It seems we can’t go more than a couple days without news of another terrorist attack. Over the weekend, it was in Pakistan, where tragedy struck. As many as 71 men, women and children died when a suicide bomber blew himself up in a park in the city of Lahore.
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And of course, the wounds are still raw in Europe in the wake of last week’s Belgian bombings. The death toll climbed to 35 over the weekend.
There are many angles to this tragic story, and we’re all shocked and saddened by the developments there. Indeed, it’s one more problem that an already-struggling Continent must come to grips with, both culturally and economically.
Can it cope?
Economically, I have my concerns. That’s why I believe Europe is a dicey place to invest in right now, particularly with regard to stocks.
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| Is Europe still a place to invest during this time of terror? |
A key reason is that Europe’s terror network looks to be even more extensive than many originally feared. I say that because police have raided dozens of locations all over Europe in the past few days. They’ve rounded up alleged accomplices, co-conspirators and document forgers in France, Belgium, Germany, the Netherlands and Italy.
Those raids are likely just the beginning because, as the Financial Times puts it: “European and Middle Eastern intelligence and counterterrorism officials — some of whom spoke on condition of anonymity — talk of a dynamic, multifaceted threat that law enforcement agencies are struggling to get to grips with, after Isis’ core leadership moved months ago to funnel significant resources into exporting violence to its enemies abroad.”
The story goes on to note that more than 1,200 European passport holders have traveled to Syria and returned. Many of them were likely radicalized and trained to wreak havoc back home. One man arrested in France late last week, Reda Kriket, was allegedly in the “advanced stage” of planning a terrorist attack there.
[Read More – The Consequences of Reckless Lending – Mike Larson]
Then there are hundreds of other individuals who may be sympathetic to the cause, willing to provide logistical support, or otherwise facilitate homegrown attacks. Catching all of them would be difficult no matter what. But it’s particularly difficult in Europe, given operational, cultural, and other barriers to effective policing and counterterrorism efforts.
| “It will also increase friction over border security, likely driving up costs and operational difficulties for European businesses.” |
So as much as I wish it weren’t the case, Europe remains vulnerable to more attacks like those in Paris and Brussels. That, in turn, could give even more momentum to anti-EU, anti-immigrant political movements around Europe. It will also increase friction over border security, likely driving up costs and operational difficulties for European businesses.
It doesn’t help that the European Central Bank is also experimenting with radical, untested monetary policy … that European banks are a complete mess … or that European economic growth is anemic.
My prescription: Instead of investing in European stocks, focus on safer, higher-yielding, non-economically sensitive companies here in the U.S. Then balance out that exposure by maintaining a higher-than-average cash cushion, and by hedging your exposure with investment vehicles like inverse ETFs.
Now, it’s your turn to speak up. Do you believe Europe will get a handle on the terrorism threat? Or will it take more attacks to generate a more-effective government response? What steps do you think European officials should take? And how should investors respond to what’s going on over there? Let me hear about it below.
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What’s going on in the housing market? What is happening on the terrorism front? How should investors respond to the latest news? Those are some of the issues you shared your opinions on over the past couple of days.
Reader Yuccatree3 said: “Investors desperate for yield have bought up available housing stock. There is little inventory here in Seattle. It doesn’t matter how low the mortgage rates are if there is nothing to buy.”
Reader Mike S. said: “The biggest reason for the housing bubble happening is low interest rates. There are other factors, but this is the largest. We have been through this before. I experienced this act, and it ends badly.”
Finally, Reader Lifestudent38 said: “Since the Fed raised rates once, and is likely to continue raising rates higher, loans will become more expensive and fewer homes will be purchased. The decreasing demand for homes will manifest in falling property prices, and likewise be reflected in decreasing returns for REITs and sector stock and ETFs. Expect some selloffs in this area!”
On the topic of terrorism, Reader Dick said: “It is only a matter of time before we have another attack here in the U.S. There are not only foreign nationals here that are planning attacks, but even more frustrating is the fact that we have native-born Americans who have some screws loose.
“Each and every one of us needs to be the eyes and ears for anything that appears suspicious, as the police and government officials cannot possibly be everywhere and see everything.”
And Reader Jim added: “The latest attack was a strike at the heart of European Liberalism. Brussels is the headquarters of NATO and the European Union. It’s a bureaucratic paradise. When you can’t defend your capital, you lose. The airport and the metro should be secure, if anything is.”
Do you have anything else to add on these topics? Then make sure to add your comments below.
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The Japanese telecom company Nippon Telegraph & Telephone Corp. (NTT) is buying cloud and business outsourcing businesses from Dell for $3.06 billion. NTT wants to boost overseas revenue amid a stagnant economy at home, while Dell is trying to raise money ahead of a record $67 billion purchase of businesses from EMC Corp. (EMC).
Bernie Sanders swept three more states over the weekend, taking Alaska, Washington, and Hawaii by landslide margins. But he still remains far enough behind Hillary Clinton in the delegate count that he faces a steep battle for the Democratic nomination.
The mortgage refinance business is fizzling, so banks are once again pushing Home Equity Lines of Credit (HELOCs) to generate revenue. CoreLogic figures show banks originated $156 billion worth of the adjustable rate, revolving lines of credit in 2015. That was the most since 2007, and a 24% increase from 2014. The average HELOC was for just under $120,000, the most ever, according to the Wall Street Journal.
[Read More – Yet ANOTHER Billionaire Warns About Coming Chaos – Mike Larson]
What do you think about the resurgence in home equity lending – is it a good or bad thing? How about the landslide Sanders victories out West? Also, do you think the latest acquisition news in the technology industry will help tech stocks? Hit up the discussion section below and weigh in.
Until next time,
Mike Larson
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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I do buy a lot of antique solid silver objects as silver is quite low in price still it can’t go further down. And these silver objects not only you get at the silverprice if you are clever enough to look at the right places but also nice to look at. A good investment longterm and sure investment in times like this now
Hi Mike
It appears to me that Europe has brought this on themselves by inviting refugees in their hundreds of thousands to come. The people smugglers are making money and millions are looking for sanctuary. There is little chance for assimilation and their open borders policy has created a flood that has no solution at the moment. It can also be argued that the open borders have allowed the free flow of terrorism. For me as a person who values my own and my family’s freedom and safety, I wouldn’t go there as a tourist and I wouldn’t invest there either. The markets everywhere look over bought at the moment and it seems like a good time to be in cash despite the lousy returns. At least I can’t lose from a decline.
This will all end badly. The cause is the Federal Reserve manipulation interest rates. The banks are reaching for products to increase their bottom line,
I have seen this act before .
Hi Mike
The people in supporting both Bernie Sanders and Donald Trump are trying to tell the top 5% in Washington that we are going the wrong way and need change. If this change is later confirmed then maybe China may be a seller of gold as their economy declines further. That could be interesting.
Didn’t the Bern have a great weekend? Jim
Yes Jim, he certainly did. I hope people power wins this which ever way it goes.
I’m there! Jim
“Help Stomp Out Liberalism & Rinoism 2016” (<:
Mule
I think they select the President before it begins. DNC and RNC have said they select their candidates, not the common people. Super Delegates will ensure Hillary Clinton is the Democratic candidate and it looks like the Republicans are taking their queue from the power elite this round and throwing the election. Most stock markets are running on fumes with Central Bank policy running thin. “The only game in town for yield” will only go so far then there will be panic selling due to some event.
And Donald became a grandpa again (no. 9). Congrats. But I wonder how worried he is about that civil fraud trial he faces this summer. (Trump University claims) I bet his lawyers are trying madly to get it postponed until after the election.
Radicalism in any religion always ends in death, destruction and chaos! Right now you have all the elements of a perfect storm in Europe: Over 1 million refugees scattered all over Europe, record unemployment among the youth , severe austerity measures on all citizens, right wing neo-natzi growth, EU travel freedom under Schengen treaty destroyed, a Euro currency under severe pressure, a possible Brexit, Greece in trouble yet again, and on and on….!
Expect the worst and plan for the best!
Thomas, I think you mean plan for the worst and hope for the best.
Counter terrorism does not go without its spending on key resources, which is the result of a specific value chain. As the threat of terrorism in Europe increases so does the spending in specific areas. This in turn does provide opportunity for watchful investors who know where to look!!
– Look to Scandinavia for stocks and also consider multi-national European companies. The Scandinavians are without serious concern regarding terrorism and reap the benefits of having pristine balance sheets. European multi-nationals with pristine balance sheets can also be found.
– Home equity lending has me very concerned. It was a contributing factor to the 2008 debacle and may be a contributing factor to the economy’s next serious downturn.
OUTSMART THE BUMS
Homeowners might try to outsmart the Big U.S. Banks by using their own greed against them, if possible. One possible way would be to consider taking out a Reverse Mortgage once you become 62 or older and qualify. Its simple.
Wait until you think your local (residential) real estate market is way overvalued compared to its historic valuations and probable future economic and home income growth. Then,
take out a reverse mortgage at what appears to be a long term peak ( Real Estate commonly has 10-12 year cycles). Just make sure you get terms you can live with. If the Bank messes up, they are the ones who are stuck.
Just hope to get a fixed, prime interest rate ( 3.5%) or less and the mortgage amount of 60% of current market value ( you hire the real estate appraiser ). If they go for it, you get a bunch of money (cash upfront) to use as you see fit. Just make damn sure to read the “fine print” first before you sign. One fine way to deploy the funds would be to buy a rural redoubt in a offshore location like New Zealand while the U.S. Dollar is relatively strong. More for your dollar overseas. If things go south in the U.S. or in your city or town, you have an alternative or “Plan B”.
As I told my Uncle, you can always walk away from it and let the bank deal with the aftermath. You don’t need to hang around if things get bad or look to get real bad. Its a judgement call for sure. My accountant recently advised me to renounce my citizenship if/when the conditions suit me. Cut the cord if its in your best long term interest. No more “FEDERAL”. How about “International” instead. Escalate it by all means by voting with your feet if need be. No need to go down with a U.S. Titanic. Let the rats onboard fend for themselves. That’s fair.
Where can I get a reverse mortgage for 3.5%? They’re more like 9% which is why they are such a bad deal. If you don’t want to leave an estate just sell the house at top dollar and rent ’til you die.
I do see a global economy sell off in the immediate days. This market is over bought. The gains from the recent rally will soon meltdown.
The central banks have tried to turn stones into bread. The real economy is sick with debt.
There is no such thing as borrowing without consequence. The logical result was negative interest rates ( one fourth of the world now). They take your savings to pay their debts. People aren’t stupid so the next logical step is to make you keep it in the bank. Lookout for the “cashless society”. Physical gold!!! Jim
P.S. The next logical step is a ten per cent “wealth tax” on everybody. Bank on it. Pun intended. Jim
Some states already have a tax on investments, etc., instead of income. Tenn. and Fla. come to mind. Low now, but future?
Not correct, Chuck. Florida does not have a tax on investments. Governor Bush got rid of that years ago.
Socialism apparently can’t distinguish Terrorism – you know, if you have nothing to lose . . . Pay heed when we are listening to Bernie, less so when listening to Hillary (she knows where the butter IS). From a business standpoint, I am with you, Mike, Europe has so many issues to deal with that business can’t help but be affected, stay away a while longer. Here at home, the time has finally come when we must re-set our expectations, a bit lower, and either stay with cash and value stocks, or be capable of discerning the future. I’m wearing a hat with a wide brim these days.
Yep.
Bernie is following in the footsteps of his idol, V.I. Lenin. Lenin took Marxism to the Russian masses by using the term DEMOCRATIC SOCIALISM. To the Russians of his day, DEMOCRATIC SOCIALISM sounded much less frightening than Marxism. To the Americans of our day….Bernie probably shouldn’t have worried about obfuscating his true goals…….most Americans are so dumbed down they don’t know the difference anyhow.
I saw a poll today that indicated seventy per cent of Democrats polled wanted a Socialist govenment. Jim
Compared to the countries that Mike Larson recommends in Europe and your Canadian neighbors Bernie Sanders is a radical right wing conservative. Guess who survived the 2007-08 “crash” better than the USA? The socialism you speak of is not the culprit. Human greed and envy is.
I survived The Big Short, alas I was on the wrong side of the equation. Now today I see the same game going on in RE loans, auto loans, and energy loans.
Watch out below!
The US bankruptcy court of New York has allowed Sabine Oil and Gas to get out of its pipeline contracts with two operators. This is huge news for owners of stock in such companies, since these contracts have been regarded as iron-clad, but now other bankrupt producers will be seeking relief, reducing the earnings of the pipeline operators. Anyone having such stocks needs to watch them closely.
Good to see you’re paying attention, Ted. I hear the Saudis are starting to face unrest in their population, as they raise prices and cut benefits due to low oil earnings, so they are convicting some of them on trumped up charges, cutting their throats and hanging them from cranes to “encourage the others”. Didn’t Hitler’s Gestapo hang people from lampposts for evading service and black-marketing and such as the war went against Germany?
“As ye sow, so shall ye reap.” Imams and Mullahs, take heed.
this is becoming a political, not a financial, blog. a sure sign of a low vix.
Hey M$AU, No matter which side you are on It’s been a pretty interesting political season. Really can’t say the same for investing. Jim
i made 10% last year before august and i’m up 10% again so far this year (not bragging, been lucky). that’s a lot more interesting than even what donald trump has to say.
If the Donald gets in and makes things from China more expensive, how will that impact on Chinese exports. If China has to keep on defending their currency because people like Kyle Bass keep on shorting it, will China eventually have to sell some of their gold? What do you think might happen?
The Israeli P.M. described the problem perfectly. “The terrorists have no resolvable grievances.” Jim
Bibi aint no dummy.! (<:
Mule
DOES ANYONE SEE THE PARALLEL BETWEEN HOWARD’S NOTE (ATTACHED) AND THE CURRENT U.S. UNCONTROLLED BORDER SITUATION??? ILLEGAL LAWBREAKING ALIENS HAVE BEEN MORPHED INTO “IMMIGRANTS” AND “MIGRANTS” AND WELCOMED WITH OPEN ARMS BY THE MEDIA AND SOME OF THE POLITICAL FOLK. WHAT’S TO STOP THE BOMB THROWERS FROM ENTERING THIS COUNTRY BY THE SAME ROUTE? VERY HARD TO COMPREHEND THE LOGIC
Howard Monday, March 28, 2016 at 5:04 pm
Hi Mike
It appears to me that Europe has brought this on themselves by inviting refugees in their hundreds of thousands to come. The people smugglers are making money and millions are looking for sanctuary. There is little chance for assimilation and their open borders policy has created a flood that has no solution at the moment. It can also be argued that the open borders have allowed the free flow of terrorism. For me as a person who values my own and my family’s freedom and safety, I wouldn’t go there as a tourist and I wouldn’t invest there either. The markets everywhere look over bought at the moment and it seems like a good time to be in cash despite the lousy returns. At least I can’t lose from a decline.
You gotta check out Trump’s new video, “The Snake”. It’s gone viral in Europe, but we will probably never see it here on our media outlets. Jim
Jim
Everyone should see this video
No one can deny that the borders in the West have been opened to individuals who have been reared under centrally planned, hierarchical & often totalitarian governmental structures. They come from places (& religions) that do not embrace democratic principles, free markets or the uniquely western traditions of individual liberty, free will & self determination. The effort has resulted in an all out blitz to discredit any one who opposes this obvious invasion as “racist” or (more ironically) “fascist”. The only question that is important: Why?
Read “Mein Kamp” for the value despots glean from creating enemies abroad & then importing them into their own borders. Understand that the resulting & willing trade of a nation’s liberty in exchange for the illusion of security insures that neither is achieved (Control is always the goal). Consult history for even one example of an enormously indebted nation doing what is best for its people rather than for its cronies. Beyond Iceland, you will find the cupboard to be bare.
Remember Wicked Evil Greedy Crooks running and gaming the system from the SHADOWS ..false flags, false flags , what can we expect from the above mention ? Nothing good just keep good companies that pay us back and PRAY for America to Return to GOD .
God bless
False flags comes to mind, I wonder how much the mafia or should I say the cia had to do with the bombing, illuminate have to cause wars and unrest?
You want duplicitous snakes? I would believe it was the media first if I was so inclined.
what is wrong with a home loan on equity? GET IN ON 2016 MONEY AND PAY FOR IT WITH 2020,30….., MONEY.,WILLIAM
Were building for the upper 3% with large families. With decreased babies, older populations and 51% of adults being single, why are we not building one bedroom apartments / homes? It’s totally ridiculous the way homes are being built today. Who
will purchase the 5 and 6 bedroom 4 bathroom homes being built and featured today…
20 years from now? My guess is rentiers who will use those homes to rent out ROOMS
to singles. I firmly believe were building future rental homes today for our single populations of tomorrow. At least, that’s the way it looks to me in Las Vegas.
Yes we should protect ourselves. Most people do no know that I was told that the first self bombers were Israeli to survive; not that they were wrong or right but it gave their enemies a way to attack others and us. It seems that they should have the best solution to the problem they invented, hopefully. My guess is lots of cameras and recording unusual behavior. Be careful what you reap, and at least know how to defend against it as you could get rich doing so. Because of this we all need help now and their help would be appreciated since they invented it.