9/15/2016

This is good-one: “Gold will plummet to $750… real-estate will drop another 30%... and the DOW will plunge to 6,000.”

Dear Reader, 

If you watch CNBC, it’s likely you’ve seen this man.  

He’s the economist who recently said, “Gold will plummet to $750… real-estate will drop another 30%... and the DOW will plunge to 6,000.”  

He even had the audacity to tell CNBC contributor Ron Insana, “You and Robert Malthus don’t know what you’re talking about!” 

When I heard this, I wondered, “Who the heck does this guy think he is?” 

Then I took a look at his track record...  

Harry Dent has predicted nearly every major economic trend over the past 30 years…including the 1991 recession, Japan’s lost decade, the 2001 tech crash, the bull market and housing boom of the last decade and, most recently, the credit and housing bubble.

And I’m thrilled he’s letting us share his latest research with Stocks & Commodities readers. I must warn you, I was shocked when I heard what he's forecasting for the coming months.

The scary thing is, much of what he predicts is already starting to happen.

But you can see it for yourself right here. 

Shannon Sands

Publisher

Bank of England


Undeniable facts


9/08/2016

FED, ECB, BOJ

 

The Big Picture ... Market Perspectives

By Bryan Rich 

September 8, 2016, 2:00pm EST 

 

https://staticapp.icpsc.com/icp/loadimage.php/mogile/1014329/89450b52c102565f481ecfe4550f7cc5/image/pngThe ECB met this morning.  As expected Draghi and company sat tight.  The big events of the month are in two weeks, when the Fed and BOJ decide on rates/monetary policy.

Today let's take a look at the total assets that have been hoovered up by the world's biggest central banks, an activity that the central banks thought would lead to growth, and the gold-bugs thought would lead to hyper-inflation.  They've both been underwhelmed.   

The Fed's balance sheet has grown to almost $4.5 trillion ...

sept 8 us fed

The ECB's balance sheet is at $3.7 trillion and growing ...

sept 8 ecbj

The BOJ's has rocketed to $4.4 trillion and growing ...

sept8 boj

And China, the stealth QE'er has ballooned to $5.1 trillion ...

sept 8 china

That's nearly $18 trillion of assets on the balance sheet of the world's top central banks.  That means much of that $18 trillion of capital has been injected into the system.  It was widely believed that this strategy would put money in the hands of consumers.  Consumers would spend and borrow.  Employers would hire.  Banks would freely lend.  And the burden on global demand would be lifted.  

But it hasn't happened. Why?  The next chart tells the story ...

sept 8 vel of money

This chart above is the velocity of money. This is the rate at which money circulates through the economy.  And you can see to the far right of the chart, it hasn't been fast.  In fact, it's at historic lows. Banks used cheap/free money from the Fed to recapitalize, not to lend.  Borrowers had no appetite to borrow, because they were scarred by unemployment and overindebtedness.

Bottom line: We get growth and inflation when people are confident about their financial future, jobs, earning potential … and competing for things, buying today, thinking prices might be higher, or the widget might be gone tomorrow. It's been the opposite for the past eight years. 



 

 

European 10-year bond yields up after #ECB decision

 

Interest rates by country

 

Current inflation by country / region (CPI)


9/01/2016

Big Picture ... Market Perspectives 9/1/16

 

The Big Picture ... Market Perspectives

By Bryan Rich 

September 1, 2016, 2:00pm EST 

 

https://staticapp.icpsc.com/icp/loadimage.php/mogile/1014329/89450b52c102565f481ecfe4550f7cc5/image/pngLast month, this time, the famed oil trader Andy Hall (and oil bull) was dealing with a sub $40 oil market again.  And he was again explaining losses to investors in his multi-billion hedge fund.

A guy that has made a career, and hundreds of millions of dollar in personal wealth, picking tops and bottoms in oil, had had entered 2016 coming off his worst year ever.  And 2016 started even worse.  

I've talked about the oil price bust extensively, at the depths of the decline in January and February.  While most were glorifying the benefits of a few extra bucks on the pockets of consumers from low gas prices, we walked through the ugly outcome of persistently low oil prices.  It would be another global financial crisis, as failing energy companies and defaulting oil producing countries would lead to crush banks and the dominos would fall from there.  Unfortunately, the central banks don't have the ammunition to pull the word back from the edge of disaster for a second time.

With that, central banks stepped in with more easing in the face of the oil price threat earlier this year, and oil bounced sharply.     

Hall's fund bounced sharply too, running up nearly 25% for the year by the end of June.  But he gave a lot it back by the time July ended.  And now oil is closer to $40 again, than $50.  Thanks to a report yesterday that oil supplies were bigger than expected, the price of crude has fallen 10% since Friday of last week

Hall was the Citigroup oil trader who made billions of dollars for the bank energy trading arm, Phibro, in the early-to-mid 2000s.  He was one of the first to load up on oil futures in 2002, when oil was sub-$30, on the thesis that a boom in demand was coming from China.

He reportedly made $800 million in profits for Citi in 2005 from his original bullish bet.  He then made over $1 billion in 2008 for the bank, as oil prices soared to $147 a barrel and then abruptly crashed.  He profited handsomely from both sides, earning a payout from Citi of more than $100 million. 

So he's a guy that has been very right about turning points, and big trends.  And he's been pounding the table for much higher oil prices.  He thinks oil prices are in for a "violent reversal" (higher). With an important OPEC meeting scheduled for later this month, Hall, in a past investor letter, reminded people how powerful an OPEC policy shift can be.  In 1986, the mere hint of an OPEC policy move sent oil up 50% in just 24 hours.  


 

Coffee futures staged a strong start to September


Pildiotsingu coffee tulemus
Coffee futures staged a strong start to September, attempting in New York to record their second highest close in more than a year, as data showing a slump in world exports crystallised concerns of tighter supplies.
Arabica coffee futures for December stood up 3.8% at 153.65 cents a pound in late deals in New York, a level which, if held to the close, would represent the strong finish for the contract, bar one, since May last year.
In London, the best-traded November robusta coffee futures contract stood 1.4% higher at $1,854 in late deals.
'Bullish as anything'

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