Silver as an investment

Is Wikipedia An Establishment Psyop?

Authored by Caitlin Johnstone via,

If you haven’t been living in a hole in a cave with both fingers plugged into your ears, you may have noticed that an awful lot of fuss gets made about Russian propaganda and disinformation these days.

Mainstream media outlets are now speaking openly about the need for governments to fight an “information war” against Russia, with headlines containing that peculiar phrase now turning up on an almost daily basis.

Here’s one published today titledBorder guards detain Russian over ‘information war’ on Poland“, about a woman who is to be expelled from that country on the grounds that she “worked to consolidate pro-Russian groups in Poland in order to challenge Polish government policy on historical issues and replace it with a Russian narrative” in order to “destabilize Polish society and politics.”

Here’s one published yesterday titled Marines get new information warfare leader“, about a US Major General’s appointment to a new leadership position created “to better compete in a 21st century world.”

Here’s one from the day before titled “Here’s how Sweden is preparing for an information war ahead of its general election“, about how the Swedish Security Service and Civil Contingencies Agency are “gearing up their efforts to prevent disinformation during the election campaigns.”

This notion that the US and its allies are fighting against Russian “hybrid warfare” (by which they typically mean hackers and disinformation campaigns) has taken such deep root among think tanks, DC elites and intelligence/defense circles that it often gets unquestioningly passed on as fact by mass media establishment stenographers who are immersed in and chummy with those groups. The notion that these things present a real threat to the public is taken for granted to such an extent that they seldom bother to even attempt to explain to their audiences why we’re meant to be so worried about this new threat and what makes it a threat in the first place.

Which is, to put it mildly, really weird. Normally when the establishment cooks up a new Official Bad Guy they spell out exactly why we’re meant to be afraid of them. Marijuana will give us reefer madness and ruin our communities. Terrorists will come to where we live and kill us because they hate our freedom. (more…)

Poor America: 40% of Americans Can’t Afford Middle-Class Lifestyle

Even though the stock market trades at near record highs, joblessness suppressed at decade lows, and corporate buybacks/profits booming via Trump’s tax reform, poverty is exploding all over America.

One of the primary objectives of the Federal Reserve’s monetary policy of this past decade was to generate the “wealth effect”: by artificially driving valuations of stocks and bonds to nosebleed valuations, American households would feel more prosperous, therefore, be more inclined to borrow and spend, even if some households did not own financial instruments.

In other words, a Central-Bank-free-money-anything-goes-induced ‘economic recovery’ was supposed to trigger fast-paced economic growth, as households would reignite the service-based economy.

While this perception management only worked for the wealthiest households who owned financial instruments, the reckless monetary policy of the Federal Reserve created a massive problem of wealth inequality among Americans.

According to a new study obtained exclusively by Axios, more than 40 percent of households cannot afford the basics of a middle-class lifestyle, including rent, transportation, childcare and a cellphone.

The study, conducted by the United Way ALICE (Asset Limited, Income Constrained, Employed) Project, a nationwide effort to quantify and describe the number of households that are struggling financially, discovered “a wide band of working U.S. households that live above the official poverty line, but below the cost of paying ordinary expenses,” said Axios.

Stephanie Hoopes, Ph.D., Director, United Way ALICE Project told Axios, “based on 2016 data, there were 34.7 million households in that group — double the 16.1 million that are in actual poverty. (more…)

Polleit: Gold Should Be Viewed As Money – Not As An Investment

Authored by Thorstein Polleit via The Mises Institute,

On May 4 and 5, 2018, Warren E. Buffett (born 1930) and Charles T. Munger (born 1924), both already legends during their lifetime, held the annual shareholders’ meeting of Berkshire Hathaway Inc. Approximately 42,000 visitors gathered in Omaha, Nebraska, to attend the star investors’ Q&A session.

Peoples’ enthusiasm is understandable: From 1965 to 2017, Buffett’s Berkshire share achieved an annual average return of 20.9 percent (after tax), while the S&P 500 returned only 9.9 percent (before taxes). Had you invested in Berkshire in 1965, today you would be pleased to see a total return of 2,404,784 percent: an investment of USD 1,000 turned into more than USD 24 million (USD 24,048,480, to be exact).

In his introductory words, Buffett pointed out how important the long-term view is to achieving investment success. For example, had you invested USD 10,000 in 1942 (the year Buffett bought his first share) in a broad basket of US equities and had patiently stood by that decision, you would now own stocks with a market value of USD 51 million.

With this example, Buffett also reminded the audience that investments in productive assets such as stocks can considerably gain in value over time; because in a market economy, companies typically generate a positive return on the capital employed. The profits go to the shareholders either as dividends or are reinvested by the company, in which case the shareholder benefits from the compound interest effect.

Buffett compared the investment performance of corporate stocks (productive assets) with that of gold (representing unproductive assets). USD 10,000 invested in gold in 1942 would have appreciated to a mere USD 400,000, Buffett said – considerably less than a stock investment. What do you make of this comparison? (more…)

“This Can Sneak Up On Us Quickly”: Morgan Stanley Has Another Warning For The Bulls

In Morgan Stanley’s latest Sunday Start note, the bank’s chief equity strategist, who toward the end of 2017 turned decidedly gloomy on the US stock market after being one of its biggest bulls a year earlier, said that at the beginning of 2018 his view was out of consensus: “while we agreed 2018 would be a year of robust earnings growth, we differed by arguing that risk markets would not be rewarded for it. For US equities, we envisioned flat to modest positive returns as multiple contraction offset earnings growth.”

And, to be sure, for a while he looked way off: as Wilson notes, “the strong start to the year made our less sanguine view look premature or just dead wrong.” Yet things quickly changed after the February volocaust, when US equity valuations corrected materially, in large part due to the forward price/earnings for the S&P 500 falling 12% from its December high, largely thanks to a surge in forecast EPS due to Trump tax reform and a record amount of projected buybacks this year, by some estimates as much as $1 trillion. And while some sectors have seen their P/Es fall by much more, the median sector P/E compression closer to 15%.

As a result of the recent market volatility, Wilson says that his recent conversations with investors are not as contentious as they were in January. In fact, he is now worried that his view is simply the consensus… “perhaps implying that our call is much less likely to prove correct. This is not to say the consensus can’t be right; we note an old adage that the consensus is right 80% of the time. The problem now is that the consensus projects much more modest returns“, Wilson laments.

Which, of course, is bad news for investors, who actually have to do some work to generate returns and “have to rely more on idiosyncratic or tactical investment ideas rather than just being long beta.”

Here, Wilson notes one such idea he has recently been vocal about, namely trading a range in the S&P 500 — between 16-18x forward 12-month earnings, and points out that since January’s highs, the market has successfully tested that 16x floor four separate times. “That floor is rising with earnings estimates, and today it sits at 2625.”

The trading range strategy is, not surprisingly, one of Morgan Stanley’s favorite, and Wilson urges clients to buy US stocks broadly when the index nears 16x… unless one of two things occurs: either 10-year rates move above 3.25%, or we get a proper growth scare for the economy and/or earnings that could push up the equity risk premium beyond 350bp. (more…)

It’s Not Stagflation… It’s Inflationary Impoverishment

Authored by Alasdair Macleod via,

It is a matter of personal interest that it was my uncle, Iain Macleod, who invented the term stagflation shortly before he was appointed shadow chancellor in 1965. It is no longer used in its original context. From Hansard (the official record of parliamentary debates) 17 November that year:

We now have the worst of both worlds —not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of “stagflation” situation and history in modern terms is indeed being made.

The inflation that Iain was referring to was of wages, which were averaging an increase of 6.2%, and rising, and stagnation in production, which had declined from an index of 134 to 131. It was this divergence that gave him the opportunity to invent this portmanteau word. It has now passed into more common use to describe an economy that fails to respond to the stimulus of monetary inflation.

Its use in this context is therefore different from the original. The idea that stagflation exists as an economic phenomenon is only really true for neo-Keynesians, who view inflation as economically stimulative, and its failure to stimulate perplexing. In this sense it is frequently applied to conditions today, where massive monetary stimulus does not appear, so far at least, to have brought about the economic growth that might have been expected from it.

The explanation why monetary stimulus has not worked as intended is not difficult to understand, but for neo-Keynesians it is unpalatable. This article takes its cue from the misapplication of the stagflation term to explain why Keynesian stimulation of the economy is bound to fail, and symptoms commonly but incorrectly referred to today as stagflationary are simply a reflection of the costs of monetary policy imposed on ordinary people. (more…)

These Are The Top 50 Hedge Fund Long And Short Positions

2018 was the year hedge funds were supposed to finally outperform the S&P. Alas, as the latest Goldman Sachs hedge fund trend monitor – a survey of 848 hedge funds with $2.3 trillion of gross equity positions ($1.6 trillion long and $702 billion short) as of March 31, 2018 – that was not meant to be, and while the hedge fund hotel basket of most popular stock is just marginally outperforming the S&P YTD, both the equity hedge fund index, the composite hedge fund index, and the global macro hedge fund index are all trailing the S&P500. Again.

Yet amid this chronic underperformance, we should note that less than three weeks after we reported that the Goldman Hedge Fund VIP basket was getting slammed in late April, mostly as a result of a hit to the tech sector and FAANGs, it has since recently recovered, largely thanks to the previously discussed wholesale short squeeze, mostly among tech, healthcare and energy names.

Also of note: strong fundamental results did not result in strong performance: the average outperformance of stocks beating earnings estimates was less than half the typical amount. As a result, funds apparently trimmed their top positions. And so, in late April, Goldman’s VIP basket of the most popular hedge fund long positions (ticker: GSTHHVIP) underperformed a basket of stocks with the highest short interest (GSTHVISP) by nearly 400 bp, lagging for six days in a row. In the last few weeks, as noted above, these favorite positions have recovered.

As discussed previously, during these sharp rotations in the past month, a major short squeeze was taking place, however that failed to dent the conviction of the smart money, and “hedge fund crowding” in the most popular positions rose slightly in 1Q and remains elevated relative to history. As a result, as shown in the chart below, the average hedge fund holds 68% of its long portfolio in its top 10 positions, the highest level in two years and slightly below the record “density” of 69% in 1H 2016.

Similarly, the share of S&P 500 market cap accounted for by the 10 largest index constituents has risen in recent years and now sits at 22%, modestly above the historical average but the highest share this cycle. (more…)

5 Factors That Drive Bitcoin’s Ups & Downs

Authored by Kayla Matthews via,

The price of Bitcoin has been wildly volatile. From November to December 2017, it increased by 223 percent. It fell by 59 percent between January and February 2018, increased by 64 percent from February to March and then dropped again during March by 40 percent.

While this isn’t necessarily a reason to give up on Bitcoin, it does serve as a stark warning to those who plan to invest in it.

[ZH: Even though we note that Bitcoin’s daily trading range has collapsed to a more reasonable level recently…]

Why does this digital currency have so many ups and downs? Many of the same factors that influence changes in the value of other items affect the price of Bitcoin. Because it’s so new and different than other currencies though, many of these impacts are exaggerated.

Here are five of the primary factors influencing the price of Bitcoin.

1. Supply and Demand

This one will be obvious to anyone who has taken an introductory economics course. Bitcoin, like other currencies, is subject to the impacts of supply and demand. (more…)

Convoy: “This Chart Has Been The Driver Of Asset Prices Over The Last Decade”

Monthly Commentary Howard Wang of Convoy Investments

Tightening money supply

This year has been a process of normalization in financial conditions. Below I show the estimated money supply in the US, which rose fairly steadily before we saw a spike in 2008. That spike lasted until the end of 2014, after which the Fed began to withdraw money from the system. US money supply shrank for the first time in almost a century.

This chart has been the fundamental driver of asset prices over the last decade and will likely continue to drive the markets until the Fed normalizes their monetary policy. On average, more money chasing the same assets means higher prices while less money means lower prices. Below I show the relationship of growth in the US money supply to the long-term return of assets.

The falling money supply since 2014 is driven by a combination of rising rates and direct unwinding of quantitative easing. Below I show the duration adjusted Fed balance sheet. I believe the trend of shrinking money supply in the system will continue for some time to come. This adjustment is a painful but necessary process for healthier markets and economies.

Below I provide an update on a commentary I wrote on the subject of money supply and credit from a few years ago. (more…)

Arizona Preparing For Post-Earthquake Inflow Of 400,000 Californians

As we’ve pointed out many times before, a powerful earthquake hammering California is a geological inevitability. In the coming decades, a magnitude 7.1 or 7.3 earthquake – similar to the deadly quake that rattled central Mexico last year  – would almost certainly strike a densely populated part of the state (the San Andreas fault runs through most of California, as the map below shows), potentially leading to tens if not hundreds of thousands of casualties. The local economy would lie in ruins and it would take years to for the area to recover.


With this in mind, it’s perhaps no surprise that government agencies, businesses and other organizations in Arizona have recognized the need to prepare. To wit, the Associated Press reports that local organizations are participate in an exercise to practice how the state would respond to a migration of 400,000 people after a catastrophic earthquake in Southern California.

The Arizona Department of Emergency and Military Affairs said participants in the National Mass Care Exercise will learn how to provide food, shelter and medical services in an emergency scenario. Planning for the exercise has been underway for nearly a year, the department said.


Many county, tribal and municipal emergency operations centers will practice taking in thousands of refugees during the exercise, as procedures and staff training are tested.

Aside from the wildfires that have ravaged California, both the northern and southern parts of the state have been hit by a series of smaller quakes in recent months.

However, the earthquake situation in California is actually more dire than most people realize. Although most Californians have experienced a small quake, most have never personally experienced a strong one. (more…)

Trump Erupts In Angry Tweetstorm: “When Does This Witch Hunt STOP”, Slams Hillary, Podesta

With the “Russian collusion” narrative disintegrating fast, as even the biggest Russiagate cheerleaders exit stage left now that the public’s attention has shifted to the FBI itself for having created the narrative after planting at least one infiltrator – Stefan Halper – in the Trump campaign, overnight the NYT tried to pivot the collusion story away from Russia and toward the middle east, reporting that Trump advisers met with an emissary for two Gulf nations during the campaign, a meeting arranged by Blackwater founder Erik Prince, suggesting countries beyond Russia may have offered help.

Erik D. Prince, the founder of Blackwater, arranged the meeting with Donald Trump Jr., George Nader and Joel Zamel

And while the NYT claims that “the meeting was convened primarily to offer help to the Trump team, and it forged relationships between the men and Trump insiders that would develop over the coming months — past the election and well into President Trump’s first year in office, according to several people with knowledge of their encounters” who we assume are more FBI moles in the Trump administration, it quietly admits deep inside the piece, that once again there is no actual evidence of anything improper: “It is unclear whether such a proposal was executed, and the details of who commissioned it remain in dispute

So, in what appears to have been a late start to his usual Sunday morning tweeting, an especially angry president Trump erupted on his favorite social network, lashing out at a variety of recent developments.

First, after late on Saturday the president called on the DOJ to allow members of Congress to review documents related to the FBI spy, saying “If the FBI or DOJ was infiltrating a campaign for the benefit of another campaign, that is a really big deal,” in his first Sunday tweet, referning the NYT story about “gulf emissaries”, Trump blasted the “failing and crooked NYT” for moving attention to the rest of the world after it found nothing on Russia:

Things are really getting ridiculous. The Failing and Crooked (but not as Crooked as Hillary Clinton) @nytimes has done a long & boring story indicating that the World’s most expensive Witch Hunt has found nothing on Russia & me so now they are looking at the rest of the World!

Following up by an angry outburst, asking “at what point does this soon to be $20,000,000 Witch Hunt, composed of 13 Angry and Heavily Conflicted Democrats and two people who have worked for Obama for 8 years, STOP! They have found no Collussion with Russia, No Obstruction.”…