MUMBAI, India – The Dow dropped 208 points yesterday – or about 1.3%.
After last week’s pause, it will be interesting to see if the selloff resumes.
“Global equities in turmoil,” reads a CNBC headline.
“A month after raising rates, Fed faces darker global economy,” suggests an AP newswire report.
Neither of these is true. The world has not changed significantly in the last month. As we reported, world economic growth was fading then, too. Junk bonds were in trouble then… just as now. There was no real recovery in America, then or now. And Sarah Palin is just as entertaining.
We’ll get to her in a moment… but first more on the current market situation.
Up and Down
Equities aren’t in “turmoil,” despite the press claims. They are simply going down.
We explained it to a reporter from the Economic Times of India yesterday:
No reason to overthink it. Markets go up, and then they go down. And when you diddle interest rates to make money cheaper than it ought to be, you’re going to get some action.
The first thing you’ll get is higher prices, as the cheap money chases returns in the stock and bond markets. The second thing you see is lower prices as the booms and bubbles eventually correct. No mystery to it. Night follows day. Busts follow booms. Credit contractions – with lower prices – follow credit expansions.
The reporter was unsatisfied.
“What can policy makers do to prevent a selloff?” he asked.
We smiled. That’s as far as he wanted to go – about a quarter of an inch into a subject that is 10 miles deep.
In the mind of the popular financial press, and most of the investing public, the markets are no different from computers.
When something isn’t working properly, there must be a technician with the answer. There must be some buttons you can push. There must be some trick to getting it working again.
“Nope. You can’t always escape the consequences of your mistakes,” we began.
But we let it go there. No point in trying to go ab ovo… back to the egg… to explain this fowl market. Keep it simple.
In Praise of Palin
Back in the US of A, we are delighted that Sarah Palin has the public’s ear again.
We’re often not sure what she is trying to say. But it doesn’t matter. With Palin, it’s not the thought that counts. It’s the lack of it.
She aims for simplicity, too – a smart move, since there are easily enough simpletons in the U.S. to elect a president, vice president, and an entire Congress.
We always come to the defense of the poor, the despised, and the hopeless halfwits. We’re pretty sure Palin fits in there somewhere. So, today, we come not to laugh at Ms. Palin but to praise her.
We weren’t able to hear Ms. Palin’s endorsement of Donald Trump last week. But we thank Sam Leith, a scholar of rhetoric, for helping us deconstruct it.
The speech was such a wonder of “oratorical eccentricity,” he wrote, “that it seems very likely she wrote it herself.”
Listening to a moron give a political speech is like watching a blind person do home electrical repairs: You know there are going to be some shocking and amusing incidents.
“Trump’s candidacy,” announced Ms. Palin, “it has exposed not just that tragic ramifications of that betrayal of the transformation of our country, but too, he has exposed the complicity on both sides of the aisle that has enable it, okay?”
What does that mean?
We don’t know. But Mr. Leith tells us it was an “anacoluthon,” which he describes as a sentence that “sets off boldly in one direction and, with a wrench of grammar, jumps the tracks and ends up pointing in another.”
We still don’t know what Ms. Palin meant to say. But at least we now know that there is a word for the disease that caused it.
It doesn’t have to mean anything anyway. There are apparently no complex ideas in Ms. Palin’s pensée worthy of careful explication. Instead, her brain simply stews the patriotic patois of the rural rightwing and dishes out the words and phrases primary voters want to hear: “commander-in-chief,” “you betcha,” “families,” “make America great.”
This cafeteria also produces some juicy linguistic innovations.
“Are you ready to stump for Trump?” she asked. We don’t know what that means either.
“Give money to” – as in “plump” – is one possible interpretation. “Stand up for” – as in “mount a stump” – is another possibility. We don’t know.
She also invents a new word: “squirmish.”
Don’t overthink it. It works for us as is. We are adding it to our own lexicon, along with her previous neologism “refudiate” and G. W. Bush’s classic “misunderestimate.”
Shakespeare invented dozens of words. Why not Sarah Palin?
Further Reading: A quick heads up for paid-up Bonner & Partners Investor Network subscribers. Later today, we’ll be sending out the January issue, featuring editor Chris Lowe’s interview with Washington insider turned Deep State “whistleblower” Mike Lofgren.
If you’re concerned about personal liberty and the ongoing attack on the U.S. Constitution, you won’t want to miss this. Lofgren reveals what the Deep State is… how it’s metastasized since 9/11 and the 2008 meltdown… and how it controls just about every aspect of our lives.
If you’re not already a subscriber, you can get a risk-free trial ofInvestor Network – and access the full Q&A with Mike Lofgren –right here.
Has gold carved out a bottom?
As you can see from today’s chart, gold has been in a bottoming process since the end of last year – a powerful signal for gold bulls.
Gold is traditionally seen as a “safe haven” in times of crisis.
As stocks tumble… and the seven-year bull market in equities starts to fade… it’s no surprise that gold is benefiting.
Soros: Chinese Hard Landing Is “Practically Unavoidable”
Billionaire speculator George Soros warns that a “hard landing” for the Chinese economy is now “practically unavoidable.” This will worsen global deflationary pressures, drag down stocks, and boost Treasury bonds.
Can Plunging Oil Prices Cause a Recession?
Many analysts see the global economy slipping into a recession. Some even claim that lower oil prices are to blame. But can cheap oil cause a recession? If so, it’ll be the first time it’s happened in history.
Secret Market Indicator Changes Cab Driver’s Life
In 1981, a cab driver’s life was changed when he met one of the world’s most brilliant men. Their conversation sparked a 35-year mission to develop a trading strategy that targets the best times to buy and sell stocks.
Today… a question on one of the big themes Bill has been covering in the Diary.
Could you explain what we could expect to see during a period of deflation in the U.S.?
I’m 62, and have seen inflation, but not sure if I’ve ever seen deflation, or at least knowingly seen it.– John D.
Chris comment: It’s a great question… and one that will no doubt be in the minds of a lot of other readers.
That’s why the Bonner & Partners research team has put together a complimentary special report for Diary readers, “How to Protect Yourself in a Deflationary Environment.”
It explains why – with global debt levels now at $225 trillion versus annual global economic of just $77 trillion – we are poised on the edge of an even deeper debt deflation than the U.S. in 1929 or Japan in 1989.
It also reveals the No. 1 asset to hold in a deflationary spiral… how to use federal legislation to protect your wealth… and the breakthrough digital technology that will allow you to buy necessities in the event of another banking meltdown.
In Case You Missed It…
Intelligence and investing expert Jim Rickards is urging everyone to watch his video update. In it, he reveals the secret method that Washington has been using to predict market moves… one that he’s now using to take the guesswork out of investing. Watch here now.