Monday, October 05, 2015

Bill Murphy & Harry S. Dent Jr.

Oct. 2, 2015
Bill Murphy & Harry S. Dent Jr.
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Summary:
  • Economist and best-selling author Harry S. Dent Jr., returns with commentary on the latest FOMC rate decision.
  • Fed officials have no intentions of hiking rates in 2015, despite the hawkish rhetoric making the media reports.
  • Financial debt-bubbles are typically followed by deflation, not inflation, which is a key reason why Fed policymakers hands are tied.
  • Too many money managers piled into the risk-off, long-only trade - the unwinding process could be more protracted than anticipated
  • The recent equities selloff could be merely the opening salvo of a new downtrend in equities, culminating with multiple price implosions.
  • The downtrend could persist throughout 2016.
  • The housing, echo-boom of 2009-2015 is losing momentum as investors / builders brace for higher rates.
  • Household income per capita has plunged since 2008, more than $5,000 - eroding another key housing demand factor.
  • Harry S. Dent notes the new long-term downtrend in housing.
  • He expects the market to drop by at least 40-50% on average and much more in frothy regions.
  • The net result will be buying opportunities for those who anticipating the sea change event.
  • The HGX Housing Index, appears to be developing the most bearish of all technical price patterns (Figure 1.1.).
  • Chris welcomes back to the show, Bill Murphy from GATA.org. The discussion includes Nassim Taleb's latest work, AntiFragile, free PDF link listed below.
  • Due to Fed intervention, risk was removed from the markets, that is until recently.
  • Even hedge funds that are supposed to ameliorate risk, employed long-only investment strategies to remain competitive.
  • However, without the Fed rate panacea, the threat of higher rates rattled the markets.
  • The duo discuss the growing crowd of cognoscente who insist that the precious metals (PMs) markets are manipulated.
  • Bill Murphy agrees with friend of the show, Jim Rogers, that a currency crisis could unfold, sending the precious metals skyward.
  • For instance, the Argentine currency dilemma resulted with a 100% in the price of gold in approximately 12 months (Figure 1.1.).
  • The next bull market in gold / silver and related equities could unfold at an alarming pace, making the prescribed accumulation via dollar cost averaging all the more sound an investment strategy.
  • Despite months of hawkish jawboning by Fed policymakers, the benchmark overnight lending rate will remain fixed at .25 at the next FOMC meeting, with a 91% probability (Figure 1.2.).
  • The duo ask the poignant question, "What do Fed policymakers know about the domestic economy, that is holding back the inevitable rate hike?"

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