Here’s a quick, executive summary of stories from this trading week, with a link to the full articles online.
Warning: Recessions Spreading Worldwide
One after another, economic miracles are turning into to nightmares, stock markets are crashing and governments are losing control. Dr. Martin Weiss tells you what’s going on in Brazil, France, Russia and markets across the world.
A Modest Positive for Stocks
A high appetite for stocks usually suggests too much risk tolerance and lower future returns, while a low one has suggested risk aversion and better future returns. Jon Markman explains why today’s IPO market is a modest positive.
Will She or Won’t She and the Big Myth
“Rising interest rates are bad for the stock market and declining rates are good for stocks.” Every investor has heard this a million times, but Larry Edelson explains why that logic is flawed.
This Sector Could Be a Big Winner After an Eventual Fed Rate Hike
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| She blinked: Janet Yellen announced the Fed would keep the federal interest rate at zero. |
Six months after the Fed starts raising rates, these stocks gain 14 percent on average. After nine months, they’re up 20 percent. Mike Burnick tells how to invest in this winning sector when the Fed eventually raises rates.
The New Paradigm: Making Money the Old Fashioned Way
Even with the Fed deciding to stand pat on interest rates this week, the great global flood of rising liquidity is draining. Mike shows you the evidence.
The Week’s Hot News
Money and Markets columnist Mike Larson takes a look at key financial and political events around the globe after the market close. Here are the week’s highlights:
Apple Phone, Failing Loans, Fed, China: What Drives Markets Next?
All of these suggest that we should still be worried about lousy overseas growth and tighter monetary conditions in the currency and bond markets that could cause stocks to tumble. Mike explains the connection.
IF We’re in a Bear Market, Here’s What to Do
What if the Fed’s decision to not raise rates doesn’t matter because we’re already in a bear market? Mike tells you the secrets of bear market investing.
FedEx, HP Warn: Real World Intrudes on Rate Debate
Outside of the Fed choosing not to raise rates this week, the real world is a scary place. Just consider FedEx and HP — while the former whiffed on first-quarter earnings, the latter will be laying off nearly 100,000 workers in the next few years. Mike explains the other signals that have him worried.
Fed Folds in Face of Major Threats — What it Means to You
Janet Yellen and Co. opted to sit tight on interest rates, sounding a cautious tone on the global economy, the outlook for inflation and more. Mike breaks down the decision.
Best wishes,
The Money and Markets Team
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If and when the Fed is ever able to raise rates, will they be able to sustain the raise? If they are able to sustain the raise this would be a healing sign; but if they can not sustain the raise for a substantial period, watch out! By waiting so long to raise rates the Fed is putting themselves into a catch 22 situation. Being late has already created uncertainty if any raise can be sustained, but as time goes by this uncertainty grows; which raises the question as to why they painted themselves into this corner.
It is interesting to notice that both the markets and gold went up from the time of the Fed announcement; but only the price of gold remained up until the markets closed. I shall be watching the price of gold as an indicator to determine the potential sustainability of any future rate hike by the Fed. If gold breaks below support then this would be a good sign that a rate raise could be sustained; but if gold breaks through upwards resistance, I would see this as an indicator that any rate raise would be vulnerable.
I’m sure everyone has heard the saying “Don’t Fight the Fed!” as have I. However, I have been doing just that for the last five or six years by shorting the 20 year Treasury Bond. In fact I have been DOUBLE shorting it with the ETN, TBT. This has been one of my worst mistakes in investing. It is one of those cases where I am down so much that I figure I should just keep riding it! Some day…….ah what???
Ha, ha, ha. “Experts” like Mike Larson are telling you to be afraid — be VERY afraid — of the current headwinds hitting the market (after all, he IS a journalism major from Boston University). Meanwhile, guys like Warren Buffett are looking at value investments to sink their billions. While there’s no consensus, my gut tells me to go with Warren. Buy good quality stocks at value prices (and if you’re heart isn’t in to it, buy index funds). You’ll thank me 10 or 15 years down the road. If you’re still scared, buy Mike’s advice (cash, gold, inverse ETFs, blah , blah). And prepare yourself for nominal (less than 2%) returns.