Financial Sense Newshour: Experts

Jim is pleased to welcome James Koutoulas of Typhon Capital Management. James has been a leading advocate in fighting to recover $1 billion for customers from the MF Global bankruptcy. James tells Jim that the bankruptcy system is broken, and the regulators are outmanned, out-lobbied and afraid of large financial entities. Furthermore, the media is woefully ignorant on financial matters and lacks true investigative journalists. James notes that by its lack of action, the government has stated, loud and clear, that it will not prosecute “well-connected” criminals.

Jim welcomes back Brian Pretti CFA, Managing Editor at ContraryInvestor.com. Brian and Jim discuss the Fed’s current policy of pumping trillions of dollars into the markets. There are legitimate reasons to be pessimistic, but Brian believes you can’t sit on the sidelines when the Fed is aggressively printing money. He sees stocks as not cheap, but not expensive either. They also discuss the Sequester “crisis” which is seen as a phony and manufactured political exercise.

Jim is pleased to welcome back Joseph Saluzzi, Co-Founder of Themis Trading LLC. As a vocal critic of the current High Frequency Trading structure, Joe discusses how the regulators are totally outmatched by the highly complex HFT firms on Wall Street. Joe mentions that there are “mini flash crashes” every day in individual stocks in the exchanges. He also adds that the addition of so many exchanges today now allow for arbitrage opportunities that disadvantage the individual investor. Joe offers a few simple fixes: 1) Take away the profit incentive of the exchanges, 2) Ban payment for order-flow and 3) Re-institute the Up-Tick Rule. Joe adds that these fixes are not likely to take place until investors contact their Congresspersons, in large numbers, demanding change. Otherwise the politicians will continue to answer to industry lobbyists.

Jim welcomes back Gail Tverberg to speak on energy, and they discuss her views on limits to oil supply limiting long-term economic growth. Gail believes the key issue is that global oil supply is not rising very quickly, no matter how much investment is made. Because of this “sinkhole” phenomenon, we are getting less and less back for every dollar invested; or declining energy return on energy invested. Gail argues that the ultimate impact for developed (OECD) countries will be a long-term contraction of their economies. The problem is that our current global financial system depends on long-term growth.