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Shocking Truth Revealed: Recessions Do Not Cause Bear Markets.

Sometimes I read something so utterly stupid that I cannot contain myself. The stock market forecast below from RBC Capital Markets qualifies as just that. Get this. Apparently a bear market in equity prices will wait for an actual recession to happen before taking the markets lower. 

 But Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, wants you to consider this: “rallies do not end when they get tired, they end when recessions ensue.” In a Monday note to clients, he writes that seven of the last eight bull markets ended at the onset of a recession:

It appears Mr. Golub confuses cause and effect. Recessions do not cause bear markets. Bear markets cause recessions. Get it through your heads everyone.

Take a look at 2000 and 2007 bear markets for instance. The official recession numbers tend to show up 6-9 months after most of the financial markets top out. In fact, according to the recently released FED minutes, Bernanke was talking about growth and tightening as late as Q2 of 2008.

What causes bear markets? They are cyclical in nature. There is a beautiful mathematical structure within the stock market that tends to control the ebb and flow of the forces within it’s multidimensional composition. Once that mathematical structure is understood it is fairly easy to predict exactly when the next bear or bull markets will occur.

Speaking off, our mathematical work continues to indicate that we will have a severe bear market between 2014-2017…..followed by a deep recession. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

bear market forecast investwithalex

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Shocking Truth Revealed: Recessions Do Not Cause Bear Markets. Google

Market Watch Writes: Bull market won’t die until a recession hits: RBC

Investors are hotly debating whether this five-year-old bull market can tack on more years of spectacular growth. But a strategist at RBC Capital Markets has a boldly simple prognosis for the years ahead: it would likely take a recession for the market to reverse course.

After 30% gains in 2013, the S&P 500 index SPX +0.32% is up a mere 0.6% this year. Given the fraught push forward in 2014, investors have approached the bull market with feelings of trepidation.

But Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, wants you to consider this: “rallies do not end when they get tired, they end when recessions ensue.” In a Monday note to clients, he writes that seven of the last eight bull markets ended at the onset of a recession:

On to the next question: Are we approaching a recession? Golub says that answer is no, given the sluggish pace of our recovery from the last recession:

“No two recessions are the same, but they tend to follow a similar pattern. Typically, an accelerating economy burns through existing spare capacity. This leads to inflationary pressure, which forces the Fed to act. As markets anticipate rate hikes, the yield curve inverts. Growth slows and, more often than not, the economy rolls over, taking the market with it.

“The current economic rebound is the slowest of the post-war period. Growth is being held back by a modest housing recovery and weak business confidence. As a result, abundant spare capacity exists, which prolongs the length of the cycle.”

All in all, the silver lining of our slow economic recovery is that another recession is a fair distance away, says Golub:

Therefore, Golub’s bull-market thesis remains intact: Price-to-earnings ratios will continue to expand, leading to double-digit returns over the next few years.

As the bull market turned five years old last month, MarketWatch’s Wallace Witkowski quoted Jeff Kleintop, chief market strategist at LPL Financial, who similarly noted theconnection between the end of bull markets and recessions. But Kleintop and other strategists asserted that for the bull market to continue, one key ingredient is acceleration in growth — not just a continuation of its sluggish pace.

By one analysis in the story, U.S. economic growth needs to hit 3% by the end of 2014 to keep the bull market alive, no easy task considering a slowdown in growth to start the year.

In the fourth quarter on 2013, GDP hit 2.4%. We’ll get one sign of just how fast the economy is humming along when we get a GDP report for the first quarter of the year on Wednesday.

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The Obama Administration Is Making Friends In All The Right Places. Big War Is Coming.

Before you assume that I have some sort of a grudge against the Obama Administration, I was not a big fan of the Bush Administration either. And while the Bush Administration was smart enough to limit itself to blowing up 1977 Toyota Pickup trucks full of Taliban fighters, the Obama Administration is hell bent on starting World War 3 with Russia and China.

While that war is still 15 years away, the moves the Obama Administration is making today (as I write this) will lead directly to what was outlined in this report Nuclear World War 3 Is Coming Soon.When, How & Why  Please note how accurately the fundamental analysis presented in that report is lining up with what is happening in the real world.

In the meantime, I present to you the brilliance of Obama’s foreign policy.

Meanwhile in the US, another day….another mass shooting. Police: 6 injured in shootings at Ga. FedEx hub……I give up.

nuclear explosion

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The Obama Administration Is Making Friends In All The Right Places. Big War Is Coming.   Google

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Stock Market Update. April 28th, 2014. InvestWithAlex.com

daily chart April 28 2014A volatile day with the Dow Jones up 87 points (0.53%) and the Nasdaq down 1 point (0.03%) for the day. 

There is a famous saying on Wall Street “Sell In May And Go Away” as the stock market tends to historically underperform during the summer months. Not always, but often enough that the pattern is easily recognized by most market participants.  While most people attribute the subject matter to seasonality, there is a clearly defined DNA sequence within the stock market that sets this pattern off. To be exact, it hits on May 19th of each year (Note: May 19th does not represent tops or bottoms, it represents the time benchmark of when this energy arrives in the market).

With market internals getting uglier by the day, there is a real possibility that 2014 “Sell In May And Go Away” time frame will be the worst we have seen in quite some time. Clearly since the beginning of the current bull market on March 6th, 2009.

This is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). 

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Stock Market Update. April 28th, 2014. InvestWithAlex.com Google

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Hedge Funds Are Shorting Small Caps…..Should You?

As per Bloomberg report below, hedge funds are starting to put out large bets that the best performing stocks (over the last few years) are set for a fall. To the tune of $2.8 Billion bet against the Russell 2000 in April alone.

Are these hedge funds on to something and should you follow? 

Yes and maybe. While the majority of the short positions were most likely put up as a hedge against declining markets, there is a growing group of short sellers that are going after the market on a net profit basis.

As per our mathematical and timing work (bear market of 2014-2017), such short sellers are positioning themselves in a proper way. Yet, this will not be an easy bear market to work with. Not even close. If I had to compare, the Dow will oscillate in a very similar fashion to the bear market that had occurred on the Dow between 2000 top and 2003 bottom. Or….a lot of highly volatile ups and downs that are guaranteed to drive both bulls and bears up the wall.

If you can operate in such an environment it might be a good idea to consider going short as soon as the bear market starts. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE.

Inflation or Deflation InvestWithAlex

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Hedge Funds Are Shorting Small Caps…..Should You?  Google

Bloomberg Writes: Hedge Funds Short Small Caps Most Since ’04 Russell Falls

Money managers are turning on stocks that have delivered the best returns during the bull market: small caps.

Large speculators such as hedge funds are betting $2.8 billion this month that the Russell 2000 Index will fall. That’s the most since 2012 and the highest versus average levels since 2004, according to data compiled by Bloomberg and Bank of America Corp. The about-face from a year of bullish wagers coincides with lackluster performance. The gauge of the smallest companies stands 7.1 percent below its 2014 high, trailing the recovery that has put the Standard & Poor’s 500 Index within 1.5 percent of a record.

Companies from KapStone Paper & Packaging Corp. to Cardtronics Inc. have climbed 20 times more than the S&P 500 since March 2009 amid faster sales and earnings growth. That’s also made them expensive. Valuations in theRussell 2000 rose above levels from the 1990s technology bubble. While small-cap shares are usually the first to benefit when economic growth picks up, the selloff reflects a loss of faith by professional investors in the five-year equity rally.

“Small-cap stocks are the most expensive I’ve ever seen them, and I’ve been doing this for 20 years,” Eric Cinnamond, manager of the $724 million Aston/River Road Independent Value Fund, said in an interview from Louisville, Kentucky. “There’s a lot of junk in the Russell 2000. If you’re a hedge fund, you’re seeing people starting to sell things like Netflix and Facebook and the biotechs, and a nice way to sell risk is to sell the Russell 2000.”

Biggest Speculators

The biggest speculators have increased short sales and bought hedges in most stocks as technology companies led a decline that erased $1 billion from American share values between April 2 and April 12. Traders including hedge funds cut holdings of Nasdaq 100 Index futures and turned bearish on the S&P 500 in the week ended April 15, according to data from the Commodity Futures Trading Commission.

In futures on the Russell 2000, whose constituents have an average market capitalization of about $1 billion, large speculators added to bearish bets that had reached $2.5 billion the previous week. Selling a futures contract is similar to a short sale, where a trader borrows and sells a security in the hope of profiting from a decline.

“It suggests a market that has become defensive,” Sid Mokhtari, a technical research strategist at CIBC World Markets Inc. in Toronto, said by phone on April 23. “We’ve seen defensive posturing in the market. We somehow have lost momentum in the small-cap space.”

Highest Valuation

The Russell 2000 last month reached a valuation of 10.8 times its members’ annual earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That was the highest since at least 1995 and compares with an average weekly ratio of 7.7 times Ebitda, the data show. The valuation was at 10.2 at the end of last week.

The Russell 1000 Index for larger stocks such as Apple Inc. and Exxon Mobil Corp. trades at 8.7 times Ebitda, close to the highest since 2001. The small-cap index carries an 18 percent premium relative to the large-cap measure, after reaching 23 percent in March and climbing to 26 percent in September, according to the data.

Russell 2000 futures gained 0.4 percent at 8:55 a.m. in London today, while S&P 500 contracts advanced 0.3 percent.

Embedded Premium

“If you look at the premium embedded in small caps through history, it tends to max out at 25 percent before reverting,” said Dan Morris, who helps oversee $569 billion as global investment strategist at TIAA-CREF Asset Management in New York. “We are still at fairly high levels, so it is not a good entry point for small caps versus large caps.”

Smaller companies have rallied as their earnings almost quadrupled between 2008 and 2013, according to data compiled by Bloomberg. Profits in the S&P 500 have gained 86 percent in the period, the data show.

“You get to a point where the valuation in small caps can get so high relative to large caps that the growth advantage is fully priced in,” Kevin Caron, a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, said by phone on April 23. His company oversees about $160 billion. “We may be pushing up against that limit.”

KapStone, the Northbrook, Illinois-based maker of paper and bags, has fallen 7.1 percent in 2014 after rising 40-fold between March 2009 and the end of 2013. The company boosted sales by an annual average of 28 percent during those years, data compiled by Bloomberg show.

Teller Machines

Cardtronics, which operates a network of automated teller machines, has fallen 24 percent this year after surging 41-fold from 2009 to 2013. Lakewood Capital Management LP said in a letter to investors on April 23 that it has started a short position in the Houston-based company.

Weakness in small-cap stocks is sometimes viewed as an augury for the broader market by analysts who consider the companies a harbinger for the economy.

During this month’s market retreat, the Russell 2000 fell almost twice as fast as the S&P 500 and remains 7.1 percent away from its March high. Other gauges considered bellwethers for the market, such as the Dow Jones Transportation Average and the Morgan Stanley Cyclical index, reached new records last week.

Professional investors are already bearing the brunt of selling in larger stocks. In the S&P 500, where companies have an average market value of $35.9 billion, shares with the highest levels of hedge-fund ownership fell twice as fast as the rest of the market during the week ended April 11, when declines reached the most in almost two years.

Missing Out

At the same time, hedge funds missed out on the most profitable short-sale opportunities. Shares borrowed and sold on expectations of a decline amounted to 0.2 percent of Facebook Inc.’s outstanding stock and 1 percent of Netflix Inc., down from 15 percent two years ago, according to data compiled by Bloomberg and Markit. Both stocks lost more than 20 percent from their highs in March.

Small caps were disproportionately punished in April due to disappointing economic data and will rebound as lending conditions and growth improve, said James Butterfill, head of global equity strategy at Coutts & Co. in London. Citigroup Inc.’s U.S. Economic Surprise Index, which drops when releases miss forecasts, fell on April 7 to the lowest since July 2012 as bad weather hurt data.

Longer Term

“Longer term, if you look at their fundamentals, aside from valuations, it suggests that small caps should continue to outperform,” Butterfill, who helps oversee $50 billion, said by phone on April 25. “There is a challenge in valuations, but people are willing to pay for that growth.”

Economists forecast the U.S. expansion will accelerate from what has been the slowest recovery since World War II. Gross domestic product will grow 2.7 percent this year and 3 percent in 2015, according to the median estimate in a Bloomberg survey.

Small caps have led the bull market as three rounds of monetary stimulus from the Federal Reserve drove investors into riskier assets. The Russell 2000 has returned 28 percent a year since March 2009, compared with a 24 percent increase in the S&P 500, data compiled by Bloomberg show.

The outperformance continued through April 2, even as earnings growth trailed large caps. Profitsfrom Russell 2000 companies shrank for a third quarter in the first three months of 2014, compared with average growth of 7.8 percent in S&P 500 stocks during that period. While thelarger companies exceeded analysts’ earnings estimates by a combined 5.8 percent in the first quarter, smaller firms beat by 0.3 percent, according to data compiled by Bloomberg.

Individual Stocks

Speculators have bigger bets against individual small caps too. Russell 2000 companies have on average 4.2 percent of their stock on loan, an indication of short-sellers’ activity, according to Markit data on Bloomberg. The average short-interest position on S&P 500 shares is 2.1 percent.

The short bets in Russell 2000 futures marked the biggest negative deviation from a mean since at least 2004, relative to historical positioning, according to data through April 15 compiled by Bank of America.

The recent performance of the smallest companies is indicative of broader concerns, according toUri Landesman, the president of New York-based Platinum Partners LLP.

“Small caps are in a riskier area of the market that hasn’t quite participated in this rebound, and they’re leading what will be a fairly significant correction in the market,” Landesman, who helps oversee $1.3 billion, said in an April 23 phone interview. “They aren’t going to recover right now. It’s a sign of some danger to come.”

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Will Russia View US Sanctions As A Declaration Of War?

As the Obama Administration readies to release it’s next round of Sanctions against Russia (see the list below), targeting Putin’s inner circle, Russia might just respond in kind by finally invading Ukraine. Why it is still unclear what it is exactly the Obama Administration is trying to accomplish in Ukraine, a nation 6,000 miles away from an American shore, it has been wildly successful in restarting the Cold War with Russia in a matter of 2 months. The progress the US and Russia have made together over the last 25 years to stabilize the world are out of the window. Great job Obama.

As I have mentioned before, the US has no business meddling in Ukraine or trying to push NATO up to Russia’s border. That destabilizes the entire region and that will eventually lead to some sort of a war. NATO’s presence in Ukraine would be equivalent to the Chinese or the Russians building a massive military base in Tijuana. Russia will not let that happen and it will go to war to prevent it, sanctions or not. Let’s now wait and see how Mr.Putin responds to Obama’s sanctions.  One thing is for sure, the US financial markets do not have Ukraine invasion priced in.    

In cartoon: Ukraine in crisis

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Will Russia View US Sanctions As A Declaration Of War?  Google

 

 

?OFFICE OF FOREIGN ASSETS CONTROL

Specially Designated Nationals List Update

The following individuals have been added to OFAC’s SDN List:
 
BELAVENCEV, Oleg Evgenyevich (a.k.a. BELAVENTSEV, Oleg); DOB 15 Sep 1949; Russian Presidential Envoy to the Crimean District; Member of the Russian Security Council (individual) [UKRAINE2].
CHEMEZOV, Sergei (a.k.a. CHEMEZOV, Sergey Viktorovich); DOB 20 Aug 1952; POB Cheremkhovo, Irkutsk, Russia (individual) [UKRAINE2].
KOZAK, Dmitry; DOB 07 Nov 1958; POB Kirovograd, Ukraine; Deputy Prime Minister of the Russian Federation (individual) [UKRAINE2].
MUROV, Evgeniy Alekseyevich (a.k.a. MUROV, Evgeny; a.k.a. MUROV, Yevgeniy; a.k.a. MUROV, Yevgeny); DOB 18 Nov 1945; POB Zvenigorod, Moscow, Russia; Director of the Federal Protective Service of the Russian Federation; Army General (individual) [UKRAINE2].
PUSHKOV, Aleksei Konstantinovich (a.k.a. PUSHKOV, Alexei); DOB 10 Aug 1954; Chairman of State Duma Committee on International Affairs (individual) [UKRAINE2].
SECHIN, Igor; DOB 07 Sep 1960; POB St. Petersburg, Russia (individual) [UKRAINE2].
VOLODIN, Vyacheslav; DOB 04 Feb 1964; POB Alexeyevka, Khvalynsk district, Saratov, Russia; First Deputy Chief of Staff of the Presidential Executive Office (individual) [UKRAINE2].
The following entities have been added to OFAC’s SDN List:
AQUANIKA (a.k.a. AQUANIKA LLC; a.k.a. LLC RUSSKOYE VREMYA; a.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU RUSSKOE VREMYA; a.k.a. RUSSKOE VREMYA OOO; a.k.a. RUSSKOYE VREMYA LLC), 47A, Sevastopolskiy Ave., of. 304, Moscow 117186, Russia; 1/2 Rodnikovaya ul., Savasleika s., Kulebakski raion, Nizhegorodskaya oblast 607007, Russia; Website http://www.aquanika.com; alt. Websitehttp://aquanikacompany.ru; Email Address [email protected]; Registration ID 1075247000036 [UKRAINE2].
AVIA GROUP LLC (a.k.a. AVIA GROUP LTD), Terminal Aeroport Sheremetyevo Khimki, 141400 Moskovskaya obl., Russia; Website http://www.avia-group.su/ [UKRAINE2].
AVIA GROUP NORD LLC, 17 A, Stratoyava St., Saint Petersburg, Russia; Website http://www.ag-nord.ru[UKRAINE2].
CJSC ZEST (a.k.a. ZEST LEASING), pr. Medikov 5, of. 301, St. Petersburg, Russia; 2 Liter a Pl. Rastrelli, St. Petersburg 191124, Russia; Website http://www.zest-leasing.ru; Registration ID 1027809190507; Government Gazette Number 44323193 [UKRAINE2].
INVESTCAPITALBANK (a.k.a. INVESTKAPITALBANK; a.k.a. OJSC INVESTCAPITALBANK; a.k.a. OPEN JOINT STOCK COMPANY INVESTCAPITALBANK), 100/1, Dostoevskogo Street, Ufa, Bashkortostan Republic 450077, Russia; SWIFT/BIC INAKRU41; Website http://www.investcapitalbank.ru; License 2377 [UKRAINE2].
JSB SOBINBANK (a.k.a. SOBINBANK), 15 Korp. 56 D. 4 Etazh ul. Rochdelskaya, Moscow 123022, Russia; 15/56 Rochdelskaya Street, Moscow 123022, Russia; SWIFT/BIC SBBARUMM; Websitehttp://www.sobinbank.ru; Registration ID 1027739051009; Government Gazette Number 09610355 [UKRAINE2].
SAKHATRANS LLC (a.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU SAKHA (YAKUTSKAYA) TRANSPORTNAYA KOMPANIYA; a.k.a. SAKHATRANS OOO), 14 ul. Molodezhnaya Rabochi Pos. Vanino, 682860 Vaninski, Raion Khabarovski Krai, Russia [UKRAINE2].
SMP BANK (a.k.a. BANK SEVERNY MORSKOY PUT; a.k.a. SMP BANK OPEN JOINT-STOCK COMPANY), 71/11 Sadovnicheskaya Street, Moscow 115035, Russia; SWIFT/BIC SMBKRUMM; Website www.smpbank.ru; Email Address [email protected] [UKRAINE2].
STROYGAZMONTAZH (a.k.a. LIMITED LIABILITY COMPANY STROYGAZMONTAZH; a.k.a. STROYGAZMONTAZH CORPORATION; a.k.a. “SGM”), 53 prospekt Vernadskogo, Moscow 119415, Russia; Websitewww.ooosgm.com; alt. Website www.ooosgm.ru; Email Address [email protected] [UKRAINE2].
STROYTRANSGAZ GROUP (a.k.a. STROYTRANSGAZ; a.k.a. “STG GROUP”), 3 Begovaya Street, Building #1, Moscow 125284, Russia; Website www.stroytransgaz.ru [UKRAINE2].
STROYTRANSGAZ HOLDING (a.k.a. STG HOLDING LIMITED; a.k.a. STG HOLDINGS LIMITED; a.k.a. STROYTRANSGAZ HOLDING LIMITED; a.k.a. “STGH”), 33 Stasinou Street, Office 2 2003, Nicosia Strovolos, Cyprus [UKRAINE2].
STROYTRANSGAZ LLC (a.k.a. OOO STROYTRANSGAZ), House 65, Novocheremushkinskaya, Moscow 117418, Russia [UKRAINE2].
STROYTRANSGAZ OJSC (a.k.a. OAO STROYTRANSGAZ), House 58, Novocheremushkinskaya St., Moscow 117418, Russia [UKRAINE2].
STROYTRANSGAZ-M LLC, 26th Meeting of the Communist Party Street, House 2V, Novy Urengoy, Tyumenskaya Oblast, Yamalo-Nenetsky Autonomous Region 629305, Russia [UKRAINE2].
THE LIMITED LIABILITY COMPANY INVESTMENT COMPANY ABROS (a.k.a. LLC IC ABROS), 2 Liter a Pl. Rastrelli, St. Petersburg 191124, Russia; Government Gazette Number 72426791; Telephone: 7812 3358979 [UKRAINE2].
TRANSOIL (a.k.a. LIMITED LIABILITY COMPANY TRANSOIL; f.k.a. OBSHCHESTVO S ORGANICHERNNOI OTVETSTVENNOSTYU TRANSOIL; a.k.a. TRANSOIL LLC; a.k.a. TRANSOYL SNG LTD.), 18A Petrogradskaya nab., St. Petersburg 197046, Russia; Website http://www.transoil-spb.ru; alt. Website http://transoil.com;Email Address [email protected]; Registration ID 1037835069986 [UKRAINE2].
VOLGA GROUP (a.k.a. VOLGA GROUP INVESTMENTS; f.k.a. VOLGA RESOURCES; f.k.a. VOLGA RESOURCES GROUP), 3, rue de la Reine L-2418, Luxembourg; Russia [UKRAINE2].

Bloomberg Writes: U.S. Plans to Hit Putin’s Inner Circle With New Sanctions

The U.S. and European Union will impose new sanctions as early as today on Russian companies and individuals close to President Vladimir Putin over the escalating crisis in Ukraine, officials said.

“We will be looking to designate people who are in his inner circle, who have a significant impact on the Russian economy,” Deputy White House National Security Adviser Tony Blinken said on CBS’s “Face the Nation” program yesterday. “We’ll be looking to designate companies that they and other inner-circle people control. We’ll be looking at taking steps as well with regard to high-technology exports to their defense industry. All of this together is going to have an impact.”

The seizure of international inspectors by pro-Russian separatists last week escalated the crisis after Russia began military exercises on Ukraine’s border where the North Atlantic Treaty Organization says Putin has massed about 40,000 troops. Ukraine’s southern air-defense forces are in “operational readiness,” the Defense Ministry said yesterday on its website.

Among those who may be hit by sanctions is Igor Sechin, the chief executive officer of OAO Rosneft (ROSN), according to people familiar with developments. Sechin is a Putin confidant.

EU Discussions

Representatives of the 28 EU states will meet today to widen a list of people subject to asset freezes and travel bans, an official from the bloc said over the weekend. The sanctions will target 15 Russians in positions of power, another diplomat said. Both asked not to be identified because of the sensitivity of the matter.

“What we will hear about in the coming days is an expansion of existing sanctions, measures against individuals or entities in Russia,” U.K. Foreign Secretary William Hague told Sky News television yesterday. “Already we have seen more than $60 billion of capital flight out of Russia so far this year, and serious falls in the Russian stock market. So no one should underestimate the impact on Russia and Russia’s own interests of continued escalation of this crisis.”

Russia has stoked tensions in Ukraine with “threatening” military maneuvers and by “taking no concrete steps” to implement an April 17 accord meant to calm the crisis, the Group of Seven nations — the U.S., the U.K., France, Germany, Italy, Canada and Japan — said in an April 25 statement.

Military Drills

Early this morning, a group of 30 gunmen seized a state security building in the city of Konstantinovka, the press secretary of the Donetsk regional police said by phone.

Ukraine’s foreign minister, Andriy Deshchytsia, said he would travel to Vienna to discuss with international officials Ukraine’s contention that Russia was not complying with the Geneva agreement and that Putin’s administration was not allowing monitors to observe its military drills.

“We are going to discuss today in Vienna the implementation of the Vienna document that allow international observers to monitor military drills that now have started near Ukraine’s borders,” Deshchytsia told Bloomberg television today. “Russia does not want to comply with it.”

In the wake of those capital outflows and a credit-rating downgrade by Standard & Poor’s, Russia’s central bank unexpectedly raised its key interest rate to 7.5 percent on April 25.

Markets Sag

Russia’s Micex Index fell 1.38 percent to 1,262.46 by 11:39 a.m. bringing its loss this year to 16 percent. The ruble has lost almost 9 percent this year against the dollar, the second-worst performance among 24 emerging currencies tracked by Bloomberg after Argentina’s peso.

Sanctions previously imposed by the U.S., the EU, Canada and other allies targeted a number of Putin’s associates and top officials, as well as St. Petersburg-based OAO Bank Rossiya.

Executives at OAO Gazprombank, Russia’s third-largest lender, are preparing for possible sanctions, two people with knowledge of the deliberations said last week, while development lender Vnesheconombank is taking precautions, according to a person familiar with talks at the lender.

U.S. Senator Bob Corker of Tennessee, the top Republican on the Foreign Relations Committee, called on President Barack Obama to impose sanctions on four of Russia’s largest banks and OAO Gazprom (OGZD), the country’s gas-export monopoly.

Largest Banks

“Hitting four of the largest banks there would send shock waves through the economy,” Corker said on CBS yesterday. “I just think we need to hit him much more toughly,” he said of Putin.

Some U.S. officials warn that broader sanctions, those that affect ordinary Russians and not just the oligarchs in Putin’s inner circle, may backfire to the Russian leader’s benefit. Ordinary Russians would probably rally behind Putin and allow him to blame the U.S. and its allies for the country’s economic woes.

Three officials, all of whom requested anonymity to discuss internal policy deliberations, said financial and other sanctions are unlikely to deter Putin. His goals are to destabilize Ukraine; ensure Russian domination of portions of it, as well as the Transnistria region of Moldova; and make the government in Kiev subservient to his.

China’s government said it did not support sanctions.

“We believe that sanction will not help solve the problem but, on the contrary, escalate the situation,” Chinese Foreign Ministry spokesman Qin Gang said. “Sanctions will not serve the interests of any party.”

Coordinated Measures

The planned EU moves are not set to include broader trade, financial and economic measures against Russia, known as “stage three” sanctions. Hague said work on those is continuing.

“It’s going to be more effective if everybody signs on and everybody’s committed,” Obama told a news conference yesterday in Putrajaya, Malaysia. “We’re going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified, rather than this is just a U.S.-Russia conflict.”

In addition to sanctions, some U.S. Republican lawmakers, led by Arizona Senator John McCain, are pushing the Obama administration to send anti-tank, anti-missile and other weapons to Ukraine’s military. Blinken, the White House adviser, dismissed that suggestion, saying the administration focus is on economic assistance.

Weapons “wouldn’t make a difference in terms of their ability to stand up to the Russians,” Blinken said on CNN. The U.S. will focus on “professionalizing” Ukraine’s military, while stopping short of providing lethal aid, he said.

Meanwhile, pro-Russian separatists freed one international observer from a group of 11 taken captive three days ago in the eastern Ukrainian city of Slovyansk. Negotiators for the Organization for Security and Cooperation in Europe left the city following the release of the observer, a Swedish officer who is diabetic, the Russian news agency RIA Novosti reported.

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Weekly Stock Market Update & Forecast. April 26th, 2014. InvestWithAlex.com

daily chart April 25 2014

Weekly Update & Summary: April 26th, 2014

With a substantial decline on Friday, the Dow Jones lost 47 points (-0.29%) and the Nasdaq lost 20 points (-0.49%) for the week. Structurally, all markets have opened up a large gap this Friday. Suggesting a near term upswing to close it. While the short-term upswing is probable, the Dow continues to have two near term gaps to the downside, the one on April 14th and a large gap on April 16th. Indicating an upcoming correction. Further, there are a number of smaller gaps left leading all the way down to February 5th low.  The Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).

WEEKLY REVIEW:

100% Of Economists Agree Yields Will Rise.
What That Means Should Send Chills Down Your Spine

As you know, I have very little (if any) respect for economists. It’s a worthless profession where they tend to do more harm than good (Greenspan, Bernanke, Yellen).Plus, things they do have very little application in the real world. Let me put it this way……if the economists knew what they were talking about they would be making millions on Wall Street instead of arguing if the GDP growth of Zimbabwe will be 2.6% or 2.9% in the year 2019.

However, when 100% of surveyed economists expect yields to rise you better perk up and pay attention. From a contrarian point of view.  In Bloomberg’s recently conducted survey, 67 out of 67 Economists expect interest rates to rise over the next 6 months. In other words, they expect continued economic growth and an eventual tightening by the FED.

10 Year Note Chart

That flies in the face of our forecast. In the past I have shown that we expect yields to fall and the yield curve to flatten as the US Economy falls into a severe recession between 2014-2017 What Does The Yield Curve Yield?  In fact, over the next 12 months the FED will be looking for ways to stimulate the economy and to print, instead of tightening. As far as I am concerned, 100% of the economists agreeing on the opposite is a direct validation of that view.

Don’t forget, our mathematical and timing work shows a severe bear market between 2014-2017. When it begins to develop, it is only rational that yields decline.

Tech Bubble 2.0 Is Here: Why High Flyers Will Collapse
To The Tune Of 70-90%. Scary!

David Einhorn of Greenlight Capital certainly thinks so…… 

“Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it. The current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm,” The firm said it was shorting a group of undisclosed “high-flying momentum stocks.”

We have maintained the same view for quite some time now. With unprecedented level of speculation, overvaluation, FED printing, IPO insanity and asset price inflation, today’s fundamental situation is not that dissimilar to 2007 top.  And while Mr. Einhorn is not particularly sure about the timing, we are.

The upcoming collapse in high flying tech specs will unfold in short order as our mathematical and timing work indicates. Again, our work shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years.

New Home Sales Plunge. Why The Upcoming Real Estate Crash Will Be Much Worse Than The 2006-2010 Decline

As per the Commerce Department report released earlier today new home sales have collapsed 14.5% to an eight month low.  While industry insiders blame everything from unusually cold weather to baby Jesus for this catastrophic drop, the reality is quite simple. The real estate market is slowly rolling over into a massive bear leg (stage 3) after it’s “dead cat” bounce between (2010-2014). I have outlined all of this in my comprehensive report dating back to October of 2013. Real Estate Collapse 2.0 Why, How & When Thus far, it’s playing out exactly as I predicted.

Here is what most people don’t get. Secular bear markets do not move in straight lines nor do they move fast. Just as bear/bull cycles in the stock markets last 17/18 years, same applies to the real estate cycles.

  • Real Estate Bull Market: Arguably, the US real estate boom began at 1991 recession bottom. It lasted until 2006/07 top or 17 years. Stock market equivalent: 1982-2000 bull market.
  • Stage 1 – Initial Bear Market Leg In Real Estate. 2007-2010 (3 years). Nationwide, prices declined 20-40%. Stock market equivalent: 2000-2003 Bear Market. The Dow declined  about 40%.
  • Stage 2 – Real Estate Bounce.  Also known as the “Dead Cat” bounce 2010-2014 (4 years). Stock market equivalent 2003-2007 bull market.
  • State 3 – Real Estate Collapse:  2014-2017. Stage 3 collapses are notoriously sharp, fast and very nasty. The stock market equivalent would be the bear market of 2007-2009 when the Dow lost 56% of it’s value in 18 months.

Conclusion: While the analysis above is fairly simplistic, it is also extremely accurate when we take our mathematical, timing and cycle work into consideration. The analysis above clearly indicates that the real estate market/sector is about to eat dirt in a massive and a severe Stage 3 decline. This is further confirmed by the undying love for Real Estate in today’s American culture.

Remember, before any bear market terminates itself any sense of “love for an asset class” must be crushed out of the prevailing culture. I am afraid we are at least a decade away from that point when it comes to the American Real Estate.

MACROECONOMIC ANALYSIS:  

Ukraine/Russia/USA/EU/NATO  continue to  be the most important issue. In fact, I continue to believe things will escalate significantly over the next few weeks.

As predicted in last week’s report, Geneva Accord  did not hold up. As of today, it is nothing but a distant memory for all involved.  I continue to believe the US/NATO, Ukraine’s Interim Government, Pro-Russian Movement In the East Ukraine and Russia are one spark away from reigniting this conflict and going at each other on multiple levels.  While I don’t believe NATO and Russia will get involved into a direct military conflict (for the time being), any misstep here by either side might lead to Russia invading East Ukraine. In fact, I continue to believe it is just a matter of time. Such a move by Russia will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences.  As you can imagine, this would be incredibly unsettling for financial markets.  The upcoming week is critical.

TECHNICAL ANALYSIS THE FOR DOW JONES:  

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last two weeks. Yet, that in itself can be misleading as per our timing analysis discussion below.

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.

Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.    

MATHEMATICAL & TIMING ANALYSIS:  

(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public.  As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If  you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).

In conclusion, xxxx

Longer-Term Overview:

The next long-term turning point is located at

Date: XXXX
Price: XXXX

XXXX

Trading:

I am now fully committed to the xxxx of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.

Remember, you should have an exact strategy and entry/exit points based on the forecast above. 

The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.    

Stock Entry Point ($) Action Taken Stop Loss @
xxxx xxxx xxxx 91
xxxx xxxx xxxx 1250
xxxx 110 xxxx 121-123
xxxx 74 xxxx 80
xxxx xxxx xxxx 260
xxxx xxxx xxxx 460
xxxx 35 xxxx 39
xxxx 65 xxxx 70
xxxx 120 xxxx 120-130
xxxx 100 xxxx 108-112
xxxx 112 xxxx 120

Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader:  XXXX

If No Position:  XXXX

If Long: XXXX

If Short:  XXXX

CONCLUSION: 

An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here.  Those anticipating the moves and those who can time them properly will be rewarded appropriately.

END OF UPDATE——–

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start. 

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Weekly Stock Market Update & Forecast. April 26th, 2014. InvestWithAlex.com  Google

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Stock Market Update. April 25th, 2014 InvestWithAlex.com

daily chart April 25 2014

A significant down day with the Dow Jones down 140 points (-0.85%) and the Nasdaq down 73 points (-1.75%). 

Even though both the S&P and the Dow are a stone throws away from their all time highs, market internals are getting ugly. We have already discussed that in the past. What concerns me the most today is to what an extent the Obama Administration is going to play chicken with Russia.

If you have been reading this blog, you know that I have maintained a fairly accurate stand (for over a month now) that Russia will invade Ukraine one way or the other. It has no other option as it must stop NATO’s expansion up to it’s borders.  For Russia it’s a matter of national security.  With Russian jets entering Ukrainian airspace as I write this and with Russian special forces already operating in East Ukraine, it’s a forgone conclusion.

The real question here is how far the US is willing to go and what impact Obama’s actions will have on the US Economy. That’s right, the US Economy….not Russian economy. While most media pundits are completely oblivious to the subject matter with their American chest beating patriotism, economic warfare against Russia will only accelerate the upcoming and severe US Recession/Bear Market of 2014-2017. Make no mistake about that.

This is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). 

 

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Is Gold Really Going To $5,000? My Answer Will Shock You

I have very little respect for Peter Schiff. His predictions and timing in the past have been notoriously wrong. Plus, from what I have heard his clients are losing a lot of money. With that said, his call for Gold $5,000 (see the article below) might actually hold water. Believe it or not, his prediction somewhat matches our forecast.

The macroeconomic setup for gold today is very similar to what we have experienced back in 2007 when the gold price ran up from $600 an ounce to over $1,800 an ounce over a 5 year period of time. Are we in for a repeat? I believe so.

As per our mathematical and timing work we are about to enter a sever bear market that will last between 2014-2017. With the US Economy in deep recession, the FED will be looking at any possible avenue to re-inflate the markets and flood the system with more liquidity. Not tighten. As you can imagine, collapsing equity markets and loose monetary policy by the FED are great drivers for Gold. As such, we wouldn’t be surprised to see Gold between $4,000-5,000 over the next 3-5 years.

Just as a quick note. Stay away from Crazy Perma Bears (like Peter Schiff) who expect an outright stock market collapse and the DOW 1,000. Based on our timing and mathematical work it’s not going to happen. Not even close. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

gold investwithalex

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Is Gold Really Going To $5,000? My Answer Will Shock You  Google

Market Watch Writes: Peter Schiff: Reckless Fed may push gold to $5,000

SAN FRANCISCO (MarketWatch) — Peter Schiff, chief executive officer of Euro Pacific Capital, has been known to make forecasts outside the mainstream, and his long-running belief that gold has the potential to hit $5,000 an ounce is no exception. Prices, after all, are struggling to get a grip on $1,300.

We caught up with Schiff to ask him how gold, a big disappointment for commodities investors last year, gets back its groove. Last year, gold futures GCM4 +0.79%   and heavyweight ETF SPDR Gold Trust GLD +0.59% lost 28%, breaking at least eight years of annual gains.

First off, Schiff’s gold forecast isn’t brand new. The author of “The Real Crash — America’s Coming Bankruptcy” has talked about the possibility of gold hitting $5,000 or higher since at least 2011, when prices for the metal topped $1,900 in intraday trading.

Schiff reiterated his call on the potential for $5,000 gold and beyond during a heated debate with Paul Krake of View from the Peak onCNBC’s “Futures Now” episodeposted on April 15.

In an email interview with MarketWatch this week, he offered his thoughts on exactly why he expects gold prices to continue to climb and under what circumstances, what it would take to change his bullish outlook on gold and whether prices for the metal have already hit bottom this year.

Here’s MarketWatch’s full email interview with Schiff that concluded Wednesday:

Q: Before this year began, what were your expectations for gold prices and how does that compare with the metal’s performance year to date?

Schiff: I thought that the selloff in 2013 was completely out of touch with reality, so I expected the price to rise this year. In this, I was virtually alone in the financial community. Just about every major investment house had predicted even more losses for gold in 2014.

So far this year, gold is the best-performing asset class, but I think the pullback we have seen over the last few weeks is just another indication of how much negative sentiment remains. Ultimately however, the fundamentals will prevail. The Fed will keep printing [dollars] and gold will keep rising.

Q: In a recent interview with CNBC, you said the Federal Reserve’s quantitative-easing program will push gold to $5,000 an ounce. Could you explain that a bit further? What’s your time frame for that forecast? [Watch: Gold bear takes on bug: ‘You’re miles off base’]

I believe the consensus expectation that the U.S. recovery is real and that the Fed will end its [quantitative-easing] program and normalize interest rates is wrong.

Over the past few years the Fed had become [a] serial mover of goal posts, delaying the decision to end stimulus more than anyone would have predicted. When the Fed has to admit that its forecast of a sustained recovery is wrong, it will come to the aid of a faltering economy with even more QE. When that happens, gold will rally.

Last year’s selloff was based [on] the expectation that a strong recovery will lead to tighter monetary policy, which would then undercut the reason for buying and holding gold. That is a false assumption.

Q: Could you offer your thoughts on other factors you see as most influential to the gold market this year, including China?

A renewed weakness in the dollar and strength in oiland other commodities will add to gold’s appeal during 2014. Also, any major geopolitical concerns, particularly if there is a deterioration of the situation in Ukraine, will add to gold’s appeal. I also expect renewed physical demand from emerging markets like India and China.

The World Gold Council recently forecast that Chinese gold demand will rise 20% by 2017 from the current level of 1,132 metric tons a year.

Q: What might alter your bullish outlook on gold?

Gold would certainly be hurt if the Fed surprised the markets by actually ending QE and tightening policy. But that is very unlikely to actually occur.

Q: What would you say to investors who are discouraged by gold’s performance so far this year? (Futures are prices up around 7% year to date, but only partially making up for last year’s plunge.)


FactSetEnlarge Image

Be patient. Many investors in the 90’s believed that gold was a dead asset class. But in the 10 years from 2001 to 2011, gold increased almost 900%. The moves come in waves.

Q: With prices currently under $1,300 an ounce, have prices hit bottom for this year? Is gold a bargain at these levels — is it a good time to buy now? Please explain.

Most likely prices have bottomed, as too many speculators are looking for lower prices. The fundamental case for gold has also never been stronger. From a gold short seller’s perspective, this will prove to be the equivalent of a perfect storm. Their losses will be severe. [Read about gold contrarians saying it’s time to start buying.]