Wednesday, September 16, 2015

Penny Thoughts

The expression, "A penny for your thoughts" is no longer valid as money printing has devalued a "wheat" penny to .07 cents or like Yogi says, "A nickel ain't worth a dime anymore." We no longer have the greats like Abbot and Costello to mock our so-called leaders, but if you pickup these penny thoughts, it will be money earned like Ben Franklin advises.
David Tepper
a perennial bull and founder of Appaloosa Management, a hedge fund that has generated 30% returns since 1993 is turning...He basically says stocks are too expensive with weak earnings. Hindsight is perfect. I wish that I had the foresight to follow this guy back in 1993
Deutsche Bank released its "Long Term Asset Return Study." Looking at bonds, equities and housing, it believes all three are at peak levels. In fact, all three are more expensive than in 2008. Why? Printing of money is what I say is the cause.
The media likes to point out how prices are rising which according to them and government officials are suppose to benefit everyone. Not so fast, Kimosabe! Studies show that 50% of all Americans do not own stocks. We all know that there are still 10 million homes underwater and the bull market in bonds is deceiving because the yields have declined for 30 years. How can you survive with a ten year note that pays less than inflation? It all points to the 1%. They were the only ones wealthy enough after the crash in 2008 to take advantage of low rates and cheap prices. Numerous studies show the wealth-gap in the US and the West is growing and the middle class is disappearing. People work, but can't afford to live. I foresee a serious civil unrest in Europe in two years when budgets are cut for social services, jobs are lost and Europeans see immigrants living better than natives. The same problem that the US has had for 50 years. I hope I'm wrong. One other thought on the vast migration which has more Muslims than any other religious sect. How come Muslims call us, infidels and yet, they decide to relocate in the West rather than a nearby wealthy Muslim country like Turkey, Kuwait, Dubai or Saudi Arabia? Maybe as Christians we are trying to show love whereas Muslim nations only preach love, but don't practice it in life?
Trend Line
has been broken which indicates the market has turned. It in itself does not mean a negative stock market because it can also go sideways for a long time too. The market has a channel line that goes from the bottom in 2009 and points upward since then to now. Prices just fell below the channel to break the formation.
Shiller's ratio which is similar to the P/E ratio is now at 24.6. This is 48% more expensive than its historical average. Definitely not good.
Death Cross
the 50-day moving average of the S & P 500 crosses under the 200-day moving average. This in itself is not the final sign as it had made false positives in the past, however combining this with the CAPE and the Trend forms a strong parlay of negatives.
encompass 25% of the world's land mass and 40% of the world's population. They account for 52% of the global GDP. All four nations are losing steam. Brazil and Russia are facing a borderline recession while India and China are slowing. Bottom line: these nations make up more than half of the world's value and they are turning south to which add this piece to the puzzle.
the source of the fiat system. The global economy is $57 trillion deeper in debt due to bailouts, stimulus, etc. than it was back in 2008. The energy sector alone has $248 billon in junk bonds and the only reason that mass failures hasn't happened is due to the selling of assets, cutback in spending and most of all, the hedging of prices to which the last is ending and prices still declining. The next big nail will be the IMF announcement on the Chinese yuan and people will become aware that the 1% is looking for a new currency to preserve their wealth with no concern for their fellow citizens which is why our Founding Fathers chose gold to backup our currency as they despised the fiat system which is why I say, End the Fed!
PS: Fed announced that no change in rates. Peter Schiff is so on!