2017 Economic Collapse Stock Market Crash Dancing With The Devil

Bring Insight makes the argument that anyone currently invested in the Stock Market is Dancing with the Devil.

Bright Insight said, “The Stock Market closed at its HIGHEST LEVELS EVER! This is actually not a good thing, as the bubble is going to pop sooner rather than later – and crash incredibly hard. It is a mathematical certainty that the stock market will crash. In fact, the stock market is literally rigged, and fraudulent.”

Folks this is one of the reasons why all new stock picks I’m releasing over GuerillaStockTrading.com have to be quality (rising EPS and revenue) that have excellent valuation (P/E and forward P/E under 15), that have already retraced. The idea is that if a big stock market correction takes place, you will lose less money and have more time to get out than if you buy risky growth small cap stocks without P/Es.

Below is the show from Bright Insight that makes some very important points about the dangers that lurk behind every trade you make in the stock market right now.

2017 Economic Collapse & Stock Market Crash – Dancing With The Devil – The Pending Implosion

Republicans In Congress Need To Be Re-Educated On International Trade

Barron’s just released a cover story that suggests that President-elect Donald Trump should take steps to make U.S. trade policy freer than it is now after a backslide during the past 15 years. Barron’s goes on to assert that any aggressive push by Trump to hike tariffs will face resistance from a Republican-dominated Congress that has traditionally supported trade liberalization.

Republicans in Congress need to be re-educated on “trade liberalization” else face the end of their political careers at the hands of the American people. Whether you like Donald Trump or not, one thing Trump made clear is that the American people have to take a more active role in holding their elected leaders accountable for the outsourcing of American jobs.

Specifically, make sure that your Republican representative gets educated on why “free trade” (or trade liberalization) hasn’t lived up to the promise by sending them this article I published here. We have new economic data that explains why “trade liberalization” in its current form does not work for the American people. Anyone who is still for “free trade” in its current form is either corrupted by a foreign entity, or simply ignorant about the latest findings in the science of Economics.

3D Printing Stocks For Playing Trump Trade War With China

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How Will Globalists Respond To Trump and The US

We know what Trump is bringing to the globalists brawl that has already begun with shots like China threatening a trade war against the US. Globalists are not going just to roll over quietly for a Trump Administration.

Lisa Haven thinks that globalists could crash the US economy in response to Trump’s win. Lisa thinks globalists could even try to assassinate Trump.

I think Lisa Haven is a bit too far on the side of paranoia, but I like hearing alternative views and some of the excellent points she makes. Regardless if you agree with Lisa Haven or not, one thing is clear that we can all agree on. Stock prices are not up because of fundamentals but on risky speculation on a Trump win which begs the question. Are we being set up for a big stock market crash?

Trump Administration and Tariffs Versus Quotas

Protectionist policies in the form of tariffs and quotas are coming from a Trump Administration. It seems appropriate then that we examine tariffs and quotas from a macroeconomics perspective.

The two most common ways of restricting trade are with tariffs and quotas. From a political point of view and to prevent a trade war, a Trump Administration should consider the use of quotas over tariffs in some cases.
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What Further Evidence the Fed Needs To Hike In December 2016

The Federal Reserve held short-term interest rates steady as traders expected. In the Fed’s postmeeting policy statement, it said it only needed “some further evidence” of economic progress before moving forward with a rate hike.

What exactly is the further evidence that the Fed needs? To answer that, you have to know about what happened last year to the unemployment rate and wages.

After the Fed had raised rates in December of 2015, it said that it would raise rates four times in 2016. I went off the rails. Long time viewers of the weekly Saturday night show remember how angry I was at the absurd proposition that the economy was strong enough to hike rates four times in 2016.

The Fed was ultimately wrong in their four hikes in 2016 statement. What happened? Here’s where the Fed went wrong. The Fed thought that in December of 2015 that wages would begin to accelerate rapidly. For most of 2016, the monthly Employment Situation report showed an average of 220,000 jobs added per month. The unemployment rate had gone to 5% from 5.8%. The Fed thought that the demand for labor would shift to the right as illustrated in this graph.

fed-forecast-supply-and-demand-graph

The Fed thought that the demand curve would shift to the right from D to D1. As demand for employment increased, unemployment would continue to fall, and wages would rise rapidly. The problem is that the Fed assumed that the job market was very tight because of the low unemployment rate. In other words, the Fed assumed that the labor market supply was fairly static so that increased demand for labor would cause wages to rise rapidly.

Last year I was one of many voices yelling out to anyone who would listen that the labor force participation rate was dropping.

labor-force-participation-rate-2015

What this means is that the supply of labor was not static at all, in fact, it was just the opposite. The labor market continued to generate jobs at an average of 187,000 per month for most of 2016, but the unemployment rate stayed at 5%, and wages barely moved at all. Why? Because, as the labor participation rate was signaling, people came off the sidelines and back into the job market. We know this because the labor participation rate began rising in 2016.

labor-force-participation-rate-2016

As you remember from our lesson on illegal immigration, a rise in the supply of labor shifts the supply curve down. In other words, it largely offsets the outward shift of the demand curve! In case you don’t understand, let’s track this on a supply and demand graph.

unemployment-supply-and-demand-graph-2016

In step 1, the labor demand curve shifts outward from D to D1 as the Fed predicted. A new equilibrium is established at point a. In step 2, suddenly people who gave up looking for work see wages rising, and so they come back into the labor market looking for work. That increase in labor supply shifts the supply curve down from S to S1 as wages fall. A new equilibrium is established at point b, the same original wage rate! We have a greater number of people employed, but the unemployment rate and more importantly wages stay the same.

At the end of 2015, the Fed thought the labor rate was much tighter than it really was because of the low unemployment rate. There was a lot more slack in the labor market (low labor participation rate) that was not being factored into the Fed’s equations. In other words, the Fed made a mistake by miscalculating how many people were on the sidelines and ready to jump back into the job market at the first sign of rising wages. That’s why the Fed said in December of 2015, after hiking rates a quarter point, that they would likely be hiking another four times in 2016. They thought wages were going to move higher really fast. There was much more slack in the labor market than the Fed thought, and there could still be more.

The Fed got fooled once. The Fed will not get fooled twice. This is what I think the Fed means by it only needs “some further evidence” of economic progress before moving forward with a rate hike. The Fed wants a little more evidence before hiking rates that most of the slack in the labor market is gone and that wages are rising from an outward shift in the labor demand curve.

The Aggregate Supply-Aggregate Demand Model

Looking at the aggregate supply (AS), aggregate demand (AD) model, we can see where the US economy is currently at in the economic cycle. It is critical that traders and investors understand where we are at in the business cycle so as to be in on the right side of the trade. Timing Bull/Bear cycles and sector rotation is a critical skill for traders.
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