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FTSE big crash


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I hate to say it, and it should be blindingly obvious by now: DON'T FIGHT THE FED.

For a long time now the Fed have done a very effective job in ensuring new currency create goes into supporting financial assets instead of goods and services. Who knows how long it can continue? 

Until we start to see consumer price inflation really start to take off then you are foolish to try to bet against this continuing. Yes, by all logical explanations inflation should start to increase, but you know what? We just got a 0.8% YoY CPI print. It ain't happening.. at least not yet. Maybe we will get an inflation spike in the near future, but are you counting on this as your whole investment thesis? How has that played out in the last decade? Right now consumer demand has collapsed, energy prices have collapsed.  If the Fed was propping up the markets before then... nothing has changed. 

Trade what you see, not what you think. 

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I see a lot of people believing that printing money continuously will have no adverse effects. They are wrong and it will eventually.  The real question is how much air is in the balloon now? Will one extra puff make it pop? 

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The printing will continue throughout the decade, it is the states last chance to borrow. 

It will be 18 months before we see the start of inflation because of the existing deflationary conditions that need to worked through. When it starts it will appear to runaway, in a few years perhaps by 2025 it will be double digits and force interest rates to rise to counter. Interest rates will reach historically "normal" levels again towards the end of the decade 6-7% base rate. 

By the end of the decade we will see conditions that force a debt default and new monetary system. High inflation, high interest rates, maxed out debt load. This decade is the states last chance to borrow and spend, after this cycle there will be no chance due to existing debt load and required interest rates to prevent runaway inflation. They have been given the nod to do this, in march £600 billion of infrastructure spending was announced and this is just the start. 

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I hate to say this @KDave but the Bond market does not agree with you. Long term rates suggest that these current conditions are here to stay for the foreseeable future. 

Now that outlook could change over the next few years, but right here, right now, that's not what the market is suggesting. We haven't even seen the start of it.

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53 minutes ago, vand said:

Trade what you see, not what you think. 

Absolutly.  And look further than ones beliefs, its clear that many just dont see that pumping assets is not directly inflationary, despite 10 yrs of evidence (20+ years in Japan).  It doesn't increase consumer demand, while increasing supply side capacity, so there is little pressure on prices. 

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The government will be spending its way out of this crisis. Its not a bailout of the banks, it will be a decade of borrowing and investment spending, huge demand created in parts of the economy while other parts become less important. 

Just have a look at what the government are saying and doing. £600 billion for infrastructure already, what is that a third of our national debt again to be borrowed and invested. This is just the start of it. 

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Yes command economy is what I expect, think 1930's economies. Infrastructure spending will only be a part of it, done on the back of cheap debt. The money will make its way into the economy because it is being spent.

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6 hours ago, GoldenPhil said:

It's funny, everyone seems to have a lot of knowledge and opinions but nobody will take a guess at the value of the FTSE in 6 months.

I say 6000 plus or minus 10% 

so you're saying it could be higher or  lower with the midpoint exactly where we currently are.

N0 SH1T SHERLOCK!

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6 hours ago, GoldenPhil said:

It's funny, everyone seems to have a lot of knowledge and opinions but nobody will take a guess at the value of the FTSE in 6 months.

I say 6000 plus or minus 10% 

4000

Help thread for members new to silver/gold stacking/collecting

The Money Printing Myth the Fed can't and don't money print - Deflation ahead, not inflation 

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My rather bold prediction, for FWIW:

FTSE to climb back past 7,000+ in 6 months

 

Why? It's not really about the FTSE. There is a popularity contest taking place on the other side of the pond, one in which the sitting incumbent will bully and pressurize the Fed to do whatever it takes to reinflate the market back up to and even past the old highs. In his mind the stock market is a vindication of his tenure, so he needs to have it saying to the voters that they've never had it so good.

That is why I think Dow 30k+, FTSE 7k are very distinct possibilities. Nothing to do with fundamentals; short term stock market action rarely is.

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59 minutes ago, GoldenPhil said:

Great.  Just what I thought in the OP.

Good instincts if this comes to pass.

I don't think it will be the same, he is talking about 80% declines, this was under the gold standard and a comparatively laissez faire government attitude to the economy, compared to today with MMT and the ability to print, central banks buying up everything in sight including stocks, governments bailing people and business out left right and center, banks giving mortgage and credit card holidays - you get the picture. Its not the same environment.

History rhymes. I think the price action of the market will also rhyme but not be anywhere near as extreme as the 30's - after the deflationary pressures are worked through via printing, we will see historically abnormal inflation followed by interest rate rises, not a grinding depression. Economic and social consequences will also rhyme, politics will be interesting. 

 

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I think I'll bump this thread every week to remind people predicting a crash that they're wrong and still wrong. 

 

Week #1 guys. 
See you next week.

 

I may stop when we take out the all time highs (and the crashmongers are still sitting on the sidelines)

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17 minutes ago, vand said:

I think I'll bump this thread every week to remind people predicting a crash that they're wrong and still wrong. 

 

Week #1 guys. 
See you next week.

 

I may stop when we take out the all time highs (and the crashmongers are still sitting on the sidelines)

Perhaps once a week is a little excessive how about the 15th of every month? 

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