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Yelnick's: " The Fed is trying to compensate for reckless fiscal policy, which the political dynamic seems incapable of dealing with (only a $61B redux by the Repubs? Tea Party is appalled). To them QE is a slight bending of the yield curve, not money printing, which I think is right; but they overlook the speculation driven by liquidity they create in the banks." So true - speculation is rife now! Here's how I summarize the Deflationists arguments: + What matters, and needs watching is not just M2 or M3, it is: Money AND CREDIT + Credit risks are now shaky and if credit is withdrawn, the economy will suffer + Bank balance sheets are greatly weakened and they cannot sustain credit growth at former levels + Excessive money creation (Quantitative Easing) and accounting gimmicks have delayed price discovery + Overall the credit bubble is getting worse, and price discovery cannot be delayed indefinitely + Problems have spread to the government sector, and the next crisis may start with sovereign and state debt + As debts are written down, there will be a flight to safety - which will benefit the US dollar and short term treasuries + Gold has a role to play, since it will avoid default (if held as physical), but the price can drop if the USD rises The worst of the deleveraging mess may be seen in 2012 or 2013 My Suggestions: + Watch PIIGS bond yields, and possible defaults in key US states + Watch copper, especially if weakness there spreads to lower oil prices
Interest in the old Deflation vs. Hyperinflation Discussion? Nicole Fosse (Stoneleigh) and Gonzalo Lira recently had a debate about it. Find out who won, and read a discussion about the debate. Link:
Some of those predictions from the Yelnick Blog sound very similar to my own ! His: 5. China slows, is the same as mine, and if it happens, this will have knock-on impact upon commodities, which I see lower, possibly from a January high. His: 6. Dollar rising, is also in line with mine But I think there is a high likelihood it will be triggered by Debt problems in Europe. Then maybe later in the year, the US states will begin going down like dominos, and the problems seen by Europe will spread to the USA. He does not see a big problem with municiple defaults, and I wonder why not? His: 7. Stocks move sideways, seems inconsistent with a rising dollar. Again, I wonder why he forecasts that. I think we could have mini-crashes in 2011, with a bigger one in 2012. His: Social mobile boom, is the opposite of mine. I think this mania is close to the end. Can it be kept alive through the flotation of Twitter and Facebook? Maybe, but it will take some major levitation efforts to keep it going 6-9 months until those are "out the door." I think these IPO will not both succeed. Too much potential buying will have been "used up" in the pre-IPO phase imho == == == Above is from my own site / see, hear my own predictions there (post #39):
Toggle Commented Jan 7, 2011 on Predictions 2011 at Planet Yelnick
I am getting HAMMERED on today by the Gold Bugs - on my own GEI website! We are seeing the upside break of a trendline, and they are all over me saying they want me to "admit I am wrong," when I am still long gold, and have been speaking about a seasonal top in Gold on or about the 7th of October. Why do some people want you to admit you are wring BEFORE a day arrives? Is it because they are desperate for confirmation of their position? I take this as further evidence, that a TURN may be at hand. In stocks and in gold too. That means the Dollar too, folks. And, yes, I could be wrong.
Toggle Commented Oct 5, 2010 on A Chartfest at the Turn at Planet Yelnick
Chabazite, I am sure your know where the BBC is coming from. They will be amongst the last to see the UK property crash as it arrives. It is already arriving, and you can see it in the data:
Toggle Commented Sep 30, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
If China property is a bubble, it is not a conventional one with the usual excesses of excessive gearing from banks. There may be gearing on the developer side, but on the property owner side, there is plenty of equity. A chinese property investor can presently get some decent gearing on purchase #1: like 75%, but #2 is now limited to 50%, and #3, if one is allowed to buy it at all, will come in less than that. How will this play out? If there is a price drop, I think the owners will wind up holding, and holding for years, with their capital tied up at a low return. This is different than the US where the high debt levels, and the burden of interest rates, have forced people to sell, or default. And there's a rising tide of supply coming to the market (at cheap prices) after foreclosure. We are unlikely to see that in China. Whitebear, how are people "borrowing to the brim" in HK?. We owned X HK properties at one stage. And I stopped buying because the bank told me they would only lend me 60% rather than the 70% they had offered on the first (X-1) purchases. (As I said, we have now sold all but one of those, each at a profit now - I don't like the risk/reward from here.) I don't think that 60-70% is "borrowed to the brim". Even in the HK property crash of 1997-2003, no HK banks went bust, thanks to these prudent principles. Yes, Mainlanders often pay cash when they buy secondhand in HK, but when they buy new properies they often take the "deferred payment schemes" on offer in HK. And that's where the vulnerability lies. More on HK property, check out this site: prop And here's a chart for those who want one: Note that prices are still below the 1997 parabolic peak. I wish I could say the same about the US and the speculation-ridden UK property market (which now set for a spectacular bonbe-rattling crash.)
Toggle Commented Sep 29, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
Whitebear: More on HK property prices. The papers here have a story about a new development just launched in Wanchai (not the mid-levels!) at HK$15,000 psf. That's almost US$2,000 psf. And guess what, the seller is a JV, where the Urban Renewal Authority is a part owner. That's a public sector company cashing in on high current prices. But they are all now rushing to sell now, because the HK Govt may launch new measures in early October to cool off the market.
Toggle Commented Sep 29, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
I agree completely, Y. From today's Asian WSJ, article by Andy Kessler, ex Hedge Fund Mgr: What's the Matter with Wall Street? "The financial industry has certainly seen slow periods of stock and bond trading and sparse banking before... but banks made up for it by inventing new products*... . . . In my estimation, there are too many traders, bankers and salesmen to support the new level of business. Wall Street firms also have too much capital that they scramble to generate returns upon. Both need to shrink over the next five years. . . . We are at the bitter end of a 30-year interest rate cycle... . . . At some point, the powers that be will figure out that rising rates will be the cure of all that ails the U.S. economy by driving the dollar higher, commodities back towards their extraction values, and encouraging commitments of capital based on market mechanisms (DB: cash flow, rather than speculative momentum), not the wishes of the government and the Federal Reserve. That will not be good news for Wall Street, which doesn't do well in a rsing rate environment. See the 1970's. Time to hunker down, and get back to basics." *(Many of those products were toxic, ripping off their clients. Or involved leveraged soeculation. He goes on to talk about how banks are losing their prop trading desks, and the profits associated with them.) Meantime, yesterday we saw: Morgan Stanley froze hiring.
Toggle Commented Sep 29, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
Y., It is tragic to see the VC's getting beat up in the US. And that is part of a bigger tragedy of Wall Street and the financial sector in the US which has moved from being "in service to the economy" to being merely parasitic. "Long Term greedy" means that you need your customers to thrive (so you can do repeat business), rather than "killing" them to gain an immediate profit. Wall Street switched from being "long term greedy" to "short term greedy" over the last decade or two.
Toggle Commented Sep 29, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
I am selling my HK property. We sold most of them. We have one left: the flat we live in, and it is for sale too. But we will want a very high price, since we need to live somewhere, and rents are sky-high. Mortgage interest rates here are around 1% versus yields of about 3%, so (on a cash flow basis) it is still cheaper to own than it is to rent. We sold down because we didn't want to be exposed if the market turns. Property prices move very in Hong Kong.
Toggle Commented Sep 29, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
And meantime, the Chinese are learning about the Venture business, and seeing that it is easier to make money through investing, rather than through the "hard graft" of industry. Yesterday, I sat in the top floor of a major Hong Kong hotel, listening to the CEO of a mining company talk about how he was going to build one of the world's largest copper mines in Minnesota (!) And at the next table, two Indian guys were pitching their investment project to a wealthy Chinese investor. In the background floated Kowloon, the most crowded place on the planet. Those sorts of conversations that used to happen in Wall Street and in Silicon Valley, are now happening in Hong Kong and Shanghai.
Toggle Commented Sep 28, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
For those of you who have not studied the report: Winners: Speculators, Hedge Funds, Trading-oriented institutions, Day traders, Electronic trading, Volatility, Black pools, Expert networks, Private equity, Big company acquirers, PIPEs- reverse mergers- SPACs, Asia- (especially China and India) Losers: Issuers, Mutual funds, Long-term institutions, Mom & Pop investors, Stockbrokers (advice), Market makers (Nasdaq), Liquity (from LT investors), Transparency, Company fundamental research, Investment bankers, Venture capital, IPOs, United States Caption: Is this what Congress really intended?
Toggle Commented Sep 28, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
The list of winners and losers says it all : wealth to the machines, and remove the "old fashioned" investors to China, where the real wealth is being created. The problem is: about a decade or so ago, everything in the US went virtual: people started monetizing "eyeballs" and other esoterica. Investment banks were allowed to gear at ridiculous levels, and people everywhere caught the speculative bug, seeing it was easier to make money speculating on dotcom stocks and flipping houses than it was to do real work. Massive amounts of "fictitious wealth" were created, and for a few years everybody felt rich, and that they could buy whatever they wanted, and not worry about repaying the debts. The fictitious wealth is being rolled back, even though the Fed is trying to resist that process, because it means painful writedowns and debt repayments. They want to protect the banks by propping up unsustainable valuations in homes, mortgage backed securities, and the like. But bit by bit gravity is winning, as home values start drifting down again DESPITE near zero rates. The liquidity that is still sloshing around seems to get channeled in to advanced hyper-speculative activities, like High Frequency Trading. Isn't it clear that the present system needs simplifying in almost every way. Old fashioned valuation metrics need to be restored, and they need to turn off the speculation machines.
Toggle Commented Sep 28, 2010 on Why IPOs Are In the Dumpster at Planet Yelnick
That Hitler video will only make sense to insiders. Watching it here in HK, the whole thing (including subtitles) is German to me... or Greek.
Who is right: the stock market or the bond market? For years, Stocks and 10yr. Rates (TNX) have been correlated But what has happened recently is, a huge gap has opened up between them. It is as if the bond market is (still) anticipating a double dip, and the stock market has decided that will not happen. Stocks have normally caught up with bond yields, as the chart shows.
Toggle Commented Sep 15, 2010 on Market is Approaching a Triple Top at Planet Yelnick
Yeah, And the mud keeps flying back and forth- again today. For the latest: Mish Refuses to Debate Gonzalo Lira
An umpleasant bunch of posts here, so I wonder why I bother, but here goes... Speaking of Bond Bulls and the Hyperinflation alternative, an argument between Mish Shedlock (Bond Bull) and Gonzalo Lira (Hyperinflationist) has broken out. Thanks to some posts on ZeroHedge over the last few days, it has "gone viral", attracting 1,000's of posts and podcast downloads. The battle described: If you want to here the original podcasts, they are on my GlobalEdgeRadio website. Links follow: 1/ 2/
"JUMP STARTS" - the key to market performance !? Without the month starting jumps, US stock Market was down 13-16%! ====== I have looked at the first (or second) trading days of each month for this year. And those big "jump start" days have been critical to holding the market up. Without those 9 single trading days, the market year-to-date would have been down between 13-16% for INDU* and SPY, respectively, and an amazing -26% for SMH ! I started out looking at September and August, and as I looked at the other months, I soon found that there was a clear pattern (see below) for a price jump at the beginning of the month - although one month (July) did not get one, and it came a day late in June. (I did not look systematically, but there did seem to be a similar pattern also in prior years) To clarify: The 9 Jump start days contributed a 1,215 point move up. Even with those Jumps, the Dow Jones Index (INDU) was down -159 points for the year. So without the "Jump starts", the market would have been down -13.2% for the year. Seems that a lazy Bull, trading only one day a month could do rather well ! /see data :
"So far there is hope and relief" You want HOPE? Here's Hope: Which may have as many legs as this market.
Great article, Y. "this Ponzi Scheme is the greatest failure of the Fed and central banks around the world." Indeed it was. Greenspan identified "Irrational Exhuberance", and then proceeded to feed it, by giving speculators a free "Greenspan Put." In return, they fed his ego, and called him "The Maestro", as they collected their big bonus checks, and found all manner of ways of keeping the game going through more debt and lower rates. What the US needs is an unpopular Fed chairman. I can still remember Arthus Burns, who thought it was his job to take away the punchbowl, rather than spiking it, as Greenie did.
"I think we have some fundamental problems in this country that we can no longer paper over with rising RE prices. They are going to bite us hard, hard, hard in the not too distant future." RIGHT. When you have people like Obama listening to people like Krugman, you are going to see things get worse. Fortunately, not everyone who wins a Nobel prize is a dangerous moron. You should read some material by Vernon Smith. Here's a good one: I especially like this line: "Our best shot at increasing employment and output is to reduce business taxes and the cost of creating new start-up companies." BTW, I "got the 'Ell out", and live in Hong Kong now. An increasing number of economic refugees from the USA are showing up here. It is nice to live in a free economy.
Funny thing. A very common opinion here and elsewhere seems to be: "Everyone is too Bearish, so I am going to be bullish." That way of thinkiing seems very dangerous now to me.
James Miekke, the "world'd leading expert" on the HO has said we saw a second signal last Friday. According to his analysis, the odds of a slide improve dramatically after a second signal. He gave a great interview to TFNN's Dave White, and you can hear it on the TFNN website, or (briefly) here:
Michael, His arguments make sense to me, and I have highlighted a recent video interview he has done on his website. You have cited a wrong forecast that he made. What about his many accurate forecasts? You must be the only one on the planet who never gets it wrong. Personally, I find that a bit of humility works well with my trading. Let's see where stocks go over the next month or two, and we can debate the accuracy of Rosenberg's views in November.
Thanks, a good point. But I suppose it is "better" to be over-optimistic, since taht may be good for the firm's business. It is good to see the smart bears like Rosenberg, getting some positive press. The problem is that most of Wall Streeet is now "short term greedy", rather than "long term greedy", and that means that they care less about how well their customers do. Result: many are running away.