Money Flow Trading Method along with Risk Management

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S&P Futures, Global Stocks Fall In End To Best US Quarter Since 2015
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by Tyler Durden
Mar 31, 2017 6:43 AM


Stocks fell worldwide on the last day of the quarter, with US equity futures pointing to a lower open even as the S&P is set for its best quarter since 2015 amid persistent economic and political uncertainty.

WTI held gain above $50 a barrel, capping the biggest weekly gain of 2017 while the rand fell after South Africa’s finance minister was fired. European government bonds and Treasuries were steady with gold. Another three Fed presidents are set to speak on Friday; today's economic data in the US includes University of Michigan consumer sentiment, as well as personal income and spending.



Global stocks dipped on Friday with the MSCI All-Country World Index declining 0.4% as investors locked in some of the more than 6% gain that has given them their best start to year since 2012, while the dollar inched toward what could be its strongest week of 2017 so far. As we look back on a particularly strong Q1, we find a remarkably quiet, and "unvolatile" quarter in which most asset classes outperformed around the world, global stocks were poised to end a blockbuster quarter with a whimper, with investors seeing little reason to take shares higher amid political and economic uncertainty in the coming quarter. As discussed last night, the saga involving Zuma and South Africa’s finance minister came to a close after he was fired, sending the plunging as much as 2.9% before recovering losses.
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Asian and European shares both saw profit-taking as traders squared up for the quarter perhaps driven by an unwind of positions into Japan's year end, though there was plenty still going, not least in South Africa where the sacking of its respected finance minister sent a spasm through the local currency.



European stocks fell for the first time in four days, with the Stoxx down -0.4%. as the Europe's Basic Resources index where big miners are listed, fell 1.7 percent to leave London's FTSE and the pan-European STOXX 600 index down 0.5-0.6%. Still, the later was on track for a 5% rise and third straight quarterly gain in a row, although emerging markets have been the big winners. MSCI's EM stocks index is up 12.5 percent on a dollar-adjusted basis.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.55 percent after its 12.5 percent charge over the quarter. Hong Kong shares fell 0.6 percent, but were still headed for a 9.8 percent quarterly jump and China's CSI 300 index added 0.4 percent, putting it on track for a 4.3 percent quarterly rise. Japan’s Topix became one of the few gauges in Asia posting a loss this quarter, wiping out a morning rally despite positive economic data. The Shanghai Composite Index added 0.4 percent. China’s official factory gauge climbed to the highest in almost five years, the latest evidence of gathering momentum in the world’s second-largest economy.

"Asia saw some pretty healthy profit-taking after a few sessions of solid gains, and as investors await euro zone and U.S. inflation data tonight," said James Woods, global investment analyst at Rivkin Securities in Sydney.

Next week promises to an interesting start to the second quarter. Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone by tweeting that Washington could no longer tolerate massive trade deficits and job losses. He will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said. Chinese Vice Foreign Minister Zheng Zeguang said on Friday that it does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States.


"The dialogue emanating from that is going to help set the tone of the relationship between the U.S. and China and these days it goes beyond trade. There is a lot to discuss geopolitically, not least North Korea," said PIMCO portfolio manager Yacov Arnopolin.


Against a basket of the world's other major currencies the dollar was up 0.1 percent and close to a 1 percent weekly gain that would be its best in an otherwise lackluster year. Over the quarter the greenback has fallen 1.7%, its worst showing in a year, on doubts that U.S. President Donald Trump was not prioritizing to push through Congress the economic reforms that had driven the dollar to 14-year highs at the start of the year.

"We are relatively optimistic on global growth but we think the cyclical trade has rotated away from the Trump trade and near-term U.S. fiscal stimulus," said Schroders' multi-asset Portfolio Manager Angus Sippe. "We are now more optimistic on the euro zone," he said, adding he was also "marginally short the dollar."

The euro held its own at just under $1.07 as data showed euro zone inflation had slowed in March by far more than the economists had expected, driven down mostly by a deceleration of energy price rises. Eurozone inflation in March printed weaker than expected, as recent German CPI prints suggested, with headline CPI coming in at 1.5% vs 1.8% exp, while core inflation printed at 0.7% (also below the 0.8% exp.), and the lowest since April 2015.
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There were tentative signs too that the euro zone's weakest members would be hit the hardest by an imminent scaling back of the European Central Bank's asset purchase program. The yield, an indication of borrowing costs, on bonds of southern euro zone states including Portugal and Italy headed higher in the final day of trading before the ECB drops its monthly purchases of debt from 80 billion to 60 billion euros. Top ECB policymaker Benoit Coeure emphasized the bank would tread carefully with any further changes.

In commodities, Brent oil and U.S. crude dipped to $52.91 a barrel and $50.35 a barrel, having zipped higher on Thursday after Kuwait backed an extension of OPEC production cuts. Oil was heading for a 6.8 percent loss for the quarter, though. In contrast gold which was at $1,241.81 has gained nearly 8 since the start of the year. Brent set for biggest weekly gain of 2017 on ongoing OPEC jawboning. Benchmarks remain on course for biggest weekly gain of the year as expectations grow for an extension of OPEC output cuts. Brent declines slightly, near $52.75/bbl. WTI near $50.25 with rig count due later.

Yields on 10-year Treasuries rose one basis point to 2.43 percent, after climbing four basis points on Thursday. German 10-year yields were steady at 0.34%.
According to Bloomberg, investor focus in the second quarter looks set to be on whether political developments in the U.S. and Europe will cloud the a brightening global economic outlook. President Donald Trump’s setback on a flagship health-care bill has cast a shadow on his fiscal agenda, while French elections could be a litmus test for the rise of European populism.

“There’s a strong sense of political uncertainty going forward in both the U.S. and Europe,” said Masaru Hamasaki, head of the investment information department at Amundi Japan Ltd. “In the U.S., the repeal of the Obamacare replacement bill has continued to create confusion. In Europe, we’ve only just had the U.K. trigger Article 50. We’ve already essentially entered the new fiscal year, and its difficult to keep buying when you look to the future.”

Bulletin Headline Summary From RanSquawk

1. European equities have seen a particularly tentative session thus far amid light newsflow on the last trading day of the quarter
2. FX markets have been relatively quiet so far today, given it is month end — and year end in Japan
3. Looking ahead, highlights include US PCE, University of Michigan sentiment, ECB's Coure and Fed's Bullard & Kashkari

Market Snapshot

1. S&P 500 futures down 0.3% to 2,358.25
2. STOXX Europe 600 down 0.3% to 379.44
3. MXAP down 0.9% to 146.81
4. MXAPJ down 0.6% to 479.90
5. Nikkei down 0.8% to 18,909.26
6. Topix down 1% to 1,512.60
7. Hang Seng Index down 0.8% to 24,111.59
8. Shanghai Composite up 0.4% to 3,222.51
9. Sensex down 0.02% to 29,640.20
10. Australia S&P/ASX 200 down 0.5% to 5,864.91
11. Kospi down 0.2% to 2,160.23
12. German 10Y yield rose 0.5 bps to 0.338%
13. Euro up 0.2% to 1.0693 per US$
14. Italian 10Y yield rose 1.1 bps to 2.148%
15. Brent Futures down 0.6% to $52.66/bbl
16. Gold spot unchanged at $1,242.64
17. U.S. Dollar Index up 0.06% to 100.47

Top Overnight News

1. Flynn Said to Seek Immunity to Testify in Russia Probes
2. KKR Said to Woo State Funds on Deal for $12 Billion Tower Firm
3. Quorum Health Holder KKR May Engage in Talks With Management
4. South African Assets Tumble as Gloom Pervades Fiscal Outlook
5. EU Says U.K. Only Gets Trade Talks After Progress on Brexit Bill
6. AstraZeneca’s Tagrisso Wins Full FDA Approval for Lung Cancer
7. Johnson & Johnson Declares Actelion Tender Offer Successful
8. German Unemployment Falls to New Record Low as Economy Booms
9. Berkshire Hathaway Energy Boosts 3-Year Capex Plan by $4.6b
10. Denmark Teams Up With Industry Lobby to Boost F-35 Order Log
11. Borgwarner Sees Hybrid Cars With Turbochargers Fuelling Growth
12. Boeing Awarded $2.2 Billion Contract for 17 P-8A Poseidon Jets
13. Gas Exports to Send U.S. Stockpiles to 3-Year Low Before Winter

Asian equity markets traded somewhat mixed with some slight indecision heading into month, quarter and fiscal year-end, while the region also digested firm Chinese PMI data and the positive lead from Wall St. where the NASDAQ printed fresh record highs. Nikkei 225 (-0.8%) traded lower despite JPY weakness and better than expected Industrial Production, while ASX 200 (-0.3%) was dampened by property names following tighter mortgage lending regulations. Shanghai Comp. (+0.4%) and Hang Seng (-0.7%) were mixed as strong Official Manufacturing and Non-Manufacturing PMI data was counter-balanced by the PBoC's hiatus from open market operations which resulted to a net weekly drain of CNY 290b1n. Furthermore, stocks in Hong Kong were also pressured after PetroChina missed on earnings and the world's largest lender ICBC posted its weakest profit growth in over a decade. Finally, 10yr JGBs were lower amid heightened risk sentiment in Japan, while the curve flattened with underperformance seen in the short end. PBoC refrained from open market operations, for a net weekly drain of CNY 290b1n vs. last week's net injection of CNY 80bIn.
Top Asian News

1. Rupee Set for Best 1Q Since 1975 as Foreigners Pour $12 Billion
2. China Manufacturing Gauge Climbs to Highest in Almost Five Years
3. China’s Factory Gauge Climbs to Highest in Almost Five Years
4. BOJ Cuts Purchase Size Range of 1-3, 3-5 Year JGBs in April
5. Battle With Apple Takes a Toll on Chinese Phone Giant Huawei
6. Indian Stocks Slip Ahead of Closing Best Quarter Since June 2014
7. BOJ to Purchase Fewer 1-to-5-Year Bonds in April, Rest Unchanged
8. IDR, INR, TWD Post Quarterly Gains Amid Fund Inflows: Asian NDFs
9. Japan Post Bank Applies to Expand Business Into Overdrafts, CDS
10. China Issues Free-Trade Zone Plans for Some Regions: Xinhua
11. China Benchmark Money Rate Climbs to Highest Since April 2015

European bourses remain quiet on typical Friday trade, but South African exposed companies are taking a major hit this morning. Investec (-7.5%) and Old Mutual (-7.5%) are down off the back of President Zuma sacking finance minister Gordhan. Elsewhere, markets remain quiet with Material names underperforming, albeit modestly so. Fixed income markets are also rangebound amid no real fundamental catalysts for any significant moves with markets somewhat unreactive to the latest raft of Eurozone inflation data which saw the headline Y/Y fall short of expectations (1.5% vs. Exp. 1.8%), with markets prepped for a soft figure given yesterday's German numbers.

Top European News

1. French Upset Signaled by Internet Chatter Flagging Macron Flaws
2. U.K. House Prices Fall for First Time in Almost Two Years
3. RBS CEO Says Bank Would Move to England on Scotland Independence
4. Tusk Says ‘No Such Thing’ as a ‘Brexit Bill’ for U.K.
5. Marine Harvest Warns Food Safety Authority of Suspected PD Case
6. Too Early to Decide Location for Brexit Job Moves: UBS’s Orcel
7. U.K. Raises $14.7 Billion in Blackstone-Prudential Mortgage Deal

In currencies, the rand plunged as much as 2.6 percent before paring losses to trade 0.7 percent lower. South African President Jacob Zuma replaced Finance Minister Pravin Gordhan and overhauled his cabinet in a late-night move that threatens to trigger a revolt against the administration. The Bloomberg Dollar Spot Index rose 0.1 percent. The euro was little changed at $1.0679 after tumbling 0.9 percent Thursday. FX markets have been relatively quiet so far today, given it is month end — and year end in Japan. Alongside some notable data releases, we sense real money flow today is keeping specs largely on the sidelines, but the USD remains near better levels as US Treasury yields build (very) modestly on yesterday's gains. USD/JPY buying has taken the pair up to highs just shy of 112.20, but traders wary of sporadic JPY repatriation flow which could hit at any time into the London fix. EUFt/USD hit lows around 1.0670-75 before trying to reclaim 1.0700, but decent intra day selling seen here, and only tempered by the usual flow anticipated in EUFt/GBP. EU wide inflation has come in weaker than expected, but the miss is slightly less in the core rate, with ECB officials already tempering some of the reactions in the rate markets this week to limit today's reaction. 1.0700 capping for now, but strong demand seen from the mid 1.0600's lower down. For EURGBP, the triggering of Article 50 and the subsequent response from the EU is what will be driving trade from here, but we saw strong demand just below 0.8550 this morning, generating an initial test back to 0.8600 recently.


In commodities, West Texas Intermediate crude fell 0.1 percent to $50.31, paring some big gains on Thursday that were spurred by a report Kuwait and other countries support prolonging production cuts. Oil prices remain buoyed this morning, with WTI notably holding above USD50.00, but looks fragile at present as the USD seems to have found fresh life. Lower than expected rises in inventory levels as reported from the API and DoE this week have been key to this, as have comments that discussions are in process on a potential extension to the production cut agreement. Iron ore prices under pressure due the stockpiles reported, but copper prices notably resilient. Gold edged lower on the back of the latest move higher in US Treasuries, but the yellow metal has held off USD1240 so far today. Silver remains above USD18.00.


Looking at the day ahead, it's a busy day in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley, Kashkari and Bullard due to speak.


US Event Calendar

1. 8:30am: Personal Income, est. 0.4%, prior 0.4%
   1. Personal Spending, est. 0.2%, prior 0.2%
   2. Real Personal Spending, est. 0.1%, prior -0.3%
   3. PCE Deflator MoM, est. 0.1%, prior 0.4%, PCE Deflator YoY, est. 2.1%, prior 1.9%
   4. PCE Core MoM, est. 0.2%, prior 0.3%, PCE Core YoY, est. 1.7%, prior 1.7%

2. 9:45am: Chicago Purchasing Manager, est. 56.9, prior 57.4
3. 10am: U. of Mich. Sentiment, est. 97.6, prior 97.6, Current Conditions, prior 114.5, Expectations, prior 86.7,
   1. 1 Yr Inflation, prior 2.4%
   2. 5-10 Yr Inflation, prior 2.2%

Central Banks
9am: Fed’s Dudley Speaks to Mike McKee in Bloomberg TV Interview
10am: Fed’s Kashkari Answers Questions at Banking Conference
10:30am: Fed’s Bullard Speaking in New York


DB's Jim Reid concludes the overnight wrap
A big factor for the strong performance in Q1 has been the incredibly calm start to the year as evidenced by what various measures of volatility have done this quarter. Indeed at the close of last night the VIX is now at 11.54 and just a shade above the January low of 10.58. It’s also down from 14.04 at the end of Q4. FX vol as measured by the CVIX (DB’s currency vol index of 9 major currency pairs) is now at 9.02 and also near the bottom of the range having started the year at 11.03.


We thought it would be interesting to put into context how low volatility has been in Q1 this year compared to Q1’s over the last 10 years. The VIX has traded in just a 5.14pt range this year using the intraday high to lows over the full quarter. The second lowest range in the VIX over the last 10 years came in 2014 when the range was 9.67pts while the highest came in 2009 when the range was 20.48pts. The average Q1 range from 2008 to 2016 was in fact 14.04pts. The highest level the VIX has hit in 2017 so far is 15.11 while the high points from the prior 9 year range from 21.48 to 57.36. In fact the high print for Q1 this year would rank as the sixth lowest level in the prior 9 Q1’s. So anyway you cut it this has been an incredibly low Q1 for volatility over the last decade.
As we highlighted in the EMR yesterday global economic data surprises are hovering around 6 and a half-year highs and it is interesting that this has coincided with US political uncertainty – as measured by the Baker, Bloom & Davis index – hitting the lowest level in the Trump-presidency era yesterday and in fact the lowest level since October 10th.


That backdrop is proving supportive for risk. Last night the S&P 500 closed up +0.29% and finished higher for the third day in a row. The index is also all of a sudden back to within just 33 points of the all-time high made at the start of this month. Unlike Wednesday banks were the big driver of the broader move higher yesterday with US banks finishing up +1.48%. That move came after Treasury yields reversed course for the fourth day in a row reflecting some fairly hawkish Fedspeak over the last 36 hours or so and a bigger than expected revision to Q4 GDP in the US. 10y Treasury yields closed 4.3bps higher at 2.421% and in fact are pretty much back to where they closed last Friday despite moves of at least 3.4bps up or down each day this week. Energy stocks also contributed positively yesterday after WTI Oil (+1.70%) rose for the third day in a row and finished above $50/bbl for the first time in 3 weeks with more suggestions that the OPEC production cut will be extended beyond the initial timeframe agreed.


Over in Europe equity markets also edged higher with the Stoxx 600 closing up +0.51%. Bonds were more mixed though and 10y Bund yields in fact edged down 1.1bps to 0.328%. A disappointing CPI print in Germany for March didn’t help (+0.2% mom vs. +0.4% expected) ahead of the wider Euro area reading today while the ECB’s Nowotny – who as a reminder a couple of weeks ago said that the ECB could raise the deposit rate before the prime rate – suggested that the ECB doesn’t want to prematurely raise interest rates and that there is no reason right now to deviate from the already defined monetary policy strategy for 2017.


Jumping quickly to the overnight session now where there has been a steady stream of both significant data and political related headlines. In China the official March PMI’s have been released. The manufacturing PMI has risen two-tenths to 51.8 this month (vs. 51.7 expected) and the highest since April 2012. The nonmanufacturing PMI has also risen to 55.1 from 54.2 and the highest since May 2014. That’s helped bourses in China to rise with the Shanghai Comp and CSI 300 +0.40% and +0.45% respectively. Elsewhere, in South Korea a court has ordered the arrest of former President Park Guen-hye following the issue of a warrant in connection with bribery and abuse of powers. The Kospi is little changed following the news. Over in EM the big story is out of South Africa where President Zuma has dismissed finance minister Pravin Gordhan and 8 other cabinet members, which in turn is heightening political uncertainty in the country again. The news has caused the Rand to sell off sharply and is currently down about -3.60% from when the headlines broke. Finally in Japan core CPI was reported as rising +0.2% yoy in February and up for the second month in succession, while industrial production and jobless rate data also showed signs of improvement. Household spending data was a little softer than expected however. The Nikkei is +0.66% following that and the Yen a touch firmer.


Back to that data yesterday, where in the US Q4 GDP was revised up in the third and final revision to +2.1% qoq annualized from +1.9%. Growth in PCE was revised up five-tenths to +3.5% qoq annualized while corporate profits were recorded as growing modestly in the quarter by +0.5% qoq. That means corporate profits have now risen for two consecutive quarters for the first time since Q3 and Q4 of 2014. Elsewhere, initial jobless claims nudged down 3k last week to 258k. In Europe the only other data was the European Commission’s economic sentiment index which edged down 0.1pts to 107.9.


In terms of the Fed speakers, late last night NY Fed President Dudley said that he favours tapering reinvestments of the balance sheet “gradually and predictably” instead of outright ending them. Dudley also confirmed that the 2% inflation target for the Fed is not a ceiling and that risks for both economic growth and inflation over the medium to longer term are gradually shifting to the upside. Our favourite line from Dudley yesterday though was his reference to William McChesney Martin – the ninth and longest serving Fed Chair who famously said that the job of the Fed is to “take away the punch bowl just as the party gets going”. Dudley last night said that “I don’t think we are removing the punch bowl yet” but that “we’re just adding a bit more fruit juice”. Meanwhile the Dallas Fed’s Kaplan confirmed that two more hikes this year is a “good base case” although didn’t rule out more depending on how the economy evolves.


Looking at the day ahead, this morning in Europe we’ll be kicking off in Germany where the February retail sales data is due out before we then get the latest Nationwide house prices data in the UK for the month of March. Following that we’ll get CPI and PPI data out of France before Germany then releases unemployment data for March. It’s back to the UK after that where the final revisions to Q4 GDP will be released before we then get March CPI for the Euro area where consensus is for a slight dip in both the headline and core readings to +1.8% yoy and +0.8% yoy respectively. It’s just as busy in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley (2pm BST), Kashkari (3pm BST) and Bullard (3.30pm BST) due to speak. The BoE’s Haldane is due to speak this evening while the ECB’s Coeure speaks this morning.

Quoting Teek

Disliked

Good morning. Please allow me to put in a very personal post. (this is -personal-, I had to get this off my chest. Please take it with a grain of salt.. or two...or three...) I made up my mind on posting in the EUR/USD forums at FF and I stop wasting my time and energy there. When I came to FF, I thought it might add to my value, but boy was I wrong. I found myself wasting my time and my energy on discussing with very negative people (not all of them) who on their part invest a lot of their time and energy to be good "Nay sayers" and point fingers...

Ignored

Hi Teek

Sorry to hear about your experience.

I have seen this a few times with traders that I have followed over the past year.

People can be brutal, even if you try to shake it off and dont take it personal, these comments can hurt to the bone.

People want to be spoon fed and dont want to take responsibility for their own actions. They dont want to learn and dont except their predefined risk.

They dont want to do the work and take call as if the trader doing the analysis are a signal service or has a crystal ball and know what will happen next.

This is a game with probabilities, you may have a 70% win ration, but you can have 3, 4, 5 losers in a row. That is just the way it goes. That is why risk management and position sizing is so important.

They are not patient to risk small sizes, equivalent to their account size and want to retire with this 1 recommendation, so now because they have not applied money management, because no one know what will happen even the most experience traders out there will lose some times, they are looking for someone to blame.
It is always easier to blame someone else than to take responsibility for your own actions.

I am glad you have posted your feelings here, we are all human and this can be a lesson for us all. I hope you feel better after you got it off your chest.

Everyone must take responsibility for their own actions and you are not to blame!

Keep on doing what you love to do!

Good day

Here are the charts

Hi Goodness, I am glad to see your post.
Yes, I also have it, if we have Risk off, money flow into JPY, so USDJPY will go down and with risk off the US30 and SPX500 also go down and Gold and Silver go up and with Risk on it is other way around.

Benjamin, please could you review your post of yesterday and just confirm that we have it correct?

Thank you petersuccess

Please post ANY questions that you have. By asking questions we both learn more so no matter what your question is please post it. Thanks for the compliment and I will continue to assist those Forex traders that want to make money.


Benjaminis

Yes KeepCalmfx

Thank you...

That is exactly how it is. Thanks Goodness for your post.


Benjaminis

Yes goodness ... You understand it correctly. Thanks for your excellent reply. When I was typing things did not feel right so that is why I posed my question.


Benjaminis

Hi Teek, I have seen this happen often here in FF , in many forums. I used to go to EURUSD forum to get a bias for direction by reading all the different opinions on that forum. It did not take long for me to drop that idea. I found it effected my decision making in very negative ways. I at that time, never do I go to any forum to get my bias to make a trade or give my opinion. I go to the charts first and believe in myself ( with all the hard work that it took to learn) My trading methods have been very true to me. Now I make one exception to this rule. Since Benj has started this site -- I will ck this forum to get a feel for the fundamentals that may effect my trades. And thank you Teek for posting here as well for I learn from you all. Teek thank you for sharing your personal thoughts.

Thank you peeps

sorry for losing my cool a little bit on this one. I am done with these people and as in everything in life, there is something good to be found in this. Some people actualy send me some really nice messages throughout the day. I appreciate the kindness and the wisdom that has been shared with me right when I needed it. Thank you very much and have a great weekend

Dear lord...
when you are right, they nag... when you are, wrong they nag...
cheers mate.
/r

https://mises.org/blog/war-cash-old-and-new

Before the United States ran aground on the dangerous reefs of State interventionism and centralism, the dollar was not only a sign of stability, but also a symbol of human freedom. A dollar was a means to express your wants and commands to the business class. The consumer, for the most part, was sovereign.

Any American could save, consume, and invest his money whose value was not debauched by a government in lack of resources. To this day, and despite the evils of inflationism and central banking, the dollar remains an instrument of freedom and independence for many Americans.

There are those, however, who would like to change that. They are the Wall Street financiers, politicians, annointed intellectuals, and central bankers for whom a centralized control of the money supply is not enough. To them, not only the supply of money but also the free and innocent use of money should be strictly limited and regulated by the State. Their new enemy is the banknote and their new war is the war on cash.


It is said of Heraclitus that he wrote that “no man ever steps in the same river twice, for it is not the same river and he is not the same man.” The river has changed indeed, and so has changed the war on cash. It is an irony of American history that in the 1830s and 1840s, the war on cash meant something totally different than today. In the middle of the 19th century, the circulation of banknotes was synonymous with the excesses of fractional reserve banking and the debasement of the currency. At the time, the war on cash was a war for sound money.


Because banks were emitting banknotes unbacked by gold, the hard money Jacksonians adopted slogans such as “No Monopolies!” “No Union of Banks and State!” “Jackson and Hard Money!” “Gold before Rags!” In 1834, William Leggett, with his typical wit and gusto, called the banks the “incorporated rag-money factories.” and argued for the ban of small banknotes. Similarly, in his book The Curse of Paper-Money and Banking (1833), another hard money Jacksonian, William Gouge wrote:
If the virtue and intelligence of the nation should direct the movements of Government during the ten or twenty years which might elapse in the gradual withdrawal of Bank notes and Bank credits, the people would suffer less from the application of the remedy, than they must otherwise suffer from the operation of the disease. … If a State Government, after having prohibited the issue of notes of a less denomination than five dollars, should afterwards be prevailed on by a complaint of “want of money” to repeal the law, it would act with the same wisdom as a surgeon, who, being engaged in the amputation of a diseased limb, should be frightened by the cries of the patient, and withdraw his knife after having cut through the first artery.


Gouge granted that the sudden ending of the old banking system, especially the prohibition of all banknotes, “would be ruinous” to the economy. His solution was to start banning small notes and proceed gradually to those with highest denominations. Although in 1833 Gouge proposed that the minimum denomination be $5, he later became more radical and by 1837 he held that the minimum should be “$50 or perhaps $100.”

Gouge’s policy remained popular among economists and as late as 1897 the famous American economist Frank Taussig argued that a way of achieving the circulation of gold was to prohibit banknotes of denominations of $20 and smaller.

The situation today is entirely different. The gold standard is not here to limit the power of both banks and of the central government. Gold and silver coins disappeared from circulation and banknotes are now bank reserves instead of gold. Once a curse, cash under the form of banknotes is now a blessing.

Banknotes are the instrument through which people can avoid excessive taxation, government surveillance, and the recklessness of our incestuous banking system. Banning cash, on the other hand, is the most efficient way to impose negative interest rates for depositors and making any unsupervised spending impossible. Cash, in other words, is a blessing for the productive people who wish to protect the money they peacefully earned from the vicious schemes of governments and central banks.


It would be a mistake, nonetheless, to think that the outright ban of cash will be the preferred method of our fiat-money lords. The most efficient and vicious method they can use is simply inflation while refusing to emit any new banknotes with higher denominations. The purchasing power of a $20 bill in 1960, for instance, is equivalent to the purchasing power of about $165 today. With only 2% inflation rate, the value of a $100 bill will be divided by two every 35 years. Inflation will be enough to impede the use of cash in current transactions. Once unusable, cash will not be able to limit both credit expansion and monetary disturbances generated by central banks.

Hence, the words written by the hard money Jacksonian William Leggett in 1837 in his article The Credit System and the Aristocracy seem more relevant than ever before:
[Our State banking system] is instituted to provide sinecures for a band of gentlemen pensioners. It was conceived in the stew of legislative prostitution, born in corruption, and smells to heaven with the rank odour of hereditary rottenness. How long will freemen — or men claiming to be free — consent to have this bastard offspring of fraud and folly for their master? How long will they consent to be the cringing vassals of a feudal system instituted for the support of such a contemptible baronage as our paper-money lords?


But no monopoly, not even the State, has infinite power. Our paper-money lords, in their attempt to become digital money lords, may very well burn their fingers. Indeed, trying to control the use of money goes against the most fundamental function of money as a medium of exchange. If fiat money cannot be used to operate many exchanges, another medium must be discovered and used. Thus, the war on cash is a formidable opportunity for alternative currencies which could put a severe check on the central banks’ folly. In India, where the war on cash has hit badly the poor and small businesses, the sector that got a big boost was that of bitcoin and digital wallet. It is thus possible that the unintended consequence of the war on cash will be to weaken central banking by propping up competing currencies. If this happens, the second irony of history will be that the hard money Jacksonians were right and that the war on cash is indeed the first step toward sound money.


Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: Alan Crocker www.flickr.com/photos/102244584@N07/

http://news.goldseek.com/Zealllc/1490976015.php

Gold in Fed-Rate-Hike Cycles 2
http://news.goldseek.com/Zealllc/zeal.gif
By: Adam Hamilton, Zeal Intelligence


-- Published: Friday, 31 March 2017

Gold suffered heavy selling in early March leading into the Fed’s latest rate hike. Speculators frantically dumped gold futures ahead of the Fed’s meeting as implied rate-hike odds soared. This is nothing new. This key group of traders has long feared Fed-rate-hike cycles, convinced they are the mortal nemesis of zero-yielding gold. But this view is highly irrational, as history proves gold actually thrives in rate-hike cycles!

The Federal Reserve’s primary and dominant tool for setting monetary policy is its target for the federal-funds rate. Commercial banks are required to maintain reserve balances at the Fed, with necessary levels fluctuating daily based on each bank’s underlying business activity. So banks with surplus reserves can lend them on an overnight basis to other banks running deficits through the federal-funds market.

The interest rate at which these transactions happen is the federal-funds rate. But the importance of the FFR extends far beyond that specialized inter-bank market. This critical interest rate is effectively the baseline from which all other US interest rates are set! So this small FFR tail wags the giant dog of the price of money across the entire US economy. The prevailing FFR levels affect virtually everything else.

Federal-funds futures trade to enable hedging and speculation on future FFR-target changes by the Fed’s monetary-policy-setting Federal Open Market Committee, which meets 8 times per year. All this futures trading collectively implies traders’ perceived odds of the FOMC hiking or cutting its FFR target at its coming meetings. Gold-futures speculators watch these futures-implied Fed-rate-hike odds like hawks.

Back in late February, these odds of the Fed raising rates at its mid-March meeting were running at just 22%. The FOMC doesn’t want to surprise and shock markets, which risks igniting major selloffs in both bonds and stocks. So it doesn’t boost its FFR target unless a rate hike is universally expected, with market odds running well over 70% leading into a meeting. At 22% odds, gold was near $1264 on February 27th.

But then top Fed officials began aggressively jawboning on a potential March rate hike. They started a concerted and relentless campaign to convince markets that a rate hike was likely at the FOMC’s March 15th meeting. In just 4 trading days, those futures-implied rate-hike odds nearly quadrupled to 80%! It was an unprecedented blindingly-fast massive shift in perceptions, blowing past that 70% hiking threshold.

By March 9th, those odds were running 91% which was nearly certain. With the markets suddenly so convinced another rate hike was coming, the FOMC would be foolish to squander that opportunity. In that short 9-trading-day span where rate-hike odds skyrocketed from 22% to 91%, gold plunged 4.5% on very-heavy selling by futures speculators. There is nothing these guys fear more than Fed rate hikes!

The same thing happened leading into the previous rate hike in mid-December 2016. Over the 6-week span from the prior FOMC meeting to that hiking one, gold plunged 10.1%. That span encompassed the election, so the resulting Trumphoria stock-market surge driving a gold mass exodus was a bigger factor. But futures speculators still fled on rate-hike fears. The same thing happened a year earlier with no election.

The Fed hiked rates for the first time in 9.5 years in mid-December 2015. Over the 7 weeks between the preceding FOMC meeting warning of a likely hike and that hiking one, gold plunged a similar 9.1%. I could go on and on. Recent years have seen many examples of heavy gold-futures selling arising on hawkish FOMC statements, Fed officials’ hawkish FFR forecasts, and hawkish jawboning by these guys.

Gold-futures speculators have even rushed for the exits on strong US economic data supporting more-hawkish stances by the Fed! Nothing influences gold-futures trading more than what these speculators expect the Fed to do with its federal-funds-rate target. And unfortunately their gold-futures trading has a wildly-disproportionate impact on prevailing gold prices. Gold is quite literally hostage to Fed expectations!

The futures speculators’ logic is simple and apparently sound. Gold yields nothing, making it a “sterile investment”. Thus investors are more likely to want to own it when prevailing interest rates are low. But as Fed rate hikes force all interest rates higher, gold becomes relatively less attractive. Higher yields on other assets entice investors to shift their allocations away from gold. So gold investment demand wanes.

If this rate-hikes-are-bad-for-gold thesis that’s universally believed today is true, history would prove it out. But it doesn’t. Between January 1970 and January 1980, gold skyrocketed 2332% higher. During that exact span, the federal-funds rate averaged a stupendously-high-by-today’s-standards 7.1%! And all the while gold still yielded zero, just like it always has. Yet gold still soared in a gargantuan secular bull.

Between April 2001 and August 2011, gold soared up 640% in another secular bull. Despite the advent of the Fed’s wildly-unprecedented zero-interest-rate policy back in mid-December 2008, over that span the FFR still averaged 2.1%. That’s far higher than today’s 0.9% levels deeply feared by gold-futures speculators. Clearly the idea that rate hikes and higher prevailing rates spell doom for gold hasn’t proven true.

Back in late 2015 leading into an expected first Fed rate hike in nearly a decade, I did a comprehensive study on how gold performed in past Fed-rate-hike cycles. I had never seen one before, and needed to understand how this gold-and-FFR relationship worked historically. So I downloaded nearly a half-century of daily federal-funds-rate data directly from the Fed itself, and merged it into a gold-price spreadsheet.

Amazingly the FOMC had changed its FFR target a whopping 251 times in that 45-year span from early 1971 to before its first recent hike in mid-December 2015! Since the FOMC meets 8 times per year, that equates to about 360 meetings which implies the FFR target was changed at well over 2/3rds of them. But that’s misleading, as the FOMC calls emergency unscheduled meetings in exceptionally-volatile markets.

Since gold-futures speculators are convinced Fed rate hikes are kryptonite for gold, I scoured decades of the Fed’s historical FOMC statements and FFR data to find all the hikes. In order to be considered a rate-hike cycle, multiple sequential hikes without intervening FFR cuts are required. 6 times between early 1971 and late 2015, the Fed had made lone rate hikes that were bracketed by cuts. Those aren’t cycles.

The Fed’s vacillation didn’t stop there. 6 additional times the FOMC raised its target FFR twice back-to-back before it was reduced again. It’s hard to argue that two hikes make a cycle. The most-generous definition possible for a Fed-rate-hike cycle is 3 or more consecutive FFR increases with no interrupting decreases. By this conservative metric, the Fed had executed fully 11 rate-hike cycles between 1971 and 2015.

Interestingly March 2017’s latest rate hike made for the third one since December 2015, which formally confirmed we are now in the Fed’s 12th rate-hike cycle since the early 1970s! That, along with gold’s sharp early-March selloff leading into this latest hike, prompted me to revisit this critical research. How has gold actually performed historically during the exact spans of all the previous Fed-rate-hike cycles?

If the futures speculators are right that Fed rate hikes are bad for gold, history would clearly show it. Yet the exact opposite has proven true! These charts highlight every Fed-rate-hike cycle in modern history in light red. These cycles are defined by the FOMC’s FFR targets, which don’t always perfectly match the troughs and peaks in the federal-funds rate because the Fed actually doesn’t directly control the FFR.

It is technically a free-market interest rate determined by federal-funds supply and demand. The FOMC sets an FFR target, and then attempts to actively manipulate the FFR to it with open-market operations directly buying and selling in the federal-funds market. While the Fed has become more sophisticated in bending the FFR to its will over the decades, there have been significant deviations from targeted levels.

These updated charts include both the actual federal-funds rate in light red with the FOMC’s FFR target on top in dark red. Depending on market conditions, it can take tens of billions of dollars of Fed trading to force the free-market FFR to converge with the FOMC’s target. Gold is superimposed over all this FFR data in blue. Gold-futures speculators need to seriously study this history totally contradicting their worldview.

Finally a half-dozen key data points are noted for each Fed-rate-hike cycle. Starting at the top is the total increase in basis points, hundredths of a percent. That’s followed by the number of individual hikes in each cycle, and their average basis-point increases per hike and per month. Next comes the duration of each Fed-rate-hike cycle in months, followed by gold’s price performance during each cycle’s exact span.



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Nearly a half-century of data is a commanding sample, encompassing all possible market conditions ranging from raging secular bulls in stock markets to a full-on once-in-a-century stock panic. If American gold-futures speculators’ fervent belief that Fed-rate-hike cycles slaughter zero-yielding gold is correct, it would absolutely show up historically in such a massive data set. But gold actually thrives in rate-hike cycles!

Since the Fed’s current 12th one of modern times likely isn’t finished yet, let’s start with the previous 11 between early 1971 and late 2015. On average during the exact spans of all of them, gold rallied 26.9% higher! Those are serious gains during events supposed to slay gold investment demand on widening yield differentials. Provocatively gold’s Fed-rate-hike-cycle performance trounces that of the stock markets.

I did a similar study in late 2015 looking at the flagship S&P 500’s performance during these same Fed-rate-hike cycles. This leading stock index saw average gains of just 2.8% during their exact spans. That is nearly an order of magnitude smaller than gold’s 26.9%! While the idea that gold vastly outperforms the stock markets during Fed-rate-hike cycles seems obnoxiously heretical today, it is absolutely true historically.

Gold’s average gains across all modern Fed-rate-hike cycles come from rallying big in 6 while slumping modestly in the remaining 5. In the majority where gold rallied, it averaged huge gains of 61.0% over their exact spans! And in the other 5 where gold fell, its average losses were asymmetrically small at just 13.9%. It turns out there are two key characteristics of Fed-rate-hike cycles that govern whether gold wins or loses.

The first is obvious, how gold is priced when the Fed births a new rate-hike cycle. If this metal is already trading at high levels relative to preceding years, it tends to slump as the Fed tightens. Fed rate hikes aren’t bullish for gold late in a major bull. By that time the great majority of willing investors have already bought, and sentiment is too greedy to be sustainable. Fed-rate-hike cycles won’t trump gold’s bull-bear ones.

The second is how fast the Fed actually hikes rates. The more gradual the rate hikes, the more bullish it is for gold. This makes sense given the extreme anxiety gold-futures speculators have over higher rates. The faster the Fed hikes, the more psychological pressure to capitulate on gold due to the perception a higher yield differential makes this metal less attractive. This is still less important than gold’s cycle entry price.

Without exception, gold rallied in every modern rate-hike cycle shown in these charts if it entered them at low price levels. But if gold was already high after years of rallying when the Fed started hiking rates again, this metal fell. Again gold’s own bull-bear cycles overrule any Fed-rate-hike cycle influence. As in all markets, gold’s relative buying price is the dominant driver by far of its ultimate investment returns.

But the pace of hiking is an important secondary determinant of gold’s rate-hike-cycle fortunes. During those 6 of 11 cycles where this metal soared 61.0% higher on average, the hiking pace was gradual. It averaged just 35 basis points per hike and 24bp per month. In contrast in the other 5 cycles where gold fell 13.9%, the FOMC’s average hiking pace was radically steeper at 110bp per hike and 141bp per month!

By these standards, gold’s performance in the Fed’s newest 12th rate-hike cycle since 1971 ought to be incredibly bullish. Just before the Fed started hiking again in December 2015 after nearly a decade of no hikes dominated by the ZIRP era, gold slumped to a brutal 6.1-year secular low. That’s about as low as gold’s ever been relative to recent history entering a Fed-rate-hike cycle, leaving huge room for big buying.

And as of mid-March, the FOMC has hiked three times for 75 basis points total over 15 months. That is the most-gradual Fed-rate-hike cycle ever witnessed by far, averaging just 25bp per hike and a mere 5bp per month! There’s never been an FOMC more timid in hiking rates than Janet Yellen’s, she has always been an uber-dove. Thus despite two rate hikes in 3 months now, today’s cycle will remain the most-gradual ever.

So gold is really set up to soar dramatically during this rate-hike cycle’s span! That’s already happened despite all the irrational selling by the gold-futures speculators leading into each of the Fed’s latest rate hikes. As of the very mid-March rate-hike day, gold had powered 15.1% higher since the day before the initial rate hike in mid-December 2015. That’s despite incredibly-euphoric stock markets weighing on gold sentiment.

With gold enjoying perfectly-bullish conditions both entering and within this 12th modern Fed-rate-hike cycle, its ultimate gains should easily exceed that +61.0% winning average. And that’s darned exciting for smart contrarian investors. A garden-variety 61.0% gain from gold’s close the day before that first rate hike a couple Decembers ago yields a conservative gold rate-hike-cycle upside target way up at $1709!

That’s another 36.5% higher from this week’s levels, implying massive additional gains by the time the Fed’s rate hikes run their course. It just blows my mind that sophisticated gold-futures speculators can’t take a few hours to understand how gold has really performed historically during rate-hike cycles. With the extreme levels of leverage they run, you’d think they’d do some serious due diligence to understand odds.

While gathering and crunching all this data since 1971 certainly isn’t trivial, why not simply look to the last Fed-rate-hike cycle for some guidance? Between June 2004 to June 2006, the FOMC hiked the FFR at every meeting for 17 consecutive hikes. These totaled 425 basis points, more than quintupling the federal-funds rate to 5.25%. If higher rates and yield differentials slay gold, it should’ve plummeted at 5%+.

Yet during that exact span, gold actually surged 49.6% higher! There is literally zero chance Yellen’s hyper-easy FOMC will hike rates 17 times, or get anywhere close to 5%. Yellen constantly rationalizes why she and her henchmen believe the new normal federal-funds rate won’t be higher than 3%. Given this Fed’s history of over-promising and under-delivering on rate hikes, I’d be surprised to see them get over 2%.

If gold could power 49.6% higher over two years in the mid-2000s in such an extreme rate-hike cycle compared to today’s, similar gains should be easy this time around. That would push gold up to $1588, again far higher than today’s levels. It’s sad most investors and speculators today don’t have a clue how bullish Fed-rate-hike cycles are for gold, as they’ve been deluded by the “zero-yielding gold” propaganda.

Gold has always yielding nothing, and thus never been a yield play. Gold serves an entirely different purpose than bonds in investors’ portfolios. They don’t directly compete as the gold-yield fallacy implies, but complement each other. Gold is a unique asset that tends to move counter to stock markets, making it the ultimate portfolio diversifier. It is a hedge against stock-market weakness, essential portfolio insurance.

Stock-market fortunes, not prevailing interest rates, are the biggest driver of gold investment demand. In euphoric stock markets like today’s late in major bulls, investors feel no need to prudently diversify their portfolios with gold. They foolishly assume stocks will keep rising indefinitely, so they way over-allocate to lofty, overvalued stocks. But when stock bulls inevitably yield to subsequent bears, the tables quickly turn.

Gold investment demand soars for portfolio-diversification purposes, driving gold sharply higher. That’s exactly what happened in late 2015 and early 2016 soon after the Fed’s initial rate hike of this 12th cycle. The stock markets sold off hard in a significant correction, rekindling gold demand. The resulting heavy gold investment buying catapulted this metal into its first new bull market since 2011, which continues today.

While recent months’ extraordinary Trumphoria stock-market surge in the wake of the election masked it, Fed rate hikes are very bearish for overvalued stock markets. When the Fed artificially suppresses rates as it did to the ultimate extreme in that 7-year ZIRP era before its initial December-2015 hike, stocks are bid up to otherwise-unsustainable valuations. Their low dividend yields aren’t competing with normal bond yields.

But once the Fed hikes and starts normalizing rates, the rising bond yields suck capital back out of the lofty stock markets. Bonds held to maturity are far-less risky than highly-volatile stocks, and unlike gold the dividend-paying stocks dominating the major indexes are indeed yield plays. Gold thrives in Fed-rate-hike cycles because they are so damaging to stock markets, which rekindles gold investment demand.

Another major underpinning of gold-futures speculators’ erroneous belief that rate hikes are bad for gold is the idea they are bullish for the US dollar. But history doesn’t bear that out either. Entering that last Fed-rate-hike cycle in the mid-2000s, the US Dollar Index was already very low relative to recent years. Yet it still actually lost 3.8% while the FOMC hiked its FFR target 17 times in a row from 1.0% to 5.25%!

The gold-futures speculators are dead wrong, gold thrives in Fed-rate-hike cycles! Thus every time they irrationally panic and emotionally dump gold futures leading into a likely Fed rate hike, treat it like a gift. Those are great opportunities to aggressively buy the resulting bargains in both gold and the stocks of its miners. That proved true again in early March, as the entire gold sector soared right after the Fed hiked!

With a newly-confirmed Fed-rate-hike cycle now well underway, investors can ride gold higher with this metal itself or shares in the flagship GLD SPDR Gold Shares gold ETF. But the greatest gains by far will be won in the stocks of the gold miners with superior fundamentals. Their profits and thus stock prices really leverage gold’s upside, so a carefully-handpicked portfolio of elite miners will far outperform gold.

At Zeal we’ve literally spent tens of thousands of hours researching individual gold stocks and markets, so we can better decide what to trade and when. As of the end of Q4, this has resulted in 906 stock trades recommended in real-time to our newsletter subscribers since 2001. Fighting the crowd to buy low and sell high is very profitable, as all these trades averaged stellar annualized realized gains of +22.0%!

The key to this success is staying informed and being contrarian, meaning buying low when others are scared. So we aggressively added new trades in early March before the Fed’s latest hike. An easy way to keep abreast is through our acclaimed weekly and monthly newsletters. They draw on our vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks. For only $10 per issue, you can learn to think, trade, and thrive like a contrarian. Subscribe today, and get deployed in great gold stocks before they surge far higher!

The bottom line is history proves gold thrives in Fed-rate-hike cycles. Rising rates are very damaging to stocks and bonds, leading to surging gold investment demand for prudent portfolio diversification. The lower gold’s price levels entering Fed-rate-hike cycles, and the more gradual their hiking pace, the better gold performs. That makes gold’s prospects in today’s newest Fed-rate-hike cycle exceptionally bullish.

Gold not only languished at deep secular lows when the Fed started hiking a couple Decembers ago, but this rate-hike cycle’s pace is the slowest ever by far. And the hyper-dovish Yellen FOMC is still falling all over itself to convince markets this relaxed pace will continue to dawdle. Thus gold is perfectly set up to enjoy a massive Fed-rate-hike cycle rally well exceeding the already-big historical winning averages.

Adam Hamilton, CPA

March 31, 2017

https://www.bostonfed.org/publicatio...-rainbows.aspx

Economic Education
Wishes and Rainbows https://www.bostonfed.org/-/media/FR...ondary_svg.svg
https://www.bostonfed.org/-/media/Im...ows.jpg?mw=945https://www.bostonfed.org/~/media/FR...ery/expand.svg
View full size
Peter Davis/Federal Reserve Bank of Boston
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Comic book children's story about the introduction of colored flowers into a town that has never seen color. Designed to stimulate students' imagination as they explore the economic problem of scarce resources, various methods of allocation, and how societies react to alleviate such problems. A teacher's guide, The Road To Roota, is also available. (Revised in 2007).


Wishes and Rainbows written by Debra Carpenter-Beck; adapted by Stephen Devaux; illustrated by Carrie Hartman.
The Road To Roota Teachers guide to accompany Wishes and Rainbows.

LINK: file:///C:/Users/user/Downloads/wishes.pdf

http://ritholtz.com/2017/03/succinct...vents-3-31-17/

Succinct Summation of Week’s Events 3.31.17


March 31, 2017 4:00pm by Barry Ritholtz

Succinct Summations for the week ending March 31st, 2017

Positives:
1. Corporate profits rose 22.3% y/o/y in the fourth quarter
2. S&P 500 and Dow Jones finished higher for the sixth straight quarter.
3. Q4 GDP revisions came in at a 2.1% annualized right, above the 2% expected.
4. Pending home sales rose 5.5% in March, well above the 2.4% expected rise.
5. Case-Shiller home prices rose 0.9% for the third straight month, the strongest run in four years.
6. After a 1% down week, stocks bounced back, with the S&P 500 gaining 1% this week.
7. Consumer confidence rose from 114.8 to 125.6, the highest since September 2000
8. For the first time in five years, the PCE index rose above the Fed’s 2% target.
9. Chicago PMI came in at 57.7, up from 57.4 previously.

Negatives:
1. Consumer spending rose just 0.1% in February, after just a 0.2% increase in January.
2. Jobless claims fell just 3k to 258k, down from the highest levels of the year. The 4-week average rose from 246.5k to 254.25k.
3. Retail inventories rose 0.4% in February, and are up 3.9% y/o/or.
4. Refinancing applications fell 3%, despite the drop in interest rates.
5. Imports fell 2.1%, exports fell 0.1%.

Thanks, Mike
Spread the wealth.

Hello, hope you all have a great weekend

here is a simple look at the EUR/USD Daily chart,
outlining Supply and Demand zones, the very important 1.064x S/R, and a potential Gartley.
In the last candle, which was a Daily+Weekly+Monthly close, we closed above the 1.064 but in the candle itself I see no signs of pullback towards the old trend just yet. There was a lot of strength in this deep correctional move with the break of the uptrend, and it does not show any sign of slowdown in this last candle.
I expect a continuation of the downmove towards the light-green Demand area (see chart). A sharp turn at around the 1.064 is also possible, especialy if we see a slow "dead range" monday, and this would support the potential Gartley pattern. If we break the 1.064x resistance it invalidates the Gartley pattern and so please stay careful! It is a -potential- setup, nothing is set in stone here.
Also keep in mind that a possible gap can throw it all over. We need to wait and see what happens monday.
I stay careful with midterm/longterm positioning.
Intraday the market could provide us with good scalping setups and that is what I be looking for in this market next week.

Risk: still OFF

Take it easy, trade the price and not the analysis, stay in the moment, and have a very green week.

cheers, Teek

http://truepublica.org.uk/global/new...age-commences/

New World Disorder – Disintegration Stage Commences
30th March 2017 / Global


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By Graham Vanbergen – The mainstream media has a new in vogue phrase and you are sure to have heard it by now – ‘the rules based international order (or system)’. The Royal Institute of International Affairs based in London, commonly known as Chatham House commented a several years ago that “Economic and political upheavals are emboldening challengers to the rules-based international system, and to the liberal Western values it embodies. To stay relevant, the system must address three major flaws.”

1. For a system based on rules to have effect, these rules must be visibly observed by their principal and most powerful advocates.
2. A rules-based order must work to the advantage of the majority and not a minority.
3. The longevity of the current international system may have led to the assumption that it was in some way the natural order of things, requiring only occasional repair and defence against particular challengers.

Given recent global events it is clear that the so-called rules based order has systemically failed to address any of these flaws. The most powerful advocates and the institutions that support this system have made the most disastrous decisions culminating in an epic financial crisis with austerity its ideological birth. The West flounders from one crisis to the next, the majority disciplined for the malfeasance and lawlessness of the few and the system is consuming itself from the inside out – a neoliberal bowel cancer with no cure in sight.

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Protests across Europe go largely unreported by the Mainstream media as important elections are due in 2017

The European Union.

With Britain’s recent EU referendum result came the realization that the rules based system on the continent had failed. Rising discontent is gathering at an unstoppable pace, much to the alarm of the ruling elite. A federalized state dreamt up by America and handed to Germany with the intention of destroying national identities, borders and sovereign rights is slowly turning into a nightmare as the 28 nation bloc enters what can only be described as a disintegration phase.

Martin Armstrong of Armstrong Economics puts it this way: “The EU intends to make it a mistake that the British will regret and fall to their knees. This attitude is consistent with the constant endeavor to explain all the shortcomings of the EU as insignificant and irrelevant, thereby closing their ears and mind to any possible reform. They have no clear statement to challenge what is going on. The regulatory nightmare and outright rage that is rising among the people is simply ignored by Brussels. The legal uncertainty with the British exit on the banking system is something nobody even wants to speculate about. How do bail-ins work in Europe if abandoned in Britain? So while the EU thinks by punishing Britain they will discourage others from leaving, they are seriously mistaken. The dream of the EU is dead. It should have remained just a trade union – that was it.”


A recent BBC programme entitled Brexit: The Battle for Europe (YouTube video/58mins) produced the line “the power-brokers of Europe face an unprecedented challenge. For the EU this is a battle to survive.” In the programme Martin Schulz, former president of the European Parliament admitted there was a “real risk the EU will fall apart” as populism rises. Schulz has since emerged as the Social Democrats main challenger in a desperate bid against Merkel in Germany’s upcoming elections.

Sky News reported (11th Feb) that “Jean-Claude Juncker has expressed doubts that EU countries will be able to maintain a united front during Brexit negotiations.” Juncker even went on to admit that the EU project is now failing and sees disintegration going forward. He asked:
“Has the time come for when the European Union of the 27 must show unity, cohesion and coherence? Yes, I say yes, when it comes to Brexit … but I have some justified doubts that it will really happen.” He added: “Do the Hungarians and the Poles want exactly the same thing as the Germans and the French?” – “I have serious doubts.”

Even the the founding architect of the monetary union, Otmar Issing has warned that the Brussels’ dream of a European superstate will finally be buried amongst the rubble of the crumbling single currency.”Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly. Governments will pile up more debt—and then one day, the house of cards will collapse.”

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The inauguration of Donald Trump heralds the arrival of a new world order – or disorder. The West is now weaker than ever before and rising US nationalism poses a threat to the European Union.

United States of America
What we are witnessing in America is the crisis and erosion of the international rules based order that America constructed and maintained since the end of World War II. The US still dominates the world in terms economic and military power, that is not under dispute, but the challenge is that she is simply unable to get her way and control the globalization project that it largely helped to create.


American world domination is not just declining, it is coming to an end. The international liberal order is facing off against nationalism and protectionism, headed up by populist movements – Donald Trump being the evidence that citizens have had enough, they are desperate. Both Trump and Brexit are the result of protest votes for the masses and a stark reminder that politician’s no longer represent the people and the people know it.


For America, the writing is on the wall. In 1990 the global south, made up of Africa, Latin America, and developing Asia including the Middle East accounted for 30 percent of global trade, today that figure has risen to 50 percent. Interestingly, the OECD has predicted that by 2060, the GDP of the developing world, including China and India, would exceed that of developed OECD and non-OECD countries: 57.7 percent to 42.3 percent. This is a big problem for the West and its world order.

Military power is no longer just about how much firepower is available, weapon technology is no longer the preserve of the West, cyber-warfare is becoming just as dangerous as nuclear weapons. The rise of global terrorism has not abated and looks set to only get worse.

Traditional political power is being replaced by transnational social movements and corporations who increasingly dominate global politics. Organisations like Facebook, Google and the Gates Foundation disperse and erode centralised American power. Interdependence by rising regional powers is much more likely to dominate the world order than America’s failing approach of global coercion.

America’s traditional outlets of power such as the UN, IMF, World Bank, WHO, UNHCR and the WTO etc are themselves waning in authority and no longer command the respect they once had. There is a rising tide of new kids on the block. The G20 for instance comprises of economic power houses from both North and South. China’s One Belt, One Road Program and the Silk Road projects are supported by the Asian Infrastructure Investment Bank (AIIB) – their version of the World Bank.


The long-term structural factors and institutions that underpinned America’s global influence are failing. The petrodollar is currently in collapse mode, NATO is being challenged and global trade agreements are being redefined. The BRICS nations economic rise will see growth doubling from 2010 to 2020, China alone will see its economic clout nearly treble in the same time frame, whilst the West’s anaemic economy limps from one crisis to the next with what is clearly turning out to be a failed neoliberal project. Capitalism is failing because everything is rigged.

The transition from America’s vision of a rules based system that it insists on devising and leading to a more complicated and internationally led system will be messy – dangerous even.

America sees the rise of China and Russia as a threat to its dominance. Unable to innovate, negotiate and calmly influence its way in the 21st century, America could do the unthinkable and attack its perceived opponents in a desperate attempt to regain control with catastrophic repercussions.

http://truepublica.org.uk/wp-content...10-300x220.png
Influential members of government, corporations and the military, are involved in the secret manipulation or control of government policy according to many MSM outlets today


The Deep State
Once the arena of ‘conspiracy theorists,’ now the playground of the mainstream media. The Deep State is defined as “a body of people, typically influential members of government agencies, corporations or the military, believed to be involved in the secret manipulation or control of government policy.”

Glen Greenwald, interviewed by DemocracyNow said “What they’re doing instead is trying to take maybe the only faction worse than Donald Trump, which is the deep state, the CIA, with its histories of atrocities, and say they ought to almost engage in like a soft coup, where they take the elected president and prevent him from enacting his policies. And I think it is extremely dangerous to do that. Even if you’re somebody who believes that both the CIA and the deep state, on the one hand, and the Trump presidency, on the other, are extremely dangerous, as I do, there’s a huge difference between the two, which is that Trump was democratically elected and is subject to democratic controls, as these courts just demonstrated and as the media is showing, as citizens are proving. But on the other hand, the CIA was elected by nobody. They’re barely subject to democratic controls at all. And so, to urge that the CIA and the intelligence community empower itself to undermine the elected branches of government is insanity.”


Britain’s own Deep State is steeped in history, effectively manipulating the global map from days of Empire. More recently, it is evidently active. Carne Ross, ex senior British diplomat named the ‘deep state’ for acting to prevent public knowledge of what really happened prior and during the run-up to the invasion of Iraq. He said “I testified last week to the Chilcot inquiry. My experience demonstrates an emerging and dangerous problem with the process. This is not so much a problem with Sir John Chilcot and his panel, but rather with Britain’s own “deep state” – that is covering up its mistakes and denying access to critical documents.”


The Deep State in Britain will be the main driver of the Brexit negotiations in the coming months and years as it manipulates legislation in favour of unprecedented political power focused on the drip-drip erosion of civil liberties and human rights to pave the way for ever-increasing corporate profits and plunder that privatization brings. Other countries have the same problems.

In France there are upcoming elections and another populist threatens the establishment in LePen. Diana Johnstone explains it in great detail for Global Research – “But the pro-European Union, pro-NATO, neoliberal Establishment is at work to keep that from happening. On every possible magazine cover or talk show, the media have shown their allegiance to a “New! Improved!” middle of the road candidate (in Emmanuel Macron) who is being sold to the public like a consumer product. Together, the anonymous sources of the “deep state” and the mass corporate media have become accustomed to controlling the narrative told to the public. They don’t want to give that power up. And they certainly don’t want to see it challenged by outsiders“


The West is no longer governed by a properly functioning political or capitalist system. Bush, Blair, Trump along with Goldman Sachs, JP Morgan, TTIP, CETA, the global financial crisis, tax havens, etc are all evidence of that. Tens of millions have protested, none were heard – that is until the shock waves of disobedience reverberated in 2016, its effects yet to unfold.

http://truepublica.org.uk/wp-content...32-300x209.png
Around 95% of active climate researchers publish climate papers endorsing the consensus position. The Petition Project features over 30,000 scientists signing the petition stating “There is no convincing scientific evidence that human release of carbon dioxide will, in the forseeable future, cause catastrophic heating of the Earth’s atmosphere.


Other Global Threats
The human population is also facing a new series of perils that threatens the international rules based system of order. If climate science is to be believed, climate change threatens water supplies, food prices, health and global security. By 2030 water stress will affect 47 percent of humanity. It is predicted to undermine global health efforts, increase poverty and will destroy global economic growth.

Humans and animals are increasingly sharing virulent viruses raising the risk of pandemics. The World Health Organisation has clearly stated “Antibiotic resistance is one of the biggest threats to global health, food security, and development today” with Antibiotic resistance rising to dangerously high levels in all parts of the world.

Nuclear proliferation is now a real problem. Nine countries roughly control 15,000 armed and ready-to-fire civilisation destroying weapons. There are a number of other countries who have never declared their nuclear capabilities and more are lining up to acquire the technology. If a nuclear weapon or dirty bomb were to fall into the hands of a rogue state – anything could happen.

The EU, worried about Trump’s commitment to NATO and European defence are considering their own nuclear defence system by combining Britain and France into a pan European nuclear umbrella deterrant – no doubt controlled by Germany. That decision alone could cause the EU to implode.

Religious and sectarian divisions continue to dominate the Middle East. The excuse is the battle for global energy supplies which continues to rage with the resulting refugee crisis that threatens the EU. The Israeli-Palestinian conflict raises political volatility with global implications. Syria currently has over two-thirds of the worlds nations involved in the fighting either directly or indirectly – a single spark could escalate into an uncontrollable inferno.

The South China Sea, Ukraine, NATO, Russia, China, Iran, Syria – all pose the potential for existential risk for millions. North Korea is rushing full on to develop a nuclear-armed intercontinental ballistic missile that increasingly demonstrates its desire to reach the US. A problem for every US president since the 1980’s, North Korea is now posing a real threat that is pushing Japan into developing its own nuclear defence system. America and China need to negotiate and put NK on a leash, but they aren’t talking either.

Disorder Not Order
Strategic manoeuvres on the global chessboard of power politics is creating a period of transition. Everything is changing; political alliances, the global economy and its demography, all facilitated by new game-changing technologies. A fight for resources is already underway particularly as globalisation slowly and reluctantly withdraws in favour of regionalised re-industrialisation and nationalism.

A new world disorder is materialising as the West’s traditional grip on the global economy weakens. As with Ying and Yang or the global pendulum, all things exist as inseparable and contradictory opposites. If one economy or political power base increases – it is only at the expense of the other.

As Mark Leonard of the European Council on Foreign Relations notes, such eras are often “the most frightening periods in history.” Quoting Antonio Gramsci, Leonard points out that; “Disorder, war, and even disease can flood into the vacuum that forms when the old is dying and the new cannot be born.”

The truth is that the post-Cold War “American-policed security order” along with the “European-inspired legal order” have both fractured at the same time. The really big problem is that no real candidates to replace them have yet emerged from what looks like a long and dangerous road ahead for us all.

http://truepublica.org.uk/wp-content...t-11.56.32.png


Comments From Benjaminis: This article best describes the state of the World as of April 1, 2017 and perhaps April Fool's day best describes what is going on in our foolish world that the powerful never learn the lessons of history. With all their INCREDIBLE POWER to control us in the end it never lasts and Empire destroys itself from the Roman Empire to the British Empire to The American Empire. The UNFORTUNATE part is along the way millions and maybe soon hopefully not billions of lives are altered or destroyed.

It is important to understand the Global Picture in order to understand how each of the parts affect each other. We now have America and China and Russia as the dominant powers along with Europe which includes Britain. So as we see America and Britain in decline along with parts of Europe which includes France and Italy and Spain then we see the beginning of NEW POWER ALLIANCES and hopefully the real NEW WORLD ORDER that will include the Citizens of the World this time which are you and myself.

Good Day Teek and KeepCalmfx and all of you that come here for information and friendship.

I appreciate your charts and views on EUR/USD and I take the information that you have posted as informative and helpful and very useful.

As KeepCalmfx understands best, as we have worked together on this thread , I set NEW Trade Plans each 3 Months so with April 1, 2017 here today, then these are my TOP FIVE TRADE PLANS and why. I started this thread called "Money Flow Trading Method along with Risk Management on December 3, 2016.

That was 17 weeks ago today. I know that this thread has been informative and helpful to many however for myself and my nature, words while helpful at times must be backed by results. I started a new FXCM UK $50,000 US Dollars Forex Demo Trading Account on February 21, 2017. That was 39 days ago or less than 6 weeks in time. When I started this thread I promised that I would show results of 10% Return on Investment and that I would hope to teach some of you to reach 5%. KeepCalmfx was able to do that. That confirmed to myself that it was possible to accomplish sharing my knowledge and teaching others to learn faster than the 14 years it took me to reach this stage of my Forex career.

At the moment in this $50,000 US Funds Demo Account opened on February 21, 2017 with 4 positions still open with a DRAW DOWN of $1273 US Dollars my Equity is now NET $61,861.75 US Dollars. Rounding it off to $12,000 US Dollars in profits even if I closed my positions when the Forex Markets open near 3:00 PM Eastern Standard Time in Wellington , New Zealand tomorrow, the return would be 24%.

The following 5 Trade Plans will most likely GUARANTEE YOU returns of 5% a month ONLY by using a $50,000 US Dollars Demo Account.

(1) US 30 SHORT
(2) SPX500 SHORT
(3) USD/JPY SHORT
(4) Silver LONG
(5) EUR/USD SHORT or LONG

The REASON that I show (5) EUR/USD SHORT or LONG is because there are just two many unknown fundamental facts not clear yet so it could go either way and I think that is the conclusion that Teek has arrived at. So since ... my only GOAL is to MAKE MONEY and to do that I want to trade pairs or CFD's that almost guarantee sure profits.

We all know that we either have RISK ON or RISK OFF or we could have NEUTRAL, however that is possible, not likely and if we have that, WE DO NOT TRADE because we will NOT HAVE MONEY FLOW.

So... we come back to our EDGE !!! Yes that is MONEY FLOW and why I can achieve the RESULTS that I have proven 100% that I can achieve and so can you at your level of knowledge and experience. MONEY FLOW has an additional CONFIRMATION and that is CORRELATION. That becomes VERY POWERFUL as an EDGE in making money. I know KeepCalmfx and Teek know and understand CORRELATION and you can also see that by the Daily Charts KeepCalmfx produces at least once a day , Monday to Friday.

Now that we have 27 subscribers here and I encourage everyone coming here to subscribe as I would hope to launch my Corporate Website on Monday, May 15, 2017 in 6 weeks from now and then I will stop posting on this thread everyday. Everyone subscribed will be given a Lifetime Pass FREE to our Forex Website. I have made that undertaking from day one and the reason is that by having the opportunity to try to teach retail Forex Traders on this thread , I myself have learned as well and have been able to strengthen my own Forex trading skills as my results show.

I would like to go back to my original plan of requesting that anyone really interested in learning without RISK of loss of money and to learn the right Forex trading habits without the FEAR or the GREED and with the right amount of CAPITAL to trade with open a COST FREE and RISK FREE $50,000 US Dollars Demo Account with FXCM and just post on this thread your User Name and FXCM UK Account Number and send a email to [email protected] with your password so that I can log on and set up the 18 Currency Pairs that I follow for CORRELATION.

LINK TO $50,000 US Dollars Demo Account: https://www.fxcm.com/uk/forex-trading-demo/

Once you do that here is what you will see and please us US Dollars as your Currency to trade with.

CONGRATULATIONS

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These are the 18 Currency Pairs or as Teek as pointed out the CFD's that I use. (Contract for Difference)

The First Six are: EUR/USD EUR/JPY USD/JPY GBP/USD USD/CNH USD/CHF

The Second Six are: EUR/CHF AUD/USD USD/CAD XAU/USD XAG/USD USDOLLAR

The Third Six are: US30 NAS100 SPX500 Copper UKOil Bund

I would BET Teek a trip to Montreal on me that his results will match my minimum goal of 10% Return on Investment for the next three months until July 1, 2017. In other words if Teek takes my challenge and he succeeds by bringing his $50,000 US Dollars Demo Account to $65,000 US Dollars then I WIN since I have another confirmation that what I know can be taught with excellent results and Teek wins because he gets an all expenses paid trip to Montreal.
I HATE to LOSE so if I was not 95% sure then I would not have made my offer. Teek has the skills to do it.


Benjaminis

Easy baby easy, slow down man.
I barely have the time to trade a Demo.
And the stupid health thing forces me to dramaticly reduce my "on screen" time.
Plus: it's spring here
So, I really don't see me finding the time for this. But who knows...
I can do pretty sick things if I am in the mood, so, beware.
You ain't seen nothing yet

Dear Teek

Since I know you are a mature adult and we can go much deeper than most in our discussions and we do wear our hearts on our sleeve then in that spirit, I post this for you and explain why I made the offer. Firstly on the health issue that needs to be your first concern because without health everything becomes so much more complex. I have been putting in 18 hour days for at least the last 10 years and I cannot imagine how I could have done that not being in good health aside from needing to bring my weight down to 160... I have my first medical check up in two years scheduled on Tuesday , April 4, 2017 at 1:30 PM Eastern Standard Time and one thing that I have done most of my life is to operate at one speed. That is warp speed so that is why when you said to slow down that is not an option or desire. Then we come to desire and focus. For myself everyday is spring and summer and fall and winter combined meaning one season goes into the other as I work hard and also play hard.

I was extremely happy and still am seeing the progress of KeepCalmfx and others. However I would love to see how a sophisticated Forex trader and teacher would do using my unique method. I say unique because in the last two weeks as I have moved higher up reviewing the teaching part of my business, I have been pleasantly surprised to find that many high level Forex Traders and sophisticated teachers, do not seem to focus on Money Flow and they teach more about using the charts. They also teach other things, however it does come back to the charts and their grasp of fundamentals is excellent however their thinking does not seem to factor in how money flow will even change some of the fundamentals.

I am self educated and as long as you cannot prove to me that 1 + 1 is not equal to 2 then I know that what I do works. So why would I not continue on with guaranteed success ? My Forex numbers are my 1 + 1 equals 2 and as long as I continue to do a minimum of 10% Return on Investment there cannot be any possibility that I am wrong.

SO ... if you cannot find the time to trade the demo then I understand and accept your position. However I still would like one person here other than KeepCalmfx who has already done it without originally having all of my skills, so the accomplishment was even greater.

I have no doubt that a qualified Forex Trader could achieve results of at least 10% a month for three consecutive months.

Anyone ready for the challenge please post here which still also includes you Teek , time , health and Spring and or Summer notwithstanding.

Just imagine if you do it then your financial future is guaranteed. I also again make the offer that I will arrange under LPOA $50,000 US Dollars for you to trade with and I have recently made the corporate decision to arrange for 5 Forex Traders that successfully complete the 3 month course to have $50,000 US Dollars to manage with a performance fee paid of 20% of the profits. That is exactly how I got here by becoming an Introducing Broker and charging a 20% performance fee to my clients. When you reach that level there is also the rebate aspect where you can earn PIP REBATES of $10 US a Forex Trade.

At the level of $250,000 US Dollars under management and with my business model I average 250 Forex Trades for every $50,000 US Dollars under management so at the level of $250,000 US Dollars the total trades would reach 1250 and the rebate monthly revenue would be $12,500 US Dollars.

You can see from some of the background on the Forex industry that I have shared here, this business when you are a professional Forex trader is very lucrative.

As always all questions and comments are welcome and my final thought before I finish this post is DESIRE and DISCIPLINE.

On December 20, 2016 , KeepCalmfx opened a $50,000 US Funds FXCM UK Demo Account and look what DESIRE and DISCIPLINE did for KeepCalmfx.

Now the opportunity is all yours.


Benjaminis

https://www.theburningplatform.com/2...g/#more-146992

No Fooling

DOUBLING TIME = 72/rate of interest


Math can be a real bitch.

Guest post by Robert Gore at Straight Line Logic

The numbers behind this story come from the Wall Street Journal, “National Debt Is Projected To Nearly Double in 30 Years,” (paywall) 3/30/17. For a Zero Hedge summary, see “CBO Warns Of Fiscal Catastrophe As A Result Of Exponential Debt Growth In The U.S.”

The Congressional Budget Office (CBO) released figures this week on the government’s deficits and the national debt that are downright scary. Unfortunately, they’re not nearly scary enough. The assumptions the CBO incorporates are optimistic and will almost certainly be undercut by reality.

The headline projection was the national debt will almost double in 30 years. Using the rule of 72, T=72/r, where T is the time in years required for principle to double and r is the annual interest rate compounded, a 30-year doubling time implies the debt is growing at 2.4 percent annually (30=72/2.4). However, the national debt almost doubled during George W. Bush’s two terms, and almost doubled again during Barack Obama’s two terms.

That implies a T of a little more than 8 years. To be conservative (because debt almost doubled but not quite), round the T up to 9 years. Plug that into the rule of 72, and you have the debt growing at 8 percent per year (9=72/8), or over 3.3 times the rate the CBO is assuming.

Scary as that 30-year doubling sounds, simply extrapolating the reality of the last 16 years projects another doubling in not 30, but 9 years, or a year longer than Donald Trump’s potential two terms.


But wait, there’s more. The CBO assumes the 10-year Treasury rate will be 1.5 percent after inflation over the long term, but last year that rate was 1.9 percent and the year before, 2.2 percent. Ask yourself, with exploding debt and an increasing supply of Treasury bills, notes and bonds, are real rates (the interest rate after inflation) likely to go higher or lower?

The CBO says lower; SLL says higher. The CBO also assumes that potential GDP will grow at 1.9 percent per year over the long term, although it grew an estimated 1.6 percent last year. Ask yourself, with debt service consuming an ever larger share of the GDP (see next paragraph), will that help or hamper economic growth?

The CBO says it will help; SLL says it will hamper. Finally, the CBO assumes that net interest costs will average 2.1 percent of the GDP over the next decade, although last year they were 2.5 percent. Again, ask yourself, will a rising national debt lead to more or less debt service cost relative to the GDP? The CBO says less; SLL says more.


Even the too rosy CBO numbers paint a grim picture. It projects that debt service’s share of total federal spending will triple, from the present 7 percent to 21 percent, over the next 30 years. In the same time frame, the national debt as a percent of the GDP will increase from 77 to 150 percent.


President Trump wants to spend “yugely” on infrastructure, increase the military’s budget, cut taxes, and not touch entitlement spending. This is all pure fantasy; it’s simply not going to happen. Something’s got to give, and it will probably start in the bond market. Indeed, it probably already has; the 10-year Treasury rate reached generational lows last July and interest rates have been in an irregular uptrend since. So if you read the Zero Hedge CBO post and are feeling glum, cheer down; you’re not feeling glum enough. Unfortunately, this is not an April Fools gag.


Comments from Benjaminis: There is the Math again as in 1 + 1 equals 2 !!!