Gains Pains & Capital

Wal-Mart Warns of Economic Disaster… Are You Prepared?

The Phoenix — Fri, 17 May 2013 14:41:03 +0000

If you want to get a sense of what’s happening in the world, your best bet is to ignore Government data and focus on corporate revenues.

Why revenues? Because earnings can be massaged any number of ways (depreciation methods, laying off staff to cut costs, depletion of loan loss reserves for banks, etc.). But you cannot fake actual money coming in the door.

With that in mind, I want to draw your attention to the recent drop in corporate revenues at a number of corporations including Proctor and Gamble, Starbucks, AT&T, CB Richard Ellis, Safeway, American Express, IBM.

If this doesn’t serve as evidence that real economy falling to pieces, I don’t know what does. To top it off, we can now add Wal-Mart, the single largest retailer, to the list. Wal-Mart just reported that same-store sales fell 1.4%.

This is the first time this has happened in six quarters.

So much for the “recovery” theory. If you look at the real economy, things are getting worse and worse. When even Wal-Mart reports that people are spending less (remember that corporate email that February sales were a “disaster”?) you KNOW things are bad.

Folks, something awful is brewing in the economy. And yet, against this backdrop, stocks continue to rally hard. This bubble is worse than anything I’ve seen in my career, including the 2007 top.

Investors, take note… stocks are always the last to “get it.” This bubble will end as all bubbles do: in disaster.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

I’ve been warning subscribers of my Private Wealth Advisory that we were heading for a dark period in the markets. I’ve outlined precisely how this will play out as well as which investments will profit from another bout of Deflation.

As I write this, all of them are SOARING.

Are you ready for another Collapse in the markets? Could your portfolio stomach another Crash? If not, take out a trial subscription to Private Wealth Advisory and start protecting your hard earned wealth today!

We produced 72 straight winning trades (and not a SINGLE LOSER) during the first round of the EU Crisis. We’re now preparing for more carnage in the markets… having just seen another SIX trade winning streak…

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Best Regards,

Graham Summers

The BIG Warning Signal to Stocks That 99% of Investors Are Ignoring

The Phoenix — Thu, 16 May 2013 14:23:17 +0000

Bill Gross, who manages the world’s largest bond fund, has indicated that the 30+ year old super cycle bull market in bonds has ended. This is very bad news for the markets.

First and foremost, if bonds fall, rates will increase. With higher rates, it will be harder to meet debt obligations. This will be the case for corporations as well as sovereign nations.

For the former, this means that more money going towards paying off debt and less going to shareholders. For the latter, sovereigns, this means default. Most sovereign nations in the developed world are sporting Debt to GDP ratios above 100%. These levels are just manageable with interest rates at record lows. When interest rates rise, default becomes a very real possibility.

In the case of the US, a 1% rise in interest rates means more than $100 billion more in interest payments. That money has to come from somewhere… which means either taxes going up, or the Government spending less on various programs.

For Europe, a 1% rise in rates can be almost deadly. Italy and Spain were both thought to be rock solid members of the EU. Once their ten year rates rose to 7%, they were suddenly on the verge of default.

And for Japan, if rates rise just a few percentage points, the entire system collapses.

For investors trying to navigate this market, it’s critical to note that the last bear market in bonds ended over 31 years ago.

This means that there is an entire generation of investment professionals and money managers who have never invested during a bear market in bonds. So many of these folks will be in a totally new environment.

Investors, take note… stocks are always the last to “get it.” This bubble will end as all bubbles do: in disaster.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

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Best Regards,

Graham Summers

Stocks Disconnect From Reality… and Every Other Asset Class

The Phoenix — Wed, 15 May 2013 17:06:05 +0000

The stock market is completely and totally out of control.

Eight of the last ten closes have been new record highs. It’s now been six months since we had a 5% correction. Traders got us to 1,650 on the S&P 500.

At this point, no long term investor in their right mind should be buying. This is especially true given that the S&P 500 is now not only totally disconnected from economic reality, but is disconnected from every other asset class.

Check out the divergence between stocks, Gold, Copper, and Oil. Do you think the latter three are more or less sensitive to the Fed slowing QE?

Better yet, take a look at the divergence between bonds and stocks. Ever since early May, stocks have gone straight up while bonds, a “smarter” asset class that is more sensitive to the threat of QE tapering, have fallen.

And again, the US Dollar is rallying (another indication QE is likely to taper). The currency markets are even larger and more sophisticated than bonds…

Investors, take note… stocks are always the last to “get it.” This bubble will end as all bubbles do: in disaster.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

It’s Official: Stocks Are In a Bubble

The Phoenix — Tue, 14 May 2013 15:32:54 +0000

The markets are rallying because today is Tuesday. Stocks have rallied every Tuesday for the last 17 weeks and traders are now conditioned to play for this move. It’s also a POMO day (meaning the Fed is pumping the markets), which adds fuel to the fire for a stock rally.

The market is beyond overstretched. We have not had a 5% correction in six months. Stocks have gone almost straight up for 89 days (we haven’t had a 3+day correction in that long). This is an all time record. The last time stocks rallied without a 3+ day correction was in the buildup to the Crash of 1987.

Check out the chart of Stocks vs. Copper.

Copper is great at predicting economic growth. Stocks are not. And the major divergences between the two tend to be resolved sharply (notice the sharp correction in Copper in late 2011).

With that in mind, either Copper needs to ERUPT higher as the world economy comes roaring back… or stocks need to drop BIG TIME.

Guess which one it will be? Do you think this might have something to do with why Bernanke is worried about potential for “sharp moves” in the markets?

Between this, rampant insider selling (makes you wonder if the people running the companies know something about the economy the Fed is ignoring), the downturn in economic data in the US, and the ongoing disaster that is the US jobs market, the market is priced for a total collapse.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

The Fed Just Sent a Signal: the Party Will Be Ending Before 2014

The Phoenix — Mon, 13 May 2013 13:58:26 +0000

After the market’s close on Friday, Jon Hilsenrath at the Wall Street Journal released an article implying that the Fed might remove or reduce its QE programs before the year end.

The reason this matters is because Hilsenrath is thought to be an unofficial mouthpiece for the Fed. Time and again he’s released articles hinting at the Fed’s future policies in advance. And many believe senior Fed officials such as Bernanke will personally leak ideas to him to test the public’s response to said ideas in advance.

So many believe that Hilsenrath’s Friday article was indeed the Fed preparing the markets for a tapering or removal of QE before the year end. Given that the entire US market is moving lockstep with Fed activity (the Fed’s balance sheet has literally reflated the NYSE tick for tick post 2009) this is a huge deal.

This supports our view that the Fed is aware stocks are in a bubble and is attempting to prep the market in advance for less liquidity.

Since QE 2, the negative effects of QE (higher costs of living) have outweighed the positive effects (higher stock prices) by a wide margin. Only 52% of US households own stocks… but everyone is paying for higher food and higher energy prices.

On a deeper level, QE is a drug for the market. There is no evidence in history that QE creates jobs or growth Both Japan and the UK have launched QE equal to over 20% of their GDP, neither have experienced a significant pickup in jobs or GDP growth as a result.

So QE was always about one thing only: pushing the market higher. But now the market is completely detached from economic realities. There is a word for this… it’s “bubble.”

The Fed knows this and is now trying to prepare the market for withdrawal. But the market is on total life support from the Fed. Take away the Fed punchbowl and the party stops.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

On the Verge of the Biggest Bond Implosion of All Time

The Phoenix — Fri, 10 May 2013 14:51:12 +0000

Japan should serve as a lesson to central planners around the world.

Japan’s stock market/ real estate bubble burst in the early ‘90s. Since that time Japan has launched NINE QE efforts equal to roughly 25% of its GDP. And GDP growth has worsened despite these efforts from 2% to 1%. Ditto for employment.

Japan elected a new Prime Minister Shinzo Abe in September 2012. Since that time, his primary belief has been that Japan hasn’t engaged in enough stimulus. He threatened the Bank of Japan to get working… and it did, announcing a $1.4 trillion stimulus last month.

Since that time, the Yen has positively imploded. It broke below 100 yesterday for the first time in years. It’s now fast approaching the long-term trend line. When we take this out, it’s GAME OVER for the great monetary experiment of Japan.

Japan has a Debt to GDP of over 200%. Japan’s demographics are terrible (the country sells more adult diapers than child diapers). Its economy has been imploding for 20 years, and now its truly epic bond bubble is on the verge of collapse as well.

If you thought Greece was bad for the financial system, wait until you see what Japan will do to it.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

This Bubble Will be Even Worse Than 2008

The Phoenix — Thu, 09 May 2013 16:01:34 +0000

Stocks are officially in a blow-off top.

This is the culmination of Bernanke’s life’s work. In his mind he has succeeded in saving capitalism by spending trillions of Dollars pushing stocks higher.

It doesn’t matter that the US hasn’t experienced 3% GDP growth a SINGLE year since he took the Fed. It doesn’t matter that the employment ratio is at levels last seen back in the early ‘80s. It doesn’t matter that there are now a record number of Americans on food stamps.

All that matters is that stocks are up. That equals a recovery for the Fed.

This whole mess is sad really. Having seen two bubbles burst in the last 13 years, we all know how this ends: in disaster. And each time the disaster has been bigger. Indeed, the 2008 collapse was a far worse thing than the Tech Crash.

And what’s coming will be even worse than 2008. This time around, entire countries will go bust, not just banks.

On top of this, when this bubble bursts, interest rates will already be at zero and the Fed’s balance sheet swollen with garbage debts. The Fed and other Central Banks WON’T have the usual tools available to save the day.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

The Market is Now the Most OverBought In Four Years

The Phoenix — Wed, 08 May 2013 15:17:21 +0000

Stocks are now beyond overbought. The market ramped on Tuesday (the 17^th straight Tuesday rally by the way) because traders are now playing for Tuesday rallies.

The financial media is looking for any and all reasons to justify the move, but the fact is that the market had rallied for 16 straight Tuesdays before… so why not a 17^th time?

Behind this backdrop things only worsen. The divergence between stocks and the economy is growing rapidly. Stocks are now over 4% above their 50-DMAs. Anytime stocks have been this far above their 50-DMAs in the last four years we’ve seen a correction:

The overbought nature of the market is even more obvious when you compare the S&P 500 to its 200-DMA:

It is clear now we are in something of a blow off top. How long it will last is anyone’s guess, but investors are far too bullish given the fundamentals. The long, “risk on” trade is so lopsided it’s not even funny.

Maybe this time is different… maybe stocks will only go straight up forever. Maybe this bubble, unlike the last two, will not burst.

Or maybe it’s time to start prepping for the next stock collapse.

Investors take note, the market may be hitting new highs thanks to traders’ games, but the real economy is contracting sharply. This is precisely what happened during the market peaks before the Tech Crash and the 2008 Collapse.

We are getting precisely the same warnings this time around.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

Four Major Warning Signs Investors Should Not Ignore

The Phoenix — Tue, 07 May 2013 13:53:35 +0000

The market is beyond overstretched at this point on a short-term, intermediate term, and long-term basis. The sheer number of warning signals is staggering.

The blow off top out of the rising wedge pattern we noted before is rolling over indicating this is likely a false breakout:

The Russell 2000 is lagging well behind the S&P 500. Small caps, in general, should lead a rally if it’s going to prove legit:

China, which has lead the S&P 500 in general since the 2009 bottom peaked months ago:

Copper, which serves as an excellent proxy for the global economy, is collapsing, showing that this rally in stocks is occurring while the global economy gets weaker and weaker.

We are getting precisely the same warnings this time around.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers

Are We Heading Into a 2008 Style Economic Implosion?

The Phoenix — Mon, 06 May 2013 15:42:26 +0000

The media is jumping for joy over last week’s US jobs numbers. But beneath the veneer of headline numbers lies a truly horrible economic reality.

Let’s have a look at the two key economies for the world: China and the US.

For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).

China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.

In the US, last week’s jobs report didn’t look too bad until you dug deeper into the report and found that the average workweek declined by 0.2 hours from March- April.

So what you may ask… 0.2 hours? Just under a 15 minutes per week?

The issue here is that if you apply this drop to the total number of people employed in the private sector, this is the equivalent of over 21 million work hours being lost in one month.

That is the single biggest drop since April of 2009 when the US economy was absolutely imploding. It’s the numerical equivalent of firing 718,000+ people.

This is how companies deal with economic contractions. They don’t start laying people off en masse… they start cutting work hours bit by bit. The mass layoffs don’t come until the official numbers announce that we’re in a full-blown recession.

The first stage of this is already happening. 99% of investors fail to see it, but the clear signs are there.

We are getting precisely the same warnings this time around.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

As I write this, all of them are SOARING.

To join us…

Click Here Now!

Best Regards,

Graham Summers