Marc Faber thinks so. And while his view has been severly challenged, he believes that is about to change. At the very least, Marc believes you should be diversified into gold at today’s “give away” prices.
Finally, given today’s global currencies devaluation, it is just a matter of time before the dollar declines. A large commercial short interest against the dollar (COT Reports) is confirming this view. Take a look at the video below. It is worth 2 minutes of your time.
8/17/2015 – A positive day with the Dow Jones up 68 points (+0.39%) and the Nasdaq up 43 points (+0.86%)
Sometimes you just have to throw your hands up in the air and say…”What”? Paul Krugman believes that Chinese officials are ill equipped to run a proper Ponzi Scheme. Yet, the FED is doing it perfectly. Bungling Beijing’s Stock Markets
The New York Times’ Paul Krugman wrote today about increased concerns that the crony capitalists who run the Chinese economy simply don’t know what they’re doing. “Their zigzagging policies over the past few months have been worrying,” he noted, asking “i]s it possible that after all these years Beijing still doesn’t get how this ‘markets’ thing works?”
Apparently, the answer is “yes,” as he demonstrates that the government fundamentally misunderstands basics like the ratio of consumption to production. It attempted to float its economy through infrastructure spending — a sound idea — but did so “by funneling cheap credit to state-owned enterprises,” resulting in them taking on debt — which isn’t quite so sound an idea.
Fair enough. And how is this different from the FED funneling cheap credit to the US Corporations. Companies that should have failed in 2008/2009. And then flooding our entire financial system with massive amount of liquidity that went towards malinvestment and share buybacks. I don’t get it. He goes on…
Next, China adopted an official policy of boosting stock prices, combining a stock-buying propaganda campaign with relaxed margin requirements, making it easier to buy stocks with borrowed money. The goal may have been to help out those state-owned enterprises, which could pay down debt by selling stock. But the consequence was an obvious bubble, which began deflating earlier this year.
Again, Mr. Krugman, how is this different from what the FED did? Zero interest rates for over 6 years now and over $1 Trillion in QE. That led directly to share buybacks, speculation and the stock market bubble that we are witnessing today. Finally……
If they really don’t (know what they are doing), that’s a big concern. China is an economic superpower — not quite as super as the United States or the European Union, yet, but big enough to matter a lot. And it’s facing tough times. So if its leadership is really as clueless as it has been looking lately, that bodes ill, not just for China, but for the world as a whole.
At least something we can agree on. The whole world is following the same playbook. Juice the stock market and the economy NOW, worry about it later or when things begin to blow up. Well, it appears they are beginning to blow up. In China first, then here. And indeed, that bodes ill for the world as a whole.
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. August 14th, 2015 InvestWithAlex.com
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Paul Krugman: Slams China’s, Praises America’s Ponzi Finance Google
On May 18th, just a day before Apple (AAPL) set in an important top, I have warned people on this blog about the big boys initiating a distribute sequence on the company. Here is the link: Alert: Smart Money Is Trying To Distribute Apple (AAPL) To Fools
Now, Tesla (TSLA) is getting the same treatment. Morgan Stanley Hikes Price Target on Tesla
In a note this morning, Jonas has increased the price target for Tesla to $465 from $280 (the stock is currently at about $243). The key reason behind this is what he calls “Tesla Mobility, an app-based, on-demand mobility service.” The race for autonomous driving is nothing new, with tech giants such as Apple and Google also making a push in this realm, but the report says Tesla is well positioned to get large market share. Jonas is telling clients that “Tesla is uniquely positioned, in our view, to solve the biggest flaw in the auto industry, <4% utilization, via an app-based, on-demand mobility service.”
Blah, blah, blah……and I am well position to die at some point over the next 50-75 years. Don’t believe the hype and don’t be fooled by the big boys. This is what DISTRIBUTION looks like.
Here is the real story behind Tesla (TSLA) Tesla Motors Raises Offering to About 2.7 Million Shares Overpriced, over hyped, losing money, needs additional capital, etc… Such stocks tend to get decimated to the tune of 50-90% in bear markets. Which is coming.
Three yogis were eating their lunch on the seventeenth-floor girder of a new skyscraper. They were working on their bodies, talking about it continuously, discovering new mysteries. “Wow,” said the second man, who was new. “I see why you guys like to eat your lunch here. The view of the city is beautiful!”
“Yes, the view is nice,” said the first man. “But do you want to know why we really like to eat lunch here?” “Yes,” said the new yogi. “Well,” explained the first, “there’s the most incredible updraft right at the fourth floor, and when we finish lunch we like to jump off and ride back up on that air current. It puts you right back on the very spot you jumped from.”
“BS!” said the second man. “I don’t believe you.”
“You don’t?” said the first, putting down his coffee thermos. “Then I’ll show you.” He jumped. Down he went, and sure enough, right at the fourth floor — whoosh! He was turned back and landed on the seventeenth-floor girder on the exact spot from which he had leaped.
“Wow!” said the second man in total amazement. “That beats the hell out of hanggliding or anything! Let me do it next!”
He stood up and jumped. Down he went — then fourth floor, third floor, second floor… splat! All over the sidewalk! Finished!
Back up on the seventeenth floor, the third man, who had been silent until now, turned to the first and said, “You know, Superman, sometimes you’re a real prick!”
8/14/2015 – A positive day with the Dow Jones up 69 points (0.40%) and the Nasdaq up 15 points (0.29%)
The primary line of thinking on “The Street” is as follows. We are undergoing a regular correction and as soon as it’s over, the stock market will push to new highs. For instance, This could be correction stocks are waiting for. AKA, buy the dip.
My question is, what if this “mild correction” turns into a real bear market? What if this 5-10% correction turns into a 20-30-40% decline over the next two years?
Don’t forget, the 2000 and 2007 bear markets started with small corrections as well.
Last week I shared the following cyclical breakdown with you Shocking: The Real Reason Behind Stock Market’s Decline & What’s Next
This week, let’s review our primary bearish driver. Excessive overvaluation.
One of the primary bullish arguments is a claim that the stock market is not expensive by any historical measure. I have argued against this notion by presenting a number of metrics over the last 6-9 months. The article below summarizes most of them in a nice fashion and with charts. It is definitely worth 5 minutes of your time.
Forbes: Disaster Is Inevitable When The Two Decade-Old Stock Bubble Bursts
The case, charts and numbers presented in the article above are right on the money. Or, you can just look at the Shiller’s Adjusted S&P ratio chart below. We have seen higher valuations only at 1929 and 2000 tops.
However, here is one crucial factor that most analyst, even the bearish ones, miss. ALL of today’s valuation metrics would be even more out of sync with reality if analysts considered how much “extra juice” zero interest rates, QE and share buybacks infused into the corporate earnings over the last 5-6 years.
What is that number?
Given current distortions, no one knows and the real number in question cannot be calculated at this time. It is arbitrary at best, but I would estimate that the drivers above added somewhere between 50-100% to today’s corporate earnings.
Here is what that means. If we are to take out QE stimulus, zero interest rates and share buybacks, today’s P/E ratio would not be around 27.44 (which is outrageously expensive), it would be somewhere in the neighborhood of 35-50. Making today’s stock market not only overvalued, but are you “freaking kidding me” overvalued. That is to say, you don’t have to be a genius to figure out how this ends.
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. August 14th, 2015 InvestWithAlex.com
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Just A Correction Or Did A Bear Market Already Start? Google
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 August 11th, 2015
Currencies:
Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, Euro, Yen and Australian Dollar rally. British pound is neutral.
Markets/Commodities/Volatility:
Conclusion: Based on the information above, commercial interests expect the stock market to decline as volatility surges higher. Gold is likely to remain within its trading range.
Next Week’s Market Calendar:
COT Reports & Weekly Market Calendar – August 14th, 2015 Google
Marc Faber believes that Yuan’s devaluation is meaningless. Yes and no. It doesn’t matter in terms of what it will actually accomplish, but it does matter on two fronts. First, it is an indicator that the Chinese and global economy is not growing. Second, it gives everyone, including the FED, an excuse to continue on with further devaluation and easing. And that will play out in our markets over the next few years.
This video is definitely worth 5 minutes of your time.Quite a good overview of the US Market as well.
8/13/2015 – A mixed day with the Dow Jones up 6 points (+0.04%) and the Nasdaq down 11 points (-0.21%)
I am 75% confident that the FED will not raise interest rates at all and 100% confident that they will not raise it in any meaningful way. What is meaningful? Even 8 separate hikes at 25 bps each would be laughable here. And while anything above that will matter, I am extremely confident that we will not even get close to that over the next 2-5 years.
Here is why…….
As I have mentioned before, this is the worst case scenario for the FED. They are already TOO LATE. Now they are stuck in a situation where our economy and capital markets collapse while they are rendered powerless. As soon as other investors realize that……well…….watch out below.
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. August 13th, 2015 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Alibaba (BABA) is down 38% in 9 months. Something that was predicted on this blog on numerous occasions. For instance…..
Is Alibaba (BABA) Getting Desperate?
Alibaba (BABA): More Money Than Brains?
Alibaba (BABA) Time To Buy Or Go Short?
Another Idiotic Advice From Jim Cramer
You get the idea. Alibaba is a giant piece of overpriced crap. That is not to say that we won’t or can’t get a bounce here. That is to say that Alibaba is just starting its long-term descend. Here is why.
That is to say, if you have the guts to hold though the volatility, Alibaba is a great short. Even at today’s levels.
