CPIAUCSL trade ideas
Just something to look atwe have eurodollar futures at ATH, bonds essentially at ATH, Stocks at ATH, Gold at ATH and the dollar is just chillin
GDP? More Like Debt-Financed ConsumptionNotice the time period where the rate of change began to significantly increase.
Sad that TV doesn't have the data but if you go and look, inflation from 1700-1900 was extremely stable. Not the "2%" per year inflation of today, was more like gradual deflation over time, with certainty that your money would be worth the same 100 years from now.
During the classic gold standard era, from 1870-1910, real growth averaged 8-10% per year, and we had 3% deflation per year.
The banking system of today is based off of printing lots of money, getting caught in a liquidity trap, and then being at risk of a major deflation because you thought you were smart enough to inflate an asset bubble with no consequences. That's where we are at right now. Very similar to 1929.
PROOF TRUMP IS LYING...Trump says there hasn't been any inflation...This chart is solid proof that there actually has been.
Since January 1st 2019 there has been 1.82% inflation, and over the last month we have seen .36% of that. That huge in 1 month!
Beware the biggest bubble of all times! Part 2Ray Dalio made a post about how and why he thinks we are going towards a paradigm shift.
What I know is this bubble is going to violently collapse and it will be biblical.
Jeff Besos is already planning his way off this planet.
What I heard is every rich person was planning how he will manage his bunker, security guards etc, OR ways off the planet.
The end of the world is coming. This stupid over-consumption uber inflation money printing bubble is going to explode into a giant nuclear firework.
I don't know when it is coming but people are preparing, and it now appears imminent. Not something that will happen in "a long time" but in our lifetimes, in the next 5 years even.
So for this occasion I am making my regular end of the world post.
You got such clear signs that we are at the peak:
Cryptocurrencies...
IPOs go up 750% in 3 days...
(All going to zero <3)
There is talk around gold but isn't the price at historical highs even inflation adjusted?
I do not know enough about it to comment and I am not interested in researching it.
The madness is not ending. Good, the more they push the bubble the faster the end will come.
Make it explode! In the past century the economy/world has had a paradigm shift, and of course no one notices it, if things have been a certain way their whole life they view it as "normal". Totally unable to think outside of the box or get in other people shoes, totally unable to understand how anything came to be...
"A great point makes is that paradigms -- by definition -- are things that have gone on for long enough that people think they will never end. He touches on examples like debt driving asset prices higher and low volatility leading to high volatility."
End the FED make something new and also a new US currency and a new world currency (I guess the world currency can be gold, better than a country currency btw the USD became the world standard because the US scammed every one the only reason it was it was because it was pegged to gold before they removed that, litteral scam, ye the world won't fall for the same trick a second time right?)
The debt cycle system/paradigm I think could work but gee they pushed it so much.
Just greedy idiots. They start a scam that cannot last forever, just their whole lives, who cares what happens next.
All reported once I get out of the simulation. Reeeeport!
Same with energy consumption etc. Human nature: obsessed with reproduction like rabbits, 0 care for the future only short sighted. Perfectly logical.
Every one for themselves when this Titanic sinks. The transition won't be nice and smooth.
I will be very stupid with absolutely nothing been thinken off, nothing prepared, as usual.
Also some political unrest wars / civil wars etc.
I really hope it happens soon so we can be done with it. I hate suspense. The faster a change is made the smoother the transition will be.
So that means less fireworks. I do not have a personal home on the moon or mars so I would rather avoid big fireworks :( Otherwise would enjoy it.
This is the log chart by the way:
BOOM!
QE4 biggest risk to a bear? Possibly negative interest rates.To be transparent and clear I am short the market, fully invested. This is my further attempt to be objective.
Bears will justify many reasons why QE4 is not possible. At the very least it's not probable, but in all honesty, after reading Bernanke's SA on reasons for using QE in a deflationary cycle, there is no reason the US will not go the way of Japan, by effectively perma QEing. Bernanke argues fairly convincingly, however only in theory, that in the face of deflation the Fed MUST at all costs pump the economy. A deflationary trap is the death of economies and empires.
As I am almost fully invested to the downside, I am looking for the Fed to increase interest rates. Therefore, the move away from "patience" is a good thing, or is it?
The Fed's focus was employment . Now that the US is arguably fully employed and ready to benefit from increasing wages, it was ready for the rate increase, only to be stifled by the USD and sluggish inflation.
So what does the Fed do? The focus on employment has now been moved to deflationary worries . For now the Fed says it sees it as transitory, but the focus communicated to the market is committed. Hence, my worry! Every HFT algo, hedge fund and it's pet dog will be looking at inflation with the scrutiny it did with employment.
As seen in the chart , the last three times inflation had a flat or decreasing cycle, the Fed QEed. What's happening with inflation now? What did Bernanke say about deflation? Remember, the Fed does not use QE to prop the market, it uses QE to arguably inflate the economy.
Now for my conspiracy. Equities will drop in the medium term pulling in every bear, her cubs and all the forest animals. If I owned the market, I would force a move quickly breaking Oct 14 lows, because the Fed will have to act on deflation soon, if not transitory. Smart money buys only for the Fed to have a justifiable reason to QE4 the hell out of us, "deflationary pressures are worrying, we have to act decisively". The Fed has been promising increased interest rates for years, but oligarchs want another capital/income boost. Once QE4 is announced markets will "reach for the sky", as Buzz Light-Year put it.
Bears should fear QE4, but ride it while it lasts, if it gets here that is :-)
Can't stop deflationary pressures, but markets don't careI was inspired by a really poorly done analysis showing the current administration's (huge successes) policy on the markets and jobless claims. Basically making the claim about how much further we can still go with jobless claims. Also wanted to play with utilizing Quandl data within Tradingview. So, I took a step back (because they only published the last 5 years of data) and wanted to examine the past few cycles of the US economy.
Basic thesis, the markets are driven long term by price accretion or inflation. Over many years the miracle of compounding takes over and we (prices, markets) begin to behave on log scales. So the moves in the markets (Dow/S&P) are not unusual when examined over longer periods of time, prices must naturally go up (if inflation exists) and on the sorter term linear view these tend to look exponential. Also, the current state of the jobs market is operating at about its peak levels with monthly jobless claims falling under 300K. We may be able to hangout in this region for another year to 18 months, but (on a longer time line) the end is near. Finally, the Federal Reserve's interest rate policies are what they are, but as can be seen by CPI Inflation (can be manipulated by the Government, by adjusting the components), a zero interest rate environment has been good for the markets and jobs, but have not done a darn thing for inflation (we are still deflating or stag-flating). Combine that with Europe's current state and we are likely to continue for a while longer.
The longer term performance on the markets can be seen in the bottom chart. Plotted on a log scale, it is nicely seen "the miracle of compounding". This is the mechanism of inflation, but in the current environment (deflationary pressures) we may not be able to reach back to the mean line. Examining the relationships of market direction to inflation, most of the normal market gains are during periods of heathy inflation. Stagnant markets (on a log scale, but still meagerly positive slopes on a linear scale) are in healthy deflationary environments. "Market events" such as spikes/drops in the inflation rate highlight divergent events in the markets, with lagging interest rate responses by the Fed and corrections back to the mean line on the lower chart.
So what to do: Stay the course...Keep picking winners in the short term, scaling into cash over the next year and get ready to buy in 2 to 3 years when an eventual correction comes. Could we see Dow 20,000 in 2015, yes not a stretch of the imagination. However, log scales are deceptively powerful. A 25% correction (easy to get in a recession) from 20,000 takes you to 15,000, and are barely noticeable on the bottom chart. This is a huge physiological blast for the average person (because numbers are "BBBIIIIGGG" and scary) and presents great opportunities.
So if you see it coming (and can actually act...rather than freeze for a couple of months), rotate towards cash, or buy some puts, or go short for a few months. Laugh at the hysteria, relishing the buying opportunities.
Chart Discussions
Jobless claims: Appears that for the US, ~300000 jobless claims per month is about as strong as the economy can get. Will probably see this tick-up over the next couple of months will oil's drop. Impressive still considering population growth
Interest rates: ...and even with 5yrs of easy money for large financial institutions, and trickles down to us little people via CC, mortgage, and loan interest rates, we still have a potential deflationary economy.
Markets: I find the moves in the markets more benign when you look at them on a log scale. This is really due to the miracle of compounding (mainly driven by core inflation). Examined in this this light, the moves in the dow are still catching us up to the mean line. However, if you combine this with the potential deflation, might not make it back to the standard run rate.
