Tuesday, October 14, 2014

Three Graphs. Three Stories.

Anyone have a simple answer to the question: "What is going on in the markets?"

These are all 1-year graphs from MarketWatch.

Here is Oil.  What happened with Oil since late June?  Are ISIS and Ukraine the drivers?  Or is the global economy shrinking?  Or all of the above?  Here is one opinion from CNBC:
The unrelenting rise in U.S. shale is colliding with a diminishing outlook for consumption...


Here is Gold. It usually follows oil (or moves in parallel).  But in the past two weeks oil continued down and Gold up.


And here is the S&P 500, where many have called a bubble for the past few months.  Even down hard these past two weeks, it is still up for the 1-year period.


The doomsdayers are saying the Fed will do more QE because they are not getting the inflation needed to maintain the illusion of 'all is well.'  They need 3+% inflation to keep the US out of default, and the talk is we are in deflation territory now.  Deflation means loan payments are harder to make.  And Obama specifically, and his voters generally, are sub-prime borrowers who have no plans to pay all $17T+ back.

Wouldn't it be cool if the US government and its citizens shared the same economic interest of a stable currency that eliminated inflation, deflation, and the business cycle?

Oh, I almost forgot.  A few folks who are wicked smart on economics have warned that the road to high inflation and economic collapse will start with a deflationary period.  So, if they are right, enjoy that cheap gas while you can.  Maybe a road trip is in order?

UPDATED 15 minutes later....

I think this explains a lot.  ZH: Put:Call Ratio. 

Scary.

No comments: