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Why The US Economy Is Just Like Philip Seymour Hoffman On Heroin

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CNBC Writes: Marc Faber: Market volatility will continue, here’s why

“It would seem to me that it’s not just tapering that is putting pressure on markets,” Faber, the author of the closely watched “Gloom, Boom & Doom Report” told CNBC on Tuesday. “In emerging economies we have practically no growth, we have a slowdown in China that is more meaningful than the strategists seem to think and than the official, Chinese statistics seem to suggest.”

“That then puts pressure on the earnings of the multinationals because most of the growth in the world over the last five years has come from emerging economies,” he told CNBC Europe’s “Squawk Box.” No growth, he said, was causing “a vicious circle on the downside” with slowing emerging economies and inflated asset markets that are now deflating, in turn putting more pressure on asset prices and on the economies.

Faber’s comments come as volatility in equity markets continued this week, prompting concerns among traders and investors that markets were at the start of a sharp correction. The moves lower follow a rally last year on the back of the U.S. Federal Reserve’s monetary stimulus.

“Total credit as a percent of the global economy is now 30 percent higher than it was at the start of the economic crisis in 2007, we have had rapidly escalating household debt especially in emerging economies and resource economies like Canada and Australia and we have come to a point where household debt has become burdensome on the system—that is, where an economic slowdown follows.”

Read The Rest Of The Article Here

Marc Faber needs to stop reading my reports. In all seriousness, it is nice to see someone like Faber confirm your own analysis and investment thesis in its entirety.

He is, of course, right on the money.  When the entire global economy depends on massive amounts of credit and each country is trying to devalue their currency faster than the other, you know you have a big problem.  Here is a good way to look at the issue.

The US Economy and its global counterpart is no different from the Philip Seymour Hoffman. One of my favorites. The guy was on top of his game in one of the most competitive industries in the world, successful, rich and with the ability to land any type of a girl. What else does a guy need in this world?

Well, for him that wasn’t good enough. So he had to find an escape in booze and heroin. The US Economy functions in exactly the same way. Neither Greenspan nor Bernanke has the testicular fortitude to let the economy go through a typical recovery, clear the slate and keep moving on.

Instead, they have infused the economy with massive amount credit (aka heroin) at the first sight of a sneeze. Distorting all financial markets to a massive degree and making the patient addicted in the process.

Now, there is no going back. Just like Philip Seymour Hoffman OD on heroin, the US and Global Economy will OD on cheap credit. Leading to massive financial trouble around the world. There is no way to avoid it now.

While I agree with Faber, I have an extra level of analysis that he does not. Timing.  Again, my timing work is indicating that the bull market topped out on December 31st, 2013 and the market will now roll over to take us into the cyclical 2017 bear market bottom. 

With that said, right now would be a prudent time to protect yourself. 

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

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Stock Market Update. InvestWithAlex.com. February 3rd, 2014

Daily Chart February 3, 2014Continue to maintain a LONG/HOLD position if invested -OR- be in CASH if not. 

2/3/2014 – Another ugly day for the market with the Dow Jones being down -326 points (-2.08%) and the Nasdaq being down  -107 points or (-2.61%).

Again, based on my mathematical work, this is not a correction. As my earlier post “Market Top” from two weeks ago outlined and explained, December 31st, 2013 was indeed the top of the bull market that started in March of 2009 and the beginning of the final bear market leg that will take us into the 2017 cyclical bear market bottom.

Even though the market continues to go down, we still need a confirmation before taking a short position. As such, I continue to anticipate the market to bounce into the March time frame before resuming its bear market. If you remember, the market left a number of open gaps in the 16,400 area that will “technically” need to be closed.

Short-Term Projections:

(***This is the only time I will provide short-term projections here. They will only be available in our premium section thereafter). 

My mathematical work shows two points of force coming in February. One coming up this Friday and the other one on February 17th.  Based on my mathematical work, I believe February 17th will be the bottom of this bear move, reversal and subsequent bounce into the March of 2014. If market confirms, we are looking at the 15,025 on the DOW  as our projected negative price target.

However, if the market gets there sooner, there is a good chance that this Friday will be a turning point. I will keep you posted. Either way, we have to wait for a confirmation before taking our long position.

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The Best Investment You Can Make Today. It Will Shock You To Your Core. Guaranteed.

USD Chart Feb 2014That’s right….. the United States Dollar. 

Yeah, yeah, I know what your are thinking. Dollar is a piece of shit and this Alex dude has lost all of his marbles. The FED is printing $65 Billion a month, interest rates are technically negative and hyperinflation is just around the corner.

Americans will soon need to use barrels of cash just to buy anything at the local supermarket. If you are to listen to Gold Bugs or PermaBears you would soon believe that the US will soon turn into Zimbabwe and that only gold and shotguns will save you.

zimbabwe-money

Clearly, there is no love for the dollar, but hear me out. There is a couple of reasons to love the USD. 

Reason #1: Everyone hates it. What do I constantly try to teach you here? To generate huge profits you must buy what other people hate. So, instead of buying Google at over $1,000 you buy Stinky Fertilizer, Inc (STINK). Assuming the company is fairly priced and has good fundamentals.

Reason #2: The USD has nothing to do with all the credit being generated at the present moment. There is a distinction between a balance sheet transaction between the FED/banks and the actual “physical” dollars. There is only a few of the real dollars to go around compared to the credit outstanding. That is why when the credit collapses the USD typically surges higher.

That is exactly what happened during the 2007-2009 credit crisis. The dollar index shot up from 71.30 in 2008 to 89.20 in 2009. When credit collapses, people scramble for dollars as there isn’t enough to go around. Typically, driving the value of the USD higher.

Reason #3: From the long-term technical perspective the USD is setup for a large move here. The long-term chart (from 2005…not provided here) shows that the currency is about to break out. Either up or down. Since everyone hates the currency and since my mathematical work predicts the credit crunch as well as the significant stock market decline, I would anticipate the dollar to break out to the upside.

CONCLUSION:

The best investment you can make right now is to accumulate dollars. Worst case scenario is that the dollar stays around the same levels while the stock market declines. Giving you the ability to buy great companies at significant discount. 

The best case scenario? Dollar zooms up while the market goes down to the tune of 40%. Giving you a higher purchasing power, no risk and massive returns down the road. Of course, this scenario would work wonders for foreign investors in particular.  

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What Will The Stock Market Do & Why You Should Care.

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Today’s 5 Minute Podcast Covers The Following Topics:

Reader’s Question: “Hey, as long-term investors, why should we care about what the market does. Shouldn’t we just concentrate on picking good stocks? ” – Angela . 

    • The answer that will shock you to your core. 
    • How knowing what the market will do can easily double your returns. 
    • Why timing is the most important element when it comes to investing. 
    • What you can do now to combine timing with fundamentals to maximize your gains. 

Please tweet me your questions @investwithalex

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

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Weekly Investment Update and Summary. February 1st, 2014. InvestWithAlex.com

daily chart Jan31, 2014

Continue to maintain a LONG/HOLD position.

Weekly Summary: 

Even thou the market had a number of significant down days during the week, the Dow Jones ended up down only -180 points or (-1.14%). Both the Nasdaq and the S&P fared much better. Loosing only -24 points (-0.59%) and -7.7 points (-0.43%) respectively. 

If this week can teach us anything, its that volatility is back. Every trading session was opened up with a fairly large gap. With Fridays gap being close to 200 points on the DOW. What does that mean?

It means the cyclical composition of the market has shifted from a general uptrend exhibited in 2013 and for the large part since the start of this bull market leg in March of 2009 to a bear market leg identified here last week. 

Again, my mathematical timing work had confirmed that the DOW Jones topped out on December 31st, 2013 at precisely 16,576, ushering in the new bear market leg that will take us into the 2017 cyclical bear market bottom. 

Now, most market participants believe that the decline since the start of the year is nothing more than a simple correction that is long overdue.  While I disagree we still have to wait for a technical confirmation before taking our short position to profit from the bear market leg.  Such confirmation must come from a short term bottom here, subsequent bounce and resumption of the bear move thereafter. 

Our model portfolio established at the beginning of the year has been in cash this entire time @10 Year Note, helping us avoid the decline. For our previous investments, we continue to maintain our LONG/HOLD position without adding anything new. Once the bear market confirmation arrives we will get out immediately and go short. 

If you recall, I have mentioned that the market opened up large gaps on the way down from 16,400. At this stage it is highly probable that the market will bounce back to those levels before resuming the bear market let once the bottom of this correction is set. When will that happen. Please see our Mathematical & Timing analysis below.  

Fundamental Analysis: 

As you know, my fundamental case remains fairly straight forward and clear cut. All stocks and most other markets (credit and real estate) are substantially overvalued due to massive infusion of credit by the FED over the last few years and pure speculation. I am acutely aware and as most market commentators point out, based on the P/E ratio of 18.5 and some other metrics that the market is not overpriced and is within its historic range. At lest suggesting that there is no need to worry about any sort of a decline. 

s&p ratio

However, everyone is missing the elephant in the room. The earnings for most corporations have been “juiced up” to the tenth degree by the same credit infusion. If you take the credit and those earnings out, the P/E ratio is likely to be in the 50-100 range. Making this market not only overpriced, but putting it in the “are you fucking kidding me overpriced” category. 

Please note, that is exactly what happened when the P/E ratio shot up to over 124 in May of 2009 even though the market had lost over 50% since October of 2007. When earning disappear (as they will), today’s valuations will look astronomical.   

Macroeconomic Analysis: 

It doesn’t matter where you look, we have the same cancer spreading across the globe. Massive credit expansion juiced up the FED. This week the Fed announced a further cut in QE from $75 Billion to $65 Billion due to perceived “Economic Strength”. I have argued for a long time that the FED will be unable to withdraw this support without a massive blow up one way or another. We already starting to see strain show up in emerging markets. 

With our mathematical work confirming the bear market over the next 3 years, this plays very well into our scenario. The bottom line is, our economy is driven by credit and will deflate on a large scale as soon as the credit intervention goes away (as it is now) and/or the velocity of credit slows down (as it is now). 

Technical Analysis: 

Technical picture remains murky. 

Long-Term: The trend is still up. Market action in January could be viewed as a simple correction in an ongoing bull market. 

Short-Term: The trend is down as the market structure turned bearish. Please see my timing analysis for further instructions. 

Overall, we must wait for a confirmation before taking a short position. 

Mathematical & Timing Analysis: 

There is a number of important mathematical turning points arriving over the weekend and next week. Will these points signal the end of the bear move and a reversal into an anticipated rebound? I believe so. As soon as the rebound completes we should see the market roll over the resume a bear market leg in March of this year.  

Time Targets: Coming Next Week.

Price Targets: Coming Next Week 

CONCLUSION: 

If you are out of the market as we have been, stay out. If you are still fully invested consider liquidating your positions as we go through a rebound over the next few weeks. Once the rebound plays itself out and the market confirms the next bear leg down, I would recommend going short at that time. 

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

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The Secret Behind What Drives The Stock Market

InvestWithAlex Wisdom 17

Today’s 5 Minute Podcast Covers The Following Topics:

Reader’s Question: “The economy is doing very well right now and the fundamentals are good. What would be the catalyst for the bear market you talk about? ” – Peter. 

    • The secret behind what drives the stock market. 
    • Why most people get it wrong when it comes to forecasting.  
    • The natural cycles behind all economic and market developments. 
    • How this one little thing can double your portfolio performance virtually overnight. 

Please tweet me your questions @investwithalex

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

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NASA Announces Plans To Send The US Economy To The Moon

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Daily Ticker Writes: The economy is only going to get stronger

Zandi has a bullish outlook on the U.S. economy: he’s forecasting 3% GDP growth this year and 4% growth in 2015.

“The U.S. economy is set to experience much stronger growth as the middle of the decade approaches,” he writes in his latest macro outlook. “Businesses are highly profitable and very competitive, households have reduced debt and are saving more, and the banking system is well-capitalized and liquid.”

Zandi says better economic growth will also lead to more jobs. He estimates that 3 million new workers will be hired in 2015, up from 2.25 million in 2013 and 2012. That would mean the economy returns to full employment (a federal jobless rate of 5.5% to 6%) by 2016.

“The job market is headed in right direction,” Zandi says. “Broadly speaking the economy is performing steadily better.”

Read The Rest Of The Article Here

I am not sure who this Zandi, but one thing is for sure. If you are to believe his forecast you will be in for a beating. By the market that is.

The article above is garbage. Again, I am dumb founded that most economist and market practitioners don’t understand our current economic environment. Perhaps I was dropped on my head as a child a few too many times and see things differently. Thanks Mom!!!

Anyhow, the economic growth we see today is not real. It is driven by massive infusion of credit and speculation. That’s it. Further, there is no point to perpetuate any growth or forecast into the future. Since it is all “artificial”, it will vanish into thin air as soon as the speculative bubble driven by credit pops.

People always ask me what the catalyst will be for such an event. They are missing the point.  Typically there is no catalyst. Let me give you an example. Was there a catalyst for 2007-09 decline? NO.  The market simply started to go down in October of 2007, slowly at first, then accelerating later.  It was the stock market that drove the economy into the ground and not the other way around.  

Point being, for the most part there is no external catalyst. The market itself is the catalyst. It is the market that drives the fundamentals. Most people miss this very important point. As such, the market will go down when its ready to go down.

Based on my mathematical work that time is already upon us.   

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Stock Market Update, January 30th, 2014. InvestWithAlex.com

Daily Chart January 30, 2014

Summary: Continue to maintain a LONG/HOLD position.

1/30/2014 – The roller coaster ride continues with the Dow Jones ending the day up +110 points or (+0.70%). With gap ups and downs galore.

It is definitely starting to feel like the volatility is coming back into the market. While VIX index is still sitting at relatively lows levels, the market is starting to exhibit signs….  Continue reading “Stock Market Update, January 30th, 2014. InvestWithAlex.com”

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Brand New Real Estate Market Ponzi Scheme. Will You Buy In?

The New York Times Writes: Wall Street’s New Housing Bonanza

house of cards

Wall Street’s latest trillion-dollar idea involves slicing and dicing debt tied to single-family homes and selling the bonds to investors around the world.

That might sound a lot like the activities that at one point set off a global financial crisis. But there is a twist this time. Investment bankers and lawyers are now lining up to finance investors, from big private equity firms to plumbers and dentists moonlighting as landlords, who are buying up foreclosed houses and renting them out.

The latest company to test this emerging frontier in securitization is American Homes 4 Rent. The company talked to prospective investors at a conference in Las Vegas last week about selling securities tied to $500 million of debt, according to people briefed on the matter.

 “The investment and lending opportunities are immense and perhaps just beginning,” Jade Rahmani, a real estate analyst with Keefe, Bruyette & Woods, wrote in a recent report.

In just the last two years, large investors have bought as many as 200,000 single-family houses and are now renting them out, according to the K.B.W. report.

Read The Rest Of The Article Here

by Alex Dvorkin 

If you were searching for evidence that our nationwide housing market recovery has been driven by speculators and massive credit, wonder no more.  Massive flood of capital from the FED’s into financial institutions has created all sorts of stupidities. This is one of them.

Trust me. Hedge funds providing massive amounts of capital “to plumbers and dentists moonlighting as landlords” is not as brilliant as it sounds.  As a matter of fact, it is fucking stupid. The only thing it will lead to is massive losses down the road for everyone involved. Big losses for hedge funds, for plumbers and dentists, for the FED, for the overall US Economy and for the average Joe with a house and a mortgage.

No one is talking about the elephant in the room.  Overall and after taking expenses associated with being a landlord into consideration, no one is making any money. There is no yield. Everyone is betting on capital appreciation to make a profit. I am afraid such capital appreciation will never arrive. Please see my Real Estate Market Top article here.

You also have to read between the lines to see the massive system wide risk. For instance, why the fuck would hedge funds who are awash with free cash from the FED invest in plumbers and dentists who would in turn become landlords?  For two reasons..

1. Everything is extremely overpriced. In bubble territory. The bond market, the stock market and even the real estate market.  They are investing in plumbers because there is nothing else left to invest in.

2. Everyone is playing the game of musical chairs, chasing performance. The money is FREE, so why not. Of course, we know what happens next. The music stops and the real estate sectors gets flushed down the toilet….again.

If this article doesn’t scream “market top” to you, I don’t know what will.  Don’t be fooled by Wall Street once again.  I am just curious to see what will happen to the real estate prices once “investors” decide that being a landlord sucks and begin dumping hundreds of thousands or perhaps millions of properties they have purchased. I wouldn’t be surprised to see 50-70% haircut from today’s real estate prices. Here is my valuation work.

The bottom line is, stay away from this Ponzi Scheme and don’t buy real estate over the next few years.  You can send me a gift basked later. 

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

Brand New Real Estate Market Ponzi Scheme. Will You Buy In?

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Stock Market Update, January 29th, 2014. InvestWithAlex.com

Daily Chart January 29, 2014

Summary: Continue to maintain a LONG/HOLD position. 

1/29/2014 – The market continued its initial bear market move with the Dow Jones being down -190 points or (-1.19%). 

Further, the market opened up another 100 point gap in the morning, erasing all of yesterdays gains and indicating that the market will eventually come back to close the gaps. No doubt, short term picture remains bearish while the long term picture remains bullish. Raising up questions if this is just a correction or a beginning of anticipated bear market. As my timing work showed, it is highly probable that the bull market topped out on December 31st and what we are witnessing now is the initial stage of the bear market. 

Again, even though the timing work confirms, we must wait for a technical confirmation that the bull market has indeed topped out before taking a short position. As such, I continue to maintain our long/hold position.  

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