Market Talk – September 12th, 2015
It was a mixed session for Asia yesterday after what has been a very volatile week. The talk remains as to what China’s next move would/should be and “if” the FED were to move next week. Not just in Asia has this been the most awaited FED decision in years but it has been the hot topic just about everywhere. It was a clearer picture for core European Stock Indices with all closing lower on the day with 1% declines. The US did open lower but has rallied back up.
Next week’s long-awaited Federal Reserve meeting may not spur a wild market reaction, even if the central bank hikes rates for the first time in almost a decade. Economists are about equally split on whether the long-awaited move will come, though futures market trades are pointing to at least one more month of the Fed delaying its 0.25 percentage point.
The key that is really important is the trend. There is no question our model has been pointing to 2015.75 as the change in trend for interest rates. The Fed has been backed into a corner for unless interest rates rise (“normalization”), retire funds are doomed. The Larry Summer approach is of course one that benefits banks, not the population. He envision punishing people for saving money with charging them a tax (negative interest rates) to keep hoarding cash.
Therefore, we are not looking a just a 0.25% hike in rates, we are looking at reality hitting the Fed in the face. Do they take the irresponsible approach of Larry Summers? Or perhaps they realize you cannot punish people for existing and trying to save for a rainy day. The Fed will raise interest rates for they have no choice. If not next week, they can do it at any meeting monthly and they can call an emergency meeting any time as well,
2015.75 – The Turning Point
What is fascinating is how Congress kicked the can down the road and it AND ONE OF THE THINGS THAT MAY CAUSE A FIGHT IS the Planned Parenthood. If the government shuts down over this fight, on the day of the ECM, it looks like this will be the peak in government debt and this could begin to make people wonder about how society is really being managed.
Sea Ice Has Expanded Hundreds of Miles — Welcome Global Cooling!
We had the third perfect summer here in New Jersey. The temperature never really went above 95° F with no humidity. The last three years have been perfect as humidity used to be brutal, although not as bad as places like Tokyo. The sun energy output is dropping rapidly and we are heading into a colder period. So much so, that we are now looking for offices in Florida since all of our staff wants to move closer to global warming. Ice at the North Pole, which was supposed to be gone by now, is expanding. There are hundreds of miles of new ice — the cycle has reversed. Those who cling to global warming I have one thing to say: STOP DRIVING YOUR DAMN CAR AND USE A BICYCLE. Stop trying to change the world to your unproven theory and DO as you preach or shut up.
Taxation & Its Role in the Destruction of Our Economy
iitalit001p4
QUESTION: Thank you for your fascinating blog. I thoroughly enjoy reading your analysis on social, political, financial and historical topics. i would like to make a couple points with questions and get your analysis or feedback on these.
First point: You describe that post 2015.75 (Big Bang), you expect a peak in bonds (safe haven) that will coincide with a low in stocks due to global fear. The eventual collapse in bonds will drive everyone into “private assets” causing a major rise in stocks and commodities due to lack of confidence in government. At the same time, you say that government won’t give up the fight on taxation and asset seizure. So, my question is, what good is it to invest in stocks in this private phase if the government will most likely tax all profits to the point of making the investment pointless? Why would people continue to buy stocks then? Typically when fair rule of law degrades, people hoard and don’t invest, correct?
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Thanks for your analysis!
ANSWER: Historically, this has been the difference between movable and immovable assets, such as real estate. Collectibles, stocks, and precious metals are in the moveable category. Of course this is what governments are now attempting to seize.
The best hedge would be to have assets in terms of stocks in the USA, and certainly not in Europe. It may be harder to engage in a taxation of shares as an asset, whereas in Europe they are much closer to communism and see nothing wrong with taxing assets, not just income.
If we look at the fall of Rome, the first asset class to decline was real estate, as you cannot take it with you when you leave town. Thus, the population of Rome collapsed from 1 million to 15,000 by the Middle Ages. People had no choice and just walked away, unable to pay the taxes demanded.
Taxes are the great destroyer. You are an economic slave if you simply cannot retire without having to pay taxes. Taxes reduce economic growth and lower productivity for they are no different, economically speaking, from some gangster demanding “protection” money to operate a business.
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