The “Thin” Liquidity in the Sovereign Bond Market in recent weeks and the ensuing Panic, are only two of Several Harbingers of The Coming Crisis.
Below we summarize here Key Crisis Signals, Triggers and consequent Opportunities.
“By suppressing Rates, The Fed has borrowed Growth and Returns from the Future.”
Mohammed el Erian, 5/21/15 (Former PIMCO CEO)
“‘Now we’ve had the weakest recovery in post-war history and what has happened?
The Fed has simply reflated the bubble to an even more gigantic proportion.’
Unpayable Debts in the U.S.A., Eurozone, China & Japan virtually guarantee Mega-Moves in Key Sectors are coming.
“Financial assets now represent over 82% of the net worth of both households and US non-financial corporations (data: Federal Reserve Z.1 Flow of Funds). Except for periods where total net worth had itself retreated (for example, 2008-2010), the concentration of private net worth on financial assets, rather than real assets or productive capital, has reached the highest extreme in history in recent years. In our view, this is just temporarily overvalued paper masquerading as something durable.
The previous extreme (again, outside of periods where net worth itself had retreated) was, not surprisingly immediately prior to The Tech Wreck.
Yes, indeed “Temporarily Overvalued Paper” accurately describes many “Markets.” And that which is Overvalued does not stay overvalued! Thus Mega-Moves are Impending and those who are prepared will Profit, and those unprepared will Suffer.
The “Devaluation Currency Wars” are in High Gear.
Well, this Currency War has Many Consequences, many as yet unseen, some unintended. And they spell Profit for the Prepared and Disaster for the Unprepared, which is why Deepcaster has already begun recommending positioning to prepare.
But this War is a Zero Sum Game. So how does it end?
All of the below are Bearish Indicators reflected in the Technicals.
Specifically, for example, the Jaws of Death and seven Hindenburg Omen observations since January 2015 indicate a Bearish Outlook for Equities going forward.
Indeed, Deepcaster’s evaluation of the Fundamentals, Technical and Interventionals led us to forecast the 2008 Market Crash with profitable results.
In sum, we have increasing Economic Deflation which has been created in large part generated by years of Fed-led Central Bank Monetary Inflation:
Not since The Great Depression have there been such Formidable Challenges to those who wish to Profit and Protect their Wealth.
If it were not clear before 2008, the Fall, 2008 Markets Crash, Credit Freeze, and Financial Institutions Collapse and subsequent unprecedented Central Bank Interventions, and ongoing Economic Difficulties all make it clear, that we have entered into a New High Risk Era in the Economy and Markets.
And the “Mixed” (at best) Fundamentals, and Key Technicals (e.g., repeated recent Hindenberg Omens) confirm that.
“When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over.” –Bill Gross, Founder & former CEO, PIMCO
We focus here on Key Profit Opportunities, Threats and possible Catastrophes for 2015, few, if any, of which you are likely to hear about from the Main Stream Media (MSM), before they occur because the MSM are beholden to the Powers-that-Be.
Investors are getting mixed Messages about whether we are facing an Inflationary or Deflationary Future.
Answering that question correctly is important both to profitability and protecting wealth.
Major Bankers and some Government Officials Claim they are worried about Deflation.
But rising costs for Health Care, Food and, until recently, Energy, indicate we face an inflationary, and perhaps even a hyperinflationary, future.
Which is it? Inflation or Deflation?
Major Geopolitical, Economic and Financial Events will occur beginning this November.
And certain of these will generate Mega-Moves in Key Sectors.
And Legendary Investor Julian Robertson has correctly identified one of them — The Great Bubble Event which will end in “a very bad way”.
Indeed, the Jaws of Death and Hindenberg Omen Technical Signals are forecasting these Events and their impact on the Markets.
These events will cause some Key Markets to spike much Higher and others Much Lower. In this Article, Deepcaster identifies Key likely events and forecasts likely consequences for Markets and the Economy.
It is important to Tune Out the Mainstream Media Hype and Spin (or Gloom and Doom, as the Case may be) and look at the Real Fundamentals.
So consider here an overview of the prospects for Four Essential Resources: Potable Water, Gold, Silver and Crude Oil.
There is a Delusion, somewhat widely accepted, that if an Essential Resource is in Short Supply, the Supply Problem can be solved if one applies enough Appropriate Technology and Capital to it.
Realistically, though, for certain Essential Resources, supply shortages, (i.e., Demand “Longages” ) can be Managed, to a point. Yes. Solved, No.
This Reality provides both an Opportunity and a Threat — a Profit Opportunity for those who are aware of it, and a Threat for those who are not.
European Central Bank Head, Mario Draghi recently signaled Eurozone QE is Dead Ahead.
And the World has yet to deal with the Consequences of past and ongoing Fed, Japanese, and Chinese Monetary Policies. The coming Consequences of Central Bank QE and other Policies are reflected in the following Major Investors’ Actions and Analysts recommendations.
“Bankers’ parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse. Wealth is no longer created; it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives and the elite societal stratum….” –Jim Rickards, June 2014
Deepcaster, like Jim Sinclair, believe it likely that Gold will launch into a New Record-Setting Bull Phase this Summer. See “30 Reasons the Bear Phase in Gold Ends This Summer”.
Deepcaster’s word to the wise: Get Physical.
There are Four Fortress Assets Investors should hold in Today’s environment of increasing Geopolitical Economic, Financial and Market Risk.
Owning some of all four is very important. Indeed, and all have Unparalleled Profit and Wealth Protection Potential in today’s increasingly risky environment.
Fortress Assets are those which offer considerable Profit Potential and some considerable degree of protection from Inflation, Hyperinflation or Deflation.
Bogus Official Numbers and Fed QE (et al) policies have artificially inflated Equities Prices – they are a “Mirage” as Carl Icahn says.
And they have greatly distorted other Markets’ Prices as well. Indeed, if one looks at the Real Numbers, one realizes the Economy is not recovering and is in fact weakening. And on that basis one can reasonably conclude the S&P is 65% overvalued.
But the foregoing Realities mean that Nasty Market Surprises (and thus Opportunities) Await Investors, and sooner rather than later.
The Currency War, Stage 2, is already Manifest in another Way. Consider that the Economic/Financial Crises of the early 1930s were characterized by Bank Runs. We are already seeing such runs this year in Crimea, Ukraine and Rural China.
Defaults in China have left Depositors understandably nervous. Deepcaster’s Forecast: there will be more Bank Runs and they will spread, eventually to the Eurozone and U.S.A. Physical Gold and Silver and Tangible Assets such as Energy and Agricultural Products will be the Investors’ Salvation.
Intensifying Currency Wars provide Opportunities and Threats for those who Track their Dynamic Effects on Key Markets.
“When the dollar collapse comes, it will happen in two ways: gradually then suddenly. That formula, famously used by Hemingway to describe how one goes bankrupt, is an apt description of critical state dynamics in complex systems. The gradual part is a snowflake disturbing a small patch of snow, while the sudden part is the avalanche. The snowflake is random yet the avalanche is inevitable. Both ideas are easy to grasp. What is difficult to grasp is the critical state of the system in which the random event occurs.”
Jim Rickards, Currency Wars
Major Fiat Currency Printers around the World are devaluing their currencies by “printing” ostensibly in order to bolster their economies.
But the consequences of The U.S. Fed’s QE for example, have been increasingly to artificially inflate financial Assets and enrich The Fed’s Mega-Bank Owners. It has not resulted in an improving U.S. Economy or Employment Picture.
But the Fed’s QE and related forms of Money Printing have unleashed Serious and Impending Financial and Economic Threats.
Will The Cartel price suppressors win out when it comes to Precious Metals and other Tangible Assets prices, or will increasingly Bullish fundamentals propel them further up?
Whatever the answer, the mounting evidence is that the Fed-led Cartel is knowingly creating conditions designed to force the U.S (and, indeed, the entire industrialized world), to eventually choose between a Hyperinflationary Depression and the Cartel‘s ominous “End Game.”
As Jim Rogers and David Stockman have recently pointed out, Fed Policy is impelling us to such a Climax.
Do you own any Bonds? Does your Retirement Account hold any Bonds? Better check. And in particular check the Yield.
Consider the recent fate of Bonds issued in Argentina or Turkey. And consider what the Real Inflation Rate is in Emerging Market Countries.
The Deception/Delusion (whichever one prefers) is not only about the Real Rate of Inflation. What about “Bail-Ins” and “Super Priority” Rights of Mega-Financial Institutions in the event of another Financial Crisis?
And does the country of issuance have Capital Controls? Is the after-tax Yield really sufficient to compensate for the Real Rate of inflation and Risk to Principal?
If Answers to any of these Questions Disturb you, just realize where a large Part of the Blame lies. The Fed and other Central Bankers have and are devaluing money and interest Rates to the point where Money can be borrowed at very low rates.
Knowing what “ain’t so” is increasingly important for Investors and Traders Going Forward.
Indeed, going into 2014 perhaps the most important Realization to be made is that certain Grand Investment & Trading Strategies and Assumptions which were profitable in the past (e.g., in 2013) may well not be profitable in 2014 and beyond.
For one, the ongoing Currency Wars – the Competitive Devaluation (i.e., loss of purchasing power) of Fiat Currencies by Central Banks – will be an increasingly important factor, as Warren Buffet tacitly acknowledges. The Assumption that Fiat Currencies are a Reliable “Store” of wealth will be increasingly questionable.
We know that there is precedent for Mega-Bank “Bail-ins” (i.e. confiscation) of Depository Accounts (cf. Cyprus and Poland) and Super-priority payments to Mega-Banks, (cf. MFGlobal) in the event of another Financial Crisis.
And now we hear, in the SOTU no less, that Americans are invited to stash their wealth (such as they have left) in MYRAs, which presumably will hold Treasury Securities.
Securities which depreciate as inflation increases.
And Investors have to cope with other “incoming” as well including Real Inflation of about 9%, & Real Unemployment of 23%.
And also we have suppression of P.M. prices. But there is a strategy for Surmounting all this Incoming and Profiting. At best American Holders of MYRA are likely to Suffer loss from inflation, and at worse loss of principal.
But arguably the more serious Incoming Threat is the Ongoing Destruction of the Purchasing Power of the $US by the private for-profit US Fed’s policies.
Jim Sinclair is correct to claim that “U.S. Major markets will Implode, if Emerging Markets Implode.”
Indeed, our Mid and Long Term Forecasts for a Major Market Crash in 2014 have been thus Far spot-on Correct.
Last week’s 600 Point drop in the Dow is the First Major Harbinger of The Great Crash we have been forecasting for Months.
We are just seeing The Beginning of The Beginning.