In search of intrinsic value
100 - $SPX since 1980
Dec 3/14 - The US$ has recently broken out of a long basing pattern. I am going out on a limb here to say that this is, in my opinion, the beginning of a tectonic shift that is heralding asset price deflation. If this should indeed be the case, this 700 points formation is looking ever more probable...
101 - US$ purchasing power versus CPI
Dec 2014 - The recent US$ breakout that I've been tracking since 2010 is a powerful signal. If this change is confirmed by the price taking out the 95 - 100 level convincingly, this would indicate a significant change in the financial landscape of the past twelve years. Most importantly however, my opinion is that this is the manifestation of global asset price devaluation. If I am correct in my assessment, this would imply that going forward a lot of money is going to leave some highly leveraged positions notably in emerging markets. Too, if the change we are currently witnessing should develop at the same speed, a lot of hedges and derivative positions are going to generate significant losses for sovereigns, sovereign funds, investment funds and pension funds. Adapting to this new reality for large investors is going to be fraught with traps and dangers of all sorts, just at a time when we are witnessing unprecedented economic, financial and monetary conditions...
105 - 30years US Treasury Bond since 1980
110 - $SPX, the 30yr US TBond and the US Dollar since 1980
Dec 3/14 - This is an important break out. It may very well herald a period of asset price deflation in which case the major indexes may not fare as well going forward...
Apr 15/14 - The reason I think the US$ is on the rise is not due to a belief of economic or financial strength in the USA. Rather, the Dollar is headed higher simply because the currencies of member countries that have adopted the US$ as reserve currency (Floating Exchange Rate Mechanism) must arithmetically suffer from aberrant US$ monetary policy...
120 - $SPX and gold since 1980
125 - Gold since 1980
126 - Gold bullion inflated by the purchasing power of the US$
127 - Mining shares investment sentiment
130 - $SPX valued in terms of gold bullion
135 - The 30yr US Treasury Bond valued in terms of gold bullion