-- Published: Thursday, 8 March 2018 | Print | Disqus
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Markets were triggered and shocked a few days ago when the yield on the Bellwether U.S. Treasury 10-Year Note shot up over 2.9% which resulted mainly from Fed Chair Powell’s hinting at the possibility of 4 rate hikes this year.
Other soon-to-be-detonated Triggers will have Mega-Consequences for Key Market Sectors but will rocket launch the #1 Asset for Profit and Protection (And soon also The Great Trigger and Consequences.) In order to appreciate the magnitude of what is coming soon it is essential to consider the background.
Deepcaster’s aim here is to provide the analysis for determining the #1 Asset and other assets for Profiting and Protecting from impending moves. Among other things the 10-Year Note Move presaged the intensifying inflation and triggered the record Equities and Bond Market Sell off.
Indeed, there is an even more impactful development than the 10-year move, largely unreported or, which is both Important Cause and Important Consequence of the Note yield move and moves to come.
“In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign Debt ratings from A- to BBB+ overnight, citing ‘deficiencies in US political ecology’ and tax cuts that ‘directly reduce the federal government's sources of debt repayment’ weakening the base of the government's debt repayment.
“Oh, and just to make sure the message is heard loud and clear, the ratings, which are now level with those of Peru, Colombia and Turkmenistan on the Beijing-based agency’s scale of creditworthiness, have also been put on a negative outlook.” (!!)
Via ZeroHedge.com
This Chinese “downgrade” of U.S. Debt (unthinkable years ago) simply emphasizes what Deepcaster has been saying for Months—that ever-increasing U.S. Sovereign Debt (and Business Debt and Consumer Debt) is increasingly unsustainable and is exacerbating the Inflation Trend and is increasingly threatening the $US World Reserve Currency Status.
After all U.S. Debt to GDP was 105% at the beginning of the Trump Presidency and is more now as the U.S. Debt approaches $22 trillion.
Indeed, unfunded pension liabilities exceed $2trillion and student loan debt (90% US government guaranteed) is $1.5trillion. Further the $US World Reserve Currency Status is also threatened by the likely implementation of the IMF’s blockchain based Global Ledger Technology system (GLT), as well as the gold backed Chinese Yuan.
And not just the U.S.A, but countries around the world are saddled with too much debt. China’s debt to GDP is over 200%, for example.
But the Consequences (e.g., Key Sector Crashes) of that intensifying Debt Threat are far-reaching, profound, and coming soon.
NOTE: We do not think President Trump’s tariffs on steel and aluminum will begin a Trade war – Indeed a one-sided trade war has been ongoing for a few years now via tariffs already imposed by many other nations against the U.S. including China e.g., stealing U.S. I.T. and otherwise competing unfairly. We applaud President Trump for, finally, defending U.S. interests.
And the Tax-cuts though helpful have come too late to help rescue the economy or substantially reduce (via increased economic growth) the Debt as the Reagan Tax-Cuts did.
After all, today the Schiller P/E is 33 today, not 7 like it was when Reagan was going to fix things, and the 10-Year Treasury yield was 14% then and had way down to go and U.S. debt to GDP was 39% when Reagan was sworn in versus 105% when President Trump was sworn in.
Indeed, when one Nets out the effect of the U.S. Tax Cut
“[I]t will increase the Deficit by $400 Billion more.”
Former OMB Director, David Stockman, 02/09/2018
And “require borrowing of at least $1.2 Trillion (in toto ed.) in Fiscal 2019.” IBID
And lead to interest rates of “3 to 4% soon on the U.S. 10-Year” …IBID
Consequence: More Market Crashes.
(See Deepcaster’s Alerts re Profiting and Protecting)
[Of course, one simple Congressional Action could reduce the U.S. Debt (i.e. reduce federal taxes paid by U.S. Federal Taxpayer!) by over $500 billion in the next decade – see recent Alerts at carryingcapacity.org]
And Stockman makes a Key Point “When Asset prices Drop, Margin gets liquidated … it does not go anywhere.” And that will result in “Fiscal Calamity.” IBID
In sum, if current trends do not change, we expect the U.S.A to run $2 Trillion Annual Deficits by 2020. Indeed!
The U.S. is on track to be “borrowing 6% of GDP in the 10th year of a supposed recovery.” IBID And, as the former OMB Director D Stockman says, Mega Bank policies have led to this Mega-Risky Situation. The cure is
“When the Crunch Comes Bankers Lie,
“I think we ought to break them up.”
D. Stockman 02/09/2018
And Deepcaster agrees.
And the coming Great Trigger will provide us the Opportunity to do so.
Bottomline: worldwide, businesses and consumers as well as Sovereigns are carrying at record indebted levels. And the coming Great Trigger can solve that one too, albeit very painfully.
The Market Crashes of early February, 2018 are a pale prelude to what is coming in Key Sectors.
Let us consider “Why” by considering the Real Numbers via Shadowstats.com versus the bogus official ones.
“Natural-Disaster Boost to the Economy Topped Out in November 2017;
Now Backing Off with a Vengeance, as Predicted
“Watch the Dollar!
“January 2018 Industrial Production Declined 0.1% (-0.1%) Month-to-Month,
On Top of Downside Revisions to December Activity
“Production Peaked in November, Net of a Record, Winter-Driven Utility Surge
“January Real Retail Sales Plunged 0.8% (-0.8%), Dropping 1.2% (-1.2%)
Net of Sharp Downside Revisions to December and Holiday-Season Activity;
Annual Growth Fell Deep into Recession-Warning Territory…
"‘Surging’ Housing Starts Activity Was Statistically Insignificant, as Usual,
Still Shy of Recovering Its Pre-Recession High by 41.7% (-41.7%)…
“Common Inflation Experience Is Much Worse than the Headline Numbers”
“No. 936: January Retail Sales, Industrial Production, Housing Starts, CPI and PPI,” Shadowstats.com, February 19th, 2018
See Shadowstats Chart below. (Note 2) for the Real Numbers.
And the Knowledge of The Real Numbers plus observation of interventions has facilitated Deepcaster’s recommending very profitable Investments (See Recent Profits Taken, Note 3).
Also consider Chris Martenson’s analysis regarding The Central Bank created Bubble’s in Bond and Equity prices. This is important for understanding the threats we face today and providing a basis for profiting and wealth protection.
“[D]id the markets recover organically? Or were they rescued by The Plunge Protection Team (PPT)?
“The answer matters.
“ …the Federal Reserve has done far more self-inflicted harm to long-term US interests than anything that Russia has been accused of, let alone been proven to have done
- Pension plans, both public and private have been ruined
- Income inequality is at the highest it’s been in over 100 years
- Wealth inequality is also at historical extremes
- Student debt is now nearly $1.5 trillion, up
- More than a trillion dollars of interest payments on savings accounts has been forfeited
- Total debt in the US and globally is up massively
“These are among a few of the destructive results of the Federal Reserve’s decision to lower interest rates to 0% in order to reward the big banks, well connected private equity firms, and unrestrained government borrowing.
“Of course, when you print money (as the Fed does) you cannot create wealth; you only transfer it from one party to another.
“ …Losers have been seniors dependent on a fixed income, Millennials and every generation following them, and savers, pensioners, and taxpayers. The winners have been the banks, the ultra-rich, entrenched political parties, rentiers, and baby boomers with sizable financial portfolios.
“The catastrophic losses that will result from these massive pension shortfalls is nothing less than an act of domestic terrorism by the Federal Reserve. They will haunt the US for generations.
“There should be serious consequences for destroying the futures of tens of millions of retirees, on purpose—and knowingly—simply so big banks could not just enjoy fat profits.’
February 2018, Chris Martenson
Going forward Deepcaster recommends selecting inflation resistant Assets from among the following: Physical Gold and Silver, in a certain form, (see our Alerts) and select Quality Miners should be included as essential elements of a Strategy for Wealth Protection and Profit, despite ongoing Cartel (Note 1) precious metal price suppression.
*Agricultural land, select food production and other key commodities should also be included as preferred investments. And the #1 asset for Profit and Protection is among in the aforementioned. Re. precious metal prices consider the following.
” Gold and Silver Historic High Prices Adjusted for January 2018 CPI-U/Shadowstats Inflation
“CPI-U: GOLD at $2,708 per Troy Ounce, SILVER at $158 per Troy Ounce
“ShadowStats: GOLD at $15,044 per Troy Ounce, SILVER at $875 per Troy Ounce”
“Despite the September 5, 2011 historic-high gold price of $1,895.00 per troy ounce (London afternoon fix), and despite the multi-decade-high silver price of $48.70 per troy ounce (London fix of April 28, 2011), gold and silver prices have yet to re-hit their 1980 historic levels, adjusted for inflation. The earlier all-time high of $850.00 (London afternoon fix, per Kitco.com) for gold on January 21, 1980 would be $2,708 per troy ounce, based on January 2018 CPI-U-adjusted dollars, and $15,044 per troy ounce, based on January 2018 ShadowStats-Alternate-CPI (1980-Base) adjusted dollars (all series here are not seasonally adjusted).
“In like manner, the all-time high nominal price for silver in January 1980 of $49.45 per troy ounce (London afternoon fix, per silverinstitute.org)—although approached in 2011—still has not been hit since 1980, including in terms of inflation-adjusted dollars. Based on January 2018 CPI-U inflation, the 1980 silver-price peak would be $158 per troy ounce and would be $875 per troy ounce in terms of the January 2018 ShadowStats-Alternate-CPI (1980-Base) adjusted dollars (again, all series not seasonally adjusted).
“Accompanying Graph 45 shows not just the regular gold plot published with monthly CPI detail, but also a comparative plot of the value of the Swiss franc (CHF) in U.S. dollars, usually published in the Hyperinflation Watch. As economic expectations have taken something of a hit in recent days, the U.S. dollar has lost ground against both gold and the CHF. Implications are highly inflationary for those living in a U.S. dollar-denominated world.
“Shown in Table 1 on page 47 of No. 859 Special Commentary, and in Table INFLATION-1 on page 46 of Special Commentary No. 935, over the decades, the increases in gold and silver prices have compensated for more than the loss of the purchasing power of the U.S. dollar as reflected by CPI inflation. The precious metals also (particularly gold in the last year) effectively have come close to fully compensating for the loss of purchasing power of the dollar based on the ShadowStats-Alternate Consumer Price Measure (1980-Methodologies Base).”
IBID.
For additional recommendations regarding Profiting and Wealth Protection visit Deepcaster.com and read Deepcaster’s next Alert for the identity of the #1 Asset for Profit and Protection going forward.
Best regards,
Deepcaster
March 7, 2018
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 Report, “Profit, Protection, Despite Cartel Intervention —2018 Update” on the ‘Two Free Reports’ page 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 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. Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported February 14, 2018
2.07% / 9.81%
U.S. Unemployment reported February 2, 2018
4.15% / 21.8%
U.S. GDP Annual Growth/Decline reported February 28, 2018
2.49% / -1.60%
U.S. M3 reported February 1, 2018 (Month of December, Y.O.Y.)
No Official Report / 4.49%(e) (i.e., total M3 Now at $18.494 Trillion!)
Note 3. Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in 2018 in our Speculative and Fortress Assets Portfolios* posted under 'SUBSCRIBER LOGIN'
- 35% Profit on a High Yield Bond Fund Short after only 34 days on February 6, 2018 (i.e., about 400% Annualized)
- 50% Profit on a P.M. Streaming Company after only 6.5 years on February 1, 2018 (i.e., about 7.5% Annualized)
- 115% Profit on a Premier Lithium Miner after only 18 months on January 4, 2018 (i.e., about 80% Annualized)
- 90% Profit on a Premier Lithium Miner after only 16 months on November 29, 2017 (i.e., about 70% Annualized)
- 55% Profit on a Mobile Media Company after less than 7 months on November 10, 2017 (i.e., about 115% Annualized)
- 90% Profit on a P M Royalty Streaming Company on October 5, 2017 after just 52 months, (i.e., about 20% Annualized)
- 33% Profit on Independent Holding Company on August 30, 2017 after just 4 months (i.e., about 100% Annualized)
- 85% Profit on P.M. ETF on August 1, 2017 after just 15 months (i.e., about 70% Annualized)
Deepcaster’s Profits Taken in 2017, 2016 and 2015 included such successes as 105%, 90%, and 55% after just 16 days, 110%, 60% 130% and 75%, 65%, 50% in 2 days, 90%, 80% in 6 days, 110% in 3 days, 265% in 57 days, 65% in 2 days.
*Past Profitable Performance is no assurance of future Profitable Performance.
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-- Published: Thursday, 8 March 2018 | E-Mail | Print | Source: GoldSeek.com
