Juggling Dynamite

As central banks and QE spirits encouraged yet one more round of levered speculation between 2012 and 2015, ‘hot money’ borrowed in Yen at rock bottom interest rates (and a weakening currency) and bought US denominated stocks and bonds (at higher yields in a strengthening currency). This looked like genius for a bit and helped to drive US asset prices from over-valued to ‘ludicrous mode’.  That was then.

In the spring of 2015, the Yen stopped weakening and began to increase once more against the greenback, much to the chagrin of Japanese policy makers hoping to depreciate the price of their exports through ‘Abe-nonsense’ initiatives.

With the Yen rising over the past year and counting, carry trade speculators are losing badly and having to sell US securities to buy back Yen and pay down Yen based margin calls as capital buffers evaporate.  A similar trigger served to accelerate selling in US markets in 2007 (red circle on left above).

Income-seeking investors are today naively looking for shelter in some of the most heinously over-valued assets of all time.  Dividend income is always sorely insufficient compensation for huge capital losses. Losses of more than 50% were experienced in these equities in both the 2001 and 2008 bear markets. Utilities, financials, telecom, REITs.  Defensive, not!

Not only that, but as many companies have already started doing, once cash flows get tight corporations cut dividends (as they should) and equity holders are left with zero recourse. That’s when capital losses rapidly accelerate as everyone races for the exits at once.  You’ve been warned.

Tell your broker utilities are NOT “safe”… pic.twitter.com/XAhvh4k2KC

— Cory Venable CMT (@CoryLVenable) February 26, 2016

There are wolves in the dividend house… pic.twitter.com/1EGSTq06lr

— Cory Venable CMT (@CoryLVenable) February 26, 2016

Once we develop good conversation-listening skills ourselves, we are likely to notice how few people have them and may often come away from social interactions feeling bored, depleted and even abused. Good conversation is a skill one can learn, but we have to care enough to develop it. Great refresher on the do’s and don’ts in this clip.

When your job hinges on how well you talk to people, you learn a lot about how to have conversations — and that most of us don’t converse very well. Celeste Headlee has worked as a radio host for decades, and she knows the ingredients of a great conversation: Honesty, brevity, clarity and a healthy amount of listening. In this insightful talk, she shares 10 useful rules for having better conversations. “Go out, talk to people, listen to people,” she says. “And, most importantly, be prepared to be amazed.”  Here is a direct video link.