Archive for November, 2016

Markets and inflation

Posted: November 14, 2016 in Uncategorized

Contrary to everybody opinion the market were very happy about President Trump, most likely as it did not expect a completely Republican Congress).

So the Trump (defense, banks, healthcare, infrastructure) and reflation trades were the big winners.

To that effect I think they were a bit too much of a winner – almost as if President Trump could do whatever it said. Also inflation is made of a lot of components, but the primary one is higher wages – which is quite a stretch of the imagination.

In reality is a part of the Republican party so whatever he says there are a lot of things that he will not be able to do.

Think about infrastructure – it is mainly financed with debt…but already the US debt is at stellar level (plus he wants to cut taxes).

It is a good strategy, but it will have quite a lot of hurdles. Plus inflation will increase, but we could really pass from deflation to stagflation (stagnation with inflation).

But a bit of inflation is good as it is always the perfect way for the government to decrease its debt burden – in the long run.

Government bond sold off 0.35% in a week – which is really a lot (the sell off just accelerated as it started in September)

So still too early to call. Also soon the market will start focusing on the Italian referendum.


As the social contract between elites and people has been broken, now it is the turn of Europe. And statistically speaking is very probable as there are a lot of events happening in a year. 

Just a list

4 December Italian referendum

4 December Austrian Presidential election

15 March 17 Netherlands elections

May 17 French elections

September 17 German elections

The media call it populism as it has a negative connotation.

But, from wikipedia,

Populism is a political ideology that holds that virtuous citizens are mistreated by a small circle of elites, who can be overthrown if the people recognize the danger and work together. Populism depicts elites as trampling on the rights, values, and voice of the legitimate people.

Brexit, President Trump are not one off. Between the end of this year we will see Italy, Austria, France, Germany and Greece trying to follow the same path. Eevn in Australia, where there is no alternative, there is the rise of the independents.

The middle class has never been so poor (or working harder) since the second world war. The parents, if they can, have to step in to help their children to buy a property – even when the children have nice jobs.

And then you have the elites that they cannot even count how much money they have.

This trend has started around the end of the last century (1999 in Europe with the introduction of the Euro) and in the 1990s in the US with globalization.

If the elite and politics wanted to stop it they should have used quantitative easing policies in 2008 to save the world…but start reflationary policies (opsss…Trump idea?) in 2011 so the “spending” could restart.

They instead choose to do nothing and let the Central Bank save the world. Monetary stimulus can save only the stock/bond market – not the economy.

So do not cry foul at populism. Brexit, Trump and “Eurexit 17” have been at least 8 years in the making. In 2013 even I wrote a post “Europe Dead on Arrival” meaning that Europe would be saved economically, but the human tide of discontent will destroy it.

This is the future. In Italian there is a song by Vasco Rossi  “Gli spari sopra” 1993. Almost prophetic.

{The Elites} And it has always been easy to do injustice
Take, handle, make believe
But now be more careful
Because everything is written
And if the armies turn and heroes {police} disappear
If besides which now we start making the war

Do not smile, the shooting above are for you
Do not smile, the shooting above are for you


President Elect Donald John Trump

Posted: November 10, 2016 in Uncategorized

What a shocker! Even if I was one of a few believers that Trump could win – it is still a shock.

He is now President Elect and he will become the 45th President the 20th January 2017.

The market did not react (at least in the US) with an immediate sell off as the “Victory Speech” was much more Presidential and re conciliatory than expected and because the Republican won both the Senate and the House – avoiding the gridlock in Washington.

Market analysis sees also that Presidential elections have limited impact on the markets in the long term, but rarely we saw more divisive candidate.

The market will keep on rallying, but the winner and loser will be quite different than before.

Trump policies are based on fiscal stimulus (so more debt!), infrastructure spending, tax reform and less red tape.


In effect, it is what the economy needs – not continuous quantitative easing that generates returns only in the stock market. Relationship with Russia could improve and finally bring a solution of the situation in Syria and Ukraine and the annihilation of Islamic State. Also, a softening of sanctions would be great for Europe.


More debt could spike the yields in US and all over the world – inflation is already peeking out of its box since September. Inflation is a very strange “animal” – once out of its cage it takes life of its own. A strong inflation could send the world back into recession and completely change the winner and loser. Inflation was already starting to creep in the system and Trump would just accelerate it. Probably it will start appearing on the media radar in the second half of 2017.

The international relations will be most interesting to watch – specially versus Russia and China.


Trump: no market sell off

Posted: November 10, 2016 in Uncategorized

Wow at the end there was no market sell off!

Again (like Brexit) the elites depicted terror and huge money loss as a way of scaremongering the people into voting the plurocracy chosen candidate.

A message for Italy, France and Greece?

We will see. As I told u before there is no relation between general market behaviour and first day of trading.

But the market has changed. Winner and loser are very different from yesterday 

The Trump Revolution

Posted: November 9, 2016 in Uncategorized

A bit like Brexit, the impossible looks just like happened!

President Trump will probably be the 45th US President (the data say saw, but let’s wait for the confirmation)

This is the storm that engulf the UK, the US and soon Europe (Italexit??)

In the last 20 years (if not more) the middle class has been devastated and now it is rebelling against the 1% ultra rich (which includes the Clinton Supporters like Robert De Niro, Beyonce and others).

Yes I would have much preferred a better candidate than Trump, but sometime you need to accept an unlikely hero.

In the next few days the market will sell off and gold will rise and my clients are primed for the opportunity (the Chinese symbol for risk means also opportunity – and I agree with them).

Like the Russian and French revolution, the revolution starts with the middle class (or the working class as Mao Zedong would put it – also Mao was from moderately well off agrarian family).

The previous revolutions were sparked by famine. This is the first “matrix” internet revolution. Internet spread the knowledge and people can see and find what is the truth and what is happening.

Welcome to the Revolution – in 10 years the world will look very different and if you better understand it



Florida nail biter

Posted: November 9, 2016 in Uncategorized

Trump 49.4 to Clinton 48.1

The decision.

The day before the election

Posted: November 8, 2016 in Uncategorized

Finally…it feels almost like having a baby!

last considerations.

The electoral college map (270 votes to  win) indicates Clinton 203 versus Trump 169 – so technically Hillary has an advantage of 39 votes.

There are 9 states with polls within the “Brexit error” range and Florida is the one to watch as it has 29 Electoral Votes.

The popular vote is more of toss up…so we can easily find in a situation Trump popular vote and Clinton Electoral Vote similar to Al Gore vs Bush Jr.

But I promise you Trump will not accept this as easily as Al Gore.

So if Clinton wins we will have a rally for 1 or 2 days to approach SP500  2,200 (Gold 1,210) and if Trump wins we will see immediately SP500 to 2,000 and then probably 1,920 (Gold 1,400 and probably 1,500).

Then things will revert to normality focusing on low growth, impending Italian referendum etc – the usual ( – or rally and then slight return in the middle ground, for now or  crash, then rally).

As statistics goes there is no relevance of sort between the 1 or 2 days after the election and the market direction over the following year.

This dismal campaign set up the stage for ugly battles in Congress and so any winner will do much less than he promised.

The world awaits the election in the US with trepidation.

With Clinton and Trump I never seen a more vitriolic, Third World Style election campaign.

Wednesday (Australian time) we will know the winner, but we already know the loser.

The multiple emails dumps and releases it shows that, whoever wins, democracy is the big loser in this election.

In 4 years we went from the fake but nice “Yes we can” Obama’s motto (who left the Middle East in flame and the American society more divided than ever – biggest delusion) to the “Yes we fear” of this election.

On the Democrat side (to cut it short) – indictment or not – we can see the pressure brought by the Democratic National Convention and President Obama to the FBI and the Department of Justice – just to name a few.

We see how the Democrat National Committee instructs the interviews of the CNN (latest Wikileaks release) to sink the adversaries in a great media – political establishment conspiracy.

On the Republican side it is less evident , you see that the establishment tried to stop Trump and a lot of Republicans even switched side (the Bush family votes Hillary !).In a sense the Left – which should be the people party, be in Italy, Australia or US (places that I know quite well) is always more dodgy – but this should not be really surprising…Soviets or Nazis (National Socialist Party) started as”Left” Parties).

The real victim of all this is democracy and the middle class.

The West practically lost its moral superiority to the Chinese Communist Party or to Putin’s Russia.

In this world the main powers are a Plutocracy, a One Party Rule and a dictator. Just different faces of the same power.

*I am not liking the Nazis or Soviets to the current Left Parties. I am just saying that when your base is “the people” or “socialism” one can get way with much more. For example in Italy, the 4th December, PM Renzi, Left, is pushing for a referendum for changing the Italian Constitution in order to give more power to the Government and no demonstration or heavy critiques happened . Ex PM Berlusconi, Right, tried it years ago and had to stop due to the backlash.

One word of warning: the establishment can defeat Trump, but the movement which the paid media define as “populism” to make it sound wrong – will not stop – in US, in Europe, in Australia.

The Middle Class is rebelling and the establishment better starts listening.

The seeds of the Russian revolution of 1917 were created in 1890 with the industrial revolution.

The seeds of the French Revolution of 1792 started at least with the Agrarian Crisis of 1785

Both were caused by inequality.

The seeds of the new revolution is already here – the internet as the establishment cannot hide the reality of what it is.

The race is ever so tight. Even the electoral colleges are not anymore that clear (273 Clinton to 265 Trump).

The market is ready to rally 5% (Clinton) or crash 10% (Trump) and gold is ready to plunge to $1,200 (Clinton) or rally to $1,400 (Trump).

And a word of advise – do not enter the market the day of the election – there could be challenges or surprise (eg  Clinton indictment on the Clinton foundation).

Gentlemen and gentlewomen, ready, set, go!