Jason Burack of Wall St for Main St had on returning guest, former portfolio manager and founder of 720 Global http://www.720global.com/, Michael Lebowitz. Michael’s articles frequently appear on Zero Hedge. His firm 720 Global writes institutional research.
During this 30+ minute interview, Jason asks Michael about the Federal Reserve and Janet Yellen announcing this week that they will not try to aggressively raise interest rates and if they are trapped and have to go to negative interest rate policy (NIRP) asap?
Michael says the Fed probably won’t increase interest more than at most once more in 2016 before they start reversing their interest rate hikes into rate cuts back towards zero and NIRP.
Michael says central bank policies from the US, Japan, China and the ECB are driving people into gold along with the threat of NIRP.
Michael thinks gold has probably bottomed and will continue to go higher long term as long as central banks keep making desperate policy decisions.
Next, Jason asks Michael if he is surprised the stock market hasn’t crashed yet?
Michael says he has written 4 articles in the last year or so about share buybacks driving the US stock market higher.
He thinks as the amount of share buybacks decreases soon the likelihood of a stock market crash and bad balance sheets of corporations doing buybacks with too much debt could increase the odds of a stock market crash.
Michael cites Conoco Phillips as an example of a large corporation that did too many share buybacks in 2012 and 2013.
Jason asks Michael if he thinks the recent rallies in oil and base metals prices are based on fundamentals or short covering? Michael thinks very little of those rallies have to do with fundamentals and he thinks oil goes much lower back to $20-30/barrel in the near future.
To wrap up the interview, Jason asks Michael which industries he sees value for in stocks?
Michael says people can start positions in larger oil companies with good balance sheets who don’t have a lot of debt and that more sophisticated investors who can read financial statements well can look at oil bonds.
He doesn’t like the value in almost any sector but thinks select gold stocks are still very good buys. Michael says people with smaller amounts of capital should buy a gold mining ETF or gold stock mutual fund or royalty and streaming companies like Franco Nevada.
Jason and Michael briefly discuss the silliness of election season now upon the US until November presidential elections are over.
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