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Wealth Building Strategies

Here Comes Quantitative Tightening

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Posted by Peter Schiff - Euro Pacific Capital

on Monday, 19 June 2017 08:26

Quantitative-TighteningAll of a sudden the Fed got a little tougher. Perhaps the success of the hit movie Wonder Woman has inspired Fed Chairwoman Janet Yellen to discard her prior timidity to show us how much monetary muscle she can flex when the time comes for action.
 
Although the Fed's decision this week to raise interest rates by 25 basis points was widely expected, the surprise came in how the medicine was administered. Most observers had expected a "dovish" hike in which a slight tightening would be accompanied by an abundance of caution, exhaustive analysis of downside risks, and assurances that the Fed would think twice before proceeding any farther. But that's not what happened. Instead Yellen adopted what should be viewed as the most hawkish policy stance of her chairmanship.


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Wealth Building Strategies

What, Me Worry?

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Posted by John Mauldin - Thoughts From The Frontline

on Monday, 12 June 2017 06:43

“Forget the past. The future will give you plenty to worry about.”

– George Allen, Sr.

“I try not to worry about the future, so I take each day just one anxiety attack at a time.”

– Tom Wilson

The middle ground can be uncomfortable. As someone now widely known as the “muddle-through guy,” I have learned this the hard way. My bullish friends call me a worrywart, and the bearish ones think I am Pollyanna incarnate.

The irony here is that I’ve never claimed to be a great trader or a short-term forecaster. I think I have a pretty good record of calling major turning points. Next week or next month is another matter. Anything can happen, and it probably will.

That said, the fact that my forecast may be wrong doesn’t prevent me from making one. So, with all the usual disclaimers, today I will review some recent analysis from my reliable sources and let you take a peek into my worry closet.

One point we all agree on: We live in unusual times.

Sell to Whom?

Last week Doug Kass sent around an e-mail comparing today’s markets to Queen’s classic “Bohemian Rhapsody.” I know that seems odd, but it was actually a good fit. I shared Doug’s full message with my Over My Shoulder subscribers. For everyone else, the point is that, like the song says, “Nothing really matters” to whoever is buying stocks these days. They just keep buying and pushing prices higher. As Jared Dillian says, “It’s a bull market, dude!” Stock prices do go higher in a bull market; and sometimes, as the end approaches, they make value investors very uncomfortable.

Neither Doug nor I quite understand the “Nothing really matters” attitude, though we have some theories. Doug is probably more bearish than I am. He has a long list of open questions. I zeroed in on the last one, which is critical: “When ETFs sell, who will buy?”



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Wealth Building Strategies

Financial Fragility Reaching a Critical Mass

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Posted by Danielle Park via Financial Sense

on Friday, 09 June 2017 06:42

There are several key factors that have contributed to the financial fragility of the masses and our economy today. First, is that over the past 30 years, globalization and technology have helped to reduce the number of middle-class jobs available domestically. Fewer jobs and superfluous workers have led to stagnating incomes for most. At the same time, living expenses for critical services that are domestically-produced like education, medical services, child-care, housing and fresh food have all strongly outpaced income gains.

Services-price-change-since-1996Today a middle-class lifestyle in America (ie., comfortable housing, transportation, food, health care and one family vacation a year), is estimated to require about 130k of annual household income for a family of 4. The median US household income, however–at 50k a year–is less than half the funds needed. In Canada, estimates of ‘middle class’ expenses vary in the range of 50-100k a year (see: Just who are middle-class).According to the latest 2014 StatsCan census, the median Canadian household income was $78,870.

To plug spending deficits over the past 3 decades, families have increasingly added debt. American households now owe a record $12.7 trillion and Canadians $2 trillion, as of Q1 2017. Not only does servicing this debt further diminish disposable cash flow, but it also keeps people from building up net savings from their income.

Not surprisingly then, most households have insufficient retirement savings and about half say that they have no emergency savings to draw on and would have trouble coming up with $2k if needed within the next 30 days.

This leads to the last key contributor in this problem. Being over-indebted, under-saved and cash flow-deficient renders the masses vulnerable to a financial industry that has queered rules and policies in its favor while extracting hundreds of billions for itself –selling debt, transactions and products (under the guise of ‘advice’)–to an increasingly desperate and largely financially illiterate public.

Hear Beware the Overzealous Advisor

In the end, individuals play a leading role in their own poor financial outcomes. Often going with impossible ‘have your cake and eat it too’ promises and products, rather than math-based, rational plans and personal discipline.

One of the first steps to better outcomes is to openly admit financial facts in a world of facades. As hard as it may seem, doing otherwise is self-destructive, often repeatedly.

As Neal Gabler points out in this recent PBS segment: “Financial illiterates pay a heavy price for their illiteracy.”

Check out Are We in for Below-Average Returns Over the Next Decade?

Could you come up with $2,000 in 30 days if you had to? As many as 40 percent of American families can’t, despite the improving economy. Among them is Neal Gabler, who is frequently broke despite his successful career as a writer. As part of a collaboration between The Atlantic and the PBS NewsHour, Judy Woodruff looks at why Gabler and so many other Americans are struggling with savings. Here is a direct video link.



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Wealth Building Strategies

Chris Martenson: Make Yourself More Self-Sufficient NOW, While It’s Still Easy...

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Posted by Mike Gleason - MoneyMetals.com

on Tuesday, 06 June 2017 06:31

youtube-thumbnail-chrismartensonMike Gleason: It is my privilege now to welcome in Dr. Chris of PeakProsperity.com, and author of the book Prosper! How to Prepare for the Future and Create a World Worth Inheriting. Chris is a commentator on a range of important topics such as global politicals, financial markets, governmental policy, precious metals and the importance of preparedness among other things. And it's always great to have him with us.

Chris, welcome back and thanks so much for joining us again.

Chris Martenson: Thank you. It's a real pleasure to be with you today, Mike, and all of your listeners.

Mike Gleason: Well, since this is actually the first time we've had you on in 2017, Chris, to get started here I'd like to have you set the stage for us because many of us continued to be confused and bewildered by the resilience of these markets. So, first off, give us your thoughts on the first 130 days or so of Trump's presidency, and then how is it that the U.S. equities market continues to soar to new heights despite what appears to be massive overvaluation? Basically, assess for us what's going on in the political and financial markets here during the first half of the year as we start off.



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Wealth Building Strategies

GOLD, SILVER or BITCOIN-CRYPTO CURRENCIES: Where Will The Big Money Be Made?

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Posted by Steve St. Angelo - SRSrocco Report

on Monday, 05 June 2017 06:45

When the Central Banks finally lose control of propping up the markets, will the BIG MONEY be made in owning gold, silver or crypto-currencies?  This is the question many investors who are focused on “alternative assets”, outside the typical mainstream stock, bond and real estate markets, are asking.

Most investors who have been concerned about the massively inflated Bubble Markets and the Greatest Financial Ponzi Scheme in history, have been investing in gold and silver.  However, a new kid on the block, called Bitcoin and the other crypto-currencies, have gained a lot of attention due to the huge increase in their prices over the past few months.

So, now many investors are wondering what to make of these extremely volatile crypto-currencies and if they are nothing more than purely speculative and gambling vehicles.  This is a logical assumption based on the massive spike in many of their crypto-currency values.

That being said, Charles Hugh Smith wrote the following in his article, Projecting The Price Of Bitcoin:

The wild card in cryptocurrencies is the role of Big Institutional Money.

I’ve taken the liberty of preparing a projection of bitcoin’s price action going forward:

BTC-projected-CHS

You see the primary dynamic is continued skepticism from the mainstream, which owns essentially no cryptocurrency and conventionally views bitcoin and its peers as fads, scams and bubbles that will soon pop as price crashes back to near-zero.

Skepticism is always a wise default position to start one’s inquiry, but if no knowledge is being acquired, skepticism quickly morphs into stubborn ignorance.

Bitcoin et al. are not the equivalent of Beanie Babies.Cryptocurrencies have utility value. They facilitate international payments for goods and services.

This was very interesting analysis done by Charles Hugh Smith who is one of the more bright minds in the alternative media community.  I have watched Bitcoin out of the corner of my eye over the past few years, but have not placed much attention on the leading crypto-currency.  However, as the price of Bitcoin and crypto-currencies have surged over the past several months, I decided to take a closer look… to see what all the hubbub was about.



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