“Economic growth will speed up this year to the 2.25-2.75 percent range, but the business expansion is endangered by a dysfunctional and divided Congress, says Pimco CEO Mohamed El-Erian.

“The American economy will improve in 2014, creating more jobs and boosting wages. That is the good news,” El-Erian writes on Politico.

“The bad news is that, rather than serve as a springboard for even better performance down the road, this improvement could lull Congress into a false sense of security and continued inaction on key economic legislation,” he says.

And what would that mean for the economy?

“Should this occur, the multi-year outcome could be an even longer (as well as unnecessary) period of below-potential national prosperity, excessive income and wealth inequalities and greater political polarization,” El-Erian writes….”

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[youtube://http://www.youtube.com/watch?v=4UDranKZROs 450 300]

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“MILAN (Reuters) – A delay to vital fundraising at Banca Monte dei Paschi di Siena<BMPS.MI> has increased the risk that Italy’s third-biggest bank has to be nationalized, a move the government would like to avoid.

Shareholders led by the biggest investor in the bailed-out bank rejected plans for a 3 billion euro ($4 billion) share sale in January and postponed the capital raising until after May 12.

The bank’s chairman and its chief executive may resign following the unprecedented clash with the main shareholder in the Siena-based lender, a charitable banking foundation with close ties to local politicians.

The focus of attention now turns to Rome where both the economy ministry, which has oversight of banking foundations, and the Bank of Italy are closely following events.

The world’s oldest bank needs to tap investors for cash to pay back 4.1 billion euros in state aid it received earlier this year and avert nationalization after being hammered by the euro zone debt crisis and loss-making derivatives trades.

The capital increase is part of a tough restructuring plan agreed with the European Commission in order to receive clearance for the state bailout.

A Treasury spokesman said the government’s priority was to give the bailout money back to taxpayers and it had no interest in nationalizing Monte Paschi…”

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[youtube://http://www.youtube.com/watch?v=1pRPBKJQnyU 450 300]

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[youtube://http://www.youtube.com/watch?v=qmooauwuv0w 450 300]

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On the matter of government and “corporate regulation”

[youtube://http://www.youtube.com/watch?v=mCAIj3YJUmg 450 300]

 

 

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“Dow is up more than 5% five consecutive years now. A sixth such year has not happened before in history. A 5-year bull trend only occurred once before, in the 1990s, and was followed by 3 down years. Russell 2k rallies of similar size and duration to 2013′s (excluding accelerations from major bear lows) are shown below. In each case all the gains were given back the following year.

 

Source: Fat-Pitch

2014 is the second year in the Presidential cycle, and is the weakest historically by returns, averaging flat. The logic for this is that is it a time for governments to deploy tougher, unpopular policies. The Investors Intelligence bull-bear ratio currently exceeding 40% also forecasts a flat return for the SP500 by the end of 2014, by averaging history, whilst the II bear percentage alone, around 15% the last 4 weeks, has historically produced returns of -5% to -20% over the next 6 months.

The Citigroup Panic/Euphoria Model, having crossed the Euphoria threshold, predicts an 83% chance of losses in 2014. Goldman’s analysis of performance following a year of 25% gains or more point to a median drawdown of 11% in the next 12 months.

Next is a chart highlighting a couple of previous occurrences similar to 2012 and 2013 where stock index rises were dominated by multiple expansion, not earnings growth.

Source: Fat-Pitch

In both instances the following two years saw better earnings growth. But notably the next two years were 1987, stock market crash, and 1999, at the end of which the Dow peaked, suggesting a common theme of pre-correction exuberance.

Both the following charts reveal that 10 year stock market returns are closely correlated to deviations from norms 10 years earlier. The first correlates average investor allocations and the second market cap to GDP. I have added the blue horiztonal line averages, revealing both are overvalued currently, but one more extreme than the other.

Source: Philosophical Economics

Source: Hussman

The logic behind both is that mean reversion always occurs. The bigger the deviation build the bigger the subsequent normalisation, as ‘this time is different’ each time is disproven. For US markets currently, we see the second highest market cap to GDP valuation outside of 2000, the 4th highest Q ratio valuation and 4th highest CAPE valuation in history. In all the other such historic outliers, a bear market followed to correct the extreme, there was no orderly consolidation of prices whilst the underlying fundamentals accelerated to catch up. ‘This time is different’ thinking argues that because the Fed has suppressed cash and bond yields, equities have to be revalued higher, so this valuation outlier doesn’t count, and there will be an orderly normalisation of valuation as earnings and GDP will accelerate and yields rise slowly, without any crash in equities.

Interesting to discover that the rally in the 1990s was also at the time considered to be Fed-induced and prolonged….”

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“It’s been a banner year for stocks. The Dow and S&P 500 have been in record territory since March, while the Nasdaq has been trading at its highest levels since 2000.

Though the robust gains have ignited some worries that stocks may be overvalued, most experts believe that a dose of skepticism is actually healthy and predict that stocks will continue to rise next year, albeit at a more modest pace.

Still, the fact that the Nasdaq is back at a level it last traded at during the tech bubble worries some investors. But experts say the Nasdaq is a completely different animal than it was at the start of the millennium.

“The Nasdaq has really grown up over the last decade. It’s a lot more mature now,” said Kim Forrest, senior equity analyst at Fort Pitt Capital.

For one, the Nasdaq is no longer as tech-heavy as it used to be.

Tech stocks still make up about 42% of the Nasdaq composite, but it was nearly 60% at the height of the tech bubble, according to the Nasdaq OMX (NDAQ). And the exchange has welcomed more companies from the retail sector, health care, and financials. Energy, materials and utility companies, which virtually had no presence on the Nasdaq a decade ago, are also now a small part of the exchange.

“The Nasdaq is definitely not nearly as lopsided as it used to be,” said Ryan Detrick, senior technical analyst Schaeffer’s Investment Research. “Having more diversification gives the index a whole different feel, and helps its safety factor.”

Even the top 100 companies….”

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“I am very pleased to have had the chance to speak with Jim Rogers, a legendary investor and true international man.

Jim and I spoke about some of the most exciting investments and stock markets around the world that pretty much nobody else is talking about.

You won’t want to miss this fascinating discussion, which you’ll find below.

Nick Giambruno: Tell us what you think it means to be a successful contrarian and how that relates to investing in crisis markets throughout the world.

Jim Rogers: Well, there are two aspects of it. One is being a trader, being able to buy panic, and nearly always if you are a trader or an investor, if you buy panic, you are going to do okay.

Sometimes it is better for the traders, because when there is a panic—a war breaks out or something like that—everything collapses, and some people are very good at jumping in and buying. Then, when the rally comes, the next day or the next month, they sell out.

Now, the people who are investors can also do that, but it usually takes longer for there to be a permanent rally. In other words, if there’s a war and stocks go from 100 to 30 and everybody jumps in, it may rally up to 50, and then the traders will get out, it may go back to 30 again. I’m trying to make the differentiation between investors and traders buying panic.

As an investor, nearly always if you buy panic and you know what you are doing, and then hold on for a number of years, you are going to make a lot of money.

You also have to be sure that your crisis or panic is not the end of the world, though. If war breaks out, you have got to make sure it’s a temporary war.

I used to work with Roy Neuberger, who was one of the great traders of all time, and whenever stocks would panic down, he was usually one of the few buyers, because he knew he could get a rally—if not that day, at least maybe that week or that month. And he nearly always did. No matter how bad the news, especially if there’s a huge drop, it’s probably a good time to buy if you’ve got the staying power and your wits, because you will likely get a rally. In terms of panic buying or crisis situations, that’s normally the way to play.

Now, it’s not always easy, because you are having everybody you know, or everybody in the media shrieking what a fool you are to even try something like that. But if you have your wits about you and you know what you are doing, and you know enough about yourself, then chances are you will make a lot of money.

Nick Giambruno: What is the story behind your most successful investment in a crisis market or a blood-in-the-streets kind of situation?

Jim Rogers: Certainly commodities at the end of the ’90s were everybody’s favorite disaster, and yet for whatever reason, I had decided that it was not a disaster. In fact, it was a great opportunity and there were plenty of things to buy. In 1998, for instance, Merrill Lynch—which at the time was the largest broker, certainly in America and maybe the world—decided to close their commodity business, which they had had for a long time. I bought. That’s when I started in the commodity business in a fairly big way. So that’s the kind of example I am talking about. Everybody had more or less abandoned or were in the process of abandoning commodities, and yet, that’s when I decided to go into commodities in a big way, because of what I considered fundamental reasons for doing it, but the fact that Merrill Lynch was getting out buttressed in my own mind anyway that I must be right, because, you know, everybody was out. Who was left to sell? There was nobody left to sell at that point.

Nick Giambruno: What about a particular country?

Jim Rogers: I first invested in China back in 1999 and then again in 2005. The market at those times was very, very bad. I invested again in November of 2008, when all markets around the world were collapsing, including in China.

So I have certainly made investments in countries with crisis markets, and I’m getting a little better at it than I used to be, because I have had more experience now. That’s why I keep emphasizing that you have to know what you’re doing. And by that I mean paying attention to and doing your homework on a stock or a commodity or a country. If you do that with a crisis market, then chances are you can move in and make some money.

Nick Giambruno: In your opinion, which countries today do you think offer the best crisis or blood-in-the-streets-type opportunities?

Jim Rogers: I think Russia is probably one of the most hated markets in the world. I don’t think many people have a nice thing to say about Russia or Putin. I was pessimistic on Russia from 1966 to 2012—that’s 46 years. But I’ve come to the conclusion that since it is so hated—and you should always look at markets that are hated—that there are probably good opportunities in Russia right now.

Nick Giambruno: Doug Casey and I were recently in the crisis-stricken country of Cyprus, which is also a pretty hated market, for obvious reasons. While we were there, we found some pretty remarkable bargains on the Cyprus Stock Exchange which we detailed in a new report called Crisis Investing in Cyprus. Companies that are still producing earnings, paying dividends, have plenty of cash (in most cases outside of the country), little to no debt, and trading for literally pennies on the dollar. What are your thoughts on Cyprus?

Jim Rogers: When I saw what you guys did, I thought, “That’s brilliant, I wish I had thought of it, and I’ll claim that I thought of it” (laughs). But it was really one of those things where I said, “Oh gosh, why didn’t I think of that,” because it was so obvious that you are going to find something.

It’s also obvious, after what happened in Cyprus, that it’s a place where one should investigate. Whether it is right to buy now or not, you are certainly right to look into it. If you stay with it and you know what you are doing, you do your homework, you are probably going to find some astonishing opportunities in Cyprus. It’s the kind of thing that I’m talking about and that you are talking about…..”

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“Citi currency analyst Steven Englander explains why the market surged on the news that the Fed will scale back its pace of asset purchases. Here’s the sentence, and then below, the explanation:

The Fed Statement is being viewed as a very dovish tapering – small reduction in purchases, indication weakening of unemployment trigger, UR trigger now conditional on inflation, no date for end….”

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“The stock market is being led by the dangerous “monetary manipulation” of the Federal Reserve’s $85-billion-a-month in quantitative easing bond purchases, Jim Grant—founder and editor of Grant’s Interest Rate Observer—said Tuesday, as the central bank began its final meeting of the year.

“The stock market is now a tool of Fed policy,” he said on CNBC’s “Squawk Box“.

“What the Fed is doing is an exercise in price control. This is ‘stocks.gov’ [and] ‘bonds.gov,'” Grant said. “The clear and present risk of the stock market is we’re living … in a hall of mirrors” because the Fed’s accommodative policy is distorting the calculations by which the market has been traditionally valued….”

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“Barron’s:You’ve warned that a correction is near. Why?

Davis: Right now, about 78% of industry groups are in healthy uptrends. That would have to fall to about 60% for us to say the market had lost upside momentum. We also focus on the Federal Reserve, and it’s still in a very easy mode, despite all the talk about tapering. So, those two indicators are bullish. However, we’ve looked at all the bear markets since 1956 and found seven associated with an inverted yield curve [in which short-term interest rates are higher than long ones] — a classic sign of Fed tightening. Those declines lasted well over a year and took the market down 34%, on average. Several other bear markets took place without an inverted yield curve, and the average loss there was about 19% in 143 market days. We don’t see an inverted yield curve anytime soon. So, whatever correction we get next year is more likely to be in the 20% range…..”

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“Larry Summers, who was nearly picked by Obama as the next Fed Chairman before for some inexplicable reason the Economist lobby deemed him “hawkish” and that he would put a halt to the Fed-Treasury cross monetization complex, is no stranger to providing hours of entertainment with his aphoristic quotes. Recall from October 2011, where he said that the solution to record debt is more debt:

“The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.” Larry Summers, source

Or his follow up from June 2012, where he submitted that insolvent governments can “improve their creditworthiness” by becoming more insolvent:

“Rather than focusing on lowering already epically low rates, governments that enjoy such low borrowing costs can improve their creditworthiness by borrowing more not less.”  Larry Summers, source.

This of course led to his pronouncement last month that the US economy needs “bubbles” to “grow“, which promptly won him accolades from none other than his former basher Paul Krugman, best known for this line from 2002: “To fight this recession the Fed needs…soaring household spending to offset moribund business investment. Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.” Yes, somehow this person was seen as hawkish.

Either way, it seems Larry was modestly disgruntled with the prevailing assessment of the media world ascribing to him the title of the next Krugs, in proposing a policy of endless bubble booms and busts, and as a result, he decided to take to the pages of that hallowed bastion of “free and efficient markets”, the FT, to explain what he really meant. His full essay is below but the punchline is as follows:

Some have suggested that a belief in secular stagnation implies the desirability of bubbles to support demand. This idea confuses prediction with recommendation. It is, of course, better to support demand by supporting productive investment or highly valued consumption than by artificially inflating bubbles. On the other hand, it is only rational to recognize that low interest rates raise asset values and drive investors to take greater risks, making bubbles more likely. So the risk of financial instability provides yet another reason why preempting structural stagnation is so profoundly important.

Apparently “some” does not include Larry, but what his clarification seems to clarify, is that while proposing bubbles as a policy tool is short-sighted, should they indeed arrive (and many have stated that the current “stock market” on the back of $10 trillion in central bank liquidity and another $25 trillion in Chinese bank asset increases is nothing else), well then – we’ll cross that bridge when we come to it. In the meantime, “stagnation may be the new normal.” Stagnation for the 90% mind you – not the 10% whoe actually benefit day in and day out from the Fed’s ceaseless attempt to get the world to said bridge as fast as possible…

From Larry Summers:

In the past decade, before the crisis, bubbles and loose credit were only sufficient to drive moderate growth

Is it possible that the US and other major global economies might not return to full employment and strong growth without the help of unconventional policy support? I raised that notion – the old idea of “secular stagnation” – recently in a talk hosted by the International Monetary Fund.

My concern rests on a number of considerations. First, even though financial repair had largely taken place four years ago, recovery has only kept up with population growth and normal productivity growth in the US, and has been worse elsewhere in the industrial world.

Second, manifestly unsustainable bubbles and loosening of credit standards during the middle of the past decade, along with very easy money, were sufficient to drive only moderate economic growth…..”

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“House Liberty Caucus Chairman Justin Amash (R-Michigan) aptly summed up the bipartisan budget deal being pushed by House Speaker John Boehner and Democratic leaders in Washington with this quip on his Facebook page: “Republicans will agree to more spending, and in exchange, Republicans will get higher taxes.”

The deal  — negotiated between House Budget Committee Chairman Paul Ryan (R-Wisc.) and Senate Budget Committee Chairman Patty Murray (D-Wash.) — would walk back about half of the $100 billion in sequester spending cuts for fiscal 2014 and a quarter of the $100 billion in spending cuts for 2015 in exchange for long-term cuts in mandatory entitlement funding that would — over 10 years — compensate for higher spending now. All of the deal’s “deficit reduction” would be far into the future, and every penny of it would eventually come from increased taxes such as a tax increase on air travel (which Republicans are calling “fees”).

“While modest in scale, this agreement represents a positive step forward by replacing one-time spending cuts with permanent reforms to mandatory spending programs that will produce real, lasting savings,” House Speaker John Boehner (R-Ohio) said in astatement supporting the Ryan-Murray deal. He also slammed Tea Party and Liberty Caucus members of Congress critical of the deal, saying in a December 11 press conference that “This is ridiculous. Listen, if you are for more deficit reduction, you are for this agreement.” Never mind that if Congress can undo some spending cuts now in exchange for spending cuts later, Congress can later undo the promised down-the-road spending cuts, in whole or in part, when the time comes for their implementation….”

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“According to multiple reports, the White House has asked Stanley Fischer to be the next Vice Chair of the Federal Reserve.

So far, we’ve heard nothing but endorsements for Fischer, who is credited for successfully navigating Israel’s economy through the financial crisis.

“We think it is great news that the Administration may nominate Stanley Fischer to be vice-chairman of the Federal Reserve Board,” wrote Morgan Stanley’s Vincent Reinhart in a note titled The Fed Dream Team. “Fischer has been around the inner circle of international economic policymaking for three decades. If he was not at a major meeting in person, one of his students from his long tenure at MIT probably was.”

Fischer’s student have included current Fed Chair Ben Bernanke and ECB chair Mario Draghi….”

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[youtube://http://www.youtube.com/watch?v=WrsfJHLx5YA 450 300] [youtube://http://www.youtube.com/watch?v=iXt1HbkSWXI 450 300]

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[youtube://http://www.youtube.com/watch?v=Ye0MHKJ00hw 450 300]

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“Despite the quiet nature of things lately from a geopolitical standpoint, coupled with the mainstream media’s obsession with new nominal highs in the various paper indexes, there is definitely turbulence below the surface. There have already been a number of thought-provoking articles written regarding the future of dollar hegemony and the purpose of this week’s piece is to hopefully add to the discussion and stimulate some thought.

The first important thing to remember is that unless one has access to credible inside information, most of what we read is speculation, and most of the commentators will readily admit that. I’m going to do the same thing here. Opinions will be clearly noted and facts will be referenced. Despite the abstract sounding nature of the term, ‘dollar hegemony’ is the paradigm that allows America to do what it is currently doing; namely spending money it doesn’t have on things it doesn’t produce (or need). It is the leverage mechanism that is used globally to politely – and sometimes with extreme prejudice – cajole other nations into doing what is in the Anglo-American banking syndicate’s best interests. The fact that the entire paradigm is a complete fabrication without foundation is lost neither on the powerbrokers that perpetrate the scam, nor the parties the scam is perpetrated on.

The main reason the dollar standard, or dollar hegemony, has lasted so long has been mainly been due to a lack of alternatives. Countries who attempted to stray from the dollar were labeled as enemies (remember the ‘axis of evil’?) and contrived wars were launched or economic sanctions were applied until compliance was achieved. That assertion is mostly fact, part opinion, but when it quacks like a duck and walks like a duck you don’t call it a horse.  However, as the wealth has shifted from America to other parts of the world due to our persistent lack of production, coupled with overconsumption and resulting debt load, alternatives to the dollar standard are beginning to show themselves.

The Dollar Standard’s Far-Reaching Effects

So why spend the time discussing this? Does it really matter to the average person? Absolutely. It couldn’t matter more from a financial standpoint. Every financial transaction you engage in as an economic actor rests firmly on this fraudulent paradigm. Without the dollar standard, your credit cards, paper scrip, and bank accounts would buy nothing. Without the dollar standard, your net worth, minus whatever tangibles you happened to own, would drop to zero, with negative equity because your debts would still exist, just not in dollar form.

That is probably one of the hardest things to grasp – the idea of not using the paper dollar. We’ve become so separated in a time manner from the pre-not-so-USFed era that we’ve lost our bearings on what it is like without the paper dollar. How many people are alive that remember what it was like before 1913? Take it another step back – there is not a person alive today that was alive and aware when the banking panic of 1907 took place. The portion of our population that remembers the great depression is dwindling every day and we ignore those people and their testimonies for the most part. We’re so much smarter now than they were back then, aren’t we? I’ve got news for you: those Americans were tougher than 99% of us today, this author included.

Think of feudalism for a minute if you would. I’ve mentioned that previously in other articles and believe that is the direction we’re headed. Let’s face it; America is not ‘rich’ as the quislings on television would have you believe. We’re broke. Sure we have a bunch of stuff, but it is mostly borrowed from others who now have the power over us. In my opinion, America is little more than a nation that is quickly becoming the land of the fee and the home of the debt slave. This is probably where some of you will choose to stop reading and that’s fine. Whether you believe it or not doesn’t make it any less true and ignoring it won’t make it go away. Believe me, I hate that reality as much as you do, but patriotism is about more than just waving flags and singing the Star Spangled Banner. It is also about taking responsibility, tightening the belt, and cleaning up our messes in the hopes of passing along a country better than the one we received.

Geopolitical Moves to End the Dollar Standard – Destruction from Within

So we’ve had this cushy lifestyle, by and large, since the mid 1980s or so. Madison Avenue had figured out how to remove the stigma of debt servitude and the deals had been cut with the Arabs to create the petrodollar (we buy their oil, they buy our junk USGovt bonds). So things were sort of copacetic with one minor problem; we’d started shedding our industry.  See, we cut a deal (my opinion here) with the Chinese to create what I’ll call the WallyWorld dollar. In exchange for unfettered access to the American consumer, who was by then beginning to be armed with credit cards, the Chinese would also become purchasers of our bonds. One of the necessary steps here was to depreciate the dollar to harm American exports and make the imported junk from China more appealing.

Now maybe this wasn’t an explicit treaty or anything like that, but there was a definite trend shift in trade and monetary policy. The 1990s included a bevy of additional ‘free trade’ agreements that did nothing but further the de-industrialization of America and fuel the industrial revolution in China. This period from the mid 1980s through the end of the millennium also featured significant destruction of the USDollar from a domestic price perspective. According to the USGovt’s delusional consumer price index (CPI), prices rose 57% from 1986 through 2000 (a period of 14 years). According to the newly cooked numbers, they’ve risen an additional 36% from 2000 to the present (almost 13 years), which, as many know, has been one of the most notorious inflationary periods in history even if the BLS insists otherwise.

To put it another way, from 1986 to 2013, the dollar lost around 54% of its purchasing power due to the above and sub-equilibrium interest rates to encourage indebtedness. The less the dollar has purchased, the more EVERYONE has borrowed to fill the gap – from the government to the consumer and every entity in between.

Tying this back to the dollar standard, if you’re one of the parties around the world that uses this currency for your international trade, then how do you feel about it losing its purchasing power in such a manner? You probably don’t like it very much. One of the functions of money is to act as a store of value and the USDollar has become like trying to hold sand between your fingers. The harder you squeeze to hang onto it, the more it slips away. The simpletons in academia and government like to pretend that either a) nobody has noticed this annoying trend, and/or b) they don’t really care or feel they can do anything about it, and/or c) because this is America and we’re just entitled to do whatever we please.

But so far, these are all moves that have served to systematically undermine the dollar standard from within. Well, there are some pretty prominent statesman who said the only way this country would fall would be from within. So maybe those old folks weren’t so dumb after all.

Geopolitical Moves to End the Dollar Standard – Destruction from Without

However, the above only represents half the story – and a very abbreviated version of it at that. There have been a whole raft of agreements over the past half dozen years in particular that have sought to undermine the dollar standard. It is pretty simple how it works. If the dollar is the ‘reserve’ currency, then that creates automatic demand for dollars because countries need to keep a given amount (subject to policy changes and economic conditions) for settling their international trades. As the purchasing power of the dollar has decreased this has increased the demand for dollars because countries needed more to purchase the same amount of goods. This is one of the biggest (and perhaps the main one) reasons the ‘fed’ has been able to get away with its inflationary policies without going into Weimar mode. Couple that with military strong-arm tactics and order has been maintained for the most part – up until now.

Conversely, what more and more countries are doing is cutting deals with other countries and settling the transactions in some other currency – or even gold in some cases. These actions that exclude the dollar reduce aggregate demand for dollars and make it harder for the ‘fed’ to hide its inflationary tactics such as QE. Assisting in that cause is the fact that most other central banks are doing the exact same thing; they’re attacking their own currencies to make them cheap to facilitate exports. As if you can’t have a strong currency AND a strong export base. We might get into that another day, but for now it is a race to the bottom. However, China for one is making a power play. Their gold-buying habits have become very well documented. From the article:

“The increased appetite for gold also reflects rising wealth. China’s rural per capita income in the first nine months of the year jumped 12.5% from a year earlier, while urban per capita disposable income rose 9.5%. In April, when the price of gold fell 14% in two days, Chinese media showed images of women clearing shelves in gold shops.”

The actions of the Chinese demonstrate the huge disconnect in thinking between East and West. But it isn’t rural Chinese buying gold that should concern Americans, it is the actions of the central bank and the deals the country has cut with Russia, Venezuela, and Iran, to name a few, that will impact the future of the dollar standard.

As indicated in the article below, Venezuela is set to start selling the Chinese oil priced in Yuan rather than USDollars. The deals to provide the oil were cut several years ago and at the time myself and many others opined that the trades would eventually be settled in Yuan rather than dollars. That pretty much takes Venezuela off America’s bully list. China will protect her interests as Russia did in the case of running to the side of Syria as the US screamed for war a few months back. Oh, by the way, where is all the outrage from our leaders at the alleged chemical weapons attacks? (emphasis on alleged) Stories rise and fall from the news based on political expediency rather than anything else. If you want backup for that assertion, just go and look up some of the stuff that has gone on in places like Liberia and Mali…..”

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“CHAPEL HILL, N.C. (MarketWatch) — Here’s something really scary: The stock market may be forming a dangerous triple top of major long-term significance.

That’s because the Dow, in inflation-adjusted terms, is no higher today than it was at the 2000 and 2007 tops. It should give us pause to note that the market — strong as it has been — is only back to the level that turned the market back on two prior occasions.

That puts the market in a “make or break” position. On the one hand, it would be a sign of significant strength if the market were able to break through the “resistance” created by the 2000 and 2007 tops

On the other hand, if the market were to turn down from close-to-current levels — and thereby form a triple top — then it would mean that the market on three occasions had tried, and failed, to break through to higher levels. According to the theory behind technical analysis, that would mean that current levels represent particularly strong resistance — and make it that much harder for the market to break through in the future as well.

In other words, if you believe in technical analysis, the market is at a very critical juncture.

Take a look at the accompanying chart, which plots the Dow in constant 2013 dollars. Compared to the Dow’s current level of close to 16,000, the October 2007 bull market top was near 15,800 and the Dow at its early 2000 top stood at close to 16,200.

To be sure, as David Aronson points out, a chart of the inflation-adjusted S&P 500 index tells a slightly different story. Aronson is president of Hood River Research, a firm that employs sophisticated modeling to “enhance the profitability of quantitative investing strategies,” and the recent author (with Dr. Timothy Masters) of “Statistically Sound Machine Learning for Algorithmic Trading of Financial Instruments.” …”

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“I am glad (and sad) to say that the Balance Sheet Recession in the USA appears to be over.  Yesterday’s Z.1 report from the Fed confirmed that households have indeed begun releveraging.  Household debt showed its first year over year gains (on a quarterly basis) in Q3 since the crisis began. …”

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“Art Cashin says the yield on the U.S. 10-year note remains the “North Star” for stocks and if it tops 3 percent we’ll see some “outright selling” in the stock market.

Cashin, UBS’ director of floor operations at the NYSE, said on CNBC, “Interestingly, on Friday it spiked up to 2.93. Stocks hesitated a little bit, but it came right back below it.”

Referring to Friday’s Dow gain of almost 200 points after….”

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