在不明朗因素下, 分散投資就是啦 !
kingworldnews.comWith the mainstream media outlets all discussing many global stock markets trading at or near all-time highs, today Michael Pento warned King World News about the corrupt and dangerous endgame all investors now face. Pento also discussed the immediate dangers which investors are facing.
However, we all know that while many made a
monetary contribution, others just dumped a bucket of water on their
head under the guise of helping the cause, simply because everyone else
was doing it. In social media circles, this is known a slactivism. A
pejorative term that describes “feel-good” measures, in support of an
issue or social cause, that have little or no practical effect other
than to make the person doing it take satisfaction from the feeling they
have made things better.
And in a similar, but far
more dangerous fashion, the Fed is engaging in its own form of
“slactonomics.” It forces new dollars into the economy in order to stoke
inflation, with the hope that rising asset prices will give the
illusion of a booming economy. Therefore, the Fed’s specific Ice bucket
challenge is: Put your cash in stocks, bonds and real estate assets; or
watch your money earn no interest while it loses its purchasing power
against those same assets. And, just like the herd mentality of humans
causes us to dump ice water on our heads, the lemmings in the market are
loading up on stocks, despite the fact that equity valuations have
become far removed from the underlying anemic fundamentals of the
economy.
But here is the catch --
the Fed thinks it can escape its huge marketing campaign that involved
years of market manipulation with impunity. But, it has made an
egregious miscalculation. Wall Street has completely bought into the
fantasy that the Fed can end its $3.5 trillion dollar QE programs and
also normalize interest rates after having them near zero percent for
over six years without hurting underlying GDP growth or having a
negative effect on equity market prices.
However, one of the
unintended consequences from normalizing interest rates is the effect on
the U.S. dollar. The dollar is already rapidly rising as the Fed winds
down QE3, and just imagine how high it would surge if interest rates
were to rise here in America.
Beginning in early 2009,
asset prices in the U.S. increased in tandem with that of the developed
world, as most global central banks depreciated the intrinsic value of
their currencies in concert. However, we now see the dollar rise and
asset prices in the U.S. begin to fall (S&P Case-Shiller Home Price
Index now down two months in a row) as the Fed winds down its latest
$1.7 trillion dollar QE program and sets the table for a lift off from a
zero percent Fed Funds rate in the first half of 2015. In fact, the
dollar index has already increased from 79 in May, to over 82.6, which
is a 52 week high.
The real estate market is
starting to factor in the end of QE and the rise of the dollar, but
equity prices seem to be still in a state of denial. The Fed’s Ice
bucket challenge seems to have frozen investors’ brains into believing
the exit from QE will be a smooth one for equities and the FX market.
While it is true that a
strong and stable currency is the cornerstone of a healthy economy, it
is also true that the journey from a massively manipulated currency to
one that is subject to free-market forces is never a smooth ride. The
Fed cannot tighten monetary policy unilaterally without causing massive
disruptions in currency valuations.
The BOJ continues to
monetize 7 trillion yen per month of Japanese assets and the ECB is
expected to begin its own substantial QE program very soon. If the U.S.
attempts to raise rates while the developed world is printing money to
keep rates low, the dollar will skyrocket against our major trading
partners. A surging dollar will crush commodity, real estate and equity
prices, as it causes the reporting earnings of U.S. based multi-national
corporations to plunge.
This is just one example of
the volatile and disruptive ramifications associated with the
normalization of interest rates; many of which appear to be out of the
Fed’s risk calculations. In a very short time from now asset prices
should undergo a sharp correction in an amount north of 20 percent
because of the end of QE and the tremendous volatility in the U.S.
dollar.
But, the Fed’s number one
fear is deflation. Ms. Yellen and Co. will do everything in their power
to make sure inflationary expectations are permanently anchored into the
U.S. economy.
Therefore, the Keynesian
mind-warped Fed will interpret the surging dollar and plunging stock
prices as a catastrophic threat of deflation—even though the rebalancing
of capital and asset prices are the only viable solutions to our
economy. And this is why, in the final analysis, the Fed will not
venture very far into its tightening cycle—if it even attempts a serious
effort to raise rates at all.
