Faber News Flow

The phenomenon works – until it doesn't. What's astonishing is how long it works. There is a phenomenon in stock markets, in bond markets, in housing markets, in cryptocurrency markets, and in other markets where people attempt to get rich. It's when everyone is pulling in the same direction, energetically hyping everything, willfully swallowing any propaganda or outright falsehood, and not just nibbling on it, but swallowing it hook, line, and sinker, and strenuously avoiding exposure to any fundamental reality. For only one reason: to make more money. People do it because it works. Trading algos are written to replicate it, because it works. It works on the simple principle: If everyone believes stocks will go up, no matter what the current price or the current situation, or current fundamental data, then stocks will go up. They will go up because there is a lot of buying pressure because everyone believes that everyone believes that prices will go up, and so they bid up

Today, the annual issuance of Treasury debt crossed the $1 trillion mark for the 2019 calendar year (crossing $23 trillion with two months still to go).  Below, surging public (marketable) debt, slowing intragovernmental (Social Security and other trust funds) deb, versus the Federal Funds Rate (cost of short term money). The fact that all that Treasury issuance has come in the last three months should be noteworthy, but heck, the Treasury had some catching up to do after another debt ceiling impasse!?!   Still, over the same period, the Federal Reserve has cut interest rates by 35%.  Over that same period, the Fed has ceased QT, pivoted, and initiated some of the most aggressive QE we have yet seen.  This has increased the Fed's balance sheet over $260 billion in just over two months, since the Fed's pivot of late August.  Over the same period, the Fed has engaged in the most aggressive monetization of debt (decreasing bank held excess reserves against increasing Fed assets) w

The globalists and banking elites have been running the "order out of chaos" scam for a long time, centuries in fact. One thing that practice does is make people of otherwise average intelligence appear brilliant. One thing that organized conspiracy does is make a group of highly vulnerable criminals appear omnipotent and untouchable. Ultimately, it's all about time. The globalists have had lots of time to tune and refine their methods for manipulating the collective psyche of the masses. They make mistakes often, but as long as no one confronts them directly and removes these people from the equation, they simply set up shop elsewhere under a different name using different masks and continue their insidious work. As long society is still stricken with ignorance and assumes that such conspiracies are "impossible", the elites have a free hand to victimize the population further. As long as academic idiots misinterpret Occam's Razor and insist that the ev

"It's not a matter of what is true that counts but a matter of what is perceived to be true." Henry Kissinger

We talk a lot about the falling interest rate, the too-low interest rate, the near-zero interest rate, the zero interest rate, and the negative interest rate. Hat Tip to Switzerland, where Credit Suisse is now going to pay depositors -0.85% . That is, if you lend your francs to this bank, they take some of them every year. Almost 1% of them. A bank deposit comes with a risk. But instead of compensating you for the risk, the bank pays you nothing. So it's a return-free risk . And worse than that, a negative rate means that you are paying the bank in order to take the risk of lending to them. Jabberwocky Lewis Caroll wrote some pretty crazy stories, but even he did not think of something so absurd as this. A vorpal blade that went snicker-snack on the Jabberwock is nothing, compared to a bank that goes snicker-snack on your deposits! Hmm, maybe there is a good analogy here. A fantasy role-playing game called Dungeons & Dragons has a magic sword called a vorpal sword that is ext

Reconciliation Principle The impact of losses Nominal GDP drive nominal EPS growth

https://www.cnbc.com/2019/10/24/goldman-sachs-predicts-the-fed-will-make-two-big-changes-next-week.html

With global markets facing a bumper week ahead, let's dive right in to the key events of the coming days. As DB's Jim Reid lays out the main highlights, first and foremost we have the FOMC meeting on Wednesday where the Fed are expected to cut 25bps, a first look at Q3 GDP in the US (also on Wednesday) and the Euro-area (Thursday) are due and China (Thursday) and the RoW PMIs and US ISM (Friday) will be closely watched before US payrolls ends the week with a bang on Friday. Earnings season will also continue apace as a number of major global companies report on both sides of the pond. Some more detail on a few of these: Ahead of this Wednesday's Fed meeting, a 25bps rate cut is just about fully priced now. Given the lack of pushback against that pricing by the recent parade of Fedspeak, it's a relative safe prediction that they deliver another cut to take the fed funds target range to 1.50-1.75%. Looking forward though, the focus will be around the tone in

Market Review & Update "If you are a bull, what is there not to love?" That was the  message from last week,  as we discussed the reasoning for our increase of equity exposure in portfolios on an opportunistic basis. Of course, besides the fact we are moving into the seasonally strong period of the year, the primary reasons for the increase in equity really came down to two simple factors: Of course, besides the fact we are moving into the seasonally strong period of the year, the primary reasons for the increase in equity really came down to two simple factors: Trump moving the put the "trade war" to rest. The Fed moving to increase bond purchases and effectively launch QE4 (more on this in a moment.) As noted in recent discussion: "Readers are often confused by our more bearish macro views on debt, demographics, and deflation, not to mention valuations, which will impair portfolio returns over the next decade versus our more bullish bias toward equities s