- It’s a “nay,” laddie. Get over it… or not. Secession, the democratic way…
- A third straight day of record highs on Wall Street… what good is the prettiest horse in the glue factory?
- Draghi tries to goose the euro… our man on the inside explains why…
- Gold to 8-month lows… why it’s time to buy…
- Hysteria in New York… new gruesome entries for the Prophecy 2015 file… the return of the “magic calendar”… and more!
Occasionally, an “issue” will motivate folks enough to care and interrupt their own quotidian regimens to go to a polling booth and register an opinion. Yea or nay.
Eighty-four percent of registered Scottish voters turned out yesterday for such an occasion. A historic record for a democratic election, says CNN.
The “nay” vote won, if you haven’t heard yet. Scotland will, for now, remain a part of the United Kingdom of England, Wales, Northern Ireland… and Scotland.
If it had gained a “yea” vote, the referendum is Scotland may have headlined our list of “what ifs” that could spark a currency crisis. But frankly, the news was already baked in… so much so that by the time we learned the result, we could barely hold back a yawn.
The Scots, of course, aren’t the only ones that want to break away; the spirit of separatism is alive and well from China to Canada. Even here in the U.S., Reuters reports this morning that one in four Americans would consider secession.
The Reuters/Ipsos poll conducted from late August through mid-September noted secessionitis doesn’t infect just guys who emblazon Confederate flags on the rear window of their Ford F-150s. A surprising 21% of self-identified Democrats were in favor of considering secession from Washington, D.C., according to the poll.
Question is, who’s got the cojones to get the ball rolling?
We turn again to our as yet unidentified insider . Our source submits the explosion of separatism around the globe isn’t being caused just by inflamed nationalism… it’s a natural result of the 2008 crash and the burdensome pile of debt that countries have been squashed with.
“The movements have always been there,” observes, “but what’s crystallizing it right now are the fiscal pressure and idea that maybe you can get a free lunch and quit the country. What these movements desire is like a bankruptcy where your debts are wiped out clean.”
Expect 45% of the Scots to try again…
Meanwhile, in the markets… blue chips have hit a record high again.
Betting with other people’s money for a third straight day, traders sent the benchmark indexes to records. The Dow gained 50 points, to close at 17,316. Early this morning, it hit a brand-new high of 17,350.
The S&P 500 index showed its own support for our prophecy project by closing the day yesterday at a cool 2,015. The Nasdaq tacked on another 5, but couldn’t quite cross the next threshold… it closed at 4,599.
“Stock indexes march to all-time highs while economic fundamentals fall apart,” our man on the inside says. “The two will be reconciled either with a spectacular turnaround in growth or a spectacular collapse in stock prices. The problem is that a turnaround in growth can come only from structural reform, not money printing.
“A stock market collapse is almost inevitable,” concludes, “and is probably coming soon.”
Our mystery man knows of what he speaks. He lived through two personal bankruptcies. One as a 12-year-old, when his dad’s business was made defunct by a bad franchising deal. The second when he was 47 years old and at the epicenter of what is possibly the most epic meltdown in Wall Street’s 197-year history.
Our new man on the inside.
“The fact that on a global basis the U.S. has emerged as the smartest kid in summer school is of little consolation,” agrees the terminally dour David Rosenberg at Canada’s Financial Post. “The problem is that there remains no global economic leadership in this cycle.
“Plenty of liquidity and central bank stimulus, yes, but no escape velocity when it comes to global economic growth.”
Amen.
Perhaps channeling Rosenberg, the Italian head of the European Central Bank (ECB), Mario Draghi, announced a surprise interest rate cut last week. There were no changes in the ECB’s “inflation expectations”… thus, no rational expectation for a cut in rates.
The Wall Street Journal wants to explain away the move as an attempt to weaken the euro and make exports cheaper. Draghi himself says he wants to expand the availability of credit.
“A model central banker,” says our man.
“Draghi has proved once again that he is the only central banker who understands central banking. He says little and does less, but it is all quite effective because he keeps dry powder and does not try to do more than he actually can…
“He knows that money printing doesn’t work to create growth,” our source continues, “nor will he join the currency wars by cheapening the euro. The euro has nearly bottomed for now and will trend higher as it becomes clear than Draghi separates himself from the easy money crowds at the Fed, the Bank of England, the People’s Bank of China and the Bank of Japan.”
Draghi’s policies will enable the euro to push past the dollar as a competitive global currency. Likewise, expects the dollar to be used for fewer transactions in international trade.
Case in point (if you’re a gold bug, you’ll appreciate this next little nugget): The Chinese allowed a new gold exchange to open in Shanghai’s free-trade zone yesterday. The exchange, forecasts could put China, the largest consumer of gold bullion in the world, on a track to set the gold price in Asia.
Historically, as you know, the price is set in London and New York.
“A successful takeup of [the exchange] could see more gold priced and paid for in yuan rather than the U.S. dollar,” comments a functionary at Reuters. What do you suppose that would mean for the nascent world’s reserve currency?
(Photo credit: goldsilver.com)We’ve mentioned it before, but it’s worth stating again: A short trip to the gold market in Beijing quickly reveals the Chinese appetite for gold bullion and jewelry. It’s insatiable.
The Chinese government likes the shiny stuff too. As we alluded to yesterday, the Chinese government has been quietly building its own gold stocks for years.
expects that China may reveal its gold holdings late this year or in early 2015.
“They have been quietly buying up gold and won’t say how much, to avoid raising the price,” he notes. “I don’t know the number, but my first approximation would be 4,000-5,000 metric tons.”
adds that this is part of a larger plan for the Chinese to position the yuan as a de facto global reserve currency… though they are careful not to formalize the status.
. .
The gold price, meanwhile, hit eight-month lows yesterday.
Conventional wisdom suggests the price dropped in response to the Fed’s tapering announcement we mentioned yesterday. Spot gold was down $3.75, to $1,219.35.
Gold has also been getting abused as the U.S. dollar strengthens. Futures traders are paying nearly half a point more for the December dollar than they were yesterday.
In addition to positioning itself to be the de facto global reserve, China is attempting to put off a major credit collapse. .
“If you adjusted the GDP figures for their actual growth,” [redact] says, “it is probably around 3% or 4%.” China, along with the rest of the world, is experiencing a global depression that began in 2007. The government wonks in the Middle Kingdom apparently exaggerate growth with fake projects and their infamous “ghost cities.”
Who knew?
It would be hard to write today’s 5 without at least some lip service to these nut cases:
photo source: ZerohedgeModern scenes of the Greater Depression? Homeless waiting in line at a soup kitchen?
Yeah, right.
This Apple store in New York has 4,700 people lined up to be the “first” to buy the iPhone 6. They could have ordered it online weeks ago and had it shipped today, but noooo. That would be too easy.
At least some of these jackasses are doing something useful and reselling the phones to people with actual jobs, and making thousands on margin.
“One of the key factors in the popping of the bubble is,” writes our first reader, catching our drift and kicking off today’s list of forecasts for the Prophecy 2015 project, “the overdue announcement of how much gold China has.
“If China has more than 6,000 tonnes, the primary source would most likely have been the U.S. That fact will destroy any confidence left in the U.S. dollar, and the bubble will really pop.”
“2015 will be the start of a slow retreat of the Dow,” writes a second. The index will slide “down to 7,000 or so and will stay down for 10 years. China will grow (as the number of spending consumers peaks in a few years), but the yuan will not be the petrodollar replacement.
[She doesn’t forecast what will replace the dollar.]
“The 3-D printing market will never be large at the domestic level,” she continues, on the innovative side, “but will revolutionize some medical procedures such as ‘part replacements,’ nerve regeneration and the like.
“Just my 5 Mins. worth.”
“There is no way that QE ends in November 2014 permanently,” another reader chimes in, answering one of our potential assertions from yesterday’s 5.
“The current ‘tapir’ campaign is a gimmick designed for the upcoming November elections. When it’s over, look for a new program to start in the first half of 2015.”
Ah, yes. The election.
“That woman will discover that the national animosity toward her is unbearable,” a fourth reader writes, veering toward the political and former first lady Hillary Clinton. “As revelations about her past transgressions become clearer to the ‘dumbed down’ electorate, she will bow out of the 2016 election.
Give us your prophecy here. We’re getting ready to make a word cloud!
Cheers,
Addison Wiggin
The 5 Min. Forecast
P.S. We’ve also been informed that a major U.S. government agency plans to “disrupt” sections of the stock market on the following dates…
- Monday, Oct. 20, 2014
- Wednesday, Nov. 5, 2014
- Friday, Dec. 5, 2014
- Tuesday, Dec. 23, 2014
- Tuesday, Dec. 30, 2014.
If you’ve got any money in the markets right now (or are thinking of getting in), put these critical dates on your calendar now. You won’t want to miss this.