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Peak Insiders
Peak Insiders
by
charleshughsmith
Executive Summary
- The underappreciated impact of the Fed's current tapering
- Get ready for corporate profits to start rolling over
- Why record margin debt is such a big danger
- The myth of de-leveraging
- Why the data make a clear case the long Bull market is ending
If you have not yet read Is Part 1: Is This Decline The Real Deal? available free to all readers, please click here to read it first.
In Part 1, we looked extremes in valuations, sentiment, leverage and complacency, and how these make the Bull case for further advances in stock prices difficult to make without drawing this time it’s different parallels with previous asset bubble tops.
In this Part 2, we’ll look at how the fundamentals of the Bull case have been weakened or threatened, and determine whether indeed we are witnessing a key moment of direction-reversal in the markets.
The Federal Reserve’s Tapering of Quantitative Easing
Everyone who follows the financial news is aware that the Federal Reserve has tapered its unprecedented Quantitative Easing bond and mortgage buying program from $85 billion a month to $25 billion a month, and has made noises about ending the program entirely by October of this year.
Observers see two primary consequences of the end of QE:
1. Interest rates, no longer suppressed by Fed bond and mortgage buying, will likely tick higher from historic lows.
2. The support for stocks and other risk assets provided by QE will end, removing a key prop under stocks.
It’s clear that interest rates—shown here by a commonly used proxy for interest rates, the 10-year Treasury bond yield—have hit bottom, and while they might bounce along the bottom for some time, they don’t have much room to decline even if “risk-off” buying of Treasuries pushes the T-bill yield lower.
In other words, even if Treasury yields fall as investors flee ‘risk-on” assets such as stocks for the safety of Treasuries, this doesn’t necessarily translate into…
Prepare For The Bear
PREVIEW by charleshughsmithExecutive Summary
- The underappreciated impact of the Fed's current tapering
- Get ready for corporate profits to start rolling over
- Why record margin debt is such a big danger
- The myth of de-leveraging
- Why the data make a clear case the long Bull market is ending
If you have not yet read Is Part 1: Is This Decline The Real Deal? available free to all readers, please click here to read it first.
In Part 1, we looked extremes in valuations, sentiment, leverage and complacency, and how these make the Bull case for further advances in stock prices difficult to make without drawing this time it’s different parallels with previous asset bubble tops.
In this Part 2, we’ll look at how the fundamentals of the Bull case have been weakened or threatened, and determine whether indeed we are witnessing a key moment of direction-reversal in the markets.
The Federal Reserve’s Tapering of Quantitative Easing
Everyone who follows the financial news is aware that the Federal Reserve has tapered its unprecedented Quantitative Easing bond and mortgage buying program from $85 billion a month to $25 billion a month, and has made noises about ending the program entirely by October of this year.
Observers see two primary consequences of the end of QE:
1. Interest rates, no longer suppressed by Fed bond and mortgage buying, will likely tick higher from historic lows.
2. The support for stocks and other risk assets provided by QE will end, removing a key prop under stocks.
It’s clear that interest rates—shown here by a commonly used proxy for interest rates, the 10-year Treasury bond yield—have hit bottom, and while they might bounce along the bottom for some time, they don’t have much room to decline even if “risk-off” buying of Treasuries pushes the T-bill yield lower.
In other words, even if Treasury yields fall as investors flee ‘risk-on” assets such as stocks for the safety of Treasuries, this doesn’t necessarily translate into…
by
Chris Martenson
Executive Summary
- The 4 most likely scenarios of Russian response
- Europe is more vulnerable, and will feel more pain sooner than the US (though the US is still at risk)
- The risk to the world economy and financial markets
- What you should be doing now, in case things worsen
If you have not yet read Part I: The West's Reckless Rush Towards War with Russia available free to all readers, please click here to read it first.
Europe Will Pay the Price First
Europe is already on the edge of slipping back into outright economic contraction and can ill afford any sort of protracted sanction warfare with Russia, a major trading partner in both directions.
While the sanctions levied by Europe were very carefully crafted to cause the least amount of pain for itself as a fist order of business, while imposing maximum pressure on Russia second, they will still bite.
‘EU sanctions on Russia will hit UK economy’ – Foreign Secretary
Jul 30, 2014
EU sanctions aimed at ‘imposing economic pain’ on Russia following the MH17 crash will hit the UK economy, Foreign Secretary Philip Hammond has warned, saying ‘you can't make an omelette without breaking eggs’.
Hammond said the measures had been “designed to maximize the impact on Russia and minimize the impact on EU economies.”
“It will affect our economy… but you can't make an omelet without breaking eggs, and if we want to impose economic pain on Russia in order to try to encourage it to behave properly in eastern Ukraine and to give access to the crash site, then we have to be prepared to take these measures,” he told Sky.
On Wednesday, The Russian Foreign Ministry criticized the new package of EU sanctions, saying it was disappointed Europe was unable to act independently from Washington in the International arena.
“We feel ashamed for the European Union who, after long searching for a unified voice is now speaking with Washington’s voice, having practically abandoned basic European values, including the presumption of innocence,” the Foreign Ministry said in a statement.
(Source)
Indeed, it's easy to imagine how disappointed Russia might be to have so many unresolved questions about MH-17 lingering yet having Europe rush forward with punishment despite a long and warming history of economic ties.
Of course, the main consideration for Europe now that autumn is just a couple of months away is…
How The Coming Confrontation Will Unfold
PREVIEW by Chris MartensonExecutive Summary
- The 4 most likely scenarios of Russian response
- Europe is more vulnerable, and will feel more pain sooner than the US (though the US is still at risk)
- The risk to the world economy and financial markets
- What you should be doing now, in case things worsen
If you have not yet read Part I: The West's Reckless Rush Towards War with Russia available free to all readers, please click here to read it first.
Europe Will Pay the Price First
Europe is already on the edge of slipping back into outright economic contraction and can ill afford any sort of protracted sanction warfare with Russia, a major trading partner in both directions.
While the sanctions levied by Europe were very carefully crafted to cause the least amount of pain for itself as a fist order of business, while imposing maximum pressure on Russia second, they will still bite.
‘EU sanctions on Russia will hit UK economy’ – Foreign Secretary
Jul 30, 2014
EU sanctions aimed at ‘imposing economic pain’ on Russia following the MH17 crash will hit the UK economy, Foreign Secretary Philip Hammond has warned, saying ‘you can't make an omelette without breaking eggs’.
Hammond said the measures had been “designed to maximize the impact on Russia and minimize the impact on EU economies.”
“It will affect our economy… but you can't make an omelet without breaking eggs, and if we want to impose economic pain on Russia in order to try to encourage it to behave properly in eastern Ukraine and to give access to the crash site, then we have to be prepared to take these measures,” he told Sky.
On Wednesday, The Russian Foreign Ministry criticized the new package of EU sanctions, saying it was disappointed Europe was unable to act independently from Washington in the International arena.
“We feel ashamed for the European Union who, after long searching for a unified voice is now speaking with Washington’s voice, having practically abandoned basic European values, including the presumption of innocence,” the Foreign Ministry said in a statement.
(Source)
Indeed, it's easy to imagine how disappointed Russia might be to have so many unresolved questions about MH-17 lingering yet having Europe rush forward with punishment despite a long and warming history of economic ties.
Of course, the main consideration for Europe now that autumn is just a couple of months away is…
by
Adam Taggart
by
charleshughsmith
Executive Summary
- The Matrix of Work & the 5 Forms of Value Creation
- The essential elements of the future's ideal work environment
- How mobility creates career security
- How to start switching from "work" to "work that matters"
If you have not yet read Part I: Escaping the Rat-Race available free to all readers, please click here to read it first.
In Part 1, we reviewed the forces of structural change in the economy and the nature of work. In Part 2, we’ll cover the matrix of work (how to create value in the age of automation) and discuss specific strategies for building a resilient career you control.
The Matrix of Work
In the traditional capital/labor model, labor is paid by the hour to perform routine work. In the emerging economy, routine work is increasingly performed by machines or outsourced. In this environment, the premium for human labor arises from creating value and solving problems.
The tool I use to understand this premium is the matrix of work, which is the overlay of the five forms of value creation: non-process-based work, high touch, non-tradable work, sensitivity of the output to mastery and flexibility.
Let’s start with commodification: when goods or services can be traded interchangeably across the globe, these become commodities, as opposed to one-of-a-kind goods and services unique to one small-scale producer. A Fuji apple from Washington State is the same as a Fuji apple from overseas in terms of its tradability and retail value.
Labor can also be commoditized: if human labor is being sold as time performing basic skills, then the time and basic skills can be bought and sold interchangeably around the world.
Work that is process-based is easily automated or commoditized, meaning that it can be performed anywhere by interchangeable laborers. Process-based work can be broken down into tasks that take a specifiable input and yield a specifiable output.
One way to avoid being commoditized out of a job is…
How The Nature of Work Is Changing
PREVIEW by charleshughsmithExecutive Summary
- The Matrix of Work & the 5 Forms of Value Creation
- The essential elements of the future's ideal work environment
- How mobility creates career security
- How to start switching from "work" to "work that matters"
If you have not yet read Part I: Escaping the Rat-Race available free to all readers, please click here to read it first.
In Part 1, we reviewed the forces of structural change in the economy and the nature of work. In Part 2, we’ll cover the matrix of work (how to create value in the age of automation) and discuss specific strategies for building a resilient career you control.
The Matrix of Work
In the traditional capital/labor model, labor is paid by the hour to perform routine work. In the emerging economy, routine work is increasingly performed by machines or outsourced. In this environment, the premium for human labor arises from creating value and solving problems.
The tool I use to understand this premium is the matrix of work, which is the overlay of the five forms of value creation: non-process-based work, high touch, non-tradable work, sensitivity of the output to mastery and flexibility.
Let’s start with commodification: when goods or services can be traded interchangeably across the globe, these become commodities, as opposed to one-of-a-kind goods and services unique to one small-scale producer. A Fuji apple from Washington State is the same as a Fuji apple from overseas in terms of its tradability and retail value.
Labor can also be commoditized: if human labor is being sold as time performing basic skills, then the time and basic skills can be bought and sold interchangeably around the world.
Work that is process-based is easily automated or commoditized, meaning that it can be performed anywhere by interchangeable laborers. Process-based work can be broken down into tasks that take a specifiable input and yield a specifiable output.
One way to avoid being commoditized out of a job is…
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