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Short-Term Market Update: Deflation is Back and It’s Pissed Off
Last month I
warned that the Fed would LOVE to see another round of deflation so it could
set the stage for more money printing in the second half of this year. My
long-term forecast remains the same (serious inflation accompanied by a US debt
default), however, it’s now clear that we’re heading into another round of
deflation in a BIG way.
Indeed, the
S&P 500 has broken its long-term trendline. Even worse, it’s not only
broken this line but failed to reclaim it: the hallmark pattern that precedes
serious corrections:
As you can
see, the S&P 500 has broken below this line several times in the past.
However, every time the S&P 500 did this it quickly reclaimed the line. But
not this time.
I also want
to alert you to the fact that the S&P 500 has broken below its 50-DMA. If
we do not reclaim this level right away, a test of the 200-DMA (1,245) is
highly likely:
Remember,
right around this time last year we saw a Flash Crash… and the issues that
caused the 2008 Crisis have NOT been solved in ANY WAY. In fact, the
billionaire investor club (Bill Gross, Carl Icahn, Jeremy Grantham, and Mark
Mobius) have begun to worry about this openly to the public.
Which means
they’re already prepared to profit from it.
On that note
if you’re not prepared to profit from the market’s correction, you NEED To
download my FREE report devoted to showing in painstaking detail how to make
SERIOUS money from a stock market collapse.
I call it The
Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a
wealth of information about portfolio protection, which investments to own and
how to take out Catastrophe Insurance on the stock market (this “insurance”
paid out triple digit gains in the Autumn of 2008).
Again, this
is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com
and click on FREE REPORTS.
Good Investing!
Graham
Summers
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How about waiting a bit before jumping to (market) conclusions.
There is still liquidity injections taking place here as well as in the world outside the USA. There is more liquidity to come in the EU.
The word 'bailout' has not lost its magic. Nothing 'interesting' will take place until that happens. Commodity traders (and stock traders) will retest the highs ... or try. New highs and the 'risk on' trade is back.
No real deflation: a large, systemically important bank or similar entity must fail -- Lehman 2.0 -- then liquidity will evaporate. Once a 'big boy' gets tossed into the fire the deleveraging will start.
Deleveraging =s deflation.
Most of the price of any commodity is margin- or credit value. Just like a house price reflects the 'mortgage' price or the price that a mortgage supports, the infiltration of credit into all prices has forced them higher. Fed credit? Maybe, more likely finance, which can create as much credit as it likes in order to lend to itself. Deleveraging will remove the price support for goods that are inflation indicators.
Wages are low now and will drop, discretionary spending is credit- enabled. Defending credit at all costs is very costly in terms of credit, you see ...
With deleveraging underway, what will central banks do? What can they do?
If they are like the ECB, they may wind up helplessly insolvent, as bystanders. See Martin Wolf in FT:
http://www.ft.com/intl/cms/s/0/1a61825a-8bb7-11e0-a725-00144feab49a.html...
Drawing tangents to a set of noisy price data, calling it a "trendline", and then freaking out when it breaks below an artibrary level isn't analysis. Clearly this joker doesn't risk his own capital in the markets, instead he attempts to get subscribers to give him free money. I'll give him a better chart to follow, SCCO, or essentially copper. Since Jan of this year its been in a continuous downtrend (from around $47 to $34 now). If that doesn't tell you we're deflating nothing will. Why one would use a lagging index like SPX to spot a trend tells you all you need to know about this "advisor". Here's some actionable advice, buy some sept 40 puts on SCCO when its around $36-37. Sell or roll them when it hits around $25 (don't get greedy).
What ever happened to Rick Wackerman? He had some secret 'hidden pivots' or something like that.
The problem is that as far as the uber rich are concerned they do have deflation in that their assets are tanking, bar the QE supported SP500.
For us plebs we have inflation and if you don't help yourself, no one else will.
The problem is that as far as the uber rich are concerned they do have deflation in that their assets are tanking, bar the QE supported SP500.
For us plebs we have inflation and if you don't help yourself, no one else will.
ah yes deflation, that thing that most of you fucking geniuses said could never happen.
hmm.
care to elaborate now?
Captain, you shall know: part of deflation pressure came from Japan where world's no.3 engine shut down for repair. Also all those tightings in BRIC countries finally impact world market. Now ben intentionally withdraws liquidity, we will see ugly deflation into early July. You need at least two months' data to induce QE3, right?
Yes, deflation for sure. Definitely got you on that one, the biggest problem all around us. I mean, food, gas, metals, energy, services... yes, the prices are just falling everywhere I turn and look.
Wow, this is good news. Maybe I'll be able to find some cheaper food now (tummy grumbles).
I simply shit every fourth day to feel like I have eaten more than I have. :/
Talk about inflation
That I can guarantee will not be in our cards.........
WTF - it's all a scam, everybody knows it, so why is now any different. Saw TBTF the other night. What a piece of shit that was...Hank Paulson, birdwatching hero! This whole culture is so deep in bullshit, we're all drowning. So now comes the next round, and this moron thinks I should send him worthless fiat so he can tell me how to survive. This is a joke, right? Hey graham, do you even write this stuff, or do you delegate it to some minion?
THANk you, Captain Obvious!
Deflation was never truly gone. It merely absented itself from the wold for a bit, that we might be all the more impressed upon its return (say, thaat's a clever strategy – maybe one could build a religion out of it).
I ask the author to consider that he might be right, but on a different scale: Political concerns may hobble the Fed for Years – or forever, as its days seem to be numbered.
Whenever it is gone, and the congress has its hands directly on the printers (and let me tell you, that's going to be Even Worse) I suspect they will (as you have postulated for the Fed) be thrilled at deflationary OK to inflate, as you have predicted.
It was Krugman that said we needed 7 trillion.
Just imagine the carnage that would ensue if newsletter writters had to make their living by investing in major markets; instead of by passing gas and bullshitting.
now that was some funny shit!
Gold & silver....going to take....a short term.... beating....must...build up position....in ZSL & DZZ....
*ack*
"You cannot change the laws of physics Jim, The USS Enterprise can't travel at warp speed 10, it will transform us into anthropomorphic newts! Captain, come in Captain . . . . . . .qzzzzreeechrrrrQEinf......."
LMAO
Deflation is Back and It’s Pissed Off
better to be pissed off
than pissed on ...
But, but, but, all the inflationists have been yelling loudly since last Summer that we were going to be experiencing hyperinflation! Some predicted it as soon as last September! Didn't Gonzo Lira predict it for last month?
Looks like they botched it again.
Here's a prediction you can bank on. They'll be back screaming about it again in September. I don't know what it is about September which sets them off, but they've done so for the past two years, and have botched it each time. Look for strike three in the Fall.
Eventually they'll be right. But it just isn't going to happen while Credit is still collapsing.
Can never understand this emotional and child like bitchiness between 'deflationists' and 'hyperinflationists' though most of it seems to come from the deflationist side of the religion as the above demonstrates.
We aren't talking religion.
And listening to some of the arguments I sincerely wonder if many of the children understand what hpyerinflation is and what deflation is. Seems they have chosen which side to pray for in total ignorance.
My goodness. The hyperinflationists just can't stand to have some fun poked at them. They can dish it out all year, but just can't take it on the occasions when their statements come back to haunt them.
Welcome to the fight club.
I also have no idea how you define *flation, but there are a lot of twisted and useless meanings which people use. I'll have to presume that you use one of them.
And the third thing that you seem totally clueless about is a rather key point. You've completely missed the rather obvious fact that we aren't talking science. Which brings it closer to religion. Very akin to what the ancient Greeks used to do a couple of thousand years ago, even with mathematics. That is, unfortunately, what most economic thought today is.
I hope that helps.
at this point, everything is what it is, its oposite, and its inverse.
Contrarians should be savvy to significance of the seemingly almost universal consensus that the dollar is doomed and precious metals the ultimate hedge.