1000 words -- part 3

BIG Increase in M2

from groovy girl: Zerohedge reports this morning that the US Money Supply has surged 33% in the past four months. Click here.

And what happened four months ago to cause Ben and his pet banks to “print” more money? The European Debt Crisis started moving to the European banks and US banks, and we had a run on the money market funds causing a huge loss of liquidity for the system. This is QExx under the table for Europe and US Banks exposed to Europe.

Once again, huge amounts of US dollars are being created to try a bailout all global debt problems. It will not work. What it will do is push price inflation first higher in non-US countries and then in the US.

More US dollars in the world monetary system creates a situation where those US dollars will come flooding back to US soil when the rest of the world loses confidence in the dollar. Groovygirl has a feeling that the “powers that be” will not reorganize the global fiat money system until the US is feeling the pain of hyperinflation. By that time, all other nations will already be knee-deep in hyperinflation and the global debt problem will still not be solved.

Be prepared.

FXI 2005 - 11

source

For some perspective on one of the more important global stock markets, today's chart focuses on Chinese stocks and presents the current trend of the iShares FTSE/Xinhua China 25 Index (FXI). As today's chart illustrates, Chinese stocks have endured what amounts to an extremely wild ride since 2005. The FXI trended upward at an ever accelerating rate (i.e. parabolic) from 2005 to Q4 2007. As the credit bubble began to unravel, so too did Chinese stocks with the FXI trending downward at an ever accelerating rate from Q4 2007 to Q4 2008. Beginning in Q4 2008, the FXI surged -- gaining over 155% trough to peak. Since that post-financial crisis peak back in Q4 2010, Chinese stocks initially treaded water but more recently have entered in to a steep downward trend channel. Considering China's increasingly significant contribution to the global economy, this recent stock market action is most definitely a red flag.

5 page quarterly forecast -- great report

http://www.hoisingtonmgt.com/pdf/HIM2011Q3NP.pdf 


Negative economic growth will probably
be registered in the U.S. during the fourth
quarter of 2011, and in subsequent quarters in
2012.  Though partially caused by monetary
and fiscal actions and excessive indebtedness,
this contraction has been further aggravated by
three current cyclical developments: a) declining
productivity, b) elevated inventory investment,
and c) contracting real wage income.

Trade Deficit vs. GDP

from Business Insider Chart of the Day:

As part of this morning's trade balance report, the July trade deficit was revised wider from $44.8 billion to $45.6 billion.

Since the trade deficit gets subtracted from GDP, this is seen as a negative. ZeroHedge expects coming down ard revisions to Q3 GDP estimates.

That may be possible, but this misses the big picture.

Wide trade deficits are a sign of more robust growth.

Here's a chart going back a long way that shows that nicely.

When the trade deficit is shrinking, GDP tends to shrink too, and when it's widening, GDP widens too, even if the trade deficit comes out of GDP

1000 words -- part 2

1000 words -- part 1

Historical PE Ratios -- S&P 500

Empire State Manu. Survey