China's Central Bank Eliminates Margin T…

19-01-2017 Hits:172 BoomBustBlog Reggie Middleton

China's Central Bank Eliminates Margin Trading of Bitcoin

There have been rumors that the Chinese Central Bank (PBoC - People's Bank of China) would limit or eliminate margin trading in Bitcoin. It is now official, sort of...

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Is Donald Trump Truly Successful or Born…

18-01-2017 Hits:303 BoomBustBlog Reggie Middleton

Is Donald Trump Truly Successful or Born With A Silver Spoon? An Analysis

In social media and mainstream media, I often hear Donald Trump quoted (by himself, and others) as an extremely successful, self-made man. As an entrepreneur for nearly all of my...

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As I Promised, EU Is Colliding Into Prac…

17-01-2017 Hits:743 BoomBustBlog Reggie Middleton

As I Promised, EU Is Colliding Into Practical Confines of NIRP, Bank Hemorrhaging Up Next

Nearly a year ago, I warned subscribers of consequences stemming from the ECB's negative interest rate program. Here's an exceprt from our resarch report titled European Banking Macro Issues for March...

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Is Bitcoin Too Risky? Whenever the Bitco…

12-01-2017 Hits:1364 BoomBustBlog Reggie Middleton

Is Bitcoin Too Risky? Whenever the Bitcoin is Mentioned in Financial Pop Media, Ignorance Ensues

I hate to be the one to break bad news to you, but most of the pop media/mainstream media financial pundits that I hear and see opine on bitcoin have...

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What Happens When Rates Rise While the S…

10-01-2017 Hits:778 BoomBustBlog Reggie Middleton

What Happens When Rates Rise While the S&P 500 Relies on Cheap Credit To Boost EPS?

So, the stock market, bond market and real estate markets are all at all-time highs. Everything is Awesome! You know better than that. You see, when the bond market wakes...

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Debt Encumbered Oil, Sovereign Soil, Toi…

10-01-2017 Hits:598 BoomBustBlog Reggie Middleton

Debt Encumbered Oil, Sovereign Soil, Toil & Trouble: Can't You Hear Seems Cracking in the OPEC Empire?

@WSJ reports Libya Ramping Up Oil Production, Threatening OPEC (supposed) Plans to lift global oil place by artificially limiting supply. This would be in violation of federal antii-trust laws in the...

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Ten Years Since BoomBustBlog Was 1st Pub…

09-01-2017 Hits:914 BoomBustBlog Reggie Middleton

Ten Years Since BoomBustBlog Was 1st Published & That Initial Research Still Relevant Today

We have looked into insurance companies' performance last month in regards to our bearish real estate thesis. A small comederie of companies are suffering losses and/or declining profits as we've exected....

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The Macro Truth About The Big Bitcoin Po…

07-01-2017 Hits:1082 BoomBustBlog Reggie Middleton

Bitcoin has dropped precipitously, and as is usual, we have the cacophony of instant digital currency pundits cackling about as if they had a clue. This is the inaugural post...

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To Bust or Not To Bust: Are We In A Real…

04-01-2017 Hits:770 BoomBustBlog Reggie Middleton

To Bust or Not To Bust: Are We In A Real Estate Bubble?

Banks are showing thin NIM, yet many of the big banks are able to boast stable if not slightly improving credit metrics. This doesn’t make sense considering the explosive growth...

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What Happens To Real Asset Lending Banks…

03-01-2017 Hits:619 BoomBustBlog Reggie Middleton

What Happens To Real Asset Lending Banks When the Real Funding Rate Appears? We're About to Find Out

During the financial crisis of 2008, money market funds who subjectively agreed to hold their NAV (net asset value) unit prices at $1 “broke the buck”. That is, the unit...

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Stress Test on Banks’ Earnings Facing th…

30-06-2014 Hits:44737 BoomBustBlog Reggie Middleton

Stress Test on Banks’ Earnings Facing the Veritaseum UltraCoin Value Transaction Platform

My last post on the topic of disintermediation during a paradigm shift was Wall Street Should Be First To Invest In Reggie Middleton's UltraCoin, Much Of It Won't Be Here In...

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Introducing the "Unbreakable Promis…

09-06-2014 Hits:39536 BoomBustBlog Reggie Middleton

Introducing the "Unbreakable Promise" As a Method Increasing Efficiencies and Decreasing Risk

Continuing on the margin compression theme originally laid out in Margin Compression Is Coming in the Payment Processing Space As $100 Million Pours Into Startups, I illustrate mathematically how the bit...

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Recently, someone emailed inquiring why I am so negative and wondering if I have any long ideas that I was interested in. Well, there are a few companies that I have looked at, that I think are a strong franchise. Keep in mind that this is not an advice column and I cannot and do not give advice here, hence I don't mention these companies. In addition, and even more important, I don't buy them. The macro scene globally, and particularly in the US, Europe, (and to a lesser extent, Asia) is abysmal, and it is getting much worse by the day. The trend is down, and sharply down. Why would I want to try to bottom fish or go long in a market where everything so obviously pointed downward? I liken this to trying to ice skate uphill. While technically possible, it is improbable and definitely not the best use of my talents, resources or time. A bear market can wipe out your portfolio, and if you buy in at the wrong time, will require up to, and over a decade just to break even. Look at those that bought at the top of the tech bubble. Those that bought at the top of the real estate bubble may do even worse. Most people who buy in to extreme swings to the upside (read as bubbles), usually buy in at the top, where most of the damage is done on the way down.

Let's take a look at what has happened over the US holiday weekend:

  1. ACA monoline insurer misses deadline on forebearance from creditors, may go into receivership
  2. gets its much deserved lowering of its credit rating from BAA, devaluing thousands of debt securities it insures along with it (this is a semantics game, the securities are intrinsically worth just as much now as they were last weekend, at least in regards to exposure from Ambac as a counterparty.)
  3. MBIA and several others are threatened the same as above
  4. The smaller reinsurers that back the primary are having their ceded coverage written down, some which is written down to zero!
  5. The party will really begin when everyone realizes that these guys all incestuously reinsure each other, and they are all sick.
  6. The financially engineered, off balance sheet vehicles of many corporations are blowing up.
  7. Housing inventories are at record levels.
  8. Housing prices are dropping at record rates.
  9. Despite this, most housing is as compared to incomes and income growth - thus is overpriced, even after historically record drops
    Despite
  10. that, most housing is overpriced in comparison to historical rental yields.
  11. Most housing is overpriced as compared to the real cost of building and demand.
  12. We are coming off of the greatest risky asset bubble since, or even before the US Gold Rush
  13. Financial companies world wide are taking record write downs and losses, quarter after quarter ''
  14. Number 13 ain't gonna end no time soon!
  15. Credit markets are freezing up
  16. Overpriced residential real estate is not moving
  17. Overpriced commercial real estate is coming up for refi from short term loans and the market is not receptive at all
  18. There are more commercial properties with cap rates below the risk free rate than at any time that I know of.
  19. The US consumer is tapped out and spent, overloaded with debt and unable to drive the global economy at the unsustainable rate that it has over the last two bubbles.
  20. The Asian and European economies that depended on this stretch and strapped US consumer will disprove the decoupling nonsense theory and lead the world into a global hard landing.
  21. We are already in recession
  22. We are already in a bear market
  23. Believe it or not there is still a majority of positive sentiment screaming buy on the dips at CNBC and this and that stock or industry is oversold and so and so is undervalued...

I can go for some time here...

On the day we celebrate Dr. Martin Luther King's birthday...

EUROPE MARKETS

      PRICE   CHG   %CHG      

Belgium 3540.02 -155.11 -4.20%
U.K. 5686.20 -215.50 -3.65%
France 4856.43 -235.97 -4.63%
Germany 6932.79 -381.38 -5.21%
Italy 34413.00 -1340.00 -3.75%
Netherlands 431.98 -18.10 -4.02%
Norway 450.93 -22.69 -4.79%
S.Africa 25533.32 -1119.34 -4.20%
Spain 13056.40 -599.00 -4.39%
Switzerland 7360.30 -331.68 -4.31%
  
Sources: Dow Jones, Reuter
  
Asian stocks echoed the weakness and closed sharply lower, with Hong Kong’s Hang Seng Index and the Shanghai Composite Index falling over 5 percent. Wall Street stock index futures tumbled too -- with Dow futures down more than 350 points -- but the effect of plummeting futures would have to wait until Tuesday as the U.S. market is shut for the Martin Luther King, Jr. Day holiday.
ASIA MARKETS
8:29 am EST

      PRICE   CHG   %CHG      

Australia * 5630.90 -168.50 -2.91%
Hong Kong * 23818.86 -1383.01 -5.49%
India * 17605.35 -1408.40 -7.41%
Indonesia * 2485.88 -125.25 -4.80%
Japan * 13325.94 -535.35 -3.86%
Pakistan * 13850.03 -24.51 -0.18%
Philippines * 3152.30 -16.00 -0.51%
S.Korea * 1683.56 -51.16 -2.95%
Sri Lanka * 2387.93 5.60 0.24%
Taiwan * 8110.20 -74.45 -0.91%
Thailand * 766.53 -23.14 -2.93%
  
Sources: Dow Jones, Reuters

Now, I have a choice of being net short, hedged long, naked long, or in cash. I have been over 100% short and bearish for quite some time now, with the anticipation that at least 70% of the companies that I am short will no longer be going concerns within 8 fiscal quarters. Last year, cash actually beat the major indexes. This year it will be even more exacerbated. Which would you rather be in this environment, long or short? Remember, don't try to ice skate uphill!!!