A look at some truly stunning charts, plus silver, global madness and a modern day Paul Volcker.
Now That’s A Bubble
December 7 (King World News) – Fred Hickey: “Relative to” justification was very popular in the 1999-2000 tech bubble until investors learned comparing grossly overpriced stocks to other grossly overpriced stocks was not a winning strategy. Currently, we’re in most overpriced stock market in US history (per Jeremy Grantham)…
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Madness Of The Crowds
Sven Henrich: Good thing people didn’t pile into margin debt like mad or all this continuous selling would be concerning.
STOCK MARKET MANIA IN FULL SWING:
Margin Debt (RED) Shatters All-Time Records!
Ole Hansen, Head of Commodity Strategy at Saxo Bank: Silver is trying to stabilize following its recent 13% slump. Currently finding some support at $22/oz while the XAUXAG ratio has seen a few rejections above 80s.
PHYSICAL SILVER AS A VALUE PLAY:
Gold/Silver Ratio Remains Capped At 80
“Never Waste A Good Crisis”
Holger Zschaepitz: Good morning from Germany, where the energy crisis for consumers is coming to a head. Power prices are on their way to a new record also driven by the price of CO2 pollution rights, which has marked a new record at over €80. Energy prices account for ~10% of the inflation rate.
Power Prices Skyrocketing In Germany…Again
More Transitory Inflation
Holger Zschaepitz: Just to put things into perspective: Carbon Price has hit fresh ATH at €81.65 per metric tons. Carbon has risen almost 150% this year.
Carbon Prices Shatter All-Time Record!
Monetary Madness Continues…For Some
Peter Boockvar: The Reserve Bank of Australia didn’t change policy as they were not expected to and are still likely bruised from getting run over with their yield curve control policy. Governor Lowe though is optimistic that they will power thru Omicron and the 2 yr yield is up by 3.5 bps to .675% and the 10 yr is up by 6.5 bps to 1.65% in response to this optimism, although he is still very dovish. They aren’t yet committing to a rate hike even with their benchmark rate at just .10% as “Inflation has increased, but, in underlying terms, is still low, at 2.1%.” Headline CPI though is up 3% because of “higher petrol prices, higher prices for newly constructed homes and the disruptions in global supply chains.”
As for when they might raise rates, “The Board will not increase the cash rate until actual inflation is sustainably within the 2-3% target range. This will require the labor market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time and the Board is prepared to be patient.” So while the Australian economy is far from an emergency, the RBA still feels that a .10% rate is appropriate along with a large balance sheet via QE. With the rise in yields and the increase in the price of oil and iron ore (see below), the Aussie $ is rallying for a 2nd day by .75%.
Is The Modern Day Paul Volcker Running Hungary’s Central Bank?
In stark contrast to the RBA, Fed, ECB, BoJ, and BoE to name a few developed central banks that are dilly dallying over inflation, the Hungarian central bank is not messing around. Their deputy governor said today “We’re going to defeat inflation, no matter how long the road is ahead of us. We’re going to front load as much of the interest rate hikes as necessary.” What the Hungarian central bank is going to do is irrelevant to us but I highlight it because emerging market central banks have taken inflation much more seriously than the developed ones because of their long history with the scourge of inflation. Turkey’s Erdogan should get an economic lesson from Hungary, in addition to Russia, Mexico, and Brazil to name some EM banks that have hiked rates this year.
China Supports Bullish Commodity Cycle
China’s November trade data saw a 22% y/o/y increase in exports, just above the estimate of up 20.3%. Imports were higher by almost 32% y/o/y vs the forecast of up 21.5% as commodity imports were strong, particularly for coal. With the demand for goods still exceeding supply, China’s manufacturing base is still in high demand. It does seem that the power shutdowns have stopped but getting goods to the final customer still remains a challenge but hopefully less so after the holidays.
With this data and on the heels of the RRR cut from the PBOC and further policy support to the real estate market has iron ore up 8% today to the highest since late October. The price of iron ore and in turn the Baltic Dry Index is being driven mostly by China’s demand for steel, infrastructure and residential housing. Copper is up 1% to a 2 week high. The H share index in Hong Kong rebounded by 3% but still remains down 21% year to date because of the pain seen by tech stocks.
***ALSO JUST RELEASED: SPROTT: Gold Correction Coming To An End CLICK HERE.
***ALSO JUST RELEASED: Money Destruction, QE Taper And What To Expect Next CLICK HERE.
***ALSO JUST RELEASED: EXCLUSIVE: Celente – These Top 2022 Trends Are Going To Be Redirecting Society & The World For Many Years To Come CLICK HERE.
***ALSO JUST RELEASED: MAJOR ALERT: We Are Going To Be Redirecting Society & The World For Many Years To Come CLICK HERE.
TOP TRENDS FOR 2022!
***To hear one of Gerald Celente’s greatest interviews ever where he discusses the all-important top trends for 2022 CLICK HERE OR ON THE IMAGE BELOW.
Gold Shortage & Unprecedented Delivery Delays
***To listen to Alasdair Macleod discuss the shortage of available physical gold and unprecedented delivery delays CLICK HERE OR ON THE IMAGE BELOW.
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