9 replies to this topic

[liberatorium]

Now that the crisis is officially a thing of the past, the next stage will probably soon manifest itself..
I believe the sovereign debt problems will steadily escalate and turn into a global crisis later this year,
and that a downgrade of Britain, sometime this summer, will be the tipping point. England is going broke.
A domino effect of nation states defaulting on their obligations will lead to deleveraging and outright deflation.
The signs are here allready; recent increases in broad money supply have wound up as the big banks' excess reserves,
which have increased close to 1,2 trillion in less than two years. Velocity is dropping, and the multiplier is now at ~ 0,8.
The post 1971 Bretton Woods era, with loose fiscal policy and ever increasing leverage, is coming to an end. We have reached debt saturation.
Leviathan is slowly commiting suicide, like a parasite killing it's host, bringing down the unsustainable nanny state. The moochers will riot, as in Greece.
When the next real buying opportunity comes along, perhaps in late 2012, the old adage “Buy when there’s blood in the streets” will again be literal.

Deflation is in reality a bullmarket in money itself, and few assets will be able to appreciate under such circumstances. Gold will hit $740 and SPX at least 580.
The US Dollar will again be king, again going beyond parity with the Euro, and Treasuries maybe make new all time highs in the initial stages of of the crisis.
CRB failed to take out the 2001 low during the crash of 2008-9, but this time will make it down to ~170, while Copper finds it's way back to the base at $80.
Crude too will make new lows, with $24 as a minimum, but could even drop well below that. One exception is Agriculture, which has strong fundamentals.
German Bunds and Swiss Francs should also be amongst the winners next couple of years, when quality bonds and currencies will be the easyest to trade.
Quality is here meant in a relative sense, they are all more or less flawed. The safest bet is to go with increasing spreads between the bad and the ugly.
The good will come later, gold and silver should pick themselves up after the implosion, when the inevitable writeoffs are done and leverage become sane.

More charts here, including BRICs and PIIGS.
China too is on the verge of a spectacular collapse, and is in no position to surpass US as the leading economy.
Never bet against America!

Edited by liberatorium, 26 April 2010 - 06:39 AM.

[andr99]

Hi liberatorium...................agreed with your comment about Great Britain. I wrote it here in January that GB is broken, but anyone was focusing on piigs. Gb is a big problem also considering its economic weight................other than Greece or Portugal or Spain.........................And who is next ? California ? I think I will migrate to one of the ex sovietic republics........................the real homelands of modern capitalism, compared to what 's happening in Western World.

[andiron]

opinions do not make money...this week metals (X), gold & energy is likely to lead to the upside..i am positioned accordingly..

[liberatorium]

Yeah.. I've been watching the developments in GB for a long time, and seeing their debt to GDP running out of control,
only become increasingly convinced it will be the next calamity large enough to pull the rest of the world down with it.
A downgrade with a loss of their AAA status is maybe 2-3 months away, and the Sterling is allready trading below 1,55.

Although California is broke, I would much rather live there than any ex USSR republic. Fascism is on the rise everywhere.
Poland or Check Republic are doing well, allthough their purchasing power is still much below that of the old Western countries.
I still have faith the anglican and germanic people, traditions and institutions will prevail, and that when need be, liberty will shine.

[liberatorium]

No, being positioned right makes money .-)
Long term perspectives are speculative and should not impair flexibility..

[MikeyG]

Your scenario is a real possibility, which is why I have positioned my bigger clients in treasuries with a small hedge in gold... I took profits on my long Aussie dollar from Friday last night... Flipped to short AUD @ .9285, might add...

Edited by MikeyG, 26 April 2010 - 08:58 AM.

[big nick]

You are a great thinker, i agree with you, keep posting, I do not know if it will turn out just as you say , but you are damm
close......nick

Now that the crisis is officially a thing of the past, the next stage will probably soon manifest itself..
I believe the sovereign debt problems will steadily escalate and turn into a global crisis later this year,
and that a downgrade of Britain, sometime this summer, will be the tipping point. England is going broke.
A domino effect of nation states defaulting on their obligations will lead to deleveraging and outright deflation.
The signs are here allready; recent increases in broad money supply have wound up as the big banks' excess reserves,
which have increased close to 1,2 trillion in less than two years. Velocity is dropping, and the multiplier is now at ~ 0,8.
The post 1971 Bretton Woods era, with loose fiscal policy and ever increasing leverage, is coming to an end. We have reached debt saturation.
Leviathan is slowly commiting suicide, like a parasite killing it's host, bringing down the unsustainable nanny state. The moochers will riot, as in Greece.
When the next real buying opportunity comes along, perhaps in late 2012, the old adage “Buy when there’s blood in the streets” will again be literal.

Deflation is in reality a bullmarket in money itself, and few assets will be able to appreciate under such circumstances. Gold will hit $740 and SPX at least 580.
The US Dollar will again be king, again going beyond parity with the Euro, and Treasuries maybe make new all time highs in the initial stages of of the crisis.
CRB failed to take out the 2001 low during the crash of 2008-9, but this time will make it down to ~170, while Copper finds it's way back to the base at $80.
Crude too will make new lows, with $24 as a minimum, but could even drop well below that. One exception is Agriculture, which has strong fundamentals.
German Bunds and Swiss Francs should also be amongst the winners next couple of years, when quality bonds and currencies will be the easyest to trade.
Quality is here meant in a relative sense, they are all more or less flawed. The safest bet is to go with increasing spreads between the bad and the ugly.
The good will come later, gold and silver should pick themselves up after the implosion, when the inevitable writeoffs are done and leverage become sane.

More charts here, including BRICs and PIIGS.
China too is on the verge of a spectacular collapse, and is in no position to surpass US as the leading economy.
Never bet against America!

[pedro]

Lib -- No sane person out there should find it difficult to agree with your thesis. As usual, its the timing that's the crux of the biscuit. I do have, broadly speaking, for the first time since January, favorable conditions on my weekly charts to give me IT reversal signals. They won't kick in til required daily chart moves occur. Those are NOT longshots either. As to whether this is THE top coming, I can't say. I play turns one at a time. My LT work allows for one more shallow dip and then further new highs before making a LT sell signal hard to avoid. I'm watching FAZ give a (false) breakout this morning that may be a first mouse move. Tech and Emerging were also weak for a bit. Not so for RUT or CRE. GL and thanks for your post.

Edited by pedro, 26 April 2010 - 09:57 AM.

[draggen33]

In case any one cares, quote from merriman on Friday!!


http://www.mmacycles...april-26,-2010/

There is something else to watch for. Mercury is retrograde April 19-May 11. The middle of that period can also coincide with a market reversal, +/- 2 trading days. That equates to Thursday, April 30. The rule is that any market that did not reverse around the time of the retrograde date will usually have a sudden turn around the middle of the retrograde period. It is very rare that a market makes it all the way through Mercury retrograde without a reversal of some importance.

[andr99]

Yeah.. I've been watching the developments in GB for a long time, and seeing their debt to GDP running out of control,
only become increasingly convinced it will be the next calamity large enough to pull the rest of the world down with it.
A downgrade with a loss of their AAA status is maybe 2-3 months away, and the Sterling is allready trading below 1,55.

Although California is broke, I would much rather live there than any ex USSR republic. Fascism is on the rise everywhere.
Poland or Check Republic are doing well, allthough their purchasing power is still much below that of the old Western countries.
I still have faith the anglican and germanic people, traditions and institutions will prevail, and that when need be, liberty will shine.

lib I was only joking when I talked about the Soviet Republics................what I meant was to underline the abyss where this Western world is going to get because of a bunch of banksters addicted to the others' bankruptcy just to become fatter day by day thanks to the frauds they set up. Without morality even the Western civilization is going to fail. How is it possible to be in a situation like this ?