Want to Know the REAL DEAL in the EU? Talk to a CEO

One of the biggest problems facing the world today is the fact that most world leaders have little if any business experience. Those who do are inevitably investment bankers/ financiers who, while technically businessmen, have expertise primarily in financial engineering, NOT manufacturing goods or services that create actual job growth.

With that in mind, when analyzing what’s happening in Europe, it’s wise to consider what ACTUAL businesspeople are doing today with their corporations’ cash rather than what leaders are claiming is true about the financial system.

Case in point, every other week we are told that Europe’s problems will soon be solved and that the EU will be stronger then ever. If this is indeed the case, I wonder about the following story:

European CEOs Move Cash to Germany In Case of Euro Breakup

Grupo Gowex, a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank…

“A couple of weeks ago I would never have thought about having conversations on the probability of the euro disappearing, but now there is more speculation on such a scenario,” Wolters Kluwer NV (WKL) CEO Nancy McKinstry said in a Nov. 29 interview at the company’s headquarters outside Amsterdam…

Kingfisher Plc (KGF), Europe’s largest home-improvement retailer, has considered plans for the possibility of a collapse of the euro region and will focus on cash generation to account for that possibility, Chief Executive Officer Ian Cheshire said.

http://www.bloomberg.com/news/2011-12-09/wary-european-ceos-move-cash-to-germany-to-protect-against-breakup-risk.html

These are REAL businesspeople who RUN corporations, preparing for the breakup of the Euro by moving their cash to Germany. Read the above article: it features executives from companies throughout Europe all of whom state they are preparing for a Crisis and the potential of a Euro breakup.

And if you think that politicians have somehow solved the banking crisis… read the following:

Eurozone banking system on the edge of collapse

If anyone thinks things are getting better then they simply don’t understand how severe the problems are. I think a major bank could fail within weeks,” said one London-based executive at a major global bank.

Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.

http://www.telegraph.co.uk/finance/financialcrisis/8947470/Eurozone-banking-system-on-the-edge-of-collapse.html

If a bank has to resort to lending out GOLD reserves in order to get DOLLAR funding so it can maintain liquidity… then it’s on its deathbed. And this is happening in France, Italy and Spain RIGHT NOW.

It’s time we admit the truth, the EU and its banking system are literally on the edge of collapse. Think 2008… for an entire region. And politicians are going to solve this mess with a March 2012 meeting!?!

The impact of what’s coming will be TREMENDOUS. Europe’s banking system is over $40 trillion in size. The EU, taken as a whole, is:

1)   The single largest economy in the world ($16.28 trillion)

2)   Is China’s largest trade partner

3)   Accounts for 21% of US exports

4)   Accounts for $121 billion worth of exports for South America

So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).

Make no mistake, we’re heading into a Crisis that will make 2008 look like a picnic. If you’ve yet to prepare for this, I suggest you do so now.

On that note, if you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the collapse in European banks, the US Dollar’s rally, and the breakdown in the emerging markets.

In fact, we’ve closed out 32 straight winners and NO losers since JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Want to Know the REAL DEAL in the EU? Talk to a CEO

Graham Summers’ Weekly Market Forecast (La La Land Edition)

Stocks have entered a kind of fantasy world, completely detached from any kind of economic, political, or financial reality. Indeed, last week the #1 driver of stock prices was unfounded rumors that were refuted within hours of their being published (I’ve circled the rumor-based rallies in the chart below).

Again, these were rumors… based on lies… that were refuted within hours of their being published… pushing the market into vertical rallies. Like I said, we’re in La La Land.

The reality of the financial system today is that we’re entering another global economic contraction. Earning have been abysmal in the US. Europe’s banking system is in a liquidity crisis on par with the post-Lehman Brothers collapse. China is entering a hard landing. And the US economy is in a second recession within a larger DE-pression.

The reasons stocks aren’t reacting to these realities (yet) are:

1)   Hedge funds and institutions are desperately trying to boost their returns before year-end (most have had HORRIBLE years)…

2)   Barring REAL selling pressure, most market action is dominated by high frequency trading programs (which don’t think or make qualitative judgments)… AND

3)   Traders have been conditioned to only care about one thing: more juice from the world’s central banks.

Indeed, if you want the real story for what’s happening to the world economy, take a look at the agricultural commodities. They (not stocks) were the first asset class to pick up on inflationary pressures from the Fed’s largesse in 2010. They were also the first asset class to pick up on the downturn in global economic activity in February 2011. And right now, they’re reflecting a reality that is far, FAR uglier than the one equities are discounting

This is an UGLY, DEFLATIONARY chart. It is a chart the predicts a SHARP economic contraction. Indeed, commodities as a whole don’t seem to be buying into the “risk on” atmosphere that dominated equities for most of 2011 (with the exception of late July-August).

The final, most glaring example of stocks being in La La Land comes from their inability to comprehend the current situation in Europe. Europe’s banking system is in a full-scale liquidity crisis that rivals the aftermath of Lehman Brothers’ bankruptcy. Indeed, multiple European nations are relying on the ECB to insure they don’t post FAILED bond auctions.

Against this backdrop, EU leaders just decided to impose stricter budgetary requirements from EU members. Only in La La Land could this be viewed as progress. The EU already had budgetary requirements… which the PIIGS countries all ignored. So how will these NEW budgetary requirements change anything? And who or what is going to enforce them?

And yet… stocks viewed this decision as a success. Again, we’re in La La Land.

Does this mean stocks can’t rally more from here? Not at all, in La La Land stocks can rally for no reason at all. But you should be aware that the credit, bond and commodities markets are all indicating we’re heading into a MASSIVE wave of deflation in the near future.

Remember, stocks were the last to “get it” in 2008. They’re the last to “get it” today too. And when they finally DO “get it,” we’re going to see some REAL fireworks.

On that note, if you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we’ve closed out 32 straight winners and NO losers since JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

Posted in It's a Bull Market | Comments Off on Graham Summers’ Weekly Market Forecast (La La Land Edition)

Forget Europe… Germany’s Got Its Own Problems to Deal With

Every day that Germany continues to flirt with the idea of propping up Europe, is another day that the country gets closer to its own fiscal crisis.

The mainstream media believes that Germany is somehow the bastion of fiscal strength. However, even a cursory look at the facts disproves this.

For starters, German banks post some of the highest leverage rations in Europe: higher that Italy, higher than Ireland, even higher than Greece. In fact, German banks are actually sporting leverage EQUAL to that of Lehman Brothers when it went bust.

To make matters worse, Germany has yet to recapitalize its banks. Indeed, by the German Institute for Economic Research’s OWN admission, German banks need 147 billion Euros’ worth of new capital.

Mind you, this is just NEW capital demands. In addition to this, German banks need to roll over 40% of their total outstanding debt within the next 12 months.

This is at a time when the many European nations are relying on the ECB to insure they don’t have a failed bond auction (by the way Germany had a failed bond auction just a few weeks ago).

Suffice to say, the German banking system isn’t as rock solid as the mainstream consensus. The German government knows about this situation which is why it’s already preparing for the potential nationalization of Germany’s largest banks should things get messy.

Germany’s sovereign balance sheet isn’t a whole lot better either. Officially, Germany has a Debt to GDP ratio of 84%. However, according to Axel Weber, the most recent head of Germany’s Central Bank (he left April 2011), Germany is in fact sitting on a REAL Debt to GDP ratio of over 200%. This is Germany… with unfunded liabilities equal to over TWO times its current GDP.

What’s truly frightening about this is that Weber is most likely being conservative here. Jagadeesh Gokhale of the Cato Institute published a paper for EuroStat in 2009 claiming Germany’s unfunded liabilities were in fact closer to 418% (and that was two years ago).

This further goes with my primary view: Germany has its own problems to deal with. So the idea that Germany is somehow going to prop up the EU is not really realistic. After all, if Germany was indeed going to serve as the mega-European backstop, don’t you think it would already have done so?

The truth is this: the German constitution won’t permit the issuance of Euro bonds. And the German population/ social contract between German politicians and voters will not stand for money printing of any kind.

So… don’t bank on Germany coming to save the day. Indeed, even the option of Germany somehow taking over other EU nations budgetary controls is ridiculous as NO EU member would submit to that.

Instead, I expect Germany to duck out of the Euro in the near future. It may happen in the next few weeks or it may happen in early 2012. But considering that the Federal Reserve had to step in to save the European banking system today I believe it will be sooner rather than later.

So if you believe that Germany is going to save the EU… you’re in for a rude surprise. Indeed, if we look at the bond or credit markets, it’s clear we’re into a Crisis far greater than 2008. Forget the stock market rally. Stocks ALWAYS get it last (just like in 2008). And before the smoke clears on this mess we’re going to see sovereign defaults, bank holidays, riots, and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To wit, my clients MADE money in 2008 outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 STRAIGHT WINNERS including gains of 12%, 14%, 16% and 18%,

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with m y Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

 

 

 

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Forget Europe… Germany’s Got Its Own Problems to Deal With

Read This and Tell Me Germany Wants a Monetary Union

I’ve stated before that I fully believe Germany will be leaving the Euro. With that in mind, I want to draw your attention to recent comments from Germany’s finance minister, Wolfgang Schauble.

Wolfgang Schauble admits euro bail-out fund won’t halt crisis

Europe’s “big bazooka” bail-out fund is not ready and won’t stem the debt crisis that on Tuesday pounded Italy and the European Central Bank (ECB), admitted Wolfgang Schauble, Germany’s finance minister.

http://www.telegraph.co.uk/finance/financialcrisis/8924462/Wolfgang-Schauble-admits-euro-bail-out-fund-wont-halt-crisis.html

This is a pretty strong admission from the finance minister of the country that Europe looks to as a financial backstop. And the following is even more disconcerting for the future of the Euro:

Seeing in Crisis the Last Best Chance to Unite Europe

MR. SCHÄUBLE said the German government would propose treaty changes at the summit of European leaders in Brussels on Dec. 9 that would move Europe closer to the centralized fiscal government that the currency zone has lacked. The ultimate goal, Mr. Schäuble says, is a political union with a European president directly elected by the people.

“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”

Critics say the spending cuts German leaders have demanded from other countries are hurting growth across the Continent, in the process making debts only harder to repay. And his proposals to give the European Commission far-reaching powers to enforce budgetary discipline have been likened by skeptics in Britain to an invasive new “super state.” Even some euro supporters fear that Mrs. Merkel and Mr. Schäuble are talking about long-term changes while panicked investors and practiced speculators are tearing the euro to pieces right now.

“There is a limited transition period where we have to manage the nervousness on the markets,” Mr. Schäuble said. “If it is clear that by the end of 2012 or the middle of 2013 that we have all the ingredients for new, strengthened and deepened political structures together, I think that will work.”

He sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.

http://www.nytimes.com/2011/11/19/world/europe/for-wolfgang-schauble-seeing-opportunity-in-europes-crisis.html?_r=1&pagewanted=2

Note that Schauble repeatedly emphasizes the goal of a “political union,” NOT a “fiscal union” or “monetary union.” Indeed, his one reference to a “fiscal union” is in the “short-term,” while stressing that in a “larger context” the EU needs a “political union.”

The message here is very, very clear: Germany is interested in the EU as a political entity, NOT the Euro as a currency. With that in mind, consider the following story which received almost NO attention from the media:

-German Chancellor Angela Merkel’s conservatives on Monday passed a resolution at a party convention urging the government to establish rules in Europe that would allow a country to voluntarily leave the euro zone without giving up membership in the European Union.

The resolution reads:

“Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily–according to the rules of the Lisbon Treaty for leaving the European Union–leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro.”

http://online.wsj.com/article/BT-CO-20111114-712771.html

I fully believe that Germany is laying the groundwork for it to leave the Euro while still remaining a member of the EU. The alternative to this would be for Germany to demand other nations give up their fiscal sovereignty and make Germany a kind of monetary authority in exchange for additional bailouts. However, the likelihood of this option being presented is next to ZERO as ALL of Europe remembers WWII and the threat of German rule.

So I expect Germany to duck out of the Euro in the near future. It may happen in the next few weeks or it may happen in early 2012. But considering that the Federal Reserve had to step in to save the European banking system today I believe it will be sooner rather than later.

So if you believe that Germany is going to save the EU… you’re in for a rude surprise. Indeed, if we look at the bond or credit markets, it’s clear we’re into a Crisis far greater than 2008. Forget the stock market rally. Stocks ALWAYS get it last (just like in 2008). And before the smoke clears on this mess we’re going to see sovereign defaults, bank holidays, riots, and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To wit, my clients MADE money in 2008 outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 STRAIGHT WINNERS including gains of 12%, 14%, 16% and 18%,

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with m y Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

 

 

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Read This and Tell Me Germany Wants a Monetary Union

Bernanke’s Scared… And He Should Be

A few months ago, I stated that Ben Bernanke was going to come under increased scrutiny and possibly even face legal trouble based on the fact that someone was going to take the fall for the bailout madness/ theft/ fraud that occurred from 2007-onward.

At the time I wrote:

First off, Goldman Sachs CEO Lloyd Blankfein has hired a criminal defense attorney… and not just any attorney, but Reid Weingarten… If Blankfein is under investigation and hiring someone of Weingarten’s caliber, a massive legal storm is about to begin on Wall Street. These lawsuits will involve the US Federal Reserve. And when push comes to shove, Blankfein (and other Wall Street executives who broke the law) will be blaming Bernanke and the Fed.

After all, the easiest defense is for Blankfein and his kind to simply say that they were pressured into defrauding investors and the public by Bernanke and the Fed when the financial system imploded in 2008.

Since I wrote this, things have indeed gotten hot for Bernanke. He’s now a verbal punching bag for virtually every GOP Presidential Candidate. And recent revelations by Bloomberg have shown that the Fed made secret bailouts to Wall Street to the tune of several TRILION Dollars.

As a result of this, Bernanke has gone into full-blown damage control mode, staging town-hall meetings and granting the press Q&A session (an unprecedented move), in a clear attempt to make himself appear more accessible and likeable to the public.

Indeed, things have gotten so heated that Bernanke even wrote a letter to policymakers defending the Fed and stating that the media’s [Bloomberg] recent reporting of the Fed’s actions contained “egregious errors.”

The significance of this CANNOT be overstated. This is a man who just a year or two ago was so arrogant of his power that he committed blatant perjury in front of Congress (the famed “debt monetization” lie)… NOW writing a letter to politicians whining about how unfair the media has been regarding his monetary actions.

This is a massive and I mean MASSIVE shift for Bernanke… and it underscores just how much the political environment has changed. Bernanke is politically toxic and he knows it. So expect him and his cronies to be much MUCH more attentive to how their moves appear to the public.

Which makes it all the more UN-likely that he’ll be able to unveil any major new policies/ QE 3 without some kind of systemic issue (a major bank going under, etc) happening first.

Consider the latest Fed move to lower the cost of borrowing US Dollars. First of all, the Fed acted with other central banks to implement this… so it was not the Fed acting alone. Secondly this move didn’t involve throwing the usual hundreds of billions of dollars around. Instead, all it did was lower the cost of borrowing Dollars.

This is a very reactive, more politically palatable move compared to the more aggressive actions of QE 1, QE lite, and QE 2. Indeed, even a brief overview of the Fed’s moves in 2011 show them to be largely symbolic or verbal in nature, especially compared to the Fed’s actions in 2010.

Which brings me back to one of my core themes for the future: that the Fed will NOT be able to act aggressively (if at all) without some systemic issue occurring first. Which means that the market and the bulls are completely misguided in believing the Fed’s about to unveil QE 3 or some major new policy any time soon… if at all.

So if you believe the Fed is coming to save the day for the EU… or the financial system in general… you’re in for a rude surprise. Indeed, if we look at the bond or credit markets, it’s clear we’re into a Crisis far greater than 2008. Forget the stock market rally. Stocks ALWAYS get it last (just like in 2008). And before the smoke clears on this mess we’re going to see sovereign defaults, bank holidays, riots, and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To wit, my clients MADE money in 2008 outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 STRAIGHT WINNERS including gains of 12%, 14%, 16% and 18%,

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with my Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

 

 

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Bernanke’s Scared… And He Should Be

Is the Fed Leaking Again?

Something fishy is going on in the markets. Stocks are holding up relatively well this morning, while the credit markets deteriorate. That the market could digest S&P putting Austria, France, and Germany under credit downgrade review this easily is a bit much to stomach.

We know that the Fed and other Central Banks have a tendency to leak information to certain friends in advance, so I cannot help but wonder if stocks are showing this strength based on someone knowing something we don’t.

Alternatively, this could just as easily be stocks showing their usual cluelessness about the true state of affairs in the financial system as traders gun the market higher for whatever misguided reason they come up with.

For certain, all eyes are on Europe where Merkel and Sarkozy continue to claim they have reached new agreements, only for it to be revealed that in point of fact they haven’t come up with anything new, nor are their proposed solutions A) viable or B) palatable to other EU members.

There is a price for kicking the can time and again: every day Germany continues to play with the idea of backstopping Europe is a day it creeps closer to losing its AAA rating. Germany already sports a real Debt to GDP of 200% (when you include unfunded liabilities) and has yet to recapitalize its banks.

Moreover, the German populace will not tolerate either Eurobonds or money printing from the ECB. So all proposed ideas so far won’t fly with German voters anyway (to say nothing of other EU members who will not be too excited about a German-lead Europe).

In other words: so far no one has any REAL solutions. So unless someone is about to unveil a REAL new proposal, stocks are misguided in their enthusiasm here.

Regardless, this is a very dangerous market environment and one that needs to be traded with extreme caution. Only those in the know can guess the Fed’s day to day moves. We’re not in that crowd.

However, big picture, nearly every indicator is pointing towards trouble ahead. The issue is whether we’re going to see another intervention before the stuff hits the fan. But things have reached a critical point in Europe. And we’re now getting some staggeringly bad data out of China as well. Barring more interventions, the trend will likely be down.

On that note, if you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe’s banking system as well as the volatility in the US Dollar.

In fact, we just closed out our 32nd straight winner last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory today… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

 

Posted in It's a Bull Market | Comments Off on Is the Fed Leaking Again?

Graham Summers’ FREE Weekly Market Forecast (Fade the Fed? Edition)

Equities got giddy last week when the world’s central banks, lead by the US Federal Reserve, lowered the global cost of borrowing Dollars. Regardless of the market’s reaction, the whole thing smells of desperation and quite frankly, everyone should be questioning the Fed’s move.

First of all, the situation in Europe is a solvency Crisis, not a liquidity Crisis. European banks need over one trillion Euros in new capital. Providing more cheap credit is not going to do anything other than give those European banks which are facing liquidity troubles a few more weeks life support.

Speaking of which, it’s now clear that Europe is fast approaching its Lehman moment. Forbes noted that a large European bank was on the ropes the night before the Fed intervention. We also see France and Germany are implementing plans to nationalize large banks that fail. I can assure you they’re not doing this because things are going well over there.

As for the market’s reaction to the Fed’s move… it could kick off a short-term end of the year rally depending on how much the market falls for the “this time we’ve got a REAL solution” tripe coming our of Europe. But, you must remember that none of the proposed solutions address the underlying problems Europe’s banks are facing.

Technically, the Fed’s move brought the market to major resistance. Unless the market moves higher aggressively to start this week, we’re heading back down in short order.

Truly, the only reason to buy into a stock rally here is based on the belief that the Fed or someone else is going to be providing more juice in the near future. The US economy has clearly begun to roll over in a big way: retail sales, GDP, and unemployment numbers are all being massaged heavily to make the situation look better than it is.

This is clear in corporate earnings which just posted their worst sequential drop since the first quarter of 2009: when the economy and markets were both falling off a cliff. These kinds of drops don’t happen if everything’s going well.

Across the pond, Europe’s banking system is experiencing a solvency crisis on par with 2008. The markets believe that Germany and France will save the day by re-vamping the EU arrangement. However, this doesn’t mean other EU members will agree to their suggestions (the idea of a German-lead EU is completely unpalatable to many EU states).

So I don’t expect a viable solution to emerge in Europe this week. The math doesn’t support any of the proposals EU leaders have come up with yet. And the fact it was the Fed, NOT the IMF or ECB or EFSF that stepped in to save the day last week should be a major red flag that Europe’s out of ideas.

The markets seem to sense this as the Euro hasn’t cleared resistance in any meaningful way yet. And unless we get above 135 and stay there, we’re heading a LOT lower in the near future.

To conclude, in the short-term the markets are moving based on hope of more juice from the Powers That Be. However, the reality of the financial system today is downright frightening. The US economy is rolling over in a big way. Europe is imploding. China is heading straight into a hard landing. And on and on.

Heck, Europe alone could derail the entire financial system temporarily. The region’s entire banking system is insolvent (with few exceptions). European non-financial corporations are running massive debt to equity ratios. And even EU sovereign states require intervention from the ECB just to meet current debt issuance, to say nothing of the huge amount of sovereign debt roll over that is due over the next 14 months.

The impact of this will be global in nature. The EU, taken as a whole, is:

 

1)   The single largest economy in the world ($16.28 trillion)

2)   Is China’s largest trade partner

3)   Accounts for 21% of US exports

4)   Accounts for $121 billion worth of exports for South America

So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).

This is the reality of the financial system, no matter what the talking heads say. The IMF, Bank of England, and others have warned of a systemic collapse… do you think they’re doing this for fun?

Many investors will have their portfolios wiped out in the coming carnage. It could be next week, or it could take place next year… but we ARE heading into a Crisis that will be worse than 2008.

If you’re looking for someone to help you navigate this mess, I strongly urge you to try out my Private Wealth Advisory newsletter.

Few investors have my ability to cut through the noise and identify the most important macro- and financial trends. To wit, my clients MADE money in 2008 and the Euro Crisis of May 2010. They’ve also locked in 32 STRAIGHT winners in the last four months, outperforming virtually every investment fund on the planet.

Because of our high quality research as well as our independence (our research is unbiased by relationships or advertising dollars), we’ve become one of the most highly regarded investment research firms out there: our clients include executives and strategists at Exxon Mobil, Time Warner, Boston Scientific, John Deere, Medtronic, Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, Raymond James and others.

These clients look to us to help them navigate the markets volatility. And we provide them with top quality research and investment returns as a result: we haven’t closed a losing trading since July 2011.

We’d love for you to join us.

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports… including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis…

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Best Regards,

Graham Summers

 

 

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Graham Summers’ FREE Weekly Market Forecast (Fade the Fed? Edition)

What Does the Fed Know That We Don’t?

The thought that should be on every investor’s mind today is “Why did the Fed have to stage the coordinated intervention yesterday?’

Put another way, what exactly does the Fed know that we don’t?

The whole thing smells fishy to me. Aside from the fact that the Fed clearly leaked its intentions as early as Monday night (hence the reason stocks rallied while credit markets weakened), there’s something peculiar about the fact the Fed chose to do this at the end of November.

Why November 30? Why not today or Tuesday?

I think the answer is that the Fed stepped in to help its institutional investor/ hedge fund buddies. November was a horrible month for this crowd. And with Bank of America approaching $5 per share (a level which would require many institutions to liquidate due to regulations), the Fed was also helping out its favorite insolvent bank as well.

Aside from this, Europe was approaching the End Game.  Germany won’t permit the ECB to print nor to issue Euro-bonds. The EFSF plan was dead before arrival, failing to even stage a 3 billion Euro bond auction without having to step in and buy the bonds itself. And the IMF wasn’t going to be an option either.

Put another way, ALL other bailout options had failed for Europe. The Fed was the lender/ intervener of last resort. That alone should have everyone worried as it indicates just how dire things had become in Europe.

However, there’s something far more worrisome about the Fed’s move which is that: IT SOLVES NOTHING.

Europe is facing a solvency crisis. Lowering the cost of borrowing Dollars does absolutely ZERO to help European banks raise capital. All it does is provide even more easy credit… which of course is the entire problem to begin with.

Banks across Europe are leveraged at an average of 26 to 1. This means that they own 26 times more assets (read: loans made to consumers, businesses, etc) than they do equity.

At these leverage levels, if the assets fall even 4% in value, you’ve wiped out ALL equity, rendering the bank bankrupt.

In this situation, providing more liquidity to these banks helps in terms of short-term operations, but it does nothing to address the core issue which is too little capital and too much leverage.

So this move, as dramatic as it was for the stock market has done NOTHING to solve Europe’s solvency crisis.

Indeed, we have reports that a large European bank was on the verge of collapse last night. Things are so bad that Germany has drawn up legislation to allow countries to leave the Euro while remaining in the EU.

I believe Germany itself will be using this option in the next few weeks as it realizes that it cannot and will not be able to prop up the Euro any longer (even Germany doesn’t have the 1 TRILLION Euros’ in capital that European banks need).

So do not be fooled. The Fed’s move today didn’t fix anything. At most its bought the markets a few weeks’ time before the whole mess comes crashing down.

So if you have not taken steps to prepare for this, the time to do so is now.

I can show you how.

Few people on the planet can match my ability to return a profit during times of Crisis.

To wit, my clients made money in 2008 outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 Straight Winners including gains of 12%, 14%, 16% and 18%… using stocks and ETFs.

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with my Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts (this is how we’ve locked in 32 straight winners in the last three months).

All of this is yours for just $249 per year.

In fact, if you subscribe now, you’ll receive my latest issue of Private Wealth Advisory hot off the press and detailing four investments poised to produce HUGE gains in the coming weeks.

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. The Fed’s intervention will at most buy us a week or two.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

 

 

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on What Does the Fed Know That We Don’t?

You Cannot Build a Financial System on Rumors and Lies

This act is getting old.

Almost every other day we’re getting rumors about new bailouts and interventions in Europe. All of these rumors turn out to be total lies as they are refuted usually within a day and sometimes within a few hours.

Case in point, stock futures erupted overnight on Sunday on rumors that Italy would be getting a 600 billion euro bailout from the IMF. Just a few hours later this story came out:

IMF denies in Italy aid talks

However, an IMF spokesperson poured cold water on a report in the Italian daily La Stampa that said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months.

“There are no discussions with the Italian authorities on a program for IMF financing,” an IMF spokesperson said.

http://www.reuters.com/article/2011/11/28/us-italy-idUSTRE7AQ0GU20111128

Is this what the markets have devolved to? The equivalent of gossip that borders on “he said, she said” nonsense? Also, why is it no one even checks with the reporters who publish the initial rumor-based news? Can reporters simply publish total lies these days and no one cares (that’s a rhetorical question, we already know the answer).

The whole thing just reminds us of the core issue pertaining to this Crisis: values.

This is not a monetary Crisis; it is a Crisis of values and morals. It is a Crisis caused by the notion that you can lie about virtually everything pertaining to a business deal (the quality of the assets, who owns them, whether they’re even legitimate, etc) and get away with it.

To review how we go into this mess, Wall Street and other industries lobbied Congress to loosen regulations. However, the secondary nature of those lobbying efforts was it trained Congress to see Wall Street as the hand that feeds, thereby making it unlikely for Congress to prosecute or pursue any criminal activity on the part of the bankers.

Take away consequence and rules and you have anarchy. And that’s virtually what we had in the Financial System leading up to the Crisis. Looking back on some of the more glaring situations (AIG, Goldman Sachs, etc) it’s simply amazing the whole mess didn’t blow up sooner.

The Federal Reserve and regulators then blew a one in 100 years opportunity to reform the system. We’re now finding out that instead of doing anything positive, Bernanke literally gave away TRILLIONS of Dollars to the banks.

In simple terms, the Fed engaged in the exact same business practices that blew up the mortgage lenders: giving money away without inquiring as to the borrowers real financial position or needs.

By doing this, the Fed spread the lies (and toxic debts) onto the public’s balance sheet, thereby compromising the Republic’s creditworthiness.

In plain terms, Bernanke extended the Big Lie: that those working in the financial sector are the smartest, most capable people on earth and that they know what they’re doing (even though they almost blew up the system).

Which brings us to today.

The whole system is now built on lies. The lie that banks are solvent. The lie that the Federal Reserve actually cares about regulating the financial system. The lie that crimes will be punished. The lie that Congress will reform Wall Street. The lie that we’ll get “change” at the ballot box.

And on and on.

You cannot build a financial system on lies. It simply doesn’t work. All it does is breed distrust and resentment. And as any businessperson can tell you, without trust business cannot work.

Small wonder then that the private sector won’t hire and the economy won’t recover. Debt only becomes a problem when the person who borrows can no longer be trusted to pay you back. We’ve now crossed that line and are trying to prop things up with more lies and more easy credit.

Neither math nor common sense indicate that this will turn out well. Indeed, when this mess finally comes undone, it’s going to make Lehman look like a joke. We’re now talking about entire countries collapsing, not just private institutions

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To whit, my clients made money in 2008 outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 Straight Winners including gains of 12%, 14%, 16% and 18%,

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with my Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

In fact, if you subscribe now, you’ll receive my latest issue of Private Wealth Advisory hot off the press when it’s published tomorrow evening after the market closes.

In it I detail six investments that are poised to produce enormous profits in the next month when the next leg down begins…

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

Posted in It's a Bull Market | Comments Off on You Cannot Build a Financial System on Rumors and Lies

How the European End Game Will Play Out

With the European End Game now in sight, the primary question that needs to be addressed is whether Europe will opt for a period of massive deflation, massive inflation, or deflation followed by inflation.

Indeed, with Europe’s entire banking system insolvent (even German banks need to be recapitalized to the tune of over $171 billion) the outcome for Europe is only one of two options:

1)   Massive debt restructuring

2)   Monetization of everything/ hyperinflation

These are the realities facing Europe today (and eventually Japan and the US). Either way we are talking about the destruction of tens of trillions of Euros in wealth. The issue is which poison the European powers that be choose.

Personally, I believe we are going to see a combination of the two with deflation hitting all EU countries first and then serious inflation or hyperinflation hitting peripheral players and the PIIGS.

In terms of how we get there, I believe that in the next 14 months, the following will occur.

1)   Germany and possibly France exit the Euro

2)   ALL PIIGS defaulting on their debt

3)   Potential hyperinflation in the PIIGS and peripheral EU countries

Regarding #1, we are already beginning to see hints of this development in the press:

DEATH OF THE EURO: SECRET PLOT TO WRECK THE CURRENCY

Ministers are understood to be deeply concerned that French President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel are secretly plotting to build a new, slimmed down Eurozone without Greece, Italy and other debt-ridden southern European nations.

Well-placed Brussels sources say Germany and France have already held private discussions on preparing for the disintegration of the Eurozone.

http://www.express.co.uk/posts/view/283060

FRENCH AND GERMANS EXPLORE IDEA OF SMALLER EURO ZONE

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller Euro zone, EU sources say.

“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.

http://www.reuters.com/article/2011/11/09/us-Eurozone-future-sarkozy-idUSTRE7A85VV20111109

With no one willing to foot the bill for the EFSF the markets are hoping Germany will step in and save the day. However, the German constitution forbids Germany from backing Euro-bonds.

German EconMin: court verdict rules out Euro bonds

German Economy Minister Philipp Roesler said on Thursday the constitutional court’s ruling on Euro aid made it clear that joint Euro zone bonds were not an option.

Addressing left-wing opposition parties in the Bundestag lower house of parliament, Roesler said: “You continue to talk up Euro bonds although the constitutional court yesterday made it clear that as transfer union such as the one you propose on the left will never be possible, never be allowed.”

“We don’t want it politically, either, and we will not let the German taxpayer be obliged to pay for the debt of other countries,” he said in a parliamentary budget debate.

http://www.reuters.com/article/2011/09/08/Eurozone-germany-Eurobonds-idUSB4E7K600L20110908

Moreover, Germans will simply not permit the monetization of debt. Weimar’s hyperinflation happened in the early 1920s and is still fresh in the memories of the German people (those who lived through it undoubtedly told their children and grandchildren about it). So the German people will not tolerate price instability in any form.

Germany is not alone in having little or no desire to attempt to backstop the system. Indeed, NONE of the G20 countries wish to support the EFSF from a monetary standpoint (yet another sign that the bailout game is ending).

No new Euro zone money for debt crisis at G20

The Euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.

Leaders of the world’s major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

“There are hardly any countries here which said they were ready to go along with the EFSF (Euro zone rescue fund),” German Chancellor Angela Merkel told a news conference.

http://www.reuters.com/article/2011/11/04/us-g-idUSTRE7A20E920111104

So… everyone claims they want to support the EFSF… but no one wants to commit the money. Moreover, Germany’s constitution forbids the backing of Euro bonds… and the EFSF itself has failed to stage even a three billion Euro bond offering under normal market conditions.

Again, the bailout game is ending. Under these conditions, I believe Germany and France will push to either:

1)   Leave the EU

2)   Draft legislation that allows countries to leave the Euro but remain in the EU

3)   Propose kicking out the PIIGS from the Euro

Whichever one of these options Germany opts for, the Euro will collapse. Indeed, the primary reason the Euro has been rallying since October is due to French banks and others selling assets (buying Euros) to recapitalize themselves.

Put another way, the Euro rally is in fact NOT a sign of currency strength. Instead, it is a sign that the major players are moving to cash (Euros) in an attempt to lower their exposure to PIIGS’ debt.

Indeed, if we look at the bond or credit markets, it’s clear we’re into a Crisis far greater than 2008. Forget the stock market rally. Stocks ALWAYS get it last (just like in 2008). And before the smoke clears on this mess we’re going to see sovereign defaults, bank holidays, riots, and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To whit, my clients MADE money in 2008, outperforming every mutual fund on the planet as well as 99% of investment legends.

We also outperformed the market by 15% during the Euro Crisis of 2010. And since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 30 STRAIGHT WINNERS including gains of 12%, 14%, 16% and 18%,

So if you’re looking for a guide to get you through the coming disaster, I’m your man.

I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.

I can do the same for you with my Private Wealth Advisory newsletter.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

In fact, if you subscribe now, you’ll receive my latest issue of Private Wealth Advisory hot off the press when it’s published tomorrow evening after the market closes.

In it I detail six investments that are poised to produce enormous profits in the next month when the next leg down begins…

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…

Click Here Now!!!

Best Regards

Graham Summers

 

 

Posted in It's a Bull Market | Comments Off on How the European End Game Will Play Out

Graham Summers’ FREE Weekly Market Forecast (Euro Breakup Edition)

The markets are rallying hard today for three reasons:

1)   Traders gaming the usual manic Monday

2)   The markets were oversold having fallen six straight days

3)   Short covering

These are the real reasons the market is exploding higher. Traders are simply using the (since refuted) IMF bailout of Italy rumor to gun the usual manic Monday rally and shred the shorts.

Technically, we were oversold and at support. So a bounce of some note here makes sense. However, a 3% rally? On rumors of an Italian bailout? Give me a break.

Regardless, this overnight move has already brought us up to resistance for the S&P 500. So we could easily see a reversal at any time (more on this in a moment).

The Euro also looks to be putting in a dead cat bounce:

I’ve received a few emails recently about my pessimism regarding the markets, even when stocks rally. The reason I am so pessimistic is because the bond markets, credit markets and interbank liquidity indicate that the situation in Europe is now into “2008 mode”.

Indeed, Treasuries have already exceeded their 2008/2009 peak. Tell me, what do you make of a situation in which the bond markets (which are far larger than stocks) are acting as though we’re in a Crisis worse than 2008… which stocks are rallying?

If you’ll recall from 2008, stocks rallied and held up much, much longer than the bond or credit markets. For that reason stocks are a terrible indicator of the real state of the financial system… which is why I remain so deeply concerned about the markets even though stocks have staged several very sharp rallies.

The reality for Europe is very, very grim. Among other items, we’ve recently seen:

1)   Italy’s 10 year note pass 7% in yield (the end of the line level)

2)   Germany post a failed bond auction

3)   The EFSF plan scaled back with less leverage

4)   German companies warning their Greek subsidiaries to prepare for contracts that are based in Drachma, NOT Euros

5)   Germany hint that it will leave the Euro if the ECB prints money

6)   The currency trading house ICAP prepare for the dissolution of the Euro

Do you still think stocks “get” what’s happening today?

The reality is that we are already into a full-scale Crisis in Europe. Do you remember warnings of riots and systemic collapse in 2008? Well, we’re getting those this time around. Do you think these folks are issuing these warnings because we’re going to get through this mess easily?

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 30th straight winner last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

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Best Regards,

Graham Summers

 

Posted in It's a Bull Market | Comments Off on Graham Summers’ FREE Weekly Market Forecast (Euro Breakup Edition)

Why Europe Will Result in Systemic Risk

Let’s rehash the European situation for those who still don’t get it.

Taken as a whole, the US banking system is leveraged at 13 to 1. Leverage levels at the TBTFs are much much higher… but when you add them in with the 8,100+ other banks in the US, total US bank leverage is 13 to 1.

The European banking system as a whole is nearly twice this at over 25 to 1. That’s the ENTIRE European Banking system leveraged at near Lehman levels (Lehman was 30 to 1 when it collapsed).

To put this into perspective, with a leverage level of 25 to 1, you only need a 4% drop in asset prices to wipe out ALL capital. What are the odds that European bank assets fall 4% in value in the near future?

Now let’s consider TOTAL debt sitting on Financial Institutions’ balance sheets in Europe. The below chart shows this number for financial institutions in several major EU members relative to their country’s 2010 GDP.

Country Financial Institutions’ Gross Debt as a % of GDP
Portugal 65%
Italy 99%
Ireland 664%
Greece 21%
Spain 113%
UK 735%
France 148%
Germany 95%
EU as a whole 148%

Source: IMF

As you can see, financial institutions in Germany, France, Italy, Spain, the UK, and Ireland are all ticking time bombs. Indeed, taken as a whole, European financial institutions have more debt than Europe’s ENTIRE GDP.

These leverage levels alone position Europe for a full-scale banking collapse on par with Lehman Brothers. Again, I’m talking about Europe’s ENTIRE banking system collapsing.

This is not a question of “if,” it is a question of “when.” And it will very likely happen within the next 10-12 months if not sooner depending on how soon Greece defaults.

The reason that this is guaranteed to happen before the end of 2012 is that a HUGE percentage of European bank debt needs to be rolled over by the end of 2012.

Between now and then…

  • French banks need to roll over 30% of their TOTAL debt.
  • Spanish banks and Italian banks need to rollover more than 33% of their TOTAL debt.
  • German banks need to roll over nearly 40% of their TOTAL debt.
  • Irish banks need to roll over almost HALF (50%) of their TOTAL debt.

Good luck with that.

The situation is no better for European Sovereign states themselves, which are facing their own debt roll over issues at a time when investors are rapidly losing their appetite for sovereign debt.

To wit, Spain, Portugal, and Italy have all relied heavily on the ECB to buy their debt at recent auctions. Germany actually just had a failed debt auction this morning.  And in this environment , these nations need to meet the following debt roll over obligations:

Maturing Debt Plus Budget Deficit as a % of GDP
2011 2012
Portugal 21.6% 21.0%
Italy 22.8% 23.1%
Ireland 19.5% 18.0%
Greece 24.0% 26.0%
Spain 19.3% 18.7%
UK 15.7% 13.6%
France 20.6% 19.7%
Germany 11.4% 10.5%

 

And this is just maturing debt that’s due in the near future: it doesn’t include unfunded liabilities.

Jagadeesh Gokhale of the Cato Institute puts the situation as the following, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”

As I said before, Europe is finished. The region’s entire banking system is insolvent (with few exceptions). European non-financial corporations are running massive debt to equity ratios. And even EU sovereign states require intervention from the ECB just to meet current debt issuance, to say nothing of the huge amount of sovereign debt roll over that is due over the next 14 months.

Again… Europe. Is. Finished.

The Great debt Implosion will hit Europe within the next 14 months and likely much much sooner. When it dues, we will see numerous debt defaults and restructuring on both the corporate and sovereign levels. We’re also very likely going to see significant portions of the European banking system collapse “Lehman-style” along with subsequent HUGE losses of capital.

The impact of this will be global in nature. The EU, taken as a whole, is:

1)   The single largest economy in the world ($16.28 trillion)

2)   Is China’s largest trade partner

3)   Accounts for 21% of US exports

4)   Accounts for $121 billion worth of exports for South America

So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).

Again, we’re in for a rough rough future in the financial system.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

When this happens the entire system could go down. I’m talking about bank holidays, sovereign debt defaults, retirement accounts and pension funds wiped out, even food shortages in some areas.

This will NOT be permanent, nor will we enter some kind of Mad Max apocalypse. But there will be temporary shutdowns of the banking system as they work through this mess. And given that most folks rely almost entirely on their credit cards to survive and haven’t prepared at all, things could indeed get very messy at times.

So you NEED to take steps now to prepare for all of this. This includes having some cash on hand as well as actual physical bullion. It also means stockpiling some food and water.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

I’ve already alerted Private Wealth Advisory to 12 CRISIS trades (three for Europe, nine for the US) that will all produce HUGE profits as this mess collapses.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect  Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 28 straight winners… including gains of 10%, 15%, 16%, and more)

All of this, for one full year, for just $249.99.

To take out an annual subscription to Private Wealth Advisory now and start taking steps to insure your loved ones and personal finances move through the coming storm safely…

Click Here Now!!!

Best Regards,

Graham Summers

Posted in It's a Bull Market | Comments Off on Why Europe Will Result in Systemic Risk

Either the ECB Prints and Germany Walks… or the EU Sees a Domino Debt Collapse Followed by Systemic Failure

By now, even the mainstream media is realizing what I’ve been saying for well over a year: that the EU in its current form is finished.

I initially believed that we would see Greece kicked out of the EU. However, at this point it looks much more likely that it will be GERMANY who leaves.

The reason is quite simple really. Germany WILL NOT tolerate debt monetization. They’ve seen how that situation plays out (Weimar) and will not allow it again, END OF STORY. If the ECB opts to print money, Germany is out.

So… the only other option to save the EU to last would be the leveraged EFSF. However, as we’ve seen, that option is a dead end as well:

No new Euro zone money for debt crisis at G20

The Euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.

Leaders of the world’s major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

“There are hardly any countries here which said they were ready to go along with the EFSF (Euro zone rescue fund),” German Chancellor Angela Merkel told a news conference.

http://www.reuters.com/article/2011/11/04/us-g-idUSTRE7A20E920111104

Remember, the EFSF failed to even stage a 3 billion Euro bond auction without buying some of the bonds itself. And with no one in the G20 wanting to fund the EFSF, the EFSF is in no way going to backstop Europe.

So there are now only two REAL outcomes:

1)   The ECB prints (and Germany walks) resulting in the Euro losing at the minimum 30-40% of its value

2)   Massive defaults and debt restructuring accompanied by systemic failure in Europe

These are the facts. I know that the mainstream financial media and other “experts” like to proclaim that Europe can somehow muddle through this, but they’re wrong. The EU kicked the can down the road for over a year in terms of debt restructuring for Greece. Now it’s facing a problem it CANNOT possibly bail out: Italy.

In other words, the can has finally hit up against the wall. The market is not willing to lend to Italy at present levels. Nor is the market willing to lend to the EFSF. The only two potential backstops for the EU are now Germany or the ECB. And Germany WILL NOT allow money printing/ debt monetization to take place.

Folks, I don’t know how else to say this, but if Europe experiences just a 2008 type event, it will be LUCKY. The entire European banking system is leveraged at 26 to 1. At these levels even a 4% drop in asset prices wipes out all equity.

Add to this the fact that with unfunded liabilities included, the average EU member states sports a REAL Debt to GDP ratio north of 300%, and you’ve got the makings of systemic failure. Indeed, even Germany, the supposed beacon of fiscal stability has a REAL Debt to GDP of 200% (this data points comes straight form Axel Weber’s mouth) and has yet to recapitalize its banks.

And Germany is THE most solvent major member of the EU.

I cannot say just how bad things will be when the stuff hits the fan in Europe. But the EU is going into a banking/ sovereign crisis with WORSE fundamentals than the US had when it went into its own 2008.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

When this happens the entire system could go down temporarily. I’m talking about bank holidays, sovereign debt defaults, retirement accounts and pension funds wiped out, even food shortages in some areas.

So you NEED to take steps now to prepare for all of this. This includes having some cash on hand as well as actual physical bullion. It also means stockpiling some food and water.

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 20th and 21st straight winners last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

Posted in It's a Bull Market | Comments Off on Either the ECB Prints and Germany Walks… or the EU Sees a Domino Debt Collapse Followed by Systemic Failure

Graham Summers’ Weekly Market Forecast (Flashback Thanksgiving 2009? Edition)

Stocks broke down in a big way last week as the situation in Europe has become truly dire. I’ll be addressing that situation in greater detail tomorrow, but for now, you should know that there are truly only two possible outcomes for the Euro:

1)   The ECB prints money and Germany leaves the EU

2)   Germany remains in the EU but moves to kick other countries out as the defaults start coming fast

The market has already proven that the EFSF won’t save the Euro. And Italy, the third largest bond market in the world, is creeping towards a default by the minute. So the above outcomes are the only realistic options that are left. And both of them will send the Euro, and stocks, lower in a big way.

On that note, the S&P 500 broke down last week as the descending trendline (black line) from the July top proved to be too much for this latest rally to overcome. We’ve now taken out the lower trendline (green line) that supported stocks since October as well as critical support (red line) formed by the trading range that dominated the market’s action from August through October.

Once we get a definitive move below the red line in the chart above, then the door is open for us to test support at 1,175 and possibly even 1,125 in short order.

This is a holiday week so trading volume will be light. However, recall that it was during Thanksgiving 2009 that the sovereign defaults first started when Dubai asked for an extension on $60 billion in debt it owed. Will we get a European version of the Thanksgiving day collapse this time around with Italy? It’s definitely possible as the ECB is now intervening on a daily basis to slow down the bond implosion over there.

On that note, both Gold and Silver are looking deflationary… or at least undergoing liquidations.

 

Remember, defaults are deflationary in nature, and given that Europe is literally on the brink of systemic failure, Gold and Silver’s recent action may be hinting that we’re about to see another round of defaults/ deflation in the markets.

After all, when you combine the situation in Europe, along with the ongoing Depression in the US, MF Global’s bankruptcy, and the fact that most institutional investors remain heavily invested to the long-side (opening the door to intense selling pressure as everyone has gone “all in”), you’ve got a recipe for a REAL collapse.

So, just be aware that if things get messy, the markets could get downright UGLY fast. Leverage levels today exceed those of the Tech bubble. And we’ve already had one player taken out by bad bets (MF Global).

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 20th and 21st straight winners last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

 

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

Posted in It's a Bull Market | Comments Off on Graham Summers’ Weekly Market Forecast (Flashback Thanksgiving 2009? Edition)

Are Companies Less Risky Than Countries?

Graham’s note: The following is an excerpt from my most recent Private Wealth Advisory newsletter. In it I explain how the Fed’s moves have changed investor appetite for various asset classes. To find out more about Private Wealth AdvisoryClick Here!

For much of the 20th century, sovereign bonds, particularly US Treasuries were considered the least risky assets to own. The idea was that while corporations and other entities might default or go bust, the US , which is the largest economy in the world, will always be able to meet its debt obligations by virtue of its economic strength or, at a minimum, printing money to pay back its creditors.

However, when the Great Crisis first erupted with Round One in 2008, the Governments and Central Banks of the world chose two policies to combat debt deflation.

The first was to move private sector debts, particularly toxic mortgage backed assets and derivatives, onto the public or sovereign balance sheets. This was most common in developed countries such as the US, UK, etc.

The second policy that Central Banks and Sovereign Governments chose to enact was printing money/ providing capital injections into their respective economies in an attempt to promote economic growth.

Both of these policies put sovereign balance sheets at risk/ damaged their trustworthiness. The first policy didn’t actually involve dealing with the debts via default or restructuring. Rather, the toxic debts and derivatives were merely moved from the private sector onto the public’s balance sheet. At the same time, the second policy (monetary intervention) ballooned both public debt and fiscal deficits.

As a result of this, the “risk profile” for all asset classes has changed dramatically.

Let me give you an example.

Who do you trust more from an investment perspective: Exxon Mobil or the US?

Historically, the common thought would have been the US. The US offered a better yield and was the largest, strongest economy in the world. Also, Treasuries are backed by the full faith and credit of the US Government, which has a printing press to insure you get your money back in one for or another.

Today, the issue is far more murky. Take a look at the following numbers:

 

Exxon Mobil The US of A
Debt to Market Cap/ GDP 37% 100%
Earnings/ Receipts to Market Cap/ GDP 8% 15%
Cash on Hand $7.8 billion $73 billion
Credit Rating AAA AA+
Two year annual yield 4.8% 0.31%

 

From a balance sheet perspective, Exxon is more attractive with less debt and a higher yield. It also has a higher credit rating and a history of increasing its payout to investors (the company has raised its dividend every year for 26 years).

In contrast, lending money to the US means receiving next to nothing in yield (0.31%). It also means you’re even more likely to see your investment lose money as Treasuries are in a bubble that will end as all bubbles do.

Other issues to consider are that the US is currently running a deficit of $1.5 trillion, sports a Debt to GDP ratio of 100% (300+% when we consider unfunded liabilities). And shows no indication of reining in these policies.

Thus, even by a quick back of the envelope analysis, we find ourselves in an environment in which a single corporation such as Exxon is actually more trustworthy (from an investment perspective) than the US Government.

This represents a complete reversal from the mentality that dominated investing for most of the last 80+ years. During that time, stocks were widely held to be riskier assets while Government bonds were considered safe: investment advisors would urge younger investors to invest heavily in stocks for “growth” while older investors who were closer to retirement were urged to invest in bonds, particularly Government bonds for “income”.

This is why the Greek default is so important for the financial world: if a sovereign nation’s bonds can lose 50% in value in a single day, the entire “risk spectrum” among asset classes has changed dramatically.

Folks, when we’re talking about entire countries going bust, then you KNOW that we’re in for a rough time. The reality is that the powers that be (the Federal Reserve and ECB) are fast losing control of the system. Bernanke’s already admitted he hasn’t got a clue how to solve the financial system’s problems. The Bank of England says we’re facing the greatest financial crisis in history. Even the IMF has warned that we’re heading towards a global financial meltdown.

The reality is that 2008 was just the warm-up. And we’re now heading into the Second Round of the GREAT CRISIS: the Sovereign Default round in which entire countries will go bust. By the time this mess ends, we’re facing systemic failure, bank holidays, debt defaults, and more.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

If you’re an individual investor (not a day trader) looking for the means of profiting from the European Crisis, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends. Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 16th straight winner yesterday. And we’ve only closed ONE LOSING trade since JUNE!

My clients include executives at many Fortune 500 companies as well as strategists at Morgan Stanley … Merrill Lynch … Wachovia … and the Royal Bank of Scotland … as well as numerous hedge funds.

I’d love for you to join us in profiting from the ongoing market volatility.
To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again, we’ve only closed ONE LOSING trade since June)…

Click Here Now!!!

Best Regards,

Graham Summers

 

Posted in It's a Bull Market | Comments Off on Are Companies Less Risky Than Countries?

What Other MF Globals Are Lurking In the System?

Without trust, the financial system cannot work. The regulators and Federal Reserve have done nothing to assuage these concerns. Instead they’ve shifted all trust onto their own shoulders: the defining bull argument for the market and economy is that “the Fed will save us”, or “don’t fight the Fed.”

As powerful as it may be, the Fed is not the market. And since the Fed failed to restore trust in the system by forcing all bad debts to light, the financial world has grown increasingly volatile and broken as investors grow increasingly distrustful of the system and begin to pull their money from it: investors have pulled $266 billion from stock based mutual funds since January 2008.

Nowhere is the lack of trust more apparent than in the financial sector. Indeed, it was a lack of trust between banks (inter-bank lending) that caused the credit markets to jam up in 2008, which resulted in the Crash.

That lack of trust continues to this day. In the post-Lehman collapse, instead of forcing real derivative and credit risk out into the open, the Federal Reserve and regulators instead suspended accounting standards and allowed financial firms (and other corporate entities) to continue to lie about the true state of their balance sheets.

As a result of this, the financial sector remains rife with fraud and impossible to accurately value (how can you value a business that is lying about its balance sheet?).

Those times in which a company was forced to value its assets at market prices have always seen said values losing 80%+ value in short order: consider Washington Mutual, which sported a book value north of $70 billion right up until it was sold for… $2 billion.

This type of fraud is endemic in the system. Indeed, we got a taste of just how problematic a lack of transparency can be with MF Global’s bankruptcy, in which a firm with $42 billion in assets lost over 80% of its value since August only to reveal in bankruptcy that it had stolen over $700 million worth of clients’ money.

Report: MF Global Exec Admits to Using Client Money

MF Global, the futures brokerage that imploded this week after facing a run on the bank, reportedly admitted to regulators it used client money in an apparent violation of government rules and Wall Street practices.

According to The Associated Press, an unnamed executive from the New York-based firm that is led by former Goldman Sachs chief Jon Corzine made the admission Monday morning after regulators discovered some $700 million went missing.

http://www.foxbusiness.com/industries/2011/11/01/report-regulators-probe-missing-cash-at-mf-global/#ixzz1cU1reIJt

That MF Global engaged in fraud and stole clients’ money is noteworthy. However, the far more important issue is:  HOW did this company receive primary dealer status from the NY Fed this year?

The Primary Dealers are the banks that actively engage in day to day activities with the New York Fed regarding the Fed’s monetary policies. Primary Dealers also participate in US Treasury auctions.

Put another way, Primary Dealers are the most elite, well-connected financial firms in the world.  They have unequal access to both the Fed and the US Treasury Dept. In order for MF Global to have attained this status it must have passed through a review by:

1)   The New York Fed

2)   The SEC

This is not a quick nor superficial process. According to the NY Fed’s own site:

Upon submission of a formal application, a prospective primary dealer can expect at least six months of formal consideration by the New York Fed. That consideration may include, among other things, on-site reviews of front, middle, and back office operations, review of compliance programs and discussions with compliance and credit risk management staff, discussions with senior management about business plans, financial condition, and the ability to meet FRBNY’s business needs, review of financial information, and consultation with primary supervisors and regulators.

MF Global passed through all of these reviews to became a primary dealer in February 2011. Today, a mere nine months later, the firm is in Chapter 11 and has admitted to stealing clients’ funds to maintain liquidity.

These developments reveal, beyond any doubt, that financial oversight in the US is virtually non-existent. This returns to my primary point: that trust has been lost in the system. And until it is restored, the system will remain broken.

A final note on this: the NY Fed is the single most powerful entity in charge of the Fed’s daily operations. How can any investor believe that the Fed can manage the system and restore trust when the NY Fed granted MF Global primary dealer status a mere nine months before the latter went bankrupt?

If the NY Fed cannot accurately audit a financial firm’s risks during a six month review, then there is NO WAY an ordinary investor can do so.

With that in mind, the banking system remains at HUGE risk as NO ONE, not even the Fed, knows the true exposure on financials’ balance sheets. The Fed couldn’t even accurately assess MF Global, a $40 BILLION company. How could it assess JP Morgan or the TBTFs!?!?!

The reality is that 2008 was just the warm-up. And we’re now heading into the Second Round of the GREAT CRISIS: the Sovereign Default round in which entire countries will go bust. By the time this mess ends, we’re facing systemic failure, bank holidays, debt defaults, and more.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

If you’re an individual investor (not a day trader) looking for the means of profiting from the European Crisis, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends. Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 16th straight winner yesterday. And we’ve only closed ONE LOSING trade since JUNE!

My clients include executives at many Fortune 500 companies as well as strategists at Morgan Stanley … Merrill Lynch … Wachovia … and the Royal Bank of Scotland … as well as numerous hedge funds.

I’d love for you to join us in profiting from the ongoing market volatility.
To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again, we’ve only closed ONE LOSING trade since June)…

Click Here Now!!!

Best Regards,

Graham Summers

Posted in It's a Bull Market | Comments Off on What Other MF Globals Are Lurking In the System?

Graham Summers Weekly Market Forecast (Makings of a Top Edition)

There are two primary stories for the markets today. They are:

1)   The political/ financial reality facing Europe

2)   The US stock market rally

Regarding #1, it is clear as day that the EU in its current form is finished. I’ve been saying this for months, but now even the mainstream media is picking up on rumblings that Germany wants to exit the Euro or at least restructure the entire EU.

DEATH OF THE EURO: SECRET PLOT TO WRECK THE CURRENCY

Ministers are understood to be deeply concerned that French President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel are secretly plotting to build a new, slimmed down eurozone without Greece, Italy and other debt-ridden southern European nations.

Well-placed Brussels sources say Germany and France have already held private discussions on preparing for the disintegration of the eurozone.

http://www.express.co.uk/posts/view/283060

 

FRENCH AND GERMANS EXPLORE IDEA OF SMALLER EURO ZONE

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say.

“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.

http://www.reuters.com/article/2011/11/09/us-eurozone-future-sarkozy-idUSTRE7A85VV20111109

 

The reality of the Eurozone is as follows:

  1. Germany cannot and will not permit debt monetization to take place and so will back out of the Euro rather than foot the bill for other countries. With Weimar still present in the public’s conscious, the German populace simply will not stand for inflation of any kind.
  2. The leveraged EFSF has already failed. It’s already failed to auction even 3 billion Euros’ worth of bonds… and it’s supposed to raise over 1 trillion!?! Add to this the fact that no G20 countries want to support it and the EFSF is FINISHED.
  3. Greek will default again. Italy will default. Spain and the other PIIGS will default. The Euro will collapse.

These are the facts. Everything else (political elections, austerity measures, etc) is just a distraction. The whole mess is just like 2008 when the plain simple truth was in front of all of us though 99% of the pundits focused on the various distractions (Wall Street CEOs saying the worst was over, Hank Paulson’s Bazooka, etc).

Europe can, at best, hope to replicate what happened to the US in 2008.

As for the other story in the markets today: the stock market rally which is based on fantasy and dreams. I’ve heard every excuse for this move ranging from “QE 3 is just around the corner” to “the leveraged EFSF will work,” but I’ve yet to hear anything that justifies this move as being something more than short covering and the usual bear market rally.

Let’s take a look over what’s happened since the market bottomed:

1)   Greece defaults

2)   Italian bonds implode

3)   The EFSF fails to raise even 3 billion Euros

4)   French/German bond spreads hit all time highs

5)   The Fed re opens swap lines to Europe AND the Bank of Japan

And stocks have rallied 14% on these developments?

Do people forget that during the 2008 debacle the market rallied 11%, 17%, even 20%?

Having said all of that, stocks look to have formed a triangle pattern, which presents the possibility of a final thrust up, possibly to 1,300 on the S&P 500.

This move will likely be followed by a very sharp sell-off. With stocks tracking the Euro, it’s worth noting that a head and shoulders pattern is forming in the European currency.


Folks, here’s the deal: the EU is out of options and out of time. Yes, we’ve seen some symbolic shifts in the political landscape, but the reality is:

1)   The EFSF CANNOT raise the funds it needs to bail out Europe

2)   Germany WILL NOT monetize the PIIGS’ debt

3)   Greece will stage an even greater default, as will the other PIIGS nations

The powers that be know it. Why do you think China is importing a record amount of Gold… because they believe in the Euro? Weren’t they the ones who were supposed to save Europe?

The reality is that the powers that be (the Federal Reserve and ECB) are fast losing control of the system. Bernanke’s already admitted he hasn’t got a clue how to solve the financial system’s problems. The Bank of England says we’re facing the greatest financial crisis in history. Even the IMF has warned that we’re heading towards a global financial meltdown.

Folks… these organizations don’t issue warnings like this just for fun. They’re the ones who are SUPPOSED to SAVE the system. Do you think they’re issuing these warnings because everything is fine?

So ignore stocks. I know, I know, they’ve made a huge move to the upside. But that huge move was just 14%… and we had rallies of 17% and 20% in 2008. How did those work out? Were they a good time to buy stocks?

Again, the EU will be broken up in the coming weeks. When it is this market rally will collapse. And the ensuing carnage will make 2008 look like a joke.

So if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 12 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Graham Summers Weekly Market Forecast (Makings of a Top Edition)

Bernanke Knows He’s Powerless This Time Around

During Round 1 of the Crisis, the US tried to combat the collapse of the private banking sector (especially the TBTFs) by shifting debt onto the public’s balance sheet and printing money to buy Treasuries so we could maintain a massive deficit (north of $1 trillion).

Put another way, the powers that be attempted to solve a MASSIVE debt implosion by issuing more debt. Aside from the fact this is outright insane, the problem with this is that we’re at a point of debt saturation in the system.

Kyle Bass of Hayman Advisors notes that from 1917 to 1952 each new Dollar of US debt brought on roughly $4 worth of GDP. From 2000-2010, you got seven cents of GDP growth for every $1 in new debt issued.

Put another way, each new $1 in debt issued today is producing less and less returns. By some estimates we’ve even reached the point at which new debt issuance is actually a net drag on the economy as interest payments eat into growth.

Ben Bernanke knows this, and has started to hint at it in his recent speeches and Q&A sessions with the public. Indeed, if you read between the lines of his statements starting in May, it’s clear that he has realized he cannot solve the US’s debt problems and that QE has failed.

Q. Since both housing and unemployment have not recovered sufficiently, why are you not instantly embarking on QE3? — Michael A. Kamperman, Waco, Tex.

Mr. Bernanke: “Going forward, we’ll have to continue to make judgments about whether additional steps are warranted, but as we do so, we have to keep in mind that we do have a dual mandate, that we do have to worry about both the rate of growth but also the inflation rate…

The trade-offs are getting — are getting less attractive at this point. Inflation has gotten higher. Inflation expectations are a bit higher. It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk. And in my view, if we’re going to have success in creating a long-run, sustainable recovery with lots of job growth, we’ve got to keep inflation under control. So we’ve got to look at both of those — both parts of the mandate as we — as we choose policy”

http://economix.blogs.nytimes.com/2011/04/28/how-bernanke-answered-your-questions/

Pessimistic Bernanke Fed Admits QE Has Failed In FOMC Statement

In its latest FOMC statement, the Bernanke Fed has admitted the economy continues to remain depressed, essentially admitting that both programs of long-term asset purchases, or quantitative easing, have failed to prop up output after what has been the worst recession since the Great Depression.

http://www.forbes.com/sites/afontevecchia/2011/08/09/pessimistic-bernanke-and-fomc-practically-admit-qe-has-failed/

“Monetary policy can do a lot, but monetary policy is not a panacea.” — Ben Bernanke 9/29/11

U.S. “close to faltering,” Fed ready to act: Bernanke

Asked whether another round of bond purchases, known as quantitative easing, was in store, Bernanke was noncommittal.

“We never take anything off the table because we don’t know where the economy is going to go. We have no immediate plans to do anything like that,” he said.

http://www.reuters.com/article/2011/10/04/us-usa-fed-bernanke-idUSTRE79337C20111004

Central banks may need to burst bubbles: Bernanke

Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, although regulation should be a first line of defense.

http://www.reuters.com/article/2011/10/18/us-usa-fed-bernanke-idUSTRE79H5IR20111018

 

Look at the progression there. As far back as May 2011, Bernanke admitted the benefits of QE were less attractive. Now he’s not only admitting that asset bubbles exist (something Greenspan never admitted) but that Central Banks may even need to “burst” them!?!?

In plain terms, the Fed will NOT be launching another round of QE or major policy changes until the next round of the Great Crisis hits in full force. And by that time it will be pointless anyway as once the defaults begin, the leverage in the global banking system will implode rapidly.

It is no longer a matter of “if” for defaults, it’s a matter of “when.” And we are going to be seeing defaults in the individual, corporate, banking, and sovereign space. This is going to be the Great Debt Reset: the time when the market calls out the global debt bubble and we enter a period of severe economic contraction accompanied by soaring interest rates.

The worst-case scenario is that everything comes to a head in the next six months. Remember, the slow motion train wreck that is Greece has been playing out since the end of 2009. The market is already pricing in a Greek default. And Germany has even alluded to the fact that it’s preparing for a Greek default that will feature at least a 60% haircut. Heck, France has even announced plans to nationalize 2-3 banks “just in case.”

What happened in 2008 was literally just the warm up. The REAL DEAL is coming in the next 14 months. And it’s going to involve corporate, financial, and sovereign defaults.

This is coming. It’s no longer a matter of if but when. And those investors who position themselves for it in advance will make a killing.

I can show you how. My clients MADE money in 2008. They’re making money now too with the 12 Crisis I mentioned earlier.
Private Wealth Advisory subscribers have also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

To obtain this information, as well as my 12 Crisis Trades, all you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on Bernanke Knows He’s Powerless This Time Around

The 3rd Largest Bond Market in the World is Imploding

I’ve been warning for days that stocks are the last to “get it” and that this latest rally should not be trusted.

Well, by the look of things, stocks are finally waking up to what the credit and bond markets have been telling us for weeks: that the European debt-implosion has now shifted from a relatively small problem (Greece) to a MAJOR problem (Italy).

Remember, worldwide exposure to Greece is roughly $280 billion. Worldwide exposure to Italy is more than THREE TIMES this. Italy is the third largest bond market in the world (behind Japan and the US). So when it implodes, the whole financial system shakes.

Well, according to Barclay’s Italy has now gone “mathematically beyond the point of no return.” Private Wealth Advisory subscribers have been prepared for this for some time.

Indeed, just last week I alerted them the following:

[Italy] is the REAL systemic risk today. And it’s the number one reason why we’ve opened our Crisis Trades again. The Italian ten-year note just cleared 6.2% earlier this week. Once it clears 8% it’s GAME OVER for Italy.

Since I sent out that report, our Crisis trades have exploded higher. Already several of them are closing in on the double digits. And I fully expect we’ll see ALL of them in the double digits in the coming weeks,

And the stuff only just hit the fan in Europe.

Folks, we’re not out of the woods yet… not by a long shot. The same problems plaguing Europe today are coming to the US’s shores. And when they do, everyone will realize what I’ve been saying since 2009: that 2008 was the warm up… the REAL Crisis is when the US defaults and we face systemic collapse.

This is coming. It’s no longer a matter of if but when. Which is why if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

I can show you how. My clients MADE money in 2008. They’re making money now too with the 12 Crisis I mentioned earlier.

Private Wealth Advisory subscribers have also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

To obtain this information, as well as my 12 Crisis Trades, all you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on The 3rd Largest Bond Market in the World is Imploding

This is No Cyclical Recession… It is a Secular DE-pression

Few if any commentators understand what is happening in the US today. The reason for this is that the vast majority of investment professionals believe that what they’ve experienced in their lifetimes is the norm.

Put another way, an entire generation of investment professionals has:

  1. Never witnessed a secular economic change
  2. Never witnessed or invested during a bear market in bonds
  3. Hasn’t studied enough history to know about either of these items

I firmly believe that what’s happening in the US today is not a cyclical recession, but a one in 100 year, secular economic shift.

See for yourself. Here’s duration of unemployment. Official recessions are marked with gray columns. While the chart only goes back to 1967 I want to note that we are in fact at an all-time high with your average unemployed person needing more than 20 weeks to find work (or simply falling off the statistics).

Here’s the labor participation rate with recessions again market by gray columns:

Another way to look at this chart is to say that since the Tech Crash, a smaller and smaller percentage of the US population has been working. Today, the same percentage of the US population is working as in 1980.

Here’s industrial production. I want to point out that during EVERY recovery since 1919 industrial production has quickly topped its former peak. Not this time. Despite spending TRILLIONS in stimulus industrial production is well below the pre-Crisis highs.

Again, what’s happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION. And the reason is that we are currently witnessing the collapse of the greatest debt bubble of all time.

Going into this recession, total US credit market debt was at its highest level of all time: over 350% of GDP. In comparison, during Roosevelt’s New Deal during the Great Depression we hit only of 300% total GDP.

Debt is absolutely endemic in our financial system. The average non-financial corporation in the US is sitting on a debt to equity ratio of 105%. Bank leverage, while relatively low compared to Europe (13 to 1 vs. 26 to 1), is still high enough that an 8% drop in asset prices wipes out ALL capital.

Folks, we’re not out of the woods yet… not by a long shot. The same problems plaguing Europe today are coming to the US’s shores. And when they do, everyone will realize what I’ve been saying since 2009: that 2008 was the warm up… the REAL Crisis is when the US defaults and we face systemic collapse.

This is coming. It’s no longer a matter of if but when. Which is why if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 12 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

Posted in It's a Bull Market | Comments Off on This is No Cyclical Recession… It is a Secular DE-pression