InvestWithAlex.com 

Subscribe Today
My Account

Posts

Posted on

What You Ought To Know About Economic BS

AP Writes: State of the US economy: strongest since recession

BS investwithalex

WASHINGTON (AP) — The U.S. economy is showing more strength than at any time since the Great Recession began six years ago.

Employers are hiring. Home prices, sales and construction have surged. Corporate profits and stocks have hit records. And consumers have picked up their spending.

The economy has yet to fully recover from the most devastating crisis since the Great Depression. But it’s getting closer — a point President Barack Obama was expected to highlight in his State of the Union address Tuesday night.

The propaganda machine continues to hum along. Let me remind you that the so called “Great Recession” was caused by the insane economic policies of the US Government. Mind you, they continue the same policies today, yet on a much larger scale.

— JOBS

Job growth has been remarkably steady in an uneven recovery. Employers have added at least 2.1 million jobs in each of the past three years, creating momentum that could help the economy gain speed in 2014. Each new job puts more money in the hands of people to spend. That’s why consistent job growth can give more traction to the recovery. The unemployment rate has plunged from 7.9 percent to 6.7 percent over the past year. That’s down from a 10 percent peak in October 2009.

Still, the benefits of more hiring have been muted so far, in part because much of it has been concentrated in the low-wage industries of hotels, restaurants, retailers and temp workers. Also, millions of jobless Americans have stopped looking for work. Once people without jobs stop their searches, they’re no longer counted as unemployed. As a result, the unemployment rate can fall in a way that overstates the health of the economy.

WOW, really. I am not even sure where they are getting their numbers. While the government claims the unemployment is at 6.7%, in reality, that number is much higher. With people giving up on finding work and prolific “underemployment” the real rate is most likely to be around 15%. Hence, no pay growth.  

— HOUSING

Real estate is rebounding. Home prices have climbed 13.7 percent over the past 12 months, according to a Standard & Poor’s index released Tuesday. Sales of existing homes totaled 5.09 million last year, the best such performance since 2006, the National Association of Realtors said last week. Home industry experts say the gains should continue this year, though at a slower pace because higher mortgage rates and home prices will make buying less affordable for some.

Sure, real estate has rebounded, but make no mistake. This has very little to do with an underlying economic health and everything to do with massive credit infusion and to a certain extent speculation in the sector. Once the bubble pops again, and it will, housing will decline below 2010-11 lows.

— CONSUMER SPENDING

The spending of consumers, which fuels about 70 percent of the economy, is starting to return to its pre-recession levels. The Conference Board said Tuesday that its consumer confidence index rose to 80.7 this month, well above last year’s average of 73.3. Retail sales bumped up 4.2 percent in 2013, the fourth straight annual increase. Roughly 15.6 million autos were bought last year, an 8 percent improvement and the highest total since 2007. Historically low inflation and interest rates have kept food and clothing affordable. And according to the Gallup Organization, average daily consumer spending rose $16 to $88 last year.

Fair enough, but consumer spending is a simple function of the economy. When the economy goes up, so does the consumer spending. Yet, keep the following in mind. Today’s economic recovery is driven primarily by credit infusion and speculation. As the result, consumer spending is being artificially levitated. When easy credit and speculation goes away, consumer spending will not only decline, but collapse.

— STOCKS

The Dow Jones industrial average enjoyed a monster 2013, climbing 28 percent. Corporate profits are at their highest share of the economy in the 66 years of tracking by the government. Shares were bolstered by a Federal Reserve bond-buying program that is now being wound down. The eventual end of the program, paired with weak growth in China and troubles in Argentina and Turkey, help explain the 4.1 percent decline in the stock market since the start of this year.

Again, everything associated with the stock market has been goosed by the FED and their “unlimited” money supply. That includes corporate profits and emerging markets. It is similar to living a high life while maxing out your credit cards. Eventually the bills will come due and the cards will be maxed out. When that happens, there will be hell to pay in all financial markets. As I have stated so many times before, my mathematical work indicates that the bear market has already started and it will take us into the 2017 bottom.

It is prudent that you get yourself ready.

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

Posted on

Stock Market Update, January 28, 2014 InvestWithAlex

Daily Chart January 28 2014

Summary: Continue to maintain a LONG/HOLD position. 

1/28/2014 – The market rebounded nicely today with the Dow Jones being up +91 points or (+0.57%). Is this the bottom of the first or “initial sell off”? It is hard to say. While it looks promising the short term picture remains bearish.

If you look at the five day chart above you will note two gaping holes on Jan 23rd and 24th. As I have mentioned many times before, the stock market tends to close such gaps before any sustained bear or bull moves can take place. Since our work indicates that the Bull market from 2009 bottom has topped out on December 31st, 2013, the market must jump back into that territory and close the gap before a sustained bear market move can take place. As such and based on my calculations, a rally from this point on into the 16,400 on the DOW would make perfect sense.  

With that said, there is nothing left for us to do except sit on our hands and wait for some sort of a confirmation. I believe we are still weeks away from such an event. It is too early to go short and it is prudent to remain long in case the analysis above is incorrect. 

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

Posted on

From Flipping Real Estate To Flipping Real Estate

Breakout Writes: Underwater mortgages are a bigger problem than the national average suggests

flipping real estate investwithalex

If you follow real estate prices or sales trends or the number of homes going into foreclosure, you’re apt to have a pretty positive feeling that things are improving. If you dig a little deeper, however, and look only at the 15 hardest hit states, you’ll find a totally different story.

While these outlier markets and metropolitan areas are also seeing improvement, they are still years away from breaking even and being whole again.

For example, December’s headline data from RealtyTrac showed the national rate slipping to 18% of homes being underwater or having negative equity (which simply means a homeowner owes more than the property is believed to be worth), but at the bottom of the scale, there are still 9.3 million “deeply underwater” homes that are in the hole by twenty five or more. In fact, six states that are at least ten points above the national average of 18%, including Nevada (38%), Florida (34%), Illinois (32%), Michigan (31%), Missouri (28%), and Ohio (28%).

The case in certain cities is even worse, as the latest data shows towns such as Las Vegas, Orlando, Tampa and Chicago still have negative equity ranging from 33 to 41 percent.

Read The Rest Of The Article

What a shocker. Las Vegas still has negative equity to the tune of 33-41% even though Blackstone and other investors have been buying real estate by the billions in the city (to the tune of 50-70% of all transactions in the city are to all cash buyers/investors). I wrote about it in my previous article Timing The Real Estate Market Crash.

Is this good or bad? It depends on who you listen to. If you listen to traditional media and real estate professionals, this is of course, great news. The real estate market has bottomed and on the way up. Eventually, the negative equity in question will be recovered. However, if you listen to assholes like me, someone who would publish a blog post titled I Am Calling For  A Real Estate Top Here, you would have a different point of view.

Listen, this is fairly basic and easy.  The real estate market recovery has been driven by excessive credit available to financial institutions, private equity and investors (not you). Still, while some select markets, such as So. Cal, have almost fully recovered, the rest of the country continues to lag behind. As the article above suggests, to the tune of 30-40%.

What troubles me the most is the fact that the real estate market is starting to roll over. As the stock market declines into the 2017 bottom, the US Economy will once again experience a severe recession. The real estate market will also roll over and begin its 3rd leg down. As I have suggested previously, the 3rd down leg down is the most severe. As such, I wouldn’t be surprised to see real estate decline to the tune of 20-50% from this point on.

My valuation work displayed HERE showed that real estate could and technically should decline to the tune of 45-70%. As such, it pays to anticipate things. 

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


Posted on

Criminal Negligence Behind The US Economy

Talking Numbers Writes: Here’s why the Fed is trapped: Ron Paul

PJ-Ron-Paul-1

Ron Paul has a warning for the markets: The Federal Reserve Bank is the source of today’s market instability and it will likely get worse.

As the Fed begins its two-day policy meeting on Tuesday, world markets are being rattled by two major issues: credit market instability in China and a further taper of the US monetary stimulus.

Former congressman Ron Paul believes that Ben Bernanke is going to avoid responsibility for additional tapering and foist it on his successor, Janet Yellen. He believes the Fed has its back against the wall – if it tapers any more, emerging markets will spin out of control; if it continues buying bonds at the same monthly pace indefinitely (which is expected to be $75 billion this month), US and world markets could find themselves overvalued and susceptible to a big drop if and when the music stops. The US dollar’s role as a reserve currency is part of the reason this could be a global problem, according to Paul.

“We create money out of thin air to the tune of billions and billions of dollars,” says Paul. “Then we spend it in places like China and they monetize that debt. It’s a worldwide phenomenon. Everybody has mal-investments and overinvestments and all the problems built-in. The weakest economies are going to crack first. But, eventually, I think everybody’s going to suffer from the massive monetary inflation that’s been going on, not only for the last 10 years but probably 30 years.”

I have a lot of respect for Ron Paul for one simple reason. He was the only politician in the US Congress to speak the truth about our economic predicament. Well, either that or all other politicians are idiots without an ounce of economic understanding. Judging by what they are doing to the country I think it’s the latter.   

His assessment of our economic situation is right on the money.  The FED is the problem that has distorted most of our financial markets and most of our pricing mechanisms to an amazing degree. Everywhere you look, you will find discrepancies. From the stock market to the car loan market. Everywhere.

Even though most people view our current economic situation as “typical”, it is anything but that. The FED is, indeed, backed into the corner. That is what happens when you blow financial bubbles on a massive scale. They cannot take the stimulus away. If they do, most financial markets around the world will ferociously collapse. If they don’t, the markets will simply stagnate as the velocity of credit/money slows down. Making the situation worse in the long run.

Of course, most people don’t see that. Even our own president.

President Barack Obama spoke repeatedly last year about the need to avoid what he called “artificial bubbles.” He praised Yellen for “sounding the alarm early about the housing bubble” when he announced her nomination for the job of Fed chairman on Oct. 9. “She doesn’t have a crystal ball, but what she does have is a keen understanding about how markets and the economy work,” he said.

Wrong, Mr. President. We are already in a massive speculative bubble driven by a massive amount of credit and by the FED. Bigger than 1929, 2000 or 2007.  Will the markets collapse as they did back then?  My mathematical and timing work says NO, but the main issue persists. While it might not take the form of a severe market collapse, the economy will have to suffer for decades to come under the weight of today’s economic mismanagement. 

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

Posted on

Stock Market Update. InvestWithAlex.com January 27th, 2014

Daily Chart January 27 2014

Summary: Continue to maintain a LONG/HOLD position. 

1/27/2014 – Another down day for the market with the DOW being down 41 points or (-0.26%). The NASDAQ was down 44.5 points or (-1.08%) as it played catch up closing the divergence gap mentioned here last week.

Overall, the short term trend is down, while the long term picture remains bullish. We did identify December 31st, 2013 as the major turning point and the beginning of the bear market that should take us into the 2017 lows.  Yet, we must first wait for a technical confirmation before reversing our long/hold position and going short.

Short term, the market could experience further weakness, before reversing and closing before mentioned gaps in the 16,400 range.  

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

Posted on

What Is The Fastest Way To Get Rich? Diversification or Concentration

InvestWithAlex Wisdom 16

 

Today’s 5 Minute Podcast Covers The Following Topics:

Reader’s Question: “What would you recommend if I would like to maximize my investment returns while minimizing risk? Diversification or concentration…” – Justin White

    • Find out which strategy is a clear winner.
    • The proper way to execute this unique approach.
    • Major problems associated and how to avoid them.
    • What you should do next to start accumulating large profits.   

Please tweet me your questions @investwithalex

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

Posted on

Can Japan’s Economic Miracle Help The US Economy?

Yahoo Finance Writes: This could signal the next leg down for stocks

nikkea 5 year

Things are precarious in Japan, and that could mean trouble for US markets.

Once the hottest trade on Earth, the Nikkei is off by 7% this year, compared to the 3% decline in the S&P 500. The culprit is a rising yen, as investors have shunned risk and flocked to safe haven currencies.

Over the past several months, the Japanese government under the leadership of Prime Minister Shinzo Abe has been trying to weaken the yen in an effort to boost its economy. Japan’s version of quantitative easing is roughly the same size as America’s but, given that Japan’s economy is one-third the size of the US, it’s had a bigger impact.

Read The Rest Of The Article Here

I don’t think Japan will have any impact on the US Financial markets. Historically speaking there has been no correlation, nor should there be one. It is simply idiotic to think otherwise.

The reason I am bringing Japan to your attention is due to pure stupidity of their economic policies. Japan has been stuck in the economic funk for over 24 years now. The Nikkei is still down a little over 60% since its top in the 1990. The Japanese (just like their American counterparts) have tried everything under the sun to get their economy going while fighting deflation. Well, everything that is easy and stupid.

What they should have done, default on bad debts while following sound macroeconomic principals, was never done. Instead, they have tried to combat deflation by lowing interest rates and debasing their currency.

I am still waiting for a good explanation from one of those Nobel Prize winning economists of how any economy can prosper through debasement of their currency. It is no different from robbing Peter to pay Paul. Yet, for most countries it is the new solution to all of their economic problems. That is until the currency overshoots and collapses, leading to economic chaos. India and Turkey are the prime examples of this over the last few months.

Yes, Nikkei is up close to 100% over the last year and a half. Yet, a distinction must be made between true market growth and speculative growth driven by insane monetary policy. The latter leads to an eventual economic collapse and pain. I will let you decide in which category Japan falls into.  

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

Can Japan’s Economic Miracle Help The US Economy? 

Posted on

Weekly Stock Market Update. January 25th, 2014. InvestWithAlex.com

daily chart Jan24, 2014

 

Summary: Continue to maintain a LONG/HOLD position. 

It was a really rough week for the market with the DOW being down -517 points or (-3.16%). While most people will dismiss this move as a “typical correction” that we need to have, I tend to disagree.

I have argued for months that the bull market that had started in March of 2009 is coming to an end and shall soon be replaced by a bear market that will take us into the 2017 bottom and the end of the Cyclical Bear Market that started in 2000.

In my earlier post, MARKET TOP, I have concluded that the market had indeed topped out on December 31, 2013, ushering in the bear market that will develop over the next 3 years. Both my mathematical, timing, cyclical and technical work tend to confirm this fact.

Now, there is a number of other issues to consider.

First, we must wait for a technical confirmation before establishing a short position. I believe such confirmation will present itself over the next few weeks.

Second, my work shows that the bear market of 2014-2017 will not be directional. In other words, the market will not collapse as it did in 2007-09, but on the contrary, decline in a volatile fashion as it did between 2000-03.

Finally, my mathematical work shows that the market will decline into the 9,000-10,000 range and not lower. As such, I continue to advise people to get out of the way and go into cash as opposed to taking a short position. This will be a very difficult market to short.

In the meantime, we maintain our long/hold position while waiting for a technical confirmation.      

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

Weekly Stock Market Update. January 25th, 2014. InvestWithAlex.com

Posted on

Is It Possible To Predict The Stock Market? YES

InvestWithAlex Wisdom 15

Today’s 5 Minute Podcast Covers The Following Topics:

Reader’s Question: Why are you so confident that we have hit the top? As far as I know no one can predict the markets. Please explain your approach…” – Roger Strand  

    • Is it possible to predict the market? 
    • The secret behind timing and/or predicting the market? 
    • What does it tell us about the future? 
    • What to do in case my timing work is incorrect. 

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

 

Posted on

Who Else Wants To Buy At The Top?

advisors

 

Business Week Writes Investment Advisers Go All In on Stocks

Advisers surveyed weekly by the National Association of Active Investment Managers have 98.3 percent of their clients’ portfolios allocated to stocks. Exposure to equities averaged 72 percent during 2013.

What a shocker!!!  Just as always and exactly at the wrong time.

This is nothing new when one sees the market from the vintage point of human psychology. Most investors make the same mistake. When speculation and advancing market psychology grips investors psyche, there only one thing left to do. BUY. BUY. BUY. Why? Well, because everyone else is doing it and just like the retail market participants, financial advisors and money managers don’t want to be left behind.

Yet, as per my article yesterday, “MARKET TOP” the markets just topped out. As always, instead of getting out or going short most investment advisors are rushing into stocks. Just like they were rushing OUT of stock in March of 2009, when they should have been buying everything under the sun.

Sometimes human nature never changes. 

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