{"id":142309,"date":"2019-02-22T10:00:17","date_gmt":"2019-02-22T15:00:17","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=142309"},"modified":"2019-02-22T06:58:34","modified_gmt":"2019-02-22T11:58:34","slug":"traders-must-be-cautious-part-iii","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/02\/traders-must-be-cautious-part-iii\/","title":{"rendered":"Traders Must Be Cautious Part III"},"content":{"rendered":"
February 22, 2019<\/div>
\r\n<\/div><\/div>

By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

Welcome back, If you\u2019ve missed any part of this multi-part research post, please visit www.TheTechnicalTraders.com\/FreeResearch\/<\/u><\/a>\u00a0to review and read our previous posts.\u00a0 This, Part III, of our multi-part research post where we are attempting to rationalize the continued bearish analysis of some other analysts as well as review some key data that may support our interpretation that the global markets are transitioning through a \u201crevaluation phase\u201d right now \u2013 headed for a breakout rally eventually will continue with more detailed information.\u00a0 Our premise is that global investors and traders should stay cautiously optimistic at the moment and prepare for some volatility as this \u201crevaluation phase\u201d continues to play out.\u00a0 Our overall analysis suggests that the US Federal Reserve and global central banks have \u201cprimes the cylinders\u201d of the global economic engine sufficiently and that a spark is all that is needed to see massive new valuation and GDP increases within the next 10~20+ years.<\/p>\n

Within the previous sections of this article, we\u2019ve discussed how Globalization has expanded and normalized the global economic activities over the past 50+ years.\u00a0 We\u2019ve also discussed how this process of globalization has created a series of crisis events as localized central banks are now dealing with total globalization and the new risks that are associated with this transition.\u00a0 Our position is that the economies of the planet are now more interconnected than ever before and, thus, the concept of a massive collapse event is less likely than ever before.\u00a0 The only way a massive collapse event could take place, in our opinion, would be a global war between super-economies or a total collapse of multiple super-economies because of some catalyst event.\u00a0 Otherwise, we believe the proper thinking is that of a \u201crevaluation phase\u201d not a \u201ccollapse event\u201d.<\/p>\n

Let\u2019s dig further into the data and continue our research.<\/p>\n

In the past, we\u2019ve suggested that capital operates like a living organism, always in search of the healthiest environment to reside within and always attempting to identify and mitigate risk factors where they reside.\u00a0 In other words, global capital is always seeking out the best, safest and most secure (immune from risk) returns possible at all times.\u00a0 The recent globalization process creates a unique environment where capital can \u201ctransition\u201d from one global market to another in an instant.\u00a0 Risks can be identified and mitigated within minutes, hours or days now where, in the past, these risks could have been catastrophic in nature.<\/p>\n

Within this new \u201cinstant\u201d environment for capital and global markets, new risks persist.\u00a0 Because huge amounts of capital can now move freely across global platforms and economies, volatility is likely to continue at 2x to 5x historical norms.\u00a0 This also means that catastrophic regional economic events will likely result in more severe price rotation and speculation.\u00a0 The end result is that capital is now flowing across the planet more efficiently than ever before and this creates a whole new playing field for investors and traders.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Consider the Global Gross Capital Flows below and pay very close attention to the change in how capital moved and was deployed prior to 2008 and on\/after 2008.\u00a0 If you read this chart as our research team sees it, we have entered a period (from 2000 onward) where massive amounts of capital have been dumped into the global markets.\u00a0 Much of this capital has been deployed into infrastructure and supporting global banking and credit markets over the past 18+ years.\u00a0 Yet a very large portion of this capital has yet to become fully activated in the global markets and this can clearly be seen by the reduced GDP output on this graph.\u00a0 2015 Global GDP levels have dramatically changed and are very near pre-2001 levels in scale.<\/p>\n

As readers of this article, the point we are trying to make is that \u201cthe guns are primed, loaded, aimed and ready for BUSINESS\u201d.\u00a0 The collapse of global GDP, which is clearly evident in the past few graphs we\u2019ve presented, began to become clearly evident in 2014~2015.\u00a0 An interesting facet of this contraction was that China instituted new Capital Outflow laws to attempt to prevent investment capital from rushing out of local Chinese markets at this same time.\u00a0 The purpose of this was a protectionary move by China attempting to support their local credit markets and internal banking markets.\u00a0 Unlike other global markets, China could not risk having large amounts of capital rush overseas (depleting repayment capabilities and local coffers) while continuing to build and pump up their credit\/lending markets.\u00a0 They had not considered the risks that Chinese investors\/Entrepreneurs would take large components of their new wealth and aggressively move it outside the Chinese market.\u00a0 Shortly after that, came the 2016 US presidential elections \u2013 which always present some level of rotation\/contraction within the markets.<\/p>\n

\"\"(Source: https:\/\/www.jvi.org\/special-events\/2016\/global-drivers-and-effects-of-capital-flows.html)<\/p>\n

 <\/p>\n

As we move forward with this data and the key question we posed at the very beginning; are the Doomsayers right?\u00a0 Do you believe the markets will collapse in the immediate future or do you believe the global markets are poised and primed for another massive price advance because of the massive influx of capital that has recently been dumped into the markets?<\/p>\n

Let\u2019s try to answer some of these questions by presenting clear data in regard to how the global markets have changed over the past 90+ years.\u00a0 The GDP data below shows how different nations have rallied GDP output over the past 90+ years and how the dynamics of the global markets are taking root.\u00a0 Remember the data we\u2019ve presented earlier when you review these GDP graphs, below.\u00a0 Remember that from 1970 till now, the US Federal Reserve and global central banks have poured over $40 Trillion US Dollars into the global markets and this capital is working through the banking system and economies in an attempt to solidify growth\/return opportunities.<\/p>\n

 <\/p>\n

\"\"<\/p>\n

(Source:http:\/\/www.newgeography.com\/content\/005050-500-years-gdp-a-tale-two-countries)<\/p>\n

 <\/p>\n

If we were to total the GDP of the Top 5 economies on the planet for each of these graphs, the numbers would like something like this :<\/p>\n

__\u00a01930: $2.87 Trillion Annually<\/p>\n

__\u00a01980: $14.16 Trillion Annually<\/p>\n

__\u00a02010: $43.84 Trillion Annually<\/p>\n

__\u00a02015: $53.82 Trillion Annually<\/p>\n

As we\u2019ve seen from the previous data, the creation of capital by the central banks take a bit of time to settle into the global economies to begin producing real GDP advancements.\u00a0 Additionally, we believe the 2009~2014 global credit market crisis was one of the biggest crisis events to \u201cre-sync\u201d the global markets in decades.\u00a0 This event was similar to the 1929 US stock market crash in combination with the wars of the 1930s and early 1940s rolled all into one.\u00a0 The primary difference between now and then is the fact that global economies are now very inter-connected and what took many decades in the past now takes only a few short years to recover.<\/p>\n

What should we expect in the future and why are we cautiously optimistic about the next 2~5+ years, keep reading our next segment to find out.\u00a0 We\u2019ve covered almost all of the key data points that highlight what has transitioned in the past 40~50+ years.\u00a0 Next, we\u2019ll highlight why we are very optimistic that 2019 and 2020 will be incredible years for skilled traders and investors and we\u2019ll show you what to expect from the US markets going all the way into 2021.<\/p>\n

Isn\u2019t it time you considered joining a group of professional traders, researchers, and friends to help you find and execute greater success in the future? Then visit www.TheTechnicalTraders.com<\/a> to learn how we can help you find and execute better trades.\u00a0 Take a look at some of our recent winners to see how we help people, just like you, create success.\u00a0 We believe 2019 and 2020 will be incredible years for skilled traders and we are executing at the highest level we can to assist our members.\u00a0 In fact, we are about to launch our newest technology solution to better assist our members in creating future success.\u00a0 Isn\u2019t it time you invested in your future success by joining a team of professionals dedicated to giving you an advantage in the markets every day?<\/p>\n

Chris Vermeulen
\nTechnical Traders Ltd.<\/p>\n

By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com Welcome back, If you\u2019ve missed any part of this multi-part research post, please visit www.TheTechnicalTraders.com\/FreeResearch\/\u00a0to review and read our previous posts.\u00a0 This, Part III, of our multi-part research post where we are attempting to rationalize the continued bearish analysis of some other analysts as well as review some key data that may support […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-142309","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142309","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=142309"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142309\/revisions"}],"predecessor-version":[{"id":142310,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142309\/revisions\/142310"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=142309"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=142309"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=142309"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}