President Donald J. Trump was elected the 45th President of the United States to preside over the largest debt collapse ever in U.S. history. During this four-year term, he and his administration will be most feared and hated president there ever was. The odds are stacked high against his ideology of “Making America Great Again” during his term in office.
Debt deflation is a concept that was first introduced in 1933 by the economist Irving Fisher. Debt deflation is a concept whereby the combination of high levels of debt and falling prices cause a downward spiral in the economy. When there is deflation in an economy, those who are in debt become significantly worse off financially. Deflation causes prices and wages to fall and the value of money to rise which increases the real value of debts thereby causing it to become more difficult for people to pay off their debts, i.e.: people holding mortgages would be forced into selling their homes. However, the selling of assets only served to worsen the situation by causing prices to fall even further – creating more deflation. This affects all those people who are in debt and the cycle repeats itself exponentially. Hence, the beginning of the “Next Great Reset of 2017-2020” which should start June/July of this year.
As many Americans enter retirement, they are realizing one unfortunate fact. The fact is that the new retirement plan means no retirement, at all, and is called the Retirement Myth.
One of the promises of the American Dream was the idea of a comfortable retirement, however, this will NOT materialize due to financial swindling and a real estate bubble. Most Americans have incurred massive debt and have consumed their future nest egg by making purchases beyond their budgets and are living beyond their means. We are now left with over 75,000,000 ‘baby boomers’ which a large portion of them are entering retirement with very little and/or no savings. DEBT has enslaved them!
The stock market collapse of 2008 resulted from a class of “subprime mortgage bonds” going into default. Today, the triggers for our financial crisis in the U.S. are still there to cause a hiccup in a Treasury bond auction, trouble in the settlements of derivatives contracts held by major banks or default on leveraged finance loans or high-yield junk bonds. Apparently, we cannot live without debt as it has become the American Way! Your next pension check or social security check could soon be cut back or eliminated altogether, regardless of legal government guarantees. A loss such as this could be both debilitating and devastating for retirees. Global Central Banks have destroyed the financial markets.
Timing Is Everything!
The next BIG TRADE is here. You should take advantage of my hard work and expertise to help make you wealthy. Protect your financial future by tuning in every morning for my current video update on all asset classes and new trade set ups. Your future should involve a proven strategy. We have just entered a new TGAOG commodity trade which looks to be nearing its’ multi-year lows and is forming a bottoming pattern. You want to be in the next trade of the Next Hot Sector setup!
Followers of my work locked in 112% profit this week in a swing trade with NUGT, and another 7.7% in 24 hours with ERX, which we are still long a portion and expecting further gains. All the trades are based on my Momentum Reversal Method (MRM) trading system. There are two key components of this trading strategy.
You will receive NEW explosive trade setups Every Week!
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Where is this economic boom that Former President Obama and his administration had taken so much credit for?
The Obama Administration, with the assistance of the Federal Reserve and Company, deliberately kept the U.S. economy from creating any growth at all. The money that flowed from the Federal Reserve, over the last 8 years, had a direct pipeline that flowed only into Wall Street Investment Banks. The American people were sold this false bill of sale that “Quantitative Easing” was going to make lending money to “Main Street America” easier to access. They promised that there would be a boost in hiring which would, in turn, increase aggregate demand and thereby reflect a newly stimulated economic growth!
This QE effectively down-sized the middle class into minority status. The largest growth has occurred within the low-income category. Despite the stock market reaching near all-time highs and real estate bubbling over once again, there are now 45 million Americans on food stamps. This number is at an all-time high. People are feeling poorer today than ever, and with sky rocketing real-estate prices those who do not own a home cannot afford to buy anymore!
This massive disconnect is expanding exponentially. The velocity of money is the number of times that currency is turned over to purchase domestically- produced goods and services. One can see, as in the chart below, that the velocity of money has been steadily decreasing. There are less transactions occurring by individuals in our economy. One can see that the money never reached “Main Street America” which is why there has not been any demand for goods and services.
The average American is now barley scraping by and many do a lot of their shopping at dollar stores. Most the growth in the job market is in low wage jobs which have zero benefits! The clear majority of Americans have bought into the propaganda promoted by the controlled media outlets.
The masses bought into this propaganda as Wall Streets’ big banks kept artificially inflating the equity markets with free and cheap money, which was at the expense of U.S. taxpayers.
The Obama Machinery put on a stellar performance for the American people, however, this was a fictitious story. In fact, the real number, as of January 2017, of unemployed Americans currently stands at 22.9%: (http://www.shadowstats.com/alternate_data/unemployment-charts). The big gains have been largely allocated to the well-connected financial sector.
Corporations took advantage of low interest rates to buy back stock in their own companies. Since 2008, corporate stock buybacks have surpassed $2.2 trillion. These buy backs have only increased the price of corporate stocks and made their companies appear more valuable than they are. This means that stock prices are far above what they would be if it were not for extremely low interest rates. The politicians believed that it was more important to create a false front and to continue the illusion so that they would remain in power.
The Tax Foundation reports that 60% of the population now receives more in government benefits than what they pay in taxes. What does this say about a society in which more than half of the population are living at the expense of the other half? Currently, what is even worse is that the dependent class is steadily growing. The 60% will soon become 70%.
Mr. Hayek stated that “Capitalism is the only system of economics compatible with human dignity, prosperity, and liberty. To the extent, we move away from that system, we empower the worst people in society to manage what they do not understand”.
On March 23rd, 2009, the then Treasury Secretary, Tim Geithner sent the stock markets soaring. He announced a plan to help banks unload illiquid securities of uncertain worth from its’ balance sheets. The Wall Street headlines read “Toxic-Asset Plan Sends Stocks Soaring”. Federal Reserve Chairman Ben Bernanke implemented “financial engineering” (https://en.wikipedia.org/wiki/Financial_engineering) as the sole solution to all our financial problems.
He was publicly opposed to the nationalization (https://en.wikipedia.org/wiki/Nationalization) of banks and said “the bookkeeping problems of many banks are largely an artifact of foolish federal regulations. Capital standards, accounting rules and other regulations have made the financial sector excessively procyclical.” As we are presently realizing, government control over the financial markets and the economy have failed us. What we needed was the Federal Government to focus on job creation and to restructure our economy for new and future growth.
They were laser focused on merely bailing out Wall Streets’ big banks. In my view, the Federal Government should only be focused on its’ constitutional responsibilities. Keeping the free markets out of their control and protection and serving the American people should be their primary goal.
They needed to allow deflation to play out its’ cyclical role. However, it turned out worse as they attempted to control it. Federal Government bailouts resulted in financial enslavement. There was further unequal distribution of wealth in our society. Today, in 2017, I clearly see the implosion of America, as we once lived and knew it to be.
The economy was being run on non-to low growth policies intentionally. President Obama deliberately took the path of doing absolutely nothing. He did not want to be accountable for any economic growth most likely because a stock market crash would ensue. That would have placed pressure on wages that would cause inflation at which time the Federal Reserve would be forced to raise interest rates. If this had occurred, all the free money which Wall Street investment banks received would not have been invested in the equity markets.
The GDP Annual Growth Rate in the United States merely expanded by 1.90% in the fourth quarter of 2016, over the same quarter of the previous year. A record low of -4.10% was reported in the second quarter of 2009.
They purchased their own shares back which sent stocks higher into unchartered territory. The way that they played the game was to keep inflation at bay and allow us to wallow in a deflationary contracting economy. As stock prices rallied upwards, the corporate executives continued to receive heavy compensation on cheap cash being provided to them. In the term that Chairwoman Yellen resides over, she has only increased interest rates twice by a mere marginal 25 basis points. This was an immaterial rate hike so as the Federal Reserve could maintain their credibility. Increasing interest rates would have killed this game of “cheap money” which kept the wealth flowing into the top 1 percent. The Federal Reserves’ decision to not raise interest rates during their last meeting (http://money.cnn.com/2017/02/01/news/economy/federal-reserve-january-meeting/index.html) sends a clear and powerful message that they do not want to go down the path of normalization (http://www.discovery.org/a/23721) . They want to continue to artificially suppress interest rates. If they had attempted to “normalize”, it would create massive assets and derivative bubbles bursting domestically and globally. Either the bubble will burst or we will return to inflation.
President Trump wants to create the growth which former President Obama never accomplished. He is proposing tax cuts, introducing fiscal stimulus and removing all the red tape that has been so costly for small businesses to implement. He has also promised to lift GDP to 4% by spending $1 trillion to rebuild America’s infrastructure. This will overheat the economy! Trying to implement his plans will call for deep cutbacks in Medicare and Social Security. It will take years to forge ahead with legislative approval.
Conclusion:
Where is this economic recovery that supposedly happened? It exists in the stock market at present as the masses are enduring a poorer quality of life!
Our subscribers are currently in a swing trade with NUGT (http://www.etf.com/NUGT) which is up 95.8% currently and we are expecting further gains going into this week. All the trades are based on our Momentum Reversal Method (MRM) trading system. The strength of the precious metals will continue to drive gains for our NUGT position. Expect some very interesting and exciting new trades this week. We are getting ready for some very explosive moves.
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This year has been a very exiting time for traders and investors. We have seen a steady climb in prices with controlled pullbacks in the broad market and gold.
Using technical analysis we are able to quickly and accurately make informed decisions just from looking at the charts. In the charts below you will see how simple chart patterns along with support & resistance levels can provide excellent low risk entry points. Also you will see how candle stick charts can be an early indicator for prices to reverse direction.
DIA ETF – Daily
The DIA (Dow Jones Index Fund) is trending higher. By applying some basic technical analysis you are able to time your entry points having the odds in your favor.
In this chart I use two simple forms of analysis. The broadening formation (red trend lines), and horizontal support zones shown in blue.
Broadening Formations: This is when the price becomes more volatile making higher highs and lower lows. I think of it as one of those Megaphones for talking to large groups of people. So when a chart has this pattern it’s virtually yelling at me and I start taking profits or tightening my stops.
Horizontal Support Zones: I like to focus on support or resistance zones which are a little different than most traders. I do not use the top and bottoms of previous waves for these levels. Instead I take the average price then expect the support level to be penetrated somewhat as the level is tested. This is how the market keeps you out of the good trades. I cover this in great detail in my Stock Market Trading Education Course available in January.
Analysis: The DIA ETF looks ready for a pullback to the $99- 100 level.
DIA ETF
GLD Exchange Traded Fund – Weekly
Gold has been on fire and riding this wave up has been very profitable thus far. Last week a doji candle was formed on the chart and this can signal a change in short term price action.
This chart shows some of the past doji candles and what happened to the price of gold soon after. What this candle is telling us is that the buying and selling pressure is equal. So we know momentum is slowing and we should expect a consolidation or correction.
Because gold has rocketed higher, indeed going almost straight up in the recent weeks, I expect a pullback to be very quick. A drop to the $110 or even the $100 level in the coming weeks is not out of the question, but we all know commodities can go parabolic for several months (straight up). This is why we continue to tighten our stops and keep holding out long positions.
Gold Exchange Traded Fund
US Dollar – Weekly
The US dollar has been up and down like a yo-yo in the past 15 months. The chart below clearly shows what has been happening with this currency and what I think we could see very soon.
The blue support zone (73-74) is a key pivot point for the dollar. That being said lets take a look at the chart.
During the time when the price is trending higher July 2008 – Feb 2009 we see lower wicks appear more often. This tells me that sellers pushed the price down early in the week but were then overcome by buyers nearer the end of the week. This is bullish price action. Also the broadening patterns during this timeframe’s tops indicate increased volatility and we know that is a sign of weakness.
From March 2009 – Sept 2009 the trend was down and there are longer upper wicks telling us buyers became over powered by sellers each time the price rallied.
In the recent 3 months we observe lower wicks meaning buyers are moving into the US dollar again. Knowing that there is major support below the current price I have to think the dollar could start to bottom around this level.
US Dollar Trading
Trading Conclusion:
The broad market is becoming unstable and looks like it could have more of a pullback this week. I would not be adding to any long positions until we see the market trading near support. Three out of four stocks move with the market so it is crucial to understand the overall market direction when buying and selling stocks and commodities.
Gold is trading at a level which is fuzzy. The weekly chart is neutral and the daily chart is still on fire as it moves up. All we can do is ride our positions and keep raising our stop prices.
The US dollar could start to bottom over the next few weeks. Depending what happens with Dubai this week we could be in for a big bounce in the dollar as investors flock to safety as the US dollar is still the currency of choice if/when other countries start to have a financial melt down again.
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