by John Ward
For the last fortnight, we’ve all been high on the drug Borichok. But the Chimps’ House Party is to be cleaned up, and the ‘victims’ shuffled off to America under the kind auspices of the CIA. So until otherwise advised, I shall consider the Skripal case closed. Back on Planet Earth, meanwhile, the epiphany of Crash2 is well under way.
The Sunday Tory, sorry, Times exclusively revealed this morning that Sergei and Yuria Skripal are to be offered new identities in the United States under the protection of the CIA. So just when you were wondering what they’d have to say to the media after having come back from the dead, it’s no longer an issue: mission accomplished….they’re going to disappear off the radar forever. Rather like the Foreign Secretary’s double-agent chum Joseph Misfud. Boris gets the final word in the Digger’s columns, calling Corbyn “one of the Kremlin’s useful idiots”.
IABATO* – but it’s pointless to continue. If we had a proper Opposition with balls and a proper media set with ethics, I’d be gung-ho to keep going. But we don’t, so let’s move on.
One thing MI5, Boris or indeed even Mario Draghi are going to be unable to hide one day is the collapse of the finacialised global monopolist system. The Sun headline here is ‘Banking recovery with public money while stock markets boom on lower rates under QE and Zirp completed. Now what?’
The “scenario going forward”, as they say inside Goldman Sachs, is that the Fed (gently hinting that the party’s over) is hawkish and high-five to raise rates at least three times during 2018. Just over two weeks ago, the Fed raised rates by a quarter percent. Their next rush of blood to the head is due on 13th June; the way things look at the moment, there is very little reason/excuse/reality available to suggest they couldn’t raise it another quarter.
For those of us swindled variously out of State pensions, bonds and income on our savings since 2010, these look like piddling increases and barely worth a column inch on Page 37. But globalist finance and economics don’t work like that. A half percent increase in the cost of borrowing money to finance more making of money is big bananas. The key factors here are:
- Third World (especially South American) debt, which remains hugely dollar denominated. More debt at higher prices means much higher potential for default on loans.
- Corporate stock-buying (to “reward” the directors and keep the stock price articifically high) will retract massively above a 2% rate. This means high potential for stock market falls, given the very high Dow Jones market peak dependence on this , frankly, greedy practice.
- Quoted companies will also stop borrowing money to pay dividends to shareholders. Dividends are high in part because of this, frankly, disgraceful practice. Falling dividends mean falling stock prices, and investors looking beyond the markets to earn a crust.
- Among market traders themselves, buying and speculating on credit is a near-universal practice. This is dangerous per se, but catastrophic when one trader up the food chain defaults. Lots of dominoes start to wobble below, and – as I never tire of saying – there is no such thing as a gradual panic.
- The US Fed’s expected rises in employment didn’t materialise last Friday (April 6th) and so Trump’s rhetoric is already looking empty(ish).
There are may other worms ready to escape the kicked can on this one – bank defaults and political deadlock in Italy, dreadful French export figures, a nationwide SNCF strike throughout the summer, Draghi’s minimal wriggle room on banks in Austria and Spain etc ad nauseam – but for my money, the Five Apocalyptic Horsemen outlined above are the ones that matter. (There used to be only four; that’s inflation for you).
From here on, the things to look for in all news and data that can be trusted (a dwindling universe) are symptoms of opinion-leader nerves. If nothing else, this makes a change from nerve agents; but in predictive terms, it is hugely useful. These are some symptoms I’ve been collecting since last Monday:
- Manhattan property sales fell 33% by volume last year. And in the last quarter, prices plunged 7.3% on some deals. The biggest falls are at the top end.
- London house prices are falling at their fastest rate since the start of the recession almost a decade ago, driven by a surge in new high-end properties that people neither want nor can afford.
- Top-end Sydney house prices are leading the falls in Australia. There were a record 3,967 house auctions in Sydney last week but only 65% of the properties on their books sold….and Sydney’s upper end is leading the correction.
- I keep getting tension headaches, but that’s not important right now.
Apart from my sore brain, what we see above is the three biggest Anglo-Saxon bourse cities, all with top end property horns being pulled in. That is a flashing light saying high-earning traders and banking firm employees are becoming risk-averse. Furthermore,
- The Sydney stock market has recorded its worst first quarter since 2008
- The Dow fell by 600 pts over the same quarter – the first time there has been no growth since mid 2015
- The London stock exchange posted its biggest Q1 2018 drop since 2011
QED, as we used to write (more in hope than exectation) at the bottom of equations in maths exams. Then there are the Big Beasts who should know what they’re talking about, on the grounds they’ve made a lot of “money” in the past:
- Last Thursday, the legendary stock market giant Jack Bogle said he hadn’t seen such volatility in the markets in his 66 years of trading, and terrified viewers on CNBC by adding, “I’ve seen 25% and 50% corrections, but nothing like this”.
- The uniquely successful Warren Buffet (boss of investment firm Berkshire Hathaway) told his stockholders two weeks ago to be “prepared to lose at least half your money”. Buffet is the only one of the top 8 billionaires not to have lost money over the last three weeks.
- The Reserve Bank of India has – as I predicted two months ago – suddenly turned bearish on the country’s outlook. (The poor rating of sub-prime debt in India is historic).
- The ECB has grudgingly accepted that economic sentiment “which remained high at the start of 2018” has not remained high, as such. After an opening flourish in its report of a month ago today, the bank’s forecasters wrote, ‘Nevertheless, real GDP growth is projected to slow somewhat over the period, as many tailwinds gradually fade’. Many fading tailwinds, heap bad medicine. (The EU Commission quietly added that ‘momentum in the euro area is forecast to moderate slightly’). The obviously brave face tendencies of these two fib factories should be taken into account here: this is the EU’s way of saying things are not looking great.
- Highly-regarded US Fed committee member Lael Brainard (great surname there, lady) told a press conference last Tuesday, “Even after this year’s correction, stocks and other assets are still high by historical standards….In the wake of the 2007-09 financial crisis and recession, we learned important lessons about the critical necessity of monitoring emerging financial vulnerabilities in a systematic fashion and taking corresponding prudential, macroprudential, and countercyclical policies to build resilience”. Ms Brainard suffers, like most Fed members, from a sort of linguistic innumeracy; but what she means is that there are a lot of extremely badly prepared goforits out there.
Depressed? You will be, after reading what the specialist media have to say about the outlook:
- Business Insider writes, ‘The fundamental backdrop is certainly more dangerous than it was just a few months ago, with various monetary and liquidity measures dropping to multi-year lows. That’s a climate the current bull has never had to negotiate…..we think the rally will be one to sell.”
- CNBC opines that ‘we now have epic market bubbles inflated by unparalleled market intervention…the worst start to April since 1929 after a nervous March suggests strongly that we could see very sharp declines by the end of the year”.
- Marketwatch suggested two days ago, ‘There’s no sense in denying the obvious—U. S. equity markets feel shaky, and stocks could fall by 40% over the next eighteen months’.
So: traders, opinion leaders, central bankers and the trade media are all nervous bordering on doom-laden.
Even they, at long last, accept that there are no tools left in the box that is neoliberal monetarism. Now we have to do some thinking outside the box. But Donald Trump, Gary Cohn, Jerome Powell, Theresa May, Jeremy Corbyn, Emmanuel Macron, Jean-Claude Juncker, Mario Draghi and Angela Merkel don’t do ‘outside the box’.
The box may short on tools, but it’s sardine-packed with fools.
So in that context, this is my plan:
- Wait for the June decision on rates. If there’s another hike, start buying gold when it gets to $1200 an ounce.
- Wait for another correction in the stock markets. Afterwards, leave the SIPP where it is – at the bank.
- Wait for the Big Correction to take place.
- When the correction reaches 25%, take my SIPP out of the bank, buy more gold and a portfolio of blue chips.
- When the correction reaches 50%, buy more blue chips.
- When the gold price reaches $2000 an ounce, sell it both inside and outside the pension.
Because (a) I am a responsible person (b) I have a history of mental illness and (c) I don’t want any smart-Alec vultures suing me, I must at this juncture point out that I am NOT registered to give financial advice, and nobody reading this post should see any of it as my advice to you or indeed anyone else. I am merely offering information and explaining what I am going to do. What you do is your own concern and nothing to do with me. The value of what I write often goes up and down. The future is no guide to the past. No animals were harmed in the writing of this Slogpost. It was produced in a house consuming nuts. I may contain nuts. Theresa May is very nuts. Lawyers are a plague upon civilisation, allegedly.
*IABATO – Its All Bollocks And That’s Official