Currently it is being reported that there are 170 protests in cities across the nation in response to the acquittal of Officer Wilson in the death of Michael Brown this August. One narrative that the MSM is trying to paint is an old one: black people are angry over the acquittal and are burning and looting. This is a false narrative! The message they are trying to send is that black people are crazy and don’t care about the truth. They want white folks (as Obama would call them) to fear black people and side with law enforcement. This narrative is BS and too simple. The other MSM narrative is that the all the protestors are noble victims of white racism. This too is a false narrative. When I was watching the protest in August I saw plenty of white faces in the crowd. And I see white faces today. This is not just a black vs white issue. I see people both white and black people really pissed off about the power of the state and their economic plight. Yes there are some thugs and undoubtably some agent provocateurs string up violence and vandalism! The police should arrest them and try to keep the peace.
This protest is a flash point for many to lash out at the system. I have had the luxury last year to take some time to travel the country on a road trip without my wife and kids. It was an eyeopener. Our country is beautiful and full of great people. However, our country is also falling apart and the people are pissed. As I chatted it up with people across the land, it became apparent that they feel like they have been screwed. There is a deep resentment of Wall Street and Washington. Surprisingly about 1/3 of the common folk knew what the Fed was and thought they were handing money to rich folks. Not so far from the the truth. Ten years ago 95% of these people did not know that the Fed even existed.
This is only the beginning of what I believe will be many civil disturbances over the years to come. If you want to continue to believe the fairy tale that the economy is doing well go right ahead. I know the truth and can see through the fog of propaganda. Democrats were thrown out in a thrashing we have not seen in decades. If the economy were swell this would not be happening. The long bond yields and commodities are singing the truth as well. Equities will eventually succumb to the forces of deflation. The bottom line is that people, not just black people, are pissed off and are itching for change. Our institutions of government and finance are about to be fundamentally changed. However, change usually only comes with great pain. The next few years will witness immense change. We are living through historic times.
The hunger games have arrived. If you are currently living in the Capital City (work on Wall Street, Washington or the C Suite) your world is going to be rocked. For the other 99% it already has and they are not to pleased.
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Don’t know that it will happen, but it could. Fri / Mon could be the beginning of the end of the world as we know it.
2 items
1) If the current Comex gold and silver OI guys do not roll forward their contract and choose to stand for delivery; Comex defaults on Monday.
2) If the Swiss vote yes on the gold initiative, how can they continue to hold the Euro peg? If the Swiss unpeg, what happens to the Euro?
Gold spikes. What happens to interest rates? How’s all that debt look a couple of points higher.
https://www.youtube.com/watch?v=XLThjyfqkJg
What I think will actually happen:
1) OI gang (China?) will be paid off behind the scenes to unwind. (They would be happy with Alaska.)
2) The Swiss gold initiate will be voted down by hook & crook. There’s no way they can let that happen.
So we live another day, until the next swan or gagle shows up.
Friday or Monday could be the end of the world? Got it, thanks for that valuable insight. PS. by end of the world I’m assuming that means the end of you’re gold margin account, but I could be missing something.
Forgetalpha,
you need to calm down. why do you get so worked up by this guys comment? clearly the world will not end. karma. its all about karma.
When someone says the world as we know it will end; it’s just an expression. It means things will change significantly. It doesn’t mean the world will actually end.
I just heard an interview from the guy who was saying the comex may default next week. It can happen, but he had absolutely no reason why it would happen now – Monday. So I did jump the gun there. Most likely they’ll be rolled forward again. Some day, they won’t.
Indeud, you’re missing something. Gold margin account? ha ha that’s a good one. I’m well positioned whatever happens. & you?
I don’t know about individual karma, but believe the world has a way of moving toward equilibrium.
Somehow Apple having a market cap greater than entire publicly traded Russian market, doesn’t seem like equilibrium.
If desired, (not by me) major race riots could easily be started in this country. Hopefully, we’re not headed there. We shall see.
right. “will be many civil disturbances”, as regular folks have been disenfranchised. though with corruption so wide/deep the outcome is cloudy. thanks bluestar.
Enjoy your insights, of course timing is everything. I travel in fly over country, and yes people are frustrated, but its not bad enough yet, they do not understand the macro economic issues and repeat what they hear on Fox news.
@ 2 swans,
this COMEX roll over business is old news, so much so that the news just keeps rolling over as does the OI. Further, you may want to look at terms of delivery. I have not, but I am sure there is a force majeure that allows settlement in cash and not physical.
Blue, you must be an avid reader of Marty Armstrong. He is calling for a rise in civil disobedience and a rise in his cycles of war.
I get frustrated by people who refuse to adapt their investment thesis, are unable to keep their world view from tainting their view on the markets, and use the same old tired Zerohedge infused dogma over and over and over again.
On another note, saying that the world as we know it is coming to an end is not just some general expression that gets thrown around in reality. If old news about Comex defaulting is an appropriate event to use the expression “world as we know it is coming to an end” then what expression do you use when something of actual substance and material impact happens? You’re head explodes? Blue, I know you think I get worked up about this for no reason, I just have seen far too many investors influenced by this constant stream of extreme bearish/pessimistic/fatalistic views on the markets over the years and have remained largely in cash or trying to pick off market shorts with puts during one of the best bull markets in history. You say that I shouldnt take what you say so literally, but you’re hear to give investing advice/views right? So when you say things like “the market was close to collapse last week” I’m assuming you’re being sincere. How many grains of salt are we supposed to take with comments like that?
Alpha, I don’t think Blue is here for advice. An opinion? maybe? so you need to govern yourself accordingly. Like you said too many bears out there and they have lead many astray. However, keep this in mind QE has ended (by official fed standards), but look at what the markets are telling you. Bond yields getting smashed lower as the equity markets rise. It doesn’t take much to move an index in most cases. The way I view it is try to keep a balanced approach, but at the end of the day the smartest guys in the room are usually the bond guys because they want their payments on time and their money back.
Seriously gloomy post
The last few times I have travelled America the inequality and exasperation is palatable. It seems as
though it was always that way. So many
years just to get healthcare and still
made to feel they are undeserving and
to bad if you lose the house.
To make it or have a chance you must
have a degree. This will allow you to get inline .Otherwise start your own business and best wishes.
The educated have work in America today. The stats are showing that. Credit
may collapse and we will have to hold on to our shorts but where we part company is that some how this event is
inevitable.
If you’re right …what an effed-up misdirected mob. Those who are really sticking it to us are laughing their asses off.
The most important and primary role of government it to protect citizens from external and internal threats to their person or property.
To a lot of people, it looks like that cop was doing exactly what they would want him to do before Mr. Brown decided to patronize THEIR shop.
Mike campi,
you are welcome
Jimmy,
Yes martin and strauss-howe the fourth turning
Forget alpha,
I am not a perma bear. I became a bear in January of this year when I went to cash. I have managed $14 billion dollars for 10 years. Have you ever tried to move that much money before? To be successful at it you need to see where the puck is going and get there before everyone else. Maybe you have not noticed but most active mangers have underperformed this year and hedge funds have shit the bed. Why is that? Because the market is getting narrower and narrower. Small caps are flat this year. Bonds are up 20% with about half the volatility. If you don’t see what is coming I can’t help you. The best sectors have been healthcare and utilities this year. If the economy were good why would this be occurring?
And yes we were close to a crash. Had we not had three central banks do their stick saves we would be a lot lower by now. They bought some more time. I am in touch with many big players and the very best ones were positioned for a crash. Good luck brother. When this goes south you will be in the fetal position. There is a chance that we have a blow off top because of the idiotic CB maneuvers but if you think for a second fundamentals are driving this market you are delusional. All cycles end. We are close on this one the sign posts are there. If you can’t admit that the CB’s are freaking out then you really are not paying attention. Have you heard of Seth Klarman? He is in my camp and is 40% cash. Could this go on longer? Yes it can. But the hangover will be immense. Stop being so fucking superior. I am giving a viewpoint that you won’t hear from wall street because they can’t say it. I know many who manage money and they agree with me. Do you know what they are doing with their money? Cash. That is right, they manage other peoples money but have the least amount of money possible in their strategy. They play because they have career risk not because they are doing the right thing for their clients. We are going lower. We have had four set ups this year. They have been all wiped out by CB’s. There will come a time when the CB’s can’t stick save. My opinion is that we are closer than you think.
Jimmy,
I used to be a bond salesman before a growth PM. You are correct. Bonds are singing a song that is different than equities right now. As Oil implodes all that debt issued over the last five years will implode at sub $80 oil. Can people not see this?
Gorby,
Post is not gloomy. Change is coming. Change will be good. I am very optimistic about the future. We will rise like a phoenix from the ashes but first we need to crash. The current zombie economy is not going to hold much longer. Capital is trapped. Once we cleanse the debt we can rebuild. I enjoy your posts. Keep coming.
BSC
You have to know that that the majority of people living near or at poverty-level are uneducated about financial literacy. I also bet the majority of employed people who contribute to their 401k haven’t the slightest idea what they are paying for fees or what type of mutual funds they are being told to invest. This country’s # of poor, uneducated people has increased through the years because our government has allowed non-speaking English peoples to live in the US with no plan on how to educate them, so they are stuck in low-paying jobs and dependent upon the government for public assistance. Our public school systems in poor socioeconomic areas of our country, are over-whelmed with high dropout rates and violence, a mirror of the communities in which they live. I find it interesting that minority violence in Chicago, which is epidemic, elicits less outrage than the shooting death of a black teen by a white cop. I’m sorry, but your attempt to connect the civil disturbances in Ferguson and other areas with government resentment does not equate with me.
flyaway18,
I agree with most of your points. The MSM is twisting the narrative. If you look closely this is not just a black issue. It may morph into one as the PTB stoke and fan the flames of a race war. Initially this was about the police state. The Chicago murders are a huge outrage. I saw a black journalist on meet the press bring this up and he was shut down by the white liberals because it did not fit the narrative. For liberals to address this issue would be to admit failure of their policies. It is easier for them to bring out the white raciest cop boogieman.
Bluestar – thanks for the interesting post(s) am in agreement that things are rarely simple, but wonder about some of your points.
As a large money manger you view a ‘crash’ as ‘near’, and a positive? Definitions are key and I would be interested to read about crash criteria and associated timelines.
Case studies help me to discover insights.
Germany’s economic experience (1900s to 1950) suggests that uncontrolled crashes are problematic. Modern day Iraq exemplfies the longterm costs of economic failures (and associated societal failures) as well as the difficulties of finding economic shelter in a ‘semi-controlled crash’. Japan’s economic experience (~1980 to present day) suggests that things can continue ‘as they are’ for quite some time into the future.
Central banks and modern day economic policy executed by empowered technocrats, imo, are analogous to the modern day car which offers computer assistance, abs, crumple zones, airbags, seatbelts, and more in order to avoid or at least mitigate the effects of a crash.
My education about, experiences with, and definitions of crashes may be very different than yours however. No hate, little ego, and genuinely interested in what you see – reading lists are welcome 😉
Happy Thanksgiving to you and yours
Blue, I am an active manager of OPM. The model I run signalled a move to cash and minimal mkt exposure for Oct. In the history of the model (2003 incep) there have only been two false positives when there was a call to cash. I agree this mkt is stretched to extremes and it is a matter of time. Interestingly, the model brought us back to the market but a much more conservative stance for Nov, and expect Dec will be about the same. The trick with being on this side of the biz is that you need to participate in the market moves otherwise you’re dead. And the street is always bullish, because you have to be in order to keep the AUM coming in. Would be nice to refocus clients on ABS returns.
Dragun,
You are a rare bird and clients are there own worst enemy. Seth Klarman built his business only taking clients that understood what he was doing. he avoided fund of funds and pension fund money. I came from the long only world. I am looking to start my own fund with a focus on absolute return with clients who get it. I hated the long only world no cash allowed mindset. Ridiculous game. If you look at the best money mangers and hedge funds they avoid the drawdowns. What does that mean? That means they are timing the market. People say don’t time the market but 50% drawdowns are devastating. We have had two in the last 14 years. We are heading for number 3. Seth Klarman at 40% cash is timing the market. He will be right. Many People don’t get the math on wealth compounding. Avoid the drawdown and then buy when people are panic selling. It is hard because you will look like a fool for a period of time. Thanks for the post.
Blue, you nailed it! its all in the math. minimize your losses and you’re already ahead of the game. My strategy is ABS returns, but the media and the street always focus on the relative returns. I run a long/flat mode i.e. move to cash/equivalent in times where model expects draw down. It won’t shoot the lights out, but you won’t get your ass shot off either. Its a quant strategy monitored daily, rebalanced monthly. agnostic to geography, sector, asset class.
Blue, happy thanksgiving brother. I know you’ll be right eventually I just think try to pick market tops is futile. Risk management is warranted. Time for some more turkey.
Forgetalpha,
Keep coming, Happy Holidays Bro.
dragun,
I like the way you think.
surfnm,
Positive only after immense pain. the status quo can not hold. We are in a deflationary death grip. The debt and mal investment needs to be cleansed. read the fourth turning by Strauss and Howe.
BlueStar – you have any idea who’s holding fracking/shale debt paper?
juice,
PIMCO is up to their eyeballs
Energy is the largest sector in terms of % of allocation in the HYG, so expoure is quite high
Forgetalpha,
You are correct sir. How was Turkey? My wife crushed it this year. She injected it with butter and oil. So moist!
Blue, where do you recommend putting long term IRA money, cash?
Although I sometimes feel you’re a bit of a gloom and doomer, I am impressed with this commendable post. Nice job, BlueStar.
Thank you for your insightful post. I’ve stayed between 50 and 75% cash all year waiting for the other shoe to fall. It does seem like the time is near.
Had a great turkey day, but my worst week of the year for investments.
I’ll probably be a buyer Monday, _______Resources perhaps. Not sure how low it can go, but they’re well positioned (if you think gold & uranium are toward the bottom) Within a few years I expect it to be up 10x. We shall see.
Blue, turkey was fantastic, scotch was great as well. Glad to hear yours was enjoyable. Looks like we should get some more fireworks this week, looking forward to some excitement.
So what we are about to see now is the leverage come out of the equity markets, particularly in the United States. I don’t remember seeing a downdraft in December in the U.S. stock market in the last 15 – 20 years. But I will be so bold as to say that I think we are going to see a downdraft back to the October lows over the next few weeks. As I said, it’s time to sell out of U.S. stocks and buy into precious metals.” Ben Davies
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/12/2_Wild_Trading_Action_In_Gold_%26_Silver_Stuns_Market_Participants.html
The gametheorist.
I will offer this. I am cash in my ira and mostly cash in my PA. I have been that way since January. I do like US treasury bonds. But please don’t just listen to me. I am doing what feels right for me given my view.
dewey d,
Thanks. I am not a gloom and doomer. I believe in cycles. We happen to be at the top of a super grand mother off all credit cycles. Once we bottom i will get bullish.
catM,
thanks. you are welcome.
anecdotal,
I would agree with you but lets see what unfolds. This may stretch a little longer.