Posts Tagged ‘currency devaluation’

The Last Half

The Last Half 

Courtesy of John Mauldin at Thoughts from the Frontline 

Financial Order

The Last Half
But It’s More Than the Deficit 
Not Everyone Can Run a Surplus 
Pity the Greeks 
The Competitive Currency Devaluation Raceway 
Amsterdam, Malta, Zurich, Mallorca, Denmark, and London

There are a number of economic forces in play in today’s world, not all of them working in the same direction, which makes choosing policies particularly difficult. Today we finish what we started last week, the last half of the last chapter I have to write to get a rough draft of my forthcoming book, The End Game. (Right now, though, it appears this will actually be the third chapter.) We will start with a few paragraphs to help you remember where we were (or you can go to www.investorsinsight.com to read the first part of the chapter).

But first, I recorded two Conversations yesterday, with the CEOs of two biotech firms that are working on some of the most exciting new technologies I have come across. I found them very informative, and we will post them as soon as we get them transcribed.

For new readers, Conversations with John Mauldin is my one subscription service. While this letter will always be free, we have created a way for you to "listen in" on my conversations (or read the transcripts) with some of my friends, many of whom you will recognize and some whom you will want to know after you hear our conversations. Basically, I call one or two friends every now and then; and just as we do at dinner or at meetings, we talk about the issues of the day, back and forth, with give and take and friendly debate. I think you will find it enlightening and thought-provoking and a real contribution to your education as an investor. Plus, we throw in a series I do with Pat Cox of Breakthrough Technology Alert, where we interview some of the leading up-and-coming biotech companies; and I also do a Conversation with George Friedman of Stratfor 3-4 times a year. Quite a lot for the low price.

I recently recorded a Conversation with Mohamed El-Erian, CEO and co-CIO of PIMCO, who is one of the smartest human beings I know, as well as one of the nicest. As you can see,…
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Bob Janjuah: In an era of the destruction of fiat money: Euro to parity, Gold to $1500

Bob Janjuah: In an era of the destruction of fiat money: Euro to parity, Gold to $1500

handing bars of gold up a ladder

Courtesy of Edward Harrison at Credit Writedowns 

RBS’ Chief Market Strategist Bob Janjuah is one of the more bearish prognosticators in global finance.  He takes a fairly anti-fiat currency position and couches what he sees with the present financial crisis as the era of the destruction of fiat money. This is bearish for bonds and bullish for gold.

Let’s put Janjuah in the inflation camp of the inflation-deflation debate (I am in the deflation camp along with the likes of David Rosenberg). Now I haven’t seen Janjuah making hyperbolic claims of hyperinflation which I don’t find particularly credible. However, he does underline the weaknesses in fiat currency and the seduction of central banks to print money as a remedy for economic woe. These are credible arguments that have investment implications in the face of the euro-zone crisis.

His basic premise – with which I agree – is that this financial crisis has been mitigated by socializing the private sector losses of 2008 onto the public sector. Unfortunately, the losses are of the magnitude that what was credit revulsion in the financial sector has now become sovereign debt revulsion in 2010. The trigger for this shift was the Dubai crisis in November 2009 (see New Citigroup maven Buiter warns of sovereign debt delusion).

Therefore, in the first instance, there is the German-Greek tension within the eurozone. The Greeks want a much weaker euro in order to alleviate economic distress associated with their sovereign debt crisis (see "Twenty-first century competitive currency devaluations"). The Germans want a strong euro for historic and cultural reasons.  The Greeks are winning this battle right now as the Euro is plummeting. He expects the Euro to eventually hit US dollar parity as a result.

He also believes the U.S. Federal reserve wants inflation, something we laid out here last year in "Inflation: The strategy that dare not state its name." Long story short, Janjuah believes this is bullish for gold and he would not be surprised to see gold at $1500 before year end. Given his euro bearish call that also means gold at 1500 euros per ounce – a fall of over one third from present levels.

I would also point out that he believes the S&P…
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The Trend in the Freddie Mac US Housing Price Index

The Trend in the Freddie Mac US Housing Price Index

Courtesy of Jesse’s Café Américain

I suspect that the US Treasury and the Fed will continue to monetize the decline in housing prices and the mortgage market, such that we may see an inflation that this trend is never realized in nominal values. Ultimately, the government may bury most of the losses in a currency devaluation.

US Housing: Four More Years to Fall – Michael White

"The exhaustive Freddie Mac price index fell 2% nationwide in the 3rd quarter and analysis of its data predicts prices will continue to fall for the next four years.

While Freddie announced Tuesday that its purchase-only index has gained for the past two quarters, the “Classic Series” of the Conventional Mortgage Home Price Index, which includes refinance appraisals as well as purchase values, has fallen 9% from the high in June 2007 and 3.8% for this year.

The projections say homeowners have lost only $1 for every $3 they can expect to lose in the end.

The trends show values will fall for four years through September 2013. Readers should take this estimate as an educated guess. The estimate may have greater relevance than forecasts described in mainstream-media headlines which typically fail to place new data within a long-term trend…"

 


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The Speculative Bubble in Equities and the Case for Deflation, Stagflation and Implosion

The Speculative Bubble in Equities and the Case for Deflation, Stagflation and Implosion

Courtesy of Jesse’s Café Américain

As part of their program of ‘quantitative easing’ which is another name for currency devaluation through extraordinary expansion of the monetary base, the Fed has very obviously created an inflationary bubble in the US equity market.


 

Why has this happened? Because with a monetary expansion intended to help cure an credit bubble crisis that is not accompanied by significant financial market reform, systemic rebalancing, and government programs to cure and correct past abuses of the productive economy through financial engineering, the hot money given by the Fed and Treasury to the banking system will NOT flow into the real economy, but instead will seek high beta returns in financial assets.

Why lend to the real economy when one can achieve guaranteed returns from the Fed, and much greater returns in the speculative markets if one has the right ‘connections?’


 

The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people.

Deflation

By far this presents the most compelling case for a deflationary episode. As the money that is created flows into financial assets, it is ‘taxed’ by Wall Street which takes a disproportionately large share in the form of fees and bonuses, and what are likely to be extra-legal trading profits.

If the monetary stimulus is subsequently dissipated as the asset bubble collapses, except that which remains in the hands of the few, it leaves the real economy in a relatively poorer condition to produce real savings and wealth than it had been before. This is because the outsized financial sector continues to sap the vitality from the productive economy, to drag it down, to drain it of needed attention and policy focus.

At the heart of it, quantitative easing that is not part of an overall program to reform, regulate, and renew the system to change and correct the elements that caused the crisis in the first place, is nothing more than a Ponzi scheme. The optimal time to reform the system was with the collapse of…
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Phil's Favorites

The World's Tech Giants, Ranked by Brand Value

 

The World’s Tech Giants, Ranked by Brand Value

Courtesy of Theras A.G. Wood, Visual Capitalist

 

The World’s Tech Giants, Ranked by Brand Value

The pandemic has businesses everywhere on the ropes, with many firms filing for bankruptcy since lockdowns began. Despite the uncertainty, tech giants and major digital retail brands are still thri...



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Zero Hedge

The Origins Of The Dollar's Value

Courtesy of ZeroHedge View original post here.

Authored by Frank Shostak via The Mises Institute,

Why does the dollar bill in one's pocket have value? The value of money is established, according to some experts, because the government in power says so. For some commentators the value of money is on account of social convention. What this implies is that money has value because it is accepted. 

And why is it accepted? ...because it is accepted! Obviously this is not a good explanation of why money has value.

...



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ValueWalk

No coronavirus relief package yet: How to create your own check

By Aman Jain. Originally published at ValueWalk.

With no decision yet on the next coronavirus stimulus package, many are starting to worry about paying their bills amid the coronavirus pandemic. Instead of waiting for the coronavirus relief package, there are a few ways that can help you create your own check without working extra hours.

Q2 2020 hedge fund letters, conferences and more

Lower dependence on coronavirus relief package

Democrats and Republicans are still far apart on the next coronavirus relief package. With the Senate scheduled to go on a month-long recess starting August 8,...



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Biotech/COVID-19

A second COVID-19 wave? Here are 6 lessons from the first

 

A second COVID-19 wave? Here are 6 lessons from the first

A man wearing a face mask to curb the spread of COVID-19 walks past a temporary Pride art installation in Vancouver on Aug. 3, 2020. THE CANADIAN PRESS/Darryl Dyck

Courtesy of Loren Falkenberg, University of Calgary and Jillian Walsh, University of York

As COVID-19 spread across the globe, governments looked to epidemiologists to slow its transmission.

Without a vaccine, large-scale testing capacity and sufficient critical-care beds, epidemiologists pushed...



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The Technical Traders

Melt-Up Continues While Metals Warn of Risks

Courtesy of Technical Traders

What a week for Metals and the markets, folks. The Transportation Index is up nearly 4% for the week.  The Dow Jones Industrial Average is up over 3% for the week.  Silver is up over 14% and reached a peak near $30 (over 23%).  Gold is up over 2.5% and trading above $2025 right now – with a peak price level near $2090.  If you were not paying attention this week, there were some really big moves taking place.

MELT-UP WITH HIGH RISKS – PAY ATTENTION

Overall, our research team believes the current “melt-up” price action is likely to continue as global investors continue to believe the US Fed will do everything possible to save the...



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Digital Currencies

Raoul Pal: "It May Not Be Worth Owning Any Asset Other Than Bitcoin"

Courtesy of ZeroHedge View original post here.

Authored by Turner Wright via CoinTelegraph.com,

Raoul Pal, CEO and founder of Real Vision, says Bitcoin may soon become his only asset for long-term investments.

image courtesy of CoinTelegraph ...



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Kimble Charting Solutions

Silver Headed Back To $50, Top Of The Cup & Handle Pattern?

Courtesy of Chris Kimble

Could Silver be creating a multi-decade bullish “Cup & Handle” pattern? Possible!

Did a retest of a handle breakout take place in March at (1), where Silver created one of the largest bullish reversals in decades? Possible!

Could Silver be creating a 40-year bullish pattern? Anything is possible! I humbly have to say share this; I’ve been in the business for 40-years and I haven’t seen anything like this.

Silver looks to have double topped back in 2011 at $50, which was the 1980 highs. After double topping, Silver ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Sunday, 29 March 2020, 07:00:37 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Silver Shorts Are In a Bind | Ted Butler youtu.be/qQc0AoJp-Q8



Date Found: Monday, 30 March 2020, 05:21:45 PM

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Comment: 5 Questions From You for Luke Gromen youtu.be/nVZD_fuxbQE


...

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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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