Vaccinate Against This Fiscal Contagion
Editor's Note: Special Contributor Michael Lewitt publishes the highly regarded The Credit Strategist and was recognized by the Financial Times for forecasting both the financial crisis of 2008, and also the credit crisis of 2001-2002. His 2010 book, The Death of Capital: How Creative Policy Can Restore Stability (John Wiley & Sons) was included in the curriculum at the University of Michigan and Brandeis University.
The European financial crisis is often pushed out of the headlines by crises of a more incendiary variety. That might suggest the problem has diminished. It hasn't.
The saga of Portugal's Banco Espirito Santo is a sure sign to investors that the European financial crisis is anything but over.
Mario Draghi and the European Central Bank (ECB) may keep its finger in the dike, but the dike is only going to spring more holes.
European banks are still highly leveraged. Their investors are likely to run for the hills at the first sign of trouble, and governments are going to be reluctant to bail them out unless they feel that their collapse poses a systemic risk.
Global investors are, for the most part, shrugging off the problems at Banco Espirito Santo, but European investors are not taking things so lightly. Here's why you shouldn't, either... Full StoryRead More...
What Thomas Piketty's Best Seller Has to Do with Investing in Energy
No one would have ever thought that a 700-page book on economics like Thomas Piketty's Capital in the Twenty-First Century would hit the best-seller lists and become a lightning rod for political controversy.
What does Piketty's Capital in the Twenty-First Century have to do with making money in energy? A lot more than you might think.You can't make big money investing in energy without understanding how it works...
These Signs of Market Trouble Are Looming
Editor's Note: By now you're familiar with Michael E. Lewitt of The Credit Strategist. We love his work. Today, he has a special report on current, troubling conditions at this late stage - and a dire warning for investors who may be unprepared. Here's Michael...
"Markets are priced to perfection...
Signs of late cycle behavior and thinking are abundant...
The latest example came from BMO's strategist Brian Belski, who published a report arguing that the bull market in stocks will continue for another ten years with annual gains of 10.5%.
This is the type of report that appears at market peaks. Despite the fact that it was dressed up in statistics and produced by a respectable brokerage house, this isn't a serious piece of research; it is nonsense and anyone who takes it seriously and invests based on its conclusions deserves the losses that will follow."
The above is excerpted from a recent report I produced for my Credit Strategist readers. I wanted to share with you some of my thinking on rapidly coalescing signs that point to growing cracks in the façade of a healthy market... Full StoryRead More...
Three Small-Cap Funds to Watch as Sector Stages a Comeback
As the U.S. economy becomes stronger and interest rates start to rise, smaller companies benefit the most from this type of environment.
With modest risk and high potential for growth, small-cap funds - which consist of stocks of companies that maintain a market capitalization between $500 million and $2 billion - are possibly one of the best investment hubs available today.Here are the benefits – and risks – of small-cap funds, plus three to watch…
U.S. Labor Department Jobs Report: Big Gains in June, but Still Lagging Behind
Optimism surrounded Thursday's release of the June U.S. Labor Department Jobs Report, but although the numbers were better than expected, we still have plenty to worry about, and the economy is still in trouble.
Employers added 288,000 jobs in June. The unemployment rate dipped to 6.1% from 6.3%, the lowest level since September 2008.Despite some encouraging figures in the jobs report, it is still peppered with troubling data - like these dismal numbers...
Dow Jones Futures Up After Record Finish; Plus FB, AMZN, GM and These Top Stories
Stock market today, July 3, 2014: Dow Jones futures edged higher this morning (Thursday) by 0.1%, following a DJI record finish on Wednesday. S&P 500 futures and Nasdaq futures also signaled gains, up 0.12% and 0.24% respectively.
This morning, the Labor Department announced that the U.S. unemployment rate fell to 6.1%, as the economy added another 288,000 jobs, crushing street estimates of 215,000.
Here's what you should know is going on in the stock market today to make your Thursday profitable:
Stock Market Close: GPRO Soars Again, While GM, DG, and CZR Run into Trouble
Stock market close, June 27, 2014: The Dow Jones Industrial Average today (Friday) was flat despite a rise in consumer sentiment. Next week, look for a heavy slate of economic reports, including the June unemployment report, factory orders, and the ISM manufacturing composite index.Here’s the scorecard from Friday’s trading session, plus top news on GPRO, DG, GM, CZR, and more...
Race to Be First "Official" Bitcoin Exchange in United States Heats Up
Within the next few months, we should see the first U.S. Bitcoin exchange. Some half dozen companies have just been waiting for a final set of rules from New York regulators - and those rules are due next week.
While it's not that hard to buy Bitcoin in the United States, the digital currency has lacked the polish of legitimacy that a U.S-based exchange would give it.Here are the top contenders - and a look at the huge impact the first U.S. Bitcoin exchange will have…
Fight Club: Shah battles "Dark Pools" apologist on NPR today
Today, Shah Gilani let some wicked punches fly, debunking the legitimacy of Wall Street's "Dark Pools" on NPR's popular talk show On Point.
As Shah himself said: "This is about how the market has been undermined and how it could collapse one day, literally, and trillions of dollars could be lost in a matter of days."Listen in and tell us what you think.
GPRO, AA, and GM Headline Today's Stock Market News
Stock market news today, June 26, 2014: U.S. markets today (Thursday) opened after finishing in the green across the board in the last trading session - despite GDP figures that revealed the worst non-recession performance in four decades.Here are the top stock market news stories today:
Stock Market Today Rises – Despite 2.9% GDP Slip – on These Top Stories
The stock market today (Wednesday) rose despite news that the U.S. economy slumped more than expected in the first quarter. Revised GDP figures for Q1 revealed the worst non-recession performance in four decades, with a 2.9% slip. The decline is also the sharpest downturn in five years, and is a significant revision from the 1% decline tallied in April.And here are the top stories that affected the stock market today:
This "Hidden" Inflation Could Wipe Out Small Returns
Official measures of inflation tell a very different story from the reality facing consumers as they shop for groceries, gasoline, insurance, healthcare, and other everyday goods.
In the real world away from government statistics, product prices continue to rise at an inexorable rate.
Asset prices also continue to rise, particularly the prices of financial assets such as stocks and bonds as well as high-end real estate and art.
While there remain pockets of weakness in the housing markets, the prices of homes have also resumed their upward trajectory after crashing during the financial crisis.
So the question remains: If the prices of just about everything are rising, why is the government telling us that inflation is so low? Full StoryRead More...
Profit Massively from This "Margin Call" on American Homeowners
Get ready. There's more trouble ahead for home buyers, home builders, and especially homeowners who took out home-equity lines of credit before the housing crisis. Those heydays have turned into haymakers.What's already started to happen might not only knock out the formerly aspiring but now petering-out housing recovery, but also might knock the already weak economy to the ground.
Back in the good old days, when banks and mortgage shops were selling mortgage money and home-equity credit lines like carnival barkers wowing crowds into the big top, millions of homeowners stepped right in.
That circus tent was nothing but a trap, however. And now I'm going to tell you what that trap means for those borrowers - and the rest of the economy... Full StoryRead More...
Low Rates Won't Hide This Looming Threat Forever
Financial markets are experiencing a significant divergence in 2014 between the direction of stocks and bonds.
While the S&P 500 and Dow Jones Industrial Average have traded to new record highs, the yields on benchmark Treasury bonds have dropped sharply.
Normally, one would not expect stock prices to rise and bond yields to drop simultaneously because these movements suggest contradictory readings of the economy.
Higher stock prices indicate bullishness about economic growth, while lower bond yields suggest just the opposite.
However, the inconsistent signals being sent by markets are not as surprising as they seem, given the context of the post-crisis environment in which Federal Reserve policies have distorted normal market pricing mechanisms.
This situation could blindside investors who don't see it coming... Full Story Read More...