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Counter Party Risk – The Truth
Counter Party Risk – The Truth Counter-Party Risk Last week (2nd of February, 2018) ESMA (European Securities and Markets Authority) published the results of its second EU wide stress test for CCP’s (Central “Clearing” Counterparties). These tests are conducted under EMIR (European Markets Infrastructure Regulations) and were first published back in April 2016. There are […]
What Just Changed?
What Just Changed? The illusion that risk can be limited delivered three asset bubbles in less than 20 years. Has anything actually changed in the past two weeks? The conventional bullish answer is no, nothing’s changed; the global economy is growing virtually everywhere, inflation is near-zero, credit is abundant, commodities will remain cheap for the […]
The stock market swoon and our hatred of (some kinds of) volatility
The stock market swoon and our hatred of (some kinds of) volatility The steepest one-day point drop in the history of the Dow Jones Industrial Average last week shook stock investors into an awareness that all is not sweetness and light in the financial markets. The sudden downside stock market volatility had been preceded by […]
Ruin is forever (revisited): Why your death isn’t as bad as that of all humankind
Ruin is forever (revisited): Why your death isn’t as bad as that of all humankind It should be obvious that the death of an individual human being isn’t as bad as the death of all humankind. But that’s only true if you accept the following premise laid out by Nassim Nicholas Taleb in his upcoming […]
ECONOMIC CRASH LIKELY? Stock Market Insanity & Risk Reaching Nose-Bleed Levels
ECONOMIC CRASH LIKELY? Stock Market Insanity & Risk Reaching Nose-Bleed Levels With the Dow Jones Index falling 665 points today, the risk of a large market correction has just increased significantly. Ironically, I discussed the very indicators that were setting up for a huge market correction in my newest video which I recorded on Tuesday. […]
Homos Economics: A Largely Irrational Animal
HOMOS ECONOMICUS: A LARGELY IRRATIONAL ANIMAL Or ‘How Expected Utility Theory was Successfully Challenged by a Nobel Prize-winning Hypothesis’ 2002’s Nobel prize-winning economist Daniel Kahneman wrote about Prospect Theory, which is hard to summarise succinctly because he wrote an entire thesis to explain it. He and his academic partner Amos Tversky examined how economic decision-making […]
One of BofA’s “Imminent Market Crash” Indicators Was Just Triggered
One of BofA’s “Imminent Market Crash” Indicators Was Just Triggered Early last month, we showed that one of Bank of America’s “guaranteed bear market” indicators, namely the three-month earnings estimate revision ratio (ERR) which since 1988 has had a 100% hit rate of predicting upcoming bear markets, was just triggered. As Bank of America explained […]
‘Perfect storm’: Global financial system showing danger signs, says senior OECD economist
‘Perfect storm’: Global financial system showing danger signs, says senior OECD economist The world financial system is as dangerously stretched today as it was at the peak of the last bubble but this time the authorities are caught in a “policy trap” with few defences left, a veteran central banker has warned. Nine years of […]
The Risk of a Correction in the Equity Bull Market
THE RISK OF A CORRECTION IN THE EQUITY BULL MARKET Rising commodity prices, including oil, are feeding through to PPI Unemployment data suggests wages may begin to rise faster Federal Reserve tightening will continue, other Central Banks may follow The bull market will be nine years old in March, the second longest in history Since […]
Cyber War Coming In 2018?
Cyber War Coming In 2018? – Cyber war is increasing threat – Investors are not prepared for – Third most likely global risk in 2018 is cyber war say WEF – “Scale and sophistication of attacks is going to grow” – EU, US, NATO lay down ground rules for offensive cyber war – Ireland is viable […]
Why Financial Markets Underestimate Risk
Frank Rumpenhorst/Getty Images Why Financial Markets Underestimate Risk Today’s economy is in a “risk-on” period, when investors exchange safe-haven assets like US Treasury Bills for riskier ones, from real estate to carry-trade currencies. But when such behavior assumes that economic conditions are more stable than they are, as seems to be the case today, trouble […]
Believing The Impossible
silenceofmind.com Believing The Impossible Is necessary to rationalize today’s bubble markets “Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.” “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as […]
Is the High Level of Debt a Major Economic Risk Factor?
IS THE HIGH LEVEL OF DEBT A MAJOR ECONOMIC RISK FACTOR? Many economic commentators regard high level of debt relative to GDP as a major risk factor as far as economic health is concerned. This way of thinking has its origins in the writings of the famous American economist Irving Fisher. According to Irving Fisher,[1] […]
The Inescapable Reason Why the Financial System Will Fail
girardatlarge.com The Inescapable Reason Why the Financial System Will Fail Credit cannot expand faster than fundamentals forever Modern finance has many complex moving parts, and this complexity masks its inner simplicity. Let’s break down the core dynamics of the current financial system. The Core Dynamic of the “Recovery” and Asset Bubbles: Credit Credit is the […]
Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin
Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin Let us not, in the pride of our superior knowledge, turn with contempt from the follies of our predecessors. The study of the errors into which great minds have fallen in the pursuit of truth can never be uninstructive.” – Charles Mackay Extraordinary Popular Delusions and […]
