Author Archives: Pater Tenebrarum

     

 

 

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?

 

winA 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.

 

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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-babyYeah baby! He was actually serious with that “we’re going to win it” line.

Photo credit: Reuters

 

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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.

 

sweden_assange222In the cross-hairs: Julian Assange

Image via truepundit.com

 

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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.

 

comey-and-the-trio-infernalFBI 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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Is Stagflation a Potential Threat?

The Incrementum Fund held its quarterly advisory board meeting on October 3 (the transcript can be downloaded below). Our regular participants – the two fund managers Ronald Stoeferle and Mark Valek, advisory board members Jim Rickards, Frank Shostak and yours truly –  were joined by special guest Grant Williams this time. Many of our readers probably know Grant; he is the author of the bi-monthly newsletter “Things That Make You Go Hmmm…”, as well as one of the founders of Real Vision TV.

 

1-stagflationCharacteristics of stagflation: economic growth goes into reverse, but price inflation rises  anyway. This scenario was completely unexpected by the Keynesian consensus when it hit the economy in the 1970s. Keynesian theory ended up discredited for a while as a result. Not surprisingly though, as a theory that provides a “scientific” fig leaf for statism and interventionism, it has been resurrected since then. Today it once again is an important part of mainstream economic orthodoxy; the monetarist school has retained a certain degree of influence as well, but its policy prescriptions are just as misguided in our opinion.

 

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Only Sell Stocks in Recessions?

We were recently made aware of an interview at Bloomberg, in which Tony Dwyer of Cannacord and Brian Wieser of Pivotal Research were quizzed on the recently announced utterly bizarre AT&T – Time Warner merger. We were actually quite surprised that AT&T wanted to buy the giant media turkey. Prior to the offer, TWX still traded 50% below the high it had reached 17 years ago.

 

1-twx-tThe merger of AT&T and TWX simply doesn’t appear to make much sense. It certainly is a symptom of loose monetary policy though – click to enlarge.

 

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Andy Duncan Interviews Claudio Grass

Andy Duncan of FinLingo.com has interviewed our friend Claudio Grass, managing director of Global Gold in Switzerland. Below is a transcript excerpting the main parts of the first section of the interview on the problems in the European banking system and what measures might be taken if push were to come to shove.

 

andy-duncan-and-claudio-grassAndy Duncan of FinLingo.com (left) and Claudio Grass of Global Gold (right)

 

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So Far a Normal Correction

In last week’s update on the gold sector, we mentioned that there was a lot of negative sentiment detectable on an anecdotal basis. From a positioning perspective only the commitments of traders still appeared a bit stretched though, while from a technical perspective we felt that a pullback to the 200-day moving average in both gold and gold stocks shouldn’t be regarded as anything but a normal – and in this case actually long overdue – event.

 

1-goldGold has pulled back to its now rising 200 dma (the fact that it is rising differentiates this pullback from declines during the pre-2016 bear market period) – click to enlarge.

 

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Iffy Looking Charts

The stock market has held up quite well this year in the face of numerous developments that are usually regarded as negative (from declining earnings, to the Brexit, to a US presidential election that leaves a lot to be desired, to put it mildly). Of course, the market is never driven by the news – it is exactly the other way around. It is the market that actually writes the news. It may finally be time for a spanking though.

 

spankinggoodtimeTime for some old-fashioned disciplining… (a. D. 1891)

Photo credit: Littleton View Co.

 

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Sentiment and Positioning

When we last discussed the gold sector correction (which had only just begun at the time), we mentioned we would update sentiment and positioning data on occasion. For a while, not much changed in these indicators, but as one would expect, last week’s sharp sell-off did in fact move the needle a bit.

 

gold_bullionGold – just as nice to look at as it always is, but slightly cheaper since last week.

Photo via The Times Of India

 

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The Long Term Outlook for the Asset Bubble

Due to strong internals, John Hussman has given the stock market rally since the February low the benefit of the doubt for a while. Lately he has returned to issuing warnings about the market’s potential to deliver a big negative surprise once it runs out of greater fools. In his weekly market missive published on Monday (entitled “Sizing Up the Bubble” – we highly recommend reading it), he presents inter alia the following eye-popping chart:

 

1-wmc161003cThe median price-sales ratio of S&P 500 component stocks – click to enlarge.

 

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A Companion Update to this Year’s “In Gold We Trust” Report

Our good friends Ronnie Stoeferle and Mark Valek of Incrementum AG have just published a new chart book, which recaps and updates charts originally shown in this year’s 10th anniversary edition of the “In Gold We Trust” report and provides an overview of recent developments relevant to the gold market. The chart book can be downloaded in PDF form via the link at the end of this post.

 

Queen Elizabeth skeptically eyes what little is left of England's once sizable gold hoardQueen Elizabeth skeptically eyes what little is left of England’s once sizable gold hoard. Her mien seems to indicate regret. Well-known socialist financial guru Gordon Brown ordered the sale of half of the UK’s gold in 1999, at prices that had just reached 20 year lows. Not surprisingly, these prices have never been seen again. While he created a once-in-a-lifetime buying opportunity for the rest of the world, the Queen possibly suspects that regrets over this ill-conceived disposal could one day easily become a great deal more intense.

Photo credit: Getty Images

 

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Most read in the last 20 days:

  • Speculative Blow-Offs in Stock Markets – Part 1
      Defying Expectations Why is the stock market seemingly so utterly oblivious to the potential dangers and in some respects quite obvious fundamental problems the global economy faces? Why in particular does this happen at a time when valuations are already extremely stretched? Questions along these lines are raised increasingly often by our correspondents lately. One could be smug about it and say “it's all technical”, but there is more to it than that. It may not be rocket science, but...
  • Speculative Blow-Offs in Stock Markets – Part 2
      Blow-Off Pattern Recognition As noted in Part 1, historically, blow-patterns in stock markets share many characteristics.  One of them is a shifting monetary backdrop, which becomes more hostile just as prices begin to rise at an accelerated pace, the other is the psychological backdrop to the move, which entails growing pressure on the remaining skeptics and helps investors to rationalize their exposure to overvalued markets. In addition to this, the chart patterns of  stock indexes...
  • India: Still the Fastest Growing Large Economy?
      India’s Currency Ban - Part X It has now been four months since Narendra Modi declared about 86% of monetary value of currency illegal. Linked here is the last in my series of updates, which was written soon after the deadline to deposit the demonetized currency. Most of the banned currency was eventually deposited, making a mockery of Modi, who had claimed that unaccounted money would not reach the banks.  Perhaps 3% of the cash never reached the banks.   A cunning plan...
  • Gold Sector: Positioning and Sentiment
      A Case of Botched Timing, But... When last we wrote about the gold sector in mid February, we discussed historical patterns in the HUI following breaches of its 200-day moving average from below. Given that we expected such a breach to occur relatively soon, the post turned out to be rather ill-timed. Luckily we always advise readers that we are not exactly Nostradamus (occasionally our timing is a bit better). Below is a chart of the HUI Index depicting the action since the January...
  • They're Worried You Might Buy Bitcoin or Gold - Precious Metals Supply and Demand
      Bitcoin Mania The price of gold has been rising, but perhaps not enough to suit the hot money. Meanwhile, the price of Bitcoin has shot up even faster. From $412, one year ago, to $1290 on Friday, it has gained over 200% (and, unlike gold, we can say that Bitcoin went up — it’s a speculative asset that goes up and down with no particular limit).   Bitcoins are a lot less tangible than this picture implies, but they are getting a lot of love recently...
  • Welcome to Totalitarian America, President Trump!
      Trump vs. the Deep State If there had been any doubt that the land of the free and home of the brave is now a totalitarian society, the revelations that its Chief Executive Officer has been spied upon while campaigning for that office and during his brief tenure as president should now be allayed.   Image adapted from the cover of “Deep State #5” - depicting an assassin from the future   President Trump joins the very crowded list of opponents of the American...
  • Boosting Stock Market Returns With A Simple Trick
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  • The Long Run Economics of Debt Based Stimulus
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  • Why the 21st Century Sucks - Turtles All the Way Down
      A Truly Sucky Century BALTIMORE – What an awful century! Worst we’ve ever seen. Household incomes are down. Employment is down, with 7 million people in the U.S. of working age without jobs. Productivity growth is down. GDP growth is down – to only about 0.5% per capita last year. Even life expectancies are down. Drug overdoses are up. Suicides are up. One out of every eight children lives in a family getting food stamps. One of out every eight adults takes psychoactive drugs...
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THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

 
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