What QE2 means

Bottom line is that during quantitative easing, savers are losers. I look at the Fed buying as a bailout for asset prices. Destined to fail but great for the nimble trader/investor.

The New Road to Serfdom

My Comments: Great speech by British member of the EU parliment Daniel Hannan.

George Soros on China, Gold, and Yen

China is the winner of the crash

Gold "not safe"

Japan "right to intervene"

This is cool...Math

Nature by Numbers from Cristóbal Vila on Vimeo.

My comments: Fibonacci relationship also exist in markets!

Trader Vic calling for Hyperinflation

Weekly update from Puru

The stealth bull-market in global stocks is climbing the proverbial ‘Wall of Worry’. Wherever you care to look, there is widespread skepticism and retail investors are still not participating in the market’s advance. Recent data reveals that investors in America continue to withdraw capital from equity mutual funds and this just shows that this bull-market is nowhere near its ultimate peak. On a near-term basis, the markets are over-extended and due for a pullback, however powerful bull-markets can stay overbought for long periods of time. In our view, as long as the monetary policy is accommodative and investors remain skeptical, the primary trend will remain positive. Therefore, we are holding on to our positions in the developing markets (China, India and Vietnam) and may add to our holdings during the next correction phase.

Over in the energy complex, the price of crude recently broke out to a new recovery high and is currently trading around US$86 per barrel. In our opinion, as the economic recovery gathers momentum, the price of crude will rise even further. Furthermore, if our homework is correct, before the end of this business cycle, the price of crude oil will trade above its all-time high recorded two years ago. In this environment, upstream energy companies will prove to be big winners and at current levels, they are on the bargain table. So far in this bull-market, the energy stocks have lagged the broad market but this may be about to change. Accordingly, we are maintaining our overweight exposure to energy and recommend oil producers and the oil services firms.

In the metals patch, the prices of base metals continue to defy gravity and against our expectation, the price of copper has climbed to a new recovery high. As we have explained before, supply and demand fundamentals do not justify this advance, therefore we will not re-invest in this sector. It is our contention that base metals are rising largely due to the easy monetary policy and speculative froth is now rampant. Accordingly, we urge caution and re-iterate our view that better investment opportunities exist elsewhere.

As far as precious metals are concerned, it looks as though gold and silver have recently put in important lows and the spring rally is now underway. If seasonal trends remain intact, both gold and silver are likely to rally until mid-May. Over the past few days, precious metals miners have appreciated considerably and this sector is still inexpensive relative to physical bullion. We are keeping our positions in gold and silver mining companies and suggest that you do the same.

In the world of paper money, it seems as though the US Dollar Index is rolling over. Conversely, the European currencies are now extremely oversold and a sharp rebound cannot be ruled out. Finally, our preferred currencies (Canadian and Australian Dollars) are performing very well and we suggest that you keep your cash in these leaders.

Finally, in the US government bond market, yields are on the rise. At the time of writing, the yield on the 10-Year Note has climbed to 3.9% and the yield on the 30-Year Bond is 4.76%. We maintain our view that the great bond bull-market ended in December 2008 and over the following months, we will see even higher interest-rates. Accordingly, we suggest that unless you are holding Treasuries for income and plan to hold them until maturity, consider liquidating your fixed income holdings.

No Housing Boom This Decade

In the midst of all the bailouts you might have missed that last month, in perma-bubble Southern California the median price of the entire regional market fell by $17,500. This was the first regional price drop since April of 2009. Now one month doesn’t make a trend of course but if you only listen to the real estate industry and banking cabal you would think that all of a sudden we are circa 2003 real estate. There is this pervasive speculative attitude once again in the air even in the face of a 12.4 percent unemployment rate. The unemployment situation was revised last month nationwide and the BLS upped the number of jobs lost in this recession from the “low” 7 million to 8.4 million. So basically we were underestimating how “good” things were for an entire year (the BLS has suspect numbers because of their methodology). Yet this is part of the new economic psychology where real data is ignored in exchange for bread and circus statistics and political theater. The reality is we are not going to see any sort of housing boom for the next decade. In fact, housing will be weak for the next ten years (at least) regardless of what the government and Wall Street attempts to do.

Full Article here

My Comments: Good info. I personally want to see how the market fares after the first time home buyers stimulus. My guess is it will be another failed Govt. program that duped buyers into quick decisions. Those that took advantage of it might need a bailout if things get worse.

Point being...buy when the situation is right not because of a Govt. bribe.

Weekly Update From Puru

In baseball terms, we are passing through the middle innings of the ongoing correction in the financial markets.

Over the past week, sellers dominated the markets and the counter-trend moves are now well established. Yesterday, global stock markets experienced intense selling and this has prompted the perma-bears to (yet again) announce the start of a new bear-market. In our view, this weakness in the markets is a routine pullback within the ongoing cyclical bull-market and we expect most indices to bottom out around the 200-day moving average.

As we pointed out in February’s Money Matters, technical data does not suggest the commencement of a new bear-market and there is no evidence of a breakdown in the price charts. Accordingly, we suggest that you ride out the volatility and consider adding to your positions in an incremental manner. In any bull-market, the best time to buy is when an item briefly corrects to its 200-day moving average and most stocks and commodities are likely to approach that level over the following days. Therefore, we urge you to keep your nerve and advise you to take advantage of Mr. Market. Remember, pessimism is an investor’s best friend, euphoria his mortal enemy.

The ongoing weakness in the markets is largely due to sovereign default risk in the West but this has even affected the developing markets in Asia. In our opinion, nations such as China, India and Vietnam are not in the same boat as the debt-plagued developed nations and this weakness in prices is a great long-term buying opportunity. Over the following years, these fast-growing economies will benefit from capital flows and their stock markets will appreciate considerably. Accordingly, we recommend buying on additional near-term weakness.

Over in the commodities complex, ‘risk aversion’ is the story of the day and most hard assets are under pressure. Yesterday, crude oil dropped significantly and the selling may continue for a few more days. However, this manic-depressive nature of Mr. Market does not change the reality of supply and demand. We maintain our view that crude oil is in a secular bull-market and its price will appreciate significantly over the following years. Accordingly, we are keeping our positions in the oil patch.

Elsewhere, metal prices got whacked in yesterday’s panic sell-off. Silver was down by more than a dollar and gold broke through its important support at US$1,075. At the time of writing, gold is trading at US$1,064 per ounce and further weakness looks likely. The next major support for gold comes in around the US$1,000-1,030 region and it looks as though the yellow metal’s price will decline to that level. The related mining stocks have depreciated considerably in the past few days and the selling looks overdone. Yesterday’s moves in precious metals appeared climactic, therefore we are in the latter stages of this correction. During this turmoil, do not forget that most nations in the West are bankrupt and precious metals represent your insurance policy. Therefore, do not join the herd by giving away your safety net at throw away prices.

Base metals are also facing selling pressure and as per our expectation, the price of copper is declining. A couple of weeks ago, we advised liquidating copper-related plays and suggested going ‘short’. This seems to be working out as planned and we expect the price of copper to decline by another 10-15%.

Finally in the realm of monopoly money, the US Dollar is rallying and this should not come as a surprise to our readers. As you will recall, we were expecting the American currency to strengthen. In our view, this advance is likely to continue for a few more days, so keep all your cash in US Dollars. In our view, the European currencies are most vulnerable and we would not buy the Euro or the British Pound; not even with your money! Once the rally in the US Dollar has run its course, we will advise you to buy back the Australian and Canadian Dollars, but for now, hold on to your greenbacks.

Weekly Update From Puru

We are going through a routine pullback within the ongoing cyclical bull-market in stocks. Prior to this correction, stock markets were strenuously overbought and due for a consolidation. Our expectation was that the correction would come in late spring, however it seems to be unfolding a few weeks earlier.

At this stage, the technical data suggests that this is not the start of a nasty bear-market. For instance, the advance/decline line is firm, the number of new lows on the NYSE is still depressed and the yield curve is very steep. All this data leads us to conclude that the majority of the stock markets are likely to find support on their 200-day moving averages. This means that if our cyclical bull-market assumption is correct, the Dow Jones will find a bottom around the 9,500 level. Accordingly, we suggest that you hold on to your long-term investment positions and consider adding more capital after some evidence of a bottom formation.

Over in the commodities complex, the price of crude is trading around the 74 level and it may continue to consolidate over the near-term. A rallying US Dollar is keeping a lid on the price of oil but the long-term trend in energy is up. We suggest that you keep your positions and allocate more capital to upstream energy companies, oil services stocks and alternative energy businesses.

In the metals arena, the prices of gold and silver are staying under pressure. This is largely due to the strengthening US Dollar. Now, if the trend consistency in precious metals is still intact, both gold and silver must rally soon. Otherwise, we may experience a lengthy consolidation and the highs recorded a few weeks ago may not be taken out before the end of the year. In any event, we suggest that you keep your positions in this sector as an insurance policy against the madness of currency debasement.

Elsewhere, the anticipated correction in copper has now commenced. If our assessment is correct, the price of copper is likely to decline by another 15-20%, so we suggest that you wait before buying back copper related plays. Aggressive traders should remain ‘short’ copper and consider covering their positions around the $2.60-$2.70 level.

Finally, in the world of currencies and debt, the American currency is rallying and the European currencies are struggling. As you may recall, we were expecting this outcome. Our view remains that the US Dollar is in a bull-market against the Euro and British Pound, however, it will probably decline to new lows against the Australian and Canadian Dollars. For now, it looks as though the rally in the greenback has legs and we want you to keep your cash in the US Dollar. Last but not least, the government bond market is benefiting from the ongoing risk aversion, but this should not last. In our view, once this phase of risk aversion in over, interest-rates will rise and government bonds will face intense selling pressure. Therefore, we suggest that you resist the urge of lending money to bankrupt governments.

Economic Debates...Hip Hop Style

My Comments: Funny cause it true...

Weekly Update From Puru

The long awaited stock market correction seems to have arrived and further declines can be expected over the following days. Although the American market’s internals still look solid, stocks were strenuously overbought and due for a pullback. Remember, no market goes up in a straight line and periodic declines are a part of this business. At this stage, the ongoing correction looks like a routine decline within the ongoing cyclical bull-market. Once this period of weakness is over, stocks should resume their advance.

It is noteworthy that Wall Street’s technical indicators are still strong. For instance, the Advance/Decline line is close to its high, new highs are healthy and new lows are in single digits. Furthermore, the yield curve is very steep and credit spreads are still narrowing. All this data diminishes the probability of a major market decline or the resumption of the bear-market. Accordingly, we suggest that you hold on to your investment positions and consider increasing your allocation towards the end of this market correction.

Over in the commodities market, the price of crude has softened somewhat but the long-term trend is still up. The supply and demand dynamics in oil are so out of whack that unless the world sinks into a global depression, the price of crude will rise. In fact, we are convinced that (under the most optimistic scenario) the world’s production of total liquids will peak within the next 3-4 years and crude oil exports may peak even sooner. Now, if this seems too much of a wait, just remember that the biggest game changer in economic history is only a thousand days away! Whether you like it or not, new discoveries and new oil-fields cannot keep up with the depletion in the existing oil-fields. When this reality dawns upon the public, we will witness an epic energy crisis.

According to our best estimates, the supply of total liquids (including unconventional oil, natural gas liquids, tar sands, ethanol and hydrocarbon processing gains) will never exceed 89 million barrels per day. And if demand grows by 1.5% per annum over the next 2 years, the world will require 89 million barrels per day by 2012. That will probably be the inflection point and the day when the world faces ‘Peak Oil’. In any event, in a post-peak world, there will be big winners and big losers. If our assessment is correct, upstream oil producers and pioneers in the alternative energy sector will be big beneficiaries. Therefore, we are maintaining our exposure to these businesses and plan to increase our holdings during this market correction.

In the metals complex, gold and silver are experiencing a routine correction and this is largely due to the expected rally in the American currency. It seems as though this counter-trend rally in the US Dollar will continue for a while longer, so gold and silver may face some additional selling pressure. We see strong support in gold around the previous correction low and recommend buying more bullion around US$1,070 per ounce. Now, it is conceivable that the price of gold may test US$1,000 per ounce, but even if it does, the downside is fairly limited. In our view, gold and silver remain in secular bull-markets and short-term corrections notwithstanding, their value should increase relative to paper money.

In the base metals camp, last week we advised you to get out of everything related to copper. Well, it looks as though the correction is still in its infancy and we expect a violent decline over the following days. The price of copper has run ahead of the fundamentals and we urge extreme caution. Long-term investors should be out of harm’s way and aggressive traders should be short copper.

Finally, in the world of currencies, our expectation of a dollar rally turned out to be correct. We maintain our position that for as long as the US Dollar Index trades above the 77 level, your cash reserves should be in the greenback. Look; when it comes to investing, nothing is set in stone and market reversals usually occur when the majority of participants are not expecting them. Only a few weeks ago, the whole world hated the American currency, so this rally should not come as a surprise. We re-iterate our view that the US Dollar has already made its lows against the European currencies, however it will probably make new lows against the Canadian and Australian Dollars

Its Funny cause its true...