Please find the global macro webinar as promised is attached at the link below.  I apologize for the quality of the slides in the presentation; they are quite bad and I couldn’t seem to improve them.  But the audio is fine so I suggest you follow along using the PDF version of the slides instead which are also available at the link below.   

Webinar video

Power Point Presentation 

It is shaping up to be a very interesting year.  We are already seeing plenty of opportunities-long the dollar, short stocks, short emerging markets, long bonds, etc. only one-month into the new year. 

Just to repeat the major investment themes covered in the webinar recording and on page four of the power point:

• Deflation pressures continue and likely intensify [this is structural]
• No rush to taper aggressively
• US current account improvement and taper – money flows back to center
• Euro crisis likely revisited later in the year – politics and single currency straight jacket
• China muddles through but reform is key – slower GDP growth either way
• Japan still a wildcard

Please let me know if you have questions or would like more information on any of the topics I covered.   

Regards,

Jack 

“Products are paid for with products,” said French economist and free-trade proponent Jean-Baptiste Say. 

He meant that if you want to get something, you better have something you can trade for it. 

What would Say make of the latest US GDP report? 

Last week brought two important pieces of news: one deceptive, the other fraudulent. 

The deceptive news was that the Fed, in its last Ben Bernanke moment, would stay the course. The course in question is the “12-Step Counterfeiters Anonymous” program popularly known as “tapering” of QE. 

The Fed says it will stay on the program, leading investors to believe that the central bank’s PhDs were steadfast in their commitment to end their bond buying… and that the economy was healthy enough that it didn’t need QE to prop it up. 

Neither of those things is true. 

The fraudulent news was that US economy grew at a 3.2% annualized pace in the last quarter of 2013. 

We’re still in the weakest recovery since the end of World War II. But since 1950, the composition of the US economy has changed so substantially that GDP ‘growth’ no longer means what it used to mean. 

“Disappointing numbers on jobs and housing also raise concerns about whether the economy is accelerating,” reports the Wall Street Journal. 

Wait. Jobs and housing are fairly important. If the news from those quarters is disappointing, what’s really up with the economy? 

The explanation: “A big driver of growth in the fourth quarter was consumer spending, which grew 3.3%.” 

The Journal quotes Bill Simon, Wal-Mart’s USA CEO: “I never cease to be amazed at the American consumers. They figure out a way to make it work…” 

We are not so much amazed as appalled. And we are not so much reassured at this recovery, however weak, as we are alarmed by it. 

Where did consumers get the money? 

They didn’t earn it. So, they had to run down their balance sheets, either by spending their savings… or taking on debt. 

That makes this a new kind of growth: The more you grow the poorer you get. 

The economy used to grow by making people wealthier. Now, consumers go further into debt, while their incomes are stagnant or falling. 

In 1980, a $7 trillion economy included $2 trillion of what City economist and author of Life After Growth Tim Morgan calls “globally marketable output” (GMO) – real wealth, the kind of stuff you can sell to pay your bills. 

But then the economy underwent plastic surgery at the hands of quack policy makers. Now, it’s unrecognizable. 

Today, we have a $16 trillion economy. But how much of that is from GMO? Well, about $13 trillion is consumer spending. And various statistical adjustments. Only $3 trillion is what Morgan calls GMO. 

That’s the real growth of the US economy since 1980 – a piddly, pathetic $33 billion a year. Barely enough to keep up with population increases. 

Growth? Forget it. 

Regards,

Bill

From the desk of Chris Hunter, Editor-in-Chief, Bonner & Partners

Are US stocks reflecting the feds’ phony growth figures… or the real growth rate of Morgan’s “globally marketable output”?

Doubts are certainly creeping into the market… 

This chart shows six-month price action for the S&P 500 plotted against its 50-day and 200-day simple moving averages (blue and red lines). 

Moving averages help investors determine recent price trends… and levels of support and resistance… by smoothing out statistical “noise” from price fluctuations. 

Shorter-term moving averages, such as the 50-day moving average, look at shorter-term price momentum. 

Long-term investors tend to pay particular attention to longer moving averages, because they highlight longer-term price trends. The 200-day moving average, for instance, is widely seen as the “line in the sand” between a bull and a bear market. 

As you can see from the chart above, the recent selloff has done considerable technical damage to the S&P 500. The index has broken below support at its 50-day moving average for the first time since last October. 

But the index is still well above support at its 200-day moving average. And both moving averages are still trending upward. 

Last week saw plenty of sideways action (yellow shaded area on the chart above), but no discernible trend either up or down. 

This is “no man’s land” for the S&P 500. 

If this sideways action gives way… and the index breaks lower… the next big level of support is at the 200-day moving average. 

The bulls will be looking for the index to climb back above its 50-day moving average and resume its uptrend. 

Which way the index breaks from its sideways trading will determine the market’s next big move.