China The Chinese stock market has probably been the hottest market over the last year. While exciting for the time being, I don’t trust it one bit. The Chinese economy has been supported by an unsustainable increase in credit the past few years and the bubble has the potential to pop at any moment. There…
It seems like the only thing I hear in the financial media these days is talk about when the Fed will raise interest rates but I think people are missing the forest for the trees. The US dollar continues to surge higher and by letting it rise, effectively the Fed is already tightening. I don’t…
Tomorrow morning the European Central Bank (ECB) will make an announcement on monetary policy and will most likely announce the beginning of their own Quantitative Easing. I was a bit skeptical of this until last week when the European Court of Justice made it now legal for the ECB to engage in Quantitative Easing and…
Here’s a chart to illustrate what happens during deflationary economic pressures, as we’re seeing right now (click to see a larger image): In order from top to bottom: Long-term Treasury Bonds (orange), US dollar (black), Emerging Markets (brown), Euro (Green), Yen (blue), Energy/oil (purple) – last 9 months Too much debt, not enough demand (poor…
When we look back, I believe history will say the seeds of the next crisis were planted in the fall of 2014. I thought it was going to be Europe that started the party, but instead Japan raised their hand and volunteered by starting the world’s next currency war – although you’ll never hear a…
I mentioned a few weeks ago that we could be in the early innings of a bull market in the US dollar. Since the Great Recession in 2008-09, it seems like fewer and fewer assets are trading freely off of their own fundamentals with everything moving together against the US dollar. Lately, it’s been US…
Stocks have had a pretty bumpy ride over the last three weeks, with the S&P 500 falling exactly 10% from the September 19th high. The S&P 500 cash index, which is what you see quoted on TV and in the paper, fell almost 9.9% but the S&P 500 futures fell exactly 10.0% and turned on…
In short, things look clear to continue another year or two, and possibly longer but it’s just too tough to see out beyond that right now. I am becoming increasingly concerned about stocks in the short-term though. The Volatility Index (VIX), which measures expected volatility of the S&P 500 over the next 30 days, is…