Three Charts Every Investor
Needs to See
http://albertpeia.com/3chartsinvestorsmustsee.htm
‘The market continues to track
the same pattern it performed going into the failed debt ceiling talks of July
2011. As you’ll recall, then as is the case now, US politicians failed to reach
a credible solution to the US’s debt problems. What followed was a credit
rating downgrade and a market collapse:
Here’s the S&P
500’s recent action:
Here’s the S&P
500’s action going into the failed debt ceiling talks of 2011:
Here’s what
followed:
Be forewarned. As
noted earlier this week there are no political incentives for the GOP or
Democrats to propose a real solution to the fiscal cliff. So it is highly
likely we will be going over the cliff.
Another item holding
up the market is hype and hope of more QE from the Federal Reserve at its
December 10-11 meeting. I have to admit, I find this proposal completely
baffling. Macroeconomics 101 dictates that it takes a full six months or more
before a change in monetary policy by the Fed will be fully digested by the
system. The Fed just announced a new program three months ago. So the
academics at the Fed aren’t even drinking their own Kool-Aid anymore.
Since the Great
Crisis began, the Fed has on average funneled some $40+billion per month into
the system (even when no official program was in place the Fed was still
juicing the markets this much, typically during options expiration weeks).
QE 3, which may as
well be called QE infinite because it is open ended (will never end), combined
with the Fed’s Operation Twist 2 program has the Fed currently putting $85
billion into the system every month. On an annualized basis this is over $1
trillion. This means that at this pace, by the end of 2013 the Fed’s balance
sheet would be $4 trillion. The entire US banking system is $13 trillion.
And somehow pumping more
money would work?
At some point some
group in the political class needs to actually ask the Fed the following:
“You’ve had four years of implementing any policy you like without political
consequence. Four years. During that time you’ve spent well over $2
trillion. And the Crisis has not been fixed. Why on earth should we give
you more time or money?”
I believe this will
happen in 2013. As the US economy takes a nose-dive and the Sovereign Crisis
moves into hyperdrive, the triumvirate of the financial system (the Fed, Wall
Street, and Washington DC) will begin to increasingly point fingers at one
another to divert blame for the fact that we’ve spent trillions of Dollars and
things haven’t really improved.
This process has
already begun with the Fed firing the first shots: it has sued Goldman Sachs
while Bernanke has told Congress that it’s their fault the US is so indebted
and facing fiscal ruin.
This process will
accelerate next year. At that point I expect Congress and Wall Street to enter
the fray more aggressively targeting the Fed. And that’s when things could get
very ugly.
If you’re an
individual investor (not a day trader) looking for the means of profiting from
all of this… particularly the US going over the fiscal cliff… then you NEED to
check out my Private
Wealth Advisory newsletter.
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And we’re not
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when the we go over the fiscal cliff in the coming weeks.
You’ll find out what
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your life for the coming Great Crisis.
These reports
outline:
1) how to prepare
for bank holidays
2) which
banks to avoid
3) how much
bullion to own
4) how much
cash is needed to get through systemic crises
5) how much
food to stockpile, what kind to get, and where to get it
And more…
To take out an
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Best Regards,
Graham Summers