Posts Tagged ‘monetary system’

A DEFLATIONARY RED FLAG IN THE $U.S. DOLLAR

A DEFLATIONARY RED FLAG IN THE $U.S. DOLLAR

Courtesy of The Pragmatic Capitalist 

Red Flag against Blue Sky

If the chart below doesn’t grab your attention then few things will. In my opinion, the performance of the dollar is the surest evidence of the kind of environment we’re currently in. The surging dollar is a clear sign that inflation is not the concern of global investors. This is almost a sure sign that deflation is once again gripping the global economy and should be setting off red flags for equity investors around the world.

The recent action in the dollar is eerily reminiscent of the peak worries in the credit crisis when deflation appeared to be taking a death grip on the global economy and demand for dollars was extremely high. The recent 16% rally in the dollar is a sign that investors are once again worried about the continuing problem of debt around the world and they’re reaching for the safety of the world’s reserve currency – the dollar. As asset prices decline and bond yields collapse this is a clear sign that inflation is not the near-term concern, but rather that the debt based deflationary trends continue to dominate global economic trends.

This is exactly the kind of market action we saw leading up to Lehman Brothers. In 2008 the dollar rallied as signs of deflation began to sprout up. This was an instant red flag for anyone who understood the deflationary forces at work (and a total surprise for the inflationistas). The dollar ultimately rallied 26% from peak to trough. Coincidentally, the dollar had rallied 16% from trough to peak just prior to the Lehman collapse when the dollar surge accelerated.

USD2 A DEFLATIONARY RED FLAG IN THE $U.S. DOLLAR

 

Of course, the inflationistas will argue that gold is rising in anticipation of inflation. In my opinion, this is incorrect. First of all, if inflation were a major global concern the Goldman Sachs Commodity Index wouldn’t be almost 65% off its all-time high and just 33% above its 2009 low. Second, and perhaps most importantly, bond yields around the globe wouldn’t be plummeting if there were rampant inflationary fears. For a much more detailed analysis on the reasons why inflation is not a near-term concern please see here.

Oriental dragon mask

As for the gold rally, I think it’s clear gold is rallying in anticipation of its potential to become a future reserve currency. The…
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Forecast 2010 – 2015: An Introduction

I’m really looking forward to Jesse’s next installment. – Ilene

Forecast 2010 – 2015: An Introduction

Wairarapa International Balloon Festival

Courtesy of Jesse’s Café Américain

I am in the midst of preparing a forecast for the next five to ten years for the United States economy, and by extension the world because of the intertwining effects of the dollar reserve currency and US consumption in the global economy. And of course the US position as the world’s sole superpower.

Before I do that, I thought it might be useful to see a recap of my last five year forecast, to set the playing field as it were, as a sort of an introduction. The next forecast will be similar in format and style, but may be a little more complex, because the US, and the world, are at a critical crossroads in history.

The greatest struggle in writing this sort of thing is to keep it brief, to prevent it expanding into a lengthy treatise that examines too many particulars, too many possibilities. Forecasters often succumb to the temptation to throw out many specific predictions and possibilities, in the hopes of ‘hits’ that will be remembered, with misses forgotten, without giving sufficient weight to the probabilities. In addition, clarity and consciences are always the challenge in writing non-fiction regarding complex subjects.

Please keep in mind that this forecast was published on my old website at the beginning of 2005, when optimism was running high, the maestro was still on his throne, black swans still an uncommon topic, and the US was in a fresh bull market in stocks with a growing housing bubble that very few would admit, and many would vehemently deny. This forecast is being written in darker hours, when some of the horsemen have already been unleashed.

I have edited out extraneous contemporary detail, and most of the charts which are dated, except for one. I edited out some grammatical errors and awkward phrasing. The timeframe has been ‘compartmentalized’ to five years, from a more open-ended original, because at the time I wrote in 2005 I did not imagine I would still be at this blogging effort five years later. I have also renumbered the footnotes and eliminated several for the sake of simplicity and relevance. 

`Humpty Dumpty sat on a wall:
Humpty Dumpty had a


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The Sound of One Hand Clapping – What Deflationists May Be Missing

I meant to post this article by Chris Martenson a few days ago, and now Mish has responded to it directly, so I’ll post this and then Mish’s one hand clapping analysis next.  – Ilene

The Sound of One Hand Clapping – What Deflationists May Be Missing

Courtesy of Chris Martenson

This is a piece that I wrote in response to a request for a guest post over at ZeroHedge. It ran there yesterday garnering some nice attention and a diverse range of comments beneath.

Based on some of those comments, this article represents nothing more than my attempt to find an explanation that matches the data.

My central thesis to this crisis, developed a few years before it even hit, is that the economic troubles are the symptoms, while the money system itself is the cause.

My views on this are expressed in the opening of an article that I initially penned in 2006 but updated in 2008:

Within the next twenty years, the most profound changes in all of economic history will sweep the globe. The economic chaos and turbulence we are now experiencing are merely the opening salvos in what will prove to be a long, disruptive period of adjustment. Our choices now are to either evolve a new economic model that is compatible with limited physical resources, or to risk a catastrophic failure of our monetary system, and with it the basis for civilization as we know it today.

In order to understand why, we must start at the beginning. While it was operating well, our monetary system was a great system, one that fostered incredible technological innovation and advances in standards of living, two characteristics that I fervently wish to continue. But every system has its pros and its cons, and our monetary system has a doozy of a flaw.

It is this: Our monetary system must continually expand, forever.

The article above provides the big-picture backdrop that drives my long-term vision and thinking.  I raise it now so that you’ll understand that I principally view the economic world through a monetary lens.

The hot topic of the day is "Inflation or Deflation?" and the camps are firmly divided into groups of inflationistas and deflationistas.  When asked which camp I am in, I reply "Yes."  Some would say that puts me in the…
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WARNING: Deflationary Collapse Dead Ahead

WARNING: Deflationary Collapse Dead Ahead


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Phil's Stock World's Weekly Webinar - March 03, 2021

 

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Major Topics:
 

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ValueWalk

These Are The 10 Largest Individual Landholders

By Aman Jain. Originally published at ValueWalk.

Land is among the most valuable assets and is also considered a safe asset. However, a significant portion of total inhabitable land (36.8 billion acres) belongs to people for whom investment is not the primary objective. These people are mostly leaders of their countries. If you want to know more about them, then detailed below are the ten largest individual landholders.

Q4 2020 hedge fund letters, conferences and more

10 Largest Individual Landholders

Our list of the ten largest individual landholders in the world is based on data from ...



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Kimble Charting Solutions

Will Bond Yields Fastest Rise In 50 Years Rattle Markets?

Courtesy of Chris Kimble

The waterfall decline of bond yields (and interest rates) has been met with an equally steep rally.

In fact, the 10-Year US Treasury bond yield is up 131% in 45 weeks, making it the biggest rally in 50 years! See the chart below.

Earlier today we asked if the 40-Year Bond Bull Market Is Over? And we highlighted how bonds and yields are facing an important test right now.

Will the record rise in bond yields continue? And will bond pric...



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Zero Hedge

Thousands Of Quakes Rock Iceland As Volcanic Eruption Could Be Brewing 

Courtesy of ZeroHedge View original post here.

Over the past week, there have been swarms of earthquakes on the Reyjanes Peninsula in Iceland. Most of the quakes are felt around Keilir volcano, just 20 miles south of the capital. Officials are warning similar quake activity has previously preceded volcanic eruptions.

According to the Icelandic Meteorological Office, thousands of quakes have hit the southwestern region of Reykjanes over the past week. The largest earthquake, a magnitude 5.6 on the Richter s...



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Politics

Why repressive Saudi Arabia remains a US ally

 

Why repressive Saudi Arabia remains a US ally

A demonstrator dressed as Saudi Arabian Crown Prince Mohammed bin Salman with blood on his hands protests outside the Saudi Embassy in Washington, D.C., on Oct. 8, 2018. Jim Watson/AFP via Getty Images

Courtesy of Jeffrey Fields, USC Dornsife College of Letters, Arts and Sciences

Saudi Crown Prince Mohammad bin Salman “approved an operation … to capture or kill Saudi journalist Jamal Khashoggi,” according to a...



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Biotech/COVID-19

COVID-19 revealed how sick the US health care delivery system really is

 

COVID-19 revealed how sick the US health care delivery system really is

Many U.S. hospitals and clinics are behind when it comes to sharing information. Teera Konakan/Moment via Getty Images

Courtesy of Elizabeth A. Regan, University of South Carolina

If you got the COVID-19 shot, you likely received a little paper card that shows you’ve been vaccinated. Make sure you keep that card in a safe place. There is no coordinated way to share information about who has been vaccinated and who has not.

...

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Mapping The Market

Which Governments Ordered Johnson & Johnson's Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, ...



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Digital Currencies

Crypto - It Is Different This Time

 

Crypto – It Is Different This Time

Courtesy of Howard Lindzon

?I have been astonished as you know by the growth of crypto.

I remember back in 2017 when I noticed that Stocktwits message volume on Bitcoin ($BTC.X) surpassed that of $SPY. I knew Bitcoin was here to stay and Bitcoin went on to $19,000 before heading into its bear market.

Today Bitcoin is near $50,000.

Back in November of 2020, something new started to happen on Stocktwits with respect to crypto.

After the close on Friday until the open of the futures on Sunday, all Stocktwits trending tickers turned crypto. The weekend messages on Stocktwits have increased 400 percent.

That has continued each weekend...



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Chart School

The Fastest Money

Courtesy of Read the Ticker

The fast money happens near the end of the long trend.

Securities which attract a popular following by both the public and professionals investors tend to repeat the same sentiment over their bull phase. The chart below is the map of said sentiment.
 


 

Video on the subject.


 

Charts in the video



 



 



Changes in the world is the source of all market moves, to ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.