View Single Post
Old 10-28-2018, 03:39 AM
Danny B Danny B is online now
Platinum Member
Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,786
Alternative economists,,,kill stocks to save GOV bonds,,, dying shale

Here is all you need to know about the U.S. dollar. The rise of the dollar is destroying everything in it's path.
"the Fed is committing its habitual policy mistake by overtightening"
Yep, if they are cutting off the free money, they are definitely WRONG.
"JPMorgan's quant Marko Kolanovic had repeatedly pushed, advising clients - so far erroneously - on at least two occasions to buy the dip "
They got hammered. Everybody needs dollars and, they are driving them up.

"Federal Reserve officials have tried this week to ease concerns on Wall Street that bank reserves are growing scarce "
Just words, no action.

Armstrong tells us that bonds will crash but, stocks will do well. That is NOT possible.
"But on the other hand, they now find that U.S. trade deficit reaching its largest level on record - the precise deficit tariffs purported to narrow - is very worrying."
Like almost everything else, the theory did NOT work out in practice.
"The problem lies with government spending and monetary inflation, precisely those activities that global businesses have been taught either to ignore or, worse, to embrace and lobby for. "
The chickens are coming home to roost.
"In asking taxes for such payments the government makes the citizens answerable for money squandered in the past. The taxes paid are not compensated by any present service rendered by the government's apparatus. The government pays interest on capital which has been consumed and no longer exists."
YES, but, we got a lot of nice war stories to tell our kids.

"For my part, I outlined in 2015 that the Federal Reserve would undertake a policy of interest rates hikes and fiscal tightening, and that they would pursue this action until markets, long supported by cheap debt, finally broke under the pressure. Months before Trump's election I stated that Donald Trump would in fact be president and that the Fed would accelerate tightening during his administration. At the beginning of this year I predicted that Fed tightening would result in massive stock market reversal (worse than the 2008 crash) in 2018. In September I refined the timing of this crash to begin in the final quarter of 2018."

"The fact is, alternative economists have been RIGHT for the past 10 years and have been far ahead of the mainstream in terms of predicting fiscal trends based on real data. As I have always said, economic collapse is a process, not an event. It’s something that happens in stages or phases over time, not something that occurs overnight or in the span of a few days."
"The establishment banks and the economists that pander to them have burned up all their goodwill and social capital. They have been wrong so much and so often that the public is looking elsewhere for their information. This has led to the explosion of interest in alternative economic analysis that is occurring today."

The broken trend,
OF NOTE, "When bonds collapse, entire countries go broke.
With that in mind, once the US bond market began to collapse, pushing yields above their long-term trendline, it became apparent that the Fed would “sacrifice stocks to save bonds.”
"The reason? Letting stocks collapse will force capital into bonds, thereby forcing yields lower.

That process is now officially underway. And if you think the Fed is close to “stepping in” you’re mistaken. Cleveland Fed President Helen Mester just told CNBC this morning that “the stock market drop is FAR from hurting the US economy.”

This ties in with Fed Chair Jerome Powell’s assertion during a recent Q&A session that the Fed would not step in to prop up the stock market unless it was a sustained collapse that was bad enough to impact the REAL economy, specifically consumer spending.
In simple terms... the Fed's not coming to the rescue this time."
OK, the FED crashes the stock market to drive money into bonds. Keep in mind that most economic theory seems to be major BS. Stocks and bonds are now 100% correlated. They go up and down together.
"So whom has the bonds and will take the loss? Guess who? The central banks. They are loaded to the gills and cannot sell the long-bonds they bought. There is no bid. In this debt crisis, there is no bid for debt, which is typically how empires, nations, & city-states collapse."

2 links,

OK, enough of the good news. Here comes the bad news.
"So, it doesn’t seem to matter if the oil price is over $100 (2013-2014) or less than $70 (2017-2018), the shale oil industry continues to spend more money than it’s making. The shale energy companies have resorted to selling assets, issuing stock and increasing debt to supplement their inadequate cash flow to fund operations."
"For the U.S. Shale Oil Industry just to pay back its debt, it must produce 9 billion barrels of oil. That is one heck of a lot of oil as the industry has produced about 10 billion barrels to date. Again, as Mike states, it would take 9 billion barrels of shale oil to pay back its $285-300 billion of debt (based on the shale industry’s very own breakeven prices).

Furthermore, the shale industry may have to sell a quarter of its oil production (1.5 million barrels per day) just to service its debt by the end of 2019. "
"total upstream shale oil debt actually is. We found it to be between $285-$300B (billion), both public and private. Kallanish Energy Consultants recently wrote that there is $240B of long term E&P debt in the US maturing by 2023"
"So, as Pioneer issued over $5 billion in stock to produce unprofitable shale oil and gas, Continental Resources racked up more than $5 billion in debt during the same period. These are both examples of “Ponzi Finance.” Thus, the shale energy industry has been quite creative in hoodwinking both the shareholder and capital investor."
Reply With Quote