The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

[Roughneck]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

Aw come on I heard on WSJ radio this morning that cpi inflation came back lower than expected and inflation is not a concern.:rolleyes:

[c1ue]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

FYI - an interesting dynamic:

If the US is attempting to weaken the dollar - then one possible goal for the BRIC financiers to work toward is selling their own currencies in order to keep the relative exchange rates even (i.e. negate all or some of the US dollar weakening).

Ironically while this does serve to keep the dollar from weakening as quickly as it should, on the other hand these extra dollars can then be used to disintermediate the US from its own currency.

After all, the US dollars being 'quantitatively eased' are mostly stuck in big US banks. For the importers/exporters, small businesses, etc etc the dollar squeeze in the form of credit squeeze still exists.

I'm still considering what this means if true.

[ASH]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

Does this mean I can use a stock screener to find the stocks the highest p/e ratios and sell short these stocks?

Broadly speaking, I think that would be consistent with EJ's view that:

We are convinced that the markets have another big crash in the wings, as the Fed experiments with ways to reverse its creative anti-deflation policies in an environment of fiscal stimulus/deficit spending fueled economic growth, and that the rally off March 2009 lows has been driven first by technicals, then by sentiment, and most recently by funds who cannot be seen by their clients sitting in the dust behind funds that got into the rally early.

I don't personally trade on margin. If you choose to short stocks with high p/e ratios, I think you will accept significant risk related to your timing. The part of this essay that I zeroed in on says that the Fed is likely to trigger a further market crash, and that fundamentals won't sustain the recent rally, but it doesn't necessarily say when the Fed will stumble into this action, or when the market will realize that it is treading on air. (One possible clue is the timing of stimulus spending, but that's not exactly bullet-proof.) In my opinion, the essay doesn't give timing advice that is tradeable by selling stocks short, with acceptible risk.

I am a novice investor, but my perception of the risk involved is that if one is inclined to speculate on the market falling in response to future actions of the Fed (or simply the failure of hope in the face of fundamentals), then long-dated options contracts are to be preferred over trading on margin. But, as I say elsewhere, I'm not the right guy to be giving you trading advice. I'm simply the guy who's willing to take a stab at answering your question.

[D-Mack]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

Perhaps California will give them a hand :confused:.

Ben, Ben, he's our man. If he can't crash it, nobody can.

Tim, Tim, he's our man. If he can't crash it, nobody can.

Arnold, Arnold, he's our man. If he can't crash it, nobody can.

(Silly take off on an old high school football cheer ;) ).

Most typical was the response of Treasury Secretary Tim Geithner, who almost lost his cool on the issue. On recognizing EIR's White House correspondent, Bill Jones, at the Washington Post pre-dinner party, Geithner was at first somewhat taciturn. "You're getting yourself into real trouble in your attempted bailout of the toxic assets," Jones said. "Don't you realize that you will bring on hyperinflation?"

Geithner responded somewhat tight-lipped, "It ain't gonna happen," he said.

Jones continued his argument as to how Geithner's policy would lead to hyperinflation. Then suddenly the mild-mannered, urbane Treasury Secretary, suddenly underwent a Jekyll-and-Hyde- like transformation into something akin to the neighborhood bully. "It ain't gonna f***in' happen!" he half-shouted. "The Fed is an independent entity and they will make the call. And Congress will also have a say in the matter. They would stop it if they felt there were a problem." "I hope to hell they do," Jones replied. "We'll see," said Geithner, eager to discontinue the conversation.

http://www.larouchepac.com/node/10208

http://www.huffingtonpost.com/ariann...mment_24166210

I wish there was video

[Mashuri]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

As always, EJ, a very well thought out analysis. I think we're at a point where Bernanke cannot stop the impending second crash he helped to set up with the "Rally of Hope". We're in for another round of deflation and strengthening dollar after which gold should smash through the $1,000 barrier and never look back.

[ThePythonicCow]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

But they might not trigger another big crash.

Perhaps California will give them a hand :confused:.

Ben, Ben, he's our man. If he can't crash it, nobody can.

Tim, Tim, he's our man. If he can't crash it, nobody can.

Arnold, Arnold, he's our man. If he can't crash it, nobody can.

(Silly take off on an old high school football cheer ;) ).

[metalman]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

I agree that the short-term picture depends on the Fed's moves, and I agree that Bernanke and the Fed are stupid enough to trigger another big crash. Bernanke is like a guy in his first-ever month of trading. You'd think he'd find an advisor who knew how to read a chart.

But they might not trigger another big crash. Did you see how quickly they backed off the headlines about the G-8 looking at draining stimulus money [BLUFF!], and did you see the headlines downplaying the chances of an interest rate increase later this year? Did you see the retreat in bets on a Fed Funds rate increase?

That tells me they are scared sh1tless of triggering a crash, and rightly so, because another crash will absolutely guarantee, among other things, an oil price spike to killer highs, instead of just a rocky climb to gruesome but still manageable prices.

Right now oil and the dollar look pretty comfortable in their trading wedges. We'll see.

agree 100%. but... time is not on their side.

[Moe_Gamble]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

We have been doing diligence on energy, and oil in particular. We are convinced that the markets have another big crash in the wings, as the Fed experiments with ways to reverse its creative anti-deflation policies in an environment of fiscal stimulus/deficit spending fueled economic growth, and that the rally off March 2009 lows has been driven first by technicals, then by sentiment, and most recently by funds who cannot be seen by their clients sitting in the dust behind funds that got into the rally early.

I agree that the short-term picture depends on the Fed's moves, and I agree that Bernanke and the Fed are stupid enough to trigger another big crash. Bernanke is like a guy in his first-ever month of trading. You'd think he'd find an advisor who knew how to read a chart.

But they might not trigger another big crash. Did you see how quickly they backed off the headlines about the G-8 looking at draining stimulus money [BLUFF!], and did you see the headlines downplaying the chances of an interest rate increase later this year? Did you see the retreat in bets on a Fed Funds rate increase?

That tells me they are scared sh1tless of triggering a crash, and rightly so, because another crash will absolutely guarantee, among other things, an oil price spike to killer highs, instead of just a rocky climb to gruesome but still manageable prices.

Right now oil and the dollar look pretty comfortable in their trading wedges. We'll see.

[FRED]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

sorry for being dense, but Where are we (US, world) on the cheh?

In this part of the process? Perhaps here?

[vinoveri]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

sorry for being dense, but Where are we (US, world) on the cheh?

[Chris Coles]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

There is nothing to the right of the cheh; empty space. No one is talking about the role of capital in the economy. It is as though it never existed.

Once again I return to point out that every time the government makes statements about bonds and interest rates, they fail to account for the need to invest capital in the form of new equity. And, as I have already pointed out, the one place you can insert new equity capital investment and not, as a nation, lose it; is right at the grass roots of a nation. Placing the funds into the very institutions that have caused the problems does nothing to re-invigorate the local community grass roots of the nation.

Until everyone recognises that we must invest new equity capital, from the savings of the nations, into the empty space to the right of the cheh; nothing will change the long term prospects of any economy.

[soulonfire]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

Does this mean I can use a stock screener to find the stocks the highest p/e ratios and sell short these stocks ?

[johngaltfla]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

woaaaaaaaaaaaaaaaaaa, there Nelly. Aren't we forgetting something? If foreigners dump dollars, THEIR dollars dump. Can they dump them all at once? Heck no, thats why the Ruskies and the Japanese act like the dollar can do no harm. Will the Fed monetize? Lets say yes, they monetize and people dump bonds which the Fed purchases back with OH!, OH!........dollars. See the problem? Thats why no pump and dump. The game plan is, you monetize, we drive up interest rates which makes you more likely to monetize, drive up rates etc.......The Fed is between a rock and a hard spot.

You think they can just dump dollars into commodities? If they even THINK about doing that on a large scale, the prices will go to Pluto and beyond, to some other galaxy yet to be named...... No, they need to ween themselves and the markets off. This won't be a quick flight, but a slow steady march out of the dollar and into a more reliable store of value.

Keep in mind the march started last August with the Chinese and Russians rotating 10's and 30's into 1-3-6 month and 2 year or less durations and short term instruments. They have no interest in holding anything longer than 2 years in their reserves. The problem is not their "dumping" dollars; it's the problem of setting up contracts for commodities, long term continuous contracts I might add, with third world countries for resources then they repatriate them here for ag products primarily, then weapons and very little else of what we produce.

The Fed has put themselves in this box by not allowing the markets to liquidate the bad debt at a correct valuation. Hence we are about to see the monetization cycle from hell you are referring to.

[occdude]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

woaaaaaaaaaaaaaaaaaa, there Nelly. Aren't we forgetting something? If foreigners dump dollars, THEIR dollars dump. Can they dump them all at once? Heck no, thats why the Ruskies and the Japanese act like the dollar can do no harm. Will the Fed monetize? Lets say yes, they monetize and people dump bonds which the Fed purchases back with OH!, OH!........dollars. See the problem? Thats why no pump and dump. The game plan is, you monetize, we drive up interest rates which makes you more likely to monetize, drive up rates etc.......The Fed is between a rock and a hard spot.

You think they can just dump dollars into commodities? If they even THINK about doing that on a large scale, the prices will go to Pluto and beyond, to some other galaxy yet to be named...... No, they need to ween themselves and the markets off. This won't be a quick flight, but a slow steady march out of the dollar and into a more reliable store of value.

[johngaltfla]

Re: The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

I think we see a test of the 78 level on the USD index then one final run to close and run up past the 82 level. After the Chinese and Russians sell off enough of their dollar denominated garbage and set up contracts for commodities with the rest, they begin the process of throwing BRIC bonds at the dollar via IMF SDRs. This will create a massive contraction in the desire to own or bid on dollar denominated debt.

After that, it's all over but Ben and the Fat Lady singing. He will HAVE to monetize the debt or allow a political realignment to occur which destroys the policy arm of the Fed and creates massive unrest in the U.S. and Mexico.

In the mean time, the BRIC nations make out like bandits because they know the playbook and Obama has no clue as to what is about to hit him. The one consideration the wizards at the Fed never thought was possible is simple:

What happens when creditor nations elect to short the dollar with their SWF's?