A "back to the basics" analysis. Let's leave behind the stock markets and look at the slow and deep fundamentals of the worldwide economy.
Today I will attempt to make a simple analysis using GDP. This is the net profit of one country.
The miracle of China caught the West in the sleep. It outperformed the largest economy of the world. And by incredible speeds.
Many use the "stochastic" indicator, and rightfully so. The word stochastic may be coming from the Greek word "stochasmos" which means "thought process".
To get a new perspective on these charts we must let nature think for us objectively. The mind of nature spoke. The miracle of China is fading.
And the same happens when compared to the "treasure" called Taiwan. Many are willing to fight for it.
For experimentation, let's compare the US with the Eurozone. For some unknown-to-me reason, GDP has embedded in it the relative strength of currencies between the two countries. Do note that all GDP is measured in USD.
In a sense, relative GDP growth is another way of comparing currency strength.
We have gone from comparing equities, to comparing GDP. We concluded that comparing GDP is simply comparing purchasing power of two countries. Currency strength comes from yield rates.
The power is given from those who make and define money. Supply + Yields.
Power = Money Supply * Money Strength MV = PQ
Tread lightly, for this is hallowed ground. -Father Grigori
P.S. You want to see an Easter Egg?
Consider the following equations: MV = PQ Q = GDP M = M2SL V = FRED:M2V P = "price level" 1 / P = "currency strength"
Currency Strength = Q / MV
In the end, it is up to the FED to decide the future.
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But what can the FED do?
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A closeup:
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My best chart as of yet.
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Dat Ting Go Block
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The game is set for an upcoming black swan event. Volatility is warning us. More specifically, the VVIX/VIX ratio. Get ready.
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