We have already discussed, a number of times before, why today’s IPO market bubble is reminiscent of the 2000 Nasdaq top (search IPO on the right side). The question becomes, when will this IPO bubble pop?
This is rather easy. As soon as the stock market breaks down and begins it’s bear market. Based on our timing and mathematical work that time will arrive shortly. Once the market breaks below 15,000, most of the animal spirits associated with “hot yet highly speculative” IPOs will go out the window. Just as it should. If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and it’s internal composition, please Click Here.
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This has been a record year so far for European stock market listings – traditionally a sign that a region’s economy has returned to health.
The average size of fundraisings in Europe this year so far is $259 million, the highest on record, according to Dealogic. With the region’s economy still growing at a relatively slow rate, this is not just about greater confidence in the economy.
“First, there was a strong amount of cash available for investors in equities,” Klaus Hessberger, co-head of ECM EMEA at JPMorgan, told CNBC. He advised on the $6.9 billion sale of UK government shares in Lloyds Banking Group, the biggest deal in the region so far in 2014.
“Second, IPOs need some preparation time, usually more than six months – so this was a reflection of a positive market from summer onwards. Third, U.S. equity money is still coming into Europe because of the continued lower interest rate environment and fourth, there was also cash raised for M&A.”
Plenty of action is also driven by private equity groups “clearing out aging investments from their portfolios,” as Maria Pinelli, Ernst & Young’s global vice-chair of strategic growth markets, pointed out. She thinks the first half of 2014 at least will continue to be a good year for the IPO market.
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Jin Lee | Bloomberg | Getty Images
With all the cheap money in the system, bankers believe the IPO boom has further to run. There is pent-up demand and a number of appetizing companies waiting to come to the markets.
“There is still some way to go to capture all the liquidity,” as Hessberger said.
In Europe, Goldman Sachs is topping the leaderboard of advisors in terms of value of IPO deals completed, with a market share of 13.6 percent in this year’s deals so far, followed by JPMorgan (9.7 percent) and Deutsche Bank (9.4 percent).
However, it isn’t quite 2006 all over again at investment banks.
There are still risks to continued outperformance, such as worse economic performance, as Hessberger pointed out.
Some of the more recent listings have been less well received, such as Candy Crush game maker King Digital, whose shares fell by 16 percent on their debut. And the most recent Lloyds sale featured a greater discount than the last tranche sold by the UK government.
There are also suggestions that some banks are having to resort to different measures to get in on IPOs, such as observing stricter guidelines against working with particular clients’ competitors and even waiving fees to be listed as part of deals they didn’t work on for existing clients.
The M&A and debt markets have not recovered in the same way. Revenues for these kind of deals are down 6 percent for M&A, and 22 percent for debt capital markets globally, according to Dealogic figures.
While there are a number of big money deals like the Time Warner Cable purchase pushing up M&A figures, the actual number of deals is down 14% compared to 2013 at this point, making 2014 the slowest year-to-date period by number of deals since 2003, according to Thomson Reuters data.
Nice piece of garbage reporting Bloomberg. Do National Association of Realtors shills have you on their speed dial? According to the NAR and most real estate agents we are about to experience a massive surge in home sales due to weather related constrained demand.
“There aren’t many people who want to drive around looking for homes in a blizzard, and there aren’t many sellers who can put their homes on the market unless they have some place to move to,” Maki said. “We’ve seen sales take a hit so far, lagging where they usually are, but we think the next few months will make up for it.”
Fact or fiction?
A bunch of nonsense is more like it. I have already pocked a number of holes in their weather related argument in my previous posts, but only time will prove me right. The reality is quite different. The real estate market is now done with it’s dead cat bounce.That was evident in last weeks report where according to the National Association of Realtors, pending home sales index “unexpectedly” fell 0.8% in February and 10.5% from a year ago level. If you would like to get a complete real estate report and learn exactly what will happen over the next few years, please read my comprehensive report. Real Estate Collapse 2.0 Why, How & When
In short, the real estate market will decline over the next 3-4 years in conjunction with the US Economy and financial markets. When it is all said and done, I wouldn’t be surprised to see real estate prices down 30-50% from today’s levels in select markets. If you would be interested in learning when the bear market of 2014 will start (to the day) so you can time the real estate market with more precision, please Click Here.
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Donna Cicerone and her husband Paul want to put their three-bedroom home in Milton, Massachusetts, on the market. First, they have to find a house to buy.
The Cicerones live in the Boston area, where all but three weekends this year have had snow, sleet or rain. Bad weather has forced them to cancel house-hunting plans half a dozen times, they said. When they have found a house they liked amid a limited supply of properties, they’ve been outbid.
“The moment we sign a contract to buy, we’re putting our house on the market,” said Donna Cicerone. “We feel like we’re missing an opportunity because everyone says there are lots of buyers, but there’s nothing we can do.”
Frustrated shoppers and would-be sellers like the Cicerones are setting the pace for the housing market’s spring selling season, the March through June period when more than half of U.S. home sales take place. The market’s getting a late start this year because so much of the country has been in the grips of bad weather, said Dean Maki, chief U.S. economist for Barclays PLC in New York.
“There aren’t many people who want to drive around looking for homes in a blizzard, and there aren’t many sellers who can put their homes on the market unless they have some place to move to,” Maki said. “We’ve seen sales take a hit so far, lagging where they usually are, but we think the next few months will make up for it.”
Photographer: David Paul Morris/Bloomberg
Potential home buyers view a model home for sale. Home sales declined in February to…Read More
Sales Fell
Home sales declined in February to the lowest level since mid-2012, according to the National Association of Realtors. The number of contracts signed with the intention of purchasing properties fell that month to the lowest since 2011, according to the Realtors’ group. While the numbers are seasonally adjusted, they can be influenced by unexpected events such as unusual weather.
Applications for mortgages to purchase homes dropped in February to the lowest since 1995, according to an index from the Mortgage Bankers Association that also is seasonally adjusted. By mid-March, the gauge regained about 12 percent from that low, while remaining about 17 percent below the level it was during the same week in 2013.
Most of the sales blocked by bad weather will happen in the next few months, Maki said. Housing forecasters Fannie Mae and the Mortgage Bankers Association predict 2014 home sales will be
‘Exaggerated Bounce’
“Because we’ve had a late start to sales, we expect a bit of an exaggerated seasonal bounce,” said Maki.
Sales of existing homes probably will rise to 5.14 million in 2014, up from last year’s 5.07 million, according to the mortgage bankers group. Mortgage lending for purchases probably will total $661 billion, near last year’s $652 billion, the trade group said.
Like many buyers, the Cicerones are eager to purchase a house so they can lock a mortgage rate before borrowing costs rise. The average U.S. rate for a 30-year fixed mortgage was 4.4 percent last week. A year earlier, it was 3.57 percent. By the end of 2014, the average rate probably will be about 4.6 percent, said Fannie Mae.
“We’re ready to pounce when we find the right house,” said Cicerone, 48. “We want to put our home on the market to catch all the buyers nervous about mortgage rates, and we want to find a house as fast as we can so we can lock in a good rate too.”
They may get some cooperation from the weather in April. Below-normal temperatures will give way to more seasonal weather in the eastern U.S. next week, according to Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland. The December through February period was the coldest in four years.
Fed Tapering
Borrowing costs have risen as the Federal Reserve continues tapering stimulus efforts that have kept interest rates low. Policy makers cut monthly bond purchases to $55 billion this month, from $85 billion last year. Fed Chair Janet Yellen said the program could end this fall and that the benchmark interest rate, which has been close to zero since 2008, may rise six months after that.
Tighter lending also is hurting the market, said Michael Hanson, a former Federal Reserve economist now working for Bank of America Corp. in New York. In January, the Fed issued a report showing 1.4 percent of banks had raised mortgage standards, the first increase since April 2012.
“We need more first-time buyers in the market so they can purchase the homes of people who want to move up,” Hanson said. “We won’t see a normal real estate market until they are included, and they are the ones most affected when lenders tighten standards.”
First-time buyers accounted for 28 percent of all purchases in February, up from 26 percent in January that was the lowest in data going back to October 2008, according to the National Association of Realtors.
Supply Differences
The supply of homes for sale is bigger than last year, according to the National Association of Realtors. At the current sales pace, it would take 5.2 months to sell the properties on the marketin February, compared with 4.6 months a year earlier.
The markets in certain areas, such as Boston, Denver, and Houston, are leaner than during the 2013 Spring selling season. In Boston and Boulder, Colorado, the number of homes for sale in February was down about 30 percent from a year ago, according to Zillow Inc. in Seattle. In Houston, Dallas and Denver, the contraction is about 20 percent. The metropolitan New York and Seattle areas were up 1 percent.
That has made extra work for home-loan brokers such as Jonathan Sexton, a vice president at NE Moves Mortgage LLC’s office in Cambridge, Massachusetts. Each time people make an offer on a house, their mortgage broker prepares a letter showing they are pre-qualified for the amount of the bid. When supply shortages cause bidding wars, those letters are in greater demand.
‘Low Success’
“So far this year, I’ve seen an inordinately low success rate for bids because the supply of properties is so limited,” he said. “I wish I got paid in pre-approval letters instead of closed loans.”
Sales in the Boston area and other parts of the country likely will pick up speed as the market goes into April and May, said Bank of America’s Hanson.
“The housing market, like the rest of the economy, is on a gradual rec
Is it possible that your entire life is governed by the same cyclical forces that operate in the stock market? Is it possible that your life tends to oscillate, grow, fall, collapse, surge higher and otherwise flat-line (move sideways) just as the stock market or individual stocks do? If so, can your life be predicted?
A contrary view to most of Western media and governments propaganda machine. A must read for any red blooded and chest beating American. With American “defense” budget pushing closer $1 Trillion mark (higher than the next 10 countries combined), the US Industrial Military complex needs another enemy to justify the expenditure. The bigger the enemy the better. Of course, China and Russia become our primary targets.
Which begs the question, were the miscalculations in Ukraine intentional or unintentional?
Of course they were intentional. If you don’t think that CIA or Pentagon analyst knew how Russia would react, I have some Notell and Pets.com stock to sell you. Unfortunately, there is only one way forward for the US Politicians and the Military Industrial complex. To escalate things for the benefit of profit. What the idiots don’t understand is what this will lead to. I have already outlined the timing and exactly what will happen in my comprehensive report Nuclear World War 3 Is Coming Soon.When, How & Why
It is downright scary how things are beginning to line up.
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As US spending on defense reaches $1 trillion a year and defense giants such as Boeing gain increased lobbying power, the US must justify this money by creating tangible enemies around the world, political analyst Patrick Hennigsen told RT.
RT:Why do some people in America say they were surprised at the speed Russia moved on Crimea?
Patrick Hennigsen: Personally I tend to be skeptical about press briefings or PR balloons coming out of Washington, especially around a crisis like this. Unless of course they were completely asleep at the wheel, or were totally incompetent, I find it hard to believe that they couldn’t have predicted at least a Crimea referendum result because of the crisis in Kiev.
So, even I in February said that Ukraine may be partitioned into two or three parts as a result of this crisis. But experienced intelligence analysts in the State Department or the CIA would have war-gamed five or six different possibilities, or any reaction as a result of an action taken with regime change in Kiev.
So it’s quite unbelievable that this would have quote, unquote, taken them by surprise. But this suits the priorities of the Pentagon in Washington, being able to talk up military confrontation in order to increase spending on defense organizations, to increase contracts which are going to be reviewed this year with the Pentagon and other defense organizations.
So it doesn’t surprise me. Even though they’ve made this statement, it’s quite disingenuous in my opinion.
RT:Has the US administration miscalculated? What and who are influencing America’s foreign policy with regard to Russia?
PH: I think throughout recent history, at least if not the whole of the last 30 to 40 years, the United States will never admit that it’s made a mistake or that any of the policies that it instituted have had a negative effect on the world. So that doesn’t surprise me, but certainly there are a lot of opportunists who stand to gain incredibly financially as a result of the crisis, a confrontation, a reigniting of the Cold War with Russia.
Currently the new United States is looking for an enemy, a major enemy, which they need to justify upwards of $1 trillion a year in total if you look at it in defense spending. And these are contracts that belong to corporations that are very powerful, as lobbies in Washington DC they hold incredible influence over political leadership, that is the system right now in the United States and Washington DC and so it shouldn’t surprise anybody that the opportunists are now jumping on board in the media and the corporate lobbies that really determine the agendas, the foreign policy agendas that are laid out by our political leadership in Washington DC.
People attend celebrations on the main square of the Crimean city of Simferopol March 21, 2014. (Reuters)
‘Decision to join Russia was a no-brainer for Crimea’
RT:Why do you think Crimean people voted in such large numbers to become part of Russia?
PH: Well, if you put aside general anti-Russian propaganda that is running rife right now regarding Russia being a “corrupt country,” a “dictatorship,” you look at the international organizations that have been monitoring elections in Russia and have commented on how transparent they are, how well organized they are. From a Crimean population’s stand point it’s a no-brainer. If you put yourself in their position you’re looking north and you’re seeing the total destabilization and the collapse of rule, the collapse of government. A complete economic collapse in Ukraine as a result of what happened in Kiev. So hence you have a huge voter turnout, an incredible landside of a majority.
And any person in the world would make a similar decision. If Northern Ireland had to make a decision because the government in London collapsed, neo-fascists took over at gunpoint in London, and people of Northern Ireland could have a referendum, of course they would join the south; they would join the Republic of Ireland for their own personal stability, for their own safety. So it’s not that big of a stretch when you look at it from a larger perspective.
RT:How can the fact be explained that the transition of the military in Crimea went so smooth? As you know, just a few Crimean soldiers decided to return to Kiev, while others joined the Russian army.
PH: The transition militarily in Crimea shouldn’t surprise anybody, because between the Ukraine and Russia you have over two decades of cooperation, military cooperation from the top brass, down to the soldiers who were doing drills together and maneuvers together for 20 years and even further back when you count the time of the Soviet Union. So Russia’s military presence goes back centuries in the Crimea. So when you look at it from that perspective, it shouldn’t surprise anybody that there would be a relatively smooth transition. I can’t believe any Ukrainian soldiers have any desire, nor do any Russian soldiers, to be firing at each other. Especially as they’ve had such a close and friendly and cooperative relationship in recent decades.
People celebrate the ceremonial change of time on the railway square in the Crimean city of Simferopol March 30, 2014. (Reuters)
‘US leadership has little respect for Iraq’
RT:Why did Obama compare Iraq to Crimea? Could those two cases actually be compared?
PH: Those comments by President Obama are very sad comments in respect to the Iraqi people. I think comments like that really demonstrate how little respect to the US leadership really has for the country of Iraq and for its people and they seem to forget the huge price that the Iraqi people paid in blood, paid in culture, paid economically for the designs of a handful of US transnational corporations and the Pentagon.
So to make such a statement, such an unequivocal statement, that has no basis really in reality. You can’t compare Iraq and the Crimea. How many Iraqis died since the first Gulf War? Two million, by some people’s estimations. To make that sort of comparison to me is intellectually sloppy and also very disrespectful to all the people who have paid the ultimate price for US foreign policy objectives in the Middle East.
RT:What do you think were Moscow’s aims in Crimea?
PH: I think in terms of Russian diplomacy regarding the Crimea, what you’re really talking about is the government in Moscow’s diplomacy and communication and relationship with the people of the Crimea. I don’t think it should surprise anybody if you look at the history of that part of the world, even Mikhail Gorbachev, who is considered by many in the West as a globalist, as an internationalist, said that the referendum in the Crimea corrected an old mistake, which was made under Nikita Khrushchev in the Soviet Union era. And that has been corrected that Crimea really should be a part of Russia and the people cast their ballots and they spoke quite loudly in fact and the result is in.
You have many other international commentators that would agree. The fact that the UN has not voted to recognize the result in terms of other opinion of UN countries is really disappointing. What the people themselves in that country have said and the argument in the West is that it’s in breach of the Ukrainian constitution. Frankly, the Ukrainian constitution ceases to exist the minute the government in Kiev was taken over at gunpoint, so all bets are off at that point. So it’s quite a disingenuous argument by the West to say that the referendum in the Crimea is in breach of the Ukrainian constitution, considering what happened in Kiev only weeks before.
After her disastrous debut just two weeks ago, in which Janet Yellen managed to crush market spirits to the tune of 200 points in 1 trading hour, today, we got a “better” version of herself that markets tend to love. Just as predicted on this blog. In fact, don’t expect to hear anything but “We will print and do whatever is necessary to keep this liquidity party going” moving forward.
This, of course, relays into everything we have been saying about the economy, the unemployment and the future of interest rates (yield curve). Again, with the advent of the bear market of 2014-2017, the US Economy will find itself in a severe recession by the end of 2014. In such an environment, the FED will not be tightening anything. Counter to today’s popular believe they will be looking to re-inflate, infuse credit or cut in any way possible. The result? Much lower equity prices, compressed (perhaps inverted) yield curve, much higher unemployment rate and surging gold prices.
Basically, exactly the opposite of what most of today’s market participants believe. If you would like to know exactly when the bear market of 2014-2017 will start (to the day), while setting the whole mess mentioned above in motion, please Click Here.
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CHICAGO (Reuters) – Federal Reserve Chair Janet Yellen said on Monday the U.S. central bank’s “extraordinary” commitment to boosting the economy, especially the still struggling labor market, will be needed for some time to come.
Yellen, in her first public speech since becoming Fed chair two months ago, strongly defended the Fed’s policies of low interest rates and continued bond-buying, saying there remains “considerable” slack in the economy and job market.
“I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy-makers at the Fed,” Yellen said at the 2014 National Interagency Community Reinvestment Conference
I really hate this sort of typical Wall Street BS reporting. (read full article below).
Money got nowhere else to go.
Money will keep chasing stocks, blow off top still ahead.
Put a stop loss 25% below today’s levels.
WTF? Why stop at the DOW 50,000. Let’s keep going my friend. This is absolute garbage and nonsense. Disregarding all of the fundamental, technical and timing issues associated with the statements above……… if putting a stop loss 25% below today’s levels doesn’t make this advice obsolete, I don’t know what will. The bottom line is as follows, you can listen to this garbage and lose a lot of money or you can follow our work.
As we have maintained for so long, the bear market of 2014-2017 is about to start. When it does, we will experience a very similar environment to what we have experienced between 2000 top and 2002 bottom (on the DOW). If you would be interested in learning exactly when this bear market will start (to the day) and it’s internal composition, please Click Here.
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Today marks the official end of the first quarter of 2014 and most traders are happen to see it end. The S&P500 (^GSPC) managed to grind out gains but it took nerves of steel to effectively trade the gyrations. That’s one reason professional trader Tres Knippa takes the emotion out of it by staying long and rolling up his stop-losses.
It’s less that Knippa is “bullish” in the traditional sense of expecting improving fundamentals. He simply thinks the bubble is still in inflation mode.
“Money’s got no where else to go. A lot of people keeping talking about overvaluation. ‘The market has come too far too fast. I’ve missed the opportunity.’ I actually don’t think you’ve missed the opportunity.”
Knippa thinks we’re in the seventh inning of a bubble but maintains that’s where the most explosive moves are often made. The so-called “blow-off top” formation is the frenzied buying before the bottom falls out from long market runs. The most famous end of a bubble of the last generation was the 30% gain in the Nasdaq (^IXIC) from February 1st to the all-time high on March 10th 2000.
Whatever you think of the valuations and today they are nothing compared to what was going on during the waning weeks of the dot.com top formation.
Obviously it’s dangerous for investors to be caught long during an investment implosion but Knippa is unabashed about the upside potential. “I don’t think we’re ridiculously overvalued but I think we’re gonna become ridiculously overvalued. I think equities could double or even triple from here.”
His strategy for participating in the upside without getting completely wiped out is to stay long individual stocks and put in stop-loss orders 25% below his positions. The key is rolling those stops higher as the momentum continues.
For long-term investors Knippa’s strategy is absurd on the surface. The implications of what would be left in the wake of a bubble of that magnitude would be horrific. It’s hard to objectively hope such a scenario unfolds but Knippa is clearly devoted to the market he has, not the one he wants.
Knippa thinks stocks are going much, much higher. It’s an openly extreme call but long time traders know better than to question what’s possible.
SAC Capital (Point 72 Asset Management) doubled their stake in Zynga (ZNGA) to 5% over the last few months. With Zynga selling at 70% off of its value from just two years ago….is it time for us to load up as well?
Probably NOT.
Listen, I would be the first one to tell you that I am not smart enough to figure out Zynga’s business model. Not in terms of their revenue generating capability, but in terms of creating “popular games”. This is more or less similar to a movie business model where the hits can be anticipated, but not fully predicted.
While the stock has been trending higher over the last few months, it did leave a large gap at around $3.50 that it must close before any meaningful gains can take place. Further, with our mathematical and timing works showing a bear market between 2014-2017, there will be very little chance for this highly speculative stock to move higher. As such, I would definitely stay away from Zynga until and unless it breaks out above $6.
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Maybe it’s investment as performance art? Hedge fund titan Steven Cohen, head of insider trading hotbed SAC Capital, has increased his stake in troubled game makerZynga (ZNGA) to more than 5 percent, according to a company filing, more than double the 2.2 percent he held at the end of 2013.
Zynga makes FarmVille, Words With Friends, Draw Something, and other social games. The company has had a rough time since going public at the end of 2011, including multiple rounds of layoffs, ill-considered acquisitions, and a soured relationship with Facebook (FB). Hedge funds own almost 58 percent of Zynga shares, according to Bloomberg data, up from 27 percent one year ago.
While Cohen is famous for buying and selling stocks rapidly, SAC Capital does have some large and seemingly miscellaneous holdings, including 8.8 percent ofClearwater Paper (CLW), 4.87 percent of Trulia (TRLA), and 4.71 percent of Crocs(CROX).
At $4.49, shares of Zynga have lost 69.7 percent since their high on March 2, 2012. This year the shares have gained 16.8 percent, owing largely to a $527 millionpurchase of mobile game developer NaturalMotion in January, which the company announced alongside a new round of layoffs. More analysts rate Zynga a sell than a buy, according to Bloomberg data.
Cohen’s hedge fund asked a federal judge on Thursday to approve its $1.8 billion insider trading settlement with the government, saying it was “deeply remorseful”for a sustained pattern of illegal activity by its employees. Six former employees have pleaded guilty to insider trading; two more, Michael Steinberg and Mathew Martoma, were found guilty at trial in recent months. As part of its deal with the government, SAC has agreed to stop managing outside investors’ money.
SAC, which is changing its name to Point72 Asset Management, will continue as a “family office” managing Cohen’s personal fortune. Cohen is worth $8.7 billion, and has amassed one of the world’s better collections of contemporary art, including a dead shark in a tank of formaldehyde, a human head sculpted out ofthe artist’s own frozen blood, and some paintings. Valued at $173 million, the Zynga stake is not much more than the $155 million Cohen paid one year ago for Le Rêve, a 1932 oil painting by Pablo Picasso.
60 Minutes did a very good story on high frequency trading and how it rips most investors off. While we have talked about this issue a number of times on this blog, this report does a much better job. Further, while I don’t believe the notion that the entire stock market is gamed, the transactional side of it is most certainly rigged. It is time our government does something useful for a change and ban this practice.
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Even Goldman Sachs’s President Gary Cohn believes that, for the most part, markets are ignoring geopolitical and overvaluation concerns. A situation where most investors are essentially forced to be in the stock market due to zero interest rate environment elsewhere. While true, this does not mean such an environment cannot be readjusted, leading to a substantial market decline in the very near future. Based on our mathematical and timing work, we are very close to such a point, as the bear market of 2014-2017 is about to begin.
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Goldman Sachs Group Inc. President Gary Cohn said prices in global markets don’t reflect the risks from geopolitical conflicts such as Russia’s annexation of Crimea.
“For the last six to 12 months, markets for some reason have been ignoring a lot of the geopolitical risk,” Cohn, 53, said in an interview with Canadian television network CBC. “Russia, Crimea, Ukraine: this is not the first or newest geopolitical risk we’ve had in the last year or so.”
Cohn cited tensions between China and Japan as well as continuing violence in the Middle Eastas risks that haven’t halted a climb in global equities over the last 12 months. Investors with a lot of cash have felt pressure to deploy it, preventing a sustained downturn in prices, he said.
“Anytime we get any sell-off in the market, there’s new investors coming into the market, so we haven’t seen that repricing,” Cohn said. Investors are saying, “I’ve got to put cash to work, and maybe these situations are going to be with us for a long time, and I can’t sit on cash at the bank earning no return forever,” he said.
Still, Cohn said the U.S. stock market seems fairly valued, given low interest rates and bond yields that will probably climb. The Standard & Poor’s 500 Index has risen 18 percent in the last 12 months.
“In a lot of respects, owning equities in the world today seems like the least risky opportunity for cash out there,” Cohn said. “Each of the alternatives has its own negative potential consequences to it, and then you evaluate all the alternatives in relationship to each other, and then you end up in a scenario where I think equities provide the most upside versus the downside.”
This was a rough week for the market. Particularly, for the Nasdaq and iShare NASDAQ Biotechnology Index (IBB). While the Nasdaq lost 121 points (-2.83%), the IBB declined 16.6 points or (-6.76%). The Dow fared much better by squeezing out a tiny gain of 20 points (0.12%). Structurally, the market did very well this week by closing most of the gaps. Keep in mind, the Dow left a large gap behind at around 16,050. I believe the market will go back to close that gap when the bear market initiates.
FUNDAMENTAL & MARKET ANALYSIS:
Why Interest Rates Will Remain Low
According to David Kotok, co-founder, chairman and chief investment officer of Cumberland Advisors, ”long-term rates are likely to stay near current levels for quite a while”.
I tend to agree, but I will go even further. Not only will interest rates stay low, but I would expect the 10-Year Note to retrace back to at least 2% over the next 2-3 years.Why?
Again, the forecast above is based on our incredibly accurate mathematical and timing work. This work predicts a severe bear market in US equities between 2014-2017 and a subsequent deep recession. As it is now, inflation is nonexistent as we continue to deal with debt liquidating deflationary forces.
When the bear market hits (we are almost there), the FED will have no choice but to abandon their “tightening” plan. Instead, a year from now they will be flooding the market with further liquidity/stimulus to try and avoid any further collapse. As you can understand, in such a interest rate environment, short-term rates will remain at zero while long-term tail of the yield curve will flatten once again.
Is Gold About To Surge?
There is very little love for the yellow stuff at the moment.Since topping out less than two weeks ago, gold is down 6%. Today,many people and money managers are falling all over each other, suggesting that the gold has topped out and the time to short is NOW. Not so fast. Not according to our mathematical and timing work.
Here is what most people miss.Most people anticipate strong economy, tightening, stronger dollar and somewhat higher interest rates going forward. That is not what our mathematical and timing work shows. Not at all. Quite the opposite. Our work shows that a severe bear market of 2014-2017 is about to start, ushering in a deep recession where the FED will be forced to flood the market with liquidity once again. Not tighten by any measure. In such an environment (liquidity pump while equity markets decline) gold tends to perform very well.
That is on top of a favorable technical setup. While I wouldn’t buy just yet, Gold should be on your BUY watch list.
What Does The Yield Curve Yield?
The opposite of what most other market participants believe.Most market participants anticipate the FED to tighten, as they have indicated, indicating economic growth and higher interest rates. In such a scenario you should see spreads widening. Instead, we are beginning to see a trend reversal and yield curve compression since the start of this year.
Does the bond market see something that most other market participants do not?
I believe so. In fact, we anticipate the yield curve to flatten further over the next 24 months and possibly invert as the bear market of 2014-2017 enters the picture. As we have indicated on this blog so many times before the bear market will usher in a severe recession, forcing the FED to flood the market with further liquidity. In such an environment, we would anticipate the long end of the curve to head lower. Much lower.
MACROECONOMIC ANALYSIS:
Ukraine continues to be the most important issue. In fact, things might escalate significantly over the next 10 days.
As I published on my blog, I am getting an unconfirmed report from a Russian military acquaintance that Russia will go into East Ukraine late next week. This is further confirmed by my analysis of Russian media and physical Russian troop buildup along Ukraine’s border. In addition, this is further confirmed by Pentagon’s warning and direct warning against such action by President Obama. Iwill have much more on this on Monday as I need to verify this information from another source (I am trying to track someone down).Thursday, April 4th was mentioned as the date.
If true, anticipate the stock market to crater next week. This action will provoke a completely different ball game in the international community. One thing is for sure, this will be an interesting week to watch.
TECHNICAL ANALYSIS:
Long-Term:The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market.
Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.
Short-Term: While the short-term trend remains bullish, it might be misleading as per our timing analysis discussion below.
Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.
MATHEMATICAL & TIMING ANALYSIS:
(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).
Based on our mathematical and timing work the next turning point is located at
Date: XXXX Price: XXXX
XXXX
Point being, you should have an exact strategy and entry/exit points based on the forecast above.
The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice.
Stock
Entry Point ($)
Action To Take
XXXX
88
XXXX
XXXX
1160-1180
XXXX
XXXX
515
XXXX
XXXX
74
XXXX
XXXX
21
XXXX
XXXX
420
XXXX
XXXX
35
XXXX
XXXX
65
XXXX
XXXX
120
XXXX
XXXX
100
XXXX
XXXX
112
XXXX
Otherwise, I suggest the following positioning over the next few days/weeks to minimize risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).
If You Are A Trader:XXXX
If No Position: XXXX
If Long:XXXX
If Short:XXXX
CONCLUSION:
An incredibly important week is coming up. Only one scenario remains on the table. I have also described the point force we are looking at and exactly what you should do in each case. With increased volatility, multiple interference patterns and an incredibly important long-term turning point we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.
Please Note: XXXXis available to our premium subscribers in our+ Subscriber Section. It’s FREE to start.
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