an e-mail conversation
player 1: correct
Marc Faber had said this in an interview sometime back
"that if Mr Bernanke prints money, it is entirely conceivable that the Dow Jones goes to 33,000 or 40,000 or 100,000 or 1 million. All I am saying is if the Dow Jones here goes up three times because of money printing by Mr Bernanke and we have examples in financial history where a central bank printed money and everything went up, but in this instance I think that gold would significantly outperform the Dow Jones. So if someone says to me the Dow will go to 33,000, I say yes, it's possible but it will decline against the price of gold which will go up to $US5,000, $US6,000 an ounce. "
(Marc pls correct me if I am wrong here )
and if you notice the chatter/momentum is very similar to that in Nov-Dec2007 when every morning irrespective of any news, mkts will open higher and quickly race up 2% plus, HangSeng & Sensex being prime examples of such behaviour....same is happening this past few weeks...
jay: as far as i am concerned ... well, no, not concerned ... decided, the inflation trade is on, on for a while, and if not yet full on, must be engaged with, with the detail only being "what will inflate fastest relative to fiat money inflation, and never mind anything to do with the velocity of money"
in the movies, when one hears a bump in the darkness, it is best for the astute to move differently than the crowd, either hang back, go side ways, but in any case, not going towards the apparent proximity of the whatever that made the bump sound
bill: My sources are indicating the brakes are being applied on bank lending in China.If true,fasten your belts because down we go!!!I reckon the inflation trade is already in extra innings Jay.
jay: hello bill, i am looking past the valley of doom, and anticipating the next round of inflation, the truer and more sincere round, to get underway as soon as the peasants reach for sickles and workers grab for hammers, and the "internationale" hits the top of the top 40 music chart;
am guessing that the truer and more sincere round of inflation yet to be will trap most in their deflation plays, and so am just panicking but panicking first.
but, you are right, suspect the ordinary inflation hedges may in truth do poorly, be they usa commercial real estate or taikoo shing residential abode;
otoh, doubt the usual deflation hedges will fare better, be they corporate or sovereign bonds or non-gold cash.
what can i do, but to fear just about anything that is for easy buy and to suspect all that is for hard sell?
bill: Jay- Here's my roadmap:
1-Deflation,A. Gary Shilling style,which creates further wealth destruction and forces even more intense money-printing next 1-2 years
2-Stagflation as real economy reverts to anemic real growth rates but stimulus isn't withdrawn in years 3-5
3-Hyperinflation,as cumulative effect of stimulus is exacerbated by a return of inflation expectations as in 70s.
This is our future IMHO.
jay: you, bill, must stop the sexy bear porn talk
and i, jay, must remain enthusiastic for galaxy-wide triple waterfall asset repricing and universal zero-state monetary reset
i think the road map as proposed has much merit, repeating patterns of increasingly volatile and fractally undulating Japan, Argentina, Zimbabwe
until natural rythmic frenquency for final and definitive collapse reached
i am now fully charged with tranche strength dose of optimism for the once-in-5-generations.
play #2: The China Bubble.
Andy Xie is quite bearish.
SNIP:
Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued. The odds are that both will adjust in the fourth quarter. However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future. The bursting will happen when the US dollar becomes strong again. The catalyst could be serious inflation that forces the Fed to raise interest rate.
Chinese asset markets have become a giant Ponzi scheme. The prices are supported by appreciation expectation. As more people and liquidity are sucked in, the resulting surging prices validate the expectation, which prompts more people to join the party. This sort of bubble ends when there isn’t enough liquidity to feed the beast.
my1510.cn
jay: china reported gdp growth for 2010-2011 will be 8%, in the bag, just as 2008-2009 is well at hand, tallying up
the force is strong
false liquidity is backed by real savings
continental momentum is enhanced by genuine systemic change, so powerful
where else can such vector traject, after having just bottomed deep from a 600 years long fall?
1.3 billion people, united under more rather than one flag, believing in one money god, speaking one language of commerce, failing to pump a market to amazing highs?! not likely.
we must give credit where credit is due, to the folks that brought the world printing press, ink, paper, and fiat printed paper money trusted by insiders in enough helpless numbers, however they may be genetically clued in to the cyclical truth.
figure on ultimate high of combined shanghai + hong kong + taipei exchanges trades 10x total mkt cap that of summation of dynamic usa, dying japan, and tacking on comfortable europe. |
