Friday, August 17, 2012

Mark Faber – Financial Survival Is About Diversification And Personal Survival

from FinancialSurvivalNet

Inflation has killed the middle class and provided a windfall to Wall Street. The financial sector has outgrown the real economy substantially over the past 30 years. The financial sector no longer exists to allocate capital but rather to act as the “house” in the largest casino that the world has ever known. This means that over time the sector will revert to the mean, which means that it is due for a large deflation. This means that geographical diversification is essential to preserving wealth. Real estate has a money-laundering component that makes it a magnet for black market income around the world. People don’t trust the market any longer. Corzine and others have completely undermined the credibility of the system. And the debt collapse could occur at any time.

Click Here to Listen to the Audio

Silver Quietly Sneaking Higher / By Dan Norcini /

Silver has managed to rally right to the top of its consolidation pattern without any fanfare and I should add, the participation of a great deal of managed money flows. In other words, without the benefit of the momentum crowd. CAll it a type of stealth rally.

I find this very interesting as it is occuring against the backdrop of rising Treasury yields and a rising equity market. Clearly, for whatever the reason, something seems to be occurring on this inflation front that is moving below the radar screen of many investors. Could silver be sniffing out the first whiff of an inflation play?


Value, Growth and Income in One Single Play

When you’re a farm-raised turkey, life is pretty carefree. You eat all you want. You sleep whenever. You wander around in the sun gobbling and doing whatever it is turkeys do. Your status quo from one day to the next is the bird equivalent of the good life.

And then one day in late fall, your status quo changes for the absolute worst.

Nassim Taleb used this analogy in his book The Black Swan to illustrate how investors often behave like a Thanksgiving turkey. After years of positive returns, investors assume the status quo is up… until along comes a crash in stocks and suddenly it’s not up anymore.

Investors miss the market’s big inflection points because they project today onto every tomorrow they can foresee – indefinitely. Though Taleb didn’t mention it in his book, the same mental frailty applies to moments like now… moments when every tomorrow looks bleak, and the only direction stocks will ever know from here on out is down. (more)

Barry Ritholtz on the Ghosts Haunting the Zombified US Housing Market!

from CapitalAccount:

Welcome to Capital Account. New home construction in the US fell in July, according to Commerce Department Data, another reminder of weakness in the housing market despite recent signs of recovery. It is not unexpected if you talk to Barry Ritholtz, author of “Bailout Nation,” who has been saying the “zombified” US housing market still has a long way to go.

Plus, from Zombie markets to Ghost inventory, we talk about the often overlooked underbelly of US housing, which is haunting the recovery. We get a forecast from Barry Ritholtz, CEO of Fusion IQ, of when the foreclosure machinery will be creaking back to life.

And, we all remember when Jon Corzine claimed he did not “know where the money went” from MF Global segregated accounts. Now it seems like he might get away with it. According to the New York Times, criminal investigators are citing lax risk control and disorder, not fraud, as causes for the disappearance of over one billion dollars of customer money at MF Global. We hear Barry Ritholtz’s colorful remarks on how prosecutors should go after MF Global.

Is There a Good Reason to Buy Stocks Now?

SPX Chart

Click to Enlarge

The S&P 500 continues to struggle with the 1,400 to 1,420 range. This back and forth has gone on so long that some of our internal indicators, chiefly the stochastic (shown) and momentum, have given weak sell signals.

Some technicians are convinced that stocks are just working off overbought conditions. The other possibility of this boring, flat range is that the market has run out of steam, and the low volume and tepid breadth number seem to support that view.

UUP Chart
Click to Enlarge

The U.S. dollar, as evidenced by the PowerShares DB US Dollar Index Bullish Fund (NYSE:UUP), may not be vaulting to higher levels, but it is inching ahead, and this is not good for stocks. It, like the S&P 500, is flashing its own signals, and since the dollar is a contra-indicator (dollar up/stocks down), these signals are telling us that the buck is headed higher.

Conclusion: While the European Central Bank (ECB) ponders its next move and the Fed stays quiet, equity folks don’t seem to know what to do. We might expect the ECB to remain mum, but our own Fed members — two of whom were interviewed on CNBC Wednesday — are at odds with each other with one claiming that we need more stimulus and the other saying that we’ve had too much already.

Now that Q2 is behind us, we can observe the health of the U.S. economy.

Corporations are making money, not from increased revenues but by pushing for more efficient operations (i.e., downsizing). Corporate insiders were very heavy sellers (2.7 billion shares) during the two-week period ending Aug. 7. This is compared to purchases of 178 million — a gross imbalance for even the high selling expected at year end and not a good sign for stocks.

Then there is the not-so-helpful government that has failed for four years to provide a statutory required budget — and finally their “falling off the cliff” scenario.

With all of this going on, does anyone out there have a reason to buy stocks?

“D-Day” For South African Platinum Mines / By SV / August 16, 2012

Beleaguered platinum mines continue to be disrupted as ongoing scuttles between mine workers, platinum miners and South African police forces continues. On Thursday, South African police opened fire against thousands of striking miners armed with machetes and sticks at Lonmin’s Marikana platinum, leaving between 7-18 individuals dead. The outbreak of violence occurred as police laying out barricades of barbed wires were outflanked by some of an estimated 3,000 miners amassed on a rocky outcrop near the mine, 100km north-west of Johannesburg.

According to police, discussions with the Association of Mineworkers and Construction Union have broken down, “leaving no option but to disperse them by force.”

Here is the gruesome video:

Francis Cianfrocca – Fall Can Be Murder On Your Portfolio

from FinancialSurvivalNet

Francis Cianfrocca is a noted writer and financial authority. He feels that we are in for a very rough fall. Traditionally, most crashes occur in the fall and have been doing so for hundreds of years. It probably has something to do with the agricultural crop cycle, where loans get made earlier in the year and then the Autumnal harvest comes in. And bad harvests in our historic agricultural economy led to market crashes around the world. And even though the economy has evolved from its agricultural past, the cycle hasn’t. Also, many people have started expecting the economy to crash in the fall. And Frances believes that 2012 could be a repeat performance of 2008, only worse. Either way, we’ll find out soon.

Click Here to Listen to the Audio