Although the stock market has had several “shock and awe” straight up rallies this year, since the beginning of January the graph of the S&P 500 looks like the infamous “bridge to nowhere:”    (click to enlarge)

Up until January, the S&P 500 had risen at a near-continuous 45-degree angle, punctuated with an occasional and very brief 1% sell-off. Every time the stock market attempted to correct, the Fed either rolled out another new QE program in some form or used its regional emissaries to soothe the computer algos and retail investor cattle with sweet nothings designed to jawbone the stock market higher. As you can see from the graph above, the one sell-off prior to this past summer was halted a by a Fed puppet’s call for more QE.

The big plunge that occurred in August was triggered by economic fears and the plunging price of oil, capped by concern about the Fed raising interest rates by one-quarter of one percent.  And of course the Fed rolled out its emissaries to soothe the market and a decision to defer the one-quarter of one percent rate hike.   What does it tell us that  minuscule rate hike threat that looms like a nuclear bomb over the markets?…

The truth is, the markets are so disconnected from the underlying fundamentals that if the Fed were to pause for just a brief moment from its continuous market intervention, the stock market – along with the entire financial system – would collapse.

As you can see from the graph above, while the Fed – for now – has the ability to prevent the S&P 500 from a big sell-off, it’s been unable to push the S&P beyond the upper end of the sideways channel framed in red in the graph above.    And now we find out that the club of inside-connected, highly regarded large hedge fund managers have been unloading their stock holdings into every rally – LINK.

Currently the S&P 500 is being propped up with five stocks – AMZN, GOOG, FB, MSFT and GE.  Collectively these five stocks account for than 100% of the YTD return on S&P 500.  I can’t speak knowledgeably to four of them, but you can find why AMZN is the largest public stock Ponzi scheme in the history of the U.S. stock market in this report:  AMAZON dot CON.    I have an interesting paired traded strategy that I’m working that reduces the risk/volatility of shorting AMZN outright and it will be made available to anyone who purchases the AMZN dot Con report.

Beneath the veneer of those five stocks, there’s a bona fide bear market  going on in many sectors and individual stocks.  We saw this most recently with several retail stocks which went into cliff-dive mode after releasing quarterly earnings.  Some sectors of the market are down 20-50% this year.

Currently just about every possible economic indicator is telling us the economy in the U.S. is starting to collapse.  This is one variable over which the manipulators have no control. The price of oil is about to drop into the $30’s and the price of copper is likely going to go below $2 soon.  By all indicators, retail sales for the holiday season are setting up to be a disaster.  The big retailers know this which is why “Black Friday” sales promotions have already started.

The housing and auto markets are next.  The Fed and Government have once again over-stimulated demand for housing and new cars with subprime lending programs.  Demand has been “pulled forward” and sales in both markets are rolling over.

I don’t know how much longer the Fed can hold up the stock market.  At some point the gravitational force of the collapsing fundamentals will outweigh the Fed’s ability to keep a safety net under the stock market and a lid on the price of gold.  I predict it will get a point in which you won’t be able to get out of the stock market (extended market holiday) and you will have trouble finding physical gold/silver to purchase except in the private market at exceptionally high premiums to the quoted spot price.

http://investmentresearchdynamics.com/

The current world-system is as doomed as the Titanic.

We’re like the passengers on the Titanic 10 minutes after the mighty ship struck the iceberg: there is virtually no evidence to those on deck or those snug in their warm cabins that everything they reckoned was safe and secure was doomed to perish.

Only those who witnessed the damage below the waterline and who knew the limitations of the ship’s design grasped that the loss of the ship was inevitable and could not be reversed.

The current world-system (call it whatever you like–cartel-crony neoliberal-state capitalism, etc.) is as doomed as the Titanic, for the same reasons: the design of the system is the source of its failure.

Why is the current world-system doomed?

1. Automation will not just continue replacing human labor–the pace of this trend is increasing exponentially.

2. The wishful thinking that technology always creates more jobs than it destroys is, well, wishful thinking: just ask the…

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Friday evening’s Paris bombings were a tragedy. Over one hundred people were killed with hundreds of others injured. 

As a socionomist and researcher in confidence-driven decision making, my mind immediately went in two different directions after I heard the news.

The first question I wanted to answer was “why now?”

Through my research and that of other socionomists, I know that terrorism and other acts of sacrifice tie to extreme lows in confidence.

Was there something that would connect ISIS and low confidence together in a meaningful way that would offer important clues on the timing of Friday night’s attacks as well as the risk of future attacks?

The second question I wanted to answer was….

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One of the most successful business models is the “razor-blade model.” 

A company sells the razor – sometimes at a loss – but makes great profits by selling the razor blades, which need to be replaced often. 

The model originated with King Gillette, the founder of Gillette. Hewlett-Packard also employed this business model successfully with printers and printer ink cartridges. 

Today, this is how the surgical robotics industry is being built. 

Hospitals buy high-tech robotic arms capable of performing surgery with smaller tools than any human can operate (see image below). Although the $1.5-$2 million price tag for these units may sound high, this is not where manufacturers make their money. 

Intuitive Surgical’s da Vinci Xi Surgical System

Just like Gillette, robotics manufacturers make their money off the instruments and accessories that attach to the arms and must be replaced after each surgery. These sales provide high margins and recurring revenues. 

That’s one of the reasons the robotic surgery industry is growing exponentially. In 2014, it was $3.2 billion; by 2021 it is forecast to reach $20 billion. 

Intuitive Surgical (NASDAQ:ISRG) makes the da Vinci Surgical System. This has been used to perform more than 3 million surgeries to date. It’s changed countless lives… and not just for patients. Investors have watched happily as Intuitive Surgical’s share price has rocketed from around $90 in the wake of the financial crisis to more than $500 today. 

Other examples include Accuray (NASDAQ:ARAY), which uses robotics for radiation therapy and radiosurgery treatments; Mako Surgical (NASDAQ:MAKO), which uses robotics for orthopedic surgery; and Titan Medical (TSE:TMD), which is focused on robots for minimally invasive surgery. 

The next generation of surgical robotics will be able to perform a range of surgeries autonomously and without any human error. This will be done at a fraction of the cost of surgical procedures today, and will improve the quality and accessibility of health care worldwide. 

It could also make well-placed investors famously rich. 

Regards, 
Jeff Brown
Editor,  Published by Bonner & Partners. 

Nov 11, 2015

Asian Equity markets really had no idea which way to play today after a mixed set of economic data releases. The Retail Sales was marginally better than expected at 11% (estimates were for around 10.9%), whilst the YoY Industrial Output release failed to meet the forecasted 5.8% expectation as we saw a 5.6% print. As a result most core markets closed around unchanged with very little incentive to move in either direction. In Europe all the talk continues to focus on the ECB and their next QE move and the resent press reports of potentially larger cuts to the DEPO rate. A partially close US market saw stocks drift closing down around -0.3%.

The US Dollar also gave some ground back today with gains seen for GBP, TRY, and JPY but we continue to see the Russian Rouble drift with energy prices. The DXY (USD Index) closed a quiet day slightly weaker at 99.05 (-0.35%).

Still the concerns are for a global slowdown and there is nowhere that is having a greater impact than in the Oil market. Again today, we saw prices for WTI and Brent off around 3% each, which puts the YoY level down to around -44%.

The Bond Market in Europe is something we quote most days but not so much in detail. So, as of closing this evening I want to provide a quick over-view of just how extreme the European Bond Market pricing has become. In Germany the 1yr rate for government bonds closed this evening at -0.33%, with 2yr at -0.35%. It is not until 7 years do you actually see a positive return (7’s are +0.12%) in the yield curve; with 10yr closing this evening at 0.61bp. A similar yield for the US Treasury market would be 2yr at 0.87%, 5yr at 1.71% and 10yr at 2.33%. I often quote the spread between 10yr US and Germany (which incidentally closed at +173bp tonight) but not often the peripherals.
The Italian government bond market currently rated by S+P (Standard and Poors) is BBB-; is the lowest limit that is accepted as investment grade. A view of the yield curve would see 2years at 0.09%, 5yr at 0.58% and 10yr at 1.63%. This compares with the USA (AA+) 2yr 0.87%, 5yr at 1.72% and 10yr at 2.33% implying a negative spread for a positive credit. Client could sell Italian 5yr paper (at 0.58%) buy US 5yr paper (at 1.71%) and collect 114 basis points. It is possible to do this spread at 10yrs and take-out 172bp. Similar credits with a BBB- rating would be Kazakhstan, Romania, Morocco, Azerbaijan, Montserrat and Uruguay.

….also from Martin:

Civil Unrest, Revolution, & the Phase Transition Curve