promise?

BA Merill...is now saying retest of January lows or 15% correction..

In January when Equites were tumbling I said that they would rebound and hit new highs. through the summer ...then sometime in the Summer an event would happen where they would crash...sic correct.

Predicting a change in direction is about as easy and useful as predicting "Nighttime," but with less accuracy. Congratulations on stating the obvious.

And for the record, I'd like to predict RIGHT NOW!

That stocks will go up, and then they will go down for a while, and then after that there will be a recovery and they will go up. And then something will happen and they will go down. You heard it here first!

Seeing that nobody can time the market right this is one way to do it. As there is dollar cost averaging when you buy stocks then you can do the opposite and sell on the same basis of dollar cost averaging. Sell a bit each month. Rebalancing into bonds, cash etc is a good way to go due to the elevated stock market.

This is good really good advice.

I have oft said you have to play the game like the music will never stop. It would be wise to hedge with gold and silver. Have some land where you can grow fruits, vegetables and some chickens. Along with some guns and ammo. That is about it. Investing money in anything either has no ROI and or is fraught with risk.

I get dismayed when I hear the banter that everything is swell and should I do this or that. What is being missed in the equation is the risk in virtually anything you invest in is off the charts. The very fundlementals of the fiscal and monetary system is being manipulated beyond creduality. All in a life support effort for a moribund economic system. You have to be aware of the risk and consider that you are going to be lucky to get out with your skin.

This has been my message and then I explain how and why it is so. I have been following the economy equities and bonds for 30 over years. After that much time you get to know how the beast reacts and its behavior patterns which has a predictive quality.

Surprised some of you still have Internet service after following Glenn Beck's advice to buy farmland and guns and get the hell out of dodge because of impending economic collapse. That was about -5000 Dow points ago.

i am going to predict that the fix is in and those in the know are making hay while they can and then it will come down very far. this is about the end of a 7 year cycle and a presidency and our consumer debt is at record highs.

More than that is at an end..a way of life.

HAL leaps will pair up nicely with your thought process. I bought those decades ago when oil bottomed the last time and you are right on target. Time to do it again as most value on the planet is based off the oil differential. The queen of England is one of the larger holders of BP common stock, so that one is blessed too. Also comes with a 7% dividend.

um.... maybe. i very much doubt it is any kind of apocalypse.

it is going to be a LONG time before oil goes substantially above $50, corrected for inflation. i am going predict that we will see it below $30 again, soon.

I became a Boglehead because of the following post by you in 2011. I ordered that book almost immediately. Thank you sir!

Never said it was an apocalypse...or no more than it was an apocalypse for the Aztecs when Cortes landed in Mexico in 1519.

Good for you...:)

It's the end of an eight-year presidential cycle. The last two times that happened there was an economic downturn. Maybe nothing will happen but keep a close eye on the market. If it starts heading down in the next 30-60 days we may be seeing our third consecutive downturn at the end of an eight-year presidency.

Wall Street gets out first, slowly and quietly. Then the other players see the trend and the herd becomes nervous and starts looking around for an answer. Then the trend accelerates and the herd starts moving. Then the herd finally sees the threat and explodes in every direction in sheer panic. When the dust settles the top Wall Street firms are smiling like the Cheshire Cat while everyone else wonders what the hell just happened. Again.

What was the commonality of events that caused the downturn that you mentioned in the last two 8 year election sequences?

Both in 2000 and 2008 Bubble economies deflated. The first was the Dot Com bubble the second the RE & mortgage bubble. The bubble that is currently building is the Mother of all bubbles and that is the Sovereign Debt Bubble. There is no walking away from an implosion of that bubble for it has to do with the very medium of exchange for the Global economy...the USD. The ramifications of a USD collapse would be like a nuclear war without the bombs.

What most do not realize is that since 2008 a whole new paradigm of reality has been operative. The old rules no longer apply as the FED now has a safety net guarantee of activism to support the economy from failing. That guarantee has been the lynchpin of the advance in Equities since 2012.

As it is turning out without FED intervention the economy falters into a no growth mode(even with intervention it is slow growth at the rate of population increase). This is unsustainable because tax revenues will not keep up with government expenditures in particular SS, Medicare and Prescription Drugs. Thus you are in effect standing on the deck of the Titanic.

Your last paragraph really said it all, Tabs. There are painful times coming.

It's foreign money inflows moving prices up. Domestic money flows are negative. The foreign buyers outweigh the domestic sellers as they are offloading debasing foreign currencies on things of value in the U.S. Hard to believe but what is actually happening. They don't want to save in their phony paper money as many are being debased hard and quickly in percentage terms. As existing bonds are bought by the EU and BOJ, where do you think the original owners of those bonds park the new capital? U.S. stocks and bonds among other things. Huge amounts of displaced capital created every month looking for a home.

Capital will flow to where it is best treated. A large part of the developed world has negative interest rates. So it routes to the most liquid and positive rate market (U.S.) and bids up prices on the available assets. Past metrics of value and fundamentals are out the window in the face of the liquidity wave. Interest rates have never been lower in the history of mankind. It will end when the interest can no longer be paid and the underlying currencies collapse and are reimagined or revalued to an underlying tangible base value and the money flows reverse.

That is why the markets are where they are today and will go higher than anyone will believe. And you won't read anything like this on Yahoo.

Who ARE you?

http://forums.pelicanparts.com/off-topic-politics-religion/734011-adverse-shift.html


An Adverse Shift

Starting with the Financial Crisis in 2008 the United States Treasury embarked on a policy of massive deficit spending resulting in a now 6T USD increase in it's debt level, brining the upfront debt to roughly 16.5T USD. The Federal Reserve on the monetary front lowered interest rates and instituted a number of Quanatative Easings to increase the liquidity of the financial system in order to at first stabilize the system and then to promote economic growth in that system. The increase of liquidity to the system through Federal Reserve purchases of US debt instruments is roughly 3T USD. In September of 2012 the Federal Reserve embarked on OE3 whose tenets included the purchase of 85B a month in US debt instruments and mortgage backed securities with an open ended time frame of the US economy having a 6.5% unemployment rate.

What the concern in this is are the dislocations that these policies have caused in the stability of the global economy and the attendant political, social and cultural strata. Here one can postulate that as US debt levels climb, it destabilizes the above mentioned strata. This is because of several factors which include that the United States is the largest economy in a globally intertwined economy and that the USD is the Reserve Currency of the World. Being the Reserve Currency for the world means that every nation must hold reserves of USD in order to purchase oil. Further the USD being not only the Reserve currency but having a 200 year history of being a stable and thus responsible currency has made it the favored currency to be held by private concerns and individuals. This has been especially true in times of distress either globally or on a foreign national level. This has recently been a factor in the USD strength in the past several years as there has been a flight to the USD and US debt instruments in the face of a potential meltdown of the European Union due to the amount of leverage it has incurred and its slow response to rectifying it's problems.

However with the "unlimited" nature of both the European Central Bank and US Federal Reserves recent QE programs which for all intents and purposes means an unlimited printing of money to purchase sovereign debt, dislocations in the various economies are now beginning to appear which is resulting in their currencies seeking a new equilibrium. This is caused by a defacto devaluation of the large amount of USD being held either by foreign governments, held by private concerns or individuals which then puts pressure on those local economies. Further the real danger lies in the fact that as the USD becomes evermore diluted/devalued/debased those foreign holders of USDs will feel increasing pressure to divest themselves of those USDs or face continued pressure on their economies. Or going beyond this as Y. Aksoy and T Piskovski state in the conclusion of their paper "Foreign Holders of Dollars And The Information Value Of US Monetary Aggregates,"

"That if the leading role of US dollar as an international currency will be challenged by longterm
adverse shifts in the preferences of the foreign holders, the US Federal Reserve may face serious
obstacles in the conduct of monetary policy to stabilize the US macroeconomic environment."

Thus in conclusion the Federal Reserves recent "unlimited" QE program has the potential unintended consequence of being a WMD which could create an economic tsunami that would sweep the world with catastrophic consequences.


The above piece is what caused Bullard to choke and stutter for 5 minutes when he read it on CNBC on 2/23/13. From giggling to stuttering with the CNBC crew. It was on the last segment of that show as a matter of fact that Bullard's website says he talked about the TAPER.

I have known that as a flight to quality foreign capital was buying USD, Bonds, RE, Businesses, and even US Equities. To be honest I wasn't watching the US Equites portion of it, but it stands to reason. I have long said the USA is an ON THE BEACH STRATEGY after the 1960 movie of the same title. In other words the last high ground before the tsunami hits. While I cover the macro you provide the nuance of the mechanics...

In 2009 I felt that the USA had the financial credibility and reserves for one more chance. The powers that be have essentially squandered that chance with continued deficits and now the global economic system is terminal.

I do not put the blame on the Central Banks and their policies as they are trying to stabilize the system to the best of their abilities. Better the devil you know than the one you don't.* The blame belongs with peoples expectations and the politicians..

As I have laid out the economics of it all is causing dislocations in political and social strata right across the globe. The uncertainty and economic duress causes people to be under stress and eventually lose faith in the political processes that can not ameliorate the problems. In the end it causes social and political upheavals which we are now seeing on an almost daily basis. The frequency and severity of those upheavals is a barometer of just how dire the economic situation is becoming. Ants on an ever hotter tin plate is the analogy I have been using.

* The powers that be have tried every remedy in the book of tried and true tricks that have seemingly worked for decades. Those tricks of stimulus and monetary expansion only worked because there was money in the bank and value in the assets and productivity of the people. When faced in 08 with a different animal those tricks didn't work anymore. The expectation was that this was another garden variety crisis, the tricks would work and we would within a fairly short time be back to business as usual and normality would once again prevail. Now that the tricks have failed desperation is going to increasingly reign (on the "Street"). Quite frankly I wasn't fooled by it, I knew from the moment GW hit the tube that the herd was spooked and the illusion of normal prosperity was shattered like Humpty Dumpty hitting the concrete. They didn't get it, and now their feet are getting wet as the Titanic goes down!

On the maiden voyage of the Titanic many of the worlds richest along with the poorest people in steerage all shared the same ride to the bottom of the Atlantic.