Navigating the Inflation-Deflation Paradigm Is Exasperating

“Markets breaking out to new highs. But is the breakout a fake out?” Northman Trader

Internally the market lacks uptrends with a sector participation problem. Sentiment Trader

A valuation update and perspective from Jill Mislinski. Meanwhile, “The link between starting valuations and subsequent returns is powerful” though “Valuations levels are not useful for timing market tops and bottoms.” Research Affiliates

“The S&P has become totally detached from profits…” Marketwatch

“The US gross national debt – the sum of all Treasury securities outstanding – passed another illustrious milestone, $23.01 trillion…when recession hits…The federal debt will jump by $2.5 trillion or more in a 12-month period.” Wolf Street

Washington Post: Unemployment is climbing in key swing states, including Michigan and Wisconsin. “If the American consumer is Atlas — holding up “the greatest economy ever” — his legs are weakening under the strain.” 13D Research

“The New York Fed Staff Nowcast stand at…0.9% for 2019:Q4.” Woo nellie. New York Fed

“All bets are off if and when the unemployment rate begins to increase.” Evergreen Gavekal

We are repeatedly asked, what is the weak link that will bring the U.S. economy down? “Although there are many possibilities, our vote right now is corporate debt.” 13D Research

“America’s largest public companies (EPS) will decline year-over-year during the three-month period…they’re managing to cut costs without cutting employment.” Marketwatch

The short Gold Chartbook is still 70 pages.

“An awful lot of money is in stocks that probably doesn’t really want to be there, that was manipulated into that risk position because the Federal Reserve’s adherence to ultra-low rate policies has forced interest rates down to levels on which even people with substantial savings can’t live.” Horizon Kinetics

Chris Martenson: “Through history, the balance has swung recklessly — almost chaotically — between inflation and deflation. Another such phase transition approaches.  These moments are billed as periods of wealth destruction, but they actually aren’t.  Instead, they are periods of wealth transfers. Independent Stock Analysis will attempt to be ready.

Navigating the coming inflation-deflation paradigm has been and will be the difficult part. A crack up boom may well occur in equities. The New Bull Market by Callum Thomas

“It may be time to replace bonds with gold.” Goldhub

Larry Benedict: “(S)tep one towards having trading discipline is finding someone successful to emulate, step two is finding the specific thing you’re good at, and becoming an expert at it…When people tell you they have a portfolio of 40-odd stocks, that’s dangerous to me… How could someone look at 40 stocks every day or week and have a broad range of exceptional knowledge of each and every one? Impossible…I’d say it’s wise to become an expert on just a handful of stocks…around 5-10.”

When picking stocks, run, don’t walk, away from stock based compensation. Ben Hunt

The Independent Stock Analysis portfolio will be a focus portfolio of 10 stocks. We begin January 1, 2020.