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Keep Your Eye On The Ball

What the France election tells us about the world economy
Monday, April 24, 2017, 4:13 PM

For investors and regular folks just trying to protect and growth their wealth, now is the hardest of all possible times.

As we've written extensively about here at PeakProsperity.com, we're living through the Mother of all Financial Bubbles. Simply maintaining this sham is requiring the world's central banks to inject an enormous amount of thin-air money into the markets. Every. Single. Day.

Everything has become distorted. Price signals are completely broken and mean nothing. Fundamentals? They haven't mattered for nearly a decade. It’s very, very hard to maintain one’s perspective during such a time.

And things get even more nuts each time a critical election occurs, as we just had yesterday in France. » Read more

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The Coming Conflagration

Prepare for it before things explode
Friday, April 21, 2017, 8:26 PM

Executive Summary

  • Have overt central bank propping efforts created a bubble in asset prices?
  • Will these overinflated markets EVER collapse?
  • What to expect when today's smoke turns into tomorrow's conflagration
  • Which assets are most sensitive to a price correction if the central banks' efforts fail?

If you have not yet read Part 1: Where there’s smoke... available free to all readers, please click here to read it first.

Question #2: How much does overt central bank propping have to do with their elevated prices?

Overt propping of the stock and bond markets also happens with some regularity.  First, at the macro level, dumping hundreds of billions of freshly printed currency units into the financial markets each month without any question whatsoever, plays a huge role in keeping them elevated.

One the one hand you have the central banks talking at every turn about how they are confident in the economy, that they feel the data is good, if not solid, and yet you have them dumping money into the financial “”markets”” (double quote marks because one is no longer sufficient to convey how unreal they’ve become) at the fastest pace in all of recorded history through the first 4 months of 2017; $1 trillion dollars(!!).

(Source)

If you were wondering why these markets are having such a difficult time going down, $250 billion a month goes a long way towards helping you appreciate why that’s the case.

It’s an astonishing number, and I want you to appreciate the fact that central banks would not be dumping record amounts of thin-air money into the ““markets””

The next point is that... » Read more

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Off The Cuff: The Era Of Easy Money Is Over

Debt-funded stimulus no longer yields an increase of GDP
Thursday, April 20, 2017, 8:44 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • Sovereign Sabre-Rattling
    • Suddenly, the world became a lot less safe
  • Market Misdirection
    • The central planners are doing their utmost to paint a positive picture
  • The Era Of Easy Money is Over
    • Debt-funded stimulus no longer results in an increase of GDP
  • How This All Will End
    • Exploring the likely pins that will pop this "mother of all bubbles"

Chris and John look at the disconnect between world events and stock prices and urge folks not to misled: risk is high, and getting higher. There is *no* rational reason for the current price levels in financial markets -- only gobs and gobs of liquidity being force-fed into the system by the world's central banks.

But the data is increasingly showing that the era of "easy money" we've lived under since the Great Recession has reached its inevitable terminus. Shoving more debt into the system is no longer boosting GDP. We are now simply blowing bigger asset bubbles that will monumentally destructive when they burst -- as they must.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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The Benefits & Challenges Of Maintaining A Retreat Property

Be smart when making the decision to purchase one
Friday, April 14, 2017, 6:18 PM

Executive Summary

  • The matrix of factors to consider in a Plan B residence
  • What to know abot eacf of the five key factors
  • Not all second homes are fully functional
  • The challenges & benefits of maintaining two separate fully functional residences

If you have not yet read Part 1: Does Your Plan B Include a Second Place to Live if Plan A Doesn’t Work Out? available free to all readers, please click here to read it first.

In Part 1 we reviewed the three basic categories of Plan B Residences: temporary (to ride out an emergency); semi-permanent (to weather a recession/loss of income) and permanent (replacing Plan A residence with Plan B residence).

In Part 2, we’ll consider a Matrix of Factors that will help us choose the inevitable trade-offs of costs and benefits, and add a category—permanent maintenance of two fully functional residences.

The Matrix of Factors

While there are many factors in any Plan B, I’ve pared the key factors in Plan B residences down to five: cost, control, security, depth of resources and functions enabled. Each is on a sliding scale from low to high. There are costs and benefits to each being low, medium or high.

Let’s go over each factor.

Cost:

While cost measured by price is self-explanatory, this also includes opportunity costs (what else could have been accomplished with the money?), time (the hassle factor of how long it will take to get something done) and labor—how much labor must be invested to accomplish a goal.

There is even a stress cost: how much will this goal/project add to my stress load? Even if the money needed is on hand, the overall cost can be high in terms of time, hassle, stress and opportunity cost.

Control:

By this I mean ownership (of the land, the house, etc.), contractual control (of jointly owned assets, of any hired labor, etc.) and functional control, i.e. residency.  As many have discovered to their regret, it’s possible to have legal ownership/control but end up with effectively zero functional control, as your house might be occupied by squatters or family members who morphed from allies to enemies.

Control is important because... » Read more

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Off The Cuff: The Soft Data & Hard Data Are At Odds

One of them is right. Which one is it?
Thursday, April 13, 2017, 7:30 PM

In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • Soft vs Hard Data
    • They disagree. Which is correct?
  • More Manipulation
    • The central banks are not even hiding it anymore
  • The Big Problem: Too Much Debt
    • Don't expect the Fed to raise rates much higher from here
  • The French Election
    • However it unfolds, France is at a breaking point

In this week's podcast, Chris and Mish discuss the increasingly opposite stories being told by the "soft" and "hard" data. Soft indicators like consumer confidence and bullish sentiment are sky-high; while hard metrics like GDP growth, retail store closures, or auto sales tell a grim story of economic slowdown.

History shows that such a dichotomy between soft and hard data occur at turning points in the economy. And, as Mish recaps, we've seen this movie before:

Hussman reports that soft data after a lengthy expansion like we've had is mainly noise. I tend to agree with him. Market tops and bottoms tend to be points, both in the economy and the stock market -- and we are seeing the stock market today is experiencing a rounded topping affair with people remaining bullish even as it's clear the economy is sinking. We saw that happen in 2007. I think we saw that happen in 2000 as well. 

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Summit At Sea: Liveblog

Adam & Chris live blog from an investor conference
Monday, April 3, 2017, 10:48 AM

For the next few days (until we fly back for this year's Peak Prosperity seminar), Chris and I will be attending the Summit At Sea, an exclusive investment conference produced by Robert Helms and Russell Grey, aka. The Real Estate Guys.

Wi-fi and power access depending, we are live blogging here the insights we're learning from our fellow speakers over the next few days. » Read more

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Doing 'Retreat' Right

What to look for when assessing location
Friday, March 31, 2017, 1:08 PM

Executive Summary

  • Understanding the difference between Artificial and Economically-Viable Communities
  • What to look for in a retreat community
  • Why regional assets matter
  • The importance of "path dependence" in a retreat location

If you have not yet read Part 1: Having A 'Retreat' Property Comes With Real Challenges available free to all readers, please click here to read it first.

In Part 1, we considered the nature of security and independence, and found that the intuitively appealing remote cabin in the woods (RCITW) is actually highly insecure and does not reduce dependence on fragile global supply chains at all—it may well increase our dependence and vulnerability to disruptions.

Security is a function of an engaged community (eyes on the street, knowing one’s neighbors, reciprocity of caring) and occupancy. The remote cabin that’s rarely occupied is the acme of insecurity.

Here in Part 2, we’ll consider the qualities that create security and resilience in communities.

Artificial Communities vs. Economically Viable Communities

If we reckon a community is a collection of dwellings, we might be tempted to view all collections of dwellings as being roughly equal. This would be a great mistake, for communities divide very naturally into artificial communities and economically viable communities.

In artificial communities, security is poor and difficult/costly to improve.  In economically viable communities, the multiple layers of stakeholders provide self-reinforcing homegrown security.

Artificial communities are consumer communities—they produce essentially nothing. Economically viable communities produce goods and services as a function of their natural-resource advantages (good soil, adequate water, river ports, coastal harbors, advantageous weather, etc.) and concentrations of capital (rail lines, banks, universities, an entrepreneurial culture supported by local government, etc.).

History has not been particularly kind to defensive strategies, which is what most artificial communities are. This is why... » Read more

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Off The Cuff: Eggshell Markets

Why the market can't sustain any losses
Wednesday, March 29, 2017, 7:20 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • Vexing Volatility
    • How the VIX is being used to drive the markets
  • We Can't Handle Losses Anymore
    • Why the market is now incredibly vulnerable to downturns
  • Our Captive System
    • Until it breaks, the system is run to serve the banks, not us
  • The Death Of The Living Wage
    • The hollowing out of the middle class continues

Lots of sobering material packed into this week's Off The Cuff discussion between Chris and John. While there are signs of growing instability to be found nearly everywhere, both are very concerned about the extreme fragility of today's financial ""markets"". At the slightest sign of weakness, tremendous interventions now happen on a daily basis to keep prices from falling, even by a single percent.

The reason why is that the system is too vulnerable for ANY degree of loss to be sustained without fear of collapsing it.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Positioning Yourself For The Crash

Steps to take before crisis arrives
Friday, March 24, 2017, 12:05 PM

Executive Summary

  • Why economic growth is not going to ride to the rescue
  • The alarming warning signs the auto, fine art, retail & housing industries are flashing now
  • The actions you should be taking now to protect yourself from (and position for) the coming crash

If you have not yet read Part 1: Why This Market Needs To Crash  available free to all readers, please click here to read it first.

Sometimes I wonder if I'm ever going to run out of new things to say about the state of the world, especially economics.  The more obvious our predicaments become to me, the less appetite there seems to be ‘out there’ to discuss them.

What more can be said about a system that is so obviously corrupt and destined to fail, and piles up more and more evidence that this is the case, and yet refuses to engage in the most minimal of introspection? 

Well, lots as it turns out. 

You see, we're finally getting to beginning of the end.  Our long national -- and global -- experiment with using flawed economic models is now running smack dab into reality.

The edifice of central planning omnipotence is crumbling and when it finally breaks down in earnest, the financial markets will implode, the central banks will be overrun and discredited, and investors will discover that overly-long parties come with massive hangovers.

There will be hell to pay.

For reasons we have discussed previously, and extensively,  GDP growth has not been a feature of the world stage for over a decade, and is unlikely to return both because of debt levels that are far too high to support rapid growth and because any return of rapid growth will run smack into higher oil prices.

So…how’s that story working out?  Not so hot.  It’s been sub-par on a global scale for more than a decade. And the same is true for the US.

And here’s where we are today... » Read more

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Off The Cuff: Weariness Everywhere In The Markets

The support underlying today's sky-high prices is faltering
Thursday, March 23, 2017, 4:43 PM

In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Weariness Everywhere In The Markets
    • The post-election price support is evaporating
  • Confused Leaders
    • Chris recaps his latest meetings at the U.N.
  • Boomer Guilt
    • Divisions between the older haves & younger have-nots are growing
  • Banks & Government
    • A partnership of evil

Charles returns to Off The Cuff this week to note the recent lack of vigor in today's financial markets. Does it portend a turning point?

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more