beaconequity.com / By Dominique de Kevelioc de Bailleul / August 29, 2012
Desperate to print Wiemar-style to fight off the most viscous Kondratiev Winter on record, Federal Reserve Chairman Ben Bernanke may not satisfy ‘inflation trade’ onlookers at the close of his Jackson Hole speech scheduled Friday. He may, instead, merely allow months of anticipatory front-running of stocks do the work of propping up asset prices for him.
And if investors don’t get the ‘all-systems go’ at Jackson Hole, there’s always the FOMC meeting of Sept. 12 & 13 to get the good news. That’s when market volatility could move off the charts, maybe extreme volatility to the downside, according some Wall Street analysts.
“With the equity market pricing in a significant chance of QE3, stock prices are no longer as useful a signal to Fed officials. Should the Fed disappoint at its September policy meeting, the risk of a stock sell-off is high,” Bank of America Merrill Lynch analysts wrote in a note to clients, Aug. 21.
“Some in the markets think that the Fed effectively targets equity prices, meaning that to predict Fed policy, one merely needs to track the U.S. stock market,” the analysts add. “There is a curious circularity to this view, however: the Fed will not launch QE3 so long as stock prices are high, yet the stock market is high because it anticipates QE3.”
The old adage on the Street, ‘buy the rumor, sell the fact’, may be at play here. But if Bernanke plays too-hard-to-get with investors in the coming weeks, a nasty fall could be in store for the Fed chief—a fall that could outright overwhelm the NY Fed’s PPT and result in a stock market plunge akin to the Crash of 1987. Maybe.
Today one of the top CEO’s in the world told King World News that going forward, “… we will see increasing central bank demand for gold.” He also warned, “We will (also) see reduced supply.” Sean Boyd, who is CEO of $8 billion Agnico Eagle, also discussed why the gold price is set up to frustrate the bears by nearly doubling from current levels.
The topic of the student loan bubble is not new: having crossed $1 trillion recently, student debt is now the biggest consumer debt category, greater even than US credit card debt. We have extensively discussed the implications of the parabolic curve representing outstanding student debt before, and it is no surprise that the issue of student loans has become of one of the key topics of debate in the ongoing presidential mudslinging campaign. As is also known, an increasing portion of student debt is funded by the government at an ever lower rate of interest: after all it is critical to allow the bubble to keep growing with as little interest expense diverting the stream of cash from the end borrower – wide eyed students who increasingly realize they are stuck with tens of thousands in loans and no jobs available to allow them to repay this debt, in effect making an entire generation debt slaves. Finally, as should be known, student debt is non-dischargeable, meaning once a person becomes indentured, they are so for life, and filing bankruptcy will do nothing to resolve debt claims against the individual. After all there is no other collateral by definition that can be confiscated by the creditor – the only thing the debtor “acquires” in exchange for this debt is a skillset, which sadly in the New Normal is increasingly redundant. But there has always been one question outstanding: just what does all this easily accessible and now pervasive student debt fund? The chart below, courtesy of Bloomberg, provides the answer: in the past 3 decades there has been no other cost that comes even remotely close to matching the near hyperinflationary surge in college tuition and costs.
“War.
Before the collapse of mega behemoth Bear Stearns there were rumors that a major Wall Street firm had bitten off more than it could chew. Mainstream media, for the most part, completely ignored the rumors, with some financial experts like CNBC’s premier Wall Street insider Jim Cramer literally screaming at viewers on the March 11, 2008 airing of Mad Money in which he vehemently denied any problems saying that the company was “fine.”
For a while, we’ve had a nagging feeling that we’ve been witnessing something profound that the markets have yet to grasp. We are not talking about a global smorgasbord of events that has been amply covered elsewhere. As readers might know, our particular interest is in silver, and that is where we see an elephant in the room that has yet to attract any headlines. No doubt most readers are aware of the recent developments in countries like Argentina, Bolivia, Peru and others, with respect to what can be broadly classified as “resource nationalism.” Our general views on the subject were detailed a few years ago. As discussed by this writer and others, such developments are not new and certainly not limited to silver or even the mining sector. However, in our opinion, it is in the silver space that these events are likely to have the most profound effect.
Did you know that median household income in the United States is lower today than it was when the last recession supposedly ended? If we are in the middle of an “economic recovery”, how can this possibly be happening? Stunning new statistics compiled by 
The Godfather of newsletter writers, Richard Russell, believes we are seeing the beginning of a major move in gold. Here is what Russell, who is now 88 and has been writing about the markets for nearly six decades, had to say: “The wild cards — the stock market takes an unexpected spill in September, and the employment and unemployment statistics worsen just around election time.”
