“The Fed is now paying interest on so-called ‘excess reserves’ held at the Fed. Those ‘excess reserves’ include a huge chunk of money held there by foreign banks who are only too happy to receive 1% on their holdings from the Fed given that their own central banks are paying 0%, or even negative rates. The money that the Fed pays these foreign banks is deducted from the amount remitted to the US Treasury at the end of each fiscal year. It’s this simple: foreign banks are being paid billions .. not one single person in the US got to vote for or approve of that action. Let me repeat that: billions and billions .. are being sent to boost the profits of foreign banks. And there’s not a single thing a voting citizen can do about it .. The decision to do this has been made unilaterally by unelected people for reasons they are under no obligation to either share or even have audited by the public. I wonder if Detroit wouldn’t mind getting several billion dollars to use however it wishes, courtesy of the Federal Reserve? Or the permaculture movement? Or jobs training programs?”
05/28/2017 - Chris Martenson: Non-U.S. Banks Are Being Paid By The U.S. Central Bank
05/25/2017 - David Rosenberg: The Fourth Industrial Revolution Is Having A Profound Impact On Worker Anxiety
“The yield curve is flat enough that if the Fed raises rates four more times, that’s all it takes. We probably will have a recession next year .. Politics, to me, unless it has a substantive impact on the earnings outlook or the economy, is just short-term noise .. What’s happening in terms of artificial, robotic intelligence and the shared economy… Right now, we’re going through the fourth Industrial Revolution, and it’s having a profound impact on worker anxiety .. How is it that we have 23 million Americans between 25 and 54, in their prime working age, that are out of the labor force? .. There’s some real structural things happening here that really transcend the need to cut taxes or what’s happening in terms of immigration policy.”
05/22/2017 - Russell Napier Fears The Dark Ages Of Government Allocating Resources And Capital To Run The Financial System
“The central banks try to manipulate markets to deliver growth, that’s effectively what they do by manipulating the price of money. If it doesn’t work, then what? Well, it’s pretty straightforward. Well, people the demand the politicians do something, people demand political action. But political action for those people who invest in financial markets means in some way reducing the par of financial markets, reducing the par of price. And yeah, I’ve speak to a lot of people about this. People fear inflation, they fear deflation. I fear something much bigger than that, that the political reaction to this is effectively to go through one of those periods again, what we’ll called ‘dark ages’, where we basically- the politicians can make it and then they run the financial system, or they begin to get directly involved with the allocation of resources and capital and credit and we go back into that, let’s call it the 1950s, 1960s, certainly a in a European context, that type of world is a world that the population demands because they look at central banks and say ‘well you haven’t been able to do this using so-called market forces, so let us use non-market forces.’ So, we’re really dealing with something very existential, here, that this will be a shock to the face and the ability of the market to deliver, not only in the ability of central bankers, but in the ability of the market to deliver in a decided move towards intervention in markets.”
Erik Townsend Interviews Russell Napier:
05/16/2017 - David Rosenberg: Investing Around The Latest Trump News? Don’t
05/10/2017 - Yra Harris And Rick Santelli: Lessons From Japan & Implications Of France’s Vote
“The global markets have been lulled into an eerie calm–think Minsky—as the recent Dutch and French elections have driven the anti-euro populists back underground. I caution that the economic situation still remains a very serious concern as President Draghi continues to build the ECB balance sheet in an effort to bail-out the fiscally weak states of Italy, Spain, Portugal, France and others. Italy is still a major concern as the non-performing loans plague its domestic banks. Add in that Italy has a debt-to-GDP ratio of 136% and it will take the entire EU to backstop the Italian financial system. I WARN ALL READERS THAT THE GLOBAL DEBT SITUATION IS FAR MORE PERILOUS THAN GLOBAL EQUITY MARKETS REFLECT .. The world’s central banks have been busy adding liquidity to the financial system, which provides the backdrop for a Minsky Moment for complacency in the realm of ZIRP creates instability below the surface. We do not fight markets and therefore have not been sellers of equity markets by battling the power of central bank liquidity creation. But as geopolitics calm markets will return to focus on the fragile financial situation created by mountains of debt.”
05/04/2017 - Kyle Bass: “All Hell Is About To Break Loose” In China
Danielle Park: “Advised and led by their US trained finance types, China has followed the same hide-your-debts-playbook that brought down Enron, Worldcom and global financial markets in 2001-03, as well as Bear Stearns, Lehman and global markets again in 2007-09. The difference this time is the unprecedented scope and scale: China is a whole country, the world’s largest population and the second largest economy. The main benefactor of credit-fueled cash flows from the west over the past 15 years, China forgot that credit expansion is a finite cycle and spent like a drunken sailor throughout. Now it’s left holding a leverage on leverage bomb of unprecedented proportions, with sketchy debts oozing out of every crack and crevice .. We should expect that the liquidity and solvency problems there will be felt though highly connected world markets. This is a necessary part of the great cleanse and reset so needed to reboot asset prices and the economy. So, long-run positive, but short to medium term dangerous for capital.”
Kyle Bass: “Some of the longer-term assets aren’t doing very well .. As soon as liabilities have problems – meaning the depositors decide to not roll their holdings – all hell breaks loose.” .. The wealth management products, or WMPs, have swelled to $4 trillion in assets in the last few years, he says., on a $34 trillion banking system .. “Think about this – in the US, our asset-liability mismatch at the peak of our subprime greatness was around 2%! … China’s mismatch is more than 10% of the system.”
05/01/2017 - Former Federal Reserve Chairman Alan Greenspan: What Is Trump Going To Do When Inflation Hits
Greenspan thinks U.S. President Donald Trump has a math problem with his budget .. Greenspan says that interest rates will have to rise because of very large budget deficits if big programs are not cut .. Interest rates and inflation will go up right along with it.
04/28/2017 - David Rosenberg: The Bond Market Is Reacting To The Facts On The Ground
The stock market is at a critical juncture, and it may be time reduce risk, strategist David Rosenberg says .. He predicts economic growth will slow even more as the Federal Reserve resumes its tightening policy.
“The reckoning will be which market has the story right: Is it the stock market that is de facto pricing in double-digit earnings growth or is it the Treasury market with the 10-year yield at 2.3 percent? .. The bond market is really pricing in a completely different nominal GDP growth world .. The bond market is actually reacting to the facts on the ground. The facts on the ground are this: Year-over-year growth on a nominal GDP cycle already peaked at 4.9 percent. We have never before in the post-World War II period ever have seen year over year nominal GDP growth peak below 5 percent. That happened two years ago.”
04/28/2017 - Dr. Albert Friedberg: Bullish On Risk Assets, Federal Reserve Will Only Shrink Its Balance Sheet When It Sees Accelerating Inflation
From the Quarterly Report
“In sum, we see a global expansion gathering strength and being liberally financed by politicians, politically influenced bankers and academics with little feel for reality. It is these academics who are now floating the idea of raising the inflation target to 4% from 2% on the pretext that it will be easier to achieve negative real rates without having to breach the zero-interestrate bound — the next time they are called on to save the world!
There is good reason to believe, then, that we are still early, that the bull is proceeding as it always has, confounding the great majority of experts, defying the well-armed but uncritical skeptics and taking its sweet time. So what is needed is patience (don’t switch lanes — you will always regret it), blindness and deafness (to experts’ concern about valuations, presumed political gridlock, Brexit, etc.) and discrimination (persist with active managers, for their time has come).”
04/21/2017 - Alan Greenspan: Stagflation Is Here And Rising, “It’s A Fiscal Issue”
Former Fed Alan Greenspan discusses U.S. entitlements growing 9% a year and that no one wants to attack that. On Stagnation he says we have a slow growth economy where you end up with inflation and slow growth just like the 70s.
04/21/2017 - Adam Andrzejewski: The Open-Government Movement – How Posting All Public Spending Online Can Transform U.S. Politics
“Sunlight is said to be the best of disinfectants; electric light the most efficient policeman,” wrote Louis Brandeis in 1914. Today, the Freedom of Information Act and internet make it possible to post online all spending at the federal, state, and local levels. This kind of radical transparency can transform U.S. politics.
Since 2011, American Transparency, a nonprofit, has built and operated OpenTheBooks.com, the largest private repository of U.S. public-sector spending. The ultimate goal: post “every dime, online, in real time.” To date, OpenTheBooks.com has captured 3.5 billion government-spending records, including nearly all disclosed federal government spending since 2000; 48 of 50 state checkbooks; and expenditures in 60,000 localities across America.
04/05/2017 - McAlvany Weekly: Central Bankers Cannot Create Perpetual Growth
Bullish Sentiment hits highest level on March 1st…So did the stock market. The repeating and painful Errors of Optimism. TESLA market cap exceeds FORD & has yet to turn a profit .. New studies showing one dollar of new debt giving one dollar less of GDP growth.
04/04/2017 - Former Federal Reserve Advisor Danielle DiMartino Booth On The Adverse Effects Of Monetary Policy On Savers
04/04/2017 - GMO’s Jeremy Grantham: Stocks “Decently Different This Time”
Jeremy Grantham, co-founder of Boston investment firm GMO, doesn’t expect valuations to drop back to normal levels for two decades. But he is keeping cash on hand to take advantage of any dip, which he says would need to be 15-20% to act.
03/23/2017 - Financial Literacy Day – Mark Your Calendar – Live Stream on March 30th – Link From Here
Financial Literacy Day
Mar 30, 2017
Cumberland Advisors and the University of South Florida Sarasota-Manatee are proud to invite you to our Financial Literacy Day being held on March 30, 2017. This event will feature panel discussions by experts on:
- Fiduciary/Trustee Roles and Responsibilities
- Women’s Financial Issues
- Investment Options/Outlook for Investors and Financial Markets
- The Global Economic Outlook
The keynote remarks will be given by William C. Dudley, President and CEO of the Federal Reserve Bank of New York.
USF Sarasota-Manatee at the Selby Auditorium
8350 N. Tamiami Trail
Sarasota, FL 34243
Please use the parking lots on the south side of Seagate Drive. You will not need a parking permit if you’re attending this event.
- David Kotok, Chairman & CIO, Cumberland Advisors
- David Berson, Senior Vice President and Chief Economist, Nationwide Mutual
- Michael Chriszt, Vice President & Public Affairs Officer, Federal Reserve Bank of Atlanta
- Tracy Collins, Assistant Professor of Economics, New College of Florida
- Neal D. Colton, Former Shareholder (retired), Cozen O’Connor (Philadelphia, PA)
- Ray Dillon, President & CEO, Deltic Timber Corporation (Retired)
- Michael Drury, Chief Economist, McVean Trading & Investments, LLC.
- Megan Greene, Managing Director and Chief Economist, Manulife Asset Management
- Edward F. Keon, Jr., Managing Director and Portfolio Manager, QMA
- Kozo Koide, Chief Economist, Asset Management One Co. Ltd. (Japan)
- Ramiro Lopez Larroy, Partner & Director, Integras Capital
- Cheryl Loeffler, Realtor & Former Chairman Board of Trustees of Ringling College of Art & Design
- Laura Mattia PhD., CFP ®, Financial Planning Program Director, University of South Florida
- Michael McNiven, PhD., Managing Director & Portfolio Manager, Cumberland Advisors
- John Mousseau, CFA, Executive Vice President and Director of Fixed Income, Cumberland Advisors
- Dr. Donal O’Shea, President & Professor of Mathematics – Natural Sciences, New College of Florida
- Kimberly Walker, Attorney specializing in Labor & Employment, Williams Parker
- Judy Hangartner, CPA, Assistant Professor, State College of Florida
- Alison Gardner, First Vice President — Wealth Management, Morgan Stanley
- Michael McKee, Radio Host and Economic Editor for Bloomberg Television
- Janet Sperling, Senior Vice President, Investments, WMS, Raymond James (Sarasota, FL)
Dedication of the
David Kotok/Cumberland Advisors Financial Information Laboratory
The day will also feature the dedication of the new David Kotok/Cumberland Advisors Financial Information Laboratory equipped with Bloomberg Professional Services. This new Lab will provide access to the same data and analysis used by financial experts and managers around the world to students across the Sarasota-Manatee region. David Kotok and Cumberland Advisors were recently featured in the October 2016 edition of SCENE Magazine (pg. 50 – 51), explaining the importance of having these services accessible to financial professionals and students in the Sarasota-Manatee area.
03/22/2017 - McAlvany: Printing Money To Save The System Will Not Work Anymore
Who’s absorbing the liquidity from international money printing? The FED’s grand stimulus experiment has lost its effectiveness, Negative consequences soon to be felt. Inflation risks create key changes in the market that could lead to 2017 being an inflection year.
03/12/2017 - Rob Arnott On Why Valuations Matter, Contrarian Investing And The Unintended Consequences Of The New U.S. Administration’s Policies
Rob Arnott Of Research Affiliates:
02/25/2017 - Yra Harris Warns Of Massive Global Slowdown If U.S.$ Appreciates 20% On Top Of A 20% Border Adjustment Tax
02/22/2017 - Will A Trump Administration Cause Rising Inflation And Rising Interest Rates?
02/12/2017 - Danielle DiMartino Booth: An Insider Exposes The Fed
Danielle DiMartino Booth, former analyst at the Federal Reserve Bank of Dallas, has just released the book Fed Up: An Insider’s Take On Why The Federal Reserve Is Bad For America.
The Federal Reserve is controlled by 1,000 PhD economists .. The Fed continues to enable Congress to grow the U.S.’s ballooning debt and avoid making hard choices, despite the high psychological and monetary costs. And the addiction to the “heroin” of low interest rates is pushing America’s economy towards yet another collapse ..
“That’s the trillion-dollar question. We didn’t used to call it that did we? We used to call it the million-dollar question. But it’s now the trillion-dollar question. The punditry up there will tell you that The Fed has been in tightening mode since the taper began several years ago, but I say hooey to that. What we have today is absolute fungibility with central bank purchases on a global basis. You’re talking about something upwards of $200 billion every single month. What the global bond market now revolves around, and relies upon, is the assumption that somebody somewhere will be conducting quantitative easing. As long as they do that, we’re operating in a bond market that is assuming that every single bond purchased by a central bank globally has been expired permanently .. You’re taking supply out of the system, which is the only thing that could get you to justify where bond yields are and, therefore the mirror image of that, where bond prices are, which is at record highs or close to record highs. That I think is at the crux of central bankers’ global dilemma. The first central bank that even hints that they are going to reduce the size of the balance sheet or even worse, sell off a single bond, it is game over at that point for the world bond market.”
On The Ticking Pension Time-Bomb: “The problem with pensions is that the sins are compounding over time. They are piling up. Every single fiscal year that goes into the history books with a 6%+ gap between what was assumed versus what was returned piles on to the next year of equal, if not worse, relative underperformance .. You’re talking about having to make up for all of that lost time, but in spades — at multiples of what the current rate of return assumptions are. Going forward, on an ongoing basis for years to come. Which is highly unrealistic when you are staring down the barrel of an almost 40-year bull market in bonds and the second longest bull market in US history. The assumptions are simply Herculean in magnitude and impossible to achieve. That’s why you’re seeing rate of return assumptions begin to come down. This is all good, fine and well until you completely square the circle and understand that every time a municipality or a state pension plan reduces their rate of return assumptions, some entity, whether it be the state, the school district, some entity has to write a bigger check in order to make up for the cash flow that is no longer being assumed in by the actuaries via rate of return investments. It doesn’t work. You can’t do it for very long when you’re not bringing money in as a state municipality.”