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When Markets Fall, Who do you Listen to?

When markets fall, who do you listen to? This may seem like an odd title for a blog post, but it is an important one from a pyschological, health and financial well being standpoint. When markets fall and the economy experiences a down turn, the mainstream media highlights worst case scenarios and how bad everything can get. It can make your stomach churn if you have money in the markets, even if you have gone through such events in the past. The media is highly trained on how to illicit response with headlines that make you want to read them. That is how they make their money. It is also built into human pyschology that any danger signals trigger the pre-historic or primordial functions of the brain that are about survival. Add a terrible war in Ukraine and ongoing economic cold-war with China and you have a recipe for doom and gloom.

Reading the daily media headlines can be bad for your health. As Baron Rothchild once said "Buy when there is blood in the streets". That is of course much harder to do for the very reasons we are just referencing. Our brains and bodies are trained to "flee" danger, and not walk into it for good reason!

Who do you listen to or turn to when markets are falling is an important question. When you have a professional seasoned financial advisor, you have an objective party to speak with who can share their perspectives about bear and bull markets over decades of experience. When you are in the midst of a bear market, it seems like it will never end. Likewise when you are in a bull market it seems like it will never end. Both statements are false however. No Bull or Bear market is permanent.

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Recession or Not? That is the Question

The speed at which the economy has nose-dived from optimism to pessimism has taken a lot of people by surprise. That's the impact the Federal Reserve can have on the markets. Consumer confidence is fickle so when the daily news is filled with fears of recession and declining markets it impacts people in a way that causes people to spend less: The Nasdaq is down over 31% from it's highs and this along with all the media headlines of "recession" is generating a more fearful and less optimistic mood.

SNAP just anounced a significant revision in its profit forecasts due to macro economic conditions. Advertising revenue is down.

The mood on the street is somber and consumers are concerned. The critical question is what impact will this decline in consumer confidence and demand have on inflation? Will inflation numbers trend down? If they do, the current economic news may provide sufficient impetus for the Federal Reserve that they need to walk and talk a softer line and send some easening signals, such as for example, that rate increases may be sufficient.

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What's Chaikin Folks? Identifying Money Flows

There is a whole lot of Chaikin going on! In todays blog post we are continuing the series about technical analysis and the large toolbox of indicators available. Today we are looking at an indicator that attempts to measure money flows into and out of a security.

The Chaikin Money Flow was created by Marc Chaikin along with the Chaikin Oscillator and Accumulation/Distribution signals to measure the flow of money into or out of a security over a given period of time.

The Money Flow Volume was conceived by Chaikin to measure the buying and selling pressure for a security over a user defined period of time such as 15, 50 or 200 days. The most popular setting for this indicator is over a 20-21 day period. The value of the oscillator swings between 1 and -1 with buying pressure being greatest when the value is closest to 1 and selling pressure being greatest when the value is closer to -1.

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China Issues Digital Currency - The Big News That is Not Being Covered with Giant Implications

China has issued a digital Yuan and it's got governments around the world scared and in catch-up mode. So what's the big deal? The world is moving at breakneck pace to a digital based currency system. Cash is being phased out. Consumers around the world are paying increasingly with debit and credit cards. Cash is being used less and less and this trend has only accellerated since the advent of COVID. It only makes sense in a predominantly digital commerce world that this would be accompanied by government issued digital currencies.

When Facebook announced its intentions to launch Libra, the world took notice and action. When a public company with 2 billion users starts issuing its own currency the financial elite start to panic. Just imagine how much power would shift to Facebook. It could become one of the largest financial payment networks in the world overnight. As if it did not have enough power and influence right now, a move to digital banking would tip the balance of power even further to the digital elite. Mark Zuckerberg's argument was simple. "If we do not do it, someone else will" and that is exactly what is happening with China announcing the launch of its digital currency. However, the implications of China announcing a digital currency are just as far reaching as Facebook's announcement.

From a Geo political and economic standpoint, China's launch into the digital world is a significant threat to the dollars global dominance. A digital currency means the ability to bypass US oversight allowing countries that the US is looking to penalize with sanctions, for example, to bypass international payment networks such as SWIFT (which the US monitors closely) and exchange funds anonymously. China's game plan to weaken US dominance in the world is not exactly a secret. As we have written in previous articles, there is a global economic fight for dominance going on between China, US and the EU (less so). One of the last significant bastions of US power in the world is the dominance of the US dollar as the global reserve currency. Almost 80% of all global trade is done in dollars. China is going to keep doing everything it can to disrupt the last bastion of US power.

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Happy Holidays!

We want to take this opportunity to wish all our clients and readers a Very Happy Holiday!

There are 6 Trillion reasons and counting why 2021 is shaping up to be a positive year for many asset classes.

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