All posts by Moderator

Police predict fresh crisis as cuts threaten one in six jobs

More than 34,000 positions could go as a result of post-election budget squeeze, senior officers warn

More than 34,000 police jobs – one in six of the total – are expected to go as a result of a new round of deep public spending cuts after the general election, senior officers have warned.

Sir Hugh Orde, president of the Association of Chief Police Officers (Acpo), says official projections show that a further 20% cut in Home Office funding would inflict much greater damage on frontline policing than so far seen.

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Hugh Hendry Live 2: “QE ‘Worked’ By Redistributing Wealth Not Creating It”

In the second of three interviews (part 1 here), Hugh Hendry tells MoneyWeek's Merryn Somerset Webb why central banks will go even further than anyone expects to keep the global economy afloat. Hendry notes, “there’s so much debt that if you reprice debt, the economy slows down. We saw that I think in 2012, after the taper tantrum and ten-year bond use went over 3%. What happened next? The economy slowed down. If anything I would be a buyer of U.S. Treasuries.”

3 Things Worth Thinking About

Submitted by Lance Roberts of STA Wealth Management,

Stock/Bond Ratio Not Confirming Rally

Following the October swoon, stocks have vaulted to all-time highs. As I discussed previously in “Sentiment Is Off The Charts Bullish,” there have only been few occasions where investors have felt so “giddy” about the financial markets. Such periods of exuberance have never ended well for investors as they were deluded by near-term “greed” which blinded them to the building risks.

One of the things that I pay attention to is the ratio of the S&P 500 compared to longer duration bonds. The theory is that when investors are willing to take on more risk, money flows out of “safe haven” like bonds to equities as portfolio allocations become more aggressively tilted. The opposite occurs as investors began to reduce “risk exposure” in portfolios and focus more on “safety.”

As you can see in the chart below, there is a very high level of correlation between the rise and fall of the stock/bond ratio and the S&P 500. Well, that is until just lately.


Notice that currently, the ratio has deviated substantially from its normal correlation with the S&P 500 index. Importantly, this deviation began precisely when the Federal Reserve began extracting their liquidity support from the financial markets at the beginning of this year. With money rotating from “risk to safety” it is likely a clear warning that risks of a more substantial correction are building.

Given the economic slowdown globally, as discussed yesterday, rising deflationary pressures and elevated valuations it is highly likely that the majority of market gains have already been achieved. Furthermore, with the Federal Reserve now signaling that they are focused on raising interest rates, the tightening of monetary policy in an extremely weak economic environment will be a stronger headwind than currently anticipated.

Crossing The Keynesian Streams: Broken Windows And Gushing Liquidity All In One

Clearly, what US GDP needs is more not less epic snowstorms such as what this house in upstate New York just experienced, because where else do you get the twin Keynesian GDP-boosting fallacies of broken windows and gushing zero velocity liquidity all rolled into one Ghostbusters reference?

As of this posting it was unclear if Paul Krugman had put in a bid for this economically-stimulating house, or if he was waiting for an alien invasion first.

Obama Nominee, Antonio “Tax Inversion” Weiss Discloses Up To $203 Million In Assets

It appears Lazard’s investment banker Antonio Weiss’ “help” in tax inversions is not ‘unpatriotic’ enough to scare President Obama off – as we suspect Weiss’ bundling and donating help more than offset any ethical challenges. However, in a somewhat eye-opening financial disclosure, Bloomberg reports that Obama’s nominee for undersecretary of Treasury for domestic finance, has between $54 million and $203 million in assets spread across various family trusts and his anticipated compensation in 2014 is between $5 million and $25 million. It’s good to know the ‘people’ are well-represented once again in Washington…