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2018/2019 Bear Market
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The Father Offline
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Post: #151
RE: 2018/2019 Bear Market
(01-03-2019 10:43 PM)Kid Twist Wrote:  I follow indicators and the step back in manufacturing was more than expected. Not sure if it's "real" but could be. Will keep an eye out.

It was huge. PMI is still well over 50, and that's good...in fact, when PMI was close to 60, i was worried it was a bit inflationary. If it stays where it is, i'm happy. Still, that's quite a drop! Another one, and i'll be concerned.
01-04-2019 06:02 PM
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Post: #152
RE: 2018/2019 Bear Market
^Agreed. We'll be tuning in, I'm less worried because of today's news, but the indicators are the indicators, not our feelings.

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01-04-2019 08:35 PM
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Post: #153
RE: 2018/2019 Bear Market
(01-03-2019 11:55 PM)The Beast1 Wrote:  Look mate, it sounds like his doom and gloom naval gazing appeals to you. But like Alex Jones, he's been predicting 50 of the last wars, recessions, and incorrect price swings. Except unlike Jones, he charges for the privilege of him being WRONG.

Good response. I'm pretty careful about sensationalism at this point, and I'm not into his doom and gloom, I just think many things he's said recently better explain what's going on in the world (ECB, bond markets, China, Fed "QE" etc) than others. Could it be that the others are much further off? Yes.

I haven't bought him and you have, so I trust that your lack of trust of his "plays" is genuine and obvious.

I try to take what I see which is good, and he's had some good stuff recently, that's all. But let's move on.

What do you see happening in the next decade? I don't think it's that far off of a prediction to see the public debt problems (for heaven's sake, you're in the UK one of the least solvent public pension situations out there) really cause major hysteria and tumult. I see that happening middle of next decade. Just a prediction. I don't see it, and never have, as total gloom, just something one would like to be on the other side of when the bottoming out of the market happens again, which I do think will be big. And planning on being away from the big city I live in now, or at least at the drop of the hat, making that a possibility given that we don't know when it'll be.

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01-04-2019 08:48 PM
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The Beast1 Offline
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Post: #154
RE: 2018/2019 Bear Market
(01-04-2019 08:48 PM)Kid Twist Wrote:  
(01-03-2019 11:55 PM)The Beast1 Wrote:  Look mate, it sounds like his doom and gloom naval gazing appeals to you. But like Alex Jones, he's been predicting 50 of the last wars, recessions, and incorrect price swings. Except unlike Jones, he charges for the privilege of him being WRONG.

Good response. I'm pretty careful about sensationalism at this point, and I'm not into his doom and gloom, I just think many things he's said recently better explain what's going on in the world (ECB, bond markets, China, Fed "QE" etc) than others. Could it be that the others are much further off? Yes.

I haven't bought him and you have, so I trust that your lack of trust of his "plays" is genuine and obvious.

I try to take what I see which is good, and he's had some good stuff recently, that's all. But let's move on.

What do you see happening in the next decade? I don't think it's that far off of a prediction to see the public debt problems (for heaven's sake, you're in the UK one of the least solvent public pension situations out there) really cause major hysteria and tumult. I see that happening middle of next decade. Just a prediction. I don't see it, and never have, as total gloom, just something one would like to be on the other side of when the bottoming out of the market happens again, which I do think will be big. And planning on being away from the big city I live in now, or at least at the drop of the hat, making that a possibility given that we don't know when it'll be.

Thanks for the reply KT. Apologies for coming off like a POed lunatic. I'm no longer in the UK, but in southern California which by the way is an absolute delight of a place to live contrary to the thread claiming that this place is like Brazil. It's not like that in anyway at all.

QE worked at propping up zombie businesses. Yes I would have liked to see them fall, but they didn't. A lot of these guys are just idiots who still think that printing digital money means something and that things will turn into the Weimar republic.

It won't. In fact, if the Fed really wanted to it could easily remove most of the digital money in circulation that the banks hold. It's digital 1s and 0s and not rocket science to make it disappear. There will never be hyperinflation.

We'll keep trading sideways for awhile before the next big external event happens. This is nothing more than a buying event.

America is fine. America will be the world's super power for the foreseeable future. When the soyboys and AOCs of the world demand something nutty and try to get a majority to make it happen, democracy will give way to a military dictatorship before that happens and things will hum along just fine contrary to what some of the spergs thing on this forum. America will go the way of slow and gradual decline, the same way Rome fell apart.

What do I see for the future?

Honestly, I see world war 3 and no it won't be at the expense of America but Asia as a whole. China will agitate Taiwan to the point where the Chinese will do something stupid and try to take over Taiwan. Who knows how, but this is the flash point that needs to be watched.

The Taiwanese will run to America for help and what better way for America to drum up a massive war machine because hey we will have the moral high ground. Taiwan is the 21st century's Poland.

China's hard-on for that silly island will be the CCP's downfall.

The debt doesn't matter because war will erase it. Like really erase it because if the Chinese attack anyone the US and other countries that sold debt to China will just cancel the paper. And no it won't affect credit ratings at all.

If you've noticed, Trump has been blocked on every domestic policy. His only options are foreign which is why he has put China in a vice. It's only a hop, skip, and a jump for a CIA "false flag" Chinese attack on Taiwan to get that tinderbox to flare up.

And what better for America to look up for a strong leader during a time of worldwide crisis? Trump will win 2020. No one's going to want some panzy woman in charge.
(This post was last modified: 01-04-2019 09:55 PM by The Beast1.)
01-04-2019 09:52 PM
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Post: #155
RE: 2018/2019 Bear Market
"America is fine. The CIA will probably manipulate us into a war with a major nuclear power, but America is fine."

Jeez man, I thought I was a downer.

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01-05-2019 02:25 AM
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Post: #156
RE: 2018/2019 Bear Market
(01-05-2019 02:25 AM)SamuelBRoberts Wrote:  Jeez man, I thought I was a downer.

Laugh

The ironic part is, the Chinese may be dumb enough to do it themselves without the help of any spooks!
(This post was last modified: 01-05-2019 03:46 AM by The Beast1.)
01-05-2019 03:42 AM
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Arado Offline
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Post: #157
RE: 2018/2019 Bear Market
Weird messaging from the Fed on Friday led to a major rally. With the Fed (as usual) giving so many conflicting signals on what path it will take, it's really hard to plan an investment strategy. It's possible to time the market if you know what how the Fed and other Central Banks will react to certain situations, but when they are being deliberately ambiguous then it's much harder.

Quote:Fed Chairman Jerome Powell sparked a huge stock market rally after he delivered just the message investors wanted to hear — that the Fed will be flexible on policy and it is in no hurry to raise interest rates.

Stocks were already rallying but the Dow surged several hundred more points after Powell changed his tone on Fed policy, walking back a comment he made in December that rattled markets and made him sound rigid about the Fed's balance sheet.

Following the Fed's December meeting, Powell had said that the central bank's balance sheet wind-down was on "autopilot." He reversed that impression and reassured investors Friday that the Fed would be flexible with all of its policy tools, including the balance sheet.

My main point from before (that keeping money in the market isn't a smart choice) was predicated on the Fed continuing its balance sheet unwind, and not lowering interest rates. However, based on Powell's comments, I wonder if the Fed is going to capitulate well before the stock market bubble bursts. In that case, the bubble in assets can continue on for quite some time, and inflation will eventually pick up. Savers will get shafted while the debt binge for the irresponsible will continue and the can will get kicked down the road again. If the asset bubble and debt overhang muddles along without a major crisis, then even precious metals may not see a significant gain until inflation takes off, at which point it will be too late hard to buy in.

If the contraction in liquidity isn't going forward, what assets are good? Emerging markets have taken a beating, so they may be a good bet as an inflation hedge, but they also have tons of USD denominated debt.

However, this is really risky. If Powell was just bsing on Friday and is still going forward with tightening (which will result in the asset bubble popping), then buying assets now will be a terrible investment. Emerging markets will continue to decline as their currencies weaken and the dollar strengthens. Even if Powell holds interest rates at the current level and continues with the balance sheet unwind, that's probably enough to pop the bubble or at least prevent further asset price appreciation. Not to mention who knows how Brexit/France/Italy will work out.
01-06-2019 12:52 PM
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Post: #158
RE: 2018/2019 Bear Market
(01-06-2019 12:52 PM)Arado Wrote:  Weird messaging from the Fed on Friday led to a major rally. With the Fed (as usual) giving so many conflicting signals on what path it will take, it's really hard to plan an investment strategy. It's possible to time the market if you know what how the Fed and other Central Banks will react to certain situations, but when they are being deliberately ambiguous then it's much harder.

Quote:Fed Chairman Jerome Powell sparked a huge stock market rally after he delivered just the message investors wanted to hear — that the Fed will be flexible on policy and it is in no hurry to raise interest rates.

Stocks were already rallying but the Dow surged several hundred more points after Powell changed his tone on Fed policy, walking back a comment he made in December that rattled markets and made him sound rigid about the Fed's balance sheet.

Following the Fed's December meeting, Powell had said that the central bank's balance sheet wind-down was on "autopilot." He reversed that impression and reassured investors Friday that the Fed would be flexible with all of its policy tools, including the balance sheet.

My main point from before (that keeping money in the market isn't a smart choice) was predicated on the Fed continuing its balance sheet unwind, and not lowering interest rates. However, based on Powell's comments, I wonder if the Fed is going to capitulate well before the stock market bubble bursts. In that case, the bubble in assets can continue on for quite some time, and inflation will eventually pick up. Savers will get shafted while the debt binge for the irresponsible will continue and the can will get kicked down the road again. If the asset bubble and debt overhang muddles along without a major crisis, then even precious metals may not see a significant gain until inflation takes off, at which point it will be too late hard to buy in.

If the contraction in liquidity isn't going forward, what assets are good? Emerging markets have taken a beating, so they may be a good bet as an inflation hedge, but they also have tons of USD denominated debt.

However, this is really risky. If Powell was just bsing on Friday and is still going forward with tightening (which will result in the asset bubble popping), then buying assets now will be a terrible investment. Emerging markets will continue to decline as their currencies weaken and the dollar strengthens. Even if Powell holds interest rates at the current level and continues with the balance sheet unwind, that's probably enough to pop the bubble or at least prevent further asset price appreciation. Not to mention who knows how Brexit/France/Italy will work out.

Prescient analysis. I see the Fed as one leg of the stool that is the American economy. The other two legs are what happens globally (China, EU etc.) and investor/consumer confidence, domestically.

Returning the topic at hand, the fact that Chairman Powell had to walk back his comments from December is indicative of how fragile the equities markets are. You have investors chasing yield in equities, as well as, other asset classes. Can you imagine the blood on streets if the Fed
were to increase the fed funds rate to 5%?

Therefore, I am approaching this with a split strategy: I'm on DCA with my 401K, however have gone to cash with my portfolio. Besides potentially needing the cash for real estate deals, I'd like to keep some powder dry as we enter a sustained bear market.
01-06-2019 10:36 PM
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Post: #159
RE: 2018/2019 Bear Market
It'll be bullish, again. Why? People are scared.

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01-09-2019 10:32 PM
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Post: #160
RE: 2018/2019 Bear Market
I don't like making macro predictions but one play is to wait for the British parliament to reject the government's Brexit deal again and buy sterling/UK equities on the dip.

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01-10-2019 12:36 AM
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Post: #161
RE: 2018/2019 Bear Market
One of the most interesting videos I have seen for 2019 including Markets, Bitcoin, possible solutions to the global debt bubbles, USD with historical perspective etc.

https://youtu.be/qAH2GuXQBFk

Deepdiver the OG Hunter-Killer ... NBF - Nuke Boats Forever!
"You do not have to be a perfect person to be a perfect PATRIOT!"

Official Whitehouse.gov President Donald John Trump's real achievements: https://www.whitehouse.gov/trump-adminis...lishments/

Communist Freaking Red China's Plan to Undermine the USA and the West:
https://www.whitehouse.gov/wp-content/up...18-PDF.pdf

The Naked Communists:
https://wrathoftheawakenedsaxon.wordpres...-download/
01-11-2019 08:00 AM
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Post: #162
RE: 2018/2019 Bear Market
(01-06-2019 12:52 PM)Arado Wrote:  If the contraction in liquidity isn't going forward, what assets are good? Emerging markets have taken a beating, so they may be a good bet as an inflation hedge, but they also have tons of USD denominated debt.

However, this is really risky. If Powell was just bsing on Friday and is still going forward with tightening (which will result in the asset bubble popping), then buying assets now will be a terrible investment. Emerging markets will continue to decline as their currencies weaken and the dollar strengthens. Even if Powell holds interest rates at the current level and continues with the balance sheet unwind, that's probably enough to pop the bubble or at least prevent further asset price appreciation. Not to mention who knows how Brexit/France/Italy will work out.

Thanks for the fantastic comment- very intelligent.

The situation is quite complex. The US has it's own problems, yet is easily the world's best and strongest economy. The dollar is getting increasingly precarious, but there is absolutely nothing to take it's place as a world reserve currency at the moment, and other government currencies (Euro etc) are in mortal danger.

I see the clear winners over the next few years as being the following (in order from least to most risky):

US Stock Market
Precious Metals/Commodities
Bitcoins

Federal, state, and local governments are up to their eyeballs in debt. Consumers are also leveraged to the hilt- credit cards, mortgages, home loans, auto loans, student loans, etc. They is NO OPTION but to kick the can down the road, which should see the above assets benefit greatly (and a lot of inflation/currency devaluation).

If >$100 Trillion of government debt becomes suspect, where can people run to? I see no choice besides equity based assets. And the USA, especially with DJT in charge, is going to be the only livable house in a very bad neighborhood, meaning capital will come here from abroad.

This is what happened during the roaring 20s-capital fleeing Europe created mega bubbles in the USA in property and equities.

Think about how bearish the sentiment is for US stocks right now. It seems like there is plenty of upside left.
01-11-2019 10:34 AM
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Post: #163
RE: 2018/2019 Bear Market
From Martin Armstrong today:

"ANSWER: There will be a cancellation of the €500. That is the rumor behind the curtain. I would convert them as soon as possible to small bills and/or US dollars. There remains a distinct possibility that we will see Europe try to cancel its currency and take up the IMF’ proposal to move toward a cryptocurrency. They are desperate for taxes and they will raise taxes even further. As far as cash is concerned, as we move into 2020, it is time to make changes.

Keep in mind that the United States has never canceled its currency. That is a common occurrence outside of the USA. More than 40% of the physical paper dollars circulate outside the USA. It will be a political difficulty to cancel the dollar. It will take a major economic crisis. The USA will be the last to do such a thing."

armstrongeconomics.com/markets-by-sector/foreign-exchange/euro/cancelling-euros/
01-11-2019 10:47 AM
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Post: #164
RE: 2018/2019 Bear Market
Brazil is in a bull market, there are some Brazilian stocks in the US market , it is called "ADR". Vale SA for example is identified as "NYSE: VALE". Probably there is the same thing in other countries or you may just send money to Brazil and have access to all stocks.

The Brazilian market in very volatile, not for beginners !
01-11-2019 12:13 PM
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Post: #165
RE: 2018/2019 Bear Market
(01-11-2019 10:34 AM)jeffreyjerpp Wrote:  
(01-06-2019 12:52 PM)Arado Wrote:  If Powell was just bsing on Friday and is still going forward with tightening (which will result in the asset bubble popping), then buying assets now will be a terrible investment. Emerging markets will continue to decline as their currencies weaken and the dollar strengthens. Even if Powell holds interest rates at the current level and continues with the balance sheet unwind, that's probably enough to pop the bubble or at least prevent further asset price appreciation. Not to mention who knows how Brexit/France/Italy will work out.

Thanks for the fantastic comment- very intelligent.

The situation is quite complex. The US has its own problems, yet is easily the world's best and strongest economy. The dollar is getting increasingly precarious, but there is absolutely nothing to take its place as a world reserve currency at the moment, and other government currencies (Euro etc) are in mortal danger.

I see the clear winners over the next few years as being the following (in order from least to most risky):

US Stock Market
Precious Metals/Commodities
Bitcoins

Federal, state, and local governments are up to their eyeballs in debt. Consumers are also leveraged to the hilt- credit cards, mortgages, home loans, auto loans, student loans, etc. There is NO OPTION but to kick the can down the road, which should see the above assets benefit greatly (and a lot of inflation/currency devaluation).

If >$100 Trillion of government debt becomes suspect, where can people run to? I see no choice besides equity-based assets. And the USA, especially with DJT in charge, is going to be the only livable house in a very bad neighborhood, meaning capital will come here from abroad.

This is what happened during the roaring 20s-capital fleeing Europe created mega bubbles in the USA in property and equities.

Think about how bearish the sentiment is for US stocks right now. It seems like there is plenty of upside left.

Thanks for your comment. I assume your asset allocation is POST Fed reserve loosening policy, correct? The sentiment isn't that bearish right now and stocks remain very overvalued both in CAPE ratio and household wealth/GDP ratio. At least on MSNBC, etc. everyone is saying that this is a great time to buy, so stocks haven't dropped enough to justify buying. Stocks can fall massively if the Fed continues with QT.

I can see the Fed stopping interest rate hikes soon, but would they really be able to lower interest rates and start-up QE without another massive market downturn to force their hand? Until the Fed does a massive reversal, then there isn't much further this dead cat rally can bounce, at least given what we've seen in the past.

The bullish commentators on this thread have not addressed the issue of the last 10-year bull run primarily being caused by Central Bank printing - how the market can keep going up without further stimulus?

Here are two articles detailing the depth of the asset bubble that we are in. The first is from marketwatch.

Quote:Opinion: Stock-market investors, it’s time to hear the ugly truth
Published: Jan 7, 2019 5:41 p.m. ET
The Federal Reserve is propping up the market — and here’s the evidence

As I’ve been saying for a long time: There is zero evidence that markets can make or sustain new highs without some sort of intervention on the side of central banks. None. Zero. Zilch.

In March 2009 markets bottomed on the expansion of QE1 (quantitative easing, part one), which was introduced following the initial announcement in November 2008. Every major correction since then has been met with major central-bank interventions: QE2, Twist, QE3 and so on.

When market tumbled in 2015 and 2016, global central banks embarked on the largest combined intervention effort in history. The sum: More than $5 trillion between 2016 and 2017, giving us a grand total of over $15 trillion, courtesy of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan:

[Image: MW-HB346_bal_20190104132802_NS.png?uuid=...162d7bc1f7]

When did global central-bank balance sheets peak? Early 2018. When did global markets peak? January 2018.
...
In September 2018, for the first time in 10 years, the U.S. central bank’s Federal Open Market Committee (FOMC) removed one little word from its policy stance: “accommodative.” And the Fed increased its QT program. When did U.S. markets peak? September 2018.

And with the sugar high of the tax cuts fading, it was too much. Add trade wars and global growth slowing, and it was more than markets could handle.
...
So don’t mistake this rally for anything but for what it really is: Central banks again coming to the rescue of stressed markets. Their action and words matter in heavily oversold markets.

But the reality remains, artificial liquidity is coming out of these markets:
...
Each successive recovery keeps the illusion alive, but “accommodation” requires ever-lower rates before the monsters return. In the meantime, debt keeps expanding, while each recovery produces less and less organically driven growth, and ever-higher wealth inequality. This is what this system produces.

Pretty clear. The Central Banks are holding everything up.

Here is another article from Peak Prosperity.

Quote:Starting back in August of 2018 we were questioning whether “it” had arrived and then were declaring that it had throughout October and November.

“Until and unless” the central banks reverse course 2019 will see even more of the same. More stock market volatility, more bond losses, and falling real estate. Eventually, these credit stresses will impact those portions of the economy dependent on continued access to more dumb money.
...
Put simply, the Fed threw an entire generation under the housing bus just so that the older folks could feel a little better about the price of their already purchased and lived-in home and maybe spend a little more. It’s no different than setting your house on fire because you are a tiny bit cold.
...
As we head into 2019, we’re expecting to see a lot more volatility and even more losses as reality once again steps back into vogue. It never really left, of course, only was kept away for a while with monetary Botox administered by self-delusional bankers and politicians unable to face their many failures directly.

Every recovery eventually ends and this one is no different.

In our view, however, any recovery built on a foundation of cheap credit will not only end but end badly. This is easy to understand in neighborhood terms.

This is why the ‘recovery’ is not really a recovery. It’s not based on anything organic or healthy. It’s simply borrowed and all borrowing sprees eventually come to an end.

[Image: Great-Credit-Bubble-2018-12-28_15-31-24.jpg]

UNTIL the Fed restarts the printing presses, then equities seem too risky. Most of the mainstream commentators are unwilling to openly admit that the Central Banks created a giant asset bubble, so if anyone can refute this argument I'm all ears. I just want to get the maximum return on my money and avoid unnecessary risk.
01-11-2019 07:10 PM
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Post: #166
RE: 2018/2019 Bear Market
I don't think anyone doubts that the asset bubble is common, has been in the making for years, and will burst. But the larger issue is that multiple bubbles are occurring all at the same time AND (perhaps most importantly, and not addresssed in your two links) the state of the global economy, with central banks and equities markets that are BOTH worse than the United States, level out the playing field in two ways: capital flight into the USA, as it is the only place to go, and confidence as a result of the intertwined currency problems that the USA is now creating, by being super strong and further weakening global banking by definition.

What will all of this do? Create a bigger bubble, and longer drawn out cycle. That's what I am seeing and why I think MA's explanation has been best. When precisely this hits, of course no one knows --- but you don't need to know precisely. You need to see the signs to take advantage of the rising bubble, but get exit points and strategy that suit your risk level to not be holding on the crash, obviously. My guess has been that the beginning of confidence loss in pension and debt issues in the USA, coupled with leadership not by Donald Trump, or subversion of him, is when it'll start. The pension crises start 2020 slowly moving up, and I still think DT gets 2021-24, so that's why my prediction remains ~2025, plus or minus a year.

Get your passport ready!
(This post was last modified: 01-11-2019 10:05 PM by Kid Twist.)
01-11-2019 10:03 PM
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Post: #167
RE: 2018/2019 Bear Market
(01-11-2019 10:03 PM)Kid Twist Wrote:  I don't think anyone doubts that the asset bubble is common, has been in the making for years, and will burst. But the larger issue is that multiple bubbles are occurring all at the same time AND (perhaps most importantly, and not addresssed in your two links) the state of the global economy, with central banks and equities markets that are BOTH worse than the United States, level out the playing field in two ways: capital flight into the USA, as it is the only place to go, and confidence as a result of the intertwined currency problems that the USA is now creating, by being super strong and further weakening global banking by definition.

What will all of this do? Create a bigger bubble, and longer drawn out cycle. That's what I am seeing and why I think MA's explanation has been best. When precisely this hits, of course no one knows --- but you don't need to know precisely. You need to see the signs to take advantage of the rising bubble, but get exit points and strategy that suit your risk level to not be holding on the crash, obviously. My guess has been that the beginning of confidence loss in pension and debt issues in the USA, coupled with leadership not by Donald Trump, or subversion of him, is when it'll start. The pension crises start 2020 slowly moving up, and I still think DT gets 2021-24, so that's why my prediction remains ~2025, plus or minus a year.

2025 is a LONG time for a bull market to last (50% longer than the longest bull market run), and I don't know if Central Banks can keep printing that long without creating hyperinflation. The amount of debt that keeps accumulating trying to keep this economy running on fumes is getting more and more absurd.

Anyway, why would the US be a better place to put your money? A good chunk of the foreign stock markets are in bear markets, meaning that they are not as overvalued as the US stock market, so when the downturn comes they won't suffer as much, and have higher upside once things reset. There are also many other countries with far lower Debt/GDP ratios than the US, so are at a lower risk of inflating away government debt.





Even this post-Christmas rally has been the result of continuous QE money printing from the ECB and BOJ. The ECB was supposed to stop printing as of the end of 2018, but looks like they've kept the charade up a bit longer. China also just released a ton of money into the system to keep things propped up prior to Chinese New Year. Unfortunately, the Central Banks are loathe to actually clearly let us know what they will do until the last minute, though the Fed is the best at hiding their intentions.

Recessions and major market corrections are necessary and healthy to clear out bad debt and inefficient businesses. Workers who aren't producing need to get laid off and shift into different industries or more efficient businesses. This constant printing just delays the inevitable - Central Banks will eventually have to decide between hyperinflation and a massive crash. It also screws over savers and retirees that need returns on nonvolatile assets that can at least outpace inflation.

Here are the choices:

A) Cash: Safe short term bet with decent 2-2.5% return on treasuries and CDs. If the Fed keeps up QT and doesn't lower rates, then you will at least keep up with inflation as long as the Fed doesn't change policy. If the Fed starts printing or bailing out without sufficient notice (inflation will kick in long before banks offer higher rates), then you could lose to inflation but there should be some advance warning and they are not likely to reverse without a major stock market reversal. The main concern is lost opportunity cost if there is no recession and the asset bubble keeps growing (though whether it can grow past recent highs is debatable). In the long term, ff the recession hits, debt skyrockets, and foreigners stop buying T-bills, then we face our long overdue debt crisis then all bets are off and the dollar becomes worthless, but that's still way off and there will be ample warning. May lose some value to inflation in a protracted trade war even if Fed doesn't capitulate.

B) Stocks: Slightly to ridiculously overpriced depending on which metric you use. Some potential gains if the economy doesn't hit recession and the printing can keep this bubble longer. HUGE downside risk if the money printing stops and asset deflation kicks in. Moderate risk of mediocre or negative real returns if stagflation kicks in. Some short term upside if China trade gets resolved or no more bad news from Europe.

C) Precious metals: No actual returns, have to rely on capital appreciation alone. Gold is relatively underpriced and silver is quite cheap, so likely not much downside risk. Good inflation and stagflation hedge, will probably perform well in a protracted trade war. May lose some value if the printing stops and deflation sets in (people will sell gold to cover margin), but will skyrocket afterwards once the stimulus starts back up again. Lots of conspiracy theories out there that very little actual gold is backing up the paper market, so if serious inflation sets in, you may end up just holding worthless paper. Taking possession of physical gold is a hassle and isn't liquid. Youtube gloom and doom preppers are pushing gold hard, of course through their broker of choice.

D) Real Estate: Somewhat or extremely overpriced depending on the market. Highly illiquid, so if there is a serious crisis then you are stuck with the property, and if the neighborhood you buy in sees unhelpful demographic changes then you are also in trouble. Several locations are seeing real estate prices drop (Seattle, Canada, Australia) while others are seeing a deceleration. Takes a few years for the market to hit bottom. In case of market, will retain value slightly better than stocks.

E) Bonds: Not so sure - better returns than treasuries, but more downside risk since prices will go down if interest rates increase or inflation sets in.

F) Foreign assets: Euro/Yen/RMB assets are all propped up by QE right now so are also subject to the whims of their respective Central Banks. Japan is a strange case with low inflation, falling housing prices and stagnating stock market despite crazy printing, and the Euro area is ripe for another debt crisis, or hyperinflation if the ECB monetizes the debt and keeps printing. China's stock market is in a bear market but their real estate and shadow banking is still ripe for a major downturn, and for now their Central Bank is loosening monetary policy as well so may be able to keep the bubble a bit more - if those bubbles burst, stocks will probably see more downside. If trade gets resolved, Chinese stocks will see huge upside. There are other countries out there that have more fiscal/monetary discipline and lower geopolitical risk - they may be better bets but I need to do more research to figure out where they are and if the respective ETFs are well managed. Many foreign stock indexes are in a bear market, so potentially, more upside and less downside in case recession hits in. However, if the dollar strengthens in the short term due to a recession flight to safety, countries and foreign corporations with dollar denominated debt will be doubly screwed.

Unfortunately, the Central Banks are loathe to actually clearly let us know what they will do in advance. They only publish their balance sheet positions after the fact. The ECB was supposed to stop printing as of the end of 2018, but looks like they've kept the charade up a bit longer.

Can't time the market? That's bs for the average Joe that doesn't realize the degree to which Central Bank printing has kept this market propped up - he's told to put his money in an index fund and forget about volatility while those that know what the Central Banks are up to can plan ahead in advance of the retail investors.
(This post was last modified: 01-17-2019 03:18 PM by Arado.)
01-17-2019 02:48 PM
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RE: 2018/2019 Bear Market
(01-11-2019 10:03 PM)Kid Twist Wrote:  What will all of this do? Create a bigger bubble, and longer drawn out cycle. That's what I am seeing and why I think MA's explanation has been best. When precisely this hits, of course no one knows --- but you don't need to know precisely. You need to see the signs to take advantage of the rising bubble, but get exit points and strategy that suit your risk level to not be holding on the crash, obviously. My guess has been that the beginning of confidence loss in pension and debt issues in the USA, coupled with leadership not by Donald Trump, or subversion of him, is when it'll start. The pension crises start 2020 slowly moving up, and I still think DT gets 2021-24, so that's why my prediction remains ~2025, plus or minus a year.

Martin Armstrong with two very important snippets today.

PAY ATTENTION FORUM MEMBERS:

"Something needs to happen between now and January 2020 that begins to seriously undermine the confidence in government. The Democrats are acting absurd. If Trump says the sky is blue they would say it is black. They must oppose whatever Trump says just to win the White House in 2020. Government will no longer function. The damage the Democrats are doing on all levels being aided by the Neocons who just want war and are not loyal Republicans, is really profound. From here into 2032, do not expect government to function. It has become permanently polarized. This is NECESSARY to aid the shift from Public to Private Confidence going into 2032. The Republicans and Democrats can no longer work together to run government. God help us for whoever follows Trump will be a full fledged pro-government person who will do whatever is necessary against the people. Trump is ONLY the reaction - not a change in trend. Those who hate Trump hate anyone who disagrees with their politics. This hatred is pervasive. In South Carolina, a friend reported that a car in a parking lot with a Trump sticker was shot numerous times as a warning to Trump supporters. The 2020 election is likely to be the most violent in American history. This is all part of the collapse in faith in government unfolding into 2032."

Also....

"There is no reversal in sight and we simply cascade in this death spiral into 2032. Perhaps now we can see that indeed the United States will cease to exist as we know it after 2032. The USA will be prone to separatist movements as well after 2024. That appears to be the target for absolute political disintegration.

The damage the Democrats have caused is truly undermining government. This confrontation as was the one they staged against Kavanaugh, has forever changed how government functions. The Democrats have crossed the line and in the process brought down the entire establishment."

armstrongeconomics.com/international-news/politics/this-is-how-the-usa-will-collapse-congress-is-incapable-to-ruling-the-country/
01-18-2019 03:17 PM
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Post: #169
RE: 2018/2019 Bear Market
Arado, the international markets are the ones with the problems. The issue at hand within the US is not a national one, it's a state and local pension debt time bomb.

Confidence is already lost in American institutions, MA is right about that. The trigger is the hard thing to put a finger on. I think 2020 will be might interesting for that reason.

Get your passport ready!
01-24-2019 11:19 PM
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RE: 2018/2019 Bear Market
(01-17-2019 02:48 PM)Arado Wrote:  2025 is a LONG time for a bull market to last (50% longer than the longest bull market run), and I don't know if Central Banks can keep printing that long without creating hyperinflation.

Depending on one's definition of a bull market this isn't necessarily true. The bull market from 1980 to 2000 was nearly 20 years. Sure, it was punctuated by some CYCLICAL bear markets ( 1987 crash, S&L crisis, 1994 bond crisis, The 1998 "mini-bear" (which by the way, reminds of of this current mini-bear we're experiencing) But, the market was in a long term SECULAR bull market from 1980 until 2000.

Likewise, this secular bull market started in March of 2009. So, 20 years, if we get any sort of a repeat puts us past 2025 until 2029. Just like the secular bull of the 80s and 90s, this secular bull has been punctuated by it's own cyclical (shorter term) bear markets - i.e. the summer of 2015, and what we're going through now.

I agree things are different and the various rounds of QE have, to a large extent, kept this secular bull going, but sometimes these things can go on longer than many folks think is reasonably possible. It's entirely possible we'll see more QE down the line soon or, at the very least, more accommodative interest rate policy by the Fed

- One planet orbiting a star. Billions of stars in the galaxy. Billions of galaxies in the universe. Approach.

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01-25-2019 12:20 AM
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RE: 2018/2019 Bear Market
(01-25-2019 12:20 AM)robreke Wrote:  
(01-17-2019 02:48 PM)Arado Wrote:  2025 is a LONG time for a bull market to last (50% longer than the longest bull market run), and I don't know if Central Banks can keep printing that long without creating hyperinflation.

Depending on one's definition of a bull market this isn't necessarily true. The bull market from 1980 to 2000 was nearly 20 years. Sure, it was punctuated by some CYCLICAL bear markets ( 1987 crash, S&L crisis, 1994 bond crisis, The 1998 "mini-bear" (which by the way, reminds of of this current mini-bear we're experiencing) But, the market was in a long term SECULAR bull market from 1980 until 2000.

Likewise, this secular bull market started in March of 2009. So, 20 years, if we get any sort of a repeat puts us past 2025 until 2029. Just like the secular bull of the 80s and 90s, this secular bull has been punctuated by it's own cyclical (shorter term) bear markets - i.e. the summer of 2015, and what we're going through now.

I agree things are different and the various rounds of QE have, to a large extent, kept this secular bull going, but sometimes these things can go on longer than many folks think is reasonably possible. It's entirely possible we'll see more QE down the line soon or, at the very least, more accommodative interest rate policy by the Fed

The period from 1980-2000 also included SEVERAL rounds of interest rate decreases and subsequent hikes, as well as multiple business cycles.

[Image: Federal_funds_rate_history_and_recessions.jpg]

The period since 2009 is within a single rate hiking cycle and single business cycle so you have to compare it other hiking cycles. Again, as you mention 2015 - the only thing that rescued the market was a massive multi trillion dollar liquidity injection from BOJ and ECB.

Anyway, the problem with looking at 1980-2000 as replicable is that it was only possible once, due to interest rates starting at insanely high levels, and gradually brought lower and lower in subsequent hiking cycles as our society became increasingly addicted to debt.

This "secular bull market" cannot be replicated since the Fed now has a bloated balance sheet and with interest rates at just 2.25-2.5% there is very little room to cut rates. The entire "boom" that we have been enjoying has been the result of massive printing and an unprecedented experiment in monetary policy. Given the obscene CAPE ratio and stock market to GDP value, there is no denying that this market is fundamentally overvalued, mainly due to being propped up by Central Bank policy.

(01-24-2019 11:19 PM)Kid Twist Wrote:  Arado, the international markets are the ones with the problems. The issue at hand within the US is not a national one, it's a state and local pension debt time bomb.

Confidence is already lost in American institutions, MA is right about that. The trigger is the hard thing to put a finger on. I think 2020 will be might interesting for that reason.

International markets are down from their early 2017 highs so they have already priced in part of the upcoming global recession, while US markets haven't yet.
(This post was last modified: 01-25-2019 07:22 AM by Arado.)
01-25-2019 07:19 AM
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RE: 2018/2019 Bear Market
^ "The market is fundamentally overvalued. " - Probably so due to the multiple rounds of QE which went into stock buybacks. However, the PE ratio of the S&P 500 is pretty much within historical norms. Granted, it was getting a little high but this latest correction has brought it down. The forward PE ratio is not "bubble territory" or extremely overvalued at this point.

This current correction is not (at this point) concurrent with a recession, like it was at major market tops a la 2008, 2000 etc. There is no extreme inflation nor deflation (like there was at the market tops in 2008, 2000 and 1929) The PE ratio of the market, as I just pointed out isn't at extreme levels (like it was in 2000 and 1929 for example). Interest rates and the yield curve are flashing some warning signals, but there's not full blown pre-recessionary indicators showing themselves regarding rates at this point ( a few of the yield curves have gone flat or slightly inverted but the "main" yield curve and others have not). These, among other things are why I believe this is a cyclical correction within a secular bull.

By the way, I agree with most points you say and each long term bull market and bear market are going to have their own reasons for lasting as long as they do. There's undoubtedly a lot of smoke and mirrors going on as you point out.

I was disagreeing with your claim that if this secular bull market lasts until 2025 then it will be 50% longer than the longest bull market. It will not, it would be about 4 years shorter than the secular bull of the 80s and 90s.

- One planet orbiting a star. Billions of stars in the galaxy. Billions of galaxies in the universe. Approach.

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(This post was last modified: 01-25-2019 11:11 AM by robreke.)
01-25-2019 10:53 AM
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Rainbow RE: 2018/2019 Bear Market
Ok, so I'm far from an expert, but what the fuck is the true value of all the bonds that the Fed is holding? I think that is key here. Because if the Fed tries to reduce its balance sheet, the stock market ranks because it causes a liquidity crisis, and as we know most economists and Moodys are predicting a liquidity crisis to be the cause of the next recession. .. though they think it will be short and severe in nature. Anyway, as long as the Fed keeps their balance sheet stacked, then the losses are unrealized, but there is pressure for them to unload it. What gives first, will the true value of their balance sheet ever be made transparent to the public, or are we just holding off the next crisis as long as we can. Posting while I'm drunk but I think I summed it up about right.
01-25-2019 10:56 PM
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RE: 2018/2019 Bear Market
(01-25-2019 10:53 AM)robreke Wrote:  ^ "The market is fundamentally overvalued. " - Probably so due to the multiple rounds of QE which went into stock buybacks. However, the PE ratio of the S&P 500 is pretty much within historical norms. Granted, it was getting a little high but this latest correction has brought it down. The forward PE ratio is not "bubble territory" or extremely overvalued at this point.

Again, depends on which metric you use. According to the CAPE (Cyclically adjusted price to earnings ratio) or just simply looking at stock market to GDP ratio it is in historically high levels of overvaluation.

Quote:I was disagreeing with your claim that if this secular bull market lasts until 2025 then it will be 50% longer than the longest bull market. It will not, it would be about 4 years shorter than the secular bull of the 80s and 90s.

How about I refine it to say that this would be the longest rate hiking cycle? Again, problem is that the Fed doesn't have the same tools to stimulate that they did during the secular bull market period you are referencing.

(01-25-2019 10:56 PM)Repo Wrote:  Ok, so I'm far from an expert, but what the fuck is the true value of all the bonds that the Fed is holding? I think that is key here. Because if the Fed tries to reduce its balance sheet, the stock market ranks because it causes a liquidity crisis, and as we know most economists and Moodys are predicting a liquidity crisis to be the cause of the next recession. .. though they think it will be short and severe in nature. Anyway, as long as the Fed keeps their balance sheet stacked, then the losses are unrealized, but there is pressure for them to unload it. What gives first, will the true value of their balance sheet ever be made transparent to the public, or are we just holding off the next crisis as long as we can. Posting while I'm drunk but I think I summed it up about right.

I've posted earlier in the thread that the Fed holdings are 4+ trillion dollars. Total global central bank assets are well over 10 trillion dollars. That's a lot of funny money propping up these markets. This situation is extremely unfair to savers - people that are out of debt and just want their money to outpace inflation are out of options. They are forced to see their life's wealth accumulation gradually whittled away by rising prices, or speculate on index funds that could lose 30+ percent of their value in case Central Banks get cranky.
01-26-2019 06:20 AM
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RE: 2018/2019 Bear Market
(01-04-2019 09:52 PM)The Beast1 Wrote:  Trump will win 2020. No one's going to want some panzy woman in charge.

Highfive

People want a woman President about as much as they want a woman boss: Not even women do.
(This post was last modified: 01-26-2019 10:23 AM by The Father.)
01-26-2019 10:06 AM
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