What is Going On?...and Trump.

Here is where we are...

Insiders dumping stock at highest levels since 2007, while we have also had record buy-backs.

REPO out of control, like in 2007. We find out if they have control again on or about October 10th. If they do not have control, expect QE4++.

IPOs being cancelled like crazy as there is no interest in financing new public companies. See here...

https://www.123rf.com/photo_62193615_fashion-pre-teen-girl-of-10-years-old-wearing-fall-clothing-hipster-style.html

This also has a very 2007 feel about it.

And Trump?  

Conspiring with a foreign country to subvert American Democracy is known as a Conspiracy Against the USA....it is a crime. 

But does it matter?  

The ethical bar has been lowered so far during this man's term in office, that what would have previously warranted a constitutional crisis and impeachment is now shrugged-off as "so what"?

Where is the America I used to know and admire? 

Certainly not in the hands of Donald Trump...or of Nancy Pelosi for that matter...or of Biden, or of Warren or of any of the other pretenders to the mantle of the Progeny of American Greatness.

At the end of an age....

Edit Vector

Buy Backs and Insiders

Here is why I read Zero Hedge...

https://www.zerohedge.com/markets/peak-buybacks-has-corporate-indulgence-hit-its-limits

The article covers the latest in the buy back binge, and shows how it is directly related to insider selling. It illustrates that corporate managers pump share prices with corporate cash used to buy back stocks, then they sell their own shares into the price rise. This article is literally light years beyond anything you will read in mainstream media.

After every crash we look back and decide that something was amiss.  This practice will be "the big 'no no'" that we discover next time.  Unlike with past bubbles, this time we will all have known this was happening well before the bubble bursts....there is no excuse for not stopping this now.

The practice should be illegal.

Simply Brilliant on Repo Madness

Read this...an excellent analysis of the recent Repo Madness.

https://seekingalpha.com/article/4292945-fed-loses-control-benchmark-interest-repo-rates-roof

Best line from it...

"In August 2007, the repo markets suddenly tightened, in what turned out to be one of the earliest indications that there were deep problems in the financial system."

The US Fed has extended its Repo support to October 10, 2019. 

Do the markets collapse the first business day after that?  

These are the Last Days of the Free Money Disco....

Return of Repo Man

The US Fed pumped $66 Billion more into the Repo market today.  

Here is a good summary of what is happening..

https://fortune.com/2019/09/23/repo-market-big-deal-400-billion-bailout-unnerving/

From this article...

"Put otherwise, the Fed is back where it was roughly a decade ago, effectively buying U.S. Treasuries from banks on an indefinite basis. But the difference this time? There’s no financial crisis in sight, just the uncomfortable fact that private capital markets once again need public support.

“For all intents and purposes, this will be equivalent to QE, with scheduled purchases of securities. We estimate that over the first year, the Fed would need to buy roughly $400bn of Treasury securities to achieve an appropriate level of reserves, plus a buffer,” the Bank of America wrote in a research note.

As plumbing problems go, this will be an expensive one to sort out."

Nothing in this is normal. The private financial markets are not working, and they need central bank intervention to function.

The article notes that there is no financial crisis is in sight??!  This is true, except that they might want to mention that but for the intervention we have seen over the last six days, we would be in a financial crisis right now!

They are estimating that $400 Billion support should do it.  But counting last week, the US Fed has already supplied roughly $345 Billion!  So, another $55 Billion and we are gold?!

Hmmm...we have seen estimates like this before = QE1, QE2, QE3!  

Would you bet they are off in theri $400 Billion estimate by, say $2 Trillion? 

Or will this support have to be endless...have we reached the point where financial markets can only function as long as the US Fed prints new money to make them work? 

What will that do to the underlying confidence that businesses an consumer have in the economy?

What I do know for sure - this chaos means that the Banksters will be cashing in their bonuses soon!

The Swindle Continues...

Wow! US Fed Intervenes - "Nothing to see here...move along...keep buying stocks!"

See this...

https://www.bnnbloomberg.ca/fed-injects-cash-for-fourth-day-as-funding-markets-stabilize-1.1319319

The US Fed had to provide liquidity into the short term market to stabilize the borrowing markets. In total, they injected $278 Billion in four days.

What does this mean? Let's keep this simple... 

Companies and banks were in need of overnight borrowing so they could satisfy their obligations - they did not have this cash. The demand was so great, and there was so little money available that short term rates for that money exploded. The US Fed had to jump in and provide enough short term cash to keep rates low.

So, the problem was that there wasn't enough liquidity available for short term lending, at least not enough so that it could be borrowed at low rates. Put another way, not enough lenders were available or willing to supply liquidity into this market for short term debt. 

The idea of a "liquidity problem" is essentially the definition of a financial crisis. It happens when financial institutions stop lending to one another and to others. When this happens, the world can go from excess available cash to not enough cash in a heartbeat.

And last week, the world's financial heart skipped a beat. 

You need to understand that the US Fed did not intervene because it wanted to, as a part of normal day-to-day operations, but because it had to in order to prevent the possibility of a financial crisis stemming from a frozen market for short term debt.  

But that was last week. Are lenders ready to lend now, so that the US Fed can stand down? 

I have to think that US Fed officials have been talking to private lenders continually this weekend to make sure that they do get back in the game. Because if they are not back in the game and lending enough to meet demand at low rates next week, we could be in for a very interesting few weeks. We should have an indication of where this is going as early as Monday morning.

We have had free money for a decade...that may have ended last Tuesday.

The Swindle Continues.

How Is This Legal?

Facebook has had a share buyback program in place for a few years now.

https://www.cnbc.com/2018/12/07/facebook-increases-stock-buyback-program-by-9-billion.html

The total buybacks are in the neighborhood of $17 Billion starting in 2017, and another $9 Billion this year.

AT THE SAME TIME AS THESE BUYBACKS.....Zuckerberg sold a reported $3.5 Billion in shares earlier this year! After taking a pause, he is selling about $100 Million per day, right now!

This is legal. It should not be legal. 

A suggestion...Officers and Directors and Insiders of publicly-traded corporations should not be able to sell their shares for at least two years after a buyback.  

Why?

Because there is too much temptation on corporate managers and insiders to use shareholders' money to pump share prices through buybacks, and then reap much higher profits when they sell their own shares into the buyback frenzy that they themselves created.

The counterargument is that buybacks pump prices for all shareholders so they benefit everyone.  

But this only applies if everyone sells like the insiders do after rices are pumped, and we all know that they almost never sell.

If companies have massive cash reserves and want to help their shareholders, they should issue special dividends. (Case in point - Facebook has over $40 Billion in cash and no debt.  This is about $15 per share!) This approach puts cash in everyone's hands, leaving it up to the shareholders whether they want to take the cash and buy more of the company's stock.

What happens if this goes unchecked?

Well, Sears happens - $6 Billion in buybacks since 2009, and $5 Billion in debt when it finally declared bankruptcy and died. 

Maybe they could have used that cash building an Internet presence to take on their competitors? I'm just saying...

The Swindle Continues.

All Philosophy, Explained

All basic philosophy is outlined for you below in a series of short questions and statements.  

It all comes down to this…

Personal Philosophy – What is the meaning of life?

Religious Philosophy – The meaning of life is God.

Humanist Philosophy – The meaning of life is Humans.

Political Philosophy – Who is in charge of tax revenues?

Democratic Philosophy – What are you doing with our money?

Non-Democratic Philosophy – The few are entitled to the people's money.

Artistic Philosophy – What is reality?

Pre-Modern Artistic Philosophy – Reality is what you see.

Modern Artistic Philosophy – Reality is what you feel.

Post-Modern Artistic Philosophy – Artichoke.

Economic Philosophy – Greed is good.

Social Philosophy – Greed is bad.

More interesting philosophies…some are real, and some are “less real”.

Pirate Philosophy – The meaning of life is “Arrrrr”.

Charitable Philosophy –The meaning of life is you.

Narcissistic Philosophy – The meaning of life is me.

Al Caponean Philosophy – The meaning of life is “fugeddaboudit”.

Bureaucratic Philosophy – Please take note, the working group that has been struck to explore this concept will report back at a later date.  Thank you. Veuillez prendre note que le groupe de travail qui a été créé pour explorer ce concept fera rapport à une date ultérieure.  Je vous remercie. (Last update, 03/02/2001)

Environmental Philosophy – The meaning of life is green.

Oceanic Philosophy – The meaning of life is blue.

Librarian Philosophy – The meaning of life is read.

Young Man’s Philosophy – Give love to get sex.

Young Woman’s Philosophy – Give sex to get love.

Parental Philosophy – Keep them busy until they are 30.

Stoic Philosophy – The meaning of life is duty, self-control and no sex.

Bacchanalian Philosophy – The meaning of life is wine, freedom and lots of sex.

Trumpian Philosophy – The meaning of life is money, control and bad sex (…also see “Narcissistic Philosophy”.)

My Philosophy - Artichoke.

Recent Deficits in Canada

Here is the record of borrowing, both completed and planned, by the Government of Canada under the present regime up to the end of the present fiscal year.

Deficits 2015-16 to 2019-20:

2015-16 - $5.3 Billion (Present regime took over half way through the 2015-16 fiscal year.)

2016-17 - $29.4 Billion

2017-18 - $29.0 Billion

2018-19 - $22.8 Billion

2019-20 - $17.7 Billion (Planned - election to take place half way through the fiscal year.)

The total will be about $95 Billion added to the debt in four years that the present regime was in charge of federal finances.

The present regime promised deficits of under $10 Billion for the first three years (2016 - 2019), and then that the budget would be balanced by 2019-20.

Assuming a deficit of $10 Billion a year in new debt over the first three years - $30 Billion maximum - the present regime has missed its promised target by about $65 Billion; the debt has been increased by 215% more than was promised. This works out to over $1,800 in new debt for every man, woman and child in Canada. 

The present regime has no plan to balance the budget…ever.

Insiders Selling

Some useful news...

https://www.cnn.com/2019/08/26/investing/stock-market-insider-selling/index.html

I'm just saying!

Inversion Invasion!

Why does an inverse yield curve matter?  How good is it as a predictor of future bad economic times?

An inverse yield curve means that interest rate yields for long term bonds are less than the yields for short term bonds.

You need to know two things…

1. Usually, long term bonds pay more interest, because they require that the bond-holders tie their money up for a longer period of time.

2. Bonds are bought and sold. The more that bonds are in demand, the higher the price for those investments, and the lower the corresponding yield.

So when yields on long term bonds are lower than yields on short term bonds, this means that some investors are buying enough of those long term assets to drive yields down to a point where they are actually below the yields on short term assets. This happens as a result of a “flight to safety”. Long term bonds - and we are talking about government bonds here – are generally considered to be safe assets. Although they provide little return to investors, they do serve to conserve wealth in difficult times, as they historically hold their value and even pay small rates of interest to investors when the stock market and the prices of other assets, like houses, tumble.

So an inverted yield curve means that some investors are taking cash out of more risky investments like the stock market, and they are parking their money somewhere that is generally considered to be very safe. 

Do you see a pattern to my recent blogs? In this uncertain and chaotic time, don’t stand pat...stay nimble and try to follow the "smart money"!

How good is this indicator?

Inverted yield curves are considered to be almost 100% predictive of recessions. On average, a recession follows about 9 months after the yield curve first inverts. 

This makes sense, as an inverted yield curve is actually saying that the “smart money” thinks we are at the end of an economic growth cycle and the economy is about to turn sour, otherwise they would not be seeking safer investments for their money.

The yield curve in the United States first inverted last Spring, and has done so twice since.

I’m just saying….

Caveat!  Virtually every single time that the yield curve inverts, a veritable army of professional talking heads takes to the airwaves and to the Internet proclaiming the reasons why it does not matter this time! History says something completely different.  

Do your own due diligence!

Francis Speaks! (Not the Pope)

Francis Fukuyama famously announced "The End of History" after the end of the Cold War. Basically, with the defeat of Communism, we were said to have reached the end of experiments with governing systems, and to have arrived at a point where democratic forms were universally acknowledged as the end point of human political development. If only...

Fukuyama moved on from this and has looked at what happens to those same democracies that he previously proclaimed were "the end point".  This, from his book, "Political Order and Political Decay", seems to capture the essence of our present time....

"Natural human sociability is based on kin selection and reciprocal altruism - that is, the preference for family and friends. While modern political orders seek to promote impersonal rule, elites in most societies tend to fall back on networks of family and friends, both as an instrument for protecting their positions and as the beneficiaries of their efforts. When they succeed, elites are said to "capture" the state, which reduced the latter's legitimacy and makes it less accountable to the population as a whole. Long periods of peace and prosperity often provide the conditions for spreading the capture by elites, which can lead to political crisis if followed by an economic downturn or external political shock."

Do we need more tax cuts for rich people?

Still reading Mueller's Tome...stay tuned.