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Market Scenarios: Winners And Losers

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Posted by Chris Ciovacco - Ciovacco Capital Management

on Thursday, 29 January 2015 08:19

Durables Miss In Big Way

The slow growth/low inflation story gained additional traction Tuesday when durable goods orders came in well below expectations. From The Wall Street Journal:

U.S. businesses broadly cut capital spending in the final months of 2014, raising red flags about the economy's ability to sustain momentum amid troubles around the globe. Orders for durable goods -- products like cars and kitchen appliances designed to last at least three years -- fell 3.4% in December from a month earlier, the Commerce Department said Tuesday. Orders have fallen four of the past five months.

Bonds Win In Two Of Three Scenarios

From an investment perspective, there are three major scenarios likely facing investors. Scenario one is an ongoing period of slow growth and low inflation, which can be favorable for both stocks and bonds. Scenario two, slower growth, has gained some momentum with the recent trends in earnings and economic data. Scenario three involves a stronger economy and a shift toward higher inflation. You can see a larger and economically-broader version of the flow diagram below via this link.

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Asset protection

Faber: We Are heading into an Iceberg , It’s Going to End in a Complete Disaster

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Posted by Marc Faber: The Gloom, Boom & Doom Report

on Monday, 26 January 2015 10:18

imagesMy belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

“We simply have highly inflated asset markets. Real estate is high, stocks are high, bonds are high, art prices are high, and interest rates and short-term deposits are basically zero,” Faber said. “The only sector that I think is very inexpensive is precious metals, and in particularly precious-metals stocks.”

“It’s going to end in a complete disaster. But, we have to distinguish – the disaster may not happen for five to ten years. But we’re heading into an iceberg. And, what will eventually happen is that the population will suffer very badly from inflation and declining real wages.”

More from Marc Faber:

Marc Faber Warning : QE has Grossly inflated Asset Prices

The Central Banks will be exposed for All The Fraud they Commit



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Asset protection

Einstein, the Definition of Insanity, Gold, the Euro Zone, and QE

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Posted by Chris Berry: The Disruptive Discoveries Journal

on Friday, 23 January 2015 11:54

imagesWhether or not the Swiss National Bank was the "first domino to fall" remains to be seen. With central banks in Denmark, Turkey, India, Peru, and Canada all lowering rates and China pumping $8 billion into its banking system via a reverse repo operation, it's clear that 2015 promises to see central banks be much more involved in managing an unwieldy financial system.

This morning we take a look at the European Central Bank's €1 trillion QE plan - likely the worst kept secret in the financial system. With QE programs in the US and Japan offering mixed results at best, one wonders if ECB officials remember Albert Einstein's words when he defined insanity as "doing the same thing over and over and expecting a different result". The results, whatever they may be, could be constructive for higher gold and silver prices in 2015. 


As always, thank you for taking the time to consider our ideas,

Chris

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Asset protection

"European Bonds: A Paucity of Corrections"

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Posted by Bob Hoye: Institutional Advisors

on Thursday, 22 January 2015 16:01

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Stock Markets

Exuberance and Volatility continue to be the features of the stock markets. This week's violence suggests that the Resolution Phase has become irresistible. Will resolving the excesses be moderate as in October, or cyclical?

We have reviewed that momentum and sentiment number have twice reached levels only seen at cyclical peaks in the stock market. At year-end the Bulls minus Bears number had increased to 41.5%, which compares to the 45.4 notched in June. Anything above 40 can be dangerous.

The highly-regarded John Hussman has reviewed valuations by P/E and concluded:

"One might as well be investing on a dare."

Liked the turn of words, but this valuation is high, but not as high as in 2000 and in 1929.

Of course, the "dare" has been that the Fed's former bond buying program would prevent bad things from happening. This was backed up with Draghi's boasting that the ECB would soon start the bond buying. We thought that in lieu of actual buying his tout about "buying" would have to be repeated at least twice a day to keep the faithful in.

There are a few salient points that seem to be overwhelming policymaker ambition.

As if on schedule, credit spreads reversed in June and had become very concerning in the middle of December. After correcting until year-end, widening has resumed. This will likely continue and as it does it will remind that the Fed has no (repeat no) control over credit spreads.

There is no official control over the yield curve as well and it seems to have reached a technical excess at year-end. Let's put it this way – flattening has been a positive and steepening at the end of a bubble has always been a negative.

Another point is that the intention of reckless policy has been to drive commodities up, making business more prosperous. Our commodity index, which does not include gold, set its high at 470 in 2011 and it has set a new low for the bear at 261 this week.

Of course, the charts provide dispassionate adjudication of the ambitions of policymakers, investors and traders.

We have using the NYSE Comp and the STOXX to monitor the big "Rounding Top".

As noted last week, the pattern for the NYA has been replicating that of 2007. For the STOXX the replication includes 2007 and 2000. The key to both breakdowns was taking out the 50-Week ma at – strangely enough – the end of the year. So far this week and on a Weekly basis the price range is trading both sides of the ma at 3149. Of interest was that the year-end 2000 failure of the 50-Week was followed by a two-year bear. The year- end failure in 2007 was followed by a 15-month bear.

On the first week of the year, STOXX took out the 50-Day and 200-Day moving averages. The rebound was stopped at the 50-Day and could not reach the 200-Day, which is weak action.

The NYA accomplished a modest Rounded Top in 2000 (big action was in the Techs). It took out the 50-Week ma in January of that fateful year and declined to late 2002. The next such failure was in December 2007 and that decline ended in March 2009. The 50- Week is at 10706 and at 10532, the key long-term moving average has failed.

The near-term pattern is similar to that of the STOXX.

For both, taking out the December lows would do a lot of damage and taking out the Octobers lows would say "Game Over!".

Within the swings the August decline registered a Springboard Buy and subsequent volatility gave two Hindenburgs. December's decline ended with a Springboard Buy, which has now provided two Hindenburgs.

What could limit the senior stock indexes to a correction of just 10 percent?

Perhaps the limit to the last correction was provided by October's ability to clear problems? We know that "everyone" was playing the October to May seasonality and that drove equities to another unsustainable condition.

More investors are becoming aware of the full implications of weakening commodities. Last week's Pivot noted that the plunge in crude was getting overdone and thought that "the action can take a pause". Which with copper's plunge getting overdone as well could release a rally in the senior indexes.

Makes intuitive sense, but Ross has noted that crashes in crude have been followed by generally weak stock markets. Some bounces are possible but the financial markets are more precarious than they were in October.

Credit Markets



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Asset protection

Man Who Predicted Collapse Of Euro Against Swiss Franc Gives More Shocking Predictions For 2015

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Posted by Egon von Greyerz

on Saturday, 17 January 2015 09:18

King-World-News-Man-Who-Predicted-Collapse-In-Swiss-Franc-Gives-More-Shocking-Predictions-For-2015-1728x800 cToday the man who remarkably predicted the collapse of the euro against the Swiss franc just 45 days ago shares more shocking predictions for 2015 with King World News. This interview takes a trip down the rabbit hole of central bank lies and deception and eventual collapse.

Greyerz: “Eric, what a day. Currency wars in 2015 are starting with a massive capitulation of the Swiss National Bank. As I have predicted for months, the SNB finally released the peg between the euro and Swiss franc at 1.20. This caused massive moves in the currency markets as well as massive losses for the Swiss National Bank….ie the Swiss National Bank has just suffered losses of 80 Billion Swiss Francs - that's over 10% of Swiss GDP. 

Continue reading the Egon von Greyerz interview



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