Stats, Europe, & US Markets

By David Chapman – Re-Blogged From http://www.Gold-Eagle.com

More Questionable Numbers – The Latest US Jobs Report

The June nonfarm payrolls came in at a stunning up 287,000, following a revised downward May nonfarm payrolls of 11,000. The surprise number gave way to a ‘wow’ moment, and the stock market soon rallied to new all-time highs.

The Bureau of Labor Statistics (BLS) conducts two job surveys each month. Actually, one is carried out by the US Census Bureau (household survey), and the other by the BLS (establishment survey). The two reports don’t necessarily jibe, as differences abound. The household survey conducts interviews with individual households, while the establishment survey does the same, only with businesses. Two surveys, two separate results.

The nonfarm payrolls reported is from the establishment survey, but the household survey determines the unemployment rate and other statistics. The key to the most recent numbers is that many of the jobs were in leisure and hospitality, which tend to be low paying and part-time. The labour force participation rate rose, as more people came looking for work and that helped push up the unemployment rate.

Canada’s equivalent of nonfarm payrolls were not encouraging. Job loss was small, but full-time jobs were replaced with part-time jobs. Not a healthy sign.

The Economist and the Italian Job

Esteemed magazine The Economist has joined the ranks of the concerned over the deteriorating banking situation in Italy, where there are some US$400 billion of non-performing loans (20% of Italy’s GDP) on Italian banks’ books. The Economist points out many of the same problems we noted a week earlier, including the inability under current EU rules to provide a direct taxpayer bailout to the banks. Instead it has to be a bail-in.

Trouble is, much of the non-performing loans are held not by institutions as one would expect, but by individuals. Previous attempts at bail-ins have resulted in suicides and demonstrations. What the article does not get into is the potential for contagion, and the growing problem of EU banks in general, where many of the biggest banks are in trouble as their stock prices have plunged precipitously.

The EU is plagued with infighting, anemic growth, high debt, deflation and some $10 to $12 trillion of debt trading at negative interest rates. Bonds issued by the EU, Germany, Switzerland and the Netherlands trade at negative yields. And then there is Brexit, and maybe even an Auxit (Austria).

Brexit Revisited

A week can’t go by without talking about Brexit. The United Kingdom has a new prime minister in, Theresa May, and how she got there was worthy of the Kremlin. She has promised to be a tough negotiator on Brexit, but so has the EU. The UK powers want to take their time. The EU wants to hurry. The clash could be interesting, and the Brexit promises to be with us for some time.

US Election Season – Now the Real Fun Begins

The final run of the US election season kicks off next Monday July 18, with the Republican National Convention (RNC) in Cleveland. The Democratic National Convention (DNC) kicks off on July 25 in Philadelphia. Once the conventions are out of the way, three months of mudslinging will follow. The conventions themselves could be controversial, with heavily armed police and protestors preparing to clash.

Both current candidates for president are extremely low in approval polls, with the winner likely to be whoever is less despised than the other. Currently the Democratic candidate (Hillary Clinton) leads the Republican candidate (Donald Trump) by either a wide margin or a narrow margin. The final leg of the campaign to Election Day on November 8, 2016 promises to be volatile and potentially violent.

Weekly Market Review

Stocks

The US stock market (S&P500 and Dow Jones Industrials) has roared to new all-time highs. Ok not all of it, as the NASDAQ and especially the Dow Jones Transportations have not yet joined the party. A divergence? A non-confirmation? Time will tell.

The roaring jobs market and the realization that the Fed is probably one and done with regards to interest rate hikes have helped fuel the run to new all-time highs. But the rally to new highs has been very narrow, reminiscent of the famous ‘nifty-fifty’ rally of 1972-1973 that culminated in a 50% collapse in the markets into 1974. There have also been net withdrawals from equity funds, and some evidence that it is instead central banks buying.

The market rallied to new all-time highs, with only shallow corrections seen in the past couple of years (under 20%). We take a look at the various cycles impacting the US stock markets and muse about a possible 90-year cycle of major depressions, with the last one seen in the ‘dirty thirties’ with the 89% drop in the markets into 1932.

Currencies

The US Dollar Index continues to tread water following Brexit, with little movement this past week. The euro also had little movement, although the Japanese yen fell quickly from its high. We look once again at the Canadian dollar and its amazing tracking with WTI oil prices. The fact that the Canadian economy continues to be weak and the BoC has lowered its growth forecast has not helped.

Gold and Precious Metals

Gold had a corrective week, but so far it is shallow and all trends remain intact. Silver actually gained small on the week, and the gold stocks hit new 52-week highs once again before closing off small. Platinum and palladium joined the party, and both made new 52-week highs, joining gold, silver and the gold stocks.

Gold has been rising on negative interest rates, anemic growth, high debt and the central banks running out of ammunition to deal with the crisis. But the market has at short term become overextended, so a correction would be healthy. We examine two schools of thought about the current market:

One that believes that the current rally is a correction to the long breakdown from the highs of September 2011, and the other that believes that the correction down from September 2011 was itself a major correction to the bull market of 2001-2011. We are now embarking on a new bull phase to the upside.

Strangely, both scenarios are generally aligned — and both could see new all-time highs for gold and silver in the end. The recovery in gold stocks has been remarkable. Moreover, in a space of 9 months the TSX Gold Index (SPTTGD) has already recovered 50% of what it lost from September 2011 to its bottom in September 2015.

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The “Mystery” Of Who Is Pushing Stocks To All Time Highs Has Been Solved

By Tyler Durden – Re-Blogged From http://www.ZeroHedge.com

One conundrum stumping investors in recent months has been how, with investors pulling money out of equity funds (at last check for 17 consecutive weeks) at a pace that suggests a full-on flight to safety, as can be seen in the chart below which shows record fund outflows in the first half of the year – the fastest pace of withdrawals for any first half on record…

… are these same markets trading at all time highs?  We now have the answer.

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Market Strategy

By Justin Spittler – Re-Blogged From http://www.Gold-Eagle.com

Below, you’ll read our interview with Nick Giambruno, editor of Crisis Investing. In it, Nick breaks down his successful investing system—what he calls “the most powerful wealth building secret in investing.”


J. Spittler, editor of Casey Daily Dispatch: Nick, your advisory is called Crisis Investing. Could you explain what “crisis investing” is?

Nick Giambruno: Crisis investing is basically buying elite companies in beaten-up countries or industries. When there’s a crisis, most people only see danger. But it’s actually an opportunity. A crisis often allows you to buy a dollar’s worth of assets for a dime…or less.

Many of the world’s greatest investors have made their fortunes this way…but anyone can do it. You don’t need be rich or well-connected. You don’t even need to travel to do it.

In fact, if you have a regular brokerage account—and the courage to buy when others are fearful—you’re all set. The courage part is key. You can’t be a successful crisis investor if you’re not willing to go against the crowd.

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The Coming Market Rout

cropped-bob-shapiro.jpg   By Bob Shapiro

Several days ago, IM Vronsky wrote that the big banks are in deep trouble. Since the financial reporting of these companies leave out much of the data necessary to evaluate these companies, he pointed to the price history (and technicals) of several bank stocks.

While stock prices reflect only the collective market sentiment based on the incomplete reporting, it does indicate that all is not well in River City.

Looking at the overall market first, we find that prices peaked about a year ago and since have turned down. Lets look at some factors affecting stock prices.

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Germans And Japanese Play “Rollover!”

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

After my last article we received two logical questions from readers.  The first one pertaining to “gaps” and the Deutsche Bank derivative exposure; the second pertaining to Japan’s strong currency with negative yields while the debt to GDP levels are astronomical.  Below is the first question.

“In the past you have warned about derivative exposure and now gapping.

One of my worst fears as a day trader on a derivatives platform is gapping. That is why I will never have an open position when the market is closed. Even then, that is not guaranteed.

A lot of trading platforms got hammered when the Swiss franc was revalued.

Could you put out a letter for your readers explaining why for example the Deutsche Bank derivatives exposure is so dangerous in terms of gapping.”

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Common Stocks Crash Through The Ice

By Dr Richard S Appel – Re-Blogged From http://www.Gold-Eagle.com

United States equities have long been skating on thin ice. It appears they have finally collapsed through it, and are now treading water before sinking deeper. From an historical standpoint they have arguably been overpriced for most if not all of the past twenty years. Their dividend yields, price-earnings ratios, price to book values and other meaningful measures have long ago gone beyond all safe valuation parameters. For over hundred years, similar conditions have always signaled caution, if not danger. Why is it now that stocks appear to be finally breaking down, and sounding the alarm of an impending Bear Market?

There are two major guides that have endured the test of time. For at least a few generations they indicated the limits that people were willing to pay for ownership of common stocks. First, whenever the Dow Jones Industrial Average’s price-earnings ratio approached or exceeded 20:1, equities normally experienced sharp Bear Market declines. Similarly, periods when its dividend yield plunged to 3% or less usually spelled impending disaster for the fate of stock prices. A bit of history might be useful at this juncture.

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Fed Starts To Walk Back Its Rate Hike. Next Step: More QE And Bigger Experiments

By John Rubino – Re-Blogged From http://www.Gold-Eagle.com

That didn’t take long. A month after the Fed’s dreaded quarter-point interest rate hike, the markets tank and then come the talking heads to promise that whatever is bothering traders, Daddy will make it right.

Falling inflation expectations could mean policy rethink: Fed’s Bullard

(Reuters) – The continued rout on global oil markets has caused a “worrisome” drop in U.S. inflation expectations that may make further rate hikes hard to justify, St. Louis Federal Reserve President James Bullard said on Thursday.

Since the dramatic fall in oil began in 2014 Fed officials have insisted the impact on U.S. price levels would be temporary, bottoming out at some point and allowing inflation to rise to the Fed’s 2 percent target.

Bullard said he has so far been willing to look beyond a slip in expectations as likely passing. But he is now worried the plunge in oil has unmoored inflation expectations as well, a fact that would make it more difficult for the Fed to lift inflation to its 2 percent target and could force officials to rethink the four quarter-point rate hikes expected this year.

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Jig Is Up For The Fed

By Rick Ackerman – Re-Blogged From http://www.Gold-Eagle.com

Traders seem obsessed lately with the ups, and mostly downs, of crude oil — so much so that every dip, feint and jiggle in energy futures is being replicated almost tick-for-tick by the S&Ps. A recent op-ed piece by Don Luskin in the Wall Street Journal asserted that falling oil prices brought on mainly by a fracking glut are crushing the world economy, but this gets it exactly wrong. In fact, falling crude prices are merely symptomatic, albeit in a big way, of deflationary forces that are starting to implode the global economy with black-hole force.

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Tactical Opportunity: Sell High, Buy Low

By Nick Barisheff – Re-Blogged From http://www.Gold-Eagle.com

As Presented to the Empire Club of Canada Annual Investment Outlook Luncheon: Making Money in 2016 from Domestic and International Financial Markets

The market outlook for 2016 presents significant challenges and opportunities that we have not seen for 40 years.

Since I began work on creating our first bullion fund in 1998, I have generally restricted my commentary to using precious metals for strategic portfolio allocation. Everyone agrees that investment portfolios should be diversified. Since gold is the most non-correlated asset class to traditional financial assets it provides important portfolio diversification. A strategic allocation of at least 10 percent reduces portfolio risk and improves returns over the long term.

This year I’d like to discuss a tactical opportunity, a market disparity that exists because of an artificial low in the gold price, and an unsustainable high in financial assets. Everybody understands buy low and sell high. The opportunity for 2016 is to sell high, buy low.

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Stock Topping Valuations

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The prevailing valuations in the lofty US stock markets are increasingly becoming a bone of contention.  Wall Street calmly asserts stocks are reasonably valued, since it has a huge vested interest in keeping people fully-invested.  But with valuations soaring following a massive rally and weak third-quarter earnings season, they are dangerously high and portend great downside risk.  Stock topping valuations abound.

Since investing is all about buying low then selling high, the price paid for any investment is everything.  Buy good companies at cheap prices, and you’ll multiply your wealth over time.  But buying those very same good companies at expensive prices radically stunts future gains.  While cheap investments have great potential to soar as traders recognize their inherent value, expensive ones have already exhausted their upside.

And it’s valuations, not absolute stock prices, that define cheap and expensive.  Valuations are where stock prices are trading relative to their underlying corporate earnings streams.  The less investors pay in terms of stock price for each dollar of profits, the greater their ultimate returns.  Valuations are most often expressed in price-to-earnings-ratio terms, with stock prices divided by underlying corporate earnings per share.

This concept is so easy to understand, yet the vast majority of investors ignore it.  Imagine purchasing a house for a rental property that has expected annual rental income of $30k.  How much would you be willing to pay for it?  If you can get it for $210k, 7x earnings, it will pay for itself in just 7 years.  That’s a great deal.  But if that same house is priced at $630k, 21x, it will take far too long just to recoup the initial cost.

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Dr Copper, The Economy And The Stock Market No Longer In Sync

By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com

Doctor copper, can no longer be viewed as a leading indicator, in fact, a name change might be in order. A change of name from Dr Copper to deadbeat copper might in order, given its dismal record over the years.  After the financial crisis of 2008-2009, the economy, the stock markets and copper parted ways; while the markets and the economy trended higher, copper plunged into an abyss, and it is still trying to find its footing.

All Jokes aside, the reason copper is diverging from the markets is because the Feds destroyed the concept of a free market system long ago.  Copper is indicating that this economic recovery is nothing but an illusion.   However, several rounds of QE, plus interest rates being held down for a record-breaking period, have altered reality.  The markets are moving higher because of hot money, and the economic miracle would end without the low-interest rate band aid.  Against such a backdrop, copper ceased to work. In this environment,  fundamentals and basic technical analysis can lead you astray; in such an environment Mass psychology works the best.  The masses have accepted that Fed intervention is the new norm and that the Fed is the saviour. Hence, this is what investors need to pay attention too, as the psychology of the masses is what drives the markets.  Given the old historical pattern between, copper and the markets, the stock market should have followed copper into the abyss, but instead we find that several indices are dangerously close from putting in new highs.

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Gold Miners’ Strong Q3 Results

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The beleaguered gold-mining sector continues to be plagued by monumental universal bearishness.  Nearly everyone assumes the gold miners are doomed, that they can’t survive for long in a sub-$1200-gold environment.  But this belief is totally wrong, a consequence of extreme fear’s fog of war.  The gold miners’ underlying earnings fundamentals remain very strong, as evidenced by their recent Q3 results.

In all the stock markets, corporate profits ultimately drive stock prices.  Because a stock simply represents a fractional stake in its underlying company’s future earnings stream, all stock prices eventually revert to some reasonable multiple of those profits.  These earnings are truly the only fundamental driver of stock prices.  All deviations from righteous valuations based on profits are just the temporary products of herd sentiment.

The gold stocks are suffering such an extreme psychological anomaly today, drowning in mind-boggling depths of popular fear and despair.  The leading HUI gold-stock index just slumped to a brutal new 13.3-year secular low this week!  The apathy and hate for this sector is nothing short of astounding.  Anyone masochistic enough to make a bullish contrarian case on gold stocks will be peppered with scathing ridicule.

But in the midst of any universal sentiment extreme, prudent investors and speculators must disconnect from the herd emotions to take a rational look at the underlying profits fundamentals.  And there is zero doubt today that prevailing gold-stock prices are truly fundamentally absurd.  The last time gold stocks were priced at these levels per the HUI ages ago in July 2002, the gold price was merely trading around $305.

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Why Isn’t This Incredibly Bearish Development Making The News?

By E B Tucker – Re-Blogged From http://www.Gold-Eagle.com

There’s a very important warning signal flashing in the financial market right now.

Despite the importance of this signal, few people know about it…even fewer are talking about it.

Don’t be one of the people who don’t understand the vital importance of the bond market and what it’s telling you right now.

This knowledge could help you avoid a huge hit to your net worth over the next 12-24 months. Here’s why…

Most investors focus on just one area of the investment market: Stocks. After all, stocks have a long track record of generating solid, long-term returns. Plus, the idea of owning shares in a small business that grows large – and making 500% along the way – can capture almost anyone’s attention.

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One Step Back From The Ledge

By Michael Pento – Re-Blogged From http://www.PentoPort.com

I started Pento Portfolio Strategies three years ago with the knowledge that the unprecedented level of fiat credit creation had rendered the globe debt disabled and would result in mass global sovereign default. As a consequence, there would be wild swings between inflation and deflation dependent upon the government provisions of fiscal stimulus, Quantitative Easing and Zero Interest Rate Policies…

For much of the third quarter the US Federal Reserve has avowed to raise rates. This in turn caused a sharp stock market correction on a worldwide basis. The flattening of the Treasury yield curve and the strengthening of the US dollar were the primary culprits. But then the September Non-Farm Payroll Report came in with a net increase of just 142k jobs, which was well below Wall Street’s expectation. The unemployment rate held steady at 5.1% but the labor force participation rate dropped to the October 1977 low of 62.4%. Average hourly earnings fell 0.04% and the workweek slipped to 34.5 hours. There were also significant downward revisions of 22k and 37k jobs for the July and August reports respectively.

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Failure to Launch

By Peter Schiff – Re-Blogged From Euro Pacific Capital

The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. A deep bench of excuses, ranging from the weather to the Chinese economy, has been called on to justify why the economy hasn’t built up any noticeable steam, and why the Fed has failed to move rates off zero, where they have been for seven years. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can’t explain away. The report should make it abundantly clear that we are far closer to recession than recovery. But old notions die hard and, shockingly, most economists still believe that we have hit a temporary speed bump not a brick wall. But at some point healthy hope turns into dangerous delusion. We may have just turned that corner.
The report was horrific any way you slice it. The consensus of economists had expected to see 203,000 new jobs in September, not a particularly impressive number, but at least it would have been an improvement from the 173,000 new jobs that were added in August. Not only did September miss substantially, at just 142,000 jobs, but August was revised down to 136,000 (Bureau of Labor Statistics) (there were economists who had even expected August to be revised up to as high 247,000). This means that the last three months have averaged just 167,000 jobs, a level that is not even close to where we should have been in a real recovery. But it gets worse from there.

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US Stock Bubble Bursting As The US Fed Begins To Shrink Its Balance Sheet

By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com

All serious students of economics well know there are several factors that can inflate stock values…and even cause them to soar beyond common sense and corresponding fundamentals. However, there is one factor that dwarfs all others in its disproportionate material effect on pumping up stock prices beyond all historical and reasonable metrics:  AND THAT IS EXCESSIVE GROWTH IN THE FED’S BALANCE SHEET. 

One must recall that the S&P500 Stock Index suffered a bear market loss from 2007-2008…including the first two months of 2009.  During this bear market the S&P500 plunged well more than 55% by the time it finally bottomed in first week of March 2009.  Subsequently, the Fed relentlessly pumped up its Balance Sheet…with a view to stem the horrific two year rout in US stock prices.

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If This Really Is A Recovery, Why Aren’t We Using More Electrical Power?

(Mark uses a “Bird’s Eye View” chart style, which shows the change from the previous high. All new high’s are at 100%, with pullbacks obviously less than 100%. It’s different, but informative. Bob)

By Mark J Lundeen – Re-Blogged From http://www.Gold-Eagle.com

Janet Yellen may not have raised interest rates this week, but Mr Bear couldn’t care less.  We can see it in the market.  In bull markets double-digit declines from an all-time high are reasons to buy.  But EARLY in bear markets, recoveries from double digit declines are reasons to sell as we’ve seen since about mid-July.  In the table below recoveries from double-digit Dow Jones declines last just a day or so before the market comes under selling pressure, again driving the Dow Jones down 10% or more from its May 2015 last all-time high.

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Fed’s Vast Gold/SPX Impact

By Adam Hamilton – Re-Blogged From Zeal LLC

Yesterday’s Fed decision was one of the most anticipated ever, with much potential to really change the global financial-market dynamics going forward.  But thanks to the Fed’s incredible market distortions of recent years, Fed meetings spawning exceptional volatility is nothing new.  Fed decisions’ impacts on gold and stocks have been vast.  And this next tightening cycle should reverse their Fed-imparted directionality.

Before we get started, a big caveat is necessary.  While this essay was published the morning after that Fed decision, I had no choice but to research and write this draft before yesterday’s momentous 2pm event!  Producing one of these weekly essays takes a lot of time and effort, and even after writing 670 of them there was no possible way to start this process after the Fed and still make the publishing deadline.

That presented a challenging quandary, as the Fed’s decision and surrounding posture is all anyone is interested in this weekend.  I’ll discuss the specifics of everything the Fed did and said in great depth, as well as the resulting market impact and outlook, in Tuesday’s Zeal Speculator weekly newsletter.  But leading into that hyper-anticipated event, I wanted to do some background research on the Fed’s market impact.

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Jim Rogers On Timeless Investing Strategies You Can Use To Profit Today

By Nick Giambruno – Re-Blogged From http://www.Gold-Eagle.com

Recently I spoke with Jim Rogers about the most important investment lessons he has learned over the years.

Jim is a legendary investor and true international man. He’s always ahead of the game. Jim made a bundle by investing in commodities in the 1990s when they were out of favor with Wall Street. He’s also made large profits investing in crisis markets.

Jim and I spoke about timeless strategies that are truly essential to being a successful investor.

You won’t want to miss this fascinating discussion, which you’ll find below.


Nick Giambruno: You’ve said that many times throughout history, conventional wisdom gets shattered. What are some widely held beliefs that will be shattered in the next 10 years?

Jim Rogers: That’s a very good question. Well, for one thing, I know bond markets are at all-time highs almost in every country in the world. Interest rates have never been so low. Everybody is convinced that bonds are a good thing to invest in. Otherwise, they wouldn’t be at all-time highs.

I’m sure that 10 years from now, we are all going to look back and say, how could people have even been investing in bonds with negative yields? How could that possibly have been happening? But at the moment, everybody assumes it’s okay, and it’s the normal and natural thing to do. Ten years from now, we’re going to look back and say, gosh, how could we ever have done something so foolish?

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Fed ‘One and Done’ is a Wall Street Fantasy

By Michael Pento – Re-Blogged From CNBC

One of the current myths promulgated by Wall Street is that the Federal Reserve will raise rates once this year, breathe a sigh of relief, and be done until the “12th of never.” But those who are familiar with our central bank’s history are aware that the Federal Open Market Committee has never tightened the federal-funds rate just once. A quarter-point hiking cycle has no historical basis and is just wishful Wall Street thinking.

In the spring of 1988, fearing a rise in core inflation, the Fed went on a tightening cycle that lasted from April 1988 to March 1989. During that time, the fed-funds rate increased more than 300 basis points (3 percentage points). This episode was followed by a recession beginning in 1990, suggesting that the corrective policy actions may have intensified a weakening economy, and that the Fed is prone to being economically tone deaf.

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A Second Big Leg Down Is Coming In Stocks

By Rick Ackerman – Re-Blogged From http://www.Gold-Eagle.com

Take a good look at the long-term chart shown and let it liberate your imagination. It’s not difficult to see the force of gravity at work here, pulling the S&Ps toward a trendline that lies 250 points below. Notice how, when the futures swooned last autumn, the recovery was much steeper and swifter than the decline. Not this time. Three weeks into a bounce that has been punctuated by manic, fleeting short squeezes, stocks have yet to recoup even half of the losses suffered during the last two weeks of August.

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Forever QE Continues Unabated

By Sol Palha  Re-Blogged From http://www.Gold-Eagle.com

It is a fraud to borrow what we are unable to pay. — Publilius Syrus

Corporations are using share buyback programs to manipulate earnings, by reducing the float of outstanding shares.  This ploy was not as ubiquitous before, but today it is being used rather indiscriminately by companies as a way to boost EPS. This modern form of alchemy turns would-be losses into profits or can be utilized to make modest profits appear to be impressive in nature. We are now in the paradigm of lies and deceit.  In these conditions, the truth does not thrive.

Many experts predict that share buybacks and dividend payments by US companies are expected to reach new highs in 2015.  The troubling factor is that it appears that companies are taking the easy path in their quest to boost profits. Rather than investing in the future, they are spending inordinate sums of money on buying back their own shares.

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7 Reasons the Bear Market Has Just Begun

By Michael Pento – Re-Blogged From http://www.PentoPort.com

On March 10th 2009 the US stock market hit an intraday low and put in the now-famous “Haines bottom”–coined after my friend, the late great Mark Haines, who made one of the most prescient calls in market history. It should be noted by the time that fateful day arrived it was virtually impossible to find a single bull out of all the geniuses on Wall Street.

Since then the major indexes have more than doubled. Therefore, today the narrow-minded canyons of Wall Street are littered almost entirely of trend following bulls and cheerleaders that don’t realize how little there is to actually cheer about. Stocks values are far less attractive than they were on that day back in 2009 and this selloff has a lot longer to run. There are hordes of perma-bulls calling for a “V” shaped recovery in stocks, even after multiple years of nary a down tick. But the following are seven reasons why I believe the bear market in the major averages has only just begun:

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Stock Market Calls Fed’s Bluff

By Michael Pento – Re-Blogged From http://www.pentoport.com

As the Fed nears its proposed first rate hike in nine years the stock market is becoming frantic. The Dow Jones Industrial Average is down around 10% on the year, as markets digest the troubling reality that our central bank may be raising interest rates into an emerging worldwide deflationary collapse.

The Fed normally raises rates when inflation is becoming intractable and robust growth is sending long-term rates spiking. However, this proposed rate hike cycle is occurring within the context of anemic growth and deflationary forces that are causing long-term U.S. Treasury rates to fall.

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Fed’s Stock Levitation Failing

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The US stock markets just suffered an extraordinary plunge, shocking traders out of their complacency psychosis.  This cast the foundational premise behind recent years’ incredible stock-market levitation into serious doubt.  Traders are finally starting to question whether central banks can indeed manipulate stock markets higher indefinitely.  Any wavering in this faith has very bearish implications for stock prices.

Less than two weeks ago, the US’s flagship S&P 500 stock index (SPX) was up above 2100.  It finished August’s middle trading day just 1.3% below the latest record highs from late May.  At the time, the Wall Street analysts were overwhelmingly bullish and saw nothing but clear sailing ahead.  Predictions for the SPX ending this year above 2250 were ubiquitous, and retail investors were urged to aggressively buy stocks.

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Why We Can’t Handle An Equities Bear Market, Part 1: State Budgets Will Implode

By John Rubino – Re-Blogged From http://www.DollarCollapse.com

Back when society’s balance sheet was reasonably solid, the occasional bear market was no big deal. A 20% drop in the average S&P 500 stock would scare investors and lead to slight declines in consumer spending and government capital gains tax revenue, but the overall economy would barely notice such a minor speed bump.

But that was then. Like a person with an impaired immune system, today’s developed world is so highly leveraged that a shock of any kind risks catastrophic complications. Which is why governments and central banks now meet every incipient crisis with quick infusions of newly-created cash and lower interest rates. We can’t risk letting markets be markets any more.

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CRITICAL Support Has Failed!

cropped-bob-shapiro.jpg   By Bob Shapiro

[I’m on vacation this week with my family, including grandkids, and I’ve just located a WiFi hotspot.] The US stock market has been down the last couple of weeks. With the Chinese market losing 9%(!) yesterday, and the US market down 367 more points as I write, it looks like the US downturn may continue to correct from the market’s unsustainably high levels. A “Mean Reversion” to more normal PE levels of 14 could lop off another 6000 points from the Dow. Mean Reversions seldom stop at “Normal Levels,” so an eventual drop over the next couple of years, to Dow 7000 or so, is not out of the question.

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A 30-50% Stock Plunge ‘Would Not Be A Surprise’

By HENRY BLODGET – Re-Blogged From http://davidstockmanscontracorner.com

As regular readers know, for the past ~21 months I have been worrying out loud about US stock prices. Specifically, I have suggested that a decline of 30% to 50% would not be a surprise.

I haven’t predicted a crash. But I have said clearly that I think stocks will deliver returns that are way below average for the next seven to 10 years. And I certainly won’t be surprised to see stocks crash. So don’t say no one warned you!

So far, these concerns have just made me sound like Chicken Little. The S&P 500 is up strongly from where I first sounded the alarm.

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An Indication Of Global PPT Failure?

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

Forget about Greece, they didn’t matter yesterday as the NYSE shut down for nearly four hours.  Greece does matter and certainly will matter in the weeks to come.  Before getting to yesterday’s very peculiar “glitch”, I do want to mention something quite humorous about Greece.  Ambrose Evans-Pritchard wrote yesterday the referendum actually backfired!  When Tsipras called for the referendum, he apparently expected a “yes” vote (and so did the banksters running the show!).  The “plan” was after the yes vote, Tsipras would hang his head and agree to more austerity and thus kick the can one more time.

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China’s Stock-Bubble Burst

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

China’s stock bubble has burst, with its stock markets utterly collapsing after rocketing parabolic.  The failure of this popular speculative mania has grave implications for the global stock markets.  It shatters the universally-believed myth that central banks can nullify normal market cycles.  No government has more power over its stock markets than China’s, yet not even it could magically eradicate greed and fear.

Even before their recent calamity, the Chinese stock markets had been the most-interesting financial story of 2015.  Having the world’s second-largest economy, China is immensely important in global markets.  And its stock markets were soaring, as evidenced by China’s flagship benchmark stock index.  It is the Shanghai Stock Exchange Composite Index (SSEC), the local equivalent of the US S&P 500.

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An Interview Worth Watching

cropped-bob-shapiro.jpg   By Bob Shapiro

Michael Pento is an stock market money manager who follows the Austrian School of Economics (as do I). For those of you unfamiliar with what that is, Austrian Economics is Free Market Economics, as opposed to Keynesianism and other names for Socialism.

Michael was interviewed recently, and I’d like to share the video with you. It’s one of the few lucid, straightforward pieces that I’ve seen recently. But, understand that some of what he says is scary, so if you have a bad ticker, you’d better take a pill before watching.

 

Fed’s Full Normalization

By Adam Hamilton – Re-Bloged From http://www.Gold-Eagle.com

The US Federal Reserve has been universally lauded for the apparent success of its extreme monetary policy of recent years.  With key world stock markets near record highs, traders universally love the Fed’s zero-interest-rate and quantitative-easing campaigns.  But this celebration is terribly premature.  The full impact of these wildly-unprecedented policies won’t become apparent until they are fully normalized.

Back in late 2008, the US stock markets suffered their first full-blown panic in 101 years.  Technically a panic is a 20% stock-market selloff in a couple weeks, far faster than the normal bear-market pace.  In just 10 trading days climaxing in early October 2008, the US’s flagship S&P 500 stock index plummeted a gut-wrenching 25.9%!  It felt apocalyptic, the most extreme stock-market event we’ll witness in our lifetimes.

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The Beginning Of “The Ending Sequence!”

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

This coming week could be very tellingChina just ended a disastrous week and finished just whiskers away from entering bear market (-20%) territory. Credit markets all over the world are weakening and yields are rising.  Greece will not make their June 30 payment(s) and probably go through a referendum to decide whether or not to flip their creditors the bird in a meaningless vote.  In fact, Greece will probably “go boom” this week.  Their banks and stock markets may not open Monday morning.  Two days later, some sort of plan will need to be concocted to classify their bankruptcy as not a “DEFAULT”, otherwise a $3 trillion fuse to a $1.4 quadrillion bomb will be lit!  These and more will be very important “mid-term exams”, any failure will bleed over into derivatives and become “final and terminal exams” with zero chance of a passing grade!

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It’s Already In The Market?

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

You have heard the phrase many times “it’s already in the market”, meaning if “something” or some sort of event happens it is already factored in to prices.  I was overseas last week, travelled much of the week and stayed in a hotel that had only two English speaking channels …one of which was CNBC.  I cannot tell you how many talking heads were paraded forth whom all parroted the same pabulum, “a Greek default is already factored in the market”.  Really?  REALLY?

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Rates Are Rising For All The Wrong Reasons

By Michael Pento – Re-Blogged From http://www.Silver-Phoenix500.com

Wall Street carnival barkers are relishing in the fantasy that the economy has finally achieved escape velocity. Therefore, they accept with alacrity that this is the primary reason why interest rates have started to rise. However, the fact still remains for the first half of 2015 GDP growth will probably be less than 1%.

GDP contracted by 0.7% in the first quarter of 2015.  The Atlanta Fed, whose GDP Now calculation has been on the money, now sees second quarter growth at 1.9%. Therefore, it is prudent to conclude the most optimistic case for growth in the first half of the year will be about 1%.  Of course, the perpetually upbeat economists on Wall Street are always convinced the economy will skyrocket in the second half of each year. But still, if the Atlanta Fed is correct—and it looks like it will be spot on given the anemic data already released for April and May—annualized GDP for the first two quarters of 2015 will be running at a pace that is less than half of the 2.2% growth averaged since 2010.

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Why Stocks Are Not “Cheap Relative To Bonds”

One of the constant refrains we hear at present is that while stocks may be richly valued on an absolute basis, they are “cheap relative to bonds.” At least one professor recently told students that valuations are meaningless because the P/E on cash is 100. Technically, with T-bill yields at just 0.01%, the P/E on cash is more like 10,000, but let’s not quibble. Using simple P/E ratios or inverted interest rates as a standard of value only makes sense if you have no appreciation for how securities are valued. By this kind of standard, I would advise these students to propose that their professor give them each $100 in return for a promise of a single payment of $2 next year, on the argument that the P/E of 50 is a fraction of the “P/E on cash.” The immediate objection – “but, value isn’t just about the coming year” – is the beginning of insight.

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Government Bonds In A Bubble….

The latest economic data are not very encouraging. For instance, the Q1 Gross National Product in the U.S. data pointed to an economic decline of -0.7%. It was the second consecutive year in which the economic activity declined quarter-on-quarter. That has not happened since the credit crisis of 2008.

The American economy clearly has been impacted by the strengthening dollar. But we also believe that real growth is fading. Additionally, we know an interest rate hike will occur sooner or later, which will undoubtedly have economic repercussions. Considering those elements the peformance of the broad averages should not come as a surprise.

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Investing’s Great Struggle

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The great endeavor of investing can be distilled down into four simple words, buy low sell high.  They are so basic, so resoundingly clear, that even a child can understand this principle.  Yet still the great majority of investors never achieve significant success.  Even while full-well knowing the core idea of investing, they end up buying high and selling low.  That treacherous struggle of investing must be overcome.

It’s funny, as life is full of simple ideas that are incredibly challenging to put into practice.  Investing is certainly not unique in this regard.  Americans’ expanding waistlines are a great example.  The only way to lean up is some combination of eating less and exercising more.  We all know this basic truth, we all know what we ought to be doing on both fronts, yet it’s still really hard to execute.  Emotions are the reason.

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It’s Ugly If You Look Under The Hood

My plan for today was to write a very basic piece hitched to the one written yesterday “the money has to go somewhere”.  The plan was to point out that gold (and silver) will be the final destination for monies dislodged from crashing markets all over the world.  Along came the Q1 figures for U.S. GDP, a disaster on many levels.  So switching gears, let’s look at the first quarter, how quickly the economy has deteriorated and what it means in the future and in relation to the past.  I do plan to tie this together at the end because no matter how you look at it, gold is a magnet for what will be shaken loose.

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The Spread between Stock Prices and GDP is Blowing Out

By Michael Pento – Re-Blogged From http://www.pentoport.com

On a fundamental basis stock prices are reflective of both economic and earnings growth. When growth is strong, stock prices should increase in value. And when economic activity decelerates or turns negative, stock prices should go down. Of course nothing is that simple—especially today, when all markets are so highly manipulated by governments and central banks. Beginning in 2008 the markets followed the Fed on a magical journey down the rabbit hole into a wonderland where bad news is good news; and economic fundamentals and stock prices no longer move in tandem.

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What the F*#k Should Investors Do? (Part 2)

(This article was written last October! Several forecasts has turned out right on the money. The author’s advice still is quite valuable today.  –Bob)

By Vitaliy Katsenelson – Re-Blogged From http://www.institutionalinvestor.com/

In my column last Friday, in response to an e-mail I had received from an investor asking “what the fuck” he should do, I promised to explain what we’re doing with our portfolio. I will, but first let me tell you a story. When I was a sophomore in college, I was taking five or six classes and had a full-time job and a full-time (more like overtime) girlfriend. I was approaching finals, I had to study for lots of tests and turn in assignments, and to make matters worse, I had procrastinated until the last minute.

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NYSE Margin Debt At An All-Time Record High Heralds An Impending Stocks Crash

By Doug Short – Re-Blogged From http://www.Silvr-Phoenix500.com

The astonishing surge in leverage (i.e. NYSE Margin Debt) in late 1999 peaked in March 2000, the same month that the S&P500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge NYSE Margin Debt began in 2006, peaking in July 2007, three months before the market peak…and subsequent crash.

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Warren Buffett Predicting Upcoming Stock Market Crash

When it comes to investing in the stock market, we’re told to follow the smart money. Who might that be? The most influential investors/businessmen in America today are Warren Buffett, John Paulson, and George Soros. Their investing acumen has helped them amass billions of dollars and millions of followers.

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The Fed’s Bizarro World Economics: Rising Home Prices, Soaring Stocks, Fallen Real Wages

By Anthony B. Sanders – Re-Blogged From http://www.davidstockmanscontracorner.com

I have often wondered when the media would catch on to the REAL story about why the housing market is so slow to comeback, in terms of borrows applying for a mortgage. Particularly since The Federal Reserve has help the holders of capital with it’s monetary expansion.

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NYSE Margin Debt

By Doug Short – Re-Blogged From http://www.advisorperspectives.com

The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let’s examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.

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To Infinity and Beyond? Don’t Be Surprised If the U.S. Stock Market Cracks.

By Vasily Katsenelson – Re-Blogged From http://www.imausa.com

(I wrote this article for Institutional Investor Magazine awhile back, but it is still as relevant today as it was when I wrote it)

In 1986 Jeremy Grantham — an investment legend and co-founder of Boston-based asset manager GMO — started to warn his firm’s clients about, and even created an investment product to protect them from what he believed would be, the eventual bursting of the Japanese stock bubble. We all know how that story ended: In 1990 the Japanese market crashed, stocks declined more than 70 percent from their peak, and the Japanese economy slipped into a 25-year coma.

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Major Stock Selloff Looms

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The latest record highs in the US stock markets have unleashed astounding complacency.  Traders are utterly convinced that the past couple years’ massive Fed-fueled rally will continue indefinitely.  But with today’s lofty stock markets extremely overvalued, wildly overextended, and rampantly euphoric, a serious selloff is looming.  The prudent contrarians preparing for this inevitable major reversal are going to earn fortunes.

Though you wouldn’t know it from recent history, stock markets rise and fall.  They are forever cyclical, an endless parade of alternating bulls and bears.  Market history simply couldn’t be clearer on this.  Yet ironically after long bull or bear markets, the great majority of traders forget this.  They get caught up in their own emotions, and wrongly assume the long-in-the-tooth trend is the new norm that will endure perpetually.

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How’s the US Economy?

cropped-bob-shapiro.jpg   By Bob Shapiro

How’s the US Economy doing? That depends on who you ask.

The “official” unemployment rate, at 5.7% is a little high by historical standards, but way down from the peak of the Great Recession. The US Dollar is way up in Forex Markets, and that usually means that the US Economy is booming and everyone wants our strong currency. GDP is up again – at a 3.8% annual rate during the 2nd half of last year.

Who could ask for anything more?! Let’s look at these and other numbers a little more deeply.

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Beware The Stock Bear!

The US stock markets’ latest record highs have left traders exceedingly euphoric and complacent.  They are utterly convinced this stock bull will power higher for years to come.  But their enthusiasm is very misplaced.  In real inflation-adjusted terms, the US stock markets only just regained breakeven levels 15 years after the last secular bull peaked.  Now the secular stock bear ever since is overdue for a new cyclical bear.

The flagship benchmark index for tracking the US stock markets is the mighty S&P 500, often shortened to SPX.  The whole financial world literally revolves around this dominant index, with most global equity markets and even some major commodities markets like oil usually mirroring it.  American stock traders can directly trade the SPX through a handful of gargantuan ETFs including the leading SPY S&P 500 ETF.

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Duck Quacks And Golden Echo’s

By Rick Mills – Re-Blogged From http://www.Gold-Eagle.com

The US Dollar, on a slippery slope for years, has reversed and broken out against every major currency and developing economy currency. A global wide quantitative easing (QE) is happening. Almost every central bank (Sweden’s Riksbank became the 14th central bank to ease monetary policy in 2014) is now creating money as fast as they can potentially leading to a global liquidity storm.

A strong dollar helps Americans by making imports cheaper and curbing inflation –  U.S. import prices fell 2.8% in January, are now down 8% yoy and January’s consumer price inflation is expected to be less than 1%.

However a strong US$ hurts U.S. based multinationals who have overseas earnings in those very same currencies that have taken such a severe beating versus the soaring U.S.$.

Over 85% of companies have lowered guidance for 2015 and the S&P 500 looks ready to turn over – despite

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