Today’s 5 Minute Podcast Covers The Following Exciting Topics.
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Eurasia, which advises businesses on political and economic concerns, released its annual list of potential risks to global economic stability in 2014 — and impending financial doom is not among them.
“That’s over,” the Eurasia analysts wrote in the report. “In 2014, big-picture economics are stable if not yet comforting.”
Europe has emerged from recession and Japan’s economy is shaking off decades of stagnation. The recovery in the United States is expected to accelerate this year even as the Federal Reserve gradually reduces its stimulus policies. China’s new government is implementing reforms to make the world’s second-largest economy more stable.
The relatively calm outlook comes after a period of heightened financial risks. Investors and economists have been on alert for another meltdown since 2008. But none of the dire predictions came to pass. The euro is still around. China has not crash landed. And the U.S. didn’t fall off the fiscal cliff.
Read The Rest Of The Article Here
I am sure you have heard of the “Calm Before The Storm”. The report above pertains to exactly that. Just because the “storm” hasn’t arrived yet, doesn’t mean that it never will. Let’s take a look at the reality.
Has Europe emerged from a recession?
Is there any evidence to support this statement? Of course not. As far as I am concerned only German economy is doing good. The rest of EU members are not doing so well. While the Socialist Party in France is working overtime trying to destroy their economy, countries like Spain, Italy and Greece are going through downright depression with 20%+ unemployment and an insolvent banking systems. Maybe the EU emerged from a recession right into a depression.
Japan’s economy is shaking off decades of stagnation?
It might seem that way at the initial glace, yet the reality is different. The perceived improvement in Japan has nothing to do with real economy or any sort or real economic growth and everything to do with currency debasement and massive credit/stimulus expansion. As always, short term gains will eventually turn into a long term pain.
As for the US and China, all of the fundamental issues remain there. Just because the calendar year turned 2014 doesn’t mean that all structural issues got better or vanished into thin air. If anything, things are getting worst. The only reason things haven’t blown up, just yet, is because both Governments pumped a huge amount of liquidity into the system to paper over issues. Eventually, this will force the markets to correct themselves with greater intensity in the future.
Bottom line is, the report above is garbage. Don’t believe it for a second. This is the calm before what might be “The Perfect Storm”.
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What You Ought To Know About The Upcoming Economic Storm
Summary: Continue to maintain a LONG/HOLD position.
The stock market continues to “Melt Up“, setting new daily highs and in the process ending 2013 with a massive 24% gain. As of right now, the trend continues to be up. As such, there is no change in our overall position for the time being. As my mathematical work clearly shows and as I have stated numerous times here, the bear market will start shortly. Either way, we still have to wait for a technical confirmation.
Many bears have been emailing me lately and asking how is it possible that the market continues to go up. Something important has to be understood. The stock market traces out exact mathematical patterns as it moves over time. Meaning, the market is doing exactly what it should be doing. You see, there is a point located in both price and time that the market must hit before resuming its bear market later this year. Think of this point as a point on a map where all roads converge. The market must go there before reversing. All other fundamental and otherwise technical indicators, do not matter. It must hit that point before reversing. Such market behavior is the reason why a lot of people get hurt playing the “short term” fundamental game.
Back to the market. My previous updates and various fundamental issues associated with the market remain right on the money. Please click on the links below to see them.
As we continue to hold our long position while waiting for the market reversal, right now might be a good time to start thinking about how you would liquidate your holding and/or re-allocate your capital once the bear market of 2014-2017 starts.
If you would like to take it one step further, this is a good time to start researching SHORT opportunities.
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Stock Market Update, January 3rd, 2014
Yahoo Finance Writes: 4 Reasons You Shouldn’t Worry Over Rising Mortgage Rate
An amazing puff piece from the Real Estate Industry. Please see my comments below. Also, please note that I have called for the Real Estate top back in early October of 2013. You can see it here. I Am Calling For A Real Estate Top Here. I am still sticking to that forecast. The market is already rolling over, although, a little bit slower.
If buying a new home is on your list of goals in the New Year, don’t let talk of rising mortgage rates derail your plans just yet.
As the economy recovers, the Federal Reserve tapers, and home values rise, experts predict we are well on our way to seeing mortgage rates crack 5% in late 2014.
Rates for a 30-year fixed-rate mortgages already hit 4.69% this week, up from 4.63% the week prior, according Bankrate.com. In May, the 30-year rate was 3.52%. Fifteen-year fixed mortgages were up as well, from 3.70% last week to 3.73% this week.
But rising rates don’t necessarily spell doom for house hunters. Here are four big reasons not to worry.
1. Mortgage rates are getting higher but not drastically so.
“I don’t think there’s any reason to panic,” says Keith Gumbinger, vice president of mortgage rate tracker HSH.com. “Buying a home will be somewhat more expensive, but I don’t think it’s going to be a matter of ‘Oh, I’m losing so much ground that I have to go out and buy [a home] right now.’”
Historical context is important. A little over a decade ago, the lowest average rate for a 30-year fixed rate mortgage was around 5.24%, Gumbinger notes. It’s easy to forget that when rates fell so dramatically following the housing crash.
“Even if we do start to see 5% rates appearing in 2014, rates will absolutely remain favorable [to buyers],” he says.
When someone in the industry says “I don’t think there’s any reason to panic”, you MUST panic. While in historic terms rates are still low they are still up over 100% in the last 1.5 years. That is a huge move within a short period of time and it will take its toll. It is already happening. Don’t let anyone fool you that it doesn’t matter.
2. Housing inventory is on the rise.
Nationwide home values have soared over the last year, with year-over-year gains of 13.6%, according to the Dec. 31 S&P/Case-Shiller Home Price Indices. That marks a seven-year high and the 17th consecutive monthly increase.
But new-home construction has picked up in the last few months and is expected to ramp up more, which should help lift supply. New housing starts were up 30% year-over-year in November 2013, according to the Commerce Department. On top of that, more homeowners will likely sell this year to capitalize on rising home values, contributing to an inventory boost.
I am not sure how this positive for the housing market, but they are absolutely correct. There is too much inventory out there. Too much hidden inventory for that matter, still sitting on bank balance sheets. Eventually all of that will come to the market and drive the prices lower.
3. There will be less competition from investors.
Real estate investors were notoriously greedy in the wake of the housing crash, snatching up cheap properties and elbowing out individual home buyers before they knew what hit them. But Jed Kolko, chief economist for Trulia, predicts that competition from investors will die down now that the market is recovering.
Last year “was the year of the investor, but 2014 will be the year of the repeat home buyer,” he says.“Investors buy less as prices rise. Higher prices mean that the return on investment falls, and there’s less room for future price appreciation.”
In other words, the author wants retail buyers to come in and purchase inventory from investors before market declines. This occurs in the stock market all the time. Again, I am not sure how this is a positive for the real estate sector. It predicts its inevitable decline. Don’t be that FOOL buying from investors at or near the top.
4. Fed tapering isn’t all bad news.
All eyes are now on Janet Yellen, the incoming Federal Reserve chairman who will be charged with phasing out the bond-buying program that has helped to steady interest rates over the last five years. It will be a delicate process. If Yellen moves too quickly, investors could get spooked and send mortgage rates soaring, notes Bloomberg’s Kathleen Howley. If she moves too slowly, rates could fall and the market could get flooded with home buyers.
But there’s a silver lining, Gumbinger points out: “Mortgage rates have started to firm up again not strictly because the Fed has started to taper but because the economy has gotten better,” he says. The fact that they’re considering winding down quantitative easing is a sign that the sluggish economic recovery is at least making some headway.
You joking, right? The economy has NOT gotten better. It has gotten sicker. A distinction must be made between real economic growth and a “drunken” credit driven speculative party. What we have seen over the last few years is the later. When it comes to an end in 2014 (based on my timing work) and the bear market resumes, this will be made very clear. Again, this is a horrible position to be in for the real estate market. As I have said many times before, the 3rd leg of the real estate decline will be a severe one. Position yourself now.
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4 Scary Reasons You Should Run Away From Real Estate…..Right Now!
BloombergWrites: Subprime Loans Are Boosting Car Sales
A woman came into Alan Helfman’s showroom in Houston in October looking to buy a car for her daily commute. Even though her credit score was below 500, in the bottom eighth percentile, she drove away with a new Dodge Dart. A year ago, “I would’ve told her don’t even bother coming in,” says Helfman, who owns River Oaks Chrysler Jeep Dodge Ram, where sales rose about 20 percent this year. “But she had a good job, so I told her to bring a phone bill, a light bill, your last couple of paycheck stubs, and bring me some down payment.”
A small, little-known company from Missouri borrows hundreds of millions of dollars from two of the biggest names in Wall Street finance. The loans are rated subprime. What’s more, they carry few of the standard protections seen in ordinary debt, making them particularly risky bets.But investors clamor to buy pieces of the loans, one of which pays annual interest of at least 8.75 percent. Demand is so strong, some buyers have to settle for less than they wanted.
A scene from the years leading up to the financial crisis in 2008? No, last month.
It’s scary how predictable human animal is from the psychological perspective. In fact, contrary to a popular believe human psychology IS the primary driver behind the stock market volatility.
Just two quick observations. First, as the articles above indicate the subprime is back in a big way. In 2003-2007 it was the real estate market, where anyone who could (and even those who couldn’t) fog a mirror could get a massive real estate loan. Today you can see the same situation in car loans and loans for small businesses. Thank god the amounts are smaller. Second, the speculative bubble and the frenzy building in the stock market. Everyone is falling over each other predicting the Dow 20,000 or up +40% in 2014. Of course, exactly at the wrong time.
Where were these people at 2009 bottom? Did any of them predict the DOW going up over +150% between 2009 and today? Of course they didn’t. They were too busy screaming that the world is about to end and we are on the verge of another great depression. Now, with credit easily flowing again, we are committing the same mistakes. Those who can take a step outside the box should now be able to see how easy it is to profit from such insanity.
As I have said so many times before, the bear market will start in 2014. Get ready to short overvalued garbage and make a killing.
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How To Make A Killing in 2014
First it won at “Jeopardy.” Now it might threaten millions of low-wage jobs. At least, that seems to be the implication of a Bloomberg News article on International Business Machines Corp.’s Watson supercomputer.
Developers are now figuring out how to use Watson’s processing power to replicate the experience of working with an “experienced in-store salesperson” when shopping for clothes. The software would combine databases provided by retailers with customer preferences for style and fit to help people find what they’re looking for.
If it works, this technology would be a boon for everyone who prefers to buy things from the comfort of home. Right now, only a small percentage of shopping occurs online. Shipping costs could be one reason. Another is that many people are hesitant to buy things over the Internet when they can’t try them out first, especially clothing. That reticence could be overcome by these new technologies. If a computer knew your body shape and knew the dimensions of each piece of clothing, it could show you exactly how items would fit.
Read The Rest Of The Article Here
As we move deeper into the 21st century, technological changes continue to accelerate. One thing that fascinates me as an investor is what type of an impact machines (computers and robotics) will have on the future of the labor force and by default, the overall economy.
I believe both robotics and enhanced computer systems are already having a significant impact on the overall labor force. It is difficult to measure, but in many sectors of the economy improved productivity means fewer jobs. While I don’t believe it is having an impact on the overall rate of employment just yet, within a few decades things might be drastically different. Imagine a world where robotics take most (if not all) lower skill manual or blue color type of jobs at the cost of $0.5-2 an hour. What happens when enhanced computer system get so good that they start to squeeze out white color work force at the fraction of the cost. To be honest with you, I have no idea.
Many will argue that this is a normal economic shift that will create more and better jobs in other sectors of the economy. Perhaps it will, but I don’t see how. This change is very different from the industrial and the low level technology revolution that preceded it. Given expected massive worldwide population growth I don’t see where the future high paying jobs will come from.
Does that mean a lower overall standard of living? Once again, not necessarily. It might mean a better standard of living for future generations. One thing is for sure. This is a trend worth watching as it will impact our lives over the next few decades more than we can imagine.
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What You Ought To Know About Machines Taking Your Job
Bloomberg Writes: France’s ‘Culture Tax’ Could Hit YouTube and Facebook
Should YouTube subsidize le cinéma français? France’s audiovisual regulator thinks so. In a report this week, the Superior Audiovisual Council (CSA) says that video-sharing websites should be subject to a tax that helps finance the production of French films and TV shows.
The so-called culture tax, totaling more than €1.3 billion ($1.8 billion) annually, is paid by movie theaters, broadcasters, and Internet service providers in France. The CSA contends that YouTube (GOOG), French video-sharing site DailyMotion, and their ilk are effectively providing video-on-demand services, which are already subject to the tax. And to the extent Facebook (FB) and other social media sites are content providers, they should be taxed as well, the CSA says.
Separately, France is considering a tax on smartphones, tablets, and other devices as another source of revenue for cultural subsidies. A government-commissioned report, released in May, said that a sales tax of 1 percent should be imposed on electronic devices capable of accessing movies, music, and other content. The proposed tax would raise an estimated €86 million annually that would be used to finance the “cultural industries’ digital transition,” France’s Culture Ministry said at the time.
Read The Rest Of The Article Here
Superior Audiovisual Council to subsidize le cinéma français. Really France? Sounds like an organizations straight out of Nazi Germany. Plus, does anyone outside of France even watch French movies anymore? Even Gérard Depardieu was chased out of France and now lives in Russia.
In the past, I have left France alone, but their recent actions are going from worse to beyond ridiculous. Just recently (I believe today) they have passed a law that would require limo drives to wait 15 minutes after picking you up before they could actually start up the vehicle and drive away. This is, of course, to appease the taxi drives and their claims of unfair competition. Now, there is a talk about taxing Google and Facebook for their video distribution platforms. How do you say “insanity” in French? Please be aware that this is just the latest in the slew of new and “crazy” laws coming out of France and their new socialist government.
Simply put, we are witnessing systematic destruction of the EU second largest economy by the French Socialist party. I will go as far as saying that France is done from the economic perspective. Its citizens should expect a much lower standard of living going forward. Let’s see how long Germany’s economic engine can sustain the rest of the economic freeloaders within the EU.
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Lunatics Are Driving France Into Economic Suffering
Everyone is running their mouth. Bernanke is talking about indefinite QE, Yellen is saying that she will accommodate the markets any way that she can and Larry Summers is talking about 0% interest rates to avoid economic depression. All of that is garbage.
The only thing that truly matter is the 10-Year Note chart above. As you can see the chart is extremely bullish. I have said numerous times here, it is fatal to believe that the FED’s can control interest rates. They can influence them over the short term, but interest rates will behave as they should over the long run. The chart above clearly indicates that interest rates have reversed their course and are climbing up. Given massive amount of leverage and speculation in the system, even a misery 0.5% increase from this point on will have huge negative consequences. Should interest rates zoom up within a short period of time (which they might) there will be hell to pay.
This is the most important trend to watch going forward. So far the trend is incredibly bullish (for interest rates). This plays very well into my forecast of the bear market starting in 2014. This fundamental development confirms it.
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The Biggest Market Story of 2013
