Right and Wrong
We called the rate hike by the Federal Reserve last week, but our overall call about the recession has an obstacle. This could make our "stealth" recession into a full recession call wrong. The SPX is starting to form a reverse head and shoulders pattern. If it does, the Bulls will be singing. Fibonacci price projections could send the index 110 points higher to 5700. However, head fakes do happen and we stand by our call.
One Strong Reason...
...why we are standing firm is this revelation from the banking industry. They are putting aside money to cover loan losses in commercial real estate and from bond holdings (prior lower rate issues). By the way, the Fed's rate hikes are causing havoc to our national debt figures. They are ballooning. We are watching the dollar. It is forming a new consolidation range from 105 to 99. Keep in mind, at the end of consolidation, big price swings happen. There are other factors like the challenge to King Dollar by the BRICS. We got news on their currency expectation...
Gold Backed Currency...
...by the BRICS is officially off the table. The central point about a true gold currency is the ability to convert those dollars for gold. These people will never agree to giving up their gold. This ends the threat to the USD for now. It is not all good news. There are over 40 nations seeking to join the BRICS. This reveals a lot of resentment over the dollar.
Singapore Blues...
...the small, so-called city state puts a premium on land. Real estate is expensive and the latest news has got people singing the blues. Two large real estate firms, Dalian Wanda Group and County Garden both need financing or they may go bust. People love owning their own homes, but greed always enters when money is involved. Remember just last year the largest real estate firm in China, Evergrande defaulted. Not much news has been forthcoming. It is a back-room deal that keeps the company operating. Then, we hear another large Chinese real estate firm, Greenland also needs financial help. We would like to make a suggestion, but we will admit our knowledge, especially when it relates to their culture, is limited.
We suggest, leave Singapore for the island of Matsu. Singapore will suffer for a lack of free choices like Hong Kong due to Communist control. The island use to be a large fishing port, but modern trawlers have changed the landscape. Now, there are many abandoned homes and the island has many needs like doctors, mechanics, etc. The people will feed and house you for free during their festival. You can sell your property high and live there cheaply while you start your own business. Just an idea.
Poor Nation?
UK. The newspaper, the Telegraph, stated this point. They show how the average standard of living cannot even compete with Serbia. The English may end up asking Ireland for help. Our point here is the US is going down this same road. It takes a yearly salary of over $64K to purchase a starter home. Don't be fooled by stats declaring the average income of $58K. They are skewed. The majority of the population makes around $35K per year.
Good News...
...American football is just one month away. Go Niners! Peace.
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