Avert your eyes! My Sunday morning look at incompetency, corruption and policy failures:
• The Surfside Condo Was Flawed and Failing. Here’s a Look Inside. How faulty design and construction could have contributed to the collapse of the building in South Florida. (New York Times)
• The World Is Still Short of Everything. Get Used to It. Pandemic-related product shortages — from computer chips to construction materials — were supposed to be resolved by now. Instead, the world has gained a lesson in the ripple effects of disruption. (New York Times)
• Bitcoin Uses More Electricity Than Many Countries. How Is That Possible? Cryptocurrencies have emerged as one of the most captivating, yet head-scratching, investments in the world. They soar in value. They crash. They’ll change the world, their fans claim, by displacing traditional currencies like the dollar, rupee or ruble. They’re named after dog memes. And in the process of simply existing, cryptocurrencies like Bitcoin, one of the most popular, use astonishing amounts of electricity. (New York Times)
• The Joe Rogan COVID Experience Is Following Its Deranged, Destined Course: Just asking questions, never learning a single thing. He has surfaced illiterate observations on how otherwise healthy young people might not need to take the COVID-19 vaccines. There’s a whiff of inevitability to be found in Rogan’s admission that he contracted COVID-19 after performing a bunch of stand-up shows in Florida last month— one of the literal worst times to perform comedy shows in Florida. (Slate)
• Why Facebook Won’t Stop Pushing Propaganda Vaccine disinformation. The Big Lie. The hate poisoning your community. It all goes back to Mark Zuckerberg’s business model. (Mother Jones)
• Which Senators And Representatives Vote In Favor Of Democracy? Its complicated, but we have some nice looking charts to help explain (FiveThirtyEight)
• “A Vast Criminal Racket”: Sebastian Junger on How the U.S. Corrupted Afghanistan Four successive American administrations utterly betrayed the public trust—and lost a righteous war. (Vanity Fair) see also The Coming Demonization of Afghan Refugees The resettlement of Afghan refugees in the U.S. will be a major political flashpoint, it’s a fight Dems can – and must- win. (Message Box)
• A former Marine was pulled over for following a truck too closely. Police took nearly $87,000 of his cash. As he stood on the side of the road, police searched the vehicle, pulling nearly $87,000 in a zip-top bag from Lara’s trunk and insisting a drug-sniffing dog had detected something on the cash. It was only after Lara got a lawyer, sued and talked with The Washington Post about his ordeal that the government said it would return his money.(Washington Post)
• A little schadenfreude and Gov. DeSantis’ COVID incompetence The governor and his supporters have been ‘conducting a clinic in informal logical fallacies’ when it comes to COVID, writes columnist Mac Stipanovich. (Tampa Bay Times) see also DeSantis promotes Covid drug that top donor invests in DeSantis has been flying around the state promoting Regeneron, a monoclonal antibody treatment that was used on then-President Donald Trump after he tested positive for Covid. (NBC News)
• Why Texas’s Abortion Law May Go Too Far For Most Americans For the first time in decades, the country will get a glimpse of what happens when abortion is suddenly unavailable to nearly all women in one of the nation’s most populous states. For better or worse, Americans’ views on when abortion should be legal will probably get a lot clearer. (FiveThirtyEight) see also The Conservative Justices’ Reasoning in the Texas Abortion Case Is Legal Mansplaining It’s almost impossible to not go one further and declare that the court opted to end virtually all abortion rights in Texas, in the full knowledge that they were blessing an unconstitutional and brutal piece of lawless vigilantism, because it’s only about women. (Slate)
Be sure to check out our Masters in Business interview this weekend with Robert Hormats, Managing Director at Tiedemann Advisors. Previously, he spent 25 years at Goldman Sachs (International), rising to Vice Chairman. Hormats has served five U.S. presidential administrations, most recently as Under Secretary of State for Economic Growth, Energy, and the Environment from 2009 through 2013.
To learn how these reads are assembled each day, please see this.
Culture As An Asset
#CKStrong Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground…
Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground balls?
This is usually a sign of the endgame for markets, i.e,, the precursor to a bear market. Think the “Great Beanie Baby Bubble” of 1999.
In general, there are two types of assets,
- They can be rare—gold bars, diamonds, houses on Victoria Peak, bottles of 1982 Pétrus, Van Gogh paintings, stamps, beanie babies, or Baseball cards or
- They can generate cash flows over time – GaveKal
Creating An Illusion Of Scarcity
Scarcity relative to the money stock is what its all about now, folks.
It probably won’t be long before the Fed has to bailout the baseball card market, no?
Full disclosure, I do own a Mike Trout rookie card.
Given the extreme valuations of all most all asset classes, coupled with the massive amount of money in the global financial system, markets are now really stretching, looking for, and actually attempting to create scarcity as a useful delusion to rationalize and drive speculation.
Maybe I will start collecting poop as an “anthropological asset,” put it the blockchain, and super charge the price ramp by snapping a pictures of each sample and converting them to NFTs?
Then again, maybe all this is signaling the start of a big, big inflation cycle?
Can you believe it, folks?
gold inflation markets fed bubble
“It All Depends On One Word – Trust” – John Rubino Warns “Worst-Case Scenario Too Horrible” To Consider
"It All Depends On One Word – Trust" – John Rubino Warns "Worst-Case Scenario Too Horrible" To Consider
Via Greg Hunter’s USAWatchdog.com,
Via Greg Hunter’s USAWatchdog.com,
It looks like we are on track for yet another global financial meltdown. This time it is coming out of China in the form of a failed property development company called Evergrande. It’s five times bigger than Lehman Brothers, whose failure cratered the global economy in 2008. Will central banks, including the Fed, just let it all fail or will they print massive amounts of money trying to stop the fall? If history is a guide, we should get ready for the most money creation ever.
In May, financial writer John Rubino said, “This is beyond the ability of any individual to fix. We can’t save the system.”
We sure can print a lot of money to try though.
Massive global money printing is what is coming, and it will come with huge consequences for all fiat currencies. Rubino explains,
“Stocks are tanking, cryptos are tanking, currencies of the world are getting volatile, politics are volatile and gold is going up while all this is happening, which it is supposed to do. Gold is supposed to be the safe haven where you hide out when nothing else seems trustworthy...
That hasn’t been the case in prior bear markets. When stocks tanked, they pulled down gold and silver...
It’s a good sign when markets start to behave rationally again. When high risk assets don’t seem worth it anymore, capital flows into real assets that hold their value no matter what the government is doing to the currency. That’s the way it’s supposed to work, and that is the way it is working...
Trust is probably the key word in this whole discussion. Fiat only exists because we trust the people who are managing them to maintain their value. You take the trust away and there is nothing there. A fiat currency is not a real thing. It doesn’t actually exist other than little pieces of paper that have no intrinsic value or computer code, which also has no intrinsic value. So, you take away the trust that we had in the Fed, Treasury, Congress and the President to do the right thing, and be honest, when it comes to the financial markets, you take that away and there really isn’t anything there. Nobody would want to hold a currency managed by people they can’t trust. Pay attention to that because the less we trust the guys in charge, the less we trust the currency.
The less we trust the currency, the less we trust the financial markets and the less valuable these financial assets are. So, it all ties together, and it all depends on that one word—Trust.”
What’s Rubino’s biggest fear? Rubino warns,
“My biggest fear is that we screw up our finances, we screw up geopolitics, and we get into a big war because we are close to that now.
The U.S., Russia and China are bumping up against each other, and we are like scorpions in a bottle on this little planet with all these high tech weapons. . . . My biggest fear is we take it well beyond the world of finance to no holds barred military action.
There’s no way to predict anything when you start doing something like that. The worst case scenario is too horrible to even think about.”
Join Greg Hunter as he goes One-on-One with John Rubio, founder of the popular website DollarCollapse.com.
What If Things Go Right?
The Covid crash recovery (March 23, 2020 to present) was starting to look like it was on shaky ground: High equity prices, an uptick in market volatility…
The Covid crash recovery (March 23, 2020 to present) was starting to look like it was on shaky ground: High equity prices, an uptick in market volatility after a period of tranquility, concerns about the Federal Reserve ending QE + low rates, credit problems with Chinese Real Estate Developers (Evergrande, plus Sinic and China Fortune Land) and more.
There are plenty of worst–case scenarios to consider if that is your preferred poison. Evolution has primed your brain to identify possible threats to your survival, hence our focus on the negative. But suppress that inherent bias for a few moments to try a simple thought experiment of inversion. Given my overall constructive stance on markets, I want to imagine for a moment a scenario that is the opposite of worst-case – what do the USA and the world look like if most things more or less go right? What if a normal economic recovery replaces the pandemic slowdown?
Consider these 7:
• Vaccines for Kids: To me, this is one of the biggest game-changers out there. Children ages 5-12 get formal FDA approval for the 3 major vaccines soon, and the vast majority of schools require them for attendance. (Teachers Unions go on strike in the holdout areas).
There is lots of evidence unvaccinated unmasked kids can be asymptomatic carriers of Covid; with schools re-opening and a decided lack of available child-care, Covid-19 vaccinations will end up just like Polio, Measles, Mumps, Rubella, jabs – just another childhood vaccination required to send your kid to public or private school. Once we take care of this age group, the biggest stumbling block to economic activity is removed.
• Delta Variant Rolls Over: We are seeing signs that the dominant Delta variant may have peaked, as more people who were vaccinated or infected bring us closer to herd immunity. This is true even along the Gulf Coast, an area where local governments have botched their covid response, and hospitals are overwhelmed. Expect infections to peak, followed by hospitalizations, ands then deaths. As this happens, local economies cannot help but improve. Recall infectious disease expert Charity Dean’s observation that today’s mortality rates are a snapshot of infections 4 weeks ago. The FDA authorization of a booster (third) shot also helps reduce poor outcomes.
• Political Resolution: There are three big issues pending before Congress: Passing the Infrastructure Bill, raising the Debt Ceiling, and getting the 2022 Spending Bill completed. All three are likely net positives for the stock market. Will the progressives spike the chance for Boden’s infrastructure bill to pass? Does the GOP want to hurt the favorable odds of their retaking Congress in the midterms?
Even in DC some times things align towards accomplishment instead of derailment. This feels like one of those times. It is not hard to imagine that a deal gets cut, and all of them are resolved positively.
• Federal Reserve Remains Accommodative: Barring any surprises, the taper of Fed bond purchases is looking increasingly likely this year. It’s anti-climatic at this point. Regardless, rates will remain low for the foreseeable future, with modest increases unlikely to begin until 2H 2022 at the earliest. Fed Fund Rates above 3% is unlikely for years.
• Inflation: I have been in the “Reset/transitory” camp for a long time – deflation with spasms of occasional inflation. The biggest cost pressures seem to be related to reopening problems and supply chain issues. Maybe this lasts into mid-2022; if it goes much beyond that I will need to rethink my position on inflations.
• China problems stay in Asia: Assume Evergrande goes to zero – does it really matter? Is its paper festooned in every bond manager’s portfolio? Will real estate take a 30% dive? China is deeply interconnected to global industrial manufacturing and its supply chains. But the integration of China’s credit and financial system is no way near as entrenched as America’s was in 2007-09.
There are always things to be concerned about in markets, reasons to sell even as the market climbs a wall of worry. The trick is to understand what is merely day-to-day noise versus what is deeper and more significant. It is as much Art as it is Science, so don’t expect any magic bullets.
DELTA is Coming For Your Economic Recovery (August 13, 2021)
Inflation: Long-Term, Transitory or Reset? (July 28, 2021)
End of the Secular Bull? Not So Fast (April 3, 2020)
Markets Drive News (not vice versa) (April 2, 2018)
PVC Prices Hit Record High As Homebuilding Costs Soar
FOMC Signals Taper “Soon”, Shows Rate-Hike In 2022
When Will “Transitory Inflation” Overstay Its Welcome?
Looking for the Next Big Crypto to Explode in 2021? Try These 5 Coins
Escobar: Eurasia Takes Shape, Part 1 – How The SCO Just Flipped The World Order
60% Polled Expect Federal Reserve to Taper Bond Purchases Starting December
‘Team Transitory’ Loses Another One – OECD Warns Of Higher Inflation For Next Two Years
Three Key Takeaways From The Fed Meeting
China Syndrome? Is Evergrande A Symptom Of Deeper Malaise
Taper Tantrum 2.0?
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