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018/2019 Bear Market
02-27-2019, 05:57 AM
You can´t predict the markets because they are dependent from central banks actions and secondary measures from governments. And these actions are seemingly random in time. The only thing you can understand is a shift in market sentiment. These shift is palpable by a backturn of central bank policies and in many measures taken by governments which direct or indirectly stifles investment. May it be foreign or national.
Central banks are like fuel on a plane. The moment they raise interest rates they are cutting it´s fuel. The plane will glide for some time but inevitably fall. Other measures from governments. Like raise in tax, regulations, etc. Are storms to help take the plane down.
The recession didn´t happen yet because Trump managed to influence Powell. And he backtracked from the path of rising interest rates. This event you cannot time. You cannot time when political and economical decision makers decide it´s time to raise or lower interest rates.
Even without raising interest rates central banks can difficult access to credit. Setting more regulations or demands of it´s approvals.
Both FED and ECB are privately owned.
If you add other measures like a raise in tax. A regulatory new rule. State persecution of investments. Crashes are more probable. Investments are globally interconnected. Just like a Rubik cube. A measure in China will affect Europe and US. You cut off the oxygen of a source of investment directly in it´s origin. Wether it be China, Europe, Dubai, US, etc. And that area of investment dries up.
Credit is the fuel of the economy. You cut the fuel the engine stops working. When does the fuel gets cut. Nobody knows. The current policy is to start cutting the fuel.
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018/2019 Bear Market
03-01-2019, 12:34 AM
The idea that any government has to pay interest rate on the loans it takes from the central bank is ridiculous. With this policy alone, you create interest debt that can never be paid back and impacts the cashflow of the state. The only fair system is 0% interest, if government wants to pull money out of their economy they can always give it back to the central bank.
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018/2019 Bear Market
03-07-2019, 11:40 PM
Bass was also shorting the yen and they still have found ways for that not to work for him. China has its issues, but the realvision guys have all been wrong for over 2 years now, meaning ... they don't know what's going on. Sorry, being early (Mr. Schiff) is wrong, especially when you miss huge runs the opportunity cost is tremendous for you and/or your clients.
You guys all know my prediction, but I think it's fair to be wary into 2020-21. I still do not believe that there will be a big market problem until all the public debt stuff kicks, which is earliest 2020 ...
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018/2019 Bear Market
03-09-2019, 06:01 PM
I highly recommended reading Richard Koo.
PE valuations are nowhere near dot com bubble levels, that's not to say that they aren't overvalued (I have no opinion on this currently) but it is to say that the market can go up much, much more.
The thing Schiff gets wrong is that this is a global economy and he doesn't understand that the flight to quality is to the USA. It DOES matter that the USA/FED is in WAY better shape than nearly every other first world equity and bond market, and by a LOT.
Koo also admits that this too shall have an end, and that no one truly knows how to unwind QE = there will be problems, but not necessarily as soon as people are saying, and they've been saying it for a long time.
Note that Trump's election and deregulation, repatriation, etc. just increases the probability that everything will last longer.
As I've said, the mini quake will be when these munis blow up --- that's not that far off for a place like Chicago or Illinois --- they just elected a fatass lefty gov to finish the job, which should be entertaining. We'll see who they choose for Mayor.
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018/2019 Bear Market
03-09-2019, 06:34 PM
Take a look at the Nikkei 225 chart from 1950-1989. (especially 74-89).This thing could go on for a while before a truly epic crash
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018/2019 Bear Market
03-10-2019, 08:53 AM
I've been reading Ray Dalio's new book Big Debt Crises - a very clear explanation of what to expect moving forward (Dalio has said there's a 70% chance of a recession in 2019-2020).
Highly recommend the book.
What I really like about Dalio is that he's actually made billions in the stock market. In that sense, I much rather listen to him that a permabear goldbug like Peter Schiff or some scammy ass dude like Armstrong.
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018/2019 Bear Market
03-10-2019, 10:18 AM
^^ what are his thoughts on how this will affect private as well as public pensions which are all already very underfunded?
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018/2019 Bear Market
03-10-2019, 12:16 PM
I don't recall him mentioning pension funds specifically in his book
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018/2019 Bear Market
03-11-2019, 09:58 AM
^ In what way is the economy "deeply flawed"?
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018/2019 Bear Market
03-28-2019, 12:56 PM
It's happening:
"The distortion in the yield curve is building with tremendous force. There are vast bids for US 90-day T-Bills from around the world and no offers. The shortage in US government paper is now being reported to us from repo desks around the world. There is a MAJOR PANIC in to the dollar as emerging markets come under a financial crisis, in part, instigated by Turkey. The government simply trapped investors and refuses to allow transactions out of the Turkish lira. Turkey’s stand-off with investors has unnerved traders globally, pushing the world ever closer to a major FINANCIAL PANIC come this May 2019.
There is a major liquidity crisis brewing that could pop in May 2019. European Banks have loaded their portfolios with real estate loans thanks to quantitative easing and negative interest rates, and emerging market debt. Spanish banks are especially invested in Turkish debt where they hoped to get the highest yields expecting that the IMF would never let Turkey default. On top of this, banks have been lending to each other to also avoid parking money at the European Central Bank where they would be charged with a negative interest rate.
Currencies from South Africa’s rand to Brazil’s real are witnessing a spike in their expected volatility, signaling concern they may weaken the most along with the Turkish lira going into May. The price swings have evoked sudden deep-rooted fears that there may be an emerging market crash before the end of the year.
We will update on the private blog in more detail. However, keep in mind that this Inverted Yield Curve is by no means reflecting a US recession. This is a global financial panic unfolding on a grand scale. This is why we selected May for the WEC in Rome. This is far more than just politics. This is beginning to evolve into a serious liquidity crisis where we may yet see more countries try capital controls to save the day."
armstrongeconomics.com/international-news/emerging-markets/the-financial-panic-of-2019/
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018/2019 Bear Market
04-02-2019, 09:41 PM
Yes, I believe there is a very, very small chance anything happens to the US in 2019, so I think Dalio is about right when he puts the end date at November 2020.
I'd be buying stocks, and MSFT options play have looked good for a long time, and they still do.
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018/2019 Bear Market
04-03-2019, 06:46 PM
S&P 500 is up 12.4% so far in 2019. Due to the nature of the market (based on the past), there will no doubt be a crash at some point in time - but when this is, most cannot predict. If people could actually time the market, they would have taken advantage of this rally this year, made huge gains and then get out before the crash happens. Instead, the people who have been predicting a crash have missed out. Even worse, some of these people have been predicting a large crash for the past 5+ years holding onto cash and missing out on all the gains!
Of course, if a crash happens in the next 6 months, the doomsdayers will say "I told you so!" but that isn't a prediction because a broken clock is right twice a day.