THE TALE OF TWO MARKETS:
Chart experts like “me” tend to look at history charts and trend lines. Some experts in my tribe say there is no bubble. I say we are in new economic history. Why?
Well first we have had a global FREE MONEY decade from central banks. Enormous sums – trillions – we applied with FREE money to stock manipulation and asset class manipulations. Stock buy backs and unregulated ETF speculations on asset prices.
New multiples never seen before give chart experts pause to consider a 2018 correction as the Fed tighten’s monetary policy. A double edged sword of never seen before action to raise interest rates world wide and sell trillions back into the markets. Can the markets absorb the double whammy?
Fueled by apparent inflationary early possible success, it might.
Oceans of ETF passive trading with software controlling market price. Any correction is now a software dollar cost averaging in the manipulations that reward rising earnings and punish falling earnings – SEE S&P for rising earnings rewarded stock and bond wealth. See GE and possibly Apple in crises from software terrible executions and hardware failures and missing iPhone X sales potentially becoming a reality report.
As a whole the WHATS NEW – oceans of super money pools software modeling down cycling until their is a full on cascade ( Bubble Burst ) which really requires a MAJOR EVENT to trigger it.
Minor events that triggered old chart models I and others use may not apply in this new market zone.
I have stated if we get through a Spring correction that is moderate or not at all 2018 should record the all time best longest boom globally in history. A great year. Is there risk to that outcome. You bet. All concentrated in the Spring after the fourth quarter great consumer buying wave dissipates.
The first quarter is going to be tepid driven by weather and climate change which is also new. WINTER we have not seen the worst of it yet.
So globally we have Australia in record heat at over 120 in Adelaide and 120 in Sydney. WE have record cold and serious record storm damages world wide this WINTER. Economic activity in the US and world in the winter first quarter is going to be tepid.
Tax stimulations will first go to stock buy backs in our opinion a trend heating up right now in all financial centers. If the record stock buy backs of 2017 – driven by this historic cheap money – beating that next FED interest rise – unfold as expected – to all time new records – old CHART experts like “me” will fail in predictions on risk due to the SUPER MONEY waves available to manipulate prices in asset classes from stocks to all commodities upward.
Which has some economic theory value if inflation is on the march and these Super Money pools deploy capital to enjoy profits from the inflation next wave world wide.
So its new.
Never seen before.
A digital casino capitalism that has price zones manipulated by AI and software never seen in markets before. As trillions are moving from active with human decision makers ( traditional ) to markets into software with no humans and AI making the price manipulations we have a new type of casino capitalism.
No prior experience can advise anyone on how the software will resolve economic imbalances. if a serious CASCADE events occurs my caution to my readers is – and REMAINS – the software which I’m so familiar with as an award winning programer in industry – lacks formulations to resolve LIQUIDITY EVAPORATIONS. No one is talking about CASCADE ( software AI triggers to all sell orders ) where buy orders EVAPORATE in a digital power hour and the AI CASCADES to protect itself but as LIQUIDITY EVAPORATION is so rapid with AI software interconnections we have a new reality globally.
I see CASINO CAPITALISM until the G 100 -RE- REGULATE DIGITAL MARKETS – now ripped by incident not yet accounted for in IP valuations – from rampant epidemic contagion of DIGITAL THEFT and institutional hacking – state and sovereign nation hacking – Harden warfare software thefts and a break down of rule of law – in the global landscape – as a risk never seen before. While liquidity remains sufficient due to moderate correction and AI determined buying decisions we have no sustained downturns and 2018 is rip roaring.
If a major events create digitals CASCADE a new never seen experience to software and AI failing to accommodate in core program solutions for LIQUIDITY EVAPORATIONS and CASCADE ENTRENCHES the result may and can with DEBT SUPER BUBBLES and corresponding in bond market defaults – create a financial perfect storm for the destruction of the World War II economic system model. I see that risk as potential.
Time is the missing element.
If sovereign nation Debt reschedules because we have time using SUPER BOND THEORY, set forth in this blog, we have a liquidity reset fo the underlying bond markets. If we don’t have time to effect SUPER BOND resetting – I feel – the risk from bond defaulting is the highest remaining current risk. It is all in the bond market.
Central bank error in normalizing markets we advise is well considered to advance over ten years and not 24 months. Time again is the required element.
If we lack TIME itself to a CASCADE and LIQUIDITY EVAPORATION EVENT all bets are off to the present SUPER BUBBLE. When experts suggest there is no bubble they are wrong and they are right.
There is a SUPER BUBBLE In debt world wide and it is only accelerating.
There is a SUPER BUBBLE in asset class valuations via AI and software price manipulations. This is NEW economics never seen before.
The outcome is an experiment to preclude a system melt down and a global depression.
The problem is the laws are all local to nations and the economics are all outside regulatory frame works trading in the CLOUD with new AI software “wars” that evolve this spiral upward that the economies of the world historically have never seen before, have no history for, and which exist outside global regulations. A RE- THINK of digital regulatory frame works is required by the G 100 as we have called for for five years with zero adaptation or even debate by media and press.
Without a REGULATORY FRAME WORK itself suggesting we extend time to a serious event – the TIME LINE for error is rising rapidly.
So in this new never experienced before digital casino capitalism how can the outcome be pretty without a regulatory reset?
The trading software and AI has outgrown a model and system designed to regulate paper trading and clearing and to preclude unwanted speculation on asset pricing.
Today largely unregulated software AI is trading 10,000 SUPER MONEY POOLS ( not a large number but the velocity and trillions involved are massive beyond any prior model ) are speculating and manipulating all asset prices world wide. This is itself a SUPER BUBBLE like the world has never seen before.
The charts spell it out and never lie.
The issue is – economics.
The value and trading ratios are requiring some new box top rules. For one – in todays speculative price modeling – just G 100 new regulations to move public reporting firms to every 180 days – bi annual – would in social long term investing and planning do oceans to remove unwanted speculation influences today.
The system is broken. Globally.
Digital Trading is spiralling to AI the world has never experienced before managing high velocity trading on all sides of any rope that manipulate prices – software against software.
No chart defines a LIQUIDITY EVAPORATION EVENT created by digital CASCADE in response to a serious event. Just one.
That risk is what keeps me up at night. My charts offer little comfort. They define economics and history and standard ratio’s. Sanity.
The market is in a SUPER BUBBLE SPIRAL fueled by fantastic debt loads. As interest rates rise now the refinancing of FREE MONEY DEBT to NORMALIZED INTEREST CARRYING COSTS appears to our charts to place a growing number of defaults into the system. When these defaults accumulate to a CASCADE EVENT and LIQUIDITY NO AI has programed for EVAPORATES the CASCADE destroys the system itself at velocities old shock absorbers no longer accommodate.
I know of no tools of nation or central banks that can accommodate the breach of core economics when the SUPER BUBBLE Bursts globally. Now I do believe there is a fix but time is running out to effect the sane fix.
A cooperation of the G 100 to effect a new global regulatory frame work for core economics for all of us is what would FIX the issue.
If we compete mindlessly – every software for itself – even the best intentions can depress value and wealth to collapse .
The risk is the system is now NEW and re-tooled digitally. This tend line is accelerating at velocities never seen before. In a blink self aware AI will replace generations of AI controlling the trillions today. Even that can not moderate CASCADE AND LIQUIDITY EVAPORATION in my opinion.
Lack of global regulatory sane frame works to re-set the digital market space world wide under a healthy box top rule upgrading.
So unless we have a major CASCADE I see volatility offset by software and rapid recovery and record 30,000 then 50,000 DOW and NADQ and S&P and world markets to boot. Self correcting.
As the spiral SUPER BUBBLE in asset phony pricing and manipulated pricing spirals upward the underlying DEBT SUPER BUBBLE and the 100’s of trillion of bad debts in the system must rebalance in the end.
The rebalancing triggers unknown and not predictable precisely today are the RISKS.
Regulation upgrading is the fix.
Without it the WILD WILD FRONTIER Of NEW CASINO CAPITALISM controlled by a first and now second generation of spiraling software modeling and AI is in control of the markets around the world. No one can predict how the DIGITAL ECONOMIC MARKET will moderate a CASCADE OF PRICE REBALANCING WITH LIQUIDITY EVAPORATION.
When I talk to small business owners, all over the world, they understand these principles. What they don’t understand is why the national leadership is not talking about the CORE ISSUE in foundation economics to resolve the problem.
As in prosperity everyone is kicking the core problem can down the road the problems become a tsunami rising to 1000’s of feet over your safe harbor.
Every business owner reader gets this fundamentally.
National leaders do not understand the economic system and its core digital out of the barn new market unfolding new modeling. This is not your grandmothers depression.
This is a new event that effects more of us than any event in history all at once.
Up or down.
No one knows how this will turn out.
A genius economist beyond my vision may have solutions beyond my range of experience as an global economist investment banker. I am looking for that understanding and solution brain to rally national leadership into the fix.
While there is still time.
Right now the circle I influence while high and at the top is not yet sufficient for attention from say a Donald Trump or May or Mearkel to set up a lunch.
All these economics are presented to US treasury and our leadership over time – but my best influencers report – no one will take action to even STUDY THE ECONOMICS being presented to FIX ALL THIS.
As we delay the spiral rises and rises and the ratio of damage from CASADE AND LIQUIDITY EVAPORATION rises exponentially.
I understand it.
Who wants to DO ANYTHING to a system while we set unmatched records ( no want to examine the HOW those records are really created ) and then – everyone is singing the song….
LET THE GOOD TIMES ROLL.
And roll they are…they are very good times.
Hey I’m rolling with them for our CEO SPACE small business. WE live NOW not tomorrow. So lets harvest the good times as right now…
THEY ARE AH ROLLING ALONG….ROLLING ALONG…..
Berny Dohrmann – WHAT IS “REALLY” GOING ON …OUT THERE— January 9, 2018