investmentwatchblog--2020-07-12--Gold & Silver Rise as Stock Valuations Become Stretched

Welcome to this week ’ s Market Wrap Podcast , I ’ m Mike Gleason .
No guest interviews this week , as we ’ re back to an all-hands-on-deck situation servicing all our Money Metals customers .
A new demand spike in recent days harkens back to the pandemonium we saw in the precious metals markets back in March .
So , let ’ s get right into today ’ s market wrap , because there is plenty to talk about… Gold and silver markets advanced this week to hit new milestones .
Gold traded up to a 9-year @ @ @ @ @ @ @ on Wednesday before giving back a few dollars on Thursday .
As of this Friday recording , the monetary metal comes in at $ 1,813 – good for a weekly gain of 1.7 % .
Turning to silver , prices are up 3.7 % this week to trade at $ 18.86 per ounce .
The silver market traded up to the $ 19 level on Wednesday and moved above it during the day on Thursday to reach a slight new high for the year .
But it fell back below that level at @ @ @ @ @ @ @ about $ 19 before as a major resistance line .
Silver has now made three attempts this year going back to February to bust through it .
When the market finally does post a strong close above $ 19 an ounce , we suspect it will be followed through with a sharp breakout rally .
Far from being mired in the summer doldrums , metals markets appear to be on their way to making this summer one for investors to celebrate .
$ 20+ silver and new record highs for gold are both @ @ @ @ @ @ @ big tech stocks that make up the Nasdaq are posting rip-roaring gains , the best performing sector of 2020 has actually been the gold miners .
The HUI gold mining stock index is up 30 % year to date – and up over 90 % since bottoming in March .
Investors who bought just about any stock market sector near the climax of the panic selling have since been able to make big gains .
But valuations are now becoming stretched while the earnings picture for most companies remains shaky .
Perhaps equities @ @ @ @ @ @ @ tide of liquidity provided by the Federal Reserve to still higher heights .
But Michael Howell , the CEO of Crossborder Capital , urged CNBC International viewers to consider diversifying into gold .
Michael Howell : The worry is that we ’ re inflating a bubble .
And bubble ’ s burst , as we know , but we still have , may have , several months of gains before that happens .
But what we would urge investors to do is to start to diversify on the one asset that is bound @ @ @ @ @ @ @ which is gold .
And gold goes up when two things happen .
Number one , the Federal Reserve eases aggressively , and number two , the People ’ s Bank of China starts to ease .
And that ’ s what we ’ re seeing .
The concurrence of these two big central banks pumping in money is magic news for the gold price .
Unfortunately , the vast majority of investors have no exposure to precious metals at all .
Surprising as it may seem to those of us who view @ @ @ @ @ @ @ the financial system as common sense , lots of investors don ’ t yet understand the first thing about precious metals .
They don ’ t know where to buy them , or what to do with them , or what the point of owning them even is .
They understand stocks , bonds , and bank accounts – perhaps even cryptocurrencies .
But for some reason they can ’ t grasp the least complicated and most enduring way to hold wealth .
It could be our lousy educational system , our biased @ @ @ @ @ @ @ , or all three that are leaving much of the public dangerously ignorant about sound money .
Perhaps , too , the bullion industry needs to do a better job of communicating the benefits and features of gold and silver ownership and combat the myth of the “ barbarous relic.
” Bullion isn ’ t just for people who are nostalgic for the past .
It also offers a host of benefits for these modern-but-turbulent times .
Physical precious metals offer far more versatility than conventional paper assets in terms of what you @ @ @ @ @ @ @ you can do with a stock or bond is sell it for cash , donate it , or in some cases borrow against it .
You can do ALL those things with bullion – and much more .
Since precious metals exist outside of the financial system , they can serve many non-financial purposes .
Bullion coins and rounds can also be appreciated for their aesthetic qualities , which confer a pride in ownership and add a special sentimental value when given as gifts .
Since gold and silver have near-universally recognized value @ @ @ @ @ @ @ around the world in transactions with any willing party .
Gold and silver can also be used to achieve conventional financial goals such as estate planning and tax savings .
Precious metals IRAs are a great way to shield gains from taxation .
Precious metals can be used as collateral to obtain loans with favorable terms .
Money Metals Exchange is proud to play a leading role in helping people tap the hidden utility of gold and silver .
And Money Metals Capital Group can now extend cash loans on your gold , @ @ @ @ @ @ @ .
If you own at least $ 35,000 of precious metals and store them in the Class 3 vaulting facility operated by Money Metals Depository , you are likely eligible for a loan of $ 25,000 or more .
Borrowing against your precious metals assets can be a far more efficient way of accessing their buying power as compared to selling and facing transaction costs along with potential tax consequences .
However , this strategy isn ’ t suitable for everyone .
The main conditions are that you have an acceptable credit rating @ @ @ @ @ @ @ investment purposes rather than for personal needs , and don ’ t use loan proceeds to purchase additional precious metals for at least 30 days .
And the Money Metals loan program isn ’ t currently available for residents of roughly 5 states .
For more information on precious metals-backed loans or to begin an application , go to moneymetals.com/gold-loan or give us a call at 1-800-800-1865 .
Well that will do it for this week , thanks for listening .
Be sure to check back next Friday for our next Weekly Market @ @ @ @ @ @ @ have been Mike Gleason with Money Metals Exchange , thanks for listening and have a great weekend everybody .

by moneymetals
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
No guest interviews this week, as we’re back to an all-hands-on-deck situation servicing all our Money Metals customers. A new demand spike in recent days harkens back to the pandemonium we saw in the precious metals markets back in March. So, let’s get right into today’s market wrap, because there is plenty to talk about…
Gold and silver markets advanced this week to hit new milestones.
Gold traded up to a 9-year high of nearly $1,825 an ounce on Wednesday before giving back a few dollars on Thursday. As of this Friday recording, the monetary metal comes in at $1,813 – good for a weekly gain of 1.7%.
Turning to silver, prices are up 3.7% this week to trade at $18.86 per ounce. The silver market traded up to the $19 level on Wednesday and moved above it during the day on Thursday to reach a slight new high for the year. But it fell back below that level at the close.
We’ve talked about $19 before as a major resistance line. Silver has now made three attempts this year going back to February to bust through it. When the market finally does post a strong close above $19 an ounce, we suspect it will be followed through with a sharp breakout rally.
Far from being mired in the summer doldrums, metals markets appear to be on their way to making this summer one for investors to celebrate. $20+ silver and new record highs for gold are both well within reach.
Even as the big tech stocks that make up the Nasdaq are posting rip-roaring gains, the best performing sector of 2020 has actually been the gold miners. The HUI gold mining stock index is up 30% year to date – and up over 90% since bottoming in March.
Investors who bought just about any stock market sector near the climax of the panic selling have since been able to make big gains. But valuations are now becoming stretched while the earnings picture for most companies remains shaky.
Perhaps equities will be able to ride the rising tide of liquidity provided by the Federal Reserve to still higher heights. But Michael Howell, the CEO of Crossborder Capital, urged CNBC International viewers to consider diversifying into gold.
Michael Howell: The worry is that we’re inflating a bubble. And bubble’s burst, as we know, but we still have, may have, several months of gains before that happens. But what we would urge investors to do is to start to diversify on the one asset that is bound to go up a lot more, which is gold. And gold goes up when two things happen. Number one, the Federal Reserve eases aggressively, and number two, the People’s Bank of China starts to ease. And that’s what we’re seeing. The concurrence of these two big central banks pumping in money is magic news for the gold price.
Unfortunately, the vast majority of investors have no exposure to precious metals at all.
Surprising as it may seem to those of us who view owning some gold and silver outside of the financial system as common sense, lots of investors don’t yet understand the first thing about precious metals. They don’t know where to buy them, or what to do with them, or what the point of owning them even is.
They understand stocks, bonds, and bank accounts – perhaps even cryptocurrencies. But for some reason they can’t grasp the least complicated and most enduring way to hold wealth.
We are primarily funded by readers. Please subscribe and donate to support us!
It could be our lousy educational system, our biased financial media, our corrupt monetary system, or all three that are leaving much of the public dangerously ignorant about sound money.
Perhaps, too, the bullion industry needs to do a better job of communicating the benefits and features of gold and silver ownership and combat the myth of the “barbarous relic.” Bullion isn’t just for people who are nostalgic for the past. It also offers a host of benefits for these modern-but-turbulent times.
Physical precious metals offer far more versatility than conventional paper assets in terms of what you can do with them. About all you can do with a stock or bond is sell it for cash, donate it, or in some cases borrow against it.
You can do ALL those things with bullion – and much more. Since precious metals exist outside of the financial system, they can serve many non-financial purposes. Bullion coins and rounds can also be appreciated for their aesthetic qualities, which confer a pride in ownership and add a special sentimental value when given as gifts.
Since gold and silver have near-universally recognized value, they can be used as money around the world in transactions with any willing party.
Gold and silver can also be used to achieve conventional financial goals such as estate planning and tax savings. Precious metals IRAs are a great way to shield gains from taxation.
Precious metals can be used as collateral to obtain loans with favorable terms. Money Metals Exchange is proud to play a leading role in helping people tap the hidden utility of gold and silver. And Money Metals Capital Group can now extend cash loans on your gold, silver, platinum, or palladium bullion.
If you own at least $35,000 of precious metals and store them in the Class 3 vaulting facility operated by Money Metals Depository, you are likely eligible for a loan of $25,000 or more.
Borrowing against your precious metals assets can be a far more efficient way of accessing their buying power as compared to selling and facing transaction costs along with potential tax consequences.
However, this strategy isn’t suitable for everyone.
The main conditions are that you have an acceptable credit rating, use loan proceeds for business or investment purposes rather than for personal needs, and don’t use loan proceeds to purchase additional precious metals for at least 30 days.
And the Money Metals loan program isn’t currently available for residents of roughly 5 states.
For more information on precious metals-backed loans or to begin an application, go to moneymetals.com/gold-loan or give us a call at 1-800-800-1865.
Well that will do it for this week, thanks for listening. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then, this have been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.


investmentwatchblog--2020-07-12--Kevin Shipp – Fear Is Marxist Democrats Greatest Weapon. Violence in Streets Going to Increase

Why are Marxist Democrats using full on violence ?
Former CIA Officer and counter-terrorism expert Kevin Shipp says , “ Every Marxist movement in history has used fear as its greatest weapon .
A lot of these people giving to BLM are afraid .
They don ’ t want to be attacked by the mob .
So , they say let ’ s just accept the mob , support the mob , contribute to the mob , and then the mob will leave us alone .
As always happens with movements like this , fear is their biggest weapon and @ @ @ @ @ @ @ .
.
.
Sadly , this appears to be the age of cowardice in this country .
These people bow to these threats , and they are afraid of them .
I think the majority is not going to be intimidated and threatened to supporting this movement .
That ’ s not going to happen .
.
.
.
The violence and threats are going to increase , but hold tight .
When you are over the target , the flack gets worse .
The increased violence you are seeing is because the @ @ @ @ @ @ @ position in this government , in both Congress and the Presidency , their entire power is jeopardy .
The DNC is in jeopardy , and it looks like Donald Trump , right now , will probably be reelected despite what the media says .
They are terrified by that , and the reason we are seeing all this violence and threats is because they are terrified .
My point is that ’ s a good sign .
We are over the target .
So .
keep the faith and stay strong .
We @ @ @ @ @ @ @ , black , Asian , Hispanic Americans , and there is a unity , and a lot of us out there doing that .
”

Why are Marxist Democrats using full on violence? Former CIA Officer and counter-terrorism expert Kevin Shipp says, “Every Marxist movement in history has used fear as its greatest weapon. A lot of these people giving to BLM are afraid. They don’t want to be attacked by the mob. So, they say let’s just accept the mob, support the mob, contribute to the mob, and then the mob will leave us alone. As always happens with movements like this, fear is their biggest weapon and their biggest tool even against corporations. . . . Sadly, this appears to be the age of cowardice in this country. These people bow to these threats, and they are afraid of them. I think the majority is not going to be intimidated and threatened to supporting this movement. That’s not going to happen. . . . The violence and threats are going to increase, but hold tight. When you are over the target, the flack gets worse. The increased violence you are seeing is because the Marxists and the DNC know their entire position in this government, in both Congress and the Presidency, their entire power is jeopardy. The DNC is in jeopardy, and it looks like Donald Trump, right now, will probably be reelected despite what the media says. They are terrified by that, and the reason we are seeing all this violence and threats is because they are terrified. My point is that’s a good sign. We are over the target. So. keep the faith and stay strong. We can defeat this Marxist movement as white, black, Asian, Hispanic Americans, and there is a unity, and a lot of us out there doing that.”
We are primarily funded by readers. Please subscribe and donate to support us!


investmentwatchblog--2020-07-12--JESSIAC COLLINS: An Epstein Trafficked Political Prisoner Being Held In Virginia Beach, Virginia

Meet Jessica L Collins , a sex trafficking victim of Epstein .
She ’ s currently being held on what appears to be outright bogus charges indefinitely pending a “ Mental Health Review ” .
She was arrested On EIGHT counts of assault and battery stemming from an incident at a Food Lion in Accomack County , Virginia In case you didn ’ t catch it , this is another clip of the police officer telling her she ’ d be lied on : She had to be transferred to Virginia Beach City jail in Virginia Beach , Virginia due @ @ @ @ @ @ @ County .
Evidently she ’ s still being held and not allowed phone calls or any of the normal inmate luxuries : Below is the Virginia database where her name Jessica Leigh Collins is easily searchable : Here is the link to case information on one of the assault and battery charges showing that she has been held since at least June 11 , 2020 pending a mental health review .
Admittedly I don ’ t know much about her or the specifics of her case yet but I ’ m about to @ @ @ @ @ @ @ help would be greatly appreciated .
All mayor ’ s and/or family of mayors arrested on child sex charges while Trump is in office .

Meet Jessica L Collins, a sex trafficking victim of Epstein. She’s currently being held on what appears to be outright bogus charges indefinitely pending a “Mental Health Review”.
She was arrested On three counts of assault and battery stemming from an incident at a Food Lion in Accomack County, Virginia
In case you didn’t catch it, this is another clip of the police officer telling her she’d be lied on:
She had to be transferred to Virginia Beach City jail in Virginia Beach, Virginia due to abuse she was getting at Accomack County.
Evidently she’s still being held and not allowed phone calls or any of the normal inmate luxuries:
Below is the Virginia database where her name Jessica Leigh Collins is easily searchable:
eapps.courts.state.va.us/ocis/landing/false
Here is the link to case information on one of the assault and battery charges showing that she has been held since at least June 11, 2020 pending a mental health review.
eapps.courts.state.va.us/ocis/error
We are primarily funded by readers. Please subscribe and donate to support us!
Admittedly I don’t know much about her or the specifics of her case yet but I’m about to start doing some real digging. Any help would be greatly appreciated.
All mayor’s and/or family of mayors arrested on child sex charges while Trump is in office.
www.news9.com/story/5e7e3c52065c486efd6d1b9b/former-wetumka-mayor-arrested-charged-with-child-sexual-abuse
www.washingtonpost.com/news/true-crime/wp/2016/09/14/ex-mayor-charged-in-4-year-olds-rape-said-the-girl-was-a-willing-participant-records-say/
www.local10.com/news/local/2020/02/07/spokesman-for-miami-mayor-arrested-after-sending-penis-picture-to-child/
www.wfmj.com/story/35230216/former-hubbard-mayor-richard-keenan-receives-life-sentence-for-child-rape
katv.com/news/local/little-rock-mayors-brother-charged-with-dwi-arrested-for-kidnapping-kids-shortly-after
h/t CrsCrpr


investmentwatchblog--2020-07-12--Drumbeats of the Epocalypse: The Economic Death March Has Come to Town!

The Depression is deep , and the pain is wide .
Yet , the NADAQ is a rocket , attempting to break out of earth ’ s atmosphere .
As I wrote several days ago and reiterated yesterday , saying I ’ d follow up with greater detail today , this bubble in stocks is the most extreme euphoria ever seen .
It will , however , blow when the initial burst of good news from reopening gives way to the reality of all that did not recover after reopening .
That endless lineup of headlines is arriving now .
@ @ @ @ @ @ @ outbreaks around the nation in the news , the market has become troubled , knocking the S & P 500 and the Dow back down to that seemingly magical 61 % retracement fibonacci line on the charts that really big rallies after really big crashes like to top out at .
As I mentioned yesterday , the Nasdaq has pressed on ahead in a tear .
Here is how it looks relative to the rest of the economy ( GDP ) .
See if this picture looks stable to you : And how @ @ @ @ @ @ @ ?
“ Ahh , ” you may say , “ but this time it is only because then denominator ( GDP ) has crashed so hard.
” It is also because , in six days , the five top stocks in the NASDAQ have added half a trillion dollars to the market ’ s value ; and , since the start of this wondrously promising year , they have added 1.6 trillion !
All but one of these companies have claimed a heady position in the trillion-dollar-company club .
I ’ m sure @ @ @ @ @ @ @ become so much more promising during 2020 , earning this appreciation .
So , while the Dow and the S & P got decapitated the second a new COVID-19 surge took the headlines back , the NASDAQ has continued to be a riot of irrational enthusiasm .
In June , one of the great bubble-blowing predictors of market madness joined with me ( unbeknownst to him and for his own reasons of course ) in calling out this madness : Stock-market legend who called 3 financial bubbles says this one is the ‘ @ @ @ @ @ @ @ crazy stuff ’ Jeremy Grantham , co-founder and chief investment strategist at Boston-based money manager Grantham , Mayo , Van Otterloo & Co. , [ offered ] up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century… .
“ My confidence is rising quite rapidly that this is , in fact , becoming the fourth , real McCoy , bubble of my investment career .
The great bubbles can go on a long time and inflict a lot of pain but at @ @ @ @ @ @ @ we ’ re in one .
And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.
“ Gratham painted a very dire picture of the investment landscape in the U.S. , suggesting that rampant trading by out-of-work investors and speculative fervor around bankrupt companies , including car-rental company Hertz Global Holdings Inc. … reflects a market that may be the most bubblicious he ’ s seen in his storied career .
“ It is a rally without precedence , ” he told CNBC , @ @ @ @ @ @ @ period in which U.S. economic health is at a low point , with millions of people out of work and bankruptcies likely to continue to rise due to a slowdown in business activity and closures that have come in the aftermath of lockdowns implemented to curb the spread of the deadly COVID-19 pathogen… .
Grantham is worth paying attention to due to his prescient calls over the years .
He said that stocks were overvalued in 2000 and again in 2007 , anticipating those market downturns .
Grantham was one of the clear-eyed @ @ @ @ @ @ @ the graph above and say it was a picture of fabulous nonsense .
And this time , the graph says it is worse , and Grantham says it is worse .
This time , he ’ s saying this stock bubble is the greatest and craziest of them all .
Grantham indicated his firm has moved to zero exposure in stocks , and he recommends others make that shift , too .
And he said that nearly a month ago !
Imagine what he thinks of the nonsense now .
In my last @ @ @ @ @ @ @ the economy that show massive permanent business closures as a result of the first shutdown .
Imagine how much worse it becomes as the knock-on effects that are continue to develop .
Then imagine how much worse it becomes if any states that go back into a shutdown .
BUT THE NASDAQ KEEPS CLIMBING thanks to the fabulous five !
News of plague turns for the worse We are now entering the phase I talked about for July where the good news from reopening starts to fade , and we get to see @ @ @ @ @ @ @ Now we start to find out how much is permanently lost and , by the end of the month , we start to see the bankruptcies and foreclosures lining up like a soup line in front of the courts .
Then , in August , the business dominoes start to topple because of the businesses that have already collapsed that other businesses depend on .
In this article , I ’ m going to start laying out the parade of facts that reveal how much did not recover during reopening .
First , @ @ @ @ @ @ @ that clipped the heads off the Dow and S & P : We all know now how that return of the COVID story went .
The news just continued to grow worse .
Whether the cases of disease are rightly reported or not , this is the news that has dominated , and it is the news governors will certainly be responding to as they consider whether or not to remain open for business .
Some of them have already begun winding back toward closure .
So , good luck with the idea @ @ @ @ @ @ @ again !
It ’ s already doing it in statewide moves .
Trump may rail against it at a national level , but his own health advisors have been saying we need to move back in the direction of closure , and numerous states have shown they are free to ignore Trump on this issue , which they did when they chose the last lockdown against his express will .
So , that ’ s a heck of a thing to be banking on !
And good luck with the economy not remaining @ @ @ @ @ @ @ of this year ( already not a good place ) for a minimum of two years to come ( probably more ) .
Good luck with the arrival of end of the reopening bump in good-news statistics not taking out the stock market ’ s drug-addled euphoria later this summer if COVID-19 ’ s rising case claims don ’ t do the job first .
Failure of the Fed is already being sensed The stock bubble is already looking ready to burst .
The Robinhood crowd , where the reigning self-proclaimed champion Dave @ @ @ @ @ @ @ , ” may be in for some sticker a shock when prices crash : The first crack appears in bulls ’ thesis that the stock market will rise no matter what .
Money printing by the Federal Reserve has propelled stocks for more than a decade .
But that effect may soon wear off… .
Until recently , the Fed has been unreasonably intransigent in that it will continue money printing even if the economy became strong and there was no need for it… .
When the Fed announced it will buy individual @ @ @ @ @ @ @ .
Fed Chairman Jerome Powell is a smart man .
The way he came across in his press conference after the FOMC policy decision last week was troubling in that he was going to do whatever it took without regard to consequences and limits .
Why would a smart man like Powell show such intransigence ?
… Powell is being clever in exhibiting intransigence because he wants everybody to believe that the Fed is all in and there are no limits to what the Fed can do… .
[ However , looking deeper @ @ @ @ @ @ @ “ We ’ re not actually increasing the dollar volume of things we ’ re buying .
We ’ re just shifting away from ETFs toward this other form of index….
” The crack in the bulls ’ thesis is that contrary to their belief , the Fed is becoming measured and may have difficulty expanding its balance sheet beyond $ 10 trillion .
In plain English , unlimited money printing is highly unlikely….. Why is Powell talking big but then showing some signs of not going there ?
Maybe he ’ s @ @ @ @ @ @ @ backs off on its monetary support of the market ’ s rise .
He might talk big and back away if he knows the Fed is at the point where the distortions it blows into being are worse than what it seeks to cure .
Right now , the Fed ’ s financial money-printing in support of the market looks like the red line below : The Fed knows it has pumped the stock market into the highest bubble in history , and it is trying to taper that because the risk gets @ @ @ @ @ @ @ However , economic damage that is still building will likely press it back to more money creation .
In the meantime , we know now from past experience , not just from my saying it would prove to be so , that the Fed can not taper its balance sheet without crashing the market it has rigged up .
We see in the graph the S & P has already responded by settling back down ( same for the Dow as shown yesterday ) , and so the market is tipping .
With @ @ @ @ @ @ @ rapidly approaching lineup of bad news the market is ignoring .
Here is the bad news that is now relentlessly drumming louder and louder until it will become a deafening roar the market can not ignore .
( And the Fed is backing down right as the news arrives , though its arrival will push the Fed back to running the money pumps , which may , if that happens , buy the market a little more time … like until September ; but right now , I ’ d say August is @ @ @ @ @ @ @ crash . )
The drumbeats of the Epocalypse A parade of headlines has been marching into town during the past couple of weeks , telling a story of death and destruction due to a plague hitting a world burdened under a crushing load of debt , papered over with optimistic accounting gimmicks that emit a sweet stink something like rose water poured over decaying meat .
How can anyone not hear the following noisy parade coming ?
Now , the parade of facts has arrived .
We can see from Chase that consumer @ @ @ @ @ @ @ , but now appears to have flatlined about 10 % lower than it was last year : Flights are still down about 70 % and that is at reduced ticket prices ( as evidenced by revenue falling more percentage-wise than than number of passengers booked ) .
International flights are , of course , even more pathetic : That ’ s as far off the ground as they got .
Looks like a plane wreck off the end of the runway to me .
As the great urban evacuation begins in America , @ @ @ @ @ @ @ % ( during reopening ) : That ’ s the first decline in eighteen months and the largest drop since 2011 .
No one wants to live in virus central .
Or it ’ s just a case of “ So , who has money to pay rent ?
” US home prices now at risk just like Manhattan rent : How serious is the housing peril ?
People who work from home don ’ t need to dress up for work .
Businesses that had been reopening are slowing back down : @ @ @ @ @ @ @ the buck : That ’ s OK .
Sales of primary products are not necessary in order to justify skyrocketing stock prices as we soar mindlessly toward the realm where shell corporations eventually trade at a trillion dollars in market cap .
Life ’ s good .
Chicago Purchase Manager ’ s Index fails to rise as much as expected : I ’ m going to sum it up by letting a rather big authority confirm all I ’ ve been saying about this recession being a great depression before it even began @ @ @ @ @ @ @ again — to see economic collapse coming , the experts eventually caught up with me . )
UCLA Anderson Forecast senior economist David the UCLA Anderson Forecast revised its outlook for the U.S. economy downward because of the expected impact of COVID-19 , which was then still being referred to as an epidemic .
Two weeks later , as the economy began shutting down because of the pandemic , the Forecast released the first revision in its 68-year history to assert that the U.S. economy was already in recession .
Now , in @ @ @ @ @ @ @ the Forecast team states that the global health crisis has “ morphed into a Depression-like crisis ” and that it does not expect the national economy to return to its 2019 fourth-quarter peak until 2023.… U.S. employment will not recover until “ well past 2022… .
“ Simply put , despite the Paycheck Protection Program , too many small businesses will fail and millions of jobs in restaurants and personal service firms will disappear in the short run .
We believe that even with the availability of a vaccine , it will take @ @ @ @ @ @ @ ” The forecast notes that while the economy seems to have hit bottom , it will be a while before GDP and employment levels reach fourth-quarter 2019 levels , as the huge debt buildup in both the public and private sectors dampen output… .
For too many workers , the recession will linger on well past the official end date of the depression .

by David Haggith
The coronavirus pandemic inflicted a “swift and massive shock” that has caused the broadest collapse of the global economy since 1870 despite unprecedented government support, the World Bank said.… “This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu…. The depth of the crisis will drive 70 to 100 million people into extreme poverty. Yahoo! News
The Depression is deep, and the pain is wide.
Yet, the NADAQ is a rocket, attempting to break out of earth’s atmosphere. As I wrote several days ago and reiterated yesterday, saying I’d follow up with greater detail today, this bubble in stocks is the most extreme euphoria ever seen. It will, however, blow when the initial burst of good news from reopening gives way to the reality of all that did not recover after reopening.
That endless lineup of headlines is arriving now.
Since COVID-19 has been rebuilding its claimed outbreaks around the nation in the news, the market has become troubled, knocking the S&P 500 and the Dow back down to that seemingly magical 61% retracement fibonacci line on the charts that really big rallies after really big crashes like to top out at.
As I mentioned yesterday, the Nasdaq has pressed on ahead in a tear. Here is how it looks relative to the rest of the economy (GDP). See if this picture looks stable to you:
And how well did that work out last time?
“Ahh,” you may say, “but this time it is only because then denominator (GDP) has crashed so hard.”
“Nay,” I say.
It is also because, in six days, the five top stocks in the NASDAQ have added half a trillion dollars to the market’s value; and, since the start of this wondrously promising year, they have added 1.6 trillion! All but one of these companies have claimed a heady position in the trillion-dollar-company club.
I’m sure that is not because their businesses have become so much more promising during 2020, earning this appreciation.
As Sven Henrich notes,
That would be a feat during any bull market during times of great growth, but in a historical recession? Northman Trader
So, while the Dow and the S&P got decapitated the second a new COVID-19 surge took the headlines back, the NASDAQ has continued to be a riot of irrational enthusiasm.
A growing drone of doomsayers
In June, one of the great bubble-blowing predictors of market madness joined with me (unbeknownst to him and for his own reasons of course) in calling out this madness:
Stock-market legend who called 3 financial bubbles says this one is the ‘Real McCoy,’ this is ‘crazy stuff’ Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., [offered] up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century…. “My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.“ Gratham painted a very dire picture of the investment landscape in the U.S., suggesting that rampant trading by out-of-work investors and speculative fervor around bankrupt companies, including car-rental company Hertz Global Holdings Inc. … reflects a market that may be the most bubblicious he’s seen in his storied career. “It is a rally without precedence,” he told CNBC, noting that the run-up comes amid a period in which U.S. economic health is at a low point, with millions of people out of work and bankruptcies likely to continue to rise due to a slowdown in business activity and closures that have come in the aftermath of lockdowns implemented to curb the spread of the deadly COVID-19 pathogen…. Grantham is worth paying attention to due to his prescient calls over the years. He said that stocks were overvalued in 2000 and again in 2007, anticipating those market downturns. MarketWatch
Grantham was one of the clear-eyed people in 2000 who could look at the graph above and say it was a picture of fabulous nonsense. And this time, the graph says it is worse, and Grantham says it is worse. This time, he’s saying this stock bubble is the greatest and craziest of them all.
Grantham indicated his firm has moved to zero exposure in stocks, and he recommends others make that shift, too. And he said that nearly a month ago! Imagine what he thinks of the nonsense now.
In my last article I described three main aspects of the economy that show massive permanent business closures as a result of the first shutdown. Imagine how much worse it becomes as the knock-on effects that are continue to develop. Then imagine how much worse it becomes if any states that go back into a shutdown.
BUT THE NASDAQ KEEPS CLIMBING thanks to the fabulous five!
Second quarter 2020 came and went like a California wildfire. The economic devastation caused by the government lockdowns was swift, the destruction immense, and the damage lasting. But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace. The Dow booked its best quarter in 33 years. The S&P 500 posted its best performance since 1998. And the NASDAQ had its biggest increase since 1999…jumping 38.85 percent in just three months. The economy, on the other hand, was severely scorched. Decades of debt had built up like dead wood amongst a forest understory. Then, at the worst possible time, government lockdown orders sparked a match and set it ablaze. Economic Prism
News of plague turns for the worse
We are now entering the phase I talked about for July where the good news from reopening starts to fade, and we get to see how much didn’t recover. Now we start to find out how much is permanently lost and, by the end of the month, we start to see the bankruptcies and foreclosures lining up like a soup line in front of the courts. Then, in August, the business dominoes start to topple because of the businesses that have already collapsed that other businesses depend on.
In this article, I’m going to start laying out the parade of facts that reveal how much did not recover during reopening. First, here was the news three weeks ago that clipped the heads off the Dow and S&P:
Coronvirus cases rise in at least 9 U.S. states, while Fed’s Powell tells Congress unemployment benefits should be extended. U.S. stocks slumped in the final hour of trade Wednesday to end three days of gains, as investors monitored signs of a revival of the coronavirus pandemic in some U.S. states and China, while still hoping for a quick economic recovery as business activity resumes…. Investors monitored the trajectory of new coronavirus cases, as business activity resumes after lockdowns, along with a fresh outbreak in China, but the focus remains on the path to economic recovery, amid some progress in developing therapeutic drugs and vaccines against COVID-19…. Meanwhile, Arizona, Florida, Oklahoma, Oregon and Texas all saw record increases in new cases on Tuesday, while hospitalizations in Texas, Nevada and Florida hit records, according to Reuters…. China canceled flights to and from Beijing, restricted movement of people, and closed schools in the capital city, after 137 new cases were reported in recent days…. “If COVID-19 were to get so bad this fall that the economy had to totally shut down, stocks would fall and fall hard. But right now, even with a surge, the general consensus is that the economy won’t completely shut down again,” said James Meyer, chief investment officer at Tower Bridge Advisors…. MarketWatch
We all know now how that return of the COVID story went. The news just continued to grow worse. Whether the cases of disease are rightly reported or not, this is the news that has dominated, and it is the news governors will certainly be responding to as they consider whether or not to remain open for business. Some of them have already begun winding back toward closure.
So, good luck with the idea that the economy will not shut down again! It’s already doing it in statewide moves. Trump may rail against it at a national level, but his own health advisors have been saying we need to move back in the direction of closure, and numerous states have shown they are free to ignore Trump on this issue, which they did when they chose the last lockdown against his express will.
So, that’s a heck of a thing to be banking on!
“Atlanta Mayor Set To Reimpose Lockdown As Cases Surge, Defying Gov Kemp, Trump“
And good luck with the economy not remaining well below where it was in January of this year (already not a good place) for a minimum of two years to come (probably more). Good luck with the arrival of end of the reopening bump in good-news statistics not taking out the stock market’s drug-addled euphoria later this summer if COVID-19’s rising case claims don’t do the job first.
(Note I say claims because a few people in the medical profession have contacted me to tell me they are instructed by the CDC to report all respiratory deaths as COVID-19 unless they are known with certainty to be something else. Yesterday, a reader here told me he heard Ron Paul claim that Texas is now reporting people who merely come into contact with COVID-19 as actual COVID-19 cases. See: “Ron Paul: Is the Texas COVID ‘Spike’ Fake News?” I keep hearing various reasons to question the numbers that are coming through. Still, as I said before, perception is reality in terms of how this story hurts the economy because politicians are acting on it and so are hundreds of millions of customers.)
Failure of the Fed is already being sensed
The stock bubble is already looking ready to burst. The Robinhood crowd, where the reigning self-proclaimed champion Dave Portnoy has proclaimed “stocks rise forever,” may be in for some sticker a shock when prices crash:
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The first crack appears in bulls’ thesis that the stock market will rise no matter what. Money printing by the Federal Reserve has propelled stocks for more than a decade. But that effect may soon wear off…. Until recently, the Fed has been unreasonably intransigent in that it will continue money printing even if the economy became strong and there was no need for it…. When the Fed announced it will buy individual bonds, the stock market loved it…. Fed Chairman Jerome Powell is a smart man. The way he came across in his press conference after the FOMC policy decision last week was troubling in that he was going to do whatever it took without regard to consequences and limits. Why would a smart man like Powell show such intransigence?… Powell is being clever in exhibiting intransigence because he wants everybody to believe that the Fed is all in and there are no limits to what the Fed can do…. [However, looking deeper into Powell’s words:] “We’re not actually increasing the dollar volume of things we’re buying. We’re just shifting away from ETFs toward this other form of index….” The crack in the bulls’ thesis is that contrary to their belief, the Fed is becoming measured and may have difficulty expanding its balance sheet beyond $10 trillion. In plain English, unlimited money printing is highly unlikely….. MarketWatch
Why is Powell talking big but then showing some signs of not going there? Maybe he’s offering empty reassurance as the Fed actually backs off on its monetary support of the market’s rise. He might talk big and back away if he knows the Fed is at the point where the distortions it blows into being are worse than what it seeks to cure.
Right now, the Fed’s financial money-printing in support of the market looks like the red line below:
The Fed knows it has pumped the stock market into the highest bubble in history, and it is trying to taper that because the risk gets worse the bigger the bubble gets. However, economic damage that is still building will likely press it back to more money creation. In the meantime, we know now from past experience, not just from my saying it would prove to be so, that the Fed cannot taper its balance sheet without crashing the market it has rigged up. We see in the graph the S&P has already responded by settling back down (same for the Dow as shown yesterday), and so the market is tipping.
With no further adieu, here is the rapidly approaching lineup of bad news the market is ignoring. Here is the bad news that is now relentlessly drumming louder and louder until it will become a deafening roar the market cannot ignore. (And the Fed is backing down right as the news arrives, though its arrival will push the Fed back to running the money pumps, which may, if that happens, buy the market a little more time … like until September; but right now, I’d say August is looking good for the start of a crash.)
The drumbeats of the Epocalypse
A parade of headlines has been marching into town during the past couple of weeks, telling a story of death and destruction due to a plague hitting a world burdened under a crushing load of debt, papered over with optimistic accounting gimmicks that emit a sweet stink something like rose water poured over decaying meat.
How can anyone not hear the following noisy parade coming?
The results were predictable to everyone but the experts. Supply chain disruptions followed by retail disruptions, followed by declining sales, followed by disappearing cash flow, followed by layoffs, followed by business closures, followed by shrinking tax receipts, followed by unserviceable public and private debt, followed by mass bankruptcies, followed by riots, followed by full societal breakdown. Economic Prism
Now, the parade of facts has arrived.
Consumer spending fails to recover:
We can see from Chase that consumer spending via credit card improved during reopening, but now appears to have flatlined about 10% lower than it was last year:
Airline recovery take-off sputtered back toward ground:
Top line is number of passengers. Bottom line is revenue.
Wolf Street
Flights are still down about 70% and that is at reduced ticket prices (as evidenced by revenue falling more percentage-wise than than number of passengers booked). International flights are, of course, even more pathetic:
That’s as far off the ground as they got. Looks like a plane wreck off the end of the runway to me.
United Airlines announced that 36,000 employees in the US, or 45% of its US workforce, could face “involuntary furloughs” on or after October 1. That’s the day after the restrictions attached to the $25 billion in payroll aid under the CARES act expire…. The “involuntary furloughs” would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1 Wolf Street
Airbus To Cut 15,000 Jobs As No Recovery Expected Until 2023 Zero Hedge
Airbnb CEO and co-founder Brian Chesky said the global travel and tourism industry might never fully recover from the coronavirus pandemic. The Hill
As the great urban evacuation begins in America, rent in Manhattan has already fallen 6.6% (during reopening):
That’s the first decline in eighteen months and the largest drop since 2011. No one wants to live in virus central. Or it’s just a case of “So, who has money to pay rent?”
US home prices now at risk just like Manhattan rent:
Despite relatively steady home price appreciation in May, the U.S. housing market is on the precipice of an extended price slump, according to a CoreLogic report released Tuesday. The housing data provider’s May Home Price Index and HPI Forecast report predicts a year-over-year home price decrease of 6.6% by May 2021. Barron’s
How serious is the housing peril?
Nearly Half Of Americans Consider Selling Home As COVID Crushes Finances As the virus pandemic has metastasized into an economic downturn … new research offers a glimpse into struggling households…. Out of the 2,000 American homeowners polled, over half (52%) of respondents say they’re routinely worried about making future mortgage payments and nearly half (47%) considered selling their home because of the inability to service mortgage payments. Zero Hedge
Oldest retailer in US files Chapter 11 bankruptcy:
People who work from home don’t need to dress up for work.
This new COVID normal of (in)formal meetings seems to have been the last nail in the coffin of America’s most iconic menswear retailers as Brooks Brothers has just filed for bankruptcy (just weeks after Men’s Wearhouse owner Tailored Brands considered the same). Zero Hedge
A tidal wave of bankruptcies is coming:
Experts foresee so many filings in the coming months that the courts could struggle to salvage the businesses that are worth saving. Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis. Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he said. The New York Times
It’s damage already done.
Businesses that had been reopening are slowing back down:
Hours worked at more than 44,000 small businesses, whose employee hours are managed by Homebase, fell in 25 states in the week ending June 28. That included a more than 7% decline in Arizona and a more than 5% drop in Texas, where new outbreaks forced governors to renege on aggressive efforts to reopen the economy…. Goldman Sachs analysts estimated that states accounting for over half the U.S. population had now paused or partially reversed their reopening plans, with limits reimposed most often on bars, restaurants and the size of gatherings. Reuters
Big Apple may deliver less byte for the buck:
Sources familiar with Apple’s supply chain partners said suppliers ‘are less optimistic about shipments’ for the new 5G iPhone…. sources said 2020 5G iPhone 12 shipments could be halved, from 30-40 million to just 15-20 million. Zero Hedge
That’s OK. Sales of primary products are not necessary in order to justify skyrocketing stock prices as we soar mindlessly toward the realm where shell corporations eventually trade at a trillion dollars in market cap. Life’s good.
Chicago Purchase Manager’s Index fails to rise as much as expected:
In conclusion
I’m going to sum it up by letting a rather big authority confirm all I’ve been saying about this recession being a great depression before it even began: (Though they completely failed — again — to see economic collapse coming, the experts eventually caught up with me.)
UCLA Anderson Forecast senior economist David the UCLA Anderson Forecast revised its outlook for the U.S. economy downward because of the expected impact of COVID-19, which was then still being referred to as an epidemic. Two weeks later, as the economy began shutting down because of the pandemic, the Forecast released the first revision in its 68-year history to assert that the U.S. economy was already in recession. Now, in its second quarterly forecast of 2020, the Forecast team states that the global health crisis has “morphed into a Depression-like crisis” and that it does not expect the national economy to return to its 2019 fourth-quarter peak until 2023.… U.S. employment will not recover until “well past 2022…. “Simply put, despite the Paycheck Protection Program, too many small businesses will fail and millions of jobs in restaurants and personal service firms will disappear in the short run. We believe that even with the availability of a vaccine, it will take time for consumers to return to normal.…” The forecast notes that while the economy seems to have hit bottom, it will be a while before GDP and employment levels reach fourth-quarter 2019 levels, as the huge debt buildup in both the public and private sectors dampen output…. For too many workers, the recession will linger on well past the official end date of the depression. The Hill
Thank you.


investmentwatchblog--2020-07-12--What is Quantitative Trading?

What is Quantitative Trading?

Simply put , quantitative trading is the practice of using computer analysis of the stock market to make informed decisions about which stocks to buy and sell .
A lot of trading on the stock market can revolve around emotional reactions to stocks rising and falling , and while some brokers swear by their intuition or gut feelings , quantitative trading introduces the scientific method to the market .
This allows quantitative traders ( you might see the term “ quants ” to refer to traders who practice this method ) to create a probability-based system for decision making , @ @ @ @ @ @ @ .
There is a reason why many of the major stock trading organizations are able to use quantitative trading practices more effectively than home based stock traders : professional stock trading generates huge amounts of historical data that quantitative traders can use to build models from .
It still requires a human with knowledge of a wide variety of stock trading strategies to design the computer program that will make past predictions based on past trends , but having a large training set means that the power of the computer analysis can be @ @ @ @ @ @ @ patterns .
Quantitative traders will also backtest their programs on the data set to make sure the program performs optimally before applying it to the real life market .
To really get an idea of how quantitative trading can help you conquer the stock market , you can think about the way in which meteorologists predict the weather .
They have complicated computer simulations that take in as much historical data about the weather conditions ; temperature , air speed , atmospheric pressure and so on .
The analytical part shows both the @ @ @ @ @ @ @ program to make a statistical guess about what weather will come from a certain set of conditions .
The same applies to quantitative analysis of the market , and the more information that the computer program has about market conditions , the more accurate it will be .
As with other stock trading strategies , there are subtle sub groups within the world of quantitative trading and they each have their pros and cons .
It ’ s worth knowing about each of the types so that you can find the best piece @ @ @ @ @ @ @ trading style .
The different strategies are all to do with the timing and length of trades : • None Low frequency trading – this uses historical end of day data rather than the small ticks that happen during the course of a day .
Computer analysis of longer term trends and patterns remove the vulnerability to the daily news cycle , but requires much more data and can easily be impacted by sudden volatile changes to the local or global economy .
A popular method of low frequency quantitative trading is to @ @ @ @ @ @ @ swing trading strategy for a set class of stocks .
• None Medium frequency trading – this is a classic day trader strategy , where the data collected and analyzed happens over the course of minutes and hours .
While it allows models to be affected by minor rises and falls , it allows statistical modelling of the fluctuations of the stock market day , where there are high and low frequency periods of trading .
The more common models look for stocks that have significant price moves meaning that investors require less @ @ @ @ @ @ @ .
• None High frequency trading – when most people here about quantitative trading , they will think about recent scandals involving high frequency trading ; the practice of buying and selling shares in a speed that is not achievable by the human mind or by most computer connections .
This day trading strategy is best left to the professionals who have direct market access , the fastest computing powers and the most complex algorithms that take advantage of even the smallest price fluctuations .
The goal here is to turn a tiny @ @ @ @ @ @ @ which will slowly accumulate over the course of a day .
Obviously , most at-home traders won ’ t have the technology or the computing speed to engage in most high frequency trading practices , but there are some benefits of learning how to use statistics in trading stocks .
Firstly , it takes the mantra “ make a plan and stick to it ” and turns it into a firm set of rules to follow throughout the day .
Even if you can ’ t automate your buying and selling , it @ @ @ @ @ @ @ a program that tells you the optimum way to manage your portfolio .
Quantitative trading practices also remove the emotions of a good or bad day from your decision making process .
It ’ s easy to get sucked into a spiral of chasing bigger profits or sending good money after bad ; statistical analysis of the data will tell you when to stop .
One of the main drawbacks of quantitative trading is that unless you have the time and effort to keep your model fed with current market data , it @ @ @ @ @ @ @ , you could have a medium frequency program that studies day trading data over the previous month for a particular set of stocks .
It will make predictions for the best day trading strategies based on this data , but will ignore any new information that could drastically change the value of the company .
You would either need to feed daily data and update the model , which is incredibly time consuming for the at-home trader , or develop a new model frequently to make use of the most recent data .
@ @ @ @ @ @ @ is that you need a huge data set to really be able to train your program to find the patterns in the noise .
As a general rule for statistical analysis of the market , the more historical data you have , the better your future predictions will be .
Having access to a regularly updated database of stock market data will dramatically increase your chances of success as a quantitative trader .
Disclaimer : This content does not necessarily represent the views of IWB .

Simply put, quantitative trading is the practice of using computer analysis of the stock market to make informed decisions about which stocks to buy and sell. A lot of trading on the stock market can revolve around emotional reactions to stocks rising and falling, and while some brokers swear by their intuition or gut feelings, quantitative trading introduces the scientific method to the market. This allows quantitative traders (you might see the term “quants” to refer to traders who practice this method) to create a probability-based system for decision making, using data from systems such as StockOdds.
Quantitative trading – the basics
There is a reason why many of the major stock trading organizations are able to use quantitative trading practices more effectively than home based stock traders: professional stock trading generates huge amounts of historical data that quantitative traders can use to build models from. It still requires a human with knowledge of a wide variety of stock trading strategies to design the computer program that will make past predictions based on past trends, but having a large training set means that the power of the computer analysis can be harnessed to pick out even the smallest patterns. Quantitative traders will also backtest their programs on the data set to make sure the program performs optimally before applying it to the real life market.
To really get an idea of how quantitative trading can help you conquer the stock market, you can think about the way in which meteorologists predict the weather. They have complicated computer simulations that take in as much historical data about the weather conditions; temperature, air speed, atmospheric pressure and so on. The analytical part shows both the conditions and the result which allows the program to make a statistical guess about what weather will come from a certain set of conditions. The same applies to quantitative analysis of the market, and the more information that the computer program has about market conditions, the more accurate it will be.
All In Good Time
As with other stock trading strategies, there are subtle sub groups within the world of quantitative trading and they each have their pros and cons. It’s worth knowing about each of the types so that you can find the best piece of quantitative trading software that matches your trading style. The different strategies are all to do with the timing and length of trades:
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Low frequency trading – this uses historical end of day data rather than the small ticks that happen during the course of a day. Computer analysis of longer term trends and patterns remove the vulnerability to the daily news cycle, but requires much more data and can easily be impacted by sudden volatile changes to the local or global economy. A popular method of low frequency quantitative trading is to use mean reversion data to develop a swing trading strategy for a set class of stocks.
Medium frequency trading – this is a classic day trader strategy, where the data collected and analyzed happens over the course of minutes and hours. While it allows models to be affected by minor rises and falls, it allows statistical modelling of the fluctuations of the stock market day, where there are high and low frequency periods of trading. The more common models look for stocks that have significant price moves meaning that investors require less capital per trade to turn a profit.
High frequency trading – when most people here about quantitative trading, they will think about recent scandals involving high frequency trading; the practice of buying and selling shares in a speed that is not achievable by the human mind or by most computer connections. This day trading strategy is best left to the professionals who have direct market access, the fastest computing powers and the most complex algorithms that take advantage of even the smallest price fluctuations. The goal here is to turn a tiny profit over a high volume of trades which will slowly accumulate over the course of a day.
Pros and Cons of Quantitative Trading
Obviously, most at-home traders won’t have the technology or the computing speed to engage in most high frequency trading practices, but there are some benefits of learning how to use statistics in trading stocks. Firstly, it takes the mantra “make a plan and stick to it” and turns it into a firm set of rules to follow throughout the day. Even if you can’t automate your buying and selling, it’s much more relaxing relying on a program that tells you the optimum way to manage your portfolio. Quantitative trading practices also remove the emotions of a good or bad day from your decision making process. It’s easy to get sucked into a spiral of chasing bigger profits or sending good money after bad; statistical analysis of the data will tell you when to stop.
One of the main drawbacks of quantitative trading is that unless you have the time and effort to keep your model fed with current market data, it can quickly become outdated. For example, you could have a medium frequency program that studies day trading data over the previous month for a particular set of stocks. It will make predictions for the best day trading strategies based on this data, but will ignore any new information that could drastically change the value of the company. You would either need to feed daily data and update the model, which is incredibly time consuming for the at-home trader, or develop a new model frequently to make use of the most recent data.
The other big problem with quantitative trading is that you need a huge data set to really be able to train your program to find the patterns in the noise. As a general rule for statistical analysis of the market, the more historical data you have, the better your future predictions will be. Having access to a regularly updated database of stock market data will dramatically increase your chances of success as a quantitative trader.
Disclaimer: This content does not necessarily represent the views of IWB.


investmentwatchblog--2020-07-13--Looks like the revolution is going on as planned…

Black and blue : BLM and NYPD supporters duke it out on NYC streets for 2nd night in a row ( VIDEOS ) At least two protesters were arrested and two NYPD officers injured as pro-cop demonstrators and Black Lives Matters supporters faced off in street clashes for the second day in a row .
Dozens of Black Lives Matter protesters clashed with members of a pro-NYPD rally held in the Bay Ridge area of Brooklyn at approximately 5:30pm local time Sunday .
The BLM counter protest began a mile away on 86th Street but it wasn ’ t long @ @ @ @ @ @ @ for the second day in a row as eyewitness footage from the scene shows BLM throws an egg directly in NYPD cops face during peaceful protest Imagine all of New York City going after the cops ?
?
?
Escape from New York is right around the corner… NYC mayor calls for unity after viral VIDEO shows man putting Bronx cop in headlock – as crowd cheers In response to a viral video of a Bronx man putting an officer in a headlock , which outraged police unions , New York Mayor Bill @ @ @ @ @ @ @ lot to do to heal the relationship between police and the community.
” “ That starts with standing together and advancing reforms , but it also means we can not accept violence against our police officers , ” de Blasio added in a tweet on Sunday night , with a link to a story about the wild incident .
IT ’ S COME TO THIS : Vermont City Council Unanimously Rejects American Flag Art After Pushing Through ‘ Emergency ’ BLM Street Mural .
THE PRESS WILL IGNORE THEM , EXCEPT WHEN IT @ @ @ @ @ @ @ the Blue ’ rallies spreading nationwide despite ‘ Black Lives Matter ’ and ‘ Defund the Police ’ rhetoric .
UPDATE : Hundreds of pro-cop supporters march to 122 Precinct to stand with NYPD .

Black and blue: BLM and NYPD supporters duke it out on NYC streets for 2nd night in a row (VIDEOS)
At least two protesters were arrested and two NYPD officers injured as pro-cop demonstrators and Black Lives Matters supporters faced off in street clashes for the second day in a row.
Dozens of Black Lives Matter protesters clashed with members of a pro-NYPD rally held in the Bay Ridge area of Brooklyn at approximately 5:30pm local time Sunday.
The BLM counter protest began a mile away on 86th Street but it wasn’t long before the two sides came to blows for the second day in a row as eyewitness footage from the scene shows
BLM throws an egg directly in NYPD cops face during peaceful protest
Imagine all of New York City going after the cops???
Escape from New York is right around the corner…
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NYC mayor calls for unity after viral VIDEO shows man putting Bronx cop in headlock – as crowd cheers
In response to a viral video of a Bronx man putting an officer in a headlock, which outraged police unions, New York Mayor Bill de Blasio said there is “a lot to do to heal the relationship between police and the community.”
“That starts with standing together and advancing reforms, but it also means we cannot accept violence against our police officers,” de Blasio added in a tweet on Sunday night, with a link to a story about the wild incident.
IT’S COME TO THIS: Vermont City Council Unanimously Rejects American Flag Art After Pushing Through ‘Emergency’ BLM Street Mural.
THE PRESS WILL IGNORE THEM, EXCEPT WHEN IT CALLS THEM WHITE SUPREMACIST: ‘Back the Blue’ rallies spreading nationwide despite ‘Black Lives Matter’ and ‘Defund the Police’ rhetoric.
UPDATE: Hundreds of pro-cop supporters march to 122 Precinct to stand with NYPD.
h/t COVID19


investmentwatchblog--2020-07-13--CHART OF THE WEEK: Top U.S. Shale Gas Stocks Crushed Even With Double The Production

The top U.S. shale gas producers have seen their stock prices decimated from their highs reached in 2014 .
What ’ s even worse is that the horrible stock performance occurs even with a nearly doubling of these shale companies ’ gas production .
While likely everyone heard the news that Chesapeake Energy , the United States ’ second-largest shale gas producer , declared bankruptcy last month , little is known about its competitors .
For example , the country ’ s third-largest shale gas producer , Antero Resources stock price lost 96 % of its value from its high @ @ @ @ @ @ @ U.S. shale gas producers stock performance from their 2014 highs : As we can see , Chesapeake stock lost 99 % of its value since its high in 2014 , Antero is down 96 % , followed by Southwestern ( -94 % ) , Range Resources ( 92 % ) , EQT Energy ( -78 % ) and lastly , Cabot Oil & Gas ( -55 % ) .
Cabot Oil & Gas share price held up better than the competitors because it actually made some decent money and Free Cash Flow versus @ @ @ @ @ @ @ the rankings of these companies above are shown on the left of the RED BAR .
EQT Energy is the largest shale gas producer shown as ( # 1 ) .
I didn ’ t include 5th ranked ExxonMobil because it is not a primary shale gas producer or 5th ranked Ascent Resources , headquartered out of London ( it does not have a U.S. stock ticker on Stockcharts.com ) .
Regardless , these six companies have seen their share prices crushed even though the combined shale gas production nearly doubled : Using @ @ @ @ @ @ @ gas production from these six companies increased from 9.8 billion cubic feet ( Bcf/d ) in 2014 to the current 19 Bcf/d in 2020 .
Unfortunately , shale gas production from most of these companies has been an unprofitable and lousy investment for shareholders .
Again , the only company that made some decent profits was Cabot Oil & Gas .
This is precisely why Cabot ’ s stock performance has held up better than its competitors .
Range Resources , ranked # 8 in the U.S. , had the highest stock price @ @ @ @ @ @ @ .
Currently , Range Resources is trading at a whopping $ 6.72 a share .
I don ’ t believe we are going to see much of a turn-around in these companies ’ share prices .
Unfortunately , I forecast that Antero , Southwestern , and Range Resources will likely head to PENNY STOCK HEAVEN sooner than later .
YOU HAVE BEEN WARNED…

BY
The top U.S. shale gas producers have seen their stock prices decimated from their highs reached in 2014. What’s even worse is that the horrible stock performance occurs even with a nearly doubling of these shale companies’ gas production.
While likely everyone heard the news that Chesapeake Energy, the United States’ second-largest shale gas producer, declared bankruptcy last month, little is known about its competitors. For example, the country’s third-largest shale gas producer, Antero Resources stock price lost 96% of its value from its high in 2014.
Here are the leading U.S. shale gas producers stock performance from their 2014 highs:
As we can see, Chesapeake stock lost 99% of its value since its high in 2014, Antero is down 96%, followed by Southwestern (-94%), Range Resources (92%), EQT Energy (-78%) and lastly, Cabot Oil & Gas (-55%). Cabot Oil & Gas share price held up better than the competitors because it actually made some decent money and Free Cash Flow versus its rivals.
According to Shaleprofile.com, the rankings of these companies above are shown on the left of the RED BAR. EQT Energy is the largest shale gas producer shown as (#1). I didn’t include 5th ranked ExxonMobil because it is not a primary shale gas producer or 5th ranked Ascent Resources, headquartered out of London (it does not have a U.S. stock ticker on Stockcharts.com).
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Regardless, these six companies have seen their share prices crushed even though the combined shale gas production nearly doubled:
Using a chart from Shaleprofile.com, the shale gas production from these six companies increased from 9.8 billion cubic feet (Bcf/d) in 2014 to the current 19 Bcf/d in 2020. Unfortunately, shale gas production from most of these companies has been an unprofitable and lousy investment for shareholders.
Again, the only company that made some decent profits was Cabot Oil & Gas. This is precisely why Cabot’s stock performance has held up better than its competitors.
Range Resources, ranked #8 in the U.S., had the highest stock price in 2014 at $92 a share. Currently, Range Resources is trading at a whopping $6.72 a share. I don’t believe we are going to see much of a turn-around in these companies’ share prices. Unfortunately, I forecast that Antero, Southwestern, and Range Resources will likely head to PENNY STOCK HEAVEN sooner than later.
YOU HAVE BEEN WARNED…


investmentwatchblog--2020-07-13--What could possibly go wrong? AOC says defunding police will call for “experimentation” with public

What could possibly go wrong? AOC says defunding police will call for “experimentation” with public safety

These demorats are very , very dangerous .
Seems that their agenda is more important than the safety of their @ @ @ @ @ Democrats have no idea what would take the place of police after defunding .
She @ @ @ @ @ with public safety , and to “ even pass laws in the spirit of that @ @ @

by DCG
These demorats are very, very dangerous.
Seems that their agenda is more important than the safety of their citizens.
Rep. Ocasio-Cortez proves Democrats have no idea what would take the place of police after defunding.
She calls for “experimentation” with public safety, and to “even pass laws in the spirit of that experimentation” pic.twitter.com/XtDBL6b8x2
— Tommy Pigott (@TCPigott) July 10, 2020


investmentwatchblog--2020-07-13--Reduce your colorectal cancer risk by up to 39% with 60 minutes of daily physical exercise

( Natural News ) A recent study in the British Journal of Cancer revealed that people with at least 60 minutes of physical activity from adolescence could potentially reduce their risk for colorectal cancer by more than a third .
The report , led by researchers from the University of Sao Paolo , is the first to analyze the direct link between physical activity during adolescence and the risk of developing adenomas later in life .
Colorectal cancer refers to cancers that start in either the colon or rectum .
These can also be called colon or rectal cancer , @ @ @ @ @ @ @ .
Most colorectal cancers develop from adenomatous polyps , or precancerous growths in the colon or rectum .
In their report , the team drew data from 28,250 women in the Nurses ’ Health Study II , one of the largest investigations into risk factors for major chronic diseases ever conducted .
They included women who offered data on their individual history of physical activity and had lower bowel endoscopy between 1998 and 2011 .
The researchers found that daily physical activity for more than 60 minutes during adolescence , measured from age @ @ @ @ @ @ @ risk of adenoma by seven percent , compared to little or no activity .
Meanwhile , physical activity only during adulthood , measured from age 23 to 64 years , reduced the risk by nine percent , and physical activity in both adolescence and adulthood reduced the risk by 24 percent .
These numbers are adjusted according to known risk factors such as smoking , diet , alcohol intake and family history of colorectal cancer .
When the severity of adenoma is considered , the differences become more significant .
Compared to participants @ @ @ @ @ @ @ adulthood , those with high physical activity during both stages had a reduced risk of advanced adenoma by 39 percent .
To note , advanced adenomas are bigger in size and more likely to develop into cancer .
“ This increased level of risk reduction correlated with villous adenomas , which are aggressive polyps with a diameter of more than 1 cm and are the most likely to evolve into colorectal cancer , ” explained Leandro Rezende , one of the lead authors of the study .
Physical activity reduces the risk of @ @ @ @ @ @ @ , inflammation and insulin levels .
It can also lead to a balanced and more diverse gut bacteria , resulting in good metabolic and inflammatory activity .
While it is common knowledge that inactivity is bad for the health , the extent of its harmful effects remains open-ended .
In another study , this time from the Journal of the National Cancer Institute , a team of researchers from the University of Regensburg in Germany drew a link between sedentary lifestyle and cancers in the colon , endometrium and lungs .
For this @ @ @ @ @ @ @ compared data from 43 observational studies , which include over 4 million individuals and 68,936 cancer cases .
When the highest levels of sedentary behavior were compared to the lowest , the researchers found a significantly higher risk for the three types of cancer .
Even people who maintain an active lifestyle can be affected if they spend large amounts of time sitting down .
In this case , limiting the time spent sedentary plays an important role in preventing cancer .
However , statistics on the American sedentary lifestyle show a penchant @ @ @ @ @ @ @ American Heart Association , nearly one-third of high school students play video games or computer games for three or more hours on an average school day .
When other virtual screens are considered , the numbers only get worse .
A study from the Kaiser Family Foundation found that children spend more than seven and a half hours a day in front of a screen .
( Related : Study suggests TV watching lowers physical activity ( press release ) . )
Meanwhile , a 2020 survey from the Centers for Disease Control @ @ @ @ @ @ @ percent of American adults were physically inactive , with the South having the highest prevalence of physical inactivity at 28 percent .
“ Too many adults are inactive , and they may not know how much it affects their health , ” says Ruth Petersen , director of the CDC ’ s Division of Nutrition , Physical Activity , and Obesity .
She also encourages everyone to be more active and exercise adequately .
“ Being physically active helps you sleep better , feel better and reduce your risk of obesity , heart @ @ @ @ @ @ @ cancers , ” Petersen adds .
Learn more ways to prevent cancer and other diseases at Health.news .

(Natural News) A recent study in the British Journal of Cancer revealed that people with at least 60 minutes of physical activity from adolescence could potentially reduce their risk for colorectal cancer by more than a third. The report, led by researchers from the University of Sao Paolo, is the first to analyze the direct link between physical activity during adolescence and the risk of developing adenomas later in life.
Physical activity, crucial for risk reduction
Colorectal cancer refers to cancers that start in either the colon or rectum. These can also be called colon or rectal cancer, depending on where the disease first appears. Most colorectal cancers develop from adenomatous polyps, or precancerous growths in the colon or rectum.
In their report, the team drew data from 28,250 women in the Nurses’ Health Study II, one of the largest investigations into risk factors for major chronic diseases ever conducted. They included women who offered data on their individual history of physical activity and had lower bowel endoscopy between 1998 and 2011.
The researchers found that daily physical activity for more than 60 minutes during adolescence, measured from age 12 to 22 years, reduced the risk of adenoma by seven percent, compared to little or no activity. Meanwhile, physical activity only during adulthood, measured from age 23 to 64 years, reduced the risk by nine percent, and physical activity in both adolescence and adulthood reduced the risk by 24 percent. These numbers are adjusted according to known risk factors such as smoking, diet, alcohol intake and family history of colorectal cancer.
When the severity of adenoma is considered, the differences become more significant. Compared to participants with low-activity lifestyle during both adolescence and adulthood, those with high physical activity during both stages had a reduced risk of advanced adenoma by 39 percent. To note, advanced adenomas are bigger in size and more likely to develop into cancer.
“This increased level of risk reduction correlated with villous adenomas, which are aggressive polyps with a diameter of more than 1 cm and are the most likely to evolve into colorectal cancer,” explained Leandro Rezende, one of the lead authors of the study.
Physical activity reduces the risk of colorectal cancer because it decreases body fat, inflammation and insulin levels. It can also lead to a balanced and more diverse gut bacteria, resulting in good metabolic and inflammatory activity.
Limiting sedentary lifestyle
While it is common knowledge that inactivity is bad for the health, the extent of its harmful effects remains open-ended. In another study, this time from the Journal of the National Cancer Institute, a team of researchers from the University of Regensburg in Germany drew a link between sedentary lifestyle and cancers in the colon, endometrium and lungs.
For this study, the researchers used meta-analysis and compared data from 43 observational studies, which include over 4 million individuals and 68,936 cancer cases.
When the highest levels of sedentary behavior were compared to the lowest, the researchers found a significantly higher risk for the three types of cancer. Even people who maintain an active lifestyle can be affected if they spend large amounts of time sitting down. In this case, limiting the time spent sedentary plays an important role in preventing cancer.
However, statistics on the American sedentary lifestyle show a penchant for sit-down activities.
According to the American Heart Association, nearly one-third of high school students play video games or computer games for three or more hours on an average school day. When other virtual screens are considered, the numbers only get worse. A study from the Kaiser Family Foundation found that children spend more than seven and a half hours a day in front of a screen. (Related: Study suggests TV watching lowers physical activity (press release).)
We are primarily funded by readers. Please subscribe and donate to support us!
Meanwhile, a 2020 survey from the Centers for Disease Control and Prevention found that more than 15 percent of American adults were physically inactive, with the South having the highest prevalence of physical inactivity at 28 percent.
“Too many adults are inactive, and they may not know how much it affects their health,” says Ruth Petersen, director of the CDC’s Division of Nutrition, Physical Activity, and Obesity. She also encourages everyone to be more active and exercise adequately.
“Being physically active helps you sleep better, feel better and reduce your risk of obesity, heart disease, type 2 diabetes and some cancers,” Petersen adds.
Learn more ways to prevent cancer and other diseases at Health.news.
Sources include:
Agencia.FAPESP.br
Cancer.org
Nature.com
ESMO.org
HHS.gov
CDC.gov
AAFP.org


investmentwatchblog--2020-07-13--Undeniable Proof Everything Is Racist

Undeniable Proof Everything Is Racist

Tipping .
Women .
Chess .
Crosswalk signs .
Mayonnaise .
Soap .
Guess what all these things have in @ @ @ @ @ : They ’ ve all been deemed racist by the wild , wild left .
@ @ @ @ @ walk down the lane of everything that the left has decided needs to be called @ @ @ @ @ curated by Titania McGrath .

Tipping. Women. Chess. Crosswalk signs. Mayonnaise. Soap. Guess what all these things have in common? You guessed it: They’ve all been deemed racist by the wild, wild left. The beanie crew takes a walk down the lane of everything that the left has decided needs to be called out for racism, list curated by Titania McGrath.
We are primarily funded by readers. Please subscribe and donate to support us!
h/t Calamity


investmentwatchblog--2020-07-13--The Fed Is Trapped In QE As Interest Rates Can’t Rise Ever Again.

Since the onset of the pandemic , the Fed has entered into the most aggressive monetary campaign .
Its goal was to bolster asset markets to restore confidence in the financial system .
However , the trap is the Fed is in a position where they can never stop QE as interest rates can ’ t rise ever again .
As we discussed previously , Jeremy Siegel already declared the end to the 40-year bond bull market .
“ History has shown that this liquidity has to come out somewhere , and we ’ re not going to get a @ @ @ @ @ @ @ think ultimately , it ’ s going to be the bondholder that ’ s going to suffer .
That ’ s certainly not the popular notion right now.
” – J. Siegel via CNBC However , this is not a new sentiment , but it has existed since I started calling for rates to fall below 1 % as far back as 2013 .
The reasoning then , and is the same today , is the linkage between the debt and economic growth .
Interest rates are a function of three primary factors @ @ @ @ @ @ @ and inflation .
The relationship between the composite index compared to the level of the 10-year Treasury rate is below .
As shown , the level of interest rates correlates to the strength of economic growth and inflation .
Since wage growth allows individuals to consume , which makes up roughly 70 % of economic growth , the demand for borrowing is a function of the need for consumption .
But therein lies the trap – inflation .
While “ deflation ” is the overarching threat longer-term , the Fed is also potentially @ @ @ @ @ @ @ threat .
The “ unlimited QE ” bazooka is dependent on the Fed needing to monetize the deficit to support economic growth .
However , if the goals of full employment and economic growth quickly come to fruition , the Fed will face an “ inflationary surge.
” Should such an outcome occur , it will push the Fed into a very tight corner .
The surge in inflation will limit the ability to continue “ unlimited QE ” without further exacerbating inflation .
Unfortunately , if they don ’ t “ monetize @ @ @ @ @ @ @ ” program , interest rates will surge as the Treasury issues more debt .
If interest rates rise for any reason , such is when the “ wheels come off the cart.
” 1 ) Economic growth is still dependent on massive levels of monetary interventions .
An increase in rates will curtail growth as rising borrowing costs slows consumption .
2 ) The Federal Reserve currently runs the world ’ s largest hedge fund with over $ 7-Trillion in assets .
Long Term Capital Mgmt.
, which managed only $ 100 billion @ @ @ @ @ @ @ rates caused its collapse .
The Fed is 70x that size .
3 ) Rising interest rates will immediately kill the housing market .
People buy payments , not houses , and rising rates mean higher payments .
4 ) An increase in interest rates means higher borrowing costs .
Such leads to lower profit margins for corporations .
5 ) One of the main bullish arguments over the last 11-years remains stocks are cheap based on low interest rates .
When rates rise the market becomes overvalued very quickly .
6 ) @ @ @ @ @ @ @ market could lead to another credit crisis as rate-spread derivatives go bust .
7 ) As rates increase , so do the variable rate interest payments on credit cards .
With the consumer already impacted by stagnant wages , under-employment , and high costs of living ; a rise in debt payments would further curtail disposable incomes .
Such would lead to a contraction in spending and rising defaults .
( Which are already happening as we speak ) 8 ) Rising defaults on debt service will negatively impact banks that are still @ @ @ @ @ @ @ massive levels of bad debt .
9 ) Commodities , which are sensitive to the direction and strength of the global economy , will plunge in price as recession sets in .
10 ) The deficit/GDP ratio will surge as borrowing costs rise sharply .
The many forecasts for lower future deficits will crumble as new estimates begin to propel higher .
I could go on , but you get the idea .
The ramifications of rising interest rates apply to every aspect of the economy .
As rates rise , so do @ @ @ @ @ @ @ loans , business loans , capital expenditures , lease , corporate profitability , etc .
Currently , the economy requires in excess of $ 4.00 in debt to manufacture $ 1.00 of economic growth .
Given the dependence on debt to fund growth , higher interest rates would be inherently destructive .
More importantly , consumers have sunk themselves deeper into debt as well .
Currently , the gap between wages and the costs of supporting the required “ standard of living ” is at a record .
With a requirement of over @ @ @ @ @ @ @ current standard of living , there is little ability to absorb higher rates before it drastically curbs consumption .
The Fed Has No Choice Given the amount of debt currently required to sustain current economic growth , the Fed has no choice but to continue monetization of the Federal debt indefinitely .
Such leaves only TWO possible outcomes from here , both of them are not good .
• • None Powell & Co. continues to keep rates at zero .
the pension and social welfare systems , the debt will continue to @ @ @ @ @ @ @ cycle that started nearly 40-years ago will continue as the U.S. adopts the • None The second outcome is far worse , which is an Such an event started in 2008 but was cut short by Central Bank interventions .
In 2020 , the Fed arrested the deleveraging process once again .
Both events lead to an even which at some point , the Fed ’ s interventions may not stop .
The Fed ’ s Trapped At Zero The debt problem exposes the Fed ’ s risk and why they are now @ @ @ @ @ @ @ Fed has stated interest rates will remain low until “ such time as the dual mandates of full employment and price stability achieved.
” Given economic stability was not achieved in the last decade , it is highly unlikely a more than doubling of the Fed ’ s balance sheet will improve future outcomes .
Unfortunately , given we now have a decade of experience of watching the “ wealth gap ” worsen under the Federal Reserve ’ s policies , the next decade will only see the “ gap ” widen .
@ @ @ @ @ @ @ deficits inhibit organic growth .
The massive debt levels added to the backs of taxpayers will only ensure the Fed remains trapped at the zero-bound .
However , the issue of rising borrowing costs spreads through the entire financial ecosystem like a virus .
The rise and fall of stock prices have very little to do with the average American and their participation in the domestic economy .
Interest rates are an entirely different matter .
Since interest rates affect “ payments , ” increases in rates quickly negatively impact consumption , housing @ @ @ @ @ @ @ economic growth .
Given the current demographic , debt , pension , and valuation headwinds , the future growth rates will be low over the next couple of decades .
Even the Fed ’ s own “ long-run ” economic growth rates currently run below 2 % .
The catalysts needed to create the type of economic growth required to drive interest rates substantially higher , as we saw before 1980 , are not available today .
Nor will they be in the future .
Ultimately , the Federal Reserve , and the @ @ @ @ @ @ @ choices to extricate the economy from the current “ liquidity trap.
” However , history shows that political leadership ever makes the choices , until the choices are forced upon them .
You don ’ t have to look much further than Japan for a clear example of what I mean .

by Lance Roberts
Since the onset of the pandemic, the Fed has entered into the most aggressive monetary campaign. Its goal was to bolster asset markets to restore confidence in the financial system. However, the trap is the Fed is in a position where they can never stop QE as interest rates can’t rise ever again.
As we discussed previously, Jeremy Siegel already declared the end to the 40-year bond bull market.
“History has shown that this liquidity has to come out somewhere, and we’re not going to get a free lunch out of this. I think ultimately, it’s going to be the bondholder that’s going to suffer. That’s certainly not the popular notion right now.” – J. Siegel via CNBC
However, this is not a new sentiment, but it has existed since I started calling for rates to fall below 1% as far back as 2013. The reasoning then, and is the same today, is the linkage between the debt and economic growth.
It’s The Economy Stupid
Interest rates are a function of three primary factors: economic growth, wage growth, and inflation. The relationship between the composite index compared to the level of the 10-year Treasury rate is below.
As shown, the level of interest rates correlates to the strength of economic growth and inflation. Since wage growth allows individuals to consume, which makes up roughly 70% of economic growth, the demand for borrowing is a function of the need for consumption.
But therein lies the trap – inflation.
The Fed Inflation Trap
While “deflation” is the overarching threat longer-term, the Fed is also potentially confronted by a shorter-term “inflationary” threat.
The “unlimited QE” bazooka is dependent on the Fed needing to monetize the deficit to support economic growth. However, if the goals of full employment and economic growth quickly come to fruition, the Fed will face an “inflationary surge.”
Should such an outcome occur, it will push the Fed into a very tight corner. The surge in inflation will limit the ability to continue “unlimited QE” without further exacerbating inflation. Unfortunately, if they don’t “monetize” the deficit through the “QE” program, interest rates will surge as the Treasury issues more debt.
It’s a no-win situation for the Fed.
The Worst Thing Ever
If interest rates rise for any reason, such is when the “wheels come off the cart.”
1) Economic growth is still dependent on massive levels of monetary interventions. An increase in rates will curtail growth as rising borrowing costs slows consumption.
2) The Federal Reserve currently runs the world’s largest hedge fund with over $7-Trillion in assets. Long Term Capital Mgmt., which managed only $100 billion, nearly derailed the economy when rising rates caused its collapse. The Fed is 70x that size.
3) Rising interest rates will immediately kill the housing market. People buy payments, not houses, and rising rates mean higher payments.
4) An increase in interest rates means higher borrowing costs. Such leads to lower profit margins for corporations.
5) One of the main bullish arguments over the last 11-years remains stocks are cheap based on low interest rates. When rates rise the market becomes overvalued very quickly.
6) The negative impact to the massive derivatives market could lead to another credit crisis as rate-spread derivatives go bust.
7) As rates increase, so do the variable rate interest payments on credit cards. With the consumer already impacted by stagnant wages, under-employment, and high costs of living; a rise in debt payments would further curtail disposable incomes. Such would lead to a contraction in spending and rising defaults. (Which are already happening as we speak)
8) Rising defaults on debt service will negatively impact banks that are still not adequately capitalized and still burdened by massive levels of bad debt.
We are primarily funded by readers. Please subscribe and donate to support us!
9) Commodities, which are sensitive to the direction and strength of the global economy, will plunge in price as recession sets in.
10) The deficit/GDP ratio will surge as borrowing costs rise sharply. The many forecasts for lower future deficits will crumble as new estimates begin to propel higher.
I could go on, but you get the idea.
Putting It In Pictures
The ramifications of rising interest rates apply to every aspect of the economy.
As rates rise, so do rates on credit card payments, auto loans, business loans, capital expenditures, lease, corporate profitability, etc.
Currently, the economy requires in excess of $4.00 in debt to manufacture $1.00 of economic growth. Given the dependence on debt to fund growth, higher interest rates would be inherently destructive.
More importantly, consumers have sunk themselves deeper into debt as well. Currently, the gap between wages and the costs of supporting the required “standard of living” is at a record. With a requirement of over $16,000 in debt to maintain the current standard of living, there is little ability to absorb higher rates before it drastically curbs consumption.
The Fed Has No Choice
Given the amount of debt currently required to sustain current economic growth, the Fed has no choice but to continue monetization of the Federal debt indefinitely.
Such leaves only TWO possible outcomes from here, both of them are not good.
Powell & Co. continues to keep rates at zero. As an aging demographic strain the pension and social welfare systems, the debt will continue to stifle inflation and economic growth. The cycle that started nearly 40-years ago will continue as the U.S. adopts the “Japan Syndrome.” The second outcome is far worse, which is an economic decoupling that leads to a massive deleveraging process. Such an event started in 2008 but was cut short by Central Bank interventions. In 2020, the Fed arrested the deleveraging process once again. Both events lead to an even more debt-laden system, which at some point, the Fed’s interventions may not stop.
The Fed’s Trapped At Zero
The debt problem exposes the Fed’s risk and why they are now forever trapped at the zero-bound.
The Fed has stated interest rates will remain low until “such time as the dual mandates of full employment and price stability achieved.” Given economic stability was not achieved in the last decade, it is highly unlikely a more than doubling of the Fed’s balance sheet will improve future outcomes.
Unfortunately, given we now have a decade of experience of watching the “wealth gap” worsen under the Federal Reserve’s policies, the next decade will only see the “gap” widen.
We now know that surging debt and deficits inhibit organic growth. The massive debt levels added to the backs of taxpayers will only ensure the Fed remains trapped at the zero-bound.
Rates Can’t Rise Ever
However, the issue of rising borrowing costs spreads through the entire financial ecosystem like a virus. The rise and fall of stock prices have very little to do with the average American and their participation in the domestic economy. Interest rates are an entirely different matter.
Since interest rates affect “payments,” increases in rates quickly negatively impact consumption, housing, and investment, which ultimately deters economic growth.
Given the current demographic, debt, pension, and valuation headwinds, the future growth rates will be low over the next couple of decades. Even the Fed’s own “long-run” economic growth rates currently run below 2%.
The catalysts needed to create the type of economic growth required to drive interest rates substantially higher, as we saw before 1980, are not available today. Nor will they be in the future.
Ultimately, the Federal Reserve, and the Administration, will have to face hard choices to extricate the economy from the current “liquidity trap.” However, history shows that political leadership ever makes the choices, until the choices are forced upon them.
You don’t have to look much further than Japan for a clear example of what I mean.