It’s easy for me to sit back and take pot shots at the hedge fund gurus calling for a repeat of the 2008 crash. Spouting words about markets never repeating the previous crisis is kind of cheap. If I am so sure history won’t repeat, why don’t I offer an alternative theory?

Well, at the risk of embarrassing myself, here it goes.

The biggest risk out there is not credit. It is not the monster short VIX speculative position. It is not CDX leverage.

The true DANGER AHEAD lies in the universal belief that treasuries (and other sovereign fixed income) offer a perfect hedge versus risk assets.

….continue reading HERE

I have made countless posts lampooning the mainstream media and its eyeball harvesting, click baiting content. This content and especially the associated headlines (let’s recall the classic R.I.P. Bond Bull Market as Charts Say Last Gasps Have Been Taken, dated Dec. 2016 as but one example) are designed to whip up emotions, draw attention and thereby gain traffic and ad dollars (diminishing though they are these days). nftrh.com is and always will be ad-free, by the way.

So sure, the bond bull market may well have ended in the Brexit and NIRP dominated summer of anxiety (in fact I believe it did), but any good contrarian would have seen the trade setup to go bearish on bonds in the middle of that hysteria, not a half a year later when Bloomberg used Louis Yamada’s chart to make a big headline. From a post in June 2016 about the Silver/Gold ratio and the prospects for a future ‘inflation trade’ right at the height of the bond bull…

“All of this as the world sits in Treasury bonds and global NIRP garbage. Perfect. More and more it is looking like Brexit may have been an exclamation point.”

We later were compelled to do a 180° on that analysis after Trump mania drove ‘reflation’ expectations too high, aided by the likes of this sentiment setup (mark ups mine on a graphic courtesy of Sentimentrader) against bonds. This was not so surprisingly right around the time of the “R.I.P. Bond Bull Market” headline stated the obvious. Bonds have risen ever since.

‘Why drag we poor readers, with more than enough on our plates through all of this?’ you might think. Well dear reader, I am marketing to you right now. I write these articles for the purpose of getting the word out on what I think is the best market service of its kind. Marketing does not need to be a 4 letter word (mark) if the marketer is telling the truth and is 100% honest in his assertions (hint: I’ve never promised to be the best stock picker, chartist, trader or macro analyst around; I only promise to provide service to the best of my ability and let my customers form their own conclusions).

The funny thing about the financial market is that it seems so scientific, so beyond the grasp of the regular individual. It alternates over time between doing some very scary things and some very exhilarating things. What it also does is humble everybody at one time or another. All of us as market participants have been humbled. Here in this post I talked about the day of my biggest humbling.

Media headlines like the above, and the seamier end of the financial advice realm seek to give you the confidence you rightly lack (again, the market eventually eats alive anyone who is cocky or chronically over confident) by making firm statements. People think that this is a science instead of a black art. P/E ratios this and chart support that… ‘let me enlist an expert on those areas’ (fundamental and technical analysis). The stock market and financial media realm are filled with confidence men. Oh and ladies, I haven’t forgotten about you. There are plenty of shysters of the female variety out there too.

But in order to avoid becoming a perma-‘mark’, it is of utmost importance to think for yourself, to learn and to Deprogram Yourself. Sure, we can all benefit from the sound input of others, but in this confusing realm it is important to figure out who’s real and who’s Memorex (that reference may be beyond many of you younger readers, but it must have been marketing genius to still be rummaging around in my head decades later). But confidence men abound and the financial media and financial advice industries are designed to give the lowly participant firm answers in a realm that by its very nature makes us feel insecure. The mark wants to feel good and ooh, if a headline says it, it must have some validity! After all, if I just capitulate and sell bonds in December of 2016 the pain of holding them will stop… and, I won’t be alone! That’s what a herd is.

The reason for this article is that I saw this thing posted in financial social media today. I just shook my head and decided to write a post. You know the gold bug “community” * is a herd, ripe for the promotions. For privacy, I’ve blacked out the author of this goofy thing. Hear that? Time to load up on gold! It just never ends. You may ascribe this to the individual who posted it but really, how often have you seen similar things in the mainstream media or packaged as advice from supposedly serious analytical sources?

And finally, we’ve all seen the pitches that pop up out there in little ads served at every major media outlet. On Bloomberg just now… ads disguised as non-ads under the heading From The Web…

Self-made Millionaire Boils Stock Success Down to 1 Pattern

Reclusive Millionaire Warns Americans: “Get Out of Cash” –Stansberry Research

Get it? They are millionaires and you are not. Now listen up chump!

Each of the above were served by none other than Taboola, but it may well have been Outbrain or any of the other companies raking in the bucks to disguise advertisements as content on the internet.

The ads noted above are actually relatively cartoonish and easy to see for what they are by people employing functioning brain cells. But believe me when I tell you, there are plenty of associations and agreements out there between news and analysis entities that have as the primary goal your eyeballs first, and getting the content right second; a distant second.

The bottom line is there is no easy way in the financial markets and anyone who tells you they have a secret sauce should be either avoided or thoroughly vetted. In many ways the internet is still like the wild west, where anything goes.

* The term “gold community”, used so often by “Mr. Gold” James Sinclair, is a dead giveaway.

NFTRH.com and Biiwii.com

The Federal Reserve Is Now Ready to Blow It All Up

Peter Schiff, CEO of Euro Pacific Capital, said that it’s “impossible” for the Fed to unwind its balance sheet. In turn, he forecasts a recession in the not too distant future. While that may be extreme, Schiff touches on a key point the feel-good-investor must now consider: we have never seen a Federal Reserve try to unwind a balance sheet of this size before, no less against the backdrop of robo-trading and real-time news. Get ready for an interesting October, folks. 

continue reading HERE

Here’s what BlackRock says will happen to interest rates when Fed slims down its balance sheet

• The Fed is expected to begin unwinding its giant $4.5 trillion portfolio, and it should not immediately have much impact on interest rates, according to BlackRock’s global chief investment officer of fixed income.
• Rick Rieder says the 10-year yield could get to 2.50 percent this year, but will rise more next year as the Fed increases the amount that it is shrinking its portfolio by to $50 billion a month.
• BlackRock also sees huge demand for Treasurys, and that should keep U.S. yields low.

…..continue reading HERE

Bill Gross: “If they followed their plan … which basically projects over the next two years for fed funds to reach 2.8 [percent] or even 3 percent, a 170 basis point increase, then yes a recession is possible,”

• Whether or not the Fed leads the U.S. economy into recession depends on whether it sticks to its fed funds forecast, Bill Gross told CNBC.
• On Wednesday, the Fed reduced its long-run target for the fed funds rate to 2.8 percent.

“They just have to be very careful because it’s a highly levered U.S. economy. It’s a highly levered global economy and currencies and the dollar and other related assets like gold will move substantially if the Fed overstates its case,” Gross said Wednesday.

Dollar jumps to 2-week high as Federal Reserve says it will start asset next month

U.S. stock benchmarks retreated Wednesday afternoon as the Federal Reserve announced that, for the first time in nine years, it would start reducing the size of its $4.5 trillion asset portfolio starting in October. 

The U.S. central bank kept interest rates unchanged, as widely expected, but said it would start to shrink its balance sheet by $10 billion a month. The start of the asset unwind also places another rate increase before the end of the year by the Fed back on the table, signaling more definitively an end to the easy-money policies in the U.S. and an unprecedented unwind of crisis-era asset purchases that had helped to buoy markets over the past decade. 

During a news conference to detail its policy plans, Yellen described the unwind would be conducted “gradually and predictably.”

“Even though this is a slow and deliberate and thoughtful unwind plan, it is not without its potential to rattle markets,” said Kristina Hooper, global market strategist at Invesco. 

The Dow Jones Industrial Average DJIA, -0.01% was down 41 points, or 0.2%, at 22,337, after hitting a fresh intraday record at 22,399.33.

The S&P 500 index SPX, -0.15% was down 8 points, or 0.3%, at 2,597, after briefly touching its own fresh intraday day record at 2,508.85.

The Nasdaq Composite Index COMP, -0.39% meanwhile, was down a firmer 43 points, or 0.7%, at 6,420.

Meanwhile, 10-year Treasury note yield TMUBMUSD10Y, +1.34%  jumped to 2.28%, compared with 2.23% earlier in the session, with expectations for higher rates and additional monetary tightening, via the portfolio decrease, encouraging selling in government bonds, pushing yields, which move in the opposite direction to prices, higher. The dollar, which draws bidders in a higher interest-rate regime, enjoyed a fillip, up 0.7% at 92.475, based on the ICE U.S. Dollar Index DXY, +0.93% which measures the buck against a half-dozen currencies.

Read: Why stock market investors shouldn’t sweat a shrinking Fed balance sheet

The Fed kept its targeted federal-funds rate between 1% to 1.25%, and said the devastation caused by Hurricanes Harvey and Irma isn’t likely to materially alter the course of the economy over the medium term.

The Fed’s interest rate projections, known as the so-called dot plot, suggests an interest-rate hike in December and three more in 2018.

A news conference hosted by Chairwoman Janet Yellen was set for 2:30 p.m. Eastern.

Some industry participants have been describing the asset reduction as the “great unwind” and worrying that it might roil markets. “It is the start of something unknown, it is going to start jitters. It is going to make us tremble,” said John Manley, chief equity strategist at Wells Fargo Funds Management. 

However, the Fed is aiming to offer as little disruption as possible, he noted. 

Several central-bank officials already wanted to start winding down the Fed’s portfolio of government securities in July, but the majority wanted to hold until a later date. Traders now expect the FOMC on Wednesday to reveal details on a balance-sheet reduction that could start as early as October.