Business

Earlier this week, we told a fascinating story about an unprecedented, multi-year smuggling ring involving Turkey, Iran, and Dubai (as well as China, Russia and countless other nations) which saw corruption reaching to the very top of the political and financial establishment: from president Erdogan in Turkey, to one of Turkey's richest people, Iran-born Riza Sarraf, to Sheikh Sultan Bin Khalifa Al Nahyan, the son of the ruler of Abu Dhabi and one of the world's richest people. The smuggled object in question was gold, billions of dollars worth of gold.

Authored by Eric Peters (h/t The Burning Platform),

When most people can’t afford to buy things outright, the cost of money – interest – becomes even more important than the cost of the things themselves.

While the traditional Barrons' flock of sellside penguins advisors is out and about, for the second year in a row predicting that, after being wrong on its consensus forecast for 2015 of double digit growth in the S&P500, the broader market will rise 200 points to 2220 by December 31, 2016...

... we are more inclined to go with the contrarian call by Prerequisite Capital Management which believes that Treasurys (deflation), not stocks (inflation) are the way to go in 2016.

Here are their arguments why.

Via ConvergEx's Nick Colas,

Our quarterly survey of “Off the Grid” economic indicators finds that the U.S. economy is still growing, but the pace seems to be slowing from Q3 2015.

 

On the plus side, used car prices remain robust and dealer inventories of new cars are in good shape.  Americans are driving more, with the growth rate for miles driven (and gas consumed) running at levels not seen in +10 years.  Lastly, workers are still quitting their jobs at a healthy clip.

 

Seven years after ZIRP (then NIRP) was launched and central banks grew their balance sheets by $13 trillion, in the process inflating the biggest bubble the world has ever seen, sending risk prices to record highs and trillions in government debt to record negative yields, first the Fed admitted QE was a mistake, and now the investment banks - especially those who were bailed out and were the biggest beneficiaries of QE such as Citigroup - admit central bank quantitative easing failed.