2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

[Southernguy]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Qe4

[ProdigyofZen]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Yuan depreciation coming soon? Would help stem outflows.

Each time they devalue just 1 to 2% it reinforces capital flight and causes more speculators to jump in to short the yuan.

But make no mistake, this is being caused by domestic capital flight out of the Chinese economy first and foremost.

That is what most do not understand.

[Polish_Silver]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Each time they devalue just 1 to 2% it reinforces capital flight and causes more speculators to jump in to short the yuan.

But make no mistake, this is being caused by domestic capital flight out of the Chinese economy first and foremost.

That is what most do not understand.

In EJ terms, the great wall of money if finally eroding. Could this lead to political instability? How big of a problem is it?

[verdo]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Yellen sounded fairly dovish and flexible yesterday, and overall didn't really say anything we weren't expecting her to say, yet the markets still ended down. That's probably a bad sign

[touchring]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Each time they devalue just 1 to 2% it reinforces capital flight and causes more speculators to jump in to short the yuan.

But make no mistake, this is being caused by domestic capital flight out of the Chinese economy first and foremost.

That is what most do not understand.

What most people don't understand is that the dollar is significantly overvalued. The US is still in recession, real unemployment has not fallen, and yet rates are rising.

You don't read news about American tourists flooding Europe, only news of Chinese tourists invading Japan.

China is right to gradually devalue the Yuan to adjust it closer to other international currencies. I don't think they are really that bothered about capital flight that happens in that process. Reserves grow and shrink. That's what reserves are for.

As China devalues the Yuan, Chinese goods, that are already cheaper than others, will get even cheaper. I've just switched my main supplier from a Canadian company to a Hong Kong based company. Chinese companies are getting more competitive in the last couple of years, providing better service at record low prices and lower to come if the Yuan devalues.

On the other hand, US companies with significant international businesses are going to face a bigger problem if Yellen does not lower rates.

[ProdigyofZen]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

What most people don't understand is that the dollar is significantly overvalued.

And??

China is right to gradually devalue the Yuan to adjust it closer to other international currencies. I don't think they are really that bothered about capital flight.

We shall see........ if capital flight continues they will be very very bothered by it.

[touchring]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

And??

We shall see........ if capital flight continues they will be very very bothered by it.

The Chinese like to over-react as they have done in the stock market, and they are the last my of concern.

I'm more worried about my financial stocks on the Dow, and how the commodity bubble burst will affect the US economy.

[Southernguy]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

And then, on the oil front: Some time ago I read the following: February 3, 2016 Oil Price Treachery: Are the Saudis Blackmailing Putin for Concessions on Syria?


by Mike Whitneya
The title is clear in itself.
Then, today, we have the following:

"By Dimitra DeFotis

With a ceasefire in Syria brewing, and the Saudi king likely visiting Russia within weeks, the world’s biggest oil producers could cut output “sometime in March,” SGH Macro Advisors said late Thursday.

The comments come on the heels of chatter Thursday from the United Arab Emirates that a production cut could be imminent. Another piece of the equation: Russia and the U.S. said late Thursday that a temporary Syria ceasefire and humanitarian aid agreement was reached in Geneva. Turkey had warned that hundreds of thousands of refugees could still flee Syria, but both Turkey and Saudi Arabia have been reluctant to combat the Islamic State with troops on the ground.
The United States Oil Fund (USO) moved into positive territory by the end of the day though oil prices dropped to a 12-year low. Emerging market energy stocks didn’t fare well. Argentina producer YPF (YPF) fell 2.5%, Brazil’s Petroleo Brasileiro or Petrobras (PBR) fell more than 5.5%, though it was up in after-hours trading. PetroChina (PTR) fell 0.6%. The iShares MSCI Turkey ETF (TUR) was up in after-hours trading,
SGH, a consultant to asset managers and policy makers on the global economy, with an expertise in Saudi Arabia and Iran, notes that while Russia announced the king’s visit, the Saudis have not confirmed it. Still, CEO Sassan Ghahramani wrote late Thursday:

“We take the news of a possible visit in March to Moscow by Saudi Arabia’s King Salman bin Abdul Aziz Al Saud very seriously, as potentially marking the culmination of an extended, high-stakes diplomatic maneuvering between the Kingdom and Russia to reach terms on both an OPEC, non-OPEC oil output cut as well as the resumption of the Syria peace negotiations in Geneva. … On the oil front, there is still nothing more than a basic framework to an agreement for now, and the negotiating process is fraught with potential setbacks, for instance when it comes to the actual terms of market share, quotas, or production standstill agreements and the like; but we do believe as we first reported in January, there has been steady, even substantial movement towards an eventual agreement between the OPEC and non-OPEC oil-producing countries for a coordinated cut in crude oil output, probably sometime in March …
An essential prerequisite to the Saudi visit to Moscow and for an oil deal is whether there is progress towards a cease-fire is agreed to in Munich. We believe it is likely, within days at most if not hours, and the March 1 start date to the cease-fire initially proposed by the Russians will be brought forward, albeit with likely concessions by the Saudis and the Americans on the terms to a resumption of the Syria peace negotiations in Geneva …”

Earlier in the day, Eurasia Group analysts Ayham Kamel, Cliff Kupchan, Greg Priddy and Naz Masraff threw water on the oil production cut hypothesis, while also commenting on the conflict in Syria:

“Saudi Arabia and Turkey are unlikely to independently deploy military forces in Syria. The U.S. is also unlikely to lead an extensive military incursion in Syria that would provide Saudi Arabia and Turkey with political cover for intervention. … the U.S. does not want to partner with an adventurist leadership in Riyadh and unpredictable one in Ankara. … Despite geopolitical tensions, Saudi Arabia and Iran may indeed discuss OPEC production policy but an agreement to cut is highly unlikely.”"

Is an accord between Russia (and probably Iran) and Saudi Arabia brewing?
Could that mark the turning point in oil prices?

[Southernguy]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

And then, on the oil front: Some time ago I read the following: February 3, 2016 Oil Price Treachery: Are the Saudis Blackmailing Putin for Concessions on Syria?


by Mike Whitneya
The title is clear in itself.
Then, today, we have the following:

"By Dimitra DeFotis

With a ceasefire in Syria brewing, and the Saudi king likely visiting Russia within weeks, the world’s biggest oil producers could cut output “sometime in March,” SGH Macro Advisors said late Thursday.

The comments come on the heels of chatter Thursday from the United Arab Emirates that a production cut could be imminent. Another piece of the equation: Russia and the U.S. said late Thursday that a temporary Syria ceasefire and humanitarian aid agreement was reached in Geneva. Turkey had warned that hundreds of thousands of refugees could still flee Syria, but both Turkey and Saudi Arabia have been reluctant to combat the Islamic State with troops on the ground.
The United States Oil Fund (USO) moved into positive territory by the end of the day though oil prices dropped to a 12-year low. Emerging market energy stocks didn’t fare well. Argentina producer YPF (YPF) fell 2.5%, Brazil’s Petroleo Brasileiro or Petrobras (PBR) fell more than 5.5%, though it was up in after-hours trading. PetroChina (PTR) fell 0.6%. The iShares MSCI Turkey ETF (TUR) was up in after-hours trading,
SGH, a consultant to asset managers and policy makers on the global economy, with an expertise in Saudi Arabia and Iran, notes that while Russia announced the king’s visit, the Saudis have not confirmed it. Still, CEO Sassan Ghahramani wrote late Thursday:

“We take the news of a possible visit in March to Moscow by Saudi Arabia’s King Salman bin Abdul Aziz Al Saud very seriously, as potentially marking the culmination of an extended, high-stakes diplomatic maneuvering between the Kingdom and Russia to reach terms on both an OPEC, non-OPEC oil output cut as well as the resumption of the Syria peace negotiations in Geneva. … On the oil front, there is still nothing more than a basic framework to an agreement for now, and the negotiating process is fraught with potential setbacks, for instance when it comes to the actual terms of market share, quotas, or production standstill agreements and the like; but we do believe as we first reported in January, there has been steady, even substantial movement towards an eventual agreement between the OPEC and non-OPEC oil-producing countries for a coordinated cut in crude oil output, probably sometime in March …
An essential prerequisite to the Saudi visit to Moscow and for an oil deal is whether there is progress towards a cease-fire is agreed to in Munich. We believe it is likely, within days at most if not hours, and the March 1 start date to the cease-fire initially proposed by the Russians will be brought forward, albeit with likely concessions by the Saudis and the Americans on the terms to a resumption of the Syria peace negotiations in Geneva …”

Earlier in the day, Eurasia Group analysts Ayham Kamel, Cliff Kupchan, Greg Priddy and Naz Masraff threw water on the oil production cut hypothesis, while also commenting on the conflict in Syria:

“Saudi Arabia and Turkey are unlikely to independently deploy military forces in Syria. The U.S. is also unlikely to lead an extensive military incursion in Syria that would provide Saudi Arabia and Turkey with political cover for intervention. … the U.S. does not want to partner with an adventurist leadership in Riyadh and unpredictable one in Ankara. … Despite geopolitical tensions, Saudi Arabia and Iran may indeed discuss OPEC production policy but an agreement to cut is highly unlikely.”"

Is an accord between Russia (and probably Iran) and Saudi Arabia brewing?
Could that mark the turning point in oil prices?

[GRG55]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

And then, on the oil front: Some time ago I read the following: February 3, 2016 Oil Price Treachery: Are the Saudis Blackmailing Putin for Concessions on Syria?

Is an accord between Russia (and probably Iran) and Saudi Arabia brewing?
Could that mark the turning point in oil prices?

Not a hope in hell.

As I have tried to point out in numerous prior posts, Saudi long, long ago lost the ability to maintain OPEC discipline to sustainably raise the price of oil. And that was before the USA ousted Saddam thus setting up the Levant for a perpetual state of civil war.

Saudi Arabia/OPEC is perfectly capable of crashing the price of oil, as it has demonstrated several times starting in 1986. it is completely incapable of the discipline necessary to raise the price of oil in any sustainable fashion.

[icm63]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Every thing reverts to the mean!

[gugion]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

The low oil prices did not cause the stock market to correct. The rate hike, even a mere 1/4 point, sent both oil and stock prices down.

My article from early 2013 forecasts exactly this result if the Fed went ahead and raised rates before the output gap closed. Yellen went ahead and raised them based 1) on market expectations she set at the Boston Economics Club meeting where I met her June 2010, and 2) Fed concerns that asset markets were over-heating.

Finance-based economy + Output Gap + Rate Hike = Fed policy induced Recession

Story from 2002. I'm at a small dinner put on by Thomas Weisel partners. Tom's there lecturing us about how the telco crash as no big deal because all of the swell infrastructure that got left behind was going to be the foundation for the recovery. A Boston Fed board member is seated next to me. I asked him what prompted the Fed to raise interest rates when it did. Was the intent to pop the dot com bubble. He answer: "Yes. We said, "Geez. Look what they're doing with our money!"

Their money, not ours. That's how they see the world. It's similar to the Hollywood mentality. My sister's in the business. A director at a party at her house once used the term "civilians" to refer to the rest of us who are not in the movie and TV business. I got exactly the same vibe talking to Yellen.

They don't care if they crash the economy up and down. Did Greenspan get indicted for his role in the housing bubble and crash?

The Fed's modus operandi is a lethal combination of arrogance, cluelessness, and lack of accountability.

I think they saw "their money" being used in ways they didn't like, such as financing of Unicorns, and decided to take asset markets down a notch.

Credit risk contagion is still fresh in the minds of market participants, so the reaction to the hike may be more than the Fed bargained for.

Lousy credits started to roll over mid-2014 but good credits have not been effected, at least not yet.
Lacking tools to contain a credit crisis if one occurred today the Fed will be forced to reverse direction at the hint of credit market spill-over.

I do not see another run-away train like I did on late 2007. In fact, I will not be surprised to see markets recover starting next week.

I looked at that Corp AAA chart back in 2007-2008 and it seems like that index didn't start falling (was actually making new highs like it is now) until September 2008 while the market was in a bear market since October 2007. Is it possible that is happening now with the market in a bear market while corp AAA credit won't go down until well into the bear market? Thanks in advance. Any idea when a new article will be published? No rush, just very excited to hear your updated views!

[anoop]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Any chance there will be an update from EJ?

[vt]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

EJ has commented in posts over the last three years. Just read them to get a sense of his more recent thinking.

He did say he is working on a new site for us.

[EJ]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

EJ has commented in posts over the last three years. Just read them to get a sense of his more recent thinking.

He did say he is working on a new site for us.

Indeed am working on a new site fully modernized but now focused on VirZOOM: https://netcapital.com/companies/virzoom