-- Published: Friday, 21 October 2016 | Print | Disqus
Regardless of who wins the U.S. Presidency, there are Key Post-Election Economic and Market Events which are highly probable.
And the advance knowledge of these events will give well-informed Investors an Opportunity for Great Profit and to protect Wealth against Great Impending Threats. To understand these, consider the following overview.
U.S. Jobs Growth and Corporate Earnings are both Slowing.
And U.S. GDP and average hours Worked are all down-Trending as well. Indeed, the U.S. Industrial Economy has experienced 13 consecutive months of Negative Growth if one looks at the Real Numbers and not the Bogus Official ones. See Shadowstats Real Numbers Note 1, below.
And China’s exports and imports are both slowing.
And, with the British Pound and Japanese Yen both weakening vis à vis the $US which has recently skyrocketed up over 98 basis USDX.
And the Currency War continues with China weakening it’s currency again.
And a Hard Brexit is becoming likely.
And perhaps most Threatening of all, Global Debt hit $152 Trillion according to the IMF – the largest Bubble of them all—and Central Bank Debt Purchases have now exceeded $21 Trillion! Practically speaking, much of this Debt can not be repaid.
But note that using more Debt to pay down debt is not Sustainable!
“In the post 2008 era, the Globalists made a major push to hold the system together. The multi-billionaire class, particularly those who made fortunes from crony capitalism and bubble economics joined forces with the Keynesian media shills to convince the world that the only way we would survive would be if trillions of Dollars were given to those who were deemed ‘systemically important.’
“Let’s be blunt here: the 2008 bailouts and money pumps completely betrayed capitalism. The outcome was precisely what you’d expect from Central Planning:
1. Economic stagnation.
2. The creation of low quality jobs that offer little upward mobility.
3. Concentration of wealth.
“Today, eight years later, the elites are terrified that the game is ending.
“The Era of Central Planning is Crumbling…and the Elite are Terrified,”
Phoenix Capital, September 10, 2016
Indeed, “Terrified” because the Globalists’ Anti-Capitalism has created Massive Bubbles.
Indeed, Key Sectors and Subsectors are Massive Bubbles and will likely burst in a few days or very few weeks.
It is essential for Investors to seriously consider exiting these Sectors to protect Wealth and/or considering shorting them for potentially Great Profit. See Deepcaster’s recent “Exit Sectors” recommendations and our recent Buy Recommendations.
Above all, consider the effect of Debt.
The World is awash in Debt—Sovereign, Business and Individual Debt.
Much of the Debt can Never be repaid. Consider for example:
¾ U S Debt of 19 Trillion
¾ 13 Trillion of Negative Interest Rate Debt Worldwide
¾ Japan’s Debt which is more than 200% of GDP
¾ And China’s Debt Bubble of reportedly over 30 times GDP if “private” lending is included
¾ Emerging Markets alone have over $25 Trillion in Debt
¾ And we are headed for a $US liquidity Crunch. Why? Because more $US in Debt have been printed/digitized than Cash $ in the System.
¾ And the Defaults have already started in one Sector—the approximate 75 Defaults/Bankruptcies already in the Energy Sector with another hundred to come.
Therefore, if the Fed, or ECB or Bank of Japan or China Tighten significantly (or, arguably, at all), not only will this tank Key Equities Markets Sectors because inter alia, many companies and Nations could not handle higher Debt Payment.
Indeed, several Defaults in one Sector are likely to start a Debt Default Domino effect in the Credit Markets.
Very Important to note is that there are over $500 Trillion Notional Value of credit-related Derivatives Worldwide, (Path: bis.org, Statistics, Derivatives).
On the other hand if the Central Banks and especially The Fed do not tighten significantly the Trend of Piling on More Debt to service pre-existing Debt will continue … until pop Pop POP.
So Exit or consider shorting the Bubble Sectors and Subsectors about to pop.
Raúl Meijer explains that the “entire model our societies have been based on for at least as long as we ourselves have lived, is over!” And he correctly claims that “That is why there’s Trump…”
But whether Trump or Hillary wins, the winner will face the following Realities.
“There is no growth. There hasn’t been any real growth for years. All there is left are empty, hollow, sunshiny S&P 500 stock market numbers propped up with ultra-cheap debt and buybacks, and employment figures that hide untold millions hiding from the labor force. And most of all, there’s debt, public as well as private, that has served to keep an illusion of growth alive and now increasingly no longer can.
“These false growth numbers have one purpose only: for the public to keep the incumbent powers that be in their plush seats. But they could always ever only pull the curtain of [The Wizard of] Oz over people’s eyes for so long, and it’s no longer so long.
“That’s what the ascent of Trump means, and Brexit, Le Pen, and all the others. It’s over. What has driven us for all our lives has lost both its direction and its energy.”
Raúl Meijer, via David Stockman’s Contra Corner Newsletter, October, 2016
Thus, Sophisticated Investors around the World already Dump U.S. Debt and Buy Gold and Silver … they see what is coming ... the displacement of the $US as World Reserve Currency by first, the IMF SDRs and then the Gold-backed Chinese Yuan, a development which will deliver yet another hit to the U.S. and Eurozone Economies.
All of the above are collectively the reasons U.S. Equities are bouncing along just under the upper Verge of the Jaws of Death Megaphone and we are just at the beginning of the next Leg of The Great Crash in certain Sectors. Fundamentals generate this Technical Pattern (not the reverse!) and in our view often provide an adequate perspective on what is coming.
Thus, the Real data demonstrate what we have been claiming for Months — the International Economy is slowing and that includes the U.S. Economy, notwithstanding Mainstream Media (MSM) and Major Government Spin to the Contrary (see shadowstats.com), plus recent “Deep Pockets” boosting of the Equities Markets.
But virtually all (except The Fed—so far) Major Central Banks are weakening their Currencies.
China is indeed weakening the Yuan at a 12% annualized rate vis à vis the $US!
And the weak underlying Economic Reality will keep Major Nations’ Sovereign Bond Prices high (Yuan low) for weeks or months to come—until The Great Crash…see our recent Letter and Alerts for more detailed Analyses and Forecasts.
But the good news is the Recent Takedown has provided Buying Opportunity in oner Key Profit and Wealth Protection Sector (see our recent Recommendations).
In order to consider what to short or exit, consider the following Bubbles.
· The Credit, i.e. Mega-Debt, Bubble
· And consequent Commercial Real Estate Bubble
· The Equities Bubble
· The $US Bubble, as well as
· NIRP Policies
· Increasing Migrant Terror attacks Worldwide
· Risks to and ultimate weakening of Fiat Currencies and Treasury Securities from the Currency Wars and Migrant Invasions and Violence
· Globalist (as opposed to Internationalist) Mega-Banks Balance Sheets
and many more.
Consequence: Initially, The Central Banks will “print” more and more to try to keep the Bubbles inflated going into and after the Election—i.e., Money from Helicopters.
There is increasing evidence that the Powers-that-be, i.e., the private, for-profit Fed, and the Obama Administration and its “Working Group” are going all-out to prevent a Market Crash prior to the Election to help elect Hillary Clinton.
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 February, 2016 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 suppression, 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.
And our continued attention to the Internationals and Real Numbers has facilitated our Recent Profits Taken (Note 2) as well.
The consequent appearance of healthy Equities Markets would they think help their “Deep State” Globalist Candidate—Hillary Clinton (as opposed to Nationalist and Internationalist Donald Trump).
After the Election, all bets are off. If Donald Trump wins—still a distinct possibility—the aforementioned Powers may well try to weaken him from the get-go by allowing a Massive (i.e., 20% or greater) Equities Crash, but note that Equities Markets are headed that Way already, due to the aforementioned Powers’ Keynesian Money Printing Policies. Allowing such a Crash would be a good way to shift blame to Trump for the Massive Mess of Bubbles they have created.
Most likely then, immediately after the Election and Equities Market Crash at some point if either is elected but
- A larger Crash Initially if Trump is elected and
- Smaller Initially if Globalist Deep Statist Hillary elected. But larger ultimately because her recent record has demonstrated she will bend over backward to support keeping the Cartel’s “game” (Money from Helicopters etc.) which will eventually result in a larger Crash, of the entire monetary system in a few months, and we expect a Move, approved by HRC to IMF SDRs as the Reserve Currency, then Transition to the Gold-backed Chinese Yuan World Reserve Currency—all very injurious to Europeans, Africans and Americans.
- If Trump elected while the Initial Crash would be Greater, the Recovery would come sooner (albeit painfully) as he would/does know how to extricate the USA from the “Rigged System” controlled by Globalist Bankers and their Kept Media led by The Private for-Profit Fed.
- After the First Major Equities Crash Leg, one of the First Equities Sectors to begin to acquire ownership interests in is Domestic Infrastructure Builders—Both candidates have promised Major Infrastructure Investments
- And, after that Crash, investing in companies which will benefit from Defense Spending which Donald Trump has explicitly and Hillary Clinton implicitly, promised
- Unfortunately, if Hillary Clinton is elected the War on Cash—the average citizens main vehicle for maintaining privacy, anonymity and especially personal freedom—will accelerate
- Perhaps worst of all, if Hillary Clinton wins the Presidency, and pushes one of her billionaire backers’ plans to force employees and employers to put a percentage of payroll into IRAs “managed by professional investment managers,” the middle class will be further massively burdened!
- And, given Hillary Clinton’s Open Borders policies, that would result in thousands of foreign workers driving down wages and job opportunities for American workers (see CarryingCapacity.org)
To date, however, those Powers-that-Be (with the help of their POMO Pump and other surreptitious Interventions) caused Equities to continue to bounce along just under the Upward Boundary of the Jaws of Death Ultra-Bearish Multi-Year Technical Pattern.
Therefore, while it is now entirely possible that the First Substantial Leg Down—The Big One—may not occur until after the November Election or even not until January, 2017 it could come at any time and is likely to come right after the U.S. Election.
Indeed, prudence indicates that you seriously consider exiting from the Vulnerable Sectors and Subsectors and even shorting them if so inclined. (See our recent Buy Recommendations.)
We reiterate, much of the recent Equities bounces back up are due to “Deep Pockets” aka Plunge Protection Team buying, and the Central Banks’ artificial boosting of Equities. But some is also due to the fact that for many investors the U.S. Equities are the only place left to go because of the perceived strength of the U.S. Economy.
But the Reality is and, as our recent Letter and Alerts demonstrate, the long-term headwinds for Equities are simply huge—lower earnings growth, slowing economic growth, huge and unpayable Sovereign and Business Debts, political and economic instability as far as the eye can see and Fed incompetence and Globalist or opposed to Nationalist and Internationalist loyalties.
We reiterate the Realities
· Existing Home Sales Negative Y. O. Y.
· 2nd Half 2014—Profits and Margins Peaked
· Employment growth Peaked in Q1 2015
· Consumption Growth Peaked in 2015
· Consumer Confidence Peaked in 2015
· Forward Multiples Peaked in Q1 2015
· And the Sovereign and Private Debt Bubble continues to increase into 2016
· U.S. GDP decelerating
And what does all the foregoing add up to?
But the Economic Data are so bad we think The Fed will Not raise rates later this month, especially not before the U.S. Election.
That should result in $US weakness, with much more weakness to come, assuming the Chinese Yuan becomes part of the IMF Currency “Basket” at the end of this Month. This will accelerate a flight out of U.S. Bonds and other $US denominated Assets.
Longer term, as the $US is displaced U.S. Treasuries should also weaken dramatically.
That said, “the Displacement” Writing is on the Wall, as it were.
But we identify Main Beneficiaries in our Letters and Alerts.
Thus, Sophisticated Investors around the World are beginning to Dump U.S. Debt and Equities—“Chop Chop Chop” in David Stockman’s words… they see what is coming... the end of the $US as World Reserve Currency, a development which will deliver yet another hit to the U.S. and Eurozone Economies and to the “Losers” itemized in our recent Alert.
In sum, the Economy continues to Decelerate.
Thus, this current Equities Bubble is one of the Top Three of all time (cf. 1929 and 1999) and is destined to Pop (i.e., Crash) in the next few weeks or very few months.
Former OMB Director, Stockman summarizes well what is coming:
“The stock market has been chopping sideways for the last 100 days, but it's not evidence of a pause that refreshes. What is actually happening is that the smart money is getting out of dodge---even as the clueless day traders and headline-stalking algos keep the bubble inflated on purely speculative fumes.
“The fact is, the stock market is priced far more irrationally at the moment than at either the dotcom bubble peak or the October 2007 pre-crisis high. Reported earnings for the September LTM are now estimated at $90.59 per share, meaning that the S&P 500 was valued at 23.6X at Tuesday's close.
“But here's the thing. Reported LTM earnings way back in September 2014 came in at $106 per share at a time when the S&P 500 was at 1950. Thus, earnings are down by nearly 15%, while the S&P 500 index has gained 10%.
“Needless to say, that's multiple expansion with a vengeance----since back at the September 2014 peak the PE multiples stood at just 18.4X. As a matter of reality, the latter wasn't all that plausible, either. But more than 5 points of multiple expansion in today's tenuous global economic and financial environment is just plain nuts.
“The robo-machines and gamblers left in the casino, therefore, are truly chopping away in harm's way. The only possible outcome is to be carried down in a crash far more severe and violent than the previous two meltdowns since the turn of the century.
“Yet they dither on the edge of the gathering storm owing to a wholly misplaced confidence in the Fed and other central banks. In fact, our monetary politburo is utterly clueless about the rampant speculation it has encouraged throughout the warp and woof of the entire financial system.”
Via David Stockman’s Contra Corner newsletter, 10/19/2016
But it is entirely possible to Survive and indeed, Prosper if one have the courage for The Truth and the Will to Act on it. Indeed, Deepcaster is pleased to continue to facilitate Investor Education, Survival, Wealth Protection and especially Profit.
October 21, 2016
Note 1: Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported October 18, 2016
1.46% / 9.15%
U.S. Unemployment reported October 7, 2016
4.96% / 23.0%
U.S. GDP Annual Growth/Decline reported September 29, 2016
1.28% / -2.04%
U.S. M3 reported October 6, 2016 (Month of September, Y.O.Y.)
No Official Report / 4.30% (i.e., total M3 Now at $17.628 Trillion!)
Shadowstats latest commentary, No. 840: September Industrial Production, covers the following:
- Representing 65% of the GDP, Industrial Production Fell Year-to-Year for the Fourth-Straight Quarter
- Outside of Formal Recessions, Two-or-More Consecutive Quarters of Annual Decline are Unprecedented in the 98-Year History of the Production Series
- September Monthly Production Gains Reflected No More than Downside Revisions to August and Before
- Weaker than Initial August Reporting, September Production Was Down by 1.42% (-1.42%) from Its Pre-2007 Recession High; Down by 2.31% (-2.31%) from Its One-Month, November 2014 Recovery
- September Manufacturing Was Down 6.28% (-6.28%) from Its Never-Recovered Pre-Recession Peak
- Domestic Oil and Gas Exploration Collapse Tentatively Appears to be Bottoming, in the Context of Bottoming of Oil Prices
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*
• 60% Profit on Precious Metals Mining Company on October 20, 2016 after just 33 months) (i.e., about 22% Annualized)
• 130% Profit on Precious Metals Mining Company on July 8, 2016 after just 29 months) (i.e., about 50% Annualized)
• 75% Profit on Gold & Silver Royalty Streaming Company on June 28, 2016 after just 36 months (i.e., about 25% Annualized)
• 33% Profit on Precious Metals Mining Company on June 13, 2016 after just 28 months) (i.e., about 14% Annualized)
• 65% Profit on Gold & Silver Royalty Streaming Company on May 2, 2016 after just 35 months (i.e., about 22% Annualized)
• 50% Profit on Long Bond position on February 19, 2016 after just 2 days (i.e., about 8810% Annualized)
• 90% Profit on Short Small Cap Equities ETF on January 20, 2016 (i.e., about 30% Annualized)
• 75% Profit on Short Small Cap Equities ETF on January 15, 2016 (i.e., about 25% Annualized)
Deepcaster’s Profits Taken in the second half of 2015 included such successes as 80% in 6 days, 110% in 3 days, 265% in 57 days, as well as 65% in 2 days.
*Past Profitable Performance is no assurance of future Profitable Performance.
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-- Published: Friday, 21 October 2016 | E-Mail | Print | Source: GoldSeek.com