Seeking Alpha

Dave Kranzler's  Instablog

Dave Kranzler
  • on Real Estate
  • on Economy
Send Message
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance. Currently I co-manage a precious metals and mining stock... More
My company:
Golden Returns Capital
My blog:
Investment Research Dynamics
  • The Deteriorating Economic Outlook 1 comment
    Jul 8, 2014 10:39 AM

     

    The Deteriorating Economic Outlook
    July 8, 2014Financial Markets, Gold, Precious Metals, U.S. Economycorporate bonds,GDP report, Junior mining stocks, silverEdit

     

    I wrote an article with Dr. Paul Craig Roberts and John Williams (Shadowstats.com) which details why the negative 2.9% GDP contraction for Q1 as measured by the Government was likely a gross misrepresentation of the real GDP decline which occurred. We also explain why this will likely lead to a further measure decline in GDP for Q2, despite Wall Street's interminable optimism in calling for a 3% rise in GDP. Finally, we explain the implications for real wealth being generated by the economy in relation to the inexorable rise in Government debt:

    Years of understatement of inflation has resulted in years of overstatement of GDP growth. Thinking about the many years of misstatement, we realized that the typical computation in nominal terms of the ratio of debt to GDP is seriously misleading.

    You can read the article here: The Deteriorating Economic Outlook

    With the economy starting to contract, corporate profits and cash flow will continue to dry up. This will place the highly overvalued corporate bond at risk for a devastating sell-off. Corporate bond spreads are the tightest they've been to Treasuries since 2007. Anyone remember what notable credit market event followed 2007?

    You need to dump your bond fund investments now. As in, call you investment advisor or retirement fund administrator and get out. ASAP. Don't put the money into money market funds because they blow up too - see 2008 for reference (they all have derivatives in them). Move as much money as you can into precious metals and junior mining stocks: Junior Mining Stock Research Reports.

    While every chart and technical analyst under the sun has been screaming that the metals and miners are going to sell-off here, they just keep bouncing back and going higher - climbing that wall of worry…

Back To Dave Kranzler's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • Mark Humphrey
    , contributor
    Comments (588) | Send Message
     
    Sounds like excellent advice to me.

     

    Stocks are cruising for trouble, probably nearing an important peak. It seems likely that a weakening economy will take down the bull market, since money supply growth has been falling from it's peak acceleration point in early 2009, and again since early 2011. The longer they taper, the closer a stock market shakedown becomes.

     

    As stocks start to cave, corporate bonds will get hurt and long term interest rates will climb, whatever the fed funds rate. Then real estate prices will slump.

     

    Gold will get bid much higher.
    8 Jul, 06:06 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.