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Forget Ukraine. Is Putin Getting Ready For An All Out Nuclear Strike On The US Economy? (PART II)

With heavy fighting breaking out all over East Ukraine (At least two Ukrainian army helicopters shot down over Slavyansk), it’s just the matter of time before Russia intervenes militarily.  Yet, as we have reported yesterday in Part I of this story, there might be a much bigger story brewing behind the scenes.

According to some reports Mr.Putin has ordered a creation of exchange where Russian oil and gas will be traded in Rubbles or Euros or Pounds or Yuans or Goats, etc….basically anything but the US Dollar (aka Petrodollars). Russia wouldn’t be the first country to try this, but it would be the first country to be able to actually pull it off because of the nuclear force equalizer.

The countries that have attempted this in the past, most notably Iran, Iraq and Libya, have faced the full force of America’s military might or crippling sanctions. Will Putin be the first to pull this off?

He certainly has all of the tools and military power to do just that, but what would it mean to  the USA?. According to some, an all out economic collapse. As the theory goes, if Mr.Putin is to strike at the heart of the American economy (by moving away from the Petrodollar), the US dollar will collapse, interest rates will surge, financial markets will crash and the US Economy will fall into a deep depression that will make the Great Depression look like a picnic.

Fact or fiction? I don’t buy it. First, the US Economy is too well diversified and too large to collapse because of Mr. Putin’s actions. Second, with the US Dollar being the global reserve currency and with no alternative in sight, it would take a lot more than accepting Rubbles for gas&oil to persuade the world to move away from the USD.

What it will do is weaken the USD and the US Economy and show that the US might no longer be in control. In other words, it would show a crack in the armor the USD and that could cause significant problems down the road. If the reports above are true, perhaps that’s exactly what Mr. Putin is trying to accomplish here.

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Forget Ukraine. Is Putin Getting Ready For An All Out Nuclear Strike On The US Economy? (PART II) Google

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Stock Market Update. May 1st, 2014. InvestWithAlex.com

daily chart May 1 2014

A mixed day with the Dow Jones down 22 points (-0.13%) and the Nasdaq up 13 points (+0.31%). 

David Zervos, chief market strategist at Jefferies, says stocks are not overvalued and investors should buy the dips.

“A lot of the valuation metrics that are typical of the stock market…they fail to take into account the extraordinary monetary policy that’s been put into place. We’ve done a lot of healing. We have a lot of risk-taking in the pipeline and a lot of that risk-taking is going to start to generate real returns.” If you would like to read the rest of this garbage Click Here

Of course, he would like nothing more than to take that risk with your money…not his. The stock market has, more or less, flat lined since its April 11th bounce rally terminated on April 22nd (the bounce we told you about here). With the Dow and the S&P unable to go higher and with the Nasdaq and Russell 2000 in a technical downtrend, is this the “buy the dip” or “buying opportunity of a lifetime” that Mr. Zervos is talking about?

Don’t bet on it if you value your money. According to our mathematical and timing work the market is approaching an important juncture that will make Mr. Zervos look very foolish….. soon enough.

Again, our work shows a severe bear market between 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

(***Please Note: 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). 

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Stock Market Update. May 1st, 2014. InvestWithAlex.com  Google

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Shocking S&P Chart Begs For A 20% Correction. Fact or Fiction?

According to Richard Ross, global technical strategist at Auerbach Grayson, certain technical indicators are calling for a serious correction.

“I’m going to be completely clear here: I’m quite bearish and I think the market’s going significantly lower,(see chart below)”

From our point of view it’s no longer the question of IF, but of WHEN. Today, the market sits at an incredibly important juncture. From the fundamental point of view, it is substantially overpriced and highly speculative. Most of it as a direct result of FED intervention and credit infusion. With FED tightening, things will only get worse.

And while most technical indicators remain bullish for the time being, our mathematical and timing work does not share in the optimism. For instance, with the 5-year cycle terminating in early March and with the 17-year bear market cycle scheduled to complete in 2017, the market has very little (if any) upside left here.

Finally, a 20% decline from today’s levels would be just a starting point for the upcoming bear market of 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

S&P Chart

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Shocking S&P Chart Begs For A 20% Correction. Fact or Fiction?  Google

Talking Numbers: This chart says we’re in for a 20% correction

We all know about the Marc Fabers, Peter Schiffs and Nouriel Roubinis of the world, endlessly calling for the mother of all crashes. But now a different source is sounding the alarm: the charts.

Despite the Dow Jones industrial average reaching a new record high, Richard Ross, global technical strategist at Auerbach Grayson, says certain technical indicators are calling for a serious correction.

“I’m going to be completely clear here: I’m quite bearish and I think the market’s going significantly lower,” said Ross, a “Talking Numbers” contributor.photo

.

Ross sees a big problem with the S&P 500’s chart—a 20 percent problem to be exact. In 2011, the index corrected by about that much to its 150-week moving average after making moves very similar to its most recent price action.

“I think that we’re in exactly the same scenario,” said Ross, who notes that a similar decline to the current 150-week moving average would also be roughly 20 percent to around the 1,500 level. “I think that’s what we’re staring at right here. I think that there’s still time to get out of this market.”

Charts are one thing. But is there a fundamental reason to back up Ross’ bearish views?

Recent economic data have been soft, including this week’s first-quarter U.S. GDP report that showed the slowest growth since the fourth quarter of 2012. The earnings front has not been much better for growth stocks either (see Twitter and Facebook).

Yet according to Gina Sanchez, founder of Chantico Global, investors were already prepared for a slow first-quarter number.

“The stock market has been reflecting defensiveness all year,” said Sanchez, a CNBC contributor. “The market already had a handle on the fact that it would already be weak.”

In particular, Sanchez says the recent weakness in housing is sounding the alarm for investors.

“If you look at the pillars of the economy that should be holding us up, one of the biggest that’s been doing poorly is housing,” Sanchez said. “If we see further (declines) in housing, that could be very negative. So, I do think that there is some reason for caution right now.”

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Marc Faber Anticipates The Stock Market To Crash. Should You?

Quick Note:  Our stock market mathematical and timing work does not show a crash. Rather, our work shows a severe bear market between 2014-2017. When it starts it will retrace most of the gains accrued over the last few years in an “orderly fashion”. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE 

marc faber2

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Marc Faber Anticipates The Stock Market To Crash. Should You?  Google

Market Watch: Is Marc Faber right that U.S. stocks could crash?

 Writing ahead of the Fed announcement, I see a lot of buzz being generated over Marc Faber’s recent comments regarding it being too late to buy U.S. stocks now.

First, allow me to preface this writing by saying that on a personal and professional basis, I am a big fan of Dr. Faber. He was among the first to really give me a chance to express my views before I began writing for major websites and appearing in the financial media. In early 2011, I shared his deflationary call and he published one of my first writings addressing inter-market movement. That writing became the genesis for the Summer Crash of 2011 call, as well as helped form my thinking in terms of big-picture macro moves in asset markets.

I thought it appropriate to write about his concerns today, which I share as well. All year long, the media has focused on the “obvious” excuses to explain weaker housing data (weather) and the breakdown in high-beta names (risk sentiment on fear of Russia/Ukraine “tensions”). None of this jibes with what the market itself has been saying for the past few months. Economic growth for the first quarter was abysmal despite the rallying cry of “ economic escape velocity” at the start of the year. Long-duration bonds and low-beta/non-cyclical sectors all along have disagreed with that narrative.

“Do what you feel in your heart to be right- for you’ll be criticized anyway. You’ll be damned if you do, and damned if you don’t.”

—Eleanor Roosevelt

Is it too late to buy U.S. stocks? It depends very much on your timeframe. I do think that from an investment standpoint, continuing exposure to high-beta U.S. stocks over a multiyear period may be sub-optimal. There remains no real reflation, and while the world is focused on Fed tapering, the real news story is a continued deflation pulse that seems unable to be reversed despite monetary action.

That is not to say there won’t be tactical periods where stocks won’t do well, but it’s clear the 2013 playbook was an anomaly and that markets are returning to historical cause and effect. I have no dog in this fight, given that I manage absolute return, non-correlated strategies and equity-sector rotation products in mutual fund and separate account formats. However, even within equities it makes sense to tactically be defensive from a sector perspective when conditions warrant.

Ask yourself if something is wrong with this picture. Small caps relative to large caps are in a crash. Yes, the word crash is appropriate given that the last three weeks have erased all of 2013’s alpha and outperformance.

Take a look at the price ratio of the Russell 2000 ETFIWM -0.56%  relative to the S&P 500 SPY -0.08%  below and let me know if that doesn’t make you wonder about underlying market perception changes.

From a long-only stock perspective, I am a big believer in the idea that alpha is beta rotation in disguise. A recent paper by Charlie Bilello and I showed this going all the way back to 1926, and in a second award-winning paper addressing asset allocation (to be released in the coming days), we show that going back to 1977, one should be very aware of the behavior that long-duration Treasurys express relative to intermediate. In both cases (Utilities and Treasuries), the predictors must be respected given longer-term metrics and odds that favor an aggressive or defensive posture.

Sure, the bull market may be intact, but I would much rather position where the payout is highest. From a trading and tactical standpoint, the payout is higher in two areas and two areas only, in my opinion. The first is on the notion that U.S. high-beta large-cap sector names are next to breakdown meaningfully.

The second is the emerging market trade EEM -0.36% , which has once again weakened in recent days. It pays to pay attention to underlying market dynamics when history is on the side of inter-market analysis. The U.S. consumer areas of the investable landscape look weak, and domestic areas are taking it on the chin.

That might mean Dr. Faber is going to be proven right with the benefit of hindsight. Gloom, Boom and Doom? Perhaps the reality of where we are headed lies in each of those words wrapped into one environment.

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Forget Ukraine. Is Putin Getting Ready For An All Out Nuclear Strike On The US Economy? (PART I)

If you study Putin’s past performance in great detail you will walk away with a sense that his strategic thinking ability, execution and drive are unmatched.  After all, he was able to rebuild Russia after the Soviet Union collapse, he was able to remain in power for over 15 years, he was able to assume a complete control of his country and according to some he was able to stash away close to $100 Billion…….potentially making him the richest man in the world. The bottom line is, no one should underestimate him as an adversary.

One of the reasons the US and the Obama Administration is so hell bent on Ukraine (in addition to NATO expansion) is due to Putin playing Obama on both Syria and Iran like a cheap flute. Understandably, the Obama Administration/Military Industrial Complex are furious and want revenge. Anyone with half a brain and patriotism blinders off understands this.

At this juncture Putin is beyond fed up with the US. His televised speech on March 18th is a clear indication of that. There is no doubt that he will not let Ukraine fall into western hands nor NATO, yet his long-term strategy might take a different path from an outright all out invasion of Ukraine the West anticipates. He is likely to take over Ukraine from within (as he has done before) and after the US and the IMF pump hundreds of billions of dollars into Ukraine’s economy.

Meanwhile, according to some reports Putin is getting ready to strike back at the US Economy in a massive fashion and where it would hurt us the most. Fact of Fiction? We will cover that in Part II tomorrow. 

RussiaVsUSA

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Forget Ukraine. Is Putin Getting Ready For An All Out Nuclear Strike On The US Economy Google

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

daily chart April 30 2014

Another up day with the Dow Jones up 45 points (0.27%) and the Nasdaq up 11 points (0.27%). 

Even though today’s FED release did not contain anything unexpected and the market ended up reacting in a positive fashion, from my vantage point, their tightening is just another death blow to today’s bull market/economy. As I have illustrated here so many times before, the FED is out of touch with reality.

It is a reactionary force at best. Earlier today I showed that the real GDP growth was a negative 1% (if you take temporary Obamacare boost out), plunging the US Economy into a technical and “unofficial” recession.  Yet, the FED continues to tighten. While I am not a proponent of QE or any other sort of artificial stimulus, tightening now is equivalent to financial suicide.

With the stock market sitting close to an all time high, this sort of a setup is a recipe for a disaster. There is no economic recovery and/or growth ahead. Instead, we have a highly leveraged/speculative economy that is running on fumes…..with FED tightening to boot. In a nutshell, watch this market blow sky high in a spectacular fashion as soon as other market participants realize this fact.

This is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

(***Please Note: 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). 

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Stock Market Update. April 30th, 2014. InvestWithAlex.com  Google

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Will Corporate Earnings Drive Stocks Higher? Don’t Bet On It.

s&p ratioBreakout makes a compelling case that corporate earnings will continue to drive stock prices higher for the foreseeable future.

“Companies are getting incremental gains from revenue, holding the line on expenses, so at the end of the day we’re likely to see modest gain in earnings for the quarter, somewhere maybe around 5%,the economy here is going to reaccelerate ”

One big problem. Today’s earnings are an illusion at best driven by artificial credit infusion into our Economy by the FED. In fact, based on our rough calculations……if you take out the QE and other stimulus out of the corporate earnings equation, the S&P P/E ratio zooms up from about 18 today to 50 – 70 it really is. Making today’s market not only incredibly expensive (by any historical measure), but “are you freaking kidding me” expensive.

That is exactly what the vast majority of today’s investors (professional or not) miss. We have faced the exact same situation in 2007-2009 collapse when the P/E ratio zoomed up from about 20 at 2007 top to 128 in 2008 as supposed corporate earnings vanished into thin air. Expect the same thing to happen today as the bear market/recession of 2014-2017 show their ugly face and corporate earnings vanish once again.

Z31

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Investment Grin Of The Day

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked.
Inside the small boat were several large yellow fin tuna.

The American complimented the Mexican on the quality of his fish and asked, “How long does it take to catch them?”
The Mexican replied: “Only a little while”.

The American then asked why didn’t he stay out longer and catch more fish?
The Mexican said he had enough to support his family’s immediate needs.
The American then asked, “But what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise.”

The Mexican fisherman asked, “But, how long will this all take?”
To which the American replied, “15-20 years.”

“But what then?”
The American laughed and said that’s the best part. “When the time is right you would announce an IPO and sell your company stock to the
public and become very rich, you would make millions.”

“Millions.. Then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

Z31

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GDP Growth Collapses. Is The US Economy In A Recession Already?

We have argued, for quite some time, that the US Economy and/or economic growth is a giant Ponzi scheme perpetuated by careless FED policies and massive credit/liquidity infusion into our financial system. Take that ocean of liquidity away and you will something very ugly swimming underneath. With most of that liquidity going directly to speculation and driving most asset classes into bubble level valuations, today’s GDP growth number of +0.1% is quite shocking. Even for me.

GDP Slows to Crawl in First Quarter, Up 0.1% (Vs 1.2% growth consensus)

Understandably, most economists will blame the weather and baby Jesus for the miss, but the story goes deeper than that.  According to some GDP observers the GDP growth would have been Negative 1.0% if it wasn’t for a temporary, government mandated and massive spending triggered by Obamacare.

Wait what?!?!….Are we in a recession already?

That in itself is irrelevant. What is relevant is that the stock market is sitting at an all time highs, the FED is talking about further tightening and you are most likely fully invested in the stock market. That is what’s really important.

Further, our mathematical and timing work confirms the notions above.Liquidity party or not, it shows a severe recession within the US Economy between 2014-2017. In the past, I have argued that we will be in “an official recession” by the end of 2014 or in Q1 of 2015. By the looks of it might happen faster than I thought.

Again, the FED will be forced to keep this liquidity party going while looking at new ways to re-inflate and stabilize the markets when the bear market of 2014-2017 kicks in. Expect a flat yield curve and much lower equity prices over the next few months/years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

GDP Growth Investwithalex

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GDP Growth Collapses. Is The US Economy In Recession Already?  Google

Economy barely grew in first quarter

The economy grew far more slowly in the first quarter as extreme winter weather helped crimp activity.

The nation’s gross domestic product in the first three months of 2014 increased at just a 0.1% annual pace, down from 2.6% in the fourth quarter, the government said Wednesday. That’s the weakest pace since late 2012.

Economists had expected growth of about 1.1%.

Consumer spending held up well despite the adverse weather, growing at a 3% annual rate, down from 3.3% in the fourth quarter.

But business investment fell 2.1%, and spending on equipment tumbled 5.5%.

Exports declined 7.6% as growth slowed in Europe and China.

Inventories, meanwhile, were a drag on growth as businesses reduced stockpiling after aggressively replenishing shelves in the fourth quarter.

A bright spot was government spending. Federal government spending ticked up 0.7% —the first increase since 2012’s third quarter — as budget cuts eased this year. State and local government spending fell 1.3%.

Analysts say the weak showing was largely the result of some temporary headwinds, including the weather, weak exports and the reduced inventory-building.

Many economists expect growth to pick up to a 3% pace or higher the rest of the year. Housing is expected to gain more traction. Rising household wealth and falling debt should prompt consumers to step up their buying. And federal government spending cuts will be smaller this year, while state and local governments are increasing their spending as their finances improve.