Off the Cuff: Things Are Toppy

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

• The Fed's Empty Threat
  • Could it really raise rates if it wanted to?
• Things Are Toppy
  • And when they break, capital will flee into real "stuff"
• Brexit
  • The Europeans are clearly worried about their banking system
• The Madness Of Crowds
  • Desperate people will act desperately

Recorded last week, the day of Fed Chair Janet Yellen's speech, in this Off The Cuff Chris and Charles focus on the mounting evidence that the Fed's happy juice is running out of ability to push this party any further. As Charles observes:

You know, Chris, listening to your description of Makers and Takers, two things occurred to me. One is that you mentioned the hedge funds and they’re struggling. Many are closing down or suffering redemptions from people who are not earning enough return to cover the high fees they’re charged to be in the hedge fund. And so we might ask: how come these smart guys with smart machines are not doing so well? I think one answer is: everything is now correlated. If you’re managing a couple billion dollars or serious money it’s really hard to hedge that in a traditional way, which is by using cross assets. Like in other words if I’m going to make a big bet in stocks, well then I’ll have a position in bonds because they tend to be on a seesaw, or I might have a commodities bet or real estate, I might be in an REIT, a real estate investment trust.