The NBA Christmas Day games are one of the league’s most visible showcases. Rivalries are deepened, as with the Clippers-Warriors matchups in 2013 and 2014, or rejoined, as with the centerpiece of this year’s slate, a finals rematch between the Golden State Warriors and the Cleveland Cavaliers. For the last seven years, the Oklahoma City Thunder have enjoyed prime placement on the Christmas marquee, playing against some of the best teams in the league. But this season, after former MVP Kevin Durant left town over the summer, the Thunder’s star power has diminished enough to warrant a matchup against the Minnesota Timberwolves, currently 9-19 and one of the worst teams in the league.We can use FiveThirtyEight’s Elo ratings to see just how far the Wolves fall below the Thunder’s standards. Here are Oklahoma City’s Christmas Day opponents beginning in 2010: The best pace-adjusted triple-double seasons K. Love2013-1497.335.517.06.015.4 J. Harden2016-1797.737.110.715.718.4 R. Westbrook2016-1798.043.714.715.021.3 C. Paul2008-0987.832.47.915.715.9 M. Johnson1986-87101.6184.108.40.2065.9 L. James2010-1190.936.410.29.615.3 12/25/2010ThunderNuggets15701595 M. Johnson1989-9096.330.08.915.416.0 (Amazingly, the top two seasons by this measure are happening right now. The No. 2 spot belongs to Rockets star and former Thunder sixth man James Harden, who is averaging a per-100-possessions triple-double of his own for new coach Mike D’Antoni, in a role I like to think of as “overgrown Steve Nash does his best Corey Maggette impersonation.” Giannis Antetokounmpo, who turned 22 this month, comes in 27th.)This won’t be the first time Westbrook will be playing Christmas Day without Durant. In 2014, Oklahoma City drew the defending-champion San Antonio Spurs (also without Kawhi Leonard) as its opponent, and won 114-106, with Westbrook pouring in 34 points, 11 assists, 5 rebounds, and 5 steals. It was a brilliant game, the type of which we’ve become accustomed to from Westbrook the last few seasons. The difference this season is that if he repeats that line on Sunday, or even if he racks up his 14th triple-double of the season, it will be away from the biggest stage of the day.Check out our latest NBA predictions. PLAYERSEASONPACEPOINTSREBOUNDSASSISTSVERSATILITY INDEX K. Garnett2004-0589.131.419.18.016.9 12/25/2013KnicksThunder17131451 K. Malone1996-9790.040.014.46.515.5 DATEHOME TEAMAWAY TEAMTHUNDER ELOOPPONENT ELO 12/25/2011ThunderMagic16201583 O. Robertson1961-62124.926.710.89.914.2 L. James2015-1693.3220.127.116.115.6 G. McGinnis1974-75105.133.718.104.22.168 12/25/2014SpursThunder15591671 G. Hill1996-9784.530.913.010.516.2 12/25/2015ThunderBulls16501524 STATS PER 100 POSSESSIONS K. Garnett2003-0489.033.219.06.816.2 L. Bird1987-8897.937.611.67.715.0 R. Westbrook2013-1495.435.79.411.415.6 K. Garnett2002-0391.929.617.37.815.9 M. Johnson1990-922.214.171.1247.216.4 L. James2007-0890.239.610.49.515.8 D. Cousins2014-1595.435.5126.96.36.199 G. Antetokounmpo2016-1796.132.713.08.315.2 L. James2011-12188.8.131.52.815.5 D. Robinson1993-94184.108.40.206.315.2 L. James2009-1091.440.09.811.516.5 R. Westbrook2015-1696.733.911.315.118.0 Versatility Index is the geometric mean of points, rebounds and assists (per 100 possessions). Data is through Dec. 23, 2016.Source: Basketball-Reference.com 12/25/2016ThunderTimberwolves15961426 12/25/2012HeatThunder16991661 L. James2008-0988.740.810.910.416.7 M. Johnson1988-89100.128.710.116.416.8 L. Bird1984-85101.634.312.67.915.1 You might notice that in 2013 the Thunder got stuck playing the New York Knicks, TV’s worst recurring Christmas Day special. Except 2013 was the rare occasion when the Knicks looked like a legitimate NBA team coming into the season. Their preseason Elo rating was 1579, 128 points higher than their rating on Christmas Day, or the difference between a top-10 team and a bottom-5 one. So the Thunder weren’t supposed to have a dog of a game, they just ended up with one because the Knicks fell off the wagon.That wasn’t the case for this season’s Timberwolves. Minnesota came into the season with a rating of 1434, and has since fallen to 1426. The idea with the Wolves was that they have one of the brightest talents in the league, Karl-Anthony Towns, and a roster packed with young, exciting players liable to throw a 30-foot alley-oop or dunk on your head. They were supposed to be among the baby-faced upstarts in the league this season, and they might yet be if they ever figure out how to hold onto a lead.This is a flavor of game the league likes to book. Last Christmas saw a similar matchup between the Miami Heat, two years removed from LeBron James’ leaving in free agency to return to Cleveland, and the New Orleans Pelicans, home to Anthony Davis. The matchmaking logic made sense enough: Pair off a franchise familiar to fans with a few stars left over from deep playoff runs against an up-and-coming face-of-the-league-type star.Things didn’t work out so well then, either. The Heat came into the game looking like dark-horse contenders in the east, with Dwyane Wade, Chris Bosh and Hassan Whiteside playing at high levels. But the Pelicans were beset by injuries early in the season, and Davis never took the leap forward many expected. New Orleans came into the game at 9-20, and while it took the game into overtime, it was hardly the glamour matchup the league had hoped for.Last year’s Pelicans-Heat and this year’s Wolves-Thunder aren’t quite parallel, though, because the year before — the Heat’s first without LeBron — saw Miami host James and his Cavs, beating them 101-91. Durant’s Warriors make a fine partner for the Cavs, but a Christmas Day reunion with Russell Westbrook would have been something to see.Westbrook is averaging 31.3 points, 10.5 rebounds and 10.8 assists with a 41.9 usage percentage and a 54.1 true shooting percentage. But as if the phrase “averaging a triple-double through Christmas Day” isn’t impressive enough, the triple-doubles he’s racking up are far removed from the basic 10-10-10 variety. If we adjust for pace of play (which has slowed from the breakneck days of Oscar and Magic), he’s having the finest triple-double-type season we’ve ever seen.Below is a versatility index1We’re using John Hollinger’s old formulation, which is the geometric mean of points, rebounds and assists, to capture players who have high averages in all three stats. (Simply adding the three stats up and taking an average would over-weight scoring, since point totals tend to be higher than assists and rebounds.) for the players with the highest point-rebound-assist per-possession averages in NBA history: W. Chamberlain1963-64115.133.320.24.614.6 L. Bird1986-8798.633.611.09.215.0 M. Jordan1988-8997.040.09.99.915.8 L. James2012-1390.737.5220.127.116.11 R. Westbrook2014-1595.741.110.612.517.6
OSU junior wide receiver Michael Thomas (3) during a game against Hawaii on Sept. 12 at Ohio Stadium. Credit: Samantha Hollingshead / Photo EditorOhio State might have two victories that ended with the second- or third-string quarterback running out the clock with a decisive lead, but members of the team have not been pleased with its performance so far.“We know in the back of our minds that as an entire team we have not played our best,” redshirt sophomore linebacker Darron Lee said. “But we don’t panic, we don’t worry necessarily, it’s just like ‘Hey, we have some work we’ve got to do to get where we’ve got to get.’”The below-expectation performance has dealt OSU a small hit in the Associated Press poll with OSU (2-0) losing its unanimous No. 1 spot. The Buckeyes were the first team ever to receive all 61 first-place votes in the preseason poll, but they lost two of those votes to Big Ten rival Michigan State this week. The Spartans, after defeating then-No. 7 Oregon on Saturday, sit in fourth place.The Buckeyes, meanwhile, struggled offensively in their home opener against Hawaii. They scored four rushing touchdowns, but a failure to get much of a game going through the air was bailed out by a strong defensive performance in their 38-0 win.“We didn’t play very well, but on defense we played outstanding … So what do you do? We work at it,” OSU coach Urban Meyer said.Now, the Buckeyes are ready to welcome the Northern Illinois Huskies on Saturday for a 3:30 p.m. kickoff. Northern Illinois (2-0), which won the Mid-American Conference championship in three of the past four years, is the first of two consecutive MAC schools on OSU’s schedule, with Western Michigan set to come to Columbus the week after.OSU’s non-conference schedule — Virginia Tech, Hawaii, Northern Illinois and Western Michigan — has drawn some criticism for its lack of firepower, most notably from former Wisconsin and current Arkansas coach Bret Bielema.“Ohio State’s ranked No. 1 and they have one game remaining on their schedule that has anybody ranked right now — Michigan State,” Bielema said during last week’s SEC coaches teleconference. “We’re going to play eight straight opponents that are ranked.”Meyer, in return, took a jab at Bielema on Monday.“I don’t know where people have time to do all that,” Meyer said. “I don’t know anyone else’s schedule. I don’t care.”Bielema’s Arkansas, as it turned out, lost to MAC school Toledo three days after his comments.Previously for the HuskiesNIU grabbed wins in each of its first two games, 38-0 over UNLV and 57-26 against Murray State. Each game was marked by a great deal of offense and a poor showing of defense.The Huskies are seventh in the nation in yards per game with 594. They compiled 545 yards against UNLV, including 360 passing yards from redshirt junior Drew Hare, before exploding for 643 yards last week.Hare has thrown for 718 yards with six touchdowns and no interceptions through two games, with 357 of those yards going to junior receiver Kenny Golladay. Golladay, who also has two touchdown receptions, is second in the nation in yards receiving.“That is a very special quarterback,” defensive line coach Larry Johnson said of Hare. “Drew is very special … He can run the ball also, but he’s pretty accurate. He doesn’t make a lot of mistakes. He runs the offense.”However, NIU has allowed 433 yards per game, 95th out of 127 schools.Meyer praised redshirt senior cornerback Paris Logan on defense, however, whom he referred to as “electric.” Logan, who had three interceptions last season, should be matched up with OSU’s No. 1 receiver, redshirt junior Michael Thomas.The Buckeyes last faced the Huskies in 2006, a 35-12 OSU victory. The Buckeyes were ranked No. 1 for that game, as well.Receiving setsAs OSU has already proved this season, depth charts released the days leading up to the game don’t always mean a whole lot. Still, the depth chart for the Week 3 matchup warrants a closer examination.The No. 1 receiver, as he should continue to be if he stays healthy, is Thomas. Behind him, however, is where it gets interesting.Redshirt freshman Parris Campbell is written in as the No. 2 receiver. Campbell, a product of Akron, does not have a catch through two games. In OSU’s opener at Virginia Tech, he had two opportunities for his first collegiate reception but came away with two drops.Still, the lack of early results did not stop Meyer from praising the receiver on Monday.He described Campbell as a “guy who’s coming on like wildfire,” and said the redshirt freshman is someone who “just does things right.”After Campbell, the depth chart lists a third starting receiver spot, held by redshirt sophomore Jalin Marshall, despite Marshall being listed on the roster as an H-back. He is not the only H-back set to line up wide either, as junior Dontre Wilson is listed behind Campbell.At the actual H-back spot, redshirt senior Braxton Miller appears set to make his third straight start, while sophomore Curtis Samuel stands behind him.Musical returner chairsIn the game against Virginia Tech, junior Ezekiel Elliott made a surprise appearance returning punts. The outcome was not stellar, as Elliott muffed one punt late in the first half for a turnover and made only two returns for 13 yards.The following game against Hawaii, OSU opted to have two men deep, for the most part — a group consisting of Marshall, Wilson and Miller. It was Marshall getting the ball as he returned three punts for 45 yards, including a 32-yard return.Even with the opening up of more options — Marshall and Wilson were suspended for the opener — Meyer has Elliott back on the depth chart, listed next to Marshall as the punt return options.As for kick returns, Meyer seems to be going with a completely different group of return men, as Samuel and redshirt junior running back Warren Ball are listed to be standing deep.Up nextAfter the game against Northern Illinois, the Buckeyes are set to wrap up its non-conference schedule by hosting Western Michigan on Sept. 26. Kickoff is set for 3:30 p.m. at Ohio Stadium.
Urban Meyer speaks at a press conference as he fields questions about his handling of the Zach Smith domestic abuse allegations on Aug. 22, 2018. Credit: Casey Cascaldo | Photo EditorOhio State head coach Urban Meyer released a statement Friday clarifying statements he believes the media has made regarding the outcome of the investigation on Aug. 22. Meyer said in the statement he was not suspended because he knew about alleged domestic violence made by former assistant coach Zach Smith.The Ohio State head coach referenced what the lead investigator said stated at the press conference announcing his suspension, saying “Coach Meyer impressed us with sincere commitment to the Respect for Women core value that he espouses.” He also referenced that the Board believed, in its findings, that Meyer would have fired Smith if he believed he committed domestic violence against his wife.pic.twitter.com/IVNDr3gZCt— Urban Meyer (@OSUCoachMeyer) August 31, 2018Meyer reiterated that he did not lie at Big Ten Media Days. He referenced the investigative report, which stated Meyer was not part of “a deliberate cover-up” for keeping Smith on the coaching staff. He also said “his fault was not in taking action sooner” against Smith and his “work-related issues.” Meyer said he and athletic director Gene Smith knew about “multiple examples of inappropriate conduct” while Zach Smith was on staff, but that both Meyer and Smith went too far in trying to help the former assistant coach in “allowing him to remain as an employee in the face of repeated misconduct.”Ohio State, in a statement given to The Lantern, reiterated what president Michael Drake said in the statement announcing Meyer’s suspension.“Based upon the independent investigation, I want to state clearly that we believe Urban Meyer did not and does not condone domestic abuse,” Drake said. “However, he did fail to take sufficient management action regarding Zach Smith — and he was not as complete and accurate at media days and did not uphold the high standards and values of the university on that day.”Meyer was suspended by the university for the first three games of the season. Meyer will be allowed to return to the team on Sept. 2 to coach Ohio State during the week leading up to the games he is suspended in. Smith was fired from the university on July 23 for the domestic violence allegations made against him by ex-wife Courtney Smith. Updated at 4:34 with statement from Ohio State.
In 2009, as oil prices began their drive from around the $30 range to over $100 today, USO stayed flat. Since mid-January 2009, oil prices have increased a stunning 142% while USO only rose by 33%. A lot of prescient investors who saw the rise coming made practically nothing with their prediction, thanks to this ETF. This isn’t an accident. Any financial professional with some basic knowledge of contango could have seen this coming. The fund simply doesn’t track spot oil prices. USO is only useful in a situation of backwardation; it’s the opposite of contango, where further-away maturities are cheaper than the nearest maturing contract. All of these problems are spelled out by the company on its website – though the details are deep in the prospectus. One can’t say that the fund is intentionally hiding anything. However, does the fund’s existence depend on investors failing to read the prospectus or to comprehend the futures market? Those who understand the fund stay away from it. With $1.51 billion under management, USO still finds plenty of unsuspecting buyers who think it’s a good way to invest in oil. With all of this said, is the fund doing anything illegal? Absolutely not. Is the fund acting in an unethical manner, much like the Abacus scandal? I’ll let the reader decide. [The United States Oil Fund is just one of ten popular ETS which are anything but what their names suggest.. Learn who the other nine are – and why you need to be careful with them.] By Vedran Vuk, Casey Research In the infamous case of the Goldman Sachs Abacus 2007 AC-1 fund, it doesn’t take a whole lot to figure out the wrongdoing. Paulson & Co., a multibillion-dollar hedge fund, helped select the mortgage-backed securities held by Abacus while at the same time, Paulson was planning on shorting it. This was all unbeknownst to Abacus buyers, since Goldman Sachs conveniently left out the details of Abacus’ creators and their bet against the fund in the investment marketing materials. Ultimately, the case was settled for $550 million. Goldman Sachs made a huge mistake here. By not telling its clients about the conflict of interest, the whole thing seemed like the coverup of a malicious act in order to defraud investors. What it really should have done is put the fund’s flaws in difficult-to-understand language on page 82 of the hundred-page prospectus. After all, that’s what everyone else in the industry does, and they’re certainly not settling for half a billion dollars with anyone. The exchange-traded fund (ETF) industry has made millions – if not billions – of dollars on products sold with a similar approach. If the problems are laid out somewhere, it’s not the ETF company’s fault when the fund fails. Better yet for them, ETFs never promise results… they are marketed only as an investment tool. In the majority of cases, this works just fine. It’s wonderful that investors can purchase a whole index such as the S&P 500 with a single ETF. Unfortunately, these incentives can create a serious problem in the ETF industry, as popularity drives much of its profits, rather than results. When commodities became all the rage in the past decade, retail investors flooded billions into futures commodity ETFs promising to provide an easy way to invest in the asset class. It didn’t matter that the underlying investments were doomed for failure. The funds lay out the risks in the prospectus and then wash their hands clean should the ETF head for the worst. Sometimes the failure of those funds is hardly an accident or the result of bad luck. In regard to ETFs, Wall Street needs to answer the following question: Is there a moral difference between constructing a package of worthless securities while hiding the creation process, and packaging the same sort of garbage while informing the investors about the problems on page 82 of a hundred-page prospectus? In both cases, you’re aggressively marketing a product which is known to be harmful, if not disastrous, to the investor. Sure, one can pretend to not know what’s in the product. After all, ETFs aren’t promising returns… they are just an investment tool. It’s always “buyer beware,” but if the tool is broken, someone should be held responsible for the damage. In the securities industry, ETF companies are encouraged to play stupid. If one pretends not to know about the likely performance of the fund, then everything is fine, as long as the fund’s faults are somewhere in the prospectus. But if one packages a garbage fund and doesn’t write down the details, then one’s likely to face a billion-dollar lawsuit. In reality, the two are close to the same thing. Of course, one man’s garbage could be another man’s treasure, but there are cases where one could objectively call the product pure trash. When a company shorts a product it created or an ETF fails to follow its intended index, then these are truly garbage investment products. It’s hard to say that anyone would want to invest in such financial instruments, if one properly understands them. An ETF that resembles this description is the United States Oil Fund (USO). Let’s take a look at the summary on the front page of USO’s website: The United States Oil Fund, LP (“USO”) is a domestic exchange traded security designed to track the movements of light, sweet crude oil (“West Texas Intermediate”). USO issues units that may be purchased and sold on the NYSE Arca. The investment objective of USO is for the changes in percentage terms of its units’ net asset value (“NAV”) to reflect the changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the price of the futures contract for light, sweet crude oil traded on the New York Mercantile Exchange (the “NYMEX”), less USO’s expenses. If I were a retail investor sans the education of a master’s in finance, I would immediately think that this sounds like a great way to invest in oil prices. Unfortunately, the devil is in the details. Essentially, because it’s impossible to hold so much oil, ETFs must purchase oil futures contracts. And by investing in the futures market, the fund must worry about contango. When a futures contract comes close to maturity, the fund must sell the contract and buy one further out in the future, since the company can’t take delivery of the oil. If the futures curve is in contango, that means future oil prices are more expensive than the current maturing contract. So, when the fund sells the maturing contract, it must buy a more expensive future contract. The fund breaks the cardinal rule of investing – it buys high and then sells low! Over time, the fund continues to lose money until its path fails to follow WTI crude oil prices:
JPMorgan et al hauled the precious metals prices down with naked brute forceNOTE: I will be at the Vancouver Investment Conference for the next five days. Because of that, my Friday, Saturday…and Tuesday columns are going to be as short as I can possibly make them. I have other fish to fry while I’m there…and sacrifices have to be made…and this is one of them.The gold price rallied in fits and starts all through Far East and most of London trading on Wednesday, but got sold down a bit beginning shortly after 9:00 a.m. in New York.But once the London p.m. gold fix was in, the gold price blasted higher…reaching its high tick of the day of $1,416.00 spot at 10:15 a.m…fifteen minutes later. It took JPMorgan et al almost to the close of London trading at 11:00 a.m. EDT to kill that rally and drive the gold price back below its Tuesday close…safely back under $1,400 spot…and an intraday trading range of seventy bucks.The low price tick at 2:45 p.m. in electronic trading…and Kitco recorded that as $1,346.00 spot.Gold close on Wednesday at $1,369.70 spot…down $6.30 from Tuesday’s close. Volume was immense, as the short sellers of last resort used a lot of paper gold to put the London p.m. gold fix fire out. Net volume was 259,000 contracts.It was pretty much the same price pattern in silver. Silver’s high tick at 10:15 a.m. in New York was reported as $23.46 spot…and the 2:45 p.m. EDT low was recorded as $22.12 spot. That was an intraday move of $1.34.Silver closed at $22.27 spot…down 16 cents from Tuesday. Volume in silver was very chunky as well…79,500 contracts.The price patterns for platinum and palladium were similar as well…and here are their respective charts… I don’t have all that many stories for you today…and I’ll leave the final edit up to you.Among the many misdeeds of British rule in India, history will look upon the Act depriving a whole nation of arms as the blackest. — Mohandas Gandhi, An AutobiographyWell, not too many shades of grey in yesterday’s price action, as JPMorgan et al hauled the precious metals prices down with naked brute force…selling whatever Comex paper contracts necessary to keep prices where they’re currently sitting.Based on the structure of last Friday’s Commitment of Traders Report, which will most likely show an even more wildly bullish set-up in tomorrow’s report, you have to wonder what “da boyz” are waiting for. As I’ve mentioned a few times already, we’ll probably have a triggering event of some kind, but it was obvious from yesterday’s price action that the powers that be didn’t want the Fed news to be the event that set it off…although it was as equally obvious that all four precious metal wanted to blow sky high.Looking at the current economic, financial and monetary situation…you just have to wonder how much time we have left before the whole thing collapses in a heap. Maybe the Fed and JPMorgan et al are awaiting that day when everything melts down before they finally allow the precious metals market to melt up. We’ll find out, as they say, in the fullness of time.In Thursday trading in the Far East, the gold price got sold down to its low shortly after 10:00 a.m. in Tokyo…and has been rallying a bit ever since. Gold and silver volumes are very high as London opens at 8:00 a.m. BST…and the dollar index is flat.And as I hit the ‘send’ button at 4:50 a.m. Eastern time, the gold price is up a respectable eighteen bucks…and silver is up about 20 cents. The dollar index has taken a real header in the last hour or so…and is down about 41 basis points. Gold’s net volume is already 50,000 contracts…and silver’s gross volume is at the 12,000 contract mark, so these rallies are not going unopposed.The rest of the Thursday trading day could be educational…and I await the Comex open in New York with great interest.See you tomorrow. The dollar index closed at 83.76 in late afternoon trading in New York on Tuesday…and then didn’t do much until 10:00 a.m. in New York. After a two-minute 27 basis point dip, the dollar index blasted higher…reaching it’s zenith at 12:30 p.m. EDT. From there it slid a hair into the close…finishing the Wednesday session at 84.28…up 48 basis points from Tuesday’s close.If you’d like to believe that the Fed minutes…or Bernanke’s commentary…had much to do with precious metal prices yesterday, you’re certainly entitled to hold that opinion. The dollar index and all four precious metals were blasting higher together, until the not-for-profit sellers showed up at 10:15 a.m. EDT and put an end to it. That’s why volumes in both gold and silver were over the moon…because, as I said, it took enormous fire power to kill the precious metal rallies stone-cold dead.The gold stocks were up over 5 percent before JPMorgan et al put in an appearance…and by the London close, most precious metal stocks were back to almost unchanged on the day. For the most part, the gold stocks followed the price of the metal itself very closely…although there was a bit of a rally in the last thirty minutes of trading that lifted the HUI from no gain, to finish up 1.16%.Of course it was pretty much the same sort of price action in the silver equities as well…but Nick Laird’s Intraday Silver Sentiment Index closed down 0.16%.(Click on image to enlarge)The CME’s Daily Delivery Report showed that zero gold and 40 silver contracts were posted for delivery on Friday…and the link to yesterday’s Issuers and Stoppers Report is here.There were more withdrawals from both GLD and SLV yesterday. In GLD, it was 96,682 troy ounces…and in SLV, it was an eye-watering 5,648,281 troy ounces. This huge amount of silver was obviously not plain-vanilla investor liquidation…and as Ted Butler mentioned in yesterday’s column, he feels that it’s JPMorgan and a few other bullion banks helping themselves by redeeming shares they already own…probably ones they bought in the April 12/15 engineered price decline…or in Monday’s bear raid…or both.There was a smallish sale by the U.S. Mint yesterday. They reported selling another 37,500 silver eagles.Over at the Comex-approved depositories on Tuesday, they didn’t report receiving any silver…but shipped 669,991 troy ounces out the door. The link to that activity is here.In gold on Tuesday, these same depositories reported receiving 57,855 troy ounces of the stuff…and didn’t ship any out. The link to that activity is here.I have no charts or graphs for you today, so here’s your “cute quota” before all the stories posted below.
In This Issue. * Flight to the so-called safe havens returns. * Traders get a grip on the rising euro.. * Poland to print their very first QTLY Trade Surplus! * IMM Futures Positions see USD longs plunge! And, Now, Today’s Pfennig For Your Thoughts! U.S. Gov’t Gets Ready To Have Partial Shutdown. Good day. And a Marvelous Monday to you! It’s the last day of September, and the last day of the 3rd QTR. WOW! 3/4’s of the year is in the books. All that economic growth that the Fed has been talking about that was going to take shape in the second half of this year, had better get on its horse or else, we’ll be talking about the last day of the year, and still be looking under rocks for that pick-up in economic growth that was supposed to be taking place. Of course, we all know for a fact that those same calls for economic growth in the 2nd half of the year, have been taking place the last few years, without anything happening, so we’ve got that going for us, right? It wouldn’t take much for me to get on my soapbox this morning, and just let ‘er rip. But, then I probably wouldn’t be allowed to write to you tomorrow, so, I guess I’ll save all my soapbox speeches for the Butler patio. The Walker Brothers are singing When you’re without love on the IPod to start the day, so that calmed me down big time. So, now that I’m properly prepared to bring you today’s Pfennig, Let’s go! Well, while we were all getting giddy here in St. Louis, as our beloved Cardinals swept the Cubs and won the Central Division, our elected officials in Washington D.C. did nothing to avert a partial Gov’t shutdown that would take place at midnight tonight. That would mean 800,000 federal workers who would be sent home tomorrow. Hey! I’ve got an idea to float around here, let’s throw it up against the wall and see if it sticks! Let’s see how the Gov’t gets along without those 800,000 workers, and maybe, just maybe, they don’t need all them. OK, ideas aside, this partial shutdown would see national parks, and IRS centers close (OK, I’ll take one without a fight!), and those wanting to renew passports will have to wait. The Biggie here is that the backlog and from what I hear, that backlog is awfully long, but the backlog of veterans’ disability checks could increase.. So.. The strange trade mentality of traders see this as a reason to buy the so-called “safe haven” assets like Treasuries, dollars, yen and francs. OK. I know I’ve gone through all this before probably going on 100 times by now, but these assets are the furthest things from “safe havens” in my mind! But the markets are so drawn to these assets in times like this, and there’s no fighting city hall on this folks. It is what it is. So, if these assets are getting bought, that would mean the other risk assets of stocks, commodities and most currencies are getting sold. The euro has fallen back below 1.35 this morning, but the move is small in nature, as the markets try to come to grips with the recent trend to buy euros and sell dollars. One of the currencies that is seeing green this morning is the Aussie dollar (A$). In recent days of trading, we’ve seen the euro and A$ move in opposite directions. If the euro is up, the A$ is down, and vice versa. Doesn’t make much sense to me folks. but, that’s what the markets have decided is the trade. The A$ is well above 93-cents this morning, and that’s a good direction for the recovering currency. But it’s not all seashells and balloons in Australia. and in an effort to bring you both sides of the ledger here are my friends over at RBC. Well, I was doing some reading the other day, and found a research paper by my friends over at the Royal Bank of Canada (RBC). In the research they go through all the reasons they believe that the markets are being premature with their call that the Reserve Bank of Australia (RBA)’s rate cut cycle has ended, and then too that the A$’s rise because of that call, is also premature. I didn’t like reading this info, because it’s opposite of what I feel is going on in Australia, but. In my effort to be balanced with my news, and not play favorites, I thought it best to bring these research results to you. BTW. The Reserve Bank of Australia (RBA) meets tonight. I would bet a dollar to a Krispy Kreme that the RBA will keep rates unchanged at this meeting. I think what this highlights is that the A$ is a two-way market right now, and that’s a healthy sign any time that happens to an asset, for it’s when everyone gets on the same side of the ship that we get into trouble! And as far as the euro is concerned. there’s obviously a two-way market here, for those of us that believe the Eurozone is making the right moves and in 3-5 years things will look much better here are far and few in between. But those that believe the Eurozone is still going to collapse are holding fast to those beliefs, no matter how much space is put between now and those days when things looked bleak in the Eurozone. And we all know that if the euro survives and continues to move along nicely, that the currencies surrounding the Eurozone will get healthier. Remember the “Euro-Wannabes”? That was the name I gave the three currencies from Poland, Hungary and the Czech Republic back in 2002.. They were thought to be on the “fast track” to euro acceptance. I have to say that I’m glad that all three of these drug their collective feet, and waited to join the euro. For a number of reasons that is. But now, you see, these three were able to independently adjust their monetary and fiscal policies to work around the Eurozone recession. And now, it is thought that Poland will print their very first ever Quarterly Trade Surplus this week. That would put Poland among the Emerging Markets that have good Current Account balances. Why is that important? Well. for those of you new to class, the Current Account consists of a country’s Trade Balance and foreign direct investment in the country. So, if you have a Current Account Surplus, then you have a “treasure chest” of reserves should the “easy money” of Quantitative Easing dry up. So. things are looking up for Poland. and as long as the euro continues to recover along with the Eurozone economy, the other Euro-Wannabes will see things looking up too! Inflation, it’s sure an interesting topic. We certainly haven’t seen any wage inflation here in the U.S. in a very long time. But does that mean that inflation doesn’t exist elsewhere? No. Over the years I’ve written about the rising food prices, and how packaging of food just keeps getting smaller so that the price won’t rise, but in reality the price per “x” does rise. It’s all a trick that’s used. Speaking of tricks, do you remember the gas shortage here in the U.S. in the late 70’s? The gas guys tried to “trick us” by changing the price per gallon to price per a metric measurement. Back then, U.S. citizens had a backbone and put their feet down and the “gas guys” switched back to price per gallon. This past weekend I was reading the local weekend paper, and came across a story on the St. Louis Fair in 1979. The story said that at that time, you could buy a 2-piece box of fried chicken with a roll and a piece of pecan pie for. are you ready for this? $1.75 So, inflation is all around us, and now that Home prices are recovering we don’t have deflation in Housing like we did for the past few years. I think this is the “whole plan” by the Fed Heads, to inflate the economy. It’s certainly what economist Paul Krugman would like to see. My problem with the whole “inflating the economy” is that economist act like inflation is something you can just turn off with the flick of a switch. We all know that to be not true. So then how high does the inflating go before things get out of whack? That’s the problem I have with the whole process. So, if the Fed Heads are looking to inflate the economy that would also mean inflating the dollar. I would have to think that the alternative at that point would be to own Gold. But then that’s just me, my opinion, and I could be wrong! Well, the IMM Futures Positions last week showed that the dollar bulls are picking up their stakes and moving. Net long positions in U.S dollars ($) plunged by more than 48,000 contracts, taking the $ long positions to the lowest levels seen since mid-February earlier this year. The top 4 currencies gaining on the drop in $ positions were: euros, loonies, sterling and pesos. As I’ve explained before. the IMM Futures Positions could be indications of what traders see for a currency, but can also change in a NY minute. So, they should be taken with just a few grains of salt at a time. Gold was all over the place, up, down, all around, on Friday, but finally ended up $12 on the day. We’ll see just how the markets feel about Gold this week with the partial U.S. Gov’t shutdown looming. And the U.S. data cupboard is void of any 1st Tier data today. Last Friday, we saw Personal Income rise .4% and Personal Spending rise .3%… So, that makes two consecutive months of not spending more than we make. And the Spending data was stronger than expected, so that was a good sign for the economy, but remember, we had back-to-school spending going on in August. And the U of Michigan Consumer Confidence slipped a bit for September. No real data today, means drifting for the currencies, that is unless we get a definitive move on the U.S. Gov’t partial shutdown. Ok. before I head to the Big Finish today, I wanted to talk about something, calmly, I might add. Remember a month or so ago, I wrote one morning asking why we never learned anything. That day I was on my soapbox about the relaxed lending rules that were being implemented by lenders once again. Well, here’s another sign that we’ve never learned a darn thing. Margin debt is nearing the sky high levels of 2007. For those of you new to the term “margin debt” think of it as buying stock on loan. That’s it in simple terms, but in reality, it’s leverage. You buy stock and only put up 50% of its value, which means you can buy twice as much with your money. I ran a margin dept at a large regional brokerage house when I was 21 years old. I know that awful feeling people get when you call them and tell them they need to deposit more money or we will begin to liquidate their account. Back in the days before the financial meltdown I used to write about how then Fed Chairman, Alan Greenspan should be raising the initial Fed deposit percentage to 65%… That would have nipped the rise to the unsustainable levels of 2007. We saw margin debt rise to lofty levels in 1999 too. We all know what happened then. So, I just can’t see this ending up with smiles and laughter. It hasn’t before, and this time won’t be any different. Again, though, that’s just me, my opinion, and I could be wrong. For What It’s Worth. I saw this on Bloomberg last Friday, and you’ve got to stop and think about this for a minute. The purchasing people at Wal-Mart are pretty smart cookies, and I think they are telling us something about the economy. “Wal-Mart Stores Inc. is cutting orders it places with suppliers this quarter and next to address rising inventory the company flagged in last month’s earnings report. Last week, an ordering manager at the company’s Bentonville, Arkansas, headquarters described the pullback in an e-mail to a supplier, who said others got similar messages. “We are looking at reducing inventory for Q3 and Q4,” said the Sept. 17 e-mail, which was reviewed by Bloomberg News. U.S. inventory growth at Wal-Mart outstripped sales gains in the second quarter at a faster rate than at the retailer’s biggest rivals. Merchandise has been piling up because consumers have been spending less freely than Wal-Mart projected, and the company has forfeited some sales because it doesn’t have enough workers in stores to keep shelves adequately stocked.” – Bloomberg Chuck again. Yes, and then this morning I saw on Bloomberg an ad where they tell you how to research what companies are on the supply chain for Wal-Mart. Because obviously those companies will be affected. Ahhh, the relative ease of research these days. To recap. The U.S. Gov’t is ready to have a partial shutdown tonight at midnight, which will begin to hurt quite a few things, and people. It’s a shame that negotiating a budget / debt ceiling deal comes to this? But what else is there to use? The so-called “safe Havens” are getting bought which means Treasuries, dollars, yen, and francs are at the top of the lists. Of course, Chuck thinks calling these assets “safe-havens” is an oxy-moron. Like Jumbo Shrimp, and my fave (think funny) one is “rap music”, now that’s an oxy-moron if I ever heard one! Currencies today 9/30/13. American Style: A$ .9325, kiwi .8285, C$ .9705, euro 1.3495, sterling 1.6140, Swiss $1.1045, . European Style: rand 19.06, krone 6.0185, SEK 6.4145, forint 220.85, zloty 3.1305, koruna 19.0595, RUB 32.46, yen 97.60, sing 1.2555, HKD 7.7540, INR 62.61, China 6.1480, pesos 13.21, BRL 2.2515, Dollar Index 80.27, Oil $101.82, 10-year 2.61%, Silver $21.74, Platinum $1,415.50, Palladium $727.28, and Gold. $1,337.41 That’s it for today. As I mentioned above, congrats to my beloved Cardinals that won the National League Central Division crown Friday night. My friend Dennis Miller, the author of Retirement Reboot, sent me a link to a story on Fox Sports about how most of the Cardinals’ star players are home grown. Pretty cool. thanks Dennis! I got to see my Missouri Tigers win their football game Saturday night. We sat through some light rain with our ponchos on, so it wasn’t too bad. I have 5 days to lose 50 lbs ahead of my 40th H.S. reunion this coming Friday night! HA! We hosted some Washington University Business School students last Friday, and I was asked about my career path. Hmmm. Let’s see, I was playing my guitar, traveling around the country, basically living out of a VW microbus. Yeah, that’s a good place to start! You should have seen their jaws drop when I told them I had hair down to my shoulders and didn’t have two nickels to rub together. But when I then told them I started out in the business in the mail room, they about fell out of their chairs! Ahhh, times have changed. Oh well, I’m sure I’m missing something today, somebody’s birthday, etc. but. I’m running late, so I’ll get this out the door and take my beatings later for forgetting something. I hope you have a Marvelous Monday! Chuck Butler President EverBank World Markets 1-800-926-4922 1-314-647-3837
Dear Reader,As promised last week, below you’ll find the conclusion of Bill Bonner’s wonderful essay Neverland. If you missed part 1, you can read it here.My thanks again to Bonner & Partners for allowing me to share this usually premium material free to Casey subscribers.Enjoy.Dan SteinhartManaging Editor of The Casey ReportNeverland, part 2by Bill Bonner, Editor, The Bill Bonner LetterEx Nihilo Nihil FitI spent much of the spring at our ranch in Argentina. I was cut off from the flow of news and opinion. No telephone. No TV or radio. But I was still thinking… in a desultory way… about how you can get something from nothing.“Out of nothing comes nothing,” is the expression. It expresses a deep truth, much like the law of conservation of matter and energy. You can’t get something from nothing. You can’t get rid of something once you’ve gotten it, either. That is, you can’t get nothing from something. As you know, the law of conservation of matter and energy tells us that you can just change the way it is expressed… where and how it shows up.Getting something out of nothing violates the laws of the universe. It doesn’t seem possible. And of course, it’s not. Free money is oxymoronic. Like an “honest dollar” or a “reclusive film star,” it doesn’t exist.So, if you think this free money coming from the Fed has no cost, you’re probably going to be surprised… and disappointed. The bill for it is out there somewhere. In the future. Debt is essentially a financial arrangement between the past and the future. And eventually, the future comes.I was thinking about this when I was helping with the roundup at our ranch in Argentina. At the time, I couldn’t figure it out. How can you get something from nothing? Who gets the bill? How? When?Then a 2,000-pound bull charged me. It’s amazing how fast something like that concentrates your attention. I practically flew over a six-foot fence to get away from him. And I got a demonstration of the conservation of energy principle. The energy I used to scramble over the fence was more or less equal to the energy that the ground… and my head and shoulder… absorbed when I came down on the other side.I think my head injury has helped me. I drool more often. But I understand the NIRP world better.A Corrupt SystemThe traditional way we understand credit is as follows: A guy runs a surplus—that is, he earns more than he spends. He saves the money and lends it to someone else… just as a farmer might lend a neighbor some of his excess time… or his excess tomatoes.This excess is real savings. It is what enables the borrower to make something… because he has something to work with. It is something real. If he is lent some seed corn, for example, he can plant it and pay back the loan out of the harvest. If he eats the seed corn, or throws it on barren rock, he will have no way of paying back the loan.But with the new financial system that came into being in the late 1960s and early 1970s, the money changed… and so did the type of credit. Gradually, the world economy came to operate without savings… without real capital… and with credit that could be consumed, wasted and never paid back. So was the entire economy transformed in deep and abiding ways… which we are just now beginning to understand.Before I get into the details of this new system, I want to emphasize that this is the system that we know… that has dominated our economy for most of our adult lives… and that we all take for granted as “the way things work.”But it’s not the way things always work… and it can’t possibly continue indefinitely. Debt can’t grow forever. And Japan is about to prove it.Lessons from JapanIs there a single road, bridge or municipal building in Japan that is in need of repair? Probably not. Because for 24 years, the government has borrowed the nation’s savings and turned them into GDP-boosting public works projects.Now, with more people retiring than entering the workforce… more people spending their savings than saving more… and more money leaving the country than coming in… the jig is almost up.This insight is an important one. But it is also an investment trap. You see disaster coming. You take cover… and sit there while the stock market goes up 150%! But watch out. It’s an even bigger danger to assume that debt can expand forever.Credit began expanding in the late 1940s… and it has been expanding ever since. My entire life has been spent in a credit expansion. I have never seen the other side of a credit cycle… at least not in the US. We all know in our minds it can’t go on indefinitely. But in our bones, we feel it will.That’s why it’s so important to try to understand what is really going on… if for no other reason than to overcome the “momentum” bias of our own experience. This will be the most difficult financial period of our lives, because we have no experience of anything else.But we are coming to understand this freaky thing more and more. We see that it can’t possibly last much longer… and that it will probably end in a catastrophic depression. Or worse, that it will mean the end of our civilization.Former World Bank Economist Richard Duncan, who came to Baltimore to visit just a few weeks ago, points out that the Great Depression was, at least partially, responsible for World War II… a war that killed more people than all the wars before it put together. And that war began before people had nuclear weapons… and before people were so completely dependent on an elaborate, worldwide supply chain… and an ultra-sophisticated, and perhaps fragile, electronic money system… and on extremely vulnerable urban lifestyles.In 1939, most of the world’s people still lived on farms. They were at least partially self-sufficient. They bought and sold things with physical money. And they didn’t depend on ATMs and central banks. They could survive a credit contraction.Duncan has helped me understand this new economy. He studied the build-up of credit over the last 60 years. At first, the credit expansion was based on healthy economic growth… new family formation after World War II… and useful technological advances.People took on more debt, but they were also earning more money. Then, for a variety of reasons, this healthy credit expansion was replaced by an unhealthy credit expansion. Incomes stopped growing. And the system began to look sickly.Lots of things were going on. But one thing, and one thing only, made it possible for credit to continue growing even as the fundamentals weakened: The US federal government changed the money system. The US took gold out of the money system in two steps: the first in 1968, when President Johnson removed gold backing from the dollar; the second in 1971, when President Nixon unilaterally canceled the direct convertibility of the dollar to gold.Before those changes, the money supply was limited by the availability of gold. The supply of savings was limited by the supply of money. The supply of credit was limited by the availability of savings. And the amount of debt was limited by the supply of credit. After those changes, the limits were removed.This is a new world. A new economy. New money. With many elements that never existed before. Nobody knows how something like this unwinds. I was just on the verge of figuring out the essential secret to it when the bull interrupted my thoughts. So, for now, I can only pass along a partial understanding of it…It’s Just Paper…Let’s stick with the new money for a moment. The post-1968 dollar is an unusual kind of money. It’s not like the old money. It doesn’t have anything behind it: neither gold nor goods or services. It is nothing. And it came from nothing.Banks conjure up credit out of thin air. You think banks are lending out deposits or reserves. But it’s not true. The Fed lowered the reserve requirements so that, after World War II, banks had about 18 cents cash on hand—real money, backed by gold—for every dollar they loaned out. Today, they have about 2 cents… and it’s just paper, backed by nothing.When a guy borrows, the bank gives him credit. The credit is buying power that comes from nowhere. Then it enters the economy, where it is indistinguishable from real money. It cost nearly nothing to produce. No one earned it or saved it.Since the 1970s, the US economy has created about $33 trillion worth of cars, houses, pancake breakfasts, lawnmowers, movie tickets—you name it—all bought with this “money from nothing.”Unlimited credit changed everything. It’s money that you don’t have to work for… or save. Like winning the lottery. Or like Spain in the 16th century. Spanish explorers had conquered the Aztec and Inca civilizations and shipped boatloads of gold and silver back to Spain. The Iberian Peninsula was soon swamped with new money.As a result, the Spanish—with so much money on their hands—found it easier to buy products from the British, the Dutch and the French rather than make them in Spain. As a result, prices rose. When the mines of the New World were emptied, it sent Spain on a course to becoming one of the poorest countries in Europe for the next three centuries.The Fuse Is LitSo, here is an economy where—over a 30-year period—credit expansion has risen above trend by about $33 trillion. (Note that this credit was provided far in excess of available savings, which declined over the period from about 10% of GDP to near zero. Also note that the typical spender had less real spending power at the end of 2010 than he had at the beginning of 1980.) In other words, people were spending money they didn’t have… they never earned… and which didn’t exist.And when, in 2008, the crisis threatened to undermine asset prices… and send the value of these accumulated credits back where they belonged… the feds (including the central bank) offered a backstop of an amount of credit that was almost unlimited. An amount of liquid capital that not only did not exist, it also could not exist.All of this was puzzling to me. Here was an entire economy that, in sickness and in health, ran on ethereal money. It looked as though we really had gotten something for nothing.Here’s another oddity: When money is free and unlimited, who benefits the most? The weakest borrowers. Credit spreads narrow—because, as long as the money flows, companies with weak balance sheets are not much more likely to default than those with strong balance sheets. The weaker companies gain the most. They can borrow at relatively lower rates.Junk-rated borrowers issued a record $380 billion of bonds last year, according to Bloomberg. The newsgroup further reports that junk bonds are the top performers this year… up 94% since the end of 2011.And yet—and this is in some ways the strangest thing of all—implied stock market volatility is remarkably low. No one is worried. More debt? Who cares? It may be crazy. But no one thinks it will come to an end any time soon.Here’s what I make of it…Yes, the Fed and Washington have distorted the economy. And yes, there is some strange stuff going on. And the longer it goes on, the worse the eventual blow up is going to be. The lack of volatility is the calm before the storm. Here is my friend Nassim Taleb, writing in Foreign Affairs magazine in 2011:Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks.Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems.And here’s a prediction: You will never make any durable returns in Neverland public markets. If the economy improves, interest rates will rise and the NIRP world will disappear. If the economy doesn’t improve, interest rates will sink further… investors will panic… and asset prices will fall.When either of these scenarios will happen, I don’t know. But Duncan says volatility will increase in the second half of this year, as the Fed continues to reduce its QE program. It is also possible that the US stock market will fall hard… and the Fed will come back with more QE.Duncan believes the Fed could succeed in holding off the day of reckoning for many years. It is also possible that investors will lose confidence… that more QE won’t work… and the entire credit-based edifice begins to give way.We don’t know what the future will bring. But we know that, in the present, you and your family face a serious threat. Free money is a gift… but there’s a fuse attached. And it’s lit. This is why we remain cautiously hedged in the recommended Family Wealth portfolio.If you enjoyed Bill’s essay, he recently launched a brand new monthly newsletter you can subscribe to right here.
— – Recommended Links Ferrari had a strong first day on the stock market… Yesterday, the Italian carmaker Ferrari (RACE) had its initial public offering, or IPO. An IPO is when a company sells shares to the public for the first time. Ferrari was looking to raise around $900 million. It planned to sell shares for $48-$52. Ultimately, the company settled on an opening share price of $52. This put the company’s valuation at $9.8 billion. • Ferrari’s reputation as a luxury automaker helped it get a premium valuation… Yesterday, CNBC said Ferrari’s valuation falls somewhere between a high-end automaker and a luxury goods company: …[A]t $52 a share, the IPO valued Ferrari at around 14 times earnings before interest, taxes, depreciation and amortization (EBITDA). This puts it on medium ground between automakers like BMW, that have lower ratios, and luxury firms like Hermes and Cucinelli, which have higher ratios. E.B. Tucker, editor of The Casey Report, thinks Ferrari will have trouble living up to its lofty valuation. Following its strong public debut, Ferrari is now valued at nearly $10 billion. That’s a huge valuation for a company that prides itself on being exclusive. They only sell around 7,000 cars every year, and the cheapest new ones start at about $198,000. Last month, I went with Doug Casey to Canada to try to buy a $400,000 Ferrari. The dealer refused to sell it to him. The market for Ferraris is so high that they don’t need any more customers. Ferrari shareholders will want to see sales and profit growth. But Ferrari can’t grow by selling more cars…because selling too many cars will tarnish the brand. That means the only way for Ferrari to grow is by raising its prices. Ferrari’s steep valuation hasn’t scared investors away yet. Its stock price was up as much as 17% yesterday. It closed up 6%. • Ferrari may have timed its IPO perfectly… Here’s what Doug Casey said in The Casey Report just days before Ferrari went public: Ferrari is going to have an IPO on its stock soon. A smart move on their part; when the ducks are quacking, you should feed them. I wouldn’t touch it if your broker offers you some… E.B. Tucker also thinks Ferrari’s owners are cashing out at the right time. The Ferrari IPO is a classic example of insiders unloading expensive shares on to the public at the end of a bubble… The mainstream media will tell you that companies go public because they need capital to grow. Sometimes, this is the case. But what you don’t hear is that most company founders and early backers see IPOs as a way to “cash out”…to sell part or all of their company’s shares to public buyers who are willing to pay a lot more than knowledgeable private buyers would. The public’s appetite for IPOs is biggest at market peaks. This is when the social mood is rosy. It’s when things look great. The guys who specialize in unloading stocks onto the public (investment bankers) know this. That’s why there is a rush to take companies private during market peaks (like we saw in the late 1990s). • Going public now looks like a smart move… The Federal Reserve’s easy money policies have fueled one of the most powerful bull markets in U.S. history. The Fed dropped its key rate to effectively zero in December 2008. It hasn’t lifted it since. Rock-bottom interest rates make it cheap to buy stocks with borrowed money. That’s a big reason why the S&P 500 has gained 130% since December 2008. But prices for a lot of stocks are detached from reality. A popular long-term valuation metric called CAPE indicates that U.S. stocks are 49% more expensive than their historical average. Rickards: “This is the Biggest Accounting Hoax Since Enron” According to Jim Rickards, the fallout will be 525 times bigger than Enron and is sure to affect all American citizens — no matter where you live, what you do for a living or how much money you have. The mainstream media could uncover this deception anytime now. Once that happens, it will be too late for anyone to act. Will you be ready? Click here to find out the four steps you need to take to prepare for the coming chaos.