“Unselfish acts are the real miracles out of which all the reported miracles grow.”

– Ralph Waldo Emerson

Have you watched any of the great Netflix TV series House of Cards? Set in present-day Washington, D.C., House of Cards is the story of Frank Underwood (Kevin Spacey), a Democrat from South Carolina’s 5th congressional district and House majority whip who, after being passed over for an appointment as Secretary of State, initiates an elaborate plan to get himself into a position of power. The series is primarily about ruthless pragmatism, manipulation, power, and doing bad things for the greater good.

Kevin Spacey is simply amazing. I love it when he looks into the camera and speaks directly to us, revealing who’s paying off whom or how much pork is needed to secure a particular vote. I can’t help but wonder how close this is to today’s reality given last week’s passing of legislation that puts banks’ future derivatives losses squarely on your back and mine (the U.S. taxpayer).

With this win in hand, the few big banks with the greatest derivative exposures step toward 2015 with their own version of stop-loss protection more securely in place. Washington has a culture of deal making and demands from third-party interests. I can hear my old man whispering in my ear, “Watch what they do and not what they say.” I include some great data on just how much derivative exposure exists, how it compares to where we were in 2008, and how it compares to the amount of money in stocks, bonds, and money market funds today.

Imagine Kevin Spacy looking into the camera telling us, “Sneaked it in when you were sleeping” as he slowly turns away with a smug smile. Really, if you haven’t watched the series, it is outstanding. Check it out.

I wrote a piece for Forbes this week titled “Looking Ahead to the Year That Interest Rates Will Finally Rise”.

Read the rest of the report…


Steve Blumenthal

Founder & CEO CMG


Stephen Blumenthal founded CMG in 1992. He is CEO, Chief Investment Officer and portfolio manager at Capital Management Group, Inc. where he manages equity and tactical investment portfolios. He is a frequent speaker and writer on investment strategies and has been featured in various media sources including the Wall Street Journal, Barron’s, Investor’s Business Daily, Pensions & Investments Magazine, Investment News, RIA Biz and Smart Money. He has been a guest on CNBC, Wall Street Journal Live, and Bloomberg. Mr. Blumenthal is a frequent speaker at industry conferences (NAPFA, IMCA, Index Universe, Opal Financial Group Indexing & ETF Summit and NAAIM) and is author of CMG’s popular investment research commentary. With 30 years of investment management and industry experience, prior to founding CMG, Mr. Blumenthal worked for Merrill Lynch Institutional, Merrill Lynch Retail and Prudential Securities.

Mr. Blumenthal graduated with a Bachelor of Science degree in Accounting from Pennsylvania State University. He is married, has three children and is active in his community coaching youth soccer.