# Why is the market rising?!



## Dominover (28 May 2020)

Can anyone provide some explanation as to why the stock market is rising right now?  I can't believe what I'm seeing.


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## gartley (28 May 2020)

Dominover said:


> Can anyone provide some explanation as to why the stock market is rising right now?  I can't believe what I'm seeing.



Who knows and who cares....
Everyday in the news we hear reasons to try and justify what the market has done. 
Just trade the market  in front of you with your strategy and plan))


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## Dominover (28 May 2020)

My curiosity lies in the ridiculous consensus that made the market rise over 100 points.  

It adds allot of weight to the argument that nobody understands what's going on around them.  It's simply herd mentality driving  the market right now.  It's baffling how much the market has moved based on this idea. 

I was hoping to get some clarity on what kind of fundamental factors are driving the market right now.   I gather there aren't any, or are there?


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## sptrawler (28 May 2020)

There is a bit of discussion, in the 'how far will the market fall thread' and a couple of other threads.


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## Garpal Gumnut (28 May 2020)

Dominover said:


> Can anyone provide some explanation as to why the stock market is rising right now?  I can't believe what I'm seeing.



I believe this is a good question. 

The answer is because it is. 

Crowd behaviour. Fear of missing out. FOMO. I'm buggered if I can work it out. I'm fairly well cashed up and will enter when it is right for me on certain shares. 

An interesting article from the SMH for the bear side of all this joyous behaviour. 

https://www.smh.com.au/business/mar...ends-sharemarket-warning-20200527-p54wr5.html

gg


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## Smurf1976 (28 May 2020)

Dominover said:


> It's simply herd mentality driving the market right now.



So far as I can determine that is indeed the answer. It's herd mentality and FOMO not a response based on any serious economic forecasts etc.

As such it's a hard subject to discuss - there's not a lot more that can really be said beyond the observation that the market going up is drawing more money in and that keeps it going up. 

At some point that will likely end but in the meantime it is what it is.


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## Chronos-Plutus (28 May 2020)

Garpal Gumnut said:


> I believe this is a good question.
> 
> The answer is because it is.
> 
> ...




It is the FED that is inflating the markets: never fight the FED head on, you will lose. The FED will buy stocks on-market like the Bank Of Japan if they have to; to keep stocks inflated.

When the music ends, I don't know. Call me a precious metal bug if you like; but I see gold and silver doing extremely well from the currency debasement. I am relatively young, so I can play the multi-decade long game, some can't.


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## tech/a (28 May 2020)

It’s simply billions of stimulus $s 
And will keep powering !


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## wayneL (28 May 2020)

Pro tip I heard today - The stock market is not the economy.


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## Dominover (28 May 2020)

Chronos-Plutus said:


> It is the FED that is inflating the markets: never fight the FED head on, you will lose. The FED will buy stocks on-market like the Bank Of Japan if they have to; to keep stocks inflated.
> 
> When the music ends, I don't know. Call me a precious metal bug if you like; but I see gold and silver doing extremely well from the currency debasement. I am relatively young, so I can play the multi-decade long game, some can't.




QE may be a good strategy when we are in a crisis like the GFC.  The following defaults had a major knock on effect that went global thanks to our trusty investment banks.  It was the fact that they had a section of the economy who received loans they could not pay back.  Consumption was not the primary issue then as it is now.   Money printing and government spending helped because credit was made cheap, some regulations on lending practices were tightened, and the US gov spent in key areas to boost the US economy which helped alleviate business investment woes.   

But....now we are faced with an earnings crisis.  If we don't earn we have nothing to spend.  Cheap money puts us further into debt and debt is a major issue now because we have less earnings to pay it off.   So, money printing on a small scale may help a little, but really what are we doing about consumption??   That's the key here!  We are now seeing the end result of a long string of terrible government policies.  Governments cooking the books has had shirt term benefits with long term consequences.  Excess immigration and the downward pressure on wage growth, unchecked foreign ownership of a nations assets, industrial relations reforms, and a whole bunch of other things that will affect the ability if wages to rise with inflation. The real value of our money is so important here. 

So I would add to the statement, 'don't fight the fed' by saying this is ok if they are using the right policy to dig us out of this hole.    

Government spending, subsidies, lower taxes in key areas, and diversified trade deals (not the China centric ones we have) would be a great start in lowering risk and driving wages.  Cutting immigration is a must here (if only for 5-10 years) to enable this recovery to occur.  Boosting it will take us back to the start where we will be relying on this influx if capital to cook the books once again.   But.. we can't talk about that.. Its racist.  

I truly believe the current market speculation shares the same short sightedness our governments use when implementing their plans for long term growth.  In all fairness, it's probably very difficult to implement economic growth policies from the bottom of a pit dug by prior poor decisions.  There is nowhere for policy makers to turn, so they gamble with dubious policies.  

In the context of our rising market in these dubious economic times, maybe investors are faced with the same dilemma.


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## tech/a (28 May 2020)

wayneL said:


> Pro tip I heard today - The stock market is not the economy.




ha wise words 
Correctly placed stimulus can certainly 
Shape an economy particularly on the scale we see world wide.
So can a GFC 
Stock markets are a consequence long and short term of outside influence.


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## Chronos-Plutus (28 May 2020)

tech/a said:


> It’s simply billions of stimulus $s
> And will keep powering !




Sure, but what happens when people no longer believe in the issued currency?

Some may say that I am fool for raising the possibility, but how many reserve currencies have been destroyed in the last 200 hundred years.

There are some billionaires like Ray Dalio that have announced that precious metals are the place to be; but he may be a bit old to see it come to fruition, which it certainly will. Perhaps he and the like will buy all the gold and silver available to store for their future generations!


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## Chronos-Plutus (28 May 2020)

Dominover said:


> QE may be a good strategy when we are in a crisis like the GFC.  The following defaults had a major knock on effect that went global thanks to our trusty investment banks.  It was the fact that they had a section of the economy who received loans they could not pay back.  Consumption was not the primary issue then as it is now.   Money printing and government spending helped because credit was made cheap, some regulations on lending practices were tightened, and the US gov spent in key areas to boost the US economy which helped alleviate business investment woes.
> 
> But....now we are faced with an earnings crisis.  If we don't earn we have nothing to spend.  Cheap money puts us further into debt and debt is a major issue now because we have less earnings to pay it off.   So, money printing on a small scale may help a little, but really what are we doing about consumption??   That's the key here!  We are now seeing the end result of a long string of terrible government policies.  Governments cooking the books has had shirt term benefits with long term consequences.  Excess immigration and the downward pressure on wage growth, unchecked foreign ownership of a nations assets, industrial relations reforms, and a whole bunch of other things that will affect the ability if wages to rise with inflation. The real value of our money is so important here.
> 
> ...





You will find that Gottfried Haberler had identified this issue based on under-consumption theory.


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## tech/a (28 May 2020)

Don’t invest in paper.
Hard asset my friend


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## Chronos-Plutus (28 May 2020)

Dominover said:


> QE may be a good strategy when we are in a crisis like the GFC.  The following defaults had a major knock on effect that went global thanks to our trusty investment banks.  It was the fact that they had a section of the economy who received loans they could not pay back.  Consumption was not the primary issue then as it is now.   Money printing and government spending helped because credit was made cheap, some regulations on lending practices were tightened, and the US gov spent in key areas to boost the US economy which helped alleviate business investment woes.
> 
> But....now we are faced with an earnings crisis.  If we don't earn we have nothing to spend.  Cheap money puts us further into debt and debt is a major issue now because we have less earnings to pay it off.   So, money printing on a small scale may help a little, but really what are we doing about consumption??   That's the key here!  We are now seeing the end result of a long string of terrible government policies.  Governments cooking the books has had shirt term benefits with long term consequences.  Excess immigration and the downward pressure on wage growth, unchecked foreign ownership of a nations assets, industrial relations reforms, and a whole bunch of other things that will affect the ability if wages to rise with inflation. The real value of our money is so important here.
> 
> ...



Have a read; https://mises.org/library/prosperity-and-depression


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Don’t invest in paper.
> Hard asset my friend



If you're Daffy Duck, I am Porky Pig sniffing for truffles in the forest; good deals in other words.


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## tech/a (28 May 2020)

Chronos-Plutus said:


> If you're Daffy Duck, I am Porky Pig sniffing for truffles in the forest; good deals in other words.



Don’t limit yourself with one forest porky


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Don’t limit yourself with one forest porky




Trying not to: but the Pommies and Yanks aren't very friendly to us Aussie Battlers at the moment, it seems. Perhaps finding friends in Italy, Greece, France or Germany might be a better choice.


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## tech/a (28 May 2020)

Similar forests 

Property
Commercial and Domestic
Gold 
Collectables 
Business 

Very different forests.


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Similar forests
> 
> Property
> Commercial and Domestic
> ...




I like:

- agriculture
- precious metals
- energy


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Similar forests
> 
> Property
> Commercial and Domestic
> ...



I thought you were talking about different nations, investments, exchanges and friends. Not sectors.

My sectors that I like are above.


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## tech/a (28 May 2020)

Nope not sectors 
Physical —— owning them


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Don’t limit yourself with one forest porky



Europe is the market for resources. That is where we need to focus our attention. Europe, as an economy, are extremely deficient of natural resources like lead, copper, silver, zinc, and so on.

They are our market that we need to focus on.


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Nope not sectors
> Physical —— owning them




We are talking about different spheres of economics and finance here; which is relevant to different scales of business and/or individual wealth.


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## tech/a (28 May 2020)

Which is where Daffy currently resides.
Cash is no longer king.
Unless you can print enough of it!


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## Chronos-Plutus (28 May 2020)

tech/a said:


> Which is where Daffy currently resides.
> Cash is no longer king.
> Unless you can print enough of it!




Well you're not so loony, if we must consider the demise of our world currency! Knowledge is knowing that all reserve currencies die, and we must prepare.

Anyway, I don't get paid to be concerned about the fallout. I intend to focus on the more enjoyable aspects of life


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## tech/a (28 May 2020)

I intend to do the same as soon as I can get out of my own back yard.


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## Smurf1976 (28 May 2020)

tech/a said:


> It’s simply billions of stimulus $s
> And will keep powering !



If we go back a few years then the prospect of the Fed propping up markets was very much in the category of conspiracy theories. Now it's not only happening but being done openly without even trying to hide it.

Putting one of those aluminium foil hats firmly on here but if the Fed were to pull the rug from under it all at some point, and there would seem to be nothing preventing that, well then it would be the biggest pump & dump scheme in history would it not?

That seems unlikely, but then not too long ago propping up the market also seemed unlikely, so I'll keep the thought in the back of my mind as being at least possible.


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## sptrawler (28 May 2020)

Smurf1976 said:


> So far as I can determine that is indeed the answer. It's herd mentality and FOMO not a response based on any serious economic forecasts etc.
> 
> As such it's a hard subject to discuss - there's not a lot more that can really be said beyond the observation that the market going up is drawing more money in and that keeps it going up.
> 
> At some point that will likely end but in the meantime it is what it is.



The trick is working out when the sentiment will reverse, my guess next reporting season.
That is for Aus, with U.K based shares, they are moving into summer so the virus news should be good, therefore I will hang on to U.K shares a bit longer.


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## Smurf1976 (29 May 2020)

The market's going up, central banks are pumping out money and the world is still turning.

We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.

The market, however, is heading up at least for the time being......


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## qldfrog (29 May 2020)

Smurf1976 said:


> The market's going up, central banks are pumping out money and the world is still turning.
> 
> We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.
> 
> The market, however, is heading up at least for the time being......



Yeap purchased a 8$ inc postage chainsaw part yesterday on ebay and i was indeed offered some finance option


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## tech/a (29 May 2020)

Smurf1976 said:


> If we go back a few years then the prospect of the Fed propping up markets was very much in the category of conspiracy theories. Now it's not only happening but being done openly without even trying to hide it.
> 
> Putting one of those aluminium foil hats firmly on here but if the Fed were to pull the rug from under it all at some point, and there would seem to be nothing preventing that, well then it would be the biggest pump & dump scheme in history would it not?
> 
> That seems unlikely, but then not too long ago propping up the market also seemed unlikely, so I'll keep the thought in the back of my mind as being at least possible.




Well there is an excess of $70 billion available.
Which if and when used generates 100s if not 1000s of Billions in economic gain.


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## Chronos-Plutus (29 May 2020)

Dominover said:


> QE may be a good strategy when we are in a crisis like the GFC.  The following defaults had a major knock on effect that went global thanks to our trusty investment banks.  It was the fact that they had a section of the economy who received loans they could not pay back.  Consumption was not the primary issue then as it is now.   Money printing and government spending helped because credit was made cheap, some regulations on lending practices were tightened, and the US gov spent in key areas to boost the US economy which helped alleviate business investment woes.
> 
> But....now we are faced with an earnings crisis.  If we don't earn we have nothing to spend.  Cheap money puts us further into debt and debt is a major issue now because we have less earnings to pay it off.   So, money printing on a small scale may help a little, but really what are we doing about consumption??   That's the key here!  We are now seeing the end result of a long string of terrible government policies.  Governments cooking the books has had shirt term benefits with long term consequences.  Excess immigration and the downward pressure on wage growth, unchecked foreign ownership of a nations assets, industrial relations reforms, and a whole bunch of other things that will affect the ability if wages to rise with inflation. The real value of our money is so important here.
> 
> ...




The problem that we will inevitably face will be stagflation/recession-inflation due to the unprecedented quantitative easing and productive destruction. For a small population like Australia, the recession/depression will be further exacerbated with the restriction of the freedom of movement of people. I believe that under-consumption is the problem that governments must address in all economic depressions.

The Central Banks pumping money into the markets will not address the underlying issue of under-consumption as it won't fix the problem of unemployment due to the capital being misallocated. When the nation gets back to work, we may then be faced with over-saving and still be stuck in an under-consumption environment. To make matters worse, a tsunami of debt has been amassing since the 2008 GFC, and when this tidal wave inevitably crashes; the world will go into an unrecoverable economic shock.

We are confronted with this situation because the economists and central bankers thought that they could avoid the economic cycle of boom and recession. They are wrong. Their job is to dampen and smooth the economic cycle, not attempt the impossible and create more problems for us all.


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## frugal.rock (29 May 2020)

Smurf1976 said:


> The market's going up, central banks are pumping out money and the world is still turning.
> 
> We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.
> 
> The market, however, is heading up at least for the time being......



It's the BNPL revolution.
The systems are gaining market share. Eg, Afterpay.
The attraction of instant gratification gives life customers to the bnpl subsector. Credit card take up surely is down in comparitive growth?
The days of having a MasterCard/visa are numbered as the new phase rolls in.
Older generations are set in their ways, the younger generation is the take up- there not dropping off the planet either.
As for the markets, the spring is nearly at max coil.... any day now.
Even Trump is getting upset at the naysayers...shhh he says. It doesn't work like that. Risk off.

F.Rock


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## qldfrog (29 May 2020)

tech/a said:


> Well there is an excess of $70 billion available.
> Which if and when used generates 100s if not 1000s of Billions in economic gain.



Sadly, while this was true 20 years ago, we have now reach a time where we have lost the multiplication factor.
i don't have the figures under the eyes but it has been a relentless decrease in efficiency, basically nearing the time where you have no multiplication factor.
If you have the time, dyor, it is astonishingly bad and widespread: West, China, Japan....


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## Trendnomics (31 May 2020)

Trendnomics said:


> Another question this thread should've asked, is: "How far will the market retrace?". The current market is reminiscent of the large 2008 retracement, prior to the subsequent crash to the 2009 low's. I can fondly remember this period, as this is when I was still cutting my teeth in the world of equity trading.
> 
> 2008 Retracement:
> View attachment 104004
> ...




The market tends to lag or ignore reality, concurrently the current period has been one of the most under-reported trading periods in history (markets are flying blind). This period reminds me of the large 2008 retracement, where most novice traders (including myself) were profiting handsomely and believing that we have perfectly picked the bottom. On the sidelines there were plenty of debates published in the media - one side stating that the current period was a once in a lifetime buying opportunity - the other side stating that the global economy is heading for ruin.

As per the graphs in my quoted post, a ~50% retracement should not be seen as abnormal - a direct answer to your thread's question - time will tell, but I believe it's down from here.


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## aus_trader (31 May 2020)

Chronos-Plutus said:


> I like:
> 
> - agriculture
> - precious metals
> - energy




Interesting. I have at least one stock each in each of those sectors in the Speculative Stock Portfolio.


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## Chronos-Plutus (31 May 2020)

aus_trader said:


> Interesting. I have at least one stock each in each of those sectors in the Speculative Stock Portfolio.




Well: in my opinion, there is opportunity outside of the sectors; if you can time it and pick it.


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## aus_trader (31 May 2020)

Chronos-Plutus said:


> Well: in my opinion, there is opportunity outside of the sectors; if you can time it and pick it.



Agree and always trying to as long as risk to reward and market forces are on my side.


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## Chronos-Plutus (31 May 2020)

aus_trader said:


> Agree and always trying to as long as risk to reward and market forces are on my side.




Perhaps we can do great on this forum; but I will not unleash the decades of what I have learnt for pittance.


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## frugal.rock (31 May 2020)

Chronos-Plutus said:


> Well: in my opinion, there is opportunity outside of the sectors; if you can time it and pick it.



When you say "outside of the sectors", can you elaborate?
I am not sure what it means! 
Cheers.

F.Rock


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## aus_trader (1 June 2020)

Chronos-Plutus said:


> Perhaps we can do great on this forum; but I will not unleash the decades of what I have learnt for pittance.




Well it's always up to individuals to share what they know. I understand not publicly sharing some secretive material/knowledge that you may have paid money to learn/acquire, so that's all good.

I have also paid for courses, seminars, newsletters etc in the past and although some were useful in developing me to who I am today, most didn't really add value. There isn't any proprietary techniques/formulae/method/recipe that I use for trading/investing. It really comes down to a lot of hard work and time spent researching. So I am happy to share what I find and what I know.


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## Smurf1976 (1 June 2020)

aus_trader said:


> I am happy to share what I find and what I know.



Only things I won't share are:

1. Anything that would be legally questionable. 

2. The workings of a market indicator jointly developed by myself and another person since I don't have their permission to publicly share how it works. I will however say that it's in bullish territory at present.

Anything else no problems.


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## ducati916 (1 June 2020)

Chronos-Plutus said:


> Perhaps we can do great on this forum; but I will not unleash the decades of what I have learnt for pittance.





1. That is a common mind-set. I have had exactly that mind-set myself early on, thinking that I had discovered something new/etc. There is very little if anything that is truly unique.

2. Second: even if you were to discuss or implement your 'system' in real time, you will still have those that disagree/argue/insult you etc. Now there can be (a) logical disagreement, there can be (b) disagreement because of a lack of understanding (if your methodology is off the beaten track) and there can be (c) disagreement simply because they like to disagree. Only (c) is frustrating. The other two might actually improve your system for you.

3. A further (although unrelated) issue is this: unless your methodology was proven beyond any doubt to be 100%: ( and even then people will not use it to enter the market) anything less than 100% will have people sitting on their hands doing nothing except argue against X. This is more likely due to fear of loss. You cannot be 100% all-in when playing the market. If you are, your tolerance to risk is too low: this will in-of-itself prevent you from winning over time. You will never make it past the short term.

4. Which brings us to your last point: compensation. Earning a return on your investment of time/money is surely a function of engaging with the market. Unless you system is so sensitive to additional capital following it (which it simply won't be) or you think that others will trade against it (why would they if it is foolproof) then what harm is incurred? Nil. 

jog on
duc


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## qldfrog (1 June 2020)

Chronos-Plutus said:


> Perhaps we can do great on this forum; but I will not unleash the decades of what I have learnt for pittance.



Funny, while i get older, 8 actually get more and more willing to actually share my learnings even with some actually random strangers, just to avoid open minded people to repeat the mistakes i made.
I do not reveal full code etc to many as it would very quickly influence my own systems, but otherwise i thought giving and taking was the purpose, exchange, and how many time have i not solved an issue just by trying to explain it?
Anyway to each his her own.


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## ducati916 (1 June 2020)

Chronos-Plutus said:


> 1. The problem that we will inevitably face will be stagflation/recession-inflation due to the unprecedented quantitative easing and productive destruction.
> 
> 2. I believe that under-consumption is the problem that governments must address in all economic depressions. The Central Banks pumping money into the markets will not address the underlying issue of under-consumption as it won't fix the problem of unemployment due to the capital being misallocated.
> 
> ...




And from the 'Trading the Bounce' thread:




Which has been re-iterated on this thread. From another earlier post, I'm assuming (always dangerous) that your economics is rooted within the Austrian methodology (as is mine).

Therefore the question becomes: What is the real economy?

I think that the confusion arises because within the total economy, there are a multitude of sub-economies. The stock market is within ( logically it has to be) the economy, but it is a different economy than that of the consumer.

The stock market is the 'Producer' economy. It is not (for the purpose of pricing shares) the consumer economy. Which is not to say that the consumer has no relevance, only that the consumer is a single variable.

In [1] above you identify 'stagflation' (which is high inflation and low growth) as a further variable. Agreed.




Inflation is simply not an issue currently. Further we must distinguish two types of inflation. Inflation (that matters to the market) is PRODUCER inflation: not consumer inflation. Consumer inflation is rampant and has been for decades. The only inflation the market cares about is producer inflation.

Why?

Because producer inflation cuts into the profit margin of the business. Consumer inflation adds to the profit margin of the business. In the chart above the 1970-1980 period was 'stagflationary'. Profitability and growth were severely impacted by producer based inflation:

(i) Commodity prices high;
(ii) Employee costs high (Union activity, Marginal productivity low/etc);
(iii) Dollar weak;
(iv) Less globalisation;
(v) Less technology;
(vi) Debt/Equity ratio was lower (cost of debt far lower than cost of equity currently adding leverage which increases profitability to a point)
(vii) Other









2. Essentially underconsumption can be defined as: _a state of affairs in which a part of the goods produced cannot be consumed because the people who could consume them are by their poverty prevented from buying them. These goods remain unsold or can be swapped only at prices not covering the cost of production. Hence various disarrangements and disturbances arise, the total complex of which is called economic depression._

_Instead of producing those goods for which the demand of the consumers is most intense, they produce less-urgently-needed goods or things which cannot be sold at all. These inefficient entrepreneurs suffer losses while their more efficient competitors who anticipated the wishes of the consumers earn profits. The losses of the former group of entrepreneurs are not caused by a general abstention from buying in the part of the public; they are due to the fact that the public prefers to buy other goods._ Thus these businesses will go into liquidation and unemployment may well be the short-term result. This is (generally) not a desirable political result.

Keynes advocated government deficit spending in tough times. Not (as we currently have) continuously. Of course due to the levels of debt, only default is an option. Inflation is a drip-by-drip default that works both for government and Corporations.

Therefore while the deflationary forces operate in the Producer's interest, 'inflation' or expansion of the credit supply only works for the Producer, increasing profitability: although from the above chart, it can be seen that profitability is looking vulnerable. Huge bursts of QE will (in the short term) boost profitability, hence the market rising.

What is relevant is: will the COVID crisis so damage the globalisation trend that profitability tumbles? Will the oil war create an inflation in oil (commodities)? Does it even matter for some of the huge Tech firms? (Certainly to power their massive database farms energy will be an issue, hence the alternate 'green' drive?).

3. Only the wealthy save. Everyone else lives paycheck-to-paycheck.




The velocity of money is so low currently that the probability of an inflation that can damage the reserve status of the US$ is not currently a threat. Of course that may change.

4. While all the above holds true, the debt tsunami is a long way off. Of course (again) that could change.

Summary: the market is the economy: just not the consumer economy. It is the Producer economy which is quite distinct from the consumer.

jog on
duc


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## qldfrog (1 June 2020)

instructive as ever


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## So_Cynical (1 June 2020)

The market went up a lot because it went down a lot more, and all that stimulus, more than twice the stimulus of the GFC...all that money has to go somewhere.


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## gartley (1 June 2020)

The market went up because the FED has mastered the art of manipulation......


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## Smurf1976 (1 June 2020)

gartley said:


> The market went up because the FED has mastered the art of manipulation......




Given there's been a few musical references on the forum lately I'll add another one and call this the Milli Vanilli rally.

For those too young to get the reference, Google will explain. In short, fake singers who made it all the way to the top of the charts until the truth was revealed and it spectacularly fell apart. That could well be where the market ends up........


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## bluekelah (1 June 2020)

guys market is up becoz iron ore prices are through the roof once again! That's becoz Brazil has been hit super bad by covid and mining there has been hit. Big Bonanaza for our miners!!


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## aus_trader (2 June 2020)

Smurf1976 said:


> Given there's been a few musical references on the forum lately I'll add another one and call this the Milli Vanilli rally.
> 
> For those too young to get the reference, Google will explain. In short, fake singers who made it all the way to the top of the charts until the truth was revealed and it spectacularly fell apart. That could well be where the market ends up........



Yeah, I remember those two hot model imposters  

Good looking and good at lip syncing but sucked at singing !


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## Chronos-Plutus (2 June 2020)

ducati916 said:


> 1. That is a common mind-set. I have had exactly that mind-set myself early on, thinking that I had discovered something new/etc. There is very little if anything that is truly unique.
> 
> 2. Second: even if you were to discuss or implement your 'system' in real time, you will still have those that disagree/argue/insult you etc. Now there can be (a) logical disagreement, there can be (b) disagreement because of a lack of understanding (if your methodology is off the beaten track) and there can be (c) disagreement simply because they like to disagree. Only (c) is frustrating. The other two might actually improve your system for you.
> 
> ...



You make some valid points, however all you need is just a team of a few to become very wealthy; if that is what people seek here.


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## Chronos-Plutus (2 June 2020)

ducati916 said:


> And from the 'Trading the Bounce' thread:
> 
> View attachment 104028
> 
> ...




Great response. 

Under-consumption theory is multifaceted though, as it is always the underlying problem for governments to address when in recession/depression.

I think the vast majority of governments have defaulted in the past. The reserve currency has never lasted for longer than a 100 years or so. A monetary reset is coming, whether it be in 10 years or 50 years.

The global debt tsunami is unavoidable, it will come and there is nothing that anyone can do about it.


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## qldfrog (7 June 2020)

https://www.livewiremarkets.com/wires/abc-of-equities-recovery-rally
Like the extra info there, etf,flows, @ducati916  Mr Le Duc might see if it fits with his views


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## aus_trader (7 June 2020)

qldfrog said:


> https://www.livewiremarkets.com/wires/abc-of-equities-recovery-rally
> Like the extra info there, etf,flows, @ducati916  Mr Le Duc might see if it fits with his views



Good article qldfrog. The following caught my attention:


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## qldfrog (7 June 2020)

aus_trader said:


> Good article qldfrog. The following caught my attention:
> View attachment 104417



It did too and so should favour my systems which are very small caps intense


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## Chronos-Plutus (8 June 2020)

qldfrog said:


> It did too and so should favour my systems which are very small caps intense




It's the FED; that the control the market!

They will pump it up, to maintain the narrative to support the government of the day!

Trump will have an over-inflated sharemarket, when the nation is in recession.

Trade accordingly! To short this is difficult, not sure how to trade it.


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## aus_trader (8 June 2020)

> It's the FED; that the control the market!





Chronos-Plutus said:


> Trade accordingly! To short this is difficult, not sure how to trade it.



Me too, but my best guess is: stay on while FED pumps ?

I hope they ease off the accelerator, rather than slamming on the brakes !


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## Chronos-Plutus (8 June 2020)

aus_trader said:


> Me too, but my best guess is: stay on while FED pumps ?
> 
> I hope they ease off the accelerator, rather than slamming on the brakes !




In my opinion the the DOW is going to run over 29000; but I don't have the capital and I am not willing to sacrifice fingers .


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## aus_trader (8 June 2020)

Chronos-Plutus said:


> In my opinion the the DOW is going to run over 29000; but I don't have the capital and I am not willing to sacrifice fingers .



Totally understand and I would be scared to go all in with the current rebound rally. But I do have a few positions on asx stocks.

Hope any shocks will be drawn out rather than a flash crash. But I think unbearable flash crashes happen when people are not expecting it. I could be wrong, but I am staying on with those few positions while sitting at the edge of my seat


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## Chronos-Plutus (8 June 2020)

aus_trader said:


> Totally understand and I would be scared to go all in with the current rebound rally. But I do have a few positions on asx stocks.
> 
> Hope any shocks will be drawn out rather than a flash crash. But I think unbearable flash crashes happen when people are not expecting it. I could be wrong, but I am staying on with those few positions while sitting at the edge of my seat




I don't have the luxury of getting it wrong my friend. Not saying that I thought that I would have predicated the V recovery so far: but I was on the button picking the drop in the market; you can check my ING  super account.

So the FED is giving money for free, give it to me!


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## aus_trader (9 June 2020)

Chronos-Plutus said:


> but I was on the button picking the drop in the market; you can check my ING super account.



Good to hear


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## frugal.rock (9 June 2020)

Well, an indicator could be a single stock.
Someone mentioned Z1P and Afterpay as being good general market indicators. So, let's note they have pulled back a bit from very recent highs.
However, if one considers Tyro (TYR), this is the finger on the pulse with regards to getting out there and spending. Their income as being currently reported weekly at the start of the week to keep investors informed.
(FYI, Tyro is a payments and lending platform with over 30,000 retailers using their EFTPOS machines )
This morning's Ann, is the first out of these recent weekly Ann's to show an improvement over same period last year.
The money is flowing, pumping hard to be precise.
Good For Tyro, the fact that many people and retailers have moved away from paying with cash, means there paying by phone or card.

Street bins are overflowing with tourists rubbish, namely and mostly take away coffee cups.
Packaging companies are onto a winner. The environment? not so much...

Table; Tyro announcement today.



F.Rock


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## sptrawler (9 June 2020)

aus_trader said:


> Totally understand and I would be scared to go all in with the current rebound rally. But I do have a few positions on asx stocks.
> 
> Hope any shocks will be drawn out rather than a flash crash. But I think unbearable flash crashes happen when people are not expecting it. I could be wrong, but I am staying on with those few positions while sitting at the edge of my seat



If this is a dead cat bounce, it should be entered in the olympics, if it wasn't for NAB and WBC i would be back to pre covid.
I like you am hanging on for dear life, but we still have to survive the next reporting season, before I breath easy.


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## Boggo (9 June 2020)

sptrawler said:


> ...
> I like you am hanging on for dear life, *but we still have to survive the next reporting season*, before I breath easy.




Yes, that's the upcoming test. I can't see it being pretty


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## Dona Ferentes (9 June 2020)

I read this guy







> Right now financial markets have their attention on an exploding Fed balance sheet, not to mention similar expansions taking place at the ECB, BOJ, RBA, BOE et al.
> Furthermore, overnight we saw the largest economic data surprise in history. Instead of an expected decline of 7.5 million U.S jobs in May, we saw an increase of 2.5 million.....
> In addition we are seeing, at long last, the reopening of economies across the world. The light at the end of the tunnel is now much closer and let us hope and pray that the darkness will soon be behind us.





> The fact of the matter is that the combination of turbo-charged, unprecedented monetary and fiscal policy has provided financial assets with an extraordinary typhoon-like tailwind.
> Adding further fuel to the ‘buy everything’ euphoria are millions and millions of new investors that have become intoxicated with the excitement of buying call options on stocks instead of gambling on sports games.





> Are we seeing signs of irrational exuberance?
> Absolutely.
> 
> Are market veterans of the crashes in 1990 (Japan), 2000 and 2008 urging caution and warning that we’ve seen this movie before?
> ...



J Pain. (he's into banks, BTW)


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## Dominover (9 June 2020)

I still can't believe this market is still rising.  Investors must be paying multiples higher price to sales than before the crash.  It must be the lack of market data at the moment, creating the illusion that everything is ok.  The dumb luck if those in the market now actually frustrates me a little.  So much faith in QE I suppose.


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## frugal.rock (9 June 2020)

Dominover said:


> I still can't believe this market is still rising.  Investors must be paying multiples higher price to sales than before the crash.  It must be the lack of market data at the moment, creating the illusion that everything is ok.  The dumb luck if those in the market now actually frustrates me a little.  So much faith in QE I suppose.



The US over estimated unemployment levels. So did we.
If it were the other way around, things would be vastly different.
In part, it seems to be the crash we didn't need to have, but of course, the ~ 10 year cycle just had to happen, one way or another. 

F.Rock


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## The Triangle (9 June 2020)

sptrawler said:


> If this is a dead cat bounce, it should be entered in the olympics, if it wasn't for NAB and WBC i would be back to pre covid.
> I like you am hanging on for dear life, but we still have to survive the next reporting season, before I breath easy.



I'm down 3% vs feb 15th and should be down 15 at least.   Ive pulled about 1/3 out of the market in the past month.  I would rather risk missing a risky gain vs a huge loss.  

What's happening here is uncharted market territory.   Melt up.  Robin hood accounts.  Who knows.  Craps are better odds than guessing whats happening.  

Gold is overrated.  In an apocalypse gold is worthless.   Im happy with holding pure AUD.  Resources will always give our currency a decent backing.   Once annual results come in i think we'll see a gradual pullback as people realise the economy has been seriously hit.   And if inflation skyrockets cash is not bad to have either. 

Also reallocating super out of any US equity.   If sleepy creepy joe wins the market will get crushed.


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## aus_trader (10 June 2020)

Agree on most of it and like given. Except for one point:


The Triangle said:


> And if inflation skyrockets cash is not bad to have either.



I thing you got it mixed up somehow, easy to happen.

Anyway, this is my take:
In an inflationary environment cash is trash.
In an deflationary environment cash is king.


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## Dominover (10 June 2020)

Well I am glad to see that others are thinking what I am thinking.  I agree especially with the point that once financial results arrive, the informed will lead the uninformed out if the market. 

Deflationary pressures are more of a worry now though.  I do you have money in the market from a long way back but would not dare add anything since the blood bath.  It kind of frustrates me that in a forward looking market nobody is seeing the obvious.  It might tell us something about the type of investors populating the market at the moment. I am just amazed at how many there are


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## Smurf1976 (10 June 2020)

Chronos-Plutus said:


> They will pump it up, to maintain the narrative to support the government of the day!



As a random thought and referring to the S&P500 we could see:

*A double or triple top. So back to the old high then down and possibly having a second go for the third top.

*A head and shoulders top where the February high was the left shoulder and we're now on the way to the head.

In both cases that means massive moves up and down and whilst my comments are pure speculation, all things considered I wouldn't say they're impossible since we've seen two massive moves already this year.


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## mangojoe (10 June 2020)

I found this article using the term “Misallocation of capital” today to the point :-| and it motivates me to take even more money out of the market even though it may keep rising.

_The car rental company, Hertz Global Holdings (HTZ), declared bankruptcy on May 22 and their stock, as you might expect, lost most of the little value it had left at that point, falling to $0.40, a long way from the $20.85 February high. That should be the end of the story, but with so much cash chasing a return, it isn't. Instead, HTZ has done this:_

_The stock has risen over 1250% from that low, taking it to nearly double its price before declaring bankruptcy._
_..._
_It is the kind of behavior we saw in the run up to 2000 and 2007, where value was irrelevant. If the hunt for profit has led to such irrational behavior, it must mean that all rational value has disappeared. That does not bode well for sustained upside in the near future._


https://www.nasdaq.com/articles/wha...ocks-says-about-the-market-overall-2020-06-09


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## The Triangle (10 June 2020)

aus_trader said:


> Agree on most of it and like given. Except for one point:
> 
> I thing you got it mixed up somehow, easy to happen.
> 
> ...



I should have been more clear!  Yes i agree in theory to your point on cash - I was not suggesting to hold cash through a large inflation period but i do not want to hold shares with inflation (or deflation) at the early stages.  Its hard to tell whats a good stable company now with the extreme accounting and tax loopholes which get exploited and with the market uncertainty I would rather hold increased cash and have it available to redeploy one we get a feeling where things are going.   Obviously Im screwed if we hit Zimbabwe level inflation.  But 70s level US Ill handle.


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## aus_trader (10 June 2020)

mangojoe said:


> I found this article using the term “Misallocation of capital” today to the point



These are biblical times as far as stocks are concerned. Resurrection of dead companies and keeping alive all sorts of zombie companies seems to be the norm.



The Triangle said:


> What's happening here is uncharted market territory. Melt up. Robin hood accounts. Who knows.



Those Robin hood stock buyers must have had a huge boost to their confidence and ego given buying at the bottom at bankruptcy levels has paid off as a 10-bagger  with Hertz Global Holdings Inc (HTZ). Risk taking may go to a whole new level  especially with Robinhood Rookies.


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## Dominover (10 June 2020)

aus_trader said:


> These are biblical times as far as stocks are concerned. Resurrection of dead companies and keeping alive all sorts of zombie companies seems to be the norm.
> 
> 
> Those Robin hood stock buyers must have had a huge boost to their confidence and ego given buying at the bottom at bankruptcy levels has paid off as a 10-bagger  with Hertz Global Holdings Inc (HTZ). Risk taking may go to a whole new level  especially with Robinhood Rookies.




Yes, Ted Bouman mentions this in his presentation on this topic.  I believe he got his information from zero hedge.   Apparently there was a surge in new sign ups to Robinhood since the start of the pandemic, and he presented this as a clue to the experience levels of those holding up the U.S market. 

Even the Aussie VIX has dropped.  We're below 20 now. Could this be a clue that the cluelesness  is expected to continue?


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## Chronos-Plutus (10 June 2020)

aus_trader said:


> Good to hear



Yes; I suppose that is why some people put up with my behaviour at times. I do have a pretty good track record at picking the market plunge; I have picked them all over the last ~3 years.


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## aus_trader (11 June 2020)

Chronos-Plutus said:


> Yes; I suppose that is why some people put up with my behaviour at times. I do have a pretty good track record at picking the market plunge; I have picked them all over the last ~3 years.



wow


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## aus_trader (11 June 2020)

Chronos-Plutus said:


> ...



Really ?
I thought he was acting like a Saint giving up most of his salary while Qantas not making any money with no flying at the moment.


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## Chronos-Plutus (11 June 2020)

aus_trader said:


> Really ?
> I thought he was acting like a Saint giving up most of his salary while Qantas not making any money with no flying at the moment.




HAHA, those poor investors. Never to see a dividend. I find it all quite amusing.


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## Chronos-Plutus (11 June 2020)

aus_trader said:


> Really ?
> I thought he was acting like a Saint giving up most of his salary while Qantas not making any money with no flying at the moment.



At least AJ gets paid his millions!


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## Chronos-Plutus (11 June 2020)

aus_trader said:


> Really ?
> I thought he was acting like a Saint giving up most of his salary while Qantas not making any money with no flying at the moment.




Don't worry about AJ; he is a little fish.

Who is going to be the president of the USA in November, that is more important.


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## aus_trader (11 June 2020)

Chronos-Plutus said:


> Don't worry about AJ; he is a little fish.
> 
> Who is going to be the president of the USA in November, that is more important.



Yes that outcome could affect the markets. Even before the election, based on ratings and prediction of the outcome as the markets are forward looking.


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## Chronos-Plutus (12 June 2020)

aus_trader said:


> Yes that outcome could affect the markets. Even before the election, based on ratings and prediction of the outcome as the markets are forward looking.




I have started to build my US Electoral College prediction:


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## peter2 (12 June 2020)

This thread may be dead unless you've got a reason to think the markets will make new highs soon. 




I got this photo at the lows. No doubt they're be plenty of bulls willing to buy this daily selloff. All the stocks that shouldn't have rallied as much as they did are now being sold off (airlines, cruises, chapter 11s = bankruptcies). It didn't take much news (slight inventory build) to smash oil prices.


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## dutchie (16 June 2020)

Don't fight the Fed. So the saying goes, and so far that seems correct.

A greater power though is coming soon to the US - Civil unrest. Unrest that makes the last three weeks look like a picnic.

The BLM political party has been very successful. You cannot disagree with them or speak up for truth because you will lose your job and be ostracised - and no one can afford that at the moment. Have a look how many politicians and other people in influential positions are defending free speech and the US Constitution. Compare that to how many politicians etc who are bending a knee and bowing to the mob.
Defund the Police - no it's about changing who runs the Police and who are the Police.
A reset of the US is coming.
It's just a matter of time. It will spread to Australia. A crash in the markets will be the least of your worries.
Good luck everyone.


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