Every doctor in the world knows it: Too much medicine makes patients sicker, not better.
Market Roundup
But the world’s central bankers have been ignoring that principle. They’ve been cutting rates deeper and deeper into negative territory. And now, not only is that strategy failing to HELP the economy or the markets, it’s actually HURTING them.
That’s the crux of this fantastic Wall Street Journal story. It zeroes in on the problem by saying:
“Those (negative interest rate) policies, which charge lenders for reserves they keep on deposit with central banks, are crimping lenders’ profits and amplifying fears of a wide economic slowdown. At the heart of the concerns is an alarming conundrum: While hobbled banks may not be able to tolerate rates this low, limping economies may not be able to tolerate them any higher.”
So how can negative interest-rate policy, or “NIRP,” hurt rather than help? Well, banks make money in a lot of ways – by selling financial advice, charging fees for safe deposit boxes, taking commissions on mutual-fund or insurance-policy sales, and so on.
But their core business is to borrow money from depositors and the bond market at low, short-term rates … and lend it out at higher, longer-term rates to borrowers of all shapes and sizes. The larger the difference between those rates, the more profitable banks become, and vice versa. The technical term for that spread is “net interest margin.”
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| Global central bank action has left many investors feeling the pain. |
The problem is that the ongoing, massive waves of QE and NIRP from every corner of the central-banking world are crushing margins. They’re driving longer-term rates lower and lower, and causing key spreads to collapse to multi-year lows.
Take the 2-10 spread I’ve talked about before here in Money and Markets. It just collapsed to 98 basis points, or 0.98 percentage points. That’s the lowest going all the way back to December 2007. It’s not a perfect proxy for core banking profitability, but it gives you the general idea.
I’m not the only one warning about the toxic side effects of NIRP, either. The bond-fund giant Pimco just weighed in with its own. And David Kelly of JPMorgan Funds told CNBC this morning: “It’s an absolutely ridiculous policy … At some stage, the medicine becomes poison.”
| “The problem is that the ongoing, massive waves of QE and NIRP.” |
So what does this policy problem mean for markets and your wealth? I started saying months ago that central bankers were starting to lose control of the markets — in China, in Europe, in Japan, and here in the U.S. I said their policies weren’t doing squat for the real economy, even as they were puffing up asset prices.
But now, we’re in a whole new regime. Untested, radical monetary policies are no longer just failing to help economic and market “patients.” They’re making them even sicker.
That’s a confidence killer. It’s further undermining trust in central bankers on Wall Street. And it underscores how you really have to take matters into your own hands when it comes to protecting and building your wealth. So continue to stay dialed in to Money and Markets for guidance in these incredibly turbulent times.
The Dow jumped more than 300 some points today as the selling pressure temporarily eased. But the underlying problems we’re facing — including the perverse threat of NIRP — haven’t gone away. My advice: Stay cautious
That’s my take anyway. What’s yours? Is the failure of NIRP a problem for stocks and risky bonds? Will it continue to hollow out the banking sector, and thereby hurt markets and the economy? Is there a better alternative to NIRP for central bankers or fiscal policymakers? Make sure you take a minute to share your ideas in our comment section.
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Yesterday was another wild and crazy day in the markets, with stocks cratering through the afternoon before rallying halfway back on yet another rumor about possible OPEC production cuts. Given the volatility, how are you handling your investments? I’m pleased to see several of you weighed in.
Reader Howard said: “In expecting a greater level of choppiness in currency markets, it is the one area that makes me nervous. Not knowing what central banks will do next with so many failed policies behind them is unsettling for a trader. It comes down to levels of risk in what you know and don’t know.”
Reader Peter said that Main Street investors aren’t fully appreciating the threats out there, but that he’s positioned conservatively: “I went to 40% cash last summer, and bought the S&P 500 inverse ETF SH and gold two weeks ago. But I don’t think we are at the point of a true megadecline yet like in 2008 and early 2009. The behavioral finance model that has guided me for years (yes such a model does exist) has not moved to a ‘sell’ signal yet, meaning that true despair on the part of millions of 401k and IRA holders has not hit the point of running for the hills.
“My best guess is these folks are not the least bit aware that we could be on the cusp of another Lehman-moment coming from Europe this time. It could be Deutsche Bank (DB) or Credit Suisse (CS) that get the ball rolling, but no one knows. My guess is that all those retirement-account holders don’t even know who those banks are and don’t even begin to understand the gravity of the current situation. Hence the psychology of the market still clings by a thread to hopium.”
Reader Gordon said there could be some “out of the blue” threats that investors aren’t prepared for, either. His take: “Something else to factor in is the fact that the SEC is investigating Boeing (BA) and its stock took a hit. I wonder how many more giants of industry are out there are quaking in their boots with the same problem. If Boeing is guilty of some sort of hanky-panky, that could be a real black swan event as investors, especially widows and orphans, will no longer trust anyone.”
Of course, there is one investment that could be entering bull-market mode here – gold. Reader Chuck B. shared his view on the metal:
“Gold broke the upper line of its nearly two-and-a-half-year down channel yesterday, but closed just a bit above the line, leading to the possibility of an overshoot after that big daily gain. Also, its RSI and MACD are well into overbought territory. Most gold-mining stocks are also overbought by those standards. I want to see a test of this gain before committing to the bull.”
Finally, Reader Lifestudent38 said currencies are a solid alternative to stocks here: “Cash holdings are safer than the market, but cash remaining still is useless. My objective is to ride the volatility waves in the foreign exchange market. There are bulls and bears all the time.
“By the way, credit-default swap (CDS) spreads on German bonds have been soaring in the recent past. That signals the symptoms of risk aversion in the eurozone markets.”
I appreciate all the different opinions about how to profit in these turbulent times. Currencies are a great alternative, and I’ve been helping my subscribers profit from the upside move in the Japanese yen in my Interest Rate Speculator service. I’m also closely watching the European banks because the action in their financial sector sure does smack of the action in our financial sector back in the Great Credit Crisis of 2007-2009.
Any other thoughts I didn’t cover yet? Then share them in the comment section below.
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The civil war in Syria has displaced 4.4 million people, and killed countless others since it began in 2011. Now, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov have attempted to broker at least a temporary cease fire. The deal is designed to allow for humanitarian and other aid to be delivered to besieged cities, even as it looks extremely tentative.
Bank stocks have gotten crushed in recent weeks amid fears of everything from energy-loan losses to shrinking lending margins to credit-market contagion. JPMorgan Chase (JPM) CEO Jamie Dimon tried to lean against the selling by purchasing 500,000 shares worth $26 million yesterday.
Do I believe this signals an end to the turmoil in that sector? In a word, no. JPMorgan has substantial exposure to derivatives and volatile capital markets, as well as other businesses that will get hit if credit-market turmoil worsens as I expect.
Finally, on the economic front, retail sales rose 0.2% in January. That was slightly better than the 0.1% gain that was expected. December’s reading was also revised up, and the core ex-autos, ex-gas number came in at a decent 0.4%.
Do the solid retail sales figures give you more optimism about the economy? How about the purchase of JPMorgan shares – is that a reason for optimism about banks? Or are interest rate trends too powerful of a negative force? Lastly, is there anything that can be done to end the fighting in Syria, Yemen, or other Middle Eastern hot spots?
Until next time,
Mike Larson
P.S. Is your stock portfolio taking a hit? Most investors’ are. The S&P 500 is off about 13% since July of last year. The Nasdaq is down 18%.
But there is an alternative: The currency market!
You see, unlike stock markets, the currency investment markets never crash.
No matter what’s going on in the world, currencies will always rise and fall against each other, giving you the opportunity to make money.
What’s more, currencies move independently of stock markets. Even if every stock market on the planet fell to zero, you could still build a FORTUNE in currencies.
Take a recent example: An option on the falling Canadian dollar posted a 76.9% gain … Another option on the declining British pound generated an 85.4% gain … And a third option on the plunging Australian dollar posted a 100% gain.
That’s enough to turn every $10,000 you invested into $20,000 in less than 24 hours!
Click this link to learn more.
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.
{ 66 comments }
Mike,
The Republican Majority in the Congress has refused to allow the Glass-Steagall Act to be returned to law…. If this had NEVER been removed by them (and Clinton) in 1999 we more than likely would not have had the Cheney/bush Stock Market Crash and Depression of November 2007-March 2009 whee we lost 60%!
. It looks like it is going to take a much larger Crash, like 1929, where we lost 90% to wake the voters up and get those removed from office who refuse to re-regulate those Big Banks that are currently playing loose and wild, making huge, highly leveraged trades with our savings accounts… :(
Major stock market bulls and bears happen on a fairly regular pattern – not exactly, but alternating to some degree. We should be due for a bear market after six years of the bull being in control. Play it roughly the reverse of how you played the bull, and you should come out fairly well.
Ignore the minor bull and bear episodes within the major trend, unless you are a practiced trader.
Yes we keep looking in the rear view mirror and think in cycles, charts and patterns and investing history. The debt world has advanced greatly and as stated the bull market has raged for some six years now. Maybe one should consider that with all the debt and bad bank and government decisions we could be looking at prolonged nuclear bear market. Negative news is everywhere small big chunks some small and people seemed filled with angst. I say by the end of the month brokers will be working the phones asking margin clients for more moola. When you borrow money to buy stock can you get a refill.
Clinton released the Glass Steagall act in a compromise to have bankers accept the CRA (community reinvestment act) which was the Democratic demand for minorities to own houses regardless of their credit or ability to pay.
How many fools have listened to the media claim “the Bankers stole all the money” in the residential mortgage collapse and then in the next sentence say “we never should have bailed them out of bankruptcy”.
If they (the Banks) were so profitable then why were they bankrupt ?
PS: The 29 crashed was caused by the Fed when they changed margin rates for purchasing stocks from 10% to 90%. Stupidity on a level that is unbelievable.
Since you brought it up, if you research the CRA, you will find that the original bill was submitted my a Democrat Barney Franks with a restriction ONLY allowing those loans in the Inner Cities…. It was a good idea. The theory was that if those folks owned their homed they would take care of them and inner city blight would be eliminated….
Before the Republican majority passed CRA, they removed the Inner City Restriction (I’m guessing at the behest of the big banks)… That allowed the Big Banks to make billions on those questionable loans.
In effect, that let the “liar loans” go nationwide and brought the real estate surge and follow on Crash…..
Today, most of the still performing loans under CRA are within the Inner City…
Thanks again to the GOP/Big Bank cabal!… :(
Eagle 485
Please get off of your high horse and stop your repetiveness, its tiring. We get it, you are a Dem and all Republicans are evil and caused all bad things in this world. Now please move on
I certainly respect Eagles’ right to preach his gospel. What I think he fails to understand is that he isn’t going to change anyone’s mind, anymore than I’m going to change his. It’s an exercise in futility. He would get a much better reception at The Huffington Post. Jim
How about using some logic and economic theory rather than spouting how much money you’ve made under Democratic rule. We are all tired of your “Democrats create economic heaven” and “Republicans kill the economy” or ability to make money.
Like anyone would be stupid enough to believe your “arguments”.
Eagle 495
Why don’t you tell us all how you have made money in the past? Where have you invested with some success before?
Very successful, by following the markets and investing heavily under the Democrats and not so heavily under the GOP…. Ran with the market since the mid 1980’s and stepped aside during the Crashes of 1987, 1999 and 2007…… Both 1999 and 2007 were as predictable as hounds teeth, thanks to the moves make by the bought off members of the GOP….. Today the 97% are worse off because we let the GOP back into power and those that do their homework are aware of that, especially if you are one of those that lost their jobs because of GOP brought GATT or NAFTA or allowing the monopolies under financial, brokerage and insurance thanks to the GOP removal of the Glass-Steagall Act…
I announce on this site that I was going to CASH and INVERSE on this site on the first trading day of January 2007 and 2016… those that followed me profited on that move by a “Commi-Pinko Liberal Progressive, who is rather wealthy, because of extensive study into why the markets rally and why they fall and who is responsible for most moves…..
I will post when I go long also…… My long date was August 2009 and that was also posted here… How I do it comes from years of study and that I am keeping to myself…..
Why don’t you use your real name so we can see whether or not you work for the Democratic Party.
maybe his name is Debbie Wasserman Schultz
I see BAC is informed and knowledgeable in fact BAC is very knowledgeable on the Glass Steagall act
Glass Stegal was a good law and is a good concept, unfortunately it did not serve the US well in a global banking market where other countries had more liberal banking laws and regulations. And when we repealed it we did not install proper guard rails to prevent excesses that could ensue. The 2008 Great Recession had lots of fingerprints on it starting with Barney Frank and the federal government agencies that promoted excessive leverage in the home ownership mortgage markets….both on the part of borrowers and lenders. Today the FED has an absolute stranglehold on the largest banks and most other banks as well, so over-leverage is not going to be a problem for the banks for a long, long time. (Interestingly the government is still promoting highly leveraged mortgages to borrowers! Unlike Canada which has minimum equity requirements for borrowers.) Remember it took many decades for the pendulum to swing after the Great Depression.
67,
I still comes down to bank regulations that work and keep the cabal of Banking, Brokerage and Insurance from doing what they did in the 1920’s under Republican/Conservative Hoover …. The Democrats brought G.S. in 1933 after the Pecora Hearings left do doubt what caused the Crash of 1929 and the Great Depression…. That worked well for 66 years until the Republicans removed it in 1999 along with turncoat Clinton…. And within 8 years we had a repeat of 1929… It has not been reinstated nor has anything even close to Glass-Steagall been allowed to pass to law because of the Republican Majority, who, in my opinion, are working at the direction of the Cabal and not in the best interests of the American people!… :(
Seems there should be more analysis of demograhhics, sovereign debt, private & personal debt, unfunded liabilities of city, county, state & federal governments. The impacts indicate the need for deleveraging no matter how much central bankers/governments atempt to avoid it. At the core is the demograghics of now. Population growth begets growth and the reverse is also true-i.e. Japan.
Take a look at the work of Harry Dent and friends. It’s not perfect, but he has a good track record on exactly these issues.
Michael
Once you have this important data it’s the cross country comparisons that can throw you. For example in China and India with no 401k accounts they will accumulate gold as a store of wealth. This is one reason why some figures emanating from there can be unclear.
One notable, previously accomplished economic stimulus occurred during the Reagan years when government tax receipts increased when federal income tax rates were lowered. Dr. Laffer who invented the Laffer Curve and supply-side economics helped generate a sustained bull market with tax reduction as a key element. Today, the U.S. corporate environment is not very business friendly, ranking 22nd amongst other major national economies according to a recent Economist publication. A major component of the lack of business friendliness is the U.S. corporate tax burden. .. If the Laffer Curve and supply-side economics served the economy very well for Reaganomics in the 1980s, a corporate tax cut could also stimulate our economy in the same manner and would be a viable alternative to the voodoo economics the Fed has embarked upon.
Al,
Reaganomics was the fuse that lit the debt explosion. Our national debt went up 280% during his administration, . (Raising the national debt from $997 billion to $2.85 trillion). Debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988. Reaganomics is not the answer.
What brought the rally was the the moves by the Fed Chairman (who was appointed by Carter) when he stopped Inflation by increasing short term rates until the economy stalled, then slowly lowering the interest rates… That happened in 1982 and was the start of the rally until 1999.. Incidentally, if you do some research, Reagan wanted to fire the Fed Chairman, when he made those moves….
Also, Reagan increased taxes several times during his administration….
Reagan had little to do with that rally as it was brought by the Fed Chairman over the complaints of Reagan…
So what would Carter and Volker do now to save us from the Republican menace? Jim
Fire them….. Soon it will get so bad the voters will despite Citizen s United
we already despise you eagle495 how do we fire you
now pete tell the truth what happened under obamas watch with the national debt ok apparently you don’t know he doubled it its now over 19 trillion and headed to 20+ trillion shortly
It still amazes me that some people still want to blame the entire credit system almost-collapse on a few loans to minorities: (1) The percentage of loans under CRA is/was tiny compared to the number of non-CRA mortgage loans outstanding, (2) the CRA was administered through banks who by law had to ensure that CRA mortgages were granted only to well-qualified minority borrowers who had otherwise been offered mortgages at rates far above what their good credit ratings should have gotten them in a free market – they were NOT granted to unqualified borrowers of any race, (3) Mortgage companies who granted the vast majority of the no-doc, low-doc, liar loans that failed were NOT participants under the CRA, and (4) the percentage of CRA loans that were foreclosed on was a tiny fraction compared to “standard” mortgages that went under during the collapse. The crisis was due to the banks “creating” ways to force the free credit from the Fed into any market they could, and this time around they created the “miracle” of packaged mortgages and laying the risk off on third party purchasers.
Dennis
You have the unmitigated temerity to inject facts into an emotional partisan argument? How dare you upset those who gorge themselves with Fox Noise pabulum.
for me and others we used the millions of bad loans on homes to our advantage acquiring premium propertys for just pennies on the dollar REOS or REMS were bought in florida for about 8% on TAV in the Midwest we averaged about 12-15% on TAV in the southwest about 8 to 10% on TAV the problem with the average purchaser of these propertys these were all cash deals so the person trying to acquire a loan even though he might have been the highest bigger was automatically out of the bidding
Not sure where you are getting your Oil quotes from but they seem to be neither correct nor self consistent. For example yesterday you reported that Oil closed at $30.03 which you said was up $0.37. I think it actually closed at $27 and change, which was down for the day. Today you report that Oil closed at $31.32 which you said was up $2.49. If it was up $2.49 from the $30.03 you reported yesterday, it would have been $32.52. This isn’t the first time your Oil reports have been off.
I have about 150000.00 and I don’t know what is best to do with it. I don’t really need it soon, but don’t want it locked up where I can’t get some when I need it. what would you say would be best for me?
In something very very conservative, with a dividend greater than 3%..But don’t listen to me. My claim to fame is taking every bit of my retirement money, @125K, and buying 75k $ of Ford at high 2’s & low 3’s. The rest went to GE at average 7$… My wife said she’d leave me if we were broke. Bittersweet. We’re now millionaires but she’s still around. Point is, the drips from those two stocks are making us money hand over fist. 11 years till retirement…
Richard
Look at your $150,000 in percentages. If you don’t do anything other than short term securities, then you haven’t lost your capital. That is what we are trying to protect. Decide for yourself to keep 20% or so in cash no matter what and keep reading these advice columns.
With all the wars on cash coming our way, I’d be inclined to physical gold (that’s Money as defined by J.P. Morgan) that defends your buying power, and taking it out of Bank vaults, keep it at home or other safe places depending where you live so you have access when the first “Bank Holiday” hits.
Then wait for the Bankegeddon to hit.
Good luck.
JohnLamb
You mention J.P. Morgan. They are sure buying up gobs of silver for some reason. Do they know something we do not?. The out of the ground price of silver is $19.50 an ounce sooo why keep producing if your loosing money. Your answer could be its the same with the oil market but there is to much oil in the world and not enough silver it is in decline. The silver market has always puzzled me. The sale of silver coins is going through the roof yet silver prices stay stagnant. I have read some disturbing stories of what is happening on the London strike market. If they ever sort that well we could be in for a real silver boom. The fix is in on precious metals its under attack by big banks and governments touting their fiat currency. The newly touted cashless society will also be a fight against precious metals.
You likely bet the farm on 2 companies, took on a ton of risk, and got lucky at the right time when the stock market was in the toilet. Assuming a lot because you leave out lots of other pertinent information. That’s called bragging. Don’t pat your vanity too hard on the back. Let’s see how often you can do it again. And now as advice, you’re touting lousy dividends that could vanish in a day. I sure won’t listen to you.
Richard; Send it to me and i’ll guard it(for a small fee of course) and i’ll send you some whenever you need it….(<: Naw, just kidding,,,Good Luck and there are some purty sharp people on these boards.
Mule
Shouldn’t the banks actually pay people to take out loans in negative interest rate territory?
Hi Mike
For those interested in gold at the moment, take time to look at a 10 year chart. You will notice that the current cup formation is repeated from about 4 years ago before it continued to slide down. On another subject the central banks are creating a perfect storm of boom followed by bust. Low interest rate policy is encouraging undue and excessive risk.
There is only one problem with your theory. This time people all over the world are losing faith and confidence in central banks ability to lift our butts out of the fire. When faith and confidence in the monetary system is lost, gold will be bid up. With all the huge short positions in gold and silver outstanding, the move up will be very fast and very big.
Most corporations pay very little tax compared to historical norms. We have some corps with hundreds of millions in free cash flow paying no taxes and even getting refunds thanks to their lobbyists and the accounting standards board. Just a couple decades ago corporations paid 30 % of our federal tax revenue. Today they pay 12%. That is a massive reduction in their taxes and contributes mightily to the deficit. We the people have ignorantly sat back as corps and their lobbyists have rewritten our laws resulting in the abusive “inversions” and the travesty know as carried interest that essentially redefined ordinary income for hedge fund managers into capital gains taxed at less than half of what the rest of us pay on our ordinary income.
Hi Mike,
Regarding the Jamie Dimon purchase: I remember specifically to the day, he did the exact same thing back on January 20, 2009 when his shares were approximately $20/share, and so did Brian Moynihan of Bank of America. Their shares continued to plunge and then miraculously President Obama gave an interview weeks later and stated, and I quote, ” Now, might be a good time to invest in the stock market!”
Then on March 9, 2009 we were off to the races. Coincidence, they got in 5 weeks before to cover their tracks?, I doubt it!
We should expect something dramatic in the near future to “goose” the markets, as shares continue to plunge, if history is to repeat itself!!
Mike M.
Currencies! Really? They’re all Fiat! Gold and Silver are real money!
We can argue over who/what caused what in the past, I am living in the present and future. In my opinion both the Democrat and Republican establishment are at fault, thus the rise of Trump & Sanders. I need to know if there is an alternative to leaving cash in a bank account should we have negative interest rates. Please don’t tell me to buy Gold or short the market. What is your suggestion????
Forgot to mention we already have real silver bars bought back in the 80’s and we own timber land. How do we protect our $300K in cash??? Do I need to bundle $100 dollar bill and store them in a safe deposit box. I am well aware that it is against the law to take money out of circulation and if one moves a certain amount of cask the DEA will put me on a watch list after the bank reports the large cash movement. Been there and done that in 1988.
Any suggestion anybody. Help
I wish I had your problems. Jim
Scott
For a novice in these choppy markets I would conserve your cash in separate accounts. It is cheaper to get some professional advice than throw a dart at this board of multiple choices
consider silver eagles they are 1 troy ounce .999 pure and if you look closely some places you can but them for a few dollars over spot price but don’t consider gold or silver bullion bars they can be easily spiked
I would’nt put past the Gov’t seizing all in safety deposit boxes when shutting down the banks. I heard that money in trading accounts are exempt gov’t grabs. why that would be, I have no idea. Trading account bank deposits are still banks are they under the same scrutiny as the rest of us?? Or am I wrong. Someone give us an answer.
Scott,
Hire a professional. You don’t seem to know what to do and you will definitely not get any meaningful suggestions from a message board. No one can give you advice unless they know or understand your situation and tolerance for risk.
Yes Scott hire a professional but do not be surprised if he makes more return from your money than you do. With a professional look at a climb in your risk exposure.
Mike, thanks for your affirmation about the Forex. It is a true alternative to the stock market BS that the herd continually falls for. However, one needs serious technical analysis skills and discipline to be a successful trader. This market is more predictable, but highly leveraged.You can be bankrupt in a few minutes, hours, or days if you don’t know how to enter, protect, and exit your positions.
It’s not easy money, but the effort offers a better education and profit than listening to the incessant media crap and hype about stocks, which can’t be trusted.
Aloha Friends…since when is a revised 0.4% increase for most of Holiday shopping period decent….I am no economics wiz,however,even that would be below this year’s worth of Inflation,correct..? Its also a Government figure..think I would pay more attention to the people with ‘Skin’ in the game..like Macy’s Walmart..etc etc Oh wait,they are Closing Stores,sorry bad analogy…lolol thanks for reading aloha
Hi Nik
I think we are really getting “skinned” in the game no COLA this year and as you say just another government figure. Inflation is way up there in the real world and politicians are insulting our intelligence with all this talk of deflation. According to Canadian government stats employers are offering their new hires less to start 2016 than in 2015 and in some provinces as high as 10%. Look for the same thing in the US. So much for 4.9% unemployment rates. Try making $15 to 20 dollars an hour and going to your local bankster to take out a mortgage on a $400,000 home. If you want a new car well the secondary lenders are always happy to make a new friend for LIFE. I saw the American market moved up a bit on Friday I think they call it taking a breather. I hope you smart money people were taking a broom to stocks you were holding as in my humble opinion they will get cheaper in the future. On the other hand the Chinese market should be interesting after being shut down for a full week and other markets world wide in free fall especially Japan. I hope the Chinese had a good long holiday with their markets closed for the entire week come Monday they could be looking at 20% loses that is before panic sets in.
Mike,
The day of reckoning for the Central Bankers has finally arrived. Janet Yellen was totally befuddled last week before congress. Her message was nonsensical. I almost feel sorry for her as she will be pilloried long before this is over. She is in WAY OVER HER HEAD…..but I do not think Greenspan or Bernanke would do any better. She should resign and get out while she still has a shred of sanity. My prediction is that the Fed will actually cease to exist once this Greater Depression moves into high gear. Obama has doubled our National Debt to almost $20 Trillion and as a result…..there will few options…… and things will be bad….VERY BAD.
I will take your bet 151…… The FED will be her long after you are gone….
Richard and Scott
Stay put for the time being. Cash is king now. The stock markets are at the turning point again,
Wait for a few week more then you will see the trend. Don’t believe the hogwash about the easy profit in trading currencies. Currency trading is for professional ONLY. Very risky for most investors unless he/she has been well trained.
Be patient, the good guys amongst the commenters will guide you. You are lucky to be here.
I think longer term we are headed into negative interest rate territory just like most of the developed countries but on the short term I think were going to see interest rate hikes the whole world is awash in a sea of debt and its constraining their ability for their economys to grow . everyone is trying the negative interest rate game to stimulate their economys and have normalized inflation of 2% but it keeps hitting the wall of world debt
Really depends on what happens come November…… If the GOP gets it and keeps the Senate, we are going to have a collapse greater than 1929….. If the Democrats keep the Presidency and get the Senate, we will begin the long road to rebuilding, just as our Grandparents did in 1932, the last time they threw the GOP out!…. :(
And, yes, I am taking bets…..
nothing is as simple as you think it is …eagle495…………….. except you
NIRP is sheer stupidity. Why would anyone pay a bank or a bond issuer to hold their money for a period of time. Supposedly, one pays for safety, but we have seen enough issuers go bust to doubt the “safety” of those issuers. Even nations go bust. Argentina, for example, which should have been a strong issuer, but wasn’t. That should make anyone with a bit of money very hesitant about the wisdom of ZIRP NIRP “investments”. Investments???
SCOTUS Justice Scalia, died Friday night the way we all might want to go, in his sleep, without waking. A sad thing for his family, and for the nation. How might his death affect the economy, and the social fabric of America? Were there any cases coming before the court that were financially important, either to families or companies? The court may be fairly well split, now that the conservative wing has lost a member. Justice Kennedy often decides with the liberal wing, but not always.
By the way, if Obama only had a month or so to go in his term, he might choose to defer to his successor in making a choice of a new Justice, but he has nearly a year to serve, and it is his duty to name a possible successor to Justice Scalia. Reagan did so, and the Republicans cannot deny that. It is also the duty of the Senate to honestly decide if the choice is a good one or not. Politics should not be a deciding factor – but of course it will be.
Mike, banks do not borrow depositor’s money to lend out. Loans are created via fractional reserve banking. What is all this debt? Money created out of nothing! If all the debt was paid off, there would be no (fiat) money in circulation.
Last week, gold overshot the upper line of its long term down channel, but quickly fell back, and is now well within the channel. Gold may still be in the down trend it has been in since 2011. Until it tops the channel and stays there, we cannot say any sort of uptrend has begun. Also, while the major stock averages have shown weakness, they have NOT definitely shown a readiness to continue down. This may come, but it is not apparent yet. We need one more strong drop to put us in a definitely down market. Until then, don’t bet the house.
‘Should have said “MEDIUM term down channel”.