Macro Profit – October 2013

It’s All About Money

Since the late 1990’s, my radio show entitled It’s All About Money has focused on the topics of government, international affairs, current events, history, and individuals who are both movers and shakers. Although the format has changed over the years, the central thesis has remained the same — everything revolves around MONEY.  Indeed, the old adage “follow the money” has never been truer than it is today.

Thus, in this month’s issue of MacroProfit, we’ll definitely follow the money.

We’ll examine our most recent government shutdown in relation to the government shutdown in 1995-96.  We’ll look at what emerged from that so-called debacle in the mid-90s, and according to Democrats and Liberals, we’ll investigate what they call Bill Clinton’s lasting legacy (and I don’t mean Monica.)

We’ll also discuss Syria, where WW III almost began, but is now only an issue worthy of an historical footnote — or is it.  The money trail in this instance isn’t difficult to follow, but it will require your careful attention.

The gold and silver bugs, much like the situation in Syria, are quietly descending back into the woodwork as deflation continues to confuse and confound the world’s central bankers.  Silently lingering in the shadows is the U.S. dollar, which everyone loves to hate, except of course yours truly.  We’ll bundle all this information together and determine whether it’s time to exchange Ben Franklin for a maple leaf, or hold these pieces of U.S. paper just a little tighter and a little longer.

In addition, there’s something new at MacroProfit, namely “historical events with a twist.”  We’ll look at moments in history which were not driven, as advertised, by patriotism, defense, religion, or even law, but simply by money.  This month, it’s the sinking of the RMS Lusitania and our entry into WWI.  Ladies and gentlemen, the quest for money never changes, it is time immemorial.

Moreover, the MacroProfit fantasy portfolio seems to be enjoying the confusion that abounds not only in Washington D.C., but around the world.  We’ll pull it apart in order to see if fantasy can turn into reality.

Of course, I’ll also throw in a few odds and ends as the spirit moves me.

To the new subscribers, I’d like to extend a very warm welcome.  And to the legacy subscribers, here we go again.  So, for all of you, it’s time to get those little gray brain cells ready to listen and learn, because no matter what you think, it’s really all about money.

Government Shutdowns — Now vs. Then

Today, it’s Obamacare, back then it was Medicare.  The shutdown of government is nothing new.  As a matter of fact, since the federal budget process was changed in 1976, eighteen separate instances, ranging from one day to three weeks, have seen hundreds of thousands of government employees furloughed.  The last actual government shutdown came in 1996, on the watch of President Bill Clinton and House Speaker Newt Gingrich.

A popular Democratic president and a popular Republican dominated House and Senate definitely made for some very interesting fireworks. Gingrich was still operating under his “Contract with America,” which had promised to slow the rate of government (think today’s Tea Party.) Clinton, however, had other ideas.  He focused on increased spending on education, the environment, Medicare, and public health. Clinton was operating under the premise, based on Office of Management and Budget (OMB) data, that economic growth and anticipated revenues would be greatly enhanced over the coming decade.  Most recently, the OMB has declared that Obamacare would be a great savings to the American public, and was basing that opinion on data which said that no changes would occur on the corporate level. Unfortunately, faulty data results in faulty conclusions.  Much of corporate America, from IBM to UPS, are making major changes in their health programs, resulting in significant disturbances to their employees. Such things as planned shutdowns, reduced working hours, and elimination of family benefits, has rendered the OMB’s basic assumptions and conclusions questionable at best.

In the mid-1990s, it was this same organization, the supposedly apolitical OMB, which Bill Clinton was depending upon for guidance.  The current brinkmanship, or who will blink first, also occurred in 1995-96.  At that time, Clinton refused to cut the budget and Gingrich threatened to refuse to raise the debt limit, and the games were on.

The most interesting aspect of the Gingrich proposal was that it would have committed the president to a 7-year balanced budget, which Clinton vehemently opposed.  The Republicans continued to send the president varying amendments (remember, unlike today, both the House and the Senate were under Republican control back then.)  One bill allowed the government to keep operating beyond the time when most spending authorities expired.  In addition, it required Medicare premiums to rise, and Clinton wanted those premiums to fall.  Thus, Clinton exercised his power to veto.  October 1st came, and still no budget.  The government operated on a continuing resolution (please keep in mind, I’m referring to 1995) set to expire on November 13th.  In keeping within the parameters of the Contract with America, Congress sent Clinton a continuing resolution for funding, and a bill to limit debt, and once again, Clinton vetoed it. Consequently, just like October 1st of this year, on November 14th 1995, a major portion of the federal government suspended operations.

Incidentally, the word “shutdown” is really a misnomer because all vital governmental service personnel continue to work and perform their functions.  The government simply operates with fewer employees; it does not shut down entirely.

Clinton and Congress came to a temporary truce with a provisional spending bill, but the underlying philosophical disagreement did not go away, even to this very day.

The shutdown, which commenced on November 14th 1995 and ended on November 19th 1995, was resurrected on December 16th 1995 and finally concluded on January 6th 1996, for a grand total of 28 days. (Side note: Bob Dole, then-Senate Majority Leader and presidential candidate, cut a deal to end the shutdown, thus keeping Gingrich hanging, who was willing to stay the course.)  The American public overwhelmingly blamed Congress and Gingrich for the shutdown versus Bill Clinton, 46% to 27%, respectively.  Disruptions to parks and historical monuments, the ability to obtain passports and visas, and patent office filings seemed to be much more significant to the American public than the continuation of deficit spending.  Sound familiar?  Bill Clinton was overwhelmingly reelected, and he was also historically claimed as the victor in the 1990’s version of the government shutdown.

The irony is that the 1995-96 government shutdown ultimately resulted in the Balanced Budget Act of 1997, as well as the first four consecutive balanced budgets since the 1920’s.  The balanced budget amendment was vehemently opposed by Bill Clinton in 1995, yet, to this day, George W. Bush is chided for wasting a government surplus that was provided to him by his democratic predecessor.  Had the 1995-96 government shutdown not occurred, it is very feasible that those great surpluses proclaimed by President Clinton would have actually been budget deficits.

Only time will tell if Barack Obama will see some sort of light as he is influenced by our most recent government shutdown.  Or, will we continue down the trillion dollar road to oblivion?

A Simple Rule of Banking

J.P. Morgan & Co. has done many stupid and arguably illegal things — until the “Whale” admission — only because they could.  (Later, we’ll talk about their role in the sinking of the Lusitania.)  However, their most recent decision to stop accepting student loan applications on October 12th of this year does suggest a degree of common sense; something that I knew was hidden somewhere in the hallowed halls of Morgan.  “We just don’t see this as market that we can significantly grow,” said the Chief Executive for Auto and Student Loans at J.P Morgan Chase.  The rationale is that the competition from federal government programs is taking the lion’s share of the business.  The truth, however, is something completely different.

According to the New York Fed, total outstanding student loan debt now stands at a whopping $1.2 trillion, and it’s growing dramatically — an amount of debt second only to mortgages.  It sounds like the student loan arena is a great market to be in, therefore, why would J.P. Morgan not compete, even if it’s against the federal government?  The answer is simple, namely the borrowers don’t repay the loans. Currently, according to the Department of Education, the amount of defaults has recently hit $146 billion.

The percentages vary from private schools (ranked the worst for defaults) to non-private (not the worst); while online education is of course another disastrous story.  In fact, some have even referred to the student loan debacle as the next “sub-prime” crisis.  Given the potential billions that Morgan will need to shell out in the Attorney General’s mortgage settlement, is it any wonder that they would shy away from anything that smacks of the same situation?  Does this represent a lot of money?  Not really.  Their student loan portfolio is $11 billion, which represents less than 0.05% of J.P. Morgan’s $2.44 trillion of assets.

But once burned, Morgan finally made a good decision that actually many of us could have made.  Specifically, if the borrower won’t repay, don’t lend.  It’s a simple rule of banking, even for the House of Morgan.

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Syria — the Real Story

Ostensibly, the most recent Syrian crisis involved the tragic deaths of approximately 1,400 men, women, and children who had been killed by weapons of mass destruction, specifically sarin gas.  The fact that
100,000 people had already perished in the ongoing Syrian civil war was totally irrelevant, it was the most recent gas attack victims which mattered the most.  For a while, we saw nightly pictures of the victims in contorted positions and foaming at the mouth.  It wasn’t difficult to feel both sadness and anger at what was truly a heinous act.  We started pointing fingers at one man, Syrian President Bashar al-Assad.  It had to be him, the culprit who perpetrated this dastardly deed.  After all, didn’t we have Facebook and Twitter to authenticate all of his actions?  You all know the next part of the story: ramp up the war machine, identify selected targets, establish a no-fly zone, send in the mercenaries, and justice had to be righted.  Oops, slow down cowboy, it may not be time to start WW III just yet.

The allies that normally jumped on board at such U.S. actions (think Iraq, Afghanistan, and Libya) quietly started to recuse themselves, with perhaps the biggest blow to Nobel Peace Prize winner Barack Hussein Obama’s war machine being the British Parliament, who voted to sit this one out.  Yet, the loudest pro-military uproars came from Turkey, Saudi Arabia, Qatar, and the freedom-loving rebels, who all said “strike, and strike now.”

At the recent G20 meeting in St. Petersburg, Russia, a 30-minute unofficial meeting occurred between President Obama and Russian President Vladimir Putin.  It wasn’t a long meeting, but apparently it was just long enough to make Syria just another forgotten chapter in the Obama legacy.

The conclusion to the soap opera included the last words that were dictated by al-Assad, who agreed to turn over his stash of chemical weapons if:

  • Israel disposed of weapons of mass destruction
  • U.S. stopped aid to terrorists (it’s interesting that we and John McCain support Al-Qaeda, who brought down the World Trade Center)
  • U.S. stops policy of threats
  • No country in the Middle East, primarily Israel, has weapons of mass destruction
  • Someone will need to pay billions for the destruction of the Syrian defense arsenal (perhaps an IPO for Wall Street)

al-Assad concluded with the following warnings:

  • Rebels may use chemical warfare against Israel as a provocation
  • Turkey, Saudi Arabia, and Qatar support terrorists in Syria
  • Any war against Syria will become a war that will destroy the whole region

The U.N. ascertained that yes, chemical weapons were used, but no, they couldn’t determine who used them.  Secretary of State John Kerry dramatically stated that it could only be al-Assad, since the freedom-loving rebels did not have the technology or the weaponry to deliver that kind of attack.  However, it’s quite interesting that the freedom-loving rebels, according to the United Nations a few months earlier, did, in fact, conduct military tests with the same kind of chemical weaponry.  Perhaps their inability this time around was due to a shutoff by our military industrial complex, which produces these very same weapons and delivery systems.  Thank you, Mr. McCain.

So, what’s the real story?  Why were 1,400 lives so important a few months ago and now those same lives are simply relegated to the dust bins of history?  Perhaps the freedom-loving rebels were so insistent on a U.S. attack because they had been stalemated by al-Assad.  As a matter of fact, according to many sources, they are actually losing the war, which is why the call has gone out for more trained mercenaries…oops, excuse me, I mean freedom-loving rebels.

If I stopped my analysis at this level, it makes perfect sense to try and make it a fair fight by getting the U.S. war machine involved.  However, we must go deeper.  The biggest supplier of natural gas to Europe is Russia’s Gazprom, which accounts for over one-third of all Russian revenues — one heck of a market.

Perhaps as large a reserve of natural gas which lies in Russia, also lies in Qatar.  A normal route for a gas pipeline to Europe from Qatar would travel through Syria and Turkey.  Of course, since the Syrian ally is Russia, the probability of Europe having a choice, or should we say a new competitor, seems highly unlikely as long as the current Syrian regime remains in power.  This one is elementary, my dear Watson.  If Assad is removed, the pipeline would be built, and perhaps the costs by the consumers are reduced as certain politicians would watch their bank accounts grow.  France is a large purchaser of natural gas, which could account for John Kerry’s comment that France has been our most significant ally over the years (hmmm, think Vichy), and accounts for the reason that French President François Hollande jumped aboard the “strike now” train.

Putin was not about to allow any of this to happen, thus he utilized the 30-minute unofficial meeting to take away all the momentum before WWIII had the chance to occur.

A potential U.S. attack on Syria is a thing of the past, yet the bloody Syrian civil war continues.  Is it about freedom, law, or even common decency?  Of course not, it’s all about money.

Real Estate — Trick or Treat?

Real estate continues to be in full recovery mode, or so they say.  The headlines would have you believe that money continues to flow into the housing sector, interrupted only by an occasional hiccup in mortgage rates (a myth dispelled in a prior MacroProfit issue.)  The mainstream media would also have us believe that the foreclosure process is being worked through in an expeditious manner.  In other words, as far as all the boys and girls in real estate are concerned, God’s in His heaven and all’s right with the world.  Au contraire, Opie.

For the past several years, there has been a great influx of large corporations dedicated to the proposition of buying-to-rent.  Cheap prices and reasonable rents made for returns exceeding double-digits.  It was a cash game, and the mainstream public was excluded, with mortgage applications falling to dramatic lows.  As prices rose, Wall Street was in, and the public was definitely out.  Following the trail of the money leads us to the current exit of Wall Street by either out-and-out sales or rollups into REIT IPOs.  Why?  Because as prices were appreciating, rents started to depreciate, and a once wonderful double-digit return turned into a low-digit sucker’s game.  It was time to exit, and exit they certainly did (and are still doing.)

Thus, as the buyers start to dwindle, another problem arises.  Namely, it’s the advent of the “vampire” foreclosure — not to be confused with the “zombie” foreclosure, where homes with no occupants are owned by the bank.  The “vampire” version foreclosure is still owner-occupied, with 47% of all U.S. bank-owned properties currently in this category.  Millions of homes are sitting in the pipeline, ready to be dumped on the market.  A decline of real buyers and an increasing supply of real homes with “vampires” and “zombies” definitely makes for a Halloween nightmare, as the money trail leads away from the ghoulish sector known as real estate.

Door #1 (Precious Metals) – Door #2 (U.S. Dollar) – Door #3 (Barter)

If this were a game show, when it comes to the real world’s currency of choice, which door would you choose?  “Coinage isn’t printed gold or silver by which the prices of things bought and sold are reckoned…it is therefore a measure of values, a measure however, must always preserve a fixed and constant standard, otherwise, public order is necessarily disturbed with buyers and sellers being cheated in many ways, just as if the yard, bushel, or pound did not maintain an invariable magnitude.” — Nicolaus Copernicus – Treatise on Debasement (1517)

Would it surprise you to know that even though the debate today rages between precious metals and fiat currencies (paper), throughout history, all matter of goods have been pressed into service as money — cowry shells, slabs of salt, elaborate beaded belts (wampum), giant stone wheels, tobacco, and so forth.  Even in  modern times, if no better medium is available, people will adapt to whatever is at hand.  After WWII, when the Mark was useless, citizens of Germany used cigarettes for money.

During the inflation ridden 1970s, Italian citizens used candies as small change.  Sometimes it seems that a complete barter system would be the answer to the world’s money problems.  If you were only dealing with four items, there could only be six prices for exchange (think about that one.)  However, if you dealt in a thousand goods, there would be 499,500 barter exchange rates needed.  Thus, as many times as barter seems to be the simplistic answer, on a worldwide scale, the impracticality is quite obvious.  At the other end of the extreme, it is possible to imagine a time in the not too distant future when paper money or coinage (precious metals) would all but disappear, replaced by some sort of credit or debit card that can be used for all underlying transactions.  In fact, many people are already there.  But even then, money’s function as a measure of value would remain.

Thus, the debate rages as to which Door, #1 or #2, will ultimately prevail as the world’s true currency.  You’ll notice that Door #2 is denoted by fiat in the United States.  I could, if this were a century ago, substitute England and the British Sterling as the fiat’s currency representative.  You see, this is not a debate involving one country over another.  It is the determination of the true store house of value, and what people will accept for both their goods and services.  As the central bankers of the world continue to inject more and more of their fiat currency into the world, whether it gets into their economies or not, they unwittingly undermine the case for paper money.  Much has been written and debated about the impact of devalued currency.  The logical conclusion is that through continued debasement, the inflationary fires will surge brilliantly.  As more and more money (think QE of $85 billion per month, Mario Draghi’s “whatever it will takes,” and Shinzo Abe’s unlimited printing) is injected into the system, the closer we’ll get to an ultimate breakdown in monetary acceptance.

What frustrates most money people, including economists, central bankers, and even the Peter Schiff’s of the world, is that hyper-inflation should have occurred by now.

But alas, structural deflation (think jobs, income, and class disparity) continues to keep it at bay, which explains why the precious metals have not continued their dramatic surge after 2011.  Most gold bugs are still waiting for the day that the system is broken, and mistrust of multiple paper currency is at hand.  Most people never stop to think about all the daily basic decisions that we’re making predicated on an overall understanding of what money actually is.  We just go about our business accepting the fact that money is money.

“Our day-to-day lives are so familiar to us, that it is worth a moment to consider the awesome complexity of the cooperative order that we participate in.  We buy a cup of coffee on our way to work.  Someone has just provided a service for us.  Perhaps that service was provided by a large corporation (Starbucks) built with bits and pieces of capital, and literally tens of thousands of investors.  The employees have struck their own contracts in  agreements with the corporation.  The coffee itself may come from Columbia, brought to the U.S. by a series of transport companies and wholesalers by their transport equipment provided by another set of companies.  The Styrofoam cup was produced by yet another corporation, which acquired its raw materials from petroleum product suppliers using equipment built in Japan and Germany by corporations that have their own tens of thousands of investors and employees.  If enough cups of coffee are sold, the coffee seller makes a profit, its stock rises on the exchange, and undertakes a debt-fueled expansion, borrowing the capital of further tens of thousands of savers.  It employs construction companies, equipment makers, and investment bankers, consultants, advisors, and advertisers, and on, and on.  In the end, very nearly the entire world, in  some way, was cooperatively involved in producing this one cup of coffee.  And imagine if you took cream or sugar.” — Nathan Lewis (2007)

The connecting link to all of this is the understanding of what is given and exchanged for the total production of that cup of coffee — that the money will be and do what it is supposed to.  However, the moment that mistrust enters the picture, the entire system will shut down.  The most recent example was 2008 when bankers mistrusted their counterparts and normal day-to-day inter-banking transactions that were necessary for the continuation of business, came to a standstill.  No one trusted anyone.  The result is the credit crisis which continues to this very day.  Imagine in our coffee example that at any point, just one participant in the chain did not accept payment for their goods and services.  Now, imagine everyone in the system had doubts about everyone else and the currency they were using.  Simply put, you’d have no cup of coffee.  Multiply that by the thousands of products that we depend upon daily, and you can clearly understand what’s at stake.

The more the central bankers disrupt the system with their incessant Keynesian philosophy of unlimited money printing, the closer we get to that doomsday of total doubt and non-acceptance of fiat currency.  Are we there yet?  No.  That’s why gold and silver will continue to trade as an asset class, not as currency.  However, should the central bankers continue their dance with death, the ultimate rejection of fiat and shift to hard money will come, but will not come easily.

Nevertheless, for the moment, that double shot of espresso in your latte is still available, and the barista will still take your $5 bill as the currency of choice.  Hold onto those Ben Franklins just a little longer, we’re getting close to the final Armageddon, but we’re not there just yet.

“The most important thing about money is to maintain its stability…you have to choose between trusting the natural stability of gold and the honesty and intelligence of members of government.  With due respect for these gentlemen, I advise you as long as the capitalist system lasts, to vote for gold.”  — George Bernard Shaw (1928)

Goldman on the “Shutdown”

Goldman Sachs recently weighed in on the current government shutdown and debt ceiling in a rather lengthy report.  However, contained in the ponderous tome were a few sentences that were worth contemplating:

“In the current shutdown, there is ample cash available to pay for government activities, but the administration has lost authority to conduct ‘non-essential’ discretionary programs, which make up about 15% of the federal budget.  By contrast, if the debt limit were not increased after late October, the administration would still have the authority to make most of its scheduled payments, but would not have enough cash available to do so…in essence, a prolonged delay would force the Treasury to rapidly eliminate the budget deficit to stay under the debt ceiling.”

Offered without comment…okay, maybe one.  A forced balanced budget?  Perhaps living within the money, not the means, is a unique concept.

“Historical Events with a Twist” — the RMS Lusitania

When you start to discuss history with most people, they simply roll their eyes as a glaze comes over their face.  Usually, it’s because there are so many dates included, and it takes a while to get to the punch line.  It seems that most people just want the facts and only the facts.  Thus, in our new section entitled “Historical Events with a Twist,” we’ll attempt to keep it as entertaining as a Kardashian reality television show.

The First World War was at a standstill.  After several years, men were fighting and dying for yards of soil, trench warfare was dominant, and desertions were becoming a problem for both sides.  However, the German blockade of England was taking its toll, as ship after ship bringing food to the British isle was being sunk.  The fear that England would sue for peace to avoid starvation was not only felt on Burberry Street, but was also felt on Wall Street.

Prior to the war, the House of Morgan had lent the British government $200 million.  Although the Woodrow Wilson administration was shipping guns, bullets, and other armaments to Great Britain, unofficially of course, they were prevented by law from giving any financial help.  That kind of aid would be recognized as an act of war, which of course, since we were neutral, we were violently against.

As the war dragged on and the blockade seemed to be taking its toll in the form a German victory, the Morganites saw concern turn to worry, to fear, and then to outright panic.  The loss of $200 million would be devastating to J.P.’s existence.  It was time to act.

The RMS Lusitania, a cruise ship owned by the Cunard Line, was known to be a transporter of weaponry, unlike the White Star Line (Titanic) owned by J.P. Morgan.  (They wouldn’t want to sink their own ship which only transported passengers.)  On this particular voyage, it was widely known — perhaps the worst kept war secret of all time — that an unusually large amount of guns and ammo would be onboard the Lusitania.  In order to protect U.S. citizenry and to keep the U.S. out of the war, the German government advertised in every U.S. newspaper that the Lusitania would be justifiably sunk because of what they were shipping.  In addition, all U.S. passengers were being forewarned: “Don’t get on the Lusitania.”

The U.S. government, under Woodrow Wilson, blocked all the ads from being published, except the Des Moines Register, obviously an oversight.  Days later, under the direction of Winston Churchill, Head of the Royal Navy, the Lusitania’s protector ship was recalled, as was the ship designated to transfer the arms for final delivery.  In other words, the purported cruise ship with 100 Americans onboard was a sitting duck.

Once sunk in the North Sea, the rest of the soap opera was inevitable.  Days later, we declared war on Germany, Congress authorized a loan of $500 million to England for war support, and within days of receiving the money, 10 Downing Street authorized a $200 million transfer back to J.P Morgan.

Was everything purely coincidence, or was it all about money?

Janet Yellen — The More Things Change…..

We’ve been waiting to distribute this month’s newsletter on the outside chance that the president would make his announcement on the new Fed Head (intuition said it could be this week.)  Originally, I felt the president would go outside the box and name Roger Ferguson to the position — a very legitimate candidate who fit the Obama mold.  However, most recently, with Obama’s failure on the world stage with Putin, Syria, and al-Assad, in addition to his inability to cower John Boehner, it seemed only natural that he would adhere to the request of Democrats and Keynesian economists by nominating Janet Yellen.  In other words, play it safe.  He’s been burned twice; he obviously wasn’t looking for a third time.

The nomination of Yellen brings some very significant warning signals.  This is a woman who really wanted the job, and who actually campaigned for it.  As we’ve seen in this month’s issue of MacroProfit, “money makes the world go round,” and Janet Yellen firmly believes that the cost of credit — the most important price in the world after the dollar — could and should be manipulated by both Janet and her international sidekicks.  The free market system is alien to her way of thinking, an attitude which has been growing stronger with each passing year, since the Federal Reserve’s inception in 1913.  Unfortunately, the Federal Reserve has a 100% error rate in predicting or reacting to significant economic terms.  Yet, Janet and her Keynesian cronies continue to believe that this time it will be different.  Yes, Einstein lives, “The height of insanity”…and so forth.  Yellen will simply provide more of the same since she’s never seen a money printing press that she didn’t like.

Jobs are created by investment, not quantitative easing.  Unfortunately, the new Fed Head will not look at quality of jobs as to whether her approach is working.  The fact that a person’s $75,000 per year job has just become $25,000 per year in a whole new situation is not relevant.  Indeed, according to Janet and the others, a job is a job.

We will enjoy more of the same until the final break comes, and then fingers will be pointed, but both Bernanke and Summers will have been long gone, and respond, “At least it didn’t happen on my watch.” Maybe we should all feel sorry for poor Janet.

Fantasy Portfolio

As the world goes through its shutdowns, printings, debt ceilings, confusion and despair, concern turns to worry, to fear, and finally to panic.  Some people, such as columnist Anthony Mirhaydari believe, “the market is starting to panic.”  A youngster such as Anthony has perhaps never seen true panic, similar to shouting “fire” in a crowded theater and having one exit for 300 people.  We are nowhere near that yet. I say “yet” because each day that passes is one step closer to 2016, the inevitable bottom of the 17-year cycle.  Each day that goes by is one less day from the ultimate panic, which means that when it does hit, volatility will be really dramatic.  Watch out!

The MacroProfit fantasy portfolio is predicated on just such an event.  IBM profits? Not yet.  Netflix concerns?  Bite your lip.  And all else, just watch with interest because after all, it’s just a fantasy.

The Portfolio based on $100,000 (Prices as of 9/30/13)

Position Entry Price 9/30 Price Allocation
Phillips REIT 10.00 10.00 20%
NFLX (SHORT) 215.94 309.21 43%     *
SH 38.55 28.01 10%
EUO 21.75 17.75 5%
HD (SHORT) 66.42 75.85 19%     *
IBM (SHORT) 194.15 185.18 60%     *
Cash 60%


In this month’s issue of MacroProfit, we’ve taken a walk down memory lane with Newt and Bill, we’ve examined the most recent luminary, Obama Federal Reserve Chairman nominee (a mouthful) Janet Yellen, and the Lusitania story almost seemed like it was something dreamt up in a Daniel Silva novel.

Each section of the newsletter has its own character, individuality, and idiosyncrasy.  And yet, what ties it all together is that…”It’s All About Money.”


Til next time,


MacroProfit is for education and entertainment purposes only. The information contained within is not a recommendation to buy or sell securities. All individuals possess different risk tolerances and should consult an advisor before making any transaction to ensure it fits their financial goals. Furthermore, individuals should understand the tax consequences of any investment and should speak with their tax advisor before making any transactions.
Written by
With his passion for economics Bill Tatro has been entertaining audiences on the radio and in seminars for decades. Bill is an economist that provides weekly paid content to subscribers, and offers a free daily "lite" version as well.

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