Is Quantitative Easing to Infinity Back on the Table?

The latest edition of our weekly finance and property news digest with a distinctively Australian flavour. Is QE to infinity about to start back up? Is it back on the table?

- Video Source, Walk the World

The Irony: Macron Suggests Italians Deserve a Better Government

The French President is taking Italy's coalition government head on after dismissing Rome's criticism of his handling of the anti-government Yellow Vest protests. 

Emmanuel Macron even suggested Italy should find itself different leaders.

- Source, Russia Today

Daniel Estulin: Back Trump or the World Loses

International best-selling author, journalist and counter-intelligence expert Daniel Estulin contends, 

“First thing you’ve got to understand is you’ve got to back Trump. 

Trump is not a person. I am not a card carrying Republican. People have to understand that our only way out of this is to make sure Donald Trump actually stays President of the United States because the entire welfare of Russia and everywhere else depends on the non-liberal crowd winning. 

The second point I want to make is make sure you have physical gold and silver.”

- Source, USA Watchdog

Will Trump Invoke Emergency Powers As a Last Resort?

We are surrounded by geopolitical hot spots, from trade war with China, to unresolved nuclear ambitions on North Korea, to Israel clashes with Iran, to the southern US border permeability. 

Who are the real drivers of these flash-points, and what is the real objective? Joel Skousen, editor & publisher of World Affairs Brief, political scientist specializing in the philosophy of law and Constitutional theory, designer of high security residences and retreats, and author of "Strategic Relocation North American Guide to Safe Places," returns to Reluctant Preppers to lay out his take on the powers behind our interventionist global agenda. 

Skousen exhorts us to prepare for the worst, while working to reclaim our true individual and national sovereignty while there's still time!

- Source, Reluctant Preppers

Pelosi Refuses Trumps Shutdown Offer: Big Mistake

Nancy Pelosi has made a massive blunder in the most recent round of "negotiations" over Trump's border wall.

She has refused his generous DACA offer and exposed that the Democrats have no plans in helping illegal immigrants. They simply want them as pawns.

Expect massive decent within the Liberal ranks.


- Source, Styxhexxenhammer

Are You Ready for the Hyper Inflationary Great Depression?

The economic slowdown is now global, and far more advanced than we thought. 

With US national debt poised to surpass $22 Trillion this year, what calamity lurks just around the corner? 

Lynette Zang believes it may be a hyper inflationary depression from which no holder of fiat will escape.

- Source, SGT Report

Fitch Threatens to Downgrade the US Credit Rating?

Jason talks about how on Wednesday, January 9th 2019 Fitch credit ratings agency threatened to downgrade the US' credit rating because of the prolonged US federal government shutdown. 

Jason talks about the history of ratings agencies downgrading the US, including the curious case of Egan Jones.

- Source, Wall St for Main St

Turning of the Tide For Silver

Volatility is returning to stocks after a record bull market run, while precious metals have been beaten down for almost a decade. 

What signals indicate we are set up for a cyclical reversal and ripe for a tipping point to launch a new cycle of investor rush into gold & silver? 

Greg Crowe, president & CEO of Silver One Resources, returns to Reluctant Preppers to give us an insider's look at the historical dynamics of the gold/silver ratio, stocks vs. precious metals cycles, silver demand forces, and why when gold makes its move, silver moves more, and silver miners move the most of all. 

Crowe outlines some of Silver One's most promising projects, explains how their stock price is at a compelling value price, and suggests what to watch for in the markets as we move forward.

- Source, Reluctant Preppers

Gold is back in a Bull Market: The Time to Buy is Now

I have upgraded gold to a bull market for the first time since I started writing about the market regularly (in the Atlas Pulse newsletter) in 2012. Back then, the message was that a bubble was unwinding. Now, things are looking up.

My official signal hasn’t yet been given, but this is my editorial, so I’m reserving the right to override it. If like me, you believe the post-2009 bull market in equities has hit a wall, then why wait to buy gold? To recap, an Atlas Pulse Bull market requires a score of three out of three on these simple tests:

1. Easy money (defined as US cash real – ie, after inflation – interest rates below 1.8%).

2. The long-term gold trend in non-dollar terms must be positive.

3. Gold must be beating the stockmarket.

I’ll go through them in turn.

With US inflation (as measured by the CPI index) at 2.5% and interest rates at 2.25%, the real rates test is met, as they are negative. The risk comes from the relentless pursuit of sound money, which is possible as the Taylor Rule states that US interest rates should be 5%. However, recent talk of the Fed slowing down its tightening stance is gaining traction.

On the second condition, I use a 35-month moving average to measure gold in multiple currencies, excluding the dollar. When the gold market is quiet, it goes through periods of mirroring the dollar, and so by stripping out this source of volatility, you get a clearer picture of the underlying trend. This long-term signal remains in rude health.

The final test is that gold should be beating equities, specifically the S&P 500. While the 35-month trend isn’t yet positive (as of December 2018), I am overriding the model on this point. That’s because the equity trend is now negative and it seems likely that an equity bear market is now underway. That’s subjective, but I’m sticking with it.
An exhausted bull market for equities

This is a tired old equity bull market that rides on high valuations, especially for companies that have embraced the modern age. The 200-day moving average for global equities is now negative; credit spreads are widening; margin debt is contracting; and economic forecasts are cooling. Those are market factors, but there’s the real world too.

China trade; Brexit (the great opportunity); Italy; Mexico; France, France and more France. Putting this together, it is hard to imagine equities doing well over the next couple of years, and particularly in the developed world. For gold to beat equities has become an undemanding task.

Looking at gold relative to the S&P 500, we’ve witnessed gold fall by 75% relative to the S&P 500 (capital return) since the 2011 peak, which is a long way; and back to 2006 levels.

Gold relative to the S&P 500 with a 35-month moving average since 1950 (Source: Bloomberg)

Notice how the gold-to-S&P chart spends more of its time going down, which is as it should be, because equities are expected to deliver a return of inflation plus 6.5% per annum over the long term, whereas gold is only expected to deliver a real return of 0%. Gold’s job is to be a reliable store of value – and sometimes, zero is the best deal in town.

By delivering a zero real-return over time, that periodically means a price surge followed by a prolonged period of catch-down. Gold soared in the 1970s during a period of high inflation; it then spent the next two decades sliding back down to earth as inflation disappeared. Gold went on to do well in the noughties as real interest rates fell. And just like the 1970s, gold was too cheap to begin with, meaning the early surge was a catch-up.

Talk of monetary tightening in 2013 killed the gold price, and the subsequent unwinding of quantitative easing and interest-rate hikes has kept a lid on the price ever since. Yet, as this tightening cycle draws to a close, the gold price will be free to climb. And even if we must wait a while longer, there is light at the end of the tunnel.

For these reasons, I believe gold is well-placed to establish an uptrend versus equities. And with that third point in place, it’s three out of three. I have upgraded the gold barometer from “becalmed” to “bull market”, for the first time since 2012.

Better times lie ahead for the gold market...

- Source, Money Week, Read More Here

Powell May Not Know It Yet, But The Fed Is Now Trapped

With even Morgan Stanley openly discussing whether the Fed will "make the market happy", it now appears that the Fed tightening is effectively over with the Fed Funds rate barely above 2%, and the only question is whether the Fed will cut rates in 2019 or 2020 - roughly around the time the next recession is expected to strike - and whether the balance sheet shrinkage will stop at the same time (and be followed by more QE).

To be sure this new consensus was reflected in both equity and credit markets, both of which cheered the Fed's recent dovish U-Turn, and recouped all their losses since mid-December. And yet, market paradoxes quickly emerged: for one, rates markets yawned. On December 31, rates were pricing no Fed hikes over the next two years. Today, after the Fed’s big ‘change of tone’, expectations are almost exactly the same.

Second, a material disconnect has emerged between front-end pricing (no hikes) and the level of 10-year real rates (near seven-year highs). If, as Morgan Stanley's Andrew Sheets notes, "one of these is right, the other seems hard to justify."

Then there is, of course, the lament about the neutral rate being so low - and the potential output of the US economy so weak - that it can't sustain nominal rates above 2.25% - incidentally we explained back in 2015 the very simple reason why r-star, or the real neutral rate, is stuck at such a low level and is only set to drift even lower: record amounts of debt are depressing economic output, as the following sensitivity analysis showed.

Bank of America touched on this key concern last week when it said mused rhetorically that "if the US rates market is right, this would suggest that potential growth is much, much lower than generally accepted." Which, to anyone who read our 2015 analysis, should have been obvious: after all there is too much debt in the system to be able to sustain material rate increases.

Bank of America continued:

If Fed Funds target rates of 2.00-2.50% are enough to cause the economy to go into recession, with inflation having normalised at around 2%, then potential growth would seem to be less than 50bp. Alternatively, when looking at where the USD OIS curve regains positive shape and flattens out (in the 7-10 year forwards) the market price for neutral rates again seems to be as low as 2.00-2.50%, leading to the same conclusion. If the above were true, every asset bar rates is massively mispriced.

And the punchline: "If we accept market pricing, then there is no shortage of inconsistencies to take advantage of. If the world is going into a severe slowdown, then the Fed is unlikely to wait until next year to cut rate."

What this means stated simply, is that while stocks may be rejoicing that the Fed shifted from hawkish to dovish, this may prove dangerously near-sighted, especially if the Fed is indeed concerned about about a major recession breaking out, an outcome which will have devastating consequences once the current short squeeze ends as does the vicious snapback bear market rally, and stocks resume pricing in a global contraction.

All of this brings us to a note from Citi's Jeremy Hale, who like Morgan Stanley, agrees that while equities may indeed need Fed help, it is indeed the question whether the Fed will help, and frames the response as follows: "Maybe if the equity market portends weakness in the economy. Does it?"

And this is where we find why the Fed is now trapped, at least when it comes to the Fed's reaction function... and the market's response to the Fed's response.

The problem is simple: for the Fed, the sequence of events during past recessions has been: Fed cuts, the SPX crashes, Fed cuts. So, as Citi notes, the SPX crash is a symptom of greater economic weakness rather than the cause.

Of course, it's a bit more nuanced than this, because as Citi also shows, for all three slowdown periods the sequence of events is: Fed hikes, equity market crashes, Fed cuts.

In other words, traders - who hold the market hostage (as Powell first discovered back in 2013) - force the Fed’s hand, a conclusion supported by the surprisingly short lag time of the Fed reaction function. Indeed, as shown in the chart below, it usually takes 1 month on average - and no longer than three months - between the first 20% drop and an appropriate Fed reaction. 

Then, once the Fed gives in and cuts, it takes at most 4 months for equities to find a bottom, as the economic backdrop and Fed are supportive. 

This story seems to fit fairly well with the current environment: i.e. the Fed hiked in December, and then the equity market fell 20%. Meanwhile, current economic conditions remain relatively robust, and in line with previous slowdowns (and stronger than prior recessions), so the logical next step is that the Fed flinches – they have always in the past after all...

- Source, Zero Hedge, Read More Here

Gold Bull Starting: It's Bigger and Better Than Last Time

First Majestic Silver founder, CEO and President Keith Neumeyer thinks another gold and silver bull run is beginning now, one that will make the 2010-2012 run pale in comparison. 

2008 eight was a liquidity crisis. It was a “sell everything” mentality. 

This time around, it is a different type of environment, says Neumeyer, where precious metals will be in a bull run going forward. Neumeyer says there is too much debt in the system and a reset is inevitable. 

What will that look like? He says no one really knows. However, he thinks gold and silver are must own assets.

- Source, Silver Doctors

We Are Near The Bottom in Cryptos and 2019 Could See A Massive Price Explosion

Jeff Berwick interviewed for Block TV, this interview was recorded at the Israel Bitcoin Summit in Tel Aviv on January 8th.

They discuss how they believe Cryptos have found their bottom and how 2019 could see a re-resurgence in this bull market.

- Source, Dollar Vigilante

Justice Ginsburg Should Resign Immediately

Taxpayer funded SCOTUS justices should not "work from home" and 85 year olds don't readily "recover" from extensive lung surgery.

- Source, Styxhexxenhammer

John Rubino: All We Have Left is to Wipe the Slate Clean

Financial writer John Rubino says no matter what country, the global debt has exploded to record highs, and it’s going to go even higher in the coming years. 

Rubino says, “All we have left is to wipe the slate clean and say, you know what, this thing did not work. 

It’s a 60 year experiment that turned out to have a fatal flaw, which is you can’t hand a printing press to a government.”

- Source, USA Watchdog

Dan Oliver: Can Gold Shares Rebound in 2019?

Dan Oliver, private hedge fund manager, who views the markets from a fundamental perspective will share his views for the gold share markets in 2019.

- Source, Jay Taylor Media

Dave Janda: The Hammer of Justice Falls in 2019

Host of the popular radio show “Operation Freedom” Dr. Dave Janda warns about the massive debt problems the world is facing and the coming economic reset. 

Dr. Janda says Trump is correct when he says, “The real problem is the Fed and not China.” Janda says the Deep State “rigged the economy to implode” with massive amounts of debt. 

Dr. Janda says, “Trump has been buying time” to put the American people in the best position possible when it all comes down. 

Dr. Janda says the economic system is “vapor” and contends, “This is all part of the war we are in right now.” Don’t worry because Janda says, “The hammer of justice will fall in 2019.”

- Source, USA Watchdog

DEBT: The Opium of The Fed's Manipulated Economy

Global debt has never been higher. It's almost $250 Trillion. Obviously, the economic world that central banks have created are built on a house of sand. 

Central banks are socialistic institutions. They are monopolies created and sustained by governments. 

When the central banking house of cards comes down, it'll be felt around the world. 

- Source, Ron Paul

Gold, Silver and the Coming 2019 Currency Crisis...

Trump is still pushing the wall and the government is still shutdown. Trump uses the quotes from past Presidents and other government officials. 

Yellow vest rebellion continues, the MSM is not reporting on it. Bolton says Turkey must guarantee that they will not attack the Kurds. 

Q drops more bread, explains how money is used to line the pockets of government officials. 

Mueller might be working for the white hats, insurance policy has expired. The DS has been caught in a trap.

- Source, SGT Report

Keiser Report: Outrunning Debt in 2019

In this second of three New Year’s specials of the Keiser Report, Max and Stacy make predictions for 2019: geo-economics and politics will be big this year as China and the US battle it out for global economic supremacy. 

Will the Belt and Road Initiative receive a military response? How will the trade war unfold or unravel? They also look at the Cantillon effect, Quantitative Tightening and GIABO. 

In the second half, Max and Stacy interview guests for their 2019 predictions: Michael Hudson for his predictions on debt and Michael Pento on whether or not China’s geopolitical power can rise fast enough to outrun its imploding corporate and household debt.

- Source, Russia Today

The Democrat Schism Has Arrived: Feinstein Wants Biden, Kamala Harris Snubbed

As predicted and right on cue. The Democratic party cannot help themselves and the elements that have invaded their party are taking action. The radical far left will ensure that the Democratic party, as we know it, will be destroyed.

- Video Source

Alex Newman: We Are Dealing With a Diabolical Conspiracy

Journalist Alex Newman thinks the huge global political unrest is much more than conservatives against liberals. 

Newman says, “If you think this is a political problem you are missing the point. We are dealing with a diabolical conspiracy that hates God and hates God’s people, hates his church and everything He has ordained. 

Everything you would expect to see is exactly what you see. God ordained there should be nations after the Tower of Babel. So, of course, the Globalist wage war on nation states. God has ordained there should be families. 

So what do we see? A massive global war on families. God has ordained private property. Thou shalt not steal. So what do we see? A massive global war on private property.

It’s ludicrous, but it is everything we should expect to see from a force that hates God. I think that is what we see.”

- Source, USA Watchdog