Tuesday, April 30, 2013


When the largest currency cross in the world spikes 70 pips on no news and starts trading like a penny stock, you know that beneath the calm surface of all-time high nominal stock prices, something is brewing...



The details: 86% are bullish on stocks and real estate, only 11% are bullish on treasury bonds. Cash is the second most hated asset, gold is in third place, with 65% bears.

Our conclusion would be that it is probably best hold cash, treasury bonds and gold. Whenever this poll reveals extremes of opinion like this, it is usually a good time to look the other way.


The Cover Of A Recent Barron's Is A Screaming Sign Of A Stock Market Top

Rule o' Thumb: When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, it's probably about time to cash in the chips.

Barron's covers near significant caveat emptor moments in recent market history;

With only 14% pessimists left, who is left to buy? One hope expressed by the fund managers interviewed was that the recent record inflows by individual investors into stock funds will continue and drive the market higher (in other words, they are in expectation of the arrival of greater fools). We believe this is a flawed theory, based on demographic considerations and the fact that many people have been worn out by the secular bear market's ups and downs. A market where performance and sentiment remain at odds with each other continues to be the US treasury bond market, which the 'big money' has hated with a passion for many years now. The pronounced bullish sentiment on gold that was still visible in late 2012 has been vaporized by the recent decline in the gold price. In our judgment, the 'big money' clearly suffers from what is known as 'recency bias'.

From Bust To Bubble, With No Recovery In Between?.............

From Bust To Bubble, With No Recovery In Between?

The gaps between markets (credit, equity, and volatility) and economic (macro- and micro-) reality have seldom been larger. What is just as concerning as this yawning chasm is the similarity of a number of activities to the 'bubble' in credit in 2007 - from record CLO issuance to covenant-lite loans resurgence. As Citi's Matt King notes, the past fortnight's virtual melt-up in all things high yielding has been accompanied by a growing sense that markets are breaking out of the patterns of the past few years. In the near term, there is no reason in principle why the moves cannot go further; but unless more of the central bank stimulus finds its way through to the economy, this opens up the risk of sudden corrections as markets fall back to earth. How long will it take for that to occur, and for markets to become scared once again? It is hard to tell, and yet, as we have noted numerous times, we have been in this situation before. In 2009, the divergences took 6 months before stocks corrected, in 2011 it took 4 months, and in 2012 it took just 1 month. It's not different this time.


That 2007 Feeling...

Just a shame the real economy isn't back...

and it seems unemployment doesn't matter anymore...

 nor do earnings...

 but we've seen that before...


Via Citi's Matt King,

It Is Not Different This Time

The past fortnight's virtual melt-up in all things high yielding has been accompanied by a growing sense that markets are breaking out of the patterns of the past few years. Euro headlines fail to shock spreads, advocates of austerity are in retreat, and "inflation-plus" targeting by central banks would seem to herald a new era of unprecedented stimulus. Does this give cause for chasing [performance] even at these levels? While it varies by asset class, we think the answer is still "no".

In the near term, there is no reason in principle why the moves cannot go further. Credit has, if anything, been lagging the rally in govies.

We do know that central bank stimulus drives markets up, not only through a "portfolio" demand channel but also through a massive dampening in the supply available to private investors . The liquidity injection from the BoJ should at a minimum entirely offset any tapering we get from the Fed this year, and hence goes a long way toward justifying the rally in global markets:

And yet even allowing for this, the chart suggests that markets are getting a bit ahead of themselves. Flows to date from Japanese asset managers still show profit-taking on foreign investments, not increases. While we do anticipate some rebalancing towards foreign bonds over the next few months, bottom-up analysis suggests it is unlikely to exceed $50bn or so from the life insurers, most of that directed towards govies. Flows from pensions, banks and retail may in time add to that, but seem likely to be slower because of continued profit-taking on the depreciating yen.

Worse, the gap between market levels and economic reality has seldom been larger, and it seems to be taking ever more credit growth to produce the same growth in GDP.  A HUGE PROBLEM!


Unless more of the central bank stimulus finds its way through to the economy, this opens up the risk of sudden corrections as markets fall back to earth. Markets may be right that the implementation of excessive austerity is bad news for growth, and hence for sovereign solvency. But not implementing austerity seems unlikely to lead them to fare any better — a realisation which seems yet to have dawned. How long will it take for that to occur, and for markets to become scared once again? It is hard to tell, and yet we have been in this situation before.

The chart below shows Citi's European Economic Surprise Index plotted against iTraxx (European credit). Over the past few weeks, the economic data have plummeted relative to expectations, yet spreads have continued to tighten in. Similar divergences occurred at this point in each of the past three years; in every case, after a delay, spreads moved to follow the data. In 2009-10, the divergence lasted a good six months (Oct09-Apr10); in 2011 it took four months (Jan-May); in 2012 it took just one month.

The temptation is to say that something has changed, that we are immune to these problems, after the shocks to date which have failed to move spreads. But we doubt it. Tightening valuations and increasingly long investor positions ultimately create an obstacle larger than any individual news headline.

Most likely in the near term is markets just continue to follow the liquidity – and yet here too we think they are overestimating central banks' largesse. Recent speeches suggest that the ECB, in particular, remains anxious that action on its part may lead to inaction on structural reforms elsewhere. Our economists expect a rate cut next week, but no major relaxation of collateral requirements just yet. Indeed, the opinion penned by the Bundesbank for Germany's constitutional court, which leaked into the press this week, is a reminder of how the backstop on which the peripheral rally is predicated rests on remarkably shaky ground.

In general, and in peripherals in particular, we see nothing to suggest this time is different.

As we sit in an increasingly unstable equilibria...


...'normal' risks may have fallen but tail-risks haven't.

The end game has a finality that few want to consider............

It is without question that both the S&P 500 Index and the 30 Year Treasury Bond have been trending higher for the past three years overall. Both underlying assets have produced strong gains during the same period of time. Now this brings me to a question for readers to ponder. If both the S&P 500 Index and the 30 Year Treasury Bond can rally together, what happens if they sell off together?

The answer to that question is the real problem. Many, probably most sell-side analysts and economists ignore the bubble that the Federal Reserve has created in equity valuations. The bubble continues to be fueled by the monstrous liquidity injections that they have conducted beginning with the original quantitative easing. However, what is even less acknowledged by the sell-side is the massive artificial bullish valuations that have been created in the bond market.

Long-dated Treasuries are being purchased by the Federal Reserve to artificially hold down interest rates. This ongoing practice is causing a separate bubble to form in fixed income investments. So now we have a bubble in equities and long-dated Treasuries forming and the sell-side continues to trumpet that higher prices are likely. Ultimately the sell-side may be right in short to intermediate time frame, but the end game has a finality that few want to consider.

When these bubbles finally pop, as all excessively valued assets do, the result is going to devastate financial markets. It may be in six months or it may be a little longer, but history will not be thwarted. The central banks can try to outsmart history, but they will ultimately fail.

The sell-side analysts will tell you the economy is strengthening or that large cap multinational companies are seeing strengthening fundamentals and earnings growth. They are called the sell-side for a reason: They want to sell you stock.

Furthermore, my favorite recent discussion is about future earnings projections and the new strength that we are going to see in earnings. The following chart originally came from Standard & Poor's. The chart below illustrates the trailing 12-month operating earnings per share of S&P 500 companies.


S&P 500 vs US 10 Year Yield to 1791.............NOT A GREAT CHART FOR EQUITY BULLS!

S&P 500 vs US 10 Year Yield to 1791...........

Have a look below at the visual "Boom Bust nature" that the markets, with a little help from the Fed and Human Psychology — helps to create. If we overlaid a chart of volatilty, we would see huge spikes every 5 or so years.

It is worth noting the major bubble of the Equity side: 1929 post WW1 bubble, 1996-2000 tech bubble, 2003-07 credit bubble, plus and definitely not least, whatever the hell you want to call the current QE driven.

Critiques of Central Bank intervention do not have a whole lot of work to do to place much blame on the Fed for these last 3 boom & bust cycles.

Evidence such as this makes it all the more amusing when Fed officials assure us that there are no signs of "irrational" activity in the markets. Their track record of recognizing bubbles is absolutely atrocious, and now they're seemingly committed to never allowing any asset price to fall ever again. Never mind that corporate earnings are actually down this quarter. Never mind that economic data keeps coming in worse than expected. All of this is positive in the "rational" franken-market these central banks have created.  IGNORING THE TRUTH, THE FACTS, AND REALITY, THAT IS THEIR SOLUTION.  IT WILL BE REAL HARD TO IGNORE THE DISASTER SETTING UP ON THIS NEXT CHART! INTEREST RATES WILL RISE AND EQUITIES WILL CRASH.

The Noose On The Economy Is Tightening............

The Noose On The Economy Is Tightening


As the evidence of an economic slowdown continues to mount, corporate revenues are feeling the pressure and the effects of the sequester are beginning to seep into the economy.

Recently we enumerated the overwhelming majority of economic reports that declined or fell short of expectations. These included payroll employment, the ISM manufacturing and non-manufacturing indices, retail sales, the University of Michigan consumer confidence survey, the NAHB housing market index, single-family housing starts, the NFIB small business index, the Empire State index and manufacturing production. Since then, additional releases have shown a meager 0.2% increase in March core capex orders following a drop of 8% in February.  The Philadelphia Fed Index dropped in April, while the Richmond Fed index was down in both March and April.  Overall, the ISM weighted composition was the lowest since November.  Existing home sales have been about flat since November.  The Chicago Fed National Activity Index was also down in March.

At the same time corporate earnings are flattening while revenues and guidance are disappointing.  With 47% of the S&P 500 companies having now reported 1st quarter results, it appears that 69% have beaten their recently downward revised estimates, which are significantly under the projections made just a few months ago. Overall, first quarter earnings are tending toward an increase of about 3% over a year-earlier after being down in the prior two quarters.  Importantly, however, only 35% of the companies beat their revenue estimates, compared to an average of 62% since 2002, and 52% over the last four quarters. Equally or even more troubling is the fact that negative guidance for 2013 exceeded positive guidance by a ratio of 14:1, compared to the historical average of 2:1.  
This indicates the probability of a lot of earnings problems in coming quarters.

The political controversy over the air controller furloughs and related airline delays are the canary in the coal mine indicating that the effects of the sequester are starting to be felt in the economy. The protests over the cuts are an indicator of what will happen as the pain and inconvenience spread through the economy.  But, after all, this is just what the sequester was supposed to do----make the cuts so onerous that the authorities couldn't let it happen.  Unfortunately they did let it happen and unless something is changed, the economy will feel the dire effects.

All in all, we believe that economic growth and corporate earnings will be highly disappointing in coming quarters and that investors will drop the pretense that the Fed can fix everything that ails the economy.  Although Bernanke, himself, has been virtually begging for help from fiscal policy, it does not seem likely that he will get it anytime soon.    


#1 Today, approximately 17 million children in the United States are facing food insecurity.  In other words, that means that "one in four children in the country is living without consistent access to enough nutritious food to live a healthy life."

#2 We are told that we live in the "wealthiest nation" on the planet, and yet more than one out of every four children in the United States is enrolled in the food stamp program.

#3 The average food stamp benefit breaks down to approximately $4 per person per day.

#4 It is being projected that approximately 50 percent of all U.S. children will be on food stamps before they reach the age of 18.

#5 It may be hard to believe, but approximately 57 percent of all children in the United States are currently living in homes that are either considered to be either "low income" or impoverished.

#6 The number of children living on $2.00 a day or less in the United States has grown to 2.8 million.  That number has increased by 130 percent since 1996.  EACH YEAR IT IS GETTING WORSE!

#7 According to Feeding America, "households with children reported food insecurity at a significantly higher rate than those without children, 20.6 percent compared to 12.2 percent".

#8 According to a Feeding America hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.  ARE THOSE OF US THAT EAT WELL EVEN GRATEFUL FOR THAT FACT?

#9 For the first time ever, more than a million public school students in the United States are homeless.  That number has risen by 57 percent since the 2006-2007 school year.

#10 Approximately 20 million U.S. children rely on school meal programs to keep from going hungry.

#11 One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.

#12 In Miami, 45 percent of all children are living in poverty.

#13 In Cleveland, more than 50 percent of all children are living in poverty.

#14 According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.



Monday, April 29, 2013

The Great Surrender........AN ABSOLUTE MUST READ!

The Great Surrender

Those who have been forcibly divested of their natural liberty by tyrants must be pitied. They have been coerced into accepting lies of security and state beneficence as paltry compensation for the loss of their birthright of a life worthy of human beings. And yet such wretchedness of external conditions, though destroying a man's practical life, does not destroy the man. More wretched than this is the spiritual self-destruction of one who would freely sell himself into tyranny in exchange for that very same subhuman compensation.

Western politics has fallen under the domination of progressive authoritarianism. The press, once perceived as a safeguard against government corruption and overreach, has become an almost monolithic mouthpiece and apologist for oppression. Art, long modernity's bastion of moral questioning and humane doubt in the face of materialist reductionism, has finally reduced itself to dogmatic nihilism, collectivist amorality, and court jesterism in the service of power.

These nightmarish degradations are often cited as causes of our decay, as though they were abstract realities controlling civilization's fate as the laws of physics control the fall of a stone. The most nightmarish fact of all, however, is that these conditions were not imposed upon us by force. The modern West's demise was chosen. Generations of men walked into this of their own volition. They voted for it. They purchased it. They chose to believe in it, defying the evidence of their own eyes and common sense. They willingly surrendered themselves to slavishness and its diminished moral horizon.

For thousands of years, men fought for a breath of freedom while struggling against the shifting currents of irrational governance imposed by brute force. Modernity promised a reasonable way out of all that, producing the theory and practical conditions of political liberty, elevating the individual human being above all coercive power, and hence allowing men, to a greater degree than ever before, to choose their own social conditions, and to project their choices into the future with some measure of solidity. But modern men, given that choice, have -- gradually but consciously -- forsaken all of it to return to the conditions from which men strained to extricate themselves for millennia: fleeting flames of hope capriciously snuffed out in sudden storms of power lust and greed.

Is it time to ask whether we flatter ourselves when we imagine that Western modernity will be remembered by future men as the age of Shakespeare, Mozart, the Industrial Revolution, rationalism, science, and political liberty? As things now stand, it is difficult to see how Time's dust storm will not settle to reveal this epoch as that of man's ultimate shame: the moment when men walked freely into hell, merely for the sake of a little rest from the trials of living as men. Modernity may be on the verge of obliterating its own great promise and achievement, and revealing itself at last as The Age of the Great Surrender.

Man is a rational and moral being, living in accordance with his nature by exercising his reason in the name of choosing well. This means that he can live specifically as human only within the range of his freedom to make practical choices concerning what is best. This is the primary meaning of the modern notion of freedom as a natural right: a man cannot live as a man without the condition in which his definitively human faculties may be exercised, namely freedom from irrational constraint.

To choose to tie one's freedom to social conditions in which it may best be preserved -- to choose political community over anarchy, for example -- is rational. To choose political conditions in which one's natural freedom itself is relinquished by degrees is irrational, in that it entails choosing to give up the practical condition that makes the reasoned moral life possible.

Virtue (literally "manliness") simply means life lived according to our nature. And this requires the capacity to choose; a man who physically does what a man ought to do, but who does so involuntarily, through external compulsion, is no more living as a man than would be a machine that performed the same actions. Giving up one's realm of choices (and their consequences) to the state means giving up to government all that was one's birthright.

A standard moral puzzle used in political philosophy classes asks whether a free man may sell himself into slavery, i.e., whether we may freely choose to surrender freedom of choice. Logical implications aside, it is now all too clear that in practical terms, the answer to that question is a resounding "Yes we can." Mankind has made precisely this exchange. Everywhere on Earth where people with free electoral choices select the path of greater state control, greater state beneficence, and greater domestic security at the price of their natural liberty, they are selecting slavery, and voluntarily sacrificing freedom.

But sacrificing freedom means surrendering more than "mere individual liberty." Liberty is not an abstraction; it is man's nature manifested in society. Freedom is the arena of nature's test of a man's virtue. "Am I a good man? Am I living according to human nature, or at odds with it? Am I of sound character, and able to follow the demands of that character in a moment of challenge or hardship?" These questions comprise the fundamental imperative of human life, i.e., the innate demand to live up to something.

The desire to avoid having to ask such questions of oneself -- to avoid the basic responsibility and difficulty of living as a member of the species into which one was born -- is the impetus to choose one's own enslavement. For what is not my responsibility cannot be blamed on me. Every decision and responsibility I relinquish to the state is another increment of what we may call freedom from freedom -- freedom from trials, freedom from risk, freedom from tests of my virtue, my knowledge, my willpower, my steadfastness. We need, and therefore happily accept, the authoritarians ultimate propaganda -- the debunking of "traditional morality" -- in order to mask the shame and disgrace of what we have done in the name of our loathsome, inhuman notion of "comfort": comfort understood as not having to care, about our souls, about others, about the results of our choices, and even about our choices themselves. WE ARE SLOWLY, ONE ELECTION AT A TIME, BECOMING NOTHING BU

In the name of freedom from freedom, i.e., "comfort," we surrender human existence. Aristotle explains God's relationship to the universe by analogy with the hierarchy of a household. The freemen of a household are, in a sense, the least free, if freedom means lack of responsibility for choosing. In this particular sense, Aristotle says, the household slaves are freest, since they are responsible for little in the way of moral choice, and hence their particular actions are of little consequence to the common good. They are, as he says, free as the household animals are free, to "live for the most part at random." The freemen of the household, by contrast, "are least at liberty to act at random, but all things or most things are already ordained for them," in the sense that they have responsibilities from which they must not shrink. Thus, freedom entails difficulty, doubt, and the inescapable burden of choice, all of which are therefore essential to living as a man. The slave, by contrast, while "spared" the burden of moral responsibility for his life, is for that reason least able to live as a human being -- he is least able to exercise meaningful choice.

Freedom from freedom means sacrificing choice and its inherent responsibility in favor of the enslaving yoke that "liberates us" from the burdens of self-determination. A man who is living up to human nature will always select freedom-for-virtue over freedom-from-virtue. A man who is unwilling to live up to human nature will choose the opposite path, self-enslavement.

This urge to surrender freedom-for-virtue in favor of freedom-from-virtue would merely be a private crisis, were it a rare case. When, however, a general population -- when an entire civilization's general population -- makes this surrendering choice, no one can escape. The material result, the wished-for ├╝ber-state, destroys or restrains every one's freedom -- that is, every one's capacity to live a human life -- whether any particular man chooses to surrender himself or not. Thus, modern progressive authoritarianism may properly be defined as universal surrender by majority will. 

You will give up your freedom to choose how to use the fruits of your labor; the government will decide how much you may keep, and how the remainder will be used. You will give up your responsibility for your children; they will be raised primarily by the state, according to the state's judgment of what kind of citizen is required. You will give up your practical means and moral will to defend yourself; the government will disarm you and demand that you remain passive against all threats, leaving your safety and preservation entirely in the state's hands. You will give up responsibility for saving and providing for your own future well-being, and that of your loved ones; the government will arrange your medical care and future economic support, and the sick and elderly will be removed from your active consideration and tucked away quietly at state facilities.

Private virtue, i.e., men living as men, will no longer be required; where feasible, it will not even be permitted. 

You will surrender your adult responsibility and choice -- your natural human existence -- in exchange for false promises that the state will take care of the moral realm on your behalf, leaving you "free" to enjoy a responsibility-free, guilt-free, shame-free existence of transient pleasure and amusement without fear of consequences. There will be only one exception to this freedom from responsibility: you will be reviled and punished, legally and socially, for every way and in every instance in which you are perceived as refusing to surrender.

You will surrender. 

Your soul-preserving resistance will be crushed, or you yourself will be crushed. The defenders of the cause of "freedom from freedom" -- the modern masses, the willingly oppressed -- must remove you from their sight, by public mockery or by law: your intellectual refusal to surrender your personal responsibility makes them uncomfortable, and this will not be tolerated. For their comfort is the new creed, the morality of the modern un-men, and there is no room here for awkward reminders of the natural freedom, responsibility, courage, thought, art, and simple decency surrendered in the name of this inhuman, coercive comfort.

Historically, men struggled to maintain their moral dignity against forms of surrender imposed upon them by the strong few. Today, it is the majority that freely chooses to divest itself of human nature, while an ever-shrinking minority pleads for the right to remain human. We are living through The Great Surrender.

Its not how hard you hit, but how hard you can get hit and keep moving forward.............

Rocky Balboa:

"Let me tell you something you already know. The world ain't all sunshine and rainbows. It is a very mean and nasty place and I don't care how tough you are, it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life…

But it ain't about how hard you hit; it's about how hard you can get hit, and keep moving forward. . It's How much you can take, and keep moving forward. That's how winning is done…

Now, if you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hits, and not point fingers and blame other people. Cowards do that and that ain't you. You're better than that!..!!!

This movie had a huge impact because what was said was so true in my own life. 

"Its not how hard you hit, but how hard you can get hit and keep moving forward."


Sunday, April 28, 2013


Dear friends, this is now my second letter to you. I have written both of them as reminders to stimulate you to wholesome thinking. 2 I want you to recall the words spoken in the past by the holy prophets and the command given by our Lord and Savior through your apostles. 3 First of all, you must understand that in the last days scoffers will come, scoffing and following their own evil desires. 4 They will say, "Where is this 'coming' he promised? Ever since our fathers died, everything goes on as it has since the beginning of creation." 5 But they deliberately forget that long ago by God's word the heavens existed and the earth was formed out of water and by water. 6 By these waters also the world of that time was deluged and destroyed. 7 By the same word the present heavens and earth are reserved for fire, being kept for the day of judgment and destruction of ungodly men. 8 But do not forget this one thing, dear friends: With the Lord a day is like a thousand years, and a thousand years are like a day. 9 The Lord is not slow in keeping his promise, as some understand slowness. He is patient with you, not wanting anyone to perish, but everyone to come to repentance. 10 But the day of the Lord will come like a thief. The heavens will disappear with a roar; the elements will be destroyed by fire, and the earth and everything in it will be laid bare. 11 Since everything will be destroyed in this way, what kind of people ought you to be? You ought to live holy and godly lives 12 as you look forward to the day of God and speed its coming. That day will bring about the destruction of the heavens by fire, and the elements will melt in the heat. 13 But in keeping with his promise we are looking forward to a new heaven and a new earth, the home of righteousness. 14 So then, dear friends, since you are looking forward to this, make every effort to be found spotless, blameless and at peace with him. 15 Bear in mind that our Lord's patience means salvation, just as our dear brother Paul also wrote you with the wisdom that God gave him. 16 He writes the same way in all his letters, speaking in them of these matters. His letters contain some things that are hard to understand, which ignorant and unstable people distort, as they do the other Scriptures, to their own destruction. 17 Therefore, dear friends, since you already know this, be on your guard so that you may not be carried away by the error of lawless men and fall from your secure position. 18 But grow in the grace and knowledge of our Lord and Savior Jesus Christ. To him be glory both now and forever! Amen.

                                    2 Peter 3:1-18


Dear God, with You on my side, nothing can destroy or crush me.......................

"We are hard pressed on every side, but not crushed; perplexed, but not in despair, persecuted, but not abandoned; struck down, but not destroyed. We always carry around in our body the death of Jesus, so that the life of Jesus may also be revealed in our body." 

                                                                       2 Corinthians 4:8-10

"It is misleading to imagine that we are developed in spite of our circumstances, for we are developed because of them. It is mastery in circumstances that is needed, not mastery over them." 

                                                                                                               Oswald Chambers

A beloved husband and father died from cancer after years of chemotherapy and radiation, suffering in horrible ways from the effects of both. During that time, he clung to 2 Corinthians 4:8-10 as a source of hope. He prayed the passage constantly and found that it gave him courage to trust and endure.

He was perplexed, but not in despair. He was not forsaken and not destroyed, because he knew that come what may, the end result would be the same: he would be with Jesus and experience the glorious full manifestation of all His promises! His peace and poise under pressure became the touchstone for his family's faith after he was gone.

The good news is that we, too, can experience that hope. No matter what you are facing, God will preserve you and give you strength.

Dear God, with You on my side, nothing can destroy or crush me. Thank You for Your work in my life. Amen.

The Answer to All Our Problems.........

The Answer to All Our Problems

"For the preaching of the cross is to them that perish foolishness; but unto us which are saved it is the power of God." 

 1 Corinthians 1:18

I once met a lawyer on an airplane. We began to talk about what we liked to read. I said, "I read newspapers, books, journals, devotional studies, but primarily the Bible."

He said, "If you don't read any further than that, how do you know what to talk about when you speak to people?"

I said, "Sir, man only has three problems: sin, sorrow, and death."

He answered, "There are more than that."

I replied, "No, only three."

"Oh," he said, "there are other problems."

I said, "All right, tell me another."

He went off for a while, came back, and said, "Man only has three problems."

That's true. And the cross of Jesus Christ is the only answer to those three problems. You give me all of the wisdom of this world....but there is no other answer apart from the cross.

The Jews want a sign; it is the Cross. 

The Greeks want wisdom; it is the Cross. 

To this world it is foolishness, but to God it is not foolishness. 

Now, thank God for the message of the Cross.

Doxology to the King................

Doxology to the King

"Now unto the King eternal, immortal, invisible, the only wise God, be honour and glory for ever and ever. Amen." 

                                                                                                                                                                       1 Timothy 1:17
In this stirring doxology to the One who allowed him into the ministry (vv. 12-13), whose grace "was exceeding abundant" (v. 14), who "came into the world to save sinners" (v. 15), who showed mercy and longsuffering, and who grants "life everlasting" (v. 16), Paul uses several majestic descriptive terms. Each deserves our attention.
The King eternal. God's sovereign kingship is in view here. The phrase literally translates, the "King of the ages." "But the LORD is the true God, he is the living God, and an everlasting king" (Jeremiah 10:10). He is the King, and we must stand in submission to Him.
Immortal. The Greek word used here implies more than mere exemption from death. A fuller meaning would include total incorruptibility; i.e., the inability to be stained by either decay or death. What a comfort to realize that the believer's crown in glory will be likewise incorruptible (1 Corinthians 9:25), as will his resurrection body (1 Corinthians 15:52).
Invisible. God is a Spirit, and as such cannot be seen. He has chosen to appear on numerous occasions, most notably as Christ, but is usually unseen, the primary meaning of the word. Christ "is the image of the invisible  God, the firstborn of every creature" (Colossians 1:15). Seen or unseen, He merits our praise.
The only wise God. God is unique in His existence and wisdom, "God only wise" (Romans 16:27). He stands alone, solitary, apart from all others.
Surely to this eternal, incorruptible, unseen, unique, wise, sovereign King belongs "honour and glory for ever and ever. Amen."

Understanding Authority.........A Mighty Fortress Is Our God.

Understanding Authority

"Behold, I give unto you power to tread on serpents and scorpions, and over all the power of the enemy: and nothing shall by any means hurt you." 

                                                                     Luke 10:19

A police officer weighing 160 pounds may effectively stand before a tanker truck and with an uplifted hand say, "Stop, in the name of the law." The police officer certainly couldn't stop the truck with his physical force. He is appealing to an authority greater than himself -- the law -- to back him up. Your authority over Satan is the same way. 

Your authority does not rest in your strength. You cannot overcome Satan with your power but rather with Kingdom Authority from God. And you have that as a child of the King. You have His authority to overcome every attack of Satan.

Sing of the power of the Lord. Find a hymnal and sing or meditate on the verses of "A Mighty Fortress Is Our God."

Hell is indeed very real--eternally real............What Jesus Said about Hell

Hell is indeed very real--eternally real......What Jesus Said about Hell

"And if thy right eye offend thee, pluck it out, and cast it from thee: for it is profitable for thee that one of thy members should perish, and not that thy whole body should be cast into hell." 

                                                                                                                             Matthew 5:29
People do not like to think about hell--especially those who are headed there! But that doesn't mean it isn't real.
We need to know that the Lord Jesus Himself often warned about the reality of hell. Today's verse is in His Sermon on the Mount, a message often quoted because of its wonderful promises. Hell is also mentioned in the same sermon in Matthew 5:22 and 5:30. Jesus also stressed in that sermon that "broad is the way, that leadeth to destruction, and many there be which go in thereat" (Matthew 7:13). He later warned that we should "fear him which is able to destroy both soul and body in hell" (Matthew 10:28).
The religious leaders of the day were not exempt. To them, speaking of their religious hypocrisy, He said, "Ye serpents, ye generation of vipers, how can ye escape the damnation of hell?" (Matthew 23:33).
Hell is also a place of fire or possibly of some fearful environment that could only be described adequately under the metaphor of fire. "Depart from me," He will say to the lost souls at His coming judgment, "into everlasting fire, prepared for the devil and his angels" (Matthew 25:41). Hell is called a "lake of fire" by Christ in John's vision of Him on His great white throne, where He will have to say, "But the fearful, and unbelieving, . . . and all liars, shall have their part in the lake which burneth with fire and brimstone: which is the second death" (Revelation 21:8).
Hell will indeed be very real--eternally real! 

Since Christ is both our Creator and our Savior, who died for our sins and defeated death by His resurrection, it is foolish for anyone to reject His revelation about hell.


Saturday, April 27, 2013

Life Begins When You Do.........

Life Begins When You Do

Nearly everyone postpones one grand thing or a collection of mighty hopes and dreams.

Between the quote marks of our lives are phrases like these: "When things slow down...when I finish my degree...when I get certified...as I acquire a deeper knowledge base...when I have kids...when the kids are grown...when I get well...when I marry...when I divorce...when I retire...when I get that promotion, that raise, that job, that house, that whatever the fill-in-the blank is for your specific postponing of life..."

Your Life Begins When You Do.

You may think you are postponing the longing of your soul until life aligns itself with your vision, until elements conspire to be more favorable...but as it happens, life just rolls along at the same remarkable consistent and disinterested cadence. Life is impartial. YOUR personal, subjective life (dreams, satisfactions, contentment, achievements, vision, fullness, passion, aspirations) begins when you begin.

From my teens into adulthood, I said, "I want to be an artist." One day I changed the sentence to, "I am an artist." My view changed. Life began. I looked behind me and saw that I had been accidentally living as an artist. I had been laying down a path that was only now visible to eyes that had begun to see. Beginning my life as an artist made my heart's longing and the small, tentative labors of my hands—visible and tangible. I began by opening the door and simply believing that I could live my dream. I began living that dream by seeing that I could.

Your purpose, that thing that among the many to-dos of your days, is what you must do. Embrace the truth of your purpose each minute of your precious life...for how very true it is that life begins when you do.

If you would dream it............BEGIN it.

If you have an idea....................OPEN it.

If there is longing....ACKNOWLEDGE it.

If there is mission.................COMMIT it.

If there is daring..........................DO it.

If there is love......................SPEAK it.

If there is resource....................USE it.

If there is abundance...........SHARE it.

PRIVACY IN AMERICA..........Is this a mosquito?

Is this a mosquito? No. It's an insect spy drone for urban areas, already in production, funded by the US Government. It can be remotely controlled and is equipped with a camera and a microphone. It can land on you, and it may have the potential to take a DNA sample or leave RFID tracking nanotechnology on your skin. It can fly through an open window, or it can attach to your clothing until you take it in your home. Given their propensity to request macro-sized drones for surveillance, one is left with little doubt that police and military may look into these gadgets next.




"The average American works six months a year for the government. Think about that. Government employees don't even work six months a year for the government." 

                                                                                          David Letterman, March 25, 2013.


"The U.S. Senate is now fighting to keep open the Senate barber shop. It loses $350,000 a year. Do you know what that makes it? The most successful government program ever. It's only losing $350,000 a year." 

                                                                                                                                           Jay Leno, March 19, 2013.

A German's View on Islam..........THE WORLD NEEDS TO WAKE UP!

A German's View on Islam 

This is by far the best explanation of the Muslim terrorist situation I have ever read. His references to past history are accurate and clear.   The author of this email is Dr. Emanuel Tanya, a well-known and well-respected psychiatrist. A man, whose family was German aristocracy prior to World War II, owned a number of large industries and estates.  When asked how many German people were true Nazis, the answer he gave can guide our attitude toward fanaticism.
'Very few people were true Nazis,' he said, 'but many enjoyed the return of German pride, and many more were too busy to care.  I was one of those who just thought the Nazis were a bunch of fools. So, the majority just sat back and let it all happen. Then, before we knew it, they owned us, and we had lost control, and the end of the world had come.  My family lost everything. I ended up in a concentration camp and the Allies destroyed my factories.'
We are told again and again by 'experts' and 'talking heads' that Islam is the religion of peace and that the vast majority of Muslims just want to live in peace.   Although this unqualified assertion may be true, it is entirely irrelevant. It is meaningless fluff, meant to make us feel better, and meant to somehow diminish the specter of fanatics rampaging across the globe in the name of Islam.
The fact is that the fanatics rule Islam at this moment in history. It is the fanatics who march. It is the fanatics who wage any one of 50 shooting wars worldwide. It is the fanatics who systematically slaughter Christian or tribal groups throughout Africa and are gradually taking over the entire continent in an Islamic wave. It is the fanatics who bomb, behead, murder, or honour-kill. It is the fanatics who take over mosque after mosque. It is the fanatics who zealously spread the stoning and hanging of rape victims and homosexuals. It is the fanatics who teach their young to kill and to become suicide bombers.
The hard, quantifiable fact is that the peaceful majority, the 'silent majority,' is cowed and extraneous.

Communist Russia was comprised of Russians who just wanted to live in peace, yet the Russian Communists were responsible for the murder of about 20 million people.  
The peaceful majority were irrelevant.. China 's huge population was peaceful as well, but Chinese Communists managed to kill a staggering 70 million people.
The average Japanese individual prior to World War II was not a warmongering sadist. Yet, Japan murdered and slaughtered its way across South East Asia in an orgy of killing that included the systematic murder of 12 million Chinese civilians; most killed by sword, shovel, and bayonet.
And who can forget Rwanda, which collapsed into butchery.  Could it not be said that the majority of Rwandans were 'peace loving'?
History lessons are often incredibly simple and blunt, yet for all our powers of reason, we often miss the most basic and uncomplicated of points: Peace-loving Muslims have been made irrelevant by their silence.

Peace-loving Muslims will become our enemy if they don't speak up, because like my friend from Germany , they will awaken one day and find that the fanatics own them, and the end of their world will have begun.
Peace-loving Germans, Japanese, Chinese, Russians, Rwandans, Serbs, Afghans, Iraqis, Palestinians, Somalis, Nigerians, Algerians, and many others have died because the peaceful majority did not speak up until it was too late. As for us who watch it all unfold, we must pay attention to the only group that counts--the fanatics who threaten our way of life.
Lastly, anyone who doubts that the issue is serious, is contributing to the passiveness that allows the problems to expand. 
Let us hope that thousands, world-wide, think about this - before it's too late.

IT HAPPENS TO ALL OF US!........Except you and me, of course!





Barack Obama, at a recent rural elementary school assembly in South Carolina, asked the audience for total quiet.

Then, in the silence, he started to slowly clap his hands once every few seconds, holding the audience in total silence.

Then he said into the microphone, 'Children, every time I clap my hands together, a child in America dies from gun violence.'

Then, little Darrell, with a proud South Carolina drawl, pierced the quiet and said: "Well then stop clapping dumbass!"

Friday, April 26, 2013

Every Investor Should Keep These Things In Mind...........

Every Investor Should Keep These Things In Mind

"The fancier the math one uses to justify an entrenched investment opinion, the more obscure and arcane the indicators employed, the more desperate and wrong that person is." 

It is only when our backs are against the wall and the core beliefs that we've held have proven to be ineffective or incorrect that we resort to mining for "new" data from decades ago to re-prove our original thesis. This is more about saving face and nursing a bruised ego than it is about making money or any kind of fact based reality.

The late Margaret Thatcher had a strong view about consensus. She called it: 

"The process of abandoning all beliefs, principles, values, and policies in search of something in which no one believes, but to which no one objects." 

The same applies to most market forecasts. With some rare exceptions, analysts don?t like to stand out from the crowd. It is dangerous and career-challenging.

"We live surrounded by a systematic appeal to a dream world which all mature, scientific reality would reject. We, quite literally, advertise our commitment to immaturity, mendacity and profound gullibility. It is the hallmark of our culture. And it is justified as being economically indispensable." 

                                                                                                                 John Kenneth Galbraith

Given the systemic lack of accountability and market discipline, it will be too late for most of these sclerotic, self-serving organizations. Real reform will trigger a collapse, as the institutional culture has lost adaptability and the ability to downsize input (headcount and costs) while increasing output.

Institutions have an innate tendency to expand even as they lose sight of their real function. If the function is complex and the political protection strong, the momentum behind these tendencies increases.

"The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives that they do not even struggle or suffer or develop symptoms as the neurotic does. They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted."

                                                              Aldous Huxley

Liberty is lost through complacency and a subservient mindset. When we accept or even welcome automobile checkpoints, random searches, mandatory identification cards, and paramilitary police in our streets, we have lost a vital part of our American heritage. America was born of protest, revolution, and mistrust of government. Subservient societies neither maintain nor deserve freedom for long.

In sum: absolutely nothing within the Status Quo can possibly be truly reformed until the default option of doing nothing will guarantee collapse.




We still forecast 450 S&P, sub-1% US 10y yields, and gold above $10,000
My working experience of the last 30 years has convinced me that policymakers' efforts to manage the economic cycle have actually made things far more volatile. Their repeated interventions have, much to their surprise, blown up in their faces a few years later. The current round of QE will be no different. We have written previously, quoting Marc Faber, that "The Fed Will Destroy the World" through their money printing. Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves.

Andrew Lapthorne passed me a great chart the other day of bond strategists forecasts. It reminded me of similar charts for analysts earnings forecasts from my former colleague, James Montier. There are some ever-present truths in this business. Economists usually forecast a return to trend growth and will never forecast a recession. Equity strategists tend to forecast the market will rise 10% each year and will never forecast bear markets. And since the equity bubble burst in 2000, bond strategists, in a discernible break in behaviour, now only ever forecast that bond yields will rise (see chart below).

I agree that bond yields will indeed be heading higher in the next 3-5 years, much, much higher. But the consensus has still not accepted that we remain locked in an Ice Age environment that will see US (and UK and German) yields converge to Japanese sub-1%.

The late Margaret Thatcher had a strong view about consensus. She called it: "The process of abandoning all beliefs, principles, values, and policies in search of something in which no one believes, but to which no one objects." The same applies to most market forecasts. With some rare exceptions (like our commodity analysts? recent prescient call for a slump in the gold price), analysts don?t like to stand out from the crowd. It is dangerous and career-challenging. In that vein, we repeat our key forecasts of the S&P Composite to bottom around 450,accompanied by sub-1% US 10y yields and gold above $10,000.

Some other thoughts from Albert on 10 Year bonds:

US 10y nominal yields have been edging down recently to 1.70% and the gap with real yields has closed ever so slightly, but the gap itself (implied inflation expectations) remains high.

There is much more, but the most amusing is where SocGen (Edwards) disagrees with SocGen (Legland) on gold:

We have been asked extensively about the slump in the gold price, especially in the context of our commodity strategists prescient report calling for just such a decline. My own view is that the reasons for owning gold have not changed. I expect imminent recession to be more likely than imminent takeoff and hence the real yield (a key gold driver) should remain low.

Gold corrected 47% from 1974-1976 before rising more than 8x to US$887/oz in 1980. A steep correction is normal before the parabolic move. As Dylan said in his note of Sept. 2011, The market for honesty: is $10,000 gold fair value, holding gold is a bet against central banks competency and given their track record thats certainly a bet Id be happy to still take.

Hopefully this should eliminate any confusion where Albert stands: certainly not with the rest of the fair-weather, momentum chasing pneguins.

SO MUCH FOR MAINSTREAM ANALYSIS............Gold Retraces Half Of Record Plunge

Gold Retraces Half Of Record Plunge

With its biggest 8-day rally in 20 months, Gold having jumped another 1% this evening has just breached $1445 and retraced half of the record plunge from April 12th. It would appear that the record physical demand that we are seeing in every corner of the globe is indeed leaking back into the actual price of gold.

Spot Gold has retraced half of its record plunge losses...

with the best 8-day performance since early September 2011...

"We live surrounded by a systematic appeal to a dream world which all mature, scientific reality would reject. We, quite literally, advertise our commitment to immaturity, mendacity and profound gullibility. It is as the hallmark of the culture. And it is justified as being economically indispensable." 

                                                                                                                 John Kenneth Galbraith