The title has a lot of "flationary" ending words. The first two pertain to prices. The last is the only one that reflects an economy. The terms get kicked around lately in the news. We like to express our opinion on our economy and a "beware" forecast on two leaders in teck.
Deflation...
is defined to mean shrinking prices. This could be do to oversupply, expectation of sales or some combination. It also implies the increase value in your currency to purchase items.
Inflation...
is the opposite of deflation. It reflects increases in prices. This could be do to limited supply, expectation of sales or some combination. It also implies that your currency has lost purchasing power. There should be no debate that our economy is in an inflationary period.
Stagflation...
is the most dangerous reflection of an economy. It means inflation is persistent. The next aspect is not overly important to the condition of stagflation. It says unemployment is high. Dear Reader, if one looks at the labor participation rate, our unemployment picture changes. The government reports a very low unemployment rate of 3.7%. If you look at the labor participation rate and combine the two, the result pushes the unemploymentrate to around 7%. Not good, but not terrible. Continuing...The main cause of inflation that could lead to stagflation is a government through its central bank expanding the money supply. We told you last week that the Fed exploded the money supply by 4Xs. They caused this inflation to happen. Continuing...The next point in stagflation refers to economic growth. However, this needs to be looked at with a clearer glass. If a nations economic growth is lower than its inflationary rate, this nation is under stagflation. Folks, no matter what the Federal Reserve chairman says, our economy is in stagflation. Our economic growth is well below our inflationary rate. If your economy is in staglation, you are in a recession. We are in Recession!
One other sign...
...is the market action. Even though the dollar has declined, the market has not bounced. This reflects market sentiment. It has shifted to the downside. Santa can't deliver to the Ukraine or anywhere else.
Two Tecks Wrecking...
in share price. One reflects the economy and its outlook. The other is due to manipulation that we feel could lead to failure and economic contagion.
Apple: has fallen in share price from $181 last December to $134 last Friday. The downside volume is strong. The share price has returned to its last breakout level. This suggests that Apple could fall all the way back to $115. Keep in mind, it is already below its 50-day moving average and $111 is the 200-day moving average. Pay attention to volume. The present trend is not promising. Apple could fall all the way to $81 or $100 below last years close.
Tesla: Musk has big problems. He overpaid for Twitter. The media firm takes in $1 billion in revenues, but loses $1.5 billion. This is a big bleed. Musk is forcing Tesla to make loans for Twitter. He is also selling his shares in Tesla. He sold over $3 billion. He is using that money to keep Twitter afloat. While he damages Tesla, the electric car company is facing stronger and more competition. The falling share price has cost investors in Tesla over $132 billion in value. Its price is below the 50-day and 200-day moving average. Keep in mind its PE/ratio is over 46. Most car firms have much lower levels. Ford is 5 and Toyota is 8. Combining everything, Tesla could fall all the way to $91. Ouch!
Enjoy the holidays. Keep a smile, try to buy American and use a cashier. It is faster than self checkout! It keeps a job for your neighbor. Peace.
