Investment Grin Of The Day
Trump Is Fighting The Wrong Trade War For All The Wrong Reasons – Weekly Update
A mixed week with the Dow Jones down 226 points (-0.89%) and the Nasdaq up 101 points (+1.32%)
What was supposed to be the most important week of the year turned out to be a dud. Trump’s meeting with The Rocket Man was nothing more than a photo op, the FED did raise rates on higher inflation expectations, the ECB threatened the end of QE and President Trump launched the next stage of his misguided trade war.
To the latter point, massive trade deficits are a symptom of a cancer stricken economy, not the cause. The real cause is the FED and their insane monetary policies. There are two very important things to consider here when it comes to Trump’s idiotic trade war.
First, trade deficits are great for the stock market. The bigger the deficit the better as it suggests higher levels of economic activity. The more we buy, the higher the earnings.
This has been more true in recent decades at our trade with China has exploded. Just look at the chart above. When our economy collapsed in 2008, so did our trade deficit. And while that was a ‘natural’ correcting, Trump’s attempt at deficit reduction is anything but.
Second, history teaches us that trade wars always escalate and always end bad for all involved. Often turning into hot wars when it is all said and done. Historians and economists still argue that trade wars were the primary cause of the 1929 crash and subsequent depression. Perhaps no one can explain this better than David Stockman
Once again, the real culprit behind nearly all imbalances and ailments associated with the US Economy and Financial markets is the FED.
I once supported President Trump, even voted for the guy, primary for that reason. He clearly identified the stock market bubble and the FED as the main problems with the US Economy during the primary process. Will The Plunge Protection Team Turn On President Trump Unfortunately for all of us Mr. Trump has flipped since then, transforming into some sort of a Jim Cramer want to be stock market cheerleader.
As a result, all is lost.
President Trump is fighting the wrong war and exactly at the wrong time (stock market bubble top). And that will lead to disastrous consequences in short order. If you would like to find out exactly when the stock market craters, based on our mathematical and timing work, please Click Here.
Investment Grin Of The Day
OH MY, The Stock Market Is Going To The Moon
Ladies and gentlemen, we have reached the promise land. Apparently, at least according to the Central Office Of Propaganda And Truth, we have never had it better.
Trump’s forecast of 4% GDP growth close to coming true as Americans spend tax-bill proceeds
-
Surging consumer spending is driving GDP well above prior estimates, and it is now tracking near 4 percent for the second quarter.
-
That’s almost double the pace of the first quarter.
-
Economists say the consumer is seeing the impact of the tax cuts and is spending, as a result of more disposable income
Damn, that sounds good. But it gets even better….
Fed is Rethinking Its Balance Sheet Unwind: Expect Lower LT Rates, Higher Gold
Four Consequences to Fed Delays in Balance Sheet Reduction
-
Downward pressure on interest rates : If Fed officials do opt for a bigger balance sheet and decide to continue telling banks to prioritize cash over Treasuries, it may mean lower long-term interest rates, according to Seth Carpenter, the New York-based chief U.S. economist at UBS Securities. “If reserves are scarce right now, and if the Fed does stop unwinding its balance sheet, the market is going to react to that, a lot,” said Carpenter, a former Fed economist. “Everyone anticipates a certain amount of extra Treasury supply coming to the market, and this would tell people, ‘Nope, it’s going to be less than you thought.”’
-
Upward pressure on gold
-
Downward pressure on the US dollar
-
More free money to banks at taxpayer expense
Still, some things are just not making any sense.
The U.S. economy is roaring, but the yield curve is flattening. What gives?
If recent data is any indication, the U.S. is on track to reap a sterling quarter of growth, but that hasn’t stopped the yield curve from flattening toward an inversion, a precursor to a recession.
What gives?
Let me attempt to dismiss this bullish narrative in one paragraph or less.
Today’s market is a speculative time bomb caused by the FED’s monetary policies. Trump’s tax cuts should be viewed as a Morphine shot to a dying and highly leveraged economy. Total S&P earnings jumped from $88 in 2016 to $110 today. Just about where they were in 2014. What growth? When you factor in the fact that most of this earnings growth came from the weak dollar, tax cuts and short-term stimulus, well, things are not looking very good.
In other words, this apparent prosperity is nothing but a giant Ponzi Scheme waiting for its day in the sun. If you would like to find out exactly when the stock market will crater, based on our mathematical and timing work, please Click Here
Get Your Kids The Hell Off Of Social Media
While no one has been listening, I have been saying for years that Social Media will make your kids fat, stupid, lazy and suicidal. It is a cancer. Now the data is finally coming in and this simple assumption is indeed being confirmed.
Web giants ‘fuel child mental health crisis’
Responding to comments from the chief executive of the NHS that web giants are fuelling a “crisis” and should come under tough scrutiny, Anne Longfield said: “The urgent response must be fast and effective. Children for whom the internet can be a powerful and positive resource do need protection from the negatives of social media and require the best mental health support.
Earlier this week a coalition of charities called for social media firms to have a ‘duty of care’ – enshrined by law – to protect children from potential mental health conditions.
They said the sites were responsible for increases in online bullying, internet addiction and self-harm amongst children which were very often undetected by parents.
Mr Stevens warned that children of today were facing a ‘double epidemic’ of obesity and mental health conditions, caused by the ‘stresses and strains of adolescence.’
In other words, if you love and care about your kids, get them the hell off of Social Media. They will thank you later as their mindless counterparts grow up to be self hating cry baby sheepish liberals.
Investment Grin Of The Day
The FED, Yield Curve Inversion & A Sense Of Impending Doom
The stock indices were mostly lower on the FED’s decision to hike interest rates. Let’s take a look at the latest…..
Fed Hikes Again, Modifies Accommodation Language, Plans on 2 More Hikes in 2018
The Fed’s “Dot Plot” part of the Fed’s Projection Materials, show a majority of FOMC participants now expect the Fed to get in two more hikes this year.
I side with the two brave souls who suggest none. Regardless, the key point is we are very close to the end of tightening. The participants expecting 4.0% or even 3.5% rates are in Fantasyland.
Yield Curve Collapse Signals ‘Policy Error’ Looms After Hawkish Fed Statement
“The current shape of the U.S. yield curve is consistent with a recession in early 2020”. One more rate hike and this is inverted!
It is also important to note the extent of the tightening cycle here.
To give all of the above context, this FED tightening cycle has been unprecedented in many respects. The FED funds rate is up close to 200% since tightening started in late 2015. The 10-Year Note Yield is up 100%. The yield curve is near inversion and some inflation readings are picking up.
That is to say, if history is any guide all sings point to a major bloodbath in the stock market. Well, unless it is truly different this time.
Our work tends to agree. If you would like to find out exactly when the stock market craters, based on our timing and mathematical work, please Click Here.
Can It Possibly Be True? Today’s Unemployment At 21.5%, Inflation At 10% And Negative Economic Growth
According to official economic numbers and our cheerleader in chief Mr. Trump, things have never been better. According to them, the US Economy is not only accelerating, it will take us to the promise land of enormous wealth in just a few short years.
Yet, if you are breathing, eating and employed red blooded American you know something is horribly wrong. You feel it at the supermarket and you see it in your weekly paycheck.
What’s the problem?
For starters, the official numbers coming out of Washington are complete and utter bullshit. A properly run Ponzi Scheme wouldn’t even come close to their number fudging. Consider the following….
The Real Economic Numbers: 21.5 Percent Unemployment, 10 Percent Inflation And Negative Economic Growth
Every time the mainstream media touts some “wonderful new economic numbers” I just want to cringe. Yes, it is true that the economic numbers have gotten slightly better since Donald Trump entered the White House, but the rosy economic picture that the mainstream media is constantly painting for all of us is completely absurd. As you are about to see, if honest numbers were being used all of our major economic numbers would be absolutely terrible. Of course we can hope for a major economic turnaround for America under Donald Trump, but we certainly are not there yet. Economist John Williams of shadowstats.com has been tracking what our key economic numbers would look like if honest numbers were being used for many years, and he has gained a sterling reputation for being accurate. And according to him, it looks like the U.S. economy has been in a recession and/or depression for a very long time.
Of course it isn’t just the U.S. economy that is troubled either.
We are living in the terminal phase of the greatest debt bubble in global history, many nations around the globe are already experiencing a very deep economic downturn, and our planet is literally in the process of dying.
So please don’t believe the hype.
Yes, we definitely hope that things will get better, but the truth is that things have not been “good” for the U.S. economy for a very, very long time.
Impossible?
Ask yourself the following questions my dear reader.
- If there is no inflation, why is everything in your local supermarket is going up in price and has been for years? What about your rent, insurance, gas, etc……?
- Ask yourself, if the official unemployment number is indeed 3.8% (classified as full employment), why the hell is your salary not going up? Why aren’t employees fighting over you?
I think you know the answer by now. The FED has distorted everything to such a degree with their money printing that the only way forward is complete and utter lying in all of their official reports.
Unfortunately, the laws of physics still apply. In other words, this massive Ponzi Scheme will come crashing down soon enough. If you would like to find out exactly when that is, based on our timing and mathematical work, please Click Here.
