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Shah Gilani

The Fed

Why Interest Rates Matter… and What Happens When Markets Diverge

In my last column, I explained why you should always keep the bond market in mind, because stocks and bonds are inextricably interconnected.

They're inextricably interconnected because interest rates matter.

When expected relationships between stocks and bonds (interest rates) diverge, it's important to take notice and consider what it could portend for both stocks and bonds.

Here’s why the current market divergence has a lot of analysts worried…

Investing Tips

How Stocks and Bonds Are Related: A Step Toward Market Mastery

Let's look at the connection between stocks and bonds.

Although I tend to write about the stock market as if it were a singular entity, when I'm talking about the stock market or stocks, I am talking about ALL the indexes.

But when I use the word markets, I'm talking about not just the stock market indexes but also the entire bond market.

Here’s how stocks and bonds are related, and how interest rates affect them both…

Wall Street

What High-Frequency Traders Actually Do

High-frequency trading is fundamentally based on how market participants (for this discussion I'm talking about stock markets) place their orders to buy and sell shares and how HFT players act on those orders.

For every stock that's traded there is always (or at least it used to be "always") a "bid" and an "ask" price. Sometimes you'll hear the term "offer" or "offered" price, those terms are interchangeable with the term "ask" or "asking price."

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Banking

Bank Insurers Bet It All at the Deal Table… With Your Money

Here's a story about a bank that failed, got rescued, was resuscitated, and made its private equity investors more than 100% on their money, all the while costing the FDIC around $5.9 billion.

It's not a story about a failed bank… although it is.

It's not a story about how smart the bank's private equity "rescuers" were… although it is.

It's not a story about how the FDIC is such a great savior of banks.

Or that that moral hazard exists manifestly because the FDIC is a tool (not as in a tool used to fix something) that lets banks run hog-wild… although it is.

This is a story about how nothing has changed and why another bank crisis is coming…

Wall Street

The Tragic Truth Behind the $13 Billion JPMorgan "Fine"

Let's address two tragedies today.

The first is how Jamie Dimon & Co. and all the guilty big banks get away with murder.

The second is something I want to share with you because 50 years ago today, President John Fitzgerald Kennedy was assassinated. It isn't a conspiracy theory about who did it, but a likely theory about what happened and the conspiracy to cover that up.

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The Fed

Deflation Is Coming (and It's Not What You Think)

Be careful out there.

The stock market rally that started in March 2009… The one that's taken us out of the Great Recession and to new highs… The rally that's driving sentiment indicators of people who benefit from rising financial assets directly, peripherally, or because they hope all boats rise with the market…

The rally has never been loved.

The thing is, equity markets don't need love to go twice as high from here, or three times as high in the next 20 years. If they get what else they need, they'll keep going higher.

We could be on the verge of a generational bull market. That's if deficit-plagued, interconnected global sovereigns deleverage and, at the same time, re-capitalize middle and rising classes by making "recourse-sound" capital available and simultaneously reconstituting entirely the notion of taxation.

Too bad the likelihood of that happening is somewhere between slim and none.

That's one reason why I'm an increasingly reluctant bull.

But there's another reason too.

And it has to do with deflation...

The Fed

The Real "Pin" That Could Pop the Stock Bubble

Nothing goes up forever. Not the Federal Reserve's balance sheet, not global debt levels, and not stock markets… even when governments don't shut down.

Precisely because the Fed's balance sheet ballooned from $869 billion in August 2007 to over $3.6 trillion (and counting) today, and in spite of ballooning U.S. and global debt levels, U.S. equity benchmarks have been inflated to precarious heights.

"Houston, we have a bubble."

While the sky-high Fed balance sheet and rising global debt levels are their own bubbles, when they diverge – meaning, when the Fed starts to taper as global debt inflates – look out.

If the Fed-induced pump priming of financial assets isn't backstopped by strong and real global GDP growth, the increasing debt burden of the world's citizens will act as the ultimate pinprick that explodes the United States' inflated financial assets bubble… and other global bubbles.

So here's what's really happening, how to prepare for the eventual correction (or possible crash), and - more importantly - how to make money from it...

Washington

The Best Way to Ignite the Economy

The problem with the U.S. government's stimulus efforts to create jobs, and the Federal Reserve's quantitative easing to foster full employment, is that banks are the only direct beneficiaries.

There's just no good pool of jobs being formed from the trickle-down effect that first bathes bankers in bonuses, and then showers shareholders with buybacks and dividends.

There is a better way.

And, in spite of the details which additionally involve two necessary but minor structural changes that can be accomplished with the stroke of a pen, there are only two primary steps we need to take to create good-paying, long-term jobs and crank up economic growth.

Step 1 to Growth and Better Jobs

Hot Stocks

Two Stocks to Buy Now – and One to Ignore

Money Morning Capital Wave Strategist Shah Gilani offered two picks for top stocks to buy now – along with one to avoid – on FOX Business' "Varney & Co." Tuesday.

His pick to avoid: Facebook Inc. (Nasdaq: FB). Recent gains haven't been enough to sway Gilani, who remains bearish on the stock.


Stocks to Buy now, GM and Apple

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Obamacare

Obamacare Facts: This Doctor Tells Why He Might End Up Jobless January 1st

My good friend Mark Kot is the real Hamptons Doctor. He doesn't make house calls because his Southampton Urgent Medical Care facility is where everyone goes for the best medical care in the Hamptons.

I asked him for his take on Obamacare. Yesterday he sent me the little ditty below, and I need to share it with you today.

He got it off the Internet. Which means it's true. No, I'm not kidding. Well, at least this time I'm not kidding. This Internet ditty is true.

Before I share it with you, let me tell you why it is so true and so frightening…

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