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Take Profits – Then Take Cover

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

2017 market crash

Investors should not be fooled by the strong performance of stocks last week. Fundamentals have not changed and still present major headwinds to a market recovery.

Oil ended the week at $29.64 per barrel (BTI crude), which is still too low to save struggling fracking companies from the junk heap. The junk bond market backed away from 10% yields but is still a disaster zone. And major hedge funds are still nursing double digit losses.

What we saw was a classic short-covering rally inside a bear market that has further to run. Readers should not let their guards down and let themselves get fooled into diving back into dangerous waters.

If they do, they will drown.

What Credit Markets Are Telling Us About Stocks Now

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

Rather than trust markets to heal themselves, the world's central banks have polluted markets with flawed economic theories and trillions of dollars of debt. Rather than ignite economic growth as they had hoped, however, they have suffocated the global economy.

It began with the U.S. Federal Reserve's move to lower interest rates to zero seven years ago, followed by several bouts of quantitative easing...

The "Unnatural Disaster" Ravaging Global Markets

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

The tide is turning for crude oil prices. Following some nice recent gains and despite a dip on Tuesday, the market currently remains at just below $60 a barrel for West Texas Intermediate (WTI) crude oil futures in New York. The recent rise in prices would seem to be just what the smaller operators in the U.S. need to avoid a sector meltdown. A few months back, when prices were pushing lows of $40 a barrel, there was widespread talk of a wave of bankruptcies coming in the oil patch. The picture is now better, given a recovery in crude prices.
The tide is turning for crude oil prices.

Following some nice recent gains and despite a dip on Tuesday, the market currently remains at just below $60 a barrel for West Texas Intermediate (WTI) crude oil futures in New York.

The recent rise in prices would seem to be just what the smaller operators in the U.S. need to avoid a sector meltdown.

A few months back, when prices were pushing lows of $40 a barrel, there was widespread talk of a wave of bankruptcies coming in the oil patch. The picture is now better, given a recovery in crude prices.

But there is another shoe about to fall in the ongoing fight by smaller companies to survive. Here's my take on the disaster that's brewing - and the opportunities it may bring...

The Truth Behind Central Banks' Machinations

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

central bank

Central bankers disguise themselves as friendly shepherds. But really it's more of a "wolf guarding the henhouse" situation...

You see, we've been experiencing deflation, not inflation...on a global scale. Why aren't prices rising? Why aren't wages rising? Why is global demand so lackluster?

Well, the answer has to do with central bankers' and how they treat your money...

Why the Federal Reserve Will Move Rates

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

dow jones industrial average

To say that markets are confused about when the Federal Reserve is going to raise interest rates is the understatement of the year.

The confusion is understandable. While the U.S. economy no longer needs crisis-era policies like zero interest rates and quantitative easing, the rest of the world is still struggling.

While some would argue that such policies are not the answer, central banks in Europe, Japan and China are doubling down on huge bond buying programs.

The question is whether the Federal Reserve will go its own way or allow weakness abroad to govern its next move...

Why the European Central Bank's Massive Economic Experiment Will Fail

By , Resource Specialist, Money Morning -

Eurozone conflict

Last week, the European Central Bank's turn finally came to announce large scale quantitative easing.

As the continent witnesses a battle between deflation and attempts at inflation, will it finally be enough?

Europe is following in the footsteps of the United States, hoping for similar "successful" results.

Instead, it's likely to fall somewhere between the U.S. and Japan.

From the Land of the Rising Sun there is precedent, but it's a forewarning.

Here's the story...

FOMC Meeting Today: A Tale of Two QEs

By , Associate Editor, Money Morning • @JimBach22 -

FOMC Meeting Today

The Federal Open Market Committee (FOMC) Meeting today marks 2015's inaugural meeting of the U.S. Federal Reserve's monetary policy makers.

It's only been a month since the last meeting convened. But a lot has changed. It's following big stories in the way of global central, particularly from the European Central Bank.

Here's how this QE story will play out, and why today's FOMC meeting will just be noise in a much more troubling outlook for central banking...

Big Central Bank Meetings Present an Opportunity to Profit

By , Associate Editor, Money Morning • @JimBach22 -

central bank meetings

Amidst a wave of central bank meetings this week, the European Central bank and the Bank of Japan matter the most.

The BOJ strategy will change little save for the possible extension of a mostly ineffective lending program. The ECB will probably announce a bond-buying program to hasten depreciation of the euro.

Savvy investors can profit from both moves.

Here's what investors need to know about - and how to profit from - this week's central bank meetings...

The Brave New World of Central Bank Tyranny

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

central bank

Thanks to U.S. Federal Reserve policies that are holding market rates down near zero, you're barely getting one one-hundredth of a percentage point on your cash deposits.

It's bad enough that you're getting practically no yield on your savings. But now the big banks - those greedy fellows that we taxpayers bailed out from a crisis they actually caused - are about to start charging you to deposit money with them. All thanks to policies enforced by the central bankers.

Welcome to the brave new world of central bank tyranny...

Central Banks are the Problem

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

The Libor scandal is about to get a whole lot worse.

And that's the good news...

Not only are at least 20 more big banks under investigation as part of a massive fraud to manipulate interbank lending rates that affect some $800 trillion in loans and derivatives, but the Bank of England is about to take center stage in the scandal.

And that's bad news for central banks around the world.

Well, actually, it could be good news, as in really good news, if it's the beginning of the end of what central banks do to manipulate free markets to the benefit of their only real constituents, the world's big banks.

First the good news.

It's already come out that traders at Barclays with huge derivatives positions leaned on co-workers who sit on "panels" that submit internal bank borrowing cost data to Thompson Reuters. And Reuters averages the middle lot of submissions to determine Libor (London Interbank Offered Rate) "fixings" (not my word, but actually the established nomenclature for what it apparently is that they do... as in "fix" rates). And it's all under the auspices of the British Banking Association.

What's good is that we now know for a fact that the traders (crooks?) were aided and abetted by their co-workers, the submitters (crooks?), who were overseen by managers and top executives who design most of these schemes (crooks?), and were all blessed by the British Banking Association, an illustrious association of 200 some-odd banks, whose many members (crooks?) are panel members submitting crooked (no question mark necessary) data.

Still don't get why that's good news?

Because it's proof there are crooks out there.

To continue reading, please click here...

Gold Prices: Central Banks See Shine in Yellow Metal

By , Contributing Writer, Money Morning -

When Federal Reserve Chairman Ben Bernanke failed to hint at more monetary stimulus last week, gold prices took a small hit.

But the picture for gold investors just brightened again thanks to increased activity from central banks.

Central banks are buying the yellow metal in copious amounts, marking the first time since 1965 that bankers have been such steady buyers.

Central banks amplified their gold stores by 400 metric tons, the equivalent of almost 2,205 pounds, in the 12 months through March 31. That was an increase from 156 tons in the same period a year ago, according to data from the World Gold Council.

Barron's reported Saturday that the World Gold Council "is now confident that central banks will continue to buy gold and has added official sector purchases as a new element of gold demand," according to a report from London-based bullion dealer Sharps Pixley.

The fresh facts indicate that central bank purchasing will continue for the foreseeable future.

That is quite a turnaround from the heavy selling the banks made from 1966 through 2007. During that time central bankers engaged in substantial selling, with only short periods of meager buying.

To continue reading, please click here...

Why I’m Taking Gold Double-Eagles on My Next Trip to Utah

By , Global Investing Specialist, Money Morning -

Federal Reserve Chairman Ben Bernanke may think he has everything under control, but the truth is the monetary ground is literally shifting beneath our feet.

That's why his loose monetary policy has some U.S. states looking to get into the gold coin business.

As I'll explain later, it's why my Gold Double-Eagles are becoming even more valuable.

Because while the U.S. Constitution bans states from printing their own paper money, it does allow states to make "gold and silver Coin a Tender in Payment of Debts."

Now no fewer than 13 states are seeking approval from their state legislatures, either to issue their own currency or to explore it as an option as the Fed's printing presses spin out of control.

So why is there this big rush by states to move into gold as an alternative currency?

It's simple really.

The Trouble with Fiat Money

Fiat money, created by central banks, possesses no intrinsic value. Paper money only works as long as governments don't create too much of it.

For pieces of paper to have value, we all have to believe there won't be too many of them and that the authority creating them has the preservation of their value as its top priority.

When that confidence vanishes, the fiat currency returns to being just paper - as it did famously in Weimar Germany in 1923. Or even more catastrophically in post-war Hungary, where the last stable symbol of value, the 1931 gold pengo, became worth 1.5 octillion 1946 paper pengos.

Of course, central banks do occasionally compete for foreign depositors by offering paper currencies with more stability.

In fact, before 2000, the U.S. dollar benefited from these flows that came from all over the world, including Europe.

Now, apart from the eccentrics who swear by the Japanese yen or the Chinese yuan, flight capital is largely confined to the Swiss Franc.

Since Switzerland is a small economy, the Swiss National Bank has drawn a hard line. It refuses to allow the franc to rise above 1.20 against the euro, so even that refuge has been made less attractive.

The Attractiveness of Gold

As you would expect, the private sector and some governments have begun to look further afield, and are beginning to focus on gold in particular.

To continue reading, please click here...

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