{"id":76641,"date":"2015-08-10T19:10:52","date_gmt":"2015-08-10T23:10:52","guid":{"rendered":"http:\/\/countingpips.com\/?p=76641"},"modified":"2015-08-10T19:10:52","modified_gmt":"2015-08-10T23:10:52","slug":"ugly-outlook-global-economics-quantitative-easing-and-equities","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/08\/ugly-outlook-global-economics-quantitative-easing-and-equities\/","title":{"rendered":"Ugly Outlook \u2013 Global Economics, Quantitative Easing and Equities"},"content":{"rendered":"
August 10, 2015<\/div>
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By\u00a0Chris Vermeulen –\u00a0ETF Trade Alerts<\/a><\/strong><\/p>\n

A take on the global economy and equities markets that paints a simple and clear pictures I think.<\/p>\n

The DJIA index has recorded seven consecutive down days in a row! \u00a0These 7 distribution days are a sign that many institutions are taking profits or establishing losses.<\/p>\n

As we are entering the second half of 2015, financial panic is occurring globally. Currently, this tremendous financial devastation is happening throughout the world<\/a>. \u00a0Stock prices are crashing in China, Europe and soon I feel the United States. Puerto Rico has now defaulted on their debts. Quantitative Easing has been masking the symptom of this endemic disease. The Greek Banks are still frozen and will continue to stay this way; however, the mainstream media is not reporting on this current situation in Greece. There is a limit on weekly withdrawals of 420 Euro per (around\u00a0US\u00a0$455).<\/p>\n

The corporate leaders of the major banks were left in place back in 2008\/2009 and were allowed to continue receiving their huge bonuses. Their banks only existed because of the unprecedented taxpayer subsidy. \u00a0The system is still essentially the same as it was before, due to any lack of meaningful reforms that have been required. \u00a0It is this lack of change in all the required global fiscal policies that I am warning you of the coming collapse of this new \u201cAsset Bubble\u201d. This is where \u201cprofits\u201d are Privatized and \u201closses\u201d are Socialized.<\/p>\n

The printing of limitless sums of virtually free money under various \u201cQuantitative Easing\u201d programs and simultaneously slashing interest rates to their lowest levels in history has created stock markets that have been artificially \u201clevitated\u201d for many years now. \u00a0This growth is based on virtually \u201cfree money\u201d. I am \u00a0warning you that the current business valuations and calculations are NOT accurate and even NON-sustainable. \u00a0Our previous \u201cCredit Bubble\u201d has now been leveraged and replaced by an even larger and more dangerous \u201cAsset Bubble\u201d.<\/p>

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The Federal Reserves easy money policies have left stocks and bonds on the verge of a massive collapse. Their \u201cFinancial Engineering\u201d has created such a \u201chorrendous bubble\u201d that \u00a0it will lead to the largest historical economic deflationary depression that we have ever experienced. This bubble, when it finally implodes, \u00a0is going to be absolutely devastating to the global economies. \u00a0All irrational bubbles eventually burst.<\/p>\n

\"bearmarket-chart\"<\/a><\/p>\n

What is actually required today is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a \u201cstore of value\u201d. \u00a0We do not require a complex international committee to solve this new future problem. \u00a0This \u201cstore of value\u201d asset is already in existence and currently held by some central bankers and prudent individuals around the world. \u00a0It is known as gold. \u00a0From the ruins of our chaotic financial crisis, a degree of sanity will prevail. \u00a0Gold, as a freely floating asset, will arise in stature as the only element of global monetary reserves. The floating aspect is the vital evolutionary improvement over all previous structural monetary failures which tried to use a gold standard at a fixed price (i.e:\u00a0unit\u00a0of account).<\/p>\n

When the global financial crisis hit in 2008, U.S.Dollar liquidity dried up and international financial markets experienced widespread paralysis. First to the scene was the U.S. Federal Reserve Board, pumping liquidity into the system and establishing a series of large-scale bilateral swap agreements with major central banks. This included several countries in the major emerging markets. The International Monetary Fund (IMF) followed with a number of programs for countries hit by the crisis and it adapted its financing toolkit to meet the demands of the crisis. For the first time,\u00a0policy makers\u00a0looked to the Special Drawing Rights (SDR) to provide\u00a0much-needed\u00a0liquidity throughout the international monetary system.<\/p>\n

SDR is an artificial \u201cbasket\u201d of currency used by the International Monetary Fund (IMF) for internal accounting purposes. The SDR is also used by some countries as a peg for their own currency and is used as an international reserve asset. The SDR was created by the countries participating in this system who needed official reserves (government or central bank holdings of widely accepted foreign currencies) that could be used to purchase the domestic currency in foreign exchange markets where it is required to maintain its exchange rate. It is a potential claim on the freely usable currencies of IMF members. The Special Drawing Rights was created by the IMF in 1969 to support a fixed exchange rate system.<\/p>\n

The SDR is neither a currency nor a claim on the IMF. It is a potential claim on the freely usable currencies of IMF members. Holders of SDR can obtain these currencies in exchange for their SDR. \u00a0The SDR is primarily a unit of account for the purpose of accounting.<\/p>\n

It is my\u00a0view point\u00a0that the SDR, which is a \u201cVirtual Reserve Currency\u201d, will never come close to achieving a status anywhere near that of \u201cthe principal reserve asset in the international monetary system\u201d as envisioned by The International Monetary Fund for a future global reserve currency!<\/p>\n

Gold has been declining sharply since its all-time high of \u00a0$1,920\/ounce on September 2011. It is experiencing a historical correction that we forecasted years ago. I am expecting much lower prices over the next few months. \u00a0 My predictive trend and cycle strategy will inform us when we have roughly hit the bottom of these two markets (gold & silver).<\/p>\n

Today, the majority of investors now believe gold is dead and no longer relevant and that cash and the U.S. dollar is King. \u00a0With this type of \u201cherd mentality\u201d, investors will mostly likely miss the next historical buying opportunity for metals, and miss the ultimate short-sell trade on US equities.<\/p>\n

Chris Vermeulen<\/strong>
\nTheGoldAndOilGuy.com\u00a0\u2013 ETF Trade Alerts<\/strong><\/a>
\nAlgorithmic Trading Strategies Developer & Trader<\/strong><\/a><\/p>\n

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By\u00a0Chris Vermeulen –\u00a0ETF Trade Alerts A take on the global economy and equities markets that paints a simple and clear pictures I think. The DJIA index has recorded seven consecutive down days in a row! \u00a0These 7 distribution days are a sign that many institutions are taking profits or establishing losses. As we are entering […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-76641","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76641","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=76641"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76641\/revisions"}],"predecessor-version":[{"id":76642,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76641\/revisions\/76642"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=76641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=76641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=76641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}