The Art of the Deal Vs. The Art of War

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At the risk of beating a dead horse on the topic of trade wars, the sequence of unfolding events is making me cautious near term.

Let me explain why.

First, for all those market pundits, analysts and investors who are following the twists and turns of this trade tiff using Trump’s Art of the Deal as their playbook…

I have a better read for you. Pick up a copy of Sun Tzu’s, The Art of War instead! Continue reading

Foreign Appetite For U.S. Securities Has Taken a Drubbing

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Chinese and Middle Eastern investors have other priorities.

It wasn’t supposed to be this way.

When the Federal Reserve hiked benchmark rates in December, the initial jump in the short-end of the nominal U.S. yield curve raised expectations that foreign buyers would snap up the country’s assets, thanks to their yield relative to those of other developed markets ravaged by low policy rates.

In fact, net foreign flows to the U.S. have been decidedly weak this year, thanks to an exodus by foreign central banks and sovereign wealth funds, who’ve been dumping U.S. securities in order to raise cash to put to work at home. Continue reading

The British pound shows that US stocks are about to fall hard: Technician

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The euro’s considerable rise against the British pound signals trouble to come for U.S. markets, according to Evercore ISI technical analyst Rich Ross.

The euro and the pound fell against the dollar after the U.K. voters opted to leave the EU, but sterling fell further, hitting three-decade lows against the dollar. According to Ross, the relative weakness in the British currency mirrors the euro’s huge rally against the British pound from 2007 to 2009.

Continue reading

China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale

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For the past year, Chinese selling of Treasuries has vexed investors and served as a gauge of the health of the world’s second-largest economy.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, burnt through 20 percent of its war chest since 2014, dumping about $250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.

While China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines. Continue reading

“The Greatest Crash Of Your Life Is Just Ahead…” – Harry Dent Warns

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Harry Dent, best-selling author and economist, has warned that the stock bubble in the U.S. today is the biggest in history and that the “greatest crash of your life is just ahead…”

Writing on his website EconomyandMarkets.com, Dent warned that

The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here!

The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May.

I’ve been telling our Boom & Bust subscribers for months now that the dominant pattern in the stock is the “rounded top” pattern I show in the chart below: (see chart above) Continue reading

Yellen cites ‘potential dangers’ in U.S. stock valuations

(Reuters) – Federal Reserve Chair Janet Yellen on Wednesday said high equity valuations could pose potential dangers but that stability risks across the U.S. financial system remained in check.

“I would highlight that equity market valuations at this point generally are quite high,” Yellen said. “There are potential dangers there.”

Yellen’s view on the run-up in stocks was an answer to questions from International Monetary Fund Managing Director Christine Lagarde, who joined the Fed chief for the opening session of the “Finance and Society” conference here. Continue reading

If The Fed Continues This, “There Won’t Be Any Active Managers Left In 5 Years”

As the dash-for-trash continues in US equities, Neuberger Berman sums up the state of investing currently, “there has certainly been little reward for owning high-return, superior business models that are conservatively financed,” as Bloomberg notes, Fed policy has had the “unintended consequence” of boosting the stocks of companies with heavy debt and little or no earnings. Typically after a recession, such companies lose out to firms that generate more cash and have better balance sheets; this time, no “Darwinian” shakeout happened and low-quality stocks ruled. Managers say they haven’t changed, the market has. The Fed’s QE/ZIRP world has artificially inflated prices of lower-quality U.S. stocks, punishing those who focus on businesses with the best fundamentals, “if the next five years are the same, there won’t be any active managers left.” Continue reading

9 Ominous Signals Coming From The Financial Markets That We Have Not Seen In Years

Is the stock market about to crash?  Hopefully not, and there definitely have been quite a few “false alarms” over the past few years.  But without a doubt we have been living through one of the greatest financial bubbles in U.S. history, and the markets are absolutely primed for a full-blown crash.  That doesn’t mean that one will happen now, but we are starting to see some ominous things happen in the financial world that we have not seen happen in a very long time.  So many of the same patterns that we witnessed just prior to the bursting of the dotcom bubble and just prior to the 2008 financial crisis are repeating themselves again.  Hopefully we still have at least a little bit more time before stocks completely crash, because when this market does implode it is going to be a doozy.

#1 By the time the markets closed on Monday, we had witnessed the biggest three day decline for U.S. stocks since 2011. Continue reading

We’re in the third biggest stock bubble in U.S. history

Here’s a quick question for you. What do the following years have in common:

1853, 1906, 1929, 1969, 1999

Give up?

Those were the peaks of the five massive, generational stock-market bubbles in U.S. history.

And, according to a new research report, we are back there again. Continue reading