Faster, Smarter, Better: The Next Chip Revolution
Companies in semiconductors, medicine, and consumer electronics—such as Applied Materials and NXP—are building devices that will change our bodies, the environment, and transportation.
By Tiernan Ray
The world around us will soon be engulfed by machines that affect our living spaces, our bodies, and our experience of light and sound, powered by a novel combination of semiconductors and miniature engines. Tasks as basic as charging a smartphone or cooking an egg—and as complex as scanning for colon cancer or powering flying drones on long journeys—stand to be transformed.
“We’ve spent the last five decades building the brains of the computer,” says Paul Saffo, a Stanford University adjunct professor in the mechanical engineering department, referring to the perfecting of the microprocessor. Now it’s time to give those brains the corresponding brawn to affect our world.
“The future is about how we do more and more work with less physical stuff.”
Janet, Government, and The Woodshed
By: Stewart Thomson
- The SPDR fund tonnage increased again yesterday, and now sits at 967 tons. This is obviously good news for all higher gold price enthusiasts.
- Please click here now. Double-click to enlarge. Gold is attempting to stage a nice upside breakout from a small symmetrical triangle pattern.
- In the short term, whether a rally happens or not probably depends on what happens with the bond market. Please click here now. Double-click to enlarge this short term T-bond chart.
- Since the Brexit vote occurred, both gold and T-bonds have been drifting lower. Sometimes gold leads the bond market. Sometimes it's the other way around, but it will be difficult for gold to stage a major rally now without a bond market rally.
- In the big picture, inflationary pressures are rising significantly, and in 2017 a divergence in the gold-bonds relationship may start to manifest itself.
- Please click here now. Double-click to enlarge this long term gold stocks versus gold chart.
- Gold stocks have been in a long twenty-year bear cycle against gold bullion, and the cycle won't be over until money velocity and bank loan profits end their own twenty-year bear cycles.
- I've suggested that 2017 is the year that happens. When it does, gold stocks should enter a multi-decade bull cycle that I would argue is better termed a "bull era".
- Please click here now. CNBC commentator Rick Santelli recently flew into a rage when hearing the news that Janet Yellen may try to seek congressional approval to buy stocks.
- The average working class person in the Western world can't afford to live normally anymore, even when working multiple jobs. Janet's latest solution, horrifically, is to try to pump up the stock market even more than her predecessor already did with his crazed QE programs, and leave Main Street to rot.
- Some gold analysts may cheer for more useless QE and other silly central bank schemes, but these programs are highly deflationary for Main Street. From a demographics standpoint, the West is an ageing society, so by definition QE cannot fix anything.
- Attention gold stock enthusiasts: Inflating Wall Street and deflating Main Street does not create a bull cycle in gold stocks. It prolongs the twenty-year bear cycle. The bottom line is that QE is the disease, and rate hikes are the cure. Rate hikes end the madness of forcing an ageing society to move savings out of banks and into speculative investments to "promote growth".
- QE destroys the standard of living of the Western world's working and middle classes. It makes housing an investment rather than a place to live. It encourages crazed government bureaucrats to borrow even more money than they already have done. That money is then promptly wasted on ludicrous regime change and entitlement schemes.
- I have to wonder if the next program to "help" most of the Western world's citizens will be for central banks to buy food commodities. That would make food an investment and completely annihilate the financial state of most citizens. Would Janet Yellen call that, "good news for inflation"? I don't know. I would call it an act of lunacy.
- The only things that QE has inflated are houses and government bonds, and that is opening the door to an "endgame" type of scenario.
- Janet Yellen is going to have to face the fact that rate hikes are desperately needed to save Main Street from the government monster that is enveloping almost everyone, including the central bank. She's also going to have to face the fact that the rate hikes are going to be followed by more PBOC devaluation of the yuan. The latest yuan devaluation is already in play now, in advance of an anticipated US rate hike in December.
- There's not going to be any "making America great again". The demographics of America are the demographics of a dying empire, regardless of who is sitting in the big White House chair.
- At some point, Janet Yellen and the rest of the Western world are going to have to accept that the West is out, and Chindia is in, in terms of empire leadership "action".
- Rising rates fit well with an ageing society. It's just common sense. Rising rates stop real estate speculation and lower rents. Also, many senior citizens can't afford the higher property taxes that are now in play in this "healthy" real estate market.
- Going forwards, it's madness to believe that roughly 350 million Americans can compete against 2.5 billion hungry Chindians. In a nutshell, it's time for the West to retire from the empire leadership game, and enjoy that retirement.
- The government bond market Ponzi scheme must end, and the diabolical attack on America's elderly savers must end. Cowards attack the elderly, and Janet Yellen should think very hard about that fact at her upcoming rate policy meeting in December. I think Janet will do the right thing, not just in December, but throughout 2017.
- I'm predicting that she is ready to begin raising rates more consistently, which is what she should have been doing from the start of the 2015 calendar year.
- Please click here now. Double-click to enlarge this key GDX chart. Like gold bullion, gold stocks appear to be "ripe for a rally". Note the position of my 14,7,7 Stochastics series oscillator, at the bottom of the chart, but please click here now. If Janet Yellen doesn't get away from promoting government borrowing and crushing savers, money velocity and bank loan profits are not going to recover, and gold stocks are going to go right back down to multi-decade lows against both gold and the dollar.
- Janet pulled the plug on QE, as I predicted she would. Now it's time for her to stop doing the bidding of a debt-soaked government. It's not time to make America great. It's time to make it normal, by raising rates in December, and consistently in 2017. If she does that, gold stocks, money velocity, and bank loan profits will all soar while an out of control government gets taken to the woodshed, where it belongs!
Worship at the Church of What’s Working Now
Energy, technology, and financials still lead while staples, health care, and utilities lag. What to do now?.
By Michael Kahn
Weekend Edition: The Last Time This Happened, Gold Tripled…Here's How to Profit
Editor's note: We're now entering an extremely important cycle of the economy that hasn't happened since the 1970s…
Back then, it caused the price of gold to triple. This time, as Casey Report editor E.B. Tucker explains, the cause of the cycle is different…but the results could be the same.
As you'll see, gold is set to skyrocket again…and there's a certain sector of the market that will perform even better…
If you’re less than 50 years old, you’ve never experienced “stagflation.”
Stagflation is the brutal combination of inflation and stagnant economic growth. In short, it means the price of things you buy—like food, fuel, and electricity—keeps going up. Meanwhile, the value of things you own—like stocks and your house—keeps falling.
The last time the U.S. dealt with stagflation was in the 1970s. From 1973 to 1975, gross domestic product—economic output—shrank for six quarters. Inflation, measured by the Consumer Price Index, rose from an annual rate of less than 3% to more than 12% by the end of 1974.
The price of oil, copper, and gold all tripled.
Economists blame that stagflation on the 1970s energy crisis, which caused oil prices to soar.
But the so-called energy crisis was due to the inflation of the U.S. dollar, which caused its collapse against other currencies. The oil-producing countries raised their prices in response to Nixon’s devaluation in 1971.
This time is different… The upcoming cycle of stagflation is going to be caused by an abundance of cheap credit.
Let me explain…
The chart below shows the interest rate, or yield, on the U.S. Treasury 10-year bond for the past 54 years.
As you can see, the stagnant growth and inflation of the 1970s caused interest rates to more than double. By 1982, a combination of sky-high interest rates, increased government spending, and lower taxes set off a multi-decade economic boom.
In August 1982, the S&P 500 hit a low of 102. It went on to rise more than 245% by the end of the decade. By the end of the ’90s, it was up 1,334% from that 1982 low.
That boom should have ended with the dot-com bubble, when many stocks in the sector become overvalued in early 2000… but it didn’t. The Fed stepped in and softened the blow by lowering interest rates. When the Fed lowers rates, it creates cheap credit—which makes it easier for people to buy things with borrowed money.
Or even borrow recklessly, living above their means… and making investments that cater to these artificially high standards of living.
The Fed went on to fight the 2008 financial crisis with an even bigger dose of easy money. It cut interest rates to effectively zero and bought around $3.5 trillion worth of government bonds and mortgage debt to prevent a depression. (Ironically… a depression would have purged malinvestment and waste from the system, making it healthy and ready for new growth.)
Recessions Are a Normal Part of the Capitalist Economic Cycle
They’re the small fires that burn back the underbrush of the forest. If you prevent or lessen them, dead wood piles up. And what would have been the next small fire turns into a catastrophic, deadly blaze.
But people now accept the Fed as a fixture of the cosmic firmament. In fact, it’s an unnecessary, but necessarily destructive, government agency.
The Fed’s interference caused many businesses and individuals to rack up unnecessary debt.
Cheap credit and money printing caused a massive investment boom. Look at what happened in the oil market, for example. Billions of dollars rushed in to fund new shale oil drilling technology in the U.S. This doubled production from 5 million barrels a day in 2008 to nearly 10 million today. Now, the world is swimming in oil. And oil prices crashed over 70% from 2014 to early 2016.
Cheap credit also caused assets like real estate and stocks to soar. Real estate prices are up across the board while stocks are up 217% from their 2009 lows. Now, these assets are overvalued and approaching bubble territory.
But while cheap credit caused massive inflation in asset prices, it hasn’t helped the “real” economy.
The U.S. economy is not growing in real terms (which takes inflation into account). It has become stagnant.
Last decade’s growth rates—at times over 7%—are a distant memory. Today, economists are happy with 2% growth.
Evidence of the weak “real” economy is everywhere. Take Apple Inc. (AAPL), the largest publicly traded company in the world. Earlier this year, the company announced first-quarter sales were less than last year for the first time since 2003. Sales declined again in the second quarter… and are expected to decline in the third, too, although at a slower pace. Apple had no debt in 2003. Today, it has $85 billion.
And it’s not just Apple.
Other well-known companies like Wal-Mart (WMT), Advance Auto Parts (AAP), and Best Buy (BBY) reported declining sales in their most recent year.
In total, 639 U.S.-listed public companies with market capitalizations of at least $1 billion had declining sales compared to one year prior. Last year, the number of companies was only 324.
That means the number of companies reporting declining sales doubled over the last year. And it’s going to get worse.
To grow sales, a company has two options. Sell more products or charge more for each product.
Unfortunately for most companies, selling more products just isn’t possible. Cash-strapped Americans don’t have the money to buy more iPhones, computers, or cars. Remember, the economy isn’t growing. Americans’ pay isn’t increasing. The real median U.S. household annual income is less than what it was in 1999.
Americans Are Angry
They haven’t gotten a raise in almost 20 years. Across the country, they’re clamoring for higher minimum wages. And politicians are listening. Earlier this year, the California legislature approved a plan to raise the state’s minimum wage to $15 per hour between now and 2022. And politicians in New York are grandstanding to raise the minimum wage to $15 per hour. The current Federal minimum wage is $7.25 an hour.
But a higher minimum wage is really price-fixing. It’s guaranteed inflation. A higher minimum wage will dramatically increase costs, forcing companies to raise prices.
You see, you can set the minimum wage at $100 per hour. But companies will merely push those extra labor costs through onto consumers in the form of higher prices.
This Is Only the Beginning
As I just showed you, the economy has become stagnant; meanwhile, inflation is rising. The cost for things we buy every day is about to go up.
This bout of stagflation will be very different from what we saw in the 1970s.
Companies like Wal-Mart and Best Buy will be using overpriced labor to try to sell goods to a strapped consumer.
As sales continue to fall, companies that binged on the Fed’s cheap credit will find they can’t pay their bills and debts. I expect a wave of defaults to clobber the stock market and real estate.
But there’s one segment of the market that will shine during this stagflation… gold-mining stocks.
Gold Stocks Have Massive Upside Potential
Gold held its value in the stagflation of the 1970s. In fact, it tripled in price from 1972 to 1974.
It tripled again at the end of the decade. Although the cause of the stagflation is different this time around, the result will be the same.
This year, gold has been on a tear. It’s up 20% since the start of the year. Gold mining stocks have performed even better… they’re up 75%.
But they could go much higher…
Even after the run-up, gold stocks are cheap. The Market Vectors Gold Miners ETF (GDX)—the popular gold-mining fund—is still down more than 60% from its September 2011 high.
Compared to gold itself, gold miners haven’t been this cheap and hated in three decades. As you can see in the chart below, the price of physical gold fell 45% from its peak in 2011.
However, the NYSE Arca Gold Miners Index, which measures the performance of gold-mining stocks, plunged 80%.
As I've shown you today, gold prices are poised to soar over the next few years. And gold-mining stocks will perform even better.
This is an incredible opportunity. Having the best gold-mining stocks in your portfolio during this time can set you up for once-in-a-lifetime profits.
Beijing and Manila follow diplomatic thaw with economic embrace
China moved to roll back economic sanctions on the Philippines and ramp up investment in the wake of this week’s Beijing visit by Rodrigo Duterte, who this week promised to distance Manila from the US.
No total value was published for the investment and CCCC declined to comment.
In total, the two countries signed 13 agreements on Thursday spanning a variety of economic sectors, while Ramon Lopez, Philippine trade secretary, said the two countries had signed $13.5bn in trade and investment deals.
Beijing placed sanctions on Manila in the wake of a 2012 crisis over Scarborough Shoal, a strategic outcrop in the South China Sea that was claimed by Manila, but was seized that year by China. The events caused a decisive break in relations between the two countries, and Filipino fishermen have been prevented from fishing in the area ever since.
Mr Duterte and his Chinese counterpart, Xi Jinping, agreed to further talks on fishing rights, even as the Philippine president appeared to surrender any leverage he had over China by all but renouncing a July decision by an international tribunal in Manila’s favour. The court in The Hague ruled that China’s expansive claims in the South China Sea had no basis but Mr Duterte seemed to set the ruling aside, describing it as “just a piece of paper with four corners”.
Experts say an offer of Access to the shoal would give China a face-saving way to recognise at least part of the legal substance of the ruling in Manila’s favour.
Paul Haenle, director of the Carnegie-Tsinghua Center in Beijing, said there were indications before Mr Duterte’s visit that an agreement could include granting Filipino fishermen conditional access to certain waters around the disputed shoal. “We’ll have to wait to see what was actually agreed on during the meeting and if it can be implemented at sea,” he said.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
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