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Showing posts with label Long Term. Show all posts
Showing posts with label Long Term. Show all posts

Monday, July 14, 2025

Future Economic Growth

Here’s an improved version of your message that maintains your critical insights while refining clarity, flow, and tone. I’ve preserved your points but made them more fluid and polished for a thoughtful, forward-looking audience:


Long-term investing—unlike short-term trading—tends to perform well when underlying investments are fueled by economic growth. For much of modern history, population growth has been the simplest and most reliable driver of that growth. As populations expand, so too does economic output, consumption, and innovation.

However, the world is now entering uncharted territory. For the first time in human history, many nations—including the U.S.—are approaching or have fallen below replacement-level fertility, with fewer than one child per adult. Simultaneously, the U.S. is curbing both legal and illegal immigration, historically one of its strongest levers for demographic and economic vitality.

But don’t worry—we have a new lever: AI-driven productivity. In the short term (2–10 years), AI will likely fill gaps in labor force participation, enabling major efficiency gains and potentially offsetting some demographic headwinds. Productivity could jump 100% to even 1000% in certain sectors.

Yet this is not a generational solution. Like any technology, AI’s exponential gains will eventually plateau. And when it does, we’ll still face the same structural issues: fewer workers, aging populations, and flatlining demand growth.

Meanwhile, the U.S. faces a geopolitical challenge of its own making. In its effort to "rebalance global fairness," America is increasingly pursuing international policies and trade frameworks that seek win-lose outcomes—with the U.S. on the winning side. Even if these lopsided arrangements succeed in the short term, how long will the rest of the world accept them?

History provides a clear answer: Sustainable global growth requires perceived mutual benefit. Nations do not tolerate long-term disadvantage, and global systems that depend on asymmetric power tend to erode over time. Today, we’re seeing early signs of decoupling, as countries look to reduce dependency on the U.S. and pursue more equitable or self-reliant paths.

AI could accelerate this shift. Unlike past technological revolutions, AI is not confined to proprietary, walled gardens. Much of its power is openly accessible—downloadable, customizable, and deployable by any motivated government or organization. This democratization of capability means productivity leaps are no longer the exclusive domain of the West.  It also has the unfortunate side effect of dramatic reduction of being a leading world consumer as US wages on average depress.

The U.S. had a choice. It could have continued leading through trust, partnership, and innovation—quietly shaping global systems while benefiting immensely from them. Instead, by trying to secure overt advantages, it may awaken a more self-sufficient, multipolar world.

In the near term, the U.S. might surge ahead—leveraging AI, reconfiguring labor, and driving GDP and corporate profits to new heights. But once the easy gains are realized, the question remains: How will the U.S. maintain global influence and economic dominance if others no longer rely on its leadership or accept its terms?

The take away is, invest in 1-5 year growth, but depending on your investment goals hedge with world investments.  See link at top of this blog for some ideas.


Wednesday, July 2, 2025

Next leg down, and then higher?


Trump administration is pushing to relax the Supplementary Leverage Ratio (SLR), which currently forces large banks to hold 5 % capital against Treasuries (3 % baseline + 2 % GSIB buffer) instead of treating them as zero-risk assets.

This should boost demand for Treasuries amid record issuance, helping keep borrowing costs down.

Relaxing the SLR will increase banks’ liquidity. By exempting (or lowering the capital charge on) U.S. Treasuries from the Supplementary Leverage Ratio, large banks free up balance‐sheet capacity they’d otherwise have to hold in reserve. That means:
  • More high-quality liquid assets count toward their liquidity buffers without eating into capital ratios.

  • Greater capacity to intermediate—banks can step in as market‐makers in the Treasury market more readily, supporting trading desks and repo operations.

In plain terms, a 1 percentage‐point cut in the SLR is estimated to unlock up to $185 billion of extra capacity at the big banks, making short-term, secured financing (i.e. liquidity) more plentiful and cheaper.

This excess liquidity has to flow someplace, I don't expect a windfall of bank lending to small businesses.  I expect  liquidity finding its way to what many consider less risky assets including Bitcoin, gold, and some stocks to benefit from this liquidity injection.  The Trump administration is also cutting taxes, decreasing spending on the bottom 90% of citizens.  AI is enabling companies to have capacity increase with half their tech workers increasing corporate profits even if their topline is reduced. 

These changes will supercharge some assets and corporations.  

What we are witnessing is the final separation of the rich vs the poor, and the rich have liquidity to put money into assets. This will continue until the people require it to stop.

For me, the pivot here is to cover my shorts - again - on this next leg down, and go long less risky assets that will catch the liquidity. 

This all ends very badly, but not in 2025 once SLR is changed.  The administration is shifting the crisis to the private sector.

This videos covers some indicators of we are getting closer to the next leg down.  


Thursday, May 22, 2025

Recessions, US Dollar, and Interest rates

This post covers some indicators of US recessions, that typically negatively affect stock market valuation, US dollar valuation, interest rates, and implicitly real estate.  

For details on my concerns see American Assets declining ahead.

Fed Funds and Recessions

 


The chart above shows with the red lines when USA had a recession.  The blue line is when the Fed Funds rate.  Notice each time before a recession the Fed Funds Rate moves higher.

This is yet another indicator of a recession approaching.  I do think AI/Robotics will be the sector to purchase in next upswing.  While a recession isn't guaranteed, as we see from raising rates in 1995, it has a pretty good track record.

US Dollar Valuations

Below is US Dollar valuation as per DXY.  If the USD breaks below 96, we will have broken an up trend in USD since 2010.  The next levels of support is 78 and 70.  A break below 70 is an unknown target.  DXY is not a complete picture, as its about half Euro and other currencies, not including Asia.  Currencies are valued against other assets such as other currencies, gold, bitcoin, or other assets.  So even though DXY is weaking, its not a full picture, but does indicate vs major currencies like the Euro its weakening.

Holding above uptrend 2011 line will show USD is maintaining value relative to 2010 to now.
I think at minimum USD will lose 20 of value from it's high in 2022.



10 year US bond Yields

10 year treasury is linked to US mortgage rates, which in turn affects real estate prices.
The US interest rates bottomed in 2020, and marked a breakout of the 38 year downtrend since 1982.
A break above 5.25% indicates we are likely to see much higher rates in the years ahead.




Sunday, May 11, 2025

What if America gets more than it wants?



This administrations goals to achieve a 'more balanced' budget includes US dollar valuation changes.

Trump administration aims to "reengineer the dollar to be depreciated" to boost U.S. exports and manufacturing (Stanford GSB, Insights). Former economic advisor Judy Shelton noted, "If the dollar's strong, it makes it very difficult for our exports to compete in foreign markets" (Fox Business).

"the dollar must depreciate to allow for U.S. reindustrialization" (El Pais, April 7, 2025) and that President Trump "wants to ensure that the US dollar can trade at a weaker value compared with other currencies while not undermining the centrality of the currency" (Al Jazeera, March 13, 2025).

The President does understand that Americans will pay materially more for imported good, as indicated in this statement its not just a small cost increase to US citizens.  After all, 2 vs 30 is being able to afford 90% less than today.

"Well, maybe the children will have two dolls instead of 30 dolls, you know. And maybe the two dolls will cost a couple of bucks more than they would normally.YouTube

What we are aiming for America to not have a financial privilege of being world reserve currency.  Being the reserve currency everyone else 'games' the system to their advantage putting America at a net disadvantage when it comes to debt.   The word privilege indicates we get goods cheaper due to this position at the cost of a future currency debt.    No one knows in 10 years if the debt will matter or not as we advance society and tools like AI, but we are assuming it is an issue and forcing dealing with it now.

If America succeeds at devaluing the dollar, and dethroning itself as the world reserve currency, be careful what you wish for, as its a one-way trip.  This is why everyone should consider diversifying some assets outside of USA.

A great video explaining some of the potential challenges.  This concern drives my thinking of international investment as part of a diversification strategy.


Sunday, May 4, 2025

Global Investment Tracker

My 2025–2028 investment bias is laid out in “American assets declining ahead” If you don’t share my POV, feel free to skip my posts.

Below is a concise stock screener with focus on global ETF's, currency related investments, select countries and U.S. tech names.  Click the “CHATGPT” link to pull up any ETF and ask questions.

Red-highlighted columns flag areas of heightened risk following the U.S. tariff scare on April 7. Bright-green items are where I’ll deploy new capital, timing purchases around the expected summer downturn (July/August) based on dividend yields, April 7 resilience, and international growth potential.

Always seek a professional investment advisor. For educational purposes only.
Good International Investments seem to be DWX, SHLD, MOO, and in next leg down XAIX , ROBO.  See below Analysis of how much was lost on Tariff Scare and the upside YTD.

Direct access to the live document, with short-term screener: [click here]


Responsive IFrame Embed

Monday, April 21, 2025

Liberation Day Lasting effects

I been following global economics at a distance since 2006, and I didn't understand the USA framework with Most Favored Nation trading status.  I am honored that as an American we setup the free trade system that we are now dismantling.  I do think USA made mistakes letting China and Russia.  USA was too optimistic if we let them in they will change, and it cost us the USA middle class.

Well the pendulum is swinging hard when America was great again circa the late 1920's.

A really good video to explain what the world must deal with now, and how utter paralyzing it is to global trade.  After watching this I can't see how a Great Depression 2 can't happen.  I encourage you to watch and help me understand why my POV is misguided.  Thanks in advance!

I am adding Long term as this is a political change not seen since the 1940's, and will have long term material change for USA finances and the world.


Saturday, April 19, 2025

Next Leg Down

Jerome Powell just dared to refuse a rate cut—leaving Trump no workaround to get what he wants. That leaves Trump with two choices: replace Powell or order Secretary of US Treasury Scott Bessent, to implement new financial innovation to project rate cuts. Either way won’t spark growth—global markets set U.S. borrowing costs, not Washington. Undermining Fed independence would erode confidence, spike yields, weaken the dollar, and likely trigger the deepest bear market since 1929. The real lever isn’t finance games—it’s providing true competitive value that the world wants.

I am still holding to sideways to a little up through April 28th.

I do recommend watching the video and reading post: "American Assets Declining Ahead".

Update: Analysis from former Fed Reserve employee, https://youtu.be/9NAVHjvN9HQ?si=6ChAqq69aypbiKBs





Monday, April 14, 2025

American assets declining ahead



Ray Dalio, founder of the world’s largest hedge fund, has been vocal about the major challenges facing the U.S. economy. On *Meet the Press* (April 13), he echoed a concern I share: the current global order—monetary, trade, and geopolitical—is breaking down, much like it did in the 1930s.

His closing advice—*“work together and negotiate, don’t dictate”*—is a successful path forward for USA. If U.S. leadership adopts this mindset, I’ll become more optimistic. Until then, I’m preparing for the outcome Dalio warns of.

We could soon face a rare and dangerous combination: a falling U.S. dollar, rising bond yields, and a declining stock market. That scenario would erode the wealth of Americans heavily invested in domestic assets and could trigger a modern Great Depression.  We have weeks, not years left before things get moving.

This is why I’ve been advocating for global diversification. Consider assets non-USA stable country fund EFAV, or individual country ETF's like INDA.  Alternative assets like Gold Miners and Bitcoin may  hold or rise in value during the storm.  Many 401(k) plans already include international funds—take a closer look.

Take action Talk to your financial advisor from a *global perspective* about how truly diversified your portfolio is—and whether it’s built to weather what’s coming.

Future posts will label "Short Term" vs "Long Term" (year plus) investment commentary.  Both are linked on left of this blog for easy filtering.

Friday, October 14, 2022

Reversal day

Quick post, we opened lower from previous reversal, but closed much much higher, this was THE reversal that I was expecting, it was a long bottoming process.   It could be a reversal that lasts for a year before hitting our much lower destination.   If you like going long, buying Friday SPY, with a stop of yesterday’s low of 349 as a stop loss.  Good luck!

Thursday, January 30, 2020

ACT NOW, Sell the market!

I am posting this, not for you, but for me.

Have you ever believed you knew something so true, that you want to share with others to understand?
Some its God, others its their living values, others is activities benefits like exercise,  and still some others is facts that seem to not be recognized by others.

Today is some FACTS I want you to really absorb.

  • The stock market is a value based on emotion.  If it was based on pure fact, company values could be computed by accounting and price fixed.  Stocks enable speculation to be captured into a dollar value.  Speculation is emotion.
  • There is a pandemic of lifetime proportions building.  Even if as humans we curb the pending disaster, between now and then there will be emotional negative views thrown into the world.
  • The general view of the market has been herd mentality positive since 2010, and since 2008 from low to high the market has risen every year on average almost 13%, the average the market has risen since 2001 is 6%.
  •  Reversion to the mean is due, to help reduce the 13% annual average since 2008, a year after a 29% gain increases likelihood of a  reversion to the mean.
  • There is a discipline called "Chart analysis" which looks at market charts to identify patterns and use them to help predict next events.  Monday we had a market gap down, Tuesday into Wednesday we had a gap fill.  Wednesday was FOMC meeting and the  market melted into close.  This reads bad after a series of other events in charts to the downside.
  • If the market moves down, your emotions will trap you making personal bets with yourself "I'll sell at new market highs".  Think back to the tipping point in 2008 that you refused to sell, sell near the decade high while its easy decision.  How do I know that what happened to you? We are all trapped by emotions to make decisions.
  • UPDATE 2/18/2020 - Or with new highs dismiss fears as nothing can stop the market, once again trapping you into buy and hold after 400%+ run up in the market.
  • Read my posts for more Year of an explosive market and Choose your expected returns

The potential downside is substantial.  The market reversion WILL be 10% to 50%.    My suggestion is if you are over age of 50, I am not a market professional, make your own decisions.  Sell today, re-evaluate March 1st.  If selling after 400%+ move up since 2008, after 29% gain in 2019, and 3% up in January (which is 50% of typical annual move up) during a pandemic which WILL trigger emotional negative views.

I believe this so firmly I am placing very high risk trades on the market in anticipation of a market decline.  Last time I did this was in August 2008.  So I am acting on this view, not just spewing it.  And if I am wrong, I will lose much more than if I played it safe in fixed funds for February.


Chances are if you are reading this, my will is to clear MY conscience that I did my best as a friend to try to help you.  Good luck!



UPDATE: 2/2/2020
from Hussman Funds, worth a read:
https://www.hussmanfunds.com/comment/mc200130/
Update 2/8/20
State street asserts 70% chance of recession in next 6 months
China is starting to impact world trade, iPhone delays is one example
Update: 2/18/2020
Dow Futures Slide as Morgan Stanley Warns ‘Downturn’ Has Begun
Apple warns it will miss quarterly revenue target due to effects of coronavirus
Largest Shipping Decline Since 2009 and That's Before Coronavirus
HSBC To Cut 35,000 Jobs, Shed $100 Billion In Assets As Profits Plunge
Dramatic Coronavirus Timelapse Reveals an Economical Wrecking Ball in China
China Shutdown To Crush India’s Already-Crumbling Economy

Saturday, September 6, 2008

Financial Ground Zero

On September 11th, 2001, I was at work when we witnessed the world trade towers collapse at a safe distance. Two co-workers who have much better grasp of political implications and future vision stated this day would change the world. At the time, I didn't quite understand, since, I saw it as "two buildings collapsed", and yes, the terrorist aspect would translate into some sort of counterstrike, but I assumed that would be the end of it.
After all, if both buildings collapsed because of a structural issue, the result of the buildings and people deaths would be the same. But the root cause of the event, and the implications, I didn't see the far-reaching effects.

September 5th, 2008 is a financial ground zero, the start of recognizing financial collapse of a magnitude never seen before. Either in size or as a percent of GDP of the country where financial failure occurred.

After hours Friday, US government announced that Freddie Mac and Fannie Mae are both going into conservatorship. In effect both companies are insolvent, and combined are responsible for over 5.5 Trillion dollars. To put this in perspective the US debt is currently 9 trillion dollars, and this is already causing significant issues. The total GDP of USA is about 14 trillion.

This is not meant to indicate that 5.5 Trillion dollars is worth nothing, and therefore is pure liability. But in "accounting" standards, if the USA books was re-assessed, and argument could be made the responsibility of the debt should show on USA outstanding debt until paid off. Congress already passed close to 1 trillion dollars of debt to be taken by USA on the bottom line of the balance sheet of "USA".

Monday may be a huge rally, unseen in recent times, the market may take this as "we are saved". The reality is, losses will now be taken on banks balance sheets sooner rather than later, as stock prices and preferred bonds are revalued lower. The reality is, the US Government will now be the primary go-to person for loans, kinda like a communist country controlling all financial matters. This is being spun as a restructuring, not ownership of these two companies. And although currently that is correct, looking down the line, who will take on this bad debt?
What company in the USA or the world wants it as it stands now? The government, if it could have, would have flipped these companies like Bear Stearns, but it couldn't.

Whatever happens in the next week, long term there is only down now, until the losses are realized and the companies (if ever) are re-privatized.

I'll be blogging more, probably either Sunday night or Monday after the market either rallies to DOW 12,000, or plummets. I suspect the spin will be good, and it will rally, a great day to get the heck out of dodge if you haven't yet. In two - three weeks earnings season for banks and other financial companies begins, and it can't yield a gain from this, unless the government assumes upfront face value, then be prepared for interest rates to rise, and the cycle to accelerate.

One way or another, the debt must have a consequence, there is no such thing as a free bailout.
Update: 2-9-13, see my entire Financial Ground Series milestones to record the journey being taken.