Juggling Dynamite

Gary Shilling, president at A. Gary Shilling & Co., and Chris Verrone of Strategas Research Partners, discuss the failures of central bank monetary policy, global currencies devaluing against the U.S. dollar, and the strengthening of the Japanese yen. Here is a direct video link.

Gary Shilling, president at A. Gary Shilling & Co., and Chris Verrone of Strategas Research Partners, examine the mining industry following BHP Billiton reporting that first-half profits tumbled 92 percent. Here is a direct video link.

Some sharp rebound rallies notwithstanding, Canada’s TSX composite (shown below since 2006) has been in a downtrend since the 2nd quarter of 2014 and is today back to the same level first reached in February 2007.  (capital progress?)

The first phase of the decline was lead by 70%+ losses in the materials and energy sectors. But now commodity based pain is spreading to the many feeder sectors: retail and service industries (like realty) and financiers.

Down just over 16% to date, the Canadian stock market (TSX) remains vulnerable, with a retest of the March 2009 lows within the realm of secular probability.  Buy and holders beware.

As policy rates have moved to sub-zero for banks in parts of Europe and now Japan, the threat of negative rates being passed on to consumer deposits is real.  ‘Central banks gone mad’ are destroying financial stability, but they are boosting safe sales at least.  This is a logical response from consumers; but driving cash out of an under-capitalized banking system is self-destructive policy.  Their next bright idea will be to mandate that cash in hand is worth less than digital currency…or some have mentioned banning cash altogether.  Time to take the controls away from the crazy folks anyone?

Demand for safes has jumped in Japan as people look for options to stash their cash following the the Bank of Japan’s introduction of negative interest rates. Here is a direct video link.