6/25/218 – A negative day with the Dow Jones down 328 points (-1.33%) and the Nasdaq down 160 points (-2.09%) 

The market is doing what it should be doing or as we have been forecasting in our membership section. I will mention this thou. At this point the market is severely oversold by quite a few indicators. If you would like to find out what happens next, in both price and time, please Click Here 

We certainty live in interesting times. And not only because our President is doing his hardest to destroy our economy in a blink of an eye, but because half of America believes he is doing a great job. They have no clue as to what is about to happen. Same logic suggest that it shouldn’t come as a surprise that real financial analysis is not coming from WSJ or Financial Time, but from Russian “PRAVDA”

US Economy Going Full Throttle ‘Towards National Ruin’

The Trump administration may find itself amidst serious economic trouble with a steadily increasing federal deficit and national debt. In case Donald Trump is re-elected in 2020 he may have to deal with a $1 trillion deficit and a US debt-to-GDP ratio exceeding 100 percent.

The US economy may find itself in dire straits, unless measures are taken as soon as possible, the US Office of Government Accountability (GAO) warned the US Congress on June 21, 2018.

“According to the 2017 Financial Report, the federal deficit in fiscal year 2017 increased to $666 billion-up from $587 billion in fiscal year 2016 and $439 billion in fiscal year 2015. Federal receipts increased by $48 billion, but that was outweighed by a $127 billion increase in spending, driven by Social Security, Medicare, and Medicaid, and interest on debt held by the public (net interest),” the congressional watchdog noted, stressing that “the longer action is delayed, the greater and more drastic the changes will have to be.”

Trade war disaster aside, what the Trump Administration is doing is not sustainable by any measure.  In the biggest blunder of his life, instead of exposing it Mr. Trump took full ownership of the “everything bubble” from the Clinton/Bush/Obama era. What’s worse, he has supersized the problem by going all in with that one last debt party.

There is no way to grow out of this and the day of reckoning is now a mathematical certainty.  If you would like to find out exactly when the stock market will crater, based on our mathematical and timing work, please Click Here

I have been warning people for months that Trump’s baseless and pointless trade war will eventually do massive damage to the US Economy and the stock market. Yet, not even I couldn’t have foreseen the latest stunt.

Trump seeks curbs on Chinese investment in U.S. tech firms, exports to China

President Donald Trump, already embroiled in a trade battle with China, plans to ratchet commercial tensions higher by barring many Chinese companies from investing in U.S. technology firms, and by blocking additional technology exports to Beijing, said people familiar with administration plans.

The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “Made in China 2025” report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology.

That is about as stupid and reckless as it gets. And I am not the only one who thinks that way.

Things Just Went Nuclear In Our Trade War With China, And A Giant Shockwave Is About To Hit The U.S. Economy

Things Just Went Nuclear In Our Trade War With China, And A Giant Shockwave Is About To Hit The U.S. EconomyIt is difficult to find the words to describe just how serious America’s trade war with China is becoming.  As you will see below, the two largest economies on the entire planet are on a self-destructive course that almost seems irreversible at this point.  The only way that this trade war is going to come to a rapid conclusion is if one side is willing to totally submit and accept an extremely bitter and humiliating defeat on the global stage, and that is not likely to happen.  So in the short-term, and probably beyond that, we are going to experience a tremendous amount of economic pain.

In fact, if one wanted to create a recipe for economic disaster, it would be hard to beat having the Federal Reserve dramatically raise interest rates at the exact same time that the U.S. government is starting trade wars with all of the other major economic powers simultaneously.  Unless something drastically changes in the very near future, there is no way that the U.S. is going to be able to get through this without experiencing severe pain.

Simply put, this is a disaster in the making when your country relies on Chinese Treasury buying to sustain its highly speculative and leveraged economy. Throw in extremely overpriced stock market, rising interest rates and the FED tightening cycle……. and, well, you have a recipe for an explosive disaster.

Our mathematical and timing work tends to agree, if you would like to find out what the stock market will do next and/or when it craters, please Click Here

6/22/2018 – A negative week with the Dow Jones down 510 points (-2.03%) and the Nasdaq down 54 points (-0.70%)

The Dow Jones is doing exactly what it should be doing. If you would like to find out exactly what happens next, based on our timing and mathematical work, please Click Here.

Now, I would hate to ruin your weekend, particularly if you are a bull, but here goes nothing.

I know you are sick and tired of this chart, but nothing has changed.  Shiller’s Adjusted S&P P/E ratio is now at 32.74. Slightly off highs, but still arguably at the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55. In other words, the stock market has never been more expensive. It would have to collapse 50% just to hit its median price and we are not even talking about overshooting to the downside.

But what about earnings? Aren’t we supposed to have 4% GDP growth with the S&P earnings surging to the moon? After all, President Trump said so……MAGA?

NO!!!

Notice something of significant importance from the chart above. The S&P earnings are back or slightly above their 2014 levels. AKA….what growth? Since their 2016 dip bottom, everything that could be thrown at the market from the bullish side was already done. Weak dollar, tax cuts, money printing, etc….. The opposite is true now. The FED is tightening and deleveraging their balance sheet, the dollar is surging and Trump’s tax cuts are already priced in.

BUT, Warren Buffett said it’s a good time to be a long-term investor.  

Umn, perhaps that’s a good idea if you are willing to wait until Warren Buffett reincarnates as a $1000 bill.

Here is the bottom line, you have to dismiss what Mr. Buffett says as he now represents the stock market in its entirety. Instead, pay attention to Mr. Buffett’s favorite market indicator of Corporate Equities to GDP is saying.

The said chart is clear in its conclusion. The stock market today is selling at the second highest valuation level ever. Certainly not a good time to look for value that Mr. Buffett so dearly loves. Valuations would have to decline over 50% just to hit their median.

Finally, the scariest chart of them all. 

It is truly mind boggling to see how long and leveraged everyone is. When the market finally cracks, as it surely will, all of the red on the right hand side will act as jet fuel to the downside.

To very quickly summarize, the stock market is incredibly expensive and sitting at historically high valuation levels. At the same time, positive drivers that were in force over the last few years (low interest rates, QE, weak dollar, margin expansion, tax cuts, etc…) have either reversed or in process of doing so. Finally, long-term bullish sentiment has never been higher as is represented by historically high margin debt levels.

What can possibly go wrong?

Luckily, our mathematical and timing work is clear in this regard. If you would like to find out what the stock market will do next, in both price and time, please Click Here

Gold has been driving long-term bulls up the wall over the last decade. In fact, it is trading today exactly where it was in both 2012 and 2009. Yet, things might get interesting going forward. Both short-term and long-term.

Jim Rogers is clear in his assessment. Gold will surge higher as soon as today’s massive financial bubble blows sky high. Any day now…….

Mr. Putin tends to agree……

Russia Buys 600,000 oz Of Gold In May After Dumping Half Of US Treasuries In April

Gold should start rallying into the end of this year. Having said that, if you would like to find out exactly when this massive financial bubble implodes on itself, please Click Here. 

6/21/2018 – A negative day with the Dow Jones down 196 points (-0.80%) and the Nasdaq down 68 points (-0.88%)

The stock market continues to perform as anticipated or as was predicted by our calculations. If you would like to find out what happens next, please Click Here

Let’s talk about the US Dollar.

Most Dollar bears, such as Peter Schiff, are in disbelief of what is happening to the currency. According to them, the US Dollar should be getting destroyed or inflated away into oblivion just about now. Yet, the opposite is true. Since April the Dollar has staged a rip your face off rally.

The Dollar missed our bottom calculations that was projecting a bottom at $88 by a few pennies and we went long at around $91. Just as was outlined here Why Peter Schiff Is Dead Wrong About Inflation & The USD

I believe quite a few people will be surprised by how far this dollar rally goes long-term. Yet, there is a much bigger reason to worry about today’s Dollar rally. The S&P earnings going forward.

Stocks Are at Risk of A SERIOUS Drop Unless the US Dollar Rolls Over Soon

The financial media are euphoric that stocks are up today. However, they’re all ignoring the fact that the issue that triggered the recent sell-off (the Fed’s colossal policy error regarding the $USD) has not been resolved.

Put another way, until the $USD rolls over, stocks are in serious danger. We need to get out of that red rectangle area ASAP and back down to the green rectangle.

That is to say, recent S&P earnings bounce from $88 in 2016 to just shy of $110 today (2014 level – what growth?) was largely driven by weaker dollar. Should this catalyst be taken away, well, the stock market will go from crazy valuations levels we see today to “are you fu*#ing kidding me” valuations levels literally overnight.

Our timing and mathematical work clears up all of the confusion associated with all of the above. If you would like to find out what happens next to the US Dollar and the stock market, please Click Here

“Trump Denier” David Stockman explains, once again, why Donald Trump has no idea what he is doing when it comes to trade. We tend to agree. As we have said before, there is no Trade Deficit issue. There is a massive FED distorting the economy, money printing issue. You can read more about it here  Trump Is Fighting The Wrong Trade War For All The Wrong Reasons

Most importantly, our stock market work is absolutely clear. Trump’s trade war will lead to an absolute disaster in the stock market. If you would like to find out exactly when that will happen, based on our mathematical and timing work, please Click Here

6/20/2018 – A mixed day with the Dow Jones down 42 points (-0.17%) and the Nasdaq up 56 points (+0.72%) 

Are you scratching your head wondering why the Nasdaq/Russell 2000 are surging higher while the Dow is negative for the year? And no, it has nothing to do with Trump’s trade war.

The secret has to do with identifying exact patterns and time/price targets for all indices involved. That is exactly what we talked about in our daily update today. If you would like to find out exactly what the stock market will do next, based on our timing and mathematical work, please Click Here.

In the meantime, here is yet another massive red flag to consider. 

We couldn’t add very much to this article from ZeroHedge.com

Active Managers Go ‘All-In’ Again As “Growth/Value Bubble Looks Ominously Similar To Late 1999”

Despite trade wars, central bank tightening, declining economic fundamental data, and an Emerging Market crisis, according to one survey, active US investment managers are presently more than 100% invested, on average.

Source: Dana Lyons’ Tumblr

However, while US equities continue to charge ahead, alarm bells elsewhere are ringing very loud…

Judging by the reaction in China, you would’ve thought global markets were in for a thrashing after President Donald Trump’s latest escalations on trade.

However, as Bloomberg notes, the question of why American equities keep skating past a worsening trade conflagration has been baffling for strategists.

“We’ve had more negative catalysts and more negative pull this year than we’ve had for a long time, but the positives continue to prevail in the investor’s mind,” Jeff Carbone, a managing partner at Cornerstone Wealth in North Carolina, said by phone.

“They’re shrugging off the negativity and taking the positive to a greater extent that this is not the end.”

As Bloomberg notes, the ignorance of risk is everywhere: Equity funds are only a trifle less long than at the height of January’s euphoria.

It’s in markets for call options, where individual investors are engaged in a buying binge of historic dimensions.

It’s in tech stocks (favored by short sellers), and ones with shaky balance sheets, all of which recently surged…

On the back of an historic short-squeeze…

 

In credit markets, various indicators are flashing bright red. For instance Bank Loans have been pummeled the last few days…

“The scary thing is that everyone keeps warning about leverage but then keeps reaching for the yield that BBB provides,” said Andrew Forsyth, a portfolio manager with BNP Paribas Asset Management.

 

Emerging Markets have been a bloodbath in recent weeks…

With 42 straight days without inflows for the biggest EM ETF…

 

It’s not like people haven’t been warned. They have their memories of February and March, and strategists at banks like Morgan Stanley and Goldman Sachs have repeatedly urged investors to rein in optimism, citing everything from politics to peak earnings and monetary tightening. Earlier today, Citigroup Inc. flagged a potential bubble in growth stocks.

“This is fine for now, but we think by year end such a ‘risk on’ hierarchy will be misplaced given the more uncertain outlook posed by ‘peaky’ growth rates and ever tightening financial conditions,” Mike Wilson, chief U.S. equity strategist at Morgan Stanley wrote in a note to clients Monday.

He urged investors to go defensive in anticipation of a rotation out of companies whose growth is tied to economic growth and upgraded utility stocks.

But the caveats have gone unheeded.

Wilson isn’t alone among analysts who see trouble brewing. As Bloomberg reports, the rally in growth stocks brought flashbacks of the internet bubble to Citigroup strategists led by Robert Buckland, even as valuation premiums are less than half of those from almost two decades ago.

A collapse would bode ill for a market whose gains have been increasingly anchored on tech giants such as Amazon.com Inc. and Facebook Inc.

“Price action of the U.S. growth/value trade looks ominously similar to late 1999,” the strategists wrote.

“Watch out for a growth bubble.”

With the price of call options now trading above their historic average, investors should sell them to reap extra returns in a market whose upside appears limited with valuations stretched, according to Rocky Fishman, an options strategist at Goldman Sachs. The firm predicted the S&P 500 will end next year at 3,000, or an 8 percent increase from the last close. That’d be below the 45th percentile in the index’s history over any 18-month period.

“The potential for upside surprises in U.S. equities is lower than the compensation received from elevated call prices,” he wrote in a note.

Coincidentally or not, such indications of retail euphoria flared up in January, just before the S&P 500’s first 10 percent correction in two years. It also accompanied the bull market peaks in 2000 and 2007.

Quite a few people, including small cap and tech investors, believe Trump’s trade war will be a walk in the park.

We do not share in their enthusiasm.

This typical view assumes it will be an easy win (video below). Yet, this sort of an attitude often serves as a red flag. Recall, Hitler was gonna be in Moscow by November of 1941, Japanese attack would be so shocking that Americans will surrender and who could ever forget Napoleon’s “Screw Winter” comment.

You get the picture. Trade wars are very similar to shooting wars. In fact, most shooting wars start off as trade or economic wars. You just never know how much pain the other side is willing to take to prove their point. And we bet China is willing to take extraordinary amounts of pain to preserve their own growing “Empire”.

Perhaps Steven Seagal has it all figured it with the following quote.

Make no mistake, a trade war with China will be anything but easy. As our work clearly indicates, it will cause a major disaster in the US Economy and the stock market. If you would like to find out exactly when the stock market will tank, please Click Here