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Wealth Building Strategies

Here’s What’s Next for China!


Posted by Mik Burnick - MoneyandMarkets

on Monday, 15 May 2017 14:24

Chinese stocks have dropped for four straight weeks to their lowest levels in seven months, following a government crackdown on financial leverage.

In fact, the Chinese policy-makers’ crackdown on leverage has already erased about $500 billion from the value of the Red Dragon’s stocks and bonds.

There’s no doubt in my mind that China’s credit boom was getting a little out of control. Take a look at this Bloomberg Intelligence chart.

WAVE-CHART

 

 

 

 

 

 

 

 

 

 

 

 

 

You can clearly see that since 2008, China’s total debt as a percentage of GDP has skyrocketed – from about 160% in 2008 to almost 260% in 2016.



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Currency

Live From The Trading Desk: Canadian Dollar Front & Centre


Posted by Michael Campbell & Victor Adair

on Monday, 15 May 2017 07:54

Victor on some data that just came out about the Canadian Dollar that shows massive negative sentiment on the Canadian Dollar.

....alsoL Featured Guest Tyler Bollhorn on Interpreting What the Market is Telling Us

Screen Shot 2014-10-03 at 10.43.49 AM



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Timing & trends

An Impending Economic And Financial Disaster


Posted by Dave Kranzler - Investment Research Dynamics

on Monday, 15 May 2017 07:27

vixxx

You’ve probably heard/read a lot lately about the VIX index. The VIX index is a measure of the implied volatility of S&P 500 index options. The VIX is popularly known as a market “fear” index. The concept underlying the VIX is that it measures the theoretical expected annualized change in the S&P 500 over the next year. It’s measured in percentage terms. A VIX reading of 10 would imply an expectation that the S&P 500 could move up or down 10% or less over the next year with a 68% degree of probability. The calculation for the VIX is complicated but it basically “extracts” the implied volatility from all out of the money current-month and next month put and call options on the SPX.

The graph above plots the S&P 500 (candles) vs. the VIX (blue line) on a monthly basis going back to 2001. As you can see, the last time the VIX trended sideways around the 11 level was from 2005 to early 2007. On Monday (May 8) the VIX traded below 10. The last time it closed below 10 was February 2007. The VIX often functions as a contrarian indicator. As for the predictive value of a low VIX reading, there is a high correlation between an extremely low VIX level and large market declines. However, the VIX does not give us any information about the timing of a big sell-off other than indicate that one will likely (not definitely) occur.

In my opinion, an extremely low VIX level, like the current one, is signaling an eventual sell-off that I believe will be quite extreme.



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Gold & Precious Metals

BREAKING: Chile Silver Production Down Stunning 26%


Posted by Steve St. Angelo - SRSrocco Report

on Monday, 15 May 2017 07:23

According to the most recently released data from Chile’s Ministry of Mining, the country’s silver production declined a stunning 26% in the first quarter of 2017.  This is a big deal as Chile is the fourth largest silver producing country in the world.  The majority of Chile’s silver production comes as a by-product of copper production.

Chile is the largest copper producer in the world, by a long shot.  Last year, Chile produced 5.5 million tons of copper compared to Peru, who took a distant second place at 2.3 million tons.

Regardless, Chile’s silver production declined to 283.4 metric tons (mt) Q1 2017 versus 383.8 mt during the same quarter last year.  Again, this is a huge 26% decline in the first three months of the year:

Chile-Silver-Production-Q1-2016-vs-2017

Chile’s silver production declined 101 mt (3.2 million oz) Q1 2017, due to a strike at the country’s largest copper mine, Escondida, as well as a drop off in copper production from many other producers.



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Bonds & Interest Rates

How to Drink from a Firehose


Posted by John Mauldin - Mauldin EconomicsMauldin Economics

on Monday, 15 May 2017 07:20

Rosengren & Carney
Draghi Heckled
Treasury Hat Trick
Stop Drinking Now
A Brief Commercial
Orlando, Washington DC, St. Thomas, and SIC 2017

Basic economics tells us all resources are scarce, but our demand for them is not. Hence we need methods to allocate the limited supply of each resource. A significant part of economics is the study of those methods.

One exception to the rule, though, has developed in the last few years: The amount of information available to us is practically unlimited. Open your internet browser, and most of that information is just a few clicks way. But if media industry profits (or lack of them) are any indication, demand for that information is anything but infinite.

One problem with information is that much of it is biased. I know, for instance, that when I read a certain economist commenting on recent data, he is going to put a spin on it that reflects the particular economic soapbox he prefers to stand upon. And while I will occasionally take time to read such people, just to kind of keep up on “influencers,” they often don’t really add much to the conversation.

Then there are those who are always delivering fascinating surprises. They do enormously deep dives into arcane data and tease out insights of real importance – connections to other ideas or solutions to challenging problems – they come up with new and different way of looking at the world. I don’t know what you call them, but “seekers of truth” is how I label them. They are just as curious as I am about how the Grand Puzzle all fits together, and they are describing the pieces as viewed from the another side of the table. I value these thinkers. (Sitting here thinking about it, I realize that I need to put a list together of some of my best resources. Some of them are expensive to access; but, surprisingly, more and more of them are either cheap or free. I will get around to that project and make it available to you one day.)

Back to the main plot line. What is scarce isn’t information itself (we’re all nearly drowning in it) but the ability to process it into something useful. All of us, including me, are still figuring out that part. And the creation of really valuable information takes time. I have had a vivid demonstration of that fact myself these last few weeks as I try to launch a new business andprepare for the upcoming Strategic Investment Conference. You cannot believe how much personal preparation goes into talking with every one of the speakers and figuring out how to blend their ideas so that something coherent emerges from our shared experiences at the conference.

And then there are the challenges of keeping up with my regular writing and research andputting in the many hours it takes to be a dad and granddad, always in the middle of a crisis or two. Life is what actually happens after you make careful plans.

170514-01

My own particular approach to drinking from the enormous information firehose has a couple of key features.



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