9 May a new economics paradigm - InDeflation (registered Trademark)

Target for the SPX is 956. Now we are at about 930. 26 more points, easily attainable in a day. Either we go straight up, or a pullback on Monday, and a snap rally towards 956.

In case you have not noticed, EURUSD broke out to 1.3650. 1.3570 and 1.3600 is the tendline connect 1.6000 and 1.4700. Euro touched its bottom in Nov last yr, and has been consolidating between 1.3000 and 1.3500 range.

Crude bottomed sometime in Jan, and reached 55, and now broke 55 and heading towards 80. Crude usually stay in its trend for a extended period.

We may see Euro back towards 1.5000 while Crude towards 80 easily

As US economy recovers, it needs to boost its export. Hence once more the US administration is paying lips service to their mantra "Strong USD is in the interest of the nation".

As the current equities rally has exceeded its fundamentals, the only way up is to have some form of currency depreciation. Stock market may be up in USD dollars term, it actually stays the same if not decline vis-a-viv the Dollar Index.

When Crude rises to 80, we would have the onset of Stagflation.

Bernanke was brash when he told the House panels that he wold be bored in the future when the crisis ends. I think his biggest headache is still coming.

Bernanke who claims to be the student of Depression, who champions QE or monies dropping from the helicopter, has to aid his methods with PR campaigns, market timings, MTM, ban shortselling. It is like the student who fudge the experiments to get the results.

When economy slows, the majority who has jobs just cut down on spending. When inflation comes, everybody is affected. In fact studies show that in inflation times, people tend to go to the streets and protest.

Imagine from now till next yr US midterm election, we have ample time for CPI to rocket to 5% or more, when crude possible would zig zag above 100.

Not to mention, countries worldwide would be in protest. a negative economy with high oil prices would essentially kill of quite a lot of incumbent governments.

Then governments would have to rollback their stimulus packages and hike rates at the same time.

For the Obiwan administration, their objectives are essentially to maximise wealth for the wallstreet. E.g. Chairman of NY Fed actually buys shares of GS, and now with millions dollars of gains. If Obiwan does not keep his bunch of money mongers at check, the Democrats would once cede their majority to Republicans when Inflation is running amock on American mainstreet.

Obiwan is probably surrounded by more Money Mongers than truly patriotic people who wants to upkeep the moral, principals and sanctity of American values. An infatuation with saving the Banks have left everything on the sideline, e.g. its allies, its friends, long held American values, etc. No wonder Volcker, a true patriot, has been mumb all the while.

This weekend, there is a gathering of Central Bankers in Basel. Let see if they have the political clout to nip inflation in the bud.

For me I am doing my thesis, I would coin it as "A new economic paradigm: Indeflation", hopefully I would get Nobel Prize one day, and be as famous as Adam Smith, Black Sholes, etc.

Indeflation is a economic phenomenon when the economy display both symptoms of Inflaiton and Deflation at fast alternating periods on a global scale. It is economic volatility which would lead eventually to the collapse of capitalism, and hence forth the Kondratieff Winter.

Bernanke should have known that if he can arrest deflation within a span of 6 months, Inflation can come back as quick.

As stress test is over, it starts off a flurry of banks mergers and acquisitions, Banks trying to runaway from the Government, would offers itself up for grabs. Even executives of healthy banks would want to get out of the game, with the Congressional investigation panel on the subprime debacle starts their work. Hence banks get bigger, getting to Big to Fail once more, while the Toxic assets just snowball. Some Banks stock would rie, others would fall. It depends on which ones you own. At least one major bank would have to fail. So far Lehman Brother is just an investment company. By the end of this yr, a lot of familiar names like Morgan Standley, JP Morgan, Citi, BAC would not be around.

The best predictions is that the economy would now shift from Deflation to Inflation and then back to Deflation within a span of 1-2 years, the volatility would lead to the destructions of productivity, innovation. And when the volatility dies down, we would enter an extended period of inactivity, a.k.a the Kondratieff Winter.

In the next 10-20 years, we would see a very different America. It would be carved up into several blocks of states each with its own autonomy. The recent Texan tea party marks the beginning.

As in Chinese saying: "the long they merge, they would separate. The long the separate, they wold merge". Possibly China, Russia would enter into alliance with separte blocks of states. E.g. China with dominance on the Western Coast, while the Europeans with the Eastern Coast. The Republicans (whites) in the South.

The Federal Reserve would be delisted within the next 5 years (there is already a Congressman tabling such a bill), when they screw up this coming In-Deflation era (an economic term coined by me in my PhD thesis). A new World Reserve currency wold emerge, possibly in Yuan, if not in a form dominated by Chinese Yuan.

Coming to the Autoworkers, if the Baal is so powerful, he would have prevented the Chrysler bankruptcy, unless the wish is otherwise. Now we watch GM.

As for the Swine Flu, when August/September comes, a new strain more virulent would be rampaging the world. This new strain is so devastating that death occurs within 5 days. Though I would not expect massive death, as hygiene, containment are much better than in 1918. Still we would expect hundred thousands death. The new vaccine under devleopment now would be useless against this strain. I suspect this new strain would have a bigger characteristics of Bird flu virus, and the place it emerges may just be in China.

By the way, the Israeli do not have much time left to rid Iran of their nuclear reactors.
http://www.haaretz.co.il/hasen/spages/880507.html

Look what North Korea is doing, it is restarting its nuclear reactors. And US is helpless. Seems like Hilary is more like a charity parties diplomat. With Crude rising, Admadinejadd probably has more monies to acquire the knowhow to equip the warheads. I guess our CIA folks are sitting at their desk twisting their thumbs losing guard (just as Clinton first yr in office). Probably they have no morale with an outsider as their boss, and cuts in the Federal budgets.

While US interest in middle-east is to keep the peace, without much consideration of the JEWS. (with a Black President, the Jews have lesser influence on the adminstration).

Iran would probably have gotten his first mini-nuclear bomb by yr end, and probably commercialising them. While the Jews live in perpetual fear of a nuclear morning.

Moses who led the Israelis was a Jew himself, he is not an Eqyptian who turn good. And Israeli has to understand that they would be facing the next exodus when its countryman starts running away from the nuclear circumference.

Obiwan is summoning Netanyahoo to white house on May 18 2009 (A white house with a Black President, and so it rhymes). Just as the Eqypt Pharaoh summons Moses and ask him to compromise. In fact Obiwan wants the Isreali to recognise the Palestinian states, and talk peace with people Hezbollah, the Hamaz. Wow !!! imagine Moses get the Pharaoh consent to leave Eqypt at first request.

The Jews would face the coming third persecution by the Beast who came from the middle of the Ocean. Now it becomes clearer as 100 days have past, when you call a Beast the Beast (Baal).

As you all can see the Four Horseman of Apocalypse is now showing their shadow.

this is a long term prediction, not suitable for short term trading. We are still in a bull trend in a long term Bear market.

So much for a weekend, I expect a continous rise in Equities towards SPX at 200 day moving average at 950 (just above Christmas high of 944, window dressing). Euro to speed towards 1.4000, and Crude to march towards 75.

At SPX=888 (Jesus code in Greek is 888), the monies monger did not heed Gods advice and ram past it (just as it bounced off Devil's 666). More sinister things are going to happen to human kind. This rally has shown its nature as the Rally of the Devil. Little wonder it bounced from 666.

Meanwhile, I am watching The Ten Commandments. Moses said he will wait for God to tell the the way to the promised land. Behind is Eqypt, and infront is the Desert. Moses said God does not fight the war for them, HE would help when the time comes. A man with pride protects his children, his family.

Moses said today there would be no mircale, they have to fight. They were banned from holding weapons for 400 years, and today that would change.

On a thread of faith, the Jews step into the Desert, the unknown.

God provide you for what you need each day no more no less. Hence you trade just to make a living, not be as filthy rich as the likes of the Bankers, the Presidents' man. Because they would have their days of reckoning, not now, but in due time.