Tag Archives: federal reserve

The New Trends

The New Trends – 1st Quarter 2012.

Lets analyze what are we witnessing thus far.

1. In the previous quarter, consumer spending was still bid based on availability of cheap deals and deal based sites were the master of the day, it seems the deals sites in the current interim have now started to bleed, with lack of availability of any new loss making deals, which didn’t go well with merchants and with reluctance of merchants and retailers to go down this path, the deals have not only dried up, as they realize the very little value additions by deals based websites to their business.  Case in point, low numbers of groupon and various other deal sites.

The consumer is more cautious and will not pay for anything that he doesn’t need and involves in extensive research in an event he needs anything, be it a product or service. A tight market in general, with uncertain conditions, inability to determine tomorrow. Therefore save for a rainy day, mentality presets.

2. Volume has never been so bad in the markets, bearish bets have declined to almost a five year low, with the Vix breaking down below 15 yesterday, the same remains with retail sales figures across most markets, yet somehow government reports differ, on the dry bulk market, shipping is in a very bad shape.

The above two factors are sufficient to suggest that growth is missing in this stock market rally and till that is fixed, it hard to see how else will the situation turn around.

Dear Friends SHORT SUMMARY Markets are off a…

Dear Friends,
{SHORT SUMMARY:
Markets are off a few good handles in two days, SP almost 80. {Confirmation of a short term top}
SIGNAL: LARGER BEAR MOVE WILL BE UNDERWAY, ONCE PREVIOUS LOWS OF
OCTOBER 4th 2011 are taken out. {Evidence of a larger move is underway}

If the above scenario plays out, we should see a move of upto -25% from 2011 highs, within
the next few weeks, Mr Market needs a bailout!, Mr Government need a bailout. the race to global currency devaluation looks underway. If we stop printing, we deflate, if we continue printing, we stagflate.

In both scenario’s, the eventuality is deflation and depression. The great depression didn’t see market highs for the next decades, unemployment soared to 25%, and if scarcity of resources play out, a study of the great china famine, is a must. In short extreme periods of difficulty could be on the HORIZON.
How does one protect his exposure in such a scenario, is the short story of the day.}

Russia Markets got Halted, when this post was emailed out.

k.regards
dtrader

{DISCLAIMER: NOT FEAR MONGERING, this is simply a market rant.}

REDFLAG: Sequence of Events.

1) Rally of the Lows from 2008.
2) No New Highs, since last TOP.
3) Rallied Fueled by Cheap Liquidity, A Million in 2008 and before was a’lot of chips.
4) Jan 2011, First Breakdown occured in Asia, mainly India, China. {China is still 50% or more off its highs from 2007, INDIA will Follow}
5) The Western Markets breakdown started in July. Asia Broke even lower.
6) Europe Sovereign debt, Insurance premiums also soared.
7) Four weeks ago, China Defended its Banks, Insurance polices on Asian Bank Debt, premiums increased.
8) Response was, We will leverage 4-5 times on Money we will yet to raise by EUROPE.
9) Markets Rallied, almost {30% closer to previous HIGHS}, In a MONTH, {20% UPWARDS} in October 2011.
10) Yesterday MF Global Went bust, over Europe Debt, Counter Party RISK, play on. RISK OFF.

–> November has just started and may break October Lows, says so, the monthly charts.

As a technical analyst, I am watching some of my Monthly Charts as they Break Down, these tell me, “it will
take almost 13 months to come back, that’s the minimum, which means a single trend grinding
downwards for 13 months”, now couple that with the economic conditions we are facing.
It spells disaster.

When I put these together, it reminds me of 2000-2003 periods in Asia, bad times, Sars in Singapore,
Malaysia, India also wasn’t doing much better, real estate values were trading almost 70% lower
than their 1994 highs, in these countries.

This was the time to buy real estate in Asia, with or without money, deals were available.

Now what worries me? is Deflation, {IS the liquidity/debt DRIVEN binge of the last 30yrs, coming to
an end?} and what also worries me is Stagflation, a period where, there is zero or very low growth, high unemployment, coupled with High Inflation.

Stagflation may continue to persists, till we are able to figure out, how to bring back growth and make it sustainable, the constant flow of the fiat money pumped into the system, will only bring about stagflation.

Inflation will rear its head, due to scarcity and hoarding of resources in the face of deflating Fiat Money.

If we deflate it would be better, that means less credit, higher interest rates to squeeze the excess
out of the system and we can build up again later in the next 10-15 years.

There are two ways going forward, print more, pump more leveraged liquidity into the system,
and suffer stagflation, the BRICS may suffer from HYPERINFLATION, since they rather keep their US FX RESERVES high / FX low to remain export competitive, they too are also running FISCAL DEFICITS.{The race to global currency devaluation}.

Hence We need a bailout, the power of punch has to be greater than 2008, expansion of balance sheets
have to be far greater than before, to have an impact and in the face of what the FEDERAL RESERVE believes in, They believe, if they don’t continue printing and paying off previous coupons, then deflation will step in, and prolong the downturn. The result will be known in time, maybe with a few more revolutions and rewarding bad behavior and calling it moral hazard.

So if we deflate then the trade is stay long CASH! as all asset values will become cheaper.
If Stagflation, borrow at whatever better rates and pay back later in cheaper currency.

But as always all fiat currencies eventually go bust, this is not the first time, even for the dollar.

The Eventually is, we will deflate and we will suffer deflation, the excess printing will simply delay the process, which is that of a fiat system going bust, the fiat economies and their respective countries will suffer deep pain, maybe starting with the EURO, if greece steps out of it, then sooner or later the others will also want too, after all, why give in to one central government, the power to print your fiat stored token of value, after all this is the only tool known to the central bank governors, pump and dump. SEE–>: The Vatican wants it some other way.

We need growth, we need to find a way to provide good decent jobs to people, so that society
can progress to the next level of evolution. Unfortunately, the only way found by each country is
to plunder the natural resources of the land and transfer them into so called GDP. It will run out,
one day. We need to find innovative ways to bring back growth.

{Everyone’s house already has gone through the process of RADIO, Black and White TV, Color TV,
Washing Machine, Microwave, etc}, we need to find out, whats the next stage in this process, what
has to come next?, which takes out one of these prior processes and brings about the next better enhanced
product or service. There is the formula, if only it was so easy to find one as i RANT.. 🙂

In any case, be careful, stay in cash, gold target is near 1200-1300, Euro 1.25, DOW below 10K,
SP below 1000, INDIA below 4500 in the next two months and for the eventual lows could
be as far as 70% from the previous highs, just like the NASDAQ top at 5000, to a low of 1000+,
or KLCI as low into the 300’s, the bear bites deep.

It will be deep for the countries who are running huge budget deficits. Hence safety found in the
markets are in some currencies who have budget surpluses, case in point, the CHF and YEN. These guys
are in the sweet spot, they can devalue yet the markets want to remain there, where else can the excess
liquidity go, I think, its back to THIN AIR, its after all where it call came from.

The dollar may remain BID during this interim. Its up to Helicopter BEN who is having a meeting
the next two days. If he heads to his HELIPAD, we have to head towards the precious metals
physical trade and stack them up. Cash will get cheaper by the minute. Farm Land is the safe bet
in a Hyper-Inflation Scenario. We don’t have to care how much food costs, if we can have some
grown in our own land.

Besides the market, the last few months have been giving me sleepless nights, two nights ago,
I almost gave up my shorts, when reviewing the whole europe story over the weekend, staying short in
this environment is just a protective measure, if they print, markets should double again, and in any
case, we are long LIFE, so a hedge strategy is simply a protective measure to survive the crash.

Belated Halloween Greetings.

dtrader
INFLATE OR DEFLATE?
http://en.wikipedia.org/wiki/Stagflation

http://en.wikipedia.org/wiki/Deflation