The Editor and Publisher of the Gloom, Boom & Doom Report expects US Federal Reserve to increase bond purchases. He also said that India could grow at around 7% if regulatory environment would improve. 

THE FED SHOULD BE AUDITED

I dont value gold, I just weight it every year to see if its the same weight. I wish they would do that with the Federal Reserve, because nobody has audited these governments who claim they have that much gold. Maybe they dont have it, maybe they have lent it already.

FABER SAYS PLATINUM IS MAYBE THE BEST PRECIOUS METAL

I stick to physical Gold largely, and I have some holdings in shares like Newmont, Freeport McMoran.

I think commodities, precious metals, will all move in the same direction. Some may move faster than others. Some say Silver is better than Gold, some sayPlatinum is the best. I tend to agree that maybe platinum is the best precious metal

FABER WARNS ABOUT MASSIVE CREDIT BUBBLE IN ASIA

Over the last Five years, everywhere in Asia, the household debt as a percentage of the economy has exploded higher, in other words a lot of growth was driven by unsustainable credit growth. 

The household debt levels are relatively high, the asset prices are high, the affordability of buying homes has diminished and many countries have had currency weaknesses and their currency account surplus has turned to deficits. Some countries like India, Indonesia had to push up interest rates to support their currencies. 

I’m not overly negative in the Asian regions but if a bubble bursts in China it would have a devastating impact on the surrounding countries.

“Continuing assessment of the efficacy and costs of asset purchases might lead the Committee to decide at some point to change the mix of its policy tools while maintaining a high degree of accommodation.” 

                                     -Minutes of Federal Open Mark Committee  – October 29-30, 2013

The above text is the most important aspect of the most recent Federal Open Market Committee (FOMC) meeting that took place between October 29 and 30. The text is in no way novel as the sustainability of this economic stimulus program has always been of concern, and thus examining its long term benefits and consequences continues to be the focus of Federal Reserve officials. However, moving past analyzing the efficacy or cost of the program, it is the end of the above quote that is most telling. And that is that the misconception by the financial media of tapering Quantitative Easing meaning that the Fed is attempting to make their policy less accommodative. In fact to the contrary, it is not that their goal is to be less accommodative, but change the medium in  which it is delivered.

The initial reaction from many following this month’s key gathering of communist-party leaders in China was of disappointment as Tuesday’s blueprint left much to be desired. But on Friday came a significantly more in-depth document regarding issues like land reform, easing of the one-child policy and cleaning up pollution.

It’s all left famed investor Jim Rogers believing “the most important economic event of the next 10 to 20 years is what happened in Beijing.” And it’s something he says has been largely ignored, notably by Western media.

During a visit at the Wall Street Journal, the former George Soros partner–who retired from Wall Street at age 37 to live a second life as world traveler—equates the plenum to those in 1978 and 1993. The first followed Mao Zedong’s death and ushered in Deng Xiaoping’s reformist agenda and his effort to remake China’s economy, while 1993’s plenum included a vow to deal with money-losing state enterprises.

In the just-concluded gathering, which occurred a year after President Xi Jinping became party chief and was seen as his stage to set forth the agenda for his possible 10-year tenure, reform was hoped to be a big focus.

Mr. Rogers, who moved with his family to Singapore seven years ago, senses change is coming.

The land reform includes increased rights for farmers. This group has long seen land taken from them but now are in position to amass large tracts for more-efficient production in a country struggling to keep up with a populace that has increasing amounts of money to spend on food.

Chinese agriculture has been ruined since Mr. Mao’s tenure, says Mr. Rogers, capped off by the Cultural Revolution, during which teens were sent to the country to work on collective farms.  But while current efforts, if followed through, could take upwards of a generation to really bear fruit, Mr. Rogers sees Chinese agriculture as a sector in which to invest, as well as railroads, medical care and defense.

“These industries will do well even” even if the country’s stock market collapses, he contends. Mr. Rogers has been buying Chinese stocks, including financials, for the first time since 2008; he previously was a purchaser in 1999 and 2005.

Also seen changed by his perspective is politicians’ resolve. “The overriding concept” from the plenum is “when in doubt, the market will decide.” For a state-controlled economy, that sounds like a 180 to past practices.

So why think the new leadership isn’t just giving reform lip service? Mr. Rogers admits he can’t be sure, but the investor—who came to New York from China and will soon be back in country–senses something different.  “As previous administrations tried to change, they ran into the bureaucracy.” But now, policy makers “seem to have the wind at their back” and leaders have “put a lot of prestige on the line.”

The reform effort would come amid years of talk about China’s economy being a bubble or that its ascendance will end.  Mr. Rogers says that reminds him what Europeans said about the US after the Civil War. Then, the New World was still considered an untamed backwater. But he notes things change quickly: Within a generation after World War I, the undisputed No. 1, the United Kingdom, was no longer that.

There are a lot of different indicators and studies that technical analysts use, and all of those tools came into usage due to some degree of merit. But the one factor which seems to be trumping everything else lately is what the Fed is doing with its QEternity program, which shows no sign of stopping anytime soon, or maybe ever. 

This week’s chart compares the SP500 to the total assets held by the Fed. That plot is made up from the total of the Fed’s Treasury holdings and its mortgage backed securities (MBS), which are sometimes referred to as “agency” debt products. The agencies which that title refers to are Fannie Mae, Freddie Mac, etc. 

Putting the chart together this way helps us see just how important the Fed’s purchases have been to the task of sustaining the bull market for stocks. Whenever the Fed has decided to change the slope of the green line, the slope of the SP500 has also changed in a dramatic way. That makes it such an important question to contemplate a “tapering” off in the rate of growth of Fed assets, or even an outright end to quantitative easing (QE).

This chart also helps us see just how critical the Fed’s actions were in bringing about the awful bear market of 2007-09. Back then, the Fed just held Treasuries, and it did not start buying agency debt until January 2009. The Fed’s holdings of Treasury debt peaked in August 2007 at $790 billion, and over the next 17 months the Fed sold off more than $300 billion of those holdings. That’s right, in the middle of the worst liquidity crisis in decades, with banks folding and with Congress handing out tax rebates, the Fed was pulling liquidity OUT of the banking system. 

There are a lot of different indicators and studies that technical analysts use, and all of those tools came into usage due to some degree of merit. But the one factor which seems to be trumping everything else lately is what the Fed is doing with its QEternity program, which shows no sign of stopping anytime soon, or maybe ever. 

This week’s chart compares the SP500 to the total assets held by the Fed. That plot is made up from the total of the Fed’s Treasury holdings and its mortgage backed securities (MBS), which are sometimes referred to as “agency” debt products. The agencies which that title refers to are Fannie Mae, Freddie Mac, etc. 

Putting the chart together this way helps us see just how important the Fed’s purchases have been to the task of sustaining the bull market for stocks. Whenever the Fed has decided to change the slope of the green line, the slope of the SP500 has also changed in a dramatic way. That makes it such an important question to contemplate a “tapering” off in the rate of growth of Fed assets, or even an outright end to quantitative easing (QE).

This chart also helps us see just how critical the Fed’s actions were in bringing about the awful bear market of 2007-09. Back then, the Fed just held Treasuries, and it did not start buying agency debt until January 2009. The Fed’s holdings of Treasury debt peaked in August 2007 at $790 billion, and over the next 17 months the Fed sold off more than $300 billion of those holdings. That’s right, in the middle of the worst liquidity crisis in decades, with banks folding and with Congress handing out tax rebates, the Fed was pulling liquidity OUT of the banking system. 

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