en-GB

Pope Blasts Global Financial System As ‘Cult of Money’

VATICAN CITY (CBSDC/AP) – Pope Francis has denounced the global financial system, blasting the “cult of money” that he says is tyrannizing the poor and turning humans into expendable consumer goods.
In his first major speech on the subject, Francis demanded Wednesday that financial and political leaders reform the global financial system to make it more ethical and concerned for the common good. He said: “Money has to serve, not to rule!”

It’s a message Francis delivered on many occasions when he was archbishop of Buenos Aires, and it’s one that was frequently stressed by retired Pope Benedict XVI.
Francis, who has made clear the poor are his priority, made the comments as he greeted his first group of new ambassadors accredited to the Holy See.
According to an April Pew Research Center study,  Pope Francis is viewed favorably by an overwhelming majority of U.S. Catholics. More than eight-in-ten (84 percent) say they have a favorable impression of the new pontiff, including 43 percent who express a very favorable view.
(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
 

ALERT: All Loans Are Fraud

Thanks to Keri for the pointer. Check out her blog, "What in the world is going on?"

This article was put out by the Ubuntu liberation movement and provides further support and evidence of the fraudulent nature of all bank loans. Most who read this blog already know this. However, this list is good to share with those who may not yet be aware to the deceptive practices within the banking system. This is the kind of information "they" don't want to get out. Please spread far and wide!

This post, written by Heather back in February, provides further evidence and support to this claim. ~BK

FACTS ABOUT THE GLOBAL BANKING MACHINE

1) All the major banks in the world are owned and controlled by the banking families.

2) They control the entire process of the creation, the printing, and supply of money around the world.

3) The three biggest names in this cartel are the Rothschilds; Rockefellers and Morgans, and they ultimately own or control all the banks in the world, together with a small number of other powerful banking families, like Carnegie, Harriman, Schiff, and Warburg. 

4) Collectively they have become known as the “banksters” by those who became aware of their devious activity.

5) All the major central banks of the world, including the Reserve Bank of South Africa, just like the Federal Reserve Bank in the USA, are privately owned corporations with complete control of the financial markets.

6) These banking families and central banks are a law unto themselves and do not have to answer to anyone. For example, section 33 of the South African Reserve Bank Act allows them to keep their actions secret. 

7) The global financial system created around the supply of money is so convoluted and complex that only a few people truly understand it. This is always used as an excuse to exclude the involvement of ordinary people.

8) The deeply complex legal system is used in the same way to manipulate and support this structure, denying the ordinary person access to lawful justice. 

9) Lawful justice cannot exist under the situation where the country is a corporation; the president appoints the judges, therefore the judges work for the corporation and have to uphold the wellbeing of the corporation – not the people. And the courts are mere enforcers of the banking policy.

10) Banks officially do not work with money. They work with Bills of Exchange, Negotiable Instruments and Promissory Notes.

11) The word ‘money’ does not even have a definition in the Bank Act of South Africa, neither is the word ‘payment’ defined.

12) All the major money of the world is ‘FIAT’ money – this basically means that it has no intrinsic value AND it is not supported by any precious metals like gold or silver, as it was a long time ago. FIAT money is created by banks, out of thin air, when you take out a “loan.” There is actually no real loan – nothing physical is exchanged – this is the equivalent of counterfeiting. South Africa’s money supply has quadrupled in the past decade, and yet this increase supply has not seen a parallel increase in gold, silver or other real commodity reserves.

13) This means that the paper/plastic money we use is completely worthless. They are just fancy pieces of paper with some fancy logos printed on them with no value at all. The ‘value’ is derived purely from the masses of people who have confidence in their currency and keep using it as a method of exchange.

14) For example, very few people know that a payment / commission / legal bribe is paid to the South African government every time a worn note or coin is returned to the SA Reserve bank. This payment is called seigniorage and allows our government to profit from the exploitation of the people by the paper/plastic money controlled by the Reserve Bank, and ultimately the Bank For International Settlements from whom our Reserve Bank receives their orders.

15) Yet it is illegal to destroy these worthless pieces of paper, and people who introduce alternative pieces of paper, or copy these pieces of paper are jailed for infringement of its copyright. 

 
16) The only reason our money has any value, is because we give it value – our perception of value is the only value it has. If the people lose faith in their money, the money will collapse, because nothing supports it. In fact the word ‘credit’ comes from the Latin credere which means “to believe.” Evidence of this is found almost every time a central bank governor opens their mouth. You will hear the word “confidence” uttered over and over and over again because the prime directive of a central bank governor is to maintain confidence in banking at all costs. Erosion in confidence leads to the collapse of the system. This is precisely why they placed Nelson Mandela’s face on the new South African notes – to instil and renew confidence in our money and abuse the man’s commitment to freedom.

17) Banks create money out of “THIN AIR” by simply creating debits and credit on the accounting computer system. This is called the Matching Principle and is governed by the Generally Accepted Accounting Principles (GAAP). A “loan” is not a loan in the ordinary sense of the word, it is an instruction that you, the customer signs, in the process creating a promissory note, which you “submit” to the bank authority, giving the bank permission to issue one of their promissory notes in return. Their promissory note (which comes in the form of a computer generated bank statement) is designed to look like a loan. So, their promise back to you (in exchange for your promise to them) is the loan you are receiving. So, in essence, you instructed the bank to make money out of thin air. Because you are none the wiser, you agree to the exploitative terms and conditions outlined in the agreement which, of course, the courts will enforce in their favour. 

18) Banks do not have money of their own to lend you as most people believe. No money existed in the system before the so called “loan” was granted to you.

19) Banks create money on the signatures of their clients and the so-called contracts and loans they make the customer sign. These contracts are sold in a process called securitisation to third parties, who in turn sell it on the global stock markets. This is a highly secretive and well guarded technique in which they profiteer and create undue enrichment. Then they bundle such loans and sell them back to the people via pensions funds and insurance policies. Are you confused yet? You should be – many lawyers and most judges do not understand this and this is why we had to study this ourselves to be able to defend ourselves in the courts against those lawyers who defend the banksters and understand it well. The people have to know.

20) By selling your signature or ‘promissory note’ or mortgage bond contract, they lose all legal rights to any property that they financed. In legal terms this is called losing ‘locus standi’.

21) When the bank securitises a loan, they get paid the full capital amount of the loan, plus interest, up front. This means that your loan has actually been pre-settled by a third party who is insured in case you default, while you have no idea that this is going on behind the scenes.

22) The banks break contract law by claiming to lend what they do not possess – money. They only create money, in most cases cyber-money, after you signed all the documents and they sold your promissory note to the third party who then on-sells it, sometimes many times, to other parties by trading it on the global stock markets. This is why securitisation is a ponzi / pyramid scheme that everyone must become aware of. It is also known as “shadow banking” which is easy to research online.

23) They do not disclose any of this to their customers, keeping us in the dark. You believed that they actually loaned real money. This is a lie. They never loaned you anything of any value and therefore there was never “equal consideration” where both you and the bank stands to lose something. This flies in the face of basic contract law, never mind common morality among people. But then banks are not people – they are legal fiction corporations. 

24) You created all the value with your own mind and it was your signature that caused the release of money from the third party buyer, which the bank received on your behalf – except they never informed you of that, did they?

25) The banks act as intermediaries, like estate agents, because they do not lend us THEIR money. Since they do not lend us anything, but only obtain it on the strength of our signatures, from a third party, any interest they charge is pure extortion and fraud. Disclosure must take place for a valid agreement to occur.

26) The money in South Africa is printed by the South African Mint – also a private company that simply profiteers on the hard work of our people. However, recently this has been outsourced to Sweden which was a disaster, causing huge embarrassment for the Reserve Bank after several billion Rands worth of notes were printed incorrectly with the wrong dimensions and had to be destroyed. 

27) The Reserve Bank, which is a private company, is in charge of printed money, which it sells or loans it to the banks at a fraction of the face value of the bank notes.

28) When the banks return the used bank notes to the Reserve Bank, they get paid almost the entire full face value of those bank notes, creating enrichment out of thin air for themselves, by creating money out of thin air from shuffling paper.

29) Banks practice what is called “Fractional Reserve Banking”. This means that they only have to retain a small percentage of any deposit and can lend out the rest many times over to the public, creating a spiral of debt on money that does not even exist.

30) For example: For every $100 you deposit, the bank lends out about $900 of imaginary fictitious money to their clients. The real fraud is that they charge compounded interest on this non-existent money. This is blatant fraud and anyone else would be jailed for a long time for doing this.

31) Interest is charged up front. Interest is considered “real money” by the bank, and so they can make more loans, out of thin air, against that interest, that did not exist in the first place.

32) As it stands today, there is not enough money in the world to pay off all the debt in the world, because of interest. This is exactly the situation the banksters wanted to create. A situation that gives them complete control over property and other assets that can be repossessed by the banks only to re-sell it to another naive person who will most likely end up in the same debt situation.

33) All this activity is continually supported by the legal system and the ignorant judges who just perpetuate the fraud in the face of clear evidence.

34) In some countries, hard working people are jailed for not being able to repay their debt. This a blatant crime against humanity for which the bankers should be jailed and the judges should be answerable to the people they serve. But then, they don’t serve the people, they serve the corporation that employs them – THE REPUBLIC OF SOUTH AFRICA and other corporations that masquerade as countries.

35) The printed notes we call money are really instruments of debt and should be illegal. Money as we know it today can only be issued as debt. In fact, about 40% of the debt of the USA is fictitious / counterfeit debt, owed to the Federal Reserve Bank who initially created it out of nothing and then charged interest on that debt. All the income tax collected in the US is used to pay off just the interest portion of the debt to the Federal Reserve Bank owners.

This is just a small taste of the convoluted web of deception that has been created to keep us ignorant and completely enslaved to the global control of the banksters.
There is no reason why we, the people, cannot create our own new form of money as an alternative to the banks’ tools of enslavement and use this new money as an interim tool to stabilise the economic crisis. A lawful kind of money that serves the people.

Gold Demand Remains Strong As Buying Records Continue To Tumble

by GoldCore


Today’s AM fix was USD 1,377.00, EUR 1,070.01 and GBP 904.32 per ounce.
Yesterday’s AM fix was USD 1,412.25, EUR 1,094.51 and GBP 926.67 per ounce.

Cross Currency Table – (Bloomberg)
Gold fell $32.70 or -2.29% yesterday to $1,392.70/oz and silver slid to $22.50 and finished – 3.55%.
There are no surprises in the latest World Gold Council Gold Demand Trends report other than the fact that statistics show global demand for gold in Q1 2013 was on the increase before the COMEX raid on April 15th. This is a clear indication that the fundamentals supporting a strong price for gold in the long term remain and also helps to explain why there was such a shortage of gold bars and coins in the weeks after April 15th.

Gold in USD, 16 May 2013 – (Bloomberg)
The statistics speak for themselves:
1. Jewellery demand was up 12% year-on-year; China returned a 19% increase on the same period last year, India and Middle East at 15%, and interestingly the US at 6%, its first increase since 2005.
2. Demand for gold bars and coins were up in all markets; 22% year-on-year in China and 52% in India and 43% in the US.
3. Central Banks continued their gold purchasing programme for the seventh consecutive quarter purchasing over 100 tons. The sector accounted for 11% of demand worth $5.7bn with volumes concentrated in emerging markets.
4. Though it was 4% down the previous year, demand in the technology sector once again surpassed 100t for the quarter demand in Q1 2013.

Marcus Grubb, Managing Director of Investments at the World Gold Council commented: “The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewellery and consumption in the technology sector still make up 81% of the market.
Grubb added: “What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”

Key gold demand and supply statistics for Q1 2013
• First quarter gold demand of 963t was down 13% compared with Q1 2012.
• The value measure of gold demand in Q1 2013 was US$51bn, down 16% on the year before.
• The Q1 2013 average gold price was US$1,632 down 3% on the year before.
• The net outflow from ETFs was 177t in the quarter. That fall pushed the sum of ETF and total bar and coin demand to just below 201t. Total investment demand was 320t in Q1 2013, flat compared with a year ago.
• Demand in the jewellery sector was up 12% to 551t. Jewellery demand in China was 185t while demand in India was 160t.
• Demand in the technology sector once again surpassed 100t for the quarter.  Demand in Q1 2013 was 102t, down 4% on the previous year.
• The Q1 2013 total mine production was up 4% on last year at 688t. Recycling fell 4% resulting in a total supply that is 1% higher than a year ago.
• Net central bank purchases totalled 109t, 5% lower than a year ago, making this the ninth consecutive quarter in which central banks have been net purchasers of gold.

Gold in USD, 5 Year – (Bloomberg)
The current gold price continues to appeal to investors and demand for all types of gold remains robust. There is no doubt that the next World Gold Council Gold Demand Trends report will surpass all the key benchmarks set above. Buying records will continue to tumble which augurs well for the long term price of gold.

Kathleen Furey v SEC: Wow, Just Wow . . . Read This

For those with an interest in learning how our financial regulators fail to perform in upholding both the law and their duty to protect investors, the SEC is “the gift that keeps on giving.”
As if we did not already know that the SEC has all too often failed to protect investors, let’s navigate and learn about the case of current SEC employee Kathleen Furey. From a recent complaint brought by Ms. Furey against the SEC:

The three-year ascent of Kathleen Furey to higher levels of official responsibility and pay came to an abrupt halt in 2008, shortly after she was forced to become a whistleblower. 
In August or September of 2007, Furey approached Assistant Regional Director George Stepaniuk, her level-2 supervisor, to discuss the investigation of “name redacted” which seemed to be floundering, just like many investigations of other investment companies or advisers had floundered in the past.

Wouldn’t you like to know what entity this was? I would. Could it have been Bernie Madoff’s operation? Actually a review of the amended complaint reveals that Furey did work on the Madoff case — after it had blown up and the SEC was skewered by Harry Markopolos.

Furey believed that “name redacted” had violated both the Investment Company Act of 1940, and the Investment Advisors Act of 1940. Stepaniuk responded that his group—approximately twenty lawyers in the SEC’s Division of Enforcement — “does not do IM (investment management) cases.” In essence, Stepaniuk had arrogantly admitted that he was flouting two of the four major securities acts that Congress and the Code of Federal Regulations had mandated the SEC and its staff enforce.

Wow. Talk about a bombshell allegation regarding a total abdication of duty within the SEC. If this is not a smoking hot gun of enormous proportions, I do not know what is. I would maintain that Stepaniuk’s statement, if made as Furey asserts, is a clear cut indication of corruption within the commission.
If the SEC “does not do IM cases,” and we know they bring very few cases against the major banks, the question begs what was — and still is — going on within the offices of our nation’s top financial cops?

Furey faced a dilemma: should she join in Stepaniuk’s decision to flout the law and thereby violate the oath she took when she became an SEC employee or risk angering Stepaniuk by disclosing his personal moratorium on enforcing the IAA and ICA to his supervisors, the next logical step to correct the problem.
In October 2007, Furey approached Associate Regional Director David Rosenfeld,  her level-3 supervisor, and requested a transfer out of Rosenfeld’s group.  Furey told Rosenfeld about Stepaniuk’s self-imposed moratorium on “IM cases.” Rosenfeld reacted with indifference. Consequently, Furey took her concerns about Stepaniuk’s IM moratorium a step higher—to the Regional Director of the New York Regional Office, Mark Schonfeld.
Schonfeld offered Furey two options: she could recant her statement about what Stepaniuk told her or she could inform the staff of the SEC’s Inspector General, David Kotz of her allegations. In this way, Furey was forced to become a whistleblower.

Talk about cavalier. Again, if true and as alleged by Ms. Furey, Rosenfeld and Schonfeld should be thoroughly investigated by an external official. Although, if we were to look for Mr. Schonfeld these days, we would have to track him down by going through the revolving door as Schonfeld is now working at Gibson Dunn.

One year later—before the sting of her whistleblower disclosures to Rosenfeld, Schonfeld, and IG Kotz had worn off—NYRO’s indifference to enforcing the securities acts against one prominent investment manager—Bernard Madoff—would produce the worst failure or perhaps more accurately the worst scandal in the SEC’s history.

Whether Furey’s claims of the SEC’s unwillingness to investigate alluded to the Madoff scandal, we may never know. We may also never know why Ms. Furey suffers the consequences of the derailment of what was once a promising SEC career. Why is that? The SEC is contesting  Furey’s request for the necessary info to pursue her case via a Freedom of Information Act request.
Furey remains an employee of the SEC and is fighting to be compensated at the level of which her own reviews indicates that she deserves.
If the new leadership of the SEC might like to convey a meaningful change in the manner in which it handles situations such as these, then they should release the information requested. Or are we to believe that perhaps the SEC still “does not do IM cases” and remains in bed with Wall Street and Washington instead of upholding its mandate to protect investors.
You cannot make this stuff up.
I thank the regular reader who brought this story to my attention. If you find situations such as these as troubling and disturbing as I do, I hope you will care enough to share it with your friends, family, and colleagues. In light of the most recent developments with the DOJ and the AP, whistleblowers need all the support they can get these days.
For those with an interest in reading more about this case, I welcome linking to Furey’s complaint brought against the SEC and related Exhibits:
FUREY v. SEC (click on image to access pdf document):

FUREY RELATED EXHIBITS (click on image to access pdf doc):

Ouster of IRS official isn't ending investigations

Investigations of IRS' targeting of groups is continuing in wake of ouster of top official

WASHINGTON (AP) -- Don't look for the outcry over the Internal Revenue Service's improper targeting of tea party groups to subside with the ouster of the agency's acting commissioner.
Three congressional committees are investigating, and the FBI is looking into potential civil rights violations at the IRS, Attorney General Eric Holder said.
Other potential crimes include making false statements to authorities and violating the Hatch Act, which prohibits federal employees from engaging in some partisan political activities, Holder said.
President Barack Obama said Treasury Secretary Jacob Lew had asked for and accepted Steven T. Miller's resignation. Obama is expected to name a new acting commissioner by the end of this week.
"Americans are right to be angry about it, and I am angry about it," Obama said Wednesday evening in a televised statement from the White House. "I will not tolerate this kind of behavior in any agency but especially in the IRS, given the power that it has and the reach that it has into all of our lives."
Miller's ouster came five days after an IRS supervisor publicly revealed that agents had improperly targeted groups with "tea party" or "patriots" in their applications for tax-exempt status. It came a day after an inspector general's report blamed ineffective management in Washington for allowing it to happen for more than 18 months.
The report said tea party groups were asked inappropriate questions about their donors, their political affiliations and their positions on political issues, resulting in delays averaging nearly two years for applications to be processed.
Miller, a 25-year IRS veteran, took over the agency in November, when the five-year term of Commissioner Douglas Shulman ended. Shulman was appointed by President George W. Bush.
Obama has yet to nominate a permanent successor. A new acting commissioner was not announced Wednesday evening.
In an email to employees, Miller said: "This has been an incredibly difficult time for the IRS given the events of the past few days, and there is a strong and immediate need to restore public trust in the nation's tax agency. I believe the service will benefit from having a new acting commissioner in place during this challenging period."
At the time when tea party groups were targeted, Miller was a deputy commissioner who oversaw the division that dealt with tax-exempt organizations.
The report by the Treasury inspector general for tax administration does not indicate that Miller knew conservative groups were being targeted until after the practice ended. But documents show that Miller repeatedly failed to tell Congress that tea party groups were being targeted, even after he had been briefed on the matter.
The IRS said Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra, sometimes burdensome scrutiny.
At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without disclosing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee but again was not forthcoming on the issue — despite being asked about it.
In all, members of Congress sent at least eight letters to the IRS over the past two years, asking about complaints from conservative groups that they were being harassed by the IRS. None of the IRS responses acknowledged that conservative groups were targeted.
Miller was scheduled to testify Friday at a Ways and Means hearing. A committee aide said Wednesday evening that Miller was still expected to attend the hearing.
"These allegations are serious — that there was an effort to bring the power of the federal government to bear on those the administration disagreed with, in the middle of a heated national election," said Senate Republican leader Mitch McConnell of Kentucky. "We are determined to get answers."
The Justice Department opened its criminal investigation last Friday, Holder said.
"I can assure you and the American people that we will take a dispassionate view of this," Holder told the House Judiciary Committee at a hearing Wednesday. "This will not be about parties, this will not be about ideological persuasions. Anybody who has broken the law will be held accountable."
But, Holder said, it will take time to determine if there was criminal wrongdoing.

Wednesday's hearing was the first of several in Congress that will focus on the issue. The House Oversight Committee announced Wednesday that it would hold a hearing May 22, featuring Lois Lerner, the head of the IRS division that oversees tax exempt organizations, and Shulman, the former commissioner.

The Senate Finance Committee announced a hearing for next Tuesday.
____
Associated Press writer Jim Kuhnhenn contributed to this report.
___
Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

 

Bull-Market Behavior Flares as Stocks Melt Up

Already 50 months old, the bull market in stocks has finally started to act like one.

With the latest sprint in the indexes to all-time highs, the action is belatedly, but unmistakably, starting to follow the bulls’ old offensive playbook. While plenty of Americans remain unmoved to return to a stock market that has subjected them to two devastating collapses in 13 years, those who are in the market are increasingly displaying the kind of confident, risk-seeking behavior that typically accompanies strong uptrends.
This is evident in heavy borrowing in investment accounts, a surge in trading volume of penny stocks, the ferocious surge in heavily shorted stocks, eager bidding for initial stock offerings, the lionizing of anointed bullish gurus and a rediscovered habit to buy minor dips.
Ample anxiety remains in the broader public about the legitimacy of Wall Street’s celebration amid a trudging economic advance, even if the pervasive label of “most hated rally in history” has outlasted its original accuracy. And the official brokerage-house handicappers are still rather reserved. Few are predicting much upside for the Standard & Poor’s 500 atop the 13% year-to-date gain, and the highest strategist target is only 7% above the current level.
No doubt the Federal Reserve's aggressive and open-ended injection of liquidity is helping to support asset values and confidence, even if the common line that the rally is "all about the Fed" is suspect. Maybe, just maybe, investors are like the child learning to ride a bike, believing a parent is still steadying them from behind even as they pedal away freely.
They want to believe
The markers of revived animal spirits, of greed shouldering aside fear, generally reflect the kinds of activity one would expect in a market methodically clicking to new highs -- eddies of speculative froth have gathered here and there. The market is getting stretched, with the highest proportion of stocks making new 52-week highs in 25 years Wednesday.
Yet the posture of more investors has not quite crossed the line into recklessness, and, for the moment, warrants just the raising of an eyebrow rather than a glare of deep suspicion. Here are some areas to monitor to determine when investors’ justified confidence morphs to dangerous arrogance:
* Margin debt in brokerage accounts as of March was $380 billion, around the level reached at prior major stock-market peaks in 2000 and 2007. Netting out cash in those accounts, investors were in the hole by some $92 billion, less than in 2000 but slightly more than the 2007 peak.
In one sense, it’s intuitive that debt levels would roughly track underlying stock values. It’s also unclear how one should adjust these borrowing totals and cash holdings for the fact that interest rates are at record lows, making debt-service cheap and cash an unattractive asset. Lenders have become aggressive, pitching cheap loans against securities accounts via Twitter.
As margin debt keeps step with rising stock values, it represents a self-reinforcing cycle of confidence, or, as financial blogger Andrew Kassen puts it, an “emerging bubble in certainty." In other words, it’s something to watch cautiously, a positive until it runs wild or reverses.
* Volume traded in speculative penny stocks, as reported by Nasdaq, was up 200% in the six months through April, an extreme acceleration by historical standards. Yet Jason Goepfert of www.SentimenTrader.com, who tracks investor-psychology indicators, notes that even with this rise the absolute level of stock flipping of this sort is below peak levels of recent years.
He categorizes it, along with other attitudinal measures, as a reason for caution, but not extreme worry -- yet. Another such clue is the ratio of assets in bullish Rydex market-timing mutual funds to the amount in bearish funds, which is approaching the 5:1 level that has preceded market tops in recent years, but isn’t yet there. The stock-bond ratio, a gauge of stocks' recent performance relative to Treasuries, is now stretched essentially to its 50-year upper limit.
An unusually sharp rebound in small-investor optimism, as surveyed by the American Association of Individual Investors, likewise is best read as more a reflection of the evident strength in stocks than as a foreboding outbreak of exuberance. Context matters when evaluating people’s emotional display. Shouting and high-fiving everyone in sight is standard behavior at the stadium when the home team wins; the same behavior on a dark, quiet sidewalk implies an unhinged personality.
* U.S. companies executing initial stock offerings reached $16.8 billion year to date, and last week saw the greatest new-issue haul since late 2007. Many deals were driven by private-equity funds harvesting gains from buyouts done in recent years. But their reception has been strong, with eager investors looking for new ideas and operating in a market where buybacks have been slurping more shares out of the market than new companies have been putting in.
Data firm Dealogic reports that the after-market performance has been upbeat, with a smaller percentage of deals declining on the first day of trading than was the rule even in the bull-market years of 2005-2007.
* The bum-rush on short sellers has again become a favored game, with heavily-shorted story stocks surging in excess of the broad market. Tesla Motors Inc. (TSLA), the thinly profitable cult maker of electric cars, and Netflix Inc. (NFLX) are the poster children, each rising more than 130% year to date.
Still, not all shorts have been scared away, maintaining a helpful reservoir of worry that the market can continue feeding from. Short interest has declined in 2013, but not to the lows of the past few years, when stock prices were lower.
* The market’s willingness to canonize the positive investment outlook offered by emerging financial celebrities such as David Tepper of hedge fund Appaloosa Management is certainly reminiscent of past ebullient markets.
The “Tepper Rally,” so called after he laid out a win-win case for stocks in 2009 based on Federal Reserve support for risk assets and improving economic conditions, has been reinforced in his subsequent TV appearances, even though his analysis is unremarkable in most respects. The “celebritization” of other hedge-fund chiefs such as Carl Icahn, Daniel Loeb, David Einhorn and others shows a suggestible investment audience craving can’t-miss ideas.
Examinations, not emotions
Set against all these indicators of speculative sap rising, though, is the unusually well-behaved, low-drama cadence of this year’s stock-market climb, reminiscent in many respects of the tireless rally of 1995.
Truly bubbly markets are driven by emotional, under-informed investors, with more unhelpful encouragement from the Wall Street sales machine.
As it stands, analysts are rather sober. Schaeffer’s Investment Research points out that as stocks have gained some 30% since late 2011, the percentage of all analyst stock ratings that were buys has ebbed from 55% to 49%. Not exactly evidence of worrisome euphoria.

Nothing says this rally has to roll on long enough for this bull-market swagger to escalate into all-out risk binge on fabulously overvalued stocks. But if the market is destined to enter the sort of full overshoot to the upside that would encourage such a public frenzy, we’re not quite there yet.