Monday, May 2, 2016

The Economy: "Very Big Correction for All Markets Coming- Alasdair Macleod"

"Very Big Correction for All Markets Coming- Alasdair Macleod"
By Greg Hunter’s

"Financial expert Alasdair Macleod says the most important economic news concerns the U.S. dollar. Macleod explains, “I think the most important point is actually the dollar has turned. The panic move into the dollar by miners and producers of raw material was driving the dollar up. That has now ceased. China has now started buying those raw materials, base metals, oil and so on and so forth. So, the result is the commodity crisis is over. That, actually, is the biggest driver of the dollar, which is pushing it down.”

On the U.S. economy having a huge recession, Macleod contends, “Actually, the underlying business conditions are not good. What we have seen for considerable time is U.S. corporations have increased their borrowing, to invest in production— no, to buy back shares to artificially inflate their earnings. There comes a point that if you don’t have the underlying cash flow, you can’t do that anymore. I think there is a concern in the markets we are getting near to that point.”

Macleod predicts when the market turns, it will crash big-time. Macleod contends, “Whenever markets get mispriced, the correction is always very sudden, unexpected and hurts a lot of people.  Now, we don’t have it in just one market, we have it in all markets. So, I would expect on that basis alone, that when the thing starts sliding, it’s going to be very, very big and actually could be systemically big.”

Macleod, who is also an expert in precious metals, says, “The fundamental reason gold (prices) is getting better is the dollar is getting weaker. The strength of the dollar in 2015 was all about falling commodity prices. Commodity producers all owe dollars. The result was when their incomes dropped, they had to cover the dollars that weren’t going to get rolled over. The bank was not going to roll over dollars for Brazil or Glencore. That period is over, and the reason it is over is China now has its 13th five year plan, which is aimed at developing the rest of Asia. It wants to give it an industrial revolution. You have a turn that has actually occurred in commodities, and if commodity prices are rising, then by definition, the purchasing power of the dollar is falling. The price of commodities over a long period of time tends to drop. The price of commodities measured in dollars tends to rise over a long period of time and quite spectacularly. You can see this relationship between the dollar and gold priced in commodities is the thing to watch. The natural drift for the dollar is down. There is a reason for foreigners to sell the U.S. dollar, and this is the key thing, I see gold going better because the dollar is going down.” (There is much more in the video interview.)
Join Greg Hunter as he goes One-on-One with Alasdair Macleod of

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