Showing posts with label stock. Show all posts
Showing posts with label stock. Show all posts

Wednesday, February 24, 2016

John Carters Strategy for Trading Everything from Crude Oil to NFLX....New Video

Our trading partner John Carter of Simpler Options is back with another amazing new video. Join John as he walks us through his favorite strategies to utilize in today's volatile market. Get a sneak peak on how he has already grown his account by 48% in 2016.

Visit Here to Watch John's New Free Video

Learn John's favorite strategy for trading everything from Crude Oil to NFLX and why John believes that decades from now investors will look back at 2016 as the best trading ever. You will also get an insider look at.
  •  The reasons why volatility can be your best friend even for newbies with small accounts
  •  Why options are the best trading vehicle on the planet right now
  •  Why down markets are better than up markets
  •  How to make successful trades on your phone while you are at work
Watch John's free video then put his methods to work right away. Take advantage of his ability to help you find your own trading style and how to recognize your own psychological limits. In the process John will help you dispel all of your fear of this volatile market. In fact you will welcome it.

Don't wait any longer.....Just Click Here to Watch John's Free Video

See you in the markets,
The Stock Market Club

P.S.  Get an even better understand of John's trading methods by downloading his free eBook "Understanding Options".....Get it Right Here



Sunday, October 25, 2015

This Unique Oil Stock is Offering A Huge Dividend Yield

By Justin Spittler

One of Casey Research's biggest calls this year is paying off.....…
In early August, E.B. Tucker, editor of The Casey Report, told subscribers how to profit from the world’s oversupply of oil. If you read financial newspapers for more than a week, you’ll notice that global oil production is near record highs. Last year, global oil output reached its highest level in at least twenty five years, according to the U.S. Energy Information Administration (EIA).

High oil prices were a big reason for the surge in production. Between 2011 and mid 2014, the price of oil hovered around $90/barrel. But oil peaked at $106 last June, and it’s been falling ever since. Today, a barrel of oil goes for about $45. Even though the price of oil has been cut in half, global oil production is still near all time highs. The Organization of the Petroleum Exporting Countries (OPEC), a cartel of 12 oil producing nations, is still pumping a record amount of oil. And it plans to increase production next year. In the U.S., oil supplies are still about 100 million barrels above their five year average.

E.B. explains why some countries have no choice but to keep pumping oil.....
Oil is the foundation of many countries’ economies. Take Venezuela, for example. Venezuela produces over 2.5 million barrels per day (BPD) of oil. Oil exports make up half of the country’s economic output. The country is so dependent on oil that cutting production would be economic suicide. This is happening across the globe. Giant state run oil companies continue to pump because it’s the only way for these countries to make money. This is why global oil production has not fallen even though the price of oil has been cut in half. In many areas, production has actually increased.

The extra oil has weighed on oil prices......
Weak oil prices have hammered virtually all oil companies…including the biggest oil companies on the planet. Profits for ExxonMobil (XOM), the largest U.S. oil company, fell 52% during the second quarter due to weak oil prices. Its stock is now down 24% since oil peaked last summer. Chevron (CVX), America’s second biggest oil company, earned its lowest profit in twelve years during the second quarter. Its stock price is down 34% since last summer’s peak. The entire industry is struggling. XOP, an ETF that holds the largest oil explorers and producers, has dropped 52% over the same period.

But oil tanker companies are making more money than they have in seven years...…
Unlike oil producers, oil tanker companies don’t need high oil prices to make big profits. That’s because they make money based on how much oil they move. Their revenues aren’t directly tied to the price of oil.
On Monday, Bloomberg Business explained why oil tankers are making the most money they’ve made in years. The world’s biggest crude oil tankers earned more than $100,000 a day for the first time since 2008. Ships hauling two million barrel cargoes of Saudi Arabian crude to Japan, a benchmark route, earned $104,256 a day, a level last seen in July 2008, according to data on Friday from the Baltic Exchange in London. The rate was a 13 percent gain from Thursday.

Casey Research’s favorite oil tanker company is cashing in on higher shipping rates...…
On August 13, E.B. Tucker told readers of The Casey Report about a company called Euronav (EURN).
According to E.B., Euronav is the best oil tanker company in the world. The company has one of the newest and largest fleets on the planet. Euronav’s sales more than doubled during the first half of the year.

The company’s EBITDA (earnings before taxes, interest, and accounting charges) quadrupled. And because Euronav’s policy is to pay out at least 80% of its profits as dividends, the company doubled its dividend payment last quarter.

Investors who acted on E.B.’s recommendation have already pocketed a 5% quarterly dividend. Based on its last two dividends, Euronav is paying an annualized yield of 12%. That’s not bad considering 10 Treasuries pay just 2.07% right now. Euronav’s stock is up big too. It has gained 15% in the past month alone...while the S&P just gained 1%.

E.B. thinks Euronav is just getting started.....
Euronav’s stock price has rocketed in recent weeks, but it’s going to go much higher. Euronav is a great business and the economics of shipping oil are improving. The market hasn’t fully caught on to how good things are in the industry right now. Shipping rates are ripping higher, but the supply of ships can’t keep up with demand. The largest supertankers can carry 2 million barrels of oil at a time. They measure three football fields long. These ships take years to build and cost about $100 million each. Shipping rates should stay high as the world works through this huge oil glut.

It’s a great time to own shipping companies. And Euronav is the best of the bunch. Euronav has shot up since E.B. recommended it, but the buying window hasn’t closed. In fact, Euronav is still below E.B.’s “buy under” price of $17.50. You can learn more about Euronav by taking The Casey Report for a risk free spin today. You’ll also learn about E.B.’s other top investment ideas, including a unique way to profit from the “digital revolution” in money. Click here to get started.



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Saturday, September 5, 2015

Buy the Dip? Hell No.....Sell the Rip Instead

By Tony Sagami

Are you worried about the stock market? You should be; at least according to your local Starbucks barista.
Starbucks CEO Howard Schultz told his 190,000 employees in his daily “Message from Howard” email communication: “Today’s financial market volatility, combined with great political uncertainty both at home and abroad, will undoubtedly have an effect on consumer confidence and … our customers are likely to experience an increased level of anxiety and concern. Let’s be very sensitive to the pressures our customers may be feeling.”

You can’t make this stuff up!

Hey, maybe I shouldn’t be too harsh on Mr. Schultz, because the stock market is in a lot of trouble… and not for the reasons the mass media and Wall Street experts are telling you. The know it alls on CNBC are pointing their fingers at the Chinese stock market meltdown as the reason for our stock market turmoil, but that is just the catalyst… not the root problem.

The source of the meltdown is deeper, more problematic, and more painful. What I’m talking about is that the Federal Reserve—from Greenspan to Bernanke, to Yellen—thought they possessed Wizard of Oz powers to fix whatever ails the economy with their menu of monetary tools.

In 2000, the Fed thought it could solve the bursting of the dot-com bubble with massive interest rate cuts and repeated that playbook again for the 2008-09 Financial Crisis. And when they ran out of room by cutting interest rates to zero, they trotted out Operation Twist and QE 1, 2, and 3.


Those three rounds of QE added about $3.7 trillion to the Federal Reserve’s balance sheet since 2008, which now totals a mind boggling $4.5 trillion. The problem is not China; the problem is Janet Yellen and her Federal Reserve buddies.


The Fed—beginning with the original monetary Mr. Magoo of Alan Greenspan—created a bubble, then rolled out more of the same to deal with the bursting of the bubble, and like the shampoo bottle says: Rinse, Lather, Repeat. Zero interest rates plus QE1, QE2, and QE3 created a massive misallocation of capital that has affected everything from home supply, ocean-going freighters, the US dollar, and wages, and pushed stock prices to a bigger than ever bubble.


The recent weakness is the painful process of deflating that bubble, but the Federal Reserve refuses to learn from its mistakes. It won’t be long until we hear about QE4 and/or a delay to the overpromised interest rate liftoff. Former US Treasury Secretary Larry Summers had this to say yesterday: “A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives; price stability, full employment and financial stability.”

Honestly, I don’t know what the Federal Reserve will do next. Heck, I bet they don’t know what to do either… but they will do something. Central bankers are arrogant know-it-alls who think they can fix the world’s financial problems with a couple of pulls of a monetary lever.

So pull they will.

And so the stock market damage will continue, albeit with some powerful up moves along the way.
Bulls, whether in a Spanish bull-fighting arena or roaming the floor of the NYSE, are a tough animal to kill. They won’t surrender until they make a few more desperate attempts to push the market higher.
Look at what happened last Tuesday after the 588-point Monday meltdown. The Dow Jones Industrial Average shot up by as much as 441 points before ending the day with a 204-point loss.


My point is that you’re going to see a lot of powerful up moves in the coming months… but I’m telling you, these are nothing more than bear market traps to lure you into buying at the wrong time. The stock market is falling into a bear market, and that means big swings both up and down, similar to 2000–2003.


The Federal Reserve, along with the rest of the world’s central bankers, has puffed stock valuations into an epic bubble, and the stock market has a long, long ways yet to fall…..just not in a straight line. That’s heart attack material for both buy-hold-and-pray and buy the dip investors, but it is a goldmine if you adapt your strategy.


Instead of buying the dip, the right strategy going forward is SELL THE RIP.

When the stock market gives you a big rally, the right move will be to sell into strength.

And if you have some risk capital, that will be the time to load up on inverse ETFs and put options, like my Rational Bear subscribers did in July.

The biggest short-selling opportunity of our lifetimes is knocking on your door.
Tony Sagami
Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.



Get our latest FREE eBook "Understanding Options"....Just Click Here!


Saturday, August 22, 2015

Why You Should Go to Africa Instead of College

By Doug Casey

Recently Doug Casey was a guest on the always excellent podcast, The Tom Woods Show. Tom and Doug talked about the enormous economic potential in Africa, Doug’s efforts to build a truly free market country, and better uses of your time and money than going to college.

It’s an exciting and informative conversation.


Tom Woods: What a pleasure and a delight it is to welcome back to the show Doug Casey. Doug is a libertarian economist, best selling financial author, international investor, entrepreneur, and the founder and chairman of Casey Research. Doug, welcome back to the show.

Doug Casey: Thanks, Tom. It is my pleasure.

Tom: You’ve been up to some interesting activity in Africa that I’d like to ask you about. Let’s start off by telling us what you’ve been busy doing there.

Doug: Well, the last two weeks, I’ve been visiting the Islamic Republic of Mauritania with a short side trip to Senegal. I’ve been pursuing my hobby, which is to propose to a backward country a plan for complete and total free marketization… including taking the country itself public on a major stock exchange and distributing most of the shares directly to the people who theoretically own the government assets. I felt like I had Maria Muldaur’s “Midnight at the Oasis” playing in the back of my mind the whole time I was there.

Tom: Suppose you got everything you wanted, what would the outcome look like?

Doug: Well, 100% of all government assets, land, state owned companies - everything - initially go into a corporation and we distribute the shares.

Let’s say, 70% pro-rata to every man, woman, and child in the country, so they don’t just theoretically own the government, now they actually do. 15% would be put it in trust for the next unborn generation to defuse that time bomb. 10% would be distributed to people who, let’s say, are of significant help to making this happen, and people who are important, whose rice bowls would be broken, and 5% to take public in major stock markets to raise some capital. Then we get rid of all duties, taxes, and regulations.

Dubai was absolutely nothing in 1980. You know what Dubai is now. If we go back further, in 1960, Hong Kong and Singapore both were very poor and look what has happened to them. So I think in today’s world if somebody is daring enough to want to do this, I think it could be of world historic importance. So I’m looking for the right guy.

Tom: I’d like to get a glimpse inside of a meeting like this. If you’re sitting down with the president, you’re sitting down with top officials, how do you make that case, especially when the response is going to be, “What’s in it for me”?

Doug: Well, that’s always the first question, of course. I start my presentation with three things I can do for you, Mr. President. It’s always a question of the benefit to the buyer. Number one, this plan will make you legitimately a multibillionaire. That always goes down very smoothly, because they know that doing what Mobutu and Mugabe did doesn’t work quite as well now as it did in the past. So it gets their attention.

Number two, the people will love you and treat you as the new George Washington. That sounds pretty good too. Half the time in these places most of the population wants to kill them. And number three, we will put you on the front cover of all the world’s magazines in a favorable light for the next decade. Now that sounds good, because these people, if they are even known to exist, are considered pariahs.

So they always listen to the rest of presentation. Of course then things start to go wrong… usually from people under the president. It’s the people under the president who are usually making the big money, not so much the president himself. So they are often the problem.

It always makes for a fun adventure and interesting cocktail party stories that I can tell and retell to people for hours. But it’s my hobby. It’s not an occupation. I haven’t made any money on it yet, although I always have a plan B when I go to these countries: look for mining concessions and so forth.

Tom: Suppose you had to do it all over again. Let’s say you turned 18 in 2015. Have conditions changed to the point where you would take a different path, and incidentally would you go to college?

Doug: I would definitely not go to college. Even then, I only did it because everybody from my socioeconomic class was going to college, so there was no thought involved on my part. It was just like going from eighth grade into high school. I counsel students against it today. College serves no useful purpose unless you want to learn a trade like doctoring or lawyering or you need a piece of paper to practice a particular occupation, or there is a formal discipline, like a hard science or engineering.

You will pick up lots of bad ideas. You will spend a huge amount of money, get yourself under a huge financial rock that will take you years to dig yourself out from under. What I suggest people do instead is lay out what the most intelligent thing to do with that four years of time and probably $200,000 of capital. I like the idea of traveling. The place that I would put first and foremost on my travel list today for economic reasons is Africa. Go someplace where you can be a big fish in a small pond quickly.

Tom: Back in the ’50s and ’60s in the wake of decolonization in Africa, you had a bunch of Western educated semi-Marxist political leaders who were nationalizing property and confiscating assets from rich people and so on, you wouldn’t touch Africa with a ten foot pole. What has changed since then?

Doug: Well, politics always draws the worst kinds of people of course. Most of the presidents of Africa even today are ex-generals or ex-colonels or something like that. It has economically improved a lot. The population has exploded and it’s going to explode more in the years to come. It’s chaotic. But if you can bring order to chaos, that’s opportunity.

If you go to the Orient, there are a lot of rich, smart people there. You are not going to have much of a competitive advantage. That’s true to a lesser extent in South America too. Africa is actually the place, I think, you want to go.

Tom: Do you have any particular parts of Africa? I’ve heard good things about Botswana. Do you have any place in particular that attracts you?

Doug: Other than South Africa, I’d say Botswana is the most developed country in Southern Africa for sure. But where would I go now? Well, of course, the nice thing about Africa is that it’s divided basically into three parts, Anglophone Africa, Francophone Africa, and Lusophone Africa, and my French is still adequately conversational. I lived in France and Switzerland for a year during college. My Spanish is functional. The language thing is a consideration of course. But on the other hand, most of the educated people in most countries of the world speak English, which is the world’s lingua franca today.

Where would I go? There are around 50 countries in Africa. I like small, obscure ones. Maybe Ghana is too developed. Look at Benin or Togo or maybe the Ivory Coast. Mauritania, where I just was, is actually quite interesting. Guinea-Bissau, Guinea-Conakry, you’ve got lots of choices. Somebody should get on a plane and just take a look. Then when they get into a country, a capital city, which is always where the action happens, get on the telephone to local lawyers and real estate agents and businessmen to set up appointments and see who you can get along with. One thing will lead to another.

I wouldn’t go to Africa as a lifestyle choice. I would go there for economic reasons and for the adventure that it would yield. I’d say as a lifestyle choice, it comes down to South America or the Orient. I lived in the Orient for years and I loved it.

Tom: What about the language barrier?

Doug: Well, I lived in Hong Kong and when I was there it was much more English. Of course everybody in China is learning English today, everybody, everywhere that you basically would want to talk to. I’m not trying to be elitist but the educated people - put it that way - all speak English today as a second language. This is one of the things that will slow down your progress on learning the local language, is that they all want to speak English to you. So that’s a double edged sword… but it’s really an advantage. No, don’t worry about the language problem.

Tom: Well, I sure appreciate your time, Doug Casey. You are the International Man himself, and we are always grateful for your time.

Doug: Well, thank you Tom. It is a pleasure to talk to you under any circumstances.

Editor’s Note: International Man is all about helping you make the most of your personal freedom and financial opportunities around the world. A great way to get started is to check out Going Global 2015. Normally, this book retails for $99. But we believe this book is so important, especially right now, that we’ve arranged a way for US residents to get a free copy. Click here to secure your copy.

The article was originally published at internationalman.com.


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Thursday, June 11, 2015

You've Heard about the "Million Dollar Trade".....Here How it was Done. Free Video

I still believe this is when everything changed for the average trader. It was only weeks later that the talking heads on CNBC were offering up their own versions and books about trading options in this way. That's right, I honestly believe that our good friend and trading partner John Carter of Simpler Options wrote the book on options trading. Literally.

And the actual sea change came when John placed this public [that's right live for all to see on screen] trade in Tesla [ticker TSLA] last year. And in the process made one million dollars. And John continues using and refining those simple methods and sharing them with our readers.

He is back again this week with a new video and as always is absolutely free!

Watch John's new video "What's Behind the BIG Trade" > Here

In this short and powerful video, John will show you.....

  *  How he made that famous million dollar trade

  *  The number one goal of every trader so you can consistently make money trading

  *  The difference between trading for income and trading for account growth

  *  Why you don't want to put it all on one big trade because you can have consistent account growth

  *  The best vehicle you can use to grow an account fast

  *  Examples of trades made this year that you could have used to grow your account

      Watch the video HERE

      See you in the markets,
      The Stock Market Club


Get John's latest version of his FREE eBook "Understanding Options"....Just Click Here!

Wednesday, January 21, 2015

The Single Most Important Economic Statistic that the White House Never Talks About

By Tony Sagami


For the first time in 35 years, American business deaths now outnumber business births. —Jim Clifton, CEO, Gallup Polls

I’ve been self employed since 1998, and let me tell you, the life of a business owner isn’t easy. It’s filled with long hours, a relentless amount of paperwork, and uncertainty of where your next paycheck will come from.

If you’ve ever owned a business, you know exactly what I’m talking about.

Difficult or not, self employment is extremely rewarding, and I wouldn’t have it any other way. Nor would the other 6 million business owners in the United States. Of those 6 million businesses, the vast majority are small “Mom and Pop” businesses. Here are more statistics on businesses in the U.S. :
  • 3.8 million have four or fewer employees. That’s me!
     
  • 1 million with 5-9 employees;
     
  • 600,000 with 10-19 employees;
     
  • 500,000 with 20-99 employees;
     
  • 90,000 with 100-499 employees;
     
  • 18,000 with 500 employees or more; and
     
  • 1,000 companies with 10,000 employees or more.
Those small businesses are the backbone of our economy and responsible for employing roughly half of all Americans. Moreover, while estimates vary, small business create roughly two thirds of all new jobs in our country.

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For those reasons, the health (or lack thereof) of small business is the single most important long term indicator of America’s economic health. Warning: new data suggest that small businesses are in deep trouble.
For the first time in 35 years, the number of business deaths outnumbers the number of business births.


The US Census Bureau reported that the birth and death rates of American businesses crossed for the first time ever! 400,000 new businesses were born last year, but 470,000 died.

Yup, business deaths now outnumber business births.


Pay attention, because this part is important.

The problem isn’t so much that businesses are failing, but that American entrepreneurs are simply not starting as many new businesses as they used to. We like to think of America has the hotbed of capitalism, but the US actually is number 12 among developed nations for new business startups.

Number 12!

You know what countries are ahead of us? Hungary, Denmark, Finland, New Zealand, Sweden, Israel, and even financially troubled Italy are creating new businesses faster than us!


The reasons for the capitalist pessimism are many, but my guess is that the root of the problem comes down to three issues: (1) difficulty of accessing capital (loans); (2) excessive and burdensome government regulations; and (3) an overall malaise about our economic future.

Business owners are permanently smitten with an entrepreneurial bug, and the only thing that prevents them from seeking business success is the expectation that they’ll lose money.

Sadly, the lack of new business start ups is confirmation that American’s free enterprise system is broken.

"There is nobody in this country who got rich on their own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory... Now look. You built a factory and it turned into something terrific or a great idea—God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."

Elizabeth Warren

“When small and medium-sized businesses are dying faster than they’re being born, so is free enterprise. And when free enterprise dies, America dies with it,” warns Gallup CEO Jim Clifton.

I don’t believe for a second that America’s free-enterprise system is permanently broken. The pendulum will eventually swing the other way, but our economy will not enjoy boom times until the birth/death trends are reversed.

That won’t happen next week or next month. It will take serious, fundamental changes in tax, regulatory, and judicial rules, and I sadly fear that it will take several years for that to happen. Until then, our economy is going to struggle and will pull our high flying stock market down with it. Are you prepared?

If you’re not familiar with inverse ETFs, you’re ignoring one of your best defenses against tough times. An inverse ETF is an exchange traded fund that’s designed to perform as the inverse of whatever index or benchmark it’s designed to track.

By providing performance opposite to their benchmark, inverse ETFs prosper when stock prices are falling. An inverse S&P 500 ETF, for example, seeks a daily percentage movement opposite that of the S&P. If the S&P 500 rises by 1%, the inverse ETF is designed to fall by 1%; and if the S&P falls by 1%, the inverse ETF should rise by 1%.

There are inverse ETFs for most major indices and even sectors and commodities (like oil and gold), as well as specialty ETFs for things like the VIX Volatility Index.

I’m not suggesting that you rush out and buy a bunch of inverse ETFs tomorrow morning. As always, timing is critical, so I recommend that you wait for my buy signals in my Rational Bear service.

But make no mistake, the birth/death ratio is signaling serious trouble ahead. Any investor who doesn’t prepare for it is going to get run over and flattened like a pancake.

Tony Sagami
Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.



New Video: 6 Simple Criteria that Guarantee Trading Success.....Just Click Here!


Thursday, January 8, 2015

Beyond Tesla: The Huge Profit Potential of Lithium

By Tony Sagami

One of the stocks that I get the most questions about is Tesla. I’m not sure whether investor interest is due to the gorgeous lines of the Tesla Model S, its amazing high performance engine, the high flying stock, or the energy saving nature of all electric vehicles….. but Tesla is a very popular subject.


Tesla cars don’t just look fast; they are fast! The Tesla Model S can go from 0 to 60 mph in a stunning 5.9 seconds and travel up to an impressive 319 miles on a single charge.

The Tesla Model S is shockingly modestly priced by luxury car standards. The basic model has a MSRP of $69,900, but the price tag can quickly escalate to $100,000 with optional add ons. Of course, a cheapskate like me would never pay that much for a car—even an electric car—but lots of status-conscious consumers have.


And you won’t see me buying Tesla stock either. Even though it’s well off of its 52 week high, it’s still trading for almost 80 times earnings and 29 times book value.

However, a lot of technology is incorporated into electric vehicles. The most profitable way to invest in electric vehicles is not through Tesla stock, but instead from the industry that makes batteries possible.
I’m talking about lithium, one of the most valuable natural resources of the new electronic world thanks to its unique and extremely valuable characteristics:

  • Lithium has such a low density that it floats on water and can be cut with a butter knife. And when mixed with aluminum and magnesium, it can form lightweight alloys that produce some the highest strength to weight ratios of all metals.
     
  • Lithium tolerates heat better than any other solid element, melting at 357°F.
  • Lithium batteries offer the best weight-to-energy ratio, making lithium batteries ideal for any application where weight is an issue, such as portable electronics.
     
  • That same high energy density and low weight characteristic makes lithium batteries the best choice for electric/hybrid vehicles due to car gas mileage. A car’s biggest enemy is weight.
     
  • Lithium has a very high electrochemical potential, meaning that it has excellent energy storage capacity.
Lithium is a key mineral of the future, but there are limited ways to invest in it because unlike other commodities, there is no vehicle to invest in the physical metal.

On top of that, few options exist to invest in it because the market is dominated by only a handful of producers: Chemical & Mining Company of Chile (SQM); FMC Corp. (FMC); Rockwood Holdings (ROC); and privately held Talison Lithium.

The Chemical & Mining Company of Chile is primarily a potash fertilizer company; FMC Corp. is a diversified chemical producer with a less than 15% of its revenues from lithium; and Talison is a privately held Chinese company.

That leaves Rockwood Holdings as the purest play on lithium by a wide margin, with close to a 50% share of the global lithium market. It’s the OPEC of lithium. It’s also trading around $80 a share right now… a lot cheaper than Tesla—the car and the stock!

Of course, timing is everything, so I’m not suggesting that you rush out and invest in lithium or any of the above stocks tomorrow morning. Instead, wait for my buy signal in Just One Trade.
Tony Sagami
Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.



Get our latest FREE eBook "Understanding Options"....Just Click Here!



Sunday, November 30, 2014

Using Stock Buybacks to Mask Deep Business Problems

By Tony Sagami


Stock buybacks are always a good thing… right? That’s what the mass media has trained investors to believe, but there are times when stock buybacks are a horrible strategy.

Let’s take a look at Herbalife, which has had very visible news items as billionaires like Carl Icahn, George Soros, Daniel Loeb, and Bill Ackman publicly debate the future of the company.



Herbalife shares have lost more than half their value in 2014 because of a Federal Trade Commission investigation and a big drop in profits. 50% is a huge haircut, but I believe Herbalife is poised for even more pain.

Rapidly Disappearing Profits


Herbalife recently reported its third-quarter results and they were just awful. Herbalife earned $0.13 per share in Q3, but that was a whopping 92% decline from the $1.32 it earned last year.

That’s awful, but Herbalife says business will be even worse going forward. The Wall Street crowd expected Herbalife to grow revenues by 7% in 2015, but the company said that its revenues will fall by -1% to -2% instead.

Part of that lower guidance is from the impact of the strong US dollar. Guidance for Q4 includes an unfavorable impact of $0.31 from currency conversions. If you remember, I previously wrote that the strong dollar was going to kill the 2015 profits of companies that do lots of business overseas.

I have to admit, I am skeptical of all the multilevel marketing businesses, but Herbalife is reinforcing that preconceived notion.

FTC and FBI Investigation


The Federal Trade Commission is investigating Herbalife for what could ultimately result in charges that Herbalife is operating an illegal pyramid scheme.

In March, the FTC sent Herbalife a civil investigative demand (CID), which is a subpoena on steroids because all the evidence produced by a CID can be used by other agencies in other investigations, such as the FBI, which is also investigating Herbalife.

The FTC outcome is unknown. Heck, Herbalife could eventually be declared innocent and pure… but I wouldn’t bet on it.

Board Members Gone Bad!


When your company is in the middle of FTC and FBI investigations, the last thing you want is for your company officers to get in trouble with the law. A current Herbalife board member, Pedro Cardoso, has been charged with illegal money laundering by Brazilian prosecutors. Time will tell if the charges are true… but it looks very bad.



That’s not the only problem with the Herbalife board of directors. Longtime Herbalife Board Member Leroy Barnes announced that he is leaving. Board members leave for legitimate reasons all the time, but Barnes is the fourth Herbalife board member to leave in 2014. Talk about rats jumping the ship!

The Smoke and Mirrors of Stock Buybacks


The above issues are all serious and enough to stay away from Herbalife, but the biggest red flag I see is the abusive financial engineering that Herbalife is using to prop up its stock.

Example: In Q2, Herbalife spent over $500 million to buy back its own stock for the purpose of propping up its earnings-per-share ratio. Fewer shares translates into higher earnings per share.



The root of the problem is that Herbalife is using up all its cash AND borrowing money like mad to finance the stock buyback.



In the last year, Herbalife’s debt has exploded by over $1 billion. Herbalife is using every penny of operating cash flow and taking on new debt just to buy back its stock.



Moreover, since Herbalife’s stock has plunged by 50% this year, Herbalife wasted hundreds of millions of dollar of shareholder money by buying stock at much higher prices.

And now that revenue, profits, and free cash flow generated by operations are shrinking, Herbalife is on a collision course with insolvency.



Carl Icahn, who is certainly a much better investor than I will ever be, is a big Herbalife fan and even went as far as to call the shares undervalued. “I would tell you I do believe Herbalife is quite undervalued and it is still a good business model.”

Ahhhh… Carl… sorry, but I think you couldn’t be more wrong.

George Soros, by the way, appears to agree with me because he reduced his Herbalife holdings by 60% after the company reported those disastrous third quarter results a few weeks ago. I’m not suggesting that you rush out and buy put options on Herbalife tomorrow morning. As always, timing is everything, but I have very little doubt that Herbalife’s stock will be significantly lower a year from now.

Moreover, the real point isn’t whether Herbalife is headed higher or lower, but that good, old fashioned fundamental research can help you make money in any type of market environment.

Even during bear markets.

30-year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.



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Wednesday, November 19, 2014

The Looming Uranium Crisis: Strategic Implications for the Colder War

By Marin Katusa, Chief Energy Investment Strategist

In the wake of one singular event—the disaster at Fukushima in March 2011, the effects of which are still being felt today across the planet—nuclear power has seemingly fallen into utter disrepute, at least in the popular mind. But this is largely an illusion.

It’s true that Japan took all 52 of its nuclear plants offline after Fukushima and sold much of its uranium inventory. South Korea followed with shutdowns of its own. Germany permanently mothballed eight of its 17 reactors and pledged to close the rest by the end of 2022. Austria and Spain have enacted laws to cease construction on new nuclear power stations. Switzerland is phasing them out. A majority of the other European nations is also opposed.

All of this has resulted in a large decrease in demand for uranium, a glut of the fuel on the market, and a per-pound price that fell as low as $28.50 in mid-2014, down nearly 80% from its peak of $135 in 2007.

Currently, it’s languishing around $39 per pound, still below the cost of production for many miners—about 80% need prices above $40 to make any return on investment, and even at that level, no new mines will be built. It’s easy to hear a death knell for nuclear energy on the breeze. And that may well be the case for Europe (except for France). But Europe is hardly the world.

South Korean plants are back online. Japan is planning to restart its reactor fleet (despite a great deal of citizen protest) beginning in 2015. Russia is heavily invested, with nine plants under construction and 14 others planned. China, faced with unhealthy levels of air pollution in many of its cities due to coal power generation, is going all in on nuclear. 26 reactors are under construction, and the government has declared a goal of quadrupling present capacity—either in operation or being built—by 2020. India has 20 plants and is adding seven more. And in the rest of the developing nations, nuclear power is exploding.

Worldwide, no fewer than 71 new plants are under construction in more than a dozen countries, with another 163 planned and 329 proposed. Many countries without nuclear power soon will build their first reactors, including Turkey, Kazakhstan, Indonesia, Vietnam, Egypt, Saudi Arabia, and several of the Gulf emirates.

For years, China, with its stunning GDP growth rate, has been seen as the leading destination for natural resources. “Produce what China needs” has been every supplier’s ongoing mantra. Yet, as many Americans fail to realize, it’s their own home that is the biggest uranium consumer. Despite having not opened a new plant since 1977 (though six additional units are scheduled to open by 2020), the US is the world’s #1 producer of nuclear energy, accounting for more than 30% of the global total. France is a distant second at 12%; China, playing catchup, sits at only 6% right now. The 65 American nuclear plants, housing just over 100 reactors, generate 20% of total US electricity.

Yet uranium is the one fuel for which there is very little domestic supply.


As you can see, the US has to import over 90% of what it uses. That’s a huge shortfall—and it’s persisted for many years. How has the country made it up?

In a word: Russia.

America’s former Cold War archenemy—and antagonist in the unfolding sequel, the Colder War—has in fact been keeping the US nuclear fires burning, through conduits like the Megatons to Megawatts Program.
When the USSR collapsed, Russia inherited over two million pounds of HEU—highly enriched uranium (the 90% U-235 needed to fashion a bomb)—and vast, underused facilities for handling and fabricating the material. Starting in 1993, it cut a deal with the US dubbed the Megatons to Megawatts Program. Over the 20 years that followed, 1.1 million pounds of Russian weapon-grade uranium, equivalent to about 20,000 nuclear warheads, was downblended to U3O8 and sold to the United States as fuel.

That source was very important in helping to fill the US supply gap for those two decades. It represented, on average, over 20 million pounds of annual uranium supply, or half of what the country consumed. I’m sure it would have come as a shock to most Americans if they’d realized that one in ten of their homes was being powered by former Soviet missiles.

Megatons to Megawatts expired in November 2013, but US dependence on Russia did not. Russia is easily able to maintain its sizeable export presence, due largely to present economics.

Because of all the uranium swamping the market since Fukushima, separative work units (SWUs) are trading at very low prices. SWUs measure the amount of separation work necessary to enrich uranium—in other words, how much work must be done to raise the product’s concentration of U-235 to the 3-5% that most reactors require for fission?

The tails that are left behind when U-235 is separated out to make warheads still contain some amount of the isotope, usually around 0.2% to 0.3%. When the price of SWUs gets low enough, it’s a condition known as “underfeeding,” meaning it’s worth the effort to go back and extract leftover U-235 from the tails. That’s done through the process of re-enrichment, the reverse of the procedure that creates HEU. It’s kind of like getting fresh gold from old ore that had already yielded the easy stuff.

After the Soviet Union broke up, Russia had a lot of enrichment capacity it no longer needed for its military program. And major uranium companies like Areva and Urenco had sent trainloads of enrichment tails to Russia in the 1990s and early 2000s.

Great stockpiles were built up, and they’ll be put to use until the pendulum swings the other way and we get “overfeeding,” where the price of SWUs makes re-enrichment too costly to continue. We will go from under- to overfeeding in the near future. Rising demand from the Japanese restart and new plants coming online ensures that it will happen, and probably within the next 24 months. The market is already anticipating it, with the per-pound price of uranium up more than 35% in the past few months. It’s going to double to $75… at the least.

Meanwhile, though, the ability to profitably produce fuel-grade uranium from tails confers on Russia a number of significant advantages. Among them:
  • It permits the country to exploit a previously worthless resource.
  • The more tails it can use as feedstock, the fewer it has to dispose of.
  • Most important, it means Russia can conserve much of its mineral supply for a future when higher prices will dramatically increase its leverage. That includes in-ground ore, of which it has a lot, and probably uranium picked up on the cheap when Japan did its massive post-Fukushima fuel dump (though it has never been officially confirmed who the buyers of Japan’s uranium supply were, I have some very connected sources who tell me it was the Russians who snapped most of it up).
This is one part of Vladimir Putin’s plan to dominate the world energy markets. In my book, The Colder War, I call it the “Putinization” of uranium.  And he has nicely positioned his country to pull it off.
In January 2014, Sergei Kiriyenko, head of Russian energy giant Rosatom, was bursting with enthusiasm when he predicted that Russia’s recent annual production rate of 6.5 million pounds of uranium would triple in 2015.

Rosatom puts Russia’s uranium reserves in the ground at 1.2 billion pounds of yellowcake, which would be the second largest in the world; the company is quite capable of mining 40 million pounds per year by 2020. Add in Russia’s foreign projects in Kazakhstan, Ukraine, Uzbekistan, and Mongolia, and annual production in 2020 jumps to more than 63 million pounds. Include all of Russia’s sphere of influence, and annual production easily could amount to more than 140 million pounds six years from now.

No other country has a uranium mining plan nearly this ambitious. By 2020, Russia itself could be producing a third of all yellowcake. With just its close ally Kazakhstan chipping in another 25%, Russia would have effective control of more than half of world supply.

That’s clout. But it doesn’t end there.
Globally, there are a fair number of facilities for fabricating fuel rods. Not so with conversion plants (uranium oxide to uranium hexafluoride) or enrichment plants (isolating the U-235). And the world leader in conversion and enrichment is…. yes, Russia.

All told, Russia has one-third of all uranium conversion capacity. The United States is in second place with 18%. And Russia’s share is projected to rise, assuming Rosatom proceeds with a new conversion plant planned for 2015. Similarly, Russia owns 40% of the world’s enrichment capacity. Planned expansion of the existing facilities will push that share close to 50%.

That’s Putin’s goal—to corner the conversion and enrichment markets—because it wraps Russian hands around the chokepoints in the whole yellowcake to electricity progression. It’s a smart strategy, too—control those, and you control the availability and pricing of a product for which demand will be rising for decades.

And that control will tighten, because the barrier to entry for either function is very high. Building new conversion or enrichment facilities is too costly for most countries, and it is especially difficult in the West due to the influence of environmentalists.

It’s worth reiterating. Russia is on track to control 58% of global yellowcake production; currently responsible for a third of yellowcake-to-uranium-hexafluoride conversion; and soon to hold half of all global enrichment capacity.

There’s a word for this: stranglehold.

That is what Putin and Russia will have on the supply chain for nuclear fuel in a world where new atomic power plants are being constructed at warp speed, which will force the price of uranium ever higher. It will give Russia enormous global influence and great leverage in all future dealings with the US America can mine some uranium domestically and buy some more from its Canadian ally. But even taken together, those sources put only a small patch on the supply gap.

The US government would do well to make peace with Putin, if it can, because the domestic nuclear power industry—and by extension the economic health of the country—is at the mercy of Russia, indefinitely.
To get the full story, click here to order your copy of my new book, The Colder War.

Inside, you’ll discover more on how Putin has cornered the market on Uranium, and how he’s making a big play to control the world's oil and natural gas markets. You’ll also glimpse his endgame and how it will personally affect millions of investors and the lives of nearly every American.



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Thursday, September 18, 2014

Top Dividend Plays – Profit in a Bull Market, Protect Yourself in a Bear Market and Collect Dividends Along the Way!

When your babysitter knows that the market is on a roll, there is no question it’s a bull market! It may also be time to keep an eye out for a correction. No one knows when a correction will take place and you don’t want to miss gains in a bull market.

So what do you do?

Easy! Continue buying good companies with outstanding fundamentals, but look for “defensive” sectors and throw in some outstanding dividend payouts for good measure.

In this complimentary INO.com special report they reveal an ETF that’s loaded with the best and most consistent dividend paying companies. And here’s the best part: all of the companies listed in this ETF have to boast a record of increasing dividends for at least 20 consecutive years (not a typo).

As an added bonus, you’ll also receive their favorite dividend stock. This stock boasts a mind blowing dividend record backed by some of the strongest fundamentals around.


See you in the markets!

Ray C. Parrish
The Stock Market Club

Friday, September 12, 2014

Sneaky 5 Part Options Formula Taught on Video

Are you excited about Bill Poulos's new Options Income Engine software that's being released next Monday like I am?

You can definitely feel the excitement online......

Bill just posted a "video answer" to one of his blog questions where he reveals his 5-part formula that tells you exactly how many options contracts to trade.



This is how the pros do it.

Go here to try it out...

Good Trading,
Stock Market Club

P.S.  Rumor has it that Bill will be giving away a LIFETIME MEMBERSHIP to his options software this weekend, so keep an eye on your email and on his website for more info...

Options Results + BIG NEWS [New Video]

Video 3 of the Options Income Engine training was just published.

See it Here...

Here's what you'll learn in this video:
  • A live options trade Bill Poulos placed with his broker using the Options Income Engine trade alert software, so you can get a feel for how easy this is...

  • An equity curve going back 20+ years so you can get a sense of how this program will work in "real life". He shows you everything - "warts & all".
I think you'll learn some very important lessons about real world trading after you see how candid Bill is in this video.
ALSO...
  • Bill is going to open up enrollment for his Options Income Engine software this Monday, September 15th, at 1pm Eastern.
(But it will be a very tight, limited enrollment.)

Watch Video #3 for more information on how to try it out...

Good Trading,
Stock Market Club

P.S. If you have any questions, make sure you post them underneath the video on the training website. There are now over 300 combined comments and counting.

Everybody is really excited about this......



Sunday, August 31, 2014

"Understanding Options".....John Carters New Free Options Trading eBook

You know our trading partner John Carter from his wildly popular free trading webinars. Well, John has found another way to make learning to trade options in any size account even easier. With a brand new free eBook. The options trading eBook "Understanding Options".

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  *   How to use leverage to grow your account exponentially or free up excess capital

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  *   The two different types of settlement

  *   The key options terms you need to know

  *   The most important factor to your options trading success

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Saturday, July 5, 2014

Low VIX and What It Means to Your Trading....Our Next Free Webinar

You are invited to attend our next free webinar, presented by former CBOE floor trader Dan Passarelli on Tuesday July 15th at 4:30 EDT. Dan's focus for this webinar will be "Low VIX and What It Means to Your Trading".

Many traders are having a tough time making money in this market. Why? Low VIX. Professional traders use the VIX as a guide to gauge potential option profits. Attend this webinar with Dan and learn what the VIX is telling us about your trading this summer.

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See you Tuesday July 15th!

The Stock Market Club

Our next free webinar "Low VIX and What It Means to Your Trading"....Just Click Here!


Wednesday, July 2, 2014

5 Simple Rules to Evolve Past the Hot Stock List

By Andrey Dashkov

If you’re a typical small time investor, chances are you prefer to let a team of analysts fuss about such irksome things as correlation and beta. Maybe you’ve bought a stock because your brother in law gave you a hot tip, maybe you heard something about it on a financial news show, or maybe you just loved the company’s product.


Friends often ask me for “hot stock tips”—which is like walking up to someone at the craps table and asking what number to bet on. An accomplished craps player will have position limits, stop losses, income targets, and an overall strategy that does not hinge on one roll of the dice. You need an overall strategy long before you put money down.

So, what do I tell those friends asking for hot stock tips? Well, that they can retire rich with a 50-20-30 portfolio:
  • Stocks. 50% in solid, diversified stocks providing healthy dividends and appreciation.
  • High Yield. 20% in high yield, dividend paying investments coupled with appropriate safety measures. These holdings are bought for yield; any appreciation is a nice bonus.
  • Stable Income. 30% in conservative, stable income vehicles.
Unless you’re starting entirely from scratch, you should review your current portfolio allocations, identify where you’re over or underallocated, and then look for investments to fill those holes. In our portfolio here at Miller's Money Forever, we separate our recommendations into StocksHigh Yield, and Stable Income to help you do just that.

The Art of the Pick

 

By the time an investment lands in our portfolio, we’ve already run it through our Five Point Balancing Test. When your boasting brother in law tempts you with a “can’t-miss opportunity” or some pundit touts a hot tech company on television, you can come back to these five points, again and again.
  1. Is it a solid company or investment vehicle? Investing your retirement money safely is a must. How do you know if a company is solid? Take the time to validate essential company information, particularly when the recommendation comes from a source with questionable motivation.
  2. Does it provide good income? A good stock combines a robust dividend and appreciation potential.
  3. Is there a good chance for appreciation? There are two types of appreciating stocks: those that rise because of general market conditions and those that rise further because of the way management runs the business. We want both.
  4. Does it protect against inflation? High inflation is one of the biggest enemies of a retirement portfolio.
  5. Is it easily reversible? Ask yourself, “Can I quickly and easily reverse this investment if something unexpected occurs?” The ability to liquidate inexpensively is critical to correcting errors.

Marking the Bull’s Eye So You Can Hit It

 

It’s worthwhile to write down your goal—including an income target and the price at which you’ll sell if things head south—with every investment. After all, if you can’t see the bull’s eye, how will you know if you’ve hit it? Buying any investment because a trusted adviser, newsletter, or pundit recommended it is not a good enough reason. Buying because your portfolio has a hole, you understand the company, the investment vehicle, the risks, and the potential is.

Remember, retiring rich means having enough money to enjoy your lifestyle without money worries. Do your homework on every investment and you’ll make that pleasant thought your life’s reality. Every week, the Miller’s Money team provides no nonsense, practical advice about the best ways to invest for your retirement in  Miller’s Money Weekly Sign up here to receive it every Thursday.

The article 5 Simple Rules to Evolve Past the Hot-Stock List was originally published at Millers Money


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Saturday, May 3, 2014

World Money Analyst: Europe....Cliff Ahead?

By Dirk Steinhoff
When Kevin Brekke, managing editor [of World Money Analyst], contacted me last week, I knew it was time again to survey the investment landscape. This month, I will focus on Europe and its decoupled financial and real economy markets.

Globally, the last two years were marked by booming stock exchanges of developed markets, disappointing bond markets, and devastation across the precious metals markets.

Since June 2012, the EURO STOXX 50 Index, Europe’s leading blue chip index for the Eurozone, has advanced by approximately 50% and outperformed even the S&P 500 and the MSCI World indices.


Over the last six months, European stock exchanges have seen a surprising change of leadership: The major stock market indices of the “weaker” countries, like Portugal, Spain, and Italy, have outperformed those considered stronger, like Germany. One of the top performers was a country that was and still remains in “bankruptcy” mode: Greece.


The question at this point is: Can these outstanding European stock market performances continue?

In our search for an answer, let’s start with a closer look at the economic conditions within the European Union (EU), where approximately 2/3 of total “exports” (internal and external) of the EU-28 are traded. And then let’s have a look at the economic setting of some major trading partners, such as the US and BRIC countries, which account for roughly 17% and 21%, respectively, of the external exports of the EU-28.
Although the EURO STOXX 50 Index has soared since June 2012, certain key measures of the underlying real economies paint a different picture.

To start, the GDP of the EU-28 is not really growing. In 2012, it contracted by 0.4% and grew by the smallest fraction of 0.1% in 2013. The GDP growth numbers for the countries in the euro area are even worse: -0.7% in 2012 and -0.4% in 2013. Whereas Germany’s GDP was up in 2013 by 0.5%, economic growth was down in Spain, Italy, and Greece by -1.2%, -1.8%, and -3.6%, respectively.

Real GDP Growth Rates 2002-2012
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
EU
1.3
1.5
2.6
2.2
3.4
3.2
0.4
-4.5
2.0
1.6
-0.4
Germany
0.0
-0.4
1.2
0.7
3.7
3.3
1.1
-5.1
4.0
3.3
0.7
Spain
2.7
3.1
3.3
3.6
4.1
3.5
0.9
-3.8
-0.2
0.1
-1.6
France
0.9
0.9
2.5
1.8
2.5
2.3
-0.1
-3.1
1.7
2.0
0.0
Italy
0.5
0.0
1.7
0.9
2.2
1.7
-1.2
-5.5
1.7
0.5
-2.5
Portugal
0.8
-0.9
1.6
0.8
1.4
2.4
0.0
-2.9
1.9
-1.3
-3.2



The EU unemployment rate stood at 10.2% at the beginning of 2012 and stands at 12.1% today. That the European Union is anything but a homogenous body that moves in unison can be seen in the following chart:


Where Germany has a current unemployment rate of 5.2% and a youth (under 25) unemployment rate of 7.5%, the numbers for other countries are worrisome: Current unemployment in Spain is 26.7%, and 12.7% in Italy, with youth unemployment in Spain at an incredible 57.7%, and 41.6% in Italy. And don’t forget Greece, which is mired in a historically unparalleled economic depression where unemployment is 28% and youth unemployment is a shocking 61.4%. Keep in mind that all of these numbers are those officially released by bureaucratic agencies. The real numbers, as we know, would likely be even worse.

Recent EU industrial production numbers have shown some slight improvement. Nevertheless, industrial production has only managed to recover to its 2004 level, and remains way below its 2007 heights (see next graph).

Source: Eurostat

So let’s see: a shrinking GDP, high and rising unemployment, and stagnant production significantly below 2007 levels. Those are not the rosy ingredients of a booming economy (as indicated by the stock exchanges) but of one that is struggling.

Europe is not in growth mode.

This verdict is further supported by the export numbers for trade between EU countries, known as internal trade. In 2001, internal trade accounted for 67.9% of EU exports. Today, this share is down to 62.7%. In an attempt to compensate for sluggish European growth, EU companies had to develop other export markets, such as the US or the emerging markets.

Will these markets help rescue European companies?

Time to Taper Expectations

With regards to the U.S., two important developments are worth mentioning. The first key development, which will have severe consequences for the global economy, was brought to my attention by my friend Felix Zulauf, an internationally well-known investor and regular member of the Barron’s Roundtable for more than 20 years. Running ever-increasing deficits in its trade and current accounts for almost 30 years, the US thus provided an enormous amount of stimulus for foreign exporters. Since 2006, however, the US trade deficit has shrunk, with deteriorating trade data for many nations as a consequence.


The second key development is that the newly appointed head of the US Federal Reserve system, Janet Yellen, seems determined to continue the taper of its bond buying program. This fundamental shift in monetary policy could be questioned if the economic numbers for the US begin to show significant weakness. But in the meantime, the reduction of economic stimulus in the US should lead to a reduced appetite for European export goods.

The emerging markets had been seen, not too long ago, as the investment opportunity and alternative to the fiscal and debt crisis-stricken countries of the developed world. Today, on a nearly daily basis, you hear bad news about the situation and developments in the emerging countries: swaying stock markets, plunging currencies, company bankruptcies, corruption scandals, and even riots.

The emerging markets are dealing with the unintended consequences of the Quantitative Easing (including liquidity easing and credit easing) programs in the West. The increased liquidity spilled over into the emerging markets in the hunt for yield. This flow of capital into the emerging markets lowered capital costs, inflated asset prices like stocks and real estate, and boosted commodity prices. All that, and more, sparked the emerging markets boom.

Now, this process has reversed. The natural conclusion to exaggerated credit-driven growth, the tapering of QE programs, the shrinking US trade deficit, and lower commodity prices has been an outflow of capital from emerging markets, triggering lower asset prices and exchange rates. The attempt of some countries to defend their currencies by raising interest rates will only exert further pressure on their economies.

With weaker emerging market economies and currencies, there will be no big added demand for European exports. Revenues and profits for EU companies (measured in euros) will fall.

When Trends Collide

So, over the last two years we had opposing trends—booming European stock markets and weak underlying real economies. This conflicting mix was mainly fostered by easy money that drove down interest rates to historic low levels. Plowing money into stocks, despite the poor fundamentals, was the only solution for most investors.

At their current elevated levels European stock markets appear vulnerable, and it seems reasonable to doubt that we will see a continuation of booming stock markets. Of course, such a decoupling can continue for some time, but the longer it continues, the closer we will get to a correction of this anomaly. Either the real economy catches up to meet runaway stock prices, or stock prices come down to meet the poor economic reality. Or some combination of the two.

Because of the economic facts that I discussed above, in my view, we may be seeing just the beginning of a stronger correction in stock prices.

Dirk Steinhoff is chief investment officer of portfolio management (international clients) at the BFI Capital Group. Prior to joining BFI in 2007, Mr Steinhoff acted as an independent asset manager for over 15 years. He successfully founded and built two companies in the realm of infrastructure and real estate management. Mr Steinhoff holds a bachelor’s and master’s degree in civil engineering and business administration, magna cum laude, from the University of Technology in Berlin, Germany. 


Want to read more World Money Analyst articles like this? Subscribe to World Money Analyst today and learn how to look abroad for truly diverse opportunities that insulate you from domestic risk.
The article World Money Analyst: Europe: Cliff Ahead? was originally published at Mauldin Economics


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Tuesday, April 22, 2014

New Video: This Weeks Nasdaq Shorting Opportunity

It looks as though the Nasdaq is about ready for another leg lower. Chris Vermeulen shows us what key resistance levels to look at for a possible short trade on the Nasdaq this week.

Get These Trade Alerts Every Week with Chris Vermeulen's ETF Trading Newsletter
 



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Saturday, March 29, 2014

Why Gold Is Falling and a Gold Forecast You May Not Like

The bitter truth about what may happen to gold is not all that exciting and likely don’t want to know, but you need to understand what is unfolding as we speak…..

Long story short, the prices of bonds look as though they are about to rally once again. Mounting fears of a stock market correction has money flowing into bonds which in turn will drive interest yields lower yet gain.

But the BIG PICTURE of what he FED said the other week about how they plan to raise rates in 2015 and cut QE down to $55 billion per month hurts the long term outlook for gold.

This news may not sound that important, it actually is and undermines the price of miners, silver and gold in a big way. Find out why gold is falling and the threat that could trigger a much larger meltdown in the long run with my gold forecast video.



Chris Vermeulen
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Sunday, January 19, 2014

A Glimpse into the Coming Collapse

By Jeff Thomas, International Man

Beginning in 1999, we predicted a systemic economic collapse that would take place in the First World and would impact all other economies. We began to list some of the "dominoes" that would fall as the collapse evolved and described that the "Great Unravelling," as we termed it, would take roughly ten years. At that time, we guesstimated that the first two of the dominoes, a real estate crash and subsequent stock market crash in the US, would begin in about 2005.


We were premature in this prediction, as the first of the crashes did not occur until 2007. And, truth be told, we have frequently been incorrect in the timing of the other dominoes. Whilst the actual events have been predicted correctly, our timing has often been incorrect. In every such case, the prediction has been premature.

Sadly, however, the prediction of the events of the collapse have been almost entirely correct.

We also predicted that, just as a ball of string speeds up its rotation as it rolls along unravelling, so, too, the events of the Great Unravelling would occur more quickly as the situation worsened. Additionally, the severity of the events would increase concurrently with the increase in velocity.

However, none of the above was the result of gypsy fortune telling, nor did it require the brightest of minds to work out. It is mostly based on the simple assumption that history repeats itself—that the world's leaders make the same mistakes in every era, because human nature never changes. Anyone who is willing to expend the effort to study history diligently and to be prepared to think in contrarian terms, may develop a meaningful insight into the events of the future.

Back in 1999, of course, the very idea that the world was headed for serious economic calamity was considered ridiculous by most. The unfortunate fact is, most people do truly deal in the present, rarely questioning the future beyond what they consider to be the very next event. The truth of this statement is borne out by the fact that the great majority of people, who have already seen the first half of the Great Unravelling come to pass, still somehow cannot imagine the second half—the more disastrous half—as being in any way possible. Surely, somehow, the governments of the world will fix things.

However, the number of people whose eyes have been opened seems to be growing, and many of them are asking what the collapse will look like as it unfolds. What will the symptoms be?

Well, the primary events are fairly predictable: they would include major collapses in the bond and stock markets and possible sudden deflation (primarily of assets), followed by dramatic inflation, if not hyperinflation (primarily of commodities), followed by a crash of several major currencies, particularly the euro and the US dollar.

The secondary events will be less certain, but likely: increased unemployment, currency controls, protective tariffs, severe depression, etc.

But, along the way, there will be numerous surprises—actions taken by governments that may be as unprecedented as they would be unlawful. Why? Because, again, such actions are the norm when a government finds itself losing its grip over the people it perceives as its minions. Here are a few:
  • Travel Restrictions. This will begin with restrictions on foreign travel, including suspension/removal of passports. (This has begun in a small way in both the EU and US.) Later, travel restrictions will be extended within the boundaries of countries (highway checkpoints, etc.)
  • Confiscation of wealth. The EU has instituted the confiscation of bank accounts, which can be expected to become an international form of governmental theft. This does not automatically mean that other assets, such as precious metals and real estate will also be confiscated, but it does mean that the barrier for confiscation has been eliminated. There is therefore no reason to assume that any asset is safe from any government that approves theft through bail-ins.
  • Food Shortages. The food industry operates on very small profit margins and survives only as a result of quick payment of invoices. With dramatic inflation, marginal businesses (suppliers, wholesalers, and retailers) will fall by the wayside. The percentage of failing businesses will be dependent upon the duration and severity of the inflationary trend.
  • Squatters Rebellions. A dramatic increase in the number of home and business foreclosures will result in homelessness for anyone whose debt exceeds his ability to pay—even those who presently appear to be well-off. As numbers rise significantly, a new homeless class will be created amongst the former middle class. As they become more numerous, large scale ownership of property may give way to large scale "possession" of property.
  • Riots. These will likely happen spontaneously due to the above conditions, but if not, governments will create them to justify their desire for greater control of the masses.
  • Martial Law. The US has already prepared for this, with the passing of the 2012 National Defense Authorization Act (NDAA), which many interpret as declaring the US to be a "battlefield." The NDAA allows the suspension of habeas corpus, indefinite detention, and the assumption that any resident may be considered an enemy combatant. Similar legislation may be expected in other countries that perceive martial law as a solution to civil unrest.
The above list is purposely brief—a sampling of eventualities that, should they occur, will almost definitely come unannounced. As the decline unfolds, they will surely happen with greater frequency.

But the value in projecting what the collapsing governments may do to their citizens is not merely an exercise in speculation. By anticipating the likelihood of any of the above, the individual may find that it would be prudent to turn off the game on television tonight and spend his time musing on the possibility of what he would do if any of the above events were to take place. (And, again, these projections are not mere fancy; they are actions typically taken by governments as their declines play out.)

Most importantly, if the reader concludes that there is a significant percentage of likelihood that any of the above are coming his way, he would be well-advised to assess whether they are developments that he feels he could live with. If not, he might wish to assess how much time he has before these events become a reality and what he may do to sidestep their impact on him.

Whilst, throughout the First World, the comment, "The whole world is going to Hell," is becoming common, in fact, this is not the case. Although some countries are in decline, others are on the rise. It is left to the reader to decide whether he will fall victim to coming events, or will use them as an opportunity to internationalise himself.

Editor’s Note: You can find Casey Research’s A-Z guide on internationalization here.


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