Email of the day (1)
"I have just seen this video clip which may be of interest. He has an interesting view that the Fed's "money printing" is not showing up in the USA (e.g. M3) but it is showing up in emerging markets."
David Fuller's view Thanks for this. Liquidity usually flows
to where it gets the best return, whether that is growth economies, stock markets
or commodities, as we have seen.
Readers clicking on the video may be jolted by the headline prediction of "S&P 400".
With respect to Russell Napier, this is 'shooting from the hip' and I cannot see it happening without a considerably larger spike in the price of crude oil (Brent & WTI). Although unlikely in the near term - because the recent moderate spike, as I have often described it, has already slowed global GDP growth and lowered 2Q corporate profits somewhat - future spikes in energy prices will remain a risk over the next five to ten years.
There are four reasons for this: 1) Energy consumption in the growth countries will continue to rise; 2) The energy supply/demand balance has been further tightened with the loss of most Libyan production for the medium term, and regional risks remain; 3) Energy supplies are further constrained by the Fukushima disaster and a misguided, in my opinion, reduction of nuclear power in Germany and a reassessment of nuclear power development in some other countries; 4) Over-optimism regarding the effectiveness of renewable sources of energy such as wind and solar power is further delaying energy security.
Fast forward approximately twelve to fifteen years and the price of crude oil should be lower in real terms (inflation adjusted) than at its recent highs. This will be mainly due to the worldwide development of vast shale gas and shale oil reserves, as Fullermoney has been discussing over the last year. That will be in addition to remaining conventional oil and gas reserves which are still being discovered and developed. If we are really serious about carbon dioxide reductions, there needs to be considerably more nuclear power as well.
The development of shale deposits, plus the significant increase in nuclear power which I hope for, would lead to far more energy independence than we see today, not least for China and the USA which have the largest known deposits of unconventional gas and oil. This would ensure the GDP growth supercycle predicted by Gerard Lyons of Standard Chartered, and which is also a Fullermoney secular view.