Tag: us economy

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Why Most Economists Are Confused About The State Of Today’s Real Estate Market

The Daily Ticker had a discussion earlier on whether or not the real estate sector was causing the economic slowdown or it was the economic slowdown was causing the real estate market to sag. 

Neil Irwin, senior economic correspondent at The New York Times says the slowdown in housing is slowing the broader economy. “If housing just returned to its longer-term role in the economy in terms of residential investment and construction activity, then we’d have a much stronger growth track,” Irwin tells The Daily Ticker in the video above.”We’d have an extra million and a half jobs.”

Here is what they don’t seem to get.  Most sectors within the US Economy, including the overall economy itself, are being artificially levitated by entirely too much credit within our financial system. With over $1 Trillion in credit being infused over the last 5 years alone and with interest rates at ZERO, both the US Economy and the real estate market are back in the bubble territory.

Again, this debate initiated by The New York Times confuses cause and effect. The real estate market and the US economy have nothing to do with each other from a traditional point of view and have everything to do with being the outcome of the same force. In short, they are both the outcome of the same credit cancer. Because they are both being artificially levitated by FED into the same speculative bubble territory, they will simply reverse and collapse at the same time when the bear market of 2014-2017 kicks into the high gear.

When?  Well, to get more information about the real estate market you can read my comprehensive report Real Estate Collapse 2.0 Why, How & When and for the overall economy/stock market you can read The Bear Market Of 2014-2017 Is Starting. Why, How & When 

credit bubble

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Why Most Economists Are Confused About The State Of Today’s Real Estate Market  Google

The Daily Ticker: Here’s what’s stopping the economy from fully recovering: Neil Irwin

The housing market is still recovering from a crisis that crushed sales and prices in 2007 and 2008, but the pace of that recovery is slowing and there are some signs it could be stalling out.

Existing home sales and new home sales were actually lower in March than in February — and lower than a year ago. And although March housing starts were higher than February starts, permits fell 2.4% lower.

Neil Irwin, senior economic correspondent at The New York Times says the slowdown in housing is slowing the broader economy. “If housing just returned to its longer-term role in the economy in terms of residential investment and construction activity, then we’d have a much stronger growth track,” Irwin tells The Daily Ticker in the video above.”We’d have an extra million and a half jobs.”

Investment in residential property accounts for the smallest share of the economy than at any time since World War II, Irwin wrote in a recent column for the times “Upshot”.

Home ownership has fallen to its lowest level in 19 years, according to the Census bureau. Only 64.8% of Americans, or about 74.4 million households, owned homes during the first quarter of this year, down from 65.2% in the fourth quarter of 2013.

A big reason for the decline in home ownership: “Young people are not forming households at the same rate they usually do,” says Irwin.

That’s an example of the economy holding back housing but the reverse is also true, says Irwin.
“You need a strong housing market to have a strong economy [and] you need a strong economy to have a strong housing market,” says Irwin.

And within the housing market, construction of multi-family homes is rising at a much faster rate than construction of single-family homes. Young people “who are striking out on their own are more likely to rent” apartments, explains Irwin.

On the positive side, construction jobs led the increase in all “goods-producing” jobs in the April jobs report released Friday. They rose by 32,000 for the month and are up 189,000 in the past year, with the bulk of the increase occurring in the past six months.

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White House Predicts Growth. I Have A Bridge To Sell Them.

The White House is at it again. Selling sunshine and rainbows. Predicting strong economic growth and low unemployment for 2014, 2015 and beyond. Proving, once again, that they are either incompetent or liars. Now that I think about it, it’s probably both.

Listen, there absolutely no basis for this analysis. Yes, you can take our growth or credit driven economic recovery and perpetuate it into the future, but that’s not the reality. The reality here is as follows. The US Economy and it’s financial markets have been juiced up by massive infusion of credit into our financial system. It helped with the recovery while infusing a substantial amount of speculation into the system. With the stock market, the real estate market and the credit markets being, once again, incredibly distorted, the future is anything but bright.

The above mentioned markets will collapse, sooner rather than later, ushering in a severe recession and a bear market of 2014-2017. If you would be interested in knowing exactly when it is going to happen, please Click Here.   

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White House Predicts Growth. I Have A Bridge To Sell Them. Google

White House has optimistic growth forecast for 2014, 2015

WASHINGTON (Reuters) – The White House on Monday forecast more robust economic growth in 2014 than last year and a further pickup in the economy for 2015.

Under a White House projection, the U.S. economy is expected to expand by 3.1 percent this year, faster than last year’s 1.7 percent. Growth would pick up to 3.4 percent in 2015, the White House said.

The administration also forecast that unemployment would ease to an average of 6.9 percent in 2014. The jobless rate, which reached a high of 10 percent in 2009, fell to a five-year low of 6.6 percent in January.

Many economists say that the unemployment rate has dropped in part because many people have stopped looking for work. The U.S. labor force participation rate has fallen from over 66 percent before the start of the recession to 63 percent.

The administration’s 2014 growth projection was more optimistic than the 2.9 percent forecast of “Blue Chip” forecasters, and the 2.7 percent projection of the non-partisan Congressional Budget Office.

In contrast, the White House jobless rate forecast for the current year was more pessimistic than the 6.6 percent Blue Chip view and the 6.8 percent CBO projection.

Almost five years after the end of the recession, the economy is still growing modestly and the unemployment rate, while declining, has remained persistently high. The administration, mindful that President Barack Obama’s popularity has slipped in opinion polls and worried that Democrats could lose ground to Republicans in November elections, has emphasized an agenda focused on jobs and growth.

The White House pointed to the declining budget deficit and the improved housing market, as among factors pointing to the likelihood of stronger growth. White House Council of Economic Advisers Chairman Jason Furman said ramped up U.S. energy production, slowing health care costs, and advances in technology would also drive stronger economic performance.

But Obama, who has vowed to narrow the gap between the rich and poor, wants Congress to raise the minimum wage to $10.10 an hour from $7.25 and spend more to help speed the economy. Last week he proposed a budget for fiscal 2015 that would spend $56 billion above the $1.014 trillion Congress agreed to in January.

The additional spending would fund education, training and defense projects, and would be offset by higher revenues obtained by closing tax loopholes that benefit wealthy people. White House economic forecasts are based on the assumption that Congress would pass the president’s proposal, but it was roundly rejected by most Republicans and is unlikely to be become law.

The White House also said in its report that economic recovery tends to be slower after a financial meltdown, such as the one triggered by the bursting of the U.S. housing bubble.

But some economists dispute that finding. The slow recovery from the most recent recession is an exception from what is normally a strong rebound after a financial crisis, economists at the Cleveland Federal Reserve wrote in 2012.

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Warning: Student Loans Replace Home Equity ATM’s

Just when I think things can’t possibly get more idiotic and ridiculous, they do.  As WSJ reports, tens of thousands (if not hundreds of thousands) of Americans are going back to school in order to take out student loans. Not for education, but to use them as their primary source of income. Once you think about it, it does make perfect sense and I do not blame the people trying to get whatever money they can in order to bridge their expense gap.  

I guess this so called 6.6% unemployment is not working for everyone. I do blame the FEDs and the idiots at every level of our government. The situation we see today is the direct result of monetary policy implemented over the last 2 decades. Somehow, the fools believe that they can simply print money and insure that everything goes on as it should. Of course, it works until it doesn’t.

We have already experienced a number of sever bear markets since the 2000 top. With one more bear market and a severe recession left of the clock (2014-2017), it is my hope that the American people wake up and demand answers from their Government. But I will not be holding my breath.  For most Americans, watching “The Biggest Loser” is a lot more important than understanding macroeconomic issues at hand. Oh well.

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WSJ Writes: Student Loans Entice Borrowers More for Cash Than a Degree

Some Americans caught in the weak job market are lining up for federal student aid, not for education that boosts their employment prospects but for the chance to take out low-cost loans, sometimes with little intention of getting a degree.

Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

“The only way I feel I can survive financially is by going back to school and putting myself in more student debt,” says Mr. Selent, who has since added $8,000 in student debt from living expenses. Returning to school also gave Mr. Selent a reprieve on the $400 a month he owed from previous student debt because the federal government doesn’t require payments while borrowers are in school.

A number of factors are behind the growth in student debt. The soft jobs recovery and the emphasis on education have driven people to attain more schooling. But borrowing thousands in low-rate student loans—which cover tuition, textbooks and a vague category known as living expenses, a figure determined by each individual school—also can be easier than getting a bank loan. The government performs no credit checks for most student loans.

College officials and federal watchdogs can’t say exactly how much of the U.S.’s swelling $1.1 trillion in student-loan debt has gone to living expenses. But data and government reports indicate the phenomenon is real. The Education Department’s inspector general warned last month that the rise of online education has led more students to borrow excessively for personal expenses. Its report said that among online programs at eight universities and colleges, non-education expenses such as rent, transportation and “miscellaneous” items made up more than half the costs covered by student aid.

The report also found the schools disbursed an average of $5,285 in loans each to more than 42,000 students who didn’t log any credits at the time. The report pointed to possible factors such as fraud in addition to cases of people enrolling without serious intentions of getting a degree.

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Capella Education Co., which runs online schools, examined student costs and debt at institutions—public and private—in Minnesota and concluded that between a quarter and three-quarters of loans taken out by students were for non-education expenses. At one of Capella’s master’s programs, the typical graduate left with about $30,200 in student debt even though tuition, fees and book costs totaled roughly $18,800. Borrowers are prohibited under federal law, except in rare instances, from discharging student debt through bankruptcy.

The share of student borrowers taking out the maximum amount of loans—$12,500 a year for undergraduates—has risen since the recession. In the 2011-12 academic year, federal Education Department data show, 68% of all undergraduate borrowers hit the annual loan ceiling, up from 60% in 2008.

Research suggests a fair chunk of that is going to non-education expenses. In 2011-12, about a quarter of student borrowers took out loans that exceeded their tuition, after grants, by $2,500, according to research by Mark Kantrowitz, a higher-education analyst and publisher of the education site Edvisors.com.

Some students say they intend to get a degree but must borrow as much as possible because they can’t find decent-paying jobs to cover day-to-day expenses.

Tommie Matherne, a 32-year-old married father of five in Billings, Mont., has been going to school since 2010, when he realized the $10 an hour he was making as a mall security guard wasn’t covering his family’s expenses. He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.

“We’ve been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don’t have to worry about food,” says Mr. Matherne, who owes $51,600 in federal loans.

Some students end up going deeper into debt. Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh’s online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable.

“Obviously, it’s better not to use it that way if you can help it, because you’re just going to owe that much more later,” says Ms. Merritt, a former bookkeeper.

The government lets students use a portion of federal loans for living expenses on the grounds that it allows students to devote more time to studying and improves their chances of graduating. Even when schools suspect students are over-borrowing, they are restricted by federal law and Education Department policy from denying funds.

College and university trade groups are pushing legislation this year to set lower maximum loan limits for some types of students, such as part-timers. Dorie Nolt, spokeswoman for Education Secretary Arne Duncan, says the Obama administration is “exploring alternatives to see how we might ensure that students don’t borrow more than necessary.”

Mr. Selent, of Fort Lauderdale, knows he is getting himself deeper in a hole but prefers that to the alternative of making minimum wage. In his 20s, he earned a bachelor’s degree in communications from a local for-profit school but couldn’t find a job in the field after graduating and began falling behind on his student-loan bills. He is now taking courses for a degree in theater so he can become an actor.

Meanwhile, federal loans allow him to cover any needs that arise during the semester. Says Mr. Selent: “It keeps me from falling apart.”

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Warning: Student Loans Replace Home Equity ATM’s   Google

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Will The War In Ukraine Collapse The US Financial Markets?

The Dow Jones gapped down at the open to the tune of -130 points. Raising the question if the potential war in Ukraine and the continued escalation of tension between Russia and the US will be enough to set off a large bear market move. Based on my mathematical timing work the answer is YES and NO. The gap we see at today’s open is likely to be closed. Either today or over the next few days. It is my belief that the market will settle down to continue it’s present trend, but not for too much longer. While the trouble in Ukraine could be blamed as the catalyst that sets the upcoming bear market off, such is not the case. Again, the market is tracing out it’s exact structure. It will start the bear market when the time is right.      

When is that time?

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NEW YORK (Reuters) – U.S. stocks were set to open sharply lower on Monday, alongside other risk assets, as Ukraine and Russia prepared for war after Russian President Vladimir Putin declared he had the right to invade his neighbor.

Ukraine mobilized for war on Sunday and Washington threatened to isolate Russia economically after Putin said he had the right to invade Ukraine, in Moscow’s biggest confrontation with the West since the Cold War.

The S&P 500 closed at a record high on Friday, and profit taking was expected on Wall Street due to the political uncertainty.

“There’s been a very significant rally,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

“If you need an excuse to sell, this is a good one.”

Russian stocks and bonds fell sharply and the central bank hiked interest rates to defend the ruble.

Energy stocks could stand to lose if relations between the United States and Russia deteriorate further. Volatility will likely spike alongside the uncertainty of the situation.

“Anything that involves a boycott of Russian supplies, which are very significant, could impact the energy sector dramatically,” said Meckler.

“In situations like this you see very quick reactions reverse as people understand the scenario and how things play out.”

S&P 500 e-mini futures fell 17 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 130 points and Nasdaq 100 futures lost 34 points.

Gold prices hit a four month high as investors sought safe-haven assets, boosting gold stocks.

Though the focus will likely remain on Ukraine, the economic calendar is full on Monday.

U.S. consumer spending rose more than expected in January, likely as chilly weather boosted demand for heating.

Will The War In Ukraine Collapse The US Financial Markets?  Google

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Make No Mistake, Russia WILL Go To War Over Ukraine. Plus, Market Update

Update: Russian troops and tanks enter Ukraine @ Sevastopol. So it begins. 

Well, the American Government and the EU Bureaucrats have done it again. They have “liberated” the people of Ukraine from oppression and injustice. I wonder if there were high fives flying in the Oval Office over the weekend.  

Yet, as the Chinese story goes “Maybe it’s good and maybe it’s bad, we shall see”.

I have said it before, but I need to say it again so people have a clear understanding.  The US and the EU destabilizing and interfering in the business of Ukraine is equivalent to Russia destabilizing and trying to take over the government of Kentucky.  Technically speaking, Russia and Ukraine is a unified state going back thousands of years.  I would argue that it is idiotic at best and extremely dangerous at its worst for the western world to interfere in Russia’s and Ukraine’s business.

Luckily, I am not alone in thinking this way. Here is an open letter from Ron Paul: “Leave Ukraine Alone”

What most people don’t understand is this…… Russia and Putin in particular will never allow Ukraine to become a part of EU or worst NATO. They will go to whatever extent necessary to make sure that doesn’t happen. Even if it means going to war.  Also, it is only half of the Ukraine (western half, the poorer half) wanting closer ties with the EU. The other half (wealthier industrial eastern part) wants nothing to do with it. They want to have closer ties with Russia.  So, when American politicians scream out “Ukrainian People Want Freedom From The Tyranny of Russia”  they are talking about 25% of Ukraine’s population. Either way you twist it, this is a ticking time bomb.  

With Olympics now over, Russia has a lot more room to maneuver.  It will be interesting to see what develops over the next few weeks. I see 2 outcomes.

1.  In the past, Russia and Putin have proved to be good strategists. They might give an indication that they are stepping aside by allowing the EU and World Bank to try and bail Ukraine out by pumping billions of dollars into Ukraine’s economy.  Over the next few years, through various political actions and economic positioning Russia will, once again, replace Ukraine’s leader with their own “puppet” as they have done so many times before.  Of course, Western powers will never see their money again.  This is the most likely outcome and exactly what I would do.  

2.  However, if Russia is pushed too hard and too far, they WILL sanction and execute some sort of a military action in Ukraine.  With the EU and the US interfering in its business, Russia might literally have no other choice.

Which option will play out? Only time will tell, but I wouldn’t be surprised to see some sort of military intervention over the next few weeks.  Will Obama draw his “Red Line” again and send in the Marines to protect newly liberated Ukrainian people?  Yeah right. I truly feel sorry for the Ukrainian people who believe that the West will come to their rescue. 

One thing is for sure.  Neither the US nor the EU have any business interfering in this part of the world. Doing so might lead to an all out conflict with Russia and a new Cold War.  Unfortunately, it looks as if it is exactly what some of our leaders want.

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MARKET UPDATE:

The market surged higher right at the open with the Dow Jones appreciating +103 point (0.64%) and with the Nasdaq gaining +29 points (0.69%) for the day. 

With most speculative issues appreciating the most, the question I see from a lot of the bears anticipating a collapse….. Is this is the “blow off” top? As I have mentioned so many times before, the bear market of 2014-2017 will not be directional. While it will have a general down trend, it will not present us with a directional move as it did between 2007-09. That means a lot of volatility and a lot of powerful ups/downs that will surely confuse and frustrate both bulls and bears. With that said, what does it say of today’s market?  

Our last inflection point was located at……. XXXX.

Not quite yet. This market is certainty not making things easy for our trading position as it continues to push upper ranges of what is possible if February XXXX was indeed a turning point.

There is couple of reasons for my hesitation. 

1. All indices have opened up a gap in the morning. Typically, the market comes back to close this gap over the next few trading days. While the market can do so during the next leg down, it closes it within the next 3 trading days 70% of the time. Indicating a high % possibility of a short-term decline. 

2. My calculations show an alternative top at today’s top of XXXX. It is hard to explain, but at times the market produces gaps within its own mathematical structure. It might be the case here.

In summary, it’s too early to call the market either way. While it is pushing upper boundaries, it is possible….. XXXX.

What are we to do?

Maintain our positions as described below while watching the market on an hourly chart. If the Dow breaks above XXXX we must nullify our XXXX top. If that is the case, the market is likely to continue higher. Not much higher, but high enough to close the gap that was left at 16,400 on the Dow.

If No Position: XXXX

If Long: XXXX

If Short/Trader:  XXXX

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start. 

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Make No Mistake, Russia WILL Go To War Over Ukraine. Plus, Market Update Google

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Warning: The US Economy Is Flying Blind…About To Crash

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Over the last couple of years I have argued, sometimes passionately, that the Federal Reserve doesn’t really know what is going on within our own economy and our financial markets. Not only that, but I have also argued that they are a bunch of idiots and fools who believe that they can somehow control our financial markets.

If recently released transcripts, generated during the 2008 meltdown don’t prove my point of view without a shadow of a doubt, I don’t know what will. Here are just a few quick points from the said transcripts.

  • They didn’t even realize recession was happening until the 4th quarter of 2008. By that point the stock market has completed 80% of its down move.  In fact, for most of 2008 they thought the recession “could be avoided”.

—-Hello???? Was anyone home??? Recession started in Q4 of 2007.

  • Bernanke talked about pent-up demand for housing as late as January 2008.
  • Bernanke was worried about inflation as late as January 2008.
  • Throughout Q1 of 2008 they have held a generally rosy view of the world and the US Economy

Here are the links to two great articles about the transcripts if you would like to learn more. Click Here and/or Click Here

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The lesson here is twofold.

First, anyone who believes that the FED can either control, anticipate or predict financial markets and/or the economy is even a bigger fool.  Neither Bernanke nor Yellen can predict the economy even if it hit them in the face with a brick. All they can do is look at past data and say “Oh, look, according to this data recession started in Q4 of 2007”. What a waste of time and money.  

Second, they will always be behind the ball. They will always be a reactionary force as opposed to market makers. Take today’s environment for example. They are cutting QE and talking about raising the interest rates at exactly the wrong time. The damage from their crazy liquidity party has already been done. The worst thing they can do now is cut it. The faster they do it the faster the markets will collapse.  

Why is any of this important?

Well, if you rely on FED to make money in the stock market and/or run your own business it becomes incredibly important. As such, no one should rely on any action by the FED as an investment indicator. It is as simple as that.

This brings us to financial markets and my premise that financial markets behave exactly as they should. Many people would argue that it was the FED’s actions that put the bottom in at the March of 2009 juncture, ensuring a subsequent and massive stock market rally.

WRONG.

Don’t confuse cause and effect. It was the market that made the FED’s look good and not the other way around. The market was structured to bottom on March 6th, 2009 at 6,469 and then have a subsequent 5-year market rally. It was the mid-cycle bottom (half point of bear market) and I predicted it as early as January of that year. I was 1 day and 100 points away. Close enough. I know I have shown this chart before, but let’s take another look.

Long Term Dow Structure35

If you perform the type of 3-dimensional analysis that I do you would know that the move between 2003 bottom and 2009 bottom would be IDENTICAL to the move between 1994 bottom and 2002 bottom. And so it was, exhibiting a variance of 22 3-dimensional units (equivalent to a few trading days or 100 points).

Any analyst working with this information would know that as soon as 2007 top was confirmed that the next move down would be exactly 8,130 3-dimensional units. Once the market developed further, the same analyst would be able to pin point the exact bottom with amazing precision and that is what I want you to understand without a shadow of a doubt. The stock market is not volatile or random, it is exact and precise.

Same thing applies to today’s market. In last week’s forecast I identified a turning point in February. While I am not yet at liberty to discuss this turning point (available to premium subscribers only), it clearly explains the market action we have witnessed over the last couple of days. By concentrating on mathematics and 3-dimensional analysis one can pick out turning points with a precision of a surgeon.

It is just my hope that the points above will force you to re-examine your reliance on the FED while eliminating your sense of false security. 

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Warning: The US Economy Is Flying Blind…About To Crash Google

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Warning: George Soros Is Shorting The Market. Should You?

No matter what you think of him, when George Soros does something in the financial markets, it typically pays to pay attention.

So, what is he up to? 

As ZeroHedge reports below he is increasing his PUT option position against the stock market and increasing his CALL options position for gold mining ETFs. Let’s explore both positions a little bit further. 

While his bearish position against the market represents a small portion of his overall portfolio, about 11%, it is up significantly since Q3…… establishing a clear upward moving trend. Certainly, a large chunk of it was put in as a hedge against his overwhelmingly bullish allocation. However, I think there is something bigger brewing under the surface. 

George Soros is not stupid. I hope we can all agree on that. He is not about to go and put up a massive short position when the market is in a clear technical uptrend. Yes, he is hedging, but he is also getting ready to go short when the time is right.  I would do exactly the same thing. Test the water at a potential point of inflection (today’s market), feel it out with a small position, go big once the market confirms the downtrend. That’s just proper money management. 

I am certain Mr. Soros understands today’s macro economic environment better than anyone else out there. What he sees troubles him. Massive global credit bubble throughout western economies, emerging markets and China. Substantial asset overvaluation and a general “psychological” setup that shorts can only dream of. In other words, the market is perfectly setup for a bear leg. The bear leg that the market will exhibit between 2014-2017, as per our forecast. 

On the gold side, I am starting to like both Gold and Gold Miners here. From both the technical as well as the fundamental point of view. From the technical side, both are exhibiting signs of stabilization and a reversal. This bodes well with my fundamental analysis of the overall market. As the bear market decimates the US Economy (once again) over the next 3 years (2014-17), the FED’s are bound to keep the stimulus coming. At any cost. Trying to get inflation and dollar devaluation going. Under such circumstances Gold typically does very well. Not only as a monetary instrument of “stability”, but also as hedge against economic trouble.

So, should you short the market and buy gold?  Yes and Yes. The question is…..when? Please log in into your Premium Account to find out the WHEN.  

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A curious finding emerged in the latest 13F by Soros Fund Management, the family office investment vehicle managing the personal wealth of George Soros.

Actually, two curious findings: the first was that the disclosed Assets Under Management as of December 31, 2013 rose to a record $11.8 billion (this excludes netting and margin, and whatever one-time positions Soros may have gotten an SEC exemption to not disclose: for a recent instance of this, see Greenlight Capital’s Micron fiasco, and the subsequent lawsuit of Seeking Alpha which led to the breach of David Einhorn’s holdings confidentiality).

The second one is that the “Soros put”, a legacy hedge position that the 83-year old has been rolling over every quarter since 2010, just rose to a record $1.3 billion or the notional equivalent of some 7.09 million SPY-equivalent shares. Since this was an increase of 154% Q/Q this has some people concerned that the author of ‘reflexivity’ and the founder of “open societies” may be anticipating some major market downside.

Then again, as the chart below shows, as a percentage of total AUM, the put position rose to 11.1% of his notional holdings. By way of reference, as of June 30 2013, his SPY put may have had a smaller notional value, but it represented both more shares (7.8 million), and was far greater as a % of AUM, at 13.5%.

Finally, remember that what was disclosed on Friday is a snapshot of Soros’ holdings as of 45 days ago. What he may or may not have done with his hedge since then is largely unknown, and since there are no investor letters, there is no way of knowing even on a leaked basis how the billionaire has since positioned for the market.

That said, while the SPY puts are most likely simply a hedge to his overall bullish exposure, perhaps more notable was the $25 million call position that Soros put on the gold miners ETF which has been beaten into oblivion over the past year, in the fourth quarter. Does Soros think that it is finally the miners’ turn to shine?

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Warning: George Soros Is Shorting The Market. Should You?  Google

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US To European Union, “Straight Up F$%# You”

I am scratching my head here. Yes, yes… everyone knows that the US has the biggest cock on the block, but what the hell is the US doing meddling in Russia’s and EU business is beyond me. What was long speculated upon by Russia and Ukraine was finally revealed to be true. The US is sticking its big nose into Ukraine’s “you know what”, trying to smell what Russia is cooking. 

Yet, the US wasn’t done. One thing we have in excess in the “Land of the Free” is arrogance.  Taking this unlimited natural resource in mind, the US Officials proceeded to accuse Russia of spying on their secret communications.

WTF???  What planet do these people live on. First, NSA spies on every monkey with a cell phone on the face of this earth. Then the US Government tries to engineer or assist in a political coup in Ukraine (territory that Russia firmly controls) and they get “angry” because Russia intercepted their communication. I give up. The Dow is going to 25,000 by March….I better go buy some stocks now.  

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Bloomberg: Intercepted F-Bomb Phone Call Shows U.S. Role in Ukraine

Some undiplomatic language by the top U.S. diplomat for Europe has rattled relations with the European Union and added more tension to the East-West strains over Ukraine’s political crisis.

“F–k the EU,” Assistant Secretary of State Victoria Nuland said in a private phone call, expressing frustration with European Union efforts to resolve Ukraine’s political turmoil.

On the eve of Russia’s showcase Olympics in Sochi, the U.S. suggested yesterday that Moscow’s intelligence apparatus was involved in some way with the leaked recording of the intercepted phone call between Nuland and U.S. ambassador to Ukraine Geoffrey Pyatt. The call was made last month, based on references in the discussion.

State Department spokeswoman Jen Psaki blamed Russian “tradecraft” — a word used to describe espionage activity — after an unknown individual posted the audio recording on Google Inc.’s (GOOG) YouTube. The clip, which was subtitled in Russian rather than Ukrainian and accompanied by photographs and images of people mentioned in the call, was reported by the Kyiv Post earlier yesterday as Nuland arrived for talks in the Ukrainian capital.

US To European Union, “Straight Up F$%# You” Google

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How To Make A Killing In A Deflationary Inflation

InvestWithAlex Wisdom 20Today’s 5-10 Minute Podcast Covers The Following Topics:

Topic: Inflation or Deflation Over The Next 5 Years? How To Allocate Capital To Make A Killing -OR- How To Make A Killing In A Deflationary Inflation.  

    • Inflation or Deflation….what will win over the next 5 years? 
    • Why it is incredibly important for your overall portfolio. 
    • How you should position yourself now. 
    • What steps to take to make a killing over the next 5 years. 

Please tweet me your questions @investwithalex

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Revealed: Who Will Win The Inflation-Deflation Battle And Make A Killing

Inflation or Deflation InvestWithAlex

Business Insider Writes: BILL GROSS ‘Be Careful 

In his February investment letter, Bill Gross, the manager of the biggest bond fund around at PIMCO, warns investors to “be careful.”

Why? Gross believes the rally has been fueled by ever-expanding debt.

Now, due to a combination of smaller government deficits and tapering of the Federal Reserve’s quantitative easing program, the rise in debt is slowing, which Gross argues is bad news for risky assets like stocks and good news for bonds.

“Bull markets are either caused by or accompanied by credit expansion. With credit growth slowing due in part to lower government deficits, and QE now tapering which will slow velocity, the U.S. and other similarly credit-based economies may find that future growth is not as robust as the IMF and other model-driven forecasters might assume. Perhaps the whisper word of “deflation” at Davos these past few weeks was a reflection of that. If so, high quality bonds will continue to be well bid and risk assets may lose some luster.”

Read The Rest Of The Article Here

Bill Gross is, of course, right on the money.  

The one question that gets left behind is whether or not we will have inflation or deflation over the next 5-10 years. That is an incredibly important question. A correct answer should greatly impact your overall portfolio allocation over the next couple years. Getting it right would mean outperformance, getting it wrong would only yield severe losses.

Gold bugs, inflationist and hyper inflationist would lead you to believe that hyperinflation is just around the corner, your dollars won’t be worth the paper they are printed on and that gold is about to surge to $100,000 an ounce.

Deflationist would lead you to believe that we are on a verge of an economic collapse, credit collapse, market collapse, great depression and that all asset prices are likely to decline to the tune of 90-95% over the next few years. If this scenario does indeed come true, it would be prudent to invest into a stockpile of canned food, a small arsenal of guns and a container load of ammo.

Who is right?

No one. The reality is somewhere in the middle. Technically we are in a deflationary environment due to a massive credit expansion and the subsequent collapse of that credit throughout our economic system. Basically, we are still feeling the impact of 2007-09 credit defaults, with more defaults coming up over the next few years (due to upcoming recession).   

On the other hand, the FEDs have been printing money like crazy over the last couple of years and distributing it though various channels of the economy. Mostly through financial institutions, speculation and asset price appreciation.   

That is why we are seeing the evidence of both inflation and deflation throughout  the economy. Which one will win out over the next couple of years and how to invest in such an environment?

Please listen to today’s podcast in order to get your answer. 

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

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Revealed: Who Will Win The Inflation Deflation Battle And Make A Killing  Google