Today, it was supposed to be Federal Reserve Chairman Janet Yellen’s time to shine.
Market Roundup
Instead, she flopped — at least as far as the markets are concerned.
After rallying by more than 180 points, the Dow Industrials rolled over late in the day and finished down 99. Not only that, but there were indications everywhere of risky “carry trades” and other speculative global bets being unwound. I say that because the Japanese yen soared and Treasury bonds surged.
Why did things play out this way? And what’s coming next? Well, let’s start with the news: Yellen went before the House Committee on Financial Services to testify on the state of the economy, monetary policy, and other issues at a particularly delicate time for the markets.
Here’s a summary of her major points …
The job market is humming along — She cited the 2.7 million increase in payrolls last year, and the 13 million in cumulative jobs added since 2010. She also underscored that unemployment was running at only 4.9% and that there were “noticeable declines” in underemployed and discouraged workers.
Growth is good but not great — Yellen noted the “moderate expansion” in GDP, calling out household spending in general, and housing and auto sector growth in particular. But she also acknowledged that “subdued foreign growth and the appreciation of the dollar” were holding things back, and discussed weak activity in the energy sector.
Yes, we see the market turmoil … — The Fed chairman highlighted declining stock prices, rising borrowing costs for risky debtors, and a rising U.S. dollar, saying they “could weigh on the outlook for economic activity.” Plus, she discussed the risks associated with China’s economic slowdown and weakness in commodity-linked economies.
… But no, we’re not changing course (yet) — At the same time, she blunted those concerns by saying that “ongoing employment gains and faster wage growth” should help here at home. She also said that “highly accommodative monetary policies abroad” would likely boost global economic growth down the road. In other words, she basically said the Fed wasn’t yet changing course and looking to cut rates, launch another round of QE, or otherwise try to ease policy further.
Early on, it looked like Wall Street might cut Yellen some slack. Stocks rose and bonds took a breather. Even deeply oversold European financial stocks, including Deutsche Bank (DB), bounced. That bounce stemmed from a Financial Times story saying that DB was considering buying back some of its senior debt securities.
But I was skeptical from the start.
First, there’s the fact other recent rallies fueled by central banker speeches and actions haven’t had staying power. They’ve all faded, sometimes in a day or two, sometimes in a matter of hours.
Second, there’s the pattern of the last credit crisis. Throughout the market decline from 2007 to early 2009, we saw multiple periods of short-term market panic … and multiple attempts by government officials and monetary policymakers to stem the bleeding.
Those actions invariably led to short-term bounces. But those bounces didn’t hold until the last of the housing, mortgage, and financial market excesses were wrung out.
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| Janet Yellen’s comments today helped stocks move higher. But, like other attempts at rallies, this one also faded. |
It sure looks like that process is now playing out again, with a particular focus on European banks. When I hear officials from Deutsche Bank proclaim that everything is fine, and German government officials echo that message, I can’t help but recall similar proclamations almost a decade ago from officials at U.S. institutions like Bear Stearns and Lehman Brothers, as well as from U.S. policymakers.
I’m not saying Deutsche Bank is necessarily mortally wounded like they turned out to be. I simply can’t say yet if that’s the case. But the credit markets are obviously very worked up about something. So a new round of forced bank mergers, massive capital raisings, bailouts, or outright failures is certainly possible both here and abroad.
Finally, there’s the issue of the underlying economy. I have repeatedly pointed to deterioration in the economic data, growing strains in the credit markets, and other threats because they all suggest my forecast of a major turn in the credit cycle is on track.
| “I’m skeptical that bounces driven by central bank “happy talk” will prove to be long-lasting.” |
Past rounds of QE, interest-rate cuts abroad and market jawboning “worked” because they came during the bullish phase of the credit cycle. We’re not there anymore. We’re in the bearish phase. So bounces driven by central bank “happy talk” are vanishing in the blink of an eye.
Bottom line: I suppose you can play these quick counter-trend moves if you really, really want to. But I think a better strategy is to avoid getting too hung up on short-term gyrations or short-term oversold readings. Instead, stay focused on the big picture – and the need for protective, proactive action to defend or build your wealth in tough times like these.
Am I off-base? Will the Yellen rally actually have legs for more than a few hours or days? Or is her rally going to suffer the same fate as the Draghi and Kuroda rallies before it?
Also, what do you think about European bank risk? Are institutions like Deutsche Bank going to suffer the same fate as Bear Stearns, Lehman Brothers, or other troubled firms during the Great Recession? Or are you taking a “this too shall pass” approach to the latest financial-sector turmoil? These are very important issues, so please try to take some time out of your day to comment below.
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Negative interest rates, large-scale debt defaults, falling bank stocks — those were among the subjects you were debating overnight.
Reader Anthony G. maintained that central banks are proving increasingly ineffectual, saying: “Bank stocks and government debt are things to avoid. Draghi is being called out on his super-stimulus bluff. It is becoming evident that this unelected emperor has no clothes.”
Reader Lynn pointed to a serious problem with central-banker thinking: “I am not sure about this contorted thesis the central banks utilize to support their contention that lower/negative interest rates will encourage consumers to spend more. If anything, it is having the opposite effect as savers — particularly those near to or in retirement — must save more, not less, to achieve their retirement savings goals. It is an inverse correlation: The higher interest rates are, the less that investors must add to savings and vice versa.”
And Reader J.R. suggested the next crisis will stem from aggressive auto lending: “The coming credit default collapse in the U.S. will be initiated by the gradually increasing defaults on all those subprime auto loans that have been repackaged and sold (as were the housing loans). The millions of subprime car loans can never be repaid, and the defaults will snowball as the recession deepens. It is inevitable.”
So what does this all mean for the markets? Reader F151 said: “Are we still early in this bear-market process, or are stocks about to reverse course and surge higher? My guess, in looking at the charts: We have another 90 to 100 points down on the S&P before a rally. Then much more downside.”
Reader Gaeton added: “The market is itching to rally given its oversold condition. I expect Janet Yellen to do the ‘right’ thing with her comments. The markets will buy into it and rally up to around S&P 2,000. Then the party will be over. The support at 1,800 will be taken out and the real pain will begin. I am looking to get very short and have a lot of cash if this plays out.”
Thanks for weighing in, and keep those comments coming in the discussion section below.
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Walt Disney (DIS) blew the cover off the ball in the most recent quarter thanks to the blockbuster Star Wars: The Force Awakens movie, earning $1.63 per share after items. Analysts expected only $1.45 per share. Revenue also topped estimates at $15.2 billion. But the stock struggled anyway amid ongoing concerns over subscriber defections and falling profit at its ESPN and ABC networks.
Why do oil producers keep spewing out oil even as prices plumb depths they haven’t seen in many years? Because they have so much debt, that’s why! This story points out that energy producers need to bring cash in the door to meet debt payments regardless of the oil price. That is perpetuating the glut, and the process won’t end until we see an even bigger wave of bankruptcies in the sector.
Donald Trump and Bernie Sanders easily won in the New Hampshire primary yesterday, with Trump taking roughly 35% of the Republican vote and Sanders grabbing 60% on the Democratic side. Republican John Kasich finished second at 16%, while Democrat Hillary Clinton nabbed around 38%.
Negative interest rates don’t seem to be helping the global economy at all, and you could easily make the case they’re hurting by crushing the banking sector. But an analysis from JPMorgan Chase (JPM) suggests we could go even further down the rabbit hole over time. The firm’s analysts said rates could be cut all the way to negative-4.5% in Europe and negative-3.45% in Japan, provided central bankers there only applied the rates to a limited percentage of bank reserves.
What do you think about Disney’s struggles? How about the prospect of even more negative interest rates? And what about the oil glut – is it going to start getting better soon? Share your thoughts on these or other topics in the discussion section here at the website.
Until next time,
Mike Larson
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Recommended Articles by 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.
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Bernie Sanders want to reinstate the Glass-Steagall Act…. No sure what Trump stands for as his positions seems to shift from year to year… Any idea what “Make America Great Again” means? I mean, nice slogan, but HOW does he intend to do that?
Mike, why have you not advocated for the return of the Glass-Steagall Act as all the banking woes that we are facing now, go back to it’s removal in 1999., don’t they?
just do the opposite of what you read and things will be so fine
Would you explain that statement hawk? Some examples of what you are talking about?
quit using my name eagle495 its bad enough you talk to yourself through different names such as…..Eagle495 , Mike S. , Helen, and now your using my name of hawk5000 sooooo im changing my name to Hawk 5000 by the way ever think of changing your name to something more realistic like Squab495 by the way your no eagle I think your more of a squab which is a fat baby pigeon
you’re so smart.
Eagle495
Bernie is a lovely old sausage but wants to give away free education and print more money. Yes we need to unwind the excesses and bring back financial controls, but without destroying the financial system and creating panic. We need clever surgery to extract ourselves out of this mess we are in.
And yet, he is the ONLY candidate relying on individual donations and NOT taking money from the Dark Pools or the Political packs….. Looks to me like he is REALLY the ONLY candidate “Not For Sale”… Food for thought?
At this point I think it is beyond politics.
I wonder just who Sanders’ donations come from? They can’t be taxpayers, can they? Certainly they don’t grasp the basis for his plans to finance his proposed solutions, and his “Robin Hood” candidacy? If they stand to benefit from the “Free” stuff, then they aren’t supposed to have money anyway, and in any case, certainly don’t have enough extra money to give it to him? Nothing is ever really “Free” anyway, is it?
I’m tired of ALL Democrats, they can’t give your money away fast enough, just to get another vote. Tax payers willing to work and not stand in line for free-bees or for a hand out are being taken for a ride. We’re 22 Trillion Dollars in debt and they still want to keep printing more funny money. How does this help, it doesn’t
Oh, come, now, Ricky,
I’m a Democrat and probably even more conservative than you. America once thought we couldn’t possibly afford free high school for all. The more educated we became, the more prosperous we became. Our financial and economic troubles are the result of an insane Middle East endless war and the corruption of our big banks and Wall Street. Don’t let yourself be drawn to the counterproductive Democrat –Republican polarization conflict. It just distracts us from the real problems.
Trump is hardly “for sale”. Bush spent $36 million in New Hampshire, Trump $3 million, Cruz $500,000. Sanders is dead wrong about donors owning this race. The candidates who spent the least did the best. I am just beginning to realize we may be on the verge of a real political revolution. It’s time to put the Republican and Democrat Establishment out to pasture. This may be the one reason we all have to thank Barack Obama. As long as it’s not a Bush or a Clinton I’m on board, and I think I have a lot of company. My big laugh for the day was seeing Sanders have breakfast with Al Sharpton. Good Grief! Jim
If I went to sleep on Feb 9, 1938 and awoke today, I would think that I only slept one day when I saw Bernie Sanders platform. The guy sounds like a membrer of the Communist Party!
He is starting to make Obama a right wing candidate.
Who wouldn’t want life to be FREE?
Nothing is free! Some where someone
has to pay for it.
He and Obama and Hillary seem to be
cut from the same cloth:
Hillary? Left
Obama? Really Left
Sanders? AUFKM,C*
* Are You Friggin Kidding Me, Communist?
In that desolate country just north of you Bernie Sanders would be considered a moderate liberal. Your understanding of the Communism scare tactic is a result of constant brainwashing by those who have more money than they could possibly spend and politicians who are grossly overpaid and whose health care benefits are paid for by, guess who?, you the taxpayer. We both live in democratic capitalist societies it’s just that some countries chose to share the wealth a little more than others. Would you rather pay $155 per month with no extra costs for guaranteed health care from doctor to hospital or what your health “insurance” costs plus all the co-pays and deductibles. And don’t give me that tired old long wait list argument because if you can’t get on a wait list what difference does it make? And wait lists don’t apply to serious health conditions anyway but I must admit they do apply to face lifts and breast implants. And if you think the taxes up north are any higher than yours I challenge you to check your facts. Bottom line is that if you want to drive a car you need insurance. If you want to stay alive you need insurance. The only ones making health care insurance unaffordable are the insurance companies and the privately run health care services. Create a real health care “system” and regulate it and you’ll be able to afford not only that house you need but the flashier car you want. Why you’ll even be able to afford the taxes to pay for your overblown military. And yes I do recognize that your military keeps me safe and for that I’m very grateful. Thanks for listening to my rant and have a good day.
Give it another decade Old Jack and they will be knocking on your door for your greatest treasure yet. Liquid clear gold. The frackers will be fracked out by then and the US will want to get back into bed with you to kiss and make up. Your dirty oil will then look pretty darn good. I predict that the Saudi’s Iranians Iraqi’s and the rest of those phony oil sheiks will be fighting the mother of all wars annihilating themselves in the process. The young people who are in the majority there now are having their source of welfare cut off due to low oil prices and as the spoiled young do if they cannot get it handed to them on a silver platter they will take it. Just relax Old Jack you live in the best country in the world. If Harper had not f****d things up by going all in on oil for 10 years you would now be the leading IT go to place in the world. Be patient Jack as my young g/f says “Everybody gets a turn”
Bernie does not plan to fix the economy by printing money, He plans to pay for his projects by taxing that one percent that has the lion’s share of the nation’s wealth, just like was done and was practical when Eisenhower was president. Our nation’s wealth didn’t disappear, it is still all there in the hands of the one percenters and will remain there and compound in the one percenters pockets until our millionaire Congress-people get guts enough to raise the taxes for those wealth hogs.
Howard you will need to resurrect Houdini to pull that one off. You say clever you really mean under handed dodgy sneaky when no one is looking kind of surgery right. Honesty in politics died with JFK
No Gordon, I’d like to resurrect some JFK principles.
Just about the only policy on which I agree with Sanders and you. Shah Gilani of Wall St Insights and Indictments also approves of the legislation. Sen. Carter Glass was a Virginia senator, just thought I mention (like anyone but me gives a r@ts @ss). Wouldn’t hurt to consider the REINS Act (for “Regulations From the Executive in Need of Scrutinyâ€). The act, sponsored by former GOP presidential candidate Sen. Rand Paul of Kentucky, would require major regulations issued by federal agencies in the executive branch to be subject to congressional approval. Democraps wouldn’t favor since proposal was made by the opposing party and they love more government regulation.
Sanders’complaints about everything being rigged in America left out the Democratic Party. He beat Hillary decisively, but according to Party rules he only got thirteen delegates while Hillary got fifteen. A real revolution! Jim
Hi Mike
One of the problems many of us have is that Washington seems to be relying on the Fed for guidance and direction. What some are hoping for is a POTUS who will actually know what to do and get on with it. I don’t have any faith in the Fed.
Until the world of progressives learns to budget, then we face nothing but debt, default and collapse. Too many world governments have promised far too much free stuff without any ‘Plan B’ on how to pay for it. Populations have become dependant on something for nothing governments. This goes far deeper than how we will vote, or who wins the next primary. You need a helmet and a hard hat, ready for a hard landing unless governments change course and learn to budget. We have to do it with our credit cards. It’s called moral honesty.
Howard,
Are you aware that our huge deficits have occurred since 1981 under Republican Administrations and mostly Republican Majority Congresses?
Take a look at Obama’s last set of budget proposals.
I have never heard anyone argue that Progressive Democrats were fiscally conservative. Really amazing! Jim
the BIG problem is that spending has run away under BOTH republicans and democrats. Think if it like 4th gear for R’s and overdrive for D’s but both are going down the same debt road. We need someone who will actually CUT all of the wasteful programs, install a flat tax doing away with 95% of the IRS and get back to minimal government. This will not happen with a Dem nor most R’s. Therein lies the issue, while he may not be great on all things I do think that Trump will at least take a business P&L approach and start reining in the spending.
An interviewer asked Donald Trump for the first word that came to mind when she mentioned the name of certain candidates. One of his answers won’t make the evening news. When Hillary Clintons name was mentioned, he said “Evil”. Actually, I can kind of see it. If she was standing by while I counted money, and I picked up the pile and started away to so something, but left a hundred dollar bill behind, would I trust her to pick it up and hand it to me? Or would she stuff it away somewhere? I’m not sure. We might ask that question about any of the candidates. How much do we really trust them?
I wouldn’t trust one of them any further than I could urinate into a 50 MPH wind.
Perhaps Disney should sell ESPN to a cable company, therefore, ESPN’s revenue decline would no longer be their burden. … Upon divesting of ESPN, Disney could seek to buy Netflix or HULU and enter the new age of entertainment before it is too late. Disney will need to understand that The Force Awakens applies rhetorically to their needing to wake up their business model.
A good suggestion Al. If they time it right they should get Netflix on the cheap. I understand there are more Star Wars movies in the cards lets hope The Force stays with them. Otherwise look for a big flop
Again, have any of you figured out what Trump is going to do to fulfill his promise “To Make America Great Again”?
Haven’t you been paying attention? Trump says we are going to start “winning” again, and that we will win so many times that we will actually get tired of winning! How’s that for a plan to “Make America Great Again”? Sounds very much like Obama’s “Hope & Change” plan with a new moniker, doesn’t it?
Actually, to make America great again, is Trump’s “position” which is actually the correct “position” to take. It simply ISN’T a “plan”!
Eagle….You are not paying attention. I am not a big Trump fan BUT….he has put several policy statements/plans that include:
1. a tax plan
2. a plan for a wall to stop illegal immigration
3. a plan to stop obamasnare
4. a plan to stop common core
etc.
When sorting through the GOP offering the Donald does stand out. All this talk about making America Great Again is a good campaign slogan but after the campaign is over then what you ask. It rather reminds of years gone being at a sideshow and listening to a guy with a Megaphone shouting. I watched Gloria Steinman God bless her on the Bill Maher show and she made some interesting comments on “The Donald” Things are just never what they appear to be. The circle is tightening old Chris Christie who said “I am the best presidential prospect” just folded his tent and crawled off into the sunset with empty pockets. It takes deep pockets to win. That is what scares me as old Jeb has the deepest pockets and the most strings attached to him. He does not talk like a winner or act like a winner but the big money behind him will push him up the leader board. Jeb against Hillary but a great opportunity for a 3rd candidate
I find it extremely interesting that Bernie “won” the election by a landslide over Hillary, but because of the convoluted democrat primary election process in NH, Hillary actually walked off with TWO MORE delegates than Bernie garnered! Hey Bernie! You don’t have to go to Wall Street, the “Fix” is in in your own party!
This is why she was so elated afterwards
and we all wonder why the coronation of Hillary is talked about. The Dem party has rigged all of the delegates for Hillary and they are called “super delegates” and Bernie doesn’t stand a chance if she is not indited. If he wins the popular vote but she gets the nod then perhaps you will see a revolt on the convention floor.
Yes and the electoral college system needs an overhaul to. The winner should be the guy with the most votes.
Well as well known Jim Cramer recommended Bear Sterns a few days before it went belly up, I shall stay away from making them. My only posit is that the price of oil will stay low until Russia goes bankrupt. And no one knows how long that will be.
Countries putting their gold reserves on the market to pay for stuff will be the final leg down for gold.
Howard you could have a point but the settlement again goes back to paper money so will an ounce of gold be worth a wheel barrow full of money. I think this happened in history somewhere Weirmar maybe.
Just another great example of why people are so upset with the “establishment” and attracted to political outsiders who want things to change.These people in the ivory tower really have absolutely no clue about what is going on and are just attempting to lead us down the garden path to satisfy their own needs.I almost get sick to my stomach listening to her cocky omnipotent voice masquerading a very limited knowledge of Econ 101..
The power people in Washinton and New York live in a bubble of their own creation. They all have good jobs, nice houses, new cars, Christmas bonuses, and fun parties every weekend. As far as they are concerned business is great. I have come to the conclusion they really don’t understand what the rest of us have to live with. They are about to find out. Jim
Mike, please clue me in: for decades the oil industry was not allowed to export oil. We imported oil from Saudia Arabia, ad nauseum. Now, we have a glut of oil and still importing oil! We do not need oil from foreign countries, so why import? Is the U.S.just “buying” a friend or what? It does not make sense to me, so please correct my thinking. Thanx
We still consume nine million more barrels a day than we produce. Jim
I do not have the numbers… but one reason is that the refineries are set up for heavy crude but what is coming out of the US. is light crude. It is too expensive to switch the refineries over to handle light crude. So they export light and import heavy.. Thank the DAMN liberals in the Demo EPA for the refinery costs and issues.
I’m not sure investors and very many others know this, but Deutsche Bank (DB) is very heavily involved in Credit Default Swaps (CDS), yeah, those financial instruments of mass destruction (as Buffett described them), and, yes, as highlighted in the Big Short. If bankruptcies accelerate and credit tightens, then look out, DB can go down. Also, DB is leveraged 30:1. Sounds like a perfect recipe for disaster
Creit Default Swaps were illegal before Glass-Steagall was removed by the Republican Majority and Clinton in 1999
The motion of events send forth cannot be stopped. #banksmustfall
This is the most inept, politically compliant fed chairman since Arthur Burns. She refuses to tell the emperor (Obama) that he has no clothes and that current fiscal policy is ruining the country. On top of it all, she acts as an enabler that has destroyed the time value of money. Voters know something is wrong; that’s why they are voting for Trump and Sanders even though they haven’t a clue what either would do as president.
Voters do know that something is wrong and I agree this is exactly why Trump and Sanders are leading. The astonishing thing is no economics is being discussed. I have never heard any economic theory being debated between any of these candidates. It’s not about what would work. It’s about what constituents they can promise to. I want free too but any too realistic to think I’m gonna get it.
Bernie is going to tax the too rich. Why? To further progress along the path that isn’t working? Handouts to the losers who won’t do anything anyway and take from the productive and entrepreneurs and savers. (yea that’s gonna work)
Hilary is going to proceed along the Obama path. It’s only given us debt to GDP of greater than 120%. Are the young with all their new service jobs going to pay for this? That’s going to provide them with a booming economy and stability to raise their families in. Oh yea I guess we’ll just raise minimum wage to force economics to pay more so America can be richer.
Donald is going to make America great. Well that’s nice and there are hints that the guy has common sense but how about stating some economic reasoning? Is he going back to America’s old motivational system where you suffer if you don’t perform? Is he going to pull back on all the promises to government workers and actually balance a budget and hence create economic stability? Is he going to stop China from stealing technology? Is he going to let society do its own spending and investing rather than rely on government to do our spending like providing more risky auto loans, giving more money to cities to encourage further moral hazard, “economic development” like climate change spending, more regulations, and killing existing jobs in current energy production areas. Or is he going to get the government out of the business of deciding how Americans should spend their money and hence create economic stability. Actually he hasn’t said. So we can’t decide if his theories would work.
The whole political discussion is nothing but a sad joke. The news is acting like this is acceptable! These news people have no idea as to what the importance of a motivational system is. They probably just want something themselves, like more money. There is no talk about whether or not the current motivational system, originally laid out in the Constitution is no longer valid. It’s all about the things I want versus those others want. What we really should be talking about it what motivational system will work but the fact is that virtually everyone thinks they just want more money (it’s free isn’t it?). The fact is that money has been free for so long most people think it really is free and hence they are stupid about what to do.
THE GROWING PERCEPTION OF RISK
Janet Yellen is a Labor Market Economist by training. Unemployment and labor issues are lagging indicators. So, Janet Yellen will be the last to come around. Janet Yellen is not going to do ANYTHING for a very long time. Investors are now on their own. There is no more “Bernanke Put”.
By the time the FED lowers interest rates or does a version of “QE4”, the damage will have been done ( markets fully corrected to new lows). So, either get out now while the getting is good or be prepared to ride it out for the next five years or the duration, whichever is longest.
We are looking at rising systemic risk for all markets.
Too many Americans are INTELLECTUALLY LAZY…hence the Demagogue, D.Trump. Yes, some good tax ideas & he’s against “Crony Capitalism”, maybe? Went bankrupt 4X’s…thousands lost their jobs…r u f**k**g kidding? Nobody pays attention to State&Local Govt’s…4 Levels of Govt with a gazillion regs.&rules…If u Repub.geniuses have a better idea 4 Health Ins., please tell us or Shut Up!
Sorry Peter, how are we doing with the black pos in the wh now?
Well, did u have a stock portfolio in Jan.2009 thru today in 2016? DJIndex from below 7000…now around 16,000. Obama, not perfect but dam better than Bush/Darth Vader…stop complaining…offer solutions…bring back some version of Glass/Steagle…bring back +2-3Trillion of Corp. $$$ to America, change tax code…No Inverse Tax Relocations…it is not simple, but it is ALL in the nitty-gritty details to fix & repair greatest country in History!
Peter,
I am beginning to believe that there are only two of us on this site that had portfolios that benefited from Obama’s programs…. :)
guys do some research, the financial collapse was due to Clinton’s insistence of banks to loan to low income people so all could realize the American Dream of Home Ownership. Yes then the banks got fancy with CDS but they were born from easy credit and NIJA loans that people could not afford. Remember, Clinton said if the banks didn’t lend to the less fortunate you will be penalized.
Don’t forget those self righteous thieving s—bags Chris Dodd and Barney Frank who also pushed the NINJA loans to anyone foolish enough to take them and then blamed the whole mess on Dubya
American’s are prescribed drugohilics, They take that many pills their bodies have forgotten how to take care of itself and the drug concoctions in their bodies that they feed daily result in more problems and side affects. Doctors and drug companies make fortunes from your psychological vunerability and weakness. You are largely being initimidated by untrue health scares and Doctors thrive on it by over prescribing drugs. Stop going to a Doctor for the slightest twinge, don’t take prescribed drugs and you wont need the high priced medical insurance, in fact medical insurance will become cheaper. You are feeding your own demise.
Adrian (pill- less at 76)
Peter W
And a gazillion separate debts. Its called the pyramid debt.
All of the readers have super negative predictions. The last time I charted this type of sentiment was in 3-2009. As a contrarian I now believe this is stock picking time. Selective of course. Europe is where we were in mid 2008. Banking and Healthcare sectosr to me look very attractive specially here in the USA. I am personally selling technology, utilities and treasur
Yellen had to blink on her bluff to raise interest rates. Dragi had to blink on his bluff as well. It is clear that central bankers have lost control of the markets. The markets seem to be following oil.
Maybe it’s time to jump out the window? OR, if you are a know something investor it could be time to look at 3 or 4 stocks you have followed and know really well. Ask yourself are they worth a shot and then enter the market at a low point of your own choosing and just hang on for a while? It is amazing watching exasperated Bears run out of stocks to sell. What might happen then?????
Howard, it was the Republicans that were jumping out of their office windows in 1929. I’m a proud Democrat and I pulled out and bought a bunch of inverse ETF’s on the first trading day of January, just as I posted on this site …
yes TVIX has been good to me. Bought and sold several times so far this year and I’m now holding readying to sell again once my next trigger is hit.
We understand that you are a proud Democrat Eagle and a proud American as well.
Howard, I sense a hint of sarcasm. Jim
No sarcasm intended at all. We are a nation of free individuals who have fought for the right to consider things differently. As much as we may believe ourselves to be right, passions run highly on all sides of the debate. No, I’m just tipping my hat to a man of great passion. As much as we may disagree on approach, Eagle495 is a passionate individual and who knows, maybe through debate we will find an answer we can all live with.
Must be nice to live life so simplistically as Democrat.
Would the Fed please quit the Yellen and allow the market to deflate all the bubbles that have grown so as to get investment values back on the firm foundation where they belong. This is not a world that I would bequeath to my grandchildren. My children are having a hard time as it is.
Mike
Sure don’t know what they wanted to hear. If everyone would pay less attention to the volatility in the entire market and just look at the bottom line a week at a time, you would see a more filtered line in the negative direction for the past 2 years. We all see what deflation is doing in Asia and Europe and negative interest rates will do even worse than the lower interest rates. I think they should stay the course and increase the rates till we are at 2 to 3% inflation. If Trump gets elected, he will try to bankrupt the government. Sanders on the other extreme will have the country in a worse state than communist states. The bottom line is it is out of my control and in the hands of the lobbiests and the upper 2%.
Hi Brad,
There was a comment in your article that basically said “The Fed Does Not Know What It is Doing†That comment inspired me to write yet again to you today. Let’s get something perfectly clear. The Fed is NOT a government agency. It is a PRIVATE ENTITY owned by very very large American and European Banks. It was set up in secret in 1913 as a way to privatize the creation and distribution of the US money supply. Remember the Continental Dollar that used to be under the Congressional Control??? The Feds purpose, disguised as trying to provide a “stable†economic environment is to carry out the monetary policies that are favorable to the large owning banks that OWN the Fed. As Alan Greenspan said, the Fed is not a Government Agency and as such does NOT have to answer or subjugate itself to anyone except the major private banks that own it. I URGE you to read the best selling book, The Creature from Jekyll Island, by G .Edward Griffen. The bottom line is the Fed is not Dumb, they know what the have done etc.. The problem is they have pushed the Keynesian based money and banking to the brink and they may not have calculated the impact of world wide DEFLATION..unless….unless…that DEFLATION is by design….in order to create a “crisis†in order to then carry out or have other actions occur. Remember the absolute “gift” of a comment by Rahm Emmanuel: NEVER LET A SERIOUS CRISIS GO TO WASTE AND WHAT I MEAN BY THAT IS YOU WOULD NOT BE ABLE TO ACHIEVE YOUR OBJECTIVES WITHOUT IT…Real ominous words of wisdom for how the world REALLY operates…..
I think that you are wrong about the Fed being a private entity. If that is so then why is it that it is the president who appoints its chairman.
Inflation is normally the result of too many dollars chasing too few goods. Then why don’t we have inflation after all the new dollars that were created with QE 1,2 and 3. I think it has to do with fact that the world produces a lot more goods than it used to.
It used to be just the U.S, Germany, Great Britain, Canada and a few other western European countries that did all the manufacturing. When you add China, India, Brazil, Bangladesh and a bunch of others doing the manufacturing, that does make a difference.
Ed
Look up the history of the Fed and you will find out that it is controlled and run by the banks going back to 1913.
Jeb Bush and Hillary Clinton are raking in the money and falling flat on their faces while Bernie Sanders with a bargain basement campaign took New Hampshire. Donald Trump while not exactly running a campaign on the cheap ran all over the other candidates. Maybe the big bucks don’t buy what they used to. Social media seems to be overtaking the big bucks campaigns. At least this year it is a little more interesting than the usual run of the mill election season.
Ted F
We look funny overseas. 330 million people and the best both parties can give us is a Clinton or a Bush. Does our system really believe we are going to swallow this?
Yellen says, “Growth is good but not great.” Yellen noted the moderate expansion in GDP, calling out household spending in general, and housing and auto sector growth in particular. Seems she made no mention as to how long she expects housing and auto growth to continue. She also did not mention that GDP can not continue to grow based on household spending without savings needed to boost production.
Then she goes on to say “subdued foreign growth and appreciation of the dollar are holding things back”; all the while failing to mention that the foreign growth is “subdued” as a result of household expenditures having been brought forward as a result of low interest rates, creating the spending bubble wcich is about to burst if it hasn’t already. I can see her laying the foundation to later say it is all the fault of a strong dollar; but that will not work as we should all know where any strong dollar came from. Some of us even know that this “strong dollar” will not last.
You can fool some of the people some of the time, but you can not fool all of the people all of the time.
Ol’ Yeller is giving a good college try, though.
I am not surprised to see that the votes in New Hampshire are even dumber than the dumbies in Iowa! What a putrid condition our “democtracy” is in!!!
I’m curious. What would have been the “smart vote”? Jim
If you are so smart why did you spell dummies wrong.
Unless they wanted to take the trouble to write in a name, the N.H. voters really had no choice. The only actual non-politico choices were the Donald and Carly, and Trump is a TV star, so you know the result. The Dems went for the politician, but at least he is an outsider.
Gold is resting and the Nikkei and Hang Seng are testing. When gold starts up again it will be like the old whalers used to say “There she blows” Try and follow facts my friends not bloated self effacing economists and rubber numbers. Look at the European Bank story and the strong defense Deutshe Bank makes saying they will buy back 10% of their bonds that smells spells trouble. Other European banks are falling like rocks. Maersk the worlds biggest carrier profit is down a whopping 82% Liquidity problems in the bond market its all there like a chickens entrails for you to read. Off to the gold store again gee I hope there is a big correction in gold. Up or down the handwriting is on the wall for stocks.
An opportunity may exist in platinum as well. It has never been priced at such a discount to gold.
Yes Dame Yellen oops sorry they have not yet recognized your good works yet. The “Alice in Wonderland” economy is just humming along. The 33 million workers out of work have had a biblical Revelations experience and whoosh just disappeared. If you take a peek at the Nikkei after all we are a global market you will notice it has dropped around 1800 points during the last three days of declines including today and if it does not do a sudden U turn. Switch to the political arena and listen to that astonishing bad bunch of Bozo’s on their road to the White House. Bickering back biting at its best. Listening to them and the wonders they will do once president they are related to the big guy upstairs. If I believed in reincarnation I would say Nero is back among us fiddling like crazy in female form. In the end your using politic speak speaking to other fiddlers and players in the orchestra and your the Maestro. Yes its time to circle the political wagons as the Indians that are coming at you have cell phones and computers loaded with media info. Sorry Dame Yellen the IT is outflanking you exposing you as the emperor with no cloths and I will shut my eyes on this one.
Congratulations I just read a report that stated the US would be energy independent by 2019. I just wonder which oil companies will still be around then and still viable. The way I see it the fracking wells have a life of about 1 to 2 years sooo everybody must continue drilling. I am sure the banks are not interested in more bad energy loans. Maybe they could tap the online investing market. To bad Charles Ponzi is dead this situation is really tailor made for him.
Gordon,
Whether it is Trump or Sanders that is elected , we are not going to need those shipping lines like we did in the past as both of those candidates are going to encourage Americans to buy products Made In America…. Only by doing that will America be “Great Again”… Really is that simple….. GATT and NAFTA will finally get torn up….. Greatest thing about the coming elections is that the Conservatives, who sold their souls to the 3%, are going to be driven crazy as the average American finally throws their candidates out along with the putrid bathwater they brought!…. :)
Karl, Rush, O’Riley and Glen, it was NOT productive knowing you guys…. :(
I see that today, gold broke above the top of the down channel it has been in for about the last 2 1/2 years. If it closes above that figure, then tests it successfully in coming days, and moves higher, we could begin a bull market in the commodity. Silver could follow.
The real bull won’t happen though, until gold gets above a declining line currently a bit under 1500.
Seeing that Deutche Bank has a huge percentage of derivatives makes me doubt the high Weiss Rating for it. Does it not consider those treacherously dangerous loans?
There is one question that I think Trump could answer and get a round of applause for, because even Fox News is hammering him on the business bankruptcies. If he just replied that unfortunately, unlike the government, I can’t print money and I have to live with a Budget, when I can’t do either I am Bankrupt.
“ongoing employment gains and faster wage growth†The world money supply is becoming worthless that dictates that you cannot get “ongoing employment gains and faster wage growth†with penny a dollar money that is still going down as to being out altogether!
I heard where Bernie “the socialist” Sanders proposes to pay for free healthcare for all (?) by putting an additional 6.2% payroll tax on employers. Now that’s a real plan to improve unemployment isn’t it? I’ll also bet all those companies that relocated manufacturing to Mexico, Brazil and China over the last 20 years just can’t wait to move back to the U.S. with that type of government with a hand more over welcome! As Ross Perot predicted, you can already hear another giant sucking sound of additional companies fleeing. One of the tax reforms that needs to be accomplished is to REMOVE those employment taxes and let the employees get more income and fund their own SS and UE accounts, if they choose. That’s one big reason those companies fled to begin. So let’s keep killing the golden goose. Can Trump help out here – depends on who he would have to work with if elected. Frankly, I don’t know if he or anyone can do it quickly enough to keep the whole mess from crashing down first. On the other hand, do you think Bush or Kasich will do anything with the high powered people behind them with all the strings attached? Nah.
I have watched / read the news, predictions, prognostications, and actual facts concerning the market and stocks since I stopped all investing in them 15 years ago. Since then I have not earned a lot of interest. However, I have not lost anything except maybe to inflation. I remember reading, back then, what the stock market is. If I remember correctly the writer called it “the playground of the rich and famous that haven’t worked for the money they have”. He said the real problem of the American economy was twofold; the unaccountable Federal Reserve and “unearned income”.