Economic News: Economy is Rapidly Slowing

In an economic news report posted on YouTube (link above) by X22 Report, it cites how the average Millennial has less than $1,000 saved to buy a home. Not only do I think that’s true, I would add that the average Millennial has zero money saved for retirement.

Economic News Forecasts Recession

Most younger people have low paying service sector jobs like McDonald’s or Carl’s Junior, and most are dealing with student loan debt.

X22 Report says that the economy has already entered into a recession and is on the verge of a complete collapse.

Please keep in mind that the X22 Report is a perma-bear YouTube channel and they make money off of doomsday preppers and pitching gold and silver. They operate in the alternative news niche and so understand the alternative news industry. Don’t go bipolar and go out and short the market just yet. Nevertheless, it’s good to listen to the bearish perspective to balance against the bull perspective of the mainstream financial media.

Don’t Double Down On Wrong Prediction, Just Move On

Whether we are talking about individual stocks, the stock market, or the economy, when you’re wrong just admit it and then move on. The goal is to make money, not to be right 100% of the time so you can stroke your ego.

AM TV and Peter Schiff predicted that the Federal Reserve could not stop their monthly QE injections into the economy. Even though the Fed kept cutting the monthly injection all the way down to zero, alternative media outlets AM TV and Peter Schiff kept saying the Fed wouldn’t stop the monthly infusions because they couldn’t as the patient (the economy) would die. Peter Schiff then went on to say that the Fed was not going to hike rates in December 2015 but instead actually cut rates. The Fed increased rates a quarter point right on schedule. For all of 2016, Peter Schiff has been saying that the Fed isn’t going to hike rates again but instead reverse course and lower rates. In December of 2016, the Fed will likely increase rates another quarter point.

Most alternative media outfits think they have to be crazed perma-bears to get viewers. Maybe they do. Rather than AM TV and Peter Schiff admitting they were wrong about the Federal Reserve, they double down on their wrong predictions and do another “interview” together, check it out.

There are some really good points in this interview, don’t get me wrong. However, to be a successful traders and investor, you can never be a perma-bear. You can never be a perma-bull. You have to adapt and respond to market conditions. That adaptation means you have to be willing to admit when you’re wrong and then to just move on.

Folks, watch out for fear mongering. Fear drives viewership and video view counts on YouTube but being forever fearful is a great way to lose all your money at trading. Some parts of the economy will no doubt suffer under a Trump Administration and higher interest rates; however, higher rates will be good for other parts of the economy like Banking. A Trump Administration will be bad for multinationals and the Dow and parts of the S&P 500; however, Trump will be great for domestic businesses and the Russell 2000.

Stocks With Bullish Money Flow 11-23-16

Stocks that have a positive divergence between the Twiggs Money Flow and price. Today’s stocks include DAR, GME, MMS, OPHT, PEIX.

Darling Ingredients Stock Chart

Comments: BlackRock, EMINENCE CAPITAL, and SOUTHERNSUN ASSET MANAGEMENT have been accumulators of DAR during 2016. Solid valuation at P/E 16.4, and forward P/E 19.6. Huge buy side volume on 11/23/16, more than 500% higher volume than the average volume.

GameStop Stock Chart

Comments: Awesome valuation P/E 6.8, forward P/E 6.7. Lower taxes and an increase in consumer discretionary income will result in better demand for video games. Still, I like this for a short term swing trade to 200-day MA resistance at $28.44.

MAXIMUS Stock Chart

Comments: Wall Street is expecting 54% YoY EPS growth for Maximus. Maximus has cleared all its moving average resistance levels. My concern with this stock would be its exposure to the Affordable Care Act and how much changes from a Trump Administration would impact earnings and profits.

Ophthotech Corporation Stock Chart

Comments: Rising Twiggs Money Flow but still below 0% line. Somebody is buying this biotech stock.

Pacific Ethanol Stock Chart

Comments: Boom! Beautiful revenue growth over the last four years.

Disclosure: I do not have any positions in any stocks mentioned.

Macroeconomics of Rising Interest Rates

The prospect of a Federal Reserve rate hike is driving up the US dollar. The rising US dollar has a significant impact on the US economy and thus stock market. It’s important that traders understand the implications of a rising US dollar from a macroeconomic perspective.
Continue reading “Macroeconomics of Rising Interest Rates”

Saudi Arabia Bond – Fat Chance You Oil Pumping Sharks

Saudi Arabia is now offering an international bond that yields 4.6%. The WSJ writes

The $6.5 billion 30-year portion of Saudi Arabia’s bond is set to pay 2.1 percentage points more in yield than a comparable U.S. Treasury, or around 4.6%. That is a sizeable pickup in a world where developed-market bond yields are on the floor or in negative territory.

Let me get this straight. Saudi Arabia targeted the US oil industry by flooding our markets with cheap oil. Mainstream media groups like the WSJ and CNBC were complicit in the scheme with only a few alternative bloggers like me critical of what Saudi Arabia was doing. Folks, what Saudi Arabia did was illegal according to international trade laws and it could even be viewed as an act of war.

The US is one of the biggest consumers of Saudi Arabia oil. By increasing supply to force down the price of oil, Saudi Arabia made a lot less money and hurt themselves in an attempt to hold on to market share. Saudi Arabia is going deeper into debt by the week.

Now Saudi Arabia has issued a bond to shovel their debt off onto Americans. Saudi Arabia wants you and me to buy their debt, and they’re willing to pay us a 4.6% yield to do so! The WSJ and other mainstream media groups seldom if ever criticize Saudi Arabia because the Saudis have a lot of influence, power, and money around the world.

Any American that buys this Saudi Arabia bond has lost sight of the forest for the trees. Buying Saudi Arabia debt is un-American in my opinion.

Folks, I hope debt crushes, Saudi Arabia. They deserve it. They put tens-of-thousands of Americans out of work and have forced many American businesses into bankruptcy. Saudi Arabia’s debt problem is of their own making, and as the Bible tells us, you reap what you sow.

I don’t buy China stocks because China is a horrible communist country that runs over its citizens with tanks. I won’t buy Saudi Arabia bonds because Saudi Arabia nationals were responsible for 911 and Saudi Arabia targeted the US shale oil industry to keep market share.

Think about it. It’s evil genius brilliant. Go into debt by oversupplying the US oil market and put US oil drillers out of business. Then get those same Americans to finance the debt that hurt their very own economy!

I’m by no means an “ethical” investor but come on folks, you don’t give your enemy weapons to turn around and shoot you with. It’s just common sense IMO.

We need to get smart, fast folks. We are getting beat at every turn. Everywhere you look the politicians that are running our government and negotiating international trade deals are doing so because of corrupt “pay-to-play” schemes and special-interest groups instead of what is best for America. If we don’t start putting America first, there won’t be an America to call home.

Illegal Immigration and Job Wage Stagnation In the US

Illegal immigration negatively impacts the hourly wage of US citizens. Illegal immigrants are pouring across the Mexico border, and we have no way of counting them but what we can do is track legal immigration from Mexico then double the number for a fuzzy-math estimate.
Continue reading “Illegal Immigration and Job Wage Stagnation In the US”

With So Much Debt In the US Economy, Is It Even Possible To Grow Faster?

The US national debt just broke above $19.5 trillion. Both Democrats and Republicans are to blame, but it is important to note that President Obama and Democrats increased the national debt more than all President’s before combined.
Continue reading “With So Much Debt In the US Economy, Is It Even Possible To Grow Faster?”

Government Spending and the Crowding Out Effect

The velocity of money has hit the lowest level ever recorded as I wrote about here. I believe the crowding out effect is at least partially to blame for the slowdown in the velocity of money.

President Obama has run the national debt up to nearly $20 trillion, more than all President’s before him combined. This expansionary fiscal policy has crowded out private sector investment.
Continue reading “Government Spending and the Crowding Out Effect”

Fed Puts Markets On Notice For Rate Hike

Fed’s Eric Rosengren was clear in his speech early Friday that rates need to be raised. Mr. Rosengren said that if we don’t raise rates soon, we could crash the economy. Mr. Rosengren said, “A failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery.”

Fed’s Kaplan (Dallas Fed) spoke about the need to raise rates very slowly but said that the Fed “has put markets on notice.”

Atlanta Federal Reserve chief Dennis Lockhart said on Monday, September 12, 2016, that a “serious discussion” of a rate increase was needed. Lockhart said, “I believe the economy is sustaining sufficient momentum to substantially achieve monetary policy objectives in an acceptable medium-term time horizon.”

Not only do banks need rates to move up as they have suffered for years under low-interest rates, but inflation is also coming on strong.

Jeffrey Gundlach of DoubleLine said last week, “This is a big, big moment.” The bond investor warned his peers that interest rates are ready to rise from their historically low levels and asset managers need to be “defensive.” Quartz writes

Gundlach said investors should reduce duration in their portfolios, move money into cash and buy protection against volatility before rates rise and inflation picks up.

Gundlach uses the recent jump in the ECRI (index of leading indicators) to suggest that we are about to see more inflation in the US.

The ECRI US leading index continues to rise so the market should be pricing in higher inflation and therefore higher interest rates.

Consumer credit confirms an overheating market and the likelihood that inflation will explode higher. Consumer credit as a percentage of GDP is exploding higher to levels never seen before.

Countries Dump U.S. Debt At Record Pace

In 2016, foreign countries have dumped a shocking $192 billion worth of U.S. Treasury bonds. This dumping of bonds is the biggest selloff of U.S. debt since 1978.

China, Japan, France, Brazil and Colombia are the leading countries that are dumping U.S. debt.

U.S. Treasury bonds are the safest investments in the world. Countries often hold large portions of their cash reserves in U.S. Treasury bonds. Countries are dumping U.S. debt because they need the money.

Most countries are selling everything including the kitchen sink to come with the money required to pay the bills and to try and stimulate their economies.

Foreign sales of U.S. debt appear to be primarily driven by economic necessity.

Debt Sales Also Driven By Record National Debt

The U.S. debt held by China is $1.243 trillion, as of April 2016. That’s 30% of the $4.046 trillion in Treasury bills, notes, and bonds held by foreign countries. The rest of the $19 trillion debt is owned by either the American people or by the U.S. government itself.

Between 1789 and 1992, the entire national debt was about $4 trillion. Today, $4 trillion is just what we owe other countries. The total $19.3 trillion national debt could be spooking U.S. debt buyers. At what point do debt buyers begin to question the ability of the U.S. government to service the $19.3 trillion national debt? The U.S. government can’t even hike rates more than a quarter-point some seven years after the last recession because the economy is so weak. If the U.S. economy goes into another downturn, that will mean more stimulus and spending that will drive the national debt beyond $23 trillion in the blink of an eye.

U.S. government debt as a percent of GDP has recently broken above 100%.

[graphiq id=”4iWDyD7B3YF” title=”Gross Government Debt of United States in Percent of GDP” width=”440″ height=”582″ url=”https://w.graphiq.com/w/4iWDyD7B3YF” link=”http://country-facts.findthedata.com/l/1/United-States” link_text=”Gross Government Debt of United States in Percent of GDP | FindTheData” ]

With the U.S. consumer’s buying power destroyed by years of offshoring at the hands of corrupt political parties taking money from foreigners, what value does the U.S. have beyond its natural resources? At some point holding U.S. debt becomes too risky and not worth the low yields paid as shown in the chart below.