Join three well known
Join three well known market analysts Guy Adami (CNBC), Dan Nathan (CNBC) and Sven Henrich (NorthmanTrader) for the latest episode of Straight Talk discussing key issues impacting markets every investor should be aware of.
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I really like this weekly video, but would also prefer some pure Sven-only content like his old videos. Don't even need all the charts, which I imagine were a lot of work to put together. Even a Sven podcast would be good.
And with the stroke of a pen, this video is outdated. Trump just signed executive orders to extend the government stimulus program through the Treasury department. Congress did not approve and he will probably get sued. Wow. I was wondering when he was going to spend the $1.7 trillion he had sitting in the Treasury General Account. Now we know. The market reaction on Monday August 10 will be "interesting".
I really appreciate this show guys. It’s become a Saturday morning staple. Thank you.
Guy: Please aim some light at your face in order to improve your image on your videos.
Is there any market sector besides precious metals that's actually rallying on fundamentals? Would be nice if you folks took a look at it. Gun and alcohol sales are up. Anything broader than that?
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Tom welcomes a new guest to Palisade, Sven Henrich. Sven is the founder and lead market strategist for NorthmanTrader. Sven outlines his corporate background and what led him to become interested in chart technicals, macro market picture, and trading. He has developed a reputation for being highly critical of central banks.
Sven discusses past market cap to GDP valuations. During the tech bubble, it reached 150%, and at the peak of the housing bubble 135%. Afterward, the ratio collapsed to 75% and 50% respectively. We have entered a new era of permanent central bank intervention with the advent of QE "emergency measures." Today, market participants understand that central banks will print more whenever the markets begin to correct. In February, the market cap to GDP reached 154%, and now after trillions in additional intervention, we are at the blow-off level of 185%. The highest market valuations in our lifetimes.
He discusses the indicators for XVG stock weighting and the VIX. The VIX may be revealing a risky period through October and November, and it's possible markets have topped out for now.
Sven says, "There is not a central banker on the planet that will say enough is enough.. none of them are willing to admit the risks they are creating." There are massive demographic problems today that have no solution.
The dollar has had a breakout, but it appears to be nearing a pivot point. He is currently neutral on gold, awaiting signals from either it or the dollar.
Time Stamp References:
0:58 - Svens background.
3:30 - Svens better half.
4:22 - Marketcap to GDP
9:40 - Dangers to retail investors.
12:50 - XVG index for relative performance.
16:20 - VIX direction from here.
20:00 - Is the Fed out of ammo?
23:50 - Downside risk in the markets.
26:55 - Can they correct wealth inequality.
29:50 - Seasonal Fall risks
32:05 - Outlook for the dollar.
34:20 - Gold expectations.
36:50 - Short-term expectations and politics.
#SvenHenrich #NorthmanTrader #Fed #CentralBanking #StockMarketBubble #Liquidity #Gold #USD
Inflation isn't coming until the FED goes from "lending powers" to "spending power".
QE is NOT money printing. We are about to have a massive deflationary event.
The FED, through QE, creates reserves on behalf of the banks in exchange for debt. Member banks use their own liquidity to buy debt. That debt is then "sold" to the FED but instead of giving the "money" to the banks, they place it in reserves on behalf of the bank. Those reserves are NOT legal tender. They cannot be spent!
Even when corporate bonds wind up on the FED's balance sheet, they still have to be serviced! It's not like the FED forgives the debt. So this idea that corporations or the government is getting money created out of thin air is ridiculous. Reserves are created out of thin air. Money is lent into existence. Even the credit facilities are loans using special purpose vehicles design to bypass the primary dealers.
The FED does not have the power to spend directly into the economy. Powell mentioned this the other day. The FED can only create reserves to be lent against. If there is no lending, in excess of repayment, there is no money being created. Money is destroyed when loans are repaid. In a debt based economy, debt must expand beyond repayment for "growth" to occur.
When we borrow, money is created in the economy, when the government borrows, they do so from existing dollars, thereby shrinking the amount of liquidity in the system. That is deflationary. QE is deflationary (see the link below from the St. Louis Fed).
Bank lending standards are at ’08 levels despite what may hear in the news.
https://fred.stlouisfed.org/series/DRTSCILM <- middle and large firms
https://fred.stlouisfed.org/series/DRTSCIS <- small firms
The reason QE "worked" before is because everyone believes it's inflationary. That causes people to spend and borrow. Powell even said the other day, "Forward Guidance is our most powerful tool." i.e. "Getting you to believe something is our most powerful tool".
QE is not going to work this time. What will? Making those bank reserves legal tender!
In order for the FED to actually create money and spend, the laws will have to change. For congress to change those laws, they will need a historic monetary crisis.
The FED needs an massive deflationary event so congress can sell this (reserves becoming legal tender) to the public.
The real crash is coming. My guess; congress/Trump/Senate will be blamed before the election. Biden will go after a long and volatile contest designed to stoke rage and division in the population. And then they hand everything over to the FED. The public narrative of the democratic party is one of social and/or welfare spending. Many of the bills introduced in March ( see below) are designed to replace lost GDP and cause massive inflation.
The FED, through negative rates, will phase out paper accounts and absorb the private sector banking system (see IMF paper link). All banks will become an extension of the FED through “FED Now” and “FEDaccounts”. In that bill, banks and credit unions are reimbursed for their expense of setting up these accounts and being an extension of the FED. In rural areas, lacking banks, the post office will be used.
These new digital dollars that the FED creates will look and act just like the paper money in your bank account but later, after your paper money has dwindled away due to negative rates, the digital dollars can be programmed to expire or only work at "participating retailers". That way they can direct and control spending. If they want inflation to go up, they can cause your money to expire sooner.
In the bills below, once the FED is authorized to create money and spend, there will be free smart phones, WiFi, $2,000/mo UBI, no rent, no mortgage payments, no commercial loan payments and no credit reporting among other things.
What do you mean ? They just bought billions of rounds of amo hallow points.
His overall view and analysis of what drives the markets is outstanding. One of the Best economic interviews I've heard in a while.
isnt this guy a perma bear who sells subscriptions
“170% market cap to GDP is usually not considered a bottom.” Check out his twitter for hilarious quips and gifs.
The age of the new day
The age of the new day trader has come about at an uncertain time for the world and the markets, meaning downturns and upturns are fleeting. Sven Henrich, founder of NorthmanTrader, is an expert at reading the macro signs of the market. On this week's episode of The Scoop, he cautioned against continued interventions by the Federal Reserve that have kept the new generation of traders from a prolonged bear market.
Henrich's firm provides macro views and technical analysis to its subscribers, and on Twitter, he's been highly critical of the Fed's actions in recent weeks. He's been raising the alarm of coming consequences due to what he sees as the central bank's refusal to take on any pain. On this week's episode, he broke down macro events in the time surrounding the COVID-19 pandemic, touching on:
- Why continued market interventions could create stresses that investors might be overlooking in a strong tech market narrative
- What the growing divergence between gold and tech stocks means for economic growth
- Where to allocate capital as governments debase currencies and real interest rates drop
- Why bitcoin isn't a hedge against the monetary side when you look at its price action
- Why the next two months are critical for the strength of the dollar
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great work being up more than 4%, having a dividend yield of around 7% and making some good option plays it seems like you’ll easily hit 12% per annum with Allen Vaughn and his investing style you might want to do dividend investing through your retirement account as you probably won’t be taxed on it as much. While in your main portfolio you could have tech stocks which have a “notional gain” but not really taxable as you’re probably not gonna sell them for a very long time.
@1:48 - start
Three is no need for the crash in stocks. All you need is 2 flat years and earnings will catch up. That's the most likely scenario.