra-powerful have so corrupted our system.
Have we REALLY gotten to the point where it is now (or will be soon):
-- Gold
-- Bearings (our small business run by my in-laws in Peru, our "Plan B" country)
-- Bitcoin (mix them and hide them well)
-- Bullets
that will preserve us as individuals?
Ugh. As they write at Zero Hedge, the guillotines are getting hungry.......
I juxtaposed and edited these images today. Talk about a classic contrarian indicator....
Greek PM meets with Russia tomorrow
http://www.zerohedge.com/news/2015-04-07/russia-offer-greece-new-loans-gas-price-discount
Apparently the 'worry' is that Russia will offer the Greeks billions in loans in return for a trade deal that effectively bypasses current sanctions.
I bet there is some real House of Cards shit going on right about now.
http://www.zerohedge.com/news/2015-04-07/russia-offer-greece-new-loans-gas-price-discount
Apparently the 'worry' is that Russia will offer the Greeks billions in loans in return for a trade deal that effectively bypasses current sanctions.
I bet there is some real House of Cards shit going on right about now.
News 4/5/15
If Anyone Doubts We Are In A Stock Market Bubble, Show Them This
--It's a well written article and has all the important points that I talk about when looking at graphs to show just how huge the bubble we are in.
I highly suggest reading the article for yourself.
...
"War on Cash"
I almost hate to chip in with a remark here, but an idea occurred to me recently. It happened at casino not real far from me. I went to an ATM to withdraw a decent chunk of cash.
Damn! A gambling habit can be expensive! Burns up a lot of cash. And, of course, all ATMs are monitored to some degree (and all casinos have cameras monitoring their areas, so play a few hands of "21", err, DON'T play!).
It's so easy to lose a bunch of cash at casinos! I highly recommend STAYING AWAY from them if you have ANY WORRIES about losing your cash. Almost as bad as the notorious boating accidents are re PMs. GAMBLING ADDICTIONS are serious business, don't get caught up!
"War on Cash"
I almost hate to chip in with a remark here, but an idea occurred to me recently. It happened at casino not real far from me. I went to an ATM to withdraw a decent chunk of cash.
Damn! A gambling habit can be expensive! Burns up a lot of cash. And, of course, all ATMs are monitored to some degree (and all casinos have cameras monitoring their areas, so play a few hands of "21", err, DON'T play!).
It's so easy to lose a bunch of cash at casinos! I highly recommend STAYING AWAY from them if you have ANY WORRIES about losing your cash. Almost as bad as the notorious boating accidents are re PMs. GAMBLING ADDICTIONS are serious business, don't get caught up!
popcorn
Forgot to add this:
Tax on bank deposits in federal budget (Australia)
-- This law hasn't passed yet and the banks of Australia are currently fighting it...but if it passes not only would you have an income tax, but when you deposit that money into the bank they get to hit you with another tax....LOL. Next there will be a tax for every withdrawal, transfer and purchase. tax tax tax tax tax tax it all! If you even look at money you're going to be taxed
Better start getting some bitcoins sooner rather than later!
Tax on bank deposits in federal budget (Australia)
Quote
The federal government is planning a tax on bank deposits at the May budget in a move that will raise about $500 million a year but which bankers warn could be passed on to customers.
The bank tax, as proposed by Labor ahead of the 2013 election, where it lost government, would be a 0.05 per cent levy on every deposit of up to $250,000. It was scheduled to start on January 1, 2016, and budgeted to raise $733 million in its first 18 months of operation.
The bank tax, as proposed by Labor ahead of the 2013 election, where it lost government, would be a 0.05 per cent levy on every deposit of up to $250,000. It was scheduled to start on January 1, 2016, and budgeted to raise $733 million in its first 18 months of operation.
-- This law hasn't passed yet and the banks of Australia are currently fighting it...but if it passes not only would you have an income tax, but when you deposit that money into the bank they get to hit you with another tax....LOL. Next there will be a tax for every withdrawal, transfer and purchase. tax tax tax tax tax tax it all! If you even look at money you're going to be taxed
Better start getting some bitcoins sooner rather than later!
News 3/27/15
How the Fed is 'screwed,' and what happens next
Investors fly away from U.S. stock funds at a rate last seen in 2009
Ramshackle San Francisco home sells for $1.2 million
--Housing bubble anyone?
How the Fed is 'screwed,' and what happens next
Quote
"There will never be a good time to raise rates off zero when you've been there for six years," Peter Boockvar, chief market analyst at The Lindsey Group, told CNBC. "The Fed's screwed, essentially."
"Zero ... is just an unnatural rate six years into a recovery." Boockvar said. "But the problem is that GDP growth hasn't averaged more than 2.5 percent (during the recovery), so they're stuck in this lackluster, mediocre-type growth rate."
--"When CNBC has a Zerohedge article, that's how you know things are fucked up." --Reddit"Zero ... is just an unnatural rate six years into a recovery." Boockvar said. "But the problem is that GDP growth hasn't averaged more than 2.5 percent (during the recovery), so they're stuck in this lackluster, mediocre-type growth rate."
Investors fly away from U.S. stock funds at a rate last seen in 2009
Quote
U.S. stock funds have seen $44 billion in outflows in the year-to-date for their worst start to a year since 2009, said Bank of America Merrill Lynch strategists in a note Thursday. Meanwhile, European equity funds have enjoyed $46.6 billion in inflows so far in 2015, as the table below shows.
The driving forces behind the move away from U.S. stocks include investors having been positioned too bullishly, weaker-than-expected economic data and the dollar’s rally, according to the BAML strategists.
The driving forces behind the move away from U.S. stocks include investors having been positioned too bullishly, weaker-than-expected economic data and the dollar’s rally, according to the BAML strategists.
Ramshackle San Francisco home sells for $1.2 million
--Housing bubble anyone?
News 3/26/15
China stocks may be in serious bubble]China stocks may be in serious bubble
China stocks may be in serious bubble]China stocks may be in serious bubble
Quote
On Wednesday, combined trading on the Shanghai and Shenzhen markets hit 1.24 trillion yuan ($198 billion), the seventh straight session in which turnover surpassed the 1 trillion yuan mark. By comparison, the New York Stock Exchange typically saw $40 billion-$50 billion a day in trading during the first two months of this year.
... “even the cleaning lady” has opened an account to play the market.
In a note this week entitled “The Worrying Sense of Calm in China,” analysts at Bank of America Merrill Lynch got right to the point: “Risk-Love (equity sentiment) in China’s equity market is in euphoria territory. It is time to book some profits.”
“China’s real interest rates remain too high, the currency is too expensive, fiscal policy is tight, and debt deflation is taking hold,” the analysts said.
--At least BofA isn't playing the "its not in a bubble....yet" card. China is an extremely fragile economy right now and if they don't have an influx of businesses (very risky due to government corruption) to fill their ghost towns that they have built as a large part of the GDP, the whole thing can come crashing down. ... “even the cleaning lady” has opened an account to play the market.
In a note this week entitled “The Worrying Sense of Calm in China,” analysts at Bank of America Merrill Lynch got right to the point: “Risk-Love (equity sentiment) in China’s equity market is in euphoria territory. It is time to book some profits.”
“China’s real interest rates remain too high, the currency is too expensive, fiscal policy is tight, and debt deflation is taking hold,” the analysts said.
News 3/25/15
Stocks are overpriced, overleveraged, headed for trouble
--Of course it takes a 1.5-2% drop in the stock market in a single day for people to slightly wake up.
U.S. stocks hammered as fears about quarterly results intensify
--Long quote but it brings out some key points such as Nasdaq: -2.37% loss, S&P500: 1.46% loss, and investors cashing out of stocks that have recently skyrockted. The market valuation for these companies is incredibly high and most P/E ratios are far greater than the safe "15-20" numbers.
This is nothing like the 2000 dot-com bubble
Should we be worried about another dot-com crash?
After all, the Nasdaq Composite is back up to 5,000 — the giddy level last seen during the peak of the big tech bubble back in 2000.
There are frothy signs everywhere — booming real estate in San Francisco, overnight millionaires with messenger bags, and everyone doing deals.
Everyone’s got “the next Uber,” “the next AirBnB.” Kids with peach fuzz on their cheeks say they’re going to reinvent the world — and investors with billions believe them.
Heavens, even Mark Cuban is calling it madness — and saying it’s worse than last time.
FAA Grants Approval to Outdated Amazon Drones
(3:05)
Is the FAA too slow or is drone technology developing too fast? WSJ’s Jack Nicas reports on Amazon’s next steps in getting its drones approved by the FAA. Photo: DPA/Zuma Press.
Maybe he’s right. Cuban’s a smart guy. And maybe this is all going to end very, very nastily, as it did last time.
But if this is a similar mania, it’s hard to see it in the numbers. Here are three reasons why is this is not the same as it was then.
One: This Nasdaq 5,000 is not that Nasdaq 5,000.
...
But by the numbers we do not seem to be back up to those wild, crazy days. Yet.
--The author actually attempts to provide evidence that we are not in another dot com bubble and even though he has some points such as the nasdaq being 5000 now isn't the same USD worth of 5000 in year 2000. However, his entire first paragraph talking about all the mania and crazy high valuations just helps to show how wrong he really is. And of course his argument ends very similar to Goldman Sachs response that we are not in a bubble "yet", so that post-crash they can say "hey we knew it was coming, but we weren't in it when we wrote the article"
Stocks are overpriced, overleveraged, headed for trouble
Quote
Just to provide a little context for the less technically minded market watchers, the CAPE ratio is the ratio of the S&P 500 index to trailing 10-year average earnings. Q-ratio is the market value of nonfinancial corporate equities outstanding divided by net worth, while the Buffett Indicator describes the ratio of corporate-market value to gross national product. All three of those metrics are approaching two standard deviations above historical means, while forward P/E ratios are within historical norms.
--Of course it takes a 1.5-2% drop in the stock market in a single day for people to slightly wake up.
U.S. stocks hammered as fears about quarterly results intensify
Quote
The carnage on the Street marks the third consecutive losing session, with the S&P 500 and Dow industrials recording the sharpest losses in two weeks and occurred as one of the year’s biggest mergers, a deal between Kraft Foods Group Inc. and H.J. Heinz Co., was announced in the morning.
Analysts attributed the selloff to pre-earnings season jitters and investors cashing out of stocks in companies that have seen big run-ups.
The Nasdaq Composite COMP, -2.37% ended the day down 118.21 points, or 2.4%, at 4,876.52.ost 19.06 points, or 0.9%, to 2,072.44. Biotechnology stocks were hit the hardest, with the iShares Nasdaq Biotechnology ETF IBB, -0.06% dropping 4.1%.
The S&P 500 SPX, -1.46% fell 30.45 points, or 1.5% to 2,061.05, with nine of its 10 main sectors finishing sharply lower. Energy sectors stocks defied the trend and followed a rally in oil prices higher sparked by an intensifying conflict in Yemen.
The Dow Jones Industrial Average DJIA, -1.62% lost 292.60 points, or 1.6% to 17,718.54, and turned negative for the year. All but two of its 30 components closed lower.
Analysts attributed the selloff to pre-earnings season jitters and investors cashing out of stocks in companies that have seen big run-ups.
The Nasdaq Composite COMP, -2.37% ended the day down 118.21 points, or 2.4%, at 4,876.52.ost 19.06 points, or 0.9%, to 2,072.44. Biotechnology stocks were hit the hardest, with the iShares Nasdaq Biotechnology ETF IBB, -0.06% dropping 4.1%.
The S&P 500 SPX, -1.46% fell 30.45 points, or 1.5% to 2,061.05, with nine of its 10 main sectors finishing sharply lower. Energy sectors stocks defied the trend and followed a rally in oil prices higher sparked by an intensifying conflict in Yemen.
The Dow Jones Industrial Average DJIA, -1.62% lost 292.60 points, or 1.6% to 17,718.54, and turned negative for the year. All but two of its 30 components closed lower.
--Long quote but it brings out some key points such as Nasdaq: -2.37% loss, S&P500: 1.46% loss, and investors cashing out of stocks that have recently skyrockted. The market valuation for these companies is incredibly high and most P/E ratios are far greater than the safe "15-20" numbers.
This is nothing like the 2000 dot-com bubble
Quote
Should we be worried about another dot-com crash?
After all, the Nasdaq Composite is back up to 5,000 — the giddy level last seen during the peak of the big tech bubble back in 2000.
There are frothy signs everywhere — booming real estate in San Francisco, overnight millionaires with messenger bags, and everyone doing deals.
Everyone’s got “the next Uber,” “the next AirBnB.” Kids with peach fuzz on their cheeks say they’re going to reinvent the world — and investors with billions believe them.
Heavens, even Mark Cuban is calling it madness — and saying it’s worse than last time.
FAA Grants Approval to Outdated Amazon Drones
(3:05)
Is the FAA too slow or is drone technology developing too fast? WSJ’s Jack Nicas reports on Amazon’s next steps in getting its drones approved by the FAA. Photo: DPA/Zuma Press.
Maybe he’s right. Cuban’s a smart guy. And maybe this is all going to end very, very nastily, as it did last time.
But if this is a similar mania, it’s hard to see it in the numbers. Here are three reasons why is this is not the same as it was then.
One: This Nasdaq 5,000 is not that Nasdaq 5,000.
...
But by the numbers we do not seem to be back up to those wild, crazy days. Yet.
The reality is that banks are closing the loop of their whole FRB system, so that everyone is only playing game on that giant exchange (banking networks), if no withdraw will happen then no bank run is possible
Yep. This could also be the setup to limit the impending bank run before a financial collapse even occurs.
News 3/24/15
Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More
But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”
Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.
As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”
--"War on cash intensifies"
Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More
Quote
But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”
Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.
As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”
--"War on cash intensifies"
The reality is that banks are closing the loop of their whole FRB system, so that everyone is only playing game on that giant exchange (banking networks), if no withdraw will happen then no bank run is possible
News 3/24/15
Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More
But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”
Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.
As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”
--"War on cash intensifies"
Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More
Quote
But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”
Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.
As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”
--"War on cash intensifies"
...
France banning cash in large transactions... If you are French, you have a low limit (1000 euros), but if you are a visitor from Pakistan, Yemen or Algeria (or any other tourist) the limit is 10,000 euros.
Which of course makes zero sense. Unless you need to make it easy for Islamic Extremist Terrorists to wreak havoc there...
Lyth0s, my guess is indeed it will be the poor and unbanked who will be hurt the most.
But, such restrictions on cash might be very good for Bitcoin. And gold. As confidence evaporates (which I imagine it will happen in due course), BTC and Au are two of the best assets to own.
* * *
As the ZeroHedgers say, it is probably best to "take the other side" of any speculation that Goldman Sachs 666 advises to its muppets...
France banning cash in large transactions... If you are French, you have a low limit (1000 euros), but if you are a visitor from Pakistan, Yemen or Algeria (or any other tourist) the limit is 10,000 euros.
Which of course makes zero sense. Unless you need to make it easy for Islamic Extremist Terrorists to wreak havoc there...
Lyth0s, my guess is indeed it will be the poor and unbanked who will be hurt the most.
But, such restrictions on cash might be very good for Bitcoin. And gold. As confidence evaporates (which I imagine it will happen in due course), BTC and Au are two of the best assets to own.
* * *
As the ZeroHedgers say, it is probably best to "take the other side" of any speculation that Goldman Sachs 666 advises to its muppets...
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