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Bonds & Interest Rates

Trump & Taxes


Posted by Martin Armstrong - Armstrong Economics

on Thursday, 07 December 2017 06:52

QUESTION: Do you support Trump increasing the debt by a trillion dollars? I thought you were conservative?

PY

ANSWER: Well the first thing you have to do is get a grip on what is a reality. Governments around the globe borrow every single year with absolutely no intention of ever paying off their national debts. So what is the difference? If you think giving the money back to the people is wrong and it is better going out the back door for political contributions, then sorry, I oppose that.

There is no “conservative” v “liberal” when it comes to the debt. They all spend more than they take in and nobody cares about paying off the debts. So I do not care what political persuasion you are, we will end up at the same place when the dice stop rolling. BROKE!

US-Debt-accumulated-Interest-as-Percent-of-total-768x541

I support cutting income taxes to ZERO. The government should just create the money it needs to cover its expenses. Let’s get real here! All national debts, including Germany, show that on average 70% of the debt is just accumulative interest. So that is money out the back-door.

Rome never had a national debt and the first 500 years they existed by creating money to pay their expenses with minimal inflation because of the economic growth. About 80% of their budget was paid with the creation of new money.

Even the Bible said giving 10% was realistic, not 40% to 60% as we have under the current Marxist style governments in the West.

The first country that wakes up and abolishes income taxes will blow everyone else out of the water. All they have to do is say they will adopt the way the United States became great. There were only indirect taxes between 1792 and 1913. If the nation survived with no income taxes, we can do it again and let the people spend their own money. You will see massive job creation and governments will stop competing with the private sector to borrow money.

....also from Martin:

How China will Surpass the West



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Wealth Building Strategies

Gundlach’s Top ETF Recommendation


Posted by Robert Huebscher - Advisor Perspectives

on Thursday, 07 December 2017 06:43

The money to be made is in non-U.S. markets, according to Jeffrey Gundlach. For long-term investors, he recommends a specific ETF.

That ETF is INDA, the iShares fund that tracks the Indian equity market. He singled out India because of the growth of its workforce and its tradition of education and technology.

“It could go up 1,000% in the next 20 years,” Gundlach said, “just like China did.” INDA is up 32% year-to-date and carries an expense ratio of 0.71%.

Screen Shot 2017-12-07 at 6.53.52 AM

Gundlach is the founder and chief investment officer of Los Angeles-based DoubleLine Capital. He spoke at the Schwab IMPACT conference on November 16. His talk was titled, “2017: At the Home Stretch.”

I’ll go over what he said about the global economy and why he believes emerging markets are a compelling opportunity, along with some “insane” developments in various asset classes.

The global landscape

This has been a very easy year for investors, he said, with no volatility in bonds, although short rates have gone up. The S&P is up 17%, but he said investors would actually have been unlucky to have over-allocated to it, since some of the emerging markets have performed better.

....continue reading HERE

...also:

2018 Global Market Outlook: Running with the Bulls



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Gold & Precious Metals

Stop Searching For The Holy Grail


Posted by Charlie Bilello - Pension Partners

on Thursday, 07 December 2017 06:39

In a recent post, I came to the following conclusion:

“the notion that simply ‘following the trend’ in Gold will lead to vast riches is a false one.”

I made this statement after analyzing a simple trend following system (going back to 1975), using the 200-day moving average as a signal of when to get in (closes above it) and when to get out (closes below it).

The most common response to the post:

“You’re using the wrong moving average. You need to use the x-day moving average for Gold. That is the one that works.”

Translation: I should have used the Holy Grail. The only problem: it doesn’t exist.

In testing other popular moving averages such as the 100-day, 50-day, and 20-day, we find that they actually fared worse than the 200-day.

grail1

These shorter-term moving averages also traded in higher frequency, meaning the net returns after commissions/slippage would be even lower.



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Stocks & Equities

Merk 2018 Outlook


Posted by Axel Merk

on Thursday, 07 December 2017 06:32

With the stock market and Bitcoin reaching all-time highs, what can possible go wrong? In offering my thoughts on 2018, I see my role in reminding investors to stress test their portfolios. Is your portfolio built of straw, sticks or brick? 

2017-12-07-pigs

First, let me allege many investors have portfolios built of straw and sticks rather than brick. How do I know this? Here’s a brief check:

 

  • If a robust portfolio is a diversified one (the only free lunch on Wall Street), then please check whether you have rebalanced your portfolio of late. If not, odds are equities have taken on an oversized portion in your portfolio, thus making it more vulnerable than you might have intended in a downturn.
  • Equities are part of the so-called risk assets in a portfolio. But what about the rest of the portfolio? Have you been chasing yield by extending duration of your fixed income portfolio? Have you accepted less creditworthy issuers? Have you been lured by the promise of higher yields by financing something in a private placement? I have news for you: without judging the merits of those investments, odds are high that the value of these investments are more correlated with risk assets than you might be aware. Read: just because the label says fixed income doesn’t mean you are diversified.  

 

Without a doubt, equities have had an extra-ordinary run. There is the view that, without a recession, you cannot have a bear market. In our analysis, that’s true for the most part – but is “for the most part” good enough? The notable exception is the Crash of 1987 where a bear market was not accompanied by a recession. In today’s context, the buy-the-dip crowd will remind you that the ’87 crash was, well, a buying opportunity. As such, if you are an asset manager interested in keeping your job, you buy. It reminds of the 1980s where buying IBM office equipment was the sure way to keep your job, as no one would question your choice. Here’s a chart that shows the S&P 500 with the percent drawdown from any peak, with recessions shaded:



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Stocks & Equities

Todd Market Forecast: The NASDAQ is Curling Up From Oversold


Posted by Stephen Todd - Todd Market Forecast

on Wednesday, 06 December 2017 15:07

Wednesday December 6, 2017 Available Mon- Friday after 3:00 Pacific.

DOW - 40 on 443 net declines

NASDAQ COMP + 14 on 920 net declines

SHORT TERM TREND Bullish

INTERMEDIATE TERM Bullish

STOCKS: Stocks meandered on Wednesday in a seemingly confused manner. We liked the fact that the high techs and the NASDAQ showed signs of life but the listed market couldn't get out of its own way.

Breadth was still not encouraging and the put call ratio remains low. Given the seasonality, it's tempting to put on a trading position, but let's hold off for now.

GOLD: Gold was up $2. Just an anemic bounce within a downtrend.

CHART: The NASDAQ Composite is just curling up from an oversold condition. This has a decent chance of projecting further strength. If this market rallies, it's unlikely that the Dow and S&P 500 will sit around.  

Screen Shot 2017-12-06 at 3.15.35 PM

BOTTOM LINE:  (Trading)



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