Opportunities in Impending Mega-Moves
by DeepCaster, GoldSeek
I told them the real 2014 deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. … all the spending on defense, repairing the roads, paying for the Supreme Court Justice salaries, Social Security, Medicare, Medicaid, welfare, everything, and take all those expenditures into the future, and compare that to all the taxes that are projected to come in, then the difference is $210 trillion. That is the fiscal gap. That is our true debt.” Lawrence Kotlikoff (economist, in testimony before the US Senate, a Professor of Economics at Boston University)
Unpayable Debts in the U.S.A., Eurozone, China & Japan virtually guarantee Mega-Moves in Key Sectors are coming.
“Financial assets now represent over 82% of the net worth of both households and US non-financial corporations (data: Federal Reserve Z.1 Flow of Funds). Except for periods where total net worth had itself retreated (for example, 2008-2010), the concentration of private net worth on financial assets, rather than real assets or productive capital, has reached the highest extreme in history in recent years. In our view, this is just temporarily overvalued paper masquerading as something durable. The previous extreme (again, outside of periods where net worth itself had retreated) was, not surprisingly, in Q1, immediately prior to The Tech Wreck. — John Hussmann, 04/21/2015
Yes, indeed “Temporarily Overvalued Paper” accurately describes many “Markets.” And that which is Overvalued does not stay overvalued! Thus Mega-Moves are Impending and those who are prepared will Profit, and those unprepared will Suffer. Recent below-expectation (except by Deepcaster and a few others) U.S. Retail Sales, Housing Starts, Business Equipment Sales, Jobs Reports and now GDP, among other indicators, show that the U.S. Economy is not recovering (as Deepcaster and a few others have been documenting for Months), despite the Happy Talk in the Main Stream Media (see Note 1, Shadowstats for the Real Numbers). Indeed, QE has mainly helped only The Private-for-Profit Fed’s Clients/Shareholders, the Mega-Banks, as well as creating a variety of Massive Asset Bubbles, including in Equities. And Economies and Markets elsewhere reflect the same Economic Malaise and Bogus Official Numbers. The Equities Market in Indonesia is down over 7% in the last 3 days, as we write. One Major Consequence of this Congeries of Bearish Real Data is that The Fed will be likely constrained to Keep Rates Lower Longer. Lower Rates Longer is only one of several Factors which signal a Weaker $US in the Months ahead. No surprise to us as we wrote on April 29 when the $US was down a Massive 125 BPS to 94.80ish. (But, very short-term, we expect a Bounce.) Indeed, we and others have documented the Reasons the $US is on the way to losing its Status as World’s Reserve Currency — a Mega Event to be sure. We reiterate China’s Action in establishing an Investment Bank and New Development Bank and an Alternative Clearing System to the Western Bankers’ SWIFT System (Chinese International Payments System–CIPS), and its importing Massive Amounts of Physical Gold which we all can expect will serve to underpin a Gold-Backed Yuan as the next World’s Reserve Currency, and indeed for a Chinese/BRICS-led Financial System. Of Course, the IMF has other ideas, namely to create a new Global Currency based on IMF Special Drawing Rights and controlled by the Globalist IMF and Bank for International Settlements. Indeed, these Globalists (i.e., those opposed to National Sovereignty) have admitted as much in publications like the Rothschild’s controlled “The Economist” and articles like “Get Ready for The Phoenix”. So much for National Sovereignty if IMF SDRs are allowed to become the World’s Reserve Currency. Candidly, while the evidence is mounting that the $US will lose its World Reserve Currency Status — The Great Impending Mega-Move — we note that IMF SDRs would be yet another Fiat Currency. And if, as we expect, the Gold-Backed Yuan emerges as The Competitor for World Reserve Currency we have little Doubt which will prevail. Thus the Question is not whether the Chinese will de-peg Yuan from its Trading Range Tie to the $US, but when — yet another Impending Mega-Move, one which will not only mortally wound the U.S. Dollar, but als0 greatly injure U.S. and Western-Focused Equities Markets — a True Mega-Shift in Political as well as Economic Power— Mega-Events with Concurrent Mega-Moves, for sure. And there is recent Precedent. Consider that when it was to their Advantage, The Swiss de-pegged from the Euro, without Warning, and, indeed, the De-Peg occurred only a few hours after the Swiss National Bank issued contrary Signals. Moreover, considering the aforementioned Real Numbers, the U.S. is already in recession. When this fact of a U.S. Recession (i.e., More Negative Economic and Market Data) becomes widely acknowledged, the present slow flight away from the U.S. Dollar will soon become a Rout. And that will create a Panic far beyond the Currency Sector. The run on the $US is probably weeks or a very few months off, but it could begin at any time. And after that, U.S. Treasuries will take a Big Hit also. Short-term, (next few weeks) however, U.S. Treasuries have been on a Strengthening Trajectory (See our recent Buy Recommendation) notwithstanding the recent weakness resulting from the Chinese Stimulus (lessening the Reserve Requirement Ratio [RRR] for the Banks), Weak GDP Numbers, and an ample supply of relatively high yielding corporate bonds and on April 30 – May 1 Rout in the German and other Eurozone Bond Markets resulting in Higher Yields, thus making them less uncompetitive with Higher U.S. Bond Yields. Moreover, the Bubbles created by the Central Banks Money Wars are Huge — consider that Total Credit Risk in the U.S. is at Record Highs, i.e., higher than in Pre-Crash 2007. Worldwide, there is $57 Trillion more Debt than 2007! A Massive Unpayable Debt Bubble Waiting to Pop, yet another Impending Mega-Move. Yes, indeed, Another “Crisis will Hit” — the only questions are “When?” and “In which Sector First?” No one can know the Exact Date The Crash Starts — it could be Triggered at any time by a “Black Swan” Event. But one can evaluate Probabilities and make forecasts based on them as Deepcaster does and successfully did before the 2008 Crash (Note 2). And consider how Deepcaster’s Focus on Interventionals as well as Fundamentals and Technicals has facilitated forecasting the 2008 Crash as well as recent Profitable Positions (Note 3). In the next few months, we expect the International Economic Contraction will worsen through 2015 and into 2016. For example, Japan’s QE is not helping — Japanese Retail Sales are down 9.7% Year-On-Year. Continue Reading>>>