Juggling Dynamite

Jeffrey Gundlach, chief executive officer of DoubleLine Capital LP, talks about the performance of the U.S. bond and stock markets and investment strategy. Jeff does an excellent job of talking sense in this broad-ranging segment.Here is a direct link.

The answer to this math is obvious: cut spending across the board, cut entitlements and increase designated revenues to fund the commitments that remain. And no the debt ceiling should not be increased. History assures us that humans with runaway spending rarely find discipline and better habits until the line of credit ends. Perpetual increases will only continue to escalate the problems. CNBC’s Rick Santelli takes a close look at U.S. debt estimates since 2000, and explains why the rating agencies have yet to weigh on the fiscal cliff issues. Here is a direct link.

This chart of stock volumes captures so much of the risk that keeps us up at night regarding equity markets today. Although long-always investment types have been recommending stock allocations throughout the duration of this chart, rational risk-assessing investors have increasingly moved to the sidelines over the past 4 years. Market prices that are built on a few leveraged-hyper-trading-participants are inherently unstable and full of great capital risk.

See: NYSE Volume chart deceptively informative

Consider what the overall falling volume trend means:

• The financial services industry is shrinking;

• Commissions are falling

• Stock picking is being replaced with ETFs;

• Psychology is negative, as Main St is not participating and Mom & Pop have left;

• Active trading is being replaced with passive indexing;

• HFT Algos may spoof millions of phony bids, but they are having a harder time getting executed.