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Will The Fed Forgo Raising Interest Rates?

subprime car loans

Quite a few bears think that they should or that they will. I believe that they should, but I don’t think that they will forgo the eventual rate hike.

“In my view, the Fed will not increase interest rates this year,” he told CNBC’s “Squawk Box,” pointing to dollar strength and recent disappointing economic data. “The economy simply [is] not taking off, so I don’t see there will be an interest rate increase.” – Mark Faber

“The U.S. economy is sicker than ever,” said Schiff. “And the Fed is going to launch QE4 for the same reason they launched QE3, 2 and 1. They’re going to try to stimulate the economy. Now that they stopped QE, the air is coming out of this bubble.”

And according to Schiff, if the Fed does raise interest rates later this year, the outcome will be catastrophic. “I think without QE4, we will be back in recession,” he said. “It’s going to be horrible. There’s going to be a worse financial crisis than 2008.”

I agree with the views above. The underlying US Economy is sick and on the verge of recession. With that in mind, the bears above are forgetting two things. First, the FED needs to re-load on their recession fighting tools before the next one hits (we are almost there). And second, the FED is a reactionary force. Meaning, it has always been behind the ball in terms of reacting to various economic developments. I don’t think that will change now.

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Will The Fed Forgo Raising Interest Rates? Google

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These Charts Will Scare The Bejeezus Out Of You

Daily Chart AMarch 17th

3/17/2015 – A mixed day with the Dow Jones down 129 points (-0.72%) and the Nasdaq up 8 points (+0.16%)

Let’s take a look at some charts in order to come to a very simple conclusion.

Two weeks ago I talked about the chart below. Suggesting that the majority of the stocks haven’t gone anywhere since about June 16th, 2014. You can see even more evidence of that here  A hidden bear market in Dow threatens all stocks

NYSE

Not only that. Various macroeconomic indicators have collapsed while earnings multiples continue to expand. Plus, corporates are starting to guide lower. That is to say, something has got to give.

Macrodata

Finally, the GDP Growth consensus is starting to collapse. So much so that if it wasn’t for the QE and zero interest rates, the US Economy would already be in a full out recession (or worse).

GPD Consensus

Given all of the above, it doesn’t take a genius to figure out what happens next. Surprisingly enough, 99% of investors out there don’t see it.

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. March 17th, 2015  InvestWithAlex.com

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

These Charts Will Scare The Bejeezus Out Of You Google

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Why Dollar Strength Suggests Upcoming Turbulence

dollar surge

A little over 3 years ago, some swanky EU supermodels were refusing payment in the US Dollars. Today, you would be hard pressed to find a single person who is not bullish on the greenback. This worries me and here is why.

We are in an incredibly complex macro economic situation. The debt levels are massive, almost every country is trying to devalue/monetize their currency, there are numerous asset bubbles and the FED is trying to re-load their toolbox before the next recession starts (just around the corner now).

In other words, people are panicking into the dollar at exactly the wrong time. As the chart above illustrates, almost every financial disaster has been preceded by such a run up. Followed by a multi-year decline. Finally, the commercials are heavily shorting the dollar at this stage. We talk about all of that and what to expect next in our latest weekly podcast. Click Here to listen.

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Why Dollar Strength Suggests Upcoming Turbulence   Google

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Yet Another Hedge Fund Manager Warns About Imminent Bear Market

bull-vs-bear1

With the mainstream financial media being overwhelmingly bullish, I make it my mission to bring you as much bearish news as possible. For one simple reason. My mathematical and timing work suggests that a bear market of 2015-2017 is about to kick in. Andy Redleaf, CEO of $4.2 billion hedge fund manager Whitebox Advisors, sees the same thing.

  • “I think it is a truly scary time,”
  • “We do not know exactly where all the credit creation of this cycle has gone. Certainly money sits idly as excess reserves, but just as certainly money that would not exist but for unconventional monetary policy has distorted prices and resource allocation,”
  • “There are some parallels with the collapse in home prices which preceded the financial crisis,”
  • “It strikes me as completely plausible that a further decline in the euro triggers a recession in the U.S.,” Redleaf wrote. “The U.S. has a bear market, high-yield spreads move to 1998 type levels (1,000-1,200 [basis points]), U.S. weakness and market tightening of credit probably make the recession global.”

And so on and so forth. I think you get the picture. It is easy to look back today and say that anyone with an ounce of intelligence could have seen the 2000 and 2007 tops coming. Yet, very few people did. Why? For the very same reasons most people today refuse to believe that yet another bear market is possible. Greed, following the crowd, perpetuating today’s market condition and, quite frankly, stupidity.

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Yet Another Hedge Fund Manager Warns About Imminent Bear Market Google

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How Low Will An Upcoming Bear Market Go?

Daily Chart AMarch 16th

3/16/2015 – A strong up day with the Dow Jones up  228 points (+1.29%) and the Nasdaq up 58 points (+1.19%). 

Jim Stack was fortunate enough to pick the 2009 bottom. Now, the president of InvesTech Research, which is on the Hulbert Financial Digest’s Honor Roll of top newsletters over the past 15 years, and Stack Financial Management, which manages more than $1 billion of investors’ money, believes we are on the verge of a bear market.

Here is what concerns him.

  • Rising interest rates,” he explained, “can provide significant headwinds to a bull market,” which he calls “one of the more interest-rate-sensitive bull markets in our lifetime.”
  • Margin debt has peaked and begun to fall. “Past peaks in margin debt have led or coincided with the start of past bear markets,” he wrote in InvesTech Research.
  • Professional investors are extremely bullish, with bearish sentiment under 14%, “the fewest bears since 1987, just before the crash,” he told me.
  • Corporate profits topped out more than a year ago, but S&P 500 earnings per share continued to rise until recently. That discrepancy is often an early-warning sign.
  • Although the S&P 500’s current multiple of 19.9 times earnings is slightly below the average when interest rates are below 3%, that will make stocks especially vulnerable when rates do rise. And the median U.S. company trades at its highest valuation of the past 65 years, according to the noted finance scholar Kenneth French of Dartmouth College.

Nothing that I haven’t covered here before, but it nice to hear the same thing from somebody else.  The question is, if a bear market does start, how low will it go? Jim suggests the following

A more likely outcome, he said, was for the S&P 500 to retrace about half of its bull market gains. If March 2 was the peak, that would mean it could fall to around 1,400, roughly a 35% decline.

I would say that is a fairly good estimate. And as I have suggested before and despite the fact that I am bearish, I don’t anticipate the markets to collapse as they did in 2007-2009. That was a mid-cycle panic. The upcoming decline will be more reminiscent of 2000-2002 decline on the Dow. Still, it wouldn’t make sense to be long here.

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. March 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!!!

How Low Will An Upcoming Bear Market Go? Google

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6 Reasons Why The US Stock Market Is NOT The Place To Be

what

Business Insider recently had a story on why the US stock market is the place to be.  6 reasons why the US stock market is still the place to be  Let’s take a look. My comments are in red.

  1. US economic growth, as measured by GDP, has outpaced other G10 economies since the end of the recession and is forecast to keep doing so, as the chart below shows.  So what, just because we outpaced everyone, doesn’t mean we can’t have a bear market here. 
  2. US companies have been more likely to meet their forecasts for earnings growth than other developed countries over the past several years. Again, who cares, doesn’t mean we can’t have a bear market. 
  3. US stocks have more exposure to faster-growing sectors like technology and health care. Yep, and the above sectors are in a massive overvaluation/speculation bubble. 
  4. Higher US yields support higher valuations for stocks. You kidding….right? 
  5. Price-to-earnings ratios tend to move in tandem with the dollar, and will climb if the dollar rally continues. Two things here. First, this utter nonsense. There is no long-term evidence to support this statement. And even if it was true, the dollar is about to reverse. As discussed in our weekly podcast. 
  6. Adjusting for sector mix, US stocks are not expensive versus the rest of the world. The US stock market is massively overpriced and on par, if not worse, than 2000 and 2007 tops. I have shown the evidence of that here over the last few months. 

In short, the points above is how the majority of money managers and investors out there think today. Unfortunately, their arguments hold very little water. A bear market here would make just as much sense, in not more, as the continuation of today’s bull market.

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6 Reasons Why The US Stock Market Is NOT The Place To Be Google

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Investment Wisdom Of The Day

warren_buffet“None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling. Unfortunately, Bertrand Russell’s observation about life in general applies with unusual force in the financial world: “Most men would rather die than think. Many do.” – Warren Buffett

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Investment Wisdom Of The Day  Google

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Marc Faber Capitulates. Stocks About To Drop

marc faber2

Marc Faber has been one of the most outspoken and well researched bears over the last couple of years. Predicting anything and everything from an outright collapse to a prolonged bear market. With that in mind, it appears that Mr. Faber has finally capitulated on his bearish stance….

“I’m an investor, and I invest,” he told CNBC. “Do I want to buy European sovereign bonds at a negative yield where I’m sure to lose some money — not a lot of money, but some money — or do I want to be in some blue chip stocks? If I take a 10-year view, I think I will make more money in blue chip stocks.”

Listen, being a bear in a bull market is one of the most difficult things out there. No matter how good your research is, you begin to question your sanity and everything else in between. I remember shorting sub-prime lenders in 2006 and then wondering how it was possible for them to still increase in value. For another 18 months. When they did finally collapse, in the summer of 2008, some of them went from $70-80 a share to penny stocks in a matter of weeks.

Point being, I believe Marc Faber is switching to the long side at the maximum pain threshold.  He is tired of this bull market proving him wrong, he is tired of everyone in the financial media making fun of him and he is tired of losing money/opportunity. Yet, there is another way to look at this. When a bear like Marc Faber finally throws in the tower, it is highly probable that the market top almost there. If not there already.

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Marc Faber Capitulates. Stocks About To Drop Google

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Two Hedge Fund Managers Discuss The Stock Market, Currencies, Commodities & Investment Ideas – Weekly Podcast

March 14th, 2015: We have a great show for you this week. Hedge fund managers Matthew Demeter and Alex Dvorkin discuss the following topics….

  • What the stock market is doing and what we expect to happen over the next few weeks.
  • COT Report and what the big guys are buying. Listen to make sure you are not on the wrong side of the trade.
  • US Dollar & Other Currencies, Interest Rates, Gold/Silver, Oil, Bond Yields, Copper, Agriculture, Natural Gas and what we expect to happen in these markets.
  • A multitude of great investment ideas and various tops/bottoms that can make you a ton of money.
  • And of course, much…..much more.

Don’t miss this one and join us again next Saturday. 

Listen to the podcast by clicking on the player above. If you prefer iTunes, please Click Here

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Two Hedge Fund Managers Discuss The Stock Market, Currencies, Commodities & Investment Ideas – Weekly Podcast Google