Tag: investing

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Stockman and El-Erian: Get Ready For A Bear Market

z31As yours truly, David Stockman and Mohamed El-Erian continue to warn their followers that a big stock market decline and a severe recession are coming down the pipeline.

David Stockman: 

  • “The worldwide central bank money printing spree of the last two decades has generated massive excess capacity and mal-investment all around the planet.”
  • “What is coming, therefore, is not their father’s inflationary spiral, but an unprecedented and epochal global deflation.”
  • “So the central banks just keep printing, thereby inflating the asset bubbles worldwide. What ultimately stops today’s new style central bank credit cycle, therefore, is bursting financial bubbles. That has already happened twice this century. A third proof of the case looks to be just around the corner.”

Mohamed El-Erian: 

  • Financial markets have grown addicted to central bank easing, and that addiction could cause a heap of trouble when central banks tighten the credit spigot.
  • “It reminds me a little bit of 2007 and 2008,” when investors tried to discern when the turn would come away from easy credit conditions, El-Erian said. “I’m not so confident that I will see the turn coming, and turns tend to happen quite quickly.”

I couldn’t agree more. The only remaining question is…….are the US Equity markets currently going through a 9 month distribution or consolidation period? If distribution, the time to pay the piper may be soon at hand.

Z30

Stockman and El-Erian: Get Ready For A Bear Market Google

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Marc Faber Expects A 60-40% Decline. Is He Insane?

Daily Chart April 30 2015

4/30/2015 – A big down day with the Dow Jones down 196 points (-1.09%) and the Nasdaq down 82 points (-1.64%).

The stock market continues to behave as forecasted in our subscriber section. Are we about to bounce to new all time highs -OR- is this sell-off just getting started? Click Here to find out.

Marc Faber has been off of his game over the last few years. So much so that the talking heads within the financial media community now openly laugh at his “Bear Market” forecasts. Now, more bearish than ever, Marc expects a rapid 40-60% decline. Has he gone insane?  Let’s take a look.

“For the last two years, I’ve been thinking that U.S. stocks are due for a correction,” Faber said Wednesday on CNBC’s “ Trading Nation .” “But I always say a bubble is a bubble, and if there’s no correction, the market will go up, and one day it will go down, big time.”

My Comment: Oftentimes the best researched bears are too early to the party. I am guilty of the same…..at least I used to be. I remember shorting sub-prime lenders in early 2006 and then wondering how these clearly bankrupt companies can surge higher. By the summer of 2008 they were worth ZERO.

“The market is in a position where it’s not just going to be a 10 percent correction. Maybe it first goes up a bit further, but when it comes, it will be 30 percent or 40 percent minimum!” Faber asserted.

My Comment: Bingo. Most investors have assumed, wrongfully I might add, that we are in a new secular bull market. As a result, everyone believes that every 10-15% correction will be recovered.  Nothing to worry about – buy the dips. It will be interesting to watch as a 10% correction turns into a 20%, 30%, etc…..

Faber says low yields and stimulative central bank policies around the world have led to a condition in which “all assets are grossly overvalued … and eventually this will unwind and cause some problems. Look at the market since November of last year to now. The market is up 2 percent. It hasn’t done much, and a lot of stocks are breaking down. I don’t think that the market is in a healthy condition.”

My Comment: I have been talking about the same thing for at least a few months now. Even though the stock market hasn’t really gone anywhere for close to 9 months, based on NYSE, bullish animal spirits are as strong as ever. Crazy.
Despite his massively bearish call, Faber said he’s “not short the market yet,” since he doesn’t know how high stocks could go in the interim. Still, he makes clear that “I’m not interested to buy momentum, I’m interested to buy value.”

My Comment: He is absolutely right. Buying now would be a suicide mission. At the same time, Marc is too scared to go short. And not only Marc. Every single bear I know, except yours truly, is scared of this market. Do I smell an opportunity? That’s why it helps to know exactly when the top is due.

In conclusion, NO,  Marc Faber is not insane. In fact, he might be the only sane person in this insane asylum we call the stock market.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 10th, 2015  InvestWithAlex.com

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Marc Faber Expects A 60-40% Decline. Is He Insane?  Google

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Ameritrade CEO Confirms A Bull Trap

all in investwithalex

This should not come as a surprise to the followers of this blog, most retail investors are fully invested on margin and extremely bullish.

Bad sign? Retail investors all in: TD Ameritrade

A broad look at the 6.5 million customer accounts at TD Ameritrade indicates that retail investors are “pretty fully invested” in stocks, the online brokerage’s CEO said Thursday.

Fred Tomczyk cited several signs of this: margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently. “It’s usually a good indication that people are very engaged in the markets and watching their investments closely,” he said.

So, while there are net capital outflows from the institutional side, retail and corporates (stock buybacks) are fully committed to this “apparent” market rally. Just as they were at 2000 and 2007 tops. Some things never change and most people don’t learn from the past.

Another bull trap is now in place.

Z30

Ameritrade CEO Confirms A Bull Trap Google

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Why Our 15 Year Old Bear Market Is About To Get Worse

S&P inflation adjusted

Over the last year or so I have tried to show in every possible way that we are still in a bubble and that we are still in a secular bear market. Scheduled to complete in 2017 based on my timing and mathematical work. And although most bulls believe we have started a new secular bull market from 2009 bottom, the chart above puts an end to such a speculation.

The chart above represents an inflation adjusted look at the S&P (S&P/CPI). As you can see, it clearly shows the S&P is just now approaching its 2000 top. It’s the same case for the Dow (double top at around 12,000), while the Nasdaq index would find itself at around 3,500 with the same adjustment.

What are we to make of that?

Well, it is rather simple. We are still in a secular bear market that will only complete in 2017. As I have said here so many times before. Also, we are pushing bubble level valuations in stocks while both the S&P and the Dow are hitting their respective double top formations (inflation adjusted). This does not bode well for the overall market.

z33

Why Our 15 Year Old Bear Market Is About To Get Worse Google

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The US Economy Nears “Official” Recession As The FED Blames It On The Weather. Who Is Right?

Daily Chart April 29 2015

4/29/2015 – A down day with the Dow Jones down 75 points (-0.41%) and the Nasdaq down 32 points (-0.63%)

If you have followed this blog for some time you are very well aware that I have suggested over a year ago that the US economy will continue to decelerate throughout 2014-2015. Until it slips into an official recession. Today’s GDP growth of 0.2% (vs. expected 1%) gives more credence to such a view.

The FED blamed the weather, strong US dollar, energy prices and other transitory factors for this slow down. Fully expecting the US Economy to rebound in the second half of the year. Hence, interest rate hikes are still in play.

Does any of that matter when it comes to our financial markets? YES and NO. 

YES. Today’s economic situation is rather easy to understand. At least from my vantage point. The US Economy is running on fumes of zero interest rates and QE #1-3. Nothing more and nothing less. Once this liquidity finally works its way through the system, we will see the US Economy fall back into a recessionary mode. Judging by today’s numbers we are nearly there.

Simply put, there is nothing to drive this economy forward. In fact, I would love to hear what, if anything, will force this economy to grow. That is one of the reasons we are seeing massive corporate stock buybacks and no capital expenditures. Most corporates don’t know what to do with their cash and most don’t have the need to invest in their own business.

NO. It doesn’t matter in terms of the eventual outcome. Whether or not the US Economy falls into a recession, whether or not the FED raises interest rates or introduces another round of QE, one simple truth remains. We are in a massive stock market bubble that will implode sooner or later.

As a result, it is time for investors to stop being mesmerized by the FED. Instead, it is time for them to realize that we are in a bubble that will soon pop. No matter what the FED or the US Economy does.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 29th, 2015  InvestWithAlex.com

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The US Economy Nears “Official” Recession As The FED Blames It On Weather. Who Is Right?  Google

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Trade Of The Decade Or A Disaster In The Making?

German Bunds

Last week we talked about Bill Gross and his trade of the decade. Coming Soon: Trade Of The Decade?  Also known as, shorting the 10-year German Bund.  Now, another big time money manager jumps on the bandwagon Gundlach Weighs 100-Times Levered Bet Against German Bonds

Sounds like a sure bet……..only if it was that easy!!!

In all of my life, I have yet to meet a “sure bet”. At the same time, I would be the first to admit that the trade above looks good on paper.

Here is my primary concern. Two massive bond managers are promoting this trade to mainstream investors around the world. Why? And since everyone already knows about it, what can go wrong?

Quite a few things. What if the Bund trades flat for the next 10-years…….what if today’s negative yield goes even lower……..what if the EUR/USD exchange rate surges back to 1.5. Impossible? Nothing is impossible when it comes to financial markets. And while you can hedge away the risks above, hedging is not free.

In other words, the trade above might not be as attractive as most investors believe. Plus, the same line of thinking (massive short position) in a 10-year treasury has backfired big time over the last 1.5 years.

A better trade might be……going long the 10-Year US Treasury. As outlined here before, and with any luck, it might follow the trajectory of the German Bund above.

z32

Trade Of The Decade Or A Disaster In The Making?  Google

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Julian Robertson: The Repeat Of 2008 Sell-Off Is Now Highly Probable

Here is a question for you. Who would you rather listen to…..some Charles Schwab yahoo financial adviser who keeps screaming that today’s market is a “buying opportunity of a lifetime” or hedge fund legend Julian Robertson (founder of Tiger Management).  I will leave that decision up to you. But if you are wondering, here is what Mr. Robertson thinks.

  • Twin bubbles: In bonds and equities.
  • The FED is frightened to death.
  • It is possible the market will boil over into an explosion. The bigger this bubble gets the bigger the burst will be. The repeat of 2008 sell-off is now a real possibility.
  • The FED will raise interest rates….be ready.
  • The stock market is in a bubble that will surely pop.

I’ll tell you one thing. It’s nice to be on the same analytical side as Julian.   


Z30

Julian Robertson: The Repeat Of 2008 Sell-Off Is Now Highly Probable Google

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What You Should Expect From The FED Tomorrow

Daily Chart April 28 2015

4/28/2015- A mixed day with the Dow Jones up 72 points (+0.40%) and the Nasdaq down 5 points (-0.10%). 

So, does it matter what the FED says tomorrow? Not really and not if you value your money. Here is why.

As far as I am concerned there is only one thing, and one thing only, that is holding this market together. The FED and investors blind faith in the fact that the FED will be able to stop any and all market corrections. Either through QE, interest rates or by simply making statements to the press. So much so that every single bottom over the last couple of months can be attributed to the FED talk.  El-Erian tends to agree. Danger, Danger — ‘Market Is in Love With Central Bank Trade’

Here are the 3 reasons as to why this “herd mentality trade” will blow up in investors faces. And much sooner than most people believe. 

  1. The Fed is a Reactionary Force: If we study the past, the FED has always been late to react to any and all market developments. For instance, Bernanke was talking about the accelerating US Economy as late as Q1 of 2008. They have no clue and there is no reason to believe that this time will be any different.
  2. The Market Will Decline Anyway: My mathematical and timing work makes it very clear. Over the short-term the market is independent of all fundamental inputs. That is to say, the market will top out on a certain date in 2015 and initiate its decline. No matter what the FED does or say. That day is approaching fast.
  3. Investors Will Lose Confidence In The FED: This is unavoidable. As soon as the FED is unable to backstop the next decline, most investors will lose confidence in a millisecond.  That in itself will accelerate the decline

The main take away from the points above is as follows. The FED trade will be in place until it is not.  The problems is, by the time most investors realize this fact, it will already be too late. By the time the analysis above becomes a reality, the stock market will already be down 10-25%.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 28th, 2015  InvestWithAlex.com

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

What You Should Expect From The FED Tomorrow Google

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Shocking: Why Even Investment Legends Make Mistakes At Market Tops

soros and duckenmillerThis is rather a sobering look at how most investors think and behave at market tops. Forget about your mom and pop retail investors, we are talking about the top 0.5% of professionals out there. 

Last month, Stan Druckenmiller recounted his own experience with capitulation and performance chasing when he was the lead portfolio manager for George Soros and the Quantum Fund:

“I’ll never forget it. January of 2000 I go into Soros’ office and I say I’m selling all the tech stocks, selling everything. This is crazy… Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gun slingers. They didn’t have enough money to really hurt the fund, but they started making 3 percent a day, and I’m out. It’s driving me nuts. I mean, their little account is like up 50% on the year. I think Quantum was up seven. It’s just sitting there.

“So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. You ask me what I learned. I didn’t learn anything. I already knew I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So maybe I learned not to do it again, but I already knew that.”

And while most investors believe it is impossible to predict the market top, I tend to disagree. When the TIME is right, I intend to nail it to the day and within 100 point accuracy.

Z31

Shocking: Why Even Investment Legends Make Mistakes At Market Tops Google