"The Fed is in total denial…(it) hasn't learned the lessons of what it put the world through a decade ago."
Stephen Roach, via CNBC, 01/09/2015
"When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over."
Bill Gross, Founder & former CEO, PIMCO
We focus here on Key Profit Opportunities, Threats and possible Catastrophes for 2015, few, if any, of which you are likely to hear about from the Main Stream Media (NYSE:MSM), before they occur because the MSM are beholden to the Powers-that-Be.
1) Contrary to MSM spin, the Middle Class in the U.S. and Eurozone and Japan has been and will increasingly suffer jobs loss and wage stagnation, thus constraining consumer spending - 70% of the U.S. Economy, for example. Official Statistics are Bogus. Thus the economic Non-Recovery will Continue and worsen (see Note 1 - Shadowstats). The U.S. Labor Force Participation Rate is at record lows - a 38 year record of 92.9 Million Americans are not in the Labor Force. The Strong U.S. Bond Market is signaling trouble ahead. If the Economy were really recovering Bonds would be weaker and Market Interest Rates much higher.
2) QE will continue in Japan, intensify in Europe and begin again in the USA withQE5 likely beginning before 2015 ends - All to continue to artificially inflate Asset Prices (e.g., Equities) and keep the Globalist Mega-Banks (some of whom are owners of the private-for-profit U.S. Fed) Profitable. Of course, none of this helps the Middle Class Workers/Savers or Retirees whose incomes are mainly reliant on Good Jobs or Low Unemployment and/or interest income from savings.
3) QE will likely be ineffective (at best) in Japan and indeed, it is more likely than not the Japanese Economy will collapse into the Pit of Extreme Economic Deflation/Depression, sending shockwaves through Markets around the World.
4) Increasing Social Strife around the World will begin to significantly affect the Markets. A collapsing Economy in Japan, increasing Under- and Unemployment in the Eurozone and USA and clashes between Obama and the Congress in the U.S. and Debt Defaults in the Eurozone and U.S. will all take their Toll.
5) Interest Rates may begin to rise (but likely slowly) so Sectors which rely on Debt Financing - e.g., Utilities, MLPs and smaller relatively undercapitalized Energy Producers - will not do well (indeed, some will collapse) and China will take a hit from their over-extended Shadow Banking System, as will other over-indebted Sovereigns.
6) Indeed - we are moving into a period of increasing visibility for the Intensifying International Debt Crisis. As rates rise, (beginning later in 2015 but no later than early 2016) not only will businesses and individuals suffer, but also over-indebted Sovereigns who will have to pay higher interest rates. And not just the Peripheral Sovereigns in Europe, but also the U.S. which has $18 Trillion in Debt and over $120 Trillion in Downstream Unfunded Liabilities (Social Security, Medicare etc.) Result: The U.S. Dollar, first, (probably beginning later in 2015) and then the U.S. Bond Market will eventually crash.
7) Central Banks will engage in ever-more QE, i.e., Monetary Inflation, and this will increasingly show up in Price Inflation and then Price Hyperinflation. Indeed, Consumers are already seeing Price Inflation in Food, Medical Care and Housing. (See Note 1)
8) All the above will result in the condition known as Severe Stagflation - Stagnant or contracting Economies and Price Inflation and then Price Hyperinflation. Dramatically increased Sovereign and other Debt Loads have not increased GDP. Consider that for every $ of Debt Added Just After WWII, $2.41 of GDP were added but for every $ added in the late 70s, and early 80s, only 41 cents of GDP was added and for every $ of Debt added today, only 3 cents GDP is added. In sum, QE/Debt increase does not sustainably boost Economic Growth.
9) Yes, the Credit/Debt Crisis is Real and Not Sustainable - for every $ of Economic Growth, Banks have created $30 of Credit/Debt. This Massive Bond/Debt Bubble will likely Catastrophically burst in 2015-2016 with the Accompanying Defaults or Write Offs, and Counterparty Failures in Major Markets.
The Entire Energy industry has been hit hard by the Oil Price Decline. This will cause increased unemployment and reduced corporate earnings which will Tsunami into the entire economy making the Non-Recovery Worse than it already is.
And the Weak Players in the Energy Industry will Default on their Debts and cause a similar ripple effect through the Banking Industry and entire Economy.
Consider that Crude Prices at or below $60 not only puts poorly capitalized frackers out of business but also causes in the tsunami effect of prospective or, in some cases, actual, defaults on Energy loans (many of which are highly leveraged to Asset Bases) and thus causes defaults on Related highly leveraged Derivatives. And all this will diminish Production, and thus will increase prices again in a few months.
The Counterparty Failure Risk in Financial Markets has thus increased dramatically, and will not diminish any time soon, and will Tsunami through the economy and financial Markets.
And once that risk begins to imperil Non-Energy Sectors, Corporate Debt Interest Rates will Skyrocket and it will be time for the Equities Markets to seriously fall, again.
In addition, there are many Black and Red Swans extant which could/will precipitate a Greater launch down this year at any time - War, Major Sovereign Defaults, Worse Economic Numbers - the list is too long to mention all.
10) Most of the Foregoing Financial "Assets" are leveraged more unsustainably and dangerously by the over $700 Trillion plus in Derivatives as reported by the Central Bankers' Bank, the BIS. $700 Trillion is about 7 times Global GDP.
For the middle and long-term (i.e., mid 2015 & Beyond), given the USA's Massive and increasing $18 Trillion National Debt and over $100 Trillion Downstream Unfunded Liabilities and The Feds $4 Trillion Balance Sheet, the $US is Structurally Impaired (as are U.S. Treasuries) and doomed to fall and lose World's Reserve Currency Status, eventually. Great Profits will be made if one shorts the $US and U.S. Treasuries and the Equities Markets at the right time. We aim to forecast that Timing as we successfully did prior to the 2008 Crash. Our forecasts were facilitated by focusing on Interventions of The Cartel of Mega-Banks as well as Fundamentals and Technicals (see Note 2). Stay tuned.
Consider as well, the ongoing increasing use of currencies other than the $US in International Transactions could spell a Sooner Doom for the $US (as World Reserve Currency, especially if increased significant Volumes of Crude Oil begin to be traded for Non $US Currencies. The West is driving Russia into the hands of China, and this is Bad News for the $US and Western economies.
And when the $US Dramatically Tanks, the Precious Metals will Soar and Western Equities Markets Crash. This scenario could possibly launch at any time (but is probably still a few months away), on Black Swan Geopolitical Events. This $US Crash will shake Economies and Markets to the core, as the Economy transitions to a Yuan/BRICS based Gold Backed World Reserve Currency.
And when the $US Tanks, that will also be accompanied by a loss of credibility of U.S. Treasuries as a store of wealth soon after. Thus they will tank too … ending in "a very bad way" according to Investment Legend, Julian Robertson, with whom Deepcaster agrees.
11) The Russia-China Axis is Strengthening, with Both Countries buying increasing amounts of Physical Gold. Result: sometime in the next very few years, the New World Reserve Currency will be the Chinese/BRICS Gold Backed Yuan or Gold-backed BRICS Notes. The view that the New World Reserve Currency will be IMF SDRs is Wrong. IMF SDRs are just another Fiat Currency doomed to fail.
12) The Flight from the $US as World Reserve Currency (catalyzed mainly by Fed/Keynesian Policy!) is continuing with China making Bilateral Currency Swap Deals with a number of leading Nations thus bypassing the $US. Eventually this will greatly diminish the Standard of living in the USA and other $US-dependent Nations. The Fiat Euro/Eurozone will take a Huge Hit Also. Indeed, there is a distinct possibility the Eurozone Currency Union will disintegrate.
13) The foregoing Developments/Trends can/will be exacerbated/initiated by Trigger Events some of which May be
- Greece and/or Portugal and/or Spain Defaults/leaves Eurozone
- Other Peripheral Countries Default
- Venezuela and/or Nigeria default due to low Oil Prices
- The LBMA is unable to Deliver Physical Gold and/or Silver
- War intensifies in the Mideast and/or Ukraine or breaks out elsewhere
14) Mainstream Keynesian Economists and those governments who follow their line, typically aim for the Wrong Target - increased aggregate GDP Growth, when they should be aiming for greater GDP per capita in a "Steady State" Economy (see the Work of Economist Herman Daly). This Keynesian view leads to a variety of flawed policies including the one that assumes that population growth is Good-in-itself. In the U.S. and Eurozone, for example, this has led to the Counterproductive Policy which encourages Mass Immigration. In fact this Policy results in larger and larger social-welfare-Dependent Populations, and the Diversity it brings generates loss of Social Cohesion. And this Mass Immigration Decreases Job Opportunities and Wages for the Native-born ("Foreign-born employment has increased by 1,028,000, while the number of native-born Americans working has decreased by 780,000" Rubenstein, vDare.com, 11/8/14) in the receiving Societies. Highly selective and extremely limited immigration creates better results Economically and Socially. (See the non-profit carryingcapacity.org)
15) But all of the foregoing will lead to Opportunities to Profit and Protect Wealth. Consider
Nowhere in the MSM for example do we find forecasts that two Key Assets will skyrocket in Price very soon - but Deepcaster forecasts which ones in our January, 2015 Letter and our Forecasts and our Successful Buy Recommendations are informed by our attention to Under and Unreported News (see Note 3).
And nowhere in the MSM do we find Forecasts of a Great Reversal in two other Key Assets Sectors, but we tell you in our January Letter.
And we Forecast a Very Great Crash in one Sector - and name names of two very popular Stocks which should take a Very Big Hit.
Conclusion : The Equities Market will suffer at least one Major Crash (more than 15%) and at least one Minor Crash (appx 10%) in 2015.
(In sum, essential to all the Foregoing Forecasts, and to Profiting and Wealth Protection is focusing on Under and Unreported News and MSM spin.)
January 9, 2015
Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported December 17, 2014
1.32% / 9.02%
U.S. Unemployment reported January 9, 2015
5.56% / 23.0%
U.S. GDP Annual Growth/Decline reported December 23, 2014
2.70% / -1.73%
U.S. M3 reported December 15, 2014 (Month of November, Y.O.Y.)
No Official Report / 4.81% (i.e., total M3 Now at $16.217 Trillion!)
Note 2: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster's July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" in the 'Latest Letter' Cache at deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster's profitable recommendations displayed at deepcaster.com have been facilitated by attention to these "Interventionals." Attention to The Interventionals facilitated Deepcaster's recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Note 3: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*
- 23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)
- 85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)
- 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
- 55% Profit on Double Short Euro Call on August 6, 2014 after just 106 days (i.e., about 200% Annualized)
- 65% Profit on Energy Storage & Management Company on July7 15, 2014 after just 342 days (i.e., about 70% Annualized)
- 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
*Past Profitable Performance is no assurance of future Profitable Performance.