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Strategies & Market Trends : US Inflation and What To Do About It -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (1293)	1/3/2020 12:54:20 PM
From: RetiredNow	Respond to of 1504

I agree with you that Powell is acting according to what Trump wants, which is lower for longer and QE4 "not QE". No question about it. The facts speak for themselves. The reason why my rantings against the Fed are important is that we need to think about the long term impact of Fed largess. It is absolutely ruinous to the long term future of this country's economy and to our currency's reserve status. Low interest rates and money printing, as well as debt monetization all do one simple thing: bring demand forward into the present. That means that future demand will be lower and future growth will be lower. That makes us feel great today, but that's at the expense of the future. In addition, easy monetary policy for 10 years means we have thousands of walking dead zombie companies that should have already shuttered due to going concern issues, but instead they are able to get loans, load up on debt, and continue to operate as banks and private lenders, as well as private equity and junk bond markets give them good money after bad. That means massive misallocation of capital from productive uses to non-productive ones that return less on invested capital. That will also serve to lower future growth rates. In addition, all the excess capacity that has been forced on markets through easy money means persistent deflation in some areas of the economy, but then massive inflation in other areas like health care and college costs, due to massive government interventions in those areas. The long and the short of macro policies means stocks and bonds are massively overvalued. Stocks now have asymmetrical risk reward profiles, with risk dominating and reward guaranteed to be minimal. Bonds are also massively risky with 1/3 to 1/2 of Investment Grade bonds now estimated to actually be at junk parameters and in need of rerating. When either the markets or the agencies rerate that debt to junk, yields will spike and principal investments will lose a lot of value. So both stocks and bonds are risky places to be. So gold again becomes an important vehicle to safeguard assets. In times like these, again I say, it's important not to lose money as a priority over making money.

To: Rarebird who wrote (1293)	1/3/2020 12:59:36 PM
From: RetiredNow	Read Replies (1) \| Respond to of 1504

Peter Schiff: The 20s Will Be An Explosive Decade For Gold Via SchiffGold.com, In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold. You know, the reason the US stock market went up this year is because the Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.” Peter emphasized that gold should have been up a lot more in 2019, but he thinks it will catch up over the next several years — probably next year in particular. Gold is going to be one of the best-performing assets classes, if not the best-performing asset class on the planet.” Peter noted that gold made significant gains in 2019 despite a dollar that was relatively flat. But the dollar is going to fall through the floor. That means gold prices are going to go through the roof.” Peter said we are about to enter a new decade of stagflation – low economic growth and increasing inflation. He said it’s going to be even worse than the stagflation we saw in the 1970s. This is going to be more like an inflationary depression. So, this century, the depression is going to come a decade early. It’s not going to be the roaring 20s. It’s going to be a decade of inflationary depression in the United States.” As far as the trade deal goes, Peter said gold will go up no matter what the trade war sideshow yields. Regardless, the dollar is going to go down. That’s bullish not only for gold, but for commodities in general, including oil and agricultural products. Peter emphasized that the Federal Reserve is going to ultimately take rates back to zero and increase the pace of quantitative easing. He pointed out that the unofficial QE the Fed launched last fall is already growing the Fed’s balance sheet faster than the official QE in the wake of the 2008 crash. But all of this is going to shift into a much higher gear as this new decade plays out.” As we move into 2020, Peter said economic growth will likely be slow and inflation will be higher than people believe. The Fed’s not going to do anything about it. So, we’re going to have higher inflation. We’re going to have slower growth. I think we could see a push up in long-term interest rates as the dollar really starts to weaken. And that destroys the appetite for US dollar-denominated debt. So, if you have higher consumer prices and higher interest rates, that’s a negative for the economy. But it’s a positive for gold, because the Fed is going to try to rescue the economy by printing even more money, and all that’s going to do is stoke the inflationary fire. So, I think we’re going to see a big up move, not just in 2020, but probably for the remainder of this decade. You’re going to see the type of move we had in the first decade of this century. Remember, gold did really well from 2001 to 2010 timeframe. So, in the teens, gold really treaded water. This is going to be the next leg up and I think this is going to be an even more explosive decade for gold than the first decade of this century.”

To: Rarebird who wrote (1293)	1/27/2020 10:29:22 AM
From: RetiredNow	Read Replies (1) \| Respond to of 1504

Well, here we go. We never really know what will trigger a correction, but only can tell objectively when things are ridiculously over-valued, and then make the call that the downside risks exceed the upside benefits to being invested by long odds. There is no way anyone could have predicted that the coronavirus would be the trigger for a correction, but it does look like this could be the big one. I just don't see how they get this under control in the short term. I think we're still going to be reading about the acceleration and spread of the virus through this summer. The earliest they can get a vaccine is April with many more months of human trials after that. Maybe they have a treatment by end of this year, if we are lucky. By then, the damage will be huge in lost lives and a global trade slowdown. Stocks will continue to get hammered in this scenario. The gold and silver I have accumulated over the last several weeks through CEF is already up 6% YTD. I wanted to get that position up to a 5% portfolio position over time, but I only managed to get it to 1% before the virus hit. My bonds are on fire, though. Even the cash in my money market accounts has been doing well since the Fed engaged in repo QE. Glad I'm not in stocks. It's the season of the reaper. ---------- China Closes Foxconn, Johnson & Johnson, And Samsung Factories Amid Virus Outbreak As the numbers of infected and dead soar exponentially, China has been forced to lock down cities and shutdown factories for the next several weeks. The outbreak of the coronavirus will likely damage first-quarter economic figures for the country, reported the Financial Times. As of Monday, China's coronavirus outbreak has so far infected about 3,000 people, where the death toll has climbed to 80 - giving the virus a roughly 5% mortality rate. China has ordered several manufacturing hubs and other centers of the industry to remain closed for the next one to two weeks. One of those manufacturing hubs is Suzhou, a city west of Shanghai has told millions of workers not to return for at least one week. The industrial region is home to the world's largest factories, including iPhone contractor Foxconn, Johnson & Johnson, and Samsung Electronics. The virus outbreak is occurring as an industrial slowdown has sparked one of the slowest growth rates in nearly three decades. This will be a significant challenge for President Xi Jinping amid fears of a hard landing. Julian Evans-Pritchard, a senior China economist at Capital Economics, has suggested that "coronavirus makes a pronounced slowdown even more likely and if the disease is not brought under control quickly, then even our downbeat forecasts may turn out to be too high." Michael Pettis, a finance professor at Peking University and senior fellow at Carnegie-Tsinghua Center, said the economic impact depends on how coronavirus spreads throughout China. Pettis said consumption is now under pressure as "people are not going out to restaurants and bars." A much larger problem in China is the shutdown of major parts of its economy, and those impacts will soon be felt globally. China is the growth engine for many economies of the world -- this is a shock that could tilt the world into a prolonged slowdown. We noted last week that the World Economic Forum (WEF) President Borge Brende warned that the world is "faced with a synchronized slowdown in the global economy. And we're also faced with a situation where the ammunition that we have to fight a potential global recession is more limited." Brende suggested the global economy could be entering a period of vulnerability where external shocks could trigger a global recession. The shutdown of major industrial hubs in China and collapsing consumption by Chinese consumers could certainly be a shock that will shortly impact the global economy. Bloomberg macro strategist Mark Cudmore suggests the outbreak in China could be a 'black swan' event exposing the fragilities, and vulnerability, of financial markets that long ago de-tethered from any fundamental underpinning. Most epidemics were a buying opportunity for bulls... But given the level of excess-liquidity and extreme over-valuation today, this time could indeed be different.