I couldn’t agree more. Let’s take a look

The world’s largest investor says negative rates are breeding a disaster for the economy

Not nearly enough attention has been paid to the toll these low rates — and now negative rates — are taking on the ability of investors to save and plan for the future. People need to invest more today to achieve their desired annual retirement income in the future. This reality has profound implications for economic growth: consumers saving for retirement need to reduce spending if they are going to reach their retirement income goals and retirees with lower incomes will need to cut consumption as well.

I have said it before and I will say it again. The FED has pushed the envelope to such an extent that I cannot see how we can get out of this unscathed. To say the least. Today’s environment is equivalent to a dying patient being pumped full of drugs just to stay alive for a few minutes more. Yet, the final outcome is now a foregone conclusion.

How bad a slowdown do you need for a real wake-up call?

It’s hard to figure out exactly what the Sputnik moment will be, but it will come from one of three areas.

One is a market accident. This notion that suddenly there is an instability and you get very large moves in financial markets that then threaten the economy. We got close to that in January and February.

To be honest I am amazed by the blatant disregard of risk in today’s market environment. Particularly when the wheels are coming off of the economic growth and stocks are selling at Shiller’s P/E of 26.  But this is not the first time I am seeing this kind of an environment. I saw the same in 1999-2000 on the Nasdaq and in 2007 in real estate/credit markets.

Invest accordingly.

Over the last few days and in the last night’s update we looked at the bullish side of the story. Let’s now switch gears and see what the bears think. Here is just a small sample….

• Risk of a recession may be higher than you think
• Warning: No volume behind 8-week Nasdaq advance
• You Call This A Bull Market? 
• Investors Stockpile Cash, In Latest Hint that All’s Not Well for Stocks

Let’s for a second forget about the fundamentals, which point to a bubble, and concentrate strictly on the technical side of the equation. At this juncture a good technician should be able to argue both sides of the market with conviction. In other words, the market finds itself at an important inflection point with multiple indicators pointing in different directions. We either initiate a breakdown from today’s levels or the rally is likely to continue. Not much help here, I know.

I will leave you with this. None of the indices put in an important base at January/February lows. The rally off of this low was entirely too loose, too fast and with no heavy volume supporting it. Plus, a number of large open up gaps remain. Typically, from a technical perspective alone, such rallies (or bounces) tend to fail at the rate of 80-90%.

4/12/2016 – A positive day with the Dow Jones up 166 points (+0.95%) and the Nasdaq up 38 points (+0.80%)

On February 10th, 2016, as the stock market was selling off and investors were literally panicking, I published the following daily update.  Financial Media Predicts Armageddon – Time To Go Long?

In that article I had the following allocation….

• Cramer: Extreme valuations point to a recession – Really? Correct me if I am wrong, but I recall Mr. Cramer calling all bears “Idiots” in May of 2015 and suggesting that the stock market was undervalued at the time. Now, 10-15% lower, it is overvalued?

Well, that’s quite interesting. Just as the market was bottoming Mr. Cramer was screaming doom and gloom. Advising people to stay out of the market and not to go long under any circumstances. Let’s fast forward to today.

• Cramer: Signs an earnings explosion is coming
• Cramer: Is anyone listening to Yellen?
• Cramer: Bernie Sanders spoiling the earnings mood

“When everyone dislikes the market, as so many people do, you can’t expect all the goods stocks you like to be on the new-high list. But when you see this kind of distribution, you know that the leadership is there. Others will follow,” Cramer said.

So, let me get this straight. When the market was putting in a bottom, Mr. Cramer was extremely bearish. But now, after a powerful 10-15% bounce, he expects further and massive upside? If anything, investors should use this as a contrarian indicator.

Tomorrow morning we will look at the other side of this equation.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, 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 when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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). Daily Stock Market Update. April 12th, 2016  InvestWithAlex.com

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I think this would be a good time to repost this video. It is as applicable today, if not more so due to higher valuations, than a few weeks ago. David Stockman delivers a very simple message. While the US Economy is hitting a major deceleration point and GAAP earnings are down 18%, the stock market is being driven ever higher into a fantasy land. And that can only end one way. I couldn’t agree more with David’s view and I highly recommend you watch the video below.

Google

4/11/2016 – A negative day with the Dow Jones down 20 points (-0.11%) and the Nasdaq down 17 points (-0.36%). 

According to the mainstream media the market is about to surge higher.  No matter what the Q-1 earnings are. In fact, the worse these earnings are, the higher we will go…..

• Earnings season will be awful — Here are 2 reasons why you shouldn’t panic
• Standby for terrible news from Wall Street …

“With the big fall in oil and big dollar appreciation behind us and with manufacturing ISM rebounding there are good reasons to believe that the slowdown in S&P500 earnings is temporary and we should over the coming quarters see a rebound is overall earnings,” Slok said in an email on Sunday. “So yes, earnings have been slowing but given the turnaround in oil and the dollar, earnings are likely to accelerate again over the coming quarters.”

I have to admit, in their own twisted way, their login appears to be solid. If the earnings are not as bad, if the forward guidance is positive, if the bad news is out, etc….stocks are likely to accelerate to the upside.

That is true. Yet, here are a few more considerations we have to add into the mix….

1. GAAP earnings are already down 18% from a year ago. Thus far, the stock market hasn’t priced that in.
2. There no evidence that either earnings or the US Economy are about to improve. Oil, USD or not.  On the contrary, a solid argument can be made that we are at a major deceleration point.
3. I doubt very many companies will issue positive or aggressive guidance in today’s market environment. They are likely to guide down again.
4. With Shiller’s Adjusted S&P P/E is at 26, the market is priced for perfection. To say the least.

When we drop all of the above into the Q-1 earnings mix, a different picture emerges. While it is entirely possible the market will rally, it is just as likely the market will snap back in a violent fashion to cover today’s massive “earnings Vs. valuations” divergence. Invest accordingly.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, 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 when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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). Daily Stock Market Update. April 11th, 2016  InvestWithAlex.com

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4/8/2016 – A positive day with the Dow Jones up 35 points (+0.20%) and the Nasdaq up 2 points (+0.05%) 

It is clear why the bears would be furious with the FED. As was covered on this blog earlier….Bulls Predict New All Time Highs. Will The Market Deliver? and Central Bank Mafia Goes All In…Stocks Rally…A Little

But, why in the world should bulls be upset?

Allow me to explain. First, today’s perceived bullish backdrop is a mirage. Must I remind you that the NYSE (largest index by capitalization) is still down 10% from two years ago. Second, how do you expect to make money when Shiller’s Adjusted S&P P/E ratio is at 26. The third highest level in history, behind 1929 and 2000 tops. All while GAAP earnings are down 18% from a year ago and with no hope for recovery.

Most importantly, the bulls must realize the following. No one makes money with the backdrop above. Under the best of circumstances investors should be able to maintain their capital base, but they will not increase it. Over 200 years of market data says so.

Investors tend to make money when the market has collapsed and stocks are liquidated. And if you have enough conviction to buy at those inflection points, as I did in March of 2009, you will make a fortune. With quite a few stocks zooming up at 5-10X or more to the market.

Very few stocks (if any) will do that in today’s market environment. As a result, you should be furious. And while most bulls don’t realize this yet, the FED has taken away their ability to generate any sort of a return.

Now that I have that out of my system, consider the following…..

• One of the best signals in the stock market is saying it may be time to sell
• The Coming Default Wave Is Shaping Up to Be Among Most Painful
• The divergence that’s worrying the stock market’s bulls
• ALBERT EDWARDS: A ‘tidal wave’ is coming that will throw the US into recession
• Nomura’s Bob “The Bear” Janjuah: “The Question Is What Would Be Necessary For The Fed To Do QE Or NIRP”

I am also even more convinced now that we are about 10 months through a multi-year bear market that likely won’t bottom until late 2017 or early 2018. This will be a stair-step decline with all the strength to the downside punctuated by occasional (very) violent bear market counter-trend rallies driven by short covering, hope and residual (albeit rapidly decaying) belief in policymakers.

I still feel confident that we will see 1500s on the cash S&P500 index in late Q2 or Q3, and some of the things I look at suggest a final bear market bottom for the cash S&P500 index around the same levels as the 2011 lows of sub-1100. However, this is a longer-term idea that will be subject to refinement. The focus must be on the next few days, weeks and months.

I couldn’t have said it better myself. But hey, who am I to tell you not to go long here!!!

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, 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 when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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). Daily Stock Market Update. April 8th, 2016  InvestWithAlex.com

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