Trivium Analytics Canada - Weekly Review - February 19, 2016 - by Jeff Fitchett

General Thoughts
Volatility in the financial markets continues unabated.  I find it fascinating to watch how everything is unravelling.  I know my comment could be construed as sadistic, but I have been watching the trends build for so many years and have expected everything to come unglued as we are now witnessing.  I find it extremely interesting how the media, politicians and central bankers continue to paint a facade of “all is well” and “we have the tools to fix the situation”, yet in reality life is looking quite stark.  

From a positive perspective, this is an excellent opportunity for people to take action and make changes in their life that can help them longer term.  All it takes is for a person to see what the Matrix is and stop playing the game.  What I am trying to convey is that you have the control to shift your mindset and do things that are contrary to popular belief.  You can change how you store your life savings and invest in assets that will benefit you and your family for the changes that are taking place.  You can downsize now while the real estate market is still functioning. You have the ability to stock up on items that are still readily available and affordable.  There are many options still available, but the window is closing and could slam shut very soon.
The Us Economy Has Not Recovered and Will Not Recover by Dr Paul Craig Roberts

Jeff Fitchett: This is an excellent article by Dr Paul Craig Roberts.  He lays out, in simple terms, how the US economy has not recovered and why it never will.  I am a student of history and I have learned about the mistakes made by many countries and empires over the centuries. Decisions made today will impact the future and what is happening today was caused by past decisions.   

“The US economy died when middle class jobs were off-shored and when the financial system was deregulated. Jobs offshoring benefitted Wall Street, corporate executives, and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefitted from the bull market generated by higher profits.”

“However, jobs offshoring also off-shored US GDP and consumer purchasing power. Despite promises of a “New Economy” and better jobs, the replacement jobs have been increasingly part-time, lowly-paid jobs in domestic services, such as retail clerks, waitresses and bartenders. The offshoring of US manufacturing and professional service jobs to Asia stopped the growth of consumer demand in the US, decimated the middle class, and left insufficient employment for college graduates to be able to service their student loans. The ladders of upward mobility that had made the United States an “opportunity society” were taken down in the interest of higher short-term profits.” 

21 New Numbers That Show That The Global Economy Is Absolutely Imploding - Michael Snyder:

After a series of stunning declines through the month of January and the first half of February, global financial markets seem to have found a patch of relative stability at least for the moment.  But that does not mean that the crisis is over.  On the contrary, all of the hard economic numbers that are coming in from around the world tell us that the global economy is coming apart at the seams.  This is especially true when you look at global trade numbers.  The amount of stuff that is being bought, sold and shipped around the planet is falling precipitously.  So don’t be fooled if stocks go up one day or down the next.  The truth is that we are in the early chapters of a brand new economic meltdown, and I believe that all of the signs indicate that it will continue to get worse in the months ahead.  The following are 21 new numbers that show that the global economy is absolutely imploding…”

Teamster retirees fight massive pension cuts at Kansas City town hall, warn others at risk

Jeff Fitchett: I have highlighted, in many articles, that entitlement benefits are not sustainable.  I have described them as “Ponzi Schemes”.  Everyone must be aware that defined benefit pension plans such as the Teachers Pension Plan, Canada Pension Plan, OMERS, etc. will be unable to meet their long term obligations to retirees.  You can expect severe cuts to these entitlements like the members of the Central States Pension Fund.  Imagine how you would deal with a 50% cut in benefits.  Simply ignoring basic math and having blind faith will not protect you.  

“They came to battle massive pension cuts proposed by the Central States Pension Fund, which covers 400,000 participants, 220,000 of them retired. The fund is so short of money, it will go broke in 10 years. A controversial 2014 law allowed the pension to propose the cuts, many of them by half or more, as a way to perhaps save the fund.” 

The following items I’ve posted on my website this week:

50% Of Canadians Say They Are Within $200/Month Of Being Unable To Pay Their Bills - by Zero Hedge

Jeff Fitchett: Canada is in for a very rude awakening.  There is a big misconception, from Canadians, that we are somehow different and immune from the troubles that plague our world.  I have argued for years that we are in much worse shape than people realize.  This article highlights the vulnerabilities Canadians face.  It's a worth a quick read. 

"It was just last month when we profiled Canada’s “other problem”: record high household debt. Canada is struggling to cope with falling crude prices which have put enormous amounts of pressure on some parts of the country, most notably Alberta, where suicide rates are on the rise, as is property crime and food-bank usage.”

"Amid the malaise, households are also being pressured by persistent CAD weakness - which is of course a symptom of falling crude. The currency’s decline has driven up prices for things like fresh fruits and vegetables, 75% of which Canada imports. That puts an extra burden on households that are already labouring under record debt."   

Rick Rule: $2-$3B Gold Deposits That Can Be Bought Now For $15mm—Will Command A $2-$3B Price Tag Again - Rick Rule

Jeff Fitchett: If you invest in precious metals mining companies or exploration companies you should watch this interview.  I agree with Rick Rule's strategy.  I am using this strategy and have purchased a company named First Mining Finance.  It is an excellent company that meets the criteria Rick discusses. First Mining Finance is buying up gold properties that have been drilled and will eventually be turned into producing mines.  First Mining does not intend on developing these properties directly.  Their strategy is to accumulate as much gold in the ground as possible while bullion is low in price and wait until bullion increases before they cash in on the properties they own. 


Jeff Fitchett: This is an awesome interview and the statistics that are provided should make you pause and think about how unsustainable our global economy and financial system are.  Some of the figures are incredible.   

Paper Assets Evaporate in 2016 Leave Gold & Silver Standing - James Turk 

Jeff Fitchett: James Turk is a very knowledgeable individual and I agree with his analysis.  I find it interesting that a consensus view has grown significantly over the past 6 months as it pertains to the economy and financial markets.  Many people have been commenting for years about the trends that have been building over the past decades. We have now hit a pivotal point in history that most people are unaware of and the outcome will be a severe depression that will shake our civilization to its core. 

The Trouble With Making Predictions - by Jeff Fitchett

Time passes before you know it. Years come and go and events slowly pass us by while we muddle along in this wacky world of ours.  We have all read articles and watched interviews from people that make predictions that the US dollar is going to collapse on a specific date or by year end in any given year.   Many forecasts have been prognosticated and yet the world continues to spin. The troubles we face are very real and the end outcome is somewhat predictable.  What is not predictable has to do with timing.  Many people, over time, begin to suffer from normalcy bias and start to believe that this is the way the world is and it will continue to be.  I do not share this view that things will continue on as they are indefinitely. I think it is important to analyze and make sense of what people are saying, but also realize that manipulation, propaganda and outright rigging can extend our way of life longer than many think is possible.     

Final Thoughts

If the equity markets drop by 89% and they are unable to recover during your life time; how will this impact you?  If your house value drops below the amount you have owing on it; will this cause you concern?  If you are your spouse lost a job; how would the job loss affect your situation?  I know that these are difficult situations to think about, but I contemplate it all the time.  I don’t worry about myself because I am a versatile person and have spent a lot of time thinking about what I would do in certain situations.  I do worry for other people as I know that most people are unaware of what is going on in our world today.  

I wish you all the best!

Jeff Fitchett B.A., FMA, CIM
Analyst - Trivium Analytics Canada

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