Where We Are in the Cycle

An image in a Tweet accurately describes the folly of Fed-sponsored bubbles.

A Tweet by OccupyWisdom accurately portrays the Fed-enhanced Cycle of Stupidity.

If accurate, and I believe the graphic is precisely on the mark, the interest rate cycle is nearly over, just as a near-unanimous consensus has formed that the bond bull market is over and the stock market is headed for new highs.

Deflationary Setup

Asset bubble bursting is inherently deflationary.

As I stated yesterday, it's increasingly easy to stick with my prognosis: Inflation is in the Rear-View Mirror.

Then again, many believe Everything Bad is Priced In.

Enjoy what's left of the bubble.

Mike "Mish" Shedlock

Yawn. This is natural.

In long term stocks will still perform better than any gold based product you are trying to pump up here.

If one really believes that there is inevitable stock market crash soon, just go into government bonds.

I guess the question is how much interest rates need to rise in order for zombie corps to go bust.

I'm waiting for auto/truck market to slack off and drop the ridiculous prices and it ain't happening so far. Export of used/off lease vehicles may not subside that much to many countries... that's my dilemma. I'm one piece of the deflationary puzzle.

Lots of 5/1 ARM mortgages resetting now UP LIMIT (+200 bps). This does not bode well for Real Estate prices or consumer spending. Higher gas prices and higher Obamacare premiums are the "coup de grace".

See a lot of Fed fighting going on here. Good luck with that, because we are still encompassed in their game. And they have stuff in their tool box we can’t even imagine.

Do you think gold makes just as good hats as tin and aluminium? Maybe one day you will find use case for your hoarded gold.

While you leave a good benefit of doubt, I really don't think you are actually that misinformed and hoarding gold. I think that you are actually in gold-related product price pumper camp.

Remember the guy who said "Crash JP Morgan, buy silver"? See similarities?

@TheLege - Please keep it civil here. If you have an alternative to Wagner__'s recommended strategy, present it and explain why you think it's better. I would like to now what you have in mind.

I am always happy to have a constructive discussion -- except with trolls. He is contrary for the sake of being contrary. I don't have time for morons like that.

It can be difficult to find truly independent 3rd party conflict of interest free analysis of gold from smart investors. Some people may make some kind of commission off gold so they may hype it, some may have big positions in gold so they hype it, some may sell a paid newsletter so they hype it, some may be strong gold bugs for philosophical reasons and strong influenced by confirmation bias so they hype it. And some may have a bias AGAINST gold do they bash it. I wish an academic like say Robert Shiller would write a book on Gold. Not taking any sides here, it may well go to $10,000 an ouce in 2 yrs , I do not know. I would just love to find more “bias free” deep analysis of it.

I don't think Wagner is a troll. Why is someone who has a different opinion from the herd here at Mish’s site automatically a troll? It’s good, it adds to the debate. Who wants an echo chamber?

There aren't really a ton of ARM loans in the US mortgage market. I think 98%+ of the people who have bought a home in the US in the last decade have very low rates mostly starting with a 3, 30 year fixed, fully amortizing mortgages. Europe, Canada, NZ, Aus is another story, there are NO 30 yr fixed mortgage loans over there.

He's been around, everyone has read his posts for a while. He parrots MSM talking points. Imagine someone who gets all their news from CNN and then searches online for anyone who dares to disagree with their narrative. That's essentially what he does. The whole point of a site like this is to get away from the dime-a-dozen MSM outlets.

@TheLege I have said it multiple times that Gold portfolio in long term has underperformed any portolio holding major stock index product. And for your record, you have never given a constructive response. Instead you have resorted to name calling, which I think tells a lot about your arguing skills.

Whenever I bring up "Gold vs Stocks" topic, then someone in response posts "nominal stock index prices" vs "nominal gold prices" and claim that gold actually performed almost equally good as stocks in long run.

However, when I point out flaws in such thinking and recommend to look at "portfolio as a whole performance" and not "nominal stock index prices", then I rarely get a further response from folks like you.

The reason I don't get response is because exponentionally compounding gold maintenance fees and exponentionally compounding stock dividends are too hard to disprove as big plus for stock portfolio when compared against any gold-related product portfolio.

To be honest, I think that Mish has the neccessary background to grasp those concepts (dividends and maintenance fees) and write a well balanced article on this topic. However, he has never done so. I can only speculate why. Nevertheless, I would like to point out that he HAS connections with folks making money by selling gold related product. Go and Google it.

Also, Mish's Tesla bashing is very flawed and he simply parrots zerohedge narrative that claims that Tesla is going to go bankrupt soon due to negative Free Cash Flow. But he never bothers to ask what is Free Cash Flow in the first place. It is clear that Free Cash Flow looks better for companies that reinvest in CapEx (e.g. Amazon buys warehouse or buys servers for AWS datacenter. Easy to account such things on books). However, Tesla reinvests into more abstract things that are harder to value and may actually count under OpEx (e.g. tell me how much worth is GigaFactory if there is only one out there? How much worth is the Intelectual Property Tesla produces, like software, patents and car production pipeline optimizations? Engineers working on IP count as expense for company)

Clearly the Russian and Chinese central banks don't share your views on gold, Wagner.