by Mike Maloney
Transcript:
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hi there’s something going on today that I think ranges from very ominous who
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very scary there was a meeting between fed chairman Janet Yellen and Barack
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Obama today and you know if you google yeltsin Obama meeting or something like
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that you end up with all of these results on that meeting but when you
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read them they’re all identical they’re just fluff it’s basically you know they
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talked about the economy and Barack Obama said you’re doing a good job Janet
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gave her a pat on the back and the thing is there was a meeting today advance
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notice of meeting under expedited procedures of the this is the Board of
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Governors Federal Reserve System website so Board of Governors of the Federal
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Reserve System at 11 a.m. this morning Monday April 11 so there is the meeting
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and it was to review and it was reviewing determination by the Board of
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Governors of the advanced and discount rates to be charged by the Federal
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Reserve Banks so this is basically a meeting setting monetary policy and they
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always the press always reports on these meetings this meeting was scheduled last
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Thursday April 7th and there’s some other stuff that the Fed became aware of
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about that same date show you in a minute but if you google said meeting
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what you come up with is a whole bunch more about the meeting that she had with
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Barack Obama at the White House and then if you google fed governor meeting what
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you come up with is the coverage that they had on the meeting on April 6 there
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was a fed governors meeting and so you see it numerous stories and the story
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that happened today but it’s not about the Fed governors meeting it’s about the
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meeting with the president at the White House and if you go to the white house’s
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site there is this press release with one paragraph here and they talked about
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both the near-term and long-term growth outlook the state of the labour market
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in equality potential risk to the economy both the United States and
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globally and this is what every press outlet has reported nothing other than
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that and basically Barack Obama gave her a pat on the back and said she was doing
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a great job that if you look you know there’s the april sixth meeting there’s
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the meeting that happens today April 11 but there’s a meeting scheduled for
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tomorrow and for the next day now this is for meetings already and we haven’t
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even gotten halfway through the month this goes up to the 13th that would
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suggest eight meetings are more are going to happen this month
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highly unusual I went all the way back to January of last year and there’s I
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don’t see anywhere where they’ve had eight meetings that had like six
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meetings in a month that has happened but to me this very often what you’ll
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see is that they have these meetings in secret and when there’s an emergency
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they try to fix it without telling anybody in paper over it and then they
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have some press announcement the next day that they’ve bailed out you know
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they’ve ranged merger of Paris you know sales for Bear Stearns or Lehman failed
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but don’t worry we’re printing a whole bunch of currency and bailing out the
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banks
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you find out about it after it’s done this is the Federal Reserve Bank of
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Atlanta and it’s their report on GDP and so their latest forecast on this is for
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the first quarter so this is a seasonally adjusted annual rate in the
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first quarter is now down to 0.1% down from 0.48% fifth so just a few days ago
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they were expecting 0.4% growth now it’s down to 0.1% and that is because the
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wholesale trade report from the USS Census Bureau the forecast of the
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contribution of inventory investment to GDP inventory investment has fallen from
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negative from minus 0.4% to end its been revised now to 0-2 you know it’s it’s
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0.7% negative that is bad we’re seeing you know we’re almost 1 percentage point
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of negative growth of manufacturing and the reason that manufacturing
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contributing to inventory is falling like that is because inventory levels
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have been rising that people aren’t buying stuff so now I’m going to talk
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about the stock market again and stuff you’ve seen this church just three weeks
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ago if you’ve been tracking the videos that I have been making but it’s
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important to show you this again because they’ve updated the information and won
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the thing about I’m showing it to you this time instead of downloading a bunch
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of separate charts join you on the Fed’s website and it’s it’s very interactive
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you can zoom in two different periods like if you want to see the 1987 stock
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market crash right there and there was no monetary policy changes base currency
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just kept on going up
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but this is the largest one-day crash in history it’s one of the major crashes of
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all time and one of the things that you can also see here is zero correlation
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between the growth of base currency and the growth of the Wilshire 5000 for
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market cap index so this is the value of the stock market versus the growth in
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base currency which is the paper dollars that exists
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basically but I’m going to zoom up a little bit more one of the things you
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notice there’s I hate that pop up sorry it’s got a lot of information that in
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the year 2000 there was a market top where rolled over and then crashed in
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the year 2005 and 27 there was a roll over in a market operated here and then
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we’ve got the basically the same shape going on but markets work in fractals
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you can go into as much smaller timescales and see these same patterns
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happening now as I zoom in this incredible correlation that I’ve been
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pointing out over and over again between the growth of base currency and all of
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this extra currency almost all of it is held as excess reserves at the major
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major banks and Wall Street institutions and so this the likelihood of this
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correlation being an access is this is such a tight correlation that it’s an
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impossibility so it’s the growth of basement he that has pumped up the stock
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markets as you zoom in to the top and you see that amazing correlation and
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then Janet Yellen took off the training wheels when they did the tapering right
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here and start creating base currency markets went along for a little while
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and then topped and rolled over and crashed right back to base currency
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and went up again crash right back to base currency and they’ve got up again I
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believe that they’ve talked again if you look at the phone in a little bit more
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we’ve got a market top back at the end of you know the mid to end of last year
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and then another top that’s a lower high and then another top and if you draw a
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trend line across this stuff the top that’s over here and and then the most
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recent top basically this rose to that trend line and bounced off of it and
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traders look at that and so the definition of a bull market is higher
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highs and higher lows the definition definition of a bear market is lower
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highs and lower lows and that is what we’re seeing here since 2015 is the
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stock market is not able to get up past its high back in mid 2015 and its
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struggling and it keeps on crashing back down toward base money and it is quite
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extended above base money right now so it’s probably going to be crashing down
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to that but if you look at the base currency back in go back a little sure
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there was ok so here is the high in September of 2014
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basically 4.1 I’m rounding its four-point 15 trillion dollars and today
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it’s down at three point eight $7 so there is a contraction going on
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of base currency but what you’re seeing here is that same pattern of a market
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top remember I told you that markets work in fractals and this looks like the
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same type of rollover that we see when we look at a long-term church we’re
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taking in twenty thirty years or more and so i think you know we’ve bumped
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into that trend line the market is going to roll over which brings me to another
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set of church here I think the market is putting his top we’re interaction
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traction the reason I left on these recession bars thats the gray areas is
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to show you that this is the longest economic expansion in history this white
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area that took place in the nineties and this economic expansion that we’re in
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right now in a few months it’s going to be longer than this economic expansion
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back in the nineties or in the eighties I mean so it’s going to be one of just a
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few that this is the longest one history like I said usually there much shorter
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than every session on the average every five and a half years and we could
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already be in recession three months from now when they released the GDP data
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if they revised the first quarter down on it and it was actually a contraction
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if it comes in at a and if it’s minus 2.1 or 2.2 or 0.4% or something like
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that and then there’s another one for the next quarter that will come out
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three months from now then part of this area that we’ve already seen well ended
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up being shaded gray economic recession and if you look here there was a market
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top back in 2007 and very very shortly after that market is the recession and
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so we could be in a recession right now which brings me to a whole nother set of
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church where I’ve updated some choice that you saw in my last videos three
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weeks ago I presented some of these charity what we’re looking at here is PE
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ratios this is Dr Robert Schuller’s data don’t leave yet because even though
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you’ve seen this data before its updated and I’ve got some brand new data at the
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end of this video they haven’t seen in quite a long time that says we’re in for
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probably the biggest crash in history but fair value in its first PE ratios go
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has always been considered somewhere between 13 and 15 so in other words the
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earnings per share
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of a stock the earnings is 13 or they prices 13 times earnings so 13 to 15 is
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considered fair value 15 to 20 is considered overvalued but not a bubble
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2225 is considered a bubble so you see that this is a these are bubbles
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twenty-five and older is considered an extreme and anything above that is
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considered like hyper bubble the last time I presented this data three weeks
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ago
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PE ratios were then at twenty five and a half an hour at 26 in the quarter so the
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stock markets are in an extreme bubble here that has to pop there’s only a few
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times in history where things have been this out of whack it touched these
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extremes in 1901 it was in this range in 1929 and then for a lot of this decade
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we’ve sort of hung out in this insane territory but everything has to
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eventually revert to the mean this red line here is interest long-term interest
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rates and one of the things that I want to point out is that before the Federal
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Reserve these varied in a very narrow band and then we establish the Federal
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Reserve we got these this huge rollercoaster ride where they’re
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manipulating things and there’s always an intended consequences and they have
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to manipulate things more than they think that nobody ever thought you could
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see long-term interest rates up as high as we hit in nineteen early nineteen
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eighties or as low as we’ve hit in the 2010 is here so the Federal Reserve is
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probably very bad idea but i wanna show you some more data here I presented this
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in that video three weeks ago and basically this is the value of the stock
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market divided by the
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GDP of the country and when it’s at a ratio of one that means the stock market
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is basically the same size as the GDP the stock market has no business being
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valued more highly than the all the goods and services that are produced in
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the country and share value exists somewhere in this range and if you look
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back at the nineteen eighties this was the time to buy stocks if you had but
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stocks back in 1982 and written this giant giant bull market here that was
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the time to buy stocks when they were undervalued and ride them up until their
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overvalued but we bounced down to fair value in the crash of 2008 measured in
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this thing that’s called the Buffett indicator because this is Warren Buffett
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buffett’s favorite measurement as to whether or not there’s a the stock
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market is in a bubble but we see here is that there’s only a few times in history
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and I showed data three weeks ago
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going all the way back to have believed it was nineteen fifteen of there’s only
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a few times in history where the stock market has been this overvalued so this
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is the nasdaq but this is the real estate bubble of 2007 but a drug the
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stock market with it up into an extreme bubble where it was larger than the
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economy and here we’re back up in these just insane levels it has to seek
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equilibria I believe that it is done the stock market is rolling over and you’re
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going to see something big but this data I haven’t presented for quite a while
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and when you add this to the stock market data this is one of the pieces
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and then the next chart after this that says that we’re in for the biggest crash
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in history this is Dr Robert Schuller’s data and he’s probably the world’s
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authority real estate prices and bubbles and his data goes back into the late
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eighteen eight I believe this goes back to 1887
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but you’ve got an area here of fair value and then you’ve got areas where
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real estate within this small bubbles and then the biggest bubble in history
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basically engineered by the Federal Reserve and then that the craziness with
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mortgage-backed securities and how slipping and all of that stuff so the
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biggest hyper bubble in history if you look at my 2005 predictions from the
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year 2005 I was presenting this data before the market started rolling over
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and crashed a couple of years before so the market’s didn’t rollover crash until
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2007 I was giving that present presentation I believe in August of 2005
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that I was showing and I said real estate was in a hyper bubble and that it
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was going to crash and it was based on Robert Schuller’s data which back then
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was very obscurity nobody paid attention to it was just a college professor with
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his ramblings everybody but if you look at this I mean real estate crashed in
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the crisis of 2008 and just came down near fair value and bounced back up into
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an extreme Bible so real estate is going to be crashing along with the stock
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market but then we have been in a bull market for 35 years since 1981 until
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2016 we’ve been in this perfect bond bull market this is the thirty-year us’
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Treasury bond price and during a crash people do run toward bonds as the one of
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the safe-haven investments there’s precious metals and bonds are basically
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the safe-haven investments and so bonds will be the short-term beneficiary of
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this that eventually with all the currency printing and the Fed buying
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bonds to print currency that’s the way that they do it is this ad writes a
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check for an asset and usually that asset is abhorrent but since 2008
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it’s a mixture of bonds and mortgage-backed securities so the Fed is
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going to be probably buying stuff like crazy and creating insane amounts of
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currency going into this stock market crash but they’re not going to be able
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to presented and you know the last time they started their printing right now
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near the bottom of the crash the crash had already happened the markets would
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have bottomed some time or another and recovered and they just probably cut it
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a little bit earlier the markets should have gone down a little bit further than
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they did in reached equilibrium before they balanced but that brings me right
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back to all these questions about this low the latest forecast this is still a
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forecast for the first quarter of GDP being because all of the data from that
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first quarter is not in yet so when this data becomes set in stone I’m expecting
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this to be a minus figure then you’ve got the extra Federal Reserve Board of
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Governors meetings the fact that every news agency has ignored the board
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meetings and they just covered the White House meeting with a bunch of stuff that
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was all based off of the White House press release that signals to me that
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the the press is either complacent or complicit they are either going along
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with the government and basically saying everything is fine do not worry Janet
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Yellen is doing a wonderful job
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or they’re just complacent and the best that they can do is all covered the same
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story all right at the same either way it’s very bad and it worries me that
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there could be some big blow up happening in the background something
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much bigger than anybody knows about right now that the fed is currently in
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the process of dealing with in papering over so that’s my report for April 11 of
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2016 thank you very much for listening and we’ll see you next time