November 2010 – T Theory® Update
T Theory Observations for November 21 2010
—part A———————
mp3 Commentary
Download TTOAudio20101121A
Chart
Download Next SRT20101119pdf
—part B ————
mp3 Commentary Download TTOAudio20101121B
Chart
Download MFIMidPointTopProjectionforJNK20101118pdf
Download MFIMidPointTopProjectionforTLT20101112pdf
Chart
Download VUSTX with 52 week ExpMApdf
—Part C———-
mp3 Commentary
Download TTOAudio20101121C
Chart
Download MFIMidPointTopProjectionforGLD20101118pdf
Chart
Download MFIMidPointTopProjectionforSPX20101118pdf
—Part D———-
mp3 Commentary
Download TTOAudio20101121D
PDF Chart None
—-Part E The Wednesday Mid week Update————————–
mp3 Commentary
Download TTOAudio20101124E
Chart
Download NextSRTado20101123pdf
T Theory Observations for November 14 2010
—part A———————
mp3 Commentary
Download TTOAudio20101114A
Chart Advance-DeclineTs
Download ADTs20101112pdf
—part B ————
mp3 Commentary
Download TTOAudio20101114B
Chart
Download NextBearT20101112pdf
—Part C———-
mp3 Commentary
Download TTOAudio20101114C
Chart
Download TLT and VUSTX 3 yr Overlaypdf
Chart
Download TLT MFI 2010 peak in August
—Part D———-
mp3 Commentary
Download TTOAudio20101114D
PDF Chart
Download MFIMidPointTopProjectionforGLD20101112
—-Part E The Wednesday Mid week Update————————–
The latest Nov 17 mid week post is below.
mp3 Commentary
Download TTOAudio20101117
PDF Chart
Download Next Bear T20101116pdf
T Theory Observations for November 7 2010
—part A———————
mp3 Commentary
Download TTOAudio20101107A
PDF Chart
ADTs and Nulled Echo Download ADTs20101104pdf
—part B ————
mp3 Commentary
Download TTOAudio20101107B
Chart Best Bond
Download BestBondvsAlternatespdf
—Part C———-
mp3 Commentary
Download TTOAudio20101107C
John Hathaway Recent Comments
John Hathaway, On Thursday October 28, 2010, 9:00 pm EDT
The world’s monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications.
The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system.
Whether prolonged or sudden, the transition to a stable monetary system will become possible only when the shortcomings of the status quo become unbearable. Such a transition is, by definition, nonlinear. So central-bank soothsaying based on the extrapolation of historical data and the repetition of conventional wisdom offers no guidance on what lies ahead.
It’s amazing that there is no intelligent discourse among policy leaders on the subject of monetary rot and its implications for the future economic and political landscape. Until there is fundamental monetary reform on an international scale, most economic forecasts aren’t worth the paper on which they are written.
Telltale signs of future trouble aren’t hard to spot. Only a few months ago, Federal Reserve Chairman Ben Bernanke and a chorus of other high-ranking Fed officials were talking about exit strategies from the U.S. central bank’s bloated balance sheet and the financial system’s unprecedented excess liquidity. Now, those same officials are talking about pumping more money into the system to stimulate growth.
Risky Targets
And they’re not alone: Six months ago, the chief economist of the International Monetary Fund, Olivier Blanchard, suggested that raising inflation targets to 4 percent from 2 percent wouldn’t be too risky.
This sort of talk must grate on the nerves of our trading partners, China, India, Russia and others, who have accumulated pyramids of non-yielding Treasury debt. No haven there. Return- free risk may be a better way to put it. And bickering among central bankers over currency manipulation and rising trade tensions doesn’t exactly reinforce one’s confidence in a scenario of sustained economic growth and a return to prosperity.
The prospects for an orderly unwinding of the extreme posture of global monetary policy are zero. Bernanke, Jean- Claude Trichet and Mervyn King, his counterparts in Europe and the U.K. respectively, are huddling en masse upon the most precarious perch in the history of monetary affairs. These alleged guardians of monetary stability, in their attempts to shore up the system, have simply created the incinerator for paper money. We are past the point of no return. Quantitative easing may well become a way of life.
No Freak Occurrence
The consensus investment view seems to be that the credit crisis of 2008 was a freak occurrence, unlikely to repeat. That is wishful thinking. Monetary policy has painted itself into a corner. Based on our present course, there will be more bubbles and more meltdowns.
Financial markets and institutions sense trouble, as reflected in the flight to supposedly safe assets such as Treasuries and corporate-debt instruments with paltry yields, as well as the reluctance to lend by commercial banks. We are stuck in an epic liquidity trap. The irony is, if global central banks succeed in creating inflation, the value of these safe assets will be destroyed. It is a slaughter waiting to happen.
In the pedantic mentality of central bankers, their playbook creates just the right amount of inflation. As inflation accelerates, consumers will spend to get rid of their dollars of diminishing value and spur the economy. Once consumers start spending, it will be time to raise interest rates because a solid foundation for prosperity will have been established, they say.
Slender Thread
But whatever the playbook promises, the capacity of financial markets to overshoot can’t be overestimated. The belief among policy makers and financial markets in the possibility of this sort of fine-tuning is preposterous, but it is the slender thread on which remaining investment and business confidence rests.
The breakdown of the monetary system will be chaotic. When inflation commences, it will be highly disruptive. The damage to fixed-income assets will seem instantaneous. Foreign-exchange markets will become dysfunctional. The economy will become even more fragile and unpredictable.
Gold is an imperfect, but comparatively reliable, market gauge for the extent of current and future monetary destruction. The recent acceleration in the dollar price of the metal to $1,381, a record high in nominal terms, coincided with talk of a new round of quantitative easing and highly visible discord among major nations on trade and currency-valuation issues.
Naysayers’ Bubble
Naysayers point to gold’s price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency. The Fed is organizing an attack on the dollar’s value, believing that this is the most expedient way to defuse deflationary market forces. The man in the street is unaware, a perfect setup. Inflation can only be successful when the public doesn’t see it coming.
The sudden torrent of commentary on gold isn’t the sign of a bubble. Anti-gold pundits provide a great service to those who grasp this historical moment: They facilitate the advantageous positioning of the one asset most likely to be left standing when the dust settles.
(John Hathaway is a managing director of Tocqueville Asset Management LP in New York. The opinions expressed are his own.)
PDF Chart
Tocqueville Gold Fund
Download TGLDX LT GoldTspdf
—Part D———-
mp3 Commentary
Download TTOAudio20101107D
PDF Chart Next T
Download Next Bear T20101105pdf
—-Part E————————–
The Nov 10 mid week post is below.
mp3 Download
TTOmidwkAudio20101110
PDF Chart
Download Next Bear T20101109pdf
T Theory Observations for October 31 2010
—part A———————
MP3 Audio
Download TTOAudio20101031A
Chart#1
Download ADTs20101028pdf
Chart#2
Download Volatility Index Top Warning20101028pdf
—part B ————
MP3 Audio Download TTOAudio20101031B
Chart#1
Download LTTreasury Return vs Long Rates20101028pdf
Chart#2 None
—Part C———-
MP3 Audio
Download TTOAudio20101031C
Chart#1
Download MFIMidPointforGLD20101027pdf
Chart#2 Note from Mike
I enjoyed this Sunday’s (early) update as usual. However, in it you asserted that it was necessary to have a $190/yr subscription in order to view ratio charts such as $VIX:$VXV in StockCharts. That is patently incorrect.
I have never had a subscription and I have no difficulty creating ratio charts that go back 3 years (there is that limitation on how far you can go back if you don’t have a subscription). For example, on my computer http://stockcharts.com/h-sc/ui?s=$NYAD:$CPC&p=D&yr=3&mn=0&dy=0&id=p76301796904 displays back to November 2007.
Furthermore, on the StockCharts “Perf” charts, the backdate limit is longer. For example, the chart http://stockcharts.com/charts/performance/perf.html?tlt,GLD goes back to late 2002. (But on perf charts you can’t create ratios. You can create differences rather than ratios, by clicking on the rectangular tabs, but I don’t think that you’d want those.)
—Part D———-
MP3 Audio
Download TTOAudio20101031D
Chart#1
Download Next Bear T20101029pdf
Chart#2 None
—-Part E————————–
Nov 3 Post
MP3 Download
TTOAudio20101102E
Download
Next Bear T20101102
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I claim no credit for the material found under T Theory® on this blog. All of this material is the creation of Terry Laundry and was downloaded from Terry’s free blog site (TypePad). I have created a mirror of Terry’s original material and now there is a second site containing Terry’s T Theory®. One or both of these websites hopefully will survive through time as Terry’s material is too important to be lost to the ravages of time. This site is simply a memorial to his lifetime work.
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FYI – I find the best way to save a webpage is using “ScrapBook” (it’s an add-on for the FireFox browser). ScrapBook saves a webpage to your computer EXACTLY as it appears on the day you saved it. You can’t tell the difference between the internet webpage and your ScrapBook saved webpage. The saved pages are not pictures. Instead the pages consist of HTML and page functionality remains identical on your computer. There is also a second method for using ScrapBook, where you can save all of the webpages down to a defined link depth. This optional method means all links will function on your computer to the link depth specified (meaning you can click on links on your saved webpages and tunnel down into pages within pages). Saving the normal way will only save the top webpage but the links that exist could continue to function by taking you to the website on the internet instead of on your computer. But sometimes the linked website doesn’t exist anymore. I’ve had this happen on some very good webpages with unique information (they just disappear into the internet void). That’s a bummer when you lost some really good info and thus rose my need for ScrapBook. You can also filter the pages saved using the optional ScrapBook method, which can exclude all pages not coming directly from the specified website (filtering is recommended using this method otherwise you wind up with a LOT of useless stuff).
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