Tuesday, July 23, 2019

The Keystone Speculator's Housing Market Indicator Signals Start of Housing Recession 7/17/19

The Keystone Speculator's Housing Market Indicator signals the start of a housing recession. Say what?! The talking heads on television as well as the Wall Street fat-cats say the economy is fantastic, the housing market is steady and fine, all is great with the US and world especially considering the never-ending global central banker collusion and market intervention.

7 years and 5 months ago, on 2/16/12, Keystone called the housing market recovery. The homebuilders had gapped lower and housing market doom and gloom was rampant. Many believed the housing market would never recover after the 2008-2009 financial crisis. Of course it is always darkest before the dawn. Traders thought Keystone was smokin' something with such a bold call back then but that is what his proprietary data showed.

In a few short weeks, the XHB homebuilder ETF had recovered and analysts were beginning to step aboard Keystone's housing market bandwagon as it rode through town. In a few short months, everyone was on Keystone's side and the housing market recovery expanded and the joy continues up until......Wednesday, 7/17/19.

The housing recession now begins, on 7/17/19, after a long 7-year-plus recovery.

The only caveat would be to watch the housing data over the next two months for confirmation, or perhaps non-confirmation (confirmation of a reversal of trend would be expected to continue). In early 2012, when the indicator flipped bullish, indicating the housing recovery had started, that turn occurred on a dime and the indicator never looked back, so the same may occur as the housing recession now begins.

A jog move of a couple more months with the data would not be unexpected but the writing is on the wall. Even if the housing permits, starts and other data would catapult higher in earnest, it will likely not be enough to reverse Keystone's indicator. For example, the next release of Housing Starts would need to register 1.7 million units and higher to avoid a housing recession and that is not going to happen. We are going into Fall in 3 short months in the northern hemisphere not exactly the time to be breaking ground on new houses and apartment buildings.

Interestingly, the end game is likely approaching for the corrupt global central bankers. Markets can only be goosed for so long with easy money. The wealthy privileged class, that is well-represented with media cheerleaders, that tout the capitalism system (which does not exist in America it is actually a crony capitalism financial system), will often quote Margaret Thatcher who said, "Socialism fails when you run out of other people's money." It is ironically funny that America's crony capitalism system is now on its last legs, and entering the last stage of failure, since it is 'running out of its own and other central banker's money'.

All financial systems and governments throughout history typically fail after the 200 to 250-year mark. This occurs because humans are corrupt and greedy animals. The other major problem is that transparency in government and with companies does not exist no matter how much it is touted and cheered by the criminal politicians and CEO's. The wealthy hide their nefarious endeavors easily. It is great to be rich and in control.

Former Federal Reserve Chairman Bernanke started this sick path forward for America, in support of crony capitalism which protects the wealthy privileged class, in March 2009. The central bankers have held the wolves at the door for the last decade and 4 months but how much longer can they hold out? Housing and autos are the two major components of the economy. Peak Auto has likely occurred and with the housing recession now starting, the future looks bleak. Overall economic recession will likely begin this year or early next which will kick off a class war in the United States.

If you are a young person, think long and hard about any long position you own in the stock market. You will likely lose money over the next year or two perhaps one-half or more of your capital. It is likely wiser to simply sit out of the stock market for the next year or so and see what happens. You will likely be a very happy camper down the road and then take that cash hoard and buy top-notch companies on the cheap, just like the smart investors did after the 1929 crash.Anyone holding lots of cash was king; everyone else lost their shirt.

The SPX prints an all-time high at 3017.80 on 7/15/19 and an all-time closing high at 3014.30 on 7/15/19. Last year's epic high before the crash was 2941. So after nearly 10 months, the S&P 500 has gained a whopping (said cynically) 77 points, or +2.6%. Understand that investing in the stock market now is akin to picking up nickels in front of a bulldozer. Sure, you may see a few more percent of upside, but is that worth the risk of seeing downside at -20% to -80% over the next couple years for your capital? You decide.

The Keybot the Quant algorithm, Keystone's proprietary trading model, incorporates the housing market indicator into its programming so the start of the housing recession is a serious black eye for markets going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Tuesday, February 12, 2019

The Keystone Speculator's Unemployment Rate Indicator Chart; Unemployment Rate Signals Potential Recession Ahead

(this article originally appeared on The Keystone Speculator blog on 2/1/19)

by K E Stone

While everyone is enjoying the 304K jobs report singing songs and drinking Fed wine, Keystone brings a wet blanket to the party. The unemployment rate rises to 4.0%. Granted, as people perceive that an economy is recovering, they will rush back into the labor market looking for a job, and then are counted again in the rate statistic, so the unemployment rate rises. In a strong economy, the rate will bump higher for a couple few months but then revert back to trending lower.

The rate should have already exhibited this behavior rather than this point in time. Perhaps the bump higher in jobs numbers are due to folks, downtrodden for many years, running back to the job market in November and December simply to work another job so they can buy some Christmas presents for the kids. "Ya want some fries wit dat burger?" This behavior would not be consistent with a strong economy and the rate may be rising because the rate should rise (a recession is coming faster than anyone realizes).

In 2010, Keystone's unemployment rate signal crosses below the proprietary signal line (green box). That forecasted a strong labor market ahead. Keystone was happy to announce this news but was met with jeers and rotten tomatoes. As usual. Back then, markets were on shaky ground with investors still wondering if the economy will recover. The negative sentiment and doom and gloom was high. As typically is the case, the job market improved at that point forward as Keystone forecasted. In fact, there has been 100 consecutive months of positive jobs numbers a record. There have been eight unemployment rate numbers that are sub 4% (3.7% to 3.9%) since May 2018.

However, the nine years of joy must end sometime. Keystone empties the punch bowl and tells everyone to go home, there is a troubled labor market beginning and problems in the jobs market with a higher unemployment rate will signal that the recession is coming faster than anyone realizes. The 4.0% unemployment rate moves above the signal line (red box). Give the data another couple or three months, say into April, before this dire outcome can be truly confirmed.

Remember, recessions occur when the economy and markets appear very strong. Watch the PMI data because if a recession is on the come, the PMI's will retreat suddenly and fall like a rock.

For you 20 to 30-year olds, make sure you read Keystone's article about recessions since you have never seen one. You are going to be punched in the face and likely will be laid off from your job in the months ahead. If you are a millennial in that age range or a Generation Z'er, read "Clueless Millennials Must Prepare Financially, Mentally and Emotionally for the Coming Recession; A PSA (Public Service announcemnt) for Millennials Explaining the Ugly Realities of Economic Recession."  This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

US 2-10 Yield Spread Versus Russell 3000 Index; Hook Pattern Forecasts Potential Recession

(this article originally appeared on The Keystone Speculator blog on 1/31/19)

by K E Stone

There is lots of talk about the potential yield curve inversion last year into this new year. The 2-3's and 2-5's have inverted but not the 2-10 which is shown in the chart above. The 2-10 spread did, however, get all the way down to 9 bips (0.09% difference between the 2-year and 10-year yields). Is that close enough for government work?

Television pundits are singing from the same hymn sheet saying that a recession will not occur until 2020 and many say 2021. On top of that, the Einstein's say the stock market will not sell off in any substantive way until a few months after the yield curve inversion occurs. As the above chart shows, they are correct in that a yield curve inversion occurs (the 2-10 spread crosses below zero as the 2-year yield moves above the 10-year yield) before a recession.

As a chart technician, patterns are important. One of the reasons traders prefer using technicals is that they see in a more visual and creative way than their analytical brothern that are better suited to study the minutia in the balance sheets (technical analysis versus fundamental analysis). What jumps out at you in the chart above is the red hook pattern.

It is correct to say that a yield curve inversion precedes a recession and stock market collapse, but you must decide if the red hook pattern is what better predicts a recession. The predictor of the recession is the action and pattern of the 2-10 spread where it bottoms and rises and not the idea that it must officially invert to zero. This concept makes sense since business conditions tighten in the rising rate environment starving off the economy.

The Federal Reserve and other global central bankers play a big role in this sick financial game. The Fed, ECB, BOJ and PBOC are starting the year with gun's blazing. China's central bank (People's Bank of China) cut the triple R's and Fed Chairman Powell is flapping his dovish wings. Former Fed Chair Yellen was Queen of the Doves that printed money and maintained ZIRP or near-zero interest rates to boost stocks and reward the wealthy class. Powell is now dubbed King of the Doves essentially taking rate hikes off the table going forward. The central bankers are one-trick ponies that only know how to print money and please their privileged-class masters.

As this message is typed, Treasury yields are; 2-year 2.49%, 5-year 2.47%, 10-year 2.666% and 10-year 3.02%. The 2-5 spread is inverted by -2 bips. The 2-10 spread is 18 basis points. The yield curve is steepening in relation to its flattening behavior down to 9 bips late last year.

Thus, do you believe the Wall Street line that a recession is at least a year or two away and a serious market downturn will not occur until months after that thus 2 to 3 years in the future? Are you drinking the Fed Kool-aid, ECB champagne, BOJ sake and PBOC rice wine, with a lampshade on your head, chasing the stock market rally buying stocks at the ask? Or, are you wondering if the red hook indicates that the recession is far closer than anyone expects and set to begin in a few weeks or a few short months? What camp are you sitting in?

The global central banker game continues as long as investors and traders have confidence in the easy money policies. Yesterday's big US stock market rally proves that traders still believe in the Fed and the dovish talk creates the upside joy. When confidence in the central bankers is lost, all is lost. Powell has performed a sharp turnaround in a short couple-months from hawk to dove. One would think confidence would be lost in such leadership. The Fed is steering the ship but they have no idea where they are going.

A short time ago, across the wires, the BOJ pledges to maintain its easy money policies going forward. Of course they do. The central bankers are sick. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Sunday, January 20, 2019

The Keystone Speculator's Inflation Deflation Indicator; America Remains Mired in Deflation; Inflation is Godot

(this article originally appeared on The Keystone Speculator blog on 12/31/18)

by K E Stone

On the last day, and trading day, of 2018, the Keystone Speculator Inflation-Deflation Indicator is way down to 1.65 signaling that the United States remains mired in deflation. We live in special times. The ongoing deflationary quagmire (America has been in deflation for 8 of the last 10 years) since the financial crisis should correspond to depressed and falling stock market prices but this has not occurred until the crash in equities in Q4 2018.

As 2019 begins, stocks are now falling for three consecutive months; October, November, December. This December is the worst monthly performance for the US stock market since 1931. This year is the poorest stock market performance in a decade.

The power of the Federal Reserve and other global central bankers (ECB, BOJ, BOE, PBOC, etc...) and their Keynesian money-printing is astounding. The central banker printing presses have created a one-decade long stock market rally (March 2009 to present), the second longest in history, rewarding the wealthy that own large stock portfolios. Common folks, however, have not benefited from the central banker largess. The middle class, now a lower middle class, and the disadvantaged and poor are p*ssed on by trickle-down economics. One-half of Americans do not own one single share of stock.

There is an ongoing battle between goods inflation/deflation and services inflation/deflation. Generally, the goods and services should track in relatively the same direction but something special has been occurring the last few years. The central bankers have destroyed all price discovery in markets due to their Keynesian intervention. Global markets are twisted into knots; no one truly knows the correct price for anything anymore.

The chart above is weighted for the goods-oriented inflation/deflation since the CRB commodities index is used in the numerator of the ratio. The internet, technology and computers are huge deflationary machines eliminating jobs and continuing to lower prices. Electronics and products such as smartphones turn into commodities and are cheaper each passing year. Corn and wheat crops are at bumper yields. The world is awash in oil maintaining a lid on fuel prices.

On the services side, however, prices are flat after maintaining buoyancy the last couple years. Recently, services prices may be showing signs of rolling over. Those of you paying college tuition bills see prices rise each year. Heath insurance (ACA; Obamacare) and medical costs are out of control. Prescription drugs are expensive; many Americans over 50 years old take a palm-full of pills each day. Utility bills consistently sneak higher. Haircuts cost more each year. Home prices continue rising creating the inflationary vibe. These services prices that create that slight inflationary vibe are likely moderating going forward.

Another reason that market participants may think they see inflation is that the well-paid talking heads on television tout the higher services costs all the time. The reason the pundits tout inflation is because they are the ones living in the expensive homes, taking the prescriptions drugs daily, paying the high costs of insurances and saving money to pay high tuition costs for their children. Most market participants are making money and doing well in their careers so they are predisposed to believe inflation is occurring because of the costs they see in their higher-class daily lives. However, they must realize they are fortunate enjoying a higher standard of living than most other common folks across the United States.

The lower middle class, disadvantaged and poor folks instead see deflation. Generalizing, common folks of modest means live in run-down houses or apartments, many do not have health or other insurances and they have no hope in seeing their children go to college. They do not see the services inflation that the upper middle class and wealthy tout.

The services components in inflation create the vibe that inflation exists in the economy when in reality it does not. The expectation is that the US and the world will enter a recession at some point forward and the slight services inflation would be expected to roll over to the downside to join the goods deflation sitting in the basement. When the recession hits, people lose jobs, they do not spend money, prices drop. Customers begin delaying services that they routinely used before the recession. Once you lose your job, your whole life will change. Subscription services will be cancelled as people lose jobs in the coming recession.

Inflation proponents need the chart above to start ramping higher to prove their thesis correct, however, that appears a tough row to hoe. It is less likely that goods inflation will all of a sudden begin moving strongly higher to join services rather than services dropping lower to join goods, especially with a recession on the come.

The US may remain mired in deflation for a couple more years but sure as night follows day and day night, inflation will arrive again. The last time that a notable whiff of inflation existed was back in early 2011 now six years in the rear view mirror. You will know inflation when it arrives since every day all day long, coworkers, family members and strangers will complain to each other about prices of everything including milk, gasoline, food, services, utility bills, etc....; this is not happening right now.

After the chart moves higher in the months and years ahead, the velocity of money will kick in and the money sitting idle at banks will be put to work. A multiplier effect will accelerate business activity and inflation will leap higher and then the country will likely shoot up into hyperinflation say in the 2020-2025 time frame. That will be a different problem and a future troubled bridge to cross. For now, deflation remains in charge.

Keystone’s Inflation-Deflation Indicator chart shows the markets and economy remaining mired in deflation. The majority consensus on Wall Street continue to tout inflationary forces ahead. After all, the Fed did hike rates in 2018. Money managers cheer inflation since they all are heavily invested in the banks hoping for higher rates and a steeper yield curve. The Federal Reserve has called the current lack of inflation "transitory" although humorously, the so-called transitory disinflation/deflation is now running strong for months and years. Bernanke and Yellen each said deflation is transitory (comically, however, they would never say how long 'transitory' is).

Inflation is Godot. Inflation has been pictured on a milk carton for the last few years (missing). Deflation rules the roost. The chart shows that more up in yields, and higher commodity prices, are needed for the indicator to move higher towards inflation and neither are cooperating.

Keystone's Inflation-Deflation Indicator remains in DEFLATION at 1.65 the lowest since both the 2015 low and the low during the 2008-2009 financial crisis. The Keystone Speculator Inflation-Deflation Indicator remains mired in the deflation region and the low number is actually extremely problematic and worrisome.

The 10-year Treasury note price is used for the denominator (bottom number) of The Keystone Speculator Inflation-Deflation Indicator. The 10-year Treasury price is 103.50 (103 16/32) with a yield at 2.72%. Commodities are in the numerator (top number). The CRB Commodity Index is 170.97. Calculating Keystone's ratio;

The Keystone Speculator Inflation Deflation Indicator

CRB/10-Year Price = 170.97/103.50 = 1.65

Over 4.40 = Hyperinflation
Between 3.60 and 4.40 = Inflation
Between 3.00 and 3.60 = Neutral; Inflationists and Deflationists Battle
Between 2.9 and 3.00 = Disinflation
Under 2.90 = Deflation

Despite all the hoopla and trumpets blaring that inflation has arrived, the economy and markets instead remain mired deep in deflation. As the above discussion highlights, commodities and goods are in serious deflation while the services components may now be rolling over into deflation. When the recession hits, housing prices will fall. Services (fees and costs charged to the consumer) will likely trend lower with deflationary behavior to attract a decreasing number of interested users and buyers.

The main reason for the lack of inflation and ongoing persistent deflation is the lack of wage growth. Inflation cannot exist without wage inflation (watch the Friday Monthly Jobs Report to see if any wage inflation occurs) and wage inflation is not occurring. Wage inflation is growing annually at about +3% a paltry amount. When is the last time you had a substantive raise?

The Federal Reserve needs to see the annual wage growth at +4.0% to +4.5% to be comfortable knowing that inflation has taken hold and will be sustainable going forward but this is a dirty little secret they will not discuss in publicPowell performed cartwheels of joy in the hallway of the Eccles Building when wages cracked the +3% annual level but in his heart of hearts he knows wages must inflate far higher to sustain ongoing overall inflation. If the 3%-handle reverts back to a 2%-handle, Powell will be crying in his cafe latte.

The United States remains in a deflationary funk since August 2014 a solid 4-1/2 years. Think back to the summer of 2008 if you want to relive the feeling of rising inflation. Rising prices were a common daily complaint at office water coolers, supermarkets and dentist offices back in 2008; not now. When inflation occurs, you will feel it and you will hear about it from family, friends and coworkers. You will be complaining about the huge cost increases for everything. This vibe is not occurring. There is no inflation currently; only deflation. Inflation is Godot.

There is a whiff of services inflation occurring as mentioned at the top of this article. The bulk of this is due to rising medical insurance (Affordable Care Act; ACA; Obamacare) and prescription costs, increasing college tuition and rising accounting, attorney and professional service fees. Home prices have also been inflationary but have been peaking and topping off lately perhaps ready to subside. Lower house prices would dampen inflation expectations and serve to keep the chart in the disinflation and deflation camp.

The world is awash in oil but the OPEC and non-OPEC nations succeeded in colluding to limit production to artificially drive prices higher in 2017 into early 2018. That was fine for a while but in late 2018 oil prices crash -40%. The move up in oil provided a tiny whiff of inflation forces in late 2017 and early 2018, but the drastic -40% crash in oil from September 2018 to present pushes Keystone's ratio down to 1.65 proving that America is mired in deflation; perhaps only a hair from a tragic deflationary spiral that sunk the United States after the 1929 crash and during the 1930's Great Depression.

All that oil sloshing around is oversupply and deflationary.  Commodities remain very subdued in price. A large increase in commodity buying and shipping is needed to prove that inflation is on the rise and that is not occurring. The BDI (Baltic Dry Index) remains subdued.

The retail bankruptcies and store closures increase. The US is grossly overstored by a factor of 3 to 1 compared to other Western nations. The retail carnage is disinflationary since racks of clothes and other products will be sold pennies on the dollar to liquidate inventories. A recession would exacerbate this activity. Sears and Kmart stores are closing; inventories are being liquidated.

There is no demand in this sick stagnant economy that is only pumped-up by fits and starts of central banker monetary policy and/or government fiscal stimulus. Deflation is identified by consumer behavior that wants to wait for the future to buy something since they believe the item will be cheaper. Of course companies cannot maintain staff waiting for your cheap butt to buy something, so they have to lay off more workers which further exacerbates the recession and deflationary scenario. Prices drop lower and customers are only encouraged to keep waiting before buying anything since they now expect prices to drop even lower. This, folks, is a tragic deflationary spiral. It be very, very bad. Great Depression bad.

recession is long overdue. recession will usher in deflationary behavior and is likely coming far faster than anyone realizes. Treasury yields will fall as investors seek safety in notes and bonds (price up yields down). This will surprise the consensus on wall Street that is guaranteeing higher Treasury yields going forward. Keystone’s indicator will then drop as the price in the denominator moves higher although the indicator probably does not have much further to drop. Likewise, demand for commodities decreases in a recession so the CRB index drops and a lower numerator in the indicator will send the ratio number lower as well; a 170-handle on the CRB is an extremely low and deflationary number already.

The structural unemployment problem remains in the U.S. and the current stagnant wage growth (wage deflation) reinforces an ongoing deflationary and disinflationary theme. Technology, computers and the Internet are huge deflationary machines. Robots continue to replace human's on the job.

The GOOGL, TSLA and other major automaker's driverless vehicle technology already has trucks operating on the road in California and other states and auto manufacturers are pouring billions into this technology that will eliminate more jobs over time. Driverless vehicles will greatly impact the trucking industry. Trucks could transport goods without the need for drivers allowing companies to drop-kick more workers across the parking lot (in actuality, there is a truck driver shortage so companies will simply be relieved that can meet their shipping demands using driverless trucks). The pattern of 'more tech--less human's' will continue. Fast-food restaurants, such as Mickey D's, are introducing kiosks that eliminate more jobs. Automation and technology is deflation.

The structural unemployment problem will continue in the US for years and perhaps decades forward. The unemployed and underemployed create a burden on the economy over time. The wealthy on Wall Street, in bed with the Fed, make themselves filthy rich by taking advantage of the 2008-2009 crash (easy money pumps the stock market higher) while the middle class and poor (that do not own stocks) are thrown under the bus over the last decade. The Fed members perform the bidding of the investment banks since they are rewarded with lucrative speaking gigs after they leave public office; a quid pro quo for their loyalty in maintaining easy-money conditions that send stock prices higher and benefit the elite class.

It is disgusting watching the privileged wealthy class take advantage of the rigged crony capitalism system raping America for all its worth starting with sending middle class jobs overseas in the 1970's and 1980's. The greedy politicians and corporate executives kept eliminating middle class jobs in favor of slave labor overseas. The lower expenses drive up stock prices making all of them filthy rich over the last few decades. The wealthy class, about 20 million strong, spit on the other 300 million Americans over the last five decades. The best part is that the elite class makes millions off the rigged system they control then they turn around and complain to America that they pay the bulk of the taxes. You have to love the pseudo free market crony capitalism system. Capitalism does not exist because transparency does not exist.

Companies are meeting EPS (earnings-per-share) by laying off workers and squeezing more production out of existing workers (as evidenced by flat to lower top line revenues for companies across all sectors for the last couple years). Instead of creating jobs and buying equipment with the central banker easy money, companies use the dough for stock repurchase programs (buybacks) that artificially pump stock prices higher. Yes, they are greedy b*stards only concerned about increasing their own wealth.

Watch Keystone's formula above; you can crunch the numbers to check the indicator every few weeks. It was shocking to see equity markets print new record highs against a disinflationary and deflationary back drop but now markets are starting to make more sense. The current market behavior is unprecedented; perhaps a 1930's redux.

The amazing power of the central banker money-printing is God-like. The central bankers are the market. They are modern day money Gods in charge of the Temple. Kneel before their Power and Majesty. The Fed may back off on further rate hikes (dovish) and the PBOC (China's central bank) keeps stepping up its plans to provide stimulus in Q1 to goose China's economy and markets (which will also boost the global markets). The central bankers are the market. The are sick, one-trick ponies. They will print money until the whole system collapses.

The Brexit stock market crash in late June 2016 was stopped by the BOE promising easy money. The PBOC keeps pumping China’s economy and markets. The Fed has remained accommodative with low rates despite the tiny rate hike path over the last couple years. The BOJ keeps implementing stimulus programs. The ECB is supposed to end its QE program today and perhaps raise rates starting summer 2019. Pause for laughter.

The central bankers create the all-time record highs in the global stock markets. The world is awash in central banker liquidity and all that money sloshing around has to go somewhere so it pumps-up all asset classes. The wealthy dance with glee as stock, bond, art, vineyard, real estate, collectibles and classic car prices leap higher on easy money. The wealthy light expensive cigars and dab the ashes onto the faces of the once-middle-class. America is in a new Gilded Age a la the 1920's. The divide between rich and poor is the widest in 50 years. nasty, and likely violent, class war is likely on tap for America in the months and year or two ahead likely triggered by the recession.

Inflation is not in sight currently. The inflation-deflation indicator moving a touch above 3.00 in early 2014 was due to rising food and beef costs. Corn and wheat prices have plummeted back to earth. Crops are producing yields at record highs so prices remain subdued. The cheaper grain prices will bring down the cost of beef especially as herds increase after the culling due to drought four years ago.

Stagnant wages in America will prevent inflation from occurring. When wages rise, that will tell you inflation is coming fast and Treasury yields will then rise strongly. As long as wages remain flat or lower, inflation will not exist. Focus on the wage data in the monthly jobs reports.

Think back to the last period of rampant sustainable inflation in 2006-2008; you were likely enjoying happy raises at work each year, right? And probably not so much from 2009 to present? Correct? In fact, it feels like you are working for the same amount of money for the last 10 years.

All this windbag mumbo-jumbo aside, what does the above say in a nutshell? The current answer to the ongoing inflation-deflation debate is DEFLATION as much as everyone tries to ignore it and say that inflation is here to stay. After a decade of obscene Fed and other central banker money-printing, the United States economy remains mired in deflation proving that Bernanke's grand Keynesian experiment, blessed and implemented by Fed Chair Greenspan, and then pursued by former Fed Chair Yellen, and now further implemented by Chairman Powell, as well as dovish Fed members such as Evans, may be tragically failing.

It is prudent to prepare yourself and your family by raising as much personal cash as possible and paying off debt. Avoid taking on new debt. Cash is king in deflation. Show respect to holding cash.

Many analysts argue against the overall ongoing global deflation hypothesis saying the view on services inflation versus goods inflation must be explored in more detail. Granted, services are experiencing some inflationary effects while goods are in a strong deflationary trend. The very minor whiff of services inflation will likely roll over lower as the US slips into recession in the months ahead.

All of you inflation enthusiasts do not fear, however, inflation will arrive soon perhaps in the 2020 time frame and then hyperinflation in 2021 and beyond. That will be a whole new set of problems, that is if we survive this ongoing bout with deflationPray that it does not develop into a deflationary spiral a la the Great Depression.If we manage to avoid the deflationary spiral, in a couple years rampant inflation will develop as the velocity of money ramps higher. This will then lead to out-of-control inflation, hyperinflation, in the 2020's decade. There is nothing but minefields ahead of us.

In a nutshell, the United States remains currently mired in DEFLATION as it has been 8 of the last 10 years since the 2008-2009 financial crisis. Inflation is Godot.

Thursday, January 3, 2019

December Publication of Daily Chronology of Global Markets and World Economics 2018-12 Available from Amazon

The December publication of the Daily Chronology of Global Markets and World Economics 2018-12 is available from Amazon. The October stock market crash is explained in real-time as it occurs in the 2018-10 publication. The November 2018-11 publication chronicles the sideways choppiness in markets after the initial October collapse. The Daily Chronology of Global Markets and World Economics 2018-12 explains the big stock market selloff and down leg in December 2018.

'Tis the Season

Do not forget the disadvantaged as the cold winter winds howl each day. Now is a great time to go through your closets and get rid of those old winter coats that you never wear anymore as well as hats, scarfs and gloves. Donate them to the local thrift store in your area; preferably the stores ran by volunteers since they are more focused on helping the needy directly in the nearby communities rather than the bigger commercialized thrift stores that are busy shoving money in their pockets. Disadvantaged kids will appreciate a new coat that they can buy for a dollar or two that will keep them warm at the bus stop.

While you are at it, clean out the pantry and get rid of all those cans of vegetables and fruit that you never plan on eating. Throw in a few cans of things you like as well since you can go buy more for yourself. Drop that bag off at the local food bank. The poor, disadvantaged and lower middle class will appreciate it. Typically, you should be able to drop off the winter coats, clothes and canned goods all at the local thrift store in your area, if not, the blue-haired gal's there will be glad to provide you with information.

At the local thrift store, all the folks volunteer their time. We have long tables that stretch about 33 feet (10 m) where bread, buns, muffins and baby food from the food bank are stacked 3 feet (1 m) high free to those in need. Within two days, it is all gone and we have to restock. There are many hard-working families, that are poor and disadvantaged, that appreciate the help.

Happy New Year to all and Good Luck in 2019.

Flash Crashes, Fat Fingers and Computer Glitches, Oh My! 3rd Edition Available from Amazon

The annual Flash Crashes, Fat Fingers and Computer Glitches, Oh My! 3rd Edition publication is available from Amazon. The book highlights the flash crashes and flash spikes starting with the infamous May 6 flash crash in 2010 up through the end of 2018. The publication chronicles the collapse in bitcoin and other cryptocurrencies. Interestingly, the dollar/yen flash crashes from a 108 to 105 handle.

The global exchanges continue sweeping the flash crash and flash spike events under the rug but the bump in the carpet is growing quite large.

Simply click the link in the margin or search on Google or Amazon for the 2018, 3rd edition release, of Flash Crashes, Fat Fingers and Computer Glitches, Oh My!