Archive for commodities

Prices Rising in Turkey, Trouble Ahead

Posted in Ezekiel 38-39, Prophecy, Trend Update with tags , , , , , , , on October 8, 2018 by paulthepoke

The Turmoil will not start in the United States, but it will reach our shores.  The warnings are moving from inevitable Global Turmoil to Imminent Global Turmoil!

Michael’s website

The Catalyst will not start in the Equity Markets, but in the Credit and Debt Markets of the World. The Debt Markets dwarf the Equity Markets by a factor of at least 20; the Credit Market is enormous!!  Although the Turmoil will not start in the US, the US Dollar will be the cause! In an effort to Save the World, the Central Bankers reduced rates to zero or below and encouraged borrowing; encouraged squander and massive, pervasive Debt! Global rates have risen from 0.1% to over 3.0% in the US. A thirty fold increase! Thirty times more interest; thirty times more tax money to service the debt. To make matters worse, a gamble was taken; betting the US Dollar would indefinitely decline in value and Debt could be rolled over in cheaper and cheaper Dollars. Historical Cycles were ignored; the Day of Reckoning is coming as the Dollar has reversed and is now getting stronger and stronger. The equation of local currency vs the US Dollar is tipping. Not only is the payment rate trending higher, more local currency is needed to buy a US Dollar; a lot more!

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Not only Debt repayment will cause Turmoil, but Imports are typically expressed in International measures which is typically the US Dollar. Energy costs will skyrocket in Argentina and Turkey as their respective currencies decline vis-a-vis the US Dollar.  Oil and refined petroleum Products will become very expensive and cause hardship on the local populations. Medicine, machine parts, electronics, replacement parts will all become expensive demanding more and more of free cash flow and eventually a breaking point!

Obviously, as more and more Capital is diverted to servicing Debt and rising costs, the Economy will suffer. It will become a Negative Feed Loop Spiral! Eventually, Debt will be Defaulted affecting the Pension Funds, Hedge Funds, Banks, Mutual Funds, Annuities, Sovereign Wealth Funds, and even small family reserves. Collateral Damage will be a Contagion as Peter can no longer pay Paul who then cannot pay Mark!

Bonds will face not only Market Risk as Interest Rates rise causing a relentless decline in value, but also Credit Risk as Defaults rise and credit Quality lowers.  It is time to review holdings. It is time to re-allocate. The US Dollar cycles; it will trend lower again. Things and Real Assets will rise substantially in the US like they are now in Turkey and India. Real Things should be accumulated now while our Dollar is high. Commodities such as copper, aluminum, steel, asphalt, agriculture, farms, lumber, and residential rentals can be slowly bought. Cash flowing rentals contain these basic materials and will not only protect their value in the future, but protect the owner with an alternative cash stream when Turmoil reaches our shores.

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Russia: An Emerging Market

Posted in Ezekiel 38-39, Michael Douville, Uncategorized with tags , , , , , , , , , , , , , , on September 17, 2018 by paulthepoke

Featuring: Michael Douville, Paul Lehr

Ezekiel 38:1-3 The word of the Lord came to me: “Son of man, set your face toward Gog, of the land of Magog, the chief prince of Meshech and Tubal, and prophesy against him and say, Thus says the Lord God: Behold, I am against you, O Gog, chief prince of Meshech and Tubal.

For evidence pointing to modern day Russia, see the link below.

https://godinanutshell.com/2017/08/04/ezekiel-38-who-is-magog/

Modern day, 21st century Russians refer to themselves as the ancient Scythians or Magogians. See the link below.

https://paulthepoke.com/2017/08/23/trend-update-putin-netanyahu-meet-in-sochi-russia-august-2017/

https://michaeldouville.com

Russia has an impressive military with Nuclear Weapons, but when it comes to Economic prowess, it is an Emerging Market! It has been only 20 years since Russia collapsed financially and it is still working through the economic disruption. Although blessed with huge Natural Resources, Russia is still very dependent on Foreign Capital to develop it’s mining,  gas and oil fields.  Foreign Capital is needed not only for developing the resources themselves, but the infrastructure to bring them to market.  Global Markets dictate much of Russia’s income as the price of basic materials fluctuate with the Business Cycle. As one of the World’s leading oil producers, Russia has benefited from the recent run up in Oil prices which are expressed in US Dollars. Basic Materials are also expressed in US Dollars, but are very sensitive to demand dynamics; much, much more sensitive. Dollar dependency is a two edged sword for although the demand for the energy component is less elastic, the price can fluctuate wildly.  The price of Natural Resources can plummet as the Global Slowdown intensifies; as with any Emerging Market repayment of Foreign Loans becomes more and more difficult.

The BRICs were the darling of the Investment Community. Now Brazil and India are struggling. China financed much of it’s Capital needs with internal financing through it’s Shadow Banking and while these loans are certainly at risk, they are less visible. Russia has done much better than many Emerging Market Nations, but Russia is still affected by a rising US Dollar and rising Global Interest Rates. The balance of Trade impacts the International repayments. A Global Slowdown is underway and many Emerging Markets are at risk of depleting Dollar Reserves and thus entering a Liquidity Crisis. Which leads to Turkey!

Commodity prices will fall crushing the Emerging Markets which will cause Turmoil throughout the World. Debts will not be paid and alliances will be stretched if not completely broken.

Turkey, along with Argentina and Brazil, is rapidly running out of Dollar Reserves. Turkey imports much more than it exports and as it’s currency declines, purchasing power falls dramatically.  Turkey needs Cash to not only finance Government offices, public utilities,  and to service domestic needs, but any recent Military adventures such as last year’s excursion into Iraq and just recently Syria. Everything needs to be financed. The Credit lines from Western Nations and the US come with restrictions which the Turkish Government seems to be unwilling to accept. Turkey is now in overtures to Russia and China to provide US Dollars to solve it’s Liquidity demands. Currently, Turkey is involved in operations with Russia in Syria; an operation that benefits both Geo-politically, but is adverse to Turkish Allies objectives.  This becomes a very interesting puzzle!

Russia and China can forestall Turkey’s liquidity crisis for awhile; a few months, maybe a year. However, both are still Emerging Markets themselves and a prolonged Global downturn will inevitably affect any extension of Credit.

A Global Downturn has been evident for months. Demand for natural Resources and eventually Energy will fall, slowly at first then much more rapidly. Commodity prices will fall crushing the Emerging Markets which will cause Turmoil throughout the World. Debts will not be paid and alliances will be stretched if not completely broken. There is still time to prepare; payoff debt, build reserves, store things like food, water, and medicine.  As quickly as possible, build a personal cash reserve held outside of financial institutions and as important, build a Financial Lifeboat of Cash Flowing assets.

https://michaeldouville.com

Remember, the reason for Russia’s future invasion of Israel is economic. Russia will seek to take Israel’s resources.

Ezekiel 38:13 Sheba and Dedan and the merchants of Tarshish and all its leaders will say to you, ‘Have you come to seize spoil? Have you assembled your hosts to carry off plunder, to carry away silver and gold, to take away livestock and goods, to seize great spoil?’

 

Will Turkey Align with Russia?

Posted in Ezekiel 38-39, Michael Douville, Prophecy, Trend Update with tags , , , , , , , , , , , , , , , , , on September 10, 2018 by paulthepoke

Featuring: Michael Douville, Paul Lehr

Ezekiel 38:1-3 The word of the Lord came to me: “Son of man, set your face toward Gog, of the land of Magog, the chief prince of Meshech and Tubal, and prophesy against him and say, Thus says the Lord God: Behold, I am against you, O Gog, chief prince of Meshech and Tubal.

Ezekiel 38:6 Gomer and all his hordes; Beth-Togarmah from the uttermost parts of the north with all his hordes—many peoples are with you.

The brothers of Magog (Meshech, Gomer, and Tubal) appear to point to modern day Turkey.

For more evidence pointing to modern day Turkey, see the link below.

https://godinanutshell.com/2017/08/08/ezekiel-38-who-are-meshech-tubal-gomer-beth-togarmah/

For evidence pointing to modern day Russia, see the link below.

https://godinanutshell.com/2017/08/04/ezekiel-38-who-is-magog/

Modern day, 21st century Russians refer to themselves as the ancient Scythians or Magogians. See the link below.

https://paulthepoke.com/2017/08/23/trend-update-putin-netanyahu-meet-in-sochi-russia-august-2017/

https://michaeldouville.com

No Presidential Decree from Turkey’s de facto ruler will stop the Lira’s decline against the US Dollar.

Nations are no different than Families; each has a credit line. Using credit to enjoy today is always at the expense of tomorrow; maybe at the expense of a lot of tomorrows.

The US Dollar is cycling higher as uncertainty in Financial Markets starts to spread; just Capital looking for Safety! The easy credit and absurdly low interest rates of the last decade have encouraged gorging on Debt across the Villages, Hamlets, Towns, Cities, and Nations of the World. The Joy of Financed Prosperity is ending and the Day of Judgment is coming as the servicing of the Debt now is impeding Prosperity and the Creditors are looking for re-payment. Emerging Markets rely heavily on Debt to finance schools, airports, roads, water sanitation and all of the infrastructure already in place in modern countries. Further, Emerging Markets rely heavily on Foreign Investments for Capital to build retail, restaurants and housing. When local currencies start to decline against the benchmarks such as the US Dollar, these pools of Capital start to leave causing a liquidity problem for local governments and eventually a loss in confidence which can quickly and adversely affect exchange rates. Capital in Argentina, Brazil, India, Greece, Macedonia, Poland and of course Turkey is fleeing to the Safety of the US Dollar and their currency’s purchasing power is declining. Once started, it is very difficult to stop: even Presidential decrees do not work.

                                  JP Morgan Emerging Market Currency Index

Nations are no different than Families; each has a credit line. Using credit to enjoy today is always at the expense of tomorrow; maybe at the expense of a lot of tomorrows. Eventually the credit line is completely spent; maybe an extension or two will postpone the inevitable. However, just as Families, nations can only service so much Debt and then something has to change. Families can declare Bankruptcy or allow a Foreclosure. Nations DEFAULT!!

Before a Nation Defaults, plans must be made for the continuation of the Government and essential services. This is done by securing funding from other sources; sources that previously would not even be considered; desperation changes things! Turkey is running out of Credit! Turkey will not accept constraints imposed by the IMF or creditor Banks and has received an emergency $15 Billion from Qatar.  The Debt must be addressed while the Turkish economy and currency is quickly declining creating a very difficult situation.  Overtures to Russia and China for funding will be a game changer. If the future funding requirements can be obtained, Turkey will be able to default on it’s Debt; geopolitics are also economic realities. Capital is fleeing now, time is short.

Prepare for Turmoil, but also prepare for opportunity! Defaults in Emerging Markets would impact Stocks and Bonds across the Globe.  Reduce or eliminate debt, create personal reserves, stockpile needed medicine, store extra food and water, and keep personal cash handy. The Financial Asset Cycle is ending and Real Assets will rise. Natural Resources, Agriculture, Mining and Minerals, Lumber, Copper, Oil, Aluminum, and most if not all of the basic materials should rise as currencies decline. Things should be accumulate; very conservative Real Estate such as rental houses should do well. It is time to prepare, time to change,  time to prepare for the next opportunity.

 

Currently, American economic sanctions and a strong US dollar are crippling the currencies of Russia, Turkey, and Iran. All of these countries are feeling an economic, monetary squeeze. Ultimately, the reason for the invasion of Israel from the north appears to be economic. Israel is a prosperous country.

Ezekiel 38:13 Sheba and Dedan and the merchants of Tarshish and all its leaders will say to you, ‘Have you come to seize spoil? Have you assembled your hosts to carry off plunder, to carry away silver and gold, to take away livestock and goods, to seize great spoil?’

Is now this time? It is looking like it more and more with each passing day. But, that remains to be seen. Will Turkey Align with Russia? God’s prophet Ezekiel says emphatically “Yes”!

 

The Rising US Dollar, Michael Douville

Posted in Michael Douville with tags , , , , , , on July 7, 2018 by paulthepoke

1 Samuel 2:7 The LORD makes poor and rich; He brings low, He also exalts.

Proverbs 3:13-16 How blessed is the man who finds wisdom and the man who gains understanding. For her profit is better than the profit of silver and her gain better than fine gold. She is more precious than jewels; and nothing you desire compares with her. Long life is in her right hand; in her left hand are riches and honor.

Michael

The US enjoys the Global Reserve Currency status. Virtually all of the major business transactions throughout the world are priced in Dollars. Sovereign Wealth Funds, Pension Funds, Insurance Funds, Corporate funds need to “Park” billions and billions of transactional cash! The ONLY currency liquid and vast enough is the US Dollar! Not Lire, Not Yuan, Not Euro, not the Yen, only the US Dollar. It is stable, safe, liquid and accepted around the World. International pricing expresses the transactional cost in US Dollars of oil, copper, grain, lead, tallow, butter, milk,  beef, etc. along with virtually all International agreements. The dollar does fluctuate, but pegging to the US Dollar standardizes Global transactions.

A weak US Dollar is good for the Global Economic community. The US Dollar was 102.21  October 1, 2016, just prior to the Presidential Elections. The World experienced “A cyclic upturn in a structural downturn” exactly as ECRI (Economic Cycle Research Institute) forecasted.  The Dollar then declined to 88.25 in February 2018; which may have been a cyclic bottom.  A weaker dollar is good for Emerging Market Economies. Raw Material sales translate into more local currency which then can buy more local and regional  goods and services. Local inflation is reduced.  During the past decade, Sovereigns around the World have gorged on cheap loans priced well below 1%, some even negative. With a declining US Dollar, not only are the loans Historically cheap, a 20% decline in currency exchange equates to repaying only $80 million of the $100 million borrowed plus receiving a higher price for exports usually oil, copper, aluminum, etc.

money
photo: MarketWatch

Like all things, the US Dollar cycles. It does not remain cheap forever. Timing becomes important. The US Dollar has risen and risen very fast from a possible low of 88 just a few months ago to a recent high of 96. This cycle of peaks and valleys is not a new phenomena; this cycle repeats historically. What is new is the record DEBT pervasive throughout the World. Debtors have enjoyed the discount of a declining US Dollar; that is now gone. Interest rates at or near zero are gone in the US and scheduled to be gone soon everywhere else. Obscene amounts of DEBT have propelled the good fortunes of virtually everyone from Credit Cards and HELOCs for citizens to massive Public and Sovereign debt in EVERY Village, Hamlet, Town, City, Municipality, County, State and Nation on the face of the PLANET!!

 

A strong Dollar will reduce the value of exports thereby slowing the economy in exporting Nations. A negative spiral’s outcome is a slowing of all global economies. This then results  in declining demand that ripples throughout the World. That is bad enough; add in rapidly rising rates and there lies a recipe for Catastrophe! The obscene debt is rarely paid off, rarely even reduced. The debt is rolled over or refinanced. A rise to only 2% equates to multiples of 10 to 20 times the debt service. There is going to be  a very rude awakening very soon!

Debt will default and these defaults will accelerate throughout the world pressuring rates even higher as nonpayment risk pressures returns. Bonds and Bond Funds will be at HUGE RISK. All manners of Debt will be affected. Rates will rise and rise quicker than anyone anticipates. Get out of Debt! Payoff Credit Cards, Helocs, anything that floats with an Index. Refinance into fixed rate LONG TERM debt.  Raise cash!  The dollar cycle peak is forecast to reach 103.8 as a typical permutation in a typical cycle.  This may not be TYPICAL! Turmoil could drive the US Dollar to 120 causing massive disruptions!  For those aware, for those prepared, Generational Wealth can be achieved when the cycle again turns down……

https://michaeldouville.com

 

Dollar Rising, Michael Douville

Posted in Michael Douville with tags , , , , , , , , on June 21, 2018 by paulthepoke

Proverbs 20:10 Unequal weights and unequal measures are both alike an abomination to the LORD.

Micah 6:10-11 Can I forget any longer the treasures of wickedness in the house of the wicked, and the scant measure that is accursed? Shall I acquit the man with wicked scales and with a bag of deceitful weights?

Michael

All currencies are not created equal. Values of currencies change. God is not a fan of currency manipulation. Imagine that, humanity outside of God’s economic laws…

The end result of currency changes can be dramatic. Michael explains the consequences of a rising dollar and what it means to global economics.

Understand the times we are in. Currently, soft commodities (grains such as barley and wheat) are relatively cheap. These times will not last forever. Make plans now while goods are inexpensive. Understand where we are going. Have a plan.

The dollar is rising causing Systemically Important Financial (SIFI) to Plummet.

 

michael@michaeldouville.com

https://michaeldouville.com/

Time to Raise Cash…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , , , , , , , , on May 3, 2018 by paulthepoke

Leviticus 19:35-36 You shall do no wrong in judgment, in measurement of weight, or capacity. You shall have just balances, just weights, a just ephah, and a just hin; I am the LORD your God, who brought you out from the land of Egypt.

Proverbs 11:1 A false balance is an abomination to the LORD, but a just weight is his delight.

Currency manipulation is global issue. The above verses are two of many examples provided in Scripture. All currencies are not balanced the same. Imagine that, the world’s economy is out of balance in regards to the standard of the Bible. All currencies are not created equal. There are global economic consequences when standards are out of balance and there is reconfiguration. God is not a big fan.

 

Michael

Many Researchers have been forecasting a rising US Dollar. This seems like an impossibility, but technical methodology from several different disciplines are coming to the same conclusion. A top researcher in March placed a 103.8 target from 88.1; currently, the dollar has risen to 92.46. Should the target be exceeded, a Spike could develop going much higher. The Dollar rose .7% on May 1, 2018 alone.  A strong dollar will pressure the repayments of debt across the Globe in an environment of struggling Municipalities, States, and Sovereign debtors. A stronger dollar will not only change the repayments dynamics, but the exports in Emerging Market Countries are affected as Commodities expressed in US Dollars lose value.

A stronger Dollar is enhanced not only by the perception that the US Economy will be stronger than any other, but also by the Interest Rate differential across the Globe and the avowed Federal Reserve policy of raising short term rates. Higher rates from both the Federal Reserve and the LIBOR affect 40-60% of all Global Debt; currently exceeding the 2008 Debt Record and now over $217 Trillion Dollars. Charles Nenner called the 10 year Treasury low at 1.6% in July of 2016. The trend line from 1981 has been broken at the 2.65% level and has now exceeded 3%; better than an 85% increase. With the trend line broken, rates could rise swiftly and approach 4.5% faster than thought possible. Normalization is occurring as Central Bank intervention recedes. Normal could easily be 5-6%; a double from here.

Prices in asset classes will be affected. Housing prices will be compressed as rates rise; Home buyers buy based on payments. Higher rates equal lower affordability; some Luxury Markets are already affected!  Equity prices will be affected as repatriated funds are reduced inversely with a stronger dollar. The US Dollar has depreciated 24% since the Presidential election. Take for example a US manufactured auto sold for 20,000 Euros in Germany in December 2016; the same car sold for 20,000 Euros in December 2017 netted the US Manufacturer 20+% more profit due to the Dollar decline; great news for Stock Prices. Bad news when the US Dollar rises; the same formula works negatively in reverse. Look for earnings to decline; stocks are correlated to earnings. Need I mention Bonds? Higher rates will decimate Bond values as well as higher rates will cause many more defaults across the Globe, again affecting the value of Fixed Income. Commodities will also be negatively affected by a spiking US Dollar as it will take fewer Dollars to purchase in local Currency as well as higher rates will certainly curb demand.

What to do? Everything cycles! Raise cash to purchase assets at lower US pricing. Research is indicating it will probably be a Spike; vicious, but not exceedingly long term. This will present HUGE opportunities for those prepared. Every Investor has personal goals. Review your portfolio and make the proper adjustments.

michael@michaeldouville.com

https://michaeldouville.com

https://paulthepoke.com/category/michael-douville/

 

 

 

Bitcoin Mania…Featuring Michael Douville

Posted in Michael Douville with tags , , on December 20, 2017 by paulthepoke

Psalm 119:72 The law of your mouth is better to me than thousands of coins of gold and silver. 

MichaelIt has taken almost 400 years, but according to Convoy Investments, Bitcoin has surpassed The Tulip Bulb Bubble, where even Sir Issac Newton lost his fortune, as the largest Financial Bubble in History.  Everyone wants to get rich! Everyone wants to be part of this phenomenon.  When queried,  there is a complete lack of understanding what Bitcoin is or can do. It is a “Store of Wealth”, however, you cannot go to Walmart and buy clothes or food with Bitcoin, nor can you fill up your car at the Gas Station. You cannot pay your mortgage,  health costs, utilities, or even buy a really good meal with Bitcoin! Yet, there is a rush to spend precious Investment Dollars, Retirement Funds, or worse yet, the Family “Nest Egg” in pursuit of the “Riches” to be made.

This will not end well! Wealth is not achieved by Speculating in the last stage of a spiking and crowded trade; that is a recipe for losses, HUGE losses.  Wealth is achieved by understanding the flow of the economy and attempting to purchase good assets early in their cycle. Purchasing assets that will appreciate as time goes on; investing long before everyone else recognizes the potential of your asset class.  Such opportunities present themselves a few times in your life. Certainly,  March 2009 for the Equities Market or Investing in Bonds after the traumatic ending of the Interest Rate Cycle in 1982 when short term rates broached 20%; resulting in  35 years of declining rates and rising Bond prices. Just these two illustrate that the time to buy is when everyone is selling and swearing never to enter that Market again.  Two possible considerations come to mind.

As China was saving the world in 2009-2012, Iron Ore, Copper, Aluminum, Timber, etc. were in demand and prices rose sharply; they have since fallen sharply. The rise of Commodity prices were also the result of the completion of the Commodity Cycle; typically a 15 year duration: 7.5 years up, 7.5 years down. The down cycle appears to be in the process of completion. No one wants to own Commodities!

Typically, Housing experiences a Mid-Cycle Correction in the 7.5 to 9 years from the cycle completion date. The last cycle would have bottomed and completed in mid to late 2009; the vulnerability stage would then be early 2017 to the end of 2018. A correction in this time frame would constitute a buying opportunity in an ongoing Bull Market. With both the Stock and Bond Market heading toward completion of their respective cycles, this “Correction” could be pretty “Scary”.  However,  the best price appreciation is generally achieved just prior to the cycle tipping point often resulting in a Price Spike. This event should transpire for Housing in the 2023/2024 time period also coinciding with Commodity Cycle. In order to benefit from both trends,  investing in cash flowing residential rentals in the high growth corridors of the US might be considered. One should always consult with your advisor prior to investing.

https://michaeldouville.com/bitcoin-mani/

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