Despite the quiet price on gold: there are current serious gold buyers bidding this market. Wall Street is now automated – fewer humans & more robots. Russia didn’t need to hack Hillary – they had her password! We discuss new stewardship of monetary policy as well as the impact of automation within Wall Street. Algorithmic based trading has massive implications for the markets moving forward.
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
Bill King Part 2 - "The Everything Bubble Will Pop"
Seth Klarman: Don’t Underestimate The Power Of Uncertainty
Since founding his investment partnership in 1983, Seth Klarman has offered a stream of wise and timeless commentary on markets and the craft of investing. His commentary from periods of market volatility is incredibly insightful. Klarman's letters to clients around the time of the dot-com bubble and financial crisis in 2008/09 contained timeless insights on Read More
Yeah I think you're absolutely right. And that's part of this adjustment. Some people don't get it because even we had problems would show up here in the U.S. the VIX crash where even when you had the impeachment talk and you get one or two day reaction would pop right back up. Well the big situation was real that was very reminiscent of 87 with the portfolio insurance in the arbitrages that was going on and have perverted the market just like that. And so you had a kind of purging there but that wasn't really the real economy that wasn't actually the real stock market the organic stock market in there. So what the market has understood all along here is that Trump was he would be impeached. There was nothing here which is kind of funny. You can see it it hit the big ball on that tax. And you know we hit it into January and you just walk back all the way from November of 2016 to you know the January 2008. And now it's consolidating what we see in the big picture the weekly picture you can see that The Daily Picture will be chap you get play overnight like today the whole plan Thursday was the the ECB meeting if there was a 22 handle S&P rally overnight and mostly really occurred before the ECB communique and Draghi and they were both more dovish and expected which one could then assume that it worked out people knew that had a time and all we do is because it's expiration you know you should have more of us. We're just doing nothing.
The only thing going up by the trading sardines here you know the stocks they're rallying sharply. Nothing else is rallying and that means you got a handful people come in the lemmings the day traders you know the guys sitting in their basements they know to buy the app the ghouls you know the face box or whatever they come in they play those things every day that passed by and large the game every now and then we'll see an asset allocation. We saw those a couple of times were when The Ten-Year got up to 3 percent above where people would come in buy tenure sell stocks. You could see they had a couple times that you know the 10 year fell below that they stopped doing it. You see there are but by and large we're treading water because you're making great points. The easy rally in the U.S. was that the tax benefit the North Korea situation you know whatever here in your question alluded to this. Now we've got this trade this trade situation here that U.S. has been on the line since Eshuys go back in the late 60s. But the U.S. paid the average worker's compensation real earnings especially in blue collar peaked around 1973. So you've got five decades of these guys didn't hammered. And at the end of something that can't be sustained we see that numbers we had we've seen a lot of things. And now we're going to try to address the situation. And you're right it's not going to be pleasant and that's what the stocks are trying to figure out here here Europe. China's got different situations of their debt.
Japan's get this really horrible demographic situation of course there's Germany and whatever. And again as we're watching this thing play out and it's not just this big bush the Gathol Trump as you mentioned here you have 10 years of this historic easy money nobody's going through this transition. After 10 years of this easy money that all of a sudden the Fed has been out of the game for a good year and a half. You're right. The ECB looks like they're moving out of this within the next six months. China has played a game where they take money out they put it in there trying to be cute so they don't have a collapse. And at the same time they know they have to stop the big speculation ahead. So they're doing what they can in their methodology. So all we're looking at now is really the Bank of Japan. And they are cutting back a little on their QE and here we will wait and see what they do as far as their monetization of ETF so some of the other stuff but you know you're absolutely asking the right questions or as we're transitioning out of something that is absolutely unprecedented 10 years naches easy credit but negative interest rates of massive QE of monetizing Saxon's you know on and on and that it's not going to be easy to make that transition. And I think we're all watching for is the worst event because it is confidence what event destroys the confidence here. And I think it is going to be Europe. It possibly could be Japan maybe China something extreme here.
What were the real gain for the U.S. was going to be is when that happens how well positioned are our banks and our citizens their liquidity to weather that storm. Because if you can it'll be similar to Britain you know when you had a great depression Britain did very well in the 30s. They were positioned they were able to come out of it better than we were. We had more access. We had more things going on here. And that's what I'm thinking with the dollar. And now you're seeing this is that people are saying when the next thing hits the fan here and it's about you you know in the next few months or something's going to happen here the U.S. looks like they're better positioned their banks are better. You know we do have a big debt situation because point to what the banks don't own that debt. Where is the reverse in Europe. The big banks there own all that bad sovereign debt here. We have corporations that are even though the Schnucks.