Tag: news

Last week Mike Maloney exposed the "biggest scam in the history of mankind" in 7 easy steps in his latest presentation. As Mike explains, most people can feel deep down that something isn't quite right with the world economy, but few know what it is. Gone are the days where a family can survive on just one paycheck…every day it seems that things are more and more out of control, yet only one in a million understand why. Here is the simple infographic to explain the grift…

 

(click image for massive legible version)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MDlwIWDD-h8/story01.htm Tyler Durden

Tired of reading 640 pages of “The Intelligent Investor”? Exhausted from imbibing 700 pages of “Security Analysis”? Fed up with the 400 pages of “The General Theory of Employment, Interest, and Money”? Have no fear, we have summarized the new normal’s investing mantra into 14 words…

 

 

h/t @Not_Jim_Cramer

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rpfhEbYfaY4/story01.htm Tyler Durden

We have long discussed the 'hidden' and not-so-hidden inflations that are impacting the standard of living for all but the wealthiest in America… and it is hardly new to anyone that the USA faces a demographic dilemma as aging boomers draw down on an ever-shrinking base of entitlement provisions… However, when we saw this slide from Kimberly-Clark's latest earnings call, we were surprised at just how clearly these two trends showed up…

 

 

So… Aging Demographics:

• Depends and Poise driving the top-line growth in North America
• Medical Devices volume up 8%

And… Stealth Inflation…

• KIMBERLY-CLARK CEO SAYS PLANS TO REDUCE HUGGIES DIAPER PACK SIZE BY ABOUT 7 PCT IN Q1'14
• KIMBERLY-CLARK CEO SAYS CUTTING NUMBER OF DIAPERS IN HUGGIES PACKS TO MATCH COMPETITION SIZES

Welcome to the new normal!

As we noted previously…

In the last two years, according to Intuit, Americans are reaching deeper into their pockets to cover family-related expenses. Given the current concerns over dis-inflationary pressures, we thought the following infographic might highlight just where that hidden liquidity-/credit-fueled inflation is leaking out.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DhDdXq0qPmc/story01.htm Tyler Durden

 

 

Today I’m going to tell you about the single most important metric for long-term investing.

 

That metric is the cyclically adjusted price-to-earnings ratio or CAPE ratio.

 

Generally speaking, most investors price a company based on its current Price to Earnings or P/E ratio. Essentially what you’re doing is comparing the price of the company today to its ability to produce earnings (cash).

 

However, corporate earnings are heavily influenced by the business cycle.

 

Typically the US experiences a boom and bust once every ten years or so. As such, companies will naturally have higher P/E’s at some points and lower P/E’s at other. This is based solely on the business cycle and nothing else.

 

CAPE adjusts for this by measuring the price of stocks against the average of ten years’ worth of earnings, adjusted for inflation. By doing this, it presents you with a clearer, more objective picture of a company’s ability to produce cash in any economic environment.

 

I mentioned before that CAPE is the single most important metric for long-term investors. I wasn’t saying that for impact.

 

Based on a study completed Vanguard, CAPE was the single best metric for measuring future stock returns. Indeed, CAPE outperformed

 

1.     P/E ratios

2.     Government Debt/ GDP

3.     Dividend yield

4.     The Fed Model,

 

…and many other metrics used by investors to predict market value.

 

So what is CAPE telling us today?

 

 

Today the S&P 500 has a CAPE of over 24.  This means the market as a whole is trading at 22 times its average earnings of the last ten years.

 

Put another way, if you bought the entire stock market today, it would take you roughly 22 years to make your money back.

 

That is hardly what I’d call cheap.

 

Indeed, as you’ll note in the above chart, the market has only been above this level three times in history. They were the 1929 Bubble, the Tech Bubble and the Housing Bubble.

 

All of these times occurred close to market peaks.

 

This is not to say that stocks can’t go even higher than they are today. Bubbles, such as the one we’re experiencing today, can often last longer than anyone expects.

 

However, the fact is that the markets are significantly overpriced. And based on over 100 years worth of data, this kind of overvaluation usually precedes a market peak.

 

This doesn’t mean the markets will crash next week or next month. But it does pose a warning to those who are heavily allocated to stocks, expecting to see significant upside in the long-term.

 

For a FREE Special Report outlining how to protect your portfolio from the Fed’s policies, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best

Phoenix Capital Research

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/WInZSVlqSJ4/story01.htm Phoenix Capital Research

Via Guy Haselmann of Scotiabank,

QE – Speculative Market Fuel

·  A weak economic report lifted an overbought equity market to even-loftier historic highs.   Investors and traders have become programmed to believe that QE (rather than economic growth) is enough to launch asset prices ever-higher. At the moment, there is little to refute this view.  “Melt-up” mentality is back.  However, shouldn’t a sluggish economy with slow job creation make investors question whether enough economic activity will be generated to justify prices?  Unless the economy improves materially, then today’s move is just another example of speculative excesses caused by QE.

“Adequate Progress” – Undefined

·  The key to market direction appears to be driven by assessing the timing of any changes to Fed action.  The longer QE lasts the higher prices are expected to be pushed, thus the basis for today’s rally.  However, reacting so robotically may not be so straightforward. After all, the FOMC communication has not been that helpful. This is because they say that asset purchases are “dependent on the state of the economy” and “making adequate progress”, yet they never define what “adequate” means.

Unemployment Rate Creeping Toward the 7% Threshold

·  The FOMC initially presented “thresholds”, saying QE would end when the unemployment rate (UR) hit 7.0%, but the rate has already hit 7.2%.  How will the markets react if the rate falls to 7.0% with the next employment report two weeks from Friday – and QE has not yet ended (let alone begun)?  Would the Fed lose credibility if this occurs?  Would it spook markets who are now expecting QE to continue well into 2014?

Fed Policy Based on an Unstable Indicator

·  The Fed has problematically tied their policy to an inherently unstable and unpredictable economic indicator (i.e., the unemployment rate).  This guidance may need to change as they develop a (sorely-needed) QE withdrawal strategy.  Formulating and communicating such a strategy would be helpful to markets as well as to the FOMC who would benefit from getting all members on the same page.

FOMC Press Conferences

·  A detailed or updated QE exit strategy could be presented at the October 30th FOMC meeting.   The stakes are rising, so announcing that a press conference will occur at every meeting is likely.

·  “I live on a one-way street that is also a dead end. I’m not sure how I got there.” –Steven Wright

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/I5C2EGHR-sk/story01.htm Tyler Durden

Just as we wondered earlier in the day…

Has Icahn tweeted an update on his NFLX position yet?

— zerohedge (@zerohedge) October 22, 2013

 

 

Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey: http://t.co/BRWpKOBfD2

— Carl Icahn (@Carl_C_Icahn) October 22, 2013

 

What is perhaps most worrisome for the market is the sale of 2.99 million shares collapsed the market cap by around 20%…

 

Of course, he hedges his sell…

• *ICAHN SAYS NETFLIX REMAINS `SIGNIFICANTLY UNDERVALUED’
• *NETFLIX HOLDER ICAHN REPORTS SALE OF 2.99M SHRS
• *ICAHN CITES 457% NFLX SHR PRICE BOOST SINCE ORIGINAL INVESTMENT

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/35OgRgydCIw/story01.htm Tyler Durden