- The US stock market is slightly overbought (which is not a positive in terms of head room for more of a rally).
- It’s massively built up on debt that is now more expensive to maintain and/or obtain.
- The Fed is still rapidly tightening money supply and says it will continue to do so for several more months.
- Interest rate increases and money tightening that already happened through this past December will continue to worsen economic conditions until summer because any changes by the Fed have about a half year lag time for the general economy.
Few people know the risks in today’s economy and marketplace as much as David Rosenberg, chief economist and strategist at Canadian wealth management firm Gluskin Sheff & Associates. For years he’s educated investors with his popular “Breakfast with Dave” newsletter, which you can subscribe to here. He’s also a regular contributor to the Globe and Mail and the Financial Post.
Considered by many to be a Wall Street permabear, Rosenberg successfully predicted the 2007-2008 financial crisis.
Now he’s predicting another recession to make landfall as soon as the second half of this year. Why? In short, the Fed has been too aggressive tightening liquidity at a time when corporate debt is at an all-time high. What’s more, the Trump administration has already enacted fiscal stimulus in the form of tax reform, which has historically been reserved for times of economic turmoil, not expansion.
By Todd Beamon – Re-Blogged From Newsmax
President Donald Trump on Friday hailed the “amazing” 4.1 percent quarterly growth rate — the fastest pace since 2014 — as proof that “we’ve accomplished an economic turnaround of historic proportion.”
“Once again, we are the economic envy of the entire world,” Trump, flanked by Vice President Mike Pence and his economic team, said at the White House. “America is being respected again and America is winning again because we are finally putting America first.
By Michael Pento – Re-Blogged From Pento Portfolio Strategies
China appears to have more to lose from a trade war with the US simply because the math behind surpluses and deficits renders the Bubble Blowers in Beijing at a big disadvantage. When you get right down to the nuclear option in a trade war, Trump could impose tariffs on all of the $505 billion worth of Chinese exported goods, while Premier Xi can only impose a duty on $129 billion worth of US exported goods–judging by the announcement on July 10thh of additional tariffs on $200 billion more of China’s exports to the US we are well underway towards that end. However, this doesn’t mean China completely runs out of ammunition to fight the battle once it hits that limit.
By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com
The mega-cap stocks that dominate the US markets have enjoyed an amazing bull run. But February’s first correction in years proved things are changing. With that unnatural low-volatility melt-up behind us, it’s more important than ever to keep leading stocks’ underlying fundamentals in focus. They help investors understand which major American companies are the best buys and when to deploy capital in them.
For some years now, I’ve been doing deep dives into the quarterly financial and operational results in the small contrarian sector of gold and silver miners. While hard and tedious work, this exercise has proven incredibly valuable. With each passing quarter my knowledge of individual companies grows, helping to ferret out miners with superior fundamentals and the greatest upside potential. Traders love the resulting essays.
By David Haggith – Re-Blogged From The Great Recession Blog
Bloomberg this week ran a story telling us how the smart money gets out of the stock market when it hits its all-time peak and how the dumb money helps the smart money out. Only they didn’t know that was what they were writing. It typically happens this way:
At the end of a deliriously euphoric market rally when the market is preparing to crash, all the Joe Six-packs, mom and pop and the family dog open trading accounts and try to chase the tail of market action. Many throw in their entire retirement funds, pawn the dog’s collar and take out loans on credit cards to buy in as much as they can. By buying in late, they help provide a smooth exit for the smart money. At least for some of it. It is the little guys, tough from hard labor, whose muscles are employed to push the money bags of the rich to the top of the mountain from which the little guys are allowed to jump off.
By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com
The changes to US taxes that were approved late last year have drawn acclaim and criticism, but in most cases both those who view the tax changes positively and those who view the tax changes negatively are missing two important points.
Most criticism of the tax changes boils down to one of three issues. The first is that the tax cuts favour the rich. This is true, but any meaningful tax cut will have to favour the people who pay most of the tax. Furthermore, contrary to the Keynesian belief system a tax cut will bring about the greatest long-term benefit to the overall economy if it favours people who are more likely to save/invest the additional income over people who are more likely to immediately spend the additional income on consumer items.
By Rob Willams – Re-Blogged From Newsmax
President Donald Trump’s tax cuts that went into effect this year will have a muted positive effect on the economy as the Federal Reserve raises interest rates and reduces its debt holdings, Hoisington Investment Management Co. said.
“The full spectrum of monetary policy is aligned against stronger growth in 2018,” chief investment officer Van Hoisington and economist Lacy Hunt said in a Jan. 11 report. “This monetary environment coupled with a heavily indebted economy, a low-saving consumer and well-known existing conditions of poor demographics suggest 2018 will bring economic disappointments.”
By Michael Pento – Re-Blogged From Pento Portfolio Strategies
President Donald Trump has finally unveiled his broad blueprint for tax reform. Well, at least let’s call it a sketchy outline of one. It would take the top income tax rate for small businesses from 35% to 15%. Theoretically, a business that makes $500k in taxable income, which had been paying roughly $175k in Federal taxes, would then pay closer to $75k. This means our business in this example, which saved 100k in Federal taxes, would have to grow its taxable income to $1,166.666, or by 133% to provide the government with revenue neutrality.
Even though Trump’s proposed tax plan offers more questions than answers, what is clear is that the administration is no longer working off the pretense that tax reform will seek revenue neutrality. Instead, it looks like Trump and the Republicans are leaning towards pretending that dynamic scoring of tax cuts will suffice for a revenue neutral plan.
By Peter Schiff – Re-Blogged From http://www.Silver-Phoenix500.com
Donald Trump has made good on one of his most audacious campaign promises by submitting what he describes as the biggest tax cut in U.S. History. For once, at least, this does not appear to be Trumpian braggadocio. It really may be the mother of all tax cuts. But if passed, what may this bunker buster do to the economy? While I have rarely met a tax cut I didn’t like, this one just may be more likely to send the economy into a downward spiral than it is to send up to orbit.
By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com
The gold-mining stocks’ usual volatility has proven outsized so far this year, spooking investors. A fast initial surge in a new upleg was soon fully reversed by a sharp major correction, which spawned much bearish sentiment. That combined with the great distraction from the Trumphoria stock-market rally has left gold stocks unloved and overlooked. But their outlook is very bullish, and major upside breakouts near.
It’s hard to find bargains in today’s extreme stock markets. They’ve been radically distorted by the post-election euphoria centered on universal hopes for big tax cuts soon. Nearly every sector has been bid up to dizzying valuations. Except gold stocks, which everyone still hates. They may very well be the last remaining contrarian sector in these crazy markets, and thus a great buying opportunity for smart traders.
By Deroy Murdock – Re-Blogged From National Review
Conservatives can help him craft an innovative reform agenda. Free-marketeers who are in tears about Donald J. Trump’s pending presidential nomination should heed the wisdom of the Beatles: “Take a sad song and make it better.”
Trump’s policy agenda remains largely unwritten. While he has detailed solutions on immigration, taxes, and health care, Trump has left many issues untouched. This is a problem, but also an opportunity. Conservatives and small-l libertarians who supported Ted Cruz, Marco Rubio, or Scott Walker for president can curse Trump . . . or do something constructive: work with him and his team to develop his platform.