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What You Ought To Know About Stock Buybacks Slowing Down

buybacks

Just imagine for a second that your plane is cruising at 30,000 ft, or in the case of the Dow at 18,000 ft, when one of its engines suddenly blows. Let’s call that engine “zero interest rates and QE”. Not a big deal. Most planes will land without a problem with just one of its engines being operational.

But, what happens when the other one blows. Well, it’s a long way down. Buybacks no longer work to boost stock prices. 

Stocks with big buyback programs are struggling this year, and according to one technician, a similar lag has previously preceded two market crashes.

As was mentioned here before, when it comes to the stock market and buybacks, Corporates tend to behave in the same fashion as most individual investors. They buy at the top and sell at the bottom.

Sure, it is easy enough to borrow at zero interest rates and then use that money to purchase stocks. Artificially driving up the prices. But there is another ominous sign to watch for. Credit spreads. Should credit  spreads continue to widen, as has been the case lately, our proverbial second engine might blow too. If it hasn’t already.

That is to say, the stock market finds itself in an incredibly vulnerable place. At dizzying valuation heights and with no fuel/engines left to support its flight. I doesn’t take a genius to figure out what happens next.

Z31

What You Ought To Know About Stock Buybacks Slowing Down  Google

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Just A Friendly Reminder From Carl Icahn

Daily Chart October 29 InvestWithAlex

10/29/2015 – A negative day with the Dow Jones down 24 points (-0.13%) and the Nasdaq down 21 points (-0.42%) 

A rather uneventful day. As a result, I figured I would replay this very important video from Carl Icahn.

I don’t know about you, but I am absolutely fed up with the US Government and Media. It is nice to see someone of Carl Icahn’s statue to come out and put them on the spot. Directly. And wait till you hear what he has to say about our financial markets.

“God knows where this is going. It’s very dangerous and could be disastrous. It’s like a movie theater and somebody yells fire. There is only one little exit door. The exit door is fine when things are OK, but when they yell fire, they can’t get through the exit door…and there’s nobody to buy those junk bonds. Stocks are way overpriced.

I found myself agreeing with 95% of what he had to say and I command him for coming out and speaking his mind. If you participate in financial markets and/or care about what happens in the US, the video below is a MUST watch.

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 29th, 2015  InvestWithAlex.com

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

Just A Friendly Reminder From Carl Icahn Google

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Why Some Bears Are Staying Put

ted bear

We have previously covered Crispin Odey, his hedge fund and his bearish stance on the US Economy/Markets. According to Bloomberg he did not have a good October.

Considering the above, one would believe Mr. Odey is covering his short positions. One would be wrong.

Not only that, I firmly believe that the only people investors should be listening to right about now are the people who got 2000 and 2007 meltdowns right. Everyone else is just blowing smoke. Crispin Odey, the founder of London-based Odey Asset Management, is one of those people. He does not hold back….

“I just think that you and I have got grandstand seats here [to an imminent market shock] and my point is having found myself in the second quarter of last year selling a lot of equities and starting to go short, I found out just how illiquid it all was. You never actually see it until people try and get out of these things.”

That’s quite a powerful statement and I wholeheartedly agree.  He goes on to say…

“For me, what I find very interesting is given the risk of recession, how is it the West stock market can be hitting all-time highs? History tends to be not very generous in this regard. If you get a recession in a low inflation environment it tends to impact the ratings of stocks dramatically. It was akin to “watching the markets take drunken bow after drunken bow. It’s amazing that nobody else is on the same page.”

Finally…….

We are in the first stage of this downturn. It is too early to see what will happen – a change of this magnitude means the darkness and mist is very great. We will make some mistakes but with our thinking we won’t make the major mistakes. The problem is where you stand – I am amazed to see so many are fully invested given that equities are already fighting the downtrend. Mid and smallcaps have moved into bear markets and much relies on large caps to keep the whole thing going and they are very exposed to international trade.

To summarize his view….

  • He thinks equity markets will get devastated. 
  • Major economies are entering a recession that will be remembered in a hundred years. 
  • Bearish opportunity to short stocks looks as great as it was in 2007-2009.

The upcoming recession and the approaching stock market meltdown are so easy to see, no matter what the FED does, I am not sure why the 99% go on missing it. The attitude was exactly the same at 2000 and 2007 tops. Greed or stupidity? I am not sure, but it is amazing indeed.

z33

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The FED’s End Game Is Finally Unveiled.

Daily Chart October 28 InvestWithAlex

10/28/2015 – A positive day with the Dow Jones up 198 points (+1.12%) and the Nasdaq up 65 points (+1.30%) 

Excuse my language, but the FED continues to BS the market.  And as far as I can tell, the FED is attempting to maintain the market within a certain range. At the same time, it is now crystal clear what their actual game plan is. It goes something like this…..

  1. Can’t raise or won’t raise. Today’s economy or financial markets won’t be able to digest any rate increases at this juncture. Period. As talked about on this blog so many times before. Why The FED Will Not Raise Interest Rates If the FED members have even an ounce of intelligence, and I believe they do, they realize the same.
  2. If the market declines, issue a “Dovish” statement. Bring it up.
  3. If the market recovers, issue a “Hawkish” statement. As they did today. Remember, they don’t want things too overheated.
  4. Rinse and repeat while praying the market and/or the US Economy won’t implode on their own.

That about covers it. There is only one fatal flaw with the plan above. It only works until it doesn’t. It only works until the FED has any credibility left. The problem is, more and more people are beginning to realize all of the above.

And while the stock market continues to rally for the time being, the real economy (Global/US) is accelerating down. Steel demand ‘evaporating at unprecedented speed’

But hey, who needs steel demand for as long as iPhone sales are strong and/or Facebook user growth goes parabolic….Right??? Point being, FED or not, the economic/earnings/overvaluation reality will catch up to this market sooner rather than later.

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 28th, 2015  InvestWithAlex.com

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

The FED End Game Is Finally Unveiled.  Google

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Shocking: The Real Story Behind Apple’s (AAPL) Decline

AAPL Stock

Apple (AAPL) has reported yet another great quarter last night. Yet, despite their outperformance, Apple’s stock price is barely up in the afterhours. So much so that most investors, market pundits and money managers are dumbfounded by company’s recent decline.  After all, it was not supposed to happen. Apple is the best performing company in the world (which is technically true) with like a zillion dollars in cash on their balance sheet.

What gives? I will simply repeat here what I first said on May 21st. When AAPL was putting in its top.

May 21st Update: Alert: Smart Money Is Trying To Distribute Apple (AAPL) To Fools

I firmly believe that the overall market and Apple (AAPL) will crack at the same time. Hence, overwhelmingly bullish coverage of the company and recent analyst upgrades should cause some concern. For instance…..

There is another name for all of the above. Distribution. The smart money is trying to unload their massive positions to unsuspecting retail investors in an illiquid market. A game that is as old as the stock market itself.

Listen, I don’t have anything against Apple. It is one of the best performing companies out there. Yes, it is overvalued, but its valuation is not as bad as some of the junk floating in the market today.

I am merely pointing out that retail investors shouldn’t be sucked into a game that they cannot win. Make no mistake, once Icahn, Morgan Stanley and the rest of the big guys unload their long positions (if they are smart), Apple’s stock will fall like a brick. Just as the market will. That is to say, the opportunity with AAPL might be on the short side of the trade, not the long.

z33

Shocking: The Real Story Behind Apple’s (AAPL) Decline  Google

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What You Ought To Know About The FED Decision Tomorrow

Daily Chart October 27 InvestWithAlex

10/27/2015 – A negative day with the Dow Jones down 41 points (-0.21%) and the Nasdaq down 5 points (-0.09%)

While I don’t necessary share the same view, most investors believe the rally off of the recent lows has been cause by a more “dovish” FED stance. Perhaps.

Yet, that notion does not address the primary issues. The recent slow down in earnings and numerous economic indicators. For instance, forward earnings guidance is down 2% on the S&P. The highest percentage drop since 2008.

“That is going to have an effect on all aggregate earnings for the S&P 500,” warns Morganlander. “It means that you’re going to see subpar market returns as S&P [500] earning struggle to get even higher highs. Net margins, we believe, will continue to revert back to its mean, which will have a downward pressure effect on actual profitability.”

I would go even further and suggest that margin and earnings will collapse as soon as our financial market readjust lower. It was an upward driven speculative spiral up and it will work in exactly the same fashion on the way down. With the QE, zero interest rates and stock buybacks now having minimal impact, things should accelerate down.

Which brings us to the FED.

“Hence risk assets have rallied for three weeks prompted by the turn to weaker U.S. data that began with the weak September jobs report, as the Fed’s rate decision is understood to be completely data dependent,” he said. “However, clearly for the market rally to be sustained it would be helpful if (the) FOMC statement tilted dovish by acknowledging this turn to weaker U.S. data.”

I have been saying this for a few months, but I guess I will have to say it again, The FED Will Not Raise Interest Rates Simply put, they cannot.

And that is the primary point most investors today miss.

  1. The overall stock market is selling at a 3rd highest valuation level in history.
  2. Earnings and the US Economy are on the way down. Despite zero interest rates.
  3. The FED is now powerless. They cannot raise interest rates nor can they stimulate the economy further. Negative rates will have minimal impact, if any at all.

But, if you believe the setup above translates into a “good time” to be fully invested in stocks or to be bullish, well, who am I to stop you.

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 27th, 2015  InvestWithAlex.com

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

Google

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Is China About To Collapse – Drag Us All Down

Just how big is China’s bubble? What is going on there? Take it from a Bear who lives there. And YES, should China implode, it will drag us all down. Credit bubble of Epic proportions just about summarizes the whole thing. We have talked about this before Just How Big Is China’s Bubble? This Will Blow Your Mind