Monthly Archives: January 2020

Grantham’s Forecast: Is A Crash About To Start?

   Jeremy Grantham of GMO published a document at gmo.com on Jan. 3, 2018 that the SP needs to go to 3,400 to 3,700 to be high enough to have a crash. First a melt-up (where stocks go up far too fast) is needed to lead to a crash. The big stock price increase of 2019 implies that a melt-up has occurred. The idea would be a 60% increase from the 2,100 level in mid-2017 until it reached 3,400 in 21 months. In actuality it took over 30 months to climb nearly 60%. If a bubble is too modest and gentle then apparently it is less likely to crash. Recently the SP reached 3338. It dropped 1% today. Grantham mentioned

2020-01-24T17:44:02-08:00January 24th, 2020|mayflowercapital blog|Comments Off on Grantham’s Forecast: Is A Crash About To Start?

How Will The Man With The Pin Affect Stocks?

      In 2018 Fed chief Powell promised to raise rates and make progress using the Quantitative Tightening (QT) program to reverse out the asset purchases of the QE program. But by December 24, 2018 stocks had dropped about 20% since the previous high point of stocks that was reached in September, 2018. Powell decided to end the QT program and start cutting rates instead of continuing to raise them. When politicians get elected after promising to cut government spending they often catch an illness called Potomac Fever when they start working in Washington. This illness results in them suddenly empathizing with various special interest groups that want handouts at taxpayers’ expense; thus they break the pledge to cut and instead

2020-01-17T17:58:51-08:00January 17th, 2020|mayflowercapital blog|Comments Off on How Will The Man With The Pin Affect Stocks?

Gold Investing: The Hidden Factors

    Should people buy gold to get protection from inflation? The increasing use of Federal Reserve money printing because of the “Repo” crisis implies that the Fed will accidentally trigger a repeat of the terrible inflation of the 1970’s. During that era investors were able to protect themselves by holding short term bonds because the yields kept up with inflation (when a short term bond matured the proceeds could be reinvested at higher rates as inflation rose). But in the post-2008 post-GFC era rates have been artificially low and could be held down to zero by the Fed. Thus investors would not be able to replicate the benefits of short term bonds during a repeat of the 1970’s level of

2020-01-15T12:26:11-08:00January 15th, 2020|mayflowercapital blog|Comments Off on Gold Investing: The Hidden Factors

Payroll Report Shows Shrinking Economy

    Today’s Payroll Report had 145k new jobs, but according to David Rosenberg, when adjusting for downward revisions and BLS Birth-Death model of jobs, employment grew by 79k. In my opinion we need 100k new jobs a month to keep up with population growth, thus by using this as an adjustment for population growth, when subtracted from the 79k figure, jobs actually had a negative growth of 21k last month. The bond market cut the 10 year Treasury yield by 4 bps, implying that the economy is cooling.     The dominant paradigm of the past 30 years is the loss of good paying blue collar jobs due to globalization where the jobs are transferred to low wage EM countries where

2020-01-10T17:32:41-08:00January 10th, 2020|mayflowercapital blog|Comments Off on Payroll Report Shows Shrinking Economy