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vand

Equities going parabolic - Is the crash near?

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2 hours ago, KDave said:

QE taps will be turning on soon then? Replaces genuine liquidity, keeps rates suppressed on the debt pile, which can then get as big as it needs. 

It worked last time after all.

QE or financial mayhem... More QE will cause uproar, financial mayhem will cause uproar and riots in the streets. 

I am sure there were many meetings behind closed doors this weekend and continuing into market open tonight. If CB's have the choice of allowing the market to find fair value and a cleaning out of the dross in a financial forest fire OR printing more money...my printed money is on them printing more money.

Only a slight problem with more QE, the US Treasury Auctions last week produced pitiful results, no one wants US debt and who can blame them. A US default in future is a distinct possibility/probability.

Probably some jawboning first, IE we are not going to taper any further, we are keeping an eye on the markets carefully, we will intervene if necessary etc etc.

It's a circus and Keynesian Economics at it's finest.

Thank God for PM's.

 

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3 hours ago, KDave said:

QE taps will be turning on soon then? Replaces genuine liquidity, keeps rates suppressed on the debt pile, which can then get as big as it needs. 

It worked last time after all.

 

peter schiff is saying that last time round was a housing/stock

market crisis. and then government bonds was used to bail out

those in trouble. this time it would be a dollar/bonds problem.

the bonds solution last time was not a fix but just a delay.

 

HH

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2 hours ago, RichRock said:

QE or financial mayhem... More QE will cause uproar, financial mayhem will cause uproar and riots in the streets. 

I am sure there were many meetings behind closed doors this weekend and continuing into market open tonight. If CB's have the choice of allowing the market to find fair value and a cleaning out of the dross in a financial forest fire OR printing more money...my printed money is on them printing more money.

Only a slight problem with more QE, the US Treasury Auctions last week produced pitiful results, no one wants US debt and who can blame them. A US default in future is a distinct possibility/probability.

Probably some jawboning first, IE we are not going to taper any further, we are keeping an eye on the markets carefully, we will intervene if necessary etc etc.

It's a circus and Keynesian Economics at it's finest.

Thank God for PM's.

 

 

Keynes proposed counter-cyclical government fiscal & monetary policy to smooth out the ups and downs of the natural business cycle, but today that has been perverted into system that perpetually stimulates when economy is expanding.. and then stimulates even more when the economy is contracting.  The number of years that we have actually run a budgetary surplus since WWII can be counted on the fingers of one hand.  

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Currently at 103 months, we are already in the 3rd longest economic expansion in recorded history, which will become the 2nd longest in June this year

https://www.cnbc.com/2017/05/08/goldman-says-u-s-economy-may-be-slowly-growing-into-the-longest-expansion-in-history.html

 

2nd longest: 1961-1969, 106 months

longest: 1991-2001,  130 months

 

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1 hour ago, KDave said:

Potentially we have some time then, possibly a couple of years, maybe longer, records are meant to broken after all :P

 

Can't discount it, but it everything comes to an end, and the longer the expansion the worse the malinvesments get and the greater the bust! 

Edited by vand

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10 minutes ago, vand said:

Can't discount it, but it everything comes to an end, and the longer the expansion the worse the malinvesments get and the greater the bust! 

Agreed, plus we don't have the love of alan greenspan this time around. I have read that the longest expansion, 1991-2001 was down to actions during his tenure but I admit I don't know about the specifics other than he was into his Keynesian ideology. Ironically all the man talks about these days is the importance of owning gold, and routinely reports where he sees bubbles in the markets - stating the obvious. Last summer he pointed out the bond bubble and end of last month he said stocks were in a bubble.

Who knows, perhaps the new FED chair will be more than just the fall guy.

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Greenspan had a lot more ammo at his disposal during his tenure to keep kicking the can down the road; the bond bull market was only a few years old, so he had a lot space for a few rate-cutting cycles, and the US economy was in much better overall long term health - smaller deficits, younger population etc.

 

That's the problem for Powell today.. he's basically coming in at the end of the party just as the music is about to stop. I think Yellen will go down as one of the luckiest chairs in history, in that she came in after the last crisis and got out of dodge just in time before the next one. 

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Bond watch..

Markets may be clawing back some the recent losses, but that US 10yr yield is continuing to spike to fresh highs. I think that if it continues it's inevitable that sooner rather than later the market will cry uncle and sell off again, probably to fresh lows.

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Bond&symb=BX%3ATMUBMUSD10Y&time=9&startdate=1%2F4%2F1999&enddate=2%2F12%2F2018&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=2&lf2=4&lf3=0&type=4&style=320&size=3&x=45&y=6&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

 

I really can't stress how important I think this is. Everything we have seen in the last 30 years has been predicated on the bond market and cheap money. If that trend is reversing then it is very much a paradigm change, and one that most people aren't even aware of.

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one day opportunity to bet on the stock market rising with

the odds in your favour, might be why the market is going up

today.

I agree bonds is the one to watch.

 

HH

Edited by HawkHybrid

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22 hours ago, HawkHybrid said:

 

peter schiff is saying that last time round was a housing/stock

market crisis. and then government bonds was used to bail out

those in trouble. this time it would be a dollar/bonds problem.

the bonds solution last time was not a fix but just a delay.

 

HH

I agree. The bonds may just enter a huge bear market.

21 hours ago, vand said:

 

Keynes proposed counter-cyclical government fiscal & monetary policy to smooth out the ups and downs of the natural business cycle, but today that has been perverted into system that perpetually stimulates when economy is expanding.. and then stimulates even more when the economy is contracting.  The number of years that we have actually run a budgetary surplus since WWII can be counted on the fingers of one hand.  

Very true. If they had allowed the curve to play out we would be in a better place today. The longer they allow this to continue the greater the crash.

I am wondering why some traders/players are still in the market. I am thinking it is because the Millennials have never experienced a crash/bear market. Here is an amusing vid that reminds me of when I traded through the last crash. Love how it all starts off lovely and rosy: (PS I was way too early in calling that one, about 6 months. Could be way too early on this one, but as they say 'Better a day early than an hour late'.:))

Institutions need a few few more days to re position from last week's sell off. Weds is a big day with the CPI. Could bounce around for a few days here. Bond rates hitting highs, Interbank liquidity drying up, huge deficits, Equities at stupid P/E ratios, what's not to like?

 

 

Edited by RichRock

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I don't think we can have rising sovereign bond rates, a banking meltdown and a stock crash at the same time. 

My guess is that the last week's drop in stocks was a head fake and we continue higher, rates up, bonds down and commodities to blast off. 

Ultimately we may see 6 - 12 months of inflation before the whole thing falls apart and the deflationary collapse begins to take everything down. 

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I think there is zero chance of a deflationary event. 

I think you've been listening to Mike Maloney too much, who in turn has been listening to too much Harry Dent, who is wedded to his deflationary thesis as he believes everything is demographically driven.

Deflation is not a pre-requisite before hyperinflation.  The central banks can always create more money supply, and absent people willing to spend their money, governments will certainly step in and act at the buyer of last resort.  Liquidity will leave paper assets and flood into commodities and real assets, which will drive inflation. 

 

or.. taking an alternative spin on it, you could argue that we have already undergone a deflationary event... in commodities

 

Edited by vand

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I agree I don't think deflation will be allowed but it may be seen for a small period, a catalyst for printing the like of which we have never seen perhaps. When the government is king debtor you can guarantee they will print and rob the population to dig themselves out the hole and not allow much if any of a deflationary transfer. The environment gives it away too, why expect any different from the insane Keynesian 'monetary' policy (theft) we have seen so much of; printing currency in all its forms is the one and only answer to everything; steal from the workers, steal from the savers.

Straight to hyperinflation is also more in line with historical examples, but those examples appear driven by ignorance (germany, zimbabwe) what would cause the world today to just start up the presses like its zimbabwe 2008 if not deflation? Ignorance again? Or just the fear of deflation?

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10 hours ago, vand said:

I think there is zero chance of a deflationary event. 

I think you've been listening to Mike Maloney too much, who in turn has been listening to too much Harry Dent, who is wedded to his deflationary thesis as he believes everything is demographically driven.

Deflation is not a pre-requisite before hyperinflation.  The central banks can always create more money supply, and absent people willing to spend their money, governments will certainly step in and act at the buyer of last resort.  Liquidity will leave paper assets and flood into commodities and real assets, which will drive inflation. 

 

or.. taking an alternative spin on it, you could argue that we have already undergone a deflationary event... in commodities

 

There is very little base money underpinning the hundreds of trillions of debt that is artificially pumping all asset prices. We're now at a point where new debt is required just to pay the interest on the existing debt in the system. This system is primed and ready to unravel.

As the everything bubbles collapses, there will a huge deleveraging event that takes place and a scramble back into cash. It will just be a re-run of 2008 on steroids. 

The hyperinflation will only occur through complete loss of confidence in the government or rapid and blatant expansion of the base moment supply. Both of these will eventually arrive but this will be due crisis response - ie The US congress may decide to mint a huge pile of Trillion Dollar platinum coins to monetise the national debt or some crazy method of flooding the entire system with cash.

Edited by C12

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After the last 2 days (now 13/02/18) all I hear on the financial media is (my contrarian indicator):

Stocks are moving higher today, great opportunity to buy’

Looks like traders are buying the dip’

Stock market could recover this week’

Last week was a temporary spasm in the market’

Volatility subsiding, equities bouncing back’

Valuations are attractive’ (lol)

There’s a lot of green if we look across the board...’

We’re seeing every sector advancing’

Dip buying continuing, rebound rally’

NASDAQ actually up for the year, you shouldn’t be worried about this’

This is not 2007 and alphabet soup of concern. Not in that scenario at all’

NOT ONE interviewee has said ‘I would take profits here whilst we see what direction the market takes.’ or ‘We could go down heavily from here’.

Alternative media sites are saying:

Only the dumb money is selling’

The smart money bought the dip’

'You are an idiot if you are short here'

etc.

These are actual quotes I wrote down as they came through.

I heard the same flurry of info in 07/08. I am an amateur trader, no expert in financial matters, but my positions in Forex during 07/08 worked out AND I could be wrong this time. If so, then I reduce/reverse position and continue. The beauty of the market is there is a seller for every buyer.

DOW currently 24600.

My interpretation of the media:

Smart money is off loading their remaining positions during this bounce. Last week was the tremor before the earthquake. Equities could tank. Please hold this expanding steaming bag of **** whilst we get ourselves to the exits before it bursts and causes a panicked stampede.’

My view is this:

The charts tell me:

Banks sell off/eventually fail.

Equities tank.

Treasuries enter bear market.

Commodities hit super bull cycle.

PM holders may have dip first, but upside hits all time highs. Unfortunately most have capitulated in last 12 months, which was the aim really.

I am holding Gold. Maybe wise, maybe foolish. Who knows?

 

All I know is this: The markets are screwed. They can continue kicking the can, but eventually they will run out of alley.

 

Contrarian_Worldview.jpg

Edited by RichRock

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It's a tricky one but my timeline from here would be something like:

Stocks enter a disorganised topping process that could take 6 - 12 months to play out. 

Interest rates continue to rise.

Commodities should do well initially, gold especially to make a run for the all time highs.

The housing market rolls over

Finally a collapse which takes everything down and make 1929 look like a picnic, banking collapses, ATM withdrawal limits etc. 

The next crash will be the real stinker we should have had in 2008-2012 and it wont be pretty. 

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3 minutes ago, C12 said:

It's a tricky one but my timeline from here would be something like:

Stocks enter a disorganised topping process that could take 6 - 12 months to play out. 

Interest rates continue to rise.

Commodities should do well initially, gold especially to make a run for the all time highs.

The housing market rolls over

Finally a collapse which takes everything down and make 1929 look like a picnic, banking collapses, ATM withdrawal limits etc. 

The next crash will be the real stinker we should have had in 2008-2012 and it wont be pretty. 

The housing market...I forgot to mention that one. Yes, extreme highs, rolling over already in London etc. The indicator in 2007 was the London Housing market cooling (for me anyway as I was into property) and it took a few months to play out.

Appreciate your input, just feeling like taking a cast iron frying pan to my head multiple times in last few days as retail jump in and buy this dip.

1929 will indeed feel like the warmth of the summer sun on your face as you stroll around the meadow listening to your children's laughter as they chase butterflies. I feel a bit sick thinking about what is coming down the pike. Nobody seems to think it is possible.

All the best

 

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17 minutes ago, RichRock said:

The housing market...I forgot to mention that one. Yes, extreme highs, rolling over already in London etc. The indicator in 2007 was the London Housing market cooling (for me anyway as I was into property) and it took a few months to play out.

Appreciate your input, just feeling like taking a cast iron frying pan to my head multiple times in last few days as retail jump in and buy this dip.

1929 will indeed feel like the warmth of the summer sun on your face as you stroll around the meadow listening to your children's laughter as they chase butterflies. I feel a bit sick thinking about what is coming down the pike. Nobody seems to think it is possible.

All the best

 

Yep, I know a lot of people are banking on inflation which would be great for us gold / silver holders. 

I think what's coming will take years to clean up. It will completely take everyone by surprise and the governments and central banks will be miles behind the curve in terms of QE or stimulus. 

Best thing now is to start thinking about liquidating assets (apart from physical gold or silver coins), accumulating cash and getting it to safety. NS&I accounts are our best bet in the UK. Also 6 - 12 months survival cash in bank notes. 

I feel like the clock is now ticking and last weeks stock market scare was just the tip of the iceberg. 9 - 12 months max before the storm hits. 

Edited by C12

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8 minutes ago, C12 said:

Yep, I know a lot of people are banking on inflation which would be great for us gold / silver holders. 

I think what's coming will take years to clean up. It will completely take everyone by surprise and the governments and central banks will be miles behind the curve in terms of QE or stimulus. 

Best thing now is to start liquidating assets (apart from physical gold or silver coins), accumulating cash and getting it to safety. NS&I accounts are our best bet in the UK. Also 6 - 12 months survival cash in bank notes. 

You know, I told a few close friends this week to take cash out of the banks due to the charts and last year's small print they all received detailing the 'bail in'. I was met with the same 'WTF?' as I was met with in 2007 when I told my friends who were buying property... 'Don't buy now, this could be a top...' Thankfully some of them are still friends, although they lost 30-40% after they bought before a slight rebound.. I understand the psychology of this market, and it can be really hard to go against it.

I have liquidated all. I am trying to figure out why many traders are still buying the market, any ideas?

Edited by RichRock

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Ps when I say 'friends' who were buying property, I don't mean the rich type. I mean the hard working guys who took out a 100% LTV on a BTL (with 15% sometimes)  on a self cert thinking that this was the future; and got shafted.

Edited by RichRock

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14 minutes ago, RichRock said:

You know, I told a few close friends this week to take cash out of the banks due to the charts and last year's small print they all received detailing the 'bail in'. I was met with the same 'WTF?' as I was met with in 2007 when I told my friends who were buying property... 'Don't buy now, this could be a top...' Thankfully some of them are still friends, although they lost 30-40% after they bought before a slight rebound.. I understand the psychology of this market, and it can be really hard to go against it.

I have liquidated all. I am trying to figure out why many traders are still buying the market, any ideas?

Yeah I remember driving to a cash point at 1am after watching late night news during the peak of the banking crisis in 2008. There were people queuing up trying to withdraw cash. It was pretty frightening at the time. 

Those under 32-35 probably wont have any real recollection of these events 10 years ago. 

As for traders, people just love trends. Who would buy stocks right now? The risk / reward ratio is completely inverted. 

Take a look at Apple on the monthly which is technically horrific. I don't usually look at declining volume or bearish divergence on oscillators but this is a real stinker.

apple.PNG

Edited by C12

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10 minutes ago, C12 said:

Yeah I remember driving to a cash point at 1am after watching late night news during the peak of the banking crisis in 2008. There were people queuing up trying to withdraw cash. It was pretty frightening at the time. 

Those under 32-35 probably wont have any real recollection of these events 10 years ago. 

As for traders, people just love trends. Who would buy stocks right now? The risk / reward ratio is completely inverted. 

Take a look at Apple on the monthly which is technically horrific. 

apple.PNG

Throw some BB's on that and a 5 day SMA (daily.) If touching top of BB's, then close below 5day Daily SMA looks ominous. I did it on Sugar last year. Oh God was I met with with jawboning: 'We are buying, great opportunity' etc from major HF lol. Now look at Sugar, nice and 1000% on the drop lol (tight stop on weekly high before drop, open TP, closed last week). 3 monthly pins? Sell, but prob spike to stops above prev high. People underestimate how quickly the market goes down if apple drops IMHO. On the other had, could do as Cable did before the major drop and bounce around for 6 months.

Edited by RichRock

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19 minutes ago, C12 said:

Yeah I remember driving to a cash point at 1am after watching late night news during the peak of the banking crisis in 2008. There were people queuing up trying to withdraw cash. It was pretty frightening at the time. 

Those under 32-35 probably wont have any real recollection of these events 10 years ago. 

As for traders, people just love trends. Who would buy stocks right now? The risk / reward ratio is completely inverted. 

Take a look at Apple on the monthly which is technically horrific. I don't usually look at declining volume or bearish divergence on oscillators but this is a real stinker.

apple.PNG

PS Yes, good divergence on the the MACD, used to use that on the beast, GBP/JPY:) in the day and the cash register used to ring with the sound of angels. Looking 130?

Edited by RichRock

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