Juggling Dynamite

Two of the best market analysts in one show this morning (both of whom head their own independent firms). No surprise they have been much better at seeing what’s happening in the world economy and markets than the mongrel hord of bank-paid-analysts that dominate business media.

Gary Shilling, president at A. Gary Shilling & Co., and Komal Sri-Kumar, president at Sri-Kumar Global Strategies, discuss slowing growth in China as the nation undergoes an economic transition. Here is a direct video link.

You can read a copy of Gary’s Special report “Chinese Sunset” this month via John Mauldin here. Worthwhile, great charts and more condensed than Gary’s usual monthly subscription-only reports.

Komal Sri-Kumar, president at Sri-Kumar Global Strategies, and Gary Shilling, president at A. Gary Shilling & Co., examine the damage done to the U.S. economy by the Federal Reserve’s interest rate increase and expectations for policy moves by the European Central Bank and Bank of England. Here is a direct video link.

What are each of us prepared to do personally in order to lead change in the world?

The oil industry is a powerhouse with control over land, resources, politics and more. In this episode of The Empire Files, Abby Martin uncovers big oil’s strong-arm reach–its growth, its crimes, its power and its impunity.  Here is a direct video link.

With the US markets closed for MLK Day, the TSX has drifted below 12,000, while the loonie is so far having a morning of reprieve from what has been months of relentless selling. Near term oversold, a CAD bounce would be reasonable, even if temporary, so long as oil remains in free fall.   But no trends last forever.

The global debt and securitization bubble that drove fossil fuels and other commodities outrageously high between 2005-2014, has been bursting since. A mean reversion to the 1999 $10-20 barrel level for West Texas Crude has to be possible, even if only temporary. But it’s important to note that currency tends to lead financial cycles.

The US dollar deteriorated with the nation’s balance sheet from 2002 to 2008, though it was not until the stock and corporate debt markets collapsed in 2008 that the consensus became convinced further U$ weakness was inevitable. By then of course, the currency cycle had already turned.  Missing that the U$ had bottomed, cost the masses a fortune in losses on overly-confident commodity bets.  With the commodity-centric C$ now below its 2009 lows, we should be cautious not to extrapolate this trend indefinitely either.  The closer the loonie gets towards its 2002 all time cycle low, the greater the probability of its bottom this cycle as well.

The same can still not be said for the broad Canadian stock market.  Shown here since 1999, as the C$ (in red) dives for a bottom, the TSX (in blue) remains vulnerable and still likely to catch down to the leading loonie.  Unless ‘this time is different’…?

The 11,000 level (marked at blue band below) is the next big support test for the TSX. But with global QE experiments now spent (to infinity and beyond), 11,000 may prove fleeting at best.  After the credit bubble, value is coming for those who can wait and know what to look for.  And that is as it should be.