domingo, noviembre 12, 2017



Wall Street's Best Minds

Greg Valliere: Investors Are Upbeat

There’s optimism about the economy. And while Trump is mocked, his policies are praised.

By Greg Valliere

Every few months we run this feature, because we learn so much from talking with investors, both institutional and retail. So this morning we will pass on what we’re hearing -- the consensus of investors, who provide a refreshing contrast from the Beltway mentality. Here goes:

There’s rising optimism over the economy, and virtually no one we talk with anticipates a recession any time soon. Not many investors are euphoric; they don’t anticipate a boom but there’s a strong belief that moderate growth is sustainable.

Donald Trump is widely mocked but his policies are praised. Most investors are savvy enough to divorce the Trump tweets -- which are viewed as childish -- from the generally pro-business climate in Washington, which is cited as a factor in the stock market rally.

Horizon Investments

Surprisingly, most clients don’t expect tax cuts to affect them much personally. But they anticipate a major plus for business, with much lower corporate tax rates giving the stock rally another leg up. No one seems to care whether the tax cuts pass in December or March; investors simply want the process to advance.

There’s growing unease over budget deficits. The $666 billion in red ink in the just-ended fiscal year is viewed with alarm, especially by retail clients. A surprising percentage worry that entitlement benefits -- Social Security and Medicare -- will eventually have to be curbed because of these deficits.

Intriguingly, a majority of investors would have no issue with higher interest rates; retail clients, eager for better yields, would actually welcome higher rates.

We never hear clients calling for Janet Yellen’s ouster. She’s associated with a roaring stock market and the economic recovery, so why fix what’s not broken?

Business execs we talk with have been complaining for over a year that they can’t find skilled labor, and recently they have lamented that they can’t find enough workers who can pass a drug test. Trump’s proposal to curb legal immigration is viewed with dismay.

There’s widespread exasperation over the Millennials, who don’t seem to accept the traditional pattern of getting a good job and buying a home. They have priorities that the older generations don’t understand.

Retail investors age 40 and older are beginning to plan for retirement. Everyone in our industry had better have good retirement advice, because it’s what clients increasingly want to discuss.

The only politician who gets good grades -- and whose reputation has improved this year -- is United Nations Ambassador Nikki Haley, the near-certain successor to Rex Tillerson at the State Department.

Unfortunately, there’s only tepid support for free trade, with a majority of clients in agreement that the U.S. has gotten fleeced, especially by China.

There’s a surprising fascination with faux currencies like Bitcoin, especially from retail investors, many of whom think this is the start of something big.

There’s little concern among clients over terrorism or ISIS or North Korea, but there’s uneasiness that the U.S. -- and the entire financial system -- is vulnerable to cyberterrorism.

Among liberal clients, there’s dismay that the Democrats have virtually no new ideas and an acute lack of fresh faces heading into the next presidential election cycle.

No one seems to care about the Russia probe. Despite strong antipathy toward Trump personally by a surprising majority of clients we talk with, very few favor impeachment.

Everyone hates Washington, it’s almost the national sport. There’s a genuine longing for bipartisanship but investors are resigned to the dysfunction and can live with it, perhaps as a form of entertainment.

That’s our summary of client attitudes. They’re a pretty optimistic bunch -- not euphoric, but cautiously optimistic. Sir John Templeton famously said bull markets begin with despair and end with euphoria; investors we talk with are not euphoric yet, which persuades us that the rally will continue.

Valliere is global chief strategist with Horizon Investments.

 Hyperinflation Chronicles, Part 1: Einstein’s Scribble, Newman’s Watch, And Dot-Blockchain

When governments create insane amounts of money, the recipients of that money tend to behave accordingly. Consider:

Einstein scribbled his theory of happiness in place of a tip. It just sold for more than $1 million.
(Washington Post) – He is known as one of the great minds in 20th-century science. But this week, Albert Einstein is making headlines for his advice on how to live a happy life — and a tip that paid off. 
In November 1922, Einstein was traveling from Europe to Japan for a lecture series for which he was paid 2,000 pounds by his Japanese publisher and hosts, according to Walter Isaacson’s biography, “Einstein: His Life and Universe.” During the journey, the 43-year-old learned he’d been awarded his field’s highest prize: the Nobel Prize in physics. The award recognized his contributions to theoretical physics. 
News of Einstein’s arrival spread quickly through Japan, and thousands of people flocked to catch a glimpse of the Nobel laureate. Impressed but also embarrassed by the publicity, Einstein tried to write down his thoughts and feelings from his secluded room at the Imperial Hotel in Tokyo. 
That’s when the messenger arrived with a delivery. He either “refused to accept a tip, in line with local practice, or Einstein had no small change available,” according to the AFP. 
Instead, Einstein wrote two short notes and handed them to the messenger. If you are lucky, the notes themselves will someday be worth more than some spare change, Einstein said, according to the seller of the letters, a resident of Hamburg, Germany who is reported to be a relative of the Messenger. 

Those autographed notes, in which Einstein offered his thoughts on how to live a happy and fulfilling life, sold at a Jerusalem auction house Tuesday for a combined $1.8 million. 
“A calm and modest life brings more happiness than the pursuit of success combined with constant restlessness,” reads one of the notes,written in German on the hotel’s stationery. 
It just sold for $1.56 million. The letter had originally been estimated to sell for between $5,000 and $8,000, according to the Winner’s Auctions and Exhibitions website.  
Luxury homes can’t keep up with high demand 
(CNBC) – The supply shortage that has been plaguing the nation’s housing market for the past two years has now affected the most expensive homes.
The number of multimillion-dollar listings is suddenly dropping, and that is only making these pricey homes, well, pricier. 
The top 5 percent of homes by price sold in the third quarter saw their values increase 4.9 percent compared with a year ago, hitting an average of $1.71 million, according to Redfin, a real estate brokerage. 
“There is still strong buyer demand for high-end homes,” said Redfin’s chief economist, Nela Richardson. “Despite declining inventory, luxury sales soared in the third quarter.” 

Sales of homes priced at or above $1 million were up 11 percent from a year ago, while sales of homes priced at or above $5 million were up almost as much at 10 percent, Richardson explained.
Paul Newman’s watch auctioned for record $17.8 million 
(Yahoo!) – A constant beloved companion of Paul Newman for years, the late Hollywood star’s Rolex has sold for $17.8 million, setting a world auction record for a wristwatch, Phillips said Friday. 

Given to him by his wife Joanne Woodward and lovingly inscribed while the couple filmed and co-starred in the 1969 movie “Winning,” Newman was photographed wearing the iconic stainless steel watch on countless occasions. 
Auction house Phillips said it was snapped up late Thursday in New York by an anonymous telephone buyer for $17.8 million after 12 minutes of frenzied bidding in a sale that attracted collectors from more than 40 countries. 
Company adds ‘Blockchain’ to its name and its shares surge nearly 400% 
(GATA) – A British company that has been investing in internet and information businesses is having its best day on record. 
On-line Plc jumped as much as 394 percent today after announcing plans to change its name to On-line Blockchain Plc, following an initial climb of 19 percent on Thursday when it announced the news. It’s the biggest one-day gain for the small-cap company since its December 1996 listing. The trading volume that reached 2.9 million shares by early afternoon in London is equal to more than 16 times the entire year’s trading before the last two days.

The first question that comes to mind here is psychological/spiritual. Say you have a spare 20 mil lying around and can do one of two things with it: Either lift 40 or so poor kids out of poverty for a lifetime or buy some dead actor’s wristwatch. In Scenario One you spend your remaining years on this Earth following the progress of people who because of you are living good, useful lives (the details of which they’re happy to share with their benefactor). In Scenario Two you have a (seriously ugly) watch in a glass case surrounded by security sensors to show your friends. And you…choose the latter. Seems like a hard thing to carry around, but hey, the money keeps rolling in so maybe with the next 20 mil…

The second question concerns levels of self-involvement. You can spend a million dollars on a handful of Einstein’s countless extant words OR finance the research of a biotechnologist working on a cure for aging or cancer. If you’re rich and of a certain age, seems like you might be more concerned with living longer to enjoy your wealth than owning a piece of paper, regardless of what’s written on it.

The last question is about simple intelligence. If you’re rich you’re presumably old enough to recall the 1990s when stocks would soar after adopting a dot-com suffix – and what happened to nearly all of those stocks in 2000. And yet here you are falling for the same scam. A fool and his money indeed.

This is not to say that some of the trophy assets listed above aren’t valuable. But the opportunity costs of paying today’s prices for them are shockingly high. The fact that so many seem willing to accept those costs implies that beyond a certain point money doesn’t just destabilize the currency markets. It also twists its owners.

1987 Stock Market Crash Anniversary Predictions; Rubbish as usual

By: Sol Palha  


Stubbornness does have its helpful features. You always know what you're going to be thinking tomorrow.

Glen Beaman

Expert after expert is busy proclaiming that the world is about to come to grinding halt again.

They never seem to let up on pushing this sewage onto the unsuspecting masses. This is a clear example of insanity in action; mouthing the same nonsense over and over again with the desperate hope that this time the outcome will be different.  The outcome will not be different this time, at least not yet. These guys should focus on writing fiction for reality seems to elude them completely. For years we have stated (and rightly so) that until the sentiment changes, this market will continue to soar higher and higher.

Here is a small sample of the flood of articles that were pushed out this month. If one simply glances through them, one would almost be compelled to think that the writers shared the same notes.  There is almost no originality in these articles. The theme is the same, just because it’s October the focus is on the disaster aspect of the 1987 crash. Almost no one mentions that it proved to be a monumental buying opportunity. The focus is oh the financial world came to a grinding halt. Only it did not, the only that came to a halt was the rubbish the predecessors of today’s experts were uttering back in 1987.  This reinforces the view that most financial writers have chosen the wrong profession.  One word sums all this nonsense “Rubbish.”

Could the 1987 stock market crash happen again? - Reuters

Black Monday anniversary: How the 2017 stock market compares with 1987 - Market Watch

Black Monday: 30 years after 1987 stock market crash... Wall Street raises fears of REPEAT-

Thursday marks 30th anniversary of the Black Monday stock market crash - courier-journal

Buy Climax at 30th Anniversary of 1987 Stock Market Crash – Money Show

The Crash of ’87, From the Wall Street Players Who Lived It - Bloomberg

Black Monday: Can a 1987-style stock market crash happen again? - USA Today

So are we stating that the stock market will never crash?

No that is not what we are stating.  The market will crash, but for the astute investor, “crash” is the wrong word to use. A strong correction is more likely as most astute investors got into this market a long time ago. It is the crowd that will eventually decide to embrace close to the top that will experience this crash that the experts have been hyping about for years.

This market will experience one strong correction before it crashes, but the moment the Dow sheds 1000 points or more these experts will crawl from the rocks they were hiding under and start screaming bloody murder. To which our response is, please scream as loud as you can; for it will push the markets lower creating a better buying opportunity for us.  This is exactly what we said in Aug of 2015 before Trump won and countless times before and after that.

This market is extremely overbought so a pullback ranging from 1500-3000 points should surprise no one and it certainly should not be construed as a crash but viewed as market releasing a well-deserved dose of steam. To state otherwise, would simply be disingenuous, which seems to be the only real qualification these so-called experts posses.

Market Sentiment indicates that the crowd is far from Ecstatic

The Bullish sentiment has risen somewhat, and the crowd is not as anxious as it was at the beginning of this month or last month, but until the readings indicate this crowd is euphoric, a crash is unlikely. Many people state that most people don’t have money to invest in the markets. We beg to differ; look at whats going on in the Bitcoin market, now that is a market showing some signs of Euphoria; the stock market in comparison is at the lukewarm stage.


The only thing that is going to crash and has been crashing since 2008 is the egos of these “know it all” experts. If any of them had even listened to themselves half of the time; they would have bankrupted themselves several times over. The fact that they are still around chiming the same rubbish is clear proof that they don’t believe a word they are putting to print and therefore neither should you.

Why Not Try Something New For A Change

Make a list of stocks you would love to own at a discount. When the market lets out a nice dose of steam, instead of fleeing for the hills, you can purchase top quality stocks for a discount

The sheer volume of these articles validates our view that the masses are from bullish and a crash is unlikely.  Until the sentiment or the trend changes,  all strong corrections should be viewed through a bullish lens.

Obstinacy is the result of the will forcing itself into the place of the intellect.

Arthur Schopenhauer

Murderous Latin American police need to start policing themselves

Cops unable to quell violence may lose their inhibitions about taking part in it

“SEVEN rats eliminated,” began one voice message in a WhatsApp chat in El Salvador. “What joy!” In a country ravaged by gangs, such exchanges might be expected among hit men. Instead this discussion was among policemen. According to revelations in August by Revista Factum, a website, they gloated over killing gang members, shared tips on tampering with crime scenes and posted videos of detainees being tortured.

El Salvador has the world’s highest murder rate, and its policemen kill with worrying frequency. The fact that police kill people so often in countries wracked by violence may stand to reason: the more armed criminals that officers confront, the more they will need to open fire.

But something particularly alarming is taking place. A study by Ignacio Cano, a Brazilian criminologist, found that the higher a country’s murder rate, the greater the overall share of killings committed by cops (see chart). It seems that police unable to quell violence may lose their inhibitions about taking part in it.

Latin American and Caribbean countries along drug-trafficking routes lead world rankings for both types of killing. Mr Cano’s study found that 17% of El Salvador’s fatal shootings in 2015 were committed by police. Jamaica’s ratio in 2014 was 13%. Those proportions are higher than the 10% rate in the United States, where police brutality is a heated political issue, and dwarf Germany’s 4%.

In theory, these high ratios might stem from Latin American cops facing frequent dangerous encounters. But the data do not support this explanation. In Mr Cano’s view, a ratio of people killed by police to police officers killed by suspects higher than 10:1 implies a misuse of force.

In 2016 El Salvador’s figure was 59:1—meaning some “shoot-outs” were probably assassinations by police.

Moreover, official statistics may understate the problem. Governments only tally killings committed by police in the line of duty. These alone can add up. Venezuela acknowledges hundreds of deaths at the hands of officers on “People’s Liberation and Protection Operations”. However, in countries where organised-crime groups have infiltrated state security forces, off-duty cops often do the dirty work for vigilantes or gangs. Official ledgers do not record such murders as killings by police.

One explanation for the prevalence of trigger-happy cops is the embrace of punitive policing as an antidote for weak justice systems. As recently as 2013, police in El Salvador killed just 39 people. But in 2015, the government reinstated a mano dura (“iron-fist”) approach, warning gang members that officers could shoot them “without any fear of suffering consequences”. Police killed 591 people the next year.

There is little evidence that mano dura works. In Central America’s “northern triangle” (El Salvador, Guatemala and Honduras), such policies have failed to stem rising murder rates.

They can be counterproductive: as police brutality grows, civilians stop offering tips or seeking protection from the authorities. That makes the public more vulnerable. In a recent poll for the Atlantic Council, a think-tank, 77% of respondents in the northern triangle said they did not trust the police. Nonetheless, Latin Americans seem more eager to punish civilian wrongdoers than to limit police violence. A survey in 2015 found that half of Brazilians believe “a good criminal is a dead criminal.”

Reformers could start to reduce killings by police with technical fixes, such as equipping officers with non-lethal weapons like tasers. But the countries that have drastically reduced police brutality have instituted broad reforms to rid the justice system of organised crime. In the early 2000s Colombia purged 12,000 corrupt officers, while teaching clean ones to investigate crimes more effectively.

Some hopeful signs have emerged in Central America. In Guatemala, a UN-backed team of independent prosecutors secured convictions in 2013 against four police officers responsible for systematic killings of prisoners. And last year Honduras appointed a civilian-led commission to vet its police force. It has already purged 30% of the country’s officers.

Guatemalan and Honduran police are still too violent. However, those countries have at least admitted that their problems stem from a rotten system, not just bad apples. In contrast, El Salvador has fired or charged only a few of the 559 officers it has arrested this year for allegedly belonging to death squads, participating in firefights or committing other crimes. Even the officers in the WhatsApp chat were freed just three days after their arrest. They are back at work, and no one is protesting.