Latest Trader Channel Posts
Elliott Wave International
Market Roundup - August 2011
Kevin remains firmly bearish on both the stock market and the commodities sector. He discusses the potential impact upon the market of the Fed meeting at Jackson Hole later this week and the possible ramifications of Ben Bernanke cranking up the printing presses yet again.
Kevin is also still bullish on the US Dollar and is looking for an opportunity to bet against the Japanese Yen.
File Attachments:
Markets:
Indicies
Currency
Futures
Bonds
Equities
ETF's
(2 votes)
Email this Video Presentation
Tags: 
Comments
An unexpected pleasure to get the email with your August roundup. It's always interesting to hear your take on the markets and see how your view differs from mine, hopefully see you at the September meeting. It's a very interesting time in the markets so it will be great to see what happens between now and then!
Thanks for the update Kevin. I'm going to hold my peace on gold but not on inflation/deflation. There is now a disconnect between bond yields and inflation. Yields are indeed falling but inflation is stubbornly high.
Many thanks for the chart and your comments.
I am sticking with my deflation stance because I believe that we are heading in that direction as we speak. Rising prices do not in themselves mean that we are in an inflationary environment. Inflation requires an expansion of the money supply and that is clearly currently not the case despite the futile efforts to artificially inflate it with QE both here and in the US.
Real wages are falling, unemployment is rising, fewer businesses and individuals are borrowing and debt defaults are increasing all of which exert deflationary pressure.
Prices for certain goods can rise for other reasons such as supply and demand pressures and speculation. Food and fuel are large constituents of the RPI. I would suggest that these asset classes have been driven higher by the practically free money handed out to speculators via QE. Steep rises in the price of commodities will inevitably feed through to the High Street despite the contracting money supply. This pressure will be relieved when the prices of raw materials fall back, as they will. Unless we are treated to QE3 of course.
Speculative bubbles have always ended with deflation. We have had three bubbles in recent times, stocks, commodities and property and I can't see why the end will be any different this time around.
We certainly live in interesting times.
We may have to agree to disagree over your statement that rising prices do not in themselves mean that we are in an inflationary environment. We saw again yesterday that inflation IS rising, goods ARE costing more. At the same time bonds are rising, yields are falling. The disconnect continues.
What you say about money supply is correct but there is an alarming problem out there, namely that China is exporting price inflation and there isn't much we can do about it. So we have a contraction in the money supply, contraction in the economy coupled with higher prices from imported inflation. Lucky us.
As an aside, what is the easiest way to get rid of the national debt? Inflation.
We certainly do live in interesting times.