Money Flow Trading Method along with Risk Management

HEADS UP !!!

I am using my post number 2616 to update during the trading day. Please keep looking at it as I have been adding to it all morning.

Thank You...


Benjaminis

very good read and so true, My main goal in life is to see, know truth, in all things - If you are true to your self - you will have to admit that most all main stream topics are deception and is directed social engineering. To grow you must let go - and know that you must relearn everything, and I mean everything.

https://www.armstrongeconomics.com/i...previous-debt/

The Euro Crisis & The Previous Debt


Blog/European Union


Posted Mar 29, 2017 by Martin Armstrong
https://www.armstrongeconomics.com/w...16-600x451.jpg
QUESTION: Hello Martin, I understand and agree to what you are saying in your post however I cannot understand what you mean when you say that: “Secondly, leaving all individual member states with past debt yet converted that to euro, then resulted in their debts doubling in international value as the euro doubled going into 2008.” Here, I cannot follow how it is possible that Greece’s PAST debt could double due to the euro doubling in value since the PAST debt has already been converted to euro. If the PAST debt had been in any other currency and then when the euro would double then I could understand that the debt also could double. Am I missing out something here?

Regards,
MG

https://www.armstrongeconomics.com/w...-M-600x446.jpg
ANSWER: All members past debts were in their home currency, including Germany. Upon joining the Euro, the past debts were also converted to the Euro because their old currencies were abandoned. What I mean by international value is if you look at the debts of all member states, when the euro doubled in value from 80 cents to the US dollar to $1.60, from a US investor, he doubled his money holding Greek debt or any member’s debt. We can see that the dollar rose sharply against the drachma between 1995 going into 1999 demonstrating that the drachma declined 47% going into the formation of the euro. The cost of servicing the past debt rises in real terms and when they had to pay off the debt and roll into new debt, they were paying in international value more than it was worth upon joining the euro.
https://www.armstrongeconomics.com/w...ma-600x280.jpg
Back during the Reagan Administration, I met with the U.S. Treasury and warned that Volcker raising rates to 14% meant he was suppressing inflation immediately, but causing it to exponentially rise by the end of the decade. Why? Because central banks cannot stimulate or suppress and economy with interest rates when the government is the biggest borrower. Whatever they think they are doing by raising rates to stop people from borrowing has no impact upon government for they will always spend other people’s money freely. In that meeting, I was flatly told it was OK because the government would be paying back with cheaper dollars. In this case, the rise in the euro to $1.60 meant the opposite – member states would be contracting and had to pay out huge sums beyond what they originally owed. This was no different from people who took out Swiss loans and then the Swiss franc/euro peg broke. Suddenly the borrowers owed q lot more in their home currency when the Swiss rallied.


Consequently, the past debt of Greece was in drachma and the decline in the currency meant that its debt in terms of dollars (international value terms) fell almost by 50%. Upon joining the euro, the past debt was then converted to euro – not before. Therefore, in international terms of value, the debts effectively doubled in real terms. This would NOT have been a problem had all the debt of member states been consolidated into a federal debt for Europe. Thereafter, any new borrowing would have been purely state debt NOT acceptable for reserves in the banking system.
https://armstrongmedia.s3.amazonaws....US-300x233.jpgIn this manner, the past debt, which does not stimulate the immediate economic position, doubled in real terms and increased the cost of servicing the past debt. This is how the economy was strip-mined. Had the debt been consolidated into one federal debt, that burden would have been relieved upon by member states. This would have allowed the euro to then actually compete against the dollar. It is likewise a total joke that people think China and Russia can sell US bonds and somehow that will dethrone the dollar. Pension funds and institutions in Europe and the US will not suddenly sell all dollars and buy rubles and yuan denominated debt. There is such a thing as credit ratings.


As long as federal debt exists and pension funds are compelled by law to own government debt, you will not dethrone the dollar simply by trade or any combination of China and Russia. That is just absurd. The big money simply cannot move to rubles and yuan. A lot more has to change.


Categories: European Union, Sovereign Debt Crisis
Tags: Debt, Euro, Greece
« ECB under Pressure to Reverse Direction

Another Excellent Chart on EUR/USD

https://www.forexfactory.com/attachm...8&d=1490795295

So can we be sure it will go back up or continue down into another box ? It is IMPOSSIBLE to know as long as US Dollar Index does not go down since Euro makes up 57.6% of the US Dollar Index.

SO.... Let us look at US Dollar Index on a Five Minute Chart from Finviz

http://finviz.com/futures_charts.ashx?t=DX&p=m5

There are other parts to the US Dollar Index such as British Pound and Yen and Canadian Dollar so keep that in mind.

https://en.wikipedia.org/wiki/U.S._Dollar_Index

is a weighted geometric mean of the dollar's value relative to other select currencies:

1. Euro (EUR), 57.6% weight
2. Japanese yen (JPY) 13.6% weight
3. Pound sterling (GBP), 11.9% weight
4. Canadian dollar (CAD), 9.1% weight
5. Swedish krona (SEK), 4.2% weight
6. Swiss franc (CHF) 3.6% weight

USDX goes up when the US dollar gains "strength" (value) when compared to other currencies.[3]
USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the US Dollar Index was 100.000. It has since traded as high as 164.7200 in February 1985, and as low as 70.698 on March 16, 2008.


Benjaminis

https://freekit.birchgold.com/sdr-ne...lacement=3t_nc

ALERT: The Death of the U.S. Dollar Commenced Last Fall... Now, the Expansion of this "New World Money Order" May Complete Its Destruction...
It all began in late 2015, when the IMF voted to make the Chinese yuan a reserve currency, by adding it to its basket of Special Drawing Rights (SDRs).


Now, this seismic change is official: As of September 30, 2016, the yuan was officially added to the SDR.


Years from now, we may recognize this date as "the day the dollar died" when SDRs replaced the USD as the world's sole reserve currency.

How This "Monetary Earthquake" Will Devastate the USD

Jim Rickards believes that this is a "monetary earthquake", in part because nations no longer have to deal in dollars. Instead, they can sell their trillions of reserves and FLOOD the market with unwanted greenbacks.


Rickards adds that the IMF may expand the role of SDRs, thus making "China an integral part of the new world money order."

In other words, this new SDR is about to get stronger... and the USD is about to get MUCH weaker.

In short, a huge dollar devaluation is on the horizon.

http://www.imf.org/external/np/exr/facts/sdr.htm

Special Drawing Right SDR
September 30, 2016

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. As of March 2016, 204.1 billion SDRs (equivalent to about $285 billion) had been created and allocated to members. SDRs can be exchanged for freely usable currencies. The value of the SDR is based on a basket of five major currencies—the U.S. dollar, euro, the Chinese renminbi (RMB), the Japanese yen, and pound sterling—as of October 1, 2016.

The role of the SDR
The SDR was created by the IMF in 1969 as a supplementary international reserve asset, in the context of the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase its domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial flows that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.


Only a few years after the creation of the SDR, the Bretton Woods system collapsed and the major currencies shifted to floating exchange rate regimes. Subsequently, the growth in international capital markets facilitated borrowing by creditworthy governments and many countries accumulated significant amounts of international reserves. These developments lessened the reliance on the SDR as a global reserve asset. However, more recently, the 2009 SDR allocations totaling SDR 182.6 billion played a critical role in providing liquidity to the global economic system and supplementing member countries’ official reserves amid the global financial crisis.


The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations.


Basket of currencies determines the value of the SDR
The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Effective October 1, 2016 the SDR basket consists of the U.S. dollar, euro, the Chinese renminbi, Japanese yen, and pound sterling.

The value of the SDR in terms of the U.S. dollar is determined daily and posted on the IMF’s website. It is calculated as the sum of specific amounts of each basket currency valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.

The basket composition is reviewed every five years by the Executive Board, or earlier if the IMF finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (concluded in November 2015), the Executive Board decided that, effective October 1, 2016, the Chinese renminbi is determined to be freely usable (See Article XXX(f)) and was included in the SDR basket.

A new weighting formula was also adopted in the 2015 review. It assigns equal shares to the currency issuer’s exports and a composite financial indicator. The financial indicator comprises, in equal shares, official reserves denominated in the member’s (or monetary union’s) currency that are held by other monetary authorities that are not issuers of the relevant currency, foreign exchange turnover in the currency, and the sum of outstanding international bank liabilities and international debt securities denominated in the currency.

The respective weights of the U.S. dollar, euro, Chinese renminbi, Japanese yen, and pound sterling are 41.73 percent, 30.93 percent, 10.92 percent, 8.33 percent, and 8.09 percent.These weights were used to determine the amounts of each of the five currencies included in the new SDR valuation basket that took effect on October 1, 2016. These new currency amounts will remain fixed over the next five-year SDR valuation period (see daily SDR valuation). Since currency amounts are fixed, the relative weight of currencies in the SDR basket can change during a valuation period, with weights rising (falling) for the currencies that appreciate (depreciate) relative to other currencies over time.

The next review is currently scheduled to take place by September 30, 2021.


The SDR interest rate
The SDR interest rate provides the basis for calculating the interest charged to borrowing members, and the interest paid to members for the use of their resources for regular (non-concessional) IMF loans. It is also the interest paid to members on their SDR holdings and charged on their SDR allocation. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt instruments in the money markets of the SDR basket currencies.


SDR allocations to IMF members
Under its Articles of Agreement (Article XV, Section 1, and Article XVIII), the IMF may allocate SDRs to member countries in proportion to their IMF quotas . Such an allocation provides each member with a costless, unconditional international reserve asset. The SDR mechanism is self-financing and levies charges on allocations which are then used to pay interest on SDR holdings. If a member does not use any of its allocated SDR holdings, the charges are equal to the interest received. However, if a member's SDR holdings rise above its allocation, it effectively earns interest on the excess. Conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. The Articles of Agreement also allow for cancellations of SDRs, but this provision has never been used.
The IMF’s Articles of Agreement provide for the possibility to prescribe as other holders of SDRs—that is, other than IMF members—certain types of official organizations, such as the BIS, ECB, and regional development banks. A prescribed holder may acquire and use SDRs in transactions and operations with other prescribed holders and the IMF’s members. The IMF cannot allocate SDRs to itself or to prescribed holders.


General allocations of SDRs have to be based on a long-term global need to supplement existing reserve assets. Decisions on general allocations are made for successive basic periods of up to five years (the last report is from June 2016), although general SDR allocations have been made only three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72, the second—for SDR 12.1 billion—distributed in 1979-81, and the third—for SDR 161.2 billion—was made on August 28, 2009.


Separately, the Fourth Amendment to the Articles of Agreement became effective August 10, 2009 and provided for a special one-time allocation of SDR 21.5 billion. The purpose of the Fourth Amendment was to enable all members of the IMF to participate in the SDR system on an equitable basis and rectify the fact that countries that joined the IMF after 1981—more than one fifth of the current IMF membership—never received an SDR allocation until 2009.
The 2009 general and special SDR allocations together raised total cumulative SDR allocations to SDR 204.1 billion.


Buying and selling SDRs
IMF members often need to buy SDRs to discharge obligations to the IMF, or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF may act as an intermediary between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. For more than two decades, the SDR market has functioned through voluntary trading arrangements. Under these arrangements a number of members and one prescribed holder have volunteered to buy or sell SDRs within limits defined by their respective arrangements. Following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market. The number of voluntary SDR trading arrangements now stands at 32, including 19 new arrangements since the 2009 SDR allocations.


Since September 1987, voluntary transactions have ensured the liquidity of the SDRs. However, in the event that there is insufficient capacity under the voluntary trading arrangements, the IMF can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the IMF to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR.

Comments From Benjaminis: We have a difference of opinion between Martin A Armstrong and Jim Rickards. We shall watch and be aware of all points of view.

http://kingworldnews.com/john-hathaw...a-accelerates/

John Hathaway – China To Radically Reprice Gold Higher In 2017 As Demise Of The COMEX & LBMA Accelerates


689 Views March 23, 2017 GOLD, KWN, KWN II King World News
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As we near the end of the first quarter of trading in 2017, here is a reminder from one of the greats in the business, John Hathaway, which says China is preparing to radically reprice gold higher as the demise of the COMEX & LBMA accelerates.

KWN wanted its global readers to review this masterpiece from Hathaway before we kickoff trading in the second quarter of 2017:
By John Hathaway, Tocqueville Gold Fund


(King World News) – Gold rose 8.5% for the year while gold-mining stocks (XAU – Philadelphia Gold and Silver Index stocks) rose 75%. On an annual basis, results were highly satisfactory. However, there was considerable drama beneath the surface that left precious metals investors in a state of anxiety by year-end. Precious metals and mining shares rose sharply through August, and then spent the rest of the year giving back much of the first-half gains. The second half downtrend accelerated into early December, following the unexpected victory by Trump and a hawkish statement after the December Federal Open Market Committee (FOMC) meeting…

IMPORTANT:
To hear which legend just spoke with KWN about $8,000 gold and the coming mania in the
gold, silver, and mining shares markets CLICK HERE OR ON THE IMAGE BELOW.
http://kingworldnews.com/wp-content/...16-300x210.jpg

The Next Big Change In The Gold Price Will Be Substantially Higher
The question of the hour is whether the 2016 gains were merely a countertrend rally following a four-and-a-half-year decline from all-time highs in 2011, or the beginning of a new leg in the secular bull market that began in 1999, during which gold rose from less than $300/oz. to $1900 in August 2011. We judge the weight of current sentiment, mainstream media opinion, and technical analysis to be extremely bearish, comparable to year-end 2015 just prior to the dramatic gains that followed. We believe that, based on prevailing negativity, the next big change in the gold price will be substantially higher. If so, the 2016 second-half correction will have established a durable higher low from the advance that began at year-end 2015, and would be the precursor to the continuation of the secular advance that began in 2000.

Fundamentals of physical supply and demand remain positive, and are reinforced by the current extended regime of precious metals prices too low to justify expanded mine supply. Global mine output has plateaued; it now seems likely to decline through 2020 and perhaps into the middle of the next decade. As shown in the chart below, discoveries of new ore bodies are at a 25-year low, while the time required to bring new ore bodies into production continues to lengthen, and now stands at nearly 20 years.
http://kingworldnews.com/wp-content/...7-1024x678.jpg
Physical demand continues to show steady secular growth, primarily in Asia. Consumption by Turkey, India, China, and Russia alone have exceeded global mine supply since 2013, which means that inventories of physical metal held in Western vaults are being depleted to meet that demand.
http://kingworldnews.com/wp-content/...7-1024x785.jpg
Two recent developments (largely ignored by mainstream media) will, in our opinion, significantly strengthen the demand for and usage of physical metal. First, a new Shariah gold standard was approved in December 2016:

The AAOIFI [Accounting and Auditing Organization for Islamic Financial Institutions], in collaboration with the World Gold Council (WGC) and Amanie Advisors, has approved what will become known as the Shariah Gold Standard. This is a set of guidelines that will expand the variety and use of gold-based products in Islamic Finance. (Jan Skoyles, Goldcore Research, 12/16)

We believe that this will lead to the creation of investment products such as gold ETFs for the Islamic world (25% of global population), a market that has not been penetrated. While estimates of the potential market size vary wildly, and this development is in its early days, it seems to us that it is a major positive for future physical gold consumption.
http://kingworldnews.com/wp-content/...acked-Yuan.jpgChina Moving To Dominate World Oil Trade In Yuan Backed By Gold
Second is the incorporation of gold as a settlement currency to facilitate trade between oil-producing nations and the world’s largest hydrocarbon importer, China. Russia, Saudi Arabia, and Iran are settling most, if not all, of their energy sales to China in yuan convertible into physical gold via the Shanghai Gold Exchange. That flow represents a significant and growing percentage of international oil commerce, which in turn represents a dominant share of all commodities.


China Preparing To Radically Reprice Gold Higher
We believe that this development has negative implications for the petrodollar system that has underpinned the dollar’s dominance in global commerce since the 1970s. Physical settlement, as opposed to paper (cash-settled) gold contracts, ramps up the migration of physical metal to Asian owners. Gold has become a reserve asset that is preferred to US Treasuries. Comments below by Xu Luode, chairman of the Shanghai Gold Exchange, show that the Chinese have made no secret of their strategy to internationalize the renminbi through gold convertibility in order to displace the US dollar:

Foreign investors can directly use offshore yuan to trade gold on the SGE international board, which is promoting the internationalization of the renminbi…Shanghai Gold will change the current gold market “consumption in the East priced in the West” situation. When China will have a right to speak in the international gold market, pricing will get revealed… (Xu Luode, speech to LBMA, May 2014)

Demise Of The COMEX And The LBMA To Accelerate
We believe that the expansion of gold’s utility as a settlement currency will accelerate the demise of paper-centric traditional institutions such as COMEX and LBMA, and greatly diminish the influence of speculative paper flows in the process of price discovery. An excellent in-depth discussion of China’s pro-gold/anti-dollar strategy can be found in the 11/21/16 issue of Grant Williams’ “Things That Make You Go Hmmm.” In addition, according to Luke Gromen (Forest for the Trees (FFTT), 1/3/17), “China is accelerating the pace at which it moves towards being able to print CNY for oil and other critical imports, and in so doing is accelerating the pace of ‘de-dollarization’/global currency system restructuring.” A link to HSBC research provided in the same issue shows that more than 25% of China’s trade is now settled in CNY.

Despite an unequivocally bullish prognosis for higher gold prices based on physical flows, short-to-intermediate-term price changes are more heavily influenced by investment accumulation or divestment of synthetic gold positions (paper contracts) on COMEX or similar exchanges than by intermediate physical market flows. Synthetic or paper gold positions are cash-settled, and only remotely connected (if at all) to ownership of physical metal.

Synthetic trading is highly volatile. Position swings are driven mainly by highly changeable macroeconomic perceptions. Directional changes are accentuated by high-frequency traders who account for approximately two-thirds of COMEX volume. Unlike traditional CTA traders who cohabit the COMEX floor and take long or short positions based on speculative macro views, HFT traders are agnostic as to fundamentals and serve primarily as directional accelerants to existing price trends, leading to overshoots on the upside as well as the downside.

Largest Six-Month Reduction In Commercial Shorts On Record
First-half 2016 gains were inflated by speculative money flows. It appears that hot-money excesses that built up in the first half have been largely worked off based on COT (Commitment of Traders) positioning reported weekly. The COT reports show that the first-half rise was driven by net accumulation of 300,000 contracts (roughly 30 million ounces of gold) and the second half by the liquidation of 200,000 contracts. According to Meridian Macro (12/31/16 Gold & Silver Report), commercial interests that take the opposite (short) side of speculative longs reported the largest six-month reduction in contracts on record. These changes were mirrored in all gold ETFs, which saw an increase in ounces of 19.1 million through October 20 and a liquidation of 7.4 million ounces by year-end. It appears to us that the stage is set for a return of speculative interest during 2017.

Synthetic-gold trading is driven, in our opinion, by market perception of the macroeconomic outlook, with scant attention paid to gold-specific fundamentals. These highly speculative bets are subject to sudden reversal. Exhibit A would be the 180-degree shift in expectations for economic growth and interest rates following the unexpected Trump electoral victory, which was also viewed as a game-changer for gold. As observed by Eric Pomboy of Meridian Macro, in the four trading days following the election, approximately 6200 tonnes of gold (2,000,000 contracts) were transacted based on reported COMEX volume. That is equivalent to two years of global gold mining production based on World Gold Council Statistics. That hair-trigger trading reaction led to a price smash of 4.5% and turned the trading sentiment for gold from positive to negative almost overnight.


“The Selling Was Almost Entirely Synthetic”
The question is where did sellers come up with 6200 tonnes – a preposterously enormous and unprecedented quantity of gold – on a moment’s notice, in the wee hours following the surprising election outcome? The answer is that nothing close to that quantity of gold changed hands in those four days. The selling was almost entirely synthetic, as there would have been, in our opinion, no possibility that that amount of physical gold, or even 10% of that amount, could be mobilized on short notice.


The suddenly contrived post-election bearish speculation was that gold under Trump would be hurt by rising fiscal deficits and interest rates, coupled with a return to robust economic growth and, consequently, a rising stock market. We shall see. While euphoria over the prospects of a more pro-business economic policy is understandable, we believe that realities may fall short of these high expectations.


It is a little-known fact that gold has outperformed equities and bonds since 2000 (see chart below). While a change in political direction may be welcome, the history of the past 16 years suggests that that the case for gold transcends partisan politics. It remains to be seen whether the kind of real change necessary to diminish the systemic risks created by 16 years of radical monetary policy can occur without inflicting considerable damage to financial asset values.
http://kingworldnews.com/wp-content/...7-1024x584.jpg
“In our view, the systemic risks that existed prior to the presidential election have not suddenly vanished. Most important among these is a massive bond-market bubble. Close behind, equity valuations remain at historically extreme levels. (“Trump’s Victory: What Does It Mean for Gold?” Tocqueville website article, 11/16)”


Lessons From Reagan’s Landslide Victory
Lofty expectations for Trump the miracle worker are reminiscent, in our opinion, of the euphoria that followed Reagan’s landslide victory in 1980. As the following quote from August 1982 – more than two years after the Reagan victory – illustrates, those initial high expectations were not rewarded before considerable market pain:

There is certainly good reason for pessimism. The Dow Jones Industrial average, battered by the protracted recession, a deepening erosion of corporate profits, and anxieties that brokerage firms as well as banks are becoming increasingly vulnerable, slid 45 points in eight straight days…. The average is down almost 25 percent from its peak in April 1981…Even more disorienting is what investors perceive to be the disarray in economic policy and the abandonment of economic leadership in Washington: the inability of anyone to cut the Federal budget, the flight of economic advisers from the Reagan Administration, and most recently, President Reagan’s sudden repudiation of his own tax cuts in favor of a $99 billion tax increase. (“Dark Days on Wall Street,” by William Shepherd, New York Times, 8/15/82)

In other words, anything can happen. The room for disappointment is substantial, given that the optimists have overcrowded one side of the boat. The 1982 example shows that serious attempts to address past policy ills do not come without collateral pain. In our view, the amount of work to be done on the fiscal and monetary front dwarfs the task of the 1980 Reagan administration. Moreover, Reaganites had the advantage of extremely undervalued equity and bond markets, just the opposite of present-day circumstances. We therefore think the likelihood is excellent that bearish speculative sentiment with respect to gold will revert to positive in 2017.


Shortage Of Available Physical Gold Will Deepen
Summing up, there is a shortage of physical metal at current prices that promises to deepen, masked only by the supply of synthetic gold not backed by physical. Given full transparency, the shortage would argue for a much higher gold price based on price discovery unimpeded by synthetic-gold trading. The progressive hollowing out of the (mostly Western) synthetic price-setting mechanisms and institutions is not a headline-grabbing process. The only clue is the steady seepage of bullion from Western storage vaults into Asian hands, where it is welcomed at bargain prices and utilized within a far friendlier institutional and political context. Advocates of this point of view must have been cheered (as were we) by the fact that GLD, the largest gold ETF, resorted to borrowing 29 tonnes in Q1 2016 from the Bank of England to connect the inflow of money flows with the physical metal necessary to back the trust instrument (from the Q1 10Q). As Trump might tweet, “Not good!!!” With the passage of time, the disparity between real (physical) and imaginary (speculative) fundamentals continues to widen. The longer it persists, the greater the likelihood that it will be resolved in epic fashion. In the end, we fully expect physical gold to trump its feeble paper facsimile.


COMMENTS FROM BENJAMINIS: Now you know !!!

three words from a TA freak: Gold Will Fly

period

Hi Benjamin, thank you for the time you have put into this post today, it really helps with the learning process to see the way you think while trading and to follow trades with you.

http://www.hardassetsalliance.com/re...ools/our-blog/

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3. Why We Could Get Negative Interest Rates Even Though the Fed Is Hiking

Why We Could Get Negative Interest Rates Even Though the Fed Is Hiking

 

1. Hard Assets Alliance Team
2. March 29, 2017

http://images.hardassetsalliance.com...170329_HAA.jpg
At its March meeting, the Federal Reserve raised interest rates by 0.25%. In doing so, it hiked rates for only the third time since 2006. However, in a strange turn of events, the Fed’s move was perceived as a dovish one by the markets.


That’s because even with inflation at its highest level since 2012, the Fed said monetary policy will remain accommodative “for some time.” As has been the case in the past, the Fed is willing to let inflation consolidate above its 2% target before embarking on a more aggressive tightening path.

This willingness to let inflation “run hot” means even as nominal rates rise, real rates—that is, the nominal interest rate minus inflation—are headed into negative territory.

So what are the implications of negative real rates?

Negative Real Rates Drive Gold Higher
The consumer price index (CPI), the most widely used measure of inflation, averaged 2.67% for the first two months of the year. Even if inflation averaged only 2% for all of 2017—the Fed’s target—it would be a big problem for investors and savers alike.

Today, a one-year bank CD pays about 1.4%. Therefore, anyone who keeps their money in a bank is watching their purchasing power erode.

Of course, there are other options. You can put your money in US Treasuries or dividend-paying stocks—both popular sources of fixed income.

However, with both the 10-year Treasury yield and the average dividend yield for a company on the S&P 500 hovering around 2.35%, that doesn’t leave much in the way of real gains if inflation is running at 2% per annum.

If inflation rises or bond yields fall, real interest rates will be pushed into the red… and that’s very bullish for gold.
Gold is known as the yellow metal with no yield, but simple math tells us no yield is better than a negative one. Because of this, gold has done well when real rates are in negative territory. In fact, real US interest rates are a major determinate of which direction the price of gold moves in.
http://images.hardassetsalliance.com...170329_HAA.jpg
A study from the National Bureau of Economic Research found that from 1997–2012, the correlation between real US interest rates and the gold price was -0.82.

This means as real rates rise, the price of gold falls and vice versa. A -1.0 reading would be a perfect negative correlation, so this is a tight relationship.


The Fed’s hesitation to raise rates faster is contributing to another trend that is also bullish for gold.

A Falling Dollar Equals Higher Gold Prices
In the six weeks following the US election, the dollar skyrocketed 5.6%—a huge move for a currency.

However, since the beginning of the year, the greenback has given back most of its post-election gains. This is in part due to the Fed’s “dovishness” on interest rates.

The strong negative correlation between gold and the US dollar is a major reason the yellow metal is up over 9% year to date.

In the March edition of Bank of America Merrill Lynch’s Global Fund Manager Survey, respondents thought the dollar was at its most overvalued level since 2006. As the chart shows, the survey has a good track record of determining when the dollar is overvalued.
http://images.hardassetsalliance.com...170329_HAA.jpg
Source: Bank of America Merrill Lynch

Tying it all together, what do these trends mean for gold?

Gold Should Go Higher from Here
With arguably the two biggest drivers of the gold price trending in the yellow metal’s favor, gold is likely to go higher. Although the dollar could rise if Washington implements some structural reform, real rates aren’t headed higher anytime soon based on the Fed’s actions.

Bank of America Merrill Lynch said these two trends were part of the reason why it upgraded its forecast for gold to $1,400 per oz. by year-end. As the chart below shows, the market turned bullish on gold following the Fed’s December rate hike.
http://images.hardassetsalliance.com...170329_HAA.jpg
Source: Bloomberg
In closing, after nine years of doing its utmost to generate inflation, the Fed has finally succeeded. If past is prologue, as inflation rises over the coming months, gold will do very well.


If you’re considering getting some gold before it goes up, do your homework first. Find out everything you need to know about which type of gold to buy and which to stay away from at all costs… how to safely store your gold… and much more… in the revealing ebook, Investing in Precious Metals 101. Click here to get your free copy now.

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Comments from Benjaminis: Very Comprehensive Article on Gold and Negative Interest Rates

GREAT GRAPHICS - THANKS

https://www.forexfactory.com/attachm...8&d=1490812442


On a side note: I thought Sis.yphus was your name....

Until i found out:

https://www.forexfactory.com/showthr...14#post9719814


https://en.wikipedia.org/wiki/Sisyphus



Benjaminis

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Something's Broken In The VIX-Stocks Relationship
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Mar 29, 2017 2:55 PM



The S&P 500 Index and CBOE Volatility Index have historically moved in opposite directions about 80 percent of the time, but that’s changed recently...
As Bloomberg reports, both gauges are heading for declines this month, after the two rose in tandem in February.



That’s weakened their inverse correlation, sending it to levels not seen since April 2005...
http://www.zerohedge.com/sites/defau...328_VIX2_0.jpg




After March/April 2005, the S&P 500 dropped around 8% (breaking down as the correlation reverted to norm)

In May 2012, the S&P 500 dropped 11% after VIX and Stocks' decoupled and correlation surged.

The smaller spikes in VIX-Stock correlation also saw notable equity market drawdowns (Feb/March 07 down 6.6%, Oct 09 down 6.5%, Dec 2012 down 3.5%)

So what will happen this time?
http://www.zerohedge.com/sites/defau...328_VIX3_0.jpg

Comments From Benjaminis: Teek can you please explain to us why this is happening ? Of course only when you come back from the beach. Sleep Well !!!

GREAT CHART

https://www.forexfactory.com/attachm...6&d=1490821474

EUR/USD now Bid 107.65


Benjaminis

This Post Can Be Used for this Forex Trading Day good until 5 PM Eastern Standard Time. (March 30, 2017)


NEWS EVERY FEW SECONDS - CLICK ON LINK

http://finviz.com/news.ashx


5 Minute Chart on US 30 DJIA - Dow 30

http://finviz.com/futures_charts.ashx?t=YM&p=m5


5 Minute Chart on US Dollar Index

http://finviz.com/futures_charts.ashx?t=DX&p=m5


5 Minute Chart on US 10 Year Bonds

http://finviz.com/futures_charts.ashx?t=ZN&p=m5


5 Minute Chart on EUR/USD

http://finviz.com/forex_charts.ashx?t=EURUSD&tf=m5


5 Minute Chart on USD/JPY

http://finviz.com/forex_charts.ashx?t=USDJPY&tf=m5


Benjaminis


NOTE: You can click on other time frames to see the other time frames.

HEADS UP LADIES AND GENTLEMAN

I am going to share with anyone that reads this post a Trade Secret or you can call it My Discovery and it is good to use everyday although as always use care and work with Stop Loss.

The reason that on most evenings starting from 5 PM EST after the Rollovers are done we have the retail traders who move EUR/USD up and it usually continues until 2 AM EST to 3 AM EST when the CAC and the DAX and the FTSE opens.

THE SHARKS see what the Retail Forex Traders have done and they know how to have their morning meal by selling the LONG EUR/USD and forcing them below all the Stops. Then normal Money Flow starts as the Europe Equity markets open at 3 AM EST as I have just said.

The way that I play it is to review things by looking at the charts using the 5 Minute and 15 Minute and 4 Hour Charts and then depending where it is meaning the Top or Bottom of the Time Frames then I join with the SHARKS and go SHORT EUR/USD !!! YUM YUM !!!

Hour Chart on EUR/USD

http://finviz.com/forex_charts.ashx?t=EURUSD&tf=h1

Please note also that I only trade with the Trend so it requires for the TREND in EUR/USD to be down. That applies with all my Forex Trades and that is to trade with the Trend. "The Trend Is Your Friend"

Benjaminis

From my Post 1622 - UPDATE

HEADS UP - VERY IMPORTANT ARTICLE - CHINA - SELLING OF TREASURIES !!! - INCREDIBLE KNOWLEDGE HERE - VERY HAPPY TO HAVE FOUND IT !!!

http://seekingalpha.com/article/4039...trend-continue

Treasury Rates Up As China Sells Big - Will The Trend Continue?

Jan. 26, 2017 2:05 PM ET

https://staticseekingalpha1.a.ssl.fa...png?1362199805
Daniel R Moore
Follow(2,506 followers)
Portfolio strategy, bonds, oil & gas, long-term horizon

FinancialRelativity.com

Summary
According to the latest TIC data released by the US Treasury, US Treasuries owned by foreigners showed a decline of $335.8B from June through November of 2016.


Based on a review of the historical data dating back to 1967, there has never been selling pressure of this dollar magnitude from foreign entities in the US Treasury market.


From the beginning of July through November 2016, China sold $191.5B in U.S. Treasuries, which amounted to 57% of all net sales.


This article examines the implications for the large sell-off of Treasuries by foreign entities on the future direction of the Treasury rates.


I read an article on January 23rd, Hedge Funds Risk Treasuries Wipeout After Bearish Bets Soar, published by Bloomberg.com where analysts at JP Morgan Chase's Jay Barry says "fast money" speculative positions will be hurt badly as Treasuries (NYSEARCA:TLT) (NYSEARCA:SHY) (NYSEARCA:IEF) (NYSEARCA:IEI) (NYSEARCA:GOVT) decline in the intermediate future. The investment thesis is based on the fact that hedge fund short interest in the 5 year Treasury (NYSEARCA:SHV) (NYSEARCA:TBT) is currently at a very high level and the expectation is that these bets are almost always a contrarian indicator as they eventually are overwhelmed by Institutional investors who from a dollar volume standpoint far outweigh the hedge fund positions.


The market expectation in the article is logical, and has certainly worked as a trade position virtually without fail over the past 25 years, particularly when Treasuries rise for any length of time longer than 6 months. And if you look at the chart below which shows the Treasury yield curve change over the past 6 months, you are probably tempted to agree with the viewpoint based on the retracement rally in Treasury rates that began post the Fed rate hike in mid-December of 2016.
https://staticseekingalpha.a.ssl.fas...rId7_thumb.jpg
I currently am skeptical that the move higher in Treasury rates is even close to the market top at this point in time, at least until there are clear sign the "Trump Rally" is going to collapse.


In my market analysis, late year and early 2017 portfolio re-balancing did cause an Institutional bid in the Treasury market and a retracement rally up to the week before Trump's inauguration. However, the market is stubbornly remaining in the current 2.50% range on the 10 year, and appears poised to break higher as stocks move even higher post the Trump inauguration.


I make this bold statement, in contrast to JP Morgan's call, because the fundamental reason that pushed rates to the cyclically low levels experienced in early July of 2016 has now been broken and pushed into reverse, and the Trump election marked a watershed moment which sent the interest rate trend in the opposite direction. At the center of the trend reversal is China, and I share data in this article that show that US Treasury selling by China is the biggest contributing factor behind the large move in rates from July through mid December of 2016. I expect this trend to continue in the intermediate term with the driver for further upticks in US Treasury interest rates being the "Made in America" trade policy which is the centerpiece of the Trump administration, and possibly foreign policy conflicts.


Large Foreign Treasury Sell-off Drives 10 Year Rate Rise
Much of the press concerning recent interest rate increases tends to monotonously focus on "inflation expectations" and whether "economic growth" can support Fed rate hikes. Given the Federal Reserve mandate to fight inflation and encourage US full employment, the tendency is understandable. However, the Treasury bond market, particularly the long end of the curve, in my experience is much more supply and demand driven as opposed to expectation driven. The U.S. Treasury market is the fundamental basis for the size of the U.S. money supply, but additionally since 1971 it has become the collateral pool on which a large majority of international trade is backed and settled. As a result, supply and demand for Treasuries, both domestic and international, is a key factor determining the market rates for longer term Treasuries. Simply reviewing the growth and inflation characteristics of the US economy can be very misleading for someone making a decision about whether to invest in US Treasuries at any given time.


I make this long prelude because the data over the past 6 months, when the 10 year US Treasury note increased 88 basis points, is heavily correlated with one primary factor. That factor was not inflation or US economic growth expectations, although the press is keenly focused on telling the story as if these factors are the drivers. As you can see in the graph below, the primary factor has been selling of Treasuries in large quantities by foreign entities, both sovereign and enterprise. According to the latest TIC data released by the US Treasury, US Treasuries owned by foreigners showed a decline of $335.8B from June through November of 2016.
https://staticseekingalpha.a.ssl.fas...rId9_thumb.jpg
Based on my review of the historical data dating back to 1967, there has never been selling pressure in this dollar magnitude from foreign entities in the US Treasury market. In fact the closest comparable time period was November 1999 to March 2000 when foreign ownership declined by $199B. As a percentage of total ownership, the 2016 decline so far has been -5.66%, whereas the year 2000 decline was a much larger -18.6%. The big difference between the two time periods is that foreign entities currently own over 42% of publicly traded US debt, whereas in the year 2000 they owned only 30%. The US publicly traded debt in March 2000 was also far less at $3.56T versus $14.4T today, a whopping 4 fold increase in just 16 years.

In the year 2000 the 10-Year Treasury note, after rising from 5% to 6% in 1999 leading up to major foreign sales at the end of the year, continued higher to peak at 6.79% on 1/21/2000, before beginning a decline that lasted for many years. History shows that the stock market eventual peak later in the year 2000 and the ensuing multi-year economic slowdown chased money from domestic and international riskier assets back into US Treasuries as a safe haven.


Why should investors care about a seemingly trivial financial statistic like how quickly foreign entities are selling US Treasuries? - Because the figure is a key barometer for the future direction of the US financial market. Since the early 1970s, US debt purchases by foreigners have typically remained positive through time if looked at over a 5 month interval to smooth out short interval anomalies (See blue line in the chart below).
https://staticseekingalpha.a.ssl.fas...Id10_thumb.jpg
However, when foreign entities as a whole become net sellers of US Treasuries (See red line below 0%), there is a clear historical pattern of upward pressure on the Treasury yield curve and the 10 year T-Note (See the short cycle peak year and month in 10 year Treasury rates in red).

These time periods also very closely align with some of the most dramatic declines in the stock market, including 1969-70, 1973-74, 1981, 1987, 2000-02, and 2008.

In the second half of 2016 foreign ownership of US Treasuries broke down dramatically, and the 10 year rate has responded upward in line with the historical pattern. The big question for investors and the US financial system is whether the sell-off pattern will subside, or is it just the beginning of a worsening trend?


Who is selling US Treasuries in Big Way? - China
Given the high correlation between long-term Treasury (NASDAQ:VGSH) (NASDAQ:VGLT) (NYSEARCA:SCHR) (NYSEARCA:TBF) (NYSEARCA:ITE) (NYSEARCA:TLH) (NYSEARCA:EDV) (NASDAQ:PLW) rate movements up through time and the selling pattern of foreign entities, it is instructive to review what countries did the most selling of US Treasuries in the second half of 2016. Probably not a surprise to many investors reading this article, it is China. From the beginning of July through November 2016, China sold $191.5B in U.S. Treasuries, which amounted to 57% of all net sales. As a reference, Chinese entities owned $1.24T in UST's when they began selling. They sold 15.4% of their Treasury holdings in 5 months, a considerable change.
https://staticseekingalpha.a.ssl.fas...Id11_thumb.jpg
The remaining concentrated sellers were based in Belgium, a country which is a known proxy location for China US Treasury market activity. In other words, China's sales were likely even higher over the time period. Other major sellers were located in Japan and the U.K. One of the interesting aspects of the financial markets during this time period is that the US Dollar strengthened, while the currencies of China, Japan and the U.K. all weakened on a relative basis.
Typically I would expect a major financial account run on the US Treasury would bring about a dollar weakening scenario. However, the currency market responded to the growing positive short-term interest rate differential between these countries on the prospects for Fed interest rate hikes, leading to the dollar to get even stronger. Over this time period, the data show that private investors in the US primarily picked up the gap in the US Treasury financing needs, as the US continued to borrow at a rate of over $100B per month.


The $2.0T in excess reserves in the financial system created by the Fed QE during the Obama administration declined by over $145B over the time period and an additional $221B in the month of December. The major decline most likely reflects money being put to work by private institutions and investors to cover the US debt financing gap during the time period. The Excess Reserve backstop currently sitting in the US financial system may be tested to finance the Trump agenda very, very soon, particularly if as expected the virtuous flow of International funds into US fixed income markets continues to run dry.


Curious Timing - Over $65B in China US Treasury Sales in November
The data which shows large volume selling of US Treasuries gets even more interesting when you put the spotlight specifically on November 2016, the month Trump was elected. During November, the total sales of US Treasuries by foreign holders were $96.2B. Of that amount, China accounted for 69% of net sales as their Treasury ownership declined by $66B.
https://staticseekingalpha.a.ssl.fas...Id13_thumb.jpg
Japan also was a large net seller in November at $23B. However, Japan on a year over year basis did not significantly reduce its $1.1T in US Treasury holdings.
The timing of the high volume in Treasury sales by China is curious and is worth trying to understand further, particularly given the current impact on US Treasury yield curve and most likely the overall worldwide financial system if it continues.


Why is China Selling US Treasuries - And, Will the Selling Continue?
The long end of the US Treasury market is witnessing rates going up, and the fundamental reason is largely tied to foreign entities selling Treasuries in large quantity, particularly China. The question is, why now, and when will the trend stop or even reverse?

The Treasury selling trend began prior to the US election, so the explanations on why it is happening cannot with certainty be linked directly to Donald Trump's election. Most of the financial information I have reviewed tend to support the fact that a large part of the pre-election decline in China's Treasury holdings can be linked to financial account "error and omissions" outflows, typically a catch all category for "Capital Flight." There is also evidence of an increase in large dollar overseas acquisition activity by China state owned entities. A good example is the $43B acquisition of Sygenta by state owned entity ChemChina in 2016 which recently closed.
https://staticseekingalpha.a.ssl.fas...Id14_thumb.jpg
There is also the likely possibility that many companies that borrowed at low US dollar based interest rates to cover operations based in Yuan were inappropriately hedged as the dollar strengthened and the Yuan depreciated. This scenario has likely caused the need for many of these loans to be called and re-structured in Yuan to avoid further currency risk if the Yuan continues its downward move. There is clear data that point to debt repayment from interest rate arbitrage arrangements being a contributing factor to China reserve sales in 2015, but not in 2016.


10 Year Treasury Likely to Rise as Long as the Trump Rally Continues
All of the likely reasons that China would sell large quantities of US Treasuries since July of 2016, however, don't come close to explaining the spike in selling in November 2016. I currently categorize the latest selling by China as a pre-emptive message to the incoming Trump administration which might be worded as follows:
"We presently have the ability to move the interest rates on you government debt higher and our currency lower in the process, to the detriment of your goals as President. If you press us on Taiwan, island building in the South Pacific and our trade practices, your ability to finance your government and the functioning of your capital markets will become more and more difficult."



Sound far-fetched? If a better explanation exists, I welcome the data. I seriously doubt the Chinese sat in a room in Beijing and debated their expectations for US inflation and economic growth in their decision making process to hit the sell button on $66B in Treasuries in November of 2016.

I currently view the Treasury rate spike immediately after Trump's election as Round 1 of a longer term trend which will see US Treasury rates return to and possibly even over-shoot historical norms of 4% on the 10-Year Treasury. In the process there will be ups and downs, but the long-term cyclical trend down in Treasury rates from 1980 through 2016 is over as long as the Trump economic plan is being followed. As the Trump stated goal of "Making goods in America that are consumed in America" is implemented, the virtuous flow of international dollars to fund the US debt will decline on a relative basis. However, federal spending levels are likely to grow faster, not slower than the previous 4 years as entitlements continue to expand to cover aging Americans, infrastructure spending is on the table and defense spending needs are going up, not down.


Mix this likely scenario with tax cuts and you have a recipe for an increasingly large supply of US Treasuries against a dwindling demand pool. If the Fed intervenes as this scenario unfolds, and they will, I don't expect it will be as a buyer of US Treasuries…


Eventually the "Trump Rally" will look more like the "Trump Set-up"; but until this happens, the US Treasury yield curve will continue to lift higher across all maturities. In the current market, keeping Treasury duration short in your bond portfolio (NYSEARCA:FTSD) SHY) (NYSEARCA:TUZ) (NYSEARCA:SST) is the only rational investment choice in my opinion.


Daniel Moore is the author of the book Theory of Financial Relativity: Unlocking Market Mysteries that will Make You a Better Investor. All opinions and analyses shared in this article are expressly his own, and intended for information purposes only and not advice to buy or sell.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My bond exposure in low risk bonds is currently very short duration, but I am not short the Treasury market.

1

 

1. Post 1,623
2. Cleanup
3. Quote
4. Jan 26, 2017 3:34pm

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Jim Rogers Warns, The Fed "Has No Clue... Will Ruin Us All"


http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Mar 29, 2017 5:05 PM



"What worries you?" asks a Bloomberg TV anchor of billionaire investor Jim Rogers. Rogers was not shy in his response: "The Federal Reserve... has no clue what they are doing. They are going to ruin us all."


Having driven rates to record lows and with debt sky-rocketing, Rogers warns "this is all going to end very, very, very badly." Rogers slams the 'counterfactual' arguments that things would have been a lot worse if The Fed had not done all this, "propping up zombie banks and dead companies is not the way the world is supposed to work."


"It's been nine years and we have nothing to show for it [economically] except staggering amounts of debt."
We have missed Mr. Rogers plain, if often painful, truthiness.

 

1. Federal Reserve
2. Jim Rogers

Comments From Benjaminis: There is no more credible person in the world than Jim Rogers. Please Listen To The short Video Interview...

http://www.zerohedge.com/news/2017-0...l-going-part-3



The election of Trump was the initial deplorable pushback to Deep State evil.

The notion that a radical is one who hates his country is nave and usually idiotic. He is, more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime; he is a good citizen driven to despair. H.L. Mencken
https://i.ndtvimg.com/i/2017-03/dona...1488339305.jpg
This new regime will enthrone itself for the duration of the Crisis. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Where leaders had once been inclined to alleviate societal pressures, they will now aggravate them to command the nations attention. The regeneracy will be solidly under way. The Fourth Turning Strauss & Howe


We are now seven weeks into the Trump presidency and it seems like seven years with amount of incidents that have occurred before and since his inauguration. When in doubt, Trumps brain dead, hyperventilating with hate, opponents either blame the Russians or declare him Hitler. The histrionics displayed by the low IQ hypocritical Hollywood elite, corrupt Democratic politicians, fake news liberal media and Soros paid left wing radical terrorists over the last two months has been disgraceful, revolting, childish, and dangerous.


A counter-revolution by the gun owning normal people in the 85% red area of the country that voted for Trump would not be a pleasant experience for the paid protesters, vagina hat wearing feminazis, and the safe space anti-free speech lefties on campuses across the land.
http://www.gannett-cdn.com/experimen..._diff_2008.jpg
I must admit I love Trumps pugnacious style. I love how he treats the despicable corporate media. I love how he responds to baseless accusations by his contemptible opponents on the left and right. The representatives of the Deep State Schumer, Pelosi, Obama, McCain, Graham, Kristol, CNN, NYT, Washington Post, MSNBC, Soros, and anyone else willing to confront Trump are met with disdain, contempt, and abuse from the president. I love that he continues to go on the road and hold rallies with the people who elected him. I love how he demoralized his opponents by giving one of the best State of the Union speeches in history.

I love how he put his opponents back on their heels by accusing Obama of wire-tapping Trump Tower. No punch is taken without two being thrown. He will never conform to the way the liberal corporate media and his opponents want him to behave. Twitter is the dagger he uses to avoid the fake news media filter and plunge into his opponents hearts. The faux journalists despise his use of Twitter. When you see the violence beginning to break out between Trump haters and Trump supporters, and read stories about Obama leading an insurgency to undermine Trumps presidency, every normal person must be prepared to do whatever necessary to support his radical agenda of draining the swamp.


Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats. H.L. Mencken

The fake news media scoffed when Trump declared what an awful economic mess Obama had left after eight years of a debt fueled Keynesian failure of epic proportions. These fake journalists are good at looking stylish, speaking in serious tones, and reading false narratives written for them by their corporate bosses, but impartially assessing our economic situation is beyond their pea brain comprehension.


The eye opening chart below shows you how far weve come since 2000, or how far weve fallen, depending on your point of view. It looks to me like Trump has been handed a bucket of shit by his egotistical sociopathic boastful predecessor. Obama can now concentrate on his true passions his NCAA pool and golf while Trump is left to try and clean up a $20 trillion mess.
https://pbs.twimg.com/media/C6GHlbkUYAAmIrV.jpg
The Bush and Obama administrations frittered away any chance for a sustainable long-term economic paradigm by fighting unnecessary wars of choice, expanding unfunded entitlements, and allowing Wall Street and their Federal Reserve puppets to fraudulently pillage the nations wealth. Trump has been left with a debt saturated stagnant economy with rising interest rates and declining corporate profits. This is where reality meets slogans like Make America Great Again.


This is where understanding what happens during Fourth Turnings keeps you focused on what is likely to happen, not what you wish to happen. Slogans and false hope dont fly during Fourth Turnings. My natural skepticism kicks in when politicians, including Trump, make promises that are mathematically impossible.

I know we are less than two months into his presidency and no legislation has actually been submitted, let alone passed, but impartially assessing his wish list of economic priorities makes me uneasy. Im not hubristic enough to declare his presidency a failure already, like Karl Denninger, Paul Craig Roberts and some other blowhards. Judging a man before hes actually done anything tells me more about the judger rather than the man being judged.

He has certainly made some questionable cabinet choices and the number of senior advisors with ties to the Vampire Squid on the Face of America (aka Goldman Sachs) is worrisome. But whenever my doubts about Trumps agenda begin to surface, I immediately picture the crooked globalist Deep State tool Hillary Clinton making the State of the Union speech last week. And all is well with the world again. My mental funk would be a full blown suicide watch level depression if Crooked Hillary was running the show.
https://d1lidwm7vls1dg.cloudfront.ne...-Graphic-2.jpg
But that isnt going to keep me from pointing out the mathematically provable impact of his plans on the budget. We already have a $20 trillion national debt, with 10,000 Baby Boomers turning 65 years old every day for the next decade. Annual deficits are already on automatic pilot to reach $1 trillion over the next few years. This is reality. Slogans wont change it. Hope wont change it. Delusional optimism by consumers wont change it. With this backdrop, Trump has proposed the following economic initiatives:

1. Hes vowed to not touch entitlements, even though they account for 50% of current spending and will grow to 60% over the next ten years.
2. Hes vowed to rebuild the military, with 50,000 more soldiers and upgrades to fighting hardware, at a cost north of $50 billion.
3. Hes floated the idea of a $1 trillion infrastructure plan.
4. The border wall will cost between $15 and $25 billion.
5. His tax reduction plans will add between $2.6 trillion and $3.9 trillion, after accounting for increased growth, over the next decade.
6. His much discussed tariffs on foreign produced goods may result in jobs staying in America, but will surely result in higher prices for people buying those goods. Whether this will be a net positive or net negative is open to debate.
7. With inflation beginning to accelerate, interest rates will rise. A 1% rise across the yield curve would result in an additional $200 billion per year in interest, a 50% increase from the current level of $400 billion.

Discretionary spending only accounts for 15% of the entire budget. There isnt savings anywhere near the level of spending increases baked into the budget, let alone Trumps new grand spending plans. If Trump gets everything he has proposed, without touching entitlements, he would depart in eight years with a $30 trillion national debt and an entitlement crisis just over the horizon. Of course, the likelihood of reaching $30 trillion in debt without triggering a global financial catastrophe beforehand is about as likely as Trump making a sobbing apology to Obama for accusing him of wiretapping Trump Tower.


As I stated at the beginning of this article, I am less sure about just about everything, as time goes on. Every day I see pronouncements from people I respect like David Stockman, Chris Martenson, Peter Schiff, Jim Rogers, Marc Faber and many others predicting a great crash in the immediate future. They will be right eventually, but theyve been saying the same thing for the last five years. I agree with their reasoning, but Ive given up on predicting the timing.


They all have one thing in common their living depends on you buying their newsletters and books. Certainty about looming disaster sells. Since my living doesnt depend on selling anything, Im comfortable pondering possibilities and trying to understand how the mood of the country will ultimately propel the unfolding events of this Fourth Turning.


Trump has been referencing the 16% rise in the Dow since his election as proof his proposed economic policies will create millions of jobs, 4% GDP growth, and a new economic boom. That seems a little bit disingenuous, as during the debates and on the campaign trail he said the stock market was a giant bubble. He said the Fed had created multiple bubbles in stocks, bonds and real estate with their QE and ZIRP Make Bankers Rich Again schemes. Of course, he was right.


His honesty was refreshing. When an extremely overvalued market rises another 16% over a four month period, one might ponder whether weve got a blow-off top in progress. Certainly the brainless spokesmodels on CNBC or the bevy of Bloomberg stock shills paraded on camera to bloviate about why this seven year Fed induced bull market is just getting started, will not be telling Joe Sucker to sell.


Any honest financial analyst, who has taken a Statistics course in college, knows whenever something is 2 standard deviations beyond the mean you have a rarely occurring extreme outcome. In fact, the average stock has only been more overvalued one time in stock market history 2001. Since that market overvaluation was solely driven by dot.com stocks, median stock valuations today are even higher than 2001. This isnt opinion or survey data.


Doug Short and John Hussman have used impartial valuation metrics which have been accurate for over 100 years. These valuation levels are 160% above historical norms and imply a market crash of 50% to 60%, which would only bring the market back to historical averages. I wonder how many Boomers and GenXers could survive the third stock market bust in the last seventeen years.
https://www.advisorperspectives.com/...8d750c8a50.png
The cock sure Wall Street analysts are as smug about this market as they were in 2000 and 2007. They scoff at the possibility of a 50% crash even though the market crashed by 45% in 2000/2001 and plummeted by 51% over a sixteen month period in 2008/2009. As usual, there are a myriad of ridiculous rationales for why its different this time. There will always be absurd justifications for outlandish valuations made by those whose paychecks depend on the greater fool theory.


John Hussman, Doug Short, Robert Schiller, and dozens of other rational thinking, honest, data oriented people are right. But that doesnt mean the market wont go up another 20% before the inevitable collapse. I have no idea when it will happen, but it will happen. Considering we are in year nine of a twenty year or so Fourth Turning, with the worst part yet to come, Id venture a guess we will see the next financial crisis during Trumps first term.


The nattering nabobs of nonsense at the Fed and in the financial mainstream press insist their monetary machinations over the last eight years have not created inflation. They clearly believe in the theory of the bigger the lie, the more likely it is to be believed by a math challenged, technologically distracted, normalcy bias ridden populace. Anyone who thinks the $3.5 trillion of QE money was to help the people on Main Street is either a government bootlicker or an establishment crony paid to spread false propaganda. In addition to the BLS under-reporting inflation by 100%, the Feds monetary inflation was pumped straight into the veins of the monetary drug addict Wall Street banks.


While Main Street wages declined and senior citizens have gotten minuscule increases in their life sustaining Social Security payments, the Wall Street bankers, who committed the greatest control fraud in world history, have gotten record bonuses and the freedom to fake their profits through legal accounting fraud (mark to fantasy).


The purpose of TARP, QE and ZIRP has been to sustain, enrich, and keep in power a ruling class of sociopaths hell bent on pillaging the last vestiges of global wealth from unsuspecting citizens. Jamie Dimon believes everything done by the Fed and Treasury has been wonderful, as he plays tennis in his $5 million opulent NYC penthouse suite. Meanwhile, your granny has to decide between her overpriced heart medication or groceries driven higher by the Fed generated inflation.
https://timebusinessblog.files.wordp...0&h=320&crop=1
I dont know when the center will give way. I dont know when the stock market will crash. I dont know when the Federals Reserve and other central banks shamefully reckless and illegal monetary machinations will blow up the world. I dont know whether Trump will succeed or fail in his quest to drain the swamp. I dont know whether the Deep State forces will take him out. I dont know whether a civil war is on the horizon. I dont know whether a global military conflict is in the offing. I dont know when this greater depression will be revealed in all its glory to the millions of people with their heads up their asses in denial about reality. But, I do know whatever happens during the remainder of this Fourth Turning will be driven by debt, global disorder and civic decay, just as it has from the beginning.
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I dont know what the hell is going on. And more often than not, I dont care anymore. Im tired of howling at the moon, with no result. Life gets put into perspective when a family member is struck with a totally random health issue and you have to see them suffer through treatments that make them sicker than the actual condition. I know times are going to get much tougher. I have no misconceptions Trump can somehow reverse the course of the US Titanic after it has struck the iceberg of debt.


I believe whats wrong with this country is unfixable. I think Trumps legacy will be the tearing down of the corrupt, decrepit, self-serving, evil status quo. His in your face, no holds barred style so angers the established social order; they come out of the shadows to fight him. The sinister intelligence services and Soros/Obama left wing terrorists are being revealed as the true enemies of the common people. We know our enemy. Thats the first step.


I will do my best to get my kids through college debt free as long as they pursue a serious degree. I will continue to pay down my mortgage debt as quickly as possible. I will try to deal with my own health issues and help my wife deal with hers. We will take care of our aging mothers. Family will always come first. Were only on this earth for a short time and while I get intellectual satisfaction from trying to change hearts and minds through writing, the only thing that truly matters to me is my wife and the futures of my three sons.


Ill prepare to the best of my ability for the worst, while trying to enjoy the present. Over the last nine years weve created a dysfunctional family of internet misfits on my website. I feel an obligation to keep that alive, especially for the talented writers who have blossomed with an open platform for their views, even though my own enthusiasm has been waning for a while.


Ive tried my best to seek truth, reveal government deception, and generally be a thorn in the side of the establishment. Based on Menckens definition, Im a dangerous man to the government, who has spread discontent among those capable of thinking things out for themselves. You may not realize it, but the war has already begun. No matter what the hell is going on, I sure hope the good guys win.
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The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is very apt to spread discontent among those who are. H.L. Mencken

1. goldman sachs
2. Goldman Sachs
3. Jamie Dimon
4. TARP
5. Twitter
6. Federal Reserve
7. Karl Denninger
8. Yield Curve
9. Fail
10. MSNBC
11. Central Banks
12. National Debt
13. Jim Rogers
14. Chris Martenson
15. Peter Schiff
16. John Hussman
17. BLS
18. Market Crash
19. Marc Faber
20. Main Street
21. Real estate
22. Reality

Comments from Benjaminis: You cannot get a better written comprehensive EXPOSE as we have just read here. Good Evening and see you soon.

1. Home
2. Technical Analysis

Is The Stock Market Now On Thin Ice?

http://www.viperreport.com/stock-market-now-thin-ice/

Tuesday's 1.2% decline in the S&P 500 and 10% rise in the VIX certainly got the market's attention as it was already nervous about the health care vote. The financial media debated the impact of both a No and a Yes vote but cancelling the vote was clearly not expected.
Of course this has started a new debate as some think it means that Trump's poor understanding of the legislative process dooms the rest of his legislative agenda while others think it will have little impact. Though the health care debacle will not help the Republican brand I would expect them to be much more organized and effective on tax reform.
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Some investors do not seem as convinced as this Bloomberg chart shows that those companies with a high tax rate have not done well this month. This basket of stocks peaked in late February and have been declining every since, line a. As the chart indicates those stocks with a low tax rate have done much better.

The lowering of tax rates is one of the driving force for both the professional and individual investors. According to AAII individual investors were a bit more bullish last week at 35.3% which was an increase of 4.1% while the bearish % fell 8.2% to 30.5%.
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There was an increase in the bearish commentary from the financial media after Tuesday's drop while many Wall Street strategists have raised their upside targets for the S&P 500. As detailed by CNBC "four of 16 market strategists CNBC surveyed in the last three days raised their S&P 500 targets for the year-end or next 12 months."

This is not normally a good sign as when strategists keep changing their forecasts to keep up with a steadily rising or falling market it often coincides with an interruption in the major trend. Many will remember that after the continued slide in crude oil prices in early 2015 many energy experts kept lowering their crude oil targets just before it rallied $20 per barrel.

When examining the stock market I look at the A/D line analysis of three main time periods monthly, weekly and daily. For long term investors I have always stressed that they should be long stocks until there are warning signs of a new bear market or there are signs of a recession.
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As I noted last week the Leading Economic Indicators (LEI) rose 0.6% in February to a ten year high. As I have pointed out in the past it has a good record of topping out before the start of a recession. That was the case in 2000 (line 1) and the LEI was declining in early 2006 which was well ahead of the financial crisis. The LEI is currently in a strong uptrend, line 3, so there are no warnings of a recession.

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For long term investors I turn to the monthly chart of the NYSE Composite and the NYSE A/D line. Prior to the last bear market it gave plenty of warning before the market topped out in October 2007. The monthly A/D line peaked in May 2007 (line 1) and then formed a lower high in October 2007, line 2. This negative divergence, line a, was subsequently confirmed in early 2008 as a new downtrend was confirmed.

Early in the summer of 2015 the monthly A/D line had deteriorated which warned of a correction. This was discussed in more detail in July (Should You Trust This Rally?) as I concluded that "the weight of the evidence indicates this is a rally that you cannot trust".

This warning was followed by the sharp drop in August 2015 and then early in 2016 as the A/D line was in the correction mode (b). The A/D line analysis turned positive in late February and the monthly A/D line made a new high in May.

The monthly NYSE A/D line is still clearly positive as it made a new high in February and is well above its WMA. Before the monthly A/D line could form a classic top it would require a sharp market decline followed by another push to new highs.

This means that the stock market is not on ice that is thin enough to indicate a new bear market. Therefore I expect stocks to survive Trump's big legislative failure but as I discuss in the Market Wrap section a further correction is now more likely.

The stock market has become more split in the past month as the energy and small cap stocks have been acting much weaker than the Spyder Trust (SPY). Crude oil is down 11% this month and while lower energy costs are generally a positive for the Dow Transportation Average it is down over 5% in March.
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The weekly chart of the iShares Dow Transportation Average (IYT) shows that is has dropped for the past three weeks and is trading below the prior three month lows. There is next support in the $157-$160 area with the 38.2% support at $150.50.


The relative performance did form lower highs, line a, and this divergence was confirmed by the drop below its WMA in late February. This was a sign that IYT was no longer leading the S&P 500. The on-balance-volume (OBV) has dropped below its WMA and may decline to the converging support (lines b and c).
The weak action of the IYT confirms that even in a strong market and in an improving economy one still needs to be selective and to only choose market leading ETFs or stocks.


The Economy
The data on the economy last week continued to support the view from the Leading Economic Indicators that the economy is strong and improving. The Chicago Fed National Activity Index at 0.34 confirmed that "February was a good month for the economy ".


Though Wednesday's Existing Home Sales were down 3.7% the New Home Sales Thursday were up 6.1% well above expectations. Durable Goods were also better than expected while the flash PMI Composite was a bit lower than the consensus view.

There is plenty of economic data this week as the Dallas Fed Manufacturing Survey is out Monday followed Tuesday by the S&P Corelogic Case-Shiller Housing Price Index, Consumer Confidence and the Richmond Fed Manufacturing Index.

The most widely watched number for the week may be Thursday's final reading on 4th quarter GDP followed on Friday by the Chicago PMI and Consumer Sentiment.
Interest Rates & Commodities
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The yield on the 10-year T-Note dropped sharply last week, closing at 2.400% down from 2.500% the previous week. This has taken yields back within the daily trading range, lines a and b. A close below 2.300% would be a downside break with next good support in the 2.200% area. The MACD-His is negative as it reversed to the downside last week consistently with the weak momentum.


Though crude oil was down 2.8% last week both the Spyder Gold Trust (GLD) and the VanEck Gold Miners (GDX) were higher. This was consistent with the positive technical readings for GDX that I pointed out last week.


Market Wrap
It was the roughest week for stocks since last September as the Dow Industrials lost 1.5% just a bit weaker than the S&P 500. The losses were even worse in the Dow Transports, down 2.4% while the small cap Russell 2000 was down 2.7%. Once again the Dow Utilities bucked the trend as it gained 1.3%.

On a weekly basis the declining stocks led the advancers by almost a 2-1 margin. For the week both the financial stocks and industrials lost over 2% while the materials along with the energy sector were not far behind. The technology stocks did better down just 0.8%.
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The Spyder Trust (SPY) closed below the prior week's doji of $235.17 which triggered a weekly doji sell signal. The rising 20-week EMA and starc- band are now in the $231.50-$230.78 area. This is just over 1% below current levels. There is more important support in the $225-$228 area.

The weekly A/D did confirm the new high in early March which is a positive for the intermediate term trend. The A/D line did drop further last week and is in a short-term downtrend as it approaches the gradually rising WMA. The weekly OBV (not shown) is still above its rising WMA.

The SPY tested its daily starc- band last week so a bounce cannot be ruled out this week. The daily S&P 500 daily A/D line dropped below its WMA and is now in the corrective mode.
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The technical outlook looks more positive on the PowerShares QQQ Trust (QQQ) as it was down 0.8% for the week as it closed just above the flat 20 day EMA at $130.42. The daily starc- band is at $128.98 with the monthly pivot at $128.53.

The Nasdaq 100 A/D line made a new high on March 17th and closed the week above its flat WMA. A decline in the A/D line below the March lows, line b, would be more negative and signal a deeper correction. The A/D line has longer-term support at line c.

The VIX bounced last week but it now needs a close back above the 14 level to signal that a short-term bottom is in place. This would be a negative for stocks and a daily close in the VIX above 16 would be more bearish.

What to do? As I commented in last week's column "A sharply lower close on widely negative A/D numbers however would be enough to signal a deeper correction before the market moves higher." This is unlikely to change the intermediate term trend but should increase the negative sentiment.

The previous correction was an opportunity to do some light buying in a low cost broadly diversified ETF. A stronger correction is now looking more likely and this should be an opportunity to do more aggressive buying.

As I noted to Viper ETF subscribers the global market are now looking more attractive and a few weeks ago the iShares Core MSCI EAFE (IEFA) was recommended. It has a yield of 2.8% with 2528 holdings and an expense ratio of 0.08%. The ETF has 61.4% in greater Europe and 37.3% in Greater Asia.

It is up 3% in the past month and is a bit over extended on a short-term basis. My regular weekly analysis of country ETFs has highlighted some other good overseas opportunities.

Viper Hot Stocks traders took some profits last week and stops were raised in order to protect profits in case of a deeper correction. There were a number of new stocks that have shown up on the sell list after last week's action.


Enjoy Teek.....

Excellent read, thank you.

When I look at the charts, it scares me.
It is not healthy for markets when you never let them do a correction.

I can't quote this often enough:
Everyone, deep in their hearts, is waiting for the end of the world to come.
- Haruki Murakami


"buy water"
- Teek

Dominic Frisby speaks some truth on interest rates and inflation