Wall Street's Battle of Stall 'N' Grab

March 10, 2015
If Trees Don't Grow to the Sky: The Next 6 Years

The 45% spread between bulls and bears today stands in stark contrast to the -20% spread six years ago. The strongest gains in equity markets are built on a wall of worry and there is no such wall to speak of anymore.

Battle of Stalingrad

Marked by constant close quarters combat and direct assaults on civilians by air raids, it is often regarded as the single largest and bloodiest battle in the history of warfare.

...

The German public was not officially told of the impending disaster until the end of January 1943, though positive media reports had stopped in the weeks before the announcement.

A Trilogy of "Rising Interest Rate" Environments

The following chart shows the annual average of the 20-year treasury bond yield.


Click to enlarge.

Go ahead Yellen. Crank up those short-term interest rates this year and let's see what happens to long-term interest rates. Nearly every financial pundit in the USA seems to think up is the only direction. Don't let it concern you that we're currently well below 2014 levels.

And why might that be? Oil was ZIRP'd out behind the woodshed. Even 0% wasn't enough to save it. Let's see what some bonus rate hikes can do to other parts of our overleveraged economy! Go for it I say! The time for patience is over! The time to act is now! In the spirit of the housing bubble, raise rates now or forever be priced out!

What's the worst that could happen? This time I'm feeling lucky! You should too!



This is not investment advice. As a long-term holder of long-term bonds, I'm just sounding the clown horn. That's all. Don't read too much into it. I love that horn. It is the perfect theme sound of the long-term global economy.

If sarcastic and you know it honk the horn
If sarcastic and you know it honk the horn
If sarcastic and you know it
And you really want to show it
If sarcastic and you know it honk the horn

Source Data:
St. Louis Fed: Custom Chart

The 2nd Best Bet of the 21st Century

March 13, 2015
Bond Funds That Will Lose Big With Rising Interest Rates

In other words, get ready for falling prices for bond funds, especially those that are most sensitive to interest rates. So let’s be sure we don’t have any bond fund types that are almost certain to lose big money when the Fed starts raising rates.

Oh, we can do better than simply avoid them. Let's short the bejesus out of them, mortgaging the house if necessary! And is it necessary? Of course it is! Leaving "sure thing" investment returns on the table is foolish! If big money will most certainly be lost by owning these funds then big money will most certainly be gained by shorting them! Genius!

And do you want to know the best part? That which should fill us with the most optimism? Everyone already seems to believe in this theory! Long-term rates can only go up from here! Common knowledge! It will take so little effort on our part now that we're running with the herd! Big money! Can't lose!

Why hasn't anyone else ever thought of this? They should make some sort of anti-bond fund that goes up when bonds go down. Perhaps something easy to remember, like TBT. Think how rich people would be if a fund like that was ever introduced!

Herd prosperity, baby. That's what I'm talking about.

Let's ignore the part that assumes that rising short-term interest rates will all but guarantee that long-term rates must also rise. No point spoiling the "sure thing" party.

So, there you have it. In my opinion, it's the second best bet of the 21st century.

You didn't come here for that though. You undoubtedly want to know the best bet. My psychic advisor told me about a certain roulette table in Las Vegas. I shall be placing a very large bet at noon on April 1st. It is all but guaranteed to change my life forever! That's what she said! Can I trust her? Well, would I be paying her $3.99 per minute if I didn't? My mother didn't raise no fool! There's free advice and then there's premium advice. You get what you pay for!

Best Place to Park Your Money

If capital depreciation appeals to you, then France might be the perfect fit! Bump those investment returns! Make a serious dent in your long-term savings goals!

March 14, 2015
Currency wars threaten Lehman-style crisis

The head of the Dutch central bank, having not previously complained publicly, last week admitted that euro-QE, by propping up spendthrift governments, would shield the likes of France and Italy from “market discipline”, postponing vital reforms. A senior Goldman Sachs banker added that negative interest rates are “freaking him out”.

And no wonder. For the longer profligate eurozone governments are able to ramp up borrowing, the more likely monetary union is dramatically to implode. And the further share prices are pumped up by QE and other monetary mutations, the more vulnerable global stock markets are to crash.

Hold on now. No need to freak out. As long as we keep the global economic speed down to the bare minimum, implosions and crashes seem highly unlikely. I doubt the airbags will even deploy!

The Economic Stimulus Vehicle of Choice!

December 8, 2014
'Calgary's Worst Driver': Woman gets ticket after video of botched backing up goes viral

Police have tracked down and issued a traffic ticket to a woman after a video dubbed “Calgary's worst driver” went viral over the weekend.

December 11, 2014
We’ve all been there: In defence of Calgary’s Worst Driver

It’s one thing to be a bozo on your own time, but as soon as you drag someone else into your incompetence, you should do the right thing and leave a note on your victim’s windshield.

I suggest, "We just stimulated the global economy! Congratulations!"

Defense? Who needs a defense? This is an economic miracle! We've all been there and we need to keep doing it. You know, smashing into stationary vehicles and then fleeing the scene. It can really add to GDP if we all do our part!

Repair labor bills? Cha-ching!
Repair shop employment? Cha-ching!
Repair part bills? Cha-ching!
Part manufacturer employment? Cha-ching!
Traffic ticket government revenue? Cha-ching!
Traffic enforcement employment? Cha-ching!
Reporter employment? Cha-ching!
Google (YouTube) shareholder profits? Cha-ching!

Real prosperity, baby. That's what I'm talking about. Or not. Your call.

How Much Money Do You Need to Retire?

March 12, 2015
Retirement's magic number? $2.5M a good start

According to a new Legg Mason survey, the new magic number is $2.5 million.

That's right. 48 years worth of real median household income is a good start but you'll probably "need" a full century to be safe. And greedy. Must not forget the greedy.

There's nothing more pathetic, demeaning, and outright embarrassing than being forced to eat dehydrated caviar out of a Ziplock bag. What would the neighbors say? Don't let it happen to you.

Interest Rates Fall Sharply on Fears the Fed May Soon Raise Interest Rates

March 10, 2015
US stocks fall sharply on fears the Fed may soon raise rates

The prospect of the Fed raising interest rates for the first time in nine years is unnerving investors.

In fact, the prospect of higher interest rates unnerved investors so much today that they piled into long-term bonds, sending today's long-term yields down as a sign of complete confidence in rising interest rate theories. That's right, long-term bonds had a very good day as stocks sold off. I kid you not.

So what does this mean? My headline is every bit as accurate as this one's.

Forehead. Desk. Whack. Whack. Whack.

The Sarcasm Report v.208

March 8, 2015
The perfect market storm: brace yourself for two bull markets to slide at once

Of course, a handful of modest interest rate increases – Federal Reserve Chair Janet Yellen has gone to great pains to demonstrate that policymakers have no intention of putting the economy at risk by sending interest rates soaring – aren’t going to wreak havoc. But they do mark a big paradigm change: the end to the bond bull market that dates all the way back to 1981.

If all it took was a handful of modest interest rate hikes to end the bond bull market that dates all the way back to 1981, then it would have ended heading into the early 1990s recession, the dotcom bubble popping recession, and the most recent real estate bubble popping recession. For those who may not have noticed, this is not exactly the first interest rate hike rodeo.

But I'm game. Tell me how I should prepare for this supposed paradigm shift.

Plan in advance for how you’ll respond to various market scenarios – talk it through with your adviser, your partner, or your investment club members.

Oh crap. My adviser? My investment club members? Seriously? How about my taxi cab driver too while I am at it? I seem to be lacking in that department. How about I just bounce my concerns off this blog's readers and call it good.

Blah blah blah paradigm shift blah blah blah rising interest rate environment blah blah blah perfect storm blah blah blah crushing stocks blah blah blah Wall Street panic blah blah blah more QE blah blah blah emergency rate cuts blah blah blah unemployment disaster blah blah blah bomb shelter blah blah blah deflation scare blah blah blah Japan blah blah blah more ZIRP blah blah blah one trick pony blah blah blah more of the same blah blah blah short-term savers shafted yet again blah blah blah.

Oh, yes. That was very helpful. Thanks for the advice. I feel much better now.