If You Bother to Think About This, There'll Be Some Palpable Benefit

With last week's stock market rally we could be in for good times - for a while. But if we're really in a Bear Market (and we are), the good times will serve one purpose and one only: to suck in the inexperienced and/or those who listen to the Wall Street shills talking trash about bargains and market bottoms.

Or maybe some skilled traders will play this bounce and scalp a few points, assuming they sell before the stock market turns down again.

Tread lightly.

Of course, for many of us this may seem all too obvious. And yet even we who keep skepticism close at hand as the Bear tries to entice us with dreams of gaining back a bit of what we lost, might be attracted to a theme or two, like, for example, health care. There's an argument that we're on the cusp of a great leap forward in health care. I sat through an online presentation that explained this in detail. Naturally, the speaker recommends stocking up on health care companies, the sooner the better. A lot of what was said made sense.

But since I'm not an expert in this sector, I'm going on the experience (an MD and a successful investment analyst) and credibility (decent track record) of the speaker. Of all that was said, though, there were a few items that made me wonder whether the thesis will hold in the face of what may be nasty Bear Market that lasts quite a while. Comments about how wonderful it was that the COVID "vaccines" were produced so quickly, with special kudos Moderna and the mRna jabs, caused me to pause: It's good that these were "produced" quickly without adequate testing? It's good that the vaccines don't really protect anymore - if they ever did in any substantive fashion? It's good that the adverse reactions far exceed adverse reactions to any other vaccine produced in the past? This guy didn't bring up any of this. He's not dumb. It made me wonder. I think I'll pass on putting down more than a speculative stake - if that.

The point is I didn't just listen, but I did think about it when something I knew something about was covered. Not that I'm an expert in mRna or vaccines, but I have done a bit of reading and research on these things. Such thinking yields palpable benefits.

With that in mind - thinking about something to yield palpable benefits - here are my notes taken from the latest issue of one our Brain Trust folks. He's been pretty good at warning - in timely fashion - about dangers in the markets. And his track record has been reasonably good. Read the notes and - if you desire to derive a palpable benefit - think about them, or at least think about any items that strike your fancy or refer to an area you know something about.

Here goes:

- Reiterates that cycle studies show we will experience something similar to 1930s, only worse, including depression.

- Shortages of everything are accelerating, including electricity.

- Believes seeming stupidity of government policies is “Kabuki Theater” intended to distract from agenda, which is being pushed at warp speed, and designed to eliminate our freedoms.

- Glaring example Netherlands ban on Nitrogen: Nitrogen is 78% or our air (which is an inert gas that does not harm anything). So they want to ban our air?

- Germany’s economy is practically shutting down: Are they a test case for what people will put up with?

- All is to promote the “Liberal World Order,” an openly used term. They want people to get used to the term.

- Capital Preservation should be #1 Priority

- Cash will not protect against soaring inflation – Precious metals (highly manipulated) may not either.

- Stocks: A rally started mid-June. It was weak. Even if we have another rally, it will be followed by a significant decline. (Compare to CN weekly cycles. These are down until 9/30, then turn up.)

- For S&P, once mid-June support line (see chart p 4) is broken (around 3,700), fast & furious down.

- Similar June support Dow @ 27,700. Could then head to 18,000 – low March 2020.

- A long-term bearish scenario presents opportunities to short and/or buy Inverse ETFs. D focus on sectors that present best chance for largest declines with weak rallies.

- When inflation hits 8% it always causes a recession.

- Debt to GDP ratio now 125% - This recession should drive this to 200%

- USD has risen strongly. D believes because USD used in leveraged derivatives. When recession gets deeper and Fed steps on monetary accelerator again, USD will turn down – and that will accelerate inflation. (cf Weber recommendation for UDN longer term).

- NB re soaring Reverse Repo market – now at $2.3 Trillion. Warning signal. Banks prefer parking money at Fed @0.8% to lending to customers. When something is at a record high, it’s not natural, creates an alert. Likely says risk is soaring in credit markets.

- Energy: Electric grids around the world are under strain – fears of not being able to produce enough during critical demand periods.

- Energy Sector had bigger correction than anticipated. But all bullish fundamentals remain in place. XLE down 25% in less than a month vs. NASDAQ down 49% - So Energy stronger that market.

- Addresses theory that Energy down because of weak demand in a recession. Do people drive less, or use less heat in a recession? Rationing in EU could explain. But eventually this will increase demand for US NG. Chart suggests bottom has formed.

- Unless voters change the politicians, expect the craziest things going forward.

- China will be the dominant power in the world.

- Precious Metals: Have been acting contrary to fundamentals. Could be more at work than market forces: If governments want CBDC, would have to have crypto failures and scams (D has believed Bitcoin was really a creation of the government, at test vehicle to see how people would respond to/accept it.) If people turn to Gold in the face of crypto failures, that won’t work. So government would want people to think they can’t trust gold. A 40% - 50% decline might do that.

- In any case, important support levels have been broken for Gold.

- Interest Rates: The 40-year decline in interest rates bottomed March 2020. New long-term trend is up.

- See series of charts that show that we are in a rare bearish period, worse than any in over 100 years.

I won't do your thinking for you. But if you did read carefully, you'll find some scary stuff, as well as some opportunities. I particularly note the comments on gold. Not sure I buy the total thesis that would drive it down that much, but this guy's been a crypto skeptic from the get-go. So his gold thesis would serve his crypto thesis. 

If he's right, and we're holding our precious metals position, there's even more pain in our future than has already caused us to second-guess holding on. On the other hand, if we do hold on, even if the thesis is correct, at some point gold and the PM universe will turn around and resume it's long-term bull market, just as it did in 2008-2009 when it suffered a horrid correction, then reached for the stars.

We'll see.

Oh, and one more item to chew on that might provide a palpable benefit: Building on our last post with its reference to prayer, we might consider it's importance in soliciting God's help as we pick our way through these Bear Market minefields. It's not that we pray to get rich, or even pray that we don't have to endure any loss or pain. It's that we want to do our very best to make prudent decisions for the welfare of our families and - in my case - for the benefit of my clients. Prayer can't be held away on the side at any time, but it's a good time to remind ourselves that it should accompany all our efforts and endeavors.

Here's little slice about prayer from the Catechism of the Council of Trent that I found to shed a shaft of beneficial light on the subject:

"...so various are our temporal and spiritual necessities, that we must have recourse to prayer as the best means for communicating our wants and receiving whatever we need. For since God owes nothing to anyone, we must ask of Him in prayer those things we need, seeing that He has constituted prayer as a necessary means for the accomplishment of our desires, particularly since it is clear that there are blessings which we cannot hope to obtain otherwise than through prayer."