Saturday, January 31, 2015

What If I Told You This?

That Apple would have a record quarter earning over $18 billion? That another hamburger place would offer an IPO? It was priced at $24. per share. Shake Shack would rise to $45. per share on the first trading day. That Amazon would finally have a quarter where they made money after five straight losing periods? In fact, it was a blowout and the stock rocketed upward by $42. per share. That Google, home of my blog, would also earn big profits? Its stock surged by $23. per share. Finally, to round out the format, a health company, ICPT, would also rise beyond belief, up by $32. per share. Putting the above together, I bet that you would have mortgaged the house, put your margin limit to the limit, placing your hard earned money that the stock market would rise?
And you know what?
You Would Be Wrong.
Why? Because you forgot or worse, didn't read my 2015 Forecast. In it, I said the first quarter was a sure bet to correct by 10% due to the rising dollar which is even higher at the moment. I don't want to brag, but I also stated that silver would rise in 2015 and it is up by 7%.
What The Market Is Saying
While bellwethers are riding high the internals of the market are decaying. Remember, I gave you, dear readers an important indicator, the Baltic Shipping Index. People, it is lower now than in the mist of the financial crisis of 2008. This affects everything! Products aren't moving because no one is buying. The talking heads in the media didn't inform you ahead of time about the oil glut and all they are saying today is buy the dips. Now, they say lower gasoline prices will put over $700. for every household which will spur the economy even higher. Not so fast, Kimosabe! Fact is gasoline consumption has declined every year since the recession of 2008. Those shills forget two facts. One, people will seek ways to avoid inflation(higher oil prices) and two, demographics, especially, older workers dropping out of the workforce or participation rate. It is lower now at 62.5% than 45 years ago and declining. Distribution is taking place. Do not get caught in a downdraft thinking that the market cannot go lower. It needs the Dow to fall to 12,000 to be fairly valued.
are screaming the truth! The ten year US Treasury is down to 1.63% and France or Germany only pays .5%. Bonds are rising in price which means rates will go lower, not higher. Dear reader, this is the smart money, however, I don't feel that they are too bright by getting a negative return in buying bonds. Central banks have issued so much debt that it is crushing their currency and government budgets. The US Fed can't raise rates because the dollar will go higher, the euro and yen lower and our exports will die on the vine. Not to mention that since our companies have outsourced all our industry, their profits will sink due to currency exchange.
Hey, I Told You So
and keep in mind that all the agencies from the IMF to the World Bank to the Federal Reserve to the ECU have all stated growth as they always do because they all print which masks the rising prices as progress by them, but it is not. Price stability is progress and only a strong currency can give you that, not fiat paper. It has no internal strength. Only gold offers this strength which is why I say, End the Fed!