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Not long after this column goes online, my co-coach/stepson Gunnar and I will grab the laptop, gather some papers off the countertop and head down to our neighbor’s house.
We’ll eat a chicken wing or two, hold some last-minute discussions and then get our fantasy football draft underway. Hopefully, the bonding time we’ve spent preparing will pay off with a neighborhood league victory a few months down the road.
Up until I started doing this a couple years ago, I didn’t realize how much work goes into it. Scouring player reports, researching sleepers and busts, coming up with a rock-solid draft strategy, deciding which players are worth paying up for and which aren’t, making trades and lineup changes during the year – it’s kind of like building a portfolio.
But there’s also one major difference: When you lose at fantasy football, there aren’t any significant real-world consequences. When you make bad financial choices or fail to come up with a solid investment strategy, it hits you right in the wallet.
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| Apple is preparing for a product refresh. |
That’s why the next several days are so important. Our fantasy league playoffs and the NFL Super Bowl are a long way off. But some real-life, financial market matchups and showdowns are right around the corner, and each one has the potential to rock stocks to the core.
Key tech bellwether Apple Inc. (AAPL) will kick things off tomorrow when it holds its annual product refresh meeting in San Francisco. Analysts expect the consumer tech giant to unveil the iPhone 6S product line, with potential upgrades like an improved camera, upgraded processor, and a “Force Touch” screen similar to the one already included on the Apple Watch.
The company may also update its Apple TV box with voice control, universal search, and integrated gaming functions. Lastly, we could see a new iPad Pro tablet with a larger screen and/or touch-sensitive screen.
Why is this event so important? Because Apple is holding it at a time when investors are very concerned about the firm’s future growth. They’re worried about slowing iPhone sales momentum, underwhelming watch adoption, and problems in China tied to that country’s economic slowdown. Those concerns have combined to lop 15% off Apple shares since July, so the company really needs to score a touchdown tomorrow.
| “Next up is the Federal Reserve policy meeting Sept. 16-17.” |
Next up is the Federal Reserve policy meeting Sept. 16-17. It seems like hardly a day goes by without another Fed member opining on the state of the economy, the markets and interest rate policy.
The latest was San Francisco Fed President John Williams, who told the Wall Street Journal he’s optimistic about the outlook for growth but remains concerned about a strong dollar and market volatility. That’s similar to the message coming out of other Fed speakers recently.
Bottom line: This Fed decision could really be one for the ages. The clock is ticking down … the Fed wants to get into the rate hike end zone … but they’re hoping the stock market equivalent of Malcolm Butler doesn’t show up and ruin the play!
Then there’s China, a country that’s getting blitzed, sacked, or run over almost every single day. We just learned that Chinese exports dropped 5.5% in August, while imports plunged 13.8%. That implies the yuan will need to depreciate much further to give the country’s sputtering exports a boost.
But the very same devaluation trend is causing foreign and domestic investors to bolt. Fresh data showed China burned through a record $93.9 billion worth of foreign exchange reserves in August trying to prop up the yuan and offset capital outflows.
At the same time, Goldman Sachs estimates China has shelled out another $236 billion to prop up its stock market. But even that financial Hail Mary hasn’t been able to boost asset prices for more than a few hours or days. The Shanghai Composite Index is down more than 40% just since June.
That tells me a major Super Bowl-style showdown between the bulls and bears is looming in China. Given the history of major market moves in September and October, it could come at almost any time.
In light of these major showdowns, I hope you’re sticking to the game-winning strategies I’ve been outlining recently …
First, keep playing defense with most of your funds. The deteriorating fundamentals and technicals I highlighted all summer long hinted at the August market chaos. None of those indicators have improved since then. If anything, they’ve gotten worse.
That means you have to keep more cash on hand, grab profits and cut losers more quickly, and stick with very highly rated stocks in safe sectors.
Second, for a portion of your money, consider investment vehicles like inverse ETFs and put options. How much you invest, and whether you want to go beyond simple hedging to outright speculating, is up to you.
But they can provide peace of mind during downturns, not to mention spin off handsome profits, if you remain flexible, prudent, and nimble with their use. That’s what I’m doing in my Interest Rate Speculator service.
So that’s my take. What’s yours? Do these upcoming events portend some major market moves in the coming days and weeks? How are you preparing, if at all? Do you think Apple has what it takes to regain momentum? And what about Chinese policymakers? Make sure you swing by the Money and Markets website and share your thoughts when you get a chance.
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I hope you enjoyed the long weekend, and are as energized as I am about what the rest of 2015 has in store. In the meantime, many of you weighed in on the European migrant crisis, the markets overall, and the U.S. employment picture.
Reader Chuck B. said the jobs figures show why our economy remains challenged, even several years after the end of the last official recession. His take:
“So, there were employment gains in service industries like health and finance, but without gains in productive industries like commodities and manufacturing that underlie the economy. Service employment is kind of robbing Peter to pay Paul. It will eventually peter out for lack of support.”
Reader Delores also sounded a worried note on the job market, saying: “I do not believe in the accuracy of any government figures. They are not true figures. They are made up to make the economy appear to look better, but the people know that this is not true.
“The homeless situation is getting worse all over the country and part-time jobs and service jobs are not enough to carry our economy; they just do not reflect the true unemployment.”
When it comes to stocks, Reader Robert P. said: “It seems now is the time to be nimble and play it both ways. Get in step with the markets, now that they’ve got things whip-sawing, and play it going up and then play it going down. I’ve seen other bloggers post basically the same thought and I believe they’re right.”
As for Europe, Reader Vic said: “My heart goes out to those poor people trying to escape war and terrible living conditions. I try to imagine what it must be like to be in a situation so terrible that you leave everything and risk your life and that of your family’s.
“I don’t know what Hungary and other countries can do as this problem gets worse. United Nation intervention is needed. The only thing these people have done is to have the misfortune of being born into such a horrible condition.”
Reader Fuad added: “It’s very sad and tragic to see those displaced migrants of all ages leaving their countries seeking better human living conditions from the Middle East and Africa, and starving and dying en route.
“Why don’t the Arab kingdoms like Saudi Arabia, Qatar, Dubai and Abu Dhabi — who have vast empty lands and are loaded with money — take them in? They can build towns with schools and hospitals, and create jobs and give them work building those towns.”
I appreciate the feedback – and if I didn’t get to your comments here, I’ll do my best to address future ones in the space I have. Feel free to respond to your fellow posters here as well.
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Germany is bucking the trend seen in other parts of the world, offering to take hundreds of thousands of displaced migrants in if need be. But critics say the generous benefits offered to immigrants by that country and Sweden are only encouraging more individuals to make the dangerous trek from the Middle East and Africa.
In any event, the migration crisis shows no sign of letting up. That means more deaths tied to boat sinkings, botched smuggling attempts, and other causes are likely in the weeks and months ahead.
If you needed something else to worry about when it comes to stocks, consider that more and more “death cross” patterns are showing up in global index charts. The cross occurs when an index’s 50-day moving average trades down through its 200-day moving average.
It’s generally interpreted as a negative signal of lost momentum, one that predicts even more downside. We’ve now seen death crosses in Germany’s DAX index and the U.S. Russell 2000 Index, and we’re just about there in China too.
Big-time energy mergers are gaining steam overseas, with Australia’s Woodside Petroleum (WOPEY) launching an $8.1 billion bid for competitor Oil Search. Tracking firm Dealogic said total oil and gas takeovers are now running at almost $334 billion, more than double what we saw in all of 2014.
What do you think about Europe’s refugee crisis, and what Germany is doing in response? How about the latest Chinese intervention – is it a waste of money or will they succeed in propping up markets? I encourage you to share your opinions on these or other stories online here.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 28 comments }
A person might realize that government people cause a lot of dislocations in a country’s economy. Government people, typically, tend to be collectivists. Hence, there are trends which are supportive of collectivist errors.
The errors are usually unintended, but those errors result in the same as any destructive errors. Of course, we all are shocked to see images of dead infants and toddlers. Such does not have to be the costs of governments, but is more usual than we should expect.
Just a couple of months ago it seemed like every one was sort of complaining about such a range bound market. Many were saying that a good correction was over due and needed. OK, now we have that longed for correction and these same people are hysterical over the “volatility”! Go figure.
In my opinion, a “Death Cross” in an index is not a “negative signal of lost momentum”, It is an actual picture of lost momentum! The cross shows the actual lost momntum graphically. This is, however, predictive of nothing! It’s a view of the current and PAST action in an index and nothing more than that.
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Many are refugees from war but also included are Isis terrorists and those coming for the free stuff, many from the East Balkans in that latter category. . Because people can move freely within the Euro borders, most will end up in countries that offer the best free stuff. No one can foresee how it will play out years from now. Muslims are not allowed to change their ways by their religion, and don’t believe in freedom of religion, so don’t assimilate well into western cultures altho there are of course exceptions. Being a woman I view the Muslim religion as a means to enslave women. No hood or Burka for me , thank you.
Joan, you display a lot of common sense that has eluded the majority of our esteemed leaders sworn to protect us… Maybe Trump will appoint you Secretary of State?
Thanks. I’m making my personal server arrangements right now in anticipation.My inner thoughts would likely not be perceived as politically correct, so best to insure they never see the light of day..
Regards,
Joan
Doc, look on the bright side. Europe is being overrun by people that believe in God! Jim
Is this sarcasim? Huh, Jim?
Not all of them Jim… Some will be terrorists hell bent on loosening the ties that bind…
Peoples heads to their bodies…!
Plus, now Obama says the U.S. will gladly accept the Muslins that Europe will not take… Seems as though their experiment in multiculturalism hasn’t worked out all that swell… Who would have ever thunk it…?
what about todays action
what about todays action? will it stop or proceed
As best as I can tell, the forecast calls for more whipsaw action……might pay us to fasten the seat belts……
One reason the markets’ action seems so extreme to us now is the fact that our markets have never been this high before. Percentage-wise, it’s not that much different than at other times in the past.
Well it is my thought every one has heard of the seven year cycle this week is seven years from the 2008 meltdown and 14 years from 2001 911 this is reason for concern. along with everything else we should be on the ends of our seats. HEADS UP!!
Jonathan Cahn covers all this in great detail. The Shemitah. Jim
Superstition is not useful in investing! Or in anything else, either!!
Read the book. I promise it will get your attention. The seven year cycle is evident. 2008 the Great Recession. 2001 9/11 and the resulting 777 point drop. 1994 the big bond crash. 1987 Black Monday etc. You don’t believe in superstition. I don’t believe in coincidences. Jim
The refugee situation is horrible in many ways. But in the middle of this global problem, where is the all knowing UN? This crisis will not end well.
I think people should think twice about criticizing Germany for taking in so many refugees. First and foremost, under the circumstances, it’s the right thing to do. Aside from that, however, is a benefit to Germany itself that is not so apparent. The fact is Germany, like many developed economies, is headed for a demographic crisis with its aging population. If nothing else, taking in the young and vulnerable is one marvelous way out of this dilemma. And no, this shouldn’t be seen as exploitive: The best solutions are those that serve the interests of all parties. The modern German economy was not built by fools and despots.
Dave… Do great minds seem to… “…If nothing else, taking in the young and vulnerable is one marvelous way out of this dilemma.”
Didn’t Adolfo Hitler say words to that effect…?
BE VERY CAREFUL OF GERMANY… WATCH CAREFULLY WHAT HAPPENS HERE…! War has always been a marvelous way out of dilemmas…
“..Hence today, I believe that I am acting in accordance with the will of the Almighty Creator, by defending myself against the Jew, I am fighting for the work of ALLAH.â€
-Adolf Hitler | Mein Kampf
“..In boundless love as a Muslim and as a man, I read through the passage which tells us how Allah at last rose in his might and seized the scourge to drive out the temple of the brood of vipers and adders..â€
– Adolph Hitler | Speech on 14October1941
Watch Germany… How much money is owed to Germany by other euro nations.
I am still trying to figure out how the market and individual stocks rose so much on such tepid earnings over the past seven years. Was everyone waiting for Godot?
Vegas gives the Astros a 100 to 1 chance to win The World Series. Somebody has taken them up on it with a $1,000,000 wager. Now that’s investing! Jim
Still more SUPERSTITION, Jim
No, insanity! Jim
Mike, in your article, you mention that “…more and more “death cross†patterns are showing up in global index charts.”
For what it’s worth, over the past few years, I’ve heard quite a bit about “death crosses” and “golden crosses.” I believe that the death cross has accurately predicted 9 of the last 3 major market corrections. (Hahaha!!)
I still pay attention when I hear of them, but I’ve learned not to bet any money on the outcome based only on the appearance of a death cross……..buyer (or seller, as the case is) beware!!
Great observation Robert!
One of my concern, which no one seems to be thinking about, is how much more anti-American sentiment the situation in Europe will cause. I still have family in Europe and I hear that a lot of people blame the flood of refugees on the situation we created in the Middle-East with wars we felt were necessary. We weren’t wildly popular before, this will only make the situation worse
Good question…why don’t those Mideast countries allow the refugees in. Probably because they don’t want them or want to deal with the challenges hundreds of thousands of refugees bring with them.
It’s a huge problem brought on by war, famine, greed and human indignities to each other.