Finster's FDI Index pointing deflation ??

[sishya]

Finster - ooh la la , Looks like we have turned back to deflation again.
Thanks for posting it.

your FDI Index has very little volatility and it has turned the corner and looks like we are in deflation mode again now - stocks down, Gold down or straight, dollar up, Bonds up, Emerging markets Down. your thoughts ? may be time to restart old thread "1..2..3 deflation" . I think EJ was wise to recommend recently to go long USG long Bonds.

http://users.zoominternet.net/~fwuthering/FFF/FinsterDollarIndex

This chart shows the past two hundred weeks of the FDI.


This chart shows the past eight hundred weeks of the FDI.

[lsa420]

Re: Finster's FDI Index pointing deflation ??

The 100 year trend on the FDI link is incredible.

Question. Is the long-term downward trend reversing, or is the current uptrend a short-term correction?

I would argue the latter considering (among other things) the fiscal and monetary policy currently being pursued by the U.S.

[jk]

Re: Finster's FDI Index pointing deflation ??

The 100 year trend on the FDI link is incredible.

Question. Is the long-term downward trend reversing, or is the current uptrend a short-term correction?

was 1930-33 a new trend or a short term correction?

[i check the fdi every week.]

[aweber]

Re: Finster's FDI Index pointing deflation ??

Finster, do you think this one is the last straw in the camel's back ? with deflation the difficulty to pay the debt increases by the minutes. I think with the credit extinction that occurred last year there is lots of deflation to hit the markets yet.

[lsa420]

Re: Finster's FDI Index pointing deflation ??

was 1930-33 a new trend or a short term correction?

[i check the fdi every week.]

The 1930 - 1933 correction ultimately set up the long term downward trend. I'm asking whether the current bounce is a repeat the 30's, and thus a continuation of the downtrend is inevitable.

Or could this be something new altogether? I think it is important to attempt to argue for both.

From my perspective, I think the downtrend will continue, just as it did after the '30 - '33 bounce.

Do you know if there is any data before 1910? Ironically the drop off really starts after the Fed is created in 1913.

[icm63]

Re: Finster's FDI Index pointing deflation ??

Finster, nice study. The chart would be great with the overay of the $USD dollar index. It seams to correlate nicely with the $USD and inverse gold swings..

Its says to me GOLD (the crowded trade) is in for a shock soon !
GOLD $600 USD per once.:p

[metalman]

Re: Finster's FDI Index pointing deflation ??

Finster - ooh la la , Looks like we have turned back to deflation again.
Thanks for posting it.

your FDI Index has very little volatility and it has turned the corner and looks like we are in deflation mode again now - stocks down, Gold down or straight, dollar up, Bonds up, Emerging markets Down. your thoughts ? may be time to restart old thread "1..2..3 deflation" . I think EJ was wise to recommend recently to go long USG long Bonds.

for a guy who claims to 'not be a trader' who makes short term market trade calls, the timing is uncanny...

The cheh shaped recovery – Part II: Yield curve says what? June 17, 2009, iTulip

• ZIRP hell for debtors
• First Bounce is over
• Entering the high volatility zone

can ya spot jun 17 here?



schiff et al were chirping re 'short bonds'

really... how the hell?

[ricket]

Re: Finster's FDI Index pointing deflation ??

can ya spot jun 17 here?

schiff et al were chirping re 'short bonds'

really... how the hell?

Stream of consciousness thinking is not the way to accurately convey your thoughts...

In order to inform others of what you are thinking, you first have to translate your thoughts to where someone else can read them. Language has served that purpose quite well the past few thousand years. Theres a reason for that.

Please try and put your thought into better coherency than just: "OMG, !!@)243313 DID yusu see that/a market moooovee todayyyyy!!!!" *cough* megametalmannero3thunderdownunderstarvingsteve *cough*. It will help the community well!

kthxbye

;)

[jiimbergin]

Re: Finster's FDI Index pointing deflation ??

Stream of consciousness thinking is not the way to accurately convey your thoughts...

In order to inform others of what you are thinking, you first have to translate your thoughts to where someone else can read them. Language has served that purpose quite well the past few thousand years. Theres a reason for that.

Please try and put your thought into better coherency than just: "OMG, !!@)243313 DID yusu see that/a market moooovee todayyyyy!!!!" *cough* megametalmannero3thunderdownunderstarvingsteve *cough*. It will help the community well!

kthxbye

;)

I thought he very accurately coveyed his thoughts
jim

[Slimprofits]

Re: Finster's FDI Index pointing deflation ??

Looks as if it turned out to be a bump in the road.

[Starving Steve]

Re: Finster's FDI Index pointing deflation ??

I thought he very accurately coveyed his thoughts
jim

My 2cents for to-day is that Bernanke and the Fed now are at risk of being blamed for the past eight decades of inflation by an outraged and hysterical public. Already, the buy-gold ads are on TV every five or ten minutes. If any serious inflation does manifest itself, the public will be draining its savings from banks and bonds; a full-blown panic into gold, oil, copper, silver, land, energy, commodities, real estate (whatever) would begin. This panic would crash stocks and bonds and the dollar--- the last thing Bernanke and the Fed needs.... My point is that we may be at a tipping-point right now, especially with gold trying to take-out the $1000 mark again.

So, the Fed may be forced to deflate, whether it wants to deflate or not.
The dollar has to be kept strong, whatever Keynes wrote, otherwise full-blown panic begins, and that panic would begin fast.

And if the Fed pulls a Latin American surprise like an over-night, out-of-the-blue devaluation, the public would panic into commodities or gold; again the Fed would lose control, and fast. So the Fed is now forced to deflate, whether it wants to deflate or not.

Finally, Richard Russell of the Dow Theory Letter just gave a major buy signal for stox. His buy signal implies a Fed-managed deflation. It also implies that some kind of major stock market bubble is ahead.

If I were to guess, I would guess the bubble is windmills and solar power. That means a public rush into alternative energy stox. The bubble would last about two or three years.....When the bubble bursts--- and the bubble, whatever it is in, always bursts--- the public will wake-up with nothing but stocks in worthless windmill and solar energy companies. Then the public will come to its senses about the need for oil drilling, atomic energy, natural gas, and hydro-electric power.

About that time, two or three years from now, the goofiness (sp?) of the man-made global warming bunch will be exposed for all to see, simply because there will be no global warming at all. And sea levels will be little changed. The world will be doing fine, but solar and wind stocks will crash, along with the rest of the stock market.

Whatever bubble is now forming in the US stock market, enjoy it, but don't get taken for a ride. The upside-down h will have been traced-out and completed.

[metalman]

Re: Finster's FDI Index pointing deflation ??

Finally, Richard Russell of the Dow Theory Letter just gave a major buy signal for stox. His buy signal implies a Fed-managed deflation. It also implies that some kind of major stock market bubble is ahead.

does he mean a new bull market started in mar 2009, not a bounce in the debt deflation bear market?

If I were to guess, I would guess the bubble is windmills and solar power. That means a public rush into alternative energy stox. The bubble would last about two or three years.....When the bubble bursts--- and the bubble, whatever it is in, always bursts--- the public will wake-up with nothing but stocks in worthless windmill and solar energy companies. Then the public will come to its senses about the need for oil drilling, atomic energy, natural gas, and hydro-electric power.

interesting idea, steve. ever hear of this guy? had a similar idea a couple years ago. :cool:

[GRG55]

Re: Finster's FDI Index pointing deflation ??

...So the Fed is now forced to deflate, whether it wants to deflate or not.

Finally, Richard Russell of the Dow Theory Letter just gave a major buy signal for stox. His buy signal implies a Fed-managed deflation. It also implies that some kind of major stock market bubble is ahead.

A DE-flation and a stock market bubble...at the same time? Never happened in history and won't happen now.

You should have noticed by now that every time the Fed temporarily tries to withdraw liquidity the stock market starts to tank and the US Dollar index starts to rise. Immediately.

The Fed and the Administration are in a delicate dance of trying to maintain that ever elusive "confidence" by propping up the stock market [see EJ's post about the correlation between consumer confidence and the DJIA] and propping up the US Dollar [see recent reports of Geithner's 2009 Arabian Nights Tour]. The two objectives conflict with each other. At some point they will either fumble the ball, or an exogenous event will take it out of their hands.

[Starving Steve]

Re: Finster's FDI Index pointing deflation ??

A DE-flation and a stock market bubble...at the same time? Never happened in history and won't happen now.

You should have noticed by now that every time the Fed temporarily tries to withdraw liquidity the stock market starts to tank and the US Dollar index starts to rise. Immediately.

The Fed and the Administration are in a delicate dance of trying to maintain that ever elusive "confidence" by propping up the stock market [see EJ's post about the correlation between consumer confidence and the DJIA] and propping up the US Dollar [see recent reports of Geithner's 2009 Arabian Nights Tour]. The two objectives conflict with each other. At some point they will either fumble the ball, or an exogenous event will take it out of their hands.

Do you believe Richard Russell is wrong, that he made a bad call with his buy signal? He is the oldest and most trusted stock market guru, but anyone can be wrong.

I suspect liquidity will NOT be drained from the economy right now, and the stock market suspects this too. The liquidity will go for one or more bubbles within the stock market.

As for the long-run, yes, there will be inflation galore, but not right now.
Right now inflation would kill Bernanke's chance of re-appointment, and it would kill the Fed too. Already calls are out in Congress to audit the Fed and maybe abolish it.

I think the inflation will come when oil goes back to $147, but oil needs more time to cement a nice base here in the $60 or $70/barrel range. Just be patient (sp?); probably we are looking at 2011 before the fun begins with oil..... This will be just about the time public is fed-up with windmills and solar, carbon taxes, cap and trade, G8 meetings, global warming scares, and rubbish like that. :rolleyes:

[GRG55]

Re: Finster's FDI Index pointing deflation ??

Do you believe Richard Russell is wrong, that he made a bad call with his buy signal? He is the oldest and most trusted stock market guru, but anyone can be wrong...

No idea if he is right or wrong. I assume his call is based on the "Dow Theory" giving a buy signal as that is what he is famous for using. Regardless, it's a lot easier for the Fed/Treasury Dept./Administration to inflate the stock market than the real economy.

However, if there is a stock market "boom" or "bubble" it will be in the context of a depreciating US Dollar, not DE-flation.