In This Issue
Wolf Wave and the Future
Mega Trend and Micro Stock Market
Analysis by Peter Eliades
Introduction
The unfolding economic
scenery can only be described as one thing: TUMULTUOUS leading to HUGE
OPPORTUNITIES. Inflation in
anything which is solid and deflation in everything that is paper, so
monetary policy can only address one or the other and fiscal reform
(reduction of regulatory, or tax, print and spend policies) is never
considered. Volatility is set to
expand from today’s levels and “Volatility is Opportunity”. As outlined in the 2008 Outlook (See Tedbits
archives at www.TraderView.com), the Wolf is afoot in the G7 and the
consequences to every investable sector will be
PROFOUND!
At
no time in the history of this newsletter (established in July 2004) have I
witnessed what I believe to be the level of unfolding market turmoil and
opportunities that are directly in our path. Hurricane-force winds and investment
opportunities are pushing markets in conflicting directions. Fight inflation in everything but
paper or fight deflation in bank balance sheets and the financial system; you
can’t do both at the same time.
The financial and banking systems face an” inflate or die”
imperative so this
is what can be expected.
So…
Set your
investing sails properly and the opportunities are limitless; failing to do
so will result in extreme PAIN.
Do your homework and hopefully you will be rewarded for it. The bills that are about to be
delivered to the public from years of POOR policy decisions by public
servants and central bankers are arriving on a daily basis. These bills are overdue. For thirty years public servants have
created, as well as legislated, the belief that you can have “something
for nothing”. In
nature you cannot consume more than you produce as to do so will result in
your ultimate demise. The
“something for nothing” belief is now fully inculcated
throughout the G7 and is a core belief of those in charge and
those that elect them.
Well, as any Econ 101
student used to be able to tell you TANNSTAAFL -- there ain’t
no such thing as a free lunch -- and now the bills
are due. Those lessons are no
longer taught in the politically-correct economic or general classrooms of
today. Unfortunately for the US
and throughout the G7, the public has been taught that they can believe in
the tooth fairy, something for nothing, the ability of government to solve
problems by writing a law and changing the laws of nature. In battles between nature and man you
can only count on one thing: Prepare for a massive dose of REALITY as
Mother Nature is set to BITE!
Wolf Wave and the Future
Income is collapsing, as is
the sentiment of business and consumers throughout the G7. Inflation is in the
PIPELINE and the policies necessary to address it are not being considered so
it is set to skyrocket, signaling a coming wave
of panicked policy responses by poorly prepared public servants who are being
counseled by economically-illiterate
IGNORAMUSES. What passes for
wisdom and economic experience is actually politically correct GARBAGE and
recipes for disaster. The
solutions to these problems take YEARS to implement and become effective. I shudder every time I hear a leading WALL STREET
or GOVERNMENT economist or public servant appear on CNBS.
For over 35 years now the
printing press, aka fiat currency and credit
creation, have substituted for fiscal policies of growth. Nothing is going to change now. The policies of capitalism and wealth
creation passed away with Ronald Reagan and the retirement of Margaret
Thatcher. Why is this so important? It is because TRUE capitalism is the
definition of disinflation.
Capitalism works to reduce inflation, and its underlying result is
wealth creation and “more goods and services for less money. This creates SAVINGS and new, hardier
competitors/providers replace inefficient established businesses. It is
survival of the fittest as defined by Charles Darwin in describing NATURE and
EVOLUTION.
In their place, asset-based
economies have been increasingly substituted for the industrialization which
had created the bedrock of wealth creation in the G7. To call the G7 “industrialized
economies” is just one more example of headlines substituting for
reality. The G7 has
de-industrialized for almost 50 years, industry has now moved to better
climates in the emerging world.
Societies which have no savings and do not invest in their futures are
like farmers who do not save seeds to plant from previous harvests and now
have no harvest. The G7 has
planted virtually no seeds for over 35 years and squashed new growth under
the heels of public servants and their entrenched elite and corporate
constituents.
Corporate incomes are
collapsing and cost push inflation threatens margins in the near future. Year over year inflation in the
Producer Price Index is over 6.9% and RISING. Take a look at this
chart of inflation in costs versus finished goods from Bill King of the King
report at www.ramkingsec.com :
Thank you Bill, I urge you
all to subscribe to his excellent report.
Wow, that is a choking
picture of today and the future.
Corporations must either pass these higher costs through to consumers
or their profits will crumble, so you can expect more of it. Of course when they do so, it will be
an act of ECONOMIC survival, but those popular public servants will point to
the greedy, evil corporations and the rich for this dastardly turn of events
caused by their own fiscal and monetary POLICY decisions.
The G7 financial and
banking systems are basically insolvent and in the process of passing form
weak hands to stronger ones.
Super regional banks Wachovia and Washington Mutual shareholders
suffered the blows of allowing poor management lead these institutions. Basically, Washington Mutual has NEW
owners going forward and Wachovia shareholders have a bigger group of NEW
partners; all following on the heels of Bear Stearns. Who’s next? The garbage that is the balance sheets
of the G7’s financial institutions continues to vaporize and is unsellable.
Why else would Washington Mutual and Citigroup pay junk bond rates of
12 to 14% return to new investors if they were INVESTMENT grade? That money did not
disappear and the fiat currency creation necessary to replace it in the
financial and banking system is rapidly increasing. Inflation run riot!
Now we know why PIMCO’s Bill Gross has supported the government
buying of mortgage securities as it is being reported that his holdings of
mortgage securities has DOUBLED since last year and now is equal to over 50%
of some of the bond portfolios he manages. Doing a TRY TO CATCH A FALLING KNIFE
trade will put the fear of god into you.
Being the biggest bond manager in the world can sometimes trick you
into believing you are GOD. What
a blow up that could turn out to be, believe me he has the ear of the
Government Plunge Protection Team and this can never be allowed to happen as
it would turn Bear Stearns into a footnote.
In this week’s Barons,
Alan Abelson outlines that over $4 trillion dollars
of OPTION Arms (adjustable rate mortgages) are sitting on the balance sheets
of small and regional banks.
Option ARM’s are also known as
EXPLODING arms and they are going to go off like firecrackers in the hands
and BALANCE SHEETS of LENDERS and BORROWERS, further requiring lots of new
FIAT CURRECY and CREDIT CREATION to rescue them and their depositors. Reconstructed M3, the broadest measure
of money and credit creation, is clocking in at over 17% growth; using the
rule of 72, the United
States is doubling the money in
circulation every 4.23 YEARS just as a banana republic would do, and it is
set to INCREASE. Does anybody
suspect this may be inflationary?
Biofuels are causing
FOOD shortages and riots throughout the world and consequently RUNAWAY food
inflation. G7 Public Servants
have no intention of rescinding the subsidies and mandates for these
abominations of the public servant’s energy solutions and their
environmental terrorist supporters.
Shortages of wheat are easing slightly but corn, rice and soybeans are
another story.
Notice any
similarity’s in these two charts?
Farmers input prices from seed costs to fertilizer are robbing them of
the incentive to expand acreage, and acreage set-aside programs are
preventing enough of any crop to be grown. Water tables are being destroyed
across the globe as processing of biofuels consumes
unbelievable amounts of water.
All sorts of other grain and foodstuff shortages loom in the future
along with meats as well. Human food and water are sacrificed for
political benefits which create misery for us all. How about cotton or feed stocks? Rotating shortages loom for all! Like a game of musical chairs, when
the music stops after planting season, one crop or another doesn’t have
the acres needed to meet the world's needs. Do you think Public servants in
the United States and Brussels might
reconsider this SOLUTION to oil dependence and GLOBAL warming? Absolutely NOT, mainly because their
campaign supporters and the new, permanent constituencies in these industries
will not consider it.
Mandates for expanded production and use of biofuels
are set in law and can be expected to grow considerably. To think that these policies were
created to PROTECT and SERVE YOU!
The public is UNABLE to connect the dots as to cause and effect and
support MORE OF ALL OF IT!
To illustrate the nonsense
G7 public servants are indulging in, please understand that China started
down the corn-based ethanol and biodiesel route,
saw the error of their ways and BANNED IT! Rising incomes throughout the world
are creating teacup-size incremental demand for grains, meats, raw materials
and energy in millions of households across the globe.
Sensible energy development
has been OUTLAWED in the G7 sacrificed on the alter
of environmentalism and concerns about GLOBAL WARMING. In the United States (the Saudi Arabia of coal) Clean coal
plants are unable to be financed or built as looming global warming laws make
the profitability of them UNKNOWABLE.
Crude oil production around the globe is shrinking, for the first time
in over a decade Russia’s
oil production has declined. Russia is the
world’s largest producer of crude oil; take a look at this chart:
This same story
of decreasing production profiles can also be seen in Iraq, Iran,
Saudi Arabia, Venezuela, Nigeria,
Mexico
and many other oil producing nations.
One thing common to these countries is they are have NATIONALIZED OIL
COMPANIES, run by public Serpents, er servants who
want maximum money today and don’t invest in tomorrow, so their fields
are poorly maintained and managed, causing diminished future supplies. They can blame speculators, but upon
close look PRODUCTION is declining in all major oil producing nations in the
world, just as the emerging world’s households are beginning to use the
proverbial teacup full of additional oil and electricity per week. Accordingly, crude has definitely
broken out to new highs as indicated last week. Take a look at this chart I constructed:
This same pattern is repeating itself throughout the
Metals and Energy markets over and over and over again IN ALL TIME
FRAMES! It finished today’s
session at new ALL TIME highs of $113.79 and its targets are $122 to 125
dollars soon. Gold soon to follow!
Something is afoot in the
Middle East as recent reports clearly indicate the Iranians are stepping up
the fomenting of trouble across the region in Iraq,
Gaza, Lebanon
and Syria
in anticipation of lame duck George’s exit and ineffectiveness until
the end of his term. War looms in
the Middle East which will not bode well for
future oil supplies or prices. I
believe they are miscalculating big time, but if Obama
or Hillary makes it to the White House they can look for an immediate
CHALLENGE, which they may or may not be up to. What do you think this might do to
energy prices? Or should I say
already is doing!
As raw material and input
costs rise income falls, as do tax revenues; take a look at this chart of
municipal and state finances, also courtesy of Dennis Gartman
of www.Thegartmanletter.com, and by extension
Stephanie Pomboy of Macro Mavens:
The city of Birmingham Alabama
is teetering on the edge of bankruptcy; municipal bankruptcies loom so
federal government bailouts can be expected. You can expect the taxman to come
knock, knock, knocking upon your door. Here in Chicago, sales taxes were just raised to
10.5%, highest municipal sales taxes in the nation; expect this to happen
somewhere near to you soon. This
on top of the repeal of the current tax rates which are slated to rise under
any new administration to support CRITICAL government spending programs and
FREE, FREE, FREE everything. What
they can’t take through taxation they will take through confiscation by
printing press while it sits in your G7 currency or bank account, robbing you
to pay themselves, their deficit spending and their something for nothing
constituents. Your
public servants on all levels of government are about to get into a fight
with you over whose money it really is YOURS OR THEIRS! Is it more important that you take
care of your family and future or theirs? To them there is only one answer: Theirs
In the UK,
“sold the gold” Gordon Brown and Chancellor of the Exchequer
Alistair Cook are doing a ditto to our British brethren as we speak. Taxes are eating the EU alive along
with MISREPORTED inflation, courtesy of your local central bank and finance
officials. The ills we have
outlined here will be met with what else? The
printing press.
The beginnings of
ever-increasing inflation are at our doorsteps and the disintegration of the
G7 financial systems, as outlined by Ludvig Von Mises in the “Crack up Boom,” is front and center.
Mega Trend and Micro Stock Market Analysis by Peter Eliades
In a recent letter I
outlined an interesting trendline going back to
1974. It was from Garret Jones
and Peter Eliades of Stock Market cycles. Many of you took me to task, and
rightly so, as I did not properly detail it. So Peter has graciously allowed us to
reprint his most recent newsletter which brings all the details of the chart
to our attention, he then provides micro analysis of the recent action. It is most interesting and I am
bringing it to you today, click here to access it. It is fascinating analysis and, as an
additional bonus, Peter is offering a 20% discount on subscriptions.
In conclusion: Inflation is set to accelerate
viciously, the rescue of the financial and banking systems is pouring
gasoline on raging inflationary pressures caused by years of money and credit
growth far in excess of GDP growth.
It now takes over $5.50 cents of debt to create a
dollar’s worth of GDP.
It’s time to pay the piper. Other than overbuilt housing, and soon
commercial real estate, deflation, which is represented as crappy paper on
bank balance sheets, is NONEXISTENT.
Incomes are plummeting from
purchasing power losses all along the income ladder -- individual, corporate,
state, municipal and federal.
Massive bailouts of states and municipalities loom over the coming
year as well as higher taxes to pay for previous extravagant spending
commitments. Also expect the
bailouts of the banks, brokers and homeowners. It signals only one thing: More FIAT CURRENCY and CREDIT creation
to rescue irresponsible people from their own behavior
-- the moral hazard of bailouts in a widening circle. Everybody is the victim with NO ONE
taking the required medicine of self responsibility. Responsibility is for those who live
their lives without getting into these predicaments and who will ultimately
pay for those that do. This is
what entitlement mentalities and societies lead to. The policies of insolvency are endemic
and epidemic to the “something for nothing” mentality.
The something for nothing
personality thinks it can have low gas prices but never build a refinery, low
electricity prices but not allow new power plants to be built (Nuclear
energy, which is clean, without emissions and cost effective is out of the
question because nuclear Jane Fonda said it is DANGEROUS. Windmills are not a solution and NEVER
will be), low oil prices but never allow oil and gas exploration in the US, etc. They believe they are entitled to FREE
medical care but never have to pay for it. Sorry it doesn’t work that way
in reality or nature. Now they
are going to find out the price for these beliefs and necessities: it is
HIGHER! Either you save, invest
and nurture these things or you have less of them at higher prices. It’s just that simple. No seeds have been saved and planted for
future needs and no crops can be expected to fill them.
You are seeing the
government bailing out one group of contributors after another, but do you
see them doing anything to make businesses more competitive and successful in
the global marketplace? No. Business in the G7 is only to be
milked, never nurtured for growth, job and wealth creation in the
future. You can’t invest in
the future or raise wages or collect more taxes if your business is not
growing at the bottom line.
Government is assaulting the bottom line of G7 businesses and
transferring it to the most irresponsible among us. The government PARASITE has now
outgrown the host private sector.
So, shortages of almost
EVERYTHING loom; combine that with incremental demand growth WORLDWIDE,
diminishing supply of everything and increasing gluts of paper fiat
currencies searching for safety from the printing press. This is the recipe for the
“Crack up Boom”. The
opportunities
are enormous as “volatility is opportunity” and EVERYBODY has put
their portfolios together based on assumptions which are NOT TRUE. Treasuries are the most over priced
markets in the world. Wait until
the big money in the bond markets realize they “GOT IT WRONG” on
inflation. It will be a bang you
can’t believe.
Theodore
“Ty” Andros
www.traderview.com
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Tedbits is authored by Theodore "Ty" Andros, and is registered
with TraderView, a registered CTA (Commodity
Trading Advisor) and Global Asset Advisors (Introducing Broker). TraderView is a managed futures and alternative
investment boutique. Mr. Andros began his commodity
career in the early 1980's and became a managed futures and forex specialist beginning in 1985. Mr. Andros duties include marketing, sales, and portfolio
selection and monitoring, customer relations and all aspects required in
building a successful managed futures and alternative investment brokerage
service. Mr. Andros attended the University of San
Diego, and the University of Miami, majoring in Marketing, Economics and
Business Administration. He began his career as a broker in 1983, and has
worked his way to the creation of TraderView. Mr. Andros is active in Economic analysis and brings this
information and analysis to his clients on a regular basis, creating
investment portfolios designed to capture these unfolding opportunities as
the emerge. Ty prides himself on his personal
preparation for the markets as they unfold and his ability to take this
information and build innovative professionally managed portfolios.
Developing a loyal clientele.
This
report may include information obtained from sources believed to be reliable
and accurate as of the date of this publication, but no independent
verification has been made to ensure its accuracy or completeness. Opinions
expressed are subject to change without notice. This report is not a request
to engage in any transaction involving the purchase or sale of futures
contracts or options on futures. There is a substantial risk of loss
associated with trading futures and options on futures.
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