Money Flow Trading Method along with Risk Management

This piece was co-authored by Mike Bellafiore and Steve Spencer, co-founders and partners of SMB Capital.


Every week we hear from aspiring traders asking how they can best pursue their success. In this article, we would like to share insights we have gained through our collaboration at SMB, a proprietary trading firm in New York.


Each of us has been involved in the training of professional traders for well over a decade. Over that time, we have learned a great deal about factors that make for trading success and failure. Our overriding takeaway is that the development of trading expertise is not so different from the development of elite performance in other fields, such as athletics and chess. It follows from a sustained developmental process.


Unfortunately, aspiring traders find few structured outlets for professional development. Whereas first-class athletic teams and chess organizations cultivate talent through years of development (high school and college competition, youth leagues, tournaments for performers at different talent levels), there are few comparable developmental platforms for young people seeking to build knowledge and skills in financial markets.


One result of this lack of developmental focus is a high failure rate, especially among active traders. Studying the investing performance of all traders in Taiwan, Barber and colleagues found that the group lost an average of 3.8% per year and 2.8% of personal income. Moreover, evidence suggests that traders do not learn from their losses, with the majority of those losses coming from experienced traders with a history of prior losses. A review of research finds that traders demonstrate cognitive biases and trading patterns that lead them to under-perform market averages.


Still, our years of experience have also taught us that trading success exists across diverse ways of attacking markets and indeed can be cultivated through structured programs of development. The best known example of this has been the development of Tiger Cub money managers springing from Julian Robertsons Tiger Management. Close mentoring and the development of a distinctive investment style led to superior returns over a period of years. Similarly, successful investment banks such as Goldman Sachs have cultivated talent by creating an internal university that facilitates personal as well as professional development. Smaller firms, such as the one where we collaborate, run internship and training programs that provide hands-on learning and skills development, much as occurs at minor league, developmental baseball clubs.


So what distinguishes the successful training efforts of financial organizations? Our experience points to four distinctive elements:

A structured curriculum Medical schools offer an unusually clear view of the development of talent in performance domains. Every year, graduate programs of medical education produce competent professionals in fields as different as surgery, psychiatry, and internal medicine. Training begins with an undergraduate curriculum focused on basic science education. It then proceeds to observation and practice under experienced physicians followed by training in specialty fields. The curriculum thus addresses both knowledge and skill development, with sufficient time to cultivate high levels of skill. We have found it helpful to move new traders through three training programs in the first year, starting with a foundation of knowledge and proceeding through skill development in closely supervised simulated and live trading.

The integration of mentoring and coaching Consider successful athletic organizations in college basketball and football as well as professional sports. The most successful coaches act as teachers and mentors, structuring practices to drill skills but also addressing the psychological aspects of performance. In the Department of Psychiatry where Brett teaches, psychiatry residents learn psychotherapy by video recording their sessions and replaying them with different supervisors. The review of the tapes, similar to the film reviews basketball and football teams conduct to prepare for upcoming games, facilitates mentoring of skills and the coaching of the performers own psychology. We have found it helpful for traders to send daily reviews to both a mentor/teacher and a performance coach, so that each day serves as professional and personal learning.

The organization of learning in teams We have been struck by the success rates of efforts to train traders within the context of trading teams. Inexperienced traders taught basics and then left to learn on their own have a much lower success rate than those trading daily with their mentors and colleagues. Hedge Fund titan Kenneth Griffin Citadel, at Milken Institute Global Conference 2015, said, Frankly you cant succeed today in the markets unless youre a part of a great team. We agree. In medical education, the team concept is captured in the phrase each one teach one. Advanced medical students participate in training the beginners; interns supervise the advanced students; advanced residents supervise the interns; and attending physicians supervise the advanced residents. When each student is also a teacher, learning opportunities are multiplied. For example, we have seen particular success with junior traders building technology for senior traders to expand trading opportunities, while senior traders share their expertise with junior traders with respect to exploiting those opportunities. Similarly, junior traders who have mastered a specific trade setup may work narrowly with trainees on this opportunity, much as senior medical students mentor more junior ones in focal areas of experience.

Data based recruitment of talent Success in performance fields starts with raw talent and proceeds with skill development through deliberate practice. Successful organizations recruit talent to ensure they are building on a solid base. Professional sports teams, for example, will measure the speed and athletic skill of prospective players. One joins an Olympic team only after having demonstrated prior success and development. Our internal research finds that unique cognitive and personality strengths distinguish traders with different strategies: successful investors are unlike successful daytraders; successful traders of macro markets are different from successful market makers and product specialists. One trader we work with is so fast with trade execution that a market making firm needed to place 'guard rails' on the firm's order flow, as that trader was implementing decisions more quickly than their system could handle. A trader like this should gravitate toward short-term strategies that reward fast thought and action. Development is accelerated when training begins with students who possess the strengths required by their specific performance domains.
So what does this mean for aspiring traders? One important implication is that silos dont work. Each one, teach none is a formula for failure. The aspiring trader should look for training within organizations that actively foster the development of new talent. Learning curves are greatly accelerated through mentoring, coaching, and teamwork.


A second implication is that trading truly is like medicine or sports, embracing many distinctive performance domains. What makes a good basketball player is different from what makes a good gymnast. What makes a great surgeon is not what makes a superior psychiatrist. Training programs not only impart knowledge and skills; they also facilitate self-discovery. Even within basketball or gymnastics, one typically specializes in particular positions or events. In a medical specialty such as psychiatry, one may find a focus in psychopharmacology, psychotherapy, or child and family intervention. Via training, we discover where our passions and talents lie, and we cultivate those through structured learning, mentoring, and coaching with other specialists. Much of trading success consists of finding one's niche within financial markets.

In short, the aspiring trader is best served by not trying to go it alone. Young athletes dont try to make the Olympics on their own; nor do they join professional sports teams that way. Early career talent requires well structured developmental platforms that turn potential into performance. Those platforms exist at hedge funds, investment banks, and proprietary trading firms--and they are succeeding.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Bernanke 'Terrifies' Stock Investors, Again
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Apr 27, 2017 9:01 AM


Authored by Jeffrey Snider via Alhambra Investment Partners,
If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the “maestro”, Ben Bernanke in retirement is still at it. In an interview with Charles Schwab, the former Fed Chairman says not to worry:

Dr. Bernanke noted that corporate earnings have risen at the same time; he believes corporate earnings will continue to grow and “catch up” to asset prices.


Obviously, given his track record, that is a chilling statement of contrarian purposes. Kidding aside, it is interesting that he of all people would feel comfortable enough in making such a claim. For one, that is exactly the market problem at the moment. It is priced for enormous growth, way out in front of actual earnings which for nearly three years now have failed $100 (for the S&P 500).
http://www.alhambrapartners.com/wp-c...Picker-GDP.png
http://www.alhambrapartners.com/wp-c...ker-EPS-FV.png
In order for EPS to “catch up” will require the kind of growth you actually find in a recovery, at the very least a short burst of intense activity that creates all the follow-on effects that he once talked about igniting through QE. But that isn’t what he actually said in his interview. Like Janet Yellen, Bernanke sees only vague improvement, so unsure that he felt compelled to qualify it further.


Part of the reason the market is up is that the global economy is doing somewhat better. [emphasis added]
Again, there is truth to his statement, but it fails because it recognizes no standards for such relativity. Making the same statement in 1999 after the US experience with the Asian flu would have been impulsive and foolish; making the same with the global economy as it is in 2017 is a different world altogether.
http://www.alhambrapartners.com/wp-c...Output-Gap.png
http://www.alhambrapartners.com/wp-c...overy-2017.png
To begin with, being improved from early 2016 is no achievement or cause for celebration. The history of oil prices and inflation really is instructive in this regard, and not just because of the energy sector’s effects on aggregate earnings; you can be enthused that oil is nearly double off the low last year, but you cannot forget or dismiss that it is still more than 50% below 2014.
http://www.alhambrapartners.com/wp-c...Picker-WTI.png
Up 80% in a year sounds like healing and the return of growth; down 50% three years later instead declares “something” still very wrong. Thus, EPS is like other economic stats where improvement has occurred but only in the narrowest sense. What Bernanke and the media talk about is not what has transpired so far but extrapolating acceleration upward forever into the future. We’ve seen too many times over the last ten (twenty) years how doing so fails, including 2013-14; the bond market, by contrast, after 2011, gets that risks are enormously weighted downward for reasons of liquidity first of all.


That, too, is in important factor because it was liquidity at the very least the QE’s were supposed to fix. The path of balance sheet expansion into the real economy was always murky to begin with, no direct channel would ever exist between the purchase of MBS or UST into the wage rates of ordinary Americans. It was thought to work through expectations more than anything else. But the trillions of bank reserves, so-called money printing, surely would cure all financial liquidity risk.


And yet, that is the most prominent feature of the financial landscape apart from the stock market. Everywhere you look there are expressed abnormal (for all history before 2007) liquidity preferences; from eurodollar futures to German federal paper the story is the same – persisting fear of illiquidity, “dollars” most of all. If Bernanke could not get even that right through four QE’s and $2.5 trillion in reserves, the one thing closest to what everyone assumed was this central bank’s wheelhouse, then his views on stocks are likely to be, again, contrarian.

We need only briefly revisit the topic of “term premiums” to make this case especially after 2013.

The only reason it still is “something of a puzzle” is because he [Bernanke] like the mainstream continues (to this day) to assume that QE works and even works well. From the point of view of effective “money printing” the behavior of the bond market has been and remains a complete mystery. Again, to reconcile these two very different positions (QE is effective stimulus but nominal interest rates don’t show it) requires the imposition of lower “term premiums” though the reason for them cannot be explained.


Economists have no answer for why interest rates, or the parts of the decomposition of interest rates they find useful for running regressions, fell more after QE than during it. There is a world of difference between thinking QE was successful via “term premiums” than realizing the bond market was right to suspect QE wasn’t much of anything. The former can lead back to normal growth and meaningful improvement; the latter will not, leaving stock investors pricing a Hail Mary.
http://www.alhambrapartners.com/wp-c...BU-5s10s-1.png
http://www.alhambrapartners.com/wp-c...te-Decomp2.jpg
http://www.alhambrapartners.com/wp-c...ion-Curves.png
What we find is that Dr. Bernanke has had it backward in every case. Therefore, his assertion that earnings will “catch up” should terrify (perhaps a little strong) stock investors to their very core. Maybe this time he will get it right, blind squirrels and all, but who in their right mind wants to bet on that basis?

COMMENTS FROM BENJAMINIS: Unless you understand the point that has been made on our thread then your results will remain the same.

I will be gone for awhile to take care of my other business interests. Have a successful Forex trading day and once again FOLLOW the MONEY FLOW and use all your EDGES !!!

Good Morning KeepCalmfx

It will be morning when you read this. Tomorrow could be an interesting day to trade however it depends on whether we have Risk Off or Risk On.

Tomorrow they must extend the debt ceiling for at least one week until May 5, 2017 and if not it will lead to a Government Shutdown on Saturday.

I did 2 quick trades at the end of the day however I closed the positions because 4 major companies reported after the bell at 4 PM and the results were positive.

It would be helpful to have some questions and confirmation that you understand and to that end, I linked a brilliant article about trading properly at the highest levels in the Forex World. I attached it to the end of my post.

For myself, I can only trade if I reach high levels of success and as you can see that both KeepCalmfx and myself demonstrate that everyday by our posted results.

As GoSlow once posted here, "KISS", so what could be simpler than to Short US 30 and Short SPX500 and Short USD/JPY with CORRELATION and Go Long Gold and Go Long Silver and Short EUR/USD all at the right moment of course, scaling in positions and controlling Risk So....

If you want to make tons of money invest your time and your energy and the rest will take care of itself.

I sincerely hope some of you understand and have the desire and the will to become Forex winners.

PLEASE READ THIS AGAIN...

This piece was co-authored by Mike Bellafiore and Steve Spencer, co-founders and partners of SMB Capital.


Every week we hear from aspiring traders asking how they can best pursue their success. In this article, we would like to share insights we have gained through our collaboration at SMB, a proprietary trading firm in New York.


Each of us has been involved in the training of professional traders for well over a decade. Over that time, we have learned a great deal about factors that make for trading success and failure. Our overriding takeaway is that the development of trading expertise is not so different from the development of elite performance in other fields, such as athletics and chess. It follows from a sustained developmental process.


Unfortunately, aspiring traders find few structured outlets for professional development. Whereas first-class athletic teams and chess organizations cultivate talent through years of development (high school and college competition, youth leagues, tournaments for performers at different talent levels), there are few comparable developmental platforms for young people seeking to build knowledge and skills in financial markets.


One result of this lack of developmental focus is a high failure rate, especially among active traders. Studying the investing performance of all traders in Taiwan, Barber and colleagues found that the group lost an average of 3.8% per year and 2.8% of personal income. Moreover, evidence suggests that traders do not learn from their losses, with the majority of those losses coming from experienced traders with a history of prior losses. A review of research finds that traders demonstrate cognitive biases and trading patterns that lead them to under-perform market averages.


Still, our years of experience have also taught us that trading success exists across diverse ways of attacking markets and indeed can be cultivated through structured programs of development. The best known example of this has been the development of Tiger Cub money managers springing from Julian Robertsons Tiger Management. Close mentoring and the development of a distinctive investment style led to superior returns over a period of years. Similarly, successful investment banks such as Goldman Sachs have cultivated talent by creating an internal university that facilitates personal as well as professional development. Smaller firms, such as the one where we collaborate, run internship and training programs that provide hands-on learning and skills development, much as occurs at minor league, developmental baseball clubs.


So what distinguishes the successful training efforts of financial organizations? Our experience points to four distinctive elements:

A structured curriculum Medical schools offer an unusually clear view of the development of talent in performance domains. Every year, graduate programs of medical education produce competent professionals in fields as different as surgery, psychiatry, and internal medicine. Training begins with an undergraduate curriculum focused on basic science education. It then proceeds to observation and practice under experienced physicians followed by training in specialty fields. The curriculum thus addresses both knowledge and skill development, with sufficient time to cultivate high levels of skill. We have found it helpful to move new traders through three training programs in the first year, starting with a foundation of knowledge and proceeding through skill development in closely supervised simulated and live trading.

The integration of mentoring and coaching Consider successful athletic organizations in college basketball and football as well as professional sports. The most successful coaches act as teachers and mentors, structuring practices to drill skills but also addressing the psychological aspects of performance. In the Department of Psychiatry where Brett teaches, psychiatry residents learn psychotherapy by video recording their sessions and replaying them with different supervisors. The review of the tapes, similar to the film reviews basketball and football teams conduct to prepare for upcoming games, facilitates mentoring of skills and the coaching of the performers own psychology. We have found it helpful for traders to send daily reviews to both a mentor/teacher and a performance coach, so that each day serves as professional and personal learning.

The organization of learning in teams We have been struck by the success rates of efforts to train traders within the context of trading teams. Inexperienced traders taught basics and then left to learn on their own have a much lower success rate than those trading daily with their mentors and colleagues. Hedge Fund titan Kenneth Griffin Citadel, at Milken Institute Global Conference 2015, said, Frankly you cant succeed today in the markets unless youre a part of a great team. We agree. In medical education, the team concept is captured in the phrase each one teach one. Advanced medical students participate in training the beginners; interns supervise the advanced students; advanced residents supervise the interns; and attending physicians supervise the advanced residents. When each student is also a teacher, learning opportunities are multiplied. For example, we have seen particular success with junior traders building technology for senior traders to expand trading opportunities, while senior traders share their expertise with junior traders with respect to exploiting those opportunities. Similarly, junior traders who have mastered a specific trade setup may work narrowly with trainees on this opportunity, much as senior medical students mentor more junior ones in focal areas of experience.

Data based recruitment of talent Success in performance fields starts with raw talent and proceeds with skill development through deliberate practice. Successful organizations recruit talent to ensure they are building on a solid base. Professional sports teams, for example, will measure the speed and athletic skill of prospective players. One joins an Olympic team only after having demonstrated prior success and development. Our internal research finds that unique cognitive and personality strengths distinguish traders with different strategies: successful investors are unlike successful daytraders; successful traders of macro markets are different from successful market makers and product specialists. One trader we work with is so fast with trade execution that a market making firm needed to place 'guard rails' on the firm's order flow, as that trader was implementing decisions more quickly than their system could handle. A trader like this should gravitate toward short-term strategies that reward fast thought and action. Development is accelerated when training begins with students who possess the strengths required by their specific performance domains.
So what does this mean for aspiring traders? One important implication is that silos dont work. Each one, teach none is a formula for failure. The aspiring trader should look for training within organizations that actively foster the development of new talent. Learning curves are greatly accelerated through mentoring, coaching, and teamwork.


A second implication is that trading truly is like medicine or sports, embracing many distinctive performance domains. What makes a good basketball player is different from what makes a good gymnast. What makes a great surgeon is not what makes a superior psychiatrist. Training programs not only impart knowledge and skills; they also facilitate self-discovery. Even within basketball or gymnastics, one typically specializes in particular positions or events. In a medical specialty such as psychiatry, one may find a focus in psychopharmacology, psychotherapy, or child and family intervention. Via training, we discover where our passions and talents lie, and we cultivate those through structured learning, mentoring, and coaching with other specialists. Much of trading success consists of finding one's niche within financial markets.

In short, the aspiring trader is best served by not trying to go it alone. Young athletes dont try to make the Olympics on their own; nor do they join professional sports teams that way. Early career talent requires well structured developmental platforms that turn potential into performance. Those platforms exist at hedge funds, investment banks, and proprietary trading firms--and they are succeeding.






Benjaminis

https://mishtalk.com/2017/04/27/dont...ent-this-time/

Don’t Worry: “It’s Only 1997” Besides “It’s Different This Time”

27 Thursday Apr 2017

Posted by Mish | April 27, 2017 3:00:44 | Economics

Two articles in the last two days, one on Bloomberg, the other on the Wall Street Journal, provided key reasons we should not worry about stock market bubbles.

1. It’s only 1997 (P/E valuations have not exceeded the dot-com bubble in 2000 yet)
2. It’s different this time (always a classic argument)

It’s Only 1997
Bloomberg explains In Dot-Com Bubble Time, It’s Still Only 1997 for U.S. Equities.
“Terrified that rallies in Facebook Inc., Amazon.com Inc. and Google portend a millennial catastrophe along the lines of the dot-com bust? Relax. Going by one doomsday clock, it’s only 1997 in bubble years … when there was still 2 1/2 years and 60 percent to go in what became the longest bull market on record.”


It’s Different This Time
The Wall Street Journal says This Time Is Different: Two Reasons Not to Be Alarmed by the Nasdaq Record.
The Nasdaq Composite crossed the 6000 mark on Tuesday morning, setting another record in a year that is already a hot one for the index, and further putting the old dot-com days in the rear-view mirror. But there are at least two notable old records it has not yet surpassed. One is a measure of how far the index still has to go, the other is a mark nobody really wants to see again.


1. Inflation-adjusted Nasdaq. Adjusted for inflation, the Nasdaq Composite still has not broken its record high, fully 17 years after that peak, according to data from the Journal’s Market Data Group.

2. Price-to-earnings ratio. The dot-com boom was such a spectacular feeding frenzy that by one measure of valuation, the Nasdaq Composite is not even at 40% of its peak.

The companies in the index collectively traded at 27.5 times their last 12 months of earnings, according to Thomson DataStream.

Don’t Worry, You Are Only Here.
https://mishgea.files.wordpress.com/...ng?w=529&h=422
Shiller P/E Ratio
https://mishgea.files.wordpress.com/...ng?w=529&h=252
Base image: Shiller PE Ratio


While waiting for that final 20% (and why should it stop there?) relax. Repeat after me: It’s not bubbly, it’s Bubblicious. Enjoy the ride.


Besides, there cannot be a bubble because, as we all know, it’s different this time. Honest!


Inquiring minds may also wish to consider Reader Asks: Can the Bubbles Last Forever?

Mike “Mish” Shedlock

Morning Thoughts - Daily

http://www.financialsense.com/contri...n-of-2013-2020

There are very few heroes in economics but for me one of the patron saints of that profession should be Nikolai Kondratiev who was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. This truth Stalin did not want to hear, thus Nikolai was exterminated and his work suppressed for over two decades.

http://www.financialsense.com/sites/...-1789-2003.jpg

Kondratiev's analysis described how international capitalism had gone through many such "great depressions" and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called "Kondratieff" cycles or "K" waves.

The K wave is a 60 year cycle (+/- a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter:

1. Spring phase: a new factor of production, good economic times, rising inflation
2. Summer: hubristic 'peak' war followed by societal doubts and double digit inflation
3. Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
4. Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A 'trough' war breaks psychology of doom.

Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this "cyclical" phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900's. His thesis states that "modern" economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.


William R. Thompson:
"Most people are quite familiar with business cycles that tend to be denominated in terms of months. Sales are good, people are confident about the future, and unemployment is reduced. Then sales fall off, the immediate future seems gloomier, and unemployment increases. The Kondratieff wave is a longer version of economic fluctuation, albeit with the added traits of initial spatial concentration of technological innovation and subsequent diffusion at the world level. It also has some rather major implications for war, peace, and order in the world system that conventional, short-term business cycles lack.

Therefore, the k-wave is a core component part of the most significant processes of the world system. Precisely what drives k-waves has been the subject of considerable analytical dispute. Arguments have been advanced that bestow main driver status on investment, profits, population growth, war, agricultural-industrial tradeoffs, prices, and technological innovations. This debate has by no means been settled but at this time the emphasis on technological changes appears to be the best bet…


In the case of the Kondratieff, the argument is that the first appearance of a paired K-wave pattern in economic innovations is found in the 10th century in Sung China which is sometimes credited with developing the first modern economy. The expansion of maritime trade in the South China Sea and the Indian Ocean, as well as the revived use of the Silk Roads on land, facilitated the transmission of long wave, paired growth impulses to the other end of Eurasia. Thus Modelski and Thompson analyze 18 k-waves encompassing some one thousand years between 930 and 1973…


In sum, the Kondratieff wave appears to be a highly pervasive and hence a critical process in the functioning of the world system. As such, it deserves more recognition than it currently receives. When more attention is paid to its influences, we will no doubt discover that it is even more central to world system development than we suspect currently."


In addition to technology being a major factor in K cycles, credit and banking also play a crucial role. This is due to the fact that new technology spurs growth, initiative and risk taking. This mindset encourages investment and lending, thus, when the multiplier effect kicks in, economies expand rapidly. Thus, as we focus our analysis on more modern times we find that periods of "K" expansion and contraction bring with them phases of bigger booms and busts. The picture is doubly exacerbated by increasingly more integrated world funding mechanisms which means these booms and busts are global rather than local and increasingly more political than economic.


Implications for 2012 and Beyond
Based on Professor Thompson's analysis, long K cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a "recession" to a "depression" phase in the cycle about the year 2013 and it should last until approximately 2017-2020.


Like all cycles, K wave analysis is more "descriptive than prescriptive", but provides enormous insight into our current economic condition. Thus, it would be wise for our political and economic leaders to accept the lessons of history and realize that based on comprehensive economic evidence, following the 2007 systemic collapse of world banking and credit, things are likely to get much worse before they get better.

Such evidence also supports the proposition that the FED and theECB, instead of prolonging the agony through $5 trillion of credit expansion, should liberate the "international market" and let it intelligently and efficiently do what it has done 18 times before. World bankers if they were properly versed in their craft would realize that Kondratiev's heroism has given them the understanding they require to correctly comprehend and deal with the crisis. However, instead of seeing "it" as an acceptable development based on the natural result of technological stagnation they have panicked and mis-diagnosed it as a credit/monetary problem. Thus the epiphany of truth will only finally dawn when both the FED and the ECB go bust and as every financial dog on Wall Street knows, this is not a matter of "if" but "when".


The good news is that after this creative destruction period is over the world economy will be ready for a new epoch making spring boom which will propel it to new levels of political, social and economic development. Hopefully, enough reasoned minds will prevail to prevent the only catastrophe that will completely destroy this paradigm blossoming into fruition and that prospect I do not even wish to contemplate or enunciate as I desire to end this brief article on a resoundingly positive note.


References:

1. Chart courtesy of longwaveanalysis.ca
2. "The Kondratieff Wave As Global Social Process" William R. Thompson, Dept. of Political Science, Indiana University, U.S.A.
3. "Leading Sections and World Politics: The Co-evolution of Global Politics and Economics" Modelski G. and W.R. Thompson, Columbia: University of South Carolina Press.
4. Delwn Lounsbury, EZine Articles.

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COMMENTS FROM BENJAMINIS: This will happen and most likely by October of this year if NOT BEFORE. I just went SHORT one position each of US30 and SPX500 and USD/JPY. The GDP number was BAD and today is DEBT CEILING DAY !!!

Good day

Hope everyone is doing well.

Here are the charts.

Thank you for your posts Benjamin.

Here is your screenshot. I am with you on those 3 trades.

http://news.goldseek.com/GoldSeek/1493403916.php

-- Published: Friday, 28 April 2017

By Graham Summers

Time to bust yet another hole in the “stocks are cheap” argument.

As we’ve already noted earlier this week, based on the only valuation metric that can’t be massaged, stocks are more expensive than they were in 2007 and on their way to tying the all-time high established in 1999.

http://goldseek.com/news/2017/4-28gs/1.png

Of course, few people use P/S to value stocks. Most people use Price to Earnings or Earnings Per Share (EPS), since this is meant to represent how expensive stocks are relative to the money a stockowner gains by “owning them.”

On that note, according to the “official data” the S&P 500 is sporting a P/E ratio of 25. This is supposedly “cheap” since it’s below the P/E ratios established in the past.

http://goldseek.com/news/2017/4-28gs/2.png


Unfortunately, this too has been shown to be a load of nonsense. As Lance Roberts has revealed, only 13% of today’s earnings per share results stem from actual “growth.” The rest are based on accounting gimmicks like buybacks, write offs and the like.

Put another way, 87% of earnings growth since the GREAT CRISIS has been the result of accounting gimmicks.


This is a 1 in 100 year type event. The fact that stocks have rallied to new all-time-highs based on this is like someone winning a Olympic Gold medal while hopping themselves up on every steroid imaginable.


The fall-out will be just as intense.
The below chart isn't a pretty one, but it's worth keeping in mind as stocks move ever higher into nosebleed territory based on accounting trickery.
http://goldseek.com/news/2017/4-28gs/3.png
This bubble, like all bubbles, will burst. And when it does, the market will crash, just as it did in 2000 and 2008.

Best Regards

Graham Summers
Chief Market Strategist
Phoenix Capital Research

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Stocks Have Best Week Of The Year As Economy Grinds To A Halt
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Apr 28, 2017 4:02 PM



Yeah, this happened...
http://www.zerohedge.com/sites/defau...428_EOD2_0.jpg


And so did this...
http://www.zerohedge.com/sites/defau...428_fink_0.jpg

So this...



April was a volatile month in markets - bonds, bullion, and stocks higher; crude, copper, and base commodities all tumbled

1. US Equities up for 5th of last 6 months (highest monthly close ever)
2. S&P Tech Sector up 5 months in a row - longest streak since Aug 2014 (record monthly close)
3. S&P Energy Sector down 4th month in a row (lowest monthly close since July)
4. Treasury Yields fell for the 3rd of the last 4 months (lowest monthly close in yields since October)
5. WTI fell for 2nd month in a row (lowest monthly close since August)
6. Copper down for 3rd month in a row - longest losing streak since Oct 2015 (lowest monthly close since December)
7. Dollar Index fell for 3rd of last 4 months (lowest monthly close sine October)
8. GBPUSD has risen for 6 of the last 7 weeks (and April was GBP's best month since April 2015)
9. Gold was up for the 4th month in a row - longest winning streak since Aug 2012 (highest monthly close since October)

Bonds, Bullion, and Stocks all rose around 1.25% on the month, but Banks were down in April (and March) for the worst 2-month drop since Feb 2016.
http://www.zerohedge.com/sites/defau...428_EOD5_0.jpg

Tech led the month, Energy lagged...
http://www.zerohedge.com/sites/defau...428_EOD3_0.jpg

Dollar Index fell for the 2nd month in a row (3rd of 4) erasing most of the gains post-Trump
http://www.zerohedge.com/sites/defau...28_EOD13_0.jpg
* * *
It was a tough week for 'soft' data and reality-checks - who do you trust to forecast reality?
http://www.zerohedge.com/sites/defau...28_gdp11_0.jpg

But stocks were all higher (apart from Trannies)...The best week of the year for The Dow!!! But it ended on a weak note...
http://www.zerohedge.com/sites/defau...28_EOD17_0.jpg
Small Caps were hit hard today as "Most Shorted" stocks' squeeze seemed to end...
http://www.zerohedge.com/sites/defau...28_EOD18_0.jpg

Utes were the only sector red on the week, Healthcare and Tech led (with Financials solid post-Macron)...
http://www.zerohedge.com/sites/defau...428_EOD4_0.jpg

Breadth has remained weak in this entire recent surge...
http://www.zerohedge.com/sites/defau...428_EOD1_0.jpg

Volume has been abysmal the last two days (lowest of the year)
http://www.zerohedge.com/sites/defau...28_EOD21_0.jpg

VIX was crushed this week - by the most since the post-Trump-election - but did bounce back a little today...
http://www.zerohedge.com/sites/defau...28_EOD20_0.jpg

Finally today was all about the Nasdaq... except all that hope faded fast as it clung to unch. Small Caps and Trannies were hit hard...
http://www.zerohedge.com/sites/defau...28_EOD19_0.jpg

The Good (AMZN), The Bad (MSFT), and The Ugly (INTC) in Nasdaq-land today...
http://www.zerohedge.com/sites/defau...428_EOD9_0.jpg

Notably, bank stocks have slumped since Trump unveiled his tax plan this week...
http://www.zerohedge.com/sites/defau...428_EOD6_0.jpg

And pretty clear picture of the safe haven buying after Trump tax plan...
http://www.zerohedge.com/sites/defau...28_EOD12_0.jpg

Big week for EUR (France elections) and JPY was sold...
http://www.zerohedge.com/sites/defau...28_EOD15_0.jpg

The Dollar Index scrambled back to unchanged from the Macron-drop but ended the week lower...
http://www.zerohedge.com/sites/defau...428_EOD8_0.jpg

EURUSD surged on the heels of the Le Pen loss to the highest since Trump's election...
http://www.zerohedge.com/sites/defau...28_EOD10_0.jpg

Cable has risen for 6 of the last 7 weeks (and April was GBP's best month since April 2015)
http://www.zerohedge.com/sites/defau...428_EOD7_0.jpg

Treasury yields ended the week higher but below the kneejerk opening yields from Sunday night after the French election relief...
http://www.zerohedge.com/sites/defau...28_EOD14_0.jpg

30Y Yields tested 3.00% fives times this week and rallied back each time (30Y ended down 1.5bps today after being up 4bps after GDP... oddly)
http://www.zerohedge.com/sites/defau...28_EOD16_0.jpg

Gold (and Silver) suffered it's worst week in the last 7 but copper rallied most in 6 weeks...





http://www.zerohedge.com/sites/defau...28_EOD11_0.jpg

http://www.zerohedge.com/news/2017-0...not-stand-idly

Sec Tillerson Makes Case to UN for Action Against N. Korea : "The United States Cannot Stand Idly By"
http://www.zerohedge.com/sites/defau...ure-234204.jpg
by The_Real_Fly
Apr 28, 2017 10:42 AM



Get ready for nuclear war, S. Koreans. The United States will have plenty of opportunities to help defend your nation against a sundry of missiles, some armed with poisonous gas, others of the nuclear varietal. But some will slip by, leveling your cities to ash -- pushing you back into the bronze age. But from that ash will rise Samsung, greater and stronger than ever. Miraculously, you will be placed under a Marshall plan, led by the United States "and its allies", to rebuild your proud peninsula. Your dear Japanese friends will assist in the occupation, as they're very familiar with your terrain and the logistics and all that.
Hence, inside of 100 years, your nation will be stronger than ever -- without the menace of N. Korea threatening the world with its MUH nuclear weapons.

Rex Tillerson makes the case for 'action' to the UN. This is a prerequisite for war. Not only is Tillerson warning N. Korea here, he's also warning all nations who support them, threatening them with sanctions.




Content originally published at iBankCoin.com

N. Korea Fires Another Ballistic Missiles Into Sea of Japan, And Fails Miserable: PREPARE FOR WAR
Dr. Fly Fri Apr 28, 2017 7:00pm EST


Yonhap news agency is reporting that N. Korea attempted to sail a ballistic missile into the sea of Japan, but failed to do so because it exploded within seconds into flight. Because of this grave threat to America, preparations for war are being prepared.


In spite of the fact that the N. Koreans are, seemingly, unable to launch missiles just a few hundred few from a launch pad, Secretary Tillerson believes — sometime soon — they will be able to launch them into space via ICBM and travel more than 5,000 miles to incinerate one of our lovely west coast locales.


“North Korea fired an unidentified missile from a site in the vicinity of Bukchang in Pyeongannam-do (South Pyeongan Province) early this morning,” Yonhap reported, quoting a statement issued by South Korea’s military. “It is estimated to have failed.”

http://ibankcoin.com/flyblog/files/2017/04/build-up.png
Get ready to fight for freedom.

Market Nuggets
Walsh's Lusk: Gold Traders Have Many Factors To Digest Next Week
http://www.kitco.com/ind/AllenSykora...len-Sykora.jpg

Allen Sykora Friday April 28, 2017 09:36
Kitco News
Share this article:
Gold traders will have a lot of events on their plates to digest next week, says Sean Lusk, director of commercial hedging with Walsh Trading. Two big events will be a two-day meeting of the Federal Open Market Committee and the monthly U.S. jobs report. “We’ll see what the Fed has to say. If inflation is not where it needs to be, that is going to tell the market we’re not going to have any further tightening any time soon,” Lusk says. “However, if inflation gauges have picked up and they like what they’re seeing in the economy, then it’s going to give more thought to rate hikes down the road and really support the U.S. dollar.” No tightening tends to support gold, while rate hikes and a firmer greenback tend to undercut the precious metal. “You have a whole host of things the market is keeping an eye on, aside from the geopolitical stuff,” Lusk continues, also citing the market’s focus on U.S. tax and health-care changes.
By Allen Sykora of Kitco News; [email protected]

Euro bolts higher on CPI data
Europe and Asia:
UK GDP 2.1 vs. 1.9%
EUR CPI 1.9% vs. 1.8%

North America
USD GDP 8:30

Euro and cable bolted higher in early European trade today with the later making 7-month highs as UK GDP came in slightly better on a year over year basis and the market focused on the key 1.3000 resistance level that has not been seen in months.

UK GDP printed at 2.1% versus 1.9% eyed but only 0.3% versus 0.4% forecast on a quarterly basis. The first quarter growth was hampered by poor retail spending in UK but the market shrugged off the mixed results and continued to push cable higher.

At this point, the trade in cable is purely momentum driven. The market is basically making a bet that the hard Brexit terms upon which UK appears to be headed will not be nearly as damaging as originally thought. Such optimism may be premature but for now, sentiment reigns supreme and cable longs are eyeing the key 1.3000 level which hasn't traded for months.

In Europe, the euro received a pleasant surprise from the EZ core CPI data which rose 1.9% versus 1.8% eyed. Although the rise was modest it proved to be a major catalyst for a euro rally as the pair spiked 40 points in the aftermath of the release. The news was taken with gusto by the market because it minimizes the possibility of any additional QE by the ECB. The ECB has been arguing that inflation pressure remains subdued, requiring perhaps, some additional monetary stimulus, but latest data shows that headline inflation has picked up 11 out of past 12 months and now core readings are inching higher, albeit modestly. That has turned sentiment towards the euro and the pair count mount a move to the 1.1000 level as the day proceeds.

COMMENTS FROM BENJAMINIS: This is what happens when any Currency Analyst and Currency Trader and Currency Teacher accepts the PARTY LINE at FACE VALUE. EUR/USD did not go over 1.1000 and with all the issues probably will not FUNDAMENTALLY. The MAIN POINT that I make NO BIAS is good even if you turn out to be correct. All you need to do is see the REAL FUNDAMENTALS that I call PERCEPTIONS (FALSE) Markets and wait for REALITY to change the FALSE PERCEPTIONS back towards REALITY. All we need to be concerned about is RISK OFF or RISK OFF. Then we execute our Trade Plans...

In North America today, the market is eyeing US GDP readings for Q1 which are expected to come in lower that the period prior. The market anticipates a reading of 1.2% versus 2.1% but the real focus will be on consumer spending component. The call is for a very tepid 0.9% rise versus 3.5% the quarter prior. If the consumer is indeed that weak, the prospect of a Fed rate hike diminishes greatly and USDJPY could take a tumble below the 111.00 figure as the week comes to a close.

COMMENTS FROM BENJAMINIS: The GDP came in at a terrible 0.7 and USD/JPY will go below 111.000 as long as US 30 goes down. That is all that you need to KNOW as relates to the direction of USD/JPY.


Boris Schlossberg
Managing Director of FX Strategy
BK Asset Management
233 West 77th Street, Suite 11G
New York, NY 10024
Direct Number: 1-212-873-4669
Fax: 1-925-887-4373
Email: bschlossberg@ bkassetmanagement.com














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100 Days Of Nothing.......Worse To Come


By David Stockman. Posted On Friday, April 28th, 2017


Some people are going to be thanking their lucky stars for Donald Trump. We are talking, of course, about the folks who have been sufficiently alert to check out of the casino since November 8.


As it turns out, the Donald was enough of a showman to bamboozle the Wall Street punters and robo-traders into a buying mania based on unadulterated hype and hopium. So doing, they levitated the stock market one final time to a level that's now at least 50% overvalued in general (S&P 500 should be 1600 or lower) and 70-90% too high in many of the momo precincts of social media and technology.


You could not have wished for a more attractive exit ramp, but with the "100 Days" marker now fast upon us, this might well be the last call. After all, when they clear the bars after 2AM, the bouncers can get a little rough.


What the remaining revilers in the casino don't understand is that the first 100 days is as good as it gets. FDR's entire reputation was built on that period---for better or worse. And Obama's singular accomplishment during that window---an $800 billion stimulus boondoggle---was clearly for the worse.

Likewise, Lyndon Johnson's Great Society was off and running in the first half of 1965 and Ronald Reagan actually won his fulcrum victory on May 8, 1981 in Tip O'Neill's U.S. House. That's when his whole grand fiscal plan---giant tax cuts, big defense increases and sweeping spending reforms---was approved with the passage of the Gramm-Latta budget resolution (with 60 votes to spare).


By contrast, on May 8, 2017 the Donald will be lucky to have the Washington Monument open. The government shutdown that now looms on that date---on the heels of today's one week continuing resolution (CR) extension---pretty much sums up what he has accomplished during his first 100 days.
That is to say, and whether he knows it or not, he has already been taken hostage by the forces of dysfunction and fractious confrontation that are deeply embedded in the fiscally bankrupt government he inherited. Now he will be forced to fight time and again a dispiriting rearguard battle to keep the fiscal lights on---careening from one short term CR to the next temporary debt ceiling increase and back again.


Another foretaste of that came today when Speaker Ryan abandoned his second effort to repeal and replace Obamacare. This time he got the Freedom Caucus on board for the so-called MacArthur compromise---only to find that the cost of shoring up his right flank was mass defections from the RINMO (Republican in name mainly/only) caucus.


The play-by-play here tells it all. In addition to their substantive objections to the MacArthur amendment (see below), another element of the Washington political equation impacted the Tuesday Group defections in a major way.

To wit, they didn't want to get in the cross-fire of battle with the Dems over the pending CR extension. Yet had they supplied the votes for Ryan's second try---that's exactly what would have happened since the Democrats yesterday promised to vote against the CR if Speaker Ryan brought what they are now pleased to call "Trumpcare" to a vote before Sunday.

Moreover, this démarche means not only that the Dems are 100% united in defense of Obamacare, but also that all the sanctimonious rhetoric and unctuous verbosity that they emitted during the last eight years about the sanctity of keeping the government running and paying Uncle Sam's bills promptly has now been declared "inoperative" in stark Nixonian fashion.

Stated differently, the Dems told the Donald in no uncertain terms that if he wishes to keep the Washington Monument open, then no money for the wall and no tampering with Obamacare. Full stop.

Even then, they are just getting started with what will surely become a pattern and practice of "keep the lights on blackmail". That is, endless riders to CRs and debt ceiling bills to protect their core constituencies---American Hispania and 110 million transfer payment recipients---from policy assaults by the Trump Administration and/or the GOP majority.

But it needs be understood that the Dem resort to this fiscal blackmail strategy is far more ominous than what was done during the Obama era by the conservative backbenchers on the GOP side of the aisle. That's because the Obama White House could count on 100% loyalty in the Dem ranks and 200% support from the mainstream media against alleged rightwing obstructionism.

Time after time, this combination caused the RIMNO wing of the GOP and the hack politicians at the center of the GOP caucus to capitulate on shutdown showdowns---sending, in turn, Speaker Boehner down to the White House to make a deal.

No more. The Freedom Caucus can never be counted on to deliver votes for CRs and debt ceiling increases, and for good reason. At least in principle they are not about to participate in an endless drift toward the fiscal wall. And now with the Dems on board for riders, obstruction and legislative blackmail, there is no reliable majority whatsoever to keep the fiscal lights on.

Nor is there a majority for the Trump Stimulus, either. Today's second failure on Obamacare proves that even the Donald's vaunted skills as a negotiator will likely prove for naught. That's because the MacArthur amendment proved once and for all that the ideological and policy differences within the GOP's gang of factions are too insuperable to overcome.

After all, the MacArthur compromise was a consummate piece of legislative double talk that ended up fooling no one. That is, to the RIMNOs it said in paragraph one that all of the so-called protections of Obamacare---pre-existing conditions, community ratings, the 10 essential benefits, non-discrimination in premium pricing based on health status, coverage of children up to 26---shall remain fully in tact.

That intrusive regulatory dragnet, of course, is exactly why premiums are soaring and coverage is rapidly disappearing in many parts of the country, and why the second part of the MacArthur amendment cancelled the first. Namely, it gave the HHS secretary plenary authority to waive any or all of these mandates under a state waiver application that showed the effect would be reduced premiums, better coverage, other public purposes---and perhaps a boost to motherhood and apple pie, too.

But it was the co-chairman of the Tuesday Group, Charlie Dent, who explained why that statutory double shuffle failed, and in doing so his voice echoed across 36 years of history. So doing, he reminded why the Reagan Revolution failed, and why the Trump Stimulus is done.


To wit, Congressman Dent said he would not walk the plank for the MacArthur comprise because he knew full well it would be jettisoned in the Senate, and that when a more middle of the road bill came back to the House, the Freedom Caucus would vote it down.

That is to say, why bother?

And that's exactly why the Reagan fiscal plan eventually failed on the budget cutting side after the high-water mark of Gramm-Latta on May 8, 1981. Back then the RIMNOs called themselves the "gypsy moths" in contradistinction to the conservative democrats lead by Phil Gramm, which called themselves "Boll Weevils".

But regardless of insect mascot preferences, the dynamic was the same. There was no governing majority---after the first 200 days in Reagan's case---and the result was that a President who had campaigned on a balanced budget ended up adding two times more ($1.8 trillion) to the national debt than had his 39 predecessors combined.

So now would be the time to sell, sell, sell. We have had 100 days of nothing and that fact alone is the death knell for the Wall Street fantasy called the Trump Stimulus.

In that respect, we are seldom at a loss for words, but yesterday the host of CNBC's "Futures Now" show caught us up short. After we had recited chapter and verse on exactly this topic, and had laid out all the reasons why the Donald's $7.5 trillion tax cut will be DBA (dead before arrival), she asked about anything good that Trump has accomplished so far.


We didn't have much to say on that topic---other than the fact that a kid we met at the Reagan cabinet Christmas party in 1981 has now become a supreme court justice.


That would be Neil Gorsuch, of course, who's mother Anne Gorsuch was EPA adminstrator and even more committed to the cause of deregulation and environmental sanity than today's scourge of the eco-libs, Scott Pruitt.


http://ws-na.amazon-adsystem.com/wid...emontreview-20http://ws-na.amazon-adsystem.com/wid...emontreview-20
As it happened, we had teamed up with Anne to lay some wood to the bureaucrats at the EPA by cutting the agency's budget by 25%. A Washington Post story on the EPA from September 1981 pretty well summarizes what happened next:
Budget cuts at the Environmental Protection Agency will strip 3,200 personnel of their jobs by the end of 1983, eliminating 30 percent of the agency’s 10,380 employees.....The cuts are so massive that they could mean a basic retreat on all the environmental programs of the past 10 years, according to agency sources and administration critics. At the same time, divisions between Administrator Anne M. Gorsuch and career agency staff over her approach to policymaking have all but reached open warfare.


That was an understatement and then some. Not long afterwards Neil's mother was gone.
But at least he's now back. There's at least that.

Source: Trump's tax plan will be 'dead on arrival': Stockman

https://www.theburningplatform.com/2...h/#more-149258


Guest Post by Martin Armstrong
https://armstrongmedia.s3.amazonaws....n-1024x528.jpg
Back in 1985 when I was called upon with the birth of the G5, it taught me a lesson. They will call people in to PRETEND they have consulted experts, but it is just a dog & pony show. They already predetermined what they will do and absolutely nobody can step up and advise them to prevent any such crash. Absolutely no government will ever take a precautionary action in such a manner. Government only responds to event – does not prevent them.



https://armstrongmedia.s3.amazonaws....00-July-20.jpg
There is absolutely nobody who can save the markets or economy in the middle of a crash – NOBODY! First of all, it was a contagion that began in Russia and because they could not sell Russian assets, they sold every other market to raise cash. So I fail to see how any person or any single country could stop a crash that is a global contagion.
Yes, in 1985 they call upon several analysts to pretend they listened but nobody directed them to create the G5. I wrote to President Reagan back then detailing why the G5 would increase volatility and fail. If you want to call me a Presidential Adviser, I think that is a stretch. If you presume you give advise which is then acted upon, there is nobody who can claim to be a Presidential Adviser to prevent anything. Sure I get calls in the midst of a crash, but there is nothing anyone can do to stop a meltdown. They are short-lived and have to play out.
I wrote to Robert Rubin warning about his jawboning the dollar would crate the same crisis as the 1987 Crash. Tim Geithner quickly responded saying they weren’t doing that. The 1997 Currency Crash came within weeks.
Sorry, I do not believe anyone can prevent anything or save the economy in the middle of crash.


Guest Post by Martin Armstrong
https://armstrongmedia.s3.amazonaws....n-1024x528.jpg
Back in 1985 when I was called upon with the birth of the G5, it taught me a lesson. They will call people in to PRETEND they have consulted experts, but it is just a dog & pony show. They already predetermined what they will do and absolutely nobody can step up and advise them to prevent any such crash. Absolutely no government will ever take a precautionary action in such a manner. Government only responds to event – does not prevent them.



https://armstrongmedia.s3.amazonaws....00-July-20.jpg
There is absolutely nobody who can save the markets or economy in the middle of a crash – NOBODY! First of all, it was a contagion that began in Russia and because they could not sell Russian assets, they sold every other market to raise cash. So I fail to see how any person or any single country could stop a crash that is a global contagion.
Yes, in 1985 they call upon several analysts to pretend they listened but nobody directed them to create the G5. I wrote to President Reagan back then detailing why the G5 would increase volatility and fail. If you want to call me a Presidential Adviser, I think that is a stretch. If you presume you give advise which is then acted upon, there is nobody who can claim to be a Presidential Adviser to prevent anything. Sure I get calls in the midst of a crash, but there is nothing anyone can do to stop a meltdown. They are short-lived and have to play out.
I wrote to Robert Rubin warning about his jawboning the dollar would crate the same crisis as the 1987 Crash. Tim Geithner quickly responded saying they weren’t doing that. The 1997 Currency Crash came within weeks.
Sorry, I do not believe anyone can prevent anything or save the economy in the middle of crash.

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Relates to trading, 100%. If you are not like this, then become like this.

http://www.becomefighterpilot.com/fi...ilot-emanates/
Be bold, but first be wise.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Hedge Fund CIO: What Central Banks Have Done Is "Stunning, Unprecedented"
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Apr 30, 2017 9:37 AM


We start a quiet Sunday with a big picture anecdote from Eric Peters' latest weekend note explaining why what central banks are trying to do is impossible, why the trend of inflation over the past 70 years is "stunning and unprecedented" and why "volatility suppression" always eventually fails.
"Anecdote", by Eric Peters of One River Asset Management



“For all of history - prior to 1955 - there was roughly equal probability of inflation or deflation in any given year,” said the economic historian.

“But since 1955 we’ve experienced uninterrupted annual inflation. It’s a stunning fact, unprecedented. To an economist in 1955, the coming 60yr inflation would have appeared less probable than a catastrophic meteor impact.”

After enduring a series of world wars, and social upheavals, policy makers conducted an experiment, removing the deflationary left-tail of our economic cycles.

“We created history’s greatest volatility-suppressing machine, and it delivered breathtaking stability.” Of course, we endured volatile periods since 1955. But life is short. And we thus lack the reference points to compare our minor wobbles to the wild booms and busts of our great grandparents.

“Minsky taught us that stability begets instability. And it stands to reason that our volatility-selling machine will break one day. We saw a glimpse of this in 2008-09.”

Perhaps the only thing more surprising than the severity of that crisis was the response of our body politic. “In 2007 if you had shown the top 100 economists a list of the extraordinary measures that central banking and economic elites would unleash in the coming decade, not a single one would have believed you.”

Politicians hate change. With very few exceptions, they stand for stasis. Our central bankers seek stability. And investors have learned to front-run them all, selling volatility into every spike using ever more complex strategies.

“But volatility suppression at the lows is much easier in many ways than at the highs. In a crisis, our central banks simply go full-throttle. At the highs though, they seek the unattainable, which is perfect economic balance in a world that is inherently unstable - they attempt to crystallize the entire ecosystem. Which is as arrogant as it is impossible.”
And this is what central planning looks like visually:
http://www.zerohedge.com/sites/defau...20more_1_0.jpg

https://www.theburningplatform.com/2...n/#more-149260

From Birch Gold Group
http://www.birchgold.com/wp-content/...ing_yellen.png
A Fed policy called quantitative easing, once thought highly risky and unconventional, could soon be making a comeback — possibly as soon as 18 months from now. Here’s what to expect if and when it happens.


Is the Fed Hooked on the Drug It Created?

In the midst of our last major financial crisis in 2008-09, the Federal Reserve essentially created money to buy up massive amounts of various assets, with the ultimate goal of increasing the money supply and boosting the economy.


The technical term for this activity is quantitative easing (QE), and its history is relatively short. The Fed used it for the first time after 2008, and some analysts worried about its long-term consequences — primarily because it was completely untested.


Put simply, quantitative easing is like a drug… It makes things feel better right now, but it’s easy to become dependent on it, and hard to get off of it.


QE’s primary intended effect is to inflate asset prices. But some argue that QE does more harm than good because it actually hurts employment
and economic activity.

With all the negative side effects, you’d think that it would be better to avoid taking the drug at all. But apparently, for the Federal Reserve, that’s not an option anymore. They’ve already used QE, and now they’re hooked.


Recent comments from Boston Fed President Eric Rosengren prove it. The Boston Globe reports:
The next recession is likely to force the Federal Reserve to once again buy up large amounts of assets to boost the supply of money and stimulate the economy, a move that nearly a decade ago was considered drastic and unconventional, according to Boston Federal Reserve president Eric Rosengren.

“During a speech Wednesday at Bard College in New York, Rosengren said that such purchases — called quantitative easing — will probably become a go-to tool for the Federal Reserve in dealing with recessions. Low inflation, limited productivity growth, and an aging population “may necessitate more frequent use of large-scale asset purchases during recessions,” he said.

“A longstanding inflation-fighting method — lowering interest rates — may no longer be enough, he said. The Fed raised the key benchmark rate by a quarter percentage point last December and then again in March, but rates remain historically low and are likely to stay that way for a long time. That will give the Fed less room to lower interest rates enough to stimulate the economy in the event of another economic downturn, Rosengren said.

If Fed officials are already talking about more QE, how soon can we expect to see it? Well, some say as soon as 2019, or whenever the next round of problematic circumstances rolls around for the U.S. economy — which could be even sooner than that.


Some are speculating that the Fed is raising rates now so it can slash them and give the illusion of “doing something” later. Perhaps the Fed is doing the same with QE, priming us now so we’re prepared when it makes a reappearance.


The Good and Bad News About More QE
Let’s get the bad news over with first: More QE will likely inflate our currency, cause asset bubbles, and threaten the long-term safety of the economy — and all in the name of a quick and easy fix.


But there is an upside to the Fed’s new taste for QE…

Whenever the Fed steps in with these overtly interventionist policies – especially when those policies may devalue the dollar – gold and silver usually rise.

When QE was introduced in 2008, precious metals thrived, and gold continued to power through its biggest bull run in years.

And if QE were to come back, it wouldn’t be surprising to see a repeat of that scenario. So if you haven’t secured your position in gold, this may be the perfect time to do so.

YOU MUST LISTEN TO THIS... YES PLEASE TRUST ME PLEASE LISTEN TO THIS AND POST YOUR THOUGHTS AFTERWARDS... NO EXCEPTIONS.

I Have never been so clear with my request. After listening you will understand much more more than ever before.

https://www.theburningplatform.com/?p=149230


Benjaminis

http://www.acting-man.com/?p=49248#more-49248

Ludwig von Mises Century of Validation
April 28, 2017 | Author MN Gordon




Seeing the Light
It has been said that the definition of insanity is doing the same thing over and over again and expecting different results. No one quite knows who first uttered this remark; it has been attributed to Albert Einstein, Mark Twain, Benjamin Franklin, and has even been said to be an Ancient Chinese Proverb. What is known is that this cliche has been repeated over and over again so often that its mere mention substantiates its own definition.

http://www.acting-man.com/blog/media...t-1024x532.jpgSeveral of the ladies and gentlemen above wanted to let us know that they're merely eccentric, and if they want to do things all over again and again and again, we should let them

Nonetheless, we repeat it again because its particularly fitting to today's deliberations. Here we begin with a look back to the past in search of edification. For the miscalculations of the past continue to dictate the insanity of the present.


Many years ago, a bright minded and well intentioned Italian pursued a devious undertaking. His efforts aimed to conceive a pure theory of a socialist economy. His objective was to take the sordid teachings of Marx and pencil out the mechanics of how a centrally planned economy could bring a life of security and abundance for all. What follows is an approximation of how the dirty deed went down.


In 1908, Italian economist Enrico Barone suffered an abstraction. One late night he skipped a bite of his meatballs and marinara, and gazed into the outer frontiers of deep space. Looking around, he couldn't believe his eyes. For in this far corner of absolute darkness, he saw something truly amazing. Out in the distant reaches of nothingness, peering into a black hole, he saw not the dark. Rather, he thought he saw the light.


Barones light was a socialist utopia achieved through scientific management of the economy, lorded over by the Ministry of Production. Through this endeavor, he imagined, an economy could attain something called maximum collective welfare.

http://www.acting-man.com/blog/media...ico_Barone.jpgEnrico Barone in the only photo of him we could find. Both Vilfredo Pareto (in 1897) and Barone (in 1908, in the monograph The Ministry of Production discussed above) used a system of simultaneous equations based on Walrasian general equilibrium theory in order to investigate whether there was some sort of theoretical/ mathematical solution available to central planners facing the problem of what to produce, how much of it to produce, how, when, and where to produce it, etc., what resources in what quantities to allocate to capital goods production, how much consumption to permit, etc., etc. all the stuff socialist planners ultimately turned out to be really bad at.

Anyway, we have to defend Barone and Pareto a bit, as neither of them seemed to really believe that the approach was actually viable in the real world. After presenting all his nifty equations, Barone pointed out that the planners would ultimately still need all the things they thought they could abolish (prices, rent, profits, interest, savings, etc., which he averred would probably return under different names). He also noted that because no a priori determination of the economically most viable technical coefficients for the production system was conceivable (always assuming the goal of the planners was to maximize welfare), they would have to experiment on a grand scale which would be far more wasteful than the so-called anarchy of production they wanted to replace.

In the final pages of his monograph Barone proceeded to lambast collectivist writers[who] simply show that they have no clear idea of what production really is, and inter alia remarked that to promise increased welfare and to propose to organize production and to preach about free love in the new regime is simply ridiculous nonsense.

Pareto meanwhile noted along similar lines that it would simply be impossible to perform all the calculations needed for running a complex economy in time and recommended to rather observe the practical solution given by the market. The problem was that the Marxists were simply too dense to understand what they were trying to tell them instead it ended up giving them ideas (further elaboration regarding the issue in the caption under the Mises picture). [PT]

Swiss Cheese
The proposal was simple enough. If a bounty of academics were put to the task of determining the best prices for all goods and services, supply and demand could be optimized to produce an economy without poverty, without unemployment and without possibility.

Of course, with all these number cruncher's hammering out technical memorandums and white papers, projecting data into the future with the intention of fixing the optimal price of toothpaste and pizza, how could they account for a change beyond their control or imagination? What if a springtime heat wave resulted in a meager wheat harvest?


How would this affect their pre-determined price for a 16 inch pizza? Would government mandated thin crust be the solution? More than likely, before the data fabricators could re-optimize the price to the change in conditions, the pizzerias would be out of pizza dough because the price wasn't allowed to naturally adjust upward by free market interactions. Government-induced shortages and artificial scarcity would result.


With just a little common sense, Barones ideas are quickly exposed as absurd. From an academic standpoint, in his 1920 monograph, Economic Calculation in the Socialist Commonwealth, Austrian economist Ludwig von Mises, poked so many holes through the rationale it was transformed to Swiss cheese.


http://www.acting-man.com/blog/media...iss_cheese.jpg

Swiss cheese does indeed have holes this reminds us of the other day, when we bought a piece of Swiss cheese at a local supermarket, only to find out at home that the wrapping paper was empty. Upon confronting the author of this transgression (the dweller behind the cheese counter) with his misdeed, he explained that it had been a Swiss cheese with particularly large holes, and the piece he had sold us simply was one of said holes. We realized that if we were to time our future Swiss cheese purchases judiciously, we would be spared a lot of unnecessary calorie intake. In socialist Utopias one can afford sloppier timing there they sell only the holes most of the time (a popular snack in Caracas these days is reportedly Hole of Swiss Cheese with Rat). [PT]

With exacting repudiation, Mises argued that in a socialist economy rational economic calculation is impossible; in the absence of private ownership of the means of production attempts to allocate resources efficiently must fail.


Without market-determined prices for goods and services via free exchange it is impossible to establish prices that reflect actual conditions. Without prices that are grounded in reality the production and consumption relationship becomes distorted. In the absence of the natural corrective mechanism of market-determined prices, oversupply and scarcity conditions extend out to absurdity.

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Ludwig von Mises naturally refrained from wasting time by wrestling with general equilibrium equations. He realized right away what the core problem was, but was misunderstood and/ or misinterpreted by contemporary and later socialist economists, of whom frighteningly large numbers were uselessly occupying otherwise perfectly fine standing room in his heyday there must have been a nest somewhere, considering how they suddenly proliferated (their large number did nothing to improve the quality of their ideas and arguments.

There were also a few interesting chameleons like the historicist Werner Sombart, a trust fund baby who started out as a radical Marxist, then joined the socialists of the chair who supported the Prussian dynasty of the Hohenzollern, and later on discovered his inner nationalist and became chummy with the Nazis without so much as batting an eyelid just as long as he was in bed with vile statist's, he seemed to be happy!).

Anyway, after the publication of Mises monograph on the literal impossibility of a rational economy under socialism, Mises, Hayek and occasionally Lionel Robbins (a fellow fighter of the good fight on Hayeks side before he defected for unfathomable reasons), proceeded to debate the leading socialist economists on the socialist calculation problem for decades (Menger and Boehm-Bawerk had debated the previous generation, except for those who invoked polylogism so as not to have to defend their ideas against economists employing bourgeois logic.

Todays identity-politics SJWs who have whole lists of topics white males are supposedly not allowed to speak or think about are a bit reminiscent of that). Socialist economist Fred Taylor was apparently inspired by Barones remark that there would be no equations for the planners to sensibly solve if they didn't do experiments on a grand scale. While Barone seemed to indicate that this rendered the entire exercise useless and they might as well stick with the market economy, Taylor shrugged and said Why not? Lets do that!

Consequently, he proposed the trial and error method of central planning, once again missing the essence of the problem. Taylor then joined Oscar Lange with whom he wrote On the Economic Theory of Socialism. Two or three years later Henry Dickinsons Economics of Socialism was published. This trio was in the process of conceding step by step that without prices for capital goods, rational resource allocation was indeed not possible, just as Mises had always pointed out.

Over the decades the debate had moved from calculation in natura propagated by Otto Bauer in the late 19th/early 20thcentury (a bizarre idea, we would have liked seeing him draw up a balance sheet), to the planners simply using the Pareto/ Barone equilibrium equations to calculate production, to the addition of the trial and error method as a refinement, until finally, they renamed their method market socialism, adding some additional ideas to Taylors trial and error shtick by which they hoped to successfully replicate the price system. There would still be socialism, but the central planners and their subordinated factory managers would actually play at market they would run a kind of make-believe market, a bit like little kids playing Monopoly.

Given that they went as far as wanting to try that, one wonders why they didn't just decide to simply stick with a market economy!


To this final pathetic attempt to save their tattered socialist economic theory Mises inter alia remarked later: [] the cardinal fallacy implied in [market socialist] proposals is that they look at the economic problem from the perspective of the subaltern clerk whose intellectual horizon does not extend beyond subordinate tasks.

They consider the structure of industrial production and the allocation of capital to the various branches and production aggregates as rigid, and do not take into account the necessity of altering this structure in order to adjust it to changes in conditions. What they have in mind is a world in which no further changes occur and economic history has reached its final stage. They fail to realize that the operations of corporate officers consist merely in the loyal execution of the tasks entrusted to them by their bosses, the shareholders.

The operations of managers, their buying and selling, are only a small segment of the totality of market operations. The market of the capitalist society also performs those operations which allocate capital goods to the various branches of industry. The entrepreneurs and capitalists establish corporations and other firms, enlarge or reduce their size, dissolve them or merge them with other enterprises; they buy and sell the shares and bonds of already existing and of new corporations; they grant, withdraw, and recover credits; in short they perform all those acts the totality of which is called the capital and money market. It is these financial transactions of promoters and speculators that direct production into those channels in which it satisfies the most urgent wants of the consumers in the best possible way. These transactions constitute the market as such. If one eliminates them, one does not preserve any part of the market. What remains is a fragment that cannot exist.


Oh well... making favorable mention of speculators, promoters and entrepreneurs when explaining to the Reds what they are wrong about is probably a good way of getting them riled up Mises remark above indirectly encompasses questions about the nature of knowledge and its distribution Hayek had begun to discuss in the early 40s.

The point being that what all these individual entrepreneurs, speculators, promoters etc. discover and know, their individual talents and the part of their knowledge that is tacit, which they cannot even verbalize themselves all of these things a central planning agency can never learn and will therefore never know. Even if its bureaucrats were mind readers and did know about them, why would they ever care?

In the socialist commonwealth going the extra mile has no rewards. As a final remark to this highly condensed caption version of the socialist calculation debate: although Oscar Lange became a high-ranking communist official in Poland after WW2, the system of market socialism was never even tried there. They opted for old-fashioned Stalinist oppression instead (and the guy had sounded so reasonable while he was still in the US!). We know Lange had still not conceded a basic error in his in old age, as he made a gleeful remark in 1967 about computers soon being able to calculate all those equilibrium equations proposed by Barone rapidly enough that a perfect 5 year plan could finally be produced for the comrades. Good grief! [PT]

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Polish-American socialist economist Oscar Lange

Ludwig von Mises Century of Validation
The planners are never able to get things quite right. In time, these absurdities become ubiquitous. For example, in a socialist economy you'll find supermarkets with long lines of people and empty shelves. Another definitive gift of socialist economies is toilets without toilet seats. How is this even possible?


Still, the socialist visionaries loved Barones gibberish because it endorsed their conceit. Here was a marvelous way for the enlightened Illuminati to play god, muck with peoples lives at large, and remake the world in their image. Conversely, the mainstream economists of the day greeted Misess truths like a five-year-old first greets word that Santa Clause isn't real.

They derided his efforts and attempted to marginalize his work. This still continues today.


The ideas of Barone, which were an attempt at defining a practical application of Marx, swept across Eastern Europe during the early 20th century like a medieval plague. Later, a somewhat altered derivative of these ideas resurfaced in France, the United Kingdom, the United States, and Japan, among other places, within the intersection of Keynesian fiscal policies and Chicago school monetary policies.


Rather than having to directly fix the price of individual goods and services via a Central Planning Board, it was established that a Central Bank can crunch fabricated aggregate demand data and control the prices of an entire economy just by monkeying around with the price of credit. Whats more, governments could run perpetual deficits to remold things nearer to their hearts desire.


Mises efforts to refute socialist economic proposals nearly a century ago were explicitly validated with the decline and fall of Soviet socialism. Presently, they are being openly validated again, with the utter chaos being heaped upon the people of Venezuela.

http://www.acting-man.com/blog/media...redit-CIPE.jpg

The somewhat diminished modern-day shopping experience in Venezuela meet the latest attempt to make socialist economics work by finally doing it right.

Indeed, the results of government intervention are always the same. Stagnation, inflation, declining living standards, and widespread social disorder. No doubt, they'll be repeated to insanity.


In closing, and although many refuse to recognize it, Mises truths are currently borne out in the United States, and other social and corporate welfare economies, where money, which is a form of private property, is covertly confiscated by the insidious effects of a centrally planned system that is based on ever increasing issuance of debt.

Lengthy article-in-article captions by PT


MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

Hi Benjamin
A reminder of how natural human traits, groupthink & conformity, affects our world.
rgds, Roger