I’m in the inflation camp. I think it’s coming. I have thought this for a while. People have looked all over for it as if looking for a lost sock or a hairpin: Where did it go? Where is that thing? But I do believe that the central bankers who have been kind of begging for inflation will be surprised at the generosity of the inflation gods over what they will ultimately be handed.
If we look back at the history of bear markets in the United States, then they were usually preceded by lengthy, strong bull markets. Those bull markets encouraged most investors to pile into the stock market and into high-yield corporate bonds, with the highest concentrations close to the tops. We can see that recently with all-time record inflows into U.S. equity funds--especially passive equity funds including ETFs--in 2017. Thus, as each bear market begins, people have huge percentages of their money in the stock market.
Unfortunately for the Fed, monetary tightening has become more powerful because of the debt. Lacy mentioned in his latest quarterly review that, “Excessive debt, rather than rendering monetary deceleration impotent, actually strengthens central bank power because interest expense rises quickly. Therefore, what used to be considered modest changes in monetary restraint that resulted in higher interest rates now has a profound and immediate negative impact on the economy.”
There is a popular notion, at least among American libertarians and gold bugs. The idea is that people will one day “get woke”, and suddenly realize that the dollar is bad / unbacked / fiat / unsound / Ponzi / other countries don’t like it. When they do, they will repudiate it. That is, sell all their dollars to buy consumer goods (i.e. hyperinflation), gold, and/or whatever other currency.
While the Liberal International Order and its institutions are credited with the relative peace the world has enjoyed since 1945, Niall says, “That's a very implausible argument.” He believes the world has been more peaceful because of the will and capacity of the US to be the principal guarantor of the system. This is often referred to as Pax Americana, in which the US employed its overwhelming military power to shape and direct global events.
My business is to constantly look for new stocks by running stock screens, endlessly reading (blogs, research, magazines, newspapers), looking at the holdings of respected investors, talking to a large network of investment professionals, attending conferences, scouring through ideas published on value investor networks, and finally, scouring a large (and growing) watch list of companies to buy at a significant margin of safety.
The decline of 20% by mid-2008 was in tandem with other stock markets across the globe. On September 29, 2008, the DJIA had a record-breaking drop of 777.68 with a close at 10,365.45. The DJIA hit a market low of 6,443.27 on March 6, 2009, having lost over 54% of its value since the October 9, 2007 high. The bear market reversed course on March 9, 2009, as the DJIA rebounded more than 20% from its low to 7924.56 after a mere three weeks of gains. After March 9, the S&P 500 was up 30% by mid May and over 60% by the end of the year.
2019 is shaping up to be the year in which all the policies that worked in the past will no longer work. As we all know, the Global Financial Meltdown / recession of 2008-09 was halted by the coordinated policies of the major central banks, which lowered interest rates to near-zero, bought trillions of dollars of bonds and iffy assets such as mortgage-backed securities, and issued unlimited lines of credit to insolvent banks, i.e. unlimited liquidity.
Shares of GoDaddy Inc (GDDY) were collapsing for the third day in a row before a strong bounce took place at $72.18. The reason for this bounce was easily predicted by pro traders. If you connect the lows of the stock over the last 6 months, the lows all line up perfectly. Today's lows went right to the trend line (as seen in the chart below). Overall, pro traders expect only a day or two bounce, then a massive break lower on GoDaddy. They are looking for a $65.00 target on the stock…
Swiss-born Marc Faber, now a resident in Thailand, holds a PhD in economics and is an investment advisor and fund manager through his firm, Marc Faber Ltd. He also writes a monthly investment newsletter, "The Gloom, Boom and Doom Report." As Money notes, Faber is consistently bearish, and frequently is called "Dr. Doom." He sees two big red flags right now.
Of course, all of those ships have sailed. We live in a reality where past fiduciary mistakes are “corrected” by amplifying those same mistakes, as if the solution to having our heads buried in the sand is that we just haven’t buried them deeply enough; that maybe the tsunami created by generations of criminal, federal, financial mismanagement and unsustainable promises will disappear if we can just duck around this next corner and close our eyes long enough. Read More
I’ve been asked to comment on the most recent market decline. My initial reaction was, markets go up and they go down. America is a great country but the US Constitution doesn’t guarantee always-rising markets. I sat down and I wanted to write a reassuring message. I wanted to express my empathy. Somehow, I found that my reservoir of empathy was empty: After recent decline the market is still up twenty-something percent from the beginning of 2017.
A stone slab bearing 3,000-year-old writing previously unknown to scholars has been found in the Mexican state of Veracruz, and archaeologists say it is an example of the oldest script ever discovered in the Western Hemisphere. — John Noble Wilford, New York Times, 15 Sept. 2006 Large public buildings often bear only a loose resemblance to what was originally in the minds of the architects who designed them. Things get cut back to save money; somebody has second thoughts about the way part of the building will function; it takes so long to get public approval that the original idea starts to seem dated … — Paul Goldberger, New Yorker, 17 Jan. 2002 The most famous work of Louis Pasteur (1822-1895), of course, was purifying milk with the process that now bears his name. — Brendan Miniter, American Enterprise, September/October 1998 In so-called parking schemes, securities aren't carried on the books of the true owner but are temporarily sold to someone else with the understanding that the seller will continue to bear any risk of loss and reap any profits. — James B. Stewart, New Yorker, 8 Mar. 1993 As a science fiction buff, many years ago, I remember being particularly fascinated by tales of genetic surgery. Imagine the surgeon … peering through the electron microscope, repairing the sickle-cell gene and returning the ovum to its mother, who would then bear a normal child. — Richard Novick, New York Times Book Review, 15 Feb. 1987 The sight of Niña already there, snugged down as if she had been at home a month, finished Martín Alonso Pinzón. Older than Columbus, ill from the hardships of the voyage, mortified by his snub from the Sovereigns, he could bear no more. — Samuel Eliot Morison, The European Discovery of America, 1974 a symphony that can bear comparison with Beethoven's best The company agreed to bear the costs. The criminals must bear full responsibility for the deaths of these innocent people. Who will bear the blame for this tragedy?
Basically, the strategy is to go long unless the unemployment rate is rising and the price trend is falling. Unemployment is rising if the reported rate is above its trailing twelve-month moving average and price trend is falling if the S&P 500 is below its trailing ten-month moving average. “Livermore” found that this indicator beats all others over the period from 1930 to 2016.
It's true that Treasuries rallied last week, as yield-starved foreign investors poured into the market following the Fed's rate decision and equity markets tumbled on the Trump administration's tariffs targeting Chinese exports. But the most telling part of the action was the 10-year Treasury yields only managed to drop a measly three basis points on the week as the Dow Jones Industrial Average tumbled more than 1400 points in its worst decline in more than two years.