...Turning and turning in the widening gyre. The falcon cannot hear the falconer; Things fall apart, the center cannot hold; Mere anarchy is loosed upon the world.
- W. B. Yeats
How does this relate? Oil, my friend. The CPI may not include oil and food, but you and I, dear reader need it every day. One-half of the equation (former)is down over 50% while the latter half is up around 10%, although the government says otherwise. We have benefitted due to the additional strength of the dollar. This is why we have been able to meet life's obligations with many living a good life and the rest of us just existing. With that stated it is important to look deeper into oil because any spike will cause serious inflation to most of us. Yes, I call it inflation, although the pundits will just say that oil is just returning to its price level. That level eats out the house in most of us.
We all know the reasons why oil declined. All one has to do is follow the petroleum reading on Wednesday. Inventories of US oil is 100 million barrels above their five-year average. The global market has more oil than demand. Those two factors tell me all that I need to know except will it continue.
Morgan Stanley
the big Wall St. house says it believes the oil market has stabilized and because China will grow, so will the demand side. They add,"...not only in oil, but commodities." Could this proclamation by this institution be the cause that oil rose 9% last week? Let me say this disclaimer: Never Trust Wall St.
Here is the way I see this price action. Gold and silver have been moving to the upside with conviction. This worries Wall St, the Fed and the government. They do not want to see another generation getting into the Founder's belief in precious metals as money, however M.S. is looking to hop on the bandwagon by declaring all commodities and at the same time, take some luster off the enemy of the fiat state. Like all pundits, they offer partial truths. In this case they remind us China is still growing to the tune of 6.8% and China consumes 50% of the world's production of: copper, nickel, aluminum, steel and coal. In addition, they are second in oil consumption and lead inmost industrial categories.
A successful investor, E.B. Tucker also likes the price action in oil, however he favors oil tankers as the way to monetize the upside. He likes Euronav (EURN)because they have an upgraded fleet and they pay out 80% of their profits in dividends. He might be on to something, but $13 is the highest that I would look to enter. One reason is the trend. Supply and demand still favor declining prices. The other reason has to do with US production. It peaked at 9.6 million barrels this year in June. US companies have been able to hold off the price destruction due to hedging. Even with that conservative approach to production, the leaders have fallen. Exxon (XOM)is off 52% and CVX is down 34%. Many other companies will suffer in 2016 because their hedges will expire. Most of these type of contracts are one year in nature. X.O. will be hurting along with most of the shale oil producers. Pioneer will get $70 a barrel in 2016. They are one of the lucky ones, but there are very few others with extended contracts. Production will gradually shrink, however if demand doesn't close the gap, prices will still decline. That is the big "if" for 2016.
Saudi Arabia
has preempted any market niche like the vote in Congress to allow US companies to export oil. I can only hope the ban continues because US citizens will pay at the pump if the ban is lifted. Nevertheless, OPEC is discounting its oil price to Asian nations to maintain control in the oil world. Then, we have the other important part of the equation...
The Dollar
The dollar began a rise in July 2014 from .80 cents to back to a dollar in value. Pundits claimed it would be at par to the Euro by now. Did you read my disclaimer? Never Trust Wall St.
At present the dollar slid to .94 cents and it is trading sideways. I see a continuation in decline. There will be no interest rate hike by the Fed which would have put the dollar at par to the euro. The bond market also sees negative rates and so does reality.
US Treasuries
did something that it never did before: paid no yield. No compensation to borrow three-month treasury notes. This is the transition to negative yields which is already happening in the world. This will lead to banks charging you to deposit your money and if a crisis happens, you could lose access to your own money.
Some have spoken out against the Fed like Carl Icahn, Howard Marks and Casey Research because they see that we are losing our free market, especially in money. Central bankers have skewered the free market with cheap money and they are gumming up the system. As a result I see the dollar returning to its breakout point of .86 cents. This will cause inflation here and around the world. This will not be good for oil demand. When the storm passes, I like CVX and EURN if it falls to $12.
And as always the culprit is the Federal Reserve which is why I say, End the Fed!
Wednesday, October 14, 2015
Wednesday, October 7, 2015
Confluence Point
If you ever been to an amusement park with its thrill rides, the joyride can best explain what I see in the market and our economy. The clearest example would be the roller coaster. The ride begins with the long ascension upward. This correlates to the economy and stock market after a downturn. The slow climb on the "wall of worry" as things get better with high anticipation. After a peak there is a sudden drop which relates to a market test of the lows. This happened in August 2011. The ride then goes through a series of quick turns, sharp bends as it slowly rises. You might even bounce up from your seat, but the wheels stay on the tracks as you zoom up, down, and all-around. You want this fun sensation to last, but alas, the bends are now more even, the speed decreases and then, the ride is over. If you take the ride numerous times as I have, I come to notice the confluence point. We have reached that same point in the market and our economy.
Shuttle Signs
What I mean by this is the market swings of triple digits, up and down with no clear direction. Back and forth the market goes, where it stops nobody knows. Market sectors like oil are down, but bio up, then, down again, but oil rebounds or seems too.The shills tell you to buy the dips, but few give insights like the importance of the bond market. Not here, dear reader, you get what I see a clear signs the market and our economy is turning - south.
If things were great and really improving the following could not be happening...
Bonds
are heading to their highs with the ten year back to 2%. Economist, Shiller predicted the 30 year to hit 2%. The Fed talks rate hikes, but action speaks louder than words. Money printing never stops. The
IMF
like clockwork have lowered their global economic forecast every quarter since the last quarter of 2014. Now, they say world growth will only be 3.1% and like I've said every quarter, they're wrong again as it will be lower.
Job Cuts
The labor bureau stated that this is the 30th straight week of job claims below 300,000, however we all know that they fudge numbers. I have questioned their numbers repeatedly since according to the Challenger Job-Cut Report, there have been over 100,000 announced job cuts in the last two months. Yes, the announcement can be for a future date, but at this present moment consider the magnitude of the announcements.
*Conagra 1,500.
*Walmart 500.
*HPQ 32,000.
*Microsoft 7,800.
*Schlumberger 11,000.
*Qualcomm 4,500.
*Target(Canada) 17,000.
*A & P 8,500.
*RadioShack 5,424.
*Baker Hughes 7,000.
AMD 5% of its global workforce.
Bebe Stores 2% of its workforce
Caterpillar, Chesapeake, Bank of America, Goldman and many, many more.
Sometimes companies like to use code words for their actions. They will announce that they are restructuring the company and they will cut costs. Cutting costs is a code word that always includes job cuts. GM plans to cut costs of $5.5 billion. Dunkin Donuts says it will close 100 stores. That is a lot of lost revenue and jobs for our economy.
All of the above happen when the ride is almost over. As B.B. King sang, "The thrill is gone..."
Shuttle Signs
What I mean by this is the market swings of triple digits, up and down with no clear direction. Back and forth the market goes, where it stops nobody knows. Market sectors like oil are down, but bio up, then, down again, but oil rebounds or seems too.The shills tell you to buy the dips, but few give insights like the importance of the bond market. Not here, dear reader, you get what I see a clear signs the market and our economy is turning - south.
If things were great and really improving the following could not be happening...
Bonds
are heading to their highs with the ten year back to 2%. Economist, Shiller predicted the 30 year to hit 2%. The Fed talks rate hikes, but action speaks louder than words. Money printing never stops. The
IMF
like clockwork have lowered their global economic forecast every quarter since the last quarter of 2014. Now, they say world growth will only be 3.1% and like I've said every quarter, they're wrong again as it will be lower.
Job Cuts
The labor bureau stated that this is the 30th straight week of job claims below 300,000, however we all know that they fudge numbers. I have questioned their numbers repeatedly since according to the Challenger Job-Cut Report, there have been over 100,000 announced job cuts in the last two months. Yes, the announcement can be for a future date, but at this present moment consider the magnitude of the announcements.
*Conagra 1,500.
*Walmart 500.
*HPQ 32,000.
*Microsoft 7,800.
*Schlumberger 11,000.
*Qualcomm 4,500.
*Target(Canada) 17,000.
*A & P 8,500.
*RadioShack 5,424.
*Baker Hughes 7,000.
AMD 5% of its global workforce.
Bebe Stores 2% of its workforce
Caterpillar, Chesapeake, Bank of America, Goldman and many, many more.
Sometimes companies like to use code words for their actions. They will announce that they are restructuring the company and they will cut costs. Cutting costs is a code word that always includes job cuts. GM plans to cut costs of $5.5 billion. Dunkin Donuts says it will close 100 stores. That is a lot of lost revenue and jobs for our economy.
All of the above happen when the ride is almost over. As B.B. King sang, "The thrill is gone..."
Wednesday, September 30, 2015
What Goes Up - Must Come Down
...Turn out the lights, the party's over are a few expressions with a lot of truth and speaking of truth, the "old professor" spoke directly to the point when Yogi stated, "In theory there is no difference between practice and theory. In practice there is." I don't know if Yogi was referring to the Fed with their belief in engineering our economy, but he often talked about economics, especially with his well known, "a nickel ain't worth a dime anymore." So, in another tribute, here are some visible signs that don't need any words to describe.
US Market
*The Dow Index topped May 19. It has retested and failed in price and volume.
*Dow Transports peaked last November and are down 20% which is BEAR territory.
*Dow Utilities reached their peak last January and are down 18%, just 2% from BEAR range.
*Small Caps are at resistance, but still down 12%.
*Nasdaq peaked in July and it is down 21%. Do you need a Bear hunting license?
Global
*German Dax and British FTSE peaked in April. Dax down 24% and FTSE down 19%.
*China's Shanghai Composite is down 42% Ouch!
*All channel trend lines are broken in all indexes in all markets.
Second Opinion
Elliot Wave is calling for a fifth wave in his cycle technical theory. The fifth wave will be down and possibly a big move, taking the Dow to 14,200. At this moment, I see a short bounce, taking the S & P to around 1929. Nothing like those four digits(1929) in October to make you want to buy the dip. A classic "dead cat" bounce.
All of the above is due to cheap money by the US Fed and central banks around the world. This printing of money distorts the free mechanism of the market, but when a nickel ain't worth a dime, you know manipulation is the cause. There was a positive aspect to the printing, but keep in mind it was the original manipulation by the Fed which sparked the financial crisis in 2008 in the first place.
Under the PRO side is that it allowed corporations to refinance previous debt at lower rates. Good.
Under the CON side it provided temptation to CEOs to buy-back shares which made them rich through options, while at the same time this leaves the company with too much debt and no new research or products to show for the use of its capital. Extremely Bad.
This is just a sampling of S & P companies taking this route.
*Apple issued a bond for buy-back purposes and it cost $23.6 billion with a "B."
*MetLife issued a bond for the same purpose and added debt of $1.5B.
*Microsoft sold $10.75B for buy-back shares.
*Oracle raised $10B for the same purpose.
In fact, according to the Securities Industry and Financial Market Association(SIFMA)US companies issued $1.1 trillion with a "T" in bonds in 2015 which is up 15% from 2014. They have been up every year since 0% rates. This is debt that has to be repaid and if rates rise, will burden all these companies. Then again, the present CEOs will be sipping cocktails at the country club while their former corporations suffer sometime in the near future. This is why there is a difference between practice and theory. How about this insight dear reader?
A journalist recently asked the chair of the Fed, Janet Yellen, if the central bank would keep interest rates at 0% forever?
Her response: "I can't completely rule it out."
They are making up the rules as they play with our lives and all they know how to do is to devalue our money by printing more of it to win the monopoly game. This is another reason why I say, End the Fed!
US Market
*The Dow Index topped May 19. It has retested and failed in price and volume.
*Dow Transports peaked last November and are down 20% which is BEAR territory.
*Dow Utilities reached their peak last January and are down 18%, just 2% from BEAR range.
*Small Caps are at resistance, but still down 12%.
*Nasdaq peaked in July and it is down 21%. Do you need a Bear hunting license?
Global
*German Dax and British FTSE peaked in April. Dax down 24% and FTSE down 19%.
*China's Shanghai Composite is down 42% Ouch!
*All channel trend lines are broken in all indexes in all markets.
Second Opinion
Elliot Wave is calling for a fifth wave in his cycle technical theory. The fifth wave will be down and possibly a big move, taking the Dow to 14,200. At this moment, I see a short bounce, taking the S & P to around 1929. Nothing like those four digits(1929) in October to make you want to buy the dip. A classic "dead cat" bounce.
All of the above is due to cheap money by the US Fed and central banks around the world. This printing of money distorts the free mechanism of the market, but when a nickel ain't worth a dime, you know manipulation is the cause. There was a positive aspect to the printing, but keep in mind it was the original manipulation by the Fed which sparked the financial crisis in 2008 in the first place.
Under the PRO side is that it allowed corporations to refinance previous debt at lower rates. Good.
Under the CON side it provided temptation to CEOs to buy-back shares which made them rich through options, while at the same time this leaves the company with too much debt and no new research or products to show for the use of its capital. Extremely Bad.
This is just a sampling of S & P companies taking this route.
*Apple issued a bond for buy-back purposes and it cost $23.6 billion with a "B."
*MetLife issued a bond for the same purpose and added debt of $1.5B.
*Microsoft sold $10.75B for buy-back shares.
*Oracle raised $10B for the same purpose.
In fact, according to the Securities Industry and Financial Market Association(SIFMA)US companies issued $1.1 trillion with a "T" in bonds in 2015 which is up 15% from 2014. They have been up every year since 0% rates. This is debt that has to be repaid and if rates rise, will burden all these companies. Then again, the present CEOs will be sipping cocktails at the country club while their former corporations suffer sometime in the near future. This is why there is a difference between practice and theory. How about this insight dear reader?
A journalist recently asked the chair of the Fed, Janet Yellen, if the central bank would keep interest rates at 0% forever?
Her response: "I can't completely rule it out."
They are making up the rules as they play with our lives and all they know how to do is to devalue our money by printing more of it to win the monopoly game. This is another reason why I say, End the Fed!
Wednesday, September 23, 2015
Real Reason Why Fed Didn't Raise Rates
How quickly they forget. In September 2013 with the Fed's Fund Rate exactly where it is today, the Fed declared that in their forecast model that they would increase the Fed's Funds Rate to 1% by year-end 2015 and 2% by year-end 2016. Then, with the usual conference follow up which is really market manipulation, Janet Yellen said it "could" happen earlier. We get the same manipulation this week.
How about this one? One year ago, September 2014, the FOMC said in its forecast model to have year-end 2015 at 1.375% and for the year-end 2016 to 2.875%. So much BS!
Now
they have reduced their forecast model with a possible negative Funds Rate of -0.125%. Don't think that is possible? It already is happening in Switzerland and elsewhere. In laymen terms this means that you have to pay the banks to hold your money. This is the same argument that anti-gold, pro-fiat people use to proclaim. You had to pay the bank safety deposit fees to store your gold.
Smart Money
is moving into gold. This is the same awakening that happened in the 70s. Gold rose from $42 to over $800. It died because of Volker and those gold people who made those investments have passed away. Time works. People can't even remember September 2013. It may cost you to store gold, but it retains value and when it moves, it moves quickly. Think Apple or Google before they paid dividends. The P/E was high, but you didn't mind because they were growth stocks. A word to the wise is sufficient.
Now, why didn't the Fed raise rates?
because they can't! Any rate increase wipes out previous issue bonds at lower rates and the bond market is bigger than anything. In addition, the Fed is over leveraged. If they were a regular bank, they would be insolvent. Wrong, you say. The Fed can always print new money. This is true and it is exactly what they will do and have always done in the past. However, this is the reason why our standard of living has decreased because the dollar will devalue and it cost more to live. Space is too limited to delve into this aspect of compounding derivatives on derivatives and leverage on leverage, but continuing with rates and bonds. As big as bonds are, they take second banana to the big picture -
Debt!
Since the last Fed Rate Hike in June 2006:
*Global government debt has increased by $24.11 trillion or 85.77% to $55.22 trillion.
*Global household debt has increased by $8.085 trillion or 28.31% to $36.64 trillion.
*Global corporate debt has increased by $23.61 trillion or 69.06% to $57.8 trillion.
Total global debt plus stock equity has increased since the last Fed Rate Hike by $81.33 trillion or 60.1% to $216.6 trillion which is equal to 289% of Gross World Product.
Just last week the US government released its Q2 current account statement. It said our account deficit came in at the low end of expectation at $109.7 billion versus $118.3 billion in the first quarter. In relation to GDP, it is a manageable 2.5 percent. More BS!
Dear reader, if you receive $100 a week, but owe $100 a week, how much do you have to manage? Zip. Correct. Our national deficit is exactly the same as our GDP, but it is growing faster due to interest rates and higher rates will make it grow even faster. Now, do you see the big picture? This is why their is talk of negative rates. Now is the time to get some gold because there is a second awakening happening just like in the 70s and why I say End the Fed!
How about this one? One year ago, September 2014, the FOMC said in its forecast model to have year-end 2015 at 1.375% and for the year-end 2016 to 2.875%. So much BS!
Now
they have reduced their forecast model with a possible negative Funds Rate of -0.125%. Don't think that is possible? It already is happening in Switzerland and elsewhere. In laymen terms this means that you have to pay the banks to hold your money. This is the same argument that anti-gold, pro-fiat people use to proclaim. You had to pay the bank safety deposit fees to store your gold.
Smart Money
is moving into gold. This is the same awakening that happened in the 70s. Gold rose from $42 to over $800. It died because of Volker and those gold people who made those investments have passed away. Time works. People can't even remember September 2013. It may cost you to store gold, but it retains value and when it moves, it moves quickly. Think Apple or Google before they paid dividends. The P/E was high, but you didn't mind because they were growth stocks. A word to the wise is sufficient.
Now, why didn't the Fed raise rates?
because they can't! Any rate increase wipes out previous issue bonds at lower rates and the bond market is bigger than anything. In addition, the Fed is over leveraged. If they were a regular bank, they would be insolvent. Wrong, you say. The Fed can always print new money. This is true and it is exactly what they will do and have always done in the past. However, this is the reason why our standard of living has decreased because the dollar will devalue and it cost more to live. Space is too limited to delve into this aspect of compounding derivatives on derivatives and leverage on leverage, but continuing with rates and bonds. As big as bonds are, they take second banana to the big picture -
Debt!
Since the last Fed Rate Hike in June 2006:
*Global government debt has increased by $24.11 trillion or 85.77% to $55.22 trillion.
*Global household debt has increased by $8.085 trillion or 28.31% to $36.64 trillion.
*Global corporate debt has increased by $23.61 trillion or 69.06% to $57.8 trillion.
Total global debt plus stock equity has increased since the last Fed Rate Hike by $81.33 trillion or 60.1% to $216.6 trillion which is equal to 289% of Gross World Product.
Just last week the US government released its Q2 current account statement. It said our account deficit came in at the low end of expectation at $109.7 billion versus $118.3 billion in the first quarter. In relation to GDP, it is a manageable 2.5 percent. More BS!
Dear reader, if you receive $100 a week, but owe $100 a week, how much do you have to manage? Zip. Correct. Our national deficit is exactly the same as our GDP, but it is growing faster due to interest rates and higher rates will make it grow even faster. Now, do you see the big picture? This is why their is talk of negative rates. Now is the time to get some gold because there is a second awakening happening just like in the 70s and why I say End the Fed!
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
DB
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.
CAPE
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.
BRICs
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.
Debt
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!
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
DB
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.
CAPE
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.
BRICs
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.
Debt
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!
Wednesday, September 9, 2015
What The Fed Will Do
Before I declare, let me share this market insight from 24 August 2015. The IVV, an ETF designed to smooth out volatility through diversification, a market mantra, plunged 38% at the opening bell. It went from $204 a share down to $164 a share in minutes. Steady and strong hands lifted it to $194 at the close. Dear reader, this safe stock lost a year of value in seconds and this closer look at the market reveals that all the engineering by the Federal Reserve and central bankers will be for naught.
Peter Schiff
gets bold letters and *s because he boldly stated back in the beginning of the year that the Fed has no intentions of raising rates and they will not raise them. He is right! He uses polite language, I don't.
Keep in mind the last BS artist at the Fed, Ben Bernanke said in 2007 that the financial system was safe. The housing crash would not spill over into the economy or cause global ramifications. He never accepted responsibility for his direction of the Fed which caused all of the above. Ben Franklin would have had him in jail. The Fed's only purpose is to allow the privatization of profits and if things go south, the socialization of losses. So, what is going to
happen now?
The Fed will take into consideration the present state of affairs. The US unemployment level reached the target of 5.1% which is a lie because there are ten million who gave up looking for meaningful work that pays a living wage. In addition, the weekly hours worked is 34 not 40. Also, there is a disconnect between unemployment claims and job layoffs. This year the oil patch laid off over 100,000 workers and yet, the total of the weekly claims for the year is nowhere near that number. Probably, Chinese accounting.
Speaking of China, that nation hopped on the devaluation bandwagon before the Fed's decision. By lowering their rate now, they still will enjoy a currency advantage if the Fed raises rates to which their currency would go higher. They want to keep their niche of those cheap exports. The ECB did a double down on printing. Mario Draghi extended QE bond buying in Europe whose economy has actually shrunk from the 1.7% in 2014 to 1.5% in 2015. Do you remember what the EU stated back in December 2014? They declared that 2.5% to 3% growth for 2015. They weren't alone as the IMF agreed with them.
Now,
half of the euro members are in recession along with Canada and Brazil. In addition, there are many nations on the fence like Russia and Australia. The Bank of Japan has doubled Japan's money supply. Then, China again. You ask, why is it slowing? China's debt over the last ten years has exploded to the point where household and corporate debt is over 200% of GDP. When you reach that level, you become a genuine member of the Greek "bailout" club.
All
of the above and other factors will effect the Fed's decision at their next meeting. I agree with Peter. They will do nothing. They will offer more BS and innuendoes that should make Peter Schiff a star, but won't because he is anti-fiat. They keep people like him and me on the outside looking in. However, because the Fed declared that they will raise rates this year and not to lose control of the market, I see them making a slight raise in December with another slight raise in January 2016. Even if they raise rates in September, the bottom line outlook will not change. The havoc that they created in the bond market will force them into the QE corner. You see, after the market tanks or I should say, resumes its slide, they will institute a new form of QE IV. They will try to spin the name to call it something else, but by that time the bond market will be reeling because the older, lower yielding bonds have crashed to which the Fed will be buying. Can you say a balance sheet of $10 trillion? I wonder how they will keep gold down at that point? This is yet another reason why I say, End the Fed!
Peter Schiff
gets bold letters and *s because he boldly stated back in the beginning of the year that the Fed has no intentions of raising rates and they will not raise them. He is right! He uses polite language, I don't.
Keep in mind the last BS artist at the Fed, Ben Bernanke said in 2007 that the financial system was safe. The housing crash would not spill over into the economy or cause global ramifications. He never accepted responsibility for his direction of the Fed which caused all of the above. Ben Franklin would have had him in jail. The Fed's only purpose is to allow the privatization of profits and if things go south, the socialization of losses. So, what is going to
happen now?
The Fed will take into consideration the present state of affairs. The US unemployment level reached the target of 5.1% which is a lie because there are ten million who gave up looking for meaningful work that pays a living wage. In addition, the weekly hours worked is 34 not 40. Also, there is a disconnect between unemployment claims and job layoffs. This year the oil patch laid off over 100,000 workers and yet, the total of the weekly claims for the year is nowhere near that number. Probably, Chinese accounting.
Speaking of China, that nation hopped on the devaluation bandwagon before the Fed's decision. By lowering their rate now, they still will enjoy a currency advantage if the Fed raises rates to which their currency would go higher. They want to keep their niche of those cheap exports. The ECB did a double down on printing. Mario Draghi extended QE bond buying in Europe whose economy has actually shrunk from the 1.7% in 2014 to 1.5% in 2015. Do you remember what the EU stated back in December 2014? They declared that 2.5% to 3% growth for 2015. They weren't alone as the IMF agreed with them.
Now,
half of the euro members are in recession along with Canada and Brazil. In addition, there are many nations on the fence like Russia and Australia. The Bank of Japan has doubled Japan's money supply. Then, China again. You ask, why is it slowing? China's debt over the last ten years has exploded to the point where household and corporate debt is over 200% of GDP. When you reach that level, you become a genuine member of the Greek "bailout" club.
All
of the above and other factors will effect the Fed's decision at their next meeting. I agree with Peter. They will do nothing. They will offer more BS and innuendoes that should make Peter Schiff a star, but won't because he is anti-fiat. They keep people like him and me on the outside looking in. However, because the Fed declared that they will raise rates this year and not to lose control of the market, I see them making a slight raise in December with another slight raise in January 2016. Even if they raise rates in September, the bottom line outlook will not change. The havoc that they created in the bond market will force them into the QE corner. You see, after the market tanks or I should say, resumes its slide, they will institute a new form of QE IV. They will try to spin the name to call it something else, but by that time the bond market will be reeling because the older, lower yielding bonds have crashed to which the Fed will be buying. Can you say a balance sheet of $10 trillion? I wonder how they will keep gold down at that point? This is yet another reason why I say, End the Fed!
Wednesday, September 2, 2015
Beware the Devil, Cause I Got the "Feeling"
No, not the James "OU" Brown classic, but that uneasy moment when you have to rub your stomach in a circular motion to put it at ease due to the gyrations of the stock market.
One day recently, the market opened 1,000 points down and closed with a 500 point loss. Less than a week later, it was up 600 points only to turn down at the close and lost almost 200 points. A few days later, it had back-to-back up days of over 600 points and another 300 points. Almost a thousand point move in 48 hours. What's happening?
Market Signals
The market is telling you that more than distribution is taking place. Smart money is exiting. What I'd like you to do is think back to August 2011. It was the last time that the market had consistent volatility, which is a code word to mean, tanking. The market signaled that September and October would be rough waters and it was, but few took the clues. They just relaxed under the summer sun. The market had triple digit days just like today. Now, add these aspects...
Dear reader, back in 2011 every central banker was pushing stimulus. China made "work" projects and built "ghost cities." In the US we had QE and I predict it will return - see future piece, coming soon.
Today, excessive debt is curtailing stimulus. Governments are going back to the playbook and doing the old fashion, beggar-thy-neighbor approach with currency devaluations. In addition, the Middle East turmoil has caused a mass migration which will cause a severe backlash. I expect the EU to come forth with new regulations to address this problem when they should be doing things to help countries like Turkey and Jordan and in Europe for Italy, Greece and the Balkan nations. Bottom line: Europe with serious unemployment will also have unrest due to this immigration problem.
As the global nations look to the US to be the engine for their economies, it released a revised second quarter GDP results. It says the US economy grew at 3.7%. I'm thinking that the US hired Chinese nationals with their constant 7% growth rate which to me is all fluff with no substance. All one has to do is check out the yearly lows of our oil companies. Earnings are down 60% and stocks are in bear territory. In fact, all commodity companies are suffering and this effects the emerging markets too. This is why smart money is getting out of the market. The recent bounce only reflects the strength of five companies who are holding up the market.
*Apple up 5%
*Facebook up 21%
*Google up 29%
*Amazon up 71%
*Netflix up 152%
and the rest of the S & P 500= 0.5% This is the rest of the story. Don't buy the dips. The safe and smart thing to do is get your money out and preserve your capital. I see oil in the 30s and then, Chevron would be a nice opportunity for the long term. However, if you want one more sign and this one will mess with your head. The famous horror director, Wes Craven just passed. He used all types of visible messages with bad overtones like the ancient sign of the devil, 666. The Dow declined 6% for August. Nasdaq declined 6% for August and the S & P declined 6% for August. You play with the devil, you're playing with fire. Therefore, I began with the Godfather of Soul and so, I will end it with the Stones, "Please, allow me to introduce myself..."
One day recently, the market opened 1,000 points down and closed with a 500 point loss. Less than a week later, it was up 600 points only to turn down at the close and lost almost 200 points. A few days later, it had back-to-back up days of over 600 points and another 300 points. Almost a thousand point move in 48 hours. What's happening?
Market Signals
The market is telling you that more than distribution is taking place. Smart money is exiting. What I'd like you to do is think back to August 2011. It was the last time that the market had consistent volatility, which is a code word to mean, tanking. The market signaled that September and October would be rough waters and it was, but few took the clues. They just relaxed under the summer sun. The market had triple digit days just like today. Now, add these aspects...
Dear reader, back in 2011 every central banker was pushing stimulus. China made "work" projects and built "ghost cities." In the US we had QE and I predict it will return - see future piece, coming soon.
Today, excessive debt is curtailing stimulus. Governments are going back to the playbook and doing the old fashion, beggar-thy-neighbor approach with currency devaluations. In addition, the Middle East turmoil has caused a mass migration which will cause a severe backlash. I expect the EU to come forth with new regulations to address this problem when they should be doing things to help countries like Turkey and Jordan and in Europe for Italy, Greece and the Balkan nations. Bottom line: Europe with serious unemployment will also have unrest due to this immigration problem.
As the global nations look to the US to be the engine for their economies, it released a revised second quarter GDP results. It says the US economy grew at 3.7%. I'm thinking that the US hired Chinese nationals with their constant 7% growth rate which to me is all fluff with no substance. All one has to do is check out the yearly lows of our oil companies. Earnings are down 60% and stocks are in bear territory. In fact, all commodity companies are suffering and this effects the emerging markets too. This is why smart money is getting out of the market. The recent bounce only reflects the strength of five companies who are holding up the market.
*Apple up 5%
*Facebook up 21%
*Google up 29%
*Amazon up 71%
*Netflix up 152%
and the rest of the S & P 500= 0.5% This is the rest of the story. Don't buy the dips. The safe and smart thing to do is get your money out and preserve your capital. I see oil in the 30s and then, Chevron would be a nice opportunity for the long term. However, if you want one more sign and this one will mess with your head. The famous horror director, Wes Craven just passed. He used all types of visible messages with bad overtones like the ancient sign of the devil, 666. The Dow declined 6% for August. Nasdaq declined 6% for August and the S & P declined 6% for August. You play with the devil, you're playing with fire. Therefore, I began with the Godfather of Soul and so, I will end it with the Stones, "Please, allow me to introduce myself..."
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