Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Stock Markets Primed For a Meltdown

Stock-Markets / Financial Markets Dec 02, 2007 - 12:10 AM GMT

By: Anthony_Cherniawski

Stock-Markets Best Financial Markets Analysis ArticleFedWatch: ``The degree of deterioration that has happened over the last couple of weeks is not something that I personally anticipated, '' Federal Reserve Vice Chairman Donald Kohn said in response to a question following a speech to the Council on Foreign Relations in New York. ``We are going to have to take a look at'' the stress in credit markets ``when we meet in a couple of weeks,'' he said. I smell another rate cut.


Is the Fed “Alert and Flexible?”

Federal Reserve Chairman Ben Bernanke said Thursday that the central bank remains concerned about consumer spending strength and problems in the financial markets and will stay "alert and flexible" leading up to its next meeting on Dec. 11. Really?

Do you want to know what inspires the rate cuts? It's the market! Take a look at the 3-month Treasury Bill rate to the left. Since 1949 the Federal Reserve has virtually lagged behind every move made by T-bills. In fact, since rates have dropped by more than a full percent since September, the odds of another rate cut are virtually 100%.

It's not the Feds that control rates, it's the rates that control the Feds!

Ready for a meltdown?

On Monday, the Dow Jones Industrials had achieved a 14% loss from its October high point. In addition, all the gains since February were wiped out. On Tuesday and Wednesday the market rallied, attempting to regain some of its losses. Is this the Santa Rally that everyone has been hoping for? Hardly. Fundamentally, the market has long been priced for perfection…and double digit profit gains. Now that losses are showing up in earnings reports, the market needs to readjust its prices to fit the new reality…a recipe for a meltdown . Brace yourselves. It promises to be bigger than anyone expects.

 

 

While Treasury Bonds enjoy the gains, munis feel the pain

The credit crunch is pouring over into areas that were not expected to be influenced by subprime mortgages… cities, states and municipalities are finding it harder to borrow money . This is especially hard for smaller entities that have no credit rating or larger cities that have had credit troubles in the past. The tough choices are either to cut back on promised projects or pay higher interest rates, a move that will lead to higher taxes.

 

 

 

Gold is not glittering for investors.

Gold closed below the $800 again on Thursday as traders were squeezed by a rising U.S. Dollar. $800 is an important psychological level for investors. A drop below $773.40 would bring heavy selling as this would be an indication of a possible new downtrend.

 

 

 

 

Japan rallies, but not for long.

The Nikkei index got a reprieve from its downtrend this week, much like the U.S. markets. This is not because of some pending Fed announcement, but rather because it had completed five waves down and was ready to rally. In the meantime, housing starts dropped 35% year-over-year in Japan . The country also saw headline inflation at .1% , the first sign of it in the official rate in 10 months. The cost of food, which is not included in the headline rate, jumped 3% this year.

 

 

Chinese investors getting the chill.

A 20% decline in the Shanghai index has put a chill in mainland investors in China . "There is no sunlight shining through the clouds. Investors are being irrational. If they were rational, they'd buy now because shares have become less expensive after the recent correction," said Zhang Yidong, an analyst with Industrial Securities. Zhang, were investors ever rational?

 

 

 

Is the Dollar ready for liftoff?

Or will it fall 90%? As Mark Twain once said, “The reports of my death have been greatly exaggerated.” The problem is that the U.S. Dollar has been declining so long that pundits are taking rulers and tracing the line to zero, or something close to it. A negative trend can turn people emotionally against an investment so that they fail to recognize the change in trend.

 

 

 

The housing index gets a reprieve…

…while foreclosures surge . Foreclosures are 94% of what they were a year ago, but more people than ever before are losing their homes. In the month, 53,609 U.S. homeowners were forced out of homes repossessed by banks, up from 20,768 a year ago, the firm said. Through October, a total of 309,557 homes have been repossessed by banks leading to forced evictions. "Some people are in over their heads, owing more than what they can sell their house for," said Realty Trac spokesman Daren Blomquist.

 

 

 

Relief at the pumps in sight. 

Striving to be above average is not something we want to see with gasoline prices. The latest development in gasoline prices is a welcome relief. At current levels, the price at the pump will remain above $3.00. At least we can say that prices at the pump have stopped rising.

 

 

 

 

Warmer-than-normal weather helps Natural Gas.

The withdrawal rate of natural gas in storage was about 40% the normal seasonal rate. The result is that natural gas in storage rose again this month to 3.51 trillion cubic feet. The only thing keeping prices high is the assumption of higher usage this year and next. Can we say that the fundamentals will keep the price of Natural gas lower? The charts suggest that outcome.

 

 

 

Is Citigroup's dividend safe?

One of the stated goals of the acceptance of the $7.5 billion cash infusion from Abu Dhabi 's sovereign fund was to preserve the quarterly dividend. The dividend rate had risen as high as 7.2% at Citigroup's lowest price since 2002 on Monday. But the cash infusion comes with some bitter medicine . Citi now owes the Sovereign fund of Abu Dhabi a yield of 11% for its trouble. That puts their fat dividend at risk. A case in point is Freddie Mac, which just announced a 50% cut in its dividend, formerly at 8%. Any investor considering Citi's dividend should know that Abu Dhabi 's investors have precedence over the stockholders. Buyer beware!

Political Philosophy 101.

By Jeff Nyquist . A “must read.” “Most Americans would not understand Aristotle's claim that man is, by nature, a “political animal.” Admittedly, most Americans don't think about politics. They are busy working and taking care of their families. They are watching TV and playing video games, having love affairs and pursuing hobbies. How, then, could they be “political animals”? The answer is very simple. The modern American belongs to a nation: arguably, the most successful and powerful nation in the history of the world. Belonging to a nation – large or small, rich or poor – is highly significant. If you lost your nationality tomorrow you would quickly come to miss it !”

We're on the air every Friday.

Tim Wood of www.cyclesman.com , John Grant and I have had a running commentary on the markets again this week. John may be gone this Friday, but Tim and I will attempt to give a summary of what we see in the markets. You may listen to our comments by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Regards,

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in