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  • #76
    Originally posted by snapper View Post
    David Sir would you care to answer question re the Hindenburg Omen that predicts a stock market collapse within 40 days (well 36 now) and how the US and other 'authorities' should respond should the omen be correct?

    Not really, as I don’t do stock markets, casinos, lotteries or horse races. But, this guy does: []Why 'Hindenburg Omen' Is Just a Superstition.

    I would, however, be interested in your response to my previous post.

    Folks, I’ll be travelling for the next couple of weeks, so don’t feel slighted if I don’t give quick or full answers.
    Hong Kong
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    Trust me?
    I'm an economist!

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    • #77
      DOR,

      looks like a good trip, have fun.

      snapper,

      i've asked you repeatedly for data. i'll distill this now into what you need to show, from reputable sources, for me to re-assess my thinking.

      - interest rates/inflation going up. you keep on talking about food and fuel, even though i've demonstrated it doesn't differ significantly from overall CPI. in your theory, QE and stimulus should affect both, and very obviously. using the big mac index as the sole demonstration doesn't cut it.

      - unemployment going up. if stimulus takes away money from the private sector and uses them in a more inefficient fashion, then we shouldn't just see labor force participation declining (which i've shown it already would, anyway), we would see an increase in unemployment as job growth lagged behind population growth.

      - dollar weakening. significant weakening of the dollar and the concurrent significant rise in the price of gold. a significant long-term decline in the market as people move away from equities. gold shouldn't have fallen right when bernanke made it clear that QE was going to continue indefinitely until a certain level of unemployment was reached, nor should the market have gone up if traders know the supposedly obvious long-term consequences.

      - the US deficit continually expanding. i've given you the CBO study that shows a short/medium-term decline followed by stabilization. you've written that off as either fakery or bad calculations because of the supposed bubble economy. (i'd like to see where you get your predictions, especially because those same predictions would need to assess how/when the bubble pops, and how big the bubble is. then again, if whomever made those predictions knew that, they'd also be making millions right now.)

      this should be simple, if QE/stimulus are so disastrous. you shouldn't need to rely on "alternative" websites nor conspiracy theory.
      Last edited by astralis; 04 Jun 13,, 13:20.
      There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

      Comment


      • #78
        Originally posted by astralis View Post
        unless you're saying that Fed data which ALL economists use is "distorted", i fail to see your argument here.
        Sadly, I believe that to be the case. I haven't trusted the fed numbers on the economy since the turn of millenium.

        Comment


        • #79
          Oh dear which should I answer first? Perhaps both together or I will be accused of not answering questions put to me... eenie-meenie-miney-mo time. I shall regard it as opportunity to answer what I consider your more substantial points, I apologise in advance if I may have chosen the wrong points to answer in your view.

          Originally posted by astralis View Post
          interest rates/inflation going up. you keep on talking about food and fuel, even though i've demonstrated it doesn't differ significantly from overall CPI. in your theory, QE and stimulus should affect both, and very obviously. using the big mac index as the sole demonstration doesn't cut it.
          Nor does shodowstats evidently but I knew that would be the case... So interest rates: As you and I both know the Fed is keeping interest rates artificially low in an attempt 'to provide liquidity for the financial sector' to paraphrase David. Notwithstanding that the Fed is buying $45bn worth of bonds per month how are 10 year yields doing? Hmm... at the beginning of May the yield was 1.63% and now it's 2.12%. Mortgage rates, which are linked to 10 year bond yields are rising - despite the other $40bn of mortgage backed securities that Bernanke 'buys' with nothing every month. Will he raise interest rates? No he can't or any supposed 'good' or reinflation he has done will be undone. If anything he is likely to increase QE which leads me to where we agree;

          Originally posted by astralis View Post
          because everyone realizes there is a potential downside to using extraordinary measures. once you get past an extraordinary situation, then extraordinary measures are no longer needed.
          On this I am most fully in agreement. What happens if you overdo it? The problem is that 5 years ago the US was only country devaluing. Now everyone is lowering rates or openly engaging in QE as a response so the Fed's monetary easing is not as effective as when it started. The race to the bottom possibly? But no surely there can't be a currency war? The truth is that for Bernankes policies to be as 'effective' (whether benign or malign) as they were 2 years ago or even last year he must increase QE. Where do we reach the point that the "potential downside" kicks in? I suppose this is THE crux question and I certainly welcome your views on this. But to continue...

          Originally posted by astralis View Post
          unemployment going up. if stimulus takes away money from the private sector and uses them in a more inefficient fashion, then we shouldn't just see labor force participation declining (which i've shown it already would, anyway), we would see an increase in unemployment as job growth lagged behind population growth.
          Unemployment figures are not going up as we have previously discussed. However the number of people 'participating' in the labour market is declining. "Year-to-date through April, the number of people filing weekly continuing unemployment insurance claims dropped 759K. During the same time, the economy added 664K jobs, suggesting that 95K people who saw their benefits expire are still without a job." from a report by Home | convergex.com The unemployment statistics and the increasing reliance on food stamps also do not match up as we have discussed.

          Originally posted by astralis View Post
          dollar weakening. significant weakening of the dollar and the concurrent significant rise in the price of gold. a significant long-term decline in the market as people move away from equities. gold shouldn't have fallen right when bernanke made it clear that QE was going to continue indefinitely until a certain level of unemployment was reached, nor should the market have gone up if traders know the supposedly obvious long-term consequences.
          The $ is not weakening so much as it was relative to other currencies due to the fact that they too have lowered interest rates or engaging in QE most notably in Japan. In 2009 $1 bought 7 yuan now $1 buys 6.2 yuan. Just google $ to yuan. I am not saying that is altogether a 'bad' thing as it restores some competitiveness to US exports which have increased in the last 4 years and this is after all one of the intended effects of QE - apart from supplying liquidity etc. Despite that the trade gap continues to widen; "trade deficit has risen by 8.5pc to $40.3 billion in April from a downwardly revised $37.1 billion in March, the Commerce Department reported today". What I am saying is precisely what you said above... the 'downside' was reached long ago but now the taps can't be turned off... which begs the question whether it wise in the first place? Another possibility is that China will also join the 'race to the bottom'.

          Regarding gold I will not repeat my previously stated views. In 2008 gold was $800. If you expect it to fall to $900-$1000 make the put and get rich if you're right! Ahh but you don't trade so this is all theoretical and kind of idealistic to you. Nothing wrong in that of course but forgive me if I don't make a put at $900 gold but lets see what happens. I think gold bottoms aound $1,265 and would be happy to make a put there normally but I think shorting GLD and EFT's reaps greater reward short term.

          Originally posted by astralis View Post
          the US deficit continually expanding. i've given you the CBO study that shows a short/medium-term decline followed by stabilization. you've written that off as either fakery or bad calculations because of the supposed bubble economy. (i'd like to see where you get your predictions, especially because those same predictions would need to assess how/when the bubble pops, and how big the bubble is. then again, if whomever made those predictions knew that, they'd also be making millions right now.)
          The CBO report you mention assumes "that current laws generally remain unchanged". That is not going to happen. As 10 year yields increase either interest rates have to rise or 'moar' QE is needed.

          http://www.zerohedge.com/sites/defau...1%202013_0.jpg

          Regarding the stock market and the Hindenburg Omen I honestly don't know. My feeling - and that of the professionals who advise me - is the market has about reached its top and rallies are worth shorting. Support levels have been broken and correction is due. How far it will go no crystal ball that I have shows. Here's a graph that confirms fear:



          Originally posted by astralis View Post
          quickly browsing through your BBC article (which doesn't count as data...it counts as an opinion piece by one BBC editorialist...know the difference).
          Lol I am not a great fan of Stephanie Flanders myself but I notice she at least acknowledges a 'currency war' even though she is very much in your camp. I mean if your own side is acknowledging that everyone (South Korea on May 9th as I predicted about 2 months ago due to being hit by Japanese QE) lowering interests competitively what should we call it? Normal business perhaps? It seems a long time since we first discussed a possible currency war in the German gold return thread. Interesting though that you will discount any opinion that contradicts your own even from Stephanie who was a "senior adviser to the US Treasury Secretary (1997-2001)".

          Have a safe journey David and try to enjoy it!
          Attached Files
          Last edited by snapper; 04 Jun 13,, 16:35.

          Comment


          • #80
            snapper,

            Notwithstanding that the Fed is buying $45bn worth of bonds per month how are 10 year yields doing? Hmm... at the beginning of May the yield was 1.63% and now it's 2.12%. Mortgage rates, which are linked to 10 year bond yields are rising - despite the other $40bn of mortgage backed securities that Bernanke 'buys' with nothing every month. Will he raise interest rates? No he can't or any supposed 'good' or reinflation he has done will be undone.
            this is why i say you need to provide data. good, you've mentioned these numbers. now i'll put these numbers in perspective.

            here's what you're talking about.



            a big rise yes? how about in the context of the last five years-- in the context of not just the dreaded QE but also TARP and stimulus?



            not so big a rise then, huh?

            let's take the even longer approach. since -1871-.



            perhaps this will allow you to see why the recent rise in interest rates...is not concerning to me, to put it mildly.

            Where do we reach the point that the "potential downside" kicks in?
            bernanke's already stated it. his 6.4% unemployment level is roughly about that reached by the US in a mild recession, whereupon keeping the fed rate close to 0 should be sufficient. he's even given a rough timeline, until 2016. hey, i'll be more than happy to keep the butter cookie bet open until then.

            Ahh but you don't trade so this is all theoretical and kind of idealistic to you
            $150K+ worth of ETFs disagree with you there. i don't pretend to know that i can consistently beat a fluctuating market; all i can do, as i have here, is make general observations about where the market is heading, and apply dollar-cost averaging in case i am right...or wrong. ETFs suit my temperament. but, i am willing to make a butter cookie bet on the gold thing, just for kicks. :)

            the rest i've discussed with you at length. in any case, i'm not joking regarding changing my views as the data comes in. given your assessment of the economy, we should provide very easy to spot data movements in advance of some truly horrific things happening. my theories, too, come with predictions as to where the data should go...and in fact, the data seems to match more with my POV, to the extent where to explain it, you need to wave it off as either cooked, or a conspiracy.

            so ultimately, it's a question between my data and your gut feeling that this must all be cooked up and that -something- must be wrong, even if you can't prove it.
            Attached Files
            There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

            Comment


            • #81
              The point is that 10 year yields are rising despite Bernanke buying $45bn worth of bonds per month. From 1.63% to 2.12% in one month is quite a substantial rise for mortgage payers. MOAR QE? But it's not working already...

              Comment


              • #82
                and you seemed to have missed my point. a one month blip? big deal.

                if this trend continues for six months to a year, then you would begin to have a point.
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • #83
                  Originally posted by Captain Worley View Post
                  Sadly, I believe that to be the case. I haven't trusted the fed numbers on the economy since the turn of millenium.
                  if QE was good, why has gold skyrocketed? The world produces about 680 tons of gold a quarter and uses about 1000 tons (mostly jewelry) so some inflationary pressure in gold prices is expected. The central banks print fiat currency and those with large amounts of it buy gold rather than be devalued when money is printed willy-nilly. We are now several years into a global economic crisis and the printing hasn't worked.

                  Comment


                  • #84
                    Originally posted by snapper View Post
                    I find it strange that David accepts that QE enriches the banks but you don't. So let me ask you this: Suppose the US stock market crashes (which the third Hindenburg omen this year suggests but forgive me... see;Morning MoneyBeat: Hindenburg Omen Rears Ugly Head - MoneyBeat - WSJ as I understand you don't trade) and banks 'profits' from the inflated get wiped, house prices fall etc.. what is proposed solution? Same question I basically put to David. I am genuinely interested to hear your proposed solutions when the current bubbles burst as the 'hindenburg omens' this year suggest.
                    Originally posted by snapper View Post
                    David Sir would you care to answer question re the Hindenburg Omen that predicts a stock market collapse within 40 days (well 36 now) and how the US and other 'authorities' should respond should the omen be correct?
                    Just so we are clear, are you backing this prediction Snapper? Is this something with a firm timeline that we can hold you to as a definitive measure of your judgement? You clearly think it is significant, otherwise you wouldn't have repeated it. We'll all be watching for a 'collapse' within 40 days - are you calling it now?

                    Yes or no will do.
                    sigpic

                    Win nervously lose tragically - Reds C C

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                    • #85
                      Originally posted by astralis View Post
                      and you seemed to have missed my point. a one month blip? big deal.

                      if this trend continues for six months to a year, then you would begin to have a point.
                      So if the rise continues at last months rate in 6 months you have yields on 10 year bonds around 5.4%... Since you are proponent of intervention when does the Fed act and what does it do? Can mortgage rates handle say 6-7% without collapsing the supposedly recovering property market? Do Central Bank interest rates have to go up? Does the Fed sell it's bond portfolio?

                      Originally posted by Bigfella View Post
                      Just so we are clear, are you backing this prediction Snapper? Is this something with a firm timeline that we can hold you to as a definitive measure of your judgement? You clearly think it is significant, otherwise you wouldn't have repeated it. We'll all be watching for a 'collapse' within 40 days - are you calling it now?

                      Yes or no will do.
                      The Hindenburg Omen does not always result in a crash but there has never been a crash without the presence of the Hindenburg Omen. It depends what Bernanke does since he just about rules the market now. I am out of US markets as I prefer to err on the side of caution.

                      Comment


                      • #86
                        Originally posted by snapper View Post
                        The Hindenburg Omen does not always result in a crash but there has never been a crash without the presence of the Hindenburg Omen.
                        I'm don't think that's very sound reasoning, but the stock market is all about risk and reward; it's your money.

                        Comment


                        • #87
                          snapper,

                          So if the rise continues at last months rate in 6 months you have yields on 10 year bonds around 5.4%..
                          i find it quite unlikely that it will continue at that rate of increase, but assuming it does, it will match the 2000 level, which itself was a 30-year low.

                          Since you are proponent of intervention when does the Fed act and what does it do?
                          this will depend on WHY the rate increased. if it's because the economy is recovering, as is most likely the reason for the recent increase, then the Fed need not intervene.

                          Can mortgage rates handle say 6-7% without collapsing the supposedly recovering property market?
                          very unlikely it'll go up that high anytime soon. the current-day historical average is 5.5% for a 30-year, and even the pessimistic observers believe it'll only start moving towards the 5% level within the next few years. the current consensus is a 30-year mortgage of approx 4-4.5% in the near future.

                          in any case the biggest factor is not the mortgage rate but the actual cost of the house itself, especially given how banks now require more down (a good thing).
                          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                          Comment


                          • #88
                            I also find it unlikely that it will continue to rise but mostly because it would land the Fed with a massive loss! As for 'recovery' have a look at the latest independent employment survey for the US entitled "U.S. Payroll to Population and Unemployment Worsen in May". It's conclusion - or Implications - starts: "The decline in P2P and the increase in unemployment that Gallup finds in May contrasts with the improvements in both seen in April. The strong year-over-year improvements seen in April were not sustained in May, and the size of the workforce, P2P, and unemployment rate are virtually the same as or in worse shape than a year ago." U.S. Payroll to Population and Unemployment Worsen in May

                            Of course the other problem with higher bond yields that is since nobody really proposes to deal with it the deficit gets worse. Do you think the two lots of blithering idiots in Congress care? No no I am not partisan or anti US - the British lot are equally culpable and are currently trying to blow more bubble with 'Help to Buy' (houses) schemes and the like...

                            But you haven't really answered my question about the Feds response. I've just been looking at yesterday ups and downs which one might describe as 'volatile' to say the least. I expect more of the same as everyone waits for even the smallest syllable from the Lord High Ben who Ruleth All. This is the problem with a centrally run economy and everything dependent on QE... Of course the $ crashed yesterday but in these circumstances nobody can say whether that's good or bad or will reversed or anything... We await the unelected broker of fates.

                            On the gold matter I note "The Reserve Bank of India has advised banks against selling gold coins to retail customers, Finance Minister P. Chidambaram said on Thursday, a day after he raised gold import duty to try to ease pressure on India's bloated current account deficit." India fin min says RBI has advised against selling gold coins | Reuters That may stem a little of the divergence between the spot price and the premium on physical but I doubt it will work. The real point I think about the gold market is those who sell GLD and SLV - the paper promises - don't have enough to fulfill the orders so they short their paper to get prices down so they can fulfill their orders cheaper. Trouble is they're losing the spot price over physical war. I still expect gold to go down again before the 'big up' is resumed.

                            Originally posted by Captain Worley View Post
                            I'm don't think that's very sound reasoning, but the stock market is all about risk and reward; it's your money.
                            Captain; I suppose it depends on your point of view - why you are on the markets. I had relatively little of my money on the US equities markets and my essential aim is make as I can with each £ or $ or yen I use. When the US market shows possibilities of going down I am better off putting somewhere else where I can be surer of what's going to happen. Yesterday proved to be extremely volatile on the US markets and the $ crashed so although the market ended up if I wanted to 'cash in' I would lose as my chips are no longer worth what they were. I think I was correctly advised on this occasion.

                            Comment


                            • #89
                              i've addressed your points regarding use of one-month data points, the Fed's response, and gold. and until you provide data from sources that economists actually use, then i think further discussion is moot.
                              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                              Comment


                              • #90
                                Originally posted by snapper View Post
                                Captain; I suppose it depends on your point of view - why you are on the markets.
                                I'm interested in long term gains right now. Put monthy $$$ in an index fund and forget it. Whe I draw closer to reirement age, I'll move it to something less volitle with smaller returns.

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