As I keep stating, Donald Trump will win the 2024 U.S. Presidential election.
The first major signal (aside from the betting markets) was Meta (formerly Facebook) founder and CEO Mark Zuckerberg pivoting politically in August 2024.
Zuckerberg has been left-leaning for most of his career. But he is also a pragmatist. And with Meta, he has access to what is perhaps the largest dataset of voter sentiment in the world. We’re talking about what voters really think as opposed to what they tell a pollster.
Zuckerberg pivoted politically in August 2024, writing a letter to Congress in which he stated that the Biden administration had pressured him and Meta to limit free speech.
That is one heck of a statement by one of the most powerful, connected elites in the world. Do you think Zuckerberg would do this if he didn’t see the writing on the wall via Meta’s massive collection of voter sentiment?
Zuckerberg isn’t the only one who’s figured out that Trump will win either.
Yesterday, Ukrainian President Volodymyr Zelenskyy outlined the steps he would take to make sign a peace treaty with Russia. This comes after 2+ years of armed conflict between the two countries… conflict that was financed by the Biden administration/ congress to the tune of $175+ BILLION.
Zelenskyy has had countless opportunities to end this conflict since it began in early 2022. Indeed, there was a full peace deal prepared as early as April 2022 that the U.S. and U.K. rejected. The only reason Zelenskyy is looking to make a deal now is because he knows Trump will soon be the next President and the U.S. will no longer be funding this conflict.
Again, Donald Trump will win the 2024 U.S. Presidential election. The most connected tech and political elites are already preparing for it.
You should too…
We just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.
We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.
We are making only 99 copies available to the public.
Politics are a full contact sport that brings out the ugliest aspects of human nature. And the political environment today is more toxic than at any other time in my lifetime.
Unfortunately for investors, the President and his/her agenda for the economy has a MAJOR impact on the markets. For those of us who want to make money from our investments, we have to address recent political events.
With that in mind, it is clear that Donald Trump will be the next U.S. President. That is not an opinion, it’s a fact: the betting markets give Trump a ~60% chance of winning.
This will have clear implications for risk assets, specifically stocks.
Why?
Trump is the Ultimate Stock Market Cheerleader
First and foremost, former President Trump LOVES the stock market.
During President Trump’s first term, then-Treasury Secretary Mnuchin stated that the Trump administration viewed the stock market as a “barometer” for the economy. Put another way, with stocks, President Trump had a real-time measure he could point to when claiming that his agenda was benefiting Americans’ net worth.
Indeed, between 2016 and 2020, President Trump posted 256 tweets mentioning the term “market”, 162 tweets mentioning the terms “stock market” another 26 tweets mentioning “stocks,” 23 tweets mentioning “highs” in relation to stocks, and finally 15 tweets mentioning the “S&P 500” all on X (formerly Twitter).
All told, we’re talking about ~500 tweets touting the stock market in a four-year span. That comes to at least TWO tweets per week during Trump’s first term!
I do not anticipate this focus on stocks to change during Trump’s 2nd Term. Say what you will about Donald Trump, but he loves wealth. And the stock market is the 2nd most-owned asset class in America behind housing: 56% of American households have exposure to stocks vs. 65% who own real estate.
Moreover, President Trump has already figured out that the stock market is a segment of the economy that he can rapidly and dramatically influence via social media. To wit, dozens of times during the trade war with China during Trump’s 1st Term he tweeted positive news about negotiations (oftentimes extremely vague) and stocks would rip higher.
The only thing Trump might love more than wealth is power. And the power to push stocks higher is one that I doubt he’ll forgo during his 2nd term.
With that in mind, it is very likely the stock market will push after Trump’s November win in 2024. This is particularly true when you consider the macro environment President Trump will inherit and create.
The Fed has already started cutting interest rates. So, Trump will inherit a stock market driven by Fed initiating a new easing cycle, at a time when the economy is still growing.
This is as close to a “goldilocks” environment for stocks you can get. And Trump will inherit this without lifting a finger.
Moreover, Team Trump has already leaked that they intend to pressure and potentially even assume partial control of the Fed via the Treasury.
This is what’s known as a “trial” balloon through which politicians gauge the public’s response to a potential policy.
I’ve posted a blurb from CNBC on the policy below…
This proposal is not surprising. From 2018-2019 Trump routinely harassed the Fed on social media, emphasizing that the Fed’s decision to raise rates and drain liquidity via Quantitative Tightening (QT) were harming his beloved stock market.
The below tweets are two such examples.
To recap…
1) The Fed was already talking about cutting rates before Trump took the lead in the polls. There is no way the Fed can reverse this intended policy path without drawing President Trump’s ire.
2) During his first term, Trump was extremely combative with the Fed, particularly any attempt by the latter to tighten monetary policy.
3) Team Trump has already leaked a document proposing several policies including
A) allowing the President to fire the Fed Chair prior to the end of the latter’s term,
B) giving the White House greater control over the Fed’s interest rate decisions, and C) using the Treasury to influence the Fed’s bond buying activities.
Considering the above items, it is clear that President Trump will have an even greater influence over the stock market during his second term.
Put simply, you could almost argue that “stocks going up” will be a Presidential Mandate!
How high could stocks go on a Trump win?
We just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.
We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.
We are making only 99 copies available to the public.
Upon observing the current movement in the stock market, it’s evident that stocks have recently crossed a critical resistance point on a weekly timeline. The market is now backtesting this breakout, which is to be expected. The key issue is whether or not this breakout holds. The line to watch is 5,675 on a weekly chart.
High yield credit often guides stock movements. Currently, high yield credit is strong, signaling continued momentum and a potential S&P 500 hit 5,750 soon.
Pay attention to high yield credit’s strength – it could lead to a significant S&P 500 breakthrough to 5,750 in the near term.
The market breadth is on the rise, signaling a strengthening bull market rally that is expanding, not constricting. Once again, we see no indications of an imminent collapse. In fact, the current scenario presents a prime opportunity to ‘buy the dip’ in stocks.”
I bring all of this up because a LOT of analysts have gotten bearish. Their clients have MISSED out on these gains! Don’t be one of them!
To avoid making the mistake of panicking during a garden variety pullback, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
Stocks have broken above critical resistance on a weekly basis. Historically, this has lead to several months’ worth of gains. As I write this, the S&P 500 is backtesting the breakout.
High yield credit, which typically leads stocks is showing no signs of slowing down. It has turned up again and anticipates the S&P 500 breaking above 5,750 in the near future.
Breadth is also strengthening. This bull market rally is getting broader, NOT narrower. And here again, there are no signs of a collapse about to begin. This is a “buy the dip” moment for stocks.
I bring all of this up because a LOT of analysts have gotten bearish. Their clients have MISSED out on these gains! Don’t be one of them!
To avoid making the mistake of panicking during a garden variety pullback, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
This week’s episode of Bulls Bears and BS is available now.
The Fed cut rates by 0.5% last week. Many commentators are seeing this as a signal that the economy is in recession. We completely disagree. In this week’s episode, Chief Market Strategist Graham Summers, MBA outlines why this time “is different” and what it means for risk assets, particularly stocks. Graham also provides a macro framework for the next 18 months, as well as where he sees stocks going before this bull market ends.
Finally, Graham dives into gold’s recent price spike, placing it in the context of two potential outcomes for what is happening in the financial system today. If you’re concerned that inflation might be returning, and want to learn about some of the potential warning signs Graham sees that this might be the case, you won’t want to miss this week’s episode!
To access this week’s episode of Bulls Bears and BS…
Outside of the U.S., the world economy is in serious trouble. Europe is teetering on the verge of recession with its collective economy barely growing for three quarters in a row.
Germany, the largest most dynamic economy in the EU has only just established a new high in its stock market. This is shocking when you consider the European Central Bank (ECB) has already cut interest rates by nearly 1%! Put another way, European stocks are struggling despite that region’s central bank already aggressively easing monetary policy!
Elsewhere in the world, China just “blinked” by cutting rates on reverse repos and injecting liquidity into its financial system. The problem here is similar to in Europe: economic weakness.
Chinese equities have gone nowhere since late 2022. In a financial system that relies heavily on asset prices for political stability, this has been a disaster. Chinese policymakers are finally acting in the hopes of breaking the downtrend.
Japan has a strong stock market… at the expense of a collapsing currency. The Yen is trading at levels not seen since the early ’90s. The global financial system experienced its first “ripple” from this situation in early August when stocks nose-dived as the Yen erupted higher on an intervention.
This leaves the the U.S. as the sole major economy chugging along with GDP growth of ~3% and a stock market that hit new all-time highs on a regular basis for six months.
A lot is riding on Uncle Sam’s shoulders. Does he have what it takes to keep the world from rolling over into recession?
To answer that question, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
You are going to hear a LOT of people talking about this, saying it’s a sign that the economy is in recession.
It’s not.
This business cycle, is unlike any other. If you’re comparing what’s happening now to what happened in 2000 or 2007, then you’re comparing apples to oranges.
Was the economy shut down prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Did the Fed and Federal Government pump $11 trillion into the financial system in the years preceding the Fed’s decision to cut rates by 0.5% in 2000 or 2007?
No.
Did the U.S. experience an inflationary storm prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Comparing the Fed rate cuts and their implications today to the last two times the Fed cut rates by 0.5% without accounting for these differences is not just bad thinking… it’s actually BAD for your portfolio.
Why?
Because in 2024, the economy is NOT rolling over into recession, nor is the financial system showing any signs of duress. GDP growth is clocking in at 2%+.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
Again, what’s happening today is NOTHING like what happened in 2000 or 2007. If your guru or strategist is telling you to sell the farm and prepare for a crisis, you need to FIRE THEM and get a copy of my How to Predict a Crash investment report, instead.
How to Predict a Crash uses a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
Why isn’t the economy rolling over into recession?
Every other week, an economic metric that has historically predicted multiple recessions goes off. Between this and the stock market’s volatility, stock market bears have plenty of ammunition for arguments that a crash or bear market is about to hit.
On the flip-side of this, stocks simply refuse to break down. Every time the market appears to be on the verge of a significant collapse, stocks erupt higher. And other economic data appears to be quite strong.
As a result of this, analysts trying to make sense of this situation end up either flip flopping on their forecasts… or appearing to be perma-bears or perma-bulls: investors who simply maintain the same perspective no matter what is happening.
What’s the deal here?
The deal is that this economic cycle is unlike any other in history. In the last five years the U.S. has experienced…
1) A voluntary economic shut down (2020-2021).
2) The Federal Reserve printing and funneling $5 trillion into the financial system in the span of 20 months (2020-2022).
3) The Federal Government spending $6 trillion in stimulus/ interventions in the span of two years (2020-2022).
4) The Federal Government running the largest deficit as a percentage of GDP outside of World War II (2020-today).
This is why everything feels so messy: investors are trying to navigate not just one Black Swan (a previously never seen before phenomenon), but FOUR Black Swans. The end result is a business cycle that is truly unlike any other.
So what are investors to do?
The answer is actually simple: invest in those stocks that will benefit from this unique environment, until a quantitative market trigger signals that a bear market is about to begin.
I’m not talking about a trigger that ONLY works during normal business cycles. I’m talking about a trigger that can in fact predict Black Swan events.
And I’ve developed PRECISELY such a tool.
It signaled before legitimate Black Swans: it fired before the 1987 Crash, the Tech Crash, and the Great Financial Crisis.
I detail this investing tool, how it works, and what it’s saying about the markets today in a special investment report How to Predict a Crash.
Normally, I’d sell this report as a standalone item for $499. But I’m giving it away for FREE for the next 30 days, to anyone who joins our daily investment commentary Gains Pains & Capital.
Again, this report will ONLY be available to the general public for the next 30 days.
Stocks suffered a mini crash in early August when the Bank of Japan blew up the carry trade. Peak to trough, the S&P 500 lost 10% in a matter of three days.
Then “someone” stepped in, buying stocks hand over fist, and the market erupted higher, erasing all of those losses in less than two weeks.
This was blatant manipulation. No REAL buyer panic buys stocks. In fact, the traders running books for large financial institutions are graded based on their ability to acquire shares without moving the market.
Again, this was clear manipulation. Someone was trying to force stocks higher no matter what.
Fast forward to last week, and the same mystery buyer was at it again.
The S&P 500 was rejected by critical resistance at 5,650 (red line in the chart below). Stocks began to roll over, taking out the all-important 50-day moving average (the blue line in the chart below). Note that breaking below the 50-DMA was what precipitated the minicrash in early August.
Then the mystery buyer showed up again, PANIC BUYING stocks. Sending them straight up with every single dip being bought aggressively. Once again, the entire decline was erased in a matter of days.
Again, this is blatant manipulation. No REAL buyer with deep pockets does this stuff. This was someone who was CLEARLY intent on propping up the stock market at all costs.
Who is doing this?
It has to be the Fed… or the Fed courtesy of a proxy.
No other investor has bottomless pockets and PANIC BUYS stocks like this. Again, this is not some investor who’s trying to make money… this is someone who wants stocks higher no matter what.
Again, this has to be the Fed. In fact, I believe that at some point in the next few months, the Fed will openly admit to buying stocks with a new QE program.
I’m putting together a special report detailing precisely why this is… and which stocks I believe the Fed is buying.
This report, titled Chapter X will be sold as a standalone item for $499.
But readers of our free daily market commentary Gains Pains & Capital will have a copy delivered to their inboxes FREE of charge.
To join Gains Pains & Capital and have your copy of Chapter X delivered to your inbox later this week…
One of our proprietary measures for the economy is signaling a recession is at hand.
That measure is the Target (TGT): Walmart (WMT) ratio.
Target and Walmart are big box retailers with distinctively different brands/ price points. Target tends to be more consumer discretionary-oriented while Walmart tends to be more consumer staple-centric.
As a result of this, comparing the performance of the two companies’ stocks is a handy way of seeing if consumers are spending more money on discretionary items or if they are cutting back and focusing on lower price goods/ staples.
Put simply, when the TGT:WMT ratio rises, the consumer is strong. And when it collapses, it usually signals that an economic contraction is underway.
See for yourself. This ratio collapsed during the recession of 1990-1992, the Tech Crash/ recession, the Great Financial Crisis and the “close-call” of 2016-2017.
So what is this metric showing us today?
Hint: it’s UGLY.
Sure, this might be a fluke… but given the accuracy of this measure over the last 40 years, I wouldn’t bet on it. Indeed, my proprietary Crash trigger is on the verge of registering a “SELL” for the first time in four years.
This signal went off before the 1987 Crash, the Tech Crash, and even the Great Financial Crisis. And right now, it’s flashing its first MAJOR warning sign in years.
To find out about this trigger, and what it’s saying about stocks today…
Economically sensitive commodities like copper and oil have erased all of their 2024 gains and are now declining rapidly.
Defensive sectors like utilities are soaring… while growth-oriented sectors like Tech are struggling to move higher.
And worst of all, the ratio between stocks and long-term Treasuries has broken its 40-week moving average (the same as the 200-day moving average) for the first time since the pandemic crash!
All of this is EXTREMELY bearish and poses a major warning sign that additional downside could be here soon. Indeed, my proprietary Crash trigger is on the verge of registering a “SELL” for the first time in four years.
This signal went off before the 1987 Crash, the Tech Crash, and even the Great Financial Crisis. And right now, it’s flashing its first MAJOR warning sign in years.
To find out about this trigger, and what it’s saying about stocks today…
Stocks have experienced a great deal of volatility in the last week.
However, when you take a step back and look at the big picture for the equity markets, it’s clear that stocks have been in a consolidation phase since mid-May. That consolidation has been between 5,200 and 5,600 on the S&P 500.
Why is this happening?
There are two critical issues the market is trying to determine:
When and how aggressively the Fed will start cutting rates.
Who will win the Presidential election in November.
Regarding #1, three factors have “muddied the waters” in terms of figuring out when and how aggressively the Fed will cut rates this year.
Those three factors are the inflation data, unemployment data, and GDP data.
With the economy not yet contracting, unemployment spiking due to immigration NOT job losses, and inflation trending down, albeit in a noisy fashion, the Fed has suffered from institutional inertia as it opts to focus on the data as opposed to cutting rates.
However, at the end of the day, the Fed tends to take its cues from the yield on the 2-Year U.S. Treasury. And the yield on the 2-Year U.S. Treasury is telling us the Fed is WAAAAAY behind the curve. The Fed needs to take action and soon or it risks a recession.
Regarding #2, the Presidential election has also provided a great deal of confusion for stocks. Some of the more critical items of note include A) the Democrat candidate was replaced in July when President Biden opted to not continue with his campaign, B) Kamala Harris has yet to debate Donald Trump, and C) the economic agenda of the two current candidates couldn’t be more different when it comes to specific policies.
However, at the end of the day, both candidates have proven to be big on social spending. In this sense, whoever wins the election, we can assume the government will continue to run significant deficits. And this will provide stimulus to the economy, which will benefit stocks.
You can see this in the monthly chart of the S&P 500. Sure, it’s experiencing a down month thus far in September, but the uptrend is clearly intact. For this reason, we view the current pullback as an opportunity to “buy the dip” not “sell the farm.”
As investors, our job is to make money, not look for any excuse to dump stocks and panic about something bad happening. And as I’ve outlined in recent articles, this means riding bull markets for as long as possible, and then side-stepping bear markets when they eventually hit.
In the very simplest of terms, you need to be invested in stocks, until an objective, verifiable tool (not your feelings or limiting beliefs) tells you it’s time to “get out.”
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
The crash callers and bears just got a major lesson.
It’s a lesson that all investors have to learn at some point. Indeed, the only investors who actually make money from the markets are those who have learned that lesson and integrated its outcomes to their investing strategies.
The lesson?
Bears don’t make money.
The reality is that being a bear provides you with endless material to write or complain about. After all, at any point in time there are a million things that can go wrong in the markets. But most of the time, as in over 95% of the time, those terrible things don’t actually play out.
Even when bad things do play out, few if any investors actually make money from them.
Consider the Great Financial Crisis of 2008: arguably the greatest bear market/ crisis of our lifetimes.
In 2008, there were roughly 216 million American adults over the age of 18. Roughly 60% of them had exposure to the stock market via brokerage accounts or retirements accounts (401Ks, IRAs, etc.) So, we’re talking about roughly 130 MILLION people who were involved in the stock market in one way or another.
The number of investors who got rich betting on a crash at that time is under 30. So, we’re talking about 30 people out of 130 MILLION succeeding. That’s roughly one ten millionth of one percent (0.00001%).
To put that into perspective, you are TEN TIMES more likely to be struck by lightning (the odds of that happening are one in one million).
Moreover, those few investors who DID get rich from the Great Financial Crises were all in highly unusual circumstances, none of which apply to the typical trader/ individual investor.
John Paulson is a famous hedge fund manager who became a billionaire betting on the housing crash. What you might not know is that the only reason this happened was because he personally had Goldman Sachs build securities that were chock full of garbage mortgages, which Goldman Sachs then sold to other clients… so Paulson could bet against them.
This was unethical and borderline illegal. And individual investors like you or I would NEVER have this opportunity (when was the last time you told Goldman Sachs to create something for you to bet against?)
Michael Burry is another hedge fund manager who got rich from betting on the housing crash. He had to LOSE money for two years before his bets worked out. And even once things went in his favor, the investment banks who sold him the securities he used to bet against the housing market refused to value his trades as profitable. Then his investors tried to withdraw their funds. When Burry refused to give the money back, they sued him. What followed was years of legal hell as well as an investigation by the FBI.
So let us consider this…
The odds of making a fortune betting on a crisis or some other Black Swan even are less than those of being struck by lightning.
The small handful of people who DO get rich from these situations do so either because they have A) a ridiculously unethical set up like John Paulson B) are willing to experience a nightmarish scenario for months, or even years like Michael Burry.
Again, being a bear is great if you want something to complain about… but it’s terrible if you want to make money from the markets.
If you’re tired of listening to bears who do nothing but lose you money, come join our daily market commentary Gains Pains & Capital. It focuses on proven investment strategies that can boost you portfolio returns.
Indeed, we just published a special investment report that details proprietary triggers that register before every bear market or crash. Unless these triggers go off, we’re putting our money to work, profiting from the markets.
I detail them, along with what they’re currently saying about the market today in our Special Investment Report How to Predict a Crash.
The Crash Callers are out in full force once again.
The problem with calling for a Crash is that you’re wrong 99% of the time. Then, once every few years, you’re correct. The whole process reminds me of a broken clock which is “correct” two times a day… but wrong the other 23 hours 58 minutes.
Remember, the purpose of investing is to make money. The easiest way to do that is to ride bull markets for as long as possible… and then get out before a bear market/ crash hits.
But what about the investors who make huge fortunes during Crashes like the Great Financial Crisis of 2008?
Let me bring you in on a dirty little secret…
Almost NO ONE made money during the market crashing in 2008. And the people who did were in situations that you or I will NEVER be in.
In 2008, there were roughly 216 million American adults over the age of 18. Roughly 60% of them had exposure to the stock market via brokerage accounts or retirements accounts (401Ks, IRAs, etc.) So, we’re talking about roughly 130 MILLION people who were involved in the stock market in one way or another.
The number of investors who got rich betting on a crash at that time is under 30. So, we’re talking about 30 people out of 130 MILLION succeeding. That’s roughly one ten millionth of one percent (0.00001%).
To put that into perspective, you are TEN TIMES more likely to be struck by lightning (the odds of that happening are one in one million).
Moreover, those few investors who DID get rich from the Great Financial Crises were all in highly unusual circumstances, none of which apply to the typical trader/ individual investor.
John Paulson is a famous hedge fund manager who became a billionaire betting on the housing crash. What you might not know is that the only reason he succeeded was because he personally had Goldman Sachs build securities that were chock full of garbage mortgages, which Goldman Sachs then sold to other clients… so Paulson could bet against them.
This was unethical and borderline illegal. And individual investors like you or I would NEVER have this opportunity (when was the last time you told Goldman Sachs to create something for you to bet against?)
Michael Burry is another hedge fund manager who got rich from betting on the housing crash. He had to LOSE money for two years before his bets worked out. And even once things went in his favor, the investment banks who sold him the securities he used to bet against the housing market refused to value his trades as profitable.
To top it off, his investors tried to withdraw their funds. When Burry refused to give the money back, they sued him. What followed was years of legal hell as well as an investigation by the FBI.
So, let us consider this…
The odds of making a fortune betting on a crisis or some other Black Swan are less than those of being struck by lightning.
The small handful of people who DO get rich from these situations do so either because they have A) a ridiculously unethical set up like John Paulson B) are willing to experience a nightmarish scenario for months, or even years like Michael Burry.
Which brings me back to my original point: the purpose of investing is to make money. The easiest way to do that is to ride bull markets for as long as possible… and then get out before a bear market/ crash hits.
Put another way, the Crash Callers have investing totally backwards: you need to focus on the 99% of times stocks don’t Crash, NOT the 1% of the time they do.
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
This mini-crisis was triggered by the BoJ raising rates for the first time since 2007, which in turn, blew up the Yen carry trade.
I realize that sounds as if I’m speaking in code, so let me break this down.
As I outlined in my most recent bestseller, Into The Abyss, Japan is the grandfather of monetary insanity. The Fed first introduced Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE) in 2008. Japan’s central bank, the Bank of Japan, or BoJ for short, introduced ZIRP in 1999 and QE in 2001, respectively.
Over the course of the last 20+ years, the BoJ has engaged in a slow-motion nationalization of Japan’s financial system. Today it owns over 50% of all Japanese Government bonds and is the single largest shareholder of Japanese stocks in the world.
All of this worked relatively well until inflation entered the financial system in 2020-2021 and the BoJ refused to address the situation.
The Fed and the European Central Bank (ECB) started raising rates and shrinking their balance sheets in early/ mid-2022. The BoJ only started tightening monetary policy in 2023. And it finally started raising rates at the end of July (as in a week ago).
That’s when all hell broke loose.
The Japanese Yen has been in a free-fall for the last four years as the BoJ refused to tighten monetary policy while every other major central bank was raising rates and draining liquidity. Indeed, going into the BoJ’s rate hike decision a week ago, the Yen was trading at levels not seen since the late 1980s.
Once the BoJ started talking about raising rates, the Yen started moving higher. And last week, when the BoJ actually raised rates, the Yen EXPLODED higher.
This is a globally systemic issue because the Yen is one of the largest carry trades in the world. If you’re unfamiliar with a carry trade, it consists of borrowing money in one currency (at a low interest rate) to invest in other assets.
Since the Yen has been yielding more or less ZERO for the last 20+ years, hedge funds and other institutional investors have been borrowing hundreds of billions of dollars’ worth of Yen to invest in other assets with EXTREME leverage.
The problem with this is that leverage works both positively and negatively.
Imagine you have $1 million to invest and you borrow $10 million in Yen at 0.1%. Your annual interest payments on the Yen are ~$10,000. Meanwhile, you invest that $10 million in stocks, which then rally 10%.
You’ve just made $1.1 million in profits (10% of your $11 million). And since your actual capital is just $1 million, you’ve more than doubled your money with this trade courtesy of leverage.
However, this process ALSO works to the downside when things go wrong. If the currency you are borrowing in (the Yen) skyrockets relative to the currency in which the assets you are buying are denominated (the $USD), your trade will BLOW up quite badly.
In the last month, the Yen/ $USD pair has ripped 12% higher. This, combined with the higher interest rate on the Yen (the BoJ raised rates from 0.1% to 2.5% last week) is BLOWING UP hundreds of billions of dollars’ worth of the Yen carry trade.
When a carry trade blows up, investors are forced to panic liquidate their holdings. That is why the market melted down over the last few weeks with companies like Apple and Nvidia collapsing in share price despite being OBSCENELY profitable.
Which brings us to today.
The BoJ announced a previously unscheduled meeting with Japan’s Ministry of Finance and its Financial Services Agency on Tuesday. This was a signal to the markets that an intervention of sorts was coming.
Soon after that, the deputy head of the BoJ, Shinichi Uchida announced that the BoJ won’t “raise rates if the markets are unstable.” This is akin to the BoJ telling the markets, “we got the message and are standing down.”
The big question now is if the lows are in… or is another round of selling coming? Put another way, was this simply a correction in the context of a bull market… or is a legitimate crash/ bear market is about to unfold.
One the one hand, corrections are common events in which you should “buy the dip.” But on the other hand, once every 10 years or so, a REAL crash/ bear market will hit that will wipe out years’ worth of gains!
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
Stocks have broken down in a big way, leading investors to ask…
Is this a garden variety correction… or the start of a REAL crash?
The S&P 500 sliced through its 50-SMA and plunged down to its 200-SMA in a matter of days. We haven’t seen a collapse like this since the regional bank crisis of March 2023.
First and foremost, you should know that market dips/ pullbacks are quite common.
Consider that stocks will typically pull back 5%+ three or four times every year. Larger drops aren’t that uncommon either: the market corrected 10% or more in HALF of the 20 years from 2002-2021.
Anyone who panicked and sold the farm when that happened ended up missing out in a big way!
Having said that, this correction has been quite violent. Many of the market’s leaders are down 20%+ which technically would be considered “bear market” territory.
Moreover, the Volatility Index (VIX) has spiked to levels that are typically associated with crises. See for yourself in the chart below.
Thus, investors are in a quandary.
One the one hand, corrections are common events in which you should “buy the dip.” But on the other hand, once every 10 years or so, a REAL crash/ bear market will hit that will wipe out years’ worth of gains!
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
A month ago, everyone on the planet was talking about new all-time highs for the stock market and big tech was the only game in town.
Fast forward to today, and Nvidia (NVDA) is down 20%, and I see gurus calling for a new bear market in stocks. And bear in mind… the S&P 500 is down just ~5%… after rallying 40% in just eight months!
This is the problem with being bearish. Sure, you will be right once a decade or so… but, 99% of the time, panicking is a colossal mistake.
Why?
Because over the long-term, stocks go up and go up a LOT. As in 1,000s of percentage points.
Moreover, market dips/ pullbacks are quite common.
Consider that stocks will typically pull back 5%+ three or four times every year. Larger drops aren’t that uncommon either: the market corrected 10% or more in HALF of the 20 years from 2002-2021.
Anyone who panicked and sold the farm when that happened ended up missing out in a big way!
As Charles Schwab notes, since 1974, the S&P 500 has risen an average of more than 8% one month after a market correction bottom and more than 24% one year later.
Put simply, panicking or getting overly bearish simply because stocks are correcting is a MASSIVE mistake for the simple reason that pullbacks/ dips are quite common even during raging bull markets!
Thus, investors are in a quandary.
One the one hand, corrections are common events in which you should “buy the dip.” But on the other hand, once every 10 years or so, a REAL crash/ bear market will hit that will wipe out years’ worth of gains!
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
Editors note: Chief Market Strategist Graham Summers, MBA will be on the Schilling Show radio program today at 1:30 EST. You can listen in here.
Everywhere I look, I see investors proclaiming that “THE” top is in and a bear market is about to unfold.
First and foremost, there is NO reason to ever try to call a top.
Why?
Because doing so doesn’t make you any money. In fact, top callers usually miss out on major market gains by selling way too early.
Consider what happened during the last market correction in April 2024. Then, just as now, the top callers came out of the woodwork. The market corrected for two weeks before rallying another 15%. Anyone who sold, missed out on these gains.
Moreover, there are nearly ZERO signs from real market indicators that THE top is in right now.
Consider the last major bear market that unfolded from early 2022 until October 2023. At that time, high yield credit broke down along with stocks, signaling that a major shift had taken place in the financial system.
Today, high yield credit is near all-time highs. If anything, it is signaling that stocks have sold off TOO MUCH!
The same is true for market breadth. Going into the bear market of 2022, breadth peaked before stocks.
Today, breadth is near all-time highs. It too is signaling that the selling is overdone for stocks.
Finally, and likely most importantly, the U.S. is four months away from the next Presidential election. And the next President of the United States, Donald Trump, is obsessed with the stock market.
Do you REALLY want to be shorting stocks when the single biggest cheerleader in the history of the stock market is going to take office?
With that in mind, we are about to publish a Special Investment Report detailing the #1 investment to own when during a Trump 2nd Term.
Normally, this report would sell as a stand-alone item for $499, but we are giving away a limited number of copies for free to investors who join our daily e-letter: Gains Pains & Capital.
To join today… and reserve your copy of The #1 Investment to Own During Trump’s 2nd Term…
This correction is close to over. And when it ends, stocks will rally hard to new all-time highs.
How do I know this?
Because the market internals are telling me.
Historically, high yield credit leads the stock market. The reason for this is because high yield credit (read: junk bonds) is MUCH more sensitive to macro changes due to the fact that when the economy rolls over, junk bond investors typically lose a LOT of money very quickly.
Because of this, high yield credit acts as a kind of “canary in the coal mine” for the financial system. If something BAD is coming, this is the first area to react.
High yield credit (red line in the chart below) just hit new all-time highs. Indeed, based on high yield credit, the S&P 500 should be north of 5,600 right now. This is NOT bearish for risk assets including stocks.
High yield credit isn’t the only market internal that suggests stocks are ready to rip higher.
Overall breadth has bounced hard after hitting new all-time highs. The below chart is telling us that the S&P 500 is being dragged down by big tech, but overall market breadth is getting STRONGER not weaker.
Again, this is NOT bearish. Indeed, if we go by breadth (red line in the chart below), the S&P 500 should be 100 points higher right now.
I suspect part of the reason why market internals are acting so strongly is because the market is discounting that the next President of the United States will be Donald Trump, who is obsessed with the stock market.
If you’ll recall, the former President promoted the stock market almost non-stop during his first term. Indeed, he tweeted about it an average of two times per week, mentioned it in the media dozens of times, and even pumped it higher by leaking economic developments any time it looked as if the markets would break down.
Put simply, Trump is a stock market cheerleader, and I believe the stock market is discounting a second Trump term. This will benefit certain sectors and stocks more than others. And those investors who are properly positioned stand to make potential fortunes.
With that in mind, we are about to publish a Special Investment Report detailing the #1 investment to own when during a Trump 2nd Term.
Normally, this report would sell as a stand-alone item for $499, but we are giving away a limited number of copies for free to investors who join our daily e-letter: Gains Pains & Capital.
To join today… and reserve your copy of The #1 Investment to Own During Trump’s 2nd Term…
Get ready for a “Rip Your Face Off” rally in the stock market.
Why?
Three reasons…
1) The bull market is getting stronger, not weaker.
Regarding #3, for most of the last three months, the overall market’s gains have been driven by a handful of Big Tech plays.
No longer…
Overall market breadth has surged in the last two weeks, hitting new all-time highs before this recent pullback. This bull market is getting stronger, not weaker.
Reason #2 why stocks are about to explode higher.
The Fed is about to start cutting rates… at a time when the economy is still growing. The futures market is predicting between 1.75% and 2% in rate cuts by September of next year. That means seven or even EIGHT rate cuts in a 13 month period!
That is NOT bearish.
And finally, and likely most importantly, reason #3 why stocks are about to rally hard.
The next President of the United States, Donald Trump, is obsessed with the stock market. He tweeted about it an average of two times per week during his first term. And Team Trump has already leaked proposals to take over the Fed if the Fed doesn’t play ball.
Remember, the stock market is forward looking, which means that starting today, the market is going to begin discounting a Trump win.
This will benefit certain sectors and stocks more than others. And those investors who are properly positioned stand to make potential fortunes.
With that in mind, we are about to publish a Special Investment Report detailing the #1 investment to own when during a Trump 2nd Term.
Normally, this report would sell as a stand-alone item for $499, but we are giving away a limited number of copies for free to investors who join our daily e-letter: Gains Pains & Capital.
To join today… and reserve your copy of The #1 Investment to Own During Trump’s 2nd Term…