URGENT🔴 JAILED: Federal Reserve At Market's MERCY!

JAILED: Federal Reserve At Market's MERCY!

Confusion Has Never Been Greater

The FED is utterly confused right now. Less than 4 months ago, Chairman Powell told the world that America's economy could withstand much higher interest rates, but the markets had other ideas. December's massacre was such a unique month, considering that it is, historically, one of the best performing periods. The FED learned how important every word they broadcast to investors really is. In January, it changed its tune entirely with the stock market enjoying a wildly profitable start to 2019. Hedge funds experienced their best month since the 2009 crash. The FED is perplexed regarding two matters; consequently, they're jumping all over the place concerning their policies. No sane investor would trust the FED any longer, after they had claimed in October that "interest rates are a long way from neutral," only to erase and replace their entire economic policy as a result of investors selling off everything in December. In other words, the central bank is delirious and losing credibility.

Nevertheless, as I see it, the FED still exerts incredible influence on stock prices. Large money flows at the level of institutions and sovereign wealth is rattled by the FED’s comments and policy trajectory, as charted above.  

When they loosen monetary measures, it's almost an automatic signal to add risk to your portfolio. This conditioned response of buying during the dip and following in the central bank's footsteps has been a profitable strategy for the past decade.

As December’s price action has demonstrated, though, the FED is confused about two matters and its margin of error is shrinking. In other words, if in the days of Bernanke and Yellen, they could make some mistakes and not be immediately punished for them, Powell doesn't have that same luxury. After all, President Trump has made sure to shine the spotlight on him as well.

Here are the FED's two main debates:

1.    The U.S. economy and the U.S. stock market: the FED is confused about how to navigate these treacherous waters. Most large U.S. corporations, which represent some of the biggest companies in the world, derive a meaningful portion of their earnings from their global presence.

2.    In other words, their fate, value, competitive advantage, and assets are not isolated to U.S. soil. They thrive in proportion to the global economy. If Europe is in shambles and China is slowing down, it will hurt their earnings power.

The U.S. economy, on the other hand, takes advantage of other continents' weaknesses. Right now, the U.S. economy is, as President Trump proclaimed in his SOTU (State of the Union) address, "the hottest economy on the planet."

These represent two conflicting trends. While earnings season for stocks showed mediocre results, Trump highlighted some of the strengths of the domestic economy in his speech: 5.3M new jobs, 600,000 new manufacturing jobs, wages rising at the fastest pace in decades, and rapidly growing wages for blue-collar workers. On top of that, 5M Americans no longer require food stamps. Unemployment has also reached its lowest rate in 50 years, with minority unemployment enjoying all-time lows. With 157M in the workforce, and plenty of Millennials still on the sidelines, there’s plenty of room for growth.

Deciding interest rates policies in this conflicting environment when conditions are robust domestically, while remaining soft globally, is next to impossible. This increases the likelihood of making bad calls. This explains why volatility might be high this year, which is an incentive to own the best-quality dividend-paying stocks. Their consistency is critical at times like these. On top of that, a major catalyst for gold is found in times of inflationary pressures, high volatility and uncertain political conditions.

We've received countless email requests to publish our full Watch List, especially after the success of our December stink-bid buy alerts on General Mills, Applied Materials, Walgreens, and Starbucks. These have proven to be some of the best performing rebounding stocks of the past month.

In light of this, I will publish the full list, including the stink-bid prices this Sunday at 09:00 AM CST.  

Review the list and research the companies. See which of these you can understand and begin compounding your dividends by re-investing the quarterly distributions over the years.

This is the SUREST ticket to predictably grow your wealth with less risk than buying an index fund. 

Dividend-raisers have outperformed all other types of stocks over the last few decades, which is why 76% of my stock portfolio is invested in them. Global synchronization: This one is really playing with the economists at the Federal Reserve—unlike the days of Bernanke and Yellen, when the global economy was recovering in all regions, today's global economy isn't moving in the same direction.

Germany, Italy and other major European countries are in decline. China is also slowing down, and the trade war may escalate further on March 1^st as more tariffs are set to begin.

One of the best strategies in times of confusion, whether you're bullish, bearish, or unsure, is to put your head down, generate more cash in your personal life, and WAIT.

Let opportunities come to you. Don’t Rule Out a Stock Market Crash in 2019 Yet; Just Look at the Earnings

Earnings Point to a Possible Stock Market Crash in 2019

Don’t rule out a stock market crash in 2019 just yet. What we saw in December 2018 could just be the preview for what’s ahead.

Since the beginning of 2019, we have seen some buyers come in, making for a lot of the “buy the dip” mentality coming in. What’s more, mainstream stock pickers are saying “buy everything” once again.

It can’t be stressed enough: don’t get too complacent.

Let’s begin by asking one question: Why do we get a stock market crash or a bull market?

Earnings are hands down one of the most critical factors in markets moving higher or lower. If earnings are bad and expected to get worse, a stock market crash follows. In contrast, if earnings are good and expected to get better, you get a rally.

As it stands, earnings are starting to look weak. We are still in the midst of earnings season for the fourth quarter of 2018, and it looks like things are turning for the worst.

As of January 25, just 22% of S&P 500 companies have reported earnings for the fourth quarter of 2018. So far, earnings growth rate is around 10.9%. At the end of 2018, analysts and strategists forecasted a growth rate of 22.2%. (Source: “Earnings Insight,” FactSet Research Systems Inc., January 25, 2019.)

Here’s the thing: we are hearing a lot more negative earnings guidance as well. So far, for the first quarter of 2019, 15 companies have issued negative guidance, while only one company has issued positive guidance. That’s scary.

So, what are analysts predicting?

Well, for the first quarter of 2019, analysts expect S&P 500 companies to report earnings growth of 0.7%. For the second quarter, the earnings growth is expected to be 2.4%. The growth rate is 3.1% for the third quarter and 11.1% in the fourth quarter.

For the entire year of 2019, analysts are expecting an earnings growth rate of 6.3%

Assuming an earnings growth rate of 10.9% in the fourth quarter of 2018, in every quarter of last year, S&P 500 earnings grew by double digits. What’s more, the estimates we see for 2019 may be too optimistic and way too early, meaning they could get revised lower.

Don’t Ignore the Global Economy

There are risks that could hurt earnings.

One of the biggest is the global economy. It’s becoming very evident that global economic health is deteriorating. Even the Federal Reserve is starting to believe this could be the case.

Keep in mind that S&P 500 companies generate a lot of revenue from outside of the U.S. In 2017, 43.6% of the revenue of S&P 500 companies was obtained internationally. (Source: “S&P 500 Global Sales,” S&P Dow Jones Indices, last accessed January 31, 2019.)

Should the global economy slow, $0.43 of every $1.00 of sales at S&P 500 companies could be impacted, which could hurt their earnings too.

Given how earnings are looking and where they could go, I can’t be too bullish on the stock market. We may see indices move a little higher in the short term, but the long-term outlook looks dismal at the very best.

I will end with what I said earlier: don’t get too complacent. More selling could be ahead in 2019.

Federal Prosecutors Probing If Enquirer Violated Ealier Deal As Saudis Deny Involvement

One doesn't just blackmail the world's richest man without consequences.

Confirming earlier speculation, federal prosecutors are said to be reviewing the National Enquirer’s handling of its "extortion" involving Jeff Bezos’ extramarital affair to determine if the company violated an earlier cooperation deal with prosecutors, according to Bloomberg which notes that prosecutors in the Manhattan attorney’s office "were provided with information about key exchanges concerning Bezos."

They are now reviewing whether there was any criminal activity or whether AMI, the National Enquirer’s parent company, violated an earlier agreement not to engage in criminal conduct. AMI reached that deal to avoid prosecution over its role to silence women who had relationships with President Donald Trump, agreements negotiated with his former lawyer Michael Cohen.

Meanwhile, what had so far been the missing link from the story, namely, Saudi Arabia, whose involvement with the Enquirer was reportedly the source of the entire fiasco, finally broke its silence when the Saudi Arabian envoy, Adel al-Jubeir, said the kingdom was not involved a fight between American Media Inc. and Amazon founder Jeff Bezos.

“I doubt it. I doubt it. We don’t have any dealings with -- as far as I know, flat no,” al-Jubeir, the Saudi minister of state for foreign affairs, told reporters Friday when asked whether the kingdom was involved in the spat. He made the remarks during a news conference at the Saudi embassy in Washington.

“It’s a soap opera. It’s a soap opera,” he said of Bezos’s blackmail claim.

As reported last night, Bezos hired investigators last month to find out how the Enquirer obtained his texts and whether the story was politically motivated. In the blog post, he said the Post’s coverage of Jamal Khashoggi’s murder - a columnist for the newspaper who was killed in the Saudi consulate in Istanbul last year - "is undoubtedly unpopular in certain circles."

More importantly, Bezos cited various media reports of links between American Media’s CEO David Pecker and Saudi Arabia in the blog post.

"Several days ago, an AMI leader advised us that Mr. Pecker is ‘apoplectic’ about our investigation,” Bezos wrote. "For reasons still to be better understood, the Saudi angle seems to hit a particularly sensitive nerve."

Earlier on Friday, American Media said in a statement Friday that it believes it acted lawfully in reporting the story of Bezos and his extramarital affair, but that it will investigate the CEO’s blackmail and extortion claims.

Fed Bombshell: Central Bankers Discussing If QE Should Be Used "More Regularly"

Just a few days after the San Fran Fed, that incubator of profound economic insight and blatantly money-wasting research which recently found that record amounts in student loans, wait for it, prevent young people from buying homes, casually tossed a bomb in academia when it said that negative rates would have accelerated the recovery from the last recession setting up a strawman to use NIRP during the next recession, just dumped another bombshell.

Speaking to reporters on Friday, Reuters reports that San Fran Fed President Mary Daly said that US central bankers are currently debating whether it should confine its controversial tool of bond buying to purely emergency situations or if it should turn to that tool more regularly.

“In the financial crisis, in the aftermath of that when we were trying to help the economy, we engaged in these quantitative easing policies, and an important question is, should those always be in the tool kit — should you always have those at your ready — or should you think about those are only tools you use when you really hit the zero lower bound and you have no other things you can do,” Daly said after a talk at the Bay Area Council Economic Institute.

So how would the Fed decided which "tool" to use when? Well, according to Daly the answer wasn't clear: "you could imagine executing policy with your interest rate as your primary tool and the balance sheet as a secondary tool, but one that you would use more readily,” she added. “That’s not decided yet, but it’s part of what we are discussing now."

So while it remains unclear what "more regularly" means, one proposal which we are confident will be adopted by the Fed is the following:

Fund Manager: The Fed Blinked – Gold & Silver Are Going Higher

Dave Kranzler has some pretty bullish news about the precious metals sector. There is, however, one issue to the next move higher. Dave explains…

“Price inflation has been badly misrepresented by CPI figures and have been averaging closer to about 8% annually since gold topped in Sept 2011. Since then the purchasing power of the dollar has declined by about 43%, so that in 2011 dollars the gold price is $740. No one seems to have noticed, leaving gold extremely cheap.” – Alasdair Macleod

The following is an excerpt from the latest issue of the Mining Stock Journal, which included an analysis of a  highly undervalued, relatively new and unknown junior mining company advancing a gold-silver project in Mexico.

As I have suggested in the past (in more detail in the Short Seller’s Journal), the Fed is retreating quickly from rate hikes and balance sheet reduction (QT). The Fed deferred on raising rates at its FOMC meeting this week. What I found somewhat shocking, however, was the removal of reference to “further gradual rate increases.”

Perhaps more shocking was the reference to the possibility of re-starting the money printing press:  “…the Committee would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy…” That statement translated means, “we’ll have to print more money eventually.”

This should be extremely bullish for the precious metals sector. The only issue is the timing of the next big move higher. That depends on the degree to which the banks can continue controlling the price with gold and silver derivatives.  No one knows that answer, not even the banks. At some point, as occurred from 2008-2011, the western banks will be unable to suppress the natural price rise of gold/silver. That said, the Chinese and the Russians could pull the rug out from under the western manipulation if and when they want. That will happen eventually as well.

Alasdair Macleod wrote a brief and insightful essay from which I quoted and linked above describing key factors in 2019 that could push the price of gold significantly higher. Most of the factors are familiar, especially for subscribers to my Short Seller’s Journal. First and foremost will be the Fed, along with Central Banks globally,  reverting to easy monetary policy.

Notwithstanding official propaganda to the contrary, the U.S./global economy is rapidly slowing down. Many areas are contracting. Government spending deficits will soar as tax revenues fall behind the rate at which Government spending is increasing.

At some point, the Government will plead with the Fed to help finance Treasury issuance (this will occur in the EU, Japan and China as well), creating another acceleration in monetary inflation/currency devaluation. This will act as a transmission mechanism to inflate the dollar price of gold. Smart investors understanding this dynamic, and who have the financial resources, will move dollars out of financial assets and into gold. See 2008-2011 for an example of this process.

Gold has outperformed almost every major asset class since 2000:

Gold has outperformed most other assets since 2000 because Central Banks globally began to implement extreme monetary policies in response to the global stock market crash in 2000 led by tech stocks. As John Hathaway, manager of the Tocqueville gold fund, describes it, “gold has been a winning strategy since monetary policy became unhinged nearly two decades ago.”

In addition to the fiscal and monetary policies implemented globally in response to deteriorating economic and financial conditions, Alasdair identifies four factors directly affecting the price of gold this year.

One factor not widely perceived or understood by the markets is the gradual and methodical shift away from using the U.S. dollar for trade and as a reserve asset by Russia and China. It’s clear that both countries are swapping dollar reserves for gold and conducting an increasing percentage of bi-lateral trade with their trading partners in each country’s sovereign currency.

As an aside, gold has been soaring in most currencies besides the dollar. At some point, this shift away from using the dollar as a reserve currency will remove the “safe haven asset” status of the dollar, causing a considerable decline in the dollar vs global currencies. Concomitantly, the dollar price of gold will soar.

Another factor identified by Macleod is price inflation: “price inflation has been badly misrepresented by CPI figures and has been averaging closer to about 8% annually since gold topped in Sept 2011. Since then the purchasing power of the dollar has declined by about 43%, so that in 2011 dollars the gold price is $740. No one seems to have noticed, leaving gold extremely cheap.”

In my view, the price inflation factor as it affects investor attitudes toward gold will be a “slowly then suddenly” process. Investors and the population in general tend to move in herds. Currently the headline Government CPI is accepted and discussed as reported. At some point,  a large contingent of mainstream institutional investors will decide the Government’s measurement of inflation is wrong and will begin to buy gold and silver. The masses will soon follow. We saw this dynamic leading up to the parabolic move by gold in 1979-1980.

The third factor is “monetary inflation.” Most people think of price when they see the term “inflation.” But the true economic definition of “inflation” is the rate of growth in the money supply in excess of the rate of growth in economic (wealth) output. This in essence reduces the value of each dollar. Think about it terms of an increasing amount of dollars made available to chase a fixed supply of goods and services. That’s the monetary inflation that causes “price” inflation. Rising prices are the manifestation of monetary inflation.

As discussed at the beginning, at some point the Fed will be forced to re-start the printing press or face the consequences of a rapid economic and financial collapse.  Macleod points out that “these are exactly the conditions faced by the German government between 1918 and 1923, and the likely response by the Fed will be the same. Print money to fund government deficits.”  Recall that the policies used by the Weimar Government eventually led to hyper price inflation. The hyperinflation did not occur until the early 1920’s. But the policies leading to this condition began in 1914, when Germany World War 1 started and Germany’s huge war debt began to pile up. This is strikingly similar to the huge U.S. Government debt outstanding currently.

The final factor mentioned by Macleod is simply, “Gold is massively under-owned in the West.” By 1980, institutional investors on average held 5% of their assets in gold. Currently the percentage allocation to gold (or fake gold like GLD) is well under 1%. All it would take for a massive price reset  in gold and silver is for institutions to allocate 1-2% of their assets to gold. I believe eventually that allocation percentage will move back to 3-5%, which will drive the price of gold well over $2000/oz.

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