Corrections Taking Place in All Markets....
You can see how my early year predictions are playing out nicely. It is not the fact that one really calls these things but rather one accepts the chance that these possibilities can happen. If for no other reason than most people think that it cannot happen.
Both the Dollar and the Ten Year are holding in a range and have been for a few weeks now. They will likely to continue to do this. Stocks are simply continuing to correct down to the targets that I showed you earlier this year where they should stabilize. No this year will likely not be a banner stock return year. However if you were following my advice you should be out with nice profits anyway.
If and I say "if" you are going to have a melt down in any markets it might happen over the next few months. You see the trade wars are beginning in earnest and while markets that are controlled by central banks probably won't feel a lot of push one way or the other they might be prone to problems.
Protectionism is never a good thing. I can't really blame the US here as they have been buying cheap, crappy, products for a long time from the Asian countries without seeing a lot come back to them. If you are going to do this you have to weigh in on what it is worth to you to engage in this sort of policy. The big factor is a deflationary effect that importing cheap goods has on your population. The cycle is very similar to deflation itself where as price wars erupt as to who can provide goods the cheapest it causes a spiral down of wages and of course more people seeking deals so they have a tendency to shop where it is cheapest not really knowing that they are causing a collapse in their own life style by doing it. In other words it feeds upon itself and once it is ingrained into the population it is not so easy to turn off the spigot.
I think that is where the US is at now. Equalizing trading partners so that this spiraling effect of importing deflation does not continue to affect the US consumer. However herein lies the problem. How do you pull the plug? Is there a way now that Walmart, Amazon, Target have taken over retailing? I doubt it without a lot of pain.
To restructure the trade imbalance would mean making changes internally too. So that being said where are the people that could not afford to shop anywhere else going to shop? In other words what will the absence of cheap goods do to people's lives? Hmmm.... at this point a good question.
Tariffs will only make the situation worse. As a debt laden society this is the canary in the coal mine folks. This could be what brings the debt explosion down.
Why?
Here it is, "because central banks can't print this over". There is no way to control this. Hence it could be what causes a small problem to become a much bigger problem. This could very easily turn into an avalanche of debt liquidation. Of illiquid conditions. This is where contagion could easily get out of control.
Time will tell.
Both the Dollar and the Ten Year are holding in a range and have been for a few weeks now. They will likely to continue to do this. Stocks are simply continuing to correct down to the targets that I showed you earlier this year where they should stabilize. No this year will likely not be a banner stock return year. However if you were following my advice you should be out with nice profits anyway.
If and I say "if" you are going to have a melt down in any markets it might happen over the next few months. You see the trade wars are beginning in earnest and while markets that are controlled by central banks probably won't feel a lot of push one way or the other they might be prone to problems.
Protectionism is never a good thing. I can't really blame the US here as they have been buying cheap, crappy, products for a long time from the Asian countries without seeing a lot come back to them. If you are going to do this you have to weigh in on what it is worth to you to engage in this sort of policy. The big factor is a deflationary effect that importing cheap goods has on your population. The cycle is very similar to deflation itself where as price wars erupt as to who can provide goods the cheapest it causes a spiral down of wages and of course more people seeking deals so they have a tendency to shop where it is cheapest not really knowing that they are causing a collapse in their own life style by doing it. In other words it feeds upon itself and once it is ingrained into the population it is not so easy to turn off the spigot.
I think that is where the US is at now. Equalizing trading partners so that this spiraling effect of importing deflation does not continue to affect the US consumer. However herein lies the problem. How do you pull the plug? Is there a way now that Walmart, Amazon, Target have taken over retailing? I doubt it without a lot of pain.
To restructure the trade imbalance would mean making changes internally too. So that being said where are the people that could not afford to shop anywhere else going to shop? In other words what will the absence of cheap goods do to people's lives? Hmmm.... at this point a good question.
Tariffs will only make the situation worse. As a debt laden society this is the canary in the coal mine folks. This could be what brings the debt explosion down.
Why?
Here it is, "because central banks can't print this over". There is no way to control this. Hence it could be what causes a small problem to become a much bigger problem. This could very easily turn into an avalanche of debt liquidation. Of illiquid conditions. This is where contagion could easily get out of control.
Time will tell.
No comments:
Post a Comment