Correlation Economics Backup

Very informative video on Deutsche Bank.

Doesn't look very well here.

New WGC report is out. Gold demand was down in Q4 2019. Gold supply was also down in Q4 2019 on lower mining production.

Here are the budget projections of the U.S. The debt will never be paid off.

Air cargo is correlated to GDP. That is why in 2020, the coronavirus will have a significant effect on GDP as air transportation is disrupted.

The energy junk bond market accounts for 13% of CCC rated bonds. This is why when oil goes down, the junk bond sector will get a hit. Oil and banks are interconnected in this way.

The Fed held rates steady. But what's very important is that repo is going to be extended until April 2020. This is supportive for gold. Bond yields were falling and starting to invert again. This has implications, because this gives a higher probability of a rate cut coming in March. By the way, he also said: "Many people benefit from low interest rates." Do you want more evidence that a rate cut is coming? He also said that excess reserves shouldn't go below $1.5 trillion, he wanted ample reserves above $1.5 trillion. He said that he didn't anticipate that the reserves would need to be higher than $1.5 trillion. This means he will expand the balance sheet even more.

The Fed will cut rates to 0% this year.  

This looks like a bubble to me.

The CPI and PCE are both important indicators of U.S. inflation. While CPI is more important from the perspective of an individual, PCE is more important from the perspective of monetary policy.  The CPI and PCE do not cover identical categories of personal spending. The PCE has a broader scope than the CPI, as it captures the expenditures by both rural and urban consumers. Unlike the CPI, the PCE includes expenditures from non-profit institutions that serve households. The Fed has given preference to PCE due to its broader scope and “chained base” for calculations.

The Ray Dalio portfolio is pretty high on bonds, which means he is expecting an inversion in the yield curve.

The Coronavirus is growing exponentially. This will have implications on world trade. Oil will go down (as will the Chinese Yuan), inflation will go up due to less efficiency and less productivity. Bond yields are crashing. Yield curve is inverting. Gold goes up on uncertainty and stagflation. This is a perfect environment for gold miners.   Most deaths are in the elderly category. Yield curve inverting, 10 year bond yield and copper are all going down. Oil is down as Asia is the largest consumer of oil. The effect is estimated to be 20% less demand in China or 3 million barrels per day. Oil should be around $30/barrel if we use this curve. Som more info on the coronavirus below based on Turner's findings: ‘Chinese overheid geeft bevel dat alle huisdieren in getroffen gebieden moeten worden afgemaakt’ – 8 e zieke in VS, ‘artsen in Pittsburgh hebben zwijgplicht gekregen over corona patiënt die al 2 weken in de stad rondliep’ – Statistieken: Mogelijk al 60 tot 150 onbevestigde be...

China power consumption grew 4.5% in 2019 . By deduction this means that December 2019 only grew by 2.6%.

Whenever the stock level of palladium goes down, this indicates there is a shortage and the palladium price will go up. This started to happen in 2014, when diesel cars were scrutinized by regulators. More and more cars went from diesel to gasoline, hence the supply shortage in palladium. The same correlation between stock level and price goes for platinum. In platinum's case, there is no shortage yet. Actually, there is an oversupply today.

When you have crypto, you're bound to lose some.  Explanation starts here .

I've stumbled upon a new stock pick. Sofina is a holding company which invests 80% of its holdings in private equities of fast growing businesses (e.g. digital transformation). They have close relations with Silicon valley so they have some privileges that normal firms don't have. These private equities are European companies with global exposure. We all know Europe is now very undervalued and we should take advantage of this undervaluation. Extremely high profits at a PE ratio of 7, so very undervalued. On top of that, private equity is generally cheaper than public equity at this time.

It hasn't been this bad at the U.S. Mint. The sales collapsed in 2017, right when Trump got elected. Investors sold their gold and went into stocks.

PSLV Sprott physical silver trust premium is slowly rising, could be bullish for silver.   If you want to bet on the rise of silver, buy the mining companies that are most exposed to silver.

The Chinese state owned banks are the last banks standing. Rural and city bank NPL's are rising.

Next week, it's Chinese new year. They already bought their gold in December: 158 tonnes. Take that into account...

Another way to predict real GDP is to look at the transportation sector. The Cass freight index is correlated to GDP. Similarly, air cargo is correlated to GDP. That is why in 2020, the coronavirus had a significant effect on GDP as air transportation had been disrupted.

How do you force China to buy soybeans from the U.S., while it's much cheaper to buy from Brazil due to the U.S. tariffs? Even if China were to execute the trade deal, this would be highly inflationary for the U.S. consumer.

Powell said he would stop the repo operations in mid January. But yesterday, news came out that Powell will extend the repo operations until mid February. There is not a single truth coming out of this person's mouth. => stocks will go higher on extended liquidity injections. Gold will go higher as well.

Palladium lease rates have been rising tremendously and signal that there is a shortage of palladium.   JP Morgan is fleeing and reducing eligible palladium stock at the COMEX. When this shortage persists and automakers won't have access to palladium anymore, they won't be able to produce cars, because they simply don't have palladium anymore. So what do you think they will do when this happens? Answer: Platinum is going to shoot past $1000/ounce as I predicted.

A month ago Trump was going to cut tariffs in half and suddenly: => Tariffs are to stay in place till at least October 2020. Very bullish for precious metals. More domestic inflation and slow growth. Remember what happened on 1 August 2019:    

We've seen deposits grow tremendously, but loan growth has stalled. Typically a sign of a recession. Commercial loans are dropping.

Another sign that the unemployment rate will move higher.

As I predicted in my gold forecaster index video , non farm payrolls were missing estimates because I knew hirings were in the dumps.

Another week passed, another new high.

Russia and Malaysia oil prices are trading at a premium, benefitting from the Iran tensions. A premium of $15/barrel.