PERMA BEARS BEWARE
For the last 6 years I’ve listened as the bear sites talk down the economy. I have to say this is the most ridiculous nonsense I’ve ever heard. Do these people even bother to go outside and see what’s happening?
For the last two months I’ve been on vacation touring a big swath of the western United States and I can tell you that in every single town I’ve gone through there are help wanted signs in virtually every window. Big towns and little towns, the story is the same. The economy is accelerating, if not booming.
I predicted this would happen over a year ago. When everyone was quoting the shadow stats nonsense of 20% unemployment, I was saying at the time it was crap. If you think the government fudges the numbers, John Williams at Shadow Stats is 10 times worse than the government ever thought about being. Let’s face it, bearish news sells. And these sites are not in the least bit interested in publishing the facts. They are interested in creating attention by continuously predicting the end of the world.
I anticipated that we would get multi-year cycle lows in everything this year, and that’s what happened. The economy didn’t turn down on any ridiculous 8.6 year economic cycle. If anything it turned up. We don’t have, and are not going to have deflation. It’s virtually impossible to have deflation in a purely fiat monetary system as long as central banks are willing to expand the monetary base indefinitely. Is it any wonder why these people continue to scratch their heads and wonder why oil isn’t going down driven by the “fundamentals”. Duh catch a clue, the fundamentals have already reversed. The market has already looked into the future and seen that the global economy is accelerating again, and demand is going to overwhelm supply by next year. Folks quit looking in the rear view mirror.
When everyone was predicting the US Dollar was going to 110 or 120 I was one of the very few who noticed that the August 2015 low had dropped below the March 2015 low. Then the May low this year the dollar dropped below the August low. That set off all kinds of warning bells. The dollar was making lower intermediate lows. If the dollar was going to 110 or 120 then it had no business making lower intermediate lows. Something was wrong. I’ll tell you what was wrong. The dollar had started a bear market with a classic double top, and the euro a bull market with a classic double bottom. Again, you have to pay attention to what is actually happening. Quit listening to these analysts that sound convincing but clearly have no clue what is going on. The euro is not collapsing and Europe is not falling apart. Quite the opposite, Europe is coming out of recession and the entire global economy is going to rebound in the years ahead.
When everyone was calling for a bear market in the stock market, I was one of the few calling for new highs. There is just no way stocks can enter a bear market without the economy rolling over into recession, and clearly the US was not even close to a recession. And just as I predicted the market recovered and now we have a breakout to new highs.
This is exactly what should happen during an inflationary phase, and make no mistake we are entering an inflationary phase over the next 4-5 years as all the global QE comes back to bite us in the ass. Seriously, did anyone really think that the world could just print trillions and trillions of currency units and nothing bad would happen? Or that it would somehow create deflation?
Sometimes I wonder if there is any commonsense left in the world.
Deflation: what a joke!
We are having one of the best years in a long long time, because I correctly anticipated that we were starting an inflationary phase. Folks, it’s time to tune out the perma bear nonsense and get on board with reality. And the reality for the next several years is that printing trillions and trillions of currency units is going to create inflation in virtually all asset classes.
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Gary,
Gee, you’re having a good year, mate.
Wish I had seen your site for the first time as a newbie in January!
But I reckon I first saw it at the worst possible time:
October, 2012.
That’s a tough bump to get over!
“Help wanted”.
Are low wages jobs.
we learned that CSCO is going to lay off 20% of their entire workforce, some 14K people. Then we learned that HD, and LOW were pretty disappointing. Then we saw that SPLS didn’t do so well. we saw mortgage applications fall. Target missed top and bottom line and warned for the rest of the year, on and on.
QE = $$$ = market
Economy is in the toilet.
This is the same old excuse the Perma Bears always use that they are low-paying jobs. That this is not the case I’m seeing Help Wanted signs in all different sectors of the economy. And yes maybe some tech companies are laying off jobs because those sectors have become commoditized, but the new high paying jobs are now moving into the biotech sector just like they were into the personal computer and internet in the late nineties
always bull mkt somewhere– biotech
Even though I agree stocks are going higher, your measurement of a recession is not the least bit sensible. For one, “help wanted” signs aren’t generally posted for professional or even most blue collar full time jobs. Those are part time service jobs only. That’s the plethora of jobs available. It is quite clear that professional jobs are decreasing in numbers with layoffs after layoffs in large numbers. You don’t see that by walking around town.
Corporate earnings are declining quarter after quarter after quarter. That is what really precedes a recession. However, I do agree with you that stocks are going higher still in spite of that. It’s just another bubble.
The same thing happened to the buggy industry when the automobile was invented. Lost jobs in an old industry were replaced by jobs in the new industry.
The mistake people are making is looking for the old industries to come back. They won’t. The new high paying jobs will now be in the biotech field.
There is a very serious disconection between financial world and real world where 90% of real people (try) to live (survive?)…(no inflation in my wage/salary!)…”they” call it the “new normal”. May be when they start to raise wages things will change, but there is to much greed in the financial planet to let that happen…
Hi Gary,
I bring this up again, I know that you work a lot with cycles and you are extremely good at it. If we assume we have a great bull market in front of us for a couple of years, and my view is in that direction… Looking at the SP 500 chart 1994 comes to mind where after a prolonged bull market since 87 we accelerated to the upside for 5 more years of bull. Looking at that move up from 94 there are very few and very shallow pullbacks for a very long time, so really a melt-up kind of situation. Would you agree that what you envisage now could be similar to this? And in that type of melt-up market working with cycles doesn’t really work right?
Thanks!
Everybody knows the first 2 years of a new presidential term the economy is down and this time will be no different.
Very often, there can be a disconnect between stock market and economy. Just follow the price, no matter what talking heads say.
Everybody knows the Fed is artificially supporting this market until election day.. after that all bets are off…
Strong words, Gary. You talk about the dollar making lower lows as evidence that the dollar is in a bear market. When the S&P was making lower lows back in January and again in February, you arrived at a whole different conclusion and correctly called for new highs coming. What makes the dollar situation different than that of the S&P ? Is there no chance the dollar will resume it’s bull move?
Euro will collapse longer term. But short term it can even go up to 1.28 and still be in a bear market.
The difference is in the timing of the multi-year cycles
Tepid bounce in us$ for a few days before heading down to lower support?
couple things Gary,
The Davos meeting Jan 21 marked the bottom for the base metals. They came out of that meeting satying what was needed was a globally coordinated infrastructure build out. Monetary policy has run its course and its time for a fiscal policy response. We are also entering what will be called the fourth industrial revolution. Robotics and renewables are the buzzwords.
The amount of base metals that will be consumed to make the transition to the post industrial society/economy is mind boggling. The inflation that you speak of will be about demand outstripping supply. I don’t think people realize the supply side destruction that has taken place.
Martin Armstrong. Not sure what your axe to grind with him is. But if you believe in karma you might just decide to keep your feelings about him private. The guy was in jail for a long time for NOT giving up his source code. He was never convicted of a crime and he did a lot of time. Maybe you could just give him a pass. other than that I like what you have to say and i have already come to the same conclusions you have independent of your work.I like that we are of the same mind in regards to energy and inflation.
Feel free to email me if you would like to converse about things in more depth.
AB
With 50 million americans on food stamps and a GDP of only 1.2 percent, I would hardly call this a booming economy.
It looks like gold and silver are going a lot lower.
Silver broke support zone at 19.38, maybe heading to low 18’s OR a shake out to go higher?
PM miners were toasted. Guess like Gary said gold ain’t taking off till nearer to Aug month end
Gary is going against the billionaires 🙂 a wise decision? Only time will tell.
I look at charts they never lie. Baltic dry index and money velocity is at historical low. Global debt is at historical high.
Here is an article from Doug Casey:
George Soros just doubled his bet against U.S. stocks.
You’ve probably heard of Soros. After Warren Buffett, he’s likely the world’s most well-known investor.
Soros is a household name because of his incredible track record. From 1969 to 2011, he generated average annual returns of 20%. He nearly beat the S&P 500 2-to-1 over that stretch.
Soros also famously “broke the Bank of England.” In 1992, he made a giant bet that the pound sterling, Britain’s currency, would crash. When it did, Soros pocketed $1 billion.
For the last few years, Soros has been on a bit of a hiatus. But two months ago, he came “out of retirement” to run Soros Fund Management, which manages about $29 billion.That’s because Soros thinks there’s big money to be made right now…
But Soros isn’t betting stocks will go higher—he’s betting they’ll crash.
In the first quarter, Soros cut his stake in U.S. stocks by 37% and placed a HUGE bet on gold.
• Soros bought 1.9 million “puts” on the SPDR S&P 500 ETF (SPY) last quarter…
The SPY tracks the performance of the S&P 500. And a put is a way for an investor to make money if a stock falls.
As of March 31, the Soros Fund owned 2.1 million puts on the SPY. At the end of June, it owned 4 million. In other words, Soros doubled down on his bet against U.S. stocks.
• Soros thinks we’re heading for a repeat of the 2008–2009 financial crisis…
In January, he warned, “When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.” He added, “The world is running into something that it doesn’t know how to handle.”
According to Soros, this crisis has been “unfolding in slow motion.” But since the “Brexit,” the world is now racing toward it.
As you probably know, Great Britain voted to leave the European Union in June. The unprecedented decision caught investors by surprise. It erased more than $3 trillion from the global stock market in two days.
In its aftermath, we warned that the Brexit was a “taste of what’s to come.” Soros agrees. He recently said the Brexit “unleashed a crisis in the financial markets comparable in severity only to that of 2007/2008.”
• Paul Tudor Jones is betting against U.S. stocks too…
Jones might not be a household name like Soros. But he’s a legend on Wall Street.
He’s a “big-picture” trader who’s nailed several market tops and bottoms. He’s best known for calling the “Black Monday” stock crash of October 1987. As you may know, the Dow Jones Industrial Average plunged almost 23% on this day. It was the darkest day in the history of the U.S. stock market.
Today, Jones runs the Tudor Investment Corporation, which manages $32 billion.
Like Soros, Jones is betting U.S. stocks will fall. Last quarter, his fund bought 5.95 million puts on the SPY, more than doubling its bearish bets against the S&P 500. The fund now owns 8.34 million puts on the SPY, making it his biggest position.
• There are plenty of reasons to be nervous about the stock market right now…
The global economy is weak. The U.S., Europe, Japan, and China are all growing at their slowest rates in decades.
Stocks are expensive. The popular CAPE valuation ratio, which gives a long-term view of the stock market, is 62% above its historic average. The S&P 500 has only been more expensive three times in history: before the Great Depression, during the dot-com bubble, and leading up to the 2008–2009 crisis.
Corporate America is also struggling to make money. Corporate profits are on track to decline for the fifth straight quarter. That hasn’t happened since the 2008–2009 crisis.
Election result most likely will produce a big spike down in stocks and probably at least short term chaos as US will divide…, that’s what probably they’re betting on…, I think better be in cash and metals at those time…
Gary is right about stocks and oil. But he is gonna be painfully wrong about Gold and Gold stocks.
The logic is simple. Gold oil Ratio hit an all time high and is reversing. The long term average is closer to 15. Now for an overshoot in the other direction Gold oil ratio needs to get to at least 10-12. I have a hard time seeing oil going over $100 even in 2017-2018 and more likely $80.
You can do the math on Gold price.
Also Gold stock profits have done phenomenally well as Gold has risen while oil has stayed low.
Most mining costs as directly linked to Oil price.
So I think next 12 months Gold will visit $1,150 at least once. Gold stocks will correct by 30-40%.
Oil, and stock market will go up…a lot.
The economy is booming… That’s a courageous statement! If you come to that conclusion by just looking at window’s `help wanted`signs, I consider that pretty superficial. I have read hundreds of economists writings and the majority of them are talking about stagnating economy, not booming. But there is a very basic and fundamental measure of economic activity, the “velocity of money” and of June 1, it was at historical all time record low, and that for sure is not indicating a booming economy. To the contrary is pointing to a very weak economy, if not recession. It was the Italian prime minister , Berlusconi, that when asked how the Italian economy was doing, in the 2010 days, he answered: the Italian economy is very strong, just look at the restaurants, they are all full of people… Of course we all know what happened since. There are a lot of Berlusconis in the USA too, particularly in the Obama/Hillary camp, not to mention at CNBC. I stick with my gold/silver and mining stocks and wait for the next QE, soon to be announced.
article discussing >>>>>> major infrastructure projects in the emerging markets >>>>>> the base metal stocks bottomed Jan 20th/2016. take a look at names like TCK for example.
http://www.bloomberg.com/news/articles/2016-08-19/a-commodities-rebound-is-accelerating-right-on-china-s-doorstep?utm_content=commodities&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-commodities
You have been calling everything well up until the first time I followed you (buying miners 3 weeks ago- to change your tune soon after) but now to think the economy is booming, wow.
Hmm we didn’t buy miners 3 weeks ago. We started buying on May 31. We just exited all leveraged positions on Aug. 11th. During that time we increased the metals portfolio from +56% to +144%.