21 April 06
More Than Ever... Expect The,,,, Very
The Unbalanced Global Macroeconomy ...... And The US Long Term Debt
The Wilshire bested the 7 April 2006 key reversal day with an
worth of frenetic activity - only to end in a caricatured double top
below the 7 April high.
The Wilshire's most recent daily fractal progression from October 2005
24/60/48 of 48 or X/2.5X/2X. The nonlinear break near the end of the
second fractal of this progression is seen best on the NASDAQ 100:
GM, propelled by the recent interest in gas efficient SUV's and modest
oil and gas prices has made a surge within the confines of a:
5/13/33/ - 34 fractal which when integrating 5/13/33 into the first
two fractals becomes a 14/35/ 34 of 28-35 maximum progression.
GM's financial position has been improved only transiently by the
value of its stock, which is providing low element blow-off for both
the DOW and the Wilshire.
Gold stocks and gold have received a nice influx of eastern and
speculative western money that has propelled metal values to about
30 percent of their 1982 dollar values. The best fractal count for gold
stocks and gold are from a near term bottom:
10/20 of 25/25. X /2x of 2.5X with a breakdown at 2x or day 20
Fractal progression of equity, bond, commodity and asset valuations
and the global macroeconomy,.... the global macroeconomy and fractal
progression of equity, bond, commodity and asset valuations.... are
intertwined; are one in the same. The mechanistic daily valuation
fractals represent the precise barometric quantification, the
integrated summation zero's to nine's numbers of actual money
investment distributed in the complex money-debt-asset system.
Today the world currency is the US dollar. The US uses this Superpower
backed valuable commodity to import about 13 million barrels of oil a
day. At 10 dollars a barrel that's 130 million dollars a day. At 70
dollars its closer to a billion a day. For the last year the US has
traded over 250 billion of its IOU dollar currency in exchange for
foreign oil. A good piece of the US foreign trade deficit arises
precisely from that indispensable and essential commodity.
Other energy poor countries, our 'trading partners', who own over 2
trillion of US debt instruments, convertible at present with little
difficulty into dollars, likewise use the utility of the US dollar to
finance their own more modest energy needs.
Something has happened to the actual IOU dollar- somewhat convertible
long term US debt interface. The US long bond and ten year note since
March 2006 have begun a critical inexorable at-a-minimum short term
and perhaps longer term fractal climb correlative to rising long term
interest rates that is on a head-on freight train collision course
with equity and commodity asset valuations. The three investment
locomotives: equities, commodities, and bonds are 120 degrees apart;
travelling at 200 miles an hour; and are arriving at the same point in
the wheel house simultaneously. The coming twisted metal of these
colliding forces aligns with the non complex and curious complex
fractal solution of the last posting and reiterated again below.
The 20 March 2006 Iranian transitional change from the dollar to the
Euro for oil has been fingered as the triggering event for the US
bond's recent activity. Indeed the long term US debt instruments'
inversion with the shorter US T Bill was arrested on 22 March 2006, 2
days later. With the recent highly publicized inflammatory rhetoric of
the Iranian president and the earlier economic Armageddon predictions
of the famous 911 Saudi renegade, a case could be made for an Iranian
precipitated global economic weapon of mass destruction in its
conversion from US dollars to Euros for oil trade. The case could be
made - but it would be false.
The Iranian conversion to the Euro is a serendipitous true, true, and
unrelated occurrence, small, even minute, in comparison to the
gathering storm building into a global economic hurricane. US recent
bond activity is a result of terminal unsustainable and tipping point
imbalances in the global macroeconomy. All informed sources understand
that paper will not forever be traded across sovereign borders for
useful items and services. There is a point where a transition must
and does occur. It has never been a question of if, but rather when.
It is the fractal evolution of investment items that delineate when.
For the US this transition point is not being caused by Iran, whose
country produces only 5 per cent of the world's oil,. Its radical
Islamic regime's change to denominate oil in Euro's is not the
trigger; rather this transition point is a result of the full
saturation of the over-consumed American consumer who has been painted
into the very small domestic service parts of a corner, having been
earlier enticed to incur debt at excessively low interest rates with
reckless and imprudent lending practices. That American consumer, the
primary engine of recent global economic expansion, is faced with the
reality that has been directly caused by excess borrowing and money
creation - inflation of raw commodities.
The American consumer is a member of the interconnected global economy
and is indirectly and directly competing with the Asian service and
manufacturing worker. Further loss of manufacturing jobs will occur.
Unbalanced US wages relative to those foreign workers must and
inexorably will reequilibrate. US wage earners with their two cars,
extra investment house, and high debt load have been, are, and will
be, unlikely buyers of US debt instruments.
Foreign owners of US debt instruments are now choosing between
ownership of dollars or debt instruments. While both are backed by a
military and an arms legacy of an earlier American tradition,
ingenuity, and engineering value system, both are poor long term
investments in a country sans manufacturing, tradable international
services, huge unpayable entitlement programs in a reequilibrating
rebalancing global macroeconomy.
From 22 March 2006 the rising fractal evolution of long term interest
rates, TNX annd TYX are:
First fractal: 5/13/7 days = 23 days
Second fractal 9/11 of 21-22/18 days = 46-47 days.
How high will the long term US debt instrument rise in the next 27
trading days? This time progression matches a weekly precious metals
devolution of 12/25 of 30 X /2.5x and a daily equity devolution of
X/2.5x/2x and 1,5x or 24/60/48 and 35 days.
Expect the very unexpected.