A Shift in Expectations
When discussing the outlook for so-called “risk assets”, i.e., mainly stocks and corporate bonds (particularly low-grade bonds) and their counterparts on the “safe haven” end of the spectrum (such as gold and government bonds with strong ratings), one has to consider different time frames and the indicators applicable to these time frames. Since Donald Trump’s election victory, there have been sizable moves in stocks, gold and treasury bonds, as the election result has strongly boosted certain market expectations.
A Quick Chart Overview
Below is an overview of charts we picked to illustrate the current market situation. The selection is a bit random, but not entirely so. The first set of charts concerns positioning and sentiment. As one would expect, these look fairly stretched at the moment, but there are always ways in which they could become even more stretched. First a look at the NAAIM exposure index:
Surface Temperatures Plunge – the Great Pause Continues
Last year’s El Nino phenomenon temporarily provided succor to climate alarmists, who were increasingly bothered by the “Great Pause” – the fact that the tiny amount of warming experienced since the last cooling cycle ended in the late 1970s had apparently stopped. Despite trace amounts of CO2 in the atmosphere continuing to climb, mother nature decided to disobey alarmist models and temperatures went sideways for about 20 years (or even longer, depending on the data set).
Too bad penguins actually don’t live at the North Pole! One probably should refrain from obtaining climate information from rabidly leftist blogs. Incidentally, the same very same ice-floe has carried lost polar bears in the past, in particular the species “ursus bogus”. If one looks around a bit, there’s also a version with three penguins…
A Very Odd Growth Spurt in the True Money Supply
The growth rates of various “Austrian” measures of the US money supply (such as TMS-2 and money AMS) have accelerated significantly in recent months. That is quite surprising, as the Fed hasn’t been engaged in QE for quite some time and year-on-year growth in commercial bank credit has actually slowed down rather than accelerating of late. The only exception to this is mortgage lending growth – at least until recently. Growth in mortgage loans is still very slow though, especially compared to historical growth rates. It cannot really account for the recent surge in money supply growth either.
Year-on-year growth rates of TMS-2 (11.19%, black line) and total loans and leases at commercial banks (7.7%, red line) as of October. In absolute terms money TMS-2 has soared by a staggering $840 billion since the beginning of the year – click to enlarge.
A Major Crisis
Last week Jayant Bhandari related the story of the overnight ban of certain banknotes in India under cover of “stamping out corruption” (see Gold Price Skyrockets In India after Currency Ban Part 1 and Part 2 for the details).
Banned 500 rupee banknotes
Mini-Panic Over Inflation After Trump’s Election Victory
We have witnessed truly astonishing short term market conniptions following the Donald Trump’s election victory. In this post we want to focus on one aspect that seems to be exercising people quite a bit at present, namely the recent surge in inflation expectations reflected in the markets. Will we have to get those WIN buttons out again?
A 1970s “whip inflation now” button. The only thing that was actually needed to “whip inflation” was for the Federal Reserve to stop printing money in ever greater quantities (or to stop supporting rapid money creation by the commercial banking system). It started doing so about 2 years before Mr. Paul Volcker took the helm – true money supply growth began to slow down considerably. Volcker then exacerbated this slowdown and briefly even pushed broad true money supply growth into negative territory. By that time, the decline in price inflation had already gotten underway and the public’s inflationary psychology soon underwent a sea change – right on the eve of one of the strongest increases in manufacturing productivity in modern history.
US Citizens Giving the Finger to Globalist Statist Elites – Big Time
Back in late August we posted something about Mr. Trump’s chances probably being a lot better than was generally assumed (see: US Presidential Election – How Reliable are the Polls?). You know what the say about a headline that ends in a question mark; most often, the answer to the question is “No”. And so it was in this case – the polls were not reliable.
Yeah baby! He was actually serious with that “we’re going to win it” line.
Photo credit: Reuters
An Important Reminder
Julian Assange, who was once considered a darling of the Left – as long as his organization’s leaks primarily embarrassed the Bush administration over its insane Iraq war that is – has in the meantime advanced to the status of walking, talking assassination target for Hillary Clinton’s drones. He should probably be extra careful if she becomes president, because nothing and no-one will be able to hold her back anymore.
In the cross-hairs: Julian Assange
Image via truepundit.com
Pre-Election Market Movers – Mr. Comey and the Trio Infernal
Before this Monday, the S&P 500 Index went down nine days in a row. While this was almost unprecedented (or in any case, a very rare event) the decline was quite small overall. The timing of the pullback and the subsequent strong rebound on Monday suggests that Mr. Comey’s letters to Congress regarding the FBI investigation into official emails by Hillary Clinton – which have found their way unto a computer owned by Anthony Weiner (the former husband of Clinton’s right-hand woman Huma Abedin) – were the “trigger” for these moves.
FBI chief Comey and the Trio Infernal: Huma Abedin, Anthony Weiner and Hillary Clinton. Weiner is embroiled in a rather unsavory scandal – allegedly he has inter alia mailed pictures of his unclothed reproductive organs to a minor. The FBI has detected some 650,000 emails on his computer that seem to have come from Ms. Clinton’s private email server, which she in turn used in her official capacity as Secretary of State (her use of this device violated regulations and testified to her lack of sound judgment).
Image credit: Robyn Beck, Don Emmert / AFP / Getty Images
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