While the metrics noted above can accurately indicate the peak of an equities bubbles several months in advance, they cannot tell us anything years ahead of time. For this, we must turn to the research of the original wizard of Wall Street, W.D. Gann. He was a finance trader who developed technical analysis tools and forecasting methods based on geometry, astronomy, astrology and ancient mathematics.
Whatever the cause behind these sharp funding shortages, one thing is clear – dollar-funding costs (FX hedging costs) for both Japanese and European insurers and banks to invest in US Treasuries are surging (with Japanese buyers and reached a post-financial-crisis high of 2.35% on 15 Dec. And in terms of practical implications for the treasury market this means that, all else equal, marginal demand for US paper is about to plunge for one simple reason: the FX-hedged yields on US Treasurys have plunged to (negative) levels never seen before (unless of course foreign investors buy US Treasurys unhedged).
…..Relatedly – and this is important – the longer the trickle-down lag, the longer the policies stay in place because after all, those policies were ostensibly designed to reflate the real economy and once you’re pot-committed (which central banks were a long time ago), you can’t very well throw in the towel and say the effort has been a failure. Rather, you’ve got to keep accommodative policies in place until growth and inflation finally tick up. Again, the longer those policies are in place, the wider becomes the divide between those who are disproportionately benefiting from financial asset price inflation and those who aren’t.
But one wonders: should the al-Qaeda linked fighters who once occupied the eastern part of Aleppo have been victorious and imposed their ‘revolution’ on the whole of the city… would Aleppines be celebrating Christmas this year? The answer to this question is of course an obvious no.
A closer look, however, reveals the opposite. Rather than the Iranian-manufactured Qiam-1 missiles Haley and the Saudi Arabian government claimed, the debris presented by Haley were of a modified Soviet-manufactured SCUD-B missile; the airframe and engine are original Soviet-made components, and many of the smaller parts on display bear Cyrillic (i.e., Russian) markings. The transformation to the Burkhan 2-H design required the Houthi engineers to increase the size of the fuel and oxidizer tanks, and lengthen the airframe accordingly.
A staggering new analysis from Zillow highlights perfectly the unintended consequences of central banking policies that drive massive asset bubbles but minimal job/wage growth. According to the study, surging home prices and rising rents have now resulted in a record 30% of American adults, up from 21% in 2005, being forced take on roommates just to afford monthly rent payments.
As a final official act, Yellen downgraded from “definitely transitory” to “imperfect understanding.” This matters a great deal, for if their grasp of basic economic factors is this flawed (just an 18% hit rate in nearly 10 years) there’s likely far more gone wrong than just the price effects of unlimited wireless data.
The new tax law is larded with goodies for Corporate America, but there is one shift – a much needed shift – in this debt-obsessed world that will punish over-indebted companies, discourage companies from taking on too much leverage, and perhaps, just maybe, make these companies less risky: The new law sharply limits the deductibility of corporate interest expense.
This release on December 10th, by the National Security Archives, of a treasure-trove of all the existing documentation — 33 key documents — that’s been made available to them from numerous archives around the world, and brought together finally for the very first time complete and in chronological order, makes crystal clear that the American apologists’ lies about the lies WERE lies, not accurate accounts of the history, at all.
President Trump’s recent report on National Security Strategy supposedly reflected his America First “realism” but his approach seems more like old wine in a new bottle, particularly his continued strong support for Saudi Arabia and Israel in the Middle East combined with an even more aggressive U.S. policy in Asia aimed at containing China as well as confronting North Korea.