Win, Lose or Draw?

Markets look at the scoreboard for a way forward...

(Source: Getty Images)

Joel Bowman, checking in today from Buenos Aires, Argentina...

Team A vs Team B... Win or Lose.. Goal or No Goal. 

There’s something refreshingly simple about sports. Down here in Argentina, where inflation is running at a world-beating 100%, the economy is circling the proverbial drain and the government stands as a towering exemplar of jaw-dropping ineptocracy, a weary people turn their minds instead to the World Cup for solace and sanity. 

Later today, perhaps when you are reading these very words, Argentina will be playing against Australia... and your Aussie-born editor will either be proclaiming his nationality to all and accepting free drinks and commiserations for a hard fought loss... or speaking with a German accent. 

Over in the not-so-simple world of finance and economics, nothing is quite so cut and dry. Take yesterday’s jobs report, for example. Here are two headlines, written by journalists who, ostensibly, read the same data... about the same job market... issued by the same government bureau...

This, from CNBC:

Payrolls and wages blow past expectations, flying in the face of Fed rate hikes

But wait… here’s Bloomberg:

More Americans Leave the Workforce as Participation Rate Drops Again

Win... or lose? Goal... or no goal? Team Bull or Team Bear? 

The answer, of course, is both. But how can that be? We’ll take a deeper dive into the murky world of lies, damned lies and statistics in tomorrow’s Sunday Session... 

Meanwhile, markets were up again in the first back-to-back weekly rally for all three major indexes since October. The Dow eked out a 0.2% gain, the S&P 500 added 1.1% and the Nasdaq finished up 2.1% for the week. 

Monthly gains were more impressive. The Dow was up 7% for November, the S&P 500 added 8.4%, and the Nasdaq surged a whopping 9.1%. 

That’s a couple of months in the black now. Investors are keen to know... is it smooth sailing from here... or are we merely in the eye of the storm, calm at the center before the outer winds lash our vessel onto the rocks? Bonner Private Research’s Investment Director, Tom Dyson, gives his take below... 

But first, yesterday Dan promised we’d include a video link to the conversation Bill and Porter Stansberry had a week or so ago. We published edited sections of the transcript on Thursday and Friday... but the conversation was as wide ranging as it was informative, so if you have time, feel free to check out the whole thing, here...

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As to the question, “Where do we go from here?” Tom had this to say to BPR members in his November Report, published this past week... 

The U.S. Federal Reserve and other central banks blew up the greatest speculative bubble of all time, in all things. That bubble has now burst. And we get to watch its slow-motion collapse – one default... one bank closure... one layoff announcement... one foreclosure notice... one soft data point at a time.

Several important dominoes have fallen since I wrote to you last month.

FTX collapsed. Crypto assets were the most manic, most speculative of all the bubbles... and therefore, crypto was the first bubble to implode.

We also got a softer Consumer Price Index ("CPI") print. Core CPI prices were reported as gaining "only" 0.3% in October compared to a gain of 0.6% in September.

I also see inflation as part of the "everything bubble." I expect it to collapse like everything else. It could even turn negative. I know this isn't a common view. Most of the smart investment analysts I follow think we've entered a new era of high inflation. I think they're right. But I think they'll be surprised by how much consumer prices fluctuate. 

I expect to see something I call "inflation volatility"... that is, a period of high but unstable CPI readings as the economy lurches between deflation and currency debasement. 

In a collapsing debt bubble, the primary problem is debt deflation and falling prices. At least until the system planners begin printing money and bailing out debtors. So I've been expecting inflation to collapse – like these container shipping rates between China and the U.S. have...

(Source: Freightos Baltic Index, Washington Post)

The third big domino that fell last month was in the world of government debt, the biggest bubble of them all. In a U.S. Treasury press release published on October 31 that didn't get much attention, the government raised its borrowing requirements over the next six months to $1.128 trillion, up about 13% from what it had said in August.

Government borrowing is out of control. The day of reckoning will arrive when investors realize the U.S. government won't be able to meet its obligations and will have to renege on its debts and some of its future promises. 

That's going to be the shockwave felt around the world... but we're not there yet. Until then, our near-term strategy remains our best defense.

If “inflation volatility” has got you concerned… if you’re interested in preserving your capital through the deepening recession… you might find a membership to Bonner Private Research worth your while. Find a subscription program that works for you, here…

P.S. The specific proxy for Tom and Dan’s Trade of the Decade is up over 130% since they alerted BPR members to it back in January, 2021. But they reckon it has a long way left to run yet. Get your in-depth Trade of the Decade report when you become a Bonner Private Research Member, today.

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And now for Bill Bonner’s missives from the past week...

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That’s all from us here in Buenos Aires our safe house, location undisclosed. Tune in again tomorrow for your regular Sunday Session, when we’ll take a deep dive into what the jobs numbers really mean and what Frédéric Bastiat called the “Fetish of Full Employment.”

We’ve also got a new Fatal Conceits podcast lined up for you, with first time guest MN Gordon, who shares the tale of his California Exodus in search of his own American Bolt Hole.

Until then...

Cheers,

Joel Bowman