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Unfortunately, as we demonstrated in Part 1 and further demonstrate below, the underlying Economic Reality was and still is that the Economy is not healthy and not recovering which is obvious when one looks at the Real Numbers per Shadowstats.com (Note 1) rather than the Bogus Official Ones.
So, our focus in this Part2 is on how to Profit and Protect Wealth from what is coming.
Therefore, further consider the Economic Realities which will be an increasingly Bearish Influence on Many Market Sectors Going Forward and a spur for Mega-Moves UP in Others.
Note that Buffet's favorite indicator Market Cap to GDP is flashing the same Warning Signal.
And the Shiller P/E Ratio is at its 2nd highest since 1890...higher even than before Black Tuesday in 1929. And NYSE Margin Debt is at Record Highs 33% Higher than just before the 2008 Crash a Real Danger Signal.
This Economic Reality sets the stage for the coming "carnage in the Casino" which the former OMB Director, David Stockman, forecast over a couple of years ago but which has only been delayed by the "Trump Bump" and Tax Reduction Deal but not avoided. Consider his Analysis: [In our view Stockman's Analysis is basically correct but his timing has been wrong.]
"There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen's press conference. She did not say one word about the real world; it was all about the hypothetical world embedded in the Fed's tinker toy model of the US economy....
"This stupendously na?ve old school marm still believes the received Keynesian scriptures as penned by the 1960s-era apostles James (Tobin), John (Galbraith), Paul (Samuelson) and Walter (Heller).
"But c'mon. Those ancient texts have no relevance to the debt-saturated, state-dominated, hideously over- capacitated global economy of 2015. They just convey a stupid little paint-by-the-numbers simulacrum of what a purportedly closed domestic economy looked like even back then.
"That is, before Richard Nixon had finally destroyed Bretton Woods and turned over the Fed's printing presses to power aggrandizing PhDs; and before Mr. Deng had thrown out Mao's little red book in favor of a central bank based credit Ponzi.
"As you listened to Yellen babble on about the purported cyclical "slack" remaining in the US economy, the current unusually low "natural rate" of federal funds, all the numerous and sundry "transient" factors affecting the outlook, and the Fed's fetishly literal quest for 2.00% inflation (yes, these fools apparently think they can hit their inflation target to the second decimal place), only one conclusion was possible.
"To wit, sell the bonds, sell the stocks, sell the house, dread the Fed!
"In a global economy that is plunging into an epic deflationary contraction, Yellen & Co still embrace mythical and unmeasurable benchmarks for domestic full employment and other idealized performance targets...."
"Sell The Bonds, Sell The Stocks, Sell The House-Dread The Fed!," David Stockman, via lemetrepolecafe.com, 12/18/2015
And Yellen's successor, Powell, appears to be in the same Mold.
Generally, we agree with Stockman, except we offer a better way of Profiting and Protecting from what is coming, than selling everything, and our timing appears to be better (cf Note 2 re Cartel and Note 3 re Recent Profits Taken).
For example, Stockman fails to Note a Very Bullish Force has been successfully acting to boost the Prices of Equities in recent years. The low interest Rate, Easy Money, Markets-supportive (as, e.g., with QE) policies of The Fed and other Major Central Banks have allowed key Sectors to soar to Record Highs on Bullish Sentiment. Will any Forces derail this Momentum? Read on.
The Most important Factor for Investors to consider is that The Private-for-Profit Fed's and other Central Banks' ZIRP has created Massive Bond and Equities and Real Estate and Corporate Debt Bubbles a consequence of Ultra-low Interest Rates which have allowed over-leveraging, i.e., a Massive Debt Bubble (see Deepcaster's Buy Recommendation for Profiting in his first week of January Alert).
But The Fed and other Central Banks have created a hell of a Bubble they need to raise rates but the IMF says even a modest interest rate rise could cause 20% of all Companies to Default!
For Deepcaster's Forecasts regarding for which Sectors have Bubble and are likely to make Mega-Moves first (and which way) and for our Consequent Buy Recommendations, see our recent Letters and Alerts. Indeed, in our recent Letters and Alerts, we outline one Simple Strategy which is likely, given the Unique Economic and Market Realities in 2018, to result in both Profit and Wealth Protection.
Looking farther down the Road (months away), if The Fed is compelled (i.e., by a Market Crash, and/or Credit Default Domino Effect), to do another round of QE (i.e., money from helicopters as we expect it eventually will), then the recently strong $US will begin to Fall even harder.
And that fall will be magnified by a Trend which has already begun a move away from the $US use in international Trade Settlement, and to the Chinese Yuan.
Some such Negative Catalyst is a virtual Certainty, the Only Question is the timing.
The U.S. Economy is ostensibly the strongest in the World these days, if one believes Official Figures but those Numbers which are positive have been buoyed up by Bullish Sentiment and Cheap Money. In Reality, the U.S. Labor Force Participation Rate is near a 40-year low. And other data indicates the Declining Trend of slow Economic Growth. (See Note 1 from Shadowstats.com re the Real Numbers)
But note that the One Great Delusion (which is just gradually being dispelled) is that the U.S. Economy is somehow stronger than all the rest and can stay stronger despite the decelerating Eurozone and China and Japan.
Even putting aside the USA's prospective $22 Trillion Deficit and its $100 Trillion plus downstream unfunded liabilities and a congeries of lousy Economic News, the Fact is that Prospects for the U.S. Economy are closely linked to the prospects for the rest of the World.
Indeed, there is over $9 Trillion of $US denominated credit outstanding to Non-Bank Borrowers outside the USA. Consider the potential Ripple (Tsunami!) Effect when Significant Numbers of Defaults begin and, especially, when the $500 Trillion plus (including Derivatives see bis.org/statistics/derivatives) Credit Bubble begins to Burst.
Indeed, many expect the very Existence of The Fed will be at risk as a result of the Market Crash which it, above all, facilitated.
Indeed, Billionaire Investor, Jim Rogers, had it nailed four years ago when he said:
"Noted investor Jim Rogers says outgoing Federal Reserve Chairman Ben Bernanke has set the stage for the collapse of the U.S. central bank within the next decade, and had turned the nation's fiscal balance sheet into 'garbage.'
"In a recent interview with the British financial website Mineweb, Rogers said Bernanke and his fellow central bankers in other countries have brought the global economy to the brink of disaster....
"Rogers predicted that history will remember Bernanke as 'the guy who set the stage for the demise of the central bank in America.'
"'It's not a possibility,' Rogers said, 'it's a probability. People will realize that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last five years, and a lot of it's garbage.'..."
"Jim Rogers: The Federal Reserve's Days Are Numbered," Moneynews, 01/06/2014
Billionaire Investor Jim Rogers' Negative view of the private-for-profit Fed (which, under Janet Yellen, has doubled down on Bernanke's Policies) is echoed by former Director of the OMB, David Stockman, who said that The Fed has created "The Mother of All Bubbles."
And just this January, 2018 in his "ICE-Nine is Coming Sooner Than You Expect" (Rickards Strategic Intelligence), Rickards indicates that the coming Crash is likely to create a Liquidity Crisis of Massive Proportions.
Therefore, we have already laid out Triggers for and Signals of an impending Crash Leg in one Sector and strong launch up in another (and appropriate Buy Recommendations) as well as how to Profit and Protect from the coming Crash and Liquidity Crisis in our recent and forthcoming Letters and Alerts.
Best regards,
Deepcaster January 25, 2018
Note 1. Shadow Government Statistics
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported January 12, 20182.11% / 9.85%
U.S. Unemployment reported January 5, 20184.09% / 21.7%
U.S. GDP Annual Growth/Decline reported December 21, 20172.30% / -1.78%
U.S. M3 reported January 4, 2018 (Month of December, Y.O.Y.)No Official Report / 4.77%(e) (i.e., total M3 Now at $18.496 Trillion!)
Note 2. *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 2017 Update" in the 'Free Reports' 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 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 2017 in our Speculative and Fortress Assets Portfolios* posted under 'SUBSCRIBER LOGIN'
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)60% Profit on Short $US Position on July 31, 2017 after just 30 days (i.e., about 730% Annualized)90% Profit on a Long Bond position on April 12, 2017 after just 42 days (i.e., about 860% Annualized)105% Profit on P.M. ETF on February 21, 2017 after just 10 months (i.e., about 115% Annualized)90% Profit on Gold Shares ETF on January 20, 2017 after just 9 months (i.e., about 150% Annualized)55% Profit on P.M. Streaming Company on January 12, 2017 after just 16 days (i.e., about 1255% Annualized)Deepcaster's Profits Taken in 2016 and 2015 included such successes as 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.