from CrushTheStreet
Austria’s Presidential Elections – Europe’s Social Mood Keeps Worsening
by Pater Tenebrarum
Acting Man
Trapped in the EU
Austria is a small European nation that has made the grievous mistake of needlessly joining the EU in 1995, together with Finland and Sweden. Austria’s neighbor Switzerland, which is of roughly similar size and likewise militarily neutral, proved to have far better instincts. The Swedes subsequently at least had the good sense to stay out of the euro zone. It seems if there is a mistake to be made, Austrian governments will eagerly make it.
[…] To be fair, back in 1995 it actually didn’t look like a mistake, at least superficially. The EU accession promised to hasten the privatization of the country’s many at the time still state-owned industries, as well as the dissolution of numerous government monopolies (such as on tobacco and gaming). Moreover, numerous restrictions on trade and capital movements which had been in place for a long time stood to be repealed as well. In other words, it seemed as though government would actually shrink.
Market Bubbles
by Jeffrey D. Saut
Financial Sense
“Market bubbles occur when the price of an asset significantly deviates from its intrinsic value. There have been numerous bubbles predicted in my 20 years as a professional investor. Fortunately, only two, from the perspective of US investors, came to pass. The technology bubble in 2000 and the financial crisis in 2008.” — Scott Kubie, Chief Strategist at CLS Investments
As many of you know, last week I traveled throughout Mississippi and Alabama presenting to our financial advisors and their clients. My message was upbeat, yet many of those investors think the equity markets are in a “bubble.” Why this “bubbleicious” sentiment is so pervasive is a mystery to me, because using S&P’s earnings estimates for this year and next (~$114 and ~$134) leaves the S&P 500 (SPX/2052.32) trading at 18x this year’s estimate and 15.3x next year’s.
First Soros… Now Jim Rogers Predicts Trillion-Dollar ‘Biblical’ Crash
by Jeff Berwick
Dollar Vigilante
Last year, we were the first financial site to explain how the Shemitah seven-year cycle would have an important and disastrous effect on the markets. The Shemitah ended in the third quarter of last year and just as we predicted, it was the worst quarter in worldwide stock markets since the last Shemitah in 2008.
Since then we have been the leader in explaining further Shemitah trends embedded in the once-every-49-year, Jubilee Year. The Jubilee Year ends on October 2nd of this year, and we expect even worse events to occur as October approaches.
Now, famous investor, Jim Rogers, has just released a new warning saying the same. He is even using biblical references to warn of a financial tsunami that could take place either this year or next. He has just said, “A $68 trillion ‘Biblical’ collapse is poised to wipe out millions of Americans.”
World’s Largest Asset Manager Blackrock: “Perfect Time and Place” For Gold
by Mark O’Byrne
GoldCore
The world’s largest asset manager, Blackrock Inc., has written a note about gold in which it suggests that this is the “perfect time and place” for gold due to “low and even negative yields, slow growth and potential signs of rising inflation.”
[…] BlackRock has over $4.6 trillion in assets under management and provides guidance to individuals, financial professionals and institutions and the note was written by Russ Koesterich, the Head of Asset Allocation for a leading Blackrock fund.
The blog, ‘Are these the golden days for gold?’ published by Blackrock last week, points out that “gold may continue to shine”:
Public Worried: A Staggering $100 Billion Has Flowed Out of Stocks So Far This Year
from King World News
With continued uncertainty in global markets, two of the greats weighed in with their thoughts on what to expect next as nearly $100 billion has flowed out of the U.S. stock market so far this year.
From Art Cashin: On The Mortality Of Bull Markets – One of the key commentaries going around Wall Street these days begins with “Bulls markets don’t die of old age….” That is then followed by the speaker’s choice of bull market mortality, e.g. euphoria, etc.
I wonder if bull markets might die of some other cause, like perhaps starvation.
How The U.S. Dollar Influences Oil Prices
by Rakesh Upadhyay
Oil Price
Crude oil has reached a critical technical level, which is likely to test the resolve of the bulls to push prices higher. The bulls have a favorable tailwind with production outages reducing the supply glut. Till about two weeks ago, the drop in the U.S. dollar was also supportive of the crude oil prices, but since then, the dollar has recovered, putting pressure on the crude oil prices.
The U.S. dollar and the various commodities have an inverse correlation. The chart below shows the correlation between crude and the U.S. dollar index for the past 12 years.
Gold in Longest Slump Since November as Fed Signals Higher Rates
Assets in gold ETFs extend gain to highest since November 2013.
by Ranjeetha Pakiam (Bloomberg)
Mine Web
Gold fell for a fifth day, heading for the longest slump in six months, as more Federal Reserve officials weighed in with comments that supported the case for higher borrowing costs, strengthening the outlook for the dollar and denting the metal’s allure.
Bullion for immediate delivery declined as much as 0.5% to $1 242.95 an ounce and was at $1 243.83 at 3:05pm in Singapore, according to Bloomberg generic pricing. Five days of losses would be the longest stretch since November 17.
Gold has dropped over the past three weeks as the dollar has advanced, eroding 2016’s gains as traders price in higher chances of a US rate increase sooner rather than later, supported by comments from a slew of policymakers and the minutes of the Fed’s April meeting.
What’s Next for the Longest Stock Market Correction in History?
The bull market, which reached a record high a year ago, seems to have petered out
by Mark Hulbert
Market Watch
CHAPEL HILL, N.C. (MarketWatch) — Some investors and pundits are commemorating the one-year anniversary of the May 2015 record high in U.S. stocks by noting that the market is only a couple percent below it.
Their implication is that the bull market is still alive, if not exactly well. But they are finding it increasingly difficult to adhere to this belief. Within one week, they will find it nearly impossible to do so.
That’s because there’s been only one bull market since 1900 that experienced a correction that lasted longer than a year. And, within one week, the length of even that bull market’s correction will be exceeded by the time elapsed since the May 2015 high.
Tesla Compared To Enron, Ponzi Scheme In Scathing New Research Report
from Zero Hedge
While Tesla’s cars may or may not be the greatest thing since sliced bread, regular readers are well aware that our recurring complaint about the company is not about the quality of its product or its growth prospects as much as its incredulous, ostensibly ridiculous, non-GAAP accounting practices…
[…] … as well as its relentless cash burn, which just last week forced the company to sell even more stock.
Manufacturing Recession Goes Global as Demand Withers
by Wolf Richter
Wolf Street
The “strong dollar” has been blamed for the manufacturing doldrums in the US that started over a year ago. But then manufacturing in other countries should boom, or at least not decline, but that’s not the case. Manufacturing is sick and weakening in just about every major economy!
References to 2009 and the Global Financial Crisis keep popping up in the latest spate of reports because that’s how bad it has gotten.
Interest Rates Could Go up or Down After Brexit Vote, Says Mark Carney
by Peter Spence, Economics Correspondent
Telegraph.co.uk
Interest rates could rise or fall if the UK votes to leave the European Union, Mark Carney, the Bank of England Governor has admitted, as he told MPs that uncertainty surrounding a Brexit result would make it difficult to determine how best to respond.
In response to questions from MPs on the Treasury Select Committee, Mr Carney said that ?City traders had developed almost a “Pavlovian” response to bad news. They assumed that “any time something bad happens, central banks ease policy”, choosing to unleash quantitative easing or slash interest rates.
In the event of a vote to leave the EU, the decision for the Bank of England would not be so clear cut, the Governor stressed.
Fear the U.S. Dollar Kill Switch
by Ted Bauman
The Sovereign Investor
Picture the scene: A man is blackmailed as revenge for cuckolding. He brings $75,000 in $500 bills — cash that he’s acquired from a home equity line of credit — to a meeting on a bridge, as the other man has demanded.
The blackmailer looks at the cash pensively for a moment. Then he takes it out of the bag and throws it over the side.
I saw this scene in a movie recently. I’ll not soon forget the image of $75,000 in borrowed money fluttering away into the Skokomish River. My poor wife was distraught. I imagine this image gives you a jolt, too. We’re hardwired to understand that purchasing power in physical form — i.e., cash — is highly ephemeral. It can disappear in a flash.
These Investing Legends Have Never Been More Bearish on U.S. Stocks
by Justin Spittler
Casey Research
George Soros is investing like a crisis is around the corner.
You’ve probably heard of Soros. Thanks to his legendary track record, he’s one of the world’s most well-known investors.
From 1969 to 2001, he generated average annual returns of 20%…nearly beating the S&P 500 2-to-1. Soros also famously “broke the Bank of England” in 1992.
These days, he runs Soros Fund Management, which manages about $10 billion.
Clinton Adviser, Nobel Prize Winning Economist Endorsed Venezuelan Socialism
by Tho Bishop
Mises.org
Venezuela is in a state of complete crisis. The country has been forced to face the horrors of hyperinflation, food shortages, and devastating depression. In spite of having the world’s largest oil reserves, the country has had to resort to rationing electricity. A horrifying article by the New York Times depicts the state of Venezuelan hospitals, with children dying by the day due to a lack of medicine and basic supplies.
This is the terrifying reality of socialism, the inevitable consequence of the economic policies of the late Hugo Chavez and his successor, Nicolás Maduro. Since 1999, the two socialist administrations championed price controls, nationalization of industries, and wealth redistribution.
Nobody Knows What This Secret Spacecraft Is Doing: “A Source of Anxiety For Weaponization of Space”
by Mac Slavo
SHTF Plan
One fourth the size of the space shuttle, this secretive unmanned vehicle is capable of launching into space, and returning into orbit for a landing.
Created by Boeing, it is one of the U.S. military’s most talked about secret vehicles and has been orbiting the planet for a full year now.
But no one officially knows just what the X-37B is being used for… it’s mission is classified.
As the Daily Mirror writes:
LLPOH: Update on the Homestead
from The Burning Platform
We have now just about completed building our “homestead” in Australia. It has been a long process, some of it done from far away, and a lot of it undertaken on site. We are transitioning from the building stage to the improvement and development of the property stage.
Our property is about a half hour outside a regional country town. We are not isolated, but we are around a half mile from our nearest neighbors. We feel we are generally accepted by the locals, who are very welcoming, if somewhat perplexed by us. The folks around here are conservative and independent by nature. A number of them are retired, and a number had small businesses, so we have common ground. We gather regularly for drinks, meals, and dinner out.
Critical Hit to Clinton Campaign as Media Dives Into Corporate Ties
by Daily Bell Staff
The Daily Bell
How corporate America bought Hillary Clinton for $21M … Hillary Clinton has amassed a huge fortune through shady speaking engagements given to some of the most powerful corporations in the world. – NY Post
As we’ve followed the coverage of Hillary Clinton, we’ve pointed out the negatives continue to mount for her in the mainstream media.
Over the weekend and late last week that trend hasn’t changed. If anything, it’s gotten worse.
We’re beginning to believe that the damage being done to Hillary is already too severe for her to become president- whether or not she is able to continue from a legal standpoint.
Nothing Like A Two-Handed Economist!
by Chuck Butler
Daily Pfennig
Good Day… And a Tom Terrific Tuesday to you! I almost bagged the office again today this morning, but then I felt better, and it was time to go in… Late, but time! Poco greets me this morning with their song: Good Feeling To Know… And they are right! IT IS A GOOD FEELING TO KNOW SOMEBODY LOVES YOU! Our Blues are in a hole, and they had better start climbing out of it, or it will be a case of “What time is my tee time?”… It was a lost day to me yesterday. I really don’t care for those, because, well, that’s the only day promised to us, and I wasted it, sleeping… UGH!
Well, the BS (Big Shift) that I talked about yesterday, has really taken ahold of the markets… Bond yields are rising, stocks are getting sold, the commodities, minus Oil, are seeing their recent gains slip away, and the currencies are folding like a lawn chair VS the dollar…
The One World Religion Cometh: Pope Francis Warmly Welcomes Top Islamic Cleric to the Vatican
by Michael Snyder
End of the American Dream
When Pope Francis met with Sheikh Ahmed al-Tayeb on Monday, he told him that “our meeting is the message“. So precisely what kind of “message” was Pope Francis attempting to convey? Sheikh Ahmed al-Tayeb is the Grand Imam of Cairo’s Al-Azhar Mosque, and some have described him as “the highest figure in Sunni Islam“. The Daily Mail said that the meeting between these two men was a “historic bid to reopen dialogue between the two churches”, and as you will see below this is yet another in a long series of attempts by Pope Francis to build bridges between Catholicism and various other faiths. In the end, what are we to make of all of this? Could it be possible that Pope Francis is laying the groundwork for the “super world church” and the coming one world religion that David Wilkerson and so many others have warned about?
Global Equities Hanging By a Thread
by BCA Research
Financial Sense
The unintended consequences from the continued altering of the capital structure of firms, by issuing debt and retiring equity at a time when operating cash flow growth is showing signs of fatigue is disconcerting. This artificial massaging of EPS is not sustainable and if non-financial corporate credit quality has peaked for the cycle as seems likely, the equity risk/reward tradeoff remains skewed to the downside.
Bottom Line: A capital preservation mindset is still warranted. Continue to prefer global defensive over cyclical sectors.
‘Massive Bailout’ Needed in China, Banking Analyst Chu Says
by Paul Panckhurst
Bloomberg.com
Charlene Chu, a banking analyst who made her name warning of the risks from China’s credit binge, said a bailout in the trillions of dollars is needed to tackle the bad-debt burden dragging down the nation’s economy.
Speaking eight days after a Communist Party newspaper highlighted dangers from the build-up of debt, Chu, a partner at Autonomous Research, said she was yet to be convinced the government is serious about deleveraging and eliminating industry overcapacity.
She also argued that lenders’ off-balance-sheet portfolios of wealth-management products are the biggest immediate threat to the nation’s financial system, with similarities to Western bank exposures in 2008 that helped to trigger a global meltdown.
The Beginning of a US Dollar Crash?
by Greg Guenthner
Daily Reckoning
Editor’s note: Guest editor Michael Covel is back today with a must-read breakdown of where the U.S. dollar is headed next. Read on for the details…
I live in Asia and travel the continent quite a bit.
So I’ve been a big fan of the strong dollar in recent years.
The greenback has gone a long way in this part of the world.
Flights… hotels… restaurants…
It seems like everything’s been on sale.
More PMI Suspicion
by Jeffrey P. Snider
Alhambra Partners
It is easy to make jokes about the BEA’s newfound respect for “residual seasonality” that in the words of CNBC’s chief economist makes each Q1 appear to be a “different economy altogether”, but that doesn’t mean there isn’t something to it if in a far different manner than the mainstream would ever contemplate. There clearly is and has been for at least the past two or even three years a confusing set of circumstances that have repeated. Each year starts out very slowly only to seemingly rebound, but with each rebound being far more “transitory” than the actual weakness that preceded it. The result is almost a ratchet effect, where the media and economists over-emphasize each bounce that “somehow” leads only to the next bout of weakness at an even lower condition.