This Week in Barrons – 1-24-2016:
Thoughts:
Cover
of ‘The Economist’ in 1988 - Notice the Year on the Coin
Dear. Ms. Yellen:
The picture above is
the January 1988 cover of the Economist magazine. The headline says: “Get Ready for a World
Currency.” Beneath the bird (‘The
Phoenix’) you see many nations currencies represented, but notice the DATE on
that coin? It’s 2018.
To quote a passage from
the article itself: ”THIRTY years from now, Americans, Japanese, Europeans,
and people in many other rich countries, and some relatively poor ones will
probably be paying for their shopping with the same currency. Prices will be quoted not in dollars, yen or
D-marks but in, let's say, ‘The Phoenix’. Companies and shoppers will favor ‘The
Phoenix’ because it will be more convenient than today's national currencies. The supply of Phoenix’s will be fixed by a
new central bank, potentially descending from the IMF. Each country will use taxes and public
spending to offset temporary falls in specific currency demand, but it would
have to borrow rather than print money to finance each of their budget deficits.
With no recourse to inflation,
governments and their creditors would be forced to judge their borrowing and
lending plans more carefully than they do today. The Phoenix
would probably start as a cocktail of national currencies, just as the Special
Drawing Right is today. In time, though, its value against
national currencies would cease to matter, because people would choose it for
its convenience, and the stability of its purchasing power.”
This Rothschild owned
financial publication (The Economist), 28 years ago – laid out exactly what the
central bankers were PLANNING. All we
had to do was read it. Major things like
this just don’t happen. Little by little
you need to get (in this case) the world angry with the U.S., our policies, and
our ever-abused currency. First Libya tried to get away from selling oil
in U.S. dollars – their government was changed. Then Iraq tried it – and their government was
toppled. Then the CEO of a large French energy company TOTAL suggested:
“There is NO NEED to trade oil in U.S. dollars.” Weeks later, he was killed in an airplane –
that was hit by a snowplow – driven by a drunk driver. No, I can’t make
this stuff up.
Today, Russia and China are
transacting billions of dollars in oil trades – all in their native currencies.
It’s only a matter of time until the Saudi's
publicly state that they'll accept anyone's currency for their oil. When that happens, the big global reset will
be near because the days of the ‘petro-dollar’ will be over. Cries of
currency manipulation will continue to rise; all the while currency exchange
rates will drive people to demand change. Canadian currency (for example) has lost almost
50% of its purchasing power in a very short period of time. Food costs in Canada have gone up dramatically
because 80% of their food is imported. A
box of frosted flakes is now $15, and a cucumber is $3.
All of this was
PLANNED. Market instability will increase,
economies will continue to grind lower, and eventually the public will come (hat
in hand) begging Governments to ‘do something’. And that ‘something’ will involve pseudo-white
knights sweeping in from Brussels and the U.N. – presenting the world with a
unified global reserve currency.
The world is in flux. Consider the unstoppable progress of
technology and what it will do to the jobs situation. What do you think
the one-time cashiers, machinists, office workers, bartenders, burger-makers,
etc. are going to do when robots replace them? The common line of
thinking is that they will be re-trained for different jobs. Unfortunately, the jobs they will be
re-trained for – will be replaced by even more technology. Right now Uber is one of those ‘gig jobs’
that many are using for extra cash. To
quote the CEO of Uber when talking about autonomous cars: “Our service would be
a whole lot cheaper if you weren't paying for that other dude in the car.” So I’m wondering what the ‘Master Plan’ has
in store for untold millions of idled workers?
Humans (for lack of a
better word) are being phased out. While
nothing ever goes strictly according to plan, you have to admire how much ‘the
Powers that Be’ have accomplished:
-
Our kids have
become dumbed down.
-
Our colleges have
become expensive sandboxes for the easily insulted.
-
Our government (for
the first time in history) forces us to purchase medical insurance.
-
We are blanketed
by inflation, but are being told that it’s imaginary.
-
Wages have
stagnated for 30 years, and it’s being termed progress.
-
And one well-paying
job has been replaced by two lousier part-time ones that do not include
pensions or benefits.
And all of this was NOT by
accident – look at the date on the coin.
The Market:
This week global markets were pronounced as ‘officially’ being in ‘bear’
territory as they were down over 20%. Soon,
we will see country after country move into recession territory. The dynamics about this situation appear to be
far more challenging than in 2008. This next global recession will be based
upon the burden of debt. The larger picture is not based upon corporate
indebtedness, but rather (to use a Warren Buffett phrase) our own derivatives –
aka ‘financial time bombs’. You see U.S.
Debt is now at $18.9 Trillion (growing at $0.1 Trillion per week) with the
total derivative market estimated to be over $700 Trillion. In the Wall Street ‘derivative casino’,
people are actively betting on events whose inaccuracy will not be exposed for
many years. The true question will be whether this ‘bear market’ will
finally expose the ‘derivatives casino’ as the ‘pyramid scheme’ that it really
is?
This week our markets (after
falling for over 2,000 points on the DOW since Dec. 30) set a short-term bottom
around 1 pm on Wednesday. Oil then
proceeded to gain 17% in just two sessions.
Mario Draghi also reported that since $7.8 Trillion has been lost from
global equities in 2016, all of the Central Banks are prepared to act in
concert to prevent a global market meltdown. It seems that Central Banks around the world are
getting ready to unleash holy hell in stimulus to SAVE the STOCK MARKETS.
I guess that takes the ‘free’ out of our ‘free market’ system.
Okay, so what happens now?
I don't for a minute think that we have
seen the bottom in stocks for 2016. I do
however think that IF oil doesn't collapse, AND China stabilizes a bit – this
‘snap-back’ rally has more to go. Those are two big ‘IFs’, but I could
see this running all the way to 1950 on the S&P. We were way overdue for a ‘snap-back’, and now
we have it. The only question is: does
this last for another day, few days, a week or maybe two weeks. The answer to that question lies in how oil
behaves. If there are any more problems
in the Middle East between the Saudi's and the Iranians – then oil could remain
elevated. But I do NOT think this is
going to last all that long, because the true earnings just don't support it.
To date, of the companies
that have reported earnings, only 47% of them have beaten their estimated revenue
numbers. Certainly ‘more’ have
engineered an Earnings Per Share beat – but that’s just accounting fiction at
this point. You can’t fake sales, and sales
are slowing across the board. Should this
market run back to the old highs on falling revenues? I think not.
Enjoy this bounce for what
it is, but it isn't time to toss the kitchen sink at it for the long term.
Tips:
I am:
-
Long various mining stocks: AG, AUY, EGO, GFI, IAG, and FFMGF,
-
Long an oil supplier: REN @ $0.56,
-
Long FB (Facebook) – heading into their earnings mid-next
week,
-
Long ATO (AutoZone), and
-
Sold SPX – Mar – Call Credit Spread – 2025 / 2030.
To
follow me on Twitter.com and on StockTwits.com
to get my daily thoughts and trades – my handle is: taylorpamm.
Please
be safe out there!
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