-- Published: Friday, 6 March 2015 | Print | Disqus
DEEPCASTER LLC
www.deepcaster.com
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Key Mega-Trends will Determine the Opportunities for Profit and Risks to Wealth Protection going forward.
The following Mega-trends are and will increasingly Determine and/or Trump Opportunities for Profit. And they will Determine Major Risks as well.
1) Economic Deflation – Even the recent Headline U.S. GDP Revision (courtesy of the U.S. BLS) came in lower than expected.
And Real U.S. GDP is a Negative Number (-1.64% per Shadowstats). And the Economic Data from other Major Economies reflects Deflation or Disinflation (e.g., in Japan Abenomics is not working and the Eurozone is not recovering and China is Disinflating). In sum, The International Economy is Deflating/Contracting.
2) Earnings — Earnings of U.S. Companies (supposedly the World’s Healthiest) have been Mixed, but the trend is toward more earnings misses
— this is Not Good for Equities Prices going forward
— And One Great Driver of the post-2009 Stock Prices Recovery, Energy Companies, Employment and Earnings and will increasingly now be a drag on overall Earnings.
3) Global Market Structure is increasingly Vulnerable.
— Derivatives: at nearly $700 Trillion Exposure to this leverage, this is the same order of Magnitude as pre-Market Crash 2008 and
— Much more Global Debt is outstanding than in 2008. Debt which can never be repaid.
— Japan, e.g., expects to spend 43% of Tax Revenue just on interest to service its Debt.
— Arguably, two Bubbles could be ready to Burst — the Equities Bubble and The Bond Bubble and Deepcaster recently forecast the future for these.
4) While Major Economies are Contracting/Deflating, Major Central Banks are competing to devalue their Currencies via Hyper Monetary Inflation. Seventeen Central Banks have devalued their Currencies in Recent Months.
Result: We are headed toward Stagflation.
5) Central Bankers are losing control
— Abenomics has not generated a Japanese recovery
— Nor has Fed QE generated a Robust U.S. Recovery.
— Indeed the U.S. Labor Force Participation Rate is at record lows and Wage Growth is Tepid.
— And the entire Eurozone is looking none to Healthy Either. — Unemployment is at record highs and increasing, and the Structural Problems of the Peripheral Countries have not been solved.
— And the Eurozone and USA are increasingly flooded with highly economically dependent, low-skilled immigrants, an increasing net economic drain (over $6 Trillion Net Cost for the next decade potentially — Rector, Heritage Fdn). Mass Immigration arguably increases GDP but surely decreases per capita GDP. And per capita GDP is the proper measure of the Economic Wealth of the Citizenry. Thus, stopping Mass Immigration is essential to Economic Health (see carryingcapacity.org).
6) International Debt is up $57 Trillion over what it was in 2007, just before the Market Crash.
— And Massive and increasing Sovereign Debts can never be repaid, without dramatic Currency Devaluation.
As to the Markets themselves, Markets Transaction Volumes are generally decreasing, and Insider Selling is generally increasing.
All of the above are Bearish Indicators reflected in the Technicals.
Specifically, for example, Jaws of Death and seven Hindenburg Omen observations since January 2015 indicate a Bearish Outlook for Equities going forward.
Indeed, Deepcaster’s evaluation of the Fundamentals, Technical and Interventionals led us to forecast the 2008 Market Crash with profitable results. (See Note 1) In light of the foregoing, Deepcaster has recently Forecast opportunities for Profit and Wealth Protection and made Buy Recommendations.
In sum, we have increasing Economic Deflation which has been created in large part generated by years of Fed-led Central Bank Monetary Inflation. Even China recently acknowledged Deflation and opted for easier credit.
7) That is, these years of excesses of Monetary Inflation (to protect the profits of The Fed’s and other Central Banks’ Mega-Bank Shareholders/Clients).
Indeed, the Inventor of QE, Richard Werner (economics professor as University of Southampton) says
“ … It’s EASY to Create a Full-Blown Recovery, But Central Banks Chose to Make Banksters Rich Instead …
“The central Banks have twisted the whole concept of easing … pretending that they’re trying to help the economy, when they’re doing something else entirely.
“Credit should be extended to the productive economy [but under Fed QE Policy is not being – Ed.] — businesses which create goods and services and not to financial speculators or high levels of consumer debt. Extending credit to small businesses … creates prosperity; lending to financial speculators only leads to economic instability and soaring inequality; and when too high a percentage of lending goes to luxury consumer consumption, it’s bad for the economy.”
“ QE Inventor: It’s EASY to Create a Full-Blown Recovery, But Central Banks Chose to Make Banksters Rich Instead,” Richard Werner, via ZeroHedge
QE has been Capital Destructive, and helpful only to Mega Banks
— the more Fiat Currency Units printed the less each Unit is Worth in Purchasing Power and Wealth Preservation terms thus we see the consequence – Economic Deflation around the World.
And worse, the repeated rounds of Monetary Inflation are likely sooner rather than later lead to Hyper-Price Inflation. Result: Stagflation, the worst of both worlds.
8) The Gap between 5 Year yields on U.S. TIPS and Comparable Maturity U.S. Debt … is a measure of Inflation Expectations over the life of the Securities.
As of the beginning of March 2015, this gap widened the most in 3 weeks. A whiff of Price inflation is already in the Air.
Not unexpected in our view. For months we have noted that we are in a phase of Economic Deflation (which will continue for months) and ongoing Central Bank Monetary Hyperinflation which will lead to Price Inflation.
Indeed, though this Price Inflation is already reflected already in U.S. Food, Housing and Medical Care Costs (CPI at 7.50% per Shadowstats) the Official BLS Numbers have not yet reflected that. But they will. Again, we are headed into a period of Stagflation.
This will have dramatic, long-term consequences for the U.S. $ and Treasury Securities and certain other Fiat Currencies.
9) Important to reiterate that WTI Crude Prices, and other Key Commodities and Securities, are highly correlated to the $US — Dollar Up, Crude Down; Dollar Down, Crude Up.
Indeed, increasing U.S. $ Strength over the last few months explains much of the recent Crude Oil Price Decline when viewed in $US Terms.
Also, the very recent slight recovery in the WTI Crude Price to over $50 is responsive to Geopolitical Threats and Realities (e.g., recent Attacks on Oil Facilities/Production in Libya) and the rapid decrease in drilling commitments as reflected in the Decline in Rig Counts. And the continuing modest, albeit fitful, Rally in the Equities Markets helps the oil price as does the rather smallish and decreasing rate of build in the above-ground surplus at Cushing, Oklahoma.
Regarding Gold, until its March 6 Takedown, it has shown remarkable resilience around $1200 and Silver in the mid-$16 range, in spite of recent $US Strength, a very Bullish sign.
Indeed, Asian and Safe Haven buying has kicked in.
An Excellent Buying Opportunity Knocks!
For the middle and long-term (i.e., mid 2015 & Beyond), given the USA’s Massive and increasing $18 Trillion National Debt and over $100 Trillion Downstream Unfunded Liabilities and The Feds $4 Trillion Balance Sheet, the $US is Structurally Impaired (as are U.S. Treasuries) and doomed eventually to fail and lose World’s Reserve Currency Status. Great Profits will be made if one shorts the $US and U.S. Treasuries at the right time. (Not yet!) We aim to forecast that Timing of the $US and Treasuries Bubble Bursting as we already have successfully forecast the timing of Market and Economic Mega-Events. (See Note 2)
Going forward, consider as well, the ongoing increasing use of currencies other than the $US in International Transactions could spell a Sooner Doom for the $US (as World Reserve Currency, especially if increased significant Volumes of Crude Oil begin to be traded for Non $US Currencies. The West is driving Russia into the hands of China, and this is Bad News for the $US and Western economies.
As a consequence of all the foregoing, Deepcaster has recently forecast when The Fed will have to start Printing QE again to boost the Equities Markets (which will have fallen by then on weak fundamentals). Ultimately, at some point after that, the Chinese will likely de-peg the Yuan from its $US trading range, and the Yuan (Gold-backed!), or a Yuan/BRICS Creation, will then be the World’s Reserve Currency.
In sum, the World Economy is slowing/deflating and the Central Banks (except Swiss) are attempting to keep it afloat for a while, by competitively devaluing their currencies (i.e., Monetary Inflation), — the Currency Wars about which we have been writing a trend which cannot continue indefinitely, and will ultimately fail because it is a race to the bottom which no country can win. We reiterate, with both Canada and Denmark, bringing to 17 the number of countries which have cut rates and debased their currencies as of this January 2015 – the Currency Wars intensify and will continue to intensify.
The Fundamental Problem is too much QE and debt worldwide — Global Debt is up $57 Trillion! since 2007, just before the Financial Crisis. Japan’s Debt is over 200% of GDP. And China’s Debt has quadrupled since 2007! with much of that money going into now unused infrastructure, i.e., the famous empty cities. These debts can never be repaid under current and likely prospective economic circumstances.
Very long-term and when the $US Dramatically Tanks, the Precious Metals will Soar and Western Equities Markets Crash. This scenario could possibly launch at any time (but is probably still a number of months away), on Black Swan Geopolitical Events. This $US Crash will shake Economies and Markets to the core, as the Economy transitions to a Yuan/BRICS based Gold-Backed World Reserve Currency. The Swiss have recently established a Yuan/Swiss Franc swap facility in Switzerland.
And when the $US Tanks, that will also be accompanied by a loss of credibility of U.S. Treasuries as a store of wealth soon after. Thus they will tank too … ending in “a very bad way” according to Investment Legend, Julian Robertson, with whom Deepcaster agrees. Excess Debt and Fed and other Central Bank Monetary inflation via QE et al will have taken their toll.
All the foregoing provides Great Profit Opportunities for the prepared and Wealth Destruction for the unprepared.
Note 1: * We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" in the ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation, and manipulation in other Markets. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Note 2: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*
• 45% Profit on a Currency Double Short ETF on January 22, 2015 after just 9 months (i.e., about 59% Annualized)
• 23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)
• 85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)
• 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
• 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
• 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
• 55% Profit on Double Short Euro Call on August 6, 2014 after just 106 days (i.e., about 200% Annualized)
• 65% Profit on Energy Storage & Management Company on July7 15, 2014 after just 342 days (i.e., about 70% Annualized)
• 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
*Past Profitable Performance is no assurance of future Profitable Performance.
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-- Published: Friday, 6 March 2015 | E-Mail | Print | Source: GoldSeek.com
