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  • Can You Trust The Energy Market Rally To Hold? [View article]
    Recent crude price increases are not being driven by increased demand, but an expectation of reduced exploration and reduced production to work down the glut. A reduction in output is long-term just as bearish as lower prices for shale/energy exploration sector given the huge leverage dependent on revenues unrealistic relative to demand. The strength in the energy sector is likely only temporary due to irrational exuberance over price increases without factoring in the underlying drivers.
    Oct 11, 2015. 09:27 PM | 1 Like Like |Link to Comment
  • The Misguided Interest Rate Obsession [View article]
    I'm not sure why an interest rate hike will even cause longer-term rates to rise. It seems the reduced short-term liquidity is more likely to spur a flight to safety in the longer-dated treasuries and away from equities. Not only that, the Fed can't afford the long-term rates to go up too much because they won't be able to pay on the debt. We are getting into the Japan situation. Until the yield curve inverts, long-term rates will probably still be supported even if that means the Fed buying more treasuries. It seems like all of the major factors are coming together for a recession and equity market decline (slowing growth, excessive debt, over-valuation, emerging market crisis, etc).
    Sep 22, 2015. 07:11 PM | 1 Like Like |Link to Comment
  • Domestic Industrial Production Keeping Up Volatility, Mining Activity Collapsing [View article]
    The protracted capacity utilization decline seems ominous if it doesn't reverse quickly. Prior instances of downturns similar to what has occurred over the past 9 months have usually been associated with recessions within a few months, see:
    Sep 15, 2015. 11:30 PM | Likes Like |Link to Comment
  • Empire State Weakness No Fluke, But Are All Industrials Weak? [View article]
    Thanks for the well-stated insights and concise analysis. Clearly the longer-term trend seems negative and it is hard to see anything that would change the outlook. Interest rates clearly are starting to normalize with or without the Fed and that will affect the demand for high-cost items that rely on low-interest credit. The global appetite for US goods is slowing with the erosion of Chinese and emerging markets. It's hard to see how the US can grow in a de-coupled fashion given all of this.
    Sep 15, 2015. 11:23 PM | 1 Like Like |Link to Comment
  • Cheaper Gas Boosting Consumer Discretionary Spending In August Retail Sales [View article]
    Thanks for the analysis. I'm afraid though this is a temporary situation as far as the subsidy that arises from low oil prices. There are significant negative implications on personal wealth associated with the fallout from the energy sector. Much of the stock market decline is related to the rising dollar, damage in emerging markets, and rising costs for high yield credit. Since much of the US economic growth has been predicated on more expensive crude oil prices for the fracking industry to function along with a low US dollar for maximizing multinational profitability, it seems that low crude prices are paradoxically a negative over the longer-term rather than a positive.

    The longer this situation continues the more consumers spending ability will be affected as aggregate income is ultimately reduced due not only to layoffs in the energy sector but tightening across all sectors. Unemployment levels and wage growth have likely already peaked and higher interest rates will become strong headwinds to corporations and individuals. S&P revenue growth is already in a recession with the last two quarters YoY lower.

    Consumer spending is enjoying the benefits of lower crude for now, but the larger negative effects take longer to reverberate.
    Sep 15, 2015. 11:04 PM | Likes Like |Link to Comment
  • Secular Movements In Interest Rates [View article]
    This is a great analysis with excellent insight linking the different cycles and their implications. The confluence of the ending bond super-cycle with huge equity overvaluation built on cheap credit is a recipe for disaster. The author is right to advocate caution. We are likely entering a monumental unwind from massive central bank intervention that rather than resolving the next phase of the cycle has ensured it will be worse when if finally hits.
    Sep 15, 2015. 10:37 PM | 1 Like Like |Link to Comment
  • 2 Unknowns: The Fed's Action, And The Market's Reaction [View article]
    Yes, if they don't cut, they still need to leave the language that it is in the works so I really don't see the difference. At this point, it doesn't really matter what the Fed does, the gears are in motion for a longer-term decline with the monthly MACD rolled over and some very important long-term trend lines broken. They'll probably have to roll out QE4 in the spring, not that it will make much difference. Central banking can postpone boom-bust cycles, but they cannot eliminate them forever. Japan and now China have both proven that central banking can only do so much. We're due for a big bust.
    Sep 15, 2015. 10:29 PM | Likes Like |Link to Comment
  • S&P Capital IQ U.S. Equity Strategist Sam Stovall: Correction To Worsen, End In October [View article]
    Overall, seems like a logical assessment, except for:
    1) A couple of gaps need to be filled at 2035 and 2080 on the S&P plus there will probably be a bounce or two off the earlier low - that seems more likely in the short-term and the next major decline would start more like mid-October and go into late November. S&P 1750 seem a reasonable target.
    2) The real carnage probably starts next year as earnings are look bleak for Q4 and beyond. Looking for a test of the S&P 2007 high of 1550 or so in the Spring.
    Sep 15, 2015. 10:23 PM | Likes Like |Link to Comment
  • Nowhere To Hide... [View article]
    I always though the US dollar is considered an asset class. That is up about 4% for the year.
    Sep 15, 2015. 10:16 PM | Likes Like |Link to Comment
  • Hedging For Disaster: 3 Ways To Save Your Assets In A Market Collapse [View article]
    Why should 1700 be a bottom? Once that is reached, a retest of the 2007 high of around 1550 seems more likely before any big rally.
    Sep 5, 2015. 01:43 AM | 2 Likes Like |Link to Comment
  • How The Fed's Interest Rate Policy Crushed The Commodity Market - How It'll Recover [View article]
    Great assessment, especially in regard to the situation with US treasury demand. I'm afraid there will be some significant carnage in the oil exploration industry before healing of the prices and this will cause further deterioration in the high yield market.
    Aug 29, 2015. 02:30 AM | Likes Like |Link to Comment
  • Have We Seen The Emotional Low In EM Stocks? [View article]
    One has to be careful in relying on technical indicators only if the fundamentals are non-supportive. At this point, currency devaluation in emerging markets still has quite a bit of momentum with China actions likely to lead to more devaluations in other EMs. To prevent massive devaluations, foreign reserves in the emerging countries will need to be sold which is already happening in China.
    There was a massive storm surge of liquidity generated by QE out to emerging markets just like what happens initially as a result of a hurricane. The problem with that liquidity is that just as in the hurricane scenario, once the storm subsides, the surge reverses with equal force in the opposite direction. Short of the FED reversing course with another round of QE, the reversal is apt to continue.
    Aug 29, 2015. 02:25 AM | 1 Like Like |Link to Comment
  • Making Sense Of The Market Crash With Jeremy Siegel [View article]
    Low interest rates by themselves do not preclude reversion to mean valuations - especially not when the low interest rates are for the purpose of debt monetization due to unsustainable GDP to debt ratio such as has been the case in Japan and increasingly more so in the US. At the end of the day, companies need to make actual profits that make sense for their valuations. Buy-backs have inflated asset prices beyond what is reasonable based on revenues.
    Aug 29, 2015. 02:18 AM | 5 Likes Like |Link to Comment
  • Equity Market Recovering Like October 2014 [View article]
    Macro conditions are different and worse than October, 2014 with the situation in emerging markets, strengthening dollar, slowing growth, and China/emerging market crisis deepening. As far as the gaps to fill, the only full gap is the one back to 2035 - the others are partial and covered in intraday trading which are not as likely to fill quickly. The January 4, 2008 gap was a full gap and even that did not get filled for 4 years. 2040 or so on the S&P could end up being a long-term ceiling.
    Aug 29, 2015. 01:59 AM | 1 Like Like |Link to Comment
  • Will It Be Interest Rate Hike Or QE4? China Slashing Treasury Holdings [View article]
    Treasury yields can't go to up very much or else the US won't be able to make payments on it's debt, especially if it adds even more to the debt with more QE. I think we are entering the Japan scenario that started around 1990. This is negative for equities because growth is too slow for the valuations which are already too high and positive for treasuries because the US will have to monetize its debt to keep interest rates low enough to pay the debt payment.
    Aug 29, 2015. 01:33 AM | Likes Like |Link to Comment