The illusion of control. Can we all admit that’s what it was now? After all, does it make sense to anyone that a handful of unelected bureaucrats and economists … holed up in gilded conference rooms in Washington, Frankfurt, Tokyo or anywhere else … could artificially prop up markets and economies forever?
Market Roundup
Sure, they could goose asset prices for periods of time. Sure, they could temporarily inflate a handful of credit-sensitive sectors. But when you think about it, the massive amounts of easy money pumped into global markets, the negative interest rates proliferating in more and more countries, and the impoverization of savers worldwide didn’t change the underlying problems faced by our economy or anyone else’s. They just papered over the problem.
Worse, those measures ensured we would remain caught in the boom/bust credit-cycle trap that has plagued the economy since the late 1990s. And arguably, this last bout of aggressive policy measures created the biggest batch of bubbles yet:
In junk bonds. Emerging-market bonds and stocks. Commercial real estate. Mergers and acquisitions. Stock buybacks. Initial public offerings. Artwork, collectibles, and trophy Manhattan condos. The list of wildly inflated assets goes on and on.
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| The ‘stress points’ in the markets are increasing. |
But with each passing day, it becomes clearer that central bankers are losing whatever control they had — a trend I warned was coming all the way back in July 2015.
Take the Japanese yen. The Bank of Japan managed to crush its value on Friday by cutting one key benchmark rate into negative territory. But a mere three trading days later, that entire move has been vaporized. The yen soared today as investors came to appreciate the BOJ’s “bazooka” is nothing more than a pea-shooter.
Or how about the bond market? I flagged the weakness in Treasury yields and the surge in Treasury prices yesterday, and those trends gathered even more steam earlier today. The 5-year Treasury yield sank as low as 1.2%, threatening the original upside breakout level that dates all the way back to the summer of 2013.
As for stocks, all the “stress point” names I’ve been monitoring and warning about — banks, real estate, you name it — swung all over the map.
| “Central bankers are throwing new measures out there more and more frequently.” |
The Financial Select Sector SPDR Fund (XLF) of major banks, brokers, and insurers briefly took out the low from a week and a half ago, while major European financials cratered across the board. The XLF is now down almost 14% year-to-date. The First Trust NASDAQ Global Auto Index Fund (CARZ) just sank to its lowest level since April 2013 (excluding the August 24 crash day), putting its YTD losses at a shocking 16%.
I think part of it is that central bankers are throwing new measures out there more and more frequently. They’re also hitting the speaking circuit almost every day, trying to “clarify” how markets should interpret and react to what they’re doing. To me, that smacks of panic.
Another reason for the loss of control? The markets know this stuff doesn’t work. Inflation breakeven rates. Treasury-yield spreads. Commodity prices. High-risk bond prices. Currencies. The economic data, itself. They’re all signaling a global economy that’s facing a widespread downturn and widespread deflationary pressures … DESPITE six-plus-years of so-called “stimulus.”
Just today, we saw job growth decelerate to 205,000 in January from 267,000 a month earlier, according to the ADP Research Institute. That’s still a decent number, but other forward-looking indicators are in much worse shape.
We also learned that the Institute for Supply Management’s service sector index dropped to 53.5 in January from 55.8 a month earlier. Not only did that miss economist forecasts, but it was also the worst reading in 23 months. The ISM’s manufacturing index is mired at six-and-a-half-year lows.
Bottom line: Wild volatility and crazy swings in everything from stocks to bonds to currencies make it abundantly clear that the illusion of market control is getting thrown out the window. That means you simply must take steps to adjust your portfolios, and protect your wealth – before it’s too late! Subscribers to Safe Money Report have been prepared and positioned for this kind of chaos since last summer.
In the meantime, what do you make of this cross-market volatility? Is the world spinning off its axis? Or is this just a temporary bout of madness that central bankers will succeed in tamping down very soon? What about the economic data? Do they confirm the U.S. is heading toward recession … or do they just indicate a short-term blip in the economic expansion? Hit up the comment section and share your insights.
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In the wake of the Iowa caucuses, several of you took some time to weigh in on the presidential race. There were also a couple of lively discussions about currencies, stocks, and interest rates.
Reader Chuck B. weighed in on politics, saying: “Trump must be seething. After leading by so much for so long, he barely got second place in Iowa. I’ll give him this: He didn’t show what he must feel in his concession speech.
“Of course, what we saw was one of the professional politicians pull out the win. Do we really want another professional politician occupying the White House? That seems to be all that’s left, except Hillary, and she is next thing to a professional – having been married to one, and in the spotlight for so long.”
Speaking of Iowa, Reader Tactical111 said: “Trump lost Iowa because he flat out said he’d eliminate the bogus ethanol program that Bush instituted to pay back his Iowa constituents. And he barely lost at that to Cruz, with both getting the same number of delegates. So it’s no big deal. Watch now as going forward, Trump runs way ahead of the pack.”
Reader D. said Donald Trump should do better in the next round, too, and also offered his take on Bernie Sanders: “Trump will win in New Hampshire. Iowa is a caucus made up of party regulars, not voters broadly.
“Sanders will probably place a strong second in N.H., though not as strong because activists will be less important. But that will be it. Sanders has no traction in the South, where we’re headed next, and he’ll run out of money soon.”
Finally, Reader Jim offered the following take on the Democratic nomination race: “Hillary is Hillary’s biggest liability. Her performance in the caucus and on the stage afterward was just plain bad. She was obviously angry. She made Dr. Dean look placid.
“She also relies on a few wealthy donors while Sanders got over 3 million small donations. If the current crop of politicians represents the Establishment, then the Establishment is in trouble.”
Switching from politics to currencies, Reader Anthony G. asked: “Why won’t the euro sell off. The continent is clearly in crisis.”
In response, Reader D. said: “Lots of emerging-market countries are selling dollar-denominated assets to prop up their currencies. Once that ends, the euro will decline more sharply, and the dollar will be up.”
But Reader John offered a contrarian take, saying: “I wonder: Do American investors understand the European economy? All the punters are predicting the collapse of the euro and the European project. I would not bet on this scenario. Europe has had many problems and all have been solved over time, making Europe even stronger.
“My scenario is a bit of volatility, a bit of negotiation and compromise, and then Europe is on the road to recovery. However a global recession could change that scenario and then all bets are off.”
Lastly, Reader Geoffrey C. shared his view on stocks: “The stock market is headed downward from here. The real question is, when will the bottom drop out of it in a serious way … and the S&P collapse below 1,700, below 1,600, or lower?
“Of course, anyone who can answer that question can buy put options at the right strike price and expiration date and get rich. My gut feeling is that this is the month for the first big move down, but there’s no way to know that for sure.”
I appreciate all the different viewpoints. I clearly agree with the bearish outlook for stocks, and I see several challenges for the euro region. Bank stocks are getting absolutely crushed there. Plus, Mario Draghi’s pledges every few days to throw “monetary policy spaghetti” at the wall to see what sticks smacks of desperation.
The only question for currencies is whether our economy is also starting to fray around the edges? It looks that way to me, which is why I believe one of my favorite “risk off” currencies is an even better “buy” right now. I gave Safe Money Report subscribers a recommendation to profit from it a few weeks ago, and I believe it will bear fruit soon.
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Yahoo (YHOO) confirmed it overnight: The fire sale is on. The troubled Internet-search firm is exploring “strategic alternatives,” which could involve the sale of some or all of the company. It’s also cutting its workforce to around 9,000 later this year (from a peak of more than 12,000), and taking a $4.5 billion charge to account for the declining value of some of its businesses.
Just three trading days after trying to shock the markets into a state of speculative frenzy … and one day after it all went “poof” … Bank of Japan Gov. Haruhiko Kuroda was at it again today. In a speech in Japan, he said there was “no limit” to what he could do to save the economy. That includes cutting interest rates further into negative territory or unleashing other stimulus measures. Phew, I know I feel better now. How about you?
Is online retailer Amazon.com (AMZN) “going bricks-and-mortar” in the book selling world? That’s what a Wall Street Journal story suggested.
The piece quoted the CEO of General Growth Properties (GGP), a mall operating REIT, as saying Amazon may open as many as 400 physical bookstores over time. The process would take years and there was no confirmation from the company. But if so, that would put Amazon in even more intense and direct competition with Barnes & Noble (BKS), which has 640 stores.
So what do you think about the dismembering of Yahoo, one of the original Internet pioneers? Or how about the possible aggressive push by Amazon into physical retailing? Any thoughts on the increasing desperation apparent in the world of central bankers? Share them in the comment section below.
Until next time,
Mike Larson
P.S. In case you missed it, I sat down today with Boris Schlossberg and Kathy Lien — both CNBC regulars — to discuss a very important topic: The fate of the European Union.
And while that is a fascinating topic in and of itself, we discussed new and exciting ways to PROFIT from Europe’s demise. This special interview will only be online a short time. I urge you to click this link now … before it’s gone!
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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The word you were looking for was impoverishment (not impoverization)
What’s Hillary doing on here? :)
Yes, it’s “impoverishment.”
She has a lot of fans here!
looks like february could be a brutal month for crude oil. we’ll all be so happy when prices go up again … hey, wait a minute. what am i saying? :-)
Quite right about central banks. They seem to think they can push a string to affect economies. All of them are acting as if they are in a glass bowl and can affect everything inside when, in fact, they are buffeted by outside factors, especially incompetent governments, over which they have little influence and no control.
Donald L
They understand them alright they are all joined at the hip. They are all incompetent none individually has that market cornered.
Mike, I’m really tired of you patting yourself on the back (a la Donald Trump) every time something happens that supports your point of view (bearish); when your predictions don’t come true, you either forget them, or pivot to revised predictions that may be more in line with the markets. And, of course, every time you congratulate yourself you reference your paid service, so those of us who don’t subscribe have no way to evaluate your self-congratulation. Furthermore, you never try to reconcile or even acknowledge the views of your compatriots, like Larry Edelson, who differ from yours. We get that your very bearish, but please acknowledge when things don’t go your way–like today, the financials turned around at day’s end, so not quite so scary as you suggest.
NO inflation says Washington? H U H! I just finished re-doing my home and two cars 2016 insurance with a “whopping” 21% increase over last year. And, that was the “best offer” of three quotes. Read the “age of deception” by James Davidson. This just cannot go on much longer.
Jerry it will go on as long as you and I let it. We speak as individuals with no central voice. Yes we are in the age of deception. Ted Cruz frightens me more than any other GOP job seeker. His frightening speeches on religion. He is not running for pastor of a church but for the presidency and the state and church should stay separate but he is hell bent on making the two into one and that marriage will be a disaster. Watch out for the religious police if he wins. He will make the religious police in Arab countries look like amateurs.
Cruz is A smart political stategist. He saw Romney lose because the Evangelicals stayed home. It’s tough to form a coalition that can beat the Demo Combo. I don’t think you will hear a whole lot about religion if he wins. Frankly, I’d rather listen to religious blather than the Progressive blather we have had to put up with the last seven years. Jim
Mario Draghi is bluffing concerning additional stimulus. I believe his tool box is empty. The rest of the eurozone may no longer be willing to play his game.
Anthony G Mario D is only a emperor in disguise and he has no clothes. Tool box empty hmm he will only go deeper into negative interest rate territory. The same crap orchestrated by the BOJ lasted 3 whole days and then the yen appreciated again why? God only knows as their financial situation is the worst in the world. People like Draghi rule through fear and with the refugee crisis everyone’s life is upside down. They have taken the focus off of the Eurozones financial problems and transferred them into fear. Fear of refugees fear of losing the value of their money and jobs. Its Fear Factor rule.
Iowans pick corn, New Hampshire residents pick presidents.
unfortunately, iowa and new hampshire pick our presidents for us. it would be nice if we could pick our own president.
At this point I’m kind of leaning towards anarchy. Jim
a group of rednecks in middle america and blue bloods on the east coast choose our presidential candidates for the rest of us. and we think our system is better than the rest of the world? sadfully, it is better.
come on, hillary. sadfully is not a word.
The Fed merely makes money available to corporate banks, It’s the banks, not the Fed, that choose to get it into circulation via loans to small businesses and individuals, or into M2 via their own accounts and those of their CEO friends, Since 2009 the banks have neglected small businesses and individuals in favor of directing the great bulk of that money into M2 investments. The problem lies with the 7,000 corporate banks and their network of corporate CEOs, not unelected bureaucrats in Washington or anywhere else. They alone created the huge bubble in stock prices long before letting small amounts of that new money trickle into the economy. The Fed is powerless to tell them what to do with that money. The result has been that corporate banks borrowed at 0.25 percent, and invested with a return of 25 percent over 6 years. That is called collusion among bankers at the expense of the economy and 325 million US residents. Fortunately OPEC decided to take on US shale in a war that forced the price of oil and most other commodities down and then stock values. Get it right, Mike.
The Cruz win in Iowa is not much to brag about when you consider the history of Iowa vs the national outcome, but it did give one candidate a win under his belt for what it was worth. The seething was not just from the Trumpster, but also from leftist enemedia, the Marxist Dems, and of course, the RINO establishment. One can only hope that a good Christian conservative constitutionalist the likes of Senator Cruz will make it into the oval office after the fraud now occupying that place has so stunk it up.
The central banksters, namely the FED, have done little since 1914, save inflate our currency to be worth about 5% what it was when they assumed the ability to monetize, incur debt and manipulate interest rates. Who but crooked banksters and politicians could ever conclude that these massive powers belong in the hands of a private banking cartel?
The piper will be paid for mindless monetization, debt and spending. No amount of central banker razzmatazz will do anything but delay the inevitable misery to come. Currently we are the prettiest horse in the glue factory, so capital will be attracted for a time.
Who knows? If our nation turned from the wickedness of warring for Corporate advantage, murdering our unborn and trafficking in their organs, celebrating, enabling and entitling the vilest of pathetic lifestyles, and repented, God would turn the deserved tribulations from our future. Nah, that is not even a faint hope. For sure the corrupt FED, our feckless CIC, nor the turd world dominated UN are not going to be any help. If you live in the city be prepared for those now sucking the marrow out of our government, to come after your stuff when SHTF. Buy some gold and a place in the country if you can. Pray. God Bless America
W
The Two Wolves
One evening an old Cherokee told his grandson about a battle that goes on inside people. He said, ‘My son, the battle is between two ‘wolves’ inside us all.
One is Evil.
It is anger, envy, jealousy, sorrow, regret , greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.
The other is Good.
It is joy, peace , love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith.
The grandson thought about it for a minute And then asked his grandfather: ‘Which wolf wins?’
The old Cherokee simply replied, ‘The one you feed .’
Mule
Mule
That is brilliant. The home of the brave truly is the land of the free.
I treasure the wisdom in “Two Wolves” but I take no credit for it. It came in an email several years ago and the author is unknown to me. God Bless the “Old Cherokee” whoever he is.
Mule
well Planet X or Nibirus has been filmed .. and lots of signs in the skies ….
prepare for worse things that a Stock market crash and pray for America to Return to GOD
Amazon going “bricks and mortar’. Maybe not such a good idea. Start branching out and they could lose focus. Better do one thing good than a bunch of things not so good.
This makes no sense to me. I thought the genius of the Amazon business model was to avoid the capital investment and overhead required to operate bricks and mortar. Are volume and razor thin margins possible there? Jim
Jim, this is just a thought.
As many would know BHP controls some of the most efficient commodity operations worldwide. One of their spin offs, called South32 also controls major supplies of commodities. For some time now we (my fund) has taken a position on a hunch that cutting production to meet the market demand and send the profit curve running back up would happen. These two giants report in late February and early information suggests a major change in both commodity costs and volumes is about to take place. BHP of course want to protect their A rating. Look up South32’s report to the market for guidance. Just offering to help.
The fate of the European Union. … Boris and Kathy made a strong point for Europe’s ultimate demise and even made suggestions on how to profit by it, however, one would need to purchase their advice beyond their presentation material which was short on substance. … For a mere 2k, one can buy that “roadmap”. … One could also simply purchase a Euro Inverse ETF and save the advise money for that purpose!
I am truly amused (maybe more amazed) by the dog and pony show playing out with David Cameron in the UK and the EU so-called concessions to persuade the UK to stay in the European Union. Brexit looks more probable than ever before! The trans Atlantic free trade agreement will be implemented soon. What will be the outcome? The US will have a stronger dollar but much less exports. STAGFLATION here we come! The clouds are gathering for a perfect storm!
The UK can see the tidal wave of immigrants arriving under the open border and EU sharing taking place. At some point this massive population movement is going to blow-up. Brexit is looking like a better than even chance.
America walked into trading with China with its eyes closed tight. They opened up their market which was used to quality made in America products. Now they America allows dangerous products to land on their shores and be put in the hands of unwitting consumers. There was no vetting process whatsoever. I just read a article where a major oil company wanted to give a contract to one of China’s newest modern shipyards. Upon vetting them they found the yards failed on every level of quality. They then told the shipyard that they would have to make major upgrades to obtain the contract and guess what the shipyard just walked away looking for suckers elsewhere. Folks your government has let you down by allow all this shoddy merchandise to arrive on your shores for the sake of profit for international companies. Wake up and smell the coffee your government has sold you down the river to push that global community crap.
Who are the vilest of pathetic lifestyles? I guess I would be one of them. Let me see, I never had an abortion, I never helped in anyone participate in one because as a member of the vilest there was no way I would want to I have never divorced and only lived out of wedlock as the old term goes with my partner of 40 years because the vilest cannot get married. I did not have children to collect welfare or neglect them so I cold say I had them.
I pray to God every day. I ask for help in my life and blessings on others. I despise greed, it is an ugly quest. Think about things and try harder with the ones you don’t understand.
Concentrate on how the world would be better if we all tried to be considerate, caring and understanding. Resign from your religious club, not your church but your club. Open your hear, your eyes and your mind. Participate in making life better by going to war with the real demons. Demons such as greed, selfishness, heartlessness, and separating us from them.
Yellen is bluffing also. She will not be able to keep rates low much longer. The bond market will be her enemy.
Chuck B. weighed in on politics, “Of course, what we saw was one of the professional politicians pull out the win.” If you intend that remark to be about Cruz, you are correct, in that he is a paid politician. But, he is hated by almost all the others because he calls them out for lying. He is a true conservative; he may be part of government, but he is trying hard to change it, for which he is hated by Democraps and RINOs. Reader Tactical111 said: “Trump lost Iowa because he flat out said he’d eliminate the bogus ethanol program”. Not true. Trump bowed to the Corn King and flat out affirmed his support for ethanol- a clear attempt to win delegates, something a politician does. Note: Mike Larson- how can you allow false narratives to be shown on the site?
Politicians before they open their big mouth always wet their finger and stick it up in the air to see which way the wind is blowing. Trump made an against the wind comment and was blown away. Lesson learned show up for debates and never take anything for granted.
This really does not compute. We want expensive fuel and raw materials and a worthless dollar since all those things are good for Goldman Sachs and the stock market. So U.S.A. manufacturing can pay high prices for raw materials with a worthless dollar. So high fuel prices will reduce consumers spendable income.. All this and more will boost the middle class? The FED and all those Ivy League snobs are destroying the country. What is really pathetic is that they have pushed their agenda for over 8 years and still believe that their only mistake was not pushing hard enough?
P.S. It would be really nice if this bust in fuel prices would destroy the brutal Saudi kingdom.
That someone who lived in 2008 – when the capitalistic economy of the USA (and Europe) was about to collapse (at least its banks, insurance companies, car companies etc.) – still does not believe in 2016 that few economists and bureaucrats – who are in charge of money supply and government activities (like providing loan guarantees, providing loans etc) – CAN save the day, and is writing such an article is… UNBLIEVABLE.
The booms and busts are NOT the fault of governments, economists etc, and they did not begin in the 1990s as mentioned in the article. Have we forgotten 1929, or the 1880s for farm products? The business cycles are certainly a product of the Capitalistic system; they may exist in other economic systems as well, but (for variety of reasons) we do not know too much about that; and it does not matter. Most of us seem still to believe that the Capitalistic system is the most EFFICIENT, and, at least since Keynes (in the 1930s) economists and politicians are devising programs that try to MODERATE the main negative outcomes of that system – the business cycles (of every 7 – 10 years in the last 6 decades), increasing economic inequality, unemployment and even inflation.
Industrial production was down 3% for the last 6 months in this country, and down for 10 of the last 12 months. The ISM Production managers index was below 50 for the last 4 months, indicating declining production. The ISM says inventories are high, backlogs and exports are falling, and prices are dropping. According to the Commerce Department, personal spending was flat in December, with both durable goods and non-durable goods sales down .9%. Retail sales for 2015 were the worst since 2008/2009, and poor sales in the last quarter of 2015, which retailers depend on to make a profit for the year make things tough for them. Earnings may be up 2.2%, but people are faced with higher health insurance costs and are trying to increase savings, up over 5%, not spending. On the international front, nations are in a negative feedback loop, reducing interest rates, trying to boost exports. Fed Vice Chairman Fischer’s remarks the other day, about killing the rate rise, and possibly going to negative interest, may reflect that American exporters are all over the Fed to join the party. The high priced dollar is hurting them badly.
Should have said “personal earnings may be up 2.2%…”.
If American exporters are all over the Fed to join the party it is a done deal they will listen to their masters. Rate rises in an election year are bad medicine.
Unfortunately, the banks are the Fed’s masters, not business.
The BOJ is throwing everything at the problem and creating a day trade for speculators.
Gold is up to $1141. today, which is up $67. in the last month! Why scrap around to find .2 % on your money when you will make at least 10% on gold by the end of 2016. I am buying gold on any dips. Happy investing!!
Gold is still in a down channel. the top of the channel is currently around 1240, and slowly falling. Until it rises above that level and tests it a bit lower, it will not break the channel.
This is nothing but a short oversold rebound. It will soon turn.
Von Mises flatly declared that there is no means of avoiding a final collapse of a boom brought about by credit expansion. The only alternatives are whether the crisis comes quickly as the result of a voluntary abandonment of further credit expansion, or later as a final and total collapse of the currency system involved. If he was right, and it’s my guess he was, it doesn’t matter what the charts say. The only place to be is gold and silver. Jim
I’m really not an alarmist by nature but there is a real possibility, though not likely, we could witness a total economic collapse. The manipulation we have witnessed since 2008 are unprecedented. We have seen this show before in the Soviet Union, whose command control economy was really not that much different than ours. As these same Western economists were praising the Soviet model and reporting great growth and economic numbers it collapsed like the house of cards that it was. We are in an even more perilous position than the Soviet citizens because they had virtually no personal debt to contend with while we have trillions. With even the remote possibility of this scenario playing out it’s foolish not to have some gold and silver stashed away just in case. Jim
Travis Me to but there are very few and very small dips to speak of in the last week. Stay away from paper gold its a trap.
Cliff The big money boys are smart now there is more profit in a market where there is much volatility (created by them) Days with large swings up or down 300 points create more profit than just letting a market top and then collapse. They can bleed this type of market for years. If they sense it is dropping to far to fast they just goose it up with all the printed money the Fed has provided. We the little guys are just pressing our nose up against the candy store window.
A day after we had heard that stocks had topped my commodity portfolio just brought in the best returns I have ever had. Who can figure this market out??
Sold major position in Novenber 2014. Because of I agreed with you went fully to cash in July 2015. Thank you for your sound advice. I have a few of your hedged positions which are basically still flat. My concern is the cash exposure. Any advise?
Just to clarify politico speak. As in the BOJ statement and the Swiss government when they uncoupled the Swiss frank both parties said no definitely not a couple days before and then in a surprise move did it anyways. So my friends to understand what is happening in the world when a politician speaks he speaks as the Indians say “With Forked Tongue” Usually within a matter of days the opposite happens. Yes America the beautiful. I was just reading this morning that medical facilities for American Indians was in a atrocious state of affairs so America before going to war and giving aid to foreign countries abroad give some help to these proud people who lost their land at the point of a rifle.
“Prediction is very difficult, especially about the future.” – Niels Bohr
That sounds like something Yogi Berra would have said. Funny! Jim
Aren’t we in an insiders market that raises and lowers the market to rake in the dough at the loss of the ordinary investor? I didn’t understand the suddenly jump in the market today except for its manipulation for the benefit of the manipulators. Any other guesses.
I read that forty per cent of trades are done by ETFs. It’s a new era. Jim
the stock market has just become another macro market. stocks now move en masse like a flock of birds or school of fish.
When you consider that for years now 10,000 people a day have been retiring and all the aliens coming here, legal and illegal, don’t equal the buying power or the dozens of millions we are losing, the entire Baby Boomer generation. A world wide “Greater Depression” is possible but here it is virtually guaranteed. Just remember that you can’t eat gold and silver. It will be solved in time, but we may not like the solution and most in cities will go hungry or be on bread lines eating GMO bread and cornmeal. This may be why 10,000 a month have been moving out of the USA but where can they go that will be truly safer? A few places perhaps but that’s a young man’s game and you better speak the language. Should have already happened but it will, soon. If you believe in God you can’t go wrong praying for direction and keep praying until you get it. Some will do well as did some in the last Great Depression. Just get out of the cities as millions who lose all their benefits will not likely take it lightly. Remember what really counts and you will be better off than most. Vaya con Dios, as they say south of the border (in a few places anyway).
I read that margin investment is at an all time high and that the S&P PE ratios are way above normal. Inventories are huge, the economy is slowing seems to be slowing. We’ve moved 50% of assets to the side lines. Very nervous.
I just read that the $5.00 Footlong is no more. Subway raised the price to $6.00, citing increased costs. In a deflationary environment, this sounds a little specious, but id probably true. Our food industry has so many levels dealers, processors, wholesalers and such that foods are unduly expensive. I wonder if one of the big supermarket chains might experiment with dealing directly with farmers and doing their own processing and packing to save costs. We might lose most of our familiar brands that way, except at higher cost, but if the quality remained intact, most people would accept it. already, house brands are often about as good as the majors.
Chuck
Ever noticed that when a cost reduction comes along that it is absorbed and there’s always an excuse for an increase
Mike: I agree with you. We need to address the structural problems in our economy; high taxes, regulation, excessive litigation, sub par educational system and infrastructure neglect. Our political system is broken. We need public financing of campaigns, so that people who have good leadership skills can have the opportunity to run for office if they choose to do so. There should be no such thing as the “establishment”. Good, honest and ethical competition brings out the best in everyone. That is how we built America. Regards, Robert Calabro.
Mike, your last issue of safe money had reco of stock that graded C and D in the Weiss ratings–should we be buying these stocks now??