Janet Yellen’s Sleepless Nights

Daily Update May 5th5/5/2016 - A mixed day with the Dow Jones up 9 points (+0.05%) and the Nasdaq down 9 points (-0.18%)

With today's market action being about as exciting as Joseph Stalin's 60th birthday party, Stan Druckenmiller did not disappoint when it came time to present his market analysis.

“I have argued that the myopic policymakers have no end game,” Druckenmiller said. "They stumble from one short-term fiscal or monetary stimulus to the next despite overwhelming evidence that they only produce a sugar high and grow unproductive debt that impedes long-term growth. Moreover, the continued decline of global growth despite unprecedented stimulus the past decade suggest we have borrowed so much from our future and for so long that the chickens are now coming home to roost."

I couldn't agree more. We have covered this topic on this blog extensively. The FED has no good tools left when it comes to fighting the next recession. Many will argue that the said recession is already here. Their only remaining option at this point in time is to go interest rate negative, introduce additional rounds of QE (in whatever form that might be) and hope/pray that the market doesn't collapse.

However, if you have been investing for any length of time you very well know that hoping and praying is not a good investment strategy. Sooner rather than later it blows up in your face.  He goes onto say....

“Let me throw this one at you," he said. "My hint is what is the one asset you did not want to own when I started Duquesne in 1981? It’s traded for 5,000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it was a metal. We regard it was a currency, and it remains our largest currency allocation.”

That is very much true. When the FED starts its monetization process, as described above, the yellow stuff should/will surge higher. But we are not there yet. A little bit more patience is necessary at this juncture. As my partner Matt Demeter has outlined so many times before, Gold Hasn’t Bottomed Yet, But We Know Exactly Where It Will

Invest accordingly.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 5th, 2016  InvestWithAlex.com

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Demeter Research Daily Trade Update – US Dollar

DX futuresMatt executed a trade with US Dollar Index Futures (DX) on 4/28/2016 at $93.6700.  Find out what that trade was (long or short) and why at Demeter Research. 

To learn more about Demeter Research and Matt's trading/analytical framework please Click Here.

Investment Grin Of The Day

investment grin of the day 5

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Is Anyone In Control Of NATO?

NATO Expansion 1990 Vs 2009

NATO Expansion 1990 Vs 2009

If my overall analysis (Click Here) is correct, NATO/Pentagon and not Russia/China will plunge the world into the 3rd and final world war. Which begs the question, what kind of cretins are running that organization?

Let's take a look at the latest news flow.

This is incredibly frustrating to me personally as I see the fools in charge get us closer and closer to an apocalyptic war. Unfortunately, exponentially more Americans care about what Kim Kardashian wore on Tuesday and how many Facebook "likes" they got, than to ask what in the world is NATO doing sitting on the Russian border. In other words, we are all screwed.

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Will The FED Outright Monetize?

Daily Update May 4th

5/4/2016 - A negative day with the Dow Jones down 99 points (-0.56%) and the Nasdaq down 38 points (-0.79%). 

Bill Gross definitely thinks so....

Gross may not be entirely serious about "helicopter money," but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost the economy. "There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die."

I would have to agree with Mr. Gross here. Now, most investors would automatically dismiss such a view at this point, but they might not realize where we could be in about a year. Allow me to illustrate a possible financial/economic setup in 12-18 months.

  • Much lower stock prices with major stock market indices down 20-40%.
  • Junk debt imploding.
  • Commodities pushing towards multi-year lows.
  • Major deflationary forces appearing throughout the economy.
  • Zero interest rates, even negative.
  • The US Economy "officially" entering a recession.
  • Unemployment numbers surging higher.
  • Etc....

Considering all of the above, the FED will only have two options. Stand by and watch an implosion -OR- attempt some sort of a rescue. Though more QE and as Mr. Gross argues, outright monetization.

As you can imagine, the answer is rather simple here. The FED will continue on with their insane monetary policies until the bitter end.  A better question here would be.....how long before the bond market finally has enough and drives rates higher....much higher?

Well, we might find out over the next 12-24 months.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 4th, 2016  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Demeter Research Daily Trade Update – EEM

eem tradeMatt executed a trade with an Emerging Market ETF (EEM) on 4/29/2016 at $34.48.  Find out what that trade was (long or short) and why at Demeter Research. 

To learn more about Demeter Research and Matt's trading/analytical framework please Click Here.

Let The Games Begin

Whatever your political views are, this is going to be a fun election.

trump and clinton

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What You Ought To Know About Being Furious With The FED.

It is clear why the bears would be furious with the FED. As was covered on this blog earlier....Bulls Predict New All Time Highs. Will The Market Deliver? and Central Bank Mafia Goes All In…Stocks Rally…A Little

But, why in the world should bulls be upset?

Allow me to explain. First, today's perceived bullish backdrop is a mirage. Must I remind you that the NYSE (largest index by capitalization) is still down 10% from two years ago. Second, how do you expect to make money when Shiller's Adjusted S&P P/E ratio is at 26. The third highest level in history, behind 1929 and 2000 tops. All while GAAP earnings are down 18% from a year ago and with no hope for recovery.

Most importantly, the bulls must realize the following. No one makes money with the backdrop above. Under the best of circumstances investors should be able to maintain their capital base, but they will not increase it. Over 200 years of market data says so.

Investors tend to make money when the market has collapsed and stocks are liquidated. And if you have enough conviction to buy at those inflection points, as I did in March of 2009, you will make a fortune. With quite a few stocks zooming up at 5-10X or more to the market.

Very few stocks (if any) will do that in today's market environment. As a result, you should be furious. And while most bulls don't realize this yet, the FED has taken away their ability to generate any sort of a return.

Now that I have that out of my system, consider the following.....

I am also even more convinced now that we are about 10 months through a multi-year bear market that likely won’t bottom until late 2017 or early 2018. This will be a stair-step decline with all the strength to the downside punctuated by occasional (very) violent bear market counter-trend rallies driven by short covering, hope and residual (albeit rapidly decaying) belief in policymakers.

I still feel confident that we will see 1500s on the cash S&P500 index in late Q2 or Q3, and some of the things I look at suggest a final bear market bottom for the cash S&P500 index around the same levels as the 2011 lows of sub-1100. However, this is a longer-term idea that will be subject to refinement. The focus must be on the next few days, weeks and months.

I couldn't have said it better myself. But hey, who am I to tell you not to go long here!!!

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How TIMING Explains Recent Market Action

Daily Update May 3rd

5/3/2016 - A negative day with the Dow Jones down 139 points (-0.78%) and the Nasdaq down 54 points (-1.13%) 

If you are confused by the recent market moves, you are not alone. As a matter of fact, you are in pretty good company. Most top money managers are currently scratching their heads while wondering "what the hell is going on". For instance.....

I would have to admit, quite a few things do not make sense here. Most importantly, the earnings Vs. the stock market performance we are witnessing today. With GAAP earnings down over 18% y-o-y and with forward guidance coming down, the stock market continues to miraculously levitate. Mostly due to the FED and their supposed unwillingness to raise interest rates. All while the Shiller's S&P P/E Ratio is at 26, the third highest level ever.

With that said, let's consider TIMING analysis.

  • As we pushed into November of 2015 I outlined an incredibly important TIME turning point to my subscribers. Located at November 27th (+/- 2 trading days). And while the Dow did put in an actual top on November 3rd, the secondary top did arrive on our November 27th TIME turning point.
    But it wasn't as easy as that. The Dow continued to oscillate for another four weeks, remaining essentially flat, before breaking down in late December and early January of 2016. Why? There were additional cycles arriving during that time. One on December 16th and one on December 27th. Once they completed the market collapsed. Please note, during the entire ordeal, in November and December, I maintained my position/analysis that the market is about to roll over and collapse. Which it eventually did. Here is what it looked like on the chart at that time.

February Chart

  • The recent rally, off of February lows was caused by a powerful TIME cycle arriving on February 16th. Just a few trading days past the actual February 11th bottom. That is all that I can reveal about this move at this juncture.

What happens next or when will the next powerful TIME cycle arrive?

Please Click Here to find out.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 3rd, 2016  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!


Investment Grin Of The Day

investment grin of the day 60

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