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Can Negative Interest Rates Save The US Economy/Markets?

negative interest rates investwithalex

I should have said negative interest rates and more QE. The short answer is, don’t bet on it.

Is the US headed for negative interest rates?

While most investors still think the FED will raise interest rates in the near future, quite a few people are beginning to realize that it will not happen. On the contrary, given the state of today’s economy and earnings, the FED is just as likely to go negative.

That works perfectly with our notion that a double bottom in 10-Year Note is still coming.

Listen, interest rates can only invert so far. I would say that an inversion over 3% would point to all out monetizations. And that’s an entirely different story with its own set of problems.

And while rates can invert up to that extent, I don’t believe such a change will have a meaningful impact. The velocity of that credit/capital has already worked itself through the system between 2008 and now. Additional capital will have minimal impact. Simply put, there is nothing to invest in.  On both capital and expenditure side.

Z30

Can Negative Interest Rates Save The US Economy/Markets?  Google

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Are We Witnessing Early Stages Of “Earnings” Down Spiral?

Daily Chart October 21 InvestWithAlex

10/21/2015 – A down day with the Dow Jones down 48 points (-0.28%) and the Nasdaq down 40 points (-0.84%). 

I believe so. Just a few quick bearish data points for today.

First, Economy ‘caught in a vicious cycle’: Larry Summers 

“We’re caught in a vicious cycle. Incomes are too low, therefore investments are too low. … We need to get out of that cycle,” he said. He called for smart tax reform and rules to discourage the kind of activism that strips cash out of companies.

He is right about both low interest rates and this vicious cycle. The problem is, we have pushed today’s “Economic Miracle” just about as far as it can go. That is, before it promptly blows sky high. The demand won’t go up because Zero Interest Rates and QE have created overcapacity in just about every sector.

And give today valuation levels, there is nothing to invest in. To speculate in, sure, but not to invest in. Unfortunately, this “vicious cycle” cannot be resolved until and unless we go though another recession, financial crisis or worse.

Second, the market’s hottest sector is about to face trouble: Technician

“The discretionary sector might be in store for the same a corrective move within the broader long-term uptrend,” predicted Stockton.

My question is, how many more sectors would have to correct before a bear market is evident? It is important to remind everyone that, despite this massive rally off of August 24th lows, most indices and sectors are selling well below their May/Summer highs.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 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. October 21st, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Are We Witnessing Early Stages Of “Earnings” Down Spiral? Google

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Investment Wisdom Of The Day

Ferrari (RACE) is going public. Not that we need another reference point to suggest that we are at a major long-term top, but there you go. Like its cars, Ferrari shares won’t come cheap or easily Should you load up? Well, with a ticker symbol like RACE and its general overvaluation, the advice below is more appropriate than ever.

car is cheaper

z33

Investment Wisdom Of The Day Google

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Will Putin Destroy Saudi Arabia

putin-salman-sword

If you have been following this blog for any length of time you know that I have been consistently right in regard to numerous geopolitical and macro economic issues. Particularly, the war in Syria, subsequent NATO action in Ukraine and Mr. Putin’s thirst for vengeance (for Ukraine and economic warfare against Russia).

I don’t think there is a doubt that Russia will destroy ISIS and stabilize Syria over the next few months. Forging a powerhouse alliance between Syria, Iran and Iraq in the process. But, I don’t think that would be Mr. Putin’s end game.

To accomplish a complete victory he must destabilize and collapse Saudi Arabia. I believe that is to be his end game at the present moment. Such a development would deliver a major blow to the US in the region, cement his power and bring the price of oil back up (buy oil?).

And that might actually happen much faster than anyone believes.

With that in mind, while Mr. Putin is delivering major blows to the US Interests in the region, here is the response from our “best and brightest” Brookings Scholar to Vladimir Putin: Fight Me!

Seriously?!?! 

It appears a bunch of five-year-olds have taken over all branches of our government, media, education, etc….

Z31

Will Putin Destroy Saudi Arabia  Google

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Is Another Crash Possible In Today’s FED “Controlled” Market?

1987 crash investwithalex

It has been exactly 28 years since the market really “crashed” in October of 1987. Well, if we don’t count Nasdaq’s 2000 “mini crash”.  On that day in 1987, the Dow Jones Industrial Average plunged a gut-wrenching 508 points, or 22.6%.

But, here is what everyone forgets. At least according to this article. Everyone forgets the most important thing about the Black Monday stock market crash of 1987

  • Stock market crashes don’t lead to recessions. The stock market follows GDP.

My Comment: Actually, it’s the opposite. It is the stock market that leads the economy/GDP, etc….. and not the other way around. And crashes do lead to recessions or worse. Just take a look at 1907 or 1929 or 1937 or 1946 or 1972 or 2000 or 2007. At all of those junctures the US Economy was booming. That abruptly changed when financial markets headed lower. At times in a violent fashion.

  • They are great buying opportunities as stocks always recover. 

My Comment: Long-term YES, but at certain junctures it takes time. A very long time. Plus, it depends on where we are in the cyclical composition of the market. The reason 1987 crash was recovered so fast was due to the fact that we were just starting a 1982-2000 bull market. On the flip side, the 1929 crash took over 20 years to recover. Well, 50 years of a flat inflation adjusted market if we go back to the termination of a previous bull market in 1899.

Is a crash possible in today’s FED controlled market?

Most people or professionals will argue that the answer is a clear NO. The FED has too much influence on what the market does. My answer is a most definite YES. For a very simple reason. When no one expects something to happen, it often does. Particularly, when it comes to financial markets.

Z31

Is Another Crash Possible In Today’s FED “Controlled” Market?  Google

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Go Bull Or Go Home

Daily Chart October 19 InvestWithAlex

10/19/2014 – An up day with the Dow Jones up 15 points (+0.09%) and the Nasdaq  up 19 points (+0.38%) 

Forget about 2000 and 2007 bear legs. By now most money managers have forgotten about what had happened in August. BARRON’S: Wall Street’s big money is more bullish on stocks today than before the market chaos in August

That’s why I thought it would be an opportune time to re-post this little gem.

I couldn’t agree more with Mark Spitznagel here. Apparently he made over a Billion (at least Intraday) during August’s market drop. It appears that our fundamental and market views match up to about 95%. So, instead of me yapping about this for the 100th time, I will let Mark tell you what he thinks.

“If August was scary for people, they ain’t seen nothin’ yet.”

If you participate in financial markets, this interview is definitely worth a few minutes of your time.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 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. October 19th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Go Bull Or Go Home  Google

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Is The Bull Market Back?

Daily Chart October 16 InvestWithAlex

10/16/2015 – A positive day with the Dow Jones up 74 points (+0.43%) and the Nasdaq up 16 points (+0.34%) 

Despite this week’s drama and high octane sell-offs and rallies, the overall market was able to push only marginally higher.  Although, I must say, the sentiment is definitely bullish.

A few things to consider as we move into the weekend.

As my earlier posts throughout the week indicated, most corporates are missing their earnings targets and/or guiding lower. And while we already talked about WalMart, here is what the Netflix had to say Netflix blames weak U.S subscriber adds on new chip-based cards

“It’s just the dumbest thing I’ve heard,” Wedbush Securities analyst Michael Pachter said. “It begs a million questions,” he said.

I couldn’t agree more. I wonder how many companies will use this innovative excuse going forward. Yet, my view remains the same.

The reality is a little bit different. I think a high percentage of companies will guide lower or miss earnings.  Now that that the QE and zero interest rates have worked their way though our financial system, the US Economy is rolling over into a severe recession. And there is nothing anyone can do to stop it. Given today’s overvaluation levels, that is not a good sign for the overall stock market.

But hey, what do I know….Bill Miller: Now is perfect time to buy US stocks

“But we also want people to take money out of stocks because they hate them, so they’re cheap,” he said in a ” Squawk Box ” interview. “That’s exactly the environment we have today.”

I especially love it when they all laugh at 1% treasury yields, followed by an always convenient, “Where else are you going to put your money?”

What these Bozos don’t get, as both Carl Icahn and I have outlined a number of times before……it is a hell of a lot better to earn 1% than to take a 30-50% haircut on your capital. Just as people found out 2000-2002 and then again in 2007-2009.

On the flip side, consider the following

For Yamada, it’s only a matter of time before the S&P 500 hits the next level of resistance, and investors should be prepared for what could be the start of sharp selling. “A lot of these rallies tend to bring us to a place of complacency before the bear claw may come out again to strike,” she warned. “We are skeptical of this rally.”

Who is right?

No one and everyone. That’s what makes the market. Yet, the fundamentals are fairly clear. The stock market, based on Shillers Adjusted S&P P/E Ratio, is at the 3rd highest valuation level in history. Right behind 1929 and 2000. At the same time and as evident from Q-3 reports thus far, earnings are decelerating if not outright collapsing. So is the US Economy.

Can the stock market stay up and/or push higher? Do you believe in magic…..would be a more appropriate question.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 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. October 16th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Is The Bull Market Back?  Google

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COT Reports & Weekly Market Calendar – October 16th, 2015

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of October 13th, 2015

Currencies: 

  • USD:  2K Long Vs. 56K Short – No changes. Substantial short interest remains.
  • Canadian Dollar: 44K Long Vs. 4K Short – Significant long interest remains.
  • British Pound: 64K Long Vs. 2K Short – Slight increase in net long interest. British pound remains bullish.
  • Japanese Yen: 69K Long Vs. 17K Short – No net changes. Japanese Yen is still bullish.
  • Euro: 92K Long Vs. 46K Short – Slight increase in net short exposure. Significant long position remains.
  • Australian Dollar: 102K Long Vs. 24K Short-  Slight increase in net short position. Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro, Japanese Yen and Australian Dollar rally. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 536K Long Vs. 363K Short – Net neutral position remains. No major changes
  • VIX: 37K Long Vs. 95K Short – No major changes.
  • Gold: 56 Long Vs. 97K Short – Slight increase in net short position. Still neutral.

Conclusion: Based on the information above, commercial interests are now net neutral the S&P and Gold. Please note, commercials have substantially increased their net short position in VIX. That could be due to them expecting a market rally and/or us remaining in a trading range. Considering the fact that S&P is neutral, no definitive conclusion can be ascertained at this time in regards to VIX. Gold is likely to remain within its trading range. 

Next Week’s Market Calendar: 

  • Just Q-3 Earnings

Z30

COT Reports & Weekly Market Calendar – October 16th, 2015 Google