Timing & trends

Fed Hikes, Markets Yawn

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Posted by Bill Bonner - Diary of a Rogue Economistist

on Thursday, 16 March 2017 10:49

4701 The Fed gave us another quarter-point rate increase yesterday. That makes the third such hike in the last 10 years! 

Whoa! Hold on… We can’t take that much excitement.

But wait… The Fed also signaled that it may abandon its “data dependent” position and take the lead. 

Instead of reacting to the news… it may lead the world’s interest rate levels back to normal, regardless of what the headlines tell it.

Oh, dear reader, you already know this is not going to happen. The Fed can never voluntarily return to sound money and market-set interest rates. 

It presides over the biggest bubble in stocks and bonds the world has ever seen. Without underpriced credit, the whole thing would collapse. 

That’s why the Fed can only take baby steps toward normalization… and only so long as they don’t matter.

We’re entering our ninth year of near-zero interest rates. During that time, businesses, investors, speculators, and consumers have adapted to extraordinarily cheap credit. 

They’ve used it to refinance their debts… and drive up their stock prices. They’ve used it to sell automobiles and buy houses. 

The big players have gotten used to gambling with money that is almost free. And if they get into trouble, they can borrow more.

If the cheap-credit system were to end – or even if people were to think it is coming to an end – it would take about two minutes for the whole capital structure to fall apart. 

Businesses couldn’t refinance. Bonds would crash (except for U.S. Treasurys… which would get a temporary boost on “safe haven” buying). 

Stocks would repeat their move of 2008–’09, but probably worse.

Crash Risk



Timing & trends

Fed Rate Hikes, Fiscal vs. Monetary Policy and Why Again the Case for Gold?

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Posted by Gary Tanashian - NFTRH

on Wednesday, 15 March 2017 06:29

I’ve been thinking about the current Fed Funds rate hike cycle, which is logically gaining forward momentum now that the Fed can stand down from its 8-year, ultra-lenient monetary policy cycle.  That is because the Obama administration’s goals required a compliant Federal Reserve to continually re-liquefy the economy as its fiscal policies drained it.

With the coming of Trump mania and its very different fiscal policy goals, we will witness the end of much of what I considered to be the “evil genius” employed by the Federal Reserve, mostly under Ben Bernanke.  When he oversaw the brilliant and completely maniacal painting of the macro known as Operation Twist in 2011, I knew we were not in Kansas anymore.  We’d gone off the charts and off the balance sheet into a Wonderland of financial and monetary possibilities.

What else would you call a plan to sell the government’s short-term debt and buy its long-term debt in the stated effort to “sanitize” (the Fed’s word, not mine) inflationary signals on the macro?  It was evil, it was genius, and it worked.  So too did various other financial manipulations that took place before and after Op/Twist.  And here we are.

The Republican view is one where businesses and consumers are stimulated, not money supplies.  I think it is a better economically, but not by much in this case.  That is because the Trumpian ‘reflation’ would simply be another form of man-made stimulation attempting to deny market and economic excesses from being cleared.  A normal economy goes through normal cycles.  We have not had a normal economy or a normal cycle since at least pre-2000.

Since Alan Greenspan panicked and blew the credit bubble of last decade, we have been on a continuum further into uncharted waters.  Trump’s policies are not going to stop it, either.  Besides, he inherits this (chart source: SlopeCharts).




Timing & trends

The Bull Market Just Turned Eight. What Now?

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Posted by Frank Holmes - US Global Investors

on Tuesday, 14 March 2017 06:22


Eight years ago last week, President Barack Obama gave investors a surprisingly hot trading tip. In office less than two months, he commented that we were at “the point where buying stocks is a potentially good deal if you’ve got a long-term perspective.”

Obama couldn’t have known then how accurate his call was. The market found a bottom that very week, and investors who took the president’s advice managed to get in on the absolute ground floor.

At the time, investor sentiment was at or near record lows. The number of S&P 500 Index stocks trading below $10 a share had grown tenfold since the end of 2007. The New York Stock Exchange, in fact, had to temporarily suspend its requirement that equities trade at more than $1 a share. Giant companies such as Citigroup and General Motors—a share of which cost little more than a pocketful of spare change—were at risk of being delisted.

Today, many of those bullish investors have seen some spectacular gains. Since its low of 666 in March 2009, the S&P 500 has climbed a whopping 260 percent, with not a single year of losses. The average annual return has been over 15.7 percent, based on Bloomberg data. With dividends reinvested, it’s closer to 18 percent.

Just take a look at Apple, which has surged more than 1,080 percent as it introduced or expanded its line of got-to-have, now-ubiquitous products, from the iPhone to iPad.



Timing & trends

4 Bold Forecasts on the Dow, Gold, Bonds and Euro Plus: Long-Term Historic Cycles Converging Now

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Posted by Martin D. Weiss, Ph.D. - MoneyandMarkets.com

on Monday, 13 March 2017 08:13

Screen Shot 2017-03-13 at 7.52.41 AMAs I presume you know by now, Larry Edelson passed away on March 2, leaving all of us in shock and mourning.

But this past week, I had the privilege of spending quality time with Larry’s cycle forecasting protégé, Mike Burnick.

Mike has worked closely with Larry since he joined our firm nearly two decades ago. He is steeped in cycle analysis. And he has used it to make an important contribution to the team’s amazingly accurate forecasts, especially regarding gold and stocks.

Gold Forecasts

October – November, 1999: “19-year bear market in gold is OVER. Finished, Kaput. We’re entering a bull market the likes of which you haven’t seen since the great glory days for gold in the 1970s. But don’t expect gold to shoot straight up. There are bound to be pullbacks, especially during the early stages.” Shortly thereafter, they warn gold will slide to the $250 level before beginning its long-term rise. 

The price of gold hits rock bottom at $255, and moves up from there. It ultimately reaches an all-time peak of $1,921 in 2011.

November 2000: Major new “buy” signal for gold and gold shares. “Start scooping up bullion coins and … mining shares.” 

Result: Investors acting on this signal have the opportunity to buy gold-mining shares close to their lowest prices in decades.

August 2011: Major “sell” signal for gold and gold shares. 

Result: Between their buy signal of 2000 and their sell signal of 2011, investors have the chance to make a total return of 850% on Agnico Eagle, 878% on Kinross, 1,059% on Newcrest, 1,248% on Goldcorp and 2,958% on Royal Gold.

May 2016. “More and more investors will get trapped in the precious metals’ first leg up … And those investors will be badly crushed under tens of billions of losses when gold, silver, platinum, palladium — and especially mining shares — collapse back down to near their record lows of late last year.”

Result: At first, as gold continues to move higher, their subscribers are frustrated with this forecast. But beginning in early July, the price of gold sinks by $200 per ounce, providing a much better buying opportunity, and subscribers cheer.

Stock Market Forecasts

April 2012. “The Dow Jones average will hit 20,000 by the year 2016.” 

At the time, the Dow is trading near 13,000. In Europe, a major sovereign debt crisis rages. In the U.S., pundits are deeply concerned about “the weakest economic recovery in history.” Even friends and family say Dow 20,000 is “unbelievable.” But four years and eight months later, on December 20 of last year, the Dow hits an intraday high of 19,988, just 12 points below their target of 20,000. And on January 25, 2017, just a few weeks beyond the target year, the Dow bursts through the 20,000 barrier.

Moreover, they don’t make this forecast just once. They repeat it in March 2013, June 2013, October 2013, December 2013 and every year thereafter.

Nor do just a handful of people see it. The original forecast of Dow 20,000 by 2016 is sent to 392,140 subscribers to Money and Markets, 37,291 subscribers to Real Wealth Report, and at least two million investors who receive the same forecast via advertisements in the mail and on the Web.

They are equally accurate in timing and predicting stock market crashes going all the way back to Larry’s forecast of the Crash of 1987!

How do you do it?



Timing & trends

Gold Bottom Is Near: Key Tactics

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Posted by Morris Hubbartt - Super Force Signals

on Friday, 10 March 2017 10:28

Today's videos and charts (double click to enlarge):

SFS Key Charts & Tactics Video Analysis




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