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Economics

How We Experience Time, Inflation Edition

    To hear an audio spoken word version of this post, click here.   The Consumer Price Index print today of 6.2% is the highest print we have seen…

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This article was originally published by The Big Picture

 

 

To hear an audio spoken word version of this post, click here.

 

The Consumer Price Index print today of 6.2% is the highest print we have seen this year. I wouldn’t be surprised if this was the highest print we see for this entire cycle. There has been enough ink spilled on this that I don’t want to add to the noise1, or repeat myself. Instead, I want to discuss a few reasons why we seem to have such difficulties with the concept of “transitory.”

We may understand it intellectually, but we find it more difficult to manage emotionally. The French mathematician and philosopher Blaise Pascal summed up our circumstances by observing: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”

It is even worse in the modern era. The forces behind our “inability to sit quietly” include, the 24/7 news cycle, Recency Effects, Social Media, even FOMO. Perhaps most significant of all is the concept of Time; more specifically, the way we experience time in the modern era.

There is the Here & Now — that’s pretty much it.2 Our memories are fallible, nostalgia-tinged recollections, error-prone, and self-edited to make ourselves look and feel better. The future is unknown and unknowable, mostly wishful thinking that too often fails to anticipate the (in hindsight) obvious, while always completely missing the unexpected.

And, we just barely exist within those parameters. We are hardly present, easily bored, always looking for a distraction. And the “right now” is the best we can hope for.

Is it any surprise we have a hard time with the concept of transitory?

Our time experiences were not always this way. In his book, Four Thousand Weeks,3 Oliver Burkeman explains that the very concept of time was unknown by most people a mere few centuries ago. Medieval farmers didn’t experience time as “an abstract entity — as a thing,” instead they followed the rhythms of Nature. There were seasons, governed by the movement of planets and stars, or the Gods, depending upon your schooling. Day and night, Winter and Summer. There was no sense something might be amiss, but not to worry, it might soon pass after some duration (or not), and then we can get back to normal. The world just was.

That is not how we operate today.

Today, we form an idea that something like inflation might be transitory, could well last 6 or 9 or 12 months, then fade away. We understand the concept of disrupted supply chains and pandemic re-opening. We place this idea within a broader intellectual framework, imagining how it will impact Global Trade and the Federal Reserve and the Bond Market, and even the White House. We read up on it, research it, crunch the numbers, do the historical comparisons. We fully grasp the idea and file it away in our own memories.

All of that took place on a random Monday in March.

The next day brought other data consistent with it. Then the next day, some data was higher; the next day lower. The markets jinked and turned, the newsflow accelerated. Every day after, there was some new hot take, another meme, a fresh Twitter thread. Home price bidding wars! Used car prices! Quarterly earnings saw CEOs mention inflation. Google Trends saw a big uptick in inflation searches. Lumber prices rose (then fell), as did Coal and Steel and Oil. Meat prices rose just in time for Thanksgiving. Endless anecdotes of rising prices. Do you know what it costs to buy 12 gallons of milk a week? No, why the hell should anyone know that?

Day after day, an endless firehose of news and punditry and data and noise.

All of which, not coincidentally, actually confirm the original thesis that inflation caused by disrupted supply chains and vaccinated post-pandemic reopening would send prices spiking before they fell back to normal.

Here we sit, in the Here & Now, with the most recent CPI data out, and at 30-year highs, there is nothing in the data that does not also confirm that thesis. We understand all of this, and yet we still — STILL — lack the ability to sit quietly in a room alone.

 

 

 

Previously:
Return of the Inflationistas (May 14, 2020)

The Inflation Reset (June 1, 2021)

Deflation, Punctuated by Spasms of Inflation (June 11, 2021)

Inflation

 

 

_________

1. We have repeatedly discussed why I think the inflationistas are wrong, that they misunderstand the general state of inflation, and that some of them are motivated by partisanship.

2. David Nadig makes the case that we experience the world on a 200-millisecond delay, as that is how long it takes for sensory inputs to traverse the distance of our nerves and be received and processed by the brain. This makes  the Here & Now actually the Here & 200 MS ago, but for the purposes of this essay, we shall stick with “Now.”

3. Assuming you live to be 80, you have just over four thousand weeks in your lifespan.

 

 

 

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The post How We Experience Time, Inflation Edition appeared first on The Big Picture.




Author: Barry Ritholtz

Precious Metals

These 29 Analysts See Silver Going Up Dramatically This Decade

More and more analysts are forecasting a significant increase in the price of silver over the balance of the decade and below are their projections.
The…

More and more analysts are forecasting a significant increase in the price of silver over the balance of the decade and below are their projections.

An original article by Lorimer Wilson, Managing Editor of munKNEE.com – Your KEY To Making Money!

1. Goldrunner: $800 to $1,200 by 2025; $5,300 by 2030/32

“My fractal analysis chart work on Silver points to a potential price for Silver of something like $800 to $1,200 a bit later than 2025 and $5,300 by the end of this decade or early in the next based on Gold reaching Jim Sinclair’s forecast of $80,500 and using a 1 to 16 ratio of Silver to Gold.” (personal email)

2. Keith Neumeyer: $300 to $1,000

“Silver is an extremely critical metal – a strategic metal – and the investment community will figure it out eventually” and, when they do, he believes the white metal could reach the $130 level and, if gold were to hit $10,000, he could see silver at $1,000. Source

3. Hubert Moolman: +$675

“The 70s pattern is very similar to the pattern that currently exists. Therefore, I do not think it is wishful thinking that silver will reach the target of $675 as a minimum.” Continue reading…

4. Egon von Greyerz: $600 to $1,000

“If we assume $10,000 for gold and a gold:silver ratio decline to the historical average of 15, we would see a silver price of $666…If we look at silver adjusted for real inflation based on ShadowStatistics, the $50 high in 1980 would equal to $950 today so silver at between $600 and $1,000 is not an unrealistic targetContinue reading…

5. Satori Traders: $50 by 2023; $1,350 by 2028

“My long-term forecast for Silver is $600 per ounce.” Source

6. Gary Christenson: $100 to $500 in 5-7 years; +$500 by 2030

“Silver prices for the next decade are dependent upon many unknowns but a ‘more of the same’ financial world suggests silver prices will rise toward $100 in the next 5 – 7 years. A more aggressive chart interpretation shows prices for silver rallying toward $200 – $300. Indeed, if the powers-that-be create or can’t stop hyper-inflation of the dollar, $500 silver will look inexpensive by the end of the decade.”   Continue reading…

7. Peter Krauth: $300+

‘I think silver’s ultimate peak could be $300, and I won’t rule out possibly even higher.” Source

8. David Smith: $166 to $250

“[If my forecast of $10,000 gold is realized, as I think it will then] you could see $166 silver, and if…[the gold:silver ratio] drops down to 40:1, which is not out of the question, [you could easily see] $250 silver.” Source

9. Mike Maloney: $100 to $200 in 5 years

“Investment demand for silver bullion has risen sharply and, with the silver market being so tiny, it doesn’t take much investment to have an out-sized impact on its price. Silver is dramatically undervalued and represents a very compelling investment opportunity. My prediction for silver 5 years out is $100-$200.” Source 

10. Jason Hamlin: $169 by end of 2025

“The silver bull has awakened and when silver finally breaks out, the move tends to be very explosive! I think we could see silver climb to $169…by the end of 2025.″ Source 

11. Nick Giambruno: +160 

“Once the dollar starts to lose its value in earnest…people will panic into precious metals just like they did in the ’70s and ’80s, and much of that money will make its way into the tiny silver market (roughly 1/10th the size of the gold market). This will cause the price to spike above $160. It’s a predictable pattern. Bottom line, the stars are aligned for a silver price spike for the record books and now is the perfect time to get in.” Continue reading…

12. Chris Vermeulen: $90 to $550

“We believe silver will soon…move up to well above $85 per troy ounce. Ultimately, we estimate it will likely top somewhere between $90 and $550.” Continue reading…

13. CoinPriceForecast.com: $84.81 by end of 2020; $100.12 by the end of 2032

“Silver price will hit $30 by the end of 2021 and then $40 by the end of 2023. Silver will rise to $50 within the year of 2024, $60 in 2026, $70 in 2027,   $75 in 2028, $80 in 2029, $90 in 2031 and $100 in 2032.” Source

14. Jeff Clark: $30 in 2021 to +$100 in 5 years

“My most confident prediction is that over the next five years, the silver price is going to increase a minimum of $100.” Source

15. Metals Focus: +$100

“See silver prices pushing “well above” $30 an ounce.

16. Paul Mladjenovic: +$100

“Triple-digit silver—$100 or more—is a possibility in the near future.” Source

17. David Morgan: $100

“Assuming a $4,000 gold price target in two to three years’ time, which is roughly a 100% increase from current levels, and assuming a normalization of the gold-silver ratio to 40-1, then silver should be trading at $100 by the time gold doubles in value.” Source

18. Gov Capital: $70 to $95 in 5 years

“Based on our custom algorithm we predict that silver will range between $70 and $95 in 5 years time.” Source

19. Mark O’Byrne: $50 to $100

“It is important investors focus on gold and silver’s value as hedging and safe haven assets rather than their nominal price highs in dollars.” That being said he believes silver could rise to between $50 and $100. Source

20. Dumb Money: $62

“History does serve as a guide for what’s normal and, based on the simple historical average, the price of silver should be about $62.” Source

21. Andrew Hecht: +$50

“Silver’s consolidation period and tightening price ranges could be the prelude to a new record high above the 1980 $50.36 peak in the COMEX futures market.” Source

22. CPM Group: +$50

“We fully expect silver to hit a new all-time high above $50.”

23. Lorimer Wilson: $40 to $60 by 2025

Every time the gold:silver ratio has reached at least 82:1, it has led to major rallies in the silver market. For example, in mid-2003 the gold:silver ratio peaked at 82:1 and over the next 5 years, silver went up 320%; at the end of 2008 the gold:silver ratio again peaked above 82:1 and, over the next 2 years, silver went up 453%. In early 2020 the gold:silver ratio again topped 82:1 and silver has already gone up by 124% since then so, based on history, silver could easily advance to somewhere between $40 and $60 per troy ounce.

24. Eric Fry: +$50

“When this ballgame ends…silver will be topping $35 and an extra-inning affair would not surprise me, lifting…the silver price to a new all-time high above $50.” Source

25. Bank of America: $35 in 2021; $50 in medium term

“$35 silver is feasible next year, but…could rally to $50 in the medium-term.” Source

26. Tom Fitzpatrick: $50

“A move back once more towards the $50 area is a very realistic target for Silver – and not necessarily something that will take years to materialize.” Source

27. Jim Willie: $50

“A quick march to the $35 mark, then to $50 in….a few months, not a couple of years.” Source

28. Don Durrett: $50

“Once we get over $30, we will run to $35 for one final pause. Then it will be off and running to $50 and an ATH. Get ready. It’s coming.” Source

29. Lawrence Williams: +$35

“While I still think $50 silver is perhaps just about out of sight, the metal can certainly move up to perhaps $35 or more given the current momentum.” Source

 

 

The post These 29 Analysts See Silver Going Up Dramatically This Decade appeared first on munKNEE.com.





Author: Lorimer Wilson

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Economics

The Good, The Bad, & The Ugly

The Good, The Bad, & The Ugly

Authored by Sven Henrich via NorthmanTrader.com,

“Sometimes I wonder if the world is being run by smart…

The Good, The Bad, & The Ugly

Authored by Sven Henrich via NorthmanTrader.com,

“Sometimes I wonder if the world is being run by smart people who are putting us on or by imbeciles who really mean it”

– Laurence Peter

After months and months of sticking to a transitory narrative despite ever rising inflation data Jay Powell finally caved yesterday and retired the word transitory. What a colossal embarrassing blunder. Once again a Fed Chair being in total denial about reality. Like Ben Bernanke in 2007 declaring subprime contained and not a threat to the economy, persistent inflation is suddenly a risk to the economy when it supposedly wasn’t all year long while the data clearly kept saying that it was.

The Fed not only got inflation wrong but by extension they got policy completely wrong and I find myself very much validated here: They’ve totally overdone it on the liquidity front as they kept printing like mad men into an inflationary environment that they denied existed. And it’s not only the Fed. Combined with the ECB both central banks have added a combined $3 trillion in liquidity just in 2021 into an inflationary environment no less. Mad. Which means they exacerbated a massive asset bubble exacerbating wealth inequality when the right policy should have been to taper sooner. And now they may be forced to slam the foot on the breaks, a point I made on CNBC today:

What’s this all mean for markets in the here and now? Since I promised some charts let me give you the good, the bad, and the ugly.

Let’s start with the good:

Let’s recap key technical developments as the context of the market action in oh so important. In late October I highlighted the case for “Make Bears Cry” the infamous broken trend and then new highs to retest the broken trend which was first identified in late September. Bears did indeed cry as everything broke out to new highs including aggressive rallies in small caps, the $NYSE, $DJIA and $SPX and $NDX of course.

On November 16th in the NorthCast I outlined an inverse pattern on $SPX with the technical target of 4740. This target not only got hit rather precisely but it served as a key reversal pivot again off of the trend line we’ve been watching all year long:

Note how stubborn and persistently $SPX keep tagging the trend line from the underside with the final highs coming on a very pronounced negative divergence.

As the sell off ensued I highlighted in MarketWatch the September highs, i.e. the 4550 zone, as a key price zone bulls must hold to continue to be constructive for year end. This level was almost reached yesterday and has so far held as support. But watch this price zone closely in the days and weeks ahead, for should bulls lose this zone things may get a lot uglier still.

Note the same applies to $NDX:

Whereas $SPX has broken its trend in September, the $NDX trend remains intact and the index has remained incredibly resilient. As long as the trend remains intact tech is in a good position to set up for a year end rally. $NDX also remains above the September highs and as long as these previous highs hold as support the price action can be constructive as a back test. Note also how precise the trend has remained both on the resistance as well as the support side in the past year:

Now to the bad:

Note in the chart above the $VXN, the underlying volatility index, has broken out and in the lead up to the November highs it kept warning with rising volatility prices, that’s the same event we saw leading up to the February 2020 top.

We can observe a similar even more pronounced breakout in $VIX a pattern that held its uptrend throughout 2021 which I again highlighted in “Make Bears Cry”:

While bulls can hope to compress the $VIX again for a backtest into late December the genie looks very much to be out of the bottle.

Another big issue is that ever more highs in $NDX this year have come on an ever weakening cumulative advance/decline picture and in recent days in particular that indicator has completely fallen off the cliff:

This again speaks to the narrowing of leadership of a few stocks that are holding up the index. Note the advance/decline was falling off the cliff even as $NDX made new all time highs on November 22. Indeed the intermittent peak was in early November way before Omicron was even identified. To highlight the extent of the damage beneath: The average Nasdaq component has experienced a 41% drawdown in 2021, 19% on the $SPX. So while we all get the impression of a massive bull market the underlying picture is not so pretty. The everything rally which sees many stocks getting hammered.

Which brings me to the ugly.

In the lead up to the November 22 highs on $SPX and $NDX many other indices did not follow suit as tech was leading driven by a few stocks. This is precisely the same development we saw in January 2020 going into February 2020.

Indeed, the September high backtest support I mentioned in $NDX has already broken in many indices, such as the $DJIA the broader $NYSE and also small caps which just got pounded dropping 12% in just 3 weeks one of the most aggressive drops from all time highs in history:

Indeed 2 out of the 3 previous similar sizable sell offs of this magnitude from all time highs came in March 2020 and in August 2007 just as the asset bubbles began to crack.

The key issue: Trapped supply above as many traders chased the breakout and are now finding themselves under water. Note $IWM is back at February levels.

And this same trapped supply issue with failed breakouts can be observed in the $DJIA and the broader $NYSE:

What all of these charts highlight is that there has been tremendous corrective damage inflicted in individual stocks far beyond what the main indices indicate.

And unless everybody owns only $SPX and $NDX index funds and only the winning stocks it appears people have gotten hammered hard somewhere in individual stock holdings. A question arises. If everybody has piled into stocks like never before:

Why are so many unhappy?

Consumer sentiment per University of Michigan shows levels commensurate with the March 2020 crash lows. Both can’t be true. So there’s something big time amiss here. And unless all the inflows are in the winning stocks only there is pain out there that is masked by the indices.

Unhappy consumers are not happy voters and this has to be a concern for Democrats going into mid term elections next year.

And it is consumers that have been hit the hardest by rising inflation exacerbated by the Fed’s reckless printing:

None of this does not preclude a Santa rally from oversold conditions still, but as we saw in early 2020, massive divergences in index performances leading up to new highs are a major warning sign, and the underlying volatility components in all of these charts, including the $VIX, show breakouts suggesting the genie is out of the bottle and will make for a much more volatile 2022.

Indeed I could even point to similar monthly candle in November as we saw in January 2020:

Back then the initial news of a new virus was very much ignored and $SPX and $NDX went onto new highs while financials and small caps did not. Sound familiar?

I’m not making a crash call here, but it may serve to remind the the S&P 500, despite the recent pullback, remains above its quarterly Bollinger band and remains far disconnected from even a basic quarterly 5 EMA reconnect:

Periods of excessive printing have seen such disconnects before, but the reconnect is coming, either this quarter or likely during the next quarter.

While in all of history this Bollinger band was resistance, the liquidity excess of 2020 and 2021 has turned this Bollinger band into support. How long this historical aberration continues very much depends on artificial liquidity injections continuing. The short term good news for bulls may be also this historical fact: Since 20009 all major corrections did not manifest themselves until QE programs were ended and corrections were ended with more liquidity coming in. In this sense it may be argued that the first larger correction will not come until the Fed actually ends QE.

But then we’ve never seen such a price and valuation disconnect from the underlying economy in history while we see the Fed’s credibility suddenly very much shaken. After all it’s all about confidence.

*  *  *

For the latest public analysis please visit NorthmanTrader and the NorthCast. To subscribe to our directional market analysis please visit Services.

Tyler Durden
Wed, 12/01/2021 – 17:01








Author: Tyler Durden

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Economics

Commodities and Cryptos: Oil pares gains post OPEC meeting/EIA report, Gold rebounds, Bitcoin higher post Gensler

Oil Crude prices pared gains after the EIA reported a small headline draw with crude inventories, but more importantly showed a massive build with gasoline…

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Oil

Crude prices pared gains after the EIA reported a small headline draw with crude inventories, but more importantly showed a massive build with gasoline and diesel stockpiles, a 100,000 bpd increase with US production, and a minimal rebound with exports. Nothing to really get excited from the EIA report, so WTI crude should consolidate here until tomorrow’s OPEC+ decision on output.

WTI crude returned to session lows after CDC identified its first Omicron case in the US. It was inevitable that Omicron would make it to the US, but when you combine how quickly it appears to be spreading across South Africa, energy traders are getting more concerned about the short-term crude demand outlook. With just under 30% of the US population being unvaccinated, nervousness about large parts of the country entering lockdown mode could grow if Omicron is proven to be much more transmissible than delta. 

Crude prices may get a boost from OPEC+ delay in delivering an increase in output, but the Omicron variant will likely wreak havoc over the short-term demand outlook.

Gold

Gold is struggling here as Wall Street can’t agree on a clear path for the dollar following Fed Chair Powell’s hawkish pivot and mounting fears Omicron might disrupt growth over the short-term. Fed rate hike expectations are constantly moving as traders grapple with the question, can the Fed really signal rate hikes are imminent as the economy potentially faces another COVID wave?

Gold prices are facing plenty of technical resistance from the three key (200-, 100- and 50-day) SMAs and the psychological $1800 level.  Real yields are rising today and that is another reason why gold can’t really benefit from the risk-off Omicron environment. Gold will likely consolidate here until the dollar takes a clear path.  

Cryptos

Bitcoin is bouncing back alongside risky assets as crypto traders grow optimistic regulators will soon form crypto-banking guidelines that could help deliver the next wave of investment. Bitcoin extended gains after SEC reiterated calls for cryptocurrency exchanges to register with the SEC. 

The cryptoverse is stuck in wait-and-see mode over what inflation will force the Fed to do and with how the regulatory environment will look. Cryptos are the top performing asset class again heading into year end, so any fears that the Fed may have to accelerate their rate hiking plans could prove to be short-term negative for Bitcoin and Ethereum.  





Author: Ed Moya

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