Economic and Markets 2023 Outlook WARNING What Worked for the Past Decades Will Not For The Next WHAT'S COMING - GLOBAL RECESSION? DE...
I was thinking about how people seem to read the Bible a whole lot more as they get older; then it dawned on me - they're cramming for their final exam.
George Carlin
On Stage Performance- Just Too Funny
With a number of socio-political grounds inducing a growing crisis in the country’s economy, Sri Lanka has joined the line of countries that have undergone similar economic crises.
Faced with an acute economic and energy crisis, triggered due to a shortage of foreign exchange, Sri Lanka’s fuel shortage has forced tens of thousands of people to queue for hours outside petrol pumps. People are also facing long hours of power cuts daily.
According to economists, Sri Lanka’s debt spiral was already on an unsustainable path even before the pandemic dried up the tourism funds.
With a number of socio-political grounds inducing a growing crisis in the country’s economy, Sri Lanka has joined the line of countries that have undergone similar crises.
NO FOREX RESERVES MAKES TRADE IMPOSSIBLE
Intelligence without ambition is a bird without wings.
Salvador Dali
Inspirational Wisdom Quotes
March 27, 2020
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Inflation is so hot the Fed may have to hike interest rates like it’s 1994
By Matt Egan, CNN Business
Inflation is so hot that Wall Street banks are falling over each other to predict the dramatic moves the Federal Reserve will have to make to cool prices off.
Goldman Sachs raised eyebrows earlier this week by forecasting the Fed will raise interest rates by a half a percentage point in each of the next two meetings.
Morgan Stanley and Jefferies quickly endorsed that view, even though the Fed hasn’t done a rate hike of that size at a single meeting since 2000.
Now, Citigroup is upping the ante. Citi economists said Friday they expect the Fed will boost interest rates by a half a percentage point during each of the next four meetings. And Citi left the door open for even more aggressive steps, such as big rate hikes at every remaining meeting this year.
The aggressive call underscores the level of concern about the inflation outlook, which has darkened considerably in recent weeks because of Russia’s invasion of Ukraine and the ensuing spike in food, energy and other commodity prices.
LOOKOUT HERE COMES THE BIG ONE
The data on this front is shocking. Home value growth was so extreme last year that it actually surpassed median salaries in 25 of 38 metropolitan areas across the country, according to research firm Zillow. And, rent prices have surged by nearly 20% nationwide year over year in January, while in the sunbelt, they have skyrocketed by 50%. Some 30% of these properties are owned by Wall Street and other investors.
What else would you expect to occur when the Fed guarantees access to money for next to nothing. Wall Street then uses that cheap credit to purchase massive tracks of single-family homes with a cash deal and then rents them out to would-be first-time homebuyers who have been priced out of the market by this very process. Wall Street wins big, profiting from both the increase in real estate prices and the increased cash flow derived from rising rent payments. While the people the Fed professes to care the most about fall further behind the American dream.
HOW DO YOU KNOW A TRAP WHEN YOU SEE IT?
Inspirational Wisdom Quotes
March 23, 2020
' The greatest deception men suffer is from their own opinions '
Leonardo da Vinci
Inspirational Wisdom Quotes
March 21, 2020
Television brought the brutality of war into the comfort of the living room. Vietnam was lost in the living rooms of America -- not on the battlefields of Vietnam.
Marshall McLuhan
THE TRUTH HURTS
SING ALONG FOLKS
Inspirational Wisdom Quotes
March 19, 2020
“Three things cannot long be hidden: the sun, the moon, and the truth.”
— Confucius
FORTUNE
Editor's Comments:
The Challenge of our Times
First of all, it is difficult to argue that even today the index is fairly valued. On the other hand, there are a number of metavariables that leads us to conclude it is extremely over-priced and there is a major correction brewing in the winds of market volatility. In a nutshell here are a few factors that drew us to this conclusion:
Clearly, an increase in the Fed rate will impact the valuation mathematics. Simply doubling the long rate from 1% to 2% - depresses the net present value of cash flow and earnings by 50%.
Climate change weather and water shortages will continue to put pressure on the production of agricultural items and essentials; thereby inflation.
The costs of diesel fuel are rising faster than gasoline under the current oil market frenzy which adds more cost pressures and creates logistical issues for the supply chain. Result - more inflation and higher rates.
Housing costs continue to rise throughout Western societies and workers we can expect will be demanding greater compensations. Again fueling the algebra of inflation/rates.
Geopolitical issues remain unresolved and that could lead to further supply and market disruptions which could lead us to Oil priced over $200 a barrel in 2022. You know what that means!
The proliferation of cryptocurrencies garners little in terms of concrete real value or logistical science and hence the danger becomes that they could undermine the inherent value of sovereign currencies thereby fueling the road to the US dollar losing its reserve currency status. Fear this event above all - because it provokes the unknown ravages of hyperinflation which are beyond any imaginable catastrophes.
Bottom line, one could argue that cost containment and inflation is now in the ballpark of nature - and it bats last. We are, most importantly, running out of essential industrial resources, water, climate conditions, and arable land. The microcosms are demonstrated today by terrible economies in a number of countries; viz, Turkey, Lebanon, SriLanka, Venezuela, Argentina and so forth.
There is no reason to believe that nature will provide papal dispensation to Western societies from these economic diseases because our broken models and theories are corrupt and outdated. They do not recognize the consequences of the per capita imbalance of population and natural resources: particularly energy, materials, and agricultural inputs.
Conclusion
To summarize, what can be expected in the future as a consequence of these hard and logical growth limits imposed by the planet? The answer is clearly more inflation, higher rates and naturally lower NASDAQ stock values over the longterm.
So don't be surprised to see the average PE Ratio for the NASDAQ market drop below 10 or worse as real earnings and future outlooks evaporate while inflation and rates sky-rocket to the high heavens. The economies are backed into a corner as we knowingly created a physical-mathematical trap that has dire consequences.
We cannot build a sustainable economic system and markets unless we redefine our economic, concepts theories and models to rebalance the relationship between population and essential resources. We need thinking based on reality and mathematics, not invisible hand abstractions.
"THIS IS THE MOST CRITICAL CHALLENGE OF OUR TIMES"
T A McNeil
CEO Founder
First Financial Insights Group
The NASDAQ's fall was bound to happen, and it's still not nearly deep enough to hit bedrock. The powerful momentum driving tech's shooting stars ever skywards is finally surrendering to market gravity. The "innovation-at-any-price" high spirits that sent the NASDAQ shooting into the stratosphere over less than three years, is giving way to the realization that its members can't grow profits nearly fast enough to give you a decent return. The reason is basic: These stocks are still just too damn expensive. Put simply, the fundamentals are taking hold following a long and crazy ride. The more unhinged prices became, the steeper the fall that was bound to follow––and most likely, we're witnessing the early stages of that inevitable descent right now.
How deeply will the NASDAQ drop? To make a reasonable estimate, let's unpack the traditional metrics that are reliable predictors of equity price trends over long periods, and address the question: What's the NASDAQ really worth? The NASDAQ 100 that represents the vast bulk of the overall index's valuation has already entered correction territory, shedding 10% from the close of 2021 to stand at 14,438 at the close on Friday, January 21, and down 13% from its all-time high, set on November 19, of 16,573. Among the glamour, stay-at-home economy luminaries that suffered the biggest hits since then: Zoom (down 41%), Netflix (-42%), Peloton (-43%), and Docusign (-56%).
BOTTOM LINE
NASDAQ GROWTH VALUE IS A NEGATIVE-SUM GAME
The Guardian
Chinese property shares have soared for a second day thanks to a decision by Beijing’s leadership to throw the country’s struggling real estate sector a lifeline amid growing pressures at home and abroad.
Despite a downgrade for China’s third-biggest property developer Sunac on Thursday, stocks in the sector lifted again in Hong Kong and the mainland thanks to an announcement by vice premier Liu He, China’s economic tsar, on Wednesday that the government needed to reduce risks in the industry.
In a sign of the heightened concern inside China’s Communist party leadership about the property sector and the economy in general – best illustrated by the near-collapse of the giant developer Evergrande – Liu urged the roll-out of market-friendly policies to support the economy.
HUGE CONCERN: THE BACKSTAGE CREDIT DEBACLE PREVAILS
Reuters
Investors were reassured that
This added to risk appetites in a market that was benefitting from some bargain hunting.
The Fed had raised interest rates by a quarter of a percentage point on Wednesday as expected and forecast an aggressive plan for further hikes while policymakers also trimmed economic growth projections for the year.
The Russian payment news and a breaking of technical decline lines "to the upside" in indices, including the S&P and the Nasdaq, all boosted stocks, according to
Ups and Downs Have Meaning
Market Watch
Federal Reserve Chairman Jerome Powell on Wednesday said inflation is going stay high in 2022, but he vowed the central bank will do whatever it takes to bring price rises under control.
The Fed raised interest rates for the first time in four years as part of a broader strategy to combat the highest inflation in 40 years. The rate of inflation has surged to almost 8% in the wake of the coronavirus pandemic.
Here’s what Powell said about inflation after the Fed decision.
