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bobdark

bobdark
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  • 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 | Likes 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
  • Major U.S. Indices To All-Time Highs In 2016 [View article]
    Thanks for the article. I am very bearish on US equities for the next few years, but try to keep an open mind for other possibilities. Some of this makes sense to me, but valuations are at least 50% too high based on the most accurate historic metrics (Buffet Debt to GDP ratio, Tobin's Q, Schiller cyclically adjusted price earnings (CAPE). The greater asset prices are inflated, the more profitable the companies must be to provide a decent return. With GDP growing at less than 2% and much of the valuation increases due to debt-based buy-backs which at some times need to resolve, further growth seems doubtful.
    Aug 28, 2015. 11:56 PM | Likes Like |Link to Comment
  • Why Did Crude Surge More Than 10%, And Why Is It Continuing To Move? [View article]
    Thanks for sharing your insights on possible reasons and I think they are certainly plausible. But, then again this may just be another irrational move in the oil market with some supporting technical factors - i.e. oversold. We've had a few of these over the last several months. The bottom line is that over-production continues while demand is stagnant. Unless there really is a change in the fundamentals, I would expect prices to revert back to the low 40s again. Short of a supply disruption or reduction of production in OPEC, it seems that US production still needs more reduction before prices can normalize.
    Aug 28, 2015. 08:27 PM | 2 Likes Like |Link to Comment
  • The Disturbing Truth About The S&P 500 [View article]
    From a long-term historical performance, simple P/E ratios do not reflect accurate valuations. When you look at this from the perspective of Tobin Q, CAPE, or the Buffet GDP to Market Cap approaches, the S&P is hugely overvalued with the likelihood of 0 to 1.5% returns for the next 10 years. Confirmation is beginning to show up with the last 2 quarters YOY for S&P revenue negative. There has been a lot written about historical accuracy of valuations by John Hussman, Doug Short, Robert Schiller, and others and quite a bit of research supporting the assertion that current valuations are excessive. Some of this has been relegated as no longer applicable due to the ZIRP environment and easy money, but one cannot assume that situation will endure forever.
    Aug 23, 2015. 12:42 AM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    Thank you for the article. I agree that overly negative sentiment often correlates with oversold markets, but once a long-term bear market is entered, negative sentiment persists without reversing the trend. You make a good case for a bounce off the current decline, but I fail to see the case for the long-term bull to continue.

    I'd like to see what the reasons you have for discounting the 15 market top warnings article referenced. Also, what is the technical basis for stating that we are still in a long-term uptrend? Some very important technical damage has been done to trend lines going back to 2009 and the NYSE A/D ratio has been declining for 4 months.
    Aug 22, 2015. 08:39 PM | 1 Like Like |Link to Comment
  • It's Time To Buy... Not Time To Sell [View article]
    Yes, it's hard to see the logic to buy this market when 7 year trend lines are now broken and the S&P is still only about 8% off all time highs. Not to mention we have had 2 consecutive quarters of declining S&P revenue and valuations 2 times historic measures including Q Ratio, GDP to market cap, etc. And then there are all the negative global factors already pointed out by others. The only thing keeping this market up has been low interest rates and the hedge against inflation. Anybody buying here should consider balancing with treasuries and precious metals.
    Aug 22, 2015. 08:13 PM | 1 Like Like |Link to Comment
  • Rebuilding The Wall Of Worry [View article]
    Investors need to look beyond the US, we are in a global economy. A China crash of 30% in 3 months and commodity prices at decade-long lows due to slowing demand indicates a big storm is coming. The outflows from emerging economies over the last year is 1 trillion dollars - twice what it was during the financial crisis.

    The stronger US dollar is causing 20% and higher devaluations in emerging economies and competitive devaluation has started which will mitigate the effectiveness of any further QE in the US with or without interest rate hikes.

    Capital outflows from EM are going to safe havens including US treasuries and PMs and not going to US stocks that are overvalued by 2X by the most reliable historic measures (CAPE, GDP to Market Cap, Tobin Q). High yield and emerging economies have been sounding a warning for a long time now and diverged from normal correlation. High yield is not just a problem due to the energy but due to easy money going into a lot of corporations that will never realize profitability commensurate with valuations - i.e. Shake Shak, Twitter. Revenues on the S&P have declined for 2 quarters in a row.

    There are a lot of things happening under the hood. The S&P doesn't decline by 5% in 2 days for no reason. There are different interpretations and perhaps this is just a bump in the road, but to simply write off the possibility that we are starting a long-term bear market decline without studying the causes is foolish.

    Those who wait to get out of the market until things are obvious will have waited too long. The warning shot has been fired.The dip-buyers will probably bring this back up again before this really starts to fall apart - just like that happened after the start of the 2000 and 2007 bear markets. The technical indicators such as the A/D decline lines, moving averages have all been confirming the probability that this is a long-term market top which aligns with the 7 year bull/bear cycles.
    Aug 22, 2015. 07:57 PM | 1 Like Like |Link to Comment
  • China's IPO Freeze Misguided, Should End Quickly [View article]
    Yes, when market interventions lose effectiveness, markets perceive further intervention as just more confirmation of a bad market. As long as PBOC keeps trying to prop up the market, it will keep falling. It won't recover until they stop messing with it and let the markets sort things out. China hasn't learned that yet. USA is coming up on the docket soon.
    Jul 7, 2015. 11:26 PM | Likes Like |Link to Comment
  • The Incredibly Bearish Bull Market [View article]
    Great points by the author. I don't know what the person that commented on positive US demographics is looking at - here's a study of US demographics put out by the census bureau. http://1.usa.gov/1dQOa6X. Percent of elderly is dramatically increasing in the US over the next 15 years.
    Jun 4, 2015. 09:41 PM | Likes Like |Link to Comment
  • Oil Crushed By U.S.-Saudi-Russian Supply Glut [View article]
    Agree. It seems that it is pedal to the metal with the producers until the wall of no more storage hits. Not going to be pretty.
    Apr 9, 2015. 02:03 AM | Likes Like |Link to Comment
  • Inflation: Fed Prepping For A Hiking Trip? [View article]
    Yes, it is too late in the cycle for the FED to utilize the rate tool. The only tool left with the bust phase kicking starting to kick in full gear along with recession is more QE. While this might help keep asset prices inflated for a while, even that will lose its effectiveness eventually.
    Apr 9, 2015. 01:58 AM | 1 Like Like |Link to Comment
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