From Petro Dollars to New Energy Currency
Recently
there was an article on the web and in the newspapers saying that a secret pact
was sealed way back in 1970s between Saudi Arabia and the US about mutual help
that the two countries will extend to each other. According to this pact US
will buy oil from Saudi Arabia and supply arms to Saudi Arabia and Saudi Arabia
in turn invest the surplus dollars in US treasuries. Here is the link to the
story for those who would be interested in understanding the details:
To me a
new story emerges from here. Now that the US is self-sufficient in oil and no
longer purchases oil from Saudi Arabia, the barter trade cannot continue and there
can be no more purchase of US treasuries by the Saudi kingdom. In fact from now
onwards the deficit of Saudi Arabia will need to be funded by sale of its
reserves in US treasuries or alternate means/ borrowings/ sale of assets, etc.
What impact can Global warming have on the Global
economy?
Now that
there are talks of the global warming and replacement of fossils based fuels by
sources of clean/ solar energy, the investments in these strong potential areas
is going to grow manifolds within the foreseeable future.
The above
indicates that if an energy product consumed on a mass scale (solar/ tidal
energy/ stored energy/ power banks) can be bartered by mass scale products/
services (be it arms and ammunitions/ clean potable water/ wheat/ coffee/
orange juice/ provision of long term consultancy/ services) of a country and
also the balance of the underlying currency payments can be reinvested in the
treasuries of the country providing the bouquet of products/ services of mass
consumption, the dynamics can tilt in favour of the currency of the country
exporting these products/ services.
That’s not
all that I wish to convey here.
How close are we to this? In which currency’s
favour is the tilt going to occur?
While the
new order may take decades to establish, its beginning may have already
started. Newer pacts will perhaps seal the fate of the pact above mentioned or
will perhaps let it not survive. The one and only factor related to the above
stated shift in paradigm which keeps unsettling me or rather keeps assuring me
or endorsing my viewpoint are the charts of the US Indices. Time has ushered in
an era where the US supremacy is going to diminish from now onwards and will
lead to a state where the strength and demand for petro dollars will also
diminish.
The
following post of mine may be read along with this article:
In my
above post, dated 21 November, 2015, I have compared the chart of US Indices
with the dated chart of Silver. The Dow Jones/ Nasdaq Composite have taken
another dip since the above post and also recovered subsequently forming a
Triple Top. To my knowledge, a Triple Top is a bearish pattern but I am amazed
how the resilience of the US Indices have changed the stance of many a
technical analysts who have started believing that if the indices/ markets
break certain resistances, the markets are in for a fresh bullish wave.
While I
do agree that anything can happen in financial markets, I do not put on
blinkers or follow the market/ technical analysts blindly.
The
duration of the multi-period employed in my post of November 21, the link for
which is given above, has now been extended by me in my current post. Besides
the line graphs and the newer duration multi-period adopted for the candlestick
charts, I am also presenting a unique proprietary combination of multiple (set
of three) stochastics drawing comparison between the charts of Silver and Dow.
Need I say anything more on the direction of the markets from here?
The Eccentricity of Extrapolation of the
Economists and the Statisticians
During my
graduation, one of the professors gave an example which I always cite as a
humorous analogy: “If you keep the lower half of a person in a furnace and the
upper half in a refrigerator, on an average he should be feeling fine.”
By the
same yardstick if we extrapolate the US economy and the Indian economy, the
Indian economy will reach moon sooner than the US economy.
The Frustrated Fed
Why is
the Fed hell bent on raising the interest rates? If the near zero interest
rates have taken the US Indices/ economy to the stratospheric heights, the Fed
should continue to maintain the rates. According to extrapolation employed by Fed,
the US GDP/ economy should continue to grow at a sustainable rate. Then why
should it tinker with the interest rates at this juncture?
Somewhere
deep within its heart, the different and diverse forces/ representative members
of FOMC feel that all is not well and there is something else brewing up which
is not revealed/ apparent to the common man. There are perhaps various
imbalances/ bubbles (be it an imbalance or a bubble in the stock market or
treasuries market or any other financial market) created by a single steadfast policy
decision of near zero interest rates under the guise of single steadfast
objective of the target unemployment rate (to hell with anyone/ anything else
which comes in/ on the way).
The Success of the Manipulative Market Makers
Dear Fed,
the Market Makers have succeeded to make the public believe that the
extrapolation of sustained/ projected growth rates will take the US GDP/
economy/ Market Indices to higher levels from here.
Triggers for a correction
Many
people ask me as to what would be the triggers for a correction? I tell them
that the triggers are always built in the system. It all depends upon when does
the media or the policy makers wish to make them public.
While I
am not at all trying to make an attempt to hint that the data being reported is
wrong or manipulated, all that I am attempting to say is that agencies
compiling the data have a first-hand feel of the anomalies about to happen in
the near future but these anomalies get guised under the averages or many of
the data reported are not perfect lead indicators.
Short-sightedness of a Consultant friend
A
consultant friend of mine who claims to be closely working with the government
claims that the Indian stock markets are not going to fall further. I can only
say that one cannot piss or fart against the wind. If the big daddy sneezes we
get the cold.
From Cheer to Fear
Here
below are the newer comparative charts along with the proprietary stochastics
(technical indicators) that indicate the soon to be direction of the US
Indices.
Contact:
Author
can be contacted at riskadvisory@outlook.com.
Disclaimer:
These
extracts from my trading books are for educational purposes only. Any advice
contained therein is provided for the general information of readers and does
not have regard to any particular person's investment objectives, financial
situation or needs and must not be construed as advice to buy, hold and sell or
otherwise deal in any kind of commodities, currencies, securities or other
investments. Accordingly, no reader should act on the basis of any information
contained therein without first having consulted a suitably qualified financial
advisor.
