Month: December 2013

 

 

The markets are entering a blow off top.

 

For five years, by keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy.

 

This has not been the case.

 

From 2007-early 2013, individual investors fled stocks for the perceived safety (and more consistent returns) of bonds. During that time, investors have pulled over $405 billion out of stock based mutual funds.

 

The pace did not slow throughout this period either with investors pulling $90 billion out of stock based mutual funds in 2012: the largest withdrawal since 2008.

 

In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012, the most since 20008.

 

Throughout this period, the market rose, largely due to institutional buying. Every time the market started to collapse, “someone” stepped in and propped it up. Consequently, institutional traders were not committed to a collapse, and gradually the market moved higher.

 

At this point the “mom and pop” crowd was, for the most part, not participating in the rally.

 

That all changed in early 2013. Suddenly the “crowd” began to get religion about the Fed’s monetary madness and piled into stocks. We’ve now reached truly manic proportions: thus far in 2013, investors have put $277 billion into stock mutual funds.

 

This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.

Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for the remainder of the year, we’ll virtually tie the all-time record for stock fund inflows in a single year.

As a result of this, the market has entered a blow off top from a rising wedge pattern.  You can clearly see the mania beginning to hit in the middle of 2013.

 

 

So, we have investor sentiment showing record bullishness, investors are piling into stocks at a pace not seen since 1999-2000: at the height of the Tech Bubble, earnings are generally falling, the global economy is contracting, and the Fed is already buying $85 billion worth of assets per month.

 

We all know how this bubble will burst: badly. It’s just a question of when. The smart money is either selling into this rally (Fortress and Apollo Group) or sitting on cash (Buffett). They know what’s coming and are waiting.

 

For a FREE Special Report outlining how to protect your portfolio from a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

Phoenix Capital Research 

 

 

 

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CckIcPZUCl4/story01.htm Phoenix Capital Research

As reported yesterday, in the aftermath of the violent crackdown on a pro-Europe rally, and the resulting call by the opposition for president Yanukovich’s resignation through nationwide strikes, the situation in the Ukraine is increasingly more unstable. Moments ago Reuters reported that Ukrainian nationalist protesters broke into Kiev’s city hall and were occupying at least part of the building during mass protests that drew several hundred thousands out on the streets to protest the government’s decision to forego an EU deal. Nationalist leader Oleh Tyahniboh told Interfax that representatives of his party had taken over the building. “Today literally 40 minutes ago, our boys took the Kiev Council,” he told crowds on Kiev’s Independence Square.

Some more detail on the rally itself via Reuters:

Hundreds of thousands of Ukrainians shouting “Down with the Gang!” rallied on Sunday against President Viktor Yanukovich’s U-turn on Europe and some used a building excavator to try to break through police lines at his headquarters.

 

The rally, by far the biggest seen in the Ukrainian capital since the Orange Revolution nine years ago, came a day after a police crackdown on protesters that inflamed demonstrators further after Yanukovich’s policy switch.

 

Last month Yanukovich – after months of pressure from former Soviet master Russia – backpedalled from signing a landmark deal on closer relations with the European Union in favour of closer ties with Moscow.

 

To try to defuse tensions before Sunday’s rally, Yanukovich issued a statement saying he would do everything in his power to speed up Ukrainian moves toward the EU.

 

In a sea of blue and gold, the colours of both the EU and Ukrainian flags, protesters swept into Kiev’s Independence Square to hear heavyweight boxer-turned-opposition politician Vitaly Klitschko call for Yanukovich to resign.

 

“They stole the dream. If this government does not want to fulfil the will of the people, then there will be no such government, there will be no such president. There will be a new government and a new president,” he said to cheers.

 

Far-right nationalist Oleh Tyahniboh, another opposition leader, called for a national strike. “From this day, we are starting a strike,” he declared.

 

“I want my children to live in a country where they don’t beat young people,” said protester Andrey, 33, the manager of a large company, who declined to give his surname for fear of reprisals against him.

At what point will Russia have to step in, either directly or indirectly, to preserve the new post-USSR world order it has so carefully and meticulously achieved so far?

Live webcast from the Ukraine below:

Live streaming video by Ustream

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SAuLwT5h2A0/story01.htm Tyler Durden

Shortly after 7 am Eastern time on Sunday, Metropolitan Transportation Authority police confirmed that a Metro-North train derailed near the Hudson river in the Bronx. The accident occurred near Palisade Avenue near the Spuyten Duyvil railroad station. Photos taken of the accident scene show eight cars derailed.  Edwin Valero was in an apartment building above the accident scene when the train derailed, the WSJ reports. He says none of the cars went into a nearby body of water, but at least one ended up a few feet from the edge. Rebecca Schwartz was at a nearby park when the accident occurred. She says she didn’t see or hear the derailment but looked across the water when she heard emergency vehicle sirens. She says numerous emergency vehicles have responded to the scene.

The most recent injury report from NBC has 4 dead and 48 injured in the derailment.

BX 2-ALARM PALISADE AVE, (SPUYTEN DUYVIL RR STATION) 5 PASSENGER TRAIN CARS DERAILED ONTO THEIR SIDE,

— FDNY (@FDNY) December 1, 2013

Photos of the accident via Breakingnews:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MBnN4PawyLE/story01.htm Tyler Durden

Last month the IMF came up with a ‘brilliant plan’ to solve the crisis in Europe. As the old continent suffers from record unemployment and a debt pile that has gotten out of control in several (mostly) Southern European countries, the idea is to target savings with a wealth tax.

The IMF came up with the idea, or ‘theoretical exersize’ as the officials like to call it, to introduce a one time off tax levy, or wealth tax, on all savings accounts. Calculations by the IMF had shown that a modest 10% would get European governments out of the woods.

Now of course this ‘theoretical exersize’ got people in Europe furious. And with good reason. At least, so it appears to be. After all: life savings is money that has been taxed,pretty severily already in most parts of Europe. Savings are no more or less the Holy Grail to most and suggesting these life savings aren’t save is like swearing in the church.

The ‘theoretical exersize’ is by no means just what governments and the IMF like us to believe.The plans are out there, leaking this through to the media is no more than a matter of testing the water tempeture.

Let’s not forget: this legal robbery by a government has already been taking place in Cyprus. Consumers on this tiny island were confronted, on a friday night of course, by bank accounts being unaccessable, ATM’s without euro’s, restrictions on making payments abroad and a one off tax levy on all bank accounts.

And although people got angry, and scared, no big riots broke out!

Cyprus was the first test, a blue print or template for what’s coming for the rest of the Eurozone. Not today or tomorrow, consumers are on the edge for now as the IMF report was publiced fairly recently, but at one point in the near future savings will be the target for a wealth tax. That’s only a matter of time.

Now one could argue about the fairness of this wealth tax. After all, people that were smart enough to put some money aside get punished for doing so. People that spent all their money would dodge the bullet.

This is of course a complet dossier.Governments in Europe strongly prefer Europeans to put their savings to work. Either by investing their money, or by spending it to give the economy a boost. At this point in time, people who are saving money, are part of the problem. It maybe a shocker, but for the first time we would like to say: listen to your government, invest your worthless cash in real assets… before they come and collect.

Europe is in some ways different from the USA. Perhaps one of the most important differences is the Fed. Europe has of course it’s own central bank: the ECB. But contrairy to the way the Fed acts with printing dollars like at high speed and ballooning it’s balance sheet, the ECB has a very different appraoch. The balance sheet has been shrinking for quite some time and the desire to print euro’s to fix the fragile economy just isn’t there. Germany, effectively the Eurozone’s ‘paymaster’, will never agree on quantitative easing, Fed-style.

This all leaves Europe with very few options. The debt level within the Eurozone has risen to a level which is unsustainable. Debt rises with €100 million… per hour. The debt-to-GDP ratio has already surpassed the 90% level and will inevitibly reach the 100% plus in a few years.

Now debt by government is of course not just the government’s problem, but a problem for all consumers living within the Eurozone. As the most health way to get out of the woods, a strong economic recovery, is far out of site, something else and drastic has to happen to get out of the woods.

One of the few ways out of this economic mess, will be a wealth tax. Will this be a one time thing? We highly doubt it, as it won’t stop European governments from over spending. Lessons learned? Again, highly unlikely. The people responsible for (over)spending in the last couple of decades will still be in charge, after all Europeans take a hit on their savings.

Will the wealth tax do the trick? That is also higly unlikely. It will help bring the debt levels back to a more sustainable level, creating some room for the battered European economies to grow, but it won’t be enough. So this means after taking a chunk out of people’s savings, the next step for European governments will be confiscate a big part, or even all?! At this point, Europe looks like a dying continent and a sitting duck for the monetary mobsters…  

Prepare yourself for the next phase of the Global Debt Crisis!

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