This video is accurate on the economic distortion that is occurring for a wide variety of reasons. The net effect is likely the aftershock will hit all post baby boomer generations.
I do not characterize this is happening as some sort of baby boomer scheme to fraud everyone else as this video asserts. Instead the end economic upheaval caused by exponential change caused by technology is the root of the issue.
The baby boomers in position of influence are reacting to keep what they perceive as normalcy. The net effect is this distortion, video gives good thought, but low on facts and high at demonizing. Look past these spins.
The Panama Papers is the world's largest information leak, far greater than Snowden in terms of sheer information volume. The information is from an offshore law firm that specializes in offshore companies to hide money from taxation from any country. The people that use this law firm is politicians, entertainment stars, sports stars, successful business people, companies, pretty much anyone that has enough wealth to need their services.
To me again this is nothing new, pretty much anyone with thought on this topic new this type of service had to exist.
What is important is attitude. The smaller people are getting bolder, Snowden, this person, and others are becoming more common. Wikileaks is providing an avenue that smaller people take risk to expose illegal activity. There is a convergence of information distribution and economic strain. Both are caused by technology.
In my #marchoftherobots series I show a future of low employment opportunities, this is the cause in economic gap, not tax dodging. Not that tax dodging helps the smaller people :). I see this as part of the evolving breaking point of the global economic model based on debt. Still, great read! This is way better than fiction dramas on TV.
I am sure people can find specific instances China through corruption has unfairly decimated a company of sector of us manufacturing. But I do firmly agree the overall trend and driver has always been manufacturing. China has only accelerated economic pressure to us manufacturing to lower production costs, resulting in job loss overall. This video dies a great job of doing a drive by summary. #marchoftherobots
I just discovered how to blog from my phone. Expect more posts, but shorter ones. I agree that really big money is going to own things and not go public to retain money generation. If you look at marginal companies like Dell you see this happening already. That will leave the average person no way to put money into the stock market and get a return they desire. Very good video for local companies to move closer to the sharing economy model.
View can change with new information, so what is the current thought?
At the moment the prediction market topped for 18 months remains intact....until proven wrong with new market highs.
I put together a bunch of charts using long term market indicator to evaluate where we stand.
I cover the S&P 500, interest rate, gold, and other sectors
I posted many times since then how China would NOT save the world economy. Here we are in 2016 and many people are arriving at this conclusion now. The uncertainty this brings is unprecedented in such a large global economy. We have all reaped the benefits of cheap Chinese products. Pretty sure every electronic item I own ows 80% or more of the parts from China.
Ran across some videos today. the first one is excellent to bring to attention the demographic miracle is over. It touches on the age problem briefly, but I have covered this many times before. The one child per couple law has dwarfed the demographics so much, the old will clearly outnumber the young for decades to come.
Also moving forward I see robotic manufacturing and small custom manufacturing exploding back into local economies, as I covered before in MarchOfTheRobots
Second video touches on the Panama papers, and how Chinese are exporting their wealth to safety.
I still think USA may want China and Russia to take a greater part in the current currency system so they can share greater pain when it is replaced as I posted in "The Hard Road must be taken".
When viewing these data points, which is more likely, 20% rise in US stocks in year ahead, or 3% or more loss? It is impossible to know, but be prudent!
Baltic Dry index measures shipments of dry goods, tad bit disturbing.
Commodity prices vs Nasdaq
With US stock market at record highs, 1 in 7 Americans rely on foodstamps
Manufacturing and new orders are trending negative.
I am making the call, we have seen a Stock Market high that will not be breached for another 18 months, that is about July 2017 at earliest. Could be as late as 2020 for markets to return to these levels, who can really say.
Now if you know me, and read here, I have been a bear too long here, and so this is kinda like the boy who cries wolf enough is eventually right.
In post Long Term Investing Signal I pointed out an independent metric you can use to detect market direction changes. This indicator has been pretty reliable since the 1970's if not before.
The cross happened in October, but wasn't convincingly crossed until the close of the market today.
This bear market is much different than 2000 or 2008, and therefore is much more unpredictable.
In 2000 the USA hyped up the market on tech, and the bubble popped.
The response was the Fed inflated housing through low interest rates and failure of Bush administration to do any regulation on fraud mortgages. ( See Blame Game ).
That time the world took a heavy dive, but the cause-effect was targeted. The housing popped, so cover-up and fix the mortgage derivatives. Part of the solution was to reduce interest rates that have been falling since 1982 even further.
The Fed brought rates to historic lows, and recently increased rates by 0.25 percentage points. The 'easy' money injection method has just hit the end of the road.
China committed financial fraud dwarfing all of humanity's history. Recently they started to unravel and all the economic ties are affecting, notably resources.
As economic strains increase, countries focus EXTERIOR rather than interior. The result is now Saudi Arabia vs Iran, North Korea vs the west, and Russia challenging USA military positioning. Unfortunately as the financial impact expands, I expect these friction points to increase.
So why all the drama here?
The world governments have interest rates at near zero. The world has inflated stock markets across the board to near highs. Housing in many countries are near highs. Natural resources are at historic lows. The 'easy inflate economy' buttons have been pushed. The next easy button is global currency wars, and China is leading the charge. Some may argue they are not devaluing the Yuan but rather the rich are exporting their wealth. In any event, the currency hot-potato will begin, the final end game is if-when the USA dollar takes its turn at collapse. I suspect that will begin January 2017.
I actually am very optimistic of USA chances for a record bounce back after this plays out, but that will depend heavily on politics.
Taking emotion out of this, and using long term indicators, the chart is in. Click this link to understand this chart.
Sell your stocks? Why not take 50% out after such a nice run for 7 years with a market 300% up? Where to put it? I really cant say, 10 year Fed bonds are 2.2% and cant fail. I can say pay off your debts, invest in reducing costs, this is the best action in times of stress.
To the chart Blue line high, orange low is a bear market. Orange high blue low is a bull market. A cross of more than 2% is material, and we are hitting that right now.
UPDATE: 1-10-2015
US Currency and global interest rates are the next act in this evolving story.
Of particular note with the FED raising rates recently, we may have seen generational low in interest rates. If this plays out, again, easy money is behind us. We had interest rates dropping from 1982 until 2015, thats a pretty good run, and another stresspoint to pile into the others.
The last post, Long Term Trading Signal, described a trading signal that can indicate trend changes in the market to help with long term investing.
The cross has to be material, and the current cross has not yet had enough of a gap to show clearly a trend change. Click here for updated chart with a start date of a month ago (zoomed in chart).
So for right now, wait and see.
After quite a while of long time of losses, this past week in Gold miners and Oil was refreshing.
Some of the stocks I am playing with.
So I looked at the price of gold to see what is going on. For perspective see Gold over last 10 years then the recent price range. Notice the 6 month view that gold seemingly broke out of a range.
The last chart shows US Dollar price range, no trend change yet.
After watching the markets since 2006, and being a professional day-trader in 2000-2001, I have learned quite a few things. As an analytical person, I search for logic in a the markets, which do not operate by any rules at all. If you have a rule-based trading system that makes you money, one thing is for sure, eventually the system will break. Upshot: Great to have guidelines for trading, but nothing is absolute.
Couple of mantras I heard as a day trader is 'don't fight the trend' or 'the trend is your friend'. Basically if the market is going up, many stocks will be going up, and vice-versa. The market has been on a tear up since 2009, will be 7 years this March!!. That is quite a trend!
Unfortunately I did not listen to this rule to my detriment, and second-guessed when the market is topping. Upshot: Spot the trend and play in the direction of the trend.
Today I bring back a post I did in 2008, I am re-writing it simply because my original post is a mess, and this week we may have a trend change upon us.
The concept is simple, have a MACRO tool to spot a trend change to help remove the emotion of guessing the market direction. I present to you today a tool that has worked as far back as the market has been trading. Take the weekly simple moving averages for 20 week and 50 week average and use its trend direction to indicate overall market direction. In the image be,ow when the 50 week (blue line) is above the 20 week (orange line) the trend is up. If reversed, the trend is down.
Does this mean we are in for a multi-year market fall? Perhaps. As we can see on the chart the two may flip back and forth and the trend does not change (one example around 2012 below). But even if this happens, simply sell when the indicator shows, and buy when it flips. Historically speaking the 'profits' lost is minimal compared to the typical risk of ignoring this indicator.
I do think the markets may someday reach a flat-line when this indicator will be broken. But until today, it has shown to be a very useful tool.
So look at the image below, take the emotion out of your trading, what do you see?
All doom and gloom, not at all! I see a very bright future AFTER we go through some more hard adjustments to the new economic model. What matters now is preserving wealth. For that, consider the long term trading signal below. For current chart click here:
Video from Karl Denninger, explaining this signal history
Jim Chanos is by far my favorite investor. He speaks his mind honestly and open since the start of his career in the 1980's!
He addresses a basic problem I have identified in the post "Employment of the Future", basically identifying that #marchoftherobots is a HUGE problem!
He calls out that as companies become more profitable, they invest in eliminating people.
WELL worth the watch
My friend John Chinnock says there is no bell that rings when stocks hit all time low or all time high. What he means is there is no clear indicator when the market hits an extreme or a turning point.
Today the FED announced interest rates would not rise. No surprise to me at all. The economy does not need higher interest rates to improve. The only way they could have targeted raising rates if on an international level, the US required to raise as a financial weapon.
So the markets have shot up. Markets may make a run like we saw in 2009 to 2015, and repeat a 6 year run!
But maybe not. There are troubling signs like China's stock market and manufacturing nose diving in the USA.
We are at historical times, economically.
Leading up to 2008 crisis, the standard economics taught in the USA since world war 2 was generally in effect. There was breaking from economic standards starting with Bill Clinton in 2000 with dismantling of Glass-Steagall act put into place in the depths of the Great Depression.
The purpose of these laws was to establish realistic accounting to value banks and keep monetary reserves and risk at acceptable levels. The reason this is important is so private business does not become public liability if there is an issue. In 2009 mark to market accounting was suspended. Mark to market accounting is what non-banks live by. For example, if you declare your house is worth 300,000 dollars, but the houses near you for equivalent assets sell for 200,000 dollars, you bank will use this information to value your house.
Since 2009 the stock market has risen to historic levels in the USA. Ignoring the banking sector, corporate America has been doing pretty good, even for a critical eye like myself. But while the companies are doing good, the average American has not. Companies are benefiting from huge gains in technical advancements that enable better profits with less people.
China has been advocated as a world leader of the NEXT generation of economics. I have question this wisdom many times. There are two primary drivers for me questioning this conventional wisdom. First is the historic 1 child per couple and second is insane levels of mal-investment never seen in human history. The combination of both makes China's future economic leadership questionable.
So here we are at end of August 2015, with China's stock market down 41% two days ago from June high. USA is down 7% from all time high set on July 17th this past Monday. As of today the USA SPX is down 6.5% since July 17th. America is in an epic panic! down 6.5% in little over 30 days after being up 300% since March 2006. Oh the horror!
The Stock market was meant to be a risk taking event. US citizens cannot take risk. The only question left is what next?
And here my friends, I can no longer advise. We are entering a world where corporate profits will hit record profits for the next decade, with majority of US citizens losing economic ground. For the market is this good for the market? China will need to shift to robotics leaving out 100's of millions of citizens without better income, is this good for the market?
China is actively trying to devalue it's currency along with many other nations to gain an economic edge through manipulation over innovation, is this good for the market?
With the realization that all laws are meaningless illustrated by the willingness of society to accept mark to fantasy accounting as perfectly fine to use logic and rule of law to judge outcome of this current events as at best pathetically optimistic.
We may be entering a time where the market soars beyond anyone's wild dreams leaving out 90% of Americans behind, with the world suffering from innovation investment due to risk tolerance. We could see the USA market cut in half as it joins the world downturn and the realization of fantasy accounting is just that.
I no longer have faith in gold, oil, or any resource in the face of world economics being turned on it's head. I have only faith in companies advancing technology to get reliable income for the next decade. Tesla, Google, Facebook, Amazon (AWS), and others are world leaders in their sectors.
For now, I am stuck in the gold miners, with epic lows I have to think they will double or triple from here. But who knows. Good luck.
Now the public media is screaming panic over the markets. Is this the next leg down? Possibly.
As long time readers know, for years now the next issue i said would come as we come closer to 2017.
I honestly don't know where this is going, but we do have several screaming warning signs.
First China's stock market has been in a freefall (chart below), along with natural resources already collapsed months ago. The world's government bond markets have historically low rates, with some countries requiring YOU PAY THEM to buy their bonds! (negative interest rates).
The VIX (Volatility index) has been off the charts, with the markets not able to price the VIX for 30 minutes on Tuesday.
Gold and gold miners pre-collapsed before all of this.
What makes all of this disturbing is the world has already done everything within reason to keep the market valuation rocketing higher for the past few years. The Banks since 2009 do not have assets valued by market prices, but rather mark to 'declared value'. So the banks already have a positive an outlook as possible for valuations. Combine that with interest rates at historic lows, and the Federal Reserve bank recently purchasing federal bonds directly with Quantitative Easing, owning trillions of US mortgages and bonds.
So the question is, assuming we do start on a year long decline, what will governments do next to spur the next leg back up? I have no idea what that could be, please put in comment what you think the world can do to spur demand like was done in 2001 and 2009.
Let me remind readers of a fairly neutral signal that has historically been a good indicator of long term downturns, see post here.
If there is a significant plunge still ahead, I am hoping for a snap back rally in days ahead, that will be the last place to get to safety.
I am tired of reading the torture the Greeks get to endure under the hand of the European Union, lead by the Germans.
Lets start at the beginning, Greece played some creative paper games with help of Goldman Sachs, allowing Greece to enter the European Union when they should not have been allowed.
So here we have a country that under the European union's own rules was not fiscally sound enough to join.
Fast forward that when 2008 hit, the mask is ripped off and we discover Greece is insolvent. I can excuse 2009-2010 that Europe did not allow Greece to exit. There was greater problems that may have required Greece to remain, even if it was not best for their citizens.
So Germany....I mean European Union....demands to be fiscally responsible. A country that is already under water fiscally, with any math at all cannot pay backs its debts for 50+ years if they play their cards perfect. Anyone can tell they are bankrupt. Why should people not alive when the debt was created pay?
Ok, lets run with the fantasy, demand Greece take measures and somehow spark economic growth AND export cash out of the country to pay off creditors.
And...surprise...we have a debacle.
Greece unemployment is at 25%, with young at over 50%. There are supply shortages and unrest.
At this point democracy is being ignored. the people want out. The Politicians don't stand up for the people and the people suffer. I do not believe in violence, but I am at a loss what it will take to free the people of Greece from slavery and let them...and us move on.
Its no secret that I have been a perma-bear since 2006. While I was early for 2008 crash, I have been plain outright wrong since 2008 most of the time for the general stock market.
What I failed to grasp until SPX touched 1,000 briefly that the market has become a game of political global competition rather than an instrument of market capitalism.
Since 2009 mark to market accounting has been suspended, first time since the 1940's.
And yet, we are told that current valuations are trustworthy without the underpinning of valuations using practices in place for 70 years.
These and other tactics have made the market soar while avoiding some of the challenges the world economy faces.
Here we are poised for a huge leg up or possibly a bit of a kick down. I lean towards a kick down, with what may be possibly a very rapid kick up.
It should be obvious to any market watcher that so far in 2015 its been a bit choppy at best.
Right now however, we have quite a few things happening that are of interest.
First up is S&P 500, using my post for long term investing, we are still green, but a week or two down may change that picture:
Then we have Greece, about to leave euro, and threatening to be the first nation on bitcoin!
Holly hell that's a mighty f-u to the world banks. If Greece does it they will get PUMMELED by every bank in the world. Every news report will blame BitCoin as the source of every woe. Notice the last few years with Greece topping 50% unemployment by some age groups that no one reports that mainstream! But if they do go bitcoin, I am sure it will be daily headlines!
Then we have USD, its been up for a while, no indicator of up or down.
And of course gold, I won't even post a chart, its pretty much who the heck knows.
Then there is political turmoil with wars and ISIS.
I personally think between now and March 2017 we will hit a severe rough patch, but who knows when. The economic system is being muscled into line for the big boys to play ultimate chicken, as China is demonstrating.
But mark my words, the one to watch that will tell everyone that we have an issue is watch the US Treasury curve, 10 year under control at the moment:.
I have had quite a few discussions and emails about my thoughts of employment in the future. I believe vast majority of people today are mis-understanding the economic and social strains we are experiencing today.
Looking forward, I want to try to not only be better prepared myself, but to share this view to others. There is a good chance you reading this is a result of me sending you this link. I ask you read in entirety, and even if you don't agree start to think critically about the future. I have spent years (since this blog started) thinking and reading to come to this current point of view. I encourage you to click through all the links I provide to prove my thought process. Also note the year of the link! Chances are links are old so the capability is much better today!
The root problem is NOT Republican or Democrat, top 1% rich or the 'lazy' poor. The economic problems we see in the world is simply because technology is advancing at such a brisk pace, humans cannot adapt. It is true, those who own the technology do get richer as technology is used to reduce costs and increase profits. But this isn't an evil play by the richest to take all the wealth, it is part of the current monetary system in place for 1,000's of years (generally speaking).
How can I say technology? The mantra you always hear is technology creates jobs. And yes, we can point back to plenty of examples of this. But that was when technology had a fraction of the power it has today. Moore's law basically states technology doubles in power every 18 months. Think about that, since the dawn of computing to day, in 18 months the same chip will be twice as powerful as what we worked on creating for last 50 years. In 2023 a computer can compute equal to a human brain, for about $1k. In 2050, a computer for $1k will compute equal to all humans on the planet.
This is the undercurrent driver for the maturing of technology in automation. The net is when automation is adopted, the reason its profitable is NET you reduce labor in that sector.
We are seeing this mature, and its very easy to see the future if you simply pay attention.
Once self driving cars and trucks are in place, most taxi drivers, limo drivers, truck drivers, bus drivers, school bus, and eventually house delivery drivers will no longer be required. Dispatchers and coordinators (back office) won't be needed either. Companies like Uber will enable people to book driver-less cars at much cheaper prices than I pay today. I already use uber and its 50% cheaper than a taxi or limo to the airport now!.
Once I can book Uber to pick me up, drop me off, and that car will run continuously (only needs to stop for recharge), the costs will plummet to rent that time. Many people will opt to not even own a car! This will of course cut down in car sales as people used the pool of what used to be idle cars sitting on streets and driveways as ways to share the cars.
So not only will people who drive be at risk, but the car industry itself will be cut back as the car manufactures, gas stations, mechanic shops, after-market car ships all will be reduced. The differences between different manufactures will be not as important, as people don't even bother to buy a car for personal use.
So, I hope you can see this impact is not as far off as people want to think, once these devices are proven safe, it will be a rapid transition to this new model.
OK, so America lost bulk of their manufacturing, and now jobs are returning to USA, so that's good right? NET however, we are talking globally manufacturing to shed millions of jobs through automation.
So we have delivery people, manufacturing, and packers dramatically reduced, is that it?
To make this article shorter, I will list other areas that we know TODAY that are ripe for downsizing. There are many more that will become clearer in the years ahead.
Computer Data Center staff (moving to cloud, eliminate Network Engineers, Virtualization specialists, specialized skills like Database Admins, Middleware admins, etc)
Finance - Anything in finance is at risk. Finance is information, and information can be automated. Once we move to cashless society majority of location-based finance establishments won't be needed. Over 80% of all trading is by robots already.
I will be continually updating on Google+ Robot advancements, click here #MarchOfTheRobots
Follow publication The-Vital-Edge.com for in-depth articles on the changing employment landscape being driven by automation.
Not only are jobs being shed, those who do work are being optimized to reduce costs (pay) and optimized time (work 60+ hours). A great site to see some of this in action, and how CHEAP is Freelancer.com
OK, so what now?
Basically if you are in a job that is going to be affected, and retirement is not an option, action now is required. I myself left a secure position to embrace the cloud and work in a vibrant, growing company.
If your just starting out, choose a job that basically involves innovation. Things like nano tech, robotics, design, biotech, anything that is new. For once whatever the new thing is invented and standardize, the work involved will be optimized. To remain in demand, you must be in a job of continual innovation.
Those who remain working will face FIERCE competition for your job. So you must be truly the best candidate for the job, and remain so to remain employed. Once a gap in employment occurs, full recovery will be near impossible.
The good news is learning has never been easier! Google for learning sites, watch programs like TED to expand your view.
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