INVESTMENT MARKETS – Ghost of Christmas Past, Present and Future

[skyreach]

If you ever have wondered how the markets work and if there is any relationship with Economic-Central Bank-financial data, and booms and busts, then this article is worth reading. Now we are in the verge of a recession fear.

Economists created the Yield Curve Recession Indicator long ago. WHICH INDICATED A RECESSION a while back (first with the USA, as it usually starts there, the biggest economy in the world).

The agreed upon definition of the Market in recession is, 20% market fall from a High. IT HAS ALREADY BEEN INDICATED IN 2022 (first with the USA).

Economists have a recession defined as two quarters of GDP decline, for economics reasons. Currently most economists are 'basking in the sun, while it lasts', so to speak regarding how the economy appears to hold up, for now (September 2023)

Insiders Transactions Ratio have a bearish signal(USA) – a recession indicator.

Many companies business metrics, the micro-economics factors are at very worrying valuations. Many companies with no profits and with high debts, or many businesses and banks with ultra-high debts. All the metrics that exist are under their bonnet out of focus from most economists viewpoints and full analysis, or not known in the public arena.

Inflation measuring yardsticks now have a new companion, the PCE – Personal Consumption Expenditures price Index that excludes Housing, Energy and food cost rises. How convenient for central bankers to change the goal post and make it more complex for analysis, and in comparing real life costs, like for like!!!

At September end 2023, the Chicago FED President (USA) considers we could see stable employment even with interest rates raised high. Usually employment numbers get reduced considerably by now on average timing but it has not done so, yet.

AI will resurrect the Economy and be our saviour is the current slogan in the media!!!!

Most professionals and Wall St feed positive news to the media, or the PR impression they wish to give. Currently, the media is giving us the “magnificent seven” US tech companies to make us feel as if 'all is rosy' scenario. After-all, their stock pricks have been doing well. But, hey! What about the rest? Anyone?

The Bond Market (USA), at the start of October 2023, has publicly proclaimed the end of low interest rates and inflation era. The FED has used that data to consider their next action.

Bond Markets determine the levels of Interest rates, well in advance of any decisions the Central Banks make to raise or lower rates as they follow behind the Bond Market in time (lag behind, many weeks). But bankers proclaim they are in control!!! The Bond Markets follow the actual real world dynamics as they are taking place. But majority of the financial community follow the bankers beliefs. For example, the FED, is apparently looked on as the “oracle experts” and most scrutinise their every word, and try to read between the lines and inform all the world their personal evaluation of this FED double-talk, or even the odd 'straight-talk' that rarely occurs, Their focus is on inflation levels. The markets get affected whether they talk mystically or give it straight.

You then have a knee-**** reaction in the markets usually. Or, in a major critical period or condition, that is used to justify big moves in the markets which is caused by big money players only. Then, there are also other triggers that unfold too, over time ( e.g. China property companies in the background currently, the big Swiss bank collapse a short while back and FTX Exchange fraud scandal or other unfolding ones in the background – all examples of badly managed, corruption or bad metrics).

The Ghost of Christmas Past is concerned with the Christmases from Scrooge's past. Our representation of him here would be 'Wall St'. It reflects Scrooge's memories, old and new. As one memory comes sharply into focus another fades. This also highlights here, how all the majority of investors forget the past true history of related events, and facts as Wall St. PR guides them forward. The Spirit also represents Scrooge's youth episode, and when Scrooge is old so the Spirit will also appear old. Here, that reflects the past booms and recessions.

Currently, in September 2023, “good news” from the FED. No rate rises for now, but maybe one later on, and hints of rates to remain high for awhile. And, “THIS TIME THE CRISIS IS DIFFERENT” some professionals chant. The public have already poured their monies back into the markets. Yet the market big money folks have now dropped the market from the September high!!!!! And, time will tell if the FED (and others) are right or not.

Most economists and bankers are proclaiming “no recession in 2023” and a “new bull market” now! THEY HAVE TOTAL OPTIMISM, so they tell us via various media. Yet the market big money has acted opposite to that PR news given out. The dynamics of different Industry Sectors behave differently too, so the collective total of these activities is an average gauge, at any one time.

Similar pattern of thinking and actions has happened in the past too.

Scrooge ( 'Wall St' ) tries to ignore the vision of his unhappy childhood (past recessions) that the Spirit reveals to him, examples such as 1929, 1978, 1987, 2000, and 2008 (Covid period was a separate and a temporary major episode). In each case “THIS TIME THE CRISIS IS DIFFERENT” has been stated in various ways in the past too. So the public has poured their monies into the markets. In 1929 was the boom period when “suddenly”it resulted in a severe market crash. The professional vested interests had been chanting the Market bull will go on at the time before the crash! The 2000 recession was “due to” the dot.com, i.e. the Internet companies. The 2008 recession was said to be “due to” the subprime mortgage crisis. In each case the economy was considered rosy prior to the crash!!! Nobody looked under the bonnet seriously at all, after all if they had and fully analysed those metrics the conclusions would have been different.

In the story, by Dickens, the Spirit shows Scrooge his engagement to the love of his life, Belle, and his subsequent painful parting from her. When Scrooge becomes upset by these memories, the Spirit says, “These are the shadows of the things that have been. That they are what they are, do not blame me”, said the spirit.

In our equivalent representation Scrooge would be 'Wall St' because they are totally in love with money only – any which way they can milk it from all others.

Just think of all the list of major key factors that are indicating alarm bells in the present period, such as (true for many countries):

Majority of all enterprises / businesses / governments involved have over expanded too fast and excessively;

Entertained too much Debts burdens;

Taken on too much (extreme) big risks;

Silicon Valley Bank (US West Coast) and Signature Bank (East Coast) were major failures (few more followed on too afterwards);

Allowed and encouraged major fraudulent companies (from the regulatory standpoint) and hardly ever scrutinised them at the start and forward into the future. They are only looked at in the late stages and the early stages of a recession;

Highest Extreme margin debt levels;

Heavy complicated entwining of credit swaps and derivatives by every major banks. So when any one of them collapse then it is bought at dirt cheap crashed price, or else, they fall like dominoes and beg for subsides in various forms to be saved or the whole system will collapse (and you pay for that created mess, as taxpayers);

Apparently little long term full fiscal planning and solvency planning via professional business management or else it was very poor or lax for many companies;

Excessive money issuing (QE) to “support” various “situations”, “poor economy”, “recession”, “too big to fail”, “must have subsides to prop-up failing businesses for those job losses from happening”, “badly run businesses”, “banks mustn't fail or chaos”, and for “high risk takers who   “cause” a recession and job losses”. So society pays for their created financial mess, via the central banks or the government directly;

USA GDP has been (and in other western countries), with every period of input of excessive money printing (QE), giving dwindling average levels , compared to periods without QE type of mechanisms periods.

We now have had the highest credit card debts, but that is slowly likely to go down as various costs rises and a recession unfolds.

Markets move in waves. Not in straight lines. Look at various bull market phases and bear phases. Currently we are still down from the all-time highs. We've had a dead cat bounce. During this phase lot of things appear positive! But What will be next?

Fear tools are enacted by the media when the bad effects come out, or the bigger effects are triggered. No possibility to “prevent it” any more. Crash goes the markets! What a surprise, shock!!!! In the past pre-recession periods, such behaviour was just flippantly cautioned by central bank officers, e.g. “ebullient”. The fact they saw red signals but not warn government to do something to sort it, or other authorities at that time.

The same symptoms as in most past recessions are here ONCE AGAIN in the present period. And, as in the past 110-years, market forces has NOT BEEN ALLOWED to naturally play off its own mismanagement of finances, and learn from their own mistakes and handle their own irresponsibilities. Governments bail out many private enterprises as pleaded by them to do so and as advised central banks.

However, if they were made to take their own responsibilities then the next generation would not do it again. And, prudent, ethical practices would be enforced, by law.

What does Debt mean? It means you are getting products or services on a loan when you do not have the money to exchange it with. So you tied yourself to paying it off over a period, which will cost you a hell of a lot more than if you saved up and then did the transactions. Debt is fine for big item purchase, such as a car, house or college fees. If you can't pay up then you default and go bankrupt, and lose possessions to pay debt collectors.

With regards to banks with their huge colossal risky debts that continue to show losses they then like to sell it on. So they get it approved to sell it onto other general investment groups. It frees up that much capital. Then they increase their risky assets without a care, once again instead of being prudent, having improved their capital ratios. Later on they pass on more of the increased risk losses from their books, onto investors. There is a further, more critical reason too (explained earlier, the intertwining). This is a very flawed practice as the investors tie up their free money in taking on losses of other banks (or even governments who take on toxic debts) that can in time create losses for them. At best it means that investors money is not used for real productive use, e.g. investing in new products, and goods and services which would help growth.

When big private companies and banks default or go bankrupt, (a similar position as individuals), they get huge direct or indirect subsides to carry on with their faulty practices and bad management. Ironically, the government usually never take their 'valuables' and collaterals in exchange, plus charge fees and royalties for bailing them out!!!!!!! What a cosy set up system for big business!!! The good get penalised, and the bad causers of the problems get rewarded – let someone else pay for all the chaos they created!!!!!

Unlike Scrooge who really changed (wised up) for the better in the story, in our real life case that is not the case, very sadly.

Same old habits, same old addiction to excessive greed, prudent practices out, excessive risk taking in. Same old unworkable practices and theories remain in use now. And, similarly patterned new fraudulent practices still coming into existence. Governments fail to implement constant policing, detection and heavy penalities applied early on to those who create or encourage it. Just think of a few of the past down right scams by WorldCom, Enron, and HealthSouth in the USA where all the so called financial systems and regulations are considered be the the “best”. So something is not well organised and structured with correct laws to deal with the scams and frauds. When times were good and money was plentiful, these companies’ accounting scandals were easy to paper over and ignore.

Look for the facts and evidence that exists and unfolds, if you know how, and not the rhetoric given by the professionals who have led us into all the past recessions, and the present one. After all, if they were such 'good professionals' then your money would not be put into jeopardy so often, or at all. So, some things are not right, but how? It has to be in how they conduct these practices, fact.

Central banks, economists and financiers critic how 'complex' economics is, and that global events, geopolitical events, big countries economies, or a large company / bank failings are to blame for triggering a recession. Yet these have been the KNOCK-ON EFFECTS of the effects of having applied QE monetary policies, and having allowed run away extreme huge debts to be allowed in the first place. And globally all countries have been following the same practices as the USA.

We repeat the same practices that are flawed, for the last 110-plus-years of the FED's existence. We use fixed theories, vested interests and excessive greed influences all at various levels of industry and government. The end result has had a devastating financial and social effects on the general population and businesses for generations. And it will do so again for generations to come unless real changes are brought about.

Let's face it, Central Bankers, big Bankers and the Economists have NOT EVER SOLVED THIS with their past “solutions”. FACT. We are still facing similar major problems. It is only new inventions, innovations and products that has saved us from going down totally.

Ironically, we think of ourselves as a financial power-house in the West. Yet most of these countries are in the highest ever debts, living beyond their means, and spending excessively with much wastage, as if there is no tomorrow, and no consequences to pay for by the Central bankers and the big Banks determinations.

So most public think and go on with “but this is how it is” blinkers on. After-all, the majority are “not experts”, just naturally ignorant on how these practices are operated and have to trust the so called professionals in these fields, by default. And, most professionals glibly let it be and become herd followers. But, most instinctively also know when something is doggy or not right. Or even when the wrong section of society is penalised (all taxpayers) instead of the true professionals who are to blame and should be made to take full responsibility. They would cry out that it has happened to most countries so 'not our fault, it is happening everywhere'. But, didn't they, overs many decades ago, export to other countries to follow similar dictates, e.g. via the G7, G20, and the World Economic Forum (Davos)?

Currently (by sept. 23) some sectors / stocks had recovered but this been just a dead cat bounce most likely.

That is something you have to figure out from the charts. I have shown some economic pointers / indicators. You get data from, say, 50-100 economists and they will either say bullish from here on, or some will say maybe trouble later, currently.

The media select data given to them or are selective themselves and at key junctures they can say one thing and a little time later the opposite occurs! It happens often, hence the existence of contrarian indicators!!

We all have to rely on others for data to a great extend. But, is that data based on solid empirical data and their evaluations fairly accurate? Or, does it at least points in the right direction? Or is it their opinion only, or flawed judgements? Remember, all data is usually based on some or many assumptions before they make their conclusions as these subjects are not exact science based.

There are very many economic and financial metrics. So which one are important and key, or which ones apply under the given conditions? And there are many projections which are based on probabilities and then one is selected! Whose judgement can you believe and, were they correct often in the past? After all, performance – good or bad – is the big test. Let's face it, all workers get performance reviews. So, why not those in charge, bankers, central banks, economists, company top Execs and financiers too. Very Poor performance, from those who affect the lives of millions and cost us billions, should means loss of position, or even a ban from working in those fields at the worst.

For the average person it is difficult to seriously know for sure which professionals are likely to be correct! After all, you may not know the technical jargon and the possible implications involved.

That is why you have to understand some basics of the given subject to use it well, particularly if you are a relatively inexperienced trader / investor.

Alternatively, you should know how to use charting methods, Gann, Elliot Waves, or other workable methods. Charts are empirical data, based on real time data. Trading also requires money management and discipline for good success. Experienced traders have come up the ladder this way.

Psychology too plays a big part. The market players and the market maker will try to trick you out at a loss, as will the big money traders in the game. So it is worth knowing charting methods!

As a trader, can you evaluate the real time chart data in front of you reasonably well?

Prudent investors (and companies) are the ones who have paid a heavy price over the decades for all the misconceived Western countries policies, e.g. off the gold standard, authorising excessive QE practices and setting very lax laws for financial-banking community. So knowing some of the major factors in play in the financial world can give the professionals an edge to survive better, and the private investor.

The future is still to come. It is slowly unfolding before our eyes. A case of Deja Vu.

WHAT DO YOU THINK IS THE GHOST OF CURRENT FUTURE GOING TO BE?

Pablo Gil, IG Market analyst (3/10/23), thinks we will hit a recession in 2024. Jim Richards and Harry Dent think it is already in progress.

There are very many bankers, economists, and financiers who have written good books on the inside practices of the financial-banking-economic world (or on utube). You should look out for some and get familiar with what is going on as the media will never give you the real truths but use the PR of the universe of vested interests.

See my past blog “The Way of The Real Markets” that compliments this article with other data viewpoints too.

I hope this gives a good overview and understanding of the financial-world-game in play, and the many pitfalls that exist which do not get resolver ever.

[THT]

Short comment today:

I've been expecting some "sort" of event that causes "issues" in the generic economy going into Oct 2025

This should be a stock market swing LOW turning point - there's other issues for 2026, where the 666 week "beast" cycle turns up and also the 18 year property cycle crash low too

The 66 week "beast" cycle last hit from memory May ish 2013, as its a 12 yr and a bit month cycle it rolls into early -mid 2026 - usually causes wild price fluctuations (check out 2013)

Don't write off the bigger cyclic picture we are in, this cycle has a huge win/hit rate above 90% that covers over 200 years of stock market price data and history and we should see the USA market(s) MASSIVELY UP into 2034

THT

[skyreach]

Yes, there are may time-sized cycle. I will bear in mind your data. It is very good.

This is going to be an interesting year forward!

All the best.