Hi, Alessi, hope you're well. In this video,
we're going to take a look at the chart of
the market that knows all,
the market that knows everything and what is potentially telling
us now.
Plus also, if we are heading towards deflation as opposed
to inflation,
then how come we're seeing inflation rising,
prices winning right now? What's going on?
So let's talk about that in this video.
All right, guys, we'll come back.
Before we start, let me just tell you where I
am.
I'm here in the South of England in the town
of Torquay.
As you can see your beautiful harbour behind me.
Torquay is one of my favorite places to come to
in the whole of England and I highly recommend if
you get a chance,
come to the South of England and visit this place.
All right guys, let's take a walk along the harbour
and we can try and answer these questions for you.
So what happened was about a few weeks ago I
put out a video,
you might have seen this one where I essentially said
that the forces of deflation are likely to win in
the very near future.
In fact, in a book that was published by Robert
Prector,
one of the greatest chart analysts out there,
in his book Conquering the Crash,
he argues that in the very near future,
we're going to see deflation winning,
not inflation as everybody else seems to think.
But after I put out the video,
the comments I was getting on social media was actually
a lot of angry comments,
people saying, hey, Alessia, what are you talking about?
You're saying deflation is going to win.
It's inflation that's happening right now.
Look at fuel prices, look at house prices,
look at the stock market,
right? So inflation is winning right now,
not deflation. So what are you talking about?
So I blame myself because I think I did a
very bad job of explaining my point in my video.
So I'm going to try my best to answer his
questions for you because I think it's a good question.
It's a reasonable question. You know,
if I'm saying in my video that deflation is going
to win in the very near future,
then how come we're seeing rising prices?
How come we're seeing inflation winning right now?
It doesn't make a lot of sense,
right? So something's wrong here.
So take a look at this chart because this chart
you're seeing here holds the clue to everything I'm going
to say in this video to almost everything.
So why are we seeing inflation this year in
2021 when in fact in my previous video I said
hang on a second,
deflation is likely to win out in the very near
future.
So what happened was last year in 2020,
as I'm sure you know,
we had deflation winning, not inflation.
Take a look at this chart and you'll see that
last year we had the forces of deflation,
as you can see here,
winning. Now, it's not too difficult to figure out why.
Last year we had deflation because essentially the economy shut
down because of COVID,
because of lockdowns and all the shutdowns,
essentially the economy came to a halt.
The economy came to a standstill,
which is why last year in 2020,
we saw the forces of inflation losing and the forces
of deflation winning out.
As you can see here from this chart,
we had a drop in inflation last year in 2020.
So what happened afterwards, as I'm sure you probably know,
is that when the economy opened up again,
when the lockdowns ended, we're seeing businesses opening up and
now the forces of inflation coming back into force.
Think of it like this.
Last year in 2020, because of again,
because of COVID and lockdowns,
a lid was put on the economy.
Think of it like a pot on a stove.
OK, You put the lid on it.
So essentially, we had put a lid on the economy
last year,
hence the deflation winning last year.
But now the economy is slowly opening up.
That lid is being slowly removed.
And now we're seeing the forces of inflation come back
into play,
like the steam being released from a pot when you
lift the lid.
OK, So this is what's happening right now.
We're seeing rising prices. We're seeing inflation winning for the
moment,
for this year and potentially perhaps until next year.
So that's why we're seeing rising house prices and stock
prices.
By the way, about fuel prices,
we mentioned last year in April of 2020 that oil
prices have bottomed.
You may recall in a video I posted last year,
I predicted oil prices would bottom and rise.
While most people last year in 2020 were extremely bearish
on oil,
they were saying, well, how can oil prices go up
when the economy is in shutdowns and lockdowns?
Again, we have to remember guys,
that the economy is lagging behind the market.
The economy always lags behind the market.
That's why when I said my previous video that deflation
is going to win,
I wasn't saying deflation is going to win right now.
That is what the smart money is anticipating by its
actions.
And that means deflation is something we're likely to see
in the next few years,
not immediately right now. So right now we're seeing inflation
winning.
Now here's something important I need to mention here before
we talk about the chart that knows everything,
the market that knows everything.
Major recessions and depressions are deflationary.
They're not inflationary. Take a look at this chart.
You will note that in the last recession that we
had the last major bear market in
2008. Notice that year in
2008 we had deflation winning,
not inflation. Take a look,
you'll see from the chart we see deflationary forces winning
in
2008 as the market crashed as we had a major
recession.
The same thing happened in the.com bubblewhenthe.com bubble
burst in the year 2000.
Notice from this chart that deflationary forces were winning that
year all the way down to 2000 and one
2002. And yes guys, in case you're wondering,
in 1929 to 1932, major Great Depression also was deflationary.
It was not inflationary. And by the way,
guys, don't take my word for it.
You will note in Robert Proctor's own book,
Conquering the Crash, he also says that he says that
depressions are associated with deflations.
So depressions or recessions are deflationary,
not inflationary. And that is really important for you to
understand because when the next major bear market crash occurs,
when the next major depression occurs in the next few
years,
that economic depression is likely to be deflationary.
And that's why Robert Proctor argues in his book Conquering
the Crash,
that when the next major economic depression occurs in the
next few years,
likely we'll see deflationary forces winning as opposed to inflation,
just like previous recessions and depressions.
All right, guys, let's talk about now the chart that
knows everything,
the market that knows all.
By the way, before we did that,
take a look at this behind me,
guys, beautiful palm trees right here.
All right, guys, let's talk now about the market that
knows everything,
the chart that knows everything.
What am I talking about?
As I'm sure you know,
I'm talking about the bond market because the bond market
knows all
first of all, why do we set the bond market
knows everything?
Because bonds are traded by the smart money,
by the big money. You know,
the average player, the average person in the street is
not trading bonds.
They're trading stocks or forex or cryptocurrencies.
The average person in the street is not trading bonds.
Bonds are traded by the big players.
So that's why we pay attention to bonds because we
want to know what the smart money is thinking.
You know, if the smart money is trading bonds,
what are they doing with it?
Are they bullish on bonds or are they bearish on
bonds?
And there's something I mentioned in my previous video.
You see guys, in my previous video,
I said, look, what's happening right now is really interesting
with the bond market.
It appears that after the major drop we had in
the bond market,
it looks as though the bond market is now stabilized
and potentially bottom.
In fact, it's possible to argue we might be seeing
like a higher low or an uptrend in the bond
market as you can see here from this chart.
And in my view, as long as TLT,
the 20 year treasuries, the bond market remains above this
level.
So as long as TLT remains above 137 to 139,
I remain bullish on bonds.
And it looks as though the bond market is trying
to establish an uptrend.
So if that's the case,
if the bond market is bottomed and is now potentially
an uptrend,
this means the smart money is betting on rising bond
prices.
And if that's the case,
rising bond prices is deflationary,
not inflationary. Now remember, as I'm sure you know,
the economy is always lagging behind the market.
So just because we're seeing bond prices are going up,
and just because I'm saying that the smart money is
likely pricing and deflation in the future does not mean
that's what's happening right now.
So yes, right now inflation is winning as we can
see from this chart.
But it looks as though it appears as though that
the smart money is betting on future deflationary forces winning.
And that is what's important for us to remember.
What's happening in the market only takes effect about 6
to 12 months later.
We're seeing the bets that are being placed on the
bond market for what is likely to happen 6 to
12 months in the future.
OK, so in my previous video,
when I said that likely we're heading towards deflation,
some people misinterpreted this, that deflation is winning right now.
No, that's not what I meant.
What I meant is that very likely we're heading towards
deflationary forces in the very near future,
potentially when the next major bear market crash occurs,
when the next major depression begins.
If you look at this chart,
notice that yes, it's possible inflation could win for the
next year or two,
maybe the next 6 to 12 months.
But eventually, when we start the next major bear market,
which by the way, I'm making a video about that,
I'll explain to you why we're heading potentially towards the
bear market in the very near future.
So when that bear market,
when that depression starts, then the force of deflation will
win and we'll see inflation drop as you can see
from this chart.
And with the bond market rising,
I think that the force of deflation are likely to
win out in the very near future.
Thank you very much for watching this video.
Look forward to seeing you in the next video update.
Cheers guys. Bye now.